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Exhibit 10.1

AMENDED AND RESTATED EMPLOYEE MATTERS AGREEMENT

This AMENDED AND RESTATED EMPLOYEE MATTERS AGREEMENT (this “Agreement”), dated as of August 18, 2022, is entered into by and among Ligand Pharmaceuticals Incorporated, a Delaware corporation (the “Company”), OmniAb, Inc., a Delaware corporation and a wholly owned subsidiary of the Company (“SpinCo”), Avista Public Acquisition Corp. II, a Cayman Islands exempted company (which will migrate to and domesticate as a Delaware corporation) (“Parent”), and Orwell Merger Sub Inc., a Delaware corporation and wholly owned Subsidiary of Parent (“Merger Sub”). “Party” or “Parties” means the Company, SpinCo, Parent or Merger Sub, individually or collectively, as the case may be. Capitalized terms used in this Agreement, but not otherwise defined in this Agreement, the Separation Agreement or the Merger Agreement, shall have the meaning set forth in Section 1.1.

W I T N E S S E T H:

WHEREAS, the Company, acting through its direct and indirect Subsidiaries, currently conducts the Company Retained Business and the SpinCo Business;

WHEREAS, the Company Board previously determined that it is appropriate, desirable and in the best interests of the Company and its stockholders to separate the Company into two separate companies, one for each of (i) the Company Retained Business, which shall be owned and conducted, directly or indirectly, by the Company and its Subsidiaries (other than SpinCo and its Subsidiaries) and (ii) the SpinCo Business, which shall be owned and conducted, directly or indirectly, by SpinCo and its Subsidiaries, in the manner contemplated by the Separation and Distribution Agreement by and among the Parties, dated as of March 23, 2022 (the “Separation Agreement”) and the other Transaction Documents; 

WHEREAS, following the Domestication and the Separation and pursuant to the Merger Agreement, Merger Sub shall merge with and into SpinCo and SpinCo will be the surviving corporation and a wholly owned Subsidiary of Parent;

WHEREAS, in connection with the transactions contemplated by the Separation Agreement and the Merger Agreement, the Parties previously entered into that certain Employee Matters Agreement, by and among the Parties, dated March 23, 2022 (the “Prior Agreement”) for the purpose of allocating assets, Liabilities and responsibilities with respect to certain employee matters and employee compensation and benefit plans and programs among them and to address certain other employment-related matters; and

WHEREAS, the Parties desire to amend and restate the terms of the Prior Agreement in their entirety as set forth herein.

NOW, THEREFORE, in consideration of the foregoing and the mutual agreements, provisions and covenants contained in this Agreement, the Parties hereby agree as follows:

 

Article I
DEFINITIONS AND INTERPRETATION

1.1       General. As used in this Agreement, the following terms shall have the following meanings:
(a)“401(k) Plan Transition Date” shall mean (i) December 31 of the calendar year in which the Distribution Time occurs, or (ii) such earlier date as mutually agreed by the Parties.
(b)“Adjusted Parent Equity Award” shall mean an Adjusted Parent Option, Adjusted Parent RSU Award or Adjusted Parent PSU Award.

(c)“Adjusted Parent Option” shall have the meaning set forth in Section 4.2(d).

(d)“Adjusted Parent PSU Award” shall have the meaning set forth in Section 4.4(g).

(e)“Adjusted Parent RSU Award” shall have the meaning set forth in Section 4.3(d).
(f)“Agreement” shall have the meaning set forth in the Preamble.
(g)“Benefit Plan” shall mean an “employee benefit plan” (within the meaning of Section 3(3) of ERISA but regardless of whether such plan is subject to ERISA) and each compensation plan, program, agreement or arrangement, including each pension, retirement, profit sharing, 401(k), severance, health and welfare, disability, deferred compensation, employment, termination, change-in-control, retention, fringe benefit, stock purchase, cash bonus or equity-based incentive or other benefit plan, program, agreement, policy or other arrangement, in each case, that is or was maintained for the benefit of current and/or former directors, officers, consultants or employees.
(h)“Code” means the Internal Revenue Code of 1986, as amended, or any successor federal income tax law. Reference to a specific Code provision also includes any proposed, temporary or final regulation in force under that provision.

(i)“Company” shall have the meaning set forth in the Preamble.
(j)“Company 2021 TSR PSU Award” shall mean a Company PSU Award granted in 2021 (or portion thereof) the vesting of which is tied to the Company’s total shareholder return for the three-year performance period ending December 31, 2023.
(k) “Company 401(k) Plan” shall mean the Company’s Section 401(k) Savings/Retirement Plan.
(l)“Company Allocation Factor” shall mean the quotient obtained by dividing (i) the Company Post-Adjustment Stock Value, by (ii) the sum of (A) the Company Post-Adjustment Stock Value, plus (B) the product of (x) the SpinCo Stock Value times (y) the Distribution Ratio.
(m)“Company Benefit Plan” shall mean any Benefit Plan sponsored, maintained or contributed to (or required to be contributed to) by any member of the Company Group that (i) is or has been maintained, sponsored, contributed to or entered into by any member of the Company Group for the benefit of any SpinCo Employee or SpinCo Independent Contractor or for which any member of the SpinCo Group could have any Liability and (ii) that is not a SpinCo Benefit Plan.
(n)“Company Employee” shall mean each employee of the Company or any of its Subsidiaries or Affiliates who does not qualify as a SpinCo Employee.
(o)“Company Employee List” shall have the meaning set forth in Section 2.2(d).

 

(p)“Company Equity Award” shall mean a Company Option, Company RSU Award or a Company PSU Award.
(q)“Company Equity Plans” shall mean the Company’s 2002 Stock Incentive Plan, as amended from time to time, that certain Non-Qualified Employment Inducement Stock Option Agreement dated April 8, 2022, between the Company and Kurt Gustafson, and such other equity plans as the Company may adopt prior to the Distribution Time in accordance with the terms of the Merger Agreement.
(r)“Company ESPP” shall mean the Company’s 2002 Employee Stock Purchase Plan, as amended from time to time.
(s)“Company Group” shall mean (i) the Company, the Company Retained Business and each Person that is a direct or indirect Subsidiary of the Company as of immediately following the Distribution Time and (ii) each Business Entity that becomes a Subsidiary of the Company after the Distribution Time.
(t)“Company Independent Contractor” shall mean each individual who is engaged as an independent contractor or consultant by the Company or any of its Subsidiaries or Affiliates who does not qualify as a SpinCo Independent Contractor.
(u)“Company Individual Agreement” shall mean each Benefit Plan sponsored, maintained entered into or contributed to by the Company under which no more than one service provider is eligible to receive compensation and/or benefits.
(v)“Company Option” shall mean an option to purchase shares of Company Common Stock granted pursuant to the Company Equity Plans.
(w)“Company Post-Adjustment Stock Value” shall mean the average closing price per share of Company Common Stock trading on an ex-dividend basis on the Nasdaq Stock Market during regular trading hours for the five (5) trading days ending on the date on which the Distribution Time occurs (or, if the Distribution Time occurs prior to regular trading hours, for the five (5) trading days ending on the date prior to the date on which the Distribution Time occurs). 

(x)“Company Pre-Adjustment Stock Value” shall mean the average closing price per share of Company Common Stock trading “regular way with due bills” (if applicable) on the Nasdaq Stock Market during regular trading hours for the five (5) trading days ending on the date on which the Distribution Time occurs (or, if the Distribution Time occurs prior to regular trading hours, for the five (5) trading days ending on the date prior to the date on which the Distribution Time occurs).

(y)“Company PSU Award” shall mean a performance stock unit award granted pursuant to the Company Equity Plans.
(z)“Company Ratio” shall mean the quotient obtained by dividing the Company Pre-Adjustment Stock Value by the Company Post-Adjustment Stock Value.

(aa)“Company RSU Award” shall mean a restricted stock unit award granted pursuant to the Company Equity Plans that vests solely based on the continued employment or service of the recipient.
(bb)    “Company Service Provider” shall mean a Company Employee, a Company Independent Contractor or a member of the Company Board.
(cc)      “Company Severance Plan” shall mean the Company’s Amended and Restated Severance Plan, as amended from time to time.
(dd)        “Cutoff Date” means March 2, 2022.

 

(ee)       “Distribution Ratio” shall mean the number of shares (and/or fraction of a share, expressed as a decimal) of SpinCo Common Stock to be distributed in respect of one share of Company Common Stock in the Distribution, as determined by the Company.
(ff)         “Distribution Time” shall mean the effective time of the Distribution pursuant to the Separation Agreement.
(gg)    “Effective Time” shall mean the “Effective Time” as defined in the Merger Agreement.
(hh)       “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended.
(ii)      “Former Company Service Provider” means (i) any individual (other than a SpinCo Employee or SpinCo Independent Contractor) who, as of the Distribution Time is a former employee or independent contractor of the Company or any of its Subsidiaries, or (ii) any individual who is a Company Employee or Company Independent Contractor as of the Distribution Time or thereafter who ceases to be an employee or independent contractor of the Company or any of its Subsidiaries following the Distribution Time.
(jj)       “Former SpinCo Service Provider” shall mean any individual who is a SpinCo Employee or SpinCo Independent Contractor as of the Distribution Time and thereafter ceases to be an employee or independent contractor of the SpinCo Group following the Distribution Time.
(kk)       “Merger Agreement” shall mean the Agreement and Plan of Merger, dated as of March 23, 2022, by and among the Company, SpinCo, Parent, and Merger Sub.
(ll)          “Parent” shall have the meaning set forth in the Preamble.
(mm)      “Parent Equity Plan” shall have the meaning set forth in Section 4.6.
(nn)      “Parent Equity Plan Share Reserve” shall have the meaning set forth in Section 4.6.
(oo)        “Parent ESPP” shall have the meaning set forth in Section 4.6.
(pp)        “Parent ESPP Share Reserve” shall have the meaning set forth in Section 4.6.
(qq)        “Party” and “Parties” shall have the meanings set forth in the Preamble.
(rr)       “Plan Transition Date” shall mean the date that is the earlier to occur of (i) January 1, 2023 or (ii) such earlier date as agreed among the Parties.
(ss)        “Prior Agreement” shall have the meaning set forth in the Preamble.
(tt)         “SpinCo” shall have the meaning set forth in the Preamble.
(uu)       “SpinCo 401(k) Plan” shall have the meaning set forth in Section 3.3(b).
(vv)     “SpinCo Allocation Factor” shall mean the quotient obtained by dividing (i) the product of (A) the SpinCo Stock Value times (B) the Distribution Ratio, by (ii) the sum of (A) the Company Post-Adjustment Stock Value, plus (B) the product of (x) the SpinCo Stock Value times (y) the Distribution Ratio.

 

(ww)   “SpinCo Benefit Plan” shall mean any Benefit Plan sponsored, maintained or contributed to exclusively by any member of the SpinCo Group.
(xx)     “SpinCo Common Stock” shall mean the common stock, par value $0.001 per share, of SpinCo.

(yy)      “SpinCo Employee” shall mean each individual listed on the SpinCo Employee List.
(zz)        “SpinCo Employee List” shall have the meaning set forth in Section 2.2(d).
(aaa)    “SpinCo Equity Award” shall mean a SpinCo Option, SpinCo RSU Award or SpinCo PSU Award.
(bbb)      “SpinCo Equity Plans” shall have the meaning set forth in Section 4.5.
(ccc)     “SpinCo Group” shall mean SpinCo and each SpinCo Entity as of the Distribution Time (but after giving effect to the Separation), and, following the Effective Time, Parent and each Person that becomes a Subsidiary of Parent or SpinCo thereafter, provided, however, that for the avoidance of doubt, no member of the Company Group shall be treated as a member of the SpinCo Group.
(ddd)    “SpinCo Independent Contractor” shall mean each individual engaged as an independent contractor or consultant by the SpinCo Group as of the Distribution Time.
(eee)   “SpinCo Individual Agreement” shall mean each Benefit Plan sponsored, maintained entered into or contributed to by SpinCo under which no more than one service provider is eligible to receive compensation and/or benefits.
(fff)      “SpinCo Option” shall mean an option to purchase shares of SpinCo Common Stock issued pursuant to the SpinCo Equity Plans as part of an equitable adjustment to a Company Option made in connection with the Distribution.
(ggg)    “SpinCo PSU Award” shall mean an award of restricted stock units covering SpinCo Common Stock issued pursuant to the SpinCo Equity Plans as part of an equitable adjustment to a Company PSU Award made in connection with the Distribution.
(hhh)     “SpinCo Ratio” shall mean the quotient obtained by dividing the Company Pre-Adjustment Stock Value by the SpinCo Stock Value.
(iii)     “SpinCo RSU Award” shall mean an award of restricted stock units covering SpinCo Common Stock that vests solely based on the continued employment or service of the recipient issued pursuant to the SpinCo Equity Plans as part of an equitable adjustment to a Company RSU Award made in connection with the Distribution.
(jjj)      “SpinCo Service Provider” shall mean a SpinCo Employee, a SpinCo Independent Contractor or a member of the board of directors of SpinCo, or any individual independent contractor, consultant or director who is reasonably expected to become a SpinCo Service Provider prior to the Distribution Time.
(kkk)    “SpinCo Severance Plan” shall have the meaning set forth in Section 5.2(a).
(lll)     “SpinCo Stock Value” shall mean (i) the Base Exchange Ratio, multiplied by (ii) $10 per share.
(mmm) “Separation Agreement” shall have the meaning set forth in the Recitals.

 

1.2       References; Interpretation. References in this Agreement to any gender include references to all genders, and references to the singular include references to the plural and vice versa. Unless the context otherwise requires, the words “include”, “includes” and “including” when used in this Agreement shall be deemed to be followed by the phrase “without limitation”. Unless the context otherwise requires, references in this Agreement to Articles, Sections, Annexes, Exhibits and Schedules shall be deemed references to Articles and Sections of, and Annexes, Exhibits and Schedules to, this Agreement. Unless the context otherwise requires, the words “hereof”, “hereby” and “herein” and words of similar meaning when used in this Agreement refer to this Agreement in its entirety and not to any particular Article, Section or provision of this Agreement. The words “written request” when used in this Agreement shall include email. Reference in this Agreement to any time shall be to New York City, New York time unless otherwise expressly provided herein. Unless the context requires otherwise, references in this Agreement to the “Company” shall also be deemed to refer to the applicable member of the Company Group, references to “SpinCo” shall also be deemed to refer to the applicable member of the SpinCo Group (including, with respect to periods of time following the Effective Time, Parent), and, in connection therewith, any references to actions or omissions to be taken, or refrained from being taken, as the case may be, by the Company or SpinCo shall be deemed to require the Company, SpinCo or Parent, as the case may be, to cause the applicable members of the Company Group or the SpinCo Group, respectively, to take, or refrain from taking, any such action. In the event of any inconsistency or conflict which may arise in the application or interpretation of any of the definitions set forth in Section 1.1, for the purpose of determining what is and is not included in such definitions, any item explicitly included on a Schedule referred to in any such definition shall take priority over any provision of the text thereof.

Article II
GENERAL PRINCIPLES

2.1Nature of Liabilities. All Liabilities assumed or retained by a member of the Company Group under this Agreement shall be “Ligand Retained Liabilities” for purposes of the Separation Agreement. All Liabilities assumed or retained by a member of the SpinCo Group under this Agreement shall be “OmniAb Liabilities” for purposes of the Separation Agreement. 
2.2Transfers of Employees and Independent Contractors Generally.  
(a)Schedule A attached hereto sets forth a complete list of each Company Employee as of March 23, 2022 (the “Company Employee List”), and Schedule B attached hereto sets forth a complete list of each employee of the Company Group whose employment will be transferred to SpinCo prior to the Distribution Time (the “SpinCo Employee List”).  The Company and SpinCo shall mutually update the Company Employee List and the SpinCo Employee List from time to time between the date hereof and the Distribution Time to remove terminated employees and to add any new Company Employees or SpinCo Employees hired following March 23, 2022.

(b)All SpinCo Employees who are employed by the SpinCo Group as of the Distribution Time shall continue to be employees of the SpinCo Group immediately after the Distribution Time. The Company and SpinCo will cooperate to cause each of the SpinCo Employees to be employed by a member of the SpinCo Group prior to the Distribution Time. 
(c)The Company and SpinCo will cooperate to cause the contract of any individual who is engaged as an independent contractor or consultant and who provides services on behalf of the SpinCo Business to the extent of such service, to be transferred to a member of the SpinCo Group prior to the Distribution Time.
(d)The Company Group and SpinCo Group agree to execute, and to seek to have the applicable SpinCo Employees execute, such documentation, if any, as may be necessary to reflect the transfers described in this Section 2.2.
2.3Assumption and Retention of Liabilities Generally.

