UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 20-F
☒ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
☐ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended ___________.
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
☐ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of event requiring this shell company report __________
For the transition period from ______ to ______
Commission file number:
Indivior PLC
(Exact name of Registrant as specified in its charter and translation of Registrant’s name into English)
England and Wales
(Jurisdiction of incorporation or organization)
10710 Midlothian Turnpike, Suite 125
North Chesterfield, Virginia 23235
(Address of principal executive offices)
| | | | | |
Mark Crossley, Chief Executive Officer Indivior PLC 10710 Midlothian Turnpike, Suite 125 North Chesterfield, Virginia 23235 (804) 379-1090; cosec@indivior.com | Copies to: Michael Levitt Freshfields Bruckhaus Deringer US LLP 601 Lexington Avenue, 31st Floor, New York, NY 10022 (212) 277-4000 |
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
Securities registered or to be registered pursuant to Section 12(b) of the Act: | | | | | | | | |
| Title of each class | Trading Symbol | Name of each exchange on which registered |
| Ordinary shares, $0.50 nominal value per share | INDV | Nasdaq Global Select Market |
Securities registered or to be registered pursuant to Section 12(g) of the Act: None
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report:
N/A
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ☐ Yes ☒ No
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. ☐ Yes ☐ No
Note – Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☐ Yes ☐ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☐ Yes ☐ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definition of “large accelerated filer,” "accelerated filer,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
| | | | | | | | |
| Large accelerated filer ☐ | Accelerated Filer ☐ | Non-accelerated filer ☒ |
| Emerging growth company ☒ | | |
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. ☐
† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing: U.S. GAAP ☐
International Financial Reporting Standards as issued by the International Accounting Standards Board ☒ Other ☐
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow. Item 17 ☐ Item 18 ☐
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☐
(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☐ No ☐
TABLE OF CONTENTS
GLOSSARY
ACO means acute cannabinoid overdose.
ADS means American Depositary Shares (“ADS”), a method by which the Group’s ordinary shares presently trade in the United States over-the-counter market. We intend to replace our ADSs with ordinary shares listed on the Nasdaq Global Select Market following the U.S. Listing. See “Item 9.” ANDA means an additional new drug application filed with the FDA.
AUD means alcohol use disorder.
Aelis means Aelis Farma, a French company from whom we obtained an exclusive option for AEF0117, a synthetic CB1 specific signaling inhibitor designed to treat cannabis-related disorders.
ANDA Litigation means legal proceedings related to intellectual property matters involving Dr. Reddy’s Laboratories S.A. and Dr. Reddy’s Laboratories, Inc. and separately, Alvogen Pine Brook LLC and Alvogen Inc.
BMAT means buprenorphine-medically assisted treatment, the process to treat OUD patients treated with Buprenorphine (as opposed to methadone).
Companies Act mean the UK Companies Act 2006 as amended, and the regulations made thereunder, which is the principal legislation under which we operate, and under which our ordinary share capital has been created.
CHMP means the Committee for Medicinal Products for Human Use, which is the relevant scientific committee in most cases with which one files marketing authorization applications under the EMA.
CIA refers to the Corporate Integrity Agreement which Indivior Inc. entered into in July 2020 with HHS-OIG. The five-year CIA requires, among other things, that Indivior Inc. implement measures designed to ensure compliance with the statutes, regulations, and written directives of U.S. Medicare, U.S. Medicaid, and all other U.S. federal healthcare programs, as well as with the statutes, regulations, and written directives of the U.S. Food and Drug Administration.
CJS means criminal justice system.
CMS means the Centers for Medicare and Medicaid Services.
CMO means a contract manufacturing organization.
CNS means central nervous system.
Companies Act means the Companies Act 2006 (of the United Kingdom).
Compliance Measures means certain compliance measures set forth in Section I of Addendum A to the Resolution Agreement which is filed as Exhibit 4.3 hereto.
CREST means the system for the paperless settlement of trades in securities and the holding of uncertificated securities in accordance with the CREST Regulations operated by Euroclear UK and International Limited.
CRO means a contract research organization, a third-party that performs clinical research on our behalf.
CUD means cannabis use disorder.
DATA 2000 means the Drug Addiction and Treatment Act of 2000.
DEA means the United States Drug Enforcement Agency.
Demerger means the acquisition of the specialty pharmaceutical business unit of RB by Indivior PLC, which became effective on December 23, 2014.
Demerger Agreement refers to that certain agreement entered into on November 17, 2014 between Indivior PLC and RB, Reckitt Benckiser Healthcare (UK) Limited, RB Pharmaceuticals Limited and RBP Global Holdings Limited to effect the Demerger and to govern the relationship between RB and Indivior PLC following the Demerger.
DIs means depositary interests issued through CREST by Computershare Investor Services PLC representing a beneficial interest in an ordinary share.
DSM-IV means the Diagnostic and Statistical Manual of Mental Disorders, Fourth Edition, which is the official manual of the American Psychiatric Association. Its purpose is to provide a framework for classifying disorders and defining diagnostic criteria for the disorders listed.
DOJ means the U.S. Department of Justice.
DTC means The Depository Trust Company.
Exchange Act means the U.S. Securities Exchange Act of 1934, as amended.
EMA means the European Medicines Agency.
FCP means our Fine Chemical Plant at which we manufacture the active pharmaceutical ingredient buprenorphine.
FFDCA means the Federal Food, Drug, and Cosmetic Act under which the FDA derives its authority to regulate pharmaceuticals.
FDA means the U.S. Food and Drug Administration.
FTC means the U.S. Federal Trade Commission.
FTC Order means that certain Stipulated Order for Permanent Injunction and Equitable Monetary Relief in the United States District Court for the Western District of Virginia, Abingdon, between the Federal Trade Commission and Indivior Inc. entered July 24, 2020. As part of the resolution with the FTC and as detailed in the text of the FTC Order, for a ten-year period Indivior Inc. is required to make specified disclosures to the FTC and is prohibited from certain conduct. See “Item 10. Additional Information—C. Material Contracts.” HCl means buprenorphine hydrochloride, the active pharmaceutical ingredient used in the formulation of SUBLOCADE long-acting injection, SUBOXONE Film, SUBUTEX Tablet, SUBOXONE Tablet, and BUPRENEX.
HCP means healthcare provider, and may refer to a physician, physician’s assistant, or nurse, under appropriate circumstances.
HHS-OIG means the Health and Human Services Office of the Inspector General.
ICH means International Conference on Harmonization, which publishes guidelines by which clinical trials of medicinal products in the EU must be conducted.
IND means an investigative new drug application filed with the FDA.
Indivior Inc. is an indirect wholly-owned United States subsidiary of the Group and directly or through its subsidiaries the entity that commercializes our products and runs the Group’s operations in the United States.
MAT means medication-assisted treatment.
“Merger” means the transactions contemplated by that certain Agreement and Plan of Merger dated as of November 13, 2022 among certain of our subsidiaries and Opiant Pharmaceuticals, Inc., a specialty pharmaceutical company developing medicines for addictions and drug overdose, pursuant to which Opiant would become our wholly-owned subsidiary, which was effective March 2, 2023 (the “Merger”).
MHRA means the UK Medicines and Healthcare products Regulatory Agency.
MOUD means medication for opioid use disorder, which is the use of medications, in combination with counseling and behavioral therapies, to provide a “whole-patient” approach to the treatment of substance use disorders. Medications used in MOUD are approved by the FDA and MOUD programs are clinically driven and tailored to meet each patient’s needs.
NDA means a new drug application submitted to the NDA for FDA review, which generally must include data from at least two well-controlled clinical trials demonstrating safety and effectiveness, as well as characterization of the drug product and a description of the manufacturing process, controls and facilities.
OHS means an Organized Health System, which is a network of physician organization (such as a hospital system) that provides or manages the provision of a coordinated continuum of healthcare services to a defined population.
“Opiant” means Opiant Pharmaceuticals, Inc., a specialty pharmaceutical company developing medicines for addictions and drug overdose. We completed our acquisition of Opiant on March 2, 2023. For more information see Item 4.A.History and Development of the Company - Acquisition of Opiant. OPNT003 refers to our product OPVEE® (nalmefene) nasal spray.
OPVEE, formally known as OPNT003, means OPVEE® (nalmefene) nasal spray, which is an opioid receptor antagonist approved by the Food and Drug Administration (FDA) to reverse opioid overdose. OPVEE is indicated for the emergency treatment of known or suspected opioid overdose induced by natural or synthetic opioids in adults and pediatric patients aged 12 years and older, as manifested by respiratory and/or central nervous system depression. OPVEE (nalmefene) nasal spray is intended for immediate administration as emergency therapy in settings where opioids may be present. OPVEE (nalmefene) nasal spray is not a substitute for emergency medical care.
OUD means opioid use disorder.
RB means Reckitt Benckiser Group PLC.
RB Group means RB and its subsidiaries.
REMS means a risk evaluation and mitigation strategy. The FDA has the authority to require the manufacturer to provide a REMS that is intended to ensure that the benefits of a drug product (or class of drug products) outweigh the risks of harm.
Resolution Agreement refers to an agreement by and among Indivior PLC, Indivior Inc., the United States Attorney’s Office for the Western District of Virginia, and the United States Department of Justice’s Consumer Protection Branch made as of July 24, 2020 by which the Group settled with DOJ, the FTC, and U.S. state attorneys general the criminal and civil liability in connection with a multi-count indictment brought in April 2019 by a grand jury in the Western District of Virginia, a civil lawsuit joined by the DOJ in 2018, and an FTC investigation. See “Item 10.—C. Material Contracts—Resolution Agreement” and “Item 18. Financial Statements—Audited Consolidated Financial Statements—Note 19, Provision and Other Liabilities” for more information. The Resolution Agreement is filed as Exhibit 4.3 hereto. SEC means the United States Securities and Exchange Commission.
Securities Act means the U.S. Securities Act of 1933, as amended.
U.S. Listing means the process of applying to have our ordinary shares listed on the Nasdaq Global Select Market under the symbol “INDV”.
WHO means the World Health Organization.
ABOUT THIS REGISTRATION STATEMENT
As used herein, references to “we,” “us,” the “Company,” “Indivior,” “Indivior PLC,” “Indivior Group” or the “Group,” or similar terms in this Form 20-F mean Indivior PLC and, as the context requires, its consolidated subsidiaries.
Our consolidated financial statements appearing in this registration statement on Form 20-F are prepared in U.S. dollars and in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS”). Also, our condensed consolidated financial statements for each of the three months ended March 31, 2023 and 2022 have been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting,’ and should be read in conjunction with the annual consolidated financial statements.
In this registration statement, we present certain financial information and measures and certain operational data which are not calculated in accordance with IFRS, such as adjusted operating profit, adjusted earnings and adjusted basic earnings per share. A summary of the non-IFRS measures discussed in this registration statement, and of how we use such measures, is presented in “Item 5. Operating and Financial Review and Prospects,” including cross-references to the sections of this registration statement in which these non-IFRS measures are reconciled to the most directly comparable measure calculated in accordance with IFRS. This registration statement includes certain trademarks, service marks and trade names that we own or otherwise have the right to use, such as SUBLOCADE®, SUBUTEX PRO®, PERSERIS®, SUBOXONE® Film, SUBOXONE® Tablet, SUBUTEX® Tablet, OPVEE®, BUPRENEX®, and INDIVIOR® which are protected under applicable intellectual property laws and are our property. This registration statement also contains additional trademarks, trade names, and service marks belonging to other parties, which are the property of their respective owners. Solely for convenience, our trademarks, service marks and trade names referred to in this prospectus may appear without the ® or ™ symbol, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights to these trademarks, service marks and trade names. We do not intend our use or display of other parties’ trademarks, trade names, or service marks to imply, and such use or display should not be construed to imply a relationship with, or endorsement or sponsorship of us by, these other parties.
Statements made in this registration statement on Form 20-F concerning the contents of any contract, agreement or other document are summaries of such contracts, agreements or documents and are not intended to be complete; such descriptions are qualified in their entirety by reference to the full text of such contract, agreement or other document that may be filed as an exhibit to this registration statement, and you may read the document itself for a complete description of its terms. Such exhibits may contain representations and warranties by the parties thereto, which were made only for purposes of that agreement and as of specified dates; are subject to limitations agreed upon by the contracting parties, including being qualified by confidential disclosure schedules; may have been made for the purposes of allocating contractual risk between the parties to the agreement instead of establishing these matters as facts; and are subject to standards of materiality applicable to the contracting parties that may differ from those applicable to investors. Investors should not rely on the representations, warranties and covenants or any descriptions thereof as characterizations of the actual state of facts or condition of the Group or any of its subsidiaries or affiliates. Moreover, information concerning the subject matter of the representations, warranties and covenants may have changed after the date of any such agreement, which subsequent information may or may not be fully reflected in the Group’s public disclosures.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements contained in this registration statement, including those in “Item 3.D. Risk Factors,” “Item 4.B. Business Overview” and “Item 5. Operating and Financial Review and Prospects” constitute “forward-looking statements.” In some cases, these forward-looking statements can be identified by the use of forward-looking terminology, including the terms “believes,” “estimates,” “forecasts,” “plans,” “prepares,” “anticipates,” “expects,” “intends,” “may,” “will” or “should” or, in each case, their negative or other variations or comparable terminology although these are not exclusive means of identifying such statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause our actual results, performance or achievements or industry results to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The forward-looking statements in this registration statement are made based upon our current expectations and beliefs concerning future events impacting us and therefore involve a number of known and unknown risks and uncertainties. Such forward-looking statements are based on numerous assumptions regarding our present and future business strategy and the environment in which we operate, which may prove to be inaccurate. These forward-looking statements are not guarantees of future performance and actual results may differ materially from those expressed or implied in these forward-looking statements.
In particular, our actual results, performance or achievements or industry results could be affected by, among other things:
•The substantial litigation and ongoing investigations to which we are or may become a party;
•Our reliance on third parties to manufacture commercial supplies of most of our products, conduct our clinical trials and at times to collaborate on products in our pipeline;
•Our ability to comply with legal and regulatory settlements, healthcare laws and regulations, requirements imposed by regulatory agencies and payment and reporting obligations under government pricing programs;
•Risks related to the manufacture and distribution of our products, some of which are controlled substances;
•Market acceptance of our products as well as our ability to commercialize our products and compete with other market participants;
•The uncertainties related to the development of new products, including through acquisitions, and the related regulatory approval process;
•Our dependence on a small number of significant customers;
•Our ability to retain key personnel or attract new personnel;
•Our dependence on third-party payors for the reimbursement of our products and the increasing focus on pricing and competition in our industry;
•Unintended side effects caused by the clinical study or commercial use of our products;
•Our use of hazardous materials in our manufacturing facilities;
•Our import, manufacturing and distribution of controlled substances;
•Our ability to successfully execute acquisitions, partnerships, joint ventures, dispositions or other strategic acquisitions;
•Our ability to protect our intellectual property rights and the substantial cost of litigation or other proceedings related to intellectual property rights;
•The risks related to product liability claims or product recalls;
•The significant amount of laws and regulations that we are subject to, including due to the international nature of our business;
•Macroeconomic trends and other global developments such as the COVID-19 pandemic;
•The terms of our debt instruments, changes in our credit ratings and our ability to service our indebtedness and other obligations as they come due;
•Changes in applicable tax rate or tax rules, regulations or interpretations and our ability to realize our deferred tax assets; and
•Such other factors as set out in “Item 3.D. Risk Factors” and “Item 5. Operating and Financial Review and Prospects.” In light of these risks, uncertainties and assumptions, the forward-looking events described in this registration statement may not occur. Forward-looking statements contained in this registration statement apply only at the date of this registration statement. We undertake no obligation publicly to update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise.
We strongly recommended that you read the risk factors set out in “Item 3.D. Risk Factors” of this registration statement for a more complete discussion of the factors that could affect our future performance and the industry in which we operate.
PART I
ITEM 1: IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
A.Directors and Senior Management.
Directors
The following table sets forth the names and positions of the members of our Board as of the date of this registration statement. Except as otherwise indicated, the business address of each of the directors is 234 Bath Road, Slough, Berkshire SL1 4EE, United Kingdom.
| | | | | | | | | | | | | | | | | | | | |
Name | | Position | | Director Since | | Term Expires(1) |
Graham Hetherington | | Chair | | Nov. 2019 | | Nov. 2023 |
| Mark Crossley | | Chief Executive Officer
and Executive Director | | Feb. 2017 | | (2) |
Ryan Preblick | | Chief Financial Officer
and Executive Director | | Nov. 2020 | | (2) |
Daniel J. Phelan | | Senior Independent Director; Designated Non-Executive Director for Workforce Engagement | | Nov. 2014 | | Nov. 2023(3) |
| Peter Bains | | Independent Non-Executive Director | | Aug. 2019 | | Jul. 2025 |
| Jerome Lande | | Non-Executive Director | | March 2021 | | Dec. 2023 |
Joanna Le Couilliard | | Independent Non-Executive Director | | March 2021 | | Mar. 2024 |
A. Thomas McLellan, Ph.D. | | Independent Non-Executive Director | | Nov. 2014 | | Nov. 2023(4) |
| Lorna Parker | | Independent Non-Executive Director | | Nov. 2014 | | Nov. 2023(5) |
| Barbara Ryan | | Independent Non-Executive Director | | June 2022 | | Mar. 2024 |
| Mark Stejbach | | Independent Non-Executive Director | | March 2021 | | Mar. 2024 |
| Juliet Thompson | | Independent Non-Executive Director | | March 2021 | | Mar. 2024 |
______________
(1)The dates listed represent the end of the respective Director’s term of office on the Board.
(2)Per their employment with the Group, Messrs. Crossley and Preblick serve at the request of the Board and may be removed at any time. Their business address is 10710 Midlothian Turnpike, Suite 125, North Chesterfield, VA, 23235, United States.
(3)Mr. Phelan will retire from the Board at September 30, 2023.
(4)Dr. McLellan will continue to serve as an independent non-executive director until a replacement has been appointed and a period of transition has been completed.
(5)Ms. Parker will retire from the Board at September 30, 2023.
Senior Management
The following table sets forth the names and positions of the members of our Senior Management team as of the date of this registration statement. Except as otherwise indicated, the business address for each member of our Senior Management is 10710 Midlothian Turnpike, Suite 125, North Chesterfield, VA, 23235, United States.
| | | | | | | | |
| Name | | Position |
| Mark Crossley | | Chief Executive Officer |
Ryan Preblick | | Chief Financial Officer |
| Jeff Burris | | Chief Legal Officer |
| Cindy Cetani | | Chief Integrity and Compliance Officer |
Nina DeLorenzo | | Chief Global Impact Officer |
| Jon Fogle | | Chief Human Resources Officer |
| Christian Heidbreder | | Chief Scientific Officer |
Kathryn Hudson (1) | | Company Secretary |
| Vishal Kalia | | Chief Strategy Officer |
| Richard Simkin | | Chief Commercial Officer |
Hillel West (1) | | Chief Manufacturing and Supply Officer |
____________
(1)Business address is 234 Bath Road, Slough, Berkshire SL1 4EE, United Kingdom.
B.Advisers.
Our external legal advisers are Freshfields Bruckhaus Deringer LLP, whose address is 100 Bishopsgate, London EC2P 2SR, United Kingdom, and Freshfields Bruckhaus Deringer U.S. LLP, whose address is 601 Lexington Avenue, 31st Floor, New York, NY 10022.
C.Auditors.
PricewaterhouseCoopers LLP (U.K.) has been our statutory auditor for the Group since incorporation.
PricewaterhouseCoopers LLP (U.S.) has audited our financial statements for the periods ended December 31, 2022, 2021 and 2020. PricewaterhouseCoopers LLP (U.S.) is an independent registered public accounting firm, registered with the Public Company Accounting Oversight Board (United States). For more information on our auditors, see “Item 10.G. Statements by Experts.” ITEM 2: OFFER STATISTICS AND EXPECTED TIMETABLE
Not applicable.
ITEM 3. KEY INFORMATION
B.Cash and Cash Equivalents, Capitalization and Indebtedness
The table below sets forth our cash and cash equivalents, capitalization and indebtedness as of March 31, 2023, to which no significant updates have occurred through the date of this filing. This table should be read in conjunction with “Item 5. Operating and Financial Review and Prospects,” and the unaudited condensed consolidated interim financial statements and the related notes thereto, which appear elsewhere in this registration statement.
| | | | | | | | |
| (in millions) | | March 31, 2023 |
Cash and cash equivalents(1, 2) | | $ | 588 | |
| | |
Current borrowings | | |
Bank loans | | 3 | |
Total current debt | | 3 | |
| | |
Non-current borrowings | | |
Bank loans | | 236 |
Total non-current debt | | 236 | |
| | |
Total borrowings(3) | | 239 | |
| | |
Equity(4,5) | | |
Share capital | | 69 | |
| Share premium | | 9 | |
| Capital redemption reserve | | 6 | |
Other reserves | | (1,295) | |
| Foreign currency translation reserve | | (39) | |
Retained earnings | | 1,322 | |
Total equity | | 72 | |
| | |
Total capitalization | | $ | 311 | |
______________(1)Cash and cash equivalents at December 31, 2022 was $774 million.
(2)On March 2, 2023, the Group completed the acquisition of Opiant Pharmaceuticals for $146 million. For a description of the acquisition, see Note 16, Acquisition of Opiant in the Unaudited Condensed Consolidated Interim Financial Statements. (3)Total borrowings reflects the principal amount drawn on our term loan ($239 million and $246 million at March 31, 2023 and December 31, 2022, respectively), net of unamortized debt issuance costs ($6 million at March 31, 2023 and December 31, 2022, respectively). For a description of the term loan, see “Item 5. Liquidity and Capital Resources - Contractual Obligations.”
(4)In October 2022, the Group completed a share consolidation. For a description of the share consolidation, see Note 15, Share Capital in the Unaudited Condensed Consolidated Financial Statements. (5)In February 2023, the Group completed its second share repurchase program. For a description of the share repurchase program, see Note 15, Share Capital in the Unaudited Condensed Consolidated Interim Financial Statements. C.Reasons for the Offer and Use of Proceeds
Not applicable.
D.Risk Factors
You should carefully consider the risks described below, together with all of the other information in this registration statement on Form 20-F. The risks and uncertainties below are not the only ones we face. Additional risks and uncertainties not presently known to us or that we believe to be immaterial may also adversely affect our business. If any of the following risks occur, our business, financial condition, and results of operations could be seriously harmed and you could lose all or part of your investment. This registration statement also contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including the risks described below and elsewhere in this registration statement.
Summary of Risk Factors
We are subject to a variety of risks and uncertainties which could have a material adverse effect on our business, financial condition, and results of operations. The summary below is not exhaustive and is qualified by reference to the full set of risk factors set forth in this "Risk Factors” section.
Risks Related to our Business
•We are subject to substantial litigation and ongoing investigations and information requests.
•We rely on third parties to manufacture commercial supplies of most of our products.
•Compliance with legal and regulatory settlements requires significant resources and, if we fail to comply, we could be subject to penalties or excluded from government healthcare programs.
•We are subject to additional risks because we import, manufacture, and distribute controlled substances.
•We are subject to risks related to the manufacture of our products.
•We receive substantial revenue from a small number of key proprietary products.
•We depend on our ability to commercialize our products and acceptance of our products by physicians, patients, and healthcare payors.
•Several factors affect the rate at which our revenues may grow.
•We operate in a highly competitive industry.
•We rely on some third parties for our pharmaceutical pipeline and our commercial product sales.
•Clinical trials for the development of products may be unsuccessful.
•We rely on third parties to conduct our clinical trials.
•Failure to retain key personnel or attract new personnel could have an adverse effect on us.
•We depend on third-party payors for reimbursement for our products.
•The clinical study or commercial use of our products may cause unintended side effects.
•We use hazardous materials in our manufacturing facilities.
•We may fail to develop or acquire other new products or compounds.
•Acquisitions, partnerships, joint ventures, dispositions, and other business combinations or strategic transactions involve several inherent risks.
•We may be subject to adverse public opinion.
Risks Related to Intellectual Property
•We may fail to obtain and maintain patents and protect other proprietary rights.
•We may incur substantial costs as a result of litigation or other proceedings related to intellectual property rights.
•We may not be able to protect our intellectual property rights throughout the world.
Risks Related to Regulatory or Legal Matters
•The regulatory approval process is expensive, time-consuming, and uncertain.
•Regulatory agencies may impose limitations or post-approval requirements on our products.
•Guidelines published by professional societies, insurance carriers, physician groups, science foundations, and other organizations may affect the use of the Group’s products.
•Product liability and product recalls could have a material adverse effect on us.
•We are subject to federal, state, local, and foreign healthcare laws and regulations.
•We may inadvertently fail to comply with payment and reporting obligations under governmental pricing programs.
•We are subject to healthcare fraud and abuse, transparency, and false claims laws.
•We are subject to anti-corruption laws and regulations.
•The pharmaceutical industry faces significant government scrutiny regarding pricing and competition.
Risks Related to our Financial Condition and Tax Matters
•We are subject to macroeconomic trends in the markets where we operate.
•The COVID-19 pandemic and governmental and societal responses thereto have adversely affected our business and may continue to do so.
•Our $250 million term loan contains covenants that could limit our ability to plan for or respond to changes in our business.
•We may not be able to generate sufficient cash to service all of our indebtedness and may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful.
•Changes in our credit ratings may reduce access to capital and increase borrowing costs.
•Our insurance coverage may not be adequate.
•Our effective tax rate may increase, and changes in tax rules and regulations, or interpretations thereof, may adversely affect our financial condition.
•Our deferred tax assets may not be realized.
•If a United States person is treated as owning at least 10% of our ordinary shares, such holder may be subject to adverse U.S. federal income tax consequences.
Risks Related to Our Ordinary Shares
•Our ordinary shares are subject to market price volatility.
•We may in the future relocate our primary listing to the U.S., which could cause volatility in our share price and shareholder base.
•The rights afforded to our shareholders are governed by English law.
•We may not pay dividends in the future.
•Our business strategy may involve future transactions which may dilute existing shareholders’ interests.
•Securities or industry analysts may fail to publish research or may publish inaccurate or unfavorable research about our business.
Risks Related to Information Security and Data Privacy
•We are at risk for business interruptions or breaches of data security.
•We are required to maintain the privacy and security of personal information.
Risks Related to Our International Status and Operations
•We are subject to various risks related to the local and international nature of our business.
•We are exposed to risks related to currency exchange rates.
Risks Related to Being a Publicly-Traded Company in the U.S.
•Corporate responsibility matters may impose additional costs and expose us to new risks.
•We are a foreign private issuer and may lose our foreign private issuer status in the future.
•We expect to eventually change to U.S. generally accepted accounting principles.
•We are subject to risks related to changes in accounting standards, assumptions, and estimates.
•The obligations associated with being a public company in the U.S. are significant.
•We have not yet completed our evaluation of our internal control over financial reporting.
Risks Related to our Group and Its Business
We are currently, in the past have been, and in the future may be, subject to substantial litigation and ongoing litigation that could cause us to incur significant legal expenses, divert management’s attention, and result in harm to our business.
We have been, are, and may in the future become, involved in various legal proceedings, regulatory proceedings and government enforcement actions. Such proceedings may include claims for, or the possibility of, damages or fines and penalties involving substantial amounts of money or other relief, including but not limited to civil or criminal fines and penalties. For example:
•In 2019, the U.S. Attorney’s Office for the Western District of Virginia brought an indictment, followed by a superseding indictment (the “2019 Indictment”), against the Group in connection with our marketing and promotional practices related to SUBOXONE Film and SUBOXONE and SUBUTEX Tablets. The indictments charged Indivior Inc. and Indivior PLC with health care fraud, mail fraud, wire fraud, and conspiracy to commit the same. They generally alleged that the Company had falsely represented that SUBOXONE film was safer and less susceptible to misuse, abuse, diverse, and inadvertent pediatric exposure than SUBOXONE tablets, purportedly to delay approval of generic versions of SUBOXONE tablets and retain market share. On July 24, 2020, as part of a global resolution with the U.S. Attorney’s Office for the Western District of Virginia, the DOJ’s Consumer Protection Branch, the FTC, and several U.S. state attorneys general (“Resolution Agreement”), a wholly-owned subsidiary of Indivior PLC pleaded guilty to a single count of making a false statement relating to healthcare matters in 2012. DOJ dismissed all charges in the indictment and the Group agreed to pay substantial fines totaling $600 million and agreed to substantial reporting and compliance obligations related to its U.S. operations, among other things. The Resolution Agreement is filed as Exhibit 4.3 to this registration statement.
In January 2021, the Group announced it had reached an agreement with Reckitt Benckiser Group plc (“RB”) to resolve claims that RB issued in the Commercial Court in London in November 2020, seeking indemnity under the Demerger Agreement entered into on November 17, 2014 between RB and Indivior to effect the Demerger and to govern the relationship between the RB Group and the Indivior Group following the Demerger. Pursuant to the settlement, RB agreed to withdraw the $1.4 billion claim and to release Indivior from any claim for indemnity under the Demerger Agreement relating to the DOJ and FTC settlements which RB entered into in July 2019, as well as other claims for indemnity arising from those matters. Indivior agreed to pay RB a total of $50 million and also agreed to release RB from any claims to seek damages relating to Indivior’s settlement with the DOJ and the FTC.
•In January 2022, the United States District Court for the District of New Jersey approved the Group’s Stipulation and Agreement of Settlement of a securities law class action brought in that court by holders of our Level 1 American Depository Receipts (ADRs) for approximately $2 million. This class action was filed in 2019 against Indivior PLC and a number of directors and officers for alleged violations of federal securities laws, including among other things Section 10(b) of the Exchange Act and Rule 10b-5. Plaintiffs’ allegations in this class action lawsuit mirrored many of the allegations of the 2019 Indictment, including that the Group had falsely represented that SUBOXONE Film was safer and less susceptible to misuse, abuse, diverse, and inadvertent pediatric exposure than SUBOXONE and SUBUTEX Tablets, in order increase SUBOXONE Film revenues in the United States and delay generic competition. The Plaintiffs alleged that Indivior made these untrue statements of material facts or omitted material facts and employed devices, schemes and artifices to defraud and engaged in acts, practices and a course of business that operated as a fraud or deceit upon the class in order to inflate its stock price.
•In July 2022, the Group settled antitrust, patent infringement, and wrongful injunction claims with the manufacturer of a generic buprenorphine/naloxone film drug product for approximately $72 million.
We are also subject to several significant unresolved matters. For example,
•Civil antitrust cases filed by a class of direct purchasers, a class of end payors, and 41 states and the District of Columbia have been consolidated in multi-district litigation pending in the U.S. District Court for the Eastern District of Pennsylvania, which is set for trial beginning September 18, 2023 against Indivior Inc. (the “Antitrust MDL”). The parties are engaged in mediation which is being overseen by the trial court. In 2022, the Group recognized a provision of $290 million related to certain multidistrict antitrust class and state claims for the purpose of settlement only. Because this litigation is in various stages, Indivior cannot predict with any certainty how these matters will ultimately be resolved, or the costs or timing of such resolution. In particular, any final aggregate costs of these matters, whether resolved by settlement or trial, may be materially different from the previously recorded provision. The aggregate amount of damages claimed by the plaintiffs in the Antitrust MDL exceeds Indivior Inc.’s resources to pay. The Group cannot predict with any certainty whether it will reach settlement with the antitrust claimants. Separate antitrust cases filed by several insurance companies are pending in the Circuit Court for the County of Roanoke, Virginia. A trial on the Group’s pleas in bar (affirmative defense of statute of limitations) related to these cases in Roanoke, Virginia is scheduled for October 30, 2023 to November 3, 2023, and trial on the merits is scheduled for July 15, 2024 to August 8, 2024. The amount of damages claimed by these insurance company plaintiffs also exceeds Indivior Inc.’s resources to pay. Finally, Humana, Centene, and other insurance carriers filed antitrust cases in federal court in the Eastern District of Pennsylvania in 2020. The federal district court dismissed the case before it, and the Third Circuit Court of Appeals affirmed the dismissal. Humana separately had filed a Kentucky state court case which was stayed pending a decision in the federal court case, and remains stayed at this time. Centene also filed an action in the Circuit Court for the County of Roanoke, Virginia following the Third Circuit’s decision.
•The Group has been named as a defendant in more than 450 civil lawsuits alleging that they engaged in a longstanding practice to market opioids as safe and effective for the treatment of long-term chronic pain to increase the market for opioids and their own market share, or alleging individual personal injury claims.
•In September 2022, certain shareholders issued representative and multiparty claims against the Group in the High Court of Justice for the Business and Property Courts of England and Wales, King’s Bench Division generally alleging that the Group violated the UK Financial Services and Markets Act 2000 (“FSMA 2000”) by making false or misleading statements or material omissions in public disclosures, including the 2014 Demerger Prospectus, regarding an alleged product-hopping scheme regarding the switch from SUBOXONE Tablets to SUBOXONE Film. A hearing on the application to strike out has been scheduled for November 20-21, 2023.
The amount of time that is required to resolve legal or regulatory proceedings is unpredictable and any litigation or claims against us, even those without merit, may cause us to incur substantial costs, divert management’s attention from the day-to-day operation of our business, and materially harm our stock price and reputation. In addition, we are obligated to indemnify and advance expenses to certain individuals and entities involved in certain of these and related proceedings. Any adverse judgment in or settlement of any pending or any future litigation could result in significant payments, fines and penalties that could have a material adverse effect on our business, results of operations, financial condition and reputation.
Moreover, the outcome of these legal proceedings may differ from the Group’s expectations because the outcomes of litigation, including regulatory matters, are often difficult to reliably predict. Although the Group maintains general liability insurance, the amount of liability that may result from certain of these risks may not always be covered by, or could exceed, the applicable insurance coverage. Various factors or developments can lead the Group to change current estimates of liabilities and related insurance receivables where applicable, or make such estimates for matters previously not susceptible of reasonable estimates, such as a significant judicial ruling or judgment, a significant settlement, significant
regulatory developments or changes in applicable law. A future adverse ruling, settlement or unfavorable development could result in future charges that could have a material adverse effect on the Group’s results of operations or cash flows in any particular period. In addition, negative publicity related to these proceedings may negatively impact the Group’s reputation.
We are also subject to ongoing investigations and information requests. For example, in May 2018, Indivior Inc. received an informal request from the U.S. Attorney’s Office (“USAO”) for the Southern District of New York, seeking records relating to the SUBOXONE Film manufacturing process. Indivior Inc. is discussing with the USAO certain information and allegations that the government received regarding SUBOXONE Film. If, as a result of these or any future investigations, we are found or suspected to have violated any applicable laws and regulations, we may be subject to a variety of fines, penalties, related administrative sanctions, potential exclusion from government healthcare program reimbursement or civil and/or criminal prosecution, any of which could have a material adverse effect on our reputation, business, financial condition, and results of operations.
For a more detailed discussion involving the Group’s legal proceedings and associated accounting estimates, see “Item 10. Additional Information—Material Contracts,” “Note 19—Provisions and Other Liabilities in Item 18,, Financial Statements—Audited Consolidated Financial Statements and Note 11. Provisions and Other Liabilities,” “Note 12—Contingent Liabilities” and “Note 13—Legal Proceedings” in Item 18. Financial Statements—Unaudited Condensed Consolidated Interim Financial Statements” especially at the captions “Antitrust Litigation and Consumer Protection” and “Civil Opioid Litigation” which provide information regarding additional matters that we believe may be significant to the Group as of the date of the filing of this registration statement. We rely on third parties to manufacture, package, test, and distribute our products and their facilities and processes must meet stringent regulatory requirements.
The Group relies almost exclusively on third parties, including contract manufacturing organizations, to manufacture, package, test, and distribute our products. The manufacturing of our products, which include oral solid dose tablet products, film products, and terminally sterilized and aseptically filled injectables, is subject to stringent global regulatory, quality, and safety standards, including current Good Manufacturing Practice (“cGMP”). Our recently developed products, including SUBOXONE Film, SUBLOCADE long-acting injectable, and PERSERIS long-acting injectable, are significantly more complicated to manufacture than tablet products. We have limited control over the performance of our third-party manufacturers and are currently dependent on our third-party contract manufacturing partners whom we manage via supply and quality agreements.
Similarly, the Group relies on a third-party logistics vendor and a network of specialty pharmacists and specialty distributors to fulfill orders and distribute our products in the U.S. and logistics and distribution partners to distribute our products worldwide. This process is complicated because most of our products contain controlled substances that require special handling, such as import and export permits, adherence to a risk evaluation and mitigation strategy (“REMS”) protocol or import restrictions on controlled substances. See also, “We are subject to additional risks because we import, manufacture, and distribute controlled substances.”
Our Fine Chemical Plant (“FCP”) in Hull, UK manufactures the Buprenorphine HCl Active Pharmaceutical Ingredient (“API”) used in our tablet and film drug products. This site also produces the intermediate Buprenorphine Base, which is purified by a third-party manufacturer and used in the manufacture of the SUBLOCADE (buprenorphine extended-release) injection drug product. All other APIs required for use in the manufacture of our commercial drug products are supplied by third-party manufacturers.
SUBOXONE (buprenorphine/naloxone) Film drug product is manufactured under a license and supply agreement with Aquestive Therapeutics (formerly known as MonoSol Rx). SUBLOCADE is manufactured under a supply agreement with Curia (formerly known as AMRI). We provide the buprenorphine API used
in all of our products and procure from third-party suppliers the polymer and syringe assembly used in the manufacture of SUBLOCADE and PERSERIS, and the API used in PERSERIS as well as the other API used in SUBOXONE. PERSERIS is manufactured under a supply agreement with Curia, which manufactures the liquid syringe, and Patheon Pharmaceuticals, LLC, which manufactures the powder syringe containing risperidone API. Curia has a manufacturing facility located in Burlington, MA, and is developing additional capacity in Albuquerque, NM. Patheon has a manufacturing facility located in Greenville, NC. We also utilize a third party packager.
We or our third-party manufacturers may encounter difficulties in production, such as issues with production costs and yields, process controls, quality control, and quality assurance, including testing of stability, impurities and impurity levels, sterility, and other product specifications by validated test methods, compliance with strictly enforced global and regional regulations, and disruptions or delays caused by man-made or natural disasters, pandemics or epidemics, or other business interruptions, including, for example, the COVID-19 pandemic. In addition, manufacturing capacity for SUBLOCADE and PERSERIS is currently constrained. We have made investments in capacity improvements at the existing Curia facility, safety stock, and additional equipment and expect an additional manufacturing line to become available in 2023 which, once validated and given regulatory approval, should meet anticipated demand for the next few years. However, there can be no assurance that such efforts will be successful. If our third-party manufacturers fail to complete planned capacity expansions in a timely manner or at all, if such expansions are delayed or are not approved by the U.S. Food and Drug Administration (“FDA”) or if we are unable to otherwise obtain adequate manufacturing capacity for SUBLOCADE and PERSERIS, we may suffer supply disruptions which would reduce growth in our net revenues and in turn have a material adverse effect on our business, financial condition, and results of operations.
If we or any of our third-party manufacturers cannot successfully manufacture material that conforms to our specifications and the applicable regulatory authorities’ strict regulatory requirements or pass regulatory inspection, we or our third-party manufacturers will not be able to ensure an adequate supply of products and/or secure or maintain regulatory approval for the manufacturing facilities. In addition, we have no direct control over the ability of third-party manufacturers to maintain adequate quality control, quality assurance and qualified personnel. If the FDA or any other applicable regulatory authorities do not approve these facilities for the manufacture of our products or if they withdraw any such approval in the future, or if our suppliers or third-party manufacturers decide they no longer want to supply our primary active ingredients or manufacture our products, we may need to find alternative manufacturing facilities, which may significantly impact our ability to develop, obtain regulatory approval for or market our products. To the extent our manufacturing facility or that of any third-party manufacturers that we engage with respect to our products are different from those currently being used for commercial supply in the U.S., studies will have to be completed, and the FDA will need to approve such facilities prior to our sale of any product manufactured using these facilities. Any delay or interruption in our ability to meet commercial demand for our products, including any further potential disruption caused by the COVID-19 pandemic, will result in the loss of potential revenues and could adversely affect our ability to gain market acceptance for these products. In addition, any delay or interruption in the supply of clinical trial supplies could delay the completion of clinical trials, increase the costs associated with maintaining clinical trials, and, depending upon the period of delay, require us to commence new clinical trials at additional expense or terminate clinical trials completely, which in turn could have a material adverse effect on our business financial condition, and results of operations.
Compliance with the terms and conditions of our Corporate Integrity Agreement, the Resolution Agreement with the U.S. Attorney’s Office for the Western District of Virginia and the U.S. Department of Justice (“DOJ”)’s Consumer Protection Branch, and the Stipulated Order for Permanent Injunction and Equitable Monetary Relief with the U.S Federal Trade Commission (“FTC”) requires significant resources and management time and, if we fail to comply, we could be subject to criminal charges, penalties, or, under certain circumstances, excluded from government healthcare programs, which would materially adversely affect our business.
Our Group operates on a global basis and the pharmaceutical industry is both highly competitive and highly regulated. Complying with all applicable laws and regulations, industry standards, and our Group’s Code of Conduct are core to the Group’s mission, culture, and practices. The Group has processes and procedures to identify, analyze and investigate any potential or actual violations of law, regulation, or policy and, if necessary, take appropriate remedial or corrective actions. Effective procedures and controls assist in ensuring that we provide reliable information and prevent and detect potential fraud. Failure to comply with applicable laws and regulations may subject the Group to civil, criminal, and administrative liability, including but not limited to the imposition of substantial monetary penalties, fines, damages and restructuring of the Group’s operations through the imposition of compliance or integrity obligations, and have a potentially adverse impact on the Group’s prospects, reputation, results of operations and financial condition.
In 2020, Indivior Inc. entered into a Corporate Integrity Agreement (“CIA”) with the U.S. Department of Health and Human Services Office of the Inspector General (“HHS-OIG”). The CIA was part of the Group’s resolution of federal criminal and civil charges related to its film and tablet products. In particular, an indictment and superseding indictment issued in the U.S. District Court for the Western District of Virginia in 2019 charged Indivior Inc. and Indivior PLC with health care fraud, mail fraud, wire fraud, and conspiracy to commit the same. The indictments generally alleged that the Company had falsely represented that SUBOXONE Film was safer and less susceptible to misuse, abuse, diversion, and inadvertent pediatric exposure than SUBOXONE and SUBUTEX Tablets, purportedly to delay approval of generic versions of SUBOXONE tablets and retain market share. The indictments were dismissed as part of a resolution agreement with the United States Department of Justice in which the Company did not admit to any wrongdoing, except that subsidiary Indivior Solutions, Inc. (“Solutions”) pleaded guilty to a one-count felony information charging Solutions with making false statements to MassHealth (the administrator of Medicaid and the Children’s Health Insurance Program (CHIP) in Massachusetts) in October 2012. The resolution agreement also settled civil claims alleging that the Company caused false claims to be submitted to government healthcare programs.
The CIA imposes significant compliance obligations on Indivior Inc.’s business and practices and requires Indivior Inc. to engage an Independent Review Organization and a Board Compliance Expert to assess Indivior Inc.’s compliance program and compliance with CIA requirements. The CIA also sets forth monetary penalties that may be imposed on a per-day basis for failure to comply with certain obligations in the CIA. The CIA also includes procedures under which Indivior Inc. must notify HHS-OIG of certain reportable events, and must notify HHS-OIG if it fails to meet the requirements under the CIA. The CIA requires the filing of annual reports describing steps Indivior Inc. has taken in implementing the terms of the CIA, certifications from certain employees that their department or functional area is compliant with certain laws and regulations, and a certification from the Compliance Officer and Chief Executive Officer that Indivior Inc. is in compliance with the CIA, to the best of their knowledge. The CIA also requires an annual resolution from the Nomination and Governance Committee of the Group’s Board of Directors that it has reviewed the effectiveness of the Group’s compliance program. In the event that HHS-OIG determines Indivior Inc. to be in material breach of certain requirements of the CIA, including, without limitation, repeated violations or any flagrant violation of the CIA, a failure by Indivior Inc. to report a reportable event and take corrective action, a failure to engage and use an independent review organization, among others, Indivior Inc. may be subject to exclusion from participation in the U.S. federal healthcare programs, which would have a severe impact on the Group’s ability to comply with the financial covenants in the Group’s $250 million term loan, maintain sufficient liquidity to fund its
operations, pay off its debt in 2026, generate future revenue and would ultimately impact the Group’s viability.
The FTC Stipulated Order contains specific notice and reporting requirements over a 10-year period related to certain activities, including product switching conduct, filing of a Citizen Petition, and receiving FDA approval or acquiring an entity or product that has FDA approval to be marketed in the U.S. The Group may be punished for contempt of court, including, but not limited to criminal contempt, if it fails to comply with any terms of the FTC Stipulated Order or Resolution Agreement.
The Resolution Agreement imposes several significant compliance obligations on the Group, separate from the CIA, including without limitation certain reporting obligations and the requirement that the Group’s Chief Executive Officer (a) certifies on an annual basis that, to the best of their knowledge, after a reasonable inquiry, the Group was in compliance with the U.S. Federal Food, Drug and Cosmetic Act (and implementing regulations) and has not committed healthcare fraud, or (b) provides a certified list of all non-compliant activities and steps taken to remedy the activity. The Resolution Agreement also requires an annual resolution from the Group's Board of Directors that it has reviewed the effectiveness of the Group’s Compliance Measures set forth in Section I of Addendum A to the Resolution Agreement. A material breach of the Resolution Agreement could reinstate the indictment against the Group.
The Group’s policies, procedures and protocols are designed to prevent and detect failures to comply with the terms of the CIA, the Resolution Agreement and the FTC Order; however, there can be no assurance that a relevant failure that bypasses established controls will be prevented or detected. Any failure to comply with such terms may subject the Group to criminal charges and penalties, or, under certain circumstances, could exclude the Group from U.S. government healthcare programs, which could have a material adverse effect on the Group’s business, financial condition and results of operation.
For more information, see “Note 19—Provisions and Other Liabilities in Item 18, Financial Statements—Audited Consolidated Financial Statements and “Item 10.C. Material Contracts.” We have filed copies of the Resolution Agreement, the CIA, and the FTC Order as Exhibits Nos. 4.3, 4.4, and 4.5, respectively, to this Registration Statement. We are subject to additional risks because we import, manufacture, and distribute controlled substances.
Our key products for opioid use disorder, SUBLOCADE long-acting injectable extended-release injection, SUBOXONE Film sublingual film, and SUBOXONE and SUBUTEX sublingual tablets, contain the active ingredient buprenorphine which is a controlled substance under the Controlled Substance Act (CSA). Buprenorphine is a partial agonist opioid. While we market these products for the treatment of opioid use disorder, the use of any opioid is highly stigmatized. Many people who are non-prescribers may fail to distinguish between drugs of abuse and drugs intended for treatment. The lack of distinction between the types and mechanisms of opioids, like buprenorphine, which is a partial opioid agonist, is widely misunderstood. Compared to a full opioid agonist, buprenorphine has less maximal euphoric effect than a full agonist, and a ceiling on its ability to cause respiratory depression. These perceptions and misunderstandings may cause a variety of problems for the Group, including adverse publicity and cause some persons or entities to decline to do business with us. See for example, “We may be subject to adverse public opinion,” and “Failure to retain key personnel or attract new personnel could have an adverse effect on us.
Products designed to treat drug addiction, by their nature, face additional risks. Drug addiction is a difficult environment in which to market our products. Societally, there is a stigma that prevents many persons who suffer from OUD or other types of addiction from coming forward to receive treatment because of potential reputational damage, societal scrutiny, and other factors. Patients with OUD often suffer from other co-morbidities, including poor general health and mental health issues like schizophrenia, which may impact one’s understanding of the disease or affect their ability to obtain treatment. Similarly, drug addiction can result in job loss or unemployment, indebtedness, and criminal
problems including incarceration which may make it more difficult for someone to obtain treatment. Other challenges include the misuse, diversion, or abuse of our products.
Regulators may impose additional requirements because of the nature of our products. Buprenorphine and products containing buprenorphine are classified as Schedule III controlled substances in the U.S. by the Drug Enforcement Agency (DEA) and similarly restricted by law enforcement authorities in the rest of the world that are signatories to the WHO Single Convention on Narcotic Drugs (1961). In the U.S., SUBLOCADE is subject to a REMS which restricts the distribution of the product so that SUBLOCADE is dispensed directly to certified healthcare settings and pharmacies so that the product is only administered by a healthcare professional. This closed distribution system helps mitigate the risk related to the potential for misuse and diversion by the patient, since the product is not dispensed directly to the patient.
In addition, our products contain controlled substances as defined in the U.S. Controlled Substances Act (“CSA”). Controlled substances are subject to several requirements and restrictions under the CSA and implementing regulations, including certain registration, security, recordkeeping, reporting, import, export and other requirements administered by the United States Drug Enforcement Agency (the “DEA”). There are also similar laws and regulations in the other jurisdictions where we operate.
Individual states have also established controlled substance laws and regulations. Though state-controlled substance laws often mirror federal law, they may separately schedule our products or our product candidates as well. We or our partners may also be required to obtain separate state registrations, permits or licenses in order to be able to manufacture, distribute, administer or prescribe controlled substances for clinical trials or commercial sale, and a failure to meet applicable regulatory requirements could lead to enforcement and sanctions by the states in addition to those from the DEA or otherwise arising under federal law.
U.S facilities conducting research, manufacturing, distributing, importing or exporting, or dispensing controlled substances must be licensed and must comply with the security, control, recordkeeping and reporting obligations under the CSA, DEA regulations, and corresponding state requirements. In addition, the DEA and state regulatory bodies conduct periodic inspections of certain registered establishments that handle controlled substances. Obtaining and maintaining the necessary registrations and complying with regulatory obligations may result in the delay of the importation, manufacturing, distribution or clinical research of our commercial products and product candidates. Furthermore, a failure to comply with CSA, DEA or state regulations by us or any of our third-party manufacturers can result in regulatory action, which can lead to criminal or civil penalties, the refusal to renew necessary registrations or proceedings to restrict, suspend or revoke applicable registrations.
The shipment of pharmaceutical products that contain controlled substances, including certain of our products and product candidates, require import and export licenses from relevant authorities. We may not be granted or, if granted, may not maintain, such licenses. Even if we maintain such licenses, shipments may be held up in transit, which could cause significant delays and may lead to product batches being stored outside required the temperature ranges. Inappropriate storage may damage the product shipment resulting in a partial or total loss of revenue from one or more shipments of our products and product candidates and necessary APIs. A partial or total loss of revenue from one or more such shipments could have a material adverse effect on our business, results of operations and financial condition.
Products containing opioids often require a risk evaluation and mitigation strategy (a “REMS”) to mitigate potential risks which may be associated with the use of a product and to inform patients and prescribers of those risks. For example, the FDA requires a REMS for SUBLOCADE and SUBOXONE Film, and other products that we sell in the future may become subject to a REMS specific to the product or shared with other products in the same class of drug. The cost to implement the REMS may be high, which may in turn have a material adverse effect on our business, financial condition, and results of operations.
We are subject to risks related to the manufacture and distribution of our products globally and must meet stringent current Good Manufacturing Practices.
All facilities and manufacturing techniques used for the manufacture of our products must be operated in conformity with the mandatory manufacturing standards (often referred to as current good manufacturing practice (cGMP)) of the FDA, the UK Medicines and Healthcare products Regulatory Agency (“MHRA”), the Irish Health Products Regulatory Authority (HPRA), and other regulatory authorities. Manufacturing facilities are subject to periodic unannounced inspections by the FDA, MHRA, HPRA, and other regulatory authorities. Failure to comply with applicable legal and regulatory requirements, and with the manufacturing details filed as part of our marketing authorization, subjects our manufacturing facilities or the facilities of our third-party manufacturers to possible legal or regulatory action, such as inspectional observations (e.g., Form FDA 483 notices), warning letters, suspension of manufacturing, product seizure, withdrawal of the product from the market, administrative, civil and criminal penalties, among other enforcement remedies. Therefore, such enforcement actions may adversely affect our ability to manufacture, or our third-party suppliers’ ability to supply, finished products.
Also, the manufacturing and distribution of our products globally are highly exacting and complex, due in part to strict regulatory and manufacturing requirements. Problems may arise during manufacturing and distribution for a variety of reasons, including but not limited to equipment malfunction, failure to follow specific protocols and procedures, testing nonconformities (e.g. sterility failure), failure to follow and provide oversight in cGMP, defective raw materials, product theft or diversion within our legal chain of custody, restricted supply of raw materials or components due to geopolitical disruption or pandemic, and environmental factors.
Our manufacturing facilities, and those owned by third-party CMOs, also maintain high direct and indirect labor costs due to the complexity of manufacturing processes, often requiring specialized personnel. As such labor costs are largely fixed, we are unable to offset such costs if we experience any interruptions or delays in the manufacturing process, product or regulatory approval delays or product suspensions or recalls. In addition, any significant personnel shortages at our manufacturing facilities, whether temporary or prolonged, including due to the COVID-19 pandemic and related mandates, testing protocols or restrictions or shortages related to the labor market more broadly, may cause significant interruptions to our manufacturing facilities and to our supply of products. While some of these costs may be borne directly by third-party CMOs, we may also incur costs for additional safety stock and supplies, repairs, capital expenditures for improvements, even if not required to do so contractually, or indirectly for lost sales. Please refer to Item 4.B.6 - Manufacturing, for more information.
We have either a single or dual source of supply for the raw materials, product components, and drug products used in most of our marketed products, drug product candidates under development, and their respective APIs (including buprenorphine). Single sourcing puts us at risk of a potential interruption to supply in the event of manufacturing, quality or compliance difficulties.
In the event of any supply chain disruption or product quality issues, our suppliers or third-party manufacturers may not have contingency plans in place that enable them to continue to supply or manufacture our products within contractual deadlines or at all. If any of our suppliers or third-party manufacturers fails or refuses to supply us for any reason, it would take a significant amount of time and expense to implement and execute the necessary technology and design transfer to, and to qualify, a new supplier or manufacturer, as applicable. Often, as a general guide, this transfer time averages 36 months and is based on several factors. The FDA and similar international or national regulatory bodies must approve our filings which identify the manufacturers of the active and inactive pharmaceutical ingredients and certain packaging materials used in our products. If there are delays in qualifying new suppliers or facilities or a new supplier is unable to meet FDA’s or similar international regulatory body’s requirements for approval, there could be a shortage of the affected products for the marketplace or for use in clinical studies, or both, which could negatively impact our anticipated revenues and could potentially cause us to breach contractual obligations with customers or to violate local laws requiring us to deliver the product to those in need. Any delay in supplying, or any failure or refusal to supply, products to, or delays in
manufacturing by, our suppliers, or any catastrophe or natural or man-made disaster affecting such third-party manufacturing facilities or suppliers, could result in our inability to meet current and future state commercial demands for our products, which in turn could materially adversely affect our business, prospects, results of operations and financial condition. The Group’s supply monitoring and contingency planning processes include proactive management of inventories throughout the supply-to-patient delivery process and initiatives to identify and qualify alternative sites and/or suppliers. Despite these mitigating measures, if major delays, interruptions, or quality events occur at those contracted suppliers, contracted manufacturers, or packaging organizations, the delivery of products to our patients could be significantly disrupted, which could materially adversely affect the sales of our products and accompanying revenues. Further, any interruption in supply could result in delays in meeting our contractual obligations and could damage our relationships with our licensees, including the loss of manufacturing and supply rights and/or revenues.
In addition, prior to commercial launch, we intend to contract for the manufacture and supply of OPVEE with Summit BioSciences, with whom we previously contracted for the manufacture and supply of limited quantities used in clinical trials. We will rely on one or more third-party CMOs to manufacture commercial quantities of this product.
We receive substantial revenue from our key proprietary products and our success depends on our ability to successfully commercialize such products.
Sales of our key proprietary products comprise an increasingly significant portion of our revenues. We developed SUBOXONE Film and SUBLOCADE for the treatment of OUD, and PERSERIS for the treatment of schizophrenia. Our success depends in large part on our ability to continue to successfully manufacture and commercialize such products in the complex markets into which they are sold. A number of our products, such as SUBOXONE Film, SUBOXONE Tablets, and SUBUTEX Tablets, are subject to substantial competition from generics and revenues from these products are declining, which increases the importance of SUBLOCADE. Further, we agreed in the Resolution Agreement to no longer employ a sales force to promote or sell SUBOXONE Film in the U.S. Any significant negative developments relating to these products could have a material adverse effect on our revenues from these products and, in turn, on our business, financial condition, cash flows and results of operations and the market price of our ordinary shares.
In addition, we recently devoted significant resources to acquire Opiant Pharmaceuticals, Inc. As a result, we acquired Opiant’s product, OPVEE. On May 22, 2023, the FDA approved OPVEE for the emergency treatment of known or suspected opioid overdose induced by natural or synthetic opioids in adults and pediatric patients aged 12 years and older, as manifested by respiratory and/or central nervous system depression. OPVEE (nalmefene) nasal spray is intended for immediate administration as emergency therapy in settings where opioids may be present. OPVEE (nalmefene) nasal spray is not a substitute for emergency medical care. We believe that a large and growing addressable market for opioid overdose reversal agents exists in the U.S. to ensure an opioid overdose reversal agent is available for all first responders, including fire departments, emergency medical services, federal law enforcement, local law enforcement, and other community groups. We also expect the primary customers for OPVEE to include state health departments, substance abuse centers, federal agencies, and consumers through pharmacies fulfilling physician-directed or standing order prescriptions. However, most of these potential customers are incremental to the customers for our current OUD products and we may face challenges building a sales force and delivery network to serve these new customers.
In addition, the biotechnology and biopharmaceutical industries are characterized by rapidly advancing technologies. Our future success will depend in part on our ability to maintain a competitive position. If we fail to stay at the forefront of technological change to create and develop product candidates, we may be unable to compete effectively. Our competitors or technological change may render limit the commercial value of our products or product candidates by advances in existing technological approaches or the development of new or different approaches, potentially eliminating the advantages of our proprietary products and product candidates.
Our ability to generate revenues from our products is subject to attaining significant market acceptance among physicians, other qualified HCPs, patients, specialty distributors, and healthcare payors and our ability to successfully develop and execute commercialization strategies for each of our products. Failure to do so would adversely impact our financial condition and prospects.
A substantial majority of our resources are focused on the commercialization of our current products. Our current products, and other products or product candidates that we may develop or acquire, may not attain market acceptance among physicians and other HCPs to administer our products, patients, specialty distributor, healthcare payors or the medical community. Some of our products, in particular SUBLOCADE and PERSERIS, have not been on the market for an extended period of time, which subjects us to numerous risks as we attempt to increase our market share. If any of our commercial strategies are unsuccessful or we fail to successfully modify our strategies over time due to changing market conditions, our ability to increase market share for our products, grow revenues and sustain profitability will be harmed.
We believe the degree of market acceptance and our ability to generate revenues from our products will depend on several factors, including:
•the timing of market introduction of our products as well as competitive products;
•our ability to manufacture in sufficient quantities in compliance with requirements of regulatory agencies and at acceptable quality and pricing levels in order to meet commercial demand and where applicable demand for samples;
•our ability to secure formulary approvals for products at a substantial number of targeted hospitals and Organized Health Systems (“OHSs”) and criminal justice systems (“CJSs”);
•our ability to implement and maintain agreements with wholesalers and distributors on commercially reasonable terms, and their performance, over which we have limited control;
•our ability to receive adequate levels of coverage and reimbursement for products from commercial health plans and government health programs;
•our ability to train, deploy and support a qualified field-facing team which includes a sales force, a managed care team, account teams that target OHS and CJS, as well as a channel team;
•market demand for our products through our marketing and sales activities and other arrangements established for their promotion;
•the efficacy and safety of our products;
•potential or perceived advantages or disadvantages of our products over alternative treatments, including the cost of treatment and relative convenience and ease of administration;
•the prevalence of the disease or condition for which the product is approved and the projected growth of the markets in which our products compete;
•the effect of current and future healthcare laws and legislation and regulation controlling the conditions of treatment and the distribution of the products for OUD treatments;
•the extent to which physicians diagnose and treat the conditions that our products are approved to treat, physicians’ willingness to prescribe the product, and our ability to educate physicians with respect to new products;
•the prevalence and severity of any side effects;
•the price of our products, both in absolute terms and relative to alternative treatments;
•impact of past and limitation of future product price increases;
•the extent to which physicians and patients delay visits or writing or filling prescriptions for our products and the extent to which operations of healthcare facilities, including infusion centers, are reduced;
•product labeling or product insert requirements of the FDA, or other regulatory authorities;
•the nature of any post-approval risk management plans mandated by regulatory authorities; see “We are subject to additional risks because we import, manufacture, and distribute controlled substances,” and
•acceptance by patients, physicians and applicable specialists.
Any factors preventing or limiting the market acceptance or commercialization of our products could have a material adverse effect on their sales and hence our business, results of operations and financial condition.
In addition, we recently devoted significant resources to acquire Opiant Pharmaceuticals, Inc. and its product, OPVEE. On May 22, 2023, the FDA approved OPVEE for the emergency treatment of known or suspected opioid overdose induced by natural or synthetic opioids in adults and pediatric patients aged 12 years and older, as manifested by respiratory and/or central nervous system depression. OPVEE (nalmefene) nasal spray is intended for immediate administration as emergency therapy in settings where opioids may be present. OPVEE (nalmefene) nasal spray is not a substitute for emergency medical care. We expect the primary customers for OPVEE will be state health departments, local law enforcement agencies, community-based organizations, substance abuse centers, federal agencies and consumers through pharmacies fulfilling physician-directed or standing order prescriptions. However, most of these potential customers are incremental to the customers for our current OUD products and we may face challenges building a sales force and delivery network to serve these new customers.
Our revenues may decrease or grow at a slower than expected rate due to many factors.
We cannot be assured that our products will be, or will continue to be, accepted in the U.S. or markets outside the U.S. or that we will be able to maintain or increase sales of our products. Factors that may cause revenues from our products to grow at a slower than expected rate, decrease or cease altogether, include, among others:
•the perception of physicians and other members of the healthcare community as to our products’ safety and efficacy relative to that of competing products and the willingness or ability of physicians and other members of the healthcare community to prescribe, dispense and/or administer, and patients to use, our products;
•unfavorable publicity concerning us, our products, similar classes of drugs or the industry generally;
•the cost-effectiveness of our products, the impact of price changes in the market, and the reimbursement policies of government and third-party payors;
•the cost and availability of raw materials necessary for the manufacture of our products;
•the successful manufacture of our products on a timely and cost-effective basis;
•the size of the markets for our products, and patient and physician satisfaction with our products;
•significant changes in the competitive landscape for our products, including any approval of generic versions of our products or other branded products that may compete with our products;
•adverse event information relating to our products or to similar classes of drugs;
•changes to the product labels of our products, or of products within the same drug classes, to add significant warnings or restrictions on use;
•our continued ability to engage third parties to package and/or distribute our products on acceptable terms;
•regulatory developments and actions related to the manufacture, commercialization or continued use of our products, including FDA actions such as the issuance of a REMS or warning letter, or conduct of an audit by the FDA or another regulatory authority in which a manufacturing or quality deficiency is identified;
•the extent and effectiveness of the sales, marketing and distribution support for our products, including our licensees’ decisions as to the timing and volume of product orders and shipments, the timing of product launches, and product pricing and discounting;
•disputes with our licensees relating to the use of our technology in, and marketing and sale of, products from which we received, or are currently receiving, manufacturing and/or royalty revenue, and the amounts to be paid with respect to such products;
•exchange rate valuations and fluctuations;
•U.S. and global political changes and/or instability, and any related changes in applicable laws and regulations, that may impact resources and markets for our products; and
•the potential negative impact of current and future healthcare laws and legislation and regulation controlling the conditions of treatment and the distribution of the product including, with respect to OUD treatments, new governmental or regulatory guidelines or policies limiting the prescription of opioids to patients.
We operate in a highly competitive industry, which includes companies with greater resources, including larger R&D and sales organizations, and more experience working with large and diverse product portfolios, than us. The approval and launch of generic or branded products that compete with SUBLOCADE, SUBOXONE Film, SUBOXONE Tablet, and SUBUTEX Tablet could have a material adverse effect on our business, prospects, results of operations and financial condition.
The manufacture and sale of pharmaceuticals are highly competitive. Our competitors may have substantially greater financial, operational and human resources than we do. Companies with more extensive resources and larger research and development expenditures have a greater ability to fund clinical trials and other development work necessary for regulatory applications. There is also a risk that our competitors may launch competing products before we are able to complete all of the regulatory milestones required to launch our own product. Competitors may also have a greater ability to offer higher rebates, discounts, chargebacks or other incentives to gain commercial advantage, and may be more successful than us in acquiring or licensing new products for development and commercialization.
Smaller or earlier-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large, established companies. If any product that competes with one of our products or product candidates is approved, our sales of that product could decrease, the effect of which would be heightened by our product and geographic concentration, which could have an adverse impact on our business, prospects, results of operations and financial condition.
In addition, many pharmaceutical companies are able to deploy more personnel to market and sell their products than us. Each of our sales representatives is responsible for a territory of significant size. The continued growth of our current products and the launch of any future products may require the expansion of our sales force and sales support organization internationally and we may need to commit significant additional funds, management and other resources to the growth of our field organization. We
may not be able to achieve any such necessary growth in a timely or cost-effective manner or at all or realize a positive return on our investment. Likewise, if our R&D organization is not appropriately sized to effectively develop our current pipeline and future pipeline projects, the commercial net present value of our current pipeline and any future pipeline projects may be diminished. This in turn could materially and adversely affect our business prospects, results of operations, and financial position. Critically, investment in a novel asset pipeline is required to ensure the sustainability of Indivior through the launch of new medicines as our existing products face increasing competition through generics and alternatives.
The pharmaceutical and biotechnology industries are also characterized by continuous product development and technological change. Our products could, therefore, be rendered obsolete or uneconomic through the development of new products with unique advantages (including, e.g., new chemical entities that may be safer, more effective or more convenient than our products) or by technological advances in manufacturing or production by our competitors. In particular, several of our branded products face competition from generic products in key markets as well as competition from alternative products or treatments. Among other things, competition could continue to require us to increase further the level of rebates and other offsets to gross revenues, particularly in our U.S. operations, and could impact potential volume growth of any particular product, which could reduce our net revenues and therefore our results of operations in future periods.
Branded Products
The introduction of branded products that compete with our products may lead to a loss of sales of our products and/or a decrease in the price at which our products can be sold. For example, SUBLOCADE is distributed in U.S., Australia, Canada, Israel, Sweden, Finland, Norway, and other countries. However, Camurus, in partnership with Braeburn Pharmaceuticals, Inc., has sought FDA approval of its long-acting injectable buprenorphine product which would compete with SUBLOCADE in the U.S. Additionally, we expect that Braeburn may eventually seek approval in Canada. This product is already well established in Sweden, Finland, Norway, and Australia, and is available in additional countries. We expect it to be available in the U.S. eventually. Any of the foregoing competitive developments could have a material adverse effect on our business, prospects, results of operations and financial condition. Among other things, developments of this nature have in the past, and could in the future, require the Group to increase further the level of rebates and other offsets to gross revenues, particularly in its U.S. operations, as well as impact potential volume growth of any affected products, which, in turn, could reduce net revenues and, therefore, its results in future periods.
Similarly, OPVEE (nalmefene) nasal spray, when launched, will compete against branded and generic naloxone nasal sprays, including Narcan® (naloxone HCI) Nasal Spray 4 mg, along with 4 mg naloxone generic equivalents, and Kloxxado® (naloxone HCI) Nasal Spray 8 mg, as well as naloxone or nalmefene administered by syringe.
Generic Products
The introduction of generic products typically leads to a loss of sales of the branded product and/or a decrease in the price at which branded products can be sold, particularly when there is more than one generic product available in the market. In addition, legislation enacted in the U.S. allows for the dispensing of generic products and, in some instances, the dispensing of generic products rather than branded products may be required (in the absence of specific instructions from the prescribing physician). If we fail to obtain or maintain adequate patent protection, we may not be able to prevent third parties from launching generic or biosimilar versions of SUBLOCADE and/or PERSERIS. Our SUBOXONE Film product already faces three generic competitors in the U.S., and a fourth competitor received approval for its product in May 2022 but has not yet launched. We have seen our market share of SUBOXONE Film decline from approximately 80% to 53% due to generic tablets and branded competition. More recently, upon entry of generic competition, our market share has fallen to approximately 19% today, and we expect further declines if another competing product becomes available. Additionally, we no longer promote SUBOXONE Film in the U.S. and no longer market our SUBUTEX Tablets and SUBOXONE
Tablets in the U.S. See also “Note 19—Provisions and Other Liabilities” of “Item 18. Financial Statements—Audited Consolidated Financial Statements.” We generally face generic competition globally for these products. For a detailed discussion of the competition that we face with respect to our current marketed products, technology platforms and product indications, please see the section entitled “Competition” in “Item 4.B. – Business Overview” in this registration statement. If we are unable to compete successfully in this highly competitive industry, our business, financial condition, cash flows and results of operations could be materially adversely affected. Similarly, OPVEE, when launched, will compete with generic 4 mg nasal naloxone HCl products, as well as naloxone or nalmefene administered by syringe.
Some of our pharmaceutical pipeline and our commercial product sales rely on collaborations with third parties, which may adversely affect the development and sale of our products.
We depend on alliances with other companies, including pharmaceutical and biotechnology companies, vendors and service providers, for the development of a portion of the products in our pharmaceutical pipeline and for the commercialization and sales of certain of our commercial products. For example, we have collaborations with third parties under which we share development rights, obligations and costs and/or commercial rights and obligations. See “Item 4. Information on the Company—Long-Term Pipeline.” Our agreements with development partners typically require substantial up-front investments, potential milestone or option payments, and royalties on net sales to the development partner. For example, through our agreements with multiple collaboration partners, we have aggregate potential financial obligations of up to approximately $285 million upon the completion of all development milestones and additional potential financial obligations of an aggregate of $621 million if all sales milestones are met. Development milestones generally are payable upon the attainment of certain milestones towards and including the approval of a new product and by definition would be triggered if at all prior to the sale of such products; sales milestones are payable upon the attainment of specified commercial sales levels. See also Item 10.C, “Material Contracts,” for additional details regarding these collaboration agreements.
Similarly, we have potential obligations of up to $68 million in connection with a Contingent Value Agreement entered into in connection with the acquisition of Opiant Pharmaceuticals, Inc., a Delaware corporation (“Opiant”) related to the future sales of a product which is currently being developed; these payments would be triggered upon the commercial sale of OPTN003 reaching certain levels. In the event that we meet these milestones it would offset some of our future revenues from the Opiant OPTN003 product. See also Item 4A, History of the Company - Acquisition of Opiant Pharmaceuticals.
Also, failures by these parties to meet their contractual, regulatory, or other obligations to us or any disruption in the relationships between us and these third parties, could have a material adverse effect on our pharmaceutical pipeline and business. In addition, our collaborative relationships for R&D and/or commercialization and sales often extend for many years and have given, and may in the future give, rise to disputes regarding the relative rights, obligations and revenues of us and our collaboration partners, including the ownership or prosecution of intellectual property and associated rights and obligations. This could result in the loss of intellectual property rights or protection, delay the development and sale of potential pharmaceutical products, affect the effective sale and delivery of our commercialized products and lead to lengthy and expensive litigation, administrative proceedings or arbitration.
Also, there is a trend in the specialty pharmaceutical industry of seeking to “outsource” drug development by acquiring companies with promising drug candidates. We face substantial competition from historically innovative companies, as well as companies with greater financial resources than us, for such acquisition targets.
Clinical trials for the development of products, including our key pipeline products, may be unsuccessful and our product candidates may not receive authorization for manufacture and sale.
Before obtaining regulatory approvals for the commercial sale of each product under development, we must demonstrate, through pre-clinical, clinical and other studies, that the product is safe and effective for the claimed use or uses, and also demonstrate that the product is of appropriate quality. No assurance can be provided that a clinical study will demonstrate that a particular product candidate safely provided hypothesized benefits.
Our lead development products are AEF0117(synthetic CB1 specific signaling inhibitor) which is currently undergoing a Phase 2b study; OPNT002 (nasal naltrexone for AUD) which is currently undergoing a Phase 2 study; and INDV-2000 (selective orexin-1 receptor antagonist) which has completed a Phase 1 Single Ascending Dose (SAD) study and for which a Multiple Ascending Dose study began in September 2022. Additionally, INDV-1000 (Selective GABAb positive allosteric modulator) and OPNT004 - drinabant injection for acute cannabinoid overdose are in the pre-clinical stage.
However, the results from early clinical trials may not be predictive of results obtained in later and larger clinical trials, and therefore these product candidates may fail to show the desired safety and efficacy in later clinical trials despite having progressed successfully through initial clinical testing. In that case, the FDA or the equivalent regulatory authority in jurisdictions outside the U.S. may determine our data are not sufficiently compelling to warrant marketing approval and may require us to engage in additional clinical trials or provide further analysis which may be costly and time-consuming and substantially delay the receipt of such regulatory approval (which may delay the launch of any potential product).
Also, the development process takes many years and can be very expensive. The number and duration of pre-clinical studies and clinical trials that are required vary depending on the product candidate, the indication being evaluated, the trial results and the regulations applicable to the particular product candidate. Such clinical and other studies can be delayed or halted for a variety of reasons, including:
•challenges in identifying clinical development pathways, including appropriate clinical trial protocol design, particularly where there is no regulatory precedent;
•delays or failures in obtaining regulatory authorization to commence a trial because of safety concerns of regulators relating to our product candidates or similar product candidates of our competitors or failure to follow regulatory guidelines;
•delays or failures in obtaining clinical materials and sufficient quantities of the product candidate for use in trials;
•delays or failures in reaching an agreement on acceptable terms with prospective study sites;
•delays or failures in obtaining approval of our clinical trial protocol from an institutional review board or ethics committees to conduct a clinical trial at a prospective study site;
•delays in identifying, recruiting, or enrolling patients to participate in a clinical trial;
•failure of clinical investigators to comply with FDA and other regulatory agencies’ good clinical practice (“GCP”) requirements;
•unforeseen safety issues, including negative results from ongoing pre-clinical studies and adverse events associated with product candidates;
•inability to monitor patients adequately during or after treatment;
•difficulty monitoring multiple study sites;
•failure of our third-party research organizations or clinical investigators to satisfactorily perform their contractual duties, comply with regulations or meet expected deadlines;
•disagreements with collaborative partners on the planning and execution of product development; or
•insufficient funds to complete the trials.
For example, regulatory approval to conduct clinical studies for one of our non-opioid OUD treatments was delayed due to a clinical hold originating with FDA’s concerns related to a third-party’s product, rather than our own product.
Many companies in the pharmaceutical industry have suffered significant setbacks in drug development and there can be no guarantee that FDA approval will ultimately be obtained for any given product.
Further, the COVID-19 pandemic has caused certain delays in the execution of our internal and third-party clinical and/or chemistry, manufacturing and controls (CMC) studies such as patient enrollments in clinical trials and CMC operations. If these effects become more severe, we could experience more significant disruptions to our clinical development programs.
Even if the clinical trials of any product under development were to be completed, they may not demonstrate the quality, safety and efficacy required to result in an approvable or marketable product which would delay or prevent regulatory approval of the product. In addition, regulatory authorities in Europe, the U.S., and other countries may require additional studies, which could result in increased costs and significant development delays, or termination of a project if it would no longer be economically viable.
We rely on third parties to conduct our clinical trials, and if they do not properly and successfully perform their legal and regulatory obligations, as well as their contractual obligations to us, we may not be able to obtain regulatory approvals for our product candidates within the timeframes currently envisaged, or at all and may be exposed to regulatory sanctions.
We rely on contract research organizations and other third parties to assist in designing, managing, monitoring and otherwise carrying out our clinical trials, including with respect to site selection, contract negotiation and data management. We do not control these third parties and, as a result, may not be able to prevent delays, interruptions, or other issues with respect to the clinical trials conducted by such third parties. If we, contract research organizations, other third parties assisting us or our study sites fail to comply with applicable GCP requirements, the clinical data generated in the relevant clinical trials may be deemed unreliable and the FDA or its non-U.S. counterparts may require us to perform additional clinical trials before approving our marketing applications.
In addition, clinical trials must be conducted with products manufactured, labeled and supplied under the FDA’s and non-U.S. regulatory agencies’ current good manufacturing practices (“cGMP”) regulations and in strict compliance with local regulatory requirements (e.g., compliance with Investigational New Drug (IND) application in the U.S., Clinical Trial Application (CTA) in Europe, etc.). Our failure, or the failure of third parties conducting clinical trials on our behalf, to comply with these regulations may require us to repeat or redesign clinical trials, which would delay the regulatory approval process or expose us to regulatory sanctions.
If our clinical trials do not meet regulatory requirements, or if the third parties conducting our clinical trials need to be replaced, our clinical trials may be extended, delayed, suspended or terminated. In addition, any delay or interruption in the supply of clinical trial supplies could delay the completion of clinical trials, increase the costs associated with maintaining clinical trials, and, depending upon the period of delay, require us to commence new clinical trials at additional expense or terminate clinical trials completely. If any of these events occur, we may not be able to obtain regulatory approval for our product
candidates or succeed in our efforts to create approved line extensions for our existing products or generate additional useful clinical data in support of these products, which would adversely affect our business, prospects, results of operations and financial condition.
Failure to retain key personnel or attract new personnel could have an adverse effect on us.
We rely upon several key executives and employees who have an in-depth and long-term understanding of the industry and the disease space and our technologies, products, programs, collaborative relationships and strategic goals. Key personnel includes experienced employees with specific expertise and the ability to compliantly interact with healthcare providers, key opinion leaders, and key decision makers across the healthcare industry.
In particular, we must compete with other pharmaceutical and life sciences companies to recruit, hire, train and retain sales and marketing personnel as well as research and development personnel. Competition for such personnel in the pharmaceutical and biotechnology industries is intense, and there can be no assurance that we will be able to recruit or retain such personnel. If our sales force and sales organization are not appropriately sized to promote any current or potential future products adequately, the commercial potential of our current products and any future products may be diminished. The inability to recruit, hire, train and retain research and development personnel could negatively affect our ability to formulate and develop new products.
We do not carry “key person” insurance. The loss of the services of any of our key executives or employees could delay or prevent the successful completion of some of our vital activities. Any employee may terminate his or her employment at any time without notice or with only short notice and without cause or good reason. The resulting loss of institutional knowledge may have a material adverse effect on our operations and future growth.
The current industry-wide challenging labor environment may have a potential negative impact on the Group’s attrition rate and its ability to recruit for certain key positions in some geographies. We have attempted to mitigate this by establishing various tools, including development, performance management and reward programs, to develop, retain, and recruit key personnel, but there can be no assurance that we will be successful.
As a result of the above factors, any failure to retain key personnel or attract new personnel could have a material adverse effect on our business, prospects, results of operations and financial condition.
Revenues generated by sales of our products depend on the availability from third-party payors for reimbursement for our products and the extent of cost-sharing arrangements for patients (e.g., patient co-payment, co-insurance, deductible obligations) and cost-control measures imposed, and any reductions in payment rate or reimbursement or increases in our or in patients’ financial obligation to payors could result in decreased sales of our products and/or decreased revenues.
In both U.S. and non-U.S. markets, sales of our products depend, in part, on the availability of reimbursement from third-party payors such as state and federal governments, including Medicare and Medicaid in the U.S. and similar programs in other countries, managed care providers and private insurance plans. Deterioration in the timeliness, certainty and amount of reimbursement for our products, the existence of barriers to coverage of our products, increases in our financial obligation to payors, including government payors, limitations by healthcare providers on how much, or under what circumstances, they will prescribe or administer our products or unwillingness by patients to pay any required co-payments, or deductible amounts, could reduce the use of, and revenues generated from, our products and could have a material adverse effect on our business, financial condition, cash flows and results of operations.
For example, when generic versions of a product are available, payors may impose access restrictions on the branded product, such as requiring prior authorization, imposing high patient co-pays,
or precluding coverage altogether. In some cases, similar restrictions might apply when a therapeutic alternative is available. In addition, when a new product is approved, the availability of government and private reimbursement, any applicable coverage restrictions and the amount of reimbursement are all uncertain. The prices for certain of our products, when commercialized, may be high compared to other pharmaceutical products. As a result, we may encounter difficulty in obtaining satisfactory pricing and reimbursement for our new products. The failure to obtain and maintain pricing and reimbursement at satisfactory levels for our products may adversely affect our results of operations and prospects.
In the U.S., federal and state legislatures, health agencies and third-party payors continue to focus on containing the cost of healthcare, including by comparing the effectiveness, benefits and costs of similar treatments. Any adverse findings for our products may reduce the extent of reimbursement for our products. Economic pressure on state budgets may also result in states increasingly seeking to limit coverage or payment for drugs, including but not limited to price control initiatives, discounts and other pricing-related actions. Over the past several years, several states have enacted drug pricing transparency laws that require companies to report on drug price increases and justify how drug prices were set, and we expect additional state or federal drug pricing initiatives to be proposed and enacted in the future. In addition, state Medicaid programs are increasingly requesting that manufacturers pay supplemental rebates and require prior authorization by the state program for use of any drug. Managed care organizations continue to seek price discounts and, in some cases, impose restrictions on the coverage of particular drugs. Government efforts to reduce Medicaid expenses may lead to increased use of managed care organizations by Medicaid programs, which may in turn result in managed care organizations influencing prescription decisions for a larger segment of the population and a corresponding constraint on prices and reimbursement for our products. Further, on August 16, 2022, President Biden signed into law the Inflation Reduction Act of 2022, or IRA, which, among other things, requires the HHS Secretary to negotiate, with respect to Medicare units and subject to a specified cap, the price of a set number of certain high-spend drugs and biologicals per year starting in 2026, penalizes manufacturers of certain Medicare Parts B and D drugs for price increases above inflation, and makes several changes to the Medicare Part D benefit, including a limit on annual out-of-pocket costs, and a change in manufacturer liability under the program that could negatively affect us. Congress continues to examine various policy proposals that may result in pressure on the prices of prescription drugs in government health programs.
In addition, the outcome or settlement of litigation could impact the practices of healthcare providers and patients, and the policies and practices of third-party payors, including Medicare, Medicaid, managed care providers and private insurance plans. For example, the Group has been named as a defendant in a federal multi-district opioid litigation. One or more defendants in the litigation have offered large volumes of products free of charge to state plaintiffs as settlement compensation that would compete with our product candidate OPNT0003 and which, if agreed to and approved, might negatively impact the sales of this potential products. The litigation and negative media attention may cause wholesalers to refrain from purchasing buprenorphine products from us, and may cause other business partners to decline to do business with us, which in turn could materially and adversely affect our business and financial condition.
In Europe and many other countries, government-sponsored healthcare systems are the primary payors for healthcare expenditures, including payment for drugs. We expect that these countries will continue to act to reduce expenditure on drugs, including mandatory price reductions, patient access restrictions, suspensions of price increases, increased mandatory discounts or rebates, preference for generic products, reduction in the amount of reimbursement and greater importation of drugs from lower-cost countries. Any such cost-control measures would likely reduce our revenues. In addition, certain countries set prices by reference to the prices in other countries where our products are marketed. Thus, the inability to secure adequate prices in a particular country may not only limit the marketing of products within that country, but may also adversely affect the ability to obtain acceptable prices in other markets.
There can be no assurance that our products will obtain favorable reimbursement status in any country. The failure to obtain and maintain reimbursement, or an adequate level of reimbursement, for our
products may have a material adverse effect on our business, prospects, results of operations and financial condition.
The clinical study or commercial use of our products may cause unintended side effects or adverse reactions, or incidents of misuse may occur, which could adversely affect our products, business and share price.
The administration of drugs to humans carries the inherent risk of product liability claims whether or not the drugs are actually the cause of an injury. Our products may cause, or may be perceived to have caused, injury or dangerous drug interactions or may produce undesirable or unintended side effects, and we may not learn about or understand those effects until the products have been administered to study participants or patients for a prolonged period of time. Additionally, incidents of product misuse may occur. We cannot be certain that the clinical or commercial use of our products will not produce undesirable or unintended side effects that have not been evident in the use of, or in clinical trials conducted for, such products to date.
These events, among others, could result in product recalls or additional regulatory controls (including additional regulatory scrutiny, a risk evaluation and mitigation strategy (“REMS”) and requirements for additional labeling) or product liability claims. Our product liability insurance coverage may be inadequate to satisfy liabilities that arise, we may be unable to obtain adequate coverage at an acceptable cost or at all or our insurer may disclaim coverage as to a future claim. This could prevent or limit the development or commercialization of our products. In addition, the reporting of adverse safety events involving our products, including instances of product misuse, and public rumors about such events could cause our product sales or share price to decline or experience periods of volatility. These types of events could have a material adverse effect on our business, financial condition, cash flows and results of operations.
We use hazardous materials in our manufacturing facilities, and any claims relating to the improper handling, storage, release or disposal of these materials could be time-consuming and expensive.
Our operations are subject to complex and increasingly stringent environmental, health and safety laws and regulations in the countries where we operate and, in particular, in the U.K. and U.S. where we have manufacturing and R&D facilities. The costs of compliance with environmental, health and safety laws and regulations are significant. If an accident or contamination involving pollutants or hazardous substances occurs, an injured party could seek to hold us liable for any damages that result, and any liability could exceed the limits or fall outside the coverage of our insurance. We may not be able to maintain insurance with sufficient coverage on acceptable terms, or at all. Costs, damages and/or fines may result from the presence, investigation and remediation of such contamination at properties currently or formerly owned, leased or operated by us or at off-site locations, including where we have arranged for the disposal of hazardous substances or waste. In addition, we may be subject to third-party claims, including for natural resource damages, personal injury and property damage, in connection with such contamination. We have developed and implemented a proprietary risk mitigation program to preemptively identify and address environmental, health, safety and security risks; however, there can be no assurance that a violation of current or future environmental, health or safety laws or regulations will not occur. Any violations, even if inadvertent or accidental, or the cost of compliance with any resulting order, fine or liability that may be imposed, could materially adversely affect our business, financial condition, cash flows and results of operations.
If we fail to develop or acquire other new products or compounds for development, our business, prospects, results of operations and financial condition could be materially adversely affected.
A key element of our long-term strategy is to develop or acquire and commercialize a portfolio of other products or product candidates in addition to our current products, through business or product acquisitions. Because we dedicate only a small portion of our own resources towards proprietary drug discovery, the success of this strategy depends in large part upon the combination of our regulatory, development and commercial capabilities and expertise and our ability to identify, select and acquire approved or clinically enabled product candidates for therapeutic indications that complement or augment our current products, or that otherwise fit into our development or strategic plans on terms that are acceptable to us. For example,
•In June 2021, we acquired an exclusive option for AEF0117, a synthetic CB1-specific signaling inhibitor designed to treat cannabis-related disorders from the French company Aelis Farma.
•We are developing INDV-2000 (Selective Orexin-1 Receptor Antagonist), a non-opioid treatment for moderate to severe opioid use disorder, in collaboration with C4X Discovery.
•We are developing INDV-1000 (Selective GABAb Positive Allosteric Modulator) for the treatment of alcohol use disorder in collaboration with ADDEX therapeutics.
•On March 2, 2023, the Company completed its acquisition of Opiant, a specialty pharmaceutical company developing medicines for addictions and drug overdose. In addition to OPVEE (nalmefene) nasal spray, which the FDA approved on May 22, 2023. Opiant’s long-term pipeline includes medicines in development for alcohol use disorder and acute cannabinoid overdose.
See “Item 4.B. Business Overview—Long Term Pipeline,” for more information. Identifying, selecting and acquiring promising products or product candidates requires substantial technical, financial and human resources expertise. Efforts to do so may not result in the actual acquisition or license of a particular product or product candidate, potentially resulting in a diversion of our Management’s time and the expenditure of our resources with no resulting benefit. In addition, we face substantial competition from historically innovative companies, as well as companies with greater financial resources than us, for such acquisition targets. If we are unable to identify, select and acquire suitable products or product candidates from third parties or acquire businesses at valuations and on other terms acceptable to us, or if we are unable to raise the capital required to acquire businesses or new products, our business and prospects will be limited.
In addition, any growth through business development will depend upon us identifying and obtaining product candidates, our ability to develop those product candidates and the availability of funding to acquire, complete the development of, obtain regulatory approval for and commercialize these product candidates. We may not be able to successfully manage the risks or other anticipated and unanticipated problems in connection with an acquisition or in-licensing, and may not be able to realize the anticipated benefits of any acquisition or in-licensing for a variety of reasons, including the possibility that a product candidate proves not to be safe or effective in later clinical trials, a product fails to reach its forecast commercial potential or the integration of a product or product candidate gives rise to unforeseen difficulties and expenditures. It is common for multiple products and product candidates to be evaluated for the same indication by multiple parties at the same time, and we cannot predict whether our products’ forecasted commercial potential will come to fruition. Any failure in identifying and managing these risks and uncertainties effectively would have a material adverse effect on our business, prospects, results of operations and financial condition.
Moreover, any product candidate we acquire may require additional, time-consuming development or regulatory efforts prior to commercial sale or prior to expansion into other indications, including pre-clinical studies if applicable, and extensive clinical testing and approval by the FDA and applicable foreign
regulatory authorities. All product candidates are prone to the risk of failure that is inherent in pharmaceutical product development, including the possibility that the product candidate will not be shown to be sufficiently safe and/or effective for approval by regulatory authorities. In addition, we cannot assure that any such products that are approved will be manufactured or produced economically, successfully commercialized or widely accepted in the marketplace or be more effective or desired than other commercially available alternatives. Any failure in identifying and managing these risks and uncertainties effectively would have a material adverse effect on our business, prospects, results of operations and financial condition.
Acquisitions, partnerships, joint ventures, dispositions, and other business combinations or strategic transactions involve several inherent risks, any of which could result in the benefits anticipated not being realized and could have an adverse effect on our business, financial condition, and results of operations.
Acquisitions are an important part of our growth model and we regularly consider and enter into strategic transactions, including mergers, acquisitions, investments and other growth, market and geographic expansion strategies, with the expectation that these transactions will result in increases in sales, cost savings, synergies and various other benefits. For example, in March 2023 we acquired Opiant Pharmaceuticals in exchange for $146 million in cash and potential future payments of up to $68 million upon the completion of certain sales milestones pursuant to a contingent value rights agreement. See Item 4.A. - History and Development of the Company - Acquisition of Opiant Pharmaceuticals.
In the future, our ability to acquire additional companies or products synergistic with our current businesses may be limited by antitrust regulators who may be particularly vigilant in our markets because we serve at-risk populations and because we already market several products in the space.
We may fail to realize anticipated benefits from such transactions or partnerships, or any future ones, we may be exposed to additional liabilities or compliance violations of any acquired business or joint venture and we may be exposed to litigation in connection with any transaction. Furthermore, we may have trouble identifying suitable acquisition targets in the future. Our ability to deliver the expected benefits from any strategic transactions is subject to numerous uncertainties and risks, including our acquisition assumptions; our ability to integrate personnel, labor models, financial, supply chain and logistics, IT and other systems successfully; disruption of our ongoing business and diversion of management time; the need to hire additional Management and other critical personnel; and increasing the scope, geographic diversity and complexity of our operations.
In addition, the integration of acquired businesses may create complexity in our financial systems and internal controls and make them more difficult to manage or cause us to fail to meet our financial reporting obligations. Any impairment of goodwill or other assets acquired in a strategic transaction or charges to earnings associated with any strategic transaction as well as any failure by the acquired business to produce the expected margins or cash flows, may materially reduce our profitability. Furthermore, we may finance these strategic transactions by incurring additional debt or raising equity, which could increase leverage or impact our ability to access capital in the future.
We may be subject to adverse public opinion.
The pharmaceutical industry is frequently subject to adverse publicity on many topics, including product recalls and research and discovery methods, as well as political controversy over pharmaceutical pricing, and the impact of novel techniques and therapies on humans, animals, and the environment, among others. We manufacture and market buprenorphine-based medications for the treatment of moderate-to-severe opioid use disorder. Buprenorphine, a synthetic opioid, that can cause death if used improperly and can be prone to health and safety risks arising from misuse and diversion. Negative publicity about us or our products, or about the industry as a whole, may adversely affect our corporate reputation, which could impact our operations, impair our ability to gain market acceptance for our
products or lead to government intervention, which in turn could have an adverse impact on our business, prospects, results of operations and financial condition.
For example, our recent settlement with the DOJ created substantial adverse publicity and may have made it more difficult for some to distinguish our company, which works to address the opioid crisis, from those companies that created or exacerbated the opioid crisis. See “Item 4: Information on the Company—History and Development of the Company.” In announcing the settlement, the DOJ made a point to note that our medicines are opioids: Suboxone is a drug product approved for use by recovering opioid addicts to avoid or reduce withdrawal symptoms while they undergo treatment for opioid-use disorder. Suboxone contains buprenorphine, a powerful opioid. “Combatting the opioid crisis is a Department of Justice priority,” said Principal Deputy Associate Attorney General Claire M. Murray. “Today’s announced resolution and related actions hold accountable entities and individuals that unlawfully marketed opioid-addiction products.”
This and other potential adverse publicity may reduce the willingness of third parties to do business with us, including credit providers and other investors, technology licensors, advocacy organizations, or potential employees, and may harm our ability to engage with policymakers on public policy issues critical to our business. For instance, in recent years, some state and federal officials were unwilling to meet with us to discuss policy issues while we were under government investigation, as were some third party groups.
Risks Related to Intellectual Property
Failure to obtain and maintain patents and protect other proprietary rights, including in-licenses of such rights from third parties, may adversely affect us.
Our success depends, in large part, on our ability to obtain and maintain patent and other intellectual property protection, particularly for our drug, compound, product, delivery, formulation and methods of treatment technologies and associated manufacturing processes in relation to both our products and our product candidates. The process of obtaining patents can be lengthy and expensive. We own, or license in, several patent rights in the U.S. and other countries covering certain products and have also developed brand names and trademarks for other products. We will be able to protect our proprietary rights from unauthorized use by third parties only to the extent that our proprietary technologies and future products are covered by valid and enforceable patents or are effectively maintained as trade secrets or confidential information within the Group. Our existing patents, and any future patents we obtain, may not be sufficiently broad to prevent others from using our technologies or from developing competing products and technologies. If third parties disclose or misappropriate our proprietary rights, it may materially and adversely impact our business, prospects, results of operations and financial condition. Moreover, our ability to obtain and enforce patents and other proprietary rights is critical to our business strategy and success.
The patent positions of many pharmaceutical and life sciences companies are highly uncertain and involve complex legal and factual questions. In some cases, the legal principles that apply to these cases may be changing or unresolved. As a result, the validity and enforceability of our patents cannot be predicted with certainty. In addition, we cannot guarantee that:
•we were the first to make the inventions covered by each of our issued patents and pending patent applications;
•we were the first to file patent applications for these inventions;
•patents will be granted in connection with any of our currently pending or future applications;
•other companies will not independently develop similar or alternative technologies or duplicate any of our technologies by inventing around our claims;
•a third-party will not challenge our proprietary rights, and if challenged that a court will hold that our patents are valid and enforceable;
•any patents issued to us or our collaboration partners will cover our products as ultimately developed, or provide us with any competitive advantages, or will not be challenged by third parties;
•we will develop additional proprietary technologies that are patentable; or
•the patents of others will not have an adverse effect on our business.
We also rely on trade secrets and other unpatented confidential information to maintain our competitive position but there can be no assurance that others may not independently develop the same or similar products or technologies, and may also obtain patents and other intellectual property protection for them. We have sought to protect trade secrets and confidential information, in some cases through the provisions of confidentiality and non-use agreements with our employees, consultants, advisers and partners. Nevertheless, it may not always be possible to prevent the disclosure of our trade secrets and other confidential information and for us to obtain an adequate remedy in the event of unauthorized disclosure or use of such information. In addition, if our employees, consultants or partners develop inventions or processes independently that may be applicable to our products or technologies under development, such inventions and processes will not necessarily become our property, but may remain the property of those persons or their employers or the persons may be entitled to compensation in respect of those inventions. Protracted and costly litigation could be necessary to enforce and determine the scope of our proprietary rights.
We have entered into several collaborative arrangements for the development and commercialization of products including Aquestive in relation to SUBOXONE Film and more recently Aelis Farma for the development of a potential product to treat cannabis use disorder. In connection with such arrangements, we have shared certain of our proprietary knowledge with our partners and it may not be possible or practical to prevent our partners from developing similar or functionally equivalent products. Any disputes between us and such partners may threaten our ability to continue using such proprietary knowledge and, in turn, could impact our ability to market our products. We have also engaged in collaborations, sponsored research agreements and other arrangements with academic researchers and institutions, some of which have received and may receive funding from government agencies. Although we have sought to retain ownership of all intellectual property rights pertaining to inventions that may result from such collaborations, there can be no assurance that governments, institutions, researchers or other third parties will not also attempt to claim certain rights to such inventions.
If we fail to obtain and maintain sufficient intellectual property protection for our current and future products and technologies and if third parties disclose or misappropriate our proprietary rights, our ability to successfully and fully exploit these products and technologies could be adversely affected, which in turn would adversely affect our business, prospects, results of operation and financial condition.
We may incur substantial costs as a result of litigation or other proceedings relating to patents and other intellectual property rights, and we may be unable to protect our rights to, or commercialize our products.
Litigation and other similar proceedings, such as inter partes reviews in the U.S. (which are initiated by third parties to challenge the validity of a patent) relating to infringement, validity or misappropriation of patent and other intellectual property rights in the pharmaceutical and life sciences industry are common. We may receive notifications of challenges to the validity of our patents or alleged infringement of patents owned by third parties. We have historically incurred, and expect that we will continue to incur, significant costs in connection with the ANDA proceedings relating to SUBOXONE Film in the U.S. If we choose to
go to court to prevent a third party from infringing our patents, our licensed patents or our partners’ patents (where we have the right to do so), that allegedly infringing third-party has the right to ask the court to rule that these patents are invalid and/or should not be enforced against that third-party.
For example, certain subsidiaries of the Group filed actions alleging that Alvogen Pine Brook LLC and Alvogen Inc (collectively, “Alvogen”) infringe U.S. Patent Nos. 9,687,454 (the "'454 Patent") and 9,931,305 (the '305 Patent"). The parties have stipulated to noninfringement of the ’305 Patent under the court’s claim construction, but the Group retained its rights to appeal the construction and pursue its infringement claims pending appeal. The Group’s infringement claims concerning the ’454 Patent remain pending, but Alvogen has challenged the validity of the asserted claims. Separately, other third parties may allege that patents on our other products or product candidates are not valid. These lawsuits are expensive, having cost the Group several million dollars per year, and time-consuming, even if we are ultimately successful in stopping the infringement of these patents. In addition, there is a risk that a court will decide that these patents are not valid or not infringed and that we do not have the right to prevent the other party from using the patented subject matter. There can be no assurance that these, or other litigation that we may file in the future, will be successful in preventing the infringement of our patents, that we will be able to successfully defend the validity of our patents, that any such litigation will be cost-effective, or that the litigation will have a satisfactory result for us. In addition, such litigation diverts the attention of Management and development personnel. Failure to stop infringement of our patents or an unsatisfactory result in litigation would adversely affect our business and results of operations. Additionally, when enforcing such patents, we also risk further liability as a result of counterclaims. For example, we became subject to counterclaims from Dr. Reddy’s Laboratories for wrongful injunction related to the enforcement of particular claims of one of our patents, which we recently settled, and from Alvogen for alleged for antitrust violations related to our contracts with payors, although we have asked the court to grant summary judgment on such claims. See “Note 21, Legal Proceedings” of “Item 18. Financial Statements—Audited Consolidated Financial Statements.” A third-party may claim that we or our manufacturing or commercialization partners are using inventions covered by the third-party’s patent rights, or that we or such partners are infringing, misappropriating or otherwise violating other intellectual property rights, and may go to court to stop us from engaging in our ordinary course operations and activities, including manufacturing or selling our products. There is a risk that a court could decide that we or our partners are infringing, misappropriating or otherwise violating third-party patents or other intellectual property rights, which could have a material adverse effect on our business and results of operations. In addition, such litigation diverts the attention of Management and development personnel.
We may initiate or defend legal proceedings relating to our patents alongside a collaborator or third-party with an interest or right in the relevant patents. In this scenario, our strategy for asserting or defending our rights might be impacted by that of our co-claimant or co-defendant which, in turn, may have an adverse impact on our existing commercial relationship.
In the pharmaceutical and life sciences industry, like other industries, it is not always clear to industry participants, including the Group, which patents cover various types of products or methods. The coverage of patents is subject to interpretation by the courts, and the interpretation is not always uniform. If we are sued for patent infringement, we would need to demonstrate that our products or methods do not infringe the patent claims of the relevant patent and/or that the patent claims are invalid or unenforceable, which we may not be able to do, and which could in turn result in our being required to pay substantial sums. These sums potentially include damages, legal fees, and increased damages if we are found to have infringed such rights willfully. Further, if a patent infringement suit is brought against us, our research, development, manufacturing, or sales activities relating to the product or product candidate that is the subject of the suit may be delayed, materially affected, or terminated by the grant of an injunction against us.
We cannot be certain that others have not filed patent applications for inventions covered by our licensors’ or our issued patents or pending applications, or that we or our licensors were the first
inventors. Our competitors may have filed, and may in the future file, patent applications covering subject matter similar to those of the Group. Any such patent application may have priority over our or our licensors’ patents or applications and could further require us to obtain rights to patent rights covering such subject matter. For example, in June 2016, a third-party’s patent application resulted in an issued patent that contains claims that could relate to SUBOXONE Film. In the U.S., if another party has filed a patent application on inventions similar to those of the Group, we may have to participate in an interference proceeding declared by the USPTO to determine the priority of invention in the U.S. The costs of these proceedings could be substantial, and it is possible that such efforts would be unsuccessful, resulting in a loss of our U.S. patent position with respect to such inventions. Patent interferences are limited or unavailable for applications filed after March 16, 2013.
As a result of patent infringement claims, or in order to avoid potential infringement claims, we or our collaborators may choose to seek, or be required to seek, a license from the third-party, which would be likely to include a requirement to pay license fees or royalties or both. These licenses may not be available on acceptable terms, or at all. Even if a license can be obtained on acceptable terms, the rights may be non-exclusive, which would potentially give our competitors access to the same intellectual property rights. If we are unable to enter into a license on acceptable terms, we, or our collaborators, could be prevented from commercializing one or more of our product candidates, or forced to modify such product candidates, or cease some aspect of our business operations, which could adversely affect our business, prospects, results of operations or financial condition.
The cost to us of any patent litigation or other proceedings, even if resolved in our favor, could be substantial. Some of our competitors may be able to sustain the costs of complex patent and other intellectual property litigation more effectively than we can because they have substantially greater resources than the Group. In addition, any uncertainties resulting from the initiation and continuation of any litigation could have a material adverse effect on our ability to raise the funds necessary to continue its operations.
Any of the foregoing could have a material adverse effect on our business, prospects, results of operations and financial condition.
We may not be able to protect our intellectual property rights throughout the world which could have an adverse effect on its business, results of operations and financial condition.
Filing, prosecuting and defending patents relating to all of our product candidates and technologies throughout the world would be prohibitively expensive. Competitors may use our technologies in jurisdictions where we have not obtained patent protection to develop their own products, and further, may export otherwise infringing products to territories where we have patent protection but where enforcement is more difficult. These products may compete with our future products in jurisdictions where we do not have any issued patents and our patent claims or other intellectual property rights may not be effective or sufficient to prevent them from so competing.
Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions. The legal systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents and other intellectual property protection, which could make it difficult for us to stop infringement of our patents or marketing of competing products in violation of our proprietary rights generally. Proceedings to enforce our patent rights in foreign jurisdictions could result in substantial costs and divert efforts and attention from other aspects of our business, which could adversely affect our operations and financial condition. Moreover, our patent rights can be challenged in post-grant or inter partes review. For example, our patents for SUBLOCADE were challenged in the EU patent office under two separate European opposition proceedings. However, both of those proceedings have been dismissed.
Risks Related to Regulatory or Legal Matters
The regulatory approval process is expensive, time-consuming, and uncertain and may prevent us or our partners from obtaining approvals for the commercialization of some or all of our product candidates. Further, the FDA or other regulatory agencies may not agree with our regulatory approval strategies or components of our filings for our products and may not approve, or may delay the approval of, our products.
The research, development, testing, manufacturing, approval, labeling, advertising and promotion, distribution and import and export of pharmaceutical products are subject to extensive regulation, and regulations differ from country to country. We must obtain government approvals before marketing or selling our products. Approval in one jurisdiction does not ensure approval in other jurisdictions. The regulatory approval process is lengthy, expensive and uncertain, and we may be unable to obtain approval for our product candidates. The FDA in the U.S., and comparable regulatory agencies in other jurisdictions, impose substantial and rigorous requirements for the development, manufacture and commercialization of products, the satisfaction of which can take a significant number of years and can vary substantially based upon the type, complexity and novelty of the product.
For example, in the U.S., the process for obtaining marketing approval for a drug or biologic product candidate generally includes (a) conducting preclinical laboratory and animal testing and submitting the results to FDA in an investigational new drug application (IND) requesting approval to test the product candidate in human clinical trials; (b) conducting adequate and well-controlled human clinical trials to establish the safety and efficacy of the product candidate in the desired indication; (c) submitting an NDA, biologics license application (BLA), or supplemental NDA/BLA, as appropriate and (d) completing inspections by FDA of the facilities where the product candidate is manufactured, analyzed and stored to demonstrate compliance with cGMP, and any requested FDA audits of the clinical trial sites that generated the data supporting the application.
In addition, regulation is not static, and regulatory agencies, including the FDA, evolve in their staff, interpretations and practices and may impose more stringent requirements than currently in effect, which may adversely affect our plans for product development, approval, manufacture and/or commercialization. The approval procedure and the time required to obtain approval also vary among countries. Regulatory agencies may have varying interpretations of the same data, and approval by one regulatory agency does not ensure approval by regulatory agencies in other jurisdictions. In addition, the ultimate decision by the FDA or other regulatory agencies regarding drug approval may not be consistent with prior communications due to the evolution of new information or changes in clinical practice during the development and registration processes.
The product approval process can last many years, be very costly and still be unsuccessful. For example, the development of SUBLOCADE from concept to commercial launch took approximately 8 years. Regulatory approval by the FDA or other regulatory agencies can be delayed, limited or not granted at all. A product may fail to demonstrate safety and efficacy for each target indication in accordance with applicable regulatory agencies’ standards for many reasons, including:
•data from preclinical testing and clinical trials may be interpreted by applicable regulatory agencies in ways different from how we or our licensees interpret it;
•regulatory agencies may not agree with our or our licensees’ regulatory approval strategies, plans for accelerated development timelines, components of our or our licensees’ filings such as clinical trial designs, conduct and methodologies, or the sufficiency of our or our licensees’ submitted data to meet their requirements for product approval;
•regulatory agencies might not approve our or our licensees’ manufacturing processes or facilities, or those of the contract research organizations (“CROs) and contract manufacturing organizations who conduct research or manufacturing work on our or our licensees’ behalf;
•failure by our clinical investigational sites and the records kept at such sites, including any clinical trial data, to be in compliance with the FDA’s good clinical practices (GCP), or other applicable legislation governing GCP, or to pass FDA, European Medicines Agency or other relevant regulatory agency’s inspections of clinical trials;
•regulatory agencies may change their requirements for approval or post-approval marketing; and
•adverse medical events during the trials could lead to requirements that trials be repeated or extended, or that a program be terminated or placed on clinical hold, even if other studies or trials relating to the program are successful.
In addition, disruptions at the FDA and other regulatory agencies that are unrelated to our Company or our products, including those relating to the COVID-19 pandemic or other political or economic conditions, could cause delays to the regulatory approval process for our products. In June 2020, the FDA noted that it was continuing to ensure timely review of applications for medical products during the COVID-19 pandemic in line with its user fee performance goals; however, if a prolonged U.S. government shutdown occurs as a result of political or economic conditions or if the COVID-19 pandemic increases in severity or impact, the FDA’s ability to timely review and process regulatory submissions could be significantly impacted.
Further, any adverse events or other data generated during the course of clinical trials of our product candidates and/or our currently marketed products could result in action by FDA or an equivalent regulatory authority. Such safety findings may restrict our ability to sell or adversely affect the commercialization of currently marketed products. Specifically, clinical trial safety data could result in FDA requiring changes to the clinical development program, labeling, including additional warnings or additional boxed warnings, or requiring us to take other actions that could have an adverse effect on patient and prescriber acceptance of our products. See also “We are subject to ongoing obligations and continued regulatory review by the FDA and equivalent foreign regulatory agencies, and we may be subject to penalties and litigation and large incremental expenses if we fail to comply with regulatory requirements or experience problems with our products.”
Any failure to obtain, or delay in obtaining, regulatory approval for our products will prevent or delay their commercialization and could have a material adverse effect on our business, financial condition, cash flows and results of operations. In addition, any failure to obtain, or delay in obtaining, approval for our products could have a material impact on our shareholders’ confidence in the strength of our development capabilities and/or our ability to generate significant revenue from our development program and could result in a significant decline in our share price. Further, even product candidates that receive regulatory approval may face additional regulatory hurdles or otherwise be unable to achieve expected market acceptance. See “The FDA, the DEA, or other regulatory agencies may impose limitations or post-approval requirements on approvals for our products” and “Our ability to generate revenues from our products is subject to attaining significant market acceptance among physicians, patients, and healthcare payors.”
The FDA, the DEA, or other regulatory agencies may impose limitations or post-approval requirements on approvals for our products.
Even if regulatory approval to market a product is granted by the FDA or other regulatory agencies, the approved label for the product may not be consistent with our initial expectations or commercial plans. For example, the FDA or other regulatory agencies may impose limitations on the clinical data that may be included in the label for the product or the indicated uses for which, or the manner in which, the product may be marketed, or may impose additional post-approval requirements. Our business could be materially adversely affected if we do not complete these post-approval requirements and, as a result, the FDA or other regulatory agencies require us to change the label for such product, or if such post-approval requirements significantly restrict the marketing, sale or use of such product.
We may be required to include, as part of an NDA, a proposed risk evaluation and mitigation strategy (“REMS”) whose goal is to mitigate potential risks that may be associated with the use of a product and to inform patients and prescribers of those risks. We may also be required to include a plan for communication with healthcare providers, restrictions on a drug’s distribution, or a medication guide to provide information to consumers about the drug’s risks and benefits. For example, the FDA requires separate REMS for SUBLOCADE and SUBOXONE Film. Other products that we sell in the future may become subject to a REMS specific to the product or shared with other products in the same class of drug. Depending on the nature of the REMS, the cost to implement the REMS may be high and the impact to the business may be significant. For example, we were required to conduct seven post-marketing requirement studies and three post-marketing commitment studies in connection with the approval of SUBLOCADE.
In the EU or UK, we may be required to adopt a risk management plan and our products could be subject to specific risk minimization measures, such as restrictions on prescription or supply, the conduct of post-marketing safety or efficacy studies, or the distribution of patient and/or prescriber educational materials.
In addition, post-marketing obligations in the form of further clinical trials may be imposed to further expand on the evaluation of the risk/benefit profile of the product relative to any potential safety concerns. These trials typically occur after approval and according to pre-specified timelines set by regulatory authorities. Depending on the nature of the post-marketing commitment, trial completion can be a lengthy process. Failure to comply with any of these requirements may potentially lead to suspension of the marketing authorization for the product and other penalties. The costs and other consequences of non-compliance with any of the post- approval obligations described above could have an adverse impact on its business, prospects, results of operations and financial condition.
Further, if a product for which we obtain regulatory approval is a controlled substance or has been shown to have a drug abuse liability, it will not become commercially available until after the DEA (or other applicable regulatory authority) provides its final schedule designation for the product, and may take longer and may be more restrictive than we expect or may change after its initial designation. In addition, a final designation that is more restrictive than we expect could adversely affect our ability to commercialize such product and could materially adversely affect our business, financial condition, cash flows and results of operations.
In addition, legislation and regulatory policies relating to post-approval requirements and restrictions on promotional activities for pharmaceutical products, or FDA, DEA or other regulatory agency regulations, guidance or interpretations with respect to such legislation or regulatory policy, may change, that may impact the development and commercialization of our products.
We are subject to ongoing obligations and continued regulatory inspection by the FDA and equivalent foreign regulatory agencies, and we may be subject to penalties and litigation and large incremental expenses if we fail to comply with regulatory requirements or experience problems with our products.
FDA and other regulatory authorities periodically inspect manufacturing facilities and the sponsor’s and manufacturer’s records to assess compliance with cGMP. Evidence of non-compliance with the statutory and regulatory requirements may result in suspension of manufacturing, product seizure, withdrawal of the product from the market, administrative, civil and criminal penalties, among other enforcement remedies both in the U.S. and abroad. See “We are subject to risks related to the manufacture and distribution of our products globally.”
Additionally, FDA and other regulatory authorities track information on side effects and adverse events reported during clinical studies and after marketing approval. We are required to file periodic safety update reports with the authorities concerning adverse events. If, upon review, an authority determines that any events and/or reports indicate a trend or signal, they can require a change in a
product label, restrict sales and marketing, require post-approval safety studies, require a labor-intensive collection of data regarding the risks and benefits of marketed products and ongoing assessments of those risks and benefits, and/or require other actions. Such safety findings could potentially lead to the withdrawal or suspension of the product from the market. FDA also periodically inspects our records related to safety reporting. Following such inspections, FDA may issue non-compliance notices on FDA Form 483 and warning letters that could cause us to modify certain activities. An FDA Form 483 notice, if issued, can list conditions FDA investigators believe may have violated relevant FDA standards. Failure to adequately and promptly correct the observations can result in a warning letter or other regulatory enforcement action.
FDA also regulates advertising and promotional activities for products in the U.S., requiring advertising, promotional materials and labeling to be truthful and not misleading, and products to be marketed only for their approved indications and in accordance with the provisions of the approved label. FDA actively investigates allegations of pre-approval and off-label promotion in order to enforce regulations prohibiting these types of activities. FDA routinely issues informal and more formal communications such as untitled letters or warning letters regarding companies’ activities.
The manufacture, quality control, labeling, packaging, safety surveillance, adverse event reporting, storage, advertising, promotion and record-keeping for products are subject to extensive and ongoing regulatory requirements which are becoming increasingly stringent. If we become aware of previously unknown problems or potential new safety risks associated with any of our products, a regulatory agency may impose restrictions on our products, our contract manufacturers or on us. If we, our products and product candidates, or the manufacturing facilities for its products and product candidates, fail to comply with applicable regulatory requirements, regulatory agencies have wide-ranging powers of enforcement, including the power to impose monetary penalties. In such instances, we could experience a significant drop in the sales of the affected products, our product revenues and reputation in the marketplace may suffer, and it could become the target of lawsuits, each of which could have a material adverse effect on our business, prospects, results of operations and financial condition.
The regulations, policies or guidance of regulatory agencies may change and new or additional statutes or government regulations may be enacted that could prevent or delay regulatory approval of our product candidates or further restrict or regulate post-approval activities.
As a result of the breadth of these laws and regulations and the lack of definitive legal guidance in certain areas, it is possible that some of our business activities could be subject to challenge. Such challenges, irrespective of the underlying merit or the ultimate outcome of the matter, could have a material adverse effect on our business, prospects, reputation, results of operations and financial condition. Similarly, if we are unable to achieve and maintain regulatory compliance, we will not be permitted to market our drugs, which would materially adversely affect our business, results of operations and financial condition.
Guidelines published by professional societies, insurance carriers, physician groups, science foundations, and other organizations may affect the use of the Group’s products.
Government agencies promulgate regulations and guidelines directly applicable to us and to our products. In addition, professional societies, practice management groups, insurance carriers, physicians’ groups, private health and science foundations and organizations involved in various diseases also publish guidelines and recommendations to healthcare providers, administrators and payers, as well as patient communities. Recommendations by government agencies or other groups and organizations may relate to such matters as usage, dosage, route of administration and use of related therapies. In the U.S., for example, a growing number of organizations are providing assessments of the value and pricing of biopharmaceutical products, and even organizations whose guidelines have historically been focused on clinical matters have begun to incorporate analyses of the cost effectiveness of various treatments into their treatment guidelines and recommendations. In addition, value assessments may come from private organizations that publish their findings and offer recommendations relating to the reimbursement of
products by government and private payers. Some companies and payers have announced pricing and payment decisions based in part on the assessments of private organizations. In addition, government health technology assessment organizations in many countries make reimbursement recommendations to payers in their jurisdictions based on the clinical effectiveness, cost-effectiveness and service effects of new, emerging and existing medicines and treatments. Such recommendations have included and may in the future include reimbursement for certain of our products for a narrower indication than was approved by applicable regulatory agencies or may include recommending against reimbursement entirely. Such recommendations or guidelines may affect our reputation, and any recommendations or guidelines that result in decreased use, dosage or reimbursement of our products could have a material adverse effect on our product sales, business and results of operations. In addition, the perception that such recommendations or guidelines will result in decreased use and dosage of our products could adversely affect the market price of our ordinary shares.
Product liability and product recalls could have a material adverse effect on us.
The testing, manufacturing, marketing and sale of pharmaceutical products entail a risk of product liability claims, product recalls, litigation and associated adverse publicity. Unanticipated side effects of, or manufacturing defects in, our products could exacerbate a patient’s condition or could result in serious injury or impairments or even death. This could result in product liability claims and/or recalls of one or more of our products. In many countries, including in EU member states and the UK, national laws provide for strict (no-fault) liability.
Product liability claims may be brought by individuals seeking relief for themselves, or by or on behalf of groups seeking to represent a class of injured patients. Further, third-party payors, either individually or as a putative class or group action, may bring actions seeking to recover monies spent on products. The risk of product liability claims may also increase if we are subject to regulatory action by the FDA, the European Medicines Agency (the “EMA”), the UK Medicines and Health products Regulatory Agency (“MHRA”), or other competent authorities, or following a product recall. The cost of defending such claims is expensive even when the claims are without merit. A successful product liability claim against us could require us to pay a substantial monetary award. Moreover, an adverse judgment in a product liability suit, even if insured or eventually overturned on appeal, could generate substantial negative publicity about our products and business and inhibit or prevent the commercialization of other products.
Moreover, although we carry product liability insurance, current coverage may not be adequate. Further, product liability insurance is difficult to obtain and may not be available in the future on acceptable terms or at all. Product recalls may be issued at our discretion or at the discretion of our suppliers, government agencies and other entities that have regulatory authority over pharmaceutical sales. Any recall of our products could materially adversely affect our business by rendering us unable to sell that product for some time and by adversely affecting our reputation. In addition, product liability claims, product complaints or product quality issues reported by us (or others) to authorities as required by local regulations could result in an investigation (conducted by the FDA, the EMA, or the competent authorities of EU member states or other national authorities) into the safety or efficacy of our products, our manufacturing processes and facilities, or our marketing programs. An investigation could potentially lead to a recall of our products or more serious enforcement actions including seizure, injunction or criminal charges, proposed changes to the indications for which they may be used or suspension or withdrawal of approval. The Group has no insurance coverage for product recalls. Any of the foregoing could have a material adverse effect on our business, prospects, results of operations and financial condition. Further, product liability insurance may not be available for many claims relating to our opioid drug products due to contractual exclusions in our insurance policies.
We are subject to federal, state and foreign healthcare laws and regulations and implementation or changes to such healthcare laws and regulations could adversely affect our business and results of operations.
We are subject to extensive federal, state and foreign healthcare regulation. The healthcare system is highly regulated in the U.S., the EU, the UK and other countries where we operate and, as a pharmaceutical company that participates in government-regulated healthcare programs, we are subject to complex laws and regulations. Violation of the healthcare laws that we are subject to, or any other federal, state or foreign regulations, may subject us to significant administrative, civil and/or criminal penalties, damages, disgorgement, fines, exclusion, imprisonment, additional reporting requirements, and/or oversight from federal or other healthcare programs that could require the restructuring of our operations. Any of these could have a material adverse effect on our business and financial results. Any action against us for violation of these laws, even if we ultimately are successful in our defense, will cause us to incur significant legal expenses and divert our Management’s attention away from the operation of our business.
The U.S. and some foreign jurisdictions are considering or have enacted several legislative and regulatory proposals that change the healthcare system in ways that could impact profitability. In the U.S. and abroad there is significant interest in implementing regulations and legislation with the stated goals of containing healthcare costs, improving quality, and/or expanding access. The pharmaceutical industry has been a focus of these efforts and has been significantly affected by major legislative initiatives, particularly in the U.S.
For example, the Affordable Care Act substantially changed the way healthcare is financed by both governmental and private insurers, and continues to significantly impact the U.S. pharmaceutical industry. Congress has enacted laws that modified certain provisions of the Affordable Care Act such as removing penalties, starting January 1, 2019, for not complying with the Affordable Care Act’s individual mandate to carry health insurance. It is unclear how any future modifications to the Affordable Care Act or its implementing regulations, judicial challenges related to the Affordable Care Act, or other future healthcare reforms will affect our business.
Further, on August 16, 2022, President Biden signed into law the Inflation Reduction Act of 2022, or IRA, which, among other things, requires the U.S. Department of Health and Human Services Secretary to negotiate, with respect to Medicare units and subject to a specified cap, the price of a set number of certain high Medicare spend drugs and biologicals per year starting in 2026, penalizes manufacturers of certain Medicare Parts B and D drugs for price increases above inflation, and makes several changes to the Medicare Part D benefit, including a limit on annual out-of-pocket costs, and a change in manufacturer liability under the program.
In addition, drug pricing by pharmaceutical companies in the U.S. has come under increased scrutiny. Specifically, there have been state and U.S. congressional inquiries into pricing practices by pharmaceutical companies. For example, Congress launched an inquiry into pharmacy benefit managers and their practices which are believed by some to have led to consolidation, lack of transparency, and spread pricing. U.S. policymakers have also studied the impact rebates (i.e., the return of part of the purchase price of a prescription drug in exchange for favorable formulary placement) may play in driving up overall drug prices. Significant developments that may adversely affect pricing in the U.S. include drug pricing and Medicare reforms by Congress, regulatory changes to Medicare Part B (physician-administered drugs) and Medicare Part D (prescription drug benefit), additional changes relating to the Affordable Care Act, and trends in the practices of managed care groups and institutional and governmental purchasers.
The pharmaceutical industry faces uncertainty regarding the continuation of current drug pricing policy. For example, on November 20, 2020, HHS finalized the “rebate rule” by publishing regulations removing safe harbor protection for price reductions from pharmaceutical manufacturers to plan sponsors under Medicare Part D, either directly or through pharmacy benefit managers, unless the price reduction
is required by law. The rule also creates a new safe harbor for price reductions reflected at the point-of-sale, as well as a safe harbor for certain fixed fee arrangements between pharmacy benefit managers and manufacturers. Legislation has delayed the implementation of the rebate rule until January 1, 2032.
Congress and the Biden Administration continue to seek new legislative and/or administrative measures to control drug costs. On March 11, 2021, President Biden signed the American Rescue Plan Act of 2021 into law which, among other things, requires the HHS Secretary to negotiate, with respect to Medicare units and subject to a specified cap, the price of a set number of certain high Medicare spend drugs and biologicals per year starting in 2026, penalizes manufacturers of certain Medicare Parts B and D drugs for price increases above inflation, and makes several changes to the Medicare Part D benefit, including a limit on annual out-of-pocket drug costs starting at $2,000 in 2025, a $35 monthly cap on insulin payments, and a change in manufacturer liability under the program that could negatively affect us. Congress continues to examine various policy proposals that may result in pressure on the prices of prescription drugs in government health programs.
Governments across the world continue to consider and take action to lower drug prices. In the U.S., there is bi-partisan support for drug pricing reforms at both federal and state levels, which include potential legislative and regulatory actions to encourage the import of drugs, to price drugs according to a defined international pricing reference, to encourage more competition, and to undertake other initiatives. These, together with federal and state government fiscal constraints resulting from the COVID-19 pandemic which constrain public benefit health programs, pose direct and indirect downward pressure risk on drug prices. The Group continues to monitor potential legislative and regulatory changes and their impacts, advocating for the Group’s products based on scientific studies and patient-centered outcomes. However, certain potential legislative and regulatory drug pricing changes could have an adverse impact on the Group’s financial performance and results in the future.
In Europe, legislators, policymakers, and healthcare insurance funds continue to propose and implement cost-containing measures to keep healthcare costs down, due in part to the attention being paid to healthcare cost containment in Europe. Certain of these changes could impose limitations on the prices we will be able to charge for our products and any approved product candidates or the amounts of reimbursement available for these products from governmental agencies or third-party payers, which may increase the tax obligations on pharmaceutical companies such as ours, or may facilitate the introduction of generic competition with respect to our products.
With the intent of lowering prescription drug prices in the U.S., federal and state governments in the U.S. have enacted and continue to consider additional legislation and regulation applying international reference pricing to prescription drugs, otherwise limiting the pricing of prescription drugs, and authorizing the importation of drugs from countries outside the U.S. Such measures could have a material effect on our business, results of operations and financial condition, though importation programs as of October 2022 exclude controlled substances.
The implementation of cost containment measures or other healthcare reforms may prevent us from being able to generate revenue, attain profitability, or commercialize our current products and/or those for which we may receive regulatory approval in the future.
Failure to comply with payment and reporting obligations under the Medicaid Drug Rebate program or other governmental pricing programs in the U.S. could result in additional reimbursement requirements, penalties, sanctions and fines.
In the U.S., we participate in the Medicaid Drug Rebate and Medicare Part D programs and, by virtue of such participation, are also required by federal law to participate in the 340B Program and Federal Supply Schedule pricing program. These programs require us to pay certain rebates based on pricing data, such as (among others) average manufacturer price and best price, reported by us to the various federal agencies administering the programs.
Pricing and rebate calculations vary among products and programs. The calculations are complex and the calculation methodology is often subject to interpretation by us, governmental or regulatory agencies and the courts. If we become aware that our reporting for a prior period was incorrect or has changed as a result of the recalculation of the pricing data, we are obliged to resubmit the corrected data. Such restatements and recalculations can increase our costs for complying with the laws and regulations governing the various programs. Any corrections to our rebate calculations could result in either additional or reduced rebate liability for past periods, depending on the nature of the correction. Price recalculations may also affect the ceiling price at which we are required to offer our products to certain covered healthcare entities, such as safety-net providers under the 340B Program, as well as the prices under which our products are made available to federal government purchasers such as the U.S. Department of Veterans Affairs and the Department of Defense under the Veterans Health Care Act of 1992, as amended (“VHCA”).
We are liable for errors associated with our submission of pricing data. In addition to retroactive rebates and the potential for 340B Program and VHCA refunds, if we are found to have knowingly submitted any false price or product information to the government, we may be liable for civil monetary penalties. Any failure to submit data on a timely basis could result in a civil monetary penalty for each day the information is late beyond the due date. In the case of the Medicaid Drug Rebate program, such failure could also be grounds for CMS to terminate our Medicaid drug rebate agreement, pursuant to which we participate in the Medicaid program. In the event that CMS terminates our rebate agreement, no federal payments would be available under Medicaid or Medicare Part B for our covered outpatient drugs. As another example, we can be subjected to civil monetary penalties under, or termination from, the 340B Program if we knowingly and intentionally overcharge covered entities.
CMS and HHS-OIG have previously indicated that they intend to pursue more aggressively companies that fail to report pricing data to the government in a timely manner. Governmental agencies may also make changes in program interpretations or requirements or conditions of participation, some of which may have implications for amounts that we previously estimated or paid. There can be no assurance CMS or any other government agency will find that our submissions are complete and correct.
Any of the foregoing could have a material adverse effect on our business, prospects, results of operations and financial condition.
We are subject, directly or indirectly, to a variety of U.S. and international laws and regulations related to fraud and abuse and transparency. Enforcement actions under such laws have increased in recent years. If we fail to comply, or have not fully complied, with such laws, we could face substantial penalties.
In the U.S., we are subject directly, or indirectly through our customers and other third parties, to various federal, state and local fraud and abuse and transparency laws. Our sales, marketing, patient support and medical activities may be subject to scrutiny under these laws. The U.S. federal healthcare program Anti-Kickback Statute prohibits, among other things, knowingly and willfully offering, paying, soliciting or receiving anything of value to induce (or in return for) the referral of business, including the purchase, recommendation or prescription of a particular drug reimbursable under Medicare, Medicaid or other federally financed healthcare programs. The statute has been interpreted to apply to arrangements between pharmaceutical companies on one hand and patients, prescribers, purchasers and formulary managers on the other. Although there are several statutory exemptions and regulatory safe harbors protecting certain common manufacturer business arrangements and activities from prosecution and administrative sanction, the exemptions and safe harbors are drawn narrowly and are subject to regulatory revision or changes in interpretation by the DOJ and HHS-OIG. Practices or arrangements that involve remuneration may be subject to scrutiny if they do not qualify for an exemption or safe harbor. Violations of the federal Anti-Kickback Statute may be established without providing specific intent to violate the statute, and may be punishable by civil, criminal, and administrative fines and penalties, damages, imprisonment, and/or exclusion from participation in federal healthcare programs.
The federal civil False Claims Act prohibits, among other things, any person from knowingly presenting, or causing to be presented, a false or fraudulent claim for payment of federal funds, or knowingly making, or causing to be made, a false statement to get a false claim paid. A claim resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim. The False Claims Act also permits a private individual acting as a “whistleblower” to bring actions on behalf of themselves and the federal government alleging violations of the statute and to share in any monetary recovery. Violations of the False Claims Act may result in significant financial penalties (including mandatory penalties on a per claim or statement basis), treble damages and exclusion from participation in federal healthcare programs.
Pharmaceutical companies are subject to other federal false claims and statements laws, some of which extend to non-government health benefit programs. For example, the healthcare fraud provisions under the Health Insurance Portability and Accountability Act of 1996 and its implementing regulations, or HIPAA, impose criminal liability for, among other things, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program, including private third party payors, or falsifying or covering up a material fact or making any materially false or fraudulent statement in connection with the delivery of or payment for healthcare benefits, items or services. Violations of HIPAA fraud provisions may result in criminal, civil and administrative penalties, fines and damages, including exclusion from participation in federal healthcare programs.
The majority of individual states also have statutes or regulations similar to the federal anti-kickback law and the False Claims Act, which apply to items and services reimbursed under Medicaid and other state programs, or, in several states, apply regardless of the payor. Other states restrict whether and when pharmaceutical companies may provide meals to healthcare professionals or engage in other marketing-related activities, and certain states and cities require the identification or licensing of sales representatives.
The Physician Payment Sunshine Act requires tracking of payments and transfers of value to physicians and teaching hospitals and ownership interests held by physicians and their families, and reporting to the federal government and public disclosure of these data. Beginning in 2022, reporting is also required of information regarding payments and transfers of value provided to physician assistants, nurse practitioners, clinical nurse specialists, certified nurse anesthetists, and certified nurse-midwives. A number of states now require pharmaceutical companies to report expenses relating to the marketing and promotion of pharmaceutical products and to report gifts and payments to healthcare providers in the states. Government agencies and private entities may inquire about our marketing practices or pursue other enforcement activities based on the disclosures in those public reports.
We are further subject in a similar manner to federal and state data privacy and security laws, such as HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, and state breach reporting requirements. Collectively, these laws may affect, among other things, our current and proposed research, sales, marketing and educational programs, as well as other possible relationships with customers, pharmacies, physicians, payers, and patients. We are subject to similar data privacy and security laws in Europe and other countries, including the EU General Data Protection Regulation (2016/679), or GDPR, under which fines of up to €20.0 million or up to 4% of the annual global revenue of the infringer, whichever is greater, could be imposed for significant non-compliance. We are also subject to qui tam, or whistleblower lawsuits, under the False Claims Act. Compliance with these laws, including the development of a comprehensive compliance program, is difficult, costly and time-consuming.
Because of the breadth and evolving interpretations and requirements of these laws, the narrowness of available statutory and regulatory exemptions, and the wide array of U.S. and international authorities with overlapping regulatory jurisdiction, it is possible that some of our business activities could be subject to challenge under one or more of such laws. For example, pharmaceutical manufacturer co-pay programs, including pharmaceutical manufacturer donations to patient assistance programs offered by charitable foundations, are the subject of ongoing litigation, enforcement actions and settlements (involving other manufacturers and to which we are not a party) and evolving interpretations of applicable
regulatory requirements and certain state laws, and any change in the regulatory or enforcement environment regarding such programs could impact our ability to offer such programs. Any action against us alleging violation of these laws, whether brought by law enforcement, regulatory agencies or private qui tam actions brought by individual whistleblowers in the name of the government, could cause us to incur significant legal expenses and divert our Management’s attention from the operation of our business, even if we successfully defend against those actions. If any enforcement actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have an impact on our business, including the imposition of significant civil, criminal and administrative sanctions, damages, disgorgement, monetary fines, possible exclusion from participation in Medicare, Medicaid and other federal healthcare programs, imprisonment, integrity oversight and reporting obligations, contractual damages, reputational harm, diminished profits and future earnings, and curtailment or restructuring of our operations, any of which could adversely affect our ability to operate our business and our results of operations.
Failure to comply with anti-corruption laws and regulations, anti-money laundering laws and regulations, and/or economic sanctions could result in us becoming subject to fines or penalties.
We are subject to various federal and foreign laws and regulations regarding anti-corruption, anti-money laundering, and economic sanctions. These include the U.K. Bribery Act of 2010 and the U.S. Foreign Corrupt Practices Act of 1977, as amended, which prohibits, among other things, payments, offers, or promises made for the purpose of improperly influencing any act or decision of a foreign official. The nature of our business means that we engage in significant interactions with foreign officials. We are also subject to economic sanctions and export controls rules and regulations imposed by, amongst others, the U.S. Department of the Treasury’s Office of Foreign Assets Control, the U.S. Department of Commerce, other agencies of the U.S. government, HM Treasury and other agencies of the UK government, the European Union, and the United Nations. Any expansion, broadened or changed interpretation, variation or addition to these rules and regulations could impose significant compliance costs on us.
We have mechanisms in place to procure compliance with applicable anti-corruption, anti-money laundering, and economic sanctions rules and regulations, and applicable self-regulatory industry codes by region that the Group has committed to follow. However, there can be no assurance that our policies and procedures will be followed at all times or will effectively detect and/or prevent violations of applicable compliance regimes by our employees, consultants, sub-contractors, agents and partners. As a result, in the event of non-compliance, we could be subject to legal proceedings, fines and/or civil or criminal penalties, the disgorgement of profits, damage to our reputation and resulting loss of revenue and profits, which could have a material adverse impact on our business, financial conditions and operations.
The pharmaceutical sector is facing increased government scrutiny from competition and pricing authorities around the world, and any failure to comply, may expose us to significant damages and commercial restrictions that can materially and adversely affect our business.
We are required to comply with competition laws in the territories where we do business around the world. Compliance with these laws has been the subject of increasing focus and activity by regulatory authorities (and private plaintiffs, where they have enforcement rights under the law), both in the U.S. and Europe, in recent years. Violations of such laws may have a material adverse effect on our reputation, business, financial condition, and results of operations. Our company has faced and may in the future face investigations and/or legal proceedings alleging that actions purportedly taken by our company violated such laws. For example, we are a party to civil claims brought by state officials and private plaintiffs alleging that we violated U.S. federal and/or state antitrust and consumer protection laws. See Note 21 “Legal Proceedings—Intellectual Property Related Matters – Antitrust Litigation and Consumer Protection” included in “Item 18. Financial Statements - Audited Consolidated Financial Statements.” We may face additional claims from state officials and private plaintiffs in the future, and any such claims could materially and adversely affect our business. Also, on July 24, 2020, we entered into a Stipulated Order for Permanent Injunction and Equitable Monetary Relief in the U.S. District Court for the Western
District of Virginia, Abingdon Division, with the FTC. As part of the resolution with the FTC, for a ten-year period Indivior Inc. is required to make specified disclosures to the FTC and is prohibited from certain conduct. See “Item 10. Additional Information—C. Material Contracts.” Companies operating in the pharmaceutical industry also face challenges to the validity or enforceability of listed patents and frequently agree to settlements of patent litigation. Regulatory authorities in the U.S. and Europe, including the FTC and the European Commission, increasingly scrutinize patent settlements. Additionally, competition law authorities may send formal or informal requests for information about particular settlement agreements, and there is a risk that governmental authorities, customers, other downstream purchasers or others may commence actions alleging violations of antitrust laws based on our settlement agreements.
The U.S. Congress and certain state legislatures in the U.S. have also passed, or proposed passing, legislation that could adversely impact the ability to settle patent litigation. For example, the State of California has enacted legislation that prohibits, with certain exceptions and safe harbors, various types of patent litigation settlements, and imposes substantial monetary penalties on companies and individuals who do not comply.
Following calls in recent years from policymakers and other stakeholders in many countries for governmental intervention to address the high prices of certain pharmaceutical products, we may become, from time to time, subject to governmental investigations, claims or other legal or regulatory actions regarding our pricing and/or other alleged exclusionary practices. It is not possible to predict the ultimate outcome of any such investigations, claims or proceedings or what other investigations or lawsuits or regulatory responses may result from such assertions, which could have a material adverse effect on our reputation, business, financial condition, and results of operations.
Risks Related to our Financial Condition and Tax Matters
Weakness in the economy, market trends, uncertainty and other conditions in the markets in which we operate, particularly in the U.S., may adversely affect the profitability and financial stability of our customers, and could negatively impact our sales growth and results of operations.
Our financial performance depends in part on general economic and geopolitical conditions in the geographic markets in which we operate, particularly in the U.S. where we generated 81% of our revenue from continuing operations in fiscal 2022. Further, as a global business, we are also subject to changes in economic conditions and cost inflation, interest rates, credit and capital markets, foreign exchange rates, political conditions, and tax policies. For example, in 2022, the U.S. has seen price inflation at its highest levels in 40 years. In the U.K., and Europe, energy prices are at record highs and shortages are possible. The global supply chain has continued to experience significant challenges disrupting all industries. The Ukraine/Russia war compounded supply chain troubles caused by the COVID-19 pandemic which include: shortages of materials and labor; unprecedented demand for goods and services; constricted logistics capacity; and raising commodity and energy prices. Our agreements with some customers and government purchasers may limit our ability to raise prices commensurate with these cost increases. The Group has noted lead time extension, constricted capacity and minor disruption in some supply components. Numerous industries have suffered from supply chain disruptions or labor shortages, that may affect us in unexpected ways. If major delays or shortages occur, the delivery of products to our patients could be disrupted and impact the short-term Group’s financial performance. Any of these geopolitical or macroeconomic trends may have an adverse effect on our profitability, ability to generate revenue or fund operations, and ability to raise capital, which in turn could have a material adverse effect on our business, financial condition, and results of operations.
The COVID-19 pandemic and governmental and societal responses thereto have adversely affected our business, results of operations, and financial condition, and the continuation of the pandemic or the outbreak of other health epidemics could further harm our business, results of operations, and financial condition.
The COVID-19 pandemic had a significant impact on the global healthcare delivery system. Many healthcare systems had to restructure operations to prioritize caring for COVID-19 patients and limit or cease other activities. The severe burden on healthcare systems caused by this pandemic has impaired the ability to diagnose and treat patients with non-COVID-19 related conditions and impaired the ability of many clinical research sites to start new studies, enroll new patients and monitor patients in clinical trials. Health care provider offices and institutions have experienced workforce disruption, including the inability to hire staff and challenges maintaining appropriate staffing. The lack of access to healthcare providers has caused, and may continue to cause, delays in appropriate diagnosis, treatment and ongoing care for some patients, which could subsequently impact prescribing and use of our products. The effects of any future pandemic or other health epidemic, and government measures taken in response, may have a significant impact, both direct and indirect, on businesses and commerce, as significant reductions in business related activities may occurred, supply chains may be disrupted, and manufacturing and clinical development activities may be curtailed or suspended.
Many governments, including in the U.S., UK, and Canada, imposed stringent restrictions to seek to mitigate, or slow, the spread of COVID-19, including restrictions on international and local travel, public gatherings and participation in business meetings, as well as closures of workplaces, schools, and other public sites, and are continuing to encourage “social distancing.” Although most of these restrictions have been lifted, some of these restrictions remain and it is possible that some or all of these measures could be reinstated if a pandemic were to recur. Moreover, the COVID-19 pandemic significantly affected the global economy due to the restrictive measures adopted to prevent its spread and various government stimulus programs. The lasting impacts of these are unknown.
Possible future pandemics may negatively affect us in a variety of ways, including restrictions on access to HCPs by our sales force, disruptions to the supply of our products to patients if we experience either a significant absence of our employees and/or employees at our contract manufacturing organizations, vendors and service providers due to infection and/or government containment measures, and/or capacity issues at our airfreight and road logistics providers. In addition, possible future pandemics may result in overall fewer patient visits to healthcare provider offices for non-pandemic reasons or essential treatments, as patients become unable or unwilling to make visits due to overburdened healthcare systems, safety concerns, quarantines and other travel restrictions, or elect to have remote consultations with their providers. This trend has also impaired our ability to enroll new patients in clinical trials and the development of real-world evidence for our existing products that are used for regulatory submissions and to supplement our label. Any of the above factors could have a material adverse effect on our business, financial condition, and results of operations.
Our term loan contains certain covenants that could limit our ability to plan for or respond to changes in our business.
The Group has a $239 million term loan provided for under a credit agreement, most recently amended and restated as of April 27, 2022, by and among certain subsidiaries of Indivior PLC and the other parties thereto. The credit agreement includes a minimum liquidity requirement of the larger of $100 million or 50% of the outstanding loan balance as well as several restrictive covenants that, among other things, and subject to certain exceptions and baskets, limit our ability and/or our subsidiaries’ ability to:
•incur or assume liens or additional debt or provide guarantees in respect of obligations of other persons;
•pay dividends or distributions or redeem or repurchase capital stock;
•prepay, redeem or repurchase or amend or modify the terms of certain debt;
•make loans, investments, acquisitions (including certain acquisitions of exclusive licenses) and capital expenditures;
•enter into agreements that restrict distributions from our subsidiaries;
•enter into transactions with affiliates;
•sell, transfer or exclusively license certain assets, including material intellectual property, and capital stock of our subsidiaries;
•consolidate or merge with or into, or sell substantially all of our assets to, another person;
•engage in new material lines of business; and
•amend or modify our organizational documents.
Our failure to comply with the terms of our Term Loan could lead to an event of default under the term loan that could result in an acceleration where all amounts outstanding under the term loan would become immediately due and payable. In addition, any default or acceleration under the term loan could lead to an event of default and acceleration under other debt instruments that contain cross-default or cross-acceleration provisions. We can provide no assurance that our assets and the assets of our subsidiaries would be sufficient to repay in full any of those. In addition, if we are unable to repay those amounts, our creditors could proceed against any collateral granted to them to secure repayment of those amounts.
Further, there can be no assurance that we will be able to refinance our existing term loan at maturity, or obtain other or additional financing on attractive terms. In fact, our involvement in the opioid industry has in the past, and may in the future, limit the number of business partners willing to lend to us. See “Item 3. Key Information—D. Risk Factors—We may be subject to adverse public opinion.” We may not be able to generate sufficient cash to service all of our indebtedness and may be forced to take other actions to satisfy our obligations under our indebtedness.
We have a $239 million term loan and almost $500 million of other obligations. See Item 5.B. - Liquidity and Capital Resources - Contractual Obligations, Note 17 “Financial Liabilities—Borrowings,” and Note 19 “Provisions and Other Liabilities” included in “Item 18. Financial Statements - Audited Consolidated Financial Statements” and Note 10 “Financial Liabilities -Borrowings” and Note 11 “Provisions and Other Liabilities” in the Unaudited Condensed Consolidated Interim Financial Statements. We also have substantial unresolved litigation that may result in additional liabilities; see “We are currently, in the past have been, and in the future may be, subject to substantial litigation and ongoing litigation that could cause us to incur significant legal expenses, divert management’s attention, and result in harm to our business “ above. At March 31, 2023, we had $494 million of contractual liabilities due over the next five years, mostly related to the settlement of prior litigation in addition to the term loan. See “Item 5. Operating and Financial Review and Prospects—B Liquidity and Capital Resources—Contractual Obligations.” Further, the Group has substantial unresolved litigation and in 2022, recognized a provision for $290 million related to certain multidistrict antitrust class and state claims, See Note 21, Legal Proceedings, which represents an estimate of potential, future liability. Our ability to make scheduled payments on our indebtedness or our other obligations or to refinance our indebtedness depends on our financial condition and operating performance and our ability to generate cash, which is subject to prevailing economic, industry and competitive conditions and to certain financial, business and other factors discussed in these “Risk Factors”, many of which are beyond our control. Our term loan will mature in 2026. See “Item 5. Operating and Financial Review and Prospects—B Liquidity and Capital Resources—Borrowings—The Term Loan.” At the maturity of our term loan and any other debt which we incur, if we do not have sufficient cash flows from operations and other capital
resources to pay our debt obligations, or to fund our other liquidity needs, or if we are otherwise restricted from doing so due to corporate, tax or contractual limitations, we may be required to refinance our indebtedness. If we are unable to refinance all or a portion of our indebtedness or obtain such refinancing on terms acceptable to us, we may be forced to reduce or delay our business activities or capital expenditures, sell assets or raise additional debt or equity financing in amounts that could be substantial. The type, timing and terms of any future financing will depend on our cash needs and the prevailing conditions in the financial markets. We can provide no assurance that we will be able to accomplish any of these measures in a timely manner or on commercially reasonable terms, if at all.
Our ability to restructure or refinance our debt will depend in part on our financial condition at such time. Any refinancing of our debt could be at higher interest rates than our current debt and may require us to comply with more onerous covenants, which could further restrict our business operations. The terms of existing or future debt instruments may restrict us from adopting some of these alternatives. Furthermore, we may be unable to find alternative financing, and even if we could obtain alternative financing, it might not be on terms that are favorable or acceptable to us. If we are not able to refinance our debt, obtain additional financing or sell assets on commercially reasonable terms or at all, we may not be able to satisfy our debt obligations. In that event, borrowings under other debt agreements or instruments that contain cross-default or cross-acceleration provisions may become payable on demand, and we may not have sufficient funds to repay all our debts, including the term loan.
If our cash flows and capital resources are insufficient to fund payments of interest or principal on our outstanding debt or our obligations, we could face substantial liquidity problems and might be required to reduce or delay capital expenditures, sell assets or business operations, seek additional capital or restructure or refinance our term loan. We cannot ensure that we would be able to take any of these actions, that these actions would be successful and permit us to meet our scheduled obligations or that these actions would be permitted under the terms of existing or future debt agreements, including the agreement governing our term loan. In addition, any failure to make payments of interest and principal on our outstanding term loan on a timely basis would likely result in a reduction of our credit rating, which could harm our ability to incur additional indebtedness.
Changes to our credit ratings and outlook may reduce access to capital and increase borrowing costs.
The Group’s credit ratings are based on several factors, including our financial strength, business prospects (including markets in which we compete, number of products with commercial sales, market share of our products, level of competition, remaining patent life of products being sold commercially, R&D pipeline and stage of those assets), and factors outside of our control, such as conditions affecting our industry generally, the market’s perception of our environmental, social and governance actions and prospects, or the introduction of new rating practices and methodologies. A re-emergence or further outbreak of a pandemic could negatively impact our credit ratings and thereby adversely affect our access to capital and cost of capital. We cannot provide assurances that our current credit ratings will remain in effect or that the ratings will not be lowered, suspended or withdrawn entirely by the rating agencies. If credit rating agencies lower, suspend or withdraw the ratings, the market price or marketability of our securities may be adversely affected. Pressure on the credit ratings could also arise from higher shareholder payouts or larger acquisitions than we have currently planned that result in increased leverage, or in a deterioration in the credit metrics used by the rating agencies to assess creditworthiness. In addition, any change in ratings could make it more difficult for the Group to raise capital on acceptable terms, impact the ability to obtain adequate financing and result in higher interest costs on future financings.
Our insurance coverage may not be adequate.
Our business exposes us to potential product liability and professional indemnity claims and other risks which are inherent in the research, pre-clinical and clinical evaluation, manufacturing, sales and marketing and use of pharmaceutical products. We have public liability (general liability) and product
liability insurance. However, product liability insurance may be unavailable for many claims involving our opioid drug products due to contractual exclusions in our insurance policies. Additionally, we have directors’ and officers’ insurance for direct claims, but are not able to obtain coverage for indemnification or for securities law claims against the Group and are self-insured for such matters. However, we are in the process of renewing our coverage and have received indicative interest from commercial insurance markets and may in the future purchase such coverage. We also have insurance covering losses from property damage and business interruption, third-party named suppliers, marine and cargo, directors’ and officers’ liability, clinical trials, automobile (fleet vehicles), employers’ liability, personal accident and travel, and cybersecurity..
While we believe the insurance coverage currently in place is generally appropriate for a business of our current size, nature and financial position, there is no certainty that coverage limits and indemnity provisions will be adequate to cover all potential claims that could arise against us in the conduct of our business nor that claims will arise from insurable risks. In addition, there are areas where insurance coverage, while potentially available, would carry premiums that are not commercially reasonable and/or may be difficult to obtain or maintain on commercially reasonable terms. Product liability insurance, particularly for buprenorphine products, is difficult to obtain and may not be available in the future on acceptable terms or at all. A successful claim or claims against us in excess of or outside the ambit of our insurance coverage may have a material adverse effect on our business, prospects, results of operations and financial condition.
Our effective tax rate may increase, and changes in tax rules and regulations, or interpretations thereof, may adversely affect our financial condition.
As a global biopharmaceutical company, we are subject to taxation in several different jurisdictions. As a result, our effective tax rate is derived from a combination of applicable tax rates in the various places where we operate. In preparing our financial statements, we estimate the amount of tax that will become payable in each of these places. Our effective tax rate may fluctuate depending on several factors, including, but not limited to, the distribution of our profits or losses between the jurisdictions where we operate and differences in the interpretation of tax laws. In addition, the tax laws of any jurisdiction in which we operate may change in the future, which could impact our effective tax rate. Tax authorities in the jurisdictions in which we operate may audit us. If we are unsuccessful in defending any tax positions adopted in our submitted tax returns, we may be required to pay taxes for prior periods, interest, fines or penalties, and may be obligated to pay increased taxes in the future, any of which could have a material adverse effect on our business, financial condition, cash flows and results of operations.
Our effective tax rates could be affected by numerous factors, such as changes in tax laws, regulations, administrative practices, principles and interpretations, the mix and level of earnings in a given taxing jurisdiction or our ownership or capital structures. Any current or future proposed changes to the tax rules that apply to corporations could materially affect our tax obligations and effective tax rate. In addition, the Organisation for Economic Co-operation and Development (OECD) has achieved widespread political agreement to work towards the implementation of a global minimum tax. As a result, it is possible that the Group’s consolidated effective tax rate will increase in the short term. It is difficult to predict whether and when tax law changes will be enacted that would have a material adverse effect on our business, financial condition, results of operations and cash flows.
The application of tax law is subject to interpretation and is subject to audit by taxing authorities. Additionally, administrative guidance can be incomplete or vary from legislative intent, and therefore the application of the tax law is uncertain. While we believe the positions taken by the Group comply with relevant tax laws and regulations, taxing authorities could interpret our application of certain laws and regulations differently. Future tax controversy matters may result in previously unrecorded tax expenses, higher future tax expenses or the assessment of interest and penalties.
Our deferred tax assets may not be realized.
At December 31, 2022, 2021 and 2020, we had $219 million, $105 million and $75 million of deferred tax assets, respectively, consisting of $91 million, $81 million and $51 million of net deferred tax assets in the U.S, and $87 million, $11 million and $7 million of net deferred tax assets in the UK, respectively.
It is possible that some or all of such deferred tax assets will not be realized, especially if we incur losses in either the U.S. or the UK in the future. Losses may arise from unforeseen operating events, or the occurrence of significant excess tax benefits arising from the vesting of restricted stock units. Unless we are able to generate sufficient taxable income in the future, a substantial reduction in the carrying value of either our U.S. or UK deferred tax assets may be required, which would materially increase our expenses in the period the reduction is recognized and materially adversely affect our business, financial condition, and results of operations.
US tax laws limit deductibility of compensation for certain management roles. At March 31, 2023 the Group carried approximately $6 million of deferred tax assets that are not expected to be realized once the U.S. listing is complete. Approximately 55% of this amount will be charged to equity and 45% will be presented as a tax charge in the period the listing takes place, as a reversal of the original booking. Additionally, the Group's current tax liabilities are expected to increase by $5 million due to disallowance of certain current year compensation.
If a U.S. person is treated as owning at least 10% of our ordinary shares, such holder may be subject to adverse U.S. federal income tax consequences.
If a U.S. person is treated as owning (directly, indirectly, or constructively) at least 10% of the value or voting power of our ordinary shares, such person may be treated as a “United States shareholder” with respect to each “controlled foreign corporation” in our group. Because our group includes one or more U.S. subsidiaries, certain of our non-U.S. subsidiaries could be treated as controlled foreign corporations (regardless of whether or not we are treated as a controlled foreign corporation). A United States shareholder of a controlled foreign corporation may be required to report annually and include in its U.S. taxable income its pro rata share of “Subpart F income,” “global intangible low-taxed income,” and investments in U.S. property by controlled foreign corporations, regardless of whether we make any distributions. An individual that is a United States shareholder with respect to a controlled foreign corporation generally would not be allowed certain tax deductions or foreign tax credits that would be allowed to a U.S. corporation that is a United States shareholder with respect to a controlled foreign corporation. Failure to comply with these reporting and tax paying obligations may subject a United States shareholder to significant monetary penalties and may prevent the statute of limitations from starting with respect to such shareholder’s U.S. federal income tax return for the year for which reporting was due. We cannot provide any assurances that we will assist investors in determining whether any of our non-U.S. subsidiaries is treated as a controlled foreign corporation or whether any investor is treated as a United States shareholder with respect to any such controlled foreign corporation or furnish to any United States shareholders information that may be necessary to comply with the aforementioned reporting and tax paying obligations. A United States investor should consult its advisors regarding the potential application of these rules to an investment in our ordinary shares.
Risks Related to Our Ordinary Shares
Our ordinary shares are subject to market price volatility and the market price may decline disproportionately in response to developments that are unrelated to our operating performance.
The market price of our ordinary shares has been, and may in the future be, volatile and subject to wide fluctuations as a result of a variety of factors including, but not limited to general economic conditions, developments with our pending litigation, period to period variations in operating results or changes in revenue or profit estimates by us, market and industry participants, and/or financial analysts. The market price could also be adversely affected by developments unrelated to our operating performance, such as the operating and share price performance of other companies that investors may
consider comparable to us, speculation about us in the press and/or the investment community, unfavorable press, strategic actions by competitors (including acquisitions and restructurings, new competing products, and new generic products), changes in market conditions, regulatory changes and broader market volatility and movements. Any or all of these factors could result in material fluctuations in the price of our ordinary shares, which could lead to investors getting back less than they invested or a total loss of their investment.
We may in the future relocate our primary listing to the U.S., which could cause volatility in our share price and shareholder base.
We currently maintain a premium listing on the London Stock Exchange (the “LSE”) and are a member of the FTSE 250 index of listed companies. Upon the effectiveness of this registration statement, we intend to also list on the Nasdaq Global Select Market (the “Nasdaq”).
We do not have any current plans to change our primary listing but may do so in the future if and when appropriate. Such a change would require approval by a special resolution of a majority of not less than 75% of the votes attaching to Indivior PLC’s shares voted on the resolution (whether in person or by proxy) at a General Meeting. However, if we were ever to change our primary listing from the LSE:
•we would no longer be eligible to be a member of the FTSE 250 and other indices.
•we would not necessarily be eligible for inclusion in certain U.S. indices in the near term until we achieve certain trading volume thresholds on the Nasdaq, among other requirements, and moreover, we cannot guarantee that once eligible, we will be included in any index in the U.S.
If we were to change our primary listing to the U.S., then certain institutional holders of our ordinary shares may no longer be permitted to hold our ordinary shares (pursuant to their internal investment mandate, for example, relating to FTSE 250 status and LSE premium listing status), and certain similarly situated U.S. investors may not immediately be able to invest in our ordinary shares (pursuant to their investment mandates, for example, due to our lack of inclusion in U.S.-centric indices). Any such mismatch between supply and demand could cause the price of our ordinary shares to become more volatile and could impact our ability to meet certain criteria for inclusion on U.S. indices.
The rights afforded to our shareholders are governed by English law. Not all rights available to shareholders under U.S. law will be available to holders of our ordinary shares.
The rights of holders of our ordinary shares are governed by English law and our articles of association (the “Articles”), that may not provide the level of legal certainty and transparency afforded by incorporation in a U.S. state.
Indivior PLC is organized under the laws of England and Wales. The United Kingdom (of which England is a part) is not a member state of the European Union. Further, there can be no assurance that English law will not change in the future or that it will serve to protect investors in a similar fashion afforded under corporate law principles in the U.S., which could adversely affect the rights of investors.
Rights afforded to shareholders under English law differ in certain respects from the rights of shareholders in typical U.S. companies. In particular, English law currently significantly limits the circumstances in which the shareholders of English companies may bring derivative actions (i.e., legal actions brought by a shareholder on behalf of a company against a third-party). Under English law, in most cases, only Indivior PLC may be the proper plaintiff for the purposes of maintaining proceedings in respect of wrongful acts committed against it and, generally, neither an individual shareholder, nor any group of shareholders, has any right of action in such circumstances. In addition, English law does not afford appraisal rights to dissenting shareholders in the form typically available to shareholders in a U.S. company.
It may not be possible for shareholders outside the UK to enforce any judgments in civil or commercial matters or any judgments in securities laws of countries other than the UK against some or all of the directors or executive officers of Indivior PLC who are resident in the UK or countries other than those in which judgment is made.
For more information, see “Item 10. Additional Information—Differences in Corporate Law between England and the State of Delaware.” We may not pay dividends in the future. Our ability to pay dividends or make other returns of capital in the future depends, among other things, on our financial performance.
There can be no guarantee that our historical performance will be repeated in the future, particularly given the competitive nature of the industry in which we operate, and our revenue, profit and cash flow may significantly underperform market expectations. If our cash flow underperforms market expectations, then our capacity to pay a dividend or make other returns of capital (including, without limitation, share repurchases) may be negatively impacted. Any decision to declare and pay dividends or to make other returns of capital will be made at the discretion of the Board and will depend on, among other things, applicable law, regulation, restrictions (if any) on the payment of dividends and/or capital returns in our financing arrangements, our financial position, retained earnings/profits, working capital requirements, finance costs, general economic conditions and other factors that the Board deems significant from time to time.
We last paid a dividend on our ordinary shares in 2016. We currently anticipate that we will retain future earnings for the development, operation and expansion of our business and do not anticipate declaring or paying any cash dividends for the foreseeable future, including due to limitations that are currently imposed by our credit agreement. Any return to shareholders likely will therefore be limited to the increase in the price of our ordinary shares, if any. Similarly, while we announced a $100 million share repurchase program on July 28, 2021, and an additional $100 million share repurchase program on April 8, 2022, any future repurchase of shares is subject to the discretion of our Board and will depend on similar factors as those that affect decisions to pay dividends. There can be no assurance that the Group will repurchase any additional shares beyond the programs already announced.
Our business strategy may involve future transactions that may harm the market price of our ordinary shares or require us to seek additional funds, and such funding may not be available on commercially favorable terms or at all and may cause dilution to our existing shareholders. The issuance of additional ordinary shares in connection with future acquisitions, any share incentive or share option plan, or otherwise, may dilute all other shareholdings.
In order to achieve our business strategy, we regularly review potential transactions related to technologies, products or product rights, and businesses that are complementary to our business, including mergers and acquisitions, licenses and collaborations, and development and supply, commercialization or co-promotion arrangements, among others. We may choose to enter into one or more of these or other transactions at any time, that may cause substantial fluctuations in the market price of our ordinary shares. Moreover, depending upon the nature of any transaction, we may experience a charge to earnings, which could also materially adversely affect our results of operations and could harm the market price of our ordinary shares.
In order to finance such transactions, we may require additional funds, and we may seek such funds through various sources, including debt and equity offerings, corporate collaborations, bank borrowings, arrangements relating to assets, monetization of royalty streams or other financing methods or structures. In particular, we may, for these and other purposes, issue additional equity or convertible equity securities which would cause our shareholders to suffer dilution to their percentage ownership of the Group, or the market price of our ordinary shares may be adversely affected. The source, timing and availability of any financings will depend on global economic conditions, credit and financial market conditions, interest rates and other factors. If we issue additional equity securities or securities convertible into equity securities,
our shareholders will suffer dilution of their investment, and it may adversely affect the market price of our ordinary shares.
In addition, the Companies Act 2006 (of England and Wales) provides that the directors of an England and Wales public limited company may only allot shares (or grant rights to subscribe for or convertible into shares) with the prior authorization of the company’s shareholders, such authorization stating the maximum amount of shares that may be allotted under such authorization and specify the date on which such authorization will expire, being not more than five years, each as specified in the articles of association or relevant shareholder resolution. Furthermore, subject to certain limited exceptions, the Companies Act 2006 generally provides that the shareholders of a company have statutory pre-emption rights when new shares in such company are allotted and issued for cash. However, it is possible for such statutory pre-emption right to be disapplied by either the articles of association of the company, or by shareholders passing a special resolution at a general meeting, being a resolution passed by at least 75% of the votes cast. Such a disapplication of statutory pre-emption rights may not be for more than five years from the date of adoption of the articles of association, if the disapplication is contained in the articles of association, or from the date of the special resolution, if the disapplication is by a special resolution. On May 4, 2023, our shareholders authorized our Board to allot additional shares and disapply pre-emption rights in respect of certain additional share issuances, in each case applying until the earlier of (i) the close of business on June 30, 2024; or (ii) the conclusion of Indivior PLC’s annual general meeting to be held in 2024. If we are unable to obtain renewal of these existing authorities from our shareholders, or are otherwise limited by the terms of new share issuance and/or disapplication of statutory preemption rights authorities approved by our shareholders, our ability to issue additional shares to effect or to fund acquisition or other transaction opportunities, or to otherwise raise capital, could be adversely affected.
In addition, future investors or lenders may demand, and may be granted, rights superior to those of existing shareholders. If we issue additional debt securities, our existing debt service obligations will increase further. If we are unable to generate sufficient cash to meet these obligations and need to use existing cash or liquidate investments in order to fund our debt service obligations or to repay our debt, we may be forced to curtail our operations. We cannot be certain that additional financing will be available from any of these sources when needed or, if available, will be on acceptable terms. If we fail to obtain additional capital when we need it, we may not be able to execute our business strategy successfully and may have to give up rights to our product platforms, and/or products, or grant licenses on terms that may not be favorable to us.
If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, our share price and trading volume could decline.
The trading market for our ordinary shares will depend in part on the research and reports that securities or industry analysts publish about us or our business. If one or more of the analysts who cover us downgrade our rating, lower our price target, or publish inaccurate or unfavorable research about our business, our share price could decline. If one or more of these analysts cease coverage of our company or fail to publish reports on our company regularly, demand for our ordinary shares could decrease, which might cause our share price and trading volume to decline.
Risks Related to Information Security and Data Privacy
Business interruptions or breaches of data security could disrupt our product sales and delay the development of our product candidates.
We are increasingly dependent on information technology systems and infrastructure, including mobile technologies, to operate our business. In the ordinary course of our business, we collect, store and transmit confidential information, including intellectual property, proprietary business information and personal information. It is critical that we do so in a secure manner to maintain the confidentiality and integrity of such confidential information. While we have implemented processes to collect, store, and
transmit such information in a secure manner, there can be no assurance that any measures we take will prevent potential cyber-attacks or security breaches that could adversely affect the confidentiality and integrity of such confidential information.
We also use a number of third-party vendors who have or could have access to our confidential information. The size and complexity of our information technology systems, and those of third-party vendors with whom we contract, make such systems potentially vulnerable to breakdown, malicious intrusion, security breaches, ransomware, and other cyber-attacks, all of which would be costly to remedy. In addition, the use of mobile devices or cloud-based systems that access confidential information increases the risk of data security breaches, which could lead to the loss of confidential information, trade secrets or other proprietary information. Failures of or disruptions to our systems or the systems of third parties on whom we rely, particularly if prolonged, could result in breaches of data security and/or a loss of key data which would adversely affect our reputation, business and results of operations. While we have implemented security measures to protect our data security and information technology systems, such measures may not prevent the adverse effect of such events.
We are required to maintain the privacy and security of personal information in compliance with privacy and data protection regulations worldwide. Failure to meet the requirements could result in fines, penalties, or private actions, harm our business and damage our reputation with customers, suppliers, and associates.
We rely on systems, networks, products, and services, some of which are managed by third-party service providers to protect our information. Increased information security threats, more sophisticated cyber-attacks and a growing base of diversified threat actors continually pose a risk to all systems and data.
Additionally, we collect, store, and process personal information relating to many stakeholders, including our customers, suppliers, and associates. This information is increasingly subject to a variety of U.S. and international laws and regulations, such as the General Data Protection Regulation, as enacted in the European Union, the Data Protection Act in the UK, Canada’s Personal Information Protection and Electronic Documents Act, the California Consumer Privacy Act, Virginia’s Consumer Data Protection Act, the Colorado Privacy Act, the Connecticut Data Privacy Act, the Utah Consumer Privacy Act, the Iowa Consumer Data Protection Act enacted on April 14, 2023, and other emerging privacy and cybersecurity laws internationally, at the federal level in the U.S., and across various U.S. states, that may carry significant potential penalties for noncompliance.
The FTC also sets expectations for failing to take appropriate steps to keep consumers’ personal information secure or failing to provide a level of security commensurate to promises made to individuals about the security of their personal information (such as in a privacy notice) may constitute unfair or deceptive acts or practices in violation of Section 5(a) of the Federal Trade Commission Act (“FTC Act”). The FTC expects a company’s data security measures to be reasonable and appropriate in light of the sensitivity and volume of consumer information it holds, the size and complexity of its business, and the cost of available tools to improve security and reduce vulnerabilities. Individually identifiable health information is considered sensitive data that merits stronger safeguards. With respect to privacy, the FTC also sets expectations that companies honor the privacy promises made to individuals about how a company handles consumers’ personal information; any failure to honor promises, such as the statements made in a privacy policy or on a website, may also constitute unfair or deceptive acts or practices in violation of the FTC Act. While we do not intend to engage in unfair or deceptive acts or practices, the FTC has the power to enforce promises as it interprets them, and events that we cannot fully control, such as data breaches, may result in FTC enforcement. Enforcement by the FTC under the FTC Act can result in civil penalties or enforcement actions.
