Document:

Exhibit 10.6

 

FORM OF REGISTRATION RIGHTS AGREEMENT

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

ARTICLE I
 DEFINITIONS

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

ARTICLE II
  REGISTRATION RIGHTS

 

2.1                               Registration.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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2.2                               Piggyback Registrations.

 

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

 

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

 

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

 

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

 

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

 

2.4                               Registration Procedures.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

2.9                               Indemnification.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

ARTICLE III
  MISCELLANEOUS

 

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

 

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

 

If to Eli Lilly, to:

 

Lilly Corporate Center

Indianapolis, Indiana 46285

Attention: General Counsel

 

If to Elanco, to:

 

Elanco Animal Health Incorporated

2500 Innovation Way

Greenfield, Indiana 46140

Attention: General Counsel

 

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

 

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

 

3.4                               GOVERNING LAW; NO JURY TRIAL.

 

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

 

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

 

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

 

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

 

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

 

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

 

3.8                               Amendment; Waiver.

 

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

 

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

 

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

 

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

 

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

 

	
 
    	
ELI LILLY AND COMPANY
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
ELANCO ANIMAL HEALTH INCORPORATED
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

 

EXHIBIT A

 

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

 

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

 

	
 
    	
 
    
	
 
    	
 
    
	
 
    	
(Signature of Transferee)
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Print NameExhibit 10.7

 

FORM OF TRANSITIONAL TRADEMARK LICENSE AGREEMENT

 

This TRANSITIONAL TRADEMARK LICENSE AGREEMENT (this “Agreement”), dated as of [·], 2018 and effective as of the Effective Date (as defined in the Separation Agreement), is entered into by and among Eli Lilly and Company, an Indiana corporation (the “Licensor”); Elanco Animal Health Incorporated, an Indiana corporation (the “Licensee”); and, solely for the purposes of Section 11(a)(iii), Elanco US Inc., a Delaware corporation (“Elanco US”).

 

WHEREAS, pursuant to that certain Master Separation Agreement by and between Licensor and Licensee, dated on or about the date hereof (the “Separation Agreement”), and the Ancillary Agreements, Licensor has transferred the Animal Health Business to Licensee in contemplation of the Separation and IPO;

 

WHEREAS, Licensor and Elanco US previously entered into that certain Trademark License Agreement, dated as of July 14, 2016 (the “Trademark License Agreement”), pursuant to which Licensor granted to Elanco US a license under certain of its Trademarks and the Parties and Elanco US now desire to wholly supersede and replace the Trademark License Agreement with the terms of this Agreement; and

 

WHEREAS, in order to provide for an orderly transition from the Animal Health Business operating as a division of Licensor to operating as a standalone publicly-traded company, Licensor and Licensee have agreed to enter into this Agreement, pursuant to which Licensor has agreed to grant to Licensee limited rights to use the “LILLY” and “ELI LILLY AND COMPANY” Trademarks (including word, logo and design versions) on a transitional basis in accordance with the terms, and subject to the conditions, set forth in this Agreement.

 

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

 

1.                                      Definitions.  Capitalized terms used herein and not otherwise defined herein shall have the meanings set forth for such terms in the Separation Agreement.  For the purpose of this Agreement, the following capitalized terms have the following meanings:

 

(a)                                 “Advertising Materials” means advertising and promotional materials in any medium, including any websites, that Licensee uses in connection with the sale and distribution of the Products.

 

(b)                                 “Licensed Territory” means, with respect to each Licensed Trademark, the countries in which Licensee conducts the Animal Health Business or distributes, directly or indirectly, Products that use such Licensed Trademark in any manner.

 

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(c)                                  “Licensed Trademarks” means, collectively, the trademarks “LILLY” and “ELI LILLY AND COMPANY” (including all word, logo and design versions thereof), to the extent used on or in connection with the Products or the Animal Health Business as of the Effective Date, as shown in Schedule A.

 

(d)                                 “Party” means Licensor and Licensee individually, and “Parties” means the Licensor and Licensee collectively.