 

(a)Except as pursuant to this Agreement, from and after the Distribution Time, the Company shall, or shall cause one or more members of the Company Group to, accept, assume (or, as applicable, retain) and perform, discharge and fulfill (i) all Liabilities under all Company Benefit Plans with respect to Company Employees, Former Company Service Providers and their respective dependents and beneficiaries (and any alternate payees in respect thereof), whenever incurred, unless this Agreement expressly provides for such Liabilities to be assumed by the SpinCo Group or subject to reimbursement by the SpinCo Group; (ii) all Liabilities with respect to the employment, service, termination of employment or termination of service of all Company Employees, Former Company Service Providers and their respective dependents and beneficiaries (and any alternate payees in respect thereof), in each case to the extent arising in connection with or as a result of employment with or the performance of services to any member of the Company Group; and (iii) all other Liabilities or obligations expressly assigned to or assumed by a member of the Company Group under this Agreement.
(b)Except as pursuant to this Agreement, from and after the Distribution Time, SpinCo shall, or shall cause one or more members of the SpinCo Group to, accept, assume (or, as applicable, retain) and perform, discharge and fulfill (i) all Liabilities under all SpinCo Benefit Plans, whenever incurred; (ii) all Liabilities with respect to the employment, service, termination of employment or termination of service of all SpinCo Employees, Former SpinCo Service Providers and SpinCo Independent Contractors and their respective dependents and beneficiaries (and any alternate payees in respect thereof), in each case to the extent arising in connection with or as a result of employment with or the performance of services to any member of the SpinCo Group or the Company Group; and (iii) all other Liabilities or obligations expressly assigned to or assumed by a member of the SpinCo Group under this Agreement.
(c)The Parties shall promptly reimburse one another, upon reasonable request of the Party requesting reimbursement and the presentation by such Party of such substantiating documentation as the other Party shall reasonably request, for the cost of any obligations or Liabilities satisfied or assumed by the Party requesting reimbursement or its Affiliates that are, or that have been made pursuant to this Agreement, the responsibility of the other Parties or any of its Affiliates.
(d)Notwithstanding any provision of this Agreement or the Separation Agreement to the contrary, SpinCo shall, or shall cause one or more members of the SpinCo Group to, accept, assume (or, as applicable, retain) and perform, discharge and fulfill all Liabilities that have been accepted, assumed or retained under this Agreement.
2.4Treatment of Compensation and Benefit Plans; Terms of Employment. Except as otherwise (i) required by applicable Law, or (ii) expressly provided for in this Agreement, for a period of twelve (12) months following the Distribution Time (or if shorter, during the period of employment), SpinCo shall, or shall cause a member of the SpinCo Group to provide or cause to be provided to each SpinCo Employee (A) a base salary or hourly wage rate, as applicable, that is at least equal to the base salary or hourly wage rate provided to such SpinCo Employee immediately prior to the Distribution Time, (B) subject to Section 5.1, a cash incentive or sales commission opportunity no less favorable than the cash incentive or sales commission opportunity in effect for such SpinCo Employee, if any, immediately prior to the Distribution Time, (C) health, welfare and retirement benefits that are substantially similar in the aggregate to those provided to such SpinCo Employee immediately prior to the Distribution Time, and (D) severance benefits (including severance payments, transition payments and continued health coverage) that are substantially similar to those provided to such SpinCo Employee immediately prior to the Distribution Time. 
2.5Participation in Company Benefit Plans. Except as otherwise provided pursuant to this Agreement or as required by Applicable Law, effective no later than the Plan Transition Date, (i) SpinCo and each member of the SpinCo Group, to the extent applicable, shall cease to be a participating company in any Company Benefit Plan and (ii) each then active SpinCo Employee shall cease to participate in, be covered by, accrue benefits under, be eligible to contribute to or have any rights under any Company Benefit Plan (except to the extent of previously accrued obligations that remain a Liability of any member of the Company Group pursuant to this Agreement).

 

2.6Service Recognition.
(a)From and after the Distribution Time, and in addition to any applicable obligations under applicable Law, SpinCo shall, and shall cause each member of the SpinCo Group to, give each SpinCo Employee full credit for purposes of eligibility, vesting, and determination of level of benefits under any SpinCo Benefit Plan for such SpinCo Employee’s prior service with any member of the Company Group or SpinCo Group or any predecessor thereto, to the same extent such service was recognized by the applicable Company Benefit Plan; provided, that, such service shall not be recognized to the extent it would result in the duplication of benefits or accruals under any defined benefit pension plan.
(b)Except to the extent prohibited by applicable Law, as soon as administratively practicable on or after the Plan Transition Date with respect to any applicable SpinCo Benefit Plan that is a health or welfare benefit plan: (i) SpinCo shall waive or cause to be waived all limitations as to preexisting conditions or waiting periods with respect to participation and coverage requirements applicable to each SpinCo Employee under any SpinCo Benefit Plan in which SpinCo Employees participate (or are eligible to participate) to the same extent that such conditions and waiting periods were satisfied or waived under an analogous Company Benefit Plan, and (ii) SpinCo shall use commercially reasonable efforts to provide or cause each SpinCo Employee to be provided with credit for any co-payments, deductibles or other out-of-pocket amounts paid during the plan year in which the SpinCo Employees become eligible to participate in the SpinCo Benefit Plans in satisfying any applicable co-payments, deductibles or other out-of-pocket requirements under any such plans for such plan year.
2.7WARN. Notwithstanding anything set forth in this Agreement to the contrary, none of the transactions contemplated by or undertaken by this Agreement is intended to and shall not constitute or give rise to an “employment loss” or employment separation within the meaning of the federal Worker Adjustment and Retraining Notification (WARN) Act, or any other federal, state, or local law or legal requirement addressing mass employment separations.
2.8No Termination; No Change in Control. No Company Employee or SpinCo Employee shall be deemed to (a) terminate employment or service solely by virtue of the consummation of the Distribution, any transfer of employment or other service relationship contemplated hereby, or any related transactions or events contemplated by the Separation Agreement, this Agreement, the Merger Agreement, or any other Transaction Document, or (b) become entitled to any severance, termination, separation or similar rights, payments or benefits, whether under any Benefit Plan, the Company Equity Plans, the SpinCo Equity Plans, the Company Severance Plan, any Company Individual Agreement or any other compensatory agreement or arrangement maintained by the Company or SpinCo or otherwise, in connection with any of the foregoing.  The Parties hereto agree that none of the transactions contemplated by the Separation Agreement, the Merger Agreement, or this Agreement, constitutes a “change in control,” “change of control” or similar term, as applicable, within the meaning of any Benefit Plan, the Company Equity Plans, the SpinCo Equity Plans, the Company Severance Plan, any Company Individual Agreement or any other compensatory agreement or arrangement maintained by the Company or SpinCo.

Article III
CERTAIN BENEFIT PLAN PROVISIONS

3.1    Health and Welfare Benefit Plans.
(a)(i) Effective as of the Plan Transition Date, the participation of each then-active SpinCo Employee who is a participant in a Company Benefit Plan shall automatically cease and (ii) SpinCo shall or shall cause a member of the SpinCo Group to (A) have in effect, no later than the Business Day immediately prior to the Plan Transition Date, SpinCo Benefit Plans providing health and welfare benefits for the benefit of each such SpinCo Employee with terms that are substantially similar to those provided to the applicable SpinCo Employee immediately prior to the date on which such SpinCo Benefit Plans become effective; and (B) effective on and after the Plan Transition Date, fully perform, pay and discharge all claims of SpinCo Employees or Former SpinCo Service Providers, including but not 

 

limited to any claims incurred under any Company Benefit Plan (to the extent not fully covered by insurance) on or prior to the date on which such SpinCo Benefit Plans become effective, that remain unpaid as of the date on which such SpinCo Benefit Plans become effective, regardless of whether any such claim was presented for payment prior to, on or after such date.
(b)Without duplication of amounts otherwise already covered in this Agreement or the Transition Services Agreement, the applicable member of the SpinCo Group shall reimburse the Company or the applicable Company Benefit Plan in the ordinary course of business consistent with past practice for any premiums and its proportionate share of any administrative or services costs related to SpinCo Employees or Former SpinCo Service Providers paid by a Company Benefit Plan (whether prior to or after the Distribution Time) and not charged back to the appropriate and applicable member of the SpinCo Group prior to the Plan Transition Date.
(c)Notwithstanding anything to the contrary in this Section 3.1, SpinCo Employees will continue to be considered to be “participants” in any Company Benefit Plan that is either a health care flexible spending account program or a dependent-care flexible spending account program for the duration of any grace period and/or claims run-out period following the calendar year in which the Plan Transition Date occurs (in either case, solely as provided under the terms of such Company Benefit Plans), provided that such SpinCo Employees will be considered to be participants solely for purposes of utilizing such grace period and/or claims run-out period; will not be allowed to make any deferral or contribution elections under such Company Benefit Plans beyond the Plan Transition Date; and will cease to be participants in such Company Benefit Plans upon the expiration of any grace period and/or claims run-out period.  Effective as of the Plan Transition Date, SpinCo shall establish a health care flexible spending account program or a dependent-care flexible spending account program for SpinCo Employees.
3.2       Disability.
(a)To the extent any SpinCo Employee is, as of the Plan Transition Date, receiving payments as part of any short-term disability program that is part of a Company Benefit Plan, such SpinCo Employee’s rights to continued short-term disability benefits (a) will end under any Company Benefit Plan as of the Plan Transition Date; and (b) all remaining rights will be recognized under a SpinCo Benefit Plan as of the Plan Transition Date, and the remainder (if any) of such SpinCo Employee’s short-term disability benefits will be paid by a SpinCo Benefit Plan. In the event that any SpinCo Employee described above shall have any dispute with the short-term disability benefits they are receiving under a SpinCo Benefit Plan, any and all appeal rights of such employees shall be realized through the SpinCo Benefit Plan (and any appeal rights such SpinCo Employee may have under any Company Benefit Plan will be limited to benefits received and time periods occurring prior to the Plan Transition Date).  Any SpinCo Employee or Former SpinCo Service Provider who is receiving short-term disability benefits under a Company Benefit Plan as of the Plan Transition Date and thereafter becomes entitled to long-term disability benefits upon the expiration of such short-term disability period (whether under a Company Benefit Plan or SpinCo Benefit Plan), shall be provided long-term disability benefits under the long-term disability plan which is a Company Benefit Plan. 
(b)For any Former SpinCo Service Provider who is, as of the Distribution Time, receiving payments as part of any long-term disability program that is part of a Company Benefit Plan, and has been receiving payments from such plan for twelve (12) months or fewer before the Distribution Time, to the extent such Former SpinCo Service Provider may have any “return to work” rights under the terms of such Company Benefit Plan, such Former SpinCo Service Provider’s eligibility for re-employment shall be with SpinCo or a member of the SpinCo Group, subject to availability of a suitable position (with such availability to be determined in the sole discretion by SpinCo or the applicable member of the SpinCo Group), provided however that, notwithstanding the foregoing, no Former SpinCo Service Provider described in this subsection will be eligible for re-employment as described in this subsection after the first anniversary of the Distribution Time.
3.3       401(k) Plans.

(a)From the Distribution Time and continuing until the 401(k) Plan Transition Date, SpinCo shall become an “adopting employer” (as defined in the Company 401(k) Plan) and the Company 

 

401(k) Plan shall provide for the SpinCo Group to participate in the Company 401(k) Plan for the benefit of SpinCo Employees and Former SpinCo Service Providers, and the Company consents to such adoption and maintenance, in accordance with the terms of the Company 401(k) Plan.

(b)(i)     Effective no later than the 401(k) Plan Transition Date, SpinCo shall establish a defined contribution savings plan and related trust that satisfies the requirements of Sections 401(a) and 401(k) of the Code in which each SpinCo Employee who participated in the Company 401(k) Plan immediately prior thereto shall be eligible to participate (the “SpinCo 401(k) Plan”), with terms that are substantially similar to those provided by the Company 401(k) Plan immediately prior to the date on which such SpinCo 401(k) Plan become effective, (ii) the active participation of each SpinCo Employee who is a participant in the Company 401(k) Plan shall automatically cease effective upon the date on which the SpinCo 401(k) Plan becomes effective, and (iii) as soon as practicable after the SpinCo 401(k) Plan becomes effective, subject to the consent of the SpinCo 401(k) Plan administrator and reasonable proof of qualification of the Company 401(k) Plan, the Company shall cause the accounts (including any outstanding participant loan balances) in the Company 401(k) Plan attributable to SpinCo Employees and all of the assets in the Company 401(k) Plan related thereto to be transferred in-kind to the SpinCo 401(k) Plan.
(c)The Company shall retain all accounts and all assets and Liabilities relating to the Company 401(k) Plan in respect of each Former SpinCo Service Provider whose employment terminated prior to the 401(k) Plan Transition Date.
3.4       Chargeback of Certain Costs. Without duplication of amounts otherwise already covered in this Agreement or the Transition Services Agreement, nothing contained in this Agreement shall limit the Company’s ability to charge back any Liabilities that it incurs in respect of any SpinCo Service Provider under a Company Benefit Plan which is a retirement plan or health or welfare benefit plan to any of its operating companies in the ordinary course of business consistent with its past practices. Subject, and in addition, to the foregoing, the Company shall allocate and charge back to SpinCo or a member of the SpinCo Group (without duplication) its proportionate share of Liabilities (other than those arising from the Company’s or its agent’s gross misconduct or negligence) that the Company incurs by reason of the continued participation of SpinCo Employees, SpinCo Independent Contractors and Former SpinCo Service Providers in such Company Benefit Plans following the Distribution Time (which Liabilities shall, for the avoidance of doubt, be subject to reimbursement under Section 2.3(c) of this Agreement).

Article IV
EQUITY INCENTIVE AWARDS

4.1       Equity Awards.  The Parties shall use commercially reasonable efforts to take all actions necessary or appropriate so that each outstanding Company Equity Award and SpinCo Equity Award held by any individual shall be adjusted as set forth in this Article IV and in accordance with applicable Law, the applicable equity plan and the applicable award agreement. The adjustments set forth below shall be the sole adjustments made with respect to Company Equity Awards in connection with the Distribution.  The adjustments set forth below shall be the sole adjustments made with respect to SpinCo Equity Awards in connection with the Merger and are subject to the terms and conditions of the Merger Agreement.

4.2       Treatment of Company Options. 

(a)Company Options Other than (i) Company Options Held by Former Company Service Providers or (ii) Company Options Granted on or following the Cutoff Date.  As determined by the Compensation Committee of the Company Board (the “Company Compensation Committee”) pursuant to its authority under the Company Equity Plans, each Company Option outstanding as of immediately prior to the Distribution Time, other than (x) any Company Option held by a Former Company Service Provider and (y) any Company Option granted on or following the Cutoff Date, shall, 

 

immediately prior to the Distribution Time, be converted into both a SpinCo Option and a Company Option and shall otherwise be, subject to Section 4.2(d) below, subject to the same terms and conditions after the Distribution Time as the terms and conditions applicable to such Company Option immediately prior to the Distribution Time; provided, however, that from and after the Distribution Time:
 
(i)     Shares Subject to Post-Distribution Company Option.  The number of shares of Company Common Stock subject to such Company Option shall be equal to the product obtained by multiplying (I) the number of shares of Company Common Stock subject to such Company Option immediately prior to the Distribution Time by (II) the Company Ratio by (III) the Company Allocation Factor, and rounding such result down to the nearest whole share.

(ii)     Shares Subject to Post-Distribution SpinCo Option.  The number of shares of SpinCo Common Stock subject to such SpinCo Option shall be equal to the product obtained by multiplying (I) the number of shares of Company Common Stock subject to the Company Option immediately prior to the Distribution Time by (II) the SpinCo Ratio by (III) the SpinCo Allocation Factor, and rounding such result down to the nearest whole share.  Each SpinCo Option that is outstanding as of the Effective Time will be further adjusted to reflect the Transactions as set forth in Section 4.2(d) below.

(iii)     Exercise Price of Post-Distribution Company Option. The per share exercise price of such Company Option shall be equal to the quotient obtained by dividing (I) the per share exercise price of such Company Option immediately prior to the Distribution Time by (II) the Company Ratio, and rounding such quotient up to the nearest whole cent.

(iv)     Exercise Price of Post-Distribution SpinCo Option. The per share exercise price of such SpinCo Option shall be equal to the quotient obtained by dividing (I) the per share exercise price of the Company Option immediately prior to the Distribution Time by (II) the SpinCo Ratio, and rounding such quotient up to the nearest whole cent.  Each SpinCo Option that is outstanding as of the Effective Time will be further adjusted to reflect the Transactions as set forth in Section 4.2(d) below.

(b)Company Options (i) Held by Former Company Service Providers or (ii) Granted on or following the Cutoff Date and Held by Company Service Providers. As determined by the Company Compensation Committee pursuant to its authority under the Company Equity Plans, each Company Option outstanding as of immediately prior to the Distribution Time (x) that is held by a Former Company Service Provider or (y) that was granted on or following the Cutoff Date and is held by a Company Service Provider, shall be subject to the same terms and conditions after the Distribution Time as the terms and conditions applicable to such Company Option immediately prior to the Distribution Time; provided, however, that from and after the Distribution Time:

(i)     Shares Subject to Post-Distribution Company Option.  The number of shares of Company Common Stock subject to such Company Option shall be equal to the product obtained by multiplying (A) the number of shares of Company Common Stock subject to such Company Option immediately prior to the Distribution Time by (B) the Company Ratio, and rounding such product down to the nearest whole share.

(ii)     Exercise Price of Post-Distribution Company Option. The per share exercise price of such Company Option shall be equal to the quotient obtained by dividing (A) the per share exercise price of such Company Option immediately prior to the Distribution Time by (B) the Company Ratio, and rounding such quotient up to the nearest whole cent.

(c)Company Options Granted on or following the Cutoff Date and Held by SpinCo Service Providers. As determined by the Company Compensation Committee pursuant to its authority under the Company Equity Plans, each Company Option outstanding as of immediately prior to the Distribution Time that was granted on or following the Cutoff Date and is held by a SpinCo Service Provider, shall, immediately prior to the Distribution Time, be converted solely into an SpinCo Option and shall otherwise be, subject to Section 4.2(d) below, subject to the same terms and conditions after the 

 

Distribution Time as the terms and conditions applicable to such Company Option immediately prior to the Distribution Time; provided, however, that from and after the Distribution Time:

(i)     Shares Subject to Post-Distribution SpinCo Option.  The number of shares of Company Common Stock subject to such SpinCo Option shall be equal to the product obtained by multiplying (A) the number of shares of Company Common Stock subject to such Company Option immediately prior to the Distribution Time by (B) the SpinCo Ratio, and rounding such product down to the nearest whole share.    Each SpinCo Option that is outstanding as of the Effective Time will be further adjusted to reflect the Transactions as set forth in Section 4.2(d) below.

(ii)     Exercise Price of Post-Distribution SpinCo Option. The per share exercise price of such Company Option shall be equal to the quotient obtained by dividing (A) the per share exercise price of such Company Option immediately prior to the Distribution Time by (B) the SpinCo Ratio, and rounding such quotient up to the nearest whole cent.    Each SpinCo Option that is outstanding as of the Effective Time will be further adjusted to reflect the Transactions as set forth in Section 4.2(d) below.

