Document:

Exhibit

Exhibit 10.1

[**] Certain information has been omitted from this exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.

CONFIDENTIAL TERMINATION AND
SETTLEMENT AGREEMENT AND MUTUAL RELEASES

THIS CONFIDENTIAL TERMINATION AND SETTLEMENT AGREEMENT AND MUTUAL RELEASES (“Termination Agreement”) is entered into as of September 10, 2019 and effective as of September 9, 2019 (the “Settlement Date”), by and between Lexicon Pharmaceuticals, Inc. (“Lexicon”), a Delaware corporation, on the one hand, and Sanofi-Aventis Deutschland GmbH (“Sanofi-Aventis”), a limited liability company formed under the laws of Germany, on the other hand.  Each of Lexicon and Sanofi-Aventis is a “Party” to this Termination Agreement, and, collectively, they are the “Parties.”  All capitalized terms used herein but not otherwise defined herein shall have the meaning ascribed to such terms in the certain Collaboration and License Agreement, dated November 5, 2015, as amended, between Sanofi and Lexicon (the “License Agreement”).
RECITALS
WHEREAS, Sanofi and Lexicon entered into the License Agreement, which License Agreement was later assigned by Sanofi to Sanofi-Aventis, under which Lexicon granted Sanofi-Aventis an exclusive license for the development, manufacture and commercialization of certain Licensed Products, and under which both Sanofi-Aventis and Lexicon committed to conduct certain developmental and commercialization activities, including undertaking certain clinical studies for the purpose of obtaining regulatory approval for the sale of Licensed Products in defined Territories;
WHEREAS, on July 25, 2019, Sanofi-Aventis provided Lexicon with a notice of its termination of the License Agreement, to be effective August 24, 2019, pursuant to Section 12.3 of the License Agreement;
WHEREAS, Lexicon has disputed the validity of Sanofi-Aventis’ July 25, 2019 notice of termination and has alleged breach of contract and other liability arising from such purported termination and certain related matters, as described in letters from Lexicon to Sanofi-Aventis dated July 25, 26 and 29, 2019, and discussed by representatives of the Parties in various teleconferences and meetings (collectively, the “Disputes”); 
WHEREAS, Sanofi-Aventis has denied all allegations of breach and liability as set forth by Lexicon in the Disputes;
WHEREAS, on August 19, 2019, Sanofi-Aventis, pursuant to Section 13.5 of the License Agreement, served a notice of arbitration upon Lexicon and initiated binding arbitration through JAMS (New York) (the “Arbitration Demand”);
WHEREAS, on August 22, 2019, the Parties agreed to extend the effective date of Sanofi-Aventis’ purported termination from August 24, 2019 to September 7, 2019, for the express purpose of allowing additional time for the Parties to negotiate a settlement resolving the Disputes, while reserving all rights and remedies with respect thereto;
WHEREAS, on September 5, 2019, the Parties agreed to further extend the effective date of Sanofi-Aventis’ purported termination from September 7, 2019 to September 13, 2019, for the express 

purpose of allowing additional time for the Parties to negotiate a settlement resolving the Disputes, while reserving all rights and remedies with respect thereto;
WHEREAS, the Parties desire to resolve the Disputes in an effort to avoid the cost and expense of arbitration and litigation, including filing and arbitration costs, and attorney’s fees.
NOW, THEREFORE, in consideration of the foregoing mutual covenants and agreements contained in this Termination Agreement and for other good and valuable consideration, the receipt and sufficiency of which are acknowledged, the Parties, intending to be legally bound, agree as follows:
1.    TERMINATION OF LICENSE AGREEMENT.  The Parties agree that the License Agreement is hereby terminated in its entirety as of the Settlement Date and that, as of the Settlement Date, the Licensed Product (which as used in this Termination Agreement shall encompass all Licensed Products that are the subject of the License Agreement as of the Settlement Date) shall be deemed a Terminated Product and the entire Territory shall be deemed Terminated Territory.

2.    CONSEQUENCES OF TERMINATION.  The Parties agree that all rights and obligations set forth in Section 12.5 (“Consequences of Termination”) and Section 12.7 (“Accrued Rights; Surviving Obligations”) of the License Agreement remain enforceable and survive the termination as intended in the License Agreement (subject to the terms and conditions therein), except to the extent any of those rights and obligations in Sections 12.5 and 12.7 are extinguished or directly modified in this Termination Agreement.  To the extent any terms and conditions of this Termination Agreement modify, contradict or are inconsistent with the License Agreement, the Parties agree that this Termination Agreement shall control and govern.

3.    PAYMENT BY SANOFI-AVENTIS TO LEXICON.  Sanofi-Aventis shall pay Lexicon $260,000,000 USD (Two-Hundred and Sixty Million U.S. Dollars).  Such payment shall be made by Sanofi-Aventis to Lexicon as follows:

a.80% ($208,000,000) within ten (10) Business Days of the Settlement Date; 

b.10% ($26,000,000) within 180 days following the Settlement Date; and

c.10% ($26,000,000) within 365 days following the Settlement Date.

The Parties agree that Sanofi-Aventis has the right to offset from any such settlement payments amounts of monies that are then due and outstanding from Lexicon to Sanofi-Aventis under this Termination Agreement until such time as any disputes regarding Sanofi’s claims are resolved by the Parties pursuant to this Termination Agreement.  In the event that Sanofi-Aventis fails to timely pay any amounts due to Lexicon under this Termination Agreement, including as a consequence of offsetting monies not due and outstanding from Lexicon to Sanofi-Aventis at the time of offset, then without limiting any remedies that may otherwise be available to Lexicon with respect to such failure under this Termination Agreement, such amounts due from Sanofi-Aventis to Lexicon but not timely paid shall be subject to late payment interest in accordance with Paragraph 31 below.    

4.    MUTUAL RELEASES.  The Parties, on behalf of themselves, their predecessors, successors, direct and indirect parent companies, direct and indirect subsidiary companies, companies under common control with any of the foregoing, affiliates and assigns, and its and their past, present, and future officers, directors, shareholders, interest holders, members, partners, attorneys, agents, employees, managers, representatives, assigns, and successors-in-interest, and all persons acting by, through, under, or in concert with them, and each of them, hereby release and discharge the other Parties, together with their predecessors, successors, direct and indirect parent companies, direct and indirect subsidiary companies, companies under common control with any of the foregoing, affiliates and assigns and its and their past, 

present, and future officers, directors, shareholders, interest holders, members, partners, attorneys, agents, employees, managers, representatives, assigns and successors-in-interest, and all persons acting by, through, under or in concert with them, and each of them, from all known and unknown charges, complaints, claims, grievances, liabilities, obligations, promises, agreements, controversies, damages, actions, causes of action, suits, rights, demands, costs, losses, debts, penalties, fees, wages, medical costs, pain and suffering, mental anguish, emotional distress, expenses (including attorneys’ fees and costs actually incurred), and punitive damages, of any nature whatsoever, known or unknown, which any Party has, or may have had, against any other Party, whether or not apparent or yet to be discovered, for (i) any acts or omissions related to or arising from the License Agreement or (ii) the Disputes.  This Termination Agreement resolves any released claim for relief that is, or could have been alleged, no matter how characterized, including, without limitation, compensatory damages, damages for breach of contract, bad faith damages, reliance damages, liquidated damages, damages for humiliation and embarrassment, punitive damages, costs, and attorneys’ fees.  The released claims shall not include any claims relating to a breach of this Termination Agreement or a breach of provisions in the License Agreement that survive termination.
5.    SANOFI-AVENTIS’ CESSATION OF FURTHER DEVELOPMENT.  The Parties agree that, from and after the Settlement Date, Sanofi-Aventis has the right and hereby invokes its right to cease conducting any further activities under the License Agreement in connection with Development, save and except for the obligations expressly set forth in this Termination Agreement.
6.    LEXICON’S ASSUMPTION OF CLINICAL STUDIES.  The Parties agree that Lexicon shall assume control of the clinical studies involving the Terminated Product set forth in Schedule A (“Assumed Studies”) in accordance with the transfer dates and other terms and conditions set forth in this Paragraph 6 and Paragraph 7.  The Parties agree that except for Sanofi-Aventis’ Development and associated obligations set forth in this Paragraph 6 and Paragraph 7, all other ongoing obligations of Sanofi-Aventis to conduct or continue to fund the Assumed Studies (or any other studies) under Section 12.5.1(iv) of the License Agreement, or otherwise, are hereby terminated, including any obligation by Sanofi-Aventis to continue to fund the costs of Assumed Studies for twelve (12) months following termination.

		
	a.
	CORE PHASE 3 STUDIES.  Lexicon hereby assumes control of all studies set forth in Schedule A-1 (collectively, the “Core Phase 3 Studies”) as of the Settlement Date.  Sanofi-Aventis agrees that for a period of [**] days following the Settlement Date, it will provide a reasonable level of assistance in support of the transition of such control, including responding to Lexicon’s reasonable requests for information and making knowledgeable Sanofi-Aventis employees reasonably available to respond to Lexicon’s questions. Lexicon will assume, and Sanofi-Aventis will undertake Commercially Reasonable Efforts to immediately assign or otherwise transfer the related clinical study contracts identified in Paragraph 7 of this Termination Agreement, including the existing [**] related to the Core Phase 3 Studies, in each case at no cost or liability to Lexicon beyond the remaining contracted budget as of the Settlement Date.

		
	b.
	NON-CORE STUDIES.  Lexicon will assume control of the studies set forth in Schedule A-2, including the “SCORED,” “SOLOIST,” and “China Studies” (collectively, the “Non-Core Studies”) as of the date which is 120 days following the Settlement Date (the “Non-Core Study Transition Date”).  Sanofi-Aventis will use Commercially Reasonable Efforts and work with Lexicon and its designee in good faith to transition the Non-Core Studies to Lexicon or its designee as of the Non-Core Study Transition Date.  Lexicon will assume, and Sanofi-Aventis will undertake Commercially Reasonable 

Efforts to assign or otherwise transfer the related clinical study contracts identified in Paragraph 7 of this Termination Agreement prior to the Non-Core Study Transition Date, in each case at no cost or liability to Lexicon beyond the remaining contracted budget as of the Settlement Date.  Sanofi-Aventis will maintain control and continue its conduct of the Non-Core Studies using Commercially Reasonable Efforts until the Non-Core Study Transition Date. 

		
	c.
	In the event the assignment, transfer and transition of the Assumed Studies is not complete within the relevant time periods set forth above, Sanofi-Aventis will continue providing support for the Assumed Studies as Lexicon may reasonably request after such timelines until [**] days after the Settlement Date, and Lexicon will reimburse Sanofi-Aventis for its internal costs directly relating to such support at the FTE Rate; provided, the foregoing [**]-day limitation on Sanofi-Aventis’ obligation to provide support for the Assumed Studies and the foregoing obligation of Lexicon to reimburse Sanofi-Aventis’ internal costs relating to such support are subject to Sanofi’s exercise of Commercially Reasonable Efforts to promptly carry out its obligations with respect to the assignment, transfer and transition of the Assumed Studies within the relevant time periods set forth above.

