Document:

Exhibit 4.6

 

	
Confidential   portions of this exhibit have
    	
 
    	
EXECUTION VERSION
    
	
been   omitted and filed separately with the
    	
 
    	
 
    
	
Securities   and Exchange Commission
    	
 
    	
 
    

 

FIRST AMENDMENT
 TO
 STOCK AND ASSET PURCHASE AGREEMENT

 

This First Amendment to the Stock and Asset Purchase Agreement (this Amendment Agreement) dated as of December 17, 2014, is entered into by and between Novartis AG, a company incorporated under the laws of Switzerland (the Seller), and Eli Lilly and Company, a corporation organized under the laws of Indiana (the Purchaser, each of the Purchaser and the Seller is a Party and together are the Parties).

 

RECITALS

 

WHEREAS, the Parties entered into that certain Stock and Asset Purchase Agreement, dated as of April 22, 2014 (the SAPA); and

 

WHEREAS, the Seller has delivered the Initial Closing Statement to the Purchaser pursuant to Section 2.03(b) of the SAPA on or prior to the date hereof;

 

WHEREAS, the Parties desire to amend the SAPA pursuant to Section 11.02 thereof, as set forth herein.

 

NOW, THEREFORE, in exchange for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the Parties agree as follows:

 

ARTICLE 1
 DEFINITIONS

 

1.01                        Definitions; References

 

Unless otherwise specifically defined herein, each capitalized term used herein shall have the meaning assigned to such term in the SAPA.  Each reference to “hereof,” “herein,” “hereunder,” “hereby” and “this Agreement” shall, from and after the date hereof, refer to the SAPA as amended by this Amendment Agreement.  Notwithstanding the foregoing, references to the date of the SAPA, as amended hereby, shall in all instances continue to refer to April 22, 2014, references to “the date hereof” and “the date of this Agreement” shall continue to refer to April 22, 2014 and references to the date of the Amendment Agreement and “as of the date of the Amendment Agreement” shall refer to December 17, 2014.

 

ARTICLE 2
 AMENDMENTS TO STOCK AND ASSET PURCHASE AGREEMENT

 

2.01                        Closing Date

 

Notwithstanding anything to the contrary in the SAPA and subject to the provisos below, if  the conditions set forth in Article VIII of the SAPA (other than those conditions that by their nature are to be satisfied at Closing, but subject to the fulfillment or waiver of those conditions at 

 

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Closing) are satisfied on or prior to 5:00 PM in New York City, New York, on December 19, 2014 (the January 1 Closing Event), the Closing shall take place at 12:01 AM Eastern Standard Time in New York City, New York, on January 1, 2015 at the offices of Freshfields Bruckhaus Deringer US LLP, 601 Lexington Avenue, 31st Floor, New York, NY 10022; provided that:

 

A.                                    the condition precedent set forth in Section 8.01(a)(i) of the SAPA required to be satisfied as of the Closing Date shall instead be deemed satisfied, if satisfied, as of 5:00 PM, New York time, December 31, 2014 (and not on the Closing Date) as if made at and as of such time;

 

B.                                    the certificate required to be delivered by the Seller pursuant to Section 8.01(a)(iii) of the SAPA certifying the matters set forth in Section 8.01(a)(i) of the SAPA shall certify such matters as of 5:00 PM, New York time, December 31, 2014 (and not on the Closing Date); and

 

C.                                    the condition set forth in Section 8.01(d) of the SAPA shall be deemed satisfied, if satisfied, as of 5:00 PM, New York time, December 31, 2014 (and not on the Closing Date).

 

2.02                        Amendment to Section 2.05 of the SAPA

 

If the January 1 Closing Event occurs, Section 2.05 of the SAPA shall be deleted and replaced in its entirety by the following provisions. For the avoidance of doubt, notwithstanding the foregoing sentence, if the January 1 Closing Event, and/or the Closing on January 1, 2015, does not occur, Section 2.05 of the SAPA, as amended by Section 2.11 of this Amendment Agreement, shall remain in full force and effect and the Parties shall consummate the Closing in accordance therewith.

 

“2.05             Transactions to be Effected Prior to and at Closing

 

(a)                                 The Seller and the Purchaser shall, or shall cause their designated Affiliates to, use reasonable best efforts to enter into on or prior to December 19, 2014 (but in no event later than December 29, 2014) (i) an escrow agreement with UBS AG (the UBS Escrow Agent), substantially in the form attached hereto as Annex 2.05A (the UBS Escrow Agreement) and (ii) an escrow agreement with Credit Suisse (the Credit Suisse Escrow Agent), substantially in the form attached hereto as Annex 2.05B (the Credit Suisse Escrow Agreement).

 

(b)                                 The Purchaser shall pay all escrow agent’s fees and expenses required to be paid under the UBS Escrow Agreement and the Credit Suisse Escrow Agreement in accordance with the terms thereof, and shall, in each case, indemnify each Seller Indemnitee and hold it harmless from any Losses (including any escrow fees, customary banking fees or commissions) arising under the UBS Escrow Agreement or the Credit Suisse Escrow Agreement including, but not limited to (i) Sections 4, 16.1, 16.2 and 16.3 of the UBS Escrow Agreement and (ii) Sections 4, 16.1, 16.2 and 16.3 of the Credit Suisse Escrow Agreement.

 

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(c)                                  Not later than 10:00 AM, in New York City, New York, on December 29, 2014, the Purchaser shall, or shall cause its Affiliates to, initiate wire transfers for an amount that, in the aggregate, equals the Initial Purchase Price (it being agreed and understood that the wire instructions for each transfer shall be noted as “priority wire to be effected on December 30, 2014”) as follows:

 

(i)                                     to the applicable Affiliate of the Seller, cash in an amount equal to such portion of the Initial Purchase Price agreed by the Parties to be allocated to the Business owned by such Affiliate in South Africa (the South Africa Purchase Price Payment), by means of a wire transfer of immediately available funds to such account or accounts as designated by the Seller in Annex 2.05(c) hereto as the “South African Purchase Price Wire Details”, which South Africa Purchase Price Payment shall be held in escrow by such Affiliate of the Seller until the Closing;

 

(ii)                                  to the applicable Affiliate of the Seller, cash in an amount equal to such portion of the Initial Purchase Price agreed by the Parties to be allocated to the Shares of Novartis Saùde Animal Ltda (the Brazil Purchase Price Payment), by means of a wire transfer of immediately available funds to such account or accounts as designated by the Seller in Annex 2.05(c) hereto as the “Brazil Purchase Price Wire Details”, which Brazil Purchase Price Payment shall be held in escrow by such Affiliate of the Seller until the Closing;

 

(iii)                               to the applicable Affiliate of the Seller, cash in an amount equal to such portion of the Initial Purchase Price agreed by the Parties to be allocated to the Business owned by such Affiliate in Argentina (the Argentina Purchase Price Payment), by means of a wire transfer of immediately available funds to such account or accounts as designated by the Seller in Annex 2.05(c) hereto as the “Argentina Purchase Price Wire Details”, which Argentina Purchase Price Payment shall be held in escrow by such Affiliate of the Seller until the Closing;

 

(iv)                              to the applicable Affiliate of the Seller, cash in an amount equal to such portion of the Initial Purchase Price agreed by the Parties to be allocated to the Business owned by such Affiliate in Colombia (the Colombia Purchase Price Payment), denominated in Colombian Pesos, by means of a wire transfer of immediately available funds to such account or accounts as designated by the Seller in Annex 2.05(c) hereto as the “Colombia Purchase Price Wire Details”, which Colombia Purchase Price Payment shall be held in escrow by such Affiliate of the Seller until the Closing;

 

(v)                                 if the India Unconditional Date has occurred prior to December 19, 2014, to the applicable Affiliate of the Seller, cash in an amount equal to such portion of the Initial Purchase Price agreed by the Parties to be allocated to the Business owned by such Affiliate in India (the India Purchase Price Payment; and such payment, together with the South Africa Purchase Price Payment, the Brazil Purchase Price Payment, the Argentina Purchase Price Payment and the Colombia Purchase Price Payment, the Local Purchase Price Payments), denominated in 

 

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Indian Rupees, by means of a wire transfer of immediately available funds to such account or accounts as designated by the Seller in Annex 2.05(c) hereto as the “India Purchase Price Wire Details”, which India Purchase Price Payment shall be held in escrow by such Affiliate of Seller until the Closing;

 

(vi)                              to the escrow account referenced in Section 2 of the Credit Suisse Escrow Agreement (the Credit Suisse Escrow Account), cash in an amount equal to such portion of the Initial Purchase Price agreed by the Parties to be allocated to the Shares of the U.S. Transferred Subsidiary (the Credit Suisse Escrow Payment), by means of a wire transfer of immediately available funds, the details of which are designated in the Credit Suisse Escrow Agreement; and

 

(vii)                           to the escrow account referenced in Section 2 of the UBS Escrow Agreement (the UBS Escrow Account), cash in an amount equal to the Initial Purchase Price, less the Local Purchase Payments (other than the India Purchase Price Payment if the India Unconditional Date does not occur prior to December 19, 2014) and less the Credit Suisse Escrow Payment (the UBS Escrow Payment) by means of a wire transfer of immediately available funds, the details of which are designated in the UBS Escrow Agreement.

 

The Purchaser shall use its reasonable best efforts (i) to cause the Local Purchase Price Payments to be received in the applicable Seller account set forth on Annex 2.05(c) not later than 3:00 PM, in New York City, New York, on December 30, 2014, and (ii) to cause the Credit Suisse Escrow Payment to be received by the Credit Suisse Escrow Agent, and the UBS Escrow Payment to be received by the UBS Escrow Agent, in each case, by 3:00 PM, in New York City, New York, on December 30, 2014, and in any event, not later than 4:00 PM in Basel, Switzerland, on December 31, 2014.  The UBS Escrow Payment and the Credit Suisse Escrow Payment shall be held in escrow pending the Closing pursuant to the terms and conditions of the UBS Escrow Agreement and the Credit Suisse Escrow Agreement, as applicable.  The Purchaser shall cause its representative or a representative of its designated Affiliate, who is authorized to deliver both the executed release instruction in the form set out in Exhibit B to the UBS Escrow Agreement and the executed release instruction in the form set out in Exhibit B to the Credit Suisse Escrow Agreement, to (y) be present in Basel, Switzerland from and after December 30, 2014 through the Closing, and (z) deliver, on behalf of the Purchaser and its designated Affiliate, to a representative of the Escrow Agent (as such term is defined in each of the UBS Escrow Agreement and the Credit Suisse Escrow Agreement) such executed release instructions at the Seller’s headquarters in Basel, Switzerland (Novartis Campus) in accordance with the UBS Escrow Agreement and the Credit Suisse Escrow Agreement.

 

If for any reason, the Closing does not occur by 11:59 P.M., New York time, on January 5, 2015, the Seller shall refund to the Purchaser or its designated Affiliates each of the Local Purchase Price Payments not later than January 9, 2015 by means of a wire transfer of immediately available funds to such account or accounts as designated by the Purchaser.

 

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The Parties acknowledge and agree that in the event that the Seller cannot, or cannot cause its Affiliate to, transfer the Shares of any Transferred Subsidiary set forth on Annex 2.05(d) (each, a Notarial Transferred Subsidiary), or any Transferred Asset of any Asset Seller set forth on Annex 2.05(d) hereto (each, a Notarial Asset Seller; and each jurisdiction of incorporation of a Notarial Transferred Subsidiary or Notarial Asset Seller, a Notarial Jurisdiction) in accordance with the terms and conditions of the SAPA as a result of the Closing Date not being a Business Day in such Notarial Jurisdiction, then, with respect to the transfer of the Shares of any such Notarial Transferred Subsidiary or any Transferred Asset of such Notarial Asset Seller:

 

i.                                          The Seller shall appear before the relevant notary or registry in order to fulfill its obligations under Sections 2.01(a), 2.01(b) and 2.05 on the first Business Day on which the relevant notary or registry is available in the relevant Notarial Jurisdiction following the Closing Date (the Notarial Closing Date);

 

ii.                                       From the Closing Date until the Notarial Closing Date, the Seller shall hold in trust for the account of the Purchaser such Notarial Transferred Subsidiary or any Transferred Asset of the Notarial Asset Sellers in a manner consistent with this Agreement.

 

(c)                                  At the Closing:

 

(i)                                     the Seller shall or shall cause its Affiliates to, as applicable, deliver to the Purchaser or its Affiliates:

 

(A)                               duly executed Local Agreements;

 

(B)                               counterparts of the Ancillary Agreements to which the Seller or any of its Affiliates is a party duly executed by the Seller or such Affiliates, as applicable;

 

(C)                               if requested by the Purchaser, the letters of resignation (or evidence that such directors have been removed from office) of those directors of the Transferred Subsidiaries who are designated by the Purchaser pursuant to Section 6.04;

 

(D)                               the Seller’s Closing Certificate;

 

(E)                                a certification that Novartis Finance Corporation (and any other “United States person” within the meaning of section 7701(a)(30) of the Code that is treated as transferring a “United States real property interest” within the meaning of section 897(c)(1) of the Code for U.S. Federal income tax purposes in the Proposed Transactions) is not a foreign person within the meaning of section 1445 of the Code, dated as of the Closing Date and in form and substance as provided in Treasury Regulations section 1.1445-2(b)(2);

 

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(F)                                 an effective, irrevocable election under Section 338(h)(10) of the Code on IRS Form 8023 (and under any comparable provisions of Applicable Law in any U.S. state or local jurisdiction) with respect to the U.S. Transferred Subsidiary; and

 

(G)                               counterparts to the Support Agreement duly executed by Seller.

 

(ii)                                  the Purchaser shall or shall cause its Affiliates to, as applicable, deliver to the Seller and in the case of paragraph (A) below the UBS Escrow Agent and in the case of paragraph (B) below the Credit Suisse Escrow Agent:

 

(A)                               duly executed release instruction in the form set out in Exhibit B to the UBS Escrow Agreement;

 

(B)                               duly executed release instruction in the form set out in Exhibit B to the Credit Suisse Escrow Agreement;

 

(C)                               duly executed Local Agreements;

 

(D)                               if requested by the Seller, an executed instrument of assignment and assumption substantially in the form attached hereto as Exhibit 2.05(b)(ii)(D) in respect of the Assumed Liabilities;

 

(E)                                counterparts of the other Ancillary Agreements to which the Purchaser or any of its Affiliates is a party, duly executed by the Purchaser or such Affiliates, as applicable;

 

(F)                                 the Purchaser’s Closing Certificate; and

 

(G)                               counterparts to the Support Agreement duly executed by Purchaser.

 

2.03                        Amendment to Section 2.06 of the SAPA

 

Notwithstanding anything to the contrary set forth in Section 2.06(d) of the SAPA, as amended by Section 2.12 of this Amendment Agreement, any repayments to be made by the Purchaser, for itself and on behalf of the Transferred Subsidiaries, to the Seller, immediately after Closing pursuant to Section 2.06(d) of the SAPA (the Intra-Group Payables Escrow Amount) shall be made by the Purchaser to the UBS Escrow Account on December 30, 2014 and held in escrow pending the Closing pursuant to the terms and conditions of the UBS Escrow Agreement.

 

2.04                        Annex 2.05A and Annex 2.05 B

 

Annex I hereto shall be inserted at the end of the SAPA as Annex 2.05A and the form of UBS Escrow Agreement shall be attached thereto, and Annex II hereto shall be inserted at the end of the SAPA as Annex 2.05B and the form of Credit Suisse Escrow Agreement shall be attached thereto.

 

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2.05                        Annex 2.05(c)

 

Annex III hereto shall be inserted at the end of the SAPA as Annex 2.05(c).

 

2.06                        Annex 2.05(d)

 

Annex IV hereto shall be inserted at the end of the SAPA as Annex 2.05(d).

 

2.07                        Amendment to Annex C — Selling Affiliates

 

The list of Selling Affiliates attached as Annex C to the SAPA is hereby deleted and replaced in its entirety by the revised Annex C attached hereto as Exhibit A.

 

2.08                        Replacement of Lek S.A.

 

All references to “Lek S.A.” as a Selling Affiliate in the SAPA and the Disclosure Schedule are hereby deleted and replaced in their entirety with “Novartis Poland Sp. z.o.o.”.

 

2.09                        Replacement of Novartis Saglik A.S.

 

All references to “Novartis Saglik A.S.” as a Selling Affiliate in the SAPA and the Disclosure Schedule are hereby deleted and replaced in their entirety with “Novartis Sağlık, Gıda ve Tarım Ürünleri Sanayi ve Ticaret A.Ş.”.

 

2.10                        Amendment to Section 2.01 of the SAPA

 

Section 2.01(b) of the SAPA is hereby amended by inserting the following at the end of that Section:

 

“; provided, that, neither the Seller nor its Affiliates shall transfer the assets set forth on Annex 2.01(b) (the Retained IT Assets) to the Purchaser or its Affiliates at Closing, but instead shall transfer the Retained IT Assets to the Purchaser or its Affiliates pursuant to this Agreement if Purchaser provides notice thereof under Section 10.02 of the Transition Services Agreement and on the date so required under such Section.”

 

2.11                        Amendment to Section 2.03 of the SAPA

 

Section 2.03(b) of the SAPA is hereby amended by inserting at the end of the first sentence after “in accordance with the Closing Statement Principles” the following: “and setting forth the breakdown of the Initial Purchase Price to be paid in U.S. Dollars and each other currency required by Applicable Law, including, the applicable conversion rate as determined in accordance with Section 11.17”.

 

2.12                        Amendment to Section 2.05 of the SAPA

 

A.                                    Section 2.05(a) of the SAPA is hereby amended by:

 

i.                                          deleting the word “and” at the end of the subsection (v);

 

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ii.                                       deleting and replacing the period at the end of subsection (vi) with “; and”; and

 

iii.                                    inserting the following provision as subsection (vii) “counterparts to the Support Agreement duly executed by the Seller.”

 

B.                                    Section 2.05(b) of the SAPA is hereby amended by adding “or, in the case of the transfer of the Business in Argentina, Colombia, India and South Africa, and the Shares of the U.S. Transferred Subsidiary and Novartis Saùde Animal Ltda. in each case, as contemplated by this Agreement, its Affiliates, as applicable” after “Seller”.

 

C.                                    Section 2.05(b)(i) of the SAPA is hereby deleted and replaced in its entirety as follows:

 

“cash in an aggregate amount equal to the Initial Purchase Price, paid in U.S. Dollars and in such local currencies as is required by Applicable Law, by means of wire transfers of immediately available funds to such account or accounts as shall be designated by the Seller no later than five (5) Business Days prior to the Closing Date;”.

 

D.                                    Section 2.05(b) of the SAPA is hereby amended by:

 

i.                                          deleting “and” at the end of the subsection (iv);

 

ii.                                       deleting and replacing the period at the end of subsection (v) with “; and”;  and

 

iii.                                    inserting the following provision as subsection (vii) of that Section: “counterparts to the Support Agreement duly executed by the Purchaser.”

 

2.13                        Amendment to Section 2.06 of the SAPA

 

Section 2.06 of the SAPA is hereby amended as follows:

 

A.                                    Section 2.06(a) of the SAPA is hereby deleted and replaced in its entirety as follows:

 

“Immediately following the Closing,

 

(i)                                     other than the Intra-Group Non-Trade Payables owed by certain Transferred Subsidiaries to the Seller as set forth on Annex 2.06(a) (the Outstanding Intra-Group Non-Trade Payables), the Purchaser shall cause each Transferred Subsidiary to repay to the relevant member of the Seller’s Group the amount of any Estimated Closing Date Intra-Group Non-Trade Payables and shall acknowledge, on behalf of each Transferred Subsidiary, the payment of  the Estimated Closing Date Intra-Group Non-Trade Receivables in accordance with Section 2.06(b);

 

(ii)                                  the Purchaser shall, or shall cause its Affiliate to, purchase from the Seller, and the Seller shall sell to the Purchaser or its Affiliate, as designated by the Purchaser, all of

 

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the Seller’s right, title and interest in and to the Outstanding Intra-Group Non-Trade Payables, and as consideration therefor, the Purchaser and its designated Affiliate, together, shall pay to the Seller an amount equal to the amount owed by the Transferred Subsidiaries to the Seller or the applicable member of the Seller’s Group, in the aggregate, under such Outstanding Intra-Group Non-Trade Payables.”

 

B.                                    Section 2.06(d) of the SAPA is hereby amended by inserting:

 

i.                                          at the end of the first sentence of that Section the words “other than any such repayment, or adjustment to such repayment, owed by Novartis Tiergesundheit GmbH to Novartis Deutschland GmbH pursuant to that certain domination and profit and loss pooling agreement (Beherrschungs- und Gewinnabführungsvertrag) dated December 6, 1996, entered into between Novartis Deutschland GmbH as controlling company and Novartis Tiergesundheit GmbH as controlled entity, which shall be settled by direct payments between Novartis Tiergesundheit GmbH and Novartis Deutschland GmbH.

 

ii.                                       into the second sentence of that Section, after “Any such payments”, the words “(other than any payment made (or required to be made) between Novartis Tiergesundheit GmbH and Novartis Deutschland GmbH pursuant to this Section 2.06(d))” and after “to produce a net sum” the words “(for the avoidance of doubt, any payment made (or required to be made) between Novartis Tiergesundheit GmbH to Novartis Deutschland GmbH pursuant to this Section 2.06(d) shall be taken into account as payment due by the Purchaser).”

 

2.14                        Amendment to Article 2 of the SAPA

 

Article 2 of the SAPA is hereby amended by adding the following provision as Sections 2.12 and 2.13 thereof:

 

“2.12                  Deferred India Closing

 

(a)                                 Notwithstanding anything to the contrary in this Agreement, the sale, conveyance, transfer, assignment and delivery to the Purchaser or one or more of its Affiliates of the Transferred Assets (the India Transferred Assets) and the assumption by the Purchaser or one or more of its Affiliates of the Assumed Liabilities (the India Assumed Liabilities), in each case, of the Business in India (the India Transferred Assets and the Assumed Liabilities, collectively, the India Business) shall occur on the later of (i) the Closing and (ii) on the last Business Day of the month in which the India Unconditional Date falls (the Deferred India Closing Date).  For purposes of this Agreement, the India Unconditional Date means the first Business Day in India after the Purchaser obtains written approval (the FIPB Approval) from the Foreign Investment Promotion Board of India permitting the Purchaser to purchase the India Business.

 

(b)                                 The sale, conveyance, transfer, assignment and delivery of the India Business shall take place on the Deferred India Closing Date at a closing (the Deferred India Closing) at the offices of Freshfields Bruckhaus Deringer US LLP, 601 Lexington

 

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Avenue, 31st Floor, New York, NY 10022, at 10:00 a.m., in New York City, New York, or at such other time and at such other location as is agreed between the Parties.

 

(c)                                  At the Deferred India Closing:

 

(i)                                     the Parties shall, and shall cause their respective Affiliates to, execute and deliver such documents and instruments as may be reasonably necessary to evidence the transfer of the India Business, including those required to be delivered by them pursuant to Sections 2.01 and 2.05 of this Agreement;

 

(ii)                                  the Purchaser (or its designated Affiliate) shall pay 866,800,000 Indian Rupees, in cash, by means of a wire transfer of immediately available funds to such account or accounts as designated by the Seller in Annex 2.05(c) hereto as the “India Purchase Price Wire Details”; and

 

(iii)                               concurrently with Section 2.12(c)(ii) above, the Seller shall refund to the Purchaser an amount equal to the India Purchase Price Payment, denominated in U.S. Dollars, actually paid to the Seller at the Closing in respect of the India Business, in cash, by means of a wire transfer of immediately available funds to such account or accounts as designated by the Purchaser.

 

(d)                                 If the Deferred India Closing is later than the Closing, during the period between the Closing and the Deferred India Closing (i) the benefits and burdens of the India Business shall be for the account of the Purchaser; (ii) no Leakage with respect to the India Business shall occur; (iii) all income, proceeds or other monies generated by the India Business, or received by the Seller or any member of the Seller’s Group (other than the India Business) for, or on behalf of the India Business, shall be held in trust for the account of, and the net profits (if any) paid to, the Purchaser or its Affiliates, as designated by the Purchaser, notwithstanding any other provision in the SAPA to the contrary, on the Deferred India Closing Date; and (iv) the Parties shall and shall cause their respective Affiliates to, use their respective best efforts to cooperate with each other to take such actions (including delivery of notice) that may be required to obtain the FIPB Approval.

 

(e)                                  The Seller shall be liable to pay, and shall pay, to the Purchaser, or its designee, an amount equal to any Leakage that occurred with respect to the India Business in India, on a dollar-for-dollar basis without any deductions, within five (5) Business Days of a written request for payment from the Purchaser on or before (i) the date upon which the Proposed Closing Statement is deemed the Final Closing Statement pursuant to Section 2.07, if the Deferred India Closing Date occurs prior to the delivery by the Seller of the Proposed Closing Statement; or (ii) the fourteen (14) month anniversary of the Deferred India Closing Date, if the Deferred India Closing Date occurs after the delivery by the Seller of the Proposed Closing Statement. In the event of any dispute regarding the calculation of Leakage with respect to the India Business, the Parties shall resolve the same in accordance with the dispute resolution provisions set forth in Sections 2.07(b) and 2.07(c), which shall apply mutatis mutandis, and any payment of the India Settlement

 

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shall be paid to the Purchaser, or its designee, within five (5) Business Days of the finalization of the amount due to the Purchaser pursuant to such resolution mechanics.

 

(f)                                   From the Closing Date to the Deferred India Closing Date, unless the context clearly requires otherwise, all references in this Agreement to the “Closing” or the “Closing Date” shall, with respect to the transfer of the India Business, be deemed to refer to the Deferred India Closing and the Deferred India Closing Date, as applicable, and the Parties shall continue to comply with all covenants and agreements contained in this Agreement that are required by their terms to be performed prior to the Closing in respect of the India Business to the extent applicable to the India Business (other than those set forth in Sections 6.04, 6.07(b) through 6.07(e), 6.10 and 6.12).

 

(g)                                  If the India Unconditional Date has not occurred on or before the eighteen (18) month anniversary of the Closing Date, the Parties shall, and shall cause their Affiliates to, negotiate in good faith alternative arrangements to effectuate the intent of this Agreement.

 

Section 2.13                            Deferred Switzerland Closing

 

(a)                                 Notwithstanding anything to the contrary in this Agreement, the sale, conveyance, transfer, assignment and delivery of the Shares of Novartis Centre de Recherche Santé Animale SA (the Deferred Switzerland Entity) to the Purchaser, or any Affiliate designated by Purchaser, shall occur on the later of (i) the Closing and (ii) on the last Business Day of the month in which all of the conditions set forth on Annex 2.13 are satisfied (the Deferred Switzerland Closing Date).

 

(b)                                 The sale, conveyance, transfer, assignment and delivery of the Shares of the Deferred Switzerland Entity shall take place on the Deferred Switzerland Closing Date at a closing (the Deferred Switzerland Closing) at the offices of Freshfields Bruckhaus Deringer US LLP, 601 Lexington Avenue, 31st Floor, New York, NY 10022, at 10:00 a.m., in New York City, New York, or at such other time and at such other location as is agreed between the Parties.

 

(c)                                  At the Deferred Switzerland Closing, the Parties shall, and shall cause their respective Affiliates to, deliver, and execute and deliver such documents and instruments as may be reasonably necessary to evidence the transfer of, the Shares of the Deferred Switzerland Entity, including those required to be delivered by them pursuant to Sections 2.01 and 2.05 of this Agreement.

 

(d)                                 If the Deferred Switzerland Closing is to occur later than the Closing, during the period between the Closing and the Deferred Switzerland Closing: (i) the benefits and burdens of the Deferred Switzerland Entity shall be for the account of Purchaser; (ii) no Leakage with respect to the Deferred Switzerland Entity shall occur; (iii) all income, proceeds or other monies received by the Seller or any member of the Seller’s Group (other than the Deferred Switzerland Entity) for and on behalf of the Deferred Switzerland Entity, and all profits and losses generated by the Deferred Switzerland Entity, shall be held in trust for, and the net profits paid to the Purchaser or its Affiliates,

 

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as designated by the Purchaser, notwithstanding any other provision in the SAPA to the contrary, on the Deferred Switzerland Closing Date; and (iv) the Parties shall, and shall cause their respective Affiliates to, use their respective reasonable best efforts to cooperate with each other to take such actions (including delivery of notice) that may be required to satisfy the conditions set forth on Annex 2.13.

 

(e)                                  The Seller shall be liable to pay to the Purchaser an amount equal to any Leakage that occurs with respect to the Deferred Switzerland Entity, on a dollar-for-dollar basis without any deductions, within five (5) Business Days of a written request for payment from the Purchaser on or before (i) the date upon which the Proposed Closing Statement is deemed the Final Closing Statement pursuant to Section 2.07, if the Deferred Switzerland Closing Date occurs prior to the delivery by the Seller of the Proposed Closing Statement; or (ii) the fourteen (14) month anniversary of the Deferred Switzerland Closing Date, if the Deferred Switzerland Closing Date occurs after the delivery by the Seller of the Proposed Closing Statement.

 

(g)                                  From the Closing Date to the Deferred Switzerland Closing Date, unless the context clearly requires otherwise, all references in this Agreement to the “Closing” or the “Closing Date” shall, with respect to the transfer of the Shares of the Deferred Switzerland Entity, be deemed to refer to the Deferred Switzerland Closing and the Deferred Switzerland Closing Date, as applicable, and the Parties shall continue to comply with all covenants and agreements contained in this Agreement that are required by their terms to be performed prior to the Closing to the extent applicable to the Deferred Switzerland Entity (other than those set forth in Sections 6.04, 6.07(b) through 6.07(e), 6.10 and 6.12).

 

(h)                                 If the Deferred Switzerland Closing is to occur later than the Closing, the Seller shall, or shall cause its Affiliates to, appoint the Purchaser and/or one or more of its Affiliates selected by the Purchaser (the Switzerland Manager) to direct the ongoing operations for the Deferred Switzerland Entity beginning on the Closing Date and until the Deferred Switzerland Closing Date. To the extent permitted by Applicable Law, the Seller shall, and shall cause its applicable Affiliates to, follow such direction of the Switzerland Manager with respect to the operations of the Deferred Switzerland Entity. The Switzerland Manager and/or any of its Affiliates may make loans to the Deferred Switzerland Entity to provide funding for such entity in the ordinary course.

 

(g) If the Deferred Switzerland Closing Date has not occurred on or before the eighteen (18) month anniversary of the Closing Date, the Parties shall, and shall cause their Affiliates to, negotiate in good faith alternative arrangements to effectuate the intent of this Agreement.

 

2.15                        Amendment to Section 4.07(f) of the SAPA

 

Section 4.07(f) of the SAPA is hereby deleted and replaced in its entirety by the following provision:

 

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“Excluding the Excluded Assets identified on Annex 2.01(c)(i), the Owned Intellectual Property Rights, the Transferred Intellectual Property Contracts, and the Intellectual Property Rights licensed (i) pursuant to the Transitional Trademark License Agreement, the Ancillary License Agreement - Amoksiklav, the Ancillary License Agreement - Xiclav and the Technology License Agreement and (ii) on a perpetual basis pursuant to the Transition Services Agreement and Manufacturing and Supply Agreements constitute all the Intellectual Property Rights necessary and sufficient for the Purchaser to conduct the Business from and after the Closing Date as conducted and proposed to be conducted by the Seller and its Affiliates, in each case, based on the current applicable stage of development, provided however, that the foregoing is not a representation of non-infringement, non-misappropriation, or any other non-violation of Intellectual Property Rights of any third party, which representation is solely set forth in Section 4.07(e) above.”

 

2.16                        Amendment to Section 6.08 of the SAPA

 

A.                                                            The following new Section 6.08(n) shall be added to the SAPA:

 

“Delayed Transfer Employees.  The Parties intend that the Delayed Transfer Employees will remain as employees of the Seller’s Group for the duration of the Secondment Period, and will become employees of the Purchaser or any of its Affiliates immediately following termination or expiration of the Secondment Period as part of the transactions contemplated by this Agreement.  Accordingly, in this Section 6.08, in respect of the Delayed Transfer Employees only, any reference to “Closing”, “the Closing Date” or, in respect of the Delayed Transfer Employees in India, “the Deferred India Closing” or “the Deferred India Closing Date” shall be treated as a reference to the end of the Secondment Period (except for, for the avoidance of doubt, the references to “the Closing Date” and “the Deferred India Closing Date” in the definitions of “Secondment Period” and “Delayed Transfer Employee”, which shall be treated as references to the Closing Date and the Deferred India Closing Date respectively as defined in Annex A).”

 

B.                                                            The following new Section 6.08(o) shall be added to the SAPA:

 

“Business Employees in Russia.  If the Closing Date occurs on a day which is not a Russian Working Day, the Parties intend that the Business Employees employed in Russia by Novartis Consumer Health LLC (the Russian Business Employees) shall remain employees of Novartis Consumer Health LLC until 11:59 p.m. on the first Russian Working Day following the Closing Date (the Russian Employee Termination Date).  The transfer of employment of the Russian Business Employees to the Purchaser or one of its Affiliates shall take effect on and from the day following the Russian Employee Termination Date.  The Purchaser or its Affiliate acknowledges that it will be responsible for the total amount actually paid by the Seller or its Affiliate for compensation and benefits, including any withholding taxes and payroll taxes paid by the Seller’s Group, to or in respect of the Russian Business Employees in relation to their ordinary course of employment for the period from the Closing Date to the Russian Employee Termination Date (inclusive).”

 

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C.                                    The following new Section 6.08(p) shall be added to the SAPA:

 

“Business Employees in Ukraine.  If the Closing Date occurs on a day which is not a Ukrainian Working Day, the Parties intend that the Business Employees employed in Ukraine by Novartis Consumer Health S.A. (the Ukrainian Business Employees) shall remain employees of Novartis Consumer Health S.A. until 11:59 p.m. on the first Ukrainian Working Day following the Closing Date (the Ukrainian Employee Termination Date).  The transfer of employment of the Ukrainian Business Employees to the Purchaser or one of its Affiliates shall take effect on and from the day following the Ukrainian Employee Termination Date.  The Purchaser or its Affiliate acknowledges that it will be responsible for the total amount actually paid by the Seller or its Affiliate for compensation and benefits, including any withholding taxes and payroll taxes paid by the Seller’s Group, to or in respect of the Ukraine Business Employees in relation to their ordinary course of employment for the period from the Closing Date to the Ukraine Employee Termination Date (inclusive).”

 

D.                                    The following new Section 6.08(q) shall be added to the SAPA:

 

“Transition Services Employees. Notwithstanding anything in this Agreement to the contrary, the Seller or its Affiliates will continue to employ the Business Employees listed in Annex 6.08(q) following the Closing and shall retain and be fully liable for any Liability (and shall indemnify and hold harmless the Purchaser and its Affiliates from any such Liabilities) related to their employment, provision of services, or termination of employment or services; provided that the Purchaser will reimburse the Seller for the actual severance costs incurred, if any, by the Seller for such Business Employees listed in Annex 6.08(q) who are terminated by Seller or its Affiliates without cause within the two (2) month period immediately following the end of their services to the Purchaser under the Transition Services Agreement between the parties in such individual’s jurisdiction (or legally required notice period not to exceed four (4) months following such termination of the Transition Services Agreement) to the extent required by the terms of the applicable Seller severance policy as of the date of the Agreement or as otherwise required by Applicable Law. The parties agree to cooperate, as reasonably practicable, to minimize any such payments. Notwithstanding anything in Section 6.08 of this Agreement to the contrary, the Business Employees listed in Annex 6.08(q) shall not be the subject of any the Purchaser obligation under this Agreement other than pursuant to the prior sentence.”

 

2.17                        Amendments to Annex 6.08(k) of the SAPA

 

(a)                                 Switzerland

 

In paragraph 2 of Annex 6.08(k) of the SAPA, sub-paragraph 2.2 shall be deleted and replaced with the following:

 

“2.2                         Subject to the below, in accordance with the Annex 6.08(k) of the SAPA regarding Group Retirement Benefit Arrangements, the Seller and the Purchaser agree

 

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that the pension fund entitlements in respect of the Transferring Swiss Employees who are members of the Swiss Pension Providers immediately before the Closing Date will be transferred with effect from the Closing Date to a retirement benefit arrangement set up by the Purchaser.

 

However, if the Seller and the Purchaser agree on a Transitional Service Agreement (a “TSA”) for a limited period of time after Closing, then:

 

(a)                                 the accession of Novartis Tiergesundheit AG and Novartis Centre de Recherche Santé Animale SA to the Swiss Pension Providers may, instead of being terminated with effect from the Closing Date, be continued for the duration of said TSA, based on a temporary affiliation of the Purchaser to the Seller’s Swiss Pension Providers, including pension plan administration services and management of the underlying assets but excluding any liability for the investment performance achieved under the TSA-based mandate; and

 

(b)                                 without prejudice to the valuation of such amounts as part of the Pension Benefit Net Liability Amount under Annex 6.08(l), the transfer of pension fund entitlements under Annex 6.08(k) para 2.2, and the provision of “grandfathered” entitlements under Annex 6.08(k) para 2.4, shall occur respectively on and from the end of the TSA period instead of the Closing Date.”

 

(b)                                 United Kingdom

 

The following amendments shall be made to paragraph 4 of Annex 6.08(k) of the SAPA:

 

(i)                                     In sub-sub-paragraph 4.1(a), the words:

 

“whose only period of pensionable service in the DB Sections was with the UK Participating Employers”

 

shall be deleted and replaced with:

 

“who are recorded by the administrators of the Seller’s UK Pension Scheme as having one of the UK Participating Employers as their last employer”

 

(ii)                                  In sub-sub-paragraph 4.1(d), the words “plus a proportionate share of the value of any “orphan liabilities” under the Seller’s UK Pension Scheme attributable to the UK Participating Employers” shall be deleted.

 

(iii)                               At the end of sub-sub-paragraph 4.1(g), there shall inserted be the words “or, if an alternative structure (including a statutory apportionment arrangement) is agreed under an applicable Local Agreement in order to produce an appropriate calculation of the debt that would otherwise be due under Section 75, under such alternative methodology”.

 

(iv)                              A new sub-sub-paragraph 4.1(j) shall be inserted as follows:

 

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“(j)      “Cessation Date” means the date on which the UK Participating Employers cease to participate in the Seller’s UK Pension Scheme, which may be after the Closing Date.”

 

(v)                                 At the beginning of sub-sub-paragraph 4.2(e), there shall be inserted the words “Subject to Annex 6.08(l),”.

 

(vi)                              In sub-paragraph 4.3:

 

(A)                               the words “on or before the Closing Date” shall be deleted and replaced with “on and from the Cessation Date”;

 

(B)                               the words “on and from the Closing Date” shall be deleted and replaced with “on and from the Cessation Date”; and

 

(C)                               after the words “If Closing occurs, and a Section 75 Debt is triggered on any of the UK Participating Employers”, there shall be inserted the words “(including on the Cessation Date)”.

 

(vii)                           At the beginning of sub-paragraph 4.4, there shall be inserted the words “Subject to any alternative structure agreed under an applicable Local Agreement as contemplated in paragraph 4.1(g),”.

 

(viii)                        In sub-paragraph 4.4, the words “Closing Date” shall be deleted and replaced with “Cessation Date”.

 

(ix)                              In sub-paragraph 4.8, each reference to the “Closing Date” shall be deleted and replaced with “Cessation Date”.

 

(c)                                  India

 

The following amendments shall be made to paragraph 5 of Annex 6.08(k) of the SAPA:

 

(i)                                     In sub-paragraph 5.1, sub-sub-paragraphs (a) to (d) shall be deleted and replaced with the following:

 

“(a)                           In relation to Novartis India Limited:

 

“(i)                               Novartis India Limited Employees’ Group Gratuity Scheme (LIC fund);

 

“(ii)                            Novartis India Limited Employees’ Group Gratuity Scheme (In-house);

 

“(iii)                         Novartis India Limited Leave Benefit Scheme;

 

“(iv)                        Novartis India Limited Employees’ Provident Fund;

 

“(v)                           Novartis India Limited Post-Retirement Medical Benefit; and

 

“(b)                           in relation to Novartis Healthcare Private Limited:

 

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“(i)                               Novartis Healthcare Private Limited Employees’ Group Gratuity Scheme;

 

“(ii)                            Novartis Healthcare Private Limited Leave Benefit Scheme;

 

“(iii)                         Novartis Healthcare Private Limited Employees’ Provident Fund; and

 

“(iv)                        Novartis Healthcare Private Limited Post-Retirement Medical Benefit.

 

(ii)                              Sub-paragraph 5.2 shall be deleted and replaced with the following:

 

“5.2                         There shall be included in the sale of the Business of Novartis Healthcare Private Limited and Novartis India Limited under this Agreement or, where relevant, the Local Agreements, any plan, contract, policy, agreement, obligation or arrangement in respect of the Indian Retirement Benefit Arrangements and any liability (whenever accrued) under the Indian Retirement Benefit Arrangements, so that all liability attributable to the Business in respect of such benefit arrangements shall transfer from the Seller to the Purchaser and the Seller and the Purchaser agree to use all reasonable best efforts to ensure that Novartis Healthcare Private Limited’s and Novartis India Limited’s respective obligations and liability in respect of such benefit arrangements shall be so transferred.”

 

(iii)                               The following new sub-paragraphs 5.4 and 5.5 shall be added to Annex 6.08(k) of the SAPA:

 

“5.4                         In respect of the Delayed Transfer Employees in India, the relevant transfer of obligations and liabilities shall occur at the end of the relevant Secondment Period (or, if no such Secondment Agreement exists at Closing, at Closing or such other date as is agreed under an applicable Local Agreement)

 

“5.5                         For the avoidance of doubt, the applicable transfer date under paragraph 5.4 above shall not affect the valuation of such obligations and liabilities, and any transferred underlying assets related thereto, both of which shall be valued as at Closing in accordance with paragraph 3 of Annex 6.08(l).”

 

(d)                                 Mexico

 

The following new paragraph 6A shall be inserted into Annex 6.08(k) of the SAPA, immediately before paragraph 7:

 

“6A.                                               Mexico

 

“6A.1                                        Where, immediately before the sale of the Transferred Assets in Mexico under this Agreement or, where relevant, the Local Agreement, a Transferred Asset participates in, or has liability in respect of, a retirement benefit arrangement, the Seller and the Purchaser agree that there shall be included in the sale of the Transferred Asset under this Agreement or, where relevant, the Local Agreement, any plan, contract, policy,

 

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agreement, obligation or arrangement in respect of the retirement benefit arrangement and any liability (whenever accrued) under the retirement benefit arrangement, so that all liability attributable to the Transferred Asset in respect of the retirement benefit arrangement shall transfer from the Seller to the Purchaser, and the Seller and the Purchaser agree to use reasonable efforts to ensure that the Transferred Asset’s obligations and liability in respect of the retirement benefit arrangement shall be so transferred at the end of the relevant Secondment Period (or, if no applicable Secondment Agreement exists at Closing, at Closing or such other date as is agreed under an applicable Local Agreement).

 

“6A.2                                        For the avoidance of doubt, the applicable transfer date under paragraph 6A.1 above shall not affect the valuation of such obligations and liabilities, and any transferred underlying assets related thereto, both of which shall be valued as at Closing in accordance with paragraph 3 of Annex 6.08(l).

 

“6A.3                                        For the avoidance of doubt, for the purpose of any Secondment Agreement, any assessment of amounts actually paid by Novartis to or in respect of secondees shall be taken to include the cost of any pension contributions made in relation to such secondees (including a pro-rated portion of any undifferentiated sum payment to a retirement benefit arrangement). The parties agree to construe (and to procure that their respective Affiliates construe) any Local Agreement and/or Secondment Agreement accordingly.”

 

(e)                                  Rest of world

 

(i)                                     The heading of paragraph 7 of Annex 6.08(k) shall be changed to “Other Jurisdictions (other than Switzerland, United States, United Kingdom, India, the Republic of Ireland, Mexico, and, subject to paragraph 6 above, Canada)”.

 

(ii)                                  In paragraph 7.1 of Annex 6.08(k) of the SAPA, the words:

 

“(other than in Switzerland, United States, United Kingdom, India, the Republic of Ireland and, subject to paragraph 6 above, Canada)”

 

shall be deleted and replaced with:

 

“(other than in Switzerland, United States, United Kingdom, India, the Republic of Ireland, Mexico and, subject to paragraph 6 above, Canada)”

 

(iii)                               In paragraph 7.2 of Annex 6.08(k) of the SAPA, the words:

 

“(other than in Switzerland, United States, United Kingdom, India, the Republic of Ireland and, subject to paragraph 6 above, Canada)”

 

shall be deleted and replaced with:

 

“(other than in Switzerland, United States, United Kingdom, India, the Republic of Ireland, Mexico and, subject to paragraph 6 above, Canada)”.

 

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2.18                        Amendment to Section 6.12(b) of the SAPA

 

Section 6.12(b) of the SAPA is hereby deleted and replaced in its entirety by the following provision:

 

“the Purchaser or its Affiliates will manufacture and supply on behalf of the Seller or such members of the Seller’s Group, and the Seller or its Affiliates will manufacture and supply on behalf the Purchaser or such member of the Purchaser’s Group, in each case as provided therein, certain products pursuant to the manufacturing and supply agreements substantially on the terms set forth in Exhibit 6.12(b), which shall be in form of four (4) separate manufacturing and supply agreements, including (i) a Manufacturing and Supply Agreement by and between Sandoz AG, a company incorporated under the Laws of Switzerland, and the Purchaser (the Sandoz MSA), (ii) a Manufacturing and Supply Agreement by and among Alcon Research, Ltd., a company incorporated under the laws of Delaware, Alcon Pharmaceuticals Ltd., a company incorporated under the laws of Switzerland, and the Purchaser (the Alcon MSA), (iii)  a Manufacturing and Supply Agreement by and between Novartis Pharma AG, a company incorporated under the laws of Switzerland, and the Purchaser (the Pharma MSA), and (iv) a Manufacturing and Supply Agreement by and among Ex-Lax, Inc., a company incorporated under the laws of Puerto Rico, Novartis Consumer Health, Inc., a company incorporated under the laws of Delaware, and the Purchaser (the OTC MSA) (the Sandoz MSA, Alcon MSA, Pharma MSA, and OTC MSAs, collectively, the Manufacturing and Supply Agreements).”

 

2.19                        Amendment to Section 7.01 of the SAPA

 

Section 7.01(a)(vi) of the SAPA is hereby deleted and replaced in its entirety by the following provision:

 

“Taxes imposed on any members of any Tax Group of which a Transferred Subsidiary is or was a member prior to the Closing Date (and, with respect to a Seller’s VAT Group (other than the New UK VAT Group), on or after the Closing Date if a Transferred Subsidiary has not been removed from that Seller’s VAT Group as of the Closing Date) payable by or recoverable from any Transferred Subsidiary or in respect of the Transferred Assets (including under U.S. Treasury Regulations Section 1.1502-6 or any analogous or similar state, local or non-U.S. law or regulation;”

 

2.20                        Amendment to Section 7.04 of the SAPA

 

Section 7.04 of the SAPA is hereby deleted and replaced in its entirety by the following provision:

 

“To the extent permitted by Applicable Law, the Seller shall Terminate any Tax indemnification, allocation or sharing agreement, VAT group arrangement or group payment arrangement in respect of Tax, in each case between any Transferred Subsidiary and Seller, any Affiliate of the Seller or any other Person prior to or as of the Closing Date, provided that the Seller shall not terminate any such VAT group arrangement comprising only Novartis Animal Health UK Limited, Novartis Animal Vaccines Limited and Vericore Limited (the New UK VAT Group).”

 

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2.21                        Amendment to Section 11.17 of the SAPA

 

Section 11.17 of the SAPA is hereby deleted and replaced in its entirety by the following provision:

 

“In the event the Parties need to convert currencies under this Agreement, the relevant exchange rate will be determined based on:

 

(a)                                 in the event that the January 1 Closing Event, and subsequently the Closing on January 1, 2015, occurs,

 

(i)                                     the Seller’s internal exchange rates (established in accordance with Paragraph 1 of Annex 4.03): (A) as of December 10, 2014, with respect to the payment of any portion of the Initial Purchase Price in currency other than U.S. Dollars and any payment made pursuant to Sections 2.06(d) (other than payments made in respect of any adjustments contemplated under that Section) and (B) as of December 31, 2014 for the purposes of any payments for adjustments pursuant to Section 2.06(d) of this Agreement;

 

(ii)                                  the spot reference rate for a transaction between two currencies in question as quoted by the European Central Bank as of December 31, 2014, for the purposes of any payments for adjustments pursuant to Section 2.07(d) to any portion of the Initial Purchase Price that is paid at the Closing in a currency other than U.S. Dollars;

 

(b)                                 if the Closing does not occur on January 1, 2015,

 

(i)                                     the Seller’s internal exchange rates (established in accordance with Paragraph 1 of Annex 4.03): (A) as of the Business Day immediately prior to the delivery by the Seller of the Initial Closing Statement with respect to the payment of any portion of the Initial Purchase Price in currency other than U.S. Dollars and any payment made pursuant to Sections 2.06(d) (other than payments made in respect of any adjustments contemplated under that Section) and (B) as of the Closing Date for the purposes of any payments for adjustments pursuant to Section 2.06(d) of this Agreement;

 

(ii)                                  the spot reference rate for a transaction between two currencies in question as quoted by the European Central Bank as of the Closing Date, for the purposes of any payments for adjustments pursuant to Section 2.07(d) to any portion of the Initial Purchase Price that is paid at the Closing in a currency other than U.S. Dollars; and

 

(c)                                  in all other instances, the spot reference rate for a transaction between the two currencies in question as quoted by the European Central Bank on the Business Day immediately prior to the relevant date of payment or, if such rate is not quoted on that date, on the preceding date on which such rates are quoted.

 

2.22                        Amendment to Annex A to the SAPA

 

A.                                    Annex A to the SAPA is hereby amended by inserting the following definitions into that Annex:

 

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Alcon Cascade Distribution Agreement means that certain Distribution Agreement, to be entered into among the Purchaser, Alcon Pharma GmbH and Alcon Laboratories (U.K.) Limited on the Closing Date, in a form mutually agreeable to the Parties.

 

Alcon Pharmacovigilance Agreement means that certain Pharmacovigilance Agreement, to be entered into between the Purchaser and Alcon Research, Ltd. on the Closing Date, in a form mutually agreeable to the Parties.

 

Ancillary License Agreement - Amoksiklav means that certain Ancillary License Agreement, to be entered into between the Purchaser and Lek Pharmacevtska Družba D.D. on the Closing Date, in a form mutually agreeable to the Parties.

 

Ancillary License Agreement - Xiclav means that certain Ancillary License Agreement, to be entered into among the Purchaser, the Seller and Lek Pharmacevtska Družba D.D. on the Closing Date, in a form mutually agreeable to the Parties.

 

Asset Seller means each of the Seller and any member of the Seller’s Group required to sell, convey, transfer, assign and deliver the Transferred Assets to the Purchaser or one or more of its Affiliates pursuant to Section 2.01(b).

 

Delayed Transfer Employees means those employees of the Seller’s Group employed by Novartis (Bangladesh) Limited, Novartis (India) Limited, Novartis Healthcare Private Limited, Novartis Corporativo, S.A. de C.V. and Novartis Institute for Functional Genomics, Inc as of the Closing Date or the “Deferred India Closing Date” as applicable (the identities of whom have been agreed between the Parties) who, under the terms of a Secondment Agreement, or such other arrangements as the Parties may make, shall remain employees of the Seller’s Group until the end of the Secondment Period.

 

Global Transitional Distribution Services Agreement means that certain Global Transitional Distribution Services Agreement, to be entered into between the Purchaser and the Seller on the Closing Date, in a form mutually agreeable to the Parties.

 

Leakage means, with respect to any Transferred Subsidiary or any Asset Seller (but only to the extent related to the Business), without duplication, any of the following that occur or have occurred following the Closing Date:

 

(a) any dividend or distribution, or any payments in lieu of any dividend or distribution paid or made or any share repurchase or redemption, or directors’ fees, return of share capital paid, or repayment or reversal of capital reserves or other reserves, in cash or in kind, by such Transferred Subsidiary, or Asset Seller (out of funds, accounts, reserves or assets of the Business), to or for the benefit of the Seller or any member of the Seller’s Group;

 

(b) any payments made (including bonuses, commissions, loan repayments, management, monitoring or service payments) or agreed to be made by such Transferred Subsidiary, or Asset Seller (out of funds, accounts, reserves or assets of the Business), to the Seller or any other member of the Seller’s Group (other than payments pursuant to an Affiliate

 

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Contract which is to remain in place following the Closing Date pursuant to Section 6.12);

 

(c) any provision of any loan or the creation, assumption or guarantee of any Liability, including based on cash pooling arrangements, by such Transferred Subsidiary or Asset Seller to the Seller or any member of the Seller’s Group;

 

(d) the waiver or agreement to waive (whether conditional or not) by such Transferred Subsidiary or Asset Seller of any amount owed to such Transferred Subsidiary or Asset Seller by any Seller or any member of the Seller’s Group;

 

(e) any purchase of goods or services not on arms’-length terms or the purchase of goods and services not required by such Transferred Subsidiary or the Business of the Asset Seller, in each case, from the Seller or any member of the Seller’s Group but only to the extent payments are greater than arm’s-length terms;

 

(f) any waiver, deferral, indemnification, exemption or remission of Liabilities and amending of terms of existing agreements with the Seller or any member of the Seller’s Group (unless expressly contemplated by this Agreement);

 

(g) any transfer or obligation to transfer assets by such Transferred Subsidiary or Asset Seller to the Seller or any member of the Seller’s Group (unless expressly contemplated by this Agreement);

 

(h) any fees or expenses resulting from any of the matters set forth in (a) to (g) above;

 

(i) any Tax (including the employer portion of any payroll Taxes) incurred, paid or payable by such Transferred Subsidiary or Asset Seller in respect of any of the matters set out in (a) to (h) above; the agreement or undertaking by the Business to do any of the matters set out in (a) to (h).

 

For purposes of determining Leakage hereunder, the Seller’s Group shall not include any Asset Seller but only to the extent related to the Business.

 

Lincoln Quality Agreement means that certain Quality Services Agreement, to be entered into among the Purchaser and each relevant Affiliate of the Seller on the Closing Date, in a form mutually agreeable to the Parties.

 

OTC Pharmacovigilance Agreement means that certain Pharmacovigilance Agreement, to be entered into between the Purchaser and Novartis Consumer Health, Inc. on the Closing Date, in a form mutually agreeable to the Parties.

 

Pharmacovigilance Agreements means the Alcon Pharmacovigilance Agreement, the OTC Pharmacovigilance Agreement, the Pharma Pharmacovigilance Agreement and the Sandoz Pharmacovigilance Agreement.

 

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Pharma Pharmacovigilance Agreement means that certain Pharmacovigilance Agreement, to be entered into between the Purchaser and Novartis Pharma AG on the Closing Date, in a form mutually agreeable to the Parties.

 

Quality Agreements means the Lincoln Quality Agreement, Vacaville Quality Agreement and the Turkey/Slovenia Quality Agreement.

 

Russian Business Employees has the meaning set forth in Section 6.08(o).

 

Russian Employee Termination Date has the meaning set forth in Section 6.08(o).

 

Russian Working Day means a day when the Russian Business Employees would, in the ordinary course of business, be expected to work (excluding Business Employees with a shift pattern that means they do not have to work on that day).

 

Sandoz Pharmacovigilance Agreement means that certain Pharmacovigilance Agreement, to be entered into between the Purchaser and Sandoz International GmbH on the Closing Date, in a form mutually agreeable to the Parties.

 

Secondment Agreement means any agreement between the Seller or any of its Affiliates and the Purchaser or any of its Affiliates under which employees of the Seller’s Group shall be seconded to the Purchaser’s Group for the Secondment Period.

 

Secondment Period means, for each Delayed Transfer Employee, the period from the Closing Date or the Deferred India Closing Date (as applicable) until the termination of:

 

(a)         the Secondment Agreement applicable to that Delayed Transfer Employee; or

 

(b)         such other arrangement as the Parties may have made in relation to that Delayed Transfer Employee to regulate the employment of that employee by the Seller’s Group from the Closing Date.

 

Support Agreement means that certain letter agreement to be entered into between the Seller and the Purchaser substantially in the form attached hereto as Exhibit 2.05(a)(vii).”

 

Turkey/Slovenia Quality Agreement means that certain Quality Agreement for Storage and Testing, to be entered into among the Purchaser and each relevant Affiliate of the Seller on the Closing Date, in a form mutually agreeable to the Parties.

 

Ukrainian Business Employees has the meaning set forth in Section 6.08(p);

 

Ukrainian Employee Termination Date has the meaning set forth in Section 6.08(p);

 

Ukrainian Working Day means a day when the Ukrainian Business Employees would, in the ordinary course of business, be expected to work (excluding Business Employees with a shift pattern that means they do not have to work on that day).

 

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Vacaville Quality Agreement means that certain Quality Agreement for Storage and Testing, to be entered into between the Purchaser and each relevant Affiliate of the Seller on the Closing Date, in a form mutually agreeable to the Parties.

 

B.                                    The definition of “Transferred Books and Records” is hereby deleted and replaced in its entirety with the following definition:

 

“Transferred Books and Records means all books, ledgers, files, databases, documents, reports, plans, records, manuals and other materials (in any form or medium) that are Exclusively Related to the Business, but excluding (i) any such items to the extent (A) they are related to any Excluded Assets or Excluded Liabilities, (B) they are related to any corporate, tax, human resources or stockholder matters of Seller or its Affiliates (other than the Transferred Subsidiaries) or (C) any Applicable Law prohibits their transfer.”

 

C.                                    The definition of “Ancillary Agreements” is hereby deleted and replaced in its entirety with the following definition:

 

“Ancillary Agreements means the Transition Services Agreement, the France Offer Letter, the France SAPA, the Manufacturing and Supply Agreements, the Technology License Agreement, the Assignment and Assumption Agreement, the IP Assignment Agreement, Local Agreements, the Transitional Trademark License Agreement, the Ancillary License Agreement — Amoksiklav, the Ancillary License Agreement — Xiclav, the Global Transitional Distribution Services Agreement, the Support Agreement, the Quality Agreements, the Pharmacovigilance Agreements and the Alcon Cascade Distribution Agreement.”

 

2.23                        Addition of Annex 2.01(b) — Retained IT Assets to the SAPA

 

Exhibit B attached hereto shall be added as Annex 2.01(b) — Retained IT Assets to the SAPA.

 

2.24                        Amendments to Annex 2.01(c)(i) of the SAPA

 

Annex 2.01(c)(i) of the SAPA is replaced in its entirety by the revised Annex 2.01(c)(i) attached hereto as Exhibit C.

 

2.25                        Amendments to Annex 2.01(d) of the SAPA

 

The chart in Annex 2.01(d) of the SAPA is hereby amended by removing all rows except for the rows relating to Spain, Italy, Mexico, Slovenia and the UK.

 

2.26                        Insertion of Annex 2.06(a) to the SAPA

 

Exhibit D attached hereto is hereby inserted as Annex 2.06(a) to the SAPA.

 

2.27                        Amendment to Annex 4.14 to the SAPA

 

The following shall be added to the list of Excluded Employees at Annex 4.14:

 

24

 

[***]

 

2.28                        Amendment to Annex 6.05 to the SAPA

 

Paragraph (h) of Annex 6.05 to the SAPA is hereby amended by replacing “two (2) years after the Closing Date (which may be extended by a further one (1) year Purchaser [sic] provided that the Purchaser has used reasonable best efforts to transfer such Product Approvals)” with “four (4) years after the Closing Date”.

 

2.29                        Amendment to Annex 6.06 to the SAPA

 

Paragraph 13 of Annex 6.06 to the SAPA is hereby deleted and replaced in its entirety by the following provision:

 

“On Closing all Transferred Real Property held or leased by a Transferred Subsidiary are intended to transfer to the Purchaser pursuant to the share sale.  As at the date of this Agreement it is anticipated that at Closing the Transferred Real Properties located in the following countries will transfer pursuant to the provisions of this Annex 6.06:  Chile, Norway, Taiwan, Colombia and Thailand.”

 

2.30                        Amendment to Annex 6.08

 

A.                                    The following list of names shall replace the list of International Assignees at Annex 6.08:

 

[***]

 

2.31                        Amendment to Annex 6.10 to the SAPA

 

Annex 6.10 to the SAPA is hereby amendment by inserting as item 3 thereof:

 

“3.                                The Affiliate Contracts governing the Outstanding Intra-Group Non-Trade Payables.”

 

2.32                        Insertion of Annex 2.13 to the SAPA

 

Exhibit E attached hereto is hereby inserted as Annex 2.13 to the SAPA.

 

2.33                        Amendment to Section 4.01(b) of the Disclosure Schedule

 

The Selling Affiliates & Jurisdictions listed in Section 4.01(b) of the Disclosure Schedule to the SAPA is hereby deleted and replaced in its entirety by the revised section 4.01(b) attached hereto as Exhibit F.

 

25

 

2.34                        Amendment to Section 4.06(a)(i) of the Disclosure Schedule

 

Section 4.06(a)(i) of the Disclosure Schedule to the SAPA is hereby deleted and replaced in its entirety by the revised section 4.06(a)(i) attached hereto as Exhibit G.

 

2.35                        Amendment to Section 4.06(a)(ii) of the Disclosure Schedule

 

Section 4.06(a)(ii) of the Disclosure Schedule to the SAPA is hereby deleted and replaced in its entirety by the revised section 4.06(a)(ii) attached hereto as Exhibit H.

 

2.36                        Amendment to Section 4.06(b) of the Disclosure Schedule

 

Section 4.06(b) of the Disclosure Schedule to the SAPA is hereby deleted and replaced in its entirety by the revised section 4.06(b) attached hereto as Exhibit I.

 

2.37                        Amendment to Section 4.06(c) of the Disclosure Schedule

 

Section 4.06(c) of the Disclosure Schedule to the SAPA is hereby deleted and replaced in its entirety by the revised section 4.06(c) attached hereto as Exhibit J.

 

2.38                        Amendment to Section 4.06(d)(iii) of the Disclosure Schedule

 

Section 4.06(d)(iii) of the Disclosure Schedule to the SAPA is hereby deleted and replaced in its entirety by the revised section attached hereto as Exhibit K.

 

2.39                        Insertion of Exhibit 2.05(a)(vii)

 

Exhibit L attached hereto is hereby inserted as Exhibit 2.05(a)(vii) to the SAPA.

 

2.40                        France Purchase Price

 

Notwithstanding anything to the contrary in the SAPA, the France Offer Letter or the France Put Option Exercise, the Parties hereby agree and acknowledge that: (a) the Initial Purchase Price shall be increased by U.S. $900,000 in respect of the transfer of parcels # 30, 391 (part of ex 374) and 377 in Huningue, France to Novartis Santé Animale S.A.S. and that such increase in price shall be allocated to the Shares of Novartis Tiergesundheit AG, (b) the purchase price for the France Business is U.S. $18,600,000 and (c) the purchase price for Novartis Tiergesundheit AG is U.S. $1,335,251,000.

 

2.41                        Statement Time

 

Notwithstanding Section 2.07(a)(i) and (ii) of the SAPA, the Seller and the Purchaser acknowledge and agree that if the January 1 Closing Event occurs, and subsequently the Closing on January 1, 2015, the definition of “Statement Time” as set forth in Section 2.07(a) of the SAPA shall be the close of business in the relevant locations on December 31, 2014.

 

26

 

2.42                        Amendment to Annex 2.09 of the SAPA

 

Paragraph 1 of Annex 2.09 of the SAPA shall be amended and replaced in its entirety as follows:

 

“1.       The Seller and the Purchaser agree that the Initial Purchase Price (and any adjustments thereto) and the Assumed Liabilities shall be allocated for tax purposes among the Shares and the Transferred Assets in accordance with Section 1060 of the Code and any similar provision of non-US Tax law (the Allocation) provided that, within such Allocation, the following amounts of the Initial Purchase Price (and any adjustments thereto) and the Assumed Liabilities shall be allocated as follows:

 

	
Transferred   Subsidiaries (Canada, Switzerland, China, Italy, Mexico, UK) held by Seller   or Swiss Affiliates of Seller:
    	
 
    	
(percentage   of total purchase price: 29.59%);
    
	
U.S.   Transferred Subsidiary:
    	
 
    	
(percentage   of total purchase price: 40.00%);
    
	
Other   Transferred Subsidiaries:
    	
 
    	
(percentage   of total purchase price: 3.34%);
    
	
IP   held by Novartis AG:
    	
 
    	
(percentage   of total purchase price: 25.00%);
    
	
Transferred   Assets/Assumed Liabilities of Selling Affiliates:
    	
 
    	
(percentage   of total purchase price: 2.07%).”
    

 

2.43                        Insertion of Annex 6.08(q) to the SAPA

 

Exhibit M attached hereto is hereby inserted as Annex 6.08(q) to the SAPA.

 

ARTICLE 3
 Miscellaneous

 

3.01                        No Further Amendment; Effect of Amendment

 

Except as expressly amended hereby, the SAPA is in all respects ratified and confirmed and all the terms, conditions, and provisions thereof shall remain in full force and effect.  This Amendment Agreement is limited precisely as written and shall not be deemed to be an amendment to any other term or condition of the SAPA or any other document referred to therein.  This Amendment Agreement shall form a part of the SAPA for all purposes, and the Parties thereto and hereto shall be bound hereby.  This Amendment Agreement shall be deemed to be in full force and effect from and after the execution of this Amendment Agreement by the Parties hereto.

 

3.02                        Entire Agreement

 

This Amendment Agreement and the SAPA (including the Disclosure Schedule and any schedule or annex hereto and thereto), the Confidentiality Agreement, the Ancillary Agreements, and Annexes to the SAPA (and any schedules or annexes thereto) contain the entire agreement and understanding between the Parties with respect to the subject matter hereof and supersede all prior agreements and understandings (whether oral or written) relating to such subject matter.

 

27

 

3.03                        Severability

 

If any provision of this Amendment Agreement (or any portion thereof) or the application of any such provision (or any portion thereof) to any Person or circumstance shall be held invalid, illegal or unenforceable in any respect by a court of competent jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision hereof (or the remaining portion thereof) or the application of such provision to any other Persons or circumstances.

 

3.04                        Counterpart Execution and Facsimile Delivery

 

This Amendment Agreement may be executed and delivered (including by facsimile or portable document format (PDF) transmission) in any number of counterparts, each of which when so executed and delivered will be deemed to be an original copy of this Amendment Agreement and all of which, when taken together, will be deemed to constitute one and the same instrument. Other

 

All other interpretive provisions of the SAPA, including, without limitation, the provisions set forth in Sections 11.02 (Amendments and Waivers), 11.03 (Assignment) 11.09 (Conflicts with Local Agreements), 11.14 (Governing Law) and 11.15 (Consent to Jurisdiction) are hereby incorporated into this Amendment Agreement by reference, mutatis mutandis.

 

[Signature Pages Follow]

 

28

 

IN WITNESS WHEREOF, each of the Seller and the Purchaser has duly executed this Amendment Agreement as of the date first written above.

 

 

	
NOVARTIS   AG
    
	
 
    
	
 
    
	
By:
    	
/s/   Roy Papatheodorou
    	
 
    
	
Name:   Roy Papatheodorou
    
	
Title:   Attorney-in-fact
    
	
 
    
	
 
    
	
By:
    	
/s/   Richard Pulik
    	
 
    
	
Name:   Richard Pulik
    
	
Title:   Attorney-in-fact
    
	
 
    
	
 
    
	
ELI   LILLY AND COMPANY
    
	
 
    
	
 
    
	
By:
    	
/s/   John C. Lechleiter
    	
 
    
	
Name:   John C. Lechleiter
    
	
Title:   Chairman of the Board, President and Chief Executive Officer
    

 

[Amendment Agreement — Signature Page]

 

 

 

TABLE OF SCHEDULES

 

(The following annexes and exhibits to the agreement identified above have been omitted in reliance upon Rule 601(b)(2) of Regulation S-K. The Registrant hereby undertakes to furnish such annexes and exhibits to the Commission supplementally upon request.)

 

	
Schedule No.
    	
 
    	
Schedule Name
    
	
 
    	
 
    	
 
    
	
Annex   I
    	
 
    	
Form of   UBS Escrow Agreement
    
	
 
    	
 
    	
 
    
	
Annex   II
    	
 
    	
Form of   Credit Suisse Escrow Agreement
    
	
 
    	
 
    	
 
    
	
Annex   III
    	
 
    	
Local   payments wire details
    
	
 
    	
 
    	
 
    
	
Annex   III
    	
 
    	
Notarial   transferred subsidiaries; notarial asset sellers
    
	
 
    	
 
    	
 
    
	
Exhibit A
    	
 
    	
Selling Affiliates
    
	
 
    	
 
    	
 
    
	
Exhibit B
    	
 
    	
Annex   2.01(b) — Retained IT Assets
    
	
 
    	
 
    	
 
    
	
Exhibit C
    	
 
    	
Annex   2.01(c)(i) — Other Excluded Assets
    
	
 
    	
 
    	
 
    
	
Exhibit D
    	
 
    	
Certain Intra-Group Non-Trade Payables
    
	
 
    	
 
    	
 
    
	
Exhibit E
    	
 
    	
Conditions   To Deferred Switzerland Closing
    
	
 
    	
 
    	
 
    
	
Exhibit F
    	
 
    	
Selling   Affiliates & Jurisdictions
    
	
 
    	
 
    	
 
    
	
Exhibit G
    	
 
    	
Transferred   Real Property
    
	
 
    	
 
    	
 
    
	
Exhibit H
    	
 
    	
Real   Property used by the Business which is not Transferred Real Property
    
	
 
    	
 
    	
 
    
	
Exhibit I
    	
 
    	
Right   to use Transferred Real Property
    
	
 
    	
 
    	
 
    
	
Exhibit J
    	
 
    	
Valid legal title to Transferred Owned Real   Property
    
	
 
    	
 
    	
 
    
	
Exhibit K
    	
 
    	
Consents and Approvals Required to 
    

 

 

	
 
    	
 
    	
Consummate the Proposed Transactions
    
	
 
    	
 
    	
 
    
	
Exhibit L
    	
 
    	
Support Agreement
    
	
 
    	
 
    	
 
    
	
Exhibit M
    	
 
    	
Business Employees
    

 

31

 

ANNEX I

 

ANNEX 2.05A

 

FORM OF UBS ESCROW AGREEMENT

 

[***]

 

32

 

ANNEX II

 

ANNEX 2.05B

 

FORM OF CREDIT SUISSE ESCROW AGREEMENT

 

[***]

 

33

 

ANNEX III

 

ANNEX 2.05(c)

 

LOCAL PAYMENTS WIRE DETAILS

 

[***]

 

34

 

ANNEX III

 

ANNEX 2.05(d)

 

NOTARIAL TRANSFERRED SUBSIDIARIES; NOTARIAL ASSET SELLERS

 

[***]

 

35

 

EXHIBIT A

 

Selling Affiliates

 

[***]

 

36

 

EXHIBIT B

 

Annex 2.01(b) — Retained IT Assets

 

[***]

 

37

 

EXHIBIT C

 

Annex 2.01(c)(i) — Other Excluded Assets

 

[***]

 

38

 

EXHIBIT D

 

Annex 2.06(a)

 

Certain Intra-Group Non-Trade Payables

 

[***]

 

39

 

EXHIBIT E

 

Annex 2.13

 

Conditions To Deferred Switzerland Closing

 

[***]

 

40

 

EXHIBIT F

 

SECTION 4.01(b)

 

Selling Affiliates & Jurisdictions

 

[***]

 

41

 

EXHIBIT G

 

SECTION 4.06(a)(i)

 

Transferred Real Property

 

[***]

 

 

EXHIBIT H

 

SECTION 4.06(a)(ii)

 

Real Property used by the Business which is not Transferred Real Property

 

[***]

 

43

 

EXHIBIT I

 

SECTION 4.06(b)

 

Right to use Transferred Real Property

 

[***]

 

44

 

EXHIBIT J

 

SECTION 4.06(c)

 

Valid legal title to Transferred Owned Real Property

 

[***]

 

45

 

EXHIBIT K

 

SECTION 4.06(d)(iii)

 

Consents and Approvals Required to Consummate the Proposed Transactions

 

[***]

 

46

 

EXHIBIT L

 

EXHIBIT 2.05(a)(vii)

 

Support Agreement

 

[***]

 

47

 

EXHIBIT M

 

ANNEX 6.08(q)

 

Business Employees

 

[***]

 

48

 

CONFORMED COPY

 

NOVARTIS AG

 

AND

 

ELI LILLY AND COMPANY

 

 

 

 

STOCK AND ASSET PURCHASE AGREEMENT

 

between

 

NOVARTIS AG

 

and

 

ELI LILLY AND COMPANY

 

 

Dated as of April 22, 2014

 

 

CONTENTS

 

	
ARTICLE
    	
 
    	
PAGE
    
	
 
    	
 
    	
 
    
	
ARTICLE I Definitions
    	
2
    
	
 
    	
 
    	
 
    
	
1.01
    	
Definitions
    	
2
    
	
 
    	
 
    	
 
    
	
ARTICLE II Purchase and   Sale; Closing
    	
2
    
	
 
    	
 
    	
 
    
	
2.01
    	
Purchase and Sale
    	
2
    
	
2.02
    	
Assumption and Exclusion of Liabilities
    	
6
    
	
2.03
    	
Initial Purchase Price
    	
8
    
	
2.04
    	
Closing
    	
9
    
	
2.05
    	
Transactions to be Effected at Closing
    	
10
    
	
2.06
    	
Settlement of Intra-Group Balances
    	
11
    
	
2.07
    	
Purchase Price Adjustment
    	
12
    
	
2.08
    	
Nonassignability of Assets
    	
16
    
	
2.09
    	
Allocation
    	
18
    
	
2.10
    	
Withholding
    	
19
    
	
 
    	
 
    	
 
    
	
ARTICLE III Representations   and Warranties Relating to the Seller
    	
19
    
	
 
    	
 
    	
 
    
	
3.01
    	
Organization and Standing of the Seller
    	
19
    
	
3.02
    	
Authority; Execution and Delivery; Enforceability
    	
20
    
	
3.03
    	
No Conflicts
    	
20
    
	
3.04
    	
Consents and Approvals
    	
21
    
	
3.05
    	
No Proceedings
    	
21
    
	
3.06
    	
Brokers or Finders
    	
21
    
	
 
    	
 
    	
 
    
	
ARTICLE IV Representations   and Warranties Relating to the Business
    	
22
    
	
 
    	
 
    	
 
    
	
4.01
    	
Organization and Standing of the Transferred Subsidiaries   and Selling Affiliates
    	
22
    
	
4.02
    	
The Shares
    	
22
    
	
4.03
    	
Financial Information
    	
23
    
	
4.04
    	
No Material Changes
    	
23
    
	
4.05
    	
Absence of Undisclosed Liabilities
    	
24
    
	
4.06
    	
Real Property
    	
24
    
				

 

 

	
4.07
    	
Intellectual Property
    	
25
    
	
4.08
    	
Contracts
    	
27
    
	
4.09
    	
Sufficiency of Transferred Assets
    	
30
    
	
4.10
    	
Compliance with Laws; Permits
    	
30
    
	
4.11
    	
Product Approvals
    	
30
    
	
4.12
    	
Taxes
    	
31
    
	
4.13
    	
Environmental Matters
    	
34
    
	
4.14
    	
Employee and Labor Matters
    	
36
    
	
4.15
    	
Employee Benefits
    	
39
    
	
4.16
    	
Proceedings
    	
44
    
	
4.17
    	
Title to Tangible Personal Property
    	
44
    
	
4.18
    	
Anti-Corruption
    	
45
    
	
4.19
    	
Trade Controls
    	
46
    
	
4.20
    	
Regulatory Compliance
    	
47
    
	
4.21
    	
Customers; Suppliers
    	
48
    
	
4.22
    	
Related Party Transactions
    	
49
    
	
 
    	
 
    	
 
    
	
ARTICLE V Representations   and Warranties of the Purchaser
    	
49
    
	
 
    	
 
    	
 
    
	
5.01
    	
Organization and Standing
    	
49
    
	
5.02
    	
Authority; Execution and Delivery; Enforceability
    	
49
    
	
5.03
    	
No Conflicts
    	
50
    
	
5.04
    	
Consents and Approvals
    	
50
    
	
5.05
    	
Proceedings
    	
51
    
	
5.06
    	
Investment Representations
    	
51
    
	
5.07
    	
Financial Capability
    	
51
    
	
5.08
    	
Solvency
    	
52
    
	
5.09
    	
Brokers or Finders
    	
52
    
	
5.10
    	
Disclaimer of Other Representations and Warranties
    	
52
    
	
 
    	
 
    	
 
    
	
ARTICLE VI Covenants
    	
53
    
	
 
    	
 
    	
 
    
	
6.01
    	
Conduct of Business
    	
53
    
	
6.02
    	
Access to Information
    	
57
    
	
6.03
    	
Confidentiality
    	
59
    
	
6.04
    	
Director Resignations
    	
60
    

 

 

	
6.05
    	
Transfer of Product Approvals and Product Applications
    	
60
    
	
6.06
    	
Transfer of Asset Transferred Real Property
    	
60
    
	
6.07
    	
Efforts; Certain Regulatory Authorizations and Consents
    	
61
    
	
6.08
    	
Employee Matters
    	
64
    
	
6.09
    	
Publicity
    	
73
    
	
6.10
    	
Termination of Affiliate Contracts
    	
74
    
	
6.11
    	
Guarantees
    	
74
    
	
6.12
    	
Ancillary Arrangements
    	
75
    
	
6.13
    	
Use of Name
    	
76
    
	
6.14
    	
Counterparty Consents
    	
77
    
	
6.15
    	
Insurance
    	
77
    
	
6.16
    	
Wrong-Pockets
    	
78
    
	
6.17
    	
Non-Competition; Non-Solicitation; No Challenge
    	
78
    
	
6.18
    	
Financial Information
    	
80
    
	
6.19
    	
Documentation Regarding Transferred Intellectual Property   Rights
    	
81
    
	
6.20
    	
Further Assurances
    	
82
    
	
 
    	
 
    	
 
    
	
ARTICLE VII Tax Matters
    	
82
    
	
 
    	
 
    	
 
    
	
7.01
    	
Tax Indemnity
    	
82
    
	
7.02
    	
Tax Returns
    	
83
    
	
7.03
    	
Allocation of Straddle Periods
    	
85
    
	
7.04
    	
Tax Sharing Agreement
    	
86
    
	
7.05
    	
Refunds
    	
86
    
	
7.06
    	
Cooperation
    	
86
    
	
7.07
    	
Tax Contests
    	
87
    
	
7.08
    	
U.S. Tax Elections
    	
89
    
	
7.09
    	
Transfer Taxes
    	
90
    
	
7.10
    	
Limitations on Indemnification of Tax Matters
    	
90
    
	
7.11
    	
VAT
    	
91
    
	
7.12
    	
Miscellaneous
    	
93
    
	
 
    	
 
    	
 
    
	
ARTICLE VIII Conditions   Precedent
    	
93
    
	
 
    	
 
    	
 
    
	
8.01
    	
Conditions to Obligation of the Purchaser
    	
93
    
	
8.02
    	
Conditions to Obligation of the Seller
    	
95
    

 

 

	
ARTICLE IX Termination
    	
96
    
	
 
    	
 
    	
 
    
	
9.01
    	
Termination
    	
96
    
	
9.02
    	
Effect of Termination
    	
97
    
	
 
    	
 
    	
 
    
	
ARTICLE X Indemnification
    	
98
    
	
 
    	
 
    	
 
    
	
10.01
    	
Survival
    	
98
    
	
10.02
    	
Indemnification
    	
99
    
	
10.03
    	
Limitations on Indemnification
    	
100
    
	
10.04
    	
Calculation of Losses
    	
101
    
	
10.05
    	
Third Party Claims; Notice of Direct Claims
    	
102
    
	
10.06
    	
Indemnification in respect of Environmental Matters
    	
103
    
	
10.07
    	
Recovery from Third Parties after Indemnification by the   Seller
    	
105
    
	
10.08
    	
Exclusivity of Remedies
    	
105
    
	
10.09
    	
Double Recovery
    	
105
    
	
 
    	
 
    	
 
    
	
ARTICLE XI Miscellaneous   Provisions
    	
106
    
	
 
    	
 
    	
 
    
	
11.01
    	
Interpretation
    	
106
    
	
11.02
    	
Amendments and Waivers
    	
107
    
	
11.03
    	
Assignment
    	
108
    
	
11.04
    	
No Third-Party Beneficiaries
    	
108
    
	
11.05
    	
Expenses
    	
108
    
	
11.06
    	
Notices
    	
108
    
	
11.07
    	
Counterpart Execution and Facsimile Delivery
    	
110
    
	
11.08
    	
Entire Agreement
    	
110
    
	
11.09
    	
Conflicts with this Agreement
    	
110
    
	
11.10
    	
France Business
    	
110
    
	
11.11
    	
Local Agreements
    	
111
    
	
11.12
    	
Severability
    	
112
    
	
11.13
    	
Method of Payment and Set-Off
    	
113
    
	
11.14
    	
Governing Law
    	
113
    
	
11.15
    	
Consent to Jurisdiction
    	
113
    
	
11.16
    	
Waiver of Jury Trial
    	
114
    
	
11.17
    	
Translation of Currencies
    	
114
    
	
11.18
    	
Bulk Sales
    	
114
    

 

 

	
11.19
    	
Specific Performance
    	
115
    
	
11.20
    	
Legal Representation
    	
115
    

 

 

TABLE OF ANNEXES

 

(The following annexes and exhibits to the agreement identified below have been omitted in reliance upon Rule 601(b)(2) of Regulation S-K. The Registrant hereby undertakes to furnish such annexes and exhibits to the Commission supplementally upon request.)