(d)SpinCo Options Outstanding as of Immediately Prior to the Effective Time.  As of the Effective Time, each SpinCo Option that is then outstanding and unexercised shall be converted into the right to receive an option relating to shares of Domesticated Parent Common Stock upon substantially the same terms and conditions as are in effect with respect to such option immediately prior to the Effective Time (other than terms that have been rendered inoperative by the Transactions), including with respect to vesting and termination-related provisions (each, an “Adjusted Parent Option”), except that (A) such Adjusted Parent Option shall relate to that whole number of shares of Domesticated Parent Common Stock (rounded down to the nearest whole share) equal to the number of shares of SpinCo Common Stock subject to such SpinCo Option, multiplied by the Base Exchange Ratio, and (B) the exercise price per share for each such Adjusted Parent Option shall be equal to the exercise price per share of such SpinCo Option in effect immediately prior to the Effective Time, divided by the Base Exchange Ratio (the exercise price per share, as so determined, being rounded up to the nearest full cent).  In addition, at the Effective Time, Parent will issue to each holder of a SpinCo Option a number of Earnout Shares equal to the product of (A) the number of shares of SpinCo Common Stock subject to the SpinCo Option, multiplied by (B) the Earnout Exchange Ratio, which Earnout Shares will be subject to the restrictions set forth in the Merger Agreement.

4.3       Treatment of Company RSU Awards. 

 (a)    Company RSU Awards Other than (i) Company RSU Awards Held by Former Company Service Providers or (ii) Company RSU Awards Granted on or following the Cutoff Date. As determined by the Company Compensation Committee pursuant to its authority under the Company Equity Plans, each Company RSU Award outstanding as of immediately prior to the Distribution Time, other than (x) any Company RSU Award granted on or following the Cutoff Date and (y) any Company RSU Award held by a Former Company Service Provider, shall, immediately prior to the Distribution Time, be converted into both a SpinCo RSU Award and a Company RSU Award and shall otherwise be, subject to Section 4.3(d) below, subject to the same terms and conditions after the Distribution Time as the terms and conditions applicable to such Company RSU Award immediately prior to the Distribution Time; provided, however, that from and after the Distribution Time:
(i)     Shares Subject to Post-Distribution Company RSU.  The number of shares of Company Common Stock subject to such Company RSU Award shall be equal to the number of shares of Company Common Stock subject to such Company RSU Award immediately prior to the Distribution Time, and
(ii)     Shares Subject to Post-Distribution SpinCo RSU. The number of shares of SpinCo Common Stock subject to such SpinCo RSU Award shall be equal to the product obtained by multiplying (A) the number of shares of Company Common Stock subject to the Company RSU Award immediately prior to the Distribution Time by (B) the Distribution Ratio, and rounding such product down to the nearest whole share.  Each SpinCo RSU Award that is 

 

outstanding as of the Effective Time will be further adjusted to reflect the Transactions as set forth in Section 4.3(d) below.
(b)     Company RSU Awards (i) Held by Former Company Service Providers or (ii) Granted on or following the Cutoff Date and Held by Company Service Providers. As determined by the Company Compensation Committee pursuant to its authority under the Company Equity Plans, each Company RSU Award that is outstanding as of immediately prior to the Distribution Time (x) that is held by a Former Company Service Provider or (y) that was granted on or following the Cutoff Date and is held by a Company Service Provider, shall be subject to the same terms and conditions after the Distribution Time as the terms and conditions applicable to such Company RSU Award immediately prior to the Distribution Time; provided, however, that from and after the Distribution Time, the number of shares of Company Common Stock covered by such Company RSU Award held by the participant, as applicable, rounded to the nearest whole share, shall be equal to the product obtained by multiplying (i) the number of shares of Company Common Stock covered by such Company RSU Award immediately prior to the Distribution Time by (ii) the Company Ratio.
(c)     Company RSU Awards Granted on or following the Cutoff Date and Held by SpinCo Service Providers. As determined by the Company Compensation Committee pursuant to its authority under the Company Equity Plans, each Company RSU Award that is outstanding as of immediately prior to the Distribution Time that was granted on or following the Cutoff Date and is held by a SpinCo Service Provider shall, immediately prior to the Distribution Time, be converted solely into a SpinCo RSU Award and shall otherwise be, subject to Section 4.3(d) below, subject to the same terms and conditions after the Distribution Time as the terms and conditions applicable to such Company RSU Award immediately prior to the Distribution Time; provided, however, that from and after the Distribution Time the number of shares of SpinCo Common Stock subject to such SpinCo RSU Award shall be equal to the product obtained by multiplying (x) the number of shares of Company Common Stock subject to the Company RSU Award immediately prior to the Distribution Time by (y) the SpinCo Ratio, and rounding down to the nearest whole share.    Each SpinCo RSU Award that is outstanding as of the Effective Time will be further adjusted to reflect the Transactions as set forth in Section 4.3(d) below.
(d)    SpinCo RSU Awards Outstanding as of the Effective Time.  As of the Effective Time, each SpinCo RSU Award that is outstanding immediately prior to the Effective Time shall be converted into the right to receive restricted stock units relating to shares of Domesticated Parent Common Stock (each, an “Adjusted Parent RSU Award”) with substantially the same terms and conditions as were applicable to such SpinCo RSU Award immediately prior to the Effective Time (other than terms that have been rendered inoperative by the Transactions), including with respect to vesting and termination-related provisions, except that such Adjusted Parent RSU Award shall relate to that whole number of shares of Domesticated Parent Common Stock as is equal to the product of (B) the number of shares of SpinCo Common Stock subject to such SpinCo RSU Awards immediately prior to the Effective Time, multiplied by (B) the Base Exchange Ratio, with any fractional shares rounded down to the nearest whole share. In addition, at the Effective Time, Parent will issue to each holder of a SpinCo RSU Award a number of Earnout Shares equal to the product of (A) the number of shares of SpinCo Common Stock subject to the SpinCo RSU Award, multiplied by (B) the Earnout Exchange Ratio, which Earnout Shares will be subject to the restrictions set forth in the Merger Agreement. 

4.4       Treatment of Company PSU Awards. 

(a)    Company PSU Awards Other than (i) Company 2021 TSR PSU Awards, (ii) Company PSU Awards Held by Former Company Service Providers, or (iii) Company PSU Awards Granted on or following the Cutoff Date. As determined by the Company Compensation Committee pursuant to its authority under the Company Equity Plans, each Company PSU Award outstanding as of immediately prior to the Distribution Time, other than (x) any Company PSU Award held by a Former Company Service Provider, (y) any Company PSU Award that is a Company 2021 TSR PSU Award, and (z) any Company PSU Award granted on or following the Cutoff Date, shall, immediately prior to the Distribution Time, be converted into both a SpinCo PSU Award and a Company PSU Award and shall, subject to Sections 4.4(f) and (g) below, otherwise be subject to the same terms and conditions after the Distribution Time as the terms and conditions applicable to such Company PSU Award immediately prior to the Distribution Time; provided, however, that from and after the Distribution Time:

 

(i)     Shares Subject to Post-Distribution Company PSU. The number of shares of Company Common Stock subject to such Company PSU Award shall be equal to the number of shares of Company Common Stock subject to such Company PSU Award immediately prior to the Distribution Time, and
(ii)     Shares Subject to Post-Distribution SpinCo PSU. The number of shares of SpinCo Common Stock subject to such SpinCo PSU Award shall be equal to the product obtained by multiplying (A) the number of shares of Company Common Stock subject to the Company PSU Award immediately prior to the Distribution Time by (B) the Distribution Ratio, and rounding such product down to the nearest whole share.   Each SpinCo PSU Award that is outstanding as of the Effective Time will be further adjusted to reflect the Transactions as set forth in Section 4.4(g) below.

(b)    Company 2021 TSR PSU Awards Not Held by Former Company Service Providers. As determined by the Company Compensation Committee pursuant to its authority under the Company Equity Plans, each Company 2021 TSR PSU Award outstanding as of immediately prior to the Distribution Time, other than any 2021 TSR PSU Award that is held by a Former Company Service Provider, shall, immediately prior to the Distribution Time, be converted into both an SpinCo PSU Award and a Company PSU Award and shall, subject to Sections 4.4(f) and (g) below, otherwise be subject to the same terms and conditions after the Distribution Time as the terms and conditions applicable to such Company PSU Award immediately prior to the Distribution Time; provided, however, that from and after the Distribution Time:
(i)     Shares Subject to Post-Distribution Company PSU. The number of shares of Company Common Stock subject to such Company PSU Award shall be equal to (x) the number of shares of Company Common Stock subject to such Company 2021 TSR PSU Award immediately prior to the Distribution Time, multiplied by (y) such percentage (not to exceed 200%) as is mutually determined by the Company and SpinCo prior to the Distribution Time, and rounding such product down to the nearest whole share, and
(ii)     Shares Subject to Post-Distribution SpinCo PSU. The number of shares of SpinCo Common Stock subject to such SpinCo PSU Award shall be equal to the product obtained by multiplying (A) (x) the number of shares of Company Common Stock subject to the Company PSU Award immediately prior to the Distribution Time, multiplied by (y) such percentage (not to exceed 200%) as is mutually determined by the Company and SpinCo prior to the Distribution Time by (B) the Distribution Ratio, and rounding such product down to the nearest whole share;
provided, further, that from and after the Distribution Time, such Company 2021 TSR PSU Award shall no longer vest based on the performance objectives applicable to such Company 2021 TSR PSU Award immediately prior to the Distribution Time and shall instead be amended to vest solely based on continuous employment or service on December 31, 2023.  Each SpinCo PSU Award that is outstanding as of the Effective Time will be further adjusted to reflect the Transactions as set forth in Section 4.4(g) below.
(c)     Company PSU Awards (Other than Company 2021 TSR PSU Awards) (i) Held by Former Company Service Providers or (ii) Granted on or following the Cutoff Date and Held by Company Service Providers. As determined by the Company Compensation Committee pursuant to its authority under the Company Equity Plans, each Company PSU Award that is not a Company 2021 TSR PSU Award and is outstanding as of immediately prior to the Distribution Time (x) that is held by a Former Company Service Provider or (y) that was granted on or following the Cutoff Date and is held by a Company Service Provider shall be, subject to Sections 4.4(f) and (g) below, subject to the same terms and conditions after the Distribution Time as the terms and conditions applicable to such Company PSU Award immediately prior to the Distribution Time; provided, however, that from and after the Distribution Time, the number of shares of Company Common Stock covered by such Company PSU Award held by the participant, as applicable, rounded to the nearest whole share, shall be equal to the product obtained by multiplying (i) the number of shares of Company Common Stock covered by such Company PSU Award immediately prior to the Distribution Time by (ii) the Company Ratio.  The Company Compensation Committee will set forth the vesting terms (including any vesting terms that will apply upon the consummation of the transactions contemplated by the Separation Agreement and the 

 

Merger Agreement) of any such Company PSU Awards in the applicable award agreement at the time of grant.  
(d)    Company 2021 TSR PSU Awards Held by Former Company Service Providers. As determined by the Company Compensation Committee pursuant to its authority under the Company Equity Plans, each Company 2021 TSR PSU Award held by a Former Company Service Provider that is outstanding as of immediately prior to the Distribution Time shall be, subject to Sections 4.4(f) and (g) below, subject to the same terms and conditions after the Distribution Time as the terms and conditions applicable to such Company 2021 TSR PSU Award immediately prior to the Distribution Time; provided, however, that from and after the Distribution Time, the number of shares of Company Common Stock covered by such Company 2021 TSR PSU Award held by the participant, as applicable, rounded to the nearest whole share, shall be equal to the product obtained by multiplying (i) the number of shares of Company Common Stock covered by such Company 2021 TSR PSU Award immediately prior to the Distribution Time by (ii) such percentage (not to exceed 200%) as is mutually determined by the Company and SpinCo prior to the Distribution Time by (iii) the Company Ratio; provided, further, that from and after the Distribution Time, such Company 2021 TSR PSU Award shall no longer vest based on the performance objectives applicable to such Company 2021 TSR PSU Award immediately prior to the Distribution Time and shall instead be amended to vest solely based on continuous employment or service on December 31, 2023.
(e)    Company PSU Awards (Other than Company 2021 TSR PSU Awards) Granted on or following the Cutoff Date and Held by SpinCo Service Providers. As determined by the Company Compensation Committee pursuant to its authority under the Company Equity Plans, each Company PSU Award that is outstanding as of immediately prior to the Distribution Time that was granted on or following the Cutoff Date and is held by a SpinCo Service Provider shall, immediately prior to the Distribution Time, be converted solely into a SpinCo PSU Award and shall otherwise be, subject to Sections 4.4(f) and (g) below, subject to the same terms and conditions after the Distribution Time as the terms and conditions applicable to such Company PSU Award immediately prior to the Distribution Time; provided, however, that from and after the Distribution Time the number of shares of SpinCo Common Stock subject to such SpinCo PSU Award shall be equal to the product obtained by multiplying (x) the number of shares of Company Common Stock subject to the Company PSU Award immediately prior to the Distribution Time by (y) the SpinCo Ratio, and rounding down to the nearest whole share. The Company Compensation Committee will set forth the vesting terms (including any vesting terms that will apply upon the consummation of the transactions contemplated by the Separation Agreement and the Merger Agreement) of any such Company PSU Awards in the applicable award agreement at the time of grant.  Each SpinCo PSU Award that is outstanding as of the Effective Time will be further adjusted to reflect the Transactions as set forth in Section 4.4(g) below.
(f)    Amendment to Vesting Terms.  Prior to the Distribution Time, the Company and SpinCo may mutually agree to amend the vesting terms of any or all outstanding Company PSU Awards. 
(g)    SpinCo PSU Awards Outstanding as of the Effective Time.  As of the Effective Time, each SpinCo PSU Award that is outstanding immediately prior to the Effective Time shall be converted into the right to receive (i) performance-vesting restricted stock units relating to shares of Domesticated Parent Common Stock (each, an “Adjusted Parent PSU Award”) with substantially the same terms and conditions as were applicable to such SpinCo PSU Award immediately prior to the Effective Time (other than terms that have been rendered inoperative by the Transactions), including with respect to vesting and termination-related provisions, except that such Adjusted Parent PSU Award shall relate to that whole number of shares of Domesticated Parent Common Stock as is equal to the product of (A) the number of shares of SpinCo Common Stock subject to such SpinCo PSU Awards immediately prior to the Effective Time, multiplied by (B) the Base Exchange Ratio, with any fractional shares rounded down to the nearest whole share. Any performance targets to which an Adjusted Parent PSU Awards are subject will be adjusted to reflect the Transactions contemplated hereby. In addition, at the Effective Time, Parent will issue to each holder of a SpinCo PSU Award a number of Earnout Shares equal to the product of (A) the number of shares of SpinCo Common Stock subject to the SpinCo PSU Award, multiplied by (B) the Earnout Exchange Ratio, which Earnout Shares will be subject to the restrictions set forth in the Merger Agreement.

 

4.5     SpinCo Equity Plans. Effective as of the date immediately prior to the date on which the Distribution occurs, SpinCo shall have adopted the OmniAb, Inc. 2022 OmniAb Service Provider Assumed Award Plan and the OmniAb, Inc. 2022 Ligand Service Provider Assumed Award Plan (together, the “SpinCo Equity Plans”), which shall permit the grant and issuance of equity incentive awards denominated in SpinCo Common Stock as described in this Article IV.  In addition, prior to the Distribution Time, the Company shall approve the SpinCo Equity Plans as the sole stockholder of SpinCo.  As of the Effective Time, Parent will assume the SpinCo Equity Plans and all outstanding equity awards thereunder in accordance with the terms of this Article IV.
 
4.6       Parent Equity Plan and Parent ESPP.  Prior to the Effective Time, Parent shall approve and adopt, subject to receipt of Parent Shareholder Approval: (i) an incentive equity plan (the “Parent Equity Plan”); and (ii) an employee stock purchase plan (the “Parent ESPP”), in each case, in form and substance reasonably acceptable to the Company and SpinCo in consultation with Parent, and effective as of the Effective Time.  The Parent Equity Plan will provide for the grant of awards of Domesticated Parent Common Stock with a total pool of shares equal to (i) 14% of the aggregate number of Fully Diluted SpinCo Shares as of the Effective Time, plus (ii) any shares which, as of the effective date of the Parent Equity Plan, are subject to Adjusted Parent Equity Awards under the SpinCo Equity Plans which, on or following such effective date, become available for issuance under the Parent Equity Plan pursuant to its terms, plus (iii) an annual “evergreen” increase of 5% of the shares of Parent Common Stock outstanding as of the day prior to such increase (the “Parent Equity Plan Share Reserve”).  The ESPP will provide for the grant of purchase rights with respect to Domesticated Parent Common Stock with a total pool of shares equal to 1.5% of the aggregate number of Fully Diluted SpinCo Shares as of the Effective Time, plus an annual “evergreen” increase of 1% of the shares of Parent Common Stock outstanding as of the day prior to such increase (the “Parent ESPP Share Reserve”).  As soon as reasonably practicable following the expiration of the sixty (60) day period following the date Parent has filed current Form 10 information with the SEC reflecting its status as an entity that is not a shell company, Parent shall file an effective registration statement on Form S-8 (or other applicable form, including Form S-1 or Form S-3) with respect to the Domesticated Parent Common Stock issuable under the Parent Equity Plan and the Parent ESPP, and Parent shall use commercially reasonable efforts to maintain the effectiveness of such registration statement(s) (and maintain the current status of the prospectus or prospectuses contained therein) for so long as awards granted pursuant to the Parent Equity Plan and the Parent ESPP remain outstanding. 