7.    LEXICON’S ASSUMPTION OF CLINICAL STUDY-RELATED CONTRACTS AND COSTS.  Sanofi-Aventis agrees to assign or transfer to Lexicon third party vendor and service contracts relating to the Assumed Studies and Lexicon agrees to make all third party vendor payments and assume such contractual obligations through direct assignment or novation of vendor and service contracts related to the Assumed Studies as set forth below. 

a.Sanofi-Aventis represents that all third party contracts relating to the Assumed Studies are identified in Schedule B (“Assumed Study Contracts”), with the exception of investigator contracts or agreements, which the Parties agree are similarly subject to assumption under this paragraph.  Sanofi-Aventis further represents that Schedule B also identifies all known change orders to such contracts or statements of work.  Sanofi-Aventis reserves the right to amend Schedule B to add additional contracts to the extent they are discovered, in good faith, following the date of execution of this Termination Agreement, unless the total liability of the added contracts exceeds $[**] (USD), in which case Lexicon will have the right to reject and not assume such added contracts.  The Parties agree that investigator contracts or agreements shall not be counted for purposes of calculating total liability of the added contracts under this Paragraph.

b.To the extent any Assumed Study Contracts are not permitted to be assigned, Sanofi-Aventis shall negotiate with the vendor or subcontractor in good faith to seek a reasonable termination of such contract and formation of a new contract between Lexicon and the respective vendor or service provider, if possible.  If termination is not possible with respect to any such Assumed Study Contract, then Sanofi-Aventis will undertake performance under such non-terminable contract, and Lexicon agrees to reimburse Sanofi-Aventis for any out-of-pocket payments associated with Sanofi-Aventis’ continued performance of such non-terminable contract, provided that Lexicon shall not be required to reimburse Sanofi-Aventis for its internal costs of administering such non-terminable contracts.

c.Pending any such assignment or novation of an Assumed Study Contract, Sanofi-Aventis will maintain such Assumed Study Contract with the applicable 

third party for Lexicon’s benefit unless and until notified by Lexicon that such third party’s services under such Assumed Study Contract is no longer needed.

d.Sanofi-Aventis will pay and take responsibility for payment under Assumed Study Contracts for all work done by vendors, service providers or subcontractors (including, without limitation, clinical sites and investigators) and any liability incurred on or before the Settlement Date, and Lexicon will pay and take responsibility for payment under Assumed Study Contracts for all work done by vendors, service providers or subcontractors (including, without limitation, clinical sites and investigators) and any liability incurred after the Settlement Date, in each case irrespective of when invoices for such work or services are issued by the vendors, service providers or subcontractors, or received by either Party.  For clarity, Sanofi-Aventis will indemnify Lexicon and will not assert liability against Lexicon or seek contribution from Lexicon relating to [**].  The Parties will jointly draft and send notices to vendors, service providers and subcontractors subject to Assumed Study Contracts to communicate this arrangement for allocation of payments within [**] Business Days following the Settlement Date.

e.Notwithstanding the foregoing, Lexicon will have the right to select its own vendors and service providers, and decline any assignment or novation of an Assumed Study Contract, in which case Lexicon will have no obligation to the Sanofi-Aventis vendor, service provider or subcontractor for which it declines such assignment or novation, and Sanofi-Aventis will have no obligation to maintain such contract following the Settlement Date for the Core Phase 3 Studies and the Non-Core Study Transition Date for the Non-Core Studies.  In the event Lexicon so declines assignment or novation of any Assumed Study Contract under this provision, Lexicon will reimburse Sanofi-Aventis for any continued out-of-pocket costs under the contract incurred by Sanofi-Aventis until such contract expires and Sanofi-Aventis shall use Commercially Reasonable Efforts to terminate such Assumed Study Contract declined by Lexicon as soon as practicable.

8.    MANUFACTURING AND SUPPLY.  The Parties agree that notwithstanding Section 12.5.1(vi) of the License Agreement, Sanofi-Aventis is not required to continue to perform and will cease performing all Manufacturing and supply obligations and efforts with respect to the Licensed Compound and Terminated Product, except as set forth in this Termination Agreement as follows:

a.Sanofi-Aventis agrees to transfer ownership and deliver to Lexicon or its designee Sanofi-Aventis’ existing inventory of Terminated Product, active pharmaceutical ingredient, intermediates and other compounds, packaging, labeling and other materials and associated documentation relating to or otherwise useful for the Manufacture of the Licensed Compound and Terminated Product identified in Schedule C (“Inventory”), in each case at no cost to Lexicon and in accordance with cGMP shipping standards.  Within [**] days of the Settlement Date, Lexicon will provide notice to Sanofi-Aventis of its desired destination for delivery of such Inventory, and Sanofi-Aventis will ship such Inventory in accordance with such notice as soon as practicable.  Sanofi-Aventis is obligated to ship Inventory at its cost only to the extent such Inventory is stored at Sanofi-Aventis-owned sites.  Sanofi-Aventis is not obligated to ship Inventory at its cost if stored by its vendors, manufacturers or suppliers.  Notwithstanding the foregoing, Sanofi is not obligated to pay and Lexicon agrees to pay all taxes and duties associated with any shipping undertaken by Sanofi pursuant to this 

Paragraph.  The Parties agree that Sanofi-Aventis represents and covenants that all such Inventory stored at Sanofi-Aventis-owned sites was Manufactured and will be maintained through delivery to Lexicon in accordance with Applicable Law and the applicable specifications therefor, including, to the extent required by Applicable Law, cGMP; provided, however, if the Inventory at Sanofi-Aventis-owned sites is damaged or does not meet applicable specifications due to Sanofi-Aventis’ gross negligence or willful misconduct, Sanofi-Aventis shall pay the reasonable replacement cost of such Inventory to Lexicon.  Sanofi further represents that all Inventory Manufactured by third party vendors, manufacturers and suppliers was so Manufactured pursuant to contracts identified in Schedule D and subject to assignment to Lexicon hereunder.

b.Sanofi-Aventis agrees, at its sole expense, to transfer to Lexicon or its designee all technology, know-how documentation, and other written information in its possession or control which is necessary or used by Sanofi-Aventis to perform the Manufacturing Process, including, without limitation, with respect to any formulation development activities (the “Technology Transfer”).  Sanofi shall use Commercially Reasonable Efforts to ensure the Technology Transfer occurs as soon as practicable.

c.At Lexicon’s request, it may assume all contractual rights and obligations through direct assignment by Sanofi-Aventis of existing vendor and service contracts related to Manufacturing and supply of the Licensed Compound and Terminated Product; provided, that Sanofi-Aventis will remain responsible for all financial obligations thereunder until such assignment to Lexicon.  Sanofi-Aventis represents that all such contracts are identified in Schedule D (the “Manufacturing Contracts”) and that there are no amounts due and owing under those contracts at the time of assignment to Lexicon and that all payments have been made for Manufacturing performed and Manufacturing obligations incurred prior to the time of assignment.  Subject to Lexicon’s prior written consent, at Sanofi-Aventis’ request the Parties may amend Schedule D to add additional contracts to the extent they are discovered, in good faith, following the Settlement Date.

d.To the extent Lexicon requests the assignment of any Manufacturing Contracts which are not permitted to be assigned, Sanofi-Aventis shall negotiate with the vendor, service provider or subcontractor in good faith to a seek a reasonable termination of such contract and formation of a new contract between Lexicon and the respective vendor, service provider or subcontractor, if possible.  If termination is not possible with respect to any such Manufacturing Contract, then Sanofi-Aventis will undertake performance under such non-terminable contract, and Lexicon agrees to reimburse Sanofi-Aventis for any out-of-pocket payments associated with Sanofi-Aventis’ continued performance of such non-terminable contract; provided that Lexicon shall not be required to reimburse Sanofi-Aventis for its internal costs of administering such non-terminable contracts.  

e.The Parties shall use Commercially Reasonable Efforts to complete such transfer of Inventory, the Technology Transfer and the assignment of requested Manufacturing and supply contracts as soon as practicable and no later than [**] days after Settlement Date.  

f.Sanofi-Aventis will retain responsibility for the supply and shipping of the Licensed Compound and Terminated Product (including clinical supply, 

distribution, returns and reconciliations, which may include the use of clinical supply depots, for the Assumed Studies) at its expense until [**] days following the Settlement Date.  If such transfers and assignments are not completed, or  to the extent Lexicon reasonably needs further Manufacturing and supply and shipping of the Licensed Compound or Terminated Product (including clinical supply and distribution), following the completion of such transfer and assignments and prior to expiration of [**] days following the Settlement Date, Sanofi-Aventis shall continue responsibility for, or assume responsibility for as the case may be, such Manufacturing and supply of Licensed Compound or Terminated Products, to the extent Sanofi-Aventis would have been obligated to do so under the License Agreement pursuant to Section 12.5.1(vi) thereof, but all such limitations contained therein, including the transfer pricing (Sanofi-Aventis’ Manufacturing Cost plus five percent (5%)), shall apply.  For purposes of further clarity, the Parties agree that clinical supplies and related manufacturing control costs (CMC costs) shall be included in Sanofi-Aventis’ Manufacturing Cost for such purpose, and subject to payment by Lexicon through the transfer cost (Sanofi-Aventis’ Manufacturing Cost, plus five percent (5%)).
g.Subject to Paragraph 8(a), Sanofi-Aventis will be under no obligation to provide Manufacturing and supply after the expiration of [**] days following the Settlement Date.

9.    LEXICON’S ASSUMPTION OF ONGOING STABILITY STUDIES.  To the extent not covered by Paragraphs 6-8 above, Lexicon also agrees to immediately assume, and Sanofi-Aventis shall assign, responsibility for all ongoing stability studies and contracts for the same, subject to the same assignment terms set forth in Paragraph 8(a)-(f).  To the extent such ongoing stability studies are being conducted directly by Sanofi-Aventis, Sanofi-Aventis will continue to undertake such activities consistent with this Termination Agreement for [**] days following the Settlement Date, at its own costs.  To the extent Lexicon requests that Sanofi-Aventis continue such internal ongoing stability studies after [**] days following the Effective Date, Lexicon will reimburse Sanofi-Aventis for all such costs, including reasonable costs for internal full-time employees (FTE) costs at the FTE Rate.