These data privacy and data protection laws and regulations are typically intended to protect the privacy of personal information that is collected, processed, transmitted, and stored in or from the governing jurisdiction. In many cases, these laws apply not only to third-party transactions, but also to
transfers of information between a company and its subsidiaries. While we have invested and continue to invest significant resources to comply with data privacy regulations, many of these regulations are new, complex, and subject to interpretation. Noncompliance with these laws could result in negative publicity, damage to our reputation, penalties, or significant legal liability. We could be adversely affected if legislation or regulations are revised or extended to require changes in our business practices or if governing jurisdictions interpret or implement their legislation or regulations in ways that negatively affect our business. The landscape of federal and state laws regulating personal information is constantly evolving, and compliance with these laws requires a flexible privacy framework and substantial resources, and compliance efforts will likely be an increasing and substantial cost in the future.
Risks Related to Our International Status and Operations
We are subject to various risks related to the local and international nature of our business, including domestic and foreign laws, regulations, and standards. Failure to comply with such laws and regulations or the occurrence of unforeseen developments such as litigation could adversely affect our business.
Our business operates in several countries including the U.S., UK, Canada, France, Germany, Italy, and Australia and our products are available in 39 countries worldwide. As a result, we are subject to specific risks of conducting business in different jurisdictions across these countries and other parts of the world. Our business is subject to a wide array of domestic and international laws, regulations and standards in jurisdictions where we operate, including advertising and marketing regulations, anti-bribery and corruption/money laundering laws, anti-competition regulations, data protection (including payment card industry data security standards) and cybersecurity requirements (including protection of information and incident responses), environmental protection laws, foreign exchange controls and cash repatriation restrictions, government business regulations applicable to us as a government contractor or supplier selling to governmental agencies, import and export requirements, intellectual property laws, labor laws, product compliance laws, supplier regulations regarding the sources of supplies or products, tax laws, zoning laws, unclaimed property laws and laws as well as regulations and standards applicable to other commercial matters. In particular, occupational health and safety or consumer product safety regulation may require that we take appropriate corrective action, including but not limited to product recall, in respect of products that we have distributed. Managing a product recall or other corrective action can be expensive and can divert the attention of Management and other personnel for significant time periods. Moreover, we are also subject to audits and inquiries by government agencies in the normal course of business.
Failure to comply with any of these laws, regulations and standards could result in civil, criminal, monetary and non-monetary penalties as well as potential damage to the Group’s reputation. Changes in these laws, regulations and standards, or in their interpretation, could increase the cost of doing business, including, among other factors, as a result of increased investments in technology and the development of new operational processes. Furthermore, while we have implemented policies and procedures designed to facilitate compliance with these laws, regulations, and standards, and applicable self-regulatory industry codes by region that the Group has committed to follow, but there can be no assurance that neither we nor our associates, contractors or agents will not violate such laws inadvertently, regulations and standards or our policies. Any product recall or other corrective action may negatively affect customer confidence in the relevant Group member’s products and the Group itself, regardless of whether it is successfully implemented. Any such failure to comply or violation could individually or in the aggregate materially adversely affect our business, financial condition, results of operations and cash flows.
We are exposed to risks related to currency exchange rates.
We are incorporated in England and Wales but present our financial statements in U.S. dollars. Based on the country where sales originate, we derived 81%, 76% and 70% of our net revenues from the U.S. in 2022, 2021, and 2020, respectively. We also conduct business in the U.K., Europe and Australia, among other places. As a result, our agreements with customers not based in the U.S. often involve payments
denominated in currencies other than U.S. dollars, which creates foreign currency translation risk. Our operating results are therefore subject to currency fluctuations in translating revenues and costs from those foreign currencies to U.S. dollars. Additionally, if in the future we expand our sales and operations into new markets, different currencies could expose us to additional currency translation risks. These risks increase with the strengthening of the U.S. dollar.
We currently do not actively hedge exchange rate fluctuations, although we attempt to balance large non-U.S. dollar liabilities with a similarly sized assets in the same currency. To the extent that we do not hedge our exposure to foreign currency exchange rate fluctuations, or to the extent that such hedging is structured ineffectively or does not offset our exposure to exchange rate fluctuations, our business, financial condition, and results of operations could be materially adversely affected.
Exchange rate fluctuations between local currencies and the U.S. dollar also create risk in other ways, including but not limited to: (i) increasing the U.S. dollar cost of non-U.S. research and development expenses and the cost of sourced product components outside the U.S. (in the case of a weakening of the U.S. dollar); (ii) decreasing the value of our revenues denominated in other currencies (in the case of a strengthening of the U.S. dollar); (iii) distorting the value of non-U.S. dollar transactions and cash deposits; and (iv) affecting commercial pricing and profit margins of our products. These effects can have an adverse impact on our results of operations and financial condition and may also make it more difficult for investors to understand the relative strengths or weaknesses of our underlying business on a period-over-period comparative basis.
Risks Related to Being a Publicly-Traded Company in the U.S.
Corporate responsibility, specifically related to environmental, social and governance (“ESG”) matters, may impose additional costs and expose us to new risks.
Comprehensive public ESG (Environmental, Social, Governance) and sustainability reporting is becoming more broadly expected by investors, shareholders and third parties and in many cases becoming mandatory. Certain organizations, including those that provide corporate governance and other corporate risk information to investors and shareholders have developed, and others may in the future develop, scores and ratings to evaluate companies and investment funds based upon ESG or “sustainability” metrics. Moreover, the standards by which ESG matters are measured are developing and evolving, and certain areas are subject to assumptions that could change over time.
Many investment funds focus on positive ESG business practices and sustainability scores when making investments and may consider a company’s ESG or sustainability scores as a factor in making an investment decision. In addition, investors, particularly institutional investors, can use these scores to benchmark companies against their peers and if a company is perceived as lagging, may make voting decisions, or take other actions, to hold these corporations and their boards of directors accountable. Board diversity, social issues such as the U.K.’s Equality, Diversity and Inclusion (EDI) factors, and sustainability are ESG topics that are receiving heightened attention from investors, shareholders, lawmakers and listing exchanges, as are claims of corporate greenwashing related to ESG and sustainability communications. Ongoing focus on corporate responsibility matters by investors and other parties as described above may impose additional costs or expose us to new risks.
From time to time, we may announce certain initiatives, including goals, regarding our focus areas, which include environmental matters, responsible sourcing, promoting access to medicines, social investments, and diversity and inclusion. We may face reputational damage in the event our corporate responsibility initiatives or objectives do not meet the standards expected by our investors, shareholders, lawmakers, listing exchanges or other constituencies, if we are unable to achieve an acceptable ESG or sustainability rating from third-party rating services, if we fail or are perceived to have failed in the achievement of our initiatives or goals whether due to changes in our business or otherwise or if we fail to accurately report our progress on such initiatives and goals. A low ESG or sustainability rating by a third-
party rating service could also result in the exclusion of our ordinary shares from consideration by certain investors who may elect to invest with our competitors instead.
Any of the above factors could have a material adverse effect on our reputation, business, financial condition, and results of operations. While we monitor a broad range of ESG issues, there can be no certainty that we will manage such issues successfully, or that we will successfully meet the expectations of investors, employees, consumers and other stakeholders.
We are a foreign private issuer. Should we no longer qualify as a foreign private issuer in the future, we may incur significant additional expenses. Also, as a foreign private issuer, we are not subject to SEC proxy rules but are subject to Exchange Act reporting obligations that, to some extent, are more lenient and less frequent than those of a domestic U.S. issuer. As a foreign private issuer, we are permitted to follow certain home country corporate governance practices in lieu of certain requirements applicable to domestic U.S. issuers. This may afford less protection to holders of our ordinary shares.
On June 30, 2022, not more than 50% of our ordinary shares were held by shareholders resident in the U.S. Additionally, as of March 31, 2023, 55,817,951 shares were held of record by 651 shareholders of record who were U.S. residents, comprising approximately 40.48% of our issued share capital. Therefore, we qualify as a “foreign private issuer” (within the meaning of Rule 405 of the Securities Act, as amended (the “Securities Act”) and Rule 3b-4 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). We are thus exempt from certain provisions of the Exchange Act that are applicable to U.S. public companies, including: (i) the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act, (ii) the sections of the Exchange Act requiring insiders to file public reports of their stock ownership and trading activities and liability for insiders who profit from trades made in a short period of time and (iii) the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q containing unaudited financial and other specified information, or current reports on Form 8-K, upon the occurrence of specified significant events. Foreign private issuers are required to file their annual report on Form 20-F within 120 days after the end of each fiscal year, while U.S. domestic issuers that are non-accelerated filers are required to file their annual report on Form 10-K within 90 days after the end of each fiscal year. Foreign private issuers are also exempt from Regulation Fair Disclosure, aimed at preventing issuers from making selective disclosures of material information.
In addition, as a foreign private issuer whose shares will be listed on Nasdaq, we are permitted to follow certain home country corporate governance practices in lieu of certain Nasdaq requirements. As a company incorporated in the U.K. and which has a primary listing on the main market of the London Stock Exchange, we may follow our home country's practice with respect to, among other things, the Nasdaq rules requiring shareholders to approve equity compensation plans and material revisions thereto. Unlike the requirements of the Nasdaq, the corporate governance practice and requirements in the UK generally do not require us to obtain shareholder approval for equity compensation plans and material revisions thereto, except under certain restricted circumstances. As a result of the above, shareholders may not have the same protections afforded to shareholders of companies that are not foreign private issuers.
The determination of foreign private issuer status is made annually on the last business day of an issuer’s most recently completed second financial quarter. We will also test foreign private issuer status within 30 days before the effectiveness of this registration statement. Accordingly, we will next make a determination with respect to our foreign private issuer status on June 30, 2023.
There is a risk that we could lose our foreign private issuer status if, for example, more than 50% of our issued ordinary share capital is held by U.S. residents. If we lose our foreign private issuer status, we would become subject to the extensive periodic and ongoing disclosure and reporting requirements under the U.S. securities laws that apply to domestic issuers, including preparing consolidated financial statements in accordance with U.S. generally accepted accounting principles (U.S. GAAP, in addition to those prepared in accordance with IFRS as required by the listing rules made by the UK Listing Authority
under the UK Financial Services and Markets Act 2000 (as set out in the UK Financial Conduct Authority’s Handbook of Rules and Guidance), as amended (the “Listing Rules”)), and preparing quarterly financial statements. We would also be subject to the proxy statement requirements under Section 14 of the Exchange Act, and our officers, directors and principal shareholders would be subject to the reporting and “short-swing” profit recovery provisions of Section 16 of the Exchange Act. The regulatory and compliance costs to us under U.S. securities laws as a U.S. domestic issuer will be significantly greater than the costs incurred as a foreign private issuer. If we are required to report as a domestic issuer, we may incur additional expenses which could have an adverse effect on our results of operations.
We will change the financial reporting standards that we apply to our financial statements from IFRS to U.S. generally accepted accounting principles, or “U.S. GAAP” should we no longer qualify as a foreign private issuer (“FPI”), and may voluntarily do so sooner and, as a result, some of our financial data may not be easily comparable to historical financial results.
Should we lose FPI status, SEC rules will require us to transition from IFRS to U.S. GAAP and we will report our financial statements under U.S. GAAP for periods following our loss of FPI status. We may elect to do so sooner. In connection with this transition, we have invested significant resources and time to convert historical financial statements prepared under IFRS from prior fiscal years into U.S. GAAP financial statements. We have incurred, and expect that we may further incur, significant additional legal, accounting and other expenses in connection with this transition, that may negatively impact our results of operations.
There have been and there may in the future be certain significant differences between U.S. GAAP and IFRS, including differences related to intangible assets, capitalized development costs, acquired in-process research and development costs, lease accounting, and income tax. As a result, our financial information and reported earnings for future periods within a fiscal year or any interim period could be significantly different if they are prepared in accordance with U.S. GAAP. Consequently, if we begin reporting in U.S. GAAP, you may not be able to meaningfully compare our financial statements under U.S. GAAP with our historical financial statements under IFRS.
Changes in accounting standards and subjective assumptions, estimates and judgments by Management related to complex accounting matters, could significantly affect our financial results or financial condition.
Accounting standards, including both IFRS and U.S. GAAP, and related accounting pronouncements, implementation guidelines and interpretations with regard to a wide range of matters that are relevant to our business, such as revenue recognition, asset impairment, inventories, lease obligations, self-insurance, tax matters, pensions and litigation, and impairment of goodwill and other intangible assets are complex and involve many subjective assumptions, estimates and judgments. See, for example, “Item 5. Operating and Financial Review and Prospects—Critical Accounting Estimates.” Further, these estimates may be more sensitive, particularly regarding assumptions pertaining to the difference between gross revenue and net revenue, than in other industries. Changes in accounting standards or their interpretation or changes in underlying assumptions and estimates or judgments could significantly change our reported or expected financial performance or financial condition. The obligations associated with being a public company in the U.S. require significant resources and Management attention, and changing laws, regulations and standards are creating uncertainty for U.S. public companies.
As a public company in the U.S., we will incur legal, accounting and other expenses that we did not previously incur. We will become subject to the reporting requirements of the Exchange Act and the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley Act”), the listing requirements of Nasdaq, and other applicable securities rules and regulations. The Exchange Act requires that we file annual and other reports with respect to our business, financial condition, and results of operations. The Sarbanes-Oxley Act requires, among other things, that we establish and maintain effective internal controls over financial
reporting. Furthermore, the establishment and the maintenance of the corporate infrastructure demanded of a U.S. public company may, in certain circumstances, divert Management’s attention from implementing our growth strategy, which could prevent us from improving our business, financial condition, and results of operations. We have made, and will continue to make, enhancements to our internal controls and procedures for financial reporting and accounting systems in order to meet our reporting obligations as a public company in the U.S. However, the measures we take may not be sufficient to satisfy these obligations. In addition, compliance with these rules and regulations has increased our legal and financial compliance costs and has made some activities more time-consuming and costly. These additional obligations may have a material adverse impact on our business, financial condition, results of operations and cash flow.
In addition, changing laws, regulations and standards relating to corporate governance, ESG matters, and public disclosure are creating uncertainty for public companies in the U.S., increasing legal and financial compliance costs and making some activities more time-consuming. These laws, regulations and standards are subject to varying interpretations, in many cases due to their lack of specificity and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. We have invested, and expect to continue to invest, resources to comply with evolving laws, regulations and standards, and this investment may result in increased operating expenses and a diversion of Management’s time and attention from revenue-generating activities to compliance activities. If our efforts to comply with new laws, regulations and standards differ from the activities intended by regulatory or governing bodies due to ambiguities related to their application and practice, regulatory authorities may initiate legal proceedings against us and our business, financial condition, results of operations and cash flow could be adversely affected.
We have not yet completed our evaluation of our internal control over financial reporting (“ICFR”) in compliance with Section 404 of the Sarbanes-Oxley Act. If we fail to maintain an effective system of ICFR, or if we identify a material weakness, we may not be able to accurately report our financial results or prevent fraud and, as a result, shareholders could lose confidence in our financial and other public reporting, which would harm our business and the trading price of our ordinary shares and may cause other increases in operating costs.
We will be required to comply with the internal control evaluation and certification requirements of Section 404 of the Sarbanes-Oxley Act by the end of our 2024 fiscal year. We have not yet completed our evaluation as to whether our current ICFR meets the requirements of Section 404. We may not be compliant and may not be able to meet the Section 404 requirements in a timely manner. If it is determined that we are not in compliance with Section 404, we may be required to implement new internal control procedures and re-evaluate our financial reporting. We may also experience higher than anticipated operating expenses during the implementation of these changes and thereafter, should we need to hire additional qualified personnel to help us become compliant with Section 404. If we fail, for any reason, to implement these changes effectively or efficiently, such failure could harm our reputation, operations, financial reporting or financial results and could result in our conclusion that our ICFR is not effective.
If we identify a material weakness in our ICFR, our ability to meet our reporting obligations and the trading price of our ordinary shares could be negatively affected. A material weakness is a deficiency, or a combination of deficiencies, in ICFR, such that a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. Accordingly, a material weakness increases the risk that the financial information we report contains material errors. Any system of internal controls, however well-designed and operated, is based in part on certain assumptions and can provide only reasonable, not absolute, assurances that the objectives of the system are met. If we cannot conclude that we have effective internal control over our financial reporting, investors could lose confidence in the reliability of our financial statements, which could lead to a decline
in the trading price of our ordinary shares. Failure to comply with reporting requirements could also subject us to sanctions and/or investigations by Nasdaq or the SEC or other regulatory authorities.
If we fail to develop and maintain an effective system of ICFR, we may not be able to accurately report our financial results or prevent fraud. As a result, shareholders could lose confidence in our financial and other public reporting, which would harm our business and the trading price of our ordinary shares.
Effective ICFR is necessary for us to provide reliable financial reports and, together with adequate disclosure controls and procedures. Any failure to implement required new or improved controls, or difficulties encountered in their implementation could cause us to fail to meet our reporting obligations. In addition, any testing by us, as and when required, conducted in connection with Section 404 of the Sarbanes-Oxley Act, or (“Section 404”), or any subsequent testing by our independent registered public accounting firm, as and when required, may reveal deficiencies in our ICFR that are deemed to be material weaknesses or that may require prospective or retroactive changes to our financial statements or identify other areas for further attention or improvement. Inferior internal controls could also cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our ordinary shares.
ITEM 4: INFORMATION ON THE COMPANY
A.History and Development of the Company
Indivior is a global pharmaceutical company working to help change patients' lives by developing medicines to treat substance use disorders (“SUD”) and serious mental illnesses. As a pioneer in developing evidence-based treatments for opioid use disorder (“OUD”), our vision is that the millions of people across the globe suffering from substance use disorders and serious mental illness will have access to evidence-based treatment to change lives. As a leader in addiction, Indivior is dedicated to transforming SUD from a global human crisis to a recognized and treated chronic disease.
Building on its portfolio of leading OUD treatments, Indivior has a pipeline of product candidates designed to both expand on its heritage in this category and potentially address other chronic conditions and co-occurring disorders of SUD, including alcohol use disorder and cannabis use disorder, and co-morbidities, including schizophrenia. Through our acquisition of Opiant Pharmaceuticals, we intend to enter the opioid overdose reversal market as well.
Headquartered in the U.S. in Richmond, VA, Indivior employs more than 1,000 individuals globally and its portfolio of products is available in 39 countries worldwide.
Our core products include the following approved treatments:
•SUBLOCADE (buprenorphine extended-release) monthly injection;
•SUBOXONE Film (buprenorphine and naloxone sublingual film);
•SUBOXONE Tablet (buprenorphine and naloxone sublingual tablets); and
•SUBUTEX Tablet (buprenorphine sublingual tablets),
all of which are treatments for OUD,
•OPVEE (nalmefene) nasal spray for opioid overdose reversal; and
•PERSERIS (risperidone) extended-release injectable suspension for the treatment of schizophrenia in adults in the U.S.
Product availability varies across the 39 countries in which Indivior treatments are available, including in terms of dosage form, strength and indication.
The Group operates in the United States and in other selected areas of the World, such as much of Europe, Canada, Australia and through distribution partners in other parts of the World. Our core geographic market (based on the country where the sale originates) is the U.S., which accounted for 83%, 71%, 76%, and 81% of net revenues for the three months ended March 31, 2023, and the years ended December 2022, 2021, and 2020, respectively.
Our business was initially developed and managed as a separate division of Reckitt Benckiser Group PLC (“RB” and, together with its subsidiaries, the “RB Group”), a public limited company incorporated under the laws of England and Wales. Indivior PLC was incorporated on September 26, 2014 for the purpose of acquiring the specialty pharmaceutical business unit from RB (the “Demerger”). Following the Demerger, which was effective on December 23, 2014, Indivior PLC has operated as a standalone business.
The treatment of OUD as a therapeutic area emerged in the early 1920s. The U.S. government’s efforts to address OUD through supply regulation and control, and to address public health concerns through scientific innovation, influenced a gradual shift in research interest towards developing a treatment for opioid dependence or OUD, as the disorder is presently known.
In 1966, RB led the breakthrough discovery of buprenorphine and developed, in partnership with the U.S. National Institute on Drug Abuse (“NIDA”), buprenorphine for the treatment of opioid dependence. SUBUTEX Tablet (buprenorphine sublingual tablet) was our first approved product specifically indicated for the treatment of opioid dependence. SUBUTEX Tablet was launched in the French market in February 1996 by Schering-Plough, which licensed the global marketing rights to the buprenorphine products from RB Group. Shortly thereafter, SUBUTEX Tablet was approved in additional EU countries. SUBOXONE Tablet (buprenorphine/naloxone) sublingual tablet was approved across the EU by the EMA in September 2006.
In the U.S., the enactment of the Drug Addiction and Treatment Act of 2000 (“DATA 2000”) was a significant development in the history of addiction treatment. Previously, treatment options for opioid dependence were limited: abstinence-based programs that have a high rate of relapse, and methadone clinics (the only medication-assisted treatment option). These clinics provide daily dosing and may be unpopular with opioid-dependent individuals owing to inconvenience and the significant societal stigma associated with methadone. As a result, many opioid-dependent individuals remained untreated.
Under DATA 2000, office-based physicians who had completed appropriate training were able to obtain a federal waiver to treat a limited number of opioid-dependent patients with medications specifically approved by the FDA for the treatment of opioid dependence, and to prescribe and/or dispense these medications in their office-based settings. By permitting treatment for opioid dependence in the privacy of physicians’ offices with take home doses, DATA 2000 was significant in creating access to treatment and beginning to treat OUD as a medical condition like other chronic diseases.
On December 29, 2022 Congress enacted the Mainstreaming Addiction Treatment Act (MAT Act) which eliminated the requirement for a health care practitioner (HCP) to apply for a separate waiver through the Drug Enforcement Administration (DEA) to dispense certain treatments (including buprenorphine) for maintenance or detoxification of patients with OUD. Indivior believes the elimination of these requirements as part of this legislation will help to normalize the chronic brain disease of addiction and expand access to evidence-based buprenorphine treatment. The Group supports efforts to encourage more HCPs to provide BMAT.
Launch of SUBUTEX Tablets, SUBOXONE Tablets, and SUBOXONE Film in the U.S.
We launched SUBUTEX Tablet (buprenorphine) and SUBOXONE Tablet (buprenorphine/naloxone) in the U.S. in 2003, following FDA approval in October 2002.
Subsequently, in August 2010, the FDA approved SUBOXONE Film (buprenorphine/naloxone) sublingual film, which dissolves more quickly than SUBUTEX and SUBOXONE Tablets.
We discontinued the distribution of SUBUTEX Tablets in 2011 and SUBOXONE Tablets in 2013 in the U.S. as generics for these products began to enter the market.
Our SUBOXONE Film product already faces three generic competitors in the U.S., and a fourth competitor received approval for its product in May 2022 but has not yet launched. We are aware of one competitor that has received FDA approval but is unable to enter the market until 2024, and another with an application pending before the FDA. Despite the launches of these generic formulations of tablets and film and branded competition, SUBOXONE Film has maintained a meaningful share of the buprenorphine-based opioid dependence treatment market (by mg volume) of approximately 19%.
In 2020, the Group’s U.S. sales force ceased promoting SUBOXONE Film as part of the Resolution Agreement with the Department of Justice (“DOJ”), discussed below, and ceased all detailing of the product in that year, though it remains available for sale.
Launch of SUBLOCADE in U.S.
SUBLOCADE (buprenorphine extended-release) injection for subcutaneous use was approved by the FDA in 2017 and launched in 2018.
Even with the availability of oral products for the treatment of OUD, SUBLOCADE became the largest product by net revenue for the Group by the second quarter of 2022.
Launch of Perseris in U.S.
In 2019, we launched PERSERIS in the U.S. PERSERIS is the first once-monthly subcutaneous extended-release injectable suspension of risperidone, indicated for the treatment of schizophrenia in adults.
Approval of OPVEE for Overdose Reversal
In May 2023, the FDA approved OPVEE (nalmefene) nasal spray for the emergency treatment of known or suspected opioid overdose induced by natural or synthetic opioids in adults and pediatric patients aged 12 years and older, as manifested by respiratory and/or central nervous system depression. OPVEE (nalmefene) nasal spray is intended for immediate administration as emergency therapy in settings where opioids may be present. OPVEE (nalmefene) nasal spray is not a substitute for emergency medical care. We acquired OPVEE as part of our acquisition of Opiant Pharmaceuticals, discussed below. We plan to launch OPVEE in the U.S. during the fourth quarter of 2023.
Agreements with DOJ, FTC and OIG-HHS
In 2020 the Group and certain of its subsidiaries reached agreements with the DOJ, the U.S. Federal Trade Commission (“FTC”), the U.S. Attorney’s Office for the Western District of Virginia, and U.S. state attorneys general to resolve criminal and civil liability in connection with an indictment brought in 2019 by a grand jury in the Western District of Virginia, a civil lawsuit joined by the Justice Department in 2018, and an FTC investigation related to alleged charges of healthcare fraud, wire fraud, mail fraud, and conspiracy in connection with marketing and promotional practices related to SUBOXONE Film, and SUBOXONE Tablet. As part of the agreement with the DOJ (“Resolution Agreement”), a wholly-owned subsidiary of Indivior PLC pleaded guilty to a single count of making a false statement relating to healthcare matters in 2012 in violation of 18 U.S.C. Section 1035 related to SUBOXONE Film, and was excluded from participating in government healthcare programs. The exclusion did not pertain to the rest of the Group and did not limit access to our medications for patients in the U.S. Under the terms of the agreements, DOJ dismissed all charges in the 2019 indictment and the Group agreed to make payments to federal and state authorities totaling $600 million (plus applicable interest of 1.25% on a portion of that total amount), of which $210 million has been paid. This indictment followed a federal criminal grand jury investigation that began in 2013. As part of the resolution, the Group and Indivior Inc. also agreed to significant compliance and reporting obligations under the Resolution Agreement with DOJ and a
stipulated injunction with the FTC, and Indivior Inc. agreed to a Corporate Integrity Agreement (“CIA”) with the Office of Inspector General of the U.S. Department of Health and Human Services (“HHS-OIG”). See (i) “Item 3.D. Risk Factors—”Compliance with the terms and conditions of our Corporate Integrity Agreement, the Resolution Agreement with the U.S. Attorney’s Office for the Western District of Virginia and the U.S. Department of Justice’s Consumer Protection Branch, and the Stipulated Order for Permanent Injunction and Equitable Monetary Relief with the FTC, requires significant resources and Management time and, if we fail to comply, we could be subject to criminal charges, penalties, or, under certain circumstances, excluded from government healthcare programs, which would materially adversely affect our business,” (ii) “Item 18. Financial Statements—Audited Consolidated Financial Statements” (iii) “Note 19—Provisions and Other Liabilities,” and “Item 10.C. Material Contracts.” We have filed copies of the Resolution Agreement, the Corporate Integrity Agreement, and the Stipulated Order for Permanent Injunction and Equitable Monetary Relief between FTC and Indivior Inc. as Exhibits Nos. 4.3, 4.4, and 4.5, respectively, to this Registration Statement. We have and continue to comply with our reporting obligations under each of the agreements and to make investments in our Global Integrity & Compliance Program to promote compliance and drive continuous learning and evolution of an effective compliance program. Outside the U.S.
In Europe, generic versions of the SUBUTEX Tablets have been available since 2010 and SUBOXONE Tablets since 2018. Despite strong competition, our group’s total oral BMAT market share (by mg volume) remained significant at 49% in 2022, 50% in 2021, and 54% in 2020. In Canada, our SUBOXONE Tablets product faces two generic competitors. We have seen our market share (by mg volume) of SUBOXONE Tablets eroding overtime, currently at 23% in 2022. In addition, we face competition from branded oral buprenorphine-based tablets and historically well-established methadone oral formulations.
We currently distribute SUBLOCADE (called SUBUTEX Prolonged Release in Europe) in the U.S., Australia, Canada, Israel, Sweden, Finland, and Norway, and have special “named patient” programs in Israel, UAE, Qatar and New Zealand. Germany, Italy, Denmark, New Zealand, and Switzerland have approved SUBLOCADE (under the name SUBUTEX Prolonged Release) and we are exploring commercial launch in those countries in the near future.
We distribute SUBOXONE Film in the U.S., Canada, all 27 EU Member States (plus UK, Sweden, Denmark, Finland, Norway, Iceland, and Lichtenstein), Australia, New Zealand, Malaysia, Qatar, and UAE.
We distribute SUBOXONE Tablets in 37 countries including Europe, the U.K., Canada, and Australia, and SUBUTEX Tablets in 18 countries worldwide, primarily in Europe, including France, United Kingdom, Germany, and Italy.
We expect our distributor to launch Perseris in Canada in the second half of 2023.
Indivior Global Integrity & Compliance Program
Indivior has developed and maintained a compliance function and program dating back to before the Demerger from RB Group. It has undergone continuous improvement and enhancement of its capabilities since then, including:
•hired an executive committee level Chief Integrity and Compliance Officer in 2018 who reports directly to the CEO and the Board;
•utilizing external consultants to evaluate and assist with evolution of its Global Integrity & Compliance Program; and
•accelerated the build out of its updated Integrity & Compliance team structure, including hiring additional credentialed personnel.
This team now includes more than 20 professionals who have established and support implementation of the defined and communicated “Indivior Global Integrity & Compliance Program Framework” which is based on the elements of an effective compliance program as defined by governing authorities. Our Integrity & Compliance team assesses risk and assists in meeting the obligations under the CIA, the Resolution Agreement, and the FTC Order. It is responsible for administering our Code of Conduct and related healthcare compliance policies, procedures and guidance with integrated controls. In addition, it works to ensure an appropriate tone at the top, develops various integrity and ethics initiatives, including business-led risk monitoring, educates on and integrates relevant risks to help support strong risk monitoring, conducts risk assessments and mitigation, and is responsible for administering the Group’s Global Integrity & Compliance Program, together with the executive committee who are the members of the Indivior Compliance Committee.
Development Pipeline
In addition to our commercially available products we have a pipeline of new drug candidates for the treatment of cannabis use disorder (“CUD”), opioid use disorder (“OUD”), and alcohol use disorder (“AUD”). Our acquisition of Opiant Pharmaceuticals also included certain early-stage pipeline assets, discussed below.
Our capital expenditures for the three months ended March 31, 2023 and the years ended 2022, 2021, and 2020 were $1 million, $5 million, $4 million, and $4 million, respectively. These capital expenditures, were primarily for equipment used in the manufacture of our products, and were made primarily in the U.S. and U.K. The Group funded these expenditures from its existing cash balances.
Purchase of intangible assets for three months ended March 31, 2023 and the years ended 2022, 2021, and 2020 were $5 million, $1 million, $30 million and $nil, respectively. In 2021, the intangible assets purchase of $30 million reflects a payment made to Aelis Farma for an exclusive option and license agreement to develop its leading compound (AEF0117) targeting cannabis use disorder. This molecule currently is in late-stage phase 2b clinical development in the U.S. The Group funded this asset purchase from its existing cash balances.
Acquisition of Opiant Pharmaceuticals and Entry Into the U.S. Overdose Reversal Market
The Group entered the opioid overdose reversal market in the U.S. with its acquisition of Opiant Pharmaceuticals, Inc., a Delaware corporation (“Opiant”), which it completed on March 2, 2023. On May 22, 2023, the FDA approve OPVEE (nalmefene) nasal spray for the emergency treatment of known or suspected opioid overdose induced by natural or synthetic opioids in adults and pediatric patients aged 12 years and older, as manifested by respiratory and/or central nervous system depression. OPVEE (nalmefene) nasal spray is intended for immediate administration as emergency therapy in settings where opioids may be present. OPVEE (nalmefene) nasal spray is not a substitute for emergency medical care. Opiant’s early-stage pipeline includes medicines in development for alcohol use disorder and acute cannabinoid overdose.
Merger Agreement
On November 13, 2022, Indivior PLC, Indivior Inc., a Delaware corporation and wholly-owned subsidiary of the Company, Olive Acquisition Sub, Inc., a Delaware corporation and wholly-owned subsidiary of Indivior Inc. (“Merger Sub”), and Opiant Pharmaceuticals, Inc., a Delaware corporation (“Opiant”) entered into an Agreement and Plan of Merger (the “Merger Agreement”).
Pursuant to the Merger Agreement, each issued and outstanding share of Opiant’s common stock (an “Opiant Share”), except as provided in the Merger Agreement, was converted into the right to receive (i) $20 per share, net to the holder thereof in cash, without interest thereon for approximate total equity value
of $146 million (the “Cash Amount”), plus (ii) one contingent value right (each, a “CVR”), which will represent the right to receive contingent payments of up to $8 per share, net to the holder thereof in cash, without interest thereon, in the aggregate (the “Milestone Payments”), upon the achievement of specified milestones pursuant to the terms of the Contingent Value Rights Agreement as further described under the heading “—CVR Agreement” below, with a maximum amount payable should OPVEE achieve all milestones of approximately an additional $68 million in the aggregate.
In addition, at the Effective Time, each Opiant equity-based award was canceled in exchange for the Cash Amount (less the exercise price in the case of any stock option) plus one CVR, in each case, multiplied by the number of Opiant Shares underlying such award. In the case of any such award subject to performance-based vesting conditions, the number of Opiant Shares underlying the award will generally be determined based on actual performance for any performance periods that have been completed as of the Effective Time but for the avoidance of doubt treating certain milestones as unachieved and certain as achieved if the deadline for achievement has not passed. Notwithstanding the foregoing, any stock option with an exercise price that is greater than the Cash Amount will instead be canceled in exchange for the right to receive cash payments in an amount equal to (1) the excess, if any, of (a) the total amount of the Milestone Payments actually payable in connection with a CVR pursuant to the terms of the CVR Agreement minus (b) the amount by which such exercise price exceeds the Cash Amount multiplied by (2) the number of Opiant Shares underlying such award.
CVR Agreement
In connection with the Merger, Indivior Inc. and a rights agent entered into the CVR Agreement governing the terms of the CVRs to be issued pursuant to the Merger. Each CVR represents the obligation of Indivior Inc. to pay certain milestone payments. We estimate total potential payments to be up to an additional $68 million over a period of up to 7 years from the date of the first commercial sales of OPTN003. Refer to the discussion of the CVR Agreement in “Item 5: Operating and Financial Review and Prospects; B. Liquidity and Capital Resources” at the caption, “CVR Agreement.” Other Information
The Group’s legal name is Indivior PLC. Indivior PLC is a public limited company incorporated under the laws of England and Wales that was incorporated on September 26, 2014. The principal legislation under which the Group operates is the Companies Act. The registered office address of Indivior PLC is: 234 Bath Road, Slough, Berkshire, United Kingdom, SL1 4EE and its telephone number is +1 (804) 379-1090. The Group’s website is https://www.indivior.com/.
Our ordinary shares are listed on the premium listing segment of the Official List of the UK Financial Conduct Authority (the “Official List”) and traded on the Main Market of the London Stock Exchange under the ticker symbol “INDV.” We are filing this registration statement on Form 20-F in anticipation of the dual listing of our ordinary shares on Nasdaq Global Select Market under the ticker symbol “INDV.”
There has been no public takeover offer as of the date of this registration statement by third parties in respect of the Group’s shares or by the Group in respect of other companies’ shares which have occurred during the last and current financial year, other than in respect of acquisitions by the Group in the ordinary course pursuant to its business strategy.
Upon the effectiveness of this registration statement, the Group will be subject to the information reporting requirements of the Exchange Act applicable to foreign private issuers, and under those requirements will file reports with the SEC. Those other reports or other information and this registration statement may be inspected without charge and copied at the public reference facilities of the SEC located at 100 F Street, N.E., Washington, D.C. 20549. You may also obtain copies of the documents at prescribed rates by writing to the Public Reference Section of the SEC at 100 F Street, N.E., Washington, DC 20549. Please call the SEC at 1-800-SEC-0330 for further information on the public reference room. The SEC also maintains a website at http://www.sec.gov from which certain filings may be accessed. We also make our electronic filings with the SEC available at no cost on the Group’s Investor Relations
website, www.Indivior.com/en/Investors, as soon as reasonably practicable after we file such material with, or furnish it to, the SEC.
As a foreign private issuer, we will be exempt from the rules under the Exchange Act related to the furnishing and content of proxy statements, and our officers, directors and principal shareholders will be exempt from the reporting and short-swing profit recovery provisions contained in Section 16 of the Exchange Act. In addition, we will not be required under the Exchange Act to file annual, quarterly and current reports and financial statements with the SEC as frequently or as promptly as U.S. companies whose securities are registered under the Exchange Act. However, for so long as we are listed on a U.S. exchange and are registered with the SEC, we will file with the SEC, within 120 days after the end of each fiscal year, or such applicable time as required by the SEC, an annual report on Form 20-F containing financial statements audited by an independent registered public accounting firm, and will furnish to the SEC, on a Form 6-K, all financial statements and other information required to be furnished on Form 6-K.
B.Business Overview
Industry overview
Substance use and its impact
According to the United Nations Office on Drugs and Crime World Drug Report 2022, an estimated 269 million people worldwide had abused drugs at least once in the previous year, representing nearly 1 in every 19 people.
People who use drugs regularly are likely to experience negative health consequences. They are also more at risk of contracting infectious diseases such as HIV and hepatitis C, and to experience overdose and suffer from premature death. Furthermore, an association exists between SUD and co-occurring or comorbid mental health disorders (for example, depression, anxiety or psychosis). There is also an association between SUD and socioeconomic disadvantage, low educational attainment, increased difficulty in finding and remaining in employment, and financial instability and poverty.
Globally, drug use killed almost half a million people in 2019, while SUD resulted in 18 million years of healthy life lost, mostly due to opioids.
The threat SUD poses to global health has long been recognized, and as such strengthening the prevention and treatment is included in the United Nation’s Sustainable Development Goals for 2030.
Overdose deaths continue to climb in the United States. According to the U.S. Center for Disease Control & Prevention (CDC), more than 107,477 people are predicted to have died from drug overdose in the 12-month period ending August 2022, with 73,102 of these deaths attributed to opioids. The majority of opioid-related overdose deaths in the U.S. are the result of synthetic opioids (mainly fentanyl and illicit fentanyl analogs) that are more potent than heroin and that can unexpectedly cause respiratory depression by being ingested as a substitute for heroin or with drugs such as prescription opioids, cocaine, methamphetamine or nonopioids with sedative or hypnotic properties (e.g., benzodiazepines, gabapentin, and xylazine).
Substance use disorder: the disease
Substance Use Disorder ("SUD”) has been described as a “medical disorder that affects the brain and changes behavior.” Various substances may be involved including alcohol, illicit drugs, prescription medications, and even some over-the-counter medicines.
The National Institute on Drug Abuse ("NIDA”), the Substance Abuse and Mental Health Services Administration ("SAMHSA") “and the National Institutes of Health ("NIH”) all describe SUD as a long-term and relapsing condition characterized by the individual compulsively seeking and using drugs despite adverse consequences.
Since SUD is marked by periods of recovery and symptom recurrence, or relapse, it resembles other chronic diseases like hypertension and type-2 diabetes. These diseases are lifelong conditions that require continual effort to manage. Symptoms will likely return during periods where treatment compliance is low or absent, and symptoms will likely diminish when compliance to treatment begins again in earnest.
In 2020, 40.3 million people aged 12 and older globally had a SUD, and 28.3 million persons had an alcohol use disorder, representing the largest population of people suffering from SUD.
There is no single cause of SUD; people begin using substances for many reasons and one person’s path to addiction may look drastically different from that of another. The prevailing view is that no one thing can predict someone’s risk of developing a SUD—rather, the interaction of the person’s unique biology and their environment both influence how the drug will impact a person’s susceptibility to becoming addicted.
Opioid use disorder
Opioids are a major concern in many countries because of the severe health consequences associated with their use, including non-fatal and fatal overdose.
OUD is a growing global public health crisis which still carries significant stigma in many countries. OUD is often perceived as a moral failing and sign of personal weakness rather than a chronic and relapsing disease affecting the brain that can be managed and respond to treatment. As a consequence, we believe coherent action to deal with sufferers and addiction is generally lacking.
According to the United Nation’s World Drug Report 2022, approximately 61.3 million people used opioids for non-medical purposes in 2020, corresponding to 1.2% of the global population, and the number of users worldwide has nearly doubled over the past decade. In the U.S., in 2020, an estimated 9.5 million people used opioids non-medically in the past year. Of these, more than 900,000 used heroin.
In addition, the number of deaths from opioid overdose in the U.S. continues to increase, and the rate of increase may have accelerated since the beginning of the pandemic.
Source: Ahmad FB, Cisewski JA, Rossen LM, Sutton P. Provisional drug overdose death counts. National Center for Health Statistics. 2022. Updated June 5, 2022: Products - Vital Statistics Rapid Release - Provisional Drug Overdose Data (cdc.gov)
The majority of opioid-related overdose deaths in the U.S. are now the result of fentanyl being ingested as a substitute for heroin or with drugs such as cocaine and methamphetamine that had been adulterated, or “cut,” with the opioid. Fentanyl is 30 to 50 times more potent than heroin and can cause
rapid and profound respiratory depression. Individuals may not be aware that they have been exposed to fentanyl-laced drugs including heroin, prescription opioids, or psychostimulants.
Against the context of the dramatic rise in deaths from opioid overdose, Indivior is doing more to understand the interaction between fentanyl and buprenorphine. According to a peer-reviewed study conducted by the University of Leiden in Leiden, Netherlands and completed in 2019, sustained high-plasma concentrations of buprenorphine (similar to those provided by SUBLOCADE at steady-state) significantly reduced fentanyl-induced respiratory depression in opioid-tolerant participants.
The European market is smaller than the U.S. market with an estimated 1 million opioid-dependent individuals, the majority of whom are heroin users. The European market is relatively mature with numbers of patients in treatment being largely stable over the last five years. There are currently approximately 514,000 patients in treatment, but there is also an emerging patient population of opioid analgesic-dependent patients who are currently under-diagnosed. Initial estimates, which we believe are conservative, suggest that in 2017 there were potentially approximately 2 million individuals dependent on prescription opioid analgesics in the United Kingdom, France, Germany, Spain, Italy, Sweden, Finland, Canada, Israel, and Australia.
According to the Australian Institute of Health and Welfare, approximately 48,000 patients are treated annually for opioid dependence in Australia. There is increasing awareness among healthcare providers in Australia of the misuse of opioid analgesics and the need for treatment. Recent policy changes to address this concern in Australia include re-classifying products containing Codeine® so that they must be dispensed by a pharmacist rather than over the counter.
Similarly, according to the Canadian Centre on Substance Use and Addiction, approximately 9.6% of Canadian adults who used opioid medications, or 351,000 persons, reported problematic use, and approximately 153,000 are in treatment according to data from IQVIA (a health information provider). Outside of the U.S., Canada, and Australia, approximately 269 million people aged 15 to 64 suffer from drug use disorders or drug dependence, according to the United Nations Office on Drugs and Crime. Treatment services are generally very underdeveloped (with the exception of Australia and New Zealand), the key challenge being to convince governments to treat addiction as a chronic medical disease rather than a social disorder.
Treatment for Opioid Use Disorder
Medication for opioid use disorder ("MOUD") is the use of medications, in combination with counseling and behavioral therapies, to provide a “whole-patient” approach to the treatment of substance use disorders. Medications used in MOUD are approved by the FDA and MOUD programs are clinically driven and tailored to meet each patient’s needs.
Research shows that a combination of medication and psychosocial support can successfully treat these disorders, and for some people struggling with addiction, MOUD can help sustain recovery. MOUD is also used to prevent or reduce opioid overdose.
MOUD is primarily used for the treatment of addiction to opioids such as heroin and prescription pain relievers that contain opiates. The prescribed medication normalizes brain chemistry, blocks the euphoric effects of opioids, relieves physiological cravings, and normalizes body functions without the negative and euphoric effects of the substance. MOUD has been shown to be more effective than medication or counseling alone in treating OUD.
A common misconception about MOUD is that some of the medicines used simply substitute one drug for another. However, these medications may restore healthy brain function, which leads to improvements in behaviors associated with addiction. Longer-term use of these medications is associated with improved outcomes.
Treatment methods in the EU differ from the U.S. While U.S. patients can obtain a 30-day prescription and self-administer treatment, such as SUBOXONE Film, prescribed by a treating physician, supervised dosing in the EU requires a daily visit to the clinic for many patients. Methadone and generics are also generally more broadly available as social funding puts pressure on prices, and treatment is more highly regulated. However, the harm reduction mindset is now changing towards recovery and the EU has begun to recognize the need to implement treatment systems that allow patients to return to a more normal lifestyle.
Opioid Overdose Reversal
A large and growing addressable market for opioid overdose reversal agents exists in the U.S., driven by sales into community-based and first responder institutions, including fire departments, emergency medical services, law enforcement, other community groups, as well as directly to patients via retail pharmacies. The co-prescribing of opioid overdose reversal agents alongside prescription opioids has also driven growth.
The Group entered the opioid overdose reversal market in the U.S. with its acquisition of Opiant Pharmaceuticals, Inc., a Delaware corporation (“Opiant”), which it completed on March 2, 2023. On May 22, 2023, the FDA approve OPVEE (nalmefene) nasal spray for the emergency treatment of known or suspected opioid overdose induced by natural or synthetic opioids in adults and pediatric patients aged 12 years and older, as manifested by respiratory and/or central nervous system depression. OPVEE (nalmefene) nasal spray is intended for immediate administration as emergency therapy in settings where opioids may be present. OPVEE (nalmefene) nasal spray is not a substitute for emergency medical care.
Treatment access
Despite the prevalence of SUD, including opioid misuse, and the existence of effective treatments, including medication for opioid use disorder, most people who need treatment do not seek or receive it. Figures show that only 20% of people with OUD in the U.S. are being treated for it.
People in urgent need of treatment are often unaware of their treatment options, have limited access to treatment and counseling, or simply do not seek it out because they are afraid of being stigmatized. In addition, access is also limited by numerous legal restrictions for pharmacological treatment, inadequate training of clinicians, and the number of HCPs who are willing to treat this population.
Focus on the Criminal Justice System
In the U.S., a substantial share of persons suffering from OUD repeatedly cycle through the criminal justice system. Further, persons exiting the criminal justice system have been shown to be 40 times more likely to suffer from opioid overdose than persons in the general population.
While as recently as 2019 buprenorphine medication-assisted treatment ("BMAT") was rarely available to patients in criminal justice settings, treatment is increasingly becoming available. The shift has been spurred by research findings and pronouncements from industry and professional medical societies that MAT in correctional settings saves lives, which in turn has shaped changes in law and policy. Treatment for OUD in correction settings has been shown to reduce overdose deaths by 75%, reduce recidivism by 32%, and reduce transmission of HIV and hepatitis. Congress is considering legislation authorizing Medicaid coverage of persons in correctional settings up to 30 days pre-release.
Separately, CMS has published guidance to states how they can apply to the agency for Medicaid funding to support treatment of patients with OUD and mental illness up to 90 days pre-release.
The DOJ issued guidance in April 2022 underscoring the rights of persons with OUD to treatment under the Americans with Disabilities Act, including in correctional settings. States have begun to expand treatment availability in criminal justice settings; for example, the state of New York enacted landmark legislation in 2021 mandating MAT be made available to patients with OUD in the state’s prisons and jails.
Other industry areas
In addition to OUD treatments, we have a pipeline of new drug candidates for the treatment of cannabis use disorder (“CUD”) and alcohol use disorder (“AUD”) and acute cannabinoid overdose, see “Long-term pipeline products,” below.
Cannabis Use Disorder
Worldwide, an estimated 209 million individuals used cannabis in 2020, corresponding to more than 4.0% of the global population aged 15–64, according to the United Nation’s World Drug Report 2022. The annual prevalence of the use of cannabis remains highest in North America (14.5%), the subregion of Australia and New Zealand (12.1%), and West and Central Africa (9.4%). In the last decade, the number of cannabis users worldwide has increased by nearly 18%.
In 2021, 49.6 million people aged 12 or older in the U.S. used cannabis in the prior year according to Substance Abuse and Mental Health Services Administration. According to the same source, cannabis was the most popular illicit drug used in the U.S. by a wide margin.
The most recent Global Burden of Disease study published by The Lancet, which included 195 countries over the 1990-2016 period estimated that 22.1 million people met the diagnostic criteria for CUD (289.7 cases per 100,000 people). Cannabis is the most commonly used substance of abuse in the U.S. after alcohol and tobacco. Nearly 50 million people used marijuana in the U.S. in 2020 and 14.2 million people in the U.S. had a CUD during the same period.
Cannabis remains the most widely used drug worldwide. The increase in cannabis users goes in parallel with a long-term trend of increase of THC (tetrahydrocannabinol, the principal psychoactive ingredient) concentrations in seized cannabis in Europe and the U.S. In the states that have legalized cannabis in the U.S. (cannabis is legal for adult’s recreational use in 21 states and Washington, D.C. and for medical use in 37 states and Washington, D.C.), there has been a diversification of cannabis products, different methods of use and changes in the potency of THC content in the available products.
A common assumption about the risk for CUD among users is that it is rare. However, recent U.S. data suggests that 3 out of 10 cannabis users eventually developed CUD (as defined in the DSM-IV). The risk of progression from cannabis use to CUD also increases with frequency of use. In the U.S., adults with CUD, on average, use cannabis 6.2 out of 10 days over a year, and about 1 in 19 non-dependent weekly cannabis users progressed to dependence within a year.
Alcohol Use Disorder
Harmful use of alcohol contributed to approximately 30 million deaths worldwide in 2016, according to the WHO.
An estimated 5.1% of the global burden of disease is attributable to alcohol consumption. Alcohol is also associated with significant societal costs, including those related to violence, child neglect and abuse, and absenteeism in the workplace. Therapeutic approaches, including pharmacotherapy, play a pivotal role in treating patients with alcohol use disorders but are commonly underutilized.
According to the United Nations, in 2020, approximately 108 million people suffered from alcohol use disorder and 28.3 million people in the U.S. had past-year AUD. More than 60% of persons with AUD self-report that their alcohol consumption increased since the beginning of the COVID-19 pandemic, while less than 13% report that their alcohol consumption has decreased.
Schizophrenia
Schizophrenia is a mental disorder characterized by continuous or relapsing episodes of psychosis, an abnormal condition of the mind that results in difficulties determining what is real and what is not real.
Major symptoms include hallucinations (typically hearing voices), delusions, and disorganized thinking. Other symptoms include social withdrawal, decreased emotional expression, and apathy.
Schizophrenia affects an estimated 2.1 million people in the U.S., according to the National Institute of Mental Health. Adherence is a major problem leading to relapse and often hospitalization. Between 20-40% of schizophrenia patients attempt suicide, between 5-13% actually die of suicide, and 41.7% of patients who suffer from schizophrenia have a substance use disorder comorbidity. Schizophrenia is responsible for an annual $62 billion in direct healthcare costs in the U.S., according to the Schizophrenia & Psychosis Action Alliance.
The patient journey for someone with schizophrenia is difficult. The symptoms of schizophrenia itself can impair a person’s ability to understand or perceive their own illness, which is one key reason why people with schizophrenia stop taking their medication.
Epidemiological and clinical studies have shown that psychiatric disorders like schizophrenia, but also including borderline and antisocial personality disorders, bipolar, depression and anxiety disorders are highly co-morbid with substance use disorders, a condition referred to as “dual” or “co-occurring” disorders. The presence of co-occurring conditions increases severity and complicates recovery from addiction, and a natural outgrowth of increased severity is to recognize a multidisciplinary and holistic approach to the treatment of patients suffering from substance use disorders.
Schizophrenia requires ongoing treatment to manage symptoms and prevent relapse. Treatments include antipsychotic medications and supportive psychosocial treatment. Anti-psychotic medicines have a large and established market with an estimated 70 million prescriptions and over $20 billion in U.S. gross sales in the recent 12 months ending October 2022, according to data from IQVIA and Symphony Healthcare. Long-acting injectable (“LAI”) antipsychotics were prescribed more than 2.1 million times and make up annual sales of approximately $8.1 billion in gross sales in the U.S., and are growing robustly at a compound annual growth rate of approximately 14% over the past five years, according to the same sources. Treatment of schizophrenia drives a majority of LAI prescriptions, and risperidone is one of the most commonly used antipsychotic used to treat schizophrenia.
We began marketing PERSERIS, (risperidone) extended-release injectable suspension in the U.S. in 2019, and expect to begin selling in Canada through a distributor in the second half of 2023. This product is an extended-release monthly formulation of risperidone, one of the most widely prescribed drug for the treatment of schizophrenia, according to data from Symphony Healthcare.
Products of the Indivior Group
Our core marketed products are described below:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Product | | Active Ingredients | | Delivery Method | | Main Markets | | 2022 Global Net Sales (in millions) |
Opioid Use Disorder | | | | | | | | |
Long-Acting Injectable | | | | | | | | $ | 408.0 | |
| SUBLOCADE and SUBUTEX PRO extended-release Injectable | |
Buprenorphine | |
Extended-release injectable suspension | | U.S., Australia, Canada, Israel, Sweden, Norway, and Finland, and have special “named patient” programs in Israel, UAE, Qatar and New Zealand. Germany, Italy, Denmark, and Switzerland | | |
| Sublingual | | | | | | | | $ | 465.0 | |
| SUBOXONE Film | | Buprenorphine and Naloxone | | Sublingual film that adheres under the tongue or on the inside of the cheek for direct absorption into the bloodstream | | U.S., Canada, all 27 EU Member States (plus UK, Iceland, Sweden, Norway, Finland, Denmark, and Lichtenstein), Australia, New Zealand, Qatar, UAE, and Malaysia. | | |
| SUBUTEX Tablet | | Buprenorphine | | Sublingual tablet that is placed under the tongue to dissolve | | 18 countries worldwide, primarily in Europe, including France, United Kingdom, Germany, and Italy | | |
| SUBOXONE Tablet | | Buprenorphine and Naloxone | | Sublingual tablet that is placed under the tongue to dissolve | | 37 countries worldwide | | |
| Opioid Overdose Reversal | | | | | | | | |
OPVEE (nalmefene) nasal spray1 | | Nalmefene | | Nasal spray | | U.S. | | n/a1 |
Schizophrenia | | | | | | | | |
| PERSERIS extended-release Injectable | |
Risperidone | |
Extended-release injectable suspension | |
U.S. | | $ | 28.0 | |
____________
(1)We intend to launch OPVEE (nalmefene) nasal spray in the U.S. in the fourth quarter of 2023.
SUBLOCADE Long-acting injectable (buprenorphine) extended-release injection
As the first long-acting buprenorphine-based injectable approved by the U.S. Food and Drug Administration ("FDA") for the treatment of moderate to severe OUD, SUBLOCADE is a highly differentiated treatment. Our RECOVER extension study, which was a 24-month observational study of individuals who participated in the Phase 3 SUBLOCADE study, assessed life changes in patients with OUD who received SUBLOCADE as part of a randomized clinical efficacy study. It has shown that SUBLOCADE may translate into (1) increased abstinence from illicit opioids compared to placebo; (2)
improved patient-reported quality-of-life outcomes (such as health status, employment and insurance status, and healthcare resource utilization); and (3) improved recovery post-treatment. Administration of monthly subcutaneous injections of SUBLOCADE also eliminates the risk of missing daily doses that might result in subtherapeutic plasma levels (see below), potentially leading to relapse to opioid-seeking and opioid-taking behaviors. Finally, because SUBLOCADE may only be administered by a healthcare practitioner via a closed distribution system whereby the patient never has access to the drug, it is expected to reduce the potential for diversion or misuse.
The logic that underpins this technology lies in a deep understanding of the relationship between buprenorphine plasma levels, whole-brain mu-opioid receptor occupancy (MOR) in the brain, and the key clinical pharmacodynamic effects of withdrawal suppression and opioid blockade. Clinical studies confirmed that the minimum threshold plasma concentration of buprenorphine needed to effectively block the subjective drug-liking effects of a full opioid agonist such as hydromorphone is 2 ng/mL, which translated into at least 70% MOR occupancy in the brain for the entire 1-month period. These unique pharmacokinetic and pharmacodynamic properties of SUBLOCADE also translated into clinical efficacy and safety and better patient outcomes.
The expected benefits of these levels of receptor occupancy/opioid blockade are that:
•Patients would likely experience substantially reduced levels of cravings associated with addiction;
•Patients should receive no gratification from abuse of opioids;
•Levels of adherence and compliance with treatment should be significantly improved because it is administered once monthly and late administration of up to 14 days is not expected to affect clinical efficacy;
•It is designed to protect patients right from the start of treatment, through every day of the month, including moments of vulnerability;
•For physicians, there should be positive clinical and patient outcomes using this technology;
•For physicians and wider society, there should be reduced levels of potential diversion and abuse compared to sublingual buprenorphine—once injected, the buprenorphine cannot easily be extracted and diverted; and
•For payors, the benefit should come in reduced costs from higher compliance, better clinical outcomes and reduced abuse and diversion.
We currently distribute SUBLOCADE (called SUBUTEX Prolonged Release in Europe) in the U.S., Australia, Canada, Israel, Sweden, Finland, and Norway, and have special “named patient” programs in Israel, UAE, Qatar and New Zealand. Germany, Italy, Denmark, New Zealand, and Switzerland have approved SUBLOCADE (under the name SUBUTEX Prolonged Release) and we are exploring commercial launch in those countries in the near future.
SUBOXONE Film (buprenorphine and naloxone) sublingual film
SUBOXONE Film was initially launched in the U.S. in 2010 and is currently sold in the U.S. and more than 30 other countries. It is one of only four products currently approved by the FDA for the treatment of opioid dependence pursuant to DATA 2000 in both the induction and maintenance phases of treatment (although several are approved for “treatment of opioid dependence”). SUBOXONE Film was developed as an alternative to the sublingual tablet.
SUBOXONE Film was developed through an exclusive agreement with Aquestive (formerly known as Monosol), utilizing its proprietary technology, to deliver SUBOXONE Film in a fast-dissolving sublingual film.
SUBOXONE Film containing 2mg buprenorphine and 0.5 mg naloxone, and 8 mg buprenorphine and 2mg naloxone, was first approved for the maintenance treatment of opioid dependence in the U.S. in August 2010, in Australia in December 2010 and in Malaysia in July 2013. Additional dosage strengths of SUBOXONE Film containing 4mg buprenorphine and 1 mg naloxone, and 12 mg buprenorphine and 3mg naloxone, were subsequently approved in the U.S. in August 2012 and in Australia in May 2014. SUBOXONE Film was also approved in the U.S. in April 2014 for use in the induction phase of buprenorphine-based treatment of opioid dependence. In addition, on September 22, 2021 the FDA approved the buccal route of administration for SUBOXONE Sublingual Film. Patients may now choose either under-the-tongue (sublingual) or against the cheek (buccal) administration.
The Group’s U.S. sales force ceased promoting SUBOXONE Film as required by the Resolution Agreement with the DOJ and ceased all detailing of the product in that year, though it remains available for sale. For more information, see “Note 19—Provisions and Other Liabilities” of “Item 18. Financial Statements—Audited Consolidated Financial Statements” and “Item 10.C. Material Contracts.” Historically, SUBOXONE Film was our highest revenue product, and it together with other oral buprenorphine products remain significant sources of revenue for us.
SUBOXONE Tablet (buprenorphine and naloxone) sublingual tablet
SUBOXONE Tablet is a fixed-dose combination of buprenorphine and naloxone in the ratio of four parts buprenorphine to one part naloxone. SUBOXONE Tablet was designed to discourage intravenous abuse of the tablet formulation in patients dependent on full opioid agonists (e.g., heroin and morphine). Naloxone is a potent antagonist at opioid receptors.
SUBOXONE Tablet containing 2 mg buprenorphine and 0.5 mg naloxone, and 8 mg buprenorphine and 2 mg naloxone, was approved in the U.S. by the FDA in October 2002 as an orphan drug for maintenance treatment of opioid dependence.
SUBOXONE Tablet is approved in 37 countries worldwide. We discontinued distribution of SUBOXONE Tablet in the U.S. market in March 2013.
SUBUTEX Tablet (buprenorphine) sublingual tablet
SUBUTEX Tablet containing 0.4 mg, 2 mg, and 8 mg buprenorphine was first approved for the treatment of opioid dependence in France in July 1995 and was launched in the French market in February 1996. 2 mg and 8 mg tablets were subsequently approved in the U.S. and launched in April 2003, but were discontinued from sale in the U.S. market in September 2011. We currently distribute SUBUTEX tablets 18 countries worldwide, primarily in Europe, including France, United Kingdom, Germany, and Italy., but not in the U.S.
OPVEE (nalmefene) nasal spray
On May 22, 2023, the FDA approved OPVEE (nalmefene) nasal spray for the emergency treatment of known or suspected opioid overdose induced by natural or synthetic opioids in adults and pediatric patients aged 12 years and older, as manifested by respiratory and/or central nervous system depression. OPVEE (nalmefene) nasal spray is intended for immediate administration as emergency therapy in settings where opioids may be present. OPVEE (nalmefene) nasal spray is not a substitute for emergency medical care. OPVEE contains 2.7 mg nalmefene.
OPVEE contains the opioid receptor antagonist nalmefene, which works quickly by blocking the brain opioid receptors. In a clinical model of opioid-induced respiratory depression in opioid-experienced, non-dependent subjects, OPVEE had an onset of action of 2.5 to 5 minutes and fully reversed respiratory depression as early as 5 minutes after OPVEE administration. Other clinical data include a terminal
plasma half-life of approximately 11 hours. While the duration of action of nalmefene is as long as most opioids, a recurrence of respiratory depression is possible.
We believe that a large and growing addressable market for opioid overdose reversal agents exists in the U.S. driven by sales into community- based and first responder institutions, as well as directly to patients via pharmacies. The current addressable market in the U.S. is substantial, to ensure an opioid overdose reversal agent is available for all first responders, including fire departments, emergency medical services, federal law enforcement, local law enforcement, and other community groups. We also expect the primary customers for OPVEE to include state health departments, substance abuse centers, federal agencies, and consumers through pharmacies fulfilling physician-directed or standing order prescriptions. The co-prescribing of opioid overdose reversal agents alongside prescription opioids has also driven growth.
The U.S. Patent and Trademark Office (USPTO) issued Patent No. 11,458,091 includes claims covering combinations of nalmefene and Intravail® in a nasal formulation which expires in 2038. In addition, we license certain patents and other intellectual property, including Intravail® (dodecyl maltoside) as an absorption enhancer, from Neurelis, Inc. (f/k/a Aegis Therapeutics, LLC). Our license agreement obligates us to pay certain development milestones, which are not material, a tiered low to mid- single digit royalty on net sales, and potential sales milestones of up to $5 million each for the sale of certain nalmefene, naloxone, or naltrexone products that incorporate the Intravail® absorption enhancer. We use Intravail® in OPVEE and OPNT002.
PERSERIS Long-acting injectable (risperidone) extended-release injection
PERSERIS (risperidone extended-release) is a novel sustained-release formulation of risperidone administered once every 28 days for the treatment of schizophrenia. PERSERIS consists of a two-syringe system, whose contents are mixed immediately prior to administration. One syringe contains the delivery system, and the other contains the sterile drug substance risperidone.
We received FDA approval for PERSERIS in 90mg and 120mg doses in 2018 and launched PERSERIS in the U.S. in 2019. In addition, PERSERIS was approved in Canada through our exclusive partnership with a Canadian distributor in November, 2020. We expect our Canadian distributor to begin distributing PERSERIS in Canada in the second half of 2023.
Competition
We operate in a highly competitive industry. While we seek patent and trademark protection where appropriate, several of our branded products face competition from generic products in key markets as well as competition from alternative products and treatments.
For example, SUBLOCADE is patent protected in the U.S., Australia, Canada, UK, Ireland, France, Germany, Italy, Spain, Denmark, Finland, Norway, the Netherlands, Switzerland, Sweden, Israel, Japan, Mexico and New Zealand. However, Camurus, in partnership with Braeburn, has sought FDA approval of its long-acting injectable buprenorphine product in the U.S. and, based on their efforts to date, we expect their product to become available for sale in the U.S. Outside the U.S., this product enjoys first mover advantage in all countries except Canada. It is well established in the Nordics (Norway, Sweden, Finland, and Denmark) and Australia, and available in other parts of Europe.
Our SUBOXONE Film product already faces three generic competitors in the U.S., and a fourth competitor received approval for its product in May 2022 but has not yet launched. We are aware of one competitor that has received FDA approval but is unable to enter the market until 2024, and another with an application pending before the FDA. We have seen our market shares of film decline from greater than 50% in 2018 to an average share of 19% during the first quarter of 2023, and expect further declines if other competing products become available or if existing participants choose to disrupt the market in line with industry analogs. We no longer promote SUBOXONE Film in the U.S. as discussed above.
In contrast, no generic competition is present in Australia. In Europe and Canada, we have recently launched SUBOXONE Film and it enjoys patent protection until 2030.
Our SUBOXONE Film and SUBOXONE and SUBUTEX Tablets face generic competition in most markets. In Europe, generic versions of the SUBUTEX Tablets have been available since 2010 and SUBOXONE Tablets since 2018. In addition, we face competition from branded oral buprenorphine-based tablets and historically well-established methadone oral formulations. Despite a strong competition, our group’s total oral BMAT market share (by mg volume) remained significant at currently at 49% in 2022, 50% in 2021, and 54% in 2020. In Canada, our SUBOXONE Tablets product faces two generic competitors. We have seen our market share (by mg volume) of SUBOXONE Tablets eroding overtime, currently at 23% in 2022. Further, our SUBOXONE Film and SUBOXONE and SUBUTEX Tablets face competition from branded oral buprenorphine-based tablets and historically well-established methadone oral formulations.
In Canada, our SUBOXONE Tablets product faces two generic competitors. We have seen our market share (by mg volume) of SUBOXONE Tablets eroding overtime, currently at 23% in 2022.
OPVEE, when launched, is expected to be the first nalmefene nasal spray approved by the FDA for the emergency treatment of known or suspected opioid overdose in adults and pediatric patients aged 12 years and older, as manifested by respiratory and/or central nervous system depression. OPVEE (nalmefene) nasal spray is intended for immediate administration as emergency therapy in settings where opioids may be present. OPVEE (nalmefene) nasal spray is not a substitute for emergency medical care. It will compete with branded and generic naloxone nasal sprays including Narcan® (naloxone HCI) Nasal Spray 4 mg, 4 mg naloxone generic equivalents, and Kloxxado® (naloxone HCI) Nasal Spray 8 mg. It will also compete with naloxone or nalmefene administered by syringe and over-the-counter (“OTC”) intranasal naloxone HCl which the FDA recently approved but which are not yet marketed.
We launched our PERSERIS long acting injectable for the treatment of schizophrenia in the U.S. in February 2019. While it enjoys patent protection, PERSERIS faces competition from other long-acting injectables, including existing products from competitors such as Johnson and Johnson, Otsuka, and Alkermes, as well as potential future entrants, in addition to a heavily genericized oral market.
The introduction of generic or branded products that compete with the Group’s products or heightened competition amongst existing participants could impact both the market share of the Indivior Group’s products and pricing and, therefore, adversely impact its results of operations. The introduction of generic products typically leads to a loss of sales of a branded product and/or a decrease in the price at which branded products can be sold. In addition, legislation enacted in the U.S. and several EU countries allows for, and in a few instances in the absence of specific instructions from the prescribing physician, mandates the dispensing of generic products rather than branded products where a generic version is available.
Research and Development
We invest in research and development to create innovative medications and services that address the needs of patients with the complex chronic condition of SUD. These efforts include the development of new medications that are designed to minimize diversion and misuse, increase compliance with treatment, support public health, improve patient outcomes and expand access to treatment for areas of SUD where no pharmacotherapy is currently available.
Chronic addictive behaviors are characterized by compulsive drug and alcohol use, loss of control over drug-seeking and drug-taking, and an intense drive to take the drug at the expense of other behaviors, with little regard for subsequent consequences. From a psychiatric perspective, SUD has aspects of both impulse control disorders and compulsive disorders. In addictive and compulsive disorders, which have prominent motivational drivers, dysfunction in the brain’s cortical regions significantly affects cognitive regulatory processes such that the individual fails to inhibit self-defeating urges or desires appropriately. This failure to resist repetitive, maladaptive behaviors is a key clinical
feature of SUD, and aspects of decision-making are compromised either directly (i.e., a dysfunctional inhibitory system) or indirectly (i.e., a dysfunctional reward system).
Indivior has a long history of supporting the SUD treatment community: it discovered buprenorphine in 1966 and has been involved in manufacturing and supplying buprenorphine to patients as a treatment for OUD. Indivior has built a portfolio of treatments for OUD and a pipeline of new molecules to address other chronic conditions and co-occurring disorders of SUD. Indivior launched the first buprenorphine-based medication for the treatment of OUD in France in 1996. The Group’s medications are now available in 39 countries and include buprenorphine sublingual tablets (SUBUTEX), buprenorphine and naloxone sublingual tablets (SUBOXONE), buprenorphine and naloxone sublingual film (SUBOXONE Film), and the first FDA-approved once-monthly injectable buprenorphine formulation (SUBLOCADE). All along, Indivior has invested in education programs on evidence-based treatment models that have helped change modern addiction medicine and transform the perception of SUD from a global human crisis to a chronic disease that should be recognized and treated.
As a result of our acquisition of Opiant, our research and development personnel also have substantial experience in the opioid overdose reversal field. Members of our Research and Development staff contributed to the development of NARCAN® (naloxone hydrochloride) Nasal Spray, a treatment to reverse opioid overdose. This product was conceived and developed by Lightlake Therapeutics (Opiant’s predecessor) under a clinical trial agreement with the National Institute on Drug Abuse (NIDA), one of the National Institutes of Health (NIH). Lightlake Therapeutics licensed this to Adapt Pharma Operations Limited (“Adapt”), an Ireland based pharmaceutical company in December 2014, and it was approved by the FDA in November 2015. (Emergent BioSolutions, Inc. later acquired Adapt.) Opiant received approval to launch the first nasal nalmefene-based medication OPVEE for the emergency treatment of known or suspected opioid overdose induced by natural or synthetic opioids in adults and pediatric patients aged 12 years and older, as manifested by respiratory and/or central nervous system depression. OPVEE (nalmefene) nasal spray is intended for immediate administration as emergency therapy in settings where opioids may be present. OPVEE (nalmefene) nasal spray is not a substitute for emergency medical care.
Indivior also launched the first FDA-approved once-monthly injectable risperidone formulation (PERSERIS) for the treatment of schizophrenia.
Our research and development team is led by our Chief Scientific Officer, Dr. Christian Heidbreder, a leading authority on the development of SUD treatments, and consists of approximately 100 persons distributed across the following sub-functions:
•Global Chemistry, Manufacturing, and Controls ("CMC") includes capabilities spanning formulation development, analytical development, chemical development, process development, and technology transfer. Indivior CMC facilities based in Hull (United Kingdom) and Fort Collins (Colorado, USA) are equipped with cutting-edge technologies including pilot plant storage, formulation laboratories, analytical laboratories, chemistry laboratories, stability chambers, office spaces, and support spaces. These facilities are also built to environmental and energy-saving standards, including the installation of a solar panel farm to increase use of renewable energy.
•Global Medicines Development encompasses all required functions to support clinical and nonclinical development, from early to late stage clinical development including pivotal Phase 3 trials and post-marketing commitment and requirement studies: (1) medical, scientific writing, publications and communication; (2) clinical development and operations; (3) data and statistical sciences; (4) clinical pharmacology and nonclinical sciences; (5) epidemiology, health economics and outcomes research; (6) clinical, medical and safety compliance, and (7) drug discovery and translational medicine.
•Global Regulatory Affairs focuses on (1) regulatory strategy; (2) regulatory CMC and compliance; (3) regulatory operations; (4) global labeling and advertisement/promotion; and (5) local regulatory affairs.
•R&D Strategy and Business Operations enhances organizational coordination, and value-based decision-making for the research and development pipeline, through resource planning, optimization of systems, processes, and support of portfolio governance.
Our research and development function endeavors to conduct all clinical trials (Phase I through Phase IV) in partnership with Clinical Research Organizations. During Phase II and Phase III of clinical trials, because the formulation of the medication must be finalized and the scalability of production proven, we engage contractors with the relevant capabilities. During the various phases of clinical trials, the number of participants in, and consequently the expenses related to, the project increases significantly. Please refer to “Item 5. Operating and Financial Review and Prospects” for further details of research and development expenses during the financial periods included in this registration statement. Long-term pipeline
Our research and development activities are focused on building on our leadership position in the treatment of SUD. Through three active collaborations, we are investing to advance research into molecules that address cannabis use disorder ("CUD”), opioid use disorder ("OUD") and alcohol use disorder ("AUD"). However, our long-term pipeline reflects only potential products, and any product would require completion of clinical trials to demonstrate safety and efficacy, and approval by the FDA. See Item 3.C Risk Factors - “Clinical trials for the development of products, including our key pipeline products, may be unsuccessful and our product candidates may not receive authorization for manufacture and sale.”
AEF0117 Synthetic CB1 Specific Signaling Inhibitor for Cannabis Use Disorder
In June 2021, we formed a strategic collaboration with French company Aelis Farma (“Aelis”). This collaboration gives Indivior an exclusive option for AEF0117 designed to treat CUD. Aelis Farma is currently conducting Phase 2B clinical trials of AEF0117 in treatment-seeking subjects with moderate to severe CUD. The trial is a randomized, double-blind, placebo-controlled, prospective, multicenter study conducted in the US and aims to enroll 330 treatment-seeking adult volunteers with a cannabis use of 5 days or more per week who meet diagnostic standards for moderate to severe CUD. The primary efficacy end point is the response to treatment defined as one day or less of cannabis use per week from week 5 to week 12. Other CMC, nonclinical toxicology, and clinical work-streams are progressing as planned. During the option period, Aelis is fully in charge of clinical and nonclinical development activities.
Upon completion of a successful Phase 2B trial and end-of-Phase2 meeting with the FDA, Indivior will have the opportunity to exercise the option for $100 million in exchange for an exclusive global license to develop, make and commercialize the AEF0017 and would assume responsibility and costs for all future development, regulatory, commercial, and manufacturing activities. Upon commercialization, we would also pay to Aelis Farma a tiered royalty on net sales generally ranging from mid to high teens.
The U.S. patents for AEF0017 expire in 2033 and 2039, and the former patent might be extended until 2038. AEF0117, if approved, would address the growing need for treatments targeting CUD. There are no FDA-approved medications for CUD. We believe AEF0117 is the most advanced new chemical entity under investigation and, if and when approved for use by the FDA, represents a unique opportunity to address a growing public health need.
OPNT002 - Nasal Naltrexone for Alcohol Use Disorder ("AUD")
Alcohol triggers the release of naturally occurring endorphins, which then bind to opioid receptors in the brain, leading to dopamine release in the brain's reward centers. Naltrexone is thought to reduce heavy drinking through the blockade of these opioid receptors, which results in dampening of alcohol-induced dopamine release and reward. Naltrexone is currently approved by the FDA for the treatment of AUD as a tablet and depot injection. However, in contrast to current naltrexone formulations OPNT002 will be taken nasally on an "as needed" basis, in anticipation of drinking or once drinking has started in order to reduce alcohol intake. We anticipate that the ability to take naltrexone on an as-needed basis
could improve patient compliance and enable a patient to regain control of their drinking, especially in situations where heavy drinking is otherwise habitual. Furthermore, we expect patients to have high rates of adherence, because they will not be required to abstain and potentially go through detoxification and withdrawal prior to initiating OPNT002 therapy, unlike the typical situation with existing medicines for AUD.
Phase 1 clinical data have shown rapid nasal absorption of OPNT002, which supports its suitability for use on an as needed basis, as high levels of naltrexone can be delivered within minutes, which is likely to be very important during a period of craving. The FDA has also provided feedback on the proposed 505(b)(2) development plan, which is based on a harm reduction primary endpoint rather than a primary endpoint based on abstinence.
In October of 2019, a dose ranging study confirming the suitability of our OPNT002 formulation of AUD was completed.
In January 2022, the first patient was dosed in a double blind, placebo-controlled Phase 2 study of OPNT002 in 300 patients with AUD. The trial will determine whether OPNT002 reduces heavy drinking as measured by a change in the World Health Organization (“WHO”) drinking risk levels. The total trial duration per patient is 20 weeks with top line data anticipated to follow in Q3 2024. The primary end point will be measured by the proportion of patients showing an improvement in World Health Organization (WHO) Risk Levels of Alcohol Consumption consisting of a 2-level reduction from baseline to end of treatment.
Opioid Use Disorder, INDV-2000 Selective Orexin-1 Receptor Antagonist
We are developing INDV-2000 (Selective Orexin-1 Receptor Antagonist), as a non-opioid treatment for moderate to severe OUD. A Phase 1, Single Ascending Dose study was completed and indicated that INDV-2000 was well tolerated with no drug-related severe or serious adverse events and demonstrated good pharmacokinetics in healthy volunteers. Additional clinical trials will be required to further demonstrate safety and efficacy prior to submission to the FDA for approval. A double-blind, placebo-controlled, randomized, single ascending dose study of 8 subjects was conducted in 2020-2021 with INDV-2000 administered in fasting condition, and an open, cross-over, food interaction, single-dose study with INDV-2000 administered once under both fasting conditions and non-fasting conditions.
A Multiple Ascending Dose study began in September 2022.
Our rights to INDV-2000 are structured as an exclusive worldwide license. Upon commercialization, we would also pay to C4X Discovery a single digit, flat royalty on net sales.
The U.S. patents for INDV-2000 expire in 2037.
INDV-1000 Selective GABAb Positive Allosteric Modulator for AUD
INDV-1000 (Selective GABAb Positive Allosteric Modulator), for the treatment of AUD, is being developed in collaboration with ADDEX Therapeutics, and is in the pre-clinical development phase. Two lead molecules and potential back-ups have been identified and lead molecules are being synthesized and fully characterized in in vitro and in vivo pharmacological experiments.
Our rights to INDV-1000 are structured as an exclusive worldwide license. Upon commercialization, we would pay to ADDEX a tiered royalty on net sales generally ranging from single digits to low teens.
OPNT004 - Drinabant Injection for Acute Cannabinoid Overdose ("ACO")
In December 2018, an exclusive global licensing agreement was signed with Sanofi for the development and commercialization of drinabant for the treatment of acute cannabinoid overdose ("ACO"). Drinabant is a selective, high affinity cannabinoid CB-1 receptor antagonist that is being developed as an injectable for administration in an emergency department setting. In a proof of principle
study that Sanofi completed with 36 patients, oral drinabant blocked both subjective and objective psychological effects of inhaled delta9-tetrahydrocannabinol ("THC"). Sanofi also generated extensive safety data in Phase 1 and 2 studies with more than 700 subject for up to 24 weeks. The agreement contemplates potential development milestone payments of up to $8.1 million, a tiered royalty on net sales ranging from mid-single-digits to low teens, and potential sales milestone payments of up to $36 million. OPNT004 remains in development and to date we have paid less than $0.9 million under this agreement.
ACO is most frequently linked to the ingestion of “edibles” containing large quantities of THC and the abuse of synthetic cannabinoids (often referred to as “K2” and “Spice”) that are more potent and yet cheaper than cannabis. Edibles, sold as candies, brownies, and cookies, pose particular risks for children who can consume these by accident. Based on 2014 rates from the National Emergency Department sample and United States Census Bureau figures, we estimate that ACO resulted in more than one million emergency department visits in the United States in 2016. With an increasing number of states legalizing cannabis for personal and recreational use, ACO rates are expected to rise. Features of ACO produced by edibles and synthetic cannabinoids can include psychosis, panic and anxiety, feelings of paranoia, agitation, hallucinations, nausea, vomiting and cardiac arrhythmias. These symptoms often require emergency medical attention and can take hours to days to resolve. There are currently no FDA approved treatments for ACO.
In January 2020, a Letter of Intent was signed with the National Center for Advancing Translational Sciences ("NCATS") to collaborate on the development of OPNT004. NCATS is one of 27 divisions and centers of the NIH. This collaboration, carried out under a Cooperative Research and Development Agreement provides development research for certain pre-clinical activities and studies to support our planned filing of an Investigational New Drug ("IND") application for OPNT004. Activities carried out under this agreement have resulted in the development of formulations which may be suitable for parental administration of OPNT004. These formulations are currently being tested for stability, with pre-clinical toxicology studies.
The United States Patent and Trademark Office (USPTO) issued Patent No. 11,471,437 entitled “Compositions and methods for treating cannabinoid hyperemesis syndrome with a cannabinoid receptor antagonist” for OPNT004. This patent covers OPNT004 as a method of treatment for CHS using drinabant administered as a parenteral formulation and expires in 2040.
Manufacturing
Raw Materials
Active Pharmaceutical Ingredients (“API”)
The Group sources a large portion of its active pharmaceutical ingredients from its own manufacturing facilities. The API used in our buprenorphine products are manufactured at our Fine Chemical Plant (“FCP”) located in Hull, United Kingdom. The FCP manufactures the buprenorphine hydrochloride (“HCl”) and the buprenorphine base active pharmaceutical ingredients (‘‘buprenorphine’’) used in the formulation of SUBLOCADE long-acting injection, SUBOXONE Film, SUBUTEX Tablet, SUBOXONE Tablet, and BUPRENEX. The FCP has the capacity to produce all of our current buprenorphine HCl requirements with approximately 25% demonstrated capacity remaining. A third-party manufacturer performs an additional purification step for the crystallized buprenorphine base that we use to make SUBLOCADE (sold under the name SUBUTEX PRO outside the U.S.). We believe there are adequate supplies of the raw materials used to manufacture buprenorphine, and the ingredient is readily available from other suppliers (although it would require significant time to qualify and obtain regulatory approval to change suppliers).
We procure the naloxone HCl active pharmaceutical ingredient mainly from two suppliers for both SUBOXONE Tablet and SUBOXONE Film, although the ingredient is readily available from other
suppliers (although it would require significant time to qualify and obtain regulatory approval to change suppliers).
Buprenorphine and products containing buprenorphine are classified as Schedule III controlled narcotics in the U.S. and require permits for import and export. An annual importation assessment value for buprenorphine and products containing buprenorphine is set by each importing country through the International Narcotics Control Board (the “INCB”). Once the assessment value has been reached for a given country, no additional import permits may be issued unless proper justification for an assessment value increase is provided to the respective country’s governing body, which reports to the INCB. While this process has not impacted product supply to our patients in the past, it presents a manufacturing and product supply risk that must be monitored and managed closely.
We procure risperidone active pharmaceutical ingredient mainly from a single supplier for PERSERIS, although the ingredient is readily available from other suppliers, although it would require significant time to qualify and obtain regulatory approval to change suppliers.
SUBLOCADE
SUBLOCADE (buprenorphine extended-release) injection for subcutaneous use is manufactured under an agreement with Curia (formerly known as AMRI). We provide the buprenorphine base, polymer and syringe assembly used in the manufacture of SUBLOCADE.
Curia has a manufacturing facility located in Burlington, MA and is developing additional capacity in Albuquerque, NM. Manufacture of all SUBLOCADE output for the U.S. market and the rest of the world is approved at the Burlington facility and U.S. market manufacturing approval is planned for Albuquerque.
We rely on third parties to fill syringes with the API and polymer, to package the products, and to perform quality assurance and quality testing.
Current manufacturing capacity for SUBLOCADE is currently single sourced and would not be adequate for our peak net revenue assumptions. However, we have made investments in additional equipment and expect the additional manufacturing line at Curia’s Albuquerque site to be approved for the U.S. in the second half of 2023. We believe that, once validated and approved, the additional manufacturing line should meet anticipated demand for net revenue in the medium term. In addition, we are evaluating alternate options to secure the supply of SUBLOCADE for the long term and for business continuity reasons. See “Item 3.D.—Risk Factors—We rely on third parties to manufacture commercial supplies of most of our products, whose facilities and processes must meet stringent regulatory requirements.” SUBOXONE Film
SUBOXONE Film is manufactured under an exclusive license and supply agreement with Aquestive Therapeutics (formerly known as MonoSol RX). Under the terms of the agreement, Aquestive is the exclusive global manufacturer and primary packager of SUBOXONE Film and is prohibited from developing any other film product containing buprenorphine without our written consent. We provide both the buprenorphine HCl and the naloxone HCl used in the manufacture of SUBOXONE Film.
Aquestive has two manufacturing facilities located in Portage, Indiana. Manufacture and primary packaging of all SUBOXONE Film output for most markets is now approved at both facilities.
SUBOXONE and SUBUTEX Tablets
We contract with Reckitt Benckiser Group PLC (“RB”) to manufacture SUBOXONE and SUBUTEX Tablets. We provide both buprenorphine HCl and naloxone HCl used in the manufacture of SUBOXONE
and SUBUTEX Tablets. RB manufactures and performs the packaging of all SUBOXONE and SUBUTEX tablets globally at its facility in Hull, United Kingdom.
OPVEE (nalmefene) nasal spray
We are negotiating to contract for the commercial supply of OPVEE with Summit BioSciences. SpecGx LLC provides the nalmefene and Neurelis, Inc. provides Intravail® used in the manufacture of OPVEE. Intravail®, dodecyl maltoside, is an absorption enhancer, and our license agreement with Neurelis obligates us to pay a tiered low to mid-single digit royalty on net sales, and potential sales milestones of up to $5 million for the sale of each of nalmefene, naloxone, or naltrexone products.
PERSERIS Long-Acting Injectable
PERSERIS has two components. Syringe A, also known as the liquid syringe, contains the delivery system and is manufactured under a supply agreement with Curia. Syringe B, also known as the powder syringe, contains risperidone active pharmaceutical ingredient and is manufactured under a supply agreement with Patheon Pharmaceuticals, LLC (“Patheon”). The finished product is later terminally sterilized after packaging into cartons. We provide the API, polymer and syringe assembly used in the manufacture of Syringe A and Syringe B, respectively. Contents in Syringe A and Syringe B are mixed before administering to the patient. We rely on third parties to fill syringes with the API and polymer, to package the products, to perform site quality assurance testing, and terminally sterilize the products. Patheon has a manufacturing facility located in Greenville, North Carolina and Curia has a manufacturing facility located in Burlington, Massachusetts.
Manufacturing capacity for PERSERIS is currently single sourced. However, we plan to transfer production of SUBLOCADE to Curia’s Albuquerque site, and when complete this will make available sufficient capacity to manufacture PERSERIS at peak expected volumes. As noted above, we have made investments in additional equipment and expect the additional manufacturing line at Curia’s Albuquerque site to be approved in the second half of 2023. See “Item 3.D.—Risk Factors—We rely on third parties to manufacture commercial supplies of most of our products, whose facilities and processes must meet stringent regulatory requirements.” Other Products
We contract with the RB Group to manufacture TEMGESIC and BUPRENEX. We provide the API used in the manufacture of this product. The RB Group manufactures and performs the packaging of all TEMGESIC and BUPRENEX globally at its facility in Hull, United Kingdom. We sold the TEMGESIC product line globally in 2021 (other than North America) but continue to supply TEMGESIC to the purchaser of that business.
Additional Manufacturing and Distributions Processes
We outsource to third parties certain aspects of the manufacturing and distribution process, including: (i) packaging our products with tamper evident pouches or child resistant components, in cardboard cartons, (ii) terminally sterilizing products that are not able to be manufactured under aseptic conditions, and (iii) securely storing products, fulfilling orders, and providing other customer service functions.
Sales, Marketing and Distribution
Our sales, marketing, and distribution processes for our products begin with a focus on the patient. Our products are intended for patients who suffer from OUD or schizophrenia, two highly stigmatized diseases. These patients are found not just in private physician offices, but also in emergency rooms, hospitals, addiction or rehabilitation centers, organized health systems ("OHSs") and, frequently, as part of their journey with addiction, as incarcerated individuals in the criminal justice system. Accordingly, we focus our sales and marketing efforts not just on physicians in private practice but also to healthcare providers situated in these diverse treatment environments.
Our sales, marketing, and distribution efforts vary by market.
United States
We derive approximately 81% of our net revenues, and an even larger portion of our profitability, from the U.S. market. Unlike many markets in the rest of the world, the U.S. market is not a single payor market. Instead, our activities are directed at a patchwork of federal and state agencies, organized health systems, criminal justice systems, and healthcare providers who provide treatment and assistance for patients suffering from OUD and schizophrenia.
Payors and Reimbursement
We have dedicated professionals responsible for obtaining access and eliminating barriers to care at the national, regional and state payor level, including every state Medicaid program. We have coverage from approximately 90% of payors, including almost all commercial insurance payors, and the Veterans’ Administration, the Department of Defense, and the Bureau of Indian Affairs.
A significant portion of our customers are reimbursed through the Medicaid plans of states and the District of Columbia, primarily because most individuals suffering from OUD are not employed or do not have employer-based health coverage.
Organized Health Systems ("OHS").
Many patients who use our products are found at OHSs, such as hospitals and managed care organizations. OHS are an important channel for our products because they have the resources and administration to appropriately handle controlled substances that are prescribed, delivered, and stored, and are equipped to administer the requirements applicable to our products, including REMS. Our OHS Access Team and Key Account Team call on key decision makers at OHSs to expand access to our products. Our goal is to ensure access to our products by establishing treatment protocols (both medical and logistical), removing barriers to access, gaining formulary access where needed, and ensuring that protocols are in place to ensure compliance with applicable DEA, state, and local requirements regarding the storage of controlled substances. As part of this process, the sales team focuses on effectively communicating the scientific rationale and the benefits of our products, appropriately balanced with safety information, and the OHS Access Director Team and medical team focus on potentially better adherence, increased continuity of care, and overall cost and resource optimization in the total treatment plan.
Criminal Justice Systems ("CJS").
We also have dedicated teams for customers in the CJS, including various types of prisons, such as states’ departments of corrections, county jails, and federal prisons, along with specialty treatment courts. A specialty treatment court is a court with expertise in substance abuse disorders which may offer alternative and deferred prosecution arrangements for appropriate persons.
For prisons, our dedicated teams attempt to increase access to our products, overcome logistical barriers to care, and promote particular products, but do not call on HCPs behind the walls of the prisons.
For specialty treatment courts, our Criminal Justice Access Directors educate judges, prosecutors, social workers, and patients about the benefits of our products. The patient is ultimately referred to a HCP, either in a private office or federally qualified health center, where the decision to use a BMAT, such as SUBLOCADE, is the patient’s decision with the assistance of his or her HCP. At these referral sites and locations, our sales personnel coordinate with the HCPs and their staff to ensure understanding of the scientific rationale and the benefits of our products, appropriately balanced with safety information.
Commercialization Activities
Our commercial activities in the U.S. are currently focused on SUBLOCADE long-acting injectable, PERSERIS long-acting injectable and, when launched, OPVEE nasal nalmefene spray. We do not
promote SUBOXONE Film in the U.S. Our sales organization in the U.S. comprises approximately 275 trained and experienced pharmaceutical professionals, which we call Clinical Specialists who are managed by Area Sales Managers. Clinical Specialists act as a vital link between the various stakeholders within the addiction community, including key opinion leaders, counselors, treatment advocates, pharmacists, nurses and healthcare providers in specialized treatment centers. We believe that our clear focus on patient needs helps deepen customer relationships which then allows the team the time to engage in clinical and logistical discussions that dramatically improve patient access to treatment with SUBLOCADE and PERSERIS.
Our Clinical Specialists are supported by dedicated and experienced professionals in our managed care group who create access to treatment for patients by partnering with U.S. commercial payors and federal, state, and local governmental payors.
Marketing
Our marketing efforts are focused on reaching the sufferers of the diseases that our products treat and the HCPs who treat them. In each of our markets, our commercial activities are supported by strategic planning, business analytics and measurement, and quarterly territory plans, ensuring that each market and sales territory is effectively resourced to maximize market access, and to increase appropriate use of our products.
In the U.S., our marketing team is responsible for claims development as well as developing marketing and sales materials, product websites, conference presentations and presence, and media plans which are reviewed by our Promotions Review Committee (PRC) consisting of medical, regulatory, and legal team members to assess compliance with rules and regulations as appropriate. We also provide reimbursement support for our U.S. markets. In addition, we have established strong marketing expertise in increasing disease state and treatment awareness, embedded in various platforms including grassroots, digital and traditional media. We employ third party vendors, such as advertising agencies, market research firms and suppliers of marketing and other sales support-related services, to assist with our commercial activities.
The challenges that we face in the sales process for our products include:
•understanding of the science that underpins the SUBLOCADE and PERSERIS value propositions,
•considerations related to buprenorphine being a controlled substance that is subject to regulation in the countries where our products are marketed,
•SUBLOCADE having been approved by the FDA with a REMS,
•SUBLOCADE requiring secure, refrigerated storage and the requirement that SUBLOCADE and PERSERIS be administered by an HCP, and
•developing strategies to ensure market acceptance of OPVEE, competing with an established product, and serving customers, most of which are expected to be incremental to our existing customer base.
To assist our sales and marketing efforts, we invest in data infrastructure and related professionals to derive insights from our data. These insights allow us to prioritize our marketing efforts, identify obstacles and barriers to treatment, and suggest new approaches.
Distribution
We distribute our products in 39 countries. Based on the country where sales originate, we derived 81%, 76% and 70% of our net revenues from the United States in 2022, 2021 and 2020, respectively.
The distribution of our buprenorphine products is more complicated than other specialty pharmaceutical products because buprenorphine is regulated in the U.S. as a Schedule III drug by the FDA, and similarly restricted by law enforcement authorities in the rest of the world. Additionally, certain products, like SUBLOCADE, utilize a restricted delivery network. Additionally, to ensure proper administration, SUBLOCADE and PERSERIS may only be administered by a HCP, and are not dispensed to the patient directly. To ensure that our products are available to HCPs and patients, we utilize specialty distributors and a network of several hundred specialty pharmacies that are equipped to adhere to these special requirements.
In contrast, SUBOXONE Film may be dispensed directly to a patient by a pharmacy with an appropriate DEA license. Accordingly, a substantial portion of our sales are to pharmaceutical wholesalers, specialty pharmacies, and distributors who, in turn, sell our products to pharmacies, hospitals, and other customers, including federal and state entities.
Our three largest customers (which are wholesale pharmaceutical companies in the U.S.) accounted for 55%, 57%, and 57% of global net revenues in 2022, 2021 and 2020. Our largest customer accounted for 22%, 21%, and 19% of our net revenues in 2022, 2021, and 2020. These customers are our primary purchases of SUBOXONE Film in the U.S., and as sales of SUBLOCADE grow, which is sold mostly through specialty pharmacists and specialty distributors, the relative importance of these three largest customers declines.
OPVEE
We expect the primary customers for OPVEE will be first responders, including fire departments, emergency medical services, federal law enforcement, local law enforcement, and other community groups. We also expect the primary customers for OPVEE to include state health departments, substance abuse centers, federal agencies, and consumers through pharmacies fulfilling physician-directed or standing order prescriptions.
Logistics
We use central third-party logistics and warehouses that comply with applicable local regulations for storage and distribution of our products into the supply chain. Our third-party logistics provider specializes in integrated operations that include warehousing and transportation services that can be scaled and customized to our needs based on market conditions and the demands and delivery service requirements for our medicines and materials. Their services eliminate the need to build dedicated internal infrastructures that would be difficult to scale without significant capital investment. Our third-party logistics provider warehouses all medicines in controlled FDA-registered facilities in the U.S., or which meet applicable requirements outside the U.S. Orders are prepared and shipped through an order entry system to ensure adequate supply and delivery of our medicines.
Rest of the World
Our commercial activities are currently focused on SUBLOCADE long-acting injectable (also called SUBUTEX PRO), SUBUTEX Tablet, SUBOXONE Tablet and SUBOXONE Film. Depending on the size and demands of the relevant markets, dedicated teams of clinical liaisons, health policy liaisons, or a combination of both, work to accelerate access to treatment for patients.
In Canada and in approved markets in Europe and Australia, we have a field force of sales specialists. In markets where these products either are not approved or are unable to be promoted under local regulation, we have medical affairs personnel responsible for responding to medical information
requests and for providing information consistent with local treatment protocols with respect to such products. In certain European markets, we have a sales team and a team of medical science liaisons supporting our rolling launches of SUBLOCADE AND SUBOXONE Film.
Outside the U.S. and Europe, we directly market SUBLOCADE, SUBOXONE Film, and SUBOXONE Tablets in in Canada and SUBLOCADE, SUBOXONE Film, and SUBUTEX Tablets in Australia. We also utilize distributors in certain markets outside the U.S. where we do not market our products directly.
We distribute our products internationally using contracted third-party distribution services.
•In Canada, we use a single distribution partner.
•In Europe, we use 2 distribution hubs, one in the UK and one in France, and 13 pre-wholesalers that sell our product on consignment. Additionally, we have 12 distribution partners across Europe.
•Outside North America and Europe we have 3 pre-wholesalers that sell our product on consignment, and nine distributors across 12 countries.
Other Activities
Advocacy, Education, and Patient Support
We collaborate with patient organizations, stakeholders and policymakers to achieve our vision that all patients around the world will have access to evidence-based treatment for the chronic conditions and co-occurring disorder of addiction. Our advocacy agenda focuses on expanding access to treatment, advancing treatment equity, and increasing focus on patients in correctional settings.
Our educational and engagement efforts have focused on expanding the availability of treatment options beyond the clinical setting in the U.S. in order to give patients the flexibility to receive appropriate treatment in the privacy of a physician’s office.
We also advocate for access to medically assisted treatment in correctional settings to ensure that resources are focused where challenges are greatest.
Equity in treatment is a barrier to care for patients. For instance, patients in correctional settings sit outside the insurance system and are ineligible by federal law for Medicaid benefits. We work to advance initiatives to increase patient access to medical care while incarcerated as well as access to care and coverage as they re-enter their communities. We also advocate to eliminate other barriers to care, including prior authorizations, step edits, and deductibles.
We have various programs to help patients access to our products. For example, we sponsor a commercial co-pay assistance program that helps patients meet co-payment obligations imposed by their commercial insurance.
Additionally, we sponsor an insurance reimbursement hub to facilitate the dispensing of our products that HCPs and pharmacies may access via telephone to confirm coverage and level of benefits. We also provide patient access specialists to problem solve access issues, coverage, and coding (after a product has been ordered).
There has been enhanced scrutiny of company-sponsored patient assistance programs, both from government enforcement and payors.
Medical Affairs
Our Medical Affairs Team, which supports HCPs and health administrators and includes Medical Science Liaisons and Medical Outcomes Value Liaisons responsible for responding to unsolicited off-label questions, clarifying data related to our products, working with study investigators, and developing and
delivering real world evidence regarding the usage and potential benefits or risks of a medical product derived from an analysis of real-world data.
Intellectual Property
We own or license several patents and patent rights in the U.S. and other countries covering or relating to certain of the products and pipeline products mentioned above, and have created brand names and also registered trademarks where appropriate for our products. Generally, and where possible, we rely upon patent protection to ensure market exclusivity for the life of the patent. We consider the overall protection of our patents, trademarks and license rights to be of material value and take actions to protect these rights from infringement or misuse where appropriate.
The majority of an innovative product’s commercial value is usually realized during the period in which the product has market exclusivity. In the branded pharmaceutical industry, an innovator’s product’s market exclusivity is generally determined by two forms of protection: patent rights held by the innovator company; and any regulatory forms of exclusivity to which the innovator is entitled. In the U.S. and some other countries, when market exclusivity expires and generic versions of a product are approved and marketed, there are often very substantial and rapid declines in the branded product’s sales. The rate of this decline varies by country and by therapeutic category; however, following patent expiration, branded products often continue to have some market viability based either upon the goodwill generated by the product name, which typically benefits from trademark protection, or upon the difficulties associated with replicating the product formulation or bioavailability.
Patents are a key determinant of market exclusivity for most branded pharmaceuticals as they can provide the innovator with the right to exclude others from practicing an invention related to the product. Patents may cover, among other things, the active ingredient(s), various uses of a drug product, pharmaceutical formulations, drug delivery mechanisms, the manufacture of products and processes for the manufacture of products, and intermediate compounds useful in the manufacture of products. Protection for aspects of individual products extends for varying periods in accordance with the expiry dates of patents in the various countries. The protection afforded, which may also vary from country to country, depends upon the type of patent, its scope of coverage and the availability of meaningful legal remedies in the country. However, patents and other forms of protection can never protect us from all forms of competition, such as from similar products or from alternatives. See, for example, “Item 4.B. Business Overview—3. Competition.” Many developed countries provide certain non-patent incentives for the development of pharmaceuticals. For example, the U.S., EU and Japan each provides for a minimum period of time after the approval of certain new drugs during which the regulatory agency may not rely upon the innovator’s data to approve a competitor’s generic copy. Regulatory exclusivity is also available in certain markets as incentives for research on new indications, orphan drugs (drugs that demonstrate promise for the diagnosis or treatment of rare diseases or conditions) and medicines that may be useful in treating pediatric patients. Regulatory exclusivity is independent of any patent rights and can be particularly important when a drug lacks broad patent protection. However, most regulatory forms of exclusivity do not prevent a second innovative competitor from gaining regulatory approval prior to the expiration of regulatory exclusivity when the second innovative competitor has conducted its own safety and efficacy studies on its drug, even when that drug is identical to that marketed by the first innovator.
We estimate the likely market exclusivity period for each of our branded products on a case-by-case basis. It is not possible to predict with certainty the length of market exclusivity for any of our branded products because of the complex interaction between patent and regulatory forms of exclusivity, the relative success or lack thereof of potential competitors’ experience in product development and inherent uncertainties concerning patent litigation. There can be no assurance that a particular product will enjoy market exclusivity for the full period of time that we currently estimate or that the exclusivity will be limited to the estimate.
We also rely on trade secrets, know‑how and inventions, which are not protected by patents and try to protect this information by entering into confidentiality agreements with parties that have access to it, such as our corporate partners, collaborators, licensees, employees and consultants. We also license or assign certain intellectual property rights to third parties.
The Group (generally Indivior UK Limited) also owns, or licenses, patent rights (i.e. granted patents or pending applications) in certain key jurisdictions in respect to our products and pipeline products. The patent rights listed below are those which are critical to our products:
| | | | | | | | | | | | | | | | | | | | |
Number | | Geographic Scope | | Expiry | | Description |
| SUBLOCADE | | | | | | |
U.S. 8,921,387 U.S. 8,975,270 U.S. 9,272,044 U.S. 9,498,432 U.S. 9,782,402 U.S. 9,827,241 U.S. 10,198,218 U.S. 10,558,394 U.S. 10,592,168 U.S. 10,646,484 U.S. 11,000,520 (and foreign equivalents) | | U.S., Europe, United Kingdom, Australia, Canada, Israel, Mexico, and New Zealand | | 2031 - 2038 | | Commercial Buprenorphine Depot Method and Formulation |
| PERSERIS | | | | | | |
U.S. 9,180,197 U.S. 9,186,413 U.S. 9,597,402 U.S. 10,010,612 U.S. 10,058,554 U.S. 10,376,590 U.S. 10,406,160 U.S. 11,013,809 U.S. 11,110,093 U.S. 11,478,407 U.S. 16/041,170 (pending application) (and foreign equivalents) | | U.S., Europe, United Kingdom, Australia, Canada, Israel, Mexico, and New Zealand | | 2026 - 2038 | | Commercial Risperidone Depot and Method |
| SUBOXONE Film | | | | | | |
8,603,514 9,687,454 11,135,216 (and foreign equivalents) | | U.S., Australia, New Zealand, Europe, and United Kingdom | | 2024 - 2029 | | Formulation |
| OPVEE (nalmefene) nasal spray) | | | | | | |
| U.S. 11,458,091 (and foreign equivalents) | | U.S. and Russia | | 2037-38 | | Formulation |
| U.S. 17/881,191 (pending application). | | U.S. | | 2037 | | Method |
Regulatory Overview
Our activities are subject to a rigorous regulatory framework on a local and international level that conditions and affects our activities. The process of obtaining regulatory approvals and the subsequent compliance with applicable laws, regulations and other requirements require the expenditure of substantial time and financial resources. The following is a summary of the regulatory landscape applicable to our business and the reimbursement schemes applicable to its products in the key markets in which we operate.
United States
Overview
Pharmaceutical companies operate in a highly regulated environment. In the U.S., we must comply with laws, regulations and other requirements promulgated by numerous federal and state authorities, including the FDA and other agencies and divisions of the Department of Health and Human Services, the Drug Enforcement Agency (“DEA”), and other agencies of the DOJ, the Consumer Product Safety Commission, the Environmental Protection Agency, the U.S. Bureau of Customs and Border Protection (the “CBP”), and state agencies such as boards of pharmacy. Applicable legal requirements govern to varying degrees the research, development, manufacturing, commercialization and sale of our prescription pharmaceutical products, including pre-clinical and clinical testing, approval, production, labeling, sale, distribution, import, export, post-market surveillance, advertising, dissemination of information and promotion. Failure to comply with applicable legal requirements can result in product recalls, seizures, injunctions, refusal to approve or withdrawal of approval of product applications, monetary fines or criminal prosecution.
Food and Drug Administration
The FDA’s authority to regulate pharmaceuticals comes primarily from the Federal Food, Drug, and Cosmetic Act (“FFDCA”). In addition to reviewing NDAs for branded drugs and additional new drug applications ("ANDAs") for generic drugs, the FDA has the authority to ensure that pharmaceuticals introduced into interstate commerce are neither “adulterated” nor “misbranded.” Adulterated means that the product or its manufacture does not comply with FDA quality and related standards. A drug is adulterated if, among other things: it is prepared under unsanitary conditions such that it may have been contaminated or may cause injury to patients, (ii) its manufacture does not comply with cGMP, (iii) it does not comply with an official compendium, (iv) its strength, purity or quality differs from that which it purports to possess, or (v) if it is manufactured, processed or held in a facility which refuses FDA inspection. Misbranded means, among other things, that the labeling of, or advertising or promotional materials for, the product contains false or misleading information, fails to conform to the FDA approval for the drug, or fails to include required information about risks.
In order to market and sell a new drug product in the U.S., a drug manufacturer must file with the FDA an NDA that shows the safety and effectiveness of the new drug. In order to market and sell a generic version of an already-approved drug product, a drug manufacturer must file an ANDA that shows that the generic version is, with narrow exceptions, the same active ingredient, dosage form, strength and route of administration as a previously approved reference product, and “bioequivalent” to that reference product, meaning that it is absorbed at the same rate and to the same extent as the reference product. The FDA classifies certain generic drugs as “therapeutically equivalent,” meaning that they are expected to have the same clinical effect and safety as the branded drug product. Alternatively, a manufacturer may submit an NDA under FFDCA section 505(b)(2) for a drug product that has some differences from an already-approved drug product, but that relies in whole or in part on the findings of safety and/or effectiveness of a previously approved reference product, or on medical literature. A section 505(b)(2) NDA must demonstrate that the proposed product is safe and effective notwithstanding the differences from the approved drug product.
Research, Development and NDA process
The path leading to FDA approval of an NDA for a new drug begins when the drug product is merely a chemical formulation in the laboratory. In general, the process involves the following steps:
(i)completion of formulation, laboratory and animal testing in accordance with good laboratory practices (“GLP”), which characterizes the drug product from a pre-clinical perspective and provides preliminary evidence that the drug product is safe to test in human beings;
(ii)filing with the FDA an Investigational New Drug Application ("IND") which once effective will permit the conduct of clinical trials (testing in human beings under adequate and well-controlled conditions) in the U.S.;
(iii)designing and conducting clinical trials to show the safety and efficacy of the drug product in accordance with good clinical practice ("GCP") and other requirements;
(iv)submitting the NDA for FDA review, which generally must include data from at least two well-controlled clinical trials demonstrating safety and effectiveness, as well as characterization of the drug product and a description of the manufacturing process, controls and facilities;
(v)satisfactory completion of FDA pre-approval inspections regarding the conduct of the clinical trials and manufacturing at the designated facility or facilities in accordance with current Good Manufacturing Practices ("cGMP");
(vi)if applicable, completion of a FDA Advisory Committee meeting in which the FDA requests views and recommendations from outside experts in evaluating the NDA;
(vii)final FDA approval of the full prescribing information, labeling and packaging of the drug product; and
(viii)in some cases, commitments to meet post-approval requirements, including ongoing monitoring and reporting of adverse events related to the drug product, implementation of a Risk Evaluation and Mitigation Strategy ("REMS") program, if applicable, and conduct of any agreed post-marketing requirement or post-marketing commitment studies.
Clinical trials are typically conducted in four sequential phases, although they may overlap. The four phases are as follows:
(i)Phase I trials are typically small (fewer than 100 study subjects and often involving healthy volunteers) and are primarily designed to determine the pharmacokinetics and toxicity of the drug product.
(ii)Phase II trials usually involve 100 to 300 participants and are designed to determine whether the drug product produces any clinically significant effects in patients with the intended disease or condition and to provide further information about safety and dosing. If the results of these trials show promise, then larger Phase III trials may be conducted.
(iii)Phase III trials are often multi-institution studies that involve a large number of participants and are designed to show efficacy and safety in the intended treatment population. Phase III (and some Phase II) trials are designed to be pivotal trials. The goal of a pivotal trial is to establish the safety and efficacy of a drug product with sufficient robustness for purposes of regulatory approval.
(iv)Phase IV studies are conducted following approval. In some cases, the FDA requires post marketing requirement studies or post marketing commitment studies after the NDA has been approved. Such post-marketing clinical studies or surveillance programs are intended to obtain more information about the risks of harm, benefits and optimal use of the drug product by evaluating the results of the drug product in a larger number of patients. The FDA may require post-approval studies either at the time of approval or, if it becomes aware of new safety information, after approval.
A drug manufacturer may conduct clinical trials either in the U.S. or outside the U.S., but in all cases must comply with GCP and must ensure that there is: (i) a legally effective informed consent process when enrolling participants; (ii) an independent review by an Institutional Review Board or ethics committee to minimize and manage the risks of harm to participants; and (iii) ongoing monitoring and reporting of adverse events related to the drug product.
In addition, under the Pediatric Research Equity Act 2003 ("PREA") as amended, all NDAs must include assessments on a drug in pediatric patients unless the applicant receives a waiver or deferral. A drug sponsor may also seek to conduct a clinical trial of a drug product on pediatric patients based on a written request from the FDA in order to obtain a form of marketing exclusivity as permitted under the Best Pharmaceuticals for Children Act 2002, as amended. Under PREA, FDA may require post-approval studies assess the safety and effectiveness of the indication in pediatric patients.
The path leading to FDA approval of a section 505(b)(2) NDA for a drug product that has differences from an already-approved product is somewhat shorter. In a section 505(b)(2) NDA, the drug sponsor relies, in whole or in part, on investigations to which the sponsor does not have a right of reference to establish that its proposed product is safe and effective. For example, a section 505(b)(2) NDA may rely on published literature or on the FDA’s prior finding of safety and effectiveness of another company’s product. Section 505(b)(2) NDAs are typically used for new products with differences from previously approved products such as in dosage forms, dosage strengths, route of administration or indication and where, therefore, an ANDA may not be used. New clinical trial data may also be needed to establish that the proposed product is safe and effective given its differences.
Under the U.S. Prescription Drug User Fee Act 1992, as amended, the FDA has the authority to collect fees from drug manufacturers who submit NDAs and section 505(b)(2) NDAs for review and approval. For U.S. fiscal year 2023, the user fee rate has been set at $3,242,026 for an NDA and $1,621,013 for an NDA not requiring clinical data, generally certain section 505(b)(2) NDAs.
ANDA process
The path leading to FDA approval of an ANDA is very different from that of an NDA. By statute, the drug manufacturer does not complete pre-clinical studies and safety and efficacy clinical trials, and instead focuses on a showing of sameness and bioequivalence to a previously approved Reference Listed Drug (“RLD”), typically a branded drug approved under an NDA. Sameness means, with limited exceptions, the same active ingredient or ingredients, dosage form, strength, route of administration and labeling. Bioequivalence is generally established by studies that involve comparing the absorption rate and concentration levels of a generic drug in the human body to that of the RLD. In the event that the generic drug behaves in the same manner in the human body as the RLD, the two drug products are considered bioequivalent. The FDA considers a generic drug therapeutically equivalent, and therefore the drug is generally substitutable under state pharmacy dispensing law, where it is shown to be the same as and bioequivalent to the RLD. Legislation enacted in most states in the U.S. allows or, in some instances mandates, that a pharmacist dispense an available generic drug that has been rated therapeutically equivalent when filling a prescription for a branded product, in the absence of specific contrary instructions from the prescribing physician. ANDA filings must include information on manufacturing processes, controls and facilities comparable to an NDA.
In 2010, Congress passed into law the Generic Drug User Fee Act to address the FDA’s backlog, which at the time was over 2,000 ANDA filings. This legislation granted the FDA authority to collect, for the first time, user fees from generic drug manufacturers who submit ANDA filings for review and approval, and the fees collected help the FDA fund the drug approval process. For U.S. fiscal year 2022, the user fee rate is set at $225,712 for an ANDA. The FDA will also collect from generic drug manufacturers a separate fee where they reference a so-called Drug Master File for a contract manufacturer, and separate annual manufacturing facility fees for API and finished drug products.
Aside from the backlog described above, the timing of FDA approval of ANDA filings depends on other factors, including whether an ANDA holder has challenged any listed patents to the reference listed drug (the “RLD”) and whether the RLD is entitled to one or more periods of non-patent data or marketing exclusivity under the FFDCA, as discussed elsewhere in this section.
Patent and non-patent exclusivity periods
A sponsor of an NDA is required to identify in its application any patent that claims the drug or a use of the drug subject to the application. Upon NDA approval, the FDA lists these patents in a publication referred to as the Orange Book. Any person that files a section 505(b)(2) NDA that relies upon reference to an approved NDA for which the patents are listed, or an ANDA to secure approval of a generic version of the previously approved drug, must make a certification in respect of listed patents. If the ANDA or section 505(b)(2) NDA applicant certifies that there are no listed patents or that the listed patents have expired, the FDA may approve the application immediately. If the applicant certifies that the patents have not expired, the FDA may only approve the application upon expiry of the patents. Alternatively, the applicant may certify that the listed patents are invalid, unenforceable and/or not infringed by the proposed drug. The applicant must give notice to the holder of the NDA for the RLD and the patent holder (if different) of the bases upon which the patents are challenged. If the NDA holder or patent owner sues the applicant for infringement within 45 days, the FDA may not approve the ANDA or section 505(b)(2) NDA until the earliest of: (i) 30-months after receipt of the notice by the holder of the NDA for the RLD; entry of a district court of appellate court judgment holding the patent invalid, unenforceable or not infringed; such other time as the court may order; or (iv) the expiry of the patent. If an infringement suit is not initiated within 45 days of notice to the NDA holder, the FDA may approve the application immediately.
A key motivation for ANDA applicants to challenge patents is the 180-day market exclusivity period (“generic exclusivity”) granted to the developer of a generic version of a product that is the first to submit an ANDA with a Paragraph IV certification. For a variety of reasons, there are situations in which a company may not be able to take advantage of an award of generic exclusivity. The determination of when generic exclusivity begins and ends is complicated, and is subject to several forfeiture provisions.
The holder of the NDA for the RLD may also be entitled to certain non-patent exclusivity during which the FDA cannot accept for filing or approve an application for a competing generic product or section 505(b)(2) NDA product. Generally, if the RLD is a new chemical entity, the FDA may not accept for filing any application that references the innovator’s NDA for five years from the approval of the innovator’s NDA. However, this five-year period is shortened to four years where an applicant’s ANDA includes a Paragraph IV certification, and the 30-month stay on FDA approval is lengthened accordingly. In other cases, where the innovator has provided certain clinical study information essential for approval, the FDA may accept for filing, but may not approve, an ANDA or section 505(b)(2) application that references the corresponding aspect of the innovator’s NDA for a period of three years from the approval of the innovator’s NDA. Certain additional periods of exclusivity may be available, such as orphan exclusivity if the RLD is indicated for use in a rare disease or condition, or pediatric exclusivity if the RLD is studied for pediatric patients based on a written request from the FDA.
Risk Evaluation and Mitigation Strategies ("REMS")
The FDA has the authority to require the manufacturer to provide a REMS that is intended to ensure that the benefits of a drug product (or class of drug products) outweigh the risks of harm. The FDA may require that a REMS include elements to assure safe use to mitigate a specific serious risk of harm, such as requiring that prescribers have particular training or experience or that the drug product is dispensed in certain healthcare settings. The FDA has the authority to impose civil penalties on or take other enforcement action against any drug manufacturer who fails properly to implement an approved REMS. Separately, there are prohibitions on a drug manufacturer using an approved REMS to delay generic competition. The FDA has been active in instituting class-wide and product-specific REMS for opioid drug products.
The FDA requires a REMS for SUBOXONE Film and for SUBLOCADE Injection. SUBOXONE Film is part of the Buprenorphine Transmucosal Products for Opioid Dependence ("BTOD”) shared REMS program, the goals of which are to: 1) mitigate the risks of accidental overdose, misuse, and abuse, and 2) inform prescribers, pharmacists, and patients of the serious risks associated with buprenorphine-containing products The goal of the SUBLOCADE REMS program is to mitigate the risk of serious harm
or death that could result from intravenous self-administration by ensuring healthcare settings and pharmacies are certified and only provide SUBLOCADE directly to a healthcare provider for administration by a healthcare provider to the patient.
Other products for which the Group secures NDA approval in the U.S. in the future may become subject to a REMS specific to the product or shared with other products in the same class of drug, if FDA determines that additional steps beyond labeling are required to help ensure the benefits of the medication outweighs its risks.
Quality assurance requirements
The FDA enforces requirements to ensure that the methods used in, and the facilities and controls used for, the manufacture, processing, packaging and holding of drugs conform to cGMP. The cGMP requirements that the FDA enforces are comprehensive and cover all aspects of manufacturing operations, from receipt of raw materials to finished product distribution, and are designed to ensure that the finished products meet all the required identity, strength, quality and purity characteristics. Ensuring compliance requires a continuous commitment of time, money and effort in all operational areas.
The FDA conducts pre-approval and post-approval inspections of facilities engaged in the development, manufacture, processing, packaging, testing and holding of the drugs subject to NDAs and ANDA filings. Prior to approval, if the FDA concludes that the facilities to be used do not or did not meet cGMP, it will not approve the application. Corrective actions to remedy the deficiencies must be performed and are usually verified in a subsequent inspection.
The FDA also conducts periodic post-approval inspections of drug manufacturing facilities to assess their cGMP status. Adverse inspections can lead to FDA inspection observations, warning letters, seizure, recalls, injunctions, and shutdown of facilities. In addition, where products or components for manufacturing are being imported into the U.S., the FDA may issue an import alert to prevent shipments into the country. In addition, if the FDA concludes that a company is not in compliance with cGMP requirements, sanctions may be imposed that include preventing that company from receiving the necessary licenses to export its products, preventing further approvals for applications involving the facility or facilities and issue and classifying that company as an “unacceptable supplier,” thereby disqualifying that company from selling products to governmental agencies.
Reporting requirements
Pharmaceutical manufacturers are subject to adverse event reporting requirements during clinical trials and following approval, with expedited reporting for certain serious adverse events and periodic reporting for other adverse events. To comply with these requirements, manufacturers must have robust procedures for surveillance, receipt, evaluation and reporting of adverse events. Manufacturers must also submit annual reports to FDA for each approved product, and field alert reports where there is a quality or labeling issue with a product already distributed to the market.
Labeling and marketing
For all pharmaceuticals sold in the U.S., the FDA and other regulatory and law enforcement bodies also regulate sales and marketing to ensure that drug product claims made by manufacturers are not false, misleading or otherwise improper. Manufacturers are required to file copies of all product-specific promotional materials with the FDA’s Office of Prescription Drug Promotion at the time of their first use. Failure to implement a robust internal company review process and to comply with FDA requirements regarding labeling and promotion increases the risk of enforcement action by the FDA, the DOJ, or the states.
In addition, the FDA has the authority to require labeling changes after approval of a drug if it becomes aware of new safety information.
Import and export requirements
To import pharmaceuticals into the U.S., the importer must file an entry notice and bond with the Customs and Board Protection (“CBP”). All drugs are subject to FDA examination before release by the CBP. Any article that appears to be in violation of the FFDCA may be refused admission and a notice of detention and hearing may be issued. If the FDA ultimately refuses admission, the CBP may issue a notice for redelivery and assess liquidated damages for up to three times the value of the drugs.
Products for export from the U.S. are subject to foreign countries’ import requirements and the exporting requirements of the FDA. For example, international sales of drugs manufactured in the U.S. that are not approved by the FDA for use in the U.S. are subject to FDA export requirements. FDA will provide a certificate of pharmaceutical product ("eCPP") directly to a requesting country to provide assurance that the product has been approved for export from the U.S. and that the manufacturing facilities are in compliance with cGMP. To obtain this certificate, the drug manufacturer must apply to the FDA.
Drug Enforcement Administration
The U.S. Drug Enforcement Agency (“DEA”) is the federal agency in the U.S. responsible for enforcement of the Controlled Substances Act (“CSA”). The CSA classifies drugs and other substances based on identified potential for dependence and abuse. Schedule I controlled substances are those with a high abuse potential and have no currently accepted medical use; thus they cannot be lawfully marketed or sold. Schedule II/IIN substances have a high potential for abuse which may lead to severe psychological or physical dependence. Many narcotics and stimulants are Schedule II controlled substances. Schedule III/IIN substances have a potential for abuse less than substances in Schedules I or II and abuse may lead to moderate or low physical dependence or high psychological dependence. Examples of Schedule III substances are products containing not more than 90 milligrams of Codeine® per dosage (Tylenol® with Codeine®) and buprenorphine, the active ingredient in SUBLOCADE and SUBOXONE. Consequently, the manufacture, storage, distribution and sale of these substances are all highly regulated.
DEA regulations make it extremely difficult for a manufacturer in the U.S. to import finished dosage forms of controlled substances manufactured outside the U.S., particularly for Schedule II controlled substances and narcotics in other Schedules. These rules reflect a broader enforcement approach by the DEA to regulate the manufacture, distribution and dispensing of legally-produced controlled substances. Accordingly, drug manufacturers who market and sell finished dosage forms of controlled substances in the U.S. often manufacture or have them manufactured in the U.S.
The DEA also requires drug manufacturers to design and implement a system that identifies suspicious orders of controlled substances, such as those of unusual size, those that deviate substantially from a normal pattern and those of unusual frequency, prior to completion of the sale. A compliant suspicious order monitoring system includes well-defined due diligence, “know your customer” efforts and order monitoring.
To meet its responsibilities, the DEA conducts periodic inspections of registered establishments that handle controlled substances. Annual registration is required for any facility that manufactures, tests, distributes, dispenses, imports or exports any controlled substance. The facilities must have the security, control and accounting mechanisms required by the DEA to prevent loss and diversion. Failure to maintain compliance, particularly as manifested in loss or diversion, can result in regulatory action. The DEA may seek civil penalties, refuse to renew necessary registrations or initiate proceedings to revoke those registrations. In certain circumstances, violations could lead to criminal proceedings.
Individual states also regulate controlled substances, and manufacturers, distributors and third-party active pharmaceutical ingredient suppliers and manufacturers, are subject to such regulation by several states with respect to the manufacture and distribution of these products.
Government benefit programs
Statutory and regulatory requirements for Medicaid, Medicare, Tricare (the uniformed services healthcare program for active duty service members, active duty family members, National Guard and Reserve members and their family members, retirees and retiree family members, survivors, and certain former spouses worldwide) and other government healthcare programs govern provider reimbursement levels for government beneficiaries, including requiring that pharmaceutical companies pay rebates to individual states based on Medicaid utilization of the manufacturer’s products. The federal and state governments may continue to enact measures in the future aimed at containing or reducing payment levels for prescription pharmaceuticals paid for in whole or in part with government funds.
From time to time, legislative or regulatory changes are made to government healthcare programs that impact our business. For example, the Medicare Prescription Drug Improvement and Modernization Act 2003 (“Medicare Part D”) created a new out-patient prescription drug coverage program for people with Medicare through a new system of private market drug benefit plans. This law provides an out-patient prescription drug benefit to seniors and individuals with disabilities in the Medicare program.
Further, on August 16, 2022, President Biden signed into law the Inflation Reduction Act of 2022, or IRA, which, among other things, requires the U.S. Department of Health and Human Services Secretary to negotiate, with respect to Medicare units and subject to a specified cap, the price of a set number of certain high Medicare spend drugs and biologicals per year starting in 2026, penalizes manufacturers of certain Medicare Parts B and D drugs for price increases above inflation, and makes several changes to the Medicare Part D benefit, including a limit on annual out-of-pocket costs, and a change in manufacturer liability under the program. Congress continues to consider various policy proposals that may result in pressure on the prices of prescription drugs in the government health programs.
In addition, the Patient Protection and Affordable Care Act (“Affordable Care Act”) has changed the way healthcare services are delivered and financed by both government and private insurers in the U.S. The overall impact of the Affordable Care Act reflects several uncertainties; the impact to our business is largely attributable to changes in the Medicare Part D coverage gap, the imposition of an annual fee on branded prescription pharmaceutical manufacturers and increased rebates payable to state Medicaid programs. There are several other provisions in the legislation that collectively have additional impact, including originator average manufacturer price for new formulations and the expansion of the ceiling prices under section 340B of the Public Health Services Act, as amended, (the “340B Program”) to new entities.
Further, federal policy makers have taken and are expected to continue to try to take steps toward expanding healthcare coverage beyond the Affordable Care Act, which could have ramifications for the pharmaceutical industry. Additional legislative changes, regulatory changes, or guidance could be adopted, which may impact marketing approvals and reimbursement for our products. For example, there has been increasing legislative, regulatory, and enforcement interest in the U.S. with respect to drug pricing practices. There have been several inquiries by the U.S. Congress and proposed and enacted federal and state legislation and regulatory initiatives designed to, among other things, bring more transparency to product pricing, evaluate the relationship between pricing and manufacturer patient programs, and reform government healthcare program reimbursement methodologies for drug products.
Healthcare fraud and abuse laws; Privacy
We are subject to various federal, state and local laws targeting fraud and abuse in the healthcare industry. For example, in the U.S., there are federal and state anti-kickback laws that prohibit the payment or receipt of kickbacks, bribes or other remuneration intended to induce the purchase or recommendation of healthcare products and services covered by government healthcare programs or reward past purchases or recommendations. In addition, the federal False Claims Act prohibits presenting or causing to be presented a false claim for payment by a federal healthcare program, and this law has been interpreted to include claims caused by improper drug manufacturer product promotion or the payment of
kickbacks. Under the Sunshine Act and related provisions of the Affordable Care Act, we must report to the federal government information on payments and transfers of value made to physicians and certain healthcare institutions, and also on drug samples distributed. In addition, if we receive protected patient health information, it may be subject to federal or state privacy laws. Violations of these laws can lead to civil and criminal penalties, including fines, imprisonment and exclusion from participation in federal healthcare programs. These laws apply to hospitals, physicians and other potential purchasers of our products and are potentially applicable to us as both a manufacturer and a supplier of products reimbursed by federal healthcare programs. In addition, some states in the U.S. have enacted compliance and reporting requirements that apply to drug manufacturers.
We must comply with the FCPA worldwide and similar anti-bribery laws in non-U.S. jurisdictions such as the U.K. Bribery Act of 2010, which generally prohibit companies and their intermediaries from making improper payments to non-U.S. officials for the purpose of obtaining or retaining business. Because of the predominance of government-sponsored healthcare systems around the world, most of our customer relationships outside the U.S. are with governmental entities and are therefore subject to such anti-bribery laws. See also, “Item 3.D. Risk Factors—We are subject, directly or indirectly, to a variety of U.S. and international laws and regulations related to fraud and abuse and transparency. Enforcement actions under such laws have increased in recent years. If we fail to comply, or have not fully complied, with such laws, we could face substantial penalties.” European Union and UK
Overview
In the EU and UK, medicinal products are subject to extensive pre- and post-marketing regulation by regulatory authorities at both the EU and national levels. Additional rules also apply at the national level relating specifically to controlled substances.
Following a referendum in 2016, the UK formally left the EU on January 31, 2020 and the transition period, during which EU laws continued to apply to the UK, expired on December 31, 2020.
A significant proportion of the regulatory framework in the UK applicable to medicinal products is currently derived from European Union Directives and Regulations, and since January 1, 2021, the EU laws which have been transposed into UK law through secondary legislation continue to be applicable in the UK as retained EU law, although any new EU law developments have ceased to apply in the UK from that date. The divergence between the UK and the EU regimes increases as time passes, including for example, with respect to EU law developments to which the UK is not subject, such as the Clinical Trials Regulation. There have been no new significant legislative enactments in the UK since its exit from the EU with respect to medicinal products which would materially deviate the UK’s overall regulatory position from the EU law at the time the UK exited the EU. However, there are important procedural and other differences, such as the requirement to obtain a UK-specific marketing authorization, for example.
There are several ongoing UK government consultations relevant to medicinal products, most notably with respect to clinical trials and the future regulatory landscape in the UK is uncertain. In addition, a draft bill has recently been published by the UK government (the so-called “Brexit Freedoms Bill”), which would, if passed, mean among other things that retained EU law would cease to apply. However, that bill is at a very early stage, is subject to change and has already been subject to fierce political opposition,
The position in Northern Ireland differs in certain respects from that of the rest of the United Kingdom (England, Scotland and Wales) as Northern Ireland has chosen to retain some EU rules following the UK’s departure from the EU.
Clinical trials and marketing approval
Clinical trials of medicinal products in the EU must be conducted in accordance with EU and national regulations and the International Council for Harmonization (“ICH”) guidelines on GCP. Prior to
commencing a clinical trial, the sponsor must obtain a clinical trial authorization from the competent authority and a positive opinion from an independent ethics committee. The application for a clinical trial authorization must include, among other things, a copy of the trial protocol and an investigational medicinal product dossier containing information about the manufacture and quality of the medicinal product under investigation.
Under the EU Regulation on Clinical Trials (Regulation (EU) 536/2014) which came into force as of January 31, 2022, and replaces the existing Directive 2001/20/EC, a centralized procedure is in place where the sponsor submits the application for a clinical trial through an EU portal. The application is then evaluated and approved or rejected by the respective member state where the trial is to take place. If more than one member state is concerned, the application will be reviewed in a coordinated process with one member state acting as “reporting” member state. Any subsequent substantial changes to the trial protocol or other information submitted with the clinical trial applications must be approved by the member states concerned. The EU Regulation on Clinical Trials provides for certain transitional rules for clinical trials applied for before it came into effect and gives sponsors a choice as to whether to apply the previous rules until January 31, 2023.
The UK regulatory framework in relation to clinical trials is derived from secondary national UK legislation implementing the EU Directive 2001/20/EC. The UK is not subject to the new EU Regulation on Clinical Trials and the details of the future regulation of clinical trials in the UK are as yet uncertain. There was a government consultation in January 2022 and the outcome is yet to be published.
After completion of the required clinical testing, a drug manufacturer must obtain a marketing authorization in line with Regulation EC 726/2004 (and as transposed into national laws) before it may place its medicinal product on the market in the EU. There are various application procedures available depending on the type of product involved. The centralized procedure gives rise to marketing authorizations that are valid throughout the EU and, by extension (after national implementing decisions), in Norway, Iceland and Liechtenstein, which, together with the EU member states, comprise the EEA. Applicants file marketing authorization applications with the EMA where they are reviewed by a relevant scientific committee, in most cases the Committee for Medicinal Products for Human Use (“CHMP”). The EMA forwards CHMP opinions to the European Commission, which uses them as the basis for deciding whether to grant a marketing authorization. The centralized procedure is compulsory for medicinal products that (i) are derived from biotechnology processes; (ii) contain a new active substance (not yet approved on November 20, 2005) indicated for the treatment of certain diseases, such as HIV/AIDS, cancer, diabetes, neurodegenerative disorders, viral diseases or autoimmune diseases and other immune dysfunctions; (iii) are orphan medicinal products; or (iv) are advanced therapy medicinal products, such as gene or cell therapy medicines.
For those medicinal products for which the centralized procedure is not available, the applicant must submit marketing authorization applications to the national medicines regulators through one of three procedures: (i) a national procedure, which results in a marketing authorization in a single EU member state; (ii) the decentralized procedure, in which applications are submitted simultaneously in two or more EU member states; and (iii) the mutual recognition procedure, which must be used if the product has already been authorized in at least one other EU member state, and in which the EU member states are required to grant an authorization recognizing the existing authorization in the other EU member state, unless they identify a serious risk to public health. A national procedure is only possible for one-member state; as soon as an application is submitted in a second member state the mutual recognition or decentralized procedure will be triggered. Marketing authorizations granted under a national procedure are also initially valid for five years but can be renewed indefinitely.
Marketing authorization applications for generic medicinal products do not need to include the results of pre-clinical and clinical trials but can instead refer to the data included in the marketing authorization of a reference product for which regulatory data exclusivity has expired. If a marketing authorization is granted for a medicinal product containing a new active substance, that product benefits from eight years of data exclusivity during which generic marketing authorization applications referring to the data of that
product may not be accepted by the regulatory authorities, and a further two years of market exclusivity during which such generic products may not be placed on the market. The two-year period may be extended to three years if during the first eight years a new therapeutic indication with significant clinical benefit over existing therapies is approved.
In the UK, the EU centralized procedure described above no longer applies and a separate application will be required to the UK Medicines and Healthcare products Regulatory Agency (“MHRA”) for a UK marketing authorization. The MHRA may consider marketing authorizations approved in EEA member states through decentralized or mutual recognition procedures, which may accelerate the process of granting a marketing authorization in the UK.
In the EU, companies developing a new medicinal product must agree to a Paediatric Investigation Plan (“PIP”) with the EMA and must conduct pediatric clinical trials in accordance with that PIP unless a waiver applies, for example because the relevant disease or condition occurs only in adults. The marketing authorization application for the product must include the results of pediatric clinical trials conducted in accordance with the PIP, unless a waiver applies, or a deferral has been granted, in which case the pediatric clinical trials must be completed at a later date. Products that are granted a marketing authorization on the basis of the pediatric clinical trials conducted in accordance with the PIP are eligible for a six-month extension of the protection under a supplementary protection certificate (if any is in effect at the time of approval). This pediatric reward is subject to specific conditions and is not automatically available when data in compliance with the PIP are developed and submitted. In the UK, after January 1, 2021, PIP applications were required to be submitted separately to the MHRA though EU PIPs agreed prior to that date were adopted as UK PIPs as at that date. The UK MHRA PIP application system mirrors the EU system and the MHRA has said it will continue to follow the EU guidelines on such applications. The MHRA will take account of whether an EU PIP is already granted when deciding whether to grant a UK PIP. The MHRA strongly encourages parallel submission to EMA and MHRA.
Pharmacovigilance and risk management
The holders of a marketing authorization are subject to extensive pharmacovigilance and risk management obligations under Directive 2001/83/EC and Regulation EC 726/2004.
According to EMA, pharmacovigilance “is the science and activities relating to the detection, assessment, understanding and prevention of adverse effects or any other medicine-related problem.” In the EU and the UK, the holders of a marketing authorization must establish and maintain a pharmacovigilance system with the overall aim to monitor and ensure the safety of a medicinal product and appoint an individual qualified person for pharmacovigilance who is responsible for oversight of that system. They are also required to establish and maintain a pharmacovigilance system master file detailing the pharmacovigilance system. On request, the system master file must be made available to the competent authorities for inspection. In the UK, if the qualified person does not reside or operate in the UK, there will need to be a national pharmacovigilance contact person who does reside or operate in the UK. Key pharmacovigilance obligations include the recording of suspected serious adverse reactions to the medicinal product in and outside the EU and promptly reporting them through the centralized EudraVigilance database. In addition, the holders of a marketing authorization are required to submit periodic safety update reports ("PSURs").
All new marketing authorization applications must include an RMP describing the risk management system that the holder of the marketing authorization will put in place and documenting measures to prevent or minimize the risks associated with the product. The regulatory authorities may also impose specific obligations as a condition of the marketing authorization. Such risk-minimization measures or post-authorization obligations may include additional safety monitoring, more frequent submission of PSURs or the conduct of additional clinical trials or post-authorization safety studies.
Promotional restrictions
In the EU and UK, all advertising and promotional activities for the product must be consistent with the approved summary of product characteristics, and therefore all off-label promotion is prohibited. Direct-to-consumer advertising of prescription medicines is also prohibited. Although general requirements for advertising and promotion of medicinal products are established under EU and UK legislation, the details are governed by national regulations and can differ from one country to another.
Manufacturing and importing
Medicinal products may only be manufactured in the EU, or imported into the EU from another country, by the holder of a manufacturing authorization. The manufacturer or importer must comply with the EU GMP and have a qualified person who is responsible for certifying that each batch of product placed on the market in a member state has been manufactured in accordance with the laws in force in that member state and in accordance with the requirements of the marketing authorization. If a medicinal product is imported from outside the EU, each batch of product has to undergo a full qualitative analysis, a quantitative analysis of at least all the active substances and all the other tests or checks necessary to ensure the quality of medicinal products in accordance with the requirements of the marketing authorization. Manufacturing facilities are subject to periodic inspections by the competent authorities for compliance with EU GMP and may, if products are produced for another market, also be subject to inspections under the GMP requirements applicable in that market. The position in the UK is broadly equivalent, save that a UK specific manufacturer’s license is required from the MHRA (in addition to the UK marketing authorization), which also requires compliance with EU GMP. For the purposes of EU legislation, the UK is now classified as a “third country.”
The manufacture, import, export, storage, distribution and sale of controlled substances are subject to additional regulation at the national level in the EU and UK. In many EU member states, the regulatory authority responsible for medicinal products is also responsible for controlled substances. In the UK and in certain EU member states, responsibility is split and in the UK the Home Office is responsible for controlled substances while the MHRA is responsible for medicinal products. Generally, any company manufacturing or distributing a medicinal product containing a controlled substance in the EU or UK will need to hold a controlled substances license from the competent national authority and will be subject to specific record-keeping and security obligations. Separate import or export certificates are required for each shipment into or out of the country.
Pricing and reimbursement
Pricing and reimbursement remain mostly within the discretion of the respective member state. However, the member states must at least comply with the Transparency Directive (Directive 89/105/EEC), which primarily provides procedural obligations. Governments influence the price of medicinal products in the EU and the UK through pricing and reimbursement rules and control of national healthcare systems that fund a large part of the cost of those products to patients. Some member states operate positive and negative list systems under which products may only be marketed once a reimbursement price has been agreed. To obtain reimbursement or pricing approval, some of these member states may require the completion of clinical trials that compare the cost-effectiveness of a particular product candidate to currently available therapies. Other countries allow companies to fix their own prices for medicinal products but monitor and control company profits. Such differences in national pricing regimes may create price differentials across Europe. The downward pressure on healthcare costs in general, particularly prescription medicines, has become intense. As a result, barriers to entry of new products are becoming increasingly high and patients are unlikely to use a drug product that is not reimbursed by their government.
In addition, in most European countries, physicians are encouraged or even required to prescribe generic rather than branded products and many governments also advocate generic substitution by
requiring or permitting pharmacists to substitute a different company’s generic version of the branded drug product that was originally prescribed.
Rest of the world
Current markets
After the U.S. and Europe, our largest markets are Canada and Australia, where we market our products pursuant to standards set by Health Canada and the Therapeutic Goods Administration, respectively. We also market our products in certain other developed countries. The laws, guidelines and standards promulgated by the relevant regulatory authorities that regulate the development, testing, manufacturing, marketing and selling of pharmaceuticals in each of these jurisdictions are broadly similar to those in the U.S. and Europe, although the precise requirements may vary from country to country.
We also market our products in various emerging markets, where regulatory review and oversight processes continue to evolve. At present, such countries typically require prior regulatory approval or marketing authorization from large, developed markets (such as the U.S.) before they will initiate or complete their review. Some countries also require the applicant to conduct local clinical trials as a condition of marketing authorization. Many emerging markets continue to implement measures to control drug product prices, such as implementing direct price controls or advocating the prescribing and use of generic drugs.
Environmental
Our Fine Chemical Plant manufactures the buprenorphine hydrochloride (“HCl”) active pharmaceutical ingredient used in the formulation of SUBLOCADE long-acting injection, SUBOXONE Film, SUBUTEX Tablet, SUBOXONE Tablet, and BUPRENEX. The FCP utilizes caustic materials as part of the manufacturing process, as well as a thermal reaction; however, these aspects of the process are tightly controlled and, we believe, represent low risk to the surrounding environment.
Our operations, like those of other pharmaceutical companies, involve the use of substances regulated under environmental laws, primarily in manufacturing processes and, as such, we are subject to numerous federal, state, local and non-U.S. environmental protection and health and safety laws and regulations. Certain environmental laws can impose strict liability (that is, liability imposed without regard to fault) and joint and several liability on current or previous owners of real property and current or previous owners or operators of facilities for the costs of investigation, removal or remediation of hazardous substances or materials at such properties or at properties at which parties have disposed of hazardous substances. These agencies may require that we reimburse the government for costs incurred at these sites or otherwise pay for the cost of investigation and clean-up of these sites, including compensation for damage to natural resources. Environmental laws are complex, frequently amended and have generally become more stringent over time.
Human Capital
Our goal is to be an employer of choice and provide a fair, equitable, and conducive working environment free from discrimination and harassment. Indivior regards its employees as fundamental to its long-term success and provides a variety of training, development, and communication programs to ensure its business activities are always conducted in line with its guiding principles and stakeholder expectations.
At Indivior, we value our distinctive culture and believe it is a key source of sustainable competitive advantage. We believe diversity and inclusion in its broadest sense supports innovation, continuous improvement of quality, and increased speed and efficiency in meeting the various needs of patients, customers and stakeholders.
Our Diversity and Inclusion Policy, which applies to the Board and our workforce, reflects our beliefs and values. Supporting and promoting the diversity of our people is an important priority for the Group, and we have focused on developing an inclusive culture that values all employees regardless of their age, disability, gender, race, sexual orientation or other protected characteristics. We achieve this through an ongoing focus on creating an environment that allows our talented people to prosper and a framework of policies and practices that promote equal opportunities in all areas of employment.
Our 50-person Culture & Inclusion Champions network is well established and has helped us to implement many initiatives aimed at strengthening our diversity and inclusion practices and building on our culture. We also conduct an annual survey of employees to monitor engagement levels and act on feedback received through this process. At the end of 2022, we were awarded the Great Place To Work Certification for all countries entered: Australia, Canada, France, Germany, Italy, Sweden, the United Kingdom, and the United States.
The table below sets forth the average monthly number of persons employed by the Group, including Directors, by business function during the years indicated.
| | | | | | | | | | | | | | | | | | | | |
| Business function | | 2022 | | 2021 | | 2020 |
| Operations | | 675 | | 573 | | 567 |
| Management | | 178 | | 164 | | 168 |
| Research and development | | 75 | | 65 | | 84 |
| Average number of employees | | 928 | | 802 | | 819 |
At March 31,2023 the Group employed 995 people worldwide. Of these, 695 were located in the United States, 268 were located in Europe, the Middle East, Africa, or Canada, and 32 were located in Australia.
Certain of our employees are represented by unions or works councils. We believe that we have a good relationship with our employees and with the unions and works councils that represent certain employees.
We strive to promote diversity, inclusion and equal opportunity across the organization. Women or minorities hold a third (4 of 12) of the seats on our Board of Directors. As of December 31, 2022, 52% of our employees were women. Additionally, 28% of senior managers (including members of our Executive Committee who are not directors of Indivior PLC and directors of each subsidiary company) were women.
Addressing the COVID-19 pandemic
In response to COVID-19, the Group established an agile cross-functional response structure and implemented several mitigation and contingency actions to help maintain the functioning of operations across the organization, supply of all products to our patients, and the welfare of our employees. The Group continuously monitors the potential impact on the health and well-being of our employees, as well as the workforce of our key third parties, which ultimately may impact our operations, and ensures our mitigation and contingency actions are as appropriate and effective as possible.
During 2022, Indivior continued to maintain many of the measures it put in place in 2020 for the health, welfare and safety of its employees during the COVID-19 pandemic. These measures were tailored to the specific circumstances of each workforce group and site, such as, for example, workers at the FCP in Hull in the United Kingdom or sales force representatives working in communities across the U.S. In 2020, the FCP also put in place a comprehensive risk management process tailored to current circumstances and prevailing UK government regulations that is still in operation.
Indivior’s management team is mindful of its employees’ expectations following the working environment changes and experiences that resulted from the global COVID-19 pandemic. Indivior continues to promote flexible ways of working including a new collaboration model where eligible
employees work three core days within the working week in office and the remaining two days can be remote. Given the shift to a remote working environment started in 2020, the Group continues to closely monitor cybersecurity threats and the overall operating effectiveness of the monitoring and control activities.
See “Item 3.D, Risk Factors”, “Risks Related to our Financial Condition and Tax Matters—The COVID-19 pandemic and governmental and societal responses thereto have adversely affected our business, results of operations and financial condition, and the continuation of the pandemic or the outbreak of other health epidemics could harm our business, results of operations, and financial condition.” Corporate Governance
We provide information with respect to our Board of Directors, Executive Officers and corporate governance policies and principles on our Investor Relations website, www.Indivior.com/en/Investors. Specifically, the Group makes available on its Investor Relations website, under the heading "Governance & Responsibility" (i) its codes of conduct or ethics for the Board, senior financial officers, and employees, and (ii) the terms of reference (committee charters) of the Group’s board committees. If the Group makes changes in, or provides waivers from, the provisions of any of its codes of ethics that the SEC requires it to disclose, the Group intends to disclose these events in the "Governance & Responsibility" section of its Investor Relations website.
C.Organizational Structure
Indivior PLC is the ultimate holding company of the Group. The following table sets out details of the Group’s significant subsidiaries as of March 31, 2023:
| | | | | | | | | | | | | | |
Name | | Country of incorporation or registration | | Proportion of Ownership Interest |
| RBP Global Holdings Limited | | England and Wales | | 100% |
| Indivior UK Limited | | England and Wales | | 100% |
| Indivior Europe Limited | | Ireland | | 100% |
| Indivior Inc. | | U.S. | | 100% |
| Indivior Treatment Services, Inc. | | U.S. | | 100% |
| Indivior Finance Sarl | | Luxembourg | | 100% |
D.Property, Plant and Equipment
The following table contains information regarding existing or planned material tangible fixed assets owned or leased by the Group.
| | | | | | | | | | | | | | | | | | | | |
| Location | | Tenure | | Principal use | | Size |
Richmond, Virginia | | Lease | | Office space | | 72,602 square feet |
Hull, England | | Owned(1) | | Office space, research facility and manufacturing facility | | 70,808 square feet |
Fort Collins, Colorado | | Lease | | Office space and research facility | | 41,600 square feet |
Slough, England | | Lease | | Office space | | 20,912 square feet |
| Santa Monica, California | | Lease | | Office space | | 7,863 square feet |
| London, England | | Lease | | Office space and research facility | | 1,696 square feet |
_____________
(1)The Hull, England property is leased for 150 years and accounted for as owned.
ITEM 4A: UNRESOLVED STAFF COMMENTS
None.
ITEM 5: OPERATING AND FINANCIAL REVIEW AND PROSPECTS
The following discussion of our financial condition and results of operations should be read in conjunction with the audited consolidated financial statements as of December 31, 2022, 2021 and 2020 and for each of the three years ended December 31, 2022 (the “Consolidated Annual Financial Statements”) and the Unaudited Condensed Consolidated Interim Financial Statements for the three months ended March 31, 2023 and 2022 (the “Q1 Interim Results”) and related notes (together, the “historical financial information”). The historical financial information has been included in “Item 18. Financial Statements.” The following discussion should also be read in conjunction with other information relating to our business contained in this registration statement, including “Item 3.D. Risk Factors.” The Historical Financial Information has been prepared in accordance with IFRS as issued by the International Accounting Standards Board.
The following discussion includes forward-looking statements that reflect our plans, estimates and beliefs and involves risks and uncertainties. Our actual results could differ materially from those discussed in these statements. Factors that could cause or contribute to these differences include, but are not limited to, those discussed below and elsewhere in this registration statement, particularly in “Item 3.D. Risk Factors.” References below to “2022”, “2021,” and “2020” are for the financial years ended December 31, 2022, 2021, and 2020, respectively. References to “Q1 2023” and “Q1 2022” are for the three-month financial periods ended March 31, 2023 and 2022, respectively.
A.Operating Results
The following table summarizes our key measures of financial condition and results of operations for the periods under review:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the three months ended
March 31, | | For the years ended
December 31, |
| (in millions, except per share data) | | 2023 | | 2022 | | % Change | | 2022 | | 2021 | | 2020 | | % Change 2022-2021 | | % Change 2021-2020 |
| Net revenues | | $ | 253 | | $ | 207 | | 22% | | $ | 901 | | $ | 791 | | $ | 647 | | 14% | | 22% |
Operating profit(1) | | $ | 57 | | $ | 54 | | 6% | | $ | (85) | | $ | 213 | | $ | (156) | | NM | | NM |
Adjusted operating profit(2) | | $ | 71 | | $ | 54 | | 31% | | $ | 212 | | $ | 187 | | $ | 88 | | 13% | | 113% |
Net income(1) | | $ | 44 | | $ | 41 | | 7% | | $ | (53) | | $ | 205 | | $ | (148) | | NM | | NM |
Adjusted net income(2) | | $ | 56 | | $ | 41 | | 37% | | $ | 169 | | $ | 140 | | $ | 59 | | 21% | | 137% |
Earnings per share - basic(1)(2) | | $ | 0.32 | | $ | 0.29 | | 10% | | $ | (0.38) | | $ | 1.41 | | $ | 1.01 | | NM | | NM |
Adjusted earnings per share - basic(1)(2) | | $ | 0.41 | | $ | 0.29 | | 41% | | $ | 1.22 | | $ | 0.96 | | $ | 0.40 | | 27% | | 140% |
________________
(1)On October 10, 2022, Indivior PLC completed a 5:1 share consolidation. The Company’s basic and diluted weighted average number of shares outstanding, basic (loss)/earnings per share, and diluted (loss)/earnings per share reflect the share consolidation for all periods presented. See the Audited Consolidated Financial Statements, Note 23, Share Capital and Note 15, Share Capital in the Unaudited Condensed Consolidated Interim Financial Statements for further discussion.
(2)Adjusted Basis excludes the impact of the items. See “Item 5. Operating and Financial Review and Prospects — Exceptional Items and Adjusted Results” for a discussion of the items excluded from our adjusted results and “Item 5. Operating and Financial Review and Prospects — Non-IFRS Measures” for the definition of adjusted operating profit, adjusted net income, adjusted earnings per share, a reconciliation of this metric to a reported IFRS measure for the periods presented and an explanation of why we believe this metric provides useful information to investors regarding our financial condition and results of operations. Adjusted results are not a substitute for, or superior to, reported results presented in accordance with International Financial Reporting Standards. For the periods under review, the Group operated as one business segment, which is predominantly the development, manufacture, and sale of buprenorphine-based prescription drugs for the treatment of opioid dependence and related disorders. Substantially all our net revenues for such periods were derived from sales of SUBLOCADE and other buprenorphine-based sublingual products (including SUBOXONE Film and SUBOXONE tablet). SUBLOCADE accounted for 45% of our net revenues in 2022 (2021: 31%, 2020: 20%) and 52% of our net revenues in Q1 2023 (Q1 2022: 41%). Other buprenorphine-based sublingual products accounted for 52% of our net revenues in 2022 (2021: 67%, 2020: 78%) and 45% of our net revenues in Q1 2023 (Q1 2022: 57%). In the U.S. market for buprenorphine-based treatments for opioid dependence, SUBOXONE Film had an average market share of approximately 19% in Q1 2023 (Q1 2022: 22%) and 19%, 22% & 21% in FY 2022, 2021, and 2020.
The U.S. market is the largest contributor to our net revenues. The following table sets out a breakdown of net revenue as between the U.S. and the rest of the world.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the three months ended
March 31, | | For the years ended
December 31, |
| (in millions) | | 2023 | | 2022 | | % Change | | 2022 | | 2021 | | 2020 | | 2022-2021 % Change | | 2021-2020 % Change |
| United States | | 209 | | | 165 | | | 27 | % | | 731 | | | 603 | | | 456 | | | 21 | % | | 32 | % |
| Rest of world (including United Kingdom) | | 44 | | | 42 | | | 5 | % | | 170 | | | 188 | | | 191 | | | (10) | % | | (2) | % |
Total Indivior Group net revenue | | $ | 253 | | | $ | 207 | | | 22 | % | | $ | 901 | | | $ | 791 | | | $ | 647 | | | 14 | % | | 30 | % |
Key factors affecting operating results
Acquisition of Opiant Pharmaceuticals, Inc.
On March 2, 2023, the Group acquired Opiant Pharmaceuticals, Inc. (Opiant), a publicly traded company in the United States, for $146 million. As a result of the acquisition, the Group will add the pipeline product OPVEE, nasal nalmefene, an opioid overdose treatment with clinically demonstrated characteristics well-suited to confront illicit synthetic opioids like fentanyl, to its addiction treatment and science portfolio.
The unaudited condensed consolidated interim financial statements for the three months ended March 31, 2023 include the results of operations of the acquisition of Opiant since the acquisition date. As substantially all of the fair value of the gross assets acquired was concentrated in the value of one in-process research and development asset, the acquisition was accounted for as an asset acquisition and total purchase consideration was allocated to the assets acquired and liabilities assumed based on their relative fair values as of the date of acquisition.
Market growth
Our net revenues are impacted by the overall growth of the markets where we operate. Market growth is impacted by increased treatment penetration, which is a function of patient awareness and desire to seek treatment, as well as the number of certified physicians available to deliver treatment. Competitive pressures can drive pricing and can also influence decisions of third-party payors regarding inclusion of products on their list of approved drugs covered by insurance. To increase access to treatment for patients, we engage with government agencies, key opinion leaders in addiction and healthcare
professionals to bring patient outcomes to the forefront of decision making. Additionally, we engage in non-branded marketing to increase awareness for patients and families impacted by addiction on a country-by-country basis as allowed by local regulations.
In Q1 2023, the US buprenorphine medication-assisted treatment (BMAT) market grew in mid-single digits. The Group continues to expect long-term US market growth to be sustained in the mid- to high-single digit percentage range due to increased overall public awareness of the opioid epidemic and approved treatments, together with regulatory and legislative actions that have expanded OUD treatment funding and treatment capacity.
The December 29, 2022 enactment of the Consolidated Appropriations Act, 2023 (P.L. 117-328), including the Mainstreaming Addiction Treatment Act (MAT Act), eliminated the requirement for health care practitioners (HCP) to apply for a separate waiver through the Drug Enforcement Administration (DEA) to dispense certain treatments for maintenance or detoxification of patients with OUD, including buprenorphine. Historically, HCPs treating patients with OUD with buprenorphine had to undertake special additional registration, meet training requirements that did not apply to any other medicine class, and limit the number of patients they could treat. Indivior believes the elimination of these requirements as part of this legislation will help to normalize the chronic disease of addiction and expand access to evidence-based buprenorphine treatment. The Group supports efforts to encourage more HCPs to provide BMAT as a treatment option, and the Group continues to expand its compliance capabilities for the growing number of BMAT prescribers and patients.
Competition
We operate in a highly-competitive industry. While we seek patent and trademark protection where appropriate, several of our branded products face competition from generic products in key markets as well as competition from alternative products or treatments. The introduction of generic or branded products that compete with the Group’s products could impact the market share of the Group’s products and pricing and adversely impact its results. The introduction of generic products typically leads to a loss of sales of a branded product and/or a decrease in the price at which branded products can be sold. Additionally, legislation enacted in the U.S. allows for, and in a few instances in the absence of specific instructions from the prescribing physician mandates, the dispensing of generic products rather than branded products where a generic version is available.
SUBLOCADE is patent protected in the U.S., Australia, Canada, UK, Ireland, France, Germany, Italy, Spain, Denmark, Finland, Norway, the Netherlands, Switzerland, Sweden, Israel, Japan, Mexico and New Zealand. However, Camurus, in partnership with Braeburn, has sought FDA approval of its long-acting injectable buprenorphine product. This product is already well established the Nordics (Norway, Sweden, Finland, and Denmark) and Australia, and available in other parts of Europe. Based on the efforts to date by this competitor in the U.S., we expect their product to become available for sale in the U.S. eventually.
In the U.S. market for buprenorphine-based treatments for opioid dependence, SUBOXONE Film had an average market share of approximately 19% in Q1 2023 (Q1 2022: 22%) and 19%, 22% & 21% in FY 2022, 2021, and 2020.
Our SUBOXONE Film product already faces three generic competitors in the U.S., and a fourth competitor received approval for its product in May 2022 but has not yet launched. We understand that a fifth competitor has been approved to enter the market beginning in 2024. We have seen our market shares of SUBOXONE Film decline from greater than 50% in 2018 to 19% in Q1 2023, and expect further declines if another competing product becomes available. Additionally, we no longer promote SUBOXONE Film in the U.S. In contrast, no generic competition is present in Australia. In Europe and Canada, we have recently launched SUBOXONE Film and it enjoys patent protection until 2030.
Our SUBOXONE and SUBUTEX Tablets face generic competition in most markets. In the EU, generic versions of the SUBUTEX Tablet have been available since 2010 but our branded SUBUTEX Tablet currently maintains a market share of approximately 50.7% (by mg volume) of the mono-buprenorphine
market giving the Group a total market share (mono-buprenorphine and buprenorphine/naloxone) of approximately 55.7%. Further our SUBOXONE and SUBUTEX Tablets face competition from branded oral buprenorphine-based tablets and historically well-established methadone oral formulations.
We launched our PERSERIS long acting injectable for the treatment of schizophrenia in the U.S. in February 2019. While it enjoys patent protection, it faces competition from other long-acting injectables marketed by Johnson & Johnson and Otsuka, as well as generic competition from oral risperidone formulations. We also anticipate the eventual approval of another branded long-acting injectable containing risperidone from an additional competitor, but expect that it will be limited to maintenance treatment of patients already controlled on oral risperidone.
Distribution channels
In the United States, we have distribution agreements with the three largest wholesalers, which accounted for 55% of our global net revenue in Q1 2023 and FY 2022 (2021 and 2020: 57%). These wholesalers, in turn, distribute our products through various channels including the following:
•Commercial managed care. This category comprises insurance programs intended to reduce the cost of providing health benefits and improve the quality of care to their members. One of the most common forms of managed care is the use of a panel or network of healthcare providers that provide care to enrollees. Also within commercial managed care is the Medicare Part D Program, a social insurance program administered by the U.S. government.
•Medicaid. Medicaid is a jointly funded, Federal-State health insurance program that covers children, the aged, blind, and/or disabled and other people who are eligible to receive federally assisted income maintenance payments, including prescription drugs. We are obligated to offer “Best Price” under Medicaid, being the lowest price at which the manufacturer sells a drug to any purchaser in any pricing structure (inclusive of discounts and rebates).
•Federal. This channel encompasses the provision of outpatient drugs to federal government purchasers, including the U.S. Department of Veterans Affairs and the Department of Defense, or under the 340B Program. Pricing discounts are provided separately for drugs provided under these schemes.
•Pharmacy. This channel covers end customers paying cash directly at the pharmacy. Often, we provide discount coupons to customers where cash is used for payment.
In the rest of the world, distribution channels differ by country. For example, in France, we engage with different wholesalers, hospitals, pharmacies and individuals, while in Australia, we engage with a single pre-wholesaler that negotiates the import and onward distribution of the products across the country.
Pricing
We offer various types of price reductions for our products, particularly in the U.S., which are reflected in net revenue. In the U.S., we primarily offer:
•Medicaid, federal and commercial managed care rebates. These are rebates granted to Medicaid, U.S. federal agencies and commercial managed care providers that purchase products from us. The level of these rebates varies by channel and product. Patients covered by commercial insurance often benefit from coupons to reduce any out-of-pocket payments they would otherwise be required to make.
•Fees under distribution agreements. Wholesalers, specialty pharmacies and specialty distributors of the Group’s products are generally offered various forms of consideration, including allowances/discounts, service fees and prompt payment discounts, for distributing the products. Wholesaler and specialty distributor allowances and service fees arise from contractual
agreements and are estimated as a percentage of the price at which the Group sells product to them. In addition, customers are offered a prompt pay discount for payment within a specified contractual period.
•Chargebacks. Discounts that occur when contracted indirect customers purchase directly from wholesalers and specialty distributors. Contracted customers generally purchase a product at its contracted price. The wholesaler or specialty distributor, in turn, then generally charges back to the Group the difference between the wholesale acquisition cost and the contracted price paid to the wholesaler or specialty distributor by the customer.
•Returns. Returns are generally made if the product is damaged, defective, or otherwise cannot be used by the customer. In the United States, the Group typically permit returns six months prior to and up to twelve months after the product expiration date. Outside the United States, returns are only allowed in certain countries on a limited basis.
In Europe, changes to government policy or practices could adversely affect the level of reimbursement through government schemes. In the United States, proposals by legislators at both federal and state levels, regulators, and third-party payors continue to emerge with the aim of keeping healthcare costs down while expanding healthcare benefits. Similarly, in Europe, legislators, policymakers and healthcare insurance funds continue to propose and implement cost-containing measures to keep healthcare costs down, due in part to the attention being paid to healthcare cost containment and other austerity measures in Europe. Certain of these changes could impose limitations on the prices that the Group will be able to charge for its products and any approved product candidates. Further, an increasing number of EU member states and other foreign countries use prices for products established in other countries as “reference prices” to help determine the price of the product in their own territory. Consequently, a downward trend in prices of products in some countries could contribute to similar downward trends elsewhere.
Legal proceedings
The Group’s operations are subject to a wide range of laws and regulations. Perceived or actual non-compliance with these applicable laws and regulations can result in investigations or proceedings leading to civil or criminal sanctions, fines and/or damages. The Group is also a party to several civil lawsuits, including ongoing litigation in the federal False Claims Act allegations, the ANDA Litigation, multidistrict antitrust class and state claims and civil opioid litigation.
We have made provisions for matters that the Group has assessed to be probable of loss. See Note 11, Provisions and Other Liabilities, in the Unaudited Condensed Consolidated Interim Financial Statements under “Multidistrict antitrust class and state claims,” “Intellectual property related matters,” and “Federal False Claims Allegations,” for a discussion of matters in which liabilities or provisions have been recognized. The Group has assessed all other legal and other matters to be not probable based upon current facts and circumstances, including any potential impact the DOJ resolution could have on these matters. Where liabilities related to these matters are determined to be possible, they represent contingent liabilities for which liabilities or provisions have been recognized, Note 12 sets out the contingent liabilities for legal and other disputes for which the Group has assessed as contingent liabilities. Where we believe that it is possible to reasonably estimate a range for the contingent liability this has been disclosed. The Group has settled several regulatory and litigation matters since 2020 requiring contractual payments to be made in future periods. See “Item 5. Liquidity and Capital Resources—Contractual Obligations” for payments to be made related to the settlement of litigation matters, the Group’s Term Loan and contractual lease liabilities.
For further discussion regarding legal proceeding risk, see “Notes to the Unaudited Condensed Consolidated Interim Financial Statements Note 12 Contingent liabilities and Note 13 Legal Proceedings, and “Item 3.D.—Risk Factors.” Key income statement items
Net revenue
Net revenue is generated from sales of pharmaceutical products (i.e. gross revenues), net of rebates, discounts and returns. We estimate and recognize returns, discounts, incentives and rebates in the period in which we recognize the underlying sales, as a reduction of gross revenues.
Cost of sales
Cost of sales includes all costs directly related to bringing products to their final selling destination. It includes purchasing and receiving costs, direct and indirect costs to manufacture products, including materials, labor and overhead expenses necessary to acquire and convert purchased materials and supplies into finished goods. Cost of sales also includes royalties on certain licensed products, inspection costs, depreciation, amortization of intangible assets for marketed products, freight charges and costs to operate equipment.
Selling, general and administrative expenses
Selling, general and administrative expenses comprise personnel costs (primarily, the field sales force), as well as marketing expenses, consulting services, depreciation of fixed assets, travel and other selling and distribution related expenses, corporate overheads and other administrative expenses. Selling, general and administrative expenses also include expenses relating to recognition or release of legal provisions.
Research and development expenses
Research and development expenses comprise internal research costs and external costs of human and animal trials, and corresponding equipment required. Research and development expenditure is expensed as incurred prior to filing for regulatory approval, as the Group has determined that filing for regulatory approval is the earliest point at which a project’s successful outcome can become probable.
Net finance income/(expense)
Net finance income includes interest income on the Group’s cash, cash equivalents and investments. Net finance expenses are the finance costs of borrowings and legal settlements recognized in the income statement over the term of those borrowings and related legal settlement payment periods.
Taxation
Tax charges represent the aggregate amount included in the determination of profit or loss for the year in respect of current tax and deferred tax. Current tax is the amount of income taxes payable (recoverable) in respect of the taxable profit/(loss) for a year. Deferred tax represents the amounts of income taxes payable/(recoverable) in future periods in respect of taxable (deductible) temporary differences and unused tax losses.
Results of operations
The discussion below references certain non-IFRS measures, including adjusted gross profit, adjusted gross margin, adjusted selling, general and administrative expenses, adjusted other operating income, adjusted operating profit, adjusted net finance expense and adjusted net income. These measures are not a substitute for, or superior to, reported results presented in accordance with IFRS. In addition, certain of these non-IFRS measures are adjusted results. Where significant expenses or income
that do not reflect the Group’s ongoing operations are incurred during the year, these items are disclosed as exceptional items (non-recurring and/or non-operating adjustments). These items are excluded from adjusted results consistent with our internal reporting.
See also “Item 5. Operating and Financial Review and Prospects — Exceptional Items and Adjusted Results” for a discussion of the exceptional items excluded from our adjusted results and “Item 5. Operating and Financial Review and Prospects — Non-IFRS Measures” for the definition of adjusted operating profit, adjusted net income, adjusted earnings per share, a reconciliation of this metric to a reported IFRS measure for the periods presented and an explanation of why we believe this metric provides useful information to investors regarding our financial condition and results of operations. The results of operations that follow reflect the historical periods under review and should not be taken as indicative of future performance.