4.7       Vesting; Accelerated Vesting.
(a)     The Distribution Time shall not constitute a termination of employment or service for any SpinCo Service Providers for purposes of any Company Equity Award and, except as otherwise provided in this Agreement, with respect to grants adjusted pursuant to this Article IV, continued employment with the SpinCo Group shall be treated as continued employment with the Company Group with respect to Company Equity Awards held by SpinCo Service Providers and continued employment with the Company Group shall be treated as continued employment with the SpinCo Group with respect to SpinCo Equity Awards (or, following the Effective Time, Adjusted Parent Equity Awards) held by Company Service Providers.
(b)    Notwithstanding the foregoing, with respect to any unvested SpinCo Equity Awards (or, following the Effective Time, Adjusted Parent Equity Awards) granted to a Company Service Provider in accordance with this Agreement, if the original Company Equity Award (that was partially adjusted into the SpinCo Equity Award (or, following the Effective Time, Adjusted Parent Equity Award)) was subject, as of immediately prior to the Distribution, to accelerated vesting provisions (i) by reference to a termination of employment or service with the Company and/or (ii) in connection with a “Change in Control” (as defined in the applicable award agreement and/or Company Equity Plan) of the Company, then the SpinCo Equity Awards (or, following the Effective Time, Adjusted Parent Equity 

 

Awards) also shall be subject to such same acceleration provisions upon the Company Service Provider’s termination of employment or service with the Company Group and/or in connection with a “Change in Control” (as defined in the applicable award agreement and/or Company Equity Plan) of the Company.

        (c)    Further notwithstanding the foregoing, with respect to any unvested Company Equity Awards or unvested SpinCo Equity Awards (or, following the Effective Time, Adjusted Parent Equity Awards) granted to an SpinCo Service Provider in accordance with this Agreement, if the original Company Equity Award (including any Company Equity Award that was solely or partially adjusted into the SpinCo Equity Award (or, following the Effective Time, Adjusted Parent Equity Award)), was subject, as of immediately prior to the Distribution, to accelerated vesting provisions (i) by reference to a termination of employment or service with the Company and/or (ii) in connection with a “Change in Control” (as defined in the applicable award agreement and/or Company Equity Plan) of the Company, then the Company Equity Award or SpinCo Equity Award (or, following the Effective Time, Adjusted Parent Equity Award), as applicable, also shall be subject to such same acceleration provisions upon the SpinCo Service Provider’s termination of employment or service with the relevant member of the SpinCo Group and/or in connection with a “Change in Control” (as defined in the applicable award agreement and/or SpinCo Equity Plan) of SpinCo.

        (d)     In addition, with respect to any unvested SpinCo Equity Awards (or, following the Effective Time, Adjusted Parent Equity Awards) held by a Company Service Provider following the Distribution Time, notwithstanding anything herein or in the applicable award agreement to the contrary, such SpinCo Equity Awards (or, following the Effective Time, Adjusted Parent Equity Awards) will vest in full upon a “Change in Control” (as defined in the applicable award agreement and/or SpinCo Equity Plans) of SpinCo (or, following the Effective Time, Parent). Further, with respect to any unvested Company Equity Awards which are adjusted as of immediately prior to the Distribution Time and continue to be held by a SpinCo Service Provider following the Distribution, in each case, in accordance with this Agreement, notwithstanding anything herein or in the applicable award agreement to the contrary, such Company Equity Awards will vest in full upon a “Change in Control” (as defined in the applicable award agreement and/or Company Equity Plan) of the Company.

        (e)    Additionally, notwithstanding anything herein or in the applicable award agreement to the contrary, if, following the Distribution Time, the Company Board determines, in its discretion, to accelerate in full the vesting of all Company Equity Awards then held by Company Service Providers and Former Company Service Providers (other than in connection with a “Change in Control” (as defined in the applicable award agreement and/or Company Equity Plan)), the Company Board shall also accelerate in full the vesting of all outstanding Company Equity Awards which are then held by SpinCo Service Providers and Former SpinCo Service Providers. Further notwithstanding anything herein or in the applicable award agreement to the contrary, if, following the Distribution Time, the SpinCo Board or Parent Board determines, in its discretion, to accelerate in full the vesting of all SpinCo Equity Awards (or, following the Effective Time, Adjusted Parent Equity Awards) then held by SpinCo Service Providers and Former SpinCo Service Providers (other than in connection with a “Change in Control” (as defined in the applicable award agreement and/or SpinCo Equity Plans)), the SpinCo Board or Parent Board shall also accelerate in full the vesting of all outstanding SpinCo Equity Awards (or, following the Effective Time, Adjusted Parent Equity Awards) which are then held by Company Service Providers and Former Company Service Providers.

        (f)    The Parties hereto acknowledge and agree that in no event shall the vesting of any Company Equity Awards or SpinCo Equity Awards (or, following the Effective Time, Adjusted Parent Equity Awards), in any case, accelerate solely by reason of the transactions or events contemplated by the Separation Agreement, this Agreement, the Merger Agreement or any other Transaction Document. 

4.8       General Terms.

(a)The adjustments contemplated by this Article IV are all intended to comply in all respects with the requirements of Sections 409A and 424 of the Code, in each case, to the extent applicable, and all such provisions shall be interpreted and implemented in accordance with the foregoing.

 

(b)The Parties shall use their commercially reasonable efforts to maintain effective registration statements with the Securities Exchange Commission with respect to the awards described in this Article IV, to the extent any such registration statement is required by applicable Law.  For the avoidance of doubt, Parent shall use commercially reasonable efforts to file an effective registration statement on Form S-8 (or other applicable form, including Form S-1 or Form S-3) with respect to the Domesticated Parent Common Stock issuable under the Adjusted Parent Equity Awards issuable under the SpinCo Equity Plans, and Parent shall use commercially reasonable efforts to maintain the effectiveness of such registration statement(s) (and maintain the current status of the prospectus or prospectuses contained therein) for so long as such awards remain outstanding.
(c)The Parties hereby acknowledge that the provisions of this Article IV are intended to achieve certain tax, legal and accounting objectives and, in the event such objectives are not achieved, the Parties agree to negotiate in good faith regarding such other actions that may be necessary or appropriate to achieve such objectives.
(d)     After the Distribution Time, Company Equity Awards adjusted pursuant to this Article IV, regardless of by whom held, shall be settled by the Company pursuant to the terms of the Company Equity Plans, and SpinCo Equity Awards (or, following the Effective Time, Adjusted Parent Equity Awards), regardless of by whom held, shall be settled by SpinCo or Parent (as applicable) pursuant to the terms of the SpinCo Equity Plans. Accordingly, it is intended that, to the extent of the issuance of such SpinCo Equity Awards (or, following the Effective Time, Adjusted Parent Equity Awards) and in connection with the adjustment provisions of this Article IV, the SpinCo Equity Plans shall be considered successors to the Company Equity Plans and to have assumed the obligations of the Company Equity Plans to make the adjustments of the Company Equity Awards as set forth in this Article IV. 
 
(e)    The Parties acknowledge and agree that each of the applicable tax deductions for which they may be eligible for federal income tax purposes with regard to the Company Equity Awards and SpinCo Equity Awards (or, following the Effective Time, Adjusted Parent Equity Awards), in any case, shall be determined in accordance with Revenue Ruling 2002-1.

(f)    By approving the form, terms and conditions of, and the entrance by the Parties into, this Agreement, the Company Board, the SpinCo Board and the Parent Board intend to exempt from the short-swing profit recovery provisions of Section 16(b) of the Exchange Act, by reason of the application of Rule 16b−3 thereunder, all acquisitions and dispositions of Company Equity Awards,  SpinCo Equity Awards and/or Adjusted Parent Equity Awards by directors and executive officers of each of the Parties contemplated herein, and the Company Board, the SpinCo Board and the Parent Board also intend to expressly approve, in respect of any Company Equity Awards, SpinCo Equity Awards and/or Adjusted Parent Equity Awards, the use of any method for the payment of an exercise price and the satisfaction of any applicable tax withholding (specifically including the actual or constructive tendering of shares in payment of an exercise price and the withholding of shares from delivery in satisfaction of applicable tax withholding requirements) to the extent such method is permitted under the Company Equity Plans or SpinCo Equity Plans (as applicable) and the applicable award agreement.

(g)    Each of the Parties shall establish an appropriate administration system in order to handle, in an orderly manner that complies with applicable Laws, (i) exercises of Ligand Options and SpinCo Options (or, following the Effective Time, Adjusted Parent Options), (ii) the settlement of other Ligand Equity Awards and SpinCo Equity Awards (or, following the Effective Time, Adjusted Parent Equity Awards), (iii) the vesting of Ligand Equity Awards and SpinCo Equity Awards (or, following the Effective Time, Adjusted Parent Equity Awards) and (iv) the satisfaction of applicable withholding taxes with respect to Ligand Equity Awards and SpinCo Equity Awards (or, following the Effective Time, Adjusted Parent Equity Awards). The Parties shall work together to unify and consolidate all indicative data and payroll and employment information on regular timetables and make certain that each applicable entity’s data and records in respect of such awards are correct and updated on a timely basis. The foregoing shall include employment status and information required for tax withholding/remittance and reporting, compliance with trading windows and compliance with the requirements of the Exchange Act and other applicable Laws.  

 

Article V
ADDITIONAL MATTERS

5.1Cash Incentive Programs.  SpinCo shall assume all Liabilities with respect to all cash incentive compensation, commissions or similar cash payments earned by or payable to SpinCo Employees for the year in which the Distribution Time occurs and thereafter. The Company shall retain all Liabilities with respect to any cash incentive compensation, commissions or similar cash payments earned by or payable to Company Employees for the year in which the Distribution Time occurs and thereafter.
5.2Severance. 
(a)Effective as of the Distribution Time, SpinCo shall have adopted a severance plan (the “SpinCo Severance Plan”) for the benefit of eligible SpinCo Employees containing terms substantially similar to those set forth in the Company Severance Plan.  Following the Distribution Time, the Company shall be responsible for any and all Liabilities and other obligations with respect to the Company Severance Plan, and SpinCo shall be responsible for any and all Liabilities and other obligations with respect to the SpinCo Severance Plan.

(b)A SpinCo Employee shall not be deemed to have terminated employment for purposes of determining eligibility for severance benefits in connection with or in anticipation of the consummation of the transactions contemplated by the Separation Agreement or Merger Agreement. SpinCo shall be solely responsible for all Liabilities in respect of all costs arising out of payments and benefits relating to the termination or alleged termination of any SpinCo Employee’s employment that occurs on or after the Distribution Time, including as a result of, in connection with or following the consummation of the transactions contemplated by the Separation Agreement or Merger Agreement, including any amounts required to be paid (including any payroll or other taxes), and the costs of providing benefits, under any applicable severance, separation, redundancy, termination or similar plan, program, practice, contract, agreement, law or regulation (such benefits to include any medical or other welfare benefits, outplacement benefits, accrued vacation, and taxes).

5.3Time-Off Benefits. Unless otherwise required under applicable Law (or as would result in duplication of benefits), SpinCo shall (i) credit each SpinCo Employee with the amount of accrued but unused vacation time, paid time-off and other time-off benefits as such SpinCo Employee had with the Company Group as of immediately before the date on which the employment of the SpinCo Employee transfers to SpinCo and (ii) permit each such SpinCo Employee to use such accrued but unused vacation time, paid time off and other time-off benefits in the same manner and upon the same terms and conditions as the SpinCo Employee would have been so permitted under the terms and conditions of the applicable Company policies in effect for the year in which such transfer of employment occurs, up to and including full exhaustion of such transferred unused vacation time, paid-time off and other time-off benefits (if such full exhaustion would be permitted under the applicable Company policies in effect for that year in which the transfer of employment occurs).
5.4Workers’ Compensation Liabilities. Effective no later than the Distribution Time, SpinCo shall assume all Liabilities for SpinCo Employees, SpinCo Independent Contractors and Former SpinCo Service Providers related to any and all workers’ compensation injuries, incidents, conditions, claims or coverage, whenever incurred (including claims incurred prior to the Distribution Time but not reported until after the Distribution Time), and SpinCo shall be fully responsible for the administration, management and payment of all such claims and satisfaction of all such Liabilities. Notwithstanding the foregoing, if SpinCo is unable to assume any such Liability or the administration, management or payment of any such claim solely because of the operation of applicable Law, the Company shall retain such Liabilities and SpinCo shall reimburse and otherwise fully indemnify the Company for all such Liabilities, including the costs of administering the plans, programs or arrangements under which any such Liabilities have accrued or otherwise arisen.
5.5COBRA Compliance. The Company shall retain responsibility for compliance with the health care continuation requirements of COBRA with respect to SpinCo Employees or Former SpinCo 

 

Service Providers who, as of the Plan Transition Date, were covered under a Company Benefit Plan or who had incurred a COBRA qualifying event and were eligible to elect COBRA under a Company Benefit Plan. SpinCo shall be responsible for administering compliance with the health care continuation requirements of COBRA, and the corresponding provisions of the SpinCo Benefit Plans with respect to SpinCo Employees and their covered dependents who incur a COBRA qualifying event or loss of coverage at any time after the Plan Transition Date. 
5.6Code Section 409A. Notwithstanding anything in this Agreement to the contrary, the Parties shall negotiate in good faith regarding the need for any treatment different from that otherwise provided herein with respect to the payment of compensation to ensure that the treatment of such compensation does not cause the imposition of a Tax under Section 409A of the Code. In no event, however, shall any Party be liable to another in respect of any Taxes imposed under, or any other costs or Liabilities relating to, Section 409A of the Code.
5.7Payroll Taxes and Reporting. The Parties shall, to the extent practicable, (i) treat SpinCo or a member of the SpinCo Group as a “successor employer” and the Company (or the appropriate member of the Company Group) as a “predecessor,” within the meaning of Sections 3121(a)(1) and 3306(b)(1) of the Code, with respect to SpinCo Employees for purposes of Taxes imposed under the United States Federal Unemployment Tax Act or the United States Federal Insurance Contributions Act, and (ii) cooperate with each other to avoid, to the extent reasonably practicable, the filing of more than one IRS Form W-2 with respect to each SpinCo Employee for the calendar year in which the Distribution Time occurs.
5.8Regulatory Filings. Subject to applicable Law and the Tax Matters Agreement, the Company shall retain responsibility for all employee-related regulatory filings for reporting periods ending at or prior to the Distribution Time, except for Equal Employment Opportunity Commission EEO-1 reports and affirmative action program (AAP) reports and responses to Office of Federal Contract Compliance Programs (OFCCP) submissions, for which the Company shall provide data and information (to the extent permitted by applicable Laws) to SpinCo, which shall be responsible for making such filings in respect of SpinCo Employees.
5.9Certain Requirements. Notwithstanding anything in this Agreement to the contrary, if applicable Law requires that any assets or Liabilities be retained by the Company Group or transferred to or assumed by the SpinCo Group in a manner that is different from that set forth in this Agreement, such retention, transfer or assumption shall be made in accordance with the terms of such applicable Law and shall not be made as otherwise set forth in this Agreement and the Parties shall reasonably cooperate to adjust for any related economic consequences.
Article VI
OBLIGATIONS OF PARENT AND MERGER SUB

6.1Obligations of Parent. Following the Merger Effective Time, Parent agrees to cause, and to take all actions to enable, SpinCo and the members of the SpinCo Group to adhere to each provision of this Agreement which requires an act on the part of SpinCo or any member of the SpinCo Group or any of its or their Affiliates, and to cause or enable SpinCo and the SpinCo Group to comply with their obligations to provide or establish compensation or benefits to SpinCo Service Providers in accordance with this Agreement pursuant to a Benefit Plan sponsored or maintained by Parent or any of its Subsidiaries.

Article VII
GENERAL AND ADMINISTRATIVE

7.1      Employer Rights. Nothing in this Agreement shall be deemed to be an amendment to any Company Benefit Plan or SpinCo Benefit Plan or to prohibit any member of the Company Group or SpinCo Group, as the case may be, from amending, modifying or terminating any Company Benefit Plan or SpinCo Benefit Plan at any time within its sole discretion.

 

7.2       Effect on Employment. Nothing in this Agreement is intended to or shall confer upon any employee or former employee of the Company, SpinCo or any of their respective Affiliates any right to continued employment, or any recall or similar rights to any such individual on layoff or any type of approved leave.

7.3       Consent of Third Parties. If any provision of this Agreement is dependent on the consent of any third party and such consent is withheld, the Parties shall use their reasonable efforts to implement the applicable provisions of this Agreement to the fullest extent practicable. If any provision of this Agreement cannot be implemented due to the failure of such third party to consent, the Parties hereto shall negotiate in good faith to implement the provision (as applicable) in a mutually satisfactory manner.

7.4       Access to Employees. On and after the Distribution Time, the Parties shall, or shall cause each of their respective Affiliates to, make available to each other those of their employees who may reasonably be needed in order to defend or prosecute any legal or administrative action (other than a legal action among the Parties) to which any employee or director of the Company Group or the SpinCo Group or any Company Benefit Plan or SpinCo Benefit Plan is a party and which relates to a Company Benefit Plan or SpinCo Benefit Plan. The Party to whom an employee is made available in accordance with this Section 7.4 shall pay or reimburse the other Parties for all reasonable expenses which may be incurred by such employee in connection therewith, including all reasonable travel, lodging, and meal expenses, but excluding any amount for such employee’s time spent in connection herewith.

7.5       Beneficiary Designation/Release of Information/Right to Reimbursement. To the extent permitted by applicable Law and except as otherwise provided for in this Agreement, all beneficiary designations, authorizations for the release of information and rights to reimbursement made by or relating to SpinCo Employees under Company Benefit Plan shall be transferred to and be in full force and effect under the corresponding SpinCo Benefit Plan until such beneficiary designations, authorizations or rights are replaced or revoked by, or no longer apply, to the relevant SpinCo Employee.

7.6       No Third Party Beneficiaries. This Agreement is solely for the benefit of the Parties and, except to the extent otherwise expressly provided herein, nothing in this Agreement, express or implied, is intended to confer any rights, benefits, remedies, obligations or Liabilities under this Agreement upon any Person, including any SpinCo Employee or other current or former employee, officer, director or contractor of the Company Group or SpinCo Group, other than the Parties and their respective successors and assigns.

7.7       Employee Benefits Administration. At all times following the date hereof, the Parties will cooperate in good faith as necessary to facilitate the administration of employee benefits and the resolution of related employee benefit claims with respect to SpinCo Employees, Former SpinCo Service Providers and employees and other service providers of the Company, as applicable, including with respect to the provision of employee level information necessary for the other Parties to manage, administer, finance and file required reports with respect to such administration.

