Document:

Exhibit 10.14

 

October 22, 2007

 

 

Paul Hollerbach

11 El Campanero

Orinda, CA 94563

 

Dear Paul,

 

On behalf of everyone here at Current Media LLC, I am very pleased to
offer you the position of Chief Financial Officer, reporting to me, with a
start date of October 29, 2007.  As
discussed, here are some details of your employment.

 

This is a full-time, regular, exempt position.  The compensation is a semi-monthly salary of
$12,500 per pay period, which works out to $300,000 on an annualized
basis.  In addition, you will be eligible
to receive an annual bonus of $100,000, less all required withholdings and
taxes, if you achieve mutually agreed upon benchmarks to be proposed by you.

 

You will be granted 190,000 shares of non-voting common stock as soon
as practicable after the commencement of your employment, with 50,000 of those
shares vesting in one installment on the first anniversary of your employment;
60,000 shares vesting in equal monthly installments in the second year of your
employment; and 80,000 shares vesting in equal monthly installments in the
third year of your employment.  The stock
grant shall be governed by the terms of your share award agreement and the
Company’s equity incentive plan; however the vesting arrangement shall be
consistent with the terms outlined in this letter.  Should the Company experience a Change in
Control, the vesting of any unvested equity grants will be accelerated so that,
upon the occurrence of the Change in Control, you will be vested in the number
of shares that would otherwise have vested in the twelve month period following
the Change in Control.

 

Current offers employees 10 company-paid holidays per year.  You will be eligible to join Current’s health
and welfare benefits plan on the first day of the month following thirty days
of employment, and you may join our 401(k) plan on a quarterly basis
beginning January 1, 2008.  What’s
more, Current will match 50 cents of every dollar that you invest in your 401(k) up
to 6% of your annual salary.

 

Please note that this offer is contingent upon your acceptance by
signing below, and also upon verification of your identity and employment
eligibility.  Should you decide to accept
our offer, you would be an at-will employee of Current, which means that either
party may terminate the relationship at any time, for any lawful reason.  As a Current employee you would naturally be
expected to comply with our policies and procedures as modified from time to
time.

 

 

We are very excited to have you join us and to be working with you to transform
and democratize television.  To accept
our offer, please send your signed letter via our confidential fax:
415-995-8273.   lf you have questions
before you start, please contact me our HR Manager, Kim Vaccaro at 415-995-8272
or kvaccaro@currentmedia.com.

 

Sincerely,

 

 

	
  /s/ Joel Hyatt

  
	
   

  
	
   

  
	
  Accepted:

  
	
  /s/ Paul HollerbachExhibit 4.7

 

Execution Copy

 

Agreement

 

As of 11 April 2007

 

(this “Agreement”)

 

Between

 

Novartis AG

Lichtstrasse 35

4056 Basel

 

Switzerland

 

(the “Seller”)

 

and

 

Nestlé S.A.

Avenue Nestlé, 55

1800 Vevey

 

Switzerland

 

(the “Buyer”)

 

Concerning

 

the Sale and Purchase of

 

the Seller’s Gerber Business

 

 

TABLE OF CONTENTS

 

	
   

  	
  Page

  
	
   

  
	
  1.

  	
   

  	
  DEFINITIONS
  AND INTERPRETATION

  	
   

  	
  2

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1.1

  	
   

  	
  Definitions

  	
   

  	
  2

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1.2

  	
   

  	
  Interpretation

  	
   

  	
  19

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
  SALE AND
  PURCHASE 

  	
   

  	
  20

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.1

  	
   

  	
  Objects of
  Sale and Purchase

  	
   

  	
  20

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.2

  	
   

  	
  Assumption
  and Exclusion of Liabilities

  	
   

  	
  24

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.3

  	
   

  	
  Purchase
  Price

  	
   

  	
  26

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.4

  	
   

  	
  Intercompany
  Indebtedness

  	
   

  	
  29

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.5

  	
   

  	
  Licenses for
  Certain Know-How

  	
   

  	
  30

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
   

  	
  TRANSITION
  SERVICES 

  	
   

  	
  30

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
   

  	
  REPRESENTATIONS
  AND WARRANTIES OF THE SELLER 

  	
   

  	
  30

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4.1

  	
   

  	
  Organization,
  Authority and Qualification of the Companies

  	
   

  	
  31

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4.2

  	
   

  	
  Organization
  and Authority of the Seller

  	
   

  	
  31

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4.3

  	
   

  	
  Capital
  Stock of the Companies

  	
   

  	
  32

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4.4

  	
   

  	
  Ownership of
  the Shares and Other Equity Interests

  	
   

  	
  32

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4.5

  	
   

  	
  No Conflict

  	
   

  	
  32

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4.6

  	
   

  	
  Financial
  Statements; Other Liabilities

  	
   

  	
  33

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4.7

  	
   

  	
  Statutory
  Accounts

  	
   

  	
  34

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4.8

  	
   

  	
  Agreements

  	
   

  	
  35

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4.9

  	
   

  	
  Insurance

  	
   

  	
  37

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4.10

  	
   

  	
  Real
  Property

  	
   

  	
  37

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4.11

  	
   

  	
  Personnel

  	
   

  	
  38

  

 

i

 

 

	
   

  	
   

  	
  4.12

  	
   

  	
  Employee
  Plans

  	
   

  	
  39

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4.13

  	
   

  	
  Taxes

  	
   

  	
  41

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4.14

  	
   

  	
  No Material
  Adverse Effects

  	
   

  	
  42

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4.15

  	
   

  	
  Conduct of
  Business Since 31 December 2006

  	
   

  	
  42

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4.16

  	
   

  	
  Litigation
  and Other Proceedings; Orders

  	
   

  	
  44

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4.17

  	
   

  	
  Licenses and
  Permits

  	
   

  	
  45

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4.18

  	
   

  	
  Environmental
  Matters

  	
   

  	
  45

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4.19

  	
   

  	
  Governmental
  Consents and Approvals

  	
   

  	
  46

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4.20

  	
   

  	
  Intellectual
  Property and Know-How

  	
   

  	
  47

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4.21

  	
   

  	
  Tangible
  Personal Property

  	
   

  	
  48

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4.22

  	
   

  	
  Assets

  	
   

  	
  48

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4.23

  	
   

  	
  Compliance
  with Legal Requirements, Regulatory Reports

  	
   

  	
  49

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4.24

  	
   

  	
  Business
  Products

  	
   

  	
  50

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4.25

  	
   

  	
  Brokers

  	
   

  	
  50

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4.26

  	
   

  	
  Commercial
  Domicile of Gerber Life; Investment Company

  	
   

  	
  50

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4.27

  	
   

  	
  Producers

  	
   

  	
  50

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4.28

  	
   

  	
  Extra-Contractual
  Liabilities

  	
   

  	
  51

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4.29

  	
   

  	
  Tax
  Representations Related to the Life Business

  	
   

  	
  51

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
   

  	
  REPRESENTATIONS
  AND WARRANTIES OF THE BUYER 

  	
   

  	
  53

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  5.1

  	
   

  	
  Organization
  and Authority

  	
   

  	
  53

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  5.2

  	
   

  	
  No Conflict

  	
   

  	
  53

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  5.3

  	
   

  	
  Governmental
  Consents

  	
   

  	
  54

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  5.4

  	
   

  	
  Financing of
  the Transactions

  	
   

  	
  54

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
   

  	
  INDEMNIFICATION

  	
   

  	
  54

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  6.1

  	
   

  	
  Indemnification
  by the Seller

  	
   

  	
  54

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  6.2

  	
   

  	
  Indemnification
  by the Buyer

  	
   

  	
  56

  

 

ii

 

	
   

  	
   

  	
  6.3

  	
   

  	
  Survival and
  Notice of Claims

  	
   

  	
  58

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  6.4

  	
   

  	
  Remedies

  	
   

  	
  58

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  6.5

  	
   

  	
  Third Party
  Claims

  	
   

  	
  59

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  6.6

  	
   

  	
  Tax
  Indemnification

  	
   

  	
  60

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  6.7

  	
   

  	
  Tax Refunds

  	
   

  	
  61

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  6.8

  	
   

  	
  Tax Contests

  	
   

  	
  61

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  6.9

  	
   

  	
  Tax Returns
  and Payments

  	
   

  	
  62

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  6.10

  	
   

  	
  Treatment of
  Indemnity Payments

  	
   

  	
  62

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  6.11

  	
   

  	
  No
  Duplicative Adjustments

  	
   

  	
  62

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  6.12

  	
   

  	
  Actions on
  the Closing Date

  	
   

  	
  63

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
   

  	
  OTHER
  COVENANTS OF THE PARTIES 

  	
   

  	
  63

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  7.1

  	
   

  	
  Access to
  Information Prior to the Closing Date

  	
   

  	
  63

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  7.2

  	
   

  	
  Access to
  Information After the Closing Date

  	
   

  	
  63

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  7.3

  	
   

  	
  Investigation

  	
   

  	
  64

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  7.4

  	
   

  	
  Employee and
  Related Matters

  	
   

  	
  64

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  7.5

  	
   

  	
  Insurance

  	
   

  	
  73

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  7.6

  	
   

  	
  Further
  Action

  	
   

  	
  74

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  7.7

  	
   

  	
  Regulatory
  and Other Authorizations

  	
   

  	
  75

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  7.8

  	
   

  	
  Non-Competition

  	
   

  	
  78

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  7.9

  	
   

  	
  Conduct of
  the Business

  	
   

  	
  79

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  7.10

  	
   

  	
  Termination
  of Intra-Group Agreements

  	
   

  	
  81

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  7.11

  	
   

  	
  Notifications

  	
   

  	
  81

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  7.12

  	
   

  	
  Bulk
  Transfer Laws

  	
   

  	
  82

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  7.13

  	
   

  	
  Conveyance
  Taxes; Proration of Taxes and Certain Charges

  	
   

  	
  82

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  7.14

  	
   

  	
  Real Estate
  Matters

  	
   

  	
  83

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  7.15

  	
   

  	
  Litigation
  Support

  	
   

  	
  83

  

 

iii

 

 

	
   

  	
   

  	
  7.16

  	
   

  	
  Trade
  Notifications

  	
   

  	
  84

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  7.17

  	
   

  	
  Interim
  Financial Statements

  	
   

  	
  84

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  7.18

  	
   

  	
  Tax Election

  	
   

  	
  84

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.

  	
   

  	
  CONDITIONS
  PRECEDENT; WAIVER; TERMINATION 

  	
   

  	
  85

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  8.1

  	
   

  	
  Conditions
  Precedent to Performance of the Parties

  	
   

  	
  85

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  8.2

  	
   

  	
  Conditions
  Precedent to Performance of the Seller

  	
   

  	
  86

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  8.3

  	
   

  	
  Conditions
  Precedent to Performance of the Buyer

  	
   

  	
  86

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  8.4

  	
   

  	
  Waiver;
  Determination of Satisfaction of Conditions

  	
   

  	
  87

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  8.5

  	
   

  	
  Termination

  	
   

  	
  87

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9.

  	
   

  	
  CLOSING 

  	
   

  	
  88

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  9.1

  	
   

  	
  Closing Date

  	
   

  	
  88

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  9.2

  	
   

  	
  Delivery

  	
   

  	
  88

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  9.3

  	
   

  	
  Discharge of
  Previous Board Members

  	
   

  	
  89

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  9.4

  	
   

  	
  Use of
  NOVARTIS Trademark

  	
   

  	
  89

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10.

  	
   

  	
  MISCELLANEOUS
  

  	
   

  	
  90

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  10.1

  	
   

  	
  Entire
  Agreement

  	
   

  	
  90

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  10.2

  	
   

  	
  Transaction
  Costs

  	
   

  	
  90

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  10.3

  	
   

  	
  Modifications

  	
   

  	
  90

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  10.4

  	
   

  	
  Notices

  	
   

  	
  91

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  10.5

  	
   

  	
  Public
  Announcements

  	
   

  	
  91

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  10.6

  	
   

  	
  Severability

  	
   

  	
  91

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  10.7

  	
   

  	
  Assignment

  	
   

  	
  92

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  10.8

  	
   

  	
  Schedules
  and Exhibits

  	
   

  	
  92

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  10.9

  	
   

  	
  Confidentiality
  Agreement

  	
   

  	
  92

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  10.10

  	
   

  	
  Translation
  of Currencies

  	
   

  	
  93

  

 

iv

 

	
   

  	
  10.11

  	
   

  	
  Governing
  Law

  	
   

  	
  93

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.12

  	
   

  	
  Specific
  Performance

  	
   

  	
  93

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.13

  	
   

  	
  Dispute
  Resolution

  	
   

  	
  93

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.14

  	
   

  	
  Counterparts;
  Facsimile Signature

  	
   

  	
  93

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.15

  	
   

  	
  Further
  Assurances

  	
   

  	
  94

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.16

  	
   

  	
  Rights
  Cumulative

  	
   

  	
  94

  

 

v

 

	
  LIST OF
  SCHEDULES

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Schedule
  1(a)(i)

  	
   

  	
  Asset Selling
  Subsidiaries

  
	
  Schedule
  1(a)(ii)

  	
   

  	
  Business
  Products

  
	
  Schedule
  1(a)(iii)

  	
   

  	
  Data
  Room Index

  
	
  Schedule
  1(a)(iv)

  	
   

  	
  Permitted
  Encumbrances

  
	
  Schedule
  1(a)(v)(A)

  	
   

  	
  Persons with
  Seller’s Knowledge

  
	
  Schedule
  1(a)(v)(B)

  	
   

  	
  Due Inquiry
  Individuals

  
	
  Schedule
  1(a)(vi)

  	
   

  	
  Share
  Selling Subsidiaries

  
	
  Schedule
  1(a)(vii)

  	
   

  	
  Consumer
  Working Capital

  
	
  Schedule
  1(a)(viii)

  	
   

  	
  Works
  Councils

  
	
  Schedule
  1(a)(ix) 

  	
   

  	
  Calculation
  of Consumer Net Debt Position as of 31 December 2006

  
	
  Schedule
  2.1(h)(i)

  	
   

  	
  Transferred
  Leased Real Property

  
	
  Schedule
  2.1(h)(vii)

  	
   

  	
  Separate
  Intellectual Property

  
	
  Schedule
  2.1(i)(v)

  	
   

  	
  Additional
  Excluded Assets

  
	
  Schedule
  2.1(i)(xii)

  	
   

  	
  Excluded
  Agreements

  
	
  Schedule
  2.3(g)

  	
   

  	
  Allocation
  of Purchase Price

  
	
  Schedule 3

  	
   

  	
  Transition
  Services

  
	
  Schedule 4.3

  	
   

  	
  Capital
  Stock of the Companies; Other Equity Interests

  
	
  Schedule
  4.6(a)

  	
   

  	
  Consumer
  Financial Statements

  
	
  Schedule
  4.6(b)

  	
   

  	
  Life
  Financial Statements

  
	
  Schedule
  4.6(c)

  	
   

  	
  Notes to
  Financial Statements

  
	
  Schedule 4.7

  	
   

  	
  SAP
  Statements

  
	
  Schedule
  4.8(a)

  	
   

  	
  Material
  Contracts

  
	
  Schedule
  4.8(b)

  	
   

  	
  Conflicts

  
	
  Schedule 4.9

  	
   

  	
  Insurance

  
	
  Schedule
  4.10(a)

  	
   

  	
  Owned Real
  Property

  
	
  Schedule
  4.10(b)

  	
   

  	
  Leased Real
  Property

  
	
  Schedule
  4.10(c)

  	
   

  	
  Real
  Property Encumbrances

  
	
  Schedule
  4.11(a)(i)

  	
   

  	
  Collective
  Bargaining Agreements

  
	
  Schedule
  4.11(a)(ii)

  	
   

  	
  Labor
  Proceedings

  
	
  Schedule
  4.11(b)

  	
   

  	
  Agreements
  in Respect of Thirty-Five (35) Hour Work Week

  
	
  Schedule
  4.11(c)

  	
   

  	
  Transaction
  Compensation Arrangements

  
	
  Schedule
  4.12(a)

  	
   

  	
  Employee
  Benefit Plans

  
	
  Schedule
  4.12(c)

  	
   

  	
  Employee
  Benefit Plans Compliance

  
	
  Schedule
  4.12(e)

  	
   

  	
  Acts or
  Omissions

  
	
  Schedule
  4.12(f)

  	
   

  	
  Employee
  Benefit Plan Proceedings

  
	
  Schedule
  4.12(g)(i)

  	
   

  	
  Accelerated
  Benefits

  
	
  Schedule
  4.12(g)(ii)

  	
   

  	
  Benefit
  Commitments

  
	
  Schedule
  4.12(h)

  	
   

  	
  Welfare
  Benefit or Insurance

  
	
  Schedule
  4.12(i)

  	
   

  	
  Plan
  Amendments

  
	
  Schedule
  4.13

  	
   

  	
  Tax Matters

  
	
  Schedule
  4.15

  	
   

  	
  Conduct of
  Business

  
	
  Schedule
  4.16

  	
   

  	
  Litigation
  and Other Proceedings; Orders

  
	
  Schedule
  4.16(c)

  	
   

  	
  Insurance
  Examinations

  

 

vi

 

	
  Schedule
  4.17

  	
   

  	
  Governmental
  Permits

  
	
  Schedule
  4.18

  	
   

  	
  Environmental
  Matters

  
	
  Schedule
  4.19

  	
   

  	
  Seller
  Governmental Consents and Approvals

  
	
  Schedule
  4.20(a)(i)

  	
   

  	
  Intellectual
  Property; Record and Beneficial Ownership

  
	
  Schedule
  4.20(a)(ii)

  	
   

  	
  Intellectual
  Property Ownership Exceptions

  
	
  Schedule
  4.20(b)(i)

  	
   

  	
  Non-Assignment

  
	
  Schedule
  4.20(b)(ii)

  	
   

  	
  Adverse
  Claims to Intellectual Property

  
	
  Schedule
  4.20(c)

  	
   

  	
  Know-How

  
	
  Schedule
  4.20(d)

  	
   

  	
  Confidentiality
  of Know-How

  
	
  Schedule
  4.20(e)

  	
   

  	
  Alleged
  Violations Against Intellectual Property or Know-How

  
	
  Schedule
  4.22(a)

  	
   

  	
  Sufficiency
  of Assets

  
	
  Schedule
  4.22(c)

  	
   

  	
  Known or
  Anticipated Capital Expenditures

  
	
  Schedule
  4.23

  	
   

  	
  Compliance
  with Legal Requirements

  
	
  Schedule
  4.24

  	
   

  	
  Product
  Registrations

  
	
  Schedule
  4.27

  	
   

  	
  Producers

  
	
  Schedule 5.3

  	
   

  	
  Buyer
  Governmental Consents and Approvals

  
	
  Schedule
  7.4(a)(ii)

  	
   

  	
  Shared
  Services Employees

  
	
  Schedule
  7.4(b)

  	
   

  	
  Transferred
  Plans

  
	
  Schedule
  7.4(c)

  	
   

  	
  Employment
  Agreements

  
	
  Schedule
  7.8(d)

  	
   

  	
  Non-Solicitation/Hire

  
	
  Schedule 7.9
  

  	
   

  	
  Conduct of
  the Business Between the Signing and the Closing Date

  
	
  Schedule
  7.10(b)

  	
   

  	
  Transition
  Services to Be Provided to the Seller

  
	
  Schedule
  7.10(c)

  	
   

  	
  Intra-Group
  Agreements Not Terminated as of the Closing Date

  
	
  Schedule
  9.2(a)(ix)

  	
   

  	
  Company
  Directors to Resign Effective as of the Closing Date

  
	
   

  	
   

  	
   

  
	
  LIST OF
  EXHIBITS

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Exhibit 1(a)

  	
   

  	
  Form of
  Assignment of Governmental Permits

  
	
  Exhibit 1(b)

  	
   

  	
  Form of
  Assignment of Product Registrations

  
	
  Exhibit 1(c)

  	
   

  	
  Form of
  Assignment of Separate Intellectual Property

  
	
  Exhibit 1(d)

  	
   

  	
  Form of
  Bill of Sale, Assignment and Assumption Agreement

  
	
  Exhibit 2.1

  	
   

  	
  Form of
  Share Purchase Agreement

  
	
  Exhibit 3

  	
   

  	
  Form of
  Transition Services Agreement

  

 

vii

 

AGREEMENT

 

Preamble:

 

WHEREAS, the Seller
directly or indirectly owns all of the issued and outstanding share capital of (i) Gerber
Products Company, a Michigan corporation (“Gerber Products”), (ii) Gerber
Products Company of Puerto Rico, Inc., a company organized under the laws
of Puerto Rico (“Gerber Puerto Rico”), (iii) Gerber Chile S.A., a
company organized under the laws of Chile, (iv) Gerber Finance Company, a
Delaware corporation, (v) Alima-Gerber S.A., a company organized under the
laws of Poland (“Gerber Poland”), (vi) Gerber Holdings de Mexico SA
de CV, a company organized under the laws of Mexico (“Gerber Holdings Mexico”),
(vii) Productos Gerber SA de CV, a company organized under the laws of
Mexico (“Gerber Mexico”), (viii) Productos Gerber de Centroamerica
S.A., a company organized under the laws of Costa Rica, (ix) Novartis
Nutrition de Venezuela S.A., a company organized under the laws of Venezuela (“Gerber
Venezuela”), (x) Gerber Ingredients S.A., a company organized under
the laws of Costa Rica (“Gerber Costa Rica”), (xi) Novartis Consumer
Health S.A., a company organized under the laws of Costa Rica (“Gerber
Consumer Costa Rica”, and collectively with the entities identified in
clauses (i) through (x), the “Consumer Companies”), (xii) Gerber
Family Services, Inc., a Delaware corporation (“Gerber Family”),
and (xiii) Gerber Life Insurance Company, a stock life insurance company
organized under the laws of New York (“Gerber Life”, together with
Gerber Family, the “Insurance Companies” and together with the Consumer
Companies, the “Companies”), and of the Asset Selling Subsidiaries (as
defined below);

 

WHEREAS,
the Seller directly and indirectly through certain of its direct and indirect
subsidiaries, including the Companies and the Asset Selling Subsidiaries, is
engaged in the business (such business, as conducted in its entirety by the
Seller and its direct and indirect subsidiaries, the “Business”) of
developing, manufacturing, marketing, distributing and selling infant and
toddler nutrition products (the “Consumer Business”) and Care Products
at various locations around the world and marketing and underwriting life
insurance and medical stop-loss insurance in the United States and Canada (the “Life
Business”); for the avoidance of doubt, the Business does not include any
business or activities conducted by Novartis OTC and Transition Services
activities of the Affiliates of Seller;

 

WHEREAS,
it is expected that the assets and corresponding liabilities relating to the
operation of the Business in Brazil may be transferred to a separate entity
incorporated in such jurisdiction prior to Closing (such transactions being
referred to as the “Spin-Off”); and

 

WHEREAS,
the Seller, either directly or through an Affiliate, wishes to sell to the
Buyer, and the Buyer wishes to purchase, either directly or through a Buyer
Designated Affiliate (as defined hereafter), from the Seller, the Business,
including the Shares (as defined hereafter) and the Purchased Assets (as
defined hereafter), and in connection therewith the Buyer is willing to assume
from the Seller all of the Assumed Liabilities (as defined hereafter), all upon
the terms and subject to the conditions set forth

 

1

 

herein;

 

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

 

1.             DEFINITIONS AND INTERPRETATION

 

1.1
         Definitions. For purposes of this
Agreement, including the Preamble, the following terms have the following meanings
(such meanings to be equally applicable to both the singular and plural forms
of the terms defined):

 

	
  “Accounting
  Principles” 

  	
   

  	
  The
  accounting principles, methods and policies specified in the Seller’s
  accounting manual for the years ended 2004, 2005 and 2006, respectively, which
  are consistent with International Financial Reporting Standards.

  
	
   

  	
   

  	
   

  
	
  “Acquired
  Business” 

  	
   

  	
  Any business
  acquired by the Seller or any of its Affiliates, or with which the Seller or
  any of its Affiliates effects a merger, consolidation or other business
  combination, or any partnership or joint venture in which the Seller or any
  of its Affiliates has a majority interest, in each case after the Closing
  Date.

  
	
   

  	
   

  	
   

  
	
  “Affiliate”
  

  	
   

  	
  With respect
  to any specified Person, any other Person that controls, is controlled by or
  is under common control with such Person (it being understood that a Person
  will be deemed to “control” another Person, for purposes of this definition,
  if such Person directly or indirectly has the power to direct or cause the
  direction of the management and policies of such other Person, whether
  through the ownership of voting securities of such other Person, through
  contract or otherwise).

  
	
   

  	
   

  	
   

  
	
  “Agreement”

  	
   

  	
  As defined
  on the title page.

  
	
   

  	
   

  	
   

  
	
  “Ancillary
  Agreements” 

  	
   

  	
  The
  Assignment of Governmental Permits, the Assignment of Product Registrations,
  the Assignment of Separate Intellectual Property, the Bills of Sale, the
  Transition Services Agreement and the Share Purchase Agreements, in each case
  to be executed and delivered at Closing in accordance with the terms hereof.

  

 

2

 

	
  “Assets”
  

  	
   

  	
  The
  Purchased Assets and the assets and properties of the Companies.

  
	
   

  	
   

  	
   

  
	
  “Asset
  Selling Subsidiaries” 

  	
   

  	
  The
  subsidiaries of the Seller listed in Schedule 1(a)(i), which term
  shall include the Brazilian Subsidiary, if the Spin-Off has not been
  completed as of the Closing Date.

  
	
   

  	
   

  	
   

  
	
  “Assignment
  of Governmental Permits”

  	
   

  	
  The
  Assignment of Governmental Permits to be executed by the Seller or one or
  more of its Affiliates at the Closing with respect to the Governmental
  Permits used by the Seller and the Asset Selling Subsidiaries exclusively in the
  conduct of the Business as currently conducted, substantially in the form of Exhibit 1(a).

  
	
   

  	
   

  	
   

  
	
  “Assignment
  of Product Registrations”

  	
   

  	
  The
  Assignment of Product Registrations to be executed by the Seller or one or
  more of its Affiliates at the Closing with respect to the Product Registrations,
  substantially in the form of Exhibit 1(b).

  
	
   

  	
   

  	
   

  
	
  “Assignment
  of Separate Intellectual Property”

  	
   

  	
  The
  Assignment of Separate Intellectual Property to be executed by the Seller at
  the Closing, substantially in the form of Exhibit 1(c).

  
	
   

  	
   

  	
   

  
	
  “Assumed
  Liabilities”

  	
   

  	
  As defined
  in Section 2.2(a).

  
	
   

  	
   

  	
   

  
	
  “Base
  Amount”

  	
   

  	
  As defined
  in Section 7.4(k)(i).

  
	
   

  	
   

  	
   

  
	
  “Base
  Purchase Price”

  	
   

  	
  As defined
  in Section 2.3(a).

  
	
   

  	
   

  	
   

  
	
  “Benefits
  Transition Agreement”

  	
  As defined
  in Section 7.4(j)

  
	
   

  	
   

  	
   

  
	
  “Bills of
  Sale” 

  	
   

  	
  The Bill of
  Sale, Assignment and Assumption Agreements to be executed by the Seller or
  one or more of its Affiliates at the Closing, substantially in the form of Exhibit 1(d),
  together with such amendments or modifications thereto as are customary in
  the jurisdiction in which the Purchased Assets are located.

  
	
   

  	
   

  	
   

  
	
  “Brazilian
  Subsidiary”

  	
   

  	
  Novartis
  Biociencias S.A.

  
	
   

  	
   

  	
   

  
	
  “Business”

  	
   

  	
  As defined
  in the Preamble.

  

 

3

 

	
  “Business
  Day” 

  	
   

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

  
	
   

  	
   

  	
   

  
	
  “Business
  Employees” 

  	
   

  	
  The
  employees who are on the payroll or treated as though they are on the payroll
  of the Business as of the Closing Date, excluding those Shared Services Employees
  who are transferred to Seller or a designated Affiliate prior to the Closing
  Date pursuant to Section 7.4(a)(ii).

  
	
   

  	
   

  	
   

  
	
  “Business
  Employee Plan” 

  	
   

  	
  Any Novartis
  Plan which covers any current or former Business Employees.

  
	
   

  	
   

  	
   

  
	
  “Business
  Orders”

  	
   

  	
  As defined
  in Section 4.16(b). 

   

  Goods produced,
  distributed, marketed or sold by the Business on the Closing Date under the
  brand names listed in Schedule 1(a)(ii), or otherwise.

  
	
   

  
	
  “Business
  Products”

  	
   

  
	
   

  	
   

  	
   

  
	
  “Buyer”

  	
   

  	
  As defined
  on the title page.

  
	
   

  	
   

  	
   

  
	
  “Buyer
  401(k) Plan”

  	
   

  	
  As defined
  in Section 7.4(k)(ii).