 

ANNEXES

 

	
Annex   A — Definitions
    
	
 
    
	
Annex   B — Transferred Subsidiaries
    
	
 
    
	
Annex   C — Selling Affiliates
    
	
 
    
	
Annex   1.01(a) — Seller’s Knowledge
    
	
 
    
	
Annex   1.01(c)(iv) — Permitted Encumbrances
    
	
 
    
	
Annex 2.01(c)(i) — Other Excluded Assets
    
	
 
    
	
Annex 2.01(c)(xvi) — Excluded Contracts
    
	
 
    
	
Annex 2.01(d) — Excluded Assets of Transferred   Subsidiaries
    
	
 
    
	
Annex   2.02(b)(i) — Excluded Liabilities
    
	
 
    
	
Annex   2.02(b)(ii) — Excluded Proceedings
    
	
 
    
	
Annex   2.02(b)(iv) — Excluded Environmental Liabilities
    
	
 
    
	
Annex   2.07 — Closing Statement Principles and Illustrative Closing Statement
    
	
 
    
	
Annex   2.09 — Allocation of the Finally Determined Purchase Price
    
	
 
    
	
Annex   4.03 — Statement of Net Asset Rules
    
	
 
    
	
Annex   4.11 — Product Marks and Products Under Registration
    
	
 
    
	
Annex   4.14 — Excluded Employees
    
	
 
    
	
Annex   6.01 — Conduct of Business
    
	
 
    
	
Annex   6.05 — Transfer of Product Approvals and Product Applications
    
	
 
    
	
Annex   6.06 — Transfer of Asset Transferred Real Property
    
	
 
    

 

vi

 

Annex 6.08(e) — International Assignees

 

Annex 6.08(k) — Group Retirement Benefit Arrangements

 

Annex 6.08(l) — Valuation of net liabilities for post-employment benefits

 

Annex 6.10 — Termination of Affiliate Contracts

 

Annex 6.11 — Third Party Assurances

 

Annex 6.14 — Counterparty Consents

 

Annex 10.02(a)(iii) — Excluded Liabilities of Transferred Subsidiaries

 

EXHIBITS

 

Exhibit 2.05(b)(iii) — Form of Purchaser Assignment and Assumption Agreement

 

Exhibit 6.12(a) — Terms of Transition Services Agreement

 

Exhibit 6.12(b) — Terms of Manufacturing and Supply Agreement

 

Exhibit 6.12(c) — Form of Technology License Agreement

 

Exhibit 6.12(f) — Form of IP Assignment Agreement

 

 

STOCK AND ASSET PURCHASE AGREEMENT

 

THIS STOCK AND ASSET PURCHASE AGREEMENT (as it may be amended or supplemented from time to time in accordance with the terms hereof, this Agreement), dated as of April 22, 2014, is entered into by and between Novartis AG, a company incorporated under the laws of Switzerland (the Seller), and Eli Lilly and Company, a corporation organized under the laws of Indiana (the Purchaser; each of the Purchaser and the Seller is a Party and together are the Parties).

 

RECITALS

 

WHEREAS, the Seller and certain Affiliates of the Seller, including the Seller’s subsidiaries set forth in Annex B (the Transferred Subsidiaries) and in Annex C (the Selling Affiliates), are engaged in the Business;

 

WHEREAS, as of the date of this Agreement, the Seller and certain of the Seller’s Affiliates directly or indirectly own shares or other equity interests in the Transferred Subsidiaries (the Shares);

 

WHEREAS, the Seller and its Affiliates desire to sell to the Purchaser and its Affiliates, and the Purchaser desires to purchase or cause its Affiliates to purchase from the Seller and its Affiliates, the Shares, and the Purchaser desires to purchase or cause its Affiliates to purchase certain assets and assume or cause its Affiliates to assume certain liabilities of the Business, as set forth in this Agreement;

 

WHEREAS, in connection with the closing of the transactions contemplated by this Agreement, the Purchaser and the Seller or certain of their respective Affiliates will enter into the Ancillary Agreements; and

 

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and in consideration of the mutual terms, conditions and other agreements set forth herein, and intending to be legally bound hereby, the Parties agree as follows:

 

 

ARTICLE I

 

DEFINITIONS

 

1.01                        Definitions

 

Capitalized terms used in this Agreement shall have the meanings assigned to such terms in Annex A, which is hereby incorporated by reference.

 

ARTICLE II

 

PURCHASE AND SALE; CLOSING

 

2.01                        Purchase and Sale

 

On the terms and subject to the conditions of this Agreement and the Local Agreements, as applicable, at the Closing:

 

(a)                                 Purchase and Sale of the Shares.  The Seller shall, or shall cause one or more of its Affiliates to, sell, convey, transfer, assign and deliver to the Purchaser or one or more of its Affiliates, and the Purchaser shall, or shall cause one or more of its Affiliates to, purchase from the Seller or its Affiliates, as applicable, the Shares, free and clear of all Encumbrances other than transfer restrictions imposed by national, federal or state securities laws.

 

(b)                                 Purchase and Sale of the Transferred Assets. The Seller shall, or shall cause one or more of its Affiliates (other than the Transferred Subsidiaries) to, sell, convey, transfer, assign and deliver to the Purchaser or one or more of its Affiliates, and the Purchaser shall, or shall cause one or more of its Affiliates to, purchase from the Seller or its Affiliates (other than the Transferred Subsidiaries), as applicable, free and clear of all Encumbrances other than Permitted Encumbrances, all of the Seller’s and each of its Affiliates’ right, title and interest as of the Closing, in and to the following assets, rights and properties of the Business (such transferred assets, rights and properties referred to in this Section 2.01(b), collectively, the Transferred Assets):

 

(i)                                     the Asset Transferred Real Property with all buildings, fixtures and improvements erected thereon;

 

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(ii)                                  the Transferred Plant and Equipment;

 

(iii)                               the Transferred Inventory;

 

(iv)                              the Transferred Accounts Receivable;

 

(v)                                 the Transferred Books and Records;

 

(vi)                              the Transferred Intellectual Property Rights and the Transferred Intellectual Property Contracts;

 

(vii)                           the Transferred Contracts;

 

(viii)                        all Marketing Authorization Data;

 

(ix)                              all Commercial Information;

 

(x)                                 all Medical Information;

 

(xi)                              all Product Approvals and all Product Applications and all other Permits Exclusively Related to the Business (it being agreed, however, that no such Product Approval or Product Application or Permit is required to be Transferred or included in the Transferred Assets unless permitted by Applicable Law);

 

(xii)                         subject to Section 6.13, the product package designs, product inserts, product logos and product artwork (whether registered or unregistered) that, as of the date of this Agreement, are Exclusively Related to the Business;

 

(xiii)                      all claims, causes of action, choses in action, rights of recovery and rights of set-off of any kind (including the right to sue and recover for past infringements or misappropriations of Transferred Intellectual Property Rights) against any Person (other than Seller and its Affiliates), in each case Exclusively Related to the Business and not relating to an Excluded Liability;

 

(xiv)                     any right to be indemnified by a Person (other than the Seller or its Affiliates) in respect of Assumed Liabilities and any Transferred Asset (other than in respect of any Excluded Liabilities);

 

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(xv)                          all goodwill of the Business;

 

(xvi)                       copies of any Tax Returns of the Seller’s Group and all books and records (including working papers) related thereto, to the extent that such Tax Returns or books and records are Exclusively Related to the Business;

 

(xvii)                    assets transferred in accordance with Section 6.08 (including Annexes 6.08(k) and 6.08(l)); and

 

(xviii)               other than any Excluded Assets, all other assets, properties or rights of every kind and description, wherever located, whether real, personal or mixed, tangible or intangible, that are Exclusively Related to the Business.

 

(c)                                  Excluded Assets. Notwithstanding anything in this Agreement to the contrary, from and after the Closing, the Seller’s Group shall retain all of its right, title and interest in and to, and there shall be excluded from the direct or indirect sale, conveyance, assignment or transfer to the Purchaser or its Affiliates pursuant to Section 2.01(b), and the Transferred Assets shall not include, the following assets, rights and properties of the Seller’s Group (other than, subject to Section 2.01(d), the Transferred Subsidiaries):

 

(i)                                     those assets set forth in Annex 2.01(c)(i);

 

(ii)                                  any (A) Intellectual Property Rights not Exclusively Related to the Business or (B) any Contract relating to Intellectual Property Rights that is not a Transferred Intellectual Property Contract;

 

(iii)                             the Seller Retained Marks;

 

(iv)                              any product, and any permits, licenses, certificates, registrations, marketing or other authorizations or consents issued by any Governmental Entity in any jurisdiction in respect of any product, or any applications therefore, other than the Products, Product Approvals, Products Under Registration and Marketing Authorizations transferrable under Applicable Law;

 

(v)                                 all cash, marketable securities and negotiable instruments;

 

(vi)                              all real property and any leases therefor and interests therein, together with all buildings, fixtures, and improvements erected thereon, other than the Transferred Real Property;

 

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(vii)                           the company seal, minute books, charter documents, stock or equity record books and such other books and records pertaining to the Seller or its Affiliates (other than the Transferred Subsidiaries), as well as any other records or material relating to the Seller or its Affiliates (other than the Transferred Subsidiaries) generally and not involving or related to the Transferred Assets or the Business;

 

(viii)                        any right of the Seller or its Affiliates to be indemnified in respect of Excluded Liabilities or any Excluded Asset;

 

(ix)                              all Tax assets (including Tax refunds and prepayments);

 

(x)                                 all Tax Returns of the Seller’s Group and all books and records (including working papers) related thereto, except as set forth in Section 2.01(b)(xvi);

 

(xi)                              any intercompany receivables of the Business, other than Intra-Group Trading Balances;

 

(xii)                           all Seller’s Group Insurance Policies and rights to proceeds thereunder;

 

(xiii)                      all artwork, paintings, drawings, sculptures, prints, lithographs, photographs and other artistic works of the Seller’s Group;

 

(xiv)                       except as set forth in Section 6.08 and Annexes 6.08(k) and 6.08(l), all rights in connection with any assets of any Benefit Plan other than any Transferred Subsidiary Benefit Plan;

 

(xv)                          any equity interest held by the Seller’s Group in any Person other than a Transferred Subsidiary;

 

(xvi)                       the Excluded Contracts;

 

(xvii)                    all rights of the Seller’s Group under this Agreement and the Ancillary Agreements;

 

(xviii)                 those assets, rights and properties that are to be used by, or necessary for, the Seller’s Group or its designated third party to provide services to the Purchaser or its Affiliates under any of the Ancillary Agreements (other than assets, properties or rights that are Exclusively Related to the Business and required to be listed on a statement of net assets of the 

 

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Animal Health Group in accordance with the Statement of Net Asset Rules); and

 

(xix)                     all assets, rights and properties that are not Exclusively Related to the Business.

 

The assets, rights and properties referred to in this Section 2.01(c) and in Section 2.01(d), the Excluded Assets.

 

(d)                                 Excluded Assets of Transferred Subsidiaries. Notwithstanding anything in this Agreement to the contrary on or prior to the Closing, the Seller shall, if it deems necessary or appropriate, cause the Transferred Subsidiaries to convey, transfer, assign and deliver to the Seller or any member of the Seller’s Group, and the Seller or any such member of the Seller’s Group shall accept from the Transferred Subsidiaries, at the Seller’s Group’s sole cost and expense, all of the Transferred Subsidiaries’ right, title and interest, if any, in and to (i) those assets, rights and properties set forth on Annex 2.01(d) and (ii) those assets, rights and properties which, if held by a member of the Seller’s Group would constitute Excluded Assets, for such consideration (or no consideration) as shall be determined by the Seller or the relevant member of the Seller’s Group.  The Seller shall notify the Purchaser of any Excluded Assets conveyed from a Transferred Subsidiary pursuant to this Section 2.01(d).

 

2.02                        Assumption and Exclusion of Liabilities

 

(a)                                 Assumed Liabilities. On the terms and subject to the conditions set forth herein, at the Closing, the Purchaser shall or shall cause its Affiliates to assume from the Seller’s Group and discharge or perform when due all of the Assumed Liabilities.  Except for Liabilities within the definition of Excluded Liabilities, the Assumed Liabilities include, but are not limited to the following:

 

(i)                       all Liabilities of the Seller’s Group arising under the Transferred Contracts, Transferred Intellectual Property Contracts and all other Contracts assumed by the Purchaser or its Affiliates;

 

(ii)                    all Liabilities for product warranty service claims relating to the Products and all Product Liabilities;

 

(iii)                 all Liabilities in respect of Proceedings relating to the Business;

 

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(iv)                all Environmental Liabilities; and

 

(v)                   all Intra-Group Trading Balances and Intra-Group Non-Trade Payables.

 

(b)                                 Excluded Liabilities. Notwithstanding any other provision of this Agreement, neither the Purchaser nor its Affiliates shall assume nor shall any of them be responsible for any of the following Liabilities (collectively, the Excluded Liabilities) of the Seller’s Group, all of which shall be retained by the applicable members of the Seller’s Group following the Closing subject to the terms and conditions of this Agreement (it being understood that, subject to Article X, no Liabilities of the Transferred Subsidiaries shall constitute Excluded Liabilities, it being acknowledged and agreed that such Liabilities shall remain Liabilities of the Transferred Subsidiaries immediately after Closing):

 

(i)                       all Liabilities relating to or in connection with compensation and employee benefits (A) under or in respect of any employee benefit or compensation plan or scheme of the Seller and its Affiliates that is not sponsored solely by a Transferred Subsidiary immediately prior to Closing, except as expressly assumed in Section 6.08 or except as assumed by operation of Applicable Law; (B) for or in respect of Excluded Employees; and (C) for or in respect of the Retention Arrangements, except as expressly assumed pursuant to Section 6.08(i)(v);

 

(ii)                    all Liabilities arising in connection with the Proceedings specified in Annex 2.02(b)(ii);

 

(iii)                 all Liabilities to the extent related to or arising under the Excluded Assets described in Section 2.01(c);

 

(iv)                all Environmental Liabilities relating to or in connection with (A) the matters set forth on Annex 2.02(b)(iv); (B) the management, treatment, storage, transportation, or disposal of Hazardous Substances, wastes, toxic substances, hazardous materials, pollutants, contaminants and hazardous constituents, as these terms are defined in Environmental Laws at locations other than the Transferred Real Property; and (C) operations at third party contract manufacturing facilities prior to the Closing Date;

 

(v)                   all Liabilities retained by the Business arising in connection with the disposition prior to Closing of any business or business line of the

 

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Business (other than, for the avoidance of doubt, the sale of products of the Business in the ordinary course);

 

(vi)                all intercompany payables other than Intra-Group Trading Balances and Intra-Group Non-Trade Payables; and

 

(vii)             all Taxes imposed as a result of the ownership or operation of the Transferred Assets for any taxable period, or portion thereof, ending on or prior to the Closing Date and all other Taxes of any member of the Seller’s Group for any taxable period.

 

2.03                        Initial Purchase Price

 

(a)                                 The aggregate initial purchase price (the Initial Purchase Price) payable by the Purchaser (and its Affiliates) to the Seller (and its Affiliates) in consideration for the sale of the Shares and the Transferred Assets, the assumption of the Assumed Liabilities by Purchaser (or its Affiliates), and the rights granted pursuant to the Technology License Agreement, shall be an amount equal to:

 

(i)                       $5,350,000,000;

 

(ii)                    plus the Delayed Closing Consideration Amount (if any);

 

(iii)                 minus Estimated Closing Date Third Party Indebtedness;

 

(iv)                plus Estimated Closing Date Transferred Subsidiary Cash;

 

(v)                   plus Estimated Closing Date Intra-Group Non-Trade Receivables;

 

(vi)                minus Estimated Closing Date Intra-Group Non-Trade Payables;

 

(vii)             plus the amount of the difference between the Estimated Closing Date Net Working Capital and the Target Net Working Capital if the Estimated Closing Date Net Working Capital is greater than the Target Net Working Capital or  minus the amount of such difference if the Estimated Closing Date Net Working Capital is less than the Target Net Working Capital; and

 

(viii)          minus the Global Integration Holdback if the Purchaser is entitled to withhold such amount at Closing pursuant to Section 2.11.

 

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(b)                                 No later than the third (3rd) Business Day prior to the Closing Date, the Seller shall deliver to the Purchaser an initial Closing Statement (the Initial Closing Statement) containing the Seller’s good faith estimate of the Initial Purchase Price, showing the Delayed Closing Consideration Amount (if any) and each of the Estimated Closing Date Third Party Indebtedness, Estimated Closing Date Transferred Subsidiary Cash, Estimated Closing Date Intra-Group Non-Trade Receivables, Estimated Closing Date Intra-Group Non-Trade Payables and Estimated Closing Date Net Working Capital, in each case calculated in accordance with the Closing Statement Principles.  The Purchaser shall promptly notify the Seller in writing of any questions or disagreements it may have with any of the items in the Initial Closing Statement.  The Parties shall discuss in good faith and attempt to resolve any such matters prior to the scheduled Closing Date; provided that, in no event shall the Closing be delayed and if the Parties are unable to resolve any such matters, then the Initial Closing Statement delivered by the Seller, with such modifications as have been agreed between the Parties, shall be used for purposes of the Closing (it being understood that the Seller shall have no obligation to agree to modify the Initial Closing Statement).

 

2.04                        Closing

 

The closing of the Acquisition (the Closing) shall take place at the offices of Freshfields Bruckhaus Deringer US LLP, 601 Lexington Avenue, 31st Floor, New York, NY 10022, at 10:00 a.m., New York City time, on the last day of the month in which the conditions set forth in Article VIII (other than those conditions that by their nature are to be satisfied at Closing, but subject to the fulfillment or waiver of those conditions at Closing) have been satisfied or, to the extent permitted, waived; provided, however, that:

 

(a)                                 where the last day of such month is not a Business Day, the Closing shall instead take place on the first Business Day of the following month; and

 

(b)                                 where less than five (5) Business Days remain between the date of such fulfillment or waiver, as applicable, and the last Business Day of such month, the Closing shall instead take place on either:

 

(i)                       the last Business Day of the following month; or

 

(ii)                    where the last day of such following month is not a Business Day, on the first Business Day of the following month; or

 

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(iii)                 at such other place, time and date as agreed in writing between the Seller and the Purchaser.

 

The date on which Closing occurs is referred to in this Agreement as the Closing Date.

 

2.05                        Transactions to be Effected at Closing

 

At Closing:

 

(a)                                 the Seller shall or shall cause its Affiliates to, as applicable, deliver to the Purchaser or its Affiliates:

 

(i)                       duly executed Local Agreements;

 

(ii)                    counterparts of the Ancillary Agreements to which the Seller or any of its Affiliates is a party duly executed by the Seller or such Affiliates, as applicable;

 

(iii)                 if requested by the Purchaser, the letters of resignation (or evidence that such directors have been removed from office) of those directors of the Transferred Subsidiaries who are designated by the Purchaser pursuant to Section 6.04;

 

(iv)                the Seller’s Closing Certificate;

 

(v)                   a certification that Novartis Finance Corporation (and any other “United States person” within the meaning of section 7701(a)(30) of the Code that is treated as transferring a “United States real property interest” within the meaning of section 897(c)(1) of the Code for U.S. Federal income tax purposes in the Proposed Transactions) is not a foreign person within the meaning of section 1445 of the Code, dated as of the Closing Date and in form and substance as provided in Treasury Regulations section 1.1445-2(b)(2); and

 

(vi)                an effective, irrevocable election under Section 338(h)(10) of the Code on IRS Form 8023 (and under any comparable provisions of Applicable Law in any U.S. state or local jurisdiction) with respect to the U.S. Transferred Subsidiary.

 

(b)                                 the Purchaser shall or shall cause its Affiliates to, as applicable, deliver to the Seller:

 

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(i)                    cash in an amount equal to the Initial Purchase Price by means of a wire transfer of immediately available funds to such account or accounts as shall be designated by the Seller no later than two (2) Business Days prior to the Closing Date;

 

(ii)                 duly executed Local Agreements;

 

(iii)              an executed instrument of assignment and assumption substantially in the form attached hereto as Exhibit 2.05(b)(iii) in respect of the Assumed Liabilities;

 

(iv)                counterparts of the other Ancillary Agreements to which the Purchaser or any of its Affiliates is a party, duly executed by the Purchaser or such Affiliates, as applicable; and

 

(v)                   the Purchaser’s Closing Certificate.

 

2.06                        Settlement of Intra-Group Balances

 

(a)                                 Immediately following the Closing, the Purchaser shall cause each Transferred Subsidiary to repay to the relevant member of the Seller’s Group the amount of any Estimated Closing Date Intra-Group Non-Trade Payables and shall acknowledge, on behalf of each Transferred Subsidiary, the payment of the Estimated Closing Date Intra-Group Non-Trade Receivables in accordance with Section 2.06(b).

 

(b)                                 Immediately following the Closing, the Seller shall cause each relevant member of the Seller’s Group to repay to the relevant Transferred Subsidiaries the amount of any Estimated Closing Date Intra-Group Non-Trade Receivables and shall acknowledge on behalf of each relevant member of the Seller’s Group the payment of the Estimated Closing Date Intra-Group Non-Trade Payables in accordance with Section 2.06(a).

 

(c)                                  Following the determination of the Final Closing Statement pursuant to Section 2.07, if the amount of any Intra-Group Non-Trade Payable or any Intra-Group Non-Trade Receivable, as applicable, contained in the Final Closing Statement is greater or less than the amount of the corresponding Estimated Closing Date Intra-Group Non-Trade Payable or Estimated Closing Date Intra-Group Non-Trade Receivable, then the Seller and the Purchaser shall cause such adjustments to the repayments pursuant to Sections 2.06(a) or 2.06(b), as

 

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applicable, to be made as may be necessary to ensure that (taking into account such adjustments) the actual amount of each Intra-Group Non-Trade Payable and each Intra-Group Non-Trade Receivable has been repaid by each Transferred Subsidiary to the relevant member of the Seller’s Group or by the relevant member of the Seller’s Group to the relevant Transferred Subsidiary, as the case may be.

 

(d)                                 The repayment of the Estimated Closing Date Intra-Group Non-Trade Receivables and the Estimated Closing Date Intra-Group Non-Trade Payables pursuant to Sections 2.06(a) and 2.06(b), as applicable, and any adjustments to such repayments pursuant to Section 2.06(c) shall be settled by payments between the Seller, for itself and on behalf of the relevant members of the Seller’s Group, and the Purchaser, for itself and on behalf of the relevant Transferred Subsidiaries.  Any such payments due between the Seller and the Purchaser in relation to repayments of the Estimated Closing Date Intra-Group Non-Trade Payables and Estimated Closing Date Intra-Group Non-Trade Receivables pursuant to Sections 2.06(a) or 2.06(b), as applicable, or in relation to adjustments to those repayments pursuant to Section 2.06(c), respectively, may be netted against each other to produce a net sum.

 

(e)                                  Any Intra-Group Trading Balances shall be settled after Closing in the ordinary course, except, in each case, where settlement terms have already been agreed between the relevant debtor and creditor.

 

2.07                        Purchase Price Adjustment

 

(a)                                 For the purposes of finally determining Closing Date Third Party Indebtedness, Closing Date Transferred Subsidiary Cash, Closing Date Intra-Group Non-Trade Receivables, Closing Date Intra-Group Non-Trade Payables and Closing Date Net Working Capital, the Seller shall, after Closing, prepare a Closing Statement (the Proposed Closing Statement), setting forth the amounts and calculations, in accordance with the Closing Statement Principles, of each of Closing Date Third Party Indebtedness, Closing Date Transferred Subsidiary Cash, Closing Date Intra-Group Non-Trade Receivables, Closing Date Intra-Group Non-Trade Payables and Closing Date Net Working Capital, and any resulting proposed adjustment to the Initial Purchase Price, in each case together with reasonable supporting detail with respect to the calculations included therein. The Seller shall deliver the Proposed Closing Statement to the Purchaser within sixty (60) days after Closing.  The Proposed Closing Statement shall be prepared as of (such time, the Statement Time):

 

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(i)                     where Closing takes place on the first Business Day of the month, the close of business in the relevant locations on the last day of the previous month; or

 

(ii)                  otherwise, the close of business in the relevant locations on the date on which Closing takes place,

 

it being understood that no account shall be taken of events taking place after the Statement Time in determining the Final Closing Statement.

 

(b)                                 The Proposed Closing Statement shall become final and binding upon the Parties on the sixtieth (60th) day following delivery thereof (and shall be deemed the Final Closing Statement, and the determination contained therein shall be final and binding) unless the Purchaser gives written notice, in good faith, of its disagreement with the Proposed Closing Statement (a Notice of Disagreement) to the Seller prior to the expiration of such sixty (60) day period.  In addition, in order to be valid, a Notice of Disagreement shall specify those items or amounts with which the Purchaser disagrees in the Proposed Closing Statement and contain a reasonably detailed description of the reasons for its objections to each such item or amount contained therein.  Items not validly disputed in the Notice of Disagreement shall be final and binding upon the Parties.

 

(c)                                  The objections set forth in the Notice of Disagreement shall be resolved as follows:

 

(i)                     During the sixty (60) day period following the delivery of a Notice of Disagreement, the Purchaser and the Seller shall first seek in good faith to resolve such objections.  If such objections are so resolved, they shall be deemed final and binding as so resolved and, at such time, the Proposed Closing Statement, as modified to reflect such resolution, shall be deemed the Final Closing Statement.

 

(ii)                  If the Parties do not resolve all of such objections during the foregoing sixty (60) day period, the Purchaser and the Seller shall submit to the Accounting Firm for determination any and all matters that remain in dispute (the Unresolved Objections) and which were included in the Notice of Disagreement.

 

(iii)               The Accounting Firm shall be instructed by the Parties to render its determination regarding only the Unresolved Objections within twenty

 

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(20) Business Days following the date of such submission.  In making its determination, the Accounting Firm shall act as an expert and not as an arbitrator.  The scope of the Accounting Firm’s determination shall be limited to whether there were mathematical errors in the Proposed Closing Statement, whether the calculations of the Closing Date Third Party Indebtedness, Closing Date Transferred Subsidiary Cash, Closing Date Intra-Group Non-Trade Receivables, Closing Date Intra-Group Non-Trade Payables and Closing Date Net Working Capital, included therein, were performed in accordance with the Closing Statement Principles and the definitions contained herein and therein, and the Accounting Firm is not to make any other determination. The Accounting Firm’s determination with respect to any Unresolved Objection shall be within the range of values assigned by the Seller to such item in the Proposed Closing Statement and by the Purchaser to such item in the Notice of Disagreement.  The Purchaser and the Seller shall furnish to each other and to the Accounting Firm such work papers and other documents and information relating to the determination of the Final Closing Statement as the Accounting Firm may reasonably request and are available to that Party (or its independent public accountants) and shall be afforded the opportunity to present to the Accounting Firm any material related to the disputed items and to discuss such items with the Accounting Firm to the extent necessary to resolve any Unresolved Objections.

 

(iv)                The resolution by the Accounting Firm of the Unresolved Objections shall be final and binding and, at such time, the Proposed Closing Statement, as modified to reflect such resolution (and any matters resolved in accordance with Section 2.07(c)(i)), shall be deemed the Final Closing Statement. The Parties agree that the procedure set forth in this Section 2.07 for resolving disputes with respect to the Proposed Closing Statement shall be the exclusive method for resolving any disputes with respect to Closing Date Third Party Indebtedness, Closing Date Transferred Subsidiary Cash, Closing Date Intra-Group Non-Trade Receivables, Closing Date Intra-Group Non-Trade Payables and Closing Date Net Working Capital.

 

(v)                   The fees and expenses of the Accounting Firm shall be allocated to and paid by the Purchaser, on the one hand, and the Seller on the other, based upon the percentage that the portion of the contested amount not awarded to each Party bears to the amount actually contested between the Parties, as determined by the Accounting Firm.

 

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(d)                                 No later than five (5) Business Days after the Proposed Closing Statement is deemed the Final Closing Statement pursuant to this Section 2.07:

 

(i)                       if Closing Date Third Party Indebtedness is: (A) less than Estimated Closing Date Third Party Indebtedness, the Purchaser shall deliver to the Seller payment of the amount of such deficit; or (B) greater than Estimated Closing Date Third Party Indebtedness, the Seller shall deliver to the Purchaser payment of the amount of such excess;

 

(ii)                    if Closing Date Transferred Subsidiary Cash is: (A) less than Estimated Closing Date Transferred Subsidiary Cash, the Seller shall deliver to the Purchaser payment of the amount of such deficit; or (B) greater than Estimated Closing Date Transferred Subsidiary Cash, the Purchaser shall deliver to the Seller payment of the amount of such excess;

 

(iii)                 if Closing Date Intra-Group Non-Trade Payables is: (A) less than Estimated Closing Date Intra-Group Non-Trade Payables, the Purchaser shall deliver to the Seller payment of the amount of such deficit; or (B) greater than Estimated Closing Date Intra-Group Non-Trade Payables, the Seller shall deliver to the Purchaser payment of the amount of such excess;

 

(iv)                if Closing Date Intra-Group Non-Trade Receivables is: (A) less than Estimated Closing Date Intra-Group Non-Trade Receivables, the Seller shall deliver to the Purchaser payment of the amount of such deficit; or (B) greater than Estimated Closing Date Intra-Group Non-Trade Receivables, the Purchaser shall deliver to the Seller payment of the amount of such excess; and

 

(v)                   if Closing Date Net Working Capital is: (A) less than Estimated Closing Date Net Working Capital, the Seller shall deliver to the Purchaser payment of the amount of such deficit; or (B) greater than Estimated Closing Date Net Working Capital, the Purchaser shall deliver to the Seller payment of the amount of such excess.

 

Any payments made by any Party pursuant to this Section 2.07(d) shall be made by wire transfer in immediately available funds to a bank account designated in writing by the Party receiving payment (such designation to be made at least three (3) Business Days prior to such payment).  The Parties shall net the payments, if any, to be made pursuant to Sections 2.07(d)(i), (ii), and (v), such that only one Party is required to deliver amounts required to be paid thereunder.

 

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Any amounts required to be paid pursuant to Sections 2.07(d)(iii) and (iv) shall be made in accordance with Sections 2.06(c) and 2.06(d).  Any amounts required to be paid pursuant to Sections 2.07(d)(iii) by the Purchaser, on the one hand, or the Seller, on the other hand, shall be considered to have been paid or received by the Seller on behalf of itself or the Selling Affiliates, as applicable or the Purchaser on behalf of itself or its Affiliates, as applicable.

 

(e)                                  If there is an adjustment pursuant to this Section 2.07 or Section 2.06(c), as applicable, which relates to any Transferred Subsidiary, Transferred Asset or any other part of the Business which is the subject of a Local Agreement, then, if required to implement such adjustment, the Purchaser shall, and the Seller shall or shall cause the relevant member of the Seller’s Group to, to the extent permissible and/or required under Applicable Law, enter into one or more supplemental agreements reflecting such adjustment and the allocation thereof.

 

(f)                                   Following the Closing and until the date the Proposed Closing Statement is deemed the Final Closing Statement pursuant to this Section 2.07, and without limiting Section 6.02, the Purchaser agrees that it shall provide and cause to be provided to the Seller’s Group and the Representatives of the Seller’s Group, reasonable access upon reasonable notice during normal business hours to the properties, books, contracts, personnel and records of the Business, and the Purchaser’s and its accountant’s work papers relevant to the preparation of the Proposed Closing Statement and/or Final Closing Statement and the adjustments contemplated by this Section 2.07, and shall provide the Seller, upon the Seller’s reasonable request and at the Seller’s expense, with copies of any such books, contracts, records and work papers and the Purchaser shall cause its personnel and the Transferred Employees to cooperate with the Seller and respond to the Seller’s requests for information promptly with respect thereto.

 

2.08                        Nonassignability of Assets

 

(a)                                 Notwithstanding anything to the contrary contained in this Agreement, to the extent that the sale, assignment, sublease, sublicense, transfer, conveyance or delivery (the Transfer, and the term Transferred has meaning correlative to the foregoing), or attempted Transfer, to the Purchaser of any asset (including any Product Approval or Product Application) that would be a Transferred Asset, or any claim or right or any benefit arising thereunder or resulting therefrom or any asset, claim, right or benefit of a Transferred Subsidiary is prohibited by any Applicable Law or would require any governmental or third-party authorizations, approvals, consents or waivers, and such authorizations, approvals, consents or

 

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waivers shall not have been obtained prior to the Closing, the Closing shall proceed without the Transfer of such asset, claim, right or benefit.

 

(b)                                 Any such asset, claim, right or benefit required to be transferred by the Seller’s Group pursuant to Sections 2.01(b) shall be regarded as a Transferred Asset for purposes of the calculations required under Section 2.07 if such asset would, but for the circumstances set out in this Section 2.08, be reflected in a Closing Statement prepared in accordance with the Closing Statement Principles and, subject to Annex 6.05 which shall apply in relation to Product Approvals and Product Applications, following the Closing, the Parties shall, subject to Section 6.14, use their respective reasonable best efforts to cooperate with each other to take such actions (including delivery of any notice) that may be required to obtain promptly such authorizations, approvals, consents or waivers; provided, however, that neither the Seller nor any member of the Seller’s Group shall be required to pay any consideration therefor or be obligated to incur any Liability in connection therewith.  Pending such authorization, approval, consent or waiver, and subject to the terms of the Manufacturing and Supply Agreement, and, for the avoidance of doubt, Annex 6.05 which shall apply in relation to Product Approvals and Product Applications, the Parties shall cooperate with each other in any mutually agreeable, commercially reasonable and lawful arrangements designed to provide to the Purchaser the benefits of use of such asset, claim, right or benefit and to the Seller or any member of the Seller’s Group the benefits, including any indemnities, that they would have obtained had the asset, claim, right or benefit been Transferred to the Purchaser at the Closing; provided that any such arrangement shall be limited to a period of eighteen (18) months following the Closing.  Once authorization, approval, consent or waiver for the Transfer of any such asset, claim, right or benefit not Transferred at the Closing is obtained, the Seller shall, or shall cause the relevant members of the Seller’s Group to, as promptly as reasonably practicable Transfer such asset, claim, right or benefit to the Purchaser.

 

(c)                                  The Seller shall hold in trust for and pay to the Purchaser promptly upon receipt thereof all income, proceeds and other monies received by the Seller or any member of the Seller’s Group in connection with its use of any asset, claim, right or benefit (net of any Taxes, reduced by any deductions available in connection therewith, as determined in the Seller’s reasonable judgment, and any other costs imposed upon the Seller’s Group) in connection with the arrangements under this Section 2.08.  The Purchaser shall promptly provide to the Seller whatever is reasonably required for the Seller to meet its obligations on a timely basis under any Contract or in relation to any asset, claim, right or benefit.

 

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(d)                                 The Purchaser acknowledges and agrees that to the extent that the Purchaser or any of its Affiliates is allowed the benefits or use of any Contract or other asset or any claim or right or benefit arising thereunder or resulting therefrom pursuant to this Section 2.08 while any third-party consent or novation relating thereto has not been obtained, the Purchaser shall be responsible for and shall indemnify and hold harmless the Seller Indemnitees from and against all Losses incurred by any Seller Indemnitee under any such Contract or in relation to any such Contract, asset, claim, right or benefit (including with respect to any breach, or alleged breach, of such Contract or any damage to such asset, claim, right or benefit by the Purchaser or any of its Affiliates or as a result of the Purchaser or any of its Affiliates having the benefit or use of any such Contract or asset, claim, right or benefit while any third-party consent or novation has not been obtained).

 

(e)                                  To the extent that the Transfer of any Excluded Asset, or attempted Transfer, is prohibited by Applicable Law or would require any governmental or third-party authorizations, approvals, consents or waivers, and such authorizations, approvals, consents or waivers shall not have been obtained at or prior to the Closing, then the foregoing provisions of this Section 2.08 shall apply mutatis mutandis.  Without limiting the previous sentence, in the event that a Transferred Subsidiary is unable to assign any rights to seek indemnity against third parties in respect of any Excluded Asset or Excluded Liability, or that any such assignment is held to be invalid or unenforceable, the Purchaser shall, or shall cause the relevant Transferred Subsidiary to, reasonably cooperate with the Seller to take such steps as the Seller may reasonably request and at Seller’s expense in pursuing the claims for indemnity.  Furthermore, in the event that a Selling Affiliate is unable to assign any rights to seek indemnity against third parties in respect of any Transferred Asset, or that any such assignment is held to be invalid or unenforceable, the Seller shall, or shall cause the relevant Selling Affiliate to, reasonably cooperate with the Purchaser to take such steps as the Purchaser may reasonably request and at Purchaser’s expense in pursuing the claims for indemnity.

 

2.09                        Allocation

 

The Parties agree to allocate the Finally Determined Purchase Price (and all other capitalizable costs) among the Transferred Assets and Transferred Subsidiaries for Tax purposes in accordance with the allocation schedule attached hereto as Annex 2.09.

 

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2.10                        Withholding

 

The Purchaser or its Affiliates shall be entitled to deduct and withhold from any amounts otherwise deliverable or payable to the Seller such amounts as may be required to be deducted and withheld with respect to the making of such payment under any Applicable Law in respect of Taxes.  The Purchaser shall, or, as applicable, shall cause its Affiliates to, notify the Seller in writing promptly (and in any event within ten (10) days of the date on which the relevant amount is due for delivery or payment) upon determining that any amount may be required to be withheld. The Parties shall cooperate in completing any certifications or similar documents or taking any other procedural steps that may be required to minimize the amount of any required deduction or withholding for or on account of Taxes.  To the extent amounts are so withheld and paid over to the appropriate Taxing Authority, the withheld amounts shall be treated for all purposes of this Agreement as having been paid to the Seller.

 

2.11                        Global Integration Holdback

 

In the event that the France Put Option has not been exercised at or prior to the Closing pursuant to the France Put Option Exercise, and in recognition that certain global integration initiatives of the Purchaser may be foregone by the Purchaser for some period of time, the Seller and Purchaser agree that the Purchaser may withhold $150,000,000 of the Initial Purchase Price (the Global Integration Holdback) payable at Closing until the date on which both the Closing and the France Closing are then completed, at which time the Purchaser shall promptly pay such amount to Seller.

 

ARTICLE III

 

REPRESENTATIONS AND WARRANTIES RELATING TO THE SELLER

 

Except as set forth in the Disclosure Schedule, the Seller hereby represents and warrants to the Purchaser as follows:

 

3.01                        Organization and Standing of the Seller

 

The Seller is duly incorporated, validly existing and in good standing, under the laws of Switzerland.  The Seller and its Affiliates have all requisite corporate power and authority to own, lease or operate, as applicable, the Transferred Assets and to carry on the Business as currently conducted, and are duly qualified to do business and, if applicable, are in good standing as a foreign corporation in each jurisdiction where the ownership or

 

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operation of the Transferred Assets or the conduct of the Business requires such qualification, except to the extent that the failure to be so qualified or in good standing would not, individually or in the aggregate, reasonably be expected to have a material and adverse effect on the ability of the Seller or its Affiliates to consummate the Proposed Transactions.

 

3.02                        Authority; Execution and Delivery; Enforceability

 

The execution and delivery by the Seller of this Agreement and by the Seller and each Affiliate of the Seller of the Ancillary Agreements to which it is a party, and the consummation by the Seller and such relevant Affiliates of the Acquisition and the other transactions contemplated hereby and thereby, as applicable, and performance by the Seller and its Affiliates hereunder and thereunder, have been duly authorized by all necessary corporate action and no further corporate action is required in connection therewith.  This Agreement has been duly executed and delivered by the Seller and, assuming that this Agreement and the Ancillary Agreements have been duly authorized, executed and delivered by the Purchaser or the Purchaser’s Affiliate party thereto, this Agreement constitutes, and when executed, each Ancillary Agreement will constitute, the Seller’s or the Seller’s Affiliate party thereto, as applicable, legal, valid and binding obligation, enforceable against the Seller or such Seller’s Affiliate in accordance with its terms, except as may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws affecting the enforcement of creditors’ rights generally, and by principles of equity regarding the availability of remedies (whether in a proceeding at law or in equity).

 

3.03                        No Conflicts

 

The execution, delivery and performance by the Seller and its Affiliates of this Agreement and the Ancillary Agreements to which they are a party, and the consummation of the transactions contemplated hereby and thereby do not: (a) violate any provision of the Governing Documents of the Seller or any of its Affiliates, (b) conflict with, or result in the breach of, or constitute a material default under, or result in the termination, cancellation, modification or acceleration (whether after the filing of notice or the lapse of time or both) of any right or obligation of the Seller or any of its Affiliates under, or result in a loss of any benefit to which the Seller or any of its Affiliates is entitled under, any Material Contract or (c) assuming the receipt of all consents, approvals, licenses, permits, orders and authorizations and the making of registrations, declarations and filings as described in Section 3.04 or required to be made or obtained prior to Closing by the Purchaser or its Affiliates, violate or result in a breach or constitute a default under any Judgment or Applicable Law applicable to the Seller or

 

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any of its Affiliates in respect of the Business, the Transferred Subsidiaries or the Transferred Assets, other than, in the case of (b) and (c): (i) as may result from any facts or circumstances relating solely to the Purchaser or any of its Affiliates (or its or their respective officers, directors, employees or agents), or (ii) any such violation or default that would not, individually or in the aggregate, reasonably be expected to (A) have a material and adverse effect on the ability of the Seller or its Affiliates to consummate the Proposed Transactions or (B) have a Material Adverse Effect.

 

3.04                        Consents and Approvals

 

No consent, approval, license, permit, order or authorization of, or registration, declaration or filing with, any Governmental Entity is required to be obtained or made by or with respect to the Seller or any of its Affiliates in connection with the execution, delivery and performance of this Agreement or the Ancillary Agreements or the consummation of the Acquisition or the other transactions contemplated hereby and thereby, other than: (a) the Required Notifications; (b) such consents, approvals, licenses, permits, orders, authorizations, registrations, declarations or filings (i) in relation to the Transfer of the Product Approvals or Product Applications or (ii) which, if not so made or obtained by the Seller or any of its Affiliates would not, individually or in the aggregate, reasonably be expected to (A) have a material and adverse effect on the ability of the Seller or its Affiliates to consummate the Proposed Transactions or (B) have a Material Adverse Effect; or (c) as may be necessary as a result of any facts or circumstances relating solely to the Purchaser or any of its Affiliates (or its or their respective officers, directors, employees or agents).

 

3.05                        No Proceedings

 

As of the date of this Agreement, there is no Proceeding pending or, to the Seller’s Knowledge, threatened, against the Seller or any of its Affiliates that would, individually or in the aggregate, reasonably be expected to (i) have a material and adverse effect on the ability of the Seller or its Affiliates to consummate the Proposed Transactions or (ii) have a Material Adverse Effect.

 

3.06                        Brokers or Finders

 

The Seller or other members of the Seller’s Group will be solely responsible for any commission, finder’s fee or other fees and expenses for services rendered by any broker, finder, financial advisor or investment bank in connection with the Proposed Transactions based on arrangements made by the Seller or any of its Affiliates.

 

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ARTICLE IV

 

REPRESENTATIONS AND WARRANTIES RELATING TO THE BUSINESS

 

Except as set forth in the Disclosure Schedule, the Seller hereby represents and warrants to the Purchaser as follows:

 

4.01                        Organization and Standing of the Transferred Subsidiaries and Selling Affiliates

 

(a)                                 Section 4.01(a) of the Disclosure Schedule sets forth a complete and accurate list of each of the Transferred Subsidiaries, together with its jurisdiction of organization, its authorized and outstanding capital stock or other equity interests, all of which equity interests are held by the Seller or an Affiliate of the Seller.

 

(b)                                 Section 4.01(b) of the Disclosure Schedule sets forth a complete and accurate list of each of the Selling Affiliates, together with its jurisdiction of organization.

 

(c)                                  Each Transferred Subsidiary and Selling Affiliate is duly incorporated, validly existing and in good standing, under the laws of its jurisdiction of organization, and has all necessary corporate power under its Governing Documents to conduct its portion of the Business as at the date of this Agreement, except to the extent that the failure to be so qualified or in good standing would not reasonably be expected to have a Material Adverse Effect.

 

4.02                        The Shares

 

(a)                                 Either the Seller or one of its Affiliates has good and valid title to the Shares, free and clear of all Encumbrances, other than transfer restrictions imposed by national, federal or state securities laws.

 

(b)                                 All of the Shares have been duly authorized and validly issued and are fully paid and non-assessable. There are no options, warrants, rights, convertible, exercisable or exchangeable securities, “phantom” stock rights, stock appreciation rights, stock-based performance units, commitments, Contracts, arrangements or undertakings of any kind to which any of the Transferred Subsidiaries is a party or by which it is bound obligating any of the Transferred Subsidiaries to issue, deliver or sell, or cause to be issued, delivered or sold, additional shares of capital stock or other equity interests in, or any security convertible into, or exercisable

 

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or exchangeable for, any capital stock of, or other equity interest in, such Transferred Subsidiary.  The Shares constitute all of the issued and outstanding shares of capital stock of the Transferred Subsidiaries.

 

(c)                                  There are no outstanding Contracts to which any of the Transferred Subsidiaries is a party or is otherwise bound to repurchase, redeem or otherwise acquire any shares of capital stock of such Transferred Subsidiary.  The Shares are not subject to and were not issued in violation of any purchase option, call option, right of first refusal, preemptive right, subscription right or similar right or any provision of Applicable Law or the Governing Documents of the Transferred Subsidiaries.

 

4.03                        Financial Information

 

Part 2 of Annex 4.03 sets forth a true and complete copy of the unaudited statement of net assets of the Animal Health Group as at December 31, 2013 (the Statement of Net Assets).  In addition, the Seller has made available to the Purchaser true and complete copies of (i) an unaudited statement of profits and loss for the Animal Health Group for the fiscal year ended December 31, 2013 and (ii) an unaudited statement of net assets of the Animal Health Group as of March 31, 2014 and the related unaudited statement of profits and loss for the year-to-date period then ended (collectively, together with the Statement of Net Assets, the Financial Statements).  The Statement of Net Assets has been prepared in accordance with the Statement of Net Asset Rules and the other Financial Statements have been prepared in accordance with Novartis’ Accounting Manual, which is aligned with IFRS.  The Financial Statements fairly present, in all material respects, the financial position and results of operations of the Animal Health Group, taken as a whole, as of the dates of and for the periods reflected in the Financial Statements.

 

4.04                        No Material Changes

 

Since December 31, 2013 and through the date of this Agreement, (a) the Seller and its Affiliates have conducted the Business in all material respects in the ordinary course of business, (b) there has been no event, occurrence or development which, individually or in the aggregate, has had or is reasonably likely to have a Material Adverse Effect and (c) the Seller and its Affiliates have not taken any action that, if taken during the period from the date hereof through the Closing, would constitute a breach of Sections 6.01(b)(iii), (iv), (v)(B), (vii), (xi), (xii), (xv) or (xvi).

 

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4.05                        Absence of Undisclosed Liabilities

 

The Business does not have any Liability, other than Liabilities (a) adequately reflected or reserved against in the Financial Statements, (b) incurred since December 31, 2013 in the ordinary course of business consistent with past practice (including actions permitted by Section 6.01), (c) arising under any Contract set forth in Section 4.08(a) of the Disclosure Schedule or not required to be so listed (other than as a result of a material breach or default thereunder), (d) disclosed in Section 4.05 of the Disclosure Schedule or in respect of the subject matters specifically addressed by the representations and warranties set forth in Sections 4.07, 4.12, 4.13, 4.14, or 4.15 or (e) which are not material to the Business taken as a whole.

 

4.06                        Real Property

 

(a)                                 (i) Section 4.06(a)(i) of the Disclosure Schedule sets forth a complete and correct list of the Transferred Owned Real Property and Transferred Leased Real Property (together, the Transferred Real Property) and (ii) Section 4.06(a)(ii) of the Disclosure Schedule sets forth a complete list of all material real property used in connection with the Business as of the date hereof and not included in the Transferred Real Property.

 

(b)                                 No Person other than Seller or its Affiliates is in possession of any Transferred Real Property and there are no other leases, licenses, concessions or other agreements (whether written or oral) granting to any Person the right of use or occupancy of any portion of the Transferred Real Property.  The Seller or its Affiliates have not received written (or, to the Seller’s Knowledge, oral) notice of any condemnation, eminent domain or similar proceedings pending or, to the Seller’s Knowledge, threatened, that would preclude or materially impair the use of any of the Transferred Real Property, or any material portion thereof, for the purposes for which they are currently used.  To the Seller’s Knowledge, the Transferred Real Property and improvements are in compliance with Applicable Laws, including those pertaining to zoning and building.

 

(c)                                  Seller or one of its Affiliates has good, legal and valid title to the Transferred Owned Real Property, free and clear of all Encumbrances, other than Permitted Encumbrances.

 

(d)                                 Except as set forth in Section 4.06(d) of the Disclosure Schedule:

 

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(i)                       Seller or one of its Affiliates holds a current and valid leasehold interest in each Transferred Leased Real Property, free and clear of all Encumbrances other than Permitted Encumbrances; and

 

(ii)                  no lessee of a Transferred Leased Real Property is in material breach or material default, nor is there any event that with the passing of time (that may not be cured by any action which may in compliance with the terms thereof be taken) or the giving of notice would be such a material breach or default, under the leases relating to the Transferred Leased Real Property, and to Seller’s Knowledge, no other party thereto is in material breach or material default thereunder, nor, to the Seller’s Knowledge, is there any event that with the passing of time (that may not be cured by any action which may in compliance with the terms thereof be taken) or the giving of notice would be such a material breach or default; and

 

(iii)               True, complete and correct copies of all leases (including any amendments, modifications, and renewals) relating to any Transferred Leased Real Property have been delivered or made available in the Virtual Data Room to the Purchaser.  No consent or approval from the landlord to any Transferred Leased Real Property is required to consummate the Proposed Transactions under any Transferred Leased Real Property.  No Transferred Leased Real Property has a lease with a related guarantee.

 

4.07                        Intellectual Property

 

(a)                                 Section 4.07(a) of the Disclosure Schedule sets forth, as of the date of this Agreement, a list of each item of Registered Intellectual Property Rights and each patent and patent application licensed to the Seller or its Affiliates that is Exclusively Related to the Business, including for each such item as applicable (i) the registration or application number, (ii) the identity of the owner, and (iii) the jurisdiction of issuance or registration.  With respect to each item of Registered Intellectual Property Rights, (x) such item is existing, and, to the Seller’s Knowledge, valid and enforceable and (y) all necessary fees due and documents and recordations with the relevant Governmental Entity in connection therewith have been paid and filed for the purposes of prosecuting, perfecting and maintaining such item, other than those that would not be reasonably likely, individually or in the aggregate with other such matters, to have a Material Adverse Effect.

 

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(b)                                 Section 4.07(b) of the Disclosure Schedule sets forth, as of the date of this Agreement, a list of each material (i) Transferred Intellectual Property Contract and (ii) other Contract involving the grant of Intellectual Property Rights to or from the Seller or its Affiliates and relating to the Business.

 

(c)                                  Except as set forth in Section 4.07(c) of the Disclosure Schedule, to the Seller’s Knowledge, no item of Registered Intellectual Property Rights is subject to any outstanding order, judgment or decree imposing restrictions on the ownership, validity, registerability or enforceability of such Registered Intellectual Property Right, other than those that would not be reasonably likely, individually or in the aggregate with other such matters, to have a Material Adverse Effect.

 

(d)                                 Except where a co-ownership interest with a third party is indicated in Section 4.07(a) of the Disclosure Schedule, the Seller and its Affiliates own all Registered Intellectual Property Rights and all other Owned Intellectual Property Rights, free and clear of Encumbrances other than Permitted Encumbrances.

 

(e)                                  There is no material judicial, administrative or arbitral action, suit, hearing, inquiry, nor to the Seller’s Knowledge or as to which Seller or its Affiliates have been notified in writing by any Governmental Entity, investigation or other proceeding (public or private) before any Governmental Entity pending against the Seller or any of its Affiliates alleging that the conduct of the Business with respect to the Products or other product candidates in full development, submission, or stewardship status under research programs of Seller or its Affiliates (including product candidates in such status as set forth on Annex 4.11 and document 3.3.1.2 of the Virtual Data Room), in each case, based on their current applicable stage of development, constitutes infringement, misappropriation or other violation of any Intellectual Property Rights of any third party.  To the Seller’s Knowledge, (i) there is no reasonable basis for any such allegation of infringement, misappropriation or violation and neither Seller nor its Affiliates have received any written notice that remains unresolved from any third party making any such allegation or challenging the validity, enforceability or ownership of any of the Owned Intellectual Property Rights, and (ii) except as set forth in Section 4.07(e) of the Disclosure Schedule, no third party is infringing, misappropriating or otherwise violating any of the Owned Intellectual Property Rights.

 

(f)                                   The Owned Intellectual Property Rights, the Transferred Intellectual Property Contracts, and the Intellectual Property Rights licensed under the Technology License Agreement, Transitional Trademark License Agreement and the

 

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Trademark License Agreement constitute all the Intellectual Property Rights necessary and sufficient for the Purchaser to conduct the Business from and after the Closing Date as conducted and proposed to be conducted by the Seller and its Affiliates, in each case, based on the current applicable stage of development, provided however, that the foregoing is not a representation of non-infringement, non-misappropriation, or any other non-violation of Intellectual Property Rights of any third party, which representation is solely set forth in Section 4.07(e) above.

 

(g)                                  All Intellectual Property Rights controlled by Seller and its Affiliates that are Exclusively Related to the Business with respect to those research programs of Seller and its Affiliates that are Exclusively Related to the Business, including all tangible embodiments thereof, are either included as part of the Transferred Assets or owned by the Transferred Subsidiaries (and such programs include all research programs, regardless of stage of development or commercialization, disclosed in the Virtual Data Room) unless otherwise identified as an Excluded Human Research Program (as defined in the Technology License Agreement).

 

(h)                                 Notwithstanding anything to the contrary, the Purchaser acknowledges and agrees that the only representations and warranties given in relation to matters relating to the Intellectual Property Rights specifically addressed in this Section 4.07, including the Transferred Intellectual Property Contracts, are those set out in this Section 4.07, and no other representation or warranty is given in relation to such matters.

 

4.08                        Contracts

 

(a)                                 Other than as set forth in Section 4.08(a) of the Disclosure Schedule, as of the date of this Agreement, no Transferred Subsidiary is a party to or bound by any Contract with a third party (other than any Contract related to Intellectual Property Rights) and no Transferred Contract (other than any Contract related to Intellectual Property Rights) is included in the Transferred Assets, that falls under any of the following categories:

 

(i)                       any Contract for the acquisition or sale of any material asset by a Transferred Subsidiary or the Seller or any member of the Seller’s Group to the extent Exclusively Related to the Business (other than, in each case, purchases of raw materials, and sales of inventory in the ordinary course) in each case involving assets the aggregate value of which exceeds $5,000,000;

 

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(ii)                  any supply or third party manufacturing Contract Exclusively Related to the Business with a total annual payment or financial commitment exceeding $5,000,000;

 

(iii)               any Contract that provides for the exclusive sale or distribution of any Product with a total annual payment or financial commitment exceeding $5,000,000;

 

(iv)                any Contract containing any non-compete provision that restricts the Seller or any of its Affiliates in any material respect from engaging or competing, to the extent related to the Business, in any line of business or in any geographic area, or from developing, manufacturing, marketing, distributing or selling any products or services or that contain any standstill or non-solicitation obligations on the Seller or any of its Affiliates that are in effect;

 

(v)                   any Contract involving aggregate consideration in excess of $5,000,000 that provides for the indemnification or the assumption of any Tax, environmental or other material Liability of any Person;

 

(vi)                any Contract not otherwise described in this Section 4.08(a) involving an annual aggregate consideration in the prior calendar year in excess of $5,000,000;

 

(vii)             any Contract relating to Indebtedness with respect to which the Seller or any of its Affiliates, in connection with the Business is an obligor in excess of $5,000,000 and which will not be terminated as of Closing, or which impose an Encumbrance other than a Permitted Encumbrance on any of the Transferred Assets or an Encumbrance that will be released on or before the Closing;

 

(viii)          any Contract pursuant to which the Seller or any of its Affiliates in connection with the Business has guaranteed the Indebtedness or Liabilities of any other Person which will not be terminated as of Closing with a value in excess of $5,000,000;

 

(ix)                all Contracts with any Governmental Entity involving an annual aggregate consideration in the prior calendar year in excess of $5,000,000;

 

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(x)                   (A) collective bargaining agreements or similar Contracts with any union, works council or other labor organization in any Material Employee Jurisdiction affecting the Business and (B) the Additional Labor Contracts, which shall be provided or made available to the Purchaser in accordance with Section 4.14(c);

 

(xi)                any partnership, joint venture, strategic alliance or similar Contract to the extent Exclusively Related to the Business;

 

(xii)             each Contract required to be disclosed in Section 4.07(b) of the Disclosure Schedule;

 

(xiii)          any Contract outside the ordinary course that contains an option or grant of any right of first refusal or right of first offer, right of first negotiation or similar right in favor of any Person in respect of the Business where such right is material to the Business taken as a whole; and

 

(xiv)         any other Contract which if terminated prior to Closing would reasonably be expected to be material to the Business taken as a whole.

 

The Contracts disclosed in Section 4.08(a) of the Disclosure Schedule (but excluding any Contracts disclosed in Section 4.07) are referred to as the Material Contracts.

 

(b)                                 There does not exist any breach or default nor is there any event that with the passing of time (that may not be cured by any action which may in compliance with the terms thereof be taken) or the giving of notice would constitute such a breach or default, on the part of the Seller or any its Affiliates (including the Transferred Subsidiaries), as applicable, under the terms of any Material Contract, and to Seller’s Knowledge, no other party to any Material Contract is in breach or default thereunder, nor is there any event that with the passing of time (that may not be cured by any action which may in compliance with the terms thereof be taken) or the giving of notice would constitute such a breach or default, except in each case for any such breaches or defaults that would not reasonably be expected to be material to the Business, taken as a whole.

 

(c)                                  The Seller has delivered or made available to the Purchaser in the Virtual Data Room a true, complete and correct copy of each Material Contract.

 

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4.09                        Sufficiency of Transferred Assets

 

Except as set forth in Section 4.09 of the Disclosure Schedule, the Transferred Assets and assets of the Transferred Subsidiaries, when taken together with the rights and services under the Ancillary Agreements and for the respective terms thereof, constitute all of the properties, assets and rights sufficient in all material respects to conduct and operate the Business after the Closing substantially as conducted by the Seller and its Affiliates as of December 31, 2013 and as of the date hereof.

 

4.10                        Compliance with Laws; Permits

 

Since January 1, 2012, the Business, taken as a whole, is, and has been, conducted in accordance with Applicable Law, except for violations of Applicable Law that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.  To the Seller’s Knowledge, neither the Seller nor any of its Affiliates has received any written notice from any Governmental Entity that it is not in compliance with any Applicable Law or is not in possession of any permits, licenses, certificates or other authorizations or consents of a Governmental Entity in each case as is necessary for the conduct of the Business in all material respects as presently conducted (each a Permit and, collectively, the Permits), other than the Product Approvals, except where such non-compliance or non-possession would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.  Notwithstanding the foregoing, neither the Seller nor any of its Affiliates makes any representation or warranty in this Section 4.10 with respect to the portions of the representations and warranties set forth in Sections 4.06, 4.07, 4.11, 4.12, 4.13, 4.14, 4.15 and 4.16 that address Applicable Law or Permits.

 

4.11                        Product Approvals

 

(a)                                 The Seller or one of its Affiliates is the registered or beneficial holder of each of the Product Approvals.  All Product Approvals held by Seller or its Affiliates are in full force and effect, except, in each case, where failure to be in full force and effect would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

(b)                                 Each Product marketed or sold under a Product Approval is manufactured, marketed and sold in all material respects in accordance with the specifications and standards contained in such Product Approval and the related Marketing Authorization Data and in accordance with Applicable Laws, except, in each case, where failure to comply would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

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(c)                                  Neither the Seller or any of its Affiliates has received any written or, to the Seller’s Knowledge, oral notice that any Governmental Entity with jurisdiction over the Products has commenced or will commence any action: (i) to withdraw the approval of any Product or otherwise revoke or materially amend any Product Approval or Marketing Authorization Data or (ii) enjoin production, marketing or sale of any Product except, in each case, where such action would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

(d)                                 All application and renewal fees due and payable with respect to all material Product Approvals have been paid, except where the failure to make such payment would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

4.12                        Taxes

 

(a)                                 Each (i) Transferred Subsidiary and each Tax Group to which it belongs, or has belonged, and (ii) member of the Seller’s Group, to the extent such Tax Return relates to the Transferred Assets, in each case, has timely filed all material Tax Returns required to be filed, and all such Tax Returns are complete and accurate in all material respects.  All material Taxes payable by or with respect to any Transferred Subsidiary, any Transferred Asset or the Business have been paid on a timely basis.

 

(b)                                 There are no Tax liens on the Transferred Assets or any assets of the Transferred Subsidiaries (other than Permitted Encumbrances).

 

(c)                                  No Transferred Subsidiary and no Tax Group to which a Transferred Subsidiary belongs is currently under audit or examination by a Taxing Authority, and to the Seller’s Knowledge no such audit or examination has been threatened in writing, that could result in the assessment of a material amount of Tax.  There is no written assessment by any Taxing Authority for additional Taxes against or in respect of the Transferred Assets or any Transferred Subsidiary which has not been paid in full or otherwise resolved without any payment required.

 

(d)                                 No Transferred Subsidiary has been a member within the previous five (5) taxable years of any Tax Group other than those entities set forth in Section 4.12(d) of the Disclosure Schedule.

 

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(e)                                  Except as set forth in Section 4.12(e) of the Disclosure Schedule, no Transferred Subsidiary, and no Tax Group to which a Transferred Subsidiary belongs, has granted or requested a waiver or extension of a limitation on any period for audit and examination or assessment and collection of Tax for any taxable period as to which Tax could be assessed.

 

(f)                                   No Taxing Authority has asserted any liability against any Transferred Subsidiary on account of any Liability for the Taxes of any other Person under U.S. Treasury Regulations Section 1.1502-6 (or any similar provision of Applicable Law), and no Transferred Subsidiary otherwise has any Liability for the Taxes of any other Person as a transferee or successor, by operation of law, assumption, Contract or otherwise.

 

(g)                                  Each Transferred Subsidiary has collected, withheld and paid all Taxes required to have been collected, withheld and paid in connection with amounts paid or owing to or from any employee, creditor, independent contractor or other third party in material compliance with Applicable Law.

 

(h)                                 No Transferred Subsidiary has made an election pursuant to U.S. Treasury Regulations Section 301.7701-3(c) to change its default entity classification for U.S. federal income tax purposes.

 

(i)                                     Novartis Finance Corporation is not a foreign person within the meaning of Section 1445 of the Code.

 

(j)                                    To the Seller’s Knowledge, no claim has been made in writing by a Taxing Authority in a jurisdiction where any Transferred Subsidiary does not file Tax Returns that such Transferred Subsidiary is or may be subject to taxation by that jurisdiction.

 

(k)                                 There is no taxable income of any Transferred Subsidiary that will be required under Applicable Law to be reported by the Purchaser or any of its Affiliates, including the Transferred Subsidiaries, for a taxable period beginning after the Closing Date which taxable income was realized (and reflects economic income) arising prior to the Closing Date.

 

(l)                                     No Transferred Subsidiary (i) has agreed to or is required to make any adjustment pursuant to Section 481(a) of the Code or any similar provision of Applicable Law, has filed any application presently pending with any Taxing Authority requesting permission for any changes in accounting methods, or has received

 

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written notice that any Taxing Authority has proposed any such adjustment, (ii) has executed or entered into a closing agreement pursuant to Section 7121 of the Code or any similar provision of state, local or non-U.S. law, (iii) has received any Tax exemptions, Tax holidays or other Tax reduction agreements or other special arrangements or concessions in any jurisdiction or (iv) is subject to any private letter ruling of the U.S. Internal Revenue Service (IRS) or comparable rulings of any Taxing Authority, in each case, that would (x) result in any item of income or gain economically accrued or earned prior to the Closing Date being recognized for tax purposes in a taxable period beginning after the Closing Date (y) any item of deduction or loss economically accrued or incurred after the Closing Date being recognized for Tax purposes in a taxable period ending on or before the Closing Date or (z) have a continuing effect after the Closing Date.

 

(m)                             No Transferred Subsidiary (i) has executed or filed a power of attorney with any Taxing Authority by or on behalf of any Transferred Subsidiary, (ii) has engaged in any “listed transaction” as defined in Treasury Regulation Section 1.6011-4(b)(2) or any similar provision of state, local or non-U.S. law, (iii) has, or has ever had, a permanent establishment or is, or has even been, subject to Tax in any country other than the country of its organization, (iv) is or has ever been a “controlled foreign corporation” within the meaning of Treasury Regulation Section 1.957-1 or (v) has constituted either a “distributing corporation” or a “controlled corporation” (within the meaning of Section 355(a)(1)(A) of the Code) in a distribution of stock qualifying for tax-free treatment under Section 355 of the Code in the two years prior to the date of this Agreement.

 

(n)                                 Each Transferred Subsidiary is in material compliance with all transfer pricing requirements in all jurisdictions in which the Transferred Subsidiaries do business.  None of the transactions between any Transferred Subsidiary and other related Persons has received written notice from any Taxing Authority of any material adjustment, apportionment, allocation or recharacterization under any Applicable Law with respect to Taxes, and all of such transactions have been effected in compliance with applicable transfer pricing requirements.

 

(o)                                 None of the Transferred Assets, or any other assets that are treated as transferred for U.S. Federal income tax purposes as a result of the Proposed Transactions, that, in each case, are transferred or treated as transferred by any person that is not a “United States person” within the meaning of section 7701(a)(30) of the Code, are “United States real property interests” within the meaning of section 897(c)(1) of the Code.

 

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(p)                                 None of the Transferred Assets is a capital item within the provisions of Part XV of the Value Added Tax Regulations 1995 (UK) (capital goods scheme).

 

(q)                                 All documents by virtue of which a Transferred Subsidiary and each Selling Affiliate (with respect to its conduct of the Business and any Transferred Asset) has any right, title or interest to or in a Transferred Asset, and which are in the possession of a Transferred Subsidiary or a Selling Affiliate, have been duly stamped where required to evidence that right, title or interest.

 

(r)                                    No Transferred Subsidiary or any Selling Affiliate (with respect to its conduct of the Business and any Transferred Asset) has been required to notify any transactions or arrangements under Part 7 of the Finance Act 2004 (UK) (disclosure of tax avoidance schemes), Schedule 11A of VATA (disclosure of avoidance schemes) or any equivalent special regime applicable to schemes and/or arrangements relating to Tax avoidance.

 

(s)                                   The implementation of the transactions contemplated by this Agreement will not give rise to any deemed disposal or realization of an asset by any Transferred Subsidiary, nor any degrouping liability in a Transferred Subsidiary with respect to an asset nor any deemed distribution from or contribution to the reserves of a Transferred Subsidiary.

 

(t)                                    The Shares of any Transferred Subsidiary organized in Canada, or any province thereof, are not “taxable Canadian property” for the purposes of the Income Tax Act (Canada).

 

(u)                                 The Purchaser acknowledges and agrees that the only representations and warranties given in relation to the Tax matters specifically addressed in this Section 4.12 are those set out in this Section 4.12 and no other representation or warranty is given in relation to such matters.

 

4.13                        Environmental Matters

 

(a)                                 To the Seller’s Knowledge, since January 1, 2012, each Selling Affiliate (with respect to its conduct of the Business and any Transferred Real Property) and Transferred Subsidiary is, and has been, in compliance in all material respects with all applicable Environmental Laws.

 

(b)                                 Each Transferred Subsidiary and each Selling Affiliate (with respect to its conduct of the Business and any Transferred Real Property) has obtained,

 

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maintained, and is in material compliance with all Permits required under applicable Environmental Laws (Environmental Permits) necessary to conduct its portion of the Business.

 

(c)                                  No Transferred Subsidiary nor any Selling Affiliate (with respect to its conduct of the Business and any Transferred Real Property) has received any written notice or claim alleging a material violation of or material liability under any Environmental Laws or Environmental Permits, other than notices or claims that have been resolved in a fashion requiring no further payments or no actions be performed or are no longer outstanding.

 

(d)                                 To the Seller’s Knowledge, there has been no actual or threatened release, spill, discharge, emission or disposal of any Hazardous Substance by any Transferred Subsidiary nor any Selling Affiliate, nor by any other Person, at or from any Transferred Real Property, or at or from any real property that was formerly owned, leased or operated by any Transferred Subsidiary, or any predecessor of any Transferred Subsidiary, that requires or may require investigation, assessment, cleanup, remediation or other corrective action that would reasonably be expected to result in the Business incurring material liabilities under Environmental Laws.

 

(e)                                  No Transferred Subsidiary nor any Selling Affiliate (with respect to its conduct of the Business and any Transferred Real Property) is a party to any pending, or to Seller’s Knowledge, threatened Proceedings or investigations relating to any Environmental Laws, other than Proceedings or investigations that would not reasonably be expected to result in the Business incurring material liabilities under Environmental Laws.

 

(f)                                   The Proposed Transactions contemplated by this Agreement do not require the consent of or filings with any Governmental Entity with respect to Environmental Matters or Environmental Permits prior to the Closing Date, the failure of which to obtain or file could materially and adversely affect the Business’ ability to operate following the Closing Date.

 

(g)                                  The Seller has delivered or made available in the Virtual Data Room to the Purchaser true, complete and correct copies of all environmental assessments, audits, studies, reports, and analyses with respect to the Business or Transferred Real Property and all material correspondence related to any material liabilities under Environmental Laws that have not been resolved in a fashion requiring no

 

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further payments or no actions be performed, to the extent such documentation is in the Seller’s possession, custody or control.

 

(h)                                 The Purchaser acknowledges and agrees that the only representations and warranties given in relation to the environmental matters specifically addressed in this Section 4.13 are those set out in this Section 4.13 and no other representation or warranty is given in relation to such matters nor does this Section 4.13 address any non-environmental regulatory or other matters.

 

(i)                                     The Parties agree that no provision in this Section 4.13, and no disclosure in Sections 4.13((a),(b),(c),(d),(e) or (f) of the Disclosure Schedule, shall affect the Seller’s obligations and responsibilities for the Environmental Liabilities described in Section 2.02(b)(iv) or set forth on Annex 10.02(a)(iii) (including those set forth on Annex 2.02(b)(iv)).

 

4.14                        Employee and Labor Matters

 

(a)                                 Section 4.14 of the Disclosure Schedule contains the following information as of March 31, 2014 in respect of each Business Employee (excluding temporary Business Employees) and each Transferred Subsidiary Employee (excluding temporary Transferred Subsidiary Employees) employed in the Material Employee Jurisdictions: (A) employee identification details (including job title and work location); (B) age; (C) employment status (part-time or full-time); (D) base salary; (E) employing entity; (F) target annual incentive for 2014; and (G) target long-term incentive for 2014; (collectively, the Employee Information).  As soon as reasonably practicable following the date hereof, but in no event later than the three (3) week anniversary of the date hereof, the Seller will provide or make available to the Purchaser the name and date of birth for each Business Employee and Transferred Subsidiary Employee.  As soon as reasonably practicable following the date hereof, but in no event later than the two (2) month anniversary of the date hereof (the Employee Reference Date), the Seller will provide or make available to the Purchaser (i) then-current Employee Information in respect of each Business Employee and each Transferred Subsidiary Employee employed outside of a Material Employee Jurisdiction and each temporary Business Employee and each temporary Transferred Subsidiary Employee: (ii) a job description, notice of termination periods and/or expiry dates of any fixed term contracts and/or details of severance entitlement and details of any bonus entitlements (other than any annual incentive or long-term incentive disclosed on Section 4.14 of the Disclosure Schedule) for each Business Employee and Transferred Subsidiary

 

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Employee; and (iii) details of any Business Employee or Transferred Subsidiary Employee who is absent from the Business on grounds of long term disability.  Section 4.14 of the Disclosure Schedule contains the termination notice periods applicable to each category or grade of Business Employee or Transferred Subsidiary Employee (as applicable).  Following the date hereof, the Seller shall reasonably cooperate to provide such additional information regarding the Business Employees and Transferred Subsidiary Employees as the Purchaser reasonably requests.

 

(b)                                 As of the date of this Agreement, there is not, and in the three (3) years prior to the date of this Agreement and to the Seller’s Knowledge in the five (5) years prior to the date of this Agreement, there has not been, nor is there pending or threatened, any labor strike, dispute, walkout, work stoppage, slow-down or lockout involving the Business.

 

(c)                                  Except as set forth in Section 4.14(c) of the Disclosure Schedule, neither the Seller nor any of its Affiliates is a party to or applies any collective bargaining agreement or similar Contract with a union, works council or other labor organization in a Material Employee Jurisdiction or is currently negotiating the terms of any collective bargaining agreement or similar Contract with any trade union, works council or labor organization in each case affecting the Business nor has there been in the last three (3) years a representation or recognition campaign by any trade union with respect to the Business.  As soon as reasonably practicable following the date hereof, but in no event later than the Employee Reference Date, the Seller will provide or make available to the Purchaser (i) any collective bargaining agreement or similar Contract with a union, works council or other labor organization affecting the Business outside of a Material Employee Jurisdiction and (ii) any social plan with a labor union, trade union, works council or labor organization affecting the Business, in each case to which the Seller or any of its Affiliates is a party or is then negotiating the terms (collectively, the Additional Labor Contracts).

 

(d)                                 The Seller and its Affiliates have complied in all material respects with their obligations under the WARN Act and other similar Applicable Laws with respect to the Business.  Except as set forth in Section 4.14(d) of the Disclosure Schedule, neither the Seller nor any of its Affiliates has, within the ninety (90) days prior to the date of this Agreement, closed any plant or facility, effectuated any layoffs of employees or implemented any early retirement, separation or similar program in each case with respect to the Business, nor has the Seller or

 

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any of its Affiliates announced any such action or program for the future with respect to the Business.

 

(e)                                  All Business Employees and Transferred Subsidiary Employees employed in the United States are employed on an “at will” basis and, subject to any participation by such Business Employees and Transferred Subsidiary Employees in any Benefit Plan that provides for severance payments or benefits, such Business Employees’ and Transferred Subsidiary Employees’ employment can be terminated at any time for any reason without any amounts being owed to such individual other than with respect to wages accrued before the termination. Seller’s and its Affiliates’ relationships with individuals in the Material Employee Jurisdictions who act on their own as contractors or as other service providers with respect to the Business can be terminated at any time for any reason without any amounts being owed to such individuals, other than with respect to compensation or benefits accrued before the notice of termination.

 

(f)                                   All individuals who perform services for the Seller or any of its Affiliates with respect to the Business and who have been classified as other than employees have been properly classified in all material respects.  Neither the Seller nor any of its Affiliates uses to any material extent the services of workers provided by third party contract labor suppliers, temporary employees or “leased employees” (as that term is defined in Section 414(n) of the Code) with respect to the Business.

 

(g)                                  The Seller and its Affiliates, with respect to Transferred Subsidiary Employees, Business Employees and former employees of the Business (A) are in material compliance with Applicable Law respecting employment, employment practices, terms and conditions of employment, occupational health, safety, wages, hours, benefits immigration, labor and the Immigration and Nationality Act 8 U.S.C Sections 1101 et seq. and its implementing regulations; and (B) have withheld and properly remitted to the appropriate Governmental Entity all amounts required by Applicable Law, collective bargaining agreements or the Non-U.S. Benefit Plans to be withheld from the wages, salaries or other payments to the Transferred Subsidiary Employees or the Business Employees or the former employees or current or former directors of the Transferred Subsidiaries.  Neither the Seller nor any of its Affiliates has sponsored any Business Employee or Transferred Subsidiary Employee for, or otherwise knowingly engaged any Business Employee or Transferred Subsidiary Employee working pursuant to, a non-immigrant visa.

 

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(h)                                 No later than the Employee Reference Date, the Seller will provide or make available to the Purchaser a current, accurate and complete copy of each material personnel policy, rule, or procedure (collectively, the Employee Policies) generally applicable to Business Employees and Transferred Subsidiary Employees.

 

(i)                                     Neither the Seller nor any of its Affiliates is a party to, or otherwise bound by, any consent decree or settlement agreement with, or citation by, any Governmental Entity relating to employees or employment practices with respect to the Business.

 

(j)                                    With respect to any of the Business Employees or Transferred Subsidiary Employees employed in a Material Employee Jurisdiction, and to the Seller’s Knowledge with respect to any of the Business Employees or Transferred Subsidiary Employees employed outside of a Material Employee Jurisdiction, the Seller or its Affiliates is not under a contractual or other obligation to increase rates of remuneration, except pursuant to any collective bargaining agreement or similar Contract affecting the Business, in each case disclosed pursuant to Section 4.14(c), or as required by Applicable Law.

 

(k)                                 Within the past three (3) years, there has not been any “transfer” of employees for the purposes of the Acquired Rights Directive 2001/23/EC into or out of any Transferred Subsidiary or (in respect of the Business) into or out of any Selling Affiliate.

 

(l)                                     The Purchaser acknowledges and agrees that the only representations and warranties given in relation to the employee and labor matters specifically addressed in this Section 4.14 are those set out in this Section 4.14 and Section 4.15 and no other representation or warranty is given in relation to such matters.

 

4.15                        Employee Benefits

 

(a)                                 Section 4.15(a) of the Disclosure Schedule contains a true, complete and correct list of each material Benefit Plan in the Material Employee Jurisdictions.

 

(b)                                 The Seller has, in relation to the Material Employee Jurisdictions, provided or made available to the Purchaser true, complete and correct copies of each material Benefit Plan (or, if not written, a written summary of its material terms), including all plan documents, trust agreements, annuity contracts,

 

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insurance contracts or other funding vehicles and all amendments thereto (collectively, the Benefit Plan Documents) and, no later than the Employee Reference Date, the Seller will provide or make available Benefit Plan Documents with respect to Benefit Plans sponsored or maintained outside of the Material Employee Jurisdictions and Benefit Plan Documents with respect to Benefit Plans sponsored or maintained in the Material Employee Jurisdictions that were not provided as of the date hereof.  None of the Seller or any of its Affiliates has made any express or implied promises or commitments to create any additional material Benefit Plan, agreement or arrangement, or to modify or change in any material way or terminate any existing Benefit Plan, other than with respect to a modification, change or termination required by Applicable Laws, including ERISA or the Code.