7.8       Audit Rights With Respect to Information Provided. 

    (a)     Each Party, and their duly authorized representatives, shall have the right to conduct reasonable audits with respect to all information required to be provided to it by the other Parties under this Agreement. The Party conducting the audit (the “Auditing Party”) may adopt reasonable procedures and guidelines for conducting audits and the selection of audit representatives under this Section 7.8. The Auditing Party shall have the right to make copies of any records at its expense, subject to any restrictions imposed by applicable laws and to any confidentiality provisions set forth in the Separation Agreement, which are incorporated by reference herein. The Party being audited shall provide the Auditing Party’s representatives with reasonable access during normal business hours to its operations, computer systems and paper and electronic files, and provide workspace to its representatives. After any audit is completed, the Party being audited shall have the right to review a draft of the audit findings and to comment on those findings in writing within thirty business days after receiving such draft.

 

        (b)    The Auditing Party’s audit rights under this Section 7.8 shall include the right to audit, or participate in an audit facilitated by the Party being audited, of any Subsidiaries and Affiliates of the Party being audited and to require the other Parties to request any benefit providers and third parties with whom the Party being audited has a relationship, or agents of such Party, to agree to such an audit to the extent any such Persons are affected by or addressed in this Agreement (collectively, the “Non-parties”). The Party being audited shall, upon written request from the Auditing Party, provide an individual (at the Auditing Party’s expense) to supervise any audit of a Non-party. The Auditing Party shall be responsible for supplying, at the Auditing Party’s expense, additional personnel sufficient to complete the audit in a reasonably timely manner. The responsibility of the Party being audited shall be limited to providing, at the Auditing Party’s expense, a single individual at each audited site for purposes of facilitating the audit.

7.9       Cooperation.  Each of the Parties hereto will use its commercially reasonable efforts to share information and promptly take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable under applicable Laws to consummate the transactions contemplated by this Agreement.

Article VIII
MISCELLANEOUS

8.1Entire Agreement. This Agreement, the Separation Agreement, the Merger Agreement, and the other Transaction Documents, including the Exhibits and Schedules thereto, shall constitute the entire agreement among the Parties with respect to the subject matter hereof and shall supersede all previous negotiations, commitments, course of dealings and writings with respect to such subject matter.
8.2Counterparts. This Agreement may be executed in two or more counterparts (including by electronic or .pdf transmission), each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.  Delivery of any signature page by facsimile, electronic or .pdf transmission shall be binding to the same extent as an original signature page.
8.3Survival of Agreements. Except as otherwise contemplated by this Agreement, all covenants and agreements of the Parties contained in this Agreement shall survive the Distribution Time and Merger Effective Time and remain in full force and effect in accordance with their applicable terms.
8.4Notices. All notices and other communications among the Parties shall be in writing and shall be deemed to have been duly given (a) when delivered in person, (b) when delivered after posting in the national mail having been sent registered or certified mail return receipt requested, postage prepaid, (c) when delivered by FedEx or other internationally recognized overnight delivery service or (d) when delivered by facsimile (solely if receipt is confirmed) or email (so long as the sender of such email does not receive an automatic reply from the recipient’s email server indicating that the recipient did not receive such email), addressed as follows:
To the Company:
Ligand Pharmaceuticals Incorporated
3911 Sorrento Valley Boulevard, Suite 110
San Diego, California 92121
Attn: Chief Financial Officer
Email: tespinoza@ligand.com

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

Latham & Watkins, LLP
12670 High Bluff Dr.
San Diego, California 92130

 

Attention:    Matthew Bush
        Scott Shean
Email:    matt.bush@lw.com
        scott.shean@lw.com

To SpinCo:
OmniAb, Inc.
5980 Horton Street, Suite 405
Emeryville, California 94608
Attn: Chief Legal Officer
Email: cberkman@omniab.com

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

Latham & Watkins, LLP
12670 High Bluff Dr.
San Diego, California 92130
Attention:    Matthew Bush
        Scott Shean
Email:    matt.bush@lw.com
        scott.shean@lw.com

    To Parent or Merger Sub:
Avista Public Acquisition Corp. II
65 East 55th Street, 18th Floor
New York, New York 10022
Attn: General Counsel
Email:  Silbert@avistacap.com 

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

Weil, Gotshal & Manges LLP
767 5th Avenue
New York, New York 10153
Attention:    Jaclyn L. Cohen, Esq.
        Raymond O. Gietz, Esq.
Email:    jackie.cohen@weil.com
        Raymond.gietz@weil.com

or to such other address or addresses as the Parties may from time to time designate in writing by like notice.
8.5Consents. Any consent required or permitted to be given by any Party to the other Parties under this Agreement shall be in writing and signed by the Party giving such consent and shall be effective only against such Party (and its Group).
8.6Assignment. This Agreement shall not be assignable, in whole or in part, directly or indirectly, by any Party hereto without the prior written consent of the other Parties, and any attempt to assign any rights or obligations arising under this Agreement without such consent shall be void. 

 

Notwithstanding the foregoing, and subject to any restrictions on assignment by SpinCo pursuant to Article IV of the Tax Matters Agreement, this Agreement shall be assignable to (i) with respect to the Company, an Affiliate of the Company, and with respect to SpinCo, and Affiliate of SpinCo, or (ii) a bona fide third party in connection with a merger, reorganization, consolidation or the sale of all or substantially all the assets of a party hereto so long as the resulting, surviving or transferee entity assumes all the obligations of the relevant party hereto by operation of Law or pursuant to an agreement in form and substance reasonably satisfactory to the other Parties to this Agreement; provided however that in the case of each of the preceding clauses (i) and (ii), no assignment permitted by this Section 8.6 shall release the assigning Party from liability for the full performance of its obligations under this Agreement.
8.7Successors and Assigns. The provisions of this Agreement and the obligations and rights hereunder shall be binding upon, inure to the benefit of and be enforceable by (and against) the Parties and their respective successors and permitted assigns.
8.8Termination and Amendment. This Agreement may be amended or modified, in whole or in part, only by a duly authorized agreement in writing executed by the Parties in the same manner (but not necessarily by the same Persons) as this Agreement, and which makes reference to this Agreement.  This Agreement shall terminate automatically without any further action of the Parties upon a termination of the Merger Agreement, and no Party will have any further obligations to the other Parties hereunder.
8.9Subsidiaries. Each of the Parties shall cause to be performed, and hereby guarantees the performance of, all actions, agreements and obligations set forth herein to be performed by any Subsidiary of such Party or by any entity that becomes a Subsidiary of such Party at and after the Distribution Time, to the extent such Subsidiary remains a Subsidiary of the applicable Party.
8.10Title and Headings. Titles and headings to sections herein are inserted for the convenience of reference only and are not intended to be a part of or to affect the meaning or interpretation of this Agreement.
8.11Governing Law.  This Agreement, and all claims, disputes, controversies or causes of action (whether in contract, tort, equity or otherwise) that may be based upon, arise out of or relate to this Agreement (including any schedule or exhibit hereto) or the negotiation, execution or performance of this Agreement (including any claim, dispute, controversy or cause of action based upon, arising out of or related to any representation or warranty made in or in connection with this Agreement or as an inducement to enter into this Agreement), shall be governed by and construed in accordance with the Laws of the State of Delaware, without regard to any choice or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the Laws of any jurisdiction other than the State of Delaware.  Each of the Parties agrees that any Action related to this agreement shall be brought exclusively in the Chosen Courts.  By executing and delivering this Agreement, each of the Parties irrevocably: (a) accepts generally and unconditionally submits to the exclusive jurisdiction of the Chosen Courts for any Action relating to this Agreement; (b) waives any objections which such party may now or hereafter have to the laying of venue of any such Action contemplated by this Section 8.11 and hereby further irrevocably waives and agrees not to plead or claim that any such Action has been brought in an inconvenient forum; (c) agrees that it will not attempt to deny or defeat the personal jurisdiction of the Chosen Courts by motion or other request for leave from any such court; (d) agrees that it will not bring any Action contemplated by this Section 8.11 in any court other than the Chosen Courts; (e) agrees that service of all process, including the summons and complaint, in any Action may be made by registered or certified mail, return receipt requested, to such party at their respective addresses provided in accordance with Section 8.4 or in any other manner permitted by Law; and (f) agrees that service as provided in the preceding clause (e) is sufficient to confer personal jurisdiction over such party in the Action, and otherwise constitutes effective and binding service in every respect.  Each of the parties hereto agrees that a final judgment in any Action in a Chosen Court as provided above may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by Law, and each party further agrees to the non-exclusive jurisdiction of the Chosen Courts for the enforcement or execution of any such judgment.

 

8.12WAIVER OF JURY TRIAL.  THE PARTIES HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVE THEIR RIGHT TO TRIAL BY JURY IN ANY JUDICIAL PROCEEDING IN ANY COURT RELATING TO ANY DISPUTE, CONTROVERSY OR CLAIM ARISING OUT OF, RELATING TO OR IN CONNECTION WITH THIS AGREEMENT (INCLUDING ANY SCHEDULE OR EXHIBIT HERETO) OR THE BREACH, TERMINATION OR VALIDITY OF THIS AGREEMENT OR THE NEGOTIATION, EXECUTION OR PERFORMANCE OF THIS AGREEMENT.  NO PARTY TO THIS AGREEMENT SHALL SEEK A JURY TRIAL IN ANY LAWSUIT, PROCEEDING, COUNTERCLAIM OR ANY OTHER LITIGATION PROCEDURE BASED UPON, OR ARISING OUT OF, THIS AGREEMENT OR ANY RELATED INSTRUMENTS.  NO PARTY WILL SEEK TO CONSOLIDATE ANY SUCH ACTION IN WHICH A JURY TRIAL HAS BEEN WAIVED WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED.  EACH PARTY TO THIS AGREEMENT CERTIFIES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT OR INSTRUMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS SET FORTH ABOVE IN THIS SECTION 8.12.  NO PARTY HAS IN ANY WAY AGREED WITH OR REPRESENTED TO ANY OTHER PARTY THAT THE PROVISIONS OF THIS SECTION 8.12 WILL NOT BE FULLY ENFORCED IN ALL INSTANCES.
8.13Severability. If any provision of this Agreement, or the application of any such provision to any Person or circumstance, shall be held invalid, illegal or unenforceable in any respect by a court of competent jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision hereof.  The Parties further agree that if any provision contained herein is, to any extent, held invalid or unenforceable in any respect under the Laws governing this Agreement, they shall take any actions necessary to render the remaining provisions of this Agreement valid and enforceable to the fullest extent permitted by Law and, to the extent necessary, shall amend or otherwise modify this Agreement to replace any provision contained herein that is held invalid or unenforceable with a valid and enforceable provision giving effect to the intent of the Parties.
8.14Interpretation. The Parties have participated jointly in the negotiation and drafting of this Agreement. This Agreement shall be construed without regard to any presumption or rule requiring construction or interpretation against the Party drafting or causing any instrument to be drafted.
8.15No Duplication; No Double Recovery. Nothing in this Agreement is intended to confer to or impose upon any Party a duplicative right, entitlement, obligation or recovery with respect to any matter arising out of the same facts and circumstances.
8.16No Waiver. No failure to exercise and no delay in exercising, on the part of any Party, any right, remedy, power or privilege hereunder shall operate as a waiver hereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.
8.17No Admission of Liability. The allocation of Assets and Liabilities herein is solely for the purpose of allocating such Assets and Liabilities among the Parties and is not intended as an admission of liability or responsibility for any alleged Liabilities vis-à-vis any third party, including with respect to the Liabilities of any non-wholly owned subsidiary of any Party.

[Signature Page Follows]

 

IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed as of the day and year first above written.

									
	

		
	LIGAND PHARMACEUTICALS INCORPORATED 

	 	 
	By:	/s/ Matthew Korenberg
	Name:	Matthew Korenberg
	Title:	Executive Vice President, Finance and Chief Financial Officer
	 	
	 	 
	OMNIAB, INC. 

	 	 
	By:	/s/ Matthew W. Foehr
	Name:	Matthew W. Foehr
	Title:	President and Chief Executive Officer
	 	
		
	AVISTA PUBLIC ACQUISITION CORP. II	
		
	By:	/s/ Benjamin Silbert
	Name:	Benjamin Silbert
	Title:	General Counsel
		
		
	ORWELL MERGER SUB INC.	
		
	By:	/s/ Benjamin Silbert
	Name:	David Burgstahler
	Title:	President

[Signature Page to Amended and Restated Employee Matters Agreement]EX-10.1

  Exhibit 10.1

  *** Text omitted pursuant to Item 601(b)(10)(iv) of Regulation S-K because it is not material and is of the type that the registrant treats as private or confidential.s

  COMMITMENT AGREEMENT

   

  September 13, 2022 (the “Commitment Agreement Date”)

   

  Athene Annuity and Life Company (“AAIA”) is pleased to provide, on the following terms, a non-participating single premium group annuity contract, supported by a [***] account (the “AAIA Contract”) for the Pactiv Evergreen Pension Plan (the “Plan”) and Athene Annuity & Life Assurance Company of New York (“AANY” and together with AAIA, the “Insurers”) is pleased to provide, on the following terms, a non-participating single premium group annuity contract, supported by a [***] account (the “AANY Contract” and together with the AAIA Contract, the “Contracts”) for the Plan in consideration of the mutual promises made and representations, warranties and covenants contained in this Commitment Agreement (this “Commitment Agreement”). For purposes of this Commitment Agreement, capitalized terms will have the meaning set forth in paragraph 8. By signing this Commitment Agreement, the Insurers, Pactiv LLC (the “Company”) as Plan sponsor, and Pactiv Evergreen Inc. Pension Plans Investment Committee (“Committee”), as Plan administrator acting solely in its capacity as named fiduciary for the Plan, agree as provided below.  For the avoidance of doubt, the parties hereby agree that if the Committee fails to perform any of its obligations set forth in this Commitment Agreement, the Company shall perform such obligations in the same manner and timing required of the Committee. 

   

  1.GAC Issuance and GAC Issuance True-Up Premium.  Each Insurer agrees to issue the applicable Contract as follows: 

   

  a.	Specimen GAC Form Issuance.  On the Scheduled GAC Issuance Date, subject to such Insurer’s receipt of the applicable Premium Due Date Transfers and any applicable GAC Issuance True-Up Premium, plus interest thereon, due to such Insurer and subject to the terms of paragraphs 1.b., 1.c., 1.d. and 3, such Insurer irrevocably agrees to issue the applicable Contract with an effective date that is the Premium Due Date and in accordance with this Commitment Agreement and such Contract, irrevocably commits to make payments owed to the applicable Payees under such Contract on and after the Annuity Start Date; provided that if the Committee and such Insurer are unable to complete the takeover of administration services regarding payments under such Contract pursuant to paragraph 6 prior to the Annuity Start Date, such Insurer shall make a bulk payment to the Plan Trust (or in such other manner as such Insurer and the Committee agree) equal to the Aggregate Monthly Payment (as defined in such Contract) for each month until administration with respect to such Contract is transferred to such Insurer pursuant to paragraph 6. The applicable Contract will be in substantially the form of the specimen group annuity contract (the “Specimen GAC Form”) attached hereto as Schedule 1 with such updates agreed upon pursuant to and in accordance with paragraph 2.

   

  b.	Form of Annuities and Payments under a Contract.  The type, description and forms of annuities (e.g., single life annuity, joint and survivor annuity), payments under the applicable Contract and other terms of 

   

   

  Commitment Agreement, dated September 13, 2022

  CONFIDENTIAL

   

  

  such Contract will be consistent with the terms of the Insurers’ proposal dated September 6, 2022 as updated to reflect (i) any modifications contemplated in the Insurers’ final annuity quote reply sheet dated September 13, 2022 and (ii) any modifications mutually agreed to between the Company, Committee and such Insurer after the Commitment Agreement Date and before the [***] Business Day prior to the Scheduled GAC Issuance Date. Subject to such Insurer’s receipt of the applicable Premium Due Date Transfers, such Insurer will make payments to the applicable Payees commencing on the Annuity Start Date (A) until the applicable Contract has been issued, in accordance with the terms and conditions of this Commitment Agreement and (B) after the applicable Contract has been issued, in accordance with the terms and conditions of the applicable Contract. For the avoidance of doubt, each Insurer will make such payments even if the applicable Contract has not been issued by such Insurer as of the Annuity Start Date. The original annuity exhibits to the applicable Contract will be consistent with the applicable Payees (including the applicable annuitants, contingent annuitants and beneficiaries) on the Tab titled “Data (include)” of the Base File.

   

  c.	Necessary Data.  As a condition to such Insurer issuing the applicable Contract, the Committee will deliver or cause to be delivered to such Insurer the data necessary for such Insurer to prepare the annuity exhibits and the information necessary for such Insurer to draft provisions of such Contract and administer the payments thereunder, including but not limited to, information such as factor tables, supporting documents such as Qualified Domestic Relations Orders, and sample calculations. If there are any delays in the delivery of the foregoing information based on the delivery dates set forth in Schedule 5 or such other delivery dates as may be designated by such Insurer, such Insurer may refer any Payee who contacts such Insurer to the Company Contact for assistance and such Insurer may, in its sole discretion, delay the mailing of the applicable Welcome Kits and annuity certificates that are to be issued by such Insurer in connection with the applicable Contract. Such Insurer may exclude from the annuity exhibits any applicable Payee for which such Insurer has not been provided each of the following: [***].