10.    REGULATORY.

		
	a.
	Regulatory Matters.  Sanofi-Aventis and Lexicon will use Commercially Reasonable Efforts to transfer control and ownership of all Regulatory Documentation to Lexicon within [**] days of the Settlement Date.  Without limiting the foregoing, Sanofi-Aventis shall (i) transfer or assign sponsorship of the INDs and Drug Approval Application in the United States, and Regulatory Approval for T1DM in the European Union, and other regulatory filings, relating to Terminated Product, and (ii) provide copies of other regulatory documents that are necessary for Lexicon to assume control and sponsorship, and maintain the regulatory files.  All Regulatory Documentation constituting INDs or Drug Approval Applications (either finalized, or if in draft form, the most recent version of the draft) shall be provided in native format documents, if applicable.  Pending and after such transfer, Sanofi-Aventis will cooperate with Lexicon in such transition and other activities as may be reasonably necessary to enable Lexicon to communicate and make submissions to regulatory authorities related to the Terminated Product in the United States and European Union, and will make appropriate personnel reasonably available to assist Lexicon in such activities.

		
	b.
	PV Quality System and Database.  Sanofi-Aventis and Lexicon will use Commercially Reasonable Efforts and work together in good faith to transfer the global safety database, and related patient safety oversight and governance files, to Lexicon within [**] days following the Settlement Date; provided, that if the Parties are unable to complete such 

transfer within such [**]-day period, Sanofi-Aventis will continue to retain responsibility for maintaining the global safety database and related files for up to an additional [**] days, subject to the cost-transfer provision of sub-Paragraph (g) of this Section.  Sanofi-Aventis will provide Lexicon with information reasonably necessary for Lexicon to comply with its pharmacovigilance responsibilities, including, as applicable, any Adverse Events or other adverse drug experiences, in each case in the form reasonably requested by Lexicon.  Subject to all other terms in this Paragraph, Sanofi-Aventis will retain responsibility for maintaining the global safety database and related files until such transfer is complete, but in no event beyond [**] days following the Settlement Date.  For clarity, following transfer of the global safety database, Sanofi-Aventis shall have no further obligations relating to pharmacovigilance responsibilities.  

		
	c.
	Regulatory Authority Inspections.  Pending and after the transfer of regulatory documentation contemplated above, at Lexicon’s request, Sanofi-Aventis will reasonably assist Lexicon with respect to any Regulatory Authority inspection that relates to any Development or Manufacturing activity conducted by or on behalf of Sanofi-Aventis under the License Agreement and will permit a reasonable number of Lexicon representatives to be present during such inspection. Lexicon will reimburse Sanofi-Aventis for all reasonable costs with respect to all such requested assistance, including reasonable costs for internal full-time employees (FTE) costs at the FTE Rate. 

		
	d.
	Simultaneous Transfer.  The Parties agree that for purposes of continuity and to ensure regulatory compliance, Sanofi-Aventis, to the extent practicable, will transfer information set forth in the “Regulatory Matters” and “PV Quality System and Database” paragraphs above simultaneously to Lexicon, and Lexicon will undertake reasonable efforts to accommodate the simultaneous transfer. 

		
	e.
	No Launch Before Transfer.  Lexicon represents that it does not intend to, and hereby agrees that it will not commercially launch the Terminated Products before the completion of transfers contemplated in the “Regulatory Matters” and “PV Quality System and Database” paragraphs above.

		
	f.
	Mutual Cooperation.  Lexicon and Sanofi-Aventis will use Commercially Reasonable Efforts to complete and execute all documentation and respond to regulator inquiries in order to effect the transfer of the Regulatory Documentation and patient safety databases under this provision.  Pending and after such transfer, Sanofi-Aventis will cooperate with Lexicon in such transition and other activities and shall provide such regulatory support as may be reasonably necessary to assist Lexicon to prepare and submit initial filings for the regulatory approval of the Terminated Product for T2DM in the United States and European Union currently planned for the first half of 2020 and to respond to inquiries or information requests from Regulatory Authorities with respect thereto, and will make appropriate personnel reasonably available to assist Lexicon in such activities; provided, that Sanofi shall not be obligated to provide such regulatory assistance or cooperation beyond [**] days following the Settlement Date except to the extent Lexicon is not reasonably able to appropriately respond to such Regulatory Authority inquiries or information requests without such assistance or cooperation from Sanofi-Aventis, in which case, the Parties agree that Sanofi-Aventis’s obligation to cooperate after [**] days following the Settlement Date shall be limited to answering specific questions via teleconference.     

		
	g.
	Ongoing Regulatory and Ethical Responsibility Costs.  To the extent Sanofi-Aventis continues maintenance of regulatory files (including activities as may be reasonably necessary to assist Lexicon to communicate and make submissions to regulatory 

authorities related to the Terminated Product in the United States and European Union) after [**] days following the Settlement Date, Lexicon will reimburse Sanofi-Aventis for all reasonable costs relating to such continued maintenance, including reasonable costs for internal full-time employees (FTE) costs at the FTE Rate; provided, that the foregoing obligation is subject to Sanofi-Aventis’ exercise of Commercially Reasonable Efforts to promptly carry out its obligations with respect to the transfer of control and ownership of such regulatory files.

11.    QUALITY.  Sanofi-Aventis will use Commercially Reasonable Efforts to transfer to Lexicon quality assurance (“QA”) information including copies of audit plans and audit certificates, comprehensive information relating to product specific observations and remediation efforts, and lists of all Regulatory Authority inspections relating to its QA activities with respect to Terminated Product within [**] days of the Settlement Date.  Lexicon may request additional QA information and Sanofi-Aventis agrees to cooperate and provide additional QA information that is reasonably requested and necessary for the purpose of Lexicon’s assumption of responsibilities for the Terminated Product. Pending and after such transfer, Sanofi-Aventis will reasonably cooperate with Lexicon representatives and any Lexicon request for additional information concerning Sanofi-Aventis’ activities relating to the Terminated Product for the purpose of identifying and understanding any areas of non-compliance with cGCP, cGMP, cGLP and other similar requirements promulgated by Regulatory Authorities, including making appropriate personnel from its QA group (and other functions as necessary) reasonably available to assist Lexicon in such activities.  In the event the transition of QA activities is not complete within [**] days of Settlement Date and Sanofi-Aventis provides support for QA activities after such time period, Lexicon will reimburse Sanofi-Aventis for internal costs at the FTE Rate; provided, that the foregoing obligation is subject to Sanofi-Aventis’ exercise of Commercially Reasonable Efforts to promptly carry out its obligations with respect to the transition to Lexicon of QA activities.  Notwithstanding the foregoing, Sanofi-Aventis agrees that it will use Commercially Reasonable Efforts to complete all QA activities relating to [**] at its sole expense and will promptly transfer to Lexicon all QA information relating to such [**] following its completion, including relevant reports and data.

12.    INTELLECTUAL PROPERTY.  Sanofi-Aventis hereby assigns to Lexicon all intellectual property rights solely relating to the Terminated Product, including without limitation any Patents, Trademarks, know-how, Information and Inventions and clinical study and other data, all of which Patents and Trademarks are set forth in Schedule E.  Sanofi-Aventis agrees to take all reasonable actions and execute such agreements, instruments and documents as may be necessary or reasonably requested by Lexicon to confirm and perfect Lexicon’s intellectual property rights in accordance with the foregoing sentence.

13.    EXPENSES; NO FURTHER PAYMENTS.  Except to the extent expressly provided in this Termination Agreement, the Parties agree that each Party will bear its own expenses incurred in connection with the matters contemplated by this Termination Agreement and that neither Party will owe any additional payment to the other Party pursuant to the License Agreement.

14.    INDEMNITY.  The Parties agree that Article 11 of the License Agreement survives termination pursuant to Section 12.7 of the License Agreement and is enforceable, and shall be expanded following the Settlement Date to include indemnification for Third Party Claims arising from breaches of the obligations of this Termination Agreement.  

15.    NOTICE REQUIREMENTS.  Any notice, request, demand, waiver, consent, approval or other communication permitted or required under the License Agreement or this Termination Agreement shall be in writing, shall refer specifically to the License Agreement or this Termination Agreement and shall be deemed given only if delivered by hand or by facsimile (with transmission confirmed) or by internationally recognized overnight delivery service that maintains records of delivery, addressed to the Parties at their respective addresses specified in this Paragraph or to such other address as the Party to 

whom notice is to be given may have provided to the other Party in accordance with this Paragraph 14.  Such notice shall be deemed to have been given as of the date delivered by hand or transmitted by facsimile (with transmission confirmed) or on the second Business Day (at the place of delivery) after deposit with an internationally recognized overnight delivery service.  Any notice delivered by facsimile shall be confirmed by a hard copy delivered as soon as practicable thereafter.  This Paragraph is not intended to govern the day-to-day business communications necessary between the Parties in performing their obligations under the terms of this Termination Agreement.

If to Sanofi-Aventis, to:
54 Rue La Boetie, 75008
Paris, France
Attention: Dieter Weinand

with copies (which shall not constitute notice) to:

54 Rue La Boetie, 75008
Paris, France
Tel. +331 5377 4664
Attention: VP, Legal Operations
Facsimile +331 5377 4453

DLA Piper LLP (US)
1251 Avenue of the Americas
New York, New York 10020
USA
Attention: Christopher M. Strongosky
Facsimile: +1(212)884-8543

If to Lexicon, to:

Lexicon Pharmaceuticals, Inc.
8800 Technology Forest Place
The Woodlands, Texas 77381
USA
Attention: President

with copies (which shall not constitute notice) to:

Lexicon Pharmaceuticals, Inc. 
8800 Technology Forest Place 
The Woodlands, Texas 77381 
USA
Attention: General Counsel 

and

Wilmer Cutler Pickering Hale and Dorr LLP
60 State Street
Boston, Massachusetts 02109
USA
Attention: Steven D. Barrett, Esq.
Facsimile: +1 (617) 526-5000

16.    LIMITATION ON LIABILITY.  The Parties agree that the limitation of liability provision contained in Section 11.4 of the License Agreement shall apply to any claim arising out of or related to this Termination Agreement. 

17.    CONSENT TO WITHDRAWAL AND DISMISSAL OF PENDING JAMS ARBITRATION.  Upon execution of this Termination Agreement, Sanofi-Aventis and Lexicon will consent to the withdrawal of the Arbitration Demand, with prejudice. 