 

(c)                                  Except as set forth in Section 4.15(c) of the Disclosure Schedule, none of the Transferred Subsidiary Benefit Plans provide for or promise retiree or post-employment health, disability or life insurance or any other employee welfare benefits to any current or former employees, directors or consultants, except (i) as required under Section 601 et seq. of ERISA and Section 4980B of the Code and (ii) where the cost thereof is borne entirely by the employee, director or consultant (or his or her eligible dependents or beneficiaries).

 

(d)                                 Except as provided in Section 6.08 or Applicable Law, nothing contained in this Agreement or in any of the Benefit Plans will obligate the Purchaser to continue any Benefit Plan, provide any benefits under any of the Benefit Plans whatsoever to any Transferred Subsidiary Employee, Business Employee, or any former employee or current or former director of a Transferred Subsidiary, or beneficiary or dependent thereof, or to make any contributions to any Benefit Plan, other than a Transferred Subsidiary Benefit Plan, from and after the Closing.  Except as provided in Section 6.08 or Applicable Law, neither the Purchaser nor any of its Affiliates will incur any unfunded liabilities in relation to any Benefit Plan or any employee of the Seller or any of its Affiliates.

 

(e)                                  To the Seller’s Knowledge, there are no pending investigations by any Governmental Entity involving any Transferred Subsidiary Benefit Plan or any Benefit Plan for which the Purchaser will incur a Liability on or following Closing, no claims pending or threatened in writing (except for claims for benefits payable in the normal operation of such plans), suits or proceedings against any Transferred Subsidiary Benefit Plan or any Benefit Plan for which the Purchaser will incur a Liability on or following Closing or asserting any rights or claims to benefits under any Transferred Subsidiary Benefit Plan or any

 

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Benefit Plan for which the Purchaser will incur a Liability on or following Closing which could give rise to any liability, nor are there any facts that could give rise to any material liability for the Purchaser or any of its Affiliates in the event of such investigation, claim, suit or proceeding.

 

(f)                                   Except as set forth in Section 4.15(f) of the Disclosure Schedule or as provided for in this Agreement and except under the Retention Arrangements, neither the execution and delivery of this Agreement nor the transactions contemplated herein will (i) result in any payment becoming due to any Business Employee or Transferred Subsidiary Employee, (ii) increase any benefits for any Business Employee or Transferred Subsidiary Employee under any Benefit Plan or (iii) result in the acceleration of the time of payment, vesting or funding of any such benefit under any Benefit Plan. Except as set forth in Section 4.15(f) of the Disclosure Schedule, neither the Seller nor any of its Affiliates is a party to any contract or arrangement that would result, separately or in the aggregate, in any payment or benefit that could be an “excess parachute payment” within the meaning of Section 280G of the Code, and the consummation of the transaction contemplated by this Agreement will not be a factor causing payments to be made by the Seller or any of its Affiliates to be non-deductible (in whole or in part) under Section 280G of the Code.

 

(g)                                  U.S. Benefit Plans.

 

(i)                                     Each U.S. Benefit Plan is and except for any noncompliance for which all Liabilities have been satisfied, has been in, compliance (both as to documentation and administration) in all material respects with the terms of such U.S. Benefit Plan and all Applicable Laws.  Each U.S. Benefit Plan that is intended to be qualified under Section 401(a) of the Code or Section 401(k) of the Code has received a favorable determination letter from the IRS covering all of the provisions applicable to the U.S. Benefit Plan for which determination letters are available as of the date of this Agreement that the U.S. Benefit Plan is so qualified and each trust established in connection with any U.S. Benefit Plan which is intended to be exempt from federal income taxation under Section 501(a) of the Code has received a determination letter from the IRS that it is so exempt, and nothing has occurred and no condition exists which could reasonably be expected to result in the loss of such qualification or the imposition of any liability, penalty or tax under ERISA or the Code.

 

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(ii)                                  Except as set forth in Section 4.15(g)(ii) of the Disclosure Schedule none of the U.S. Benefit Plans is, and neither the Seller and its Subsidiaries, nor any ERISA Affiliate, has ever maintained, established, contributed to or had any obligation to contribute to: (i) a plan subject to Title IV or Section 302 of ERISA or Section 412, 430 or 4971 of the Code; or (ii) a “multiemployer plan” (within the meaning of section 3(37) of ERISA).  Neither the Seller and its Subsidiaries, nor any ERISA Affiliate, has incurred any liability under Title IV of ERISA which remains outstanding and unsatisfied and no liability under Title IV of ERISA is reasonably expected to be incurred by the Seller and its Subsidiaries or any ERISA Affiliate.

 

(iii)                               All contributions required to be made by Seller to each U.S. Benefit Plan which is a Transferred Subsidiary Benefit Plan or any Benefit Plan for which the Purchaser will incur a Liability on or following Closing have been made or paid in full on or before their due date thereof.  There has not been any prohibited transaction (within the meaning of Section 406 of ERISA or Section 4975 of the Code) with respect to a U.S. Benefit Plan which is a Transferred Subsidiary Benefit Plan or any Benefit Plan for which the Purchaser will incur a Liability on or following Closing. No litigation or governmental investigation is pending or threatened with respect to a U.S. Benefit Plan which is a Transferred Subsidiary Benefit Plan or any Benefit Plan for which the Purchaser will incur a Liability on or following Closing (other than routine claims for benefits) and no fact or event exists that could reasonably be expected to give rise to such action.

 

(iv)                              For the avoidance of doubt, none of the representations and warranties in this Section 4.15(g) is intended to apply to any Non-U.S. Benefit Plan.

 

(h)                                 Non-U.S. Benefit Plans.

 

(i)                                     Each Non-U.S. Benefit Plan is in compliance (both as to documentation and administration) in all material respects with the terms of such Non-U.S. Benefit Plan and all Applicable Laws of each jurisdiction in which such Non-U.S. Benefit Plan is maintained.  Each Non-U.S. Benefit Plan that is required to be registered with any Governmental Entity has been so registered and has been maintained in good standing with all applicable Governmental Entities and, if intended to qualify for special

 

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tax treatment, each Non-U.S. Benefit Plan meets all requirements for such treatment.

 

(ii)                                  The Seller and its Affiliates, (A) with respect to Transferred Subsidiary Employees and Business Employees, or former employees or current or former directors of the Transferred Subsidiaries are not liable under any applicable provisions of the Non-U.S. Benefit Plans and any Applicable Law for any arrears or wages, other than payments not yet due, or any penalty for failure to comply with the foregoing and (B) are not liable under any applicable provisions of the Non-U.S. Benefit Plans and any Applicable Laws for any payment to any trust or other fund or to any Governmental Entity with respect to unemployment compensation benefits, workers compensation or other benefits for or in respect of Transferred Subsidiary Employees or Business Employees or former employees or current or former directors of the Transferred Subsidiaries, other than payments not yet due. Nothing herein shall apply to the U.S. Transferred Employees.

 

(iii)                               All material contributions, premiums and payments that the Seller and its Affiliates, with respect to Business Employees and Transferred Subsidiary Employees, are required to make to or in respect of any Non-U.S. Benefit Plan in respect of the period on or before the date of this Agreement have been fully and timely paid when due or, where applicable, accrued in accordance with normal accounting practice and all benefits payable on death are fully insured. Other than in relation to the Non-U.S. Defined Benefit Pension Plans set forth on Section 4.15(h)(iii) of the Disclosure Schedule, no Transferred Subsidiary is or has been since 27 April 2004 associated or connected with (within the meanings given by the UK Pensions Act 2004) any person who is or has been an employer in relation to a UK occupational pension scheme which is not a money purchase scheme. No contribution notice or a financial support direction has been issued to the Seller or its Affiliates under the UK Pensions Act 2004, and, to the Seller’s Knowledge, there are no circumstances which could reasonably be expected to give rise to the issuing to the Transferred Subsidiaries by the United Kingdom Pensions Regulator of such a contribution notice or a financial support direction and there has been no correspondence between the Seller and its Affiliates and the UK Pensions Regulator except in the ordinary course of business. To the Seller’s Knowledge upon due inquiry no Transferred Subsidiary has any obligation in

 

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respect of the provision of an early retirement benefit or an enhanced pension on redundancy as a result of the operation of any regulations implementing the Acquired Rights Directive (2001/23/EC).

 

(iv)                              The Non-U.S. Defined Benefit Pension Plans are the only Non-U.S. Benefit Plans in respect of which non-money purchase retirement benefits are provided. Except in respect of the Non-U.S. Defined Benefit Pension Plans, no assurance or promise (oral or written) has been made or given to a Transferred Subsidiary Employee or Business Employee outside the US or former employee or current or former director of any Transferred Subsidiary outside the US of any particular level or amount of benefits to be provided for or in respect of him on retirement or death or any guaranteed investment return on contributions paid to the plan, in each case which is not fully insured.

 

(v)                                 For the avoidance of doubt, none of these representations and warranties in this Section 4.15(h) is intended to apply to any U.S. Benefit Plan.

 

(i)                                     The Purchaser acknowledges and agrees that the only representations and warranties given in relation to matters relating to the employee benefit plans specifically addressed in this Section 4.15 are those set out in this Section 4.14 and Section 4.15 and no other representation or warranty is given in relation to such matters.

 

4.16                        Proceedings

 

There is no Proceeding pending or, to the Seller’s Knowledge, threatened against any Transferred Subsidiary or, with respect to the Business, against the Seller or any of its Affiliates or any of their respective assets, properties, employees or products that would reasonably be expected to result in damages exceeding $5,000,000.

 

4.17                        Title to Tangible Personal Property

 

At the Closing, the Seller and its Affiliates (other than the Transferred Subsidiaries) will transfer to the Purchaser or its Affiliates title to the tangible personal property they own or lease that is included in the Transferred Assets, free and clear of all Encumbrances, except Permitted Encumbrances.  The Transferred Subsidiaries have title to all material tangible personal property they own or lease, free and clear of all Encumbrances, except Permitted Encumbrances.

 

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4.18                        Anti-Corruption

 

(a)                                 In the past five (5) years, neither the Seller nor its Affiliates, nor, to the Seller’s Knowledge, any Person or Representative acting on behalf of the Seller or its Affiliates, in any way relating to the Business, have violated the U.S. Foreign Corrupt Practices Act (15 U.S.C. §§ 78dd-1, et seq.), the U.K. Bribery Act 2010, or any similar anti-corruption laws that apply to the Business world-wide (collectively, Anti-corruption Laws).

 

(b)                                 In the past five (5) years, neither the Seller nor its Affiliates, nor, to the Seller’s Knowledge, any Representative or other Person acting on behalf of the Seller or its Affiliates, in connection with the Business, has, in violation of any applicable Anti-corruption Laws, offered, given, promised, or authorized the giving of anything of value, directly or indirectly, to any Person, including any Government Official:  (i) for the purpose of influencing any action or decision of a Government Official in his or her official capacity; (ii) for the purpose of inducing a Government Official to use his or her influence with any Governmental Entity to affect or influence any act or decision of such Governmental Entity to assist the Seller or its Affiliates in obtaining or retaining business or any business advantage for or with, or directing business to, any Person; (iii) where such action would constitute a bribe, kickback or illegal payment to assist the Seller or its Affiliates in obtaining or retaining business or any business advantage for or with, or directing business to, any Person; or (iv) where such action would violate any Anti-corruption Laws.

 

(c)                                  In the past five (5) years, neither the Seller nor its Affiliates, nor, to the Seller’s Knowledge, any Representative or other Person acting on behalf of the Seller or its Affiliates, in connection with the Business, solicited or accepted any payment, bribe, payoff, kickback or any other improper payment (including any improper contribution, loan or gift) in violation of any Anti-corruption Laws.

 

(d)                                 To the Seller’s Knowledge, there is not any beneficial ownership in the Business by any Governmental Official in any country, except for ownership of publicly traded securities of Seller.  For purposes of this Section 4.18, Government Official means: (i) any officer, employee or representative of any regional, federal, state, provincial, county or municipal government or government department, agency, or other division; (ii) any officer, employee or representative of any commercial enterprise that is owned or controlled by a government, including any state-owned or controlled veterinary or medical facility; (iii) any officer, employee or representative of any public international organization, such

 

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as the African Union, the International Monetary Fund, the United Nations or the World Bank; (iv) any person acting in an official capacity for any government or government entity, enterprise, or organization identified above; and (v) any political party, party official or candidate for political office.

 

(e)                                  The Seller is not aware of any known or alleged violations, enforcement actions, penalties or threats of penalty, whistleblower reports, governmental investigations or audits, voluntary disclosures to a government agency, or threatened or pending litigation over the past five (5) years relating to Anti-corruption Laws, involving the Seller or any of its Affiliates, or any Person or Representative acting on behalf of the Seller or any of its Affiliates, in any way relating to the Business.

 

(f)                                   In the past five (5) years, the Business has been subject to an anti-corruption compliance program designed to achieve compliance with Anti-corruption Laws.

 

4.19                        Trade Controls

 

(a)                                 Over the past five (5) years, neither the Seller nor any of its Affiliates, nor, to the Seller’s Knowledge, any Person or Representative acting on behalf of the Seller or any of its Affiliates, in any way relating to the Business, has taken any action in violation of any export control Law, trade or economic sanctions Law applicable in the United States, Switzerland, the European Union (EU), or any other jurisdiction, including, but not limited to: the Arms Export Control Act (22 U.S.C.A. § 2278), the Export Administration Act (50 U.S.C. App. §§ 2401-2420), the International Traffic in Arms Regulations (22 C.F.R. 120-130), the Export Administration Regulations (15 C.F.R. 730 et seq.), the Office of Foreign Assets Control Regulations (31 C.F.R. Chapter V), the Customs Laws of the United States (19 U.S.C. § 1 et seq.), the U.S. Customs and Border Protection regulations (19 C.F.R. Title 19, Chapter I), the International Emergency Economic Powers Act (50 U.S.C. § 1701-1706), the U.S. Commerce Department antiboycott regulations (15 C.F.R. 560), the U.S. Treasury Department antiboycott requirements (26 U.S.C. § 999), any other export control regulations issued by the agencies listed in Part 730 of the Export Administration Regulations, or any non-U.S. Laws or regulations of a similar nature (including but not limited to Council Regulation (EU) No. 428/2009, as amended) maintained or administered by the United Nations (UN), the competent authority of any Member State of the EU (including Her Majesty’s Treasury (HMT) or the Export Control Organisation (ECO) of the United Kingdom), the Swiss State Secretariat for Economic Affairs (SECO) or the Swiss Directorate of Public International Law, or by any other relevant sanctions authority (collectively, Trade Controls Laws).

 

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(b)                                 Neither the Seller nor any of its Affiliates, nor, to Seller’s Knowledge, any Person or Representative acting on behalf of the Seller or any of its Affiliates, in any way relating to the Business, is listed or is owned or controlled or acting on behalf of a Person, entity or body listed on the U.S. Office of Foreign Assets Control “Specially Designated Nationals and Blocked Persons” (SDN List), the U.S. Commerce Department’s “Denied Persons List” or “Entity List,” the U.S. Department of State’s “Debarred List,” the “Consolidated List of Financial Sanctions Targets” maintained by HMT, or any other list of restricted parties maintained by the U.S. Government, Swiss Government, UK Government, EU, and/or the UN.

 

(c)                                  All export licenses and other consents, notices, waivers, approvals, orders, authorizations, registrations, declarations, classifications and filings required for the export, import and re-export of the products of the Business, services, software and technology related to the Transferred Assets (Export Approvals) over the past five (5) years have been obtained, and the Seller and each of its Affiliates has in all material respects complied with the Export Approvals.

 

(d)                                 The Seller is not aware of any known or alleged violations, enforcement actions, penalties or threats of penalty, whistleblower reports, governmental investigations or audits, or threatened or pending litigation over the past five (5) years relating to Trade Controls Laws, involving any Affiliate, or to the Seller’s Knowledge involving any Person or Representative acting on behalf of the Seller or any of its Affiliates, in each case in any way relating to the Business, nor has the Seller or any Affiliate made any voluntary disclosures to any Governmental Entity relating to Trade Controls Laws in any way relating to the Business.

 

4.20                        Regulatory Compliance

 

(a)                                 Except as set forth on Section 4.20(a) of the Disclosure Schedule, all products that are being distributed, manufactured, sold, tested, developed and marketed by the Seller or its Affiliates in connection with the Business are being distributed, manufactured, sold and marketed in compliance in all material respects with all requirements under Applicable Law.

 

(b)                                 Except as set forth on Section 4.20(b) of the Disclosure Schedule, there have been no Proceedings with respect to, and neither the Seller nor any of its Affiliates have received any written communication regarding, a recall, suspension or discontinuance of any product of the Business.

 

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(c)                                  All animal studies and trials conducted by or, to the Seller’s Knowledge, on behalf of, the Seller or its Affiliates in connection with the Business that are required or regulated by the EMA/EC or the USDA or any other applicable Governmental Entity of the United States, Australia or Brazil have been since January 1, 2012, and are being, conducted in compliance in all material respects with the requirements of generally accepted animal testing practices and Applicable Law.

 

(d)                                 Since January 1, 2012, neither the Seller nor any of its Affiliates, with respect to the Business, has been subject to physical inspections or received written inspection reports from the EMA/EC or the USDA or any other applicable Governmental Entity of the United States, Australia or Brazil in which such Governmental Entity has asserted or alleged in writing that the operations of the Business is or was not in material compliance with any Applicable Laws.

 

4.21                        Customers; Suppliers

 

(a)                                 Section 4.21(a) of the Disclosure Schedule sets forth a true, complete and correct list of the ten largest customers of the Business (as measured by the dollar amount of sales revenue received therefrom) in respect of estimated sales for the twelve-month period ended December 31, 2013.  As of the date hereof, neither the Seller nor any of its Affiliates have received any written communication or, to the Seller’s Knowledge, other communication that any such customer has terminated, cancelled or significantly curtailed, or has finally determined that it will terminate, cancel or significantly curtail its business relationship with the Seller or any of its Affiliates.

 

(b)                                 Section 4.21(b) of the Disclosure Schedule sets forth a true, complete and correct list of the ten largest suppliers (by estimated total spending) for the Business (other than members of the Seller’s Group) for the twelve-month period ended December 31, 2013.  As of the date hereof, neither the Seller nor any of its Affiliates have received any written communication or, to Seller’s Knowledge, other communication that any such supplier has terminated, cancelled or significantly curtailed, or has finally determined that it will terminate, cancel or significantly curtail its business relationship with the Seller or any of its Affiliates.

 

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4.22                        Related Party Transactions

 

Section 4.22 of the Disclosure Schedule sets forth a true, complete and correct list of all Affiliate Contracts as of the date hereof.  Except as set forth in Section 4.22 of the Disclosure Schedule, or as contemplated by this Agreement or the Ancillary Agreements, none of the Affiliate Contracts will continue in effect following the Closing and neither the Seller nor its Affiliates will have any material business arrangement in connection with the Business.

 

ARTICLE V

 

REPRESENTATIONS AND WARRANTIES OF THE PURCHASER

 

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

 

5.01                        Organization and Standing

 

The Purchaser is duly incorporated, validly existing and in good standing under the laws of Indiana.  The Purchaser is duly qualified and in good standing to transact business in each jurisdiction in which it is required to be so qualified, except to the extent that the failure to be so qualified or in good standing, would not, individually or in the aggregate, reasonably be expected to have a material and adverse effect on the ability of the Purchaser or any of its Affiliates to consummate the Proposed Transactions.

 

5.02                        Authority; Execution and Delivery; Enforceability

 

The execution and delivery by the Purchaser of this Agreement and by the Purchaser and each Affiliate of the Purchaser of the Ancillary Agreements to which it is a party and the consummation by the Purchaser and such relevant Affiliates of the Acquisition and the other transactions contemplated hereby and thereby, as applicable, and performance by the Purchaser and its Affiliates hereunder and thereunder, have been duly authorized by all necessary corporate action and no further corporate action is required in connection therewith.  This Agreement has been duly executed and delivered by the Purchaser and, assuming that this Agreement has been duly authorized, executed and delivered by the Seller, this Agreement constitutes, and when executed, the Ancillary Agreements will constitute, the Purchaser’s and such Affiliates’ legal, valid and binding obligation, enforceable against the Purchaser in accordance with its terms, except as may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws affecting the

 

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enforcement of creditors’ rights generally, and by principles of equity regarding the availability of remedies (whether in a proceeding at law or in equity).

 

5.03                        No Conflicts

 

The execution, delivery and performance by the Purchaser and its Affiliates of this Agreement and the Ancillary Agreements to which they are a party, and the consummation of the transactions contemplated hereby and thereby do not: (i) violate any provision of the Governing Documents of the Purchaser or any of its Affiliates; (ii) conflict with, or result in the breach of, or constitute a material default under, or result in the termination, cancellation, modification or acceleration (whether after the filing of notice or the lapse of time or both) of any right or obligation of the Purchaser or any of its Affiliates under, or result in a loss of any benefit to which the Purchaser or any of its Affiliates is entitled under, any material contract; or (c) assuming the receipt of all consents, approvals, licenses, permits, orders and authorizations and the making of registrations, declarations and filings as described in Section 5.04 or required to be made or obtained prior to Closing by the Seller or its Affiliates, violate or result in a breach or constitute a default under any Judgment or Applicable Law applicable to the Purchaser or any of its Affiliates, other than, in the case of clauses (b) and (c): (i) as may result from any facts or circumstances relating solely to the Seller or any of its Affiliates (or its or their respective officers, directors, employees or agents); or (ii) any such violation or default that would not, individually or in the aggregate, reasonably be expected to have a material and adverse effect on the ability of the Purchaser or any of its Affiliates to consummate the Proposed Transactions.

 

5.04                        Consents and Approvals

 

No consent, approval, license, permit, order or authorization of, or registration, declaration or filing with, any Governmental Entity is required to be obtained or made by or with respect to the Purchaser or any of its Affiliates in connection with the execution, delivery and performance of this Agreement or the Ancillary Agreements or the consummation of the Acquisition or the other transactions contemplated hereby and thereby, other than: (a) the Required Notifications; (b) such consents, approvals, licenses, permits, orders, authorizations, registrations, declarations or filings (i) in relation to the Transfer of the Product Approvals or Product Applications or (ii) which, if not so made or obtained by the Purchaser or any of its Affiliates, would not, individually or in the aggregate, reasonably be expected to have a material and adverse effect on the ability of the Purchaser or any of its Affiliates to consummate the Proposed Transactions; or (c) as may be necessary as a result of any facts or circumstances relating solely to the Seller or any of its Affiliates (or its or their respective officers, directors, employees or agents).

 

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5.05                        Proceedings

 

There is no Proceeding pending or, to the Purchaser’s knowledge, threatened, against the Purchaser or any of its Affiliates, that would, individually or in the aggregate, reasonably be expected to have a material and adverse effect on the ability of the Purchaser or any of its Affiliates to consummate the Proposed Transactions.

 

5.06                        Investment Representations

 

(a)                                 The Purchaser is acquiring the Shares solely for the purpose of investment and not with a view to, or for sale in connection with, any distribution thereof in violation of any Applicable Law (including the Securities Act).  The Purchaser acknowledges that the Shares have not been registered under the Securities Act or under other Applicable Law, and that the Shares may not be transferred or sold except in accordance with the registration requirements of the Securities Act and other Applicable Law, or pursuant to an applicable exemption therefrom.  The Purchaser (either alone or together with its advisors) has sufficient knowledge and experience in financial and business matters (including the Business) so as to be capable of evaluating the merits and risks of its investment in the Shares and is capable of bearing the economic risks of such investment for an indefinite period of time.

 

(b)                                 The Purchaser and its representatives have been afforded adequate opportunity to meet with, ask questions of and receive answers from the management of the Seller and its Affiliates in connection with the determination by the Purchaser to enter into this Agreement and the Ancillary Agreements and consummate the transactions contemplated hereby and thereby.

 

5.07                        Financial Capability

 

The Purchaser has, and at Closing shall have, sufficient cash, financial resources and credit to pay the Initial Purchase Price and to make any other necessary payment contemplated hereunder and under the Ancillary Agreements, including fees and expenses in connection with the consummation of the Proposed Transactions.  The Purchaser acknowledges that its obligation to consummate the Proposed Transactions is not and will not be subject to the receipt by the Purchaser of any financing or the consummation of any other transaction.

 

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5.08                        Solvency

 

Assuming satisfaction of the conditions to the Purchaser’s obligation to consummate the transactions contemplated by this Agreement, or waiver of such conditions, and after giving effect to the transactions contemplated by this Agreement, including the payment of the Finally Determined Purchase Price, payment of all amounts required to be paid in connection with the consummation of the transactions contemplated hereby, and payment of all related fees and expenses, each of the Purchaser and its Affiliates will be Solvent as of the Closing Date and immediately after the consummation of the transactions contemplated hereby.

 

5.09                        Brokers or Finders

 

The Purchaser will be solely responsible for any commission, finder’s fee or other fees and expenses for services rendered by any broker, finder, financial advisor or investment bank in connection with the Proposed Transactions based on arrangements made by the Purchaser or any of its Affiliates.

 

5.10                        Disclaimer of Other Representations and Warranties

 

THE PURCHASER ACKNOWLEDGES AND AGREES THAT, EXCEPT AS EXPLICITLY SET FORTH IN ARTICLE III AND ARTICLE IV, NEITHER THE SELLER NOR ANY OF THE SELLER’S AFFILIATES (NOR ANY OF ITS OR THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES OR AGENTS) MAKES OR HAS MADE ANY OTHER REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AT LAW OR IN EQUITY, IN RESPECT OF THE SHARES OR THE TRANSFERRED ASSETS, THE TRANSFERRED SUBSIDIARIES, THE ASSUMED LIABILITIES OR THE BUSINESS AS CONDUCTED BY EACH OF THEM (INCLUDING ITS FINANCIAL PERFORMANCE), INCLUDING WITH RESPECT TO: (I) MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE (INCLUDING AS RELATES TO THE PRODUCTS); (II) THE USE OR OPERATION OF THE TRANSFERRED SUBSIDIARIES, THE TRANSFERRED ASSETS OR THE BUSINESS BY THE PURCHASER AFTER THE CLOSING; OR (III) THE PROBABLE SUCCESS OR PROFITABILITY OF THE TRANSFERRED SUBSIDIARIES, THE TRANSFERRED ASSETS OR THE BUSINESS AFTER CLOSING, AND EACH AND EVERY SUCH OTHER REPRESENTATION OR WARRANTY IS HEREBY EXPRESSLY DISCLAIMED.

 

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ARTICLE VI

 

COVENANTS

 

6.01                        Conduct of Business

 

(a)                                 The Seller covenants and agrees that, except as required by Applicable Law, as disclosed in Annex 6.01 or as required, permitted or contemplated by the terms of this Agreement or any Ancillary Agreement, from the date of this Agreement to the Closing Date, the Seller shall and shall cause each of its Affiliates to:

 

(i)                                     cause the Business to be conducted and operated in the ordinary course;

 

(ii)                                  Subject to Section 6.01(b), and the last sentence of Section 6.14, use its commercially reasonable best efforts to (A) keep available the services of the officers and employees of the Business in the ordinary course consistent with past practice, including by not transferring manufacturing employees from the Business to Seller’s human business other than pursuant to an employee request (without solicitation) in the ordinary course of business (it being agreed that the Seller and its Affiliates shall not be required to make retention or similar payments outside the ordinary course), and (B) preserve intact its existing relationships with customers, suppliers, distributors, licensors and licensees having material business relationships with the Business in the ordinary course consistent with past practice; and

 

(iii)                               pay all maintenance and similar fees and take such other customary actions required in connection with the prosecution and maintenance of Registered Intellectual Property Rights in the ordinary course of business consistent with past practice.

 

(b)                                 To the extent permitted by Applicable Law (including applicable Antitrust Laws), and except as required, permitted or disclosed in Annex 6.01 or as required, permitted or contemplated by the terms of this Agreement or any Ancillary Agreement, the Seller shall not and shall cause its Affiliates not to do any of the following without the prior written consent of the Purchaser, such consent not to be unreasonably withheld, delayed or conditioned:

 

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(i)                                     amend or otherwise modify the Governing Documents of any Transferred Subsidiary in a manner adverse to the Business;

 

(ii)                                  issue, sell, pledge transfer, repurchase or redeem (other than for cash) or propose to issue, sell, pledge or transfer, repurchase or redeem (other than for cash) any shares of capital stock or other equity interest of any Transferred Subsidiary, or securities convertible into or exchangeable for, or options with respect to, or warrants to purchase or rights to subscribe for, shares of capital stock of any Transferred Subsidiary;

 

(iii)                               adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization, bankruptcy or other reorganization under Applicable Law of any Transferred Subsidiary or Selling Affiliate;

 

(iv)                              except in the ordinary course consistent with past practice, incur, create or assume any Encumbrance on any of the Transferred Assets or the assets of the Transferred Subsidiaries (other than the Excluded Assets), other than a Permitted Encumbrance, or an Encumbrance that will be released on or prior to the Closing;

 

(v)                                 except (x) in the ordinary course consistent with past practice (including any sale of inventory) or (y) for any Excluded Asset or Transferred Intellectual Property Rights (which are covered by clause (vi) below): (A) sell, lease, license, transfer or dispose of any tangible assets located at the Vacaville facility with a market value exceeding $1,000,000 in the aggregate; or (B) sell, lease, license, transfer or dispose of any of the Transferred Assets or assets of a Transferred Subsidiary, in each case that are material;

 

(vi)                              except in the ordinary course consistent with past practice (including any sale of inventory), sell, lease, license, transfer or dispose of any of Transferred Intellectual Property Rights (other than, for the avoidance of doubt, any Excluded Asset);

 

(vii)                           make any material change with respect to the Transferred Subsidiaries’ accounting practices, policies, principles, methods or procedures, including revenue recognition policies, other than as required by IFRS or a Governmental Entity, or as are necessary to conform with the accounting

 

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practices or policy used by the Seller or its Affiliates (in either case, following notice to the Purchaser);

 

(viii)                        settle any material claims, actions, arbitrations, disputes or other Proceedings involving the Business, any Transferred Subsidiary or Transferred Asset other than waivers, releases, compromises or settlements in the ordinary course of business or that involve only the payment of monetary damages not in excess of $5,000,000 in the aggregate;

 

(ix)                              other than in the ordinary course of business consistent with past practice, adopt, establish, enter into, amend or terminate any Benefit Plan or any plan, agreement, program, policy, trust, fund or other arrangement that would be a Benefit Plan if it were in existence as of the date of this Agreement;

 

(x)                                 other than in the ordinary course of business consistent with past practice (including newly hired employees, promotions, or annual raises consistent with past practice) (A) make or commit to make any material changes to the compensation or benefits of the Business Employees and the Transferred Subsidiary Employees in each case in circumstances which are likely to increase in aggregate the total staff costs of the Business by more than three percent (3%) per annum; (B) make any change or commit to make any change to the terms of any redundancy policy or practice applying to the Business Employees and the Transferred Subsidiary Employees (including amounts payable on redundancy); (C) take any steps to employ or offer to employ or engage any new persons on a permanent basis fully or part time within the Business (including by way of moving employees employed in any other part of the Seller’s Group into the Business), other than as necessary to replace a Business Employee or a Transferred Subsidiary Employee whose employment terminates; or (D) terminate the employment of any Transferred Subsidiary Employee or Business Employee, in each case at the level of Global Job Family Architecture 2 or above, other than for cause, or transfer any Business Employee or Transferred Subsidiary Employee, in each case at the level of Global Job Family Architecture 2 or above, from the Business to any other business conducted by the Seller or any of its Affiliates;

 

(xi)                              with respect to the Business, any Transferred Subsidiary or Transferred Asset, incur or modify any Indebtedness or assume, guarantee or

 

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otherwise become responsible for the obligations of, or make any loans, capital contributions or advances of any money or other property to, any other Person, other than Indebtedness incurred, assumed or guaranteed in the ordinary course of business in amounts not in excess of $10,000,000 in the aggregate or which will terminate on or before the Closing;

 

(xii)                           (A) amend, terminate, assign or waive any material right under any Material Contract other than in the ordinary course of business consistent with past practice, or (B) except in the ordinary course of business consistent with past practice, enter into any agreement that, if existing on the date of this Agreement, would be a Material Contract;

 

(xiii)                        incur or authorize any capital expenditures with respect to the Business, except for capital expenditures pursuant to (A) a business or capital expenditure plan made available to the Purchaser in folder 1.1.4.2 of the Virtual Data Room, (B) that are set forth in Annex 6.01 or (C) which do not exceed $10,000,000 in the aggregate;

 

(xiv)                       with respect to the Business, (A) make, change or revoke any Tax election, (B) amend any Tax Return, (C) settle or compromise any Tax Claim or Liability, (D) change (or make a request to any Taxing Authority to change) any method of accounting for Tax purposes, (E) waive or extend any statute of limitations period in respect of Taxes, (F) surrender any right to claim a refund of Taxes or (G) enter into any closing agreement with respect to Taxes with any Taxing Authority, in each case, to the extent (x) related to any Transferred Subsidiary or any Transferred Asset and (y) reasonably expected at the time made or effected to result in an increase in any liability to Taxes in respect of any Transferred Subsidiary or any Transferred Asset in a Tax period (or portion of a Straddle Period) beginning after the Closing Date of more than $5,000,000 in the aggregate;

 

(xv)                          enter into any commitment to any Governmental Entity that is reasonably likely to give rise to a Liability of any Transferred Subsidiary in excess of $10,000,000 or would reasonably be expected to materially alter the operations of the Business from and after the Closing (without prejudice, for the avoidance of doubt, to the obligations of the Purchaser under Section 6.07);

 

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(xvi)                       sell or deliver products outside the ordinary course of business in a manner constituting “channel stuffing” or “front loading” of products (it being understood that launches and relaunches of products are generally subject to fluctuation in levels of sales and inventory levels); or

 

(xvii)                    resolve, authorize, agree or commit to do any of the foregoing.

 

(c)                                  Notwithstanding anything to the contrary contained in this Agreement, each Transferred Subsidiary shall be permitted to declare and pay cash dividends and make cash distributions to the Seller or any of its Affiliates prior to the Closing Date.  Additionally, notwithstanding anything to the contrary set forth in this Section 6.01, the Seller may, at any time prior to the Closing, take, or cause its Affiliates to take, (i) the actions contemplated in Section 2.01(d) and (ii) any action reasonably undertaken by any the Seller or its Affiliates in an emergency or disaster situation with the intention of minimizing any adverse effect of such situation in relation to the Business.

 

6.02                        Access to Information

 

(a)                                 Access prior to Closing. Seller shall, and shall cause its Affiliates to, until the earlier of the Closing Date and the date this Agreement is terminated pursuant to the terms hereof, upon reasonable notice from the Purchaser, provide to Representatives and personnel of the Purchaser (a list of such Representatives and personnel to be provided by the Purchaser to, and approved by, the Seller in advance of any access; provided that such approval shall not be unreasonably withheld, conditioned or delayed), during reasonable business hours or at such times as agreed between the Seller and the Purchaser (and taking into account the day-to-day duties of the personnel of the Seller and its Affiliates):

 

(i)                                     reasonable access to the Transferred Real Property, Transferred Books and Records and the books and records of the Transferred Subsidiaries, permits, work papers (other than work papers of any Tax Group of which Seller or any Affiliate of Seller is a member unless such work papers are Exclusively Related to the Business), Contracts and other assets in each case of the Business, in each case solely to the extent reasonably required for the purpose of preparing to operate the Business following the Closing and subject in all cases to compliance with all applicable security requirements or other limitations on access imposed by Applicable Law or under any lease;

 

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(ii)                                  reasonable access to the management team and other key employees and personnel of the Business (including, without limitation, employees and personnel involved in the manufacturing operations, human resources, and sales and marketing functions of the Business) solely to the extent reasonably required for the purposes of preparing to operate the Business following the Closing and subject in all cases to Applicable Law; and

 

(iii)                               reasonable access to such additional financial and operating data solely to the extent relating to the Business as the Purchaser may from time to time reasonably request and solely for purposes of preparing to operate the Business following the Closing;

 

provided that any such access or furnishing of information shall be at the Purchaser’s expense, under the supervision of the Seller’s or its Affiliates’ personnel, and in such manner as not to interfere unreasonably with the businesses, personnel or operations of Seller or any of its Affiliates; provided, further, that (A) the Purchaser shall not, without the prior written consent of the Seller (not to be unreasonably withheld or delayed), contact any customer, client, vendor, employee, supplier or competitor of the Business (other than customers, clients, vendors, suppliers and competitors of the Purchaser or its Affiliates in connection with Purchaser’s business and the impact of the Acquisition thereon), (B) the auditors and accountants of the Seller or any of its Affiliates shall not be obliged to make any work papers available to any Person except in accordance with such auditors’ and accountants’ normal disclosure procedures and then only after such Person has signed a customary agreement relating to such access to work papers in form and substance reasonably acceptable to such auditors or accountants, and (C) the Seller shall be entitled to restrict such access, (x) as determined, in its reasonable discretion, to be appropriate to ensure compliance with any Applicable Laws (including Antitrust Laws), and (y) to preserve any applicable attorney client privilege and to comply with contractual confidentiality obligations. Notwithstanding anything to the contrary contained herein, prior to the Closing, the Purchaser and its Representatives shall not, without the prior written consent of the Seller (which may be withheld in the Seller’s sole discretion), be entitled to conduct any intrusive indoor or outdoor sampling or testing at the Transferred Real Property or any other property associated or affiliated in any way with the Seller or the Business.

 

(b)                                 Access after Closing. For a period of ten (10) years after the Closing, the Purchaser shall: (i) retain the Transferred Books and Records and all other books

 

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and records related to the Business held by the Purchaser’s Group, including those held by or relating to the Transferred Subsidiaries for periods prior to the Closing; and (ii) upon reasonable notice and during normal business hours, cooperate with and provide the Seller, members of the Seller’s Group, and the officers, employees, agents and representatives of the Seller and members of the Seller’s Group reasonable access (including the right to make copies at the Seller’s expense or the expense of any member of the Seller’s Group) to such books and records, including as may be necessary for the preparation of financial statements, regulatory filings, Tax Returns, or in connection with any Proceedings or claims.  The Seller and members of the Seller’s Group shall be entitled, at their expense and subject to reasonable and customary confidentiality undertakings, to make copies of the books and records to which they are entitled access pursuant to this Section 6.02.

 

6.03                        Confidentiality

 

(a)                                 From and after the date of this Agreement until the Closing, any information provided hereunder by or on behalf of any Party hereto, the existence of this Agreement and the Ancillary Agreements and the terms hereof and thereof, shall be governed by the terms of the Confidentiality Agreement.  The Confidentiality Agreement shall terminate at the Closing and shall survive the earlier termination of this Agreement in accordance with its terms.

 

(b)                                 From and after Closing, the Seller shall hold in strict confidence, and (subject to this Agreement and the Ancillary Agreements) not use except as expressly agreed in writing by the Purchaser or its Affiliates, any non-public information of the Business, any Transferred Subsidiary, or included in the Transferred Assets or Assumed Liabilities, and in each case use the standard of care reasonably necessary to prevent the unauthorized use, dissemination or disclosure of such information (provided that any such information that otherwise meets the standard set forth in clause (i), (ii), or (iii) of the definition of “Confidential Information” shall not be subject to this Section 6.03(b)).

 

(c)                                  Each of the Parties and its respective Affiliates and Representatives may disclose Confidential Information or non-public information to the extent required by Applicable Law or as requested by a Governmental Entity; provided that in the event that the disclosure of such information is so required or requested by any Applicable Law or Governmental Entity, the Party requesting to provide such Confidential Information will provide the other Party with prompt notice if permitted to do so by Applicable Law or Governmental Entity so that such other

 

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Party may seek an appropriate protective order or similar relief or, if appropriate, waive compliance with the provisions of this Section 6.03.  The Purchaser or the Seller will, upon request, and if permitted to do so by Applicable Law or by such applicable Governmental Entity, use reasonable best efforts to assist the other Party in obtaining such a protective order or relief.  Disclosure of any Confidential Information pursuant to any such order or requirement of Applicable Law or Governmental Entity shall not be deemed to render such Confidential Information non-confidential.

 

(d)                                 The Parties shall be responsible for any breach of the terms of this Section 6.03 by the respective Party’s Representatives.

 

6.04                        Director Resignations

 

At the Closing, the Seller shall cause to be delivered to the Purchaser duly signed resignations (or evidence that such directors have been removed from office) of those directors of the Transferred Subsidiaries who are designated by the Purchaser to the Seller in writing at least ten (10) Business Days prior to the Closing.

 

6.05                        Transfer of Product Approvals and Product Applications

 

The Parties acknowledge that the Transfer of Product Approvals and Product Applications to the Purchaser may be subject to the approval of applicable Governmental Entities, and that, notwithstanding anything in this Agreement to the contrary, each Product Approval and Product Application shall continue to be held by the relevant member of the Seller’s Group from the Closing Date until the relevant PA Transfer Date. Without prejudice to the foregoing, the Parties acknowledge that Annex 6.05 sets forth their respective obligations with respect to the Transfer of Product Approvals and Product Applications to the Purchaser.

 

6.06                        Transfer of Asset Transferred Real Property

 

The Parties acknowledge and agree that Annex 6.06 sets forth their respective obligations with respect to the Transfer of Asset Transferred Real Properties to the Purchaser.

 

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6.07                        Efforts; Certain Regulatory Authorizations and Consents

 

(a)                                 Subject to Section 2.08(a), Section 6.05, Section 6.07(e), and the last sentence of Section 6.14 below, each of the Parties will cooperate and use their respective reasonable best efforts to take, or cause to be taken, or do, or cause to be done, all things necessary, proper or advisable to satisfy, or cause to be satisfied, all conditions to the obligations of the Parties under this Agreement over which it has control or influence, and to cause the Acquisition to be consummated as promptly as practicable in accordance with the terms hereof, including but not limited to, using reasonable best efforts to secure as promptly as practicable all consents, approvals, waivers, authorizations and Permit transfers required prior to Closing.

 

(b)                                 Notwithstanding anything herein to the contrary, each of the Seller and the Purchaser agree that the only notifications and approvals required or advisable to be filed and obtained under any applicable antitrust or competition laws or regulations in any jurisdiction (collectively, the Antitrust Laws) in connection with the Proposed Transactions are the filings and corresponding approvals in the following jurisdictions: the United States, the European Union, Japan, Brazil, Colombia, South Africa, Ukraine and, if the Parties agree, Vietnam (the Required Notifications). The Purchaser shall have primary responsibility for obtaining all consents, approvals or actions of any Governmental Entity which are required in connection with the Required Notifications.

 

(c)                                  The Purchaser and, where applicable, the Seller shall prepare and file the Required Notification in respect of the HSR Act within fifteen (15) Business Days of the date hereof and, in respect of the other Required Notifications, as soon as practicable after the date hereof.

 

(d)                                 The Purchaser, on the one hand, and the Seller, on the other hand, shall each be responsible for paying its own filing fees in connection with filing the Required Notifications.

 

(e)                                  Without limiting the generality of the Purchaser’s covenants otherwise set out in this Section 6.07, the Purchaser agrees: (i) to use its reasonable best efforts and to take any and all steps necessary to avoid and eliminate each and every impediment under any Antitrust Law that may be asserted by any Governmental Entity or any other Person so as to enable the Parties to consummate the Proposed Transactions as promptly as practicable, including proposing, negotiating, committing to and effecting, by consent decree, hold separate orders, or

 

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otherwise, the sale, divestiture or disposition of: (x) such of its assets, properties or businesses; or (y) the assets, properties or businesses to be acquired by it pursuant hereto, and the entrance into such other arrangements, as may be necessary or advisable in order to avoid the entry of, and the commencement of litigation seeking the entry of, or to effect the dissolution of, any injunction, temporary restraining order or other order in any Proceeding (including before any Governmental Entity), that would have the effect of delaying or preventing the consummation of the Proposed Transactions; and (ii) that it shall (at its sole cost and expense, but subject to Sections 6.07(f) and (h) below defend through litigation on the merits any claim asserted in court by any Person in order to avoid entry of, or to have vacated or terminated, any decree, order or judgment (whether temporary, preliminary or permanent) that would have the effect of delaying or preventing the consummation of the Proposed Transactions; provided that such litigation shall in no way limit the obligation of the Purchaser to use its reasonable best efforts, and to take any and all steps necessary to eliminate each and every impediment under any Antitrust Law to consummate the Proposed Transactions as promptly as practicable and in any event prior to the Drop-Dead Date.  Notwithstanding the foregoing, nothing contained in this Agreement shall require the Purchaser, the Seller or their respective Affiliates to take, or cause to be taken, any action with respect to the divestiture of any assets, properties or businesses of the Seller or any of its Affiliates, or the Purchaser or any of its Affiliates (including the Transferred Subsidiaries), or any combination thereof, that is not conditioned on the consummation of the Acquisition.

 

(f)                                   To the extent permitted by Applicable Law, each Party shall promptly notify the other of any communication (including oral communications) it or any of its Affiliates receives from any Governmental Entity relating to the matters that are the subject of this Agreement and permit the other to review in advance any proposed communication by such Party to any Governmental Entity.  To the extent permitted by Applicable Law, neither of the Parties shall participate in or agree to participate in any meeting with any Governmental Entity in respect of any filings, investigation (including any settlement of the investigation), litigation or other inquiry related to the Required Notifications unless it consults with the other in advance.  Each Party will coordinate and cooperate fully with each other in exchanging such information and providing such assistance as the other may reasonably request in connection with the foregoing and in seeking early termination of any applicable waiting periods under any Antitrust Law (including under the HSR Act).  Subject to the confidentiality provisions of the Confidentiality Agreement, the Parties will provide each other with copies of all

 

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correspondence, filings or communications between them or any of their representatives, on the one hand, and any Governmental Entity or members of its staff, on the other hand, with respect to this Agreement and the transactions contemplated by this Agreement; provided that materials may be redacted by the Seller: (i) to remove references concerning valuation of the Transferred Subsidiaries, Transferred Assets, Excluded Assets or Assumed Liabilities; (ii) as necessary to comply with contractual arrangements; and (iii) as necessary to address reasonable attorney-client or other privilege or confidentiality concerns.

 

(g)                                  Notwithstanding anything in this Agreement to the contrary, with respect to the matters covered in this Section 6.07, it is agreed that the Purchaser, after consulting with the Seller and considering the Seller’s views in good faith, shall make all decisions, lead all discussions, negotiations and other proceedings, and coordinate all activities and any requests that may be made by, or any actions, consents, undertakings, approvals, waivers or authorizations that may be sought by or from, any Governmental Entity, including determining the strategy and manner in which to contest or otherwise respond, by litigation or otherwise, to objections to, or proceedings or other actions challenging, the consummation of the Proposed Transactions.  At the Purchaser’s request and at the Purchaser’s sole cost and expense, the Seller agrees to take all reasonable actions the Purchaser reasonably deems prudent in order to reasonably assist the Purchaser in obtaining any actions, consents, undertakings, approvals, waivers or authorizations by or from any Governmental Entity for or in connection with, and to reasonably assist the Purchaser in litigating or otherwise contesting any objections to or proceedings or other actions challenging, the consummation of the Proposed Transactions.  The Seller shall not permit any of its Representatives to participate in any meeting with any Governmental Entity in respect of any filings, investigation, proceeding or other matters relating to this Agreement or the Proposed Transactions unless the Seller consults with the Purchaser in advance and, to the extent permitted by such Governmental Entity, gives the Purchaser the opportunity to attend and lead the discussions at such meeting.

 

(h)                                 The Purchaser shall not enter into any transaction, or any Contract to effect any transaction that would reasonably be expected to increase the time required or reduce the Parties’ respective abilities, to: (i) obtain any approval under the Antitrust Laws, including the approvals required to be obtained pursuant to Sections 8.01(b) and 8.02(b); (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 have the effect of delaying in any material respect or preventing the consummation of the Proposed

 

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Transactions; or (iii) obtain all authorizations, consents, orders and approvals of Governmental Entities necessary for the consummation of the Proposed Transactions.

 

6.08                        Employee Matters

 

(a)                                 Employment of Business Employees.  The Parties intend that the Business Employees will become employees of the Purchaser or its Affiliates as part of the transactions contemplated by this Agreement.  Accordingly, if the employment of any Business Employee does not automatically transfer to the Purchaser or one of its Affiliates in accordance with Applicable Law, the Purchaser shall offer, or cause one of its Affiliates to offer, employment to each such Business Employee in a substantially comparable position with the Purchaser’s Group on terms and conditions that comply with this Section 6.08.  Such offer of employment shall be made no later than thirty (30) days before the Closing Date (or such longer period of time before the Closing Date as shall be required in order to comply with any applicable Contract or Applicable Law) and shall be stated to be conditional on Closing and to take effect on the Closing Date immediately following the Closing.  The Parties acknowledge and agree that (i) any Deferred Employee shall be treated for all purposes under this Agreement as if such Deferred Employee were a Business Employee, to the extent applicable; (ii) the Purchaser’s obligations under this Section 6.08 shall apply in respect of each Deferred Employee in the same way as they do to each Business Employee; and (iii) if any Deferred Employee accepts an offer of employment made by the Purchaser under this Section 6.08(a) and reports to work with Purchaser or any of its Affiliates on the start date set forth in such Deferred Employee’s offer letter, such Deferred Employee shall be treated for all purposes under this Agreement as a Transferred Employee commencing on the day such Deferred Employee reports to work with Purchaser.

 

(b)                                 Notification and Release.  Where any Business Employee accepts an offer of employment made pursuant to Section 6.08(a):

 

(i)                  the Purchaser shall, as soon as reasonably practicable after the date on which such Business Employee notifies the relevant member of the Purchaser’s Group that he or she accepts or rejects such offer of employment, notify the Seller of such acceptance or rejection; and

 

(ii)               the Seller shall ensure that such Business Employee is released from employment with the relevant member of the Seller’s Group with effect

 

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from the Closing Date or on the date of acceptance of employment with the Purchaser or the relevant Affiliate (or as otherwise provided under Section 6.08(a)), if later.

 

(c)                                  Indemnity for termination costs.  The Purchaser shall indemnify the Seller (for itself and on behalf of any relevant member of the Seller’s Group) against any claims and Losses for payments in lieu of notice or severance payments, penalties, compensation awards or expenses which arise (whether pursuant to a Contract, customary practice (consistent with the ordinary course past practice of the Seller and its Affiliates) and/or Applicable Law) as a result of any Business Employee refusing or not accepting an offer of employment made pursuant to Section 6.08(a) or such person accepting such offer and ceasing to be employed by the Seller or the relevant member of the Seller’s Group.  The Seller shall, so far as reasonably practicable, seek to minimize any such payments.

 

(d)                                 Shared employees.  After the date of this Agreement, the Seller shall identify, in consultation with the Purchaser, any employees who are engaged wholly or substantially in the Business but who are not Transferred Subsidiary Employees or Selling Affiliate Employees; provided, however, that no more than fifteen (15) of such employees shall be identified.  In consultation with the Purchaser, the Seller shall cause a Transferred Subsidiary to offer employment to any such employee before the Closing Date, such employment to take effect from immediately before the Closing Date or, where that is not reasonably practicable or there is no Transferred Subsidiary in the country in which the employee works, the Purchaser shall treat such employee as if that person were a Business Employee and the provisions of this Section 6.08 shall apply to such person.

 

(e)                                  International Assignees.  Where Applicable Law does not provide for the automatic transfer of employment of any International Assignee and/or the other terms governing their international assignment, the Purchaser shall assume and agree to be bound by the individual Contract of employment and such other terms governing such international assignment, including any Tax equalization agreement entered into between such International Assignee and a member of the Seller’s Group, provided that such employee becomes a Transferred Employee.

 

(f)                                   Long term disability.   It is the intention of the parties that any Business Employees or Transferred Subsidiary Employees who are absent from the Business immediately prior to the Closing due to long term disability will become employees of the Purchaser’s Group on and following Closing in accordance with this Section 6.08; provided that prior to the Closing, the Seller and the Purchaser

 

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shall reasonably cooperate so that any such employees shall not have any disruption in their benefits solely as a result of the occurrence of the Closing.

 

(g)                                  Consultation.  The Purchaser shall, and shall cause its Affiliates to, and the Seller shall, and shall cause its Affiliates to:

 

(i)                  provide the other party with such information and assistance at such times as that party may reasonably request or as may be reasonably necessary for it or any of its Affiliates to comply with any requirement to consult with employees, the Novartis Euroforum, a relevant trade union or any other employee representatives, in connection with the transactions contemplated by this Agreement; and

 

(ii)               at the reasonable request of the other party, cooperate in preparation for any information, negotiation and/or consultation process which that party undertakes with employees or their representatives in connection with the transactions contemplated by this Agreement.

 

(h)                                 Responsibility for Losses.

 

(i)             The Seller and its Affiliates shall have no responsibility for, and the Purchaser shall be responsible for and shall indemnify the Seller (for itself and on behalf of any relevant member of the Seller’s Group) against, any and all Losses and claims of any kind (i) arising out of the employment, or termination of employment, whether actual or constructive, of any Transferred Employee following the Closing Date, including, but not limited to, all claims relating to severance, termination pay, pay in lieu of notice of termination and similar obligations, (ii) arising out of or relating to any failure by the Purchaser or any of its Affiliates to comply with its or their obligations under any regulations implementing the Acquired Rights Directive 2001/23/EC to provide information to the Seller and its Affiliates in order to allow the Seller and its Affiliates to comply with their information and consultation obligations in respect of any Business Employees or (iii) arising out of or relating to any act or omission (or alleged act of omission) by the Purchaser or any of its Affiliates in relation to any Business Employee before Closing as a result of which such Business Employee treats his employment as having been terminated on grounds of anticipatory repudiatory breach of contract by such Business Employee’s employer following Closing or on grounds that the

 

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Proposed Transactions involve a substantial change in working conditions to the detriment of such Business Employee (as that term is referred to in Article 4(2) of the Acquired Rights Directive 2001/23/EC or any implementing regulation.  The Purchaser shall, or shall cause its Affiliates to, be solely responsible for, and shall provide, any plant closing or similar notices as required under Applicable Law in connection with any termination of any Transferred Employees after the Closing Date in connection with the transactions contemplated hereby: provided that, on or prior to the Closing Date, the Seller shall provide the Purchaser with relevant information regarding any layoffs and employment terminations that occur on or within the one hundred and eighty (180) day period immediately prior to the Closing Date.

 

(ii)          Unless attributable to any act or omission of the Purchaser and/or its Affiliates, the Seller shall be responsible for and shall indemnify the Purchaser and/or its Affiliates against any and all Losses and claims relating to any failure by any member of the Seller’s Group to comply with their information and/or consultation obligations under any regulations implementing the Acquired Rights Directive 2001/23/EC in respect of any Business Employee.

 

(i)                                     Employee Compensation and Benefit Plans.

 

All Transferred Employees

 

(i)             Terms of Employment. Subject to Applicable Law where Applicable Law is more favorable for the relevant Transferred Employee, for the period beginning on the Closing Date and ending no earlier than the earlier of: (A) the relevant Transferred Employee’s termination date; or (B) the second (2nd) anniversary of the Closing Date, the Purchaser shall, or shall cause its Affiliates to, provide each Transferred Employee with base compensation and an annual cash bonus opportunity at target that is no less favorable than that provided to such Transferred Employee immediately prior to the Closing Date (Core Compensation), and benefits (including any long-term incentive compensation other than any annual cash bonus opportunity taken into account in the Core Compensation of such Transferred Employee but excluding severance) that are substantially comparable in the aggregate to the benefits that were provided to the Transferred Employee immediately prior to the Closing Date, provided that, for the purpose of this Section 6.08(i)(i), post-retirement medical

 

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benefits shall be disregarded (it being understood that such benefits shall be replaced by the Purchaser with substantially comparable compensation or benefits opportunities in the aggregate).  The Seller will reasonably co-operate with the Purchaser to provide information about the Benefit Plans reasonably necessary to assist the Purchaser in complying with this Section 6.08(i)(i).

 

(ii)          Severance Benefits.  Subject to Applicable Law where Applicable Law is more favorable for the relevant Transferred Employee, the Purchaser shall, or shall cause its Affiliates, to provide severance benefits to any Transferred Employee who is laid-off or terminated during the two (2) year period immediately following the Closing Date in an amount that is equal to the greater of (A) severance benefits that the employee would have been entitled to pursuant to the terms of the applicable employee benefit plan or policy in place as of the Closing Date but based on employment to the actual termination date and (B) the severance benefits provided under the severance arrangements of the Purchaser or its Affiliates for similarly situated employees; provided that, in each case such Transferred Employee otherwise satisfies the terms and conditions for such severance benefits under the applicable severance plan, policy or arrangement or would have done so if such plan or policy was in place as at the actual termination date.

 

(iii)       Benefits Arrangement/Service Continuity.  Following the Closing Date, the Purchaser shall, or shall cause its Affiliates to, credit each Transferred Employee with service credit for purposes of eligibility to participate and vesting, in the case of (x) the tax-qualified defined contribution plans, (y) the tax-qualified defined benefit plans solely for Transferred Employees who participated immediately prior to the Closing in such a plan that was open and actively accruing benefits and (z) severance and vacation plans, programs and policies of the Purchaser and its Affiliates and for purposes of benefit accruals, in the case of the severance and vacation plans, programs and policies of the Purchaser and its Affiliates, to the extent such service was recognized for such Transferred Employee under the comparable Benefit Plans immediately prior to the Closing Date; provided that, subject to Applicable Law, nothing in this Section 6.08(i)(iii) shall require the crediting of service for the purposes of calculation of benefits or that would result in:

 

(A)                      duplication of benefits;

 

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(B)                      recognition of service for any purposes under any plans for which participation, service and/or benefits accrual is frozen or any post-retirement medical plan; or

 

(C)                      recognition of service under a newly established plan for which prior service is not taken into account for employees of the Purchaser’s Group generally.

 

Without limiting the foregoing, with respect to the Transferred Employees, the Purchaser shall, or shall cause its Affiliates to, be responsible for all paid time-off benefits, including accrued but untaken vacation pay, sick pay, flexi-time and other payments for time off or normal work hours accrued by Transferred Employees up to the Closing Date. For the calendar year in which the Closing Date occurs, the Purchaser shall, or shall cause its Affiliates to, waive any pre-existing condition exclusions, evidence of insurability provisions, waiting periods with respect to participation and coverage requirements or any similar provisions under any of the Purchaser’s benefit plans that are welfare plans (as defined in section 3(1) of ERISA or any equivalent Applicable Law) for the Transferred Employees to the extent that such conditions, exclusions, and waiting periods or other provisions were satisfied or did not apply to such employees under Benefit Plans that are welfare plans immediately prior to the Closing Date. Further, each Transferred Employee shall be eligible to receive credit under the Purchaser’s medical plans for the calendar year in which the Closing Date occurs towards annual out-of-pocket limits for expenses incurred under any Benefit Plan that is a medical plan during the calendar year in which the Closing Date occurs but prior to the Closing Date and, to the extent applicable and determined by the Purchaser to be reasonably practicable under the terms of the Purchaser’s benefit plans, Transferred Employees shall be eligible to receive credit for co-payments and deductibles during the calendar year in which the Closing Date occurs by prior to the Closing Date.

 

(iv)      Cash bonus arrangements. As soon as reasonably practicable following the Closing Date and in any event within ninety (90) days of the Closing Date:

 

(A)                               the Seller or its Affiliates shall pay to each Transferred Employee who participated in an annual bonus and/or sales incentive plan

 

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immediately prior to the Closing Date, a pro-rated cash bonus for the performance period in which the Closing Date occurs;

 

(B)                               where the Seller is able to determine performance, any bonus payment made to such eligible employees by the Purchaser will be based on the Seller’s determination of performance to the Closing Date and pro-rated to the Closing Date; or

 

(C)                               where the Seller is unable to determine performance (either business or individual), for example, because the Closing Date occurs near the start of the bonus year, the Seller shall calculate bonus based on a deemed achievement of performance conditions at target level pro-rated to the Closing Date; and

 

(D)                               the Seller shall deduct and account for any Tax due of such payments (including, for the avoidance of doubt, paying any employer’s social security contributions in respect thereof).

 

To the extent that any of the Transferred Subsidiaries have accrued for 2014 bonus payments in respect of the period prior to Closing in respect of Transferred Subsidiary Employees (2014 Bonus Accruals) and such accrued amounts have therefore been transferred to the Purchaser on Closing, the Purchaser shall, within 30 days following written notification from the Seller of (i) the fact that the cash bonus payments referred to in this Section 6.08(i)(iv) have been paid; (ii) the aggregate gross amount of such paid cash bonus payments and (iii) the aggregate gross amount of employer’s social security contributions paid in respect of such cash bonus payments (to the extent included in the 2014 Bonus Accruals), pay to Seller a sum equal to the aggregate of the amounts referred to in (ii) and (iii) above, which payment shall not exceed the 2014 Bonus Accruals.  For the avoidance of doubt, once the Seller has complied with the terms of this Section 6.08(i)(iv), the Seller shall have no further obligation under any of its annual bonus and sales incentive bonus plans for any Transferred Employee for performance periods ending after the Closing Date.

 

(v)         Liability for retention arrangements. Subject to the prior approval of the Purchaser, the Seller will put in place retention arrangements to retain key employees in connection with the transactions contemplated by this Agreement (collectively the Retention Arrangements).  With respect to any such retention arrangement approved by the Purchaser, the Purchaser

 

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shall, or shall cause such other member of the Purchaser’s Group to, make such cash retention payments when due to the relevant Transferred Employees on or after Closing and shall deduct and/or pay and account for any Tax and social security contributions due on such cash payments. The Seller and the Purchaser shall each bear fifty percent (50%) of the costs of the cash and share award retention arrangements (including any Tax or social security contributions due on them) and appropriate apportionments and/or payments shall be made to achieve this (to the extent such amounts are not reflected in the Closing Statement).  The Parties will provide each other with all information and documentation reasonably necessary to allow such apportionment and payments to be made.

 

(vi)                         Share incentive plans.  To the extent that a Transferred Employee holds any unvested stock options or other equity-based awards in Seller common stock (Seller Equity Awards) as of the Closing, the Seller shall take all actions to cause such Seller Equity Awards to become vested as follows: (A) with respect to any Seller Equity Award that is subject to time or service-based vesting conditions, the Seller Equity Award shall vest early as a result of Closing and be time pro-rated to take account of the reduced period of time, as a proportion of the original vesting period, that the relevant Transferred Employee worked within the Seller’s Group (calculated on the basis of the number of years of service as at the Closing Date, where part years of service are rounded up); (B) with respect to any Seller Equity Award that is subject to performance-based vesting conditions where the Seller is able to reasonably determine performance, the Seller Equity Award shall vest early as a result of Closing based on the Seller’s determination of performance to the Closing Date and be time pro-rated to take account of the reduced period of time, as a proportion of the original vesting period, that the relevant Transferred Employee worked within the Seller’s Group (calculated on the basis of the number of years of service as at the Closing Date, where part years of service are rounded up); and (C) with respect to any Seller Equity Award that is subject to performance-based vesting conditions for which the Seller is unable to determine performance, the Seller Equity Award shall vest early as a result of Closing based on the Seller’s reasonable determination of performance conditions at target level and be time pro-rated to take account of the reduced period of time, as a proportion of the original vesting period, that the relevant Transferred Employee worked within the Seller’s Group (calculated on the basis of the number of years of service as at the Closing

 

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Date, where part years of service are rounded up).  To the extent that a Transferred Employee forfeits any stock options or other equity-based awards granted (or to which such Transferred Employee would otherwise have been entitled under the Seller’s Leveraged Share Savings Plan in Switzerland or the Seller’s Employee Share Ownership Plans in Switzerland and the United Kingdom) under any Benefit Plan as a consequence of becoming a Transferred Employee, the Purchaser shall, or shall cause its Affiliates to, grant such Transferred Employee cash or equity-based awards with respect to the Purchaser as determined by the Purchaser to replace the forfeited value.

 

(vii)                      The U.S. Transferred Employees shall, as of the date such employees become U.S. Transferred Employees, become eligible to participate in a U.S. tax-qualified defined contribution plan sponsored by the Purchaser or one of its Affiliates; provided that such U.S. Transferred Employees meet the eligibility requirements applicable to similarly situated employees of the Purchaser.  The Purchaser agrees that such plan will accept rollovers of the account balances of U.S. Transferred Employees (including participant loan promissory notes) from the Seller’s tax-qualified retirement plans.

 

(viii)                   Liabilities and obligations post-Closing.  Liabilities and obligations incurred by or with respect to Transferred Employees (including any beneficiary or dependent) on or after the Closing Date (or such later date on which an individual becomes a Transferred Employee) shall be the sole responsibility of the Purchaser or its Affiliates.

 

(j)                                    Information necessary to comply with this Section 6.08.  The Seller shall provide to the Purchaser, within two (2) months after the date of this Agreement, information about the base compensation, annual cash bonus opportunity at target and any other information necessary to comply with the covenants in this Section 6.08.  The Purchaser will not be in breach of a covenant under this Section 6.08 if the alleged breach arises solely as a direct result of a failure by the Seller to provide the Purchaser with accurate and complete information under this Section 6.08(j).

 

(k)                                 Group Retirement Benefit Arrangements.  The provisions of Annex 6.08(k) and Annex 6.08(l) shall apply in respect of retirement benefit arrangements.

 

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(l)                                     Nonqualified Deferred Compensation Plans. At and following the Closing, the Seller and its Affiliates shall retain any Benefit Plan that is, or constitutes, a non-qualified deferred compensation plan; provided that the Purchaser shall, or shall cause its Affiliates to, assume any such Benefit Plan at the Closing to the extent that the Seller and the Purchaser reasonably determine in good faith prior to the Closing that the Liabilities with respect to such Benefit Plan may be transferred to the Purchaser without causing any adverse Tax consequences for any participant in such Benefit Plan; provided further that it would be reasonably practicable for the Seller and its Affiliates to transfer any trust assets supporting any such Benefit Plan to the Purchaser and its Affiliates.

 

(m)                                 Effect of this Agreement.  Notwithstanding any other provision of this Agreement to the contrary, each of the Seller and the Purchaser hereby acknowledges and agrees that all provisions contained in this Section 6.08 are included for the sole benefit of the parties hereto, and that nothing in this Agreement, whether express or implied, (i) shall be treated as an amendment or other modification of any Benefit Plan or other employee benefit plan, agreement or other arrangement, (ii) shall limit the right of the Purchaser, the Seller or their respective Affiliates to amend, terminate or otherwise modify any Benefit Plan or other employee benefit plan, agreement or other arrangement following the Closing Date, or (iii) shall create any third party beneficiary or other right (x) in any other Person, including, without limitation, any current or former director, officer, employee or independent contractor of the Seller or its Affiliates or any participant in any Benefit Plan or other employee benefit plan, agreement or other arrangement (or any dependent or beneficiary thereof) or (y) to continued employment with the Purchaser or the Seller or any of their respective Affiliates.

 

6.09                        Publicity

 

(a)                                 The Purchaser and the Seller shall agree on the initial press release with respect to the execution of this Agreement and the Proposed Transactions contemplated hereby.  Thereafter, prior to the Closing, no Party or any of their respective Affiliates and Representatives shall issue any press release or other public announcement with respect to this Agreement and the Proposed Transactions without the prior consent of the other Party (which consent shall not be unreasonably withheld or delayed), except (a) as such release or announcement may be required by Applicable Law (including stock exchange requirements) or legal process, in which case the Party required to make the release or announcement shall, to the extent practicable and permitted by Applicable Law,

 

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allow the other Party reasonable time to comment on such release or announcement in advance of such issuance or (b) to the extent reasonably necessary for either Party to enforce its rights under this Agreement or any Ancillary Agreement.

 

(b)                                 Each of the Purchaser and the Seller agrees that the existence or terms of this Agreement or any Ancillary Agreement shall not be disclosed or otherwise made available to the public and that copies of this Agreement or any Ancillary Agreement shall not be publicly filed or otherwise made available to the public, except where such disclosure, availability or filing is required by Applicable Law (including stock exchange requirements) and only to the extent required by such Applicable Law.  In addition, nothing herein shall be deemed to prohibit either Party from making disclosures concerning this Agreement or the Proposed Transactions deemed necessary or, upon the advice of external counsel, advisable by the Party making such disclosure in any publication or other report required to be filed pursuant to Applicable Law, including federal securities laws.

 

6.10                        Termination of Affiliate Contracts

 

In each case to the extent permitted by Applicable Law and except as contemplated by Annex 6.10 or as provided in or contemplated by the Ancillary Agreements, the Seller and the Purchaser shall cause:

 

(a)                                 the Cash Pooling Arrangements; and

 

(b)                                 each Affiliate Contract,

 

to be terminated, effective immediately prior to Closing, and to cause each counterparty to an Affiliate Contract to, effective as of Closing, unconditionally release and irrevocably discharge each other party thereto from (i) any and all obligations to perform or any further performance of the covenants, undertakings, warranties and other obligations contained in such Affiliate Contract and (ii) any and all claims and Liabilities whatsoever arising out of, in any way connected with, as a result of or in respect of such Affiliate Contract.

 

6.11                        Guarantees

 

(a)                                 The Purchaser shall use its reasonable best efforts to ensure that, as of Closing, each member of the Seller’s Group is released from all Third Party Assurances (including those listed in Annex 6.11) given by such member of the Seller’s

 

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Group in respect of (i) obligations of any Transferred Subsidiary that will exist after Closing, (ii) obligations relating to or under any Transferred Asset or the Business that will exist after Closing or (iii) any Assumed Liability, including effecting such release by issuing Purchaser guarantees or other credit support (including providing a letter of credit from a bank in the full amount thereof in favor of the beneficiary), and substituting the Purchaser, its Affiliates, the Transferred Subsidiaries or one or more banks or other financial institutions of international standing for the applicable member of the Seller’s Group that is a party to such Third Party Assurance.

 

(b)                                 To the extent that satisfactory releases are not obtained with respect to Third Party Assurances in accordance with Section 6.11(a), the Purchaser shall defend (with counsel acceptable to the Seller in its reasonable discretion), indemnify and hold harmless the Seller and the applicable Seller Indemnitees for all Losses suffered by them arising from, under or in respect of the relevant Third Party Assurance, as applicable, or any counter-indemnity provided by or on behalf of the Seller or the applicable Seller Indemnitee in respect thereof (including any fees, costs, interest payments and other payments made thereunder or with respect thereto).

 

6.12                        Ancillary Arrangements

 

As of Closing, the Seller or such relevant members of the Seller’s Group and the Purchaser or its relevant Affiliates shall enter into arrangements pursuant to which:

 

(a)                                 the Seller or other relevant members of the Seller’s Group will provide or cause to be provided to the Purchaser or its Affiliates (and vice versa) as provided therein, as the case may be, certain agreed upon services pursuant to a transition services agreement substantially on the terms set forth in Exhibit 6.12(a) (the Transition Services Agreement);

 

(b)                                 the Purchaser or its Affiliates will manufacture and supply on behalf of the Seller or such members of the Seller’s Group, and the Seller or its Affiliates will manufacture and supply on behalf the Purchaser or such member of the Purchaser’s Group, in each case as provided therein, certain products pursuant to a manufacturing and supply agreement substantially on the terms set forth in Exhibit 6.12(b) (the Manufacturing and Supply Agreement);

 

(c)                                  the Seller or other relevant members of the Seller’s Group will provide, or cause to be provided, to the Purchaser and such of its Affiliates (and vice versa) as provided therein certain licenses to Patents and Know-How pursuant to a

 

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Technology License Agreement substantially in the form attached as Exhibit 6.12(c) (the Technology License Agreement);

 

(d)                                 the Seller or other relevant members of the Seller’s Group will provide, or cause to be provided, to the Purchaser or its Affiliates a license to use the Seller Licensed Marks on terms to be negotiated by the Parties in good faith prior to Closing (the Trademark License Agreement);

 

(e)                                  the Seller or other relevant members of the Seller’s Group will provide, or cause to be provided, to Purchaser or its Affiliates a license to use for a limited duration (not exceeding a reasonable period of time to transition the Business to the Purchaser’s marks) certain Trademarks that contain or incorporate the term “Novartis”, on terms to be negotiated by the Parties in good faith prior to Closing (the Transitional Trademark License Agreement), which will include an obligation on the Purchaser to change the corporate name of each of the Transferred Subsidiaries to a name that does not include the term “Novartis” or any other marks or names that, in the reasonable opinion of the Seller, are confusingly similar thereto and make any necessary legal filings with the appropriate Governmental Entity to effect such change within a reasonable period of time following the Closing; and

 

(f)                                   the Seller or other relevant members of the Seller’s Group will assign, convey and deliver, or cause to be assigned, conveyed and delivered, the Transferred Intellectual Property Rights to the Purchaser and such of its Affiliates as provided therein pursuant to an Intellectual Property Assignment Agreement substantially in the form attached as Exhibit 6.12(f) (the IP Assignment Agreement).

 

For the purposes of compliance with this Section 6.12, the Seller and the Purchaser shall, between the date of this Agreement and Closing, negotiate in good faith any and all Ancillary Agreements.

 

6.13                        Use of Name

 

The Purchaser agrees that it shall cause each of its Affiliates, from and after the Closing, to (i) not hold themselves out as having any affiliation with the Seller or any of its Affiliates, and (ii) except as permitted under any Ancillary Agreement, and subject to the terms of the Transitional Trademark License Agreement, not use or display in any way whatsoever the term “Novartis”, the Seller Retained Marks or any of the “Novartis” Trademarks used or held by any member of the Seller’s Group or any trademark, service mark, domain name, trade name, identifying symbol, logo, emblem, sign or insignia

 

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related to any of the foregoing or which, in the reasonable opinion of the Seller, is confusingly similar to any of the foregoing.

 

6.14                        Counterparty Consents

 

With respect to each of the Material Contracts that is intended to be a Transferred Asset, and in respect of which a third-party authorization, approval, consent or waiver is required in order for such Contract to be assigned or otherwise transferred to the Purchaser or any of its Affiliates, the Seller shall or shall cause a member of the Seller’s Group to, prior to Closing, use (i) reasonable best efforts to cooperate with the Purchaser in order to obtain such third party authorization, approval, consent or waiver, including the Transferred Intellectual Property Contracts set forth on Annex 6.14 and (ii) use reasonable best efforts to obtain such third party authorizations, approvals, consents or waivers in respect of material Transferred Intellectual Property Contracts, including as set forth on Annex 6.14. The Purchaser hereby acknowledges that, notwithstanding any other provision of this Agreement, neither the Seller nor any member of the Seller’s Group shall be required to pay any consideration in relation to obtaining the third-party authorizations, approvals, consents or waivers pursuant to this Section 6.14 and/or be obligated to make any commitment or incur any Liability in connection therewith.

 

6.15                        Insurance

 

The Purchaser acknowledges and agrees that, upon Closing, all insurance coverage provided under the Seller’s Group Insurance Policies or otherwise in relation to the Business pursuant to policies, risk funding programs or arrangements maintained by the Seller or by any Affiliate of the Seller (whether such policies are maintained in whole or in part with third party insurers or with the Seller or its Affiliates and including any captive policies or fronting arrangements, and including any “occurrence” based insurance policies provided in relation to the Seller and its Affiliates with respect to any occurrences prior to Closing), in each case other than the Transferred Subsidiary Insurance Policies, shall cease, and no further coverage shall be available to the Business, any Transferred Subsidiary as an Affiliate of the Seller or in respect of any Transferred Asset or Assumed Liability under any such policies, programs or arrangements; provided that, if a material Transferred Asset or a material asset of a Transferred Subsidiary suffers a casualty loss prior to the Closing Date that is covered by insurance maintained by the Seller or its Affiliates, the Seller shall cause any insurance proceeds received in respect of such casualty loss to be applied to restore or replace such Transferred Asset or asset of a Transferred Subsidiary.

 

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6.16                        Wrong-Pockets

 

(a)                                 Except as otherwise provided in Annex 6.05 (which shall apply in relation to Product Approvals and Product Applications), if, after Closing, (i) any Transferred Asset has not been transferred to the Purchaser in circumstances other than as contemplated by Section 2.08, the Seller shall cause such Transferred Asset (and any related Liability which is an Assumed Liability) to be transferred to the Purchaser as soon as practicable or (ii) any Assumed Liability has not been transferred to and/or assumed by the Purchaser, the Seller shall cause such Assumed Liability (and any related property, right or asset that is a Transferred Asset) to be transferred to and assumed by the Purchaser as soon as practicable.

 

(b)                                 If, after Closing, (i) any Excluded Asset is found to have been transferred to the Purchaser pursuant to this Agreement or any Local Agreement or to be held by a Transferred Subsidiary despite the Seller exercising its rights under Section 2.01(d), the Purchaser shall transfer such Excluded Asset as soon as practicable to the Seller or another member of the Seller’s Group nominated by the Seller or (ii) any Excluded Liability is found to have been transferred to and/or assigned by the Purchaser pursuant to this Agreement or any Local Agreement, the Purchaser shall transfer, and the Seller or another member of the Seller’s Group nominated by the Seller, shall assume such Excluded Liability as soon as practicable.

 

6.17                        Non-Competition; Non-Solicitation; No Challenge

 

(a)                                 For a period of four (4) years from the Closing, without the express, prior written consent of the Purchaser, the Seller shall not, and shall cause its Affiliates not to, directly or indirectly through any Person (including as agent, consultant, stockholder, member, manager, director, co-partner or in any other representative capacity), own, operate, manage, control, engage in, invest in or participate in a business that competes with the Business as it is carried out on the Closing Date (a Restricted Business) (it being understood that commercial transactions consistent with those in effect on the date hereof by the Seller’s Group (other than the Business) with a client, customer (including distributor), supplier or licensor shall not be deemed to be indirectly violating the provisions of this Section 6.17); provided, however, that the restrictions contained in this Section 6.17(a) shall not restrict (i) the acquisition by the Seller or its Affiliates, directly or indirectly, of less than five percent (5%) of the outstanding capital stock of any publicly traded company engaged in a Restricted Business, (ii) Novartis Venture Funds or any other venture capital business of Seller or its Affiliates from making financial investments in any third Person which engages in, invests in, manages or operates

 

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a Restricted Business in connection with its customary venture capital activities, (iii) the ownership of any equity interests through any employee benefit plan or pension plan or trust for present or former employees, (iv) the acquisition of a Person that is engaged in a Restricted Business; provided that, the annual net sales of the Restricted Business do not exceed twenty percent (20%) of the annual net sales of the acquired Person, in each case as reported in the most recent full year financial statements of the acquired Person prior to the date of the signing of the definitive agreement providing for such acquisition, (v) any business activity that would otherwise violate this Section 6.17(a) that is acquired in connection with an acquisition so long as the relevant member of the Seller’s Group divests all or substantially all of the business activity that would otherwise violate the non-compete restriction or otherwise terminates or disposes of such business activity, product line or assets of such acquired business that would otherwise violate this Section 6.17(a), within nine (9) months after the consummation of the relevant acquisition (it being understood that any such acquisition within forty-eight (48) months of the Closing shall require such divestiture notwithstanding the expiration of the obligations under this Section 6.17(a), (vi) investments by Novartis Foundation for Sustainable Development or a similar Novartis non-profit-based organization, (vii) the provision of data or other content to or in connection with business conducted by any Person as may be required by Applicable Law, (viii) any activities by an Affiliate of Seller in which a Person who is not a member of the Seller’s Group holds equity interests and with respect to whom a member of the Seller’s Group has at the date of this Agreement contractual or legal obligations limiting its discretion to impose non-competition obligations, (ix) the performance by the Seller and its Affiliates of their respective obligations under this Agreement and the Ancillary Agreements (each as amended from time to time), (x) the business of selling active pharmaceutical ingredients by the generics division of the Seller’s Group, (xi) the research and development of compounds that could have both human and animal application, (xii) any business conducted or investment held by any member of the Seller’s Group (other than the Business), or contemplated by an existing contractual arrangement (including licensing arrangements) applicable to any member of the Seller’s Group (other than the Business) as of the date hereof which is not significant in the context of the size of the Business, (xiii) the business under current contractual arrangements with the company set forth on Section 6.17(a) of the Disclosure Schedule.