 

(e)                                  “Product Packaging” means (i) the primary packaging in which Products are packaged (e.g., blister packs or bottles with labels), (ii) the secondary packaging in which Products are packaged (e.g., boxes containing blister packs or bottles) and (iii) any leaflets contained inside the secondary packaging.

 

(f)                                   “Products” means any products sold by or through the Animal Health Business.

 

(g)                                  “Regulatory Approval” means the approval, registration, license or authorization of a Governmental Authority necessary for the manufacturing, distribution, use, promotion or sale of a Product for one or more indications in a country or other regulatory jurisdiction, including approval of Biologics License Applications (as defined by applicable Law) in the United States and Marketing Authorizations in the European Union or other European countries.

 

(h)                                 “Third Party” means any Person other than Licensor, Licensee, or one of their Subsidiaries.

 

2.                                      License Grants.

 

(a)                                 License to Use Licensed Trademarks on Product Packaging.

 

(i)                                     Beginning on the Effective Date and solely for the term set forth in Section 2(a)(iii), Licensor hereby grants to Licensee a non-exclusive, non-transferable (subject to Section 11(d)), sublicensable (subject to Section 2(d)), fully paid-up, royalty-free, temporary (in accordance with Section 2(a)(iii)), limited right and license to use the Licensed Trademarks on Product Packaging for the Products, subject to the terms of this Agreement and solely in the Licensed Territory, in each case in a manner consistent with the operation of the Animal Health Business for the six (6) month period immediately prior to the Effective Date or as otherwise approved in writing by Licensor (the “Product Packaging License”).

 

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(ii)                                  Re-branding.  The Product Packaging License is granted solely for transitional purposes, and Licensee shall use commercially reasonable efforts to cease its use of all of the Licensed Trademarks as quickly as practicable after the Effective Date, including by seeking labeling approval from a Governmental Authority to change the Product Packaging so that such Product Packaging no longer displays any Licensed Trademarks or by completing the transfer of the Regulatory Approvals and replacing the Licensed Trademarks with Licensee’s name or house mark.

 

(iii)                               Term.  Unless terminated earlier under Section 10, the Product Packaging License will terminate, on a Product-by-Product and (to the extent applicable) country-by-country basis, after the receipt by Licensee of labeling approval from the relevant Governmental Authority for any such Product to change the Product Packaging so that such Product Packaging no longer displays any Licensed Trademarks, consistent with the timelines specified in regulations or guidance from such Governmental Authority on implementation of labeling changes. Notwithstanding the foregoing, under no circumstances shall the Product Packaging License expire later than four (4) years after the Effective Date; provided, however, that upon the Parties’ mutual agreement, the term of the Product Packaging License can be extended for one (1) additional year (beyond the four (4) year period immediately following the Effective Date).

 

(iv)                              Notice Obligations of Licensee.  Licensee shall provide written notice to Licensor promptly upon Licensee’s receipt of any labeling approval from the relevant Governmental Authority with respect to any Product to change the Product Packaging so that such Product Packaging no longer displays any Licensed Trademarks.

 

(b)                     License to Use Licensed Trademarks in Advertising Materials. Beginning on the Effective Date and solely for the term of the Product Packaging License, Licensor hereby grants to Licensee a non-exclusive, non-transferable (subject to Section 11(d)), sublicensable (subject to Section 2(d)), fully paid-up, royalty-free, temporary (in accordance with Section 2(a)(iii)), limited right and license to use the Licensed Trademarks in Advertising Materials, including advertising online and via social media outlets, in connection with the Products, subject to the terms of this Agreement and solely in the Licensed Territory, in each case in a manner consistent with the operation of the Animal Health Business for the six (6) month period immediately prior to the Effective Date or as otherwise approved in writing by Licensor.

 

(c)                      License to Use Licensed Trademarks in the Animal Health Business.  Beginning on the Effective Date and solely for the term of the Product Packaging License, Licensor hereby grants to Licensee a non-exclusive, non-transferable (subject to Section 11(d)), sublicensable (subject to Section 2(d)), fully paid-up, royalty-free, temporary (in accordance with Section 2(a)(iii)), limited right and license to use the Licensed Trademarks, including as a trade name, in connection with the distribution and sale of the Products and in Licensee’s business records used in connection with the day-to-day operation of the Animal Health Business (including Company Books and Records, human resource records, 

 

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bank statements, invoices and Regulatory Approval applications), subject to the terms of this Agreement and solely in the Licensed Territory, in each case in a manner consistent with the operation of the Animal Health Business for the six (6) month period immediately prior to the Effective Date or as otherwise approved in writing by Licensor.