Comparison of three months ended March 31, 2023 and March 31, 2022
| | | | | | | | | | | | | | | | | | | | |
| | For the three months ended
March 31, |
| ($ in millions) | | 2023 | | 2022 | | % Change |
Net Revenues | | 253 | | | 207 | | | 22 | % |
| Cost of sales | | (39) | | | (37) | | | 5 | % |
Gross profit | | 214 | | | 170 | | | 26 | % |
| Selling, general and administrative expenses | | (131) | | | (109) | | | 20 | % |
| Research and development expenses | | (27) | | | (8) | | | 238 | % |
| Net other operating income | | 1 | | | 1 | | | — | % |
Operating profit | | 57 | | | 54 | | | 6 | % |
| Net finance income/(expense) | | 1 | | | (6) | | | (117) | % |
Profit before taxation | | 58 | | | 48 | | | 21 | % |
| Income tax expense | | (14) | | | (7) | | | 100 | % |
Net Income | | $ | 44 | | | $ | 41 | | | 7 | % |
Net revenues. Substantially all our net revenues for such periods were derived from sales of SUBLOCADE, PERSERIS and other buprenorphine-based sublingual products (including SUBOXONE Film and SUBOXONE tablet). SUBLOCADE accounted for 52% of our net revenues in Q1 2023 (Q1 2022: 41%). PERSERIS accounted for 3% of our net revenues in Q1 2023 and 2% Q1 2022. Other buprenorphine-based sublingual products accounted for 45% of our net revenues in Q1 2023 (Q1 2022: 57%). Price changes were insignificant to our net revenues.
On a disaggregated basis, the Group’s net revenue by major product line:
| | | | | | | | | | | | | | | | | | | | |
| | For the three months ended
March 31, |
| ($ in millions) | | 2023 | | 2022 | | % Change |
| SUBLOCADE | | 132 | | | 85 | | | 55 | % |
| PERSERIS | | 8 | | | 5 | | | 60 | % |
| Sublingual (SUBOXONE/Other) | | 113 | | | 117 | | | (3) | % |
Total Indivior Group net revenue | | $ | 253 | | | $ | 207 | | | 22 | % |
Total net revenues increased by $46 million, or 22%, to $253 million in Q1 2023 from $207 million in Q1 2022. The increase was primarily driven by higher net revenues from SUBLOCADE, which increased by $47 million or 55% from Q1 2023, due to continued growth in the buprenorphine medication-assisted treatment market and by our relatively stable market share for SUBOXONE Film in the U.S. Strong year-over-year SUBLOCADE net revenue growth was due to growth in the Organized Health Systems channel
and increased new patient enrollments. SUBOXONE Film share averaged 19% through March 31, 2023 (Q1 2022: 22%) and exited March 2023 at 19% (Q1 2022 exit share: 20%). SUBOXONE Film share performance since the launch of generic buprenorphine/naloxone film products in February 2019 has continued to be higher than historical industry analogs, but we expect an additional generic competitor to enter the U.S. market in the second half of 2023 which may cause further declines in our market share. In Q1 2023, total net revenues from PERSERIS was $8 million, representing a 60% increase from Q1 2022.
The U.S. market is the largest contributor to our net revenues. Sales rebates, discounts and returns and other offsets to gross revenues are reflected in net revenues. The following table sets out a breakdown of net revenue as between the U.S. and the rest of the world.
| | | | | | | | | | | | | | | | | | | | |
| | For the three months ended
March 31, |
| ($ in millions) | | 2023 | | 2022 | | % Change |
| United States | | 209 | | | 165 | | | 27 | % |
| Rest of world (including United Kingdom) | | 44 | | | 42 | | | 5 | % |
Total Indivior Group net revenue | | $ | 253 | | | $ | 207 | | | 22 | % |
In Q1 2023, U.S. net revenue increased by 27% to $209 million as compared to $165 million in Q1 2022. Growth in the overall U.S. buprenorphine medication-assisted treatment market was in-line with Group expectations. Underlying market growth, together with strong year-over-year unit volume growth for SUBLOCADE and PERSERIS drove the net revenue increase. SUBOXONE Film share declined modestly as expected with Q1 2023 average share of 19% versus FY 2022 average share of 20%.
In Q1 2023, net revenue attributable to the rest of the world (including the United Kingdom) increased 5% at actual exchange rates to $44 million from $42 million in Q1 2022. The rest of the world net revenue from SUBLOCADE (under the brand name SUBUTEX XR®) was $9 million (Q1 2022: $6 million). The increase in the rest of the world net revenue was mainly due to higher unit volume growth of SUBLOCADE in existing and new markets, including Finland and Sweden. Growth from SUBLOCADE and SUBOXONE Film was partially offset by ongoing competitive pressure in the legacy tablet business in Western Europe. SUBLOCADE / SUBUTEX Prolonged Release net revenue for Q1 2023 and Q1 2022 in rest of world were $9 million and $6 million (at actual exchange rates), respectively.
Cost of sales. Cost of sales increased by $2 million, or 5%, to $39 million in Q1 2023 from $37 million in Q1 2022 due to increased volumes. Q1 2023 gross margin improvement over the prior year’s period primarily reflects an improved product mix from continued growth of SUBLOCADE, partially offset by cost inflation. Q1 2023 gross margin was also impacted favorably by FX and lower manufacturing write-offs.
Selling, general and administrative expenses. Selling, general and administrative expenses increased by $22 million, or 20%, to $131 million in Q1 2023 from $109 million in Q1 2022. The increase primarily reflects investments to grow the Group’s long-acting injectable (LAI) technologies (SUBLOCADE and PERSERIS), including further investments to grow SUBLOCADE in the U.S. Criminal Justice System, and cost inflation.
Adjusted selling, general and administrative expenses, which we define as selling, general and administrative expenses excluding exceptional items, increased to $14 million in Q1 2023 from $nil million in Q1 2022. Exceptional items of $12 million related to costs associated with the acquisition of Opiant Pharmaceuticals, Inc. and $2 million of additional U.S. listing costs. On an adjusted basis, Q1 2023 SG&A expenses increased 7% to $117 million (Q1 2022: $109 million).
Research and development expenses. Research and development expenses increased by $19 million, or 238%, to $27 million in Q1 2023 from $8 million in Q1 2022. The increase over the prior year's period is primarily due to increased activities related to certain post-marketing studies for SUBLOCADE
and PERSERIS, process validation testing related to LAI capacity expansion, and ongoing early-stage pipeline activities.
Net other operating income. Net other operating income was $1 million in Q1 2023 which reflects a fair value gain on equity investments. Net other operating income in Q1 2022 was $1 million due to net proceeds from the sale of intangible assets.
Operating profit. Operating profit in Q1 2023 was $57 million compared to an operating profit of $54 million in Q1 2022. Adjusted operating profit, which comprises operating profit excluding the exceptional items described above, was $71 million in Q1 2023 compared to $54 million in Q1 2023, respectively. The increase on a reported and adjusted basis primarily reflects strong net revenue growth, partially offset by higher operating expenses, mainly related to increased sales and marketing investments to grow the Group’s long-acting injectable technologies, SUBLOCADE and PERSERIS, along with higher research and development expenses.
Net finance income/expense. Net finance income in Q1 2023 was $1 million (Q1 2022 net finance expense: $6 million). The current period includes interest income of $11 million versus nil in the year-ago period. The increases to finance income and finance expense were due to rising interest rates from the prior year period.
Taxation. Income tax expense in Q1 2023 was $14 million, reflecting an effective tax rate of 24% on the Group’s profits for Q1 2023 as compared with an income tax expense of $7 million in Q1 2022, reflecting an effective tax rate of 15% on the Group’s profits for Q1 2022. The tax expense on Q1 2023 adjusted profits amounted to $16 million, excluding the $2 million tax benefit on exceptional items, which represented an effective tax rate of 22%. There were no exceptional items recorded in the prior period. The increase in the effective tax rate on adjusted profits was primarily driven by the increase in the UK tax rate from 19% to 23.5%, and the temporary reduction in innovation incentives due to 2022 losses.
Comparison of the years ended December 31, 2022 and December 31, 2021
| | | | | | | | | | | | | | | | | | | | |
| | For the years ended
December 31, |
| (in millions) | | 2022 | | 2021 | | % Change |
Net revenues | | $ | 901 | | | $ | 791 | | | 14 | % |
| Cost of sales | | (159) | | | (127) | | | 25 | % |
Gross profit | | 742 | | | 664 | | | 12 | % |
Selling, general and administrative expenses(1) | | (763) | | | (431) | | | 77 | % |
| Research and development expenses | | (72) | | | (52) | | | 38 | % |
| Net other operating income | | 8 | | | 32 | | | (75) | % |
Operating (loss)/profit | | (85) | | | 213 | | | (140) | % |
| Net finance expense | | (10) | | | (23) | | | (57) | % |
(Loss)/profit before taxation | | (95) | | | 190 | | | (150) | % |
| Income tax benefit | | 42 | | | 15 | | | 180 | % |
Net (loss)/income | | $ | (53) | | | $ | 205 | | | (126) | % |
________________
(1)In 2022, the Group recognized a provision of $290 million related to certain multidistrict antitrust class and state claims (refer to Note 21, Legal proceedings for further discussions) and $6 million to settle a dispute over reimbursement of legal costs with a supplier. Net revenues. Substantially all our net revenues for such periods were derived from sales of SUBLOCADE, PERSERIS and other buprenorphine-based sublingual products (including SUBOXONE Film and SUBOXONE Tablet). SUBLOCADE accounted for 45% of our net revenues in 2022 (2021: 31%). PERSERIS accounted for 3% of our net revenues in 2022 (2021: 2%) and other buprenorphine-based sublingual products accounted for 52% of our net revenues in 2022 (2021: 67%). The increase in
net revenues for such periods were attributable to an increase in products sold across all major product lines. Price changes were insignificant to our net revenues.
On a disaggregated basis, the Group’s net revenue by major product line:
| | | | | | | | | | | | | | | | | | | | |
| | For the years ended
December 31, |
| (in millions) | | 2022 | | 2021 | | % Change |
| SUBLOCADE | | 408 | | | 244 | | | 40 | % |
| PERSERIS | | 28 | | | 17 | | | 65 | % |
| Sublingual (SUBOXONE)/Other | | 465 | | | 530 | | | (12) | % |
Total Indivior Group net revenue | | $ | 901 | | | $ | 791 | | | 14 | % |
Total net revenues increased by $110 million, or 14%, to $901 million in 2022 from $791 million in 2021. The increase was primarily driven by higher net revenues from SUBLOCADE, which increased by $164 million or 14% from 2021, due to continued growth in the BMAT market and by our relatively stable market share for SUBOXONE Film in the U.S. Strong year-over-year SUBLOCADE net revenue growth was due to volume growth in the Organized Health Systems channel and increased new patient enrollments. SUBOXONE Film share averaged 20% (2021: 20%) and exited 2022 at 19% (2021 exit share: 22%). In 2022, total net revenues from PERSERIS was $28 million, representing a 65% increase from 2021.
The U.S. market is the largest contributor to our net revenues. Sales rebates, discounts and returns and other offsets to gross revenues are reflected in net revenues. The following table sets out a breakdown of net revenue as between the U.S. and the rest of the world.
| | | | | | | | | | | | | | | | | | | | |
| | For the years ended
December 31, |
| (in millions) | | 2022 | | 2021 | | % Change |
| United States | | 731 | | | 603 | | | 21 | % |
| Rest of world (including United Kingdom) | | 170 | | | 188 | | | (10) | % |
Total Indivior Group net revenue | | $ | 901 | | | $ | 791 | | | 14 | % |
In 2022, U.S. net revenue increased by 21% to $731 million as compared to $603 million in 2021, primarily due to strong growth in net revenue attributable to SUBLOCADE over the same period, the market share resilience of SUBOXONE Film and the underlying BMAT market growth.
In 2022, net revenue attributable to the rest of the world (including the United Kingdom) decreased 10% at actual exchange rates to $170 million from $188 million in 2021. In 2022, positive contributions from product launches in new markets (SUBLOCADE / SUBUTEX Prolonged Release and SUBOXONE Film) were more than offset by unfavorable foreign currency translation and ongoing competitive pressure on legacy tablet products. In 2022, SUBLOCADE / SUBUTEX® Prolonged Release net revenue in ROW was $27 million (at actual exchange rates), respectively. Net revenue at a constant exchange rate is an alternative performance measure used by Management to evaluate underlying performance of the business and is calculated by applying the 2021 exchange rate to net revenue in the currency of the foreign entity. Please refer the Non-IFRS Measures section below for further discussion.
We estimate provisions for rebates, discounts and returns based on contractual arrangements with customers or terms of the regulations and/or agreements applicable for transactions with healthcare authorities, and in some cases on assumptions about the attainment of targeted volumes. We recognize returns, discounts, incentives and rebates in the period in which we recognize the underlying sales, as a reduction of gross revenues and as current liabilities on our consolidated balance sheets under trade and other payables. The outstanding amounts are affected by changes in gross sales, the provision for net product sales deductions and timing of payments/credits. Estimates, assumptions and judgements
applied to determine the provision for rebates, discounts and returns are set out in “Item 18. the Audited Consolidated Financial Statements—Note 2 “Basis of Preparation.” The following table provides a summary of activities with respect to provisions for rebates, discounts and returns for the years ended December 31, 2022 and 2021:
| | | | | | | | | | | | | | |
Provision for rebates, discounts and returns (in millions) | | 2022 | | 2021 |
Opening balance at beginning of period | | (436) | | | (396) | |
| Provision related to sales made in: | | | | |
| Current period | | (1,090) | | | (1,003) | |
| Prior period | | 14 | | | 24 | |
| Payments | | 1,084 | | | 939 | |
Closing balance at beginning of period | | $ | (428) | | | $ | (436) | |
The provision for rebates, discounts and returns decreased to $428 million as of December 31, 2022 from $436 million as of December 31, 2021 primarily due to the timing of rebate payments.
The provision for rebates, discounts and returns increased from $396 million as of December 31, 2020 to $436 million as of December 31, 2021 primarily due to a year-over-year increase in net revenue and timing of rebate payments.
Cost of sales. Cost of sales increased by $32 million, or 25%, to $159 million in 2022 from $127 million in 2021 due to higher sales volumes in the U.S and inflation.
Gross margin, which we define as gross profit divided by revenue, was 82% in 2022 as compared to 84% in 2021. We define adjusted gross margin as adjusted gross profit divided by net revenue and we define adjusted gross profit as gross profit excluding exceptional items. Gross margin declined slightly as expected in 2022, reflecting a higher mix of less profitable government channels for SUBOXONE film in the US and some cost impacts from inflation.
Selling, general and administrative expenses. Selling, general and administrative expenses increased by $332 million, or 77%, to $763 million in 2022 from $431 million in 2021. In 2022, selling, general and administrative expenses included exceptional items of $296 million for litigation provisions primarily related to the antitrust litigation and consumer protection claims. The increase in expenses also included $6 million and $2 million, respectively, of exceptional legal and consulting costs incurred in preparation for the planned additional listing of Indivior shares on a US exchange. Exceptional costs of $6 million was included in 2021 due to a non-cash adjustment to the provision for ANDA litigation offset by release of provisions.
Adjusted selling, general and administrative expenses, which we define as selling, general and administrative expenses excluding exceptional items, increased to $461 million in 2022 from $425 million in 2021. This increase primarily reflects sales and marketing investments to grow the Group’s long-acting injectable products, SUBLOCADE and PERSERIS, along with cost inflation.
Research and development expenses. Research and development expenses increased by $20 million, or 38%, to $72 million in 2022 from $52 million in 2021. The increases over the year-ago periods reflect higher R&D activity for SUBLOCADE studies (safety and efficacy and Post Marketing Requirement (PMR) studies), process validation testing related to LAI capacity expansion and continued early-stage asset development.
Net other operating income. Net other operating income was $8 million in 2022 and $32 million in 2021. In 2022, net other operating income included a fair value gain on equity investments and the net proceeds received from the out-licensing of nasal naloxone opioid overdose patents and a Directors' & Officers' insurance claim settlement that were recorded as exceptional other operating income. Net other operating income in 2021 included $32 million, respectively, of net exceptional benefits primarily due to
the net proceeds received from the sale of the legacy TEMGESIC®/ BUPREX® / BUPREXX® (buprenorphine) franchise outside of North America and a Directors' & Officers' insurance claim settlement.
Adjusted other operating income, which we define as other operating income excluding exceptional items was $3 million in 2022 (2021: nil).
Operating (loss)/profit. Operating loss in 2022 was $85 million as compared to an operating profit of $213 million in 2021. In 2022, net exceptional costs of $297 million are included compared to the net exceptional benefit of $26 million in FY 2021. On an adjusted basis, 2022 adjusted operating profit increased 13% to $212 million (2021: $187 million). The loss in 2022 on a reported basis primarily reflected the exceptional litigation provision. The increase in 2022 on an adjusted basis reflected strong net revenue growth partially offset by higher operating expenses, mainly related to increased sales and marketing investments to grow the Group’s long-acting injectable technologies, SUBLOCADE and PERSERIS, and higher R&D expenses.
Net finance expense. Net finance expenses decreased by $13 million, or 57%, to $10 million in 2022 from $23 million in 2021. The reduction in net finance expense reflected higher interest income earned on the Group's investments and rising interest rates.
Adjusted net finance expense, which we define as net finance expense excluding exceptional items was $22 million in 2021.There were no adjustments to net finance expense in 2022.
Taxation. Income tax benefit in 2022 was $42 million, reflecting an effective tax rate of 44% on the Group’s profits for 2022 as compared with an income tax benefit of $15 million in 2021, reflecting an effective tax rate of -8% on the Group’s profits for 2021. In 2022 adjusted tax expense was $33 million, excluding the $75 million tax benefit on exceptional items, an effective tax rate of 16%. In 2021, adjusted tax expense amounted to $25 million, excluding the $40 million tax benefit on exceptional items, an effective tax rate of 15%.
Net income. Net income decreased by $258 million, representing a net loss of $53 million in 2022 compared to a net profit of $205 million in 2021 which primarily reflects the exceptional litigation provision.
Adjusted net income, which comprises net income excluding exceptional items described above, was $169 million in 2022 compared to $140 million in 2021. The increase in net income on an adjusted basis primarily reflects higher net revenue partially offset by the increase in operating expense, primarily SG&A investments behind SUBLOCADE and PERSERIS.
Comparison of the years ended December 31, 2021 and December 31, 2020
| | | | | | | | | | | | | | | | | | | | |
| | For the years ended
December 31, |
| (in millions) | | 2021 | | 2020 | | % Change |
Net revenues | | $ | 791 | | | $ | 647 | | | 22 | % |
| Cost of sales | | (127) | | | (97) | | | 31 | % |
Gross profit | | 664 | | | 550 | | | 21 | % |
| Selling, general and administrative expenses | | (431) | | | (666) | | | (35) | % |
| Research and development expenses | | (52) | | | (40) | | | 30 | % |
| Net other operating income | | 32 | | | — | | | N/A |
Operating profit/(loss) | | 213 | | | (156) | | | (237) | % |
| Net finance expense | | (23) | | | (17) | | | 35 | % |
Profit/(loss) before taxation | | 190 | | | (173) | | | (210) | % |
| Income tax benefit | | 15 | | | 25 | | | (40) | % |
Net income/(loss) | | $ | 205 | | | $ | (148) | | | (239) | % |
Net revenues. Substantially all our net revenues for such periods were derived from sales of SUBLOCADE, PERSERIS and other buprenorphine-based sublingual products (including SUBOXONE Film and SUBOXONE Tablet). SUBLOCADE accounted for 31% of our net revenues in 2021 (2020: 20%). PERSERIS accounted for 2% of our net revenues in 2021 and 2020 and other buprenorphine-based sublingual products accounted for 67% of our net revenues in 2021 (2020: 78%). The increase in net revenues for such periods were attributable to an increase in products sold across all major product lines. Price changes were insignificant to our net revenues.
On a disaggregated basis, the Group’s net revenue by major product line:
| | | | | | | | | | | | | | | | | | | | |
| | For the years ended
December 31, |
| (in millions) | | 2021 | | 2020 | | % Change |
| SUBLOCADE | | 244 | | | 130 | | | 88 | % |
| PERSERIS | | 17 | | | 14 | | | 21 | % |
| Sublingual (SUBOXONE)/Other | | 530 | | | 503 | | | 5 | % |
Total Indivior Group net revenue | | $ | 791 | | | $ | 647 | | | 22 | % |
Total net revenues increased by $144 million, or 22%, to $791 million in 2021 from $647 million in 2020. The increase was primarily driven by higher net revenues from SUBLOCADE, which increased by $114 million or 88% from 2020, due to continued growth in the BMAT market and by our relatively stable market share for SUBOXONE Film in the U.S. Strong year-over-year SUBLOCADE net revenue growth was due to volume growth in the Organized Health Systems channel and increased new patient enrollments. SUBOXONE Film share averaged 20% (2020: 21%) and exited 2021 at 22% (2020 exit share: 21%). In 2021, total net revenues from PERSERIS was $17 million, representing a 21% increase from 2020.
The U.S. market is the largest contributor to our net revenues. Sales rebates, discounts and returns and other offsets to gross revenues are reflected in net revenues. The following table sets out a breakdown of net revenue as between the U.S. and the rest of the world.
| | | | | | | | | | | | | | | | | | | | |
| | For the years ended
December 31, |
| (in millions) | | 2021 | | 2020 | | % Change |
| United States | | 603 | | | 456 | | | 32 | % |
| Rest of world (including United Kingdom) | | 188 | | | 191 | | | (2) | % |
Total Indivior Group net revenue | | $ | 791 | | | $ | 647 | | | 22 | % |
In 2021, U.S. net revenue increased by 32% to $603 million as compared to $456 million in 2020, primarily due to strong growth in net revenue attributable to SUBLOCADE over the same period, the market share resilience of SUBOXONE Film and the underlying BMAT market growth.
In 2021, net revenue attributable to the rest of the world (including the United Kingdom) decreased 2% at actual exchange rates to $188 million from $191 million in 2020. The decrease in net revenue was mainly due to ongoing competitive pressure and austerity measures in the legacy tablet business in western Europe, and the disposal of the legacy TEMGESIC/ BUPREX/ BUPREXX franchise, which led to a $5 million decrease in net revenue for 2021. The decrease in net revenue was partially offset by net revenue from new products, including net revenue of $16 million attributable to SUBLOCADE and favorable foreign currency translation benefits.
The following table provides a summary of activities with respect to provisions for rebates, discounts and returns for the years ended December 31, 2021 and 2020:
| | | | | | | | | | | | | | |
Provision for rebates, discounts and returns (in millions) | | 2021 | | 2020 |
Opening balance at beginning of period | | (396) | | | (460) | |
| Provision related to sales made in: | | | | |
| Current period | | (1,003) | | | (898) | |
| Prior period | | 24 | | | 16 | |
| Payments | | 939 | | | 946 | |
Closing balance at beginning of period | | $ | (436) | | | $ | (396) | |
The provision for rebates, discounts and returns decreased from $460 million as of December 31, 2019 to $396 million as of December 31, 2020 primarily due to a year-over-year decrease in net revenue and timing of rebate payments.
The provision for rebates, discounts and returns increased from $396 million as of December 31, 2020 to $436 million as of December 31, 2021 primarily due to a year-over-year increase in net revenue and timing of rebate payments.
Cost of sales. Cost of sales increased by $30 million, or 31%, to $127 million in 2021 from $97 million in 2020 due to higher sales volumes in the U.S.
Gross margin, which we define as gross profit divided by revenue, was 84% in 2021 as compared to 85% in 2020. We define adjusted gross margin as adjusted gross profit divided by net revenue and we define adjusted gross profit as gross profit excluding exceptional items. Adjusted gross margin was 84% in 2021 as compared to 86% in 2020. Adjusted gross margin in 2020 included exceptional items related to changes in inventory provision estimates due to the adverse impact of the COVID-19 pandemic on our business. These changes in inventory provision estimates have been considered exceptional as they are one-off and do not reflect the underlying performance of our business. The decrease in gross margin and adjusted gross margin primarily reflects the continued relative strength of SUBOXONE Film in the U.S., particularly in less profitable government channels.
Selling, general and administrative expenses. Selling, general and administrative expenses decreased by $235 million, or 35%, to $431 million in 2021 from $666 million in 2020 primarily due to selling, general and administrative expenses in 2020 including costs of $239 million related to the resolution of litigation matters.
Adjusted selling, general and administrative expenses, which we define as selling, general and administrative expenses excluding exceptional items, decreased slightly to $424 million in 2021 from $427 million in 2020. The decline largely reflects one-time costs related to the U.S. direct-to-consumer advertising campaign for SUBLOCADE in 2020 and lower legal fees and expenses related to the DOJ matter in 2021, which was settled in the third quarter of 2020 with our entry into the Resolution Agreement. The decrease was partially offset by sales and marketing investments to grow the Group’s long-acting injectable technologies, SUBLOCADE and PERSERIS in 2021.
Research and development expenses. Research and development expenses increased by $12 million, or 30%, to $52 million in 2021 from $40 million in 2020. The increase reflects planned higher research and development activity, as certain projects and post-market studies that were suspended in 2020 due to the COVID-19 pandemic were resumed in 2021 as well as strategic pipeline and production capacity investments in 2021.
Net other operating income. Other operating income was $32 million in 2021 and $nil in 2020, primarily attributable to net proceeds received from the disposal of the legacy TEMGESIC/ BUPREX / BUPREXX (buprenorphine) franchise outside of North America (+$19 million), net proceeds received from
the out-licensing of nasal naloxone opioid overdose patents (+$1 million) and a directors and officers insurance claim settlement (+$12 million received in the fourth quarter of 2021).
Adjusted other operating income, which we define as other operating income excluding exceptional items was $nil in 2021.
Operating profit/(loss). Operating profit in 2021 was $213 million as compared to an operating loss of $156 million in 2020. Adjusted operating profit, which comprises operating profit excluding the exceptional items described above, was $187 million in 2021 as compared to $88 million in 2020. The increase in adjusted operating profit was primarily driven by strong net revenue growth.
Net finance expense. Net finance expenses increased by $6 million, or 35%, to $23 million in 2021 from $17 million in 2020. The increase primarily reflects lower interest income on the Group’s cash balance due to lower short-term interest rates 2021 as compared to 2020 and higher expense primarily related to interest on the Group’s outstanding DOJ settlement amount.
Adjusted net finance expense, which we define was net finance expense excluding exceptional items was $22 million in 2021. There were no adjustments to net finance expense in 2020.
Taxation. Income tax benefit in 2021 was $15 million, reflecting an effective tax rate of -8% on the Group’s profits for 2021 as compared with an income tax benefit of $25 million in 2020, reflecting an effective tax rate of 14% on the Group’s profits for 2020. Income tax benefit in 2021 included a one-time tax benefit of $40 million and income tax benefit in 2021 included tax on exceptional items of $37 million. Excluding these exceptional items, the Group’s effective tax rate was 15% in 2021 as compared to 17% in 2020.
Net income. Net income increased to $205 million in 2021, representing an increase of $353 million, from a $148 million loss in 2020.
Adjusted net income, which comprises net income excluding the exceptional items described above, was $140 million in 2021 as compared to $59 million in 2020. The increase in adjusted net income was primarily driven by higher operating profit, partially offset by higher tax and net finance expenses.
Exceptional Items and Adjusted Results
Where significant expenses or income that do not reflect the Group’s ongoing operations are incurred during the year, these items are recorded as exceptional items. Exceptional items are excluded from adjusted results consistent with our internal reporting. Adjusted results are not a substitute for, or superior to, reported results presented in accordance with IFRS. Management performs a quantitative and qualitative assessment to determine if an item should be considered for exceptional treatment.
In 2020, the COVID-19 pandemic had an adverse impact on the Group, primarily driven by a decrease in patient enrollments during the onset of the initial outbreak. In 2020, the Group announced cost-saving actions to protect the financial and operational flexibility of the Group. Consistent with the Group’s existing policies, the restructuring charges due to the COVID-19 pandemic were considered non-recurring and therefore classified as exceptional. Additionally, the Group revised estimates used in inventory provision calculations for SUBLOCADE and PERSERIS which led to an overall increase in inventory needing to be provided for. Provisions were based on expiration dating and sales forecasts associated with SUBLOCADE and PERSERIS inventory in line with the Group policy. The change in inventory provision due to the COVID-19 pandemic was considered a one-off transaction in 2020 and therefore recorded as exceptional.
In 2021, no exceptional items were recorded specifically due to the impact of the COVID-19 pandemic. However, after the restructuring program concluded, a remaining provision was released which resulted in an exceptional benefit of $1 million. In 2021, upon conclusion of expert discovery, the Group increased the provision for intellectual property-related matters - ANDA litigation to $73 million resulting in
an exceptional charge for $24 million (refer to Note 21, Legal Proceedings in the Audited Consolidated Financial Statements). Debt refinancing costs in 2021 consist of advisory and legal fees incurred related to the Group’s debt refinancing. These costs are included in SG&A. Additionally, in 2021 the Group wrote off $1 million of unamortized deferred financing costs due to extinguishment and settlement of the previous term loan. These costs are included within finance expense. In 2021, the Group received net proceeds from the disposal of the TEMGESIC / BUPREX / BUPREXX (buprenorphine) analgesic franchise outside of North America to Eumedica Pharmaceuticals AG for $19 million. The Group also received proceeds from the out-licensing of nasal naloxone opioid overdose patents for $1 million. In 2022, the Group recognized a provision for $290 million related to certain multidistrict antitrust class and state claims (refer to Note 21, Legal Proceedings in the Audited Consolidated Financial Statements). A provision of $6 million was recognized to settle a dispute over reimbursement of legal expenses with a supplier. In 2021, negotiation with DOJ-related plaintiffs led to a change in the Group’s provision for DOJ-related matters which resulted in a provision release of $18 million. Additionally, the Group recognized $6 million of exceptional consulting costs in preparation for an additional listing of Indivior shares on a major US exchange. The Group recognized $5 million exceptional other income related to Directors’ and Officers’ insurance reimbursement claims. Exceptional tax benefits recorded in 2022 relate mainly to the impact of the re-measurement of certain deferred tax assets. In Q1 2023, the Group recognized $12 million of exceptional SG&A expenses related to costs associated with the acquisition of Opiant Pharmaceuticals, Inc. (“Opiant”), a publicly traded company in the United States. An additional $2 million of exceptional SG&A expenses relate to consulting costs in preparation for a potential additional listing of Indivior shares on a major U.S. exchange.
The table below sets out exceptional items recorded in each period:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the three months ended
March 31, | | For the year ended
December 31, |
| (in millions) | | 2023 | | 2022 | | 2022 | | 2021 | | 2020 |
Exceptional items within cost of sales | | | | | | | | | | |
Cost of sales(1) | | — | | | — | | | — | | | — | | | (5) | |
Total exceptional items within cost of sales | | — | | | — | | | — | | | — | | | (5) | |
| | | | | | | | | | |
Exceptional items within selling, general and administrative expenses | | | | | | | | | | |
Restructuring costs(2) | | — | | | — | | | — | | | 1 | | | (11) | |
Legal expenses/provision(3) | | — | | | — | | | (296) | | | 18 | | | (228) | |
ANDA litigation(4) | | — | | | — | | | — | | | (24) | | | — | |
Debt refinancing(5) | | — | | | — | | | — | | | (1) | | | — | |
US listing costs(6) | | (2) | | | — | | | (6) | | | — | | | — | |
Opiant acquisition(7) | | (12) | | | — | | | — | | | — | | | — | |
Total exceptional items within selling, general and administrative expenses | | $ | (14) | | | $ | — | | | $ | (302) | | | $ | (6) | | | $ | (239) | |
| | | | | | | | | | |
Exceptional items within net other operating income | | | | | | | | | | |
Net proceeds from the sale of intangible assets(8) | | — | | | — | | | — | | | 20 | | | — | |
Insurance reimbursement(9) | | — | | | — | | | 5 | | | 12 | | | — | |
Total exceptional items within other operating income | | $ | — | | | $ | — | | | $ | 5 | | | $ | 32 | | | $ | — | |
| | | | | | | | | | |
Exceptional items within net finance expense | | | | | | | | | | |
Finance expense(5) | | — | | | — | | | — | | | (1) | | | — | |
Total exceptional items within finance expense | | $ | — | | | $ | — | | | $ | — | | | $ | (1) | | | $ | — | |
| | | | | | | | | | |
Total exceptional items before taxes | | $ | (14) | | | $ | — | | | $ | (297) | | | $ | 25 | | | $ | (244) | |
| | | | | | | | | | |
Exceptional items within taxation | | | | | | | | | | |
| Tax on exceptional items | | 2 | | | — | | | 57 | | | (3) | | | 37 | |
Exceptional tax item(10) | | — | | | — | | | 18 | | | 43 | | | — | |
Total exceptional items within taxation | | $ | 2 | | | $ | — | | | $ | 75 | | | $ | 40 | | | $ | 37 | |
Total exceptional items | | $ | (12) | | | $ | — | | | $ | (222) | | | $ | 65 | | | $ | (207) | |
________________
(1)For 2020, relates to changes in inventory provision estimates due to the adverse impact of the COVID-19 pandemic on our business.
(2)For 2020, relates to cost-saving actions taken by the Group in response to challenges posed by the COVID19 pandemic in 2020. In 2021 the restructuring program concluded and the remaining provision was released which resulted in an exceptional benefit of $1 million.
(3)In 2021, negotiation with DOJ-related plaintiffs led to a change in the Group’s provision for DOJ-related matters which resulted in a provision release of $18 million. In 2020, relates to net settlement expenses for DOJ-related matters ($178 million) and RB ($50 million). In 2022, the Group recognized a provision of $290 million related to certain multidistrict antitrust class and state claims (refer to Note 21, Legal proceedings for further discussions) and $6 million to settle a dispute over reimbursement of legal costs with a supplier. (4)In 2021, upon conclusion of expert discovery, the Group increased the provision for ANDA Litigation, to $73 million, resulting in an exceptional charge for $24 million.
(5)For 2021, relates to advisory and legal fees incurred related to the Group’s debt refinancing, which are included in selling, general and administrative expenses. In 2021, the Group wrote off $1 million of unamortized deferred financing costs due to the extinguishment and settlement of the previous term loan. These costs are included within finance expense.
(6)In Q1 2023, the Group recognized $2 million of exceptional costs in preparation for a potential additional listing of Indivior shares on a major US exchange. The Group expects to incur approximately $3 million in additional exceptional pre-tax costs in FY 2023 as it prepares for an additional US listing. In 2022, the Group recognized $6 million of exceptional consulting costs in preparation for a potential additional listing of Indivior shares on a major U.S. exchange.
(7)In Q1 2023, the Group recognized $12 million of exceptional costs related to the acquisition of Opiant (refer to Note 16, in the Unaudited Condensed Consolidated Interim Financial Statements). The Group expects to incur approximately $3 million in additional pre-tax acquisition-related costs in FY 2023 which would be recorded as exceptional. (8)For 2021, relates to the net gain on disposal received from the sale of the disposal of the legacy TEMGESIC/ BUPREX / BUPREXX (buprenorphine) franchise outside of North America to Eumedica Pharmaceuticals AG for $19 million and the proceeds received from the out-licensing of nasal naloxone opioid overdose patents for $1 million.
(9)In 2022 and 2021, the Group recognized $5 million and $12 million, respectively of exceptional other income related to a directors’ and officers’ insurance reimbursement claim.
(10)Exceptional tax benefits recorded in 2022 relate mainly to the impact of the re-measurement of certain deferred tax assets. See Note 7 Tax for a further discussion. For 2021, relates to the approval of tax credits by the Internal Revenue Service in relation to development credits for SUBLOCADE claimed for 2014 to 2017 and the tax impact of settlement costs incurred with RB which were recorded in the prior year. Non-IFRS Measures
In considering the financial performance of the business, Management analyzes the primary financial performance measures of adjusted operating profit, adjusted net income and adjusted basic earnings per share. Adjusted operating profit, adjusted net income and adjusted basic earnings per share are not measures defined by IFRS and are not a substitute for, or superior to, reported results presented in accordance with IFRS.
We believe adjusted operating profit, adjusted net income and adjusted basic earnings per share, as defined below, are useful to investors as they exclude items which do not impact our day-to-day operations and which Management in many cases does not directly control or influence. Similar concepts of adjusted operating profit and adjusted earnings are frequently used by securities analysts, investors and other interested parties in their evaluation of our company and in comparison to other companies, many of which present an adjusted operating profit or earnings-related performance measure when reporting their results.
Adjusted operating profit, adjusted net income and adjusted basic earnings per share have limitations as analytical tools. They are not recognized terms under IFRS and therefore do not purport to be an alternative to operating profit as a measure of operating performance. Adjusted operating profit, adjusted net income and adjusted basic earnings per share are not necessarily comparable to similarly titled measures used by other companies. As a result, you should not consider these performance measures in isolation from, or as a substitute analysis for, our results of operations.
In September 2022, the Group’s shareholders approved a 5-for-1 share consolidation. On October 10th, 2022, the Group completed this share consolidation. Shareholders received 1 new Ordinary share with a nominal value of $0.50 each for every 5 previously existing Ordinary shares which had a nominal value of $0.10 cents each. The Group’s basic and diluted weighted average number of shares outstanding, basic (loss)/earnings per share, diluted (loss)/earnings per share and adjusted basic earnings per share reflect the share consolidation for all periods presented.
Presented below are adjusted operating profit, adjusted net income and adjusted basic earnings per share for the historical periods presented along with a reconciliation of these metrics to a reported IFRS measure:
Adjusted basic earnings/(loss) per share reconciliation:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the three months ended
March 31, | | For the years ended
December 31, |
| Earnings Per Share | | 2023 | | 2022 | | 2022 | | 2021 | | 2020 |
Reported basic (loss)/earnings per share - IFRS | | $ | 0.32 | | | $ | 0.29 | | | $ | (0.38) | | | $ | 1.41 | | | $ | (1.01) | |
Adjustments to cost of sales(1) | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 0.03 | |
Adjustments to selling, general and administrative expenses(2) | | $ | 0.11 | | | $ | — | | | $ | 2.20 | | | $ | 0.04 | | | $ | 1.63 | |
Adjustments to other operating income(3) | | $ | — | | | $ | — | | | $ | (0.04) | | | $ | (0.22) | | | $ | — | |
Adjustments to finance expense(4) | | $ | — | | | $ | — | | | $ | — | | | $ | 0.01 | | | $ | — | |
| Tax on exceptional items | | $ | — | | | $ | — | | | $ | (0.43) | | | $ | 0.02 | | | $ | (0.25) | |
Tax adjustments(5) | | $ | (0.02) | | | $ | — | | | $ | (0.13) | | | $ | (0.30) | | | $ | — | |
Adjusted basic earnings per share - Non IFRS | | $ | 0.41 | | | $ | 0.29 | | | $ | 1.22 | | | $ | 0.96 | | | $ | 0.40 | |
________________
(1)For 2020, relates to changes in inventory provision estimates due to the adverse impact of the COVID-19 pandemic on our business.
(2)In Q1 2023, the Group recognized $2 million of exceptional consulting costs (FY 2022: $6 million) in preparation for a potential additional listing of Indivior shares on a major U.S. exchange. The Group expects to incur approximately $3 million in additional exceptional pre-tax costs in FY 2023 as it prepares for an additional US listing. In Q1 2023, the Group recognized $12 million of exceptional costs related to the acquisition of Opiant (refer to Note 16, Acquisition of Opiant, in the Unaudited Condensed Consolidated Interim Financial Statements). The Group expects to incur approximately $3 million in additional pre-tax acquisition-related costs in FY 2023 which would be recorded as exceptional. In 2022, the Group recognized a provision for $290 million related to certain multidistrict antitrust class and state claims (Refer to Note 21, Legal Proceedings for further discussion) and $6 million to settle a dispute over reimbursement of legal costs with a supplier. In 2021 negotiation with DOJ-related plaintiffs led to a change in the Group’s provision for DOJ-related matters which resulted in a provision release of $18 million and upon conclusion of expert discovery, the Group increased the provision for ANDA Litigation, to $73 million, resulting in an exceptional charge for $24 million. In YTD 2021 the Group incurred an exceptional charge of $1 million related to advisory and legal fees incurred related to the Group’s debt refinancing. In 2021, an exceptional benefit of $1 million related to the release of remaining provisions related to a restructuring program that concluded in 2021 initially put in place in 2020 in response to challenges posed by the COVID-19 pandemic. In 2020, adjustments related to costs of the restructuring program and net settlement expenses for DOJ-related matters ($178 million) and RB ($50 million). (3)In 2022, the Group recognized $5 million of exceptional other income related to a directors’ and officers’ insurance reimbursement claim. In YTD 2021, exceptional benefit recorded relates to the net gain on disposal received from the sale of the disposal of the legacy TEMGESIC/ BUPREX / BUPREXX (buprenorphine) franchise outside of North America to Eumedica Pharmaceuticals AG for $19 million and the proceeds received from the out-licensing of nasal naloxone opioid overdose patents for $1 million. In 2021, adjustments also relate to $12 million of exceptional other income related to a directors’ and officers’ insurance reimbursement claim.
(4)In 2021, the Group wrote-off $1 million of unamortized deferred financing costs due to extinguishment and settlement of the previous term loan.
(5)Exceptional tax benefits recorded in 2022 relate mainly to the impact of the re-measurement of certain deferred tax assets. See Note 7, Tax for a further discussion. For 2021, relates to the approval of tax credits by the Internal Revenue Service in relation to development credits for SUBLOCADE claimed for 2014 to 2017 and the tax impact of settlement costs incurred with RB which were recorded in the prior year.
Adjusted Summarized Results - Non IFRS
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the three months ended
March 31, | | For the years ended
December 31, |
| (in millions, except per share data) | | 2023 | | 2022 | | 2022 | | 2021 | | 2020 |
| Adjusted operating profit - Non IFRS | | $ | 71 | | | $ | 54 | | | $ | 212 | | | $ | 187 | | | $ | 88 | |
| Adjusted net income - Non IFRS | | $ | 56 | | | $ | 41 | | | $ | 169 | | | $ | 140 | | | $ | 59 | |
| Adjusted basic earnings per share - Non IFRS | | $ | 0.41 | | | $ | 0.29 | | | $ | 1.22 | | | $ | 0.96 | | | $ | 0.40 | |
Adjusted gross margin reconciliation:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the three months ended
March 31, | | For the years ended
December 31, |
| (in millions) | | 2023 | | 2022 | | 2022 | | 2021 | | 2020 |
Gross margin- IFRS | | $ | 215 | | | $ | 170 | | | $ | 742 | | | $ | 664 | | | $ | 550 | |
Adjustments to cost of sales(1) | | — | | | — | | | — | | | — | | | 5 | |
Adjusted gross margin - Non IFRS | | $ | 215 | | | $ | 170 | | | $ | 742 | | | $ | 664 | | | $ | 555 | |
_____________
(1)For 2020, relates to changes in inventory provision estimates due to the adverse impact of the COVID-19 pandemic on our business.
Adjusted operating profit/(loss) reconciliation:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the three months ended
March 31 | | For the years ended
December 31, |
| (in millions) | | 2023 | | 2022 | | 2022 | | 2021 | | 2020 |
Operating (loss)/profit - IFRS | | $ | 57 | | | $ | 54 | | | $ | (85) | | | $ | 213 | | | $ | (156) | |
Adjustments to cost of sales(1) | | — | | | — | | | — | | | — | | | 5 | |
Adjustments to selling, general and administrative expenses(2) | | 14 | | | — | | | 302 | | | 6 | | | 239 | |
Adjustments to other operating income(3) | | — | | | — | | | (5) | | | (32) | | | — | |
Adjusted operating profit - Non IFRS | | $ | 71 | | | $ | 54 | | | $ | 212 | | | $ | 187 | | | $ | 88 | |
_____________
(1)For 2020, relates to changes in inventory provision estimates due to the adverse impact of the COVID-19 pandemic on our business.
(2)In Q1 2023, the Group recognized $12 million of exceptional costs related to the acquisition of Opiant (refer to Note 16, Acquisition of Opiant, in the Unaudited Condensed Consolidated Interim Financial Statements. The Group expects to incur approximately $3 million in additional pre-tax acquisition-related costs in FY 2023 which would be recorded as exceptional. In Q1 2023, the Group recognized $2 million of exceptional costs (FY 2022: $6 million) in preparation for a potential additional listing of Indivior shares on a major US exchange. The Group expects to incur approximately $3 million in additional exceptional pre-tax costs in FY 2023 as it prepares for an additional US listing. In 2022, the Group recognized a provision for $290 million related to certain multidistrict antitrust class and state claims (Refer to Note 21, Legal Proceedings for further discussion) and $6 million to settle a dispute over reimbursement of legal costs with a supplier. In 2021 negotiation with DOJ-related plaintiffs led to a change in the Group’s provision for DOJ-related matters which resulted in a provision release of $18 million and upon conclusion of expert discovery, the Group increased the provision for ANDA Litigation, to $73 million, resulting in an exceptional charge for $24 million. In 2021 the Group incurred an exceptional charge of $1 million related to advisory and legal fees incurred related to the Group’s debt refinancing. As defined by Management, “exceptional” items are significant expenses or income that do not reflect the Group’s ongoing operations and are excluded from adjusted results consistent with internal reporting. In 2021, an exceptional benefit of $1 million related to the release of remaining provisions related to a restructuring program that concluded in 2021 initially put in place in 2020 in response to challenges posed by the COVID-19 pandemic. In
2020, adjustments related to costs of the restructuring program and net settlement expenses for DOJ-related matters ($178 million) and RB ($50 million).
(3)In 2022, the Group recognized $5 million of exceptional other income related to a directors’ and officers’ insurance reimbursement claim. In 2021, exceptional benefit recorded relates to the net gain on disposal received from the sale of the disposal of the legacy TEMGESIC/ BUPREX / BUPREXX (buprenorphine) franchise outside of North America to Eumedica Pharmaceuticals AG for $19 million and the proceeds received from the out-licensing of nasal naloxone opioid overdose patents for $1 million. In 2021, adjustments also relate to $12 million of exceptional other income related to a directors’ and officers’ insurance reimbursement claim.
Adjusted net income reconciliation:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the three months ended
March 31, | | For the years ended
December 31, |
| (in millions) | | 2023 | | 2022 | | 2022 | | 2021 | | 2020 |
Net income/(loss) for the period - IFRS | | $ | 44 | | | $ | 41 | | | $ | (53) | | | $ | 205 | | | $ | (148) | |
Adjustments to costs of sales(1) | | — | | | — | | | — | | | — | | | 5 | |
Adjustments to selling, general and administrative expenses(2) | | 14 | | | — | | | 302 | | | 6 | | | 239 | |
Adjustments to other operating income(3) | | — | | | — | | | (5) | | | (32) | | | — | |
Adjustments to finance expense(4) | | — | | | — | | | — | | | 1 | | | — | |
| Tax on exceptional items | | (2) | | | — | | | (57) | | | 3 | | | (37) | |
Tax adjustments(5) | | — | | | — | | | (18) | | | (43) | | | — | |
Adjusted net income - Non IFRS | | $ | 56 | | | $ | 41 | | | $ | 169 | | | $ | 140 | | | $ | 59 | |
________________
(1)For 2020, relates to changes in inventory provision estimates due to the adverse impact of the COVID-19 pandemic on our business.
(2)In Q1 2023, the Group recognized $12 million of exceptional costs related to the acquisition of Opiant (refer to Note 16, Acquisition of Opiant, in the Unaudited Condensed Consolidated Interim Financial Statements. The Group expects to incur approximately $3 million in additional pre-tax acquisition-related costs in FY 2023 which would be recorded as exceptional. In Q1 2023, the Group recognized $2 million of exceptional costs (FY 2022: $6 million) in preparation for a potential additional listing of Indivior shares on a major US exchange. The Group expects to incur approximately $3 million in additional exceptional pre-tax costs in FY 2023 as it prepares for an additional US listing. In 2022, the Group recognized $6 million and of exceptional consulting costs in preparation for a potential additional listing of Indivior shares on a major U.S. exchange. In 2022, the Group recognized a provision for $290 million related to certain multidistrict antitrust class and state claims (Refer to Note 19, Provision and Other Liabilities, Consolidated Financial Statements for further discussion) and $6 million to settle a dispute over reimbursement of legal costs with a supplier. In 2021 negotiation with DOJ-related plaintiffs led to a change in the Group’s provision for DOJ-related matters which resulted in a provision release of $18 million and upon conclusion of expert discovery, the Group increased the provision for ANDA Litigation, to $73 million, resulting in an exceptional charge for $24 million. In YTD 2021 the Group incurred an exceptional charge of $1 million related to advisory and legal fees incurred related to the Group’s debt refinancing. In FY 2021, an exceptional benefit of $1 million related to the release of remaining provisions related to a restructuring program that concluded in 2021 initially put in place in 2020 in response to challenges posed by the COVID-19 pandemic. In 2020, adjustments related to costs of the restructuring program and net settlement expenses for DOJ-related matters ($178 million) and RB ($50 million). (3)In 2022, the Group recognized $5 million of exceptional other income related to a directors’ and officers’ insurance reimbursement claim. In 2021, exceptional benefit recorded relates to the net gain on disposal received from the sale of the disposal of the legacy TEMGESIC/ BUPREX / BUPREXX (buprenorphine) franchise outside of North America to Eumedica Pharmaceuticals AG for $19 million and the proceeds received from the out-licensing of nasal naloxone opioid overdose patents for $1 million. In 2021, adjustments also relate to $12 million of exceptional other income related to a directors’ and officers’ insurance reimbursement claim.
(4)In Q3 2021, the Group wrote-off $1 million of unamortized deferred financing costs due to extinguishment and settlement of the previous term loan.
(5)Exceptional tax benefits recorded in 2022 relate mainly to the impact of the re-measurement of certain deferred tax assets. See Note 7, Tax for a further discussion. For 2021, relates to the approval of tax credits by the Internal Revenue Service in relation to development credits for SUBLOCADE claimed for 2014 to 2017 and the tax impact of settlement costs incurred with RB which were recorded in the prior year.
B.Liquidity and Capital Resources
Overview
The Group funds its operating costs, investments in organic growth of the business, research and development, and corporate expenses from cash flows generated by operations and borrowings from banks and other financial institutions. Indivior PLC is a holding company with no direct source of operating income. It is therefore dependent on its capital-raising abilities and dividend payments from its subsidiaries. The ability of companies within the Group to pay dividends and Indivior PLC’s ability to receive distributions from its investments in other entities are subject to restrictions, including, but not limited to, the covenants in our $250 million term loan and the existence of sufficient distributable reserves.
Based on our current and anticipated levels of operations, and the condition in our markets and industry, we believe our cash on hand and cash flows from operations will enable us to meet our working capital, capital expenditures and debt service and other funding requirements for the foreseeable future. However, our liquidity is subject to certain contractual obligations, discussed below, and contingent liabilities. See Item 3.D - Risk Factors, “We are currently, in the past have been, and in the future may be, subject to substantial litigation and ongoing litigation that could cause us to incur significant legal expenses, divert management’s attention, and result in harm to our business” As of March 31, 2023, the Group’s gross borrowings under its Term Loan were $239 million, and the Group had $803 million of gross liquidity (comprising readily available cash of $588 million and investments of $215 million). The Group has contractual obligations of $738 million mainly comprised of obligations under its Term Loan and undiscounted legal settlement payments and lease liabilities. See “Item 5. Liquidity and Capital Resources—Contractual Obligations.” Borrowings
See “Item 3.B. Capitalization and Indebtedness” for details relating to our capitalization and indebtedness as at the dates indicated therein. The table below sets out the current and non-current portion obligation of the Term Loan as presented in the balance sheet as of March 31, 2023, December 31 2022, and December 31, 2021:
| | | | | | | | | | | | | | | | | | | | |
Term loan (in millions) | | Mar 31 2023 | | Dec 31 2022 | | Dec 31
2021 |
| Term loan – current | | (3) | | | (3) | | | (3) | |
| Term loan – non-current | | (236) | | | (237) | | | (239) | |
Total term loan | | $ | (239) | | | $ | (240) | | | $ | (242) | |
________________
*Total term loan borrowings reflect the principal amount drawn net of debt issuance costs of $6 million at Q1 2023 and FY 2022 (FY 2021: $7 million).
The Term Loan
Certain subsidiaries of Indivior PLC entered into a New York law-governed credit agreement, originally dated as of December 19, 2014, as amended and restated from time to time, most recently by that certain Fourth Amendment dated as of April 27, 2022 with Morgan Stanley Senior Funding, Inc., Morgan Stanley Bank, N.A., and Deutsche Bank AG New York Branch as lenders (the “Credit Agreement”). The Credit Agreement provides for a $250 million term loan (the “Term Loan”). Certain subsidiaries of Indivior PLC, including Indivior Finance S.àr.l., Indivior Finance (2014) LLC, Indivior SMTM LLC, RBP Global Holdings Limited, and Indivior Global Holdings Limited, are borrowers under the Credit Agreement, and their obligations are guaranteed by the other borrowers and certain other subsidiaries of Indivior PLC. Such guarantees, and the obligations of the borrowers, are secured by substantially all the assets of the borrowers and the guarantors, including a pledge of all of the equity interests of the
Borrowers and guarantors and, subject to certain customary exceptions, certain other potential subsidiaries.
The Term Loan has a 1% annual amortization feature with a quarterly payment of $0.625 million, with the remainder of the principal amount of the term loans outstanding on June 30, 2026 to be paid on such date. Interest on the Term Loan is payable on a “Term SOFR Rate” or (other than in the case of loans denominated in currencies other than U.S. dollars) at the “Alternate Base Rate,” plus in each case, a different, applicable margin (see below). The Term SOFR Rate is the published rate, as adjusted to include the agreed credit spread adjustment to account for the recent phase out of the floating rate in the Original Credit Agreement, which was the London Interbank Offered Rate, or "LIBOR" but subject to a floor of 0.75% per annum. The Alternate Base Rate is the rate per annum equal to the highest of (i) the Federal Funds Effective Rate in effect on such day plus 0.50%, (ii) the Adjusted Term SOFR Rate (calculated based upon an interest period of one month) plus 1.00% and (iii) the “Prime Rate,” which is a rate announced publicly by the Administrative Agent as its prime rate. Solely with respect to U.S. dollar denominated term loans, the Alternate Base Rate shall not be less than 1.75%. The Term Loan margin shall be either 5.25% in respect of a Term SOFR Rate loan or (solely with respect to U.S. dollar denominated term loans) 4.25% in respect of an Alternate Base Rate loan. The average interest rate during 2022 was 7.22%. The interest rate was 10.09% as of March 31, 2023.
The Credit Agreement includes an accordion feature such that a minimum of $75 million of additional incremental loans are permitted plus additional further incremental loans up to amounts based on various leverage ratios and subject to various conditions, including as to the absence of certain events of default, accuracy of certain representations and warranties, intercreditor relations, maturity, weighted average life to maturity, prepayments, interest rate margins, borrower identity, guarantors and security and other terms and conditions (including, without limitation, an “MFN” provision providing that the interest rate applicable to any incremental facility or loan must be not more than 50 basis points above the corresponding interest rate applicable to the Term Loan). The Term Loan allows for additional borrowing capacity which is available per management’s discretion provided that (i) certain debt/EBITDA relationships are maintained, (ii) Term Loan lenders retain priority status with regards to collateral, and (iii) Term Loan lenders receive interest at the higher of the Term Loan interest rate or incremental borrowing rate. However, the is no commitment by any Lender to make any additional incremental loans.
The Term Loan is subject to mandatory prepayment in respect of (i) certain non-ordinary course asset dispositions, exchanges or transfers, (ii) proceeds received under any casualty insurance policy or as a result of the taking of assets of any of the borrowers or their restricted subsidiaries pursuant to a condemnation or similar event, in each case above a threshold of $10 million per fiscal year and subject to certain re-investment rights and (iii) the proceeds of certain debt issuances. The Indivior Borrowers are also required, in certain circumstances, to make certain prepayments of Excess Cash Flow (as defined in the Credit Agreement) of the borrowers and their restricted subsidiaries for the fiscal year then ended. The borrower representative under the Credit Agreement has the option to reduce the amount to be paid by the aggregate amounts that have been otherwise prepaid at the option of the Indivior Borrowers or retired and cancelled as a result of certain assignments. The percentage of Excess Cash Flow to be paid is calculated as to 50% of an aggregate principal amount of Excess Cash Flow in the event the Total Leverage Ratio of Net Debt to Consolidated Adjusted EBITDA (each as defined in the Credit Agreement) is in excess of 1.00x. The Excess Cash Flow sweep steps down to (i) 0.25% if Total Leverage Ratio is less than or equal to 1.00x but greater than 0.50x and (ii) 0% if Total Leverage Ratio is less than or equal to 0.50x and the sweep only applies to amounts in excess of $1 million.
Under the Credit Agreement, the borrowers make representations and warranties as well as affirmative covenants and are subject to negative covenants customary for facilities of this nature, including a limitation on disposal of assets, a limitation on mergers and acquisitions and other fundamental changes, limitations on share buybacks and redemptions, dividends and other “restricted payments,” a limitation on further negative pledges, a limitation on indebtedness, a limitation on prepayments and redemptions of certain indebtedness, a limitation on subsidiary distributions, a limitation on liens, sale and lease-back transactions and investments, a restriction on changes to any material line
of business (including the business of the restricted subsidiaries of the borrowers), restrictions on modifying the terms of certain debt and general restrictions on the organizational documents and fiscal year of the borrowers. These negative covenants are subject to various carve-outs, grace periods and qualifications and, in some instances, are also applicable to the restricted subsidiaries of the borrowers.
The Credit Agreement contains a minimum liquidity covenant requiring that the borrowers and their restricted subsidiaries not allow liquidity to be less than the greater of $100 million or 50% of the aggregate amount of loans outstanding on the last day of each fiscal quarter with respect to the period of four consecutive fiscal quarters then most recently ended for which financial statements have been delivered (or are required to have been delivered) under the terms of the Credit Agreement.
The Credit Agreement contains customary events of default including non-payment of principal, interest, fees or any other amounts when due, breach of certain covenants or representations, cross event of default and cross acceleration, insolvency and insolvency events, material monetary judgments, pension defaults, material invalidity of guarantees or security, ranking and change of control. In the event of an event of default under the Credit Agreement (and at any time thereafter during the continuance of such event of default) the administrative agent under the Credit Agreement may, and at the request of the lenders shall, terminate the debt facilities and/or demand repayment in full of any borrowings outstanding under the debt facilities, together with accrued interest thereon and all fees and other accrued obligations of the borrowers.
In April 2022, the Group completed an amendment to its existing term loan which provides the Group greater flexibility in the use of cash being generated and changes the variable interest rate base from USD LIBOR to USD SOFR plus a credit spread adjustment of 26 basis points. As part of the modification, the Group incurred $1 million of issuance costs, banking fees and legal fees which are deemed to be incremental and directly attributable to the amendment. Accordingly, the Group capitalized these costs, which were netted against the total amount borrowed and are amortized over the maturity period using the effective interest method.
Cash flow
The following table summarizes the principal components of our cash flows for the periods under review:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the three months ended
March 31, | | For the years ended
December 31, |
| (in millions) | | 2023 | | 2022 | | 2022 | | 2021 | | 2020 |
| Net cash (outflow)/inflow from operating activities | | (36) | | | (75) | | | (4) | | | 353 | | | (193) | |
| Net cash outflow from investing activities | | (127) | | | (149) | | | (223) | | | (14) | | | (4) | |
| Net cash used in financing activities | | (22) | | | (2) | | | (100) | | | (94) | | | (10) | |
| Exchange difference on cash and cash equivalents | | (1) | | | (2) | | | (1) | | | (1) | | | 5 | |
Net (decrease)/increase in and cash equivalents | | $ | (186) | | | $ | (228) | | | $ | (328) | | | $ | 244 | | | $ | (202) | |
Net cash provided by (used in) operating activities
The net cash outflow from operating activities was $36 million in 2023, an decrease of $39 million, compared to the net cash inflow of $75 million in 2022. This reflects tax payments and interest paid on the Group’s term loan facility and settlement payments, partially offset by interest received on investments.
The net cash outflow from operating activities was $4 million in 2022, a decrease of $357 million, compared to the net cash inflow of $353 million in 2021. This reflects the changes in cash generated from operations and higher interest paid on the Group’s term loan facility, interest paid on settlement payments and income taxes paid in 2022 versus income tax refunds received in 2021.
Net cash provided by operating activities was $353 million in 2021, an increase of $546 million, or 27%, compared to a $193 million use of cash in 2020. The increase was a result of mainly strong 2021 operating profit, timing of government payables, surety bond refund and an exceptional tax refund from the IRS, which was offset by taxes paid, interest paid, and transaction costs paid related to the Group’s debt refinancing. Net cash outflow from operating activities was $193 million in 2020, which reflects the impact of legal settlement expenses incurred and payments made related to the net settlement expenses for DOJ related matters and RB and timing of payments of made on government rebates payables. Legal settlement expenses incurred were one-time in nature and did not occur in 2021.
Net cash used in investing activities
Net cash used in investing activities was $127 million in Q1 2023, an decrease of $22 million, compared to net cash used of $149 million in 2022. This reflects $124 million for the acquisition of Opiant Pharmaceuticals, net of cash assumed. In the prior year period, the outflow from investing activities primarily included $150 million in a portfolio of investment-grade debt securities and ordinary shares of Aelis Farma.
Net cash used in investing activities was $223 million in 2022, an increase of $209 million, compared to net cash used of $14 million in 2021. This reflects the net investment in a portfolio of investment grade debt and treasury securities. See Note 12 for further discussion on investments. Net cash used in investing activities increased from $4 million in 2020 to $14 million in 2021, which reflects a $30 million payment made to Aelis Farma for an exclusive option and license agreement to develop its leading compound (AEF0117) targeting cannabis use disorders, partially offset by proceeds received from the sale of the legacy TEMGESIC / BUPREX / BUPREXX (buprenorphine) franchise outside of North America.
Net cash used in financing activities
Net cash used in financing activities increased by $20 million, from $2 million in Q1 2022 to $22 million in Q1 2023. Net cash used in financing activities in the current period reflects the extinguishment of debt assumed in the Opiant acquisition, as well as shares repurchased and cancelled, principal portion of lease payments and quarterly amortization of the Group’s term loan facility partially offset by proceeds received from the issuance of shares.
Net cash used in financing activities increased by $6 million, to $100 million in 2022 from $94 million in 2021. This is primarily a reflection of an increase in payments made for the Group’s share repurchase program.
Net cash used in financing activities increased by $84 million, from $10 million in 2020 to $94 million in 2021 which reflects payments made for the Group’s share repurchase program and principal lease payments which were partially offset by the gross proceeds received upon refinancing of the Group’s term loan.
Capital Expenditure
The Group’s capital expenditures for the three months ended March 31, 2023 and the years ended 2022, 2021, and 2020 were $1 million, $5 million, $4 million, and $4 million, respectively. These capital expenditures, were primarily for equipment used in the manufacture of our products, and were made primarily in the U.K. The Group funded these expenditures from its existing cash balances.
Purchase of intangible assets for the three months ended March 31, 2023 and the years ended 2022, 2021, and 2020 were $5 million, $1 million, $30 million and $nil respectively. In 2021, the intangible assets purchase of $30 million reflects a payment made to Aelis Farma for an exclusive option and license agreement to develop its leading compound (AEF0117) targeting cannabis use disorders. This molecule is in late-stage phase 2b clinical development in the U.S. The Group funded this asset purchase from its existing cash balances.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Capital Expenditures | | For the three months ended
March 31, | | For the years ended
December 31, |
| (in millions) | | 2023 | | 2022 | | 2022 | | 2021 | | 2020 |
| Purchases of property, plant and equipment | | 1 | | | — | | | 5 | | | 4 | | | 4 | |
| Purchases of intangible assets | | 5 | | | — | | | 1 | | | 30 | | | — | |
Total | | $ | 6 | | | $ | — | | | $ | 6 | | | $ | 34 | | | $ | 4 | |
Contractual Obligations
The table below sets forth the Group’s anticipated contractual cash flows including bank borrowings, legal settlement payments and lease liabilities on an undiscounted basis as of March 31, 2023:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Total | | 1 year or less | | 2-5 years | | More than
5 years |
| (in millions) | | As at March 31, 2023 |
| Borrowings | | 239 | | | 3 | | | 236 | | | — | |
| DOJ Resolution | | 393 | | | 51 | | | 342 | | | — | |
| RB Settlement | | 38 | | | 15 | | | 23 | | | — | |
| Lease liabilities | | 47 | | | 10 | | | 31 | | | 6 | |
| ANDA Settlement | | 11 | | | — | | | 11 | | | — | |
Other(1) | | 10 | | | — | | | 10 | | | — | |
Total | | $ | 738 | | | $ | 79 | | | $ | 653 | | | $ | 6 | |
_______________
(1)Other liabilities primarily represent employee related liabilities and deferred revenue related to a supply agreement.
CVR Agreement
In connection with the acquisition of Opiant, a subsidiary of Indivior issued Contingent Value Rights (“CVRs”) to the stockholders of Opiant at the closing of the Merger. Each CVR represents the obligation of Indivior Inc. to pay the following Milestone Payments, in cash, without interest thereon and less any applicable withholding taxes, payable as specified upon the achievement of the following milestones (each, a “Milestone”):
•During the period beginning with the first commercial sale of OPTN003 (provided that if the first commercial sale occurs less than 45 days prior to the end of a calendar quarter, then the period beginning with the first day of the first calendar quarter immediately following the quarter in which the first commercial sale occurred) and ending on the seventh anniversary of the beginning of such period:
◦$2.00 per CVR, upon the first achievement in any four consecutive calendar quarters of worldwide Net Sales (as defined in the CVR Agreement) with respect to certain of Opiant’s products exceeding $225,000,000;
◦$2.00 per CVR, upon the first achievement in any four consecutive calendar quarters of worldwide Net Sales (as defined in the CVR Agreement) with respect to certain of Opiant’s products exceeding $300,000,000;
◦$2.00 per CVR, upon the first achievement in any four consecutive calendar quarters of worldwide Net Sales (as defined in the CVR Agreement) with respect to certain of Opiant’s products exceeding $325,000,000; and
•During the period beginning with the first commercial sale of OPTN003 (provided that if the first commercial sale occurs less than 45 days prior to the end of a calendar quarter, then the period beginning with the first day of the first calendar quarter immediately following the quarter in which the first commercial sale occurred) and ending on the third anniversary of the beginning of such period, $2.00 per CVR, upon the achievement of worldwide Net Sales (as defined in the CVR Agreement) with respect to certain of Opiant’s products exceeding $250,000,000.
We estimate total potential payments to be up to an additional $68 million over a period of up to 7 years from the date of the first commercial sales of a new Opiant product. Until the earlier of (a) the 7th anniversary of the closing of the merger and (b) the achievement of U.S. commercial launch, Indivior Inc., shall and shall cause its affiliates to use their commercially reasonable efforts to develop and seek FDA approval for OPVEE and following receipt of approval to achieve U.S. commercial launch. However, there is no requirement that Indivior Inc. or its affiliates undertake any level of efforts, or employ any level of resources, to develop, market or commercialize certain of Opiant’s products after U.S. commercial launch. Additionally, neither Indivior Inc. nor its affiliates are required to conduct or commit to conduct, any additional clinical, safety or efficacy studies in connection with obtaining regulatory approvals of OPVEE. The CVR Agreement has been filed as Exhibit 4.21 to this Registration Statement.
C.Research and Development Expenses, Patents and Licenses, etc.
See “Item 4.B.—Intellectual Property,” “Item 4.B.—Research and Development,” and “Item 5. Operating and Financial Review and Prospects D.Trend Information
For a discussion of trend information, see “Item 5.A.— Operating Results—Key factors affecting results of operations.” E.Critical Accounting Estimates
The consolidated financial statements are prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). The preparation of the financial statements requires Management to make certain estimates and assumptions, either at the balance sheet date or during the year, which affect the reported amounts of revenues, expenses, assets, liabilities and contingent amounts. Our most significant accounting estimates, set out in Note 2 “Basis of Preparation” included in “Item 18. Financial Statements—Audited Consolidated Financial Statements,” include a description of the estimates, assumptions and judgements applied in the preparation of the consolidated financial statements of the Group. Given the uncertainties inherent in our business activities, we must make certain estimates and assumptions that require difficult, subjective and complex judgments. These estimates are based on the Group’s knowledge of the amount, events, or actions considering history and expectations of future outcomes. Estimates and underlying assumptions are reviewed on an ongoing basis. Because of uncertainties inherent in such judgments, actual outcomes and results may differ from our assumptions and estimates, which could materially affect the Group’s consolidated financial statements. Application of the following accounting policies requires certain assumptions and estimates that have the potential for the most significant impact on our consolidated financial statements. Management believes that the
estimation uncertainties included within each policy could be material to the results of operations or cash flows in a given period. Revisions to the following estimates are recognized prospectively.
•Accruals for rebates, discounts and returns
•Litigation and IP related claims
•Impairment of intangible assets
ITEM 6: DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
A.Directors and Senior Management
The following table sets forth the names and positions of the members of our Board as of the date of this registration statement. Except as otherwise indicated, the business address of each of the directors is 234 Bath Road, Slough, Berkshire SL1 4EE, United Kingdom.
There are no familial relationships between any director, executive officer, or person nominated or chosen by the Group to become a director or executive officer.
| | | | | | | | | | | | | | | | | | | | |
Name | | Position | | Director Since | | Term Expires(1) |
Graham Hetherington | | Chair | | Nov. 2019 | | Nov. 2023 |
| Mark Crossley | | Chief Executive Officer
and Executive Director | | Feb. 2017 | | (2) |
Ryan Preblick | | Chief Financial Officer
and Executive Director | | Nov. 2020 | | (2) |
Daniel J. Phelan | | Senior Independent Director; Designated Non-Executive Director for Workforce Engagement | | Nov. 2014 | | Nov. 2023(3) |
| Peter Bains | | Independent Non-Executive Director | | Aug. 2019 | | Jul. 2025 |
| Jerome Lande | | Non-Executive Director | | Mar. 2021 | | Dec. 2023 |
Joanna Le Couilliard | | Independent Non-Executive Director | | Mar. 2021 | | Mar. 2024 |
Dr. A. Thomas McLellan, Ph.D. | | Independent Non-Executive Director | | Nov. 2014 | | Nov. 2023(4) |
| Lorna Parker | | Independent Non-Executive Director | | Nov. 2014 | | Nov. 2023(5) |
| Barbara Ryan | | Independent Non-Executive Director | | Jun. 2022 | | Jun. 2025 |
| Mark Stejbach | | Independent Non-Executive Director | | Mar. 2021 | | Mar. 2024 |
| Juliet Thompson | | Independent Non-Executive Director | | Mar. 2021 | | Mar. 2024 |
________________
(1)The dates listed represent the end of the respective Director’s term of office on the Board.
(2)Per their employment with the Group, Messrs. Crossley and Preblick serve at the request of the Board and may be removed at any time. Their business address is 10710 Midlothian Turnpike, Suite 125, North Chesterfield, VA, 23235, United States.
(3)Mr. Phelan will retire from the Board at September 30, 2023.
(4)Dr. McLellan will continue to serve as an independent non-executive director until a replacement has been appointed and a period of transition has been completed.
(5)Ms. Parker will retire from the Board at September 30, 2023.
Graham Hetherington, age 64, has served as Chair of the Board since November 2020 and as a non-executive director since November 2019. Mr. Hetherington brings substantial financial and industry experience to the Board having served as the Chief Financial Officer of two FTSE 100 companies. He has a wide knowledge of international financial management and planning, including M&A and audit and risk management, coupled with an in-depth understanding of the U.S. market. Mr. Hetherington was previously Chief Financial Officer of Shire PLC, a global pharmaceutical company, from 2008 until 2014, Chief Financial Officer of Bacardi and Company between 2007-08 and Chief Financial Officer of Allied Domecq plc from 1999 to 2005. Mr. Hetherington was chair of the Audit Committee of BTG plc, a global healthcare company, from 2016 to 2019 and senior independent director of BTG plc from 2017 to 2019. Mr. Hetherington is a Fellow of the Chartered Institute of Management Accountants.
Mark Crossley, age 53, has been Chief Executive Officer since June 2020. He joined the Group in 2012 as the Global Finance Director with responsibilities for finance, information systems and procurement. He was appointed Chief Strategy Officer in October 2014. Mr. Crossley was appointed to the Board in February 2017 and served as Chief Financial Officer from 2017 to 2019. He was appointed Chief Financial and Operations Officer in July 2019, with oversight of the finance, information technology,
manufacturing, supply, quality and procurement functions. Prior to joining Indivior, Mr. Crossley spent 13 years at Procter & Gamble in various finance leadership roles including Corporate Portfolio, Strategic and Business Planning (Female Beauty), as well as multiple roles in Corporate Treasury and its Baby Care division. He also enjoyed an eight-year career with various operational and staff assignments in the U.S. Coast Guard. Mr. Crossley graduated from the U.S. Coast Guard Academy with a BS in Management and Economics and received an MBA from Boston College.
Ryan Preblick, age 47, was appointed Chief Financial Officer and executive director in November 2020, having served as Interim Chief Financial Officer since June 2020. Mr. Preblick has been in a financial leadership capacity since joining Indivior in 2012. Prior to his appointment as Interim Chief Financial Officer in June 2020, Mr. Preblick was Senior Vice President, Global Finance and Commercial Operations. This included overseeing all key financial management, analysis and reporting elements of the Group’s global business. Prior to that, he was Vice President, U.S. Finance with responsibility overseeing all financial aspects of the U.S. business, the Group’s largest business, including management, planning, analysis and reporting, government pricing and managed care contracting operations. Mr. Preblick joined Indivior as U.S. Commercial Controller in 2012. Mr. Preblick began his career in corporate finance at Honeywell International and then spent twelve years at Altria Company (including Phillip Morris USA) in finance leadership roles of increasing responsibility working with Treasury, Financial Planning & Analysis, Market Analytics, Supply Chain and Brand Decision Support. Mr. Preblick holds a BS in Finance from Penn State University and an MBA from the University of Richmond.
Daniel J. Phelan, age 73, has served as an independent non-executive director since November 2014. Mr. Phelan retired from GlaxoSmithKline plc in December 2012 after 31 years, during which time he was an adviser to three chief executives and a member of the Corporate Executive Team. Prior to his retirement, he was Chief of Staff with global responsibility for Corporate Strategy and Development, Human Resources, Information Technology, Real Estate and Facilities, Environmental, Health and Safety, and Security. Before that, he was Senior Vice-President, Human Resources for fourteen years. Mr. Phelan previously served from 2006 to 2022 as a member of the board of directors of TE Connectivity Ltd. (NYSE: TEL) (formerly Tyco Electronics Ltd.), was a member of the Health Care and Life Sciences Advisory Board of Computer Sciences Corporation from 2013 to 2015 and served on the Advisory Board of RiseSmart, Inc. from 2012 to 2016. He was also a member of the Board of Trustees of Rutgers University from 2013 to 2017. Mr. Phelan is a graduate of Rutgers College and holds a Master’s degree from The Ohio State University and a Law degree from Rutgers University School of Law. He is admitted to practice law in New Jersey and Pennsylvania. Mr. Phelan previously served as an officer on active duty and in the reserves of the U.S. Army Medical Service Corps. He has published on CEO succession planning and onboarding and public sector collective bargaining. Mr. Phelan will retire from the Board on September 30, 2023.
Peter Bains, age 65, has served as an independent non-executive director since August 2019. He currently serves as Chief Business Officer of MiNA Therapeutics Limited, a private company focused on the development of RNA activation therapeutics. Mr. Bains is Non-Executive Chair of ILC Therapeutics, a private UK-based biotechnology company and pioneer in the discovery and development of hybrid interferon drugs, and a non-executive director of both Apterna Limited and Biocon Limited. Mr. Bains has over three decades of experience in the biotech and pharmaceutical industry, including a 23-year career at GlaxoSmithKline, where he held numerous senior operational and strategic roles. He also served as the Chief Executive Officer of Sosei Group Corporation, a Tokyo-listed biotech company, from 2010 to 2018, and as the Chief Executive Officer of Syngene International, which he successfully took public on the Mumbai Exchange, from 2010 to 2016. Mr. Bains previously served as a member of the board of directors of Mereo BioPharma Group plc (NASDAQ: MREO), a public biopharmaceutical company focused on innovative therapeutics in both oncology and rare diseases, from 2015 to 2021. Mr. Bains has a BSc Combined (Honours) in Physiology/Zoology from Sheffield University.
Jerome Lande, age 47, has served as a non-executive director since March 2021. Mr. Lande has over 20 years of experience as a professional investor, including substantial investing in medical device, pharmaceutical and healthcare services companies. He currently serves as Head of Special Situations
investments at Scopia Capital Management. Mr. Lande co-founded Coppersmith Capital Management, where he was managing partner and portfolio manager until it combined with Scopia in 2016. Prior to co-founding Coppersmith, Mr. Lande was a partner of MCM Capital Management, LLC, the general partner of MMI Investments, LP, a small-cap investment fund founded in 1996 to employ private equity investing methodologies in public equities, and where Mr. Lande oversaw research, trading, and activism from 1998 to 2011. During that time, he was also associated with MCM’s private equity investments wherein he was directly involved with corporate development as well as equity growth. Mr. Lande is a member of the board of directors and of the compensation committee and chair of the strategy committee of CONMED Corporation (NYSE: CNMD), a public global medical technology company. Mr. Lande is also a member of the board of directors and of the audit/finance committee of Itron, Inc. (NASDAQ: ITRI), a public global technology company that offers products and services on energy and water resource management. He previously served as a member of the board of directors of Forest City Realty Trust, Inc. (NYSE: FCE/A), a public national real estate company. Mr. Lande holds a B.A. from Cornell University.
Mr. Lande became a non-executive director in connection with the Relationship Agreement between the Group and Scopia.
Joanna Le Couilliard, age 59, has served as an independent non-executive director since March 2021. Ms. Le Couilliard is a healthcare industry veteran with 25 years of healthcare management experience gained in Europe, the U.S. and Asia. Much of her career has been in pharmaceuticals at GlaxoSmithKline where, amongst other roles, she headed the U.S. vaccines business and Asia Pacific Pharmaceuticals business and led a program to modernize the commercial model. Ms. Le Couilliard was previously Chief Operating Officer at the BMI group of private hospitals in the UK. She currently serves as a non-executive director and chair of the Audit and Risk Committee at Niox Group PLC (previously Circassia Group plc), as a non-executive director and chair of the Remuneration Committee at Alliance Pharma plc, and as a non-executive director at the Italian-listed pharmaceutical company Recordati S.p.A., where she is also chair of the Remuneration and Nominations Committee. Ms. Le Couilliard has previously served as a non-executive director at Frimley Park NHS Foundation Trust in the UK, at Cello Health PLC and at the Duke NUS Medical School in Singapore. Ms. Le Couilliard is a Chartered Accountant holding an ACA from the Association of Chartered Accountants and holds a Masters in Natural Sciences from the University of Cambridge. Ms. Le Couilliard will become Chair of the Remuneration Committee with effect from October 1, 2023.
Dr. A. Thomas McLellan, Ph.D., age 74, has served as an independent non-executive director since November 2014. He has been a career researcher for over 40 years with the Treatment Research Institute (which he co-founded in 1992) and the University of Pennsylvania. In his career, Dr. McLellan has published over 650 articles and chapters on addiction research. He has received several awards including Life Achievement Awards from the American, Swedish, Italian and British Societies of Addiction Medicine and from the American Public Health Association in 2010. Between 2009 and 2011, Dr. McLellan was unanimously confirmed by the U.S. Senate to serve as Deputy Director of the White House Office of National Drug Control Policy, where he was one of the principal authors of the President’s National Drug Control Strategy. Dr. McLellan holds a BA from Colgate University and his MS and PhD from Bryn Mawr College. He received postgraduate training in psychology at The University of Oxford. Dr. McLellan will continue to serve as an independent non-executive director until a replacement has been appointed and a period of transition has been completed.
Lorna Parker, age 64, has served as an independent non-executive director since November 2014 and was Chair of the Nominations and Governance Committee from 2016 to 2021. She has over 30 years of executive search, management assessment and board consulting experience, and UK-listed company experience and provides strong leadership on governance matters including succession planning. Ms. Parker is currently an advisory partner at Manchester Square Partners, where she conducts board effectiveness reviews for FTSE 100 companies. She is also currently a supervisory board member of PAI Partners SAS, a trustee of the Royal Horticultural Society, and a trustee of the National Opera Studio. Previously, Ms. Parker served as a Senior Advisor at CVC Capital Partners from 2016 to 2021, director of Future Academies from 2014 to 2017, and Senior Advisor at BC Partners from 2008 to 2016. She was a
partner from 1989 to 2008 at Spencer Stuart, where she led the private equity practice across Europe and the legal search practice group. Ms. Parker has an MA in Economics from Cambridge University and an MBA from Stanford Business School, where she was a Harkness Fellow. Ms. Parker will retire from the Board on September 30, 2023.
Barbara Ryan, age 63, has served as an independent non-executive director since June 2022. Ms. Ryan was a Wall Street sell-side research analyst covering the U.S. Large Cap Pharmaceutical Industry for more than 30 years before founding Barbara Ryan Advisors, a capital markets and communications firm, in 2012. She has deep experience in equity and debt financings, M&A, valuation, SEC reporting, financial analysis and corporate strategy across a broad range of life sciences companies. Ms. Ryan is also the Founder of Fabulous Pharma Females, a non-profit organization whose mission is to advance women in the biopharma industry. She is a Senior Advisor at Ernst & Young and is currently a non-executive director of INVO Bioscience, Inc. (NASDAQ: INVO), serving as a member of the Audit, Compensation, and Nominating and Governance Committees, and MiNK Therapeutics, Inc. (NASDAQ: INKT), serving as the chair of the Audit Committee and as a member of the Compensation Committee.
Mark Stejbach, age 60, has served as an independent non-executive director since March 2021. Mr. Stejbach has over 35 years of experience in biotech and pharmaceuticals, including senior roles in a broad range of commercial functions including marketing, sales, economic affairs, managed care and finance. Mr. Stejbach most recently served as Senior Vice President and Chief Commercial Officer at Alkermes, plc, a publicly traded global biopharmaceutical company, where he was responsible for building sales of Vivitrol from approximately $40 million to approximately $300 million. Prior to his role at Alkermes, Mr. Stejbach served as the Chief Commercial Officer at Tengion, Inc. from 2008 to 2012, and previously held senior positions at Merck and Biogen. He served as a non-executive director on the board of Flexion Therapeutics, Inc. (NASDAQ: FLXN) from 2016 until its acquisition in 2021. Flexion marketed a “buy-and-bill” long-acting injectable for the treatment of osteoarthritis. He also previously served as Senior Commercial Advisor to EIP Pharma Inc., a private company advancing CNS-focused therapeutics to benefit patients with neurodegenerative diseases. Mr. Stejbach holds an MBA from the Wharton School, University of Pennsylvania and a BS in mathematics from Virginia Tech.
Juliet Thompson, age 56, has served as an independent non-executive director since March 2021, and has been appointed as Senior Independent Director with effect from October 1, 2023. Ms. Thompson has over 30 years of finance, banking and board experience with significant focus in the healthcare sector. Ms. Thompson is a proven FTSE 250 audit chair and a former investment banker who has spent her career advising pharmaceutical companies. She played a leading role in setting up Code Securities, which was acquired by Nomura (becoming Nomura Code) but remained independent. At Nomura Code, Ms. Thompson advised companies in the healthcare and clean tech sectors on their financing and strategic options. She worked on over 50 transactions including IPO’s, secondary offerings, private placements and M&A. As Nomura Code was devolved, she joined Stifel with a team from Nomura Code to head up the life sciences and clean tech teams where she advised CEOs and CFOs in the healthcare sector. Since retiring, Ms. Thompson has built a diverse portfolio; she currently chairs the Audit Committees of Novacyt S.A., OrganOx Limited and ANGLE plc. She previously served on the board of GI Dynamics, Inc., a Boston-based medical device company developing products for patients with type 2 diabetes and obesity. Ms. Thompson holds a BSc in Economics from the University of Bristol and is a Chartered Accountant holding an ACA from the Association of Chartered Certified Accountants.
Agreement with Significant Shareholder
The Group entered into an agreement titled Relationship Agreement with Scopia Capital Management LP (“Scopia”) on March 24, 2021 (as further amended on July 7, 2022 and April 26, 2023, the “Relationship Agreement”). In recognition of Scopia’s ownership of approximately 16.9% of the Group’s shares as at March 24, 2021, the Group agreed to appoint Jerome Lande as a Representative Director.
Scopia agreed to certain standstill provisions (for example to vote on ordinary course resolutions in accordance with the Board’s recommendation).
The parties amended and restated the Relationship Agreement on July 7, 2022 and April 26, 2023 and further agreed that Scopia would not exercise voting rights in excess of 10% of the outstanding shares. The Relationship Agreement, as amended and restated, is filed as Exhibit 4.2 to this Registration Statement.
The Relationship Agreement, as amended, terminates upon the earlier of (i) December 31, 2023, (ii) the date on which Scopia publicly discloses that it has ceased to hold directly or indirectly at least five per cent of the issued share capital of the Group, or (iii) in certain circumstances, and only in the event that Mr. Lande has resigned from the Board, a specified date to be calculated with reference to the date of the 2023 AGM.
Senior Management
The following table sets forth the names and positions of the members of our Senior Management team as of the date of this registration statement. Except as otherwise indicated, the business address for each member of our Senior Management is 10710 Midlothian Turnpike, Suite 125, North Chesterfield, VA, 23235, United States.
| | | | | | | | |
| Name | | Position |
| Mark Crossley | | Chief Executive Officer |
Ryan Preblick | | Chief Financial Officer |
| Jeff Burris | | Chief Legal Officer |
| Cindy Cetani | | Chief Integrity and Compliance Officer |
| Nina DeLorenzo | | Chief Global Impact Officer |
| Jon Fogle | | Chief Human Resources Officer |
| Christian Heidbreder | | Chief Scientific Officer |
Kathryn Hudson (1) | | Company Secretary |
| Vishal Kalia | | Chief Strategy Officer |
| Richard Simkin | | Chief Commercial Officer |
Hillel West (1) | | Chief Manufacturing and Supply Officer |
________________(1)The business address for Ms. Hudson and Mr. West is 234 Bath Road, Slough, Berkshire, SL1 4EE, United Kingdom.
Mark Crossley—Chief Executive Officer. See biography at page 135. Ryan Preblick—Chief Financial Officer. See biography at page 136. Jeff Burris, age 51, was appointed Chief Legal Officer in December 2021. He brings 25 years of extensive legal, life sciences and public company experience to Indivior, including over 14 years as the head of the legal function at various life sciences companies. Mr. Burris joined Indivior from Arbor Pharmaceuticals where he was Vice President, General Counsel, Chief Compliance Officer and Secretary from October 2018 to October 2021. Prior to that he was Vice President, General Counsel, Chief Compliance Officer and Secretary at Alimera Sciences, a publicly traded pharmaceutical company, from April 2015 to September 2018 and Vice President, General Counsel and Chief Compliance Officer at CryoLife, a publicly traded biotechnology company, from February 2008 to August 2014. Jeff started his career in the corporate law group at Arnall Golden Gregory LLP focused on mergers, acquisitions, divestitures, contracting and licensing work. He then moved in-house to Waste Management, where he was Senior Counsel focused primarily on acquisitions and divestitures of Waste Management’s Southern Group. Mr. Burris holds a BA in History and Economics from the University of Tennessee and a JD from The University of Chicago Law School.
Cindy Cetani, age 58, was appointed as Chief Integrity & Compliance Officer for Indivior in October 2018. Ms. Cetani brings to Indivior 35 years of U.S. and global leadership predominantly in the pharmaceutical industry, with a diversity of cross-industry experience spanning life and health insurance. Ms. Cetani joined Indivior in 2018 from Novartis Pharmaceuticals Corp. (Novartis) where she served as Head of Compliance Operations, Group Integrity and Compliance at the Novartis headquarters in Basel, Switzerland. Prior to that role, she served as Chief Compliance Officer and U.S. Country Compliance Head and was responsible for administration of Novartis’ U.S. compliance program and negotiation, implementation of, and compliance with Novartis’ 5-year Corporate Integrity Agreement with the Department of Health and Human Services Office of Inspector General, and was a member of the executive committee and global and international compliance leadership teams. Before joining Novartis in 2003, Ms. Cetani was Director of Operations, Managed Markets at Pharmacia, led Advertising Compliance for Prudential Healthcare, and held various managerial roles at U.S. life insurance and mutual benefit life insurance companies. Ms. Cetani is certified as a Leadership Professional of Ethics and Compliance from Ethics & Compliance Initiative, and holds a BS, Commerce, Finance – magna cum laude from Rider College.
Nina DeLorenzo, age 51, was appointed Chief Global Impact Officer in May 2022. She brings over 25 years of public affairs, communications, policy, and government affairs experience to Indivior. Immediately prior to joining Indivior, Ms. DeLorenzo was Senior Vice President of Global Communications and Public Affairs for Emergent BioSolutions from March 2020 to May 2022 where she led all aspects of corporate communications and was also responsible for citizenship, philanthropy, and third-party alliance building. Ms. DeLorenzo’s previous experience also includes overseeing operations and engagement for a global organization of 450 external affairs professionals at Sanofi in Paris; leading international government affairs and other public policy functions at AbbVie; and in various senior government and public affairs roles at Pfizer Inc., Schering-Plough Corp. (now Merck), and the Pharmaceutical Research and Manufacturers of America (PhRMA). Prior to starting her career path in the pharmaceutical industry, Ms. DeLorenzo served in the administration of President George W. Bush, working in the White House Coalition Information Center at the outset of the war on terror; served in the Bureau of International Information Programs at the U.S. Department of State; and also worked in the U.S. Senate and on political campaigns. Ms. DeLorenzo obtained her BA in government and international relations from the University of Notre Dame and her master’s degree in international relations from the University of Chicago.
Jon Fogle, age 52, was appointed Chief Human Resources Officer for the Group in October 2014 and brings over 30 years’ human resources experience. Prior to joining Indivior, Mr. Fogle worked at Reckitt Benckiser Pharmaceuticals (RBP), having joined RBP as Human Resources Director for the U.S. in 2007. In 2010, he was promoted to Global Human Resources Director, and, under his leadership, RBP grew from just over 200 employees in three countries to more than 1,000 employees in 11 countries. Working with the entire leadership team, Mr. Fogle fostered a strong commitment to developing both Indivior’s culture and talent. Prior to joining RBP, he was Senior Vice President of Human Resources, North America for Capmark Finance (formerly GMAC Commercial Mortgage). Mr. Fogle holds a BS in psychology from Ursinus College and is a Society for Human Resource Management (SHRM) Senior Certified Professional.
Dr. Christian Heidbreder, age 60, has served as Chief Scientific Officer since December 2014. Dr. Heidbreder combines 30 years of experience in the neurosciences spanning the academic, governmental, and industrial sectors across Europe and the US. He has authored and co-authored over 450 peer-reviewed scientific publications, reviews, and published conference proceedings with more than 10,000 citations. For ten years prior to crossing into industry, Dr. Heidbreder made a mark in the halls of Academia at the University of Louvain in Belgium, at the National Institute on Drug Abuse in Baltimore, and at the Swiss Federal Institute of Technology in Zürich. For the last 20 years, Dr. Heidbreder held positions of increasing responsibility at SmithKline-Beecham’s Neuroscience Department in the UK, GSK’s R&D Centre of Excellence for Drug Discovery in Psychiatry in Italy, Altria’s Health Sciences Department in the US, and Reckitt Benckiser Pharmaceuticals (RBP) in the US and the UK. Following the
demerger of the Pharmaceuticals component of RBP in December 2014, Dr. Heidbreder joined Indivior as Chief Scientific Officer to provide strategic global leadership for worldwide R&D and Medical Affairs operations and drive the development of new pharmacotherapies in the area of addiction and related co-morbidities. Dr. Heidbreder holds BA, MA, and PhD degrees from the University of Louvain and is an Affiliate Professor in the Department of Pharmacology & Toxicology of the Virginia Commonwealth University School of Medicine and a Governance Fellow of the National Association of Corporate Directors. Dr. Heidbreder also served as a member of the National Advisory Council on Drug Abuse from 2018 to 2022 and has been a member of the National Institutes of Health Helping to End Addiction Long-term Multi-Disciplinary Working Group since 2018.
Kathryn Hudson, age 48, has served as Company Secretary since June 2015. Ms. Hudson is a Chartered Secretary who has over twenty years of experience working for UK-listed companies. Prior to joining Indivior, she was Company Secretary of Kingfisher plc, a constituent of the FTSE 100 and one of Europe’s largest retailers, Deputy Company Secretary of Burberry Group plc, the FTSE 100 global luxury goods group, and Deputy Company Secretary of ICAP PLC, a FTSE 100 Interdealer Broker. Ms. Hudson is a fellow of the Chartered Governance Institute.
Vishal Kalia, age 42, was appointed Chief Strategy Officer in March 2023. He began his career with Indivior in 2016 as Head of Marketing and New Product Launch, followed by Head of Business Unit for Addiction Sciences leading the successful launch of SUBLOCADE, followed by SVP Responsible for Treatment Access (Channel, Managed Care), Organized Health Systems, Criminal Justice System, Patient Support Programs, Customer Marketing, and Business Strategy. Prior to joining Indivior, Vishal worked at global companies like Reckitt Benckiser and Nestle in a number of global and regional roles, leading global category development, launching several breakthrough innovation, lifecycle management, award winning brand communications, and global success models. Vishal graduated from DAVV University with a Bachelors of Commerce and Accountancy and a Masters of International Marketing Management from Leeds University.
Richard Simkin, age 53, has served as Chief Commercial Officer since January 2015. He began his career with Reckitt Benckiser plc (formerly Reckitt & Colman plc) (RB) in 1987 and held various roles in operations, sales and marketing with increasing responsibility. Prior to his role with RB, Mr. Simkin held the position of Global Category Director for one of the core categories within the Reckitt Benckiser Group (RBG) where he was responsible for driving strategy and new product development. He also held a number of general manager positions within the RBG, including as General Manager, Portugal beginning in 2008. In 2012, Mr. Simkin was appointed President, North America of Reckitt Benckiser Pharmaceuticals Inc. (RBPI) and moved to the U.S. where he led the U.S. and Canadian teams in introducing market competition and preparing pre-launch activities related to RBPI’s product pipeline. Mr. Simkin holds an MBA from the University of Lincoln (formerly the University of Lincolnshire and Humberside).
Hillel West, age 55, was appointed Chief Manufacturing and Supply Officer in February 2020. Mr. West has more than 25 years of experience in operations management, strategy and business development across the U.S., Europe, Asia-Pacific and emerging markets. He joined Indivior from Teva Pharmaceuticals where he held roles of increasing responsibility over his 14-year tenure including Head of Specialty Medicines Supply, Head of Global Supply Chain and Operations Strategy, and Vice President – Integration and Separation Management. Previously, he was a senior director at PwC Management Consulting for 9 years in New York, Israel and the Czech Republic, partnering with a number of U.S. Fortune 500 CPG, Food and Pharma manufacturers leading engagements in supply chain strategy, organizational and process transformation. Mr. West holds a Bachelor of Chemical Engineering (Hons) from Monash University, Australia and an MBA from Columbia University.
B.Compensation
Total Compensation for the Chair and Non-Executive Directors
The table below sets out the total remuneration received by the Chair and the Non-Executive Directors for the year ended December 31, 2022.
| | | | | |
| 2022(1) |
| ’000 |
| Graham Hetherington | £275.0 |
| Peter Bains | £85.0 |
Jerome Lande (2) | $101.7 |
| Joanna Le Couilliard | £75.0 |
| A. Thomas McLellan | $110.0 |
| Lorna Parker | £75.0 |
| Daniel J. Phelan | $153.4 |
Barbara Ryan (3) | $58.3 |
| Mark Stejbach | $110.0 |
| Juliet Thompson | £85.0 |
__________________
(1)The amounts include fees and benefits. Fees are paid in their local currency. Since 2016, a fixed exchange rate (GB£1:U.S.$1.4434) has been applied to translate UK amounts into U.S. dollars, effectively setting fees at that time, on both a UK and U.S. basis. Benefits comprise the estimated grossed-up cost of providing professional support for the completion of UK tax returns for U.S. tax residents; these costs were translated to U.S. dollars using the average exchange rate for the last quarter of the 2022 financial year (GB£1:U.S.$1.1717).
(2)Jerome Lande stood down as a member of the Audit Committee with effect from April 25, 2022; his fees were adjusted accordingly.
(3)Barbara Ryan was appointed as a Non-Executive Director on June 1, 2022 and was appointed as a member of the Audit and Science & Policy Committees on July 27, 2022. The fee shown for 2022 is from the date of her appointment to December 31, 2022. As Mr. Ryan was appointed after the end of the 2021-2022 tax year, she did not incur a UK tax liability and did not need support to file a UK tax return.
Compensation of Executive Directors and Senior Managers
The table below sets forth the remuneration of the Executive Directors and Senior Managers for the financial year ended December 31, 2022.
| | | | | | | | | | | | | | | | | | | | |
| Mark Crossley $’000 | | Ryan Preblick $’000 | | All Other Senior Managers Combined $’000 | |
| Fixed Pay | | | | | | |
| Base Salary | 806.0 | | 499.2 | | 3,496.0 | |
Taxable Benefits (1) | 60.6 | | 59.0 | | 417.6 | |
Retirement Benefits (2) | 25.9 | | 25.9 | | 312.6 | |
Total Fixed Pay | 892.5 | | 584.1 | | 4,226.2 | |
| | | | | | |
| Variable Pay | | | | | | |
Annual Incentive Plan (AIP) (3) | 608.5 | | 376.9 | | 2,917.7 | |
| Long Term Incentive Plan (LTIP) | 8,585.0 | (4) | 1,283.2 | (5) | 25,238.0 | (6) |
Total Variable Pay | 9,193.5 | | 1,660.1 | | 28,155.7 | |
Total Pay | 10,086.0 | | 2,244.2 | | 32,381.9 | |
_____________
(1)Taxable benefits consist primarily of healthcare, car allowance, life and disability insurance and professional support for the completion of U.S. and UK tax returns. Taxable benefits included a car allowance ($19,500) and premiums for medical coverage ($18,800 for Mark Crossley and $29,000 for Ryan Preblick).
(2)Executive Directors and Senior Managers may receive contributions into a defined contribution plan, a cash allowance, pension benefits in the form of company profit-sharing or matching contributions into the U.S. qualified 401(k) plan or a combination thereof. Mark Crossley and Ryan Preblick received profit-sharing contributions of $12,200 (4% of base salary) and matching contributions of $13,700 (75% on elected deferrals up to 4.5% of base salary) to their 401(k) plan accounts.
(3)The maximum Annual Incentive Plan (“AIP”) opportunity for the Chief Executive Officer is 200% of his base salary. The maximum AIP opportunity for the Chief Financial Officer is 120% of his base salary. The maximum AIP opportunity for our Senior Managers ranges from 90% to 140% of their base salary. For our Executive Directors, the AIP is paid 75% in cash, with the remaining 25% deferred into conditional shares for two years under the Group’s Deferred Bonus Plan. See “Deferred Bonus Plan 2018 (“DBP”)”, beginning on page 152. For Senior Managers, the AIP is paid in cash. For fiscal year 2022, the Remuneration Committee set performance targets in the context of the business plan for 2022 and taking account of external forecasts. These targets were set by reference to the key strategic drivers for the business: global net revenues for SUBLOCADE and U.S. net revenues for PERSERIS, weighted 80%/20% respectively. For threshold performance 12.5% of the maximum bonus would be paid, for target performance 50% of the maximum bonus would be paid, and 100% of the maximum bonus would be paid for the delivery of performance significantly above both internal and external expectations. Achievement of the performance targets is calculated on a straight-line basis between threshold and target, and between target and maximum. Overall performance resulted in a formulaic payout of 75.5% of maximum. (4)The LTIP awards granted to Mark Crossley in March and November 2020 vested on March 9, 2023 and are subject to a two-year post-vesting holding period and will be released in March 2025. The value of the awards was estimated based on the number of shares expected to vest (443,118) at the three-month average share price of Indivior shares for the last quarter of the 2022 financial year (1653.5p) and converted to U.S. dollars using the average GBP/U.S.$ exchange rate over the same period (GB£1:U.S.$1.1717). The proportion of the value disclosed in the single figure attributable to share price growth is 84.6%.
(5)The LTIP awards granted to Ryan Preblick in March 2020 vested on March 9, 2023. The value of the award was estimated based on the number of shares expected to vest (66,233) at the three-month average share price of Indivior shares for the last quarter of the 2022 financial year (1653.5p) and converted to U.S. dollars using the average GBP/U.S.$ exchange rate over the same period (GB£1:U.S.$1.1717). Mr. Preblick was not an Executive Director when the awards were granted to him and consequently the awards are not subject to a two-year post-vesting holding period. The proportion of the value disclosed in the single figure attributable to share price growth is 83.9%.
(6)The value of the awards has been estimated based on the number of shares expected to vest (1,302,672) at the three-month average share price of Indivior shares for the last quarter of the 2022 financial year (1653.5p) and converted to U.S. dollars using the average GBP/U.S.$ exchange rate over the same period (GB£1:U.S.$1.1717).
Annual Incentive Plan (“AIP”)
In addition to base salary, an annual bonus opportunity exists for all employees, including the Executive Directors and Senior Managers. The maximum AIP opportunity for the Chief Executive Officer is 200% of his base salary. The maximum AIP opportunity for the Chief Financial Officer is 120% of his base salary. The maximum AIP opportunity for our Senior Managers ranges from 90% to 140% of their base salary. For our Executive Directors (the Chief Executive Officer and Chief Financial Officer), the AIP is paid 75% in cash, with the remaining 25% deferred into conditional shares for two years under the Group’s Deferred Bonus Plan. See “The Deferred Bonus Plan 2018 (“DBP”)”, beginning on page 152. For Senior Managers, the AIP is paid in cash. Performance measures under the AIP are designed to align to the key strategic drivers for the year ahead and are developed alongside the Group’s annual financial plans. The Remuneration Committee has discretion to adjust the formulaic bonus outcomes both upward and downward (including to zero) to ensure alignment of pay with the underlying performance of the Group, e.g. in the event performance is impacted by unforeseen circumstances outside Management control.
For the 2022 financial year, the Remuneration Committee set performance targets in the context of the business plan for 2022 and taking account of external forecasts. These targets were set by reference to the key strategic drivers for the business: global net revenues for SUBLOCADE and U.S. net revenues for PERSERIS, weighted 80%/20% respectively. For threshold performance 12.5% of the maximum bonus would be paid, for target performance 50% of the maximum bonus would be paid, and 100% of the maximum bonus would be paid for the delivery of exceptional performance significantly above both internal and external expectations. Achievement of the performance targets is calculated on a straight-line basis between threshold and target, and between target and maximum. Overall performance resulted in a formulaic payout of 75.5% of maximum.
In line with our Remuneration Policy, 25% of the 2022 bonus payable under the AIP to the Executive Directors was automatically deferred into conditional shares under the DBP. The deferred conditional share awards vest after two years subject to continued employment as well as malus provisions.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Date of Grant | | Number of shares under award | | Closing share price at date of grant | | Aggregate fair market value as of the date of grant (1) $’000 | | Vesting Date |
Mark Crossley | Mar. 15, 2022 | | 19,215 | | | 1,349p | | 342.9 | | | Mar. 15, 2024 |
Ryan Preblick | Mar. 15, 2022 | | 7,140 | | | 1,349p | | 127.4 | | | Mar. 15, 2024 |
__________
(1)The market value used to determine the number of shares subject to awards was 1,370p, being the average mid-market closing price of Indivior shares on the business day immediately preceding the date of grant.
Indivior PLC Long-Term Incentive Plan (“LTIP”)
On March 1, 2022, the Chief Executive Officer and Chief Financial Officer were granted conditional awards over shares with a value equal to 400% of their base salary, being the maximum cap under the 2021 Remuneration Policy.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Date of Grant | | Number of shares under award at maximum | | Closing Share Price at date of grant | | Aggregate fair market value as of the date of grant $’000 | | Performance period | | Vesting date | | Release Date | |
Mark Crossley | Mar. 1, 2022 | | 175,699(1) | | 1403.0p | | 3,224.0 | | | Jan. 2022 – Dec. 2024 | | Mar. 1, 2025 | | Mar. 1, 2027 | (2) |
Ryan Preblick | Mar. 1, 2022 | | 108,820(1) | | 1403.0p | | 1,996.8 | | | Jan. 2022 – Dec. 2024 | | Mar. 1, 2025 | | Mar. 1, 2027 | (2) |
| All Other Senior Managers Combined | (3) | | 704,538(4) | | (5) | | 13,000.2 | | | Jan. 2022 – Dec. 2024 | | Mar. 1, 2025 | | Mar. 1, 2025 | |
______________
(1)The market value used to determine the number of shares subject to awards was 1370.6p, being the average mid-market closing price of Indivior shares on the five business days immediately preceding the date of grant on March 1, 2022.
(2)Awards granted to the Executive Directors under the LTIP are subject to a two-year post-vesting holding period and are then released to the Executive Director.
(3)634,901 shares were granted on March 1, 2022 to those senior managers existing as of that date, and 69,637 shares were granted on August 3, 2022 to a senior manager hired after the March 1, 2022 grant.
(4)The market value used to determine the number of shares subject to awards was 1370.6p and 1587.2p, being the average mid-market closing price of Indivior shares on the five business days immediately preceding the dates of grant on March 1, 2022 and August 3, 2022, respectively.
(5)The closing share price was 1403.0p and 1634.0p at the dates of the March 1, 2022 and August 3, 2022 grants, respectively.
(6)Conditional awards include the right to receive an amount equal in value to any dividends payable on the number of vested shares between the date of grant and the release date.
Indivior Share Plans
We have established the following plans, the key terms of which are summarized below.
The Indivior Long-Term Incentive Plan (the “LTIP”)
The LTIP was adopted by the Board on November 5, 2014 and was amended by the Remuneration Committee on November 16, 2016, November 14, 2018 and February 14, 2023.
Administration of the LTIP
The LTIP is administered by the Remuneration Committee or, in the case of awards not being made to directors, such other committee as authorized by the Group (the “LTIP Committee”).
Eligibility
The LTIP Committee may select any employee of the Group, including any Executive Director, to participate in the LTIP.
Awards
Awards may be granted over ordinary shares and will normally take one of three forms:
•a conditional award, which is a right to receive ordinary shares on vesting;
•an option to acquire ordinary shares at a price set by reference to their market value at the grant date; or
•an option to acquire ordinary shares for no cost or a nominal amount.
Awards may be satisfied by the issue of new ordinary shares, the transfer of ordinary shares held in treasury or by paying an equivalent amount in cash.
Awards are personal to the participant and may not be transferred except on death. No payment is required for the grant of an award.
Timing
Awards may only be granted within 42 days following: the announcement of the Group’s results for any period; the removal of any restrictions imposed on the Group which have previously prevented an award from being granted; any date on which changes to legislation or regulations affecting share plans are announced or made; or at any other time if the LTIP Committee considers that exceptional circumstances exist. No awards may be granted under the LTIP after November 5, 2024.
Individual limit
Under the 2021 Remuneration Policy, the maximum annual award that may be made to any individual in respect of any financial year will be the lower of 300,000 ordinary shares or 400% of base salary.
Plan limits
The LTIP is subject to the limit that on any date, the aggregate nominal amount of ordinary shares that may be allocated under the LTIP may not, when added to the nominal amount of ordinary shares allocated in the previous 10 years under all employee share plans of the Group, exceed 10% of the then equity share capital of the Group.
For these purposes, ordinary shares are treated as allocated when they are issued or transferred in satisfaction (directly or indirectly) of a person’s right under an award. No account will be taken of (i) ordinary shares acquired for a price equal to their market value at or about the date of acquisition and whose cost is borne by the employee; or (ii) an award to the extent to which the LTIP Committee considers that it will be satisfied by the transfer of existing ordinary shares other than treasury shares.
Performance conditions
Each award may, or in the case of Executive Directors of the Group must, be subject to one or more performance conditions, at least one of which must be linked to the performance of the Group, which will determine whether and to what extent the participant will receive ordinary shares. Performance conditions are normally measured over a period of three years. For Executive Directors the performance conditions are measured on one occasion only; there is no re-testing.
The LTIP Committee may waive or change performance conditions if events happen as a result of which the LTIP Committee reasonably considers it appropriate to make the change, provided that any changed performance conditions will not be materially easier or more difficult to satisfy.
Vesting of awards
Awards will normally only vest in accordance with the performance conditions at the end of the performance period or, if later, three years after the date of grant. Awards granted to the Executive Directors under the LTIP are subject to a two-year post-vesting holding period and are then released to the Executive Director.
Each award may, to the extent that it vests, be adjusted by the LTIP Committee to include the dividends payable on the vested shares during the period starting with the date the award is granted and ending with the date on which the award vests or the option is exercised. The adjustment will be made, as the LTIP Committee may decide, either by paying an amount equal to the dividends in cash or by paying that amount in ordinary shares. Dividend equivalents will be paid to any relevant participant as soon as practicable after entitlement to the ordinary shares under the award or, in the case of an option, after exercise.
In the case of conditional awards, the ordinary shares are issued or transferred to the participant as soon as reasonably practicable upon vesting while in the case of options, the award becomes exercisable on vesting and may be exercised during the exercise period specified at the time of grant.
Alternatively, the LTIP Committee may decide to satisfy awards on vesting by a cash payment.
The LTIP includes a clawback provision under which the LTIP Committee may reduce and/or recover awards. Awards may be adjusted subsequent to their exercise if, before the later of (i) the second anniversary of the date a conditional award vests or an option becomes exercisable, as applicable, and (ii) the fifth anniversary of the award date the LTIP Committee determines in its absolute discretion that there was a material misstatement of the Group’s results for any of the financial years during a performance period, there was serious misconduct by the participant, or at any time from the award date (or the start of the performance period, if earlier) there was serious reputational damage to any member of the Group.
Termination of employment
If a participant ceases to be employed within the Group for any reason other than misconduct, he is entitled to retain any awards which have vested.
If a participant ceases to be employed within the Group, his unvested awards lapse unless he leaves for a permitted reason. A permitted reason is death, injury, ill-health, disability, redundancy, retirement with his employer’s agreement, the sale of the company or business in which the participant works and such other reason as the LTIP Committee may decide.
Where a participant leaves for a permitted reason and the award is subject to a performance condition, the award will vest after the end of the performance period and be released on the normal release date. Alternatively, the LTIP Committee may decide that the extent to which the award will vest will be measured in accordance with a determination of the performance conditions and other conditions at the end of the financial year in which the cessation of employment occurs. The award will also be reduced pro rata to reflect the period from the date of cessation of employment until the date of the end of the performance period as a proportion of the performance period, unless the LTIP Committee decides otherwise.
In the case of death, the performance conditions will not apply and the award will vest and be released on the date of death, but the award will be reduced on a time pro-rated basis. If the award is not subject to performance conditions, the award will vest on the normal vesting date unless the LTIP
Committee decides otherwise. Options that have already vested, or which vest following termination of employment, may be exercised within the 12 months following their release.
Change of control
Special rules apply in the event of a change of control, including a change of control resulting from a scheme of arrangement or a takeover.
Unless the LTIP Committee decides otherwise, awards will vest (if at all) on the date of the change of control, but only to the extent that any performance conditions have been satisfied at that date as determined by the LTIP Committee and the extent to which the award vests shall be reduced pro rata to reflect the period from the date of the event until the date of the end of the performance period as a proportion of the performance period.
In the event of a change of control, participants may or the LTIP Committee may require that participants surrender their awards in return for substitute awards over shares in the acquiring company or another company. The LTIP Committee may allow awards to vest on a similar basis in the event of a demerger or other corporate events.
Listing
So long as the ordinary shares are listed on the Official List and traded on the London Stock Exchange, the Group will apply for any new ordinary shares issued under the LTIP to be admitted to the Official List and for permission to trade in those ordinary shares. Ordinary shares issued under the LTIP will rank equally in all respects with existing ordinary shares except for any rights attaching to the ordinary shares by reference to a record date prior to the date of allotment.
Variation of Capital
On any variation of the Group’s share capital, or in the event of a demerger, special dividend or other circumstances which the LTIP Committee considers appropriate, the LTIP Committee may adjust the number or class of ordinary shares or securities comprised in an option or conditional award and, in the case of an option, the option price.
Benefits non-pensionable
Benefits under the LTIP will not form part of a participant’s remuneration for pension purposes.
Amendments
The LTIP Committee may, without the approval of the Group, amend the LTIP through any minor changes to benefit the administration of the LTIP, to comply with or take account of the provisions of any proposed or existing legislation or changes to any applicable legislation, or to obtain or maintain favorable tax, exchange control or regulatory treatment for participants or for any company in the Group.
Except as described above, no amendment which is to the advantage of existing or future participants may be made, without the prior approval of the Group in general meeting, to those provisions dealing with eligibility, limitations on the number of ordinary shares which may be issued under the plan, or the rights of a participant in the event of a capitalization issue, rights issue or open offer, sub-division or consolidation of shares or reduction of capital or any other variation of capital of the Group.
HM Revenue and Customs in the United Kingdom (“HMRC”) registered options
The LTIP allows options to be granted in satisfaction of the conditions of Schedule 4 of the Income Tax (Earnings and Pensions Act) 2003, as amended (the “ITEPA”).
U.S. Participants
The LTIP contains a part to ensure that options granted to and held by US participants have an exercise price that is at least fair market value, and that conditional awards granted to and held by such U.S. participants either meet the requirements of the short-term deferral exemption to Section 409A of the United States Internal Revenue Code 1986, as amended, or are compliant therewith.
Canadian Participants
The LTIP contains a part to ensure that an award made to a participant who is subject to taxation under the laws of Canada is not taxed as a “Salary Deferral Arrangement”. All awards subject thereto are administered and interpreted in a manner which complies with such intent.
The Indivior Savings-Related Share Option Plan (the “Sharesave Plan”)
The Sharesave Plan was adopted by the Board on November 5, 2014 and amended by the Remuneration Committee on May 16, 2017 and February 14, 2023.
Administration
The Sharesave Plan is administered, in accordance with its rules, by the Board or a duly authorized committee thereof.
Eligibility
All employees (including directors working 25 hours or more per week) who have a qualifying period (if any) of continuous service (commencing not earlier than five years prior to the Date of Grant) as the Directors may in their absolute discretion and from time to time determine of continuous service with the Group, or any subsidiary nominated to join in the Sharesave Plan, and who receive general earnings to which section 15 of the Income Tax (Earnings and Pensions) Act 2003 applies are eligible to participate. The Board may invite other employees of the Group to participate.
Options
Options will entitle the holder to acquire ordinary shares. Options will be personal to the participant and may not be transferred. No payment will be required for the grant of an option. No options will be granted under the Sharesave Plan after 30 November 2024.
Timing
Invitations to participate will normally be issued within 30 days (or 42 days if applications are scaled down) following: the announcement of the Group’s results for any period or its issue of any prospectus, listing particulars or other document containing equivalent information relating to the ordinary shares; a day on which an announcement is made of a new prospectus for certified SAYE (Save As You Earn) savings arrangements (within the meaning of section 703(1) of the Income Tax (Trading and Other Income) Act 2005) for the purposes of Schedule 3 to the Income Tax (Earnings and Pensions) Act 2003; a day on which an announcement is made of amendments to be made to the Income Tax (Earnings and Pensions) Act 2003 (so far as those changes affect savings-related share option plans approved by HMRC) or a day on which any such amendments come into force; the date of any general meeting of the Group’s shareholders; or at any other time if the Board determines that the circumstances are sufficiently exceptional to justify the grant of an option. No awards may be granted under the Sharesave Plan after November 30, 2024.
Exercise price
The price payable per ordinary share on exercise of an option granted under the Sharesave Plan may not be less than an amount equal to 80% of the market value of an ordinary share (or such other
percentage as shall from time to time be specified in paragraph 28(1)(b) of Schedule 3 of the Income Tax (Earnings and Pensions) Act 2003) or, if greater, and ordinary shares are to be acquired by subscription, the nominal value of an ordinary share.
Individual limit
Each eligible employee will be given the opportunity to apply for an option, the total exercise price of which does not exceed the aggregate of the monthly contributions made and any bonus due under the Sharesave contract to be entered into as a condition of the grant of the option. The aggregate maximum monthly contribution payable by an employee under all Sharesave contracts linked to the options granted under the Sharesave Plan may not exceed such sum as may from time to time be permitted by statute and approved by the directors.
Plan limits
On any date, the aggregate nominal amount of new ordinary shares in respect of which options may be granted may not exceed 10% of the nominal amount of the equity share capital of the Group, less the total nominal amount of any new ordinary shares allocated in the previous 10 years under all employee share plans of the Group.
For these purposes, allocation means the issue of new ordinary shares or the transfer of treasury shares in satisfaction (directly or indirectly) of a person’s rights under an award. No account will be taken of ordinary shares acquired by an employee where the ordinary shares are acquired for a price equal to their market value at or about the date of acquisition and the cost of those ordinary shares is borne by the employee. No account will be taken of an award if and to the extent to which the Board considers that it will be satisfied by the transfer of existing ordinary shares other than treasury shares. Any ordinary shares allocated, or remaining to be allocated, to the trustee of any trust which were used, or which are to be used, to satisfy awards granted under an employee share plan must be treated as having been allocated, or as remaining to be allocated, in respect of those awards unless the ordinary shares were acquired by the trustee pursuant to a rights issue or other opportunity offered to the trustee in respect of ordinary shares other than ordinary shares previously allocated to it. Where an award is granted in consideration of the release by the holder of an award previously granted to such holder under an employee share plan, then the earlier award is ignored and the later award is deemed to have been granted at the same time as the earlier award.
Exercise of options
Options will normally be exercisable in whole or in part during the period of six months starting on the bonus date. The bonus date is the date on which the bonus under the related Sharesave contract is payable. In normal circumstances this will be the third or fifth anniversary of the starting date of the Sharesave contract and will depend upon the election made by the participant at the time of grant.
Whenever an option is exercised, it may only be exercised with monies not exceeding the amount of the aggregate monthly contributions made and any bonus due under the related Sharesave contract.
Termination of employment
If the participant dies, his personal representatives may exercise his options in the 12 months following his death or, if earlier, the bonus date. If a participant ceases to be employed within the Group for a permitted reason, the participant may exercise his options in the six months following the termination of his employment. A permitted reason is injury, disability, redundancy, retirement, the transfer or sale outside the Group of the company or business in which the participant works or, in the case of any option which the participant has held for at least three years, where the employee does not return after maternity leave or ceases employment not by reason of dismissal for misconduct. If a participant ceases to be employed for any other reason, his option will lapse.
For these purposes, a participant will not be treated as ceasing to be employed within the Group for so long as he remains employed by a company which is an associated company of the Group.
Change of control
The exercise of options will also be permitted in the event of a change in control, a reorganization, a court-sanctioned compromise or arrangement applicable to or affecting all of the ordinary shares, a takeover offer or a voluntary winding up of the Group. In the event of a change in control of the Group, participants may surrender their options in return for substitute options over shares in the acquiring company.
Listing
Application will be made for admission to the Official List of new ordinary shares issued under the Sharesave Plan and for permission to trade in those ordinary shares. Ordinary shares issued on the exercise of options will rank equally in all respects with existing ordinary shares except for rights attaching to ordinary shares by reference to a record date prior to the date of allotment.
Variation of Capital
If there is a variation in the share capital of the Group, the Board may adjust options in such manner as it determines to be appropriate.
Benefits non-pensionable
Benefits under the Sharesave Plan will not form part of a participant’s remuneration for pension purposes.
Amendments
If and for so long as the ordinary shares are admitted to the Official List of the London Stock Exchange, no amendment which is to the advantage of employees or participants may be made to those provisions dealing with eligibility, individual or Sharesave Plan limits, the basis for entitlement to and the terms of the ordinary shares or the adjustment of options without the prior approval of the Group in general meeting, except for minor amendments to benefit the administration of the Sharesave Plan, to take account of a change in legislation or to obtain or maintain favorable tax, exchange control or regulatory treatment for participants or eligible employees or for a member of the Group. Subject to the foregoing, the Board may amend the Sharesave Plan in any respect.
The Indivior PLC U.S. Employee Stock Purchase Plan (the “ESPP”)
The ESPP was approved by shareholders at the Annual General Meeting of the Group held on May 12, 2016 and amended by resolution of the Board on September 24, 2020 and by resolution of the Remuneration Committee on February 14, 2023. It is the intent of the Group to have the ESPP qualify as an “employee stock purchase plan” under Section 423 of the U.S. Internal Revenue Code of 1986, including any amendments or replacements of such section.
Administration
The ESPP is administrated by our Board or a duly authorized committee thereof.
Eligibility
All individuals who are eligible employees of the Group or participating subsidiaries are eligible to participate in the ESPP. An employee is ineligible if (i) upon enrollment in the ESPP, they would own directly or indirectly an aggregate of 5% or more of the total combined voting power or value of the Group or a subsidiary’s shares; (ii) they work 20 hours a week or less; or (iii) they work for five months or less of the calendar year.
Options
Under the ESPP, participants are granted options to purchase ordinary shares from the Group. As of each enrollment date, each participant is automatically granted an option to purchase a number of ordinary shares representing their savings but subject to a maximum number of ordinary shares with a market value at the date of grant of $10,000. Options may either be options to subscribe for newly-issued ordinary shares or for existing ordinary shares purchased in the market. The rights of the participant shall not be transferable. No option shall be granted under the ESPP after the date as of which the ESPP is terminated by the Board in accordance with the termination provisions or, in any event after, the tenth anniversary of the ESPP’s approval by the Group’s shareholders.
Timing
Participation in the ESPP is voluntary. Eligible employees who meet the specified requirements are able to enroll in the ESPP on the first day of each six-month period commencing with the first regular payroll period on or after each successive January 1 or July 1 (each an “Accumulation Period”). Any eligible employee may consent to enrollment in the ESPP by completing and signing an enrollment form (which authorizes the payroll deductions).
Exercise Price
The exercise price shall be eighty-five percent (85%) of the lower of (i) the fair market value of an ordinary share on the enrollment date on which the option is granted; or (ii) the fair market value of an ordinary share on the purchase date but, in the case of newly issued ordinary shares, not lower than the par value of an ordinary share. The Board may establish a different purchase price, though it may not be less than (i) the purchase price set forth above and (ii) in the case of newly issued ordinary shares, than the par value per ordinary share. Also, in such case, the Board must determine such different purchase price at least thirty (30) days prior to the Accumulation Period for which it is applicable.
Payroll Deductions
To participate in the ESPP, eligible employees must elect and authorize to have deductions made from their pay on each payday during the Accumulation Period to which the enrollment form relates. Each participant designates a percentage of their base earnings to be deducted. The minimum deduction is one percent (1%) and the maximum is ten percent (10%), of base earnings per Accumulation Period.
Plan limits
The ESPP will be subject to the limit that on any date, the aggregate number of new ordinary shares which may be issued (or treasury shares transferred) under the ESPP may not, when added to the number of new ordinary shares allocated in the previous 10 years under all employee share plans of the Group, exceed 10% of the equity share capital of the Group in issue at that time.
Exercise of awards
An award will normally be deemed to have been exercised on the specific trading day during an Accumulation Period on which ordinary shares are purchased under the ESPP. For each Accumulation Period, the purchase date is the last trading day occurring in such Accumulation Period. Whenever an award is exercised it will be for the number of ordinary shares (including partial or fractional shares) which the funds accumulated in their account at such purchase date will purchase at the applicable purchase price.
Termination of employment
Participation in the ESPP terminates immediately when a participant ceases to be employed with the Group or a participating subsidiary for any reason whatsoever, including but not limited to termination of employment, whether voluntary or involuntary, or on account of death, disability or retirement, or if the
participating subsidiary employing the participant ceases to be a participating subsidiary. As soon as administratively practicable after termination, the Group shall pay the participant or legal representative all amounts accumulated in the participant’s account.
Change of Control
A participant’s accumulated savings at the relevant date will be used to exercise their options under the ESPP in the event of a change of control, takeover offer, scheme of arrangement or winding up of the Group.
Listing
Application will be made for admission to the Official List of any new ordinary shares issued under the ESPP and for permission to trade in those ordinary shares. Ordinary shares issued on the exercise of options will rank equally in all respects with existing ordinary shares except for rights attaching to ordinary shares by reference to a record date prior to the date of allotment.
Variation of Capital
In the event of any reorganization, recapitalization, stock split, stock dividend, combination of shares, merger, consolidation, acquisition of property or shares, separation, asset spin-off, stock rights offering, liquidation or other similar change in the capital structure of the Group, the Board shall make such adjustment, if any, as it deems appropriate in the number, kind and purchase price of the ordinary shares available for purchase under the ESPP. In the event of liquidation of the Group, each option to purchase ordinary shares shall terminate but the participant holding such an option shall have the right to exercise their option prior to such termination.
Benefits non-pensionable
Benefits under the ESPP do not form part of a participant’s remuneration for pension purposes.
Amendments
The Board may amend or modify the ESPP at any time, provided that no amendment that would amend to the advantage of participants (i) the definition of eligible employees entitled to participate in the ESPP, (ii) the maximum number of ordinary shares reserved for sale and issuance under the ESPP, (iii) the number, kind and purchase price of the ordinary shares available for purchase in order to permit the enlargement of a participant’s rights under the ESPP, (iv) the maximum fair market value option amount that a participant may be granted in a calendar year under the ESPP, or (v) the requirements of any securities exchange on which the ordinary shares are traded unless in each case it has been authorized by shareholders of the Group in a general meeting. The committee authorized to administer the ESPP may, without such approval, make minor amendments to benefit the administration of the ESPP, to take account of a change in legislation or to obtain or maintain favorable tax, exchange control or regulatory treatment for participants in the ESPP or for the Group or for members of its Group. Subject to the preceding paragraph, the committee authorized to administer the ESPP shall have the power to amend the ESPP and perform such acts as it deems necessary to promote the best interests of the Group.
The Deferred Bonus Plan 2018 (“DBP”)
In line with our Remuneration Policy, the DBP requires the Executive Directors to defer 25% of their annual bonus in the form of ordinary shares or ADRs of the Group for a period of time. The DBP was adopted by the Board on July 19, 2018 and subsequently amended on November 19, 2018 and February 14, 2023. The DBP only applies to the Executive Directors (the Chief Executive Officer and Chief Financial Officer). The DBP is intended to comply with section 409A of the U.S. Internal Revenue Code of 1986.
Administration of the DBP
The DBP is administered, in accordance with its rules, by the Remuneration Committee or another duly authorized committee of the Board (the “DBP Committee”).
Eligibility
The DBP Committee may grant an award under the DBP to any employee (including an Executive Director) who was a participant in any annual bonus plan operated by the Group during the financial year immediately preceding the proposed date of grant as a means of deferring part of that employee’s annual bonus into ordinary shares or ADRs of the Group.
Awards
Awards may be granted in the form of (i) options to acquire ordinary shares or ADRs of the Group, (ii) conditional share awards or (iii) phantom shares awards, in each case as the DBP Committee may determine in its absolute discretion. Prior to granting an award, the DBP Committee shall determine the amount of ordinary shares, ADRs or notional shares subject to an award where the market value of such ordinary shares, ADRs or notional shares, as applicable, shall not exceed 25% (or such other percentage as the DBP Committee may determine) of the individual’s annual bonus.
Timing
Awards may only be granted within 42 days commencing on the day immediately after the announcement of the Group’s results for any period or the day on which the DBP Committee considers that exceptional circumstances exist which justify the grant of awards.
Vesting of awards
Awards will typically vest after a period of two years from the date of grant or such other period or periods as the DBP Committee considers appropriate. Ordinary shares or ADRs transferred under the DBP will rank equally in all respects with existing ordinary shares or ADRs, as applicable, then in issue except for any rights attaching to such ordinary shares or ADRs, as applicable, by reference to a record date before the date of such transfer.
The DBP includes a clawback provision under which the DBP Committee may reduce awards, recover awards or make certain other adjustments to awards if (and in respect of vested awards only, before the second anniversary of such award’s vesting date) the DBP Committee determines in its absolute discretion that there was a material misstatement of the Group’s results for any financial year before an award was granted, there was serious misconduct by the participant, or at any time during or after any financial year before an award was granted there was serious reputational damage to any member of the Group.
Termination of employment
If, prior to an award vesting, a participant ceases to be employed within the Group due to voluntary resignation, misconduct or the Group becomes aware of facts or circumstances that would have entitled it to dismiss the participant for misconduct, such participant’s unvested awards shall lapse. If, prior to an award vesting, a participant ceases to be employed within the Group for any other reason, then such participant’s unvested award shall continue subject to the rules of DBP.
Change of control
Special rules apply in the event of a change of control, including a change of control resulting from a scheme of arrangement pursuant to the Companies Act or a takeover. Unless the DBP Committee decides otherwise, awards will vest on the date of the relevant event.
The DBP Committee may determine that participants may surrender their awards in return for substitute awards over shares in the acquiring company or another company. The DBP Committee may allow awards to vest on a similar basis in the event of a voluntary winding-up of the Group.
Dividends
Subject to the determination of the DBP Committee, participants shall be entitled on the vesting of any award either (a) to be paid a cash amount equal to the dividend that the participant would have accrued had the participant held the number of ordinary shares or ADRs, as applicable, under the award from the date of grant until the vesting date or (b) to receive an additional number of ordinary shares or ADRs, as applicable, that could have been acquired with the amount of cash dividends payable on the ordinary shares or ADRs, as applicable, under the award.
Variation of Capital
On any variation of the Group’s share capital, such as a rights issue, super dividend, demerger, dividend in specie or any capitalization issue or other similar event, awards may be adjusted in such manner as the DBP Committee considers appropriate. If any such event, in the opinion of the DBP Committee, would materially affect the value of an award, the DBP Committee may permit awards to vest on or prior to the date of such event.
Amendments
The DBP Committee may amend the DBP from time to time. However, except for minor amendments to benefit the administration of the DBP, to take account of changes in law, tax or regulatory treatment or to take account of local laws where participants are situated, no amendment that would adversely and materially affect the existing rights of a participant may be made unless with the written consent of the participant or a majority of the participants affected by the amendment.
Indivior PLC Employee Benefit Trust
In 2016, we established an employee benefit trust with an independent trustee, based in Jersey, Channel Islands, to purchase and hold shares in Indivior to be used to satisfy awards and/or options granted to eligible employees under our share plans established from time to time. Shares purchased in the market, held in trust and subsequently used to satisfy awards and/or options granted under the Group’s share plans, do not count towards the limits under the plans.
The trustee has waived its rights to receive dividends on any shares that it holds. The employee benefit trust held 256,710 ordinary shares as at April 20, 2023.
Indivior Inc. Profit Sharing and 401(k) Plan (the “401(k) Plan”)
The 401(k) Plan is a defined contribution plan and is intended to be a qualified retirement plan under the U.S. Internal Revenue Code of 1986. The purpose of the 401(k) Plan is to enable eligible employees to save for retirement. As well as retirement benefits, the 401(k) Plan provides certain benefits in the event of death, disability, or other termination of employment. The 401(k) Plan is for the exclusive benefit of eligible employees and their beneficiaries.
Eligible employees may elect to defer a percentage of their eligible compensation into the 401(k) Plan, and the Group will match 75% of the first 6% of an eligible employee’s contributions. Additionally, the Group automatically contributes an amount equal to 4% of an eligible employee’s eligible compensation to the employee’s 401(k) Plan, representing a profit sharing contribution.
Indivior Inc. Deferred Compensation Plan (“DCP”)
We maintain a Deferred Compensation Plan (“DCP”) that provides a select group of Management and other highly compensated employees in the U.S., including Executive Directors and Senior Managers, as
determined by the committee administering the DCP, with an opportunity to defer the receipt of portions of their compensation. The DCP is intended to comply with section 409A of the U.S. Internal Revenue Code of 1986. The DCP allows highly compensated employees who are unable, due to limits that the Internal Revenue Service (“IRS”) imposes on 401(k) plans, to save a proportionate amount of their eligible compensation for retirement within the 401(k) Plan, to defer compensation in excess of IRS limits.
Under our DCP, for each financial year, participants may elect to defer up to 75% of their base salary and up to 100% of their bonus. Employees hired before January 1, 2011 are eligible for a Group match on 401(k) deferrals in excess of the annual IRS limit up to 4.5% of eligible compensation. Amounts contributed to the DCP are invested in one or more investment options as elected by a participant or absent such election, the committee administering the DCP. Participants can elect to have the benefits associated with compensation deferred in a financial year paid on June 1 of a year at least two financial years after the financial year in which such compensation was deferred. Otherwise, and subject to certain exceptions, benefits under the DCP are paid in a lump sum or in a fixed amount annually over a period not to exceed 10 years starting 60 days (or for certain employees, six months) after termination of employment of the participant.
Deeds of Indemnity
The Company also entered into a deed poll of indemnity (the “Deed Poll”) on November 5, 2014 for the benefit of the officers, directors, company secretary or any position equivalent to any of the foregoing (“Beneficiaries”) of the Company or any body corporate that is a group undertaking of the Company (“Group Company”). Under the Deed Poll, the Company undertakes to indemnify each Beneficiary against any and all liability suffered or incurred by that Beneficiary in respect of that Beneficiary’s acts or omissions while, or in the course of acting or purporting to act as, an officer of any Group Company or which otherwise arises by virtue of that Beneficiary holding or having held such position, in each case, to the extent arising out of or in connection with, directly or indirectly, any investigation, demand, claim, action or proceeding brought or threatened against that Beneficiary or any other person in any jurisdiction.
The Deed Poll do not extend to any liability incurred by the Beneficiary (1) to pay a fine imposed in criminal proceedings, (2) to pay a sum payable to a regulatory authority by way of a penalty in respect of non-compliance with any requirement of a regulatory nature, (3) in defending any criminal proceedings in which he is convicted, (4) in defending civil proceedings brought by the Company, in which judgment is given against him, or (5) in connection with an application for relief in which the court refuses to grant him relief. The Deed Poll also do not apply to the extent that the Beneficiary has been indemnified or reimbursed by any other insurance, where there has been gross negligence, fraud or willful default by the Beneficiary or where the Beneficiary has improperly derived a personal benefit or profit.
The Company may advance such funds to a Beneficiary as the Company, in its reasonable discretion, considers appropriate for the Beneficiary to meet expenditures incurred in defending any criminal or civil proceedings in connection with any alleged negligence, default, breach of duty or breach of trust by the Beneficiary or in defending himself in an investigation by a regulatory authority or against action proposed to be taken by a regulatory authority in connection with any alleged negligence, default, breach of duty or breach of trust by the Beneficiary.
The Deed Poll also provide that the Company will use reasonable endeavors to purchase and maintain insurance cover for directors and officers liabilities on reasonable commercial terms in respect of each Beneficiary for so long as the Beneficiary is a director or employee of any Group Company and for at least six years thereafter.
Malus and Clawback
The Remuneration Committee has the discretion to scale back or cancel LTIP awards, extend the performance period or defer the exercise period prior to the satisfaction of awards or after the end of any relevant holding period in the event that results are materially misstated for part of the performance period applicable to an award, an individual’s conduct has amounted to gross misconduct or, in respect of
awards made after the adoption of the 2018 Remuneration Policy, in the event of serious reputational damage to Indivior. Where LTIP awards have vested, the Committee has the discretion to “claw back” awards or reduce amounts of other payments due to the individual up to the fifth anniversary of the grant of awards in the circumstances described above.
Executive Financial Recoupment Program
As part of Indivior Inc.’s Corporate Integrity Agreement with the Office of the Inspector General of the U.S. Department of Health and Human Services, an Executive Financial Recoupment Program was implemented (the “Recoupment Program”). Under the terms of the Recoupment Program, up to two years of performance pay may be put at risk of forfeiture and/or recoupment for certain US-based executives (which includes both serving Executive Directors).
Forfeiture and/or recoupment may be applied in the event that it is determined that there has been a “Triggering Event”; a Triggering Event includes significant misconduct (violation of law or regulation or a significant violation of an Indivior policy) related to covered activities, or, significant misconduct related to covered activities by subordinate employees in the business unit for which the relevant executive had responsibility that is not an isolated incident and which the relevant executive knew or should have known was occurring.
Forfeiture and/or recoupment under the Recoupment Program may be applied to awards granted after November 20, 2020 and will cease to apply to awards on July 24, 2025 or the date on which Indivior Inc.’s obligations under the Corporate Integrity Agreement expire (if later).
C.Board Practices
As a foreign private issuer, we are permitted to follow certain home country corporate governance practices instead of those otherwise required under Nasdaq’s rules for domestic U.S. issuers, provided that we disclose which requirements we are not following and describe the equivalent home country requirement. However, notwithstanding our ability to follow the corporate governance practices of our home country, the United Kingdom, in most cases we have elected to adhere to the corporate governance rules of Nasdaq applicable to U.S. domestic registrants that are not “controlled” companies. The corporate governance practice that we follow in lieu of Nasdaq’s corporate governance rules is as follows:
•In lieu of the requirement to comply with Rule 5605(e)(1), which requires that director nominees must be selected, or recommended for the board’s selection, by either independent directors constituting a majority of the board’s independent directors in a vote in which only independent directors participate or a nominations committee comprised solely of independent directors, our Nomination and Governance Committee (which is responsible for director nominations) consists of six directors, one of whom we do not consider to be an independent non-executive director for the purposes of the 2018 UK Corporate Governance Code and as a result, might not be considered independent under the Nasdaq rules. The 2018 UK Corporate Governance Code, which sets out standards of good practice (as opposed to mandatory requirements) for companies with a UK Premium Listing (such as Indivior) on, inter alia, board and board committee composition, provides that the board of such companies should establish a nominations committee to lead the process for appointments and that the majority of the members of the nominations committee should be independent non-executive directors.
Board of Directors
The Board is committed to the highest standards of corporate governance and maintaining a sound framework for the control and management of the business. The Board is responsible for leading and controlling the Group and has overall authority for the management and conduct of our business and our strategy and development. The Board is also responsible for ensuring the maintenance of a sound system of internal control and risk management (including financial, operational and compliance controls, and for reviewing the overall effectiveness of systems in place) and for the approval of any changes to the
capital, corporate and/or management structure of the Group. At the date of this registration statement, the Board comprises 12 members: the Chair, nine Non-Executive Directors, and two Executive Directors. Daniel J. Phelan is the Group’s Senior Independent Director. Juliet Thompson has been appointed as Senior Independent Director with effect from October 1, 2023.
Committees of the Board
Our Board has established an Audit Committee, a Remuneration Committee, a Nomination and Governance Committee and a Science and Policy Committee. Each of the Board’s committees have Terms of Reference which are reviewed annually and approved by the Board.
Audit Committee
The Audit Committee has responsibility for, among other things, monitoring the financial integrity of the financial statements of the Group along with PwC our external auditors in that process. It focuses in particular on compliance with accounting policies and ensuring that an effective system of internal financial controls is maintained. The ultimate responsibility for reviewing and approving the annual report and accounts and other interim financial reports remains with the Board. The Audit Committee shall meet not less than four times a year to coincide with key dates in the Group’s financial reporting cycle. The Audit Committee also meet on an ad hoc basis when necessary.
The responsibilities of the Audit Committee set out in its Terms of Reference cover external audit, internal audit, financial and narrative reporting, internal controls and risk management and the systems and procedures for detecting fraud. The Terms of Reference also set out the authority of the Audit Committee to carry out its responsibilities.
SEC rules and regulations and the Nasdaq listing standards require that the Audit Committee comprises at least three members who are all independent and possess requisite financial literacy and includes one member who qualifies as an “audit committee financial expert.” The members of the Audit Committee are Juliet Thompson, Joanna Le Couilliard, Mark Stejbach and Barbara Ryan. Juliet Thompson is the Chair of the Audit Committee. Our Board has determined that each member is independent within the of SEC rules and regulations and the Nasdaq listing standards and possesses the required level of financial literacy as required by Nasdaq. Our Board has determined that Ms. Thompson and Ms. Le Couilliard both qualify as an “audit committee financial expert” as defined in the SEC rules and satisfies the financial sophistication requirement of Nasdaq.
Remuneration Committee
The Remuneration Committee is responsible for determining the specific remuneration packages for the Chair, the Executive Directors and members of Senior Management. It is also responsible for determining general remuneration policy and monitoring workforce remuneration arrangements. The Remuneration Committee shall meet not less than quarterly.
The responsibilities of the Remuneration Committee set out in its Terms of Reference cover setting levels of remuneration and determination and monitoring of the remuneration policy, approval of the design of, and determining targets for, performance-related pay schemes and approval of the design and implementation of all long-term incentive arrangements. The Terms of Reference also set out the reporting responsibilities and the authority of the Remuneration Committee to carry out its responsibilities.
The members of the Remuneration Committee are Daniel J. Phelan, Graham Hetherington, Joanna Le Couilliard, Lorna Parker and Peter Bains each of whom is an Independent Non-Executive Director. Mr. Phelan is the Chair of the Remuneration Committee. Joanna Le Couilliard has been appointed as Chair of the Remuneration Committee with effect from October 1, 2023. Our Board has determined that each member is independent under the Nasdaq listing standards.
Nomination and Governance Committee
The Nomination and Governance Committee is responsible for considering and making recommendations to the Board in respect of appointments to the Board and the Board’s committees. It is also responsible for keeping the structure, size and composition of the Board under regular review, and for making recommendations to the Board with regard to any necessary changes. The Nomination and Governance Committee’s Terms of Reference cover succession planning, taking into account the skills and expertise that will be needed on the Board in the future. The Nomination and Governance Committee meets no less than quarterly. The Nomination and Governance Committee also has responsibility for oversight of the Group’s Global Integrity & Compliance Program.
The members of the Nomination and Governance Committee are Graham Hetherington, Juliet Thompson, A. Thomas McLellan, Lorna Parker, Jerome Lande and Daniel J. Phelan. Graham Hetherington is the Chair of the Nomination and Governance Committee. Our Board has determined that each member of the Nomination and Governance Committee, other than Mr. Lande, is independent under the Nasdaq listing standards.
Science and Policy Committee
The Science and Policy Committee is responsible for providing assurance to the Board regarding the quality, competitiveness and integrity of the Group’s research and development activities. It is responsible for reviewing the approaches adopted in respect of the Group’s chosen therapy area of addiction and its co-morbidities, reviewing the scientific technology and research and development capabilities deployed within the business, assessing the decision-making processes for research and development projects, reviewing benchmarking against industry and scientific best practices and reviewing relevant and important bioethical issues and assisting in the formulation of appropriate policies in relation to such issues. Additionally, it is also the responsibility of the Science and Policy Committee to evaluate emerging issues and trends in science and policy matters including the potential impact of wider government policy that may affect the Group’s overall business strategy.
The members of the Science and Policy Committee are Peter Bains, Barbara Ryan, Mark Stejbach and A. Thomas McLellan, Ph.D. The Science and Policy Committee is chaired by Peter Bains.
Code of Conduct and Ethical Guidelines
Our Board has adopted a Code of Conduct and a Supplemental Code of Ethics for Senior Financial Officers that describes our commitment to, and requirements in connection with, ethical issues relevant to business practices and conduct.
Indemnification of Directors and Senior Managers
Each of the Directors and Senior Managers has the benefit of indemnity insurance maintained by the Group on their behalf indemnifying them against liabilities they may potentially incur to third parties as a result of their office as director or senior manager.
Service Contracts with Directors and Senior Managers
Chair and Non-Executive Directors’ letters of appointment
The terms of service of the Chair and the Non-Executive Directors are contained in letters of appointment. In accordance with the 2018 UK Corporate Governance Code, the Chair and Non-Executive Directors are appointed subject to re-appointment by shareholders at the Group’s next AGM following their appointment and re-appointment at each subsequent AGM. The Group may terminate the appointment of the Chair and the Non-Executive Directors upon one month’s written notice, and they are not otherwise entitled to receive compensation for loss of office.
Executive Directors’ service agreements
The Executive Directors have service agreements that set out the contract between them and the Group. Messrs. Crossley and Preblick each have agreements that entitle them to 12 months base salary and a pro rata amount of their annual incentive in the event the Group terminates their employment without cause, or they terminate their employment for Good Reason (as defined in the agreements). A change in control alone does not constitute good reason. The Group is obligated to pay their base salary for one month if their employment terminates due to their death.
Other Senior Managers
The members of our Executive Committee, other than Messrs. Crossley and Preblick, have service agreements that set out the contract between them and the Group. The agreements with each member of the Executive Committee, other than the Executive Directors, generally provide for severance of 12 months’ base salary following the termination of employment without Cause or by the Executive for Good Reason (as defined in the agreement), plus a pro rata portion of the annual bonus the executive would have received for the year of termination, and in the case of termination of employment on or within 12 months following the date of a change of control and such termination is by the Group without Cause or by the Executive for Good Reason (as defined in the agreement), in which case severance is 24 months’ base salary (12 months for the Executive Directors). An executive is also entitled to a pro rata portion of the annual bonus if their employment terminates as a result of their death or disability.
D.Employees
The information at “Item 4.—INFORMATION ON THE COMPANY—B. Business Overview Background—Human Capital,” is incorporated herein by reference. E.Share Ownership
The information at “Item 7. Major Shareholders and Related Party Transactions,” is incorporated herein by reference. In addition, the following executives hold options over shares in Indivior PLC as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Executive | | Share Plan | | Security | | Total Purchase Price | | Per Share Exercise Price | | Vesting
Date | | Expiry
Date | | Number
of Shares |
| Mark Crossley | | LTIP (1) | | ordinary shares | | n/a | | £5.55 | | 5/11/2016 | | 12/28/2024 | | 42,123 |
| Christian Heidbreder | | LTIP (1) | | ordinary shares | | n/a | | £5.55 | | 5/11/2016 | | 12/28/2024 | | 63,185 |
| Kathryn Hudson | | Sharesave (2) | | ordinary shares | | n/a | | £4.80 | | 3/1/2024 | | 8/31/2024 | | 1,875 |
| Kathryn Hudson | | Sharesave (2) | | ordinary shares | | n/a | | £13.40 | | 3/1/2026 | | 8/31/2026 | | 671 |
| Hillel West | | Sharesave (2) | | ordinary shares | | n/a | | £4.80 | | 3/11/2024 | | 8/31/2024 | | 2,250 |
| Hillel West | | Sharesave (2) | | ordinary shares | | n/a | | £4.80 | | 3/11/2026 | | 8/31/2026 | | 2,500 |
______________
(1)Reflects market-value options held by the executives granted under the rules of the Indivior Long-Term Inventive Plan in December 2014 (on demerger).
(2)Reflects options granted senior managers under the rules of the Indivior UK Savings-Related Share Option Plan, which is a tax qualified plan available to all UK-based employees. Eligible employees may enter into a savings contract, saving up to £500 per month, with the opportunity to buy shares at 20% discount to market value at the time of invitation upon completion of the savings period.
F. Disclosure of Registrant’s Action to Recover Erroneously Awarded Compensation
Not applicable.
ITEM 7: MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
A.Major Shareholders
As of March 31, 2023, 55,817,951 shares were held of record by 651 shareholders of record who were U.S. residents, comprising approximately 40.48% of our issued share capital.
The table below sets forth information with respect to the beneficial ownership of our ordinary shares, based on notifications made by such shareholders under the UK Financial Conduct Authority’s Disclosure and Transparency Rules as of May 15, 2023 by:
•each of our directors, executive officers and senior managers individually and as a group; and
•each person, or group of affiliated persons, who is known by us to own beneficially more than 3% of our ordinary shares.
Beneficial ownership is determined in accordance with the rules and regulations of the SEC. In computing the number of shares beneficially owned by a person and the percentage ownership of that person, we have included shares that the person has the right to acquire within 60 days, including through the exercise of any option, warrant or other right or the conversion of any other security. These shares, however, are not included in the computation of the percentage ownership of any other person.
All ordinary shares have the same voting rights.
| | | | | | | | | | | | | | |
| NAME AND ADDRESS OF BENEFICIAL OWNER | | NUMBER OF SHARES BENEFICIALLY OWNED | | TOTAL PERCENTAGE(1) |
| Major Shareholders: | | | | |
Two Seas Capital LP (formerly Kairos Capital Management LP)(2) | | 13,809,639 | | | 10.02 | % |
Scopia Capital Management LP(3) | | 12,267,363 | | | 8.90 | % |
Morgan Stanley & Co. International plc(4) | | 8,279,542 | | | 6.01 | % |
BlackRock, Inc.(5) | | 6,990,371 | | | 5.07 | % |
| | | | |
Directors(6) | | | | |
| Graham Hetherington | | 15,844 | | | * |
Mark Crossley(7) | | 132,155 | | (10) | * |
Ryan Preblick(7) | | 64,466 | | | * |
| Daniel J. Phelan | | 12,063 | | | * |
| Peter Bains | | 10,800 | | | * |
| Jerome Lande | | 63 | | | * |
| Joanna Le Couilliard | | 0 | | * |
| Dr. A. Thomas McLellan | | 1,509 | | | * |
| Lorna Parker | | 5,173 | | | * |
| Barbara Ryan | | 0 | | * |
| Mark Stejbach | | 9,684 | | | * |
| Juliet Thompson | | 0 | | * |
Senior Management(8) | | | | |
| Jeff Burris | | * | | * |
| Cindy Cetani | | * | | * |
| Nina DeLorenzo | | * | | * |
| Jon Fogle | | * | | * |
| Dr. Christian Heidbreder | | * | | * |
Kathryn Hudson(9) | | * | | * |
| Vishal Kalia | | * | | * |
| Richard Simkin | | * | | * |
Hillel West(9) | | * | | * |
All Directors and Senior Managers as a Group | | 823,027 | | (10) (11) | * |
________________
*Represents beneficial ownership of less than one percent of our outstanding ordinary shares.
(1)Based on 137,875,429 ordinary shares outstanding as of May 15, 2023, which comprise our entire issued and outstanding share capital as of that date.
(2)The business address for Two Seas Capital LP (formerly Kairos Capital Management LP) is 32 Elm Place, 3rd Floor, Rye, NY 10580, United States. Based on the Group’s review of a Schedule 13G and a TR-1 filed by Two Seas Capital LP on February 13, 2023 and April 18, 2023, respectively, Sina Toussi has voting and investment control of shares held by Two Seas Capital LP.
(3)The business address for Scopia Capital Management LP is 152 West 57th Street, 33rd Floor, New York, NY 10019, United States. Based on the Group’s review of a Schedule 13D filed by Scopia Capital Management LP on April 12, 2023, Scopia Management, Inc., Matthew Sirovich, and Jeremy Mindich share voting and investment control of shares held by Scopia Capital Management LP.
(4)The business address for Morgan Stanley & Co. International plc is 25 Cabot Square, Canary Wharf, London, E14 4QA, United Kingdom. Based on the Group’s review of Form SBSE-A filed by Morgan Stanley & Co. International plc on February 15, 2023, Morgan Stanley Investments (UK) has voting and investment control of shares held by Morgan Stanley & Co. International plc.
(5)The business address for BlackRock, Inc. is 50 Hudson Yards, New York, NY 10001, United States.
(6)Except as otherwise indicated, the business address for each of our Directors is 234 Bath Road, Slough, Berkshire, SL1 4EE, United Kingdom.
(7)The business address for Mr. Crossley and Mr. Preblick is 10710 Midlothian Turnpike, Suite 125, North Chesterfield, VA 23235, United States.
(8)Except as otherwise indicated, the business address for each member of our Senior Management is 10710 Midlothian Turnpike, Suite 125, North Chesterfield, VA 23235, United States.
(9)The business address for Ms. Hudson and Mr. West is 234 Bath Road, Slough, Berkshire, SL1 4EE, United Kingdom.
(10)This amount includes 42,123 shares which Mr. Crossley has the right to acquire within 60 days by option or other agreement.
(11)This amount includes 63,185 shares which Senior Management has the right to acquire within 60 days by option or other agreement.
Changes in the percentage ownership by major shareholders are set out below. The information in the table below is based on the notifications made by such shareholders as of the dates indicated under the UK Financial Conduct Authority’s Disclosure and Transparency Rules.
| | | | | | | | | | | | | | | | | | | | |
| | December 31, 2020 | | December 31, 2021 | | December 31, 2022 |
| Two Seas Capital LP (formerly Kairos Capital Management LP) | | 5.13 | % | | 5.13 | % | | 5.13 | % |
| Scopia Capital Management LP | | 15.51 | % | | 13.52 | % | | 8.98 | % |
| Morgan Stanley & Co. International plc | | — | % | | — | % | | 7.02 | % |
| BlackRock, Inc. | | — | % | | — | % | | — | % |
B.Related Party Transactions
The Group entered into an agreement titled Relationship Agreement with Scopia Capital Management LP (“Scopia”) on March 24, 2021 (as further amended on July 7, 2022 and April 26, 2023, the “Relationship Agreement”). In recognition of Scopia’s ownership of approximately 16.9% of the Group’s shares as at March 24, 2021, the Group agreed to appoint Jerome Lande as a Representative Director. Scopia agreed to certain standstill provisions (for example to vote on ordinary course resolutions in accordance with the Board’s recommendation).
The parties amended and restated the Relationship Agreement on July 7, 2022 and April 26, 2023 and further agreed that Scopia would not exercise voting rights in excess of 10% of the outstanding shares. The Relationship Agreement, as amended and restated, is filed as Exhibit 4.2 to this Registration Statement.
The Relationship Agreement, as amended, terminates upon the earlier of (i) December 31, 2023, (ii) the date on which Scopia publicly discloses that it has ceased to hold directly or indirectly at least five per cent of the issued share capital of the Group, or (iii) in certain circumstances, and only in the event that Mr. Lande has resigned from the Board, a specified date to be calculated with reference to the date of the 2023 AGM.
C.Interests of Experts and Counsel
Not applicable.
ITEM 8: FINANCIAL INFORMATION
A.Consolidated Statements and Other Financial Information
See “Item 18. Financial Statements” for a list of all financial statements filed as part of this registration statement. Share Consolidation
In September 2022, the Group’s shareholders approved an additional listing in the U.S. Additionally, to fulfill U.S. exchange requirements for share price minimums and norms, the Group’s shareholders also approved a 5-for-1 share consolidation. On October 10th, 2022, the Group completed this share consolidation. Shareholders received 1 new ordinary share with a nominal value of $0.50 each for every 5 previously existing ordinary shares which had a nominal value of $0.10 cents each. All share and per share information of the Group, including basic and diluted weighted average number of shares outstanding, basic (loss)/ earnings per share, diluted (loss)/earnings per share and adjusted basic earnings per share reflect the share consolidation for all periods presented.
Share Repurchase Program
In July 2021, the Group commenced an irrevocable share repurchase program for an aggregate purchase price up to no more than $100 million or 73,462,098 of ordinary shares. In December 2021, the program concluded with the Group repurchasing 33,507,433 of the Group’s ordinary shares over the duration of the program for an aggregate nominal value of $3m ($0.10 per share). In addition, 256,055 ordinary shares purchased as part of the share repurchase program at $0.10 each were canceled in January 2022. These shares are included in the total number of share capital outstanding as at December 31, 2021.
In May 2022, the Group commenced a second share repurchase program for an aggregate purchase price up to no more than $100 million or 39,698,610 of ordinary shares (equivalent shares post consolidation: 7,939,722), which is expected to end no later than March 31, 2023. During the year, prior to the share consolidation, the Group repurchased and cancelled 17,815,033 of the Company’s ordinary shares for an aggregate nominal value of $2 million ($0.10 per share), including the 256,055 ordinary shares purchased as part of the Group’s share repurchase program executed in 2021 and cancelled in January 2022. Subsequent to the share consolidation, the Group repurchased and cancelled 1,280,914 of the Company’s ordinary shares for an aggregate nominal value of $1 million ($0.50 per share).
On May 3, 2022, the Group commenced a second share repurchase program for an aggregate purchase price up to no more than $100 million or 39,698,610 of ordinary shares (equivalent shares post consolidation: 7,939,722), which concluded on February 28, 2023. During the period, the Group repurchased and cancelled 484,362 of the Company’s ordinary shares at $0.50 per share. In Q1 2022, 256,055 ordinary shares at $0.10 purchased in 2021 as part of the Group’s share repurchase program were cancelled in January 2022.
All ordinary shares repurchased under share repurchase programs were cancelled resulting in a transfer of the aggregate nominal value to a capital redemption reserve. The total cost of the purchases made under the share repurchase program during the period, including directly attributable transaction costs, was $11 million. Total purchases under the share repurchase program will be made out of distributable profits.
Corporate Debt and Equity Investments
In 2022, the Group purchased ordinary shares of a listed company and invested in a portfolio of investment-grade debt securities and has therefore adopted new accounting policies as disclosed below:
Investments comprise holdings in equity and debt securities. Investments in equity securities held for trading or for which the Group has not elected to recognize fair value gains and losses through other comprehensive income are initially recorded and subsequently measured at fair value through profit or loss. Investments in debt securities are initially recorded at fair value plus or minus directly attributable transaction costs and remeasured on the basis of the Group’s business model and the contractual cash flow characteristics. Interest income from debt securities is included in finance income using the effective interest method.
Legal Proceedings
Except as disclosed in this paragraph, or in Note 21 “Legal Proceedings” included in “Item 18. Financial Statements—Audited Consolidated Financial Statements,” (which is incorporated by reference herein), there are no governmental, legal or arbitration proceedings (including any such proceedings which are pending or threatened of which the Group is aware), which may have, or have had during the 12 months prior to the date of this registration statement, a significant effect on the Group’s and/or our
financial position or profitability. In addition to the proceedings set out in this section, the Group is involved in other legal proceedings and claims in the ordinary course of business.
B.Significant Changes
For information on any significant changes that may have occurred since the date of our annual financial statements, see “Item 5. Operating and Financial Review and Prospects.” ITEM 9: THE OFFER AND LISTING
A.Offering and Listing Details
Our only issued and outstanding shares are our ordinary shares of $0.50 each. We have no other outstanding class of equity securities. Our issued and outstanding ordinary shares are fully paid. Our ordinary shares are in certificated and uncertificated form.
The principal trading market for the Group’s ordinary shares is the London Stock Exchange, where the Group’s ordinary shares are traded under the symbol “INDV.”
We are in the process of applying to have our ordinary shares listed on the Nasdaq Global Select Market under the symbol “INDV” (the “U.S. Listing”). We make no representation that such application will be approved or that our ordinary shares will trade on such market either now or at any time in the future.
The Group’s ordinary shares are also listed and trade in the form of American Depositary Shares (“ADSs”) in the United States over-the-counter market under the symbol “INVVY.”
We intend to replace our ADSs with ordinary shares listed on the Nasdaq Global Select Market following the U.S. Listing. On August 4, 2022, we entered into a Letter Agreement with the ADS Depositary and Computershare Trust Company N.A. (the “Transfer Agent”) to create a mechanism to effectively exchange ADSs for ordinary shares listed on Nasdaq. On the day immediately prior to our U.S. listing, the Transfer Agent will (a) cancel the ADS Depositary’s entitlement to all of its certificated Indivior ordinary shares, (2) credit the ADS holders with those Indivior ordinary shares, which will be held in book-entry form, and (3) cancel all outstanding ADSs. We provided JPMorgan Chase Bank N.A., in its capacity as ADS Depositary, notice on October 3, 2022 of the termination of the ADS program effective upon the earlier of the effectiveness of the listing of our ordinary shares on the Nasdaq Global Select Market or nine months from the date of notice. As a result, upon effectiveness of this Registration Statement and the U.S. Listing, our ADS program will no longer exist and those ADSs will have been converted to Indivior ordinary shares listed on the Nasdaq Global Select Market.
Our ordinary shares are currently traded on the London Stock Exchange’s main market for listed securities and such trades are settled through the CREST system in the United Kingdom. Upon completion of the U.S. Listing, our ordinary shares will also be eligible to be traded on the Nasdaq Global Select Market and such trades will be settled through the DTC system in the United States.
At the effective time of our U.S. Listing, all of our ordinary shares (other than those held by our affiliates) held in uncertificated form within the CREST system will be transferred to and deposited with DTC. In order to enable holders of uncertificated ordinary shares to continue to transfer and settle their interests through CREST after the effective time of our U.S. Listing in the manner in which they did prior to such time, such shareholders will receive depositary interests operated by Computershare Investor Services PLC through CREST representing ordinary shares (“DIs”) on a one for one basis. Accordingly, after the effective time of our U.S. Listing, holders of uncertificated ordinary shares (other than our affiliates) will instead be able to transfer and settle their interests in ordinary shares in CREST accounts in the form of DIs.
At the effective time of our U.S. Listing, all of our ordinary shares (other than those held by our affiliates) held in certificated form will also be transferred to and deposited with DTC. Holders of ordinary shares in certificated form in certain permitted jurisdictions, which comprise Argentina, Botswana, Brazil,
Chile, Gibraltar, Guernsey, Guinea, Hong Kong, Indonesia, Isle of Man, Jersey, Mexico, Namibia, Paraguay, Peru, South Africa, South Korea, Switzerland, Taiwan and the United Kingdom (the “Permitted Jurisdictions”), will automatically be enrolled in a corporate sponsored nominee facility where Computershare Company Nominees Limited will hold DIs as nominee for such holders. Holders of ordinary shares in certificated form outside the Permitted Jurisdictions will, for 180 calendar days, have the option to (i) transfer their ordinary shares to a bank, broker or nominee who is a participant in DTC or CREST or (ii) have their ordinary shares sold in the market at the holder’s expense for the best price reasonably obtainable on their behalf; or (iii) have their ordinary shares delivered to them in certificated form. Following expiry of the 180-calendar day period, such holders will be issued a certificate in respect of their ordinary shares and will be the registered or record holder of such ordinary shares.
At the effective time of our U.S. Listing, all of our ordinary shares held by affiliates will automatically be transferred to GTU Ops Inc. (as nominee for Computershare Trust Company N.A.), and Computershare Trust Company N.A. (as depositary for the affiliate shareholders) will issue depositary receipts to the affiliate shareholders in respect of their ordinary shares on a one for one basis.
For additional details regarding our ordinary shares, see “Item 10. — Additional Information—A. Share Capital.” ITEM 10. ADDITIONAL INFORMATION
A.Share Capital
As of May 15, 2023, the issued and fully paid share capital of Indivior was as follows: | | | | | | | | | | | | | | |
Class of share | | Issued and fully paid shares | | Amount $ |
Ordinary shares, $0.50 nominal value per share | | 137,875,429 | | | 68,937,715 | |
The Group has one class of ordinary share which carries no rights to fixed income. Each share carries the right to one vote at general meetings of the Group. The ordinary shares are listed on the Official List and traded on the London Stock Exchange. As of May 15, 2023, the Group had 137,875,429 ordinary shares in issue, each with a nominal value of $0.50 per share.
The Group does not hold any shares in Treasury. There are no restrictions on the voting rights attaching to the Group’s ordinary shares or the transfer of securities in the Group. No person holds securities of the Company which carry special voting rights with regard to control of the Company. The Group is not aware of any agreements between holders of securities that may result in restrictions on the transfer of securities or on voting rights.
For reconciliation of the number of shares outstanding at the beginning and end of the year, see Note 23, “Share Capital” included in “Item 18. Financial Statements – Audited Consolidated Financial Statements.” For a description of share-based options outstanding, see Note 8 “Earnings/(Loss) Per Share,” and Note 25 “Share-Based Plans” included in “Item 18. Financial Statements – Audited Consolidated Financial Statements.” History of share capital
On September 26, 2014 (being the date of the Group’s incorporation) two ordinary shares of $2.00 each in the capital of the Group were issued and were fully paid up in cash.
On January 21, 2015, the High Court of Justice made an Order confirming the reduction of the Group’s share capital which was referred to in the prospectus published by the Group on November 17, 2014 (pages 188 to 189). Following registration of the Order of the High Court with Companies House,
the capital reduction became effective on January 21, 2015. The nominal value of each ordinary share in the Group accordingly reduced from $2.00 to $0.10.
On October 10, 2022 the Group implemented a share consolidation pursuant to which every five existing ordinary shares were consolidated into one new ordinary share. The nominal value of an ordinary shares accordingly increased to $0.50. The ISIN for the new ordinary shares is GB00BN4HT335.
The following table highlights increases in the share capital of the Group since January 1, 2020:
| | | | | | | | | | | | | | |
| Date | | No. of Shares
(Post-Consolidation) | | Share issued pursuant to: |
| January 6, 2020 | | 185,777.0 | | U.S. Employee Stock Purchase Plan |
| July 2, 2020 | | 209,733.4 | | U.S. Employee Stock Purchase Plan |
| January 5, 2021 | | 82,304.8 | | U.S. Employee Stock Purchase Plan |
| July 5, 2021 | | 83,578.4 | | U.S. Employee Stock Purchase Plan |
| January 4, 2022 | | 51,043.6 | | U.S. Employee Stock Purchase Plan |
| July 4, 2022 | | 68,905.2 | | U.S. Employee Stock Purchase Plan |
| February 9, 2021 | | 6,740.4 | | UK Sharesave Plan |
| June 29, 2021 | | 9,411.6 | | UK Sharesave Plan |
| August 25, 2021 | | 3,750.0 | | UK Sharesave Plan |
| August 31, 2021 | | 750.0 | | UK Sharesave Plan |
| Sept. 28, 2021 | | 5,588.2 | | UK Sharesave Plan |
| February 18, 2020 | | 138,345.6 | | Indivior Long-Term Incentive Plan |
| April 7, 2020 | | 5,568.2 | | Indivior Long-Term Incentive Plan |
| Sept. 23, 2020 | | 3,940.4 | | Indivior Long-Term Incentive Plan |
| December 4, 2020 | | 26,193.8 | | Indivior Long-Term Incentive Plan |
| January 12, 2021 | | 1,401.0 | | Indivior Long-Term Incentive Plan |
| March 4, 2021 | | 106,919.4 | | Indivior Long-Term Incentive Plan |
| June 17, 2021 | | 34,287.8 | | Indivior Long-Term Incentive Plan |
| August 20, 2021 | | 1,503.4 | | Indivior Long-Term Incentive Plan |
| October 14, 2021 | | 3,580.2 | | Indivior Long-Term Incentive Plan |
| Nov. 2, 2021 | | 122,766.8 | | Indivior Long-Term Incentive Plan |
| March 1, 2022 | | 771,639.2 | | Indivior Long-Term Incentive Plan |
| July 4, 2022 | | 68,905.0 | | U.S. Employee Stock Purchase Plan |
| January 4, 2023 | | 47,044.0 | | U.S. Employee Stock Purchase Plan |
| March 1, 2023 | | 271,358.0 | | UK Sharesave Plan |
| March 3, 2023 | | 1,522,280.0 | | Indivior Long-Term Incentive Plan |
| March 7, 2023 | | 17,998.0 | | UK Sharesave Plan |
| March 14, 2023 | | 17,999.0 | | UK Sharesave Plan |
| March 21, 2023 | | 2,117.0 | | UK Sharesave Plan |
Share Repurchases and Canceled
On July 30, 2021, the Group commenced an irrevocable share repurchase program for an aggregate purchase price up to no more than $100 million of ordinary shares. On December 23, 2021, the program concluded with the Group having repurchased 6,752,697.6 shares (adjusted for the October 2022 share consolidation) of the Group’s ordinary shares over the duration of the program.