  
	
   

  	
   

  	
   

  
	
  “Buyer
  Designated Affiliate”

  	
   

  	
  As defined
  in Section 10.7.

  
	
   

  	
   

  	
   

  
	
  “Buyer
  Incurred Damages”

  	
   

  	
  As defined
  in Section 6.1(a).

  
	
   

  	
   

  	
   

  
	
  “Buyer’s
  Infant Nutrition Business” 

  	
  The business
  conducted by the Buyer and its Affiliates (including by using assets,
  properties and rights used by the relevant business unit(s) of the Buyer
  and its Affiliates) of developing, manufacturing, marketing, distributing and
  selling infant nutrition products.

  
	
   

  	
   

  	
   

  
	
  “Buyer
  Pension Plan”

  	
   

  	
  As defined
  in Section 7.4(k)(i).

  
	
   

  	
   

  	
   

  
	
  “Care
  Products”

  	
   

  	
  Infant and
  toddler development Business Products.

  
	
   

  	
   

  	
   

  
	
  “Cash
  Pooling Loans”

  	
   

  	
  As defined
  in Section 2.4.

  
	
   

  	
   

  	
   

  
	
  “Closing”

  	
   

  	
  As defined
  in Section 9.1.

  
	
   

  	
   

  	
   

  
	
  “Closing
  Date”

  	
   

  	
  As defined
  in Section 9.1.

  
	
   

  	
   

  	
   

  
	
  “Closing
  Date Consumer

  	
   

  	
   

  
	
  Net Debt”

  	
   

  	
  As defined
  in Section 2.3(d).

  
	
   

  	
   

  	
   

  
	
  “Closing
  Date Consumer

  	
   

  	
   

  

 

4

 

	
  “Working
  Capital”

  	
   

  	
  As defined
  in Section 2.3(d).

  
	
   

  	
   

  	
   

  
	
  “Closing
  Date Life

  	
   

  	
   

  
	
  Net Equity”

  	
   

  	
  As defined
  in Section 2.3(d).

  
	
   

  	
   

  	
   

  
	
  “Code”

  	
  The United
  States Internal Revenue Code of 1986, as amended, and any lawful regulations
  and pronouncements thereunder.

  
	
   

  	
   

  	
   

  
	
  “Companies”

  	
   

  	
  As defined
  in the Preamble, including from after the consummation of the Spin-Off,
  Gerber Brazil.

  
	
   

  	
   

  	
   

  
	
  “Companies’
  Intellectual Property”

  	
   

  	
  As defined
  in Section 4.20(a).

  
	
   

  	
   

  	
   

  
	
  “Companies’
  Know-How”

  	
   

  	
  All Know-How
  owned by the Companies.

  
	
   

  	
   

  	
   

  
	
  “Confidentiality
  Agreement”

  	
   

  	
  As defined
  in Section 10.1(a).

  
	
   

  	
   

  	
   

  
	
  “Consumer
  Business”

  	
   

  	
  As defined
  in the Preamble.

  
	
   

  	
   

  	
   

  
	
  “Consumer
  Companies”

  	
   

  	
  As defined
  in the Preamble.

  
	
   

  	
   

  	
   

  
	
  “Consumer
  Financial Statements”

  	
  As defined
  in Section 4.6(a).

  
	
   

  	
   

  	
   

  
	
  “Consumer
  Net Debt Difference”

  	
  As defined
  in Section 2.3(f)(i).

  
	
   

  	
   

  	
   

  
	
  “Consumer
  Net Debt Position” 

  	
   

  	
  To the
  extent not included in the calculation of the Consumer Working Capital, the
  amount equal to the difference between (A) the aggregate amount in US dollars
  of bank debt and other financial indebtedness of the Companies (other than
  the Insurance Companies) owing to Third Parties for borrowed money, including
  the amount of any recourse factored receivables, and other Liabilities treated
  as indebtedness (other than Liabilities in respect of Transferred Plans and
  other Liabilities transferred pursuant to Section 7.4) in accordance with
  the Accounting Principles, but excluding Taxes, trade receivables or
  payables, accruals and provisions, each as included in accordance with the Accounting
  Principles consistently applied in the line items specified under the caption
  “Debt” in Schedule 1(a)(ix), less (B) the amount in US dollars of cash
  (including bank deposits), marketable securities, and other cash equivalents
  held by the Companies (other than the Insurance Companies), each as included
  in accordance with the Accounting Principles consistently applied in the line
  items

  

 

5

 

	
   

  	
   

  	
  specified
  under the caption “Cash” in Schedule 1(a)(ix).

  
	
   

  	
   

  	
   

  
	
  “Consumer
  Working Capital”

  	
   

  	
  Current
  Assets minus Current Liabilities.

  
	
   

  	
   

  	
   

  
	
  “Consumer
  Working Capital

  	
   

  	
   

  
	
  Difference”

  	
   

  	
  As defined
  in Section 2.3(f)(iii).

  
	
   

  	
   

  	
   

  
	
  “Contest”

  	
   

  	
  As defined
  in Section 6.8(b).

  
	
   

  	
   

  	
   

  
	
  “Continuation
  Period”

  	
   

  	
  As defined
  in Section 7.4(c).

  
	
   

  	
   

  	
   

  
	
  “Current
  Assets”

  	
   

  	
  The
  aggregate amount in US dollars of current assets of the Consumer Business
  included in accordance with the Accounting Principles consistently applied in
  the line items specified under the caption “Assets” in Schedule 1(a)(vii),
  to the extent not included in the calculation of the Consumer Net Debt
  Position.

  
	
   

  	
   

  	
   

  
	
  “Current
  Liabilities”

  	
   

  	
  The
  aggregate amount in US dollars of current liabilities of the Consumer
  Business included in accordance with the Accounting Principles consistently
  applied in the line items specified under the caption “Liabilities” in Schedule
  1(a)(vii), to the extent not included in the calculation of the Consumer
  Net Debt Position.

  
	
   

  	
   

  	
   

  
	
  “Data
  Room” 

  	
   

  	
  The
  documents and information relating to the Business made available through 11
  April 2007 to the Buyer, its Affiliates, directors, officers, employees,
  advisers or agents through a virtual data room, an index of the contents of
  which is set forth in Schedule 1(a)(iii). 

  
	
   

  	
   

  	
   

  
	
  “December 2006
  Consumer

  Statement of Net Assets”

  	
   

  	
  As defined
  in Section 4.6(a). 

  
	
   

  	
   

  	
   

  
	
  “December 2006
  Life

  Statement of Net Assets”

  	
   

  	
  As defined
  in Section 4.6(b).

  
	
   

  	
   

  	
   

  
	
  “De
  Minimis”

  	
   

  	
  As defined
  in Section 6.1(b).

  
	
   

  	
   

  	
   

  
	
  “Determination
  Date”

  	
   

  	
  As defined
  in Section 2.3(e).

  
	
   

  	
   

  	
   

  
	
  “Directive”

  	
   

  	
  Within the
  European Union, any legislation, regulation, enactment, agreement or other instrument
  implementing the provisions of EC

  

 

6

 

	
   

  	
   

  	
  Directives
  No 77/187 dated 14 February 1977 (as modified by EC Directive 98/50/EC)
  or 2001/23/EC dated 12 March 2001 or legislation having equivalent
  effect, and in other jurisdictions, any federal, state or local legislation,
  regulation, enactment, agreement or other instrument having equivalent
  effect.

  
	
   

  	
   

  	
   

  
	
  “Employment
  Transfer Date”

  	
   

  	
  As defined
  in Section 7.4(a).

  
	
   

  	
   

  	
   

  
	
  “Encumbrance”
  

  	
   

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

  
	
   

  	
   

  	
   

  
	
  “Environmental
  Law” 

  	
   

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

  
	
   

  	
   

  	
   

  
	
  “Environmental
  Liabilities” 

  	
   

  	
  Any claim,
  demand, order, suit, obligation, liability, cost (including the cost of any
  investigation, testing, compliance or remedial action), loss or expense (including
  reasonable and incurred attorney’s and consultant’s fees and expenses)
  arising out of, relating to or resulting from any Environmental Law or
  environmental, health or safety matter or condition, including natural
  resources, and related in any way to the Assets or to this Agreement or its subject
  matter, in each case whether arising or incurred before, at or after the
  Closing.

  
	
   

  	
   

  	
   

  
	
  “Environmental
  Permits” 

  	
   

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

  
	
   

  	
   

  	
   

  
	
  “Equipment”

  	
   

  	
  As defined
  in Section 2.1(h)(ii).

  

 

7

 

	
  “ERISA”
  

  	
   

  	
  The Employee
  Retirement Income Security Act of 1974, as amended, and any lawful
  regulations and pronouncements thereunder.

  
	
   

  	
   

  	
   

  
	
  “Estimated
  Closing

  Consumer Net Debt”

  	
   

  	
  As defined
  in Section 2.3(b).

  
	
   

  	
   

  	
   

  
	
  “Estimated
  Closing Consumer Net Debt Statement”

  	
   

  	
  As defined
  in Section 2.3(b).

  
	
   

  	
   

  	
   

  
	
  “European
  Commission”

  	
   

  	
  The
  Commission of the European Communities.

  
	
   

  	
   

  	
   

  
	
  “Excluded
  Agreements”

  	
   

  	
  As defined
  in Section 2.1(i)(xii).

  
	
   

  	
   

  	
   

  
	
  “Excluded
  Assets”

  	
   

  	
  As defined
  in Section 2.1(i).

  
	
   

  	
   

  	
   

  
	
  “Excluded
  Liabilities”

  	
   

  	
  As defined
  in Section 2.2(b).

  
	
   

  	
   

  	
   

  
	
  “Excluded
  Taxes” 

  	
   

  	
  (i) All
  Taxes relating to the Purchased Assets or the Business for any Pre-Closing
  Period; (ii) all Taxes imposed on or payable by any Company for any Pre-Closing
  Period; (iii) with respect to Straddle Periods, Taxes imposed on any
  Company that are allocable, pursuant to Section 6.6(b), to the portion of
  such period ending on and including the Closing Date; (iv) Taxes
  attributable to a taxable period (or portion of a taxable period) ending at
  or before the close of business on the Closing Date for which any Company is
  held liable by reason of having been a member of a consolidated, combined or unitary
  group with any Seller (or any Affiliate of a Seller) prior to the Closing
  (v) all Taxes of any Person (other than a Company) imposed on any
  Company as a transferee or successor, by contract or pursuant to any law,
  rule, or regulation for a taxable period ending on or before the Closing
  Date; and (vi) all Taxes resulting from “excess parachute payments” as
  defined in section 280G of the Code (without regard to subsection 280G(b)(4))
  payable as a result of the transactions contemplated by this Agreement, including
  (A) the Tax cost of not being permitted to take a Tax deduction for such
  payments, (B) the reimbursement to a Business Employee for such Taxes,
  and (C) any gross-up or other payment made to a Business Employee for
  such Taxes; provided, however, that Excluded Taxes will not
  include Taxes (A) resulting from any act, transaction or

  

 

8

 

	
   

  	
   

  	
  omission of
  the Buyer or any Company occurring after the Closing that is not in the
  ordinary course of business, (B) attributable to Buyer’s failure to satisfy
  any of its obligations pursuant to this Agreement or (C) resulting from
  any elections filed by the Buyer or its Affiliates (including, after the Closing,
  the Companies), other than any such elections made at the request of Seller.

  
	
   

  	
   

  	
   

  
	
  “Final
  Closing Statement” 

  	
   

  	
  The
  statement setting forth the calculation of the Closing Date Consumer Net
  Debt, the Closing Date Consumer Working Capital and the Closing Date Life Net
  Equity that is final and binding on the parties, either through the Buyer
  being deemed to have accepted the Initial Closing Statement, through agreement
  by the parties or through the action of the Independent Accountants in the
  manner set forth in Section 2.3(e).

  
	
   

  	
   

  	
   

  
	
  “Forms”

  	
   

  	
  As defined
  in Section 7.18(b).

  
	
   

  	
   

  	
   

  
	
  “Gerber
  Brazil” 

  	
   

  	
  A separate
  legal entity to be incorporated prior to Closing by the Seller in the
  Federative Republic of Brazil.

  
	
   

  	
   

  	
   

  
	
  “Gerber
  Brazil Shares”

  	
   

  	
  As defined
  in Section 2.1(g).

  
	
   

  	
   

  	
   

  
	
  “Gerber
  Consumer Costa Rica”

  	
   

  	
  As defined
  in the Preamble.

  
	
   

  	
   

  	
   

  
	
  “Gerber
  Consumer Costa Rica

  Shares”

  	
   

  	
  As defined
  in Section 2.1(b).

  
	
   

  	
   

  	
   

  
	
  “Gerber
  Costa Rica”

  	
   

  	
  As defined
  in the Preamble.

  
	
   

  	
   

  	
   

  
	
  “Gerber
  Costa Rica Shares”

  	
   

  	
  As defined
  in Section 2.1(c).

  
	
   

  	
   

  	
   

  
	
  “Gerber
  Family”

  	
   

  	
  As defined
  in the Preamble.

  
	
   

  	
   

  	
   

  
	
  “Gerber
  Family Shares”

  	
   

  	
  As defined
  in Section 2.1(e).

  
	
   

  	
   

  	
   

  
	
  “Gerber
  Holdings Mexico”

  	
   

  	
  As defined
  in the Preamble.

  
	
   

  	
   

  	
   

  
	
  “Gerber
  Life”

  	
   

  	
  As defined
  in the Preamble.

  
	
   

  	
   

  	
   

  
	
  “Gerber
  Life Shares”

  	
   

  	
  As defined
  in Section 2.1(f).

  
	
   

  	
   

  	
   

  
	
  “Gerber
  Mexico”

  	
   

  	
  As defined
  in the Preamble.

  

 

9

 

	
  “Gerber
  Poland”

  	
   

  	
  As defined
  in the Preamble.

  
	
   

  	
   

  	
   

  
	
  “Gerber
  Products”

  	
   

  	
  As defined
  in the Preamble.

  
	
   

  	
   

  	
   

  
	
  “Gerber
  Products Shares”

  	
   

  	
  As defined
  in Section 2.1(a)

  
	
   

  	
   

  	
   

  
	
  “Gerber
  Puerto Rico”

  	
   

  	
  As defined
  in the Preamble

  
	
   

  	
   

  	
   

  
	
  “Gerber
  Venezuela”

  	
   

  	
  As defined
  in the Preamble.

  
	
   

  	
   

  	
   

  
	
  “Gerber
  Venezuela Shares”

  	
   

  	
  As defined
  in Section 2.1(d).

  
	
   

  	
   

  	
   

  
	
  “Governmental
  Authority” 

  	
   

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

  
	
   

  	
   

  	
   

  
	
  “Governmental
  Permits” 

  	
   

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

  
	
   

  	
   

  	
   

  
	
  “Hazardous
  Substance” 

  	
   

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

  
	
   

  	
   

  	
   

  
	
  “HSR Act”
  

  	
   

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

  
	
   

  	
   

  	
   

  
	
  “Incidental
  Business”

  	
   

  	
  As defined
  in Section 7.8(c).

  
	
   

  	
   

  	
   

  
	
  “Indemnified
  Party”

  	
   

  	
  As defined
  in Section 6.5(a).

  
	
   

  	
   

  	
   

  
	
  “Indemnifying
  Party”

  	
   

  	
  As defined
  in Section 6.5(a).

  
	
   

  	
   

  	
   

  
	
  “Independent
  Accountants” 

  	
   

  	
  Ernst &
  Young LLP or such other internationally recognized accounting firm as agreed
  by both the Seller and the Buyer.

  

 

10

 

	
  “Initial
  Closing Statement”

  	
   

  	
  As defined
  in Section 2.3(d).

  
	
   

  	
   

  	
   

  
	
  “Insurance
  Companies”

  	
   

  	
  As defined
  in the Preamble.

  
	
   

  	
   

  	
   

  
	
  “Insurance
  Contracts”

  	
   

  	
  As defined
  in Section 4.23(c).

  
	
   

  	
   

  	
   

  
	
  “Intellectual
  Property” 

  	
   

  	
  (i) U.S.,
  foreign and international design and utility patents and patent applications
  (including all re- exams, reissues, divisions, continuations, continuations-in-part,
  and extensions of any patent or patent application), industrial designs
  (registered and unregistered) and applications for registration of industrial
  designs, including all rights, to the extent permitted by applicable Legal
  Requirements, to file corresponding applications in any country in the world;
  (ii) copyrights (registered and unregistered), copyright applications,
  design rights, design right registrations; (iii) trademarks, trade mark applications,
  service marks and trade dress, business names and trade names, whether registered,
  unregistered or existing at common law, including the goodwill associated
  therewith; (iv) Web sites; and (v) domain names and domain name
  applications, except as may contain the Retained Marks.

  
	
   

  	
   

  	
   

  
	
  “Intercompany
  Indebtedness”

  	
   

  	
  As defined
  in Section 2.4.

  
	
   

  	
   

  	
   

  
	
  “Interest
  Amount”

  	
   

  	
  As defined in
  Section 2.3(j).

  
	
   

  	
   

  	
   

  
	
  “Inventory”
  

  	
   

  	
  The
  inventories, wherever located and as of the Closing Date, of raw materials,
  work in progress, finished Business Products and packaging and labeling
  material exclusively used or held for use exclusively in the operation or
  conduct of the Business, other than those of the Companies.

  
	
   

  	
   

  	
   

  
	
  “IRS”

  	
   

  	
  The Internal
  Revenue Service of the United States.

  
	
   

  	
   

  	
   

  
	
  “Know-How”
  

  	
   

  	
  Each of the
  following items as they relate to the development, manufacturing, sale and
  distribution of the Business Products and exist in a written or electronically
  saved form: all confidential or proprietary information, including all
  product composition data and specifications, recipes, packaging
  specifications, research and development data as well as purchasing and
  marketing data and procedures, technologies in development,

  

 

11

 

	
   

  	
   

  	
  instructions,
  formulae and information, manufacturing drawings, engineering drawings,
  manuals, designs, lab journals, notebooks, schematics, blue prints, research
  and development reports, results of clinical trials (whether or not
  published) and related clinical investigators’ reports, technical
  information, design and engineering specifications, including those related
  to products under development.

  
	
   

  	
   

  	
   

  
	
  “Leased Real Property”

  	
   

  	
  As defined in Section
  4.10(b).

  
	
   

  	
   

  	
   

  
	
  “Legal Requirement”
  

  	
   

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

  
	
   

  	
   

  	
   

  
	
  “Liabilities” 

  	
   

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

  
	
   

  	
   

  	
   

  
	
  “Life Business”

  	
   

  	
  As defined in the
  Preamble.

  
	
   

  	
   

  	
   

  
	
  “Life Financial
  Statements”

  	
   

  	
  As defined in Section
  4.6(b).

  
	
   

  	
   

  	
   

  
	
  “Life Net Equity”
  

  	
   

  	
  As of any date, the
  amount in US dollars equal to the difference between (A) the total assets of
  the Insurance Companies, as of such date, over (y) the total liabilities of
  the Insurance Companies, as of such date, prepared in accordance with the
  Accounting Principles consistently applied; provided, however,
  that the impact of realized gains and losses since December 31, 2006 and
  unrealized gains and losses, in each case, net of any current and deferred
  Taxes and changes in deferred Taxes, shall be disregarded for purposes of
  calculating Life Net Equity.

  
	
   

  	
   

  	
   

  
	
  “Life
  Net Equity Difference”

  	
  As defined in Section
  2.3(f).

  
	
   

  	
   

  	
   

  
	
  “Loss”

  	
   

  	
  As defined in Section
  6.1(a).

  

 

12

 

	
  “Material Adverse
  Effect”

  	
  Any event, circumstance,
  change in or effect on the Business that, individually or in the aggregate,
  is materially adverse to the results of operations or the financial condition
  of the Business taken as a whole; provided, however, that the
  following events, circumstances, changes or effects shall not be taken into
  account in determining whether a “Material Adverse Effect” has
  occurred: (i) those fully and fairly disclosed to the Buyer by the
  Seller in the Data Room prior to the Signing Date; (ii) those
  caused by, arising out of or attributable to the general political or
  economic environment or affecting the securities markets generally; (iii) those
  caused by, arising out of or attributable to the announcement of the sale of
  the Business, the execution of this Agreement, or the consummation of the
  transactions contemplated hereby; (iv) those that generally affect the
  industries in which the Business operates (including legal and regulatory
  changes); (v) those caused by, arising out of or attributable to acts of
  terrorism or war (whether or not declared); or (vi) those caused by any
  action or inaction of the Seller, any Selling Subsidiary or any Company
  pursuant to or in accordance with this Agreement or any Ancillary Agreements
  or pursuant to a request or at the direction of the Buyer.

  
	
   

  	
   

  
	
  “Material Contracts”

  	
  As defined in Section 4.8(a).

  
	
   

  	
   

  
	
  “MEC”

  	
  As defined in Section 4.29(e).

  
	
   

  	
   

  
	
  “Medical Nutrition
  Business”

  	
  The “Business,” as defined
  in the agreement dated as of 14 December 2006, between Seller and Buyer
  concerning the sale and purchase of the Seller’s medical nutrition business.

  
	
   

  	
   

  
	
  “Mexico’s Competition
  Act”

  	
  As defined in Section 4.19.

  
	
   

  	
   

  
	
  “New York Department”

  	
  As defined in Section 4.7.

  
	
   

  	
   

  
	
  “Novartis Finance”

  	
  Novartis Finance Corporation,
  an indirect wholly owned subsidiary of the Seller.

  
	
   

  	
   

  
	
  “Novartis OTC”

  	
  A business unit of the
  Seller that is engaged primarily in the research and development,
  manufacturing, marketing, distribution and sales of

  

 

13

 

	
   

  	
  self-medication products.

  
	
   

  	
   

  
	
  “Novartis Plan”

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

  
	
   

  	
   

  
	
  “Other Shares”

  	
  As defined in Section 4.4.

  
	
   

  	
   

  
	
  “Owned Real Property”

  	
  As defined in Section 4.10.

  
	
   

  	
   

  
	
  “PBGC”

  	
  Pension Benefit Guaranty
  Corporation.

  
	
   

  	
   

  
	
  “Retiree Medical
  Liability”

  	
  $60,000,000.

  
	
   

  	
   

  
	
  “Permitted Encumbrances”

  	
  Mechanics’, carriers’,
  workmen’s, repairmen’s, materialmen’s or other like liens arising or incurred
  in the ordinary course of business in respect of Liabilities which are not
  delinquent; liens for Taxes, assessments and charges and other claims not yet
  due and payable, or the validity of which are being contested in good faith;
  imperfections of title, liens, easements, covenants, rights of way or other
  restrictions on use the existence of which would not materially adversely
  affect the value of the relevant property or which do not materially impair
  the use of the property or asset subject thereto for its current purpose and
  other Encumbrances identified in Schedule 1(a)(iv).

  
	
   

  	
   

  
	
  “Permitted Restrictions”

  	
  Encumbrances that do not
  adversely affect the ownership interest in, or the value or use of, such asset
  for its current purposes.

  
	
   

  	
   

  
	
  “Person”

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

  
	
   

  	
   

  
	
  “Plan”

  	
  Any employee benefit plan,
  scheme, program, agreement, arrangement, commitment or understanding of any
  kind (written or unwritten), including without limitation any bonus,
  incentive, stock, stock option, phantom stock, equity-based

  

 

14

 

	
   

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

  
	
   

  	
   

  
	
  “Pre-Closing
  Application”

  	
  As defined in Section 4.29(d).

  
	
   

  	
   

  
	
  “Pre-Closing Period”

  	
  Any taxable period, and
  the portion of any Straddle Period, ending on or before the Closing Date.

  
	
   

  	
   

  
	
  “Proceeding”

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

  
	
   

  	
   

  
	
  “Producers”

  	
  As defined in Section 4.27.

  
	
   

  	
   

  
	
  “Product Liabilities”

  	
  With respect to Business
  Products, all Liabilities resulting from actual or alleged harm, injury,
  damage or death to persons, property or business, irrespective of the legal
  theory asserted.

  
	
   

  	
   

  
	
  “Product Registrations”

  	
  Registrations of Business
  Products existing on the Closing Date, made or filed with Governmental Authorities
  under applicable Legal Requirements held by (i) the Companies or (ii) the
  Seller or the Asset Selling Subsidiaries and related exclusively to the Business,
  including Uniform Product Codes.

  
	
   

  	
   

  
	
  “Purchase Price”

  	
  As defined in Section 2.3(b).

  
	
   

  	
   

  
	
  “Purchase Price Bank
  Account”  

  	
  A bank account to be
  designated by the Seller in a written notice to the Buyer at least five (5) Business
  Days before the Closing.

  
	
   

  	
   

  
	
  “Purchased Assets”

  	
  As defined in Section 2.1(h).

  
	
   

  	
   

  
	
  “Qualified Contract”

  	
  As defined in Section 4.29(f).

  

 

15

 

	
  “Real Property”

  	
  As defined in Section 4.10(b).

  
	
   

  	
   

  
	
  “Real Property Lease”

  	
  The leases relating to
  material Leased Real Property.

  
	
   

  	
   

  
	
  “Receivables”

  	
  Other than those of the
  Companies, any and all accounts receivable, notes and other amounts receivable
  from Third Parties, including customers, to the extent arising exclusively
  from the Business before the Closing Date, whether or not in the ordinary
  course, together with any unpaid financing charges accrued thereon.

  
	
   

  	
   

  
	
  “Reference Consumer
  Working 

  Capital”

  	
  The amount of
  $185,000,000.

  
	
   

  
	
  “Reference Life Equity”

  	
  The amount of
  $612,800,000.

  
	
   

  	
   

  
	
  “Regulations”

  	
  The Treasury Regulations
  (including Temporary Regulations) promulgated by the United States Department
  of Treasury with respect to the Code or other federal tax statutes.

  
	
   

  	
   

  
	
  “Regulatory Reports”

  	
  As defined in Section 4.23(b)

  
	
   

  	
   

  
	
  “Restricted Activities”

  	
  As defined in Section 7.8(a).

  
	
   

  	
   

  
	
  “Retained Marks”

  	
  As defined in Section 9.4.

  
	
   

  	
   

  
	
  “Retained Shared
  Services

  Employees”

  	
  As defined in Section 7.4(a)(ii).

  
	
   

  
	
  “SAP”

  	
  As defined in Section 4.7.

  
	
   

  	
   

  
	
  “SAP Statements”

  	
  As defined in Section 4.7.

  
	
   

  	
   

  
	
  “Section 338(h)(10) Election”

  	
  As defined in Section 7.18(b).

  
	
   

  	
   

  
	
  “Seller”

  	
  As defined on the title
  page.

  
	
   

  	
   

  
	
  “Seller Accounts”

  	
  As defined in Section 2.4.

  
	
   

  	
   

  
	
  “Seller Incurred
  Damages”

  	
  As defined in Section 6.2(a).

  
	
   

  	
   

  
	
  “Seller Insurance”

  	
  As defined in Section 7.5.

  
	
   

  	
   

  
	
  “Seller Loans”

  	
  As defined in Section 2.4.

  
	
   

  	
   

  
	
  “Seller Pension Plan”

  	
  As defined in Section 7.4(k)(i).

  
	
   

  	
   

  
	
  “Seller’s Actuary”

  	
  As defined in Section 7.4(k)(i).

  

 

16

 

	
  “Seller’s Knowledge”

  	
  The actual knowledge of
  the Persons listed in Schedule 1(a)(v)(A) after due inquiry of
  the individuals listed in Schedule 1(a)(v)(B).

  
	
   

  	
   

  
	
  “Selling Subsidiaries”

  	
  The Asset Selling
  Subsidiaries and the Share Selling Subsidiaries.

  
	
   

  	
   

  
	
  “Senior Employee”

  	
  As defined in Section 4.15(c).

  
	
   

  	
   

  
	
  “Separate Intellectual
  Property”

  	
  As defined in Section 2.1(h)(vii).

  
	
   

  	
   

  
	
  “Share Purchase
  Agreements”

  	
  The Share Purchase
  Agreements to be executed between the Seller, the Selling Subsidiaries and
  the Buyer (or their designees) at the Closing, substantially in the form of Exhibits
  2.1.

  
	
   

  	
   

  
	
  “Shared Services
  Employees”

  	
  The employees who as of
  the date hereof are on the payroll, or treated as on the payroll, of the
  Business and who perform shared services to Affiliates of the Companies.

  
	
   

  	
   

  
	
  “Shares”

  	
  The Gerber Products
  Shares, the Gerber Consumer Costa Rica Shares, the Gerber Costa Rica Shares, the
  Gerber Venezuela Shares, the Gerber Family Shares and the Gerber Life Shares,
  and from and after the date of the consummation, if any, of the Spin-Off, all
  of the outstanding capital stock of Gerber Brazil.

  
	
   

  	
   

  
	
  “Share Selling
  Subsidiaries”

  	
  The Subsidiaries of the
  Seller listed in Schedule 1(a)(vi).