 

(d)                     Sublicensing.  Licensee may sublicense (i) rights it receives under Sections 2(a) through 2(c) to its Affiliates and (ii) rights it receives under Sections 2(a) and 2(b) to (A) distributors of Product or (B) buyers of any divested Product lines, in each case if, at the time of distribution by any such distributor or purchase by any such buyer, such Products (or Product lines) are still subject to such licenses (each such sublicense recipient in (i) or (ii), a “Sublicensee”), on the condition that each Sublicensee agrees in a written sublicense agreement to be bound by terms of use and obligations with respect to the Licensed Trademarks that are no less restrictive than those set forth in this Agreement.  Licensee is liable to Licensor and, as between the Parties, to all other Persons, for the failure of any Sublicensee to comply with its sublicense agreement to the same extent that Licensee would have been liable had Licensee failed to comply with this Agreement.  Any sublicenses granted under this Section 2(d) shall automatically terminate upon the termination of the relevant license to Licensee hereunder.

 

3.                                      Reservation of Rights.  Licensor reserves all rights in and to the Licensed Trademarks.  Licensee acknowledges and agrees that as between Licensor and Licensee, Licensor is the sole and exclusive owner of all right, title and interest in, to and under the Licensed Trademarks, including all goodwill of the business connected with the use of, or symbolized by, the Licensed Trademarks.  All goodwill generated by Licensee’s use of the Licensed Trademarks inures solely to the benefit of Licensor.  Nothing in this Agreement grants Licensee any ownership or other proprietary interest in any Licensed Trademarks.

 

4.                                      Restrictions on Use.  Without limiting the generality of Section 3 of this Agreement, Licensee will not nor attempt to, nor permit, enable, or request any of its Subsidiaries to:

 

(a)                     use any Licensed Trademarks in any manner, or engage in any other act or omission, that would be reasonably likely to impair any right of Licensor in, to or under the Licensed Trademarks, including any act or omission that would be reasonably likely to invalidate or cause the cancellation or abandonment of any Licensed Trademarks;

 

(b)                     file, acquire or otherwise obtain any registration for or application to register any Trademark or Internet domain name, or acquire, create or otherwise obtain any social media account that consists of, incorporates, uses, or is confusingly similar to any Licensed Trademarks, whether with any Governmental Authority, Internet domain name registrar, social media platform or otherwise (each of the foregoing, a “Registration”);

 

(c)                      adopt or use any variation, derivation or acronym of the Licensed Trademarks or any word, symbol or Trademark confusingly similar to the Licensed Trademarks (each, a “Variation”);

 

(d)                     use any Licensed Trademarks together with any other word, symbol or Trademark so as to form a composite Trademark (each, a “Composite”);

 

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(e)                      represent to any other Person that Licensee, any of its Subsidiaries or any other Person (other than Licensor or its successors in interest to the Licensed Trademarks) has or will have any ownership interest in any Licensed Trademarks;

 

(f)                       grant or attempt to grant a security interest in or lien on, record any security interest or lien on, or otherwise encumber, any Licensed Trademarks or this Agreement; or

 

(g)                      contest, challenge or otherwise make any claim or take any action adverse to Licensor’s ownership of or interest in, or the validity of, the Licensed Trademarks, including in any proceeding before any Governmental Authority.

 

5.                                      Transfer of Rights.  If Licensee has or acquires any rights in, to or under the Licensed Trademarks, or any Registrations, Composites or Variations, Licensee hereby irrevocably assigns all such rights to Licensor.  At the reasonable request of Licensor, Licensee will execute any document, and perform any act reasonably necessary to obtain or confirm, Licensor’s or its designee’s exclusive ownership interest in and to the Licensed Trademarks and Registrations, in each applicable jurisdiction, including executing and delivering applications, oaths, declarations, affidavits, waivers, assignments and other documents.