On May 3, 2022, the Group commenced a second share repurchase program for an aggregate purchase price up to no more than $100 million of ordinary shares, which was completed on February 28, 2023.
The following table highlights decreases in the share capital of the Group since January 1, 2020:
| | | | | | | | | | | | | | |
| Date | | No. of Shares
(Post-Consolidation) | | Action |
| July 2021 | | 45,379.4 | | Purchases of Shares for cancellation |
| August 2021 | | 1,129,334.0 | | Purchases of Shares for cancellation |
| September 2021 | | 1,171,704.0 | | Purchases of Shares for cancellation |
| October 2021 | | 886,879.4 | | Purchases of Shares for cancellation |
| November 2021 | | 2,086,297.4 | | Purchases of Shares for cancellation |
| December 2021 | | 1,598,140.2 | | Purchases of Shares for cancellation |
| January 2022 | | 51,211.0 | | Purchases of Shares for cancellation |
| February 2022 | | 0.0 | | Purchases of Shares for cancellation |
| March 2022 | | 0.0 | | Purchases of Shares for cancellation |
| April 2022 | | 0.0 | | Purchases of Shares for cancellation |
| May 2022 | | 789,121.8 | | Purchases of Shares for cancellation |
| June 2022 | | 906,355.4 | | Purchases of Shares for cancellation |
| July 2022 | | 708,104.2 | | Purchases of Shares for cancellation |
| August 2022 | | 822,101.6 | | Purchases of Shares for cancellation |
| September 2022 | | 841,392.4 | | Purchases of Shares for cancellation |
| October 2022 | | 591,337.0 | | Purchases of Shares for cancellation |
| November 2022 | | 354,621.0 | | Purchases of Shares for cancellation |
| December 2022 | | 304,956.0 | | Purchases of Shares for cancellation |
| January 2023 | | 236,563.0 | | Purchases of Shares for cancellation |
| February 2023 | | 247,799.0 | | Purchases of Shares for cancellation |
Information about the Ordinary Shares
Rights attached to the ordinary shares
Each ordinary share ranks equally in all respects with each other ordinary share and has the same rights and restrictions as each other ordinary share. The ordinary shares rank pari passu with respect to all dividends or other distributions made, paid or declared by the Group. Further details of the rights attached to the ordinary shares in relation to dividends, attendance and voting at general meetings, entitlements on a winding-up of the Group and transferability of shares are set out in “Item 10.B. Memorandum and Articles of Association.” Description of the type and class of securities
The ordinary shares have a nominal value of $0.50 each and the Group has one class of ordinary shares, the rights to which are detailed in the Articles, a summary of which is set out in “Item 10.B. Memorandum and Articles of Association.” Except as described in this registration statement, the ordinary shares are credited as fully paid and free from all liens, equities, encumbrances and other interests. As described in “Item 5.A.—The Term Facility and Revolving Credit Facility,” there is a fixed charge covering all of our ordinary shares. The ordinary shares rank in full for all dividends and distributions on ordinary shares of the Group declared, made or paid after their issue. The ordinary shares are in registered form and are capable of being held in uncertificated form. No temporary documents of title have been or will be issued in respect of the ordinary shares. As of February 20, 2022, the Group held no treasury shares. No ordinary shares have been issued other than fully paid.
Rights attached to the ordinary shares
Each ordinary share ranks equally in all respects with each other ordinary share and has the same rights (including voting and dividend rights and rights on a return of capital) and restrictions as each other ordinary share, as set out in the Articles.
Subject to the provisions of the Companies Act, any equity securities issued by the Group for cash must first be offered to shareholders in proportion to their holdings of ordinary shares. The Companies Act and the Listing Rules allow for the disapplication of pre-emption rights which may be waived by a special resolution of the shareholders, either generally or specifically, for a maximum period not exceeding five years.
Except in relation to dividends which have been declared and rights on a liquidation of the Group, the shareholders have no rights to share in the profits of the Group.
The ordinary shares are not redeemable. However, the Group may purchase or contract to purchase any of the ordinary shares on or off-market, subject to the Companies Act and the requirements of the Listing Rules. The Group may purchase ordinary shares only out of distributable reserves or the proceeds of a new issue of shares made to fund the repurchase.
Further details of the rights attached to the ordinary shares in relation to dividends, attendance and voting at general meetings, entitlements on a winding-up of the Group and transferability of shares are set out in “Item 10.B.—Memorandum of Association.” Description of restrictions on free transferability
The ordinary shares are freely transferable and there are no restrictions on transfer in the United Kingdom.
The Group may, under the Companies Act, send out statutory notices to those persons whom it knows or has reasonable cause to believe have an interest in its shares, asking for details of those who have an interest and the extent of their interest in a particular holding of shares. When a person receives a statutory notice and fails to provide any information required by the notice within the time specified in it, the Group can apply to the court for an order directing, among other things, that any transfer of shares which are the subject of the statutory notice is void.
B.Memorandum and Articles of Association
Unrestricted objects
The objects of the Group are unrestricted.
Limited liability
The liability of the Group’s members is limited to the amount, if any, unpaid on the shares in the Group held by them.
Change of name
The Articles allow the Group to change its name by resolution of the Board. This is in addition to the Group’s statutory ability to change its name by special resolution under the Companies Act.
Share rights
Subject to any rights attached to existing shares, shares may be issued with such rights and restrictions as the Group may by ordinary resolution decide, or (if there is no such resolution or so far as it does not make specific provision) as the Board may decide (as long as there is no conflict with any resolution passed by the shareholders). Such rights and restrictions shall apply as if they were set out in
the Articles. Redeemable shares may be issued, subject to any rights attached to existing shares. The Board may determine the terms and conditions and the manner of redemption of any redeemable share so issued. Such terms and conditions shall apply to the relevant shares as if they were set out in the Articles. Subject to the Articles, any resolution passed by the shareholders and other shareholders’ rights, the Board may decide how to deal with any shares in the Group.
Voting rights
Members will be entitled to vote at a general meeting or class meeting whether on a show of hands or a poll, as provided in the Companies Act. The Companies Act provides that:
•on a show of hands every member present in person has one vote and every proxy present who has been duly appointed by one or more members will have one vote, except that a proxy has one vote for and one vote against if the proxy has been duly appointed by more than one member and the proxy has been instructed by one or more members to vote for and by one or more other members to vote against. For this purpose the Articles provide that, where a proxy is given discretion as to how to vote on a show of hands, this will be treated as an instruction by the relevant member to vote in the way that the proxy decides to exercise that discretion; and
•on a poll every member has one vote per share held by him and he may vote in person or by one or more proxies. Where he appoints more than one proxy, the proxies appointed by him taken together shall not have more extensive voting rights than he could exercise in person.
This is subject to any special terms as to voting which are given to any shares or on which shares are held.
In the case of joint holders of a share the vote of the senior who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the other joint holders and, for this purpose, seniority shall be determined by the order in which the names stand in the register in respect of the joint holding.
Restrictions
No member shall be entitled to vote at any general meeting or class meeting in respect of any share held by him if any call or other sum then payable by him in respect of that share remains unpaid or if a member has been served with a restriction notice (as defined in the Articles) after failure to provide the Group with information concerning interests in those shares required to be provided under the Companies Act.
Dividends and other distributions
The Group may by ordinary resolution from time to time declare dividends not exceeding the amount recommended by the Board. Subject to the Companies Act, the Board may pay interim dividends, and also any fixed rate dividend, whenever the financial position of the Group, in the opinion of the Board, justifies its payment. If the Board acts in good faith, it is not liable to holders of shares with preferred or pari passu rights for losses arising from the payment of interim or fixed dividends on other shares.
The Board may withhold payment of all or any part of any dividends or other monies payable in respect of the Group’s shares from a person with a 0.25% or greater holding, in number or nominal value, of the shares of the Group or of any class of such shares (in each case, calculated exclusive of any shares held as treasury shares) (in this paragraph, a “0.25% interest”) if such a person has been served with a restriction notice (as defined in the Articles) after failure to provide the Group with information concerning interests in those shares required to be provided under the Companies Act.
Except insofar as the rights attaching to, or the terms of issue of, any share otherwise provide, all dividends shall be apportioned and paid pro rata according to the amounts paid up on the share during
any portion of the period in respect of which the dividend is paid. Except as set out above, dividends may be declared or paid in any currency.
The Board may if authorized by an ordinary resolution of the Group offer ordinary shareholders (excluding any member holding shares as treasury shares) in respect of any dividend the right to elect to receive ordinary shares by way of scrip dividend instead of cash.
Any dividend unclaimed after a period of 12 years from the date when it was declared or became due for payment shall be forfeited and revert to the Group.
The Group may stop sending cheques, warrants or similar financial instruments in payment of dividends by post in respect of any shares or may cease to employ any other means of payment, including payment by means of a relevant system, for dividends if either (i) at least two consecutive payments have remained uncashed or are returned undelivered or that means of payment has failed or (ii) one payment remains uncashed or is returned undelivered or that means of payment has failed and reasonable enquiries have failed to establish any new postal address or account of the holder. The Group may resume sending dividend cheques, warrants or similar financial instruments or employing that means of payment if the holder requests such resumption in writing.
Variation of rights
Subject to the Companies Act, rights attached to any class of shares may be varied with the written consent of the holders of not less than three-fourths in nominal value of the issued shares of that class (calculated excluding any shares held as treasury shares), or with the sanction of a special resolution passed at a separate general meeting of the holders of those shares. At every such separate general meeting (except an adjourned meeting) the quorum shall be two persons holding or representing by proxy not less than one-third in nominal value of the issued shares of the class (calculated excluding any shares held as treasury shares) or by the purchase or redemption by the Group of any of its own shares.
The rights conferred upon the holders of any shares shall not, unless otherwise expressly provided in the rights attaching to those shares, be deemed to be varied by the creation or issue of further shares ranking pari passu with them.
Transfer of shares
The shares are in registered form. Any shares in the Group may be held in uncertificated form and, subject to the Articles, title to uncertificated shares may be transferred by means of a relevant system. Provisions of the Articles do not apply to any uncertificated shares to the extent that such provisions are inconsistent with the holding of shares in uncertificated form, with the transfer of shares by means of a relevant system, with any provision of the legislation and rules relating to uncertificated shares or with the Group doing anything by means of a relevant system.
Subject to the Articles, any member may transfer all or any of his certificated shares by an instrument of transfer in any usual form or in any other form which the Board may approve. The instrument of transfer must be signed by or on behalf of the transferor and (in the case of a partly paid share) the transferee.
The transferor of a share is deemed to remain the holder until the transferee’s name is entered in the register.
The Board can decline to register any transfer of any share which is not a fully paid share. The Board may also decline to register a transfer of a certificated share unless the instrument of transfer:
•is duly stamped or certified or otherwise shown to the satisfaction of the Board to be exempt from stamp duty and is accompanied by the relevant share certificate and such other evidence of the right to transfer as the Board may reasonably require;
•is in respect of only one class of share; and
•if to joint transferees, is in favor of not more than four such transferees.
Registration of a transfer of an uncertificated share may be refused in the circumstances set out in the uncertificated securities rules (as defined in the Articles) and where, in the case of a transfer to joint holders, the number of joint holders to whom the uncertificated share is to be transferred exceeds four.
The Board may decline to register a transfer of any of the Group’s certificated shares by a person with a 0.25% interest if such a person has been served with a restriction notice (as defined in the Articles) after failure to provide the Group with information concerning interests in those shares required to be provided under the Companies Act, unless the transfer is shown to the Board to be pursuant to an arm’s length sale (as defined in the Articles).
Sub-division of share capital
Any resolution authorizing the Group to sub-divide any of its shares may determine that, as between the shares resulting from the sub-division, any of them may have a preference, advantage or deferred or other right or be subject to any restriction as compared with the others.
General meetings
The Articles rely on the Companies Act provisions dealing with the calling of general meetings. Under the Companies Act an annual general meeting must be called by notice of at least 21 days. The Group is a “traded company” for the purposes of the Companies Act and as such will be required to give at least 21 days’ notice of any other general meeting unless a special resolution reducing the period to not less than 14 days has been passed at the immediately preceding annual general meeting or at a general meeting held since that annual general meeting or, pending the Group’s first annual general meeting, at any general meeting.
Notice of a general meeting must be given in hard copy form, in electronic form, or by means of a website and must be sent to every member and every director. It must state the time and date and the place of the meeting and the general nature of the business to be dealt with at the meeting. As the Group is a traded company, the notice must also state the website address where information about the meeting can be found in advance of the meeting, the voting record time, the procedures for attending and voting at the meeting, details of any forms for appointing a proxy, procedures for voting in advance (if any are offered), and the right of members to ask questions at the meeting. In addition, a notice calling an annual general meeting must state that the meeting is an annual general meeting.
Each director shall be entitled to attend and speak at any general meeting. The chairman of the meeting may invite any person to attend and speak at any general meeting where he considers that this will assist in the deliberations of the meeting.
Directors
Number of Directors
The Directors shall be not less than two and not more than 15 in number (disregarding alternate directors). The Group may by ordinary resolution vary the minimum and/or maximum number of Directors.
Directors’ shareholding qualification
A Director shall not be required to hold any shares in the Group.
Appointment of Directors
Directors may be appointed by the Group by ordinary resolution or by the Board. A Director appointed by the Board holds office only until the next following annual general meeting of the Group and is then eligible for reappointment.
The Board or any committee authorized by the Board may from time to time appoint one or more Directors to hold any employment or executive office for such period and on such terms as they may determine and may also revoke or terminate any such appointment.
Retirement of Directors
At every annual general meeting of the Group any Director who has been appointed by the Board since the last annual general meeting, or who held office at the time of the two preceding annual general meetings and who did not retire at either of them, or who has held office with the Group, other than employment or executive office, for a continuous period of nine years or more at the date of the meeting, shall retire from office and may offer himself for reappointment by the members.
Removal of Directors by special resolution
The Group may by special resolution remove any Director before the expiration of his period of office.
Vacation of office
The office of a Director shall be vacated if:
•he resigns or offers to resign and the Board resolves to accept such offer;
•he is removed by notice given by all the other Directors and all the other Directors are not less than three in number;
•he is or has been suffering from mental or physical ill health and the Board resolves that his office be vacated;
•he is absent without the permission of the Board from meetings of the Board (whether or not an alternate Director appointed by him attends) for six consecutive months and the Board resolves that his office is vacated;
•he becomes bankrupt or compounds with his creditors generally;
•he is prohibited by a law from being a Director;
•he ceases to be a Director by virtue of the Companies Act; or
•he is removed from office pursuant to the Group’s Articles.
If the office of a Director is vacated for any reason, he must cease to be a member of any committee or sub-committee of the Board.
Alternate Director
Any Director may appoint any person to be his alternate and may at his discretion remove such an alternate Director. If the alternate Director is not already a Director, the appointment, unless previously approved by the Board, shall have effect only upon and subject to being so approved.
Proceedings of the Board
Subject to the provisions of the Articles, the Board may meet for the dispatch of business, adjourn and otherwise regulate its meetings as it thinks fit. The quorum necessary for the transaction of the business
of the Board may be fixed by the Board and, unless so fixed at any other number, shall be two. A meeting of the Board at which a quorum is present shall be competent to exercise all the powers, authorities and discretions vested in or exercisable by the Board.
The Board may appoint a Director to be the chairman or a deputy chairman and may at any time remove him from that office. Questions arising at any meeting of the Board shall be determined by a majority of votes. In the case of an equality of votes the chairman of the meeting shall have a second or casting vote.
All or any of the members of the Board may participate in a meeting of the Board by means of a conference telephone or any communication equipment which allows all persons participating in the meeting to speak to and hear each other. A person so participating shall be deemed to be present at the meeting and shall be entitled to vote and to be counted in the quorum.
The Board may delegate any of its powers, authorities and discretions (with power to sub-delegate) to any committee, consisting of such person or persons as it thinks fit, provided that the majority of persons on any committee or sub-committee must be Directors. The meetings and proceedings of any committee consisting of two or more members shall be governed by the provisions contained in the Articles for regulating the meetings and proceedings of the Board so far as the same are applicable and are not superseded by any regulations imposed by the Board.
Remuneration of Directors
Each of the Directors shall be paid a fee at such rate as may from time to time be determined by the Board, but the aggregate of all such fees so paid to the Directors shall not exceed £1,500,000 per annum or such higher amount as may from time to time be decided by ordinary resolution of the Group. Any Director who is appointed to any executive office shall be entitled to receive such remuneration (whether by way of salary, commission, participation in profits or otherwise) as the Board or any committee authorized by the Board may decide, either in addition to or in lieu of his remuneration as a Director. In addition, any Director who performs services which in the opinion of the Board or any committee authorized by the Board go beyond the ordinary duties of a Director may be paid such extra remuneration as the Board or any committee authorized by the Board may determine. Each Director may be paid his reasonable travelling, hotel and incidental expenses of attending and returning from meetings of the Board, or committees of the Board or of the Group or any other meeting which as a Director he is entitled to attend, and shall be paid all other costs and expenses properly and reasonably incurred by him in the conduct of the Group’s business or in the discharge of his duties as a Director. The Group may also fund a Director’s or former Director’s expenditure and that of a Director or former Director of any holding company of the Group for the purposes permitted under the Companies Act and may do anything to enable a Director or former Director or a Director or former Director of any holding company of the Group to avoid incurring such expenditure as provided in the Companies Act.
Pensions and gratuities for Directors
The Board or any committee authorized by the Board may exercise the powers of the Group to provide benefits either by the payment of gratuities or pensions or by insurance or in any other manner for any Director or former Director or his relations, dependents or persons connected to him, but no benefits (except those provided for by the Articles) may be granted to or in respect of a Director or former Director who has not been employed by or held an executive office or place of profit with the Group or any of its subsidiary undertakings or their respective predecessors in business without the approval of an ordinary resolution of the Group.
Directors’ interests
The Board may, subject to the provisions of the Articles, authorize any matter which would otherwise involve a Director breaching his duty under the Companies Act to avoid conflicts of interest. Where the Board gives authority in relation to a conflict of interest or where any of the situations described in (i) to (v)
below applies in relation to a Director, the Board may (a) require the relevant Director to be excluded from the receipt of information, the participation in discussion and/or the making of decisions related to the conflict of interest or situation; (b) impose upon the relevant Director such other terms for the purpose of dealing with the conflict of interest or situation as it may determine; and (c) may provide that the relevant Director will not be obliged to disclose information obtained otherwise than through his position as a Director of the Group and that is confidential to a third party or to use or apply the information in relation to the Group’s affairs, where to do so would amount to a breach of that confidence. The Board may revoke or vary such authority at any time.
Subject to the provisions of the Companies Act, and provided he has declared the nature and extent of his interest to the Board as required by the Companies Act, a Director may:
(i)be party to, or otherwise interested in, any contract with the Group or in which the Group has a direct or indirect interest;
(ii)hold any other office or place of profit with the Group (except that of auditor) in conjunction with his office of Director for such period and upon such terms, including remuneration, as the Board may decide;
(iii)act by himself or through a firm with which he is associated in a professional capacity for the Group or any other company in which the Group may be interested (otherwise than as auditor);
(iv)be or become a Director or other officer of, or employed by or a party to a transaction or arrangement with, or otherwise be interested in any holding company or subsidiary company of the Group or any other company in which the Group may be interested; and
(v)be or become a Director of any other company in which the Group does not have an interest and which cannot reasonably be regarded as giving rise to a conflict of interest at the time of his appointment as a Director of that other company.
A Director shall not, by reason of his office be liable to account to the Group or its members for any benefit realized by reason of having an interest permitted as described above or by reason of having a conflict of interest authorized by the Board and no contract shall be liable to be avoided on the grounds of a Director having any such interest.
Restrictions on voting
No Director may vote on or be counted in the quorum in relation to any resolution of the Board concerning his own appointment, or the settlement or variation of the terms or the termination of his own appointment, as the holder of any office or place of profit with the Group or any other company in which the Group is interested save to the extent permitted specifically in the Articles.
Subject to certain exceptions set out in the Articles, no Director may vote on, or be counted in a quorum in relation to, any resolution of the Board in respect of any contract in which he has an interest and, if he does so, his vote shall not be counted.
Subject to the Companies Act, the Group may by ordinary resolution suspend or relax to any extent the provisions relating to Directors’ interests or the restrictions on voting or ratify any transaction not duly authorized by reason of a contravention of such provisions.
Borrowing and other powers
Subject to the Articles and any directions given by the Group by special resolution, the business of the Group will be managed by the Board who may exercise all the powers of the Group, whether relating to the management of the business of the Group or not. In particular, the Board may exercise all the powers of the Group to borrow money, to guarantee, to indemnify, to mortgage or charge any of its undertaking, property, assets (present and future) and uncalled capital and to issue debentures and other securities
and to give security for any debt, liability or obligation of the Group or of any third party. The Board must restrict the borrowings of the Group and exercise all voting and other rights or powers of control exercisable by the Group in relation to its subsidiary undertakings so as to secure that, save with the previous sanction of an ordinary resolution, no money shall be borrowed if the aggregate principal amount outstanding of all borrowings (as defined in the Articles) by the Indivior Group (exclusive of borrowings within the Indivior Group) then exceeds, or would as a result of such borrowing exceed, an amount equal to three times the adjusted capital and reserves (as defined in the Articles).
Indemnity of Directors
To the extent permitted by the Companies Act, the Group may indemnify any Director or former Director of the Group or any associated company against any liability and may purchase and maintain for any Director or former Director of the Group or any associated company insurance against any liability.
Methods of service and communications with Shareholders
Any notice, document (including a share certificate) or other information may be sent or supplied to any Shareholder by the Group personally, by post, by means of a relevant system, by sending or supplying it in electronic form to an address notified by the Shareholder to the Group for that purpose, where appropriate, by means of a website and notifying the Shareholder of its availability, or by any other means authorized in writing by the Shareholder. For joint shareholders, any notice, document (including a share certificate) or other information may be sent or supplied to any one of the joint holders and will be treated as having been sent or supplied to all the joint holders.
The United Kingdom City Code on Takeovers and Mergers
The United Kingdom City Code on takeovers and mergers (the “City Code”) applies to the Group. Under the City Code, if an acquisition of an interest in the Group’s ordinary shares were to increase the aggregate holding of an acquirer and its “concert parties” to an interest in the Group’s ordinary shares carrying 30% or more of the voting rights in the Group, the acquirer and, depending upon the circumstance, its concert parties, would be required (except with the consent of the UK Takeover Panel) to make an offer in cash (or accompanied by a cash alternative) for the outstanding ordinary shares in the Group at a price not less than the highest price paid for any interest in the Group’s ordinary shares by the acquirer or its concert parties during the 12 months prior to the announcement of the offer. A similar obligation to make such a mandatory offer would also arise on the acquisition of the Group’s ordinary shares by a person (together with its concert parties) interested in the Group’s ordinary shares carrying between 30% and 50% of the voting rights in the Group if the effect of such acquisition were to increase the percentage of shares carrying voting rights in which he or she is interested.
Differences in Corporate Law between England and the State of Delaware
As a public limited company incorporated under the laws of England and Wales, the rights of our shareholders are governed by applicable English law, including the Companies Act, and not by the law of any U.S. state. As a result, our directors and shareholders are subject to different responsibilities, rights and privileges than are applicable to directors and shareholders of U.S. corporations. We have set out below a summary of the differences between the provisions of the Companies Act applicable to us and the Delaware General Corporation Law relating to shareholders’ rights and protections. This summary is not intended to be a complete discussion of the respective rights and it is qualified in its entirety by reference to English law, Delaware law and our Articles of Association. Before investing, you should consult your legal advisor regarding the impact of English corporate law on your specific circumstances and reasons for investing. The summary below does not include a description of rights or obligations under the U.S. federal securities laws or stock market listing requirements. You are also urged to carefully
read the relevant provisions of the Delaware General Corporation Law and the Companies Act for a more complete understanding of the differences between Delaware and English law.
| | | | | | | | | | | | | | |
| | Delaware | | England |
Number of Directors | | Under Delaware law, a corporation must have at least one director and the number of directors shall be fixed by or in the manner provided in the bylaws, unless specified in the certificate of incorporation. | | Under the Companies Act, a public limited company must have at least two directors and the number of directors may be fixed by or in the manner provided in a company’s articles of association. |
Removal of Directors | | Under Delaware law, directors may be removed from office, with or without cause, by a majority shareholder vote, except (a) in the case of a corporation whose board is classified, shareholders may effect such removal only for cause, unless otherwise provided in the certificate of incorporation, and (b) in the case of a corporation having cumulative voting, if less than the entire board is to be removed, no director may be removed without cause if the votes cast against his or her removal would be sufficient to elect him or her if then cumulatively voted at an election of the entire board of directors, or, if there are classes of directors, at an election of the class of directors of which he or she is a part. | | Under the Companies Act, shareholders may remove a director without cause by an ordinary resolution (which is passed by a simple majority of those voting in person or by proxy at a general meeting) irrespective of any provisions of any service contract the director has with the company, provided that 28 clear days’ notice of the resolution is given to the company and certain other procedural requirements under the Companies Act are followed (such as allowing the director to make representations against his or her removal at the meeting and/or in writing). |
Vacancies on the Board of Directors | | Under Delaware law, vacancies and newly created directorships may be filled by a majority of the directors then in office (even though less than a quorum) or by a sole remaining director unless otherwise provided in the certificate of incorporation or bylaws of the corporation. | | Under English law, the procedure by which directors (other than a company’s initial directors) are appointed is generally set out in a company’s articles of association, provided that where two or more persons are appointed as directors of a public limited company by resolution of the shareholders, resolutions appointing each director must be voted on individually unless a resolution of the shareholders that such resolutions do not have to be voted on individually is first agreed to by the meeting without any vote being given against it. |
Annual General Meeting | | Under Delaware law, the annual meeting of shareholders shall be held at such place, on such date and at such time as may be designated from time to time by the board of directors or as provided in the certificate of incorporation or by the bylaws. | | Under the Companies Act, a public limited company must hold an annual general meeting each year. This meeting must be held within six months beginning with the day following the company’s accounting reference date. |
General Meeting | | Under Delaware law, special meetings of the shareholders may be called by the board of directors or by such person or persons as may be authorized by the certificate of incorporation or by the bylaws. | | Under the Companies Act, a general meeting of the shareholders of a public limited company may be called by the directors. Shareholders holding at least 5% of the paid-up capital (excluding any paid-up capital held as treasury shares) of the company carrying voting rights at general meetings can also require the directors to call a general meeting. |
| | | | | | | | | | | | | | |
| | Delaware | | England |
Notice of General Meetings | | Under Delaware law, written notice of any meeting of the shareholders must be given to each shareholder entitled to vote at the meeting not less than ten nor more than 60 days before the date of the meeting and shall specify the place, date, hour and purpose or purposes of the meeting. | | The Companies Act provides that a general meeting (other than an adjourned meeting) must be called by notice of: •in the case of an annual general meeting, at least 21 days; and •in any other case, at least 14 days. The company’s articles of association may provide for a longer period of notice and, in addition, certain matters (such as the removal of directors or auditors) require special notice, which is 28 clear days’ notice. The shareholders of a company may in all cases consent to a shorter notice period, the proportion of shareholders’ consent required being 100% of those entitled to attend and vote in the case of an annual general meeting and, in the case of any other general meeting, a majority in number of the members having a right to attend and vote at the meeting, being a majority who together hold not less than 95% in nominal value of the shares giving a right to attend and vote at the meeting. |
Quorum | | The certificate of incorporation or bylaws may specify the number of shares, the holders of which shall be present or represented by proxy at any meeting in order to constitute a quorum, but in no event shall a quorum consist of less than 1/3 of the shares entitled to vote at the meeting. In the absence of such specification in the certificate of incorporation or bylaws, a majority of the shares entitled to vote, present in person or represented by proxy, shall constitute a quorum at a meeting of shareholders. | | Subject to the provisions of a company’s articles of association, the Companies Act provides that two shareholders present at a meeting (in person or by proxy) shall constitute a quorum. At the Annual General Meeting held May 4, 2023, shareholders approved an amendment to the Articles of Association increasing the quorum requirements for general meetings so as to require at least two or more persons entitled to vote at least one-third of the Company’s issued ordinary shares to be present at a general meeting. |
Proxies | | Under Delaware law, at any meeting of shareholders, a shareholder may designate another person to act for such shareholder by proxy, but no such proxy shall be voted or acted upon after three years from its date, unless the proxy provides for a longer period. | | Under the Companies Act, at any meeting of shareholders, a shareholder may designate another person to attend, speak and vote at the meeting on their behalf by proxy (or, in the case of a shareholder which is a corporate body, may appoint a corporate representative). |
| | | | | | | | | | | | | | |
| | Delaware | | England |
Issue of New Shares | | Under Delaware law, if the company’s certificate of incorporation so provides, the directors have the power to issue additional stock for consideration consisting of cash, any tangible or intangible property, or any benefit to the company or any combination thereof. | | Under the Companies Act, the directors of a company must not exercise any power to allot shares or grant rights to subscribe for, or to convert any security into, shares unless they are authorized to do so by the company’s articles of association or by an ordinary resolution of the shareholders. Any authorization given must state the maximum amount of shares that may be allotted under it and specify the date on which it will expire, which must be not more than five years from the date the authorization was given. The authority can be renewed by a further resolution of the shareholders. |
Preemptive Rights | | Under Delaware law, unless otherwise provided in a corporation’s certificate of incorporation, a stockholder does not, by operation of law, possess preemptive rights to subscribe to additional issuances of the corporation’s stock. | | Under the Companies Act, “equity securities” (being (i) shares in the company other than shares that, with respect to dividends and capital, carry a right to participate only up to a specified amount in a distribution (“ordinary shares”) or (ii) rights to subscribe for, or to convert securities into, ordinary shares) proposed to be allotted for cash must be offered first to the existing equity shareholders in the company in proportion to the respective nominal value of their holdings, unless an exception applies or a special resolution to the contrary has been passed by shareholders in a general meeting or the articles of association provide otherwise in each case in accordance with the provisions of the Companies Act. On May 4, 2023, our shareholders authorized our Board to allot additional shares and disapply pre-emption rights in respect of certain additional share issuances, in each case applying until the earlier of (i) the close of business on June 30, 2024; or (ii) the conclusion of Indivior PLC’s annual general meeting to be held in 2024. |
| | | | | | | | | | | | | | |
| | Delaware | | England |
Liability of Directors and Officers | | Under Delaware law, a corporation’s certificate of incorporation may include a provision eliminating or limiting the personal liability of a director to the corporation and its shareholders for monetary damages arising from a breach of fiduciary duty as a director. However, no provision can limit the liability of a director for: •any breach of the director’s duty of loyalty to the corporation or its shareholders; •acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law; •willful or negligent payment of unlawful dividends or stock purchases or redemptions; or •any transaction from which the director derives an improper personal benefit. | | Under the Companies Act, any provision (whether contained in a company’s articles of association or any contract or otherwise) that purports to exempt a director of a company (to any extent) from any liability that would otherwise attach to him in connection with any negligence, default, breach of duty or breach of trust in relation to the company is void. Any provision by which a company directly or indirectly provides an indemnity (to any extent) for a director of the company or of an associated company against any liability attaching to him in connection with any negligence, default, breach of duty or breach of trust in relation to the company of which he or she is a director is also void except as permitted by the Companies Act, which provides exceptions for the company to: (i) purchase and maintain insurance against such liability; (ii) provide a “qualifying third party indemnity” (being an indemnity against liability incurred by the director to a person other than the company or an associated company, which must not cover fines imposed in criminal proceedings, penalties imposed by regulatory bodies arising out of non-compliance with regulatory requirements, the defense costs of criminal proceedings where the director is found guilty, the defense costs of civil proceedings successfully brought against the director by the company or an associated company, or the costs of unsuccessful applications by the director for certain reliefs); and (iii) provide a “qualifying pension scheme indemnity” (being an indemnity against liability incurred in connection with the company’s activities as trustee of an occupational pension plan). |
| | | | | | | | | | | | | | |
| | Delaware | | England |
Voting Rights | | Delaware law provides that, unless otherwise provided in the certificate of incorporation, each shareholder of record is entitled to one vote for each share of capital stock held by such shareholder. | | Under English law, unless a poll is demanded by the shareholders of a company or is required by the Chairman of the meeting or the company’s articles of association, shareholders shall vote on all resolutions on a show of hands. Under the Companies Act, a poll may be demanded by: (i) not fewer than five shareholders having the right to vote on the resolution; (ii) any shareholder(s) representing at least 10% of the total voting rights of all the shareholders having the right to vote on the resolution (excluding any voting rights attached to treasury shares); or (iii) any shareholder (s) holding shares in the company conferring a right to vote on the resolution being shares on which an aggregate sum has been paid up equal to not less than 10% of the total sum paid up on all the shares conferring that right. A company’s articles of association may provide more extensive rights for shareholders to call a poll. Under English law, an ordinary resolution is passed on a show of hands if it is approved by a simple majority (more than 50%) of the votes cast by shareholders present (in person or by proxy) and entitled to vote. If a poll is demanded, an ordinary resolution is passed if it is approved by holders representing a simple majority of the total voting rights of shareholders present (in person or by proxy) who (being entitled to vote) vote on the resolution. Special resolutions require the affirmative vote of not less than 75% of the votes cast by shareholders present and entitled to do so (in person or by proxy) at the meeting. |
| | | | | | | | | | | | | | |
| | Delaware | | England |
Variation of Class Rights | | Under Delaware law, the holders of the outstanding shares of a class shall be entitled to vote as a class upon a proposed amendment, whether or not entitled to vote thereon by the certificate of incorporation, if the amendment would increase or decrease the aggregate number of authorized shares of such class, increase or decrease the par value of the shares of such class, or alter or change the powers, preferences or special rights of the shares of such class so as to affect them adversely. | | The Companies Act provides that rights attached to a class of shares may only be varied or abrogated in accordance with provision in the company’s articles for the variation or abrogation of those rights or, where the company’s articles contain no such provision, if the holders of shares of that class consent to the variation or abrogation. Consent for these purposes means: •consent in writing from the holders of at least 75% in nominal value of the issued shares of that class (excluding any shares held as treasury shares); or •a special resolution passed at a separate meeting of the holders of that class sanctioning the variation. The Companies Act provides that the quorum for a class meeting is not less than two persons holding or representing by proxy at least one-third of the nominal value of the issued shares of that class (excluding any shares held as treasury shares). Following a variation of class rights, shareholders who amount to not less than 15% of the shareholders of the class in question who did not approve the variation may apply to court to have the variation cancelled. Any application must be made within 21 days of the variation. The court may cancel the variation if it is satisfied having regard to all the circumstances of the case that the variation would unfairly prejudice the shareholders of the class represented by the applicant. |
| | | | | | | | | | | | | | |
| | Delaware | | England |
Shareholder Vote on Certain Transactions | | Generally, under Delaware law, unless the certificate of incorporation provides for the vote of a larger portion of the stock, completion of a merger, consolidation, sale, lease or exchange of all or substantially all of a corporation’s assets or dissolution requires: •the approval of the board of directors; and •approval by the vote of the holders of a majority of the outstanding stock or, if the certificate of incorporation provides for more or less than one vote per share, a majority of the votes of the outstanding stock of a corporation entitled to vote on the matter. Under Delaware law, a contract or transaction between the company and one or more of its directors or officers, or between the company and any other organization in which one or more of its directors or officers, are directors or officers, or have a financial interest, shall not be void solely for this reason, or solely because the director or officer participates in the meeting of the board which authorizes the contract or transaction, or solely because any such director’s or officer’s votes are counted for such purpose, if: •the material facts as to the director’s or officer’s relationship or interest and as to the contract or transaction are disclosed or are known to the board, and the board in good faith authorizes the contract or transaction by the affirmative votes of a majority of the disinterested directors, even though the disinterested directors be less than a quorum; •the material facts as to the director’s or officer’s relationship or interest and as to the contract or transaction are disclosed or are known to the shareholders entitled to vote thereon, and the contract or transaction is specifically approved in good faith by vote of the shareholders; or •the contract or transaction is fair as to the corporation as of the time it is authorized, approved or ratified, by the board of directors, a committee or the shareholders. | | The Companies Act provides for schemes of arrangement, which are arrangements or compromises between a company and any class of shareholders or creditors that may be used in certain types of reconstructions, amalgamations, capital reorganizations or takeovers. These arrangements require: •the approval at a shareholders’ or creditors’ meeting convened by order of the court, of a majority in number of shareholders or creditors representing 75% in value of the capital held by, or debt owed to, the class of shareholders or creditors, or class thereof present and voting, either in person or by proxy; and •the approval of the court. Once approved, sanctioned and effective, all shareholders or creditors of the relevant class and the company are bound by the terms of the scheme. In addition, the Companies Act provides for restructuring plans, which may be used by a company only for the purpose of reducing or mitigating the effects of financial difficulties it is encountering that may affect its ability to carry on business as a going concern. These plans are similar to schemes of arrangement, but: the only shareholder or creditor approval required is that of shareholders or creditors representing 75% in value of the capital held by, or debt owed to, the members present and voting of one class of shareholders or creditors that would have a genuine economic interest in the company if the plan were not approved; and if that approval is obtained, members of any other class of shareholders or creditors will be bound by the restructuring plan if they will not as a result be worse off than if the plan were not approved and the court grants its approval. The Companies Act also contains certain provisions relating to transactions between a director and the company, including transactions involving the acquisition of substantial non-cash assets from a director (or person connected with a director) or the sale of substantial noncash assets to a director (or person connected with a director), and loans, quasi-loans and credit transactions between a company and a director or certain connected persons of directors. If such transactions meet certain thresholds set out within the Companies Act the approval of shareholders by ordinary resolution will be required. |
| | | | | | | | | | | | | | |
| | Delaware | | England |
Standard of Conduct for Directors | | Delaware law does not contain specific provisions setting forth the standard of conduct of a director. The scope of the fiduciary duties of directors is generally determined by the courts of the State of Delaware. In general, directors have a duty to act without self-interest, on a well-informed basis and in a manner they reasonably believe to be in the best interest of the shareholders. Directors of a Delaware corporation owe fiduciary duties of care and loyalty to the corporation and to its shareholders. The duty of care generally requires that a director act in good faith, with the care that an ordinarily prudent person would exercise under similar circumstances. Under this duty, a director must inform himself or herself of all material information reasonably available regarding a significant transaction. The duty of loyalty requires that a director act in a manner he or she reasonably believes to be in the best interests of the corporation. The director must not use his or her corporate position for personal gain or advantage. In addition, under Delaware law, when the board of directors of a Delaware corporation approves the sale or break-up of a corporation, the board of directors may, in certain circumstances, have a duty to obtain the highest value reasonably available to the shareholders. | | Under English law, a director owes various statutory and fiduciary duties to the company, including: •to act in the way he or she considers, in good faith, would be most likely to promote the success of the company for the benefit of its shareholders as a whole; •to avoid a situation in which he or she has, or can have, a direct or indirect interest that conflicts, or possibly may conflict, with the interests of the company; •to act in accordance with the company’s constitution and only exercise his or her powers for the purposes for which they are conferred; •to exercise independent judgment; •to exercise reasonable care, skill and diligence; •not to accept benefits from a third party conferred by reason of his or her being a director or doing (or not doing) anything as a director; and •to declare any interest that he or she has, whether directly or indirectly, in a proposed or existing transaction or arrangement with the company. |
Shareholder Suits | | Under Delaware law, a shareholder may initiate a derivative action to enforce a right of a corporation if the corporation fails to enforce the right itself. The complaint must: •state that the plaintiff was a shareholder at the time of the transaction of which the plaintiff complains or that the plaintiff’s shares thereafter devolved on the plaintiff by operation of law; •allege with particularity the efforts made by the plaintiff to obtain the action the plaintiff desires from the directors and the reasons for the plaintiff’s failure to obtain the action; or •state the reasons for not making the effort. Additionally, the plaintiff must remain a shareholder through the duration of the derivative suit.
| | Under English law, generally, the company, rather than its shareholders, is the proper claimant in an action in respect of a wrong done to the company or where there is an irregularity in the company’s internal management. Notwithstanding this general position, the Companies Act provides that (i) a court may allow a shareholder to bring a derivative claim (that is, an action in respect of and on behalf of the company) in respect of a cause of action arising from a director’s negligence, default, breach of duty or breach of trust, subject to complying with the procedural requirements under the Companies Act and (ii) a shareholder may bring a claim for a court order where the company’s affairs have been or are being conducted in a manner that is unfairly prejudicial to some or all of its shareholders. |
C.Material Contracts
Our material contracts include:
•The Fourth Amendment (and Restatement of) Credit Agreement, dated as of April 26, 2022 among Indivior Finance S.àr.l., Indivior Finance (2014) LLC, Indivior SMTM LLC, RBP Global Holdings Limited, Indivior Global Holdings Limited, and certain other Loan Parties, and Morgan Stanley Senior Funding, Inc., Morgan Stanley Bank, N.A., and Deutsche Bank AG New York Branch. For a description of this contract, see “Item 5. Operating and Financial Review and Prospects—B Liquidity and Capital Resources.” •Second Amended Relationship Agreement with Scopia Capital Management LP dated as of April 26, 2023. For a description of this contract, see “Item 6. Directors, Senior Management and Employees—A. Directors and Senior Management.” •Agreements with JPMorgan regarding American Depositary Shares. Deposit Agreement dated as of December 23, 2014 between Indivior PLC, JPMorgan Chase Bank, N.A., as Depositary and Owners and Holders from time to time of the American Depositary Receipts issued thereunder, including the Form of American Depositary Receipt; Notice of Termination dated October 3, 2022 related to that certain Deposit Agreement dated as of December 23, 2014 between Indivior PLC, JPMorgan Chase Bank, N.A.; Letter Agreement dated August 4, 2022 related to that certain Deposit Agreement dated as of December 23, 2014 between Indivior PLC, JPMorgan Chase Bank, N.A. For a description of our agreements with JPMorgan, see “Item 9. The Offer and Listing—A. Offering and Listing Details.” •Resolution Agreement. On July 24, 2020, Indivior Inc. settled with the DOJ, FTC, and U.S. state attorneys general the criminal and civil liability in connection with a multi-count indictment brought in April 2019 by a grand jury in the Western District of Virginia, a civil lawsuit joined by the DOJ in 2018, and an FTC investigation related to alleged charges of healthcare fraud, wire fraud, mail fraud, conspiracy in connection with marketing and promotion practices, pediatric safety claims, and over-prescribing of SUBOXONE Film and/or SUBOXONE Tablet by certain physicians. A wholly-owned subsidiary of Indivior PLC pleaded guilty to a single count of making a false statement relating to healthcare matters in 2012 in violation of 18 U.S.C. Section 1035. Indivior agreed to make payments to federal and state authorities totaling $600 million (plus applicable interest of 1.25% on a portion of that total amount), of which $200 million has been paid, and agreed to a stipulated injunction with the FTC, specific compliance measures with the DOJ, and entered into a Corporate Integrity Agreement with the Office of Inspector General of the Department of Health and Human Services. Interest accrues on certain portions of the resolution which will be paid together with the annual installment payments. Under the terms of the Resolution Agreement, Indivior Inc. has agreed to compliance terms regarding its sales and marketing practices. The Resolution Agreement contains certain requirements, such as reporting obligations and that the Group’s CEO (a) certify on an annual basis that, to the best of the CEO’s knowledge, after a reasonable inquiry, Indivior Inc. was in compliance with the Federal Food, Drug and Cosmetic Act and implementing regulations governing the manufacture, marketing, sale, promotion, and distribution of Indivior products in the U.S. and has not committed healthcare fraud, or (b) provide a certified list of all non-compliant activity and steps taken to remedy the activity. Indivior Inc. is subject to contempt prosecution if it fails to comply with any terms of the Resolution Agreement. See also, “Item 3. Key Information—D. Risk Factors—’Compliance with the terms and conditions of our Corporate Integrity Agreement, the Resolution Agreement with the United States Attorney’s Office for the Western District of Virginia and Consumer Protection Branch, and the Stipulated Order for Permanent Injunction and Equitable Monetary Relief with the FTC, requires significant resources and management time and, if we fail to comply, we could be subject to penalties or, under certain circumstances, excluded from government healthcare programs, which would materially adversely affect our business.’”
•Stipulated Order for Permanent Injunction and Equitable Monetary Relief in the U.S. District Court for the Western District of Virginia, Abingdon, between the FTC and Indivior Inc. entered July 24, 2020. As part of the resolution with the FTC and as detailed in the text of the stipulated order, for a ten-year period Indivior Inc. is required to make and provide specified disclosures and notifications to the FTC, including, among other items, regular written reports on Indivior Inc.’s compliance with the stipulated order and any proposed changes to Indivior Inc.’s corporate structure, and is prohibited from certain conduct related to, among other items, the filing of a New Drug Application for a Follow-on Drug Product with the United States Food and Drug Administration (FDA), the filing of a Citizen Petition with the FDA, or bringing a new drug product to market in the United States. Indivior Inc. also agreed to make a payment of $10 million to the FTC. See also, “Item 3. Key Information—D. Risk Factors—’Compliance with the terms and conditions of our Corporate Integrity Agreement, the Resolution Agreement with the United States Attorney’s Office for the Western District of Virginia and Consumer Protection Branch, and the Stipulated Order for Permanent Injunction and Equitable Monetary Relief with the FTC, requires significant resources and management time and, if we fail to comply, we could be subject to criminal chargers, penalties, or, under certain circumstances, excluded from government healthcare programs, which would materially adversely affect our business.’” •Corporate Integrity Agreement between the Officer of Inspector General of the Department of Health and Human Services and Indivior Inc. made as of July 24, 2020. In addition to the Resolution Agreement, Indivior Inc. entered into a five-year CIA with the HHS-OIG. The five-year CIA requires, among other things, that Indivior Inc. implement measures designed to ensure compliance with the statutes, regulations, and written directives of U.S. Medicare, U.S. Medicaid, and all other U.S. Federal healthcare programs, as well as with the statutes, regulations, and written directives of the U.S. Food and Drug Administration. Furthermore, Indivior Inc. is subject to additional periodic reporting and monitoring requirements related to the CIA. In addition, the CIA requires reviews by an independent review organization who will submit audit findings to HHS-OIG and a review by a Board Compliance Expert, who will prepare two compliance assessment reports in the first and third reporting periods of the CIA and compliance-related certifications from Indivior Inc.’s executives and Board members, and the implementation of a risk assessment and mitigation process. The CIA sets forth specified monetary penalties that may be imposed on a per day basis for failure to comply with the obligations specified in the CIA. The CIA also includes specific procedures under which Indivior Inc. must notify HHS-OIG if it fails to meet the requirements under the CIA. In the event that HHS-OIG determines Indivior Inc. to be in material breach of certain requirements of the CIA (including, repeated violations or any flagrant obligations under the CIA, a failure by Indivior Inc. to report a reportable event and/or take corrective action, a failure to engage and use an independent review organization, a failure to respond to certain requests from HHS-OIG), Indivior Inc. may be subject to exclusion from participation in the U.S. federal healthcare programs, which would have a severe impact on Indivior Inc.’s ability to comply with the financial covenants in Indivior Inc.’s debt facility, maintain sufficient liquidity to fund its operations, pay off its debt, generate future revenue and ultimately impact Indivior Inc.’s viability. See also, “Item 3. Key Information—D. Risk Factors—’Compliance with the terms and conditions of our Corporate Integrity Agreement, the Resolution Agreement with the United States Attorney’s Office for the Western District of Virginia and Consumer Protection Branch, and the Stipulated Order for Permanent Injunction and Equitable Monetary Relief with the FTC, requires significant resources and management time and, if we fail to comply, we could be subject to criminal charges, penalties or, under certain circumstances, excluded from government healthcare programs, which would materially adversely affect our business.’” •Lease of Land and Buildings at Dansom Lane, Hull HU8 7DS, by and between Reckitt Benckiser Healthcare (UK) Limited and RB Pharmaceuticals Limited, dated December 1, 2014. Under the terms of the lease, the Group has an exclusive right of use of the subject property for a 150-year term beginning on December 1, 2014. The lease is subject to certain affirmative and restrictive
covenants usual to such contracts, including, among other items, limitations on the ability of the parties to sublet, assign, or sell the subject premises.
•Certain incentive compensation, employee benefit, and related agreements may be considered to be material contracts, including (i) the Indivior PLC Annual Incentive Plan, (ii) the Indivior PLC Long-Term Incentive Plan, (iii) the trust deed in respect of the Indivior PLC Employee Benefits Trust, (iv) the Indivior PLC Savings-Related Share Option Plan, (v) the Indivior PLC U.S. Employee Stock Purchase Plan, (vi) the Indivior PLC Deferred Compensation Plan, and (vii) the Indivior Global Stock Profit Plan. For descriptions of these agreements, see “Item 6. Directors, Senior Management and Employees—B. Compensation.” •Copacker Supply Agreement by and between Reckitt Benckiser Healthcare (UK) Limited and Indivior UK Limited (f/k/a RB Pharmaceuticals Limited), originally made December 23, 2014, as amended March 29, 2019. Under the terms of the agreement, Reckitt Benckiser Healthcare (UK) Limited serves as the exclusive manufacturer and supplier of certain products and services, including SUBUTEX tablets, SUBOXONE Tablets, and TEMGESIC injectables and sublingual tablets, for a ten-year term beginning January 1, 2019. The agreement terminates January 1, 2029 although it requires the parties to discuss an extension.
•Commercial Exploitation Agreement by and between Aquestive Therapeutics (f/k/a MonoSol Rx, LLC) and Indivior Inc. (f/k/a Reckitt Benckiser Pharmaceuticals Inc.), dated August 15, 2008, as amended August 19, 2009, November 13, 2009, March 30, 2010, October 13, 2010, December 15, 2010, December 9, 2011, December 1, 2012, October 14, 2013 (by Addendum A), July 30, 2014 (by Addendum B), January 12, 2017, November 25, 2019, December 29, 2020, and March 2, 2023. Under the terms of the agreement, Aquestive Therapeutics has granted certain exclusive rights to the Group, including an exclusive license under Aquestive patents to use and sell SUBOXONE sublingual film, and the Group has granted certain exclusive rights to Aquestive, including an exclusive right to manufacture SUBOXONE sublingual film. The parties agreed to an additional extension for three (3) years through August 16, 2026 after which the agreement renews annually unless a party provides notice to the other party at least one year prior to termination.
•Master Manufacturing Services Agreement between Patheon Manufacturing Services LLC and Indivior UK Limited made April 6, 2018. Under the terms of the agreement, Patheon has been engaged by the Group to supply the component of our SUBLOCADE and PERSERIS products for a term ending December 31, 2027.
•Master Development and Supply Agreement by and between Curia Massachusetts, Inc. and Indivior UK Limited made January 1, 2022. Under the terms of the agreement, the Group has engaged Curia to manufacture and supply components of our SUBLOCADE and PERSERIS products and to provide related development services for a five-year term beginning January 1, 2022. The agreement terminates January 1, 2027 but may be extended by mutual agreement of the parties.
•Packaging and Supply Agreement between Sharp Corporation and Indivior UK Limited made September 7, 2017, as last amended May 9, 2021. Under the terms of the agreement, Sharp serves as the exclusive packager and supplier for our products.
•Master Collaboration Agreement between Indivior UK Limited and Aelis Farma SAS made June 3, 2021. For a description of this contract, see “Item 4. Information on the Company—B Business Overview, Long-term pipeline.” •Agreement and Plan of Merger among Indivior PLC, Indivior Inc., Olive Acquisition Sub, Inc., and Opiant Pharmaceuticals, Inc. dated as of November 13, 2022. For a description of this contract, see “Item 4. Information on the Company—A. History and Development of the Company—Acquisition of Opiant—Merger Agreement.”
•Contingent Value Rights Agreement dated as of March 2, 2023 between Indivior, Inc., Computershare Inc. and Computershare Trust Company, N.A. For a description of this agreement, see “Item 4. Information on the Company—A. History and Development of the Company—Acquisition of Opiant—CVR Agreement.” •License Agreement by and among Indivior UK Limited and Aelis Farma dated June 3, 2021. This agreement gives the Group an option for $100 million in exchange for an exclusive global license to develop, make and commercialize AEF0017. The option becomes exercisable upon completion of a successful Phase 2B. The Group made an up-front payment of $30 million to Aelis, and upon exercise the Group would assume responsibility and costs for all future development, regulatory, commercial, and manufacturing activities. Upon commercialization, we would also pay to Aelis Farma a tiered royalty on net sales generally ranging from mid to high teens. We may make additional development milestone payments of up to $90 million and potential sales milestones of up to $235 million. Separately, we also invested $11 million in Aelis common stock in February 2022.
•License Agreement by and among Indivior UK Limited and C4X Discovery Limited dated March 28, 2021. This agreement gives the Group an exclusive global license to develop, make and commercialize INDV-2000. The Group made an up-front payment of $10 million to C4X. Upon commercialization, we would also pay to C4X a single-digit flat royalty on net sales. We may make additional development milestone payments of up to $40 million and potential sales milestones of up to $150 million.
•License Agreement by and among Indivior UK Limited and Addex Pharma S.A. dated January 2, 2021. This agreement gives the Group an exclusive global license to develop, make and commercialize INDV-1000. The Group made an up-front payment of $5 million to Addex. Upon commercialization, we would also pay to Addex a tiered royalty on net sales generally ranging from single digit to low teens. We may make additional development milestone payments of up to $145 million and potential sales milestones of up to $185 million.
•License Agreement between Opiant Pharmaceuticals, Inc. and Neurelis, Inc. (f/k/a Aegis Therapeutics, LLC) effective January 1, 2017. The agreement gives the Group the right to use certain patents and other intellectual property, including Intravail® (dodecyl maltoside) as an absorption enhancer, from Neurelis, Inc. (f/k/a Aegis Therapeutics, LLC). Our license agreement obligates us to pay certain development milestones, which are not material, a tiered low to mid- single digit royalty on net sales, and potential sales milestones of up to $5 million each for the sale of products including nalmefene, naloxone, or naltrexone.
D.Exchange Controls
Other than certain economic sanctions which may be in place from time to time, there are currently no UK laws, decrees or regulations restricting the import or export of capital or affecting the remittance of dividends or other payment to holders of ordinary shares who are non-residents of the United Kingdom. Similarly, other than certain economic sanctions which may be in force from time to time, there are no limitations relating only to nonresidents of the United Kingdom under English law or Indivior’s articles of association on the right to be a holder of, and to vote in respect of, the ordinary shares.
E.Taxation
Taxation in the United States
The following discussion is a general summary based on present law of certain U.S. federal income tax considerations relevant to U.S. Holders (as defined below) of the ownership and disposition of ordinary shares. This discussion is not a complete description of all tax considerations that may be relevant to a U.S. Holder of ordinary shares; it is not a substitute for tax advice. It applies only to U.S. Holders that hold ordinary shares as capital assets and use the U.S. dollar as their functional currency. In
addition, it does not describe all of the U.S. federal income tax considerations that may be relevant to a U.S. Holder in light of a U.S. Holder’s particular circumstances, including U.S. Holders subject to special rules, such as banks or other financial institutions, insurance companies, tax-exempt entities, dealers, traders in securities that elect to mark-to-market, regulated investment companies, real estate investment trusts, partnerships and other pass-through entities (including S-corporations), U.S. expatriates, persons liable for the alternative minimum tax, persons that directly, indirectly or constructively, own 5% or more of the total combined voting power of the Group’s voting stock or of the total value of the Group’s equity interests, investors that hold ordinary shares in connection with a permanent establishment or fixed base outside the United States, or investors that hold ordinary shares as part of a hedge, straddle, conversion, constructive sale or other integrated financial transaction. This summary also does not address U.S. federal taxes other than the income tax (such as estate or gift taxes) or U.S. state and local, or non-U.S. tax laws or considerations.
As used in this section, “U.S. Holder” means a beneficial owner of ordinary shares that is, for U.S. federal income tax purposes: (i) a citizen or individual resident of the United States, (ii) a corporation, or other entity taxable as a corporation, created or organized in or under the laws of the United States, any state thereof or the District of Columbia, (iii) a trust subject to the control of one or more U.S. persons and the primary supervision of a U.S. court; or (iv) an estate the income of which is subject to U.S. federal income taxation regardless of its source.
The U.S. federal income tax treatment of a partner in a partnership (or other entity or arrangement treated as a partnership for U.S. federal income tax purposes) that holds ordinary shares generally will depend on the status of the partner and the activities of the partnership. Partnerships that hold ordinary shares should consult their own tax advisors regarding the specific U.S. federal income tax consequences to their partners of the partnership’s ownership and disposition of ordinary shares.
Dividends
Subject to the discussion below under “– Passive Foreign Investment Company Rules,” the gross amount of any distribution of cash or property (other than certain pro rata distributions of ordinary stock) with respect to ordinary shares will be included in a U.S. Holder’s gross income as ordinary income from foreign sources when actually or constructively received. Dividends will not be eligible for the dividends-received deduction generally available to U.S. corporations. Dividends received by eligible non-corporate U.S. Holders that satisfy a minimum holding period and certain other requirements generally will be taxed at the preferential rate applicable to qualified dividend income if the Group qualifies for the benefits of the income tax treaty between the United States and the United Kingdom and the Group is not a passive foreign investment company (a “PFIC”) as to the U.S. Holder in the year of distribution or the preceding year.
Dividends paid in a currency other than U.S. dollars will be included in income in a U.S. dollar amount based on the exchange rate in effect on the date of receipt, whether or not the currency is converted into U.S. dollars at that time. A U.S. Holder’s tax basis in the non-U.S. currency will equal the U.S. dollar amount included in income. Any gain or loss realized on a subsequent conversion or other disposition of the non-U.S. currency for a different U.S. dollar amount generally will be U.S. source ordinary income or loss. If dividends paid in a currency other than U.S. dollars are converted into U.S. dollars on the day they are received, the U.S. Holder generally will not be required to recognize foreign currency gain or loss in respect of the dividend income.
Dividends received by certain non-corporate U.S. Holders generally will be includible in “net investment income” for purposes of the Medicare contribution tax.
Dispositions
Subject to the discussion below under “– Passive Foreign Investment Company Rules,” a U.S. Holder generally will recognize capital gain or loss on the sale or other disposition of ordinary shares in an amount equal to the difference between the U.S. dollar value of the amount realized and the U.S. Holder’s
adjusted tax basis in the disposed ordinary shares. Any gain or loss generally will be treated as arising from U.S. sources and will be long-term capital gain or loss if the U.S. Holder’s holding period exceeds one year. Deductions for capital loss are subject to significant limitations.
A U.S. Holder that receives a currency other than U.S. dollars on the sale or other disposition of ordinary shares will realize an amount equal to the U.S. dollar value of the currency received at the spot rate on the date of sale or other disposition (or, if the ordinary shares are traded on an “established securities market” at the time of disposition, in the case of cash basis and electing accrual basis U.S. Holders, the settlement date). A U.S. Holder that does not determine the amount realized using the spot rate on the settlement date will recognize foreign currency gain or loss if the U.S. dollar value of the currency received at the spot rate on the settlement date differs from the amount realized. A U.S. Holder will have a tax basis in the currency received equal to its U.S. dollar value at the spot rate on the settlement date. Any foreign currency gain or loss realized on the settlement date or on a subsequent conversion of the non-U.S. currency for a different U.S. dollar amount generally will be U.S. source ordinary income or loss.
Capital gains from the sale or other disposition of ordinary shares received by certain non-corporate U.S. Holders generally will be includible in “net investment income” for purposes of the Medicare contribution tax.
Passive Foreign Investment Company Rules
Based on the composition of the Group’s current gross assets and income and the manner in which the Group expects to operate its business in future years, the Group believes that it should not be classified as a PFIC for U.S. federal income tax purposes for the Group’s current taxable year and does not expect to be so classified in the foreseeable future. In general, a non-U.S. corporation will be a PFIC for any taxable year in which, taking into account a pro rata portion of the income and assets of 25% or more owned subsidiaries, either (i) 75% or more of its gross income is passive income, or (ii) 50% or more of the average quarterly value of its assets are assets that produce, or are held for the production of, passive income or which do not produce income. For this purpose, passive income generally includes, among other things and subject to various exceptions, interest, dividends, rents, royalties and gains from the disposition of assets that produce passive income. Whether the Group is a PFIC is a factual determination made annually, and the Group’s status could change depending among other things upon changes in the composition and relative value of its gross receipts and assets. Because the market value of the Group’s assets (including for this purpose goodwill) may be measured in large part by the market price of the ordinary shares, which is likely to fluctuate, no assurance can be given that the Group will not be a PFIC in the current year or in any future taxable year.
If the Group were a PFIC for any taxable year in which a U.S. Holder holds ordinary shares, such U.S. Holder would be subject to additional taxes on any excess distributions and any gain realized from the sale or other taxable disposition of ordinary shares (including certain pledges) regardless of whether the Group continues to be a PFIC. A U.S. Holder will have an excess distribution to the extent that distributions on ordinary shares during a taxable year exceed 125% of the average amount received during the three preceding taxable years (or, if shorter, the U.S. Holder’s holding period). To compute the tax on excess distributions or any gain, (i) the excess distribution or gain is allocated ratably over the U.S. Holder’s holding period, (ii) the amount allocated to the current taxable year and any year before the Group became a PFIC is taxed as ordinary income in the current year and (iii) the amount allocated to other taxable years is taxed at the highest applicable marginal rate in effect for each year and an interest charge is imposed to recover the deemed benefit from the deferred payment of the tax attributable to each year.
A U.S. Holder may be able to avoid some of the adverse impacts of the PFIC rules described above by electing to mark ordinary shares to market annually. The election is available only if the ordinary shares are considered “marketable stock,” which generally includes stock that is regularly traded in more than de minimis quantities on a qualifying exchange (which includes Nasdaq). If a U.S. Holder makes the
mark-to-market election, any gain from marking Shares to market or from disposing of them would be ordinary income. Any loss from marking ordinary shares to market would be recognized only to the extent of unreversed gains previously included in income. Loss from marking ordinary shares to market would be ordinary, but loss on disposing of them would be capital loss except to the extent of mark-to-market gains previously included in income. No assurance can be given that the ordinary shares will be traded in sufficient frequency and quantity to be considered “marketable stock.” A valid mark-to-market election cannot be revoked without the consent of the IRS unless the ordinary shares cease to be marketable stock.
U.S. Holders should consult their own tax advisors concerning the Group’s possible PFIC status and the consequences to them if the Group were classified as a PFIC for any taxable year.
Information Reporting and Backup Withholding
Dividends on and proceeds from the sale or other disposition of ordinary shares may be reported to the IRS unless the holder is a corporation or otherwise establishes a basis for exemption. Backup withholding tax may apply to amounts subject to reporting. Any amount withheld may be credited against the holder’s U.S. federal income tax liability subject to certain rules and limitations. U.S. Holders should consult with their own tax advisers regarding the application of the U.S. information reporting and backup withholding rules.
Certain non-corporate U.S. Holders are required to report information with respect to ordinary shares not held through an account with a domestic financial institution to the IRS. U.S. Holders that fail to report required information could become subject to substantial penalties. Prospective investors are encouraged to consult with their own tax advisors about these and any other reporting obligations arising from their investment in ordinary shares.
THE DISCUSSION ABOVE IS A GENERAL SUMMARY. IT DOES NOT COVER ALL TAX MATTERS THAT MAY BE OF IMPORTANCE TO A PARTICULAR U.S. HOLDER. EACH U.S. HOLDER OF ORDINARY SHARES IS URGED TO CONSULT ITS OWN TAX ADVISOR ABOUT THE TAX CONSEQUENCES TO IT OF OWNING AND DISPOSING OF ORDINARY SHARES IN LIGHT OF THE U.S. HOLDER’S OWN CIRCUMSTANCES.
Taxation in the United Kingdom
The following statements are intended only as a general guide to certain UK tax considerations and do not purport to be a complete analysis of all potential UK tax consequences of acquiring, holding or disposing of the ordinary shares. They are based on current UK law and what is understood to be the current practice of HM Revenue and Customs (“HMRC”) as at the date of this registration statement, both of which may change, possibly with retroactive effect. They apply only to shareholders who are resident, and in the case of individuals domiciled, for tax purposes in (and only in) the UK (except insofar as express reference is made to the treatment of non-UK residents), who hold their ordinary shares as an investment (other than where a tax exemption applies, for example where the ordinary shares are held in an individual savings account or pension arrangement) and who are the absolute beneficial owner of both the ordinary shares and any dividends paid on them. The tax position of certain categories of shareholders who are subject to special rules is not considered (except insofar as express reference is made to the treatment of exempt shareholders) and it should be noted that they may incur liabilities to UK tax on a different basis to that described below. This includes persons acquiring their ordinary shares in connection with employment, dealers in securities, insurance companies, collective investment schemes, charities, exempt pension funds, and temporary non-residents and non-residents carrying on a trade, profession or vocation in the UK.
The statements summarize the current position and are intended as a general guide only. Shareholders who are in any doubt as to their tax position or who may be subject to tax in a jurisdiction other than the UK are strongly recommended to consult their own professional advisers.
Income from Ordinary Shares
Indivior is not required to withhold UK tax when paying a dividend. Liability to tax on dividends will depend upon the individual circumstances of a shareholder.
UK Resident Individual Shareholders
Under current UK tax rules specific rates of tax apply to dividend income. These include (i) a nil rate of tax (the “dividend allowance”) for the first £2,000 of non-exempt dividend income in any tax year (reducing to £1,000 from April 6, 2023 and to £500 from April 6, 2024), and (ii) different rates of tax for dividend income that exceeds the dividend allowance. No tax credit attaches to dividend income. For these purposes “dividend income” includes UK and non-UK source dividends and certain other distributions in respect of shares.
An individual shareholder who is resident for tax purposes in the United Kingdom and who receives a dividend from Indivior will not be liable to UK tax on the dividend to the extent that (taking account of any other non-exempt dividend income received by the shareholder in the same tax year) that dividend falls within the dividend allowance.
To the extent that (taking account of any other non-exempt dividend income received by the shareholder in the same tax year) the dividend exceeds the dividend allowance, it will be subject to income tax at 8.75% to the extent that it falls below the threshold for higher rate income tax. To the extent that (taking account of other non-exempt dividend income received by the shareholder in the same tax year) it falls above the threshold for higher rate income tax then the dividend will be taxed at 33.75% to the extent that it is within the higher rate band, or 39.35% to the extent that it is within the additional rate band. For the purposes of determining which of the taxable bands dividend income falls into, dividend income is treated as the highest part of a shareholder’s income. In addition, dividends within the dividend allowance which would (if there was no dividend allowance) have fallen within the basic or higher rate bands will use up those bands respectively for the purposes of determining whether the threshold for higher rate or additional rate income tax is exceeded.
UK Resident Corporate Shareholders
It is likely that most dividends paid on the ordinary shares to UK resident corporate shareholders would fall within one or more of the classes of dividend qualifying for exemption from corporation tax. However, it should be noted that the exemptions are not comprehensive and are also subject to anti-avoidance rules.
UK Resident Exempt Shareholders
UK resident shareholders who are not liable to UK tax on dividends, including exempt pension funds and charities, are not entitled to any tax credit in respect of dividends paid by the Group.
Non-UK Resident Shareholders
No tax credit will attach to any dividend paid by Indivior. A shareholder resident outside the UK may also be subject to non-UK taxation on dividend income under local law. A shareholder who is resident outside the UK for tax purposes should consult his or her own tax adviser concerning his or her tax position on dividends received from the Group.
Disposal of Shares
UK Resident Shareholders
A disposal or deemed disposal of ordinary shares by a shareholder who is resident in the UK for tax purposes may, depending upon the shareholder’s circumstances and subject to any available exemption or relief (such as the annual exempt amount for individuals), give rise to a chargeable gain or an allowable loss for the purposes of UK taxation of capital gains.
Non-UK Resident Shareholders
Shareholders who are not resident in the UK will not generally be subject to UK taxation of capital gains on the disposal or deemed disposal of ordinary shares unless they are carrying on a trade, profession or vocation in the UK through a branch or agency (or, in the case of a corporate shareholder, a permanent establishment) in connection with which the ordinary shares are used, held or acquired. Non-UK tax resident shareholders may be subject to non-UK taxation on any gain under local law.
An individual shareholder who has been resident for tax purposes in the UK but who ceases to be so resident or becomes treated as resident outside the UK for the purposes of a double tax treaty for a period of five years or less and who disposes of all or part of his or her ordinary shares during that period may be liable to capital gains tax on his or her return to the UK, subject to any available exemptions or reliefs.
Stamp Duty and Stamp Duty Reserve Tax
No UK stamp duty will be payable in respect of transfers of the ordinary shares, provided that no written instrument of transfer is entered into (which should not be necessary, while the ordinary shares are held within the DTC clearance system).
While the ordinary shares are held within the DTC clearance system (and provided the DTC satisfies various conditions specified in UK legislation), agreements to transfer such shares should not be subject to stamp duty reserve tax (“SDRT”). The Group has received HMRC clearance confirming that agreements to transfer ordinary shares which are held by way of DIs which will represent ordinary shares held within the DTC clearance system (see “Item 9. The Offer and Listing—A. Offer and Listing Details,” for a description of the DIs) will not be subject to UK SDRT. Transfers of, or agreements to transfer, ordinary shares from the DTC clearance system into another clearance system (or into a depositary receipt system) should not, provided that the other clearance system or depositary receipt system satisfies various conditions specified in UK legislation, be subject to UK stamp duty or SDRT.
In the event that ordinary shares are not held in the DTC clearance system (or such ordinary shares have left the DTC clearance system, other than into another clearance system or depositary receipt system), and are to be subsequently transferred (or transferred back) into the DTC clearance system, such ordinary shares will not be transferred (or transferred back) into the DTC clearance system until the transferor of the ordinary shares has first transferred the ordinary shares to a depositary specified by us so that stamp duty (and/or SDRT) may be collected and paid to HMRC in connection with such transfer to the depositary. We have put in place arrangements such that prior to being transferred (or transferred back) into the DTC clearance system, ordinary shares must be transferred to GTU Ops Inc. (as depositary nominee for Computershare Trust Company N.A. (acting in its capacity as depositary)) or to such other relevant depositary and depositary nominee entities within the Computershare group as may be specified by Computershare. Before effecting the transfer of the ordinary shares to the relevant depositary nominee (as nominee for the relevant depositary), for onward transfer into the DTC clearance system, the transferor will be required to provide Computershare Trust Company N.A. (acting in its capacity as transfer agent) (the “Transfer Agent”) with the funds necessary to settle any stamp duty (and/or SDRT) in respect of such transfer of ordinary shares, which would generally be charged at the rate of
1.5% of the value of the ordinary shares. Once the Transfer Agent has been provided with the necessary funds, all stamp tax obligations have been complied with by the relevant transferor and/or the Transfer Agent and the transfer of the ordinary shares from the transferor to the relevant depositary nominee (as nominee for the relevant depositary) has been effected, the relevant depositary will then issue depositary receipts in respect of the ordinary shares on a one for one basis. On instruction by, or on behalf of, the relevant transferor, the relevant depositary will then cancel the depositary receipts representing the ordinary shares and instruct the relevant depositary nominee to transfer the ordinary shares into the DTC clearance system.
If the ordinary shares were transferred by way of written instrument, then UK stamp duty at the rate of 0.5% (rounded up to the next multiple of £5) of the amount or value of the consideration given would generally be payable on the written instrument transferring the ordinary shares. Other than in the circumstances described above for ordinary shares held in (or transferred to) the DTC clearance system (including ordinary shares that are held by way of DIs), a charge to SDRT will also arise on an unconditional agreement to transfer shares (at the rate of 0.5% of the amount or value of the consideration payable). However, if within six years of the date of the agreement becoming unconditional an instrument of transfer is executed pursuant to the agreement, and stamp duty is paid on that instrument, any SDRT already paid will be refunded (generally, but not necessarily, with interest) provided that a claim for repayment is made, and any outstanding liability to SDRT will be cancelled. The liability to pay stamp duty or SDRT is generally satisfied by the purchaser or transferee. An exemption from stamp duty is available on an instrument transferring shares where the amount or value of the consideration is £1,000 or less, and it is certified on the instrument that the transaction effected by the instrument does not form part of a larger transaction or series of transactions for which the aggregate consideration exceeds £1,000.
Inheritance Tax
Liability to UK inheritance tax may arise in respect of ordinary shares on the death of, or on a gift of ordinary shares by, an individual holder of such ordinary shares who is domiciled, or deemed to be domiciled, in the UK.
The ordinary shares, if held directly, rather than as DIs, will be assets situated in the UK for the purposes of UK inheritance tax. A gift of such assets by, or the death of, an individual holder of such assets may (subject to certain exemptions and reliefs) give rise to a liability to UK inheritance tax even if the holder is neither domiciled in the UK nor deemed to be domiciled there under certain rules relating to long residence or previous domicile.
Further, DIs may be treated as assets situated in the UK for the purposes of UK inheritance tax. Accordingly, the death of a holder of DIs or a gift of DIs by a holder may give rise to a liability to UK inheritance tax, even if the holder is neither domiciled nor deemed to be domiciled in the UK.
For inheritance tax purposes, a transfer of assets at less than full market value may be treated as a gift and particular rules apply to gifts where the donor reserves or retains some benefit. Special rules also apply to close companies and to trustees of settlements who hold ordinary shares, bringing them within the charge to inheritance tax. Shareholders should consult an appropriate tax adviser if they make a gift or transfer at less than full market value or if they intend to hold any ordinary shares or DIs through trust arrangements.
F.Dividends and Paying Agents
For a discussion of the declaration and payment of dividends on our ordinary shares, see “Item 10.B.—Dividends and other distributions.”
G.Statement by Experts
The financial statements of Indivior PLC as of December 31, 2022, 2021, and 2020, and for each of the three years in the period ended December 31, 2022 included in this registration statement on Form 20-F have been so included in reliance on the audit report of PricewaterhouseCoopers U.S. LLP, independent registered public accounting firm, given on the authority of said firm as experts in auditing and accounting. PricewaterhouseCoopers U.S. LLP is registered with the U.S. Public Company Accounting Oversight Board (PCOAB).
H.Documents on Display
Upon the effectiveness of this registration statement, the Group will be subject to the information reporting requirements of the Exchange Act applicable to foreign private issuers, and under those requirements will file reports with the SEC. Those other reports or other information and this registration statement may be inspected without charge and copied at the public reference facilities of the SEC located at 100 F Street, N.E., Washington, D.C. 20549. You may also obtain copies of the documents at prescribed rates by writing to the Public Reference Section of the SEC at 100 F Street, N.E., Washington, DC 20549. Please call the SEC at 1-800-SEC-0330 for further information on the public reference room. The SEC also maintains a website at http://www.sec.gov from which certain filings may be accessed. We also make our electronic filings with the SEC available at no cost on the Group’s Investor Relations website, www.Indivior.com/en/Investors, as soon as reasonably practicable after we file such material with, or furnish it to, the SEC.
As a foreign private issuer, we will be exempt from the rules under the Exchange Act related to the furnishing and content of proxy statements, and our officers, directors and principal shareholders will be exempt from the reporting and short-swing profit recovery provisions contained in Section 16 of the Exchange Act. In addition, we will not be required under the Exchange Act to file annual, quarterly and current reports and financial statements with the SEC as frequently or as promptly as U.S. companies whose securities are registered under the Exchange Act. However, for so long as we are listed on a U.S. exchange and are registered with the SEC, we will file with the SEC, within 120 days after the end of each fiscal year, or such applicable time as required by the SEC, an annual report on Form 20-F containing financial statements audited by an independent registered public accounting firm, and will furnish to the SEC, on a Form 6-K, all financial statements and other information required to be furnished on Form 6-K.
I.Subsidiary Information
Not applicable.
ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
See “Item 5. Operating and Financial Review and Prospects—B. Liquidity and Capital Resources.” In addition to the risks inherent in our operations, we are exposed to a variety of financial risks, such as market risk (including foreign currency exchange, cash flow and interest rate risk), credit risk and liquidity risk. Further information can be found under Note 15 “Financial Instruments and Risk Management” included in “Item 18. Financial Statements—Audited Consolidated Financial Statements.” b. Qualitative Information about Market Risk
See “Item 5. Operating and Financial Review and Prospects—B. Liquidity and Capital Resources.” In addition to the risks inherent in our operations, we are exposed to a variety of financial risks, such as market risk (including foreign currency exchange, cash flow and interest rate risk), credit risk and liquidity risk. Further information can be found under Note 15 “Financial Instruments and Risk Management” included in “Item 18. Financial Statements—Audited Consolidated Financial Statements.”
ITEM 12: DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
A.Debt Securities
Not applicable.
B.Warrants and Rights
Not applicable.
C.Other Securities
Not applicable.
D.American Depositary Shares
Not applicable
PART II
ITEM 13 DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
Not applicable.
ITEM 14: MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
Not applicable.
ITEM 15: CONTROLS AND PROCEDURES
Not applicable.
ITEM 16. [Reserved]
ITEM 16A: AUDIT COMMITTEE FINANCIAL EXPERT
Not applicable.
ITEM 16B: CODE OF ETHICS
Not applicable.
ITEM 16C: PRINCIPAL ACCOUNTANT FEES AND SERVICES
Not applicable.
ITEM 16D: EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
Not applicable.
ITEM 16E: PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
Not applicable.
ITEM 16F: CHANGE IN REGISTRANTS CERTIFYING ACCOUNTANT
The certifying accountant of the Group as of, and for, the fiscal years ended December 31, 2021 and 2020 was PricewaterhouseCoopers LLP (UK) (“PwC UK”). PwC UK will continue as the Group’s certifying accountant under International Auditing Standards applicable for the United Kingdom for UK regulatory purposes and for purposes of our listing on the London Stock Exchange.
In connection with our contemplated dual listing on the Nasdaq Global Select Market, the Audit Committee approved the appointment of PricewaterhouseCoopers LLP (US) (“PwC US”) as the Group’s independent registered public accounting firm for the fiscal year ended December 31, 2022, effective September 28, 2022.
PwC-US participated in a portion of the audit of the Group’s consolidated financial statements for the years ended December 31, 2021 and December 31, 2020. During the Group’s two most recent years ended December 31, 2021 and December 31, 2020 and in the subsequent interim period through September 30 2022, other than in the normal course of the audit, the Group did not consult PwC US regarding either
a.the application of accounting principles to a specified transaction, either completed or proposed; or the type of audit opinion that might be rendered on the Group's financial statements; or
b.any matter that was either the subject of a disagreement or a reportable event.
The audit reports of PwC UK on our consolidated financial statements as of and for the fiscal years ended December 31, 2021 and 2020 did not contain an adverse opinion or a disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope or accounting principles.
During the fiscal years ended December 31, 2021 and 2020 and the subsequent interim period through September 30 2022, there were no disagreements between us and PwC UK on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure which, if not resolved to the satisfaction of PwC UK would have caused PwC UK to make reference to the subject matter of the disagreements in connection with its reports for such fiscal years; and there were no reportable events as defined in “Item 16F. (a)(1)(v)” of Form 20-F. The Group provided PwC UK with a copy of this disclosure. PwC UK furnished the Group with a letter addressed to the U.S. SEC stating that it agreed with the statements made by the Group, which the Group files as Exhibit 16.1 to this registration statement.
ITEM 16G: CORPORATE GOVERNANCE
Not applicable.
ITEM 16H: MINE SAFETY DISCLOSURE
Not applicable.
ITEM 16I: DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
PART III
ITEM 17: FINANCIAL STATEMENTS
We have elected to furnish financial statements and related information specified in “Item 18”. ITEM 18: FINANCIAL STATEMENTS
See the Financial Statements beginning on page F-2.
Unaudited Condensed Consolidated Interim Income Statement
| | | | | | | | | | | | | | | | | | | | |
For the three months ended March 31 (in millions) | | Notes | | Q1
2023 | | Q1
2022 |
| Net Revenue | | 2 | | $ | 253 | | | $ | 207 | |
| Cost of sales | | | | (39) | | | (37) | |
| Gross Profit | | | | 214 | | | 170 | |
| Selling, general and administrative expenses | | 3 | | (131) | | | (109) | |
| Research and development expenses | | 3 | | (27) | | | (8) | |
| Net other operating income | | 3 | | 1 | | | 1 | |
| Operating Profit | | | | 57 | | | 54 | |
| Finance income | | 4 | | 11 | | | — | |
| Finance expense | | 4 | | (10) | | | (6) | |
| Net Finance Income/(Expense) | | | | 1 | | | (6) | |
| Profit Before Taxation | | | | 58 | | | 48 | |
| Income tax expense | | 5 | | (14) | | | (7) | |
| Net Income | | | | $ | 44 | | | $ | 41 | |
| | | | | | |
| Earnings per ordinary share (in dollars)* | | | | | | |
| Basic earnings per share | | 6 | | $0.32 | | $0.29 |
| Diluted earnings per share | | 6 | | $0.31 | | $0.28 |
______________
*Basic and diluted earnings per share reflect the impact of the Company's share consolidation for all periods presented. Refer to Note 6 for further details. Unaudited Condensed Consolidated Interim Statement of Comprehensive Income
| | | | | | | | | | | | | | |
For the three months ended March 31 (in millions) | | Q1
2023 | | Q1
2022 |
| Net income | | 44 | | | 41 | |
| Other comprehensive loss | | | | |
| Items that may be reclassified to profit or loss in subsequent years: | | | | |
| Foreign currency translation adjustment, net | | — | | | (6) | |
| Other comprehensive loss | | — | | | (6) | |
| Total comprehensive income | | $ | 44 | | | $ | 35 | |
The notes are an integral part of these condensed consolidated interim financial statements
Unaudited Condensed Consolidated Interim Balance Sheet
| | | | | | | | | | | | | | | | | | | | |
| (in millions) | | Notes | | Mar 31, 2023 | | Dec 31, 2022 |
| ASSETS | | | | | | |
| Non-current assets | | | | | | |
| Intangible assets | | 7 | | 200 | | | 70 | |
| Property, plant and equipment | | | | 54 | | | 54 | |
| Right-of-use assets | | | | 34 | | | 31 | |
| Deferred tax assets | | 5 | | 201 | | | 219 | |
| Investments | | 8 | | 98 | | | 98 | |
| Other assets | | 9 | | 46 | | | 38 | |
| | | | 633 | | | 510 | |
| Current assets | | | | | | |
| Inventories | | | | 123 | | | 114 | |
| Trade receivables | | | | 213 | | | 220 | |
| Other assets | | 9 | | 48 | | | 27 | |
| Current tax receivable | | 5 | | 33 | | | 5 | |
| Investments | | 8 | | 117 | | | 119 | |
| Cash and cash equivalents | | | | 588 | | | 774 | |
| | | | 1,122 | | | 1,259 | |
| Total assets | | | | $ | 1,755 | | | $ | 1,769 | |
| | | | | | |
| LIABILITIES | | | | | | |
| Current liabilities | | | | | | |
| Borrowings | | 10 | | (3) | | | (3) | |
| Provisions | | 11 | | (298) | | | (303) | |
| Other liabilities | | 11 | | (70) | | | (79) | |
| Trade and other payables | | 14 | | (657) | | | (617) | |
| Lease liabilities | | | | (8) | | | (8) | |
| Current tax liabilities | | 5 | | (7) | | | (9) | |
| | | | (1,043) | | | (1,019) | |
| Non-current liabilities | | | | | | |
| Borrowings | | 10 | | (236) | | | (237) | |
| Provisions | | 11 | | (5) | | | (5) | |
| Other liabilities | | 11 | | (367) | | | (428) | |
| Lease liabilities | | | | (32) | | | (29) | |
| | | | (640) | | | (699) | |
| Total liabilities | | | | (1,683) | | | (1,718) | |
| Net assets | | | | 72 | | | 51 | |
| | | | | | |
| EQUITY | | | | | | |
| Capital and reserves | | | | | | |
| Share capital | | 15 | | 69 | | | 68 | |
| Share premium | | | | 9 | | | 8 | |
| Capital redemption reserve | | | | 6 | | | 6 | |
| Other reserve | | | | (1,295) | | | (1,295) | |
| Foreign currency translation reserve | | | | (39) | | | (39) | |
| Retained earnings | | | | 1,322 | | | 1,303 | |
| Total equity | | | | $ | 72 | | | $ | 51 | |
The notes are an integral part of these condensed consolidated interim financial statements.
Unaudited Condensed Consolidated Interim Statement of Changes in Equity
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (in millions) | | Notes | | Share capital | | Share premium | | Capital redemption reserve | | Other reserve | | Foreign currency translation reserve | | Retained earnings | | Total equity |
| Balance at January 1, 2022 | | | | $ | 70 | | | $ | 7 | | | $ | 3 | | | $ | (1,295) | | | $ | (20) | | | $ | 1,438 | | | $ | 203 | |
| Comprehensive income | | | | | | | | | | | | | | | | |
| Net income | | | | — | | | — | | | — | | | — | | | — | | | 41 | | | 41 | |
| Other comprehensive loss | | | | — | | | — | | | — | | | — | | | (6) | | | — | | | (6) | |
| Total comprehensive income | | | | — | | | — | | | — | | | — | | | (6) | | | 41 | | | 35 | |
| Transactions recognized directly in equity | | | | | | | | | | | | | | | | |
| Shares issued | | | | 1 | | | — | | | — | | | — | | | — | | | — | | | 1 | |
| Share-based plans | | | | — | | | — | | | — | | | — | | | — | | | 3 | | | 3 | |
| Settlement of tax on equity awards | | | | — | | | — | | | — | | | — | | | — | | | (10) | | | (10) | |
| Balance at March 31, 2022 | | | | $ | 71 | | | $ | 7 | | | $ | 3 | | | $ | (1,295) | | | $ | (26) | | | $ | 1,472 | | | $ | 232 | |
| | | | | | | | | | | | | | | | |
| Balance at January 1, 2023 | | | | $ | 68 | | | $ | 8 | | | $ | 6 | | | $ | (1,295) | | | $ | (39) | | | $ | 1,303 | | | $ | 51 | |
| Comprehensive income | | | | | | | | | | | | | | | | |
| Net income | | | | — | | | — | | | — | | | — | | | — | | | 44 | | | 44 | |
| Other comprehensive loss | | | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
| Total comprehensive income | | | | — | | | — | | | — | | | — | | | — | | | 44 | | | 44 | |
| Transactions recognized directly in equity | | | | | | | | | | | | | | | | |
| Shares issued | | | | 1 | | | 1 | | | — | | | — | | | — | | | — | | | 2 | |
| Share-based plans | | | | — | | | — | | | — | | | — | | | — | | | 5 | | | 5 | |
| Settlement of tax on equity awards | | | | — | | | — | | | — | | | — | | | — | | | (21) | | | (21) | |
| Shares repurchased and cancelled | | 15 | | — | | | — | | | — | | | — | | | — | | | (11) | | | (11) | |
| Transfer from share repurchase liability | | | | — | | | — | | | — | | | — | | | — | | | 9 | | | 9 | |
| Taxation on share-based plans | | | | — | | | — | | | — | | | — | | | — | | | (7) | | | (7) | |
| Balance at March 31, 2023 | | | | $ | 69 | | | $ | 9 | | | $ | 6 | | | $ | (1,295) | | | $ | (39) | | | $ | 1,322 | | | $ | 72 | |
The notes are an integral part of these condensed consolidated interim financial statements.
Unaudited Condensed Consolidated Interim Cash Flow Statement
| | | | | | | | | | | | | | |
For the three months ended March 31 (in millions) | | 2023 | | 2022 |
| CASH FLOWS FROM OPERATING ACTIVITIES | | | | |
| Operating Profit | | 57 | | | 54 | |
| Depreciation and amortization of property, plant and equipment and intangible assets | | 4 | | | 3 | |
| Depreciation of right-of-use assets | | 2 | | | 2 | |
| Gain on disposal of intangible assets | | — | | | (1) | |
| Share-based payments | | 5 | | | 3 | |
| Unrealized gain on equity investment | | (1) | | | — | |
| Settlement of tax on employee awards | | (21) | | | (10) | |
| Decrease in trade receivables | | 7 | | | 6 | |
| (Increase)/Decrease in current and non-current other assets | | (23) | | | 7 | |
| (Increase)/Decrease in inventories | | (5) | | | 2 | |
| Increase/(Decrease) in trade and other payables | | 30 | | | (75) | |
Decrease in provisions and other liabilities(1) | | (71) | | | (55) | |
| Cash used in operations | | (16) | | | (64) | |
| Interest paid | | (10) | | | (9) | |
| Interest received | | 11 | | | — | |
| Taxes paid | | (21) | | | (2) | |
| Net cash outflow from operating activities | | $ | (36) | | | $ | (75) | |
| | | | |
| CASH FLOWS FROM INVESTING ACTIVITIES | | | | |
Acquisition of assets, net of cash acquired (refer to Note 16) | | (124) | | | — | |
| Purchase of property, plant and equipment | | (1) | | | — | |
| Purchase of investments | | (33) | | | (150) | |
| Maturity of investments | | 36 | | | — | |
| Purchase of intangible asset | | (5) | | | — | |
| Proceeds from disposal of intangible assets | | — | | | 1 | |
Net cash outflow from investing activities | | $ | (127) | | | $ | (149) | |
| | | | |
| CASH FLOWS FROM FINANCING ACTIVITIES | | | | |
| Repayment of borrowings | | (11) | | | (1) | |
| Principal elements of lease payments | | (2) | | | (2) | |
| Shares repurchased and cancelled | | (11) | | | — | |
| Proceeds from the issuance of ordinary shares | | 2 | | | 1 | |
Net cash outflow from financing activities | | $ | (22) | | | $ | (2) | |
| | | | |
| Exchange difference on cash and cash equivalents | | (1) | | | (2) | |
| | | | |
| Net decrease in cash and cash equivalents | | (186) | | | (228) | |
| Cash and cash equivalents at beginning of the period | | 774 | | | 1,102 | |
| Cash and cash equivalents at end of the period | | $ | 588 | | | $ | 874 | |
_____________
*In Q1 2023, $3 million (Q1 2022: $4 million) of interest paid on the DOJ Resolution has been recorded in the interest paid line item.
The notes are an integral part of these condensed consolidated interim financial statements.
Notes to the Unaudited Condensed Consolidated Interim Financial Statements
1. BASIS OF PREPARATION AND ACCOUNTING POLICIES
Indivior PLC (the Company) is a public limited company incorporated on September 26, 2014 and domiciled in the United Kingdom. In these condensed consolidated interim financial statements (Condensed Financial Statements), reference to the ‘Group’ means the Company and all its subsidiaries.
The Condensed Financial Statements for the periods ending March 31, 2023 and 2022, respectively, have been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting.’ The Condensed Financial Statements should be read in conjunction with the annual financial statements for the year ended December 31, 2022, which were prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board.
In 2023, the Group acquired 100% of the share capital of Opiant Pharmaceuticals, Inc. (“Opiant”) which has been accounted for as an asset acquisition as substantially all of the fair value of the gross assets acquired is concentrated in the value of the in-process research and development. The Group has disclosed new accounting policies in Note 16 regarding the policy elected for treatment of contingent consideration and the method used to evaluate whether an acquisition is a business. In preparing these Condensed Financial Statements, the significant judgments made by management in applying the Group’s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements for the year ended December 31, 2022, except for estimates used in determining the valuation of the in-process research and development associated with the acquisition of Opiant and changes in estimates that are required in determining the provision for income taxes. The Condensed Financial Statements are unaudited and do not include all the information and disclosures required in the annual financial statements and therefore should be read in conjunction with the Group’s Annual Report and Accounts as at December 31, 2022. These Condensed Financial Statements were approved by the Board of Directors for issue on April 26, 2023.
As discussed in Note 6 and Note 15 the Company effected a 5-for-1 share consolidation on October 10, 2022. Shareholders received 1 new Ordinary share with a nominal value of $0.50 each for every 5 previously existing Ordinary shares which had a nominal value of $0.10 each. The Company’s basic and diluted weighted average number of shares outstanding, basic earnings per share, and diluted earnings per share reflect the share consolidation in all the periods presented. The Directors have assessed the Group’s ability to maintain sufficient liquidity to fund its operations, fulfill financial and compliance obligations as set out in Note 11, and comply with the minimum liquidity covenant in the Group’s debt facility for the period to September 2024 (the going concern period). A base case model was produced reflecting: •Board approved forecasts and financial plans for the period;
•the acquisition of Opiant completed in Q1 2023; and
•settlement of liabilities and provisions in line with contractual or expected terms.
The Directors also assessed a ‘severe but plausible’ downside scenario which included the following key changes to the base case within the going concern period:
•the risk that SUBLOCADE will not meet revenue growth expectations by modelling a 15% decline on forecasts;
•an accelerated decline in sublingual product sales including reversion to generic analogues for SUBOXONE Film in the U.S.; and
•stress testing of payments from ongoing legal proceedings.
Under both the base case and the downside scenario, sufficient liquidity exists and is generated by the business such that all operational and covenant requirements are met for the going concern period. The Directors believe the near-term litigation outcomes can be appropriately managed; should this not be the case, the Group would take the cases to trial where it believes it has a strong case that would not merit material additional payments in the going concern period. These risks were balanced against the Group’s current and forecast liquidity position as well as other mitigating measures available to the Group. As a result of the analysis described above, the Directors reasonably expect the Group to have adequate resources to continue in operational existence for at least one year from the approval of these Condensed Financial Statements and therefore consider the going concern basis to be appropriate for the accounting and preparation of these Condensed Financial Statements.
2. SEGMENT INFORMATION
The Group is engaged in a single business activity, which is predominantly the development, manufacture, and sale of buprenorphine-based prescription drugs for the treatment of opioid dependence and related disorders. The CEO reviews disaggregated net revenue on a geographical and product basis and allocates resources on a functional basis between Commercial, Supply, Research, and Development, and other Group functions. Financial results are reviewed on a consolidated basis for evaluating financial performance and allocating resources. Accordingly, the Group operates in a single reportable segment.
Net revenue and non-current assets
Revenues are attributed geographically based on the country where the sale originates. The following tables represent net revenues and non-current assets, net of accumulated depreciation, amortization and impairment, by country. Non-current assets for this purpose consist of intangible assets, property, plant and equipment, right-of-use assets, investments, and other assets.
Net revenue:
| | | | | | | | | | | | | | |
For the three months ended March 31 (in millions) | | Q1 2023 | | Q1 2022 |
| United States | | 209 | | | 165 | |
| Rest of World | | 44 | | | 42 | |
Total net revenues | | $ | 253 | | | $ | 207 | |
On a disaggregated basis, the Group’s net revenue by major product line:
| | | | | | | | | | | | | | |
For the three months ended March 31 (in millions) | | Q1 2023 | | Q1 2022 |
| Sublingual/other | | 113 | | | 117 | |
| SUBLOCADE | | 132 | | | 85 | |
| PERSERIS | | 8 | | | 5 | |
Total | | $ | 253 | | | $ | 207 | |
Non-current assets:
| | | | | | | | | | | | | | |
| (in millions) | | Mar 31, 2023 | | Dec 31, 2022 |
| United States | | 201 | | | 65 | |
| Rest of World | | 231 | | | 226 | |
Total | | $ | 432 | | | $ | 291 | |
3. OPERATING EXPENSES AND NET OTHER OPERATING INCOME
The table below sets out selected operating costs and expense information:
Operating Expenses
| | | | | | | | | | | | | | |
For the three months Mar 31 (in millions) | | Q1 2023 | | Q1 2022 |
Research and development expenses | | $ | (27) | | | $ | (8) | |
| | | | |
| Selling and general expenses | | (53) | | | (53) | |
Administrative and general expenses | | (78) | | | (56) | |
Selling, general, and administrative expenses | | $ | (131) | | | $ | (109) | |
| | | | |
Depreciation, amortization and impairment(1) | | $ | (4) | | | $ | (3) | |
__________________
(1)Depreciation and amortization expense is included in research and development and selling, general and administrative
expenses. Additionally, depreciation and amortization expense in Q1 2023 of $2 million (Q1 2022: $2 million) for ROU assets
and intangibles is included within cost of sales.
The increase in research and development expenses is primarily due to increased activities related to certain post-marketing studies for SUBLOCADE and PERSERIS, process validation testing related to LAI capacity expansion and ongoing early-stage pipeline activities.
Net Other Operating Income
| | | | | | | | | | | | | | |
For the three months ended March 31 (in millions) | | Q1 2023 | | Q1 2022 |
| Net proceeds from the sale of intangible assets | | — | | 1 | |
| Fair value gain on equity investment | | 1 | | — | |
| Net other operating income | | $ | 1 | | | $ | 1 | |
4. NET FINANCE INCOME (EXPENSE)
| | | | | | | | | | | | | | |
For the three months ended March 31 (in millions) | | 2023 | | 2022 |
Finance income | | | | |
| Interest income on cash and cash equivalents/investments | | 11 | | | — | |
| Total finance income | | 11 | | | — | |
| Finance expense | | | | |
| Interest expense on borrowings | | (7) | | | (4) | |
| Interest expense on lease liabilities | | (1) | | | — | |
| Interest expense on legal matters | | (2) | | | (2) | |
| Total finance expense | | (10) | | | (6) | |
Net finance income (expense) | | $ | 1 | | | $ | (6) | |
The increases to finance income and finance expense were primarily due to higher interest rates. Investments in corporate debt and U.S. Treasury securities in 2022 also contributed to the increase in finance income.
5. TAXATION
The Group calculates tax expense for interim periods using the expected full year rates, considering the pre-tax income and statutory rates for each jurisdiction. To the extent practicable, a separate estimated average annual effective income tax rate is determined for each taxing jurisdiction and applied individually to the interim period pre-tax income of each jurisdiction. Similarly, if different income tax rates apply to different categories of income (such as capital gains or income earned in particular industries), to the extent practicable a separate rate is applied to each individual category of interim period pre-tax income. The resulting expense is allocated between current and deferred taxes based on actual movement in deferred tax for the quarter, with the balance recorded to the current tax accounts.
In the three months ended March 31, 2023, the reported total tax expense was $14 million, or a rate of 24% (Q1 2022 tax expense: $7 million, 15%). The increase in the effective tax rate on profit was primarily driven by the increase in the UK tax rate from 19% to 23.5%, and the temporary reduction in innovation incentives due to 2022 losses.
The Group’s balance sheet at March 31, 2023 includes a current tax receivable of $33 million (FY 2022: $5 million), current tax liabilities of $7 million (FY 2022: $9 million), and deferred tax assets of $201 million (FY 2022: $219 million). The main decrease in deferred tax assets is due to share-based compensation.
The Group recognizes deferred tax assets to the extent that sufficient future taxable profits are probable against which these future tax deductions can be utilized. At March 31, 2023, the Group’s net deferred tax assets of $201 million relate primarily to net operating loss carryforwards, share-based compensation, inventory costs capitalized for tax purposes, litigation liabilities, and other non-current temporary differences. Recognition of deferred tax assets is reliant on forecast taxable profits arising in the jurisdiction in which the deferred tax asset is recognized. The Group has assessed recoverability of deferred tax assets using Group-level budgets and forecasts consistent with those used for the assessment of viability and asset impairments, particularly in relation to levels of future net revenues. These forecasts are subject to similar uncertainties to those assessments. This is reviewed each quarter and, to the extent required, an adjustment to the recognized deferred tax asset may be made. With the exception of specific assets that are not currently considered realizable, Management have concluded full recognition of deferred tax assets to be appropriate and do not believe a significant risk of material change in their assessment exists in the next 12 months.
Other tax matters
In September 2022, the Company’s shareholders approved an additional listing in the U.S., which is expected to take place in June 2023. Once listed in the U.S., U.S. tax laws limit deductibility of compensation for certain management roles. The Group currently carries approximately $6 million of deferred tax assets that are not expected to be realized once the listing is complete. Approximately 55% of this amount will be charged to equity and 45% will be presented as a tax charge in the period the listing takes place, as a reversal of the original booking. Additionally, the Group's current tax liabilities will increase by $5 million, due to disallowance of current year compensation.
The enacted UK Statutory Corporation Tax rate has increased to 25% as of April 1, 2023, providing a blended rate of 23.5% for the year ended December 31, 2023. A framework for the introduction of a global minimum effective tax rate of 15%, applicable to large multinational groups has been published. In the Spring Finance Bill that followed the 2023 Spring Budget, the UK Government proposed legislation to implement the OECD Global Anti-Base Erosion Model Pillar Two rules in the UK. The legislation is expected to be enacted in summer 2023 and will be effective for accounting periods starting on or after December 31, 2023. The Group is reviewing these draft rules to understand any potential impacts when ultimately enacted.
As a multinational group, tax uncertainties remain in relation to Group financing, intercompany pricing and the location of taxable operations. Management have concluded tax provisions made to be
appropriate and do not believe a significant risk of material change to uncertain tax positions exists in the next 12 months.
6. EARNINGS PER SHARE
Share consolidation
In September 2022, the Company’s shareholders approved a 5-for-1 share consolidation. On October 10, 2022, the Company completed this share consolidation. Shareholders received 1 new Ordinary share with a nominal value of $0.50 each for every 5 previously existing Ordinary shares which had a nominal value of $0.10 each. All share and per share information of the Group, including basic and diluted weighted average number of shares outstanding, basic earnings per share, and diluted earnings per share reflect the share consolidation for all periods presented.
The table below sets out basic and diluted earnings per share for each period:
| | | | | | | | | | | | | | |
| For the three months ended March 31 | | Q1 2023 | | Q1 2022 |
| Basic earnings per share | | $0.32 | | $0.29 |
| Diluted earnings per share | | $0.31 | | $0.28 |
Basic
Basic earnings per share is calculated by dividing net income for the period attributable to owners of the Group by the weighted average number of ordinary shares in issue during the period.
Diluted
Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. The Group has dilutive potential ordinary shares in the form of stock options and awards. These options and awards reflect the share consolidation for all periods presented, referred to above. The weighted average number of shares is adjusted for the number of shares granted to the extent performance conditions have been met at the balance sheet date and as determined using the treasury stock method.
Weighted average number of shares
The weighted average number of ordinary shares outstanding for Q1 2023 includes the impact of 484,362 ordinary shares repurchased in Q1 2023, 17,815,033 ordinary shares repurchased prior to the share consolidation in 2022 (equivalent post consolidation: 3,563,007), and 1,280,914 ordinary shares repurchased after the share consolidation in FY 2022. See Note 15 for further discussion. Conditional awards of 1,760,805 and 7,491,252 (equivalent post consolidation approximately 1,498,000) were granted under the Group’s Long-Term Incentive Plan in Q1 2023 and Q1 2022, respectively. | | | | | | | | | | | | | | |
Weighted average number of shares (in thousands) | | 2023 | | 2022 |
| On a basic basis | | 136,536 | | | 140,740 | |
| Dilution from share awards and options | | 4,452 | | | 5,498 | |
| On a diluted basis | | 140,988 | | | 146,238 | |
7. INTANGIBLE ASSETS
| | | | | | | | | | | | | | |
| Intangible assets, net of accumulated amortization and impairment | | Mar 31 2023 | | Dec 31 2022 |
| Products in development | | 167 | | | 36 | |
| Marketed products | | 29 | | | 29 | |
| Software | | 4 | | | 5 | |
Total | | $ | 200 | | | $ | 70 | |
The increase in intangible assets is primarily due to the acquisition of Opiant which resulted in the recognition of a product in development related to the in-process research and development value for the pipeline product OPNT003, nasal nalmefene, for $126 million (refer to Note 16). 8. INVESTMENTS
| | | | | | | | | | | | | | |
Current and non-current Investments (in millions) | | Mar 31 2023 | | Dec 31 2022 |
| Equity securities at FVPL | | 11 | | | 10 | |
| Debt securities held at amortized cost | | 106 | | | 109 | |
Total investments, current | | 117 | | | 119 | |
| Debt securities held at amortized cost | | 98 | | | 98 | |
Total investments, non-current | | 98 | | | 98 | |
Total | | $ | 215 | | | $ | 217 | |
The Group’s investments in debt and equity securities do not create significant credit risk, liquidity risk, or interest rate risk. Debt securities held at amortized cost consist of investment grade debt. At March 31, 2023, approximately 25% of the Group's portfolio was invested in the banking sector; none of those securities were downgraded as a result of the recent market events in that sector.
As of March 31, 2023, expected credit losses for the Group’s investments held at amortized cost are deemed to be immaterial.
Fair value hierarchy
Fair value is the price that would be received to sell an asset or transfer a liability in an orderly transaction between market participants at the measurement date. The different levels have been defined as follows:
• Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities
• Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly
• Level 3: Unobservable inputs for the asset or liability
The Group’s only financial instruments which are measured at fair value are equity securities at FVPL. The fair value of equity securities at FVPL is based on quoted market prices on the measurement date.
The following table categorizes the Group’s financial assets measured at fair value by valuation methodology used in determining their fair value at March 31, 2023.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Financial assets at fair value (in millions) | | Level 1 | | Level 2 | | Level 3 | | Total |
| Equity securities at FVPL | | 11 | | | — | | | — | | | 11 | |
The Group also has certain financial instruments which are not measured at fair value. The carrying value of cash and cash equivalents, trade receivables, other assets, and trade and other payables is assumed to approximate fair value due to their short-term nature. At March 31, 2023, the carrying value of investments held at amortized cost was above the fair value by $2 million, due to rising interest rates. The fair value of investments held at amortized cost was calculated based on quoted market prices which would be classified as Level 1 in the fair value hierarchy above.
9. CURRENT AND NON-CURRENT OTHER ASSETS
| | | | | | | | | | | | | | |
Current and non-current other assets (in millions) | | Mar 31 2023 | | Dec 31 2022 |
| Current prepaid expenses | | 26 | | | 14 | |
| Other current assets | | 22 | | | 13 | |
Total other current assets | | 48 | | | 27 | |
| Non-current prepaid expenses | | 20 | | | 20 | |
| Other non-current assets | | 26 | | | 18 | |
Total other non-current assets | | 46 | | | 38 | |
Total | | $ | 94 | | | $ | 65 | |
Non-current assets primarily represent the funding of surety bonds in relation to intellectual property related matters (see Note 13 for further discussion). Long-term prepaid expenses primarily relate to payments for contract manufacturing capacity. 10. FINANCIAL LIABILITIES – BORROWINGS
The table below sets out the current and non-current portion obligation of the Term Loan:
| | | | | | | | | | | | | | |
Term loan* (in millions) | | Mar 31 2023 | | Dec 31 2022 |
| Term loan – current | | (3) | | | (3) | |
| Term loan – non-current | | (236) | | | (237) | |
| Total term loan | | $ | (239) | | | $ | (240) | |
__________________* Total Term Loan borrowings reflect the principal amount drawn including debt issuance costs of $6 million (FY 2022: $6 million).
At March 31, 2023, the term loan fair value was approximately 98% (FY 2022: 98%) of par value. The key terms of the term loan in effect at March 31, 2023, are as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Currency | | Nominal interest margin | | Maturity | | Required annual repayments | | Minimum liquidity |
| Term Loan facility | USD | | SOFR + 0.26% + 5.25% | | 2027 | | 1% | | Larger of $100m or 50% of Loan Balance |
The term loan amounting to $245 million (FY 2022: $246 million) is secured against the assets of certain subsidiaries of the Group in the form of guarantees issued by respective subsidiaries.
•Nominal interest margin is calculated as USD SOFR plus 0.26%, subject to a floor of 0.75%, plus a credit spread adjustment of 5.25%.
•There are no revolving credit commitments.
11. PROVISIONS AND OTHER LIABILITIES
Provisions
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Current and non-current provisions (in millions) | | Current | | Non-current | | Mar 31 2023 | | Current | | Non-current | | Dec 31 2022 |
| Multidistrict antitrust class and state claim | | (290) | | | — | | | (290) | | | (290) | | | — | | | (290) | |
| Federal false claim allegations | | (5) | | | — | | | (5) | | | (5) | | | — | | | (5) | |
| Intellectual property related matters | | — | | | (3) | | | (3) | | | — | | | (3) | | | (3) | |
| Other | | (3) | | | (2) | | | (5) | | | (8) | | | (2) | | | (10) | |
Total provisions | | $ | (298) | | | $ | (5) | | | $ | (303) | | | $ | (303) | | | $ | (5) | | | $ | (308) | |
The Group carries a current provision of $290 million (FY 2022: $290 million) for certain multidistrict antitrust class and state claims. The provision is the Group’s estimate at this time of a potential aggregate settlement. However, the Group cannot predict with any certainty whether Indivior Inc. will reach a settlement with any of the Plaintiffs, and the final aggregate cost of these matters, whether resolved by settlement or trial, may be materially different. See Note 13, Antitrust Litigation and Consumer Protection for further details. The effect of discounting was not material. The Group carries a provision of $5 million (FY 2022: $5 million) pertaining to all outstanding False Claims Act Allegations as discussed in Note 13. These matters are expected to be settled within the next 12 months and are not expected to materially change. The Group carries a provision of $3 million (FY 2022: $3 million) for intellectual property related matters (see Note 13, Intellectual property related matters). The Group does not expect the remaining matters to be settled within a year and therefore the provision is classified as non-current. Other provisions totaling $5 million (FY 2022: $10 million) primarily represent general legal matters expected to be settled within the next 12 months and retirement benefit costs which are not expected to be settled within one year.
Other liabilities
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Current and non-current other liabilities (in millions) | | Current | | Non-current | | Mar 31 2023 | | Current | | Non-current | | Dec 31 2022 |
| DOJ resolution | | (51) | | | (342) | | | (393) | | | (52) | | | (392) | | | (444) | |
| Intellectual property related matters | | (11) | | | — | | | (11) | | | (10) | | | (11) | | | (21) | |
| RB indemnity settlement | | (8) | | | (15) | | | (23) | | | (8) | | | (22) | | | (30) | |
| Share repurchase | | — | | | — | | | — | | | (9) | | | — | | | (9) | |
| Other | | — | | | (10) | | | (10) | | | — | | | (3) | | | (3) | |
| Total other liabilities | | $ | (70) | | | $ | (367) | | | $ | (437) | | | $ | (79) | | | $ | (428) | | | $ | (507) | |
DOJ Resolution Agreement
In July 2020, the Group settled criminal and civil liability with the United States Department of Justice (DOJ), the U.S. Federal Trade Commission (FTC), and U.S. state attorneys general in connection with a multi-count indictment brought in April 2019 by a grand jury in the Western District of Virginia, a civil lawsuit joined by the DOJ in 2018, and an FTC investigation. In November 2020, the first payment of $103 million (including interest) was made. In January 2023 and 2022, additional payments of $54 million and $53 million (including interest) were made pursuant to the resolution agreement, respectively. Subsequently, four annual installments of $50 million plus interest will be due every January 15 from 2024 to 2027 with the final installment of $200 million due in December 2027. Interest accrues at 1.25% on
certain portions of the resolution which will be paid together with the annual installment payments. For non-interest-bearing portions, the liability has been recorded at the net present value based on timing of the estimated payments and using a discount rate equal to the interest rate on the interest-bearing portions. In Q1 2023, the Group recorded interest expense totaling $1 million (Q1 2022: $2 million) related to this resolution.
Under the terms of the resolution agreement with the DOJ, the Group has agreed to compliance terms regarding its sales and marketing practices. Compliance with these terms is subject to annual Board and CEO certifications submitted to the U.S. Attorney’s Office. As part of the resolution with the FTC and as detailed in the text of the stipulated order, for a ten-year period Indivior Inc. is required to make specified disclosures to the FTC and is prohibited from certain conduct.
In addition to the resolution agreement, the Group entered into a five-year Corporate Integrity Agreement with the HHS Office of the Inspector General (HHS-OIG), pursuant to which the Group committed to promote compliance with laws and regulations and committed to the ongoing evolution of an effective compliance program, including written standards, training, reporting, and monitoring procedures. The Group is subject to reporting and monitoring requirements, including annual reports and compliance certifications from key management and the Board’s Nominating & Governance Committee, which is submitted to HHS-OIG. In addition, the Group is subject to monitoring by an Independent Review Organization, which submits audit findings to HHS-OIG, and review by a Board Compliance Expert, who prepared a compliance assessment report in the first reporting period and will prepare a compliance assessment report in the third reporting period.
To date, the Group reasonably believes it has met all of the requirements specified in these three agreements.
IP Related Matters
The Group has other liabilities for intellectual property related matters totaling $11 million (FY 2022: $21 million), which relates to the settlement of intellectual property litigation with DRL in June 2022. Under the settlement agreement, the Group made payments to DRL in June 2022 and March 2023 with a final payment due in 2024. This liability has been recorded at the net present value, using a market interest rate at the time of the settlement determined to be 4.50%, considering the timing of payments and other factors.
RB Resolution
In January 2021, the Group reached a settlement with RB to resolve claims which RB issued in the Commercial Court in London in November 2020, seeking indemnity under the Demerger Agreement between amongst others, RB and the Group (Demerger Agreement). Pursuant to the settlement, RB withdrew the U.S. $1.4 billion claim to release the Group from any claim for indemnity under the Demerger Agreement relating to the DOJ and FTC settlements which RB entered into in July 2019, as well as other claims for indemnity arising from those matters. The Group agreed to pay RB a total of $50 million and has agreed to release RB from any claims to seek damages relating to its settlement with the DOJ and the FTC. The Group made an initial payment of $10 million in February 2021, followed by an installment payments of $8 million in January 2022 and 2023, respectively. Subsequently, annual installment payments of $8 million will be due every January from 2024 to 2026. The Group carries a liability totaling $23 million(FY 2022: $30 million) related to this settlement. This liability has been recorded at the net present value, using a market interest rate at the time of the settlement determined to be 3.75%, considering the timing of payments and other factors.
Other
Other liabilities primarily represent employee related liabilities and deferred revenue related to a supply agreement, which are non-current as of March 31, 2023.
12. CONTINGENT LIABILITIES
The Group has assessed certain legal and other matters to be not probable based upon current facts and circumstances, including any potential impact the DOJ resolution could have on these matters. Where liabilities related to these matters are determined to be possible, they represent contingent liabilities. Except for those matters discussed in Note 13 under "Multidistrict Antitrust Class and State Claims", “False Claims Act Allegations”, and “Intellectual Property Related Matters”, for which liabilities or provisions have been recognized, Note 13 sets out the details for legal and other disputes for which the Group has assessed as contingent liabilities. Where the Group believes that it is possible to reasonably estimate a range for the contingent liability this has been disclosed. 13. LEGAL PROCEEDINGS
There are certain ongoing legal proceedings or threats of legal proceedings in which the Group is a party, but in which the Group believes the possibility of an adverse impact is remote and they are not discussed in this Note 13. Antitrust Litigation and Consumer Protection
Multidistrict Antitrust Class and State Claims
•Civil antitrust claims have been filed by (a) a class of direct purchasers, (b) a class of end payors, and (c) a group of states, now numbering 41, and the District of Columbia (collectively, the "Plaintiffs"). The Plaintiffs generally allege, among other things, that Reckitt Benckiser Pharmaceuticals, Inc. (now known as Indivior Inc.) violated U.S. federal and/or state antitrust and consumer protection laws in attempting to delay generic entry of alternatives to SUBOXONE Tablets. Plaintiffs further allege that Indivior Inc. unlawfully acted to lower the market share of these products. These antitrust cases are pending in multidistrict litigation (the "Antitrust MDL") in federal court in the Eastern District of Pennsylvania. The court denied Indivior Inc.'s motion for summary judgment by order dated August 22, 2022. Trial is currently scheduled for September 18, 2023.
•In the first quarter of 2023, Indivior Inc. participated in mediation sessions related to the Antitrust MDL. The Plaintiffs and Indivior Inc. submitted initial monetary demands and offers prior to the mediation. Additional demands and offers have been exchanged with the States. Additional mediation sessions may take place in the future.
•The Group believes Indivior Inc. has meritorious defenses and will continue to vigorously defend itself in this matter. The Group has evaluated the current status of mediation, the strengths and weaknesses of the Plaintiffs’ liability and damages claims, the Group’s defenses, the inherent uncertainty of trial, the remaining legal issues to be resolved, and the benefits of certainty to the Group in resolving these claims and savings in legal fees and costs. The Group has determined that it is in the interests of its stakeholders to explore settlement of these matters. As a result, a provision of $290 million has been recognized by the Group although any settlement could occur at a lower or higher amount. The provision is the Group’s estimate at this time of a potential aggregate settlement in light of the above analysis. However, the Group cannot predict with any certainty whether Indivior Inc. will reach a settlement with any of the Plaintiffs, and the final aggregate cost of these matters, whether resolved by settlement or trial, may be materially different.
•If Indivior Inc. is found liable in a trial to any of the Plaintiffs and is unable to reduce the claimed damages of such Plaintiff group or groups during such trial (or in any subsequent proceeding) which the Directors believe is beyond "severe but plausible" (and therefore remote) within the going concern period, then its financial position, results and future cash flows could be materially adversely affected. If the Group continues with mediation or other settlement discussions, it
makes no guarantee as to whether any settlement can be reached and if so, what amounts, if any, it may agree to pay, or what amounts the Plaintiffs will demand.
Other Antitrust and Consumer Protection Claims
•In 2013, Reckitt Benckiser Pharmaceuticals, Inc. (now known as Indivior Inc.) received notice that it and other companies were defendants in a lawsuit initiated by writ in the Philadelphia County (Pennsylvania) Court of Common Pleas. See Carefirst of Maryland, Inc. et al. v. Reckitt Benckiser Inc., et al., Case. No. 2875, December Term 2013. The plaintiffs include approximately 79 entities, most of which appear to be insurance companies or other providers of health benefits plans. The Carefirst Plaintiffs have not served a complaint, but they have indicated that their claims are related to those asserted in the Antitrust MDL. The Carefirst case remains pending.
•In 2020, the Group was served with lawsuits filed by several insurance companies, some of whom are proceeding both on their own claims and through the assignment of claims from affiliated companies. Cases filed by (1) Humana Inc. and (2) Centene Corporation, Wellcare Healthcare Plans, Inc., New York Quality Healthcare Corp. (d/b/a Fidelis Care), and Health Net, LLC were pending in the Eastern District of Pennsylvania. The complaints were dismissed in July 2021. The plaintiffs filed Notices of Appeal in August 2021 to the United States Court of Appeals for the Third Circuit (“Third Circuit”). The Third Circuit affirmed the district court's dismissal by opinion and order dated December 15, 2022. Humana also filed a Complaint in state court in Kentucky on August 20, 2021 with substantially the same claims as were raised in the federal court case. See Humana Inc. v. Indivior Inc., No. 21-CI-004833 (Ky. Cir. Ct.) (Jefferson Cnty). That case was stayed pending a decision by the Third Circuit, and remains stayed. Centene Corporation and the above-referenced related companies filed a complaint in the Circuit Court for the County of Roanoke, Virginia alleging similar claims on January 13, 2023 following the mandate from the Third Circuit affirming the district court's dismissal. See Centene Corp. v. Indivior Inc., No. CL23000054-00 (Va. Cir. Ct.) (Roanoke Cnty). Indivior has not been served in the Centene action.
•Cases filed by (1) Blue Cross and Blue Shield of Massachusetts, Inc., Blue Cross and Blue Shield of Massachusetts HMO Blue, Inc., (2) Health Care Service Corp., (3) Blue Cross and Blue Shield of Florida, Inc., Health Options, Inc., (4) BCBSM, Inc. (d/b/a Blue Cross and Blue Shield of Minnesota) and HMO Minnesota (d/b/a Blue Plus), (5) Molina Healthcare, Inc., and (6) Aetna Inc. are pending in the Circuit Court for the County of Roanoke, Virginia. See Health Care Services Corp. v. Indivior Inc., No. CL20-1474 (Lead Case) (Va. Cir. Ct.) (Roanoke Cnty). These plaintiffs have asserted claims under federal and state RICO statutes, state antitrust statutes, state statutes prohibiting unfair and deceptive practices, state statutes prohibiting insurance fraud, and common law fraud, negligent misrepresentation, and unjust enrichment. In June 2021, defendants’ motion to stay was denied and certain claims were dismissed without prejudice. The plaintiffs filed amended complaints, and the Group filed demurrers seeking dismissal of some of the asserted claims. The court heard oral argument on the demurrers on September 1, 2022, and issued a letter opinion on October 14, 2022 sustaining in part and overruling in part the Group's demurrers. A jury trial on the Group's pleas in bar has been set for October 30 - November 3, 2023. A jury trial on the merits has been set for July 15, 2024 - August 8, 2024.
•The Group is still in the process of evaluating the claims, believes it has meritorious defenses, and intends to defend itself. No estimate of the range of potential loss can be made at this time.
Civil Opioid Litigation
•The Group has been named as a defendant in more than 400 civil lawsuits alleging that manufacturers, distributors, and retailers of opioids engaged in a longstanding practice to market opioids as safe and effective for the treatment of long-term chronic pain to increase the market for opioids and their own market shares for opioids or alleging individual personal injury claims. Most
of these cases have been consolidated and are pending in a federal multi-district litigation ("the Opioid MDL") in the U.S. District Court for the Northern District of Ohio. See In re National Prescription Opiate Litigation, MDL No. 2804 (N.D. Ohio). Nearly two-thirds of the cases in the Opioid MDL were filed by cities and counties, while nearly a third of the cases were filed by individual plaintiffs, most of whom assert claims relating to neonatal abstinence syndrome (“NAS”). Litigation against the Group in the Opioid MDL is stayed. On December 12, 2022, the court in the Opioid MDL set forth procedures requiring plaintiffs to show cause why the court should not dismiss cases in which plaintiffs have not submitted a plaintiff fact sheet or timely served the relevant defendants. On April 6, 2023, the court ordered that plaintiffs must perfect service and governmental subdivision plaintiffs must serve plaintiff fact sheets within 45 days, or the cases will be dismissed without prejudice. Separately, motions to remand have been denied or withdrawn in more than 50 cases to which the Group is a party (among numerous other defendants). Motions to remand remain pending in additional cases to which the Group is a party.
•The court in the Opioid MDL held a status conference on June 22, 2022, with county and municipality plaintiffs and certain manufacturer defendants (including the Group) and distributor defendants to discuss what information the parties needed to proceed, whether the parties would entertain settlement and whether there should be any bellwether trials from this subset of plaintiffs and defendants. During the status conference and at subsequent conferences, the court expressed its view that no additional bellwether trials should be needed for these cases, provided that the parties were progressing on a settlement track. By order dated February 28, 2023, the court indicated that it will not select hospital cases for bellwether trials at this time, and set forth a process for selecting six bellwether third-party payor trials.
•Regarding civil opioid cases not in the Opioid MDL:
◦In 2017, Indivior Inc. was named as one of numerous defendants in International Brotherhood of Electrical Workers Local 728 Family Healthcare Plan v. Allergan, PLC et al., Case ID: 190303872 (C.P. Phila. Cnty). That case was consolidated with Lead Case No. 2017-008095 in Delaware County and stayed.
◦Indivior also was named as one of numerous defendants in various other federal and state court cases that are not in the Opioid MDL and were brought by municipalities. Many were only recently filed. Indivior is not yet currently required to respond to the complaints in those actions.
◦Indivior Inc. was named as a defendant in five individual complaints filed in West Virginia state court that were transferred to West Virginia's Mass Litigation Panel. See In re Opioid Litigation, No. 22-C-9000 NAS (W.V. Kanawha Cnty. Cir. Ct.) ("WV MLP Action"). All five of Indivior Inc.’s cases in the WV MLP Action involved claims related to NAS. Indivior Inc. moved to dismiss all five complaints on January 30, 2023. The plaintiffs in those cases separately have moved to strike the defendants' notices of non-party fault. A hearing on motions to dismiss in the WV MLP Action, including Indivior Inc.'s motions, was held on March 24, 2023. By order dated April 17, 2023, the court granted Indivior's motions to dismiss.
•Given the status and preliminary stage of litigation in both the Opioid MDL and the separate federal and state court actions, no estimate of possible loss in the opioid litigation can be made at this time.
False Claims Act Allegations
•In August 2018, the United States District Court for the Western District of Virginia unsealed a declined qui tam complaint alleging causes of action under the Federal and state False Claims Acts against certain entities within the Group predicated on best price issues and claims of retaliation. See United States ex rel. Miller v. Reckitt Benckiser Group PLC et al., Case No. 1:15-cv-00017 (W.D. Va.). The suit also seeks reasonable attorneys’ fees and costs. The Group filed a
Motion to Dismiss in June 2021. The case was stayed for mediation in September 2021, but the parties did not reach agreement. In March 2022, Relator submitted a request for oral argument on the Motion to Dismiss. On July 21, 2022, the court entered an order staying the action and reserving a decision on the Group’s Motion to Dismiss pending rehearing en banc by the U.S. Court of Appeals for the Fourth Circuit in U.S. ex rel. Sheldon v. Allergan Sales, LLC. On rehearing en banc, the Fourth Circuit affirmed the district court's opinion in U.S. ex rel. Sheldon v. Allergan Sales, LLC by order dated September 23, 2022. The United States District Court for the Western District of Virginia has not yet ruled on the Group's Motion to Dismiss, and instead has further stayed the proceedings pending decisions by the Supreme Court of the United States in two cases concerning the False Claims Act—United States ex rel. Proctor v. Safeway, Inc., and United States ex rel. Schutte v. Supervalu, Inc.
•In May 2018, Indivior Inc. received an informal request from the United States Attorney’s Office (“USAO”) for the Southern District of New York, seeking records relating to the SUBOXONE Film manufacturing process. The Group is discussing with the USAO certain information and allegations that the government received regarding SUBOXONE Film.
UK Shareholder Claims
•On September 21, 2022, certain shareholders issued representative and multiparty claims against Indivior PLC in the High Court of Justice for the Business and Property Courts of England and Wales, King’s Bench Division. On January 16, 2023, the representative served its Particular of Claims setting forth in more detail the claims against the Group, while the same law firm that represents the representative also sent its draft Particular of Claims for the multiparty action. The claims made in both the representative and multiparty actions generally allege that Indivior PLC violated the UK Financial Services and Markets Act 2000 (“FSMA 2000”) by making false or misleading statements or material omissions in public disclosures, including the 2014 Demerger Prospectus, regarding an alleged product-hopping scheme regarding the switch from SUBOXONE® tablets to SUBOXONE® film. Indivior PLC filed an application to strike out the representative action on February 27, 2023. A hearing on the application to strike out has been scheduled for November 20-21, 2023.
•The Group has begun its evaluation of the claims, believes it has meritorious defenses, and intends to vigorously defend itself. Given the status and preliminary stage of the litigation, no estimate of possible loss can be made at this time.
Intellectual Property Related Matters
•Various subsidiaries of the Group filed actions against Alvogen Pine Brook LLC and Alvogen Inc. (together, “Alvogen”) in the United States District Court for the District of New Jersey (the "NJ District Court") alleging that Alvogen’s generic buprenorphine/naloxone film product infringes U.S. Patent Nos. 9,687,454 (the "454 Patent") and 9,931,305 (the "305 Patent") in 2017 and 2018, respectively. The cases were consolidated in May 2018. In January 2019, the NJ District Court granted Indivior a temporary restraining order (“TRO”) to restrain the launch of Alvogen’s generic buprenorphine/naloxone film product pending a trial on the merits of the ’305 Patent, and the subsidiaries of the Group that were a party to the case were required to post a surety bond of $36 million. The parties entered into an agreement whereby Alvogen was enjoined from selling in the U.S. its generic buprenorphine/naloxone film product unless and until the Court of Appeals for the Federal Circuit ("CAFC") issued a mandate vacating Indivior’s separate preliminary injunction entered against Dr. Reddy's Laboratories, Inc. ("DRL") in a related case. The CAFC’s mandate vacating Indivior’s preliminary injunction as to DRL issued in February 2019, and Alvogen launched its generic product. Any sales in the U.S. by Alvogen are on an “at-risk” basis, subject to the ongoing litigation against Alvogen in the NJ District Court. In November 2019, Alvogen filed an amended answer alleging various antitrust counterclaims. In January 2020, Indivior and Alvogen stipulated to noninfringement of the ’305 Patent under the court’s claim construction, but Indivior
retained its rights to appeal the construction and pursue its infringement claims pending appeal. Indivior’s infringement claims concerning the ’454 Patent and Alvogen’s antitrust counterclaims remain pending in the NJ District Court. In June 2022, the parties participated in court-ordered mediation. The parties did not reach settlement. Summary judgment motions have been fully briefed, and the court heard arguments on those motions on August 29, 2022. The NJ District Court has not yet ruled on those motions, and no trial date has been set.
14. TRADE AND OTHER PAYABLES
| | | | | | | | | | | | | | |
| (in millions) | | Mar 31 2023 | | Dec 31 2022 |
| Accrual for rebates, discounts and returns | | (466) | | | (428) | |
| Accounts payable | | (36) | | | (36) | |
| Accruals and other payables | | (134) | | | (138) | |
| Other tax and social security payable | | (21) | | | (15) | |
| Trade and other payables | | $ | (657) | | | $ | (617) | |
15. SHARE CAPITAL
| | | | | | | | | | | | | | | | | |
| Equity ordinary shares | | Nominal value paid per share | | Aggregate nominal value (in millions) |
| Issued and fully paid | | | | | |
At January 1, 2023 | 136,480,995 | | | $ | 0.50 | | | 68 | |
| Ordinary shares issued | 1,878,796 | | | $ | 0.50 | | | 1 | |
| Shares repurchased and cancelled | (484,362) | | | $ | 0.50 | | | — | |
At March 31, 2023 | 137,875,429 | | | | | 69 | |
| | | | | | | | | | | | | | | | | |
| Equity ordinary shares | | Nominal value paid per share | | Aggregate nominal value (in millions) |
| Issued and fully paid | | | | | |
At January 1, 2022 | 702,439,638 | | | $ | 0.10 | | | 70 | |
| Ordinary shares issued | 3,840,414 | | | $ | 0.10 | | | 1 | |
| Shares cancelled | (256,055) | | | $ | 0.10 | | | — | |
At March 31, 2022 | 706,280,052 | | | | | 71 | |
Ordinary shares issued
During the period, 1,878,796 ordinary shares at $0.50 each (Q1 2022: 3,840,414 at $0.10 each) were issued to satisfy vesting/exercises under the Group’s Long-Term Incentive Plan and US Employee Stock Purchase Plan. In Q1 2023, net settlement of tax on employee equity awards was $21 million (Q1 2022: $10 million).
Share consolidation
In October 2022, the Company completed a share consolidation. Shareholders received 1 new Ordinary share with a nominal value of $0.50 each for every 5 previously existing Ordinary shares which had a nominal value of $0.10 each.
Shares repurchased and cancelled
On May 3, 2022, the Group commenced a second share repurchase program for an aggregate purchase price up to no more than $100 million or 39,698,610 of ordinary shares (equivalent shares post
consolidation: 7,939,722), which concluded on February 28, 2023. During the period, the Group repurchased and cancelled 484,362 of the Company’s ordinary shares at $0.50 per share. In Q1 2022, 256,055 ordinary shares at $0.10 purchased in 2021 as part of the Group’s share repurchase program were cancelled in January 2022.
All ordinary shares repurchased under share repurchase programs were cancelled resulting in a transfer of the aggregate nominal value to a capital redemption reserve. The total cost of the purchases made under the share repurchase program during the period, including directly attributable transaction costs, was $11 million. Total purchases under the share repurchase program will be made out of distributable profits.
16. ACQUISITION OF OPIANT
On March 2, 2023, the Group acquired 100% of the share capital of Opiant Pharmaceuticals, Inc. (“Opiant”), a publicly traded company in the United States, for upfront cash consideration of $146 million and an additional amount to be potentially paid upon achievement of net sales milestones. Opiant is a specialty pharmaceutical company focusing on developing drugs for addictions and drug overdose. As a result of the acquisition, the Group added the pipeline product OPNT003, nasal nalmefene, an opioid overdose treatment well-suited to confront illicit synthetic opioids like fentanyl, to its addiction science portfolio. The U.S. Food and Drug Administration (FDA) has accepted for review the New Drug Application (NDA) for OPNT003, granted a Priority Review designation and has given a Prescription Drug User Fee Act (PDUFA) action date of May 22, 2023.
Management has elected to apply the optional concentration test under IFRS 3. As substantially all of the fair value of the gross assets acquired (excluding cash and cash equivalents, deferred tax assets, and goodwill resulting from the effects of deferred tax liabilities) are concentrated in a single asset, the Group will account for the transaction as an asset acquisition. For the acquisition of Opiant, substantially all of the fair value of the gross assets acquired is concentrated in the in-process research and development associated with OPNT003. As a result, the acquisition has been accounted for as an asset acquisition. With the closing of this transaction, a relative fair value approach was taken for allocating the purchase consideration to the acquired assets and liabilities with no goodwill recognized. The Group has recorded an intangible asset associated with OPNT003 for $126 million. The Group used a multi-period excess earnings method, a form of the income approach, to determine the fair value of the intangible asset.
As part of the acquisition of Opiant, the Group agreed to provide a maximum of $8.00 per share in Contingent Value Rights (CVR) post-acquisition. The Group will pay $2.00 per CVR for each of the following net revenue thresholds achieved by OPNT003, during any period of four consecutive quarters prior to the seventh anniversary of the U.S. commercial launch: (i) $225m, (ii) $300m and (iii) $325m. The remaining (iv) $2.00 per CVR would be paid if OPNT003 achieves net revenue of $250m during any period of four consecutive quarters prior to the third anniversary of the U.S. commercial launch. The potential undiscounted payout of contingent consideration ranges from nil to $68 million based on the achievement of the milestones. The Group accounts for contingent consideration associated with asset acquisitions using a cost accumulation model. No liabilities are initially recognized at the date of acquisition. When an obligation associated with a variable payment is no longer uncertain, it is capitalized as part of the cost of the asset, as it represents a direct cost of the acquisition.
An initial recognition exception applies to the tax attributes acquired whereby only certain items are recognized with the transaction, such as net operating loss carryforwards, other tax carryforwards, and tax credits. Such attributes totaled $9 million, recorded as deferred tax assets.
The cash outflow for the acquisition was $124 million, net of cash acquired. Direct transaction costs of $10 million are included in this cash outflow and capitalized as a component of the total cost of the asset acquisition. Of the $146 million upfront consideration, $2 million represents acceleration of vesting of employee share compensation and has been recognized as a post-combination expense. As part of the
acquisition, the Group assumed outstanding debt of $10 million which was settled and included as a cash outflow from financing activities.
The following table summarizes the net assets acquired:
| | | | | | | | |
| Net Assets Acquired (in millions) | | |
| Cash and cash equivalents | | 30 | |
| Inventories | | 3 | |
| Right-of-use assets | | 2 | |
| Intangible assets | | 126 | |
| Deferred tax assets | | 9 | |
| Other assets | | 6 | |
| Trade and other payables | | (10) | |
| Lease liabilities | | (2) | |
| Borrowings | | (10) | |
Total net assets acquired | | $ | 154 | |
17. POST BALANCE SHEET SUBSEQUENT EVENTS
There are no subsequent events at the date of issuance.
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders of Indivior PLC
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Indivior PLC and its subsidiaries (the “Company”) as of December 31, 2022, 2021 and 2020 and the related consolidated statements of income, comprehensive income/(loss), changes in equity and cash flow for the years then ended, including the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022, 2021 and 2020, and the results of its operations and its cash flows for the years then ended in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB and in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
| | |
| /s/ PricewaterhouseCoopers LLP |
| Richmond, Virginia |
| March 9, 2023 |
|
| We have served as the Company's auditor since 2022. |
Consolidated Income Statement
| | | | | | | | | | | | | | | | | | | | | | | | | | |
For the year ended December 31 (in millions, except per share data) | | Notes | | 2022 | | 2021 | | 2020 |
Net revenue | | 3 | | $ | 901 | | | $ | 791 | | | $ | 647 | |
Cost of sales | |
| | (159) | | | (127) | | | (97) | |
Gross profit | |
| | 742 | | | 664 | | | 550 | |
Selling, general and administrative expenses | | 4 | | (763) | | | (431) | | | (666) | |
Research and development expenses | | 4 | | (72) | | | (52) | | | (40) | |
Net other operating income | | 4 | | 8 | | | 32 | | | – |
Operating (loss)/profit | |
| | (85) | | | 213 | | | (156) | |
Finance income | |
| | 19 | | | 4 | | | 9 | |
Finance expense | |
| | (29) | | | (27) | | | (26) | |
Net finance expense | | 6 | | (10) | | | (23) | | | (17) | |
(Loss)/profit before taxation | |
| | (95) | | | 190 | | | (173) | |
Income tax benefit | | 7 | | 42 | | | 15 | | | 25 | |
Net (loss)/income | |
| | $ | (53) | | | $ | 205 | | | $ | (148) | |
| |
| | | |
| |
|
(Loss)/earnings per ordinary share* | |
| | | |
| |
|
Basic (loss)/earnings per share | | 8 | | $ | (0.38) | | | $ | 1.41 | | | $ | (1.01) | |
Diluted (loss)/earnings per share | | 8 | | $ | (0.38) | | | $ | 1.35 | | | $ | (1.01) | |
______________
*Basic and diluted (loss)/earnings per share reflect the impact of the Company’s share consolidation for all periods presented. Refer to Note 8 for further details. Consolidated Statement of Comprehensive (Loss)/Income
| | | | | | | | | | | | | | | | | | | | |
For the year ended December 31 (in millions) | | 2022 | | 2021 | | 2020 |
Net (loss)/income | | $ | (53) | | | $ | 205 | | | $ | (148) | |
Other comprehensive (loss)/income | | | |
| |
|
Items that may be reclassified to profit or loss in subsequent years: | | | |
| |
|
Foreign currency translation adjustment, net | | (19) | | | (7) | | | 10 | |
Other comprehensive (loss)/income | | (19) | | | (7) | | | 10 | |
Total comprehensive (loss)/income | | $ | (72) | | | $ | 198 | | | $ | (138) | |
The notes are an integral part of these Consolidated Financial Statements.
Consolidated Balance Sheets
| | | | | | | | | | | | | | | | | | | | | | | | | | |
As at December 31 (in millions) | | Notes | | 2022 | | 2021 | | 2020 |
Assets | |
| | | |
| |
|
Non-current assets | |
| | | |
| |
|
Intangible assets | | 9 | | $ | 70 | | | $ | 82 | | | $ | 62 | |
Property, plant and equipment | | 10 | | 54 | | | 58 | | | 60 | |
Right-of-use assets | | 11 | | 31 | | | 37 | | | 43 | |
Deferred tax assets | | 7 | | 219 | | | 105 | | | 75 | |
| Investments | | 12 | | 98 | | | — | | | — | |
Other assets | | 14 | | 38 | | | 106 | | | 104 | |
| |
| | 510 | | | 388 | | | 344 | |
Current assets | |
| | | |
| |
|
Inventories | | 13 | | 114 | | | 95 | | | 93 | |
Trade receivables | | 14 | | 220 | | | 202 | | | 179 | |
Other assets | | 14 | | 27 | | | 32 | | | 50 | |
Current tax receivable | | 7 | | 5 | | | 13 | | | 7 | |
| Investments | | 12 | | 119 | | | — | | | — | |
Cash and cash equivalents | | 16 | | 774 | | | 1,102 | | | 858 | |
| |
| | 1,259 | | | 1,444 | | | 1,187 | |
Total assets | |
| | $ | 1,769 | | | $ | 1,832 | | | $ | 1,531 | |
Liabilities | |
| | | |
| |
|
Current liabilities | |
| | | |
| |
|
Borrowings | | 17 | | $ | (3) | | | $ | (3) | | | $ | (4) | |
Provisions | | 19 | | (303) | | | (5) | | | (38) | |
Other liabilities | | 19 | | (79) | | | (61) | | | (10) | |
Trade and other payables | | 22 | | (617) | | | (720) | | | (524) | |
Lease liabilities | | 11 | | (8) | | | (8) | | | (8) | |
Current tax liabilities | | 7 | | (9) | | | (7) | | | (15) | |
| |
| | (1,019) | | | (804) | | | (599) | |
Non-current liabilities | |
| | | |
| |
|
Borrowings | | 17 | | (237) | | | (239) | | | (230) | |
Provisions | | 19 | | (5) | | | (76) | | | (51) | |
Other liabilities | | 19 | | (428) | | | (474) | | | (526) | |
Lease liabilities | | 11 | | (29) | | | (36) | | | (43) | |
| |
| | (699) | | | (825) | | | (850) | |
Total liabilities | |
| | (1,718) | | | (1,629) | | | (1,449) | |
Net assets | |
| | 51 | | | 203 | | | 82 | |
Equity | |
| | | |
| |
|
Capital and reserves | |
| | | |
| |
|
Share capital | | 23 | | $ | 68 | | | $ | 70 | | | $ | 73 | |
Share premium | |
| | 8 | | | 7 | | | 6 | |
Capital redemption reserve | | 24 | | 6 | | | 3 | | | – |
Other reserves | | 24 | | (1,295) | | | (1,295) | | | (1,295) | |
Foreign currency translation reserve | | 24 | | (39) | | | (20) | | | (13) | |
Retained earnings | |
| | 1,303 | | | 1,438 | | | 1,311 | |
Total equity | |
| | $ | 51 | | | $ | 203 | | | $ | 82 | |
The notes are an integral part of these Consolidated Financial Statements.
Consolidated Statements of Changes in Equity
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(in millions) | | Notes | | Share capital | | Share premium | | Capital redemption reserve | | Other reserves | | Foreign currency translation reserve | | Retained earnings | | Total equity |
Balance at January 1, 2020 | | | | $ | 73 | | | $ | 5 | | | $ | — | | | $ | (1,295) | | | $ | (23) | | | $ | 1,449 | | | $ | 209 | |
Comprehensive loss | | | | | | | | | | | | | | | | |
Net loss | | | | — | | | — | | | — | | | — | | | — | | | (148) | | | (148) | |
Other comprehensive income | | | | — | | | — | | | — | | | — | | | 10 | | | — | | | 10 | |
Total comprehensive loss | | | | — | | | — | | | — | | | — | | | 10 | | | (148) | | | (138) | |
Transactions recognized directly in equity | | | | | | | | | | | | | | | | |
Shares issued | | 23 | | — | | | 1 | | | — | | | — | | | — | | | — | | | 1 | |
Share-based plans | | 25 | | — | | | — | | | — | | | — | | | — | | | 8 | | | 8 | |
Taxation on share-based payments | | 7 | | — | | | — | | | — | | | — | | | — | | | 2 | | | 2 | |
Total transactions recognized directly in equity | | | | — | | | 1 | | | — | | | — | | | — | | | 10 | | | 11 | |
Balance at December 31, 2020 | | | | $ | 73 | | | $ | 6 | | | $ | — | | | $ | (1,295) | | | $ | (13) | | | $ | 1,311 | | | $ | 82 | |
| | | | | | | | | | | | | | | | |
Balance at January 1, 2021 | |
| | $ | 73 | | | $ | 6 | | | $ | — | | | $ | (1,295) | | | $ | (13) | | | $ | 1,311 | | | $ | 82 | |
Comprehensive income | |
| | | | | | | | | | | | | | |
Net income | |
| | — | | | — | | | — | | | — | | | — | | | 205 | | | 205 | |
Other comprehensive loss | |
| | — | | | — | | | — | | | — | | | (7) | | | — | | | (7) | |
Total comprehensive income | |
| | — | | | — | | | — | | | — | | | (7) | | | 205 | | | 198 | |
Transactions recognized directly in equity | |
| | | | | | | | | | | | | | |
Shares issued | | 23 | | — | | | 1 | | | — | | | — | | | — | | | — | | | 1 | |
| Shared repurchased and canceled | | 23 | | (3) | | | — | | | 3 | | | — | | | — | | | (101) | | | (101) | |
Share-based plans | | 25 | | — | | | — | | | — | | | — | | | — | | | 11 | | | 11 | |
| Settlement of tax on equity awards | | | | — | | | — | | | — | | | — | | | — | | | (1) | | | (1) | |
Taxation on share-based payments | | 7 | | — | | | — | | | — | | | — | | | — | | | 13 | | | 13 | |
Total transactions recognized directly in equity | |
| | | | | | | | | | | | | | |
Balance at December 31, 2021 | |
| | $ | (3) | | | $ | 1 | | | $ | 3 | | | $ | — | | | $ | — | | | $ | (78) | | | $ | (77) | |
| |
| |
| |
| |
| |
| |
| |
| |
|
Balance at January 1, 2022 | |
| | $ | 70 | | | $ | 7 | | | $ | 3 | | | $ | (1,295) | | | $ | (20) | | | $ | 1,438 | | | $ | 203 | |
Comprehensive loss | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net loss | |
| | — | | | — | | | — | | | — | | | — | | | (53) | | | (53) | |
Other comprehensive loss | |
| | — | | | — | | | — | | | — | | | (19) | | | — | | | (19) | |
Total comprehensive loss | |
| | — | | | — | | | — | | | — | | | (19) | | | (53) | | | (72) | |
Transactions recognized directly in equity | |
| | | | | | | | | | | | | | |
Shares issued | | 23 | | 1 | | | 1 | | | — | | | — | | | — | | | — | | | 2 | |
Shares repurchased and canceled | | 23 | | (3) | | | — | | | 3 | | | — | | | — | | | (90) | | | (90) | |
| Transfer to share repurchase liability | | 23 | | — | | | — | | | — | | | — | | | — | | | (9) | | | (9) | |
Share-based plans | | 25 | | — | | | — | | | — | | | — | | | — | | | 16 | | | 16 | |
Settlement of tax on equity awards | |
| | — | | | — | | | — | | | — | | | — | | | (10) | | | (10) | |
Taxation on share-based plans | | 7 | | — | | | — | | | — | | | — | | | — | | | 11 | | | 11 | |
Total transactions recognized directly in equity | | | | (2) | | | 1 | | | 3 | | | — | | | — | | | (82) | | | (80) | |
Balance at December 31, 2022 | |
| | $ | 68 | | | $ | 8 | | | $ | 6 | | | $ | (1,295) | | | $ | (39) | | | $ | 1,303 | | | $ | 51 | |
The notes are an integral part of these Consolidated Financial Statements.
Consolidated Cash Flow Statement
| | | | | | | | | | | | | | | | | | | | | | | | | | |
For the year ended December 31 (in millions) | | Notes | | 2022 | | 2021 | | 2020 |
Cash flows from operating activities | |
| | | |
| |
|
Operating (loss)/profit | |
| | $ | (85) | | | $ | 213 | | | $ | (156) | |
Depreciation and amortization of property, plant and equipment and intangible assets | | 9, 10 | | 13 | | | 15 | | | 18 | |
Gain on disposal of intangible assets | |
| | (1) | | | (20) | | | — | |
Gain on disposal of right-of-use assets | | 11 | | — | | | — | | | (2) | |
Depreciation and impairment of right-of-use assets | | 11 | | 8 | | | 7 | | | 8 | |
Share-based payments | | 25 | | 16 | | | 11 | | | 8 | |
Settlement of tax on employee awards | |
| | (10) | | | (1) | | | — | |
Impact from foreign exchange movements | |
| | (3) | | | (3) | | | (5) | |
(Increase)/decrease in trade receivables | |
| | (21) | | | (25) | | | 15 | |
Decrease/(increase) in current and non-current other assets | |
| | 72 | | | 16 | | | (44) | |
Increase in inventories | |
| | (25) | | | (3) | | | (16) | |
(Decrease)/increase in trade and other payables | |
| | (98) | | | 201 | | | (103) | |
Increase/(decrease) in provisions and other liabilities(1) | |
| | 197 | | | (16) | | | 129 | |
Cash generated from/(used in) operations | |
| | 63 | | | 395 | | | (148) | |
Interest paid | |
| | (24) | | | (18) | | | (20) | |
Interest received | |
| | 15 | | | 1 | | | 9 | |
Taxes paid | |
| | (57) | | | (17) | | | (34) | |
Transaction costs related to debt refinancing | | 17 | | (1) | | | (8) | | | — | |
Net cash (outflow)/inflow from operating activities | |
| | $ | (4) | | | $ | 353 | | | $ | (193) | |
| |
| | | |
| |
|
| Cash flows from investing activities | |
| | | |
| |
|
Purchase of property, plant and equipment | | 10 | | (5) | | | (4) | | | (4) | |
| Purchase of investments | | 12 | | (245) | | | — | | | — | |
| Maturity of investments | | 12 | | 27 | | | — | | | — | |
Purchase of intangible assets | | 9 | | (1) | | | (30) | | | — | |
Net proceeds from disposal of intangible assets | | 9 | | 1 | | | 20 | | | — | |
Net cash outflow from investing activities | |
| | $ | (223) | | | $ | (14) | | | $ | (4) | |
| |
| | | |
| |
|
| Cash flows from financing activities | |
| | | |
| |
|
Proceeds from borrowings | | 17 | | — | | | 250 | | | — | |
Repayment of borrowings | | 17 | | (3) | | | (236) | | | (4) | |
Principal elements of lease payments | |
| | (9) | | | (8) | | | (7) | |
Proceeds from the issuance of ordinary shares | |
| | 2 | | | 1 | | | 1 | |
Cash paid for the repurchase and cancellation of shares (including direct transaction costs) | | 23 | | (90) | | | (101) | | | — | |
Net cash outflow from financing activities | |
| | $ | (100) | | | $ | (94) | | | $ | (10) | |
| |
| | | |
| |
|
Exchange difference on cash and cash equivalents | | | | (1) | | | (1) | | | 5 | |
Net (decrease)/increase in cash and cash equivalents | |
| | (328) | | | 244 | | | (202) | |
Cash and cash equivalents at beginning of the period | | 16 | | 1,102 | | | 858 | | | 1,060 | |
Cash and cash equivalents at end of the period | |
| | $ | 774 | | | $ | 1,102 | | | $ | 858 | |
__________________
(1)The 2022 increase in provisions and other liabilities primarily relates to the $290 million provision recognized related to certain multidistrict antitrust class and state claims (refer to Note 21, Legal proceedings for further discussions), partially offset by payments for other settled matters. The 2020 increase in provisions and other liabilities primarily results from adjustment of the provision for DOJ and related matters, partially offset by the initial payment under the DOJ resolution. The notes are an integral part of these Consolidated Financial Statements.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. GENERAL INFORMATION
Indivior PLC (the “Company”) and its subsidiaries (together, “Indivior” or the “Group”) are predominantly engaged in the development, manufacture and sale of buprenorphine-based prescription drugs for the treatment of opioid dependence, and co-occurring disorders (the “Indivior Business”).
The Group is a public limited company incorporated and domiciled in England, United Kingdom on September 26, 2014, and is the holding company for the Group. The address of the registered office and company number is 234 Bath Road, Slough, Berkshire, SL1 4EE, UK and 09237894, respectively.
Indivior PLC is the ultimate holding company of the Group. The following table sets out details of the Group’s significant subsidiaries:
| | | | | | | | | | | | | | |
Name | | Country of incorporation or registration | | Proportion of Ownership Interest |
| RBP Global Holdings Limited | | England and Wales | | 100% |
| Indivior UK Limited | | England and Wales | | 100% |
| Indivior Europe Limited | | Ireland | | 100% |
| Indivior Inc. | | U.S. | | 100% |
| Indivior Treatment Services, Inc. | | U.S. | | 100% |
| Indivior Pty Ltd | | Australia | | 100% |
The principal accounting policies adopted in the preparation of these financial statements are set out below. Unless otherwise stated, these policies have been consistently applied to all years presented.
2. BASIS OF PREPARATION AND ACCOUNTING POLICIES
The annual financial statements of the Group have been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board. The financial statements are presented in US dollars ($) and are prepared on a historical cost basis except where otherwise stated. As discussed in Note 8 and Note 23, the Company effected a 5-for-1 share consolidation on October 10, 2022. Shareholders received 1 new ordinary share with a nominal value of $0.50 each for every 5 previously existing ordinary shares which had a nominal value of $0.10 each. The Company’s basic and diluted weighted average number of shares outstanding, basic (loss)/earnings per share, and diluted (loss)/earnings per share reflect the share consolidation for all periods presented. The financial statements were approved by the Board of Directors on March 7, 2023. Going concern assessment
The Directors have considered the Company’s and the Group’s financial plan, in particular with reference to the period through to June 2024.
The Directors have assessed the Group’s ability to maintain sufficient liquidity to fund its operations, fulfill financial and compliance obligations as set out in Note 19, and comply with the minimum liquidity covenant in the Group’s debt facility for the period to June 2024 (the going concern period). A base case model was produced reflecting: •Board approved budgets for the period;
•the proposed acquisition of Opiant Pharmaceuticals, Inc. which is expected to complete in Q1 2023; and
•settlement of liabilities and provisions in line with contractual or expected terms.
The Directors also assessed a “severe but plausible” downside scenario which included the following key changes to the base case within the going concern period:
•the risk that SUBLOCADE will not meet revenue growth expectations by modeling a 15% decline on forecasts;
•an accelerated decline in sublingual product sales including reversion to generic analogues for SUBOXONE Film in the US; and
•stress testing of payments from ongoing legal proceedings.
Under both the base case and the downside scenario, sufficient liquidity exists and is generated by the business such that all operational and covenant requirements are met for the going concern period. The Directors believe the near-term litigation outcomes can be appropriately managed; should this not be the case, the Group would take the cases to trial where it believes it has a strong case that would not merit material additional payments in the going concern period. These risks were balanced against the Group’s current and forecast liquidity position as well as other mitigating measures available to the Group. As a result of the analysis described above, the Directors reasonably expect the Group to have adequate resources to continue in operational existence for at least one year from the approval of these financial statements and therefore consider the going concern basis to be appropriate for the accounting and preparation of these financial statements.
New accounting standards issued but not yet effective
Certain new accounting standards, amendments to accounting standards and interpretations have been published that are not mandatory for December 31, 2022 reporting periods and have not been early adopted by the Group. These standards, amendments, or interpretations are not expected to have a material impact on the entity in the current or future reporting periods and on foreseeable future transactions.
Adoption of new and revised standards
There are no new accounting standards that are effective from January 1, 2022 that have had a material impact on the Company.
Basis of consolidation
The consolidated financial statements include the results of the Company and its subsidiaries. Subsidiaries are those investees, including structured entities, the Group controls because the Group (i) has power to direct the relevant activities of the investees that significantly affect their returns, (ii) has exposure, or rights, to variable returns from its involvement with the investees, and (iii) has the ability to use its power over the investees to affect its returns. Subsidiaries are consolidated from the date on which control is transferred to the Group (acquisition date) and are deconsolidated from the date on which control ceases. Intra-Group transactions, outstanding balances payable or receivable and unrealized income and expense on transactions between Group entities have been eliminated on consolidation. All subsidiaries have year ends which are coterminous with the Company’s. For IFRS reporting, subsidiaries’ accounting policies are consistent with the policies adopted by the Group.
Foreign currency translation
The financial statements of each Group entity are measured using the currency of the primary economic environment in which the entity operates (the functional currency), which is generally the local currency with the exception of treasury and holding companies where the functional currency is the U.S. dollar. The Group’s reporting currency is the U.S. dollar.
Foreign currency transactions are translated into the functional currency using exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the
settlement of foreign currency transactions and from the remeasurement of monetary assets and liabilities denominated in foreign currencies are recognized within SG&A in the consolidated income statement.
The exchange rates used for the translation of currencies into U.S. dollars that have the most significant impact on the Group’s results were:
| | | | | | | | | | | | | | | | | |
| 2022 | | 2021 | | 2020 |
| GBP year-end exchange rate | 1.2083 | | | 1.3532 | | | 1.3651 | |
| GBP average exchange rate | 1.2386 | | | 1.3763 | | | 1.2833 | |
| EUR year-end exchange rate | 1.0698 | | | 1.1378 | | | 1.2226 | |
| EUR average exchange rate | 1.0545 | | | 1.1840 | | | 1.1403 | |
The financial statements of subsidiaries with different functional currencies are translated into U.S. dollars on the following basis:
•Assets and liabilities at the year-end rate.
•Profit and loss account items at the weighted average exchange rate for the year.
Exchange differences arising from translation of retained earnings and the net investment in foreign entities are recognized in the statement of comprehensive income on consolidation.
Revenues
Net revenue is generated from sales of pharmaceutical products, net of accruals for returns, discounts, incentives and rebates (“allowances”). Direct customers are often wholesalers and distributors of pharmaceutical products; indirect customers are often government-sponsored programs or commercial insurers with whom the Group has separate pricing and formulary agreements.
Net revenue is recognized when a contractual promise to a customer (performance obligation) has been fulfilled by transferring control over pharmaceutical products to the direct customer, substantially all of which is upon receipt of the products by the customer, and therefore all revenue is considered as “point in time”. The amount of net revenue recognized is based on the consideration expected in exchange for pharmaceutical products, including reductions in revenue for rebates expected to be paid to indirect customers. The consideration Indivior receives may be fixed or variable. Variable consideration is only recognized when it is highly probable that a significant reversal will not occur. The Group has no material contracts with more than one performance obligation.
Management is required to determine the net transaction price in respect of each of its contracts with direct and indirect customers. In making such judgment, management assesses the impact of any variable consideration in the contract due to allowances. These are estimated and recognized in the period in which the underlying performance obligation is fulfilled as a reduction of net revenue.
The following are the Group’s significant categories of allowances:
•Government and commercial rebates
The Group records accruals for rebates for governmental programs as a reduction of sales when the product is sold into the distribution channel. The Group pays rebates to individual US states for all eligible units purchased under the Medicaid Drug Rebate Program in the United States (Medicaid) based on a “per unit rebate” calculation, which is based on the Group’s average manufacturer prices and applicable supplemental agreements.
Management estimates expected unit sales under Medicaid and adjusts its rebate accrual based on actual unit, per unit rebate amounts and changes in trends in Medicaid utilization.
Commercial rebates include amounts payable to payers and healthcare providers under contractual arrangements and may vary by product.
Government and commercial rebates are estimated using contracted rates, historical and estimated payer mix, historical utilization trends and payment processing time lag. Additionally, in developing estimates, management considers statutory rebate requirements, estimated patient mix, known market events or trends, channel inventory data obtained from third parties and other pertinent internal or external information. Management assesses and updates estimates each reporting period to reflect billing trends and other current information.
•Chargebacks
Chargebacks relate to discounts that occur when contracted indirect customers purchase directly from wholesalers and specialty distributors at a contracted price. The wholesaler or specialty distributor, in turn, then generally charges back to the Group the difference between the wholesale acquisition cost and the contracted price paid to the wholesaler or specialty distributor by the customer.
Management estimates the accrual for these chargebacks based on historical and expected utilization of these programs.
•Allowance for sales returns
Returns are generally made if the product is damaged, defective, or otherwise cannot be used by the customer. In the United States, the Group typically permit returns six months prior to and up to twelve months after the product expiration date. Outside the United States, returns are only allowed in certain countries on a limited basis.
Accruals for product returns are estimated based primarily on analysis of the Group’s historical product return patterns, expected future returns, and contractual agreement terms. Estimated returns are accrued in the period the related revenue is recognized.
•Sales discounts
Wholesalers, specialty pharmacies and specialty distributors of the Group’s products are generally offered various forms of consideration, including discounts, service fees and prompt payment discounts, for distributing the products. Wholesaler and specialty distributor allowances and service fees arise from contractual agreements and are estimated as a percentage of the price at which the Group sells product to them. In addition, customers are offered a prompt pay discount for payment within a specified contractual period. Prompt pay discounts are classified as reductions of accounts receivables.
Management also takes account of factors such as levels of inventory in its various distribution channels, product expiry dates and information about potential entry of competing products into the market. In each case, the accruals made for allowances noted above are subject to continuous review and adjustment as appropriate, based on the most recent information available to management.
Adjustments to the accruals may be necessary based on actual utilization information submitted to the Group (in the case of accruals for rebates related to sales targets or contractual rebates), claims/invoices received (in the case of regulatory rebates and chargebacks) and actual return rates.
Operating segments
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker (CODM). The CODM, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Chief Executive Officer (CEO).
Cost of sales
Cost of sales are recognized as the associated net revenue is recognized or when the asset no longer represents a probable future economic benefit. Cost of sales include manufacturing costs, movements in provisions for inventories, inventory write-offs, and depreciation and impairment charges in relation to manufacturing assets.
Selling, general and administrative expenses
Selling, general and administrative expenses comprise personnel costs, as well as marketing expenses, consulting services, depreciation of fixed assets, travel and other selling and distribution related expenses, corporate overheads, patent-related costs and other administrative expenses. Selling, general and administrative expenses also include expenses relating to recognition or release of legal provisions.
Expenses are recognized in respect of goods and services received when supplied in accordance with contractual terms. Marketing, promotional, and other selling expenses are charged to the consolidated income statement as incurred.
Research and development
Research and development expenses comprise internal and external research expenses. Internal R&D expenses include employee related expenses, occupancy costs, depreciation of corresponding equipment and other costs. External R&D expenses include cost related to clinical trials non-clinical activity, and laboratory services. Research expenditure is charged to the consolidated income statement in the year in which it is incurred.
Development expenditure is expensed as incurred, unless it meets the requirements of IAS 38 to be capitalized and then amortized over the useful life of the developed product, once commercialized.
The Group has determined that filing for regulatory approval is generally the earliest point at which internal development costs can be capitalized. However, judgment is exercised when assessing the point at which it is probable that the asset created will generate future economic benefits, which may not be until final regulatory approval for certain assets. All internal development expenditure incurred prior to filing for regulatory approval is therefore expensed as incurred.
Net other operating income
Net other operating income is credited to the consolidated income statement as earned.
Finance income and expense
Finance income represents interest earned on invested cash balances plus interest income from debt securities which is included in finance income using the effective interest method. Finance income on cash and cash equivalents and investments is recognized in the consolidated income statement in the period earned.
Finance costs of borrowings are recognized in the consolidated income statement over the term of those borrowings. Finance costs related to lease arrangements are recognized in the consolidated income statement over the lease period. Finance costs on significant legal matters are generally recognized in the income statement over the settlement payment period.
Income tax
Income tax for the year comprises current and deferred tax. Current tax is the expected tax payable on taxable income for the year, using tax rates enacted, or substantively enacted, at the balance sheet date, and any adjustment to tax payable in respect of previous years.
Income tax is recognized in the consolidated income statement except to the extent that it relates to items recognized in other comprehensive income or directly in equity. In this case, the tax is also recognized in other comprehensive income or directly in equity, respectively.
Current tax for the current and prior periods is recognized as a liability to the extent that it has not yet been settled, and as an asset to the extent that the amounts already paid exceed the amount due.
Deferred tax is recognized on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements using the balance sheet approach. Deferred tax is not recorded if it arises from the initial recognition of an asset or liability in a transaction (other than a business combination) that affects neither accounting nor taxable profit or loss at that time. Deferred tax is determined using tax rates (and laws) that have been enacted or substantively enacted at the balance sheet date and apply when the deferred tax asset or liability is expected to reverse. They are revalued for changes in tax rates when new tax rates are substantively enacted.
Intangible assets
Intangible assets are carried at cost less accumulated amortization and impairment.
Payments made in respect of acquired distribution rights are capitalized when it is probable that the expected future economic benefits attributable to the asset will flow to the Group. The useful life of the acquired distribution rights is determined based on legal, regulatory, contractual, competitive, economic or other relevant factors. Acquired rights with finite lives are subsequently amortized using the straight-line method over their expected useful economic lives (see Note 9). Payments related to the acquisition of rights to products in development or marketed products are capitalized if it is probable that future economic benefits from the asset will flow to the Group. Probability of future economic benefit is assumed for all payments made for externally acquired products in development and therefore capitalized. Subsequent success-based milestone payments up to and including approval are capitalized when achieved. Products in development are not amortized as they are not yet in use but are assessed for impairment at the end of each reporting period. Once approved in their primary market, products in development are transferred to marketed products.
Marketed products are amortized over their useful economic life, which is generally estimated as the patent life within the product’s primary market. Amortization of marketed products is recognized within cost of sales. All products are assessed for impairment indicators at the end of each reporting period and tested for impairment annually.
Acquired computer software licenses and related implementation costs are capitalized at cost. These costs are typically amortized on a straight-line basis, generally over a period of up to five years. For cloud-based software licenses, implementation costs are expensed as incurred and subscription costs are expensed ratably over the license period.
Gains and losses on the disposal of intangible assets are determined by comparing the asset’s carrying value with any sale proceeds and are included in the consolidated income statement.
The carrying values of intangible assets are reviewed for impairment annually and/or when events or changes in circumstances indicate the carrying value may be impaired depending on the intangible asset type. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of impairment loss. Where it is not possible to estimate the recoverable amount of an individual asset, management estimates the recoverable amount of the cash-generating unit (CGU) to which it belongs.
Property, plant and equipment
Property, plant and equipment are stated at historic cost less accumulated depreciation and impairment, with the exception of land, which is shown at cost less impairment. Cost includes expenditure that is directly attributable to the acquisition of the asset.
The cost of subsequent improvements and enhancements is included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be reliably measured.
Except for freehold land and assets under construction, the cost of property, plant and equipment is depreciated on a straight-line basis over the expected useful life of the asset. For this purpose, expected lives are determined within the following limits:
•freehold buildings: not more than 20 years;
•plant and equipment: not more than 10 years;
•motor vehicles and computer equipment: not more than 4 years; and
•leasehold improvements: up to the expected lease term.
Assets’ residual values and useful lives are reviewed, and adjusted if necessary, at each balance sheet date. Property, plant and equipment are reviewed for impairment if events or changes in circumstances indicate that the carrying amount may not be appropriate. Freehold land is reviewed for impairment on an annual basis.
Gains and losses on the disposal of property, plant and equipment are determined by comparing the asset’s carrying value with any sale proceeds and are included in the income statement.
Leases and right-of-use asset
The Group leases various properties and equipment (including vehicles). Rental contracts are typically made for fixed periods of 3 to 10 years but may have termination or extension options. Management assesses whether it is reasonably certain to exercise the options at lease commencement and subsequently, if there is a change in circumstances within its control. Extension options (or periods after termination options) are only included in the lease term if the lease is reasonably certain to be extended (or not terminated). Such assessment involves management judgment and estimations based on information at the time the assessments are made.