18.    DISPUTE RESOLUTION.  To the extent either Party disputes the sufficiency of the other Party’s performance under this Termination Agreement, including but not limited to claims of breach of this Termination Agreement (but expressly excluding claims of breach of the License Agreement, which are otherwise released by the Parties in this Termination Agreement), the dispute shall be subject to the dispute resolution procedures applicable to Legal Disputes set forth in Sections 13.5 and 13.6 of the License Agreement, which are incorporated by reference.

19.    COMPROMISE OF DISPUTED CLAIMS.  This Agreement is a compromise and settlement of the Disputes (disputed claims) and is entered into in order to avoid the expense and uncertainty of arbitration or additional litigation.  No action taken by Lexicon or Sanofi-Aventis, either previously or in connection with this Termination Agreement, shall be deemed or construed to be: (1) an admission of the truth or falsity of any claims made by one Party against any other Party; or (2) an acknowledgement or admission by any Party of any fault or liability whatsoever to any other Party, or to any third party.

20.    CONFIDENTIALITY.  The Parties agree that the terms of this Termination Agreement (including, but not limited to, the fact of payment and the amounts to be paid hereunder), are confidential and shall not be disclosed by any Party or by its representatives, except (1) as required by law, subpoena or government order, including in order to comply with applicable securities laws or regulations or the rules or regulations of any stock exchange on which securities of the Party making such disclosure are traded, (2) to the Parties’ respective counsel, accountants, financial advisors, and tax professionals retained by them, or (3) to any federal, state, or local governmental taxing or regulatory authority.  The Parties agree to use reasonable efforts to ensure that any person identified in the preceding sentence to whom information concerning this Termination Agreement is disclosed maintains the confidentiality outlined by this provision.  Nothing contained in this paragraph shall prevent any Party from stating that the Parties have “amicably resolved all differences.”

21.    NON-DISPARAGEMENT.  The Parties agree that, unless required by legal process, its corporate officers, employees and directors shall not make any disparaging statements or representations, either directly or indirectly, whether orally or in writing, by word or gesture, to any person whatsoever, about the other Party or its attorneys, or representatives/affiliates, or any of its directors, officers, employees, attorneys, agents, or representatives, and in the case of Sanofi-Aventis shall not make any such disparaging statements or representations about the Terminated Product.  For purposes of this paragraph, a disparaging statement or representation is any communication which, if publicized to another, would cause or tend to cause the recipient of the communication to question the business condition, integrity, competence, or good character of the person or entity to whom the communication relates, and in the case of the Terminated Product, the development results and commercial potential of the Terminated Product.  Notwithstanding the foregoing, the Parties agree that Sanofi-Aventis may repeat its prior public statements concerning the Terminated Product and each Party may repeat its prior public statements concerning the Disputes or make similar statements without violating the terms of this Paragraph.

22.    MEDIA/PRESS RELEASES.  Upon the execution of this Termination Agreement, Lexicon may issue the press release attached as Exhibit F.  If either Party seeks to issue any other press release related to this Termination Agreement, it will provide the other Party an advance copy of the press 

release related to this Termination Agreement, at least 24 hours before it is released and consider in good faith any edits or modifications requested by the other Party. 

23.    GOVERNING LAW AND FORUM SELECTION.  This Termination Agreement and all related documents, including all schedules attached hereto, and all matters arising out of or relating to this Termination Agreement, whether sounding in contract, tort, or statute, are governed by, and construed in accordance with, the laws of the State of New York, United States, without giving effect to the conflict of law provisions thereof to the extent such principles or rules would require or permit the application of the laws of any jurisdiction other than those of the State of New York.  Each Party irrevocably and unconditionally agrees that it will not commence any action, litigation, or proceeding of any kind whatsoever against any other Party in any way arising from or relating to this Termination Agreement and all contemplated transactions, including, but not limited to, contract, equity, tort, fraud, and statutory claims, in any forum other than through arbitration pursuant to Section 13.5 of the License Agreement or through the state or federal courts of New York, New York County.  Each Party irrevocably and unconditionally submits to the jurisdiction of such fora for such express purposes, and subject to the dispute resolution process set forth herein.  Each Party agrees that a final judgment in any such arbitration, action, litigation, or proceeding is conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.  In addition, each Party agrees to accept service of any legal process sent in accordance with the notice provision of Paragraph 14 of this Termination Agreement.

24.    ENTIRE AGREEMENT.  This Termination Agreement, including the attachment(s), contains the entire understanding of the Parties with respect to the subject matter contained herein, and supersedes all prior written or oral communications.  This Termination Agreement may not be modified or amended except by an instrument in writing signed by all Parties.  No other representation has induced the Parties to execute this Termination Agreement, and there are no representations, inducements, promises or agreements, oral or otherwise, between the Parties not embodied in this Termination Agreement, which are of any force or effect with reference to this Termination Agreement or otherwise.  This Termination Agreement shall inure to the benefit of, and be binding upon, the Parties hereto, and their respective affiliated entities, trusts, successors-in-interest, assigns, representatives, directors, officers, employees, stockholders, and members.

25.    NON-WAIVER.  No delay or failure by a party to exercise any right under this Termination Agreement, and no partial or single exercise of that right, shall constitute a waiver of that or any other right, unless otherwise expressly provided herein. 

26.    REPRESENTATION BY COUNSEL.  Each Party hereby acknowledges that it has been represented by counsel of its choosing in connection with the execution and delivery of this Termination Agreement, that the Parties and their counsel have reviewed this Termination Agreement prior to execution and that any ambiguity in or dispute about the meaning of any term or provision of this Termination Agreement shall not be construed against any Party, but shall be construed as if this Termination Agreement were jointly drafted.

27.    ATTORNEY’S FEES.  Each Party is responsible for its own legal fees and costs in connection with the preparation, negotiation and consideration of this Termination Agreement.  The prevailing Party in any arbitration or litigation regarding this Termination Agreement shall be entitled to recover its reasonable attorneys’ fees and costs.

28.    CONSTRUCTION.  Except where the context otherwise requires, wherever used, the singular shall include the plural, the plural the singular, the use of any gender shall be applicable to all genders and the word “or” is used in the inclusive sense (and/or). Whenever this Agreement refers to a number of days, unless otherwise specified, such number refers to calendar days. The captions of this Agreement are for convenience of reference only and in no way define, describe, extend or limit the scope or intent of this Agreement or the intent of any provision contained in this Agreement. The term 

“including,” “include,” or “includes” as used herein shall mean including, without limiting the generality of any description preceding such term. The language of this Agreement shall be deemed to be the language mutually chosen by the Parties and no rule of strict construction shall be applied against either Party hereto.

29.    SEVERABILITY.  In the event any part of this Termination Agreement is held by a court of law to be unenforceable, the remaining parts of this Termination Agreement shall remain in full force and effect.

30.    COUNTERPARTS.  This Termination Agreement may be executed in any number of counterparts, each of which when executed and delivered shall be deemed to be an original and all of which counterparts taken together shall constitute but one and the same instrument.  The Parties hereto agree that facsimile transmission or PDF of original signatures shall constitute and be accepted as original signatures.

31.    LATE PAYMENTS.  Should any amount payable from one Party to the other Party under this Termination Agreement not be paid on or before the date such payment is due, then, without limiting any other remedies the payment-receiving Party may have with respect to such non-payment, late payment interest shall be payable on such amount as set forth in Section 7.12 of the License Agreement, which shall survive termination of the License Agreement for such purpose.

[SIGNATURE PAGE FOLLOWS]

IN WITNESS WHEREOF, the Parties hereto have caused this Termination Agreement to be executed by their duly authorized representatives and effective as of the Settlement Date. 

	
		
	Dated: September __, 2019
	Lexicon Pharmaceuticals, Inc.

By:______________________________

Name:______________________________

Title:______________________________

	 
	 

	Dated: September __, 2019
	Sanofi-Aventis Deutschland GmbH

By:______________________________

Name:______________________________

Title:______________________________

SCHEDULE A-1

ASSUMED CORE PHASE 3 STUDIES

	
			
	CORE PHASE 3 STUDIES

	No.
	Study Name
	Study  ID

	1.
	Efficacy and Safety of Sotagliflozin Versus Placebo in Patients With Type 2 Diabetes Mellitus Not Currently Treated With Antidiabetic Therapy
	EFC14833

	2.
	Efficacy and Safety of Sotagliflozin Versus Placebo in Patients With Type 2 Diabetes Mellitus on Background of Metformin
	EFC14834

	3.
	Efficacy and Safety of Sotagliflozin Versus Placebo in Patients With Type 2 Diabetes Mellitus on Background of Sulfonylurea Alone or With Metformin
	EFC14835

	4.
	Safety and Efficacy Study of Sotagliflozin on Glucose Control in Patients With Type 2 Diabetes, Moderate Impairment of Kidney Function, and Inadequate Blood Sugar Control (SOTA-CKD3)
	EFC14837

	5.
	Efficacy and Safety of Sotagliflozin Versus Glimepiride and Placebo in Subjects With Type 2 Diabetes Mellitus That Are Taking Metformin Monotherapy (SOTA-GLIM)
	EFC14838

	6.
	Efficacy and Safety of Sotagliflozin Versus Placebo and Empagliflozin in Subjects With Type 2 Diabetes Mellitus Who Have Inadequate Glycemic Control While Taking a DPP4 Inhibitor Alone or With Metformin (SOTA-EMPA)
	EFC14867

	7.
	Efficacy and Safety of Sotagliflozin Versus Placebo in Subjects With Type 2 Diabetes Mellitus Who Have Inadequate Glycemic Control While Taking Insulin Alone or With Other Oral Antidiabetic Agents (SOTA-INS)
	EFC14868

	8.
	A Study to Evaluate Safety and Effects of Sotagliflozin Dose 1 and Dose 2 on Glucose Control in Patients With Type 2 Diabetes, Severe Impairment of Kidney Function and Inadequate Blood Sugar Control (SOTA-CKD4)
	EFC15166

	9.
	Efficacy and Bone Safety of Sotagliflozin Dose 1 and Dose 2 Versus Placebo in Subjects With Type 2 Diabetes Mellitus Who Have Inadequate Glycemic Control (SOTA-BONE)
	EFC15294

SCHEDULE A-2

ASSUMED NON-CORE STUDIES

	
			
	NON-CORE STUDIES

	No.
	Study Name
	Study  ID

	10.
	Effect of Sotagliflozin on Cardiovascular and Renal Events in Patients With Type 2 Diabetes and Moderate Renal Impairment Who Are at Cardiovascular Risk (SCORED)
	EFC14875