 

6.                                      Compliance with Laws.  Licensee will comply with all applicable Laws in connection with its use of the Licensed Trademarks, including the sale, distribution, promotion and advertising of Products, in connection with its use of the Advertising Materials, and in connection with any other exercise of the rights and licenses granted to it under this Agreement.

 

7.                                      Quality Control.

 

(a)                                 Licensee will use the Licensed Trademarks under the terms of this Agreement solely in a manner consistent with the operation of the Animal Health Business for the six (6) month period immediately prior to the Effective Date or as otherwise approved in writing by Licensor.

 

(b)                                 Licensee will comply with any specifications, standards and directions that Licensor may provide in writing from time to time relating to the use of the Licensed Trademarks under this Agreement.

 

(c)                                  Concerning any Products manufactured by Licensor or its Subsidiaries, or by any Third Party in privity of contract with Licensor or its Subsidiaries, Licensee will not tamper, modify or otherwise take any action to affect the quality of such Products.

 

(d)                                 Concerning any Products manufactured by Licensee or its Subsidiaries, or by any Third Party in privity of contract with Licensee or its Subsidiaries, Licensee will ensure that such Products at all times meet or exceed (i) the quality and manufacturing standards of similar products in the Products’ industry, (ii) the then-current Good Manufacturing Practices applicable to such Products, (iii) any other standards imposed by the applicable Governmental Authorities and (iv) any specifications and quality provisions set forth in any agreement entered into by the Parties.  Licensee will notify Licensor in writing in the event that any Product does not meet such standards.

 

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(e)                                  Inspection.  Licensee will permit Licensor to enter any place used for the storage or distribution of the Products, Advertising Materials or Company Books and Records to inspect (at reasonable times and on reasonable advance notice) the methods of storage and distribution to ensure compliance with the quality standards, or any other specifications or requirements, described in this Agreement.  Licensee will promptly cease all use of any Licensed Trademark identified by Licensor that does not comply with this Agreement.

 

(f)                                   Notice.  Except where Product Packaging or Advertising Materials originate with Licensor or Licensor’s Subsidiary, Licensee will, to the extent physically practicable, include on all Product Packaging and Advertising Materials that bear a Licensed Trademark (i) a statement that the Licensed Trademark used thereon is a trademark of Licensor and used under license (or any similar statement required by Licensor concerning the status of the Licensed Trademarks), and (ii) the symbols “®,” “TM” or other notice required by Licensor and/or the applicable Governmental Authority in proximity to each prominent use of such Licensed Trademark.

 

8.                                      Enforcement and Maintenance.

 

(a)                                 Notification. Licensee will promptly notify Licensor upon becoming aware of any use of, or any application or registration for, a Licensed Trademark by any Third Party which Licensee considers might be (i) an infringement, dilution or other violation of such Licensed Trademark or (ii) a claim asserted by any Person that such Licensed Trademark is invalid or that Licensee’s use of such Licensed Trademark infringes, dilutes or otherwise violates any Person’s Trademark or other rights.

 

(b)                                 Enforcement.  Licensor has the sole right, but not the obligation, to take action against other Persons in the courts, administrative agencies or otherwise, at Licensor’s cost and expense, to (i) prevent or terminate infringement, dilution or other violation of the Licensed Trademarks, (ii) oppose or cancel applications or registrations for any Trademarks that may conflict with any Licensed Trademarks, or (iii) otherwise defend the Licensed Trademarks (each of (i)-(iii), an “Action”).  Licensee may not initiate or maintain any Action on its own.

 

(c)                                  Procedure.  At the reasonable request of Licensor, Licensee will cooperate with Licensor, at Licensor’s expense, in an Action (including by executing, filing and delivering all documents and evidence requested by Licensor) and will lend its name to that Action if required by Law or if reasonably requested by Licensor.  Licensee will not assert or maintain any claim against Licensor based on or arising out of Licensor’s handling of or decisions concerning any Action or any settlement or compromise thereof, and Licensee hereby irrevocably releases Licensor from all such claims.  All damages or other compensation of any kind recovered in any Action or from any settlement or compromise thereof, are for the sole benefit of Licensor.