 

(b)                                 For a period of twenty-four (24) months from the Closing, the Seller’s Group shall not, directly or indirectly: (i) solicit or induce any employees of the

 

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Purchaser’s animal health business with an annual base salary of $200,000 or more to leave such employment or hire, employ or otherwise engage any such individual; provided, however, that the restrictions contained in this Section 6.17(b)(i) shall not prohibit any advertisement or general solicitation (or hiring as a result thereof) that is not specifically targeted at any such individual nor shall it prohibit the solicitation or hiring of any such individual who, prior to the initiation of any employment discussions with a member of the Seller’s Group, either terminates his or her employment with the Purchaser’s animal health business or has his or her employment with such business terminated by the Purchaser or one of its Affiliates; or (ii) knowingly induce or encourage any actual client, customer or supplier of the Purchaser’s animal health business or any other Person who has a material business relationship with the Purchaser’s animal health business, to terminate or modify any such actual or prospective relationship in a manner intended to compete with the Business as conducted on the Closing Date.

 

(c)                                  Until the expiration and termination of all Owned Intellectual Property Rights and Transferred Intellectual Property Contracts, Seller shall not, and shall cause its Affiliates not to, directly or indirectly, challenge, oppose or otherwise contest the Owned Intellectual Property Rights or validity of enforceability thereof.

 

(d)                                 The Seller and the Purchaser acknowledge that this Section 6.17 constitutes an independent covenant and shall not be affected by the performance or nonperformance of any other provision of this Agreement.  Each of the Seller and the Purchaser has independently consulted with its counsel and after such consultation agrees that the covenants set forth in this Section 6.17 shall be enforced to the fullest extent permissible under Applicable Law.  If all or part of this Section 6.17 is held invalid, illegal or incapable of being enforced by any Applicable Law or public policy, all other terms and provisions of this Agreement shall nevertheless remain in full force and effect.  If any part of this Section 6.17 is held to be excessively broad as to duration, scope, activity or subject, such part will be construed by limiting and reducing it so as to be enforceable to the maximum extent compatible with Applicable Law.

 

6.18                        Financial Information

 

(a)                                 Following the next full month following the date of this Agreement and until the Closing, the Seller shall prepare in respect of the Animal Health Group on a monthly basis an unaudited statement of net assets and the related unaudited statement of profits and losses.  The Seller shall deliver such financial statements to the Purchaser as soon as practicable, but in any event no later than twelve (12)

 

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Business Days following the end of the month in respect of which such financial information was prepared.  Notwithstanding anything herein to the contrary, neither the Seller nor any of its Affiliates makes any representation or warranty as to any financial information delivered pursuant to this Section 6.18(a), nor shall any of them have any Liability in connection therewith or the information reflected therein. Such financial information shall be prepared in good faith in accordance with past practice.

 

(b)                                 During the ninety (90) days following the Closing Date, the Purchaser shall provide and cause to be provided to the Seller the information reasonably required to enable the Seller to prepare and audit the standard monthly reporting forms of the Seller and its Affiliates, to the extent that such financial reporting relates to the Transferred Assets, Assumed Liabilities, the Transferred Subsidiaries or the Business, in respect of the period prior to the Closing and in respect of the calendar month in which the Closing occurs. The Purchaser shall provide such financial reporting in respect of the calendar month in which Closing occurs to the Seller within six (6) Business Days of the last day of the relevant month.  Notwithstanding anything herein to the contrary, neither the Purchaser nor any of its Affiliates makes any representation or warranty as to any financial information delivered pursuant to this Section 6.18(b), nor shall any of them have any Liability in connection therewith or the information reflected therein. Such financial information shall be prepared in good faith in accordance with past practice.

 

6.19                        Documentation Regarding Transferred Intellectual Property Rights

 

(a)                                 Upon the Purchaser’s reasonable request, the Seller and its Affiliates shall execute and deliver assignment agreements and other transfer documentation, including duly executed assignments of the Transferred Intellectual Property Rights for recording with the applicable Governmental Entity, and to take such further actions, in each case at the Purchaser’s reasonable cost and expense and as may be required, to give effect to the foregoing assignments. The Purchaser shall proceed with the recording of such duly executed assignment agreements or other transfer documentation, as applicable, at Purchaser’s sole cost and expense.

 

(b)                                 Seller and its Affiliates shall use reasonable efforts to cause the record ownership of all Registered Intellectual Property Rights to be consistent with the actual ownership rights of Seller and its Affiliates in such Registered Intellectual

 

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Property Rights as of the Closing Date, and shall thereafter use reasonable efforts to provide Purchaser such assistance as it needs in connection with the same.

 

6.20                        Further Assurances

 

Subject to the express limitations in this Agreement, from time to time, as and when requested by one Party of any other Party, such other Party shall, as promptly as reasonably practicable and at the requesting Party’s expense, execute and deliver, or cause to be executed and delivered, all such documents and instruments and shall take, or cause to be taken, all such further or other actions, as such requesting Party may reasonably deem necessary or desirable to consummate the transactions contemplated by this Agreement and the Ancillary Agreements as soon as reasonably practicable.

 

ARTICLE VII

TAX MATTERS

 

7.01                        Tax Indemnity

 

(a)                                 The Seller shall indemnify each Purchaser Indemnitee against and hold it harmless from any Loss with respect to: (i) Taxes imposed on any Transferred Subsidiary or on any Transferred Asset with respect to a taxable period ending on or before the Closing Date, treating transactions that are not in the ordinary course of business and that are properly allocable to the portion of the Closing Date after the Closing as having occurred at the beginning of the day immediately following Closing Date; (ii) Taxes imposed on any Transferred Subsidiary or on any Transferred Asset allocated as provided in Section 7.03 to the portion of a Straddle Period ending on the Closing Date; (iii) Taxes that are Excluded Liabilities; (iv) Taxes attributable to the failure of any of the representations or warranties made by the Seller contained in Section 4.12 (Taxes) to be true and correct in all respects at and as of the date hereof and at and as of the Closing Date as if made on such date (without giving effect to any materiality or Seller’s Knowledge qualification contained or incorporated in any representation or warranty); provided, that with respect to any representations or warranties contained in Section 4.12 (other than Section 4.12(k) and Section 4.12(l)) such Taxes shall be limited to any Taxes with respect to a taxable period ending on or before the Closing Date and that portion of a Straddle Period ending with the Closing Date; (v) Taxes attributable to any breach by the Seller, or any of its Affiliates (including, prior to the Closing, the Transferred Subsidiaries), of its

 

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obligations under this Agreement with respect to Taxes; (vi) Taxes imposed on any members of any Tax Group of which a Transferred Subsidiary is or was a member prior to the Closing Date (and, with respect to the Seller’s VAT Group, on or after the Closing Date if a Transferred Subsidiary has not been removed from the Seller’s VAT Group as of the Closing Date) payable by or recoverable from any Transferred Subsidiary or in respect of the Transferred Assets (including under U.S. Treasury Regulations Section 1.1502-6 or any analogous or similar state, local or non-U.S. law or regulation); (vii) Taxes imposed on another Person for any taxable period (or portion thereof) ending on or before the Closing Date payable by or recoverable from any of the Transferred Subsidiaries or in respect of the Transferred Assets by reason of Contract, assumption, transferee or successor liability, operation of law or otherwise (plus any such Taxes for any taxable period (or portion thereof) ending after the Closing Date pursuant to any Tax indemnification, allocation or sharing agreement, VAT grouping arrangement or group payment arrangement in respect of Tax that was in effect prior to Closing that has not been terminated as of the Closing Date); (viii) Taxes attributable to any election under section 338(h)(10) of the Code with respect to the U.S. Transferred Subsidiary; and (ix) Transfer Taxes allocated to the Seller pursuant Section 7.09.

 

(b)                                 The Purchaser shall indemnify each Seller Indemnitee against and hold it harmless from any Loss with respect to (i) Taxes imposed on any Transferred Subsidiary or on or in respect of the Transferred Assets, with respect to a taxable period beginning after the Closing Date, treating transactions that are not in the ordinary course of business and that are properly allocable to the portion of the Closing Date after the Closing, as having occurred at the beginning of the day immediately following the Closing Date; (ii) Taxes imposed on any Transferred Subsidiary or on or in respect of the Transferred Assets allocated as provided in Section 7.03 to the portion of a Straddle Period beginning after the Closing Date; (iii) Taxes attributable to a breach by the Purchaser, or any of its Affiliates (including, following the Closing, the Transferred Subsidiaries), of its obligations under this Agreement with respect to Taxes; and (iv) Transfer Taxes allocated to the Purchaser pursuant to Section 7.09.

 

7.02                        Tax Returns

 

(a)                                 The Seller shall prepare, or cause to be prepared, all Tax Returns with respect to each Transferred Subsidiary or in respect of the Transferred Assets for any taxable period that ends on or before the Closing Date and pay all Taxes shown due on such returns (except, with respect to Taxes payable after the Closing Date,

 

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to the extent such Taxes have been taken into account in determining the Finally Determined Purchase Price or do not exceed the remaining Tax Reserve).  The Purchaser shall prepare, or cause to be prepared, all Tax Returns with respect to each Transferred Subsidiary or in respect of the Transferred Assets for any Straddle Period (each a Purchaser Prepared Return).  The Seller and the Purchaser shall prepare Tax Returns for which they are responsible on a basis consistent with past methods and practices for the completion of such Tax Returns except to the extent Applicable Law specifies otherwise.

 

(b)                                 The Purchaser, with respect to each Purchaser Prepared Return, and the Seller, with respect to any Tax Return which the Seller is required to prepare (or cause to be prepared) pursuant to Section 7.02(a) and which is required to be filed after Closing and signed by Purchaser or any of its Affiliates, shall provide the other Party with a complete copy of each such Tax Return for the other Party’s review and written approval (not to be unreasonably withheld, conditioned or delayed) at least thirty (30) days, or in the case of Tax Returns other than income Tax Returns at least five (5) days, before the date when such Tax Return is due; provided that, with respect to any Tax Return for a Tax Group that includes any Transferred Subsidiary, the Seller shall only be required to provide a pro forma Tax Return with respect to such Transferred Subsidiary prepared on a stand-alone basis.  The Parties shall attempt in good faith to resolve any disagreements regarding such Tax Return prior to the due date for filing.  Once such Tax Return has been approved by the non-preparing Party or any disagreement has been resolved in accordance with this Section 7.02(b), such Tax Return shall be timely filed by the Party responsible for filing such Tax Return.  In the event that the Parties are unable to resolve any dispute with respect to such Tax Return at least ten (10) days prior to the due date for filing, such dispute shall be resolved by the Accounting Firm, which resolution shall be binding on the Parties.  The fees and expenses of the Accounting Firm shall be borne equally by the Seller and the Purchaser.  If any dispute with respect to a Tax Return is not resolved prior to the due date of such Tax Return, such Tax Return shall be filed in the manner that the Party responsible for filing such Tax Return deems correct without prejudice to the other Party’s rights hereunder.

 

(c)                                  Not later than five (5) days prior to the due date for the payment of Taxes in respect of any Purchaser Prepared Return, the Seller shall pay to or as directed by the Purchaser the amount of Taxes for which the Seller is liable under Section 7.01(a) in respect of such Purchaser Prepared Return as set forth in a statement delivered by the Purchaser to the Seller (for the avoidance of doubt, taking into account any limitations set forth in Section 7.10 and reduced by any

 

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amounts, including estimated Tax payments, previously paid by the Seller or its Affiliates (including the Transferred Subsidiaries prior to Closing) with respect to the relevant Taxes for the taxable period, including any Straddle Period).  No payment pursuant to this Section 7.02(c) shall excuse the Seller from its indemnification obligations pursuant to Section 7.01(a) if the amount of Taxes as ultimately determined (on audit or otherwise) for the periods covered by such Tax Returns that are the responsibility of the Seller exceeds the amount of any payments by the Seller under this Section 7.02(c).

 

(d)                                 Unless required by Applicable Law, as determined by a Taxing Authority upon termination or settlement of an audit or examination, the Purchaser shall not and shall cause its Affiliates not to amend, refile or otherwise modify any Tax Return relating in whole or in part to any Transferred Subsidiary or in respect of the Transferred Assets with respect to any period (or portion thereof) ending on or before the Closing Date if such modification would result in an indemnification obligation by Seller under Section 7.01(a) without the Seller’s prior written consent, which consent may be withheld in the Seller’s sole discretion.

 

7.03                        Allocation of Straddle Periods

 

The Seller shall reimburse the Purchaser for the amount of Tax with respect to any Straddle Period that is allocable to the portion of the period ending on the Closing Date.  The amount of real, personal and intangible property Taxes (and any refund of or credit for such Taxes) allocable to the portion of any Straddle Period ending on the Closing Date shall equal the amount of such Taxes for the entire Straddle Period multiplied by a fraction the numerator of which is the number of days in the portion of the period that ends on the Closing Date and the denominator of which is the number of days in the entire period.  The amount of all other Taxes (and the amount of any refund of or credit for such Taxes and any other Tax items) allocable to the portion of each Straddle Period ending on the Closing Date shall be computed as if that portion were a separate taxable period that ended as of the end of the Closing Date. To the extent permitted or required by Applicable Law, all transactions that are properly allocable to the portion of the Closing Date after the Closing (including transactions occurring on the Closing Date after the Closing that are not in the ordinary course of business), shall be treated as having occurred at the beginning of the day immediately following the Closing Date and shall be reported on income Tax Returns of the Purchaser or its Affiliates rather than income Tax Returns of a Tax Group of which Seller or any of its Affiliates is a member to the extent permitted or required by Section 1.1502-76(b)(1)(ii)(B) of the U.S. Treasury Regulations (or any similar provision of state, local or non-U.S. law).

 

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7.04                        Tax Sharing Agreement

 

To the extent permitted by Applicable Law, the Seller shall terminate any Tax indemnification, allocation or sharing agreement, VAT grouping arrangement or group payment arrangement in respect of Tax, in each case between any Transferred Subsidiary and the Seller, any Affiliate of the Seller or any other Person prior to or as of the Closing Date.

 

7.05                        Refunds

 

Any refund of Taxes of any Transferred Subsidiary or in respect of the Transferred Assets for any taxable period ending on or before the Closing Date (and the allocable portion of any such refund for any Straddle Period) shall be for the account of the Seller except to the extent such refund (a) was taken into account in determining the Closing Date Net Working Capital or is in respect of a Tax that was applied against or the Tax Reserve or (b) is attributable to a carryback of any operating losses, net operating losses, capital losses, tax credits or similar items arising in, resulting from, or generated in connection with a taxable period (or portion thereof) beginning after the Closing Date.  Any other refund of Taxes of any Transferred Subsidiary or in respect of the Transferred Assets shall be for the account of the Purchaser.  If any Party or its Affiliates receives or realizes (including by way of offset or credit against a liability for Tax for which such Party or its Affiliates would otherwise be responsible) a Tax refund to which the other Party is entitled, such Party shall or shall cause its Affiliates to pay an amount equal to the refund (net of any Taxes imposed thereon and any reasonable expenses incurred in connection therewith) to the Party entitled to it within thirty (30) Business Days after receiving the refund or becoming entitled to the offset or credit.  Any such payment with respect to a Tax refund shall be treated as an adjustment to the Finally Determined Purchase Price.  Unless required by Applicable Law, the Purchaser shall not and shall cause its Affiliates not to carry back to any taxable period ending (or portion thereof) on or before the Closing Date any operating losses, net operating losses, capital losses, Tax credits or similar items arising in, resulting from, or generated in connection with a taxable period (or portion thereof) beginning after the Closing Date.  The Purchaser shall and shall cause its Affiliates to make all available elections to forego carry back of any of the foregoing Tax items to a taxable period (or portion thereof) beginning prior to the Closing Date.

 

7.06                        Cooperation

 

The Seller and the Purchaser shall cooperate, and shall cause their Affiliates (and its and their respective officers, directors, employees or agents) to cooperate, as reasonably

 

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required, to prepare and to file all Tax Returns of each Transferred Subsidiary or in respect of the Transferred Assets for any Straddle Period and all taxable periods ending on or before the Closing Date (including declaring any transfers of the Transferred Assets in accordance with any applicable VAT notification procedures) and to deal with any audit, examination, inquiry or other proceedings related to such returns or periods.  Purchaser and Seller agree (a) notwithstanding anything in Section 6.02(b) to the contrary, to retain all books and records with respect to Tax matters pertinent to the Transferred Subsidiaries or in respect of the Transferred Assets relating to any Straddle Period and any taxable period beginning before the Closing Date until the expiration of the statute of limitations (and, to the extent notified by the Purchaser or the Seller, any extensions thereof) of the respective taxable periods, and to abide by all record retention agreements entered into with any Taxing Authority, and (b) to give the other Party reasonable written notice prior to transferring, destroying or discarding any such books and records and, if the other Party so requests, the Purchaser or the Seller, as the case may be, shall allow the other Party to take possession of such books and records.  No provision of this Agreement shall be construed to require any Seller to provide to any Person, before, on or after the Closing Date, any right to access or to review any Tax Return or Tax work papers of any Tax Group of which Seller or any Affiliate of the Seller is a member (including any consolidated, combined, affiliated or unitary Tax Return that includes the Seller or any Affiliate of the Seller, and any pro forma Tax Return used to create any such consolidated, combined, affiliated or unitary Tax Return) to the extent such Tax Return or Tax work papers do not relate to a Transferred Subsidiary; provided that information regarding a Transferred Subsidiary may be provided on a pro forma basis and no information will be provided that could disclose any confidential information relating to any Seller business activity or conduct not Exclusively Related to the Business.

 

7.07                        Tax Contests

 

(a)                                 If any Taxing Authority makes a claim or proposes an adjustment that could give rise to a Tax Claim pursuant to Section 7.01(a), the Purchaser promptly (but in no event more than ten (10) Business Days (or if the period during which a Tax Claim may be legally disputed or resisted is ten (10) Business Days or less, five (5) Business Days) after receiving notice from the Taxing Authority about the claim or proposed adjustment), shall give the Seller written notice of the claim or proposal; provided that failure to give such notice shall not affect the right to indemnification provided hereunder except to the extent the Seller shall have been actually and materially prejudiced as a result of such failure.

 

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(b)                                 The Seller shall have the right, at the Seller’s expense, to control any claim or proposed adjustment by a Taxing Authority that could give rise to a Tax Claim that relates to any Taxes or Tax Return of (i) any Tax Group of which the Seller or any of its Affiliates is a member (other than a Tax Group comprised solely of Transferred Subsidiaries) or (ii) the Seller or any of its Affiliates (other than the Transferred Subsidiaries) that relate to any Transferred Assets and to make all decisions in connection with such Tax Claim; provided that the Seller shall not settle or compromise any claim or agree to any payment, refund or credit of Tax without the written consent of the Purchaser (which shall not be unreasonably withheld or delayed) if such settlement or compromise would lead to Liability or create any financial or other obligation on the part of the Purchaser or any of its Affiliates (including the Transferred Subsidiaries) under this Agreement or in a taxable period (or portion of a Straddle Period) beginning after the Closing Date (including by way of requiring any Transferred Subsidiary to adopt a new method of Tax accounting or transfer pricing for such a period).

 

(c)                                  With respect to any Tax Claim relating to a taxable period (or portion thereof) ending on or before the Closing Date of any Transferred Subsidiary, the Seller shall have the right to control (or to have one or more of its Affiliates control) the conduct of such Tax Claim unless the Seller fails to provide the Purchaser with written notice of its election to control such Tax Claim within ten (10) days of the Seller’s receipt of notice of such Tax Claim in accordance with Section 7.07(a); provided, however, that (i) the Seller shall keep the Purchaser reasonably informed as to the status of such Tax Claim, (ii) the Purchaser shall be entitled to participate in any such Tax Claim and (iii) if the settlement or compromise of such Tax Claim would reasonably be expected to lead to Liability or create any financial or other obligation on the part of the Purchaser or any of its Affiliates (including the Transferred Subsidiaries) for any taxable period (including the portion of any Straddle Period) beginning on or after the Closing Date (including by way of requiring any Transferred Subsidiary to adopt a new method of Tax accounting or transfer pricing for such a period), the Seller shall not settle or otherwise compromise such Tax Claim (including agreeing to any payment, refund or credit of Tax) without the Purchaser’s written consent, which shall not be unreasonably withheld, conditioned or delayed; provided that settlement or compromise shall not include a final determination of any Taxing Authority or any court from which no appeal lies.  If the Seller does not elect to control a Tax Claim pursuant to this Section 7.07(c) within the time period set forth above, then the Purchaser shall control such Tax Claim; provided, however, that (A) the Purchaser shall keep the Seller reasonably informed as to the status of such Tax

 

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Claim and (B) the Purchaser shall not settle or otherwise compromise such Tax Claim without the Seller’s written consent, which shall not be unreasonably withheld, conditioned or delayed.

 

(d)                                 To the extent reasonably required in connection with the proceedings governed by this Section 7.07, each Party shall assist and cooperate with any reasonable requests of the other Party (including making officers, employees, agents, auditors and representatives available at mutually convenient times and places).

 

7.08                        U.S. Tax Elections

 

(a)                                 Notwithstanding anything in this Agreement to the contrary, upon notice from the Purchaser as provided herein, the Seller or its applicable Affiliates shall join the Purchaser or its respective Affiliates in electing to treat the purchase and sale of the shares of Novartis Animal Health US, Inc. (the U.S. Transferred Subsidiary) as provided in section 338(h)(10) of the Code (and in electing to apply any similar provision of U.S. state or local Tax law).

 

(i)                      The Seller (or its applicable Affiliates) shall execute an effective, irrevocable election under Section 338(h)(10) of the Code on IRS Form 8023 (and under any comparable provisions of Applicable Law in any U.S. state or local jurisdiction) and deliver it to the Purchaser on the Closing Date.

 

(ii)                   The Purchaser shall notify the Seller no more than 180 days following the Closing Date regarding whether it shall make an election under section 338(h)(10) of the Code with respect to the U.S. Transferred Subsidiary.  In the event that the Purchaser notifies the Seller that it will make such election, the Seller and the Purchaser shall further allocate the purchase price allocated to the U.S. Transferred Subsidiary in accordance with Annex 2.09 among the assets of the U.S. Transferred Subsidiary in accordance with the procedures set forth in Annex 2.09.

 

(b)                                 The Purchaser or any of its Affiliates may, in its or their sole discretion, make any election that may be permissible under section 338(g) of the Code (or any similar provision of state, local or non-U.S. Tax law) with respect to any Transferred Subsidiary other than the U.S. Transferred Subsidiary.

 

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7.09                        Transfer Taxes

 

Any transfer, conveyance or similar taxes, duties or charges (and any penalties, interest or other additions imposed thereon) (Transfer Taxes) applicable to the purchase or sale of the Shares, the Business or the Transferred Assets pursuant to this Agreement shall be borne equally by the Purchaser and the Seller.  Each Party shall use reasonable best efforts to claim any available exemption from such Transfer Taxes and to cooperate with the other Parties to obtain such exemption.

 

7.10                        Limitations on Indemnification of Tax Matters

 

In respect of Tax Claims, the Seller shall have no Liability (and shall have no obligation to provide indemnification) for a Tax Claim to the extent that:

 

(a)                                 accruals in respect of the Liability giving rise to the claim are reflected in Closing Date Net Working Capital and are taken into account in the Finally Determined Purchase Price and, in all other cases, until the aggregate amount of such Liabilities (plus the aggregate amount of any Taxes applied against the Tax Reserve (in lieu of actual payment by the Seller) pursuant to Section 7.02(a) or Section 7.02(c)) exceeds the Tax Reserve;

 

(b)                                 the Liability giving rise to the claim was paid or discharged at or before the Closing; provided that, in the case of a Tax other than an income Tax, the payment has been taken into account in the Closing Date Net Working Capital and in the Finally Determined Purchase Price;

 

(c)                                  the Loss giving rise to the claim is attributable to (i) Taxes incurred as a result of any action taken or election (other than any election expressly permitted or required by this Agreement) made after the Closing by the Purchaser or any of its Affiliates that was reasonably expected at the time taken or made to result in (x) any item of income or gain economically accrued or earned after the Closing Date being recognized for tax purposes in a taxable period (or portion thereof) ending on the Closing Date or (y) any item of deduction or loss economically accrued or incurred on or before the Closing Date being recognized for Tax purposes in a taxable period (or portion thereof) beginning after the Closing Date other than an action or election consented to in writing by the Seller or (ii) any breach by a Purchaser Indemnitee (or its respective officers, directors, employees or agents) of any obligation under this Agreement or any Ancillary Agreement;

 

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(d)                                 (i) relief was granted to the Purchaser or any Transferred Subsidiary (excluding relief under an insurance policy); (ii) relief would have been granted to the Purchaser or any Transferred Subsidiary had it maintained arrangements existing at Closing that could have been maintained on terms no less favorable than those existing at the date of this Agreement or (iii) with respect to Tax Claims with respect to a Transferred Subsidiary other than Novartis Animal Health US, Inc., a Tax Group of which a Transferred Subsidiary was a member makes relief available to any Transferred Subsidiary for no consideration;

 

(e)                                  the Loss giving rise to a claim for non-U.S. Taxes is attributable to, or the amount of such claim is increased as a result of, any: (i) Applicable Law not in force at the date of this Agreement; or (ii) any change: (x) of Applicable Law (or any published change in interpretation on the basis of Applicable Law, or any published change in Taxing Authority practice); (y) in applicable accounting standards, principals or interpretations; or (z) in the rate of taxation effective after the date of this Agreement;

 

(f)                                   relating to any Liability which is contingent only, unless and until such contingent Liability gives rise (within the time periods contemplated by Section 7.12(b)) to an actual obligation to make payment;

 

(g)                                  a Purchaser Indemnitee or Affiliate thereof is entitled to claim a corresponding saving in connection with any matter giving rise to the indemnification claim; provided that such corresponding savings has actually led to a refund of Taxes or a reduction of any otherwise payable Tax no later than the taxable year in which the payment in respect of the indemnification claim is received; or

 

(h)                                 the Liability giving rise to the claim relates to Transfer Taxes allocated to the Purchaser pursuant to Section 7.09.

 

7.11                        VAT

 

(a)                                 General. Any sum payable under this Agreement is exclusive of any applicable VAT.  If any supply is treated as made under this Agreement and the maker of the supply is required to account for VAT in respect of that supply, or if the Seller charges VAT in accordance with a ruling from a Taxing Authority pursuant to Sections 7.11(c) and 7.11(d) below, the recipient of the supply shall, against receipt of a valid VAT invoice (if applicable) pay to the maker of the supply (in addition to, and at the same time as, any other consideration for that supply) an amount equal to such VAT.

 

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(b)                                 Records. The Seller may obtain a direction from the relevant Taxing Authority for the retention and preservation by it of any VAT records relating to its period of ownership of the Shares and, if such directions are obtained, the Seller agrees to preserve any such records in such a manner and for such period as may be required by Applicable Law and shall allow the Purchaser, upon the Purchaser giving reasonable notice, reasonable access and copies of such records where reasonably required by the Purchaser for its taxation purposes.  If no such direction is obtained and any documents are required by Applicable Law to be preserved by the Purchaser, the Seller shall, as soon as reasonably practicable, deliver such documents to the Purchaser.

 

(c)                                  Going Concern — EU member states.  The Seller and its Affiliates shall have the right, but not the obligation, to seek a ruling from the relevant Taxing Authority as to whether the sale of the Transferred Assets so far as carried on in the relevant member state should be treated as neither a supply of goods nor a supply of services for VAT purposes in that member state and to charge (or not to charge) VAT to the Purchaser in accordance with that ruling. The Seller and its Affiliates shall not be obliged to challenge that ruling. If the Purchaser wishes to challenge any ruling it may do so at its own cost, but any such challenge shall be without prejudice to the Purchaser’s obligations under Section 7.11(a) above.

 

(d)                                 Going Concern — non-European Union jurisdictions.  The Seller and its Affiliates shall have the right, but not the obligation, to seek a ruling from the relevant Taxing Authority as to whether the sale of the Shares and the Transferred Assets so far as the Business is carried on in the relevant state is eligible for a relief or exemption or are otherwise non-taxable for VAT purposes in that state and to charge (or not to charge) VAT to the Purchaser in accordance with that ruling. The Seller and its Affiliates shall not be obliged to challenge that ruling. If the Purchaser wishes to challenge any ruling it may do so at its own cost, but any such challenge shall be without prejudice to the Purchaser’s obligations under Section 7.11(a) above.

 

(e)                                  The Seller and its Affiliates undertake not to opt into any VAT system with respect to the transfer of the Shares.

 

(f)                                   The Purchaser shall reimburse, or shall cause each Transferred Subsidiary which has been treated for VAT purposes as a member of the same VAT group as a member of the Seller’s Group (such VAT group, a “Seller VAT Group”) to reimburse, the representative member of any Seller VAT Group for any VAT for which that representative member is accountable that is attributable to supplies, 

 

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acquisitions and importations made by a Transferred Subsidiary after the Closing Date whilst a member of the relevant Seller VAT Group. Such reimbursement shall be made within five (5) Business Days of written demand by the Seller.

 

7.12                        Miscellaneous

 

(a)                                 For Tax purposes, the Parties agree to treat all payments made pursuant to any indemnification obligation under this Agreement (including pursuant to this Article VII and Article X) as adjustments to the Finally Determined Purchase Price.

 

(b)                                 Notwithstanding anything to the contrary contained in this Agreement, the covenants and agreements of the Parties contained in this Article VII and representations and warranties of the Seller set forth in Section 4.12 (Taxes) shall terminate sixty (60) days following the expiration of the applicable statute of limitations; provided, however, that any obligations under Section 7.01 shall not terminate with respect to any Losses as to which the Person to be indemnified shall have given notice (stating in reasonable detail the basis of the claim for indemnification) to the indemnifying party in accordance with Section 7.07 before such termination.

 

(c)                                  The Purchaser shall have sole discretion to determine whether an election under subsection 256(9) of the Income Tax Act (Canada) will be filed with respect to the Canadian Target.

 

ARTICLE VIII

CONDITIONS PRECEDENT

 

8.01                        Conditions to Obligation of the Purchaser

 

The obligation of the Purchaser to purchase and pay for the Shares and the Transferred Assets and assume the Assumed Liabilities and consummate the Proposed Transactions is subject to the satisfaction (or written waiver by the Purchaser) of the following conditions precedent:

 

(a)                                 Representations and Warranties and Covenants.

 

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(i)                      (A) The Fundamental Representations shall be true and correct in all material respects as of the Closing Date, as if made at and as of such time (other than any such representations that address matters as of a particular date, which shall be true and correct in all material respects as of such date) and the representation and warranty set forth in Section 4.04(b) (including for the avoidance of doubt the reference to Material Adverse Effect) shall be true and correct in all respects as of the Closing Date, as if made at and as of such time and (B) all other representations and warranties of the Seller contained in Article III and Article IV (disregarding all qualifications and exceptions contained therein relating to materiality, including references to “Material Adverse Effect”) shall be true and correct in all respects as of the Closing Date, as if made at and as of such time, except for (x) breaches of representations and warranties that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect and (y) those representations and warranties that address matters as of a particular date, which, subject to clause (x) above, shall be true and correct as of such date;

 

(ii)                   the covenants and agreements of the Seller contained in this Agreement to be complied with by the Seller at or before the Closing shall have been complied with in all material respects; and

 

(iii)                the Purchaser shall have received a certificate of the Seller, signed by a duly authorized officer thereof and dated as of the Closing Date, certifying the matters set forth in Sections 8.01(a)(i) and (ii) above and Section 8.01(d) below (the Seller’s Closing Certificate).

 

(b)                                 Governmental Approvals. (i) The EC Clearance or EU Member State Clearance(s), as applicable, shall have been obtained; (ii) any waiting period (and any extension thereof) under the HSR Act shall have expired or been terminated and (iii) the approvals, or expirations or terminations of waiting periods, as applicable, pursuant to the other Required Notifications shall have been obtained or occurred (such requirements, collectively, being the Regulatory Conditions); and

 

(c)                                  No Order.  Subject to Section 6.07(a), no Governmental Entity of competent jurisdiction shall have issued, promulgated, enforced or entered any Judgment (whether temporary, preliminary or permanent) that is in effect as of the Closing Date and that, subject to Section 2.08, has the effect of making the Acquisition illegal or otherwise prohibiting the consummation of the Acquisition.

 

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(d)                                 No Material Adverse Effect.  Since the date of this Agreement, there has not occurred and there shall not be occurring any Material Adverse Effect.

 

8.02                        Conditions to Obligation of the Seller

 

The obligation of the Seller and its Affiliates to sell the Shares and Transferred Assets and consummate the Proposed Transactions is subject to the satisfaction (or written waiver by the Seller) of the following conditions precedent:

 

(a)                                 Representations and Warranties and Covenants.

 

(i)                      The representations and warranties of the Purchaser contained in Article V (disregarding all qualifications and exceptions contained therein relating to materiality) shall be true and correct in all respects as of the Closing Date, as if made at and as of such time (other than any representations that address matters as of a particular date, which shall be true and correct in all respects as of such date), except for breaches of representations and warranties that would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of the Purchaser to consummate the Acquisition and the other Proposed Transactions;

 

(ii)                   the covenants and agreements of the Purchaser contained in this Agreement to be complied with by the Purchaser at or before the Closing shall have been complied with in all material respects; and

 

(iii)                the Seller shall have received a certificate of the Purchaser, signed by a duly authorized officer thereof and dated as of the Closing Date, certifying the matters set forth in clauses (i) and (ii) above (the Purchaser’s Closing Certificate).

 

(b)                                 Governmental Approvals.  The Regulatory Conditions set forth in Section 8.01(b) shall have been satisfied.

 

(c)                                  No Order.  Subject to Section 6.07(a), no Governmental Entity of competent jurisdiction shall have issued, promulgated, enforced or entered any Judgment (whether temporary, preliminary or permanent) that is in effect as of the Closing Date and that, subject to Section 2.08, has the effect of making the Acquisition illegal or otherwise prohibiting the consummation of the Acquisition.

 

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ARTICLE IX

TERMINATION

 

9.01                        Termination

 

(a)                                 This Agreement may be terminated and the transactions contemplated by this Agreement abandoned at any time prior to the Closing:

 

(i)                      by mutual written consent of the Seller and the Purchaser;

 

(ii)                   by either the Seller or the Purchaser in the event that any Judgment issued by a Governmental Entity of competent jurisdiction enjoining or prohibiting the consummation (subject to Section 2.08) of the Acquisition shall have become final and non-appealable; provided that the Party seeking to terminate this Agreement pursuant to this Section 9.01(a)(ii) shall have complied with the terms of this Agreement in connection with having such Judgment vacated or denied; or

 

(iii)                by either the Seller or the Purchaser, if the conditions set forth in Article VIII are not satisfied or waived on or prior to the date falling nine (9) months from the date of this Agreement (the Drop-Dead Date), so long as the Party seeking to terminate this Agreement pursuant to this Section 9.01(a)(iii) shall not have breached its obligations under this Agreement in any manner that shall have proximately caused such conditions not to be satisfied on or before such date; provided that if the Closing would be capable of taking place by the Drop-Dead Date but for the failure to have satisfied the Regulatory Conditions, or the conditions set forth in Sections 8.01(c) or 8.02(c) due to any Judgment issued under any Antitrust Law (or in connection with any approval, clearance, consent, or filing thereunder), either Party may, by written notice to the other Party, extend the Drop-Dead Date from time to time in successive three (3) month periods to a date not later than fifteen (15) months following the date of this Agreement and, following any such extension, this proviso shall apply, and all references in this Agreement to the Drop-Dead Date shall refer, to the Drop-Dead Date as so extended.

 

(b)                                 In the event of a termination of this Agreement pursuant to and in accordance with this Section 9.01, written notice thereof shall be given by the Party seeking 

 

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termination to the other Party and the transactions contemplated by this Agreement shall be terminated, without further action by any Party.

 

9.02                        Effect of Termination

 

(a)           If this Agreement is terminated and the transactions contemplated hereby are abandoned as described in Section 9.01, this Agreement shall become null and void and of no further force and effect and, subject to Section 9.02(b) and Section 9.02(c), there shall be no further liability on the part of any Party, except that Section 6.03 (confidentiality), Section 6.09 (publicity), this Section 9.02; Section 11.05 (expenses), Article I (and Annex A) (definitions) and Article XI (miscellaneous provisions), in each case, to the extent applicable, shall survive any termination.

 

(b)                                 Nothing in this Section 9.02 shall be deemed to release any Party from any liability for any breach by such Party of the terms and provisions of this Agreement prior to termination of this Agreement.

 

(c)                                  If the transactions contemplated by this Agreement are terminated as provided herein:

 

(i)                      the Purchaser shall return all documents and other material received from the Seller or any of its Affiliates or any of their representatives relating to the transactions contemplated hereby, whether so obtained before or after the execution hereof, to the Seller; and

 

(ii)                   all Confidential Information received by the Purchaser with respect to each of the Seller and its Affiliates or relating to the provisions of or negotiations leading to this Agreement or the Ancillary Agreements or the other transactions contemplated hereby or thereby shall be treated in accordance with the terms of the Confidentiality Agreement, which shall remain in full force and effect notwithstanding the termination of this Agreement and any other provision hereof to the contrary.

 

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ARTICLE X

INDEMNIFICATION

 

10.01                 Survival

 

(a)                                 The representations and warranties set forth in this Agreement, as well as the related obligations to indemnify and hold harmless any Person for any breach thereof pursuant to this Agreement, shall survive the Closing through and including the eighteen (18) month anniversary of the Closing Date; provided, however, that (a) the representations and warranties of the Seller set forth in Sections 4.13 (Environmental) and 4.15 (Employee Benefits) shall survive the Closing for three (3) years, (b) the Fundamental Representations and the representations and warranties of Purchaser set forth in Sections 5.01 (Organization and Standing), 5.02 (Authority; Execution and Delivery; Enforceability) and 5.09 (Brokers or Finders) shall survive the Closing for five (5) years (in each case, the Survival Period); provided, however, that any obligations under Section 10.02 shall not terminate with respect to any breach as to which the Person to be indemnified shall have given notice (stating in reasonable detail the basis of the claim for indemnification) to the indemnifying party in accordance with Section 10.05 before the termination of the applicable Survival Period.

 

(b)                                 All covenants and agreements set forth in this Agreement, as well as the related obligations to indemnify and hold harmless any Person for any breach thereof pursuant to this Agreement, shall survive the Closing through and including the eighteen (18) month anniversary of the Closing Date (unless such covenant or agreement expressly contemplates performance after such date, in which case such covenant or agreement shall survive for the remainder of such contemplated period of performance).

 

(c)                                  Subject to Section 10.06, the obligation of the Seller to assume, pay when due and perform all Liabilities referred to in Section 10.02(a)(iii) and the obligation of the Purchaser to assume, pay when due and perform all Assumed Liabilities shall survive the Closing indefinitely.

 

(d)                                 This Section 10.01 shall not apply to matters addressed in Article VII, the survival of which is addressed in Section 7.12(b).

 

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10.02                 Indemnification

 

(a)                                 Subject to the provisions of this Article X, from and after Closing, the Seller shall indemnify each Purchaser Indemnitee against and hold it harmless from any losses, liabilities, claims, expenses and damages, including reasonable legal fees and expenses (the Losses) actually suffered or incurred by such Purchaser Indemnitee to the extent arising out of or resulting from:

 

(i)                      the failure of any of the representations or warranties made by the Seller in Article III or Article IV to be true and correct (x) at and as of the date hereof and, (y) other than Section 4.08(a), at and as of the Closing Date as if made on such date;

 

(ii)                   the breach of any covenant or agreement by the Seller contained in this Agreement; or

 

(iii)                any Excluded Liabilities or Liabilities of the Transferred Subsidiaries described in Annex 10.02(a)(iii).

 

(b)                                 Subject to the provisions of this Article X, from and after Closing, the Purchaser shall indemnify each Seller Indemnitee against and hold it harmless from, any Losses actually suffered or incurred by such Seller Indemnitee to the extent arising out of or resulting from:

 

(i)                      The failure of any of the representations or warranties made by the Purchaser in Article V of this Agreement to be true and correct in all respects (x) at and as of the date hereof and (y) at and as of the Closing Date as if made on such date;

 

(ii)                   the breach of any covenant or agreement by the Purchaser contained in this Agreement; and

 

(iii)                any Assumed Liabilities.

 

(c)                                  This Section 10.02 shall not apply to indemnification for Taxes attributable to (i) the failure of any of the representations or warranties made by the Seller contained in Section 4.12 (Taxes) to be true and correct or (ii) breaches of any covenants relating to Taxes, which indemnification matters are addressed in Section 7.01(a)(iv) , Section 7.01(a)(v) and Section 7.01(b)(iii) respectively.

 

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10.03                 Limitations on Indemnification

 

(a)                                 Notwithstanding anything to the contrary contained in this Agreement:

 

(i)                      neither the Seller nor any of its Affiliates shall be liable for any claim for indemnification pursuant to Section 10.02(a)(i) of this Agreement (other than with respect to a breach of a Fundamental Representation) unless and until the aggregate amount of Losses which may be recovered from the Seller thereunder equals or exceeds an amount equal to 1.25% of the amount specified in Section 2.03(a)(i) (the Deductible), whereupon the Purchaser Indemnitees shall be entitled to indemnification only for Losses in excess of the Deductible;

 

(ii)                   no claim for Losses under Section 10.02(a)(i) of this Agreement (other than with respect to a breach of a Fundamental Representation other than the representations and warranties contained in Section 4.09) may be made (and no Losses may be recovered from the Seller or its Affiliates with respect thereto) by any Purchaser Indemnitee unless the amount of such Purchaser Indemnitee’s Losses in respect of any such claim or series of related claims exceeds $300,000 (the De minimis);

 

(iii)                in no event shall the Seller or any of its Affiliates have any aggregate Liability under (A) Section 10.02(a)(i) of this Agreement (other than with respect to a breach of a Fundamental Representation) in excess of an amount equal to 12.5% of the amount specified in Section 2.03(a)(i) or (B) this Agreement in excess of an amount equal to 35% of the amount specified in Section 2.03(a)(i).

 

(b)                                 For purposes of determining the failure of any of the representations and warranties to be true and correct and calculating Losses hereunder, any qualifications in the representations and warranties by the words “material,” “Material Adverse Effect” or “material to the Business taken as a whole” shall be disregarded; provided that this Section 10.03(b) shall not apply to the representations and warranties in Sections 4.03, 4.04(b), 4.05, 4.06(a)(ii), 4.07(b), 4.08(a), 4.09 and 4.15(a).

 

(c)                                  Notwithstanding anything to the contrary contained in this Agreement, no Party shall have any Liability under any provision of this Agreement for (i) any punitive, incidental, special or indirect damages or (ii) except to the extent Losses with respect thereto are reasonably foreseeable, any consequential damages or

 

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damages for loss of future profits, revenue or income, diminution in value or loss of business reputation or opportunity; provided, in each case, that any such damages shall be deemed direct damages to the extent awarded in connection with a Third Party Claim.

 

10.04                 Calculation of Losses

 

Notwithstanding anything to the contrary in this Agreement, a Party shall not be liable pursuant to this Article X for any Loss incurred by the other Party:

 

(a)                                 with respect to any indemnification obligation of the Seller, relating to any matter to the extent that: (i) accruals or reserves in respect of the liability giving rise to the Loss are included in the Statement of Net Assets; or (ii) the matter was subject to an adjustment in favor of the Party claiming a Loss in the determination of the Finally Determined Purchase Price, whether or not any Purchaser Indemnitee shall have been compensated for such matter;

 

(b)                                 relating to any Liability which is contingent only, unless and until such contingent Liability gives rise (within the time periods contemplated by Section 10.01) to an actual obligation to make payment;

 

(c)                                  to the extent that the Liability giving rise to the Loss is attributable to or exacerbated by (i) an action or omission by the Purchaser or its Affiliates (or its or their respective officers, directors, employees or agents) after the Closing (other than an action or omission expressly required by (x) Applicable Law in force on the Closing Date or (y) this Agreement or any Ancillary Agreement); (ii) actions required or permitted under or in connection with this Agreement or the transactions contemplated hereby or by the Ancillary Agreements, or other actions taken or not taken at the request or with the consent of the Purchaser; or (iii) any breach by the Indemnified Party (or its respective officers, directors, employees or agents) of any obligation under this Agreement or any Ancillary Agreement;

 

(d)                                 to the extent that mitigation by the other Party and its Affiliates (or its or their respective officers, directors, employees or agents) would have eliminated or reduced such Loss;

 

(e)                                  to the extent the Liability giving rise to the Loss is attributable to, or the amount of such Loss is increased as a result of, any: (i) Applicable Law not in force at the date of this Agreement; or (ii) any change of Applicable Law (or any change in

 

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interpretation on the basis of Applicable Law) or in applicable accounting standards, principles or interpretations.

 

10.05                 Third Party Claims; Notice of Direct Claims

 

(a)                                 In order for any Person to be entitled to any indemnification provided for under this Article X in respect of, arising out of or involving a claim made by any Person (other than a Party) against an Indemnified Party (a Third Party Claim), such Indemnified Party must notify the indemnifying Party in writing of the Third Party Claim within ten (10) Business Days after receipt by such Indemnified Party of written notice of the Third Party Claim (or sooner, to the extent the nature of the Third Party Claim requires a response in a shorter period of time); provided that failure to give such notice shall not affect the right to indemnification provided hereunder except to the extent the indemnifying Party shall have been actually prejudiced as a result of such failure.  Thereafter, the Indemnified Party shall deliver to the indemnifying Party, as promptly as reasonably practicable following such Indemnified Party’s receipt thereof, copies of all written notices and documents (including any court papers) received by such Indemnified Party relating to the Third Party Claim.

 

(b)                                 If a Third Party Claim is made against an Indemnified Party, the indemnifying Party shall be entitled at its election and its cost to assume the defense of such Third Party Claim with counsel selected by the indemnifying Party; provided that, should, following any such election, the indemnifying Party determine that it will contest its obligation to indemnify the Indemnified Party, it may do so only if the cessation of its control of the defense can be effected in a manner that does not materially prejudice the Indemnified Party’s ability to conduct a defense of such matter.  If the indemnifying Party assumes such defense, the Indemnified Party shall nonetheless have the right to employ counsel separate from the counsel employed by the indemnifying Party; provided that the indemnifying Party shall not be liable to such Indemnified Party for any fees of such separate counsel with respect to the defense of such Third Party Claim, unless the employment and reimbursement of such separate counsel is authorized by the indemnifying Party in writing or in the reasonable opinion of the Indemnified Party, a conflict or potential conflict exists between such Indemnified Party and the indemnifying Party that would make such separate representation advisable.  If the indemnifying Party does not assume such defense, and for any period during which the indemnifying Party has not assumed such defense, the indemnifying Party shall be liable for the reasonable fees and expenses of one single counsel (in addition to reasonable fees and expenses of local counsel required in jurisdictions

 

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not central to the Third Party Claim) employed (and reasonably acceptable to the indemnifying Party) by such Indemnified Party (which reasonable fees and expenses shall be considered Losses for purposes of this Agreement).  If the indemnifying Party chooses to defend a Third Party Claim or prosecute a claim in connection therewith, each Indemnified Party shall provide all cooperation as is reasonably requested by the indemnifying Party in such defense or prosecution.

 

(c)                                  If the indemnifying Party assumes the defense of a Third Party Claim, the indemnifying Party may settle, compromise or discharge (and in doing so, make any reasonable admission of liability with respect to) such Third Party Claim for money damages only without the prior written consent of the Indemnified Party, subject to the indemnifying Party paying or causing to be paid all amounts arising out of such settlement or obtaining and delivering to such Indemnified Party, prior to the execution of such settlement, a general release prepared and executed by all Persons bringing such Third Party Claim.

 

(d)                                 In the event an Indemnified Party has a claim against an indemnifying Party under Section 10.02 that does not involve a Third Party Claim, such Indemnified Party shall deliver notice of such claim to the indemnifying Party 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, within ten (10) Business Days of becoming aware of the facts or circumstances giving rise to such claim; provided that failure to give such notice shall not affect the indemnification provided hereunder except to the extent the indemnifying Party shall have been actually prejudiced as a result of such failure. The Indemnified Party and the indemnifying Party shall, for a period of not less than twenty (20) Business Days following receipt by the indemnifying Party of the notice of such claim, negotiate, in good faith, to resolve the claim, and such Indemnified Party shall not commence proceedings with respect to such claim prior to the end of such period.

 

(e)                                  The procedures in this Section 10.05 shall not apply to Tax Claims (which shall be governed exclusively by Section 7.07).

 

10.06                 Indemnification in respect of Environmental Matters

 

The Parties agree on behalf of themselves and their respective Affiliates that, notwithstanding anything to the contrary herein, in addition to the provisions set forth in Sections 10.03, 10.04 and 10.05, in each case, if applicable, with respect to any Liabilities or Losses relating to environmental matters subject to indemnification under

 

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Section 10.02 (Environmental Matters), including any Liability described in Section 2.02(b)(iv) or paragraph 4 of Annex 10.02(a)(iii):

 

(a)                                 No Purchaser Indemnitee shall be entitled to indemnification for any Losses arising out of or resulting from any testing, sampling, remedial action or clean-up activity unless such testing, sampling, remedial action or clean-up activity is (i) located at the Wusi Farm facility (provided that in the opinion, supported by evidence, of a mutually-appointed environmental advisor, such activity is required to bring the Wusi Farm facility into compliance with Applicable Laws) or (ii) demanded by a Governmental Entity and so long as the Purchaser Indemnitees have taken no affirmative steps or actions intended to cause such demand.

 

(b)                                 The entitlement to indemnification of the Purchaser Indemnitees for any Environmental Matter shall be limited to, and any obligation to indemnify the Purchaser Indemnitees under this Agreement shall be satisfied upon, (i) the ten (10) year anniversary of the Closing (except in respect of the sites located at Wusi Farm and Huningue, for which such obligations shall be satisfied on the fifteen (15) year anniversary of the Closing) and (ii) the achievement, in a reasonably cost-effective manner of, the minimum standards required to be met based on industrial/commercial use of the affected property, under applicable Environmental Laws as in effect at the time such Environmental Matter is addressed or by any order or requirement of a Governmental Entity.  The Parties hereto expressly agree that such minimum standards may include risk-based clean-up remedies and standards or the imposition of institutional and engineering controls (subject to clause (c) below) that are approved by a Governmental Entity.

 

(c)                                  The Seller shall have the right to retain the defense and control of any Environmental Matter with respect to which a claim for indemnification is made, including the disclosure, investigation, negotiation, performance and settlement thereof, and shall keep the Purchaser reasonably informed of the progress of such Environmental Matter.  Purchaser shall cooperate with the Seller as necessary in respect of any actions undertaken by the Seller regarding any Environmental Matter with respect to which a claim for indemnification is made, including granting the Seller sufficient access to relevant sites and providing the Seller with reasonably requested documentation and information with respect thereto.

 

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10.07                 Recovery from Third Parties after Indemnification by the Seller

 

Where the Seller has made or is liable to make a payment to any Purchaser Indemnitee pursuant to Section 10.02(a) in relation to any Loss suffered by such Purchaser Indemnitee and such Purchaser Indemnitee is entitled to recover (whether by payment, discount, credit, relief or otherwise) from a Person (other than the Seller or its Affiliates) a sum which indemnifies or compensates the Purchaser Indemnitee (in whole or in part) in respect of such Loss; (i) to the extent that the Seller shall have made a payment to the Purchaser Indemnitee pursuant to Section 10.02(a) in relation to any such Loss, the Purchaser shall pay to the Seller, as soon as practicable after receipt, an amount equal to the amount recovered from the third party (net of Tax and less any reasonable costs of recovery) and (ii) to the extent that the Seller shall be liable for, but shall not have made a payment to the Purchaser Indemnitee pursuant to Section 10.02(a) in relation to, any such Loss, any such payment shall thereafter be limited (in addition to the other limitations on liability of the Seller referred to in this Article X) to the amount by which such Loss exceeds the amount so recovered (net of Tax and less any reasonable costs of recovery); provided the Purchaser Indemnitee shall have no obligation to enforce any such right against any such third party.

 

10.08                 Exclusivity of Remedies

 

Following the Closing, Article VII, this Article X and Section 11.18 (as applicable) shall provide the exclusive remedy of the Parties for any misrepresentation, breach of warranty, breach of covenant or other obligation under this Agreement and any other claim arising out of this Agreement or any certificate delivered in connection with this Agreement or the transactions contemplated hereby, and the Purchaser and Seller each expressly waive any and all other rights or causes of action it or its Affiliates may have against the other Party or any of its Affiliates under any Applicable Law with respect thereto.  Notwithstanding the foregoing, nothing herein will eliminate the availability to the Parties of any equitable remedies with respect to any dispute that may arise under this Agreement or the Ancillary Agreements or limit any remedies available under Applicable Law for fraud; provided that in no event shall the Purchaser or the Seller, after the consummation of the Acquisition, have any right to rescind this Agreement or the Ancillary Agreements or any of the transactions contemplated hereby or thereby.

 

10.09                 Double Recovery

 

No Indemnified Party shall be entitled to recover any amount pursuant to any provision of this Agreement in respect of any claim to the extent that such Indemnified Party has

 

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already recovered any amount in respect of such claim under the same or any other provision of this Agreement (including Section 2.07) or pursuant to any other agreement, including the Ancillary Agreements, the Local Agreements and the France SAPA, or to the extent that recovery has already been made under this Agreement in respect of the same subject matter.

 

ARTICLE XI

MISCELLANEOUS PROVISIONS

 

11.01                 Interpretation

 

(a)                                 The Disclosure Schedule shall be incorporated by reference into this Agreement and shall be deemed a part hereof.

 

(b)                                 In this Agreement, unless expressly provided otherwise:

 

(i)                      the definitions of terms herein shall apply equally to the singular and plural forms of the terms defined;

 

(ii)                   the words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”;

 

(iii)                the words “herein”, “hereof” and “hereunder”, and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof;

 

(iv)               all references to this Agreement shall include any recitals and Exhibits, Schedules and Annexes to it and all references herein to Articles, Sections, Exhibits, Schedules and Annexes shall be construed to refer to Articles, Sections of, and Exhibits, Schedules and Annexes to, this Agreement;

 

(v)                  all references to any document (including this Agreement), or to a provision in a document, shall be construed as a reference to such document or provision as amended, supplemented, modified, restated or novated from time to time;

 

(vi)               the headings, captions and table of contents for this Agreement are for convenience of reference only and are not to affect the construction of, or to be taken into consideration in interpreting, this Agreement;

 

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(vii)            references to the terms “Dollars” and “$” mean United States Dollars; and

 

(viii)         if any period referred to herein expires on a day which is not a Business Day, or any event or condition is required by the terms of this Agreement to occur or be fulfilled (including the making of any payment required hereunder) on a day which is not a Business Day, such period shall expire on or such event or condition shall not be required to occur or be fulfilled until, as the case may be, the next succeeding Business Day.

 

(c)                                  Notwithstanding anything to the contrary contained in the Disclosure Schedule or elsewhere in this Agreement, every exception and disclosure set forth in the Disclosure Schedule shall be deemed to be a disclosure with respect to all Articles, Sections, sub-Sections, Schedules or Annexes of this Agreement to which such disclosure may apply, if (i) the relevance of such exception or disclosure to such other applicable Article, Section, sub-Section, Schedule or Annex is reasonably apparent (whether or not a specific cross-reference to such Article, Section, sub-Section, Schedule or Annex is made); or (ii) a specific cross-reference to such Article, Section, sub-Section, Schedule or Annex is made. Inclusion of an item in the Disclosure Schedule shall not be deemed an indication or admission that such item is material to the Business, the Transferred Subsidiaries, Transferred Assets, Assumed Liabilities or any member of the Seller’s or Purchaser’s Group, or is required by this Agreement to be reflected therein (and such inclusion shall not be deemed to establish or be considered for purposes of establishing a standard of materiality or other disclosure threshold). Without limiting the foregoing, no such references to or disclosure of a possible breach or violation of any contract, Applicable Law or Judgment shall be construed as an admission or indication that a breach or violation exists or has actually occurred.

 

11.02                 Amendments and Waivers

 

This Agreement may not be amended or modified except by an instrument in writing signed on behalf of each of the Parties.  No waiver of any provision of this Agreement will be valid and binding unless it is in writing and signed by the Party against whom the waiver is to be effective.  No waiver by any Party of any breach or violation or default under or inaccuracy in any representation, warranty or covenant hereunder, whether intentional or not, will be deemed to extend to any prior or subsequent breach, violation, default of, or inaccuracy in, any such representation, warranty or covenant hereunder or affect in any way any rights arising by virtue of any prior or subsequent such occurrence.  Except to the extent that this Agreement expressly provides for performance within a

 

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specified time period, no delay or omission on the part of any Party in exercising any right, power or remedy under this Agreement will operate as a waiver thereof.

 

11.03                 Assignment

 

This Agreement and the rights and obligations hereunder may not be assigned, delegated or otherwise transferred by any Party without the prior written consent of the other Party, except that the Purchaser may assign any or all of its rights and obligations hereunder to any one or more of its Affiliates without the prior written consent of the Seller; provided that no such assignment shall relieve the Purchaser of its obligations hereunder and except that the Seller may assign any or all of its rights to receive payment under this Agreement or under any Local Agreement to any Affiliate of the Seller provided that no such assignment shall relieve the Seller of its obligations hereunder. Any attempted assignment in violation of this Section 11.03 shall be null and void and of no effect.

 

11.04                 No Third-Party Beneficiaries

 

This Agreement shall be binding upon and inure solely and exclusively to the benefit of the Parties and their successors and permitted assigns, and nothing herein expressed or implied shall give, or be construed to give, to any Person, other than the Parties and such successors and permitted assigns, any legal or equitable right, remedies or claims under or with respect to this Agreement or any provisions hereof.

 

11.05                 Expenses

 

Whether or not the Closing takes place, and except as set forth in this Section 11.05, or in Section 2.07(c)(v), Section 6.07(d), Section 7.02, Section 7.07, Section 7.08 or Section 7.09, all costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the Party incurring such expense.  Notwithstanding the foregoing, the Purchaser shall bear the cost of all notarial fees and all registration, stamp and similar duties in all jurisdictions where such costs, fees or duties are payable in connection with the transactions contemplated by this Agreement.

 

11.06                 Notices

 

All notices, consents, waivers, and other communications required or permitted under this Agreement must be in writing (including by facsimile) and will be deemed to have been duly given when: (a) delivered by hand to the Party to be notified; (b) sent by facsimile if sent during the normal business hours of the Party to be notified, and if not, then on the

 

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next Business Day; or (c) received by the Party to be notified, if sent by an internationally recognized overnight delivery service, specifying the soonest possible time and date of delivery, in each case to the appropriate addresses and facsimile numbers set forth below (or to such other addresses, and facsimile numbers as a Party may designate by notice to the other parties from time to time).  All such notices and other communications shall be sent:

 

(i)             if to the Purchaser, to:

 

Eli Lilly and Company

Lilly Corporate Center

Indianapolis, Indiana 46285

Attention:  President, Elanco Animal Health

General Counsel

Facsimile: +1 (317) 277-1680;

 

with a copy (which shall not constitute notice) to:

 

Weil, Gotshal & Manges LLP

767 Fifth Avenue

New York, NY 10153

Attention: Raymond O. Gietz

Matthew J. Gilroy

Facsimile: +1 (212) 310-8007;

 

(ii)          if to the Seller to:

Novartis AG

Forum 1-1.29

Novartis Campus

CH-4002 Basel

Switzerland

Attention:  Head M&A

Head M&A Legal

Facsimile: +41 613244300;

 

with a copy (which shall not constitute notice) to:

 

Freshfields Bruckhaus Deringer US LLP

 

109

 

601 Lexington Avenue, 31st Floor

New York, NY 10022

Attention: Julian Pritchard

Doug Bacon

Facsimile:  +1 (212) 277-4001.

 

11.07                 Counterpart Execution and Facsimile Delivery

 

This Agreement may be executed and delivered (including by facsimile or portable document format (PDF) transmission) in any number of counterparts, each of which when so executed and delivered will be deemed to be an original copy of this Agreement and all of which, when taken together, will be deemed to constitute one and the same instrument.

 

11.08                 Entire Agreement

 

This Agreement (including the Disclosure Schedule and any schedule or annex thereto), the Confidentiality Agreement and the Ancillary Agreements, and Annexes hereto (and any schedules or annexes thereto), contain the entire agreement and understanding between the Parties with respect to the subject matter hereof and supersede all prior agreements and understandings (whether oral or written) relating to such subject matter.  None of the Parties shall be liable or bound to any other Party in any manner by any representations, warranties or covenants relating to such subject matter except as specifically set forth herein or therein.

 

11.09                 Conflicts with this Agreement

 

If there is a conflict between the terms of this Agreement and any other agreement, including, without limitation, any Local Agreement, this Agreement shall prevail (as among the Parties) unless: (i) such other agreement expressly states that it overrides this Agreement in the relevant respect; and (ii) the Parties are either also Parties to that other agreement or otherwise expressly agree in writing that such other agreement shall override this Agreement in that respect.

 

11.10                 France Business

 

Notwithstanding any other provision of this Agreement, this Agreement shall not constitute a binding agreement to sell or purchase the France Business, provided that:

 

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(a)                                 in the event that the France Put Option Exercise occurs before Closing, this Section 11.10 (other than this clause (a)) shall terminate and shall cease to have effect;

 

(b)                                 in the event that the France Put Option Exercise does not occur before Closing:

 

(i)                      Sections 2.01, 2.02, 2.04 and 2.05 (the Disapplied Provisions) and, prior to the France Closing only, Sections 6.08 and 6.17 (the Suspended Provisions), shall not apply to the France Business;

 

(ii)                   in respect of the Disapplied Provisions and, prior to the France Closing only, the Suspended Provisions, (A) the term “Business” shall be deemed to exclude the France Business, (B) the term “Transferred Subsidiaries” shall be deemed to exclude Novartis Santé Animale S.A.S, (C) the term “Asset Transferred Real Property” shall be deemed to exclude any real property located in France, (D) the term “Assumed Liabilities” shall be deemed to exclude the France Assumed Liabilities and (D) the term “Transferred Subsidiary Employees” shall be deemed to exclude the France Employees;

 

(iii)                with effect from the France Closing, the Suspended Provisions shall apply to the France Business mutatis mutandis except that in respect of the Suspended Provisions only (A) the term “Closing” shall be deemed to refer to the France Closing and (B) the term “Closing Date” shall be deemed to refer to the date of the France Closing; and

 

(iv)               the parties shall negotiate in good faith to agree any amendments to this Agreement and the Ancillary Agreements as may be required in order to give effect to the principles set forth in this Section 11.10.

 

11.11                 Local Agreements

 

(a)                                 The Parties do not intend this Agreement to transfer title to any Shares or Transferred Assets in any jurisdiction in which such transfer is required to be made pursuant to a Local Agreement, and any such Shares and Transferred Assets, as applicable, shall only be transferred by the applicable Local Agreement.

 

(b)                                 Notwithstanding the generality of Section 11.09, to the extent that the provisions of a Local Agreement are inconsistent with or (except to the extent they 

 

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implement a transfer in accordance with this Agreement) additional to the provisions of this Agreement:

 

(i)                      the provisions of this Agreement shall prevail; and

 

(ii)                   so far as permissible under Applicable Law of the relevant jurisdiction, the Seller and the Purchaser shall cause the provisions of the relevant Local Agreement to be adjusted, to the extent necessary to give effect to the provisions of this Agreement or, to the extent the foregoing is not permissible, the Seller shall indemnify the Purchaser against all Losses suffered by the Purchaser or, as the case may be, the Purchaser shall indemnify the Seller against all Losses suffered by the Seller or its Affiliates, in either case through or arising from any inconsistency between the relevant Local Agreement and this Agreement or such additional provisions (except to the extent they implement a transfer in accordance with this Agreement).

 

(c)                                  Each Party shall not, and shall cause its respective Affiliates not to, bring any claim (including for breach of any warranty, representation, undertaking, covenant or indemnity relating to the Proposed Transactions) against the other Party or any of its Affiliates in respect of or based upon any of the Local Agreements, except to the extent necessary to enforce any transfer of Shares or Transferred Assets or assumption of Assumed Liabilities hereunder in a manner consistent with the terms of this Agreement.  All such claims (except as referred to above) shall be brought and be subject to the provisions, rights and limitations set out in this Agreement and no Party shall be entitled to recover damages or obtain payment, reimbursement, restitution or indemnity under or pursuant to any of the Local Agreements (but without prejudice to the establishment of the existence of the claim hereunder). To the extent that a Party does bring such a claim (except as referred to above), that Party shall indemnify the other Party (and/or that other Party’s relevant Affiliates) against all costs which it or they may suffer through or arising from the bringing of such claim against it or them.

 

11.12                 Severability

 

If any provision of this Agreement (or any portion thereof) or the application of any such provision (or any portion thereof) to any Person or circumstance shall be held invalid, illegal or unenforceable in any respect by a court of competent jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision hereof (or the 

 

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remaining portion thereof) or the application of such provision to any other Persons or circumstances.

 

11.13                 Method of Payment and Set-Off

 

Except as set forth in Sections 2.06(d), 2.07(d) and 2.10, any payments pursuant to this Agreement shall be made in full, without any set-off, counterclaim, restriction or condition and without any deduction or withholding (save as may be required by Applicable Law or as otherwise agreed).  Any payments pursuant to this Agreement shall be effected by crediting for same day value the account specified by the Seller or the Purchaser (as the case may be) on behalf of the Person entitled to payment on or before the due date for payment.  Payment of a sum in accordance with this Section 11.13 shall constitute a payment in full of the sum payable and shall be a valid discharge to the payer (and those on whose behalf such payment is made) of the payer’s obligation to make such payment and the payer (and those on whose behalf such payment is being made) shall not be obligated to see to the application of the payment as between those on whose behalf payment is received.

 

11.14                 Governing Law

 

This Agreement shall be construed in accordance with, and this Agreement and all matters arising out of or relating in any way whatsoever (whether in contract, tort or otherwise) to this Agreement shall be governed by, the laws of the State of New York.

 

11.15                 Consent to Jurisdiction

 

Each Party irrevocably submits to the exclusive jurisdiction of the Supreme Court of the State of New York, located in New York County and the United States District Court for the Southern District of New York (and, in each case, any appellate court arising therefrom) for the purposes of any suit, action or other proceeding arising out of this Agreement, the Ancillary Agreements or any transaction contemplated hereby or thereby.  Each party agrees to commence any such action, suit or proceeding in the United States District Court for the Southern District of New York or, only if such action, suit or proceeding may not be brought in such court for jurisdictional reasons, in the Supreme Court of the State of New York, located in New York County. Each Party further agrees that service of any process, summons, notice or document by U.S. registered mail to such Party’s respective address, set forth in Section 11.06, shall be effective service of process for any action, suit or proceeding in New York with respect to any matters to which it has submitted to jurisdiction in this Section 11.15.  Each Party irrevocably and unconditionally waives any objection to the laying of venue of any action, suit or 

 

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proceeding arising out of this Agreement, the Ancillary Agreements or the transactions contemplated hereby and thereby in the Supreme Court of the State of New York, located in New York County and the United States District Court for the Southern District of New York, and hereby and thereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such action, suit or proceeding has been brought in an inconvenient forum.

 

11.16                 Waiver of Jury Trial

 

EACH PARTY HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT, THE ANCILLARY AGREEMENTS OR ANY TRANSACTION CONTEMPLATED HEREBY OR THEREBY.  EACH PARTY: (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER; AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTY HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE ANCILLARY AGREEMENTS, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 11.16.

 

11.17                 Translation of Currencies

 

In the event that the Parties need to convert currencies under this Agreement, the relevant exchange rate will be determined based on the spot reference rate for a transaction between the two currencies in question as quoted by the European Central Bank on the Business Day immediately preceding the relevant date of payment or, if no such rate is quoted on that date, on the preceding date on which such rates are quoted.

 

11.18                 Bulk Sales

 

The Purchaser and the Seller waive compliance with the requirements of the bulk sales Applicable Law of any jurisdiction in connection with the transactions contemplated by this Agreement.

 

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11.19                 Specific Performance

 

Without affecting any other rights or remedies of the Parties under this Agreement, each Party acknowledges and agrees that, in addition to any other remedies that may be available to it, each Party shall be entitled to enforce the terms of this Agreement by a decree of specific performance, and each Party hereby waives, and agrees that it will not raise, any defense to such an action for specific performance of the terms of this Agreement based on an obligation of the other Party to mitigate damages or based upon the other Party having an adequate remedy under Applicable Law or a breach of this Agreement not giving rise to irreparable harm.  Such remedy shall not be deemed to be the exclusive remedy for a breach of this Agreement, but shall be in addition to all other remedies available at law or equity to the Parties.

 

11.20                 Legal Representation

 

(a)                                 The Purchaser, on behalf of itself and its Affiliates (including after the Closing, the Transferred Subsidiaries), acknowledges that Freshfields Bruckhaus Deringer US LLP and its associates (Freshfields), Hogan Lovells US LLP and its associates (Hogan Lovells), Kaye Scholer and its associates (Kaye Scholer), and Fross Zelnick Lehrman & Zissu, P.C. (Fross Zelnick) act or have acted as counsel for the Seller and the Transferred Subsidiaries and may continue to represent the Seller and its Affiliates in future matters.  Accordingly, the Purchaser, on behalf of itself and its Affiliates (including, after the Closing, the Transferred Subsidiaries) expressly consents to each of Freshfields’, Hogan Lovells’, Kaye Scholer’s and Fross Zelnick’s representation of the Seller and its Affiliates in any post-Closing matter, relating to the transactions contemplated by this Agreement or the Ancillary Agreements or any disagreement or dispute relating thereto, in which the interests of the Purchaser and its Affiliates (including the Transferred Subsidiaries), on the one hand, and the Seller and its Affiliates, on the other hand, are adverse, and agrees not to claim or assert any conflict of interest in connection therewith by virtue of their representation of the Seller and its Affiliates in connection with the Proposed Transactions or any disagreement or dispute relating thereto.

 

(b)                                 Effective as of the Closing, the Purchaser hereby agrees not to assert, and to cause each of its Affiliates (including the Transferred Subsidiaries) not to assert, any attorney-client privilege held by the Business or any Transferred Subsidiary, or any officer, employee, director or manager thereof, with respect to any communication relating to the negotiation, documentation or consummation of this Agreement, the Ancillary Agreements or any of the transactions contemplated 

 

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hereby or thereby occurring with counsel to any such Person on or prior to the Closing, it being the intention of the parties hereto that all such rights to such attorney-client privilege and to control such attorney-client privilege shall be retained by the Seller and its Affiliates, and their respective officers, employees, directors and managers.  Notwithstanding the foregoing, neither the Purchaser nor its Affiliates (including the Transferred Subsidiaries) is waiving its right to assert any attorney-client privilege in connection with any Proceeding not involving Seller or its Affiliates.

 

[Signature Page Follows]

 

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IN WITNESS WHEREOF, each of the Seller and the Purchaser has duly executed this Agreement as of the date first written above.

 

 

	
NOVARTIS   AG
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
By:
    	
/s/   Marvelle Sullivan
    	
 
    
	
Name:
    	
Marvelle   Sullivan
    	
 
    
	
Title:
    	
Global   Head of M&A
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
/s/   Roy Papatheodorou
    	
 
    
	
Name:
    	
Roy   Papatheodorou
    	
 
    
	
Title:
    	
Head   of Legal Transactions
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
ELI   LILLY & COMPANY
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
By:
    	
/s/   John C. Lechleiter
    	
 
    
	
Name:
    	
John   C. Lechleiter
    	
 
    
	
Title:
    	
Chairman,   President and Chief Executive Officer
    	
 
    

 

117

 

[***]Exhibit 4.7

 

	
Confidential portions of this exhibit have
    	
 
    	
CONFORMED COPY
    
	
been omitted and filed separately with the
    	
 
    	
 
    
	
Securities and Exchange Commission
    	
 
    	
 
    

 

Dated 26 October 2014

 

NOVARTIS AG

 

and

 

CSL LIMITED

 

SHARE AND BUSINESS SALE AGREEMENT

 

relating to the Flu Group

 

 

Linklaters LLP 
 One Silk Street

London EC2Y 8HQ

United Kingdom

 

Telephone (+44 20) 7456 2000

Facsimile (+44 20) 7456 2222

 

Ref L-225505_A18882028

 

 

Share and Business Sale Agreement

 

This Agreement is made on 26 October 2014

 

between:

 

(1)                              NOVARTIS AG, a corporation (Aktiengesellschaft) incorporated in Switzerland whose registered office is at Lichtstrasse 35, 4056 Basel, Switzerland (the “Seller”); and

 

(2)                              CSL LIMITED, a company incorporated in Australia whose registered office is at 45 Poplar Road, Parkville, Victoria 3052, Australia (the “Purchaser”),

 

each a “party” and together the “parties”.

 

Whereas:

 

(A)                            The Seller and certain of the Seller’s Affiliates, including the Flu Group Companies (as defined below), are engaged in the Business.

 

(B)                            As of the date of this Agreement, the Seller and certain of the Seller’s Affiliates directly or indirectly own shares or other equity interests in the Flu Group Companies.

 

(C)                            Subject to the terms and conditions of this Agreement, the Seller has agreed to sell (or procure the sale of) the Flu Group (as defined below) and to assume the obligations imposed on the Seller under this Agreement.

 

(D)                            Subject to the terms and conditions of this Agreement, the Purchaser has agreed to purchase (or procure the purchase of) the Flu Group and to assume the obligations imposed on the Purchaser under this Agreement.

 

(E)                             In connection with the transactions contemplated by this Agreement, the Purchaser and the Seller, or certain of their respective Affiliates, have or will enter into the Ancillary Agreements.