  
	
   

  	
   

  
	
  “Significant Countries”

  	
  United States, Mexico and
  Poland.

  
	
   

  	
   

  
	
  “Signing Date”

  	
  The date of this Agreement
  set forth on the title page.

  
	
   

  	
   

  
	
  “Spin-Off”

  	
  As defined in the
  Preamble.

  
	
   

  	
   

  
	
  “Statutory Accounts”

  	
  The audited statutory
  accounts of: Gerber Holdings Mexico, Gerber Mexico, Gerber Poland, Gerber Puerto
  Rico, and Gerber Venezuela for the fiscal years ended 31 December 2005
  and, when finalized, 2006.

  
	
   

  	
   

  
	
  “Straddle Period”

  	
  Any taxable period
  beginning on or prior to the Closing Date and ending after the Closing Date.

  

 

17

 

	
  “Subsidiary”

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

  
	
   

  	
   

  
	
  “Tangible Personal
  Property”

  	
  As defined in Section 2.1(h)(ii).

  
	
   

  	
   

  
	
  “Tax” or “Taxes”

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

  
	
   

  	
   

  
	
  “Tax Returns”

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

  
	
   

  	
   

  
	
  “Third Party”

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

  
	
   

  	
   

  
	
  “Threshold”

  	
  As defined in Section 6.1(c).

  
	
   

  	
   

  
	
  “Title Commitments”

  	
  As defined in Section 7.14.

  
	
   

  	
   

  
	
  “Transfer Amount”

  	
  As defined in Section 7.4(k)(i).

  
	
   

  	
   

  
	
  “Transfer Date”

  	
  As defined in Section 7.4(k)(i).

  
	
   

  	
   

  
	
  “Transferred Employee”

  	
  As defined in Section 7.4(a).

  

 

18

 

	
  “Transferred
  Participants”

  	
  As defined in Section 7.4(k)(i).

  
	
   

  	
   

  
	
  “Transferred Plan”

  	
  Any Business Employee Plan
  or portion thereof (including any assets and liabilities thereof), that is transferred
  to, or retained by, the Companies, the Buyer or any of their respective
  Subsidiaries, in accordance with Section 7.4.

  
	
   

  	
   

  
	
  “Transition Services
  Agreement”

  	
  The Transition Services
  Agreement to be executed between the Seller and the Buyer (or their designees)
  at the Closing, substantially in the form of Exhibit 3.

  
	
   

  	
   

  
	
  “Transition Services”

  	
  As defined in Section 3.

  
	
   

  	
   

  
	
  “U.S. Companies”

  	
  Gerber Products, Gerber
  Products Company of Puerto Rico, Inc., Gerber Finance Company, Gerber Family
  and Gerber Life.

  
	
   

  	
   

  
	
  “U.S. Parent”

  	
  Novartis Corporation.

  
	
   

  	
   

  
	
  “Watson Wyatt Report”

  	
  Project Gerber Report on
  the Retirement Benefit Arrangements Operated by Novartis, dated 10 March 2007,
  prepared by Watson Wyatt.

  
	
   

  	
   

  
	
  “Works Councils”

  	
  The works councils listed
  in Schedule 1(a)(viii).

  
	
   

  	
   

  
	
  “2006 Consumer
  Financial  Statements”

  	
  As defined in Section 4.6(a).

  
	
   

  	
   

  
	
  “2005 Consumer
  Financial Statements”

  	
  As defined in Section 4.6(a).

  
	
   

  	
   

  
	
  “2006 Life Financial
  Statements”

  	
  As defined in Section 4.6(b).

  
	
   

  	
   

  
	
  “2005 Life Financial
  Statements”

  	
  As defined in Section 4.6(b).

  
	
   

  	
   

  
	
  “$” or “US
  dollars”

  	
  The valid currency of the
  United States of America.

  

 

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

 

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

 

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

 

19

 

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

 

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

 

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

 

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

 

2.             SALE AND PURCHASE

 

2.1          Objects of
Sale and Purchase

 

Subject to and in accordance
with the terms and conditions of this Agreement, at the Closing the Seller and
the Buyer, respectively, will take the following actions:

 

(a)           Sale and
Purchase of Gerber Products:  The Seller will cause Novartis Finance to
sell and the Buyer or a Buyer Designated Affiliate will purchase from Novartis
Finance all of the issued and outstanding shares of Gerber Products (the “Gerber
Products Shares”) free and clear of any Encumbrances, pursuant to an
agreement in the form attached as Exhibit 2.1.

 

(b)          Sale and
Purchase of Gerber Consumer Costa Rica:  The Seller will sell and the Buyer or a Buyer
Designated Affiliate will purchase from the Seller all of the issued and
outstanding shares of Gerber Consumer Costa Rica (the “Gerber Consumer Costa
Rica Shares”) free and clear of any Encumbrances, pursuant to an agreement
in the form attached as Exhibit 2.1.

 

(c)           Sale and
Purchase of Gerber Costa Rica:  The Seller will sell and the Buyer or a Buyer
Designated Affiliate will purchase from the Seller all of the issued and
outstanding shares of Gerber Costa Rica (the “Gerber Costa Rica  Shares”)
free and clear of any Encumbrances, pursuant to an agreement in the form
attached as Exhibit 2.1.

 

(d)          Sale and
Purchase of Gerber Venezuela:  The Seller will sell and the Buyer or a Buyer
Designated Affiliate will purchase from the Seller all of the issued and
outstanding shares of Gerber Venezuela not owned by Gerber Products (the “Gerber
Venezuela Shares”) free and clear of any Encumbrances, pursuant to an
agreement in the form attached as Exhibit 2.1.

 

20

 

(e)           Sale and
Purchase of Gerber Family:  The
Seller will cause Novartis Finance to sell and the Buyer or a Buyer Designated
Affiliate will purchase from Novartis Finance all of the issued and outstanding
shares of Gerber Family (the “Gerber Family Shares”) free and clear of
any Encumbrances, pursuant to an agreement in the form attached as Exhibit 2.1.

 

(f)           Sale and
Purchase of Gerber Life:  The
Seller will cause Novartis Finance to sell and the Buyer or a Buyer Designated
Affiliate will purchase from Novartis Finance all of the issued and outstanding
shares of Gerber Life (the “Gerber Life Shares”) free and clear of any
Encumbrances, pursuant to an agreement in the form attached as Exhibit 2.1.

 

(g)          Sale and
Purchase of Gerber Brazil:  If
as of the Closing Date Gerber Brazil has been established and the Spin-Off to
Gerber Brazil has occurred, the Seller will sell and the Buyer or a Buyer
Designated Affiliate will purchase from the Seller all of the issued and
outstanding shares of Gerber Brazil (the “Gerber Brazil Shares”) free
and clear of any Encumbrances, pursuant to an agreement in the form attached as
Exhibit 2.1.

 

(h)          Sale and
Purchase of the Assets:  The
Seller will sell, assign, transfer, convey and deliver, or cause to be sold,
assigned, transferred, conveyed and delivered, to the Buyer or a Buyer
Designated Affiliate, and the Buyer or a Buyer Designated Affiliate will
purchase from the Seller free and clear of any Encumbrances, other than
Permitted Encumbrances, all of the Seller’s, the Asset Selling Subsidiaries’
and any of the Seller’s other Affiliate’s, if applicable, rights, title and interest
in and to the following assets to the extent used by the Seller, the Asset
Selling Subsidiaries and the Seller’s other Affiliate’s, if applicable, in the
conduct of the Business (the “Purchased Assets”): 

 

(i)            all rights in respect of the
Leased Real Property leased by the Asset Selling Subsidiaries and listed in Schedule
2.1(h)(i) (to the extent transferable);

 

(ii)           all furniture, fixtures,
office and other equipment, and other items of tangible personal property,
including spare parts, supplies, tools, machinery and vehicles (collectively,
the “Equipment”), used by the Seller, the Asset Selling Subsidiaries or
any other Affiliate of the Seller at the locations at which the Business is
currently conducted, or otherwise owned or held by the Asset Selling
Subsidiaries at the Closing and used exclusively in the Business or otherwise
reflected on the balance sheet of the Business, including, in particular, if
Gerber Brazil has not been established and such assets are not transferred
thereto prior to the Closing Date, the Equipment used in the Business as
currently conducted in the Federative Republic of Brazil (the “Tangible
Personal Property”);

 

21

 

(iii)          the Inventory; 

 

(iv)          the Receivables;

 

(v)           the books of account,
general, financial and personnel records, invoices, shipping records, product
files, product dossiers (including, but not limited to, health economics
dossiers), supplier lists, customer lists and files, correspondence,
proprietary information and records and other documents, records and files and
any rights thereto, and Tax Returns (and supporting schedules, workpapers and
related documents) relating exclusively to the Business; 

 

(vi)          the goodwill of the Seller
and the Asset Selling Subsidiaries related exclusively to the Business; 

 

(vii)         all rights to the
Intellectual Property owned, utilized or licensed by or to the Seller, the
Asset Selling Subsidiaries or any other Affiliate of the Seller which is used
exclusively in or otherwise exclusively related to the Business and the
Know-How used primarily in or otherwise primarily related to the Business (the
“Separate Intellectual Property”), including the Intellectual Property
listed in Schedule 2.1(h)(vii);  

 

(viii)        the sales and promotional literature,
and other sales-related materials;

 

(ix)           the rights of the Seller and
the Asset Selling Subsidiaries under the contracts, licenses, agreements and
commitments of the Seller and the Asset Selling Subsidiaries exclusively
related to the Business (to the extent such contracts are transferable);  

 

(x)            the Governmental Permits,
including the Product Registrations (to the extent transferable);   

 

(xi)           the databases and software
programs, source codes and manuals owned or used by, or licensed to, the Seller
or the Asset Selling Subsidiaries and used exclusively in the Business (to the
extent transferable); 

 

(xii)          all express or implied
warranties from suppliers to the Business to the extent that they relate
exclusively to the Purchased Assets (to the extent transferable);

 

(xiii)         all prepaid expenses, and
lease and utility and similar deposits of the Seller and any Asset Selling
Subsidiary and any and all deposits, prepayments and other security held by the
Seller and any Asset Selling Subsidiary, which in each case relate exclusively
to the Business, together with all claims, causes of action, rights of
recovery, rights of set-off and rights of recoupment related exclusively to the
Business, other than any of the foregoing related to the Excluded Assets or the
Excluded Liabilities;

 

22

 

and

 

(xiv)        all other assets of the
Seller and the Asset Selling Subsidiaries used exclusively in the Business,
other than the Excluded Assets and the assets, properties and rights owned or
held by the Seller or the Asset Selling Subsidiaries that are required to be
retained by the Seller or the Asset Selling Subsidiaries for the purpose of
providing Transition Services to the Buyer and its Affiliates after the Closing
Date pursuant to the Transition Services Agreement.

 

The Purchased Assets shall
include all assets, properties and rights of the Seller and the Asset Selling
Subsidiaries reflected on the December 2006 Statement of Net Assets.  Purchased Assets shall not include assets
sold, disposed of or depleted in the ordinary course of business or as
required, permitted or contemplated by this Agreement.

 

(i)      Notwithstanding anything in Section 2.1(h) to
the contrary, the Seller will not sell, convey, assign, transfer or deliver,
nor cause to be sold, conveyed, assigned, transferred or delivered, to the
Buyer, and the Buyer will not purchase, and the Purchased Assets will not
include, nor will the Companies hold as of the Closing Date, the Seller’s, any
Company’s or any Asset Selling Subsidiary’s right, title and interest in or to
any of the following (the “Excluded Assets”):

 

(i)            the Purchase Price Bank
Account;

 

(ii)           any cash, marketable
securities, and negotiable instruments and other cash equivalents of the
Seller, any Company (other than the Insurance Companies) or any Asset Selling
Subsidiary on hand, in lock boxes, in financial institutions or elsewhere as of
the Closing Date, including all cash residing in any collateral cash account
securing any obligation or contingent obligation of the Seller, any Company
(other than the Insurance Companies) or any Affiliate of the Seller; 

 

(iii)          any rights to Tax refunds,
credits or similar benefits attributable to Excluded Taxes; 

 

(iv)          the company seal, minute
books, charter documents, stock or equity record books and such other books and
records as pertain to the organization, existence or capitalization of the
Seller or the Asset Selling Subsidiaries, as well as any other records or
materials relating to the Seller or the Asset Selling Subsidiaries generally
and not involving or related to the Purchased Assets or the operations of the
Business; 

 

(v)           any right, property or asset
that is listed or described in Schedule 2.1(i)(v);  

 

(vi)          any intercompany receivables
(i.e., receivables from any Company or any Asset Selling Subsidiary owing to
the Seller or any Affiliate of the

 

23

 

Seller,
other than a Company) as of the Closing Date, other than accounts receivable
incurred in the ordinary course of business in connection with the sale of
Business Products;

 

(vii)         any rights in respect of the
Intercompany Indebtedness; 

 

(viii)        the Retained Marks; 

 

(ix)           all rights of the Seller and
its Affiliates under this Agreement and the Ancillary Agreements; 

 

(x)            Tax Returns (and supporting
schedules, workpapers and related documents), other than those relating
exclusively to the Business;

 

(xi)           any rights under the Seller
Insurance; or 

 

(xii)          subject to Section 7.6(d) and
(e), (A) any rights of the Asset Selling Subsidiaries under any contracts
that are not transferable at Closing and (B) any right of any Company or
any Asset Selling Subsidiary under any license agreement or lease, in each case
that are listed in Schedule 2.1(i)(xii) (the “Excluded Agreements”).

 

The
Seller shall, if it deems such transfer to be necessary, at its sole cost and
expense, take (or cause to be taken) such action (including preparing any
necessary transfer documentation therefor) as is necessary to transfer, no
later than the Closing Date, the Excluded Assets from the Companies for such
consideration or no consideration as may be determined by the Seller.  The Seller shall provide the Buyer with
evidence of the foregoing transfers at the request of the Buyer.  The transfer and conveyance of the Excluded
Assets from the Companies to the Seller or its designee shall be completed in a
manner which does not result in any Liability of the Companies which is
required to be discharged by the Companies after the Closing Date.

 

2.2    Assumption
and Exclusion of Liabilities

 

(a)           Upon the terms
and subject to the conditions set forth in this Agreement, the Buyer will
assume, and agree to pay, perform and discharge when due, any and all of the
Liabilities of the Seller and the Asset Selling Subsidiaries to the extent
relating to or arising exclusively out of the Business or the Purchased Assets,
other than the Excluded Liabilities set forth in Section 2.2(b) below
(the “Assumed Liabilities”).  The
Assumed Liabilities include, but are not limited to, the following:

 

(i)            all Liabilities of the
Seller or any Asset Selling Subsidiary arising under the contracts assumed by
the Buyer; 

 

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

 

24

 

(iii)          all Liabilities in respect
of any and all accounts payable and the accrued vacation, sick leave, workers’
compensation claims and insurance claims of, in each case, the Transferred
Employees; 

 

(iv)          all Environmental
Liabilities; 

 

(v)           all intercompany Liabilities
(i.e., payables by any Company or any Asset Selling Subsidiary to the Seller or
any Affiliate of the Seller), to the extent incurred in the ordinary course of
business for the purchase of products used exclusively in the Business; 

 

(vi)          all Taxes relating to the
Companies, the Purchased Assets or the Business other than Excluded Taxes; and 

 

(vii)         all Liabilities transferred
to the Buyer in accordance with Section 7.4. 

 

(b)           The Seller will retain, and
will be responsible for paying, performing and discharging when due, and the
Buyer will not assume or have any responsibility for, the following
Liabilities, whether belonging to the Seller, the Companies or the Asset
Selling Subsidiaries (collectively, the “Excluded Liabilities”): 

 

(i)            all Excluded Taxes; 

 

(ii)           all Liabilities relating to
or arising out of the Excluded Assets; 

 

(iii)          the Seller’s and its
Affiliate’s obligations under this Agreement and the Ancillary Agreements and
any Liability to Goldman Sachs & Co. arising in connection with this
Agreement and the transactions contemplated hereby; 

 

(iv)          all Liabilities for
intercompany accounts payable, other than trade payables arising in the
ordinary course of business from the sale of products by the Seller or an
Affiliate of the Seller to a Company or an Asset Selling Subsidiary to the
extent related exclusively to the Business; 

 

(v)           all Intercompany
Indebtedness;

 

(vi)          other than under any
Transferred Plans, or except as otherwise expressly provided in Section 7.4,
all Liabilities related to the Seller’s, the Companies’, the Companies’
Subsidiaries or the Asset Selling Subsidiaries’ sponsorship of, maintenance of,
contribution to or other obligations with respect to any Plan; 

 

(vii)         any Liabilities related to
the Spin-Off, including, without limitation, any Tax and severance Liabilities,
except as otherwise provided in Section 7.4; and 

 

(viii)        all Liabilities of the
Seller or the Asset Selling Subsidiaries that do

 

25

 

not
relate exclusively to the Business.

 

(c)           The Buyer shall
indemnify the Seller and its Affiliates for and hold them harmless against all
Assumed Liabilities (without limitation to the Buyer’s rights under Section 6.1
with respect to breaches of representations and warranties) and the Seller
shall indemnify the Buyer and its Affiliates for and hold them harmless from
all Excluded Liabilities.

 

2.3          Purchase
Price

 

(a)           The purchase
price for the Shares, the Purchased Assets and the covenant in Section 7.8
will be $5,500,000,000 (Five billion, five hundred million US dollars),
exclusive of any applicable value added tax less the Retiree Medical Liability
(the “Base Purchase Price”). 

 

(b)          No later than five (5) Business
Days prior to the Closing Date, the Seller will deliver to the Buyer an
estimate of the Consumer Net Debt Position as of the Closing Date (the “Estimated
Closing Consumer Net Debt”), together with a statement setting forth the
calculation thereof (the “Estimated Closing Consumer Net Debt Statement”).  The Base Purchase Price will be adjusted (as
so adjusted, the “Purchase Price”) (i) upward, US dollar for US
dollar, by the Estimated Closing Consumer Net Debt in the event that such
amount is negative and (ii) downward, US dollar for US dollar, by the
Estimated Closing Consumer Net Debt in the event that such amount is positive.

 

(c)           The Buyer will
pay the Purchase Price in full to the Seller at the Closing, in US dollars, by
electronic transfer in immediately available funds to the Purchase Price Bank
Account. 

 

(d)          No later than
sixty (60) Business Days after the Closing Date, the Seller will prepare and
deliver to the Buyer a statement (the “Initial Closing Statement”) of (A) the
Consumer Net Debt Position as of the close of business on the Closing Date (the
“Closing Date Consumer Net Debt”), (B) the Consumer Working Capital
as of the close of business on the Closing Date (the “Closing Date Consumer
Working Capital”) and (C) the Life Net Equity as of the close of
business on the Closing Date (the “Closing Date Life Net Equity”).   The Initial Closing Statement shall set
forth the Seller’s determination of (i) the Closing Date Consumer Net Debt
prepared in a manner consistent with the preparation of the Estimated Closing
Consumer Net Debt Statement, (ii) the Closing Date Consumer Working
Capital prepared in a manner consistent with the Accounting Principles and (iii) the
Closing Date Life Net Equity prepared in a manner consistent with the
preparation of the December 2006 Life Statement of Net Assets.  At all reasonable times during the forty-five
(45) days immediately following the Buyer’s receipt of the Initial Closing
Statement, the Buyer and its representatives shall be permitted to review the
Seller’s records relating to the Initial Closing Statement, and the Seller
shall make

 

26

 

reasonably
available the individuals responsible for the preparation of the Initial
Closing Statement in order to respond to the inquiries of the Buyer related
thereto. 

 

(e)           The Buyer will
notify the Seller in writing of any disputed item, specifying the amount in
dispute and setting forth, in reasonable detail, the basis for such dispute,
within forty-five (45) days of the Seller’s delivery of the Initial Closing
Statement to the Buyer.  The Buyer may
dispute any amount reflected in the Initial Closing Statement, but only on the
basis that such disputed amount is either arithmetically inaccurate or was not
prepared in the manner consistent with (or failed to take into account items
required by) the Accounting Principles, in the case of the Closing Date
Consumer Working Capital, the Estimated Closing Consumer Net Debt Statement, in
the case of the Closing Date Consumer Net Debt, or the December 2006 Life
Statement of Net Assets, in the case of the Closing Date Life Net Equity.  The Buyer agrees that the failure to notify
the Seller of a dispute within such period will be conclusively deemed to be an
acceptance by the Buyer of the Initial Closing Statement and will constitute a
waiver of any right of the Buyer to dispute the Initial Closing Statement for
purposes of this Agreement.  In the event
of a dispute, the Seller and the Buyer will use their reasonable best efforts
to reconcile their differences.  If the
Seller and the Buyer are unable to reach a resolution within fifteen (15)
Business Days after receipt by the Seller of the Buyer’s written notice of
dispute, the items remaining in dispute will be submitted to the Independent
Accountants.  The Seller and the Buyer
will make available to the Independent Accountants such business records and
explanations relating to, and access to personnel of the Seller, the Buyer and
the Companies involved in the preparation of, the Initial Closing Statement, as
may reasonably be required by the Independent Accountants to make their final
determination.  The Independent
Accountants will be directed to resolve the disputed items within thirty (30)
days after such disputed items are referred to them, and their decision will be
final and binding on the parties hereto. 
The Seller and the Buyer will each bear fifty percent (50%) of the fees
and expenses of the Independent Accountants. 
The Initial Closing Statement will be deemed final and binding on the parties
hereto and shall be deemed the Final Closing Statement upon the earliest of (i) the
date the Buyer is deemed to have accepted the Initial Closing Statement in
accordance with this Section 2.3(e), (ii) the resolution of all
disputes pursuant to this Section 2.3(e) by the Seller and the Buyer
or (iii) the resolution of all disputes pursuant to this Section 2.3(e) by
the Independent Accountants (such earliest date being the “Determination
Date”).

 

(f)           Within five (5) Business
Days after the Determination Date, a Purchase Price adjustment shall be made as
follows: 

 

(i)            in the event that the
difference between the Closing Date

 

27

 

Consumer
Net Debt (as set forth on the Final Closing Statement) and the Estimated
Closing Consumer Net Debt (as set forth on the Estimated Closing Consumer Net
Debt Statement) (the “Consumer Net Debt Difference”) is negative, the
Buyer will pay to the Seller the amount of the Consumer Net Debt Difference,
together with the Interest Amount; 

 

(ii)           in the event that the
Consumer Net Debt Difference is positive, the Seller will pay to the Buyer the
amount of the Consumer Net Debt Difference, together with the Interest Amount; 

 

(iii)          in the event that the
difference between the Reference Consumer Working Capital and the Closing Date
Consumer Working Capital (as set forth on the Final Closing Statement) (the “Consumer
Working Capital Difference”) is negative in an amount of at least
$3,000,000, the Buyer will pay to the Seller the amount of the Consumer Working
Capital Difference, together with the Interest Amount;  

 

(iv)          in the event that the
Consumer Working Capital Difference is positive in an amount of at least
$3,000,000, the Seller will pay to the Buyer the amount of the Consumer Working
Capital Difference, together with the Interest Amount; 

 

(v)           in the event the difference
between the Reference Life Equity and the Closing Date Life Net Equity (as set
forth on the Final Closing Statement) (the “Life Net Equity Difference”)
is negative, in an amount of at least $3,000,000, the Buyer will pay to the
Seller the amount of the Life Net Equity Difference, together with the Interest
Amount; and 

 

(vi)          in the event the Life Net
Equity Difference is positive, in an amount of at least $3,000,000, the Seller
will pay to the Buyer the amount of the Life Net Equity Difference, together
with the Interest Amount.

 

(g)           The Base
Purchase Price will be allocated in accordance with Schedule 2.3(g),
subject to adjustment as set forth in Section 2.3(b).  In the event the Purchase Price is adjusted
pursuant to Section 2.3(f) or Section 7.4(k), the Seller will,
no later than five (5) Business Days after the Determination Date or the
Transfer Date, as applicable, prepare and deliver to the Buyer a revised allocation
schedule that reflects such adjustment and, in the case of adjustments in
accordance with Section 2.3(f), is consistent with the Closing Date
Consumer Net Debt, the Closing Date Consumer Working Capital and the Closing
Date Life Net Equity, in each case, as set forth in the Final Closing
Statement.  Neither the Buyer nor the
Seller or any of their respective Affiliates will file any Tax Return or
otherwise take any position or agree to take any position that is inconsistent
with the allocation contemplated by this Section 2.3(g) without prior
notice and consultation with the other party.

 

(h)           The Buyer
agrees that following the Closing through the date on which

 

28

 

payment,
if any, is made by either party pursuant to Section 2.3(f) or if the
Final Closing Statement indicates that no such payment is required, then
through the date on which the Final Closing Statement becomes effective, it
will not take any actions with respect to any accounting books, records,
policies or procedures on which the Final Closing Statement is to be based that
would make it impossible or impracticable to calculate the Consumer Net Debt
Position, the Consumer Working Capital or the Life Net Equity in the manner and
utilizing the methods required hereby.

 

(i)            The Buyer
agrees to permit full access to the books and records of the Companies and the
Business to the extent relevant to the determination of the Closing Date
Consumer Net Debt, the Closing Date Consumer Working Capital and the Closing
Date Life Net Equity to the Seller (and its advisors and/or agents), following
the Closing Date through the date on which the Final Closing Statement become
effective. 

 

(j)            Any payment
required to be made by the Buyer or the Seller pursuant to Section 2.3(f),
if any, will bear interest at a rate of five percent (5%) per annum, calculated
from the Closing Date until the date of payment (the “Interest Amount”).  All payments required to be made pursuant to Section 2.3(f) together
with interest payable pursuant to this Section 2.3(j) shall be made
in full in US dollars by electronic transfer of immediately available funds to
the bank account designated in writing by the party receiving the payment no
later than the fifth Business Day after the Determination Date. 

 

(k)           To the extent
an amount with respect to any asset or liability is included in the calculation
of the Consumer Net Debt Position, such amount shall not be included in the
calculation of the Closing Date Consumer Working Capital or the Closing Date
Life Net Equity.  To the extent an amount
with respect to any asset or liability is included in the calculation of the
Closing Date Consumer Working Capital, such amount shall not be included in the
calculation of the Consumer Net Debt Position or the Closing Date Life Net
Equity.  To the extent an amount with
respect to any asset or liability is included in the calculation of the Closing
Date Life Net Equity, such amount shall not be included in the calculation of
the Consumer Net Debt Position or the Closing Date Consumer Working Capital.

 

2.4    Intercompany
Indebtedness

 

Prior to the Closing, the
Seller will discharge, or will cause to be discharged (i) the aggregate
amount of all outstanding loans to, and cash deposits with, the Companies from
the Seller or any of its Affiliates (other than the Companies) (excluding
balances arising from ordinary trading activities) (the “Seller Loans”),
together with any interest thereon for the period ending on and including the
Closing Date, (ii) the aggregate amount of all amounts payable by the
Companies net of any amounts receivable thereby under cash pooling arrangements
between each Company, on the one hand, and the Seller or any of its Affiliates,
on the

 

29

 

other hand (the “Cash
Pooling Loans”), (iii) the aggregate amount of intercompany open
accounts of the Seller or any of its Affiliates with the Companies (the “Seller
Accounts”) and (iv) together with interest thereon and accrued charges
relating thereto for the period ending on and including the Closing Date, in
each case, as a repayment of such Seller Loans, Cash Pooling Loans and Seller
Accounts (the aggregate amount of the Seller Loans, the Cash Pooling Loans and
the Seller Accounts and all interests and charges accrued thereon for the
period ending on and including the Closing Date are referred to as the “Intercompany
Indebtedness”).

 

2.5          Licenses
for Certain Know-How

 

(a)           To the extent
that the Business currently uses any Know-How which is not transferred to the
Buyer or the Buyer Designated Affiliates under or pursuant to this Agreement,
but which is owned or held under license (with the right to grant sublicenses)
by the Seller or any of its Affiliates, the Seller shall, and shall cause its respective
Affiliates to, grant the Buyer and the Buyer Designated Affiliates a perpetual,
world-wide, royalty-free, irrevocable license (in customary form) to use such
Know-How solely in the Business as it is currently conducted.

 

(b)          To the extent
that the Seller and any of its Affiliates (other than the Companies) currently
use, other than with respect to the Business, any Know-How which is transferred
to Buyer or the Buyer Designated Affiliates under or pursuant to this
Agreement, the Buyer shall, and shall cause its respective Buyer Designated
Affiliates to, grant the Seller and its respective Affiliates a perpetual,
world-wide, royalty-free, irrevocable license (in customary form) to use such
Know-How solely in the business that currently makes use of the Know-How as
such business is currently conducted.