 

(d)                                 Maintenance.  As between Licensor and Licensee, Licensor is responsible for prosecuting, maintaining and renewing applications and registrations for the Licensed Trademarks (“Maintenance”).  Licensor will use commercially reasonable efforts to maintain the Licensed Trademarks during the term of this Agreement.  At Licensor’s request and expense, Licensee will cooperate and provide assistance to Licensor in connection with Maintenance, including (i) supplying specimens and other samples of Licensee’s use of the Licensed

 

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Trademarks and (ii) executing documents and performing lawful acts as reasonably requested by Licensor.

 

9.                                      Indemnification.  Each Party hereby agrees to indemnify, defend and hold harmless the other Party and its Subsidiaries, and their respective officers, directors, employees, shareholders, members, partners, agents, representatives, successors, and assigns (collectively, “Indemnitees”), from any losses, liabilities, claims, expenses and damages, including reasonable legal fees and expenses, actually suffered or incurred by such Indemnitee to the extent arising out of or resulting from the breach of any covenant or agreement by the first Party in this Agreement.

 

10.                               Term and Termination.

 

(a)                                 Term.  This Agreement shall be effective as of the Effective Date through the earlier of the date of (A) termination of the last-to-terminate Product Packaging License (as set forth in Section 2(a)(iii)), or (B) four (4) years after the Effective Date (or, if the Parties have agreed to extend the Product Packaging License in accordance with Section 2(a)(iii), five (5) years after the Effective Date), unless earlier terminated under this Section 10.

 

(b)                                 Termination.  Licensor may terminate this Agreement and any of the rights granted to Licensee under this Agreement at any time by providing written notice of termination to Licensee if Licensee commits a breach of this Agreement and the breach continues unremedied for a period of fifteen (15) Business Days after Licensor provides written notice to Licensee describing the nature of the breach.

 

(c)                                  Effect of Termination.  After any termination of this Agreement by Licensor pursuant to Section 10(b), (i) all rights of Licensee to use the Licensed Trademarks automatically terminate, and (ii) Licensee will promptly cease using the Licensed Trademarks and will destroy (or modify so as to remove the Licensed Trademarks) the applicable Product Packaging and Advertising Materials as set forth in Sections 2(a) and 2(b).

 

(d)                                 License-by-License and Product-by-Product Basis for Termination.

 

(i)                                     In the event of an unremedied, non-material breach that gives rise to Licensor’s right to terminate this Agreement pursuant to Section 10(b), Licensor shall terminate only the specific licenses or Products to which such non-material breach applies.  In such a case, this Agreement will remain in effect as to the non-terminated licenses and Products.

 

(ii)                                  In the event of an unremedied, material breach that gives rise to Licensor’s right to terminate this Agreement pursuant to Section 10(b), Licensor may, in Licensor’s sole discretion, terminate any and all licenses granted under this Agreement as to any and all Products.

 

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(e)                                  Survival.  The following sections, together with any sections that expressly survive by their terms, survive expiration or termination of this Agreement:  Sections 1, 2(a)(iv), 3, 4(b), 4(c), 4(d), 4(e), 7, 8, 9, 10(c), 10(e) and 11.

 

11.                               Miscellaneous.

 

(a)                                 Counterparts; Entire Agreement; Conflicting Agreements.

 

(i)                                     This Agreement may be executed in one (1) or more counterparts, all of which shall be considered one (1) and the same agreement, and shall become effective when one (1) or more counterparts have been signed by each Party and delivered to the other Party.  Execution of this Agreement or any other documents pursuant to this Agreement by facsimile or other electronic copy of a signature shall be deemed to be, and shall have the same effect as being, executed by an original signature.

 

(ii)                                  This Agreement, the Separation Agreement, the other Ancillary Agreements, the exhibits, the schedules and appendices hereto and thereto contain the entire agreement between the Parties with respect to the subject matter hereof, supersede all previous agreements, negotiations, discussions, writings, understandings, commitments and conversations with respect to such subject matter and there are no agreements or understandings between the Parties with respect to such subject matter other than those set forth or referred to herein or therein.