	11.
	Effect of Sotagliflozin on Cardiovascular Events in Patients With Type 2 Diabetes Post Worsening Heart Failure (SOLOIST-WHF Trial)
	EFC15156

	12.
	Safety, Tolerability and Pharmacodynamic Activity of Sotagliflozin in Hemodynamically Stable Patients With Worsening Heart Failure
	PDY15079

	13.
	Sotagliflozin Multiple-dose Study in Healthy Chinese Subjects
	TDR15349

	14.
	Efficacy and Safety of Sotagliflozin Versus Placebo in Chinese Patients With Type 2 Diabetes Mellitus Not Adequately Controlled by Metformin With or Without Sulfonylurea
	EFC15193

	15.
	Efficacy and Safety of Sotagliflozin Versus Placebo in Chinese Patients With Type 2 Diabetes Mellitus Not Adequately Controlled by Diet and Exercise
	EFC15194

	16.
	Efficacy and Safety of Sotagliflozin in Asian Patients with Type 2 Diabetes Mellitus Who Have Inadequate Glycemic Control on basal insulin alone or basal insulin with oral anti-diabetic drugs (OADs) 
Note: Does not have patients screened yet. 
	EFC15253

	17.
	Study To Determine Bioavailability of Sotagliflozin in Healthy Male and Female Subjects
	PKM15402

	18.
	A Bioequivalence Study Testing Two Formulations of Sotagliflozin in Healthy Male and Female Subjects Under Fasted Conditions
	BEQ14993

	19.
	Comparison of Pharmacodynamic Effects of Sotagliflozin and Empagliflozin in T2DM Patients With Mild to Moderate Hypertension
	PDY15010

	20.
	Pre-clinical study ongoing in Germany: 
The role of combined SGLT-1 and SGLT-2 inhibition in the heart- rat model of diabetic cardiomyopathy
	EC000412

SCHEDULE B

ASSUMED STUDY CONTRACTS*

*This list tracks the file structure and organization of Assumed Study Contracts as provided and disclosed to Lexicon in the SharePoint document sharing platform.  To the extent this Schedule varies in contract name, party name or date, Sanofi refers Lexicon to the SharePoint site for the specific details.

	
				
	No.
	Contract
	Party(ies)
	Date

	[**]
	[**]
	[**]
	[**]

[Fifteen (15) pages redacted]

SCHEDULE C

INVENTORY TO BE TRANSFERRED

	
				
	 
	Quantity
	Use by date
	Location

	[**]
	[**]
	[**]
	[**]

SCHEDULE D

ASSUMED MANUFACTURING AND SUPPLY CONTRACTS

	
				
	No.
	Contract
	Party(ies)
	Date

	[**]
	[**]
	[**]
	[**]

[Two (2) pages redacted]

SCHEDULE E

PATENTS AND TRADEMARKS TO BE ASSIGNED

PATENTS:

	
				
	Patents
	Agency
	Date Filed
	Summary

	[**]
	[**]
	[**]
	[**]

TRADEMARKS:

[**]

[Five (5) pages redacted]

EXHIBIT F

PRESS RELEASE
    
LEXICON PHARMACEUTICALS announces termination of alliance AND SETTLEMENT with sanofi

Conference Call and Webcast Today at 5:00 pm EDT / 4:00 pm CDT

The Woodlands, Texas, September 10, 2019 - Lexicon Pharmaceuticals, Inc. (Nasdaq: LXRX), today announced the termination of its alliance with Sanofi for the development and commercialization of ZynquistaTM (sotagliflozin) and the settlement of its related disputes with Sanofi, each effective September 9, 2019. In connection with the termination, Lexicon will regain all rights to Zynquista and assume full responsibility for the worldwide development and commercialization of Zynquista in both type 1 and type 2 diabetes. Under the terms of the settlement, Sanofi will pay Lexicon $260 million, of which $208 million is payable upfront and the remainder is payable within twelve months, and coordinate with Lexicon in the transition of responsibility for ongoing clinical studies and other activities.

“Our four-year alliance with Sanofi has been a productive one, with Zynquista receiving marketing approval in Europe in type 1 diabetes and advancing into late-stage studies in type 2 diabetes,” said Lonnel Coats, president and chief executive officer of Lexicon. “Regaining worldwide rights allows us to advance our efforts to realize the full value of the Zynquista program as we prepare for regulatory filings in the U.S. and in Europe in type 2 diabetes, with data coming over the next few months from the remainder of the core Phase 3 studies and over the longer term from two outcomes studies with potential for demonstrating cardiovascular and renal benefits. We believe that this potential, along with a European approval in type 1 diabetes, offer an attractive opportunity for potential collaborators as we work to maximize the global potential for Zynquista and to achieve greater operational flexibility.”

Conference Call and Webcast Information

Lexicon management will hold a live conference call and webcast today at 5:00 pm EDT / 4:00 pm CDT to discuss today’s announcement. The dial-in number for the conference call is 888-645-5785 (U.S./Canada) or 970-300-1531 (international). The conference ID for all callers is 7376526. The live webcast and replay may be accessed by visiting Lexicon’s website at www.lexpharma.com/investors. An archived version of the webcast will be available on the website for 14 days. 

About Zynquista (sotagliflozin)

Discovered using Lexicon’s unique approach to gene science, Zynquista is an oral dual inhibitor of two proteins responsible for glucose regulation known as sodium-glucose co-transporter types 1 and 2 (SGLT1 and SGLT2). SGLT1 is responsible for glucose absorption in the gastrointestinal tract, and SGLT2 is responsible for glucose reabsorption by the kidney. Zynquista is approved in the European Union (EU) for use as an adjunct to insulin therapy to improve blood sugar (glycemic) control in adults with type 1 diabetes with a body mass index ≥ 27 kg/m2, who could not achieve adequate glycemic control despite optimal insulin therapy. Outside of such approval, Zynquista is investigational and has not been approved by any other regulatory authority for type 1 or type 2 diabetes.

About Lexicon Pharmaceuticals

Lexicon is a fully integrated biopharmaceutical company with a mission of pioneering medicines that transform patients’ lives. Through its Genome5000TM program, Lexicon scientists studied the role and function of nearly 5,000 genes and identified more than 100 protein targets with significant therapeutic potential in a 

range of diseases. Through the precise targeting of these proteins, Lexicon is pioneering the discovery and development of innovative medicines to safely and effectively treat disease. In addition to its first commercial product, XERMELO, Lexicon has a pipeline of promising drug candidates in clinical and preclinical development in diabetes and metabolism, oncology and neuropathic pain. For additional information, please visit www.lexpharma.com.

Safe Harbor Statement

This press release contains “forward-looking statements,” including statements relating to Lexicon’s long-term outlook on its business, the commercialization of XERMELO (telotristat ethyl) and Zynquista (sotagliflozin), and the clinical development of, the regulatory filings for, and the potential therapeutic and commercial potential of telotristat ethyl, sotagliflozin, LX2761 and LX9211. In addition, this press release also contains forward looking statements relating to Lexicon’s growth and future operating results, discovery, development and commercialization of products, strategic alliances and intellectual property, as well as other matters that are not historical facts or information. All forward-looking statements are based on management’s current assumptions and expectations and involve risks, uncertainties and other important factors, specifically including Lexicon’s ability to meet its capital requirements, successfully commercialize XERMELO, successfully conduct preclinical and clinical development and obtain necessary regulatory approvals of telotristat ethyl, sotagliflozin, LX2761, LX9211 and its other potential drug candidates on its anticipated timelines, achieve its operational objectives, obtain patent protection for its discoveries and establish strategic alliances, as well as additional factors relating to manufacturing, intellectual property rights, and the therapeutic or commercial value of its drug candidates. Any of these risks, uncertainties and other factors may cause Lexicon’s actual results to be materially different from any future results expressed or implied by such forward-looking statements. Information identifying such important factors is contained under “Risk Factors” in Lexicon’s annual report on Form 10-K for the year ended December 31, 2018, as filed with the Securities and Exchange Commission. Lexicon undertakes no obligation to update or revise any such forward-looking statements, whether as a result of new information, future events or otherwise.

For Investor Inquiries:

Kimberly Lee, D.O.
Head of Investor Relations and Corporate Strategy
Lexicon Pharmaceuticals
(281) 863-3383
klee@lexpharma.com

For Media Inquiries:

Chas Schultz
Executive Director, Corporate Communications and Patient Advocacy
Lexicon Pharmaceuticals
(281) 863-3421
cschultz@lexpharma.comExhibit 10.1

 

EXECUTION VERSION

 

AMENDMENT NO 2. (INCREMENTAL FACILITY AMENDMENT)

 

AMENDMENT NO. 2 (INCREMENTAL FACILITY AMENDMENT), dated as of November 7, 2019 (this “Agreement”), by and among Atkins Intermediate Holdings, LLC, a Delaware limited liability company (“Holdings”), Conyers Park Acquisition Corp., a Delaware corporation (“Parent”), Atkins Nutritionals, Inc., a New York corporation (“ANI” or the “Administrative Borrower”), Atkins Nutritionals Holdings, Inc., a Delaware corporation (“ANH”), Atkins Nutritionals Holdings II, Inc., a Delaware corporation (“ANH II”), NCP-ATK Holdings, Inc., a Delaware corporation (“NCP” and, together with ANH, ANHII and ANI, the “Borrowers” and, the Borrowers together with Holdings and Parent, the “Loan Parties”) and the financial institutions set forth on Schedule A hereto as Additional Term Lenders (the “2019 Incremental Term Loan Lenders”), and acknowledged by Barclays Bank PLC, as administrative agent (in such capacity, the “Administrative Agent”).