 

3.             TRANSITION SERVICES

 

The Seller will provide to
the Buyer, and the Buyer will provide to the Seller, transitional services
listed in Schedule 3 selected, on or before June 30, 2007, to be received
by the Customer (as defined in Exhibit 3) in accordance with this Section (the
“Transition Services”), pursuant to a transition services agreement
substantially in the form attached as Exhibit 3.  The Buyer and the Seller further agree that
the Customer shall be entitled to select individual units of service (i.e.
individual data points) in their entirety from the Matrix of Service Units (as
defined in Schedule 3). In the event Customer selects any such service unit
(i.e. individual data point), the entire cost of such unit shall nevertheless
be paid, irrespective of whether the total value of services within such unit
is consumed.

 

4.             REPRESENTATIONS AND
WARRANTIES OF THE SELLER

 

The Seller hereby represents
and warrants to the Buyer, as of the Signing Date and as of the Closing Date,
as follows:

 

30

 

4.1          Organization,
Authority and Qualification of the Companies

 

Each Company is duly
organized, validly existing and, in jurisdictions where the concept is recognized,
in good standing under the laws of its respective jurisdiction of organization
and has the necessary corporate power and authority to own its assets and
properties and carry on its business as currently conducted, except where the
failure to be so organized, existing and in good standing would not (a) adversely
affect the ability of the Seller to carry out its obligations under, and to
consummate the transactions contemplated by, this Agreement or (b) materially
adversely affect the ability of each Company to conduct the Business as it is
currently conducted.  Each Company and
each Asset Selling Subsidiary is licensed or qualified to do business in each
jurisdiction where the nature of the properties owned, leased or operated by it
and the business transacted by it requires such licensing or qualification,
except where the failure to be qualified or licensed would not, individually or
in the aggregate, have a Material Adverse Effect.

 

4.2          Organization
and Authority of the Seller

 

(a)           The Seller is a
corporation duly organized and validly existing under the laws of Switzerland
and has all necessary corporate power and authority to enter into this
Agreement and the Ancillary Agreements to which it is a party, and to perform
its obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby.  Each
Selling Subsidiary is or will be as of the Closing Date a corporation duly
organized and validly existing under the laws of its jurisdiction of
organization and has or will have as of the Closing Date all requisite power
and authority to enter into any Ancillary Agreement to which it is or will
become a party, and to perform its obligations thereunder and to consummate the
transactions contemplated thereby.  The
execution and delivery of this Agreement and the Ancillary Agreements by the
Seller and each Selling Subsidiary, the performance by the Seller and each
Selling Subsidiary of its obligations hereunder and thereunder and the
consummation by the Seller and each Selling Subsidiary of the transactions
contemplated hereby and thereby have been duly authorized by all requisite
corporate action on the part of the Seller and have been or will be as of the
Closing Date duly authorized by all requisite corporate action on the part of
each Selling Subsidiary.

 

(b)          This Agreement
has been, and upon their execution the Ancillary Agreements will have been,
duly executed and delivered by the Seller and each Selling Subsidiary, as
applicable, and (assuming due authorization, execution and delivery by the
Buyer) constitutes, and upon their execution the Ancillary Agreements will
constitute, a legal, valid and binding obligation of the Seller and each
Selling Subsidiary, as applicable, enforceable against the Seller and each
Selling Subsidiary, as applicable, in accordance with their respective terms.

 

31

 

4.3          Capital
Stock of the Companies

 

Schedule 4.3 lists for each Company true and complete
information regarding all of the authorized, issued and outstanding shares of
capital stock of such Company and the current record and beneficial ownership
of such shares.  If Gerber Brazil is
formed on or prior to the Closing Date, Schedule 4.3 will be updated
prior to the Closing Date to reflect the ownership of all of the outstanding
capital stock of such Person.  As of the
date of this Agreement, the Business is conducted through the Seller, the
Companies, the Asset Selling Subsidiaries or the Seller’s Affiliates providing
Transition Services and no other Person. 
The Companies do not have any Subsidiaries or an ownership interest in
any other Person except as set forth on Schedule 4.3.

 

4.4          Ownership of the Shares and
Other Equity Interests

 

(a)           As of the Signing Date and as of the Closing
Date, (a) Novartis Finance owns beneficially and of record the Gerber
Products Shares, the Gerber Family Shares and the Gerber Life Shares and (b) the
Seller owns beneficially and of record the Gerber Consumer Costa Rica Shares, the Gerber Costa Rica Shares and the
Gerber Venezuela Shares, in each case, free and clear of all Encumbrances.  As of the Signing Date and as of the Closing
Date, Gerber Products directly, or indirectly, owns beneficially and of record
all the outstanding share capital of each Company other than the Shares (such
share capital, the “Other Shares”), in each case free and clear of all
Encumbrances.  The Shares and the Other
Shares are validly issued, fully paid and non-assessable and were not issued in
violation of any preemptive rights. 
There are no options, warrants, convertible securities or other rights,
agreements, arrangements or commitments relating to the Shares, the Other
Shares or any other securities of the Companies obligating the Seller, any
Company or any of the Seller’s Affiliates to issue, sell, purchase, redeem or
otherwise acquire any equity interest in any Company.  There are no voting trusts, shareholder
agreements, proxies or other agreements in effect with respect to the voting or
transfer of the Shares or the Other Shares.

 

(b)           As of the Closing Date, if the Spin-Off
contemplated for Brazil shall have occurred, the Seller or one of its wholly
owned Subsidiaries will own, beneficially and of record, all of the Gerber
Brazil Shares free and clear of any Encumbrances.  The Gerber Brazil Shares, upon issuance (if
issued) and as of the Closing Date, will be validly issued, fully paid and
non-assessable and will not have been issued in violation of the preemptive
rights of any Person.

 

4.5          No Conflict

 

Assuming that all consents,
approvals, authorizations and other actions described in Schedule 4.8(b),
Section 4.19 and Schedule 4.19 have been obtained, all filings and
notifications described in Section 4.19 or listed in Schedule 4.19
have been

 

32

 

made and any applicable
waiting period has expired or been terminated, and except as may result from
any facts or circumstances relating solely to the Buyer or any of its
Affiliates, neither the execution or delivery by the Seller of this Agreement
nor the execution or delivery by the Seller or any Selling Subsidiary of any
Ancillary Agreement to which it is a party, or the performance by the Seller of
its obligations under this Agreement or by the Seller or any Selling Subsidiary
of its obligations under any Ancillary Agreement to which it is a party, or the
consummation of the transactions contemplated hereby or thereby will (a) result
in any breach of any provision of the certificate of incorporation or by-laws
(or other similar organizational documents) of the Seller, any Company or any
Selling Subsidiary, (b) result in any material breach of, or constitute a
default under, any Material Contract or judgment to which the Seller, any
Company or any Selling Subsidiary is a party or by which it is bound or (c) violate
any applicable material Legal Requirement, other than such breaches, defaults
or violations which would not, in the case of clause (b), (i) materially
and adversely affect the ability of the Seller to carry out its obligations
under, and to consummate the transactions contemplated by, this Agreement and
the Ancillary Agreements or (ii) otherwise have a Material Adverse Effect.

 

4.6          Financial Statements; Other
Liabilities

 

(a)           Schedule 4.6(a) contains:  (i) the unaudited combined statement of
net assets of the Consumer Business as of 31 December 2006 (the “December 2006
Consumer Statement of Net Assets”), and the related unaudited combined
statement of operating income of the Consumer Business for the year ended 31 December 2006
(the “2006 Consumer Financial Statements”) and (ii) the unaudited
combined statement of net assets of the Consumer Business as of 31 December 2005,
and the related unaudited combined statement of operating income of the
Consumer Business for the year ended 31 December 2005 (the “2005
Consumer Financial Statements”, together with the 2006 Consumer Financial
Statements,  the “Consumer Financial
Statements”).

 

(b)           Schedule 4.6(b) contains: (i) the unaudited
combined statement of net assets of the Life Business as of 31 December 2006
(the “December 2006 Life Statement of Net Assets”), and the related
statement of operating income of the Life Business for the year ended 31 December 2006
(the “2006 Life Financial Statements”) and (ii) the unaudited
combined statement of net assets of the Life Business as of 31 December 2005,
and the related statement of operating income of the Life Business for the year
ended 31 December 2005 (the “2005 Life Financial Statements”,
together with the 2006 Life Financial Statements, the “Life Financial
Statements”).

 

(c)           The Consumer Financial Statements (i) were prepared in accordance
with the books of account and other financial records of the Consumer Business
(except as may be indicated in the notes thereto or in Schedules 4.6(a) and
4.6(c)) and the Accounting Principles and (ii) present fairly, in
all material

 

33

 

respects, the combined
financial position and the combined results of operations of the Consumer
Business as of the dates thereof or for the periods covered thereby in
conformity with the Accounting Principles, consistently applied.  The Life Financial Statements (i) were
prepared in accordance with the books of account and other financial records of
the Life Business (except as may be indicated in the notes thereto or in Schedules
4.6(b) and 4.6(c)) and the Accounting Principles, FAS 60 and
FAS 115, as applicable, and (ii) present fairly, in all material respects,
the combined financial position and the combined results of operations of the
Life Business as of the dates thereof or for the periods covered thereby in
conformity with the Accounting Principles, consistently applied.

 

(d)           Except as set forth in the December 2006 Consumer Statement of Net
Assets in Schedule 4.6(a), there was no material “off-balance sheet”
financial indebtedness relating to the Consumer Business as of the date of the December 2006
Consumer Statement of Net Assets. Except as set forth in the December 2006
Life Statement of Net Assets in Schedule 4.6(b), there was no material
“off-balance sheet” financial indebtedness related to the Life Business as of
the date of the December 2006 Life Statement of Net Assets.

 

4.7          Statutory Accounts

 

(a)           The balance sheets included in the Statutory Accounts were prepared in
accordance with applicable statutory requirements of the relevant jurisdictions
in effect as of the date of their preparation.

 

(b)           Schedule 4.7 contains the annual statutory statements of
Gerber Life filed with the Insurance Department of the State of New York (the “New
York Department”) for the years ended 31 December 2006 and 2005,
together with all related notes, exhibits and schedules thereto (other than the
Audit Report and Actuarial Report related to the 31 December 2006
statements)(the “SAP Statements”). 
The SAP Statements (i) were prepared in accordance with the
statutory accounting practices and procedures (“SAP”) required or
permitted by the New York Insurance laws and regulations, as in effect as of
the date thereof and for the periods presented (except as may be noted therein,
in the notes thereto, or in Schedule 4.7), and (ii) present fairly,
in all material respects, the statutory financial position and results of
operations of Gerber Life as of the date thereof for the periods covered
thereby.

 

(c)           The reserves and other liability amounts established or reflected on
the SAP Statements, including reserve and other liability amounts in respect of
insurance policies, annuity contracts and other insurance products (i) were
determined in accordance with U.S. generally accepted actuarial practices
applied on a consistent basis for the periods presented, (ii) were based
on actuarial assumptions that were reasonable in relation to relevant policy
and contract provisions, (iii) reflect each policy, contract and claim in
the

 

34

 

books and records of Gerber
Life that should, in accordance with U.S. generally accepted actuarial
practices, applied on a consistent basis for the periods presented, have a
reserve or other liability reflected in such statutory statements, and (iv) are
in compliance in all material respects with the requirements of the New York
Insurance laws and regulations.

 

4.8          Agreements

 

(a)           Schedule 4.8(a) lists all material distribution
contracts, franchise contracts, leases, supply and Third Party manufacturing
contracts, joint venture, partnership and stockholder agreements, advertising
and sponsorship contracts, debt agreements, guarantees and related security
agreements, non-competition contracts, Third Party management contracts, asset
purchase agreements and other material agreements of the Business, except for
those agreements and contracts that are not held by the Companies or the Asset
Selling Subsidiaries and that do not relate exclusively to the Business (and
together with the contracts identified in Schedule 4.11(a)(i),
collectively the “Material Contracts”). 
For purposes of this Section 4.8, “material” means:

 

(i)            brokerage, distribution, sales agency and
franchise contracts with an annual turnover or financial commitment, on an
individual basis, exceeding $8,000,000;

 

(ii)           leases of personal property with an annual payment, on an individual
basis, exceeding $4,300,000;

 

(iii)          supply and Third Party manufacturing contracts and binding purchase or
sale commitments with a total annual payment or financial commitment, on an
individual basis, exceeding $8,000,000;

 

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

 

(v)           advertising and sponsorship contracts with commitments, on an
individual basis, exceeding $6,900,000;

 

(vi)          agreements under which any Company has incurred, assumed or guaranteed
any indebtedness for borrowed money, sale and leaseback agreements and
factoring agreements and related security agreements, on an individual basis,
exceeding $5,000,000;

 

(vii)         contracts or commitments restricting any Company or an Asset Selling
Company (to the extent that the same would constitute a Purchased Asset) from
engaging in or competing in any line of business;

 

(viii)        contracts for the management of any business owned by a Third Party;

 

35

 

(ix)           agreements for the sale or purchase of any assets of the Business other
than in the ordinary course of business, or for the grant of any options or
preferential rights to purchase any assets, property or rights of the Business
(other than inventory), in each case, for consideration in excess of $8,000,000
or under which the Company or any Asset Selling Subsidiary has any continuing
obligation;

 

(x)            research and development agreements with
total annual payments or financial commitments, on an individual basis,
exceeding $4,300,000;

 

(xi)           material license agreements pursuant to which the Seller, any Company,
any Asset Selling Subsidiary or any Affiliate of the Seller licenses any
Intellectual Property used exclusively in the Business to or from any Third
Party;

 

(xii)          executory contracts for capital expenditures with total annual payments
or financial commitments, on an individual basis, exceeding $6,900,000;

 

(xiii)         (A) any contracts, treaties, agreements or arrangements with
managing general underwriters, underwriters or reinsurers, including
reinsurance contracts under which Gerber Life has ceded risks to reinsurers
that have been terminated but under which there remains outstanding liability
from the reinsurer, together with any letters of credit, trust, or collateral
arrangements posted by or created for the benefit of Gerber Life with respect
to any credit reinsurance agreement, and (B) any contract or agreement
under which Gerber Life has agreed to reinsure any risks from other insurers,
in each case, on an individual basis, where the applicable insurance or
reinsurance liability exceeds $8,000,000; and

 

(xiv)        any other agreement that requires an annual payment of more than
$4,300,000 during the current term of such agreement or, with respect to the
conduct of the Business in Significant Countries, which any Company or Asset
Selling Subsidiary is not able to terminate on twelve (12) months’ notice or
less without penalty.

 

(b)           Except as disclosed in Schedule 4.8(b), the execution and
delivery of this Agreement by the Seller does not, and the performance of this
Agreement by the Seller and the Selling Subsidiaries will not, conflict with,
result in any breach of, constitute a default (or event which with the giving
of notice or lapse of time would become a default) under, require any consent
under, or give to others any rights of termination, acceleration or
cancellation of, any of the Material Contracts other than (i) those
conflicts, breaches, defaults or events of default that would not materially
adversely affect the aggregate value of such Material Contracts to the Business
or otherwise have a Material Adverse Effect and (ii) (A) those
consents, the failure of which to obtain, and (B) the rights of
termination, acceleration or cancellation, the exercise of which, would not
materially adversely affect

 

36

 

 

the aggregate value of such
Material Contracts to the Business or otherwise have a Material Adverse
Effect.  Except as set forth in Schedule
4.8(b), to the Seller’s Knowledge, Gerber Life has not received written notice
from any reinsurer under any material reinsurance contract that the reinsurer
intends not to pay any material claim made by Gerber Life under such contract.

 

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

 

4.9          Insurance

 

Except as disclosed in Schedule
4.9, all material properties of the Companies are currently covered by
insurance or self insurance or programs in such types and amounts as are
consistent with customary practices and standards of companies engaged in
businesses similar to the Business and applicable Legal Requirements.

 

4.10        Real Property

 

(a)           Schedule 4.10(a) lists each parcel of real property
owned by the Companies (the “Owned Real Property”).  None of the Seller, the Asset Selling
Subsidiaries or any other Affiliate of the Seller owns any other material real
property which is used exclusively in the Business.

 

(b)           Schedule 4.10(b) lists each parcel of real property
leased by the Companies or, to the extent used exclusively in the conduct of
the Business as currently conducted, the Asset Selling Subsidiaries (the “Leased
Real Property” and, together with the Owned Real Property, the “Real
Property”).

 

(c)           Except as disclosed in Schedule 4.10(c), the Companies own all
of the Owned Real Property free and clear of all Encumbrances, other than
Permitted Encumbrances.

 

(d)           Each lease relating to material Leased Real Property is a valid
agreement enforceable against the relevant Company or Asset Selling Subsidiary
and, to the Seller’s Knowledge, against the other parties thereto.  None of the relevant Companies or Asset
Selling Subsidiaries is in material default or breach, or has received a
written notice alleging that it is in material default or breach, under any
lease relating to the material Leased Real Property and, to the Seller’s
Knowledge, none of the other parties to such leases is in material default or
breach thereunder.

 

(e)           None of the Companies or Asset Selling Subsidiaries has received a
written notice from any Governmental Authority or any Third Party that

 

37

 

any of the Real Property
listed in Schedule 4.10(a) and Schedule 4.10(b) is not
in compliance with all applicable Legal Requirements, except for such failures
to comply that would not, individually or in the aggregate, have a Material
Adverse Effect or materially adversely affect (i) the ability of the
Seller to carry out its obligations under, and to consummate the transactions
contemplated by, this Agreement, (ii) the ability of the Companies or the
Asset Selling Subsidiaries to conduct the Business as currently conducted or (iii) the
value or the use of such Real Property for its current purposes.  None of the Companies or Asset Selling
Subsidiaries has received a written threat of condemnation or similar
proceeding relating to the Real Property listed in Schedule 4.10(a) and
Schedule 4.10(b) or any portion thereof.  The Real Property represents the entirety of
the material real property currently used exclusively in the Business.

 

4.11        Personnel

 

(a)           Schedule 4.11(a)(i) lists the collective bargaining
agreements applicable to the Business Employees and to which any of the
Companies or the Asset Selling Subsidiaries (in respect of the Business
Employees) is a party that are material to the Business.  Within forty-five (45) days after the Signing
Date, the Seller will deliver to the Buyer an updated Schedule 4.11(a)(i) which
shall list all collective bargaining agreements applicable to the Business
Employees and to which any of the Companies or the Asset Selling Subsidiaries
(in respect of Business Employees) is a party. 
To the Seller’s Knowledge, no collective bargaining agreement is
currently being negotiated by any of the Companies or the Asset Selling
Subsidiaries to the extent related to the Business.  Except as set forth in Schedule
4.11(a)(ii), there are no:  (i) strikes,
lockouts or material stoppages or work slowdowns pending or, to the
Seller’s Knowledge, threatened against or involving the Companies or the Asset
Selling Subsidiaries to the extent related to the Business; or (ii) material
unfair labor practice charges, grievances or complaints or material judicial or
administrative proceedings pending or, to the Seller’s Knowledge, threatened by
or on behalf of any Business Employees to the extent related to the Business.

 

(b)           Schedule 4.11(b) lists all of the agreements to which
any of the Companies or any Asset Selling Subsidiary is a party that provides
for the reduction of any Business Employee’s work week to thirty-five (35)
hours.

 

(c)           Except as set forth in Schedule 4.11(c), no Business Employee
has a right to any extra income or bonus payment from any Company or Asset
Selling Subsidiary as a result of the execution of, or consummation of the
transactions contemplated by, this Agreement and, except as disclosed in Schedule
4.11(c), no Business Employee has a legal and contractual right to any
enhanced redundancy or severance payment from any Company or

 

38

 

Asset Selling Subsidiary
arising solely from the execution of, or consummation of the transactions
contemplated by, this Agreement.

 

4.12        Employee Plans

 

(a)           Schedule 4.12(a) sets forth certain material Business
Employee Plans covering Business Employees that are in effect on the Signing
Date.  Within forty-five (45) days after
the Signing Date, the Seller will deliver to the Buyer a revised Schedule
4.12(a), which will list each Business Employee Plan (other than de  minimis
Plans) in effect on the Signing Date and each Subsidiary of Seller with
Business Employees covered by such plan, as well as the nation or territory
each such plan covers (and whether such plan provides for retiree medical or
other retiree welfare benefits), and also separately will list each other
material Business Employee Plan in effect within the preceding two (2) years.

 

(b)           With respect to each Business Employee Plan (other than de  minimis
Plans) in effect on the Signing Date, the Seller will make available to the
Buyer within sixty (60) days after the Signing Date, to the extent applicable,
complete and accurate copies of:  (i) each
plan document, trust, insurance contract and amendment to each of them; (ii) summaries
of material terms provided, or required to be provided under applicable Legal
Requirements, to participants and beneficiaries; (iii) solely with respect
to the Transferred Plans, licenses, certificates, stamps, letters (including
favorable determination letters) or similar items issued by a governmental,
quasi-governmental or administrative organization approving its form or
required for its lawful maintenance or operation; (iv) solely with respect
to the Transferred Plans, the most recently filed governmental report or
reports; and (v) solely with respect to the Transferred Plans for which
all of the liability is being transferred to the Buyer, the two most recent
financial, actuarial, valuation and similar reports.  The Seller shall provide the Buyer with a
written description of the material terms of any Business Employee Plan which
is not in written form.

 

(c)           Except as disclosed in Schedule 4.12(c), each Transferred Plan
has been maintained, operated and administered in compliance in all material
respects with its terms and the applicable Legal Requirements of the relevant
jurisdiction (including the requirements for any funding and Tax-favored
treatment intended for such plan or applicable to plans of its type).  To the Seller’s Knowledge, no event,
transaction or condition exists or has occurred that is reasonably likely to
result in the loss or material limitation of such Tax-favored treatment.

 

(d)           All material contributions, premiums and benefit payments in respect of
the Transferred Employees under or in connection with the Business Employee
Plans due prior to the date hereof have been timely made.

 

(e)           Except as set forth in Schedule 4.12(e), there have been no acts
or

 

39

 

omissions by any party with
respect to the Business Employee Plans which have given rise to or may give
rise to material fines, penalties, taxes or related charges under applicable
Legal Requirements for which after the Closing Date the Companies, Buyer or any
of its other Subsidiaries could reasonably be expected to be liable.

 

(f)            Except as set forth in Schedule 4.12(f),
there are no actions, suits, claims (other than routine claims for benefits) or
investigations pending or, to Seller’s Knowledge, threatened, involving any
Business Employee Plan or their assets for which after the Closing Date the
Companies, Buyer or any of its other Subsidiaries could reasonably be expected
to incur any material Liability and no event, transaction or condition exists
or has occurred which could give rise to any such actions, suits, claims (other
than routine claims for benefits) or investigations.  The Companies have no material Liability with
respect to any Plan other than for contributions, payments or benefits due in
the ordinary course of business under the current Business Employee Plans.

 

(g)           Except as set forth in Schedule 4.12(g)(i), neither the
execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will (i) result in any material payment
becoming due on or after the Closing Date to any director, officer, employee,
or former employee under any Transferred Plan, (ii) materially increase
any benefits otherwise payable under any Transferred Plan, (iii) result in
any acceleration of the time of payment or vesting of any material benefits
under any Transferred Plan, or (iv) with respect to any of the Business
Employees subject to taxation by the United States, result in any excess
parachute payments (as defined in Section 280G of the Code (without regard
to subsection 280G(b)(4))).  Except as
set forth in Schedule 4.12(g)(ii), the Company and its Subsidiaries have
made no agreement, undertaking or commitment with any employee, director,
officer, service provider or agent (whether written or oral) to make such
person fully or partially whole with respect to any adverse Tax consequences relating
to any Transferred Plan.

 

(h)           Except as set forth in Schedule 4.12(h) or in the Watson
Wyatt Report, no Transferred Plan provides any post retirement medical, dental,
vision, life, disability or other welfare benefits or insurance coverage except
as required by Legal Requirements.

 

(i)            Except as set forth in Schedule 4.12(i),
the Companies and all other sponsors of the Transferred Plans have retained the
right to unilaterally amend or terminate each Transferred Plan to the fullest
extent reasonably permitted by the Legal Requirements of the relevant
jurisdiction.  The Seller will deliver Schedule
4.12(i) to the Buyer within forty-five (45) days after the Signing
Date.

 

40

 

4.13        Taxes

 

Except as set forth in Schedule
4.13 and as solely limited to Taxes relating to the Significant Countries:

 

(a)           all material Tax Returns that are required to be filed on or before the
Closing Date by or on behalf of each Company and each Asset Selling Subsidiary
(insofar as relates to the Purchased Assets) have been, or will be, timely
filed; each such Tax Return is true and correct or will be true and correct
when filed in all material respects; and all Taxes shown to be due and payable
on such Tax Returns have been, or will be, timely paid; 

 

(b)           there are no outstanding written agreements or waivers extending the
statute of limitations applicable to any such Tax Return (other than extensions
of time to file Tax Returns obtained in the ordinary course) or, in the case of
any Asset Selling Subsidiary, to the extent related to the Purchased Assets,
which agreements or waivers could reasonably be expected to result in a
Liability for a material amount of Taxes;

 

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

 

(d)           no Purchased Asset nor any Share to be sold by a Selling Subsidiary
which is “foreign person” within the meaning of Section 1445 of the Code
is a “United States Real Property Interest” within the meaning of Section 897(c)(1) of
the Code;

 

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

 

(f)            since 1 January 2005, with respect to
each Company, no written claim has been made by a Governmental Authority in a
jurisdiction where such Company has not filed Tax Returns that the Company is
or may be subject to material taxation by that jurisdiction;

 

(g)           none of the Companies (A) has been a member of an Affiliated Group
(under §1504 of the Code) filing a consolidated U.S. federal income Tax Return
(other than a group the common parent of which was the U.S. Parent) or (B) has
any material Liability for the Taxes of any Person under Reg. §1.1502-6 (or any
similar provision of state, local, or foreign law), as a transferee or
successor or by contract; and

 

(h)           since May 14, 2002, except for the Gerber Life distribution from
Gerber Products, no U.S. Company has distributed stock of another Person, or
has

 

41

 

had its stock distributed by
another Person, in a transaction that was governed in whole or in part by Section 355
of the Code.

 

(i)            For U.S. federal income tax reporting
purposes, each U.S. Company (other than Gerber Life) is and will be on the
Closing Date a member of the “consolidated group” (within the meaning of Section 1502
of the Code and the accompanying Treasury resolutions).

 

(j)            The Seller and each U.S. Company (other than
Gerber Life) have made a valid election to file a consolidated U.S. federal
income tax return.

 

4.14        No Material Adverse Effects

 

Since 31 December 2006
through the earlier of (i) October 31, 2007 and (ii) the Closing
Date, there has been no Material Adverse Effect.

 

4.15        Conduct of Business Since 31
December 2006

 

Except as disclosed in Schedule
4.15, the Business has been conducted in the ordinary and usual course,
consistent with past practice from 31 December 2006 to the Signing Date
and, in particular, during such period (or in the case of clauses (c), (d),
(f), and (h) of this Section 4.15, from 31 December 2006 until
the Closing), there has not been any Material Decision or Action other than
those set forth in Schedule 4.15. 
For the purpose hereof, “Material Decision or Action” shall mean
any decision or action, to the extent it relates to the Business, of the
Companies and the Asset Selling Subsidiaries, to:

 

(a)           (x) acquire any material assets or make any material capital or
financial investments other than in the ordinary course of its business
operations consistent with past practice or (y) dispose of any assets, in
each case, for consideration, individually, in excess of $4,000,000 or, in the
aggregate, in excess of $10,000,000, other than in the ordinary course of its
business operations consistent with past practice;

 

(b)           except for increases in accordance with past practices not in excess of
3% in the aggregate or as may be required by any Legal Requirement or pursuant
to any contracts or agreements existing as the date hereof and disclosed to the
Buyer, increase the compensation or other benefits payable to Business
Employees or accelerate any rights or benefits attributed to such Business
Employees;

 

(c)           terminate the employment of any Business Employee whose annual gross
remuneration is in excess of $250,000 (a “Senior Employee”) or
materially alter the existing terms of his or her employment or enter into any
severance, retention or change of control agreement with any Senior Employee;

 

(d)           create any Encumbrance on (x) shares of capital stock or (y) any
assets or properties, other than Permitted Encumbrances;

 

42

 

 

(e)           incur additional indebtedness (other than drawings on existing lines of
credit) or issue rights to acquire any debt securities issued by it or
repurchase or prepay any indebtedness or enter into any arrangement having the
economic effect of any of the foregoing;

 

(f)            with respect to the Companies, issue shares,
other voting securities, or any securities convertible into, or any rights,
warrants or options to acquire, any such shares, voting securities or
convertible securities or otherwise make any changes to its capital stock;

 

(g)           with respect to the Companies, pay, discharge, settle or satisfy any
material claims, liabilities or obligations (absolute, accrued, asserted or
unasserted, contingent or otherwise) or legal proceedings for payments in
excess of $2,500,000 other than the payment, discharge, settlement or
satisfaction, in the ordinary course of business consistent with past practice
or in accordance with the terms of liabilities recognized or disclosed in the
Financial Statements;

 

(h)           waive the benefits of, agree to modify in any manner detrimental to any
Company or any Asset Selling Subsidiary, terminate, release any Person from or
fail to enforce any material confidentiality, non-competition, standstill or
similar agreement to which any Company or Asset Selling Subsidiary is a party
or of which any Company or Asset Selling Subsidiary is a beneficiary in
relation to the Business;

 

(i)            enter into, terminate or amend any Material
Contract or Real Property Lease (or other similar contract, which if in effect
on the Signing Date, would constitute a Material Contract or Real Property
Lease), other than in the ordinary course of business;

 

(j)            incur, prior to the Signing Date, any damage
or destruction to any assets or properties exclusively related to the Business
(whether or not covered by insurance) having a value of in excess of
$4,000,000, individually, and $10,000,000 in the aggregate, and, between the
Signing Date and the Closing Date $20,000,000 in the aggregate; 

 

(k)           enter into or adopt, or amend any bonus, profit sharing, stock option,
stock appreciation, restricted stock, pension, retirement, deferred
compensation, retention, severance or other employee benefit agreement, trust,
plan or fund or other arrangement for the benefit of Business Employees, other
than any such plans or arrangements that are to be retained by the Seller or
any Asset Selling Subsidiaries following the Closing;

 

(l)            make any material Tax election or any
settlement or compromise with any material federal, state or local Tax
liability, in each case, related to the Business;

 

(m)          modify in any material respect the Accounting Principles;

 

43

 

(n)           declare or pay any dividends or otherwise make any cash distributions
to the shareholders of Gerber Life; and

 

(o)           authorize, or commit, resolve or agree to take, any of the foregoing
actions.