 

It is agreed as follows:

 

1                                      Interpretation

 

In this Agreement, unless the context otherwise requires, the provisions in this Clause 1 apply:

 

1.1                            Definitions

 

“2013 Carve Out Accounts” means the unaudited carve out balance sheet of the Flu Group as at 31 December 2013 and the unaudited carve out profit and loss account and cash flow statement of the Flu Group for the accounting reference period ended on 31 December 2013, as contained in the Data Room at 9.1.2.2.3.1;

 

“2014 Accounts” means the audited statutory financial statements of each of Novartis Vaccines Holdings Limited and Novartis Vaccines and Diagnostics Limited, prepared in accordance with IFRS as adopted by the European Union and Applicable Law, for the accounting reference period ended on 31 December 2014, comprising the balance sheet, the profit and loss account and the notes to the accounts;

 

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“Accounts” means the audited statutory financial statements of each of Novartis Vaccines Holdings Limited and Novartis Vaccines and Diagnostics Limited for the accounting reference period ended on the Accounts Date, comprising the balance sheet, the profit and loss account and the notes to the accounts, as filed with the UK registrar of Companies on 3 October 2014 and as contained in the Data Room at 1.2.1.2.6 and 1.2.1.2.5;

 

“Accounts Date” means 31 December 2013;

 

“Affiliate” means, with respect to any person, any other person that Controls, is Controlled by or is under common Control with such person, and “Affiliates” shall be interpreted accordingly;

 

“Affiliate Contract” means a Contract between or among any member of the Seller’s Group (other than the Flu Group Companies) on the one hand, and any Flu Group Company on the other hand, but excluding any Ancillary Agreement;

 

“Agreed Terms” means, in relation to a document, such document in the terms agreed between the Seller and the Purchaser and initialled for identification purposes by the Seller or its representatives and the Purchaser or its representatives, with such alterations as may be agreed in writing between the Seller and the Purchaser from time to time;

 

“Agreement” means this share and business sale agreement;

 

“Ancillary Agreements” means the Local Transfer Documents, the Disclosure Letter, the Tax Indemnity, the Transitional Services Agreement, the Marketing Authorisation Services Agreement, the MF59® Manufacturing and Supply Agreement, the FCC Bulk Antigens Supply Agreement, the Purchaser Intellectual Property Licence Agreement, the Netherlands Offer Letter, the Netherlands APA, the Intellectual Property Assignment Agreements, the GSK Ancillary Agreements, the LEK Filling and Packaging Agreement  and any other agreement to be entered into in connection with the transactions contemplated by this Agreement;

 

“Anti-Bribery Law” means any Applicable Law that relates to bribery or corruption, including the US Foreign Corrupt Practices Act of 1977 and the UK Bribery Act 2010, in each case as amended, re-enacted or replaced from time to time;

 

“Applicable Law” means any supra-national, federal, national, state, municipal or local statute, law, ordinance, regulation, rule, code, order (whether executive, legislative, judicial or otherwise), judgment, injunction, notice, decree or other requirement or rule of law or legal process (including common law), or any other order of, or agreement issued, promulgated or entered into by, any Governmental Entity or any rule or requirement of any national securities exchange, including, for the avoidance of doubt, the Transfer Regulations;

 

“Assumed Liabilities” has the meaning given to it in Clause 8.1.1;

 

“Benefit Plans” means the US Benefit Plans and the Non-US Benefit Plans;

 

“Business” means:

 

(i)                                   the business conducted by the Seller’s Group from time to time of research, development, manufacture, sales, distribution, marketing and Commercialisation of:

 

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(a)                              influenza Vaccines and other products using egg-based technologies and related adjuvant technologies;

 

(b)                              influenza Vaccines using cell-based technologies, including such business conducted at the Holly Springs Site;

 

(c)                               adjuvants conducted at the Holly Springs Site; and

 

(d)                              other Vaccines products to the extent that such business is conducted or contemplated to be conducted by the Seller’s Group at the Holly Springs Site in accordance with its obligations to, or as requested by, the US government or regulatory authorities;

 

(ii)                                the operations for the manufacture of the MF59® adjuvant located within the Marburg MF59® Premises and at the Holly Springs Site; and

 

(iii)                             the technical development, manufacturing and supply of any other pharmaceutical or biological products at the Holly Springs Site;

 

other than the Excluded Assets;

 

“Business Assets” has the meaning given to it in Clause 2.3.1 of this Agreement;

 

“Business Day” means a day which is not a Saturday, a Sunday or a public holiday in the canton of Basel-Stadt (Switzerland), London (UK) or Melbourne (Australia);

 

“Business Information” means: (i) Commercial Information; (ii) Medical Information; and (iii) any other information Exclusively Related to the Business (including the Products, Pipeline Products and Products Under Registration);

 

“Business Sellers” means the members of the Seller’s Group (other than the Flu Group Companies) that own assets of or otherwise conduct any of the Flu Group Businesses;

 

“Cash Balances” means cash in hand or credited to any account with a financial institution and securities which are readily convertible into  cash as at the Effective Time;

 

“Cash Pooling Arrangements” means the cash pooling arrangements of members of the Seller’s Group in which the Flu Group Companies participate;

 

“CFIUS” means the Committee on Foreign Investment in the United States;

 

“CFIUS Approval” means written notice from CFIUS that any review or investigation of the Transaction under Section 721 of the Defense Production Act of 1950, as amended (50 U.S.C. App. Section 2170), has been concluded and there are no unresolved national security concerns with respect to the Transaction or the President shall have determined not to take action with respect to the Transaction;

 

“CFIUS Filing” has the meaning given to it in Clause 4.2.9;

 

“Closing” means the completion of the sale of the Shares and the Flu Group Businesses pursuant to this Agreement and the entry into or novation of any Ancillary Agreement;

 

“Closing Date” means the date on which Closing takes place;

 

“Closing Statement” means the statement setting out the Flu Group Companies’ Cash Balances, the Tax Adjustment and the Third Party Indebtedness to be prepared by the Seller and agreed or determined in accordance with Clause 7 and Schedule 14;

 

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“COBRA” means the Consolidated Omnibus Budget Reconciliation Act of 1985 of the United States, as amended, section 4980B of the Code, Title I Part 6 of ERISA, and any similar US state group health plan continuation law, together with its implementing regulations;

 

“Code” means the U.S. Internal Revenue Code of 1986, as amended, together with its implementing regulations;

 

“Commercial Information” means information that is, as of the Closing Date, owned or in the possession of the Seller and/or its Affiliates and relates exclusively to the Commercialisation of any Product or future possible Commercialisation of any Pipeline Product or Product Under Registration other than information which the Seller and/or its Affiliate is required by Applicable Law to retain;

 

“Commercialisation” means the promotion, marketing, distribution and/or sale of a Product, and “Commercialise” shall be construed accordingly;

 

“Company Leased Real Properties” has the meaning given to it in paragraph 1.1 of Part 1 of Schedule 3;

 

“Company Leases” has the meaning given to it in paragraph 1.1 of Part 1 of Schedule 3;

 

“Company Owned Real Properties” has the meaning given to it in paragraph 1.1 of Part 1 of Schedule 3;

 

“Company Real Properties” means the Company Owned Real Properties and the Company Leased Real Properties, and “Company Real Property” means any one of them;

 

“Competition Authorities” has the meaning given to it in Clause 4.1.1;

 

“Confidentiality Agreement” means the confidentiality agreement dated 12 May 2014 between Novartis International AG and the Purchaser pursuant to which the Seller made available to the Purchaser certain confidential information relating to the Flu Group;

 

“Contract” means any binding contract, agreement, instrument, lease, licence or commitment, excluding: (i) any lease or other related or similar agreements, undertakings and arrangements with respect to the leasing or ownership of the Properties (to which the provisions set out in Schedule 3 shall apply); and (ii) any contract with any Employee (to which the provisions set out in Schedule 9 shall apply);

 

“Control” means the power to direct the management and policies of a person (directly or indirectly), whether through ownership of voting securities, by Contract or otherwise, and the term “Controlled” shall be interpreted accordingly;

 

“Co-Owned Flu Group Intellectual Property Right” means any Flu Group Intellectual Property Right that is owned in part by any person other than the Seller or one of its Affiliates;

 

“Copyright” means any works of authorship, copyrights, database rights, mask work rights and registrations and applications therefor;

 

“Data Room” means the electronic data room containing documents and information relating to the Flu Group made available by IntraLinks, Inc. on behalf of the Seller, the index of which has been and initialled for identification purposes by the Seller or its

 

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representatives and the Purchaser or its representatives and the contents of which is listed in the Disclosure Letter and copied to a CD ROM that has been exchanged between the parties on or about the date of this Agreement;

 

“Decision” means the issuing of any decision by any competition, antitrust, foreign investment, national, federal, state, local, supranational or supervisory or other government, governmental, quasi-governmental, trade, or regulatory body, agency, branch, subdivision, department, commission, official or authority, including any Tax Authority and any governmental department and any court or other tribunal, that would have the effect of preventing the consummation of the transactions contemplated by this Agreement;

 

“Deferred Employee” means, subject to Clauses 5.1.2(xviii) to 5.1.2(xxiv), any person to whom the Seller, any Flu Group Company or any other member of the Seller’s Group has made an offer of employment for a role in the Business and whose employment in the Business will take effect on a date following the Closing Date, save that no person shall become a Deferred Employee unless and until the Seller has provided to the Purchaser a copy of the offer letter setting out the agreed principal terms of employment and/or employment agreement applicable to such person;

 

“Disclosed” means fairly disclosed and with sufficient particularity to enable a reasonable purchaser to identify the nature and scope of the fact, matter or circumstances disclosed;

 

“Disclosure Letter” means the letter dated on the same date as this Agreement from the Seller to the Purchaser disclosing information against the Seller’s Warranties;

 

“Draft Closing Statement” has the meaning given to it in Clause 7.1;

 

“Effective Time” means: (i) if the Closing Date is the last day of a month, 11.59 p.m. (local time in the relevant location) on the Closing Date; or (ii) if the Closing Date is the first Business Day of a month, 11.59 p.m. (local time in the relevant location) on the last day of the immediately preceding month;

 

“Election Date” has the meaning given in Clause 4.2.9;

 

“Employee Benefit Liabilities” has the meaning given to it in Schedule 10;

 

“Employee Benefits” has the meaning given to it in Schedule 10;

 

“Employee Inventor Payments” means any past or future compensation payments payable to any employee of the Seller’s Group who was an inventor of any Flu Group Intellectual Property Rights provided that the Seller was, prior to the date of this Agreement, aware of such compensation payments being payable to such employee. For the purposes of this definition the Seller’s awareness shall be deemed to refer to the actual knowledge of [***]. For the avoidance of doubt, this shall include the claims brought by employees of Novartis Vaccines and Diagnostics GmbH before the date of this Agreement for inventor compensation under German law for sales of Begrivac between 2006 and 2011 that are based on the employee’s rights in or contributions to the development of the Flu Group Intellectual Property;

 

“Employees” means the Flu Business Employees and the Flu Group Company Employees, and “Employee” means any one of them;

 

“Encumbrance” means any claim, charge, mortgage, restriction, lien, option, equitable right, power of sale, pledge, hypothecation, usufruct, retention of title, right of pre-emption,

 

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right of first refusal or other security interest of any kind or an agreement, arrangement or obligation to create any of the foregoing, and for the avoidance of doubt shall exclude any licences of or claims of infringement relating to Intellectual Property Rights;

 

“Environmental Laws” means any and all Applicable Law, Permit or agreement regulating or imposing Liability or standards of conduct concerning pollution or protection of the environment (including air (including air within buildings and other natural or man-made structures above or below the ground), water, or land and any ecological systems and living organisms (including humans) supported by any of those media);

 

“ERISA” means the Employee Retirement Income Security Act of 1974 of the United States, as amended, together with its implementing regulations;

 

“Estimated Flu Group Companies’ Cash Balances” means the Seller’s reasonable and good faith estimate of the aggregate of the Flu Group Companies’ Cash Balances, to be notified by the Seller to the Purchaser pursuant to Clause 6.4;

 

“Estimated Tax Adjustment” means the Seller’s reasonable and good faith estimate of the aggregate of the Tax Adjustment, to be notified by the Seller to the Purchaser pursuant to Clause 6.4;

 

“Estimated Third Party Indebtedness” means the Seller’s reasonable and good faith estimate of the Third Party Indebtedness, to be notified by the Seller to the Purchaser pursuant to Clause 6.4;

 

“Event” means any transaction, event, circumstance, action or omission, including, without limitation, any change in the residence of any person for the purposes of any Tax, and shall also include Closing;

 

“Excluded Assets” has the meaning given to it in Clause 2.3.2;

 

“Excluded Contracts” means, collectively, each Contract: (i) which is not Predominantly Related to the Business; (ii) which is listed in Schedule 5; (iii) which is solely between members of the Seller’s Group (excluding the Flu Group Companies); or (iv) which is a MF59® Platform Intellectual Property Rights Contract;

 

“Excluded Employees” means the employees listed in Schedule 18 and such other employees of the Seller’s Group as may be agreed in writing between the Seller and the Purchaser after the date of this Agreement but before the Closing Date;

 

“Excluded Liabilities” has the meaning given to it in Clause 8.2;

 

“Exclusively Related to the Business” means exclusively related to, or exclusively used or held for use exclusively in connection with, the Business;

 

“FCC Bulk Antigens Supply Agreement” means the manufacturing and supply agreement for the supply of bulk antigens in the Agreed Terms;

 

“FCC Vaccines” means bulk influenza Vaccines produced using cell-based technologies;

 

“FDA” means the United States Food and Drug Administration (or its successor);

 

“Final Payment Date” means 5 Business Days after the agreement or determination of the Closing Statement in accordance with Clause 7 and Schedule 14;

 

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“Flu Business Employees” means, subject to any changes made in accordance with Clauses 5.1.2(xviii) to 5.1.2(xxiv) (inclusive), but excluding Clause 5.1.2(xxii), the employees of any member of the Seller’s Group who work wholly or mainly in the Business or who perform a critical role in the Business, an indicative list, as at the date of this Agreement, of whom are identified with a unique identifier (not name) as appended to the Disclosure Letter, including, for the avoidance of any doubt, the International Assignees, other than the Flu Group Company Employees and the Excluded Employees, and provided that, in relation to the Seller’s Warranties only, the words “from time to time” shall be deemed to be replaced by “at the date of this Agreement” and “Flu Business Employee” means any one of them;

 

“Flu Group” means the Flu Group Companies and the Flu Group Businesses, taken as a whole;

 

“Flu Group Businesses” means the businesses of the Business (but excluding the businesses of the Business carried on by the Flu Group Companies) as set out in Clause 2.3.1, but subject always to Clause 2.3.2;

 

“Flu Group Companies” means:

 

(i)                                   Novartis Vaccines Holdings Limited and the Subsidiary; and

 

(ii)                                any entity incorporated and existing after the date of this Agreement for the purpose of holding any part of the Flu Group Businesses, including as the result of any Reorganisation, and whose operations, assets and/or businesses are Exclusively Related to the Business,

 

and “Flu Group Company” means any one of them;

 

“Flu Group Company Employees” means, subject to any changes made in accordance with Clauses 5.1.2(xviii) to 5.1.2(xxiv) (inclusive), but excluding Clause 5.1.2(xxii), the employees employed by any of the Flu Group Companies who work wholly or mainly in the Business or who perform a critical role in the Business other than the Excluded Employees, an indicative list of whom, as at the date of this Agreement, are identified with a unique identifier (not name) as contained in the Data Room at 5.1.3.5, and provided that, in relation to the Seller’s Warranties only, the words “from time to time” shall be deemed to be replaced by “at the date of this Agreement”, and “Flu Group Company Employee” means any one of them;

 

“Flu Group Information Technology” means the Transferred Information Technology and the Owned Information Technology;

 

“Flu Group Insurance Policies” means all insurance policies held exclusively by and for the benefit of the Flu Group Companies and “Flu Group Insurance Policy” means any one of them;

 

“Flu Group Intellectual Property Contracts” means the Transferred Intellectual Property Contracts and the Owned Intellectual Property Contracts;

 

“Flu Group Intellectual Property Rights” means the Transferred Intellectual Property Rights and the Owned Intellectual Property Rights;

 

“FSAs” has the meaning given to it in paragraph 5.1 of Schedule 9;

 

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“GMP” means current good manufacturing practices as set out in the ICH Guideline on Good Manufacturing Practice for Active Pharmaceutical Ingredients; the corresponding requirements of any other Governmental Entity and any other good manufacturing practices applicable to the relevant Product, Product Under Registration and Pipeline Product Approval;

 

“Governmental Entity” means any supra-national, federal, national, state, county, local, municipal or other governmental, regulatory or administrative authority, agency, commission or other instrumentality, any court, tribunal or arbitral body with competent jurisdiction, or any national securities exchange or automated quotation service, including, any governmental regulatory authority or agency responsible for the grant approval, clearance, qualification, licensing or permitting of any aspect of the research, development, manufacture, marketing distribution or sale of the Products, Pipeline Products or Products Under Registration, including the FDA, the European Medicines Agency, or any successor agency thereto, but excluding any Tax Authority;

 

“GSK” means GlaxoSmithKline plc and its Affiliates;

 

“GSK Ancillary Agreements” means:

 

(i)                                   the manufacturing and supply agreement pursuant to which GSK will manufacture and supply certain products relating to the treatment of influenza;

 

(ii)                                the manufacturing, supply and distribution agreement pursuant to which GSK will undertake certain activities in relation to certain marketing authorisations pending their transfer to, or re-registration by the Purchaser; and

 

(iii)                             the support services agreement pursuant to which GSK will provide certain site services to the Marburg MF59® Premises,

 

in each case entered into by GSK and a member of the Seller’s Group on or around 23 October 2014;

 

“Hazardous Substance” means any gasoline or petroleum products, polychlorinated biphenyls, urea-formaldehyde insulation, hazardous wastes, toxic substances, asbestos, pollutants, or contaminants defined as such in or regulated under any applicable Environmental Law;

 

“Headline Price” means has the meaning given to it in Clause 3.1;

 

“Holly Springs Site” means the Properties located in Holly Springs, North Carolina, United States of America at which the Business undertakes, among other things, Manufacturing activities;

 

“IFRS” means the International Financial Reporting Standards promulgated by the International Accounting Standards Board;

 

“In-Market Inventory” means all inventory of Products for Commercialisation that, at any particular time: (i) is beneficially owned by a member of the Seller’s Group; and (ii) is in finished packed form and released for Commercialisation; and (iii) is located: (a) in (or in transit to) the relevant market; or (b) in (or in transit to) a multi-market warehouse owned or operated by a member of the Seller’s Group or by a third party; or (c) at a Property pending despatch following release by the relevant qualified person to the relevant market or multi-market warehouse;

 

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“Indebtedness” means all loans and other financing liabilities and obligations in the nature of borrowed moneys and overdrafts and moneys borrowed and other debt like items, but excluding trade debt and liabilities arising in the ordinary course of business and excluding any amounts in respect of Tax;

 

“Information Technology” means computer, hardware, software and network;

 

“Intellectual Property Assignment Agreements” means the assignments between the Seller and/or one or more of its Affiliates and the Purchaser and/or one or more of its Affiliates in the Agreed Terms, to be entered into at Closing, in respect of the transfer of certain Intellectual Property Rights in each of the relevant jurisdictions;

 

“Intellectual Property Litigation” means actual and threatened litigation anywhere in the world with:

 

(i)                                   [***] in relation to [***] and [***] or counterpart wherever registered; and

 

(ii)                                [***], [***] and [***] in relation to [***] or counterpart patents wherever registered;

 

“Intellectual Property Rights” means all: (i) Patents; (ii) Know-How; (iii) Trademarks; (iv) internet domain names; (v) Copyrights; (vi) rights in designs; (vii) database rights; and (viii) all rights or forms of protection, anywhere in the world, having equivalent or similar effect to the rights referred to in (i) to (vii) above, in each case, whether registered or unregistered and including applications for registration of any such thing;

 

“International Assignees” means: (i) the employees listed in Schedule 19; and (ii) such other employees as may be agreed in writing between the Seller and the Purchaser between the date of this Agreement and the Closing Date;

 

“Intra-Group Non-Trade Payables” means all outstanding loans or other financing liabilities or obligations (including, for the avoidance of doubt, interest accrued, dividends declared or payable but not paid) owed by a Flu Group Company to a member of the Seller’s Group (other than a Flu Group Company) as at the Effective Time, but excluding: (i) Intra-Group Trading Balances; and (ii) any amounts in respect of Tax;

 

“Intra-Group Non-Trade Receivables” means all outstanding loans or other financing liabilities or obligations (including, for the avoidance of doubt, interest accrued, dividends declared or payable but not paid) owed by a member of the Seller’s Group (other than a Flu Group Company) to a Flu Group Company as at the Effective Time, but excluding: (i) Intra-Group Trading Balances; and (ii) any amounts in respect of Tax;

 

“Intra-Group Trading Balances” means all trade accounts and notes receivable or payable arising in the ordinary course between any two members of the Seller’s Group, in each case to the extent related to the Business, together with any unpaid financing charges accrued thereon;

 

“Judgment” means any order, writ, judgment, injunction, decree, stipulation, determination, Decision or award entered into by or with any Governmental Entity of competent jurisdiction;

 

“Key Sites” means the Holly Springs Site and the Liverpool Site, and “Key Site” means any one of them;

 

“Key Warranty” means the warranties set out in the following paragraphs of Schedule 16:

 

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(i)                                   2.1.2;

 

(ii)                                2.3.1 and 2.3.2;

 

(iii)                             2.5 (but for these purposes only the words “or Business Seller or Share Seller” in each of paragraphs 2.5.1 and 2.5.2 shall be deemed to be deleted);

 

(iv)                            2.11.1(iv) and 2.11.2(iii) (but for these purposes only each such paragraph shall be deemed to include the following additional sentence:

 

“Neither of the Key Sites (each taken as a whole) is at Closing:

 

(a)                       incapable of operation by the Purchaser’s Group without a member of the Purchaser’s Group being in breach of any Applicable Law or any other material duty or obligation; or

 

(b)                       otherwise incapable of operation by virtue of some other event, matter, or circumstance,

 

but only where the circumstances giving rise to the inability of the Purchaser’s Group to operate a Key Site would, or would be reasonably likely to, result in:

 

A.                          a Key Site being prohibited from, or otherwise being substantially incapable of, operation for a period of at least three consecutive months in the 12 month period immediately following the Closing Date; and

 

B.                          the manufacturing output of that Key Site in the 12 month period following the Closing Date falling by 30 per cent. or more as compared to the manufacturing output at that Key Site in the 12 month period ending on the corresponding date in the immediately preceding year.”;

 

(v)                               2.13.3 (but for these purposes only such paragraph shall be deemed to read: “No member of the Seller’s Group has received written notice that it is in material default under any US Government Contract with a value in excess of US$5 million (as determined based on annual sales or expenditure in 2013) or the UK Pandemic Agreement.”);

 

(vi)                            2.16.1 (but for these purposes only such paragraph shall be deemed not to include the first sentence);

 

(vii)                         2.17.2; and

 

(viii)                      2.24;

 

“Know-How” means all existing and available technical information, know-how and data, including inventions (whether patentable or not), discoveries, trade secrets, specifications, instructions, processes and formulae, including all biological, chemical, pharmacological, biochemical, toxicological, pharmaceutical, physical, safety, quality control, preclinical and clinical data;

 

“LEK Filling and Packaging Agreement” means the agreement for the production of ready to fill formulation on the declaration of a pandemic entered into by LEK

 

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Pharmaceuticals d.d., Sandoz AG and Novartis Vaccines and Diagnostics AG on or about 23 October 2014;

 

“Liabilities” means all liabilities, claims, damages, proceedings, demands, orders, suits, costs, losses and expenses of every description, whether deriving from contract, common law, statute or otherwise, whether present or future, actual or contingent, ascertained or unascertained or disputed and whether owed or incurred severally or jointly or as principal or surety;

 

“Liverpool Site” means the Properties located in Liverpool at which the Business undertakes Manufacturing activities;

 

“Local Transfer Document” has the meaning given to it in Clause 2.6.1;

 

“Long Stop Date” has the meaning given to it in Clause 4.4;

 

“Losses” means all losses, liabilities, costs (including legal costs and experts’ and consultants’ fees), charges, expenses, actions, proceedings, claims and demands;

 

“Manufacture”, “Manufacturing” or “Manufactured” means the planning, purchasing of materials for, production, processing, compounding, storage, filling, packaging, labelling, leafleting, warehousing, quality control testing, waste disposal, quality release, sample retention and stability testing of products;

 

“Manufacturing Inventory” means any packed inventory of Products that is: (i) in finished form; (ii) beneficially owned by any member of the Seller’s Group; (iii) held at a Property or outside of a Property where secondary packaging is undertaken; and (iv) not yet released by a qualified person of the Seller’s Group; and excluding in each case, for the avoidance of doubt, any In-Market Inventory and Manufacturing Stocks;

 

“Manufacturing Stocks” means, as at Closing, all stocks of raw materials, active pharmaceutical ingredients, ingredients, adjuvants, drug substances, intermediates, packaging materials, components, devices and other production and pre-production consumables and work-in-progress that are beneficially owned by any member of the Seller’s Group for use in the Manufacture of Products, Products Under Registration or Pipeline Products;

 

“Marburg MF59® Premises” means the premises leased by the Seller, a member of the Seller’s Group or a member of the Flu Group and which are located in Marburg (Germany) in which the Flu Group undertakes the manufacture of MF59® adjuvant;

 

“Marketing Authorisation Data” means the existing dossiers in the Seller’s Group possession or control containing the relevant Know-How used by the Seller and/or its Affiliates to obtain and maintain the Marketing Authorisations;

 

“Marketing Authorisation Services Agreement” means the manufacturing, supply and distribution agreement pending transfer of the Marketing Authorisations to be entered into at Closing in the Agreed Terms;

 

“Marketing Authorisations” means the marketing authorisations issued or applications for marketing authorisations with respect to the Products, Pipeline Products and Products Under Registration and all supplements, amendments and revisions thereto;

 

“Material Adverse Effect” means any event, occurrence, fact, condition, change or effect that has had or would have a materially adverse effect on the business, financial condition

 

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or results of operations of the Flu Group taken as a whole (other than on a short term, cyclical or temporary basis), except to the extent caused by: (i) the transactions contemplated by this Agreement and the Ancillary Agreements and the announcement and consummation thereof; (ii) changes in law, regulation or accounting standards, principles or interpretations thereof applicable to the Business; (iii) changes generally applicable to financial, economic, political or similar conditions (including acts of war, declared or undeclared, armed hostilities and terrorism) or to financial, securities, commodities or other market conditions or prevailing interest rates; (iv) changes generally applicable in the industry in which the Business operates; or (v) any matters disclosed in this Agreement, the Ancillary Agreements, the Disclosure Letter or the Data Room (other than any such matters which would not as at the date of this Agreement have constituted a Material Adverse Effect but which subsequently develop in such a manner as to constitute a Material Adverse Effect as a result of an event or occurrence after the date of this Agreement which could not reasonably have been anticipated at the date of this Agreement);

 

“Material Employee Jurisdictions” means the United Kingdom, the United States of America, Italy and Switzerland;

 

“Medical Information” means information relating to clinical and technical matters, such as therapeutic uses for the approved indications, drug-disease information, and other product characteristics Exclusively Related to the Business (including the Products, Pipeline Products and Products Under Registration) which is owned or in the possession of the Seller and/or its Affiliates as of the Closing Date other than information which the Seller and/or its Affiliate is required by Applicable Law to retain;

 

“MF59® Flu Specific Intellectual Property Rights” means the Intellectual Property Rights owned by the Seller’s Group comprised within the MF59® Rights that are Exclusively Related to the Business;

 

“MF59® Flu Specific Intellectual Property Rights Contracts” means the Contracts held by the Seller’s Group relating to the Intellectual Property Rights comprised within the MF59® Rights that are Exclusively Related to the Business;

 

“MF59® Manufacturing and Supply Agreement” means the manufacturing and supply agreement for the supply of MF59® adjuvant to the Seller and/or its Affiliates to be entered into at Closing in the Agreed Terms;

 

“MF59® Platform Intellectual Property Rights” means the Intellectual Property Rights owned by the Seller’s Group comprised within the MF59® Rights excluding the MF59® Flu Specific Intellectual Property Rights, including the Intellectual Property Rights set out in Schedule 23;

 

“MF59® Platform Intellectual Property Rights Contracts” means the Contracts held by the Seller’s Group relating to the Intellectual Property Rights comprised within the MF59® Rights excluding the MF59® Flu Specific Intellectual Property Rights Contracts;

 

“MF59® Rights” means all rights in the MF59® adjuvant owned by or licensed to the Seller’s Group including: (i) all stocks of the adjuvant and materials used in its production; (ii) all Intellectual Property Rights in and relating to the MF59® adjuvant; and (iii) all Intellectual Property Rights in and relating to the manufacture and production or fill finish process relating to the MF59® adjuvant;

 

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“Netherlands APA” has the meaning given to it in the Netherlands Offer Letter;

 

“Netherlands Assumed Liabilities” means the Assumed Liabilities to the extent they relate to the Netherlands Business, excluding always the Excluded Liabilities;

 

“Netherlands Business” means that part of the Flu Group, comprising:

 

(i)            the Flu Group Businesses as conducted in the Netherlands;

 

(ii)           the Netherlands Assumed Liabilities;

 

(iii)          the Netherlands Employees; and

 

(iv)                            any other assets that are exclusively related to the Flu Group Business as conducted in the Netherlands;

 

“Netherlands Closing” has the meaning given to it in the Netherlands APA;

 

“Netherlands Employees” means the Employees employed in the Netherlands Business;

 

“Netherlands Offer Letter” means the letter from the Purchaser to the Seller in respect of the binding offer from the Purchaser to acquire the Netherlands Business dated on or around the date hereof;

 

“Netherlands Put Option Exercise” has the meaning given to it in the Netherlands Offer Letter;

 

“Non-US Benefit Plans” has the meaning given to it in paragraph 2.21.4 of Schedule 16;

 

“Notice” has the meaning given to it in Clause 15.11.1;

 

“Owned Information Technology” means all Information Technology of any Flu Group Company to the extent Exclusively Related to the Business;

 

“Owned Intellectual Property Contracts” means the Contracts Exclusively Related to the Business which relate to Intellectual Property Rights and that are held by the Flu Group Companies;

 

“Owned Intellectual Property Rights” means the Intellectual Property Rights of any Flu Group Company to the extent Exclusively Related to the Business;

 

“Patents” means patents, design patents, patent applications and any reissues, re-examinations, divisionals, continuations, continuations-in-part, provisionals, and extensions thereof or any counterparts to any of the foregoing (including rights resulting from any post-grant proceedings relating to any of the foregoing);

 

“PA Transfer Date” means, in relation to a Product Approval or Product Application, the date upon which the relevant Governmental Entity approves and notifies the Product Approval or Product Application (as applicable) naming the Purchaser or the relevant Affiliate of the Purchaser (or designee thereof) as the holder of such Product Approval or Product Application in the relevant country or territory covered by that Product Approval or Product Application;

 

“Pension Scheme” means the Chiron UK Pension Scheme;

 

“Permit” has the meaning given to it in paragraph 4.15.1 of Schedule 16;

 

“Permitted Encumbrance” means:

 

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(i)            Encumbrances for Taxes, assessments and charges or levies of any Governmental Entity not yet delinquent or for which adequate reserves are maintained on any financial statements (including management accounts) relating to the Business, where such financial statements have been made available to the Purchaser;

 

(ii)           Encumbrances imposed by Applicable Law;

 

(iii)          Encumbrances imposed in the ordinary course of business which are not yet due and payable or which are being contested in good faith;

 

(iv)         Encumbrances which are listed in Schedule 6;

 

(v)          except with respect to the Transferred Real Property, pledges or deposits to secure obligations under Applicable Law relating to workers’ compensation, unemployment insurance or to secure public or statutory obligations; and

 

(vi)         except with respect to the Transferred Real Property, liens, title retention arrangements or deposits to secure the performance of bids, trade contracts (other than for borrowed money), conditional sales contracts, leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of the Business;

 

“Pipeline Product” means:

 

(i)            each product in development by the Business set out under the heading “Pipeline Products” in Paragraph C of Part 2 of Schedule 7; and

 

(ii)           any other product in development which is Exclusively Related to the Business;

 

“Pipeline Product Approvals” means all permits, licences, certificates, clearances, registration or other authorisations or consents issued by any Governmental Entity to the Seller or one of its Affiliates in relation to the research and development of Pipeline Products;

 

“Predominantly Related to the Business” means exclusively or predominantly related to, or used or held for use exclusively or predominantly in connection with, the Business;

 

“Product Applications” means all applications for Product Approval filed with respect to Products Under Registration, with each individual application being a “Product Application”;

 

“Product Approvals” means all permits, licences, certificates, clearances, registrations or other authorisations or consents, including any Marketing Authorisations, issued by any Governmental Entity to the Seller or one of its Affiliates with respect to the Products or the use, research, development, marketing, distribution or sale thereof;

 

“Products” means:

 

(i)            the products set out under the heading “Products” in paragraph A of Part 2 of Schedule 7; and

 

(ii)           any other products Exclusively Related to the Business;

 

“Products Under Registration” means:

 

(i)            the products set out under the heading “Products Under Registration” in paragraph B of Part 2 of Schedule 7; and

 

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(ii)           any other product under registration Exclusively Related to the Business;

 

“Properties” means the Company Real Properties, the Transferred Real Properties and the Marburg MF59® Premises and “Property” means any one of them;

 

“Proprietary Information” means all confidential and proprietary information of the Seller or its Affiliates that is Exclusively Related to the Business, including confidential Medical Information, confidential Know How and confidential Commercial Information;

 

“Prosecution and Maintenance” means the preparation, filing, prosecution and maintenance of the Flu Group Intellectual Property Rights, and any re-examinations, re-issues, interference actions, oppositions or other similar proceedings before national or supranational patent offices. For the avoidance of doubt, Prosecution and Maintenance shall exclude the enforcement or defence of Flu Group Intellectual Property Rights in any U.S. federal court or any foreign counterpart thereof or before any international trade commission panel;

 

“Purchase Price” has the meaning given to it in Clause 3.1;

 

“Purchase Price Bank Account” means the account notified by the Seller to the Purchaser no later than 5 Business Days prior to the Closing Date;

 

“Purchaser Intellectual Property Licence Agreement” means the agreement between the Seller and/or one or more of its Affiliates and the Purchaser and/or one or more of its Affiliates in the Agreed Terms, to be entered into on Closing, in respect of the grant of licences from the Seller’s Group (other than a Flu Group Company) to the Purchaser’s Group of certain Intellectual Property Rights;

 

“Purchaser’s Group” means the Purchaser and its Affiliates from time to time;

 

“Purchaser’s Lawyers” means Baker & McKenzie LLP, of 100 New Bridge Street, London, EC4V 6JA, United Kingdom;

 

“Registered Intellectual Property Rights” means Intellectual Property Rights that are registered, issued, filed, or applied for under the authority of any Governmental Entity;

 

“Registered Flu Group Intellectual Property Rights” means all Flu Group Intellectual Property Rights that are Registered Intellectual Property Rights;

 

“Relevant Employers” means the Business Sellers and such other members of the Seller’s Group who employ the Relevant Flu Business Employees;

 

“Relevant Employer’s FSAs” has the meaning given to it in paragraph 5.1 of Schedule 9;

 

“Relevant Part” means the relevant part of the Shared Business Contracts which relates exclusively to the Business (or the relevant part of the Business that is transferred to the Purchaser at Closing);

 

“Relevant Pension and Employment Liabilities” means: (i) any Liabilities assumed by the Purchaser or a member of the Purchaser’s Group as contemplated by Schedule 9; and (ii) any Transferred Employee Benefit Liabilities which the Purchaser agrees to assume in accordance with Schedule 10;

 

“Relevant Persons” has the meaning given to it in Clause 8.4.2;

 

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“Relevant Flu Business Employees” means the Flu Business Employees immediately prior to the Closing Date and “Relevant Flu Business Employee” means any one of them;

 

“Relevant Flu Group Company Employees” means the Flu Group Company Employees immediately prior to the Closing Date and “Relevant Flu Group Company Employee” means any one of them;

 

“Relief” means any loss, relief, allowance or credit in respect of any Tax and any deduction in computing Income, Profits or Gains for the purposes of any Tax;

 

“Reorganisation” has the meaning given to it in Clause 2.3.4;

 

“Reporting Accountants” means an internationally recognised and independent firm of accountants who does not act as auditor to the Seller or the Purchaser, to be agreed by the Seller and the Purchaser within seven days of a notice by one to the other requiring such agreement or, failing such agreement, to be nominated on the application of either of them by or on behalf of the Institute of Chartered Accountants of England and Wales;

 

“Required Antitrust Notifications” has the meaning given to it in Clause 4.1.1;

 

“Sanctions Laws” has the meaning given to it in paragraph 2.16.6 of Schedule 16;

 

“Seller Marks” means any of the Trademarks (including in either or both logo and local script form) “Novartis”, “Sandoz”, “Alcon” and “Ciba Vision” used either alone or in combination with other words or marks;

 

“Seller Partner” means any counterparty to a development, contract research, commercialisation, manufacturing, distribution, sales, marketing, supply, consulting or other collaboration Contract with the Seller or any Affiliate of the Seller;

 

“Seller’s Group” means the Seller and its Affiliates from time to time;

 

“Seller’s Group Insurance Policies” means all insurance policies (whether under policies maintained with third party insurers or any member of the Seller’s Group), other than Flu Group Insurance Policies, maintained by the Seller or any member of the Seller’s Group in relation to the Flu Group or under which, immediately prior to Closing, any Flu Group Company or the Seller or member of the Seller’s Group in relation to the Flu Group Businesses is entitled to any benefit, and “Seller’s Group Insurance Policy” means any one of them;

 

“Seller’s Group Retained Business” means, from time to time, all businesses of the Seller’s Group, excluding the Business;

 

“Seller’s Knowledge” has the meaning given to it in Clause 9.1.4;

 

“Seller’s Lawyers” means Linklaters LLP, of One Silk Street, London, EC2Y 8HQ, United Kingdom;

 

“Seller’s Warranties” means the warranties given by the Seller pursuant to Clause 9 and Schedule 16, and “Seller’s Warranty” means any one of them;

 

“Share Sellers” means the members of the Seller’s Group (other than the Flu Group Companies) that own any Shares;

 

“Shared Business Contracts” means any Contract which relates both:

 

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(i)            to the Business or any part of the Business to be transferred to the Purchaser at Closing; and

 

(ii)           to any part of the Seller’s Group Retained Business (as at the date of this Agreement), any product other than the Products, Pipeline Products or Products Under Registration, or any Excluded Asset,

 

and to which a member of the Seller’s Group is a party or in respect of which a member of the Seller’s Group has any right, liability or obligation at Closing, and “Shared Business Contract” shall mean any of them;

 

“Shares” means the shares in the capital of any Flu Group Company (other than the Subsidiary);

 

“Sinergium Arrangements” means agreements and arrangements relating to the business and activities of the Sinergium Consortium, including agreements and arrangements between: (i) any of the Sinergium Consortium Members; (ii) any of the Sinergium Consortium Members (and/or the Sinergium Consortium) and the Argentinian Ministry of Health; and (iii) any member of the Seller’s Group and any Sinergium Consortium Member (and/or the Sinergium Consortium);

 

“Sinergium Consortium Members” means the members of Sinergium Biotech - Consorcio de Cooperación (taken together, the “Sinergium Consortium”), who as at the date of this Agreement are Novartis Argentina, S.A., Biogénesis Bago, S.A., Laboratorio ELEA S.A.C.I.F. y A. and Sinergium Biotech, S.A.;

 

“Statement of Net Assets” means the statement of net assets as at the Statement of Net Assets Date, as set out in Schedule 20;

 

“Statement of Net Assets Date” means 31 December 2013;

 

“Statement of Net Assets Rules” means the rules in accordance with which the Statement of Net Assets was prepared, as set out in Part 2 of Schedule 20;

 

“Stub Period Carve Out Accounts” means the unaudited carve out profit and loss account of the Flu Group for the 9 month period ended on 30 September 2014, as contained in the Data Room at 9.1.2.2.5.1;

 

“Subsidiary” means Novartis Vaccines and Diagnostics Limited, details of which are set out in paragraph 2 of Schedule 2;

 

“Surviving Affiliate Contract” means the LEK Filling and Packaging Agreement and any of the other agreements or arrangements referred to in Clause 5.2.2;

 

“Taxation” or “Tax” means all forms of taxation (other than any accounting for deferred tax), and statutory, governmental, state, provincial, local governmental or municipal impositions, duties, contributions and levies, in each case in the nature of tax, whether levied by reference to income, profits, gains, net wealth, asset values, turnover, added value or otherwise and shall further include payments to a Tax Authority on account of Tax, in each case whether of the United Kingdom or elsewhere in the world whenever imposed and whether chargeable directly or primarily against or attributable directly or primarily to a member of the Seller’s Group or any other person, and including all interest, penalties and additions imposed with respect to such amounts by any Tax Authority or with respect to any failure to file any Tax Return;

 

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“Tax Adjustment” means the amount by which:

 

(i)            the aggregate amount of the corporate income taxes payable by the Flu Group Companies, as at the Effective Time and as derived from the Closing Statement,

 

exceeds or is less than

 

(ii)           the aggregate amount of the corporate income tax receivables of the Flu Group Companies as at the Effective Time as derived from the Closing Statement,

 

and any such excess amount shall be treated as a positive number and any shortfall shall be treated as a negative amount;

 

“Tax Authority” means any taxing or other authority competent to impose any liability in respect of Taxation or responsible for the administration and/or collection of Taxation or enforcement of any law in relation to Taxation;

 

“Tax Indemnity” means the deed of covenant against taxation, in the Agreed Terms, to be entered into on the Closing Date between the Seller and the Purchaser;

 

“Tax Return” means any return, declaration, claim for refund, information return or statement, including any schedule or attachment thereto, which must be filed or lodged with, or submitted to, any Tax Authority in relation to the assessment, notification, collection or administration of any Tax, or which a taxpayer must prepare and retain;

 

“Tax Warranties” means the Seller’s Warranties set out in paragraph 2.18 of Schedule 16;

 

“Third Party Claim” has the meaning given to it in Clause 11.4;

 

“Third Party Consents” means all consents, licences, approvals, permits, authorisations or waivers required from third parties for the assignment or transfer to the Purchaser of any of the Transferred Contracts, Transferred Intellectual Property Contracts, Shared Business Contracts, Co-Owned Flu Group Intellectual Property Rights or Transferred Plant and Equipment and “Third Party Consent” means any one of them;

 

“Third Party Indebtedness” means the aggregate amount as at the Effective Time of all outstanding Indebtedness owed by the Flu Group Companies to any third party less any Indebtedness owed by any third party to any Flu Group Company as derived from the Closing Statement (but excluding any item included in respect of any Flu Group Companies’ Cash Balances), and, for the purposes of this definition, third party shall exclude any member of the Seller’s Group;

 

“Trademarks” means trademarks, service marks, trade names, certification marks, service names, industrial designs, brand names, brand marks, trade dress rights, identifying symbols, logos, emblems, and signs or insignia and all goodwill of the business in relation to which any of the foregoing are used (but no other or greater goodwill);

 

“Transaction” means the proposed acquisition of all or any of the Shares or Flu Group Businesses pursuant to this Agreement;

 

“Transfer Regulations” means the relevant national measure by which the employment of a Relevant Flu Business Employee automatically transfers to the Purchaser or a relevant member of the Purchaser’s Group;

 

“Transferred Accounts Receivable” means all trade accounts and notes receivable arising in the ordinary course of the business of the Seller’s Group (other than any Flu

 

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Group Company) after the Closing Date to the extent related to the Business, and outstanding at the Effective Time, together with any unpaid financing charges accrued thereon;

 

“Transferred Books and Records” means copies of all books, ledgers, files, reports, plans, records, manuals and other materials (in any form or medium) to the extent relating to, or maintained exclusively for, the Business by the Seller’s Group (excluding the Flu Group Companies) (other than emails), but excluding:

 

(i)            any such items to the extent that: (A) they are related to any Excluded Assets; (B) they are related to any corporate, Tax, human resources or stockholders matters of the Seller or its Affiliates (other than the Flu Group Companies); (C) any Applicable Law prohibits their transfer; or (D) any transfer thereof otherwise would subject the Seller or any of its Affiliates to any material liability (unless such items are required by Applicable Laws to be held by the Purchaser); and

 

(ii)           any laboratory notebooks to the extent containing research and development information unrelated to the Business;

 

“Transferred Contracts” means:

 

(i)            the Contracts, other than Transferred Intellectual Property Contracts and the US Government Contracts, that are Predominantly Related to the Business between a member of the Seller’s Group (excluding the Flu Group Companies), on the one hand, and any person who is not a member of the Seller’s Group, on the other hand (other than this Agreement and any Ancillary Agreement), but excluding any Excluded Contract; and

 

(ii)           the Relevant Part of the Shared Business Contracts;

 

“Transferred Employee Benefit Liabilities” has the meaning given to it in Schedule 10;

 

“Transferred Employees” means:

 

(i)            the Flu Business Employees to whom the Purchaser (or a member of the Purchaser’s Group) offers employment and who accept such employment and become employed by the Purchaser (or a member of the Purchaser’s Group) in accordance with Schedule 9;

 

(ii)           any Relevant Flu Business Employees who transfer to the Purchaser (or a member of the Purchaser’s Group) by operation of the Transfer Regulations and do not object to such transfer (to the extent permitted by the Transfer Regulations) in accordance with Schedule 9; and

 

(iii)          the Relevant Flu Group Company Employees,

 

and “Transferred Flu Business Employees” means the employees in (i) and (ii), “Transferred Flu Group Company Employees” means the employees in (iii) and “Transferred Employee”, “Transferred Flu Business Employee” and “Transferred Flu Group Company Employee” respectively means any one of them;

 

“Transferred Information Technology” means all Information Technology of any member of the Seller’s Group (other than a Flu Group Company) to the extent Exclusively Related to the Business;

 

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“Transferred Intellectual Property Contracts” means Contracts Exclusively Related to the Business which relate to Intellectual Property Rights (but excluding the rights under any such Contracts that are held by the Flu Group Companies) including the MF59® Flu Specific Intellectual Property Rights Contracts, but excluding the MF59® Platform Intellectual Property Rights Contracts;

 

“Transferred Intellectual Property Rights” means the Intellectual Property Rights of any member of the Seller’s Group (other than a Flu Group Company) Exclusively Related to the Business including the MF59® Flu Specific Intellectual Property Rights, but excluding the MF59® Platform Intellectual Property Rights;

 

“Transferred Inventory” means all inventories (including Manufacturing Inventory and Manufacturing Stocks and In-Market Inventory), including all raw materials, work in progress, finished Products and packaging and labelling material in respect of the Products and otherwise Exclusively Related to the Business (but excluding any such items held by the Flu Group Companies) whether held at any location or facility of a member of the Seller’s Group or in transit to a member of the Seller’s Group, in each case as of the Effective Time;

 

“Transferred Leased Real Properties” has the meaning given to it in paragraph 1.1 of Part 4A of Schedule 3;

 

“Transferred Owned Real Properties” has the meaning given to it in paragraph 1.1 of Part 4A of Schedule 3;

 

“Transferred Plant and Equipment” means:

 

(i)            the Transferred Information Technology;

 

(ii)           all plant, furniture, furnishings, vehicles, equipment, tools and other tangible personal property (other than Transferred Inventory or Transferred Information Technology) of the Seller’s Group that are Exclusively Related to the Business (but excluding: (a) any such items owned by the Flu Group Companies; and (b) any such items situated at or otherwise used in relation to the Holly Springs Site); and

 

(iii)          all plant, furniture, furnishings, vehicles, equipment, tools and other tangible personal property (other than Transferred Inventory or Transferred Information Technology) of the Seller’s Group that are Predominantly Related to the Business and are situated at or otherwise used in relation to the Holly Springs Site;

 

“Transferred Real Properties” means:

 

(i)            the Transferred Owned Real Properties; and

 

(ii)           the Transferred Leased Real Properties;

 

and “Transferred Real Property” means any one of them;

 

“Transitional Services Agreement” means the transitional services agreement between the Seller and/or one or more of its Affiliates and the Purchaser and/or one or more of its Affiliates which shall be entered into at Closing in the Agreed Terms;

 

“UK Pandemic Agreement” means the agreement for the reservation of manufacturing capacity and production and supply of vaccine during a pandemic entered into between the

 

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Secretary of State for Health (acting through the Commercial Medicines Unit) and Novartis Vaccines and Diagnostics Limited dated 1 June 2012;

 

“US Benefit Plans” means all benefit and compensation plans, contracts, policies or agreements, including but not limited to “employee benefit plans” (within the meaning of section 3(3) of ERISA), deferred compensation, severance, change in control or employment, vacation, incentive, bonus, stock option, stock purchase, or restricted stock plans, benefiting United States Flu Business Employees in respect of which any Flu Group Company or Business Seller contributes or under which any Flu Group Company or Business Seller is subject to continuing financial obligations or liabilities (whether actual or contingent);

 

“US Government Contracts” means: (i) the Contracts of Novartis Vaccines & Diagnostics, Inc. set out in Part 1 of Schedule 15; and (ii) any other Contracts that are Predominantly Related to the Business between a member of the Seller’s Group (excluding the Flu Group Companies), on the one hand, and a Governmental Entity in the United States of America on the other hand, but excluding any Excluded Contract;

 

“US Transferred Employees” has the meaning given to it in paragraph 5.1 of Schedule 9;

 

“USD LIBOR” means the London interbank offered rate, being the interest rate offered in the London inter-bank market for three month US dollar deposits as displayed on pages LIBOR01 or LIBOR02 of the Reuters screen at 11 a.m. (London) on the second Business Day prior to the Closing Date;

 

“Vaccines” means a preparation comprising: (i) an antigen; (ii) an epitope of an antigen; or (iii) a polynucleotide encoding an antigen derived directly or indirectly from, or mimicking, an agent (including, but not limited to, a compound, a toxin, a microbe including a pathogen or component thereof), wherein such preparation may further comprise a composition capable of modulating an immune response, including preparations intended to improve a human’s immune response to a microbe that has been linked to cancer, wherein said preparation is intended for purposes of inducing an immune response in a human, including, but not limited to, a functional immune response or immunological memory to the particular or related antigen or agent, thereby causing or improving an immune response to a challenge by the particular or related agent. “Vaccines” shall not include preparations intended to improve a human’s immune response to or to treat other non-infectious conditions, whether or not related to pathogens, such as certain autoimmune diseases, Alzheimer’s disease and certain cancers, or non-antigen preparations comprising immune system components intended to function analogous to corresponding native components within the patient, such as antibodies or white blood cells (both unmodified or modified to better treat disease);

 

“VAT” means within the European Union such Taxation as may be levied in accordance with (but subject to derogations from) Council Directive 2006/112/EC and outside the European Union any Taxation levied by reference to added value or sales; and

 

“WARN Act” means the Worker Adjustment and Retraining Notification Act of 1988 of the United States.

 

1.2                            Shares

 

References to shares shall include, where relevant, quotas.

 

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1.3                            Singular, plural, gender

 

References to one gender include all genders and references to the singular include the plural and vice versa.

 

1.4                            References to persons and companies

 

References to:

 

1.4.1                   a person include any individual, company, partnership or unincorporated association (whether or not having separate legal personality); and

 

1.4.2                   a company include any company, corporation or any body corporate, wherever incorporated.

 

1.5                            Schedules, etc.

 

References to this Agreement shall include any Recitals and Schedules to it and references to “Clauses” and “Schedules” are to Clauses of, and Schedules to, this Agreement. References to “paragraphs” and “Parts” are to paragraphs and parts of the Schedules.

 

1.6                            Reference to documents

 

References to any document (including this Agreement), or to a provision in a document, shall be construed as a reference to such document or provision as amended, supplemented, modified, restated or novated from time to time.

 

1.7                            References to enactments

 

Except as otherwise expressly provided in this Agreement, any express reference to an enactment (which includes any legislation in any jurisdiction) includes references: (i) to that enactment as amended, consolidated or re-enacted by or under any other enactment before or after the date of this Agreement; (ii) any enactment which that enactment re-enacts (with or without modification); and (iii) any subordinate legislation (including regulations) made before or after the date of this Agreement under that enactment as amended, consolidated or re-enacted as described in (i) or (ii) above, except to the extent that any of the matters referred to in (i) to (iii) occurs after the date of this Agreement and increases or alters the liability of the Seller or the Purchaser under this Agreement.

 

1.8                            Information

 

References to books, records or other information mean books, records or other information in any form including paper, electronically stored data, magnetic media, film and microfilm.

 

1.9                            Legal Terms

 

References to any English legal term shall, in respect of any jurisdiction other than England and Wales, be construed as references to the term or concept which most nearly corresponds to it in that jurisdiction.

 

1.10                     Non-limiting effect of words

 

The words “including”, “include”, “in particular” and words of similar effect shall not be deemed to limit the general effect of the words that precede them.

 

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1.11                     Currency

 

References to “$”, “US$” and “US dollar” are references to the lawful currency of the United States of America.

 

Any amount to be converted from one currency into another currency for the purposes of this Agreement shall be converted into an equivalent amount at the Conversion Rate prevailing at the Relevant Date.

 

For the purposes of this Clause 1.11:

 

“Conversion Rate” means the spot reference rate for a transaction between the two currencies in question as quoted by the European Central Bank on the Business Day immediately preceding the Relevant Date or, if no such rate is quoted on that date, on the preceding date on which such rates are quoted; and

 

“Relevant Date” means, save as otherwise provided in this Agreement, the date on which a payment or an assessment is to be made, save that, for the following purposes, the date shall mean:

 

(i)                                   for the purposes of the monetary amounts set out in Clause 5, the date of this Agreement;

 

(ii)                                for the purposes of Clause 7 and Schedule 14, the Closing Date;

 

(iii)                             for the purposes of Clause 10, the date of this Agreement; or

 

(iv)                            for the purposes of the monetary amounts set out in Schedule 16, the date of this Agreement.

 

1.12                     References to “indemnify”

 

Unless specified to the contrary, references to “indemnify” and “indemnifying” any person against any circumstance means indemnifying and holding that person harmless on an after-Tax basis and:

 

1.12.1            references to the Purchaser indemnifying each member of the Seller’s Group shall constitute undertakings by the Purchaser to the Seller for itself and on behalf of each other member of the Seller’s Group;

 

1.12.2            references to the Seller indemnifying each member of the Purchaser’s Group shall constitute undertakings by the Seller to the Purchaser for itself and on behalf of each other member of the Purchaser’s Group;

 

1.12.3            to the extent that the obligation to indemnify relates to the Shares (including any Flu Group Companies) or other assets or liabilities transferred by a Share Seller or a Business Seller (as the case may be) to a member of the Purchaser’s Group pursuant to this Agreement, references to the Seller indemnifying the Purchaser and references to the Seller indemnifying the Purchaser or any member of the Purchaser’s Group shall constitute undertakings by the Seller, to indemnify or procure that the relevant Share Seller or relevant Business Seller indemnify the relevant purchaser of the Shares or of the assets or liabilities transferred by that Business Seller (as the case may be), and references to the Purchaser indemnifying the Seller and references to the Purchaser indemnifying the Seller and each member of the Seller’s Group shall constitute undertakings by the

 

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Purchaser to indemnify or procure that the relevant purchaser of the Shares or of the assets or liabilities transferred (as the case may be) indemnify the relevant member of the Seller’s Group; and

 

1.12.4            where under the terms of this Agreement one party is liable to indemnify or reimburse another party in respect of any costs, charges or expenses, the payment shall include an amount equal to any VAT thereon not otherwise recoverable by the other party or any member of any group or consolidation of which it forms part for VAT purposes, subject to that party using reasonable endeavours to recover or to procure recovery of such amount of VAT as may be practicable.

 

For the purposes of this Clause 1.12, indemnifying and holding harmless a person on an “after-Tax basis” means that the amount payable pursuant to the indemnity (the “Payment”) shall be calculated in such a manner as will ensure that, after taking into account:

 

(i)                                   any Tax required to be deducted or withheld from the Payment and any additional amounts required to be paid by the payer of the Payment in consequence of such withholding;

 

(ii)                                the amount and timing of any additional Tax which becomes (or would, but for the use of any credit or other relief which would otherwise have been available to reduce the Tax liabilities of any member of the Seller’s Group, have become) payable by the recipient of the Payment (or a member of the Seller’s Group or the Purchaser’s Group, as the case may be) as a result of the Payment being subject to Tax in the hands of that person; and

 

(iii)                             the amount and timing of any Tax benefit which is obtained by the recipient of the Payment (or a member of the Seller’s Group or the Purchaser’s Group, as the case may be) to the extent that such Tax benefit is attributable to the matter giving rise to the indemnity payment or to the receipt of the Payment,

 

which amount and timing is to be determined by the auditors of the recipient at the shared expense of both relevant parties and is to be certified as such to the party making the Payment, the recipient of the Payment (together with the members of the Seller’s Group or the Purchaser’s Group, as relevant) is in no better and no worse after Tax position as that in which it would have been if the matter giving rise to the indemnity payment had not occurred, provided that if either party to this Agreement shall have transferred (whether by legal or equitable assignment, declaration of trust, novation or otherwise) the benefit of this Agreement in whole or in part or shall, after the date of this Agreement, have changed its Tax residence or the permanent establishment to which the rights under this Agreement are allocated then no Payment to that party shall be increased by reason of the operation of paragraphs (i) to (iii) above to any greater extent than would have been the case had no such transfer or change taken place.

 

2                                      Sale and Purchase of the Flu Group

 

2.1                            Sale and Purchase of the Flu Group

 

On and subject to the terms and conditions of this Agreement:

 

2.1.1                   the Seller shall procure that the Share Sellers and Business Sellers shall sell; and

 

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2.1.2                   the Purchaser shall purchase, or shall procure the purchase by one or more members of the Purchaser’s Group, of

 

the whole of the Flu Group as a going concern.

 

2.2                            Sale of the Shares

 

2.2.1                   The Seller shall procure that the Share Sellers shall sell the Shares, which shall be sold free from Encumbrances and together with all rights attaching to them as at Closing (including the right to receive all dividends or distributions declared, made or paid on or after Closing).

 

2.2.2                   The Seller shall procure that, on or prior to Closing, any and all rights of pre-emption over the Shares are waived irrevocably by the persons entitled thereto.

 

2.3                            Sale of the Flu Group Businesses

 

2.3.1                   The Seller shall procure that the Business Sellers shall sell the Flu Group Businesses to be sold under this Agreement or, where relevant, under the Local Transfer Documents, free from Encumbrances other than Permitted Encumbrances, such Flu Group Businesses comprising:

 

(i)                                  the Transferred Real Properties;

 

(ii)                               the Marburg MF59® Premises;

 

(iii)                            the Transferred Plant and Equipment;

 

(iv)                           the Transferred Inventory;

 

(v)                              the Transferred Accounts Receivable;

 

(vi)                           the Transferred Books and Records;

 

(vii)                        subject to and in accordance with Schedule 8, the Transferred Intellectual Property Rights and the Transferred Intellectual Property Contracts;

 

(viii)                     subject to and in accordance with Schedule 8, the Transferred Contracts;

 

(ix)                           subject to and in accordance with Schedule 15, the US Government Contracts;

 

(x)                              the interest of the Seller’s Group in the Sinergium Arrangements;

 

(xi)                           subject to and in accordance with Schedule 7, all Products, all Product Approvals, all Pipeline Products, all Pipeline Product Approvals, all Products Under Registration and all Product Applications and all other permits, licences, certificates, registrations, marketing or other authorisations or consents issued by a Governmental Entity Exclusively Related to the Business and not held by the Flu Group Companies;

 

(xii)                        all Marketing Authorisation Data not held by the Flu Group Companies;

 

(xiii)                     all Business Information not held at Closing by the Flu Group Companies;

 

(xiv)                    all rights of the Purchaser, its Affiliates and the Flu Group Companies as contemplated by Schedule 9 and Schedule 10; and

 

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(xv)                       all other property, rights and assets owned or held by the Seller’s Group (other than the Flu Group Companies) and Exclusively Related to the Business at Closing (other than any property, rights and assets of the Flu Group expressly excluded from the sale under this Agreement),

 

together the “Business Assets”.

 

2.3.2                   There shall be excluded from the sale of the Flu Group under this Agreement the following:

 

(i)                                  all manufacturing, plant, equipment and other assets at any of the Seller’s Group’s facilities at: (a) Marburg, Germany (except those located within the Marburg MF59® Premises); (b) Rosia, Italy; and (c) Siena, Italy;

 

(ii)                               any interest in Zhejiang Tianyuan Bio-Pharmaceutical Co., Ltd. and any business carried on by or on behalf of Zhejiang Tianyuan Bio-Pharmaceutical Co., Ltd.;

 

(iii)                            the Seller’s Group Retained Business;

 

(iv)                           any Intellectual Property Right that is not a Flu Group Intellectual Property Right (subject to the Purchaser Intellectual Property Licence Agreement) and any Contract relating to Intellectual Property Rights that is not a Flu Group Intellectual Property Contract;

 

(v)                              the MF59® Platform Intellectual Property Rights Contracts and MF59® Platform Intellectual Property Rights (subject to the Purchaser Intellectual Property Licence Agreement);

 

(vi)                           any Information Technology other than Flu Group Information Technology;

 

(vii)                        the Seller Marks;

 

(viii)                     any product and any permits, licences, certificates, registrations, marketing or other authorisations or consents issued by any Governmental Entity in respect of any products, or any applications therefor, other than: (a) the Products, Product Approvals, Product Applications, Products Under Registration, Pipeline Product Approvals and Pipeline Products; and (b) Permits Exclusively Related to the Business;

 

(ix)                           all cash, marketable securities and negotiable instruments, and all other cash equivalents, of the Seller’s Group (other than the Flu Group Companies);

 

(x)                              all real property and any leases thereof and interests therein other than the Properties;

 

(xi)                           the company seal, minute books, charter documents, stock or equity record books and such other books and records pertaining to the Seller or its Affiliates (other than the Flu Group Companies and the Transferred Books and Records), as well as any other records or material relating to the Seller or its Affiliates (other than Flu Group Companies) generally and not involving or related to the Flu Group;

 

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(xii)                        any right of the Seller or its Affiliates to be indemnified in respect of Assumed Liabilities or otherwise pursuant to the terms of this Agreement;

 

(xiii)                     all Tax assets (including Tax reliefs refunds and prepayments), other than Tax assets of any Flu Group Company to the extent that such assets remain in a Flu Group Company after Closing and subject to the terms of the Tax Indemnity;

 

(xiv)                    all Tax Returns of the Seller’s Group (other than Tax Returns relating solely to the Flu Group Companies) and all books and records (including working papers) related thereto;

 

(xv)                       any rights in respect of any insurance policies of the Seller’s Group, as provided in Clause 13;

 

(xvi)                    all artwork, paintings, drawings, sculptures, prints, photographs, lithographs and other artistic works of the Seller’s Group that are not embodiments of Flu Group Intellectual Property Rights;

 

(xvii)                 any rights of the Seller’s Group (other than the Flu Group Companies) under any Intra-Group Non-Trade Payables or Intra-Group Non-Trade Receivables (excluding Transferred Accounts Receivable);

 

(xviii)              any rights of the Seller or its Affiliates (other than the Flu Group Companies) contemplated by Schedule 9 and Schedule 10;

 

(xix)                    any equity interest in any person other than a Flu Group Company (excluding the Seller’s Group’s interest in the Sinergium Arrangements);

 

(xx)                       the Excluded Contracts;

 

(xxi)                    all rights of the Seller’s Group under this Agreement and the Ancillary Agreements; and

 

(xxii)                 the Purchase Price Bank Account,

 

together the “Excluded Assets”.

 

2.3.3                   Notwithstanding anything in this Agreement to the contrary, on or prior to the Closing, the Seller shall, if it deems necessary or appropriate, cause the Flu Group Companies to convey, transfer, assign and deliver to the Seller or any member of the Seller’s Group (but always only in accordance with Applicable Law), and the Seller or any such member of the Seller’s Group shall accept from the Flu Group Companies, all of the Flu Group Companies’ right, title and interest, if any, in and to any Excluded Assets (but always only in accordance with Applicable Law).

 

2.3.4                   Subject to complying with its obligations pursuant to Clauses 2.1, 2.2, 2.3.1 to 2.3.3, 2.4 and 2.5 of this Agreement, on or prior to Closing, the Seller may:

 

(i)                                  assign or otherwise transfer assets, liabilities and employees (subject to Clauses 5.1.2(xxiii) and 5.1.2(xxiv)) between members of the Seller’s Group as may be reasonably required to facilitate the separation of the Business from any other business or activities of the Seller’s Group or the Seller’s Group Retained Business (as at the date of this Agreement);

 

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(ii)                               otherwise, carry out or procure one or more reorganisations of the Seller’s Group (including assigning or otherwise transferring assets, liabilities and employees between members of the Seller’s Group and including, without limitation, transferring all or part of the Flu Group Businesses into or (directly or indirectly) beneath, as the case may be, newly incorporated entities with the intention of such new entities being transferred to the Purchaser on Closing) as may reasonably be required to facilitate the Transaction (but always only in accordance with Applicable Law), and

 

(iii)                            capitalise or loan money to or from the Flu Group Companies in connection with any arrangements to facilitate the settlement of any Intra-Group Non-Trade Receivables and Intra-Group Non-Trade Payables at or prior to Closing in accordance with Clause 8.6 (but always in accordance with Applicable Law and taking account of the obligations set out in Clause 5.1,

 

each, together with any act permitted by Clause 2.3.3, a “Reorganisation”.

 

2.4                            Employees and Employee Benefits

 

2.4.1                   The provisions of Schedule 9 shall apply in respect of the Employees.

 

2.4.2                   The provisions of Schedule 10 shall apply in respect of Employee Benefits.

 

2.5                            Properties

 

The provisions of Schedule 3 shall apply in respect of the Properties.

 

2.6                            Local Transfer Documents

 

2.6.1                   On Closing or at such other time as agreed between the parties, the Seller shall procure that the Share Sellers and Business Sellers execute, and the Purchaser shall execute (or procure the execution by one or more other members of the Purchaser’s Group of), such agreements, transfers, conveyances and other documents, as may be required pursuant to the relevant local law and otherwise as may be agreed between the Seller and the Purchaser to implement the transfer of: (i) the Shares; and (ii) the Flu Group Businesses, in each case on Closing (the “Local Transfer Documents” and each, a “Local Transfer Document”). The parties do not intend this Agreement to transfer title to any of the Shares. Title shall be transferred by the applicable Local Transfer Document.

 

2.6.2                   To the extent that the provisions of a Local Transfer Document are inconsistent with or (except to the extent that they implement a transfer in accordance with this Agreement) additional to the provisions of this Agreement:

 

(i)                                  the provisions of this Agreement, shall prevail; and

 

(ii)                               so far as permissible under the laws of the relevant jurisdiction, the Seller and the Purchaser shall procure that the provisions of the relevant Local Transfer Document are adjusted, to the extent necessary to give effect to the provisions of this Agreement or, to the extent this is not permissible, the Seller shall indemnify the Purchaser against all Liabilities suffered by the Purchaser or its Affiliates or, as the case may be, the Purchaser shall indemnify the Seller against all Liabilities suffered by the Seller or its Affiliates, in either case through or arising from the inconsistency between

 

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the Local Transfer Document and this Agreement or the additional provisions (except to the extent that they implement a transfer in accordance with this Agreement).

 

2.6.3                   The Seller shall not, and shall procure that none of its Affiliates shall, bring any claim against the Purchaser or any member of the Purchaser’s Group in respect of or based upon the Local Transfer Documents save to the extent necessary to implement any transfer of the Shares or Flu Group Businesses as contemplated by this Agreement. To the extent that the Seller or a member of the Seller’s Group does bring a claim in breach of this Clause, the Seller shall indemnify the Purchaser and each member of the Purchaser’s Group against all Liabilities which the Purchaser or that member of the Purchaser’s Group may suffer through or arising from the bringing of such a claim.

 

2.6.4                  The Purchaser shall not, and shall procure that none of its Affiliates shall, bring any claim against the Seller or any member of the Seller’s Group in respect of or based upon the Local Transfer Documents save to the extent necessary to implement any transfer of the Shares or Flu Group Businesses as contemplated by this Agreement. To the extent that the Purchaser or a member of the Purchaser’s Group does bring a claim in breach of this Clause, the Purchaser shall indemnify the Seller and each member of the Seller’s Group against all Liabilities which the Seller or any member of the Seller’s Group may suffer through or arising from the bringing of such a claim.

 

3                                      Consideration

 

3.1                            Amount

 

The aggregate consideration for the purchase of the Flu Group under this Agreement and the Local Transfer Documents (the “Purchase Price”) shall be an amount in US dollars equal to the sum of:

 

(i)                                US$ 275,000,000 (the “Headline Price”);

 

plus

 

(ii)                             the Flu Group Companies’ Cash Balances;

 

minus

 

(iii)                          the Third Party Indebtedness;

 

minus

 

(iv)                         the Tax Adjustment.

 

3.2                            Payment of Purchase Price

 

The Purchase Price shall be paid by the Purchaser (for itself and on behalf of each relevant member of the Purchaser’s Group) by way of cash payments to the Purchase Price Bank Account pursuant to Clause 6.3.

 

3.3                            Allocation of Purchase Price

 

Between the date of this Agreement and Closing, the parties shall use their reasonable endeavours to agree both: (i) a methodology for allocation of the Purchase Price; and (ii)

 

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an allocation of the Purchase Price between the respective Shares and Business Assets (taking into account the Assumed Liabilities), within 6 months of the date hereof. Accordingly, the Purchaser shall, within 3 months of the date hereof, provide to the Seller a proposed methodology for such an allocation, along with a reasonably detailed explanation thereof, including supporting rationale and details of the split between different categories of assets (e.g. tangible assets, intangible assets, etc.). The Seller shall thereafter comment on the proposed methodology and the parties shall work together in good faith to find a mutually agreeable methodology and allocation.

 

3.4                            VAT

 

3.4.1                   The provisions of Schedule 12 shall apply in respect of VAT.

 

3.4.2                   The Seller and the Purchaser agree that the consideration given under this Agreement in respect of the sale of the Flu Group Businesses and the Shares is exclusive of any VAT.

 

3.4.3                   The Seller and the Purchaser shall (and shall procure that any relevant Share Seller, Business Seller or member of the Purchaser’s Group shall) use reasonable endeavours to secure that, to the extent reasonably possible, the transfer of the Flu Group Businesses under the Local Transfer Documents is treated as a “transfer of a going concern” for VAT purposes.

 

3.4.4                   To the extent that VAT is properly chargeable in respect of any sale of the Shares or the Flu Group Businesses or any part thereof, the Purchaser shall (or shall procure that the relevant member of the Purchaser’s Group shall), against delivery of a valid VAT invoice (or equivalent, if any), in addition to any other amount expressed in this Agreement to be payable by the Purchaser or any member of the Purchaser’s Group, pay or procure the payment to the Seller (on behalf of the relevant Business Seller or Share Seller as applicable) any amount of any VAT so chargeable for which the Seller (or the relevant Share Seller or Business Seller, as the case may be) is liable to account.

 

3.5                            Treatment of Payments

 

3.5.1                   If any payment is made or procured: (i) by the Seller to the Purchaser or relevant member of the Purchaser’s Group; or (ii) by a Purchaser to the Seller or a member of the Seller’s Group, in either case in respect of any claim under or for any breach of this Agreement, or pursuant to an indemnity (or equivalent covenant to pay) under this Agreement, the payment shall be treated, so far as possible, as an adjustment of the consideration paid by the relevant member of the Purchaser’s Group for the Shares (including the underlying Flu Group Companies) or the particular part of the Flu Group to which the payment and/or claim relates under this Agreement and the consideration shall be deemed to be increased or reduced (as applicable) by the amount of such payment.

 

3.5.2                   If:

 

(i)                                  the payment and/or claim relates to the Shares in more than one Flu Group Company and/or to one or more category of Flu Group Businesses, it shall be allocated in a manner which reflects the impact of the matter to which the payment and/or claim relates, failing which it shall be allocated rateably

 

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to the Shares or the Flu Group Businesses concerned by reference to the proportions in which the consideration is allocated; or

 

(ii)                               the payment and/or claim does not relate to any particular Shares or to any particular category of Flu Group Businesses, it shall be allocated rateably to all the Shares and all the Flu Group Businesses by reference to the proportions in which the consideration is allocated,

 

and in each case the consideration shall be deemed to have been reduced by the amount of such payment.

 

4                                      Conditions

 

4.1                            Conditions Precedent

 

The sale and purchase of the Flu Group is conditional upon satisfaction of the following conditions, or their satisfaction subject only to Closing:

 

4.1.1                   any requisite filings with any competition authorities (the “Competition Authorities”) as set out in Schedule 22 (the “Required Antitrust Notifications”) shall have been made, and all consents and approvals of any such Competition Authority shall have been obtained and all applicable mandatory waiting periods in connection with any such filings, submissions or notification shall have expired or been terminated;

 

4.1.2                   receipt of CFIUS Approval if CFIUS has initiated a review of the transactions contemplated by this Agreement, whether pursuant to Clause 4.2.9 or otherwise;

 

4.1.3                   no Governmental Entity having enacted, issued, promulgated, enforced or entered any Applicable Law or Judgment (whether temporary, preliminary or permanent) that is in effect at the Closing Date and that has the effect of making the transactions contemplated by this Agreement illegal or otherwise restraining or prohibiting the consummation of such transactions;

 

4.1.4                   in relation to all US Government Contracts which require formal novation pursuant to 48 C.F.R. Subpart 42.12 in connection with the consummation of the Transaction, no relevant Governmental Entity within the United States Government having stated that it will not, or intends not to, grant consent to novation, unless such statement or indication has been withdrawn as at the Closing Date, and the parties having put in place (effective as from the Closing Date) a sub-contracting relationship with the United States Government’s consent, if such consent is required, that achieves substantially the same economic effect as novation until novation occurs or for the duration of the relevant US Government Contract in the event that novation does not occur;

 

4.1.5                   the Purchaser having received from the Secretary of State for Health (acting through the Commercial Medicines Unit), as required pursuant to the UK Pandemic Agreement, consent to the change in control in connection with the Transaction; and

 

4.1.6                   there having been no breach of any Key Warranty which constitutes a Material Adverse Effect the consequences of which have not been mitigated or remedied in all material respects on or prior to the Closing Date.

 

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The Purchaser may, at its sole discretion, waive all or part of the conditions set out in Clause 4.1.5 and Clause 4.1.6. The condition set out in Clause 4.1.4 may only be waived by the mutual agreement of both the Seller and the Purchaser.

 

4.2                            Responsibility for Satisfaction

 

Competition condition:

 

4.2.1                   The Purchaser shall prepare and file the Required Antitrust Notifications at such times as are mutually agreed by the parties (but before 31 March 2015 and subject to Applicable Law), provided, however, that the Seller shall be responsible for preparing its Required Antitrust Notification under the Hart—Scott—Rodino Antitrust Improvements Act of 1976 as amended (the “HSR Act”) (again, before 31 March 2015 and subject to Applicable Law). Notwithstanding anything to the contrary contained in this Agreement, the Purchaser shall have primary responsibility for obtaining all consents, approvals or actions of any Competition Authority which are required in connection with the Required Antitrust Notifications.

 

4.2.2                   The Purchaser shall be responsible for the payment of all filing and other fees and expenses in connection with the Required Antitrust Notifications and the satisfaction of the condition in Clause 4.1.1, except that the Seller shall be responsible for the payment of all fees and expenses in connection with the Seller’s Required Antitrust Notification under the HSR Act.

 

4.2.3                   The parties shall cooperate with each other in connection with the satisfaction of the condition in Clause 4.1.1.

 

4.2.4                   In connection with the satisfaction of the condition in Clause 4.1.1 and subject to Clause 4.2.6, the parties will consult and cooperate reasonably with each other and consider in good faith the views of the other. Without limiting the foregoing or the parties’ obligations under Clause 4.2.3 and subject to Clause 4.2.6, the parties agree to: (a) give each other reasonable advance notice of all meetings with any Governmental Entity; (b) give each other an opportunity to participate in each such meeting; (c) give each other reasonable advance notice of all substantive oral communications with any Governmental Entity; (d) if any Governmental Entity initiates a substantive oral communication, promptly notify the other party; (e) provide each other with a reasonable advance opportunity to review and comment upon all substantive written communications (including any analyses, presentations, memoranda, briefs, arguments, opinions and proposals) with a Governmental Entity and take account of the comments of the other party; and (f) provide each other with copies of all written communications to or from any Governmental Entity, provided however, that neither party shall be required to comply with sub-Clause (b) above to the extent that the relevant Governmental Entity objects to the participation of a party or with sub-Clause (e) or (f) above to the extent that such disclosure may raise regulatory concerns (in which case, the disclosure may be made on an outside counsel basis). The Purchaser further agrees that it will not file any Required Antitrust Notification or contact any Governmental Entity prior to the filing of any Required Antitrust Notification without the consent of the Seller (subject to Applicable Law and to the Seller’s compliance with its obligations under this Agreement in relation to the Required Antitrust Notifications).

 

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4.2.5                   The Seller’s obligations under Clauses 4.2.1 to 4.2.7 (inclusive) relate solely to the satisfaction of the condition in Clauses 4.1.1. Without prejudice to the Seller’s obligations under Clauses 4.2.3, 4.2.4 or 4.2.7, and notwithstanding any other provision in the Agreement, the Seller shall not be obliged to inform, consult with, provide notice to or take account of the comments of the Purchaser in connection with any communication with any Governmental Entity concerning or relating in any way to any other transaction or investigation or the relationship or interaction with or between the Transaction and any other transaction or investigation.

 

4.2.6                   The Purchaser shall, and shall cause its Affiliates to, use all reasonable endeavours to procure the satisfaction of the condition in Clause 4.1.1 (in any event not later than the Long Stop Date). Notwithstanding anything in this Agreement to the contrary, the Purchaser shall consider, in good faith, proposing or agreeing to such conditions, obligations, undertakings or commitments of any Competition Authority as it may, in good faith, consider acceptable, including minor behavioural commitments, obligations or undertakings, but shall not be required to propose or agree to the sale, divestiture, licence or other disposition of assets or businesses.

 

4.2.7                   The Seller shall, and shall cause their Affiliates to, use reasonable endeavours to cooperate with the Purchaser in connection with procuring the satisfaction of the condition in Clause 4.1.1, including providing to the Purchaser such information as the Purchaser may reasonably require in connection with satisfaction of its obligations under this Clause; provided, however, that the Seller shall not be required to defend against the entry, or threatened entry, of any Judgment by any US court or Competition Authority.

 

4.2.8                   Notwithstanding anything in this Agreement to the contrary, the Purchaser shall not propose, negotiate, take or commit to, and neither the Seller, the Flu Group, nor any of their respective Affiliates shall be required to agree to, the taking of any action that would:

 

(i)                                  require the Seller or any of its Affiliates to retain any part of the Flu Group;

 

(ii)                               place any limitations on the Seller, the Flu Group or any of their respective Affiliates, the effectiveness or consummation of which is not conditioned on Closing occurring; or

 

(iii)                            result in an adverse effect on the Seller or its Affiliates (other than the Flu Group Companies).

 

CFIUS condition:

 

4.2.9                   Within 60 days after the date of this Agreement, any party wishing to submit a formal joint voluntary notice to CFIUS pursuant to 31 C.F.R. Section 800.401, et. seq. (“CFIUS Filing”) shall provide the other party with written notice of its intent to make a CFIUS Filing (“Election Date”). Prior to making its election to submit a CFIUS Filing, the party wishing to make a CFIUS Filing shall consult in good faith with senior executives of the other party. If neither the Seller nor the Purchaser provides notice to submit a formal joint voluntary notice to CFIUS, a CFIUS Filing will not be made unless requested by CFIUS.

 

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4.2.10            If either the Seller or the Purchaser elects to make a CFIUS Filing following the procedures and consultations in Clause 4.2.9 or if CFIUS requires a filing then:

 

(i)                                  the Seller and the Purchaser shall use their respective reasonable endeavours to submit a draft CFIUS Filing as soon as reasonably practicable after the Election Date, and a final CFIUS Filing no later than 30 Business Days after submitting the draft CFIUS filing, provided that the final CFIUS Filing shall not be submitted earlier than (1) 5 Business Days after submitting the draft CFIUS Filing or (2) 5 Business Days after the receipt of any comments from CFIUS staff regarding the draft CFIUS Filing;

 

(ii)                               the Seller and the Purchaser will provide each other with the reasonable opportunity to review and comment on any information provided to CFIUS to the extent permitted by Applicable Law, with the exception of personal identifier information required under Section 800.402(c)(6)(vi)(B) of the CFIUS regulations, 31 C.F.R or other personal information requested by CFIUS staff. Competitively sensitive information, or information not related to the transactions contemplated by this Agreement, may be restricted to each party’s external counsel to the extent reasonably considered necessary or advisable by the providing party;

 

(iii)                            the Seller and the Purchaser shall each have an opportunity to approve and mutually agree on the joint contents of the CFIUS Filing (subject to Clause 4.2.10(ii)) and shall be jointly responsible for the accuracy of such contents, except as provided below. The Seller and the Purchaser respectively, shall each be responsible for the accuracy of the contents of the CFIUS Filing to the extent exclusively relating to itself, its business, and any subsidiaries, parents or other related parties; and

 

(iv)                           the Seller and the Purchaser shall use their respective reasonable endeavours to obtain CFIUS Approval as promptly as practicable (and in any event not later than the Long Stop Date) and shall consult with each other on strategic matters related to obtaining such CFIUS Approval.

 

4.2.11            In the event a CFIUS filing is made, the Seller and the Purchaser shall consult, cooperate and keep each other reasonably informed regarding communications with, and requests for additional information from, CFIUS with respect to the Transaction. The Seller and the Purchaser shall use their respective reasonable endeavours to provide promptly all information that is required pursuant to a request by CFIUS.

 

No prohibition of transaction condition:

 

4.2.12            The Purchaser, subject to the limitations in Clause 4.2.6 (mutatis mutandis), and the Seller shall cooperate and use their respective reasonable endeavours to ensure that no Governmental Entity shall enact, issue, promulgate, enforce or enter any Applicable Law or Judgment as contemplated under Clause 4.1.3. In the event that any Governmental Entity enacts, issues, promulgates, enforces or enters any Applicable Law or Judgment as contemplated under Clause 4.1.3, the Purchaser, subject to the limitations in Clause 4.2.6 (mutatis mutandis), and the Seller shall cooperate and use their respective reasonable endeavours to put in place

 

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arrangements that would allow the Transaction to complete to the greatest possible extent in compliance with the relevant Applicable Law or Judgment.

 

Third Party Consents:

 

4.2.13            With reference to the conditions set out in Clauses 4.1.4 and 4.1.5, the Parties shall use their respective reasonable endeavours to satisfy the conditions on a timetable to be mutually agreed (but in any event not later than the Long Stop Date) and shall consult with each other on matters relating to obtaining such consents or waivers.

 

4.3                            Notification of Satisfaction

 

The party responsible for satisfaction of each condition pursuant to this Clause 4 shall give notice to the other party of the satisfaction of the relevant condition within 1 Business Day of becoming aware of the same.

 

4.4                            Non-Satisfaction by the Long Stop Date

 

4.4.1                   If the conditions in Clause 4.1 are not satisfied on or before 30 September 2016 (the “Long Stop Date”), the Purchaser or the Seller may, in its sole discretion, terminate this Agreement (other than Clauses 1, 12 and 15.2 to 15.15 inclusive). Neither the Seller nor the Purchaser may terminate this Agreement after satisfaction of the conditions in Clause 4.1, except in accordance with this Agreement.

 

4.4.2                   Nothing in this Clause 4.4 shall be deemed to release any party from any liability for any breach by such party of the terms and provisions of this Agreement prior to termination of this Agreement.

 

4.5                            Termination

 

4.5.1                  This Agreement may be terminated at any time prior to the Closing:

 

(i)                                  by written consent of the Seller and the Purchaser; or

 

(ii)                               by either the Seller or the Purchaser by notice to the other party in the event that any Judgment restraining, enjoining or otherwise prohibiting the transactions contemplated by this Agreement shall have become final and non-appealable, provided that the party seeking to terminate this Agreement pursuant to this Clause 4.5 has complied with the terms of this Agreement; or

 

(iii)                            by the Seller by notice to the Purchaser at any time following the date that is 270 days after the date of filing of the Seller’s and the Purchaser’s Required Antitrust Notifications under the HSR Act in the event that the Seller determines, acting reasonably and in good faith, that it will not be possible for the Purchaser to ensure satisfaction of the condition in Clause 4.1.1 prior to the Long Stop Date.

 

4.5.2                  Save as provided by this Clause 4 or Clause 6.5, neither party shall be entitled to terminate or rescind this Agreement. If this Agreement is terminated pursuant to this Clause 4.5, this Agreement shall be of no further force and effect and there shall be no further liability on the part of any party, except that Clauses 1, 12 and

 

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15.2 to 15.15 inclusive, in each case, to the extent applicable, shall survive any termination.

 

4.5.3                   Nothing in this Clause 4.5 shall be deemed to release any party from any liability for any breach by such party of the terms and provisions of this Agreement prior to termination of this Agreement.