 

RECITALS:

 

WHEREAS, reference is hereby made to the (a) Credit Agreement, dated as of July 7, 2017, among the Borrowers, Holdings, Parent, the lenders party thereto from time to time (the “Lenders”), the Administrative Agent and the other parties thereto (as amended by that certain Repricing Amendment dated as of March 16, 2018 (the “Repricing Amendment”) and as further amended, restated, amended and restated, supplemented or otherwise modified prior to the date hereof, the “Credit Agreement”, and the Credit Agreement as amended by this Amendment, the “Amended Credit Agreement”) and (b) the Amended and Restated Commitment Letter, dated as of September 25, 2019 (the “Incremental Commitment Letter”); capitalized terms used (including in the preamble and recitals hereto) but not defined herein shall have the meanings assigned to such terms in the Credit Agreement or the Incremental Commitment Letter, as applicable;

 

WHEREAS, pursuant to that certain Stock and Unit Purchase Agreement by and among the Administrative Borrower, Voyage Holdings, LLC (“Voyage Holdings”), VMG Quest Blocker, Inc. (“Voyage Blocker” and, together with Voyage Holdings, the “Targets”) and the sellers identified therein, dated as of August 21, 2019 (together with the schedules and exhibits thereto, the “Quest Acquisition Agreement”), the Administrative Borrower will, directly or indirectly, acquire all of the outstanding equity interests of the Targets (the “Quest Acquisition”) in all material respects in accordance with the terms thereof;

 

WHEREAS, pursuant to and in accordance with Section 2.20 of the Credit Agreement, the Borrowers may establish an Incremental Term Facility by, among other things, entering into one or more Incremental Facility Amendments with Additional Term Lenders or existing Lenders;

 

WHEREAS, the 2019 Incremental Term Loan Lenders and the Borrowers wish to establish an Incremental Term Facility (the loans thereunder, the “2019 Incremental Term Loans”) on the terms set forth in this Agreement;

 

WHEREAS, proceeds of the 2019 Incremental Term Loans received by the Borrowers will be used to fund, among other things, (i) the payment of consideration pursuant to the terms and conditions of the Quest Acquisition Agreement, and the other payments contemplated by the Quest Acquisition Agreement, (ii) the repayment in full (or the termination, discharge or defeasance (or arrangements for the termination, discharge or defeasance)) of all outstanding indebtedness of the Targets and their subsidiaries under that certain Credit Agreement dated as of March 25, 2015, by and among Quest Nutrition, LLC, the lenders from time to time party thereto, and OneWest National Bank, as administrative agent, as such agreement has been amended, supplemented or otherwise modified through August 21, 2019 (the “Quest  Closing Refinancing”), (iii) fees, premiums and expenses incurred in connection with the foregoing and 

 

 

 

transactions related thereto (such fees and expenses, the “Quest Transaction Costs”), and (iv) working capital and general corporate purposes, including maintaining cash on the balance sheet of Holdings and its subsidiaries; and

 

WHEREAS, immediately after giving effect to the making of the 2019 Incremental Term Loans hereunder, Holdings, the Borrowers, the Administrative Agent and the Lenders party hereto (which shall constitute the Required Lenders under the Credit Agreement) desire to make further changes to the Credit Agreement pursuant to Section 9.02(b) thereof, including to increase the Applicable Rate with respect to the Initial Term Loans outstanding immediately prior to the date hereof (the “Existing Term Loans”) to equal the Applicable Rate with respect to the 2019 Incremental Term Loans;

 

NOW, THEREFORE, in consideration of the premises and agreements, provisions and covenants herein contained, the parties hereto agree as follows:

 

Each 2019 Incremental Term Loan Lender (i) confirms that it has received a copy of the Credit Agreement and the other Loan Documents and the exhibits thereto, together with copies of the most recent financial statements referred to in Section 5.01 of the Credit Agreement and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Agreement; (ii) agrees that it will, independently and without reliance upon the Administrative Agent, the Collateral Agent or any other Lender or Agent, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Amended Credit Agreement; (iii) appoints and authorizes the Administrative Agent and the Collateral Agent to take such action as agent on its behalf and to exercise such powers under the Amended Credit Agreement and the other Loan Documents as are delegated to the Administrative Agent or the Collateral Agent, as the case may be, by the terms thereof, together with such powers as are reasonably incidental thereto; and (iv) agrees that it will perform in accordance with their terms all of the obligations which by the terms of the Loan Documents are required to be performed by it as a Lender.  This Agreement shall constitute (i) the notice required to be delivered by the Borrower to the Administrative Agent pursuant to Section 2.20(a) of the Credit Agreement and (ii) an “Incremental Facility Amendment” for purposes of Section 2.20(d) of the Credit Agreement.

 

Notwithstanding any provision to the contrary herein or in the Credit Agreement, after giving effect to the amendment set forth below in Section 2 hereof to the definition of “Applicable Rate” in the Credit Agreement, the terms of the 2019 Incremental Term Loans (including without limitation the Applicable Rate, the principal payment terms applicable thereto and the maturity date thereof) shall be the same as the terms of the Existing Term Loans, and such 2019 Incremental Term Loans shall be deemed to be “Initial Term Loans” for all purposes of this Agreement, the Amended Credit Agreement and each other Loan Document and shall constitute one tranche with, and be the same Class as, the Initial Term Loans made on the Closing Date (including as modified pursuant to the Repricing Amendment).  Following the 2019 Incremental Amendment Funding Date (as defined below) and the funding of the 2019 Incremental Term Loans on the 2019 Incremental Amendment Funding Date, each reference to “Initial Term Loans” and “Initial Term Loans” shall include the 2019 Incremental Term Loans and each reference to “Lender” shall include the 2019 Incremental Term Loan Lenders hereunder, in each case, unless the context shall require otherwise.  Each of the parties hereto hereby agrees that, with the consent of the Administrative Borrower (not to be unreasonably withheld), the Administrative Agent may take any and all action as may be reasonably necessary to ensure that all amounts of such 2019 Incremental Term Loans, when originally made, are Initial Term Loans for all purposes under the Loan Documents and are included in each Borrowing of outstanding Initial Term Loans on a pro rata basis.  This may be accomplished at the discretion of the Administrative Agent by allocating a portion of each such 2019 Incremental Term Loans to each outstanding Eurodollar Loan that is a Term Loan of the same Class on a pro rata basis, even though  as a result thereof such 2019 Incremental Term Loans may effectively have a shorter Interest Period than 

 

2

 

the Term Loans included in the Borrowing of which they are a part (and notwithstanding any other provision of the Credit Agreement that would prohibit such an initial Interest Period).  The 2019 Incremental Term Loans shall not accrue interest for any period prior to the 2019 Incremental Amendment Funding Date and the Borrower shall not be required to pay interest on the 2019 Incremental Term Loans pursuant to Section 2.13 of the Credit Agreement for any period prior to the 2019 Incremental Amendment Funding Date.

 

Subject to satisfaction of the conditions set forth in Section 3 of this Agreement, each 2019 Incremental Term Loan Lender hereby agrees to make 2019 Incremental Term Loans as its portion of the Incremental Term Facility as set forth on Schedule A annexed hereto to the Borrowers on the Amendment No. 2 Effective Date (as defined below) on the following terms and conditions:

 

Section 1.                            Incremental Amendment.  Effective as of the Amendment No. 2 Effective Date, Holdings, the Borrower, the Administrative Agent and the Lenders party hereto (which constitute the Required Lenders under the Credit Agreement) agree pursuant to Section 2.20(d) and Section 9.02(b), as applicable, to amend the Credit Agreement as follows:

 

(a)                                 Section 1.01 of the Credit Agreement is amended to add the following definitions in appropriate alphabetical order:

 

“2019 Incremental Term Loan” means the Incremental Term Loans made on the Amendment No. 2 Effective Date in accordance with Section 2.20.

 

“Amendment No. 2” shall mean Amendment No. 2 (Incremental Facility Amendment), dated as of November 7, 2019, among the Borrowers, Holdings, Parent, the other Loan Parties party thereto, the Administrative Agent and the Additional Term Lenders party thereto.

 

“Amendment No. 2 Effective Date” shall mean the date on which the 2019 Incremental Term Loans are funded in accordance with Amendment No. 2 pursuant to Section 3 thereof.

 

“Quest Acquisition” has the meaning given to such term in Amendment No. 2.

 

“Quest Closing Refinancing” has the meaning given to such term in Amendment No. 2.

 

“Quest Transaction Costs” has the meaning given to such term in Amendment No. 2.

 

(b)                                 Section 1.01 of the Credit Agreement is amended to change the following definitions:

 

(i) The definition of “Applicable Rate” is amended by replacing clause (b) of such definition with following:

 

“(b) (i) prior to the Amendment No. 2 Effective Date, with respect to any Initial Term Loan that is an ABR Loan, 2.50% per annum, and with respect to any Initial Term Loan that is a Eurodollar Loan, 3.50% per annum, and (ii) on and after the Amendment No. 2 Effective Date, with respect to any Initial Term Loan that is an ABR Loan, 2.75% per annum, and with respect to any Initial Term Loan that is a Eurodollar Loan, 3.75% per annum:

 

(ii) Clause (g) of the definition of “Required Additional Debt Terms” is amended by (a) deleting the comma after the first reference to “Initial Term Loans” and replacing it with the word “and” and (b) deleting the words “and matures earlier than 12 months after the original maturity date of the Initial Term Loans”.

 

3

 

(c)                                  Section 2.10(a) of the Credit Agreement is hereby amended to read as follows

 

Subject to adjustment pursuant to paragraph (c) of this Section 2.10, the Borrower shall repay Initial Term Loans on the last day of each March, June, September and December (commencing on March 31, 2020) in the principal amount of Term Loans as follows (subject to reduction in accordance with the terms of Section 2.10(c) below); provided that if any such date is not a Business Day, such payment shall be due on the next preceding Business Day:

 

	
Payment Date
    	
 
    	
Amortization Payment
    	
 
    
	
March 31,   2020
    	
 
    	
$
    	
1,676,470.59
    	
 
    
	
June 30,   2020
    	
 
    	
$
    	
1,676,470.59
    	
 
    
	
September 30,   2020
    	
 
    	
$
    	
1,676,470.59
    	
 
    
	
December 31,   2020
    	
 
    	
$
    	
1,676,470.59
    	
 
    
	
March 31,   2021
    	
 
    	
$
    	
1,676,470.59
    	
 
    
	
June 30,   2021
    	
 
    	
$
    	
1,676,470.59
    	
 
    
	
September 30,   2021
    	
 
    	
$
    	
1,676,470.59
    	
 
    
	
December 31,   2021
    	
 
    	
$
    	
1,676,470.59
    	
 
    
	
March 31,   2022
    	
 
    	
$
    	
1,676,470.59
    	
 
    
	
June 30,   2022
    	
 
    	
$
    	
1,676,470.59
    	
 
    
	
September 30,   2022
    	
 
    	
$
    	
1,676,470.59
    	
 
    
	
December 31,   2022
    	
 
    	
$
    	
1,676,470.59
    	
 
    
	
March 31,   2023
    	
 
    	
$
    	
1,676,470.59
    	
 
    
	
June 30,   2023
    	
 
    	
$
    	
1,676,470.59
    	
 
    
	
September 30,   2023
    	
 
    	
$
    	
1,676,470.59
    	
 
    
	
December 31,   2023
    	
 
    	
$
    	
1,676,470.59
    	
 
    
	
March 31,   2024
    	
 
    	
$
    	
1,676,470.59
    	
 
    
	
June 30,   2024
    	
 
    	
$
    	
1,676,470.59
    	
 
    

 

(d)                                 Section 2.11(a)(i) of the Credit Agreement is amended to read as follows:

 

(i)  The Borrower shall have the right at any time and from time to time to prepay any Borrowing in whole or in part, without premium or penalty; provided that in the event that, on or prior to the date that is 12 months after the Amendment No. 2 Effective Date, the Borrower (x) makes any prepayment of Initial Term Loans in connection with any Repricing Transaction or (y) effects any amendment of this Agreement resulting in a Repricing Transaction or (z) makes a mandatory prepayment of Initial Term Loans pursuant to Section 2.11(c) in connection with a Prepayment Event described in clause (b) of the definition of “Prepayment Event” resulting in a Repricing Transaction, in either case, the Borrower shall pay to the Administrative Agent, for the ratable account of each of the applicable Term Lenders holding Initial Term Loans, (I) a prepayment premium of 1.00% of the principal amount of the Initial Term Loans being prepaid in  connection with such Repricing Transaction and (II) in the case of clause (y), an amount equal to 1.00% of the aggregate amount of the applicable Initial Term Loans of non-consenting Lenders 

 

4

 

outstanding immediately prior to such amendment that are subject to an effective pricing reduction pursuant to such amendment.