 

(iii)                               The Parties and Elanco US hereby acknowledge and agree that the Trademark License Agreement is wholly superseded and cancelled and replaced with the terms of this Agreement and such Trademark License Agreement is of no further force or effect.

 

(iv)                              In the event of any inconsistency between this Agreement and any other agreement entered into in connection with the Transaction (including the Separation Agreement), the Separation Agreement shall prevail.  In the event and to the extent that there shall be a conflict between the provisions of this Agreement and the provisions of the Separation Agreement, the Separation Agreement shall control.

 

(b)                     No Construction Against Drafter.  The Parties acknowledge that this Agreement and all the terms and conditions contained herein have been fully reviewed and negotiated by the Parties.  Having acknowledged the foregoing, the Parties agree that any principle of construction or rule of Law that provides that, in the event of any inconsistency or ambiguity, an agreement shall be construed against the drafter of the agreement shall have no application to the terms and conditions of this Agreement.

 

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(c)                      Governing Law.  This Agreement shall be governed by and construed and interpreted in accordance with the Laws of Indiana, without regard to the conflict of laws principles thereof that would result in the application of any Law other than the Laws of Indiana.

 

(d)                     Assignment.  This Agreement shall be binding upon and inure to the benefit of the Parties hereto and their respective successors and permitted assigns; provided, however, that no Party hereto may assign its respective rights or delegate its respective obligations under this Agreement without the express prior written consent of the other Party hereto.

 

(e)                      No Third-Party Beneficiaries.  Except for the indemnification rights under this Agreement as set forth in Section 9, (i) the provisions of this Agreement are solely for the benefit of the Parties hereto and are not intended to confer upon any Person (including employees of the Parties hereto) except the Parties any rights or remedies hereunder, and (ii) there are no Third Party beneficiaries of this Agreement and this Agreement shall not provide any Third Party (including employees of the Parties hereto) with any remedy, claim, liability, reimbursement, claim of action or other right in excess of those existing without reference to this Agreement.

 

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

 

If to Licensor, to:

 

Eli Lilly and Company
 Lilly Corporate Center
 Indianapolis, Indiana 46285
 Attention:                                         General Counsel

 

with a copy (which shall not constitute notice) to:
 Trademarks@lilly.com

 

If to Licensee to:

 

Elanco Animal Health Incorporated
 2500 Innovation Way
 Greenfield, Indiana 46140
 Attention:                                         General Counsel

 

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

 

(g)                      Severability.  If any provision of this Agreement or the application thereof to any Person or circumstance is determined by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions hereof or the application of such provision to Persons or circumstances or in jurisdictions other than those as to which it has been held

 

9

 

invalid or unenforceable, shall remain in full force and effect and shall in no way be affected, impaired or invalidated thereby, so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner adverse to any Party.  Upon such determination, the Parties shall negotiate in good faith in an effort to agree upon a suitable and equitable provision to effect the original intent of the Parties as closely as possible in a mutually acceptable manner in order that the rights and obligations contemplated by this Agreement be fulfilled as originally contemplated to the greatest extent possible.

 

(h)                     Force Majeure.  No Party shall be deemed in default of this Agreement to the extent that any delay or failure in the performance of its obligations under this Agreement results from any cause beyond its reasonable control and without its fault or negligence, such as acts of God, acts of civil or military authority, embargoes, epidemics, war, riots, insurrections, fires, explosions, earthquakes, floods, unusually severe weather conditions, or labor problems, or, in the case of computer systems, any failure in electrical or air conditioning equipment.  In the event of any such excused delay, the time for performance shall be extended for a period equal to the time lost by reason of such delay.

 

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

 

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

 

(k)                     Specific Performance.  In the event of any actual or threatened default or breach of, any of the terms, conditions and provisions of this Agreement, the Party or Parties who are or are to be thereby aggrieved shall be entitled to seek an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof, in each case (i) without the requirement of posting any bond or other indemnity and (ii) in addition to any other remedy to which it or they may be entitled, at Law or in equity.  Such remedies shall be cumulative with and not exclusive of and shall be in addition to any other remedies which any Party may have under this Agreement, or at Law or in equity or otherwise, and the exercise by a Party hereto of any one remedy shall not preclude the exercise of any other remedy.