As a lessee, management assesses whether a contract conveys the right to control use of an identified asset for a period in exchange for consideration, in which case it is classified as a lease. The Group recognizes a right-of-use asset (lease asset) and a corresponding liability at the lease commencement date, measured on a present value basis.
Leases with a term of 12 months or less (short-term leases) and low-value leases are not recognized on the balance sheet. For these short-term and low-value leases, the Group recognizes the lease payments as an operating expense on a straight-line basis over the term of the lease.
The Group’s right-of-use assets are calculated based upon the following:
•the amount of the initial measurement of the lease liability;
•any lease payments made to the lessor at or before the commencement date, less any lease incentives (e.g. rent abatements, tenant improvement allowances) received; and
•any initial direct costs incurred by the Group.
Right-of-use assets are amortized on a straight-line basis from the commencement date of the lease over the shorter of the lease term or useful life of the right-of-use asset. Right-of-use assets are assessed for impairment whenever there is an indication the carrying amount may not be recoverable, generally using cash flow projections for the cash-generating unit in which the right-of-use asset belongs.
Lease liabilities are initially measured at the present value of the lease payments to be made over the lease term using the discount rate for the lease at lease commencement. If the interest rate implicit in the lease can be determined, it will be used to measure the liability. If an interest rate is not implicit in the lease, the incremental borrowing rate for the respective loan type at the date of commencement will be used, which ranged from 3.9% to 7.9%. The incremental borrowing rate is determined by referencing the cost of borrowing in recent debt issuances for entities with comparable credit ratings, adjusted for the term of the lease and country of origin.
The Group remeasures the lease liability (and makes a corresponding adjustment to the related right-of-use asset) whenever the lease terms or expected payments under the lease change, or a modification occurs that is not accounted for as a separate lease. Lease payments are allocated between principal and finance cost. The finance cost is charged to profit or loss over the lease period to produce a constant periodic rate of interest on the remaining balance of the liability for each period. Principal elements of lease payments are recognized as cash flows from financing activities.
Investments
Investments comprise holdings in equity and debt securities. Investments in equity securities held for trading or for which the Group has not elected to recognize fair value gains and losses through other comprehensive income are initially recorded and subsequently measured at fair value through profit or loss (FVPL). Investments in debt securities are initially recorded at fair value plus or minus directly attributable transaction costs and remeasured on the basis of the Group’s business model and the contractual cash flow characteristics.
The Group’s investments in debt securities are held at amortized cost as the Group’s intention is to hold these investments to maturity and collect contractual cash flows that are solely payments of principal and interest.
The Group applies an expected credit loss impairment model to financial instruments held at amortized cost. The recognition of a loss allowance is limited to 12-month expected credit losses unless credit risk increases significantly, which would require lifetime expected credit losses to be applied. When measuring expected credit losses, investments are grouped based on similar credit risk characteristics. Management uses judgment in selecting the inputs to the impairment model based on historical loss rates for similar instruments, current conditions, and forecasts of future economic conditions.
Inventories
Raw materials, stores and consumables, work in progress and finished goods are stated at the lower of cost or net realizable value. Cost comprises materials, direct labor and an appropriate portion of overhead expenses (based on normal operating capacity) required to get the inventory to its present location and condition. Inventory valuation is determined on a first in, first out basis. Selling expenses, product amortization, and certain other overhead expenses are excluded from product cost. Net realizable value is the estimated selling price less applicable selling expenses. Impairment of inventory is recognized in cost of sales.
Trade receivables
Trade receivables are initially recognized at their invoiced amounts less estimated adjustments for deductions such as cash discounts. Trade receivables consist of amounts due from customers, primarily wholesalers and distributors, for which there is no significant history of default. The credit risk of
customers is assessed, taking into account their financial positions, past experiences and other relevant factors. Individual customer credit limits are imposed based on these factors.
Provisions for expected credit losses are established using an expected credit loss model (ECL). The provisions are based on a forward-looking ECL, which includes possible default events on the trade receivables over the entire holding period. These provisions represent the difference between the carrying amount in the consolidated balance sheet and the estimated collectible amount. Charges for ECL are recognized in the consolidated income statement within SG&A expenses.
Cash and cash equivalents
Cash and cash equivalents comprise cash in hand, current balances with banks and similar institutions, and highly liquid investments with original maturities of less than three months.
Borrowings
Interest-bearing borrowings are recognized initially at fair value less attributable transaction costs. Subsequent to initial recognition, interest-bearing borrowings are stated at amortized cost, with any difference between cost and redemption value being recognized within finance expense in the income statement over the year of the borrowings on an effective interest basis.
Borrowings are classified as a current liability unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date.
Provisions and other liabilities
Provisions are recognized when the Group has a present legal or constructive obligation as a result of past events, an outflow of resources to settle that obligation is more likely than not, and the amount can be reliably estimated. Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the present obligation at the reporting date. Provisions are reviewed regularly, and amounts updated where necessary to reflect the latest assumptions. The assessment of provisions can involve complex judgments about future events and can rely heavily on judgments and estimates. Given the inherent uncertainties related to these judgments and estimates, the actual outflows resulting from the realization of those risks could differ adversely and materially from management’s assessments.
Other liabilities represent contractual obligations to third parties where the amount and timing of payments is fixed. Where other liabilities are not interest-bearing and the impact of discounting is significant, other liabilities are recorded at their present value, generally using a discount rate appropriate to the liability or approximating a market interest rate at the time the Group entered into the obligation.
Trade and other payables
Trade and other payables are recognized initially at fair value and, where applicable, subsequently measured at amortized cost using the effective interest method. Accrual balances are reviewed and adjusted in the light of actual experience of rebates, discounts or allowances given and returns made and any expected changes in arrangements. Future events could cause the assumptions on which the accruals are based to change, which could affect the future results of the Group. Please refer to the revenue policy accounting policy for further details on accruals for rebates, discounts and returns.
Employee share-based plans
The Group operates three equity-settled executive and employee share plans. For all grants of share options and awards, the fair value at the grant date is calculated using appropriate pricing models. The grant date fair value is recognized over the vesting period as an expense, with a corresponding increase in retained earnings.
Employee short-term obligations
Liabilities for salaries and wages, including non-monetary benefits, vacation and accumulating sick leave expected to be settled within 12 months after the end of the period in which the employees render the related service, are recognized in respect of employees’ services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled. The liability for vacation and accumulating sick leave is recognized in the provision for employee benefits. All other short-term employee benefits are included within trade and other payables.
Pension commitments
Some companies within the Group operate defined contribution and (funded and unfunded) defined benefit pension schemes. The cost of providing pensions to employees who are members of defined contribution schemes is charged to the income statement as contributions are made. The Group has no further payment obligations in respect of such schemes once the contributions have been paid.
Post-retirement benefits other than pensions
Some companies within the Group provide post-retirement medical care to their retirees. The costs of providing these benefits are accrued over the period of employment and the liability recognized in the balance sheet is calculated using the projected unit credit method and is discounted to its present value and the fair value of any related asset is deducted.
Accounting estimates and judgments
Management makes several estimates and assumptions regarding the future and significant judgments in applying the Group’s accounting policies.
Key estimates and assumptions
Estimates and assumptions may affect the reported amount of assets and liabilities, disclosure of contingent assets and liabilities, and the reported amounts of revenues and expenses. These estimates are based on the Group’s knowledge of the amount, events, or actions; however, actual results may ultimately differ from those estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates are recognized prospectively. The key estimates and assumptions used in the financial statements are set out below.
Accruals for returns, discounts, incentives and rebates
The Group offers various types of reductions from list prices on its products. Products sold in the United States are covered by various programs (such as Medicare and Medicaid) under which products are sold at a discount. Rebates are granted to healthcare authorities, and under contractual arrangements with certain customers. Some wholesalers are entitled to chargeback incentives under specific contractual arrangements. Cash discounts may also be granted for prompt payment.
The discounts, incentives and rebates described above are estimated based on contractual arrangements with customers or terms of the relevant regulations and/or agreements applicable for transactions with healthcare authorities, and in some cases on assumptions about the attainment of targeted volumes. Several months may pass between the original estimate of rebates due and confirmation of the amount, which may increase the estimation risk. Please refer to the revenue accounting policy for further details.
Management also estimates the amount of product returns based on contractual sales terms and reliable historical data, adjusted for future expectations. The estimates are recognized in the period in which the underlying sales are recognized, as a reduction of sales revenue.
During 2022, $14 million of revenue was recognized from performance obligations satisfied in prior years (2021: $24 million, 2020: $16 million), primarily relating to resolution of aged accruals for US government programs. The estimates for US governmental and commercial end-payor accruals are also reasonably expected to vary due to shifts between US governmental end-payor sales and US commercial end-payor sales. A 1 percentage point shift between these channels would impact the accrual by $4 million. Due to the number of variables contributing to the overall accruals for returns, discounts, incentives, and rebates, further meaningful sensitivity is not able to be provided. Accruals for returns, discounts, incentives, and rebates are disclosed in Note 22 of the Group financial statements. Impairment of intangible assets
In carrying out impairment reviews, specifically in relation to products in development, significant assumptions have been made. These include the probability of success in obtaining regulatory approvals, discount rates, and projected net revenues (based on future rate of market growth and market demand for the products acquired). As actual results differ and/or changes in expectations arise, impairment charges may be required which would have a material adverse impact on reported results and financial position. The cash flows used in the recoverable amount calculation for assets in development are inflation adjusted. Changes in the inflationary environment in 2022 did not have a significant impact on the recoverable amount calculations due to its effect on both projected cash inflows and outflows. See Note 9 to the Group financial statements for further details and sensitivity analysis. Provisions and IP-related claims
Provisions, when made, are valued based on the management’s best estimates considering all available information, external advice, and historical experience. The assessment of provisions can involve a series of complex judgments about future events and can rely heavily on estimates and assumptions, including advice from counsel on the merits of the claim, the settlement or litigation strategy, amount and timing of potential payments, and discounting. As of December 31, 2022, the Group maintained a provision related to multidistrict antitrust class and state claims for $290 million (2021 and 2020: $nil), DOJ-related matters for $5 million (2021: $5 million; 2020: $32 million) and IP-related claims for $3 million (2021: $73 million; 2020: $47 million). These provisions are valued based on the management’s best estimates considering available historical information and external advice. The multidistrict antitrust class and state claims provision represents management’s estimate at this time of a potential aggregate settlement. However, management cannot predict with any certainty whether Indivior Inc. will reach a settlement with any of the Plaintiffs, and the final aggregate cost of these matters, whether resolved by settlement or trial, may be materially different. The provision for IP-related claims has been substantially transferred to other liabilities as a result of the settlement with DRL in 2022. The actual settlement was not materially different from the provision previously recorded. The provision for remaining IP-related claims continues to be management’s best estimate, however, the final cost of settling or litigating this matter could be materially different. For more details, see Notes 19 and Note 21 to the Group financial statements. Critical judgments
Management has made the following critical judgments in applying the Group’s accounting policies that have the most significant effect on the amounts recognized in the Group financial statements:
Ongoing litigation
The Group is involved in litigation, arbitration, and other legal proceedings. These proceedings typically are related to compliance and trade practices, commercial claims, product liability claims, intellectual property rights, and employment and wrongful discharge claims. For each claim or grouping of similar claims, management make’s judgments regarding the relative merits and risks within the claims. These judgments inform the Group’s defense strategies, whether a loss or settlement from the claims is probable and whether sufficient information exists to make a reliable estimate of the likely outcome of the claims. Provisions are recognized when the Group has a present legal or constructive obligation, an
outflow of resource to settle the obligation is more likely than not, and the amount can be reliably estimated. Management has assessed as “contingent” matters that cannot be reliably estimated or are not considered probable at the current time. For more details of all the outstanding legal proceedings including those that have been deemed contingent, see Note 21 to the Group financial statements. Based on facts and circumstances at December 31, 2021, which did not indicate that a loss or settlement was probable, multidistrict antitrust class and state claims were treated as a contingent liability. Based on new developments, this judgment has now changed such that a provision has been recorded at December 31, 2022. Refer to Note 21 to the Group financial statements for further details on the conditions that led to this change in judgment. 3. SEGMENT INFORMATION
The Group is engaged in a single business activity, which is predominantly the development, manufacture, and sale of buprenorphine-based prescription drugs for treatment of opioid dependence and related disorders. The CEO reviews disaggregated net revenue on a geographical and product basis and allocates resources on a functional basis between Commercial, Supply, Research and Development, and other Group functions. Financial results are reviewed on a consolidated basis for evaluating financial performance and allocating resources. Accordingly, the Group operates in a single reportable segment.
Revenues are attributed geographically based on the country where the sale originates. The following table represents net revenues and non-current assets, net of accumulated depreciation, amortization and impairment, by country. Non-current assets for this purpose consist of intangible assets, property, plant and equipment, right-of-use assets, investments, and other assets.
Net revenue:
| | | | | | | | | | | | | | | | | | | | |
For the year ended December 31 (in millions) | | 2022 | | 2021 | | 2020 |
| United States | | 731 | | | 603 | | | 456 | |
| Rest of World | | 164 | | | 181 | | | 182 | |
| United Kingdom | | 6 | | | 7 | | | 9 | |
Total | | $ | 901 | | | $ | 791 | | | $ | 647 | |
On a disaggregated basis, the Group’s net revenue by major product line:
| | | | | | | | | | | | | | | | | | | | |
For the year ended December 31 (in millions) | | 2022 | | 2021 | | 2020 |
| SUBLOCADE | | 408 | | | 244 | | | 130 | |
| PERSERIS | | 28 | | | 17 | | | 14 | |
| Sublingual/Other | | 465 | | | 530 | | | 503 | |
Total | | $ | 901 | | | $ | 791 | | | $ | 647 | |
Significant customers
Net revenues include amounts derived from significant customers that amount to 10% or more of the Group’s revenues as net follows (in percentages of total net revenue):
| | | | | | | | | | | | | | | | | | | | |
| Customer | | 2022
% | | 2021
% | | 2020
% |
| Customer A | | 22 | % | | 21 | % | | 19 | % |
| Customer B | | 16 | % | | 18 | % | | 17 | % |
| Customer C | | 17 | % | | 18 | % | | 21 | % |
Non-current assets:
| | | | | | | | | | | | | | | | | | | | |
At December 31 (in millions) | | 2022 | | 2021 | | 2020 |
| United States | | 65 | | | 133 | | | 141 | |
| United Kingdom | | 223 | | | 145 | | | 122 | |
| Rest of World | | 3 | | | 5 | | | 6 | |
Total | | $ | 291 | | | $ | 283 | | | $ | 269 | |
4. OPERATING EXPENSES AND OTHER OPERATING INCOME
The table below sets out selected operating costs and expense information.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| (in millions) | | Notes | | 2022 | | 2021 | | 2020 |
Research and development expenses | | | | $ | (72) | | | $ | (52) | | | $ | (40) | |
| Selling and marketing expenses | | | | (218) | | | (192) | | | (202) | |
| Administrative and general expenses | | | | (545) | | | (239) | | | (464) | |
Selling, general and administrative expenses | | | | $ | (763) | | | $ | (431) | | | $ | (666) | |
| | | | | | | | |
Depreciation, amortization and impairment(1) | | 9, 10, 11 | | $ | (13) | | | $ | (13) | | | $ | (17) | |
__________________
(1)Depreciation and amortization expense is included in research and development and selling, general and administrative expenses. Additionally, depreciation and amortization expense in FY 2022 of $8 million (FY 2020 and 2021: $9 million) for ROU assets and intangibles is included within cost of sales.
Net other operating income
| | | | | | | | | | | | | | | | | | | | |
For the year ended December 31 (in millions) | | 2022 | | 2021 | | 2020 |
| Net proceeds from the sale of intangible assets | | 1 | | | 20 | | | — | |
| Directors’ and Officers’ insurance reimbursements | | 5 | | | 12 | | | — | |
| Other income | | 2 | | | — | | | — | |
| Net other operating income | | $ | 8 | | | $ | 32 | | | $ | — | |
5. EMPLOYEES
Details of employee costs
(a) Staff costs
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| (in millions) | | Note | | 2022 | | 2021 | | 2020 |
| The total employment costs, including Executive Directors, were: | | | | | | | | |
| Wages and salaries | | | | (182) | | | (165) | | | (139) | |
| Social security costs | | | | (30) | | | (25) | | | (22) | |
Pension costs(1) | | | | (12) | | | (6) | | | (9) | |
| Share-based payments | | 25 | | (16) | | | (11) | | | (8) | |
| Termination reversal/(costs) | | | | — | | | 1 | | | (9) | |
Total staff costs | | | | $ | (240) | | | $ | (206) | | | $ | (187) | |
__________________
(1)Pension costs predominately reflect contributions made towards the Group’s defined contribution plans.
Key management is defined as the Executive Committee, a body of 10 employees (2021: 9 employees, 2020: 9 employees) including the CEO and the functional leads directly reporting the CEO plus all Non-Executive Directors. Compensation awarded to key management was, excluding Non-Executive Directors, was:
| | | | | | | | | | | | | | | | | | | | |
| (in millions) | | 2022 | | 2021 | | 2020 |
| Short-term employee benefits | | (10) | | | (10) | | | (6) | |
| Termination costs | | — | | | (1) | | | (2) | |
| Share-based payments | | (10) | | | (7) | | | (5) | |
| Total compensation awarded | | $ | (20) | | | $ | (18) | | | $ | (13) | |
(b) Staff numbers
The average monthly number of persons employed by the Group, including Directors, during the year was:
| | | | | | | | | | | | | | | | | |
| 2022 | | 2021 | | 2020 |
| Operations | 675 | | | 573 | | | 567 | |
| Management | 178 | | | 164 | | | 168 | |
| Research and development | 75 | | | 65 | | | 84 | |
| Average number of employees | 928 | | | 802 | | | 819 | |
6. NET FINANCE EXPENSE
| | | | | | | | | | | | | | | | | | | | |
| (in millions) | | 2022 | | 2021 | | 2020 |
| Finance income | | | | | | |
| Interest income on cash and cash equivalents/investments | | 18 | | | 1 | | | 7 | |
| Other finance income | | 1 | | | 3 | | | 2 | |
| Total finance income | | $ | 19 | | | $ | 4 | | | $ | 9 | |
| | | | | | |
| Finance expense | | | | | | |
| Interest expense on borrowings | | (20) | | | (16) | | | (14) | |
| Interest expense on lease liabilities | | (2) | | | (2) | | | (3) | |
| Interest expense on legal matters | | (7) | | | (8) | | | (7) | |
| Other finance expense | | — | | | (1) | | | (2) | |
| Total finance expense | | $ | (29) | | | $ | (27) | | | $ | (26) | |
Net finance expense | | $ | (10) | | | $ | (23) | | | $ | (17) | |
7. INCOME TAXES
Income tax benefit
| | | | | | | | | | | | | | | | | | | | |
| (in millions) | | 2022 | | 2021 | | 2020 |
| Current tax | | (51) | | | (48) | | | (11) | |
| Recognition of orphan drug credits earned in prior years | | — | | | 43 | | | — | |
| Other adjustments for prior year | | (13) | | | 2 | | | 3 | |
Total current tax | | $ | (64) | | | $ | (3) | | | $ | (8) | |
| Origination and reversal of temporary differences | | 72 | | | 18 | | | 37 | |
| Adjustments for changes in tax rates | | 22 | | | (1) | | | — | |
| Adjustments for prior year deferred tax | | 12 | | | 1 | | | (4) | |
Total deferred tax | | $ | 106 | | | $ | 18 | | | $ | 33 | |
Total income tax benefit | | $ | 42 | | | $ | 15 | | | $ | 25 | |
The standard rate of corporation tax in the UK was 19% for the year ended December 31, 2022 (2021 and 2020: 19%). The Group’s losses for the year ended December 31, 2022, are taxed at an effective rate of 44% (2021: -8%; 2020: 14%).
The total tax benefit for the year reconciles to the accounting profit as follows:
| | | | | | | | | | | | | | | | | | | | |
| (in millions) | | 2022 | | 2021 | | 2020 |
| (Loss)/profit before taxation | | (95) | | | 190 | | | (173) | |
| Tax at the notional UK corporation tax rate of 19% | | (18) | | | 36 | | | (33) | |
| Effects of: | | | | | | |
| Tax at rates other than the UK corporation tax rate | | 5 | | | (1) | | | 5 | |
| Impact of rate changes | | (22) | | | 1 | | | — | |
| Permanent differences | | (3) | | | (4) | | | 7 | |
| Benefit from innovation incentives | | (3) | | | — | | | — | |
| Recognition of orphan drug credits earned in prior years | | — | | | (43) | | | — | |
| Adjustments for prior year | | (1) | | | (2) | | | 5 | |
| Recognition of previously unrecognized tax benefit | | (1) | | | — | | | — | |
| Current year unrecognized deferred tax asset | | 2 | | | — | | | — | |
| Adjustments to amounts carried in respect of unresolved tax matters | | (1) | | | (1) | | | (6) | |
| Share awards | | — | | | — | | | (2) | |
| R&D tax credit | | — | | | (1) | | | (1) | |
Income tax benefit | | $ | (42) | | | $ | (15) | | | $ | (25) | |
The reported effective tax rate of 44% (2021: -8%; 2020:14%) was impacted by:
•Permanent difference tax benefit of $3 million (2021: tax benefit of $4 million; 2020: tax expense of $7 million). Permanent differences arise due to differences between financial statement income and taxable income determination that will never reverse. Current year differences resulted from income not subject to tax, offset by business expenses not deductible.
•The impact of rate change includes a $18 million tax benefit related to non-operating items (described in table below).
•Prior year tax items related to the recognition of orphan drug credits.
•Adjustments for prior year relate to tax accrual to return true ups of $1 million benefit (2021: $2 million, 2020: $5 million expense).
•The Group recognized $3 million (2021: $1 million, 2020: $1 million expense) tax benefit in relation to foreign currency translation adjustment recorded in the statement of other comprehensive (loss)/income.
| | | | | | | | | | | | | | | | | | | | |
| (in millions) | | 2022 | | 2021 | | 2020 |
| Income tax benefit | | (42) | | | (15) | | | (25) | |
| Tax on non-operating items | | 57 | | | (3) | | | 37 | |
| Non-operating tax items | | 18 | | | 43 | | | — | |
| Income tax expense excluding non-operating items | | $ | 33 | | | $ | 25 | | | $ | 12 | |
Management believes it has made adequate provision for the liabilities likely to arise from periods that are open and not yet agreed by tax authorities. The ultimate liability for such matters may vary from the amounts provided and is dependent upon the outcome of agreements with relevant tax authorities or litigation where appropriate. As a multinational Group, tax uncertainties remain in relation to Group financing, intercompany pricing and the location of taxable operations. Management has concluded tax provisions made to be appropriate and does not believe a significant risk of material change to uncertain tax positions exists in the next 12 months.
Factors affecting future tax charges
As a Group with worldwide operations, Indivior is subject to several factors that may affect future tax charges, principally the levels and mix of profitability in different jurisdictions, transfer pricing regulations, tax rates imposed and tax regime reforms. The enacted United Kingdom Statutory Corporation Tax rate is 19% for the year ended December 31, 2022. In March 2021, the UK Chancellor announced an increase in the corporation tax rate from 19% to 25% with effect from April 2023. The increase to the corporation tax rate was enacted in June 2021.
The OECD published a framework for the introduction of a global minimum effective tax rate of 15%, applicable to large multinational groups. In July 2022, HM Treasury released draft legislation to implement these “Pillar Two” rules with effect from April 1, 2024, in the UK. Management is reviewing these draft rules to understand any potential impacts for when ultimately enacted.
Tax assets and liabilities
Deferred taxes
The Group recognizes deferred tax assets to the extent that sufficient future taxable profits are probable against which these future tax deductions can be utilized. At December 31, 2022, the Group’s net deferred tax assets of $219 million includes $120 million (2021: $102 million, 2020: $59 million) in the US and $87 million (2021: $11 million, 2020: $7 million) in the UK. The US deferred tax asset of $120 million includes $25 million of share-based compensation (2021: $18 million, 2020: $5 million) and $4 million of profit in stock (2021 and 2020: $3 million). Management has assessed recoverability of deferred tax assets using Group-level budgets and forecasts consistent with those used for the assessment of asset impairments, particularly in relation to levels of future sales. These forecasts are therefore subject to similar uncertainties to those assessments as set out in Note 2, Going concern assessment. This exercise is reviewed each year and, to the extent required, an adjustment to the recognized deferred tax asset may be made. The Group made an overall loss in the current period, which is driven by costs and the deferred tax assets are expected to be used in full within the lifecycle of existing products. With the exception of specific assets that are not currently considered accessible (see unrecognized deferred tax assets below) and the anticipated future adjustment for non-deductibility of certain management compensation (see below), management has concluded full recognition of deferred tax assets to be
appropriate and does not consider there a significant risk of a material change in their assessment in the next 12 months.
The composition of deferred tax assets is summarized in the table below.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Deferred tax assets (in millions) | | Unrealized profit in inventory | | Inventory costs capitalized | | Share-based payments | | Short-term temporary differences | | Long-term temporary differences | | Litigation | | Carry-forward losses | | State taxes | | Other | | Total |
| At January 1, 2020 | | 12 | | | 4 | | | 2 | | | 19 | | | 1 | | | — | | | — | | | 5 | | | (3) | | | 40 | |
| Credit to the income statement | | 2 | | | — | | | 2 | | | — | | | 3 | | | 24 | | | — | | | 2 | | | — | | | 33 | |
| Credit directly to equity | | — | | | — | | | 2 | | | — | | | — | | | — | | | — | | | — | | | — | | | 2 | |
| At January 1, 2021 | | 14 | | | 4 | | | 6 | | | 19 | | | 4 | | | 24 | | | — | | | 7 | | | (3) | | | 75 | |
| Credit to the income statement | | (6) | | | 11 | | | 1 | | | 4 | | | 6 | | | — | | | — | | | 1 | | | 1 | | | 18 | |
| Credit directly to equity | | — | | | — | | | 13 | | | — | | | — | | | — | | | — | | | — | | | — | | | 13 | |
| Exchange adjustments | | — | | | — | | | — | | | — | | | (1) | | | — | | | — | | | — | | | — | | | (1) | |
| At December 31, 2021 | | 8 | | | 15 | | | 20 | | | 23 | | | 9 | | | 24 | | | — | | | 8 | | | (2) | | | 105 | |
| (Charged)/credit to the income statement | | — | | | 11 | | | 2 | | | (4) | | | (9) | | | 7 | | | 87 | | | 5 | | | 7 | | | 106 | |
| Credit directly to equity | | — | | | — | | | 9 | | | — | | | — | | | — | | | — | | | — | | | — | | | 9 | |
| Exchange adjustments | | — | | | — | | | — | | | — | | | (1) | | | — | | | — | | | — | | | — | | | (1) | |
At December 31, 2022 | | $ | 8 | | | $ | 26 | | | $ | 31 | | | $ | 19 | | | $ | (1) | | | $ | 31 | | | $ | 87 | | | $ | 13 | | | $ | 5 | | | $ | 219 | |
The Group has not recognized deferred tax assets in relation to certain losses and interest expense in the UK, as the likelihood of future economic benefit is not sufficiently assured.
Unrecognized deferred tax assets of $23 million (2021: $22 million, 2020: $17 million) consist of $12 million (2021: $14 million, 2020: $11 million) in respect of losses of earlier periods, $9 million (2021: $8 million, 2020: $6 million) in respect of interest expense, and foreign tax credit carry-forward of $2 million (2021 and 2020: nil). Both the losses and interest expense have an unlimited carry-forward period, and the foreign tax credits start to expire after nine years, or in 2031, if unused.
In September 2022, the Company’s shareholders approved an additional listing in the US, which is expected to take place in spring 2023. Once listed in the US, US tax laws limit deductibility of compensation for certain management roles. The Group currently carries approximately $12 million of deferred tax assets that are not expected to be realized once the listing is complete. Approximately three-quarters of this amount will be charged to equity and one-quarter will be presented as a tax charge in the period the listing takes place, as a reversal of the original booking.
The tax (credit)/charge recognized other than within the consolidated income statement as follows:
| | | | | | | | | | | | | | | | | | | | |
| (in millions) | | 2022 | | 2021 | | 2020 |
| Other comprehensive income: | | | | | | |
| Current tax recorded in currency translation review | | $ | (3) | | | $ | (1) | | | $ | 1 | |
| Equity: | | | | | | |
| Current taxation on share-based plans | | $ | (2) | | | $ | — | | | $ | — | |
| Deferred taxation on share-based plans | | $ | (9) | | | $ | 13 | | | $ | 2 | |
Other tax matters
In 2022, the Group recognized a provision of $290 million related to certain multidistrict antitrust class and state claims. The resulting tax benefit of $68 million includes $12 million of rate change impact.
As disclosed in Note 21, the Group reached a settlement with Reckitt Benckiser in January 2021. Based on the strength of external advice received, an $8 million tax benefit from the settlement cost has
been recognized in 2021 within tax items. Tax authorities may potentially challenge management’s position.
The Group has undistributed earnings of $11 million (2021: $12 million, 2020: $10 million) which, if paid out as dividends, would be subject to tax in the hands of the recipient. An assessable temporary difference exists, but no deferred tax liability has been recognized as the Group is able to control the timing of distributions from this subsidiary and is not expected to distribute these profits in the foreseeable future. The potential deferred tax liability would be less than $1 million (2021 and 2020: less than $1 million).
8. EARNINGS/(LOSS) PER SHARE
In September 2022, the Group’s shareholders approved a 5-for-1 share consolidation. On October 10th, 2022, the Group completed this share consolidation. Shareholders received 1 new Ordinary share with a nominal value of $0.50 each for every 5 previously existing Ordinary shares which had a nominal value of $0.10 cents each. All share and per share information of the Group, including basic and diluted weighted average number of shares outstanding, basic (loss)/earnings per share, and diluted (loss)/earnings per share reflect the share consolidation for all periods presented.
Presented below are the basic and diluted (loss)/earnings per share for 2022, 2021 and 2020:
| | | | | | | | | | | | | | | | | |
| 2022 | | 2021 | | 2020 |
| Basic (loss)/earnings per share | $ | (0.38) | | | $ | 1.41 | | | $ | (1.01) | |
| Diluted (loss)/earnings per share | $ | (0.38) | | | $ | 1.35 | | | $ | (1.01) | |
Basic
Basic (loss)/earnings per share is calculated by dividing net (loss)/income for the year attributable to owners of the Group by the weighted average number of ordinary shares in issue during the year.
Diluted
Diluted (loss)/earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. The Group has dilutive potential ordinary shares in the form of stock options and awards. These options and awards reflect the share consolidation for all periods presented, referred to above. The weighted average number of shares is adjusted for the number of shares granted to the extent performance conditions have been met at the balance sheet date and as determined using the treasury stock method.
The weighted average number of ordinary shares outstanding (on a basic basis) includes the favorable impact of 17,815,033 ordinary shares repurchased prior to the share consolidation in 2022 (equivalent post consolidation: 3,563,007), 1,280,914 ordinary shares repurchased after the share consolidation in 2022, and 33,507,433 ordinary shares repurchased through 2021 (equivalent post consolidation: 6,701,487). The weighted average number of ordinary shares outstanding for 2021 (on a basic basis) includes the favorable impact of the share repurchase program. Refer to Note 23 for further details.
Conditional awards of 7,839,441 (equivalent post consolidation approximately 1,568,000), 14,174,745 (equivalent post consolidation approximately 2,835,000) and 22,186,508 (equivalent post consolidation approximately 4,437,000) were granted under the Group’s Long-Term Incentive Plan in 2022, 2021 and 2020, respectively.
| | | | | | | | | | | | | | | | | | | | |
Weighted average number of shares (in thousands) | | 2022 | | 2021 | | 2020 |
| On a basic basis | | 139,012 | | | 145,660 | | | 146,573 | |
| Dilution for share awards and options | | 6,605 | | | 6,280 | | | 4,098 | |
| On a diluted basis | | 145,617 | | | 151,940 | | | 150,671 | |
9. INTANGIBLE ASSETS
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (in millions) | | Acquired distribution rights | | Products in development | | Marketed products | | Software | | Total |
| Cost | | | | | | | | | | |
| At January 1, 2022 | | 220 | | | 66 | | | 57 | | | 39 | | | 382 | |
| Additions | | — | | | 1 | | | — | | | — | | | 1 | |
| Exchange adjustments | | (25) | | | (7) | | | (3) | | | — | | | (35) | |
At December 31, 2022 | | $ | 195 | | | $ | 60 | | | $ | 54 | | | $ | 39 | | | $ | 348 | |
| Accumulated amortization and impairment | | | | | | | | | | |
| At January 1, 2022 | | 220 | | | 27 | | | 21 | | | 32 | | | 300 | |
| Amortization charge | | — | | | — | | | 5 | | | 2 | | | 7 | |
| Exchange adjustments | | (25) | | | (3) | | | (1) | | | — | | | (29) | |
At December 31, 2022 | | $ | 195 | | | $ | 24 | | | $ | 25 | | | $ | 34 | | | $ | 278 | |
Net book amount at December 31, 2022 | | $ | — | | | $ | 36 | | | $ | 29 | | | $ | 5 | | | $ | 70 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (in millions) | | Acquired distribution rights | | Products in development | | Marketed products | | Software | | Total |
| Cost | | | | | | | | | | |
| At January 1, 2021 | | 235 | | | 37 | | | 57 | | | 39 | | | 368 | |
| Additions | | — | | | 30 | | | — | | | — | | | 30 | |
| Disposal | | (12) | | | — | | | — | | | — | | | (12) | |
| Exchange adjustments | | (3) | | | (1) | | | — | | | — | | | (4) | |
At December 31, 2021 | | $ | 220 | | | $ | 66 | | | $ | 57 | | | $ | 39 | | | $ | 382 | |
| Accumulated amortization and impairment | | | | | | | | | | |
| At January 1, 2021 | | 235 | | | 27 | | | 15 | | | 29 | | | 306 | |
| Amortization charge | | — | | | — | | | 6 | | | 3 | | | 9 | |
| Disposal | | (12) | | | — | | | — | | | — | | | (12) | |
| Exchange adjustments | | (3) | | | — | | | — | | | — | | | (3) | |
At December 31, 2021 | | $ | 220 | | | $ | 27 | | | $ | 21 | | | $ | 32 | | | $ | 300 | |
Net book amount at December 31, 2021 | | $ | — | | | $ | 39 | | | $ | 36 | | | $ | 7 | | | $ | 82 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (in millions) | | Acquired distribution rights | | Products in development | | Marketed products | | Software | | Total |
| Cost | | | | | | | | | | |
| At January 1, 2020 | | 228 | | | 36 | | | 56 | | | 39 | | | 359 | |
| Exchange adjustments | | 7 | | | 1 | | | 1 | | | — | | | 9 | |
At December 31, 2020 | | $ | 235 | | | $ | 37 | | | $ | 57 | | | $ | 39 | | | $ | 368 | |
| Accumulated amortization and impairment | | | | | | | | | | |
| At January 1, 2020 | | 228 | | | 26 | | | 9 | | | 24 | | | 287 | |
| Amortization charge | | — | | | — | | | 6 | | | 5 | | | 11 | |
| Exchange adjustments | | 7 | | | 1 | | | — | | | — | | | 8 | |
At December 31, 2020 | | $ | 235 | | | $ | 27 | | | $ | 15 | | | $ | 29 | | | $ | 306 | |
Net book amount at December 31, 2020 | | $ | — | | | $ | 10 | | | $ | 42 | | | $ | 10 | | | $ | 62 | |
Acquired distribution rights
Acquired distribution rights have been fully amortized in all periods presented. In 2021, $19 million of net cash proceeds were received from the disposal of the TEMGESIC /BUPREX / BUPREXX (buprenorphine) analgesic franchise outside of North America to Eumedica Pharmaceuticals AG which had a nil carrying value. The remaining acquired distribution rights represent the ongoing sublingual tablet business in Europe which is still in use.
Products in development
Products in development are products in different stages of research and development which have not received regulatory approval. There were no new primary market product approvals in 2022.
In 2021 the Group entered a strategic collaboration with Aelis Farma that includes an exclusive option for the license of the global rights to AEF0117, a leading compound to treat cannabis-related disorders. Under the agreement, the Group paid $30 million to secure the option.
In 2021, $1 million of proceeds were received for the out-licensing of nasal naloxone opioid overdose patents to Adapt Pharmaceuticals (Emergent BioSolutions) which had a nil carrying value.
Marketed products
Marketed products include approved product rights for SUBLOCADE of $16 million (2021: 17 million; 2020: $18 million) and PERSERIS of $13 million (2021: $19 million; 2020: $24 million). In 2021, a new SUBLOCADE patent was approved in the United States extending the patent exclusivity period and amortization period from 2031 to 2035. Amortization expense of $5 million (2021: $6 million; 2020: $6 million) was recognized in cost of sales.
Impairment of intangible assets
An asset’s recoverable amount is the higher of an asset’s or CGU’s fair value less costs of disposal or its value in use. In assessing value in use, its estimated future cash flows are discounted to their net present value using a pre-tax discount rate that reflects the current market assessments of the time value of money and the risks specific to the asset. No impairment was indicated when assessing the value in use of the Group’s intangible assets, therefore fair value less costs of disposal was not assessed.
In carrying out impairment reviews of products in development, several significant assumptions have to be made. These include the probability of success in obtaining regulatory approvals, discount rates, and projected net revenues (based on future rate of market growth and market demand for the products acquired). These assumptions, covering periods through the expected patent life of the products and a reasonable period of generic competition thereafter, are based on past experience and management’s
expectations of market development. If actual results should differ, or changes in expectations arise, impairment charges may be required which would have a material adverse impact on reported results and financial position. Products in development of $36 million (2021: $39 million; 2020: $10 million) are subject to potential impairment in line with the aforementioned assumptions.
Sensitivity analysis
Management performed a sensitivity analysis by applying reasonable changes to key assumptions used in the recoverable amount calculations for its assets in development, assuming all other factors are kept constant. Consistent with other products in early stages of development, it is probable that these products in development could fail to obtain regulatory approvals. The probability of success is factored into the risk-adjusted calculation of the recoverable amounts; however, failure to reach commercialization would result in a full impairment of the assets.
For the INDV-2000 asset which is considered a separate CGU, with a carrying value of $9 million (2021 and 2020: $10 million), the key inputs and assumptions include the probability of success in obtaining regulatory approvals, discount rate, and market demand for the products. The Group determined that a reduction of peak market share by approximately 7% across weighted scenarios ranging 17% to 35% or an increase in the discount rate by approximately 3.4% to 18.0% would be required for the recoverable amount to be equal to the carrying amount. Given the risks inherent in pharmaceutical R&D and considering the current stage of development, the probability of regulatory approval is less than 25%; regulatory failure could result in a full impairment. Reasonable changes in any other individual assumption will not result in a material impairment charge.
For the AEF0117 asset which is considered a separate CGU, with a carrying value of $26 million (2021: $29 million), the key inputs and assumptions include the probability of success in obtaining regulatory approvals, discount rate, and projected net revenues. The Group determined that a reduction of projected net revenue by approximately 13% annually or an increase in the discount rate by approximately 2.0% to 16.6% would be required for the recoverable amount to be equal to the carrying amount. Given the risks inherent in pharmaceutical R&D and considering the current stage of development, the probability of regulatory approval is less than 25%; regulatory failure could result in a full impairment. Reasonable changes in any other individual assumption will not result in a material impairment charge.
10. PROPERTY, PLANT AND EQUIPMENT
| | | | | | | | | | | | | | | | | | | | |
| (in millions) | | Land and buildings | | Plant and equipment | | Total |
| Cost | | | | | | |
| At January 1, 2022 | | 55 | | | 77 | | | 132 | |
| Additions | | — | | | 6 | | | 6 | |
| Disposals and asset write-offs | | (1) | | | — | | | (1) | |
| Exchange adjustment | | (3) | | | (3) | | | (6) | |
At December 31, 2022 | | $ | 51 | | | $ | 80 | | | $ | 131 | |
| Accumulated depreciation and impairment | | | | | | |
| At January 1, 2022 | | 21 | | | 53 | | | 74 | |
| Charge for the year | | 3 | | | 3 | | | 6 | |
| Disposals and asset write-offs | | (1) | | | — | | | (1) | |
| Exchange adjustment | | — | | | (2) | | | (2) | |
At December 31, 2022 | | $ | 23 | | | $ | 54 | | | $ | 77 | |
Net book amount at December 31, 2022 | | $ | 28 | | | $ | 26 | | | $ | 54 | |
| | | | | | | | | | | | | | | | | | | | |
| (in millions) | | Land and buildings | | Plant and equipment | | Total |
| Cost | | | | | | |
| At January 1, 2021 | | 55 | | | 73 | | | 128 | |
| Additions | | — | | | 4 | | | 4 | |
| Exchange adjustment | | — | | | — | | | — | |
At December 31, 2021 | | $ | 55 | | | $ | 77 | | | $ | 132 | |
| Accumulated depreciation and impairment | | | | | | |
| At January 1, 2021 | | 18 | | | 50 | | | 68 | |
| Charge for the year | | 3 | | | 3 | | | 6 | |
| Exchange adjustment | | — | | | — | | | — | |
At December 31, 2021 | | $ | 21 | | | $ | 53 | | | $ | 74 | |
Net book amount at December 31, 2021 | | $ | 34 | | | $ | 24 | | | $ | 58 | |
| | | | | | | | | | | | | | | | | | | | |
| (in millions) | | Land and buildings | | Plant and equipment | | Total |
| Cost | | | | | | |
| At January 1, 2020 | | 54 | | | 66 | | | 120 | |
| Additions | | — | | | 6 | | | 6 | |
| Exchange adjustment | | 1 | | | 1 | | | 2 | |
| At December 31, 2020 | | $ | 55 | | | $ | 73 | | | $ | 128 | |
| Accumulated depreciation and impairment | | | | | | |
| At January 1, 2020 | | 14 | | | 46 | | | 60 | |
| Charge for the year | | 4 | | | 3 | | | 7 | |
| Exchange adjustment | | — | | | 1 | | | 1 | |
At December 31, 2020 | | $ | 18 | | | $ | 50 | | | $ | 68 | |
Net book amount at December 31, 2020 | | $ | 37 | | | $ | 23 | | | $ | 60 | |
Depreciation expense of $6 million (2021: $6 million; 2020: $7 million) is included in SG&A. Additions in the year relate primarily to PERSERIS syringe-filler equipment and other manufacturing equipment. Additions of $1 million (2021: $nil, 2020: $nil) had not yet been paid as of December 31, 2022.
11. LEASES AND RIGHT-OF-USE ASSETS
Leases and right-of-use assets
Potential future cash outflows of $21 million (2021 and 2020: $21 million) have not been included in the lease liability because it is not reasonably certain that the leases will be extended (or not terminated).
The following tables summarize movements of the right-of-use assets in 2022, 2021, and 2020:
| | | | | | | | | | | | | | | | | | | | |
| (in millions) | | Land and buildings | | Plant and equipment | | Total |
| Net book value | | | | | | |
At January 1, 2022 | | 12 | | | 25 | | | 37 | |
| Additions | | — | | | 5 | | | 5 | |
| Depreciation | | (2) | | | (6) | | | (8) | |
| Exchange adjustments | | (1) | | | (2) | | | (3) | |
At December 31, 2022 | | $ | 9 | | | $ | 22 | | | $ | 31 | |
| | | | | | | | | | | | | | | | | | | | |
| (in millions) | | Land and buildings | | Plant and equipment | | Total |
| Net book value | | | | | | |
At January 1, 2021 | | 14 | | | 29 | | | 43 | |
| Additions | | — | | | 2 | | | 2 | |
| Depreciation | | (2) | | | (5) | | | (7) | |
| Exchange adjustments | | — | | | (1) | | | (1) | |
At December 31, 2021 | | $ | 12 | | | $ | 25 | | | $ | 37 | |
| | | | | | | | | | | | | | | | | | | | |
| (in millions) | | Land and buildings | | Plant and equipment | | Total |
| Net book value | | | | | | |
At January 1, 2020 | | 17 | | | 30 | | | 47 | |
| Additions | | 2 | | | 3 | | | 5 | |
| Depreciation | | (3) | | | (5) | | | (8) | |
| Impairment | | (2) | | | — | | | (2) | |
| Exchange adjustments | | — | | | 1 | | | 1 | |
At December 31, 2020 | | $ | 14 | | | $ | 29 | | | $ | 43 | |
Depreciation expense of $5 million (2021: $4 million; 2020: $5 million) is included in SG&A and $3 million (2021 and 2020: $3 million) in cost of sales within the income statement. Additions in the year relate primarily to vehicle leases and office space.
Lease liabilities at December 31, 2022 by maturity were as follows:
| | | | | | | | | | | | | | | | | | | | |
| (in millions) | | 2022 | | 2021 | | 2020 |
| Within one year | | 10 | | | 10 | | | 10 | |
| Later than one and less than five years | | 27 | | | 29 | | | 31 | |
| More than five years | | 5 | | | 12 | | | 19 | |
| Gross lease liabilities | | 42 | | | 51 | | | 60 | |
| Less: future interest on lease liabilities | | (5) | | | (7) | | | (9) | |
Net lease liabilities | | $ | 37 | | | $ | 44 | | | $ | 51 | |
The net lease liabilities balance of $37 million (2021: $44 million; 2020: $51 million) is shown within current liabilities of $8 million (2021 and 2020: $8 million) and non-current liabilities of $29 million (2021: $36 million; 2020: $43 million).
Lease payments during the year were comprised of the following:
| | | | | | | | | | | | | | | | | | | | |
| (in millions) | | 2022 | | 2021 | | 2020 |
| Interest paid on lease liabilities | | 2 | | | 2 | | | 3 | |
| Payments of lease liabilities | | 9 | | | 8 | | | 7 | |
Total lease payments | | $ | 11 | | | $ | 10 | | | $ | 10 | |
12. INVESTMENTS
| | | | | | | | | | | | | | | | | | | | |
Current and non-current investments (in millions) | | Dec 31 2022 | | Dec 31 2021 | | Dec 31
2020 |
| Equity securities at FVPL | | 10 | | | — | | | — | |
| Debt securities held at amortized cost | | 109 | | | — | | | — | |
Total investments, current | | $ | 119 | | | $ | — | | | $ | — | |
| Debt securities held at amortized cost | | 98 | | | — | | | — | |
Total investments, non-current | | $ | 98 | | | $ | — | | | $ | — | |
Total | | $ | 217 | | | $ | — | | | $ | — | |
Equity securities at FVPL
In February 2022, the Group purchased ordinary shares of Aelis Farma. The shares were subject to a holding period of 365 days from the acquisition. The investment is classified as a current investment at December 31, 2022 as the holding period expires in less than 12 months. Fair value gain/(loss) recorded in 2022 was nominal and included within net other operating income.
Debt securities held at amortized cost
In 2022, the Group initiated purchases of investment-grade corporate debt and US Treasury securities. Also in 2022, the Group executed an agreement to fund insurance coverage. As part of this arrangement, the Company transferred $26 million to a separate cell of an insurance company. The Group controls the separate cell, an unincorporated entity, and receives benefit from its investment returns. As a result, the separate cell is deemed a structured entity and is consolidated by the Group. The $26 million was invested in debt securities which are classified as non-current as access to the funds is restricted for 24-months after the term of the insurance. All other debt securities held at amortized cost are also classified as non-current investments, except for those with maturities less than 12 months from the end of the reporting period, which are classified as current investments.
As of December 31, 2022, expected credit losses for the Group’s investments held at amortized cost are deemed to be immaterial.
Fair value hierarchy
Fair value is the price that would be received to sell an asset or transfer a liability in an orderly transaction between market participants at the measurement date. The different levels have been defined as follows:
• Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities
• Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly
• Level 3: Unobservable inputs for the asset or liability
The Group’s only financial instruments which are measured at fair value are equity securities at FVPL. The fair value of equity securities at FVPL is based on quoted market prices on the measurement date.
The following table categorizes the Group’s financial assets measured at fair value by valuation methodology used in determining their fair value at December 31, 2022.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Financial assets at fair value (in millions) | | Level 1 | | Level 2 | | Level 3 | | Total |
| Equity securities at FVPL | | 10 | | | — | | | — | | | 10 | |
13. INVENTORIES
Inventory, net is comprised of:
| | | | | | | | | | | | | | | | | | | | |
| (in millions) | | 2022 | | 2021 | | 2020 |
| Raw materials, stores and consumables | | 27 | | | 34 | | | 38 | |
| Work in progress | | 42 | | | 28 | | | 19 | |
| Finished goods and goods held for resale | | 45 | | | 33 | | | 36 | |
Total inventories, net | | $ | 114 | | | $ | 95 | | | $ | 93 | |
The cost of inventories recognized as an expense and included as cost of sales amounted to $159 million (2021: $127 million; 2020: $97 million). Cost of sales included inventory write-offs and losses of $7 million (2021: $12 million; 2020: $6 million). The inventory provision (reflected in the carrying amounts above) at December 31, 2022, was $8 million (2021: $13 million; 2020: $12 million).
14. TRADE RECEIVABLES AND OTHER ASSETS
The Group is not aware of any deterioration in the credit quality of its customers and considers the net receivables to be fully recoverable.
Trade receivables
| | | | | | | | | | | | | | | | | | | | |
| (in millions) | | 2022 | | 2021 | | 2020 |
| Trade receivables | | 222 | | | 205 | | | 181 | |
| Less: provision for ECL | | (2) | | | (3) | | | (2) | |
Trade receivables, net | | $ | 220 | | | $ | 202 | | | $ | 179 | |
The aging of past due trade receivables as of December 31 is as follows:
| | | | | | | | | | | | | | | | | | | | |
| (in millions) | | 2022 | | 2021 | | 2020 |
| Up to three months past due | | 8 | | | 6 | | | 9 | |
| Three to six months past due | | — | | | 1 | | | 3 | |
| Over six months past due | | 4 | | | 6 | | | 2 | |
| | 12 | | | 13 | | | 14 | |
| Not due and not impaired | | 210 | | | 192 | | | 167 | |
| Provision for impairment of receivables | | (2) | | | (3) | | | (2) | |
Trade receivables – net | | $ | 220 | | | $ | 202 | | | $ | 179 | |
As at December 31, 2022, a provision of $2 million (2021:$3 million; 2020: $2 million) was recorded against the trade receivables balance based on management’s assessment of ECL. The assessment factors are discussed in Note 2. The maximum exposure to credit risk at the year end is the carrying value of each class of receivable. The Group does not hold any collateral as security. The Group’s trade receivables are denominated in the following currencies:
| | | | | | | | | | | | | | | | | | | | |
| (in millions) | | 2022 | | 2021 | | 2020 |
| Sterling | | 2 | | | 2 | | | 4 | |
| Euro | | 13 | | | 16 | | | 18 | |
| U.S. dollar | | 192 | | | 172 | | | 146 | |
| Other currencies | | 15 | | | 15 | | | 13 | |
Total trade receivables | | $ | 222 | | | $ | 205 | | | $ | 181 | |
Current and non-current other assets:
| | | | | | | | | | | | | | | | | | | | |
| (in millions) | | 2022 | | 2021 | | 2020 |
| Current prepaid expenses | | 14 | | | 18 | | | 17 | |
| Other current assets | | 13 | | | 14 | | | 33 | |
Total other current assets | | $ | 27 | | | $ | 32 | | | $ | 50 | |
| Non-current prepaid expenses | | 20 | | | 22 | | | 22 | |
| Other non-current assets | | 18 | | | 84 | | | 82 | |
Total other non-current assets | | $ | 38 | | | $ | 106 | | | $ | 104 | |
Total other assets | | $ | 65 | | | $ | 138 | | | $ | 154 | |
Other current and non-current assets relate primarily to surety bond funding (see Note 21). At December 31, 2022, remaining collateral provided to surety bond holders, inclusive of accrued interest, was $18 million (2021: $82 million; 2020: $108 million). During 2022 and 2021, the surety bond holders returned $64 million and $26 million, respectively, as a result of the settlement agreement with Dr. Reddy’s Laboratories S.A. and Dr. Reddy’s Laboratories, Inc. (together, “DRL”) and acceptance by the Group’s surety providers for a reduction in collateral held against to 50% of the total remaining bond amounts. The change in other non-current assets was primarily the result of the return of collateral. Long-term prepaid expenses relate primarily to payments for contract manufacturing capacity.
15. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
The Group’s financial assets and liabilities include investments, trade receivables, other assets, cash and cash equivalents, borrowings and trade and other payables as set out in Notes 12, 14, 16, 17 and 22, respectively. The Group measures financial assets and liabilities at amortized cost, with the exception of investments in equity securities which are measured at fair value through profit or loss. Financial assets and liabilities are offset, and the net amount reported in the consolidated balance sheet when there is a legally enforceable right to offset and net settlement is intended. The carrying value (less impairment provision, where applicable) of current borrowings, cash and cash equivalents, trade receivables, other assets, trade accruals and trade payables is assumed to approximate fair value due to their short-term nature. At December 31, 2022, the carrying value of investments held at amortized cost was above the fair value by $3 million, due to rising interest rates. The fair value of investments held at amortized cost was calculated based on quoted market prices which would be classified as Level 1 in the fair value hierarchy in Note 12.The non-current borrowing, which is presented at amortized cost, was trading at approximately 98% (2021: 99%; 2020: 98%) of par value. Financial risk management of the Group is mainly exercised and monitored at Group level. The Group’s financing and financial risk management activities are centralized to achieve benefits of scale and control with the goal of maximizing liquidity and mitigating operational and financial risks. Financial exposures of the Group are managed in a manner consistent with underlying business risks. Only those risks and flows generated by the underlying commercial operations are managed; speculative transactions are not undertaken.
Foreign exchange risk management
The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures. Foreign exchange risk arises from future commercial transactions, recognized assets and liabilities, and net investments in foreign operations. The Group’s policy is to align the foreign currency assets and liabilities within its major subsidiaries in order to provide some protection against the remeasurement exposure on profits.
Interest rate risk management
The Group has interest-bearing assets and liabilities. The Group monitors interest income and expense rate exposure on a regular basis with an objective of minimizing net interest cost. The main interest rate risk arises from the Group’s borrowings, which are discussed in Note 17, due to the floating interest rate. This exposure is partially offset by the interest income generated on the Group’s investments in debt securities with varying rates and maturities and cash and cash equivalents which are based on variable market interest rates. The majority of the Group’s investments in debt securities are issued at fixed interest rates and changes in floating rates would not have a significant impact on interest rate risk. Liquidity risk management
Liquidity risk is the risk that the Group is not able to settle or meet its obligations on time or at a reasonable price. The Group’s policy is to ensure sufficient funding and facilities are in place to meet foreseeable liquidity requirements. The Group manages and monitors liquidity risk through regular reporting of current cash and borrowing balances and periodic review of short-, medium- and long-term cash forecasts, while considering the maturity of its borrowing facility. At December 31, 2022, Indivior had $3 million (2021: $3 million; 2020: $4 million) of borrowings repayable within one year and $774 million (2021: $1,102 million; 2020: $858 million) of cash and cash equivalents.
Credit risk management
The Group’s exposure to credit risk arises from cash and cash equivalents, deposits with banks and financial institutions, investments in debt securities, trade receivables and other assets. Financial institution counterparties are subject to approval under the Group’s counterparty risk policy and such
approval is limited to financial institutions with a BBB rating or above. The investments in debt securities are managed by an external third-party fund manager with instructions to maintain a portfolio rating of A or higher and an allocation to BBB at 25% or less of the total portfolio. The Group applies the credit ratings assigned by Standard and Poor’s and Moody’s when assessing expected credit losses and monitors these ratings for indications of credit deterioration. All the Group’s corporate debt securities held at amortized cost are considered to be of low credit risk based on investment-grade credit ratings from Standard and Poor’s or Moody’s (BBB-/Baa3 or higher). The Group's U.S. Treasury securities have minimal default risk as they are guaranteed by the U.S. government.
Concentration of credit risk with respect to trade receivables in the U.S. is limited as the balances consist of amounts due from customers, primarily major wholesalers and distributors, for whom there is no significant history of default. Outside the U.S., no single customer accounts for a significant share of Group’s trade receivables balance. In the U.S., in line with other pharmaceutical companies, the Group sells its products through a small number of wholesalers in addition to hospitals, pharmacies, physicians and other groups. Sales to the three largest wholesalers amounted to approximately 55% of the Group sales in 2022 (2021 and 2020: 57%). At December 31, 2022, the Group had trade receivables due from these three wholesalers totaling $131 million (2021: $142 million; 2020: $142 million). The Group is exposed to a concentration of credit risk in respect of these wholesalers such that, if one or more of them encounters financial difficulty, it could materially and adversely affect the Group’s financial results. The Group’s credit risk monitoring activities relating to these wholesalers include a review of their financial information and Standard & Poor’s credit ratings, and establishment and periodic review of credit limits. However, the Group believes there is no further credit risk provision required in relation to these customers (see Note 14). Capital risk management
The Group considers capital to be net cash plus total reported equity. Net cash is calculated as cash and cash equivalents less total borrowings. Total borrowings reflect the outstanding principal amount of the term loan drawn before debt issuance costs of $6 million (2021: $7 million, 2020: $1 million) and do not include lease liabilities of $37 million (2021: $44 million; 2020: $51 million). Refer to Note 17 for further discussion on borrowings. Total equity includes share capital, reserves and retained earnings as shown in the consolidated balance sheet.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| (in millions) | | Note | | 2022 | | 2021 | | 2020 |
| Net cash | | | | 528 | | | 853 | | | 623 | |
| Total equity | | | | 51 | | | 203 | | | 82 | |
| | | | $ | 579 | | | $ | 1,056 | | | $ | 705 | |
The objectives for managing capital are to safeguard the Group’s ability to continue as a going concern, in order to provide returns for shareholders and benefits for other stakeholders and to maintain an efficient capital structure to optimize the cost of capital.
The Group monitors net cash, which at year end amounted to net cash of $528 million (2021: $853 million; 2020: $623 million), to maintain an appropriate level of financial flexibility.
16. CASH AND CASH EQUIVALENTS
| | | | | | | | | | | | | | | | | | | | |
| (in millions) | | 2022 | | 2021 | | 2020 |
| Cash and cash equivalents | | $ | 774 | | | $ | 1,102 | | | $ | 858 | |
There were no bank overdrafts at December 31, 2022, 2021, or 2020.
17. FINANCIAL LIABILITIES - BORROWING
In 2021, the Group completed a refinancing of its term loan, repaying in full the existing $235 million term loan and replacing it with a new term loan with a principal amount of $250 million. As a result of the debt refinancing, the Group incurred a collective charge of $2 million related to writing off unamortized deferred financing costs due to the extinguishment and settlement of previous term loan ($1 million) and advisory fees incurred in conjunction with the refinancing ($1 million). The Group capitalized $8 million of deferred financing and original issue discount costs related to the new term loan, which were netted against the total amount borrowed and are amortized over the maturity period using the effective interest method.
In 2022, the Group completed an amendment to its existing term loan which provides the Group greater flexibility in the use of cash being generated and changes the variable interest rate base from USD LIBOR to USD SOFR plus a credit spread adjustment of 26 basis points. As part of the modification, the Group incurred $1 million of issuance costs, banking fees and legal fees which are deemed to be incremental and directly attributable to the amendment. Accordingly, the Group capitalized these costs, which were netted against the total amount borrowed and are amortized over the maturity period using the effective interest method.
| | | | | | | | | | | | | | | | | | | | |
Term loan (in millions) | | 2022 | | 2021 | | 2020 |
| Term loan – current | | (3) | | | (3) | | | (4) | |
| Term loan – non-current | | (237) | | | (239) | | | (230) | |
Total term loan | | $ | (240) | | | $ | (242) | | | $ | (234) | |
The terms of the loan in effect at December 31, 2022 are as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Currency | | Nominal interest margin | | Maturity | | Required annual payments | | Minimum liquidity |
| Term loan facility | USD | | SOFR + 0.26% + 5.25% | | 2026 | | 1% | | Larger of $100m or 50% of Loan Balance |
The term loan amounting to $246 million (2021: $249 million; 2020: $235 million) is secured against the assets of certain subsidiaries of the Group in the form of guarantees issued by respective subsidiaries.
Also included within the terms of the loan were:
•Nominal interest margin is calculated as USD SOFR plus 0.26%, subject to a floor of 0.75%, plus a credit spread adjustment of 5.25%; and
•There are no revolving credit commitments.
Maturity of gross borrowings (including expected interest using the rate at the balance sheet date)
| | | | | | | | | | | | | | | | | | | | |
| (in millions) | | 2022 | | 2021 | | 2020 |
| Within one year or on demand | | 25 | | | 18 | | | 17 | |
| Bank loans payable due: | | | | | | |
| Later than one and less than five years | | 299 | | | 298 | | | 243 | |
| More than five years | | — | | | — | | | — | |
Gross borrowings (including interest) | | $ | 324 | | | $ | 316 | | | $ | 260 | |
Analysis of changes in liabilities from financing activities | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (in millions) | | At January 1, 2022 | | Cash flows | | Profit and loss | | Additions | | Reclassifications | | Exchange adj. | | At December 31, 2022 |
| Current borrowings | | (3) | | | 3 | | | — | | | — | | | (3) | | | — | | | (3) | |
| Non-current borrowings | | (239) | | | — | | | (2) | | | 1 | | | 3 | | | — | | | (237) | |
| Lease liabilities | | (44) | | | 9 | | | — | | | (5) | | | — | | | 3 | | | (37) | |
| Share repurchase | | — | | | 90 | | | — | | | (99) | | | — | | | — | | | (9) | |
Total | | $ | (286) | | | $ | 102 | | | $ | (2) | | | $ | (103) | | | $ | — | | | $ | 3 | | | $ | (286) | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (in millions) | | At January 1, 2021 | | Cash flows | | Profit and loss | | Additions | | Reclassifications | | Exchange adj. | | At December 31, 2021 |
| Current borrowings | | (4) | | | 3 | | | — | | | — | | | (2) | | | — | | | (3) | |
| Non-current borrowings | | (230) | | | 233 | | | (2) | | | (242) | | | 2 | | | — | | | (239) | |
| Lease liabilities | | (51) | | | 8 | | | — | | | (2) | | | — | | | 1 | | | (44) | |
| Share repurchase | | — | | | 101 | | | — | | | (101) | | | — | | | — | | | — | |
Total | | $ | (285) | | | $ | 345 | | | $ | (2) | | | $ | (345) | | | $ | — | | | $ | 1 | | | $ | (286) | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (in millions) | | At January 1, 2020 | | Cash flows | | Profit and loss | | Additions | | Reclassifications | | Exchange adj. | | At December 31, 2020 |
| Current borrowings | | (4) | | | 4 | | | — | | | — | | | (4) | | | — | | | (4) | |
| Non-current borrowings | | (233) | | | (1) | | | — | | | — | | | 4 | | | — | | | (230) | |
| Lease liabilities | | (56) | | | 7 | | | 4 | | | (5) | | | — | | | (1) | | | (51) | |
Total | | $ | (293) | | | $ | 10 | | | $ | 4 | | | $ | (5) | | | $ | — | | | $ | (1) | | | $ | (285) | |
18. COMMITMENTS
The Group has various purchase commitments for services and materials in the ordinary course of business. These commitments are generally entered into at current market prices and reflect normal business operations. As of December 31, 2022, the Group received invoices totaling $10 million for services to be provided in 2023.
In November 2022, the Company and Opiant Pharmaceuticals, Inc. (Opiant) announced that the companies have entered into a definitive agreement under which Indivior Inc. will acquire Opiant for an upfront consideration of $20.00 per share, in cash (approximately $146 million in aggregate), plus up to $8.00 per share in contingent value rights (CVRs) that may become payable in the event that certain net revenue milestones are achieved during the relevant seven-year period by OPNT003 after its approval and launch. See Note 27 for additional details of the Opiant acquisition which was effected after the reporting date. As of December 31, 2022, the Group had no material PP&E or intangible asset commitments for future periods.
19. PROVISIONS AND OTHER LIABILITIES
The Group is involved in legal and intellectual property disputes as described in Note 21, Legal proceedings. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Provisions (in millions) | | Multidistrict antitrust class and state claims | | DOJ-related matters | | IP-related matters | | Restructuring costs | | Other provisions | | Total provisions |
At January 1, 2020 | | — | | | (438) | | | (45) | | | (2) | | | (3) | | | $ | (488) | |
| Charged to the income statement | | — | | | (178) | | | — | | | (9) | | | (1) | | | (188) | |
| Transfer to other liabilities | | — | | | 586 | | | — | | | — | | | — | | | 586 | |
| Interest and discounting | | — | | | (2) | | | (2) | | | — | | | — | | | (4) | |
| Utilized during the year/payments | | — | | | — | | | — | | | 5 | | | — | | | 5 | |
At December 31, 2020 | | $ | — | | | $ | (32) | | | $ | (47) | | | $ | (6) | | | $ | (4) | | | $ | (89) | |
| Released/(charged) to income statement | | — | | | 18 | | | (24) | | | 1 | | | 1 | | | (4) | |
| Interest and discounting | | — | | | — | | | (2) | | | — | | | — | | | (2) | |
| Utilized during the year/payments | | — | | | 9 | | | — | | | 5 | | | — | | | 14 | |
At December 31, 2021 | | $ | — | | | $ | (5) | | | $ | (73) | | | $ | — | | | $ | (3) | | | $ | (81) | |
| (Charged)/released to income statement | | (290) | | | — | | | — | | | — | | | (7) | | | (297) | |
| Transfer to other liabilities | | — | | | — | | | 70 | | | — | | | — | | | 70 | |
At December 31, 2022 | | $ | (290) | | | $ | (5) | | | $ | (3) | | | $ | — | | | $ | (10) | | | $ | (308) | |
| | | | | | | | | | | | |
| Provisions | | | | | | | | | | | | |
| Current | | (290) | | | (5) | | | — | | | — | | | (8) | | | (303) | |
| Non-current | | — | | | — | | | (3) | | | — | | | (2) | | | (5) | |
At December 31, 2022 | | $ | (290) | | | $ | (5) | | | $ | (3) | | | $ | — | | | $ | (10) | | | $ | (308) | |
| | | | | | | | | | | | |
| Current | | — | | | (5) | | | — | | | — | | | — | | | (5) | |
| Non-current | | — | | | — | | | (73) | | | — | | | (3) | | | (76) | |
At December 31, 2021 | | $ | — | | | $ | (5) | | | $ | (73) | | | $ | — | | | $ | (3) | | | $ | (81) | |
| | | | | | | | | | | | |
| Current | | — | | | (32) | | | — | | | (6) | | | — | | | (38) | |
| Non-current | | — | | | — | | | (47) | | | — | | | (4) | | | (51) | |
At December 31, 2020 | | $ | — | | | $ | (32) | | | $ | (47) | | | $ | (6) | | | $ | (4) | | | $ | (89) | |
Multidistrict antitrust class and state claims
In 2022, the Group recognized a provision of $290 million related to certain multidistrict antitrust class and state claims. The provision is management’s estimate at this time of a potential aggregate settlement. However, management cannot predict with any certainty whether Indivior Inc. will reach a settlement with any of the Plaintiffs, and the final aggregate cost of these matters, whether resolved by settlement or trial, may be materially different. See Note 21, Antitrust litigation and consumer protection for further details. The effect of discounting is not material. DOJ-related matters
The Group carries a provision of $5 million (2021: $5 million; 2020: $32 million) pertaining to all outstanding False Claims Act Allegations as discussed in Note 21. These matters are expected to be settled within the next 12 months and are not expected to materially change.
IP-related matters: ANDA litigation
The Group carries provisions totaling $3 million (2021: $73 million; 2020: $47 million) for intellectual property-related matters outlined in Note 21. In 2021, upon conclusion of expert discovery, the Group increased the provision for intellectual property-related matters to $73 million, resulting in a charge of $24 million. In 2022, as a result of settlement with DRL, the provision has been substantially transferred to other liabilities. The Group does not expect the remaining matters to be settled within a year and therefore the provision is classified as non-current. Restructuring costs
The restructuring provision related to cost-saving initiatives announced and implemented in 2020 which consisted of redundancy and related costs has been fully utilized as of December 31, 2021.
Other provisions
Other provisions totaling $10 million (2021: $3 million; 2020: $4 million) primarily represent general legal matters expected to be settled within the next 12 months and retirement benefit costs which are not expected to be settled within one year.
Other liabilities
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Other liabilities (in millions) | | DOJ Resolution | | IP-related matters | | RB indemnity settlement | | Share repurchase | | Other | | Total other liabilities |
At January 1, 2020 | | — | | | — | | | — | | | — | | | — | | | — | |
| Charged to the income statement | | — | | | — | | | (50) | | | — | | | — | | | (50) | |
| Transfer from provisions | | (586) | | | — | | | — | | | — | | | — | | | (586) | |
| Interest and discounting | | (3) | | | — | | | — | | | — | | | — | | | (3) | |
| Utilized during the year/payments | | 103 | | | — | | | — | | | — | | | — | | | 103 | |
At December 31, 2020 | | $ | (486) | | | $ | — | | | $ | (50) | | | $ | — | | | $ | — | | | $ | (536) | |
| Contract liabilities | | — | | | — | | | — | | | — | | | (3) | | | (3) | |
| Interest and discounting | | (6) | | | — | | | — | | | — | | | — | | | (6) | |
| Utilized during the year/payments | | — | | | — | | | 10 | | | — | | | — | | | 10 | |
At December 31, 2021 | | $ | (492) | | | $ | — | | | $ | (40) | | | $ | — | | | $ | (3) | | | $ | (535) | |
| Transfer from provisions | | — | | | (70) | | | — | | | — | | | — | | | (70) | |
| Released to income statement | | — | | | — | | | 2 | | | — | | | — | | | 2 | |
| Share repurchase liability | | — | | | — | | | — | | | (9) | | | — | | | (9) | |
| Interest and discounting | | (6) | | | (1) | | | — | | | — | | | — | | | (7) | |
| Utilized during the year/payments | | 54 | | | 50 | | | 8 | | | — | | | — | | | 112 | |
At December 31, 2022 | | $ | (444) | | | $ | (21) | | | $ | (30) | | | $ | (9) | | | $ | (3) | | | $ | (507) | |
| | | | | | | | | | | | |
| Other liabilities | | | | | | | | | | | | |
| Current | | (52) | | | (10) | | | (8) | | | (9) | | | — | | | (79) | |
| Non-current | | (392) | | | (11) | | | (22) | | | — | | | (3) | | | (428) | |
At December 31, 2022 | | $ | (444) | | | $ | (21) | | | $ | (30) | | | $ | (9) | | | $ | (3) | | | $ | (507) | |
| | | | | | | | | | | | |
| Current | | (53) | | | — | | | (8) | | | — | | | — | | | (61) | |
| Non-current | | (439) | | | — | | | (32) | | | — | | | (3) | | | (474) | |
At December 31, 2021 | | $ | (492) | | | $ | — | | | $ | (40) | | | $ | — | | | $ | (3) | | | $ | (535) | |
| | | | | | | | | | | | |
| Current | | — | | | — | | | (10) | | | — | | | — | | | (10) | |
| Non-current | | (486) | | | — | | | (40) | | | — | | | — | | | (526) | |
At December 31, 2020 | | $ | (486) | | | $ | — | | | $ | (50) | | | $ | — | | | $ | — | | | $ | (536) | |
DOJ resolution
In July 2020, the Group settled criminal and civil liability with the DOJ, the U.S. Federal Trade Commission (FTC), and US state attorneys general in connection with a multi-count indictment brought in April 2019 by a grand jury in the Western District of Virginia, a civil lawsuit joined by the DOJ in 2018, and an FTC investigation. In November 2020, the first payment of $103 million (including interest) was made. In January 2022, an additional payment of $54 million (including interest) was made pursuant to the resolution agreement. Subsequently, five annual installments of $50 million plus interest will be due every January 15 from 2023 to 2027 with the final installment of $200 million due in December 2027. Interest accrues at 1.25% on certain portions of the resolution which will be paid together with the annual
installment payments. For non-interest-bearing portions, the liability has been recorded at the net present value based on timing of the estimated payments and using a discount rate equal to the interest rate on the interest-bearing portions. In 2022, the Group recorded interest expense totaling $6 million (2021: $6 million; 2020: $3 million) related to this resolution. As of December 31, 2022, the Group carries other liabilities of $444 million (2021: $492 million; 2020: $486 million) related to the settlement agreement with the DOJ.
Under the terms of the resolution agreement with the DOJ, the Group has agreed to compliance terms regarding its sales and marketing practices. Compliance with these terms is subject to annual Board and CEO certifications submitted to the U.S. Attorney’s Office. As part of the resolution with the FTC and as detailed in the text of the stipulated order, for a 10-year period Indivior Inc. is required to make specified disclosures to the FTC and is prohibited from certain conduct.
In addition to the resolution agreement, the Group entered into a five-year Corporate Integrity Agreement with the HHS Office of the Inspector General (HHS-OIG), pursuant to which the Group committed to promote compliance with laws and regulations and committed to the ongoing evolution of an effective compliance program, including written standards, training, reporting, and monitoring procedures. The Group is subject to reporting and monitoring requirements, including annual reports and compliance certifications from key management and the Board’s Nominating & Governance Committee, which is submitted to HHS-OIG. In addition, the Group is subject to monitoring by an Independent Review Organization, which submits audit findings to HHS-OIG, and review by a Board Compliance Expert, who prepared a compliance assessment report in the first reporting period and will prepare a compliance assessment report in the third reporting period. To date, the Group reasonably believes it has met all of the requirements specified in these three agreements.
IP-related matters
The Group has other liabilities for intellectual property-related matters totaling $21 million (2021: $73 million previously classified as a provision; 2020: $47 million), which relates to a settlement of intellectual property litigation with DRL. In June 2022, the Group, entered into a settlement agreement with DRL resolving intellectual property litigation. Under the settlement agreement, the Group made a settlement payment to DRL in June 2022 with final payments due in 2023 and 2024. This liability has been recorded at the net present value, using a market interest rate at the time of the settlement determined to be 4.5%, considering the timing of payments and other factors. In 2022, the Group recorded $1 million of finance expense (2021: $2 million; 2020: $2 million) for time value of money on the liability.
RB resolution
In January 2021, the Group reached a settlement with RB to resolve claims which RB issued in the Commercial Court in London in November 2020, seeking indemnity under the 2014 Demerger Agreement between amongst others, RB and the Group (Demerger Agreement). Pursuant to the settlement, RB withdrew the US $1.4 billion claim and released the Group from any claim for indemnity under the Demerger Agreement relating to the DOJ and FTC settlements which RB entered into in July 2019, as well as other claims for indemnity arising from those matters. The Group agreed to pay RB a total of $50 million and has agreed to release RB from any claims to seek damages relating to its settlement with the DOJ and the FTC. The Group made an initial payment of $10 million in February 2021, followed by an installment payment of $8 million in January 2022. Subsequently, annual installment payments of $8 million will be due every January from 2023 to 2026. The Group carries a liability totaling $30 million (2021: $40 million) related to this settlement. This liability has been recorded at the net present value, using a market interest rate at the time of settlement determined to be 3.75%, considering the timing of payment and other factors.
Share repurchase
On May 3, 2022, the Group commenced a share repurchase program of up to $100 million. As of December 31, 2022, the Group recorded a liability for $9 million, which represents the amount to be spent
under the program up to February 16, 2023, the period closed for modification or termination of the program. This liability has been classified as current. Refer to Note 23 for further discussion. Other
Other represents deferred revenue related to a supply agreement which is non-current as of December 31, 2022.
20. CONTINGENT LIABILITIES
The Group has assessed certain legal and other matters to be not probable based upon current facts and circumstances, including any potential impact the DOJ resolution could have on these matters. These represent contingent liabilities. Where liabilities related to these matters are determined to be possible, they represent contingent liabilities. Except for those matters discussed in Note 21 under “Antitrust class and state claims”, “False Claims Act allegations”, and “Intellectual property-related matters”, for which liabilities or provisions have been recognized, Note 21 sets out the details for legal and other disputes for which the Group has assessed as contingent liabilities. Where the Group believes that it is possible to reasonably estimate a range for the contingent liability this has been disclosed. 21. LEGAL PROCEEDINGS
There are certain ongoing legal proceedings or threats of legal proceedings in which the Group is a party, but in which the Group believes the possibility of an adverse impact is remote and they are not discussed in this Note 21. Antitrust litigation and consumer protection
Multidistrict antitrust class and state claims
Civil antitrust claims have been filed by (a) a class of direct purchasers, (b) a class of end payors, and (c) a group of states, now numbering 41, and the District of Columbia (collectively, the "Plaintiffs"). The Plaintiffs generally allege, among other things, that Reckitt Benckiser Pharmaceuticals, Inc. (now known as Indivior Inc.) violated US federal and/or state antitrust and consumer protection laws in attempting to delay generic entry of alternatives to SUBOXONE Tablets. Plaintiffs further allege that Indivior Inc. unlawfully acted to lower the market share of these products. These antitrust cases are pending in multidistrict litigation (the “Antitrust MDL”) in federal court in the Eastern District of Pennsylvania. The court denied Indivior Inc.'s motion for summary judgment by order dated August 22, 2022. Trial is currently scheduled for September 18, 2023.
In late January 2023, Indivior Inc. participated in a mediation session related to the Antitrust MDL with the Plaintiffs, as well as plaintiffs in the Carefirst case discussed below under Other Antitrust and Consumer Protection Claims. The Plaintiffs and Indivior Inc. submitted initial monetary demands and offers prior to the mediation, and no subsequent monetary demands or offers have since been made. Additional mediation sessions may take place in the future.
The Group believes Indivior Inc. has meritorious defenses and will continue to vigorously defend itself in this matter. The Group has evaluated the current status of mediation, the strengths and weaknesses of the Plaintiffs’ liability and damages claims, the Group’s defenses, the inherent uncertainty of trial, the remaining legal issues to be resolved, and the benefits of certainty to the Group in resolving these claims and savings in legal fees and costs. The Group has determined that it is in the interests of its stakeholders to explore settlement of these matters. As a result, a provision of $290 million has been recognized by the Group, although any settlement could occur at a lower or higher amount. The provision is the Group’s estimate at this time of a potential aggregate settlement in light of the above analysis. However, the Group cannot predict with any certainty whether Indivior Inc. will reach a settlement with any of the Plaintiffs, and the final aggregate cost of these matters, whether resolved by settlement or trial, may be materially different.
If Indivior Inc. is found liable in a trial to any of the Plaintiffs and was unable to reduce the claimed damages of such Plaintiffs group or groups during such trial (or in any subsequent proceeding), which the Directors believe is beyond “severe but plausible” (and therefore remote) within the going concern period, then its financial position, results and future cash flows could be materially adversely affected. If the Group continues with mediation or other settlement discussions, it makes no guarantee as to whether any settlement can be reached and if so, what amounts, if any, it may agree to pay, or what amounts the Plaintiffs will demand.
Other antitrust and consumer protection claims
In 2013, Reckitt Benckiser Pharmaceuticals, Inc. (now known as Indivior Inc.) received notice that it and other companies were defendants in a lawsuit initiated by writ in the Philadelphia County (Pennsylvania) Court of Common Pleas. See Carefirst of Maryland, Inc. et al. v. Reckitt Benckiser Inc., et al., Case. No. 2875, December Term 2013. The plaintiffs include approximately 79 entities, most of which appear to be insurance companies or other providers of health benefits plans. The Carefirst Plaintiffs have not served a complaint, but they have indicated that their claims are related to those asserted in the Antitrust MDL. The Carefirst case remains pending.
In 2020, the Group was served with lawsuits filed by several insurance companies, some of whom are proceeding both on their own claims and through the assignment of claims from affiliated companies. Cases filed by (1) Humana Inc. and (2) Centene Corporation, Wellcare Healthcare Plans, Inc., New York Quality Healthcare Corp. (d/b/a Fidelis Care), and Health Net, LLC were pending in the Eastern District of Pennsylvania. The complaints were dismissed in July 2021. The plaintiffs filed Notices of Appeal in August 2021 to the United States Court of Appeals for the Third Circuit (“Third Circuit”). The Third Circuit affirmed the district court's dismissal by opinion and order dated December 15, 2022. Humana also filed a Complaint in state court in Kentucky on August 20, 2021 with substantially the same claims as were raised in the federal court case. See Humana Inc. v. Indivior Inc., No. 21-CI-004833 (Ky. Cir. Ct.) (Jefferson Cnty). That case was stayed pending a decision by the Third Circuit, and remains stayed. Centene Corporation and the above-referenced related companies filed a complaint in the Circuit Court for the County of Roanoke, Virginia alleging similar claims on January 13, 2023 following the mandate from the Third Circuit affirming the district court's dismissal. See Centene Corp. v. Indivior Inc., No. CL23000054-00 (Va. Cir. Ct.) (Roanoke Cnty).
Cases filed by (1) Blue Cross and Blue Shield of Massachusetts, Inc., Blue Cross and Blue Shield of Massachusetts HMO Blue, Inc., (2) Health Care Service Corp., (3) Blue Cross and Blue Shield of Florida, Inc., Health Options, Inc., (4) BCBSM, Inc. (d/b/a Blue Cross and Blue Shield of Minnesota) and HMO Minnesota (d/b/a Blue Plus), (5) Molina Healthcare, Inc., and (6) Aetna Inc. are pending in the Circuit Court for the County of Roanoke, Virginia. See Health Care Services Corp. v. Indivior Inc., No. CL20-1474 (Lead Case) (Va. Cir. Ct.) (Roanoke Cnty). These plaintiffs have asserted claims under federal and state RICO statutes, state antitrust statutes, state statutes prohibiting unfair and deceptive practices, state statutes prohibiting insurance fraud, and common law fraud, negligent misrepresentation, and unjust enrichment. In June 2021, defendants’ motion to stay was denied and certain claims were dismissed without prejudice. The plaintiffs filed amended complaints, and the Group filed demurrers, seeking dismissal of some of the asserted claims. The court heard oral argument on the demurrers on September 1, 2022, and issued a letter opinion on October 14, 2022 sustaining in part and overruling in part the Group's demurrers. A jury trial on the Group's pleas in bar has been set for October 16-20, 2023. A jury trial on the merits has been set for July 15, 2024-August 8, 2024.
The Group is still in the process of evaluating the claims, believes it has meritorious defenses, and intends to defend itself. No estimate of the range of potential loss can be made at this time.
Civil opioid litigation
The Group has been named as a defendant in more than 400 civil lawsuits brought by state and local governments and public health agencies, among others, alleging that manufacturers, distributors, and
retailers of opioids engaged in a longstanding practice to market opioids as safe and effective for the treatment of long-term chronic pain to increase the market for opioids and their own market shares for opioids, as well as individuals alleging personal injury claims. Most of these cases have been consolidated and are pending in a federal multi-district litigation ("the Opioid MDL") in the US District Court for the Northern District of Ohio. See In re National Prescription Opiate Litigation, MDL No. 2804 (N.D. Ohio); see also, e.g., Winston County, Alabama v. AmerisourceBergen Drug Corp., et al., 6:22-cv-01394 (N.D. Ala.) (filed November 2022, not yet served, and not consolidated in Opioid MDL proceedings); International Brotherhood of Electrical Workers Local 728 Family Healthcare Plan v. Allergan, PLC et al., Case ID: 190303872 (C.P. Phila. Cnty) (consolidated with Lead Case No. 2017-008095 in Delaware County and stayed). Litigation against the Group in the Opioid MDL is stayed. On December 12, 2022, the court set forth procedures requiring plaintiffs to show cause why the court should not dismiss cases in which plaintiffs have not submitted a plaintiff fact sheet or timely served the relevant defendants. Separately, motions to remand have been denied or withdrawn in more than 50 cases to which the Group is a party (among numerous other defendants). Motions to remand remain pending in additional cases to which the Group is a party.
The court in the Opioid MDL held a status conference on June 22, 2022, with county and municipality plaintiffs and certain manufacturer defendants (including the Group) and distributor defendants to discuss what information the parties needed to proceed, whether the parties would entertain settlement and whether there should be any bellwether trials from this subset of plaintiffs and defendants. During the status conference and at subsequent conferences, the court expressed its view that no additional bellwether trials should be needed for these cases, provided that the parties were progressing on a settlement track. The court held a status conference on January 25, 2023 concerning cases filed by school districts, hospitals, and third-party payors, followed by an additional status conference on February 24, 2023 regarding cases filed by hospitals and third-party payors. By order dated February 28, 2023, the court indicated that it will not select hospital cases for bellwether trials at this time, and set forth a process for selecting six bellwether third-party payor trials.
Separately, Indivior Inc. was named as a defendant in five individual complaints filed in West Virginia state court that have not been transferred to the MDL, and instead have been transferred to West Virginia's Mass Litigation Panel. See In re Opioid Litigation, No. 22-C-9000 NAS (W.V. Kanawha Cnty. Cir. Ct.) (“WV MLP Action”). Indivior Inc. moved to dismiss all five complaints on January 30, 2023. The plaintiffs in those cases separately have moved to strike the defendants' notices of non-party fault. Indivior’s motions to dismiss, as well as the plaintiffs’ motions to strike, remain pending. A hearing on motions to dismiss in the WV MLP Action, including Indivior Inc.’s motions, is set for March 24, 2023.
Given the status and preliminary stage of litigation in both the Opioid MDL and state courts, no estimate of possible loss in the opioid litigation can be made at this time.
False Claims Act allegations
In August 2018, the United States District Court for the Western District of Virginia unsealed a declined qui tam complaint alleging causes of action under the Federal and state False Claims Acts against certain entities within the Group predicated on best price issues and claims of retaliation. See United States ex rel. Miller v. Reckitt Benckiser Group PLC et al., Case No. 1:15-cv-00017 (W.D. Va.). The suit also seeks reasonable attorneys’ fees and costs. The Group filed a Motion to Dismiss in June 2021. The case was stayed for mediation in September 2021, but the parties did not reach agreement. In March 2022, Relator submitted a request for oral argument on the Motion to Dismiss. On July 21, 2022, the court entered an order staying the action and reserving a decision on the Group’s Motion to Dismiss pending rehearing en banc by the US Court of Appeals for the Fourth Circuit in US ex rel. Sheldon v. Allergan Sales, LLC. On rehearing en banc, the Fourth Circuit affirmed the district court's opinion in US ex rel. Sheldon v. Allergan Sales, LLC by order dated September 23, 2022. The United States District Court for the Western District of Virginia has not yet ruled on the Group's Motion to Dismiss, and instead has further stayed the proceedings pending decisions by the Supreme Court of the United States in two cases
concerning the False Claims Act—United States ex rel. Proctor v. Safeway, Inc., and United States ex rel. Schutte v. Supervalu, Inc.
In May 2018, Indivior Inc. received an informal request from the United States Attorney’s Office (“USAO”) for the Southern District of New York, seeking records relating to the SUBOXONE Film manufacturing process. The Group is discussing with the USAO certain information and allegations that the government received regarding SUBOXONE Film.
UK shareholder claims
On September 21, 2022, certain shareholders issued representative and multiparty claims against Indivior PLC in the High Court of Justice for the Business and Property Courts of England and Wales, King’s Bench Division. On January 16, 2023, the representative served its Particular of Claims setting forth in more detail the claims against the Group, while the same law firm that represents the representative also sent its draft Particular of Claims for the multiparty action. The claims made in both the representative and multiparty actions generally allege that Indivior PLC violated the UK Financial Services and Markets Act 2000 (“FSMA 2000”) by making false or misleading statements or material omissions in public disclosures, including the 2014 Demerger Prospectus, regarding an alleged product-hopping scheme regarding the switch from SUBOXONE® tablets to SUBOXONE® film. Indivior PLC filed an application to strike out the representative action on February 27, 2023. A hearing on the application to strike out has been scheduled for November 20-21, 2023.
The Group has begun its evaluation of the claims, believes it has meritorious defenses, and intends to vigorously defend itself. Given the status and preliminary stage of the litigation, no estimate of possible loss can be made at this time.
Intellectual property-related matters
Various subsidiaries of the Group filed actions against Alvogen Pine Brook LLC and Alvogen Inc. (together, “Alvogen”) in the United States District Court for the District of New Jersey (the "NJ District Court") alleging that Alvogen’s generic buprenorphine/naloxone film product infringes US Patent Nos. 9,687,454 (the "454 Patent") and 9,931,305 (the “305 Patent") in 2017 and 2018, respectively. The cases were consolidated in May 2018. In January 2019, the NJ District Court granted Indivior a temporary restraining order (“TRO”) to restrain the launch of Alvogen’s generic buprenorphine/naloxone film product pending a trial on the merits of the ’305 Patent, and the subsidiaries of the Group that were a party to the case were required to post a surety bond of $36 million. The parties entered into an agreement whereby Alvogen was enjoined from selling in the US its generic buprenorphine/naloxone film product unless and until the Court of Appeals for the Federal Circuit ("CAFC") issued a mandate vacating Indivior’s separate preliminary injunction entered against Dr. Reddy's Laboratories, Inc. ("DRL") in a related case. The CAFC’s mandate vacating Indivior’s preliminary injunction as to DRL issued in February 2019, and Alvogen launched its generic product. Any sales in the US by Alvogen are on an “at-risk” basis, subject to the ongoing litigation against Alvogen in the NJ District Court. In November 2019, Alvogen filed an amended answer alleging various antitrust counterclaims. In January 2020, Indivior and Alvogen stipulated to noninfringement of the ’305 Patent under the court’s claim construction, but Indivior retained its rights to appeal the construction and pursue its infringement claims pending appeal. Indivior’s infringement claims concerning the ’454 Patent and Alvogen’s antitrust counterclaims remain pending in the NJ District Court. In June 2022, the parties participated in court-ordered mediation. The parties did not reach settlement. Summary judgment motions have been fully briefed, and the court heard arguments on those motions on August 29, 2022. The NJ District Court has not yet ruled on those motions, and no trial date has been set.
22. TRADE AND OTHER PAYABLES
| | | | | | | | | | | | | | | | | | | | |
| (in millions) | | 2022 | | 2021 | | 2020 |
| Provision for rebates, discounts and returns | | (428) | | | (436) | | | (396) | |
| Accounts payable | | (36) | | | (137) | | | (20) | |
| Accruals and other payables | | (138) | | | (136) | | | (97) | |
| Other tax and social security payable | | (15) | | | (11) | | | (9) | |
| Interest payable | | — | | | — | | | (2) | |
Trade and other payables | | $ | (617) | | | $ | (720) | | | $ | (524) | |
The change in the year was primarily the result of the timing of settlement of trade payables.
The carrying amounts of total trade and other payables are denominated in the following currencies:
| | | | | | | | | | | | | | | | | | | | |
| (in millions) | | 2022 | | 2021 | | 2020 |
| Sterling | | (45) | | | (36) | | | (25) | |
| Euros | | (12) | | | (10) | | | (14) | |
| U.S. dollar | | (540) | | | (658) | | | (473) | |
| Other currencies | | (20) | | | (16) | | | (12) | |
Trade and other payables | | $ | (617) | | | $ | (720) | | | $ | (524) | |
23. SHARE CAPITAL
| | | | | | | | | | | | | | | | | | | | |
Issued and fully paid (in millions) | | Equity ordinary shares | | Nominal value paid per share $ | | Nominal value |
At January 1, 2022 | | 702,439,638 | | | 0.10 | | | 70 | |
| Ordinary shares issued | | 4,184,940 | | | 0.10 | | | 1 | |
| Shares repurchased and canceled | | (17,815,033) | | | 0.10 | | | (2) | |
| Share consolidation | | (551,047,636) | | | | | |
| Share repurchased and cancelled (post share consolidation) | | (1,280,914) | | | 0.50 | | | (1) | |
At December 31, 2022 | | 136,480,995 | | | | | 68 | |
| | | | | | | | | | | | | | | | | | | | |
Issued and fully paid (in millions) | | Equity ordinary shares | | Nominal value paid per share $ | | Nominal value |
At January 1, 2021 | | 733,635,511 | | | 0.10 | | | 73 | |
| Ordinary shares issued | | 2,311,560 | | | 0.10 | | | — | |
| Shares repurchased and canceled | | (33,507,433) | | | 0.10 | | | (3) | |
At December 31, 2021 | | 702,439,638 | | | | | 70 | |
| | | | | | | | | | | | | | | | | | | | |
Issued and fully paid (in millions) | | Equity ordinary shares | | Nominal value paid per share $ | | Nominal value |
At January 1, 2020 | | 730,787,719 | | | 0.10 | | | 73 | |
| Ordinary shares issued | | 2,847,792 | | | 0.10 | | | — | |
At December 31, 2020 | | 733,635,511 | | | | | 73 | |
Ordinary shares issued
In 2022, prior to share consolidation, 4,184,940 ordinary shares at $0.10 each (2021: 2,311,560 and 2020: 2,847,792 at $0.10 each) were allotted to satisfy vesting/exercises under the Group’s Long-Term Incentive Plan and the US Employee Stock Purchase Plan.
Share consolidation
In October 2022, the Company completed a share consolidation. Shareholders received 1 new ordinary share with a nominal value of $0.50 each for every 5 previously existing ordinary shares which had a nominal value of $0.10 each. As a result of the consolidation, as at October 10, 2022 the Company's issued share capital consisted of 137,761,909 ordinary shares at $0.50 each (equivalent shares pre-consolidation: 688,809,545).
Shares repurchased and canceled
In July 2021, the Group commenced an irrevocable share repurchase program for an aggregate purchase price up to no more than $100 million or 73,462,098 of ordinary shares. In December 2021, the program concluded with the Group repurchasing 33,507,433 of the Group’s ordinary shares over the duration of the program for an aggregate nominal value of $3 million ($0.10 per share). In addition, 256,055 ordinary shares purchased as part of the share repurchase program at $0.10 each were canceled in January 2022. These shares are included in the total number of share capital outstanding as at December 31, 2021.
In May 2022, the Group commenced a second share repurchase program for an aggregate purchase price up to no more than $100 million or 39,698,610 of ordinary shares (equivalent shares post consolidation: 7,939,722), which is expected to end no later than March 31, 2023. During the year, prior to the share consolidation, the Group repurchased and cancelled 17,815,033 of the Company’s ordinary shares for an aggregate nominal value of $2 million ($0.10 per share), including the 256,055 ordinary shares purchased as part of the Group’s share repurchase program executed in 2021 and cancelled in January 2022. Subsequent to the share consolidation, the Group repurchased and cancelled 1,280,914 of the Company’s ordinary shares for an aggregate nominal value of $1 million ($0.50 per share).
All ordinary shares repurchased during the year under share repurchase programs were cancelled (except for 16,793 shares that were canceled in January 2023) resulting in a transfer of the aggregate nominal value to a capital redemption reserve. The total cost of the share repurchase program was $90 million consisting of $89 million (2021: $100 million; 2020: $nil) paid for the repurchase of shares and $1 million (2021: $1 million; 2020: $nil) of directly attributable transaction costs paid, which include advisory fees and stamp duties. A net repurchase amount of $9 million has been recorded as a financial liability and reduction in retained earnings which represents the amount to be spent under the program up to February 16, 2023, the period closed for modification or termination of the program. Total purchases under the share repurchase program will be made out of distributable profits.
24. OTHER EQUITY
Foreign currency translation
The foreign currency translation reserve contains the accumulated foreign exchange differences from the translation of the financial statements of the Group’s foreign operations arising when the Group’s entities are consolidated.
Other reserves
The other reserves balance relates to the Group formation in 2014. It represents the difference between the nominal value of the shares issued by the Group and the net investment in the Group by the former owner.
Capital redemption reserve
The capital redemption reserve was created for capital maintenance purposes as a result of the repurchase and cancellation of ordinary shares under the Group’s share repurchase programs as required under the UK Companies Act.
25. SHARE-BASED PLANS
Employee plans
Indivior Long-Term Incentive Plan (LTIP)
In 2015, a share-based incentive plan was introduced for employees (including Executive Directors) of the Group. An award under the LTIP can take the form of a nil-cost option, a market value option, or a conditional award.
The Remuneration Committee may determine the vesting of awards is conditional upon the satisfaction of one or more performance conditions. Awards with performance conditions granted under the LTIP will normally have a performance period of at least three years. Awards granted to Executive Directors are subject to a further two-year post-vesting period.
The fair values of awards granted under the Long-Term Incentive Plans are calculated using a Monte Carlo simulation model. The key assumptions in the simulation model are share price of the Group, expected volatilities of the Group, risk-free rate, and dividend yield.
For all plans, the inputs to the option pricing models are reassessed for each grant. The following assumptions were used in calculating the fair value of options granted under the LTIP schemes.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Award | | Grant date | | Performance period | | Share price on grant date £ | | Volatility %(1) | | Dividend yield % | | Expected life in years | | Risk-free interest rate(2) | | Weighted average fair value | | Exercisable Shares(3) |
| 2019 | | March 5, 2019 | | 2019–21 | | 1.08 | | 73 | | 0 | | 3 | | 0.82 | | 0.77 | | — | |
| 2019 | | March 5, 2019 | | 2019–21 | | 1.08 | | 73 | | 0 | | 5 | | 0.82 | | 0.5 | | 269,674 | |
| 2019 | | August 8, 2019 | | 2019–21 | | 0.58 | | 73 | | 0 | | 5 | | 0.82 | | 0.5 | | — | |
| 2020 | | March 9, 2020 | | 2020-22 | | 0.45 | | 110 | | 0 | | 3 | | 0.10 | | 0.41 | | 2,612,726 | |
| 2020 | | March 9, 2020 | | 2020-22 | | 0.45 | | 110 | | 0 | | 5 | | 0.10 | | 0.42 | | 472,721 | |
| 2020 | | November 6, 2020 | | 2020-23 | | 1.17 | | 110 | | 0 | | 5 | | 0.10 | | 1.10 | | 31,596 | |
| 2021 | | March 1, 2021 | | 2021-23 | | 1.29 | | 115 | | 0 | | 5 | | 0.10 | | 1.16 | | 513,665 | |
| 2021 | | March 1, 2021 | | 2021-23 | | 1.29 | | 115 | | 0 | | 3 | | 0.10 | | 1.17 | | 2,040,118 | |
| 2022 | | March 1, 2021 | | 2022-24 | | 2.81 | | 64 | | 0 | | 5 | | 0.90 | | 2.23 | | 284,519 | |
| 2022 | | March 1, 2021 | | 2022-24 | | 2.81 | | 64 | | 0 | | 3 | | 0.90 | | 2.41 | | 1,209,650 | |
| 2022 | | August 3, 2022 | | 2022-24 | | 3.17 | | 64 | | 0 | | 3 | | 0.90 | | 2.25 | | 69,637 | |
______________
(1)The expected volatility is based on historical volatility over the period of time commensurate with the expected award term immediately prior to the date of grant.
(2)The risk-free interest rate reflects the continuous risk-free yield based on the UK Government interest rates as of the valuation date, based upon a maturity commensurate with the performance period.
(3)Reflects the impact of the 5:1 share consolidation completed in October 2022.
The maximum number of shares that could vest under the Group’s LTIP was:
| | | | | | | | |
| (in millions) | | Total LTIP |
| Outstanding at January 1, 2020 | | 25 | |
| Awarded | | 22 | |
| Vested/exercised | | (1) | |
| Forfeited | | (12) | |
| Outstanding at December 31, 2021 | | $ | 34 | |
| Awarded | | 14 | |
| Vested/exercised | | (1) | |
| Forfeited | | $ | (7) | |
| Outstanding at December 31, 2021 | | 40 | |
| Awarded | | 8 | |
| Vested/exercised | | (4) | |
| Forfeited | | (5) | |
| Share consolidation | | (31) | |
Outstanding at December 31, 2022 | | $ | 8 | |
For awards outstanding at year end, the weighted average remaining contractual life is 0.97 years (2021: 1.25 years; 2020: 1.56 years).
Other employee plans
The Group operates an HMRC-approved SAYE plan for UK employees and US Employee Stock Purchase Plan (“ESPP”) for US employees. The amounts recognized for these plans are not material for disclosure.
Charged to income statement
The expense charged to the consolidated income statement for share-based payments is as follows:
| | | | | | | | | | | | | | | | | | | | |
| (in millions) | | 2022 | | 2021 | | 2020 |
| Granted in current year | | (7) | | | (6) | | | (3) | |
| Granted in prior years | | (9) | | | (7) | | | (10) | |
| Unvested awards due to unmet performance conditions | | — | | | 2 | | | 5 | |
Total share-based expense for the year | | $ | (16) | | | $ | (11) | | | $ | (8) | |
26. RELATED PARTIES
In March 2021, the Group entered into a Relationship Agreement with its largest shareholder, Scopia Capital Management LP ("Scopia"). The Relationship Agreement provides for Scopia to have one representative director appointed to the Board and contains certain standstill, voting and governance terms. In July 2022, the Group announced that it has amended the existing Relationship Agreement with Scopia. Under the original terms, the Relationship Agreement terminated in the event that Scopia (and its affiliates) ceased to have interests in at least 10% of the Company's issued share capital. As announced on July 1, 2022, Scopia has sold interests in the Company representing 2.28% which has taken the total holding of Scopia (and its affiliates) to 9.71%, below this 10% threshold, and down from 16.9% at
origination of the agreement. The Group has agreed not to exercise its right to terminate the Relationship Agreement immediately, and instead has agreed:
•to continue with the agreement until the expiration of its original term of December 31, 2023, unless the Relationship Agreement is otherwise extended by mutual agreement or terminated earlier in accordance with its terms; and.
•the threshold for automatic termination will be amended, such that the Relationship Agreement will terminate in the event that Scopia (and its affiliates) cease to have interests in at least 5% of the Company's issued share capital (reduced from 10% under the original terms).
Key management compensation is disclosed in Note 5. The significant subsidiaries included in the consolidated financial statements at December 31, 2022 are disclosed in Note 1. 27. POST BALANCE SHEET SUBSEQUENT EVENTS
Acquisition of Opiant Pharmaceuticals, Inc.
On March 2, 2023, the Group acquired all outstanding shares of Opiant Pharmaceuticals, Inc. (Opiant) for upfront consideration of $20.00 per share in cash (approximately $146 million in aggregate), plus up to $8.00 per share in CVRs. The Group will pay $2.00 per CVR for each of the following net revenue thresholds achieved by OPTN003, Opiant’s lead asset, during any period of four consecutive quarters prior to the seventh anniversary of the US commercial launch: (i) $225 million, (ii) $300 million, and (iii) $325 million. The remaining (iv) $2.00 per CVR would be paid if OPNT003 achieves net revenue of $250 million during any period of four consecutive quarters prior to the third anniversary of the US commercial launch. The maximum amount payable by the Group should OPNT003 achieve all four CVRs would be approximately $68 million. The Group has funded the acquisition using internal resources.
The acquisition of Opiant extends Indivior’s addiction treatment portfolio, primarily with the pipeline product OPNT003, nasal nalmefene, an opioid overdose treatment with clinically demonstrated characteristics well-suited to confront illicit synthetic opioids like fentanyl. The U.S. Food and Drug Administration (FDA) has accepted for review the New Drug Application (NDA) for OPNT003 and it granted a Priority Review designation and has been given a Prescription Drug User Fee Act (PDUFA) action date of May 22, 2023.
Due to the proximity of the acquisition to the approval date of the Group financial statements, the Group has not completed the initial accounting for the acquisition and hence disclosures related to the fair valuation of the assets and liabilities acquired and resultant goodwill (including the factors that make up the goodwill) and any contingent liabilities were not determinable by the approval date of the Group financial statements. The acquisition will be accounted for as an asset acquisition as substantially all of the fair value of the gross assets acquired (excluding cash and cash equivalents, deferred tax assets, and goodwill resulting from the effects of deferred tax liabilities) is concentrated in a single asset or group of similar assets.
The accounting impact of this acquisition and the results of the operations for Opiant will be included in the Group’s Consolidated Financial Statements for the first quarter of 2023.
Share repurchase program
In February 2023, the Company completed its second share repurchase program. In 2023, an additional 484,362 shares were repurchased and canceled at $0.50 each, bringing the total cost of the program to $101 million including directly attributable costs.
28. PARENT COMPANY INFORMATION
Cash dividends and/or share repurchase programs, if any, are made by Indivior PLC (the “Parent Company”). The Parent Company’s primary source of income and cash flow is dividends and loans from its subsidiaries, which are restricted by our term loan (see Note 17). The term loan allows the subsidiaries to pay cash dividends, transfer assets, and make loans to the Parent Company at an accumulating amount representing 50% consolidated net income, as defined in the term loan. The stand-alone condensed financial statements of the Parent Company are presented below in accordance with SEC regulations when such restrictions exist. We currently anticipate that we will retain future earnings for the development, operation and expansion of our business and do not anticipate declaring or paying any cash dividends for the foreseeable future. Parent Company Income Statements
| | | | | | | | | | | | | | | | | | | | |
For the year ended December 31 (in millions) | | 2022 | | 2021* | | 2020* |
| Administrative and general expenses | | $ | (23) | | | $ | (17) | | | $ | (5) | |
| Legal settlement | | — | | | — | | | (50) | |
| Other (loss)/ income | | (12) | | | 12 | | | — | |
| Dividends from subsidiaries | | 152 | | | 109 | | | — | |
Operating profit/(loss) | | $ | 117 | | | $ | 104 | | | $ | (55) | |
| Interest income | | 1 | | | — | | | — | |
| Profit/(loss) before taxation | | 118 | | | 104 | | | (55) | |
| Tax credit | | 8 | | | 12 | | | 3 | |
Net income/(loss) | | $ | 126 | | | $ | 116 | | | $ | (52) | |
____________
*See below for details regarding the revision due to a prior period adjustment.
There were no items of other comprehensive income or loss for the years ended December 31, 2022, 2021 or 2020.
Parent Company Balance Sheets
| | | | | | | | | | | | | | | | | | | | |
As at December 31 (in millions) | | 2022 | | 2021* | | 2020* |
Assets | | | | | | |
Non-current assets | | | | | | |
| Investments in subsidiaries | | 1,550 | | | 1,508 | | | 1,497 | |
| Deferred tax assets | | 12 | | | — | | | 5 | |
| | $ | 1,562 | | | $ | 1,508 | | | $ | 1,502 | |
Current assets | | | | | | |
| Amounts due from subsidiaries | | 1 | | | — | | | 3 | |
| Other assets | | 4 | | | 9 | | | 3 | |
| Cash and cash equivalents | | 60 | | | 21 | | | 19 | |
| | 65 | | | 30 | | | 25 | |
Total assets | | $ | 1,627 | | | $ | 1,538 | | | $ | 1,527 | |
| Liabilities | | | | | | |
| Current liabilities | | | | | | |
| Trade and other payables | | (21) | | | (9) | | | (10) | |
| Amounts due to subsidiaries | | (54) | | | (2) | | | (1) | |
| | (75) | | | (11) | | | (11) | |
| Non-current liabilities | | | | | | |
| Other liabilities | | (22) | | | (32) | | | (40) | |
Total liabilities | | $ | (97) | | | $ | (43) | | | $ | (51) | |
Net assets | | $ | 1,530 | | | $ | 1,495 | | | $ | 1,476 | |
Equity | | | | | | |
| Share capital | | 68 | | | 70 | | | 73 | |
| Share premium | | 8 | | | 7 | | | 6 | |
| Capital redemption reserve | | 6 | | | 3 | | | — | |
| Retained earnings | | 1,448 | | | 1,415 | | | 1,397 | |
Total equity | | $ | 1,530 | | | $ | 1,495 | | | $ | 1,476 | |
____________
*See below for details regarding the revision due to a prior period adjustment.
Parent Company Statements of Changes in Equity
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (in millions) | | Share capital | | Share premium | | Capital redemption reserve | | Retained earnings | | Total equity |
Balance at January 1, 2020, as reported | | $ | 73 | | | $ | 5 | | | $ | — | | | $ | 1,387 | | | $ | 1,465 | |
| Prior period adjustment* | | — | | | — | | | — | | | 52 | | | $ | 52 | |
At January 1, 2020, revised* | | $ | 73 | | | $ | 5 | | | $ | — | | | $ | 1,439 | | | $ | 1,517 | |
Comprehensive loss | | | | | | | | | | |
| Net loss for the financial year, revised* | | — | | | — | | | — | | | (52) | | | (52) | |
| | | | | | | | | | |
Total comprehensive loss, revised* | | $ | — | | | $ | — | | | $ | — | | | $ | (52) | | | $ | (52) | |
Transactions with owners | | | | | | | | | | |
| Shares issued | | — | | | 1 | | | — | | | — | | | 1 | |
| Share-based payments | | — | | | — | | | — | | | 8 | | | 8 | |
| Taxation on share-based payments | | — | | | — | | | — | | | 2 | | | 2 | |
| Total transactions recognized directly in equity | | $ | — | | | $ | 1 | | | $ | — | | | $ | 10 | | | $ | 11 | |
Balance at December 31, 2020, revised* | | $ | 73 | | | $ | 6 | | | $ | — | | | $ | 1,397 | | | $ | 1,476 | |
| | | | | | | | | | |
Balance at January 1, 2021 | | $ | 73 | | | $ | 6 | | | $ | — | | | $ | 1,397 | | | $ | 1,476 | |
| Comprehensive income | | | | | | | | | | |
| Net income for the financial year, revised* | | — | | | — | | | — | | | 116 | | | 116 | |
Total comprehensive income | | — | | | — | | | — | | | 116 | | | 116 | |
| Transactions recognized directly in equity | | | | | | | | | | |
| Shares issued | | — | | | 1 | | | — | | | — | | | 1 | |
| Shares repurchased and cancelled | | (3) | | | | | 3 | | | (101) | | | (101) | |
| Share-based payments | | | | — | | | — | | | 11 | | | 11 | |
| Settlement of tax on equity awards | | — | | | — | | | — | | | (1) | | | (1) | |
| Taxation on share-based payments | | — | | | — | | | — | | | (7) | | | (7) | |
| Total transactions recognized directly in equity | | $ | (3) | | | $ | 1 | | | $ | 3 | | | $ | (98) | | | $ | (97) | |
| Balance at December 31, 2021 | | $ | 70 | | | $ | 7 | | | $ | 3 | | | $ | 1,415 | | | $ | 1,495 | |
| | | | | | | | | | |
Balance at January 1, 2022 | | $ | 70 | | | $ | 7 | | | $ | 3 | | | $ | 1,415 | | | $ | 1,495 | |
| Comprehensive income | | | | | | | | | | |
| Net income for the financial year | | — | | | — | | | — | | | 126 | | | 126 | |
Total comprehensive income | | $ | — | | | $ | — | | | $ | — | | | $ | 126 | | | $ | 126 | |
Transactions recognized directly in equity | | | | | | | | | | |
| Shares issued | | 1 | | | 1 | | | — | | | — | | | 2 | |
| Shares repurchased and cancelled | | (3) | | | — | | | 3 | | | (90) | | | (90) | |
| Transfer to share repurchase liability | | — | | | — | | | — | | | (9) | | | (9) | |
| Share-based payments | | — | | | — | | | — | | | 16 | | | 16 | |
| Settlement of tax on equity awards | | — | | | — | | | — | | | (10) | | | (10) | |
Total transactions recognized directly in equity | | $ | (2) | | | $ | 1 | | | $ | 3 | | | $ | (93) | | | $ | (91) | |
Balance at December 31, 2022 | | $ | 68 | | | $ | 8 | | | $ | 6 | | | $ | 1,448 | | | $ | 1,530 | |
______________
*See below for details regarding the revision due to a prior period adjustment.
Parent Company Cash Flow Statements
| | | | | | | | | | | | | | | | | | | | |
For the year ended December 31 (in millions) | | 2022 | | 2021* | | 2020* |
| Cash flows from operating activities: | | | | | | |
| Operating profit/(loss) | | 117 | | | 104 | | | (55) | |
| | | | | | |
| Settlement of tax on employee awards | | (10) | | | (1) | | | — | |
| Impact from foreign exchange movements | | (1) | | | — | | | — | |
| Decrease/(increase) in other assets | | 5 | | | (7) | | | — | |
| (Increase)/decrease in amounts due from subsidiaries | | (1) | | | 3 | | | 20 | |
| (Decrease)/increase in trade and other payables | | 3 | | | (1) | | | 10 | |
| Increase in amounts due to subsidiaries | | 49 | | | 1 | | | 1 | |
| (Decrease)/Increase in other liabilities | | (10) | | | (8) | | | 40 | |
Cash generated from operations | | $ | 152 | | | $ | 91 | | | $ | 16 | |
| Interest received | | 1 | | | — | | | — | |
| Taxes refunded - Group relief | | — | | | 11 | | | 2 | |
Net cash inflow from operating activities | | $ | 153 | | | $ | 102 | | | $ | 18 | |
| | | | | | |
Net cash flows from investing activities | | | | | | |
| Investment in subsidiaries | | (26) | | | — | | | — | |
| Net cash outflow from investing activities | | $ | (26) | | | $ | — | | | $ | — | |
| | | | | | |
| Cash flows from financing activities | | | | | | |
| Proceeds from the issuance of ordinary shares | | 2 | | | 1 | | | 1 | |
| Shares repurchased and cancelled | | (90) | | | (101) | | | — | |
Net cash (outflow)/inflow from financing activities | | $ | (88) | | | $ | (100) | | | $ | 1 | |
| | | | | | |
Net increase in cash and cash equivalents | | 39 | | | 2 | | | 19 | |
| Cash and cash equivalents at beginning of the year | | 21 | | | 19 | | | — | |
Cash and cash equivalents at end of the year | | $ | 60 | | | $ | 21 | | | $ | 19 | |
______________
*See below for details regarding the revision due to a prior period adjustment.
Basis of preparation
The Parent Company financial statements have been prepared using the same accounting principles and policies as described in the notes to our consolidated financial statements except for the investment in the subsidiaries that are recognized and measured at cost. Any material contingencies, long-term obligations and guarantees have been separately disclosed in the accompanying consolidated financial statements.
Prior Period Adjustment
During the year ended December 31, 2022, the Company identified prior period errors in the parent company financial statements footnote related to the recognition of stock-based compensation expense. Accordingly, the Company revised the Parent Company financial statements footnote to increase net income by $11 million and $8 million in 2021 and 2020, respectively, and to increase investment in subsidiaries and retained earnings by $71 million and $60 million at December 31, 2021 and 2020, respectively. The Company evaluated the materiality of the adjustments to prior-period consolidated financial statements and concluded the effect of the adjustments were immaterial to all periods.
Reconciliations of Parent Company financial information
| | | | | | | | | | | | | | | | | | | | |
As at December 31 (in millions) | | 2022 | | 2021* | | 2020* |
| Profit (loss) reconciliation | | | | | | |
| Parent company profit/(loss) for the year | | 126 | | | 116 | | | (52) | |
| Additional profit/(loss) if subsidiaries had been accounted for using the equity method | | (179) | | | 89 | | | (96) | |
Consolidated (loss)/profit for the year | | $ | (53) | | | $ | 205 | | | $ | (148) | |
| | | | | | |
| Equity reconciliation | | | | | | |
| Parent company equity | | 1,530 | | | 1,495 | | | 1,476 | |
| Adjustment to equity if subsidiaries had been accounted for using the equity method | | (1,479) | | | (1,292) | | | (1,394) | |
Consolidated equity | | $ | 51 | | | $ | 203 | | | $ | 82 | |
______________
*See above for details regarding the revised due to a prior period adjustment.
ITEM 19: EXHIBITS
| | | | | | | | |
| Exhibit No. | | Description |
1.1 | | |
| 2.1 | | |
4.1.1 | | |
4.1.2 | | |
4.1.3 | | |
| 4.2 | | |
4.3 | | |
4.4 | | |
4.5 | | |
4.6 | | |
4.7 | | |
4.8* | | |
4.9* | | |
4.10* | | |
4.11* | | |
4.12* | | |
4.13* | | |
4.14.1† | | |
4.14.2† | | |
4.15.1† | | Commercial Exploitation Agreement by and between Aquestive Therapeutics (f/k/a MonoSol Rx, LLC and Reckitt Benckiser Pharmaceuticals Inc., dated August 15, 2008 (as amended on August 19, 2009, November 13, 2009, March 30, 2010, October 13, 2010, December 15, 2010, December 9, 2011, December 1, 2012, October 14, 2013 (by Addendum A), July 30, 2014 (by Addendum B), January 12, 2017, November 25, 2019, December 29, 2020, and March 2, 2023.) |
4.15.2† | | |
4.16.1† | | |
4.16.2† | | |
| | | | | | | | |
| 4.16.3 | | |
4.16.4† | | |
| 4.16.5 | | |
4.17† | | |
4.18.1† | | |
4.18.2† | | |
4.18.3† | | |
4.19.1† | | |
4.19.2† | | |
4.19.3† | | |
4.20 | | |
4.21† | | |
4.22† | | |
4.23† | | |
4.24† | | |
| 5.1 | | |
5.2 | | |
8.1 | | |
__________________
†Confidential treatment requested as to certain portions, which portions have been omitted and filed separately with the Securities and Exchange Commission
*Management Contract
The Merger Agreement is being included to provide investors with information regarding the terms of the Merger Agreement. It is not intended to provide any other factual information about the Company, Indivior Inc., Olive Acquisition Sub, Inc., Opiant or their respective subsidiaries or affiliates. The representations, warranties and covenants contained in the Merger Agreement were made only for purposes of that agreement and as of specific dates, were solely for the benefit of the parties to the Merger Agreement and may be subject to limitations agreed upon by the parties in connection with negotiating the terms of the Merger Agreement, including being qualified by confidential disclosures made by each party to the other for the purposes of allocating contractual risk between them that differ from those applicable to investors. In addition, certain representations and warranties may be subject to a contractual standard of materiality different from those generally applicable to investors and may have been used for the purpose of allocating risk between the parties rather than establishing matters as facts. Information concerning the subject matter of the representations, warranties and covenants may change after the date of the Merger Agreement, which subsequent information may or may not be fully reflected in public disclosures by Indivior PLC. or its affiliates or Opiant. Investors should not rely on the representations, warranties and covenants or any description thereof as characterizations of the actual state of facts or condition of Indivior PLC, Indivior Inc., Olive Acquisition Sub, Inc., Opiant or any of their respective subsidiaries, affiliates or businesses.
SIGNATURES
The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this registration statement on its behalf.
| | | | | | | | |
| Indivior PLC |
| | |
| By: | /s/ Ryan Preblick |
| Title: | Chief Financial Officer |
Date: May 23, 2023
COMPANY HAVING A SHARE CAPITAL
MEMORANDUM OF ASSOCIATION
OF
Indivior PLC
Each subscriber to this memorandum of association wishes to form a company under the Companies Act 2006 and agrees to become a member of the company and to take at least one share.
| | | | | | | | |
| | |
| Name of each subscriber | | Authentication by each subscriber |
| | |
Adrian Norton
Dominic Neary
Dated: 26 September 2014
ARTICLES OF ASSOCIATION
of
INDIVIOR PLC
Public Limited Company
(Articles adopted by a special resolution on 30 October 2014 and amended by a special resolution on 23 December 2014 and on 30 September 2022)
TABLE OF CONTENTS
| | | | | | | | | | | |
| 1. | | EXCLUSION OF MODEL ARTICLES | 10 |
| | | |
| 2. | | DEFINITIONS | 10 |
| | | |
| 3. | | LIMITED LIABILITY | 12 |
| | | |
| 4. | | CHANGE OF NAME | 12 |
| | | |
| 5. | | RIGHTS ATTACHED TO SHARES | 12 |
| | | |
| 6. | | REDEEMABLE SHARES | 13 |
| | | |
| 7. | | VARIATION OF RIGHTS | 13 |
| | | |
| 8. | | MATTERS NOT CONSTITUTING VARIATION OF RIGHTS | 13 |
| | | |
| 9. | | SHARES | 13 |
| | | |
| 10. | | PAYMENT OF COMMISSION | 14 |
| | | |
| 11. | | TRUSTS NOT RECOGNISED | 14 |
| | | |
| 12. | | SUSPENSION OF RIGHTS WHERE NON-DISCLOSURE OF INTEREST (LR 9.3.9R) | 14 |
| | | |
| 13. | | UNCERTIFICATED SHARES | 15 |
| | | |
| 14. | | RIGHT TO SHARE CERTIFICATES | 16 |
| | | |
| 15. | | REPLACEMENT OF SHARE CERTIFICATES | 17 |
| | | |
| 16. | | SHARE CERTIFICATES SENT AT HOLDER’S RISK | 17 |
| | | |
| 17. | | EXECUTION OF SHARE CERTIFICATES | 17 |
| | | |
| 18. | | COMPANY’S LIEN ON SHARES NOT FULLY PAID | 17 |
| | | |
| 19. | | ENFORCING LIEN BY SALE | 18 |
| | | |
| 20. | | APPLICATION OF PROCEEDS OF SALE | 18 |
| | | |
| 21. | | CALLS | 18 |
| | | |
| | | | | | | | | | | |
| 22. | | TIMING OF CALLS | 18 |
| | | |
| 23. | | LIABILITY OF JOINT HOLDERS | 19 |
| | | |
| 24. | | INTEREST DUE ON NON-PAYMENT | 19 |
| | | |
| 25. | | SUMS DUE ON ALLOTMENT TREATED AS CALLS | 19 |
| | | |
| 26. | | POWER TO DIFFERENTIATE | 19 |
| | | |
| 27. | | PAYMENT OF CALLS IN ADVANCE | 19 |
| | | |
| 28. | | NOTICE IF CALL OR INSTALMENT NOT PAID | 19 |
| | | |
| 29. | | FORM OF NOTICE | 19 |
| | | |
| 30. | | FORFEITURE FOR NON-COMPLIANCE WITH NOTICE | 19 |
| | | |
| 31. | | NOTICE AFTER FORFEITURE | 20 |
| | | |
| 32. | | SALE OF FORFEITED SHARES | 20 |
| | | |
| 33. | | APPEARS TO BE PAID NOTWITHSTANDING FORFEITURE | 20 |
| | | |
| 34. | | STATUTORY DECLARATION AS TO FORFEITURE | 20 |
| | | |
| 35. | | TRANSFER | 20 |
| | | |
| 36. | | SIGNING OF TRANSFER | 21 |
| | | |
| 37. | | RIGHTS TO DECLINE REGISTRATION OF PARTLY PAID SHARES | 21 |
| | | |
| 38. | | OTHER RIGHTS TO DECLINE REGISTRATION | 21 |
| | | |
| 39. | | NO FEE FOR REGISTRATION | 21 |
| | | |
| 40. | | UNTRACED SHAREHOLDERS | 22 |
| | | |
| 41. | | TRANSMISSION ON DEATH | 22 |
| | | |
| 42. | | ENTRY OF TRANSMISSION IN REGISTER | 23 |
| | | |
| 43. | | ELECTION OF PERSON ENTITLED BY TRANSMISSION | 23 |
| | | |
| 44. | | RIGHTS OF PERSON ENTITLED BY TRANSMISSION | 23 |
| | | | | | | | | | | |
| | | |
| 45. | | SUB-DIVISION | 23 |
| | | |
| 46. | | FRACTIONS | 24 |
| | | |
| 47. | | OMISSION OR NON-RECEIPT OF NOTICE | 24 |
| | | |
| 48. | | POSTPONEMENT OF GENERAL MEETINGS | 24 |
| | | |
| 49. | | QUORUM | 24 |
| | | |
| 50. | | PROCEDURE IF QUORUM NOT PRESENT | 24 |
| | | |
| 51. | | SECURITY ARRANGEMENTS | 25 |
| | | |
| 52. | | CHAIRMAN OF GENERAL MEETING | 25 |
| | | |
| 53. | | ORDERLY CONDUCT | 25 |
| | | |
| 54. | | ENTITLEMENT TO ATTEND AND SPEAK | 25 |
| | | |
| 55. | | ADJOURNMENTS | 25 |
| | | |
| 56. | | NOTICE OF ADJOURNMENT | 26 |
| | | |
| 57. | | AMENDMENTS TO RESOLUTIONS | 26 |
| | | |
| 58. | | AMENDMENTS RULED OUT OF ORDER | 26 |
| | | |
| 59. | | VOTES OF MEMBERS | 26 |
| | | |
| 60. | | METHOD OF VOTING | 26 |
| | | |
| 61. | | PROCEDURE IF POLL DEMANDED | 27 |
| | | |
| 62. | | WHEN POLL TO BE TAKEN | 27 |
| | | |
| 63. | | CONTINUANCE OF OTHER BUSINESS AFTER POLL DEMAND | 27 |
| | | |
| 64. | | VOTES OF JOINT HOLDERS | 27 |
| | | |
| 65. | | VOTING ON BEHALF OF INCAPABLE MEMBER | 27 |
| | | |
| 66. | | NO RIGHT TO VOTE WHERE SUMS OVERDUE ON SHARES | 28 |
| | | |
| | | | | | | | | | | |
| 67. | | OBJECTIONS OR ERRORS IN VOTING | 28 |
| | | |
| 68. | | APPOINTMENT OF PROXIES | 28 |
| | | |
| 69. | | RECEIPT OF PROXIES | 28 |
| | | |
| 70. | | MAXIMUM VALIDITY OF PROXY | 29 |
| | | |
| 71. | | FORM OF PROXY | 29 |
| | | |
| 72. | | CANCELLATION OF PROXY’S AUTHORITY | 30 |
| | | |
| 73. | | SEPARATE GENERAL MEETINGS | 30 |
| | | |
| 74. | | NUMBER OF DIRECTORS | 30 |
| | | |
| 75. | | DIRECTORS’ SHAREHOLDING QUALIFICATION | 30 |
| | | |
| 76. | | POWER OF COMPANY TO APPOINT DIRECTORS | 30 |
| | | |
| 77. | | POWER OF DIRECTORS TO APPOINT DIRECTORS | 30 |
| | | |
| 78. | | RETIREMENT OF DIRECTORS BY ROTATION | 30 |
| | | |
| 79. | | FILLING VACANCIES | 31 |
| | | |
| 80. | | POWER OF REMOVAL BY SPECIAL RESOLUTION | 31 |
| | | |
| 81. | | PERSONS ELIGIBLE AS DIRECTORS | 31 |
| | | |
| 82. | | POSITION OF RETIRING DIRECTORS | 31 |
| | | |
| 83. | | VACATION OF OFFICE BY DIRECTORS | 31 |
| | | |
| 84. | | ALTERNATE DIRECTORS | 32 |
| | | |
| 85. | | EXECUTIVE DIRECTORS | 32 |
| | | |
| 86. | | DIRECTORS’ FEES | 33 |
| | | |
| 87. | | ADDITIONAL RENUMERATION | 33 |
| | | |
| 88. | | EXPENSES | 33 |
| | | |
| 89. | | PENSIONS AND GRATUITIES FOR DIRECTORS | 33 |
| | | | | | | | | | | |
| | | |
| 90. | | DIRECTORS’ INTEREST | 33 |
| | | |
| 91. | | GENERAL POWERS OF COMPANY VESTED IN DIRECTORS | 37 |
| | | |
| 92. | | BORROWING POWERS | 37 |
| | | |
| 93. | | AGENTS | 39 |
| | | |
| 94. | | DELEGATION TO INDIVIDUAL DIRECTORS | 40 |
| | | |
| 95. | | REGISTERS | 40 |
| | | |
| 96. | | PROVISION FOR EMPLOYEES | 40 |
| | | |
| 97. | | DIRECTORS’ MEETINGS | 40 |
| | | |
| 98. | | NOTICE OF DIRECTORS’ MEETINGS | 41 |
| | | |
| 99. | | QUORUM | 41 |
| | | |
| 100. | | DIRECTORS BELOW MINIMUM THROUGH VACANCIES | 41 |
| | | |
| 101. | | APPOINTMENT OF CHAIRMAN | 41 |
| | | |
| 102. | | COMPETENCE OF MEETINGS | 41 |
| | | |
| 103. | | VOTING | 41 |
| | | |
| 104. | | DELEGATION TO COMMITTEES | 41 |
| | | |
| 105. | | PARTICIPATION IN MEETINGS | 42 |
| | | |
| 106. | | RESOLUTION IN WRITING | 42 |
| | | |
| 107. | | VALIDITY OF ACTS OF DIRECTORS OR COMMITTEE | 42 |
| | | |
| 108. | | USE OF SEALS | 42 |
| | | |
| 109. | | DECLARATION OF DIVIDENDS BY COMPANY | 43 |
| | | |
| 110. | | PAYMENT OF INTERIM AND FIXED DIVIDENDS BY DIRECTORS | 43 |
| | | |
| 111. | | CALCULATION AND CURRENCY OF DIVIDENDS | 43 |
| | | |
| | | | | | | | | | | |
| 112. | | AMOUNTS DUE ON SHARES CAN BE DEDUCTED FROM DIVIDENDS | 43 |
| | | |
| 113. | | NO INTEREST ON DIVIDENDS | 43 |
| | | |
| 114. | | PAYMENT PROCEDURE | 43 |
| | | |
| 115. | | UNCASHED DIVIDENDS | 44 |
| | | |
| 116. | | FORFEITURE OF UNCLAIMED DIVIDENDS | 44 |
| | | |
| 117. | | DIVIDENDS NOT IN CASH | 44 |
| | | |
| 118. | | SCRIP DIVIDENDS | 45 |
| | | |
| 119. | | POWER TO CAPITALISE RESERVES AND FUNDS | 46 |
| | | |
| 120. | | SETTLEMENT OF DIFFICULTIES IN DISTRIBUTION | 47 |
| | | |
| 121. | | POWER TO CHOOSE ANY RECORD DATE | 47 |
| | | |
| 122. | | INSPECTION OF RECORDS | 47 |
| | | |
| 123. | | STRATEGIC REPORTS WITH SUPPLEMENTARY MATERIAL | 47 |
| | | |
| 124. | | METHOD OF SERVICE | 48 |
| | | |
| 125. | | RECORD DATE FOR SERVICE | 48 |
| | | |
| 126. | | MEMBERS RESIDENT ABROAD OR ON BRANCH REGISTERS | 49 |
| | | |
| 127. | | SERVICE OF NOTICES ON PERSONS ENTITLED BY TRANSMISSION | 49 |
| | | |
| 128. | | DEEMED DELIVERY | 49 |
| | | |
| 129. | | NOTICE WHEN POST NOT AVAILABLE | 50 |
| | | |
| 130. | | PRESUMPTIONS WHERE DOCUMENTS DESTROYED | 50 |
| | | |
| 131. | | INDEMNITY OF DIRECTORS | 51 |
| | | |
| 132. | | ARBITRATION | 51 |
| | | |
| 133. | | EXCLUSIVE JURISDICTION | 52 |
| | | |
| 134. | | GENERAL DISPUTE RESOLUTION PROVISIONS | 52 |
| | | | | | | | | | | |
| | | |
| 135. | | ARRANGEMENTS IN RESPECT OF THE ADDITIONAL LISTING OF THE COMPANY’S SHARES IN THE UNITED STATES OF AMERICA | 53 |
| | | |
| GLOSSARY | 56 |
1. Exclusion of Model Articles
The articles prescribed in any legislation relating to companies do not apply as the articles of the company.
2. Definitions
(A) The following table gives the meaning of certain words and expressions as they are used in these articles. However, the meaning given in the table does not apply if it is not consistent with the context in which a word or expression appears. At the end of these articles there is a Glossary which explains various words and expressions which appear in the text. The Glossary also explains some of the words and expressions used in the memorandum. The Glossary is not part of the memorandum or articles and does not affect their meaning.
| | | | | |
| “Additional US Listing” | has the meaning given in paragraph (A) of Article 135; |
| “address” | includes a number or address used for sending or receiving documents or information by electronic means; |
| “ADR” | means an American depositary receipt issued by the ADR Depositary which evidences any number of ADSs; |
| “ADR Depositary” | has the meaning given in paragraph (E) of Article 135; |
| “ADS” | means an American depositary share, which represents one share in the Company; |
| “Affiliate Shareholder” | means any shareholder which is considered to be an affiliate of the company for the purposes of United States federal securities laws; |
“amount” (of a share) | this refers to the nominal amount of the share; |
“these articles” | means these articles of association, including any changes made to them, and the expression “this article” refers to a particular article in these articles of association; |
| “auditors” | means the auditor of the company and, where two or more people are appointed to act jointly, any one of them; |
“Bank of England base rate” | means the base lending rate most recently set by the Monetary Policy Committee of the Bank of England in connection with its responsibilities under Part 2 of the Bank of England Act 1998; |
“certificated share” | means a share which is not a CREST share and is normally held in certificated form; |
| “chairman” | means the chairman of the board of directors; |
| “Circular” | has the meaning given in paragraph (A) of Article 135; |
“clear days” | in relation to the period of a notice means that period excluding the day when the notice is served or deemed to be served and the day for which it is given or on which it is to take effect; |
| “CSN Facility” | has the meaning given in paragraph (B) of Article 135; |
| | | | | |
| “CSN Permitted Jurisdiction” | means a jurisdiction in which participation in the CSN Facility is permitted being, as at the date of adoption of these articles: Argentina, Botswana, Brazil, Chile, Gibraltar, Guernsey, Guinea, Hong Kong, Indonesia, Isle of Man, Jersey, Mexico, Namibia, Paraguay, Peru, South Africa, South Korea, Switzerland, Taiwan, United Kingdom; |
| “CREST” | means the electronic settlement system for securities traded on a recognised investment exchange and owned by Euroclear UK & International Limited, or any similar system; |
“CREST share” | means a share which is noted on the shareholders’ register as being held through CREST in uncertificated form; |
| “CTCNA” | means Computershare Trust Company N.A. |
| “Depositary Interest” | has the meaning given in paragraph (A) of Article 135; |
| “Depositary Receipt” | means a depositary receipt issued by CTCNA representing a beneficial interest in a share in the company; |
| “DI Custodian” | has the meaning given in paragraph (A) of Article 135; |
| “DI Depositary” | has the meaning given in paragraph (A) of Article 135; |
| “directors” | means the executive and non-executive directors of the company who make up its board of directors (and “director” means any one of them) or, where applicable, the directors present at a meeting of the directors at which a quorum is present; |
| "DTC Depositary" | means any depositary, custodian, nominee or similar entity that holds legal title to the shares in the capital of the company for DTC, including Cede & Co.; |
| “DTC participant” | means any financial institution (or any nominee of such institution) having one or more participant accounts with DTC for receiving, holding and delivering the securities and cash held in DTC; |
| “DTC” | has the meaning given in paragraph (A) of Article 135; |
| “DR Deed” | has the meaning given in paragraph (D) of Article 135; |
| “DR Depositary Nominee” | has the meaning given in paragraph (D) of Article 135; |
| “holder” | in relation to any shares means the person whose name is entered in the register as the holder of those shares; |
| “legislation” | means every statute (and any orders, regulations or other subordinate legislation made under it) applying to the company; |
“the office” | means the company’s registered office; |
“ordinary shareholder” | means a holder of ordinary shares; |
“ordinary shares” | means the company’s ordinary shares; |
“paid up” | means paid up or treated (credited) as paid up; |
| “pay” | includes any kind of reward or payment for services; |
| | | | | |
| “register” | means the company’s register of shareholders and, at any time when the company has shares in issue which are CREST shares, means the Operator register of members (maintained by CREST) and the issuer register of members (maintained by the company); |
| “Relevant Member” | has the meaning given in paragraph (A) of Article 135; |
| “seal” | means any common or official seal that the company may be permitted to have under the legislation; |
| “secretary” | means the secretary, or (if there are joint secretaries) any one of the joint secretaries, of the company and includes an assistant or deputy secretary and any person appointed by the directors to perform any of the duties of the secretary; |
| “shareholder” | means a holder of the company’s shares; |
“uncertificated securities rules” | means any provision in the legislation which relates to CREST shares or to the transfer of CREST shares or how the ownership of CREST shares is evidenced; and |
“United Kingdom” | means Great Britain and Northern Ireland. |
(B) References in these articles to a document being “signed” or to “signature” include references to its being executed under hand or under seal or by any other method and, in the case of a communication in electronic form, such references are to its being authenticated as specified by the legislation.
(C) References in these articles to “writing” and to any form of “written” communication include references to any method of representing or reproducing words in a legible and non-transitory form whether sent or supplied in electronic form or otherwise.
(D) Any words or expressions defined in the legislation in force when these articles or any part of these articles are adopted will (if not inconsistent with the subject or context in which they appear) have the same meaning in these articles or that part save the word “company” includes any body corporate.
(E) References to a meeting will not be taken as requiring more than one person to be present if any quorum requirement can be satisfied by one person.
(F) Headings in these articles are only included for convenience. They do not affect the meaning of these articles.
(G) Where these articles refer to a person who is entitled to a share by law, this means a person who has been noted in the register as being entitled to a share as a result of the death or bankruptcy of a shareholder or some other event which gives rise to the transmission of the share by operation of law.
3. Limited Liability
The liability of the company’s members is limited to any unpaid amount on the shares in the company held by them.
4. Change of Name
The company may change its name by resolution of the directors.
5. Rights Attached to Shares
The company can issue shares with any rights or restrictions attached to them as long as this is not restricted by any rights attached to existing shares. These rights or restrictions can be
decided either by an ordinary resolution passed by the shareholders or by the directors as long as there is no conflict with any resolution passed by the shareholders. These rights and restrictions will apply to the relevant shares as if they were set out in these articles.
6. Redeemable Shares
Subject to any rights attached to existing shares, the company can issue shares which can be redeemed. This can include shares which can be redeemed if the holders want to do so, as well as shares which the company can insist on redeeming. The directors can decide on the terms and conditions and the manner of redemption of any redeemable share. These terms and conditions will apply to the relevant shares as if they were set out in these articles.
7. Variation of Rights
If the legislation allows this, the rights attached to any class of shares can be changed if this is approved either in writing by shareholders holding at least three quarters of the issued shares of that class by amount (excluding any shares of that class held as treasury shares) or by a special resolution passed at a separate meeting of the holders of the relevant class of shares. This is called a “class meeting”.
All the articles relating to general meetings will apply to any such class meeting, with any necessary changes. The following changes will also apply:-
(i) a quorum will be present if at least two shareholders who are entitled to vote are present in person or by proxy who own at least one third in amount of the issued shares of the class (excluding any shares of that class held as treasury shares);
(ii) any shareholder who is present in person or by proxy and entitled to vote can demand a poll; and
(iii) at an adjourned meeting, one person entitled to vote and who holds shares of the class, or his proxy, will be a quorum.
The provisions of this article will apply to any change of rights of shares forming part of a class. Each part of the class which is being treated differently is treated as a separate class in applying this article.
8. Matters not constituting Variation of Rights
If new shares are created or issued which rank equally with any other existing shares, or if the company purchases or redeems any of its own shares, the rights of the existing shares will not be regarded as changed or abrogated unless the terms of the existing shares expressly say otherwise.
9. Shares
The directors can decide how to deal with any shares in the company. They can, for instance, offer the shares for sale, reclassify them, grant options to acquire them, allot them or dispose of the shares in any other way. The directors are free to decide who they deal with, when they deal with the shares and the terms on which they deal with the shares. However, in making their decision they must take account of:
(i) the provisions of the legislation relating to authority, pre-emption rights and other matters;
(ii) the provisions of these articles;
(iii) any resolution passed by the shareholders; and
(iv) any rights attached to existing shares.
10. Payment of Commission
In connection with any share issue or any sale of treasury shares for cash, the company can use all the powers given by the legislation to pay commission or brokerage. The company can pay the commission in cash or by allotting fully or partly-paid shares or other securities or by a combination of both.
11. Trusts Not Recognised
The company will only be affected by, or recognise, a current and absolute right to whole shares. The fact that any share, or any part of a share, may not be owned outright by the registered owner (for example, where a share is held by one person as a nominee or otherwise as a trustee for another person) is not of any concern to the company. This applies even if the company knows about the ownership of the share.
The only exceptions to this are where the rights of the kind described are expressly given by these articles or are of a kind which the company has a legal duty to recognise.
12. Suspension of Rights Where Non-Disclosure of Interest (LR 9.3.9R)
(A) The company can under the legislation send out notices to those it knows or has reasonable cause to believe have an interest in its shares. In the notice, the company will ask for details of those who have an interest and the extent of their interest in a particular holding of shares. In these articles this notice is referred to as a “statutory notice” and the holding of shares in respect of which a person fails to give the information requested by a statutory notice or makes a false or inadequate statement as referred to in Article 12(B) are referred to as the “identified shares”.
(B) When a person receives a statutory notice, he has 14 days to comply with it. If he does not do so or if he makes a statement in response to the notice which is false or inadequate in some important way, the company can decide to restrict the rights relating to the identified shares and send out a further notice to the holder, known as a restriction notice. The restriction notice will take effect when it is delivered. The restriction notice will state that the identified shares no longer give the shareholder any right to attend or vote either personally or by proxy at a shareholders’ meeting or to exercise any other right in relation to shareholders’ meetings.
(C) Where the identified shares make up 0.25 per cent. or more (in amount or in number) of the existing shares of a class (calculated exclusive of any shares of that class held as treasury shares) at the date of delivery of the restriction notice, the restriction notice can also contain the following further restrictions:-
(i) the directors can withhold any dividend or part of a dividend (including scrip dividend) or other money which would otherwise be payable in respect of the identified shares without any liability to pay interest when such money is finally paid to the shareholder; and
(ii) the directors can refuse to register a transfer of any of the identified shares which are certificated shares unless the directors are satisfied that they have been sold outright to an independent third party. The independent third party must not be connected with the shareholder or with any person appearing to be interested in the shares. Any sale through a recognised investment exchange or any other stock exchange outside the United Kingdom or by way of acceptance of a takeover offer will be treated as an outright sale to an independent third party. For this purpose, any associate (as that term is defined in section 435 of the Insolvency Act 1986) is included in the class of persons who are connected with the shareholder or any person appearing to be interested in the shares. In order to enforce the restriction in this sub-paragraph, the directors can give notice to the relevant shareholder requiring him to change identified shares which are CREST shares to certificated shares by the time given in the notice and to keep them in certificated form for as long as the directors require. The notice can also say that the relevant shareholder may not change any identified shares
which are certificated shares to CREST shares. If the shareholder does not comply with the notice, the directors can authorise any person to instruct the Operator to change any identified shares which are CREST shares to certificated shares in the name and on behalf of the relevant shareholder.
(D) Once a restriction notice has been given, the directors are free to cancel it or exclude any shares from it at any time they think fit. In addition, they must cancel the restriction notice within seven days of being satisfied that all information requested in the statutory notice has been given. Also, where any of the identified shares are sold and the directors are satisfied that they were sold outright to an independent third party, they must cancel the restriction notice within seven days of receipt of notification of the sale. If a restriction notice is cancelled or ceases to have effect in relation to any shares, any moneys relating to those shares which were withheld will be paid to the person who would have been entitled to them or as he directs.
(E) The restriction notice will apply to any further shares issued in right of the identified shares. The directors can also make the restrictions in the restriction notice apply to any right to an allotment of further shares associated with the identified shares.
(F) If a shareholder receives a restriction notice, he can ask the company for a written explanation of why the notice was given, or why it has not been cancelled. The company must respond within 14 days of receiving the request.
(G) If the company gives a statutory notice to a person it has reasonable cause to believe has an interest in any of its shares, it will also give a copy at the same time to the person who holds the shares. If the company does not do so or the holder does not receive the copy, this will not invalidate the statutory notice.
(H) This article does not restrict in any way the provisions of the legislation which apply to failures to comply with notices under the legislation.
(I) For the purposes of this Article 12:
(i) where any person appearing to be interested in identified shares has been served with a statutory notice and such identified shares are held by a DTC Depositary, the provisions of this Article 12 shall be deemed to apply only to those identified shares held by the DTC Depositary in which such person appears to be interested and not (so far as that person’s apparent interest is concerned) to any other shares held by the DTC Depositary in which such person does not have an interest; and
(ii) where the shareholder on whom a statutory notice has been served is a DTC Depositary, the obligations of the DTC Depositary shall be limited to disclosing to the company such information relating to any person appearing to be interested in the shares held by it as has been recorded by the DTC Depositary and the provision of such information shall be at the company’s cost.
13. Uncertificated Shares
(A) Under the uncertificated securities rules, the directors can allow the ownership of shares to be evidenced without share certificates and for these shares to be transferred through CREST. The directors can select and make arrangements for any class of shares to participate in CREST in this way, provided that the shares of the class are identical in all respects.
As long as the directors comply with the uncertificated securities rules, they can also withdraw a class of shares from being transferred through CREST and from allowing ownership of them to be evidenced without share certificates.
CREST shares do not form a class of shares separate from certificated shares with the same rights.
(B) If the company has any shares in issue which are CREST shares, these articles apply to those shares, but only as far as they are consistent with:-
(i) holding shares in an uncertificated form;
(ii) transferring shares through CREST;
(iii) any provision of the uncertificated securities rules; or
(iv) the company exercising any of its powers or functions or doing anything through CREST,
and, without affecting the general nature of this article, no provision of these articles applies so far as it is inconsistent with the maintenance, keeping or entering up by the Operator, so long as that is permitted or required by the uncertificated securities rules, of an Operator register of securities in respect of CREST shares.
(C) CREST shares can be changed to become certificated shares and certificated shares can be changed to become CREST shares, provided the requirements of the uncertificated securities rules are met.
(D) If under these articles or the legislation the company can sell, transfer or otherwise dispose of, forfeit, re-allot, accept the surrender of or otherwise enforce a lien over a CREST share, then, subject to these articles and the legislation, the directors may:
(i) require the holder of that CREST share by written notice to change that CREST share to a certificated share within a period specified in the notice and to keep it as a certificated share for as long as the directors require;
(ii) appoint any person to take any other steps, by instruction given through CREST or otherwise, in the name of the holder of that share as may be necessary to effect the transfer of that share and these steps will be as effective as if they had been taken by the registered holder of that share; and
(iii) take any other action that the directors consider appropriate to achieve the sale, transfer, disposal, forfeiture, re-allotment or surrender of that share or otherwise to enforce a lien in respect of that share.
(E) Unless the directors decide otherwise, CREST shares held by a shareholder will be treated as separate holdings from any certificated shares which that shareholder holds.
(F) Unless the uncertificated securities rules otherwise require or the directors otherwise determine, shares which are issued or created from or in respect of CREST shares will be CREST shares and shares which are issued or created from or in respect of certificated shares will be certificated shares.
(G) The company can assume that entries on any record of securities kept by it as required by the uncertificated securities rules and regularly reconciled with the relevant Operator register of securities are a complete and accurate reproduction of the particulars entered in the Operator register of securities and therefore will not be liable in respect of anything done or not done by or on its behalf in reliance on such assumption; in particular, any provision of these articles which requires or envisages action to be taken in reliance on information contained in the register allows that action to be taken in reliance on information contained in any relevant record of securities (as so maintained and reconciled).
14. Right to Share Certificates
(A) When a shareholder is first registered as the holder of any class of certificated shares, he is entitled, free of charge, to one certificate for all of the certificated shares of that class which he holds. If a shareholder holds certificated shares of more than one class, he is entitled to a separate share certificate for each class. This does not apply if the legislation allows the company not to issue share certificates.
(B) If a shareholder receives more certificated shares of any class, he is entitled, without charge, to a certificate for the extra shares.
(C) If a shareholder transfers some of the shares represented by a share certificate, he is entitled, free of charge, to a new certificate for the balance to the extent the balance is to be held in certificated form.
(D) Where a certificated share is held jointly, the company does not have to issue more than one certificate for that share. When the company delivers a share certificate to one joint shareholder, this is treated as delivery to all of the joint shareholders.
(E) The time limit for the company to provide a share certificate under this article is as prescribed by the legislation or, if this is earlier, within any prescribed time limit or within a time specified when the shares were issued.
15. Replacement of Share Certificates
(A) If a shareholder has two or more share certificates for shares of the same class, he can ask the company for these to be cancelled and replaced by a single new certificate. The company must comply with this request.
(B) A shareholder can ask the company to cancel and replace a single share certificate with two or more certificates for the same total number of shares. The company may comply with this request.
(C) A shareholder can ask the company for a new certificate if the original is:-
(i) damaged or defaced; or
(ii) said to be lost, stolen or destroyed.
(D) If a certificate has been damaged or defaced, the company can require the certificate to be returned to it before issuing a replacement. If a certificate is said to be lost, stolen or destroyed, the company can require satisfactory evidence of this and insist on receiving an indemnity before issuing a replacement.
(E) The directors can require the shareholder to pay the company’s exceptional out-of- pocket expenses incurred in connection with the issue of any certificates under this article.
(F) Any one joint shareholder can request replacement certificates under this article.
16. Share Certificates Sent at Holder’s Risk
Every share certificate will be sent at the risk of the member or other person entitled to the certificate. The company will not be responsible for any share certificate which is lost or delayed in the course of delivery.
17. Execution of Share Certificates
Share certificates must be sealed or made effective in such other way as the directors decide, having regard to the terms of issue and any listing requirements. The directors can resolve that signatures on any share certificates can be applied to the certificates by mechanical or other means or can be printed on them or that signatures are not required. A share certificate must state the number and class of shares to which it relates and the amount paid up on those shares.
18. Company’s Lien on Shares Not Fully Paid
The company has a lien on all partly paid shares. This lien has priority over claims of others to the shares. The lien is for any money owed to the company for the shares. The directors can decide to give up any lien which has arisen and can also decide to suspend any lien which would otherwise apply to particular shares.
19. Enforcing Lien by Sale
If a shareholder fails to pay the company any amount due on his partly paid shares, the directors can enforce the company’s lien by selling all or any of them in any way they decide. The directors cannot, however, sell the shares until all the following conditions are met:-
(i) the money owed by the shareholder must be payable immediately;
(ii) the directors must have given notice to the shareholder. The notice must state the amount of money due, it must demand payment of this sum and state that the shareholders’ shares may be sold if the money is not paid;
(iii) the notice must have been served on the shareholder or on any person who is entitled to the shares by law and can be served in any way that the directors decide; and
(iv) the money has not been paid by at least 14 clear days after the notice has been served.
The directors can authorise any person to sign a document transferring the shares. Any such transferee will not be bound to ensure that his purchase moneys are transferred to the person whose shares have been sold, nor will his ownership of the shares be affected by any irregularity or invalidity in relation to the sale to him.
20. Application of Proceeds of Sale
If the directors sell any shares on which the company has a lien, the proceeds will first be used to pay the company’s expenses associated with the sale. The remaining money will be used to pay off the amount which is then payable on the shares and any balance will be passed to the former shareholder or to any person who would otherwise be entitled to the shares by law. But the company’s lien will also apply to any such balance to cover any money still due to the company in respect of the shares which is not immediately payable. The company has the same rights over the money as it had over the shares immediately before they were sold. The company need not pay over anything until the certificate representing the shares sold has been delivered to the company for cancellation.
21. Calls
The directors can call on shareholders to pay any money which has not yet been paid to the company for their shares. This includes the nominal value of the shares and any premium which may be payable on those shares. The directors can also make calls on people who are entitled to shares by law. If the terms of issue of the shares allow this, the directors can do any one or more of the following:-
(i) make calls at any time and as often as they think fit;
(ii) decide when and where the money is to be paid;
(iii) decide that the money may be paid by instalments;
(iv) revoke or postpone any call.
A shareholder who has received at least 14 clear days’ notice giving details of the amount called and of the time and place for payment, must pay the call as required by the notice. A person remains liable jointly and severally with the successors in title to his shares to pay calls even after he has transferred the shares to which they relate.
22. Timing of Calls
A call is treated as having been made as soon as the directors have passed a resolution authorising it.
23. Liability of Joint Holders
Joint shareholders are jointly and severally liable to pay any calls in respect of their shares. This means that any of them can be sued for all the money due on the shares or they can be sued together.
24. Interest Due on Non-Payment
Where a call is made and the money due remains unpaid, the shareholder will be liable to pay interest on the amount unpaid from the day it is due until it has actually been paid. The directors will decide on the annual rate of interest, which must not exceed the Bank of England base rate by more than five per cent. The shareholder will also be liable to pay all expenses incurred by the company as a result of the non-payment of the call. The directors can decide to forego payment of any or all of such interest or expenses.
25. Sums Due on Allotment Treated as Calls
If the terms of a share require any money to be paid at the time of allotment, or at any other fixed date, the money due will be treated in the same way as a valid call for money on shares which is due on the same date. If this money is not paid, everything in these articles relating to non-payment of calls applies. This includes articles which allow the company to forfeit or sell shares and to claim interest.
26. Power to Differentiate
On or before an issue of shares, the directors can decide that shareholders can be called on to pay different amounts or that they can be called on at different times.
27. Payment of Calls in Advance
The directors can accept payment in advance of some or all of the money from a shareholder before he is called on to pay that money. The directors can agree to pay interest on money paid in advance until it would otherwise be due to the company. The rate of interest will be decided by the directors, but must not exceed the Bank of England base rate by more than five per cent. unless the company passes an ordinary resolution to allow a higher rate.
28. Notice if Call or Instalment Not Paid
If a shareholder fails to pay a call or an instalment of a call when due, the directors can send the shareholder a notice requiring payment of the unpaid amount, together with any interest accrued and any expenses incurred by the company as a result of the failure to pay.
29. Form of Notice
This notice must:-
(i) demand payment of the amount immediately payable, plus any interest and expenses;
(ii) give the date by when the total amount due must be paid. This must be at least 14 clear days after the date of the notice;
(iii) say where the payment must be made; and
(iv) say that if the full amount demanded is not paid by the time and at the place stated, the company can forfeit the shares on which the call or instalment is outstanding.
30. Forfeiture for Non-Compliance with Notice
If the notice is not complied with, the shares it relates to can be forfeited at any time while any amount is still outstanding. This is done by the directors passing a resolution stating that the shares have been forfeited. The forfeiture will extend to all dividends and other sums payable in respect of the forfeited shares which have not been paid before the forfeiture. The directors
can accept the surrender of any share which would otherwise be forfeited. Where they do so, references in these articles to forfeiture include surrender.
31. Notice after Forfeiture
After a share has been forfeited, the company will notify the person whose share has been forfeited. However, the share will still be forfeited even if such notice is not given.
32. Sale of Forfeited Shares
(A) A forfeited share becomes the property of the company and the directors can sell or dispose of it on any terms and in any way that they decide. This can be with, or without, a credit for any amount previously paid up for the share. It can be sold or disposed of to any person, including the previous shareholder or the person who was previously entitled to the share by law. The directors can, if necessary, authorise any person to transfer a forfeited share.
(B) After a share has been forfeited, the directors can cancel the forfeiture, but only before the share has been sold or disposed of. This cancellation of forfeiture can be on any terms the directors decide.
33. Arrears to be Paid Notwithstanding Forfeiture
When a person’s shares have been forfeited, he will lose all rights as shareholder in respect of those forfeited shares. He must return any share certificate for the forfeited shares to the company for cancellation. However, he will remain liable to pay calls which have been made, but not paid, before the shares were forfeited. The shareholder also continues to be liable for all claims and demands which the company could have made relating to the forfeited share. He must pay interest on any unpaid amount until it is paid. The directors can fix the rate of interest, but it must not exceed the Bank of England base rate by more than five per cent. He is not entitled to any credit for the value of the share when it was forfeited or for any consideration received on its disposal unless the directors decide to allow credit for all or any of that value.
34. Statutory Declaration as to Forfeiture
(A) A director or the secretary can make a statutory declaration declaring:-
(i) that he is a director or the secretary of the company;
(ii) that a share has been properly forfeited under these articles; and
(iii) when the share was forfeited.
The declaration will be evidence of these facts which cannot be disputed.
(B) If such a declaration is delivered to a new holder of a share along with a completed transfer form (if one is required), this gives the buyer good title. The new shareholder does not need to take any steps to see how any money paid for the share is used. His ownership of the share will not be affected if the steps taken to forfeit, sell or dispose of the share were invalid or irregular, or if anything that should have been done was not done.
35. Transfer
(A) Certificated shares
Unless these articles say otherwise, any shareholder can transfer some or all of his certificated shares to another person. A transfer of certificated shares must be made in writing and either in the usual standard form or in any other form approved by the directors.
(B) CREST shares
Unless these articles say otherwise, any shareholder can transfer some or all of his CREST shares to another person. A transfer of CREST shares must be made through CREST and must comply with the uncertificated securities rules.
(C) Entry on register
The person making a transfer will continue to be treated as a shareholder until the name of the person to whom the share is being transferred is put on the register for that share.
36. Signing of Transfer
(A) A share transfer form for certificated shares must be signed or made effective in some other way by, or on behalf of, the person making the transfer.
(B) In the case of a transfer of a certificated share, where the share is not fully paid, the share transfer form must also be signed or made effective in some other way by, or on behalf of, the person to whom the share is being transferred.
(C) If the company registers a transfer of a certificated share, it can keep the transfer form.
37. Rights to Decline Registration of Partly Paid Shares
The directors can refuse to register the transfer of any shares which are not fully paid.
38. Other Rights to Decline Registration
(A) Certificated shares
(i) A share transfer form cannot be used to transfer more than one class of shares. Each class needs a separate form.
(ii) Transfers cannot be in favour of more than four joint holders.
(iii) The share transfer form must be properly stamped to show payment of any applicable stamp duty or certified or otherwise shown to the satisfaction of the directors to be exempt from stamp duty and must be delivered to the office, or any other place decided on by the directors. The transfer form must be accompanied by the share certificate relating to the shares being transferred, unless the transfer is being made by a person to whom the company was not required to, and did not send, a certificate. The directors can also ask (acting reasonably) for any other evidence to show that the person wishing to transfer the share is entitled to do so and, if the share transfer form is signed by another person on behalf of the person making the transfer, evidence of the authority of that person to do so.
(B) CREST shares
(i) Registration of a transfer of CREST shares can be refused in the circumstances set out in the uncertificated securities rules.
(ii) Transfers cannot be in favour of more than four joint holders.
(C) Renunciations
Where a share has not yet been entered on the register, the directors can recognise a renunciation by that person of his right to the share in favour of some other person. Such renunciation will be treated as a transfer and the directors have the same powers of refusing to give effect to such a renunciation as if it were a transfer.
39. No Fee for Registration
No fee is payable to the company for transferring shares or registering changes relating to the ownership of shares.
40. Untraced Shareholders
(A) The company can sell any certificated shares at the best price reasonably obtainable at the time of the sale if:-
(i) during the 12 years before the earliest of the notices referred to in paragraph (ii) below, the shares have been in issue either as certificated shares or as CREST shares, at least three cash dividends have become payable on the shares and no dividend has been cashed during that period;
(ii) after the 12 year period, the company has published a notice, stating that it intends to sell the shares. The notice must have appeared in a national newspaper and in a local newspaper appearing in the area which includes the postal address held by the company for serving notices relating to those shares; and
(iii) during the 12 year period and for three months after the last of the notices referred to in paragraph (ii) above appear, the company has not heard from the shareholder or any person entitled to the shares by law.
(B) The company can also sell at the best price reasonably obtainable at the time of the sale any additional certificated shares in the company issued either as certificated shares or as CREST shares during the said 12 year period referred to in paragraph (A)(i) in right of any share to which paragraph (A) applies (or in right of any share so issued), if the criteria in paragraph (A)(ii) and paragraph (A)(iii) are satisfied in relation to the additional shares (but as if the words “after the 12 year period” were omitted from paragraph (A)(ii) and the words “during the 12 year period and” were omitted from paragraph (A)(iii) and no dividend has been cashed on these shares. (C) To sell any shares in this way, the directors can appoint anyone to transfer the shares. This transfer will be just as effective as if it had been signed by the holder, or by a person who is entitled to the shares by law. The person to whom the shares are transferred will not be bound to concern himself as to what is done with the purchase moneys nor will his ownership be affected even if the sale is irregular or invalid in any way.
(D) The proceeds of sale will belong to the company, but it must pay an amount equal to the sale proceeds less the costs of the sale to the shareholder who could not be traced, or to the person who is entitled to his shares by law, if that shareholder, or person, asks for it unless and until forfeited under this article.
(E) After the sale, the company must record the name of the shareholder, or (if known) the person who would have been entitled to the shares by law, as a creditor for the money in its accounts. The company will not be a trustee of the money and will not be liable to pay interest on it. The company can use the money, and any money earned by using the money, for its business or in any other way that the directors decide. If no valid claim for the money has been received by the company during a period of six years from the date on which the relevant shares were sold by the company under this article, the money will be forfeited and will belong to the company.
41. Transmission on Death
(A) When a sole shareholder or a shareholder who is the last survivor of joint shareholders dies, his personal representatives will be the only people who will be recognised as being entitled to his shares.
(B) If a joint shareholder dies, the surviving joint shareholder or shareholders will be the only people who will be recognised as being entitled to his shares.
(C) However, this article does not discharge the estate of any shareholder from any liability.
42. Entry of Transmission in Register
A person who becomes entitled to a share as a result of the death or bankruptcy of a shareholder or some other event which gives rise to the transmission of the share by operation of law must provide any evidence of his entitlement which is reasonably required. In the case of certificated shares, the directors must note this entitlement in the register within two months of receiving such evidence.
43. Election of Person Entitled by Transmission
(A) Subject to these articles, a person who becomes entitled to a share by law can either be registered as the shareholder or choose another person to become the shareholder.
(B) If a person who is entitled to a certificated share by law wants to be registered as a shareholder, he must deliver or send a notice to the company saying that he has made this decision. This notice will be treated as a transfer form. All the provisions of these articles about registering transfers of certificated shares apply to it. The directors have the same power to refuse to register a person entitled to certificated shares by law as they would have had to refuse to register a transfer by the person who was previously entitled to the shares.
(C) If a person entitled to a CREST share by law wants to be registered as a shareholder, he must do so in accordance with the uncertificated securities rules. All the provisions of these articles about registering transfers of CREST shares will apply and the same power to refuse to register a person entitled to a CREST share by law will apply as would have applied to refuse to register a transfer by the person who was previously entitled to the shares.
(D) If a person who is entitled to a certificated share by law wants the share to be transferred to another person, he must do this by signing a transfer form to the person he has selected. The directors have the same power to refuse to register the person selected as they would have had to refuse to register a transfer by the person who was previously entitled to the shares.
(E) If a person who is entitled to a CREST share by law wants the share to be transferred to another person, he must do this using CREST. The same power to refuse to register the person selected will apply as would have applied to refuse to register a transfer by the person who was previously entitled to the shares.
44. Rights of Person Entitled by Transmission
(A) Where a person becomes entitled to a share by law, the rights of the registered shareholder in relation to that share will cease to have effect.
(B) A person who is entitled to a share by law is entitled to any dividends or other money relating to the share, even though he is not registered as the holder of the share, on supplying evidence reasonably required to show his title to the share. However, the directors can send written notice to the person saying the person must either be registered as the holder of the share or transfer the share to some other person. If the person entitled to a share by law does not do this within 60 days of the notice, the directors can withhold all dividends or other money relating to the share until he does.
(C) Unless he is registered as the holder of the share, the person entitled to a share by law is not entitled to:-
(i) receive notices of shareholders’ meetings or attend or vote at these meetings; or
(ii) exercise any of the other rights of a shareholder in relation to these meetings, unless the directors decide to allow this.
45. Sub-division
Any resolution authorising the company to sub-divide any of its shares can provide that, as between the holders of the divided shares, different rights (including deferred rights) and
restrictions of a kind which the company can apply to new shares can apply to different divided shares.
46. Fractions
If any shares are consolidated, consolidated and then divided or divided, the directors have power to deal with any fractions of shares which result. For example, they can decide that fractions are aggregated and sold or deal with fractions in some other way. The directors can arrange for any shares representing fractions to be entered in the register as certificated shares if they consider that this makes it easier to sell them. The directors can sell those shares to anyone, including the company, and can authorise any person to transfer or deliver the shares to the buyer or in accordance with the buyer’s instructions. The buyer does not have to take any steps to see how any money he is paying is used and his ownership will not be affected if the sale is irregular or invalid in any way.
47. Omission or Non-Receipt of Notice
(A) If any notice, document or other information relating to any meeting or other proceeding is accidentally not sent or supplied, or is not received (even if the company becomes aware of such failure to send or supply or non-receipt), the meeting or other proceeding will not be invalid as a result.
(B) A shareholder present in person or by proxy at a shareholders’ meeting is treated as having received proper notice of that meeting and, where necessary, of the purpose of that meeting.
48. Postponement of General Meetings
If the directors consider that it is impracticable or undesirable to hold a general meeting on the date or at the time or place stated in the notice calling the meeting, they can move or postpone the meeting (or do both). If the directors do this, an announcement of the date, time and place of the rearranged meeting will, if practicable, be published in at least two national newspapers in the United Kingdom. Notice of the business of the meeting does not need to be given again. The directors must take reasonable steps to ensure that any shareholder trying to attend the meeting at the original time and place is informed of the new arrangements. If a meeting is rearranged in this way, proxy forms are valid if they are received as required by these articles not less than 48 hours before the time of the rearranged meeting. The directors can also move or postpone the rearranged meeting (or do both) under this article.
49. Quorum
Before a general meeting starts to do business, there must be a quorum present. Unless these articles say otherwise, a quorum for all purposes is two people who are entitled to vote. They can be shareholders who are personally present or proxies for shareholders or a combination of both. If a quorum is not present, a chairman of the meeting can still be chosen and this will not be treated as part of the business of the meeting.
50. Procedure if Quorum Not Present
(A) This article applies if a quorum is not present within five minutes of the time fixed for a general meeting to start or within any longer period not exceeding one hour which the chairman of the meeting can decide or if a quorum ceases to be present during a general meeting.
(B) If the meeting was called by shareholders it will be cancelled. Any other meeting will be adjourned to a day (being not less than ten days later, excluding the day on which the meeting is adjourned and the day for which it is reconvened), time and place decided on by the chairman of the meeting.
(C) One shareholder present in person or by proxy and entitled to vote will constitute a quorum at any adjourned meeting and any notice of an adjourned meeting will say this.
51. Security Arrangements
The directors can put in place arrangements, both before and during any general meeting, which they consider to be appropriate for the proper and orderly conduct of the general meeting and the safety of people attending it. This authority includes power to refuse entry to, or remove from meetings, people who fail to comply with the arrangements.
52. Chairman of General Meeting
(A) The chairman will be the chairman of the meeting at every general meeting, if he is willing and able to take the chair.
(B) If the company does not have a chairman, or if he is not willing and able to take the chair, a deputy chairman will chair the meeting if he is willing and able to take the chair. If more than one deputy chairman is present they will agree between themselves who will take the chair and if they cannot agree, the deputy chairman who has been a director longest will take the chair.
(C) If the company does not have a chairman or a deputy chairman, or if neither the chairman nor a deputy chairman is willing and able to chair the meeting, after waiting five minutes from the time that a meeting is due to start, the directors who are present will choose one of themselves to act as chairman of the meeting. If there is only one director present, he will be the chairman of the meeting, if he agrees.