 

5                                      Pre-Closing

 

5.1                            Seller’s Obligations in Relation to the Conduct of Business

 

5.1.1                   The Seller undertakes to procure that between the date of this Agreement and Closing, the Business Sellers and the relevant Flu Group Companies shall, so far as permitted by Applicable Law, save in so far as agreed in writing by the Purchaser (such consent not to be unreasonably withheld or delayed) or as provided in Clause 5.2 or Clause 5.7:

 

(i)                                  carry on the business of the Flu Group as a going concern in the ordinary and usual course (including taking into account the seasonal and pandemic nature of the Business) in accordance with Applicable Law as carried on prior to the date of this Agreement;

 

(ii)                               take reasonable steps to preserve and protect the Business and the Business Assets and shall not remove any material Business Assets (except for any Excluded Assets) from any of the Properties or otherwise dispose of any of the Business Assets, save in the ordinary and usual course of business;

 

(iii)                            settle all trade payables incurred in the ordinary and usual course of the Business within the applicable periods of credit or otherwise in accordance with past practice;

 

(iv)                           continue to Commercialise the Products in accordance with past practice (including taking into account: (i) the seasonal and pandemic nature of the Business; and (ii) any increased capacity at the Holly Springs Site);

 

(v)                              maintain the level of inventory of seasonal Products held for use in the Business materially in accordance with past practice (including taking into account: (i) the seasonal and pandemic nature of the Business; and (ii) any increased capacity at the Holly Springs Site);

 

(vi)                           use reasonable endeavours to ensure that the Manufacture of the Products by the Seller’s Group complies with applicable GMP requirements in all material respects;

 

(vii)                        notify the Purchaser in writing of any actual safety issue in respect of any Product (as soon as reasonably practicable after becoming aware of the same) which issue the relevant member of the Seller’s Group, acting reasonably and in good faith, considers material in the context of the Manufacture or Commercialisation of such Product;

 

(viii)                     manage all observations, requests and recommendations from Governmental Entities in respect of the Manufacture of Products in

 

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accordance with the Business’ corporate policies and procedures and Applicable Law;

 

(ix)                           continue to conduct and perform the Business’s clinical trials in accordance with the current development plans associated with such trials, subject to such changes as the Seller and the Business reasonably determine are appropriate acting reasonably and taking into account the results of any such trials and any adverse effects reported in connection therewith;

 

(x)                              at their own cost, undertake all Prosecution and Maintenance in the same manner as Prosecution and Maintenance has been carried out prior to the date of this Agreement and allocate a yearly budget for such Prosecution and Maintenance that is no less than 80 per cent. of the average yearly spend on Prosecution and Maintenance over the 3 years prior to the date of this Agreement, and:

 

(a)                       provide the Purchaser with quarterly reports (within 14 days of the end of each calendar quarter) setting out a summary of all material Prosecution and Maintenance performed in the preceding quarter, the first of which reports shall be provided within 14 days of the end of the calendar quarter in which signing takes place;

 

(b)                       make reasonably available during normal business hours to the Purchaser or its counsel, on reasonable advance written notice, employees of the Seller’s Group and the Seller’s Group’s legal counsel (as at the time of the request), for the purposes of providing the Purchaser with reasonable assistance in relation to understanding the Prosecution and Maintenance activities relating to the Flu Group Intellectual Property Rights and facilitating the orderly transfer of the Flu Group Intellectual Property Rights from the Seller’s Group to the Purchaser’s Group; and

 

(c)                        to the extent necessary, enter into a common interest privilege agreement for the purposes of providing the information in Clauses 5.1.1(x)(a) or 5.1.1(x)(b),

 

provided that nothing in Clauses 5.1.1(x)(a) or 5.1.1(x)(b) shall require the Seller to provide the Purchaser with any information which is subject to legal professional privilege but not subject to common interest privilege;

 

(xi)                           maintain an appropriate level of capital expenditure in relation to the Business in accordance with the levels of expenditure budgeted for as set out in the management presentation on the Business given to the Purchaser in June 2014 (as contained in the Data Room at 9.1.1.2.20) and the information memorandum prepared in connection with the sale of the Flu Group (as contained in the Data Room at 9.1.11.1), subject to such changes as the Seller and the Business determine are appropriate acting reasonably and taking into account the need to maintain appropriate levels of capital expenditure in order to maintain and operate the Business in the ordinary course;

 

(xii)        comply with material provisions in all material Transferred Contracts;

 

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(xiii)                     comply with the Seller’s rights and obligations pursuant to the UK Pandemic Agreement to seek confirmation of whether the Authority intends to extend the agreement, and keep the Purchaser informed, to the extent permitted by Applicable Law, of the Seller’s progress with respect to any proposed renewals or extensions of the UK Pandemic Agreement; and

 

(xiv)                    comply with the Seller’s obligations to the Town of Holly Spring by removing, or procuring the removal of, the trailers used as office space by the Holly Springs Site prior to Closing.

 

5.1.2                   Without prejudice to the generality of Clause 5.1.1 and subject to Clause 5.2, the Seller undertakes to procure that, between the date of this Agreement and Closing in relation to the Flu Group, the Business Sellers and the relevant Flu Group Companies shall not, except as may be required to comply with this Agreement, without the prior written consent of the Purchaser (such consent not to be unreasonably withheld or delayed) and so far as permitted by Applicable Law:

 

(i)                                  amend or otherwise modify the constitutional documents of any Flu Group Company other than minor or administrative amendments or modifications which are not adverse to the Business;

 

(ii)                               create, allot or issue, or grant an option to subscribe for, any share capital of any Flu Group Company;

 

(iii)                            repay, reduce, redeem or repurchase any share capital of any Flu Group Company;

 

(iv)                           voluntarily wind up, dissolve or liquidate any Flu Group Company (or take any steps in relation to the same);

 

(v)                              enter into any agreement or incur any commitment, in each case involving any capital expenditure, which is in excess ofUS$5 million, exclusive of VAT;

 

(vi)                           (A) enter into, or amend in any material respect, any material agreement relating to the Business, or incur any material commitment relating to the Business, which expires after 31 December 2015; or (B) make any material amendment to any existing material agreement relating to the Business, or any material commitment relating to the Business, which would result in such agreement expiring after 31 December 2015; unless such agreement or commitment is capable of being terminated without compensation at any time with 12 months’ notice or less, or where such agreement or commitment is entered into or amended in the ordinary course of business, or relates to the Employees (subject to Clauses 5.1.2(xvii) to 5.1.2(xxiii) inclusive). This Clause 5.1.2(vi) shall not apply to entering into, or amending in any material respect, any agreement, or incurring any material commitment, in relation to the sale by the Seller (or a member of the Seller’s Group) of all or any substantial part of the Seller’s Group Retained Business (including the Seller’s Group’s vaccines business (excluding the Business) and animal health business), provided that doing so would not materially prejudice the rights of the Purchaser under this Agreement;

 

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(vii)                        make any material amendment to (except where such amendment is in the ordinary and usual course of business), terminate or assign to any third party, any agreement relating to the Business (including any Transferred Contracts, US Government Contracts, Transferred Intellectual Property Contracts, Co-Owned Flu Group Intellectual Property Rights or relevant part of a Shared Business Contract) which: (a) obligates total annual expenditure in excess of US$5 million, exclusive of VAT, save to the extent that such obligation can be terminated by the Seller at its discretion for a cost of less than US$5 million; or (b) is otherwise material and necessary for the operation of the Business and for which the primary purpose of such contract relates to the licence or grant of, or settlement of a dispute relating to, Intellectual Property Rights (which, for the avoidance of doubt and without limitation, shall exclude any distribution agreements, customer contracts and supply contracts). This Clause 5.1.2(vii) shall not apply to making any material amendment to, terminating or assigning to any third party, any agreement, in relation to the sale by the Seller (or a member of the Seller’s Group) of all or any substantial part of the Seller’s Group Retained Business (including the Seller’s Group’s vaccines business (excluding the Business) and animal health business), provided that doing so would not materially prejudice the rights of the Purchaser under this Agreement);

 

(viii)                     enter into any agreement (including any Transferred Contracts, US Government Contracts, Transferred Intellectual Property Contracts, Co-Owned Flu Group Intellectual Property Rights or relevant part of a Shared Business Contract) or incur any commitment relating to the Business which obligates the Seller (or a member of the Seller’s Group) to make total annual contract expenditure in excess of US$5 million (exclusive of VAT), save in respect of any agreement or commitment that expires on or before 31 December 2015 or that can be terminated by the Seller at its discretion for a cost of less than US$5 million. This Clause 5.1.2(viii) shall not apply to any agreement requiring contract expenditure, or incurring any commitment, in respect of which the Purchaser would be entitled to be fully indemnified on an undisputed basis pursuant to the terms of this Agreement;

 

(ix)                           enter into any agreement (including any Transferred Contracts, US Government Contracts, Transferred Intellectual Property Contracts, Co-Owned Flu Group Intellectual Property Rights or relevant part of a Shared Business Contract) in relation to the Business whose primary purpose is the licence and/or transfer of Intellectual Property Rights or the settlement of Intellectual Property Rights disputes (in each case not including, by way of example, distribution or sales agreements) which:

 

(a)                       have an annual or initial expenditure of US$1 million or more; or

 

(b)                       would require the Purchaser after the Closing Date to pay any royalty in respect of: (A) the sale and manufacture of the MF59® adjuvant at any time; (B) the sale and manufacture of any seasonal flu product that is, as at the time of entering into such agreement, sold by the Business or reasonably expected to be sold by the Business within

 

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18 months of the Closing Date; or (C) the sale and manufacture of a pandemic vaccine;

 

(x)                              acquire, or agree to acquire, any material asset or material stocks, involving consideration, expenditure or liabilities in excess ofUS$5 million, exclusive of VAT;

 

(xi)                           dispose of, or agree to dispose of, any material asset or material stock (other than any Excluded Asset) otherwise than in the ordinary course of business;

 

(xii)                        acquire any share, shares or other interest in any company, partnership or other body corporate, or any business, other than any investment of US$2.5 million or less in any such company, partnership or other body corporate;

 

(xiii)                     enter into any partnership or joint venture arrangement which involves investment by the Business or any Flu Group Company in excess of US$2.5 million;

 

(xiv)                    create or grant any Encumbrance (other than a Permitted Encumbrance) on, over or affecting any Shares, Business, or any Business Assets or assets of any Flu Group Company, other than in the ordinary course of business;

 

(xv)                       discontinue, or cease operation, of all or any material part of the Business, other than ceasing any commercial relationships in the ordinary and usual course of business;

 

(xvi)                    allow any Flu Group Company to make any loan (other than the granting of trade credit in the ordinary course of business or other loans in the ordinary course of business) to any person (other than to a member of the Seller’s Group);

 

(xvii)                 allow any Flu Group Company to incur any additional borrowings other than: (a) the receipt of trade credit in the ordinary course of business (whether from a third party or a member of the Seller’s Group); (b) any borrowing from any member of the Seller’s Group; and (c) any third party indebtedness incurred by any Flu Group Company for general working capital purposes;

 

(xviii)              offer to engage any employee in a role which is an executive committee role, or a direct report to an executive committee role and (in each case) at a base salary in excess of US$200,000 per annum (where such employee, would either be an employee of a member of the Seller’s Group working wholly or mainly in the Business or an employee of a Flu Group Company working wholly or mainly in the Business);

 

(xix)                    other than in the ordinary and usual course of business, offer to engage any employee in any role not covered by Clause 5.1.2(xviii) above where such employee, if employed would either be an employee of a member of the Seller’s Group working wholly or mainly in the Business or an employee of a Flu Group Company working wholly or mainly in the Business;

 

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(xx)                       unilaterally dismiss any Employee from a role which is an executive committee role, or a direct report to an executive committee role and (in each case) at a base salary in excess of US$200,000 per annum, save for misconduct or gross misconduct, and other than in those instances where the dismissal process commenced prior to the date of this Agreement;

 

(xxi)                    other than in the ordinary and usual course of business, unilaterally dismiss any Employee from any role not covered by Clause 5.1.2(xx);

 

(xxii)                 make any material change or alteration to the terms and conditions of employment of, or the benefits conferred upon, any Employees which results in an aggregate increase in the total remuneration of the Employees in aggregate in excess of 2.5 per cent. per annum otherwise than in the ordinary course of business, or which is for the purposes of fulfilling the obligations under this Agreement (including in connection with complying with the Seller’s obligations under paragraph 7 of Schedule 10;

 

(xxiii)              transfer any Employee from or to a role which is an executive committee role, or a direct report to an executive committee role and (in each case) at a base salary in excess of US$200,000 per annum;

 

(xxiv)             other than in the ordinary and usual course of business:

 

(a)                       transfer any employee to any role not covered by Clause 5.1.2(xxiii) above where such transfer would result in the relevant employee becoming an employee of a member of the Seller’s Group working wholly or mainly in the Business or an employee of a Flu Group Company working wholly or mainly in the Business; or

 

(b)                       transfer any Employee from any role not covered by Clause 5.1.2(xxiii) above where such transfer would result in the individual ceasing to be an Employee;

 

(xxv)                grant permission to any Flu Group Company to change the jurisdiction in which it is resident for Tax purposes;

 

(xxvi)             initiate, settle or abandon any litigation, arbitration or other proceedings where the relief or amount claimed has a value above US$5 million and relating to a Flu Group Company, the Business, the Business Assets or any asset held by any Flu Group Company, other than:

 

(a)                       debt collection in the ordinary course of business;

 

(b)                       any claim, litigation, arbitration or other proceedings in respect of which the Purchaser would be entitled to be fully indemnified on an undisputed basis pursuant to the terms of this Agreement; or

 

(c)                        any claim in respect of Tax to which the provisions of the Tax Indemnity would apply from Closing; or

 

(xxvii)          enter into any guarantee, indemnity or surety otherwise than in the ordinary course of business;

 

(xxviii)       dispose of or terminate, or otherwise permit to lapse any rights in, or enter into any agreement or grant any licence relating to any Flu Group

 

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Intellectual Property Rights or rights to be licensed under the Purchaser Intellectual Property Licence Agreement, in each case that relate to material Products, material Pipeline Products or material Products Under Registration (save in respect of non-exclusive licences relating to the Seller’s research, development or Commercialisation of the Products) otherwise than in the ordinary course of business as it was conducted in the 3 years prior to the date of this Agreement. This Clause 5.1.2(xxviii) shall not apply to the disposal or termination of any rights to be licensed under the Purchaser Intellectual Property Licence Agreement or the grant by the Seller (or a member of the Seller’s Group) of any licence to any purchaser of all or any substantial part of the Seller’s Group Retained Business (including the Seller’s Group’s vaccines business (excluding the Business) and animal health business) provided that such disposal, termination or licence (as applicable) would not materially prejudice the rights of the Seller to validly enter into the Purchaser Intellectual Property Licence Agreement or Intellectual Property Assignment Agreements;

 

(xxix)             acquire or dispose of any freehold or leasehold property with a fair market value in excess of US$1 million or grant any lease or third party right in respect of any of the Transferred Real Properties or agree a material increase to the rent paid in respect of any lease of any of the Transferred Real Properties as at the date of this Agreement (except in each case as contemplated by Part 4B of Schedule 3); or

 

(xxx)                allow any Registered Flu Group Intellectual Property Rights to lapse or be abandoned otherwise than in the ordinary course of business as it was conducted in the 3 years prior to the date of this Agreement.

 

5.1.3                   If the Seller requests, by written notice to the Purchaser, the consent of the Purchaser as contemplated by Clauses 5.1.1 and 5.1.2 and the Purchaser fails to respond by written notice to the Seller within 10 Business Days of the request being received or deemed received in accordance with Clause 15.11.4, the consent of the Purchaser shall be deemed to have been given in respect of the relevant action or matter.

 

5.2                            Exceptions to the Seller’s Obligations in Relation to the Conduct of Business

 

Clause 5.1 shall not operate so as to prevent or restrict:

 

5.2.1                   any action undertaken by any member of the Seller’s Group to facilitate or implement any Reorganisation in accordance with Clause 2.3.4 or otherwise pursuant to Clause 5.7.5;

 

5.2.2                   the entry into of any agreements or arrangements with the Seller’s Group Retained Business on arm’s length terms to facilitate or implement any separation of the Business from the Seller’s Group Retained Business or its activities;

 

5.2.3                   the completion or performance of actions which are reasonably necessary to discharge any obligations undertaken pursuant to any legal, statutory or regulatory obligation or pursuant to any contract, arrangement, commitment, licence or consent entered into by, issued, granted, amended or incurred, or relating to the Company prior to the date of this Agreement or pursuant to any contract,

 

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arrangement, commitment, licence or consent entered into, issued, granted, amended or incurred after the date of this Agreement in the ordinary course of business or with or following the Purchaser’s express consent in respect thereto (if required) in accordance with Clause 5.1.2;

 

5.2.4                   the entry into of any agreements or arrangements on arm’s length terms with respect to the supply by the Flu Group of any products to Sandoz Inc. or its Affiliates;

 

5.2.5                   the technology transfer of the production lines in respect of the MF59® adjuvant between manufacturing sites, provided, however that such transfer does not materially adversely affect:

 

(i)                                  the ability of the Business to operate in a substantially similar form as at the date of this Agreement; or

 

(ii)                               the Purchaser’s rights under this Agreement;

 

5.2.6                   any matter undertaken which is substantially consistent with the provisions of any capital expenditure plan, business plan or projection relating to the Flu Group which has been provided to the Purchaser prior to the date of this Agreement;

 

5.2.7                   the declaration, making or payment of any dividend or other distribution to shareholders;

 

5.2.8                   any action required to be undertaken to comply with Applicable Law or requests from, and any dealings or other arrangements with, any Governmental Entity including, for the avoidance of doubt, the tender for, entry into or re-negotiation of, Contracts with Governmental Entities in the ordinary course of business;

 

5.2.9                   any matter reasonably undertaken by any member of the Seller’s Group in an emergency or disaster situation with the intention of minimising any adverse effect of such situation in relation to the Flu Group, provided that the Seller shall notify the Purchaser as soon as reasonably practicable of any action taken or proposed to be taken as described in this Clause 5.2.9, provide to the Purchaser all such information as the Purchaser may reasonably request and use reasonable endeavours to consult with the Purchaser in respect of any such action; or

 

5.2.10            any matter that is set out in Schedule 21.

 

5.3                            Interim period steering committee

 

Without prejudice to the generality of Clause 5.1.1, between the date of this Agreement and Closing the Seller and the Purchaser shall meet on a regular basis and no less than four times a calendar year for the Seller to update the Purchaser on the operations of the Business, it being understood that the obligations of the Seller under this Clause shall not extend to allowing access to information which is: (i) regarded by the Seller as confidential to the activities of the Seller and the Seller’s Group otherwise than in relation to the Flu Group; or (ii) commercially sensitive or other information relating to the Flu Group if such information cannot be shared with the Purchaser prior to Closing in compliance with Applicable Law.

 

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5.4                            Seller’s obligations in relation to insurance

 

Without prejudice to the generality of Clause 5.1.1, between the date of this Agreement and Closing, the Seller shall or shall procure that the relevant members of the Seller’s Group shall maintain in full force and effect all Flu Group Insurance Policies and all Seller’s Group Insurance Policies with limits of indemnity for the benefit of the Flu Group Businesses and Flu Group Companies.

 

5.5                            Seller’s Obligations in Relation to Books and Records

 

Without prejudice to the generality of Clause 5.1.1, prior to Closing but with regard to minimising the disruption that may be caused to the operations of the Flu Group, the Seller shall, and shall procure that its Affiliates shall, allow the Purchaser and its agents, upon reasonable notice, reasonable access to the premises and employees of the Flu Group, and to take copies of, books, records and documents of or relating in whole or in part to the Flu Group (including in respect of the Reorganisation), in each case that are reasonably requested by the Purchaser, provided that the obligations of the Seller under this Clause shall not extend to allowing access to information which is: (i) regarded by the Seller as confidential to the activities of the Seller and the Seller’s Group otherwise than in relation to the Flu Group; or (ii) commercially sensitive or other information relating to the Flu Group if such information cannot be shared with the Purchaser prior to Closing in compliance with Applicable Law.

 

5.6                            Affiliate Contracts

 

Other than as provided in the Ancillary Agreements and subject to Clause 8.6, the Seller and the Purchaser shall procure that:

 

5.6.1                   the Cash Pooling Arrangements; and

 

5.6.2                   each Affiliate Contract in force immediately prior to Closing other than any Surviving Affiliate Contract,

 

shall terminate prior to Closing and each counterparty thereto shall, effective as of Closing, settle all outstanding financial obligations arising out of such Affiliate Contracts and unconditionally release and irrevocably discharge each other party thereto from: (i) any and all further obligations to perform or any further performance of the various covenants, undertakings, warranties and other obligations contained in such Affiliate Contract; and (ii) any and all claims and Liabilities whatsoever arising out of, in any way connected with, as a result of or in respect of such Affiliate Contract.

 

5.7                            Other Pre-Closing Obligations

 

Subject to Applicable Law, unless otherwise agreed in writing between the parties:

 

5.7.1                   the Seller shall provide the Purchaser with:

 

(i)                                  a copy of the 2014 Accounts;

 

(ii)                               a statement of sales by the Flu Group for each full calendar month between the date of this Agreement and 31 December 2014; the first statement being for the month ending 30 November 2014;

 

(iii)                            the unaudited carve out profit and loss account of the Flu Group for the quarter starting on 1 January 2015 and ending on 31 March 2015;

 

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(iv)                           the unaudited carve out profit and loss account of the Flu Group for each full calendar month between 1 April 2015 and Closing, the first statement being for the month ending 30 April 2015;

 

(v)                              the unaudited carve out balance sheet of the Flu Group as at 31 December 2014 and each as at 30 June and 31 December thereafter until Closing;

 

(vi)                           an estimated unaudited carve out balance sheet of the Flu Group as of the Closing Date and an estimated unaudited carve out profit and loss account of the Flu Group for the period starting on 1 January of the year in which Closing occurs to the Closing Date,

 

in each case without unreasonable delay and promptly after such accounts are finalised;

 

5.7.2                   the Seller shall provide the Purchaser with a copy of the business plan of the Flu Group for the year commencing on 1 January 2015 before 31 December 2014;

 

5.7.3                   the Seller shall use its reasonable endeavours, in good faith, to procure the entering into of binding amendments to the agreements entered into with the Argentinian Ministry of Health, which form part of the Sinergium Arrangements, to agree and document:

 

(i)                                  that a pilot plant for the development and manufacture of cell culture based flu vaccines will be constructed;

 

(ii)                               the necessary technology transfer from the Seller’s Group in connection therewith;

 

5.7.4                   with respect to: (i) the remaining stages of the FCC technology transfer; and (ii) the MF59® technology transfer, in each case, from the Seller’s Group’s facilities at Marburg, Germany to the Holly Springs Site, the Seller shall use commercially reasonable endeavours to progress such transfer in accordance with the timeline set out in the management presentation on the Business given to the Purchaser in June 2014 (as contained in the Data Room at 9.1.1.2.20);

 

5.7.5                   the Seller shall use its reasonable endeavours to ensure that any excess cash available in the Flu Group Companies is extracted on or prior to Closing taking account of the obligations set out in Clause 5.1.1 and any associated obligations to have or expend cash prior to Closing so that at Closing excess cash within the Flu Group Companies is as close to zero as practicable whether by way of dividend or such other means as the Seller deems appropriate, in any case in accordance with Applicable Law;

 

5.7.6                   the Seller shall carry out the Reorganisation; and

 

5.7.7                   the Seller agrees that it shall procure: (i) that, prior to Closing, Novartis Vaccines and Diagnostics AG shall assign all of its rights and obligations under the Lek Filling and Packaging Agreement to a Flu Group Company or that the rights and obligations of Novartis Vaccines and Diagnostics AG under the Lek Filling and Packaging Agreement are novated to a Flu Group Company; and (ii) that the member of the Seller’s Group which is party to the Lek Filling and Packaging Agreement shall not exercise its rights under the Lek Filling and Packaging Agreement to agree to any change to the Effective Date (as defined in the Lek

 

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Filling and Packaging Agreement), other than to align the Effective Date with the Closing Date; and (iii) that, prior to Closing, there shall be no material amendments to the terms of the Lek Filling and Packaging Agreement without the prior written consent of the Purchaser, such consent not to be unreasonably withheld or delayed.

 

6                                      Closing

 

6.1                            Date and Place

 

6.1.1                   Closing shall take place at 10.00 a.m. (London Time) at the offices of Linklaters LLP, One Silk Street, London EC2Y 8HQ (other than in respect of any Local Transfer Documents agreed between the parties to be executed in another jurisdiction) on the last day of the month in which the condition(s) set out in Clauses 4.1.1, 4.1.2, 4.1.4 and 4.1.5 have been fulfilled or (where permitted by this Agreement) waived and, as at the Closing date, the conditions set out in Clauses 4.1.3 and 4.1.6 being satisfied, except that:

 

(i)                                  Closing shall not take place before 31 December 2015 other than if the parties have mutually agreed that Closing should take place before then (subject always to the conditions set out in Clause 4.1 having first been fulfilled or (where permitted by this Agreement) waived);

 

(ii)                               the Seller may, if it determines that the timing of Closing may be prejudicial to a public health risk, including (without limitation) as a result of an influenza or other pandemic, in connection with which the Seller’s Group performs or expects to perform any research and development activities or supplies or expects to supply any products, fix a later date for Closing by notice to the Purchaser, provided that such later date falls on or before the Long Stop Date;

 

(iii)                            where the last day of such month is not a Business Day, Closing shall instead take place on the first Business Day of the following month; and

 

(iv)                           where less than 5 Business Days remain between such fulfilment and the last day of the month, Closing shall take place:

 

(a)                       on the last day of the following month; and

 

(b)                       where the last day of such month is not a Business Day, the Closing shall instead take place on the first Business Day of the month following the month referred to in Clause 6.1.1(iv)(a);

 

(c)                        or at such other location, time or date as may be agreed between the Purchaser and the Seller.

 

6.2                            Closing Events

 

6.2.1                   On Closing, the parties shall comply with their respective obligations specified in Schedule 13. The Seller may waive some or all of the obligations of the Purchaser as set out in Schedule 13 and the Purchaser may waive some or all of the obligations of the Seller as set out in Schedule 13.

 

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6.2.2                   The parties acknowledge that the transfer of Product Approvals, Pipeline Product Approvals and Product Applications to the Purchaser or other members of the Purchaser’s Group may be subject to the approval of applicable Governmental Entities, and that, notwithstanding anything in this Agreement to the contrary, each Product Approval, Pipeline Product Approvals and Product Application shall continue to be held by the relevant member of the Seller’s Group from the Closing Date until the relevant PA Transfer Date.

 

6.2.3                   The parties shall perform their respective obligations with respect to:

 

(i)                                  the transfer of the Product Approvals, Product Applications and Pipeline Product Approvals as set out in Schedule 7;

 

(ii)                               the transfer of Contracts (other than US Government Contracts, Product Approvals, Product Applications and Pipeline Product Approvals) and the Transferred Intellectual Property Contracts and the treatment of Shared Business Contracts as set out in Schedule 8; and

 

(iii)                            the transfer of US Government Contracts as set out in Schedule 15.

 

6.3                            Payment on Closing

 

On Closing, the Purchaser shall pay (for itself and on behalf of each relevant member of the Purchaser’s Group in accordance with Clause 3.2) an amount in cleared funds, to the Seller to the Purchase Price Bank Account, which is equal to the sum of:

 

(i)                                   the Headline Price;

 

plus

 

(ii)                                the Estimated Flu Group Companies’ Cash Balances;

 

minus

 

(iii)                             the Estimated Third Party Indebtedness;

 

minus

 

(iv)                            the Estimated Tax Adjustment.

 

6.4                            Notifications to determine payments on Closing

 

6.4.1                   Not later than 5 Business Days prior to Closing, the Seller shall notify the Purchaser of:

 

(i)                                   the Estimated Flu Group Companies’ Cash Balances;

 

(ii)                                the Estimated Third Party Indebtedness; and

 

(iii)                             the Estimated Tax Adjustment,

 

and shall at the same time provide to the Purchaser reasonable supporting calculations and information to enable the Purchaser to review the basis on which the estimates have been prepared.

 

6.5                            Breach of Closing Obligations

 

If any party fails to comply with any material obligation in Clauses 6.2, 6.3 or 5.7.7 or Schedule 13 in relation to Closing, the Purchaser, in the case of non-compliance by the

 

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Seller, or the Seller, in the case of non-compliance by the Purchaser, shall be entitled (in addition to and without prejudice to all other rights or remedies available) by written notice to the Seller or the Purchaser, as the case may be:

 

6.5.1                   to effect Closing so far as practicable having regard to the defaults which have occurred; or

 

6.5.2                   to fix a new date for Closing which, except as agreed by the parties, shall be the last day of the month next ending or, if that day is not a Business Day, the first Business Day falling after that day, in which case the provisions of Schedule 13 shall apply to Closing as so deferred, but provided such deferral may only occur once (the “Deferred Closing Date”).

 

6.5.3                   If Closing does not occur on the Deferred Closing Date, either party may terminate this Agreement by written notice given to the other.

 

The parties agree that compliance with paragraph 1.1.2 (to the extent it relates to the Transitional Services Agreement, the Marketing Authorisation Services Agreement, the MF59® Manufacturing and Supply Agreement and the FCC Bulk Antigens Supply Agreement) and paragraph 1.1.7 of Schedule 13 shall be deemed to be a material obligation for the purposes of this Clause 6.5.

 

7                                      Post-Closing Adjustments

 

7.1                            Closing Statements

 

7.1.1                   The Seller shall procure that as soon as practicable following Closing there shall be drawn up a draft of the Closing Statement (the “Draft Closing Statement”) in accordance with Schedule 14 in relation to the Flu Group Companies and Flu Group Businesses, on a combined basis.

 

7.1.2                   The Closing Statement shall be drawn up as at the Effective Time.

 

7.2                            Determination of Closing Statement

 

7.2.1                   The Draft Closing Statement as agreed or determined pursuant to paragraph 1 of Part 1 of Schedule 14:

 

(i)                                  shall constitute the Closing Statement for the purposes of this Agreement; and

 

(ii)                               shall be final and binding on the parties.

 

7.2.2                   The Flu Group Companies’ Cash Balances, the Tax Adjustment and the Third Party Indebtedness shall be derived from the Closing Statement.

 

7.3                            Adjustments to Purchase Price

 

7.3.1                   Flu Group Companies’ Cash Balances

 

(i)                                  If the Flu Group Companies’ Cash Balances are less than the Estimated Flu Group Companies’ Cash Balances, the Seller shall repay to the Purchaser an amount equal to the deficit; or

 

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(ii)                               if the Flu Group Companies’ Cash Balances are greater than the Estimated Flu Group Companies’ Cash Balances, the Purchaser shall pay to the Seller an additional amount equal to the excess.

 

7.3.2                   Third Party Indebtedness

 

(i)                                  If the Third Party Indebtedness is greater in magnitude than the Estimated Third Party Indebtedness, the Seller shall repay to the Purchaser an amount equal to the excess; or

 

(ii)                               if the Third Party Indebtedness is less in magnitude than the Estimated Third Party Indebtedness, the Purchaser shall pay to the Seller an additional amount equal to the deficit.

 

7.3.3                   Tax Adjustment

 

(i)                                  If the Tax Adjustment is greater than the Estimated Tax Adjustment, the Seller shall repay to the Purchaser an amount equal to the difference; or

 

(ii)                               if the Tax Adjustment is less than the Estimated Tax Adjustment, the Purchaser shall pay to the Seller an additional amount equal to the difference.

 

7.3.4                   Netting

 

To the extent each of the Seller and the Purchaser are required to pay an amount pursuant to Clause 7.3, the amount payable by the Seller to the Purchaser shall first be set off against the amount payable by the Purchaser to the Seller. If the amount due from the Seller is less than the amount due from the Purchaser, the Purchaser shall pay the Seller an amount equal to such excess. If the amount due from the Seller is more than the amount due from the Purchaser, the Seller shall pay the Purchaser an amount equal to such excess.

 

7.4                            Interest

 

Any payment to be made in accordance with Clause 7.3 shall include interest thereon calculated from the Closing Date to the date of payment at a rate per annum of USD LIBOR.

 

7.5                            Payment

 

7.5.1                   Any payments pursuant to Clause 7.3, and any interest payable pursuant to Clause 7.4, shall be made on or before the Final Payment Date.

 

7.5.2                   Where any payment is required to be made pursuant to Clause 7.3 or Clause 7.4 (in relation to a payment pursuant to Clause 7.3) the payment made on account of the Purchase Price shall be reduced or increased accordingly.

 

8                                     Post-Closing Obligations

 

8.1                            Assumed Liabilities and Purchaser Indemnity

 

8.1.1                   “Assumed Liabilities” means all Liabilities to the extent referable to the Business, but excluding:

 

(i)                                  the Excluded Liabilities;

 

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(ii)                               the Relevant Pension and Employment Liabilities (which are dealt with separately under Schedule 9); and

 

(iii)                            any Liabilities of the Seller’s Group in respect of Tax (other than Tax which has been assumed by the Purchaser’s Group under an express provision of this Agreement).

 

8.1.2                   The Seller agrees to procure the transfer (to the extent it is able to do so) and the Purchaser agrees to accept (or procure the acceptance by another member of the Purchaser’s Group of), with effect from Closing and with reference only to periods after the Effective Time, the transfer of, and to assume, pay, satisfy, discharge, perform or fulfil (or procure that another member of the Purchaser’s Group will assume, pay, satisfy, discharge, perform or fulfil) the Assumed Liabilities.

 

8.1.3                   The Purchaser hereby undertakes to the Seller (for itself and on behalf of each other member of the Seller’s Group and their respective directors, officers, employees and agents) that, with effect from Closing, the Purchaser will indemnify on demand and hold harmless each member of the Seller’s Group and their respective directors, officers, employees and agents against and in respect of any and all:

 

(i)                                  Assumed Liabilities;

 

(ii)                               Liabilities arising out of the US Government Contracts (including any modifications, amendments or extensions thereto) which are referable to the period after the Effective Time, or the Purchaser’s performance of any such US Government Contracts; and

 

(iii)                            Losses which the Seller or any other member of the Seller’s Group may suffer by reason of any member of the Seller’s Group taking any reasonable action to avoid, resist or defend against any Liability referred to in (i) and (ii) in this Clause 8.1.3.

 

8.2                            Excluded Liabilities and Seller Indemnity

 

8.2.1                   “Excluded Liabilities” means:

 

(i)                                  all Liabilities referable to the Business to the extent such liabilities have arisen or arise (whether before or after the Effective Time) as a result of an act, omission, fact, matter, circumstance or event undertaken, occurring, in existence or arising before the Effective Time, including all Liabilities in respect of Tax of the Seller’s Group (other than the Flu Group Companies, for which the provisions of the Tax Indemnity shall apply), other than any such Liabilities provided for or reflected in the Statement of Net Assets, the Accounts, the 2013 Carve Out Accounts, the Stub Period Carve Out Accounts or the Closing Statement but only to the extent so provided for or reflected;

 

(ii)                               all Liabilities referable to any business or asset not acquired by the Purchaser pursuant to this Agreement;

 

(iii)                            all Liabilities referable to the Seller’s Group Retained Business;

 

(iv)                           all Liabilities which arise from the Reorganisation,

 

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save, in the case of sub-Clauses (i) and (iv), for any issues in relation to Pension and Liabilities relating to Employees which are dealt with separately in Schedule 9.

 

8.2.2                   The Purchaser shall not be obliged to accept (or procure the acceptance by another member of the Purchaser’s Group of), the transfer of or to assume, pay, satisfy, discharge, perform or fulfil, or procure that another member of the Purchaser’s Group will assume, pay, satisfy, discharge, perform or fulfil any Excluded Liabilities.

 

8.2.3                   The Seller hereby undertakes to the Purchaser (for itself and on behalf of each other member of the Purchaser’s Group and their respective directors, officers, employees and agents) that, with effect from Closing and for a period of 6 years from Closing, the Seller will indemnify on demand and hold harmless each member of the Purchaser’s Group and their respective directors, officers, employees and agents against and in respect of any and all:

 

(i)                                  Excluded Liabilities;

 

(ii)                               Subject to the Purchaser complying with its obligations in Clause 8.2.5, Liabilities arising out of the US Government Contracts (including any modifications, amendments or extensions thereto) which are referable to the period prior to the Effective Time, or Seller’s Group’s performance of any such US Government Contracts;

 

(iii)                            Losses which the Purchaser or any other member of the Purchaser’s Group may suffer by reason of any member of the Purchaser’s Group taking any reasonable action to avoid, resist or defend against any Liability referred to in sub-Clause (i);

 

(iv)                           Losses arising from any Employee Inventor Payments or Intellectual Property Litigation (including, without limitation, any Losses arising from settlements, royalty payments or injunctions);

 

(v)                              Liabilities, whether arising prior to or after Closing, under Environmental Laws arising from or relating to the incidents described in the Disclosure Letter against warranty 2.19.1 relating to the presence of mercury in excess of applicable discharge limits in waste water at the Liverpool Site, and

 

(vi)                           Liabilities, whether arising prior to or after Closing, under Environmental Laws arising from or relating to odour emissions broadly of the type described more particularly in the Liverpool Part A notification dated 8 January 2014 at the Liverpool Site and their sources, impacts and effects) as contained in the Data Room at 3.5.1.2.6,

 

in each case, to the extent that a provision or reserve in respect of such Losses or Liabilities has not been made, or such Losses or Liabilities were not reflected in, the Statement of Net Assets, the Accounts, the 2013 Carve Out Accounts, the Stub Period Carve Out Accounts or the Closing Statement.

 

8.2.4                   Notwithstanding anything in this Agreement to the contrary:

 

(i)                                  the Seller (or relevant member of the Seller’s Group) shall, at its cost (including legal and professional costs and expenses), have the exclusive right to take whatever action it deems appropriate in its sole discretion for

 

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the defence or enforcement, as applicable, of any Employee Inventor Payments or Intellectual Property Litigation; and

 

(ii)                               the parties agree that any action taken by the Seller (or relevant member of the Seller’s Group) pursuant to this Clause 8.2.4 shall constitute a claim that is subject to Clauses 8.4.2 and 8.4.4 to 8.4.6, and in relation to any such action each party shall (as applicable) have the rights provided by, and be subject to the obligations arising under, Clauses 8.4.2 and 8.4.4 to 8.4.6.

 

8.2.5                   The Purchaser shall notify the Seller as soon as reasonably practicable of any changes to the US Government Contracts that would be likely to increase the Seller’s potential liability in connection therewith. The notice shall provide a summary of any changes in sufficient detail to allow the Seller to understand the impact of the changes and the increased potential liability.

 

8.3                            Conduct of Claims in respect of Assumed Liabilities

 

8.3.1                   If the Seller becomes aware after Closing of any claim which constitutes or may constitute an Assumed Liability, the Seller shall as soon as reasonably practicable:

 

(i)                                  give written notice thereof to the Purchaser, setting out such information as is available to the Seller as is reasonably necessary to enable the Purchaser to assess the merits of the potential claim;

 

(ii)                               take all appropriate actions to preserve evidence; and

 

(iii)                            provide the Purchaser with periodic updates on the status of the claim upon reasonable request and shall not admit, compromise, settle, discharge or otherwise deal with such claim without the prior written agreement of the Purchaser (such agreement not to be unreasonably withheld or delayed).

 

8.3.2                   The Seller shall, and shall procure that each Share Seller and Business Seller shall:

 

(i)                                  take such action as the Purchaser may reasonably request to avoid, dispute, resist, appeal, compromise, defend or mitigate any claim which constitutes or may constitute an Assumed Liability subject to the Seller and each Share Seller and Business Seller being indemnified to their reasonable satisfaction by the Purchaser against all Liabilities which may thereby be incurred. In connection therewith, the Seller shall make or procure to be made available to the Purchaser or its duly authorised agents on reasonable notice during normal business hours all relevant books of account, records and correspondence relating to the Flu Group Businesses which have been retained by the Seller’s Group (and shall permit the Purchaser to take copies thereof at its expense) and shall afford the Purchaser or its duly authorised agents reasonable access, on reasonable notice, during normal business hours to its premises and to its directors, officers, employees, consultants, agents and advisers for the purposes of enabling the Purchaser to ascertain or extract any information relevant to the claim; and

 

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(ii)                               on reasonable notice from the Purchaser, give such assistance to the Purchaser as it may reasonably require in relation to the claim including providing the Purchaser or any member of the Purchaser’s Group and its representative and advisers with access to and assistance from directors, officers, managers, employees, advisers, agents or consultants of the Seller and/or of each other member of the Seller’s Group (collectively, the “Relevant Persons”) and the Seller will use its reasonable endeavours to procure that such Relevant Persons comply with any reasonable requests from the Purchaser and generally co-operates with and assists the Purchaser and other members of the Purchaser’s Group.

 

8.3.3                   In addition, where any such claim or investigation involves a Governmental Entity, the Seller shall, subject to Applicable Law, the requirements of the relevant Governmental Entity and the Purchaser providing an appropriate confidentiality undertaking in favour of the Seller’s Group, provide to the Purchaser, at least 5 Business Days in advance (or, where not possible, as soon as reasonably possible), any analyses, appearances, presentations, memoranda, briefs, arguments, opinions and proposals they or their agents make or submit to a Governmental Entity. Without limiting the foregoing, the parties agree, subject to Applicable Law, and the requirements of the relevant Governmental Entity, and the Purchaser providing an appropriate confidentiality undertaking in favour of the Seller’s Group, to:

 

(i)                                  give the Purchaser reasonable advance notice of all meetings with any Governmental Entity;

 

(ii)                               give the Purchaser an opportunity to participate in each of such meetings;

 

(iii)                            to the extent practicable, give the Purchaser reasonable advance notice of all substantive oral communications with any Governmental Entity;

 

(iv)                           if any Governmental Entity initiates a substantive oral communication, promptly notify the Purchaser of the substance of such communication;

 

(v)                              provide the Purchaser with a reasonable advance opportunity to review and comment upon all substantive written communications (including any substantive correspondence, analyses, presentations, memoranda, briefs, arguments, opinions and proposals) that the Seller or its agents intend to make or submit to a Governmental Entity in connection with such claim;

 

(vi)                           provide the Purchaser with copies of all substantive written communications to or from any Governmental Entity; and

 

(vii)                        not advance arguments with the Governmental Entity without the prior written agreement of the Purchaser that would reasonably be likely to have a significant adverse impact on the Purchaser, provided however, that the Seller shall not be required to comply with sub-clause (ii) above to the extent that the Governmental Entity objects to the participation of a party, or with sub-clause (v) or (vi) above to the extent that such disclosure may raise regulatory concerns (in which case, the disclosure may be made on an outside counsel basis).

 

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8.3.4                   The Purchaser shall be entitled at its own expense and in its absolute discretion, by notice in writing to the Seller, to take such action as it shall deem necessary to avoid, dispute, deny, defend, resist, appeal, compromise or contest any such claim (including making counterclaims or other claims against third parties) in the name of and on behalf of the Seller or other member of the Seller’s Group concerned and to have the conduct of any related proceedings, negotiations or appeals. In taking action on behalf of any member of the Seller’s Group as permitted by this Clause 8.3.4, the Purchaser shall, in good faith, take into account and have due regard to any reputational matters or issues arising out of the claim for any member of the Seller’s Group or any of their respective directors, officers, employees or agents which are brought to its attention by the Seller or a member of the Seller’s Group.

 

8.3.5                   The Purchaser shall be entitled at any stage and in its absolute discretion to settle any such claim (but without any admission of wrongdoing) after giving reasonable advance written notice to the Seller or the relevant member of the Seller’s Group and provided that the Seller or the relevant member of the Seller’s Group is indemnified in full against all Losses arising in connection with such claim.

 

8.3.6                   When seeking assistance under Clause 8.3.4 the Purchaser, or any other relevant member of the Purchaser’s Group, shall use reasonable endeavours to minimise interference with the Seller and the Seller’s Group’s conduct of the relevant business or the performance by the relevant employees of their employment duties.

 

8.4                            Conduct of Claims in respect of Excluded Liabilities

 

8.4.1                   If the Purchaser becomes aware after Closing of any claim which constitutes or may constitute an Excluded Liability, the Purchaser shall as soon as reasonably practicable:

 

(i)                                  give written notice thereof to the Seller, setting out such information as is available to the Purchaser as is reasonably necessary to enable the Seller to assess the merits of the potential claim;

 

(ii)                               take all appropriate actions to preserve evidence; and

 

(iii)                            provide the Seller with periodic updates on the status of the claim upon reasonable request and shall not admit, compromise, settle, discharge or otherwise deal with such claim without the prior written agreement of the Seller (such agreement not to be unreasonably withheld or delayed).

 

8.4.2                   The Purchaser shall, and shall procure that each member of the Purchaser’s Group shall:

 

(i)                                  take such action as the Seller may reasonably request to avoid, dispute, resist, appeal, compromise, defend or mitigate any claim which constitutes or may constitute an Excluded Liability subject to the Purchaser and each member of the Purchaser’s Group, being indemnified to their reasonable satisfaction by the Seller against all Liabilities which may thereby be incurred. In connection therewith, without limitation to the Seller’s rights under Clause 8.4.2(ii), the Purchaser shall make or procure to be made available to the Seller or its duly authorised agents on reasonable notice during normal business hours all relevant books of account, records and

 

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correspondence relating to the Flu Group Businesses which are in the possession of the Purchaser’s Group (and shall permit the Seller to take copies thereof at its expense) and shall afford the Seller or its duly authorised agents reasonable access, on reasonable notice, during normal business hours to its premises and to its directors, officers, employees, consultants, agents and advisers for the purposes of enabling the Seller to ascertain or extract any information relevant to the claim; and

 

(ii)                               on reasonable notice from the Seller, give such assistance to the Seller as it may reasonably require in relation to the claim including providing the Seller or any member of the Seller’s Group and its representative and advisers with access to and assistance from directors, officers, managers, employees, advisers, agents or consultants of the Purchaser and/or of each other member of the Purchaser’s Group (collectively, the “Relevant Persons”) and the Purchaser will use its reasonable endeavours to procure that such Relevant Persons comply with any reasonable requests from the Seller and generally co-operates with and assists the Seller and other members of the Seller’s Group.

 

8.4.3                   In addition, where any such claim or investigation involves a Governmental Entity, the Purchaser shall, subject to Applicable Law, the requirements of the relevant Governmental Entity and the Seller providing an appropriate confidentiality undertaking in favour of the Purchaser’s Group, provide to the Seller, at least 5 Business Days in advance (or, where not possible, as soon as reasonably possible), any analyses, appearances, presentations, memoranda, briefs, arguments, opinions and proposals they or their agents make or submit to a Governmental Entity. Without limiting the foregoing, the parties agree, subject to Applicable Law, and the requirements of the relevant Governmental Entity, and the Seller providing an appropriate confidentiality undertaking in favour of the Purchaser’s Group, to:

 

(i)                                  give the Seller reasonable advance notice of all meetings with any Governmental Entity;

 

(ii)                               give the Seller an opportunity to participate in each of such meetings;

 

(iii)                            to the extent practicable, give the Seller reasonable advance notice of all substantive oral communications with any Governmental Entity;

 

(iv)                           if any Governmental Entity initiates a substantive oral communication, promptly notify the Seller of the substance of such communication;

 

(v)                              provide the Seller with a reasonable advance opportunity to review and comment upon all substantive written communications (including any substantive correspondence, analyses, presentations, memoranda, briefs, arguments, opinions and proposals) that the Purchaser or its agents intend to make or submit to a Governmental Entity in connection with such claim;

 

(vi)                           provide the Seller with copies of all substantive written communications to or from any Governmental Entity; and

 

(vii)                        not advance arguments with the Governmental Entity without the prior written agreement of the Seller that would reasonably be likely to have a

 

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significant adverse impact on the Seller, provided however, that the Purchaser shall not be required to comply with sub-clause (ii) above to the extent that the Governmental Entity objects to the participation of a party, or with sub-clause (v) or (vi) above to the extent that such disclosure may raise regulatory concerns (in which case, the disclosure may be made on an outside counsel basis).

 

8.4.4                   The Seller shall be entitled at its own expense and in its absolute discretion, by notice in writing to the Purchaser, to take such action as it shall deem necessary to avoid, dispute, deny, defend, resist, appeal, compromise or contest any such claim (including making counterclaims or other claims against third parties) in the name of and on behalf of the Purchaser or other member of the Purchaser’s Group concerned and to have the conduct of any related proceedings, negotiations or appeals. In taking action on behalf of any member of the Purchaser’s Group as permitted by this Clause 8.4, the Seller shall, in good faith, take into account and have due regard to any reputational matters or issues arising out of the claim for any member of the Purchaser’s Group or any of their respective directors, officers, employees or agents which are brought to its attention by the Purchaser or a member of the Purchaser’s Group.

 

8.4.5                   The Seller shall be entitled at any stage and in its absolute discretion to settle any such claim (but without any admission of wrongdoing) after giving reasonable advance written notice to the Purchaser or the relevant member of the Purchaser’s Group and provided that the Purchaser or the relevant member of the Purchaser’s Group is indemnified in full against all Losses arising in connection with such claim.

 

8.4.6                   When seeking assistance under Clauses 8.4.2 and 8.4.3, the Seller, or any other relevant member of the Seller’s Group, shall use reasonable endeavours to minimise interference with the Purchaser and the Purchaser’s Group’s conduct of the relevant business or the performance by the Relevant Persons of their employment duties.

 

8.5                            Release of Guarantees

 

8.5.1                   The Purchaser shall use reasonable endeavours to procure as soon as reasonably practicable after Closing, the release of the Seller or any member of the Seller’s Group from any securities, guarantees or indemnities given by or binding upon the Seller or any member of the Seller’s Group in respect of the Assumed Liabilities or in connection with a liability of any of the Flu Group Companies, including any liability resulting from the novation of the US Government Contracts. Pending such release, the Purchaser shall indemnify the Seller and any member of the Seller’s Group against all amounts paid by any of them (acting reasonably) pursuant to any such securities, guarantees or indemnities in respect of such Assumed Liabilities or such liability of the Flu Group Companies.

 

8.5.2                   The Seller shall use reasonable endeavours to procure by Closing or, to the extent not done by Closing, as soon as reasonably practicable after Closing, the release of the Flu Group Companies from any securities, guarantees or indemnities given by or binding upon the Flu Group Companies in respect of any liability of the Seller or any member of the Seller’s Group. Pending such release, the Seller shall indemnify the Flu Group Companies against all amounts paid by any of them

 

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(acting reasonably) pursuant to any such securities, guarantees or indemnities in respect of such liability of the Seller which arises after Closing.

 

8.6                            Intra-Group Non-Trade Payables and Receivables

 

Any Intra-Group Non-Trade Payables and Intra-Group Non-Trade Receivables shall be settled at or prior to Closing.

 

8.7                            Intra-Group Trading Balances

 

The Seller or the Purchaser, as applicable, shall procure that any Intra Group Trading Balances shall be settled after Closing in the ordinary course of business and in any event within 60 days of Closing.

 

8.8                            Wrong Pockets Obligations

 

8.8.1                   Except as provided in Schedules 3, 7, 8 and 9, if any property, right or asset forming part of the Flu Group (other than any property, right or asset expressly excluded from the sale under this Agreement) has not been transferred to the Purchaser or to another member of the Purchaser’s Group and should have transferred pursuant to the terms of this Agreement, the Seller shall procure that such property, right or asset (and any related liability which is an Assumed Liability) is transferred to the Purchaser, or to such other member of the Purchaser’s Group as the Purchaser may nominate which is reasonably acceptable to the Seller, as soon as practicable and at no cost to the Purchaser.

 

8.8.2                   If, following Closing, any property, right or asset not forming part of the Flu Group (other than any property, right or asset expressly included in the sale under this Agreement) is found to have been transferred to the Purchaser or to another member of the Purchaser’s Group and should not have transferred pursuant to the terms of this Agreement, the Purchaser shall procure that such property, right or asset is transferred to the transferor or another member of the Seller’s Group nominated by the Seller which is reasonably acceptable to the Purchaser as soon as practicable and at no cost to the Seller.

 

8.8.3                   If, after Closing, any member of the Seller’s Group takes receipt of any assets or payments in respect of the Flu Group which are the entitlement of any member of the Purchaser’s Group under this Agreement, such member of the Seller’s Group shall hold such assets or payments on trust for such member of the Purchaser’s Group and shall remit such assets or payments to such member of the Purchaser’s Group within 5 Business Days following receipt.

 

8.8.4                   If, after Closing, any member of the Purchaser’s Group takes receipt of any assets or payments in respect of the Seller’s Group’s Retained Business which are the entitlement of any member of the Seller’s Group under this Agreement, such member of the Purchaser’s Group shall hold such assets or payments on trust for such member of the Seller’s Group and shall remit such assets or payments to such member of the Seller’s Group within 5 Business Days following receipt.

 

8.9                            The Purchaser’s Continuing Obligations

 

8.9.1                   The Purchaser shall, and shall procure that the Purchaser’s Affiliates shall procure that, as soon as practicable after Closing, each of the Flu Group Companies shall change its name so that it does not contain the Seller Marks or any name which is

 

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likely to be confused with the same and shall provide the Seller with appropriate evidence of such change of name.

 

8.9.2                   Except as provided in the Ancillary Agreements, the Purchaser shall not, and shall procure that no member of the Purchaser’s Group shall, after Closing, use in any way whatsoever any of the Seller Marks or any confusingly similar name or mark, any extensions thereof or developments thereto in any business which competes with the Seller’s business, or any other business of the Seller or any member of the Seller’s Group in which the Seller Marks are used for a minimum period of five years following Closing and thereafter for so long as any member of the Seller’s Group continues to retain an interest in the name.

 

8.9.3                   The Purchaser shall, and shall procure that the relevant Flu Group Companies shall, retain for a period of 10 years from Closing, and not dispose of or destroy the books, records and documents of the Flu Group to the extent they relate to the period prior to Closing and shall, and shall procure that the relevant Flu Group Companies shall, if reasonably requested by the Seller, allow the Seller reasonable access to such books, records and documents (including the right to take copies at the Seller’s expense) and to the employees of the Flu Group or former employees of the Flu Group who are employees of any member of the Purchaser’s Group.

 

8.9.4                   During the 90 days following the Closing Date, the Purchaser shall provide and cause to be provided to the Seller the information reasonably required to enable Seller to prepare and audit the standard monthly reporting forms of the Seller’s Group, to the extent that such financial reporting relates to the Flu Group, in respect of the period prior to the Closing and in respect of the calendar month in which the Closing occurs. The Purchaser shall provide such financial reporting in respect of the calendar month in which Closing occurs to the Seller within six Business Days of the last day of the relevant month.

 

8.10                     The Seller’s Continuing Obligations

 

8.10.1            The Seller shall, and shall procure that the Seller’s Affiliates shall, retain for a period of 10 years from Closing, and not dispose of or destroy, the Business Information in the possession of the Seller or the Seller’s Affiliates relating to the Business which were not delivered to the Purchaser on Closing.

 

8.10.2            For a period of 10 years from Closing, the Seller shall, or shall procure that the Seller’s Affiliates shall, on reasonable notice from the Purchaser and during ordinary business hours:

 

(i)                                  make available to the Purchaser all relevant books, records and documents in the possession of the Seller or the Seller’s Affiliates and relating to the Business prior to Closing (other than any Tax Return of any member of the Seller’s Group) which were not delivered to the Purchaser on Closing (including the right to take copies thereof at the Purchaser’s expense); and

 

(ii)                               allow reasonable access, to the extent the Purchaser reasonably requires, to employees of the Seller’s Group who have relevant knowledge of any of the Business, provided that the Purchaser shall promptly reimburse the Seller and any relevant Seller’s Affiliate for any expenses incurred by the Seller or any such Seller’s Affiliate.

 

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8.10.3            Following Closing, the Seller shall, and shall procure that the Seller’s Affiliates shall, pass on to the Purchaser all notices, correspondence, information, orders and enquiries to the extent that they relate to the Business received by any member of the Seller’s Group for a period of 10 years from Closing.

 

8.11                     Holly Springs Site

 

The Seller and the Purchaser shall perform their respective obligations with respect to the transfer of the facility at the Holly Springs Site as set out in Part 2 of Schedule 15.

 

9                                      Warranties

 

9.1                            Seller’s Warranties

 

9.1.1                   Subject to Clause 9.2, the Seller warrants (on behalf of the relevant Business Sellers or Share Seller as applicable) to the Purchaser and each member of the Purchaser’s Group to which Shares or other assets are transferred pursuant to this Agreement or any Local Transfer Document, that the statements set out in Schedule 16 are now and will at Closing (by reference to the facts and circumstances existing at the relevant time) be true and accurate.

 

9.1.2                   Each of the Seller’s Warranties shall be separate and independent and shall not be limited by reference to any other paragraph of Schedule 16 or by anything in this Agreement or any Local Transfer Document or in the Tax Indemnity.

 

9.1.3                   The Seller does not give or make any warranty as to the accuracy of the forecasts, estimates, projections, statements of intent or statements of opinion provided to the Purchaser or any of its directors, officers, employees, agents or advisers on or prior to the date of this Agreement, including in the information book on the Business provided to the Purchaser dated May 2014, the management presentation on the Business given to the Purchaser in June 2014 or any document provided in the Data Room.

 

9.1.4                   Any Seller Warranty qualified by the expression “so far as Seller is aware” or to “Seller’s Knowledge” or any similar expression shall, unless otherwise stated, be deemed to refer to the actual knowledge of the following persons: [***]; [***]; [***]; [***]; [***]; [***]; [***]; [***]; [***]; [***] and [***] such persons having made reasonable enquiry, with no imputation of the knowledge of any other person.

 

9.1.5                   The Seller’s Warranties and any claim in respect of the Seller’s Warranties shall be subject to the limitations and other provisions set out in Clauses 10 and 11.

 

9.2                            Seller’s Disclosures

 

9.2.1                   The Seller’s Warranties are subject to all matters which are Disclosed in this Agreement, the Disclosure Letter or the Data Room.

 

9.2.2                   References in the Disclosure Letter to paragraph numbers shall be to the paragraphs in Schedule 16 to which the disclosure is most likely to relate. Such references are given for convenience only and, shall not limit the effect of any of the disclosures, all of which are made against Seller’s Warranties as a whole.

 

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9.3                            Updating of Seller’s Warranties to Closing

 

No right to damages or compensation shall arise in favour of the Purchaser under Clause 9.1.1 in consequence of an event occurring or matter arising after the signing of this Agreement and before Closing which results or may result in any of the Seller’s Warranties being untrue or inaccurate at Closing (whether or not this Agreement is terminated in consequence thereof) unless the relevant event or matter has a material adverse effect (other than on a short term, temporary basis) on the Flu Group taken as a whole and which has not been mitigated or remedied to the reasonable satisfaction of the Purchaser on or prior to the Closing Date. For the purposes of this Clause 9.3 only, the breach of a Seller’s Warranty will be taken as having a “material adverse effect” only if the relevant fact, matter, event or circumstance constituting the breach, if it had been known to the Purchaser prior to the date of this Agreement, could reasonably have expected to have resulted in the Purchaser offering to acquire the Business on the terms of this Agreement at a discount to the Purchase Price of 10 per cent. or more.

 

9.4                            The Purchaser’s Warranties

 

The Purchaser warrants to the Seller that the statements set out in Schedule 17 are as of the date of this Agreement, and will at Closing (by reference to the facts and circumstances existing at the relevant time) be, true and accurate.

 

10                               Limitation of Liability

 

10.1                     Application

 

10.1.1            In respect of the Tax Indemnity, the provisions of this Clause 10 shall operate to limit the liability of the Seller only in so far as any provision in this Clause 10 is expressed to be applicable to the Tax Indemnity, and the provisions of the Tax Indemnity shall further operate to limit the liability of Seller in respect of any claims thereunder.

 

10.1.2            The Tax Indemnity shall operate to limit the liability of the Seller and to govern the claims procedure in respect of any claim under the Tax Warranties in respect of a liability for Tax as if such claim had been a claim in respect of a Tax Liability (as defined in the Tax Indemnity) under the Tax Indemnity.

 

10.2                     Time Limitation for Claims

 

The Seller shall not be liable under this Agreement or any Local Transfer Document for breach of any Seller’s Warranty or under the Tax Indemnity in respect of any claim unless a notice of the claim is given by the Purchaser to the Seller specifying the matters set out in Clause 11.2:

 

10.2.1            in the case of a claim under paragraphs 1, 2.1 or 2.3 of Schedule 16, within 5 years from the Closing Date;

 

10.2.2      in the case of a claim under the Tax Warranties or Tax Indemnity, the date falling 6 months after the expiry of the period specified by statute during which an assessment of that liability to Tax may be issued by the relevant Tax Authority (assuming the absence of fraud or wilful wrongdoing); and

 

10.2.3            in the case of any other claim, within 18 months from the Closing Date.

 

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10.3                     Minimum Claims

 

10.3.1            The Seller shall not be liable under this Agreement or any Local Transfer Document for breach of any Seller’s Warranty in respect of any individual claim (or a series of claims arising from similar or identical facts or circumstances) where the liability agreed or determined (disregarding the provisions of this Clause 10.3) in respect of any such claim or series of claims does not exceed 0.1 per cent. of the Purchase Price.

 

10.3.2            Where the liability agreed or determined in respect of any such claim or series of claims exceeds 0.1 per cent. of the Purchase Price, the Seller shall be liable for the amount of the claim or series of claims as agreed or determined and not just the excess.

 

10.4                     Aggregate Minimum Claims

 

10.4.1            The Seller shall not be liable under this Agreement or any Local Transfer Document for breach of any Seller’s Warranty in respect of any claim unless the aggregate amount of all claims for which the Seller would otherwise be liable under this Agreement or any Local Transfer Document for breach of any Seller’s Warranty or under the Tax Indemnity (disregarding the provisions of this Clause 10.4) exceeds 1 per cent. of the Purchase Price.

 

10.4.2            Where the liability agreed or determined in respect of all claims exceeds 1 per cent. of the Purchase Price, the liability of the Seller shall be liable for the aggregate amount of all claims as agreed or determined and not just the excess.

 

10.5                     Maximum Liability

 

The aggregate liability of the Seller in respect of any breaches of the Seller’s Warranties (other than the Seller’s Warranties contained in paragraphs 1, 2.1 or 2.3 of Schedule 16) shall not exceed an amount equal to 20 per cent. of the Purchase Price provided that the aggregate liability of the Seller in respect of all breaches of the Seller’s Warranties (including those contained in paragraphs 1, 2.1 or 2.3 of Schedule 16) shall not exceed an amount equal to the Purchase Price.

 

10.6                     Contingent Liabilities

 

The Seller shall not be liable under this Agreement or any Local Transfer Document for breach of any Seller’s Warranty in respect of which the liability is contingent, unless and until such contingent liability becomes an actual liability and is due and payable (but the Purchaser has the right under Clause 11.1 to give notice of such claim before such time). For the avoidance of doubt, the fact that the liability may not have become an actual liability by the relevant date provided in Clause 10.2 shall not exonerate the Seller in respect of any claim properly notified before that date.

 

10.7                     Losses

 

The Seller shall not be liable under this Agreement or any Local Transfer Document or the Tax Indemnity in respect of any indirect or consequential losses.

 

10.8                     Provisions

 

The Seller shall not be liable under this Agreement or any Local Transfer Document in respect of any claim for breach of any Seller’s Warranty if and to the extent that any 

 

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allowance, provision or reserve has been properly made in the Accounts for the matter giving rise to the claim.

 

10.9                     Liability for Certificate

 

The certificate required to be delivered by the Seller pursuant to paragraph 1.1.4 of Schedule 13 is given solely for the purpose of establishing satisfaction with the condition in Clause 4.1.6 and does not and shall not constitute a separate warranty or representation by the Seller or the Purchaser and no liability shall arise solely as a result of delivery of that certificate.

 

10.10              Matters Arising Subsequent to this Agreement

 

The Seller shall not be liable under this Agreement or any Local Transfer Document in respect of any claim for breach of any Seller’s Warranty in respect of any matter, act, omission or circumstance (or any combination thereof), to the extent that the same would not have occurred but for:

 

10.10.1    Agreed matters

 

any matter or thing done or omitted to be done by the Seller or any member of the Seller’s Group before Closing pursuant to and in compliance with this Agreement or any Local Transfer Document or otherwise at the request in writing of the Purchaser or any action taken or not taken by the Seller, any member of the Seller’s Group or any Flu Group Company as a result of the Purchaser not approving any other action or omission which the Seller, any member of the Seller’s Group or any Flu Group Company proposed to take under Clause 5.1.2;

 

10.10.2    Changes in legislation

 

the passing of, or any change in, after the Closing Date, any Applicable Law or administrative practice of any government, governmental department, agency or regulatory body having the force of the law including (without prejudice to the generality of the foregoing) any increase in the rates of Taxation or any imposition of Taxation or any withdrawal of relief from Taxation not in force at the Closing Date;

 

10.10.3     Accounting and Taxation Policies

 

any change in accounting or Taxation policy, bases or practice of the Purchaser or any of the Flu Group Companies (including any change to the date to which any accounts are made up to) introduced or having effect on or after Closing; or

 

10.10.4    Cessation or in any trade

 

any cessation or change in the nature or conduct of any trade carried on at Closing by the Purchaser, any member of the Purchaser’s Group or any of the Flu Group Companies, being a cessation or change introduced or having effect on or after Closing.

 

10.11              Insurance

 

Without prejudice to Clause 13 and to the Purchaser’s duty to mitigate any loss in respect of any breach of the Seller’s Warranties, the Seller’s Liability under this Agreement for breach of any Seller’s Warranty shall be reduced by an amount equal to any loss or 

 

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damage to which such claim related which has actually been recovered under a policy of insurance held by the Purchaser or a Flu Group Company.

 

10.12              Effect of Purchaser’s Knowledge

 

10.12.1    Pre-Signing Knowledge

 

The Seller shall not be liable in respect of any claim for breach of any Seller’s Warranty to the extent that the Purchaser was actually aware on or before the date of this Agreement of the facts, matters or circumstances giving rise to the relevant claim. For these purposes the Purchaser’s awareness shall mean the actual knowledge of: [***]; [***]; [***]; [***]; [***]; [***]; [***]; [***]; [***], [***] and [***].

 

10.12.2    Post-Signing Knowledge

 

The parties agree that no knowledge of the Purchaser or any of its directors, officers and employees (whether actual, constructive or imputed), to the extent arising following the date of this Agreement, shall in any way serve to reduce or extinguish any liability of the Seller or any of its Affiliates for any breach of a Seller’s Warranty when repeated at Closing.

 

10.13              Mitigation

 

Nothing in this Agreement shall prejudice the Purchaser’s duty under common law to mitigate any Loss which is or could be the subject of a claim under this Agreement.

 

10.14              Purchaser’s Right to Recover

 

If the Seller has paid an amount in discharge of any claim under this Agreement for breach of any Seller’s Warranty and subsequently the Purchaser recovers (whether by payment, discount, credit, relief, insurance or otherwise) from a third party a sum which indemnifies or compensates the Purchaser (in whole or in part) in respect of the loss or liability which is the subject matter of the claim, the Purchaser shall pay to the Seller as soon as practicable after receipt an amount equal to: (i) the sum recovered from the third party less any costs and expenses incurred in obtaining such recovery and any Tax on any amounts recovered (or Tax that would have been payable on such amounts but for the availability of any Tax relief), or if less, (ii) the amount previously paid by the Seller to the Purchaser. Any payment made by the Purchaser to the Seller under this Clause shall be made or procured by way of further adjustment of the consideration paid by the Purchaser and the provisions of Clause 3.3 shall apply mutatis mutandis.

 

10.15              No Double Recovery and no Double Counting

 

A party shall be entitled to make more than one claim under this Agreement arising out of the same subject matter, fact, event or circumstance but shall not be entitled to recover under this Agreement or any Local Transfer Document or the Tax Indemnity or otherwise more than once in respect of the same Losses suffered or amount for which the party is otherwise entitled to claim (or part of such Losses or amount), regardless of whether more than one claim arises in respect of it. No amount (including any relief) (or part of any amount) shall be taken into account, set off or credited more than once under this Agreement or any Local Transfer Document or the Tax Indemnity or otherwise, with the intent that there will be no double counting under this Agreement or any Local Transfer Document and the Tax Indemnity or otherwise.

 

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10.16              Fraud

 

None of the limitations contained in this Clause 10 shall apply to any claim to the extent that such claim which arises or is increased, or to the extent to which it arises or is increased, as the consequence of, or which is delayed as a result of, fraud by any director or officer of any member of the Seller’s Group.

 

11                               Claims

 

11.1                     Notification of Potential Claims

 

Without prejudice to the obligations of the Purchaser under Clause 11.2, if the Purchaser becomes aware of any fact, matter or circumstance that may give rise to a claim against the Seller under this Agreement or any Local Transfer Document for breach of any Seller’s Warranty other than a Tax Warranty (ignoring for these purposes the application of Clause 11.2 or 11.3), the Purchaser shall as soon as reasonably practicable (and in any event within 30 days) give a notice in writing to the Seller of such facts, matters or circumstances as are then available regarding the potential claim. The Purchaser shall not be entitled to make the relevant claim under this Agreement or any Local Transfer Document for breach of any Seller’s Warranty (other than a Tax Warranty) if:

 

11.1.1            the Purchaser fails to give such notice; or

 

11.1.2            the breach (if capable of remedy) is remedied in full at the cost of the Seller within 30 days after such notice is given.

 

11.2                     Notification of Claims under this Agreement

 

Notices of claims under this Agreement or any Local Transfer Document for breach of any Seller’s Warranty (other than a Tax Warranty) shall be given by the Purchaser to the Seller within the time limits specified in Clause 10.2 and shall specify information (giving reasonable detail) in relation to the basis of the claim and setting out the Purchaser’s estimate of the amount of Losses which are, or are to be, the subject of the claim.

 

11.3                     Commencement of Proceedings

 

Any claim notified pursuant to Clause 11.2 shall (if it has not been previously satisfied, settled or withdrawn) be deemed to be irrevocably withdrawn 6 months after the relevant time limit set out in Clause 10.2 unless, at the relevant time, legal proceedings in respect of the relevant claim have been commenced by being both issued and served except:

 

11.3.1            where the claim relates to a contingent liability, in which case it shall be deemed to have been withdrawn unless legal proceedings in respect of it have been commenced by being both issued and served with 6 months of it having become an actual liability; or

 

11.3.2            where the claim is a claim for breach of a Seller’s Warranty of which notice is given for the purposes of Clause 10.2 at a time when the amount set out in Clause 10.4.2 has not been exceeded, in which case it shall be deemed to have been withdrawn unless legal proceedings in respect of it have been commenced by being both issued and served within 6 months of the date of any subsequent notification to the Seller pursuant to Clause 11.1 of one or more claims which result(s) in the total amount claimed in all claims notified to the Seller pursuant to Clause 10.2 exceeding the amount set out in Clause 10.4.2 for the first time.

 

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11.4                     Conduct of Third Party Claims

 

If the matter or circumstance that may give rise to a claim against the Seller under this Agreement or any Local Transfer Document for breach of any Seller’s Warranty (other than a Tax Warranty) is a result of or in connection with a claim by a third party (a “Third Party Claim”) then:

 

11.4.1            the Purchaser shall as soon as reasonably practicable give written notice thereof to the Seller and thereafter shall provide the Seller with periodic updates upon reasonable request and shall consult with the Seller so far as reasonably practicable in relation to the conduct of the Third Party Claim and shall take reasonable account of the views of the Seller in relation to the Third Party Claim;

 

11.4.2            the Third Party Claim shall not be admitted, compromised, disposed of or settled without the written consent of the Seller (such consent not to be unreasonably withheld or delayed);

 

11.4.3            subject to the Seller indemnifying the Purchaser or other member of the Purchaser’s Group concerned against all reasonable costs and expenses (including legal and professional costs and expenses) that may be incurred thereby, the Purchaser shall, or the Purchaser shall procure that any other members of the Purchaser’s Group shall, take such action as the Seller may reasonably request to avoid, dispute, deny, defend, resist, appeal, compromise or contest the Third Party Claim;

 

11.4.4            the Seller shall be entitled at its own expense and in its absolute discretion, by notice in writing to the Purchaser, to take such action as it shall deem necessary to avoid, dispute, deny, defend, resist, appeal, compromise or contest the Third Party Claim (including making counterclaims or other claims against third parties) in the name of and on behalf of the Purchaser or other member of the Purchaser’s Group concerned and to have the conduct of any related proceedings, negotiations or appeals, but shall not settle such Third Party Claim without the prior written consent of the Purchaser (such consent not to be unreasonably withheld or delayed); and

 

11.4.5            if the Seller sends a notice to the Purchaser pursuant to Clause 11.4.4:

 

(i)                                  the Purchaser shall, and the Purchaser shall procure that any other member of the Purchaser’s Group shall give, subject to their being paid all reasonable costs and expenses, all such information and assistance including access to premises and personnel, and the right to examine and copy or photograph any assets, accounts, documents and records, as the Seller may reasonably request, including instructing such professional or legal advisers as the Seller may nominate to act on behalf of the Purchaser or other member of the Purchaser’s Group concerned but in accordance with the Seller’s instructions; and

 

(ii)                               the Seller shall:

 

(a)                       consult with the Purchaser and take reasonable account of the views of the Purchaser before taking any action in relation to the Third Party Claim;

 

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(b)                       keep the Purchaser informed of all relevant matters relating to the Third Party Claim and shall promptly forward or procure to be forwarded to the Purchaser copies of all correspondence and other written communications relating to the Third Party Claim; and

 

(c)                        in good faith, take into account and have due regard to any reputational matters or issues arising out of the Third Party Claim for any member of the Purchaser’s Group or any of their respective directors, officers, employees or agents which are brought to its attention by the Purchaser or a member of the Purchaser’s Group.

 

12                               Confidentiality

 

12.1                     Announcements

 

No announcement, communication or circular concerning the existence or the subject matter of this Agreement shall be made or issued by or on behalf of any member of the Seller’s Group or the Purchaser’s Group without the prior written approval of Seller and the Purchaser (such consent not to be unreasonably withheld or delayed). This shall not affect any announcement, communication or circular required by law or any governmental or regulatory body or the rules of any stock exchange on which the shares of any party (or its holding company) are listed but the party with an obligation to make an announcement or communication or issue a circular (or whose holding company has such an obligation) shall consult with the other parties (or shall procure that its holding company consults with the other parties) insofar as is reasonably practicable before complying with such an obligation.

 

12.2                     Confidentiality

 

12.2.1            The Confidentiality Agreement shall cease to have any force or effect from the date of this Agreement.

 

12.2.2            Subject to Clause 12.1 and Clause 12.2.3, each of the parties shall treat as strictly confidential and not disclose or use any information received or obtained as a result of entering into this Agreement, the Ancillary Agreements or any agreement entered into pursuant to this Agreement which relates to:

 

(i)                                  the existence and provisions of this Agreement, the Ancillary Agreements and of any other agreement entered into pursuant to this Agreement;

 

(ii)                               the negotiations relating to this Agreement, the Ancillary Agreements and any such other agreement;

 

(iii)                            (in the case of Seller) any information relating to the Flu Group Companies and Flu Group Businesses following Closing and any other information relating to the business, financial or other affairs (including future plans and targets) of the Purchaser’s Group; or

 

(iv)                           (in the case of the Purchaser) any information relating to the business, financial or other affairs (including future plans and targets) of the Seller’s Group including, prior to Closing, the Flu Group Companies and Flu Group Businesses.

 

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12.2.3            Clause 12.2.1 shall not prohibit disclosure or use of any information if and to the extent:

 

(i)                                  the disclosure or use is required by law, any governmental or regulatory body or any stock exchange on which the shares of any party (or its holding company) are listed;

 

(ii)                               the disclosure or use is required to vest the full benefit of this Agreement or the Ancillary Agreements in any party;

 

(iii)                            the disclosure or use is required for the purpose of any arbitral or judicial proceedings arising out of this Agreement, the Ancillary Agreements or any other agreement entered into under or pursuant to this Agreement or to enable a determination to be made by the Reporting Accountants under this Agreement;

 

(iv)                           the disclosure is made to a Tax Authority in connection with the Tax affairs of the disclosing party;

 

(v)                              the disclosure is made to a ratings agency on a confidential basis in connection with the affairs of the disclosing party;

 

(vi)                           the disclosure is made to professional advisers of any party on a need to know basis and on terms that such professional advisers undertake to comply with the provisions of Clause 12.2.1 in respect of such information as if they were a party to this Agreement;

 

(vii)                        the information was lawfully in the possession of that party without any obligation of secrecy prior to its being received or held, in either case as evidenced by written records;

 

(viii)                     the information is or becomes publicly available (other than by breach of this Agreement or the Confidentiality Agreement);

 

(ix)                           the other party has given prior written approval to the disclosure or use; or

 

(x)                              the information is independently developed,

 

provided that prior to disclosure or use of any information pursuant to Clause (i), (ii) or (iii), the party concerned shall, where not prohibited by law, promptly notify the other parties of such requirement with a view to providing the other parties with the opportunity to contest such disclosure or use or otherwise to agree the timing and content of such disclosure or use.

 

13                               Insurance

 

13.1                     No cover under Seller’s Group Insurance Policies from Closing

 

The Purchaser acknowledges and agrees that following Closing:

 

13.1.1            neither the Purchaser nor any Flu Group Company shall have or be entitled to the benefit of any Seller’s Group Insurance Policy in respect of any event, act or omission that takes place after Closing and it shall be the sole responsibility of the Purchaser to ensure that adequate insurances are put in place for those Flu Group Companies and Flu Group Businesses with effect from Closing;

 

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13.1.2            neither Seller nor any member of the Seller’s Group shall be required to maintain any Seller’s Group Insurance Policy for the benefit of the Flu Group; and

 

13.1.3            no Flu Group Company shall make or shall be entitled to make or notify a claim under any Seller’s Group Insurance Policy in respect of any event, act or omission that occurred prior to the Closing Date.

 

13.2                     Existing claims under Seller’s Group Insurance Policies

 

With respect to any claim made before the Closing Date under any Seller’s Group Insurance Policy by or on behalf of any Flu Group Company or in relation to any Flu Group Business, to the extent that:

 

13.2.1         neither the Purchaser nor the Flu Group Companies have been indemnified by Seller prior to the Closing Date in respect of the matter in respect of which the claim was made; or

 

13.2.2         the Liability in respect of which the claim was made has not been provided for in the Accounts,

 

the Seller shall use reasonable endeavours after Closing to recover all monies due from insurers and shall pay any monies received (after taking into account any deductible under the Seller’s Group Insurance Policies and less any Taxation suffered on the proceeds and any reasonable out of pocket expenses suffered or incurred by Seller or any member of the Seller’s Group in connection with the claim) to the Purchaser or, at the Purchaser’s written direction, the relevant Flu Group Company as soon as practicable after receipt.

 

14                               Netherlands Business

 

14.1                     Notwithstanding any other provision of this Agreement, this Agreement shall not constitute a binding agreement to sell or purchase the Netherlands Business, provided that:

 

14.1.1            in the event that the Netherlands Put Option Exercise occurs before Closing, this Clause 14.1 (other than this Clause 14.1.1) shall terminate and shall cease to have effect, and the sale of the Netherlands Business shall be subject to the provisions of this Agreement as if it were part of the Business to be sold as and from the date of this Agreement;

 

14.1.2            in the event that the Netherlands Put Option Exercise does not occur before Closing:

 

(i)                                  the provisions of Clauses 2 and 6 (the “Disapplied Provisions”) shall not apply to the Netherlands Business;

 

(ii)                               prior to the Netherlands Closing, the provisions of Schedules 9 and 10 (the “Suspended Provisions”) shall not apply to the Netherlands Business; and

 

(iii)                            in respect of the Disapplied Provisions and, prior to the Netherlands Closing, the Suspended Provisions only:

 

(a)                       the term “Business” shall be deemed to exclude the Netherlands Business;

 

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(b)                       the term “Flu Group Businesses” shall be deemed to exclude the Netherlands Business;

 

(c)                        the term “Assumed Liabilities” shall be deemed to exclude the Netherlands Assumed Liabilities; and

 

(d)                       the term “Employees” shall be deemed to exclude the Netherlands Employees;

 

14.1.3            with effect from the Netherlands Closing, the Suspended Provisions shall apply to the Netherlands Business mutatis mutandis save that in respect of the Suspended Provisions only (A) the term “Closing” shall be deemed to refer to the Netherlands Closing and (B) the term “Closing Date” shall be deemed to refer to the date of the Netherlands Closing; and

 

14.1.4            the parties shall negotiate in good faith to agree any amendments to the Transaction Documents as are required in order to give effect to the principles set forth in this Clause 14.1 for the purposes of complying with the information and consultation requirements in respect of Onderdeelcommissie NV (being the relevant works council in respect of the Netherlands Business); and

 

14.1.5            the provisions of Clause 10 shall apply to the Netherlands Business as if the remaining provisions of this Clause 14.1 did not have any force or effect.