 

(e)                                  Section 2.12 of the Credit Agreement is amended to incorporate the following clause (e):

 

The Borrower agrees to pay on the Amendment No. 2 Effective Date to each 2019 Incremental Term Loan Lender party to Amendment No. 2 as an 2019 Incremental Term Loan Lender on the Amendment No. 2 Effective Date, as fee compensation for the funding of such 2019 Incremental Term Loan Lender’s 2019 Incremental Term Loan, a closing fee in an amount equal to 0.50% of the stated principal amount of such 2019 Incremental Term Lender’s 2019 Incremental Term Loan.  Such fees shall be payable to each such 2019 Incremental Term Loan Lender out of the proceeds of such 2019 Incremental Term Loan Lender’s 2019 Incremental Term Loan as and when funded on the Amendment No. 2 Effective Date and may be treated (and reported) by the Borrower and 2019 Incremental Term Loan Lenders as a reduction in issue price of the 2019 Incremental Term Loans for U.S. federal, state and local income tax purposes.  Such closing fee will be in all respects fully earned, due and payable on the Amendment No. 2 Effective Date and non-refundable and non-creditable thereafter.

 

(f)                                   Section 2.20(b)(i) of the Credit Agreement is amended to replace the first proviso thereto with the following:

 

provided that, only in the case of any Incremental Term Loans which are secured on a pari passu basis with the Initial Term Loans and ranking pari passu with the Initial Term Loans in right of payment, in the event that the Effective Yield for any such Incremental Term Loans is greater than the Effective Yield for the Initial Term Loans by more than 0.50% per annum, then the Effective Yield for the Initial Term Loans shall be increased to the extent necessary so that the Effective Yield for the Initial Term Loans is equal to the Effective Yield for such Incremental Term Loans minus 0.50% per annum;

 

(g)                                  Section 5.10 of the Credit Agreement is amended by inserting the following at the end of such Section:  “The proceeds of the 2019 Incremental Term Loans made on the Amendment No. 2 Effective Date pursuant to Amendment No. 2 shall be used to (a) fund the Quest Acquisition, (b) pay the Quest Transaction Costs, (c) fund the Quest Closing Refinancing and (d) provide funding for working capital, general corporate purposes and other purposes not prohibited by the Credit Agreement.”

 

(h)                                 Section 6.04(c) of the Credit Agreement is amended to add the following proviso at the end thereof:

 

; provided that at the time any such Investment is made pursuant to this Section 6.04(c) by a Loan Party in a non-Loan Party, the aggregate outstanding amount of such Investments by Loan Parties in non-Loan Parties made pursuant to this Section 6.04(c), following the Amendment No. 2 Effective Date, shall not exceed the greater of (A) $100,000,000 and (B) 66% of Consolidated EBITDA for the Test Period then last ended, at the time of making such Investment (it being understood and agreed that to the extent subsequent to any such Investment a non-Loan Party shall become a Loan Party, then such Investment shall not count as outstanding for purposes of this proviso);

 

(i)                                     Section 6.04(bb) of the Credit Agreement is amended to add the following proviso at the end thereof:

 

5

 

provided that such Investments pursuant to clause (B) of this Section 6.04(bb) shall only be permitted to the extent that at the time of any such Investment and after giving effect thereto, on a Pro Forma Basis, the Total Net Leverage Ratio is no greater than 5.00 to 1.00 (it being understood and agreed that to the extent subsequent to any such Investment a non-Loan Party shall become a Loan Party, then such Investment shall not count as outstanding for purposes of this proviso);

 

Section 2.                            Terms of the Incremental Term Loans.  The 2019 Incremental Term Loans made hereunder shall be subject to the following additional terms:

 

(a)                                 Applicable Rate.  For the avoidance of doubt, the Applicable Rate for ABR Loans or for Eurodollar Loans, as applicable, for the 2019 Incremental Term Loans shall mean, as of any date of determination, the applicable percentage per annum with respect to any Initial Term Loan as set forth in the definition of “Applicable Rate” in the Amended Credit Agreement.  All Interest Periods applicable to Initial Term Loans shall continue in effect after the 2019 Incremental Amendment Funding Date. The 2019 Incremental Term Loans shall be initially incurred pursuant to a single Borrowing of Eurodollar Loans, with such Borrowing to be subject to (x) Interest Periods which commence on the 2019 Incremental Amendment Funding Date and end on the last day of the Interest Period applicable to the Initial Term Loans and (y) the LIBO Rate applicable to the Initial Term Loans. From and after the 2019 Incremental Amendment Funding Date to the first Interest Payment Date to occur after the 2019 Incremental Amendment Funding Date, the Borrower shall make to the Administrative Agent on such first Interest Payment Date (and the Administrative Agent shall distribute to the applicable Lenders in accordance with the Amended Credit Agreement) all payments in respect of interest on the 2019 Incremental Term Loans to the 2019 Incremental Term Lenders for amounts which have accrued on the 2019 Incremental Term Loans from the 2019 Incremental Amendment Funding Date to but excluding such Interest Payment Date.

 

(b)                                 Voluntary and Mandatory Prepayments; Maturity.

 

(i)                                     Scheduled installments of principal of the Incremental Term Increase set forth above shall be reduced in connection with any voluntary or mandatory prepayments of the Initial Term Loans in accordance with Sections 2.10 and 2.11 of the Amended Credit Agreement.

 

(ii)                                  The 2019 Incremental Term Loans will mature on the maturity date applicable to the Initial Term Loans, which date is July 7, 2024.

 

(c)                                  Ranking and Security.  The 2019 Incremental Term Loans shall rank equal in right of payment and equal in right of security with the Initial Term Loans.

 

Section 3.                            Conditions to Borrowing.  The obligations of the 2019 Incremental Term Loan Lenders to extend the 2019 Incremental Term Loans are subject solely to the satisfaction, or waiver by the 2019 Incremental Term Loan Lenders (the date of such satisfaction or waiver, the “Amendment No. 2 Effective Date”), of the following conditions:

 

(a)                                 Delivery of Documents. The Administrative Agent (or its counsel), on behalf of the 2019 Incremental Term Loan Lenders, shall have received each of the following, each dated the Amendment No. 2 Effective Date unless otherwise indicated or agreed to by the Administrative Agent:

 

6

 

(i)             a customary written opinion of Kirkland & Ellis LLP, counsel to the Borrowers, addressed to the 2019 Incremental Term Loan Lenders, in form and substance reasonably satisfactory to the Administrative Agent;

 

(ii)          to the extent such concept exists in the relevant jurisdiction, certificates attesting to the good standing of the Closing Date Loan Parties (as defined in the Incremental Commitment Letter) in their jurisdiction of formation or incorporation certified as of a recent date by the relevant Governmental Authority;

 

(iii)       a certificate, executed by any Responsible Officer of the Closing Date Loan Parties (A) certifying as to the names and signatures of each officer of the Closing Date Loan Parties executing and delivering this Agreement, (B) either (x) attaching the Organizational Documents of the Closing Date Loan Parties certified, if applicable, by the relevant authority of their jurisdiction of organization or (y) certifying that there has been no change to such Organizational Document since last delivered to the Administrative Agent and (C) attaching the resolutions of the Closing Date Loan Parties’ board of directors or other appropriate governing body approving and authorizing the execution, delivery and performance of this Agreement; and

 

(iv)      a certificate from the chief financial officer, chief operating officer or other officer with similar responsibilities of the Borrowers certifying as to the solvency of the Borrowers and their Subsidiaries on a consolidated basis after giving effect to this Agreement and the Quest Acquisition, substantially in the form of Exhibit P to the Credit Agreement.

 

(b)         Fees.

 

(i)             Each 2019 Incremental Term Loan Lender (or the Administrative Agent, on such 2019 Incremental Term Loan Lender’s behalf) shall have received all fees required to paid by the Borrowers on the Amendment No. 2 Effective Date pursuant to that certain First Lien Fee Letter, dated as of September 25, 2019 among the Administrative Borrower, Barclays Bank PLC, Credit Suisse Loan Funding LLC, Credit Suisse AG, Goldman Sachs Bank USA, Deutsche Bank AG New York Branch, Deutsche Bank Securities Inc., Bank of Montreal, BMO Capital Markets Corp., SunTrust Bank and SunTrust Robinson Humphrey, Inc. (the “Fee Letter”) (which amounts may, at the election of the Borrower, be offset against the proceeds of the 2019 Incremental Term Loans).

 

(ii)          The Borrowers shall have paid, upon the borrowing of the 2019 Incremental Term Loans (or substantially simultaneously with the borrowing of the 2019 Incremental Term Loans) (which amounts may, at the election of the Borrowers, be offset against the proceeds of the 2019 Incremental Term Loans) the reasonable out-of-pocket expenses of the Commitment Parties (as defined in the Incremental Commitment Letter) in connection with this Agreement and the transactions contemplated hereby and any other fees and expenses required to be paid on the Amendment No. 2 Effective Date pursuant to the Incremental Commitment Letter and with respect to expenses, to the extent invoiced at least three (3) business days prior to the Amendment No. 2 Effective Date.

 

(c)          Other Conditions.