 

4.16        Litigation and Other
Proceedings; Orders

 

(a)           Except as listed in Schedules 4.11(a)(ii), 4.12(f), 4.13,
4.16, 4.18 and 4.20(b), there are no Proceedings involving
a claim in excess of $2,500,000 against any Company or any Asset Selling
Subsidiary primarily related to the Business. Except as set forth in Schedule
4.16, since 31 December 2006, neither the Seller nor any Company or any
Asset Selling Subsidiary has received a written product liability claim or
initiated a product recall in respect of the quality or fitness for use of any
material amount of Business Products (it being understood and agreed that a
product return in the ordinary course of business does not constitute a product
liability claim).

 

(b)           Except as set forth in Schedule 4.16, to the Seller’s Knowledge,
none of the Seller, any Company or any Asset Selling Subsidiary is subject, in
connection with the Business, to any order, judgment, decree, injunction, stipulation,
settlement agreement or consent decree of or with any court or other
Governmental Authority that imposes any material obligations on the Business
(the “Business Orders”).  Except
as set forth in Schedule 4.16, no Company or Asset Selling Subsidiary
has entered into any settlement or compromise related to the Business for which
the Buyer or its Affiliates, including from and after the Closing, the
Companies may have continuing obligations after the Closing Date.  Except as set forth in Schedule 4.16,
the Seller, the Companies and the Asset Selling Subsidiaries are currently, and
since 1 January 2006 have, operated, the Business in material compliance
with the Business Orders.

 

(c)           Schedule 4.16(c) identifies, and the Seller has
previously made available to the Buyer true and complete copies of, the reports
(or the most recent draft thereof, to the extent (i) any final report is
not available, (ii) Gerber Life has possession of such draft and (iii) Gerber
Life is not prohibited by any Legal Requirement or confidentiality undertaking
from disclosing it) reflecting the results of the most recent financial
examinations and market conduct examinations of Gerber Life issued by any
insurance regulator since January 1, 2002 and prior to the Signing
Date.  Other than those reports and since
the respective dates of those reports, prior to the Signing Date, Gerber Life
has not received written notice of any review or investigation by any
Governmental Authority of any market conduct and/or selling practices of Gerber
Life or any of its independent agents, other than periodic market conduct
examinations arising in the ordinary course of business and attorney general
inquiries in connection with which

 

44

 

no material issues have been
raised that have not been resolved.

 

4.17        Licenses and Permits

 

The Companies and the Asset
Selling Subsidiaries possess all material Governmental Permits necessary for
the conduct of the Business as currently conducted, a complete list of which
(other than the Environmental Permits) will be delivered to the Buyer by the
Seller prior to the Closing Date.  Except
as set forth in Schedule 4.17, to the Seller’s Knowledge, none of the
Seller, any Company or any Asset Selling Subsidiary has received written notice
that any Governmental Authority intends to suspend, revoke or rescind any
material Governmental Permit related to the Business.  The Business as currently conducted complies
in all material respects with the Governmental Permits.

 

4.18        Environmental Matters

 

(a)           Except as disclosed in Schedule 4.18:

 

(i)            to the Seller’s Knowledge, the Companies and
the relevant Asset Selling Subsidiaries to the extent related to the conduct of
the Business as currently conducted, and during the two (2) year period
immediately preceding the date hereof, the Business has been conducted in
material compliance with all applicable Environmental Laws;

 

(ii)           to the Seller’s Knowledge, all material Environmental Permits required
under all applicable Environmental Laws for the continued operation of the
Business have been obtained, are valid, and an accurate and complete list of
such Environmental Permits will be delivered to the Buyer by the Seller prior
to the Closing Date;

 

(iii)          none of the Real Property is involved in or subject to any material
pending or, to the Seller’s Knowledge, threatened suit, prosecution,
investigation, consent decree or consent agreement, notice of possible
violation, inquiry or proceeding by or before any court or Governmental Authority
under any Environmental Law;

 

(iv)          to the Seller’s Knowledge, no Person or Governmental Authority has
asserted any requests or demands in amounts material to the Business for
damages, costs or expenses, demands, causes of action or claims arising out of or
due to the emission, disposal, discharge or other release of any Hazardous
Substances, or arising out of or due to any injury to human health or the
environment by reason of the current or past condition or operation of any
facility, or for offsite treatment, storage or disposal of Hazardous Substances
transported from the Real Property;

 

(v)           there is no environmental condition, situation or incident on, at,
under, in or concerning any Real Property that could give rise to any material
Environmental Liability under any Environmental Laws; and

 

45

 

(vi)          the Companies and the relevant Asset Selling Subsidiaries have made
available to the Buyer true and complete copies of all material written
environmental assessments, correspondence, reports, data, analyses and
compliance audits that have been prepared by or on behalf of the Companies and
the relevant Asset Selling Subsidiaries with respect to the Real Property or
any property formerly owned, operated or leased by the Companies and the
relevant Asset Selling Subsidiaries, in each case to the extent prepared since January 1,
2004 and in the Companies’ or the relevant Asset Selling Subsidiaries’
possession or control.

 

(b)           The Buyer acknowledges that (i) the representations and warranties
contained in this Section 4.18 are the only representations and warranties
being made with respect to compliance with or liability under any Environmental
Law or with respect to any environmental matters, including natural resources,
related in any way to the Business or to this Agreement or its subject matter
and (ii) no other representation contained in this Agreement will apply to
any such matters and no other representation and warranty, express or implied,
is being made with respect thereto.

 

4.19        Governmental Consents and
Approvals

 

No consent, approval,
license, permit, order or authorization of, or registration, declaration or
filing with or permit from, any Governmental Authority is required to be
obtained or made by or with respect to the Seller or any Seller Subsidiary in
connection with the execution and performance of this Agreement or the
consummation of the transactions contemplated by this Agreement and the
Ancillary Agreements, other than (i) compliance with and filings under the
HSR Act, (ii) compliance under the Council Regulation (EC) No. 139/2004,
as amended, or, in the event of a referral by the European Commission pursuant
to Art. 9 of the same regulation, the transactions contemplated by this
Agreement can be lawfully consummated pursuant to the applicable national
competition laws of the member states to which the transactions have been
referred, (iii) compliance with the Ley Federal de Competencia Economica
of Mexico (“Mexico’s Competition Act”), (iv) any additional
consents and filings required under any other applicable antitrust or
competition law or regulation, except (x) where the failure to obtain any
such consent, approval, authorization or action, or to make any such filing or
notification, would not prevent or materially delay the consummation by the
Seller of the transactions contemplated by this Agreement, (y) where the
failure to obtain such consent, approval, authorization or action, or to make
such filing or notification, would not have a Material Adverse Effect or (z) as
may be necessary as a result of any facts or circumstances relating solely to
the Buyer or any of its Affiliates, (v) the approval of the New York
Department and such consents and filings which may be required under the
insurance laws of any state in which the Insurance Companies do business and (vi) as
disclosed in Schedule 4.19.

 

46

 

4.20        Intellectual Property and
Know-How

 

(a)           Schedule 4.20(a)(i) lists (i) all Intellectual
Property that is the subject of a registration or application for registration,
which is currently used exclusively in the Business and that (x) is owned
or licensed by the Companies (the “Companies’ Intellectual Property”) or
(y) is Separate Intellectual Property and (ii) the record and
beneficial owners of all such Companies’ Intellectual Property and Separate
Intellectual Property.  The Companies’
Intellectual Property and the Separate Intellectual Property constitute all of
the Intellectual Property that is used by the Seller, the Companies or the
Asset Selling Subsidiaries exclusively in the Business.  Except as disclosed in Schedule
4.20(a)(ii), (x) the Seller or an Asset Selling Subsidiary, as
applicable, owns all right and interest in, and all title to, the Separate
Intellectual Property free and clear of any Encumbrances, other than Permitted
Restrictions, and (y) the relevant Companies own all rights and interest
in, and have all title to, the Companies’ Intellectual Property free and clear
of all Encumbrances, other than Permitted Restrictions.

 

(b)           Except as set forth in Schedule 4.20(b)(i), to the Seller’s
Knowledge, there are no facts or circumstances that would render any of the
Companies’ Intellectual Property or the Separate Intellectual Property invalid,
unenforceable or non-assignable.  Except
as disclosed in Schedule 4.20(b)(ii), since 1 January 2004 neither
the Seller nor, to the Seller’s Knowledge, any Company or Asset Selling
Subsidiary has received a written claim that the Companies’ Intellectual
Property or the Separate Intellectual Property is invalid, unenforceable or
non-assignable, nor has any such claim been asserted in any pending or, to the
Seller’s Knowledge, threatened litigation or proceeding before any Governmental
Authority, and none of the Companies’ Intellectual Property or the Separate
Intellectual Property is subject to any pending or, to the Seller’s Knowledge,
threatened proceedings for infringement, opposition, cancellation or
revocation.  All registration or
application fees necessary to maintain the Companies’ Intellectual Property and
the Separate Intellectual Property have been paid, all necessary renewal
applications have been filed and all other material steps necessary for
maintenance have been taken, other than such fees, renewal applications and
steps the failure of which to pay, file or take would not, in the aggregate,
materially adversely affect the value or use of the Companies’ Intellectual
Property or the Separate Intellectual Property.

 

(c)           Except as disclosed in Schedule 4.20(c), the relevant Companies
own all right and interest in, and all title to, the Companies’ Know-How free
and clear of any Encumbrances other than Permitted Restrictions and the Seller
or an Affiliate of the Seller owns all right and interest in, and all title to,
all other Know-How used primarily in the Business free and clear of any
Encumbrances other than Permitted Restrictions.

 

47

 

(d)           Except as disclosed in Schedule 4.20(d) or as would not, individually
or in the aggregate, materially adversely affect the value or use of the
Companies’ Know-How since 1 January 2004, the Companies have taken
reasonable steps in accordance with normal industry practice to maintain the
confidentiality of the Companies’ confidential information, including the
Companies’ Know-How, and the Seller and its Affiliates have taken all steps
that are reasonably necessary to protect all other Know-How used primarily in
the Business.

 

(e)           Except as disclosed in Schedule 4.20(e), to the Seller’s
Knowledge, the conduct of the Business as currently conducted does not violate
any license or agreement, infringe, misappropriate or otherwise violate any
Intellectual Property or Know-How owned by a Third Party.

 

(f)            To the Seller’s Knowledge, no Person has
infringed the Company’s Intellectual Property, the Separate Intellectual
Property and/or the Companies’ Know-How rights. (g) Since 1 January 2006,
to the Seller’s Knowledge, there have been no material breaches of the
Business’s security procedures or any material attempted or successful
unauthorized incidents of access, use, disclosure, modification, or destruction
of information or interference with systems operations in any information
system or database of the Business, including any such breach or incident that
required or requires notice to any Third Party.

 

4.21        Tangible Personal Property

 

The Seller and the relevant
Asset Selling Subsidiaries own, lease or have the legal right to use all of the
Tangible Personal Property free and clear of all Encumbrances, except for
Permitted Encumbrances.

 

422         Assets

 

(a)           Except as set forth in Schedule 4.22(a), each of the Seller, the
Asset Selling Subsidiaries and the Companies owns, leases or has the legal
right to use all the properties and assets, including the Companies’
Intellectual Property, the Separate Intellectual Property, the Companies’
Know-How, the Know-How of the Seller and its Affiliates, the Owned Real
Property, the Leased Real Property and the Tangible Personal Property, used
exclusively in the conduct of the Business as currently conducted and, with
respect to contract rights, is a party to and enjoys the right to the benefits
of all contracts, agreements and other arrangements used by the Seller, the
Asset Selling Subsidiaries and the Companies exclusively in the conduct of the
Business as currently conducted.

 

(b)           The Assets, together with the rights the Buyer will have under the
Ancillary Agreements, constitute (i) all the properties, assets and rights

 

48

 

used exclusively in, and (ii) all
such properties, assets and rights as are necessary for the continued conduct
of, the Business as currently conducted by the Seller, the Companies and the
Asset Selling Subsidiaries.

 

(c)           Except as set forth in Schedule 4.22(c) or disclosed to the
Buyer by the Seller prior to the Signing Date, there are no known or
anticipated material requirements to make material capital expenditures to
allow the Business to continue to operate in the ordinary course of business.

 

4.23        Compliance with Legal
Requirements, Regulatory Reports

 

(a)           Except with respect to Legal Requirements arising under (i) Environmental
Laws (which are the subject of Section 4.18), (ii) Product
Registrations (which are the subject of Section 4.24), (iii) employee
benefits (which are the subject of Section 4.12), and except as set forth
in Schedule 4.23, to the Seller’s Knowledge, the Companies and the Asset
Selling Subsidiaries are in material compliance with all Legal Requirements
applicable to the conduct of the Business, and since 1 January 2006, to
the Seller’s Knowledge, none of the Seller, any Company or any Asset Selling
Subsidiary has received written notice from a Governmental Authority of any
material violations with respect to Legal Requirements applicable to the
ownership or operation of the Business, or any notice that any material
facility of the Business is not in material compliance with applicable Legal
Requirements or requires any material improvement, modification or alteration
in order to lawfully continue any aspect of the operations conducted at the
facility. 

 

(b)           Since 1 January 2005, Gerber Life has timely filed all material
periodic statements, together with all exhibits, interrogatories, notes,
schedules and any actuarial opinions, affirmations or certifications or other
supporting documents in connection therewith, required to be filed with or
submitted to any Governmental Authority on forms prescribed or permitted
thereby (collectively, the “Regulatory Reports”).  The Regulatory Reports complied in all
material respects with all applicable Legal Requirements when filed, and no
material deficiency has been asserted with respect to any Regulatory Report by
any Governmental Authority.

 

(c)           Except as would not, individually or in the aggregate, have a Material
Adverse Effect or would not materially adversely affect the aggregate insurance
or reinsurance liability under the Insurance Contracts, (i) all policies
of insurance and annuity contracts issued by Gerber Life (collectively, “Insurance
Contracts”) that are now in force, and all amendments, applications,
brochures, illustrations and certificates pertaining thereto, are, to the
extent required under applicable insurance laws and regulations, on forms approved
by all applicable Governmental Authorities or which have been filed and not
objected to by such Governmental Authorities within the period provided for
objection, and such forms comply with applicable insurance laws and regulations
and (ii)

 

49

 

all rates of Gerber Life
(including rates with respect to Insurance Contracts) that are required to be
filed with or approved by any Governmental Authorities have been so filed or
approved.

 

4.24        Business Products

 

(a)           Prior to the Closing Date, the Seller will deliver to the Buyer a true
and complete list of all Product Registrations granted to the Companies and the
Asset Selling Subsidiaries in respect of the Business Products, and the
jurisdiction in which each such Product Registration was issued or
granted.  Except as specified in Schedule
4.24, the Seller, the Companies and the Asset Selling Subsidiaries are the
exclusive owners of the Product Registrations and none of them have granted any
right of reference with respect thereto to any Third Party.

 

(b)           The Business has not manufactured or sold a product prior to the
Closing Date that will result in a material Product Liability.

 

4.25        Brokers

 

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

 

4.26        Commercial Domicile of
Gerber Life; Investment Company

 

(a)           Gerber Life is not a “commercially domiciled insurer” under the laws of
any jurisdiction and is not otherwise treated as domiciled in a jurisdiction,
other than the State of New York.

 

(b)           Gerber Life is not an investment company within the meaning of the
Investment Company Act of 1940, as amended.

 

4.27        Producers

 

Except as set forth on Schedule
4.27, each insurance producer, managing general underwriter, managing
general agent, agent, broker, solicitor and customer representative, including
salaried employees of Gerber Life or any of its Affiliates performing the
duties of insurance producer, managing general underwriter, managing general
agent, agent, broker, solicitor or customer representative with respect to
Gerber Life (collectively, “Producers”), at the time such Producer
wrote, sold, solicited, negotiated or produced business, or performed such
other act that may require a producer’s, solicitor’s, broker’s or other
insurance license with respect to Gerber Life, was duly licensed and appointed,
where required, as

 

50

 

an insurance producer (for
the type of business written, sold, solicited, negotiated or produced by such
insurance producer, managing general underwriter, managing general agent,
agent, broker, solicitor, or customer representative) in the particular
jurisdiction in which such Producer wrote, sold, produced, solicited, or
serviced such business, as may be required by the various jurisdictions, in
each case, with such exceptions as would not, individually or in the aggregate,
have a Material Adverse Effect.

 

4.28        Extra-Contractual
Liabilities

 

To Seller’s Knowledge,
Gerber Life is not subject to any claims or liabilities (other than those
arising under the express terms and conditions, and within the limits of the
Insurance Contracts, including any liability for punitive, exemplary, special
or any other form of extra-contractual damages) relating to any act, error or
omission with respect to the marketing, underwriting, production, issuance,
cancellation or administration of the Insurance Contracts, or the
investigation, defense, settlement or handling of claims, benefits or payments
under the Insurance Contracts, in each case, with such exceptions as would not,
individually or in the aggregate, have a Material Adverse Effect.

 

4.29        Tax Representations Related
to the Life Business

 

(a)           For the taxable period ending on and including the Closing Date and for
all prior taxable periods for which the applicable statute of limitations has
not expired, Gerber Life is and was a “life insurance company” for purposes of
the Code and is and was subject to taxation under Subchapter L of the Code.

 

(b)           Gerber Life has not agreed to, nor is it required to make, any material
adjustment under Section 446(e) or Section 807(f) of the
Code (or any analogous provisions of state or local laws).  Gerber Life has not entered into any closing
agreement pursuant to Section 7121 of the Code or any other agreement with
similar material Tax effect, and has no written requests for rulings,
determinations or advice pending with or before any taxing authority.

 

(c)           To Selle’s Knowledge, the Tax treatment under the Code of any life
insurance or annuity contracts included in the Life Business issued or sold
before the Closing by Gerber Life or issued after the Closing in response to an
application submitted to Gerber Life prior to the Closing (“Pre-Closing
Applications”) is in all material respects the same or more favorable to
the purchaser, policyholder or intended beneficiaries thereof as the Tax
treatment under the Code for which such contracts qualified or purported to
qualify at the time of their issuance or purchase.  For purposes of this Section 4.29(c),
the provisions of the Code relating to the Tax treatment of such contracts
shall include, but not be limited to, Sections 61, 72, 79, 101, 104, 105, 106,
125, 130, 264, 401, 403, 404, 408, 408A, 412, 415, 419, 419A, 457, 501, 505,
817, 818, 1035, 1275, 7702, 7702A and 7702B.

 

51

 

(d)           To Seller’s Knowledge, any annuity contract included in the Life
Business issued on or before the Closing by Gerber Life or issued or sold after
the Closing in response to a Pre-Closing Application qualifies as an annuity
contract under Section 72 of the Code and any life insurance policy included
in the Life Business issued before the Closing by Gerber Life or issued or sold
after the Closing in response to a Pre-Closing Application  qualifies as a life insurance contract under Section 7702
of the Code.

 

(e)           To Seller’s Knowledge, any life insurance policy included in the Life
Business issued before the Closing by Gerber Life or issued after the Closing
in response to a Pre-Closing Application that qualifies as a life insurance
contract under the Code avoids modified endowment contract status under Section 7702A
of the Code (each, a “MEC”), unless the holder of any such policy has
consented in writing to such MEC status.

 

(f)            To Seller’s Knowledge, any annuity contract
(each a “Qualified Contract”) included in the Life Business (A) (1) which
has been issued or sold before the Closing or issued or sold after the Closing
in response to a Pre-Closing Application as a contract intended to qualify as
an individual retirement annuity within the meaning of Section 408(b) of
the Code or as a Roth IRA within the meaning of 408(A) of the Code, or (2) which
has been issued or sold before the Closing or issued or sold after the Closing
in response to a Pre-Closing Application as a contract intended to qualify as
an annuity described in Section 403(b) of the Code, qualifies for the
benefits associated with such Code section, and (B) issued or sold before
the Closing or issued or sold after the Closing in response to a Pre-Closing
Application to, or in connection with, a plan described in Section 401(a) of
the Code or Section 404(a)(2) of the Code, satisfies in all material
respects the requirements of the Code applicable to such contracts.

 

(g)           To Seller’s Knowledge, Gerber Life has complied in all material
respects with all contractual obligations or responsibilities by operation of
law with respect to the Life Business for calculating, deducting or accounting
for, recording, making and reporting plan or contract loans under Section 72(p) of
the Code and minimum required distributions under Sections 401(a), 403(b), 408
or 408A of the Code, or for testing, determining or otherwise ensuring
compliance in operation of plans or contracts under Sections 401(a), 403(b) or
408 of the Code, and for otherwise providing administrative services of any
nature with respect to any plan or arrangement funded through a Qualified
Contract.

 

(h)           To Seller’s Knowledge, the annuity contracts included in the Life
Business issued to or sold before the Closing by Gerber Life or issued after
the Closing by Gerber Life in response to a Pre-Closing Application in
connection with a plan intended to satisfy the requirements of Section 457
of the Code do satisfy such requirements in all material respects.

 

52

 

5.             REPRESENTATIONS AND
WARRANTIES OF THE BUYER

 

The Buyer hereby represents
and warrants to the Seller, as of the Signing Date and as of the Closing Date,
as follows:

 

5.1          Organization and Authority

 

The Buyer is a corporation
duly organized, validly existing and in good standing under the laws of
Switzerland and has all necessary corporate power and authority to enter into
this Agreement and the Ancillary Agreements to which it is a party and to
perform its obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby. 
The execution and delivery of this Agreement and the Ancillary
Agreements by the Buyer or the Buyer Designated Affiliates, as applicable, the
performance by each of them of their respective obligations hereunder and
thereunder and the consummation by the Buyer and the Buyer Designated
Affiliates of the transactions contemplated hereby and thereby have been duly
authorized by all requisite corporate action on the part of the Buyer and, in
the case of the Buyer Designated Affiliates, will have been duly authorized by
all requisite corporate action on the part of the Buyer Designated Affiliates
as of the Closing.  This Agreement has
been, and upon their execution the Ancillary Agreements will have been, duly
executed and delivered by the Buyer and the Buyer Designated Affiliates and
(assuming due authorization, execution and delivery by the Seller) constitutes,
and upon their execution the Ancillary Agreements will constitute, a legal,
valid and binding obligation of the Buyer and the Buyer Designated Affiliates
enforceable against the Buyer and the Buyer Designated Affiliates in accordance
with their respective terms.

 

5.2          No Conflict

 

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

 

53

 

5.3          Governmental Consents

 

The execution and delivery
of this Agreement by the Buyer do not, and the performance of this Agreement
and the Ancillary Agreements by the Buyer and the Buyer Designated Affiliates
will not, require any consent, approval, authorization or other order of,
action by, filing with or notification to, any Governmental Authority other
than (i) compliance with and filings under the HSR Act, (ii) compliance
under the Council Regulation (EC) No. 139/2004, as amended, or the
applicable national competition laws of the member states to which the
transactions have been referred or notified, (iii) compliance with
Mexico’s Competition Act, (iv) any additional consents and filings
required under any other applicable antitrust or competition law or regulation,
except where the failure to obtain such consent, approval, authorization or
action, or to make such filing or notification, would not prevent or materially
delay the consummation by the Buyer or any Buyer Designated Affiliate of the
transactions contemplated by this Agreement and the Ancillary Agreements, (v) the
approval of the New York Department and such consents and filings which may be
required under the insurance laws of any state in which the Insurance Companies
do business and (vi) as described in Schedule 5.3.

 

5.4          Financing of the
Transactions

 

The Buyer has and on the
Closing Date will have sufficient immediately available funds to pay, in cash,
the Purchase Price and all other amounts payable pursuant to this Agreement and
the Ancillary Agreements or otherwise necessary to consummate the transactions
contemplated hereby and thereby.

 

6.             INDEMNIFICATION

 

6.1          Indemnification by the
Seller

 

(a)           General Principle:  In
the event of any breach of any representation or warranty by the Seller
contained in Section 4 of this Agreement, the Seller will indemnify the
Buyer, other than indemnification for Taxes (which will be governed solely by Section 6.6),
for all losses, costs, damages and expenses (including but not limited to
reasonable attorneys’ fees) (each, a “Loss”) suffered by the Buyer and
its Affiliates including, from and after the Closing, the Companies, within the
limits of this Section 6.1 net of (i) any insurance or other
recoveries payable to the Buyer in connection with the facts giving rise to the
right of indemnification and (ii) any Tax benefits attributable to the
incurrence or payment of the incurred Losses (the “Buyer Incurred Damages”).  The Buyer will use, and will cause each
Company to use, commercially reasonable efforts to mitigate any such Buyer
Incurred Damages.  Any positive,
incidental, special, indirect or consequential damages, and any other action or
relief, including a right of rescission or revocation of this Agreement, loss
of future revenue or income, or loss of business reputation or opportunity, and
any remedies

 

54

 

based on a potential breach
of a duty to negotiate in good faith (culpa
in contrahendo) or based on a theory of material error (Grundlagenirrtum), is expressly excluded.

 

(b)           De Minimis:  No Buyer Incurred Damages may
be claimed by the Buyer or will be reimbursable by the Seller or will be
included in calculating the aggregate Buyer Incurred Damages set forth in Section 6.1(c) other
than Buyer Incurred Damages in excess of $1,000,000 (the “De Minimis”)
resulting from any single claim or aggregated claims arising out of the same
facts, events or circumstances; provided that the foregoing limitation
shall not apply to any Buyer Incurred Damages arising from a breach of the
representations and warranties set forth in Sections 4.1, 4.2, 4.3, 4.4 and 4.25.

 

(c)           Threshold:  The Seller’s
liability for indemnification under this Section 6.1, excluding
liabilities arising in respect of breaches of Sections 4.18 and 4.24(b), will
apply only to Buyer Incurred Damages which, in the aggregate and subject to the
De Minimis, exceed $90,000,000 (the “Threshold”) and then only to the
extent the amount of such Buyer Incurred Damages exceeds the Threshold in
total; provided that the foregoing limitation shall not apply to any
Buyer Incurred Damages arising from a breach of the representations and
warranties set forth in Sections 4.1, 4.2, 4.3, 4.4 and 4.25.  The Seller’s liability for indemnification
under this Section 6.1 arising from breaches of the representations and
warranties of the Seller set forth in Sections 4.18 and 4.24(b) will apply
only to the Buyer Incurred Damages which, in the aggregate and subject to the
De Minimis, exceed $30,000,000 and then only to the extent the amount of such
Buyer Incurred Damages exceeds $30,000,000.

 

(d)           Maximum Recovery: 
Notwithstanding anything in this Agreement to the contrary, the Seller’s
liability for indemnification under this Section 6.1 will not exceed 30%
of the Purchase Price; provided that the foregoing limitation shall not
apply to any Buyer Incurred Damages arising from a breach of the
representations and warranties set forth in Sections 4.1, 4.2, 4.3 and 4.4.

 

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

 

(i)            if and to the extent that the facts or
circumstances giving rise to the Buyer Incurred Damages have been fully and
fairly disclosed in writing in the documents or other materials contained in
the Data Room; 

 

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

 

55

 

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

 

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

 

(v)           if and to the extent that such Buyer Incurred Damages arise from, or
are increased by, any act or omission by the Buyer or its Affiliates or,
following the Closing Date, by the Companies other than in the ordinary course
of business; or (vi) if and to the extent that allowance, provision or
reserve in respect of any specific Buyer Incurred Damages was made in the
Financial Statements, but only up to the amount of such allowance, provision or
reserve.