 

15                               Other Provisions

 

15.1                     Further Assurances

 

Each of the parties shall, and shall procure that its Affiliates shall, and shall use reasonable endeavours to procure that any necessary third party shall, from time to time execute such documents and perform such acts and things as any party may reasonably require to transfer the Shares, Flu Group Businesses and Assumed Liabilities to the Purchaser and to give any party the full benefit of this Agreement and any Local Transfer Document.

 

15.2                     Whole Agreement

 

15.2.1            This Agreement contains the whole agreement between the parties relating to the subject matter of this Agreement at the date hereof to the exclusion of any terms implied by law which may be excluded by contract and supersedes any previous written or oral agreement between the parties in relation to the matters dealt with in this Agreement.

 

15.2.2            The Purchaser acknowledges that, in entering into this Agreement, it is not relying on any representation, warranty or undertaking not expressly incorporated into it.

 

15.2.3            Each of the parties agrees and acknowledges that its only right and remedy in relation to any representation, warranty or undertaking made or given in connection with this Agreement shall be for breach of the terms of this Agreement and each of the parties waives all other rights and remedies (including those in tort or arising under statute) in relation to any such representation, warranty or undertaking.

 

15.2.4            In Clauses 15.2.1 to 15.2.3, “this Agreement” includes the Ancillary Agreements and all other documents entered into pursuant to this Agreement.

 

15.2.5            Nothing in this Clause 15.2 excludes or limits any liability for fraud.

 

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15.3                     No Assignment

 

No party may without the prior written consent of the other parties, assign, grant any security interest over, hold on trust or otherwise transfer the benefit of the whole or any part of this Agreement.

 

15.4                     Third Party Rights

 

15.4.1            Subject to Clause 15.4.2, the parties to this Agreement do not intend that any term of this Agreement should be enforceable, by virtue of the Contracts (Rights of Third Parties) Act 1999, by any person who is not a party to this Agreement.

 

15.4.2            Certain provisions of this Agreement confer benefits on the Affiliates of the Purchaser and the Affiliates of Seller and, subject to Clause 15.4.3, are intended to be enforceable by each such Affiliate by virtue of the Contracts (Rights of Third Parties) Act 1999.

 

15.4.3            Notwithstanding Clause 15.4.2, this Agreement may be varied in any way and at any time without the consent of the persons named in Clause 15.4.2.

 

15.5                     Variation or waiver

 

15.5.1            No variation of this Agreement shall be effective unless in writing and signed by or on behalf of each of the parties.

 

15.5.2            No failure or delay by a party in exercising any right or remedy provided by Applicable Law or under this Agreement or any Ancillary Agreement shall impair such right or remedy or operate or be construed as a waiver or variation of it or preclude its exercise at any subsequent time and no single or partial exercise of any such right or remedy shall preclude any further exercise of it or the exercise of any other remedy.

 

15.6                     Method of Payment and set off

 

15.6.1            Payments (including payments pursuant to an indemnity, compensation or reimbursement provision) made or expressed to be made by the Purchaser and Seller pursuant to this Agreement or any claim for breach of this Agreement shall, insofar as the payment or claim relates to or affects any Shares (including the underlying Flu Group Companies transferred (directly or indirectly) by reason of the transfer of those Shares), assets or liabilities, transferred pursuant to this Agreement and the Local Transfer Documents, be made or received (as the case may be) by:

 

(i)                                  Seller, for itself or as agent on behalf of the relevant Share Seller or Business Seller (each in respect of the Shares and/or assets and liabilities to be transferred by it pursuant to this Agreement and the Local Transfer Documents); and

 

(ii)                               the Purchaser, for itself or as agent on behalf of the relevant members of the Purchaser’s Group (each in respect of Shares and/or the assets and liabilities to be transferred by it pursuant to this Agreement and the Local Transfer Documents).

 

15.6.2            Except as otherwise provided for in this Agreement, any payments pursuant to this Agreement shall be made in full, without any set-off, counterclaim, restriction or

 

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condition and without any deduction or withholding (save as may be required by law or as otherwise agreed).

 

15.6.3            Any payments pursuant to this Agreement shall be effected by crediting for same day value the account specified by Seller or the Purchaser (as the case may be) on behalf of the party entitled to the payment (reasonably in advance and in sufficient detail to enable payment by telegraphic or other electronic means to be effected) on or before the due date for payment.

 

15.6.4            Payment of a sum in accordance with this Clause 15.6 shall constitute a payment in full of the sum payable and shall be a good discharge to the payer (and those on whose behalf such payment is made) of the payer’s obligation to make such payment and the payer (and those on whose behalf such payment is made) shall not be obliged to see to the application of the payment as between those on whose behalf the payment is received.

 

15.7                     Costs

 

15.7.1            Subject to Clause 15.8, the Seller shall bear all costs incurred by it and its Affiliates in connection with the preparation and negotiation of, and the entry into, this Agreement, the Local Transfer Documents, the Tax Indemnity and the sale of the Flu Group.

 

15.7.2            The Purchaser shall bear all such costs incurred by it and its Affiliates in connection with the preparation and negotiation of, and the entry into, this Agreement, the Local Transfer Documents, the Tax Indemnity and the purchase of the Flu Group.

 

15.8                     Notarial Fees, Registration, Stamp and Transfer Taxes and Duties

 

The Purchaser or the relevant member of the Purchaser’s Group:

 

15.8.1            shall bear the cost of all notarial fees and all registration, stamp and transfer taxes and duties or their equivalents in all jurisdictions where such fees, taxes and duties are payable as a result of the transactions contemplated by this Agreement;

 

15.8.2            shall be responsible for arranging the payment of all such fees, taxes and duties, including fulfilling any administrative or reporting obligation imposed by the jurisdiction in question in connection with such payment; and

 

15.8.3            shall indemnify the Seller or any other member of the Seller’s Group against any Losses suffered by the Seller or that member of the Seller’s Group as a result of the Purchaser failing to comply with its obligations under this Clause 15.8.

 

15.9                     Interest

 

If any party defaults in the payment when due of any sum payable under this Agreement, the Local Transfer Documents or the Tax Indemnity the liability of that party shall be increased to include interest on such sum from the date when such payment is due until the date of actual payment (as well after as before judgment) at a rate of two per cent. above USD LIBOR. Such interest shall accrue from day to day.

 

15.10              Grossing-up

 

15.10.1     Subject to Clauses 15.10.2 and 15.10.3, all sums payable under this Agreement, the Local Transfer Documents and the Tax Indemnity shall be paid free and clear of

 

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all deductions, withholdings, set-offs or counterclaims whatsoever save only as may be required by law. If any deductions or withholdings are required by law the party making the payment shall (except in the case of any interest payable under Clause 7.4 or Clause 15.9) be obliged to pay to the other party such sum as will after such deduction or withholding has been made leave the other party with the same amount as it would have been entitled to receive in the absence of any such requirement to make a deduction or withholding, provided that if either party to this Agreement shall have transferred (whether by way of legal or equitable assignment, declaration of trust, novation or otherwise) the benefit in whole or in part of this Agreement or shall, after the date of this Agreement, have changed its tax residence or the permanent establishment to which the rights under this Agreement are allocated then the liability of the other party under this Clause 15.10 shall be limited to that (if any) which it would have been had no such transfer or change taken place.

 

15.10.2     Clause 15.10.1 shall not apply to any payment of the Purchase Price (including any part thereof) to the Seller where the requirement to make the deduction or withholding has arisen otherwise than as a result of a connection of the payor with any relevant jurisdiction.

 

15.10.3     If a party receives and uses a credit for, or receives a refund of, any Tax by reason of any deduction or withholding or gross up on account of tax made pursuant to Clause 15.10.1, that party shall reimburse to the other party such amount as will leave it (after such reimbursement) in the same position it would have been if that other party had not been required to make payment under Clause 15.10.1. Each party shall use all reasonable endeavours to obtain and utilise any available credit or obtain any refund.

 

15.11              Notices

 

15.11.1     Any notice or other communication in connection with this Agreement (each, a “Notice”) shall be:

 

(i)                                  in writing in English; and

 

(ii)                               delivered by hand, fax, or by courier using an internationally recognised courier company.

 

15.11.2     A Notice to the Seller shall be sent to such party at the following address, or such other person or address as the Seller may notify to the Purchaser from time to time:

 

Novartis AG

 

Postfach
 OH-4002 Basel
 Switzerland

 

Fax: +41 613244 300

 

Attention: Head of M&A Legal

 

with a copy to the Seller’s Lawyers, marked for the urgent attention of [***] (delivery of such copy shall not in itself constitute valid notice).

 

72

 

15.11.3     A Notice to the Purchaser shall be sent to such party at the following address, or such other person or address as the Purchaser may notify to Seller from time to time:

 

CSL Limited

 

For the care of:
 CSL Behring
 1020 First Avenue
 King of Prussia, PA 19406

 

Fax: +1 610.878.4221

 

Attention: [***], Legal and CSL Group General Counsel.

 

with a copy to the Purchaser’s Lawyers, marked for the urgent attention of Baker & McKenzie LLP Ref JXH at the following address: Baker & McKenzie, 100 New Bridge Street, EC4V 6JA, London, UK (delivery of such copy shall not in itself constitute valid notice).

 

15.11.4     A Notice shall be effective upon receipt and shall be deemed to have been received:

 

(i)                                  at the time of delivery, if delivered by hand or courier; or

 

(ii)                               at the time of transmission in legible form, if delivered by fax.

 

15.12              Invalidity or Conflict

 

15.12.1     If any provision in this Agreement shall be held to be illegal, invalid or unenforceable, in whole or in part, the provision shall apply with whatever deletion or modification is necessary so that the provision is legal, valid and enforceable and gives effect to the commercial intention of the parties.

 

15.12.2     To the extent it is not possible to delete or modify the provision, in whole or in part, under Clause 15.12.1, then such provision or part of it shall, to the extent that it is illegal, invalid or unenforceable, be deemed not to form part of this Agreement and the legality, validity and enforceability of the remainder of this Agreement shall, subject to any deletion or modification made under Clause 15.12.1, not be affected.

 

15.12.3     If there is any conflict between the terms of this Agreement and any of the Ancillary Agreements this Agreement shall prevail (as between the parties to this Agreement and as between any member of the Seller’s Group and any member of the Purchaser Group) unless (i) such Ancillary Agreement expressly states that it overrides this Agreement in the relevant respect and (ii) the Seller and the Purchaser are either also parties to that Ancillary Agreement or otherwise expressly agree in writing that such Ancillary Agreement shall override this Agreement in that respect.

 

15.13              Counterparts

 

This Agreement may be entered into in any number of counterparts, all of which taken together shall constitute one and the same instrument. Any party may enter into this Agreement by executing any such counterpart. Delivery of a counterpart of this Agreement by email attachment shall be an effective mode of delivery.

 

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15.14              Governing Law and Submission to Jurisdiction

 

15.14.1     This Agreement and the documents to be entered into pursuant to it, save as expressly referred to therein, and any non-contractual obligations arising out of or in connection with the Agreement and such documents shall be governed by and construed in accordance with English law.

 

15.14.2     Each of the parties irrevocably agrees that the courts of England and Wales are to have exclusive jurisdiction to settle any dispute which may arise out of or in connection with this Agreement and the documents to be entered into pursuant to it, save as expressly referred to therein, and that accordingly any proceedings arising out of or in connection with this Agreement and the documents to be entered into pursuant to it shall be brought in such courts. Each of the parties irrevocably submits to the jurisdiction of such courts and waives any objection to proceedings in any such court on the ground of venue or on the ground that proceedings have been brought in an inconvenient forum.

 

15.15              Appointment of Process Agent

 

15.15.1     The Seller hereby irrevocably appoints Hackwood Secretaries Limited of One Silk Street, London EC2Y 8HQ as its agent to accept service of process in England and Wales in any legal action or proceedings arising out of this Agreement, service upon whom shall be deemed completed whether or not forwarded to or received by the Seller.

 

15.15.2     The Seller agrees to inform the Purchaser in writing of any change of address of such process agent within 28 days of such change.

 

15.15.3     If such process agent ceases to be able to act as such or to have an address in England and Wales, the Seller irrevocably agrees to appoint a new process agent in England and Wales and to deliver to the Purchaser within 14 days a copy of a written acceptance of appointment by the process agent.

 

15.15.4     The Purchaser hereby irrevocably appoints Baker & McKenzie LLP of 100 New Bridge St, London EC4V 6JA as its agent to accept service of process in England and Wales in any legal action or proceedings arising out of this Agreement, service upon whom shall be deemed completed whether or not forwarded to or received by the Purchaser.

 

15.15.5     The Purchaser agrees to inform the Seller in writing of any change of address of such process agent within 28 days of such change.

 

15.15.6     If such process agent ceases to be able to act as such or to have an address in England and Wales, the Purchaser irrevocably agrees to appoint a new process agent in England and Wales and to deliver to the Seller within 14 days a copy of a written acceptance of appointment by the process agent.

 

15.15.7     Nothing in this Agreement shall affect the right to serve process in any other manner permitted by law.

 

This Agreement has been entered into on the date stated at the beginning.

 

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SIGNED   by 

MARVELLE   SULLIVAN BERCHTOLD 
    	

    	
 
    
	
 
    
	
/s/ MARVELLE SULLIVAN BERCHTOLD
    
	
 
    
	
 
    
	
 
    	
 
    	
 
    
	
AND
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
ROY   PAPATHEODOROU

 

for   and on behalf of 

NOVARTIS AG:
    	

    	
 
    
	
 
    
	
/s/ ROY PAPATHEODOROU
    
	
 
    
	
 
    
	
 
    	
 
    	
 
    
	
SIGNED   by 

Gordon   Naylor 

for   and on behalf of 

CSL LIMITED:
    	

    	
 
    
	
 
    
	
/s/ GORDON NAYLOR
    
	
 
    
	
 
    

 

 

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

 

	
(1)
    	
 
    	
(2)
    	
 
    	
(3)
    
	
Name 
   of Share Seller
    	
 
    	
Name of
   Company
    	
 
    	
Shares
    
	
Novartis   Pharma AG
    	
 
    	
Novartis   Vaccines Holdings Limited
    	
 
    	
92   shares (100%)
    

 

75

 

Schedule 2
 Company and Subsidiary

 

1                                      Particulars of the Company

 

	
Name    of Company:
     	
Novartis    Vaccines Holdings Limited
     
	
Registered   Number:
    	
4679458
    
	
Registered   Office:
    	
C/O   Novartis Pharmaceuticals UK Limited, Frimley Business Park, Frimley,   Camberley, GU16 7SR, United Kingdom
    
	
Date   and place of incorporation:
    	
26   February 2003, England and Wales
    
	
Issued   share capital:
    	
GBP   92 divided into 92 shares of GBP 1 each
    
	
Shareholders   and shares held:
    	
Novartis   Pharma AG
    	
92   (100%)
    

 

2                                      Particulars of the Subsidiary

 

	
Name    of Subsidiary:
     	
Novartis    Vaccines and Diagnostics Limited
     
	
Registered   Number:
    	
3970089
    
	
Registered   Office:
    	
C/O   Seller Pharmaceuticals UK Ltd, Frimley Business Park, Frimley, Camberley,   Surrey, GU16 7SR, United Kingdom
    
	
Date   and place of incorporation:
    	
11   April 2000, England and Wales
    
	
Issued   share capital:
    	
GBP   100 divided into 100 shares of GBP 1 each
    
	
Shareholders   and shares held:
    	
Novartis   Vaccines Holdings Limited
    	
100   (100%)
    

 

76

 

Schedule 3
 The Properties
 Part 1
 (Company Real Property)

 

[***]

 

77

 

Schedule 3
 The Properties
 Part 2
 (Transferred Real Property)

 

[***]

 

78

 

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

 

 Deliberately blank.

 

79

 

Schedule 3
 The Properties
 Part 4A
 Terms relating to the Transferred Real Property (United States)

 

1                                      General Provisions Relating to the Transferred Real Property (United States)

 

1.1                            Interpretation

 

The following further definitions apply in this Part 4A of Schedule 3:

 

“Documents” means the documents listed as such in Part 2 of this Schedule 3;

 

“Landlord” means the person identified as such in the Leases and their successors and assignees;

 

“Leases” means the leases, licences or tenancy agreements under which the Transferred Leased Real Properties are held or leased by the relevant member of the Seller’s Group as either Landlord or tenant all of which are identified in Part B of Part 2 of this Schedule 3, and “Lease” means any one of them;

 

“Property Third Party Consents” means all consents, licences, approvals, permits, authorisations or waivers required from any Landlord, superior landlord and/or other third party, including any consents, licences, approvals, permits, authorisations or waivers required by any legislation or regulation or by any statutory, governmental, state, provincial or municipal bodies or authorities for or in connection with the transfer of a Transferred Real Property by the Business Sellers to the Purchaser;

 

“Required Endorsements” means the following endorsements with respect to each Transferred Owned Real Property: (i) Owner’s Comprehensive; (ii) Zoning; (iii) Restrictions, Encroachments and Minerals; (iv) Access; (v) Tax Lot; (vi) Contiguity; (vii) Creditors Rights; (viii) Location; (ix) Survey, and (x) such other endorsements as Purchaser may reasonably require;

 

“Survey” shall have the meaning set forth in paragraph 1.4 hereof;

 

“Title Amount” shall mean the amount of title insurance for each Transferred Owned Real Property equal to the amount allocated to such Transferred Owned Real Property pursuant to Clause 3.3 of the Agreement;

 

“Title Commitments” shall have the meaning set forth in paragraph 1.4 hereof;

 

“Title Company” means Commonwealth Land Title Insurance Company;

 

“Title Policies” means the title policies for each Transferred Owned Real Property to be issued by the Title Company, dated as of the date of the recording of the deed for said Transferred Owned Real Property in an amount equal to the Title Amount and: (i) insuring the Purchaser as the holder of fee simple title to said Transferred Owned Real Property, subject only to the Permitted Encumbrances; and (ii) containing the Required Endorsements;

 

“transfer”, for the purposes of this Part 4A of Schedule 3 only, means in respect of a Transferred Leased Real Property, the transfer or assignment of the relevant Lease or Leases, and in the case of a Transferred Owned Real Property the transfer thereof, and “a

 

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transfer” means and includes any instruments, deeds or agreements effecting such transfer;

 

“Transferred Leased Real Properties” means the leasehold properties held by a Business Seller and identified in Part B of Part 2 of this Schedule 3 and “Transferred Leased Real Property” means any one of them; and

 

“Transferred Owned Real Properties” means:

 

(i)                                   the owned Properties more particularly identified in Part A of Part 2 of this Schedule 3 together with all improvements, buildings and structures, and, to the extent constituting the Business Assets, all fixed plant, fixed machinery and fixed equipment located thereon;

 

(ii)                                any and all rights and easements appurtenant to the owned Properties and the improvements including, without limitation, all permits, approvals, licenses, signage rights, access rights, rights of way, roadways, streets, sidewalks, utilities and sewers located on or about the owned Property and used in connection therewith;

 

(iii)                             the owned Property lying in the bed of any street or highway in front of or adjoining the owned Property and all other appurtenances to the owned Property and the improvements, and all right, title and interest of the Seller’s Group in, to and under any award to be made in lieu thereof, any unpaid award for damages to the owned Property and the improvements by reason of change of grade of any street, all water, ditch, reservoir and well rights, interests and priorities, decreed or undecreed, tributary and non-tributary, customarily used with or upon the owned Properties or appurtenant thereto, any mineral rights affecting the owned Properties and any development rights affecting the owned Properties; and

 

(iv)                            all plans and specifications and as built drawings pertaining to the owned Property and the improvements, all scale models, utility contracts and deposits pertaining to the owned Property and the improvements, and all warranties, guaranties, licenses, permits, operation and maintenance manuals and job site records relating to the owned Property;

 

but excluding Excluded Assets, and “Transferred Owned Real Property” means any one of them.

 

1.2                            Each of the Transferred Real Properties and/or the Leases thereof shall be transferred subject to the terms set out in this Part 4A of Schedule 3 and all other applicable terms of this Agreement.

 

1.3                            Pre-Closing

 

1.3.1                   This paragraph 1.3.1 of Part 4A of Schedule 3 applies to those Transferred Real Properties in relation to which a Property Third Party Consent is required. If any Property Third Party Consents are required:

 

(i)                                  the Seller or relevant Business Seller shall make an application for, and shall use reasonable endeavours to obtain each Property Third Party Consent for the transfer of the Transferred Real Property prior to the Closing and shall keep the Purchaser reasonably informed of progress in obtaining such Property Third Party Consents; and

 

81

 

(ii)                               the Purchaser shall supply such information and references as may reasonably be required by a Landlord, any superior landlord or other relevant third party in connection with a Property Third Party Consent.

 

1.3.2                   Each party shall give written notice to the other party as soon as reasonably practicable after obtaining any Property Third Party Consents which shall be accompanied by a copy of such consent.

 

1.4                            Title Policies; Surveys

 

1.4.1                   The Seller’s Group shall convey and the Purchaser shall accept fee simple title to the Transferred Owned Real Property in accordance with the terms of this Agreement.

 

1.4.2                   The Purchaser shall promptly after the date hereof, at its sole cost and expense, order (i) commitments (the “Title Commitments”) for each Transferred Owned Real Property in the respective Title Amount for a Title Policy for each Transferred Owned Real Property and (ii) current ALTA surveys or updates of any existing ALTA surveys for each Transferred Owned Real Property certified to the Purchaser, its lender, if applicable, and the Title Company (the “Surveys”), and shall cause copies thereof to be delivered to Seller’s attorneys within 5 Business Days after receipt by the Purchaser.

 

1.4.3                   The Seller shall, and shall procure that its Affiliates shall, use reasonable endeavours and cooperate with the Purchaser to remove of record and otherwise cure any Encumbrances that appear in the Title Commitments or the Surveys or any bringdown or updates thereof, other than Permitted Encumbrances.

 

1.4.4                   The Seller shall, and shall procure that its Affiliates shall, execute and deliver to the Title Company mechanic’s lien, possession, and gap affidavits in such form and containing such terms and conditions as may reasonably be required by the Title Company.

 

1.5                            Closing

 

1.5.1                   The transfer of the Transferred Real Property shall take place on the Closing Date.

 

1.5.2                   Completion of the transfer of the Transferred Real Property shall take place at such place (or places) as the parties may agree.

 

1.6                            General Transfer Provisions

 

1.6.1                  The Seller shall procure that the relevant members of the Seller’s Group shall transfer the Transferred Real Property to the Purchaser subject to the terms set out in this Part 4A of Schedule 3 and all other applicable terms of this Agreement on the Closing Date.

 

1.6.2                  The Transferred Real Property is sold subject to the Leases (if any) but otherwise with vacant possession together with all buildings, structures, fixed plant, fixed machinery and fixed equipment thereon except as excluded in Clause 2.3.2.

 

1.6.3                   The transfer of each Transferred Real Property shall contain covenants with the relevant Business Seller by the Purchaser to comply with:

 

(i)                                  the obligations arising under the Documents that are to be performed by Purchaser post closing;

 

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(ii)                               the obligations on the part of the landlord arising under the Leases (if any) that are to be performed by Purchaser post closing; and

 

(iii)                            the obligations on the part of the tenant arising under the Leases,

 

insofar as the relevant Business Seller may remain liable directly or indirectly for them after the Closing Date and to indemnify the relevant member of the Seller’s Group against any non-compliance.

 

1.6.4                   At the Closing, the Seller’s Group shall deliver or cause to be delivered to the Purchaser:

 

(i)                                  with respect to the Transferred Owned Real Properties, warranty deeds in a form to be agreed between the parties (acting reasonably), duly executed and acknowledged by the relevant company in the Seller’s Group;

 

(ii)                               with respect to the Transferred Leased Real Properties, an assignment and assumption agreement in a form to be agreed between the parties (acting reasonably) duly executed and acknowledged by the relevant company in the Seller’s Group;

 

(iii)                            a duly executed certificate dated as of the Closing Date and substantially in the form set forth in United States Treasury Regulations Section 1.1445-2(b)(2)(iv), stating that the relevant company in the Seller’s Group is not a “foreign person” within the meaning of Section 1445 of the Code; and

 

(iv)                           copies of any reasonably required transfer tax forms or waiver forms duly executed and acknowledged by the relevant company in the Seller’s Group.

 

1.6.5                   The Purchaser shall procure that all transfers are duly stamped, filed or registered at the relevant registries on a timely basis and within the statutory period (if any) and the relevant Business Seller shall promptly assist the Purchaser with any requisitions or enquiries raised in relation thereto.

 

1.7                            Subjections

 

Notwithstanding anything contained in this Agreement:

 

1.7.1                   Each of the Transferred Real Properties is transferred subject to and (where appropriate) with the benefit of the Permitted Encumbrances.

 

1.7.2                   The Purchaser is deemed to acquire with full knowledge of the matters referred to in paragraph 1.7.1 of this Part 4A of Schedule 3.

 

1.7.3                  The Business Sellers do not give any warranty as to the area of any of the Transferred Real Properties and shall not be required to define the boundaries of any of the Transferred Real Properties.

 

1.7.4                  On the date on which the transfer of each Transferred Real Property is completed, the Seller shall deliver, to the Purchaser (or such other third party as the Purchaser may reasonably direct) all of the original documents in the possession of the Business Sellers or relevant member of the Seller’s Group in respect of each of the Transferred Real Properties and certified copies of any documents that are not originals which are in the possession of the Business Sellers or relevant member of the Seller’s Group.

 

83

 

1.8                            Insurance

 

The Business Sellers shall maintain their existing insurance (if any) on the Transferred Real Properties and shall cancel such insurance with effect from the Closing Date unless agreed otherwise with the Purchaser.

 

1.9                            Obligations on the Business Sellers

 

In this Part 4A of Schedule 3, any reference to an obligation on the part of the Business Sellers (or any of them, as the case may be) shall be read as if it were an obligation on the part of the Seller to procure performance of such obligation by the Business Seller or Business Sellers in question.

 

84

 

Schedule 3
 The Properties
 Part 4B
 Terms relating to the German Carve-out Leases

 

1                                      General Provisions Relating to the German Carve-out Leases

 

1.1                            Interpretation

 

The following further definitions apply in this Part 4B of Schedule 3:

 

“German Carve-out Leases” means the lease dated 5 May 2000 between (1) PharmaServ GmbH (originally PharmaServ GmbH & Co. KG) and Novartis Vaccines and Diagnostics GmbH (original contractual party Chiron Behring GmbH & Co.) in respect of Building H12 (amongst others) at Behringwerke, Emil-von-Behring-Straße 76, 35041 Marburg, Germany and any other lease(s) at Marburg (Germany) where the premises demised by such lease(s) are occupied in whole or in part by the Flu Group for the manufacture of MF59® adjuvant (the “Unidentified German Carve-out Lease(s)”);

 

“German Flu Lease(s)” has the meaning set out in paragraph 1.2.1 of this Part 4B of Schedule 3;

 

“Landlord” means the person for the time being entitled to the reversion immediately expectant on the termination of the term granted by a Lease;

 

“Leases” means the German Carve-out Leases, including all documents supplemental to them, and “Lease” means any one of them;

 

“Property Longstop Date” means a date being 15 months after the Closing Date or such other date as the parties may agree;

 

“Property Third Party Consents” means all consents, licences, approvals, permits, authorisations or waivers required from any Landlord, superior landlord and/or other third party, including any consents, licences, approvals, permits, authorisations or waivers required by any legislation or regulation or by any statutory, governmental, state, provincial or municipal bodies or authorities for or in connection with the Separation and includes Sublease Consents and, where appropriate, any consents required in relation to any change of control, shareholders or directors in a Flu Group Company;

 

“Separation” has the meaning given to it in paragraph 1.2.1 of this Part 4B of Schedule 3;

 

“Sublease Consent” has the meaning given to it in paragraph 1.9.2 of this Part 4B of Schedule 3; and

 

“Tenant”, for the purposes of this Part 4B of Schedule 3 only, means any tenant under any Lease;

 

1.2                            Separation of the German Carve-out Lease(s)

 

1.2.1                   The Seller shall use reasonable endeavours to procure, subject to paragraph 1.2.5 below, prior to Closing the contemporaneous surrender of the German Carve-out Leases and the grant of replacement leases, certain of which shall relate exclusively to those parts of the premises demised by the German Carve-out Leases which are used by the Flu Group for the manufacture of MF59® adjuvant,

 

85

 

including where appropriate (joint) use of ancillary parts and common facilities and comprise the Marburg MF59® Premises (the “German Flu Lease(s)” (the “Separation”).

 

1.2.2                   If the Seller is able to procure the surrender of the German Carve-out Leases and the grant of the German Flu Lease(s) prior to Closing, subject to paragraph 1.2.5 below, the German Flu Lease(s) shall be entered into by, or assigned prior to Closing to, a Flu Group Company designated by the Purchaser and the parties acknowledge that such Flu Group Company may be acquired by the Purchaser thereby vesting the German Flu Lease(s) within the ownership of the Purchaser.

 

1.2.3                   If and to the extent that the Seller determines that it will not be able to procure the surrender of the German Carve-out Leases and the grant of the German Flu Lease(s) prior to Closing, the Seller shall with the co-operation of the Purchaser use reasonable endeavours to give practical effect to the Separation as from the Closing or as soon as reasonably practicable following Closing, and shall consider (without limitation):

 

(i)                                  continued negotiations with the relevant Landlords to achieve a separation of each German Carve-out Lease into a German Flu Lease (amongst others), which shall be entered into by, or immediately assigned to, a Flu Group Company designated by the Purchaser; or

 

(ii)                               a sub-lease of those parts of the premises demised by the German Carve-out Leases which are used by the Flu Group to a Flu Group Company designated by the Purchaser.

 

1.2.4                   The Seller shall not agree to any terms of any German Flu Lease(s) or any sublease pursuant to paragraph 1.2.3(ii) which are not substantially similar to the equivalent terms of the relevant underlying German Carve-out Lease without the consent of the Purchaser (not to be unreasonably withheld or delayed).

 

1.2.5                   The Seller shall not enter into any German Flu Lease(s) or any sublease pursuant to paragraph 1.2.3(ii) relating to (an) Unidentified German Carve-out Lease(s) without the prior consent of the Purchaser (not to be unreasonably withheld or delayed).

 

1.2.6                   Prior to Closing, the Seller and the Purchaser shall agree (acting reasonably) the form of all documents necessary for effecting the Separation.

 

1.3                            Dispute resolution

 

1.3.1                   Any dispute arising out of or connected with this Part 4B of Schedule 3 which is not resolved by agreement between the parties within nine months of such dispute arising shall be referred for and resolved by expert determination as follows:

 

(i)                                  either the Seller or the Purchaser may initiate an expert reference under this provision by proposing to the other party the appointment of an expert (the “Expert”);

 

(ii)                               the Expert shall either be the nearest equivalent to a chartered surveyor in the relevant jurisdiction or (in relation to legal issues) an expert attorney for lease and condominium law (Fachanwalt für Miet- und Wohnungseigentumsrecht), in each case with no less than 15 years’ post-qualification experience in commercial real estate in the relevant jurisdiction

 

86

 

chosen by agreement between the Seller and the Purchaser or, failing agreement within 14 days of the initiation of the reference, by the President for the time being of the relevant professional body to which the Expert belongs (the “President”) on the application of either the Seller or the Purchaser;

 

(iii)                            the Seller and the Purchaser shall request that the Expert determines the referred dispute within 10 days of receiving the reference;

 

(iv)                           if the Expert has been appointed but is unable or unwilling to complete the reference, another Expert shall be appointed by agreement between the Seller and the Purchaser or, failing agreement within 7 days of the parties being notified that the Expert is unable or unwilling to complete the reference, by the President on the application of either party;

 

(v)                              the Expert shall act as an expert and not as an arbitrator;

 

(vi)                           the Seller and the Purchaser shall have the right to make representations and submissions to the Expert, but there will be no formal hearing;

 

(vii)                        the Seller and the Purchaser shall make all relevant documents and information within their control available to the Expert;

 

(viii)                     the costs of the Expert shall be borne equally by the Seller and the Purchaser; and

 

(ix)                           the decision of the Expert shall, in the absence of fraud or manifest error, be final and binding on the parties.

 

1.4                            Property Third Party Consents

 

1.4.1                   This paragraph 1.4 of Part 4B of Schedule 3 applies if any Property Third Party Consent is required to effect the Separation and shall continue to apply until the relevant Property Third Party Consent shall have been obtained or until the Property Longstop Date.

 

1.4.2                   If any Property Third Party Consents are required:

 

(i)                                  the Seller shall use reasonable endeavours to procure that the relevant Tenant makes an application for, and uses all reasonable endeavours to obtain, each Property Third Party Consent required for the Separation and shall, at all times, keep the Purchaser informed of progress in obtaining such Property Third Party Consents;

 

(ii)                               the Purchaser shall:

 

(a)                       supply such information and references as may reasonably be required by a Landlord, any superior landlord or other relevant third party in connection with a Property Third Party Consent;

 

(b)                       in respect of the period after the German Flu Leases are vested in the ownership of the Purchaser only, enter into such covenants for the payment of the rent in respect of the German Flu Leases and for the observance and performance of the covenants and conditions on the part of the lessee contained in any German Flu Lease as may

 

87

 

reasonably be required by the Landlord, any superior landlord or other relevant third party; and

 

(c)                        if reasonably required by the Landlord, any superior landlord or other relevant third party, provide a rent deposit or procure that a surety acceptable to such person guarantees the Purchaser’s obligations under the German Flu Lease following any transfer of a relevant German Flu Lease.

 

1.4.3                   Each party shall give written notice to the other party as soon as reasonably practicable after obtaining any Property Third Party Consents which shall be accompanied by a copy of such consent.

 

1.4.4                   The Seller shall bear the professional and other fees of any Landlord, any superior landlord or other relevant person (including any Tax or disbursements in respect of such fees but excluding any Tax on the actual net income, profit or gains of the Landlord, any superior landlord or other relevant person) properly incurred in connection with any application for Property Third Party Consents, whether or not such Property Third Party consents are given.

 

1.4.5                   Subject to the Purchaser complying with its obligations under paragraphs 1.4.2(ii)(b) to (c) of this Part 4B of Schedule 3, the Seller shall pay, or shall procure that a member of the Seller’s Group pays, any moneys or provide or procure the giving of any guarantees or other security, in each case as may be lawfully required by a Landlord, superior landlord or other relevant third party in connection with the obtaining of the Property Third Party Consents, provided that the Purchaser shall indemnify and keep indemnified the Seller in an amount equal to any Liabilities under any guarantees or other security given or procured by the Seller pursuant to this paragraph and arising out of, or in connection with, an act or omission on the part of the Purchaser.

 

1.5                            Closing

 

1.5.1                   The Separation shall only take place on or prior to Closing to the extent that all necessary Property Third Party Consents in respect of the Separation have been obtained prior to the Closing Date.

 

1.5.2                   The Purchase Price shall be paid on the Closing Date in accordance with this Agreement even if any necessary Property Third Party Consents have not then been obtained and the Separation is not completed on the Closing Date.

 

1.5.3                   Completion of the Separation shall take place at such place (or places) as the parties may agree.

 

1.6                            General Transfer Provisions

 

1.6.1                   The transfer of any German Flu Lease shall contain covenants with the Seller by the transferee to comply with the obligations of the tenant under each German Flu Lease insofar as the Seller may remain liable directly or indirectly for them after the transfer date.

 

1.7                            Subjections

 

Notwithstanding anything contained in this Agreement;

 

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1.7.1                   Each German Flu Lease shall be transferred subject to and (where appropriate) with the benefit of the following matters:

 

(i)                                  all exceptions, reservations, rights, easements, quasi-easements, wayleaves, rent charges, covenants, conditions, declarations, leases, tenancies (including statutory tenancies), licences and agreements affecting the same;

 

(ii)                               the rents, covenants and conditions reserved by or contained in the German Flu Lease under which the same is respectively held;

 

(iii)                            all notices served and orders, demands, proposals, or requirements made by any local or other public or competent authority; and

 

(iv)                           all actual or proposed orders, directions, plans, notices, instruments, charges, restrictions, conditions, agreements or other matters arising under any statute relating to town and country planning and any laws and regulations intended to control or regulate the construction, demolition, alteration or change of use of land or buildings or to preserve or protect the environment.

 

1.8                            Insurance

 

The Seller shall procure that the relevant Tenants maintain their existing insurance (if any) on the German Carve-out Leases and shall cancel such insurance with effect from the Closing Date or, if later, until the Separation is completed.

 

1.9                            Grant of Sublease

 

Where the provisions of paragraph 1.2.3(ii) of this Part 4B of Schedule 3 apply:

 

1.9.1                   where a Lease permits a sublease to be granted without the requirement for any Property Third Party Consent from the Landlord, the Seller shall procure the grant to a Flu Group Company designated by the Purchaser of a sublease on terms which are substantially similar to the equivalent terms of the relevant German Carve-out Lease with such changes as are appropriate (in particular regarding the areas to be sub-let); and

 

1.9.2                   where a Lease is held by the relevant Tenant from a Landlord on terms which require the consent of the Landlord to:

 

(i)                                  the grant of a sublease; or

 

(ii)                               the terms on which a sublease is granted,

 

the Seller shall use all reasonable endeavours to procure that the relevant Tenant obtains such consent (“Sublease Consent”) from the relevant Landlord. Where the Tenant is able to obtain the appropriate Sublease Consent, the Seller shall use all reasonable endeavours to procure that a Flu Group Company designated by the Purchaser is granted a sublease of the relevant German Carve-out Lease on terms which are substantially similar to the equivalent of the relevant German Carve-out Lease with such changes as are appropriate (in particular regarding the areas to be sub-let).

 

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1.10                     Failure to Obtain Property Third Party Consents

 

If a Property Third Party Consent is refused or otherwise not obtained by the Property Longstop Date such that the Separation and vesting of the Marburg MF59® Premises (whether by grant or transfer of the German Flu Lease(s) or a sublease) in the Purchaser has not been effected, then either the Seller or the Purchaser may serve written notice on the other to the intent that the Marburg MF59® Premises shall not become vested in the Purchaser under the Agreement and the Seller and the Purchaser shall each bear fifty per cent. of any Losses of the Seller and the Purchaser arising out of or in connection with the failure to obtain such Property Third Party Consents (and no adjustment shall be made to the Purchase Price).

 

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

 

Part 1

 

Flu Group Intellectual Property Rights

 

[***]

 

91

 

Part 2

 

Flu Group Intellectual Property Contracts

 

[***]

 

92

 

Schedule 5 
 Excluded Contracts 
 (Clause 1.1)

 

None.

 

93

 

Schedule 6
 Permitted Encumbrances 
 (Clause 1.1)

 

1                                      Co-owned Flu Group Intellectual Property Rights;

 

2                                      Any rights of the Governmental Entities in the United States of America under the US Government Contracts and any ownership interests of the US government in the Transferred Owned Real Property or any facilities or equipment relating thereto as specified in the US Government Contracts; and

 

3                                      Any encumbrances (other than deeds of trust or mortgages): (i) affecting the Transferred Owned Real Property as at the date of this Agreement; and/or (ii) arising after the date of this Agreement and which arise in the ordinary course of business; provided, however, that such encumbrances do not interfere in any material respect with the use of the Transferred Owned Real Property as currently used in conducting the Business and would not result in a forfeiture of the Transferred Owned Real Property.

 

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Schedule 7
 Product Approvals, Pipeline Product Approvals and Product Applications
 Part 1
 Terms relating to the Product Approvals, Pipeline Product Approvals and Product Applications

 

1                                      General Provisions

 

1.1                            For the purposes of Part 1 of this Schedule 7, the term “Product Approvals” shall be deemed to include Pipeline Product Approvals and Product Applications.

 

1.2                            Where any Product Approval is held by any Business Seller at the Closing Date (“Transferred Product Approvals”), the Purchaser shall take such steps as are necessary to effect the transfer of each Transferred Product Approval, including complying with requirements and reasonable requests of Governmental Entities with respect to the transfer of each Transferred Product Approval.

 

2                                      Transfer Applications

 

2.1                            The Purchaser shall file or cause to be filed applications for the transfer of each Transferred Product Approval in each country or territory in which such transfer is required to be submitted as soon as practicable after the Closing Date.

 

2.2                            Pending the transfer of each Transferred Product Approval pursuant to this Agreement or the Marketing Services Authorisation Services Agreement, the Seller shall, and shall cause the relevant members of the Seller’s Group to:

 

2.2.1                   retain such Transferred Inventory as is required to supply the Products in accordance with the Marketing Authorisation Services Agreement;

 

2.2.2                   invoice customers for the Products;

 

2.2.3                   upon reasonable request from the Purchaser and at the Purchaser’s expense, reasonably cooperate and coordinate with the Purchaser in relation to the transfer of the Transferred Product Approvals, including by providing the Purchaser with regulatory documentation concerning the Products, Pipeline Product Approvals and Products Under Registration owned or controlled by the Seller or any of its Affiliates and general assistance for (but not to undertake) the transfer of the Transferred Product Approvals; and

 

2.2.4                   not initiate any withdrawals of, or additional variations or amendments to, the Product Approvals, except in the event such withdrawals, variations or amendments are necessary for the continuation of the Business, as are provided in paragraph 3 or upon the Purchaser’s written request.

 

2.3                            The Purchaser shall be solely responsible for applying for, and neither the Seller nor any of its Affiliates shall be required to apply for, any new tenders provided that, with respect to any Product Approvals that have not been transferred to the Purchaser, the parties will discuss in good faith commercially reasonable terms pursuant to which Seller shall cooperate with the Purchaser to respond to any new tenders to the extent necessary as the holders of any such Product Approvals, in each case provided that:

 

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2.3.1                   the Seller or the relevant Affiliate of the Seller is able to transfer any liabilities associated with such tenders to the Purchaser upon transfer of such Product Approval; and

 

2.3.2                   any new tender does not postpone or interfere with the transfer of the Product Approval to the Purchaser or create additional liability for the Seller or its Affiliates.

 

3                                      Maintenance of Product Approvals

 

From the Closing Date until completion of the transfer of the Product Approvals to the Purchaser (or its Affiliates), the Seller shall or shall procure that the relevant members of the Seller’s Group shall maintain in force (or procure that there is maintained in force) each Product Approval and shall not voluntarily amend, cancel or surrender any Product Approval unless requested to do so by the Purchaser or required to do so by any Applicable Law or any Governmental Entity or with the consent of the Purchaser, such consent not to be unreasonably withheld or delayed.  For the avoidance of doubt, Seller does not warrant in respect of, and shall not be responsible for, the successful maintenance or renewal of the Product Approvals after the Closing Date, except and only to the extent that a Governmental Entity cancels a Product Approval or refuses its renewal as a result of the Seller’s wilful misconduct or gross negligence, and the Seller and its Affiliates shall not be responsible for conducting any studies, including clinical and stability studies, concerning the Products which may be requested by the relevant Governmental Entities after the Closing Date, regardless of whether the PA Transfer Date has occurred or not.

 

4                                      Fees and expenses

 

From and after the Closing Date, the Purchaser shall promptly reimburse the relevant members of the Seller’s Group for all maintenance and renewal fees and similar fees paid, and all out of pocket expenses reasonably incurred in connection with the satisfaction of any commitments or obligations by such members of the Seller’s Group with respect to each Product Approval.

 

5                                      Notification

 

As soon as the Seller or the Purchaser or any of their respective Affiliates receives notification, if any, of impending approval or approval of the transfer of a Product Approval from a Governmental Entity, the notified party or the party whose Affiliate was notified shall inform the other party of the expected date of appointment or transfer and actual date of appointment or transfer of that Product Approval.

 

6                                      Responsibility for transfer

 

Notwithstanding any other provision of this Agreement, neither the Seller nor any of its Affiliates shall have any Liability to the Purchaser in the event that the transfer of any Product Approval results in any further obligations, commitments or Liabilities in relation to a Product Approval

 

The Seller shall use all reasonable endeavours to procure the transfer of the Marketing Authorisations materially in accordance with the broad timeline set out in the Data Room at 7.5, unless otherwise agreed in writing by the Purchaser.

 

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Schedule 7
 Product Approvals, Pipeline Product Approvals and Product Applications
 Part 2
 List of Products, Products Under Registration and Pipeline Products

 

[***]

 

97

 

Schedule 8
 Transferred Contracts
 (Clause 2.3)

 

1                                      Shared Business Contracts

 

1.1                            Prior to Closing, the Seller and the Purchaser shall discuss and agree in good faith a process to identify all material Shared Business Contracts.

 

1.2                            The Seller shall use all reasonable efforts to maintain relationships under the Shared Business Contracts and continue to operate the Shared Business Contracts, including fulfilling all its obligations under the Shared Business Contracts, in the same manner as it has for the twelve months prior to this Agreement.

 

2                                      Obligation to obtain Third Party Consents

 

2.1                            In relation to any Transferred Contract (excluding, for the purposes of this Schedule 8, any US Government Contract, Product Approval, Pipeline Product Approval or Product Application), Transferred Intellectual Property Contract, Co-Owned Flu Group Intellectual Property Right or Transferred Plant or Equipment which is not assignable or sub-licensable without a Third Party Consent or a separation of a Shared Business Contract (the effect of which is the severance of the benefit and burden of the Relevant Part of such Shared Business Contract, whether pursuant to an agreement or arrangement between the relevant counterparty and a member of the Purchaser’s Group which is equivalent to such Shared Business Contract or the sub-licensing of the Relevant Part to the Purchaser) which is not separable without a Third Party Consent, this Agreement, shall not be construed as an assignment, an attempted assignment, a sub-licensing or an attempted sub-licensing and the Seller and the Purchaser shall each use reasonable endeavours both before and after Closing to obtain all necessary Third Party Consents as soon as possible and shall keep each other informed of progress in obtaining such Third Party Consents. The Seller shall deliver to the Purchaser, on Closing or, if later, as soon as possible after receipt, any Third Party Consent.

 

2.2                            In connection with the obtaining of any Third Party Consent referred to in paragraph 2.1, the Purchaser shall supply to the Seller such information as may be reasonably requested by the Seller or any relevant third party.

 

2.3                            The cost of any fee demanded by the third party as consideration for giving the Third Party Consent shall be borne by the Seller.

 

3                                      Obligations until Third Party Consents are obtained/where Third Party Consents are refused

 

3.1                            Subject to paragraph 3.2 below, the Purchaser shall assume, carry out, perform and discharge the Seller’s and the Business Seller’s obligations arising under the Transferred Contracts, Transferred Intellectual Property Contracts, Co-Owned Flu Group Intellectual Property Rights, Transferred Plant and Equipment and the Relevant Part of the Shared Business Contracts as from Closing and shall indemnify and keep indemnified the Seller and the Business Sellers against any liability incurred by the Seller or the Business Sellers arising from the failure by the Purchaser to assume, carry out, perform or discharge such obligations, provided that nothing in this Agreement shall:

 

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3.1.1                   require the Purchaser to perform any obligation falling due for performance, or which should have been performed, on or before Closing; or

 

3.1.2                   make the Purchaser liable for any act, neglect, default or omission of the Seller and/or the Business Sellers in respect of any such contracts on or before Closing.

 

3.2                            In respect of any Transferred Contract, Transferred Intellectual Property Contract, Transferred Plant and Equipment, Relevant Part of Shared Business Contract or Co-Owned Flu Group Intellectual Property Right, from Closing until the relevant Third Party Consent has been obtained as contemplated by paragraph 2.1 or where the Third Party Consent has been refused:

 

3.2.1                   the relevant Business Seller shall hold on trust to the extent it is lawfully able to do so or, where it is not lawfully able to do so or where holding on trust is not possible under local law or otherwise impracticable, the relevant Business Seller and the Purchaser shall make such other arrangements between themselves to provide to the Purchaser the benefits of the Contract (other than amounts corresponding to any Tax liability of the relevant Business Seller), in each case in respect of amounts due under or in respect of the Transferred Contract, Transferred Intellectual Property Contract, Relevant Part of Shared Business Contract, Transferred Plant and Equipment or Co-Owned Flu Group Intellectual Property Right including the enforcement at the cost and for the account of the Purchaser of all rights of the relevant Business Seller against any other party thereto;

 

3.2.2                   to the extent that the relevant Business Purchaser is lawfully able to do so, the Purchaser shall perform the relevant Business Seller’s obligations under the Contract as agent or sub-contractor and shall indemnify the Seller and the relevant Business Seller if the Purchaser fails to do so. To the extent that the Purchaser is not lawfully able to perform such obligations, the Seller shall procure that the relevant Business Seller shall, (subject to being indemnified by the Purchaser for any Losses the Seller or the relevant Business Seller may incur in connection therewith) do all such things as the Purchaser may reasonably require to enable due performance of the Transferred Contract, Transferred Intellectual Property Contract, Transferred Plant and Equipment or Relevant Part of the Shared Business Contract.

 

4                                      Failure to Obtain Third Party Consents

 

4.1                            If a Third Party Consent is refused or otherwise not obtained on terms reasonably acceptable to the Purchaser within 9 months of Closing, the parties shall use reasonable endeavours to put in place alternative arrangements so as to give the Purchaser equivalent rights or benefits as the Purchaser would have received if the Third Party Consent had been obtained. If no such alternative arrangement has been validly put in place within 6 months of the relevant Third Party Consent having been refused or otherwise not obtained, then:

 

4.1.1                   the Seller shall be entitled to procure the termination of the Transferred Contract, Transferred Plant and Equipment, Transferred Intellectual Property Contract or Relevant Part of the Shared Business Contract and the obligations of the parties under this Agreement in relation to such Transferred Contract, Transferred Intellectual Property Contract or Relevant Part of the Shared Business Contract shall cease forthwith; and

 

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4.1.2                   references in this Agreement to the Transferred Contract, Transferred Intellectual Property Contracts, Transferred Plant and Equipment or Relevant Part of the Shared Business Contract and the Flu Group Businesses (other than in this paragraph 4) shall be construed as excluding such Transferred Contract, Transferred Intellectual Property Contract, Transferred Plant and Equipment or Relevant Part of the Shared Business Contract.

 

4.2                            Provided that the Seller has reasonably consulted with the Purchaser in good faith in relation to any proposed termination, prior to such termination, the cost of any break or termination fee which becomes payable to the relevant the third party as a result of termination of the Transferred Contract, Transferred Plant and Equipment, Transferred Intellectual Property Contract or Relevant Part of the Shared Business Contract shall be borne by the Seller and the Purchaser in equal portions.

 

4.3                            To the extent that, at Closing, any Contract exists which is Predominantly Related to the Business but is not a Transferred Contract by virtue of the fact that neither party to such contract is a member of the Seller’s Group, the Seller shall use all reasonable efforts to obtain the consent of the parties to the relevant Contract to transfer such Contract to the Purchaser or a Flu Group Company, and for the purposes of this Schedule 8 only such Contract shall be deemed to be a Transferred Contract to the extent practicable taking into account that neither the Seller nor any member of the Seller’s Group is a party to the relevant Contract.

 

100

 

Schedule 9
 Employees
 (Clause 2.4.1)

 

1                                      Employee Transfer

 

1.1                            The Purchaser shall cause:

 

1.1.1                   the Flu Group Companies to continue to employ all Flu Group Company Employees immediately after the Closing Date; and

 

1.1.2                   a member of the Purchaser’s Group to employ each Flu Business Employee immediately after the Closing Date (where employment transfers and continues automatically by operation of Applicable Law) or, where the Seller and Purchaser agree in advance that the employment of any Flu Business Employee will not automatically transfer to a member of the Purchaser’s Group by operation of Applicable Law, offer, or cause a member of the Purchaser’s Group to offer, at least 30 Business Days before the Closing Date or, if earlier, on or before the date by which the Relevant Employer would be required to serve notice to terminate such employee’s employment, but contingent on Closing and the employee continuing to be a Flu Business Employee until the Closing Date, employment to each of those Flu Business Employee on terms and conditions that are no less favourable in the aggregate (but subject to paragraph 2.1 below and specifically excluding, for the avoidance of doubt, the obligation to provide defined benefit pension benefits, but recognising the value to certain Flu Group Company Employees of defined benefit pension benefits while not being obliged to assess the value of those benefits) than those on which such Flu Business Employee was employed by the Relevant Employer when the offer was made (where employment does not transfer and continue automatically by operation of Applicable Law). The Purchaser shall keep the Seller updated throughout the offer process on when offers are made and accepted or rejected. The Seller shall, where requested, offer such reasonable assistance to the Purchaser (or relevant member of the Purchaser’s Group) to encourage such Flu Business Employee to accept any offer of employment made by the Purchaser or relevant member of the Purchaser’s Group, pursuant to this paragraph 1.1.2.

 

1.2                            If it is found or alleged that any contract of employment with any person who is not a Transferred Employee has effect at any time on or after the Closing Date as if originally made between the Purchaser (or any relevant member of the Purchaser’s Group) and such person as a result of the operation of any Applicable Law or otherwise then (without prejudice to any other rights or remedies which may be available to the Purchaser (or relevant member of the Purchaser’s Group)):

 

1.2.1                   the Purchaser shall promptly notify the Seller of that finding or allegation. In consultation with the Purchaser, the Seller or relevant member of the Seller’s Group shall at the Purchaser’s request or if it so chooses within ten Business Days of such notification, make to that person an offer in writing to employ him or her under a new contract of employment subject to, and to take effect upon, the termination referred to below;

 

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1.2.2                   the offer to be made will be on the same terms and conditions (including as to period of continuous employment) as were provided to that person immediately prior to the Closing Date;

 

1.2.3                   after the expiry of the ten Business Days referred to at paragraph 1.2.1 above (whether or not an offer of employment is made) the Purchaser or relevant member of the Purchaser’s Group may terminate the employment of such person and the Seller shall be responsible for and shall indemnify and keep indemnified the Purchaser (for itself and as trustee for any relevant member of the Purchaser’s Group) against all Losses made, suffered or incurred by the Purchaser (or any other member of the Purchaser’s Group) as a result of:

 

(i)                                  the actual or alleged transfer to a member of the Purchaser’s Group and (regardless of whether there has been such a transfer) any employment liabilities relating to such person;

 

(ii)                               employing such person on and from the Closing Date until such termination (up to the time reasonably expected to have achieved such termination in accordance with the terms of the contract of employment and applicable Law) but subject to a maximum period of 6 months unless prevented by the terms of the contract of employment or Applicable Law; and

 

(iii)                            such termination; and

 

1.2.4                   the parties agree to co-operate in good faith to minimise the Losses which are subject to the indemnity referred to in paragraph 1.2.3 above.

 

1.3                            The parties acknowledge and agree that:

 

1.3.1                   any Deferred Employee shall be treated for all purposes under this Agreement as if such Deferred Employee were a Flu Business Employee or a Flu Group Company Employee (as appropriate); and

 

1.3.2                   the Purchaser’s obligations under this Schedule 9 shall apply in respect of each Deferred Employee in the same way as they do to each Flu Business Employee or Flu Group Company Employee (as appropriate); and

 

1.3.3                   if any Deferred Employee accepts an offer of employment made by the Purchaser under paragraph 1.1.2 above or becomes an employee of a Flu Group Company after the Closing Date, such Deferred Employee shall further be treated for all purposes under this Agreement as a Transferred Employee.

 

1.4                            Where any Flu Business Employee accepts such an offer of employment (pursuant to paragraph 1.1 above), the Seller will procure that the Relevant Employer will release such employee from its employment with effect from the Closing Date.

 

1.5                           The Purchaser shall (for itself and for each member of the Purchaser’s Group) be responsible for and shall indemnify and keep indemnified the Seller (for itself and on behalf of each member of the Seller’s Group) from any and all Losses and claims of any kind:

 

1.5.1                   arising out of the employment, or termination of employment, whether actual or constructive, of any Transferred Employee following the Effective Time, save to the extent that such Losses arise from the Seller’s, or a member of the Seller’s Group’s, acts or omissions (or alleged acts or omissions), including, but not limited

 

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to, all claims relating to severance, termination pay, pay in lieu of notice of termination and similar obligations;

 

1.5.2                   which are attributable to any act or omission (or alleged act or omission) by the Purchaser or any member of the Purchaser’s Group in relation to any of the Flu Business Employees, Flu Group Company Employees or Transferred Employees relating to any failure by the Purchaser or any member of the Purchaser’s Group to comply with obligations under Applicable Law to provide information to the relevant members of the Seller’s Group in order to allow them to comply with their information and consultation obligations; and/or

 

1.5.3                   arising from any finding or allegation that the terms and conditions of employment provided or to be provided by the Purchaser or a member of the Purchaser’s Group to any Flu Business Employee would constitute a repudiatory breach of his contract.

 

1.6                            The Seller shall (for itself and on behalf of each member of the Seller’s Group) be responsible for and shall indemnify and keep indemnified the Purchaser (for itself and on behalf of each member of the Purchaser’s Group) from any and all Losses and claims of any kind:

 

1.6.1                   arising out of the employment of any Employee at any time prior to the Effective Time (excluding any transferred Employee Benefit Liabilities (as defined in Schedule 10) which the Purchaser agrees to assume in accordance with Schedule 10), save to the extent that such Losses arise from the Purchaser’s, or a member of the Purchaser’s Group’s, acts or omissions (or alleged acts or omissions);

 

1.6.2                   subject to paragraph 1.5.3 above, arising out of any termination of employment, whether actual or constructive, of any Employee prior to the Effective Time including, but not limited to, all claims relating to severance, termination pay, pay in lieu of notice of termination and similar obligations;

 

1.6.3                   which are attributable to any act or omission (or alleged act or omission) by the Seller or any member of the Seller’s Group in relation to any of the Flu Business Employees, Flu Group Company Employees or Transferred Flu Business Employees relating to any failure by the Seller or any member of the Seller’s Group to comply with its obligations (under Applicable Law, trade union agreement or otherwise) to inform and consult (other than as a result of any failure by the Purchaser or any member of the Purchaser’s Group to comply with its obligations under Applicable Law to provide information and assistance to the Seller to enable such compliance); and/or

 

1.6.4                   the employment or termination of employment by the Seller or any member of the Seller’s Group of any person who is an Excluded Employee at any time.

 

2                                     Terms of employment

 

2.1                            [***]

 

2.1.1                   [***]

 

2.1.2                   [***]

 

2.2                            [***]

 

103

 

2.3                            [***]

 

2.3.1                   [***]

 

2.3.2                   [***]

 

2.3.3                   [***]

 

2.3.4                   [***]

 

2.3.5                   [***]

 

2.3.6                   [***]

 

2.3.7                   [***]

 

3                                      Severance arrangements

 

3.1                            [***]

 

3.1.1                   [***]

 

3.1.2                   [***]

 

3.2                            [***]

 

4                                      Benefits arrangements/service continuity

 

4.1                            Each Transferred Employee shall have their service with the Seller’s Group and their respective predecessors recognised under any employee benefit plans or arrangements of the Purchaser’s Group for all purposes of eligibility, vesting and accrual of benefits to the extent past service was recognised for such Transferred Employees under a comparable benefit plan immediately prior to the Closing Date. Notwithstanding the foregoing, nothing in this paragraph 4.1 shall be construed to require recognition of service for the purposes of calculation of benefits or that would result in:

 

4.1.1                   duplication of benefit;

 

4.1.2                   recognition of service for any purposes under any plans for which participation, service and/or benefits accrual is frozen or any post-retirement medical plan; or

 

4.1.3                   recognition of service under a newly established plan for which prior service is not taken into account for employees of the Purchaser’s Group generally.

 

Without limiting the foregoing, with respect to the Transferred Employees, the Purchaser shall, or shall cause such other member of the Purchaser’s Group to, be responsible for all paid time off benefits, including vacation pay, sick pay, banked leave, flexitime and other payments for time off of normal work hours accrued by the Transferred Employees up to the Closing Date.

 

4.2                           With respect to any welfare plan maintained by the Purchaser or any other member of the Purchaser’s Group in which Transferred Employees are eligible to participate after the Closing Date, the Purchaser shall:

 

4.2.1                   waive all limitations as to pre-existing conditions, exclusions, evidence of insurability provisions, waiting periods with respect to such participation and coverage requirements or similar provisions under a Purchaser’s benefit plans that are welfare plans (as defined in section 3(1) of ERISA or any equivalent Applicable

 

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Law) applicable to such employees to the extent such conditions, exclusions and waiting periods or other provisions were satisfied or did not apply to such employees under welfare plans maintained by the Seller or other members of the Seller’s Group prior to the Closing Date; and

 

4.2.2                   provide each Transferred Employee with credit for any co-payments and deductibles paid prior to the Closing Date in satisfying any analogous deductible or out-of-pocket requirements to the extent applicable under any such plan in the year in which Closing occurs, to the extent credited under the welfare plans maintained by the Seller or other members of the Seller’s Group prior to the Closing Date.

 

5                                      US Transferred Employees

 

5.1                            The Purchaser will maintain or, if they do not exist, establish a health care and dependent care flexible spending account arrangement pursuant to section 125 or 129 of the Code (collectively, “FSAs”). The Purchaser will honour the elections of all Transferred Employees who are employed in the United States and/or covered by US Benefit Plans (“US Transferred Employees”) under the FSAs of any relevant member of the Seller’s Group (“Relevant Employer’s FSAs”), as in effect immediately prior to the Closing Date, and the Purchaser will assume responsibility for administering all reimbursement claims of US Transferred Employees with respect to the calendar year in which the Closing Date occurs that are submitted for payment on or after the Closing Date, whether arising before, on or after the Closing Date, under the Purchaser’s FSAs. As soon as practicable but no more than 45 days following the Closing Date, the Seller will cause to be transferred to the Purchaser an amount in cash equal to (i) the sum of all contributions to the Relevant Employer’s FSAs with respect to the calendar year in which the Closing Date occurs by or on behalf of the US Transferred Employees prior to the Closing Date, reduced by (ii) the sum of all claims incurred in the calendar year in which the Closing Date occurs that are submitted to the Relevant Employer for payment prior to the Closing Date and paid by the Relevant Employer’s FSAs with respect to such US Transferred Employees prior to the date of such cash transfer to the Purchaser; provided, however, if this calculation results in a negative amount, then the Purchaser will pay to the Seller (on behalf of the Relevant Employer) as soon as practicable but not more than 45 days following the Closing Date, the amount by which (ii) exceeds (i).

 

5.2                            The US Transferred Employees shall, as of the Closing Date, become eligible to participate in a US tax-qualified defined contribution plan sponsored by the Purchaser or another member of the Purchaser’s Group. The Purchaser agrees that such plan will accept rollovers of the account balances of US Transferred Employees (including participant loan promissory notes) from the Relevant Employer’s tax-qualified retirement plans, provided that the Seller makes available to the Purchaser at the Purchaser’s request a copy of the relevant IRS determination letter.

 

5.3                            With effect on and from the Closing Date, the Purchaser shall, or shall procure that such other members of the Purchaser’s Group shall, assume the responsibility and obligation to provide COBRA continuation coverage to all M&A Qualified Beneficiaries. “M&A Qualified Beneficiary” means an individual whose COBRA qualifying event occurred prior to or in connection with the transactions contemplated by this Agreement and who is, or whose COBRA qualifying event occurred in connection with, a covered employee whose last employment prior to the COBRA qualifying event was in connection with the Business with a Relevant Employer.

 

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6                                      Consultation

 

The Seller and the relevant member of the Seller’s Group (as the case may be) shall comply with its obligations under the Transfer Regulations and any other relevant information negotiation and/ or consultation process or requirements in connection with the transactions contemplated by this Agreement. The parties shall, and shall cause such other relevant members of the Seller’s Group or the Purchaser’s Group (as the case may be) to, provide the other with such information and assistance at such times as the parties may reasonably request or as may be reasonably necessary for them or any other relevant member of the Seller’s Group or the Purchaser’s Group (as the case may be) to comply with any requirements to consult with any affected employees, the Novartis Eurofourm, a relevant trade union or any other employee representatives, in connection with the transactions contemplated by this Agreement. The Purchaser shall, and shall cause such other relevant members of the Purchaser’s Group to, at the reasonable request of the Seller, cooperate with and participate in any information, negotiation and/or consultation process which the Seller or such other member of the Seller’s Group undertakes with employees or their representatives in connection with the transactions contemplated by this Agreement.

 

7                                      International Assignees

 

Where Applicable Law does not provide for the automatic transfer of employment of any International Assignee and/or the other terms governing their international assignment, the Purchaser shall assume and agree to be bound by the individual contract of employment and such other terms governing their international assignment including any tax equalisation agreement entered into between an International Assignee and a member of the Seller’s Group provided that such employee becomes a Transferred Employee.

 

8                                      Liability for retention arrangements

 

8.1                            [***]

 

8.2                            The provisions of paragraph 9 below shall not apply to the share-based retention awards made pursuant to this paragraph, which will vest in accordance with their terms.

 

9                                      Share incentive plans

 

9.1                            This paragraph 9 applies notwithstanding any other provision of this Agreement, except paragraph 8 above.

 

9.2                            Share-based awards held by Transferred Employees pursuant to a share-based incentive scheme operated by the Seller or another member of the Seller’s Group (“Relevant Awards”) shall be treated in accordance with the rules of the relevant share based incentive scheme and, where possible shall be afforded ‘good leaver treatment’. Where Relevant Awards are subject to performance (or other) conditions and it is not possible to determine whether or not such conditions have been met at the applicable early vesting date (or within a reasonable period thereafter), the Seller and Purchaser agree that performance shall be deemed “on target”.

 

Without limitation:

 

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(a)                               where necessary and subject to (b), the Seller shall rely on and procure the exercise of existing discretions in the relevant plan rules to afford the “good leaver treatment”; and

 

(b)                               the Seller (or relevant member of the Seller’s Group) shall not take any action which would require shareholder approval or which could trigger any significant legal, Tax or operational issues for the relevant Transferred Employee (including the loss of any Tax-favourable treatment), the Seller’s Group or the Purchaser’s Group.

 

For the purposes of this paragraph 9.2, and subject to the rules of the relevant share based incentive scheme the “good leaver treatment” shall be that:

 

(c)                                Relevant Awards shall not lapse or be forfeited as a result of Closing except to the extent that they do not vest in accordance with (d) and/or (e) below;

 

(d)                               Relevant Awards shall vest early as a result of Closing and shall (subject to (f) below) be time pro-rated to take account of the reduced period of time, as a proportion of the original vesting period, that the relevant Transferred Employee worked within the Seller’s Group (calculated on the basis of the number of years of service as at the Closing Date, where part years of service are rounded up to the next whole year of service);

 

(e)                                Relevant Awards that vest after the Closing Date shall remain subject to any relevant performance (or other) conditions, adjusted as necessary to take account of Closing and measured up to the applicable early vesting date; and

 

(f)                                 The Seller shall procure that any restricted shares or restricted stock units (or any part of an award of restricted shares or restricted stock units) granted under the Employee Share Ownership Plan, Restricted Stock Plans for Switzerland, the Restricted Stock Plan for the Rest of the World or the 2007 Restricted Stock Unit Plan, shall not lapse or be forfeited on Closing and will vest on the Closing Date.

 

The Seller retains the discretion to provide more favourable treatment for Relevant Awards in accordance with the rules of the relevant share based incentive scheme and, in particular but without limiting this general discretion, for the purposes of this paragraph 9.2, “on target” performance may be construed as permitting share-based awards to vest in full.

 

9.3                            The Seller agrees to indemnify the Purchaser (or relevant member of the Purchaser’s Group) for any Liabilities borne by the Purchaser’s Group in connection with the Relevant Awards and any payments made by the Seller in accordance with paragraph 9.9, including any Tax (which, for the avoidance of doubt and without limitation to the definition of Tax, in this paragraph 9 includes any UK secondary Class 1 National Insurance contributions, US FICA and any other amounts of employer and employee social security contributions arising in any jurisdiction, any income tax and any state, cantonal or other local taxes in any jurisdiction). The Purchaser agrees to use its best endeavours to obtain and utilise any applicable Tax relief in respect of the Relevant Awards as soon as reasonably practicable and pay (or procure payment) to the Seller of an amount equal to any reduction in the Tax Liabilities of the Purchaser’s Group arising as a result of or by reference to such Tax relief by way of adjustment to the Purchase Price, provided always that the Seller provides the Purchaser with any information that the Purchaser may reasonably request in this respect in a timely manner.

 

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9.4                            The Seller undertakes to inform the Purchaser of the vesting or exercise (as applicable) of the Relevant Awards (or cash payments made by the Seller in accordance with paragraph 9.9) and to provide, in a timely manner, details of the Relevant Awards that so vest or are exercised (or cash payments made) so that the Purchaser’s Group can make any applicable withholdings for Tax and pay any Tax for which the Purchaser’s Group is liable in respect of the Relevant Awards to the relevant Tax Authority within any applicable timescale.

 

9.5                            To the extent permitted under the relevant plan rules and any Applicable Law, the Seller undertakes to sell such number of the shares underlying the Relevant Awards as may be necessary for the sale proceeds to satisfy any applicable Tax required to be withheld or accounted for by the Purchaser’s Group and to pay such amounts to the Purchaser in sufficient time for the Purchaser to pay such Tax to the relevant Tax Authority within any applicable timescale, provided always that the Purchaser provides the Seller with any information that the Seller may reasonably request in this respect in a timely manner.

 

9.6                            The Seller undertakes to complete all relevant filings, tax reporting obligations and notifications in relation to Relevant Awards in all relevant jurisdictions.

 

9.7                            This paragraph shall apply where restricted stock units granted under the 2011 Stock Incentive Plan for North American Employees lapse or are forfeited (or will lapse or be forfeited) either in whole or in part as a result of Closing (“RSU Awards”). As soon as practicable following Closing (and, in any event, by the later of 30 days from the Closing Date and 30 days from the first date after the Closing Date when the granting of share-based awards is not prevented by dealing restrictions, subject in both cases to the relevant plan rules and any Applicable Law), the Purchaser (or member of the Purchaser’s Group) shall grant each relevant Transferred Employee a share-based award referable to shares in the capital of the Purchaser substantially equal in value (valued as at the grant date) to the value of the portion of their RSU Awards which lapsed or was forfeited (or will lapse or be forfeited) as a result of Closing (valued as at the Closing Date), where relevant, disregarding any loss (or expected loss) of Tax-favourable treatment (each a “Compensation Award”). Such Compensation Awards shall be granted pursuant to the rules of whichever incentive plan operated by the Purchaser’s Group at the time of grant the Purchaser considers most closely aligned to the share-based incentive plan operated by the Seller’s Group (which may, for the avoidance of doubt, include a plan which may or must be settled in cash) pursuant to which the related RSU Award had been granted but will vest according to a vesting schedule substantially similar to the vesting schedule that would have otherwise applied to the related RSU Award if Closing had not occurred.

 

For the purposes of this paragraph 9.7:

 

(a)                               the portion of a RSU Award which lapsed or was forfeited (or will lapse or be forfeited) as a result of Closing shall be valued on the basis of the average price of an ordinary share in the capital of the Seller over the five trading days immediately prior to Closing;

 

(b)                               the value of a Compensation Award to be granted shall be valued on the basis of the average price of an ordinary share in the capital of the Purchaser over the five trading days immediately prior to the date of grant; and

 

(c)                                any currency conversion shall be made in accordance with Clause 1.11 of this Agreement.

 

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9.8                            To the extent that any payment to a Transferred Employee (whether by the Seller’s Group or by the Purchaser’s Group) would trigger Liabilities to Tax under section 280G of the United States Internal Revenue Code (“Section 280G”), the relevant Transferred Employee shall be allowed to choose whether to accept the full payment (and pay any relevant Section 280G Tax) or to receive such lower payment as may be necessary in order to fall below the Section 280G threshold for Tax. To the extent that any similar Tax would arise pursuant to any Applicable Law in another jurisdiction, this paragraph 9.8 shall apply mutatis mutandis.

 

9.9                            This paragraph shall apply where: (i) a Transferred Employee would, in the ordinary course of business, have been granted a share-based award pursuant to a share-based incentive scheme operated by the Seller or another member of the Seller’s Group on the basis of performance criteria linked to the Seller’s Group’s 2015 financial year (which may, for the avoidance of doubt, be business and/or individual performance criteria and assessment) (each a “2015 Performance Award”); and (ii) Closing occurs prior to the grant of such 2015 Performance Award. As soon as practicable following Closing (and, in any event, by the later of 30 days from the Closing Date and 30 days from the date when the value of each 2015 Performance Award has been determined), the Seller shall notify the Purchaser in writing of the value of each 2015 Performance Award and under which share-based incentive plan operated by the Seller’s Group the related 2015 Performance Award would have been granted. As soon as practicable following the receipt of such notice (and, in any event, by the later of 30 days from the receipt of such notice and 30 days from the first date following the receipt of such notice when the granting of share-based awards is not prevented by dealing restrictions, subject in both cases to the relevant plan rules and any Applicable Law), the Purchaser (or member of the Purchaser’s Group) shall grant each relevant Transferred Employee a share-based award referable to shares in the capital of the Purchaser substantially equal in value (valued as at the date of grant) to two-thirds of the value of the 2015 Performance Award which would have been granted but for the occurrence of Closing (“2016 Grant Award”). Such 2016 Grant Awards shall be granted pursuant to the rules of whichever share-based incentive plan operated by the Purchaser’s Group (which may, for the avoidance of doubt, include a plan which may or must be settled in cash) at the time of grant the Purchaser considers most closely aligned to the share-based incentive plan operated by the Seller’s Group pursuant to which the related 2015 Performance Award would have been granted.

 

The Seller shall pay, in cash, the remaining one-third of the value of the 2015 Performance Award which would have been granted but for the occurrence of Closing to each relevant Transferred Employee on, or as soon as practicable following, Closing.

 

The grant of a 2016 Grant Award to a Transferred Employee shall be taken into account by the Purchaser when determining the extent to which that Transferred Employee shall participate in incentive arrangements (other than any Compensation Award) operated by the Purchaser’s Group following Closing.

 

For the purposes of this paragraph 9.9:

 

(a)                               the value of a 2015 Performance Award to be granted shall: (i) be determined by the Seller acting reasonably and in good faith; (ii) be consistent with past practice and with the level of similar awards granted to employees remaining in service within the Seller’s Group; (iii) take into account the relevant business and/or individual performance criteria linked to the Seller’s Group’s 2015 financial year, and (iv) if Closing occurs before 31 December 2015, be time pro-rated to take

 

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account of the reduced period of time, as a proportion of the Seller’s Group’s 2015 financial year, that the relevant Transferred Employee worked within the Seller’s Group (calculated on the basis of the number of complete months of service as at the Closing Date);

 

(b)                               the number of shares by reference to which a 2016 Grant Award is granted shall be valued on the basis of the average price of an ordinary share in the capital of the Purchaser over the five trading days immediately prior to the date of grant; and

 

(c)                                any currency conversion shall be made in accordance with Clause 1.11 of this Agreement.

 

9.10                     Costs in relation to satisfying the Compensation Awards and the 2016 Grant Awards shall be shared equally between the Seller and Purchaser, provided that the Purchaser shall bear costs in relation to satisfying the Compensation Awards and the 2016 Grant Awards only to the extent that the aggregate costs of satisfying the Compensation Awards and the 2016 Grant Awards do not exceed a maximum value of US$5m. In the event that the costs of satisfying the Compensation Awards and 2016 Grant Awards exceed US$10m (as shared between the Purchaser and Seller equally), any costs in respect of satisfying the Compensation Awards and/or the 2016 Grant Awards in excess of US$10m shall be at the cost of the Seller only. In the event that Compensation Awards and/or 2016 Grant Awards are satisfied in cash, for the purposes of this paragraph 9.10 the costs involved in that satisfaction shall be equal to the gross cash payments made in satisfaction of those awards. In the event that Compensation Awards and/or 2016 Grant Awards are satisfied in shares, the Seller and Purchaser shall use their reasonable endeavours to agree the quantum of the costs of satisfaction.

 

10                               Marburg

 

[***]

 

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Schedule 10
 Group Retirement Benefit Arrangements
 (Clause 2.4.2)

 

In this Schedule 10:

 

“Employee Benefits” means benefits to or in respect of any current or former employee, including without limitation, any pension, early retirement, disability, death benefit, long service awards, termination indemnity or post-retirement medical benefits or deferred compensation linked to retirement, disability or death benefits or old age part-time benefits and jubilee payments; and

 

“Employee Benefit Liabilities” means liabilities and obligations (whether funded or unfunded) in respect of any employee benefit promise, scheme, plan, fund, program, policy, practice or other individual or collective arrangement providing Employee Benefits.

 

1                                      Except to the extent otherwise agreed by the Seller and the Purchaser before Closing, Employee Benefit Liabilities in respect of the Flu Group shall transfer to the Purchaser or the relevant member of the Purchaser’s Group.

 

2                                      Where Employee Benefit Liabilities transfer to or remain with the Purchaser and/or its Affiliates (which for the avoidance of doubt in the period from Closing includes any Flu Group Company) (such Employee Benefit Liabilities being the “Transferred Employee Benefit Liabilities”), the Purchaser shall, or shall procure that its relevant Affiliate shall, assume, with a full discharge for Seller and its Affiliates, the Transferred Employee Benefit Liabilities.

 

3                                      Without limiting the provisions of paragraph 1 above, the Purchaser agrees and acknowledges the pension liabilities in respect of the Flu Group (including, for the avoidance of doubt, in Germany, Italy, India, Switzerland, the United Kingdom and the USA) other than the Pension Scheme will transfer to the Purchaser.

 

4                                      Without limiting the provisions of paragraph 1 above, the Purchaser agrees and acknowledges the post-retirement medical healthcare plan to which it admits US Transferred Employees who immediately before Closing were members of such a plan will take account of periods of employment with the Seller’s Group to the extent previously recognised under the equivalent Seller’s Group plan for the purposes of determining eligibility, contributions, and vesting; provided, however, that, unless otherwise agreed between the Seller and the Purchaser, the Seller shall retain liability for post-retirement medical liabilities for employees who became eligible for such benefits under the Seller’s plans prior to the Closing Date and the Seller shall retain liability or unfunded non-qualified deferred compensation liabilities accrued through the date of Closing. If the Seller requests, the Purchaser shall enter into discussions to discuss a transfer of these liabilities in good faith.

 

5                                      The Purchaser shall admit Transferred Employees in the United States who were not eligible for post-retirement benefits under the Seller’s plans as of the Closing Date to participation in a Purchaser post-retirement medical plan as of the Closing Date. Periods of employment with the Seller’s Group (including, without limitation, any current or former Affiliate of the Seller, to the extent previously recognised under the applicable benefit plan arrangement provided by the Seller’s Group), shall be taken into account for such employees or the purposes of determining, as applicable, the eligibility for participation, contributions, and vesting for any employee under such post-retirement medical plan.

 

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6                                      Notwithstanding any general provision to the contrary in Schedule 9, the US Transferred Employees shall, as of the Closing Date, become eligible to participate in a US tax-qualified defined contribution plan to the extent such plan is sponsored by the Purchaser or a relevant member of the Purchaser’s Group. The Purchaser will use all reasonable efforts to cause such plan to accept rollovers of the account balances of the US Transferred Employees (including participant loan promissory notes) from the relevant employer’s tax-qualified retirement plans provided that the Seller provides reasonable evidence of the Relevant Employer’s tax qualified retirement plans compliance with applicable regulatory requirements.

 

7                                      The Seller and Purchaser agree that the Pension Scheme will be retained by the Seller at Closing. The Seller will procure that, before, on, or immediately after, the Closing Date, Novartis Vaccines Holdings Limited and its Subsidiary will cease to participate in the Pension Scheme and will have no further liability to contribute to the Pension Scheme.

 

8                                      The Seller shall indemnify the Purchaser against any Liabilities that are incurred in relation to the imposition of a debt on the Flu Group Companies under Section 75 or 75A of the Pensions Act 1995 or otherwise in respect of the Pension Scheme.

 

9                                      Indemnity for underfunded transferred pension liabilities

 

9.1                            To the extent liability to fund a pension arrangement transfers to the Purchaser in accordance with the provisions of this Schedule 10, and the relevant arrangement is underfunded (calculated using the methods and assumptions used by the relevant member of the Seller’s Group for IFRS accounting purposes at Closing) at Closing, the Seller will indemnify the Purchaser, by way of a reduction in the Purchase Price attributable to the relevant Shares or the particular part of the Flu Group to which the payment relates.