 

(l)                         Amendments.  No provision of this Agreement shall be deemed waived, amended, supplemented or modified by any Party, unless such waiver, amendment, supplement or modification is in writing and signed by the authorized representative of the Party against whom it is sought to enforce such waiver, amendment, supplement or modification.

 

(m)                 Interpretation.  Interpretation of this Agreement (except as specifically provided in this Agreement, in which case such specified rules of construction shall govern with respect to this Agreement) shall be governed by the following rules of construction: (i) words in the singular shall be held to include the plural and vice versa, and words of one gender shall be held to include the other gender as the context requires; (ii) references to the terms Article, Section, paragraph and Exhibit are references to the Articles, Sections,

 

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paragraphs and Exhibits to this Agreement unless otherwise specified; (iii) the terms “hereof”, “herein”, “hereby”, “hereto” and derivative or similar words refer to this entire Agreement, including the Schedules and Exhibits hereto; (iv) references to “$” shall mean U.S. dollars; (v) the word “including” and words of similar import shall mean “including without limitation,” unless otherwise specified; (vi) the word “or” shall not be exclusive; (vii) references to “written” or “in writing” include in electronic form; (viii) provisions shall apply, when appropriate, to successive events and transactions; (ix) a reference to any Person includes such Person’s permitted successors and permitted assigns; (x) any reference to “days” means calendar days unless Business Days are expressly specified; and (xi) when calculating the period of time before which, within which or following which any act is to be done or step taken pursuant to this Agreement, the date that is the reference date in calculating such period shall be excluded and, if the last day of such period is not a Business Day, the period shall end on the next succeeding Business Day.

 

(n)                     Waiver of Jury Trial.  SUBJECT TO SECTIONS 11(k) AND 11(o) HEREIN, EACH OF THE PARTIES HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY COURT PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF AND PERMITTED UNDER OR IN CONNECTION WITH THIS AGREEMENT.  EACH OF THE PARTIES HEREBY (i) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (ii) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 11(n).

 

(o)                     Submission to Jurisdiction; Waivers.  With respect to any claim relating to or arising out of this Agreement, each Party to this Agreement irrevocably (i) consents and submits to the exclusive jurisdiction of the courts of Indiana, (ii) waives any objection which such Party may have at any time to the laying of venue of any claim brought in any such court, waives any claim that such claim has been brought in an inconvenient forum and further waives the right to object, with respect to such claim, that such court does not have jurisdiction over such Party and (iii) consents to the service of process at the address set forth for notices in Section 11(f) herein; provided, however, that such manner of service of process shall not preclude the service of process in any other manner permitted under applicable Law.

 

(p)                     Further Assurances.  In addition to the actions specifically provided for elsewhere in this Agreement, each of the Parties will cooperate with each other and shall use its (and shall cause its Subsidiaries to use their) commercially reasonable efforts, prior to, on and after the Effective Date, to take, or cause to be taken, all actions, and to do, or cause to be done, all things, reasonably necessary, proper or advisable under applicable Laws, regulations and agreements to implement and give effect to this Agreement.

 

[Signature page follows]

 

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IN WITNESS WHEREOF, each of the Parties hereto and Elanco US have caused this Agreement to be duly executed and delivered in its name and on its behalf as of the date first written above.

 

	
LICENSOR:
    	
 
    	
LICENSEE:
    
	
 
    	
 
    	
 
    
	
Eli   Lilly and Company
    	
 
    	
Elanco   Animal Health Incorporated
    
	
 
    	
 
    	
 
    
	
By:
    	
 
    	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Name:
    	
 
    	
 
    	
Name:
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Title:
    	
 
    	
 
    	
Title:
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Date:
    	
 
    	
 
    	
Date:
    	
 
    

 

ELANCO US:

 

Elanco US Inc.

 

	
By:
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Name:
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Title:
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Date:
    	
 
    	
 
    	
 
    

 

12

 

SCHEDULE A

 

Licensed Trademarks

 

ELI LILLY AND COMPANY

 

LILLY

 

 

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