 

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

 

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

 

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

 

6.2          Indemnification by the Buyer

 

(a)           General Principle:  In
the event of any breach of any representation or warranty by the Buyer
contained in Section 5 of this Agreement, the Buyer will indemnify the Seller
for all Losses suffered by the Seller within the limits of this Section 6.2
net of (i) any insurance or other recoveries payable to the Seller in
connection with the facts giving rise to the right of indemnification and (ii) any
Tax benefits attributable to the incurrence or payment of the incurred losses,
costs, damages and expenses (the “Seller Incurred Damages”).  The Seller will use and will cause its
Affiliates to use commercially reasonable efforts to mitigate any such Seller
Incurred Damages.  Any positive,
incidental, special, indirect or consequential damages, and any other action or
relief, including a right of rescission or revocation of this Agreement, loss
of future revenue or income, or loss of business reputation or opportunity, and
any remedies based on a potential

 

56

 

breach of a duty to
negotiate in good faith (culpa in
contrahendo) or based on a theory of material error (Grundlagenirrtum), is expressly excluded.

 

(b)           De Minimis:  No Seller Incurred Damages may
be claimed by the Seller or will be reimbursable by the Buyer or will be
included in calculating the aggregate Incurred Damages set forth in Section 6.2(c) other
than Seller Incurred Damages in excess of the De Minimis resulting from any
single claim or aggregated claims arising out of the same facts, events or
circumstances.

 

(c)           Threshold:  The Buyer’s liability for
indemnification under this Section 6.2 will apply only to Seller Incurred
Damages which, in the aggregate and subject to the De Minimis, exceed the
Threshold and then only to the extent the amount of such Seller Incurred
Damages exceeds the Threshold in total. 

 

 

(d)           Maximum Recovery: 
Notwithstanding anything in this Agreement to the contrary, the Buyer’s
liability for indemnification under this Section 6.2 will not exceed 30%
of the Purchase Price.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

57

 

 

6.3          Survival
and Notice of Claims

 

(a)           The representations and warranties of the
parties contained in Section 4 and Section 5 of this Agreement will
survive until the eighteenth (18th) month anniversary of the Closing
Date; provided, however, that (i) any claim for
indemnification arising under or in connection with a breach of a
representation or warranty set forth in Sections 4.1, 4.2, 4.3 and 4.4 and 4.13
(i) and (j) and 4.29 will survive until ninety (90) days after the
expiration of the applicable statute of limitations, (ii) any claim for
indemnification arising under or in connection with a breach of a
representation or warranty set forth in Sections 4.18 and 4.24(b) shall
survive until the third (3rd) anniversary of the Closing Date and (iii) any
claim for indemnification arising under or in connection with a breach of a
representation or warranty set forth in Section 4.13 (a) through (h) shall
terminate as of the Closing Date, and, provided  further, that any
claim made with reasonable specificity by the party seeking to be indemnified
within the time periods set forth in this Section 6.3 will survive until
such claim is finally and fully resolved. 
No claim may be asserted nor may any Proceeding be commenced against
either party for breach of any representation or warranty contained herein,
unless written notice of such claim or Proceeding is received by such party
describing in reasonable detail the facts and circumstances with respect to the
subject matter of such claim or Proceeding on or prior to the date on which the
representation or warranty on which such claim or Proceeding is based ceases to
survive as set forth in this Section 6.3.

 

(b)          Subject to Section 6.5, a party seeking
indemnification under this Section 6 will give the other party notice of
any matter which such indemnified party has determined has given or could give
rise to a right of indemnification under this Agreement, within sixty (60) days
of such determination, stating the amount of the Loss, if known, and method of
computation thereof, and containing a reference to the provisions of this
Agreement in respect of which such right of indemnification is claimed or
arises.  The failure to provide such
notice within the specified time period shall not relieve the indemnifying
party of any obligation in respect of the claim except to the extent that the
indemnifying party shall have been prejudiced thereby.

 

6.4          Remedies

 

The
Buyer and the Seller acknowledge and agree that (i) following the Closing,
the indemnification provisions of Section 6.1 and Section 6.2 (and
with respect to Taxes, Section 6.6) will be the sole and exclusive
remedies of the Buyer and the Seller for any breach by the other party of the
representations and warranties in this Agreement, and (ii) anything herein
to the contrary notwithstanding, no breach of any representation, warranty,
covenant or agreement contained herein will give rise to any right on the part
of the Buyer or the Seller, after the Closing,

 

58

 

to
rescind this Agreement or any of the transactions contemplated hereby.  Each party hereto will take all reasonable
steps to mitigate its Losses upon and after becoming aware of any event which
could reasonably be expected to give rise to any Losses.

 

6.5          Third Party Claims

 

(a)           If any claim is made against the Companies,
the Seller, the Selling Subsidiaries or the Buyer that, if sustained, would
give rise to indemnification under Sections 6.1 or 6.2 of this Agreement, the
Seller or the Buyer, as the case may be (the “Indemnified Party”), will
promptly notify the other party (the “Indemnifying Party”) in writing of
the claim and will afford the Indemnifying Party, or its designee, the
opportunity to defend or to settle the claim at the Indemnifying Party’s sole
expense.  The Indemnifying Party will
have the right to defend or, subject to clause (b) below, settle, at its
own expense and with counsel of its choice, any such matter involving the
asserted liability of the Indemnified Party, if the Indemnifying Party promptly
gives written notice of its intention to do so to the Indemnified Party.

 

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

 

59

 

6.6          Tax Indemnification

 

The
rights and obligations of the parties with respect to indemnification for any
and all Taxes will be governed solely by this Section 6.6.

 

(a)           General Principle: 
Subject to the provisions of this Section 6.6, the Seller will
indemnify the Buyer for Excluded Taxes, net of any Tax benefits attributable to
the incurrence or payment of such Taxes, and the Buyer shall be responsible for
all other Taxes relating to the Companies, the Purchased Assets and the
Business.

 

(b)          Allocation:  With respect to any Tax that
is payable with respect to a Straddle Period, the amount of such Tax allocable
to the Pre-Closing Period will be deemed equal to the Tax that would be payable
if the taxable period ended at the close of business on the Closing Date; provided,
however, that, in the case of a Tax imposed on a periodic basis and
measured by the level of any item (such as a capital Tax), the amount of such
Tax allocable to the Pre-Closing Period will be determined by multiplying the
Tax by a fraction the numerator of which is the number of calendar days in the
portion of the period ending on (and including) the Closing Date and the
denominator of which is the number of calendar days in the entire taxable
period.

 

(c)           Exclusions:  Notwithstanding anything to
the contrary herein, the liability of the Seller to indemnify for Excluded
Taxes under this Section 6.6 will not apply if and to the extent that such
Taxes arise from or are increased by any act or omission by the Buyer or its
Affiliates, or following the Closing Date, by any Company other than in the
ordinary course of business, or to the extent that, as of the Closing Date,
such Taxes have been properly collected or withheld in accordance with
applicable law but not yet remitted to the relevant Governmental Authority.

 

(d)          Survival/Exclusivity:  The
obligation of the Seller to indemnify the Buyer for Excluded Taxes under this Section 6.6
will terminate on the date which is ninety (90) days after the expiration of
the statute of limitations with respect to such Taxes.

 

(e)           Indemnification payments by the Seller of any
Taxes due under this Section 6.6 will be made within thirty (30) days
following written notice by the Buyer that payment of any amounts to the
appropriate Governmental Authority is due, provided that the Seller will
not be required to make any payment earlier than two (2) days before such
Taxes are due to the appropriate Governmental Authority.  Upon request by the Seller, the Buyer will
deliver to the Seller reasonable documentary evidence that such Taxes are due
and payable.  In the case of any Tax that
is contested in accordance with the provisions of Section 6.8, payment of
such Tax to the appropriate Governmental Authority will be considered due no
earlier than the date a final determination to such effect is made by

 

60

 

the appropriate Governmental Authority or a court of proper
jurisdiction.

 

6.7          Tax Refunds

 

The
Seller will be entitled to any Tax refund, credit or similar benefit relating
to the Companies, the Purchased Assets or the Business for any Pre-Closing
Period (including, for the avoidance of doubt, any such credit relating to a
Pre-Closing Period obtained through a reduction in Tax liability for a taxable
period ending after the Closing Date). 
If the Buyer or any of its Affiliates or, following the Closing, any
Company receives any such refund or credit, the Buyer will pay to the Seller
(or cause to be paid to the Seller) the amount of such refund or credit within
five (5) Business Days of the earlier of receipt or entitlement
thereto.  The Buyer will, if the Seller
so requests and at the Seller’s expense, file (or cause to be filed) a claim
for any Tax refunds or Tax credits that are allocable to the Seller hereunder.

 

6.8          Tax Contests

 

(a)           After the Closing, the Buyer will promptly
notify the Seller in writing of the commencement of any Tax audit or
administrative or judicial proceeding or of any demand or claim on the Buyer or
any Company, which if determined adversely to the taxpayer or after the lapse
of time, would be grounds for indemnification by the Seller under Section 6.6.  Such notice will contain factual information
(to the extent known to the Buyer) describing the asserted Tax liability in
reasonable detail and will include copies of any notice or other document
received from the relevant taxing authority in respect of any such asserted Tax
liability.  If the Buyer fails to give
the Seller prompt notice of an asserted Tax liability, then (i) if the
Seller is precluded by the failure to give prompt notice from contesting the
asserted Tax liability in both the administrative and judicial forums, the
Seller will not have any obligation to indemnify for any loss arising out of
such asserted Tax liability, and (ii) if the Seller is not so precluded
from contesting but such failure to give prompt notice results in a detriment
to the Seller, any amount by which the Seller is otherwise required to
indemnify the Buyer with respect to such liability will be reduced by the
amount of such detriment.

 

(b)          The Seller may elect to direct, through
counsel of its own choosing and at its own expense, any audit, claim for refund
and administrative or judicial proceeding involving any asserted Tax liability
with respect to which indemnity may be sought by the Buyer (a “Contest”).  If the Seller elects to direct the Contest of
an asserted Tax liability, the Seller will, within ten (10) Business Days
of receipt of the notice of asserted Tax liability, notify the Buyer of its
intent to do so, and the Buyer will cooperate and will cause any Company, as
the case may be, to cooperate, at the Seller’s expense, in each phase of such
Contest.  The Seller may not settle or
compromise any claim that would reasonably be expected to result in

 

61

 

additional
material Taxes for the account of the Buyer or its Affiliates for a
post-Closing Period without the prior consent of the Buyer (which consent will
not be unreasonably withheld or delayed). 
If the Seller does not elect to direct the Contest, the Buyer may assume
control of the Contest; provided, however, that the Buyer may not
settle or compromise any asserted Tax liability without the prior written
consent of the Seller (which consent will not be unreasonably withheld or
delayed).

 

6.9          Tax Returns and Payments

 

From
and after the Closing, the Buyer will prepare and file or otherwise furnish to
the appropriate party (or cause to be prepared and filed or so furnished) in a
timely manner all Tax Returns relating to the Companies and the Purchased
Assets, except for (i) income and similar Tax Returns of the Asset Selling
Subsidiaries, and (ii) Tax Returns for which any Company joins in filing
on a consolidated, combined, unitary or similar basis with the Seller or any of
its Affiliates (other than a Company) for a taxable period ending on or prior
to, or including, the Closing Date.  Tax
Returns filed by the Buyer for any Pre-Closing Period or Straddle Period will,
to the extent permitted by law, be prepared in a manner consistent with past
practices employed by the Seller with respect to the Companies and the
Purchased Assets.  The Buyer and the
Seller will consult with each other prior to filing any material Tax Returns
for a Pre-Closing Period or Straddle Period. 
With respect to any Tax Return required to be filed with respect to any
Company or the Purchased Assets after the Closing Date, and as to which an
Excluded Tax is allocable to the Seller, the Buyer will provide the Seller with
a copy of such completed Tax Return and a statement indicating the amount of
Tax shown on such Tax Return that is allocable to the Seller at least twenty
(20) days prior to the due date (including any extension thereof) for the
filing of such Tax Return, and the Seller will have the ability to review and
comment on such Tax Return and statement prior to the filing of such Tax
Return.  The Seller and the Buyer will,
in any event, consult with each other and attempt in good faith to resolve any
issues arising from the Seller’s review of any such Tax Return and statement
prepared by the Buyer.

 

6.10        Treatment of Indemnity
Payments

 

The
Seller and the Buyer agree to treat all payments made under the indemnity
provisions of this Agreement, and for any misrepresentations or breaches of
warranties or covenants, as adjustments to the Purchase Price.

 

6.11        No Duplicative Adjustments

 

Notwithstanding
anything to the contrary contained in this Agreement, to the extent that an
adjustment has been made to the Purchase Price or any other payments are made
hereunder in respect of any matter relating to or arising out of this
Agreement, such matter will, to the extent of such adjustment or other payment,
not constitute a breach of any representation, warranty, covenant or

 

62

 

agreement
contained herein, and the Buyer will not be entitled to any indemnification
with respect thereto.

 

6.12        Actions on the Closing Date

 

After
the Closing, the Buyer shall not permit any Company (or any direct or indirect
Subsidiary of a Company) that is a U.S. corporation to engage in any activity
on the Closing Date outside the ordinary course of business which could result
in an adverse tax consequence to the Seller.

 

7.             OTHER COVENANTS OF THE
PARTIES

 

7.1          Access to Information Prior
to the Closing Date

 

From
the Signing Date until the Closing Date, upon reasonable notice, the Seller
will, and will cause each Selling Subsidiary, Company and each of their
respective officers, employees and other representatives, (i) to afford
the Buyer and its representatives reasonable access, during normal business
hours, to the offices, properties and books and records of each Company and (ii) to
furnish to the representatives of the Buyer such additional information
regarding the Companies, and the Business as the Buyer and its representatives
may from time to time reasonably request; provided, however, that
such investigation will be made upon reasonable notice, during normal business
hours, and in a manner that will not unreasonably interfere with the conduct of
the business of the Seller, the Selling Subsidiaries, the Companies or the
Business, and will not include any right by the Buyer or its representatives to
investigate or collect any samples of air, surface water, groundwater or soil
at or from such properties.  Notwithstanding
anything to the contrary in this Agreement, the Seller will not be required to
disclose any information to the Buyer if such disclosure would, in the Seller’s
sole discretion, (i) cause significant competitive harm to the Business if
the transactions contemplated hereby are not consummated, (ii) jeopardize
any attorney-client privilege or other legal privilege or (iii) contravene
any applicable Legal Requirement, fiduciary duty or binding agreement entered
into prior to the Signing Date.

 

7.2          Access to Information After
the Closing Date

 

Each
party agrees that it will cooperate with and make available (including the
right to make, at the requesting party’s expense, photocopies) to the other
party, during normal business hours, all books and records and information
(without substantial disruption of their respective businesses) retained and
remaining in existence after the Closing Date relating to the Companies, the
Purchased Assets, the Assumed Liabilities or the conduct of the Business prior
to the Closing Date.  Such cooperation
and information will include providing copies of, among other things, relevant
Tax Returns or portions thereof, together with accompanying schedules and
related work papers and documents relating to rulings or other determinations
by Tax authorities.  Each party will make
its employees available

 

63

 

on
a mutually convenient basis to provide explanations of any documents or
information provided hereunder.  Each
party will retain all books and records relating to the Business and each
Company for a period ending after the Closing Date until the earlier of (i) the
applicable period specified in such party’s document retention policy or Tax
law, or (ii) ten (10) years following the Closing Date; provided,
however, that if either party decides to destroy any such books and
records prior to the tenth (10th) anniversary of the Closing Date, such party
will notify the other at least ninety (90) calendar days in advance of
destroying any such books and records in order to provide the other party the
opportunity, at such party’s cost and expense, to access (in accordance with
this Section 7.2) and remove and retain all or any part of such books and
records as such party may select.  Any
information obtained hereunder will be kept confidential, except as may be
otherwise necessary in connection with the filing of Tax Returns or claims for
refund or in conducting an audit or other proceeding.  The party requesting any such information will
bear all reasonable out-of-pocket costs and expenses (including but not limited
to reasonable attorneys’ fees, but excluding reimbursement for salaries and
employee benefits) incurred in connection with providing such information.

 

7.3          Investigation

 

(a)           The Buyer acknowledges and agrees that it has
made its own inquiry and investigation and has formed an independent judgment
concerning the Companies, the Purchased Assets, the Assumed Liabilities and the
Business.

 

(b)          In connection with the Buyer’s investigation
of the Companies, the Purchased Assets, the Assumed Liabilities and the
Business, the Buyer has received from the Seller certain projections, forecasts
and other planning and budget information for the Business.  The Buyer acknowledges that there are
uncertainties inherent in attempting to make such projections, forecasts, plans
and budgets, that the Buyer is familiar with such uncertainties, that the Buyer
is taking full responsibility for making its own evaluation of the adequacy and
accuracy of all estimates, projections, forecasts, plans and budgets so
furnished to it, and that the Buyer will not assert any claim against the
Seller and/or any entity which is part of the Business and/or any of their
employees or agents, respectively, or hold any such entities and/or Persons
liable with respect thereto.

 

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

 

7.4          Employee and Related Matters

 

(a)           (i) Offer of Employment; Continuation
of Employment; Credited Service. The transfer of employment of all Business
Employees who are covered by the Directive shall be governed by the
Directive.  To the extent that the

 

64

 

employment
relationship of a Business Employee does not transfer by operation of
applicable Legal Requirements, including the Directive as of the Closing Date,
the Buyer will, or will cause a Buyer Designated Affiliate to, offer each of
the Business Employees an employment position (or, in the case of the
Companies, continued employment) that is suitable and appropriate for such
employee’s level of qualification and substantially equivalent to their current
employment role and purpose.  Each such
Business Employee who accepts such offer of employment (or continued
employment) and commences or continues such employment, and all Business
Employees whose employment transfers automatically to the Buyer or a Buyer
Designated Affiliate, is referred to in this Agreement as a “Transferred
Employee.”  The Transferred Employees
are intended to be transferred with the Business.  For any Transferred Employee, the date such
employment shall be transferred (the “Employment Transfer Date”) shall
be 12:01 a.m. on the day immediately following the Closing Date.  In the event that the Companies have any
employees who are not Business Employees (e.g.,
an employee seconded to an Affiliate), the Seller and the Companies shall take
all commercially reasonable steps necessary for such employees to be
transferred to the Seller or its Subsidiaries (other than the Companies) on or
prior to the Closing Date, and on and after the Closing Date, the Seller and
its Subsidiaries shall hold the Buyer and its Affiliates (including the
Companies) harmless from all future Liabilities and responsibilities with
respect to such employees.

 

(ii) Shared
Services Employees. Upon termination of the shared service, either prior to
or post-Closing, the Seller shall be entitled to cause Gerber Products to
transfer to the Seller or its designated Affiliate those Shared Services
Employees (other than any such employee whose primary work duties involve the
administration of, or who has critical, unique knowledge with respect to,
Transferred Plans) reasonably designated by the Seller who perform services
primarily for businesses other than the Business, and provided that, subject to
the next sentence, the Shared Services Employees to be retained by the Business
shall include employees with sufficient knowledge, experience and skill to
permit the Business to be operated in a manner consistent with its prior
practice (“Retained Shared Services Employees”).  Notwithstanding the foregoing, (i) the
Seller shall make transferred Shared Services Employees available to the
Business for a period of time sufficient to permit such employee to transfer
sufficient knowledge to another person providing service to the Business and (ii) the
total number of the Shared Services Employees to be transferred in any
functional area or geographic region shall in no event exceed the numbers
reflected on Schedule 7.4(a)(ii). Prior to transferring any such Shared
Services Employees, the Seller shall consult with the Buyer.

 

(b)          Transferred Plans; Cessation of Coverage
under Novartis Plans; Service Credit.

 

65

 

(i)            Transferred Plans. 
Unless otherwise set forth on Schedule 7.4(b), or as otherwise
provided in this Section 7.4, the Transferred Plans shall include only
those Business Employee Plans that are currently sponsored by the Companies or
their respective Subsidiaries (so that the Companies or their respective
Subsidiaries are the entities with the authority to amend such Plans and the
obligation to provide benefits under such Plans),  and cover only Business Employees and no Novartis Plans which
cover other employees or which are group-wide (or other employees on the
payroll of the Business) shall be Transferred Plans and the Transferred Plans
shall not include any stock, stock options, stock appreciation rights or other
equity or equity-based Plans, such as the Novartis Corporation 2001 Stock
Incentive Plan for North American Employees. In jurisdictions in which, under
applicable Legal Requirements (including, without limitation, the Directive) or
existing agreements, it is required that any Business Employee Plan (including
without limitation, any pension, retirement plans or retiree medical plan) or
any portion thereof (including any Liabilities to any Transferred Employee or
group of Transferred Employees) be retained by (or transferred to) the
Companies, the Buyer or any of its other Subsidiaries (including by virtue of
any election available to the Transferred Employees under applicable Legal
Requirements or existing agreements), then, to the extent so required, such
Business Employee Plan, or portion thereof, shall constitute a Transferred
Plan.

 

(ii)           Plan Assets.  Other than as with respect to
Transferred Plans subject to Section 7.4(k)(i) and 7.4(l), in all
cases in which any Transferred Plan is retained by (or transferred to) the
Companies or any of their Subsidiaries, the assets related to such Transferred
Plan shall also be transferred (or retained) along with such Transferred Plan
and such related assets shall include, to the extent reasonably practicable
(and in any event to the extent required by applicable Legal Requirements), all
insurance policies, trust funds, or other funding media or funding arrangements
related to the benefits being transferred, and to the extent required by
applicable Legal Requirements or relevant governing documents, any reserves
(whether or not allocated). Other than as with respect to Transferred Plans
subject to Section 7.04(k)(i) and 7.04(l), any transfers of assets
hereunder out of any reserves, trust funds, or other funding media or funding
arrangements of a Novartis Plan will be made in cash or property reasonably
acceptable to the Buyer and shall not be less than either the amount required
by applicable Legal Requirements, or with respect to a (i) funded defined
benefit pension plan, the unfunded liability of which was not properly
disclosed on the most recent balance sheet included in the Financial
Statements, the Defined Benefit Obligation determined under International
Accounting Standard 19 (“IAS 19 DBO”) and related International
Financial Reporting Standards, or (ii) a funded defined contribution
pension plan, all vested and unvested balances for each Transferred Employee,
including all earned and unpaid matching, supplemental, and/or profit sharing
contributions due to such employees

 

66

 

through
the Closing Date.  For this purpose, the
IAS 19 DBO shall be determined using assumptions and methodologies consistent
with those utilized in the report issued by Watson Wyatt and customary and
reasonable with respect to each Transferred Plan involved, provided however,
that such IAS 19 DBO shall be determined assuming, to the extent relevant, that
a buyer would provide to Transferred Employees a benefit plan of the same
design and benefit level as the Business Employee Plan involved.

 

(iii)          Steps to Assume or Retain Plans. 
Effective as of the Closing, the Buyer shall, or shall cause its
Subsidiaries to, adopt, assume or retain (as applicable) and honor in
accordance with their existing terms (but subject to the right of Buyer and its
Subsidiaries to amend them) all Transferred Plans and take all actions required
to effect such adoption, assumption or retention and the Seller shall, or shall
cause its Subsidiaries to, adopt, assume or retain (as applicable) and honor in
accordance with their existing terms (but subject to the right of Seller and
its Subsidiaries to amend them) all Business Employee Plans which are not
Transferred Plans and take all actions required to effect such adoption,
assumption or retention.

 

(iv)          Cessation of Coverage under Novartis Plans;
Service Credit.  As of the Closing Date, the only Business
Employee Plans which shall be sponsored or maintained by the Buyer or its
Affiliates (including the Companies) shall be the Transferred Plans.  At the Employment Transfer Date, each
Transferred Employee will cease to be an active participant under any Novartis
Plans, and each Company and Company Subsidiary shall formally terminate its
participation in and sponsorship of each Novartis Plan that is not a
Transferred Plan, except as may be provided pursuant to an applicable Benefits
Transition Agreement and except for the Transferred Plans.  Each Transferred Employee will receive credit
for services with the Seller, the Selling Subsidiaries and the Companies and
their Affiliates and predecessors under the Buyer’s Plans in which each such
Transferred Employee participates for purposes of eligibility and vesting (but
not for purposes of benefit accrual, except for (i) severance benefits or (ii) to
the extent required by applicable Legal Requirements) to the same or similar
extent as such Transferred Employee was entitled immediately prior to the
Closing to credit for such service under the corresponding Plans of the Seller,
the Selling Subsidiaries and the Companies and their Affiliates and
predecessors; provided, however, that in no event will such
credit result in the duplication of benefits or the funding thereof.

 

(c)           Continuation of Benefits.  For
a period of not less than two (2) years from the Closing Date (the “Continuation
Period”), the Buyer will, or will cause the Buyer Designated Affiliates to,
provide to each Transferred Employee starting on his or her Employment Transfer
Date, salary or wages,

 

67

 

opportunities
for commission, bonuses, incentive compensation and employee benefits
(including pension benefits) that are of not less than economically similar
value, in the aggregate, to those paid or provided to such Transferred Employee
immediately prior to the Closing, but disregarding any special bonus or
incentive payments made to any Transferred Employees in connection with the
transactions contemplated by this Agreement. 
The provision of any such employee benefits (including pension benefits)
shall be, at the option of the Buyer, through arrangements operated by the
Companies, the Transferred Plans or other arrangements maintained or adopted by
the Buyer or the Buyer Designated Affiliates. 
The transfer to, or retention by, the Companies, the Buyer or any of its
Subsidiaries of any Transferred Plan, and any related transfer of assets and
liabilities, shall conform with Legal Requirements, including the Directive, as
applicable.  Nothing in this Agreement
shall be construed as requiring the Buyer or the Buyer Designated Affiliates to
make an offer of employment on any basis other than an employment-at-will basis
where applicable, or to continue to employ any Transferred Employee for any
particular period after the Closing Date, except as may be provided in the
employment agreements listed in Schedule 7.4(c).

 

Notwithstanding
any provision of this Agreement to the contrary, the terms of this Section 7.4
are not intended to, and do not, constitute (A) an amendment to any
Transferred Plan or any Plan of Buyer or Seller or their respective Affiliates,
(B) a promise or commitment to any current or former participants under
any Transferred Plan or any Plan of Buyer or Seller or their respective
Affiliates, (C) the establishment of any new Plan, (D) a commitment
to provide or continue any benefits under any Plan, or (E) a limitation on
the authority of Seller, Buyer or any of their respective Affiliates to amend
or terminate any Transferred Plan.

 

(d)          Allocation of Responsibility. The Buyer or a Buyer Designated Affiliate
will perform and discharge for its own account all salaries and wages for
services by a Transferred Employee on and after the Closing Date (or if later
the Employment Transfer Date for such Transferred Employee), and all
contributions due under the Transferred Plans or any Plans which it or they
extend to the Transferred Employees.  On
and after the Closing Date, the Seller and its Subsidiaries shall hold the
Buyer and its Affiliates (including the Companies) harmless from all past,
present or future Liabilities and responsibilities with respect to all Business
Employee Plans, except for the Transferred Plans and except as may otherwise be
provided in an applicable Benefits Transition Agreement.

 

(e)           Vesting.  Effective as of the Closing
Date, the Seller and its Subsidiaries shall amend any Business Employee Plan
which is not a Transferred Plan and which provides pension, retirement,
retirement savings or similar benefits, to the extent necessary to fully vest
the Transferred Employees in such benefits.

 

68

 

(f)           Consent to Transfer of Employment.

 

(i)            Where, pursuant to any applicable Legal
Requirement (which, for the purpose of this clause, shall not include the
Directive), express consent to the transfer of the employment of a Business
Employee to the Buyer or a Buyer Designated Affiliate is required of any
Business Employees, the Seller shall seek to obtain such consent after the
signing of this Agreement and prior to the Closing Date.  Where such consent is obtained, the Seller or
the applicable Asset Selling Subsidiary shall release such Transferred
Employees from their employment with the Seller or the Asset Selling
Subsidiary, as applicable, as of the Closing Date and the Buyer will, or will
cause a Buyer Designated Affiliate to, offer each such Business Employee an
employment position that is suitable and appropriate for such employee’s level
of qualification and substantially equivalent to their current employment role
and purpose.

 

(ii)           In the event that a Business Employee whose employment is covered by
any applicable Legal Requirement (which, for the purpose of this clause
(f)(ii), shall not include the Directive) does not consent (if consent is
required pursuant to such applicable Legal Requirement) to the transfer of his
or her employment to the Buyer or a Buyer Designated Affiliate, the Seller
shall (a) retain such Business Employee in the Seller’s employ or in the
employ of an Affiliate of the Seller, (b) be responsible for all costs
resulting from such continued employment, and (c) indemnify and hold
harmless the Buyer in respect of the same.