    

  d.	GAC Issuance True-Up Premium.  Schedule 6 provides a description of the methodologies and procedures by which such Insurer will calculate the applicable GAC Issuance True-Up Premium. The Committee and Insurer may mutually agree in writing to timing with respect to any deliverable that differs from that set forth in this paragraph 1.d.  The Committee and Insurer each acknowledge and agree that it shall cooperate in good faith prior to the GAC Issuance Data Notice Date in the drafting and/or review, as applicable, of preliminary drafts of the deliverables described in this paragraph 1.d.   Such Insurer and the Committee will cooperate in good faith so that such Insurer can calculate the applicable GAC Issuance True-Up Premium, subject to the following acknowledgements, limitations and conditions:

  i.GAC Issuance Data.  To the extent that the Committee discovers or has any Data Corrections with respect to the applicable Contract after the Commitment Agreement Date and prior to the date that is [***] Business Days prior to the Scheduled GAC Issuance Date (the “GAC Issuance Data Notice Date”), the Committee will provide written notice of such Data Correction as promptly as reasonably practicable to such Insurer. Such Insurer will only be responsible for incorporating into the calculation of the applicable GAC Issuance True-Up Premium those Data Corrections with respect to the applicable Contract that have been notified to such Insurer by the Committee on or prior to the GAC Issuance Data Notice Date together with any other Data Corrections identified by such Insurer (with 

  		2

   

  Commitment Agreement, dated September 13, 2022

  CONFIDENTIAL

   

  

  respect to the AAIA Contract, the “AAIA GAC Issuance Data” and, with respect to the AANY Contract, the “AANY GAC Issuance Data”). Such incorporation is subject to such Insurer’s agreement with such Data Corrections and any limitations on incorporating such Data Corrections into the applicable GAC Issuance True-Up Premium set forth in Schedule 6.  

  ii.GAC Issuance Annuity Exhibits.  [***] Business Days prior to the Scheduled GAC Issuance Date, such Insurer will deliver to the Committee proposed annuity exhibits utilizing and consistent with the Base File and the applicable GAC Issuance Data. [***] Business Days prior to the Scheduled GAC Issuance Date, the Committee will respond to such Insurer with any questions on the annuity exhibits. Such Insurer and the Committee will cooperate in good faith to resolve any discrepancies on or prior to the [***] Business Day prior to the Scheduled GAC Issuance Date.  [***] Business Days prior to the Scheduled GAC Issuance Date, such Insurer will send revised annuity exhibits to the Committee for review, which will reflect any changes agreed upon by the parties. Such Insurer may exclude from the annuity exhibits any applicable Payee for which such Insurer has not been provided each of the following: [***]. 

  iii.GAC Issuance True-Up Premium.  [***] Business Days prior to the Scheduled GAC Issuance Date, such Insurer will send the calculation of the applicable GAC Issuance True-Up Premium to the Committee for review. [***] Business Days prior to the Scheduled GAC Issuance Date, the Committee will respond to such Insurer with any questions on the applicable GAC Issuance True-Up Premium. [***] Business Days prior to the Scheduled GAC Issuance Date, such Insurer will send the updated calculation of the applicable GAC Issuance True-Up Premium to the Committee for review. Such Insurer and the Committee will cooperate in good faith to resolve any discrepancies on or prior to the [***] Business Day prior to the Scheduled GAC Issuance Date.  If the Committee and such Insurer cannot resolve any discrepancies with respect to such GAC Issuance True-Up Premium on or prior to the date that is [***] Business Days prior to the Scheduled GAC Issuance Date, such Insurer’s reasonable determination will control for purposes of such GAC Issuance True-Up Premium.

  iv.GAC Issuance True-Up Premium Payment.  The applicable GAC Issuance True-Up Premium will be paid on the Scheduled GAC Issuance Date as follows: (A) if such GAC Issuance True-Up Premium is a positive number, then the Company will, or the Committee will irrevocably direct the Plan Trustee to, pay to such Insurer an amount, in Cash, equal to such GAC Issuance True-Up Premium, plus interest calculated in accordance with Schedule 6, and such Insurer will deposit the Cash into the [***] account that supports the applicable Contract; or (B) if such GAC Issuance True-Up Premium is a negative number, then such Insurer will pay to the Plan Trust an amount, in Cash, equal to the absolute value of such GAC Issuance True-Up Premium plus interest calculated in accordance with Schedule 6.  

   

  2.Negotiation of Modified GAC Form.  After the Commitment Agreement Date, each Insurer and the Committee will each use [***] efforts to revise the Specimen GAC Form to reflect such revisions that were mutually agreed to by such Insurer and the Committee prior to the Commitment Agreement Date and will use [***] efforts to negotiate any additional revisions to the Specimen GAC Form (with respect to the AAIA Contract, the “AAIA Modified GAC Form” and, with respect to the AANY Contract, the “AANY Modified GAC Form”) and related forms of annuity certificates, subject to the following acknowledgements, limitations and conditions: 

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  a.	Regulatory Approvals.  Such Insurer will use [***] efforts to obtain regulatory approvals, to the extent required by applicable law, of the applicable Modified GAC Form prior to the Scheduled GAC Issuance Date, and in the event that any approval, to the extent required by applicable law, is not granted, or if the applicable Contract is disapproved, such Insurer and the Committee will cooperate in good faith to mutually agree on modifications to such Contract to address any requests of, with respect to the AAIA Contract, the Illinois Department of Insurance, or, with respect to the AANY Contract, the NYSDFS, and, to the extent possible, to preserve the provisions included in the applicable Modified GAC Form.  If the parties are unable to come to an agreement after good faith discussions, Insurer may in its sole reasonable discretion finalize the Contract to comply with the requests of the applicable regulatory authority.  Such Insurer will use [***] efforts to obtain regulatory approvals, to the extent required by applicable law, of customized annuity certificates to be issued by such Insurer in connection with the applicable Contract prior to the annuity certificate mailing date set forth in paragraph 5.b.

   

  b.	Contract Issuance.  Following the negotiation of the applicable Modified GAC Form and the receipt of any related regulatory approvals for all negotiated changes to the Specimen GAC Form in accordance with paragraph 2.a., subject to such Insurer’s receipt of the applicable Premium Due Date Transfers and any applicable GAC Issuance True-Up Premium, plus interest thereon, due to such Insurer, such Insurer will issue the applicable Contract on the Scheduled GAC Issuance Date using the applicable Modified GAC Form, subject to and in accordance with paragraphs 1.a., 1.b. and 1.c.. Such Contract will have an effective date that is the Premium Due Date.

   

  3.Premium Due Date Transfers.  The Committee will irrevocably direct the Plan Trustee to pay AAIA, per the wire and asset transfer instructions to be delivered to the Committee by the Insurers no later than one Business Day after the Commitment Agreement Date (the “Transfer Instructions”), $[***] (the “AAIA Premium Amount”) on the Premium Due Date, by: 

   

  (x) 	assigning, transferring and delivering to AAIA, by the Cut-Off Time, all rights, title and interests in and to each applicable Eligible Asset, and

  (y)	paying to AAIA an amount in Cash equal to the excess, if any, of the AAIA Premium Amount over the applicable Transferred Asset Valuation.

   

  The Committee will irrevocably direct the Plan Trustee to pay AANY, per the Transfer Instructions, $[***] (the “AANY Premium Amount”) on the Premium Due Date, by:

   

  (x) 	assigning, transferring and delivering to AANY, by the Cut-Off Time, all rights, title and interests in and to each applicable Eligible Asset, and

  (y)	paying to AANY an amount in Cash equal to the excess, if any, of the AANY Premium Amount over the applicable Transferred Asset Valuation.

   

  In addition, on the Premium Due Date, the Committee will irrevocably direct the Plan Trustee to  pay or cause to be paid to each Insurer the applicable Interim Asset Cash Flows (such payment, together with the payment of the 

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  Commitment Agreement, dated September 13, 2022

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  applicable Premium Amount, with respect to AAIA, the “AAIA Premium Due Date Transfers” and, with respect to AANY, the “AANY Premium Due Date Transfers”).  If on or following the Premium Due Date, the Plan, the Plan Trust or the Company receives any payments with respect to any Transferred Asset that were due and payable prior to the Commitment Agreement Date and are not reflected in the Transferred Asset Valuation used to determine either Premium Amount, then the Plan, the Plan Trust or the Company, as applicable, shall retain such payment; otherwise, the Committee will irrevocably direct the Plan Trustee to promptly pay to the applicable Insurer an amount in Cash equal to such payment. Each Insurer will deposit the applicable Premium Due Date Transfers into the applicable [***] account that supports the applicable Contract.

   

  [***]

   

  a.Schedule 2 Updates.  On the second Business Day after the Commitment Agreement Date, the Insurers will deliver to the Committee an updated Schedule 2 that reflects the Asset Market Value of each Schedule 2 Asset by providing [***]. The Committee and the Insurers shall use [***] efforts to resolve any dispute with respect to any such information on or prior to the Premium Due Date. On the Premium Due Date, the Insurers will, if needed, update Schedule 2 to reflect the removal of any asset that is not received by either Insurer prior to the Cut-Off Time. Each Insurer will, if needed, further update Schedule 2 to reflect the removal and return, if applicable, of any asset that is determined to be an Ineligible Asset or a Misstated Asset pursuant to paragraph 3.c. or 3.d.

     

  b.Asset Portfolio Activity.  On and as of the Business Day prior to the Premium Due Date, the Insurers will provide to the Committee asset portfolio activity information in the form of Schedule 3 (or in such other manner as agreed to by the parties) with respect to each Schedule 2 Asset and reflecting all Interim Asset Cash Flows. Prior to the Premium Due Date, the Committee will confirm to the Insurers in writing that such information is accurate and complete or will provide any additions, deletions or corrections to such information. The Committee and the Insurers shall use [***] efforts to resolve any dispute with respect to any such information on or prior to the Business Day prior to the Premium Due Date.  If the Committee and such Insurer, despite using [***] efforts, cannot resolve such dispute on or prior to the Business Day prior to the Premium Due Date, then such Insurer’s asset portfolio activity information will control for purposes of the Premium Due Date Transfers.

     

  c.Ineligible Assets.  By written notice to the other party on or before the [***] Business Day following the Premium Due Date, the Committee or an Insurer may identify as an Ineligible Asset any asset that was transferred to such Insurer as part of the applicable Premium Due Date Transfers and such parties will work in good faith for [***] Business Days following the receipt of such notice to agree on which, if any, assets constituting part of such Premium Due Date Transfers are Ineligible Assets. If the Committee and an Insurer agree that an asset is an Ineligible Asset within such [***] Business Days following the receipt of such notice, then, on or before the date that is [***] Business Days following such agreement, the Committee will irrevocably direct the Plan Trustee to promptly pay or cause to be paid to such Insurer an amount, in Cash, per the Transfer Instructions, equal to [***], and, simultaneously with receipt of such payment, such Insurer will return each such asset to the Plan Trust together with any Interim Asset Cash Flows associated with such asset. The Committee and such Insurer will reflect in the applicable Contract 

  		5

   

  Commitment Agreement, dated September 13, 2022

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  the removal of any Ineligible Asset from the “Cash and Transferred Assets Exhibit” to such Contract. The Committee and the applicable Insurer will use [***] efforts to resolve any dispute with respect to any Ineligible Asset.

     

  d.Misstated Assets.  By written notice to the other party on or before the [***] Business Day following the Premium Due Date, the Committee or an Insurer may identify any asset that was included on Schedule 2 and treated as if it were a Transferred Asset for purposes of determining the applicable Premium Amount but was not received by such Insurer (a “Misstated Asset”), and such parties will work in good faith for [***] Business Days following the receipt of such notice to agree on which, if any, applicable assets included on Schedule 2 are Misstated Assets. If the Committee and an Insurer agree that an asset is a Misstated Asset within such [***] Business Days following the receipt of such notice, then, on or before the date that is [***] Business Days following such agreement, the Committee will irrevocably direct the Plan Trustee to promptly pay or cause to be paid to such Insurer an amount, in Cash, per the Transfer Instructions, calculated in accordance with paragraph 3.g. The Committee and such Insurer will reflect in the applicable Contract the removal of any Misstated Asset from the “Cash and Transferred Assets Exhibit” to such Contract. The Committee and the applicable Insurer will use [***] efforts to resolve any dispute with respect to any Misstated Asset.

    

  e.Interest Payments.  Any payment made to an Insurer pursuant to paragraph 3.c or 3.d shall also include an amount, in Cash, equal to the interest on such payment calculated at an annual rate equal to [***], from the Premium Due Date through but excluding the date of such payment.

   

  f.Additional Actions with respect to Assets.  The Committee will, or will irrevocably direct the Plan Trustee to, promptly give or cause to be given all notices that are required, under applicable law and the terms of each Eligible Asset, in connection with the sale, assignment, transfer and delivery of the Eligible Assets on the Premium Due Date. The Committee will, or will irrevocably direct the Plan Trustee to, and the Insurers will promptly execute, deliver, record or file or cause to be executed, delivered, recorded or filed, any and all releases, affidavits, waivers, notices or other documents that the Committee or the Insurers may reasonably request in order to implement the transfer of the Eligible Assets, as applicable, to the Insurers. [***].

   

  g.Failure to Deliver an Eligible Asset.  In the event an Eligible Asset is not transferred to either Insurer on the Premium Due Date, including in connection with any corporate action pursuant to paragraph 3.f. above, the Committee will irrevocably direct the Plan Trustee to pay to such Insurer an amount in Cash equal to [***].

   

  h.Risk of Loss on Transferred Assets; Gains on Transferred Assets.  Each Insurer acknowledges and agrees that, if the applicable Premium Due Date Transfers occur, then, from and after the Commitment Agreement Date, such Insurer bears any and all risks associated with each applicable Transferred Asset.

     

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  Commitment Agreement, dated September 13, 2022

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  i.Available Assets.  The Company will cause the Plan Trust to have sufficient Cash or other assets (whether by means of a Cash contribution or otherwise) to enable the Plan Trustee to pay all amounts that it is directed to pay to each Insurer by the Committee pursuant to this Commitment Agreement. 

   

  4.Public Announcements.  

   

  a.Press Releases.  The Company and the Insurers have the right to issue a transaction announcement or press release regarding the transactions contemplated by this Commitment Agreement, a copy of which will be provided to the other party (or, as applicable, the other parties) for review no less than two Business Days prior to the issuance thereof, and the party or parties, as applicable, issuing the transaction announcement or press release will consider in good faith any comments made by any other party (or, as applicable, the other parties); provided, however, that, if the Company has not issued a transaction announcement or press release, the Insurers will not issue a transaction announcement or press release without the prior written consent of the Company; provided, further, that nothing contained in this paragraph 4.a. will prevent an Insurer from (i) communicating with the applicable Payees, including through communications posted to the Insurers’ website or (ii) discussing or disclosing the transactions contemplated by this Commitment Agreement so long as such disclosure does not reference the Plan or the Company’s name, industry, workforce, or other information that could reasonably allow a third party to identify the Company and/or the Plan.

   

  b.	SEC Filings.  If the Company concludes that disclosure of this Commitment Agreement and/or either or both of the Contracts is required by the rules of the Securities and Exchange Commission (“SEC”), (i) the Company will cooperate with the Insurers to make a request to the SEC for confidential treatment of information relating to the pricing of the Contracts and such other information as the Company and the Insurers mutually conclude is competitively sensitive from the perspective of the Company or the Insurers or otherwise merits confidential treatment and (ii) the Company will provide the Insurers with a copy of any material correspondence (written or oral) with the SEC regarding any such application for confidential treatment, and the Company and the Insurers will otherwise reasonably cooperate in connection with such request, including by the Company proposing to redact confidential portions of documents as to which the SEC staff seeks disclosure. 

   

  c.	No Insurer Communications.  Except to the extent the Company or Committee has provided prior written consent, from the Commitment Agreement Date until the issuance of any annuity certificate by an Insurer to an annuitant, other than as provided for in this Commitment Agreement, (i) such Insurer will cause the employees of its retirement services business unit not to initiate any contact or communication with any participant or beneficiary of the Plan in connection with any transactions other than those transactions contemplated by this Commitment Agreement and (ii) such Insurer will not, and will cause all of its affiliates not to, provide any of its respective insurance agents, wholesalers, retailers or other representatives with any contact information of such participants and beneficiaries of the Plan obtained from the Committee, the Company or any of their representatives in connection with the transactions contemplated by this Commitment Agreement, except for those representatives of such Insurer or any of its affiliates who need to know such information for purposes of the transactions contemplated by this Commitment Agreement 

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  Commitment Agreement, dated September 13, 2022

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  and agree to comply with the requirements of this Commitment Agreement. However, this paragraph 4.c. will not restrict employees of either Insurer’s retirement services business unit from contacting any participant or beneficiary of the Plan in connection with, or to facilitate, the Insurers’ performance of their obligations under the Contracts, the annuity certificates or this Commitment Agreement, in each case, as applicable. Until the mailing of the applicable Welcome Kit by an Insurer to the applicable annuitants, other than as provided for in this Commitment Agreement, if any participant or beneficiary of the Plan who is covered by the applicable Contract contacts an employee of either Insurer’s retirement services business unit, such Insurer and the Committee will cooperate to coordinate on a response to such participant or beneficiary of the Plan.

   

  5.	Welcome Kits and Annuity Certificates.  

   

  a.	Welcome Kits.  On or before [***] (or such other date agreed to by the parties) (the “Welcome Kit Mailing Date”), each Insurer will mail a welcome kit to each annuitant under the applicable Contract (each, a “Welcome Kit”). Each Insurer will send a preliminary draft of the applicable Welcome Kit to the Committee no later than [***] (or such other date agreed to by such Insurer and the Committee) and such Insurer will consider in good faith any comments made by the Committee on the Welcome Kit on or before [***] (or such other date agreed to by such Insurer and the Committee). Each Insurer and the Committee shall cooperate in good faith to finalize the applicable Welcome Kit on or before [***] (or such other date agreed to by such Insurer and the Committee).

   

  b.	Annuity Certificates.  Each Insurer will mail an annuity certificate to each applicable Payee on or before the later of (i) [***] and (ii) [***], in each case, subject to receiving regulatory approvals for any such annuity certificate, if needed (or such other date agreed to by such Insurer and the Committee). To the extent that any changes are made to the forms of the applicable annuity certificates or the related benefit terms with respect to a Contract after the Committee and the applicable Insurer have agreed on the forms of the applicable annuity certificates to be filed and the related benefit terms, the mailing of an annuity certificate to each applicable Payee shall be extended by the number of days elapsed since the Committee and such Insurer had first agreed on the forms of such annuity certificates and the related benefit terms. Each annuity certificate will include a statement informing a Payee of his or her right to obtain a copy of the applicable Contract (redacted to exclude [***]) and how to obtain such copy of such Contract. The rights of a Payee are not conditioned on the issuance of the applicable annuity certificates, and any delay in issuing a certificate shall not have any effect on the date as of which the Payee has enforceable rights against the applicable Insurer.