(D) If there is no director willing and able to be the chairman of the meeting, then the persons who are present at the meeting and entitled to vote will decide which one of them is to be the chairman of the meeting.
(E) Nothing in these articles is intended to restrict or exclude any of the powers or rights of a chairman of a meeting which are given by law.
53. Orderly Conduct
The chairman of a meeting can take any action he considers appropriate for proper and orderly conduct at a general meeting. The chairman’s decision on points of order, matters of procedure or on matters that arise incidentally from the business of a meeting is final, as is the chairman’s decision on whether a point or matter is of this nature.
54. Entitlement to Attend and Speak
Each director can attend and speak at any general meeting of the company. The chairman of a meeting can also allow anyone to attend and speak where he considers that this will help the business of the meeting.
55. Adjournments
(A) The chairman of a meeting can adjourn the meeting before or after it has started, and whether or not a quorum is present, if he considers that:-
(i) there is not enough room for the number of shareholders and proxies who can and wish to attend the meeting;
(ii) the behaviour of anyone present prevents, or is likely to prevent, the business of the meeting being carried out in an orderly way; or
(iii) an adjournment is necessary for any other reason, so that the business of the meeting can be properly carried out.
The chairman of the meeting does not need the consent of the meeting to adjourn it for any of these reasons to a time, date and place which he decides. He can also adjourn the meeting to a later time on the same day or indefinitely. If a meeting is adjourned indefinitely, the directors will fix the time, date and place of the adjourned meeting.
(B) The chairman of a meeting can also adjourn a meeting which has a quorum present if this is agreed by the meeting. This can be to a time, date and place proposed by the chairman of the meeting or the adjournment can be indefinite. The chairman of the meeting must adjourn the meeting if the meeting directs him to. In these circumstances the meeting will decide how long the adjournment will be and where it will adjourn to. If a meeting is adjourned indefinitely, the directors will fix the time, date and place of the adjourned meeting.
(C) A reconvened meeting can only deal with business that could have been dealt with at the meeting which was adjourned.
(D) Meetings can be adjourned more than once.
56. Notice of Adjournment
If the continuation of an adjourned meeting is to take place three months or more after it was adjourned or if business is to be considered at an adjourned meeting the general nature of which was not stated in the notice of the original meeting, notice of the adjourned meeting must be given in the same way as was required for the original meeting. Except as provided in this article, there is no need to give notice of the adjourned meeting or of the business to be considered there.
57. Amendments to Resolutions
(A) Amendments can be proposed to any resolution if they are clerical amendments or amendments to correct some other obvious error in the resolution. No other amendments can be proposed to any special resolution.
(B) Amendments to an ordinary resolution which are within the scope of the resolution can be proposed if:-
(i) notice of the proposed amendment has been received by the company at the office at least two working days before the date of the meeting, or adjourned meeting; or
(ii) the chairman of the meeting decides that the amendment is appropriate for consideration by the meeting.
No other amendment can be proposed to an ordinary resolution. The chairman of the meeting can agree to the withdrawal of any proposed amendment before it is put to the vote.
58. Amendments Ruled Out of Order
If the chairman of a meeting rules that a proposed amendment to any resolution under consideration is out of order, any error in that ruling will not affect the validity of a vote on the original resolution.
59. Votes of Members
Shareholders will be entitled to vote at a general meeting, whether on a show of hands or a poll, as provided in the legislation. Where a proxy is given discretion as to how to vote on a show of hands this will be treated as an instruction by the relevant shareholder to vote in the way in which the proxy decides to exercise that discretion.
This is subject to any special rights or restrictions as to voting which are given to any shares or upon which any shares may be held at the relevant time and to these articles.
60. Method of Voting
(A) For so long as any shares are held in a settlement system operated by DTC and a DTC Depositary holds legal title to shares in the capital of the company for DTC, (i) any resolution put to the vote of a general meeting must be decided on a poll and (ii) this Article 60(A) may only be removed, amended or varied by resolution of the members passed unanimously at a general meeting of the Company.
(B) Subject to Article 60(A), a resolution put to the vote at any general meeting will be decided on a show of hands unless a poll is demanded when, or before, the chairman of the meeting declares the result of the show of hands. Subject to the legislation, a poll can be demanded by:-
(i) the chairman of the meeting;
(ii) at least five persons at the meeting who are entitled to vote;
(iii) one or more shareholders at the meeting who are entitled to vote (or their proxies) and who have between them at least ten per cent. of the total votes of all shareholders who have the right to vote at the meeting; or
(iv) one or more shareholders at the meeting who have shares which allow them to vote at the meeting (or their proxies) and on which the total amount which has been paid up is at least ten per cent. of the total sum paid up on all shares which give the right to vote at the meeting.
(C) The chairman of the meeting can also demand a poll before a resolution is put to the vote on a show of hands.
(D) A demand for a poll can be withdrawn if the chairman of the meeting agrees to this.
(E) If no poll is demanded or a demand for a poll is withdrawn, any declaration by the chairman of the meeting of the result of a vote on that resolution by a show of hands will stand as conclusive evidence of the result without proof of the number or proportion of the votes recorded for or against the resolution.
61. Procedure if Poll Demanded
If a poll is demanded in the way allowed by these articles, the chairman of the meeting can decide when, where and how it will be taken. The result will be treated as the decision of the meeting at which the poll was demanded, even if the poll is taken after the meeting.
62. When Poll to be Taken
If a poll is demanded on a vote to elect the chairman of the meeting, or to adjourn a meeting, it must be taken immediately at the meeting. Any other poll demanded can either be taken immediately or within 30 days from the date it was demanded and at a time and place decided on by the chairman of the meeting. It is not necessary to give notice for a poll which is not taken immediately.
63. Continuance of Other Business after Poll Demand
A demand for a poll on a particular matter (other than on the election of the chairman of the meeting or on the adjournment of the meeting) will not stop a meeting from continuing to deal with other matters.
64. Votes of Joint Holders
If more than one joint shareholder votes (including voting by proxy), the only vote which will count is the vote of the person whose name is listed before the other voters on the register for the share.
65. Voting on behalf of Incapable Member
This article applies where a court or official claiming jurisdiction to protect people who are unable to manage their own affairs has made an order about the shareholder. The person appointed to act for that shareholder can vote for him. He can also exercise any other rights of the shareholder relating to meetings. This includes appointing a proxy, voting on a show of hands and voting on a poll. Before the representative does so however, such evidence of his authority as the directors require must be received by the company not later than the latest
time at which proxy forms must be received to be valid for use at the relevant meeting or on the holding of the relevant poll.
66. No Right to Vote where Sums Overdue on Shares
Unless the directors decide otherwise, a shareholder cannot attend or vote shares at any general meeting of the company or upon a poll or exercise any other right conferred by membership in relation to general meetings or polls if he has not paid all amounts relating to those shares which are due at the time of the meeting.
67. Objections or Errors in Voting
(A) If:-
(i) any objection to the right of any person to vote is made;
(ii) any votes have been counted which ought not to have been counted or which might have been rejected; or
(iii) any votes are not counted which ought to have been counted,
the objection or error must be raised or pointed out at the meeting (or the adjourned meeting) or poll at which the vote objected to is cast or at which the error occurs. Any objection or error must be raised with or pointed out to the chairman of the meeting. His decision is final. If a vote is allowed at a meeting or poll, it is valid for all purposes and if a vote is not counted at a meeting or poll, this will not affect the decision of the meeting or poll.
(B) The company will not be obliged to check whether a proxy or representative of a corporation has voted in accordance with a shareholder’s instructions and if a proxy or representative fails to do so, this will not affect the decision of the meeting (or adjourned meeting) or poll.
68. Appointment of Proxies
In the case of a proxy relating to shares in the capital of the company held in the name of a DTC Depositary, the appointment of a proxy shall be in a form or manner of communication approved by the board, which may include, without limitation, a voter instruction form to be provided to the company by certain third parties on behalf of the DTC Depositary. A proxy form must otherwise be in writing, signed by the shareholder appointing the proxy, or by his attorney. Where the proxy is appointed by a company, the proxy form should either be sealed by that company or signed by someone authorised to sign it. If a member appoints more than one proxy and the proxy forms appointing those proxies would give those proxies the apparent right to exercise votes on behalf of the member in a general meeting over more shares than are held by the member, then each of those proxy forms will be invalid and none of the proxies so appointed will be entitled to attend, speak or vote at the relevant general meeting.
69. Receipt of Proxies
(A) Proxy forms which are in hard copy form must be received at the office, or at any other place specified by the company for the receipt of appointments of proxy in hard copy form:-
(i) 48 hours (or such shorter time as the directors decide) before a meeting or an adjourned meeting;
(ii) 24 hours (or such shorter time as the directors decide) before a poll is taken, if the poll is taken more than 48 hours after it was demanded; or
(iii) before the end of the meeting at which the poll was demanded (or at such later time as the directors decide), if the poll is taken after the end of the meeting or adjourned meeting but not more than 48 hours after it was demanded.
If such a proxy form is signed by an attorney and the directors require this, the power of attorney or other authority relied on to sign it (or a copy which has been certified by a notary or in some other way approved by the directors, or an office copy) must be received with the proxy form.
(B) Proxy forms which are in electronic form must be received at the address specified by the company for the receipt of appointments of proxy by electronic means at least:-
(i) 48 hours (or such shorter time as the directors decide) before a meeting or an adjourned meeting;
(ii) 24 hours (or such shorter time as the directors decide) before a poll is taken, if the poll is taken more than 48 hours after it was demanded; or
(iii) before the end of the meeting at which the poll was demanded (or at such later time as the directors decide), if the poll is taken after the end of the meeting or adjourned meeting but not more than 48 hours after it was demanded.
If such a proxy form is signed by an attorney and the directors require this, the power of attorney or other authority relied on to sign it (or a copy which has been certified by a notary or in some other way approved by the directors, or an office copy) must be received at such address, at the office or at any other place specified by the company for the receipt of such documents by the time set out in paragraph (i) or (ii) or (iii) above, as applicable. (C) If the above requirements are not complied with, the proxy will not be able to act for the person who appointed him.
(D) If more than one valid proxy form is received in respect of the same share for use at the same meeting or poll, the one which is received last (regardless of its date or the date on which it is signed) will be treated as the valid form. If it is not possible to determine the order of receipt, none of the forms will be treated as valid.
(E) A shareholder can attend and vote at a general meeting or on a poll even if he has appointed a proxy to attend and vote on his behalf at that meeting or on that poll.
(F) The proceedings at a general meeting will not be invalidated where an appointment of a proxy in respect of that meeting is sent in electronic form as provided in these articles, but because of a technical problem it cannot be read by the recipient.
(G) When calculating the periods mentioned in this article the directors can decide not to take account of any part of a day that is not a working day.
70. Maximum Validity of Proxy
A proxy form will cease to be valid 12 months from the date of its receipt. But it will be valid, unless the proxy form itself states otherwise, if it is used at an adjourned meeting or on a poll after a meeting or an adjourned meeting even after 12 months, if it was valid for the original meeting.
71. Form of Proxy
A proxy form can be in any form which the directors approve. A proxy form gives the proxy the authority to demand a poll or to join others in demanding a poll and to vote on any amendment to a resolution put to, or any other business which may properly come before, the meeting. Unless it says otherwise, a proxy form is valid for the meeting to which it relates and also for any adjournment of that meeting.
72. Cancellation of Proxy’s Authority
Any vote cast in the way a proxy form authorises or any demand for a poll made by a proxy will be valid even though:-
(i) the person who appointed the proxy has died or is of unsound mind;
(ii) the proxy form has been revoked; or
(iii) the authority of the person who signed the proxy form for the shareholder has been revoked.
Any vote cast or poll demanded by a company representative will also be valid even though his authority has been revoked.
However, this does not apply if written notice of the relevant fact has been received at the office (or at any other place specified by the company for the receipt of proxy forms) not later than the last time at which a proxy form should have been received to be valid for use at the meeting or on the holding of the poll at which the vote was given or the poll taken.
73. Separate General Meetings
If a separate general meeting of holders of shares of a class is called otherwise than for changing or abrogating the rights of the shares of that class, the provisions of these articles relating to general meetings will apply to such a meeting with any necessary changes. A general meeting where ordinary shareholders are the only shareholders who can attend and vote in their capacity as shareholders will also constitute a separate general meeting of the holders of the ordinary shares.
74. Number of Directors
The company must have a minimum of two directors and a maximum of 15 directors (disregarding alternate directors). The shareholders can change this restriction by passing an ordinary resolution.
75. Directors’ Shareholding Qualification
The directors are not required to hold any shares in the company.
76. Power of Company to Appoint Directors
Subject to these articles, the company can, by passing an ordinary resolution, appoint any willing person to be a director, either as an extra director or to fill a vacancy where a director has stopped being a director for some reason.
77. Power of Directors to Appoint Directors
Subject to these articles, the directors can appoint any willing person to be a director, either as an extra director or as a replacement for another director. Any director appointed in this way must retire from office at the first annual general meeting after his appointment. A director who retires in this way is then eligible for re-appointment.
78. Retirement of Directors by Rotation
(A) At every annual general meeting the following directors shall retire from office:
(i) any director who has been appointed by the directors since the last annual general meeting, and
(ii) any director who held office at the time of the two preceding annual general meetings and who did not retire at either of them, and
(iii) any director who has been in office, other than as a director holding an executive position, for a continuous period of nine years or more at the date of the meeting.
(B) Any director who retires at an annual general meeting may offer himself for re- appointment by the shareholders.
79. Filling Vacancies
Subject to these articles, at the general meeting at which a director retires, shareholders can pass an ordinary resolution to re-appoint the director or to appoint some other eligible person in his place.
80. Power of Removal by Special Resolution
In addition to any power to remove directors conferred by the legislation, the company can pass a special resolution to remove a director from office even though his time in office has not ended and can (subject to these articles) appoint a person to replace a director who has been removed in this way by passing an ordinary resolution.
81. Persons Eligible as Directors
The only people who can be appointed as directors at a general meeting are the following:-
(i) directors retiring at the meeting;
(ii) anyone recommended by the directors; and
(iii) anyone nominated by a shareholder (not being the person to be nominated) in the following way:-
The shareholder must be entitled to vote at the meeting. He must deliver to the office not less than seven nor more than 42 days before the day of the meeting:
(a) a letter stating that he intends to nominate another person for appointment as a director; and
(b) written confirmation from that person that he is willing to be appointed.
82. Position of Retiring Directors
A director retiring at a general meeting retires at the end of that meeting or (if earlier) when a resolution is passed to appoint another person in the director’s place. Where a retiring director is re-appointed, he continues as a director without a break.
83. Vacation of Office by Directors
Any director automatically stops being a director if:-
(i) he gives the company a written notice of resignation;
(ii) he gives the company a written notice in which he offers to resign and the directors decide to accept this offer;
(iii) all of the other directors (who must comprise at least three people) pass a resolution or sign a written notice removing him as a director;
(iv) he is or has been suffering from mental or physical ill health and the directors pass a resolution removing the director from office;
(v) he has missed directors’ meetings (whether or not an alternate director appointed by him attends those meetings) for a continuous period of six months without permission from the directors and the directors pass a resolution removing the director from office;
(vi) a bankruptcy order is made against him or he makes any arrangement or composition with his creditors generally;
(vii) he is prohibited from being a director under the legislation; or
(viii) he ceases to be a director under the legislation or he is removed from office under these articles.
If a director stops being a director for any reason, he will also automatically cease to be a member of any committee or sub-committee of the directors.
84. Alternate Directors
(A) Any director can appoint any person (including another director) to act in his place (called an “alternate director”). That appointment requires the approval of the directors, unless previously approved by the directors or unless the appointee is another director. A director appoints an alternate director by sending a signed written notice of appointment to the office or to an address specified by the company or by tabling it at a meeting of the directors, or in such other way as the directors approve.
(B) The appointment of an alternate director ends on the happening of any event which, if he were a director, would cause him to vacate that office. It also ends if the alternate director resigns his office by written notice to the company or if his appointor stops being a director, unless that director retires at a general meeting at which he is re- appointed. A director can also remove his alternate director by a written notice sent to the office or to an address specified by the company or tabled at a meeting of the directors.
(C) An alternate director is entitled to receive notices of meetings of the directors. He is entitled to attend and vote as a director at any meeting at which the director appointing him is not personally present and generally at that meeting is entitled to perform all of the functions of his appointor as a director. The provisions of these articles regulating the meeting apply as if he (instead of his appointor) were a director. If he is himself a director, or he attends any meeting as an alternate director for more than one director, he can vote cumulatively for himself and for each other director he represents but he cannot be counted more than once for the purposes of the quorum. An alternate director’s signature to any resolution in writing of the directors is as effective as the signature of his appointor, unless the notice of his appointment provides to the contrary. This article also applies in a similar fashion to any meeting of a committee of which his appointor is a member. Except as set out in this article, an alternate director:-
(i) does not have power to act as a director;
(ii) is not deemed to be a director for the purposes of these articles; and
(iii) is not deemed to be the agent of his appointor.
(D) An alternate director is entitled to contract and be interested in and benefit from contracts, transactions or arrangements and to be repaid expenses and to be indemnified by the company to the same extent as if he were a director. However, he is not entitled to receive from the company as an alternate director any pay, except for that part (if any) of the pay otherwise payable to his appointor as his appointor may tell the company in writing to pay to his alternate director.
85. Executive Directors
(A) The directors or any committee authorised by the directors can appoint one or more directors to any executive position, on such terms and for such period as they think fit. They can also terminate or vary an appointment at any time. The directors or any committee authorised by the directors will decide how much remuneration a director appointed to an executive office will receive (whether as salary, commission, profit share or any other form of remuneration) and whether this is in addition to or in place of his fees as a director.
(B) If the directors terminate the appointment, the termination will not affect any right of the company or the director in relation to any breach of any employment contract which may be involved in the termination.
86. Directors’ Fees
The total fees paid to all of the directors (excluding any payments made under any other provision of these articles) must not exceed:-
(i) £1,500,000 a year; or
(ii) any higher sum decided on by an ordinary resolution at a general meeting.It is for the directors to decide how much to pay each director by way of fees under this article.
87. Additional Remuneration
The directors or any committee authorised by the directors can award extra fees to any director who, in their view, performs any special or extra services for the company.
Extra fees can take the form of salary, commission, profit-sharing or other benefits (and can be paid partly in one way and partly in another). This is all decided by the directors or any committee authorised by the directors.
88. Expenses
The company can pay the reasonable travel, hotel and incidental expenses of each director incurred in attending and returning from general meetings, meetings of the directors or committees of the directors or any other meetings which as a director he is entitled to attend. The company will pay all other expenses properly and reasonably incurred by each director in connection with the company’s business or in the performance of his duties as a director. The company can also fund a director’s or former director’s expenditure and that of a director or former director of any holding company of the company for the purposes permitted by the legislation and can do anything to enable a director or former director or a director or former director of any holding company of the company to avoid incurring such expenditure all as provided in the legislation.
89. Pensions and Gratuities for Directors
(A) The directors or any committee authorised by the directors can decide whether to provide pensions, annual payments or other benefits to any director or former director of the company, or any relation or dependant of, or person connected to, such a person. The directors can also decide to contribute to a scheme or fund or to pay premiums to a third party for these purposes. The company can only provide pensions and other benefits to people who are or were directors but who have not been employed by, or held an office or executive position in, the company or any of its subsidiary undertakings or former subsidiary undertakings or any predecessor in business of the company or any such other company or to relations or dependants of, or persons connected to, these directors or former directors if the shareholders approve this by passing an ordinary resolution.
(B) A director or former director will not be accountable to the company or the shareholders for any benefit provided pursuant to this article. Anyone receiving such a benefit will not be disqualified from being or becoming a director of the company.
90. Directors’ Interests
Conflicts of interest requiring authorisation by directors
(A) The directors may, subject to the quorum and voting requirements set out in this article, authorise any matter which would otherwise involve a director breaching his duty under the legislation to avoid conflicts of interest (“Conflict”).
(B) A director seeking authorisation in respect of a Conflict must tell the directors of the nature and extent of his interest in a Conflict as soon as possible. The director must give the directors sufficient details of the relevant matter to enable them to decide how to address the Conflict together with any additional information which they may request.
(C) Any director (including the relevant director) may propose that the relevant director be authorised in relation to any matter the subject of a Conflict. Such proposal and any authority given by the directors shall be effected in the same way that any other matter may be proposed to and resolved upon by the directors under the provisions of these articles except that:
(i) the relevant director and any other director with a similar interest will not count in the quorum and will not vote on a resolution giving such authority; and
(ii) the relevant director and any other director with a similar interest may, if the other directors so decide, be excluded from any meeting of the directors while the Conflict is under consideration.
(D) Where the directors give authority in relation to a Conflict or where any of the situations described in paragraph (F) applies in relation to a director (“Relevant Situation”): (i) the directors may (whether at the relevant time or subsequently) (a) require that the relevant director is excluded from the receipt of information, the participation in discussion and/or the making of decisions (whether at directors’ meetings or otherwise) related to the Conflict or Relevant Situation; and (b) impose upon the relevant director such other terms for the purpose of dealing with the Conflict or Relevant Situation as they think fit;
(ii) the relevant director will be obliged to conduct himself in accordance with any terms imposed by the directors in relation to the Conflict or Relevant Situation;
(iii) the directors may also provide that where the relevant director obtains (otherwise than through his position as a director of the company) information that is confidential to a third party, the director will not be obliged to disclose that information to the company, or to use or apply the information in relation to the company’s affairs, where to do so would amount to a breach of that confidence;
(iv) the terms of the authority shall be recorded in writing (but the authority shall be effective whether or not the terms are so recorded); and
(v) the directors may revoke or vary such authority at any time but this will not affect anything done by the relevant director prior to such revocation or variation in accordance with the terms of such authority.
Other conflicts of interest
(E) If a director knows that he is in any way directly or indirectly interested in a proposed contract with the company or a contract that has been entered into by the company, he must tell the other directors of the nature and extent of that interest in accordance with the legislation.
(F) If he has disclosed the nature and extent of his interest in accordance with paragraph (E) a director can do any one or more of the following: (i) have any kind of interest in a contract with or involving the company or another company in which the company has an interest;
(ii) hold any other office or place of profit with the company (except that of auditor) in conjunction with his office of director for such period and upon such terms, including as to remuneration, as the directors may decide;
(iii) alone, or through a firm with which he is associated do paid professional work for the company or another company in which the company has an interest (other than as auditor);
(iv) be or become a director or other officer of, or employed by or a party to a transaction or arrangement with, or otherwise be interested in any holding company or subsidiary company of the company or any other company in which the company has an interest; and
(v) be or become a director of any other company in which the company does not have an interest and which cannot reasonably be regarded as giving rise to a conflict of interest at the time of his appointment as a director of that other company.
Benefits
(G) A director does not have to hand over to the company or the shareholders any benefit he receives or profit he makes as a result of anything authorised under paragraph (A) or allowed under paragraph (F) nor is any type of contract authorised under paragraph (A) or allowed under paragraph (F) liable to be avoided. Quorum and voting requirements
(H) A director cannot vote or be counted in the quorum on a resolution of the directors relating to appointing that director to a position with the company or a company in which the company has an interest or the terms or the termination of the appointment.
(I) This paragraph applies if the directors are considering proposals about appointing two or more directors to positions with the company or any company in which the company has an interest. It also applies if the directors are considering setting or changing the terms of their appointment. These proposals can be split up to deal with each director separately. If this is done, each director can vote and be included in the quorum for each resolution, except any resolution concerning him or concerning the appointment of another director to a position with a company in which the company is interested where the director has a Relevant Interest in it.
(J) A director cannot vote or be counted in the quorum on a resolution of the directors about a contract in which he has an interest and, if he does vote, his vote will not be counted, but this prohibition will not apply to any resolution where that interest cannot reasonably be regarded as likely to give rise to a conflict of interest or where that interest is included in the following list:-
(i) a resolution about giving him any guarantee, indemnity or security for money which he or any other person has lent or obligations he or any other person has undertaken at the request of or for the benefit of the company or any of its subsidiary undertakings;
(ii) a resolution about giving any guarantee, indemnity or security to another person for a debt or obligation which is owed by the company or any of its subsidiary undertakings to that other person if the director has taken responsibility for some or all of that debt or obligation. The director can take this responsibility by giving a guarantee, indemnity or security;
(iii) a resolution about giving him any other indemnity where all other directors are also being offered indemnities on substantially the same terms;
(iv) a resolution about the company funding his expenditure on defending proceedings or the company doing something to enable him to avoid incurring such expenditure where all other directors are being offered substantially the same arrangements;
(v) a resolution relating to an offer by the company or any of its subsidiary undertakings of any shares or debentures or other securities for subscription or purchase if the
director takes part because he is a holder of shares, debentures or other securities or if he takes part in the underwriting or sub-underwriting of the offer;
(vi) a resolution about a contract in which he has an interest because of his interest in shares or debentures or other securities of the company or because of any other interest in or through the company;
(vii) a resolution about a contract involving any other company if the director has an interest of any kind in that company (including an interest by holding any position in that company or by being a shareholder in that company). This does not apply if he knows that he has a Relevant Interest in that company;
(viii) a resolution about a contract relating to a pension fund, superannuation or similar scheme or retirement, death or disability benefits scheme or employees’ share scheme which gives the director benefits which are also generally given to the employees to whom the fund or scheme relates;
(ix) a resolution about a contract relating to an arrangement for the benefit of employees of the company or of any of its subsidiary undertakings which only gives him benefits which are also generally given to the employees to whom the arrangement relates; and
(x) a resolution about a contract relating to any insurance which the company can buy or renew for the benefit of directors or of a group of people which includes directors.
(K) A director will be treated as having a Relevant Interest in a company if he holds an interest in shares representing one per cent. or more of a class of equity share capital (calculated exclusive of any shares of that class in that company held as treasury shares) or of the voting rights of that company. In relation to an alternate director, an interest of his appointor shall be treated as an interest of the alternate director without prejudice to any interest which the alternate director has otherwise. Interests which are unknown to the director and which it is unreasonable to expect him to know about are ignored.
(L) Where a company in which a director has a Relevant Interest is interested in a contract, the director will also be treated as being interested in that contract.
(M) Subject to these articles, the directors can exercise or arrange for the exercise of the voting rights attached to any shares in another company held by the company and the voting rights which they have as directors of that company in any way that they decide. This includes voting in favour of a resolution appointing any of them as directors or officers of that company and deciding their remuneration. Subject to these articles, they can also vote and be counted in the quorum as directors of the company in connection with any of these things.
(N) If a question comes up at a meeting of the directors about whether a director (other than the chairman of the meeting) has an interest in a contract and whether it is likely to give rise to a conflict of interest or whether he can vote or be counted in the quorum and the director does not agree to abstain from voting on the issue or not to be counted in the quorum, the question must be referred to the chairman of the meeting. The chairman of the meeting’s ruling about any other director is final and conclusive unless the nature or extent of the director’s interest (so far as it is known to him) has not been fairly disclosed to the directors. If the question comes up about the chairman of the meeting, the question shall be decided by a resolution of the directors. The chairman of the meeting cannot vote on the question but can be counted in the quorum. The directors’ resolution about the chairman of the meeting is conclusive, unless the nature or extent of the chairman’s interest (so far as it is known to him) has not been fairly disclosed to the directors.
General
(O) References in this article to
(i) a contract include references to an existing or proposed contract and to an existing or proposed transaction or arrangement whether or not it is a contract; and
(ii) a conflict of interest include a conflict of interest and duty and a conflict of duties.
(P) The company can by ordinary resolution suspend or relax the provisions of this article to any extent or ratify any contract which has not been properly authorised in accordance with this article.
91. General Powers of Company Vested in Directors
(A) The directors will manage the company’s business. They can use all the company’s powers except where these articles say that powers can only be used by the shareholders voting to do so at a general meeting. The general management powers under this article are not limited in any way by specific powers given to the directors by other articles.
(B) The directors are, however, subject to:-
(i) the requirements of these articles; and
(ii) any regulations laid down by the shareholders by passing a special resolution at a general meeting.
(C) If a change is made to these articles or if the shareholders lay down any regulation relating to something which the directors have already done which was within their powers, that change or regulation cannot invalidate the directors’ previous action.
92. Borrowing Powers
(A) The directors can exercise all the company’s powers:-
(i) to borrow money;
(ii) to guarantee;
(iii) to indemnify;
(iv) to mortgage or charge all or any of the company’s undertaking, property and assets (present and future) and uncalled capital;
(v) to issue debentures and other securities; and
(vi) to give security, either outright or as collateral security, for any debt, liability or obligation of the company or of any third party.
(B) (i) The directors must limit the borrowings of the company and exercise all voting and other rights or powers of control exercisable by the company in relation to its subsidiary undertakings so as to ensure that no money is borrowed if the total amount of the group’s borrowings then exceeds, or would as a result of such borrowing exceed, three times the company’s adjusted capital and reserves. This affects subsidiary undertakings only to the extent that the directors can do this by exercising these rights or powers of control.
(ii) This limit can be exceeded if the consent of the shareholders has been given in advance by passing an ordinary resolution.
(iii) This limit does not include any borrowings owing by one member of the group to another member of the group.
(C) Adjusted capital and reserves
The company’s adjusted capital and reserves will be established by the following calculations:-
Add:
(i) the amount paid up or credited or deemed to be paid up on the company’s issued share capital (including any shares held as treasury shares); and
(ii) the amount standing to the credit of the reserves of the company (which include any share premium account, capital redemption reserve and retained earnings),
using the figures shown on the then latest audited balance sheet.
Then:-
(iii) deduct any debit balance on retained earnings at the date of the audited balance sheet (if such a deduction has not already been made),
and
(iv) make any adjustments needed to reflect any changes since the date of the audited balance sheet to the amount of paid up share capital or reserves.
(D) Borrowings
When calculating the group’s borrowings, the directors will include not only borrowings but also the following (unless these have already been included in borrowings):-
(i) the amount of any issued and paid up share capital (other than equity share capital) of any subsidiary undertaking beneficially owned otherwise than by a member of the group;
(ii) the amount of any other issued and paid up share capital and the principal amount of any debentures or borrowed moneys not beneficially owned by a member of the group where a member of the group has given a guarantee or indemnity for its redemption or repayment or where a member of the group may have to buy such share capital, debenture or borrowed money;
(iii) the amount outstanding under any acceptance credits opened for or in favour of any member of the group;
(iv) the principal amount of any debenture (whether secured or unsecured) issued by any member of the group which is not beneficially owned by any other member of the group;
(v) any fixed or minimum premium payable on the final repayment of any borrowing or deemed borrowing;
(vi) the minority proportion of moneys borrowed by a member of the group and owing to a partly-owned subsidiary undertaking.
However, the directors will not include the following items in the borrowings:-
(vii) amounts borrowed by any member of the group to repay some or all of any other borrowings of any member of the group (but this exclusion will only apply if the original debt is discharged within six months from the new borrowing);
(viii) amounts borrowed by any member of the group to finance any contract where part of the price receivable by any member of the group is guaranteed or insured by the Export Credits Guarantee Department or any other similar government department or
agency (but this exclusion will only apply up to an amount equal to the amount guaranteed or insured);
(ix) amounts borrowed by, or amounts secured on assets of, an undertaking which became a subsidiary undertaking of the company after the date of the last audited balance sheet (but this exclusion will only apply up to an amount equal to the amount of borrowing, or amounts secured on assets, of the undertaking at the time immediately after it became a subsidiary undertaking); or
(x) the minority proportion of moneys borrowed by a partly-owned subsidiary undertaking which is not owing to another member of the group.
(E) Any foreign currency amounts will be translated into sterling when calculating total borrowings. The exchange rate applied will be the exchange rate on:-
(i) the last business day before the date of the calculation; or
(ii) the last business day six months before the date of the calculation, whichever exchange rate produces the lower figure.
The exchange rate will be taken as the spot rate in London which is recommended by a London clearing bank (chosen by the directors for this purpose) as the most appropriate rate for buying the relevant currency for sterling on the relevant day.
(F) If the amount of adjusted capital and reserves is being calculated in connection with a transaction involving a company becoming or ceasing to be a member of the group, the amount is to be calculated as if the transaction had already occurred.
(G) The audited balance sheet of the company will be taken as the audited balance sheet of the company prepared for the purposes of the legislation. However, if an audited consolidated balance sheet relating to the company and its subsidiary undertakings has been prepared for the same financial year, the audited consolidated balance sheet will be used instead. In that case, all references to reserves will be taken to be references to consolidated reserves.
(H) The company can from time to time change the accounting convention applied in the preparation of the audited balance sheet, but any new convention applied must comply with the requirements of the legislation. If the company prepares a supplementary audited balance sheet applying a different convention from the main audited balance sheet, the main audited balance sheet will be taken as the audited balance sheet for the purposes of the calculations under these articles.
(I) The group will be taken as the company and its subsidiary undertakings (if any).
(J) For the purposes of this article the minority proportion means a proportion equal to the proportion of the issued share capital of a partly-owned subsidiary undertaking which does not belong to a member of the group.
(K) A certificate or report by the company’s auditors:-
(i) as to the amount of the adjusted capital and reserves;
(ii) as to the amount of any borrowings; or
(iii) to the effect that the limit imposed by this article has not been or will not be exceeded at any particular time,
will be conclusive evidence of that amount or that fact.
93. Agents
(A) The directors can appoint anyone as the company’s attorney by granting a power of attorney or by authorising them in some other way. Attorneys can either be appointed directly by the
directors or the directors can give someone else the power to select attorneys. The directors or the persons who are authorised by them to select attorneys can decide on the purposes, powers, authorities and discretions of attorneys. But they cannot give an attorney any power, authority or discretion which the directors do not have under these articles.
(B) The directors can decide how long a power of attorney will last for and attach any conditions to it. The power of attorney can include any provisions which the directors decide on for the protection and convenience of anybody dealing with the attorney. The power of attorney can allow the attorney to grant any or all of his power, authority or discretion to any other person.
(C) The directors can:-
(i) delegate any of their authority, powers or discretions to any manager or agent of the company;
(ii) allow managers or agents to delegate to another person;
(iii) remove any people they have appointed in any of these ways; and
(iv) cancel or change anything that they have delegated, although this will not affect anybody who acts in good faith who has not had any notice of any cancellation or change.
Any appointment or delegation by the directors which is referred to in this article can be on any conditions decided on by the directors.
(D) The ability of the directors to delegate under this article applies to all their powers and is not limited because certain articles refer to powers being exercised by the directors or by a committee authorised by the directors while other articles do not.
94. Delegation to Individual Directors
(A) The directors can give a director any of the powers which they have jointly as directors (with power to sub-delegate). These powers can be given on terms and conditions decided on by the directors either in parallel with, or in place of, the powers of the directors acting jointly.
(B) The directors can change the basis on which such powers are given or withdraw such powers. But if a person deals with an individual director in good faith without knowledge of the change or withdrawal, he will not be affected by it.
(C) The ability of the directors to delegate under this article applies to all their powers and is not limited because certain articles refer to powers being exercised by the directors or by a committee authorised by the directors while other articles do not.
95. Registers
The company can keep an overseas, local or other register. The directors can make and change any regulations previously made by them relating to any of such registers.
96. Provision for Employees
The directors can exercise the powers under the legislation to make provision for the benefit of employees or former employees of the company or any of its subsidiaries in connection with the cessation or transfer of the whole or part of the business of the company or that subsidiary.
97. Directors’ Meetings
The directors can decide when and where to have meetings and how they will be conducted. They can also adjourn their meetings. A directors’ meeting can be called by any director. The secretary must call a directors’ meeting if asked to by a director.
98. Notice of Directors’ Meetings
Directors’ meetings are called by giving notice to all the directors. Notice is treated as properly given if it is given personally, by word of mouth or in writing to the director’s last known address or any other address given by him to the company for this purpose. Any director can waive his entitlement to notice of any directors’ meeting, including one which has already taken place and any waiver after the meeting has taken place will not affect the validity of the meeting or any business conducted at the meeting.
99. Quorum
If no other quorum is fixed by the directors, two directors are a quorum. Subject to these articles, if a director ceases to be a director at a directors’ meeting, he can continue to be present and to act as a director and be counted in the quorum until the end of the meeting if no other director objects and if otherwise a quorum of directors would not be present.
100. Directors below Minimum through Vacancies
The directors can continue to act even if one or more of them stops being a director. If the number of directors falls below the minimum which applies under these articles (including any change to that minimum number approved by an ordinary resolution of shareholders), or the number fixed as the quorum for directors’ meetings, the remaining director(s) may appoint further directors and convene general meetings to make up the shortfall.
If no director or directors are willing or able to act under this article, any two shareholders (excluding any shareholder holding shares as treasury shares) can call a general meeting to appoint extra directors(s).
101. Appointment of Chairman
(A) The directors can appoint any director as chairman or as deputy chairman and can remove him from that office at any time. If the chairman is at a directors’ meeting, he will chair it. In his absence, the chair will be taken by a deputy chairman, if one is present. If more than one deputy chairman is present, they will agree between them who should chair the meeting or, if they cannot agree, the deputy chairman longest in office as a director will take the chair. If there is no chairman or deputy chairman present within five minutes of the time when the directors’ meeting is due to start, the directors who are present can choose which one of them will be the chairman of the meeting.
(B) References in these articles to a deputy chairman include, if no one has been appointed with that title, a person appointed to a position with another title which the directors designate as equivalent to the position of deputy chairman.
102. Competence of Meetings
A directors’ meeting at which a quorum is present can exercise all the powers and discretions of the directors.
103. Voting
Matters to be decided at a directors’ meeting will be decided by a majority vote. If votes are equal, the chairman of the meeting has a second, casting vote.
104. Delegation to Committees
(A) The directors can delegate any of their powers or discretions to committees of one or more persons. If the directors have delegated any power or discretion to a committee, any references in these articles to using that power or discretion include its use by the committee. Any committee must comply with any regulations laid down by the directors. These
regulations can require or allow people who are not directors to be members of the committee, and can give voting rights to such people. But:-
(i) there must be more directors on a committee than persons who are not directors; and
(ii) a resolution of the committee is only effective if a majority of the members of the committee present at the time of the resolution were directors.
(B) Unless the directors decide not to allow this, any committee can sub-delegate any of its powers or discretions to sub-committees. Reference in these articles to committees include sub-committees permitted under this article.
(C) If a committee consists of more than one person, the articles which regulate directors’ meetings and their procedure will also apply to committee meetings (if they can apply to committee meetings), unless these are inconsistent with any regulations for the committee which have been laid down under this article.
(D) The ability of the directors to delegate under this article applies to all their powers and discretions and is not limited because certain articles refer to powers and discretions being exercised by committees authorised by directors while other articles do not.
105. Participation in Meetings
All or any of the directors can take part in a meeting of the directors by way of a conference telephone or any communication equipment which allows everybody to take part in the meeting by being able to hear each of the other people at the meeting and by being able to speak to all of them at the same time. A person taking part in this way will be treated as being present at the meeting and will be entitled to vote and be counted in the quorum.
106. Resolution in Writing
A resolution in writing must be signed by all of the directors who at the time are entitled to receive notice of a directors’ meeting and who would be entitled to vote on the resolution at a directors’ meeting, and who together meet the quorum requirement for directors’ meetings. This kind of resolution is just as valid and effective as a resolution passed by those directors at a meeting which is properly called and held. The resolution can be passed using several copies of the resolution if each copy is signed by one or more directors.
107. Validity of Acts of Directors or Committee
Everything which is done by any directors’ meeting, or by a committee of the directors, or by a person acting as a director, or as a member of a committee, will be valid even if it is discovered later that any director, or person acting as a director, was not properly appointed. This also applies if it is discovered later that anyone was disqualified from being a director, or had ceased to be a director or was not entitled to vote. In any of these cases, anything done will be as valid as if there was no defect or irregularity of the kind referred to in this article.
108. Use of Seals
(A) The directors must arrange for every seal of the company to be kept safely.
(B) A seal can only be used with the authority of the directors or a committee authorised by the directors.
(C) Subject as otherwise provided in these articles, every document which is sealed using the common seal must be signed by one director and the secretary, or by two directors or by one director in the presence of a witness who attests the signature or by any other person or persons authorised by the directors.
(D) Any document to which the official seal is applied need not be signed, unless the directors decide otherwise or the legislation requires otherwise.
(E) The directors can resolve that the requirement for any counter-signature in this article can be dispensed with on any occasion.
109. Declaration of Dividends by Company
The company’s shareholders can declare dividends in accordance with the rights of the shareholders by passing an ordinary resolution. No such dividend can exceed the amount recommended by the directors.
110. Payment of Interim and Fixed Dividends by Directors
If the directors consider that the financial position of the company justifies such payments, they can:-
(i) pay the fixed or other dividends on any class of shares on the dates prescribed for the payment of those dividends; and
(ii) pay interim dividends on shares of any class of any amounts and on any dates and for any periods which they decide.
If the directors act in good faith, they will not be liable for any loss that any shareholders may suffer because a lawful dividend has been paid on other shares which rank equally with or behind their shares.
111. Calculation and Currency of Dividends
(A) All dividends will be declared and paid in proportions based on the amounts paid up on the shares during any period for which the dividend is paid. Sums which have been paid up in advance of calls will not count as paid up for this purpose. If the terms of any share say that it will be entitled to a dividend as if it were a fully paid up, or partly paid up, share from a particular date (in the past or future), it will be entitled to a dividend on this basis. This article applies unless these articles, the rights attached to any shares, or the terms of any shares, say otherwise.
(B) Unless the rights attached to any shares, the terms of any shares or these articles say otherwise, a dividend or any other money payable in respect of a share can be paid in whatever currency the directors decide using an exchange rate selected by the directors for any currency conversions required. The directors can also decide how any costs relating to the choice of currency will be met.
112. Amounts Due on Shares can be Deducted from Dividends
If a shareholder owes the company any money for calls on shares or money in any other way relating to his shares, the directors can deduct any of this money from any dividend or other money payable to the shareholder on or in respect of any share held by him. Money deducted in this way can be used to pay amounts owed to the company.
113. No Interest on Dividends
Unless the rights attached to any shares, or the terms of any shares, say otherwise, no dividend or other sum payable by the company on or in respect of its shares carries a right to interest from the company.
114. Payment Procedure
(A) Any dividend or other money payable in cash relating to a share can be paid by sending a cheque, warrant or similar financial instrument payable to the shareholder who is entitled to it by post addressed to his registered address. Or it can be made payable to someone else named in a written instruction from the shareholder (or all joint shareholders) and sent by post to the address specified in that instruction. A dividend can also be paid by inter-bank transfer or by other electronic means (including payment through CREST) directly to an account with a bank or other financial institution (or other organisations operating deposit accounts if
allowed by the company) in the United Kingdom named in a written instruction from the person entitled to receive the payment under this article. Alternatively, a dividend can be paid in some other way requested in writing by the shareholder (or all joint shareholders) and agreed with the company.
(B) For joint shareholders or persons jointly entitled to shares by law, payment can be made to the shareholder whose name stands first in the register. The company can rely on a receipt for a dividend or other money paid on shares from any one of them on behalf of all of them.
(C) Cheques, warrants and similar financial instruments are sent, and payment in any other way is made, at the risk of the person who is entitled to the money. The company is treated as having paid a dividend if the cheque, warrant or similar financial instrument is cleared or if a payment is made through CREST, bank transfer or other electronic means. The company will not be responsible for a payment which is lost or delayed.
(D) Dividends can be paid to a person who has become entitled to a share by law as if he were the holder of the share.
115. Uncashed Dividends
(A) The company can stop sending dividend payments through the post, or cease using any other method of payment (including payment through CREST), for any dividend if:-
(i) for two consecutive dividends:-
(a) the dividend payments sent through the post have been returned undelivered or remain uncashed during the period for which they are valid; or
(b) the payments by any other method have failed; or
(ii) for any one dividend:-
(a) the dividend payment sent through the post has been returned undelivered or remains uncashed during the period for which it is valid; or
(b) the payment by any other method has failed,
and reasonable enquiries have failed to establish any new postal address or account of the registered shareholder.
(B) Subject to these articles, the company must recommence sending dividend payments if requested in writing by the shareholder, or the person entitled to a share by law.
116. Forfeiture of Unclaimed Dividends
Where any dividends or other amounts payable on a share have not been claimed, the directors can invest them or use them in any other way for the company’s benefit until they are claimed. The company will not be a trustee of the money and will not be liable to pay interest on it. If a dividend or other money has not been claimed for 12 years after being declared or becoming due for payment, it will be forfeited and go back to the company unless the directors decide otherwise.
117. Dividends Not in Cash
If recommended by the directors, the company can pass an ordinary resolution that a dividend be paid, and the directors can decide that an interim dividend be paid, wholly or partly by distributing specific assets (and, in particular, paid up shares or debentures of any other company). Where any difficulty arises on such a distribution, the directors can resolve it as they decide. For example, they can:
(i) authorise any person to sell and transfer any fractions;
(ii) ignore any fractions;
(iii) value assets for distribution purposes;
(iv) pay cash of a similar value to adjust the rights of shareholders; and/or
(v) vest any assets in trustees for the benefit of more than one shareholder.
118. Scrip Dividends
The directors can offer ordinary shareholders (excluding any shareholder holding shares as treasury shares) the right to choose to receive extra ordinary shares, which are credited as fully paid up, instead of some or all of their cash dividend. Before they can do this, shareholders must have passed an ordinary resolution authorising the directors to make this offer.
(i) The ordinary resolution can apply to some or all of a particular dividend or dividends. Or it can apply to some or all of the dividends which may be declared or paid in a specified period. The specified period must not end later than the fifth anniversary of the date on which the ordinary resolution is passed.
(ii) The directors can also offer shareholders the right to request new shares instead of cash for all future dividends (if a share alternative is available), until they tell or are treated as telling the company that they no longer wish to receive new shares.
(iii) A shareholder will be entitled to ordinary shares whose total “relevant value” is as near as possible to the cash dividend he would have received (disregarding any tax credit), but not more than it. The relevant value of a share is the average value of the company’s ordinary shares for five consecutive dealing days selected by the directors starting on or after the day when the shares are first quoted “ex dividend”. This average value is worked out from the middle market quotations for the company’s ordinary shares on the London Stock Exchange as derived from the Daily Official List (or any other publication of a recognised investment exchange showing quotations for the company’s ordinary shares) for the relevant dealing days.
(iv) The ordinary resolution can require that the relevant value is worked out in some different way. A certificate or report by the auditors stating the relevant value of a share for any dividend will be conclusive evidence of that value.
(v) After the directors have decided how many new shares ordinary shareholders will be entitled to, they can notify them in writing of their right to opt for new shares. This notice should also say how, where and when shareholders must notify the company if they wish to receive new shares. Where shareholders have opted to receive new shares in place of all future dividends, if new shares are available, the company will not need to notify them of a right to opt for new shares. No shareholders will receive a fraction of a share. The directors can decide how to deal with any fractions left over. For example, they can decide that the benefit of these fractions belongs to the company or that fractions are ignored or deal with fractions in some other way.
(vi) If a notice informing any shareholders of their right to opt for new shares is accidentally not sent or supplied or is not received (even if the company becomes aware of such failure to send or supply or non-receipt), the offer will not be invalid as a result nor give rise to any claim, suit or action.
(vii) The directors can exclude or restrict the right to opt for new shares or make any other arrangements where they decide that this is necessary or convenient to deal with any of the following legal or practical problems:-
(a) problems relating to laws of any territory, or
(b) problems relating to the requirements of any recognised regulatory body or stock exchange in any territory,
or where the directors believe that for any other reason the right should not be given.
(viii) If a shareholder has opted to receive new shares, no dividend on the shares for which he has opted to receive new shares (which are called the “elected shares”), will be declared or payable. Instead, new ordinary shares will be allotted on the basis set out earlier in this article. To do this, the directors will convert into capital the sum equal to the total amount of the new ordinary shares to be allotted. They will use this sum to pay up in full the appropriate number of new ordinary shares. These will then be allotted and distributed to the holders of the elected shares on the basis set out above. The sum to be converted into capital can be taken from:-
(a) any amount which is then in any reserve or fund (including the share premium account, any capital redemption reserve and the profit and loss account or retained earnings); or
(b) any other sum which is available to be distributed.
The directors can do anything they think necessary to give effect to any such conversion into capital.
(ix) The new ordinary shares will rank equally in all respects with the existing fully paid up ordinary shares at the time when the new ordinary shares are allotted. But, they will not be entitled to share in the dividend from which they arose, or to have new shares instead of that dividend.
(x) The directors can decide that new shares will not be available in place of any cash dividend. They can decide this at any time before new shares are allotted in place of such dividend, whether before or after shareholders have opted to receive new shares.
(xi) The directors can decide how any costs relating to making new shares available in place of a cash dividend will be met. For example, they can decide that an amount will be deducted from the entitlement of a shareholder under this article.
(xii) Unless the directors decide otherwise or unless the uncertificated securities rules require otherwise, any new ordinary shares which a shareholder has chosen to receive instead of some or all of his cash dividend will be:-
(a) CREST shares if the corresponding elected shares were CREST shares on the record date for that dividend; and
(b) certificated shares if the corresponding elected shares were certificated shares on the record date for that dividend.
(xiii) The directors may not proceed with any election unless the company has sufficient reserves or funds that may be capitalised, and the directors have authority to allot sufficient shares, to give effect to it after the basis of allotment is determined.
119. Power to Capitalise Reserves and Funds
(A) If recommended by the directors, the company’s shareholders can pass an ordinary resolution to capitalise any sum:-
(i) which is part of any of the company’s reserves (including premiums received when any shares were issued, capital redemption reserves or other undistributable reserves); or
(ii) which the company is holding as net profits.
(B) Unless the ordinary resolution states otherwise, the directors will use the sum which is capitalised by setting it aside for the ordinary shareholders on the register at the close of business on the day the resolution is passed (or another date stated in the resolution or fixed
as stated in the resolution) and in the same proportions as the ordinary shareholders’ entitlement to dividends (or in other proportions stated in the resolution or fixed as stated in the resolution). The sum set aside can be used:-
(i) to pay up some or all of any amount on any issued shares which has not already been called, or paid in advance; or
(ii) to pay up in full shares, debentures or other securities of the company which would then be allotted and distributed, credited as fully paid, to shareholders.
However, a share premium account, a capital redemption reserve, or any reserve or fund representing unrealised profits, can only be used to pay up in full the company’s shares that are then to be allotted and distributed, credited as fully paid, to shareholders. Where the sum capitalised is used to pay up in full shares that are then to be allotted and distributed, credited as fully paid, to shareholders, the company is also entitled to participate in the relevant distribution in relation to any shares of the relevant class held by it as treasury shares and the proportionate entitlement of the relevant class of shareholders to the distribution will be calculated on this basis.
(C) The directors can appoint any person to sign a contract with the company on behalf of those who are entitled to shares, debentures or other securities under the resolution. Such a contract is binding on all concerned.
120. Settlement of Difficulties in Distribution
If any difficulty arises in connection with any distribution of any capitalised reserve or fund, the directors can resolve it in any way which they decide. For example, they can deal with entitlements to fractions by deciding that the benefit of fractions belong to the company or that fractions are ignored or deal with fractions in some other way.
121. Power to Choose Any Record Date
This article applies to any dividend on any shares, or any distribution, allotment or issue to the holders of any shares. This can be paid or made to the registered holder or holders of the shares, or to anyone entitled in any other way, at a particular time on a particular day selected by the directors. It will be based on the number of shares registered at that time on that day, even if this is before any resolution to authorise what is being done was passed. This article applies whether what is being done is the result of a resolution of the directors, or a resolution at a general meeting. The time and date can be before the dividend and so on is to be paid or made, or before any relevant resolution was passed.
122. Inspection of Records
A shareholder is not entitled to inspect any of the company’s accounting records or other books or papers unless:-
(i) the legislation or a proper court order gives him that right;
(ii) the directors authorise him to do so; or
(iii) the shareholders authorise him to do so by ordinary resolution.
123. Strategic Reports with Supplementary Material
The company can send or supply copies of its strategic reports with supplementary material to its shareholders instead of copies of its full reports and accounts.
124. Method of Service
(A) The company can send or supply any notice, document, including a share certificate, or other information to a shareholder:-
(i) by delivering it to him personally;
(ii) by addressing it to him and posting it to, or leaving it at, the shareholder’s registered address;
(iii) through CREST, where it relates to CREST shares;
(iv) as authorised in writing by the relevant shareholder;
(v) where appropriate, by sending or supplying it in electronic form to an address notified by the relevant shareholder to the company for that purpose; or
(vi) where appropriate, by making it available on a website and notifying the shareholder of its availability in accordance with this article.
Where there are joint shareholders, the notice, document or other information can be sent or supplied to any one of the joint holders and will be treated as having been sent or supplied to all the joint holders.
(B) Where there are joint shareholders, anything which needs to be agreed or specified in relation to any notice, document or other information to be sent or supplied to them can be agreed or specified by any one of the joint shareholders. The agreement or specification of the senior will be accepted to the exclusion of the agreement or specification of the other joint shareholder(s). For this purpose, seniority will be determined by the order in which the joint shareholders’ names stand in the register in respect of the joint shareholding.
(C) If on three consecutive occasions any notice, document or other information sent or supplied to a shareholder has been returned undelivered, the company need not send or supply further notices, documents or other information to that shareholder until he has communicated with the company and supplied the company (or its agents) with a new registered address, or a postal address for the service of notices and the despatch or supply of documents and other information, or has informed the company of an address for the service of notices and the sending or supply of documents and other information in electronic form. Any notice, document or other information sent by post will be treated as returned undelivered if the notice, document or other information is sent back to the company (or its agents), and any notice, document or other information sent or supplied in electronic form will be treated as returned undelivered if the company (or its agents) receives notification that the notice, document or other information was not delivered to the address to which it was sent.
(D) The company may at any time and in its sole discretion choose (a) to serve, send or supply notices, documents or other information in hard copy form alone to some or all shareholders; and (b) not to serve, send or supply a notice, document or other information to a particular shareholder where it considers this necessary or appropriate to deal with legal, regulatory or practical problems in, or under the laws of, any territory.
125. Record Date for Service
Where the company sends or supplies notices, documents or other information to shareholders, it can do so by reference to the shareholders’ register as it stands at any time not more than 15 days before the date the notice, document or other information is sent or supplied. Any change of details on the register after that time will not invalidate the sending or supply and the company is not obliged to send or supply the same notice, document or other information to any person entered on the shareholders’ register after the date selected by the company.
126. Members Resident Abroad or on Branch Registers
(A) If a shareholder’s address on the register is outside the United Kingdom, he can give the company a United Kingdom postal address to which notices, documents or other information can be sent or supplied to him. If he does, he is entitled to have notices, documents or other information set to him at that address or, where applicable, to be notified at that address of the availability of the notice, documents or other information on a website. Alternatively, a shareholder whose address on the register is outside the United Kingdom can give the company an address for the purposes of communications in electronic form. If he does, notices, documents or other information may, subject to these articles, be set or supplied to him at that address. Otherwise he is not entitled to receive any notices, documents or other information from the company.
(B) For a shareholder registered on a branch register, notices, documents or other information can be posted or despatched in the United Kingdom or in the country where the branch register is kept.
127. Service of Notices on Persons Entitled by Transmission
(A) This article applies where a shareholder has died or become bankrupt or is in liquidation, or where someone else has otherwise become entitled by law to that shareholder’s shares, but is still registered as a shareholder. It applies whether he is registered as a sole or joint shareholder.
(B) A person who is entitled to that shareholder’s shares by law, and who proves this to the reasonable satisfaction of the directors, can give the company a postal address for the sending or supply of notices, documents and other information and/or an address for the purposes of communications by electronic means. If this is done, the company can send notices, documents and other information or, where applicable, a notification about the availability of the notice, document or other information on a website, to that address.
(C) Otherwise, if any notice, document or other information is sent or supplied to the shareholder named on the register, this will be valid despite his death, bankruptcy or liquidation or the fact that any other event giving rise to an entitlement to the shares by law has occurred. This applies even if the company knew about these things. If any notice, document or other information is sent or supplied in accordance with this article, there is no need to send or supply it to any other people who may be involved.
(D) The company may at any time and in its sole discretion choose to serve, send or supply notices, documents or other information in hard copy form alone to some or all persons who are entitled to a shareholder’s shares by law and may also in its sole discretion, where it considers necessary or appropriate to deal with legal, regulatory or practical problems n, or under the laws of, any territory, determine not to serve, send or supply a particular notice, document or other information to any particular such person.
128. Deemed Delivery
(A) If any notice, document or other information is given, sent or supplied by the company by post, it is treated as being received the day after it was posted if first class post was used or 48 hours after it was posted if first class post was not used. In proving that any notice, document or other information was given, sent or supplied, it is sufficient to show that the envelope was properly addressed and put into the postal system with postage paid.
(B) If any notice, document or other information is left by the company at a shareholder’s registered address or at a postal address notified to the company in accordance with these articles by a shareholder or a person who is entitled to a share by law, it is treated as being received on the day it was left.
(C) If a notice is sent through CREST, it is treated as being received when the company, or any CREST participant acting for the company, sends the issuer-instruction relating to the notice, document or other information.
(D) If any notice, document or other information is given, sent or supplied by the company using electronic means, it is treated as being received on the day it was sent even if the company subsequently sends a hard copy of such notice, document or other information by post. In the case of any notice, document or other information made available on a website, the notice, document or other information is treated as being received on the day on which the notice, document or other information was first made available on the website, or, if later, when a notice of availability is received or treated as being received by the shareholder in accordance with these articles. In proving that any notice, document or other information was given, sent or supplied by electronic means, it is sufficient to show that it was properly addressed.
(E) If any notice, document or other information is given, sent or supplied by the company by any other means authorised in writing by a shareholder, it is treated as being received when the company has done what it was authorised to do by that shareholder.
129. Notice When Post Not Available
If the postal service in the United Kingdom or some part of the United Kingdom is suspended or restricted, the directors only need to give notice of a meeting to shareholders with whom the company can communicate by electronic means and who have provided the company with an address for this purpose. The company must also publish the notice in at least one United Kingdom national newspaper and make it available on its website from the date of such publication until the conclusion of the meeting or any adjournment of the meeting. If it becomes generally possible to send or supply notices by post in hard copy form at least six clear days before the meeting, the directors will send or supply a copy of the notice by post to those who would otherwise receive it in hard copy form by way of confirmation.
130. Presumptions Where Documents Destroyed
(A) The company can destroy or delete:-
(i) all transfer forms or Operator-instructions transferring shares, and documents sent to support a transfer, and any other documents which were the basis for making an entry by the company on the register, after six years from the date of registration;
(ii) all dividend and other payment instructions and notifications of a change of address or name, after two years from the date these were recorded;
(iii) all cancelled share certificates, after one year from the date they were cancelled; and
(iv) all proxy forms after one year from the date they were used if they were used for a poll, or after one month from the end of the meeting to which they relate if they were not used for a poll.
(B) If the company destroys or deletes a document under this article, it is conclusively treated as having been a valid and effective document in accordance with the company’s records relating to the document. Any action of the company in dealing with the document in accordance with its terms before it was destroyed or deleted is conclusively treated as having been properly taken.
(C) This article only applies to documents which are destroyed or deleted in good faith and where the company is not on notice of any claim to which the document may be relevant.
(D) If the documents relate to CREST shares, the company must comply with any requirements of the uncertificated securities rules which limit its ability to destroy or delete these documents.
(E) This article does not make the company liable if:-
(i) it destroys or deletes a document earlier than the time limit referred to in paragraph (A); (ii) it does not comply with the conditions in paragraph (C); or
(iii) the company would not be liable if this article did not exist.
(F) This article applies whether a document is destroyed or deleted or disposed of in some other way.
131. Indemnity of Directors
(A) As far as the legislation allows this, the company:-
(i) can indemnify any director or former director of the company or of any associated company against any liability; and
(ii) can purchase and maintain insurance against any liability for any director or former director of the company or of any associated company.
(B) A director or former director of the company or of any associated company will not be accountable to the company or the shareholders for any benefit provided pursuant to this article. Anyone receiving such a benefit will not be disqualified from being or becoming a director of the company.
132. Arbitration
(A) Unless Article 133 applies:
All disputes:
(i) between a shareholder in that shareholder’s capacity as such and the company and/or its directors arising out of or in connection with these articles or otherwise; and/or
(ii) so far as permitted by law, between the company and any of its directors in their capacities as such or as employees of the company, including all claims made by or on behalf of the company against its directors; and/or
(iii) between a shareholder in that shareholder’s capacity as such and the company’s professional service providers; and/or
(iv) between the company and the company’s professional service providers arising in connection with any claim within the scope of sub-paragraph (A)(iii),
will be exclusively and finally resolved under the Rules of Arbitration of the International Chamber of Commerce (“ICC”) (the “ICC Rules”), as amended from time to time.
(B) The tribunal will consist of three arbitrators to be appointed in accordance with the ICC Rules.
(C) The chairman of the tribunal must have at least 20 years’ experience as a lawyer qualified to practise in a common law jurisdiction within the Commonwealth (as constituted on the date of adoption of this article) and each other arbitrator must have at least 20 years’ experience as a qualified lawyer.
(D) The place of arbitration will be London, England.
(E) The language of the arbitration will be English.
(F) These articles are a contract between the company and its shareholders and between the company’s shareholders amongst themselves. This article (as supplemented from
time to time by any agreement to a similar effect between the company and its directors or professional service providers) also contains or evidences an express submission to arbitration by each shareholder, the company, its directors and professional service providers and such submissions will be treated as a written arbitration agreement under the Arbitration Act 1996 of England and Wales and Article II of the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958).
(G) Each person to whom this article applies hereby waives, as far as permitted by law: (i) any right under the laws of any jurisdiction to apply to any court of law or other judicial authority to determine any preliminary point of law, and/or (ii) any right he or she may otherwise have under the laws of any jurisdiction to appeal or otherwise challenge the award, ruling or decision of the tribunal.
133. Exclusive Jurisdiction
(A) This article applies to:
(i) a dispute (which would otherwise be subject to Article 132) in any jurisdiction if a court in that jurisdiction determines that Article 132 is invalid or unenforceable in relation to that dispute in that jurisdiction; and
(ii) any derivative claim under the Companies Acts.
(B) For the purposes of paragraph (A), “court” means any court of competent jurisdiction or other competent authority including for the avoidance of doubt, a court or authority in any jurisdiction which is not a signatory to the New York Convention.
(C) Any proceeding, suit or action:
(i) between a shareholder in that shareholder’s capacity as such and the company and/or its directors arising out of or in connection with these articles or otherwise; and/or
(ii) so far as permitted by law, between the company and any of its directors in their capacities as such or as employees of the company, including all claims made by or on behalf of the company against its directors; and/or
(iii) between a shareholder in that shareholder’s capacity as such and the company’s professional service providers and/or
(iv) between the company and the company’s professional service providers arising in connection with any claim within the scope of sub-paragraph (C)(iii),
can only be brought in the courts of England and Wales.
(D) Damages alone may not be an adequate remedy for any breach of this article, so that in the event of a breach or anticipated breach, the remedies of injunction and/or an order for specific performance would in appropriate circumstances be available.
134. General Dispute Resolution Provisions
(A) For the purposes of Articles 132 and 133, a “dispute” means any dispute, controversy or claim, other than:
(i) any dispute, controversy or claim relating to any failure or alleged failure by the company to pay all or part of a dividend which has been declared and which has fallen due for payment; and
(ii) in the case of Article 133 only, any derivative claim under the Companies Acts.
(B) The governing law of these articles, including the submissions to arbitration and written arbitration agreement contained in or evidenced by Article 132 and any dispute, controversy or claim arising out of or in connection with these articles (whether contractual or non-contractual), is the substantive law of England.
(C) The company is entitled to enforce Articles 132 and 133 for its own benefit, and that of its directors, subsidiary undertakings and professional service providers.
(D) References in Articles 132 and 133 to:
(i) “company” includes each and any of the company’s subsidiary undertakings from time to time; and
(ii) “director” includes each and any director of the company from time to time in his or her capacity as such or as employee of the company and extends to any former director of the company; and
(iii) “professional service providers” includes the company’s auditors, legal counsel, bankers, ADR depositaries and any other similar professional service providers in their capacity as such from time to time but only if and to the extent such person has agreed with the company in writing to be bound by Article 132 and/or 133 (or has otherwise agreed to submit disputes to arbitration and/or exclusive jurisdiction in a materially similar way).
135. Arrangements in respect of the additional listing of the company’s shares in the United States of America
(A) Subject to paragraphs (B) and (C) of this Article 135, immediately upon the effectiveness of the additional listing of the shares of the company on either the New York Stock Exchange or the Nasdaq Stock Market (as the directors shall determine) (the “Additional US Listing”), the legal title to each share in the company (other than any share held by any Affiliate Shareholder or the ADR Depositary immediately prior to the effectiveness of the Additional US Listing) that was in issue immediately prior to the effectiveness of the Additional US Listing shall be automatically transferred (by first transferring such shares to GTU Ops Inc. (as nominee for CTCNA, acting in its capacity as depositary) (or to such other depositary nominee as the board may nominate) in the manner set out in paragraph (G)) (and any outstanding share certificate(s) in respect thereof shall be automatically cancelled) (without any further action by the shareholder of the company who held such share immediately prior to the Additional US Listing (the “Relevant Member”) or the company) to Cede & Co., which will be the registered holder of such share, as nominee of The Depository Trust Company (“DTC”), to be held on behalf of CTCNA (or such other person as the directors may nominate) (the “DI Custodian”), as custodian for Computershare Investor Services PLC (or such other person as the directors may nominate) (the “DI Depositary”), which shall hold its interest in such share on trust as bare trustee under English law for the Relevant Member, against the issue to such Relevant Member of a depositary interest operated by Computershare Investor Services PLC representing one share in the company (a “Depositary Interest”) under the arrangements described in the shareholder circular published by the company in relation to the Additional US Listing dated 5 September 2022 (the “Circular”) and the Relevant Member will be bound by the terms and conditions of the DI Deed (as defined in the Circular) made by the DI Depositary concerning the Depositary Interests.
(B) Subject to paragraph (C) of this Article 135, any Depositary Interest which is issued in respect of a share held in certificated form by a Relevant Member immediately prior to the Additional US Listing shall be issued to Computershare Company Nominees Limited (or such other person as the board may nominate) to hold such Depositary Interest as nominee and trustee for such Relevant Member under the corporate sponsored nominee facility arranged by the company with Computershare Investor Services PLC (the “CSN Facility”) and the Relevant Member shall be bound by the terms and conditions under which Computershare Investor Services PLC provides the CSN Facility, as amended from time to time.
(C) Paragraphs (A) and (B) of this Article 135 will not apply in respect of shares held in certificated form by a Relevant Member immediately prior to the effectiveness of the Additional US Listing where such Relevant Member is not resident in a CSN Permitted Jurisdiction. Instead such shares will be automatically transferred (by first transferring such shares to GTU Ops Inc. (as nominee for CTCNA, acting in its capacity as depositary) (or to such other depositary nominee as the board may nominate) in the manner set out in paragraph (G)) (and any outstanding share certificate(s) in respect thereof shall be automatically cancelled) (without further action by the Relevant Member or the Company) to Cede & Co., which will be the
registered holder of such shares as nominee for DTC, to be held on behalf of CTCNA (or such other person as the board may nominate), as exchange agent, for such Relevant Member for a period not to exceed 180 calendar days (unless otherwise agreed between the company and the exchange agent) under the custody arrangements described in the Circular.
(D) Nothing in paragraphs (A), (B) or (C) of this Article 135 shall apply to shares held by Affiliate Shareholders immediately prior to the effectiveness of the Additional US Listing, the legal title to which shall, immediately upon the effectiveness of the Additional US Listing, be automatically transferred (and any outstanding share certificate(s) in respect thereof shall be automatically cancelled) (without any further action by such Affiliate Shareholder or the company) to GTU Ops Inc. (or such other person as the board may nominate) (“DR Depositary Nominee”) as nominee for CTCNA (or such other person as the board may nominate), against which CTCNA shall (in its capacity as depositary) issue to each Affiliate Shareholder Depositary Receipts each representing one share in the company under the arrangements described in the Circular and the Affiliate Shareholders shall be bound by the terms and conditions of the DR Deed (as defined in the Circular).
(E) Nothing in paragraphs (A), (B) (C) or (D) of this Article 135 shall apply to shares that are in issue immediately prior to the effectiveness of the Additional US Listing and that are held by JPMorgan Chase Bank, N.A. (the “ADR Depositary”), in its capacity as depositary of shares in connection with the company’s ADR facility. Instead, immediately upon the effectiveness of the Additional US Listing, the legal title to such shares in the company shall be transferred from the ADR Depositary (and any outstanding share certificate(s) in respect thereof shall be automatically cancelled) (without any further action by the ADR Depositary or the company) as follows: (i) subject to, and in exchange for, the cancellation of all ADSs held by Cede & Co. (as nominee for DTC) immediately prior to the Additional US Listing, Cede & Co. (as nominee of DTC) will receive by way of transfer from the ADR Depositary, and be registered as the holder of, such number of shares in the company as is equal to the number of shares which such ADSs represent (by first transferring such shares to GTU Ops Inc. (as nominee for CTCNA, acting in its capacity as depositary) (or to such other depositary nominee as the board may nominate) in the manner set out in paragraph (G)), to be held on behalf of the DTC participants that (immediately prior to the Additional US Listing) held interests in ADSs through DTC; and (ii) subject to, and in exchange for, the cancellation of all ADSs held by each other registered holder immediately prior to the Additional US Listing, without any action being required on the part of each other registered holder, each such other registered holder will receive by way of transfer from the ADR Depositary, and be registered on the transfer books of the company as the holder of, such number of shares in the company as is equal to the number of shares which such ADSs represent, provided that in the case of both (i) and (ii) above, (A) registered holders whose holding of ADSs cannot be exchanged for an exact number of shares in the company (and who would otherwise be left with a fractional entitlement) will not be allocated fractions of shares in the company and (B) instead, the fractions of shares will be aggregated and the whole number of shares represented thereby will be transferred to Cede & Co., as the registered holder of such shares as nominee for DTC, to be held on behalf of and be sold by CTCNA (or such other person as the directors may appoint), as the company’s transfer agent, in the open market with the net cash proceeds from the sale thereof being distributed to any registered holders entitled thereto.
(F) All mandates, preferences, elections and instructions of shareholders as regards their holding of shares relating to the payment currency of dividends, notices and other communications which are in force immediately prior to the effectiveness of the Additional US Listing will, to the extent reasonably possible, be continued after the Additional US Listing becomes effective unless and until varied or revoked by such shareholder at any time thereafter.
(G) The company may appoint any person as attorney and/or agent for a shareholder to execute and deliver as transferor a form of register removal, transfer or instructions of transfer on behalf of the shareholder (or any subsequent holder or any nominee of such shareholder or any such subsequent holder) or Affiliate Shareholder (as the case may be) in favour of (i) Cede & Co. (as nominee of DTC) or GTU Ops Inc. (as DR Depositary Nominee) (as the case may be) and do all such other things and execute and deliver all such documents as may in
the opinion of the company or any attorney and/or agent appointed by it be necessary or desirable to give effect to the arrangements described in this Article 135 (including, without limitation, implementing one or more transfer of shares to Cede & Co. as contemplated in paragraphs (A), (B) (C) or (E) of this Article 135 (as nominee for DTC) by first transferring such shares to GTU Ops Inc. (as nominee for CTCNA, acting in its capacity as depositary) (or to such other depositary nominee as the board may nominate), with Depositary Receipts each representing one share in the company being issued for the benefit of the entitled shareholder, before the relevant Depositary Receipts shall be cancelled prior to the onward inter-systems transfer of the underlying ordinary shares from GTU Ops Inc. (or the relevant depositary nominee) to Cede & Co.)).
GLOSSARY
About the Glossary
This Glossary is to help readers understand the company’s articles. Words are explained as they are used in the articles - they might mean different things in other documents. This Glossary is not legally part of the articles and it does not affect their meaning. The explanations are intended to be a general guide - they are not precise. Words and expressions which are printed in bold in a definition have their own general explanation of their meaning which is contained in this Glossary.
abrogate If the special rights of a share are abrogated, they are cancelled or withdrawn.
adjourn Where a meeting breaks up, to be continued at a later time or day, at the same or a different place.
allot When new shares are allotted, they are set aside for the person they are intended for. This will normally be after the person has agreed to pay for a new share, or has become entitled to a new share for any other reason. As soon as a share is allotted, that person has the right to have his name put on the register of shareholders. When he has been registered, the share has also been issued.
asset Anything which is of any value to its owner.
attorney An attorney is a person who has been appointed to act for another person. The person is appointed by a formal document, called a “power of attorney”.
brokerage Commission which is paid to a broker by a company issuing shares where the broker’s clients have applied for shares.
call A call to pay money which is due on shares which has not yet been paid. This happens if the company issues shares which are partly paid, where money remains to be paid to the company for the shares. The money which has not been paid can be “called” for. If all the money to be paid on a share has been paid, the share is called a “fully paid share”.
capitalise To convert some or all of the reserves of a company into capital (such as shares).
capital redemption reserve A reserve which a company may have to set up to maintain the level of its capital base when shares are redeemed or bought back.
certificated form A shareholder holds a share or other security in certificated form if it is not able to be held in uncertificated form or, if it is able to be held in uncertificated form but that shareholder has requested that a certificate be issued for that share or other security (see also uncertificated form).
company representative If a corporation owns shares, it can appoint a company representative to attend a shareholders’ meeting to speak and vote for it.
consolidate When shares are consolidated, they are combined with other shares - for example, three £1 shares might be consolidated into one new £3 share.
debenture A typical debenture is a long-term borrowing by a company. The loan usually has to be repaid at a fixed date in the future and carries a fixed rate of interest.
declare Generally, when a dividend is declared, it becomes due to be paid.
derivative claim An action which may be brought by a member on behalf of the company to enforce liability for breach by a director of his duties to the company.
electronic form A document is in electronic form if it is either sent by electronic means or it is sent by other means while in an electronic form e.g. a CD ROM.
electronic means A communication is sent by electronic means if it is sent by means of a telecommunications system. It includes fax and telephone communications and also electronic mail.
entitled to a share by law In some situations, a person will be entitled to have shares which are registered in somebody else’s name registered in his own name or to require the shares to be transferred to another person. When a shareholder dies, or the sole survivor of joint shareholders dies, his personal representatives have this right. If a shareholder is made bankrupt, his trustee in bankruptcy has the right.
ex dividend Once a share has gone ex-dividend, a person who buys the share in the market will not be entitled to the dividend which has been declared shortly before it was bought. The seller remains entitled to this dividend even though it will be paid after he has sold his share.
executed A document is executed when it is signed or sealed or made valid in some other way.
exercise When a power is exercised, it is used.
forfeit and forfeiture When a share is forfeited it is taken away from the shareholder and goes back to the company. This process is called “forfeiture”. This can happen if a call on a partly paid share is not paid on time.
fully paid shares When all of the money or other property which is due to the company for a share has been paid or received, a share is called a “fully paid share”.
hard copy form A document is in hard copy form if it is in a paper copy or similar form.
indemnity and indemnify If a person gives another person an indemnity, he promises to make good any losses or damage which the other might suffer. The person who gives the indemnity is said to “indemnify” the other person.
in issue See issue.
instruments Formal legal documents.
issue When a share has been issued, everything has been done by a company to make the shareholder the owner of the share. In particular, the shareholder’s name has been put on the register. Existing shares which have been issued are called “in issue”.
joint and several liability A person who is jointly and severally liable is liable together with others and is also liable separately.
lien Where the company has a lien over shares, it can take the dividends, and any other payments relating to the shares which it has a lien over, or it can sell the shares, to repay the debt and so on.
members Shareholders.
nominal amount or nominal value The amount of the share shown in a company’s account. The nominal value of the company’s ordinary shares is 0.50 US Dollars. This amount is shown on the share certificate for a share. When a company issues new shares this can be for a price which is at a premium to the nominal value. When shares are bought and sold on the stock market this can be for more, or less, than the nominal value. The nominal value is sometimes also called the “par value”.
officer The term officer includes (subject to the provisions of the articles) a director, secretary, any employee who reports directly to a director or any other person who the directors decide should be an officer.
Operator A person approved by the Treasury under the Uncertificated Securities Regulations 2001 as operator of a relevant system.
Operator-instruction A properly authenticated instruction sent by or on behalf of an Operator and sent or received by means of a relevant system.
ordinary resolution A decision reached by a simple majority of votes - that is by more than 50 per cent. of the votes cast.
partly paid shares If any money remains to be paid on a share, it is said to be partly paid. The unpaid money can be “called” for.
personal representatives A person who is entitled to deal with the property (the “estate”) of a person who has died. If the person who has died left a valid will, the will appoints “executors” who are personal representatives. If the person died without a will, the courts will appoint one or more “administrators” to be the personal representatives.
poll On a vote taken on a poll, the number of votes which a shareholder has will depend on the number of shares which he owns. An ordinary shareholder has one vote for each share he owns. A poll vote is different to a vote taken on a show of hands, where each person who is entitled to vote has just one vote, however many shares he owns.
power of attorney A formal document which legally appoints one or more persons to act on behalf of another person.
pre-emption rights The right of some shareholders which is given by the legislation to be offered a proportion of certain classes of newly issued shares and other securities before they are offered to anyone else. This offer must be made on terms which are at least as favourable as the terms offered to anyone else.
premium If a company issues a new share for more than its nominal value, the amount above the nominal value is the premium.
proxy A proxy is a person who is appointed by a shareholder to attend a meeting and vote for that shareholder. A proxy is appointed by using a proxy form, which may be electronic. A proxy does not have to be a shareholder. A proxy can vote on a poll and on a show of hands under the company’s articles.
proxy form A form (including an electronic form) which a shareholder uses to appoint a proxy to attend a meeting and vote for him. The proxy forms are sent out by the company and must be returned to the company before the meeting to which they relate.
quorum The minimum number of shareholders or directors who must be present before a shareholders’ or, as appropriate, directors’ meeting can start. When this number is reached, the meeting is said to be “quorate”.
rank When either capital or income is distributed to shareholders, it is paid out according to the rank (or ranking) of the shares. For example, a share which ranks ahead of (or above) another share in sharing in a company’s income is entitled to have its dividends paid first, before any dividends are paid on shares which rank below (or after) it. If there is not enough income to pay dividends on all shares, the available income must be used first to pay dividends on shares which rank first, and then to shares which rank next. The same applies for repayments of capital. Capital must be paid first to shares which rank first in sharing in the company’s capital, and then to shares which rank next. A company’s preference shares (if it has any) generally rank ahead of its ordinary shares.
recognised investment exchange An investment exchange which has been officially recognised by the UK authorities. An investment exchange is a place where investments, such as shares, are traded. The London Stock Exchange is a recognised investment exchange.
redeem, redemption and redeemable When a share is redeemed, it goes back to the company in return for a sum of money which was fixed (or calculated from a formula fixed) before the share was issued. This process is called “redemption”. A share which can be redeemed is called a “redeemable” share.
relevant system This is a term used in the legislation for a computer system which allows shares without share certificates to be transferred without using transfer forms. The CREST system for paperless share dealing is a “relevant system”.
renounces and renunciation Where a share has been allotted, but nobody has been entered on the share register for the share, it can be renounced to another person. This transfers the right to have the share registered to another person. This process is called “renunciation”.
reserves A fund which has been set aside in the accounts of a company - profits which are not paid out to shareholders as dividends, or used up in some other way, are held in a reserve by the company.
retire by rotation Directors must retire at an annual general meeting after they have been in office for three years or if they have been appointed since the last annual general meeting. This gives the shareholders the chance to confirm or renew their appointments by voting on whether to re-appoint them. In addition, non-executive directors who have acted as such for nine years must retire at every annual general meeting.
revoke To withdraw or cancel.
shadow director Where the directors of a company are accustomed to act in accordance with directions or instructions given by a person, that person is known as a shadow director. This does not include the company’s professional advisers.
share premium account If a new share is issued by a company for more than its nominal value, the amount above the nominal value is the premium and the total of these premiums is held in a reserve (which cannot be used to pay dividends) called the share premium account.
show of hands A vote where each person who is entitled to vote has just one vote, however many shares he holds.
special resolution A decision reached by a majority of at least 75 per cent. of votes cast.
special rights These are the rights of a particular class of shares as distinct from rights which apply to all shares generally. Typical examples of special rights are: where the shares rank; their rights to sharing in income and assets; and voting rights.
statutory declaration A formal way of declaring something in writing. Particular words and formalities must be used - these are laid down by the Statutory Declarations Act of 1835.
sub-divide When shares are subdivided they are split into shares which have a smaller
nominal amount. For example, a £1 share might be subdivided into two 50p shares.
subject to Means that something else has priority, or prevails, or must be taken into account. When a statement is subject to something this means that the statement must be read in the light of that other thing, which will prevail if there is any conflict.
subsidiary A company which is controlled by another company (for example, because the other company owns a majority of its shares) is called a subsidiary of that company. This is defined in more detail in the legislation.
subsidiary undertaking This is a term used by the legislation. It has a wider meaning than subsidiary. Generally speaking, it is a company which is controlled by another company because the other company:
•has a majority of the votes in the company, either alone or acting with others;
•is a shareholder who can appoint or remove a majority of the directors; or
•can exercise dominant influence over the company because of anything in the company’s memorandum or articles or because of a certain kind of contract.
treasury shares Shares in the company which were bought by the company as provided by the legislation and which have been held by the company continuously since being bought are called treasury shares.
trustees People who hold property of any kind for the benefit of one or more other people under a kind of arrangement which the law treats as a “trust”.
uncertificated form A share or other security is held in uncertificated form if no certificate has been issued for it. A share or other security held in uncertificated form is eligible for settlement in CREST or any other relevant system.
underwriting A person who agrees to buy new shares if they are not bought by other people underwrites the share offer.
warrant or dividend warrant Similar to a cheque for a dividend.
THIS CERTIFIES THAT is the owner of CUSIP DATED COUNTERSIGNED AND REGISTERED: COMPUTERSHARE TRUST COMPANY, N.A. TRANSFER AGENT AND REGISTRAR, FULLY-PAID ORDINARY SHARES OF Indivior plc (hereinafter called the “Company”) transferable in accordance with, and subject to, the Company’s articles of association on the books of the Company in person or by duly authorized attorney upon surrender of this certificate properly endorsed. This certificate is not valid unless countersigned by the Transfer Agent and registered by the Registrar. Witness the facsimile signatures of its duly authorized officers. ORDINARY SHARES NOMINAL VALUE $0.50 ORDINARY SHARES Certificate Number Shares . INDIVIOR PLC INCORPORATED UNDER THE LAWS OF ENGLAND AND WALES WITH COMPANY NUMBER 09237894 FACSIMILE SIGNATURE TO COME FACSIMILE SIGNATURE TO COME Director Secretary By AUTHORIZED SIGNATURE SEE REVERSE FOR CERTAIN DEFINITIONS THIS CERTIFICATE IS TRANSFERABLE IN CITIES DESIGNATED BY THE TRANSFER AGENT, AVAILABLE ONLINE AT www.computershare.com ZQ|CERT#|COY|CLS|RGSTRY|ACCT#|TRANSTYPE|RUN#|TRANS# G4766E 11 6 DD-MMM-YYYY * * 0 0 0 0 0 0 * * * * * * * * * * * * * * * * * * * * * 0 0 0 0 0 0 * * * * * * * * * * * * * * * * * * * * * 0 0 0 0 0 0 * * * * * * * * * * * * * * * * * * * * * 0 0 0 0 0 0 * * * * * * * * * * * * * * * * * * * * * 0 0 0 0 0 0 * * * * * * * * * * * * * * ** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Alexander David Sample **** Mr. Sample **** Mr. Sample **000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares*** *000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares**** 000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****0 00000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****00 0000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000 000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****0000 00**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****00000 0**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000 **Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000* *Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000** Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**Shares****000000**S * *ZERO HUNDRED THOUSAND ZERO HUNDRED AND ZERO** MR. SAMPLE & MRS SAMPLE & MR. A PLE & MRS. SAMPLE ZQ00000000 Certificate Num bers 1234567890/1234567890 1234567890/1234567890 1234567890/1234567890 1234567890/1234567890 1234567890/1234567890 1234567890/1234567890 Total Transaction Num /No. 123456 Denom . 123456 Total 1234567 MR A SAMPLE DESIGNATION (IF ANY) ADD 1 ADD 2 ADD 3 ADD 4 PO BOX 43004, Providence, RI 02940-3004 CUSIP XXXXXX XX X Holder ID XXXXXXXXXX Insurance Value 1,000,000.00 Num ber of Shares 123456 DTC 12345678 123456789012345
The IRS requires that the named transfer agent (“we”) report the cost basis of certain shares or units acquired after January 1, 2011. If your shares or units are covered by the legislation, and you requested to sell or transfer the shares or units using a specific cost basis calculation method, then we have processed as you requested. If you did not specify a cost basis calculation method, then we have defaulted to the first in, first out (FIFO) method. Please consult your tax advisor if you need additional information about cost basis. If you do not keep in contact with the issuer or do not have any activity in your account for the time period specified by state law, your property may become subject to state unclaimed property laws and transferred to the appropriate state. . INDIVIOR PLC A FULL STATEMENT OF THE POWERS, DESIGNATIONS, PREFERENCES AND RELATIVE, PARTICIPATING, OPTIONAL OR OTHER SPECIAL RIGHTS OF EACH CLASS OF SHARES OF THE COMPANY OR SERIES THEREOF AND THE QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS OF SUCH PREFERENCES AND/OR RIGHTS WILL BE FURNISHED BY THE COMPANY WITHOUT CHARGE TO ANY SHAREHOLDER WHO SO REQUESTS UPON APPLICATION TO THE TRANSFER AGENT NAMED ON THE FACE HEREOF OR TO THE OFFICE OF THE SECRETARY OF THE COMPANY. THE TRANSFER OF THESE SHARES REPRESENTED BY THIS CERTIFICATE REQUIRES THE COMPLETION OF A SPECIALIZED STOCK TRANSFER FORM AND MAY BE SUBJECT TO THE UNITED KINGDOM’S HM REVENUE AND CUSTOMS STAMP DUTY. PLEASE CONTACT THE TRANSFER AGENT FOR ADDITIONAL INFORMATION. For US purposes the following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable laws or regulations: TEN COM - as tenants in common UNIF GIFT MIN ACT -............................................Custodian................................................ (Cust) (Minor) TEN ENT - as tenants by the entireties under Uniform Gifts to Minors Act........................................................ (State) JT TEN - as joint tenants with right of survivorship UNIF TRF MIN ACT -............................................Custodian (until age................................ ) and not as tenants in common (Cust) ............................. under Uniform Transfers to Minors Act................... (Minor) (State) Additional abbreviations may also be used though not in the above list.
TABLE OF CONTENTS
| | | | | | | | |
| | Page |
| | |
| PARTIES | 1 |
| RECITALS | 1 |
| | |
| Section 1. | Certain Definitions | 1 |
| (a) | ADR Register | 1 |
| (b) | ADRs; Direct Registration ADRs | 1 |
| (c) | ADS | 1 |
| (d) | Custodian | 1 |
| (e) | Deliver, execute, issue et al | 1 |
| (f) | Delivery Order | 1 |
| (g) | Deposited Securities | 1 |
| (h) | Direct Registration System | 2 |
| (i) | Holder | 2 |
| (j) | Securities Act of 1933 | 2 |
| (k) | Securities Exchange Act of 1934 | 2 |
| (l) | Shares | 2 |
| (m) | Transfer Office | 2 |
| (n) | Withdrawal Order | 2 |
| Section 2. | ADRs | 2 |
| Section 3. | Deposit of Shares | 3 |
| Section 4. | Issue of ADRs | 3 |
| Section 5. | Distributions on Deposited Securities | 3 |
| Section 6. | Withdrawal of Deposited Securities | 4 |
| Section 7. | Substitution of ADRs | 4 |
| Section 8. | Cancellation and Destruction of ADRs; Maintenance of Records | 4 |
| Section 9. | The Custodian | 4 |
| Section 10. | Lists of Holders | 5 |
| Section 11. | Depositary's Agents | 5 |
| Section 12. | Successor Depositary | 5 |
| Section 13. | Reports | 6 |
| Section 14. | Additional Shares | 6 |
| Section 15. | Indemnification | 6 |
| Section 16. | Notices | 8 |
| Section 17. | Miscellaneous | 8 |
| Section 18. | Consent to Jurisdiction; Appointment of Agent for Service of Process | 8 |
TESTIMONIUM | 10 |
SIGNATURES | 11 |
| | | | | | | | | | | |
| | | Page |
| | | |
| EXHIBIT A |
| | | |
FORM OF FACE OF ADR | A-1 |
| | | |
| Introductory Paragraph | A-1 |
| | | |
| (1) | Issuance and Pre-Release of ADSs | A-2 |
| (2) | Withdrawal of Deposited Securities | A-3 |
| (3) | Transfers of ADRs | A-3 |
| (4) | Certain Limitations | A-4 |
| (5) | Taxes | A-4 |
| (6) | Disclosure of Interests | A-5 |
| (7) | Charges of Depositary | A-6 |
| (8) | Available Information | A-8 |
| (9) | Execution | A-8 |
| | | |
| Signature of Depositary | A-8 |
| | |
| Address of Depositary’s Office | A-8 |
| | | |
FORM OF REVERSE OF ADR | A-9 |
| | | |
| (10) | Distributions on Deposited Securities | A-9 |
| (11) | Record Dates | A-10 |
| (12) | Voting of Deposited Securities | A-10 |
| (13) | Changes Affecting Deposited Securities | A-11 |
| (14) | Exoneration | A-11 |
| (15) | Resignation and Removal of Depositary; the Custodian | A-13 |
| (16) | Amendment | A-13 |
| (17) | Termination | A-14 |
| (18) | Appointment | A-15 |
| (19) | Waiver | A-15 |
| (20) | Elective Distributions in Cash or Shares | A-15 |
DEPOSIT AGREEMENT dated as of December 23, 2014 (the "Deposit Agreement") among INDIVIOR PLC and its successors (the "Company"), JPMORGAN CHASE BANK, N.A., as depositary hereunder (the "Depositary"), and all holders from time to time of American Depositary Receipts issued hereunder ("ADRs") evidencing American Depositary Shares ("ADSs") representing deposited Shares (defined below). The Company hereby appoints the Depositary as depositary for the Deposited Securities and hereby authorizes and directs the Depositary to act in accordance with the terms set forth in this Deposit Agreement. All capitalized terms used herein have the meanings ascribed to them in Section 1 or elsewhere in this Deposit Agreement. The parties hereto agree as follows:
1. Certain Definitions.
(a) "ADR Register" is defined in paragraph (3) of the form of ADR.
(b) "ADRs" mean the American Depositary Receipts executed and delivered hereunder. ADRs may be either in physical certificated form or Direct Registration ADRs (as hereinafter defined). ADRs in physical certificated form, and the terms and conditions governing the Direct Registration ADRs, shall be substantially in the form of Exhibit A annexed hereto (the "form of ADR"). The term "Direct Registration ADR" means an ADR, the ownership of which is recorded on the Direct Registration System. References to "ADRs" shall include certificated ADRs and Direct Registration ADRs, unless the context otherwise requires. The form of ADR is hereby incorporated herein and made a part hereof; the provisions of the form of ADR shall be binding upon the parties hereto.
(c) Subject to paragraph (13) of the form of ADR, each "ADS" evidenced by an ADR represents the right to receive five Shares and a pro rata share in any other Deposited Securities.
(d) "Custodian" means the agent or agents of the Depositary (singly or collectively, as the context requires) and any additional or substitute Custodian appointed pursuant to Section 9.
(e) The terms "deliver", "execute", "issue", "register", "surrender", "transfer" or "cancel", when used with respect to Direct Registration ADRs, shall refer to an entry or entries or an electronic transfer or transfers in the Direct Registration System, and, when used with respect to ADRs in physical certificated form, shall refer to the physical delivery, execution, issuance, registration, surrender, transfer or cancellation of certificates representing the ADRs.
(f) "Delivery Order" is defined in Section 3.
(g) "Deposited Securities" as of any time means all Shares at such time deposited under this Deposit Agreement and any and all other Shares, securities, property and cash at such time held by the Depositary or the Custodian in respect or in lieu of such deposited Shares and other Shares, securities, property and cash.
(h) "Direct Registration System" means the system for the uncertificated registration of ownership of securities established by The Depository Trust Company ("DTC") and utilized by the Depositary pursuant to which the Depositary may record the ownership of ADRs without the issuance of a certificate, which ownership shall be evidenced by periodic statements issued by the Depositary to the Holders entitled thereto. For purposes hereof, the Direct Registration System shall include access to the Profile Modification System maintained by DTC which provides for automated transfer of ownership between DTC and the Depositary.
(i) "Holder" means the person or persons in whose name an ADR is registered on the ADR Register.
(j) "Securities Act of 1933" means the United States Securities Act of 1933, as from time to time amended.
(k) "Securities Exchange Act of 1934" means the United States Securities Exchange Act of 1934, as from time to time amended.
(l) "Shares" mean the ordinary shares of the Company, and shall include the rights to receive Shares specified in paragraph (1) of the form of ADR.
(m) "Transfer Office" is defined in paragraph (3) of the form of ADR.
(n) "Withdrawal Order" is defined in Section 6.
2. ADRs.
(a) ADRs in certificated form shall be engraved, printed or otherwise reproduced at the discretion of the Depositary in accordance with its customary practices in its American depositary receipt business, or at the request of the Company typewritten and photocopied on plain or safety paper, and shall be substantially in the form set forth in the form of ADR, with such changes as may be required by the Depositary or the Company to comply with their obligations hereunder, any applicable law, regulation or usage or to indicate any special limitations or restrictions to which any particular ADRs are subject. ADRs may be issued in denominations of any number of ADSs. ADRs in certificated form shall be executed by the Depositary by the manual or facsimile signature of a duly authorized officer of the Depositary. ADRs in certificated form bearing the facsimile signature of anyone who was at the time of execution a duly authorized officer of the Depositary shall bind the Depositary, notwithstanding that such officer has ceased to hold such office prior to the delivery of such ADRs.
(b) Direct Registration ADRs. Notwithstanding anything in this Deposit Agreement or in the form of ADR to the contrary, ADSs shall be evidenced by Direct Registration ADRs, unless certificated ADRs are specifically requested by the Holder.
(c) Holders shall be bound by the terms and conditions of this Deposit Agreement and of the form of ADR, regardless of whether their ADRs are Direct Registration ADRs or certificated ADRs.
3. Deposit of Shares. In connection with the deposit of Shares hereunder, the Depositary or the Custodian may require the following in form reasonably satisfactory to it: (a) a written order directing the Depositary to issue to, or upon the written order of, the person or persons designated in such order a Direct Registration ADR or ADRs evidencing the number of ADSs representing such deposited Shares (a "Delivery Order"); (b) proper endorsements or duly executed instruments of transfer in respect of such deposited Shares; (c) instruments assigning to the Depositary, the Custodian or a nominee of either any distribution on or in respect of such deposited Shares or indemnity therefor; and (d) proxies entitling the Custodian to vote such deposited Shares. As soon as practicable after the Custodian receives Deposited Securities pursuant to any such deposit or pursuant to paragraph (10) or (13) of the form of ADR, the Custodian shall present such Deposited Securities for registration of transfer into the name of the Depositary, the Custodian or a nominee of either, to the extent such registration is practicable, at the cost and expense of the person making such deposit (or for whose benefit such deposit is made) and shall obtain evidence satisfactory to it of such registration. Deposited Securities shall be held by the Custodian for the account and to the order of the Depositary for the benefit of Holders of ADRs (to the extent not prohibited by law) at such place or places and in such manner as the Depositary shall determine. Deposited Securities may be delivered by the Custodian to any person only under the circumstances expressly contemplated in this Deposit Agreement. To the extent that the provisions of or governing the Shares make delivery of certificates therefor impracticable, Shares may be deposited hereunder by such delivery thereof as the Depositary or the Custodian may reasonably accept, including, without limitation, by causing them to be credited to an account maintained by the Custodian for such purpose with the Company or an accredited intermediary, such as a bank, acting as a registrar for the Shares, together with delivery of the documents, payments and Delivery Order referred to herein to the Custodian or the Depositary.
4. Issue of ADRs. After any such deposit of Shares, the Custodian shall notify the Depositary of such deposit and of the information contained in any related Delivery Order by letter, first class airmail postage prepaid, or, at the request, risk and expense of the person making the deposit, by cable, telex or facsimile transmission. After receiving such notice from the Custodian, the Depositary, subject to this Deposit Agreement, shall properly issue at the Transfer Office, to or upon the order of any person named in such notice, an ADR or ADRs registered as requested and evidencing the aggregate ADSs to which such person is entitled.
5. Distributions on Deposited Securities. To the extent that the Depositary determines in its discretion that any distribution pursuant to paragraph (10) of the form of ADR is not practicable with respect to any Holder, the Depositary, after consultation with the Company if practicable, may make such distribution as it so deems practicable, including the distribution of foreign currency, securities or property (or appropriate documents evidencing the right to receive foreign currency, securities or property) or the retention thereof as Deposited
Securities with respect to such Holder's ADRs (without liability for interest thereon or the investment thereof).
6. Withdrawal of Deposited Securities. In connection with any surrender of an ADR for withdrawal of the Deposited Securities represented by the ADSs evidenced thereby, the Depositary may require proper endorsement in blank of such ADR (or duly executed instruments of transfer thereof in blank) and the Holder's written order directing the Depositary to cause the Deposited Securities represented by the ADSs evidenced by such ADR to be withdrawn and delivered to, or upon the written order of, any person designated in such order (a "Withdrawal Order"). Directions from the Depositary to the Custodian to deliver Deposited Securities shall be given by letter, first class airmail postage prepaid, or, at the request, risk and expense of the Holder, by cable, telex or facsimile transmission. Delivery of Deposited Securities may be made by the delivery of certificates (which, if required by law shall be properly endorsed or accompanied by properly executed instruments of transfer or, if such certificates may be registered, registered in the name of such Holder or as ordered by such Holder in any Withdrawal Order) or by such other means as the Depositary may deem practicable, including, without limitation, by transfer of record ownership thereof to an account designated in the Withdrawal Order maintained either by the Company or an accredited intermediary, such as a bank, acting as a registrar for the Deposited Securities.
7. Substitution of ADRs. The Depositary shall execute and deliver a new Direct Registration ADR in exchange and substitution for any mutilated certificated ADR upon cancellation thereof or in lieu of and in substitution for such destroyed, lost or stolen certificated ADR, unless the Depositary has notice that such ADR has been acquired by a bona fide purchaser, upon the Holder thereof filing with the Depositary a request for such execution and delivery and a sufficient indemnity bond and satisfying any other reasonable requirements imposed by the Depositary.
8. Cancellation and Destruction of ADRs; Maintenance of Records. All ADRs surrendered to the Depositary shall be cancelled by the Depositary. The Depositary is authorized to destroy ADRs in certificated form so cancelled in accordance with its customary practices.
The Depositary agrees to maintain or cause its agents to maintain records of all ADRs surrendered and Deposited Securities withdrawn under Section 6 hereof and paragraph (2) of the form of ADR, substitute ADRs delivered under Section 7 hereof, and canceled or destroyed ADRs under this Section 8, in keeping with the procedures required by the laws or regulations governing the Depositary.
9. The Custodian. Any Custodian in acting hereunder shall be subject to the directions of the Depositary and shall be responsible solely to it. The Depositary reserves the right to add, replace or remove a Custodian. The Depositary will give prompt notice to the Company of any such action, which will be advance notice if practicable.
Any Custodian may resign from its duties hereunder by at least 30 days written notice to the Depositary. The Depositary may discharge any Custodian at any time upon notice to the
Custodian being discharged. Any Custodian ceasing to act hereunder as Custodian shall deliver, upon the instruction of the Depositary, all Deposited Securities held by it to a Custodian continuing to act. Notwithstanding anything to the contrary contained in this Deposit Agreement (including the ADRs) and subject to the penultimate sentence of paragraph (14) of the form of ADR, the Depositary shall not be responsible for, and shall incur no liability in connection with or arising from, any act or omission to act on the part of the Custodian except to the extent that (A) the Custodian has been determined by a final non-appealable judgment of a court of competent jurisdiction to have (i) committed fraud or wilful misconduct in the provision of custodial services to the Depositary or (ii) failed to use reasonable care in the provision of custodial services to the Depositary as determined in accordance with the standards prevailing in England and Wales and (B) the Company or the Holders have incurred direct damages as a result of such act or omission to act on the part of the Custodian.
10. Lists of Holders. The Company shall have the right to inspect transfer records of the Depositary and its agents and the ADR Register, take copies thereof and require the Depositary and its agents to supply copies of such portions of such records as the Company may request. The Depositary or its agent shall furnish to the Company promptly upon the written request of the Company, a list of the names, addresses and holdings of ADSs by all Holders as of a date within seven days of the Depositary's receipt of such request.
11. Depositary's Agents. The Depositary may perform its obligations under this Deposit Agreement through any agent appointed by it, provided that the Depositary shall notify the Company of such appointment and shall remain responsible for the performance of such obligations as if no agent were appointed, subject to paragraph (14) of the form of ADR.
12. Successor Depositary. The Depositary may at any time resign as Depositary hereunder by written notice of its election so to do delivered to the Company, such resignation to take effect upon the appointment of a successor depositary and its acceptance of such appointment as hereinafter provided. The Depositary may at any time be removed by the Company by providing no less than 60 days prior written notice of such removal to the Depositary, such removal to take effect the later of (i) the 60th day after such notice of removal is first provided and (ii) the appointment of a successor depositary and its acceptance of such appointment as hereinafter provided. Notwithstanding the foregoing, if upon the resignation or removal of the Depositary a successor depositary is not appointed within the applicable 45-day period (in the case of resignation) or 60-day period (in the case of removal) as specified in paragraph (17) of the form of ADR, then the Depositary may elect to terminate this Deposit Agreement and the ADR and the provisions of said paragraph (17) shall thereafter govern the Depositary's obligations hereunder. In case at any time the Depositary acting hereunder shall resign or be removed, the Company shall use its best efforts to appoint a successor depositary, which shall be a bank or trust company having an office in the Borough of Manhattan, The City of New York. Every successor depositary shall execute and deliver to its predecessor and to the Company an instrument in writing accepting its appointment hereunder, and thereupon such successor depositary, without any further act or deed, shall become fully vested with all the rights, powers, duties and obligations of its predecessor. The predecessor depositary, only upon payment of all sums due to it and on the written request of the Company, shall (i) execute and
deliver an instrument transferring to such successor all rights and powers of such predecessor hereunder (other than its rights to indemnification and fees owing, each of which shall survive any such removal and/or resignation), (ii) duly assign, transfer and deliver all right, title and interest to the Deposited Securities to such successor, and (iii) deliver to such successor a list of the Holders of all outstanding ADRs. Any such successor depositary shall promptly mail notice of its appointment to such Holders. Any bank or trust company into or with which the Depositary may be merged or consolidated, or to which the Depositary shall transfer substantially all its American depositary receipt business, shall be the successor of the Depositary without the execution or filing of any document or any further act.
13. Reports. On or before the first date on which the Company makes any communication that would require, or result in, the Depositary taking action under this Deposit Agreement (e.g. voting, dividends, etc.) available to holders of Deposited Securities or any securities regulatory authority or stock exchange, by publication or otherwise, the Company shall transmit to the Depositary a copy thereof in English or with an English translation or summary. The Company has delivered to the Depositary, the Custodian and any Transfer Office, a copy of all provisions of or governing the Shares and any other Deposited Securities issued by the Company or any affiliate of the Company and, promptly upon any change thereto, the Company shall deliver to the Depositary, the Custodian and any Transfer Office, a copy (in English or with an English translation) of such provisions as so changed. The Depositary and its agents may rely upon the Company's delivery of all such communications, information and provisions for all purposes of this Deposit Agreement and the Depositary shall have no liability for the accuracy or completeness of any thereof.
14. Additional Shares. The Company agrees with the Depositary that neither the Company nor any company controlling, controlled by or under common control with the Company shall issue additional Shares, rights to subscribe for Shares, securities convertible into or exchangeable for Shares or rights to subscribe for any such securities or shall deposit any Shares under this Deposit Agreement, except under circumstances complying in all respects with the Securities Act of 1933. In support of the foregoing or at the reasonable request of the Depositary where it deems necessary in each case, in connection with any such proposed deposit or any distribution or offering by the Company of additional Shares, rights or other securities or property to holders of Shares and/or Holders, the Company will furnish to the Depositary, at the Company's own expense written opinions of counsels (reasonably satisfactory to the Depositary) dealing with such matters as reasonably requested by the Depositary. The Depositary will use reasonable efforts to comply with written instructions of the Company not to accept for deposit hereunder any Shares identified in such instructions at such times and under such circumstances as may reasonably be specified in such instructions in order to facilitate the Company's compliance with securities laws in the United States.
15. Indemnification. The Company shall indemnify, defend and save harmless each of the Depositary and its agents (each, an "indemnified person" and together, the "indemnified persons") against any loss, liability or expense (including reasonable fees and expenses of counsel) which may arise out of acts performed or omitted, in connection with the provisions of this Deposit Agreement and of the ADRs, as the same may be amended, modified or
supplemented from time to time in accordance herewith by any indemnified person or their respective directors, employees, agents and affiliates, except for any liability or expense directly arising out of such indemnified person's negligence or willful misconduct.
The indemnities set forth in the preceding paragraph shall also apply to any liability or expense which may arise out of any misstatement or alleged misstatement or omission or alleged omission in any registration statement, proxy statement, prospectus (or placement memorandum), or preliminary prospectus (or preliminary placement memorandum) relating to the offer or sale of ADSs, except to the extent any such liability or expense arises out of (i) information relating to any indemnified person, as applicable, furnished in writing by the Depositary and not changed or altered by the Company expressly for use in any of the foregoing documents or (ii) if such information is provided, the failure to state a material fact necessary to make the information provided not misleading.
Except as provided in the next succeeding paragraph, the Depositary shall indemnify, defend and save harmless the Company against any direct loss, liability or expense (including reasonable fees and expenses of counsel) incurred by the Company in respect of this Deposit Agreement to the extent such loss, liability or expense is due to the negligence or willful misconduct of the Depositary.
Notwithstanding any other provision of this Deposit Agreement or the ADRs to the contrary, neither the Company nor the Depositary, nor any of their agents shall be liable to the other for any indirect, special, punitive or consequential damages (including, without limitation, lost profits but excluding legal fees and expenses) (collectively "Special Damages") of any form incurred by any of them or any other person or entity, whether or not foreseeable and regardless of the type of action in which such a claim may be brought; provided, however, that to the extent Special Damages arise from or out of a claim brought by a third party (including, without limitation, Holders) against the Depositary or any of its agents acting under the Deposit Agreement, the Depositary shall be entitled to full indemnification from the Company for all such Special Damages, unless such Special Damages are found to have been a direct result of the gross negligence or willful misconduct of the Depositary.
An indemnified person seeking indemnification hereunder shall notify the Company of the commencement of any indemnifiable action or claim promptly after such indemnified person becomes aware of such commencement (provided that the failure to make such notification shall not affect such indemnified person's rights to indemnification except and only to the limited extent the Company is materially prejudiced by such failure) and shall consult in good faith with the Company as to the conduct of the defense of such action or claim, which shall be reasonable in the circumstances. No indemnified person shall compromise or settle any indemnifiable action without the prior written consent of the Company, which consent shall not be unreasonably withheld or delayed, unless (i) there is no finding or admission of any violation of law and no effect on any other claims that may be made against the Company and (ii) the sole relief provided is monetary damages that are paid in full by the indemnified party (without indemnification hereunder by the Company) seeking such compromise or settlement.
The obligations set forth in this Section 15 shall survive the termination of this Deposit Agreement and the succession or substitution of any indemnified person.
16. Notices. Notice to any Holder shall be deemed given when first mailed, first class postage prepaid, to the address of such Holder on the ADR Register or received by such Holder. Failure to notify a Holder or any defect in the notification to a Holder shall not affect the sufficiency of notification to other Holders or to the beneficial owners of ADSs held by such other Holders. Notice to the Depositary or the Company shall be deemed given when first received by it at the address or facsimile transmission number set forth in (a) or (b), respectively, or at such other address or facsimile transmission number as either may specify to the other by written notice:
(a) JPMorgan Chase Bank, N.A.
4 New York Plaza, Floor 12
New York, New York, 10004
Attention: Depositary Receipts Group
Fax: (212) 552-1950
(b) Indivior PLC
103-105 Bath Road
Slough
Berkshire
SL1 3UH, England
Attention: Company Secretary
Fax: (44) 1753-446424
17. Miscellaneous. This Deposit Agreement is for the exclusive benefit of the Company, the Depositary, the Holders, and their respective successors hereunder, and shall not give any legal or equitable right, remedy or claim whatsoever to any other person. The Holders and owners of ADRs from time to time shall be parties to this Deposit Agreement and shall be bound by all of the provisions hereof. If any such provision is invalid, illegal or unenforceable in any respect, the remaining provisions shall in no way be affected thereby. This Deposit Agreement may be executed in any number of counterparts, each of which shall be deemed an original and all of which shall constitute one instrument.
18. Consent to Jurisdiction; Appointment of Agent for Service of Process. The Company irrevocably agrees that any legal suit, action or proceeding against the Company brought by the Depositary or any Holder, arising out of or based upon this Deposit Agreement or the transactions contemplated hereby, may be instituted in any state or federal court in New York, New York, and irrevocably waives any objection which it may now or hereafter have to the laying of venue of any such proceeding, and irrevocably submits to the non-exclusive jurisdiction of such courts in any such suit, action or proceeding. The Company also irrevocably agrees that any legal suit, action or proceeding against the Depositary brought by the Company, arising out of or based upon this Deposit Agreement or the transactions contemplated hereby, may only be instituted in a state or federal court in New York, New York. The Company has
appointed Reckitt Benckiser Pharmaceuticals Inc. c/o Corporation Service Company, 2711 Centerville Road, Wilmington, DE 19808, as its authorized agent (the "Authorized Agent") upon which process may be served in any such action arising out of or based on this Deposit Agreement or the transactions contemplated hereby which may be instituted in any state or federal court in New York, New York by the Depositary or any Holder, and waives any other requirements of or objections to personal jurisdiction with respect thereto. The Company represents and warrants that the Authorized Agent has agreed to act as said agent for service of process, and the Company agrees to take any and all action, including the filing of any and all documents and instruments, that may be necessary to continue such appointment in full force and effect as aforesaid. The Company further hereby irrevocably consents and agrees to the service of any and all legal process, summons, notices and documents in any suit, action or proceeding against the Company, by service by mail of a copy thereof upon the Authorized Agent (whether or not the appointment of such Authorized Agent shall for any reason prove to be ineffective or such Authorized Agent shall fail to accept or acknowledge such service), with a copy mailed to the Company by registered or certified air mail, postage prepaid, to its address provided in Section 16(b) hereof. The Company agrees that the failure of the Authorized Agent to give any notice of such service to it shall not impair or affect in any way the validity of such service or any judgment rendered in any action or proceeding based thereon. If, for any reason, the Authorized Agent named above or its successor shall no longer serve as agent of the Company to receive service of process in New York, the Company shall promptly appoint a successor that is a legal entity with offices in New York, New York, so as to serve and will promptly advise the Depositary thereof. In the event the Company fails to continue such designation and appointment in full force and effect, the Company hereby waives personal service of process upon it and consents that any such service of process may be made by certified or registered mail, return receipt requested, directed to the Company at its address last specified for notices hereunder, and service so made shall be deemed completed five (5) days after the same shall have been so mailed. Notwithstanding the foregoing, any action based on this Deposit Agreement may be instituted by the Depositary in any competent court in England and Wales and/or the United States.
By holding an ADS or an interest therein, Holders and owners of ADSs each irrevocably agree that any legal suit, action or proceeding against or involving the Company or the Depositary, arising out of or based upon this Deposit Agreement or the transactions contemplated hereby, may only be instituted in a state or federal court in New York, New York, and by holding an ADS or an interest therein each irrevocably waives any objection which it may now or hereafter have to the laying of venue of any such proceeding, and irrevocably submits to the exclusive jurisdiction of such courts in any such suit, action or proceeding.
To the extent that the Company or any of its properties, assets or revenues may have or may hereafter be entitled to, or have attributed to it, any right of immunity, on the grounds of sovereignty or otherwise, from any legal action, suit or proceeding, from the giving of any relief in any respect thereof, from setoff or counterclaim, from the jurisdiction of any court, from service of process, from attachment upon or prior to judgment, from attachment in aid of execution or judgment, or from execution of judgment, or other legal process or proceeding for the giving of any relief or for the enforcement of any judgment, in any jurisdiction in which
proceedings may at any time be commenced, with respect to its obligations, liabilities or other matter under or arising out of or in connection with the Shares or Deposited Securities, the ADSs, the ADRs or this Deposit Agreement, the Company, to the fullest extent permitted by law, hereby irrevocably and unconditionally waives, and agrees not to plead or claim, any such immunity and consents to such relief and enforcement.
EACH PARTY TO THIS DEPOSIT AGREEMENT (INCLUDING, FOR AVOIDANCE OF DOUBT, EACH HOLDER AND BENEFICIAL OWNER AND/OR HOLDER OF INTERESTS IN ADRS) HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY SUIT, ACTION OR PROCEEDING AGAINST THE DEPOSITARY AND/OR THE COMPANY DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THE SHARES OR OTHER DEPOSITED SECURITIES, THE ADSs OR THE ADRs, THE DEPOSIT AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREIN OR THEREIN, OR THE BREACH HEREOF OR THEREOF (WHETHER BASED ON CONTRACT, TORT, COMMON LAW OR ANY OTHER THEORY).
IN WITNESS WHEREOF, Indivior PLC and JPMORGAN CHASE BANK, N.A. have duly executed this Deposit Agreement as of the day and year first above set forth and all holders of ADRs shall become parties hereto upon acceptance by them of ADRs issued in accordance with the terms hereof.
| | | | | | | | |
| INDIVIOR PLC | |
| | |
| By: | /s/ Lola Emetulu | |
| | |
| Name: Lola Emetulu | |
| Title: Company Secretary |
| | |
| JPMORGAN CHASE BANK, N.A. |
| | |
| By: | | |
| | |
| Name: | |
| Title: Executive Director |
IN WITNESS WHEREOF, INDIVIOR PLC and JPMORGAN CHASE BANK, N.A. have duly executed this Deposit Agreement as of the day and year first above set forth and all holders of ADRs shall become parties hereto upon acceptance by them of ADRs issued in accordance with the terms hereof.
| | | | | | | | |
| INDIVIOR PLC | |
| | |
| By: | | |
| | |
| Name: | |
| Title: |
| | |
| JPMORGAN CHASE BANK, N.A. |
| | |
| By: | /s/ Gregory A. Levendis | |
| | |
| Name: Gregory A. Levendis | |
| Title: Executive Director |
EXHIBIT A
ANNEXED TO AND INCORPORATED IN
DEPOSIT AGREEMENT
[FORM OF FACE OF ADR]
| | | | | |
| No. of ADSs: |
| |
| Number | |
| |
| Each ADS represents |
| Five Shares |
| |
| CUSIP: |
AMERICAN DEPOSITARY RECEIPT
evidencing
AMERICAN DEPOSITARY SHARES
representing
ORDINARY SHARES
of
INDIVIOR PLC
(Incorporated under the laws of England and Wales)
JPMORGAN CHASE BANK, N.A., a national banking association organized under the laws of the United States of America, as depositary hereunder (the "Depositary"), hereby certifies that is the registered owner (a "Holder") of American Depositary Shares ("ADSs"), each (subject to paragraph (13)) representing five ordinary shares (including the rights to receive Shares described in paragraph (1), "Shares" and, together with any other securities, cash or property from time to time held by the Depositary in respect or in lieu of deposited Shares, the "Deposited Securities"), of Indivior PLC, a corporation organized under the laws of England and Wales (the "Company"), deposited under the Deposit Agreement dated as of December 23, 2014 (as amended from time to time, the "Deposit Agreement") among the Company, the Depositary and all Holders from time to time of American Depositary Receipts issued thereunder ("ADRs"), each of whom by accepting an ADR becomes a party thereto. The Deposit Agreement and this ADR (which includes the provisions set forth on the reverse hereof) shall be governed by and construed in accordance with the laws of the State of New York.
(1) Issuance and Pre-Release of ADSs. This ADR is one of the ADRs issued under the Deposit Agreement. Subject to paragraph (4), the Depositary may so issue ADRs for delivery at the Transfer Office (defined in paragraph (3)) only against deposit of: (a) Shares in form satisfactory to the Custodian; (b) rights to receive Shares from the Company or any registrar, transfer agent, clearing agent or other entity recording Share ownership or transactions; or, (c) in accordance with the next paragraph of this paragraph (1).
In its capacity as Depositary, the Depositary shall not lend Shares or ADSs; provided, however, that the Depositary may issue ADSs prior to the receipt of Shares (each such transaction a "Pre-Release"). The Depositary may receive ADSs in lieu of Shares to close out a Pre-Release (which ADSs will promptly be canceled by the Depositary upon receipt by the Depositary). Each such Pre-Release will be subject to a written agreement whereby the person or entity (the "Applicant") to whom ADSs are to be delivered (i) represents that at the time of the Pre-Release the Applicant or its customer owns the Shares that are to be delivered by the Applicant under such Pre Release, (ii) agrees to indicate the Depositary as owner of such Shares in its records and to hold such Shares in trust for the Depositary until such Shares are delivered to the Depositary or the Custodian, (iii) unconditionally guarantees to deliver to the Depositary or the Custodian, as applicable, such Shares, and (iv) agrees to any additional restrictions or requirements that the Depositary deems appropriate. Each such Pre-Release will be at all times fully collateralized with cash, U.S. government securities or such other collateral as the Depositary deems appropriate, terminable by the Depositary on not more than five (5) business days' notice and subject to such further indemnities and credit regulations as the Depositary deems appropriate. The Depositary will normally limit the number of ADSs involved in such Pre-Release at any one time to thirty percent (30%) of the ADSs outstanding (without giving effect to Pre Released ADSs outstanding), provided, however, that the Depositary reserves the right to change or disregard such limit from time to time as it deems appropriate. The Depositary may also set limits with respect to the number of ADSs involved in Pre Release with any one person on a case-by-case basis as it deems appropriate. The Depositary may retain for its own account any compensation received by it in conjunction with the foregoing. Collateral provided as described above, but not the earnings thereon, shall be held for the benefit of the Holders (other than the Applicant).
Every person depositing Shares under the Deposit Agreement represents and warrants that (a) such Shares and the certificates therefor are duly authorized, validly issued and outstanding, fully paid, nonassessable and legally obtained by such person (b) all pre-emptive and comparable rights, if any, with respect to such Shares have been validly waived or exercised, (c) the person making such deposit is duly authorized so to do, (d) the Shares presented for deposit are free and clear of any lien, encumbrance, security interest, charge, mortgage or adverse claim and (e) such Shares (A) are not "restricted securities" as such term is defined in Rule 144 under the Securities Act of 1933 ("Restricted Securities") unless at the time of deposit the requirements of paragraphs (c), (e), (f) and (h) of Rule 144 shall not apply and such Shares may be freely transferred and may otherwise be offered and sold freely in the United States or (B) have been registered under the Securities Act of 1933. To the extent the person depositing Shares is an "affiliate" of the Company as such term is defined in Rule 144, the person also represents and warrants that upon the sale of the ADSs, all of the provisions of Rule 144 which
enable the Shares to be freely sold (in the form of ADSs) will be fully complied with and, as a result thereof, all of the ADSs issued in respect of such Shares will not be on the sale thereof, Restricted Securities. Such representations and warranties shall survive the deposit and withdrawal of Shares and the issuance and cancellation of ADSs in respect thereof and the transfer of such ADSs. The Depositary will not knowingly accept for deposit under the Deposit Agreement any Shares that it knows are required to be registered under the Securities Act of 1933 and not so registered; the Depositary may refuse to accept for such deposit any Shares identified by the Company in order to facilitate compliance with the requirements of the Securities Act of 1933 or the Rules made thereunder.
(2) Withdrawal of Deposited Securities. Subject to paragraphs (4) and (5), upon surrender of (i) a certificated ADR in form satisfactory to the Depositary at the Transfer Office or (ii) proper instructions and documentation in the case of a Direct Registration ADR, the Holder hereof is entitled to delivery at, or to the extent in dematerialized form from, the Custodian's office of the Deposited Securities at the time represented by the ADSs evidenced by this ADR, provided that the Depositary may deliver Shares prior to the receipt of ADSs for withdrawal of Deposited Securities, including ADSs which were issued under (1) above but for which Shares may not have been received (until such ADSs are actually deposited, "Pre-released Shares") only if all the conditions in (1) above related to such Pre-Release are satisfied). At the request, risk and expense of the Holder hereof, the Depositary may deliver such Deposited Securities at such other place as may have been requested by the Holder. Notwithstanding any other provision of the Deposit Agreement or this ADR, the withdrawal of Deposited Securities may be restricted only for the reasons set forth in General Instruction I.A.(1) of Form F-6 (as such instructions may be amended from time to time) under the Securities Act of 1933.
(3) Transfers of ADRs. The Depositary or its agent will keep, at a designated transfer office (the "Transfer Office"), (a) a register (the "ADR Register") for the registration, registration of transfer, combination and split-up of ADRs, and, in the case of Direct Registration ADRs, shall include the Direct Registration System, which at all reasonable times will be open for inspection by Holders and the Company for the purpose of communicating with Holders in the interest of the business of the Company or a matter relating to the Deposit Agreement and (b) facilities for the delivery and receipt of ADRs. The term ADR Register includes the Direct Registration System. Title to this ADR (and to the Deposited Securities represented by the ADSs evidenced hereby), when properly endorsed (in the case of ADRs in certificated form) or upon delivery to the Depositary of proper instruments of transfer, is transferable by delivery with the same effect as in the case of negotiable instruments under the laws of the State of New York; provided that the Depositary, notwithstanding any notice to the contrary, may treat the person in whose name this ADR is registered on the ADR Register as the absolute owner hereof for all purposes and neither the Depositary nor the Company will have any obligation or be subject to any liability under the Deposit Agreement to any holder of an ADR, unless such holder is the Holder thereof. Subject to paragraphs (4) and (5), this ADR is transferable on the ADR Register and may be split into other ADRs or combined with other ADRs into one ADR, evidencing the aggregate number of ADSs surrendered for split-up or combination, by the Holder hereof or by duly authorized attorney upon surrender of this ADR at the Transfer Office properly endorsed (in the case of ADRs in certificated form) or upon delivery to the Depositary of proper instruments
of transfer and duly stamped as may be required by applicable law; provided that the Depositary may close the ADR Register at any time or from time to time when deemed expedient by it or, with respect to the issuance book portion of the ADR Register, when reasonably requested by the Company in order to enable the Company to comply with applicable laws. At the request of a Holder, the Depositary shall, for the purpose of substituting a certificated ADR with a Direct Registration ADR, or vice versa, execute and deliver a certificated ADR or a Direct Registration ADR, as the case may be, for any authorized number of ADSs requested, evidencing the same aggregate number of ADSs as those evidenced by the certificated ADR or Direct Registration ADR, as the case may be, substituted.
(4) Certain Limitations. Prior to the issue, registration, registration of transfer, split-up or combination of any ADR, the delivery of any distribution in respect thereof, or, subject to the last sentence of paragraph (2), the withdrawal of any Deposited Securities, and from time to time in the case of clause (b)(ii) of this paragraph (4), the Company, the Depositary or the Custodian may require: (a) payment with respect thereto of (i) any stock transfer or other tax or other governmental charge, (ii) any stock transfer or registration fees in effect for the registration of transfers of Shares or other Deposited Securities upon any applicable register and (iii) any applicable charges as provided in paragraph (7) of this ADR; (b) the production of proof satisfactory to it of (i) the identity of any signatory and genuineness of any signature and (ii) such other information, including without limitation, information as to citizenship, residence, exchange control approval, beneficial ownership of any securities, compliance with applicable law, regulations, provisions of or governing Deposited Securities and terms of the Deposit Agreement and this ADR, as it may deem necessary or proper; and (c) compliance with such regulations as the Depositary may establish consistent with the Deposit Agreement. The issuance of ADRs, the acceptance of deposits of Shares, the registration, registration of transfer, split-up or combination of ADRs or, subject to the last sentence of paragraph (2), the withdrawal of Deposited Securities may be suspended, generally or in particular instances, when the ADR Register or any register for Deposited Securities is closed or when any such action is deemed advisable by the Depositary or, to the extent not prohibited by applicable law, rule or regulation, when reasonably requested by the Company in order to enable the Company to comply with applicable law.
(5) Taxes. If any tax or other governmental charges (including any penalties and/or interest) shall become payable by or on behalf of the Custodian or the Depositary with respect to this ADR, any Deposited Securities represented by the ADSs evidenced hereby or any distribution thereon, such tax or other governmental charge shall be paid by the Holder hereof to the Depositary and by holding or having held an ADR the Holder and all prior Holders hereof, jointly and severally, agree to indemnify, defend and save harmless each of the Depositary and its agents in respect thereof. The Depositary may refuse to effect any registration, registration of transfer, split-up or combination hereof or, subject to the last sentence of paragraph (2), any withdrawal of such Deposited Securities until such payment is made. The Depositary may also deduct from any distributions on or in respect of Deposited Securities, or may sell by public or private sale for the account of the Holder hereof any part or all of such Deposited Securities (after attempting by reasonable means to notify the Holder hereof prior to such sale), and may apply such deduction or the proceeds of any such sale in payment of such tax or other
governmental charge, the Holder hereof remaining liable for any deficiency, and shall reduce the number of ADSs evidenced hereby to reflect any such sales of Shares. In connection with any distribution to Holders, the Company will remit to the appropriate governmental authority or agency all amounts (if any) required to be withheld and owing to such authority or agency by the Company; and the Depositary and the Custodian will remit to the appropriate governmental authority or agency all amounts (if any) required to be withheld and owing to such authority or agency by the Depositary or the Custodian. The Depositary will forward to the Company such information from its transfer records maintained by it in its capacity as depositary hereunder as the Company may reasonably request to enable the Company to file any necessary reports with governmental authorities or agencies. If the Depositary determines that any distribution in property other than cash (including Shares or rights) on Deposited Securities is subject to any tax that the Depositary or the Custodian is obligated to withhold, the Depositary may dispose of all or a portion of such property in such amounts and in such manner as the Depositary deems necessary and practicable to pay such taxes, by public or private sale, and the Depositary shall distribute the net proceeds of any such sale or the balance of any such property after deduction of such taxes to the Holders entitled thereto. Each Holder of an ADR or an interest therein agrees to indemnify the Depositary, the Company, the Custodian and any of their respective officers, directors, employees, agents and affiliates against, and hold each of them harmless from, any claims by any governmental authority with respect to taxes, additions to tax, penalties or interest arising out of any refund of taxes, reduced rate of withholding at source or other tax benefit obtained.
(6) Disclosure of Interests. To the extent that the provisions of or governing any Deposited Securities may require disclosure of or impose limits on beneficial or other ownership of Deposited Securities, other Shares and other securities and may provide for blocking transfer, voting or other rights to enforce such disclosure or limits, Holders and all persons holding ADRs agree to comply with all such disclosure requirements and ownership limitations and to comply with any reasonable Company instructions in respect thereof. The Depositary agrees to forward, upon the request and at the expense of the Company, any written request for beneficial ownership information from the Company to the Holders, and at the Company's expense, to promptly forward to the Company any responses received by the Depositary. The Company reserves the right to instruct Holders to deliver their ADSs for cancellation and withdrawal of the Deposited Securities so as to permit the Company to deal directly with the Holder thereof as a holder of Shares and Holders agree to comply with such instructions. The Depositary agrees to cooperate with the Company in its efforts to inform Holders of the Company's exercise of its rights under this paragraph and agrees to consult with, and provide reasonable assistance without risk, liability or expense on the part of the Depositary, to the Company on the manner or manners in which it may enforce such rights with respect to any Holder. The Company may from time to time request Holders (other than DTC or its nominee) or former Holders to provide information as to the capacity in which such Holders hold or held ADRs and regarding the identity of any other persons then or previously interested in such ADRs and the nature of such interest and various other matters as may be required to comply with applicable law or the Articles of Association of the Company. Each such Holder agrees to provide any information requested by the Company pursuant to this paragraph (6) and any applicable laws or regulations whether or not still a Holder at the time of such request.
Notwithstanding any provision of the Deposit Agreement or of the ADRs and without limiting the foregoing, by being a Holder, each such Holder agrees to provide such information as the Company may request in a disclosure notice (a "Disclosure Notice") given pursuant to the United Kingdom Companies Act 2006 (as amended from time to time and including any statutory modification or re-enactment thereof, the "Companies Act") or the Articles of Association of the Company. By accepting or holding an ADR, each Holder acknowledges that it understands that failure to comply with a Disclosure Notice may result in the imposition of sanctions against the holder of the Shares in respect of which the non-complying person is or was, or appears to be or has been, interested as provided in the Companies Act and the Articles of Association which currently include, the withdrawal of the voting rights of such Shares and the imposition of restrictions on the rights to receive dividends on and to transfer such Shares. In addition, by accepting or holding an ADR each Holder agrees to comply with the provisions of the United Kingdom Disclosure and Transparency Rules (as amended from time to time, the "DTRs") with regard to the notification to the Company of interests in Shares and certain financial instruments, which currently provide, inter alia, that a Holder must notify the Company of the percentage of its voting rights he holds as shareholder or holds or is deemed to hold through his direct or indirect holding of certain financial instruments (or a combination of such holdings) if the percentage of those voting rights (i) reaches, exceeds or falls below 3%, 4%, 5%, 6%, 7%, 8%, 9%, 10% and each 1% threshold thereafter up to 100% as a result of an acquisition or disposal of Shares or certain financial instruments, or (ii) reaches, exceeds or falls below such applicable thresholds as a result of events changing the breakdown of voting rights and on the basis of information disclosed by the Company in accordance with the DTRs. The notification must be effected as soon as possible, but not later than two trading days after the Holder (a) learns of the acquisition or disposal or of the possibility of exercising voting rights, or on which; having regard to the circumstances, should have learned of it, regardless of the date on which the acquisition, disposal or possibility of exercising voting rights takes effect, or (b) is informed of the event mentioned in (ii) above.
(7) Charges of Depositary. The Depositary may charge, and collect from, (i) each person to whom ADSs are issued, including, without limitation, issuances against deposits of Shares, issuances in respect of Share Distributions, Rights and Other Distributions (as such terms are defined in paragraph (10)), issuances pursuant to a stock dividend or stock split declared by the Company, or issuances pursuant to a merger, exchange of securities or any other transaction or event affecting the ADSs or the Deposited Securities, and (ii) each person surrendering ADSs for withdrawal of Deposited Securities or whose ADSs are cancelled or reduced for any other reason, U.S.$5.00 for each 100 ADSs (or portion thereof) issued, delivered, reduced, cancelled or surrendered (as the case may be). The Depositary may sell (by public or private sale) sufficient securities and property received in respect of Share Distributions, Rights and Other Distributions prior to such deposit to pay such charge. The following additional charges shall be incurred by the Holders, by any party depositing or withdrawing Shares or by any party surrendering ADSs, to whom ADSs are issued (including, without limitation, issuances pursuant to a stock dividend or stock split declared by the Company or an exchange of stock regarding the ADSs or the Deposited Securities or a distribution of ADSs pursuant to paragraph (10)), whichever is applicable (i) a fee of U.S.$0.05 or less per ADS for any Cash distribution made pursuant to the Deposit Agreement, (ii) a fee of U.S.$1.50 per ADR or ADRs for transfers made pursuant to
paragraph (3) hereof, (iii) a fee for the distribution or sale of securities pursuant to paragraph (10) hereof, such fee being in an amount equal to the fee for the execution and delivery of ADSs referred to above which would have been charged as a result of the deposit of such securities (for purposes of this paragraph (7) treating all such securities as if they were Shares) but which securities or the net cash proceeds from the sale thereof are instead distributed by the Depositary to Holders entitled thereto, (iv) an aggregate fee of U.S.$0.05 or less per ADS per calendar year (or portion thereof) for services performed by the Depositary in administering the ADRs (which fee may be charged on a periodic basis during each calendar year and shall be assessed against Holders as of the record date or record dates set by the Depositary during each calendar year and shall be payable at the sole discretion of the Depositary by billing such Holders or by deducting such charge from one or more cash dividends or other cash distributions), and (v) a fee for the reimbursement of such fees, charges and expenses as are incurred by the Depositary and/or any of its agents (including, without limitation, the Custodian and expenses incurred on behalf of Holders in connection with compliance with foreign exchange control regulations or any law or regulation relating to foreign investment) in connection with the servicing of the Shares or other Deposited Securities, the sale of securities (including, without limitation, Deposited Securities), the delivery of Deposited Securities or otherwise in connection with the Depositary's or its Custodian's compliance with applicable law, rule or regulation (which fees and charges shall be assessed on a proportionate basis against Holders as of the record date or dates set by the Depositary and shall be payable at the sole discretion of the Depositary by billing such Holders or by deducting such charge from one or more cash dividends or other cash distributions). The Company will pay all other charges and expenses of the Depositary and any agent of the Depositary (except the Custodian) pursuant to agreements from time to time between the Company and the Depositary, except (i) stock transfer or other taxes and other governmental charges (which are payable by Holders or persons depositing Shares), (ii) cable, telex and facsimile transmission and delivery charges incurred at the request of persons depositing, or Holders delivering Shares, ADRs or Deposited Securities (which are payable by such persons or Holders), (iii) transfer or registration fees for the registration or transfer of Deposited Securities on any applicable register in connection with the deposit or withdrawal of Deposited Securities (which are payable by persons depositing Shares or Holders withdrawing Deposited Securities; there are no such fees in respect of the Shares as of the date of the Deposit Agreement), and (iv) in connection with the conversion of foreign currency into U.S. dollars, JPMorgan Chase Bank, N.A. ("JPMorgan") shall deduct out of such foreign currency the fees, expenses and other charges charged by it and/or its agent (which may be a division, branch or affiliate) so appointed in connection with such conversion. JPMorgan and/or its agent may act as principal for such conversion of foreign currency. Such charges may at any time and from time to time be changed by agreement between the Company and the Depositary. For further details see https:/ /www.adr.com.
The Depositary anticipates reimbursing the Company for certain expenses incurred by the Company that are related to the establishment and maintenance of the ADR program upon such terms and conditions as the Company and the Depositary may agree from time to time. The Depositary may make available to the Company a set amount or a portion of the Depositary fees charged in respect of the ADR program or otherwise upon such terms and conditions as the Company and the Depositary may agree from time to time.
The right of the Depositary to receive payment of fees, charges and expenses as provided above shall survive the termination of the Deposit Agreement. As to any Depositary, upon the resignation or removal of such Depositary, such right shall extend for those fees, charges and expenses incurred prior to the effectiveness of such resignation or removal.
(8) Available Information. The Deposit Agreement, the provisions of or governing Deposited Securities and any written communications from the Company, which are both received by the Custodian or its nominee as a holder of Deposited Securities and made generally available to the holders of Deposited Securities, are available for inspection by Holders at the offices of the Depositary and the Custodian and at the Transfer Office. The Depositary will distribute copies of such communications (or English translations or summaries thereof) to Holders when furnished by the Company. The Company publishes information in English required to maintain the exemption from registration under Rule 12g3-2(b) under the Securities Exchange Act of 1934 on its Internet Web site (www.Indivior.com) or through an electronic information delivery system generally available to the public in its primary trading market. The Company represents that as of the date of the Deposit Agreement, the statements in the previous sentence of this paragraph (8) with respect to the exemption from registration under Rule 12g3-2(b) under the Securities Exchange Act of 1934, as amended, are true and correct. The Company agrees to promptly notify the Depositary and all Holders in the event of any change in the truth of any such statements. The Depositary does not assume any duty to determine if the Company is complying with the current requirements of Rule 12g3-2(b) under the Securities Exchange Act of 1934 or to take any action if the Company is not complying with those requirements.
(9) Execution. This ADR shall not be valid for any purpose unless executed by the Depositary by the manual or facsimile signature of a duly authorized officer of the Depositary.
| | | | | | | | |
| Dated: | | |
| | |
| JPMORGAN CHASE BANK, N.A., as Depositary |
| | |
| By | |
| Authorized Officer | |
The Depositary's office is located at 4 New York Plaza, Floor 12, New York, New York, 10004.
[FORM OF REVERSE OF ADR]
(10) Distributions on Deposited Securities. Subject to paragraphs (4) and (5), to the extent practicable, the Depositary will distribute to each Holder entitled thereto on the record date set by the Depositary therefor at such Holder's address shown on the ADR Register, in proportion to the number of Deposited Securities (on which the following distributions on Deposited Securities are received by the Custodian) represented by ADSs evidenced by such Holder's ADRs: (a) Cash. Any U.S. dollars available to the Depositary resulting from a cash dividend or other cash distribution or the net proceeds of sales of any other distribution or portion thereof authorized in this paragraph (10) ("Cash"), on an averaged or other practicable basis, subject to (i) appropriate adjustments for taxes withheld, (ii) such distribution being impermissible or impracticable with respect to certain Holders, and (iii) deduction of the Depositary's and/or its agents' fees and expenses in (1) converting any foreign currency to U.S. dollars by sale or in such other manner as the Depositary may determine to the extent that it determines that such conversion may be made on a reasonable basis, (2) transferring foreign currency or U.S. dollars to the United States by such means as the Depositary may determine to the extent that it determines that such transfer may be made on a reasonable basis, (3) obtaining any approval or license of any governmental authority required for such conversion or transfer, which is obtainable at a reasonable cost and within a reasonable time and (4) making any sale by public or private means in any commercially reasonable manner. (b) Shares. (i) Additional ADRs evidencing whole ADSs representing any Shares available to the Depositary resulting from a dividend or free distribution on Deposited Securities consisting of Shares (a "Share Distribution") and (ii) U.S. dollars available to it resulting from the net proceeds of sales of Shares received in a Share Distribution, which Shares would give rise to fractional ADSs if additional ADRs were issued therefor, as in the case of Cash. (c) Rights. (i) Warrants or other instruments in the discretion of the Depositary, after consultation with the Company if practicable, representing rights to acquire additional ADRs in respect of any rights to subscribe for additional Shares or rights of any nature available to the Depositary as a result of a distribution on Deposited Securities ("Rights"), to the extent that the Company timely furnishes to the Depositary evidence satisfactory to the Depositary that the Depositary may lawfully distribute the same (the Company has no obligation to so furnish such evidence), or (ii) to the extent the Company does not so furnish such evidence and sales of Rights are practicable, any U.S. dollars available to the Depositary from the net proceeds of sales of Rights as in the case of Cash, or (iii) to the extent the Company does not so furnish such evidence and such sales cannot practicably be accomplished by reason of the nontransferability of the Rights, limited markets therefor, their short duration or otherwise, nothing (and any Rights may lapse). (d) Other Distributions. (i) Securities or property available to the Depositary resulting from any distribution on Deposited Securities other than Cash, Share Distributions and Rights ("Other Distributions"), by any means that the Depositary may deem equitable and practicable, or (ii) to the extent the Depositary deems distribution of such securities or property not to be equitable and practicable, any U.S. dollars available to the Depositary from the net proceeds of sales of Other Distributions as in the case of Cash. The Depositary reserves the right to utilize a division, branch or affiliate of JPMorgan Chase Bank, N.A. to direct, manage and/or execute any public and/or private sale of securities hereunder. Such division, branch and/or affiliate may charge the Depositary a fee in connection with such sales, which fee is considered an expense of the
Depositary contemplated above and/or under paragraph (7) hereof. Any U.S. dollars available will be distributed by checks drawn on a bank in the United States or, in the case of DTC or its nominee, by wire transfer, in either case for whole dollars and cents. Fractional cents will be withheld without liability and dealt with by the Depositary in accordance with its then current practices. All purchases and sales of securities will be handled by the Depositary in accordance with its then current policies, which are currently set forth in the "Depositary Receipt Sale and Purchase of Security" section of https://www.adr.com/Investors/FindOutAboutDRs, the location and contents of which the Depositary shall be solely responsible for.
(11) Record Dates. When applicable, The Depositary shall, after consultation with the Company if practicable, fix a record date (which, to the extent applicable, shall be as near as practicable to any corresponding record date set by the Company) for the determination of the Holders who shall be entitled to receive any distribution on or in respect of Deposited Securities, to give instructions for the exercise of any voting rights, to receive any notice or to act in respect of other matters and only such Holders shall be so entitled or obligated. The Depositary may also set a record date for the determination of the Holders who shall be responsible for the fee assessed by the Depositary for administration of the ADR program and for any expenses provided for in paragraph (7) hereof.
(12) Voting of Deposited Securities. As soon as practicable after receipt from the Company of notice of any meeting or solicitation of consents or proxies of holders of Shares or other Deposited Securities, the Depositary shall distribute to Holders a notice stating (a) such information as is contained in such notice and any solicitation materials, (b) that each Holder on the record date set by the Depositary therefor will, subject to any applicable provisions of English law, be entitled to instruct the Depositary as to the exercise of the voting rights, if any, pertaining to the Deposited Securities represented by the ADSs evidenced by such Holder's ADRs and (c) the manner in which such instructions may be given, including instructions to give a discretionary proxy to a person designated by the Company. Upon actual receipt by the ADR department of the Depositary of instructions of a Holder on such record date in the manner and on or before the time established by the Depositary for such purpose, the Depositary shall endeavor insofar as practicable and permitted under the provisions of or governing Deposited Securities to vote or cause to be voted the Deposited Securities represented by the ADSs evidenced by such Holder's ADRs in accordance with such instructions. The Depositary will not itself exercise any voting discretion in respect of any Deposited Securities. There is no guarantee that Holders generally or any Holder in particular will receive the notice described above with sufficient time to enable such Holder to return any voting instructions to the Depositary in a timely manner. Notwithstanding anything contained in the Deposit Agreement or any ADR, the Depositary may, to the extent not prohibited by law or regulations, or by the requirements of the stock exchange on which the ADSs are listed, in lieu of distribution of the materials provided to the Depositary in connection with any meeting of, or solicitation of consents or proxies from, holders of Deposited Securities, distribute to the Holders a notice that provides Holders with, or otherwise publicizes to Holders, instructions on how to retrieve such materials or receive such materials upon request (i.e., by reference to a Web site containing the materials for retrieval or a contact for requesting copies of the materials). Holders are strongly encouraged to forward their voting instructions as soon as possible. Voting instructions will not be deemed received until
such time as the ADR department responsible for proxies and voting has received such instructions notwithstanding that such instructions may have been physically received by JPMorgan Chase Bank, N.A., as Depositary, prior to such time.
(13) Changes Affecting Deposited Securities. Subject to paragraphs (4) and (5), the Depositary may, in its discretion, and shall if reasonably requested by the Company, amend this ADR or distribute additional or amended ADRs (with or without calling this ADR for exchange) or cash, securities or property on the record date set by the Depositary therefor to reflect any change in par value, split-up, consolidation, cancellation or other reclassification of Deposited Securities, any Share Distribution or Other Distribution not distributed to Holders or any cash, securities or property available to the Depositary in respect of Deposited Securities from (and the Depositary is hereby authorized to surrender any Deposited Securities to any person and, irrespective of whether such Deposited Securities are surrendered or otherwise cancelled by operation of law, rule, regulation or otherwise, to sell by public or private sale any property received in connection with) any recapitalization, reorganization, merger, consolidation, liquidation, receivership, bankruptcy or sale of all or substantially all the assets of the Company, and to the extent the Depositary does not so amend this ADR or make a distribution to Holders to reflect any of the foregoing, or the net proceeds thereof, whatever cash, securities or property results from any of the foregoing shall constitute Deposited Securities and each ADS evidenced by this ADR shall automatically represent its pro rata interest in the Deposited Securities as then constituted. Promptly upon the occurrence of any of the aforementioned changes affecting Deposited Securities, the Company shall notify the Depositary in writing of such occurrence and as soon as practicable after receipt of such notice from the Company, may instruct the Depositary to give notice thereof, at the Company's expense, to Holders in accordance with the provisions hereof. Upon receipt of such instruction, the Depositary shall give notice to the Holders in accordance with the terms thereof, as soon as reasonably practicable.
(14) Exoneration. The Depositary, the Company, their agents and each of them shall: (a) incur no liability (i) if any present or future law, rule, regulation, fiat, order or decree of the United States, the United Kingdom or any other country, or of any governmental or regulatory authority or any securities exchange or market or automated quotation system, the provisions of or governing any Deposited Securities, any present or future provision of the Company's charter, any act of God, war, terrorism, nationalization or other circumstance beyond its control shall prevent or delay, or shall cause any of them to be subject to any civil or criminal penalty in connection with, any act which the Deposit Agreement or this ADR provides shall be done or performed by it or them (including, without limitation, voting pursuant to paragraph (12) hereof), or (ii) by reason of any exercise or failure to exercise any discretion given it in the Deposit Agreement or this ADR (including, without limitation, any failure to determine that any distribution or action may be lawful or reasonably practicable); (b) assume no liability except to perform its obligations to the extent they are specifically set forth in this ADR and the Deposit Agreement without gross negligence or willful misconduct; (c) in the case of the Depositary and its agents, be under no obligation to appear in, prosecute or defend any action, suit or other proceeding in respect of any Deposited Securities or this ADR; (d) in the case of the Company and its agents hereunder be under no obligation to appear in, prosecute or defend any action, suit or other proceeding in respect of any Deposited Securities or this ADR, which in its opinion may
involve it in expense or liability, unless indemnity satisfactory to it against all expense (including fees and disbursements of counsel) and liability be furnished as often as may be required; or (e) not be liable for any action or inaction by it in reliance upon the advice of or information from legal counsel, accountants, any person presenting Shares for deposit, any Holder, or any other person believed by it to be competent to give such advice or information. The Depositary shall not be liable for the acts or omissions made by, or the insolvency of, any securities depository, clearing agency or settlement system. The Depositary shall not be responsible for, and shall incur no liability in connection with or arising from, the insolvency of any Custodian that is not a branch or affiliate of JPMorgan Chase Bank, N.A. The Depositary shall not have any liability for the price received in connection with any sale of securities, the timing thereof or any delay in action or omission to act nor shall it be responsible for any error or delay in action, omission to act, default or negligence on the part of the party so retained in connection with any such sale or proposed sale. Notwithstanding anything to the contrary contained in the Deposit Agreement (including the ADRs), subject to the penultimate sentence of this paragraph (14), the Depositary shall not be responsible for, and shall incur no liability in connection with or arising from, any act or omission to act on the part of the Custodian except to the extent that (A) the Custodian has been determined by a final non-appealable judgment of a court of competent jurisdiction to have (i) committed fraud or willful misconduct in the provision of custodial services to the Depositary or (ii) failed to use reasonable care in the provision of custodial services to the Depositary as determined in accordance with the standards prevailing in England and Wales and (B) the Company or the Holders have incurred direct damages as a result of such act or omission to act on the part of the Custodian. The Depositary, its agents and the Company may rely and shall be protected in acting upon any written notice, request, direction, instruction or document believed by them to be genuine and to have been signed, presented or given by the proper party or parties. The Depositary shall be under no obligation to inform Holders or any other holders of an interest in any ADSs about the requirements of English law, rules or regulations or any changes therein or thereto. The Depositary and its agents will not be responsible for any failure to carry out any instructions to vote any of the Deposited Securities, for the manner in which any such vote is cast or for the effect of any such vote. The Depositary may rely upon instructions from the Company or its counsel in respect of any approval or license required for any currency conversion, transfer or distribution. The Depositary and its agents may own and deal in any class of securities of the Company and its affiliates and in ADRs. Notwithstanding anything to the contrary set forth in the Deposit Agreement or an ADR, the Depositary and its agents may fully respond to any and all demands or requests for information maintained by or on its behalf in connection with the Deposit Agreement, any Holder or Holders, any ADR or ADRs or otherwise related hereto or thereto to the extent such information is requested or required by or pursuant to any lawful authority, including without limitation laws, rules, regulations, administrative or judicial process, banking, securities or other regulators. None of the Depositary, the Custodian or the Company shall be liable for the failure by any Holder or beneficial owner to obtain the benefits of credits on the basis of non-U.S. tax paid against such Holder's or beneficial owner's income tax liability. The Depositary and the Company shall not incur any liability for any tax consequences that may be incurred by Holders and beneficial owners on account of their ownership of the ADRs or ADSs. The Depositary shall not incur any liability for the content of any information submitted to it by or on behalf of the Company for distribution to the Holders or for any inaccuracy of any translation thereof, for any investment risk associated with acquiring an interest in the Deposited
Securities, for the validity or worth of the Deposited Securities, for the credit worthiness of any third party, for allowing any rights to lapse upon the terms of the Deposit Agreement or for the failure or timeliness of any notice from the Company. Notwithstanding anything herein or in the Deposit Agreement to the contrary, the Depositary and the Custodian(s) may use third-party delivery services and providers of information regarding matters such as pricing, proxy voting, corporate actions, class action litigation and other services in connection herewith and the Deposit Agreement, and use local agents to provide extraordinary services such as attendance at annual meetings of issuers of securities. Although the Depositary and the Custodian will use reasonable care (and cause their agents to use reasonable care) in the selection and retention of such third-party providers and local agents, they will not be responsible for any errors or omissions made by them in providing the relevant information or services. The Depositary shall not be liable for any acts or omissions made by a successor depositary whether in connection with a previous act or omission of the Depositary or in connection with any matter arising wholly after the removal or resignation of the Depositary, provided that in connection with the issue out of which such potential liability arises the Depositary performed its obligations without negligence or willful misconduct while it acted as Depositary. By holding an ADS or an interest therein, Holders and owners of ADSs each irrevocably agree that any legal suit, action or proceeding against or involving the Company or the Depositary, arising out of or based upon the Deposit Agreement or the transactions contemplated hereby, may only be instituted in a state or federal court in New York, New York, and by holding an ADS or an interest therein each irrevocably waives any objection which it may now or hereafter have to the laying of venue of any such proceeding, and irrevocably submits to the exclusive jurisdiction of such courts in any such suit, action or proceeding. The Company has agreed to indemnify the Depositary and its agents under certain circumstances and the Depositary has agreed to indemnify the Company under certain circumstances. Neither the Depositary nor any of its agents shall be liable to Holders or beneficial owners of interests in ADSs for any indirect, special, punitive or consequential damages (including, without limitation, lost profits) of any form incurred by any person or entity, whether or not foreseeable and regardless of the type of action in which such a claim may be brought. No disclaimer of liability under the Securities Act of 1933 is intended by any provision hereof.
(15) Resignation and Removal of Depositary; the Custodian. The Depositary may resign as Depositary by written notice of its election so to do delivered to the Company, such resignation to take effect upon the appointment of a successor depositary and its acceptance of such appointment as provided in the Deposit Agreement. The Depositary may at any time be removed by the Company by no less than 60 days prior written notice of such removal, to become effective upon the later of (i) the 60th day after delivery of the notice to the Depositary and (ii) the appointment of a successor depositary and its acceptance of such appointment as provided in the Deposit Agreement. The Depositary may appoint substitute or additional Custodians and the term "Custodian" refers to each Custodian or all Custodians as the context requires.
(16) Amendment. Subject to the last sentence of paragraph (2), the ADRs and the Deposit Agreement may be amended by the Company and the Depositary, provided that any amendment that imposes or increases any fees or charges (other than stock transfer or other taxes
and other governmental charges, transfer or registration fees, cable, telex or facsimile transmission costs, delivery costs or other such expenses), or that shall otherwise prejudice any substantial existing right of Holders, shall become effective 30 days after notice of such amendment shall have been given to the Holders. Every Holder of an ADR at the time any amendment to the Deposit Agreement so becomes effective shall be deemed, by continuing to hold such ADR, to consent and agree to such amendment and to be bound by the Deposit Agreement as amended thereby. In no event shall any amendment impair the right of the Holder of any ADR to surrender such ADR and receive the Deposited Securities represented thereby, except in order to comply with mandatory provisions of applicable law. Any amendments or supplements which (i) are reasonably necessary (as agreed by the Company and the Depositary) in order for (a) the ADSs to be registered on Form F-6 under the Securities Act of 1933 or (b) the ADSs or Shares to be traded solely in electronic book-entry form and (ii) do not in either such case impose or increase any fees or charges to be borne by Holders, shall be deemed not to prejudice any substantial rights of Holders. Notwithstanding the foregoing, if any governmental body or regulatory body should adopt new laws, rules or regulations which would require amendment or supplement of the Deposit Agreement or the form of ADR to ensure compliance therewith, the Company and the Depositary may amend or supplement the Deposit Agreement and the ADR at any time in accordance with such changed laws, rules or regulations. Such amendment or supplement to the Deposit Agreement in such circumstances may become effective before a notice of such amendment or supplement is given to Holders or within any other period of time as required for compliance. Notice of any amendment to the Deposit Agreement or form of ADRs shall not need to describe in detail the specific amendments effectuated thereby, and failure to describe the specific amendments in any such notice shall not render such notice invalid, provided, however, that, in each such case, the notice given to the Holders identifies a means for Holders to retrieve or receive the text of such amendment (i.e., upon retrieval from the Depositary's or the Company's Web site or upon request from the Depositary).
(17) Termination. The Depositary may, and shall at the written direction of the Company, terminate the Deposit Agreement and this ADR by mailing notice of such termination to the Holders at least 30 days prior to the date fixed in such notice for such termination; provided, however, if the Depositary shall have (i) resigned as Depositary hereunder, notice of such termination by the Depositary shall not be provided to Holders unless a successor depositary shall not be operating hereunder within 45 days of the date of such resignation, or (ii) been removed as Depositary hereunder, notice of such termination by the Depositary shall not be provided to Holders unless a successor depositary shall not be operating hereunder on the 60th day after the Company's notice of removal was first provided to the Depositary. After the date so fixed for termination, the Depositary and its agents will perform no further acts under the Deposit Agreement and this ADR, except to receive and hold (or sell) distributions on Deposited Securities and deliver Deposited Securities being withdrawn. As soon as practicable after the expiration of six months from the date so fixed for termination, the Depositary shall sell the Deposited Securities and shall thereafter (as long as it may lawfully do so) hold in a segregated account the net proceeds of such sales, together with any other cash then held by it under the Deposit Agreement, without liability for interest, in trust for the pro rata benefit of the Holders of ADRs not theretofore surrendered. After making such sale, the Depositary shall be discharged
from all obligations in respect of the Deposit Agreement and this ADR, except to account for such net proceeds and other cash. After the date so fixed for termination, the Company shall be discharged from all obligations under the Deposit Agreement except for its obligations to the Depositary and its agents.
(18) Appointment. Each Holder and each person holding an interest in ADSs, upon acceptance of any ADSs (or any interest therein) issued in accordance with the terms and conditions of the Deposit Agreement shall be deemed for all purposes to (a) be a party to and bound by the terms of the Deposit Agreement and the applicable ADR(s), and (b) appoint the Depositary its attorney-in-fact, with full power to delegate, to act on its behalf and to take any and all actions contemplated in the Deposit Agreement and the applicable ADR(s), to adopt any and all procedures necessary to comply with applicable law and to take such action as the Depositary in its sole discretion may deem necessary or appropriate to carry out the purposes of the Deposit Agreement and the applicable ADR(s), the taking of such actions to be the conclusive determinant of the necessity and appropriateness thereof.
(19) Waiver. EACH PARTY TO THE DEPOSIT AGREEMENT (INCLUDING, FOR AVOIDANCE OF DOUBT, EACH HOLDER AND BENEFICIAL OWNER AND/OR HOLDER OF INTERESTS IN ADRS) HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY SUIT, ACTION OR PROCEEDING AGAINST THE DEPOSITARY AND/OR THE COMPANY DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THE SHARES OR OTHER DEPOSITED SECURITIES, THE ADSs OR THE ADRs, THE DEPOSIT AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREIN OR THEREIN, OR THE BREACH HEREOF OR THEREOF (WHETHER BASED ON CONTRACT, TORT, COMMON LAW OR ANY OTHER THEORY).
(20) Elective Distributions in Cash or Shares. Whenever the Company intends to distribute a dividend payable at the election of the holders of Shares in cash or in additional Shares, the Company shall give notice thereof to the Depositary at least 30 days prior to the proposed distribution stating whether or not it wishes such elective distribution to be made available to Holders. Upon receipt of notice indicating that the Company wishes such elective distribution to be made available to Holders, the Depositary shall consult with the Company to determine, and the Company shall assist the Depositary in its determination, whether it is lawful and reasonably practicable to make such elective distribution available to the Holders. The Depositary shall make such elective distribution available to Holders only if (i) the Company shall have timely requested that the elective distribution is available to Holders, (ii) the Depositary shall have determined that such distribution is reasonably practicable and (iii) the Depositary shall have received satisfactory documentation within the terms of Section 14 of the Deposit Agreement including, without limitation, any legal opinions of counsel in any applicable jurisdiction that the Depositary in its reasonable discretion may request, at the expense of the Company. If the above conditions are not satisfied, the Depositary shall, to the extent permitted by law, distribute to the Holders, on the basis of the same determination as is made in the local market in respect of the Shares for which no election is made, either (x) cash or (y) additional ADSs representing such additional Shares. If the above conditions are satisfied, the Depositary
shall establish a record date and establish procedures to enable Holders to elect the receipt of the proposed dividend in cash or in additional ADSs. The Company shall assist the Depositary in establishing such procedures to the extent necessary. Nothing herein shall obligate the Depositary to make available to Holders a method to receive the elective dividend in Shares (rather than ADSs). There can be no assurance that Holders generally, or any Holder in particular, will be given the opportunity to receive elective distributions on the same terms and conditions as the holders of Shares.
Indivior PLC
Letter Agreement
August 4, 2022
JPMorgan Chase Bank, N.A.
383 Madison Avenue, Floor 11
New York, New York 10179
Attention: Gregory Levendis, ADR Administration
Re: Indivior PLC Share Listing in the United States and matters related thereto
Dear Mr. Levendis:
We refer to that Deposit Agreement dated as of December 23, 2014, among Indivior PLC (the “Company”), JPMorgan Chase Bank, N.A., as depositary (the “Depositary”) and all holders from time to time of American depositary receipts (“ADRs”) issued thereunder (the “Deposit Agreement”). Capitalized terms used herein but not otherwise defined herein shall have the meaning assigned to them in the Deposit Agreement.
At the general meeting to be held on or about 30 September 2022, the Company will submit to its shareholders resolutions to adopt new articles of association and to effect a consolidation of the Company’s share capital (the “Consolidation”) in order to facilitate the additional listing of the Company’s ordinary shares (the “Shares”) directly on a securities exchange that has registered with the U.S. Securities and Exchange Commission under Section 6 of the Securities Exchange Act of 1934, as amended (the “U.S. Listing”).
In connection with the transactions giving rise to the U.S. Listing, the Company acknowledges and understands that, pursuant to the terms of the Deposit Agreement, the Company would normally deliver depositary interests representing the deposited Shares (the “Indivior DIs”) directly to the Custodian as substitute Deposited Securities under the Deposit Agreement. However, in connection with the U.S. Listing, the Company has appointed Computershare Trust Company N.A., as the global transfer agent for its Shares (the “Transfer Agent”) and, in lieu of the Depositary or its Custodian receiving Indivior DIs as Deposited Securities and processing the same in accordance with the Deposit Agreement and the Depositary’s current practices, the Company hereby notifies the Depositary that the Company will be taking steps to cause the Transfer Agent to deliver the Shares represented by the ADSs (and not the Indivior DIs) directly to the Holders on or about the Listing Effective Date.
Accordingly, notwithstanding any provisions of the Deposit Agreement to the contrary and subject to the approval of the aforesaid resolutions by the Company’s shareholders, the Company hereby (i) agrees to provide the Depositary with (a) a written notice confirming the effective date of the U.S. Listing (the “Listing Effective Date”), which notice shall be delivered to the Depositary not less than seven London business days or seven New York business days (whichever results in a longer notice period) prior to the Listing Effective Date, and (b) on or about October 3, 2022, and in any event subsequent to the approval of the Consolidation at the general meeting, a termination notice pursuant to the Deposit Agreement, which states that the Deposit Agreement will terminate on the earlier to occur of the Listing Effective Date (as defined above) and nine (9) months after the date on which the Depositary mails a notice of termination to the Holders (the earlier of such dates being the “Termination Date”), and which termination notice shall also include (x) confirmation of the date on which the Consolidation will become effective (the “Consolidation Effective Date”) and (y) an instruction that,
effective as of the close of business on the date immediately prior to the Consolidation Effective Date, the number of Shares represented by each ADS be amended from each ADS representing five Shares to each ADS representing one Share (the “Termination and Amendment Notice”), and (ii) notifies the Depositary that on the effectiveness of the U.S. Listing it will not receive the Indivior DIs through CREST as Deposited Securities under the Deposit Agreement and, in lieu thereof and in order to give effect to the Company’s plans, the Company hereby:
(a) instructs the Depositary as follows, subject to sub-paragraph (8) below:
(1) in lieu of receiving and processing the Indivior DIs pursuant to the Deposit Agreement, to validly complete by 2.00 p.m. GMT on the London business day immediately prior to the Transaction List Date (as defined below), a CREST stock withdrawal instruction (CREST transaction type “STW”) via the CREST system so as to rematerialize the entire balance of Shares in the Company held by, or on behalf of, the Depositary resulting in the Depositary (or its appointed custodian) being recorded in certificated form as the legal title holder of Shares in the Company immediately prior to the Transaction List Date,
(2) To the extent the Termination and Amendment Notice is in the form prescribed in this Letter Agreement, to countersign the same and (i) mail a notice of termination to the Holders pursuant to the Deposit Agreement which sets out the Termination Date specified in the Termination and Amendment Notice and (ii) effect the ratio change instructed in the Termination and Amendment Notice to be effective as of the close of business on the date immediately prior to the Consolidation Effective Date;
(3) provide the Transfer Agent with a list of all Holders as of the date so requested by the Transfer Agent showing, the names, addresses and, if in your possession, taxpayer identification numbers of such Holders and the number of ADSs held by each such Holder with applicable tax lot details in your possession, any certificate details and information regarding any applicable account stops or blocks for each such Holder on the date of such list (such list being the “Transaction Date List” and the date of the Transaction Date List being the “Transaction List Date”),
(4) to close its issuance, cancellation and transfer books as of the close of business two business days before the Transaction List Date,
(5) that, upon the receipt by the Depositary’s servicing agent, Equiniti Trust Company, of a Shipment Control List (“SCL”) drawdown from DTC totaling all of the ADSs registered in the name of Cede & Co. as of the date of the Transaction Date List, to provide a copy of the DTC SCL drawdown to the Transfer Agent and to accept the DTC SCL drawdown in respect of all such Cede & Co. registered ADS positions and debit down all of such ADSs leaving DTC’s total balance at zero,
(6) to automatically cancel each and every outstanding ADS with effect from the close of business on the Transaction List Date, without the need to receive a Withdrawal Order or any ADR certificates from any Holder (including Cede &
Co.), but otherwise in accordance with the provisions of the Deposit Agreement,
(7) not to charge cancellation fees under the Deposit Agreement to Holders in connection with the cancellation of ADSs effected in accordance with sub- paragraph (6) above, subject to the Company’s payment of the Cancellation Fees as provided below, and
(8) notwithstanding anything herein to the contrary, if the Termination Date occurs before the U.S. Listing becomes effective, then the following shall not apply: sub-paragraphs (1), (3), (4), (5) and (6) of this paragraph (a), and paragraphs (b) and (c) below; in such event, the Depositary will be governed by the provisions of the Deposit Agreement that are applicable subsequent to the termination thereof (as set forth in paragraph (17) of the form of ADR attached to the Deposit Agreement),
(b) notifies the Depositary that the Company has instructed the Transfer Agent not to deliver Indivior DIs to the Custodian’s CREST account and, in lieu thereof, to cancel the Depositary’s Share position upon the Transfer Agent’s receipt of the Transaction Date List and thereafter to deliver all Shares represented by the ADSs directly to the Holders entitled thereto based on the number of ADSs held by each respective Holder (as advised to the Transfer Agent within the Transaction Date List); provided, however, that no Shares shall be delivered to
(1) Cede & Co. until after such time as you have informed the Transfer Agent that the DTC SCL drawdown referred to above has been accepted by Equiniti Trust Company and that all ADSs drawn down thereon have been cancelled in accordance with the Deposit Agreement and the Company’s instructions set forth above, and
(2) Holders other than Cede & Co. until after you have informed the Transfer Agent that you have cancelled each and every ADS held by such Holders in accordance with the Deposit Agreement and the Company’s instructions set forth above,
(c) confirms that it will cause the Transfer Agent to (i) provide you with the date for the Transaction Date List no less than seven days prior to such date and (ii) request a Transaction List Date which occurs one New York business day prior to the Listing Effective Date, and
(d) requests that the Depositary provide reasonable cooperation to the Transfer Agent in connection with any questions the Transfer Agent may have regarding the Deposit Agreement.
The Company confirms that the Transfer Agent is, and at all times will be, an agent of the Company and not of the Depositary. The Company (i) acknowledges and agrees that, from and after the Listing Effective Date, the Depositary will have no obligation whatsoever to deliver to the Holders the Shares represented by the Holders’ ADSs, and (ii) will ensure that, upon the cancellation of the outstanding ADSs, the Transfer Agent will promptly re-register the Shares represented thereby into the names of the respective Holders entitled thereto (including Cede & Co.) based on the number of ADSs held by each respective Holder, and promptly deliver said Shares to such Holders.
The Company acknowledges and agrees that, as a result of its decision to cause the Transfer Agent to deliver the Shares directly to the Holders, except to the extent set out in this Letter Agreement, none of the Depositary, its agents (including, without limitation, the Custodian appointed under the Deposit Agreement) nor the officers, directors, employees, agents, affiliates, successors and assigns of any of them (collectively, the “Indemnitees”) shall have any obligations whatsoever to the Company, the Transfer Agent, Holders (including Cede & Co.), beneficial owners of ADSs or any other persons or entities with respect to, or otherwise related to, the U.S. Listing or any component or aspect thereof, including without limitation the delivery of Shares or Indivior DIs to the Holders. The Company hereby releases each of the Indemnitees from any obligations and duties it might have under the Deposit Agreement with respect, or otherwise related, to the U.S. Listing and each and any component and aspect thereof, including without limitation any obligation to deliver Shares or Indivior DIs to the Holders upon the cancellation of their ADSs.