 

(iii)          In the case of automatic transfers of Business Employees covered by the
Directive, the Seller shall grant the Transferred Employees such time period,
if any, as may be provided under the Directive (such time period to start as
provided under the Directive) to decline the transfer of their employment to
the Buyer or the applicable Buyer Designated Affiliate.  If any such Business Employee declines to be
transferred to the Buyer or the relevant Buyer Designated Affiliate, the legal
consequences shall be those provided for under the Directive.

 

(g)          Labor Disputes.  The
Seller and its Subsidiaries shall use commercially reasonable efforts to
conduct themselves with respect to the Transferred Employees in any respect so
as to avoid any labor dispute, dispute with works councils, unions and the
like.  The Seller and the Asset Selling
Subsidiaries and the Buyer and the Buyer Designated Affiliates shall, where
required by the Directive or other applicable Legal Requirements, or in
accordance with the provisions of any collective bargaining agreement, inform
and consult with employees, trade unions, works councils or other employee
representatives regarding the contemplated transfers and fulfill any
obligations to notify and/or obtain any consent from any relevant Governmental
Authority or other person in respect of the contemplated transfers of the
Transferred Employees.

 

69

 

(h)          Employee Information. 
Prior to the Closing Date, the Seller shall deliver to the Buyer a
schedule that lists for each Business Employee with an annual base salary in
excess of $250,000, including each employee on leave of absence: (i) name;
(ii) employer; (iii) years of service; (iv) job title; and (v) current
base salary or hourly wage, except where the furnishing of such information
would result in a violation of applicable Legal Requirements, in which case
such information shall be furnished to the Buyer when authorized under
applicable Legal Requirements and the Seller shall use commercially reasonable
efforts to provide the Buyer with any other information reasonably necessary to
effectuate the orderly transition of the Transferred Employees from the Seller
to the Buyer.

 

(i)            Works Council Consultation.  The
provisions of this Section 7.4 shall, where applicable, be subject to
completion of the mandatory employee and works council consultation procedures
in accordance with applicable Legal Requirements.

 

(j)            Cooperation.  Following the date of this
Agreement, the Seller and the Buyer shall reasonably cooperate in all matters
reasonably necessary to effect the transactions contemplated by this Section 7.4,
including exchanging information and data relating to workers compensation,
employee benefits and employee benefit plan coverages (except to the extent
prohibited by applicable Legal Requirements), and in obtaining any governmental
approvals required hereunder; provided that Seller shall not be
obligated to provide any data relating to benefits provided to persons who are
neither current or former Business Employees nor covered by any Transferred Plan.  Without limiting the foregoing, the Buyer and
the Seller agree to cooperate fully and to use all commercially reasonable
efforts to permit the Buyer to establish by the Closing all Plans necessary for
it to provide the level of benefits from and after the Closing required by this
Section 7.4.  If in any jurisdiction
it is impracticable for the Buyer, using commercially reasonable efforts, to
establish one or more Plans by the Closing Date, the Seller shall make
available transition benefit coverage under such Plans as the Buyer may request
with respect to that jurisdiction for a period of time not in excess of the
greater of 6 months after the date that the information with respect to the
Business Employee Plans is made available to the Buyer in accordance with Section 4.12(b) or
the end of the calendar year that includes the Closing Date pursuant to an
agreement on terms similar to the Transition Services Agreement (a “Benefits
Transition Agreement”), it being understood and agreed that the Buyer shall
reimburse the Seller for one hundred percent (100%) of the cost for services
and benefits (including costs and expenses of obtaining actuarial calculations
and funding for past services, if applicable) provided pursuant to the Benefits
Transition Agreement from the Closing until the date that is six (6) months
following the Signing Date (if the Closing has occurred prior to such six (6) month
anniversary) and thereafter at one hundred fifteen percent (115%) of such cost;
provided that notwithstanding the

 

70

 

foregoing,
in no event shall Seller be obligated to take any action that would give rise
to a multiple employer plan or violation of any applicable Legal Requirement.

 

(k)           Special U.S. Provisions.

 

(i)            U.S. Tax-Qualified Pension Plan.  (A)
As soon as practicable after the Closing but in no event later than the
Transfer Date, the Buyer shall have in effect a defined benefit pension plan
(the “Buyer Pension Plan”) that shall provide benefits to Transferred Employees
and former employees of the Business who are participants, whether active
(regardless of whether benefits for such employees have been frozen), deferred
or retired (“Transferred Participants”) in the Pension Plan for Salaried
Employees of Novartis Corporation (the “Seller Pension Plan”) that are
the same as those provided by the Seller Pension Plan immediately prior to the
Closing.  The Buyer Pension Plan is
intended to be qualified under Section 401(a) of the Code and the
trust which is a part of such plan is intended to be exempt from tax under Section 501(a) of
the Code.  Each Transferred Participant
participating in the Seller Pension Plan as of the Transfer Date shall become a
participant in the Buyer Pension Plan as of the Transfer Date.  To the extent necessary to comply with Legal
Requirements, the Buyer Pension Plan and the trust that is a part of such plan
(and any successor to such plan and/or trust) shall provide (1) that with
respect to assets transferred to the Buyer Pension Plan from the Seller Pension
Plan, such assets shall be held by the trust that is a part of the Buyer
Pension Plan for the exclusive benefit of the participants in such plan, (2) that
the accrued benefits as of the Closing Date of each Transferred Participant may
not be decreased by amendment or otherwise and (3) that each Transferred
Participant shall have the right to receive his or her benefit accrued through
the Closing Date under the Seller Pension Plan in any optional form provided
under the Seller Pension Plan.

 

(B)           Subject to the provisions of Section 7.4(k)(i)(C), as soon as
practicable following the Closing Date, the Seller shall cause to be
transferred to a trust established by the Buyer as part of the Buyer Pension
Plan an amount of cash or assets, or a combination thereof (the “Transfer
Amount”), calculated as of a date that is on or about the date such
transfer is effected (the “Transfer Date”) required to satisfy the
obligations, liabilities and commitments of the Seller and its Affiliates and
the Seller Pension Plan with respect to the Transferred Participants under the
Seller Pension Plan.  Such required
amount of cash or assets shall be determined by an enrolled actuary designated
by the Seller (“Seller’s Actuary”) in accordance with Section 414(l) of
the Code (including the safe harbor PBGC assumptions and methodology as of the
Closing Date).  The amount expressly
called for to be transferred pursuant to this Section 7.4(k)(i)(B) shall
be adjusted to the extent necessary to satisfy Section 414(l) of the
Code as well as Section 4044 of ERISA. 
Seller shall provide

 

71

 

Buyer,
or shall cause Seller’s Actuary to provide, reasonable assurances as to the
accuracy of the calculations under Section 4044 of ERISA by Seller’s
Actuary.

 

(C)           Notwithstanding the foregoing, no transfer shall be made until such
time as (1) the Seller has been provided evidence reasonably satisfactory
to the Seller that the Buyer has established a trust as part of the Buyer
Pension Plan and that the Buyer Pension Plan satisfies the requirements for a
qualified plan under Section 401(a) of the Code and that such trust
is exempt from tax under Section 501(a) of the Code, (2) the
Seller and the Buyer have received any other required governmental approvals
and (3) 30 days have elapsed from the filing of Form 5310-A with
respect to the transfer.  Unless the
Seller and the Buyer agree otherwise, the transfer of assets from the Seller
Pension Plan to the Buyer Pension Plan shall occur on the last business day of
a month.  Seller’s Actuary shall be
responsible for the required actuarial certification under Section 414(l) of
the Code.  As of the Closing, the Buyer
shall assume all liabilities with respect to benefits to be transferred
pursuant to this Section 7.4(k)(i).

 

(D)          The Buyer shall use its reasonable best efforts to qualify the Buyer
Pension Plan under Section 401(a) of the Code, and the Buyer and the
Seller shall reasonably cooperate to make any and all filings and submissions
to the appropriate governmental agencies required to be made by the Seller or
the Buyer as are appropriate in effectuating the provisions of this Section 7.4(k)(i)(D) (including
(x) IRS Forms 5310-A in respect of the transfers of assets and (y) in
the event that the transactions contemplated by this Agreement constitute a “reportable
event” (within the meaning of Section 4043 of ERISA) for which the 30-day
notice has not been waived, timely notification of the PBGC and filing of all
reports required in connection therewith).

 

(E)           In the event the difference between the Transfer Amount and the amount
of liabilities under the Seller Pension Plan in respect of Transferred
Participants as of the Transfer Date, calculated in a manner consistent with
International Accounting Standard 19, using the assumptions contained in, and
underlying, the Watson Wyatt Report (the “Base Amount”) is negative by
more than $3,000,000, within five (5) Business Days following the
Transfer Date, the Seller shall pay the Buyer the amount of such difference
less $3,000,000. In the event the difference between (i) the Transfer
Amount plus $3,000,000 and (ii) the Base Amount is positive, within five (5) Business
Days following the Transfer Date, the Buyer shall pay the Seller the amount of
such difference.

 

(ii)           Rollovers to U.S. Tax-Qualified Savings/401(k) Plan.  As
soon as practicable after the Closing Date, and subject to its determination
that any applicable Legal Requirements are satisfied,  the Buyer shall cause one or more tax-qualified defined contribution
plans (each, a “Buyer 401(k)

 

72

 

Plan”) established or maintained by it or one or
more of its Subsidiaries to commence accepting eligible rollover distributions
(as defined in Section 402(c)(4) of the Code) from United
States-based Transferred Employees with respect to any account balances
distributable to them on or after the Closing Date by a Novartis Plan which is
a tax-qualified plan.  Each Buyer 401(k) Plan
shall accept rollovers of outstanding loans from United States-based
Transferred Employees.  The distribution
and rollover described herein shall comply with applicable Legal Requirements
and each party shall make all filings and take any actions required of such
party under applicable Legal Requirements in connection therewith.

 

(iii)          Post-Retirement Medical Benefits. 
Notwithstanding the provisions Section 7.4(b)(iv) of this
Agreement to the contrary, with respect to U.S.-Based Transferred Employees who
as of the Closing Date are covered by a post-retirement medical benefit plan
and are not yet eligible for benefits under such plan but who would be eligible
for such benefits with an additional two years of service credit, such
Transferred Employees’ service with Buyer or an Affiliate of Buyer during the
Continuation Period shall count for purposes of determining eligibility for
post-retirement medical benefits to be provided to Transferred Employees based
on the same eligibility criteria that applied with respect to such benefits
immediately before the Closing Date, and upon attaining eligibility such
Transferred Employees shall be eligible to receive levels of post-retirement
medical benefit no less favorable than those provided to Transferred Employees
generally.

 

(l)            Special Brazil Provisions.  The
account balances and benefit liabilities of the Previ Novartis Plan A and Previ
Novartis Plan D with respect to Transferred Employees and former employees of
the Business shall transfer to the Buyer.

 

7.5          Insurance

 

Effective as of 23:59 CET on
the Closing Date, the Companies, the Purchased Assets and, except as provided
under Section 7.4, the Transferred Employees will cease to be insured by
the insurance policies, binders of insurance, programs of self-insurance or
similar arrangement maintained by the Seller and its Affiliates (the “Seller Insurance”).  From and after the Closing, the Buyer
undertakes to obtain and maintain effective insurance policies or binders of
insurance, programs of self-insurance or similar arrangements with respect to
the Companies, the Purchased Assets and the Transferred Employees.  With respect to the Seller Insurance coverage
written on an “occurrence basis”, the Seller will have no liability for
occurrences which take place on or after 23:59 CET on the Closing Date.  With respect to the Seller Insurance coverage
written on a “claims made basis”, the Seller will have no liability for claims
made after 23:59 CET on the Closing Date.

 

73

 

7.6          Further Action

 

(a)           Each of the parties to this Agreement will
execute and deliver such documents and other papers, and, subject to Section 7.7,
shall take such further actions and do or cause to be done all things
necessary, proper or advisable under applicable Legal Requirements, as may be
reasonably required to carry out the provisions hereof and to give effect
to the transactions contemplated hereby and by the Ancillary Agreements.

 

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

 

(c)           During the period between the Signing Date
and the Closing Date, the Seller and the Buyer, subject to Section 7.7,
will use all commercially reasonable efforts to take, or to cause to be taken,
all appropriate action, to do or cause to be done all things necessary, proper
or advisable under applicable Legal Requirements, and to execute and deliver
such documents and other papers, as may be required to carry out the provisions
of this Agreement and consummate and make effective the transactions
contemplated by this Agreement, including to cause the Companies and the Asset
Selling Subsidiaries, as applicable, to obtain all requisite consents of or
waivers from Third Parties with respect to the agreements listed in Schedule
4.8(b).

 

(d)          There shall be excluded from the transactions
contemplated to occur at Closing by this Agreement, the assignment or transfer
of any agreement, lease, license, permit or right which is not assignable or
transferable without the consent of any Person other than the Seller, the Asset
Selling Subsidiaries or their Affiliates, to the extent that any such consent
shall not have been given or obtained prior to the Closing, provided, however,
that each of the Seller or the Asset Selling Subsidiaries shall have the
continuing obligation after the Closing to use commercially reasonable efforts
to endeavor to obtain all necessary consents to the assignment or transfer
thereof (provided that the Seller and the Asset Selling Subsidiaries
shall not be required to commence any litigation or offer or grant any
financial accommodation to any Third Party), and upon obtaining the requisite
Third Party consent thereto, the underlying agreement, lease, license, permit
or right, if otherwise includable in the Purchased Assets or the transactions
contemplated hereby, shall be transferred and assigned to the Buyer or the
Buyer Designated Affiliate hereunder.  To
the extent that the sale of the Shares of any Company causes a breach of any
agreement, lease, license, permit or right or gives any Person other than the
Companies the ability to terminate any such agreement, lease, license, permit
or right, the Seller shall use reasonable commercial efforts to obtain

 

74

 

the
consent of any Third Parties required to prevent such breach or termination.

 

(e)           In the event that any waiver, consent or
approval required to be obtained, cannot for any reason be given or obtained on
or prior to the Closing Date in order to permit the valid transfer of all
right, title and interest of the Seller or any Asset Selling Subsidiary in any
agreement, lease, license, permit or right which is not assignable or
transferable without the consent or waiver of a third Person, then the Buyer
shall or shall cause the Buyer Designated Affiliate to perform the obligations
under such agreements, leases, licenses, permits or rights and the Seller or
the applicable Asset Selling Subsidiary shall enter into or be deemed to have
entered into such leases, licenses, distribution agreements, subleases, sublicenses
or other interim arrangements, and shall cooperate with the Buyer as may be
necessary to provide the Buyer with the benefit of the use of the applicable
Purchased Asset on substantially the same economic terms until such time as the
waiver, consent or approval is obtained.

 

(f)           In the event any contract, license, agreement
or commitment is held by the Seller or any Asset Selling Subsidiary and does
not relate exclusively to the Business, the Seller shall use reasonable best
efforts to provide the benefits of such contract, license, agreement or
commitment to the Buyer until such time as the Buyer can obtain a separate
agreement that provides substantially the same benefits.  In the event any contract, license, agreement
or commitment that does not relate exclusively to the Business is assigned by
the Seller or any of its Affiliates to the Buyer, the Buyer shall use
reasonable best efforts to provide the benefits of such contract, license
agreement or commitment to the Seller until such time as the Seller can obtain
a separate agreement that provides substantially the same benefits.

 

7.7          Regulatory and Other
Authorizations

 

(a)           The Seller and the Buyer will (i) use
their reasonable best efforts to obtain (or cause the Selling Subsidiaries or
Companies to obtain) as promptly as practicable all authorizations, consents,
orders, actions and approvals, and to make all filings with and to give all
notices to all Governmental Authorities required to consummate the transactions
contemplated by this Agreement, (ii) cooperate fully with the other party
hereto in promptly seeking to obtain all such authorizations, consents, orders,
actions and approvals and to make all such filings and give such notices and (iii) provide
such other information to any Governmental Authority as such Governmental
Authority may reasonably request in connection therewith.  Each party hereto agrees to make promptly
(but in no event later than ten (10) Business Days after the Signing Date)
its filing pursuant to the HSR Act and to supply as promptly as practicable to
the appropriate Governmental Authorities any information and documentary
material that

 

75

 

may
be reasonably requested pursuant to the HSR Act.  The Buyer hereto agrees to make as promptly
as practicable its filing required to be made with the European Commission
and/or any relevant member state with respect to the transactions contemplated
by this Agreement and to supply as promptly as practicable to the European
Commission and/or any relevant member state any additional information and
documentary material that may be reasonably requested.  The Buyer hereto agrees to make as promptly
as practicable its filing under Mexico’s Competition Act and to supply as
promptly as practicable to the appropriate Governmental Authorities any
information and documentary material that may be reasonably requested pursuant
to Mexico’s Competition Act.  The Buyer
hereto agrees to make as promptly as practicable its filings in the
jurisdictions set forth on Schedule 4.19 or Schedule 5.3 and to
supply as promptly as practicable to the appropriate Governmental Authorities
any information and documentary material that may be reasonably requested in
connection therewith.  The Buyer agrees
to file promptly (but in no event later than twenty (20) Business Days after
the Signing Date) a Form A with the New York Department pursuant to the
New York Insurance Law and related regulations and shall use its best efforts
to obtain approval for the transactions contemplated hereby from the New York
Department.  The Buyer will pay all fees
or make other payments to any Governmental Authority in order to obtain any
such authorizations, consents, orders or approvals.

 

(b)          In addition, provided that the Buyer shall
not be required to take any action that would have a material adverse effect on
the Consumer Business and the Buyer’s Infant Nutrition Business as currently
conducted, taken as a whole, the Buyer agrees to use its best efforts to avoid
or eliminate each and every impediment under any antitrust, competition or
trade regulation Legal Requirement that may be asserted by any antitrust or
competition Governmental Authority or any other party so as to enable the
parties hereto to close the transactions contemplated by this Agreement as
promptly as practicable, including negotiating, committing to and effecting as
promptly as practicable by consent decree, hold separate orders, or otherwise,
the sale, divestiture or disposition of such of the Buyer’s Infant Nutrition Business
assets, properties or businesses (or assets, properties or rights of the Buyer
and its Affiliates used in the Buyer’s Infant Nutrition Business) or of the
Assets, properties or businesses to be acquired by it pursuant hereto, and the
entrance into such other arrangements, as are 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 suit or proceeding, which would otherwise have the effect of
materially delaying or preventing the consummation of the transactions
contemplated by this Agreement.  In
addition, provided that the Buyer shall not be required to take any action that
would have a material adverse effect on the Consumer Business and the Buyer’s
Infant Nutrition

 

76

 

Business
as currently conducted, taken as a whole, the Buyer shall use its best efforts
to defend through litigation on the merits any claim asserted in court by any
party in order to avoid entry of, or to have vacated or terminated, any decree,
order or judgment (whether temporary, preliminary or permanent) that would
prevent the Closing prior to 31 December 2007.

 

(c)           The Seller and the Buyer will each promptly
notify the other party of any communication that it or any of its Affiliates
receives from any Governmental Authority relating to the matters that are the
subject of this Agreement and permit, when practicable, the other party to
review in advance any proposed communication by such party to any Governmental
Authority.  Neither the Seller nor the
Buyer will agree to participate in any meeting with any Governmental Authority
in respect of any filings, investigation (including any settlement of the
investigation), litigation, or other inquiry unless it consults with the other
party in advance and, to the extent permitted by such Governmental Authority,
gives the other party the opportunity to attend and participate at such meeting.  The parties to this Agreement will coordinate
and cooperate fully with each other in exchanging such information and
providing such assistance as the other party may reasonably request in
connection with the foregoing (i.e., in particular, in relation to all
necessary merger control proceedings worldwide) and in seeking early
termination of any applicable waiting periods, including under the HSR
Act.  The Seller and the Buyer will
provide each other with copies of all correspondence, filings or communications
between them or any of their representatives, on the one hand, and any
Governmental Authority or members of its staff, on the other hand, with respect
to this Agreement and the transactions contemplated by this Agreement; provided,
however, that materials may be redacted (x) to remove references
concerning the valuation of the Business or the Purchased Assets, (y) as
necessary to comply with contractual arrangements, and (z) as necessary to
address reasonable privilege or confidentiality concerns; however, both parties
shall assess on a case-by-case basis in good faith whether the redacted
information may be exchanged between outside competition counsel for the
purpose of any merger control proceedings.

 

(d)          The Buyer shall not enter into any transaction,
or any agreement to effect any transaction (including any merger or
acquisition) that might reasonably be expected to prevent, hinder or delay the
consummation of the transactions contemplated hereby or to make it more
difficult, or to increase the time required, to: (i) obtain the expiration
or termination of the waiting period under the HSR Act, or any other applicable
antitrust or competition law or regulation or applicable insurance law, in each
case applicable to the transactions contemplated by this Agreement, (ii) avoid
the entry of, the commencement of litigation seeking the entry of, or to effect
the dissolution of, any injunction, temporary restraining order or

 

77

 

other
order that would materially delay or prevent the completion of the transaction
contemplated hereby, or (iii) obtain all authorizations, consents, orders
and approvals of Governmental Authorities, including the New York Department,
necessary for the consummation of the transactions contemplated by this
Agreement.

 

(e)           The Buyer and the Seller will, or will cause
their respective Affiliates to, (i) notify their respective employees in
respect of whom notification is required under applicable Legal Requirements or
by contract of the transactions contemplated by this Agreement and the
Ancillary Agreements, and (ii) to the extent required under applicable
Legal Requirements, continue to consult with the Works Councils or, if
necessary, worker delegations or recognized unions with respect to the
consummation of the transactions contemplated by this Agreement and the
Ancillary Agreements.

 

7.8          Non-Competition

 

(a)           Subject to Section 7.8(b), for a period
of two (2) years commencing on the Closing Date, neither the Seller nor
any of its Affiliates will directly or indirectly:

 

(i)            engage in the development, manufacture,
marketing, distribution or sale of any infant and toddler nutrition products
and Care Products (including both branded and unbranded products) that are
directly competitive with any Business Product (or successor products to any
such Business Product) marketed, distributed or sold in any country; or

 

(ii)           engage in the underwriting and marketing of life insurance in the
United States or Canada (other than on behalf of itself or its Affiliates)

 

(the
activities set forth in Section 7.8(a)(i) through (ii) being,
collectively, the “Restricted Activities”).

 

(b)          The prohibitions contained in Section 7.8(a) will
not be construed to prohibit or restrict the rights of the Seller, Novartis OTC
or any of their Affiliates (other than the Companies) to continue, extend or
expand its existing concentrated vitamins and mineral supplements or its
existing over the counter pediatric medicines research and development,
manufacturing, marketing, promotion, distribution or selling activities in the
hospital, nursing home, home care, pharmacy and retail channels, including by
extending or expanding such existing activities to any products developed,
manufactured, marketed, promoted, distributed or sold by the Seller or any of
its Affiliates (other than the Companies).

 

For
the avoidance of doubt, the prohibitions set forth in Section 7.8(a) apply
only to the Seller and its Affiliates as of the Signing Date, and will have no
effect on Third Parties.

 

78

 

 

For
the purpose of this Section 7.8(b), “vitamins and mineral supplements”
shall have the meaning given to those terms in the FDA Guidelines for Vitamin
and Mineral Food Supplements CAC7GL 55 -2005.

 

(c)           The restrictions set forth in Section 7.8(a) shall
not apply to any Acquired Business that at the time of the acquisition is
engaged in the Restricted Activities if the consolidated annual turnover
directly attributable to such Restricted Activities in the previous fiscal year
constitutes less than ten percent (10%) of the consolidated annual turnover of
such Acquired Business during the same period (an “Incidental Business”).  In the event that such annual turnover
attributable to such Restricted Activities constitutes more than an Incidental
Business, the business activities of such Restricted Activities will
nevertheless be excluded from the prohibitions set forth in Section 7.8(a);
provided that the Seller or its Affiliates sell or otherwise dispose of such
Restricted Activities within six (6) months after the consummation of the
transaction with such Acquired Business.

 

(d)          Except as set forth on Schedule 7.8(d),
for a period of one (1) year from the Closing Date, the Seller shall not,
and shall cause its Affiliates not to, hire any Transferred Employee identified
on Schedule 4.11(c) or solicit for hire any other Transferred
Employee, provided, that this covenant shall not apply to general
advertisements for employment not targeted at the Transferred Employees, or to
the hiring of persons who respond to such general advertisements or who contact
the Seller or any of its Affiliates at their initiative or the hiring or
solicitation for hire any Transferred Employee that the Buyer or an Affiliate
of the Buyer has previously terminated or as otherwise may be agreed by the
Seller and the Buyer.

 

(e)           In addition to any other remedies that may be
available to the Buyer at law or in equity, the Buyer shall be entitled to have
all of the rights under this Section 7.8 specifically performed and shall
have the right to obtain preliminary and permanent injunctive relief to secure
the performance or to prevent a breach of this Section 7.8.

 

7.9          Conduct of the Business

 

(a)           Except as may be necessary to comply with
applicable Legal Requirements, as specifically contemplated by this Agreement
or as disclosed in Schedule 7.9, from the Signing Date until the Closing
Date, the Seller will, and will cause the Companies and the Selling
Subsidiaries to:

 

(i)            use commercially reasonable efforts to
preserve the relationships with customers, suppliers, reinsurers, managing
general underwriters, employees and others having business dealings with the
Business and the Companies; and

 

79

 

(ii)           conduct the activities of the Business in the ordinary and usual course
of business.

 

(b)           Except as described in Schedule 7.9 or
as otherwise contemplated by this Agreement or as may be necessary to comply
with applicable Legal Requirements, the Seller covenants and agrees that,
between the Signing Date and the Closing Date, without the prior written
consent of the Buyer, none of the Seller, the Selling Subsidiaries (in each
case, to the extent it relates exclusively to the Business) or the Companies will:

 

(i)            (A) issue or sell any capital stock,
notes, bonds or other securities of any Company (or any option, warrant or
other right to acquire the same) or (B) redeem any of the capital stock of
any Company;

 

(ii)           except as part of the Closing arrangements agreed with the Buyer to
replace Intercompany Indebtedness with Third Party indebtedness, incur any
indebtedness to Third Parties for borrowed money in excess of $8,000,000
individually or $25,000,000 in the aggregate, provided, however,
that this clause (ii) will not apply to the Seller or the Selling
Subsidiaries so long as the indebtedness incurred is not an Assumed Liability
or is otherwise secured by any Asset (if the security interest is not released
as of the Closing Date);

 

(iii)          amend or restate the certificate of incorporation or by-laws (or other
similar organizational documents) of any Company;

 

(iv)          grant or announce any increase in the salaries, bonuses or other
benefits payable to any Business Employee, adopt any new Plans or amend or
modify any existing Plans with respect to the Business, in each case, other
than as required by applicable Legal Requirements, pursuant to any plans,
programs or agreements existing on the Signing Date or other ordinary increases
consistent with past practices not in excess of 3% in the aggregate;

 

(v)           change any method of accounting or accounting practice or policy used
by the Seller or any Selling Subsidiary (in either case, as it relates
exclusively to the Business) or any Company, other than such changes required
by the applicable generally accepted accounting principles or unless required
by law or regulation;

 

(vi)          fail to exercise any rights of renewal with respect to any material
Leased Real Property that by its terms would otherwise expire;

 

(vii)         settle or compromise any material claims or debts relating exclusively
to the Business;

 

(viii)        acquire, dispose of, assign, lease or pledge (if the security interest
is not released as of the Closing Date) any material Asset outside of the
ordinary course of business and consistent with past practice;

 

80

 

(ix)           enter into, amend any material term of, or waive any material right
under, any Material Contract, any Real Property Lease or any agreement between
the Seller or any of its Affiliates, on the one hand, and Gerber Life, on the
other hand, in each case other than in the ordinary course and other than any
customer contracts;

 

(x)            organize any Subsidiary or acquire the
capital stock of any Person or any equity or ownership interest in any Person,
or form a joint venture with a Third Party;

 

(xi)           make any material Tax election or settle or compromise any material
federal, state or local Tax Liability, in each case to the extent related
exclusively to the Business;

 

(xii)          since 31 December 2006 with respect to the Companies, incur any
financial indebtedness, whether accrued, contingent or otherwise, that would
not have to be reflected in the Final Closing Statements;

 

(xiii)         permit or allow Gerber Life to declare or pay any dividend or make any
distribution to its shareholders;

 

(xiv)        permit or allow Gerber Life to make any material change to the
underwriting or reinsurance practices, policies or methods applicable to the
Insurance Companies, in each case other than (x) in the ordinary course of
its business operations, (y) changes required by applicable Legal
Requirements or (z) Governmental Authority or in accordance with industry
practice for like companies; and

 

(xv)         agree to take any of the actions specified in Sections 7.9(b)(i)-(xiv),
except as contemplated by this Agreement and the Ancillary Agreements.