   

  6.Administration and Transfer.  

   

  a.Administrative Transition.  The Committee will provide or cause to be provided to each Insurer the information needed by such Insurer to administer the payments under the applicable Contract and will complete or cause to be completed all processes set forth in Schedule 5. The Committee and each Insurer will use [***] efforts to take or cause to be taken all actions and do or cause to be done all things necessary to coordinate the takeover by such Insurer of all administration responsibilities necessary to effectively 

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  Commitment Agreement, dated September 13, 2022

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  provide recordkeeping and administration services regarding direct payments to the applicable Payees under the applicable Contract commencing on the Annuity Start Date. The Committee will provide the Insurers with final census data in good order on or before the Premium Due Date in order for each Insurer to provide recordkeeping and administration services regarding payments to the applicable Payees under the applicable Contract commencing on the Annuity Start Date. The Committee agrees to cooperate with each Insurer in the takeover of such applicable recordkeeping and administration services, including ensuring that any third-party service provider provides such Insurer with any information or records relating to the Plan benefits and the applicable Payees in its possession. The Committee will make subject matter experts available to promptly address any questions the Insurers may have regarding the benefit provisions, including but not limited to forms of annuity, eligibility conditions, administrative practices and calculation methodology. Each Insurer shall perform all of its obligations contemplated under this Commitment Agreement in material compliance with all applicable laws.

   

  b.Call Center and Company Contact.  Each Insurer will maintain, at its cost and expense, a toll-free phone number and/or a website (each, a “Call Center”) which will be available starting from the Welcome Kit Mailing Date for the applicable Payees to contact such Insurer with questions related to the applicable Contract and the annuity certificates issued thereunder. For a period of five years following the Premium Due Date, the Company or Committee will maintain, at its cost and expense, a point of contact (the “Company Contact”) to which either Insurer may refer Payees who pose questions related to their Plan benefits or other Company benefits. In the event that a Payee contacts the Company with questions related to a Contract and/or annuity certificates issued thereunder, the Company may refer the Payee to the applicable Call Center. In the event that a Payee contacts an Insurer with questions related to their Plan benefits, such Insurer may refer the Payee to the Company Contact.

   

  7. Representations and Warranties.

  a.  Insurers Representations and Warranties.  Each Insurer hereby represents and warrants to the Company and Committee as of the Commitment Agreement Date and (unless otherwise stated herein) as of the Premium Due Date, severally as to itself and not jointly, that:

  i.Due Organization, Good Standing and Corporate Power.  Such Insurer is a life insurance company, duly organized, validly existing and in good standing under the laws of the State of Iowa (in the case of AAIA) and the State of New York (in the case of AANY). Such Insurer is duly qualified or licensed to do business and is in good standing in each jurisdiction in which its performance of its obligations in this Commitment Agreement and the applicable Contract makes such qualification or licensing necessary, except in such jurisdictions where the failure to be in good standing or so qualified or licensed would not be material. Such Insurer has all requisite corporate power and legal authority to enter into and carry out its obligations under this Commitment Agreement and the applicable Contract and to consummate the transactions contemplated to be undertaken by Insurer in this Commitment Agreement and the applicable Contract.

  ii.Authorization of Commitment Agreement and Enforceability.  Such Insurer has received all necessary corporate approvals and no other action on the part of such Insurer is necessary to authorize the execution, delivery and performance of this Commitment Agreement and the applicable 

  		9

   

  Commitment Agreement, dated September 13, 2022

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  Contract, and the consummation of the transactions contemplated to be undertaken by such Insurer in this Commitment Agreement and the applicable Contract. This Commitment Agreement has been duly executed and delivered by such Insurer, and is a valid and binding obligation of such Insurer, enforceable against such Insurer in accordance with its terms, subject to the applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting the enforcement of creditors’ rights generally and by general equitable principles (“Enforceability Exceptions”).  

  iii.No Conflict.  The execution, delivery and performance of this Commitment Agreement and the applicable Contract by such Insurer, and the consummation by such Insurer of the transactions contemplated to be undertaken by such Insurer in this Commitment Agreement do not (A) violate or conflict with any provision of its certificates or articles of incorporation, bylaws, code of regulations or the comparable governing documents, (B) except for the filings and approvals of state insurance governmental authorities in the applicable states listed on Schedule 7, violate or conflict with any law or order of any governmental authority applicable to such Insurer, (C) require any governmental or governmental agency approval other than any filing made or approval received as of the Commitment Agreement Date and filings with and approvals of state insurance governmental authorities in the applicable states listed on Schedule 7 or (D) require any consent of or other action by any person under, constitute a default or an event that, with or without notice or lapse of time or both, would constitute a default under, or cause or permit termination, cancellation, acceleration or other change of any right or obligation or the loss of any benefit under, any provision of any contract to which such Insurer is a party, except where the occurrence of any of the foregoing would not have a material adverse effect on such Insurer’s ability to consummate the transactions and perform its obligations contemplated by this Commitment Agreement. No filing or approval is required to issue the annuity certificates in accordance with the applicable Contract, other than any filing made or approval received as of the Commitment Agreement Date and filings with and approvals of state insurance governmental authorities in the applicable states listed on Schedule 7.

  iv.Compliance with Laws. [***], as of the Commitment Agreement Date, the business of insurance conducted by such Insurer [***] is being conducted in material compliance with applicable laws, and none of the licenses, permits or governmental approvals required for the continued conduct of the business of such Insurer as such business is currently being conducted will lapse, terminate, expire or otherwise be impaired as a result of the consummation of the transactions contemplated to be undertaken by such Insurer in this Commitment Agreement, except as, in either case, would not reasonably be expected to have, individually or in the aggregate, a material adverse effect on the ability of such Insurer to perform its obligations under this Commitment Agreement.  

  v.Accuracy of Information.  To such Insurer’s Knowledge, as of the Commitment Agreement Date, (A) all material information provided by such Insurer to the Company and Committee (other than any component incorporated into the calculation of the applicable Premium Amount or the applicable GAC Issuance True-Up Premium not calculated, determined or provided by such Insurer, including, as applicable, the Base File, and any information provided by such Insurer based on any such component) in connection with the transactions contemplated by this Commitment Agreement was, as of the date indicated on such information, true and correct in all material respects and (B) no change has occurred since the date indicated on such information that either Insurer or any of its 

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  Commitment Agreement, dated September 13, 2022

  CONFIDENTIAL

   

  

  affiliates has not publicly disclosed or disclosed to the recipient of such information that would cause such information, taken as a whole, to be materially false or misleading. 

  vi.Relationship to the Plan.  Such Insurer is not (A) a trustee of the Plan, (B) a plan administrator (within the meaning of ERISA § 3(16)(A) and the Code § 414(g) with respect to the Plan) or (C) an employer any of whose employees are covered by the Plan. Schedule 4 sets forth a true and complete list of (1) such Insurer and such Insurer’s affiliates that are investment managers within the meaning of ERISA § 3(38)(B) and (2) without duplication of clause (1), such Insurer and such Insurer’s affiliates that are registered as investment advisers under the Investment Advisers Act of 1940; provided, however, that solely with respect to the representation and warranty as to Schedule 4 to be made by such Insurer on and as of the Premium Due Date, the Insurers may update Schedule 4 through the Premium Due Date by providing a written update to the Committee so that the information included therein is current on and as of the Premium Due Date.  

  vii.No Post-Closing Liability.  Following receipt by such Insurer of the applicable Premium Due Date Transfers, the Plan, the Company, the Committee and their respective affiliates will not have any liability to pay any annuity payment under the applicable Contract.

  viii.The Applicable Contract.  The applicable Contract, when executed, will be duly executed and delivered by such Insurer and will be a valid and binding obligation of such Insurer and enforceable against such Insurer by the Company and each applicable Payee in accordance with its terms, subject to the Enforceability Exceptions. At all times, the right to a benefit and all other provisions under a Contract, in accordance with such Contract’s terms, will be enforceable at the sole choice of the applicable Payee to whom the benefit is owed under such Contract, subject to the Enforceability Exceptions. In the event that the Company, as the contract holder, ceases to exist, notifies such Insurer that it will cease to perform its obligations under the applicable Contract, or no longer has obligations under such Contract, such Contract will remain a valid and binding obligation of such Insurer, irrevocable and in full force and effect, and enforceable against such Insurer by each applicable Payee in accordance with its terms, subject to the Enforceability Exceptions. 

  ix.Litigation.  As of the Commitment Agreement Date, there is no action pending or, to such Insurer’s Knowledge, threatened against such Insurer that in any manner challenges or seeks to prevent, enjoin or materially alter or delay the transactions contemplated by this Commitment Agreement or that could reasonably be expected to materially impair or restrict such Insurer’s ability to consummate the transactions contemplated by this Commitment Agreement and to perform its obligations hereunder.

  x.No Commissions.  No fees, commissions or payments are or will be owed by such Insurer to any individual or entity in connection with the transactions contemplated in this Commitment Agreement and the applicable Contract for which any other party, or its respective affiliates or representatives, could be liable.

  xi.RBC Ratio.  As of the Commitment Agreement Date, to such Insurer’s Knowledge, no event (including a change to financial market metrics) has occurred that would reasonably be expected to result in a material adverse change to such Insurer’s risk-based capital levels as most recently filed or reported with state insurance regulators.

   

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  Commitment Agreement, dated September 13, 2022

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  b.Company Representations and Warranties.  The Company hereby represents and warrants to each Insurer as of the Commitment Agreement Date and (unless otherwise stated herein) as of the Premium Due Date that:

  i.Due Organization, Good Standing and Corporate Power.  The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. The Company is duly qualified or licensed to do business and is in good standing in each jurisdiction in which its performance of its obligations in this Commitment Agreement and the Contracts makes such qualification or licensing necessary, except in such jurisdictions where the failure to be in good standing or so qualified or licensed would not be material. The Company has all requisite power and legal authority to enter into and carry out its obligations under this Commitment Agreement and each Contract and to consummate the transactions contemplated to be undertaken by the Company in this Commitment Agreement and each Contract.  

  ii.Authorization of Commitment Agreement and Enforceability.  The Company has received all necessary approvals and no other action on the part of the Company is necessary to authorize the execution, delivery and performance of this Commitment Agreement and each Contract, and the consummation of the transactions contemplated to be undertaken by the Company in this Commitment Agreement and each Contract. This Commitment Agreement and the Contracts have been (or will be) duly executed and delivered by the Company, and each Contract is (or when executed will be) a valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, subject to the Enforceability Exceptions.  

  iii.No Conflict.  The execution, delivery and performance of this Commitment Agreement and each Contract by the Company, and the consummation by the Company of the transactions contemplated to be undertaken by the Company in this Commitment Agreement do not (A) violate or conflict with any provision of the Plan and any documents and instruments governing the Plan as contemplated under ERISA § 404(a)(1)(D) (the “Plan Governing Documents”), the certificates or articles of incorporation, bylaws, code of regulations or the comparable governing documents of the Company, (B) violate or conflict with any law or order of any governmental authority applicable to the Company or the Plan Governing Documents, (C) require any governmental or governmental agency approval or (D) require any consent of or other action by any person under, constitute a default or an event that, with or without notice or lapse of time or both, would constitute a default under, or cause or permit termination, cancellation, acceleration or other change of any right or obligation or the loss of any benefit under, any provision of any contract to which the Company is a party, except where the occurrence of any of the foregoing would not have a material adverse effect on the Company’s ability to consummate the transactions and perform its obligations contemplated by this Commitment Agreement.

  iv.Fiduciary.  The Committee has been duly appointed as fiduciary of the Plan with respect to the purchase of one or more group annuity contracts to (A) be the sole fiduciary responsible for selecting one or more insurers to provide annuities in accordance and compliance with the ERISA Requirements, (B) determine whether the transactions contemplated by this Commitment Agreement and the Contracts satisfy the ERISA Requirements, (C) represent the interests of the Plan and its participants and beneficiaries in connection with the negotiation of a commitment agreement and the terms of any other agreements with Insurer, including the Contracts and the annuity certificates, (D) direct the Plan Trustee on behalf of the Plan to transfer the applicable Premium Due Date Transfers in connection with the consummation of the 

  		12

   

  Commitment Agreement, dated September 13, 2022

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  transactions contemplated by this Commitment Agreement and any amounts required pursuant to paragraph 1.d.iv. and (E) take all other actions on behalf of the Plan necessary to effectuate the foregoing.

  v.Litigation.  There is no action pending or, to the Company’s Knowledge, threatened against the Company or the Plan that in any manner challenges or seeks to prevent, enjoin or materially alter or delay the transactions contemplated by this Commitment Agreement or that could reasonably be expected to materially impair or restrict such party’s ability to consummate the transactions contemplated by this Commitment Agreement and to perform its obligations hereunder.

  vi.No Commissions.  No fees, commissions or payments are or will be owed by the Company to any individual or entity in connection with the transactions contemplated in this Commitment Agreement and each Contract for which any other party, or its respective affiliates or representatives, could be liable.

   

  c.Committee Representations and Warranties.  The Committee hereby represents and warrants to each Insurer and the Company as of the Commitment Agreement Date and (unless otherwise stated herein) as of the Premium Due Date that:

  i.Authorization of Commitment Agreement and Enforceability.  The Committee has received all necessary internal approvals and no other action on the part of Committee is necessary to authorize the execution, delivery and performance of this Commitment Agreement, and the consummation of the transactions contemplated to be undertaken by Committee in this Commitment Agreement. This Commitment Agreement has been duly executed and delivered by Committee and is a valid and binding obligation of the Committee, enforceable against the Committee in accordance with its terms, subject to the Enforceability Exceptions. 

  ii.No Conflict.  The execution, delivery and performance of this Commitment Agreement by Committee and the consummation by the Committee of the transactions contemplated to be undertaken by the Committee in this Commitment Agreement do not (A) violate or conflict with any provision of the Plan and any Plan Governing Documents, (B) violate or conflict with any law or order of any governmental authority applicable to Committee or the Plan Governing Documents, (C) require any governmental or governmental agency approval or (D) require any consent of or other action by any person under, constitute a default or an event that, with or without notice or lapse of time or both, would constitute a default under, or cause or permit termination, cancellation, acceleration or other change of any right or obligation or the loss of any benefit under, any provision of any contract to which the Committee is a party, except where the occurrence of any of the foregoing would not have a material adverse effect on the Committee’s ability to consummate the transactions and perform its obligations contemplated by this Commitment Agreement.

  iii.Accuracy of Information.  To the Committee’s Knowledge, (A) the mortality experience data file(s) provided by or on behalf of the Company to the Insurers identified on Schedule 8 did not contain any misstatements or omissions that were, in the aggregate, material and (B) the data in respect of benefit amounts, forms of annuities, date of birth, date of death, state of residence, gender, plan indicator, lump-sum indicator, hourly/salaried indicator, status (e.g. in-pay, deferred, beneficiary, etc.), years of service and any other relevant information, in each case, with respect to the Payees that was furnished by or on behalf of the Company to the Insurers, was not generated using any materially incorrect systematic assumptions or material omissions.

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  CONFIDENTIAL

   

  

  iv.Compliance with ERISA.  The Plan and the Plan Trust are maintained under and subject to ERISA and, to the Committee’s Knowledge, are in compliance with ERISA in all material respects. To the Committee’s Knowledge, no event has occurred that is reasonably likely to result in the Plan losing its status as qualified by the Code for preferential tax treatment under Code §§ 401(a) and 501(a). All Plan amendments necessary to effect the transactions contemplated by this Commitment Agreement and each Contract have been duly executed and, to the extent that they require authorization by the Committee or the Company, have been, or will be by the Premium Due Date, duly authorized and made by the Committee or the Company, as applicable.

  v.Plan Investments.  To the Committee’s Knowledge, neither Insurer nor any of the Insurers’ affiliates is a fiduciary of the Plan who either (A) has or exercises any discretionary authority or control with respect to the investment of Plan Assets that are or will be involved in the transactions contemplated by this Commitment Agreement or either Contract or (B) renders investment advice (within the meaning of ERISA § 3(21)(A)(ii) or Code § 4975(e)(3)(B)) with respect to such assets. There are no commingled investment vehicles that hold Plan Assets, the units of which are or will be Plan Assets involved in the transactions contemplated by this Commitment Agreement or either Contract. No Plan Assets that are or will be involved in the transactions contemplated by this Commitment Agreement or either Contract are or will be managed by any investment manager listed on Schedule 4, and no investment advisor listed on Schedule 4 renders or will render investment advice (within the meaning of ERISA § 3(21)(A)(ii)) with respect to those assets. The Plan Assets that are or will be involved in the transactions contemplated by this Commitment Agreement or either Contract will, immediately prior to the Commitment Agreement Date, be exclusively managed by Rank Treasury Limited. Rank Treasury Limited has not engaged and will not engage any sub-managers or advisors with respect to its management of the Plan Assets that are or will be involved in the transactions contemplated by this Commitment Agreement or either Contract. Investment advice (within the meaning of ERISA § 3(21)(A)(ii)) with respect to the Plan Assets that are or will be involved in the transactions contemplated by this Commitment Agreement or either Contract is and will be exclusively rendered by Rank Treasury Limited.

  vi.Plan Trustee is Directed Trustee.  The Plan Trustee has been duly appointed as the directed trustee of the Plan Trust and is obligated to follow the Committee’s direction to effectuate and consummate the transactions contemplated by this Commitment Agreement.

  vii.Tax Status.  The Plan is intended to be qualified under Code § 401(a). To the Committee’s Knowledge, no event has occurred that is reasonably likely to result in the Plan losing its status as qualified by the Code for preferential tax treatment under Code §§ 401(a) and 501(a).

  viii.ERISA Related Determinations.

  A.The Committee has selected each Insurer to issue the applicable Contract as set forth in this Commitment Agreement and such selection, the transactions contemplated by this Commitment Agreement, the purchase of the Contracts and the Plan’s use of assets for the purchase of the Contracts as contemplated by this Commitment Agreement and each Contract (including its terms) each satisfies the ERISA Requirements.

  B.The transactions contemplated by this Commitment Agreement and the purchase of the Contracts do not result in a Non-Exempt Prohibited Transaction, provided that the representations in paragraphs 7.a.vi and 7.b.vi are true and correct in all material respects as of the Premium Due Date.