 

(i)             The Quest Acquisition shall have been, or substantially concurrently with the initial borrowing under the Incremental Term Loans shall be, consummated in all material 

 

7

 

respects in accordance with the Quest Acquisition Agreement.  No provision of the Quest Acquisition Agreement shall have been waived, amended, consented to or otherwise modified in a manner material and adverse to the 2019 Incremental Term Loan Lenders without the consent of the 2019 Incremental Term Loan Lenders (not to be unreasonably withheld, delayed, denied or conditioned and provided that the 2019 Incremental Term Loan Lenders shall be deemed to have consented to such waiver, amendment, consent or other modification unless they shall object thereto within three (3) business days after notice of such waiver, amendment, consent or other modification); provided that (i) any reduction in the purchase price for the Quest Acquisition set forth in the Quest Acquisition Agreement of less than 15% shall be deemed to be not material and adverse to the interests of the 2019 Incremental Term Loan Lenders, and any reduction in the purchase price of 15% or more shall deemed to be material and adverse to the interests of the 2019 Incremental Term Loan Lenders unless applied to reduce the 2019 Incremental Term Loans in a manner to be determined by the Borrowers in consultation with the 2019 Incremental Term Loan Lenders, (ii) any increase in the purchase price set forth in the Quest Acquisition Agreement shall be deemed to be not material and adverse to the interests of the 2019 Incremental Term Loan Lenders so long as such purchase price increase is not funded with additional indebtedness of the Borrowers or their Restricted Subsidiaries (it being understood and agreed that no purchase price, working capital or similar adjustment provisions set forth in the Quest Acquisition Agreement shall constitute a reduction or increase in the purchase price) and (iii) any change to the definition of Target Material Adverse Effect (as defined in the Incremental Commitment Letter) shall be deemed materially adverse to the 2019 Incremental Term Loan Lenders and shall require the consent of the 2019 Incremental Term Loan Lenders (not to be unreasonably withheld, delayed, denied or conditioned).

 

(ii)          The Quest Closing Refinancing shall have been made or consummated prior to, or shall be made or consummated substantially concurrently with, the initial borrowing of the 2019 Incremental Term Loans.

 

(iii)       There shall have not occurred, since August 21, 2019, any Target Material Adverse Effect (as defined in the Incremental Commitment Letter) that is continuing.

 

(iv)      The Specified Representations (as defined in the Incremental Commitment Letter) shall be true and correct in all material respects as of the Amendment No. 2 Effective Date.

 

(v)         The Specified Acquisition Agreement Representations (as defined in the Incremental Commitment Letter) shall be true and correct in all material respects as of the Amendment No. 2 Effective Date (or, as of such earlier date if expressly made as of an earlier date), in each case without duplication of any materiality qualifier therein.

 

(vi)      The Administrative Agent shall have received (at least three (3) Business Days prior to the Amendment No. 2 Effective Date) all documentation and other information about the Targets, the Borrowers and each Guarantor on the Amendment No. 2 Effective Date as has been reasonably requested in writing at least ten (10) Business Days prior to the Amendment No. 2 Effective Date by the Administrative Agent that is required by regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including without limitation the PATRIOT Act and the Beneficial Ownership Regulation.

 

8

 

(vii)                 Holdings and the Borrowers shall have satisfied the Collateral and Guarantee Requirement and, substantially simultaneously with the consummation of the Quest Acquisition the Loan Guarantors shall have satisfied the Collateral and Guarantee Requirement; provided that if, notwithstanding the use by Holdings and the Borrower of commercially reasonable efforts or without undue burden or expense to cause the Collateral and Guarantee Requirement to be satisfied on the Amendment No. 2 Effective Date, the requirements thereof are not satisfied as of the Amendment No. 2 Effective Date, the satisfaction of such requirements shall not be a condition to the availability of the Incremental Term Loans on the Amendment No. 2 Effective Date (but shall be required to be satisfied as promptly as practicable after the Amendment No. 2 Effective Date and in any event within the period specified therefor in Schedule B attached hereto or such later date as the Administrative Agent may otherwise reasonably agree).

 

(viii)              The Administrative Agent shall have received a borrowing request relating to the 2019 Incremental Term Loans at least one Business Day prior to the Amendment No. 2 Effective Date.

 

Section 4.                            Effect on Loan Documents.  Except as specifically amended hereby, all Loan Documents shall continue to be in full force and effect and are hereby in all respects ratified and confirmed.  Without limiting the generality of the foregoing:

 

(a)                                 each 2019 Incremental Term Loan Lender acknowledges and agrees that upon the funding of the 2019 Incremental Term Loans, such 2019 Incremental Term Loan Lender shall be deemed to be a “Lender” and “Term Lender” under, and for all purposes of, the Amended Credit Agreement and the other Loan Documents, and shall be subject to and bound by the terms thereof, and shall perform all the obligations of and shall have all rights of a Lender thereunder pursuant to the terms of the Amended Credit Agreement.

 

(b)                                 except as set forth in this Agreement, the 2019 Incremental Term Loans shall otherwise be subject to the provisions of the Amended Credit Agreement and the other Loan Documents.

 

(c)                                  the execution, delivery and effectiveness of this Agreement shall not operate as a waiver of any right, power or remedy of the Administrative Agent, the Collateral Agent or any Lender under any Loan Document, nor constitute a waiver of any provision of any Loan Document or in any way limit, impair or otherwise affect the rights and remedies of the Administrative Agent, the Collateral Agent and the Lenders under any Loan Document;

 

(d)                                 on and after the Amendment No. 2 Effective Date, each reference in the Credit Agreement to “this Agreement,” “hereunder,” “hereof,” “herein” or words of like import referring to the Credit Agreement and each reference in any other Loan Document to “the Credit Agreement,” “thereunder,” “thereof,” “therein” or words of like import referring to the Credit Agreement shall mean and be a reference to the Credit Agreement as amended by this Agreement, and this Agreement and the Credit Agreement shall be read together and construed,  as a single instrument;

 

(e)                                  nothing herein shall be deemed to entitle the Borrowers (or any other Loan Party) to a further amendment to, or a consent, waiver, modification or other change of, any of the terms, conditions, obligations, covenants or agreements contained in the Amended Credit Agreement or any other Loan Document in similar or different circumstances; and

 

9

 

(f)                                   each of the parties hereto hereby acknowledges and agrees that this Agreement shall constitute a Loan Document for all purposes of the Credit Agreement and the other Loan Documents and (ii) the terms of this Agreement do not constitute a novation but, rather, an amendment of the terms of certain pre-existing Indebtedness and the Credit Agreement and the incurrence of certain new indebtedness, as evidenced by the Credit Agreement and this Agreement.  For the avoidance of doubt, each representation and warranty in the Credit Agreement with regard to the Loan Documents shall be deemed a representation and warranty with regard to this Agreement.

 

Section 5.                            Expenses.  The Borrowers agree to pay all reasonable out-of-pocket costs and expenses incurred by the Administrative Agent in connection with this Agreement and any other documents prepared in connection herewith and the consummation and administration of the transactions contemplated hereby, in each case to the extent required by (and subject to the limitation contained in) Section 9.03 of the Credit Agreement.

 

Section 6.                            Recordation of the New Loans.  Upon execution and delivery hereof, the Administrative Agent will record the 2019 Incremental Term Loans, as the case may be, made by each 2019 Incremental Term Loan Lender in the Register.

 

Section 7.                            Acknowledgement and Consent.  The Borrower and each other Loan Party party hereto hereby acknowledges that it has reviewed the terms and provisions of the Credit Agreement and this Agreement and consents to the amendment of the Credit Agreement effected pursuant to this Agreement, including without limitation, the making of the 2019 Incremental Term Loans.  The Borrower and each other Loan Party party hereto hereby confirms that each Loan Document to which it is a party or otherwise bound and all Collateral encumbered thereby will continue to guarantee or secure, as the case may be, to the fullest extent possible in accordance with the Loan Documents the payment and performance of all “Secured Obligations” under each of the Loan Documents to which it is a party (in each case as such terms are defined in the applicable Loan Document), including without limitation, the 2019 Incremental Term Loans.  The Borrower and each other Loan Party party hereto acknowledges and agrees that any of the Loan Documents (as they may be modified by this Agreement) to which it is a party or otherwise bound shall continue in full force and effect and that all of its obligations thereunder shall be valid and enforceable and shall not be impaired or limited by the execution or effectiveness of this Agreement other than to the extent expressly contemplated hereby.

 

Section 8.                            Amendment, Modification and Waiver.  This Agreement may not be amended, modified or waived except by an instrument or instruments in writing signed and delivered on behalf of each of the parties hereto.

 

Section 9.                            Entire Agreement.  This Agreement, the Credit Agreement, the Fee Letter and the other Loan Documents constitute the entire agreement among the parties with respect to the subject matter hereof and thereof and supersede all other prior agreements and understandings, both written and verbal, among the parties or any of them with respect to the subject matter hereof.

 

Section 10.                     GOVERNING LAW.  THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.

 

Section 11.                     Severability.  Any provision of this Agreement held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction.  Without limiting the foregoing provisions of this Section 10, if 

 

10

 

and to the extent that the enforceability of any provisions in this Agreement relating to Defaulting Lenders shall be limited by Debtor Relief Laws, as determined in good faith by the Administrative Agent, then such provisions shall be deemed to be in effect only to the extent not so limited.

 

Section 12.                     Counterparts; Integration; Effectiveness.  This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract.  This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.  Delivery of an executed counterpart of a signature page of this Agreement by facsimile or other electronic means shall be effective as delivery of an original executed counterpart of this Agreement.

 

11

 

IN WITNESS WHEREOF, each of the undersigned has caused its duly authorized officer to execute and deliver this Agreement as of the date first set forth above.

 

	
 
    	
BARCLAYS   BANK PLC
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
ATKINS   NUTRITIONALS, INC. 

NCP-ATK   HOLDINGS, INC. 

ATKINS   NUTRITIONALS HOLDINGS, INC. 

ATKINS   NUTRITIONALS HOLDINGS II, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    	
 
    

 

 

	
 
    	
ATKINS   INTERMEDIATE HOLDINGS, LLC

CONYERS   PARK ACQUISITION CORP.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    	
 
    

 

13

 

Acknowledged by:

 

	
 
    	
BARCLAYS BANK PLC,
   as Administrative Agent
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    

 

14

 

SCHEDULE A
 TO INCREMENTAL FACILITY AMENDMENT

 

	
Name of 2019 Incremental
   Term Loan Lenders
    	
 
    	
2019 Incremental Term
   Loan Commitment
    	
 
    
	
Barclays Bank PLC
    	
 
    	
$
    	
460,000,000
    	
 
    
	
Total: 
    	
 
    	
$
    	
460,000,000

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