 

7.10        Termination of Intra-Group
Agreements

 

Except with respect to (a) the
Transition Services Agreement, (b) the agreements in respect of services
to be provided by or arrangements between any Company to the Seller and its
Affiliates (other than the Companies) as listed in Schedule 7.10(b) and
(c) the agreements listed in Schedule 7.10(c), and subject to any
required approval from any Governmental Authority, the Seller will, and will
cause the Companies to, terminate, effective as of the Closing Date, all
agreements between the Seller or any of its Affiliates (other than the
Companies), on the one hand, and any Company, on the other hand.

 

7.11        Notifications

 

Until the Closing, each
party hereto will promptly notify the other party in writing of any fact,
change, condition, circumstance or occurrence or nonoccurrence of any event of
which it is aware that will or is reasonably likely to result in any of the
conditions set forth in Article 8 of this Agreement becoming incapable of

 

81

 

being satisfied; provided,
however, that the delivery of any notice pursuant to this Section 7.11
will not limit or otherwise affect the remedies available hereunder to the
party receiving such notice.  In
addition, the Seller shall, five (5) Business Days prior to the Closing
Date, deliver to the Buyer modifications, changes or updates to the Schedules
in order to disclose or take into account facts, matters or circumstances which
arise or occur between the date of this Agreement and the Closing Date.  No updated information provided to the Buyer
in accordance with this Section 7.11 shall be deemed to cure any breach of
representation, warranty or covenant made in this Agreement, except for
breaches resulting from changes in the Schedules affecting the representation
and warranties arising out of the ordinary course of business or as required,
permitted or contemplated by this Agreement, in which case such breach will be
deemed to be cured and will not be indemnifiable under Section 6.1.

 

7.12        Bulk Transfer Laws

 

The Buyer hereby waives
compliance by the Seller with any applicable bulk sale or any so-called “bulk
transfer law” of any jurisdiction in connection with the sale of the Purchased
Assets to the Buyer.

 

7.13        Conveyance Taxes; Proration
of Taxes and Certain Charges

 

(a)           The Buyer shall be liable for, shall hold the
Seller, the Selling Subsidiaries, the Companies and their Affiliates harmless
against, and agrees to pay any and all sales, use, value added, transfer,
stamp, stock transfer, real property transfer or gains and similar Taxes that
may be imposed upon, or payable or collectible or incurred in connection with,
this Agreement and the transactions contemplated hereby.  The Buyer and the Seller agree to cooperate
in the execution and delivery of all instruments and certificates necessary to
enable the Buyer or the Seller to comply with any pre-Closing filing
requirements.  Notwithstanding anything
to the contrary contained herein, this Section 7.13(a) is not
intended to apply to any income Taxes payable by the Seller as a result of the
transactions contemplated by this Agreement or to any Taxes payable in
connection with the Spin-Off.

 

(b)          Except as provided in Section 7.13(a),
all real property Taxes, personal property Taxes or similar ad valorem
obligations levied with respect to the Purchased Assets for any Straddle
Period, whether imposed or assessed before or after the date of the Closing,
shall be prorated between the Seller and the Buyer as of 11:59 p.m. CET on
the date of the Closing.  If any Taxes
subject to proration are paid by the Buyer, on the one hand, or the Seller, on
the other hand, the proportionate amount of such Taxes paid (or in the event a
refund of any portion of such Taxes previously paid is received, such refund)
shall be paid promptly by (or to) the other after the payment of such Taxes (or
promptly following the receipt of any such refund).

 

82

 

(c)           The prorations pursuant to this Section 7.13
may be calculated after the date of the Closing, as each item to be prorated
(including any such Tax, obligation, assessment, charge, refund, reimbursement,
rent installment, fee or revenue) accrues or comes due, provided that,
in any event, any such proration shall be calculated not later than 30 days
after the party requesting proration of any item obtains the information
required to calculate such proration of such item.

 

7.14        Real Estate Matters

 

As soon as practical after
the Signing Date, the Seller and the Buyer will cooperate in obtaining, for the
Owned Real Property located in the United States, a title commitment for each
parcel of Owned Real Property (the “Title Commitments”) issued by a
title company of recognized international or domestic standing, providing a
commitment to insure the applicable Owned Real Property for such amount as
shall be reasonably requested by the Buyer. 
The Title Commitments shall identify the Buyer or a Buyer Designated
Affiliate (which may be a Company) as the proposed insured party, and shall be
accompanied by copies of all documents referred to in the Title Commitment
(which shall include for the United States an ALTA/ACSM land title survey dated
within six (6) months of the Closing Date that contains the following
Table A items from the standards for such surveys: 1, 2, 3, 4, 7(a), 7(b)(1),
7(b)(2), 7(c), 8, 9, 10, 11(a) 16 and 18), and in the case of the Owned
Real Property located in the United States, will be in the Form of an ALTA
Owner’s Policy, 1970 Form B (or in such other customary form in any other
jurisdiction where any Owned Real Property is located).  The Title Commitment shall be subject only to
the standard exclusions from coverage and the Permitted Exceptions.  The Title Commitments shall include
commitments to issue the following endorsements: owner’s comprehensive; zoning
3.1 with parking coverage; survey; access to a named street; and tax
parcel.  For each parcel of Owned Real
Property located outside of the United States, the Seller shall cooperate with
the Buyer in any efforts to obtain customary assurances of title in accordance
with local practices for real estate transactions.  The cost of the issuance of any title insurance
policy or local equivalent shall be for the account of the Buyer.

 

7.15        Litigation Support

 

For a period of twenty-four
(24) months following the Closing Date, the Buyer and the Seller shall, and
shall cause their respective Affiliates to, reasonably cooperate with each
other in the defense or settlement of all Liabilities (including Product
Liabilities) or lawsuits involving the Business for which they have
responsibility under this Agreement by providing the other party and such party’s
legal counsel and other designated Persons reasonable access to their
respective books and records and other information related to the Business as
such other party may reasonably request, to the extent the same are maintained
or under control of the requested party. 
The requesting party shall reimburse the other party for all reasonable
out-of-pocket expenses paid to Third Parties in

 

83

 

performing its obligations
under this Section 7.15.

 

7.16        Trade Notifications

 

The Buyer and the Seller
shall jointly determine the method and content of the notifications to
customers of the transfer of the Business to the Buyer and the Buyer Designated
Affiliates.  The Buyer and the Seller agree
that said notifications are to provide sufficient advance notification of the
sale and the plans associated therewith, with the objective of minimizing any
disruption of the Business.

 

7.17        Interim Financial Statements

 

The Seller shall provide the
Buyer (a) as soon as the same are available in final form after the end of
each calendar month prior to the Closing Date, monthly statements of results
for the Business prepared by the Seller in customary form.

 

7.18        Tax Election

 

(a)           Tax Balance Sheet. 
Following the Closing Date, the Seller and the Buyer shall reasonably
cooperate to calculate (i) the tax basis in the assets and liabilities of
Gerber Products and Gerber Life and (ii) the tax basis in the stock of
Gerber Products and Gerber Life.  The
Buyer and the Seller shall mutually select an independent accounting firm for
purposes of determining these calculations (which shall be at the Buyer’s
expense).  Subject to the Seller’s
consent, and to the extent permitted by applicable Legal Requirements, the
independent accounting firm so selected shall commence its work prior to the
Closing.

 

(b)          Section 338(h)(10) Election.  At
the election of the Buyer, which shall be furnished to the Seller in writing no
later than one hundred and twenty (120) days after the Closing Date, each of
the Seller and the Buyer shall cause an authorized person to make a valid and
timely joint election under Section 338(h)(10) of the Code and a
similar election under any applicable state or local income tax law for Gerber
Products and/or Gerber Life (the “Section 338(h)(10) Election”).  Thereafter, the Seller and the Buyer shall
cooperate in the preparation and execution of Internal Revenue Service Form 8023
and any similar forms under applicable state or local tax law (the “Forms”).  The Buyer shall timely file the Forms with
the relevant taxing authorities.  The
Buyer shall duly and timely file the Forms as prescribed by Treasury Regulation
§1.338(h)(10)-1 or the corresponding provisions of applicable state, local or
foreign income tax Law, and deliver evidence of such filings to the
Seller.  The Buyer shall and the Seller
shall cause U.S. Parent to timely file Internal Revenue Service Form 8883.  If a Section 338(h)(10) Election is
made, the Seller and the Buyer shall agree upon an allocation of the “adjusted
deemed sale price” among the assets of Gerber Products and/or Gerber Life in
accordance with Section 338 of the Code and the Treasury Regulations
promulgated thereunder in a manner

 

84

 

consistent
with Section 2.3(g).  The term “adjusted
deemed sale price” shall be based on the portion of Purchase Price allocated to
the Shares of Gerber Products and/or Gerber Life and shall otherwise be
determined in accordance with Section 338 of the Code and the Treasury
Regulations promulgated thereunder.  The
Buyer and the Seller and their respective Affiliates shall file Tax Returns
(including Internal Revenue Service Form 8883 or any successor form)
consistent with this allocation.  To the
extent that interest accrues or an adjustment to the Purchase Price occurs, the
Parties shall promptly make appropriate adjustments to such allocations.

 

(c)           Payment of Taxes.  In
the event that the Buyer exercises its election to cause the Seller to make a Section 338(h)(10) Election,
the Buyer agrees to indemnify and hold the Seller harmless for the excess of
the Taxes for which the Seller is liable solely as a result of the Section 338(h)(10) Election
over the Taxes that the Seller would have incurred if the Section 338(h)(10) Election
had not been made (including, without limitation, any Taxes arising as a result
of an audit by the Internal Revenue Service or another taxing authority) and
gross up for all tax costs arising from reimbursement of such Taxes, to bring
the Seller to the same after-tax position in which it would have been if the
Seller had sold only the stock of Gerber Products and/or Gerber Life, as
applicable, without a Section 338(h)(10) Election.  Initial payment under this Section 7.18(c) shall
be made, for estimated income Tax purposes, within three (3) Business Days
prior to the relevant estimated payment dates. 
In connection with later claims for indemnity under this Section 7.18,
the Seller agrees to provide a detailed explanation for the amount of Taxes
owed when making such further claim. 
Notwithstanding anything to the contrary in this Agreement, the
obligation of the Buyer to indemnify the Seller under this Section 7.18
will not be subject to the limitations and conditions of Section 6 hereof,
and shall survive until ninety (90) days after the expiration of the statute of
limitations with respect to such Taxes.

 

8.             CONDITIONS PRECEDENT;
WAIVER; TERMINATION

 

8.1          Conditions Precedent to
Performance of the Parties

 

The obligations of the
parties to consummate the transactions contemplated by this Agreement are
subject to fulfillment or waiver, at or prior to the Closing, of each of the
following conditions:

 

(a)           Regulatory Requirements:  (i) Any
waiting period (and any extension thereof) under the HSR Act applicable to the
transactions contemplated hereby will have expired and any investigations
relating to the sale hereunder that may have been opened by either the
Department of Justice or the Federal Trade Commission by means of a request for
additional information have been terminated, (ii) if the European
Commission or any member state has jurisdiction to examine the transactions
contemplated by

 

85

 

this
Agreement, a decision will have been adopted by the European Commission pursuant
to Council Regulation (EC) 139/2004, as amended, declaring that such
transactions are compatible with the common market (either unconditionally or
subject to the fulfillment of certain conditions or obligations) or
compatibility will have been deemed under Article 10(6) of the
European Commission Merger Regulation, provided that if one or more
member states of the European Community has jurisdiction to examine the
transactions contemplated by this Agreement, whether by referral or otherwise,
then (A) the approval of such member state under the applicable national
competition laws of such member state or (B) the expiration or termination
of any applicable waiting period without any injunction or restraining order
having been made shall be required, (iii) if the transactions contemplated
by this Agreement are notifiable pursuant to Mexico’s Competition Act, all
filings shall have been duly made and all approvals or notices of non-objection
shall have been duly received; and (iv) all filings with the New York
Department required in connection with the completion of the transactions
contemplated by this Agreement under applicable New York Legal Requirements
shall have been made and all approvals in New York in connection with such
filings shall have been received.

 

(b)          No Order:  No Governmental Authority will
have enacted, issued, enforced or entered into any statute, rule, regulation,
injunction or other order (whether temporary, preliminary or permanent) that is
in effect and has the effect of making the transactions contemplated by this
Agreement illegal or otherwise restraining or prohibiting consummation of such
transactions; provided, however, that prior to asserting
non-satisfaction of this Section 8.1(b), the Buyer must have complied with
its obligations under Sections 7.6 and 7.7.

 

8.2          Conditions Precedent to
Performance of the Seller

 

The obligations of the
Seller to consummate the transactions contemplated by this Agreement will be
subject to the fulfillment or written waiver, at or prior to the Closing, of
the following condition:

 

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

 

8.3          Conditions Precedent to
Performance of the Buyer

 

The obligations of the Buyer
to consummate the transactions contemplated by this Agreement will be subject
to the fulfillment or written waiver, at or prior to the Closing, of the
following conditions:

 

(a)           Agreements and Covenants:  The
agreements and covenants contained in this Agreement to be complied with by the
Seller on or before the Closing

 

86

 

will have been complied with
in all material respects; and

 

(b)          Material Adverse Effect.  No
Material Adverse Effect shall have occurred since the Signing Date through the
earlier of (i) October 31, 2007 and (ii) the Closing Date, and
no event or events shall have occurred prior to such date that could reasonably
be expected to have a Material Adverse Effect; provided, however,
that the condition set forth in this Section 8.3(b) (but not the
representation in Section 4.14) shall be deemed to be satisfied and shall
terminate on October 31, 2007 if the Closing shall not have occurred prior
to such date.

 

8.4          Waiver; Determination of
Satisfaction of Conditions

 

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

 

8.5          Termination

 

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

 

(i)            by either the Seller or the Buyer if the
Closing has not occurred by 31 December 2007; provided, however,
that the right to terminate this Agreement under this Section 8.5(a)(i) will
not be available to any party whose failure to fulfill any obligation under
this Agreement has been the cause of, or has resulted in, the failure of the
Closing to occur by this date, including, in particular, the Buyer’s failure to
fulfill its obligations under Section 7.7(b); or

 

(ii)           by either the Seller or the Buyer in the event that any Governmental
Authority has enacted, issued, enforced or entered into any statute, rule,
regulation, injunction or other order, restraining, enjoining or otherwise
prohibiting the transactions contemplated by this Agreement that will have
become final and nonappealable; provided, however, that the Buyer’s
right to terminate this Agreement under this Section 8.5(a)(ii) will
not be available to the Buyer if the Buyer has failed to fulfill any of its
obligations under Section 7.7(b); or

 

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

 

(b)          In the event of termination of this Agreement
under Section 8.5(a) by written notice to the other party, this
Agreement will become void and there will be no liability on the part of either
party to this Agreement except (i) that Sections 8.5(b), 10.2, 10.4, 10.5,
10.9, 10.11 and 10.13 will survive any termination of this Agreement and (ii) that
nothing in this Agreement will relieve either party from liability for any
prior breach of this Agreement.

 

87

 

9.             CLOSING

 

9.1          Closing Date

 

The Closing will take place
at a time and place to be mutually agreed between the parties on the fifth
(5th) Business Day, or a date otherwise mutually agreed between the parties,
following the satisfaction (or deemed satisfaction as contemplated by Section 8.3(b))
or waiver of all conditions precedent to the performance of the parties set
forth in Sections 8.1, 8.2 and 8.3 (the “Closing Date”).  On the Closing Date, the parties will
complete the exchange of documents and the payment of the Purchase Price as
outlined in Section 9.2 below (the “Closing”).

 

9.2          Delivery

 

(a)           At the Closing, the Seller will deliver or
cause to be delivered:

 

(i)            certificates representing the Shares, duly
endorsed in blank, or accompanied by stock powers duly executed in blank and
with all required stock transfer tax stamps affixed;

 

(ii)           executed counterparts of each Share Purchase Agreement, duly executed
by each Share Selling Subsidiary;

 

(iii)          the Assignment of Separate Intellectual Property, duly executed by the
Seller and each of the Affiliates of Seller who are registered owners of the Separate
Intellectual Property;

 

(iv)          the Assignment of Product Registrations, duly executed by the Seller or
such Affiliate of the Seller which is a registered holder of the Product
Registrations;

 

(v)           separate Bills of Sale, duly executed by each of the Asset Selling
Subsidiaries;

 

(vi)          the Assignment of Governmental Permits, duly executed by the Seller and
each of the Affiliates of Seller who are registered owners of the Governmental
Permits;

 

(vii)         the Transition Services Agreement, duly executed by each entity
providing or receiving Transition Services on behalf of the Seller;

 

(viii)        a receipt for the Purchase Price and the payment of the Intercompany
Indebtedness;

 

(ix)           resignation letters of the directors of each Company listed in Schedule
9.2(a)(ix), effective as of the Closing Date;

 

(x)            a certificate of a duly authorized officer of
the Seller certifying as to the matters set forth in Section 8.3(a); and

 

88

 

(xi)
such other instruments, in form and substance reasonably satisfactory to the
Buyer, as may be reasonably requested by the Buyer to effect the transfer of
the Purchased Assets to the Buyer or evidence such transfer on the public
records, in each case duly executed by the Seller or its Affiliates, as
applicable, provided, however, that the Seller and its Affiliates
will not be required to incur any costs or expenses or make any filings or take
any other action to give effect to such transfers.

 

(b)          Upon the Seller’s presentation of the
documents in Section 9.2(a), the Buyer or a Buyer Designated Affiliate
will:

 

(i)            countersign and thereby execute each Share
Purchase Agreement, the Assignment of Product Registrations, the Assignment of
Separate Intellectual Property, the Assignment of Governmental Permits, the
Bills of Sale and the Transition Services Agreement;

 

(ii)           deliver a certificate of a duly authorized officer of the Buyer
certifying as to the matters set forth in Section 8.2(a);

 

(iii)          deliver the Purchase Price by electronic transfer of cash in
immediately available funds to the Purchase Price Bank Account; and

 

(iv)          execute and deliver such other instruments, in form and substance satisfactory
to the Seller, as may be requested by the Seller to effect the assumption by
the Buyer or a Buyer Designated Affiliate of the Assumed Liabilities and to
evidence such assumption in the public records.

 

(c)           Upon confirmation by the bank designated by
the Seller that the funds in the amount of the Purchase Price and the
Intercompany Indebtedness have been credited to the Seller’s account, the
parties will exchange all documents enumerated above.

 

9.3          Discharge of Previous Board
Members

 

The Buyer undertakes to
convene extraordinary shareholders’ meetings or such similar meetings of each
Company promptly after the Closing, and to cause the shareholders or such
similar meetings of each Company to approve the discharge of the previous
members of the board of directors of such Companies.

 

9.4          Use of NOVARTIS Trademark

 

The Buyer will, within
twelve (12) months of the Closing, remove or obliterate the trademark NOVARTIS,
together with all variations thereof and all trademarks, service marks, domain
names, trade names, trade dress, corporate names and other identifiers of
source containing, incorporating or associated with any of the foregoing (the “Retained
Marks”) from all of the existing stocks of signs, letterheads,
advertisements and promotional materials, and other documents and materials
transferred to the Buyer or cease using such materials.  The Buyer will ensure that nothing is done or
omitted to be done by it or its Affiliates that

 

89

 

would or might bring the
NOVARTIS name or any of the Retained Marks into disrepute, or prejudice or
endanger any application or registration thereof, including defacing, altering
or adding to the presentation of the NOVARTIS name or any of the Retained Marks
or using them on or in relation to materials other than those acquired by it
pursuant to this Agreement.  Except as
expressly provided in this Agreement, no other right to use the NOVARTIS
trademark or any of the Retained Marks is granted by the Seller to the Buyer,
whether by implication or otherwise.  For
the avoidance of doubt, the rights and obligations set forth in this Section 9.4
shall not alter, extend or otherwise modify the obligations of Buyer or Seller,
or any of their respective Affiliates, in respect of Retained Marks provided
for in the agreement dated as of 14 December 2006, between Seller and
Buyer concerning the sale and purchase of the Seller’s Medical Nutrition
Business or any documents or agreements delivered in connection therewith.

 

10.          MISCELLANEOUS

 

10.1        Entire Agreement

 

(a)           This Agreement, together with the Schedules,
Exhibits and all documents referred to herein, constitutes the entire agreement
between the parties with respect to the subject matter of this Agreement and
supersedes any and all prior agreements, negotiations, correspondence,
undertakings, understandings and communications of the parties with respect to
the subject matter of this Agreement, with the exception of the confidentiality
agreement between the parties dated 27 June 2006 (the “Confidentiality
Agreement”), to which Section 10.9 applies.

 

(b)          This Agreement constitutes an umbrella
agreement for all of the Ancillary Agreements. 
In case of any conflict between the terms of this Agreement and the
terms of any Ancillary Agreement or other document delivered in accordance with
this Agreement, the terms of this Agreement will govern.

 

10.2        Transaction Costs

 

Except as otherwise provided
herein, the parties to this Agreement will pay their own costs and expenses
(including legal, accounting and other fees) relating to this Agreement.  Any notary fees and/or registration costs
will be borne by the Buyer.

 

10.3        Modifications

 

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

 

90

 

10.4        Notices

 

Notices hereunder will be in
writing in the English language.  Notices
will be deemed to have been received (a) upon receipt of a registered
letter, (b) the next Business Day following proper deposit with an
internationally recognized express overnight delivery service, or (c) upon
confirmation of a facsimile transmission. 
Notices will be addressed as follows:

 

	
  If to the Seller:

  	
   

  	
  Novartis AG

  Lichtstrasse 35

  4056 Basel

  Switzerland

  Attention: General Counsel

  Facsimile: +41 61 324 78 26

  
	
   

  	
   

  	
   

  
	
  If to the Buyer:

  	
   

  	
  Nestlé S.A.

  Avenue Nestlé, 55

  1800 Vevey

  Switzerland

  Attention: General Counsel

  Facsimile: +41 21 924 4592

  
	
   

  	
   

  	
   

  
	
  With a copy to:

  	
   

  	
  Mayer, Brown,
  Rowe & Maw LLP

  71 South Wacker Drive

  Chicago, Illinois 60603

  Attention: David A. Carpenter

  Facsimile: (312) 701-7711

  

 

or to such other address as
may be hereafter communicated in writing by the Seller to the Buyer or vice
versa in a notice given in accordance with this Section 10.4.

 

10.5        Public Announcements

 

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

 

10.6        Severability

 

Each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement will be held to be
unenforceable or invalid under applicable law, such provision will be
ineffective only to the extent of such unenforceability or invalidity, and

 

91

 

the parties will negotiate
in good faith to modify this Agreement so that the unenforceable or invalid
provision is replaced by such valid and enforceable provision which the parties
consider, in good faith, to match as closely as possible the invalid or
unenforceable provision and to achieve the same or a similar economic effect
and to give effect to the parties’ original intent.  The remaining provisions of this Agreement
will continue to be binding and in full force and effect.

 

10.7        Assignment

 

No party hereto may assign,
in whole or in part, or delegate all or any part of its rights, interests or
obligations under this Agreement without the prior written consent of the other
party.  Any assignment or delegation made
without such consent will be void.

 

Notwithstanding the
foregoing, the Buyer shall be entitled to designate any one of its Affiliates
that is directly or indirectly wholly owned (each a “Buyer Designated
Affiliate”) to be the purchaser or transferee of some or all of the Shares
or the Purchased Assets (and to be a counterparty to one or more of the
Ancillary Agreements), provided that no such designation shall release
the Buyer from its obligations under this Agreement.  The Buyer shall be responsible for and shall
pay or reimburse the Selling Subsidiaries for any incremental Tax liabilities
and other reasonable out-of-pocket costs and expenses resulting solely from the
substitution of a Buyer Designated Affiliate for the Buyer as the purchaser of
Shares or Assets in accordance with this Section 10.7.

 

10.8        Schedules and Exhibits

 

Each Schedule and Exhibit referenced
herein is hereby incorporated into this Agreement as if set forth in full
herein.  Schedules and Exhibits so
incorporated need to be physically attached hereto.  Notwithstanding anything to the contrary
contained in the Schedules or in this Agreement, the information and
disclosures contained in any Schedule will be deemed to be disclosed and
incorporated by reference in any other Schedule as though fully set forth in
such other Schedule.

 

10.9        Confidentiality Agreement

 

The terms of the
Confidentiality Agreement are hereby incorporated herein by reference and will
continue in full force and effect until the Closing Date, at which time the
Buyer’s obligations to the Seller under the Confidentiality Agreement will
terminate, with the exception of Paragraph 6 of the Confidentiality
Agreement.  If, however, the transactions
contemplated by this Agreement and the Ancillary Agreements are not consummated,
the Confidentiality Agreement will remain in full force and effect, in which
case neither party will declassify said information.

 

92

 

10.10      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 rate two (2) Business Days preceding
the applicable determination date as published in the Financial Times under the
heading “Currencies and Interest Rates” of the “Dollar Spot Forward Against the
Dollar” tables, in the column “Closing mid-point”.

 

10.11      Governing Law

 

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

 

10.12      Specific Performance

 

The Buyer acknowledges and
agrees that the Seller would be irreparably damaged if the provisions of Section 7.7(b) are
not performed in accordance with their terms and that any breach of Section 7.7(b) and
the non-consummation of the transactions contemplated hereby by the Buyer could
not be adequately compensated in all cases by monetary damages alone.  Accordingly, in addition to any other right
or remedy to which the Seller may be entitled, at law or equity, it shall be
entitled to enforce Section 7.7(b) and require the Buyer to
consummate the Closing as contemplated hereby in any court by a decree of
specific performance.

 

10.13      Dispute Resolution

 

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

 

10.14      Counterparts; Facsimile
Signature

 

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

 

93

 

10.15      Further Assurances

 

Upon the reasonable request
of the Buyer, the Seller will, for a period of 18 months from the Closing Date,
(i) execute and deliver, or cause to be executed and delivered, to the
Buyer or a Buyer Designated Affiliate, and will assist the Buyer in obtaining
from any necessary Third Parties, such other documents, deeds, releases, assignments
and other instruments as may be necessary to complete the transfer and
assignment to the Buyer or the Buyer Designated Affiliates of, and to vest in
the Buyer or a Buyer Designated Affiliate, title to, each of the Purchased
Assets and the Shares, and to otherwise carry out the purposes of this
Agreement; provided, that the Seller’s obligation with respect to the
transfer of Intellectual Property pursuant to the foregoing provision will be
for a period of three (3) years from the Closing Date; provided, further,
that the Seller and its Affiliates will not be required to incur any costs and
expenses (other than notarization and legalization costs that will be
reimbursed by the Buyer) or make any filings or take any other action to give
effect to such transfers and (ii) assist the Buyer, or a Buyer Designated
Affiliate, in obtaining the transfer of Product Registrations, including
procuring the cooperation of any necessary Third Parties.  Upon the reasonable request of the Seller, the
Buyer will on or after the Closing Date, execute and deliver, or cause to be
executed and delivered, to the Seller or its designee, such documents, deeds,
releases, assignments and other instruments as may be necessary to complete the
transfer and assignment to the Seller or designee of, and to invest in the
Seller or such designee, title to, each of the Excluded Assets or other assets
transferred by the Seller or an Asset Selling Subsidiary that are not Purchased
Assets, and to otherwise carry out the purposes of this Agreement, and Buyer
will on or after the Closing Date assist Seller in connection with the orderly
transition to the Seller or its designee of the business associated with any
license agreement constituting an Excluded Agreement.  If within twelve months after the Closing
Date, it is determined that, immediately prior to the Closing Date, the
Business used Intellectual Property of the Seller or its Affiliates (excluding
any Retained Marks) in connection with the manufacturing, marketing or sale of
Business Products or that the Seller or its Affiliates used the Intellectual
Property of the Business in connection with the manufacturing, marketing or
sale of the products of the Seller or its Affiliates (other than the Companies
and the Asset Selling Subsidiaries, to the extent related to the Business),
then the parties shall enter into one or more non-exclusive licensing
agreements providing for the continued use of such Intellectual Property on the
terms identified in Section 2.5.

 

10.16      Rights Cumulative

 

All rights and remedies of
each of the parties under this Agreement will be cumulative, and the exercise
of one or more rights or remedies will not preclude the exercise of any other
right or remedy available under this Agreement or applicable law.  All claims arising under the Ancillary
Agreements (other than the Transition Services Agreement) may not be brought
under such Ancillary Agreement and shall be resolved solely in accordance with Section 10.13
of this

 

94

 

Agreement, but only to the
extent that such claims constitute valid claims under this Agreement.

 

95

 

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

 

 

	
  NOVARTIS AG

  	
  NESTLÉ S.A.

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Raymund Breu

  	
   

  	
  By:

  	
  /s/ James M. Singh

  	
   

  
	
   

  	
  Name:

  	
   Raymund Breu

  	
   

  	
  Name:

  	
  James M. Singh

  
	
   

  	
  Title:

  	
   Authorized Signatory

  	
   

  	
  Title:

  	
  Senior Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Joerg Walther

  	
   

  	
   

  
	
   

  	
  Name:

  	
   Joerg Walther

  	
   

  
	
   

  	
  Title:

  	
   Authorized Signatory

  	
   

  
										

 

96

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