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  C.The Plan Trust will pay no more than “adequate consideration” for the Contracts within the meaning of “adequate consideration” under ERISA § 408(b)(17)(B) and Code § 4975(f)(10).

  ix.Litigation.  There is no action pending or, to Committee’s Knowledge, threatened against the Committee or the Plan that in any manner challenges or seeks to prevent, enjoin or materially alter or delay the transactions contemplated by this Commitment Agreement or that could reasonably be expected to materially impair or restrict such party’s ability to consummate the transactions contemplated by this Commitment Agreement and to perform its obligations hereunder.

  x.No Commissions.  No fees, commissions or payments are or will be owed by the Committee to any individual or entity in connection with the transactions contemplated in this Commitment Agreement and the Contracts for which any other party, or its respective affiliates or representatives could be liable.

   

  8.Definitions.  For purposes of this Commitment Agreement, the following defined terms will have the following meanings:

   

  a.“AAIA” is defined in the preamble.

  b.“AAIA Contract” is defined in the preamble.

  c.“AAIA GAC Issuance Data” is defined in paragraph 1.d.i.

  d.“AAIA Modified GAC Form” is defined in paragraph 2.

  e.“AAIA Premium Amount” is defined in paragraph 3.

  f.“AAIA Premium Due Date Transfers” is defined in paragraph 3.

  g.“AANY” is defined in the preamble.

  h.“AANY Contract” is defined in the preamble.

  i.“AANY GAC Issuance Data” is defined in paragraph 1.d.i.

  j.“AANY Modified GAC Form” is defined in paragraph 2.

  k.“AANY Premium Amount” is defined in paragraph 3.

  l.“AANY Premium Due Date Transfers” is defined in paragraph 3.

  m.[***].

  n.“Annuity Start Date” means January 1, 2023.

  o.“Asset Market Value” means (i) the close-of-market Fair Market Value of a Schedule 2 Asset as of the close of business on the Business Day prior to the Commitment Agreement Date, plus (ii) accrued interest on such Schedule 2 Asset as of the close of business on the Business Day prior to the Commitment Agreement Date.  For purposes of paragraph 3.c, which relates to “Ineligible Assets” instead of “Schedule 2 Assets,” the reference in this definition to “Schedule 2 Asset” shall instead refer to “Ineligible Asset.” For purposes of paragraph 3.d, which relates to “Misstated Assets” instead of “Schedule 2 Assets,” the reference in this definition to “Schedule 2 Asset” shall instead refer to “Misstated Asset.”

  p.“Authorized Persons” is defined in paragraph 10.d.

  q.“Base File” means the data file titled “20220817_Project Nightfall_Annuity Purchase Data (for Insurers).xlsx”, provided on behalf of the Company to the Insurers via email with a link to a secure website at 7:07 a.m. eastern time on August 17, 2022.

  r.“Business Day” means any day other than a Saturday, a Sunday or a day on which banks located in New York, New York are authorized or required by law to close.

  s.“Call Center” is defined in paragraph 6.b.

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  t.“Cash” means a wire transfer, through the Federal Reserve System, of currency of the United States of America.

  u.[***].

  v.“Code” means the Internal Revenue Code of 1986 and the applicable Treasury Regulations issued thereunder.

  w.“Committee” is defined in the preamble.

  x.“Commitment Agreement” is defined in the preamble.

  y.“Commitment Agreement Date” is defined in the preamble.

  z.“Company” is defined in the preamble.

  aa.“Company Contact” is defined in paragraph 6.b.

  bb.“Contracts” is defined in the preamble.

  cc.“Cut-Off Time” means 1:00 p.m. eastern time on the Premium Due Date.

  dd.“Data Breach” is defined in paragraph 10.d.

  ee.“Data Correction(s)” is defined in Schedule 6.

  ff.“Eligible Asset” means, with respect to any Insurer, a Schedule 2 Asset (i) [***], and  (ii) to which the Plan Trust has valid title, free and clear of all Liens, other than Permitted Liens on the Premium Due Date at the time of transfer.

  gg.“Enforceability Exceptions” is defined in paragraph 7.a.ii.

  hh.“ERISA” means Employee Retirement Income Security Act of 1974, as amended, and any federal agency regulations promulgated thereunder that are currently in effect and applicable.

  ii.“ERISA Requirements” means all of the applicable requirements of ERISA and applicable guidance promulgated thereunder, including Interpretive Bulletin 95-1.

  jj.“Fair Market Value” means the fair market value as of the applicable date for a Schedule 2 Asset in an amount equal to the fair market value as of such date for such Schedule 2 Asset as indicated (i) by the primary pricing source set forth in the table below that corresponds to the applicable asset class of such Schedule 2 Asset, (ii) if such primary pricing source is not available or no fair market value is indicated by such primary pricing source for such Schedule 2 Asset, by the secondary pricing source set forth in the table below that corresponds to the applicable asset class of such Schedule 2 Asset, or (iii) if neither such primary nor secondary pricing source is available or no fair market value is indicated by either such source for such Schedule 2 Asset, by the tertiary pricing source, if any, set forth in the table below that corresponds to the applicable asset class of such Schedule 2 Asset.  For any applicable pricing source, the Mid Price as of 3 p.m. eastern time will be used.  

   

  						
	Asset Class
	Primary Pricing Source
	Secondary Pricing Source
	Tertiary Pricing Source

	Treasuries
	ICE
	[***]
	[***]

	Agencies
	ICE
	[***]
	[***]

	IG Corp
	ICE
	[***]
	[***]

	Emerging 
	ICE
	[***]
	[***]

	HY
	ICE
	[***]
	   [***]

   

  kk.[***].

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  ll.“GAC Issuance Data” means, with respect to AAIA, the AAIA GAC Issuance Data and, with respect to AANY, the AANY GAC Issuance Data.

  mm.“GAC Issuance Data Notice Date” is defined in paragraph 1.d.i.

  nn.“GAC Issuance True-Up Premium” is defined in Schedule 6.

  oo.“ICE” means the Intercontinental Exchange.

  pp.“Indemnified Party” is defined in paragraph 9.

  qq.[***].

  rr.“Insurers” is defined in the preamble.

  ss.“Interim Asset Cash Flows” means, with respect to the Transferred Assets, the aggregate amount paid by the issuer of each asset to the record owner as of any day during the period from and including the Commitment Agreement Date and to but excluding the date that the Premium Due Date Transfers occur, (i) with respect to any coupon, plus (ii) with respect to cash flows received on such assets, including but not limited to principal payments, principal redemptions and tender offers but not including coupons described in clause (i).  Interim Asset Cash Flows will not include any payments made with respect to any Transferred Assets that were due prior to the Commitment Agreement Date and any other cash flows not principal- or interest-related (such as class action payment receipt and litigation payment) relevant to events occurring prior to the Commitment Agreement Date. For purposes of paragraph 3.b, which relates to “Schedule 2 Assets” instead of “Transferred Assets,” the reference in this definition to “Transferred Assets” shall instead refer to “Schedule 2 Assets”.  For purposes of paragraph 3.c, which relates to “Ineligible Assets” instead of “Transferred Assets,” the reference in this definition to “Transferred Assets” shall instead refer to “Ineligible Assets”.

  tt.“Knowledge” means actual knowledge after making appropriate inquiry. 

  uu.“Lien” means any lien, mortgage, security interest, pledge, deposit, encumbrance, restrictive covenant or other similar restriction.

  vv.“Mid Price” means, for any applicable pricing source set forth in the definition of Fair Market Value, the mid price as provided by the pricing source.

  ww.“Misstated Asset” is defined in paragraph 3.d.

  xx.“Modified GAC Form” means, with respect to AAIA, the AAIA Modified GAC Form and, with respect to AANY, the AANY Modified GAC Form.

  yy."NDA” is defined in paragraph 10.b.

  zz.“Non-Exempt Prohibited Transaction” means a transaction prohibited by ERISA § 406 or Code § 4975, for which no statutory exemption or U.S. Department of Labor class exemption is available.

  aaa.“NYSDFS” means the New York State Department of Financial Services.

  bbb.“Payee” means, with respect to any Contract, any payee under such Contract, including annuitants, contingent annuitants, alternate payees and beneficiaries, as applicable. 

  ccc.“Permitted Liens” means: 

  i.any Liens created by operation of law in respect of restrictions on transfer of securities (other than restrictions relating to the transfer of a Transferred Asset on the Premium Due Date in violation of applicable law); or 

  ii.with respect to any Transferred Asset, any transfer restrictions or other limitations on assignment, transfer or the alienability of rights under any indenture, debenture or other similar governing 

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  agreement to which such assets are subject (other than restrictions relating to the transfer of such an asset on the Premium Due Date in violation of any such restriction).

  ddd.“Plan” is defined in the preamble.

  eee.“Plan Asset” means an asset of the Plan within the meaning of ERISA.

  fff.“Plan Governing Documents” is defined in paragraph 7.b.iii.

  ggg.“Plan Trust” means the Pactiv General Employee Benefit Trust. 

  hhh.“Plan Trustee” means Northern Trust Company in its capacity as trustee for the Plan Trust.

  iii.[***].

  jjj.“Premium Amount” means, with respect to AAIA, the AAIA Premium Amount and, with respect to AANY, the AANY Premium Amount.

  kkk.“Premium Due Date” means September 20, 2022. 

  lll.“Premium Due Date Transfers” means, with respect to AAIA, the AAIA Premium Due Date Transfers and, with respect to AANY, the AANY Premium Due Date Transfers.

  mmm.“Schedule 2 Asset” means each asset listed from time to time on Schedule 2, including any updated Schedule 2 pursuant to paragraph 3.a.

  nnn.“Scheduled GAC Issuance Date” means, with respect to any Contract, [***], or such other date agreed upon by the Company and the applicable Insurer.

  ooo.“SEC” is defined in paragraph 4.b.

  ppp.“Specimen GAC Form” is defined in paragraph 1.a.

  qqq.[***].

  rrr.“Transfer Instructions” is defined in paragraph 3.

  sss."Transferred Asset” means, with respect to any Insurer, each Eligible Asset transferred to and received by such Insurer by the Cut-Off Time on the applicable Premium Due Date.  Until valid title to an Eligible Asset has transferred to an Insurer, such asset is not a Transferred Asset.

  ttt.“Transferred Asset Market Value” means (i) the close of market Fair Market Value of a Transferred Asset as of the close of business on the Business Day prior to the Commitment Agreement Date, plus (ii) accrued interest on such Transferred Asset as of the close of business on the Business Day prior to the Commitment Agreement Date.

  uuu.“Transferred Asset Valuation” means, with respect to any Insurer, the sum of the Transferred Asset Market Value for each applicable Transferred Asset.

  vvv.[***].

  www.[***].

  xxx.“Welcome Kit” is defined in paragraph 5.a.

  yyy.“Welcome Kit Mailing Date” is defined in paragraph 5.a.

   

  9.Indemnification by the Insurers.

   

  From and after the Premium Due Date, each Insurer agrees, severally as to itself and not jointly, to indemnify, defend and hold the Company, the Plan, the Committee and their respective affiliates, officers, directors, employees, Plan fiduciaries, agents and other representatives (each, an “Indemnified Party”) harmless from and against any and all actual, but not potential or contingent, losses, damages, costs and expenses (in each case, including reasonable out of pocket expenses and reasonable fees and expenses of counsel) to the extent arising out of or relating to the portion 

  		18

   

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  CONFIDENTIAL

   

  

  of any action, lawsuit, proceeding, investigation, demand or other claim against such Indemnified Party by a third party that is threatened or brought against or that involves an Indemnified Party and that arises out of or relates to (a) any breach by such Insurer of a representation, warranty or covenant under this Commitment Agreement or the applicable Contract or (b) any failure by such Insurer to make, or cause to be made, any payments required to be made by such Insurer pursuant to the applicable Contract or the annuity certificates issued thereunder.

   

  10.Miscellaneous.  

   

  a.This Commitment Agreement, together with the Schedules to this Commitment Agreement, which are incorporated by reference and made a part of this Commitment Agreement as if fully set forth herein, and the NDA together constitute the sole and entire agreement of the parties to this Commitment Agreement with respect to the subject matter contained herein and therein. Upon issuance of the Contracts, in the event of a conflict between this Commitment Agreement and the applicable Contract, the terms of the applicable Contract shall prevail. The parties each hereby acknowledge that they jointly and equally participated in the drafting of this Commitment Agreement and all other agreements contemplated hereby, and no presumption will be made that any provision of this Commitment Agreement will be construed against any party by reason of such role in the drafting of this Commitment Agreement or any other agreement contemplated hereby. No amendment of any of the provisions hereof shall be effective unless set forth in writing and signed by each party hereto. No waiver by any party of any of the provisions hereof shall be effective unless explicitly set forth in writing and signed by the party so waiving. No failure to exercise, or delay in exercising, any right, remedy, power or privilege arising from this Commitment Agreement shall operate or be construed as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power, or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.  Except to the extent expressly provided in this Commitment Agreement, nothing in this Commitment Agreement shall confer any rights or remedies upon any person other than the parties hereto.

   

  b.Notwithstanding anything to the contrary in the Mutual Non-Disclosure Agreement, dated as of [***], between the Company and [***] (the “NDA”), (i) nothing in this Commitment Agreement or the NDA shall be construed to prohibit the Insurers, the Company, the Committee or the Plan from [***], and (ii) neither Insurer will be required to return or destroy any Confidential Information (as defined in the NDA) and neither Insurer will be restricted in its use or disclosure of any Confidential Information related to Payees, annuity payments under the applicable Contract or the pricing or underwriting of the applicable Contract, received from another party, provided, that each Insurer will use such confidential information only in compliance with all applicable laws relating to privacy of personally identifying information and only for purposes of performing such Insurer’s obligations under this Commitment Agreement and the applicable Contract.

    

  c.This Commitment Agreement shall be governed by and construed in accordance with the internal laws of the State of New York without giving effect to any choice or conflict of law provision or rule (whether of the State of New York or any other jurisdiction). Any legal suit, action, or proceeding arising out of or relating to this Commitment Agreement or the transactions contemplated hereby may be instituted in the courts of the State of New York in each case located in the city of New York and County of New York, and each 

  		19

   

  Commitment Agreement, dated September 13, 2022

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  party hereby irrevocably submits to the non-exclusive jurisdiction of such courts in any suit, action, or proceeding. The parties agree that irreparable damage may occur if any provisions of this Commitment Agreement were not performed in accordance with the terms hereof and that the parties shall be entitled to seek equitable relief, including injunctive relief or specific performance of the terms hereof, in addition to any other remedy to which they are entitled at law or in equity. To the fullest extent permitted by law, none of the parties will be liable to any other party for any punitive or exemplary damages of any nature in respect of matters arising out of this Commitment Agreement.

   

  d.Each Insurer will comply, and will use [***] efforts to ensure that all of its affiliates, agents, and subcontractors comply, with all applicable state and federal laws governing the confidential information of all applicable Payees, including those laws relating to privacy, data security and protection and the safeguarding of such information, and its maintenance, disclosure and use.  Each Insurer will maintain [***] administrative, technical and physical safeguards to protect the privacy and security of the confidential information related to the applicable Payees in its custody or under its control.  Each Insurer has established and will maintain [***] internal written policies relating to the confidential information of any applicable Payee in its custody or under its control.  Each Insurer will comply in all material respects with any internal written policies relating to the confidential information of any applicable Payee in its custody or under its control as in effect from time to time.  Each Insurer acknowledges that it is responsible from and after the Commitment Agreement Date for any Data Breach with respect to the applicable Payee data. For purposes of this paragraph 10.d., “Data Breach” with respect to an Insurer means any act or omission by such Insurer or its agents, subcontractors or service providers (“Authorized Persons”) that compromises either the security, confidentiality or integrity of any applicable Payee data in its custody or under its control or the physical, technical, administrative or organizational safeguards put in place by such Insurer (or any Authorized Persons) that relate to the protection of the security, confidentiality or integrity of any personally identifying information of any applicable Payee that is in its custody or under its control.

   

  e.Neither of the Insurers nor the Company shall assign or transfer this Commitment Agreement or any of its rights or obligations hereunder without the prior written consent of the other parties. Any assignment or transfer in violation of this paragraph 10.e. will be null and void from the outset, without any effect whatsoever.

   

  f.This Commitment Agreement may be executed in any number of counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.

   

  [Remainder of Page Intentionally Left Blank]

  IN WITNESS WHEREOF, the Company, Committee and the Insurers have executed this Commitment Agreement as of the date first written above.

   

   

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  Commitment Agreement, dated September 13, 2022

  CONFIDENTIAL

   

  

  		
	Athene Annuity and Life Company
	Pactiv LLC

	By: _____/s/ [**]___________________________ 
	By: ___/s/ Chandra Mitchell__________________

	Print Name: __[**]_________________________   
	Print Name: __Chandra J. Mitchell____________   

	Title: _______[**]__________________________
	Title: ___VP, General Counsel & Secretary________

   

  		
	 
	 

	Athene Annuity & Life Assurance Company
of New York
	Pactiv Evergreen Inc. Pension Plans Investment Committee

	By: _____/s/ [**]___________________________ 
	By: ___/s/ Chandra Mitchell__________________

	Print Name: __[**]_________________________   
	Print Name: __Chandra J. Mitchell____________   

	Title: _______[**]__________________________
	Title: ___Authorized Signatory_______________

   

  ** Redacted pursuant to Item 601(a)(6) of Regulation S-K.

   

   

   

  Pursuant to Item 601(a)(5) of Regulation S-K, the Schedules to this Agreement listed below have not been filed:

   

  Schedule 1	Specimen GAC Form

  Schedule 2	List of Schedule 2 Assets

  Schedule 3	Interim Asset Cash Flows

  Schedule 4	Investment Managers and Investment Advisers

  Schedule 5	Administration and Transfer

  Schedule 6	GAC Issuance True-Up Premium

  Schedule 7	State Insurance Governmental Authorities

  Schedule 8	Historical Mortality Data

  Schedule 9	Disclosure Schedule

   

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