 

9.2                            The provisions of paragraph 9.1 of this Schedule 10 shall apply In relation to Switzerland with the following modifications:

 

9.2.1                   the methods and assumptions used in the calculation will be modified by:

 

(i)                                          replacing any assumed “cash balance” annuity conversion rate with a conversion rate representing a reasonable estimate of the likely effective overall blended conversion rate which will apply, having regard to the changes to the rate which can reasonably be expected to occur during the expected service lives of the relevant individuals, and weighting the impact of those changes by reference to the ages of the relevant employees (and so the extent to which the changes will in fact operate to reduce the effective liability on the Purchaser); and

 

(ii)                                       removing any reserve for death or disability benefits to the extent that it constitutes a reserve for liabilities in respect of the relevant individuals which could reasonably be externally insured by the Purchaser; and

 

9.2.2                   the calculation of any underfunding shall, if partial liquidation occurs in relation to any of the Swiss pension liabilities before the period ending 12 months after Closing, make allowance for the assets thereby transferred.

 

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Schedule 11
 Allocation of Purchase Price
 (Clause 3.3)

 

Deliberately blank.

 

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Schedule 12
 VAT
 (Clause 3.4)

 

1                                      VAT: Records

 

1.1                            The Seller may, on or before the date of Closing, obtain a direction from the relevant Tax Authority for the retention and preservation by it of any VAT records relating to its period of ownership of the relevant part of the Flu Group and, where any such direction is obtained, the Seller shall:

 

1.1.1                   preserve the records to which that direction relates in such a manner and for such period as may be required by the direction or by Applicable Law; and

 

1.1.2                   allow the Purchaser, upon the Purchaser giving reasonable notice, reasonable access to and copies of such records where reasonably required by the Purchaser for its Tax purposes.

 

1.2                            If no such direction as is referred to in paragraph 1.1 above is obtained or before the date of Closing and any documents in the possession or control of a member of the Seller’s Group are required by law to be preserved by the Purchaser, the Seller shall, as soon as reasonably practicable after Closing, deliver such documents to the Purchaser.

 

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Schedule 13
 Closing Obligations
 (Clause 6)

 

1                                      General Obligations

 

1.1                            Seller’s Obligations

 

On Closing, the Seller shall deliver or make available to the Purchaser the following:

 

1.1.1                   the Tax Indemnity duly executed by the Seller;

 

1.1.2                   the Ancillary Agreements (other than the Netherlands APA) and the Local Transfer Documents (including, where relevant, any notarial deeds referred to in this Agreement) duly executed by the relevant members of the Seller’s Group;

 

1.1.3                   a valid power of attorney or such other evidence that the Seller, and each of its relevant Affiliates, are authorised to execute the Tax Indemnity, the Ancillary Agreements and the Local Transfer Documents (including, where relevant, any notarial deeds referred to in this Agreement), in each case to the extent that they are parties thereto;

 

1.1.4                   a certificate, dated the Closing Date and signed by person a duly authorised by the Seller, to the effect that the condition set forth in Clause 4.1.6 has been satisfied;

 

1.1.5                   if required, a written resignation of each director and secretary of each of the Flu Group Companies in respect of his or her position as director or secretary, as the case may be, in each case taking effect on Closing;

 

1.1.6                   the statutory books of each Flu Group Company (written up to, but not including, the Closing) and the certificate of incorporation, share certificates and common seal (if any) of each Flu Group Company;

 

1.1.7                   the novation of the GSK Ancillary Agreements duly executed by GSK or its representatives, provided that, in the event that the transaction entered into between the Seller and GSK in respect of the sale of the Seller’s vaccines business has not completed, then instead of the novation of the GSK Ancillary Agreements, the Seller shall deliver agreements duly executed by the relevant members of the Seller’s Group to provide the services contemplated by the GSK Ancillary Agreements to the Flu Group Companies on the same or substantially similar, but no worse, terms as are set out in the GSK Ancillary Agreements; and

 

1.1.8                   to the extent they have been obtained, all Property Third Party Consents and, as the case may be, Sublease Consents, required to complete or give practical effect to the Separation so that the relevant Flu Group Companies may lawfully use the Marburg MF59® Premises following Closing.

 

1.2                           The Purchaser’s Obligations

 

On Closing, the Purchaser shall deliver or make available to the Seller the following:

 

1.2.1                   the Tax Indemnity duly executed by the Purchaser;

 

1.2.2                   the Ancillary Agreements (other than the Netherlands APA) and the Local Transfer Documents (including, where relevant, any notarial deeds referred to in this Agreement) duly executed by the relevant members of the Purchaser’s Group; and

 

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1.2.3                   a valid power of attorney or such other evidence that the Purchaser, and each of its relevant Affiliates, are authorised to execute the Tax Indemnity, the Ancillary Agreements and the Local Transfer Documents (including, where relevant, any notarial deeds referred to in this Agreement), in each case to the extent that they are parties thereto.

 

2                                      Transfer of the Shares and Flu Group Businesses

 

2.1                            General Transfer Obligations

 

On Closing, the Seller shall procure that the Share Sellers and Business Sellers shall, and the Purchaser shall, execute and/or deliver and/or make available Local Transfer Documents and take such steps as are required to transfer the Shares and Flu Group Businesses in accordance with this Agreement.

 

2.2                            Specific Transfer Obligations

 

For the purposes of compliance with paragraph 2.1, the Seller and the Purchaser shall, between the date of this Agreement and Closing, negotiate in good faith any and all Local Transfer Documents and other such steps as are required to transfer the Shares and Flu Group Businesses in accordance with this Agreement.

 

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Schedule 14
 Post Closing Adjustments
 (Clause 7)

 

Part 1

Preparation of Closing Statement

 

1                                      Preparation

 

1.1                            No later than 60 days following Closing, the Seller shall deliver to the Purchaser the Draft Closing Statement. Prior to such delivery, the Seller shall so far as is practicable consult with the Purchaser with a view to reducing the potential areas of disagreement.

 

1.2                            In order to enable the Seller to prepare the Draft Closing Statement, the Purchaser shall keep up-to-date and, subject to reasonable notice, make available to the Seller’s representatives and to the Seller’s accountants all books and records relating to the Flu Group during normal office hours and co-operate with them with regard to the preparation, review and agreement or determination of the Draft Closing Statement. The Purchaser agrees to make available the services of the employees of the Flu Group to assist the Seller in the preparation, review and agreement or determination of the Draft Closing Statement. In order to allow the Purchaser to review the Draft Closing Statement, the Seller shall, subject to reasonable notice, make available to the Purchaser’s representatives and to the Purchaser’s accountants all books and records relating to the Flu Group during normal office hours and co-operate with them with regard to their review of the Draft Closing Statement. The Seller agrees to make available the services of the employees of the Seller and its Affiliates to assist the Purchaser in its review of the Draft Closing Statement.

 

1.3                            If the Purchaser does not within 60 days of presentation to it of the Draft Closing Statement give notice to the Seller that it disagrees with the Draft Closing Statement or any item thereof, such notice stating the reasons for the disagreement in reasonable detail and specifying the adjustments which, in the Purchaser’s opinion should be made to the Draft Closing Statement (the “Purchaser’s Disagreement Notice”), the Draft Closing Statement shall be final and binding on the parties for all purposes. If the Purchaser gives a valid Purchaser’s Disagreement Notice within such 60 days, the Seller and the Purchaser shall attempt in good faith to reach agreement in respect of the Draft Closing Statement and, if they are unable to do so within 30 days of such notification, the Seller or the Purchaser may by notice to the other require that the Draft Closing Statement be referred to the Reporting Accountants (an “Appointment Notice”).

 

1.4                            Within 30 days of the giving of an Appointment Notice, the Seller may by notice to the Purchaser indicate that, in the light of the fact that the Purchaser has not accepted the Draft Closing Statement in its entirety, it wishes the Reporting Accountants to consider matters relating to the Draft Closing Statement in addition to those specified in the Purchaser’s Disagreement Notice, provided that such matters as are related to the matters specified in the Purchaser’s Disagreement Notice and that the notice states in reasonable detail the reasons why and in what respects the Seller believes that the Draft Closing Statement should be altered in respect of such matters (the “Seller’s Disagreement Notice”).

 

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1.5                            The Reporting Accountants shall be engaged jointly by the Seller and the Purchaser on the terms set out in this paragraph 1 and otherwise on such terms as shall be agreed; provided that neither the Seller nor the Purchaser shall unreasonably (having regard, inter alia, to the provisions of this paragraph 1) refuse its agreement to terms proposed by the Reporting Accountants or by the other party. If the terms of engagement of the Reporting Accountants have not been settled within 45 days of their identity having been determined (or such longer period as the Seller and the Purchaser may agree) then, unless the Seller or the Purchaser is unreasonably refusing its agreement to those terms, those accountants shall be deemed never to have become the Reporting Accountants and new Reporting Accountants shall be selected in accordance with the provisions of this Agreement.

 

1.6                            Except to the extent that the Seller and the Purchaser agree otherwise, the Reporting Accountants shall determine their own procedure but:

 

1.6.1                   apart from procedural matters and as otherwise set out in this Agreement shall determine only:

 

(i)                                  whether any of the arguments for an alteration to the Draft Closing Statement put forward in the Purchaser’s Disagreement Notice or the Seller’s Disagreement Notice is correct in whole or in part; and

 

(ii)                               if so, what alterations should be made to the Draft Closing Statement in order to correct the relevant inaccuracy in it;

 

1.6.2                   shall apply the accounting principles, policies, procedures, practices and estimation techniques as set out in Part 2 of this Schedule;

 

1.6.3                   shall make their determination pursuant to paragraph 1.6.1 as soon as is reasonably practicable;

 

1.6.4                   the procedure of the Reporting Accountants shall:

 

(i)                                  give the Seller and Purchaser a reasonable opportunity to make written and oral representations to them;

 

(ii)                               require that each party supply the other with a copy of any written representations at the same time as they are made to the Reporting Accountants;

 

(iii)                            permit each party to be present while oral submissions are being made by the other party; and

 

(iv)                           for the avoidance of doubt, the Reporting Accountants shall not be entitled to determine the scope of their own jurisdiction.

 

1.7                            The Reporting Accountants shall send the Seller and the Purchaser a copy of their determination pursuant to paragraph 1.6.1 within one month of their appointment. Such determination:

 

1.7.1                   shall be made available to the Seller and the Purchaser in writing; and

 

1.7.2                   unless otherwise agreed by the Seller and the Purchaser, shall include reasons for each relevant determination.

 

1.8                            The Reporting Accountants shall act as experts and not as arbitrators and their determination of any matter falling within their jurisdiction shall be final and binding on the Seller and the Purchaser save in the event of manifest error (when the relevant part of their 

 

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determination shall be void and the matter shall be remitted to the Reporting Accountants for correction). In particular, their determination shall be deemed to be incorporated into the Draft Closing Statement.

 

1.9                            The expenses (including amounts in respect of VAT) of the Reporting Accountants shall be borne as they shall direct at the time they make any determination under paragraph 1.6.1(i) or, failing such direction, equally between the Purchaser and the Seller.

 

1.10                     The Seller and the Purchaser shall co-operate with the Reporting Accountants and comply with their reasonable requests made in connection with the carrying out of their duties under this Agreement. In particular, the Purchaser shall keep up-to-date and, subject to reasonable notice, make available to the Seller’s representatives, the Seller’s accountants and the Reporting Accountants all books and records relating to the Flu Group during normal office hours as the Seller or the Reporting Accountants may reasonably request during the period from the appointment of the Reporting Accountants down to the making of the relevant determination.

 

1.11                     Nothing in this Schedule 14 shall entitle a party or the Reporting Accountants access to any information or document which is protected by legal professional or litigation privilege, provided that neither the Seller nor the Purchaser shall be entitled to refuse to supply such part or parts of documents as contain only the facts on which the relevant claim or argument is based.

 

1.12                     Each party and the Reporting Accountants shall, and shall procure that its accountants and other advisers shall, keep all information and documents provided to them pursuant to this paragraph 1 confidential and shall not use the same for any purpose, except for disclosure or use in connection with the preparation of the Draft Closing Statement, the proceedings of the Reporting Accountants or another matter arising out of this Agreement.

 

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Part 2

Closing Statement Principles

 

This Part 2 of Schedule 14 comprises the specific rules, principles, policies and practices, without limitation, for preparing the Closing Statement.

 

The Closing Statement sets out the Flu Group Companies’ Cash Balances, the Tax Adjustment and the Third Party Indebtedness, in each case as prepared in accordance with the specific rules, principles, policies and practices set forth in this Part 2 of Schedule 14. The Closing Statement shall be prepared in the form of the Illustrative Closing Statement in Part 3 of this Schedule 14 which also sets forth, for illustrative purposes only, a computation of each of the components of the Closing Statement as of the close of business on 31 December 2013.

 

For the avoidance of doubt, the Closing Statement as referred to in this Part 2 of Schedule 14 shall inclusively apply to each of the Draft Closing Statement and the Closing Statement.

 

1                                      Closing Statement Rules

 

1.1                            The Closing Statement shall be prepared as follows:

 

1.1.1                   in accordance with the specific accounting treatments set out in paragraph 2 of this Part 2 of Schedule 14; and, subject thereto

 

1.1.2                   adopting the same accounting principles, methods, procedures and practices utilized in preparing the Statement of Net Assets, as detailed in the Statement of Net Asset Rules, applied on a consistent basis using consistent estimation methodologies and judgments and with consistent classifications as were used to prepare the Statement of Net Assets; and subject thereto

 

1.1.3                   in accordance with IFRS.

 

1.2                            For the avoidance of doubt, paragraph 1.1.1 shall take precedence over paragraphs 1.1.2 and 1.1.3, and paragraph 1.1.2 shall take precedence over paragraph 1.1.3.

 

2                                      Specific requirements

 

2.1                            Cut-off

 

The Closing Statement (including the Draft Closing Statement) shall not take into account any additional events and any additional information that becomes available after the Effective Time up to the date that such Closing Statement is prepared.

 

2.2                            Change of Ownership

 

The Closing Statement shall not be adjusted for any charges, provisions, reserves or write-offs in respect of any costs, liabilities or charges that may be incurred by the Flu Group prior to or after the Closing as a consequence of the change of ownership of the Flu Group or any changes in the management strategy, direction or priority or possible closure of any part of the Flu Group by the Purchaser after Closing, whether or not resulting from the change in ownership.

 

2.3                            Deferred Tax

 

The Closing Statement (including the Draft Closing Statement) shall not take into account or provide for deferred tax.

 

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Part 3

Illustrative Closing Statement

 

[***]

 

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Schedule 15
 US Government Contracts
 (Clause 1.1)

 

Part 1

List of US Government Contracts

 

[***]

 

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Schedule 15
 US Government Contracts
 (Clause 1.1)

 

Part 2

US Government Contracts Obligations

 

1                                      Obligation to Obtain US Government Consent

 

1.1                            Unless the parties agree otherwise, in relation to all US Government Contracts which require formal novation pursuant to 48 C.F.R. Subpart 42.12 (the “Applicable FAR Regulations”), or require consent to transfer, the Seller and the Purchaser shall obtain all US Government or state and local consents necessary for such novation or transfer as soon as reasonably practicable, and shall keep each other informed of progress in obtaining such consents. The Seller shall deliver to the Purchaser, on the Closing Date, or, if such consents have not been received by the Closing Date, as soon as reasonably practicable after their receipt, copies of any such consent executed by the appropriate parties.

 

2                                      Obligations of the Parties

 

2.1                            For all US Government Contracts that the parties agree to novate, the parties shall perform their respective obligations under the Applicable FAR Regulations in order to consummate the novation of the US Government Contracts.

 

2.2                            Without limitation of and subject to the Applicable FAR Regulations:

 

(a)                               the Seller shall begin discussions with the Responsible Contracting Officer (as defined in the Applicable FAR Regulations) 30 April 2015, and in doing so shall use its reasonable endeavours to identify any possible issues with, or objections to, the Transaction and/or the proposed novation of US Government Contracts that the Responsible Contracting Officer and/or US Government might raise;

 

(b)                               the parties shall use their reasonable endeavours to negotiate, on or before 31 May 2015, documentation in Agreed Terms to be entered into as at the Closing Date providing for such sub-contracting arrangements as would customarily be used in a transaction such as the Transaction during the period between Closing and the novation of contracts (the “Interim Period”), or for the duration of any US Government Contracts for which novation does not occur, in accordance with the Applicable FAR Regulations and consistent with the following principles:

 

(i)                                  during the Interim Period, or for the duration of the relevant contract in the event that the novation does not occur, the Purchaser will perform the Seller’s obligations under the relevant US Government Contracts to the extent permissible under the Federal Acquisition Regulations (“FAR”);

 

(ii)                               during the Interim Period, or for the duration of the relevant contract in the event that novation does not occur, the Seller will perform its obligations under the relevant US Government Contracts to the extent necessary to entitle it to payment from the US Government for the work performed under such contracts; and

 

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(iii)                            any payments made by the US Government during the Interim Period, or for the duration of the relevant contract in the event that novation does not occur, in respect of the relevant contracts shall promptly be paid over by the Seller to the Purchaser;

 

(c)                                the Seller shall seek US Government consent to the sub-contracting arrangements described in sub-paragraph (b) above on or before 30 June 2015, or as otherwise agreed between the parties;

 

(d)                               the parties shall prepare and provide (or cause to be prepared and provided) to the Responsible Contracting Officer (as defined in the Applicable FAR Regulations) for Novartis Vaccines and Diagnostics Inc., as promptly as practicable, and in any event within two months of the Closing Date, audited balance sheets of:

 

(i)                                  Novartis Vaccines and Diagnostics Inc. as of immediately prior to Closing;

 

(ii)                               Novartis Vaccines and Diagnostics Inc. as of immediately following Closing;

 

(iii)                            the Purchaser as of immediately prior to Closing; and

 

(iv)                           the Purchaser as of immediately following the Closing; and

 

(e)                                the parties shall provide the following information to the Responsible Contracting Officer:

 

(i)                                  all information required under 48 C.F.R. § 42.1204(e)-(f), including an opinion of legal counsel for the transferor and transferee stating that the transfer was properly effected under Applicable Law and the effective date of transfer; and

 

(ii)                               any other relevant information requested by the Responsible Contracting Officer.

 

The provisions of Clause 4.2.4 shall apply mutatis mutandis to this Part 2 of Schedule 15.

 

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Schedule 16
 Warranties given under Clause 9.1

 

1                                      Authority and Capacity

 

1.1                            Incorporation

 

The Seller and each Share Seller and Business Seller is validly existing and is a company duly incorporated and validly existing under the law of its jurisdiction of incorporation.

 

1.2                            Authority to enter into Agreement

 

1.2.1                   The Seller and each Share Seller and Business Seller has, or will have by Closing, the legal right and full power and authority to enter into and perform this Agreement, any Local Transfer Document to which it is a party and any other documents to be executed by it pursuant to or in connection with this Agreement or any Local Transfer Document.

 

1.2.2                   The documents referred to in paragraph 1.2.1 will, when executed, constitute valid and binding obligations on the Seller and each Share Seller and Business Seller.

 

1.3                            Authorisation

 

1.3.1                   The Seller and each Share Seller and Business Seller has taken, or will have taken by Closing, all corporate action required by it to authorise it to enter into and to perform this Agreement, any Local Transfer Document and any Ancillary Agreement to which it is a party and any other documents to be executed by it pursuant to or in connection with this Agreement or any Local Transfer Document.

 

1.3.2                   The execution by the Seller of this Agreement and any Ancillary Agreement to which it is a party and the performance by the Seller of its obligations under them will not result in a breach of any existing order, judgment or decree of any court, Governmental Entity by which the Seller is bound and where such breach is material to its ability to perform its obligations under such documents.

 

2                                      Warranties relating to the Flu Group

 

2.1                            Organisation and Standing of the Flu Group Companies

 

2.1.1                   Schedule 2 sets out a complete and accurate list of the Flu Group Companies in existence as at the date of this Agreement, together with its jurisdiction of organisation, its authorised and outstanding capital stock or other equity interests, all of which equity interests are held by the Seller or an Affiliate of the Seller unless otherwise stated in Schedule 2.

 

2.1.2                   Each Flu Group Company is duly incorporated, validly existing and in good standing, under the laws of its jurisdiction of organisation and has all necessary corporate power under its constitutional documents to conduct its portion of the Business as at the date of this Agreement.

 

2.2                            Constitutional Documents, statutory books and records

 

2.2.1                   The constitutional documents provided in the Data Room are true and accurate copies of the constitutional documents of the Flu Group Companies and there have not been and are not any breaches by any Flu Group Company of its constitutional 

 

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documents which would have a material adverse effect on the Business of the Flu Group.

 

2.2.2                   The registers, minute books and other records required to be maintained by each Flu Group Company under the law of the jurisdiction of its incorporation are maintained in accordance with Applicable Law and are up-to-date, in each case in all material respects.

 

2.2.3                   All material filings required by Applicable Law to be delivered or made by the Flu Group Companies to company registries in each relevant jurisdiction have been duly delivered or made.

 

2.2.4                   No member of the Flu Group Companies has received any notice of any application or intended application for rectification of its register of members or shareholders (or its relevant equivalent) under Applicable Law.

 

2.3                            The Shares

 

2.3.1                   Either the Seller or one of its Affiliates has good and valid title to the Shares, free and clear of all Encumbrances, other than transfer restrictions imposed by national, federal or state securities laws.

 

2.3.2                   All of the Shares have been duly authorised and validly issued and are fully paid.

 

2.3.3                   Either the Seller or one of its Affiliates is entitled to transfer or procure the transfer of the full legal and beneficial ownership in the Shares to the Purchaser on the terms and subject to the conditions set out in this Agreement and any Local Transfer Document (as applicable).

 

2.4                            Ownership and Sufficiency of Assets

 

2.4.1                   Each of the Business Assets (other than any business inventory acquired in the ordinary course of business on terms that the property does not pass until payment is made) and the assets of each Flu Group Company is owned both legally and beneficially by a Business Seller or a Flu Group Company and each of those assets capable of possession is, save where in the possession of third parties in the ordinary course of business, in the possession of a Business Seller or a Flu Group Company.

 

2.4.2                   Save for Permitted Encumbrances, no Encumbrance on, over or affecting the whole or any part of the Business Assets or the assets of any Flu Group Company is outstanding and, save in relation to any Permitted Encumbrance, there is no agreement or commitment entered into by any Business Seller or any Flu Group Company to give or create any Encumbrance and no claim has been made against any Business Seller or any Flu Group Company by any person to be entitled to any Encumbrance.

 

2.4.3                   The Business Assets and the assets of each Flu Group Company, together with such other facilities and services which are to be provided to the Purchaser’s Group pursuant to this Agreement and the Ancillary Agreements, comprise all of the material assets and services (excluding Intellectual Property Rights) required to carry on the Business in substantially the same manner as it has been carried on during the 12 months preceding the date of this Agreement.

 

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2.5                            Solvency

 

2.5.1                   No order has been made and no resolution has been passed for the winding up of any Flu Group Company. No petition has been presented or meeting convened for the purpose of considering a resolution for the winding up any Flu Group Company or for the appointment of any provisional liquidator. No petition has been presented for an administration order to be made, and no administrator or receiver (including any administrative receiver) has been appointed in respect of, the whole or any part of the property, assets and/or undertaking of any Flu Group Company or Business Seller or Share Seller.

 

2.5.2                   No Flu Group Company or Business Seller or Share Seller has stopped payment or suspended payment of its debts generally, is insolvent or deemed unable to pay its debts as they fall due.

 

2.6                            Third Party Indebtedness

 

None of the Flu Group Companies have any financing facilities with any person (other than a member of the Seller’s Group) exceeding $1 million (other than short-term bank borrowings in the ordinary course of business).

 

2.7                            Accounts

 

The Accounts:

 

2.7.1                   were prepared in accordance with Applicable Law in the jurisdiction of incorporation of the relevant Flu Group Company and IFRS as adopted by the European Union at the time they were audited; and

 

2.7.2                   give, with respect to the business of the relevant Flu Group Company, a true and fair view of:

 

(i)                                  the assets and liabilities of the relevant Flu Group Company at the Accounts Date;

 

(ii)                               the profits or losses of the relevant Flu Group Company for the accounting period ended on the Accounts Date; and

 

(iii)                            of the state of affairs of the relevant Flu Group Company at the Accounts Date; and

 

2.7.3                   disclose and make provision or reserve for all actual liabilities (other than liabilities in respect of Tax or deferred tax);

 

2.7.4                   disclose and make provision or reserve for (or note in accordance with IFRS as adopted by the European Union) all contingent, unquantified or disputed liabilities (other than liabilities in respect of Tax or deferred tax) and all capital commitments.

 

2.8                            The Carve Out Accounts

 

2.8.1                   The 2013 Carve Out Accounts and the Stub Period Carve Out Accounts have been prepared in accordance with the basis of preparation provided at 9.1.2.2.3.1 of the Data Room.

 

2.8.2                   The 2013 Carve Out Accounts do not materially misstate the assets and liabilities (excluding any assets or liabilities in respect of Tax or deferred tax) of the Flu Group as at 31 December 2013 and the 2013 Carve Out Accounts and the Stub

 

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Period Carve Out Accounts do not materially misstate the profits or losses of the Flu Group for the accounting reference periods ended on 31 December 2013 and 30 September 2014, respectively.

 

2.9                            Statement of Net Assets

 

The Statement of Net Assets was prepared for the purposes of the transactions contemplated by this Agreement and in accordance with the Statement of Net Assets Rules and the Statement of Net Assets fairly presents, in all material respects and with respect to the Business, the financial position of the Flu Group as of the date thereof, subject to the absence of footnote discussions and similar presentation items therein. For the purposes of this paragraph 2.9, “in all material respects” shall be construed by reference to a materiality threshold of US$10 million.

 

2.10                     Events since the Accounts Date

 

Since the Accounts Date and except as permitted by Clause 5:

 

(i)                                  there has been no Material Adverse Effect with respect to the financial condition of the Business as a whole; and

 

(ii)                               the Business has been carried on in the ordinary course.

 

2.11                     Real Property

 

2.11.1            Company Real Properties

 

(i)                                  Schedule 3 Part 1 contains a complete list of the Company Real Properties, which are the only freehold or leasehold property owned, used or occupied by the Flu Group Companies with the exception of the properties that are a part of, or shared with, the Seller’s Group Retained Business (as at the date of this Agreement).

 

(ii)                               No third party consents are required in respect of the Company Real Properties as a result of or arising out of the transactions contemplated by this Agreement.

 

(iii)                            Each of the Company Real Properties is used and occupied for the purpose of the business of a Flu Group Company.

 

(iv)                           A member of the Seller’s Group is the sole legal and beneficial owner of the Company Real Property.

 

(v)                              No person has or will have any right to possession, occupation or use of such Company Real Property in a manner that has or will have a material adverse effect on the use of, or operations at, such Company Real Property for the purposes of the Business.

 

(vi)                           There are no Encumbrances over any of the Company Real Properties other than Permitted Encumbrances and those registered in the relevant Land Register.

 

(vii)                        The present use of each Company Real Property is a permitted use for the purpose of Applicable Laws and such use is not subject to onerous or unusual conditions giving rise to material expenditure or materially and

 

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adversely affecting the use of, or operations at, such Company Real Property for the purposes of the Business.

 

(viii)                     To the Seller’s Knowledge, there are no material outstanding disputes, actions, claims or demands in respect of any Company Real Property, nor has the Seller or any member of the Seller’s Group received any notice threatening the same.

 

(ix)                           The Seller’s Group is not engaged in any negotiation for review of, or dispute in relation to, the rent payable under any of the Company Leased Real Property.

 

2.11.2            Transferred Real Properties

 

(i)                                  Schedule 3, Part 2 contains a complete list of the Transferred Real Properties, which, together with the Marburg MF59® Premises, are the only freehold or leasehold property owned or occupied by the Flu Group Businesses with the exception of the properties that are a part of, or shared with, the Seller’s Group Retained Business (as at the date of this Agreement).

 

(ii)                               Each of the Transferred Real Properties is used and occupied for the purpose of the business of the Flu Group Businesses.

 

(iii)                            A member of the Seller’s Group is the legal fee simple titleholder of, and has good and marketable title to, the Transferred Owned Real Property, except to the extent of the rights of the United States government pursuant to the US Government Contracts and subject to the Permitted Encumbrances.

 

(iv)                           No person other than: (i) the rights of the US government pursuant to the US Government Contracts; and (ii) the Seller’s Group has or will have any right to possession, occupation or use of such Transferred Real Property in a manner that has or will have a material adverse effect on the use of, or operations at, such Transferred Real Property.

 

(v)                              There are no mortgages or charges affecting any of the Transferred Real Properties other than Permitted Encumbrances.

 

(vi)                           To the Seller’s Knowledge, there are no material outstanding disputes, actions, claims or demands in respect of any Transferred Real Property, nor has the Seller or any member of the Seller’s Group received any notice threatening the same.

 

(vii)                        With respect to each Lease: (a) such Lease is valid, binding and enforceable as to the applicable Seller’s Group and, to Seller’s Knowledge, as to the other party thereto, in accordance with its respective terms; (b) the transactions contemplated by this Agreement do not require the consent of any other party to such Lease, will not result in a breach of or default under such Lease, or otherwise cause such Lease to cease to be legal, valid, binding, enforceable and in full force and effect on identical terms following the Closing; (c) the applicable Seller’s Group possession and quiet enjoyment of the Transferred Leased Real Property under such Lease has not been disturbed in any material respect; (d) the applicable Seller’s Group

 

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and, to the Seller’s Knowledge, such other party to such Lease are not in breach or default under such Lease, and, to the Seller’s Knowledge, no event has occurred or circumstance exists that, with the delivery of notice, the passage of time or both, would constitute such a breach or default, or permit the termination, modification or acceleration of rent under such Lease; and (e) the applicable Seller’s Group has not subleased, licensed or otherwise granted any person the right to use or occupy such Transferred Leased Real Property or any portion thereof.

 

(viii)                     To the Seller’s Knowledge, the Seller’s Group has not received any notice of any violation of any Applicable Law, including building and zoning laws, or any Environmental Law and Occupational Safety and Health Laws issued by any applicable Government Entity having jurisdiction over the Transferred Real Property.

 

(ix)                           The Seller’s Group has not taken any action to have any real estate taxes assessed or to be assessed against the Transferred Real Property adjusted or modified in any respect.  To the Seller’s Knowledge, there is no pending reassessment, and the Seller’s Group has not received any notice of a threatened reassessment, of all or any portion of the Transferred Real Property.

 

(x)                              To the Seller’s Knowledge, use of the Transferred Real Property for the various purposes for which it is presently being used is permitted as of right under applicable zoning laws and is not subject to “permitted non conforming” use or structure classifications.

 

(xi)                           The Seller’s Group has not received written notice that the Transferred Real Property and the present use and condition thereof violate any applicable deed restrictions, zoning or subdivision regulations, or urban redevelopment plans applicable to the Transferred Real Property, as modified by any duly issued variances.  No action or proceeding relating to the foregoing is pending or to the Seller’s Knowledge threatened with respect to the Transferred Real Property.

 

2.11.3            Marburg MF59® Premises

 

(i)                                  The Marburg MF59® Premises are at the date of this Agreement held pursuant to the German Carve-out Leases and used and occupied for the purpose of the business of the Flu Group Businesses.

 

(ii)                               A member of the Seller’s Group is solely legally and beneficially entitled to the Marburg MF59® Premises pursuant to the German Carve-out Leases.

 

(iii)                            No person has or will have any right to possession, occupation or use of the Marburg MF59®Premises which at the date of this Agreement are held pursuant to the German Carve-out Leases in a manner that has or will have a material adverse effect on the use of, or operations at, the Marburg MF59®Premises.

 

(iv)                           To the Seller’s Knowledge, there are no material outstanding disputes, actions, claims or demands in respect of the Marburg MF59® Premises which at the date of this Agreement are held pursuant to the German

 

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Carve-out Leases, nor has the Seller or any member of the Seller’s Group received any notice threatening the same.

 

(v)                              With respect to each German Carve-out Lease, (a) such German Carve-out Lease is valid, binding and enforceable as to the applicable Seller’s Group and, to the Seller’s Knowledge, as to the other party thereto, in accordance with its respective terms; (b) the applicable Seller’s Group possession and quiet enjoyment of the Marburg MF59® Premises under the German Carve-out Lease(s) has not been disturbed in any material respect; (c) the applicable Seller’s Group and, to the Seller’s Knowledge, such other party to such German Carve-out Lease are not in breach or default under such German Carve-out Lease, and, to the Seller’s Knowledge, no event has occurred or circumstance exists that, with the delivery of notice, the passage of time or both, would constitute such a breach or default, or permit the termination, modification or acceleration of rent under such Lease; and (d) the applicable Seller’s Group has not subleased, licensed or otherwise granted any person the right to use or occupy the Marburg MF59®Premises Property or any portion thereof.

 

(vi)                           To the Seller’s Knowledge, use of the Marburg MF59® Premises for the various purposes for which it is presently being used is permitted as of right under applicable zoning laws and other applicable public laws.

 

(vii)                        To the Seller’s Knowledge, the Seller’s Group has not received any notice of any violation of any Applicable Law, including building and zoning laws, or any Environmental Law and Occupational Safety and Health Laws issued by any applicable Government Entity having jurisdiction over the Marburg MF59® Premises.

 

2.12                     Intellectual Property

 

2.12.1            Schedule 4 sets out, as of the date of this Agreement, a complete and accurate list of the material Registered Flu Group Intellectual Property Rights, including for each such item, as applicable, (i) the identity of the record owner, (ii) the registration or application number, and (iii) the jurisdiction of issuance or registration.

 

2.12.2            Schedule 4 sets out, as of the date of this Agreement, a complete and accurate list of each Transferred Intellectual Property Contract with a value in excess of $5 million or otherwise material and necessary for the operation of the Business and for which the primary purpose of such contract relates to the licence, grant or settlement of Intellectual Property Rights (a “Material Transferred Intellectual Property Contract”). Neither the Seller nor any of its Affiliates has given, or received, written notice to terminate any Material Transferred Intellectual Property Contract and, to the Seller’s Knowledge, neither the Seller nor any Affiliate of the Seller is in breach or default of any Material Transferred Intellectual Property Contract, except for any such breach or default which would not be material to the Business.

 

2.12.3            The Seller and its Affiliates legally and beneficially own all Registered Flu Group Intellectual Property Rights free of all Encumbrances except Permitted Encumbrances. The Seller and its Affiliates have taken reasonable steps to protect the confidentiality of Proprietary Information.

 

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2.12.4            Neither the validity nor subsistence of the Registered Flu Group Intellectual Property Rights, nor the right, title and interest of the Seller in the Registered Flu Group Intellectual Property Rights, is the subject of any current, pending or threatened challenge, claim or proceedings (including for opposition, cancellation, revocation or rectification) nor has it been in the period of two years prior to the date of this Agreement. As of the date of this Agreement, the Seller has not received written notice from any third party of any facts or matters nor, to the Seller’s Knowledge, have any facts or matters come to the Seller’s attention through the patent monitoring activities it conducts with third party advisors which, in each case, in the reasonable opinion of the Seller would be reasonably likely to give rise to such challenge, claim or proceedings.

 

2.12.5            To the Seller’s Knowledge, any person who, either alone or with others, has created, developed or invented the Flu Group Intellectual Property Rights, and whose role it was or is to develop such Intellectual Property Rights in the course of their employment or engagement by the Seller or its Affiliates, has entered into a written agreement with the Seller or its Affiliates which obliges them to disclose and to assign such Flu Group Intellectual Property Rights to the Seller or its Affiliates, or such Flu Group Intellectual Property Rights are vested in the Seller or its Affiliates by operation of law. No employee inventor has brought in the period of two years prior to the date of this Agreement any claim for compensation in respect of employee inventions which relate to the Flu Group Intellectual Property. As of the date of this Agreement, the Seller has not received written notice from any third party of any non-public facts or matters nor, to the Seller’s Knowledge, have any non-public facts or matters come to the Seller’s attention through its own monitoring activities which, in each case, in the reasonable opinion of the Seller would be reasonably likely to give rise to such challenge, claim or proceedings.

 

2.12.6            To the Seller’s Knowledge, as of the date of this Agreement, (i) the conduct of the Business as currently conducted does not infringe or misappropriate the Intellectual Property Rights or confidential information of any third party; (ii) there is no judicial, administrative or arbitral action, suit, hearing, inquiry, investigation or other proceeding (public or private) before any Governmental Entity pending against the Seller or any of its Affiliates in which it is alleged that the conduct of the Business as currently conducted by the Seller and its Affiliates infringes or misappropriates any Intellectual Property Rights or confidential information of any third party; and (iii) no allegation in writing has been made by any third party that the conduct of the Business as currently conducted infringes or misappropriates their Intellectual Property Rights or confidential information. As of the date of this Agreement, the Seller has not received written notice from any third party of any facts or matters nor, to the Seller’s Knowledge, have any facts or matters come to the Seller’s attention through the patent monitoring activities it conducts with third party advisors which, in each case, in the reasonable opinion of the Seller would be reasonably likely to give rise to such challenge, claim or proceedings.

 

2.12.7            No claim has been made by the Seller or any of its Affiliates in the period of two years prior to the date of this Agreement which alleges that a third party is infringing or is likely to infringe the Flu Group Intellectual Property Rights.

 

2.12.8            To the Seller’s Knowledge, the Flu Group Intellectual Property Rights, the Intellectual Property Rights licensed under the Transferred Intellectual Property

 

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Contracts, and the Intellectual Property Rights licensed under the Purchaser Intellectual Property Licence Agreement constitute all the material Intellectual Property Rights used in the conduct of the Business as currently conducted by the Seller and its Affiliates; provided however, that the foregoing is not a representation of non-infringement, non-misappropriation, or any other non-violation of Intellectual Property Rights of any third party.

 

2.13                     Contracts

 

2.13.1            No Flu Group Company or Business Seller is a party to or subject to any contract, transaction, arrangement, understanding or obligation (other than in relation to any Property, lease, contract of employment, Affiliate Contract or Contract solely between or among members of the Seller’s Group) which is material to the Business and which:

 

(i)                                  is not in the ordinary course of business;

 

(ii)                               is not on an arm’s length basis;

 

(iii)                            has an unexpired term or likely duration of 10 years or more;

 

(iv)                           restricts its freedom to carry on its business in any part of the world in such manner as it thinks fit other than ordinary course exclusive distribution arrangements; or

 

(v)                              involves the supply of goods and services, the aggregate sales value of which (exclusive of VAT) will be more than 10 per cent. of turnover of the business of the Flu Group (exclusive of VAT) for financial year ending on 31 December 2013, and

 

for the purposes of this paragraph 2.13.1 “material” shall mean with a value in excess of US$5 million (based on annual sales or expenditure).

 

2.13.2            No Flu Group Company or Business Seller is a party to or subject to any contract, transaction, arrangement, understanding or obligation (other than in relation to any Property, lease, contract of employment, Affiliate Contract or Contract solely between or among members of the Seller’s Group) which involves an aggregate outstanding expenditure by it of more than US$20 million, exclusive of VAT.

 

2.13.3            No member of the Seller’s Group has received written notice that it is in material default under any Transferred Contract with a value in excess of US$5 million (as determined based on annual sales or expenditure in 2013) and, to the Seller’s Knowledge, no third party is in material default under any such Transferred Contract or US Government Contract.

 

2.13.4            Details of and copies of all material agency, sales intermediary or distribution arrangements or agreements to which a member of the Seller’s Group (in respect of the Business) or any Flu Group Company is a party or is bound by are contained in the Data Room. For the purposes of this paragraph 2.13.4 “material” shall mean with a value in excess of US$5 million (based on annual sales or expenditure for 2013).

 

2.13.5            To the Seller’s Knowledge, as of the date of this Agreement, no member of the Seller Group has received written notice threatening to terminate any material Transferred Contract, US Government Contract, Transferred Intellectual Property

 

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Contract, Co-Owned Flu Group Intellectual Property Right, or the relevant part of a material Shared Business Contract, by reason of the transactions contemplated by this Agreement.

 

2.14                     Joint Ventures, etc.

 

No Flu Group Company or Business Seller is, or has agreed to become, a member of any joint venture, consortium, partnership or other unincorporated association with respect to the Business (other than a recognised trade association in relation to which the Flu Group Company or Business Seller has no liability or obligation except for the payment of annual subscription or membership fees or otherwise in the ordinary course of business in connection with the development and Commercialisation of Products or Pipeline Products or Products Under Registration which would not result in material expenditure to the Business).

 

2.15                     Agreements with Connected Parties

 

There are no existing contracts or arrangements material to the Business between, on the one hand, any Business Seller or Flu Group Company and, on the other hand, the Seller, the Share Sellers or any Business Seller other than in the ordinary course of business.

 

2.16                     Compliance with Laws, Permits and Anti-Bribery

 

2.16.1            All material licences, consents, permissions, waivers, exceptions and approvals of or issued by any Governmental Entity required for carrying on the Business in the places and in the manner which the Business is now carried on (each a “Permit” and, collectively, the “Permits”) are in full force. Neither the Seller nor any of its Affiliates has, in relation to the Business, received any written notice from any Governmental Entity that it is not in compliance with any Applicable Law or Permit in any material respect, except where such written notice is in the ordinary course or where such non-compliance or non-possession does not remain outstanding or uncured as of Closing.

 

2.16.2            So far as the Seller is aware, there are no circumstances which indicate that any Permits will or are likely to be suspended, cancelled or revoked or not renewed, in whole or in part, in the ordinary course of events (whether in connection with the Transaction or otherwise), and where the suspension, cancellation, revocation or failure to renew such Permit would be reasonably expected to have a material adverse effect on the operation of the Business or the Commercialisation of a Product.

 

2.16.3           During the 24 months ending on the date of this Agreement, the Business has been conducted in all material respects in compliance with applicable GMP requirements.

 

2.16.4           With respect to the Business, since 1 January 2011, neither the Seller nor any of its Affiliates, nor any of their respective directors, officers or employees and, to the Seller’s Knowledge, no Seller Partner has, directly or indirectly: (i) used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expense relating to political activity or to influence official action; (ii) made or offered to make any unlawful payment to any foreign or domestic government official or employee, or agent, political party or any official of such party, or political candidate from corporate funds; (iii) made or offered to make any bribe, rebate, payoff, influence payment, money laundering, kickback or other unlawful payment;

 

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or (iv) violated or is in violation of any provision of any applicable Anti-Bribery Law; and with respect to the Business, the Seller and its relevant Affiliates have instituted and maintain policies and procedures reasonably designed to ensure compliance with applicable Anti-Bribery Law.

 

2.16.5            With respect to the Business, neither the Seller nor any of its Affiliates, nor any of their respective directors, officers or employees and, to the Seller’s Knowledge, no Seller Partner is currently the subject of, nor has it been since 1 January 2011, the subject of, any action alleging a violation, or possible violation, of any Anti-Bribery Law, or been since 1 January 2011, the recipient of a subpoena, letter of investigation or other document alleging a violation, or possible violation, of any Anti-Bribery Law.

 

2.16.6            With respect to the Business, since 1 January 2011, neither the Seller nor any of its Affiliates, nor any of their respective directors or officers, and, to the Seller’s Knowledge, none of their respective employees has received notice that any such person is or has been alleged to be in violation of any sanctions administered by the Office of Foreign Assets Control of the U.S. Department of the Treasury or by the U.S. Department of State or equivalent measures of the United Kingdom, European Union, or the United Nations (the “Sanctions Laws”). With respect to the Business, neither the Seller nor any of its Affiliates, nor any of their respective directors or officers, and, to the Seller’s Knowledge, none of their respective employees has conducted any of their business activities whatsoever with, or for the benefit of, a government, national or legal entity to the extent such actions would violate any Sanctions Law. None of the execution, delivery and performance of this Agreement and the direct or indirect use of proceeds from any transaction contemplated hereby or the fulfilment of the terms hereof will result in a violation by any person of any Sanctions Law.

 

2.17                     Product Approvals

 

2.17.1            The Seller or one of its Affiliates is the registered holder of each of the Product Approvals. All Product Approvals, Pipeline Product Approvals and approvals for Products under Registration held by the Seller or its Affiliates are in full force and effect.

 

2.17.2            Each Product marketed or sold under a Product Approval is manufactured, marketed and sold in all material respects in accordance with the specifications and standards contained in such Product Approval and the related Marketing Authorisation Data and in accordance with Applicable Laws.

 

2.17.3            Neither the Seller nor, to the Seller’s Knowledge, any of its Affiliates, has received any written notice that any Governmental Entity with jurisdiction over the Products has commenced or will commence any action: (i) to withdraw the approval of any Product or otherwise revoke or materially amend any Product Approval or Marketing Authorisation Data; or (ii) enjoin production, marketing or sale of any Product.

 

2.17.4            All application and renewal fees due and payable with respect to all material Product Approvals have been paid.

 

2.17.5            To the Seller’s Knowledge, during the two influenza seasons prior to the date of this Agreement, there has been no adverse event in relation to any Product which

 

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has or might reasonably give rise to a suspension or withdrawal of any Product Approval or a recall of any of the Products from the market.

 

2.18                     Taxes

 

2.18.1            General

 

No charge to Tax will arise to a Flu Group Company as a result of:

 

(i)                                  entering into this Agreement; or

 

(ii)                               Closing.

 

2.18.2            Clearances, consents and special arrangements

 

Any transaction or arrangement for which any clearance or consent was required to be obtained by a Flu Group company, or in respect of which a Tax Authority has agreed to operate any special arrangement in relation to a Flu Group Company (other than an arrangement which is in accordance with relevant law or the published statements of practice or published extra-statutory concessions of the relevant Tax Authority), has been carried out only in accordance with the terms of a valid clearance or consent given following full, accurate and timely disclosure of all material facts and circumstances or in accordance with the relevant special arrangement (as applicable). To the Seller’s knowledge, nothing has arisen since any such clearance or consent was obtained, or the special arrangement was entered into, which would bring into question its validity.

 

2.18.3            Secondary liability

 

No Flu Group Company is, nor to the Seller’s knowledge have there been any circumstances in which a Flu Group Company will, or is likely to, become liable to pay any Tax or any amount in respect of any Tax which is primarily or jointly chargeable against or attributable to any other person (other than a Flu Group Company, the Purchaser or a member of the Purchaser’s Group) and which such other person fails to discharge.

 

2.18.4            Compliance

 

(i)                                  Each Flu Group Company has timely filed all Tax Returns it was legally required to file, and all Taxes shown due on such returns have been paid or will be paid on a timely basis. As far as the Seller is aware, all such returns and information remain correct and complete and none is, or is likely to become, the subject of any investigation or dispute by or with any Tax Authority.

 

(ii)                               Each Flu Group Company has properly and within the applicable time limits paid all Tax which it has become liable to pay and it has not in the preceding six year period paid or become liable to pay any penalty, fine or surcharge in respect of Tax.

 

(iii)                            To the Seller’s Knowledge, no Flu Group Company is currently under audit or examination by a Tax Authority that could result in the assessment of a material amount of Tax, and no Flu Group Company has received written notice from a Tax Authority of any material unresolved Tax deficiency or assessment or an intention to commence an audit or examination.

 

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(iv)                           Each Flu Group Company has complied with all valid notices served on it by any Tax Authority to the extent that compliance is required prior to the date hereof and unless the relevant Flu Group Company is disputing such notice (or the subject matter thereof) in good faith.

 

(v)                              To the Seller’s Knowledge, no Flu Group Company has received or requested any extension of time to file a Tax Return which is not in the ordinary course that remains unfiled or has granted or requested a waiver or extension of a limitation on any period for audit and examination or assessment and collection of Tax for any taxable period as to which Tax could be assessed.

 

2.18.5            Records

 

Each Flu Group Company has prepared, kept and preserved complete, accurate and up-to-date records both as required by law and to enable it to deliver correct and complete Tax Returns and to calculate any current or, to the extent that it depends on any Event occurring on or before Closing, future Tax liability or Purchaser’s Relief of that Flu Group Company.

 

2.18.6            Deduction of Tax

 

All payments by the Flu Group Companies which were required to have been made under deduction of Tax have been so made and, where required, relevant Flu Group Companies have provided a certificate of deduction in the required form and properly and punctually accounted to the relevant Tax Authority for the Tax so deducted.

 

2.18.7            International

 

Each Flu Group Company is and has always been resident for all Tax purposes only in the jurisdiction in which it is incorporated and is not liable to and has at no time incurred any liability to Tax in respect of a permanent establishment in any jurisdiction other than the jurisdiction in which it is incorporated.

 

2.18.8            Third party rights in respect of unpaid Tax

 

To the Seller’s Knowledge, (a) there are no Tax liens on the Flu Group Businesses or the assets of the Flu Group Companies (other than Permitted Encumbrances), and (b) no event has occurred which could result in any charge, lien, security interest, encumbrance or other third party right arising over any asset of the Flu Group in respect of unpaid Tax.

 

2.18.9           Transfer Taxes

 

Each Flu Group Company has paid all stamp duties or similar transfer taxes (including interest and penalties) in respect of all documents or transactions necessary to establish that Flu Group Company’s right or title to any asset and all such documents requiring stamping have been duly stamped.

 

2.18.10    Employment/Payroll Taxes

 

The Flu Group has deducted Tax as required by law from all payments to or treated as made to or benefits provided for employees, officers, ex-employees, ex-officers of and persons rendering services to it and has within the appropriate time limits

 

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accounted to the relevant Tax Authority for all such Tax deducted and has paid to the relevant Tax Authority all Tax payable in respect of such payments or benefits.

 

2.19                     Environmental Matters

 

2.19.1            To the Seller’s Knowledge, each Business Seller (with respect to its conduct of the Business and any Transferred Real Property) and Flu Group Company is, and  has been during the period of three years prior to the date of this Agreement, in compliance in all material respects with all Environmental Laws.

 

2.19.2            To the Seller’s Knowledge, each Flu Group Company and each Business Seller (with respect to its conduct of the Business and any Transferred Real Property) possesses and is in material compliance with all material Permits required under applicable Environmental Laws to conduct its portion of the Business. All such Permits are in full force and effect and have been complied with in all material respects during the period of three years prior to the date of this Agreement.

 

2.19.3            No material capital expenditure is required to be expended in the three years following the date of this Agreement to discharge any regulatory upgrade, remediation or abatement obligation under Environmental Law that is known to the Seller in order to carry on lawfully the Business and/or to use any Property for the purpose of the Business in each case as it is carried out at the date of this Agreement.

 

2.19.4            No Flu Group Company nor any Business Seller (with respect to its conduct of the Business and any Transferred Real Property) has in the three years prior to the date of this Agreement received any written notice alleging a material violation of any Environmental Laws, other than matters that have been resolved in all material respects.

 

2.19.5            No Flu Group Company nor any Business Seller (with respect to its conduct of the Business and any Transferred Real Property) has in the three years prior to the date of this Agreement received any written notice or claim alleging that it is or may be liable to any person in any material respect under any applicable Environmental Law as a result of a release or threatened release of any Hazardous Substance at any Transferred Real Property, other than matters that have been resolved in all material respects.

 

2.19.6            To the Seller’s Knowledge, no Flu Group Company nor any Business Seller (with respect to its conduct of the Business and Transferred Real any Property) is a party to any pending proceedings relating to any Environmental Laws, other than proceedings that would not reasonably be expected to have a material adverse effect on the Business of the Flu Group.

 

2.20                     Employees

 

2.20.1            The Disclosure Letter contains the following information in respect of each Flu Business Employee and each Flu Group Company Employee as of 21 October 2014: (A) employee identification details; (B) date of birth; (C) employment status (part-time or full-time); (D) salary and wages; (E) target annual incentive for 2014; and (F) target long-term incentive for 2014.

 

2.20.2            In the Material Employee Jurisdictions:

 

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(i)                                  As of the date of this Agreement there is not, and in the 12 months prior to the date of this Agreement there has not been, nor to the Seller’s Knowledge is there pending or threatened, any labour strike, dispute, work stoppage or lockout by any group of either Flu Business Employees or Flu Group Company Employees;

 

(ii)                               No collective bargaining negotiations, whether voluntary or mandatory, are currently taking place with respect to any of the Flu Business Employees or Flu Group Company Employees and, as of the date of this Agreement, no Flu Group Company or Business Seller is a party to any collective bargaining agreement affecting any Flu Business Employee or Flu Group Company Employee;

 

(iii)                            No Flu Group Company or Business Seller has, within the 90 days prior to the date of this Agreement and with respect to the Business, closed any plant or facility, effectuated any layoffs of employees or implemented any early retirement, separation or similar programme in each case in violation of the WARN Act, nor has any Flu Group Company or Business Seller announced any such action or programme for the future;

 

(iv)                           Other than with respect to the retention arrangements set out in paragraph 8 of Schedule 9, or any arrangement relating to the share-based incentive schemes of the Seller’s Group pursuant to paragraph 9 of Schedule 9, neither the Seller nor any relevant member of the Seller’s Group are involved in negotiations (whether with employees, any trade union, work’s council or other employees’ representatives) to vary the terms and conditions of employment of any Flu Business Employee or Flu Group Company Employee, nor has it made any representations, promises, offers or proposals concerning or affecting the terms and conditions of employment of any Flu Business Employee or Flu Group Company Employee, nor is it under any obligation to vary such terms or conditions;

 

(v)                              Other than with respect to the retention arrangements set out in paragraph 8 of Schedule 9 and the share-based incentive schemes of the Seller’s Group (to which paragraph 9 of Schedule 9 applies), Closing will not give rise to the payment of any remuneration, payments or benefits or any enhancements or accelerations thereof to any Transferred Employee whether in accordance with the standard terms and conditions of employment of such Transferred Employee or otherwise;

 

(vi)                           The Seller and each relevant member of the Seller’s Group have discharged its obligations in full in relation to salary, wages, fees, commission, bonuses, overtime pay, holiday pay, sick pay and all other benefits and emoluments relating to the Flu Business Employees and Flu Group Company Employees in respect of all prior periods; and

 

(vii)                        Neither the Seller nor any member of the Seller’s Group has adopted, whether formally or informally, and whether in writing or otherwise, any policy, custom or practice of making redundancy or severance payments in excess of statutory minima or of making payments in lieu of notice nor has it historically made any such redundancy or severance payments or payments in lieu of notice.

 

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2.21                     Employee Benefits

 

2.21.1            The Disclosure Letter contains a true, complete and correct list of each material Benefit Plan applicable to either Flu Business Employees or Flu Group Company Employees in the Material Employee Jurisdictions.

 

2.21.2            The Seller has, in the Material Employee Jurisdictions, provided or made available to the Purchaser true and complete copies of all material written Benefit Plans applicable to either Flu Business Employees or Flu Group Company Employees and for Benefit Plans that are not share-based incentive schemes all related trust agreements or other funding documents and a summary of the material terms of any material unwritten Benefit Plan. Neither the Seller nor any Business Seller has made any promises or commitments to create any additional material Benefit Plan, agreement or arrangement, or to modify or change in any material way any existing Benefit Plan with respect to which the Purchaser or any member of the Purchaser’s Group could reasonably be expected to have any material additional Liability.

 

2.21.3            US Benefit Plans

 

(i)                                  Each US Benefit Plan applicable to the Flu Business Employees has been administered in compliance with the terms of such US Benefit Plan and all Applicable Laws, except for failures that would not reasonably be expected to have a material adverse effect.

 

(ii)                               Except as Disclosed in the Disclosure Letter, none of the US Benefit Plans covering Flu Business Employees is, and none of the Seller, Flu Group Company or Business Seller (with respect to the Business) had, during the last six years any obligation to contribute to: (i) a plan subject to Title IV of ERISA or section 412 of the Code; or (ii) a “multiemployer plan” (within the meaning of section 3(37) of ERISA).

 

(iii)                            For the avoidance of doubt, none of the representations and warranties in this paragraph 2.21.3 is intended to apply to any Non-US Benefit Plan.

 

2.21.4            Non-US Benefit Plans

 

(i)                                  Since 1 July 2012, in the Material Employee Jurisdictions all benefit and compensation plans, contracts, policies, agreements or arrangements (other than US Benefit Plans and plans, contracts, policies, agreements or arrangements operated by any Governmental Entity) (A) maintained by a Flu Group Company or Business Seller, with respect to Flu Group Company Employees or Flu Business Employees or current or former employees or directors of a Flu Group Company, (B) in respect of which any Flu Group Company or Business Seller, with respect to Flu Group Company Employees or Flu Business Employees, the Seller or any member of the Seller’s Group has contributed or (C) in respect of which any Flu Group Company or Business Seller, with respect to Flu Group Company Employees or Flu Business Employees, has any material liability (whether actual or contingent), including, but not limited to, plans providing benefits on retirement, early retirement, leaving service, death, termination of employment (whether voluntary or not), or during periods of sickness or disablement, or any deferred or incentive compensation, welfare, healthcare, medical, stock or stock-related award plans, including individual pension commitments, “jubilee” pension benefits and retirement and

 

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termination indemnity arrangements (such plans, contracts, agreements, policies and arrangements hereinafter being referred to as “Non-US Benefit Plans”) have been administered in accordance with their terms and are in compliance with Applicable Laws, except for any failures to so administer or be in compliance that, individually and in the aggregate, would not reasonably be expected to have a material adverse effect. All required filings for all Non-US Benefit Plans have been made on time and with the appropriate Governmental Entity, except for any failures to timely file that, individually and in the aggregate, would not reasonably be likely to have a material adverse effect. As of the date hereof, there is no pending or, to the Knowledge of Seller, threatened material litigation relating to Non-US Benefit Plans.

 

(ii)                               The Flu Group Companies or Business Sellers, with respect to Flu Group Company Employees or Flu Business Employees in a Material Employee Jurisdiction, (A) are in material compliance with all Applicable Laws respecting employment, employment practices, terms and conditions of employment, occupational health, safety, wages and hours, (B) have withheld all amounts required by Applicable Laws, collective bargaining agreements or the Non-US Benefit Plans to be withheld from the wages, salaries or other payments to the Flu Group Company Employees or the Flu Business Employees and former employees of the Flu Group Companies, (C) in respect of the Flu Group Company Employees or Flu Business Employees or former employees of the Flu Group Companies, are not liable under any applicable provisions of the Non-US Benefit Plans and any Applicable Laws for any arrears, wages, Taxes, other than payments not yet due, or any penalty for failure to comply with the foregoing and (D) are not liable under any applicable provisions of the Non-US Benefit Plans and any Applicable Laws for any payment to any trust or other fund or to any Governmental Entity with respect to unemployment compensation benefits, workers compensation, social security or other benefits for Flu Group Company Employees or Flu Business Employees or former employees of the Flu Group Companies, other than payments not yet due, except, in each case, for any failures to comply, failures to withhold or liabilities that, individually and in the aggregate, would not reasonably be likely to have a material adverse effect.

 

(iii)                            All material contributions that the Flu Group Companies or Business Seller, with respect to Flu Business Employees or the Flu Group Company Employees in a Material Employee Jurisdiction, are required to make to any Non-US Benefit Plan in respect of the period on or before the date of this Agreement have been fully and timely paid when due.

 

(iv)                           For the avoidance of doubt, none of these representations and warranties in this paragraph 2.21.4 is intended to apply to any US Benefit Plan.

 

2.21.5            No retirement benefits scheme (as formerly defined in Section 611 of the Taxes Act) or scheme registered under Chapter 2 of Part 4 of the Finance Act 2004 in which the Flu Group Companies participate or have participated has been or is in the process of being (or is proposed to be) wound up (in whole or in part) or closed to new entrants (in whole or in part).

 

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2.21.6            No plan, proposal or intention to set up any new arrangement has been communicated to any Employee.

 

2.21.7            The Flu Group Companies have not at any time in relation to the provision of pension or life assurance benefits for or in respect of any Employee or former employee infringed any legal requirement relating to discrimination on any grounds, including the equality of pay or treatment of male and female employees, including without prejudice to the generality to the foregoing, Article 141 of the Treaty of Rome (formerly Article 119) and the Equality Act 2010 and the Part-time Workers (Prevention of Less Favourable Treatment Regulations) 2000.

 

2.21.8            No Flu Group Company has given a guarantee, security or indemnity in relation to any pension scheme and there are no circumstances which have arisen prior to the Completion Date which may give rise to the imposition on any Flu Group Company or the Purchaser or their associated or affiliated companies of any order, notice or direction pursuant to Sections 38 to 51 of the Pensions Act 2004.

 

2.21.9            No Employee or former employee has transferred to the employment of a Flu Group Company in circumstances governed by the Transfer of Undertakings (Protection of Employment) Regulations 2006 or predecessor legislation with an entitlement to payment of enhanced benefits on redundancy or early retirement by reference to employment with the Flu Group Company or a previous employer.

 

2.21.10     The Seller has Disclosed in relation to the Flu Group Companies data showing the number, gross earnings, age and sex of workers who (i) are or will be required to be automatically enrolled in to an automatic enrolment scheme, (ii) or who may request membership of a pension scheme, (iii) or who are active members of a qualifying scheme in accordance with the Pensions Act 2008 and material details of any proposals made or announced to workers regarding how the Flu Group Companies comply or intends to comply with their duties under the Pensions Act 2008, and the staging dates applicable.

 

2.21.11     The Seller has at all times complied with its obligations under the Pensions Act 2008 and relevant regulations in relation to automatic enrolment and there are no circumstances which might result in failure to comply with such obligations.

 

2.21.12     Other than under the Pension Scheme, all benefits provided under any pension arrangement are and have in the past been provided and calculated on a money purchase basis only, and all risk benefits are insured with an insurer of good repute.

 

2.22                     Litigation

 

Except in relation to Intellectual Property Rights:

 

2.22.1            No Flu Group Company or Business Seller is involved whether as claimant or defendant or other party in any claim or Proceeding (or series of related claims or proceedings) in relation to the Business (other than as claimant in the collection of debts arising in the ordinary course of its business) which has a value in excess of US$2.5 million.

 

2.22.2            To the Seller’s Knowledge, no such claim or Proceeding in relation to the Business is threatened or pending by or against any Flu Group Company or Business Seller.

 

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2.23                     Insurance

 

All material insurance policies relating to the Business are in full force and effect and, to the Seller’s Knowledge, no notice of cancellation, termination or default has been received with respect to any such insurance policy. All premiums due and payable on such policies covering periods up to Closing have been paid in full or accrued.

 

2.24                     Research and Development

 

2.24.1            The Seller and its Affiliates have carried out in all material respects their respective obligations under Applicable Law in relation to all clinical trials for the Products, Products Under Registration and Pipeline Products conducted by or on behalf of the Sellers or its Affiliates and included in the Sellers’ or its Affiliates’ regulatory filings.

 

2.24.2            To the Seller’s Knowledge, the Sellers and its Affiliates have not withheld from any regulatory authority any material information in the possession of the Sellers or its Affiliates related to the safety, toxicity, quality or efficacy of the Products, Products Under Registration and/or Pipeline Products that has been reasonably requested by a regulatory authority or is required by Applicable Law to be disclosed.

 

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Schedule 17
 Warranties given by the Purchaser under Clause 9.4

 

1                                      Authority and Capacity

 

1.1                            Incorporation

 

The Purchaser is validly existing and is a company duly incorporated and registered under the law of its jurisdiction of incorporation.

 

1.2                            Authority to enter into Agreement

 

1.2.1                   The Purchaser and each member of its Group has, or will have by Closing, the legal right and full power and authority to enter into and perform this Agreement, any Local Transfer Document and any Ancillary Agreement to which it is a party and any other documents to be executed by it pursuant to or in connection with this Agreement, any Local Transfer Document, or any Ancillary Agreement.

 

1.2.2                   The documents referred to in paragraph 1.2.1 will, when executed, constitute valid and binding obligations on the Purchaser and each member of its Group.

 

1.3                            Authorisation

 

The Purchaser has taken, or will have taken by Closing, all corporate action required by it to authorise it to enter into and to perform this Agreement, any Local Transfer Document and any Ancillary Agreement to which it is a party and any other documents to be executed by it pursuant to or in connection with this Agreement, any Local Transfer Document or any Ancillary Agreement.

 

2                                      Financing

 

The Purchaser has, and at Closing shall have, immediately available on an unconditional basis (subject only to Closing) sufficient cash, financial resources and credit to pay the Headline Price, and to make any other necessary payment contemplated hereunder, under the Local Transfer Documents and under the Ancillary Agreements, including fees and expenses in connection with the consummation of the Transaction. The Purchaser acknowledges that its obligation to consummate the Transaction is not and will not be subject to the receipt by the Purchaser of any financing or the consummation of any other transaction.

 

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Schedule 18
 Excluded Employees
 (Clause 1.1)

 

[***]

 

145

 

Schedule 19
 International Assignees
 (Clause 1.1)

 

[***]

 

146

 

Schedule 20
 Statement of Net Assets (Clause 1.1)
 Part 1
 Statement of Net Assets

 

[***]

 

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Schedule 20
 Statement of Net Assets (Clause 1.1)
 Part 2
 Statement of Net Assets Rules

 

1                                      Preparation of the Statement of Net Assets

 

1.1                            Period

 

The Statements of Net Assets is prepared as of the close of business on the final day of the relevant calendar month.

 

1.2                            Translation of Reporting Entity’s Statements of Net Assets

 

A reporting entity reports in local currency. All reports are translated into US Dollars by the Seller for reporting purposes. The Statement of Net Assets is translated with the period-end exchange rates which are the rates provided by Novartis Group Treasury and are based on Bloomberg’s mid-morning CET exchange rates and are published in the Group Treasury section of the Novartis intranet.

 

1.3                            Novartis Reporting System and Materiality:

 

1.3.1                   Financial information for the Flu Businesses has historically been reported together within all other activities of the Vaccines & Diagnostics division within the Financial Consolidation & Reporting System of Novartis. The financial information for the business has been carved out for the purpose of this statement of net assets utilizing information contained in the SAP IFRS ledgers. All financial information are prepared in accordance with Novartis’s Accounting Manual (the “NAM”). The Financial Consolidation & Reporting System is the system of record for Novartis external reporting. References in the Statement of Net Assets included as part 1 of this Schedule 20 shown as “BS01 lines 010-671” relate to the groupings shown in Novartis’s monthly reporting form “BS01 — Balance sheet”.

 

1.3.2                   For the Seller’s reporting purposes, the financial reporting of a legal entity is separated into a divisional part, which includes operating items (column A) and a corporate part (column B), which mainly captures the amounts related to taxes, post-employment benefit obligations and most of the financial assets and liabilities. The Statement of Net Assets contains the Novartis Flu Business, and items of the corporate Statement of Net Assets for the Flu legal entities, which existed as per the date at which this Statement of Net Assets is prepared. A US$10 million threshold was applied to this Statement of Net Assets.

 

1.3.3                   The Statement of Net Assets has been prepared as follows:

 

(i)                                  in accordance with the specific accounting treatments set out below; and, subject thereto;

 

(ii)                               adopting the same accounting principles, methods, procedures and practices utilized in preparing the consolidated financial statements of Novartis AG as described in the Novartis Accounting Manual applied on a consistent basis using consistent estimation methodologies and judgments and with consistent classifications and, subject thereto, and

 

(iii)                            in accordance with IFRS.

 

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1.3.4                   For the avoidance of doubt, paragraph 1.3.3(i) shall take precedence over paragraphs 1.3.3(ii) and 1.3.3(iii), and paragraph 1.3.3(ii) shall take precedence over paragraph 1.3.3(iii).

 

2                                      Specific Policies

 

The following supplement the description in the NAM for certain items included in the Statement of Net Assets:

 

2.1                            Assets

 

2.1.1                   Financial assets & subsidiaries/JV (BS01_040)

 

This line reflects equity investments that Flu Group Companies hold in other Flu Group Companies. These relationships have been eliminated in the Statement of Net Assets (as reflected in Column C).

 

2.1.2                   Financing to subsidiaries / JV (BS01_046)

 

This line represents financing owed by any member of the Seller’s Group to a Transferred Subsidiary. For the purpose of the Statement of Net Assets balances within the Flu Group have been excluded (as reflected in Column C).

 

2.1.3                   Receivables own BU (BS01_130)

 

For the Corporate part this line may show balances against other members of the seller group and entities within the Flu Businesses. As of the date of this statement of net assets all receivables are hold against other entities within the Flu Businesses and have therefore been eliminated in Column C of the Statement of Net Assets. For the operating part of the business this line has not been filled in as the entire amount eliminates against a respective payable.

 

2.1.4                   Prepaid share-based payments (BS01_161)

 

An asset for prepaid share-based compensation is recognized to reflect Novartis’s internal charge-out mechanism for its equity settled share-based compensation plans. For entities settling the charge for the shares at the beginning of the vesting period, it reflects the expense yet to be recognized for the unvested part of a share-based compensation plan. This asset has been excluded (as reflected in Column C) and is not reflected in the Statement of Net Assets.

 

2.1.5                   Total BS01_110 Total inventories

 

This line includes an amount of USD 10m for raw materials and work in progress for FCC products, which will be subject to the MSA between Novartis and Calvin.

 

2.2                           Liabilities:

 

2.2.1                   Financing from subsidiaries / JV (BS01_516)

 

This line represents financing received from any member of the Seller’s Group. For the purpose of the Statement of Net Assets, balances within the Flu Group have been excluded (as reflected in Column C).

 

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2.2.2                   Other non-current liabilities (BS01_540)

 

Column C excludes net liabilities for post-employment benefits of US$8 million included in the corporate part of the Flu Group Companies as their treatment is addressed separately in Schedule 20.

 

2.2.3                   Payables own BU (BS01_620)

 

For the Corporate part this line shows balances against other members of the seller group and entities within the Flu Businesses. The amounts related to other members of the Flu Group have been eliminated in column C in the Statement of Net Assets.

 

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Schedule 21
 Exceptions to Pre-Closing Obligations
 (Clause 5.2)

 

1.                                   In accordance with past practice in the relevant market, respond to any calls for a tender (including any tender for a basket of products), whether a new tender or the renewal of an existing tender, which relates in whole or in part to the sale of Products.

 

2.                                   Entry into Contracts from time to time with third parties where the Flu Group has submitted a binding offer in relation thereto on or prior to the date of this Agreement.

 

3.                                   Entry into Contracts from time to time in relation to any tender submitted to a Governmental Entity by the Flu Group on or prior to the date of this Agreement.

 

4.                                   Entry in the ordinary course of business into any Contract in furtherance of the terms of any Shared Business Contract or Transferred Contract including: (i) the delivery of any forecast and order letter pursuant to the terms of a manufacturing or supply agreement; (ii) entry into a material transfer agreement pursuant to any research or collaboration agreement; or (iii) the entry into any quality agreement or commercial agreement pursuant to an existing supply or distribution agreement.

 

5.                                   Any matter undertaken in order to continue to conduct, in accordance with good clinical practices and the Seller’s Group policies and procedures, the ongoing clinical studies sponsored or supported by the Seller’s Group (including post-approval studies) or otherwise recommended by a Governmental Entity, and any regulatory commitments in respect of the Products and the Pipeline Products.

 

6.                                   Any matter undertaken in connection with the Commercialisation of the Products in accordance with past practice, including in respect of a bona fide increase in demand for the relevant Product by the relevant distributor and/or wholesaler which has not been stimulated in any way by discounts, rebates, claw-backs or the like outside of the ordinary course of business or the grant of preferred terms offered by the Seller’s Group outside of the ordinary course.

 

7.                                   Entry into any Contract or series of Contracts with DPI NewCo LLC or its affiliates in relation to fulfilment of commitments to the United States Department of Health and Human Services for the provision of surge/pandemic and seasonal influenza vaccine formulation and fill-finish services.

 

8.                                   Entry into an agreement between Novartis Pharma Schweiz AG and Swiss Army Pharmacy (on behalf of the Swiss government) for reservation of capacity at the Liverpool bulk manufacturing facility and an option to purchase additional doses.

 

9.                                   Implementation of a change to compliance policies or procedures of the Seller’s Group, provided that any such changes are implemented in the Flu Group as part of a global program affecting the Seller’s Group as a whole.

 

10.                           Initiation, settlement or abandonment of any claim, litigation, arbitration or other proceedings which is included in the list of actual, potential and threatened litigation as contained in the of the Disclosure Letter.

 

11.                            Amendments of modifications to any Contract which would not reasonably be expected to increase the Liability of the Flu Group thereunder.

 

151

 

12.                            In respect of each of the matters set out in paragraphs 1 to 11, the negotiation and execution of any Contract (including Ancillary Agreements related thereto or contemplated thereby) in furtherance thereof.

 

152

 

Schedule 22
 Competition Authorities

 

1                                      Australia

 

2                                      US

 

3                                      Brazil

 

4                                      EU or, in the event that the Transaction is not capable of being reviewed under the national competition laws of at least three EU Member States or, upon a reasoned submission being made under Article 4(5) of EU Council Regulation 139/2004, one or more EU Member States competent to examine the Transaction under its national competition law expressing its disagreement as regards the request to refer within 15 working days of receiving the reasoned submission, then: Austria, Germany and the United Kingdom.

 

153

 

Schedule 23
 MF59® Platform Intellectual Property Rights

 

154

 

Table of Contents

 

	
Contents
    	
 
    	
Page
    
	
 
    	
 
    	
 
    	
 
    
	
1
    	
Interpretation
    	
 
    	
1
    
	
 
    	
 
    	
 
    	
 
    
	
2
    	
Sale and Purchase of the Flu Group
    	
 
    	
24
    
	
 
    	
 
    	
 
    	
 
    
	
3
    	
Consideration
    	
 
    	
29
    
	
 
    	
 
    	
 
    	
 
    
	
4
    	
Conditions
    	
 
    	
31
    
	
 
    	
 
    	
 
    	
 
    
	
5
    	
Pre-Closing
    	
 
    	
36
    
	
 
    	
 
    	
 
    	
 
    
	
6
    	
Closing
    	
 
    	
46
    
	
 
    	
 
    	
 
    	
 
    
	
7
    	
Post-Closing Adjustments
    	
 
    	
48
    
	
 
    	
 
    	
 
    	
 
    
	
8
    	
Post-Closing Obligations
    	
 
    	
49
    
	
 
    	
 
    	
 
    	
 
    
	
9
    	
Warranties
    	
 
    	
59
    
	
 
    	
 
    	
 
    	
 
    
	
10
    	
Limitation of Liability
    	
 
    	
60
    
	
 
    	
 
    	
 
    	
 
    
	
11
    	
Claims
    	
 
    	
64
    
	
 
    	
 
    	
 
    	
 
    
	
12
    	
Confidentiality
    	
 
    	
66
    
	
 
    	
 
    	
 
    	
 
    
	
13
    	
Insurance
    	
 
    	
67
    
	
 
    	
 
    	
 
    	
 
    
	
14
    	
Netherlands Business
    	
 
    	
68
    
	
 
    	
 
    	
 
    	
 
    
	
15
    	
Other Provisions
    	
 
    	
69
    
	
 
    	
 
    	
 
    	
 
    
	
Schedule 1 Details of the Share Sellers, Shares, etc.   (Clause 2.1)
    	
 
    	
75
    
	
 
    	
 
    	
 
    
	
Schedule 2 Company and Subsidiary
    	
 
    	
76
    
	
 
    	
 
    	
 
    
	
Schedule 3 The Properties Part 1 (Company Real   Property)
    	
 
    	
77
    
	
 
    	
 
    	
 
    
	
Schedule 3 The Properties Part 2 (Transferred Real   Property)
    	
 
    	
78
    
	
 
    	
 
    	
 
    
	
Schedule 3 The Properties Part 3 Terms relating to the   Company Real Property
    	
 
    	
79
    
	
 
    	
 
    	
 
    
	
Schedule 3 The Properties Part 4A Terms relating to   the Transferred Real Property (United States)
    	
 
    	
80
    
	
 
    	
 
    	
 
    
	
Schedule 3 The Properties Part 4B Terms relating to   the German Carve-out Leases
    	
 
    	
85
    

 

i

 

	
Schedule 4 Flu Group Intellectual Property Rights and Flu   Group Intellectual Property Contracts (Clause 2.3)
    	
 
    	
91
    
	
 
    	
 
    	
 
    
	
Schedule 5 Excluded Contracts (Clause 1.1)
    	
 
    	
93
    
	
 
    	
 
    	
 
    
	
Schedule 6 Permitted Encumbrances (Clause 1.1)
    	
 
    	
94
    
	
 
    	
 
    	
 
    
	
Schedule 7 Product Approvals, Pipeline Product Approvals   and Product Applications Part 1 Terms relating to the Product Approvals,   Pipeline Product Approvals and Product Applications
    	
 
    	
95
    
	
 
    	
 
    	
 
    
	
Schedule 7 Product Approvals, Pipeline Product Approvals   and Product Applications Part 2 List of Products, Products Under   Registration and Pipeline Products
    	
 
    	
97
    
	
 
    	
 
    	
 
    
	
Schedule 8 Transferred Contracts (Clause 2.3)
    	
 
    	
98
    
	
 
    	
 
    	
 
    
	
Schedule 9 Employees (Clause 2.4.1)
    	
 
    	
101
    
	
 
    	
 
    	
 
    
	
Schedule 10 Group Retirement Benefit Arrangements (Clause   2.4.2)
    	
 
    	
111
    
	
 
    	
 
    	
 
    
	
Schedule 11 Allocation of Purchase Price (Clause 3.3)
    	
 
    	
113
    
	
 
    	
 
    	
 
    
	
Schedule 12 VAT (Clause 3.4)
    	
 
    	
114
    
	
 
    	
 
    	
 
    
	
Schedule 13 Closing Obligations (Clause 6)
    	
 
    	
115
    
	
 
    	
 
    	
 
    
	
Schedule 14 Post Closing Adjustments (Clause 7)
    	
 
    	
117
    
	
 
    	
 
    	
 
    
	
Schedule 15 US Government Contracts (Clause 1.1)
    	
 
    	
122
    
	
 
    	
 
    	
 
    
	
Schedule 16 Warranties given under Clause 9.1
    	
 
    	
125
    
	
 
    	
 
    	
 
    
	
Schedule 17 Warranties given by the Purchaser under Clause   9.4
    	
 
    	
144
    
	
 
    	
 
    	
 
    
	
Schedule 18 Excluded Employees (Clause 1.1)
    	
 
    	
145
    
	
 
    	
 
    	
 
    
	
Schedule 19 International Assignees (Clause 1.1)
    	
 
    	
146
    
	
 
    	
 
    	
 
    
	
Schedule 20 Statement of Net Assets (Clause 1.1)   Part 1 Statement of Net Assets
    	
 
    	
147
    
	
 
    	
 
    	
 
    
	
Schedule 20 Statement of Net Assets (Clause 1.1)   Part 2 Statement of Net Assets Rules
    	
 
    	
148
    
	
 
    	
 
    	
 
    
	
Schedule 21 Exceptions to Pre-Closing Obligations (Clause 5.2)
    	
 
    	
151
    
	
 
    	
 
    	
 
    
	
Schedule 22 Competition Authorities
    	
 
    	
153
    
	
 
    	
 
    	
 
    
	
Schedule 23 MF59® Platform Intellectual Property Rights
    	
 
    	
154
    

 

ii

 

TABLE OF SCHEDULES

 

(The following schedules and exhibits to the agreement identified above have been omitted in reliance upon Rule 601(b)(2) of Regulation S-K. The Registrant hereby undertakes to furnish such schedules and exhibits to the Commission supplementally upon request.)

 

	
Schedule No.
    	
 
    	
Schedule Name
    
	
Schedule   3, Part 1
    	
 
    	
Company   Real Property
    
	
Schedule   3, Part 2
    	
 
    	
Transferred   Real Property
    
	
Schedule   4
    	
 
    	
Flu   Group Intellectual Property Rights and Flu Group Intellectual Property   Contracts
    
	
Schedule   7, Part 2
    	
 
    	
List   of Products, Products under Registration and Pipeline Products
    
	
Schedule   14, Part 3
    	
 
    	
Illustrative   Closing Statement
    
	
Schedule   15, Part 1
    	
 
    	
List   of US Government Contracts
    
	
Schedule   18
    	
 
    	
Excluded   Employees
    
	
Schedule   19
    	
 
    	
International   Assignees
    
	
Schedule   20, Part 1
    	
 
    	
Statement   of Net Assets
    

 

iii

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