In order to induce you to acknowledge this Letter Agreement, to carry out the instructions set forth herein, and to refrain from asserting your right to receive the Indivior DIs for processing, the Company covenants and agrees to reimburse, indemnify and hold the Indemnitees harmless from and against any and all claims, actions, judgments, damages, losses, liabilities, costs and expenses (including without limitation reasonable attorney's fees and expenses) and transfer or other taxes (each, a “Loss”) that may be paid, incurred or suffered by any of them, or to which any of them may become subject, arising out of or incident to (i) this Letter Agreement (ii) the U.S. Listing, (iii) the administration of any of the Company’s and/or the Transfer Agent’s duties hereunder, (iv) the performance by the Company and the Transfer Agent of the transactions contemplated herein, (v) the Company’s issuance of the instructions described herein or any instructions delivered pursuant hereto, and/or the Transfer Agent’s compliance with any such instructions, or (vi) any Indemnitee’s compliance with the Company’s instructions and/or requests set forth herein, or as a result of any Indemnitee defending itself against any Loss resulting from its actions (or omission to act) hereunder or resulting from the delivery of the Shares in accordance herewith, including, without limitation, any claim against any Indemnitee by any Holder (including Cede & Co.) or Beneficial Owner, which covenants and agreements shall survive the termination hereof, the cancellation of the ADSs and the delivery of the Shares to the Holders. In no event shall any of the Indemnitees be liable for any indirect, special, punitive or consequential damages (including, without limitation, legal fees and expenses) or lost profits, in each case of any form incurred by any person or entity (including, without limitation, Holders and beneficial owners of ADSs), whether or not foreseeable and regardless of the type of action in which such a claim may be brought.
The indemnification provided by this Letter Agreement shall be in addition to any other rights that the Depositary and its agents may be entitled under the Deposit Agreement or otherwise and shall survive the termination of the Deposit Agreement and this Letter Agreement. The Company agrees that, to the extent the Depositary acts in accordance with these instructions, such actions and/or omissions to act shall not constitute negligence or willful misconduct by the Depositary or its agents.
In connection herewith, the Company will pay the Depositary (i) a transaction fee in the amount of $100,000, payable promptly upon invoicing but in any event before the Listing Effective Date (the “Transaction Fee”), and (ii) the aggregate amount of cancellation fees owing with respect to all of the ADSs cancelled in accordance with sub-paragraph (a)(6) of this Letter Agreement, which fees shall be equal to the product of US$0.05 multiplied by the aggregate number of ADSs so cancelled (the “Cancellation Fees”), and the Company will promptly reimburse you and your agents for any and all actual and documented out-of-pocket fees, charges and expenses incurred by them in connection with, or arising from, the U.S. Listing, this Letter Agreement, and the services contemplated hereunder, including, but not limited to, the fees and expenses charged by the Depositary’s servicing agent Equiniti
Trust Company, legal fees and expenses (provided that in the case of legal fees the supporting documentation may consist of an unitemized invoice), printing expenses, postage, escheatment costs (if any), and taxes or related fees incidental to processing charged directly or indirectly by governmental authorities, issuers, or their agents. Invoices will be payable within thirty (30) days of the date of the invoice. Other than as set out in this Letter Agreement, the Company shall not be liable to pay the Depositary any fees or reimburse any charges or expenses in connection with the termination of the Deposit Agreement or the Depositary’s carrying out of the instructions set forth herein (including, without limitation, pursuant to the fee letter agreement dated 2 December 2014 between the Company and the Depositary).
This Letter Agreement shall be construed and enforced in accordance with the laws of the State of New York applicable to contracts to be performed wholly in such state, and shall inure to the benefit of, and the obligations created hereby shall be binding upon, the successors and assigns of the parties hereto. All actions and proceedings relating to or arising from, directly or indirectly, this Letter Agreement may be litigated in U.S. federal or state courts located within the Borough of Manhattan, City and State of New York and shall not be litigated in any other jurisdiction without the Depositary’s written consent. Delivery of an executed signature page of this Agreement by facsimile or other electronic transmission (including “.pdf”, “.tif” or similar format) shall be effective as delivery of a manually executed counterpart hereof. Notwithstanding the foregoing, the parties hereto shall endeavor to exchange original signatures.
[Signature page follows]
* * *
| | | | | | | | | | | |
| Very truly yours, | | |
| | | |
| INDIVIOR PLC | | |
| | | |
| By: | /s/ Kathryn Hudson | |
| Name: | Kathryn Hudson | |
| Title: | Company Secretary | |
| | | |
Acknowledged and Agreed to as of the date first above written: |
| | | |
JPMORGAN CHASE BANK, N.A. | |
| | | |
| | | |
| By: | | | |
| Name: | | | |
| Title: | | | |
| | | | | | | | | | | |
| Very truly yours, | | |
| | | |
| INDIVIOR PLC | | |
| | | |
| By: | | |
| Name: | | |
| Title: | | |
| | | |
Acknowledged and Agreed to as of the date first above written: |
| | | |
JPMORGAN CHASE BANK, N.A. | |
| | | |
| | | |
| By: | /s/ Timothy E. Green | |
| Name: | Timothy E Green | |
| Title: | Vice President | |
October 3, 2022
JPMorgan Chase Bank, N.A.
383 Madison Avenue, Floor 11
New York, New York 10179
Attention: Gregory Levendis, Depositary Receipts Group
Email: gregory.a.levendis@jpmorgan.com
Dear Mr. Levendis:
We refer to: (i) paragraph (17) of the form of ADR set forth in Exhibit A to the Deposit Agreement dated as of December 23, 2014 (the “Deposit Agreement”) among INDIVIOR PLC and its successors (the “Company”), JPMORGAN CHASE BANK, N.A., as depositary thereunder (the “Depositary”), and all holders from time to time of American Depositary Receipts issued thereunder (“ADRs”) evidencing American Depositary Shares (“ADSs”) representing deposited Shares; and (ii) that Letter Agreement dated as of August 4, 2022 between the Company and the Depositary (the “Letter Agreement”). Unless otherwise defined herein, all capitalized terms used, but not otherwise defined, herein shall have the meaning given to such terms in the Deposit Agreement.
We hereby advise you that, at the most recently held general meeting of shareholders of the Company our shareholders approved resolutions adopting new articles of association and approving a consolidation of the Company’s share capital (the “Consolidation”) in order to facilitate the additional listing of the Company’s ordinary shares (the “Shares”) directly on a securities exchange that has registered with the U.S. Securities and Exchange Commission under Section 6 of the Securities Exchange Act of 1934, as amended (the “U.S. Listing”). We further advise you that the Consolidation will become effective on October 10, 2022.
In connection with the U.S. Listing, and in accordance with the provisions of said paragraph (17), the Company hereby notifies the Depositary that it is terminating the Deposit Agreement effective on the earlier to occur of the effective date of the U.S. Listing (the “Listing Effective Date”) and nine months after the date on which you first mail a notice of termination to Holders (the “Notice of Termination” with the effective date of termination being the “Termination Date”). Simultaneous with providing such Notice of Termination to Holders, and included as a part thereof, we hereby instruct that you notify Holders that:
(i) effective on the close of business on the date immediately preceding the effectiveness of the Consolidation, the number of Shares represented by each ADS be amended from each ADS representing five Shares to each ADS representing one Share,
(ii) the third sentence of paragraph (17) of the form of ADR, and all outstanding ADRs, is replaced in its entirety with the following: “To the extent the Company does not effect a listing of its Shares directly on a securities exchange registered under Section 6 of the Securities Exchange Act of 1934 from the date Notice of Termination is first mailed to Holders, as soon as practicable following the first business day after such nine month period the Depositary shall sell the Deposited Securities and shall thereafter (as long as it may lawfully do so) hold in a segregated account the net proceeds of such sales, together with any other cash then held by it under the Deposit
Indivior PLC
234 Bath Road
Slough, Berkshire SL1 4EE
United Kingdom
| | | | | |
Registered in England & Wales, No. 9237894. Registered office at 234 Bath Road, Slough, Berkshire SL1 4EE | indivior.com |
Agreement, without liability for interest, in trust for the pro rata benefit of the Holders of ADRs not theretofore surrendered”;
(iii) the Company has instructed the Depositary that, as long as the Listing Effective Date occurs prior to nine (9) months from the date on which such Notice of Termination is mailed to Holders, with effect from close of business on such Termination Date, the Depositary will cancel each and every outstanding ADS, including ADSs held through The Depository Trust Company’s settlement system;
(iv) the Company has made arrangements pursuant to which Computershare Trust Company N.A., as the Company’s transfer agent for the Shares, will deliver Shares directly to Holders entitled thereto, following the cancellation of the ADSs representing the Shares; and
(v) to the extent the Listing Effective Date does not occur within nine (9) months from the date on which the Notice of Termination is mailed to Holders, the Depositary will act in the manner provided in, and subject to the provisions of, paragraph (17) of the form of ADR (as amended in accordance with clause (ii) above) and endeavor to sell the Deposited Securities for the benefit of remaining Holders.
In accordance with paragraph (16) of the form of ADR, the amendment set forth in clause (ii) above shall become effective thirty (30) days after the date on which you first notify Holders thereof.
We understand that, after the Termination Date, the Depositary and its agents will perform no further acts under the Deposit Agreement or the ADRs, other than to comply with the provisions of the Letter Agreement related thereto, and that as of the Termination Date, save for any obligation that is expressly provided in the Deposit Agreement to survive the termination thereof, the Depositary shall be discharged from all other obligations in respect of the Deposit Agreement and the ADRs.
| | | | | | | | |
| Yours sincerely, |
| | |
| INDIVIOR PLC |
| | |
| By: | /s/ Kathryn Hudson |
| Name: | Kathryn Hudson |
| Title: | Company Secretary |
PORTIONS OF THIS EXHIBIT HAVE BEEN REDACTED.
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS BOTH (i) NOT MATERIAL AND (ii) WOULD BE LIKELY TO CAUSE COMPETITIVE HARM IF PUBLICLY DISCLOSED.
REDACTED MATERIAL IS MARKED WITH [***].
Dated 23 December 2014
COPACKER SUPPLY AGREEMENT
BETWEEN
(1) RECKITT BENCKISER HEALTHCARE (UK) LIMITED
("Supplier")
AND
(2) RB PHARMACEUTICALS LIMITED
("Buyer")
THIS AGREEMENT is made on 23 December 2014
BETWEEN:
(1) Reckitt Benckiser Healthcare (UK) Limited incorporated and registered in England and Wales with company number 261312 whose registered office is at 103-105 Bath Road, Slough, Berkshire, SL1 3UH, United Kingdom (“Supplier”),
AND
(2) RB Pharmaceuticals Limited incorporated and registered in England and Wales with company number 7183451 whose registered office is at 103-105 Bath Road, Slough, Berkshire, SL1 3UH, United Kingdom (“Buyer”).
WHEREAS the Buyer wishes to engage the Supplier to manufacture and supply the Products (as defined below) on the terms of this Agreement and the Supplier wishes to manufacture and supply the Products to the Buyer on the terms of this Agreement.
IT IS AGREED as follows:
1 DEFINITIONS
1.1 In this Agreement the following definitions shall apply, unless the context requires otherwise.
"Active Pharmaceutical Ingredient" or "API" means, with respect to a Product, any substance or mixture of substances intended to be used in the manufacture of a drug (medicinal) product and that, when used in the production of a drug, becomes an active ingredient of the drug product.
"Actual Order Volume" has the meaning set out in paragraph 4 in Schedule One.
"Affected Party" has the meaning set out in clause 18.1.
"Affiliate" means in relation to a company, any entity Controlled by that company or any entity which Controls that company or any entity which is Controlled by another entity, which also Controls that company whether such Control is direct or indirect. "Supplier's Affiliates" and "Buyer's Affiliates" shall be construed accordingly in relation to the Supplier and the Buyer respectively.
"Agreement" means this agreement.
"Amended Supply Agreement" means the supply agreement between the parties dated 23 July 2012, as updated and amended from time to time.
"API Specification" has the meaning set out in Schedule Eleven.
"Arising Product Intellectual Property Rights" means such Intellectual Property Rights as are developed or created during the conduct of, and as a result of, the work undertaken under this Agreement and which relate exclusively to any Product (including without limitation its manufacture and/or use) (excluding, for the avoidance of doubt, any Existing Intellectual Property Rights).
"Arising Supplier Intellectual Property Rights" means such Intellectual Property Rights as are developed or created by the Supplier (or any agent or authorised sub-contractor of it), whether with or without third parties arising as a consequence of a change in relation to manufacture of the Products made under clauses 8.6 to 8.10 and which do not relate exclusively to any Product (for the avoidance of doubt, (i) including without limitation any manufacturing Intellectual Property Rights (excluding any trade marks and rights in passing off) of applicability to manufacturing generally, and (ii) excluding any Existing Intellectual Property Rights).
"Asset Purchase Agreement" means the asset purchase agreement between the parties dated 23 May 2012.
"Assumed API Costs" has the meaning set out in paragraph 1(2) in Schedule One.
"Budget Order Volume" has the meaning set out in paragraph 2 in Schedule One.
"Business Continuity Plan"/the "BCP Plan" has the meaning set out in clause 19.1.
"Business Day" means a day (other than a Saturday or Sunday) on which banks are open for business in London, UK.
"Buyer lndemnitees" has the meaning set out in clause 11.2.
"CAPA" means a corrective and preventative action taken pursuant to applicable quality procedures.
"cGMP" means all applicable standards for good manufacturing practices as promulgated under applicable laws, including (a) Directive 2001/83/EC, 2003/94/EC and any applicable guidance on good manufacturing practices adopted pursuant to Article 47 of Directive 2001/83/EC, in particular relevant guidance on good manufacturing practices contained in the Rules Governing Medicinal Products in the European Union, Volume IV Good Manufacturing Practice for Medicinal Products, the principles detailed in the ICH Q7A guidelines, and (b) U.S Good Manufacturing Practice regulations promulgated by the U S. Food and Drug Administration including 21 CFR Part 210 and 211, in each case as amended from time to time.
"Certificate of Analysis" means the certificate of analysis contemplated by the Technical Agreement.
"Change Plan" has the meaning set out in clause 8.6.
"Change in Specification" has the meaning set out in clause 8.8.1.1.
"Commencement Date" has the meaning set out in clause 2.3.
"Confidential Information" means
(A) information concerning the existence of this Agreement and the fact that the Supplier is manufacturing the Products (as hereinafter defined) for the Buyer;
and
(B) information related to Arising Product Intellectual Property Rights, Arising Supplier Intellectual Property Rights, Existing Intellectual Property Rights, the Specifications and Technical Manual (all as defined herein), know how, and data and information of a technical, operational, administrative, financial or business nature, whether oral or in some tangible form, such as in documents, papers, drawings, diagrams, discs, articles, samples, prototypes or otherwise, in each case that is disclosed (intentionally or unintentionally) by one party or their Affiliates to the other party or its Affiliates.
Without limiting the foregoing, the Confidential Information of the Buyer includes all Manufacturing IPR as defined in the Asset Purchase Agreement, the Specifications and the Technical Manual.
"Control" means, in relation to a company, the ability of a person to ensure that the activities and business of that company are conducted in accordance with the wishes of that person, and a person shall be deemed to have Control of a company if it possesses or is entitled to acquire 50% or more of the shares carrying votes exercisable at a general meeting (or its equivalent) of the particular company if such company is a corporation issuing voting shares or the right to receive the majority of the income of that company on any distribution by it of all of its income or the majority of its assets on a winding up "Controlled" shall be construed accordingly.
"Delivery Point" means the Buyer's specified point for delivery at either (i) [***], or (ii) [***], or (iii) such other UK delivery address as specified by the Buyer from time to time.
"Demerger Agreement" means the demerger agreement to be entered into between Reckitt Benckiser Group plc and lndivior plc on or around 17 November 2014.
"Direct Manufacturing Costs" means costs which are directly attributed to the manufacture of the Products, as set out in the "direct costs" section of the FOS.
"EMA'' means the European Medicines Agency or any successor entity thereto.
"Emergency Trigger Level" means an OTIF performance level of 85 per cent.
"Escalation Notice" has the meaning set out in clause 20.1.
"Excess Supply" has the meaning set out in clause 5.4.
"Existing Intellectual Property Rights" means any Intellectual Property Rights owned by or licensed to the Buyer or the Supplier (as applicable) or their Affiliates (i) prior to the date of this Agreement or (ii) that is created or resulting during the term of this Agreement otherwise than under or pursuant to this Agreement ("Supplier's Existing Intellectual Property Rights" and "Buyer's Existing Intellectual Property Rights" shall be construed accordingly in relation to the Supplier and the Buyer respectively).
"Existing Tooling" means the Tooling which, as at the date of this Agreement, is owned by the Buyer, as indicated in Schedule Seven.
"FCP Lease" means the lease of the fine chemical plant, land and buildings on Dansom Lane, Hull, HUB 7DS dated on or around 1 December 2014 entered into by the parties.
"FDA" means the United States Food and Drug Administration and any successor agency thereto.
"Force Majeure Event" has the meaning set out in clause 18.1.
"FOS" means the factory operating statement as agreed between the parties from time to time each year (the initial version of which is set out at Appendix 1 to Schedule One).
"ILCH" means the Index of Labour Costs per Hour released by the Office for National Statistics.
"Indirect Manufacturing Costs" means costs which are indirectly attributed to the manufacture of the Products, as set out in the "indirect costs" section of the FOS.
"Indirect Manufacturing Cost Product Allocation" has the meaning set out in paragraph 2 in Schedule One.
"Intellectual Property Rights" means patents, applications for patents, utility models, applications for utility models, trade marks or applications for trade marks or trading names (whether or not registered or registrable), rights in know how (including trade secrets, technology, methods of manufacture and specifications), designs (registered or unregistered and including applications for registered designs), copyright (including rights in computer software), topography rights and other rights in semiconductor chips, rights in inventions, the right to claim damages for past infringements of any or all such rights and all rights having equivalent or similar effect wherever situated.
"Key Performance Indicators" / "KPls" means those target performance levels as set out in Schedule Five or otherwise agreed between the parties in writing from time to time.
"Manufacturing Costs" has the meaning set out in paragraph 1(1) in Schedule One.
"Manufacturing Site" means the Supplier's site of manufacture of Products as specified in the Supplier's manufacturing licence and controlled substance licence in respect of such Products.
"Material OTIF Failure" has the meaning set out in clause 14.3.2.
"Optional Restricted Period" has the meaning set out in clause 3.6.1.2.
"Order" has the meaning set out in clause 5.1.1.
"Order Requirements" means each Order shall, for each SKU of Products, have a minimum order quantity of one (1) pallet, and be in multiples of whole pallets.
"OTIF" means, in relation to delivery of Products, on time in full.
"Pallet Policy" shall be construed in accordance with clause 5.7.
"Plant Day" shall have the meaning set out in the Demerger Agreement.
"Premises" has the meaning set out in the FCP Lease.
"Price" means the prices (described by reference to skus) specified in the price list attached to the FOS to be charged by the Supplier to the Buyer in respect of any Products supplied pursuant to this Agreement.
"Proceeding" means any judicial, administrative or adversarial proceeding (public or private), any action, claim, lawsuit, litigation, arbitration or mediation, any hearing, investigation, probe or inquiry by any governmental authority, or any other dispute, in each case initiated by a third party (including any governmental authority).
"Products" means those products listed in Schedule Two or as otherwise agreed by the parties in writing, together with such additional, improved, modified or replacement products as shall be agreed between the parties from time to time as are manufactured by the Supplier and for supply to the Buyer under this Agreement and wherever "Products" is referred to in this Agreement it shall refer to the relevant Products or all Products as the case may be, as listed in Schedule Two.
"Product Field" has the meaning set out in clause 13.7.
"Product Forecast" has the meaning set out in clause 5.1.
"Protected Person" has the meaning set out in clause 3.6.3.
"Purchase Terms" has the meaning set out in clause 6.6.
"Raw Materials" means, on a Product by Product basis, such raw materials and components as are used to manufacture such Product, including without limitation all packaging components but excluding API.
"Raw Materials Manufacturing Cost" means, with respect to a Product, the cost of all materials and components, excluding the API, which are directly used to manufacture and form an integral part of such Product.
"Rectification Plan" has the meaning set out in clause 14.3.2.2.
"Restricted Period" has the meaning set out in clause 3.6.1.1.
"Restricted Person" means
(A) until any such time as Reckitt Benckiser Group plc becomes Controlled by a third party, each Supplier Affiliate, and
(B) from and including the date (if any) on which Reckitt Benckiser Group plc becomes Controlled by a third party, the body corporate (if different to the Supplier) that operates the Manufacturing Site, or possesses or has access to any information within limb (B) of the
definition of Confidential Information with respect to the manufacture of one or more Products.
"Services" means those internal logistics and other services listed in Schedule Two or as otherwise agreed by the parties in writing in respect of each of the Products to be performed by the Supplier in respect of any of the Products as part of its obligations in supplying the relevant Products under this Agreement, including any Temporary Additional Services as required.
"SOP" means standard operating procedure.
"Specifications" means each of the specifications for the Products as listed in the relevant Technical Manual and in Schedule Four signed for the purposes of identification by each party, as amended from time to time, and in accordance with which the Supplier shall manufacture and supply the Products.
"SKU" means stock keeping unit.
"Supplier lndemnitees" has the meaning set out in clause 11.1.
"Target OTIF Level" means an OTIF performance level of 98.5 per cent.
"Tax Authority" means any authority responsible for the collection or management of any tax.
"Technical Agreement" means the Technical Agreement entered into between the parties on or about the date of this Agreement, as such agreement shall be amended from time to time.
"Technical Manual" means the manual in respect of each of the Products containing the technical information for manufacture of the Products which is supplied by the Buyer to the Supplier and signed for the purposes of identification by each party along with any and all manufacturing policies of the Buyer which may be provided by the Buyer or its Affiliates to the Supplier from time to time.
"Technical Transfer" means those activities required to be performed by the Supplier in order to transfer the manufacture of the Products to an alternative supplier and manufacture batches up to and including process validation as further set out in clause 14.
"Temporary Additional Services" means those services as are set out in Schedule Three.
"Tooling" has the meaning set out in clause 6.6.
"Transferee" has the meaning set out in clause 2.2.
"VAT" means
(A) within the European Union, any tax imposed by any Member State in conformity with the Directive of the Council of the European Union on the common system of value added tax (2006/112/EC), and
(B) outside the European Union, any tax corresponding to, or substantially similar to, the common system of value added tax referred to in paragraph (A) of this definition.
1.2 Unless otherwise indicated, references to clauses and schedules are references to clauses and schedules in this Agreement.
1.3 For the purpose of this Agreement, references to "manufacturing" a Product includes, without limitation, manufacturing, processing, formulating, packaging, finishing, filling, labelling, holding and quality control testing of such a Product, and "manufacture" shall be construed accordingly.
2 TERM
2.1 This Agreement shall be effective from the Commencement Date and, subject to applicable laws and the provisions of clause 15 (Termination), shall have effect until seven (7) years following the Commencement Date unless terminated by either party giving the other not less than thirty-six (36) months written notice, such termination not to take effect earlier than the sixth anniversary of the Commencement Date.
2.2 If notice has been served under clause 2.1, at the request of the Buyer any time during the period of notice the Supplier shall promptly and efficiently undertake and complete a Technical Transfer in accordance with clause 14 to the Buyer or a third party identified by the Buyer (the Buyer or the third party (or both) being the ''Transferee") to enable the Transferee to establish and conduct cGMP manufacture of the Products.
2.3 The parties agree that this Agreement shall commence immediately upon Plant Day (the "Commencement Date").
3 SUPPLY OF PRODUCTS AND SERVICES
3.1 During the term of this Agreement, and subject to the terms of this Agreement the Supplier shall, at the Manufacturing Site:
3.1.1 manufacture and supply the Buyer's requirements of the Products on an exclusive basis (save where such exclusivity is disapplied in accordance with the terms of this Agreement), and
3.1.2 supply or procure the supply of the Services.
3.2 [***].
3.3 The Buyer shall supply the API to the Supplier for the sole purpose of manufacturing the Products. If the Buyer is unable to supply the API to the Supplier, the Buyer may in its discretion arrange for an alternative source of API to be supplied to the Supplier and in such event the Supplier shall use all reasonable endeavours to qualify such alternative source as promptly as practicable, at the Buyer's cost (as to expenses properly incurred). For the avoidance of doubt, the Supplier shall not be responsible for sourcing the API. The Supplier shall not be in breach of its obligations under this Agreement to manufacture Products to the extent such breach was caused by a failure of the Buyer's obligations to supply quantities of API in accordance with this Agreement.
3.4 Unless and to the extent the Raw Materials are supplied by the Buyer to the Supplier as provided in this clause 3, the Supplier shall only obtain Raw Materials from sources approved in writing by the Buyer and shall ensure that such Raw Materials are of the requisite standard to comply with the Specification and any applicable laws, codes of practice and regulations, provided however the Buyer may at its sole discretion supply any Raw Materials required for the Products to the Supplier to be delivered to the Supplier's manufacturing plant as agreed between the parties hereto. The said Raw Materials will be solely used by the Supplier for the Products The Supplier shall incorporate the cost and agreed wastage level as charged by the Buyer with no further charge into the Price of the Products. The Buyer shall provide the Supplier with a Certificate of Analysis for all APls and any Raw Materials as may be supplied by the Buyer under this clause 3.
3.5 Unless otherwise agreed with the Buyer in writing or set out in this Agreement, the Supplier shall operate on a full service basis (meaning that the Supplier shall be responsible for the purchase of all Raw Materials, except for Raw Materials provided by the Buyer (if any), and the supply of the Products in finished form to the Buyer). The Buyer shall only be invoiced for the Price of finished Products inclusive of such costs and expenses.
3.6 Subject to clause 3.7, the Supplier (for itself and on behalf of each Restricted Person) covenants with the Buyer that it will not, without the prior written consent of the Buyer whether directly or indirectly
and whether alone or in conjunction with or on behalf of any other person and whether as principal, shareholder, director, employee, agent, consultant, partner or otherwise:
3.6.1 during:
3.6.1.1 the term of this Agreement and the period of one (1) year thereafter (the "Restricted Period"); and
3.6.1.2 at the Buyer's option (which it may exercise in its sole discretion), a further one (1) year period from the end of the Restricted Period (the "Optional Restricted Period"),
canvass, solicit or approach, or cause to be canvassed, solicited or approached, any person for orders or deal with or contract with any person, who at any time during such period is or was:
3.6.1.2.1 negotiating with the Buyer or any of its Affiliates for the supply by the Buyer or any of its Affiliates of one or more of the Products, or
3.6.1.2.2 was an actual customer of the Buyer or any of its Affiliates for one or more of the Products,
where the above mentioned orders or contracts relate to products which are competitive with a Product supplied by the Supplier to the Buyer or any of its Affiliates at any time during such period.
3.6.2 during:
3.6.2.1 the Restricted Period, and
3.6.2.2 the Optional Restricted Period,
interfere, or seek to interfere, with the continuation of Raw Materials to the Buyer or any of its Affiliates from any supplier who has been supplying such Raw Materials to the Buyer or any of its Affiliates at any time during such period if such interference causes or would cause that supplier to cease supplying, or materially reduce its supply of those Raw Materials to the Buyer. For avoidance of doubt, if a third party supplier suffers a shortage of supply of Raw Materials which are used by the Supplier other than to manufacture any Products, then the Supplier's negotiation with or attempts to obtain a supply of Raw Materials from such third party supplier under the terms of the Supplier's agreed arrangements with such third party supplier shall not of itself constitute interference by the Supplier for the purpose of this clause.
3.6.3 during:
3.6.3.1 the Restricted Period, and
3.6.3.2 the Optional Restricted Period,
solicit or entice, or endeavour to solicit or entice, away from the Buyer or its Affiliates, any person employed in a managerial, supervisory, technical or sales capacity by, or who is or who was a consultant to, the Buyer or its Affiliates (each a "Protected Person") at any time during such period unless such person responds to a bona fide recruitment advertisement or general solicitation that is not targeted at Protected Persons;
3.6.4 subject to clause 3.6.6, during:
3.6.4.1 the Restricted Period; and
3.6.4.2 the Optional Restricted Period,
engage in, or be concerned with, or interested in, any person that conducts a business competitive with all or a substantial part of the Products;
3.6.5 subject to clause 3.6.6, during:
3.6.5.1 the Restricted Period, and
3.6.5.2 the Optional Restricted Period,
(A) whether alone or with, or for the benefit of any other person, or
(B) assist (including without limitation by way of granting a licence to or providing information to) any other person to,
research, develop, manufacture, market or sell in any manner any products that are competitive with, or could be competitive with, one or more of the Products that are manufactured by the Supplier or any Supplier Affiliate during such period, and
3.6.6 during the term of this Agreement, unless expressly authorised by the Buyer in writing, for the purpose of commercial sale during the term of this Agreement supply (or directly or indirectly authorise the manufacture or supply of) the Products or any product which might reasonably be considered to compete with the Products to any person, firm or company other than the Buyer or an Affiliate of the Buyer.
3.7 Clause 3.6 shall not apply to the extent that
3.7.1.1 the Supplier or any Restricted Person is the holder of securities in a company whose securities are listed on a recognised investment exchange (as defined in the Financial Services and Markets Acts 2000, as amended) and holds not more than five per cent (5%) of the votes which could normally be cast at a general meeting of that company, or
3.7.1.2 the Supplier or any Restricted Person acquires an interest in an entity which is directly or indirectly interested in carrying on any business which competes with the business of the Buyer as it was carried out at the date of this Agreement but the acquisition is not made with the sole or main purpose of acquiring a business which so competes.
3.8 If the Buyer discontinues receiving a Product under this Agreement, then the reference in clause 3.6.1.1 to "term of this Agreement" shall be construed as a reference to the period commencing on the Commencement Date and ending on the date of delivery of the last order of the Product in question.
3.9 The Supplier shall (i) by the fifth day of each month, provide a written report to the Buyer on the Bollini usage/reconciliation in respect of the previous month to Fiege Logistics Italy (or any successor thereof), and (ii) each calendar quarter, provide a written report to the Buyer on the usage of sequential labels for Belgium to the Buyer's regulatory affairs director for Western Europe (or such other person nominated by the Buyer from time to time), which reporting in each case ((i) and (ii)) shall be in accordance with any applicable SOP of the Supplier.
4 INSPECTION TESTING AND SAMPLES DURING MANUFACTURE
4.1 Pursuant to the terms of any legislative or contractual rights or otherwise, the Buyer may reject or revoke acceptance of any Products which are defective or which do not comply with the Specifications or the provisions of this Agreement, other than as a result of a breach of the Buyer of this Agreement.
4.2 Subject to the last sentence of this clause 4.2, the Supplier shall supply the Buyer with such Health and Safety data sheets (MSDS) and other available information as shall detail the compliance of the Supplier with its manufacturing obligations under this Agreement and the condition necessary to ensure that the Products can be safely handled and used by Buyer's personnel and by any subsequent purchaser or user thereof, for such purpose as shall have been notified to the Supplier in writing. The Buyer shall supply the Supplier with the foregoing in respect of any API or any Raw Materials supplied by the Buyer (if any) to the Supplier under this Agreement.
4.3 Buyer right of audit; records
4.3.1 The Supplier shall, if requested by the Buyer (a) upon reasonable prior notice, once per calendar year, (b) if the Buyer receives any notice from any regulatory authority of competent jurisdiction with respect to the manufacture or packaging of any Product, during the term of this Agreement and up to seven years after the last delivery of Products has been made by the Supplier to the Buyer, (c) in the event of a breach, or the Buyer's reasonable suspicion of a breach of clause 9.1 or (d) following implementation by the Supplier of a CAPA in response to a previous audit or incident give the Buyer or its authorised representatives access (such access to be limited to during normal working hours unless immediate access is required under local law) to the Supplier's premises (including without limitation the Manufacturing Site), Products, reference samples, manufacturing records and books (including without limitation records relating to manufacturing processes, work in progress, operating procedures, sampling records, testing and packaging procedures), in each case with respect to Products, for the purpose of auditing the Supplier's quality control and procedures with respect to Products (such audit to be at the Buyer's cost). The Supplier shall use reasonable endeavours to ensure that its employees, its Affiliates and their employees and its subcontractors cooperate with and provide reasonable assistance to the Buyer during such audit.
4.3.2 The Supplier shall retain manufacturing records and books (as referred to in clause 4.3.1) for seven (7) years after the last delivery of Products under this Agreement or as otherwise required under local laws. Such records and books shall, in so far as they are applicable, be maintained in accordance with applicable law and regulation. At the end of that period the Supplier shall notify the Buyer in writing and offer to transfer the relevant records and books to the Buyer for retention at the Buyer's cost (as to reasonable expenses, properly incurred). If the Buyer does not notify the Supplier of its acceptance within two (2) months, then the Supplier can destroy such manufacturing records and books securely, in accordance with the Supplier's normal document retention and destruction procedures.
4.4 Supplier right of audit; records
4.4.1 The Buyer shall, if requested by the Supplier (a) upon reasonable prior notice, once per calendar year, (b) if the Supplier receives any notice from any regulatory authority of competent jurisdiction with respect to the manufacture of API under this Agreement, during the term of this Agreement and up to seven years after the last delivery of API has been made by the Buyer to the Supplier, (c) in the event of a breach, or the Supplier's reasonable suspicion of a breach of Schedule Eleven, or (d) following implementation by the Buyer of a CAPA in response to a previous audit or incident give the Supplier or its authorised representatives access (such access to be limited to during normal working hours unless immediate access is required under local law) to the Buyer's site of manufacture of API under this Agreement, reference samples, manufacturing records and books (including without limitation records relating to
manufacturing processes, work in progress, operating procedures, sampling records, testing and packaging procedures), in each case with respect to API supplied by the Buyer to the Supplier under this Agreement, for the purpose of auditing the Buyer's quality control and procedures with respect to API (such audit to be at the Supplier's cost). The Buyer shall use reasonable endeavours to ensure that its employees, its Affiliates and their employees and its subcontractors cooperate with and provide reasonable assistance to the Supplier during such audit.
4.4.2 The Buyer shall retain manufacturing records and books (as referred to in clause 4.4.1) with respect to API supplied under this Agreement for seven (7) years after the last delivery of such API under this Agreement or as otherwise required under local laws. Such records and books shall, in so far as they are applicable, be maintained in accordance with applicable law and regulation. At the end of that period the Buyer shall notify the Supplier in writing and offer to transfer the relevant records and books to the Supplier for retention at the Supplier's cost (as to reasonable expenses, properly incurred). If the Supplier does not notify the Buyer of its acceptance within two (2) months, then the Buyer can destroy such manufacturing records and books securely, In accordance with the Buyer's normal document retention and destruction procedures.
5 DELIVERY
5.1 Each week the Buyer may provide (or cause to be provided from its Affiliates) a rolling forecast of its requirements for the Products for the next twelve (12) months (a "Product Forecast"). The parties agree that:
5.1.1 the first eleven (11) weeks of such forecast, on a rolling basis, shall be binding and as such in submitting each Product Forecast the Buyer or any of its Affiliates will issue to the Supplier a purchase order ("Order") for the Products to be delivered to the Buyer as provided in clause 5.2, which Order shall constitute a firm order for Products and shall be binding on the Supplier. If the Buyer does not provide a Product Forecast each week, the projections for the Buyer's requirements for the Products as set out in the most recent Product Forecast shall apply beyond the first eleven (11) weeks until such time as the Buyer provides the Supplier with a revised Product Forecast,
5.1.2 the Supplier will also ensure that it will have on hand at its Manufacturing Site as of the date of receipt of each of the Buyer's forecasts, sufficient Raw Materials and other materials necessary to manufacture the Buyer's requirements for the Products as set out in the first sixteen (16) weeks of each such forecast, the parties agreeing that anything purchased by the Supplier against such sixteen (16) weeks forecast (or purchased pursuant to clause 6.4) and subsequently not used shall be at the Buyer's cost PROVIDED THAT this clause 5.1.2 shall not apply to the extent that the Buyer has agreed to supply to the Supplier any or all of the Raw Materials and the Buyer has failed to provide sixteen (16) weeks’ stock of such Raw Materials, and
5.1.3 the Buyer shall ensure that, unless otherwise agreed with the Supplier, all Orders comply with the Order Requirements and the Buyer shall not order the same SKU of Products more than twice in any consecutive four (4) week period.
5.2 Following receipt of an Order from the Buyer, the Supplier shall, at its own expense, deliver, or procure the delivery, of the Products DAP (lncoterms 2010) to the Delivery Point. In respect of all Orders, the Supplier shall deliver the Products to the Buyer at the time specified in the Order. With respect to given Products, delivery shall be effected on the last to occur of the following events: (i) such Products are physically delivered to the Delivery Point, (ii) such Products have been QP released in accordance with the Technical Agreement, or (iii) the Buyer has received a Certificate of Analysis from the Supplier confirming such Products meet the Specifications.
5.3 The Supplier represents and warrants that, unless otherwise agreed in writing with the Buyer, at the time of delivery all Products will have a minimum shelf life remaining of four months less than full
shelf life, except in the case of an Order for Products the delivery of which has been deferred at the Buyer's request.
5.4 If the Supplier delivers to the Buyer a supply of the Products exceeding the amount specified in the applicable Order (the "Excess Supply"), the Buyer shall purchase such amount of the Excess Supply equal to the lower of:
5.4.1 one (1) additional pallet of the amount specified in the relevant Order, and
5.4.2 ten per cent (10%) of the total Order,
For the avoidance of doubt, the Buyer shall not be obliged to purchase any amount of Product above the amounts specified in clauses 5.4.1 and 5.4.2 unless such purchase has been agreed in writing in advance between the parties.
5.5 Following delivery, the Buyer shall have five (5) working days to examine each delivery of the Products and report any defects (including without limitation defects in quantity or obvious defects in quality identifiable from visible inspection of the pallet delivered) to the Supplier within such period. If no report is received by the Supplier within such period the Buyer will be deemed to have accepted such Products. The parties further agree that:
5.5.1 If such a report is received by the Supplier, the Supplier shall notify the Buyer whether or not it agrees that the Products in question are defective within five (5) working days after receipt of such report (and if the Supplier fails to do so within such five (5) working day period, the Supplier shall be deemed to have agreed with the Buyer's determination that the Products in question are defective). If the Supplier does not agree with the Buyer that the Products in question are defective then the parties' respective heads of quality shall promptly meet (and in any event within ten (10) working days after the Supplier's receipt of the Buyer's report) to discuss and attempt to resolve the dispute. If the heads of quality have not resolved the dispute within fifteen (15) working days after the Supplier's receipt of the Buyer's report then a sample of the alleged defective Product shall be submitted for analysis to an independent laboratory (or other appropriate expert) to be agreed upon in good faith between the Buyer and the Supplier in writing. The decision of such laboratory (or expert) shall be final and binding on the parties and the corresponding expenses will be paid by the party found to be in error.
5.5.2 If the Supplier agrees with the Buyer that the Products are defective (or is deemed to have so agreed) or the laboratory or other expert determines that the Products are defective (and such defect is not as a result of the Buyer's breach of this Agreement), the Supplier shall, at the Buyer's option, either (a) if the Buyer has paid for the Products in question, reimburse the Buyer for the Price it paid for such Products or, if the Buyer has not paid for the Products in question, reimburse the Buyer's cost of the API used in such Products or (b) deliver replacement Products at no additional charge to the Buyer in substitution for the rejected Products and reimburse the Buyer's cost of the API used in such replacement Products.
5.6 The Supplier represents and warrants that it will have the capacity to fill the Buyer's requirements for the amount of Products set forth in any Order so long as such amount does not exceed 125% of the forecasted demand set forth in the immediately preceding Product Forecast. The Supplier shall provide the Buyer with capacity information, and complete a vulnerability analysis from time to time to demonstrate that the available capacity meets the Buyer's requirements. The Supplier shall promptly take action to address to the Buyer's reasonable satisfaction any capacity issues identified by the analysis.
5.7 If required by the Buyer, the Supplier shall make arrangements to meet the Buyer's "Pallet Policy" for shipment of Product to each specified location. A copy of the Policy is attached in Schedule Six.
5.8 For avoidance of doubt, the terms and conditions relating to Products, which were ordered prior to Plant Day in accordance with the Amended Supply Agreement but fall due for delivery during the term
of this Agreement, will be governed (including as to cost) by the terms and conditions of this Agreement.
6 API, RAW MATERIALS AND TOOLING
6.1 The parties agree that the API and Raw Materials shall be sourced by the Supplier in accordance with this clause 6.
6.2 The Supplier shall collect the APls from the Buyer at the entrance to the Premises.
Active Pharmaceutical Ingredients (API)
6.3 The Supplier shall only use API supplied by the Buyer (or by a third party approved in writing by the Buyer) in the manufacture of any Products and the parties agree:
6.3.1 the Supplier will order API from the Buyer according to the minimum batch quantity of [***]kg of Buprenorphine and [***]kg of Naloxone (or as otherwise agreed between the parties) which shall be delivered by the Buyer or the Buyer's nominee on a one (1) week lead time together with the APls’ Certificate of Analysis,
6.3.2 the Supplier will at all times retain appropriate stockholdings of API, being three (3) to six (6) months usage of each of Buprenorphine and Naloxone or as otherwise agreed following review twice a year, and
6.3.3 notwithstanding the terms of any shipping document or any other delivery documents, the API is supplied by the Buyer on a consignment basis as set out in Schedule Eleven;
6.3.3.1 all risk in the API (including without limitation for any loss of or damage to the API) transfers to the Supplier at the point of delivery to the Supplier, the Supplier shall maintain and store the API in appropriate and secure conditions in accordance with applicable laws and shall fully insure the API for so long as it remains at the Supplier's risk; and
6.3.3.2 legal title to the API shall remain with the Buyer after delivery to the Supplier pending use in the manufacture of the Products. Legal title in the API shall pass to the Supplier upon use in the manufacture of the Products and will be sold and charged to the Supplier in accordance with Schedule One and Schedule Eleven;
6.3.4 the Supplier shall monitor, account for all usage and wastage of the API and is responsible for filing of annual reports with relevant authorities detailing all storage and use of API within the Supplier's control and at the Supplier's risk, the Supplier will report such information to the Buyer on a monthly basis and co-ordinate the filing of such annual reports with the Buyer,
6.3.5 all API supplied by the Buyer will be solely used by the Supplier for the Products, and
6.3.6 the Supplier shall ensure that all personnel involved in the manufacture of the Products are suitably trained for the handling of APls used in the Product.
Raw Materials
6.4 The Supplier shall be responsible for the purchase of all Raw Materials (except for Raw Materials elected to be supplied by the Buyer) as required to meet the Orders. The Supplier shall only obtain Raw Materials from suppliers to the extent specified as authorised suppliers for the relevant material or component within the Technical Manual and the marketing authorisation or otherwise approved in writing by the Buyer. The Supplier shall ensure that such Raw Materials and other components are of the requisite standard to comply with the Specification.
6.5 The parties agree that for any Raw Material which (i) is on a lead time from the Supplier of more than sixteen (16) weeks; or (ii) has a minimum order quantity in excess of the forecasted quantity of applicable Products in the forthcoming sixteen (16) weeks (including without limitation those materials specified in Schedule Nine); the Supplier shall liaise with the Buyer in respect of such purchase and prior to such purchase shall obtain confirmation from the Buyer that the Buyer will underwrite any write-off (if applicable) of unused Raw Materials, before purchasing such Raw Materials as detailed in Schedule Nine.
Tooling
6.6 To the extent that the Buyer is not already the owner thereof (as indicated in Schedule Seven), the Buyer may agree in its sole discretion to provide the Supplier with sufficient funds to cover the Supplier's purchase of the punch and die tooling (as described in Schedule Seven) required to support the capacity required for the anticipated supply of the Products, such tooling to be used solely for the production of the Products (being such tooling specified in Schedule Seven and hereinafter referred to as the "Tooling"). The purchase price for the Tooling, the amortisation formula and other commercial terms ("Purchase Terms") in respect thereof are set out in Schedule Seven.
6.7 Upon the Buyer's achievement of the Purchase Terms with respect to each item of Tooling (other than Existing Tooling) such Tooling shall become the sole and exclusive property of the Buyer, and the Supplier shall take all such actions as the Buyer may reasonably request (including, without limitation, the execution and delivery to the Buyer of documents of title and other instruments) confirming the Buyer's exclusive right, title and interest therein. Notwithstanding the foregoing, the Supplier acknowledges and agrees that all designs, drawings, samples, prototypes and all Intellectual Property Rights related thereto, with respect to the Tooling and the Products are the exclusive property of the Buyer. From and after the date on which the Buyer achieves the Purchase Terms with respect to an item of Tooling, the Supplier shall mark such item conspicuously with a sign or sticker indicating that such item is the exclusive property of the Buyer.
6.8 The Supplier acknowledges and agrees that the Buyer is the sole and exclusive owner of the Existing Tooling and the Supplier shall take all such actions as the Buyer may reasonably request (including, without limitation, the execution and delivery to the Buyer of documents of title and other instruments) confirming the Buyer's exclusive right, title and interest therein. The Supplier acknowledges and agrees that all designs, drawings, samples, prototypes and all Intellectual Property Rights related thereto, with respect to the Existing Tooling are the exclusive property of the Buyer.
6.9 Throughout the term of this Agreement, the Supplier, at its expense, shall maintain the Tooling in good working order and repair for at least five (5) years, shall not encumber or charge the Tooling in any manner whatsoever, shall procure insurance with an insurance company approved by the Buyer (such approval not to be unreasonably withheld) insuring the Tooling for its replacement value against all insurable risks, and shall use the Tooling exclusively for the production of the Products for the Buyer.
6.10 Notwithstanding anything contained in this Agreement to the contrary, the Supplier shall use reasonable endeavours to ensure that the Tooling shall have a working life of at least five (5) years from the date it was or is commissioned, the date of commissioning for Tooling existing at the date of this Agreement being set out in Schedule 7. The repair or replacement of any such Tooling that fails to achieve such capacity shall be at Supplier's sole cost and expense. The Supplier shall continue to provide routine maintenance on Tooling that has exceeded such life, provided, however, that if such a Tooling fails and the Supplier is unable to return it to service through the application of routine maintenance, any further costs of repair or replacement of such Tooling shall be at Buyer's sole cost and expense.
6.11 Where the Tooling is provided by the Buyer, ownership, title and interest in the Tooling shall at all times belong to the Buyer, and the Supplier shall throughout the term of this Agreement keep and maintain the sign and/or sticker on the Tooling indicating the sole ownership of the property of the Buyer.
7 PRICE AND PAYMENT
7.1 The price for the Products shall be those set out in Schedule One and shall be fixed for the period up to and including 31 December 2016. The parties agree that the Price shall be subject to review thereafter every one year, and each such review shall commence following the Supplier's provision to the Buyer of the Supplier's proposed pricing for the forthcoming year by 31 July of the then current year. The first such review shall take place following the Supplier's first proposal for the year 2017 (to be made by 31 July 2016). The parties agree that the proposed pricing and review every one year (and any corresponding adjustment) will reflect the principles set out in Schedule One.
7.2 For the duration of this Agreement, the Supplier shall use its reasonable endeavours to be technically and commercially competitive taking into account the market for the supply of Raw Materials, and improvements in technology and the production of products similar to the Products. The Supplier will prepare an improvement plan and provide this to the Buyer before 31 July each year. Such improvement plan shall be discussed as part of the annual review set out in clause 7.1 above and the Supplier agrees to adhere to any improvement plan mutually agreed between the parties.
7.3 The Buyer shall pay the Price for Products delivered to it pursuant to clause 5 together with any other invoices submitted to it pursuant to this Agreement within 60 days of receipt by the Buyer from the Supplier of a valid VAT (or other applicable similar taxes) invoice therefor.
7.4 On reasonable request of the Buyer from time to time, the Supplier shall supply:
7.4.1 those of the Services listed in Schedule Two (if any) specified in the request and the Buyer shall reimburse the Supplier for such Services at cost without any mark up, and
7.4.2 the Temporary Additional Services pursuant to the provisions and charges as set out in Schedule Three, until the Buyer provides notice to the Supplier in accordance with Schedule Three to cease providing the Temporary Additional Services,
provided that such supply of Services shall be performed either (i) In relation to the provision of the Products or (ii) as reasonably required for the purposes of performing a Technical Transfer.
7.5 The amounts payable by the Buyer to the Supplier in relation to the Services set out in this Agreement shall be subject to a price review at each anniversary of this Agreement.
7.6 The Buyer shall be entitled to set off against any amounts due to the Supplier hereunder any amounts due to it and any of its Affiliates from the Supplier under this Agreement.
7.7 The parties acknowledge that the Price includes delivery to the Delivery Point and that in the event that the Buyer specifies an alternative Delivery Point, the variation in the Supplier's delivery cost (including any additional charges, or any cost reductions) shall be passed through (without mark-up or variation) to the Buyer.
7.8 Any amounts expressed to be payable under this Agreement by the Buyer to the Supplier shall be deemed to be exclusive of any VAT which is chargeable on any supply or supplies for which that amount (or any part thereof) is the whole or part of the consideration for VAT purposes.
7.9 If anything done by the Supplier under this Agreement is a supply on which VAT is chargeable and the Supplier is required to account to the relevant Tax Authority for any VAT chargeable on that supply, then an amount equal to any VAT so chargeable shall be paid by the Buyer to the Supplier (in addition to, and at the same time as, any other consideration for that supply) and the Supplier shall provide the Buyer with a valid VAT invoice for that supply.
8 SERVICE LEVELS, GOVERNANCE AND CHANGE CONTROL
8.1 The Supplier shall meet the agreed Key Performance Indicators in its performance of the Services as set out in Schedule Five. All Key Performance Indicators except for OTIF are for monitoring purposes only.
Governance
8.2 The parties agree that appropriate representatives of each of the parties' operational team shall have a weekly telephone conference or meeting to discuss the operational issues under this agreement, including if applicable the provision of Product Forecasts and Orders.
8.3 The parties further agree that they shall each appoint a relationship manager to be responsible for the management of arrangements and supply of Products under this Agreement. The parties acknowledge that their respective relationship managers are as follows:
8.3.1 The Buyer’s relationship manager is Purchasing Manager,
8.3.2 The Supplier’s relationship manager is Site Director,
who shall meet (in person or telephone conference) on a monthly basis unless otherwise agreed by both parties to discuss the performance under, and any issues arising under, this Agreement, and shall include a review of performance against the KPls, and assess volume of API used and stored (so as to understand the Supplier's use of API as described in clause 6.3.4). Accordingly, the Supplier agrees to provide the Buyer's relationship manager in advance of each meeting a report showing the performance against the KPls over the previous month and over a rolling twelve (12) month period or, if shorter, the period from the Commencement Date to the end of the previous month.
8.4 The parties further agree that approximately every three (3) months, and in any event four (4) times a year (unless otherwise agreed between the parties) they shall hold a joint steering group meeting comprised of the key stakeholders from each of the parties which shall include:
8.4.1 for the Buyer, the Buyer's relationship manager and the Buyer's supply director (together with any other additional representative as nominated by the Buyer), and
8.4.2 for the Supplier, the Supplier's relationship manager and the Supplier's SVP Health Supply (together with any other additional representative as nominated by the Supplier),
who shall meet to discuss the performance under, and any issues arising under, this Agreement, review of performance against the KPls, and discuss any strategic issues, including without limitation any expected variation in demand and/or capacity (if any).
8.5 The parties agree that the monthly meetings of the relationship managers shall be used to resolve where possible any issues or problems as they arise. However, the parties agree that in the event any problem or issue is not resolved between the relationship managers, either relationship manager shall escalate the matter by providing written notice to the other party as set out in clause 20.
Change Control and Change Management
8.6 The parties acknowledge the regulatory requirements and associated timescales involved in making changes to the manufacture of the Products are significant and as such both parties agree that, upon becoming aware of any possible need or desire to make any changes, that party will provide the other with written notice of such possible change (including rationale, expected timings, risk assessment, price impact and any impact on business continuity). Upon receipt of such notice the parties will meet to discuss such proposed changes (each acting reasonably and in good faith). Any changes agreed between the parties shall be documented in writing via a change plan specifying timings, responsibilities of each of the parties and costs, and must be signed by both parties ("Change Plan"). The Supplier will not make any changes to the manufacture of the Products without a Change Plan
signed by the Buyer PROVIDED THAT neither party shall be entitled to reject such Change Plan if such rejection would result in the other party being in breach of its obligations under any applicable laws or regulations.
8.7 The Supplier and Buyer shall implement any Change Plan in accordance with its terms and the Supplier shall keep the Buyer informed of progress, and each party shall notify the other party in the event of any delays or changes to the Change Plan.
8.8 Notwithstanding the above, the Supplier provides the following undertakings with respect to the manufacture and supply of the Products,
8.8.1 the Supplier undertakes to
8.8.1.1 provide a minimum of twenty four (24) months' written notice to the Buyer in the event that the Supplier wishes to (i) change or modify the manufacture of the Products according to the Specification which shall include a change to a production process or method (a "Change in Specification") or (ii) or the Supplier wishes to change the site of manufacture of Products, and
8.8.1.2 notify the Buyer as soon as reasonably practicable after the Supplier becomes aware of any changes in applicable law which are likely to affect the supply of the Products under this Agreement (including rationale, expected timings, risk assessment, price impact and any impact on business continuity),
8.8.2 the Supplier undertakes that in the event of (i) a Change in Specification, (ii) a change in the site of manufacture of the Products, or (iii) when the Supplier becomes aware of any changes in applicable law which are likely to affect the supply of Products under this Agreement, it shall use its reasonable endeavours to procure sufficient Products, with the maximum possible shelf life, to meet the Buyer's Product Forecasts for the agreed transition period from the date of such notification or such other volume as the Buyer may agree with the Supplier;
8.8.3 the Supplier undertakes that in the event of a change in site of manufacture of Products, upon written notice from the Buyer the Supplier shall grant the Buyer, or the Buyer's representatives, reasonable access to the new site of manufacture as soon as reasonably practicable following receipt of such notice and at any time thereafter, and in any event prior to the change, in order to ensure that it meets all regulatory requirements under applicable law. Any approval by the Buyer of a new site of manufacture shall not relieve the Supplier of any obligations under this clause 8 or this Agreement; and
8.8.4 the Supplier further undertakes that it shall reimburse any and all reasonable, documented and auditable direct and indirect costs incurred by the Buyer as a result of the Change in Specification or change in the site of manufacture of Products.
8.9 The parties agree that where the change is agreed as a result of a third party initiator (e.g. authorities or regulators making a change in requirements) the costs of complying with such change shall be borne by the party on whose activity is changed by such change in regulation (apportioned accordingly to the extent the change in regulation applies to each party), and the parties set out in Schedule Ten (10) an illustrative list of possible anticipated changes and the party bearing the costs (of both parties) for making such changes.
8.10 The Supplier agrees certain changes are included within the Price (and accordingly the Buyer shall not incur any additional charges in respect of such changes), including
8.10.1 up to 400 artwork changes per year (or pro rata for any part thereof); and
8.10.2 up to 400 person-hours of Supplier's time per year (or pro rata for any part thereof) in relation to any changes,
each as more fully described in Schedule Ten.
8.11 The Supplier shall not raise any charges for any changes outside an agreed Change Plan, nor any other charges outside of those specified in this Agreement unless otherwise agreed in writing by the Buyer.
9 QUALITY AND RECALLS
9.1 The Supplier shall manufacture the Products and supply the Services strictly in accordance with
9.1.1 the Specifications;
9.1.2 the Technical Manual;
9.1.3 the Technical Agreement;
9.1.4 cGMP;
9.1.5 all applicable licences, permits, registrations, authorisations, regulations and legislation in relation to controlled drugs or substances;
9.1.6 all other applicable laws and regulations; and
9.1.7 the terms of this Agreement.
9.2 Prior to commencement of the manufacture of the Products the Supplier shall satisfy itself that the know-how contained in the Technical Manual (and any other information provided by the Buyer to the Supplier) is sufficient to enable it to efficiently perform its obligations under this Agreement. If the Supplier concludes that further information is necessary it shall notify the Buyer and obtain such information prior to the commencement of manufacture. If sufficient information has not been provided to the Supplier by the Buyer in respect of a particular SKU of Product, such particular SKU shall not be subject to Key Performance Indicators while such information has not been provided.
9.3 If the Supplier shall become aware that any aspect of a Specification is liable to result in the manufacture of a defective Product which may lead to a liability being incurred, the Supplier shall, as soon as reasonably practicable, notify the Buyer in writing. The Supplier and the Buyer shall promptly meet to discuss and address the risk of manufacture of defective Product and if the Supplier can reasonably demonstrate that manufacture of Product in accordance with the specification would, or would likely, result in a defective product, the Supplier may, while the Supplier rectifies such risk, suspend its obligations to supply Product under this Agreement, without prejudice to any right or remedy of the Buyer, and provided that the Supplier uses all reasonable endeavours to rectify such risk as promptly as practicable.
9.4 Upon reasonable request by the Buyer the Supplier shall provide the production and quality records in respect of any or all of the Products.
9.5 The Supplier will provide the Buyer with Certificates of Analysis of all batches of the Products manufactured by it. Such certificates shall comply with, and be in the form set out in, the quality assurance requirements included in the Specifications and the Technical Manual. The Supplier shall not release the Products from its warehouse for sale until the Certificates of Analysis relating to such Products demonstrate that the Products meet the Specifications.
9.6 The Supplier shall establish and maintain a batch-tracking system to enable it to identify and procure the recall (if necessary) of Products which may be affected in any way by manufacturing and production problems. The Supplier shall provide details to the Buyer of its batch-tracking system upon request to do so.
9.7 The parties agree that, in relation to Product recalls:
9.7.1 The Buyer shall be responsible for any recall of a Product. The Supplier shall cooperate with the Buyer in the event of any recall and provide such reasonable assistance in connection therewith as the Buyer may reasonably request.
9.7.2 In the event the Buyer should be required or should voluntarily decide to initiate a recall, Product withdrawal, or field correction of any Product, the Buyer shall notify the Supplier and provide a copy of its recall letter. In conjunction with such recall, the Supplier shall provide reasonable assistance in any investigation reasonably required to determine the cause and extent of the problem causing the recall.
9.7.3 In the event that the Supplier independently believes that a recall, Product withdrawal, or field correction of a Product may be necessary or appropriate, the Supplier shall notify the Buyer and reasonably cooperate with the Buyer concerning the necessity and nature of such action.
9.7.4 All coordination of any recall or field correction activities involving a Product shall be handled by the Buyer whether or not such action was initiated by the Buyer.
9.7.5 Subject to clause 9.7.7, in the event that any Product is recalled as a result of a the breach of this Agreement by or negligent or intentionally wrongful act of, the Supplier or its representatives (including without limitation the supply by the Supplier of Product that does not conform to the requirements of this clause 9), then the Supplier shall bear all of the costs and expenses of such recall, including, without limitation, expenses related to communications and meetings with all required regulatory agencies, expenses of replacement stock, the cost of notifying customers and costs associated with shipment of recalled Product from customers and shipment of an equal amount of replacement Product to those same customers.
9.7.6 Subject to clause 9.7.7, in the event that any Product is recalled for any other reason other than that specified in clause 9.7.5, then the Buyer shall bear all of the costs and expenses of such recall, including without limitation expenses related to communications and meetings with all required regulatory agencies, expenses of replacement stock, the costs of notifying customers and costs associated with shipment of recalled Product from customers and shipment of an equal amount of replacement Product to those same customers.
9.7.7 To the extent that the reason for any recall of Products hereunder is in part caused by the Supplier and in part caused by the Buyer, then the costs and expenses shall be allocated in an equitable manner between the parties. For avoidance of doubt, neither party shall be liable for any indirect or consequential loss in relation to the Product recall.
9.7.8 If the parties disagree on who shall bear the costs and expenses of a Product recall under this Clause 9.7, the parties shall use the dispute resolution process as set out in clause 20 to determine the allocation of such costs and expenses.
9.7.9 The Buyer will inform the Supplier of any product manufacturing complaints they are aware of. The Supplier shall investigate the issues promptly and provide a written report to the Buyer.
9.7.10 If the Supplier becomes aware of any Product complaints it will promptly notify the buyer and provide reasonable assistance in investigating such complaints.
10 WARRANTIES
10.1 The Supplier hereby warrants that:
10.1.1 any Products manufactured pursuant to this Agreement shall comply with all provisions as to quality set out in clause 9 hereof;
10.1.2 it will not be negligent in the manufacture of the Products or in the supply of Services;
10.1.3 the Products manufactured pursuant to this Agreement will:
10.1.3.1 be free from all defects obvious on visual inspection of the Product,
10.1.3.2 be fit for their purpose and satisfactory quality,
10.1.3.3 comply with all applicable statutes and regulations relating to the Products,
10.1.3.4 conform in all respects with the Specifications and the Technical Manual;
10.1.4 any Services supplied by the Supplier or its subcontractors or agents will be supplied:
10.1.4.1 by appropriately qualified and trained personnel, and
10.1.4.2 with reasonable care and diligence;
10.1.5 so far as the Supplier is aware the manufacture of the Products and the supply of the Services will not infringe any third party rights.
10.2 The Supplier further warrants that:
10.2.1 it will meet all Orders from the Buyer for the Product, and
10.2.2 it will supply the Products in accordance with Clause 5.
10.3 The Buyer warrants that any supply of APls provided by the Buyer to the Supplier in accordance with the terms of this Agreement shall comply with the API Specification.
10.4 Each of the Supplier and the Buyer warrants that:
10.4.1 it is duly incorporated and organised and is validly existing under the laws of its jurisdiction of incorporation and has the corporate power and authority to own its assets and to conduct its businesses and to perform its obligations hereunder,
10.4.2 the execution and delivery of this Agreement by it and the completion by it of the obligations contemplated herein, do not and will not result in the breach of, or violate any term or provision of, its articles or by-laws,
10.4.3 it is not subject to any outstanding injunction, judgement or order of any governmental authority which would prevent or materially delay the transactions contemplated by this Agreement, there are no civil, criminal or administrative claims, actions, suits, demands, proceedings, hearings or investigations pending or, to the Supplier's knowledge, threatened at law, in equity or otherwise, in, before, or by, any governmental authority which (if successful) would prevent or materially delay the Supplier's compliance with the provisions of this Agreement,
10.4.4 no dissolution, winding up, bankruptcy, liquidation or similar proceeding has been commenced, or is pending or proposed, in respect of it,
10.4.5 the execution and delivery of this Agreement and the completion of the obligations contemplated herein have been duly approved by appropriate persons within its organisation and this Agreement constitutes legal, valid and binding obligations of the Supplier enforceable against it in accordance with its terms, and
10.4.6 it or its Affiliates has taken or will take all action as may be required or necessary to obtain and maintain, comply and keep current any governmental licences, permits, approvals and/or registrations that are necessary for the Supplier and/or its Affiliates to manufacture and/or supply the Products and Services and to carry out and perform its obligations under this Agreement.
10.5 Without prejudice to any other remedy (and the Buyer's rights generally under this Agreement) if any Services are not supplied or performed in accordance with this Agreement, then the Buyer at its sole option shall be entitled to require the Supplier at Supplier's cost within such reasonable time as is required by the Buyer in writing to supply replacement Services conforming with this Agreement.
11 INDEMNITY
11.1 On the terms and subject to the conditions of this clause 11, the Buyer shall defend, indemnify and hold harmless the Supplier, its Affiliates and their respective officers, directors, employees and agents (collectively, "Supplier lndemnitees"), from and against any and all liabilities, damages, losses, costs, taxes, expenses (including reasonable legal fees and other expenses of litigation and arbitration), claims, demands, suits, penalties, judgments or administrative and judicial orders (collectively, "Losses") relating to any Proceeding to the extent arising out of or resulting from (i) any negligent act or omission of the Buyer or its Affiliates, or any of their respective officers, directors, employees or agents in connection with the performance of this Agreement; or (ii) any breach by the Buyer or its Affiliates of any of its representations, warranties or obligations contained in this Agreement, in each case (i) and (ii), except for those Losses for which the Supplier has an obligation to indemnify a Buyer lndemnitee pursuant to clause 11.2, as to which Losses each party shall indemnify the other to the extent of their respective liability for such Losses.
11.2 On the terms and subject to the conditions of this clause 11, the Supplier shall defend, indemnify and hold harmless the Buyer, its Affiliates, and their respective officers, directors, employees and agents (collectively, "Buyer lndemnitees"), from and against any and all Losses relating to any Proceeding to the extent arising out of or resulting from (i) any negligent act or omission of the Supplier, its Affiliates, its contract manufacturers or Raw Material suppliers (other than the Buyer), or any of their respective officers, directors, employees or agents in connection with the performance of this Agreement, or (ii) any breach by the Supplier or its Affiliates of any of its representations, warranties or obligations contained in this Agreement, in each case (i) and (ii), except for those Losses for which the Buyer has an obligation to indemnify a Supplier lndemnitee pursuant to clause 11.1, as to which Losses each party shall indemnify the other to the extent of their respective liability for such Losses.
11.3 Each party shall take out and maintain in full force and effect sufficient insurance (which shall be no less than [***] GBP (£[***]) in respect of each and every claim or series of claims arising from the same incident) to cover such liabilities as it may incur by virtue of this Agreement or by reason of the manufacture and supply of the Products including, without limitation, in respect of product liability claims. The existence of such insurance shall not be construed as a limitation of the Supplier's liability hereunder and shall not affect the liability of the Buyer hereunder which shall be limited to payment for any Products which are the subject matter of any Orders and which have been supplied by the Supplier in accordance with the provisions of this Agreement. The Supplier shall ensure that the Buyer's interest is noted on such policy and, at the request of the Buyer, produce for inspection by the Buyer a valid certificate of insurance in respect of such insurance cover and the receipt for the then current premium.
11.4 Each party shall promptly notify the other of claims likely to be made by such party under the terms of this Agreement, and shall promptly exchange any relevant documents and records within its possession or control, save for any documents or records which are the subject of legal or professional privilege, for the purpose of investigating such claim. Each party shall consult the other party prior to making any settlement of a third party claim or action.
11.5 Nothing in clause 11 shall operate to limit or exclude any liability for death or personal injury caused by either party's (or their agent's or subcontractor's) act or omission or negligence or for fraud.
12 TITLE AND RISK
12.1 Title to the Products shall pass to the Buyer upon delivery to the DAP (lncoterms 2000) Point.
12.2 The Products shall be at the Supplier's risk until they are delivered to an authorised representative of the Buyer at the Delivery Point. The Supplier shall fully insure the Products for so long as they remain at the Supplier's risk.
13 CONFIDENTIAL INFORMATION AND INTELLECTUAL PROPERTY RIGHTS
13.1 Each party acknowledges that the Confidential Information may be disclosed to it by the other party (or its Affiliates) in connection with the Products, this Agreement and potentially in connection with other possible contract manufacturing. The recipient party shall keep such information strictly confidential (both during the subsistence and after the termination or expiry of this Agreement), shall not disclose it to any third party (including an Affiliate) and shall only disclose it to those of its employees who need to know it for the purposes of this Agreement and who have agreed to be bound by similar duties of confidentiality as the recipient party. In particular, and without limiting the foregoing, the Supplier shall not disclose to any third party (including an Affiliate) or use for any other purpose any information contained in the Specifications or the Technical Manual.
13.2 The Supplier agrees to use the Confidential Information of the Buyer or its Affiliates only for the purpose of manufacturing and supplying the Products for the Buyer or its Affiliates on the terms of this Agreement and for no other purpose or for its or any third party's benefit.
13.3 The restrictions in clauses 13.1 and 13.2 shall not apply to any Confidential Information to the extent that such Confidential Information:
13.3.1 is or becomes public knowledge through no fault of the receiving party,
13.3.2 is required to be disclosed by applicable laws or order of the court or other competent authority, or
13.3.3 is disclosed in confidence to professional advisers, auditors, insurers and bankers.
13.4 The Buyer or as the case may be any Affiliate of the Buyer retains the ownership of all rights (including without limitation Intellectual Property Rights) in the Product formulation for the duration of and at any time after the termination of this Agreement. For the avoidance of doubt, this information constitutes Confidential Information of the Buyer.
13.5 All copyright and other Intellectual Property Rights in any artwork and origination work supplied by the Buyer or its nominee for the labelling, packaging and, where applicable, package inserts for the Products is and shall remain the property of the Buyer or its nominee absolutely. The Supplier shall not supply or manufacture any such packaging or other components or finished Products or confusingly similar packaging or products other than to the Buyer or as it may direct.
13.6 If during the term of this Agreement the Supplier (or any agent or authorised sub contractor of it) develops or creates (whether with or without others) any Arising Product Intellectual Property Rights, the Supplier shall promptly disclose any such Arising Product Intellectual Property Rights to the Buyer and shall promptly upon request by the Buyer assign the entire right, title and interest to any and all such Arising Product Intellectual Property Rights to the Buyer or any of its Affiliates with full title guarantee for a nominal consideration.
Subject to the foregoing, the Supplier shall own all Arising Supplier Intellectual Property Rights the Supplier (or any agent or authorised sub-contractor of it) develops or creates (with or without others (excluding the Buyer)). The Buyer shall own all Arising Product Intellectual Property Rights the Buyer
(or any agent or authorised sub-contractor of it) develops or creates (with or without others). All Existing Intellectual Property Rights are and shall remain the exclusive property of the party owning them (or, where applicable, the third party from whom its right to use the Existing Intellectual Property Rights has derived).
13.7 During the term of this Agreement, the Supplier shall not assign or license any of the Supplier's Existing Intellectual Property Rights to other parties for use in relation to the Products or similar to the Products ("the Product Field").
13.8 During the term of this Agreement, and whether in isolation or for or with others, the Supplier shall not carry out research or research and development work in the Product Field which is other than pursuant to this Agreement.
13.9 To the extent that the Buyer requires a licence from the Supplier of any of the (i) Supplier's Existing Intellectual Property Rights (excluding any trade marks and rights in passing off) owned or controlled by the Supplier or any of its Affiliates and/or (ii) Arising Supplier Intellectual Property Rights, in each case which are used by the Supplier in the then-current manufacturing process, for the purposes of the Technical Transfer and the related manufacture and commercialisation of Products, the Supplier hereby grants (and shall procure that its Affiliates grant) to the Buyer (to the extent permitted) a non-exclusive irrevocable, perpetual, world-wide, royalty-free, transferable and sub-licensable licence in respect thereof. For the avoidance of doubt, this licence shall survive the termination or expiry of this Agreement.
13.10 To the extent that the Supplier requires a licence from the Buyer of any of the (i) Buyer's Existing Intellectual Property Rights owned by the Buyer or any of its Affiliates and/or (ii) Arising Product Intellectual Property Rights, in each case in order to perform its obligations under this Agreement, the Buyer hereby grants (and shall procure the grant) to the Supplier for the duration of this Agreement a non-exclusive irrevocable, royalty-free, non-transferable and non-sublicensable licence in respect thereof, exercisable only at the Manufacturing Site.
13.11 In the event that the Supplier shall decide that it no longer wishes to prosecute or maintain any registered protection for any of the Supplier’s Existing Intellectual Property Rights (excluding any trade marks and rights in passing off) in relation to the Product Field for any country it shall notify the Buyer in writing (and in any event at least 90 days before the date upon which any payment or step would be required to be taken to continue prosecuting or maintaining any such protection). If within 60 days of receipt of such notice from the Supplier, the Buyer indicates to the Supplier that it wishes to take an assignment of such Existing Intellectual Property Rights, it shall so notify the Supplier who immediately shall assign, with full title guarantee, the entire right, title and interest to such Existing Intellectual Property Rights to the Buyer for a nominal consideration. For the avoidance of doubt, this includes any registered protection which the company is entitled to claim priority from an earlier application at the end of the Paris Convention priority period.
13.12 During the term of this Agreement and upon their knowledge of the occurrence of (i) any infringement or suspected or threatened infringement of any of the Arising Product Intellectual Property Rights, Arising Supplier Intellectual Property Rights or Existing Intellectual Property Rights, or (ii) any proceedings or suspected or threatened proceedings for the revocation or involving the validity of any such Intellectual Property Rights, the party with this knowledge shall notify the other and provide all details within their knowledge with respect to the same and thereafter the parties will assist each other in taking such steps as either party may reasonably consider to be appropriate at the expense of the party that considers such steps to be appropriate.
13.13 For any Existing Intellectual Property Rights and any Arising Product Intellectual Property Rights or Arising Supplier Intellectual Property Rights, in each case owned by or to be owned by the Buyer or Supplier (as applicable), the Buyer or Supplier shall provide all necessary assistance, required by the other party to complete the registration of such rights with the competent authorities in anywhere designated by the Buyer or Supplier (as applicable) (subject to the designating party bearing the reasonable costs and expenses incurred by the other party in respect of such assistance).
13.14 For the purpose of protecting the Existing Intellectual Property Rights, the Arising Product Intellectual Property Rights or Arising Supplier Intellectual Property Rights each party shall also procure that its Affiliates shall comply with clauses 13.12, 13.13 and this clause 13.14.
13.15 Without prejudice to a party's right to challenge the validity of any registrations of Intellectual Property Rights owned by the other party, each party undertakes that it shall not at any time during the continuance of this Agreement do or suffer to be done any act or thing which would impair the rights of the other party in its Intellectual Property Rights relevant to this Agreement and further undertakes that it shall not represent that it has any title to or right of ownership in such Intellectual Property Rights of the other party.
13.16 The Supplier shall at the request of the Buyer (and at the Buyer's cost) execute such registered user agreement in respect of the use of the trade marks of the Buyer or its Affiliates as the Buyer may reasonably require.
14 [***]
[***]
14.1 [***]:
14.1.1 [***], and
14.1.2 [***];
[***].
14.2 [***].
14.3 If, other than to the extent caused by the Buyer's breach of its obligations under this Agreement:
14.3.1 the Supplier's OTIF performance decreases such that it falls below the Emergency Trigger Level at any time, without prejudice to any other right or remedy of the Buyer, whether hereunder or at law, the Supplier shall use all reasonable endeavours to improve performance such that its OTIF performance returns to the Target OTIF Level, which endeavours shall include without limitation (a) allocation of any resource required (including people and/or funds) so as to return to the Target OTIF Level (including the allocation of additional, appropriately qualified, permanent and temporary staff and/or putting on additional shifts); and (b) at the Buyer's request, rapid approval of a new supplier of Raw Materials (as applicable),
14.3.2 the Supplier's OTIF performance falls below the Emergency Trigger Level over any four (4) consecutive weeks or any ten (10) weeks in any rolling twelve (12) months period or the Supplier is aware of circumstances that will result in the same (a "Material OTIF Failure") the parties agree, without prejudice to any other right or remedy of the Buyer, whether hereunder or at law,
14.3.2.1 the Supplier shall:
(A) submit a draft rectification plan to the Buyer as soon as possible and in any event within five Business Days (or such other period as may be agreed between the parties), which draft rectification plan shall set out (1) full details of the Material OTIF Failure, including an analysis of the cause, and (2) the steps which the Supplier proposes to take (using all reasonable endeavours) to rectify the Material OTIF Failure and/or to prevent the Material OTIF Failure from continuing or recurring (as applicable), including timescales for such steps and for the rectification of the Material OTIF Failure, and
(B) provide to the Buyer any further documentation that the Buyer reasonably requires to assess the analysis of the cause and viability of the proposed rectification or preventative steps,
14.3.2.2 the Buyer shall notify the Supplier whether it consents to the draft rectification plan as soon as reasonably practicable. If the Buyer consents to the draft rectification plan (such draft then being the "Rectification Plan"), the Supplier shall immediately commence the actions set out in the Rectification Plan,
14.3.2.3 if (i) the Buyer, acting reasonably, does not consent to the draft rectification plan within five Business Days of receipt of the draft rectification plan, (ii) the Supplier has not submitted a draft rectification plan in accordance with clause 14.3.2.1 above or (iii) the Material OTIF Failure has not been cured or remedied in accordance with the Buyer's reasonably expected progress of an agreed Rectification Plan, then either party may serve notice to escalate this matter in accordance with clause 20.1 (such notice being an Escalation Notice for purpose of clause 20.1) and clause 20 shall apply save that the parties agree:
(A) the 14 (fourteen) day period in clause 20.1.1 shall be reduced to five (5) days,
(B) the 14 (fourteen) day period in clause 20.1.2 shall be reduced to five (5) days,
(C) in the event that the matter is not resolved by the parties in accordance with clause 20.1.2 (as amended by item ii. above) the issue shall be referred to (1) the Supplier's CEO on the one hand, and (2) the Buyer's CEO on the other hand, who shall meet and seek to resolve such issue within 10 (ten) days of such matter being referred to them (or within such longer period as the parties may agree in writing prior to the expiration of the initial 10 (ten)-day period), and
(D) in the event that the matter is not resolved by the parties under item iii. above within such 10 (ten)-day period (or longer period as agreed between the parties under item iii. above) the Buyer may, without prejudice to any other right or remedy whether hereunder or at law, exercise its rights under clause 14.3.2.4 below, and
14.3.2.4 in the event that (i) the matter is not resolved via escalation under and in accordance with clause 14.3.2.3 above, or (ii) the Supplier does not return the OTIF performance level to the Target OTIF Level by performing the steps set out in the Rectification Plan within the time period set out in that Rectification Plan, the Buyer may, without prejudice to any other right or remedy whether hereunder or at law, give notice to the Supplier (a) of such failure and (b) [***].
14.4 [***]:
14.4.1 [***],
14.4.2 [***],
14.4.3 without limiting the generality of clause 14.5.2, causing an appropriate number of analytical and quality control laboratory employees and representatives of the Supplier to meet with employees or representatives of the Transferee, at the Buyer's sole cost and expense as to reasonable costs and expenses, properly incurred, at both the manufacturing facility of the Supplier and the manufacturing facility of the Transferee and make available all necessary equipment, at mutually convenient times, to support and execute the transfer of all applicable analytical methods and the validation thereof,
14.4.4 without limiting the generality of the preceding clauses, support for analytical method transfers / establishment of pharmacopieal methods (a collaborative inter-laboratory transfer of the analytical test methods required for the Product), equipment qualification and validation (of alternative supplier's equipment), cleaning validation (the provision of validated cleaning test method that is fit for purpose), engineering batch manufacture and validation (assisting alternative supplier as required to manufacture and validate such batches), registration stability I process validation batches (assist as required in the manufacture of full commercial scale batches, enabling the Buyer to generate stability data to be submitted as part of regulatory filing for the Product) and secondary packaging process validations (assisting as needed to ensure secondary packaging is performed according to validated processes and settings), and
14.4.5 [***]. For the purpose of this clause, successful technology transfer shall have taken place once the Transferee has produced three (3) commercial scale batches of the Product (or such greater number of batches as may then be required by cGMP or by the FDA or EMA to conclude that the practice of the then-current manufacturing process by the Transferee to manufacture the Product is validated) that conform to the Specification and at yields substantially comparable to the yields obtained by the Supplier.
Exclusive uses of manufacturing lines
14.5 The parties agree that the manufacturing and packaging lines used for the manufacture of the products will:
14.5.1 be exclusively used for, and dedicated to, the production of the Products for the Buyer (unless otherwise agreed by the Buyer following the Supplier's written request for alternative use),
14.5.2 be physically separated from areas of manufacture of any products other than the Products, and
14.5.3 not be transferred from existing locations without the Buyer's prior written consent, such consent not to be unreasonably withheld following the Supplier's written request for such consent detailing reasons and impact of such transfer.
15 TERMINATION
15.1 This Agreement may be terminated at any time upon either party giving to the other thirty (30) days' notice in writing if the other party commits a material breach of the terms of this Agreement and (where such breach is capable of remedy) fails to remedy such breach within thirty (30) days of receiving written notice from the other party specifying the breach and requiring its remedy.
15.2 This Agreement may be terminated by either party immediately on written notice to the other, if,
15.2.1 the other party shall go into liquidation whether voluntary or compulsory or is dissolved or becomes insolvent or if a petition shall be presented or an order made for the appointment of an administrator or if a receiver, administrative receiver or manager shall be appointed over any part of its assets or undertaking which appointment is not dismissed within thirty (30) days of having been made, or
15.2.2 any distress, execution, sequestration or other process is levied or enforced upon or sued out against the property of the other party which is not discharged within thirty (30) days, or
15.2.3 the other is unable to pay its debts in the normal course of business.
15.3 Without prejudice to any other remedy (and the Buyer's rights generally under this Agreement) if and to the extent that the Supplier does not (i) supply or deliver the Products in accordance with the terms of the relevant Order or (ii) comply with (a) the relevant Order Requirements or (b) a request for Services under clause 7.4, then, unless and to the extent such failure is caused by the Buyer's breach of this Agreement, the Buyer at its sole option shall be entitled to treat such failure as a material breach in which case clause 15.1 shall apply. If, following the remedial period as set out in clause 15.1, such material breach has not been remedied, the Supplier shall forthwith repay the Price (or any part of the Price) the Buyer has paid for such Products or Services to the Buyer and return any Tooling owned by the Buyer or any of its Affiliates which are located at the Supplier's premises to the Buyer.
15.4 Within 5 Business Days of this Agreement terminating for any reason, the Buyer shall have the option by serving written notice on the Supplier to acquire any Tooling used exclusively for the Products which it does not own, the consideration for which shall be an amount equal to the original purchase price for that Tooling paid by the Supplier less any amounts paid by the Buyer to the Supplier in respect of amortisation in respect of that Tooling. If the Buyer does not serve such notice the Supplier may elect, at its sole discretion to either (i) retain ownership of the Tooling, or (ii) by serving written notice on the Buyer within ten (10) Business Days of such termination, require the Buyer to take ownership and delivery of the Tooling for no consideration.
16 CONSEQUENCES OF TERMINATION
16.1 Upon termination or expiry of this Agreement for whatever reason:
16.1.1 the Supplier shall at the request of the Buyer, use its reasonable endeavours to novate those contracts that provide for the supply of all Raw Materials exclusively used in the production of the Products to the Buyer, or as the Buyer may direct and to meet any reasonable request from any competent authority and the Buyer required to transfer production or any registrations or licences or approvals to the Buyer, its Affiliates or any third party approved in writing by the Buyer. The parties shall discuss in good faith and attempt to agree as expeditiously as possible a mutually acceptable course of action with respect to any contracts that provide for the supply of Raw Materials that are used both in the production of the Products and products of the Supplier,
16.1.2 the Supplier shall at the request of the Buyer release and make available for immediate collection by or on behalf of the Buyer (i) all finished Products at the Prices set out in Schedule One, (ii) all API the Supplier has in stock and (iii) all Raw Materials attributable to the Products which the Supplier has in stock at cost price,
16.1.3 the Supplier shall at the request of the Buyer promptly and efficiently undertake and complete a Technical Transfer to the Transferee to enable the Transferee to establish and conduct cGMP manufacture of the Products,
16.1.4 each party shall promptly procure the delivery to the other party of, or destroy, all copies in its possession of all Confidential Information of the other party which is in documentary or other tangible form (including all copies thereof) and which has been disclosed to it together with all material relating to that Confidential Information prepared by, or on behalf of, it (save to the extent that first party is required by applicable law to maintain a copy of such information or as required by the first party to exercise any rights and licences that survive termination or expiry, including in the case of the Buyer to manufacture and commercialise Products following Technical Transfer in accordance with this Agreement) and, at the other party's request, undertake to the other party in writing that it has complied with the provisions of this clause 16, and
16.1.5 the Supplier shall promptly collect, pack and make ready for delivery to the Buyer all Tooling, and follow all reasonable directions of the Buyer with respect to the disposition of such Tooling. In the event that the Buyer has not achieved the Purchase Terms with respect to any items of Tooling as of the termination of this Agreement, the Buyer shall pay the Supplier the unamortised portion of the purchase price thereof within thirty (30)
days following the termination date, and the Supplier shall take such actions as the Buyer may reasonably request to confirm the Buyer's exclusive right, title and interest therein promptly following receipt of such payment, including tendering such Tooling for shipment in accordance with this clause.
17 ASSIGNMENT AND THIRD PARTY RIGHTS
17.1 Save as provided in clause 17.2 neither the benefit nor the obligations of this Agreement or of any provision of it may be assigned or transferred by either party without the prior written consent of the other.
17.2 The benefit subject to the obligations of this Agreement shall be assignable by the Buyer to any Affiliate of the Buyer or to the purchaser of all or a substantial part of the business of the Buyer (or any other Affiliate of the Buyer) and in the event of such assignment, the Buyer shall with effect from such assignment be released from its obligations hereunder and all references in this Agreement to the Buyer shall be deemed to include its assigns.
17.3 Any Affiliate of the Buyer may place orders under this Agreement (which orders shall be placed through one or more nominated contact points as agreed between the parties from time to time) and may accordingly in their own right enforce the provisions of this Agreement, as though it were the Buyer, provided that (a) each Affiliate of the Buyer that places an order shall by doing so be deemed to have assumed the Buyer's obligations under this Agreement, and (b) the Buyer shall remain obligated for the performance of all of the obligations of the Buyer and Affiliate of the Buyer arising from this paragraph.
17.4 The Buyer, or as the case may be any Affiliate of the Buyer, may upon written notice require that the Supplier deliver the Products from any order (in whole or part) to the place of business of the Buyer or any agent or sub-contractor of the Buyer or as the case may be any Affiliate of the Buyer provided however that such place of delivery is in the UK and that such notice(s) shall not affect the Buyer's obligations hereunder and such notice shall not be deemed to be any assignment of the benefits or obligations of the Buyer hereunder. The Supplier may charge the Buyer (on a passthrough basis) for any reasonable additional costs properly incurred by the Supplier as a direct result of a change of delivery destination.
18 FORCE MAJEURE
18.1 If either party (the "Affected Party") is prevented or delayed in the performance of any of its obligations under this Agreement as a result of civil commotion, embargo, governmental legislation or regulation, not, invasion, war, threat of or preparation for war, fire, explosion, storm, flood, earthquake, subsidence, epidemic or other natural physical disaster or other event beyond the reasonable control of a party that has not occurred as a result of its negligence or other act or omission and which was not reasonably foreseeable ("Force Majeure Event"), it shall notify the other party, in writing, of the same as soon as practicable, fully detailing the background to, and all relevant matters connected with, such Force Majeure Event, together with such evidence thereof that it reasonably can give and specifying the period for which such prevention or delay can reasonably be expected to continue. The Affected Party shall use its reasonable endeavours to remove or overcome such Force Majeure Event as quickly as possible and shall also use its reasonable endeavours to mitigate the impact of such Force Majeure Event of the other party. Subject to clause 18.2, if the Affected Party has fully complied with its obligations under this clause 18.1, it shall be excused from performance of its unfulfilled obligations under this Agreement from the date of such notice until such Force Majeure Event no longer pertains.
18.2 If a Force Majeure Event prevents performance by the Affected Party of any obligations hereunder for a continuous period in excess of eight (8) weeks, the other party shall be entitled to terminate this Agreement by written notice at any time after such 8 week period provided the relevant Force Majeure Event remains subsisting at the time such notice is given.
19 BUSINESS CONTINUITY PLAN
19.1 The parties acknowledge that the regulatory requirements and associated timescales involved in switching manufacture of the Products to an alternative supplier are significant and as such the Supplier's business continuity plan shall focus on risk minimisation and mitigation to maintain the Supplier as the manufacturer of the Products. Within three (3) months of start of production or thirty (30) days of the Buyer's request, whichever is the sooner, the Supplier will provide the Buyer with a detailed, written business interruption and recovery plan, including business impact and risk assessment, crisis management, information technology disaster recovery, and business continuity (including plans to source Raw Materials and how a Technology Transfer would be performed in the event of an emergency) (the "BCP Plan").
19.2 The Supplier will update the BCP Plan annually and provide a copy to the Buyer on 31 July each year demonstrating risk mitigation against the previous year. Such BCP Plan shall be discussed as part of the annual review set out in clause 7.1 above and the Supplier agrees to adhere to the BCP Plan, including any modifications or changes mutually agreed between the parties.
19.3 The Supplier will notify the Buyer in writing within twenty-four (24) hours of any activation of the BCP Plan.
19.4 Subject to clause 18, the Supplier agrees that in the event that the BCP Plan is activated and during such activation the Buyer, acting reasonably, concludes that the Supplier is not able to fulfil its obligations under this Agreement and the Products will go out of stock in markets, on the Buyer's request the Supplier will perform, at the Buyer's cost (as to reasonable expenses properly incurred), an emergency Technology Transfer to a third party identified by the Buyer as an alternative source of manufacture of the Products and the Buyer's obligations to purchase Products exclusively from the Supplier as set out under this Agreement shall cease to apply.
19.5 If the Supplier's ability to supply the Products to its customers becomes limited due to a Force Majeure Event, or otherwise limited due to circumstances not foreseen by this Agreement, such that the Supplier is making allocations of Raw Materials (other than Raw Materials supplied by the Buyer (if any), which may not be allocated) on a pro rata basis between Products and products of third party customers to its customers, the Supplier undertakes that it shall nevertheless use all reasonable endeavours to supply the Buyer with its requirement of Raw Materials (or such other pro rata volume as is agreed with the Buyer) as evidenced by any unfulfilled Order and in accordance with the terms of this Agreement.
20 DISPUTE RESOLUTION
20.1 Prior to the beginning of any arbitration process the parties hereby undertake to attempt to resolve any dispute arising under or in relation to this Agreement by way of negotiation between senior executives of the parties who have authority to settle such dispute, subject to the Buyer's rights under clause 14.3. In furtherance of the foregoing, any party shall initiate the negotiation by way of a notice (an ''Escalation Notice") demanding an in-person meeting or telephone conference involving representatives of the parties at a senior level of management of the parties.
20.1.1 A copy of any Escalation Notice shall be given to, as a first stage (i) the Supplier's SVP Health Supply on the one hand, and (ii) the Buyer's Supply Director on the other, who shall meet and seek to resolve such issue within fourteen (14) days of such matter being referred to them (or within such longer period as the parties may agree in writing prior to the expiration of the initial fourteen (14) day period), and if the matter is not resolved between these parties within such fourteen (14) day period either of the representatives of such party may refer the matter to the second stage escalation as set out below.
20.2.2 As a second stage escalation, the matter shall be referred to (i) the Supplier's EVP Global Supply on the one hand, and (ii) the Buyer's Group Finance Director on the other hand, who shall meet and seek to resolve such issue within fourteen (14) days of such matter being referred to them (or within such longer period as the parties may agree in writing prior to the expiration of the initial fourteen (14) days period).
20.2.3 In the event agreement cannot be reached in accordance with clauses 20.1.1 and 20.1.2, or clause 14.3 (as applicable) the dispute will be subject to arbitration as described in clauses 20.3 and 20.6.
20.2 The costs of the arbitration shall be fixed by the arbitral tribunal and shall be borne by the unsuccessful party, unless the arbitral tribunal, in its discretion, determines a different apportionment, taking all relevant circumstances into account. The costs of arbitration include: (i) the fees and disbursements of the arbitrator, (ii) the reasonable fees, travel and other expenses of expert witnesses, and (iii) the costs of legal representation and assistance, to the extent that the arbitral tribunal determines that the amount of such costs is reasonable.
20.3 The arbitral tribunal shall endeavour to issue its award within sixty (60) days of the last hearing of the substantive issues in dispute between the parties, however, the arbitral tribunal shall not lose jurisdiction if it fails to respect this timescale. The arbitral award shall be final and binding.
20.4 Neither the parties (including their auditors and insurers) nor their counsel and any person necessary to the conduct of the arbitration nor the arbitrators shall disclose the existence, content, (including submissions and any evidence documents presented or exchanged), or results of any arbitration hereunder without the prior written consent of the parties, except as required by law or the applicable rules of a stock exchange.
20.5 The existence of a dispute with respect to this Agreement between the parties shall not relieve either party from performance of its obligations under this Agreement that are not the subject of such dispute.
20.6 This Agreement shall be governed by and construed in accordance with the laws of England and Wales, save as to conflict of law provisions. If any dispute is not resolved in accordance with clause 20.1, the matter shall then be referred to arbitration to be conducted under the auspices of the London Court of International Arbitration. Proceedings will be heard by a single arbitrator and held in London in English and subject to the Arbitration Act 1996.
21 CODE OF CONDUCT
21.1 The Supplier shall comply with the Buyers Code of Conduct referred to in Schedule Eight hereto and shall otherwise comply with all applicable national legal requirements, customs, and accepted international standards pertaining to employment and manufacturing.
22 MISCELLANEOUS
22.1 If there is any inconsistency between the terms and conditions set out in this Agreement and the terms and conditions set out in any quotation, order, acknowledgement or invoice, the terms and conditions of this Agreement shall prevail to the extent of the inconsistency.
22.2 If there is any inconsistency between the terms and conditions set out in this Agreement and the terms and conditions set out in the Technical Agreement with respect to quality-related activities, including, without limitation, compliance with cGMP, the terms and conditions of the Technical Agreement shall prevail to the extent of the inconsistency. If there is any inconsistency between the terms and conditions set out in this Agreement and the terms and conditions set out in the Technical Agreement with respect to commercial matters, including, without limitation, allocation of risk, liability and financial responsibility, the provisions of this Agreement shall prevail to the extent of the inconsistency.
22.3 This Agreement, the Specification or any Order may only be amended, modified or varied by the parties by an instrument in writing signed on behalf of each of the parties.
22.4 The waiver by either party of any right under this Agreement or of any failure to perform or breach hereof by the other party shall not constitute or be deemed to be a waiver of any other or future right
hereunder or of any other failure to perform or breach hereof by such other party, whether of a similar or dissimilar nature.
22.5 All notices, consents, approvals or other communications hereunder shall be in writing and shall be delivered personally or by registered or certified mail, postage prepaid, or sent by fax, addressed to the authorised personnel at relevant party and at such address as each party shall from time to time notify to the other in writing. Any such notice, consent, approval and other communication shall be deemed given, in the case of personal delivery, on the date of delivery, in the case of mailing, on the fifth day following its deposit in the mail and in the case of a fax, on the next business day after the day of transmission provided the sender's facsimile machine produces a report showing complete and successful transmission to the correct facsimile number.
22.6 The expiration or earlier termination of this Agreement will not operate to release either party hereto from its obligations under clauses 3.8, 10, 11, 13.1 and 13.9 or 16 which obligations will survive such expiration or termination, or from any liability which has already accrued to the other party as of the date of expiration or termination or which may thereafter accrue in respect of any act, omission or default occurring prior to expiration or termination.
22.7 Nothing in this Agreement shall constitute or be deemed to constitute the creation of a partnership, agency, or employer/employee relationship between the parties.
22.8 This Agreement, together with the Specifications, Technical Manual and the Schedules attached hereto, constitutes the entire agreement and understanding of the parties and supersedes any previous agreement between the Buyer and the Supplier and their Affiliates in relation to the subject matter of this Agreement.
22.9 If any provision of this Agreement is held by any court or other competent authority to be invalid or unenforceable in whole or in part it shall be deemed severed from this Agreement and the validity of the other provisions and the remainder of the provision in question shall not be affected.
22.10 This Agreement may be executed in one or more counterparts, all of which shall be considered as one and the same agreement and shall become effective when one or more counterparts have been signed by each of the parties.
22.11 All royalties, taxes and duties imposed or levied on any Products delivered hereunder shall be for the account of and paid by the Supplier to the point where the Products have been delivered DAP. All royalties, taxes and duties imposed or levied on the Products after such delivery shall be for the account of and paid by the Buyer.
SCHEDULE ONE
THE PRICES
1. Prices
[***]:
1) [***]:
a [***],
b [***], and
c [***]
2) [***], and
3) [***].
API will be sold to the Supplier upon taking title to the API in accordance with clause 6.2.3.2. The Supplier will each week notify the Buyer of the volume of API used and will be invoiced by the Buyer for such volume of API at the Buyer's then current Price for the API at the time of transfer of title (and for the sake of clarity not the price at the time of delivery to the Supplier).
Any change in the cost of API shall mean the Assumed API Costs part of the Price for the Product shall be varied pro rata (such that by way of example only a [***] per cent ([***]%) increase in the API Price would mean a corresponding [***] per cent ([***]%) increase in the Assumed API Costs part of the Price for the Products, but the Manufacturing Costs shall remain unaffected).
2. Price Reviews and Budgeting Process
The parties agree that the Manufacturing Costs and Assumed API Costs shall be fixed under this Agreement until 31 December 2016.
The parties agree that thereafter the Manufacturing Costs shall be reviewed every year, and each such review shall commence by the Buyer notify the Supplier of (i) the number of Products that the Buyer anticipates ordering from the Supplier during the following calendar year (the "Budget Order Volume") (the initial Budget Order Volume, effective until calendar year ending 31 December 2016, shall be [***] ([***]) Products per year (on a pro rata basis from the Commencement Date until 31 December 2015)) and (ii) the Assumed API Costs for the purpose of the Price before 31 May each year. Following the Buyers provision of such information, by 1 July of the then current year the Supplier shall produce an updated proposed FOS and by 31 July the Supplier shall produce a Price list using the principles set out below.
Within fourteen (14) days (or such other period agreed between the parties) following provision of an updated proposed FOS and Price list the parties shall hold a price review. The first such review shall take place following the Supplier's first proposal for the year 2017 (to be made within fourteen (14) days (or such other period agreed between the parties) of provision of the updated proposed FOS and Product Price list to be supplied before 31 July 2016).
The parties agree that the updated proposed FOS and Price list shall be calculated based on the below principles which can be assessed and discussed at such pricing review:
• Raw Materials Manufacturing Cost are revised based on [***] (averaged over a one (1) year period), [***],
• Direct Manufacturing Cost are [***] for the duration of the Agreement save for adjustment every year (based on the ILCH since the previous adjustment) as part of a price review as set out in clause 7.1, and
• Indirect Manufacturing Costs shall be calculated [***]. The Supplier shall calculate its allocation of Indirect Manufacturing Costs per Product by dividing the Indirect Manufacturing Costs across the Budget Order Volume (the "Indirect Manufacturing Cost Product Allocation"). The Supplier shall provide the Buyer with reasonable supporting explanation of its calculation of Indirect Manufacturing Cost and Indirect Manufacturing Cost Product Allocation.
Following such review the parties shall agree proposed pricing and the Supplier shall create the revised FOS and revised Price list which shall be supplied to the Buyer for approval by the 31 August of the then current year, whereupon it shall be binding for the forthcoming year. In the absence of any approved FOS and Price list by such date, either party may serve notice on the other that it is to escalate the matter in accordance with clause 20.1.
3. Exceptional Price reviews
The parties agree that following 1 January 2017 either party may request a review of Raw Materials Manufacturing Costs if:
• the cost of a key Raw Material has varied +/- ten per cent (10%) over a period of six (6) months due to demonstrable feed-stock changes (provided always such exceptional price review shall be limited to the key Raw Material in question and any variation is limited only to the applicable variation associated with the key Raw Material), or
• a Price is agreed for new Product based on anticipated volumes, six (6) months has elapsed since launch of such new Product and a party wishes to discuss price for such new Product based on further information regarding sales volumes of such new Product (such Price review being particular to the Price for such new Product only).
4. Indirect Manufacturing Costs and reconciliation
[***]:
(a) [***], and
(b) [***]:
(i) [***], or
(ii) [***].
Appendix 1 - Initial FOS
[***]
SCHEDULE TWO
THE PRODUCTS (AND SERVICES IF ANY)
Finished Products
Temgesic Injection 0.3mg/ml
Temgesic Sublingual Tablets 0.2mg
Temgesic Sublingual Tablets 0.4mg
Subutex Tablets 0.4mg
Subutex Tablets 2mg
Subutex Tablets 8mg
Suboxone Tablets 2mg
Suboxone Tablets 8mg
Suboxone Tablets 12mg
Suboxone Tablets 16mg
(including, where applicable, the similar products sold under Buprex or Buprenex name)
Services
• Providing manufacturing section of annual product review
• Rolling stability according to annual stability commitment as per ICH guidelines for all finished products
SCHEDULE THREE
TEMPORARY ADDITIONAL SERVICES
• Weighing and dispensing Buprenorphine for the purpose of exportation
o Cost = [***] GBP (£[***])/event
• Perform receipt, testing, release and assembly for despatch of Naloxone (likely service required until Monosol is approved as an authorised source to perform release testing). Resolution of Non-conformance on receipt or test results with the material supplier remains with the Buyer
o Cost = [***] GBP (£[***])/event
• Micro laboratory testing
o Maintain established routine micro testing testing schedules for purified water, environmental monitoring, finished material testing and provide associated Certificates of Analysis. Monthly testing and administration fee: [***] GBP (£[***])
o Provide microbiological advise and investigation support up to a total of 5 days annually. Annual retention fee: [***] GBP (£[***])
o The Buyer can end such service on three (3) months' written notice to the Supplier
• Rolling stability programme API
o Maintain annual Buprenorphine HCI API rolling stability including all storage, testing and reporting to end of all protocols committed under RBH control. Report any out of trend or out of specification results to the Buyer within 3 days of confirmation. Report routine results annually or within seven (7) days of request for information. At Suppliers cost.
o Provide annual Buprenorphine HCI API rolling stability post plant day including all storage, testing and reporting in line with existing current testing protocols and shelf-life specifications. Report any out of trend or out of specification results to the Buyer within 3 days of confirmation. Report routine results annually or within 7 days of request for information. [***] GBP (£[***])/annum.
o The Buyer can end such service on three (3) months' written notice to the Supplier.
The parties acknowledge that the above Temporary Additional Services are not envisaged as being provided long term under this Agreement and as such may be terminated by the Buyer on three (3) months' written notice to the Supplier at any time, or in the event not so terminated by the third anniversary of the Commencement Date the Buyer may thereafter serve notice to terminate any or all of such Temporary Additional Services on six (6) months' written notice to the Buyer, such notice being served at any time following the third anniversary of the Commencement Date.
SCHEDULE FOUR
THE SPECIFICATION
Temgesic Injection 0.3mg/ml
[***]
Temgesic Sublingual Tablets 0.2mg
[***]
Temgesic Sublingual Tablets 0.4mg
[***]
Subutex Tablets 0.4mg
[***]
Subutex Tablets 2mg
[***]
Subutex Tablets 8mg
[***]
Suboxone Tablets 2mg
[***]
Suboxone Tablets 8mg
[***]
Suboxone Tablets 12mg
[***]
Suboxone Tablets 16mg
[***]
SCHEDULE FIVE
KPls
1. On Time In Full (OTIF): Based on OTIF calculation in OTIF spreadsheet Mechanism:
Delivery
• Delivery = Released and sold
• Measure 1 delivery date vs delivery date promised (measured on a week basis not day basis so if delivery date was Monday and delivery is Friday then it counts as 100% - discounted on a daily basis 5% per day so effectively down to 0% after 4 weeks late
Quantity
• Quantity promised vs received %
• Delivery and quantity. Weighed 50/50 = OTIF
This give an OTIF score for each country on a weekly basis. It also gives an overall OTIF score (this is weighed against the quantity of each delivery).
OTIF shall be maintained at the Target OTIF Level or better.
2. Yield: agreed API waste level as follows:
• [***]% tablets
• [***]% injection
This will impact:
• KPI - API yield is [***]% for Product in tablet form and [***]% for injection products.
3. QA:
• Customer complaints - Serious complaints investigated and reported within 10 days of receipt, all other complaints investigated and reported within 20 days. Change control - Implementation actions >95% on time. None > 10 days late. Non-conformance CAPAs - All major actions on time, minor actions >95% on time
• Competent authority inspection actions - on time with commitment to authority. RBP audits - major actions on time, minor actions >95% on time recommendations monitored
• Agreed failure to meet KPls will enable RBP to seek remedy of the situation. Failure to meet a KPl (other than in respect of OTIF) does not, of itself, entitle the Buyer to terminate this Agreement.
SCHEDULE SIX
BUYER'S PALLET POLICY
EPAL pallets to be used for storage and shipment unless specified otherwise.
SCHEDULE SEVEN
TOOLING AND EXISTING TOOLING
1. Tooling
1.1 Existing Tooling
[***]
1.2 Amortisation formula (applicable to Tooling)
• The Supplier shall obtain a quotation for such Tooling which is to be agreed by RBP. The cost of such Tooling shall be agreed upfront by RBP.
• The cost of Tooling shall be amortised over 12 months following the purchase of such Tooling by the Supplier on behalf of the Buyer in relation to the relevant volume.
• Any outstanding balance upon such amortised costs in relation to the Tooling shall be paid by the Buyer to the Supplier as a lump sum after such 12 month period.
• The Buyer may at the Buyer's own discretion pay the full sum for such Tooling upfront.
SCHEDULE EIGHT
BUYER’S CODE OF CONDUCT
http·//www.rb com/Our-responsibility/Our-policies-reports or as otherwise updated and notified to the supplier from time to time
SCHEDULE NINE
RAW MATERIALS SUBJECT TO BUYER PRE-APPROVAL
[***]
SCHEDULE TEN
ANTICIPATED CHANGES AND PARTY BEARING COST
Costs shall, in each applicable case, be subject to the Buyer approving such costs prior to them being incurred by the Supplier.
| | | | | | | | | | | |
| Scenario | Initiator | Party bearing costs | Note |
Change to Licences or legislation specific to the Products only | Authority, regulator or third party | Buyer | See *** below. |
Change to Licences or legislation not specific to the Products only | Authority, regulator or third party, | Supplier | |
Change to manufacturing or industry standards - such changes apply not only to the Products | Authority, regulator or third party | Supplier | |
Artwork change* | Buyer | Buyer | See ** below |
Artwork change* | Supplier | Supplier | |
Artwork change - specific to the Products* | Authority, regulator or third party | Buyer | See ** below |
Artwork change - not specific to the Products* | Authority, regulator or third party | Supplier | |
New supplier - commercial reasons | Buyer/ Supplier | Buyer/ Supplier | Costs to be split pro-rata according to which party obtains what percentage of benefit (e.g. if the Buyer obtains 75% benefit the Buyer pays 75% costs). See *** below |
New supplier - business continuity | Buyer/ Supplier | Buyer | Supplier to notify the Buyer as soon as aware of risk, present case and obtain the Buyer's approval. |
New equipment - replacement of the Supplier's equipment | Supplier | Supplier | Owned by Supplier |
New equipment - replacement of the Buyer's Equipment | Supplier/ Buyer | Buyer | Owned by Buyer See *** below |
New equipment- requested By the Buyer | Buyer | Buyer | Owned by Buyer See *** below |
* For any artwork change the Supplier shall provide the Buyer with information on remaining materials and to enable the parties to minimise write off costs.
** [***].
*** [***].
SCHEDULE ELEVEN
Consignment APJ stock arrangements
In this Schedule "API Specification" means the specification for the API as set out in the Technical Manual.
1 Title and API Specifications
1.1 Title in the API shall pass to the Supplier at the point the same is removed from consignment stock for consumption by the Supplier. The Supplier shall use such procedures (physical and administrative) as are reasonably necessary and customary to keep separate the API from the Supplier's other stock and to identify the API as the property of the Buyer.
1.2 The API shall comply with the API Specifications.
2 Reporting and audit
2.1 No later than five Business Days after the end of the previous calendar month, the Supplier will submit to the Buyer by email a report stating in detail the Product removed from consignment stock for consumption by the Supplier since the immediately preceding calendar month. Following delivery of such report, the Buyer may invoice the Supplier for the API detailed in such report at the Unit Price and each such invoice shall be payable in accordance with the terms of clause 7 of this Agreement mutatis mutandis.
2.2 Once a month, the Supplier and the Buyer shall each provide to the other a stock list, being its believed level of API (being the amount of API delivered, less that removed from consignment stock for consumption by the Supplier and less that rejected in accordance with the terms of this Agreement).
2.3 In the event of any inconsistency between the reports exchanged pursuant to paragraph 2.2, the parties shall commence immediate good faith negotiations to resolve the inconsistency. Following resolution, the Buyer shall promptly issue an invoice or credit note to address such agreed inconsistency.
2.4 At reasonable intervals (and in any event at least once a year), the Buyer shall perform (or have performed by its representative) a physical audit of the inventory of the API held at the Supplier's site. In the event of any inconsistency between the physical level of API at such site and that which the Buyer believes should be present, the parties shall commence immediate good faith negotiations to resolve the inconsistency. Following resolution, the Buyer shall promptly issue an invoice or credit note to address such agreed inconsistency. If such agreement cannot be reached the parties will request adjudication from an independent third party acting as expert, the cost of which shall be borne equally between the parties. Should the parties not be able to agree on an expert they shall request a nomination from the President of the Institute of Chartered Accountants in England and Wales or any successor body to that institution.
| | | | | | | | | | | |
| SIGNED by | /s/Patrick Clements | |
| for and on behalf of Reckitt Benckiser Healthcare (UK) Limited |
| PATRICK CLEMENTS | | |
| in the presents of Saiqa Panday | |
| | [***] | |
| | /s/ Saiqa Panday | |
| | | |
| SIGNED by | /s/Richard Jameson | |
for and on behalf of RB Pharmaceuticals Limited |
| RICHARD JAMESON | | |
| in the presents of Steven Lucas | |
| | [***] | |
| | /s/Steven Lucas | |
PORTIONS OF THIS EXHIBIT HAVE BEEN REDACTED.
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS BOTH (i) NOT MATERIAL AND (ii) WOULD BE LIKELY TO CAUSE COMPETITIVE HARM IF PUBLICLY DISCLOSED.
REDACTED MATERIAL IS MARKED WITH [***].
FIRST AMENDMENT TO COPACKER SUPPLY AGREEMENT DATED 23 DECEMBER 2014 BETWEEN
RECKITT BENCKISER HEALTHCARE (UK) LIMITED AND INDIVIOR UK LIMITED
This First Amendment to Copacker Supply Agreement (the "Amendment") is effective as of the date of last signature below (the "Amendment Effective Date") by and between
(1) Reckitt Benckiser Healthcare (UK) Limited ("Supplier") and
(2) lndivior UK Limited, formerly known as RB Pharmaceuticals Limited ("Buyer")
and collectively "the parties".
This Amendment amends the Copacker Supply Agreement dated 23 December 2014 between the parties (the "Agreement").
Capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Agreement.
WHEREAS, the parties wish to amend the Agreement as set forth herein.
IT IS AGREED as follows:
1. Clause 1.1 – shall be amended by –
a. addition of the following definitions:
"Business" shall mean the manufacture and sale of Subutex and Suboxone Tablets and Temgesic;
"Buyer Ran TT" shall mean those activities required by the Buyer to perform its own technical transfer of technology to a Buyer's TT Recipient, ran by and at the cost of the Buyer, pursuant to clauses 2.4 and/or 14.1;
"Buyer's TT Recipient" shall mean the PRC Purchaser (or their designee), and/or the party to whom the Buyer transfers demand in accordance with under clause 14.1;
"Contractual Year" shall mean January 1st to December 31st inclusive;
"New Country" shall mean any country additional to those countries for which the Supplier has already manufactured Products for the Buyer set out in Schedule 4 as at the Commencement Date;
"PRC Purchaser" means the Third-Party purchaser of the Buyer's business to exploit Suboxone Products in the People's Republic of China (excluding Hong Kong, Taiwan and Macao);
"Products" means those products listed in Schedule Two for potential sale worldwide or as otherwise agreed by the parties in writing, together with such additional, improved, modified or replacement products as shall be agreed between the parties from time to time as are manufactured by the Supplier and for supply to the Buyer under this Agreement and wherever "Products" is referred to in this Agreement it shall refer to the relevant Products or all Products as the case may be, as listed in Schedule Two;
"Suboxone Products" means Suboxone Tablets 2 mg and Suboxone Tablets 8 mg.
b. the deletion of the definition "Existing Tooling" in its entirety and replaced with:
"Existing Tooling" means the punch and die tooling which are required for the anticipated supply of the Products and which, as at the date of this Agreement, is owned by the Supplier, as indicated in Schedule Seven.
c. The revision of the definition of" Commencement Date" such that:
"Commencement Date" shall now refer to having the meaning set out in clause 2.6.
2. Clause 2.1 is deleted in its entirety and replaced with the following:
“2.1 This Agreement shall be effective from the Commencement Date and, subject to applicable laws and the provisions of clause 15 (Termination), shall have effect until ten (10) years following the Commencement Date. The parties agree that during the sixth (6th) year of this Agreement, they shall discuss renewal of this Agreement.”
3. Clause 2.2 is deleted in its entirety and replaced with the following:
“2.2 Notwithstanding anything to the contrary contained herein and only in the event that –
2.2.1 the Agreement enters the final four years the Agreement without the Supplier making any commitment of intent to renew this Agreement following discussion under 2.1; or
2.2.2 the Buyer has given the Supplier notice and terminates the Agreement pursuant to clauses 15.1 or 15.2; or
2.2.3 the Buyer has given the Supplier notice of an unjustified proposed price increase pursuant to discussion under 2.1, which unreasonable proposed price increase is calculated in contrary to clause 7.1 and/or Schedule One, which prevents a renewal of the Agreement;
and at the request of the Buyer any time during such notice period, the Supplier shall promptly and efficiently undertake and complete a Technical Transfer in accordance with clause 14 to the Buyer or a third party identified by the Buyer (the Buyer or the third party (or both) being the "Transferee") to enable the Transferee to establish and conduct cGMP manufacture of Products. For the sake of clarity, the parties agree that the provisions set out in clause 14 are subject to this clause 2.2. The Parties specifically agrees that the Supplier shall not be obliged to perform any Technical Transfer in the event that:
(i) the Buyer provides the Supplier notice to terminate or terminates this Agreement for whatever reason, other than set out in clauses 15.1 or 15.2; or
(ii) the Supplier provides the Buyer notice to in terms of clauses 2.4 or 14.1; or
(iii) the Supplier provides the Buyer notice to terminate or terminates this Agreement as a result of a breach, including as set out in clauses 15.1 or 15.2, by the Buyer or as a result of any negligent act or omission, or any wilful misconduct of the Buyer."
4. Clause 2.3 is deleted in its entirety and replaced with the following:
“2.3 Upon termination or expiry of this Agreement for whatever reason (apart from the circumstances outlined in clauses 2.2), the Supplier shall at the Buyer's cost and the request promptly and efficiently enable the Buyer access to all technical information needed to undertake and complete its own technical transfer to a Transferee to enable that Transferee to establish and conduct cGMP manufacture of the Products. The Supplier acknowledges that in the circumstances described in 2.2 the Supplier's obligations to perform a Technical Transfer shall include allowing the Buyer access to all technical information as described in this clause 2.3.”
5. The following clauses are inserted as clause 2.4 and 2.5:
“2.4 The parties agree that in the event that the Buyer has given the Supplier 6 (six) months' prior written notice that the Buyer requires a Buyer Ran TT for the purposes of assisting a PRC Purchaser (as a Buyer's TT Recipient), the Supplier shall at the request, cost and reasonable instructions of the Buyer reasonably and actively assist the Buyer to undertake and complete the Buyer Ran TT. For the sake of clarity, the parties agree that the Supplier shall not be responsible for the cost or to lead such Buyer Ran TT, which shall be the sole responsibility of the Buyer with appropriate active support from the Supplier as set out in clause 2.5.
2.5 In this regard the parties agree that for a Buyer Ran TT:
2.5.1 access to the Supplier's Manufacturing Site as part of any technical transfer shall not be granted to a Buyer's TT Recipient without prior written consent from the Supplier; such consent not to be unreasonably withheld;
2.5.2 the Supplier gives no warranties or guarantees of success in transferring the technology under a Buyer Ran TT; and
2.5.3 notwithstanding 2.5.1, the Supplier shall use all commercially reasonable endeavours (at cost and reasonable instructions of the Buyer) to actively facilitate such transfer which shall include without limitation:
(i) providing reasonable access to the necessary data/technical information;
(ii) reasonable participation in creation of the technical transfer plan;
(iii) reasonable assistance in participation in 3-way communication with the Buyer and the Buyer's TT Recipient;
(iv) reasonable assistance in resolving problems identified with item(s) transferred to the Buyer's TT Recipient but not meeting expected requirements despite Buyer action and support (including without limitation equipment set-up and validations, and in-process controls and process validation);
(v) where reasonably required, travel and in-plant visit/support at as the designated plant of the Buyer's TT Recipient; and
(vi) providing reasonable support in such activity consistent with that described in clause 14.4, as modified to reflect such activity is Buyer lead and at the Buyer's cost."
6. The following is inserted as clause 2.6:
“2.6 The parties agree that this Agreement shall commence on 1st January 2019 (the "Commencement Date").”
7. The first sentence of clause 5.6 is deleted in its entirety and replaced with the following:
"The Supplier represents and warrants that it shall have the capacity to fill the Buyer's requirements for the amount of Products set forth in any Order so long as such amount is limited to [***] ([***]) consumer units per annum ("Annual Volume") and does not exceed [***]% of the forecast demand set forth in the immediately preceding Product Forecast. The Supplier agrees that it has the capacity to provide the Annual Volume to a maximum of [***] ([***]) consumer units per annum ("Maximum Volume")."
8. Clause 6.6 is deleted in its entirety and replaced with the following:
“6.6 The Buyer may agree in its sole discretion to provide the Supplier with sufficient funds to cover the Supplier's purchase of the punch and die tooling (as described in Schedule seven) required to support the capacity requirement for the anticipated supply of the Products, such tooling to be used for the production of the Products (being such tooling specified in Schedule Seven and hereinafter referred to as "Tooling"). The purchase of the Tooling, the Purchase Process and the commercial terms ("Purchase Terms") in respect thereof are set out in Schedule Seven."
9. Clause 6.7 is deleted in its entirety and replaced with the following:
“6.7 The Supplier acknowledges and agrees that all designs, drawings, samples, prototypes and Intellectual Property Rights related thereto, with respect to the Products are the exclusive property of the Buyer."
10. Clause 6.8 is deleted in its entirety and replaced with the following:
“6.8 The Buyer acknowledges and agrees that the Supplier is the sole and exclusive owner of the Tooling and the Existing Tooling and that legal ownership, title and interest in Tooling and the Existing Tooling (including but not limited to all designs, drawings, samples, prototypes and Intellectual Property Rights related thereto) shall at all times remain with Supplier. To the extent that the Supplier is not already the owner of the Tooling or the Existing Tooling, the Buyer agrees that it shall take all such actions as the Supplier may reasonably request (including without limitation, the execution and delivery to the Supplier of documents of title and other instruments) confirming the Suppliers exclusive right, title and interest therein."
11. Clause 6.11 is deleted in its entirety and replaced with the following:
“6.11 [Reserved.]”
12. The following Clause is inserted as Clause 6.12:
“6.12 The Supplier, at its expense, shall maintain Existing Tooling in good working order and repair for at least Five (5) Contract Years from the date the Existing Tooling was or is commissioned, the date of commissioning of the Existing Tooling shall be set out in Schedule 7 ("Existing Tooling Commissioned Date"). The Supplier shall use reasonable endeavours to ensure that the Existing Tooling shall have a working life of at least Five (5) Contract Years from Existing Tooling Commissioned Date. The repair, maintenance or replacement of any such Existing Tooling that fails to achieve such capacity before Five (5) Contract Years from the Existing Tooling Commissioned Date shall be at Supplier's sole cost and expense. Thereafter, the Supplier shall continue to provide routine maintenance or repairs on Existing Tooling after the Five (5) Contract Years from the Existing Tooling Commissioned Date, at the sole cost and expense of the Buyer, and if any such Existing Tooling fails after Five (5) Contract Years from the Existing Tooling Commissioned Date and the Supplier is unable to return Existing Tooling to service through the application of routine maintenance, any further costs of repair or replacement of such Existing Tooling shall be at Buyer's sole cost and expense."
13. Clause 7.1 is deleted and replaced by the following one:
“7.1 The price for the Products shall be those set out in Schedule One and shall be fixed for the period up to and including 31 December 2019. The parties agree that the Price shall be subject to review thereafter each year, and each such review shall commence following the Supplier's provision to the Buyer of the Supplier's proposed pricing for the forthcoming year by 31 July of the then current year. The first such review shall take place following the Supplier's first proposal for the year 2020 (to be made by 31 July 2019). The parties agree that the proposed pricing and review each year (and any corresponding adjustment) will reflect the principles set out in Schedule One."
14. There shall be added to clause 9 the following:
“9.8 The parties specifically agree that for any New Country, the Supplier will comply with all requirements of this clause 9 (including in particular and without limitation, clause 9.1.1) save that for any products manufactured for or distributed to a New Country, the Supplier specifically does not warrant that manufacture will comply with any applicable laws local to such New Country to the extent such applicable laws demand additional requirements or standards than those required for production of products for the European market, and shall not be liable for the products in any New Country save for failure to meet the Specification.”
15. Clause 11.2 is hereby deleted in its entirety and replaced with the following:
“11.2 On the terms and subject to the conditions of this clause 11, the Supplier shall defend, indemnify and hold harmless the Buyer, its Affiliates, and their respective officers, directors, employees and agents (collectively, "Buyer lndemnitees"), from and against any and all Losses relating to any Proceeding to the extent arising out of or resulting from
(i) any negligent act or omission, or any wilful misconduct, of the Supplier, its Affiliates, its contract manufacturers or Raw Material suppliers (other than Buyer), or any of their respective officers, directors, employees or agents in connection with the performance of this Agreement; or
(ii) any breach by the Supplier or its Affiliates of any of its representations, warranties, or obligations contained in this Agreement;
in each case (i) and (ii), except for those Losses which Buyer has an obligation to indemnify a Supplier lndemnitee pursuant to clause 11.1, as to which Losses each party shall indemnify the other to the extent of their respective liability for such Losses."
16. The following text is added to the end of clause 11.3:
"The parties acknowledge that the Supplier does not have specific third-party insurance against loss arising out of a Cyber-Attack (being any malicious third party action which undermines the functions of the Supplier's information systems and/or the networks that deliver such information, including, without limitation, the unauthorised use of, or attempts to gain unauthorised access to, systems and/or to data, modification of a system's firmware, software or hardware without the Supplier's consent, and/or any actual or attempted malicious disruption or denial of service). Whilst the Buyer does not demand third party insurance against such risks, the parties acknowledge the absence of such insurance shall not be construed as an implied limitation of the Supplier's liability hereunder. Save to the extent that a Cyber Attack results from a failure by the Supplier to comply with its IT security or other obligations under this Agreement, the parties acknowledge and agree that the nature of Cyber Attacks is such that they cannot be completely prevented and as such will be deemed to constitute a "Force Majeure Event" for the purposes of this Agreement and the provisions of clause 18 shall apply."
17. Clauses 14.1, 14.1.1 and 14.1.2 are deleted in their entirety and replaced with the following:
"14.1 Parties agree that the Buyer's obligations to [***] the Supplier as set out under this Agreement shall be modified such that during the final four years of this Agreement, the Buyer shall upon written notice to the Supplier be [***] over the remaining term of this Agreement [***]. The parties agree that under this clause 14.1, in order to enable the Buyer to identify and utilise an [***], the Supplier shall at the request, cost and reasonable instructions of the Buyer reasonably assist the Buyer to undertake and complete its own Buyer Ran TT to a Buyer's TT Recipient. The parties agree that such Buyer Ran TT will be supported by the Supplier in accordance with clause 2.5."
18. Clause 15.4 is deleted in its entirety and replaced with the following:
“15.4 [Reserved.]”
19. There shall be added to clause 15 the following:
“15.5 This Agreement may be terminated by the Buyer at any time;
15.5.1 subject to clause 16.2, by giving not less than twelve (12) months written notice in the event of loss of main Market License (e.g. France or Canada);
15.5.2 by giving not less than twenty four (24) months written notice if the Buyer's annual demand from the Supplier falls below [***] packs or if there are commercial pressures making it no longer economically viable for the Buyer to maintain the Business. In either case, should the Supplier find a replacement Business during that 24 month notice period, the Buyer shall be relieved from its financial responsibility for the remainder of the notice period."
20. There shall be added to clause 16 the following:
16.2 Notwithstanding anything to the contrary contained in this Agreement and without prejudice to Supplier's other rights or remedies whether hereunder, at law or in equity, if the Agreement is terminated pursuant to clause 15.5.1 as a result of or attributed to the Buyer's negligent or wilful act(s) or omission(s), or any wilful misconduct, then the Buyer shall (i} give the Supplier not less than twenty four (24) months written notice (in lieu of twelve (12) months) and, (ii) pay all the Supplier's fixed cost for same notice period (twenty four (24) months), payable on/before the end of each the remaining Contractual Year. Should the Supplier find a replacement Business during that 24 months' notice period, the Buyer shall be relieved from its financial responsibility for the remainder of the notice period.
16.3 Buyer acknowledges and agrees that the provisions set out in clause 16.2 does not constitute a penalty.”
21. Clause 16.1.3 is deleted in its entirety and replaced with the following:
“16.1.3 Subject to clause 2.2, the Supplier shall at the request of the Buyer promptly and efficiently undertake and complete a Technical Transfer to the Transferee to enable the Transferee to establish and conduct cGMP manufacture of the Products."
22. Clause 16.1.5 is deleted in its entirety and replaced with the following:
“16.1.5 [Reserved.]”
23. Clauses 17.1 and 17.2 are deleted in their entirety and replaced as follows:
“17.1 Save as provided in clause 17.2 neither the benefit nor the obligations of this Agreement or of any provision of it may be assigned or transferred by either party without the prior written consent of the other, such consent not to be unreasonably withheld.
17.2 The benefit subject to the obligations of this Agreement shall be assignable by the Buyer to any Affiliate of the Buyer or to the purchaser of all or a substantial part of the Business of the Buyer (or any other Affiliate of the Buyer) (otherwise than to a competitor of the Supplier where clause 17.1 above shall continue to operate), and in the event of such assignment, the Buyer shall with effect from such assignment be released from its obligations hereunder and all references in this Agreement to the Buyer shall be deemed to include its assigns.”
23. The following Clause is inserted as Clause 18.3:
“18.3 [***]."
24. Clause 21.1 is deleted in its entirety and replaced with the following:
“21.1 The Supplier shall comply with Supplier Code of Business Conduct and Anti-Bribery Policy (the "Policies") referred to in Schedule Eight hereto, and shall otherwise comply with all applicable national and legal requirements, customs, and accepted international standards pertaining to employment and manufacturing."
25. Schedule Eight attached to this Amendment supersedes and replaces Schedule Eight of the Agreement.
26. Clause 22.5 is deleted in its entirety and replaced with the following:
“22.5 All notice, consents, and approvals required or permitted to be given hereunder shall be in writing and shall be delivered (i) personally; (ii) by registered or certified mail, postage prepaid; or (iii) by reliable and nationally recognized overnight delivery service with parcel tracking enabled, addressed to the receiving party as follows (or to such other address as a party may designate in writing):
| | | | | |
| TO SUPPLIER: | Reckitt Benckiser Healthcare (UK) limited |
| [***] |
| Attn: SVP Manufacturing |
| |
| With copy to: | Reckitt Benckiser Health limited |
| [***] |
| Attn: Legal Department |
| |
| TO BUYER: | lndivior UK Ltd. |
| [***] |
| Attn: Company Secretary |
| |
| With copy to: | lndivior UK ltd. |
| [***] |
| Attn: Chief Legal Officer |
Any such notice, consent, or approval shall be deemed given, in the case of personal delivery, on the date of delivery; in the case of mailing, on the fifth calendar day following its deposit in the mail; and in the case of overnight delivery service, on the next business day following its deposit with the delivery service."
27. Schedule One section 4(b)(i) is deleted and replaced by the following:
“(i) if the Actual Volume is less than the Budget Order Volume (other than as a result of (A) Supplier's own fault or technical issues which leads to a breach of this Agreement or (B) a Force Majeure Event experienced by Supplier), invoice the Buyer for an amount equal to the following: (Budget Order Volume less Actual Volume), multiplied by the Indirect Manufacturing Cost Product Allocation, which invoice shall be paid by the Buyer within sixty (60) days of receipt thereof;]”
28. Schedule once section 1(3) is deleted and replaced by the following:
“[***]% margin on Manufacturing Costs, as agreed between the parties in accordance with clause 7.1 for the first (1) year after the Commencement Date. Such margin shall increase to [***] per cent ([***]%) for the remainder of the agreement, provided that in each individual contractual year, the Supplier meets an OTIF of >95% in at least nine (9) months of that year.
In the eventuality that the Supplier fails to meet the above requirement (except where failure to meet the OTIF target is entirely the fault of lndivior) in a specific contractual year, then the [***]% margin applies for that specific year, and the Supplier shall reimburse the buyer for any margin overpayment by March 1st of the subsequent contractual year.”
29. Schedule 4 attached to this Amendment supersedes and replaces the existing Schedule 4 to the Agreement.
30. Schedule 7 attached to this Amendment supersedes and replaces the existing Schedule 7 to the Agreement.
31.Except as modified by this Amendment, the Agreement shall remain in full force and effect. If there is a conflict between the terms of this Amendment and the terms of this Agreement, the terms of this Amendment shall govern.
The parties have caused their duly authorized representatives to execute this Amendment as of the Effective Date.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
RECKITT BENCKISER HEALTHCARE (UK) LTD | | INDIVIOR UK LTD |
| By: | /s/Frederick Dutrenit | | By: | /s/Frank Stier |
| Name: | Frederick Dutrenit | | Name: | Frank Stier |
| Title: | SVP Manufacturing Health | | Title: | Chief Manufacturing and Supply Officer |
| Date: | March 29, 2019 | | Date: | March 12, 2019 |
SCHEDULE FOUR
THE SPECIFICATION
Temgesic Injection 0.3mg/ml
[***]
Temgesic Sublingual Tablets 0.2mg
[***]
Temgesic Sublingual Tablets 0.4mg
[***]
Subutex Tablets 0.4mg
[***]
Subutex Tablets 2mg
[***]
Subutex Tablets 8mg
[***]
Suboxone Tablets 2mg
[***]
Suboxone Tablets 8mg
[***]
Suboxone Tablets 12mg
[***]
Suboxone Tablets 16mg
[***]
SCHEDULE SEVEN
TOOLING AND EXISTING TOOLING
1.Tooling
2.Existing Tooling
[***]
3.Purchasing process (applicable to Tooling)
The Supplier shall obtain a quotation for Tooling which is to be agreed by Buyer. The cost of such Tooling shall be agreed upfront by Buyer. The Buyer shall pay the full sum for such Tooling upfront.
SCHEDULE EIGHT
SUPPLIER’S CODE OF CONDUCT AND ANTI-BRIBERY POLICY
Supplier’s Code of Conduct and Anti-Bribery Policy attached.
PORTIONS OF THIS EXHIBIT HAVE BEEN REDACTED.
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS BOTH (i) NOT MATERIAL AND (ii) WOULD BE LIKELY TO CAUSE COMPETITIVE HARM IF PUBLICLY DISCLOSED.
REDACTED MATERIAL IS MARKED WITH [***].
DATED AUGUST 15, 2008
(1) MONOSOL RX LLC
(2) RECKITT BENCKISER PHARMACEUTICALS INC.
| | |
|
| COMMERCIAL EXPLOITATION AGREEMENT |
|
THIS AGREEMENT (the “Agreement”) is made on the 15th day of August, 2008 between:
PARTIES
(1) MonoSol Rx, LLC, a company organized and existing under the laws of the USA, with offices at 30 Technology Drive, Warren, New Jersey 07059, USA (“MSX”),
and
(2) Reckitt Benckiser Pharmaceuticals Inc, a company existing under the laws of the USA with offices at 10710 Midlothian Turnpike, Suite 430, Richmond, Virginia 23235 (“RB”).
WHEREAS, RB wishes to engage MSX to manufacture and supply the Products (as defined below) on the terms of this Agreement and MSX wishes to manufacture and supply the Products to RB on the terms of this Agreement.
IT IS AGREED as follows:
1. DEFINITIONS
1.1. In this Agreement the following definitions shall apply, unless the context requires otherwise:
“Affiliates” means in relation to a company, any entity controlled by that company or any entity which controls that company or any entity which is controlled by another entity, which also controls that company whether such control is direct or indirect. For the purpose of this definition, a particular company is:
(i) directly controlled by another company or companies if the latter hold/holds in the aggregate fifty percent (50%) or more of (a) the shares carrying votes exercisable at a general meeting (or its equivalent) of the particular company if such company is a corporation issuing voting shares or (b) the control rights or interests if it is not a corporation; and
(ii) indirectly controlled by a company or companies (“the parent company or companies”) if a series of companies can be specified, beginning with the parent company or companies and ending with the particular company, so related that each company or companies of the series, except the parent company or companies, is directly controlled by one or more companies earlier in the series.
“MSX’s Affiliates” and “RB’s Affiliates” shall be construed accordingly in relation to MSX and RB respectively. MSX’s Affiliates shall expressly include MonoSol Rx, Inc., a Delaware corporation.
“Arising Intellectual Property Rights” means such Intellectual Property Rights as are created during the conduct of and pursuant to the work performed under this Agreement by either party (or its authorized Sub-Contractor) whether acting alone or in combination with the other party, including, without limitation, any Improvements.
“Annual Review” shall have the meaning given in Clause 7.12.
“API” means the active pharmaceutical ingredient buprenorphine and/or naloxone manufactured by or for RB and/or used in the manufacture of the Product, as further described in the API Specification.
“API Specification” means the specification for the API as set out in Schedule Four Part B attached to and incorporated by reference in this Agreement and which shall be deemed to include that API shall be manufactured and supplied in accordance with all applicable laws, codes of practice and regulations.
“Certificate of Analysis” means in respect of the Product a document, signed by the Quality Manager, setting out the results of the testing and analysis of the Product to which such document refers together with the Product Specification and methods against which, and by which, the tests were performed, and in respect of the API a document, signed by the Quality Manager, setting out the results of the testing and analysis of the API to which such document refers together with the API Specification and methods against which, and by which, the tests were performed.
“Certificate of Compliance” means in respect of the Product a document, signed by the Quality Manager, confirming that the Product to which such document refers has been manufactured in accordance with, and in all respects complies with, the Health Registration, the Product Specification and cGMP and, in respect of the API a document, signed by the Quality Manager, confirming that the API to which such document refers has been manufactured in accordance with, and in all respects complies with, the API Specification and cGMP.
“cGMP” means current European Good Manufacturing Practice as set out in Commission Directive 2003/94/EC laying down the principles of good manufacturing practice in respect of medicinal products for human use and sale in the European Union, and as set out in the U.S. FDA, 21 Code of Federal Regulations, Parts 210 and 211 in respect of medicinal products for human use and sale in the U.S.
“Commencement Date” means the date of this Agreement.
“Confidential Information” means:
information concerning the existence and terms of this Agreement and the fact that MSX is manufacturing the Products for RB;
and
information related to Intellectual Property Rights generally, Arising Intellectual Property Rights, Existing Intellectual Property Rights, the API Specification, the Product Specification, formulations and Quality Agreement (all as defined herein), Know How, and data and information of a technical, operational, administrative, financial or business nature, whether oral or in some tangible form, such as in documents, papers, drawings, diagrams, discs, articles, samples, prototypes or otherwise, that is disclosed (intentionally or unintentionally) by one party or its Affiliates to the other party.
“Cost of Goods Price” shall have the meaning given in Clause 7.13.
“Delivery Date” shall have the meaning given in Clause 4.2.
“DMF” means the drug master file relating to the Product, containing all the information on the validation activities, manufacture, and testing of the Product.
“Existing Intellectual Property Rights” means any Intellectual Property Rights owned by or licensed to RB or MSX or their respective Affiliates prior to the Commencement Date or created or resulting after the Commencement Date otherwise than under, or pursuant to, this Agreement.
“FDA” means the United States Food and Drug Administration or any successor thereto.
“Field” means either (a) opiate (i) agonists, (ii) partial agonists, and (iii) antagonists, in each case alone or in combination with other opiate agonists, partial agonist or antagonists for administration to humans in the treatment of drug addiction, or (b) buprenorphine.
“Film” means the dissolvable film material impregnated with the API in the manufacture of the Products.
“Foil” means the primary packaging material for the Products.
“Forecasts” shall have the meaning given in Clause 4.1.
“Half Year” means the six month period ending 30 June or 31 December in each calendar year (or such part thereof as the case may be for the initial and final Half Year periods under this Agreement) and the term “Half Yearly” shall be construed accordingly.
“Health Registration” means the technical, medical and scientific licences, registration, authorisations or approvals required or deemed necessary by any Regulatory Authority for the advertising, distribution, import, export, marketing or sale of the Products in the Territory or any part thereof.
“Improvements” means any improvement, modification or adaptation to the Know-How, the Patents or the Products (whether itself patentable or not) created during the conduct of and pursuant to the work performed under this Agreement by either
party (or its authorized Sub-Contractor) whether acting alone or in combination with the other party and related to the design, manufacture and supply of the Products.
“Intellectual Property Rights” means the patents (including the Patents), applications for patents, utility models, applications for utility models, trade marks or applications for trademarks or trading names (whether or not registered or registrable), rights in Improvements, Know How, designs (registered or unregistered and including applications for registered designs), copyright (including rights in computer software), rights in inventions, the right to claim damages for past infringements of any or all such rights and all rights having equivalent or similar effect wherever situated.
“Know-How” means all knowledge, experience, data, technical or commercial information, inventions and all other Intellectual Property Rights (other than the Patents) related to the design, manufacture and supply of Products (including, without limitation, trade secrets, technology, methods of manufacture, specifications, description of manufacturing processes, recopies, formulae or drawings relating to the design, development, manufacture and supply of the Products, and other information).
“Losses” means, collectively, any and all claims, liabilities, losses, damages, costs, expenses, including reasonable fees and disbursements of counsel (except as herein limited) and any consultants or experts and expenses of investigation, obligations, liens, assessments, judgments, fines and penalties imposed upon or incurred by an indemnified party under this Agreement.
“Manufacturing Capacity” means MSX’s capacity to manufacture products (including, without limitation, the Products) using tooling and machines which are in some way used in the manufacture of the Products.
“Major Raw Materials” means Raw Materials constituting [***] percent ([***]) or more of the Price.
“Manufacturing Site” means MSX’s manufacturing site used for the Manufacture of the Products located at [***], or such other manufacturing facility as may be agreed in writing between the parties from time to time.
“Master Manufacturing File” means the documentary file created by MSX in accordance with cGMP containing information and data on the Product Specification, the purchase of Raw Materials (excluding the API), labelling, testing, packaging, quality control, storage, release and despatch data, formula, procedures and manufacturing records generated in connection with the manufacture of the Product.
“Milestone Payments” means the payments to be made by RB to MSX upon the Product Launch in the U.S. and first Product Launch of the Products within any country within the ROW as set out in Clause 7.10.
“Net Sales Value” means the invoiced sales price of the Products after taking the deductions specified in Schedule One attached to and incorporated by reference in this Agreement.
“Options” means RB’s option to make payments to MSX in accordance with Clause 7.7 in order to buy out its obligation to continue making payments of the Royalties.
“Order” shall have the meaning given in Clause 4.2.
“Packaging Specifications” means each of the specifications for the packaging of the Products in a pouch/sachet (but for the avoidance of doubt not cartoned) as annexed in Schedule Four Part A and as listed in the relevant Quality Agreement signed for the purposes of identification by each party, as amended from time to time.
“Patents” means:
(i) the patents and applications for the patents in the MSX Arising Intellectual Property Rights and Existing Intellectual Property Rights and rights of a similar nature in the Territory and relating to the Products, the particulars of which are set out in Schedule Two attached to and incorporated by reference in this Agreement; and
ii) the patents granted in the Territory pursuant to the patent applications in (i) above including any patents for Improvements.
“Pharma Price Index” means the Producer Price Index for Finished Goods, Pharmaceutical Preparations, Series Id: WPU0638, issued by the Bureau of Labor Statistics, U.S. Department of Labor, or comparable successor index.
“Price” means the price (described by reference in Schedule One to stock keeping units) to be charged by MSX to RB in respect of any Products supplied pursuant to this Agreement as set out in Clause 7.1 (for the avoidance of doubt the Price shall not include any Milestone Payments).
“Price Change” means the documented price change in MSX’s manufacturing costs from the preceding Year’s manufacturing costs of MSX. For purposes of this definition, change in manufacturing costs includes all costs to manufacture the Products, including, without limitation, changes in the cost of Raw Materials (excluding the API) (“Cost of Raw Materials”), energy, transportation, legal and regulatory costs. The changes in manufacturing costs shall exclude labour and overhead allocation.
“Product Launch” means the first date that the Products are supplied by RB or its agents to a customer in a country within the Territory, save that for the avoidance of doubt such date shall not be before the date on which the Products have been approved and rated by the relevant Regulatory Authority in that country and RB or its Affiliates has obtained a Health Registration in that country.
“Product Specification” means each of the specifications for the Products annexed in Schedule Four Part A and as listed in the relevant Quality Agreement signed for the purposes of identification by each party, as amended from time to time by mutual written agreement of the parties, and in accordance with which MSX shall manufacture and supply the Products, and which, for the avoidance of doubt, shall from the point of MSX’s compliance with its obligations at Clause 3.14 include the Serialized Product Specifications (as defined in Clause 3.11).
“Products” means those products which are listed in Schedule Three attached to and incorporated by reference in this Agreement or as otherwise agreed by the parties in writing, together with such additional, improved, modified or replacement products as shall be agreed between the parties from time to time in writing as are manufactured by MSX under this Agreement and wherever “Products” is referred to in this Agreement it shall refer to the relevant Product or all Products as the case may be, as listed in Schedule Three.
“Quality Agreement” means the manual referred to in Schedule Six attached to and incorporated by reference in this Agreement, in respect of each of the Products (supplied by RB to MSX and signed for the purposes of identification by each party) containing the technical information for manufacture of the Products along with any and all manufacturing policies of RB together with such manufacturing policies which may be provided by RB or its Affiliates to MSX in writing prior to the Commencement Date or as periodically updated by mutual written agreement of the parties.
“Quality Manager” means in respect of the Product the person (independent of the person responsible for production) responsible for the inspection and testing of the Raw Materials, the Film and the Product and for confirming that the manufacture of the Product is in compliance with the requirements of this Agreement; and in respect of the API the person (independent of the person responsible for production) responsible for the inspection and testing of the raw materials used in the manufacture of the API, and the API, and for confirming that the manufacture of the API is in compliance with the requirements of this Agreement.
“Raw Materials” means the API, excipients, reagents, solvents, packaging, labelling and other materials used by MSX in connection with the manufacture of the Products.
“Regulatory Authority” means any governmental body or agency responsible for the regulation of narcotics or the granting of any health or pricing approvals, Health Registration or reimbursement prices required to be obtained before the Products can be lawfully advertised, imported, distributed, marketed or sold in the Territory or any part thereof (including, without limitation, the FDA in the U.S., the Medicines and Healthcare products Regulatory Agency in the UK and the Transparency Commission in France).
“ROW” means the Territory excluding the U.S.
“Royalty” means the payments to be made by RB to MSX in respect of the Net Sales Value of the Products as set out in Clause 7.4.
“Sub-Contractors” means in respect of each of the Products the sub-contractor (if any) listed in Schedule Five attached to and incorporated by reference in this Agreement together with any other person or company proposed by MSX as a sub-contractor and agreed to in writing by RB, which agreement shall not be unreasonably withheld, conditioned or delayed.
“Term” shall have the meaning set forth in Clause 2.1.
“Territory” means the world.
“Tooling” means any moulds, machines, or equipment required for and specific to the manufacture of the Products under the terms of this Agreement
“U.S.” means the United States of America.
“Year” means the period from the Commencement Date until the 31 December in the calendar year of the Commencement Date and shall thereafter constitute any period of 365 days (or 366 days if the period includes 29th February) commencing on the 1st day of January in any calendar year.
1.2. Unless otherwise indicated, references to clauses and schedules are references to clauses and schedules in this Agreement.
2. TERM
2.1 This Agreement shall be effective from the Commencement Date and shall continue until the latter of (i) the expiration of the last to expire of the Patents; or (ii) in the event that the Patents do not proceed to registration (or are otherwise declared void, terminated or revoked during the seven year period beginning with the Commencement Date), the expiration of the seven year period beginning with the Commencement Date; unless terminated by either party in accordance with the provisions of Clause 17 (the “Term”).
2. MANUFACTURE AND SUPPLY
3.1 During the Term, MSX shall manufacture and supply RB’s requirements of the Products on an exclusive basis and shall manufacture the Products:
3.1.1 in accordance with cGMP, the Product Specification and the processes set out in the Quality Agreement;
3.1.2 in accordance with any legislation applicable to the manufacture of the Products (including without limitation legislation and standards applicable to environmental protection such as waste disposal and any legislation or regulations regarding ePedigree requirements as and when enforced as further described in Clause 3.13); and
3.1.3 subject to Clause 3.3 below, at the Manufacturing Site.
3.2 MSX shall not:
3.2.1 use any site other than the Manufacturing Site for the manufacture of the Products (including the process, plant or equipment used in the manufacture of the Products), without the prior written consent of RB, such consent not to be unreasonably withheld, conditioned or delayed, and RB to cooperate reasonably with MSX in respect of any proposals to utilise new manufacturing sites; and
3.2.2 at any time during the Term carry out any activities that MSX actually knows or should reasonably know shall prejudice the quality, safety or efficacy of the Products.
3.3 The parties acknowledge that MSX intends to use its facility located at [***] as a manufacturing site for the manufacture of the Products, and RB hereby consents to such site transfer subject to RB conducting a quality review of the [***] site in accordance with Clause 3.2.1.
3.4 MSX shall:
3.4.1 only use API supplied from RB in the manufacture of the Products;
3.4.2 ensure that all personnel employed by MSX in the manufacture of the Products are suitably trained, experienced and competent for their respective functions; and
3.4.3 monitor, account for and keep RB regularly informed of the usage and waste of API and MSX shall ensure that in the manufacture of the Products MSX does not waste any more than a set percentage of the API to be determined by the parties in writing acting reasonably and assuming efficient manufacture of the Products.
3.5 Subject to Clause 7.12, MSX shall be entitled to obtain the Raw Materials and other components for the manufacture and delivery of the Products from qualified suppliers of its own choosing. In the event that MSX obtains Raw Materials from a third party supplier, MSX shall notify RB and MSX shall consider in good faith (but not be bound by) any reasonable objection by RB timely delivered to MSX as to the qualification of such third party supplier; provided, however, that (subject to Clause 7.12) RB shall have no right to object to any financial arrangement reached between MSX and such third party supplier, which shall be determined at the sole discretion of MSX. MSX shall ensure that such Raw Materials and other components are of the requisite standard to comply with the Product Specification and any applicable laws, codes of practice and regulations and the terms of this Agreement. Periodically, MSX will share with RB a list of all suppliers, so RB may voice to MSX any concerns in connection with them.
3.6 Unless otherwise agreed with RB in writing and save for the fact that RB shall be responsible for cartoning the Products once delivered to RB, MSX shall operate on a full service basis (meaning that MSX shall be responsible for the purchase of all Raw Materials (except for API which shall be supplied by RB in accordance with Clause 4.3 hereof) and the supply of the Products in individual sachet form to RB or its nominee). RB shall only be invoiced for the Cost of Goods Price as set out in Schedule One which shall be inclusive of such costs and expenses, including FCA (Incoterms 2000) delivery.
3.7 For the purposes of ensuring that RB has the full protection of its business interests and the ongoing benefit of its and any of its Affiliates’ Intellectual Property Rights, and subject to applicable laws, MSX covenants with RB that during the Term it will not, so far as it is aware, without the prior written consent of RB, whether directly or indirectly and whether alone or in conjunction with or on behalf of any other person and whether as principal, shareholder, director, employee, agent, consultant, partner or otherwise:
3.7.1 subject to Clause 3.9, canvass, solicit or approach, or cause to be canvassed, solicited or approached, any person for orders of products within the Field who RB informs MSX in writing is or was at any time during the Term:
3.7.1.1 negotiating with RB or any of its Affiliates for the supply by RB or any of its Affiliates of the Products; or
3.7.1.2 an actual customer of RB or any of its Affiliates in respect of the Products;
3.7.2 interfere, or seek to interfere, with the continuation of supplies to RB or any of its Affiliates from any supplier who RB informs MSX in writing has been supplying goods to RB or any of its Affiliates at any time during the Term if such interference causes or would cause that supplier to cease supplying, or materially reduce its supply of those goods; and
3.7.3 directly solicit or entice, or endeavour to solicit or entice, away from RB or its Affiliates, any person employed in a managerial, supervisory, technical or sales capacity by, or who is or who was a consultant to, RB or its Affiliates at a time during the Term; provided, that, general solicitations not directed to a specific individual shall not constitute a breach hereof; and
3.7.4 develop (subject to Clause 3.9), manufacture, market or sell any product within the Field.
3.8 For the purposes of ensuring that MSX has the full protection of its business interests and the ongoing benefit of its and any of its Affiliates’ Intellectual Property Rights, and subject to applicable laws, RB covenants with MSX that during the Term it will not, without the prior written consent of MSX whether directly or indirectly and whether alone or in conjunction with or on behalf of any other person and whether as principal, shareholder, director, employee, agent, consultant, partner or otherwise:
3.8.1 subject to Clause 6.5 and Clause 3.9, canvass, solicit or approach, or cause to be canvassed, solicited or approached; any person for the manufacture of the Products in the Field;
3.8.2 interfere, or seek to interfere, with the continuation of supplies or Raw Materials to MSX or any of its Affiliates from any supplier who has been supplying supplies or Raw Materials to MSX or any of its Affiliates at any time during the Term if such interference causes or would cause that supplier to cease supplying, or materially reduce its supply of those goods;
3.8.3 directly solicit or entice, or endeavour to solicit or entice, away from MSX or its Affiliates, any person employed in a managerial, supervisory, technical or sales capacity by, or who is or who was a consultant to, MSX or its
Affiliates at a time during the Term; provided, that, general solicitations not directed to a specific individual shall not constitute a breach hereof; and
3.8.4 develop (subject to Clause 3.9), manufacture, make, have made, market or sell Products outside the Field.
3.9 Each of RB and MSX agrees that at least one year prior to the expiration of the Term it will notify the other of its intent to renew or not to renew this Agreement. In the event that either party elects not to renew this Agreement upon the expiration of the Term, notwithstanding the restriction contained in Clauses 3.7.1 and 3.7.4 as to MSX and Clauses 3.8.1 and 3.8.4 as to RB, during the last twelve (12) months of the Term of this Agreement: (i) RB shall have the right to develop Products outside the Field and to canvass, solicit and approach, and cause to be canvassed, solicited and approached, any person for the manufacture of the Products in the Field to commence after the expiration of the Term, and (ii) MSX shall have the right to develop products in the Field and to canvass, solicit and approach, and cause to be canvassed, solicited and approached, any person for the manufacture of products in the Field to commence after the expiration of the Term. Notwithstanding anything to the contrary contained in this Agreement, no notice by either party under this Clause 3.9 shall reduce or impair the respective obligations of each of the parties under this Agreement for the remainder of the Term except as set forth in this Clause 3.9.
3.10 At the option of RB delivered by written notice to MSX at least ninety (90) days prior to the expiration of the Term, MSX shall continue to supply the Products to MSX in accordance with the terms and conditions of this Agreement for a period determined by RB not to exceed six (6) months after the expiration of the Term.
3.11 The parties agree to use their best efforts to implement as soon as possible (including prior to Launch, or if this is not possible, as soon as possible thereafter) an electronic pedigree system in connection with the manufacture and supply of the Products which would satisfy the expected legal requirements of the E-Pedigree regulations of the State of California for the electronic tracking and tracing of prescription drugs through the supply chain, California Business and Professions Code § 4034 et seq. (the “E-Pedigree Regulations”) (currently scheduled to become effective as of January 1, 2011) and in accordance with the Serialized Product Specifications (as defined below). The parties agreement set forth in the preceding sentence shall apply to the manufacture and supply of the Products throughout the Territory; provided that such manufacture and/or supply, as the case may be, is not in violation of any applicable law, code of practice or regulation in any country in the ROW in which instance it shall not apply in such country in the ROW. To that end, RB intends to purchase, or have purchased, technology (including equipment and software) from a third party manufacturer (the “E-Pedigree Manufacturer”) which consists of a pouch image acquisition and collating system and affixes a unique serialization identifier on the packaging of each saleable unit of the Product/ Part of such technology will be installed at RB’s third party packager of the Product (the “Packager Serialization Technology”) and part of such technology will be purchased by and installed at the facility of MSX’s third party Foil supplier (the “Foil Supplier”) for the Product (the “Foil Serialization Technology”) (the Foil Serialization Technology together with the Packager Serialization Technology, shall collectively be referred to as the “Serialization Technology”). The specifications for serialization of the Product using the Foil Serialization Technology (the “Serialized Product Specifications”) are set forth in Schedule Four Part A.1 and shall not be modified without the prior approval of RB. RB acknowledges that the Foil Serialization Technology is newly developed by the E-Pedigree Manufacturer and has never before been installed, tested, or validated by the E-Pedigree Manufacturer and, as a result, the parties are at the time of signing this Agreement unable to guarantee the performance of the Foil Serialization Technology or the effectiveness, value, safety, merchantability or fitness for any particular purpose of the Foil Serialization Technology, or any part thereof, or its impact on the manufacture or supply of the Products under this Agreement. MSX agrees to coordinate the purchase, installation, testing, validation and qualification of the Foil Serialization Technology by the Foil Supplier and to use its best efforts to ensure that the Foil Serialization Technology is purchased, installed, tested, validated and qualified, in order to enable MSX to manufacture and supply the Products in accordance with the Product Specifications (the “Serialized Products”) for Launch (or if this is not possible as soon as soon as possible thereafter). Thereafter MSX shall manufacture and supply the Serialized Product in accordance with the Serialized Product Specifications subject to the following conditions, which conditions shall be and remain in effect only until such time as (i) MSX shall be required by state law to comply with the E-Pedigree Regulations, or be required by federal law to comply with a comparable electronic pedigree prescription drug supply chain tracking and tracing system, in connection with the manufacture and supply by MSX of Serialized Products under this Agreement (the “Effective E-Pedigree Regulations”) in accordance with the provision of Clause 3.13 or (ii) MSX has complied with its obligations under Clause 3.14 and successfully manufactured such volume of Serialized Products (as specified in Clause 3.14) in accordance with the Serialized Product Specification such that MSX shall thereon be responsible for ensuring all Products produced
under this Agreement comply with the Serialized Product Specifications (and MSX shall no longer be able to produce to the Non-Serialized Product Specifications (as defined below)), whichever is the earlier:
3.11.1 In the event that the Foil Serialization Technology fails or causes a material adverse impact on the manufacture and supply of the Film or the Products or the timely delivery of same, RB and MSX agree to suspend the use of the Serialization Technology in the manufacture and supply of the Product until the cause of such material adverse impact has been cured or the parties agree in writing to abandon the Serialization Technology, and MSX shall thereafter resume the manufacture and supply of the Products which meet the Product Specifications not including the Serialized Product Specifications, (the “Non-Serialized Product Specifications”) in accordance with the terms of this Agreement. MSX shall promptly notify RB upon becoming aware of any such failure or material adverse impact. During the period while MSX is manufacturing and supplying the Product (including any Serialized Product or Non-Serialized Product) under this Clause 3.11, MSX shall arrange with the Foil Supplier to maintain an appropriate rolling amount of inventory of Foil (the “Foil Stock”) which is reasonably anticipated as necessary to avoid any material delay In the manufacture and supply of Product in compliance (with the Non-Serialized Product Specifications required as a result of such failure or material adverse impact. RB shall reimburse MSX for the cost of any unused Foil Stock providing that MSX has used reasonable efforts to ensure such unused Foil waste is kept to a minimum;
3.11.2 MSX shall bear no cost for the purchase, installation, implementation, testing, validation or qualification of the Serialization Technology and RB agrees that the Cost of Goods Price shall be simultaneously increased to reflect any and all direct increases incurred by MSX (without mark-up thereof by MSX and based upon supporting documentation from MSX) during the Term in the purchase of Foil manufactured using the Foil Serialization Technology (the “Serialized Foil”), whether as an increase in the cost of purchase of the Serialized Foil and/or as an amortization charge by the Foil Supplier for the purchase, installation, implementation, testing, validation, and/or qualification of the Serialization Technology. MSX estimates that the Cost of Goods Price will be initially increased by the sum of (i) $[***] per unit of Product for the cost associated with the purchase by MSX of the Serialized Foil plus (ii) $[***] per unit of Product for the amortized cost of purchasing the Foil Serialization Technology by the Foil Supplier based upon the purchase by MSX of Serialized Foil required to make [***] of Serialized Products (a total estimated initial cost increase per unit of Product of $[***]). The parties agree that if the Cost of Goods Price is initially increased for the amortization of the cost of purchasing the Foil Serialization Technology by the Foil Supplier, when such cost is fully amortized by the Foil Supplier, or if RB has otherwise fully paid MSX or the Foil Supplier all sums due to the Foil Supplier in respect of the Foil Serialization Technology, the Cost of Goods Price per unit of Serialized Product would thereafter be reduced by an amount equal to any such increase in the Cost of Goods Price for the amortized cost of purchasing the Foil Serialization Technology by the Foil Supplier. Such estimates shall not be binding on MSX and shall be adjusted and finalized by MSX upon receipt by MSX from the Foil Supplier of all final costs incurred in purchasing the Foil Serialization Technology, producing and supplying the Serialized Foil and all other related costs and expenses of the Foil Supplier. In the event of any suspension or abandonment of the manufacture and supply of the Serialized Product in accordance with Clause 3.11.1, the Cost of Goods Price for the purchase of all Products manufactured and supplied following such suspension or abandonment in accordance with the Non-Serialization Specifications shall revert to the Cost of Goods Price in effect prior to such increase and any unamortized costs for the purchase of the Foil Serialization Technology shall be paid by RB; provided, however, that RB may exercise any right and remedy (and MSX shall assist RB therewith) against the Foil Supplies to dispute such payment in the event that such suspension is not due to a failure of the Serialization Technology but is due to the fault of the Foil Supplier, including failure by the Foil Supplier to manufacture the Foil in accordance with the Serialized Foil specifications agreed to by MSX and the Foil Supplier;
3.11.3 The provisions under Clause 7.14 relating to RB’s rights to obtain pricing for Major Raw Materials from third parties, and MSX’s obligations to engage any other supplier or obtain a price reduction from its then-current Foil supplier in the event that a Price Change exceeds the Pharma Price Index shall not apply to any Price Change resulting from the purchase, installation, implementation, testing, validation, and/or qualification of the Foil Serialization Technology until RB has complied with its obligations under Clause 3.11.7 in respect of identifying and qualifying an alternative secondary supplier for the Serialized Foil and such engagement of an alternate Foil supplier or obtaining a, price reduction from its then current Foil supplier would not result in a breach of the agreement between MSX and its then current Foil supplier. MSX shall remain obliged to show documentary evidence of the Price Change;
3.11.4 MSX makes no representation or warranty with respect to the Serialization Technology including any representation or warranty under Clause 9 as it may relate to the Foil Serialization Technology;
3.11.5 MSX shall be excused from any and all unfulfilled manufacturing, supply and delivery performance obligations under this Agreement resulting from, relating to or in connection with Foil Serialization Technology including the purchase, installation, implementation, testing, validation, qualification and/or operation of the Foil Serialization Technology; provided, however, that nothing in this Clause 3.11.5 shall limit MSX’s obligation to manufacture and supply Product in compliance with the Non-Serialized Product Specifications as soon as possible in accordance with Clause 3.11.1 in the event and for such period of time that the parties determine to suspend the manufacture of Serialized Product and, in the event that the parties determine to terminate and abandon the manufacture of Serialized Product in accordance with Clause 3.11.1; for the remainder of the Term or the date upon which the E-Pedigree Regulations become effective, whichever is earlier;
3.11.6 MSX shall not be in default or breach under this Agreement, and RB shall not be entitled to withhold payment for non-conforming Products, or to terminate this Agreement for any reason with respect to any delay or incomplete delivery of, failure to deliver or delivery of non-conforming Products relating to, as a result of or in connection with the Foil Serialization Technology (including the purchase, installation, implementation, testing, validation, qualification or failure of the Serialization Technology), except to the extent caused by the breach by MSX of any of its obligations under this Clause 3.11;
3.11.7 RB and MSX agree to use commercially reasonable efforts to qualify an FDA approved secondary supplier of the Serialized Foil as soon as practicable after the Commencement Date. It is acknowledged that, due to importance of obtaining a secondary supplier of the Serialized Foil in order to reduce the risk of failure to supply the Serialized Foil, both parties will use their best efforts to qualify such secondary supplier within one (1) year of the FDA approval of the Product or as soon as possible thereafter. The parties further agree that RB shall be responsible for payment to MSX of all costs and expenses incurred by MSX in connection with the qualification of any secondary and/or replacement supplier of Serialized Foil in connection with the manufacture and supply of the Products under this Agreement if RB continues to require that the Products be manufactured and supplied using the Serialization Technology, or any part thereof, or substitute therefore, including without limitation, the cost of the purchase, installation, implementation, testing, validation, and qualification of the Foil Serialization Technology by the secondary and/or replacement supplier.
3.11.8 In addition to the exceptions and exclusions set forth in the foregoing provisions of this Clause 3.11, notwithstanding anything to the contrary contained in this Agreement or otherwise, none of the provisions of Clauses 5.5, 6.5, 6.6, 6.7, 7.9, 10.2, 13.10, 16.2, 17.3.4, 17.3.6, and 17.4 shall during the course of manufacture under this Clause 3.11 apply to the Foil Serialization Technology or any event or matter covered therein relating to, resulting from or in connection with the purchase, installation, implementation, testing, validation, qualification and/or failure of the Foil Serialization Technology, and MSX shall have no obligations or responsibilities with respect to the Foil Serialization Technology except as expressly set forth in this Clause 3.11 which for the avoidance of doubt expressly includes MSX’s obligations to manufacture and supply Products in compliance with Non-Serialized Product Specifications as soon as possible in accordance with Clause 3.11.1 in the event and for such period of time that the parties determine to suspend the manufacture of Serialized Product, and for the remainder of this Clause 3.11 in the event that the parties determine to terminate the manufacture of Serialized Product in accordance with Clause 3.11.1.
3.12 RB acknowledges that MSX shall have no interest in the Serialization Technology and that, MSX shall have no obligations to transfer or grant to RB, or to arrange the transfer or grant to RB of, any interest in the Serialization Technology under any circumstances at any time whether during the Term or upon any expiration or termination of this Agreement for any reason, including, without limitation, the Foil Serialization Technology, and/or any Arising Intellectual Property Rights therein of the Foil Supplier under Clause 15 except to the extent such interests or Arising Intellectual Property Rights are in the possession or control of MSX and not subject to any third party restrictions on such transfer or grant to RB.
3.13 For the avoidance of doubt, in the event that MSX is required to comply with Effective E-Pedigree Regulations after the Commencement Date, MSX shall (i) use commercially reasonable efforts to deliver the Product serialization data produced by MSX in compliance with the Effective E-Pedigree Regulations in a format which is compatible with RB’s Product distribution system; and (ii) from the date on which the Effective E-Pedigree Regulations come into effect (currently scheduled to become effective as of January 1, 2011) be fully responsible for ensuring all Products manufactured and supplied under this Agreement comply with all legislation and regulatory requirements including the Specifications and Serialized Product Specifications as may be amended to ensure compliance with the Effective E-Pedigree Regulations (including without limitation the envisaged requirement to ensure all Products are serialized and thereafter scanned before leaving the Manufacturing Site) and, for the avoidance of doubt, from this date MSX shall under no circumstances
(including without limitation those set out Clauses 3.11.1 to 3.11.8) be released from any liability arising from the failure to manufacture and supply the Products to such Specifications in accordance with the terms of this Agreement.
3.14 Following the date upon which each of the following has occurred (the “Product Serialization Acceptance Date”): (i) successful implementation of the Foil Serialization Technology; (ii) successful production of the Serialized Products in compliance with the Serialized Product Specifications at scale and consistent with applicable Product Order patterns for an uninterrupted period of three (3) consecutive months or a period of six (6) consecutive months after the Product Launch (whichever is the latter); and (iii) qualification of a secondary supplier of Serialized Foil in accordance with Clause 3.11.7; the Product Specification for the Products shall thereupon be permanently amended to include the Serialized Product Specifications. For the avoidance of doubt, from and after the Serialization Acceptance Date, MSX shall be responsible for ensuring that the Products manufactured and supplied under this Agreement are in compliance with the Serialized Product Specifications, and MSX shall be responsible for any failure to comply with such Serialized Product Specifications and, for the further avoidance of doubt, from and after the Product Serialization Date MSX shall under no circumstances (including without limitation those set out Clauses 3.11.1 to 3.11.8) be released from any liability arising from the failure to manufacture and supply the Products to such Serialized Product Specifications in accordance with the terms of this Agreement.
4. FORECASTS, ORDERS AND SUPPLY OF THE API
4.1 No less than one (1) month prior to the end of every calendar month, RB shall provide (or cause to be provided from its Affiliates) a forecast of its requirements for the Products for the [***] months (a “Forecast”), By way of example, this means that the Forecast for [***] to [***] (inclusive) of any year shall be provided by no later than the end of [***] in the previous year, and the subsequent Forecast for [***] to [***] of any year shall be provided by no later than the end of [***] in the previous year.
4.2 In respect of the [***] months of the Forecast, RB shall specify the date by which the Products are requested to be delivered (“Delivery Date”). RB’s requirements as set out in the [***] months of the Forecast shall be fixed and shall constitute a firm order binding on MSX (subject to the terms and conditions of this Agreement) for the delivery of, and on RB for the purchase of, those Products specified in the [***] months of the Forecast by the Delivery Date with delivery in accordance with Clause 5.1 (an “Order”). Once MSX receives the Forecast, MSX shall ensure that it has sufficient Raw Materials, packaging components and other materials necessary to manufacture RB’s requirements for Products as set out in the Order, and MSX shall use commercially reasonable efforts to acquire sufficient Raw Materials, packaging components and other materials necessary to manufacture [***] percent [([***]%)] of RB’s requirements as set out in the remaining [***] months of the Forecast. For the avoidance of doubt this means that the Forecast given at the end of [***] shall be a binding Order for [***] and the Forecast given at the end of [***] shall be a binding Order for [***]. To the extent that the Forecast given in [***] would increase the Order for [***] as originally set in [***], MSX agrees to liaise with RB and use reasonable endeavours to meet such increase but failure to supply such increase shall not in any way constitute a breach by MSX of this Agreement and shall not constitute a failure by MSX to deliver an Order on time for the purposes of Clause 6.4. Notwithstanding anything to the contrary contained in this Agreement, MSX shall be under no obligation to fill any Order that is for less than [***] units of a Product (the “Minimum Purchase Requirement”). RB shall have the right to delay the issuance of any firm Order for a reasonable period of time in order to combine such Order with one or more subsequent Orders for the purpose of meeting the Minimum Purchase Requirement (meaning that in order to meet the [***] unit Minimum Purchase Requirements RB can (subject to compliance with Clause 7.12) combine Orders for the same dose Product for different countries (such as [***] 2mg dose units for the UK and [***] 2mg dose units for the US (which therefore require different packaging requirements chargeable under Clause 7.3.2)) but cannot combine orders for different dose Products (such as [***] 2mg dose units and [***] 8mg dose units)).
4.3 RB shall supply, or arrange the supply of, API that conforms to the API Specification to MSX at the Manufacturing Site free of charge on the dates and in such quantities as are required by MSX for manufacture of the Products in the Forecasts and in connection with manufacturing validation and site transfer, together with the API’s Certificate of Analysis and Certificate of Compliance. Save as may be amended by the mutual written agreement of the parties in accordance with the terms of this Agreement, such supply shall be made by RB to MSX DDP (Incoterms 2000) and on or before the delivery dates reasonably required by MSX in writing. RB will promptly notify MSX of any changes to the safety and handling procedures in relation to the API that are required by applicable law or Regulatory Authorities after the Commencement Date, and MSX shall comply with such changes with respect to all future Orders placed by RB at least ninety (90) days following receipt of notice thereof, or such earlier time as required by applicable law or Regulatory Authority. The purchase orders by MSX for API shall be made and filled in accordance with the procedure specified in Schedule Seven. Subject to the terms of this Agreement, MSX shall only use the API to manufacture and test the Product and for no other purpose whatsoever.
4.4 MSX shall test each batch or stock of the API delivered to MSX in accordance with the testing procedure set out in the Schedule Eight to determine its conformance with the necessary amounts and API Specification or for contamination during transit. If in the reasonable opinion of MSX, MSX determines that such API is contaminated or does not meet the API Specification or necessary amounts, MSX shall within twenty-one (21) days from the date of completion of such tests notify RB in writing of such defect or non-conformance, including the test results supporting MSX’s opinion.
4.5 If RB agrees that the API is contaminated or does not meet the API Specification, RB shall at no charge to MSX replace the defective or non-conforming API with API that meets the API Specification. If RB disagrees with the alleged defective or non-conformity of the API, samples of the alleged defective or non-conforming API shall be retested by an independent laboratory, mutually agreed upon by the parties in writing, to determine compliance with the API Specification. MSX and RB shall be bound by the results of such independent laboratory testing. The costs incurred in connection with independent laboratory’s testing of the API shall be borne by MSX if the API in question is found to conform to the API Specification or not defective and by RB if it is found not to conform to the API Specification or be defective. Any delay in the manufacture or supply of Products resulting from RB’s failure or delay in supplying API in accordance with the API Specification or MSX’s good faith reasonable belief pursuant to Clause 4.4 and this Clause 4.5 that the API does not meet the API Specifications or is defective, shall not constitute a default under or breach of this Agreement. The parties agree that in the event that the API is found to be defective, RB shall be responsible, at its costs, to identify and implement such remedial action as is necessary to rectify the issue and ensure that the API meets the API Specification.
4.6 Notwithstanding the terms of any DDP delivery (or any other delivery) of the API by RB to MSX, legal title to the API shall remain with RB after delivery to MSX. MSX shall use reasonable efforts to ensure proper storage and handling of the API once delivered to MSX. Risk of damage to, or loss of, the API shall pass from RB to MSX upon delivery as set out in Clause 4.3. MSX shall retain casualty insurance coverage for the expected inventory of the API (amounts expected to be supplied to MSX by RB for manufacture of the Product in the amounts set forth in the Forecasts) to cover damage to or loss of the API for so long as the API remains at MSX’s risk.
4.7 In the event that MSX manufactures Products which cannot be sold due to latent defects in the API supplied (and such defects are not caused by MSX’s negligent storage or handling), RB shall remunerate MSX for its costs of manufacturing such Products. In the event that MSX manufactures Products which cannot be sold due to latent defects in the API caused by MSX’s negligent storage or handling, MSX shall remunerate RB for the Cost of Goods Price for such Products, to the extent such Cost of Goods Price has been paid to MSX for such Products.
5. DELIVERY OF THE PRODUCTS
5.1 Unless otherwise specifically stated, the Delivery Date shall be the date by which the Order shall be made available FCA (Incoterms 2000) at MSX’s loading dock at the Manufacturing Site, whereupon MSX shall be entitled to invoice RB for Cost of Goods Price in respect of the Products so delivered. An Order may request boxed shipping at an additional handling charge beyond the Cost of Goods Price. No Orders shall be shipped in boxes unless expressly agreed to by MSX in writing. Legal title to the Products and risk of damage to, or loss of, the Products shall pass from MSX to RB upon being made available at MSX’s loading dock at the Manufacturing Site on the Delivery Date in accordance with Clause 5.7. Any invoices sent to RB under this Clause 5.1 shall specify the Price in respect of the Products delivered, the quantity of Products delivered, the date of delivery and the amount of VAT or other taxes due in respect of the Products delivered, together with any applicable transportation costs (if any) associated with delivery.
5.2 MSX shall not be liable for any delay or failure to deliver hereunder after the Products leave MSX’s loading dock at the Manufacturing Site as set out in Clause 5.1.
5.3 Each shipment of Product shall be delivered to RB with:
5.3.1 a Certificate of Analysis and Certificate of Compliance;
5.3.2 in accordance with the Quality Agreement; and
5.3.3 any other documentation required by any applicable rule, law or regulation having jurisdiction over the shipment and supply of the Products.
5.4 RB shall be entitled to reject any Product delivered to RB (or its nominee) without a Certificate of Analysis, Certificate of Compliance or other documentation required under any applicable rule, law or regulation.
5.5 MSX recognises that late delivery of the. Products may have an impact on RB’s obligations to its customers. MSX shall make all reasonable efforts to deliver Products by the Delivery Date requested by RB. The Delivery Date shall be reasonable based on MSX’s production capacity.
5.6 MSX shall manage any mutually agreed upon changes in writing to the Product Specification and the Packaging Specification, whilst maintaining the supply and delivery performance as set out herein. Changes to the Products shall be made with commercially reasonable speed of implementation, and meet the launch timings mutually agreed upon by the parties in writing or required by applicable law or Regulatory Authority. Inventory levels of Raw Materials, Film and the Products are to be communicated at least ninety (90) days prior to the change and usage agreed with RB in writing before the change is implemented. The parties shall agree in writing to the implementation date at least sixty (60) days prior thereto.
5.7 Legal title and risk in the Products shall pass to RB upon being made available FCA (Incoterms 2000) at MSX’s loading dock at the Manufacturing Site on the Delivery Date. MSX shall fully insure the Products (at a valuation based on MSX’s cost of manufacture plus the cost of API) for as long as they remain at MSX’s risk.
5.8 In the event there is an incomplete delivery of the Products to RB (or its nominee) pursuant to an Order, RB shall notify MSX in writing within twenty-one (21) days, identifying the amount of Product that has not been delivered. MSX shall use commercially reasonable efforts to rectify such incomplete delivery by supplying, the balance of the Products under such Order.
5.9 RB shall inspect and test the Products within thirty (30) calendar days of receipt thereof, and shall be entitled to reject such Products which do not conform to the Product Specification and withhold payment of the Cost of Goods Price for such non-conforming Products by giving written notice to MSX within forty (40) calendar days from receipt of such Products by RB.
5.10 Any written notice of rejection of the Products given by RB shall specify in sufficient detail the manner in which the Products fail to conform. If it is determined by written agreement between the parties (or, in the absence of written agreement of the parties, by an independent laboratory or consultant agreed upon by the parties in writing whose fees shall be paid by the non-prevailing party) that the non-conformity is due to:
5.10.1 damage to the Products caused by RB (or its nominee), including, without limitation, through improper Product storage or transit, after the delivery of the Products to RB (or its nominee), MSX shall have no liability to RB with respect thereto and RB shall promptly pay what is owed for such Products in accordance with the terms of this Agreement; or
5.10.2 the negligence of MSX or breach by MSX of the terms of this Agreement, then MSX shall credit RB’s account with the Cost of Goods Price invoiced for such non-conforming Products (or in the event the Cost of Goods Price has been withheld by RB, waive any right to claim the Cost of Goods Price for such non-conforming Products from RB under this Agreement). RB will either return such non-conforming Product to MSX, or lawfully destroy such non-conforming Products (in each case at MSX’s written option and cost).
6. CAPACITY, STOCK LEVELS AND TOOLING
6.1 Within six (6) months following the Commencement Date, and thereafter within the first calendar month of each Year, MSX shall provide to RB copies of its disaster recovery and contingency plans.
6.2 MSX shall inform RB when:
6.2.1 the Forecasts; and
6.2.2 any other third party orders for products other than the Products that use any tooling or machines which are used in the manufacture of the Products;
together meet or exceed [***] percent ([***]%) of the Manufacturing Capacity.
6.3 MSX represents and warrants that it will have the capacity to fill RB’s requirements for the Products set forth in any Order so long as the amount specified in the Order does not exceed [***] percent ([***]%) of the forecasted volume for such period as set out in the previous Forecast (or such other figure as RB and MSX may agree in writing from time to time). At RB’s reasonable written request, MSX shall provide RB with capacity information to demonstrate that the available capacity meets RB’s requirements. MSX shall promptly take commercially reasonable action to address to RB’s reasonable satisfaction any capacity issues identified in accordance with this Clause 6.3 and Clause 6.5.
6.4 MSX hereby agrees that, in the event that MSX’s success in meeting Orders (whether in terms of failure to meet either or both of the volume and/or the Delivery Date specified in the Orders) falls below [***] percent ([***]%) for any consecutive [***] period during which RB places less than [***] Orders (provided that in the case of any Order which exceeds [***] percent ([***]%) of the volume as set out for that period in the previous Forecast, MSX shall only be deemed to have failed to meet that Order for the purposes of this Clause 6.4 if it fails to deliver on the Delivery Date at least [***] percent ([***]%) of the volume set out in the previous Forecast), MSX shall thereafter hold [***] month stock of the Products, as set out in the latest Forecast, in advance of any Orders from RB.
6.5 In the event that:
6.5.1 MSX’s success in meeting Orders (whether in terms of failure to meet either or both of the volume and/or the Delivery Date specified in the Orders) falls below either (i) [***] percent ([***]%) for any consecutive [***] period during which RB places [***] Orders or more, or (ii) [***] percent ([***]%) for any consecutive [***] period during which RB places less than [***] Orders (provided that in the case of any Order which exceeds [***] percent ([***]%) of the volume as set out for that period in the previous Forecast, MSX shall only be deemed to have failed to meet that Order for the purposes of this Clause 6.5.1 if it fails to deliver on the Delivery Date at least [***] percent ([***]%) of the volume set out in the previous Forecast); or
6.5.2 if MSX is prevented from performance in view of an event of Force Majeure as set out in Clause 16.2;
then RB shall have the right to retain a temporary alternative supplier to manufacture and supply the Product, without prejudicing any other rights RB may have under this Agreement.
6.6 If RB elects to purchase the Product from an alternative supplier in accordance with Clause 6.5 above, MSX shall, if necessary:
6.6.1 grant RB and the alternative supplier a limited, personal, non-exclusive, royalty-free licence, without the right to sublicense, to use MSX’s applicable Intellectual Property Rights for such period as may be necessary for the alternative supplier to be able to supply Products pursuant to the Forecasts; and
6.6.2 use commercially reasonable efforts to promptly transfer such MSX Intellectual Property Rights under Clause 6.6.1 above subject to confidentiality and intellectual property agreements in the form reasonably satisfactory to MSX.
6.7 MSX shall provide all reasonable assistance regarding the identification, appointment and validation of any proposed alternative supplier of the Products in the event a supply issue under Clause 6.5 hereof arises. The parties agree to work together in good faith to procure the continued manufacture and supply of the Products from MSX as soon as reasonably practicable following the resolution of the manufacturing problem by MSX.
6.8 At the recommencement of the supply of the Product by MSX pursuant to Clause 6.7 above, the licence to use MSX Intellectual Property Rights to make, have made and import the Products shall cease immediately thereupon. Supply of all Products to RB by MSX will resume immediately thereupon. Except as otherwise provided in Clause 6.5 above, RB shall source the Products exclusively from MSX during the Term.
6.9 The provisions of Clause 6.5 and 6.6 shall not apply, and subject to Clause 5.9, RB shall not be entitled to withhold payment for Products, where a delay or failure to deliver arises due to the delay or failure of RB to deliver the quantities of API ordered by MSX, where the API delivered by RB fails to meet the API Specification or is contaminated, or is due to any other delay, fault or failure attributable to RB or any of its Affiliates or assigns and, in each case, MSX shall not be in default under or breach of this Agreement for any corresponding failure or delay in the manufacture or delivery of Products.
6.10 MSX represents and warrants that, subject to Clause 6.12 and the receipt of binding Orders from RB for such stock materials, it will maintain sufficient stock levels of the Film (which subject to Clause 6.11 below shall be no less than [***] months) to provide flexibility and to respond in a commercially reasonable manner to increases in RB’s demand.
6.11 MSX will use commercially reasonable efforts to carry out such stability testing as is necessary to demonstrate that the storage of the Film (whether in the form of Master Rolls or in Daughter Rolls (being a Master Roll divided into approximately [***] equal rolls)) in accordance with Clause 6.8 shall not adversely affect the manufacture of the Products and that the Products will remain within the Product Specification and the Packaging Specification. If MSX is unable to demonstrate that the storage of the Film for [***] months or more shall not adversely affect the manufacture of the Products and/or the maintenance of the Products within the Product Specification and the Packaging Specification, it will use commercially reasonable efforts to obtain a suitable shorter duration of commercially reasonably possible storage under the circumstances and the duration specified in Clause 6.10 shall be adjusted accordingly.
6.12 RB warrants and represents that it shall reimburse MSX for all reasonable third party costs incurred by MSX in storing the Film and carrying out the stability testing as specified in Clauses 6.10 and 6.11, respectively. Such costs shall be invoiced by MSX to RB following MSX incurring the obligation to make payment of such costs and these invoices shall be paid by RB within the time set forth in such invoices, but in no event later than thirty (30) days from receipt thereof.
6.13 Where any Tooling is provided or funded by RB, if any (including in accordance with the provisions of Clause 15.17), ownership, title and interest in such Tooling shall at all times belong to RB and MSX shall throughout the Term keep and maintain the sign and/or sticker on the Tooling indicating the sole ownership of the property of RB.
7. PRICE AND PAYMENT
7.1 The price for the Products (the “Price”) shall be as set out in Clause 7.2 and all references to sums payable shall be in U.S. dollars (USD) unless specifically indicated to the contrary in this Agreement.
7.2 The Price payable by RB to MSX for the Products shall be the Cost of Goods Price for the Year of manufacture, subject to minimum Order price adjustments and additional packaging fees, if any, in accordance with Clause 7.3 below.
7.3 RB agrees that, during the Term, the Price for each of the Products shall be adjusted as follows:
7.3.1 the Price for each Product shall be increased in the event that RB fails to satisfy the minimum Order requirements for each Order as set forth below:
(i) each Order that is for [***] or more, but less than [***] units of a Product, the Price for each such Product shall be increased by [***] U.S. dollars (USD$[***]); and
(ii) each Order that is for less than [***] units of a Product, the Price for each such Product shall be increased by [***] U.S. dollars (USD$[***]); and where in this Clause 7.3 Order shall mean any Order composed of the same dose Product for different countries (such that a requirement for [***] 2mg dose units for the UK and [***] 2mg dose units for the US would be an Order for [***] units) but shall not include any combination of orders for different dose Products (such that a requirement for [***] 2mg dose units and [***] 8mg dose units would be considered as two separate Orders for [***] units each).
7.3.2 In the event that any Order requests more than one packaging for the Products covered by such Order, RB shall pay a [***] amount for each additional packaging request in the amount of [***] Dollars (USD $[***]), regardless of the number of units of Product covered by such new packaging request (the “Packaging Fee”). For the avoidance of doubt, the parties agree that any Order that is for [***] units of a Product or more shall not be adjusted as to price per each Product by a request under such Order for multiple packaging of such Products but RB will pay any applicable Packaging Fees for such Order.
7.4 Subject to Clauses 7.5 to 7.7, in addition to the fees under Clause 7.1, RB shall pay to MSX a royalty of the sum of the following:
7.4.1 [***] of the Net Sales Value of the Products sold during the Term in the U.S. up to a maximum annual royalty of USD$[***] ([***] U.S. dollars) per Year of sale (pro rated accordingly for the period from the Product Launch of
the Product in the U.S. to the 31st of December in the Year of the Product Launch in the U.S. and from the 1st of January until the expiry of the Royalty obligations in accordance with Clauses 7.5 in any Year where those obligations expire, if applicable); and
7.4.2 [***] of the Net Sales Value of the Products sold during the Term in the ROW up to a maximum annual royalty of GBP£[***] ([***] Pounds Sterling) per Year of sale (pro rated accordingly for the period from the Product Launch of the Product in the ROW to the 31st of December in the Year of the Product Launch in any country within the ROW and from the 1st of January until the expiry of the Royalty obligations in accordance with Clause 7.6 in any Year where those obligations expire, if applicable).
7.5 The obligations to pay Royalties as set out in Clause 7.4.1 above shall end upon the occurrence of:
7.5.1 the expiry of all of the Patents in the U.S. and of all patents which issue in the U.S. in respect of any Improvements relating to the MSX Arising Intellectual Property Rights and/or Existing Intellectual Property Rights, as the case may be; or
7.5.2 RB exercising the option under Clause 7.7.1 in respect of the U.S., whichever is the sooner.
7.6 The obligations to pay Royalties as set out in Clause 7.4.2 above shall end, on a country by country basis, upon the occurrence of:
7.6.1 the expiry of all of the Patents in the ROW and of all patents which issue in any country within the ROW in respect of any Improvements relating to the MSX Arising Intellectual Property Rights and/or Existing Intellectual Property Rights, as the case may be; or
7.6.2 RB exercising the option under Clause 7.7.2 in respect of the ROW, whichever is the sooner.
7.7 RB shall have the option upon prior written notice to MSX to stop making payments of the Royalties due under Clauses 7.4.1 and/or 7.4.2 (the “Options”) by making payment to MSX of:
7.7.1 with respect to Royalties due under Clause 7.4.1, USD$[***] ([***] U.S. dollars) immediately upon exercising such Option. The Option under this Clause 7.7.1 shall be exercisable at any time commencing after the [***] anniversary of the date of the Product Launch of the Product in the U.S.; and/or
7.7.2 with respect to Royalties due under Clause 7.4.2, GBP£[***] ([***] Pounds Sterling) immediately upon exercising such Option. The Option under this Clause 7.7.2 shall be exercisable at any time commencing after the [***] anniversary of the date of the Product Launch of the Product in any country of the European Union within the ROW.
Upon making payment to MSX of the amounts stated in Clause 7.7.1 the obligations to pay Royalties to MSX in respect of the U.S. will immediately cease and upon making payment to MSX of the amounts stated in Clause 7.7.2 the obligations to pay Royalties to MSX in respect of the ROW will immediately cease. For the avoidance of doubt, the Options granted under Clauses 7.7.1 and 7.7.2 may be exercised independently of each other.
7.8 For the avoidance of doubt, no credit will be given in respect of Royalties previously paid and where any of the Options are exercised part way through any Half Year Period, RB shall be responsible for making payments of any Royalties due in respect of sales of Products made before the date such of the Options was exercised and shall make such Royalty payments at the end of the Half Year period in which such of the Options was exercised.
7.9 Third Party Claims
7.9.1 If a third party claims that the manufacture and supply of a Product by MSX under this Agreement (including manufacture in accordance with the MSX’s Existing Intellectual Property Rights or MSX’s Arising Intellectual Property Rights), or the subsequent use and sale of such. Products by RB, infringes any claims of patents of such third party (and such infringement claim is not a claim that (i) the buprenorphine or naloxone component of the Product, and (ii) the manufacture of the buprenorphine or naloxone component of the Product, infringes any claims of patents of such third party) (a “TP Patent Claim”), MSX shall be responsible, at its cost and expense, for either defending or settling such TP Patent Claim and paying any judgment recovered by such third party in a suit
for such TP Patent Claim (including any amounts for past infringement of such third party’s patent by the Product), and using commercially reasonable endeavours to obtain an exclusive license in the Field from such third party that would by the terms of such settlement or exclusive license allow RB the right to continue to sell during the Term such Product in the Field in the jurisdiction or country in which such claim is brought, consistent with the terms and conditions of this Agreement and without any additional royalty or remuneration therefore by RB. In the event that MSX has not successfully defended or settled such TP Patent Claim or obtained such exclusive license, the obligation for payment of Royalty by RB under Clauses 7.4.1 and 7.4.2 (and, if applicable, Clause 7.7) in connection with continued sales of such Product (if any) shall be adjusted as set out in Clauses 7.9.3.1 and 7.9.3.2, as applicable, and in the event that the TP Patent Claim is brought more than [***] years after the Commencement Date and RB is prohibited from selling Products (i) in any of the U.S. or that portion of the ROW that constitutes all of the European Union, then RB shall have the right upon [***] days prior written notice to MSX to terminate this Agreement, or (ii) in any other jurisdiction in the Territory, then RB shall have the right upon [***] days prior written notice to MSX to terminate this Agreement as to such other jurisdiction. For purposes of this Clause 7.9.1, MSX shall be deemed to have failed to use commercially reasonable efforts to obtain such a licence as set out above if MSX fails or elects not to use such efforts and resources (including, without limitation, the promptness in which such efforts and resources would be applied) consistent with its expression on and before the Commencement Date of MSX’s commitment to obtaining such a licence should it be required in order to alleviate as a priority concern of MSX, including expending such additional funds and devoting such additional manpower and other resources as is necessary and appropriate to reasonably assure the grant of such a licence to allow RB to continue to sell during the Term the Products in the Field in the relevant jurisdiction or country and, in any circumstances, which are consistent with the general level of effort and resources that would be used in the pharmaceutical industry for a company with the intention to commercialize and exploit a product critical to the continued success of the company. In the event that despite the use of such endeavours as described above, MSX is unable to obtain the licence described above it shall inform RB of this fact and discuss with RB any further possibilities for the joint resolution of this issue including, without limitation, RB assisting MSX to obtain such a licence (which RB shall be entitled to consider in its absolute discretion) on the assumption that any sums paid by RB (if any) towards obtaining such a licence will be offset against any Royalties to be paid by RB to MSX pursuant to Clause 7.4.
7.9.2 If a third party brings a claim of invalidity of the Patents in any part of the Territory, then, subject to Clause 7.9.4, MSX shall be responsible for defending such claim, at its cost and expense, and seeking to maintain validity of the Patents and all obligations for payment of a Royalty under Clauses 7.4.1 and 7.4.2 (and if applicable Clause 7.7) in connection with sales of Products following such claim shall be adjusted according to Clause 7.9.3.1 and 7.9.3.2 below, as applicable, and RB shall have the other rights set forth in Clause 7.9.3.3.
7.9.3 For any claim brought by a third party which is successful or not yet finally adjudicated under Clauses 7.9.1 or 7.9.2
7.9.3.1 and such third party introduces a product in the Field which gains a market share in the Field of at least a [***] percent ([***]%) but not more than [***] percent ([***]%) in any of (i) the U.S., (ii) that portion of the ROW that constitutes the European Union, or (iii) any other country in the Territory within [***] months after such product introduction (the “Market Review Period”), RB’s obligation to make such Royalty payments after the expiration of the Market Review Period with respect to sales of such Product in such jurisdiction or country shall be reduced by [***]; or
7.9.3.2 and such party introduces a product in the Field which gains a market share in the Field of [***] percent ([***]%) or more in any of (i) the U.S., (ii) that portion of the ROW that constitutes the European Union, or (iii) any other country in the Territory during the Market Review Period, RB’s obligation to make such Royalty payments after the expiration of the Market Review Period and thereafter with respect to sales of such Product in such jurisdiction or country shall be terminated; or
7.9.3.3 if such third party claim is brought within [***] years after the Commencement Date and (i) RB is prohibited from achieving Product Launch in any of the U.S. or that portion of the ROW that constitutes all of the European Union, then RB shall have the right upon thirty (30) days prior written notice to MSX to terminate this Agreement, or (ii) RB is prohibited from selling all Products in any other jurisdiction in the Territory, then RB shall have the right upon thirty (30) days prior written notice to MSX to terminate this Agreement as to such other jurisdiction. Upon termination of this Agreement under this Clause 7.9.3.3, RB shall satisfy its obligations under Clause 18.1.2 and MSX shall indemnify RB for the Losses incurred by RB as a result of such termination up to an amount equal to [***] percent
([***]%) of the payments made by RB (and its Affiliated Companies) to MSX and its Affiliated Companies in developing the Products (which for the avoidance of doubt shall be all sums paid by RB (and its Affiliated Companies) to MSX excluding sums paid by RB (and its Affiliated Companies) in respect of the purchase of the Products and Royalties under this Agreement including, payments by RB under Clause 7.7, if any) prior to such termination. Payment of such amount to RB under this Clause 7.9.3.3 shall be the sole and exclusive remedy of RB for any termination of this Agreement under this Clause 7.9.3.3 and, upon payment thereof to RB, MSX shall have no further obligation or liability to RB under this Agreement or otherwise for such third party claim, except for MSX’s obligations to pay the costs and expense of defending and settling such third party claim under Clause 7.9.1. This Clause 7.9.3.3 shall not apply to any claim brought by [***] within [***] after the Commencement Date, which claim (and the rights and obligations of MSX and RB relating thereto) shall be solely covered under Clause 7.10.
7.9.4 For any such third party claim brought under Clauses 7.9.1 or 7.9.2 in which such third party is unsuccessful (including a claim brought by [***] as described in Clause 7.10), then RB’s obligations to make payment of the Royalties shall remain unchanged and shall be in effect in accordance with the terms of this Agreement, subject to the following. If such third party introduces a product in the Field while such claim is being adjudicated and which is thereafter withdrawn from the Field after such adjudication, RB shall make payment of the Royalties (together will all future Royalties due under this Agreement) which would have been paid in accordance with the terms of this Agreement prior to such adjudication, subject to RB’s rights in accordance with Clauses 7.9.3.1 and 7.9.3.2 to reduce or terminate such Royalty payments, as the case may be, for the period prior to such withdrawal and subject to the last sentence of Clause 7.9.1 in which RB may offset royalties paid by RB to such third party for a license under Clause 7.9.1, if any, against Royalties to be paid by RB to MSX pursuant to Clause 7.4.
7.9.5 For any such third party claim that is brought alleging the invalidity of the Patents and MSX believes that defending such claim is unnecessary and uneconomical, then save in respect of the US and that portion of the ROW that constitutes all of the Europe Union (in which areas MSX shall be obliged to defend any claims for invalidity), MSX shall seek RB’s consent not to defend such actions and RB agrees that such consent shall not be unreasonably withheld, conditioned or delayed.
7.10 In the event that [***] brings a claim that the manufacture and supply of a Product by MSX under this Agreement (including manufacture in accordance with MSX’s Existing Intellectual Property Rights or MSX’s Arising Intellectual Property Rights) or the subsequent use and sale of such Products by RB, infringes a claim of one of its patents described in Schedule 10 attached hereto (and such infringement claim is not a claim that (i) the buprenorphine or naloxone component of the Product, or (ii) the manufacture of the buprenorphine or naloxone component of the Product, infringes any claims of such patents), MSX shall have all of the obligations to defend, settle and obtain an exclusive license with respect thereto in accordance with the terms of Clause 7.9.1. If the claim is brought within one year after the Commencement Date and [***] is successful in its claim, or such claim has not yet been finally adjudicated, and, as a result thereof, RB is prohibited from achieving Product Launch in the US or that portion of the ROW that constitutes all of the European Union, RB shall have the right to terminate this Agreement and, upon such termination, RB shall satisfy its obligations under Clause 18.1.2 and MSX shall pay to RB as liquidated damages a lump sum amount equal to [***] Dollars ($[***]) for all Losses incurred or to be suffered by RB (the “[***] Settlement”) as a result thereof or in connection therewith. Payment of the [***] Settlement to RB shall be the sole and exclusive remedy of RB for any termination of this Agreement with respect to a claim by [***] under this Clause 7.10 and, upon payment of the [***] Settlement to RB, MSX shall have no further obligation or liability to RB under this Agreement or otherwise with respect to such [***] claim, except for MSX’s obligation to pay for the defense and settlement of such [***] claim, including the payment of any judgement (including for past infringement of [***] patents by the Product, if any) recovered by [***] in a suit for such [***] claim in accordance with Clause 7.9.1.
7.11 In addition to the Price, RB shall make a payment to MSX of USD$[***] ([***] U.S. dollars) (the “Milestone Payments”) on each of the following dates:
7.11.1 the Product Launch of the Product in the U.S.; and
7.11.2 the first Product Launch of a Product within any country within the ROW.
For the avoidance of doubt, this shall amount to a maximum total payment of USD$[***] ([***] dollars) for Milestone Payments.
7.12 For the duration of this Agreement, MSX shall use commercially reasonable efforts to be technically and commercially competitive, taking into account the market for the supply and the cost from other suppliers of product(s) similar to the Products, and shall effect cost reductions and engage in all such technical innovations in respect of the Products which are commercially reasonably possible, taking into account MSX’s manufacturing obligations to other parties, capital investment and any other relevant factor as determined by MSX.
7.13 Promptly following the execution and delivery of this Agreement, MSX shall deliver to RB information regarding the Costs of Raw Materials. At least sixty (60) days prior to the beginning of each subsequent Year, the parties shall confer (each, an “Annual Review”) regarding all costs of manufacturing the Products, including without limitation, Raw Materials, other components, energy, transportation, legal, regulatory and all other hard and soft costs of manufacture, but not labour, in order to determine if cost reductions are appropriate.
7.14 The cost of goods price for the period from the Commencement Date and expiring on the 31St of December in the Year of the Commencement Date shall be the price as set out in Schedule One and, unless otherwise agreed by the parties in writing pursuant to this Clause 7.14, the cost of goods price for each subsequent Year, shall be increased or decreased in accordance with the Price Change (the “Cost of Goods Price”). In the event that the Price Change for a Year exceeds the change in the Pharma Price Index for the same period, RB may, at its option, obtain pricing for one or more of the Major Raw Materials from , third parties who are, to the reasonable satisfaction of MSX, qualified suppliers (as can be demonstrated through written documentation). If the pricing obtained by RB is at least [***] percent ([***]%) more favourable for a given Year than the costs provided by MSX during such Year, MSX shall engage in a good faith review of the obtained pricing. If MSX, acting with commercial reasonableness (including, without limitation, giving consideration to quality control, shipping fees, import duties, warehousing fees, time of transit, and the cost of certifying, qualifying and testing the Major Raw Materials of such proposed supplier), determines that the pricing obtained by RB is at least [***] percent ([***]%) more favourable for a given Year, MSX shall, at its sole option, either (i) engage the supplier offering the pricing obtained by RB for such period as the supplier pricing remains at least [***] percent ([***]%) more favourable, and adjust the Cost of Raw Materials for the given period, or (ii) obtain a price reduction from its then-current supplier to pricing similar (even if less favourable) to the reduced pricing obtained by RB. The parties agree that during the course of such discussions the Price chargeable for the Products shall be the Price for the previous Year as varied according to the Pharma Price Index and that following the determination of the Price in accordance with the above procedure RB shall be responsible to MSX for the payment of any excess sums due to MSX applying such determined price retrospectively against all Orders for the Products during such period. RB shall make such payment within [***] days after determining the Price in accordance with the above procedures. For the avoidance of doubt, MSX acknowledges that in dealing with any third party suppliers of Raw Materials it will not disproportionately allocate any discounts in determining costs charged by the third party supplier for the Raw Materials, when such Raw Materials are purchased from a third party supplier supplying to MSX raw materials to be used by MSX in relation to products other than the Products. MSX hereby agrees that upon reasonable advance written notice to MSX, RB shall have a right to an audit of such records of MSX as is reasonable to ensure that the cost of such rat materials are in compliance with this Clause 7.14; provided, that, such access shall be limited to the period ending not more than [***] years prior to the date of such audit and RB shall be responsible for the costs of such audit and MSX shall not charge RB for any of MSX’s costs of such audit. For the avoidance of doubt, RB agrees that all information disclosed by MSX under this Clause 7.14 shall be Confidential Information for the purpose of this Agreement and RB shall ensure that any nominee of RB participating in such audit shall enter into a confidentiality agreement with MSX obligating such nominee to maintain the confidentiality of any information disclosed by MSX pursuant to this Clause 7.14.
7.15 All invoices to be sent to RB shall be sent to [***].
7.16 RB shall pay invoices in respect of the Cost of Goods Price, together with any other invoices submitted to it pursuant to this Agreement, within [***] of receipt by RB from MSX of a valid VAT (or other applicable similar taxes) invoice therefore.
7.17 If RB is required to withhold any tax, including, but not limited to, the value-added tax (VAT) and any similar taxes that can replace or append the existing ones, then RB shall make payment of the relevant fee after such withholding in accordance with the applicable law. The parties agree to co-operate in all commercially reasonable respects necessary to determine, prior to any such withholding, whether either party is responsible for any taxes in connection with the transactions contemplated under this Agreement and during the Term to take advantage of such double taxation agreement as may be available and the party responsible for securing any certificates or approvals that are necessary for the payment without any withholding of taxes at source is MSX, and all the expenses related to obtaining such certificates or approvals are for the remit of MSX.
7.18 RB shall pay the Royalty for Products (if any) within [***] days of the expiry of the Half Year period in which the relevant Royalties are chargeable. Each Royalty payment shall be accompanied by a statement detailing the calculation of Royalties due to MSX, including, without limitation, the amount of Products sold and the corresponding Royalty amount.
7.19 MSX shall be expressly permitted to assign any sums payable under this Clause 7.
7.20 MSX shall have the right to have its independent certified accountants (“MSX Accountants”) review and verify the accuracy of the records and accounts related to the Royalties (including records of sales as notified to it by its distributor in respect of certain countries within the Territory) hereunder for any Half Year ending not more than [***] years prior to the date of such review (the “Records”); provided, that, MSX shall not have the right to conduct more than [***] such inspection in any [***] month period, unless MSX or RB shall have a good faith belief that during such period that a Regulatory Authority inspection is expected, or unless otherwise required by applicable law, regulation rule or Regulatory Authority. Following such review, MSX’s accountants shall disclose to RB and MSX whether the Royalties paid to MSX hereunder are correct and accurate, and give details of any discrepancies between the Royalties due under the Records and Royalties paid. MSX shall be responsible for the costs of the MSX Accountants unless the MSX Accountants certify that RB has underpaid Royalties properly due to MSX by [***] percent ([***]%) or more in the period being audited, in which instance RB shall reimburse MSX for all costs of the MSX Accountants within [***] of receipt of notice of such underpayment. In no event shall the MSX Accountants disclose to MSX information other than whether the Royalties payable by RB were accurate of inaccurate and the amount of any discrepancies due. For the avoidance of doubt, MSX agrees that all information disclosed by RB under this Clause 7.20 shall be Confidential Information for the purpose of this Agreement and MSX shall ensure that the MSX Accountants shall enter into a confidentiality agreement with RB obligating the MSX Accountants to maintain the confidentiality of any information disclosed by RB pursuant to this Clause 7.20.
7.21 In the event that the review conducted under Clause 7.20 concludes that RB owes to MSX further Royalty payments, RB shall make such additional payments within [***] days of a copy of the MSX Accountants’ review being delivered to both parties. In the event that the review conducted under Clause 7.20 concludes that RB has made Royalty payments to MSX in excess of those required, such excess payments shall be credited against future payments owed by RB to MSX under this Agreement (or, if no such payments are owed, shall be promptly refunded by MSX to RB within [***] days of a copy of the MSX Accountants’ review being delivered to MSX).
7.22 During the Term commencing with the period ending at December 31, 2008, RB shall be entitled to receive a rebate on volume purchases of the Products in accordance with the following (the “Rebate”):
7.22.1 In the event that RB purchases in any Year in the aggregate more than [***], but less than [***], units of Product, in any combination of one or more Products set forth on Schedule 3, RB shall be entitled to receive a Rebate of [***] U.S. dollars (USD$[***]) for each unit of Product over [***] and less than [***] purchased by RB during such Year; and
7.22.2 In the event that RB purchases in any Year in the aggregate [***] units of Products or more, in any combination of one or more Products set forth on Schedule 3, then in addition to the rebate payable under Clause 7.22.1 above, RB shall be entitled to receive a Rebate of [***] U.S. dollars (USD$[***]) for each unit of Product at and in excess of [***] purchased by RB during such Year; and
7.22.3 The Rebate due to RB in any Year, if any, shall be calculated by MSX on or before January 31st of the immediately succeeding Year (the “Rebate Calculation”); and
7.22.4 At the option of MSX, exercised in its sole discretion, the Rebate for each Year, if any, shall be either: (i) paid by MSX to RB on or before February 15th of the immediately succeeding Year for which such Rebate Calculation is due; or (ii) granted as a credit by MSX in the amount of such Rebate against the payment or payments of Royalties due by RB after the Rebate Calculation; and
7.22.5 No Rebate under this Agreement, if any, shall result in or entitle RB to any right of set-off, discount or similar reduction of the Price of any Product purchased by RB, or in any other payment due by RB under this Agreement, including, without limitation, any Milestone payment, Option payments, and Royalty payments except as specifically set forth in Clause 7.22.4(ii) above. No interim payments of Rebates, if any, due under this Agreement shall be made during the Term except any Rebates due and unpaid by MSX, pursuant to the terms of this Agreement, upon the expiration or termination of this Agreement and not theretofore applied by MSX as a credit against Royalties due and owing by RB upon such expiration or termination.
8. QUALITY DOCUMENTATION AND INSPECTION
8.1 MSX shall manufacture the Products in accordance with this Agreement and in particular with the provisions of Clause 3.1.1.
8.2 If MSX has actual knowledge that any aspect of the Product Specification is liable to result in the manufacture of a defective Product which may lead to a liability being incurred, MSX shall, as soon as reasonably practicable, notify RB in writing.
8.3 MSX shall establish and maintain a batch-tracking system to enable it to identify and procure the recall (if necessary) of Products which may be affected in any way by manufacturing and production problems. MSX shall provide details to RB of its batch-tracking system upon RB’s reasonable written request to do so.
8.4 MSX shall:
8.4.1 complete the documentation relevant to the manufacture, testing, storage and delivery of the Product in accordance with cGMP and any other reasonable requirements of RB provided to MSX in advance in writing, and shall retain such documentation for a minimum period of six (6) years after delivery of the Product to RB (or its nominee);
8.4.2 permit RB (or its nominee), on reasonable prior written notice to MSX, access to the Manufacturing Site from time to time during the Term as is reasonable (or if required by applicable law, regulation, rule or Regulatory Authority) for the inspection of any documentation relating solely to the manufacture, testing, storage or delivery of the Products, the Raw Materials or the Film for the period ending not more than [***] years prior to the date of such inspection; provided, that, RB shall be responsible for the costs of such inspection and MSX shall not charge RB for MSX’s costs of such inspection. For the avoidance of doubt, RB agrees that all information disclosed by MSX under this Clause 8.4.2 shall be Confidential Information for the purpose of this Agreement and RB shall ensure that any nominee of RB participating in such inspection shall enter into a confidentiality agreement with MSX obligating such nominee to maintain the confidentiality of any information disclosed by MSX pursuant to this Clause 8.4.2;
8.4.3 promptly, upon the reasonable written request of RB, provide RB with any Product validation report, including a summary of the analytical results, the stability results, details of any Product failures, process deviations and any out of Product Specification results; and
8.4.4 complete and lodge with the appropriate Regulatory Authorities where required all documentation relating to the export of the Products where delivery involves export from the country of manufacture.
8.5 RB (or its nominee) shall have the right to perform any tests it wishes (at RB’s expense) on any Product, Raw Materials or Film at MSX’s Manufacturing Site as reasonably requested by RB upon ten (10) days advance written notice to MSX to ensure its compliance with the Product Specification, and without interference with MSX’s operations.
8.6 MSX shall, and shall use commercially reasonable efforts to, procure that its Affiliates shall, grant a right of reasonable access to RB (or its nominee) to inspect any records relevant to the manufacture of the Products subject to Clause 8.4.2 or conduct any tests on the Products, Raw Materials or Film subject to Clause 8.5.
8.7 RB shall, and shall use commercially reasonable efforts to procure that any Affiliate or third party API manufacturer shall:
8.7.1 complete the documentation relevant to the manufacture, testing, storage and delivery of the API in accordance with cGMP and any other reasonable requirements of MSX provided to RB in advance in writing, and shall retain such documentation for a minimum period of six (6) years after delivery of the API to MSX (or its nominee);
8.7.2 permit MSX (or its nominee), on reasonable prior written notice to RB, access to the manufacturing site of the API from time to time during the Term as is reasonable (or if required by applicable law, regulation, rule or Regulatory Authority) for the inspection of any documentation relating to the manufacture, testing, storage or delivery of the API for the period ending not more than [***] years prior to the date of such inspection; provided, that, MSX shall be responsible for the costs of such inspection and RB shall not charge MSX for any of RB’s costs for such inspection. For the avoidance of doubt, MSX agrees that all information disclosed by RB under this
Clause 8.7.2 shall be Confidential Information for the purpose of this Agreement and MSX shall ensure that any nominee of MSX participating in such inspection shall enter into a confidentiality agreement with RB obligating such nominee to maintain the confidentiality of any information disclosed by RB pursuant to this Clause 8.7.2;
8.7.3 promptly, upon reasonable request of MSX, provide MSX with any validation report for any API batch, including a summary of the analytical results, the stability results, details of any such batch failures, process deviations and any out of API Specification results; and
8.7.4 complete and lodge with the appropriate Regulatory Authorities where required all documentation relating to the export of the API where delivery involves export from the country of manufacture.
8.8 MSX shall have the right, but not the obligation, to perform any tests it wishes (at MSX’s expense) on any API at the manufacturing site of the API or any other relevant sites as MSX reasonably requests to ensure its compliance with API Specifications.
8.9 RB shall, and shall use commercially reasonable efforts to procure that its Affiliates and any third party API manufacturer shall, grant a right of reasonable access to MSX (or its nominee) to inspect any records relevant to the manufacture of the API subject to Clause 8.7.2 or conduct any tests on the API subject to Clause 8.7.4.
8.10 Each of the parties hereby warrant and represents to the other that (i) it is not debarred under the Generic Drug Enforcement Act of 1992, 21 U.S.C. 335[a] (the “Generic Drug Enforcement Act”), and that it has not been convicted of a crime for which it could be debarred under the Generic Drug Enforcement Act; and (ii) it shall not use in any capacity the services of any person debarred under the Generic Drug Enforcement Act, or convicted of a crime for which a person can be debarred under the Generic Drug Enforcement Act.
9. WARRANTIES
9.1 MSX hereby warrants that:
9.1.1 the Manufacturing Site has as of the Commencement Date, and will maintain during the Term, all necessary or appropriate consents, approvals, licences, permits, registrations or authorisations (or waivers) required to manufacture the Products, in accordance with the terms of this Agreement;
9.1.2 it has the necessary facilities, equipment, Know-How, procedures and personnel at the Manufacturing Site to manufacture the Products in accordance with the terms of this Agreement;
9.1.3 any Products manufactured pursuant to this Agreement shall comply with the Product Specification and all provisions as to quality set out in the Quality Agreement;
9.1.4 subject to Clause 6.9, at the time that legal title and risk of loss passes to RB pursuant to Clause 5.7, the Products manufactured pursuant to this Agreement shall be free from adulteration or contamination and fit for their intended purpose under this Agreement; and
9.1.5 the manufacture of the Products will comply with all applicable national and local laws, rules, regulations and guidelines in force in the jurisdiction of the country of distribution in respect of the manufacture of the Products and, to the knowledge of MSX, there are no circumstances or conditions in existence as of the Commencement Date which would reasonably be expected to prevent continuing compliance of the manufacture of the Products in accordance with the terms of this Agreement with all such national and local laws, rules, regulations and guidelines during the Term.
9.2 MSX further warrants that:
9.2.1 subject to the terms of this Agreement, it will meet all Orders from RB for the Products that are consistent with the terms of this Agreement;
9.2.2 it shall supply the Products within the periods set out in Clause 5.1;
9.2.3 it shall convey good title in any Products delivered to RB under this Agreement;
9.2.4 it is duly incorporated and organized and is validly existing under the laws of its jurisdiction of incorporation and has the corporate power and authority to own its assets and to conduct its businesses and to perform its obligations hereunder;
9.2.5 the execution and delivery of this Agreement by it and the completion by it of the transactions contemplated herein do not and will not result in the breach of, or violate any term or provision of, its articles of incorporation or by-laws;
9.2.6 it is not subject to any outstanding injunction, judgement or order of any governmental authority which would prevent or materially delay the transactions contemplated by this Agreement; there are no civil, criminal or administrative claims, actions, suits, demands, proceedings, hearings or investigations pending or, to MSX’s knowledge threatened, at law, in equity or otherwise, in, before, or by, any governmental authority which (if successful) would prevent or materially delay MSX’s compliance with the provisions of this Agreement;
9.2.7 no dissolution, winding up, bankruptcy, liquidation or similar proceeding has been commenced or is pending or, to MSX’s knowledge, proposed in respect of it;
9.2.8 the execution and delivery of this Agreement and the completion of the transactions contemplated herein have been duly approved by appropriate persons within its organisation and this Agreement constitutes the legal, valid and binding obligation of MSX enforceable against it in accordance with its terms;
9.2.9 it or its Affiliates has taken or will take all action as may be required to obtain and maintain, comply and keep current any governmental licences, permits, approvals and/or registrations that are necessary for MSX and/or its Affiliates to manufacture and/or supply the Products and to carry out and perform its obligations under this Agreement;
9.2.10 it shall, at its own cost, diligently prosecute to grant all subsisting patent applications within the Patents so as to secure the broadest monopoly legally and reasonably obtainable within the Field consistent with avoiding serious prejudice to the validity of such granted Patents and provide RB with a patent update report (which shall include details of the renewal dates of all Patents registered) every [***] months during the Term;
9.2.11 it shall for the life of the Patents pay all renewal fees and do all such act: and things as may be necessary to maintain and keep the Patents and shall provide RB with written notice of its intent not to renew at least [***] months before the last day for renewing the Patents; and
9.2.12 it shall not during the Term, save following receipt of written notice that RB does not wish to acquire the Patents in accordance with Clause 15.13, abandon any of the Patents or allow any of them to lapse.
9.3 RB hereby warrants that:
9.3.1 RB, the manufacturing site of the API and/or any third party API manufacturer, as applicable, has as of the Commencement Date, and to RB’s knowledge will maintain during the Term, all necessary or appropriate consents, approvals, licences, permits, registrations or authorisations (or waivers) required to manufacture the API in accordance with the terms of this Agreement. For the avoidance of doubt this warranty is given without prejudice to RB’s obligations to supply API in accordance with the API Specifications;
9.3.2 it and/or any third party API manufacturer, as applicable has the necessary facilities, equipment, Know-How, procedures and personnel at the manufacturing site of the API to manufacture the API in accordance with the terms of this Agreement;
9.3.3 any API delivered pursuant to this Agreement shall comply with the provisions the API Specification;
9.3.4 the API supplied pursuant to this Agreement shall conform to the API Specification and shall be free from adulteration or contamination and fit for its intended purpose under this Agreement;
9.3.5 it and/or any third party API manufacturer, as applicable shall comply with all applicable national and local laws, rules, regulations and guidelines in force in the U.S. and the European Union in respect of the manufacture of the API and, to the knowledge of RB, there are no circumstances or conditions in existence as of the Commencement
Date which would reasonably be expected to prevent continuing compliance of the manufacture of the API in accordance with the terms of this Agreement with all such national and local laws, rules, regulations and guidelines during the Term; and
9.3.6 MSX’s use of the API in accordance with the terms of this Agreement shall not infringe any third party patent rights or other intellectual property rights which are known by RB (or ought reasonably to be known by RB) to exist as of the Commencement Date.
9.4 RB further warrants that:
9.4.1 it shall supply the API within the time periods set out in Clause 4.3;
9.4.2 it is duly incorporated and organized and is validly existing under the laws of its jurisdiction of incorporation and has the corporate power and authority to own its assets and to conduct its businesses and to perform its obligations hereunder;
9.4.3 the execution and delivery of this Agreement by it and the completion by it of the transactions contemplated herein do not and will not result in the breach of, or violate any term or provision of its articles of formation or by-laws;
9.4.4 it is not subject to any outstanding injunction, judgement or order of any governmental authority which would prevent or materially delay the transactions contemplated by this Agreement; there are no civil, criminal or administrative claims, actions, suits, demands, proceedings, hearings or investigations pending or, to RB’s knowledge threatened, at law, in equity or otherwise, in, before, or by, any governmental authority which (if successful) would prevent or materially delay RB’s compliance with the provisions of this Agreement;
9.4.5 no dissolution, winding up, bankruptcy, liquidation or similar proceeding has been commenced or is pending or, to the knowledge of RB, proposed in respect of it;
9.4.6 the execution and delivery of this Agreement and the completion of the transactions contemplated herein have been duly approved by appropriate persons within its organisation and this Agreement constitutes the legal, valid and binding obligation of RB enforceable against it in accordance with its terms; and
9.4.7 it or its Affiliates has taken or will take all action as may be required or necessary to obtain and maintain, comply and keep current any governmental licences, permits, approvals and/or registrations that are necessary for RB and/or its Affiliates to manufacture and/or supply the API and to carry out and perform its obligations under this Agreement.
9.5 NOTHING IN THIS AGREEMENT SHALL BE CONSTRUED AS A WARRANTY OR REPRESENTATION BY EITHER PARTY (II) REGARDING THE EFFECTIVENESS, VALUE, SAFETY, NON-TOXICITY OR PATENTABILITY OF ANY PATENT TECHNOLOGY, THE PRODUCT OR ANY INFORMATION OR RESULTS PROVIDED BY EITHER PARTY PURSUANT TO THIS AGREEMENT, OR (II) THAT THE PRODUCT WILL BE APPROVED. EACH PARTY EXPRESSLY DISCLAIMS, WAIVES, RELEASES, AND RENOUNCES ANY WARRANTY, EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, EXCEPT THOSE EXPRESS WARRANTIES SET FORTH IN THIS AGREEMENT WHICH SHALL REMAIN IN FULL FORCE AND EFFECT IN ACCORDANCE WITH THE TERMS OF THIS AGREEMENT.
10. INDEMNITY
10.1 Subject to the limitations in Clause 22 below, RB shall indemnify, defend and hold harmless MSX, its Affiliates and its and their respective directors, officers, employees, representatives, agents and contractors (“MSX Parties”) from any and all Losses that result from or arise in connection with any claim, action, suit or proceeding, made or brought by or on behalf of a third party (a “Claim”) against any of the MSX Parties to the extent the Claim arises from (i) the marketing, distribution or sale of the Products by RB, its Affiliates and its agents, (ii) the use of the Products, (iii) the failure of API to meet the API Specification as a result of defects (latent or otherwise) in, or non-conformance of, the API (save for those defects or non-conformance which would have been discovered but for MSX’s failure to perform the tests to be carried out by MSX in accordance with the terms under Clause 4.4) or the breach by RB of the warranties set forth in Clauses 9.3 and 9.4.1, or (iv) a material breach of this Agreement by RB or any of its Affiliates; provided, that:
10.1.1 the Claim does not arise from the negligence, wilful default or breach of the terms of this Agreement (including the warranties by MSX in Clause 9) or the Quality Agreement by the MSX Parties; and
10.1.2 the indemnity shall not extend to any part of a Claim that results from any failure by MSX to promptly notify RB in writing of any matter which may give rise to such a Claim to which this indemnity may apply, where such failure actually causes material prejudice to RB’s rights or ability to defend against such Claim.
10.2 MSX shall indemnify, defend and hold harmless RB, its Affiliates, and its and their respective directors, officers, employees and contractors (“RB Parties”) from any and all Losses that result from or arise in connection with any Claim brought against the RB Parties to the extent the Claim arises from (i) the failure of the Products to meet the Product Specification or the breach by MSX of the warranties set forth in Clause 9, or (ii) a material breach of this Agreement by MSX or its Affiliates, provided, that:
10.2.1 the Claim does not arise from the negligence, wilful default or breach of the terms of this Agreement (including the warranties by RB in Clause 9) or the Quality Agreement by the RB Parties; and
10.2.2 the indemnity shall not extend to any part of a Claim that results from any failure by RB to promptly notify MSX in writing of any matter which may give rise to such a Claim to which this indemnity may apply, where such failure actually causes material prejudice to MSX’s rights or ability to defend against such Claim.
10.3 Each party shall be obliged to promptly notify the other in writing upon becoming aware of any indemnity claims likely to be made by a third party under the terms of this Clause 10, and shall promptly exchange all information relating to an indemnity claim to the extent reasonably practicable.
10.4 The indemnifying party shall:
10.4.1 have sole control over the conduct, defense (including the right to select counsel) and settlement of any such Claim; provided that no compromise or settlement may be affected by the indemnifying party that indicates an admission of liability by the indemnified party or requires the indemnified party to make any monetary payments, without the prior written consent of the indemnified party, such consent not to be unreasonably withheld, conditioned or delayed; and
10.4.2 keep the indemnified party fully informed of the progress of the defense of such Claim.
10.5 The indemnified party shall:
10.5.1 cooperate fully with the indemnifying party and its legal representatives in the investigation and defense of any Claim under this Agreement;
10.5.2 not make any admissions or do anything that may compromise or prejudice the defense of such Claim without the prior written consent of the indemnifying party; and
10.5.3 not make any payment or incur any expenses in connection with any such Claim or make any admission or do anything that may compromise or prejudice the defense of the Claim without the prior written consent of the indemnifying party, such consent not to be unreasonably withheld, conditioned or delayed.
10.6 Subject to Clause 10.5, in the event a Claim is asserted, the indemnified party may elect to choose counsel independent from that representing the indemnifying party and participate in the Claim, in which case the indemnified party shall be solely responsible for any costs and expenses associated with such counsel including, legal costs, expert fees and all related costs.
10.7 No later than the first shipment of Product to RB for commercial sale, throughout the remainder of the Term and for a period of [***] months after its expiry or termination, the parties shall carry and keep in force a comprehensive general liability insurance policy, including product liability as well as blanket contractual liability coverage. This insurance policy shall provide a liability limit of not less than £[***] ([***] Pounds Sterling) for each occurrence or series of related occurrences within any twelve (12) month period. Each party shall, upon the reasonable request of the other, produce satisfactory evidence that all insurance premiums have been paid and kept up to date and are kept in accordance with
local insurance laws or regulations from time to time in force. The existence of such insurance shall not be construed as a limitation of either party’s liability hereunder.
11. CONFIDENTIAL INFORMATION
11.1 For the avoidance of doubt, RB and MSX may be disclosing Confidential Information belonging to them or their Affiliates on behalf of those Affiliates and those Affiliates may also disclose such information themselves directly.
11.2 “Discloser” means either party or any of its Affiliates disclosing Confidential Information to the Recipient.
11.3 “Recipient” means either party or any of its Affiliates receiving Confidential Information from the Discloser.
11.4 Each party will disclose to the other such Confidential Information as it considers necessary to further the purpose of this Agreement.
11.5 Each party shall treat all Confidential Information disclosed hereunder with strict confidentiality.
11.6 The Recipient shall only use Confidential Information to further the purpose of this Agreement and for no other purpose.
11.7 The Recipient will not, without the prior written consent of the Discloser, make any notes, sketches, drawings, photographs or copies of any kind of any part of the Confidential Information, except when reasonably necessary for the purposes of this Agreement, in which case such copies will be regarded as Confidential Information of the Discloser.
11.8 The Recipient shall not authorise any third party other than a Sub-Contractors as set forth in Schedule Five (and in the case of the API Specification which, for the avoidance of doubt, MSX shall not without the prior written consent of RB disclose or pass to, or allow use by, any party including a Sub-Contractor as set forth in Schedule Five) to act on or use in any way any Confidential Information belonging to the Discloser (whether or not such third party is aware of such Confidential Information), shall promptly notify the Discloser if it becomes aware of any third party so acting, and (without prejudice to any of its other obligations) shall provide the Discloser such assistance as the Discloser reasonably requires, at the Discloser’s cost and expense, to prevent such third party from so acting.
11.9 The Recipient will not without the prior written consent of the Discloser communicate or otherwise make available the Confidential Information to any third party save in so far as is necessary to make available the Confidential Information (other than the API Specification which for the avoidance of doubt shall be held in the strictest confidence and shall not be disclosed to any third party (otherwise than under Clause 11.12.6) without the prior written consent of RB) to a third party for any application for registration of any Intellectual Property Rights that it owns or in connection with the registration of any medicinal product provided that it does not prevent the registration of or destroy any registrable Intellectual Property Right. The Recipient will forthwith notify the Discloser of any such application and the Discloser may (in its absolute discretion) refuse permission to allow publication. The Recipient shall require each third party (including Sub-Contractors) to which it gives Confidential Information of the Discloser, including those covered under Clause 11.8 and this Clause 11.9, to sign, prior to receipt of any of the Discloser’s Confidential Information, an agreement of confidentiality having the same obligations on such third party as are placed on the Recipient under this Agreement.
11.10 The Recipient will however be permitted to disclose Confidential Information to those of its officers and employees and/or officers and employees of its Affiliates who are required in the course of their duties to receive and acquire the Confidential Information for the purpose of this Agreement where such Affiliates and/or employees and/or officers are bound by obligations of confidentiality to the Recipient and/or the relevant Affiliate and are first made aware of the other terms of this Agreement. The Recipient will be liable to the Discloser for any breach of the terms of this Agreement by such Affiliates or by their employees or officers.
11.11 The terms of this Clause 11 will continue beyond the expiration or termination of this Agreement for a period of [***] years, except in relation to the Know-How of the Discloser and the API Specification which shall remain confidential for the duration of its confidential nature.
11.12 The undertakings given in Clauses 11.4 to 11.11 above shall not apply, in relation to the Recipient, to Confidential Information that:
11.12.1 the Recipient can show by written records was already in the Recipient’s possession prior to the Commencement Date and was not obtained under a duty of confidentiality;
11.12.2 the Recipient can show by written records is subsequently developed independently by the Recipient without any reference to or use by the Recipient of Confidential Information disclosed by the Discloser;
11.12.3 is or becomes public knowledge other than through the default of the Recipient;
11.12.4 is disclosed to the Recipient by a third party where such third party did not obtain the same under an obligation of confidence to the Discloser and was not under an obligation of confidence to the Discloser at the time of disclosure;
11.12.5 is approved for release upon the written permission of the Discloser; or
11.12.6 is required by applicable law, rule or regulation including, without limitation, the United States Securities Act of 1933, the Securities Exchange Act of 1934 and related regulations and interpretations thereof (collectively, the “Securities Laws”) to be disclosed by the Recipient, in which case the Recipient shall first inform the Discloser of all relevant facts relating to such a disclosure and shall provide such opportunity as is reasonable in the circumstances for the Discloser to object to, or limit, such disclosure and will provide reasonable assistance to the Discloser in seeking to prevent or limit such disclosure, except that no such act by the Discloser to object to or limit, or assistance of the Recipient requested by the Discloser, shall interfere with, delay or hinder the Recipient’s obligations under Securities Laws.
11.13 Notwithstanding any other provision of this Agreement, neither party shall make any public disclosure or statement relating to the existence, nature, terms, subject matter or other item in connection with this Agreement, except as required by applicable law, rule or regulation (including, without limitation, Securities Laws), and shall follow the procedure stated in Clause 11.12.6 in connection with issuing such statement.
12. HEALTH REGISTRATIONS AND QUALITY ASSURANCE
12.1 RB shall be responsible for obtaining and maintaining the Health Registrations in the Territory and MSX shall provide such assistance as may be reasonably required in connection with obtaining and maintaining such Health Registrations.
12.2 RB shall prepare, submit and maintain any relevant DMF dossiers for the Products and any relevant certificate of suitability for the Products in accordance with cGMP. Upon the reasonable request of MSX, MSX shall be given access to relevant information contained in DMF dossiers or the certificate of suitability necessary for its activities under this Agreement or required by applicable law.
12.3 The parties shall comply, and procure that their Affiliates comply, with their respective obligations set out in the Quality Agreement.
12.4 MSX shall, on reasonable written request by RB to MSX, provide RB with access to the Master Manufacturing File compiled by MSX in connection with the manufacture of the Products for review.
13. REGULATORY COMPLIANCE, COMPLAINTS AND PRODUCT RECALLS
13.1 MSX shall promptly and at its own cost:
13.1.1 provide any Regulatory Authority all such documents and information as it may request in relation to the manufacture of the Products;
13.1.2 allow any Regulatory Authority access in relation to the manufacture of the Products to the Manufacturing Site or any other relevant sites for the purpose of an audit or inspection promptly on request by such Regulatory Authority;
13.1.3 respond in a timely manner to any questions of a regulatory nature relating to the manufacture of the Products raised by any Regulatory Authority and copy RB into any such response; and
13.1.4 promptly provide to RB the findings of any such Regulatory Authority audits, inspections or enquires relating to the Manufacturing Site or other sites relevant to the manufacture of the Products.
13.2 If any Regulatory Authority requires any changes to be made to the manufacture of the Products, the process, plant or equipment used in the manufacture of the Products or disposal of residue after such manufacture, MSX shall promptly notify RB and send it copies of any relevant documents. MSX shall consult with RB and shall use commercially reasonable efforts to defer implementation of any such changes until RB has been able to make any appropriate amendments to its Health Registrations as may be necessary for manufacture of the Products by MSX.
13.3 Each party shall notify the other immediately by telephone and confirm in writing within twenty-four (24) hours upon having actual knowledge of any problem relating to the Products including where:
13.3.1 the Products do not comply with the Product Specification or any matter which may affect the safety or efficacy of the Products arising during their manufacture;
13.3.2 the Products are affected by bacteriological or other contamination; or
13.3.3 the Products are affected by significant chemical, physical or other change or deterioration or stability failures.
13.4 Upon written request by a party, the other party shall promptly investigate any problem identified under Clause 13.3 above or any third party complaint it relation to the Products and shall promptly submit follow-up reports upon the receipt of any new information in connection with the problem or complaint. Upon written request by RB, MSX shall provide reasonable assistance to RB in investigating such problems or complaints. Such investigations by MSX shall include appropriate chemical or microbial analysis of the relevant Product sample (if available), analysis of any retained Product sample or the review of relevant batch documentation. MSX shall provide RB with a written report of its investigations and conclusions [***] days from receipt of RB’s written request (including samples, if available) for such investigation. RB shall provide all reasonable assistance to MSX in analyzing any such Product problems or complaints.
13.5 All contact and correspondence with any Regulatory Authority in relation to a Product recall or complaint shall be made and co-ordinated by RB (unless otherwise required by applicable law). MSX shall not contact any Regulatory Authority or other government body in relation to any matter concerning the recall of or complaint concerning the Products, without the prior written consent of RB (unless required to do so by law), such consent not to be unreasonably withheld, conditioned or delayed.
13.6 During the Term:
13.6.1 MSX shall provide RB with copies of any communications (which are known to MSX to exist and are within its possession or control) with any Regulatory Authority specifically relating to the Products;
13.6.2 RB shall provide MSX with copies of relevant communications with any Regulatory Authority in relation to the API or the Products which would impact MSX’s obligations under this Agreement; and
13.6.3 If the communications with any Regulatory Authority referred to in this Clause 13 require or directly lead to any change in or to the Manufacturing Site in so far as such change affects or impacts upon the manufacture of the Products, then MSX shall in every case provide RB with all information relating thereto and in addition shall keep RB regularly updated of all events occurring and all further communications from Regulatory Authorities from time to time.
13.7 MSX shall, on written request by RB, provide RB with reasonable assistance at RB’s cost in the event that:
13.7.1 any Regulatory Authority issues a request, directive or order that the Products be recalled, corrected or withdrawn from market; or
13.7.2 a court of competent jurisdiction orders such a recall, correction or withdrawal from market; or
13.7.3 RB determines in its reasonable discretion that the Products shall be recalled, withdrawn from market or corrected for any reason.
13.8 RB shall at all times have sole responsibility for the initiation and co-ordination of any recall of the Products or the issue of corrective statements (unless otherwise required by applicable law or Regulatory Authorities). MSX shall not, without RB’s prior written consent, communicate with any Regulatory Authority or other third party in connection with any such recall or complaint (unless required to do so by law). Notwithstanding the above, MSX and RB shall notify the other promptly if any of the Products are suspected or proven to be the subject of a complaint which may require a recall of the Products and the parties shall cooperate with each other in the handling and disposition of such complaint.
13.9 If RB reasonably determines that a recall of the Products is required, the recall strategy shall be reasonably developed by RB and followed by MSX with strict regard to timing. RB shall promptly notify MSX in writing in the event that it deems that a recall of the Products is required.
13.10 MSX shall be responsible for its own and RB’s reasonable costs and expenses of all recalls of Products or complaints in the event that such recall or complaint is the result of any negligent act or omission or breach of the terms of this Agreement by MSX.
13.11 RB shall be responsible for its own and MSX’s reasonable costs and expenses of all recalls of Products or complaints in the event that such recall or complaint is the result of any negligent act or omission or breach of the terms of this Agreement by RB.
13.12 In the event that a recall of Products results from the joint negligence of RB and MSX, each party shall be responsible for the expenses of such recall in direct proportion to each party’s percentage of fault as determined jointly by written agreement of the parties or by a court of competent jurisdiction.
13.13 In the event of a recall being initiated by a Regulatory Authority, where the scope of the recall is directed at all Products and where the purpose of such recall is not attributable to the fault of either RB or MSX, RB shall be responsible for MSX’s expenses properly and necessarily incurred directly in connection with the recall.
13.14 Provided that MSX has stocks of usable API, MSX shall use commercially reasonable efforts, subject to other MSX contractual commitments, in attempting to supply RB with replacement Products during the handling and disposition of such recall.
14. AD HOC INSPECTION TESTING AND SAMPLES
14.1 Notwithstanding the provisions of Clause 13 above, upon the reasonable written request of RB, MSX shall promptly, at RB’s cost, submit samples of the Products for RB’s approval before the Products are delivered. Such samples shall be marked by MSX for identification.
14.2 On reasonable request and notice in writing, RB shall be entitled, without interfering with MSX’s operations, to inspect and test the Products during manufacture, processing and storage and MSX shall at its own cost provide or shall procure the provision of all such facilities as may reasonably be required by RB including access to MSX’s premises.
14.3 The exercise by RB of its rights pursuant to Clauses 14.1 or 14.2 shall not prejudice RB’s right to reject, pursuant to the terms of this Agreement, any Products which do not comply with the Product Specification or the provisions of this Agreement (except the API Specification), or represent RB’s assumption of liability in any manner whatsoever with respect to such non-compliant Products.
15. INTELLECTUAL PROPERTY RIGHTS AND LABELLING
15.1 Nothing in this Agreement shall affect the ownership of any Existing Intellectual Property Rights which one party agrees to make available to the other during the Term and, save as otherwise set out in this Agreement, neither party shall have the right to use or exploit the Existing Intellectual Property Rights of the other party.
15.2 MSX hereby grants RB and its Affiliates during the Term the exclusive (including to the exclusion of MSX) and only right and license (with the right to grant sub-licenses thereunder) under MSX’s Existing Intellectual Property Rights to use and sell any product, including the Products, in the Field throughout the Territory. During the remainder of the Term after payment of Royalties stops under Clause 7 (or otherwise in accordance with the terms of this Agreement) in the Territory or any portion thereof, as applicable, this license shall thereafter become royalty-free in the Field in that portion of the Territory, as applicable.
15.3 During the Term, MSX shall not assign or license any of MSX Existing Intellectual Property Rights to other parties for the use or sale of products within the Field.
15.4 If, during the Term, either party (or any agent or authorised Sub-Contractor of it) develops or creates (whether with or without others and whether jointly with the other party or not) any Arising Intellectual Property Rights, it will forthwith disclose any such Arising Intellectual Property Rights to the other party. To this extent, MSX warrants to RB that in the event of MSX using any agent (including without limitation and authorised Sub-Contractor) for the performance of any tasks under this Agreement it has in place, or will put in place, agreements with such agents which provide that any Arising Intellectual Property Rights within the Field created in the performance of such tasks shall belong to RB.
15.5 Any Arising Intellectual Property Rights (including without limitation any Arising Intellectual Property Rights created by MSX acting alone or in combination with RB) in the Field will belong to RB. To the extent that MSX would otherwise be the owner in whole or in part of any such rights, MSX shall promptly, upon request by RB, assign the entire right, title and interest to any and all such Arising Intellectual Property Rights to RB for a consideration of one Pound Sterling. In cases where MSX owns Arising Intellectual Property Rights within the Field which cannot be assigned, MSX will grant RB an irrevocable, perpetual, exclusive (including to the exclusion of MSX) royalty-free license (with the right to grant sub-licenses thereunder) under such Arising Intellectual Property Rights solely within the Field throughout the Territory. Other than as set forth in the first three sentences of this Clause 15.5, MSX shall own and, unless otherwise agreed in writing by MSX, RB shall not have or be granted under this Agreement any right, title or interest to, in or under, any Arising Intellectual Property Rights.
15.6 Claims of patent applications filed by RB shall be limited to the Field. To the extent that registered patent protection is obtained which is broader than the Field, RB grants MSX a royalty-free worldwide exclusive (including to the exclusion of RB) license, with rights to sublicense, outside the Field under the registered protection or applications therefor, which shall last for the duration of the registered protection or application therefor, to carry out all acts which would otherwise be prohibited due to RB’s patent protection outside the Field.
15.7 Any Arising Intellectual Property Rights (including without limitation any Arising Intellectual Property Rights created by RB acting alone or in combination with MSX) other than those covered by Clause 15.5 above will belong to MSX. To the effect that RB would otherwise be the owner in whole or in part of any such rights, RB shall promptly upon request by MSX assign with full title guarantee the entire right, title and interest to any and all such Arising Intellectual Property Rights to MSX for a consideration of one Pound Sterling. In cases where RB owns Arising Intellectual Property Rights which cannot be assigned, such as a claim which falls outside the Field, RB will grant MSX a royalty-free, worldwide exclusive (including to the exclusion of RB) license, with rights to sublicense, outside the Field.
15.8 Claims of patent applications filed by MSX shall be limited to being outside the Field. To the extent that registered patent protection is obtained which is within the Field, MSX grants RB a royalty-free worldwide exclusive (including to the exclusion of MSX) license, with rights to sublicense, within the Field under the registered protection or applications therefor, which shall last for the duration of the registered protection or application therefor, to ‘carry out all acts which would otherwise be prohibited due to MSX’s patent protection within the Field.
15.9 By way of illustration of Clauses 15.5 through and including Clause 15.8 and Clause 15.10, if the parties were to create an improved formulation for certain types of common compounds which would speed the production time for the product, RB would have all Arising Intellectual Property Rights (including the exclusive right to use or to license) within the Field and MSX would have all Arising Intellectual Property Rights (including the exclusive right to use or to license) outside of the Field. For the avoidance of doubt, following termination of this Agreement then, subject to any future written agreement of the parties expressly to the contrary, RB would have rights to the Arising Intellectual Property Rights within the Field but no rights to any Arising Intellectual Property Rights outside the Field or MSX’s Existing Intellectual Property Rights, and MSX would have rights to Arising Intellectual Property Rights outside the Field but no rights to the Arising Intellectual Property Rights within the Field or any of RB’s Existing Intellectual Property Rights.
15.10 The parties agree that, in order (i) to allow RB to apply for, prosecute or maintain any registered protection for RB’s rights in the Arising Intellectual Property as identified in Clause 15.5 and (ii) to allow MSX to apply for, prosecute or maintain any registered protection for MSX’s rights in the Arising Intellectual Property as identified in Clause 15.7, each in a manner which does not prejudice the prospects for registered protection of the other party. Each party shall work with and cooperate with the other prior to any disclosure of, or patent application filing for, any Arising Intellectual Property Right and shall act in accordance with Schedule Nine.
15.11 During the Term, MSX will not assign or license any of MSX’s Existing Intellectual Property Rights to other parties for use in the Field.
15.12 During the Term, except during the last twelve (12) month period thereof if the parties have elected not to extend the Term of this Agreement in accordance with the terms of Clause 3.9, and whether in isolation or for or with others, MSX shall not carry out research or research work related to the Field, other than pursuant to this Agreement.
15.13 During the Term, in the event that MSX shall decide that it no longer wishes to apply for, prosecute or maintain any registered protection for any of MSX Existing Intellectual Property Rights for any country, it shall forthwith notify RB. If RB indicates to MSX that it wishes to take an assignment of such Existing Intellectual Property Rights within the Field, it shall so notify MSX who agrees to conduct good faith negotiations in attempting to reach a resolution to assign such Existing Intellectual Property Rights within the Field to RB. For the avoidance of doubt, this includes any registered protection which MSX is entitled to claim priority from an earlier application at the end of the Paris Convention priority period. If such Existing Intellectual Property Rights are assigned to RB, and to the extent that registered patent protection is obtained which is broader than the Field, RB will grant MSX an irrevocable, perpetual, exclusive (including to the exclusion of RB), royalty-free license (with the right to grant sub-licenses thereunder) under such registered protection or applications therefor outside the Field and throughout the Territory. Notwithstanding anything to the contrary, MSX is under no obligation to assign such Existing Intellectual Property Rights to RB.
15.14 During the Term and upon its knowledge of the occurrence of any infringement or suspected or threatened infringement of any of the Patents, the Arising Intellectual Property rights or the Existing Intellectual Property Rights in the Product or in the Field, or of any proceedings or suspected or threatened proceedings for the revocation or involving the validity of any of the Intellectual Property Rights, the party with this knowledge shall notify the other and provide all details within its knowledge with respect to the same and thereafter upon receipt of a written request the parties will assist each other in taking such steps as either party may reasonably consider to be appropriate at the expense of the party that considers such steps to be appropriate.
15.15 For the purpose of protecting the Intellectual Property Rights, each party shall also procure that its Affiliates shall comply with Clause 3 and this Clause 15.
15.16 Each party undertakes that it shall not at any time during the Term or after the termination or expiration of this Agreement knowingly do or suffer to be done any act or thing which may impair the rights of the other party in its Intellectual Property Rights and further undertakes that it shall not represent that it has any title to or right of ownership in the Intellectual Property Rights of the other party.
15.17 MSX shall manufacture the Products incorporating such layout, content, design, trade marks and artwork as may be reasonably directed by RB in writing. RB shall bear the cost of designing the layout, content and appearance of the labelling, inserts and packaging, including costs of Tooling, used solely in connection with the Products.
15.18 Except as may be required by any Regulatory Authority, MSX shall not make any change or modification to the Products’ packaging or labelling, including the layout, content, design, trade marks or artwork used in connection with such packaging or labelling without the prior written consent of RB.
15.19 RB may, on reasonable prior written notice, change any part of the packaging or labelling of the Products. In the event that such change results in any write-off of the cost of Raw Materials, RB shall bear the cost of such write-off to the extent that such Raw Materials were reasonably required to meet RB’s Forecasts.
15.20 In the event of any packaging or labelling changes, MSX shall, if requested in writing by RB, either destroy (in accordance with all applicable laws) or deliver to RB any Products which are to be written off. RB is to bear the cost of such write off for such Products at: (1) the Cost of Goods Price for such Products if the packaging or labelling change was at RB’s choice; or (2) the manufacturing costs for such Products if the packaging or labelling change was done to meet a change in legal requirements. In addition to the foregoing, in either case, RB shall reimburse MSX for the acquisition costs of any unused packaging materials which can no longer be used for the Products to the extent that such Raw Materials were reasonably required to meet RB’s Forecasts.
15.21 For the avoidance of doubt, in the event of any packaging or labelling changes pursuant to Clause 15.18 or Clause 15.19, upon receipt of written notice of such changes, MSX shall inform and keep RB informed of the stock levels of the Products and relevant Raw Materials and packaging components in order that RB may decide how it wishes to proceed under Clauses 15.18 and 15.19.
15.22 All copyright and other Intellectual Property Rights in any artwork and origination work supplied by RB or its nominee for the labelling, packaging and, where applicable, package inserts for the Products is and shall remain the property of RB or its nominee absolutely. MSX shall not supply or manufacture any such packaging or other components or finished Products or confusingly similar packaging or products other than to RB or as it may direct. Subject to RB being able to incorporate the trademark of MSX as set out in Schedule Eleven (or such variation thereto as is reasonably suggested by MSX and approved by RB, such approval not to be unreasonably withheld, conditioned or delayed) on the back of secondary packaging (being packaging containing one or more of the Products and of an appropriate size for such requirements) without impeding the artwork and information required by Regulatory Authorities to be placed on such secondary packaging, RB shall include the MSX trademark on the reverse of such secondary packaging with the size and location approved by RB (such approval not to be unreasonable withheld, conditioned or delayed but shall remain subject to RB’s obligations to place information required by Regulatory Authorities on such secondary packaging).
16. FORCE MAJEURE
16.1 If either party is prevented or delayed in the performance of any of its obligations under this Agreement as a result of civil commotion, strike (but excluding industrial action or strikes by employees of either party) embargo, governmental legislation or regulation, riot, invasion, war, threat of or preparation for war, fire, explosion, storm, flood, earthquake, subsidence, epidemic or other natural physical disaster or other event beyond the reasonable control of a party that has not occurred as a result of its negligence or other act or omission (“Force Majeure Event”), it shall notify the other party, in writing, of the same as soon as practicable, fully detailing the background to, and all relevant matters connected with, such Force Majeure Event, together with such evidence thereof that it reasonably can give and specifying the period for which such prevention or delay can reasonably be expected to continue. The affected party shall use commercially reasonable efforts to remove or overcome such Force Majeure Event as quickly as possible and shall also use its commercially reasonable efforts to mitigate the impact of such Force Majeure Event of the other party. Subject to Clause 16.2, if a party shall have fully complied with its obligations under this Clause 16.1, it shall be excused from performance of its unfulfilled obligations under this Agreement from the start date of the Force Majeure until such Force Majeure Event no longer pertains.
16.2 If a Force Majeure Event prevents performance by a party of any obligations hereunder for a continuous period in excess of [***] weeks, the other party shall be entitled to terminate this Agreement by written notice at any time after such [***] week period provided the relevant Force Majeure Event remains subsisting at the time such notice is given.
17. TERMINATION
17.1 This Agreement may be terminated at any time upon either party giving to the other [***] days notice in writing if the other party commits a material breach of the terms of this Agreement and (where such breach is capable of remedy) fails to remedy such breach within [***] days of receiving written notice from the other party specifying the breach and requiring its remedy.
17.2 This Agreement may be terminated by either party, immediately on written notice to the other, if;
17.2.1 the other party shall go into liquidation whether voluntary or compulsory or is dissolved or becomes insolvent or if a petition shall be presented or an order made for the appointment of an administrator or if a receiver, administrative receiver or manager shall be appointed over any part of its assets or undertaking which appointment is not dismissed within thirty (30) days of having been made; or
17.2.2 any distress, execution, sequestration or other process is levied or enforced upon or sued out against the property of the other party which is not discharged within thirty (30) days.
17.3 This Agreement may be terminated by RB, forthwith upon written notice to MSX, in the event that:
17.3.1 any applicable Regulatory Authority, state or local regulatory approvals, laws, ordinances or regulations, present or future, state that the Manufacturing Site is not suitable, or ceases to be suitable, for the manufacture of the Products; or
17.3.2 the Product is not suitable for Manufacture by MSX due to environmental, health or safety reasons; or
17.3.3 any of RB’s Health Registrations for the Products is suspended or withdrawn; or
17.3.4 it is determined that the formulation, use or sale of the Products infringes any third party Intellectual Property Rights; or
17.3.5 RB is unable to demonstrate bio-equivalence between the Products and its Suboxone product; or
17.3.6 MSX is unable to provide stability data demonstrating, and obtain appropriate authorisation specifying, a shelf life of the finished Products (i.e. Products packed in accordance with the Packaging Specification) at least equivalent to [***] months; or
17.3.7 RB exercises its right to terminate in accordance with the terms of Clause 7.9.
17.4 This Agreement may be terminated by RB, forthwith upon written notice to MSX, in the event that MSX’s cumulative on-time Product delivery falls below [***] percent ([***]%) during any six (6) month period as specified in Clause 6.5.1, provided that the reason for such failure is not due to the failure of RB to deliver the API on time or to any other fault or failure attributable to RB or its Affiliates or their respective assigns or sublicensees.
17.5 This Agreement may be terminated by MSX, forthwith upon written notice to RB:
17.5.1 In the event that following RB’s filing of a New Drug Application (“NDA”) for FDA approval of the Product (which shall be filed on the assumption that both parties will act reasonably to obtain such filing) and after the expiry of the six (6) month period commencing with RB’s receipt of final response from the FDA regarding RB’s NDA filing, RB fails to use its commercially reasonable efforts to obtain and diligently pursue all approvals from the FDA as required by this Agreement. For purposes of this Clause 17.5.1, RB shall be deemed to have failed to use commercially reasonable efforts to obtain all approvals from the FDA as required by this Agreement if RB fails or elects not to use such efforts and resources (including, without limitation, the promptness in which such efforts and resources would be applied) consistent with its expression of commitment and intent regarding its regulatory strategy for the commercialization exploitation of the Products, on and before the Commencement Date, as a priority of its and its Affiliates product development program, including expending such additional funds and devoting such additional manpower and other resources as is necessary and appropriate to reasonably assure the timely grant of such approvals to effect the transactions contemplated under this Agreement and, in any circumstances, which are consistent with the general level of effort and resources that would be used in the pharmaceutical industry for a company similar in size and scope and with the intention to commercialize and exploit a product critical to the continued success of the company. The parties understand and agree that RB shall not be construed as failing to use commercially reasonable efforts for delays caused solely by the FDA in its review of the applications for U.S. Regulatory Approvals by RB if RB is diligently and timely responding to requests and demands by the FDA relating to such applications;
17.5.2 In the event that RB fails to make reasonable efforts toward a Product Launch in the U.S. after obtaining all necessary approvals from the relevant Regulatory Authorities within six (6) months after obtaining such approvals; or
17.5.3 In the event that RB fails to reach minimum sales of the Products of at least USD$[***] ([***] U.S. dollars) within twenty-four (24) months from the Product Launch set forth in Clause 17.5.2 above.
17.6 This Agreement may be terminated by MSX, forthwith upon written notice to RB, in the event that MSX notifies RB that supplies of the API do not meet the API Specification in accordance with Clause 4.4 and have not done so during the previous consecutive three (3) month period, and RB has not implemented an action plan and remedied the failure to supply the API to the API Specification in accordance with Clause 4.5 within three (3) months after the end of such three (3) month period.
17.7 This Agreement may be terminated by RB if a majority percentage of the issued share capital, or control of the management or voting rights, of MSX is taken over or acquired (collectively, a “Change in Control”) by any third party or parties operating within the Field or expropriated or nationalised.
18. CONSEQUENCES OF TERMINATION
18.1 Upon termination or expiry of this Agreement for whatever reason, MSX shall:
18.1.1 at the written request of RB, use its best endeavours to novate the contracts for the supply of all Raw Materials, Film, packaging components and other materials used in the production of the Products to RB, or as RB may direct, and to meet any request from RB required to transfer production or any registrations or licences or approvals relating to the Products to RB, its Affiliates or any third party approved in writing by RB;
18.1.2 release and make available for immediate collection by or on behalf of RB, and RB shall forthwith purchase from MSX, (i) all finished Products (including stocks maintained in accordance with Clause 6.4) at the Cost of Goods Price and/or (ii) the Raw Materials at the relevant cost of Raw Materials, each as determined in the previous Annual Review;
18.1.3 promptly deliver to RB (or its nominee) a copy of the Master Manufacturing File;
18.1.4 in the case of termination of this Agreement by RB under Clauses 17.1, 17.2, 17.3.1, 17.3.2, 17.3.6, 17.3.7, 17.4, and 17.7 promptly provide to RB all relevant Intellectual Property which is necessary or reasonably useful for the manufacture of the Product in the Field by a qualified third party manufacturer including, but not limited to, those specified in Clause 6.6, subject to confidentiality and intellectual property agreements in the form reasonably satisfactory to MSX; MSX not to unreasonably withhold or delay the execution of such agreements;
18.1.5 promptly collect, pack and make ready for delivery to RB all Tooling provided by or funded by RB, and follow all reasonable directions of RB with respect to the disposition of such Tooling, such delivery being at RB’s cost, and the risk of loss or damage to such Tooling shall pass to RB at the time of removal from MSX’s facility; and
18.1.6 promptly procure the delivery to RB of, or at RB’s request destroy, all copies in its possession of all Confidential Information which is in documentary or other tangible form (including all copies thereof) and which has been disclosed to MSX together with all material relating to that Confidential Information prepared by, or on behalf of, MSX and, at RB’s written request, undertake to RB in writing that it has complied with the provisions of this Clause 18.
19. ASSIGNMENT AND THIRD PARTY RIGHTS
19.1 Except as expressly provided herein, neither the benefits nor the obligations of this Agreement (or any agreement hereunder) or of any provision of it may be assigned or transferred (including sub-contracting other than sub-contracting to the Sub-Contractors listed on Schedule Five) by either party without the prior written consent of the other.
19.2 MSX’s consent, this Agreement (including any agreements hereunder) shall be assignable by RB to any Affiliate and to any purchaser of all or a substantial part of the business of RB to which this Agreement relates and in the event of such assignment and written assumption by such purchaser, RB shall with effect from such assignment be released from its obligations hereunder and all references in this Agreement to RB shall be changed to mean its assigns.
19.3 Any Affiliate of RB may place Orders for Products under this Agreement and may accordingly in their own right enforce the provisions of this Agreement, as though it were RB; provided, that (a) each Affiliate of RB that places an Order for Products shall by doing so be deemed to have assumed RB’s obligations under this Agreement for purposes of such Order, and (b) RB shall remain obligated for the performance of all of the obligations of RB and the applicable Affiliate of RB arising from this Clause 19.3.
19.4 MSX may, without the prior consent of RB, assign this Agreement (and any agreements hereunder): (i) to any purchaser of all or a substantial part of the assets or business of MSX to which this Agreement relates, or (ii) to MonoSol Rx, Inc., and, in each such case, MSX shall with effect from such assignment be released from its obligations hereunder and all references in this Agreement to MSX shall be deemed to include its assigns.
19.5 MSX may, without the prior consent of RB, assign its rights and/or benefits under this Agreement or any provision of it, including, without limitation, any Royalties and/or any other payments due MSX, to any third party, including, without limitation, MonoSol Rx, Inc. or other Affiliate of MSX; provided, that in the event of such assignment under this Clause 19.5, MSX shall remain obligated for the performance of all of the obligations of MSX arising under this Agreement.
20. NOTICES
20.1 Any notice or other communication to be given under this Agreement shall be delivered personally, sent by first-class, pre-paid post or by fax to the following numbers and addresses:
| | | | | | | | | | | | | | |
RECKITT BENCKISER | | | | With a copy to |
| | | | |
Addressee | | [***] | | [***] |
| | [***] | | [***] |
| Fax | | [***] | | [***] |
| Address | | 10710 Midlothian Turnpike, | | 10710 Midlothian Turnpike, |
| | Suite 430 | | Suite 430 |
| | Richmond, VA 23235 | | Richmond, VA 23235 |
| | | | |
| MONOSOL RX, LLC | | | | With a copy to |
| | | | |
Addressee | | Senior Vice President – | | |
| | Business Development | | [***] |
| Fax | | [***] | | [***] |
| Address | | 30 Technology Drive Warren, | | Day Pitney LLP |
| | NJ 07059 | | By Courier: |
| | | | 200 Campus Drive |
| | | | Florham Park, New Jersey 07932 |
| | | | Or |
| | | | By Mail: |
| | | | P.O. Box 1945 |
| | | | Morristown, New Jersey 07962 |
and shall be deemed to have been served upon delivery to the above addresses (if served by hand), three (3) working days following postage to such addresses (if sewed by first-class pre-paid post), and upon transmission of the fax correctly sent to the above number (provided that the sender has proof of transmission and any notice sent after 16:30 shall be deemed to have been served on the recipient the next working day).
21. MISCELLANEOUS
21.1 If there are any inconsistencies between the terms and conditions set forth in this Agreement and the terms and conditions set forth in any quotation, Order, acknowledgement or invoice, the terms and conditions of this Agreement shall prevail.
21.2 This Agreement, the Product Specification, Packaging Specification, API Specification, or any Order may only be amended, modified or varied by the parties by an instrument in writing signed on behalf of each of the parties.
21.3 The waiver by either party of any right under this Agreement or of any failure to perform or breach hereof by the other party shall not constitute or be deemed to be a waiver of any other or future right hereunder or of any other failure to perform or breach hereof by such other party, whether of a similar or dissimilar nature.
21.4 The expiration or earlier termination of this Agreement will not operate to release either party hereto from its obligations which are expressed to or implicitly survive such expiration or termination (including, without limitation, Clauses 9, 10, 11, 12, 13, 15, 18, 20, or 22 and any regulatory obligations imposed by Regulatory Authorities to the extent that these obligations by their terms require the parties to continue to perform such obligations beyond such expiration or termination), or from any liability which has already accrued to the other party as of the date of expiration or termination or which may thereafter accrue in respect of any act, omission or default occurring prior to expiration or termination.
21.5 Nothing in this Agreement shall constitute or be deemed to constitute the creation of a partnership, agency, or employer/employee relationship between the parties.
21.6 This Agreement, together with the Development Agreement for a Pharmaceutical Film between the parties dated 11 December 2006 (and associated amendments, collectively, the “Development Agreement”), Product Specification, API Specification, Quality Agreement and the Schedules attached hereto, constitute the entire agreement and understanding of the parties and supersede any previous agreement between RB and MSX and their Affiliates in relation to the subject matter of this Agreement. To the extent of any conflict or inconsistency between the Development Agreement and/or the Quality Agreement and this Agreement, the terms and conditions of this Agreement shall supersede and control such conflict and/or inconsistent term or condition of the Development Agreement and/or the Quality Agreement, as the case may be save that in the event that the Quality Agreement imposes an additional or greater responsibility than that contained in this Agreement, such additional or greater responsibility shall prevail and be binding on the parties.
21.7 If any provision of this Agreement is held by any court or other competent authority to be invalid or unenforceable in whole or in part it shall be deemed severed from this Agreement and the validity of the other provisions and the remainder of the provision in question shall not be affected.
21.8 This Agreement may be executed in one or more counterparts, all of which shall be considered as one and the same agreement and shall become effective when one or more counterparts have been signed by each of the parties.
21.9 All royalties, taxes and duties imposed or levied on any Products delivered hereunder shall be for the account of and paid by MSX to the point where the Products have been delivered FCA in accordance with Clause 5.7. All royalties, taxes and duties imposed or levied on the Products after such delivery shall be for the account of and paid by RB.
22. LIMITATION OF LIABILITY
22.1 Notwithstanding any provision of this Agreement to the contrary (save in respect of any liability for personal injury or death resulting from a party’s negligence), in no event shall either party be liable to the other, or have any obligation to the other, as the case may be, for any consequential or indirect damages or Losses (including any loss of profits suffered by RB or MSX) however caused and on any theory of liability, regardless of any failure of essential purpose of any remedy available under this Agreement. For the avoidance of doubt, notwithstanding the foregoing limitation of liability, MSX shall ‘remain liable for performance of its obligations as set out under Clauses 7.9.3.3 and 7.10 and the foregoing limitation of liability shall not be applicable to consequential or indirect damages or Losses (including, without limitation, lost profits incurred by the indemnified party) suffered or incurred by an indemnified party as a direct result of any failure by the indemnifying party to perform its obligations under this Agreement which the indemnified party can demonstrate is due to wilful misconduct by the indemnifying party or any of its employees or Affiliates; provided, however, that the parties acknowledge and agree that any act or omission of the indemnifying party or any of its employees or Affiliates done in good faith shall not be and shall not be construed to be wilful misconduct of the indemnifying party or any of its employees or Affiliates. The indemnified party shall inform the indemnifying party in writing of its intent to seek damages pursuant to the foregoing sentence and provide the indemnifying party with reasonable opportunity to remediate any such Loss; provided that nothing in this sentence shall relieve the indemnifying party from performing its obligations in accordance with the terms of this Agreement.
23. LAW AND JURISDICTION
23.1 This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, United States of America, save as to conflict of law provisions, and the parties hereby agree to submit to the jurisdiction of the federal courts located in the State of Delaware.
24. CODE OF CONDUCT
24.1 MSX and RB shall discuss at each Annual Review RB’s Code of Conduct as published as at the time of such Annual Review and ways in which MSX may seek to be consistent with such Code of Conduct to the extent such Code of Conduct does not conflict with the laws of employment practices in the United States and the State of Indiana.
| | | | | | | | |
Signed for and on behalf of Reckitt Benckiser Pharmaceuticals Inc. |
| | |
| /s/Shaun Thaxter | |
| Name: | Shaun Thaxter | |
| Title: | President RB Pharma U.S. | |
| Date: | 8/18/08 | |
| | |
Signed for and on behalf of MonoSol Rx, LLC |
| | |
| /s/Alexander M. Schobel | |
| Name: | Alexander M. Schobel | |
| Title: | President & CEO | |
| Date: | 8/18/08 | |
Schedule One
Cost of Goods Price
USD$[***] per pouched single dose Product
Net Sales Value
The Net Sales Value shall mean, in any case where a Product is sold or commercially disposed of for value by RB, its Affiliates or distributors, the gross invoiced sales price for such Product to third parties, on an arm’s length basis, less the following discounts: (a) customary trade, quantity and trade discounts, charge backs, Medicare or other governmental rebates and customary rebates actually taken or allowed; (b) credits or allowances given or made for the rejection or return of any previously sold Product; (c) to the extent included and separately invoiced in such gross invoice price, any tax or government charge imposed and paid on sale, delivery or use of such Product including, without limitation, any value added or similar tax or government charge, but not including any tax levied with respect to income; and (d) to the extent included and separately invoiced in such gross invoice price any reasonable or documented transport charges.
Schedule Two
Patents
Filed MSRX IP Covering Reckitt-Benckiser
Current Film Formulations and Processes
[***]
Schedule Three
Products
A pouched single dose of the following products:
Buprenorphine Active Ingredient
2 mg
8 mg
12 mg
16 mg
Buprenorphine plus Naloxone Active Ingredient
2 mg Buprenorphine + 0.5 mg Naloxone
8 mg Buprenorphine + 2 mg Naloxone
12 mg Buprenorphine + 3 mg Naloxone
16 mg Buprenorphine + 4 mg Naloxone
Schedule Four
Specifications
PART A
Product and Packaging Specifications
These specifications are as attached in the following pages
[***]
| | | | | | | | | | | | | | |
MonoSol Rx, LLC | [***] | Rev. 1 | Page: 1 of 1 | [***] |
| [***] | [***] | [***] |
| | | | | | | | |
| Test | Method | Specification |
| [***] | [***] | [***] |
| [***] | [***] | [***] |
| [***] | [***] | [***] |
| [***] | [***] | [***] |
| | | | | | | | | | | | | | |
| | Name | Department | Signature | Date |
| Prepared by: | [***] | [***] | [***] | [***] |
| Reviewed by: | [***] | [***] | [***] | [***] |
| Approved by: | [***] | [***] | [***] | [***] |
| Approved by: | [***] | [***] | [***] | [***] |
| | | | | | | | | | | | | | |
MonoSol Rx, LLC | [***] | Rev. 1 | Page: 1 of 2 | [***] |
| [***] | [***] | [***] |
[***]
| | | | | | | | | | | |
| Test | [***] | [***] | [***] |
| [***] | [***] | [***] | [***] |
| [***] | [***] | [***] | [***] |
| [***] | [***] | [***] | [***] |
| [***] | [***] | [***] | [***] |
| | | | | | | | | | | | | | |
| | Name | Department | Signature | Date |
| Prepared by: | [***] | [***] | [***] | [***] |
| Reviewed by: | [***] | [***] | [***] | [***] |
| Approved by: | [***] | [***] | [***] | [***] |
| Approved by: | [***] | [***] | [***] | [***] |
| Approved by: | [***] | [***] | [***] | [***] |
| Approved by: | [***] | [***] | [***] | [***] |
| | | | | | | | | | | | | | | | | | | | |
MonoSol Rx, LLC | [***] | Rev. 1 | Page: 2 of 2 | [***] |
| [***] | [***] | [***] |
| Author’s Initial & Date | Reviewer’s Initial & Date: | Approver’s Initial & Date: | Approver’s Initial & Date: | Approver’s Initial & Date: | Approver’s Initial & Date: |
| | | | | | | | | | | |
| [***] | [***] | [***] | [***] |
| [***] | [***] | [***] | [***] |
| [***] | [***] | [***] | [***] |
| [***] | [***] | [***] | [***] |
| [***] | [***] | [***] | [***] |
| | | | | | | | | | | | | | |
MonoSol Rx, LLC | [***] | Rev. 1 | Page: 1 of 2 | [***] |
| [***] | [***] | [***] |
[***]
| | | | | | | | | | | | | | |
| | Name | Department | Signature | Date |
| Prepared by: | [***] | [***] | [***] | [***] |
| Reviewed by: | [***] | [***] | [***] | [***] |
| Approved by: | [***] | [***] | [***] | [***] |
| Approved by: | [***] | [***] | [***] | [***] |
| | | | | | | | | | | | | | | | | | | | | | | |
MonoSol Rx, LLC | [***] | Rev. 1 | Page: 2 of 2 | [***] |
| [***] | [***] | [***] |
| Preparer’s Initials & Date | Reviewer’s Initials & Date | Approvers’ Initial & Date: | Approver’s Initials & Date: |
| | | | | | | | |
| TEST | Method | Specification |
| [***] | [***] | [***] |
| [***] | [***] | [***] |
| [***] | [***] | [***] |
| [***] | [***] | [***] |
| | | | | | | | | | | | | | | | | | | | |
MonoSol Rx, LLC | [***] | Rev. 1 | Page: 1 of 3 | [***] |
| [***] | [***] | [***] |
[***]
| | | | | | | | | | | | | | |
| | Name | Department | Signature | Date |
| Prepared by: | [***] | [***] | [***] | [***] |
| Reviewed by: | [***] | [***] | [***] | [***] |
| Approved by: | [***] | [***] | [***] | [***] |
| Approved by: | [***] | [***] | [***] | [***] |
| Approved by: | [***] | [***] | [***] | [***] |
| Approved by: | [***] | [***] | [***] | [***] |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
MonoSol Rx, LLC | [***] | Rev. 1 | Page: 2 of 3 | [***] |
| [***] | [***] | [***] |
| Preparer’s Initials & Date | Reviewer’s Initials & Date | Approvers’ Initial & Date: | Approver’s Initials & Date: | Approver’s Initials & Date: |
| | | | | | | | | | | |
| Test | [***] | [***] | [***] |
| [***] | [***] | [***] | [***] |
| [***] | [***] | [***] | [***] |
| [***] | [***] | [***] | [***] |
| [***] | [***] | [***] |
| [***] | [***] | [***] | [***] |
| [***] | [***] | [***] | [***] |
| [***] | [***] | [***] | [***] |
| [***] | [***] | [***] | [***] |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
MonoSol Rx, LLC | [***] | Rev. 1 | Page: 3 of 3 | [***] |
| [***] | [***] | [***] |
| Preparer’s Initials & Date | Reviewer’s Initials & Date | Approvers’ Initial & Date: | Approver’s Initials & Date: | Approver’s Initials & Date: |
| | | | | | | | | | | | | | |
MonoSol Rx, LLC | [***] | Rev. 1 | Page: 1 of 1 | [***] |
| [***] | [***] | [***] |
[***]
| | | | | | | | |
| TEST | Method | Specification |
| [***] | [***] | [***] |
| [***] | [***] | [***] |
| [***] | [***] | [***] |
| [***] | [***] | [***] |
| | | | | | | | | | | | | | |
| | Name | Department | Signature | Date |
| Prepared by: | [***] | [***] | [***] | [***] |
| Reviewed by: | [***] | [***] | [***] | [***] |
| Approved by: | [***] | [***] | [***] | [***] |
| Approved by: | [***] | [***] | [***] | [***] |
| | | | | | | | | | | | | | | | | | | | | | | |
MonoSol Rx, LLC | [***] | Rev. 1 | Page: 1 of 2 | [***] |
| [***] | [***] | [***] |
| Author’s Initials & Date | Reviewer’s Initials & Date | Approvers’ Initial & Date: | Approver’s Initials & Date: | Approver’s Initials & Date: |
[***]
| | | | | | | | | | | |
| Test | [***] | [***] | [***] |
| [***] | [***] | [***] | [***] |
| [***] | [***] | [***] | [***] |
| [***] | [***] | [***] | [***] |
| [***] | [***] | [***] | [***] |
| [***] | [***] | [***] |
| [***] | [***] | [***] | [***] |
| [***] | [***] | [***] | [***] |
| | | | | | | | | | | | | | |
MonoSol Rx, LLC | [***] | Rev. 1 | Page: 2 of 2 | [***] |
| [***] | [***] | [***] |
| | | | | | | | | | | | | | |
| | Name | Department | Signature | Date |
| Prepared by: | [***] | [***] | [***] | [***] |
| Reviewed by: | [***] | [***] | [***] | [***] |
| Approved by: | [***] | [***] | [***] | [***] |
| Approved by: | [***] | [***] | [***] | [***] |
| Approved by: | [***] | [***] | [***] | [***] |
| | | | | | | | | | | | | | |
MonoSol Rx, LLC | [***] | Rev. 1 | Page: 1 of 1 | [***] |
| [***] | [***] | [***] |
[***]
| | | | | | | | |
| TEST | Method | Specification |
| [***] | [***] | [***] |
| [***] | [***] | [***] |
| [***] | [***] | [***] |
| [***] | [***] | [***] |
| | | | | | | | | | | | | | |
| | Name | Department | Signature | Date |
| Prepared by: | [***] | [***] | [***] | [***] |
| Reviewed by: | [***] | [***] | [***] | [***] |
| Approved by: | [***] | [***] | [***] | [***] |
| Approved by: | [***] | [***] | [***] | [***] |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
MonoSol Rx, LLC | [***] | Rev. 1 | Page: 1 of 2 | [***] |
| [***] | [***] | [***] |
| Author’s Initials & Date | Reviewer’s Initials & Date | Approvers’ Initial & Date: | Approver’s Initials & Date: | Approver’s Initials & Date: |
[***]
| | | | | | | | | | | |
| Test | [***] | [***] | [***] |
| [***] | [***] | [***] | [***] |
| [***] | [***] | [***] | [***] |
| [***] | [***] | [***] | [***] |
| [***] | [***] | [***] | [***] |
| [***] | [***] | [***] |
| [***] | [***] | [***] | [***] |
| [***] | [***] | [***] | [***] |
| | | | | | | | | | | | | | |
MonoSol Rx, LLC | [***] | Rev. 1 | Page: 2 of 2 | [***] |
| [***] | [***] | [***] |
| | | | | | | | | | | | | | |
| | Name | Department | Signature | Date |
| Prepared by: | [***] | [***] | [***] | [***] |
| Reviewed by: | [***] | [***] | [***] | [***] |
| Approved by: | [***] | [***] | [***] | [***] |
| Approved by: | [***] | [***] | [***] | [***] |
| Approved by: | [***] | [***] | [***] | [***] |
| | | | | | | | | | | | | | |
MonoSol Rx, LLC | [***] | Rev. 1 | Page: 1 of 1 | [***] |
| [***] | [***] | [***] |
| | | | | | | | |
| TEST | Method | Specification |
| [***] | [***] | [***] |
| [***] | [***] | [***] |
| [***] | [***] | [***] |
| [***] | [***] | [***] |
| | | | | | | | | | | | | | |
| | Name | Department | Signature | Date |
| Prepared by: | [***] | [***] | [***] | [***] |
| Reviewed by: | [***] | [***] | [***] | [***] |
| Approved by: | [***] | [***] | [***] | [***] |
| Approved by: | [***] | [***] | [***] | [***] |
| | | | | | | | | | | | | | |
MonoSol Rx, LLC | [***] | Rev. 1 | Page: 1 of 1 | [***] |
| [***] | [***] | [***] |
[***]
| | | | | | | | | | | |
| Test | [***] | [***] | [***] |
| [***] | [***] | [***] | [***] |
| [***] | [***] | [***] | [***] |
| [***] | [***] | [***] | [***] |
| [***] | [***] | [***] | [***] |
| [***] | [***] | [***] | [***] |
| [***] | [***] | [***] | [***] |
| [***] | [***] | [***] | [***] |
| [***] | [***] | [***] | [***] |
| | | | | | | | | | | | | | |
| | Name | Department | Signature | Date |
| Prepared by: | [***] | [***] | [***] | [***] |
| Reviewed by: | [***] | [***] | [***] | [***] |
| Approved by: | [***] | [***] | [***] | [***] |
| Approved by: | [***] | [***] | [***] | [***] |
| Approved by: | [***] | [***] | [***] | [***] |
| Approved by: | [***] | [***] | [***] | [***] |
| | | | | | | | | | | | | | |
MonoSol Rx, LLC | [***] | Rev. 1 | Page: 1 of 1 | [***] |
| [***] | [***] | [***] |
[***]
| | | | | | | | | | | |
| Test | [***] | [***] | [***] |
| [***] | [***] | [***] | [***] |
| [***] | [***] | [***] | [***] |
| [***] | [***] | [***] | [***] |
| [***] | [***] | [***] | [***] |
| [***] | [***] | [***] | [***] |
| [***] | [***] | [***] | [***] |
| [***] | [***] | [***] | [***] |
| [***] | [***] | [***] | [***] |
| | | | | | | | | | | | | | |
| | Name | Department | Signature | Date |
| Prepared by: | [***] | [***] | [***] | [***] |
| Reviewed by: | [***] | [***] | [***] | [***] |
| Approved by: | [***] | [***] | [***] | [***] |
| Approved by: | [***] | [***] | [***] | [***] |
| Approved by: | [***] | [***] | [***] | [***] |
| Approved by: | [***] | [***] | [***] | [***] |
| | | | | | | | | | | | | | |
MonoSol Rx, LLC | [***] | Rev. 2 | Page: 1 of 1 | [***] |
| [***] | [***] | [***] |
[***]
| | | | | | | | |
| TEST | Method | Specification |
| [***] | [***] | [***] |
| [***] | [***] | [***] |
| [***] | [***] | [***] |
| [***] | [***] | [***] |
| | | | | | | | | | | | | | |
| | Name | Department | Signature | Date |
| Prepared by: | [***] | [***] | [***] | [***] |
| Reviewed by: | [***] | [***] | [***] | [***] |
| Approved by: | [***] | [***] | [***] | [***] |
| Approved by: | [***] | [***] | [***] | [***] |
| | | | | | | | | | | | | | |
MonoSol Rx, LLC | [***] | Rev. 1 | Page: 1 of 1 | [***] |
| [***] | [***] | [***] |
[***]
| | | | | | | | | | | |
| Test | [***] | [***] | [***] |
| [***] | [***] | [***] | [***] |
| [***] | [***] | [***] | [***] |
| [***] | [***] | [***] | [***] |
| [***] | [***] | [***] | [***] |
| [***] | [***] | [***] | [***] |
| [***] | [***] | [***] | [***] |
| [***] | [***] | [***] | [***] |
| [***] | [***] | [***] | [***] |
| | | | | | | | | | | | | | |
| | Name | Department | Signature | Date |
| Prepared by: | [***] | [***] | [***] | [***] |
| Reviewed by: | [***] | [***] | [***] | [***] |
| Approved by: | [***] | [***] | [***] | [***] |
| Approved by: | [***] | [***] | [***] | [***] |
| Approved by: | [***] | [***] | [***] | [***] |
| Approved by: | [***] | [***] | [***] | [***] |
| | | | | | | | | | | | | | |
MonoSol Rx, LLC | [***] | Rev. 1 | Page: 1 of 1 | [***] |
| [***] | [***] | [***] |
[***]
| | | | | | | | | | | |
| Test | [***] | [***] | [***] |
| [***] | [***] | [***] | [***] |
| [***] | [***] | [***] | [***] |
| [***] | [***] | [***] | [***] |
| [***] | [***] | [***] | [***] |
| [***] | [***] | [***] | [***] |
| [***] | [***] | [***] | [***] |
| [***] | [***] | [***] | [***] |
| [***] | [***] | [***] | [***] |
| | | | | | | | | | | | | | |
| | Name | Department | Signature | Date |
| Prepared by: | [***] | [***] | [***] | [***] |
| Reviewed by: | [***] | [***] | [***] | [***] |
| Approved by: | [***] | [***] | [***] | [***] |
| Approved by: | [***] | [***] | [***] | [***] |
| Approved by: | [***] | [***] | [***] | [***] |
| Approved by: | [***] | [***] | [***] | [***] |
PORTIONS OF THIS EXHIBIT HAVE BEEN REDACTED.
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS BOTH (i) NOT MATERIAL AND (ii) WOULD BE LIKELY TO CAUSE COMPETITIVE HARM IF PUBLICLY DISCLOSED.
REDACTED MATERIAL IS MARKED WITH [***].
AMENDMENT NO. 1
COMMERCIAL EXPLOITATION AGREEMENT
THIS AMENDMENT NO. 1 (this “Amendment”) is made on the 19th day of August, 2009 (the “Effective Date”) between:
PARTIES
(1) MonoSol Rx, LLC, a company organized and existing under the laws of the USA, with offices at 30 Technology Drive, Warren, New Jersey 07059, USA (“MSX”),
and
(2) Reckitt Benokiser Pharmaceuticals Inc., a company existing under the laws of the USA with offices at 10710 Midlothian Turnpike, Suite 430, Richmond, Virginia 23235 (“RB”).
WHEREAS, MSX and RB entered into a Commercial Exploitation Agreement, dated August 15, 2008 (the “Agreement”), pursuant to which RB engaged MSX to manufacture and supply the Products on the terms of the Agreement and MSX agreed to manufacture and supply the Products to RB on the terms of the Agreement; and
WHEREAS, for valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the. parties mutually desire to amend and modify certain terms and conditions of the Agreement as set forth in this Amendment.
IT IS AGREED as follows:
A. Capitalized terms used In this Amendment without definition shall have the respective meanings ascribed thereto in the Agreement.
B. The parties hereby agree that from the Effective Date through and until March 31, 2010 (the “Expedited Release Approval Period”), MSX shall manufacture and supply RB’s requirements of the Products for the U.S. in accordance with the SUBOXONE® Sublingual Film — Batch Transfer and Batch Release Approval Process (the “Expedited Release Approval Process”), a copy of which is annexed hereto as Schedule B and made a part hereof. As between MSX and RB, RB shall be solely responsible for ensuring that the Products are not released for commercial distribution by RB or its secondary packager(s) until the prerequisites for release set forth in the Expedited Release Approval Process have been satisfied. RB shall indemnify, defend and hold harmless MSX Parties pursuant to Clause 10 of the Agreement from any and all Losses that result from or arise in connection with any Claim against any of the MSX Parties to the extent the Claim arises from a release of Product by RB or its secondary packager(s) during the Expedited Release Approval Period in violation of the Expedited Release Approval Process. RB shall accept all shipments of Product subject to the Expedited Release Approval Process. The parties acknowledge and agree that MSX’s release of Product under the Expedited Release Approval Process deviates from the release process set forth in the underlying Agreement and Quality Agreement and that, as such, such deviation by MSX shall not constitute a violation of the underlying Agreement or the Quality Agreement.
C. This Amendment shall be governed by and construed in accordance with the laws of the State of Delaware, United States of America, save as to conflict of law provisions, and the parties hereby agree to submit to the Jurisdiction of the federal courts located in the State of Delaware.
D. Except as expressly set forth herein, all other terms and provisions of the Agreement shall remain in full force and effect without modification or change.
Signed for and on behalf Reckitt Benckiser Pharmaceuticals Inc.
| | |
| /s/ Shaun Thaxter |
| Name: Shaun Thaxter |
| Title: President |
| Date: August 19, 2009 |
Signed for and on behalf of MonoSol Rx, LLC
| | |
| /s/ Mark Schobel |
| Name: Mark Schobel |
| Title: CEO |
| Date: August 19, 2009 |
SCHEDULE B
SUBOXONE® SUBLINGUAL FILM – BATCH TRANSFER AND BATCH APPROVAL PROCESS
SUBOXONE® SUBLINGUAL FILM — BATCH TRANSFER AND BATCH RELEASE APPROVAL PROCESS
[***]
PORTIONS OF THIS EXHIBIT HAVE BEEN REDACTED.
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS BOTH (i) NOT MATERIAL AND (ii) WOULD BE LIKELY TO CAUSE COMPETITIVE HARM IF PUBLICLY DISCLOSED.
REDACTED MATERIAL IS MARKED WITH [***].
AMENDMENT NO. 2
COMMERCIAL EXPLOITATION AGREEMENT
THIS AMENDMENT NO. 2 (the “Amendment”) is made effective as of the 13th day of November, 2009 (the “Effective Date”) between:
PARTIES
(1) MonoSol Rx, LLC, a company organized and existing under the laws of the USA, with offices at 30 Technology Drive, Warren, New Jersey 07059, USA (“MSX”),
and
(2) Reckitt Benckiser Pharmaceuticals Inc., a company existing under the laws of the USA with offices at 10710 Midlothian Turnpike, Suite 430, Richmond, Virginia 23235 (“RB”).
WHEREAS, MSX and RB entered into a Commercial Exploitation Agreement, dated August 15, 2008, as amended by Amendment No. 1, dated August 19, 2009 (the “Agreement”), pursuant to which RB engaged MSX to manufacture and supply the Products on the terms of the Agreement and MSX agreed to manufacture and supply the Products to RB on the terms of the Agreement; and
WHEREAS, for valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties mutually desire to amend and modify certain terms and conditions of the Agreement as set forth in this Amendment.
IT IS AGREED as follows:
A. Capitalized terms used in this Amendment without definition shall have the respective meanings ascribed thereto in the Agreement. This Amendment shall apply solely to Products supplied for sale or other uses in the U.S. and shall not be construed to amend, modify or change the Agreement as it relates to any Products supplied for sale or other uses the ROW, except as otherwise specifically set forth in this Amendment.
B. The parties acknowledge and agree that, as of the Effective Date, the Price payable by RB to MSX for purchases of Products for the U.S. shall be fixed at USD$[***] per pouched single dose Product, subject only to price adjustments pursuant to Clause 7.3 and Clause 7.23 of the Agreement (a new provision to the Agreement as set forth in Section K below) (the “Fixed Purchase Price”), until the earlier of either: (i) RB’s acceptance of the delivery of the [***] unit of Product for the U.S., or (ii) January 1, 2011 (the “Fixed Purchase Price Period”). The parties further acknowledge and agree that, as of the Effective Date, RB shall not be entitled to receive any Rebate on any Products purchased for the U.S. during the Term pursuant to Clause 7.22; however, all of RB’s purchases of Products during the Term, including without limitation, RB’s purchases of Products for the U.S., shall be included in and counted towards the calculation of RB’s aggregate volume purchases of Product in any Year for purposes of determining RB’s entitlement to the Rebates on purchases of Products during the Term in the ROW pursuant to Clause 7.22. By way of example, if during any one Year, RB purchases [***] units of Product for the U.S. and [***] units of Product for the ROW, for an aggregate purchase of [***] units of Product, RB would be entitled to receive a Rebate of [***] U.S. Dollars (USD$[***]) per unit of Product for the [***] units of Product for the ROW [***] on the units of Product for the U.S, By way of further example, if during any one Year, RB purchases [***] units of Product for the U.S. and [***] units of Product for the ROW, for an aggregate purchase of [***] units of Product, RB would be entitled to receive a Rebate of [***] U.S. Dollars (USD$[***]) per unit of Product for the first [***] units of Product for the ROW and a Rebate of [***] U.S. Dollars (USD$[***]) per unit of Product for the second [***] units of Product for the ROW but no Rebate on the units of Product for the U.S.
C. The parties hereby agree that the definition of “Cost of Goods Price” under Clause 1.1 of the DEFINITIONS section of the Agreement shall be amended and restated as follows:
“Cost of Goods Price” shall have the meaning given in Clause 7.14.
D. The parties hereby agree to amend the DEFINITIONS section of the Agreement to include the definition of “Quarter Year” under Clause 1.1 as set forth below:
“Quarter Year” means the three month period ending 31 March, 30 June, 30 September, or 31 December in each calendar year (or such part thereof as the case may be for the initial and final Quarter Year periods under this Agreement).
E. The parties hereby agree that Clause 2.1 set forth in the TERM section of the Agreement shall be amended and restated in its entirety to read as follows:
2.1 This Agreement shall be effective beginning as of the Commencement Date and shall continue, unless earlier terminated by either party in accordance with the provisions of Clause 17, for a period of seven (7) years (the “Initial Term”). Upon expiration of the Initial Term, this Agreement shall thereafter automatically renew for successive one (1) year periods (each, a “Renewal Term”) on a continuous basis, unless and until RB delivers to MSX written notice of RB’s intent not to renew the Agreement, which notice must be delivered at least one (1) year prior to the expiration of the Initial Term or of a Renewal Term (the Initial Term, together with any Renewal Terms, are hereinafter collectively referred to as the “Term”). In no case shall the Term of this Agreement extend beyond the expiration date of the last to expire of the Patents, without the written consent of both parties.
F. The parties hereby agree that Clause 6.3 set forth in the CAPACITY, STOCK LEVELS AND TOOLING section of the Agreement shall be amended and restated in its entirety to read as follows:
6.3.1 MSX represents and warrants that it will have the capacity to fill RB’s requirements for the Products set forth in any Order so long as the amount specified in the Order does not exceed [***] percent ([***]) of the forecasted volume for such period as set out in the previous Forecast (or such other figure as RB and MSX may agree in writing from time to time). In addition to the foregoing, MSX covenants, represents and warrants that it shall take commercially reasonable action to promptly validate and obtain cGMP approval of its [***] and [***] facilities for the manufacture of the Products at the [***] batch size and that, by no later than [***] months after the date on which the new drug application for the Products is approved by the FDA (the “Capacity Increase Deadline”), MSX will have the capacity to manufacture and supply to RB up to [***] units of the Products for the U.S. per Quarter Year [***] units of the Products for the U.S. per Year). At RB’s reasonable written request, MSX shall provide RB with capacity information to demonstrate that the available capacity meets RB’s requirements of Product. MSX shall promptly take commercially reasonable action to address to RB’s reasonable satisfaction any capacity issues identified in accordance with this Clause 6.3 and Clause 6.6.
6.3.2 To ensure RB of Product supply continuity for the U.S. and ROW and in support of an extended shelf-life for the Products, MSX agrees that: (i) upon execution of this Amendment, it shall provide all necessary support to RB in order to expeditiously validate and obtain cGMP approval of an RB-designated third party packaging facility with the capability to package the Products [***]; and (ii) in the event that MSX cannot supply RB’s requirements for Products in the U.S. and/or ROW because MSX either does not have the capacity or capability to package sufficient Product [***] or Product [***], as determined by the longest Product shelf-life, to meet RB’s requirements, then RB shall have the right to source packaging of the Products from the RB-designated third party packager but only until such time as MSX is able to meet RB’s requirements for Products; and (iii) further to subsection (ii) of this Clause 6.32, MSX will supply to RB such quantities of unpackaged Product (i.e., the finished substrate) in bulk rolls, as needed by RB (within the capacity limits set forth in the Agreement), to meet RB’s requirements for Product in accordance with the terms of this Agreement.
G. The parties hereby agree that Clause 7.4.1 set forth in the PRICE AND PAYMENT section of the Agreement shall be amended and restated in its entirety to read as follows:
7.4.1 [***] percent ([***]%) of the Net Sales Value of the Products sold during the Term in the U.S. per Year up to a not to exceed amount of [***] U.S. Dollars (USD$[***]) per Year. Once the aggregate Royalties paid by RB to MSX with respect to Products sold in the U.S., inclusive of the Royalty prepayment pursuant to Clause 7.18 and the advance on Royalties pursuant to Clause 7.24, equal [***] U.S. Dollars (USD$[***]), RB’s
obligation to pay any further Royalties to MSX with respect to Products sold in the U.S. shall immediately and permanently cease; and
H. The parties hereby agree that Clause 7.5.2 set forth in the PRICE AND PAYMENT section of the Agreement shall be amended and restated in its entirety to read as follows:
7.5.2 The aggregate Royalties paid by RB to MSX with respect to Products sold in the U.S., inclusive of the Royalty prepayment pursuant to Clause 7.18 and the advance on Royalties pursuant to Clause 7.24, reaching the amount of [***] U.S. Dollars (USD$[***]).
I. The parties hereby agree that Clause 7.7 set forth in the PRICE AND PAYMENT section of the Agreement shall be amended to delete: (i) the reference to Clause 7.4.1 in the first sentence, (ii) Clause 7.7.1 in its entirety, and (iii) the last two sentences of Clause 7.7 and replace these sentences with the following provision: “Upon making payment to MSX of the amounts stated in Clause 7.7.2 the obligations to pay Royalties to MSX in respect of the ROW will immediately cease.”
J. The parties hereby agree that Clause 7.16 set forth in the PRICE AND PAYMENT section of the Agreement shall be amended and restated in its entirety to read as follows:
7.16 Invoices shall be paid in accordance with the following payment schedule:
7.16.1 RB shall pay invoices in respect of the Cost of Goods Price for the U.S., together with any other invoices submitted to it pursuant to this Agreement for the U.S. prior to the expiry of the 2010 Year, within [***] of receipt by RB from MSX of a valid invoice therefore (reflecting applicable sales tax, if any). RB shall thereafter pay invoices in respect of the Cost of Goods Price for the U.S., together with any other invoices submitted to it pursuant to this Agreement for the U.S. for the remainder of the Term, within [***] of receipt by RB from MSX of a valid invoice therefore (reflecting applicable sales tax, if any); provided, however, that, commencing after the Price reduction in respect of the U.S. pursuant to Clause 7.23 below takes effect, RB shall thereafter pay for the remainder of the Term such invoices within [***] of receipt by RB from MSX of a valid invoice therefore (reflecting applicable sales tax, if any).
7.16.2 RB shall pay invoices in respect of the Cost of Goods Price for the ROW, together with any other invoices submitted to it pursuant to this Agreement for the ROW, within [***] of receipt by RB from MSX of a valid invoice therefore (reflecting applicable sales tax, if any).
K. The parties hereby agree that Clause 7.18 set forth in the PRICE AND PAYMENT section of the Agreement shall be amended and restated in its entirety to read as follows:
7.18 RB shall pay the Royalty for Products (if any) pursuant to Clause 7.4.1 within [***] of the expiry of the Quarter Year period in which the relevant Royalties are chargeable. Once the aggregate Royalties paid by RB to MSX with respect to Products sold in the U.S., inclusive of the advance on Royalties pursuant to Clause 7.24, equal [***] U.S. Dollars (USD$[***]), RB shall, within [***] days, prepay to MSX [***] U.S. Dollars (USD$[***]) on a non-refundable basis, which prepayment shall be credited by MSX against future Royalties payable by RB for Products sold in the U.S. Upon making the prepayment of [***] U.S. Dollars (USD$[***]) to MSX, RB’s obligation to pay any further Royalties to MSX with respect to Products sold in the U.S. shall immediately and permanently cease. RB shall pay the royalty for Products (if any) pursuant to Clause 7.4.2 within [***] of the expiry of the Half Year period in which the relevant Royalties are chargeable. Each Royalty payment shall be accompanied by a statement detailing the calculation of Royalties due to MSX, including, without limitation, the amount of Products sold and the corresponding Royalty amount.
L. The parties hereby agree that the PRICE AND PAYMENT section of the Agreement shall be amended to include a new Clause 7.23, which shall be set forth as follows:
7.23 Upon the payment by RB to MSX of [***] U.S. Dollars (USD$[***]) of Royalties for the U.S. (including the prepayment of Royalties pursuant to Clause 7.18), the then current Price payable by RB to MSX for purchases of Products in the U.S. shall automatically and immediately be reduced by [***] percent ([***]%) and this reduced Price shall thereafter remain in effect for a period of one (1) year before it is subject to adjustment pursuant to the terms of the Agreement.
M. the parties hereby agree that the PRICE AND PAYMENT section of the Agreement shall be amended to include a new Clause 7.24, which shall be set forth as follows:
7.24 RB agrees to pay MSX an advance of [***] U.S. Dollars (USD$[***]) on the Royalties payable to MSX pursuant to Clause 7.4.1 upon receiving approval of its new drug application (NDA) for the Products from the FDA. MSX hereby agrees that RB shall be entitled to receive interest on this advance in the amount of [***] percent ([***]%) per annum and that the total amount of the advance, plus accumulated interest, shall be credited against the Royalties payable by RB to MSX pursuant to Clause 7.4.1.
N. Except as expressly set forth herein, all other terms and provisions of the Agreement shall remain in full force and effect without modification or change. This Amendment shall be made a part of, and incorporated by reference into, the Agreement and shall be subject to the terms and provisions thereof, except as expressly set forth herein.
Signed for and on behalf Reckitt Benckiser Pharmaceuticals Inc.
| | |
| /s/ Shaun Thaxter |
| Name: Shaun Thaxter |
| Title: President |
| Date: November 13, 2009 |
Signed for and on behalf of MonoSol Rx, LLC
| | |
| /s/ Mark Schobel |
| Name: Mark Schobel |
| Title: CEO |
| Date: November 13, 2009 |
PORTIONS OF THIS EXHIBIT HAVE BEEN REDACTED.
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS BOTH (i) NOT MATERIAL AND (ii) WOULD BE LIKELY TO CAUSE COMPETITIVE HARM IF PUBLICLY DISCLOSED.
REDACTED MATERIAL IS MARKED WITH [***].
AMENDMENT NO. 3
COMMERCIAL EXPLOITATION AGREEMENT
THIS AMENDMENT NO. 3 (this “Amendment”) is made on the 30th day of March 2010 (the “Effective Date”) between:
PARTIES
(1) MonoSol Rx, LLC, a company organized and existing under the laws of the USA, with offices at 30 Technology Drive, Warren, New Jersey 07059, USA (“MSX”),
and
(2) Reckitt Benckiser Pharmaceuticals Inc., a company existing under the laws of the USA with offices at 10710 Midlothian Turnpike, Suite 430, Richmond, Virginia 23235 (“RS”).
WHEREAS, MSX and RB entered into a Commercial Exploitation Agreement, dated August 15, 2008 (the “Agreement”), pursuant to which RB engaged MSX to manufacture and supply the Products on the terms of the Agreement and MSX agreed to manufacture and supply the Products to RB on the terms of the Agreement; and
WHEREAS, for valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties mutually desire to amend and modify certain terms and conditions of the Agreement as set forth in this Amendment.
IT IS AGREED as follows:
A. Capitalized terms used in this Amendment without definition shall have the respective meanings ascribed thereto in the Agreement.
B. The parties hereby agree that from the Effective Date through and until May 31, 2010 (the “Expedited Release Approval Period”), MSX shall manufacture and supply RB’s requirements of the Products for the U.S. in accordance with the SUBOXONE® Sublingual Film — Batch Transfer and Batch Release Approval Process (the “Expedited Release Approval Process”), a copy of which is annexed hereto as Schedule B and made a part hereof. As between MSX and RB, RB shall be solely responsible for ensuring that the Products are not released for commercial distribution by RB or its secondary packager(s) until the prerequisites for release set forth in the Expedited Release Approval Process have been satisfied. . RB shall indemnify, defend and hold harmless MSX Parties pursuant to Clause 10 of the Agreement from any and all Losses that result from or arise in connection with any Claim against any of the MSX Parties to the extent the Claim arises from a release of Product by RB or its secondary packager(s) during the Expedited Release Approval Period in violation of the Expedited Release Approval Process. RB shall accept all shipments of Product subject to the Expedited Release Approval Process. The parties acknowledge and agree that MSX’s release of Product under the Expedited Release Approval Process deviates from the release process set forth in the underlying Agreement and Quality Agreement and that, as such, such deviation by MSX shall not constitute a violation of the underlying Agreement or the Quality Agreement.
C. This Amendment shall be governed by and construed in accordance with the laws of the State of Delaware, United States of America, save as to conflict of law provisions, and the parties hereby agree to submit to the jurisdiction of the federal courts located in the State of Delaware.
D. Except as expressly set forth herein, all other terms and provisions of the Agreement shall remain in full force and effect without modification or change.
Signed for and on behalf Reckitt Benckiser Pharmaceuticals Inc.
| | |
| /s/ Shaun Thaxter |
| Name: Shaun Thaxter |
| Title: President |
| Date: March 30, 2010 |
Signed for and on behalf of MonoSol Rx, LLC
| | |
| /s/ Mark Schobel |
| Name: Mark Schobel |
| Title: CEO |
| Date: March 30, 2010 |
SCHEDULE B
SUBOXONE® SUBLINGUAL FILM – BATCH TRANSFER AND BATCH APPROVAL PROCESS
[***]
PORTIONS OF THIS EXHIBIT HAVE BEEN REDACTED.
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS BOTH (i) NOT MATERIAL AND (ii) WOULD BE LIKELY TO CAUSE COMPETITIVE HARM IF PUBLICLY DISCLOSED.
REDACTED MATERIAL IS MARKED WITH [***].
AMENDMENT NO. 4
COMMERCIAL EXPLOITATION AGREEMENT
THIS AMENDMENT NO. 4 (this “Amendment”) is made on the 13th day of October 2010 (the “Effective Date”) between:
PARTIES
(1) MonoSol Rx, LLC, a company organized and existing under the laws of the USA, with offices at 30 Technology Drive, Warren, New Jersey 07059, USA (“MSX”),
and
(2) Reckitt Benckiser Pharmaceuticals Inc., a company existing under the laws of the USA with offices at 10710 Midlothian Turnpike, Suite 430, Richmond, Virginia 23235 (“RB”).
WHEREAS, MSX and RB entered into a Commercial Exploitation Agreement, dated August 15, 2008 as amended by Amendment No, 1 thereto on August 19, 2009, Amendment No. 2 thereto on November 13, 2009, and Amendment No. 3 thereto on March 30, 2010 (collectively, the “Agreement’), pursuant to which RB engaged MSX to manufacture and supply the Products on the terms of the Agreement and MSX agreed to manufacture and supply the Products to RB on the terms of the Agreement; and
WHEREAS, for valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties mutually desire to amend and modify certain terms and conditions of the Agreement as set forth in this Amendment.
IT IS AGREED as follows:
A. Capitalized terms used in this Amendment without definition shall have the respective meanings ascribed thereto in the Agreement.
B. The parties hereby agree that from the Effective Date through and until December 31, 2010 (the “Expedited Release Approval Period”), MSX shall manufacture and supply RB’s requirements of the Products for the U.S. in accordance with the SUBOXONE4 Sublingual Film — Batch Transfer and Batch Release Approval Process (the “Expedited Release Approval Process”), a copy of which is annexed hereto as Schedule B and made a part hereof. As between MSX and RB, RB shall be solely responsible for ensuring that the Products are not released for commercial distribution by RB or its secondary packager(s) until the prerequisites for release set forth in the Expedited Release Approval Process have been satisfied. RB shall indemnify, defend and hold harmless MSX Parties pursuant to Clause 10 of the Agreement from any and all Losses that result from or arise in connection with any Claim against any of the MSX Parties to the extent the Claim arises from a release of Product by RB or its secondary packager(s) during the Expedited Release Approval Period in violation of the Expedited Release Approval Process. RB shall accept all shipments of Product subject to the Expedited Release Approval Process. The parties acknowledge and agree that MSX’s release of Product under the Expedited Release Approval Process deviates from the release process set forth in the underlying Agreement and Quality Agreement and that, as such, such deviation by MSX shall not constitute a violation of the underlying Agreement or the Quality Agreement.
C. This Amendment shall be governed by and construed in accordance with the laws of the State of Delaware, United States of America, save as to conflict of law provisions, and the parties hereby agree to submit to the jurisdiction of the federal courts located in the State of Delaware.
D. Except as expressly set forth herein, all other terms and provisions of the Agreement shall remain in full force and effect without modification or change.
Signed for and on behalf Reckitt Benckiser Pharmaceuticals Inc.
| | |
| /s/ Shaun Thaxter |
| Name: Shaun Thaxter |
| Title: President |
| Date: 10/18/10 |
Signed for and on behalf of MonoSol Rx, LLC
| | |
| /s/ Mark Schobel |
| Name: Mark Schobel |
| Title: CEO |
| Date: 10/19/10 |
SCHEDULE B
SUBOXONE® SUBLINGUAL FILM – BATCH TRANSFER AND BATCH APPROVAL PROCESS
[***]
PORTIONS OF THIS EXHIBIT HAVE BEEN REDACTED.
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS BOTH (i) NOT MATERIAL AND (ii) WOULD BE LIKELY TO CAUSE COMPETITIVE HARM IF PUBLICLY DISCLOSED.
REDACTED MATERIAL IS MARKED WITH [***].
AMENDMENT NO. 5
COMMERCIAL EXPLOITATION AGREEMENT
THIS AMENDMENT NO. 5 (this “Amendment”) is made on the 15th day of December 2010 (the “Effective Date”) between:
PARTIES
(1) MonoSol Rx, LLC, a company organized and existing under the laws of the USA, with offices at 30 Technology Drive, Warren, New Jersey 07059, USA (“MSX”),
and
(2) Reckitt Benckiser Pharmaceuticals Inc., a company existing under the laws of the USA With office’s at 10710 Midlothian Turnpike, Suite 430, ROMEO, Virginia 23235 (“RB”).
WHEREAS, MSX and RB entered into A Commercial Exploitation Agreement, dated August 15, 2005 as amended by Amendment No. 1 thereto do August 19, 2009, Amendment No, 2 thereto on November 13, 2009, Amendment No, 3 thereto on March 30, 2010, and Amendment No. 4 thereto on October 13, 2010 (collectively the “Agreement”), pursuant to which RB engaged MSX to manufacture and supply the Products on the terms of the Agreement and MSX agreed to manufacture and supply the Products to RB on the terms of the Agreement; and
WHEREAS, for valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties mutually desire to amend and modify certain terms and conditions of the Agreement as set forth in this Amendment.
IT TS AGREED as follows:
A. Capitalized terms used In. this Amendment without definition Shell have the respective meanings ascribed thereto in the Agreement.
B. The parties hereby agree that Clause 7.16 set forth in the PRICE AND PAYMENT section of the Amendment No. 2 dated November 13, 2009 shall be amended and restated in its entirety to read as follows;
7.16 Invoices shall be paid in accordance with the following payment schedule:
7.16.1 RB shall pay Invoices in reaped of the Cost of Goods Price for the U.S., together with any other invoices submitted to it pursuant to this Agreement for the U.S. prior to the expiry of the 2010 Year, within [***] of receipt by RB from MSX of a valid invoice therefore (reflecting applicable sales tax, if any). RB shall pay invoices in respect of the Cost of Goods Price for the U.S., together with any other invoices submitted to it pursuant to this Agreement for the U.S. from January 1, 2011 to March 31, 2011, within [***] of receipt by RB from MSX of a valid invoice therefore (reflecting applicable safes tax, if any). RB shall thereafter pay invoices, in respect of the Cost of Goods Price for the U.S., together with, any other invoices submitted to pursuant to this Agreement for the U.S. for the remainder-of the Term, within [***] of receipt by RB from MSX of a valid invoice therefore (reflecting applicable sales tax, if any) provided, however, that, commencing after the Price reduction in respect of the U.S. pursuant to Clause 7:23 of the Amendment No. 2 dated November 13, 2002 takes effect, RB shall thereafter pay for the remainder of the Term such invoices [***] days of receipt by RB from MSX of a valid invoice therefore (reflecting applicable sales tax, if any).
7.16.2 RB shall pay invoices in respect of the Cost of Goods Price for the ROW, together with any other invoices submitted to if pursuant to this Agreement for the ROW, within [***] of receipt by RB from MSX of a valid invoice therefore (reflecting applicable sales fax, if any).
C. This Amendment shall be governed by and construed In accordance with the laws of the State of Delaware, United States of America, save as to conflict of law provisions, and the parties hereby agree to submit to the jurisdiction of the federal courts located In the State of Delaware.
D. Except as expressly set forth herein, all other terms and provisions the Agreement shall remain in full force and effect without modification or change.
Signed for and on behalf Reckitt Benckiser Pharmaceuticals Inc.
| | |
| /s/ Shaun Thaxter |
| Name: Shaun Thaxter |
| Title: President |
| Date: 12/16/10 |
Signed for and on behalf of MonoSol Rx, LLC
| | |
| /s/ Mark Schobel |
| Name: Mark Schobel |
| Title: CEO |
| Date: 12/16/2010 |
PORTIONS OF THIS EXHIBIT HAVE BEEN REDACTED.
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS BOTH (i) NOT MATERIAL AND (ii) WOULD BE LIKELY TO CAUSE COMPETITIVE HARM IF PUBLICLY DISCLOSED.
REDACTED MATERIAL IS MARKED WITH [***].
AMENDMENT NO. 6
COMMERCIAL EXPLOITATION AGREEMENT
THIS AMENDMENT NO. 6 (this “Amendment”) is made on the 9th day of December 2011 (the “Effective Date”) between:
PARTIES
(1) MonoSol Rx, LLC, a company organized and existing under the laws of the USA, with offices at 30 Technology Drive, Warren, New Jersey 07059, USA (“MSX”),
and
(2) Reckitt Benckiser Pharmaceuticals Inc., a company existing under the laws of the USA with offices at 10710 Midlothian Turnpike, Suite 430, Richmond, Virginia 23235 (“RB”).
WHEREAS, MSX and RB entered into a Commercial Exploitation Agreement, dated August 15, 2008, as amended (collectively, the “Agreement”), pursuant to which RB engaged MSX to manufacture and supply the Products on the terms of the Agreement and MSX agreed to manufacture and supply the Products to RB on the terms of the Agreement; and
WHEREAS, MSX currently maintains an existing packaging line pursuant to which MSX currently packages the Products at MSX’s [***] facility (the “[***] Packaging Line”); and
WHEREAS, MSX has acquired a second packaging line more particularly described in Schedule 1 to this Amendment (the “[***] Packaging Line”) from [***] for use at MSX’s [***] facility for which capital investment is required to upgrade the [***] facility, install the [***] Packaging Line and validate the packaging of the Products on the [***] Packaging Line to cGMP requirements; and
WHEREAS, RB has agreed to contribute towards such further capital investment in the [***] Packaging Line in exchange for, inter alia, certain guarantees with respect to MSX’s capacity to fill RB’s requirements for the Products on the terms herein set forth;
WHEREAS, for valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties mutually desire to supplement, amend and/or modify certain terms and conditions of the Agreement as set forth in this Amendment.
IT IS AGREED as follows:
A. Capitalized terms used in this Amendment without definition shall have the respective meanings ascribed thereto in the Agreement.
B. RB shall provide up to [***] US Dollars ($[***]) in funding for the required build-out of the [***] facility and installation of the [***] Packaging Line (the “Funding”). The cost estimates for such build-out and installation are set forth on Schedule 1 to this Amendment and are derived from that certain engineering study dated October 27, 2010 issued by [***]. The Funding shall be made by RB to MSX in immediately available funds to an account designated by MSX as follows:
[***]% to be paid on January 10, 2012;
[***]% upon the achievement of certain milestones related to the build-out of the [***] facility and installation of the [***] Packaging Line, which milestones shall be agreed to by the parties in writing subsequent to the execution of this Amendment; and
The balance of the project costs incurred by MSX, not to exceed [***]% of the total Funding, upon completion of the build-out and installation of the [***] Packaging Line and receipt of all FDA approvals needed for commercial packaging of the Products to cGMP requirements.
C. RB and MSX shall agree upon key suite build-out features of the [***] Packaging Line and RB shall have the right to approve the cGMP suite build-out and the installation plans relating thereto, such approval not to be unreasonably withheld, delayed or conditioned. Selection of and negotiations with engineering and construction providers shall be undertaken jointly by MSX and RB; provided that, MSX shall have final approval rights with respect to the retention of any engineering and construction providers within the scope of the cost estimates referred to in paragraph B. of this Amendment.
D. RB and MSX mutually agree that certain activities related to the build-out of the [***] facility and installation of the [***] Packaging Line, including, but not limited to, engineering support, process work and qualification, may be performed more efficiently by MSX resources and that if such efficiencies can quantified, then the activities should be performed by MSX resources and reimbursed by RB as part of the Funding; provided, however, that the final decision on entitlement for reimbursement shall be at RB’s discretion and that the performance of such activities by MSX resources follows certain agreed principles, including, but not limited to, the following:
- Said activities, if performed by MSX employees, would not be part of their normal duties or responsibilities, hence not part of MSX fixed costs;
- MSX can quantify that said activities would be performed more efficiently if carried out by MSX resources; and
- Said activities could be done by duly qualified temporary workers hired by MSX.
E. In exchange for RB’s contribution of the Funding: (i) MSX will increase its current annual capacity commitment under Clause 6.3 of the Agreement from [***] units of the Products for the U.S. per Quarter Year (i.e., [***] units of the Products for the U.S. per Year) to [***] units of the Products for the U.S. and ROW combined per Quarter Year (i.e., [***] units of the Products for the U.S. and ROW combined per Year), with the intent of the parties being to utilize the [***] Packaging Line as the primary line such that the majority of units of the Products shall be packaged on the [***] Packaging Line; and (ii) MSX agrees to undertake commercially reasonable efforts to support peaks in demand of Product of up to [***] units of Products per month.
F. MSX shall have the right to use excess capacity on the [***] Packaging Line for the packaging of other products for its other customers; provided, however, that RB’s production requirements and service levels are not impacted. With respect to the [***] Packaging Line only, any capacity utilized by MSX for the packaging of other commercial products shall be subject to the payment by MSX to RB of a fee of $[***] per unit of packaged product, subject to the total fees receivable by RB shall not exceed the amount of Funding provided by RB hereunder. For the sake of clarity, MSX shall not be subject to the per unit fee for non-commercial usage of the [***] Packaging Line.
G. In the event of a business interruption impacting the [***] Packaging Line, MSX hereby agrees to utilize the [***] Packaging Line line as a contingency / business continuity solution, subject to MSX’s other commercial commitments, for quantities of Product of up to [***] units for U.S. and ROW per Year. In the event of a business interruption impacting the [***] Packaging Line, MSX hereby agrees to utilize the [***] Packaging Line as a contingency / business continuity solution, subject to MSX’s other commercial commitments, for quantities of Product of up to [***] units for U.S. and ROW per Year.
H. From and after the date of this Amendment, other than as set forth In this paragraph H, RB shall place Orders for Product as: (i) [***] batch sizes; and (ii) a maximum of [***] SKU changeovers per batch or a maximum of [***] SKUs per batch (the “Ordering Criteria”). The parties shall create a joint project team to develop and have in place the most cost-effective solution of packaging small runs by March 31, 2013.
I. The parties hereby agree that Clause 7.3.2 set forth in the PRICE AND PAYMENT section of the Agreement shall be amended and restated in its entirety to read as follows:
7.3.2 In the event that any Order requests more than [***] packaging for the Products covered by such Order, RB shall pay a [***] amount for each additional packaging request in an amount of [***] Dollars (USD $[***]), regardless of the number of units of Product covered by such new packaging request (the “Packaging Fee”).
RB and MSX will review the documented costs for additional packaging (“Changeover Costs”) on an annual basis and increase or decrease the Packaging Fee based on the annual increase or decrease in Changeover Costs. For Orders containing SKU runs of [***] doses or less RB will pay the actual documented Changeover Costs by run as provided by MSX, which actual documented Changeover Costs are expected to be [***] Dollars (USD $[***])) or less.
J. Consistent with Section 7.12 of the Agreement, MSX will, together with RB, examine the costs associated with the [***] Packaging Line on annual basis to determine if Product cost reductions are commercially reasonable based upon equipment or environmental improvements; provided, however, that such obligation on the part of MSX shall cease if and when the payments made by MSX to RB equal the full amount of the Funding provide by RB hereunder.
K. MSX may buy out its obligations under paragraph E to utilize the [***] Packaging Line as the primary line at any point within [***] years of the Effective Date of the Amendment in return for payment to RB of an amount equal to the amount of Funding provided by RB hereunder net of any payments made by MSX to RB in respect to paragraph F. On the [***] anniversary of the Effective Date of the Amendment, MSX’s obligation to utilize the [***] Packaging Line as the primary line will cease.
L. This Amendment shall be governed by and construed in accordance with the laws of the State of Delaware, United States of America, save as to conflict of law provisions, and the parties hereby agree to submit to the jurisdiction of the federal courts located in the State of Delaware.
M. Except as expressly set forth herein, all other terms and provisions of the Agreement shall remain in full force and effect without modification or change.
Signed for and on behalf Reckitt Benckiser Pharmaceuticals Inc.
| | |
| /s/ Shaun Thaxter |
| Name: Shaun Thaxter |
| Title: President |
| Date: December 9, 2011 |
Signed for and on behalf of MonoSol Rx, LLC
| | |
| /s/ Keith Kendall |
| Name: Keith Kendall |
| Title: COO |
| Date: 12/9/01 |
SCHEDULE 1
[***]
PORTIONS OF THIS EXHIBIT HAVE BEEN REDACTED.
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS BOTH (i) NOT MATERIAL AND (ii) WOULD BE LIKELY TO CAUSE COMPETITIVE HARM IF PUBLICLY DISCLOSED.
REDACTED MATERIAL IS MARKED WITH [***].
AMENDMENT NO. 7
COMMERCIAL EXPLOITATION AGREEMENT
THIS AMENDMENT NO. 7 (this “Amendment”) is made on the 1st day of December 2012 (the “Amendment Effective Date”) between:
PARTIES
(1) MonoSol Rx, LLC, a company organized and existing under the laws of the USA, with offices at 30 Technology Drive, Warren, New Jersey 07059, USA (“MSX”),
and
(2) Reckitt Benckiser Pharmaceuticals Inc., a company existing under the laws of the USA with offices at 10710 Midlothian Turnpike, Suite 430, Richmond, Virginia 23235 (“RB”).
WHEREAS, MSX and RB entered into a Commercial Exploitation Agreement, dated August 15, 2008, as amended (collectively, the “Agreement”), pursuant to which RB engaged MSX to manufacture and supply the Products on the terms of the Agreement and MSX agreed to manufacture and supply the Products to RB on the terms of the Agreement; and
WHEREAS, for valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties mutually desire to amend and modify certain terms and conditions of the Agreement as set forth in this Amendment.
IT IS AGREED as follows:
A. Capitalized terms used in this Amendment without definition shall have the respective meanings ascribed thereto in the Agreement.
B. From and after the Amendment Effective Date, an additional formulation of Product is hereby added to Schedule 3 of the Agreement as follows:
| | | | | |
•4 mg Buprenorphrine + 1 mg Naloxone | |
C. The Cost of Goods Price for the 2012 and 2013 Years of manufacture per pouched single dose of Product for the following dosage strengths will be as follows:
| | | | | | | | | | | |
•4 mg Buprenorphine + 1 mg Naloxone (US) | | $[***] | |
•4 mg Buprenorphine + 1 mg Naloxone (ROW) | | $[***] | |
•12 mg Buprenorphine + 3 mg Naloxone (US) | | $[***] | |
•12 mg Buprenorphine + 3 mg Naloxone (ROW) | | $[***] | |
D. The Cost of Goods Price per pouched single dose of Product for the 2013 Year of manufacture for the following dosage strengths will be as follows:
| | | | | | | | | | | |
•2 mg Buprenorphine + 0.5 mg Naloxone (US) | | $[***] | |
•2 mg Buprenorphine + 0.5 mg Naloxone (ROW) | | $[***] | |
•8 mg Buprenorphine + 2 mg Naloxone (US) | | $[***] | |
•8 mg Buprenorphine + 2 mg Naloxone (ROW) | | $[***] | |
E. As of the Amendment Effective Date, MSX will conduct a representative batch sampling of no less than [***] doses per batch and no more than [***] doses per batch of 8 mg Buprenorphine + 2 mg Naloxone and 12 mg Buprenorphine + 3 mg Naloxone for each such batch commenced on or after the Amendment Effective Date. The batch sampling quantities may be adjusted by written agreement from both parties. [***].
F. For the 12 mg Buprenorphine + 3 mg Naloxone Product, MSX will warehouse Product until RB has provided MSX written instructions either to ship the Product or have the Product destroyed (“Disposition Instructions”). RB shall provide the Disposition Instructions to MSX within ten (10) business days after receipt by RB of the Summary Findings from the Visual Sampling unless RB has commercially reasonable questions on a given batch or seeks further clarification on existing data from a particular batch in order to aid RB in making a decision in which case MSX will make available an appropriate level of management to respond to RB. If RB does not provide the required Disposition Instructions within ten (10) business days of MSX having provided responses to commercially reasonable inquiries made by RB, then RB will have the subject batch shipped to a third party of RB’s choosing for further warehousing (such Product, “12 mg Warehoused Product”). The Order for a batch will be fulfilled per Section 5.1 of the Agreement and legal title shall pass to RB per Section 5.7 of the Agreement upon MSX providing a Certificate of Analysis to RB. MSX will invoice RB upon providing a Certificate of Analysis to RB and RB shall pay the full batch Price plus associated Sampling Charges for all 12 mg Buprenorphine + 3 mg Naloxone Product with a Certificate of Analysis in accordance with the terms of the Agreement regardless of the associated Disposition Instructions. In the event that RB subsequently elects to have the 12 mg Warehoused Product destroyed, RB shall cause the Product to be shipped (at RB’s cost) to MSX along with instructions to destroy the Product and MSX shall destroy the Product (at MSX’s cost). Notwithstanding the foregoing, each shipment of Product (including 12 mg Warehoused Product) delivered by MSX shall comply with Clause 5.3 of the Agreement.
G. For the 8 mg Buprenorphine + 2 mg Naloxone Product, MSX will warehouse Product until the summary findings from the Visual Sampling have been provided to RB. For batches with a Visual Sampling Level [***] of [***]% or less, MSX will ship Product per Clause 5.1 of the Agreement and RB shall pay for all Product with a Certificate of Analysis. MSX will warehouse 8 mg Buprenorphine + 2 mg Naloxone Product for an additional ten (10) business days where the Visual Sampling Level for a batch exceeds [***]%. RB shall provide MSX with Disposition Instructions within said ten (10) business day period unless RB submits to MSX commercially reasonable questions on a given batch or seeks further clarification on existing data from a particular batch in order to aid RB in making a decision, in which case MSX will make available an appropriate level of management to answer commercially reasonable questions on a given batch or provide further clarification on existing data from a particular batch in order to aid RB in making a decision. RB shall provide the required Disposition Instructions to MSX within five (5) business days of MSX having provided responses to commercially reasonable inquiries made by RB during the ten (10) business day period referenced in the immediately preceding sentence. If the Disposition Instructions provided to MSX require destruction of the Product, then MSX shall dispose of the subject batch and the parties respective liability for costs associated with the destroyed batch shall be as set forth below:
| | | | | |
[***] | [***] |
| [***] | [***] |
| [***] | [***] |
| [***] | [***] |
Responsibility for costs associated with destroyed batches with Visual Sampling Level above [***]% which are in process as of the Amendment Effective Date shall be as follows: (i) for batch [***] (produced in July) MSX shall be responsible for all MSX costs and all API costs shall be the responsibility of RB; (ii) for batch [***] (presently warehoused at [***]) RB shall accept the batch; (iii) for batch [***] MSX shall be responsible for all MSX costs and all
API costs shall he split equally by MSX and RB; and (iv) all other remaining in process batches will be subject to this Amendment.
If the Disposition Instructions provided to MSX require shipment of the Product, then MSX will ship Product per Clause 5.1 of the Agreement and RB shall pay for all Product with a Certificate of Analysis. Notwithstanding the foregoing, each shipment of Product (including 8 mg Warehoused Product) delivered by MSX shall comply with Clause 5.3 of the Agreement.
H. Both parties acknowledge and agree that nothing in this Amendment relieves either party of its responsibilities to undertake commercially reasonable efforts to continuously improve the Products. Accordingly, the parties agree to establish and convene a joint technical team (the “JTT”) consisting of members from each party who have the requisite expertise to analyze manufacturing and Product data, customer complaints on an ongoing basis, and utilize the Annual Product Review Process to continuously improve the Products. The parties hereby further agree that the JTT will meet on a quarterly basis and the first meeting of the JTT shall be convened within thirty (30) days of the Amendment Effective Date. MSX agrees to work diligently and in good faith, through the JTT, to improve the manufacturing process and quality of the Product output on [***] of the production line. The JTT shall also work in good faith to evaluate the merits and feasibility of a robust Product reformulation and shall work in good faith to agree upon a commercially viable plan for such Product reformulation. The JTT may also, from time-to—time, with both parties written approval, develop other specific and limited projects to improve the overall quality of the existing Product or manufacturing process.
I. The parties hereby agree that Clause 3.4.3 set forth in the MANUFACTURE AND SUPPLY section of the Agreement shall be amended and restated in its entirety to read as follows:
monitor, account for and keep RB regularly informed of the usage and waste of API. MSX will act reasonably to ensure maintenance of an overall yield percentage (the “Yield Target”), defined as the actual strips produced before samples divided by the theoretical strips available based on the amount of defect free API used in manufacturing. For the avoidance of doubt, this includes any API dispensed and/or used for commercial production regardless of whether film strips were yielded from said use but excluding API associated with batches destroyed based on Visual Sampling data. The parties will work in good faith to identify commercially reasonable Yield Targets for dosage strengths, batch sizes, and SKU configurations within ninety (90) days of the Amendment Effective Date. On an annual basis, MSX and RB will review and reconcile results against the Yield Target and MSX will, within thirty (30) days, remunerate RB for RB’s documented API costs on an annual basis to the extent MSX falls below the Yield Target. For the sake of clarity, the formula for calculating API costs owed will be Yield Target minus the actual yield times the API costs. The parties hereby agree that Clause 3.4.3 of the Agreement represents the sole mechanism for MSX reimbursement of API to RB associated with manufacturing usage and waste.
J. The parties hereby agree that Clause 4.6 set forth in the FORECASTS, ORDERS AND SUPPLY OF THE API section of the Agreement shall be amended and restated in its entirety to read as follows:
Notwithstanding the terms of any DDP delivery (or any other delivery) of the API by RB to MSX, legal title to the API shall remain with RB after delivery to MSX. MSX shall use reasonable efforts to ensure proper storage and handling of the API once delivered to MSX and prior to manufacturing. Risk of damage to, or loss of, the API shall pass from RB to MSX upon delivery as set out in Clause 4.3. MSX shall retain casualty insurance coverage for the expected inventory of the API (amounts expected to be supplied to MSX by RB for manufacture of the Product in the amounts set forth in the Forecasts) to cover damage to or loss of the API during storage for so long as the API remains at MSX’s risk. For the sake of clarity, the responsibilities of the parties with respect to usage and waste of API during manufacturing is covered under Clause 3.4.3 and this Clause 4.6 is in no way intended to address API usage and waste during manufacturing.
K. The parties hereby agree that Clause 4.7 set forth in the FORECASTS, ORDERS AND SUPPLY OF THE API section of the Agreement shall be amended to include the following sentence at the end of the paragraph:
For the sake of clarity, MSX’s obligation to remunerate RB under this Clause 4.7 is limited to the amount paid to MSX by RB and shall not include remuneration for RB’s API cost.
L. RB agrees to waive any API loss claims to MSX for batches made prior to the Amendment Effective Date.
M. This Amendment shall be governed by and construed in accordance with the laws of the State of Delaware, United States of America, save as to conflict of law provisions, and the parties hereby agree to submit to the jurisdiction of the federal courts located in the State of Delaware.
N. Except as expressly set forth herein, all other terms and provisions of the Agreement shall remain in full force and effect without modification or change.
Signed for and on behalf Reckitt Benckiser Pharmaceuticals Inc.
| | |
| /s/ Shaun Thaxter |
| Name: Shaun Thaxter |
| Title: President |
| Date: 12/1/12 |
Signed for and on behalf MonoSol Rx, LLC
| | |
| /s/ Keith Kendall |
| Name: Keith Kendall |
| Title: COO |
| Date: 12/1/12 |
PORTIONS OF THIS EXHIBIT HAVE BEEN REDACTED.
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS BOTH (i) NOT MATERIAL AND (ii) WOULD BE LIKELY TO CAUSE COMPETITIVE HARM IF PUBLICLY DISCLOSED.
REDACTED MATERIAL IS MARKED WITH [***].
ADDENDUM A TO COMMERCIAL EXPLOITATION AGREEMENT:
SUBOXONE STRIP DEVELOPMENT AGREEMENT
This Addendum A to Commercial Exploitation Agreement: Suboxone Strip Development Agreement (the “Addendum”) is entered into as of this 14th day of October, 2013 the (“Addendum Effective Date”), by and between Reckitt Benckiser Pharmaceuticals Inc., with offices at 10710 Midlothian Turnpike, Suite 430, Richmond, VA 23235 (“RB”) and MonoSol Rx, LLC, with offices at 30 Technology Drive, Warren, NJ 07059 (“MSX”).
BACKGROUND AND PURPOSE OF PROJECT
A. The parties entered into a Commercial Exploitation Agreement dated August 15, 2008, as amended (the “Agreement”).
B. Pursuant and subject to the Agreement, the parties now wish to enter into an addendum to the Agreement relating to the development and potential commercialization of improved formulations of the Products;
C. This Addendum relates to a research and development project to develop and potentially commercialize improved formulations of the Products having a higher degree of product stability which MSX would manufacture and supply to RB pursuant to the terms of the Agreement. The parties intend that the Price for these improved formulations be the same as the Price which RB is currently paying for existing Products with the same API and dosage strengths, (subject only to variations in costs with respect to Raw Materials, Direct Labor, Release Testing, or use of manufacturing line time; provided however, that MSX shall validate with competent evidence any increase in costs with respect to Raw Materials, Direct Labor, Release Testing, or use of manufacturing line time).
NOW, THEREFORE, for and in consideration of the mutual covenants contained herein, the parties hereto agree as follows:
1. Capitalized Terms
Capitalized terms used in this Addendum without definition shall have the same meanings ascribed to those terms in the Agreement.
2. Addendum is Part of Agreement
This Addendum is hereby incorporated into and made a part of the Agreement as if fully set forth therein, and is subject to the terms of the Agreement.
Without limiting the foregoing and for the avoidance of doubt, rights to and ownership of any inventions and other intellectual property developed or created as a result of the work performed hereunder shall be governed by the Intellectual Property Rights provisions of the Agreement.
3. Services and Payment
MSX shall perform the services set forth in the attached Appendix A (the “Services”), which is hereby incorporated by reference and made a part of this Addendum as if fully set forth herein.
MSX represents and warrants that it will perform the Services in accordance with prevailing industry standards. MSX further represents and warrants that all personnel who perform the Services shall have appropriate training, experience and qualifications.
In consideration for performing the Services, MSX shall receive payments as set forth herein and in Appendix A and Appendix B. Appendix B is hereby incorporated by reference and made a part of this Addendum as if fully set forth herein.
The initial payment will be invoiced by MSX upon Signing (as defined below) and will be due upon receipt of said invoice by RB.
Subsequent payments will be invoiced by MSX upon completion of all applicable criteria and will be due [***] after receipt of said invoice by RB. In the event of any good faith disputes with respect to any such invoice, RB shall pay the undisputed portion of any such invoice within this time period.
4. Project Specifics
Project milestones and timelines as well as associated payments are outlined in Appendix A.
4.1. Payment Triggers
RB’s obligation to make a payment for services rendered pursuant to each milestone phase is triggered by either the commencement or the completion of a milestone activity, as outlined in Appendix A and further described herein.
In order to receive payments for an applicable milestone activity whereby payment is due on “commencement of the activity” MSX shall first provide RB a project plan outlining critical activities and a definitive time period for the commencement of the milestone phase, which plan must be accepted in writing by RB (such approval not to be unreasonably withheld or delayed).
If payment is due upon completion, MSX shall first provide RB with written confirmation of completion, which confirmation shall be deemed accepted by RB unless RB delivers to MSX a written deficiency notice within twenty-one (21) business days of RB’s receipt of written confirmation of completion. Any such deficiency notice delivered by RB hereunder shall contain a level of detail sufficient for MSX to assess the deficiency and propose a plan of corrective action to address the deficiency. In the event a deficiency notice is delivered by RB under this Section 4.1, the parties shall endeavor to agree promptly upon a corrective action plan and payment of the milestone payment in question will not be required and the milestone shall not be deemed completed until such time as the deficiency is remedied in accordance with the corrective action plan; provided that the time periods during which RB is responsible for responding under this Section 4.1 (i.e., the period of up to 21 business days during which RB is reviewing MSX’s proposed completion of a milestone) shall not be counted for purposes of MSX’s eligibility for any Milestone Bonus Payment or the assessment of any Milestone Reduction Penalty set forth in Appendix A.
As used in Sections 4.2 and 4.3 below (and elsewhere in this Addendum), the completion of a milestone or a project activity is considered to include both the completion of the specified activities by MSX and their acceptance by RB as set forth above.
4.2. Bonus Payments
RB will pay milestone bonus payments described in this Section 4.2 (“Milestone Bonus Payments”) to MSX where MSX has completed all project activities as outlined in the project plan pertaining to a particular project milestone a minimum of [***] in advance of the specified target delivery date, with larger bonuses payable if MSX completes all project activities pertaining to a particular milestone a minimum of [***] in advance of the specified target delivery date. The Milestone Bonus Payment column indicates the percentage of the bonus, with the number to the left of the diagonal indicating the percentage bonus (expressed as a percentage of the base milestone payment) if the milestone is completed a minimum of [***] before the target date and the (smaller) percentage to the right of the diagonal line indicating the percentage bonus payment if the milestone is completed a minimum of [***] in advance of target date.
As an example, the Milestone Bonus Payment for the “Analytical Toolkit” phase is written “[***]% / [***]%,” and the target delivery date is described as “[***] from Signing” and the Milestone Amount is $[***]. (“Signing” is the date on which the later to be executed of the [***] and the [***] is fully executed by both parties).
If MSX completes all of the activities in the Analytical Toolkit milestone a minimum of [***] prior to the target delivery date, i.e., no more than [***] from Signing, MSX would receive a bonus payment of [***]% of the milestone payment. In such case, its bonus payment would be $[***] ([***]% x $[***] = $[***]) in addition to the base milestone payment of $[***], which means that that total amount payable for this milestone to MSX would be $[***].
If MSX completes all of the activities in the Analytical Toolkit milestone a minimum of [***] prior to the target delivery date, i.e., no more than [***] from Signing, MSX would receive a bonus payment of [***]% of the milestone payment. In such case, its bonus payment would be $[***] ([***]% x $[***] = $[***]) in addition to the base milestone payment of $[***], which means that that total amount payable for this milestone to MSX would be $[***].
For the avoidance of doubt, bonus payments for completion of a particular milestone are not cumulative. MSX might receive either a [***] bonus or a [***] bonus, but it could not receive both bonuses for completing a single milestone (although MSX
might receive separate bonuses, or penalties, for completing other milestones specified in Appendix A early or late, as applicable.)
4.3. Penalty Payment Reductions
Subject to Section 4.1 of this Addendum, milestone reduction penalties described in this Section 4.3 (“Milestone Reduction Penalties”) will be deducted from the amounts payable to RB if MSX exceeds the applicable target delivery date for successfully completing all project activities pertaining to a particular milestone by more than [***], with larger reduction penalties if MSX exceeds the applicable Target Delivery Date for successfully completing all project activities pertaining to a particular milestone by more than [***]. The Milestone Reduction Penalty column indicates the percentage of the penalty, with the number to the left of the diagonal line indicating the percentage penalty if MSX completes the project activities more than [***] after the target date and the (larger) percentage to the right of the diagonal line indicating the percentage penalty if MSX completes the project activities more than [***] after the target date.
As an example, the Milestone Reduction Penalty for the “Analytical Toolkit” phase is written “[***]% / [***]%,” and the target delivery date is described as “[***] from Signing” and the Milestone Amount is $[***].
If MSX completes all of the project activities in the Analytical Toolkit milestone at least [***] after the target delivery date, i.e., a minimum of [***] from Signing, MSX would receive a reduction penalty of [***]% of the milestone payment. In such case, its reduction penalty would be $[***] ([***]% x $[***] = $[***]) deducted from the base milestone payment of $[***], which means that that total amount payable for this milestone to MSX would be $[***].
If MSX completes all of the project activities in the Analytical Toolkit milestone at least [***] after the target delivery date, i.e., a minimum of [***] from Signing, MSX would receive a reduction penalty of [***]% of the milestone payment. In such case, its reduction penalty would be $[***] ([***]% x $[***] = $[***]) deducted from the base milestone payment of $[***], which means that that total amount payable for this milestone to MSX would be $[***].
4.4. Termination and Termination Fee
MSX may terminate this Addendum at any time with or without cause during the “Pre-Signing” and “Analytical Toolkit” phases of the project only by giving written notice of termination to RB.
4.4.1 RB may terminate this Addendum or any individual milestone phase at any time with or without cause by giving written notice of termination to MSX. Each individual milestone phase, except the “Pre-Signing” and “Analytical Toolkit” milestones, requires the payment of a termination fee by RB (as specified in Appendix A) in the event that RB terminates the applicable milestone phase of the project, along with the milestone payment associated with any active and ongoing work. Any termination notice by RB shall specify the particular milestone phase or phases being terminated. In the event that RB terminates the entire project or multiple milestone phases at substantially the same time, RB shall pay only a single termination fee, which shall be equal to the largest individual termination fee applicable to any of the terminated milestone phases in addition to the milestone payments associated with any active and ongoing work (i.e., as an illustrative example, in the event that RB elects to pursue the optional “Delivery of [***]” milestone phase (termination fee = $[***]) and then subsequently terminates that phase, and, at substantially the same time, RB terminates the “[***]” milestone phase (termination fee = $[***]), then, in addition to the milestone payments associated with any active and ongoing work, RB would owe MSX a single termination fee of $[***], which is the largest individual termination fee applicable to any of the terminated milestone phases).
4.4.2 In addition to the amounts specified in 4.4.1 above, RB will make the following termination payments to MSX if RB without cause terminates either the entire Addendum or the milestone phases specified below prior to making the applicable milestone payments:
Batch Manufacture milestones
[***] Manufacture of [***] validation batches: Payment of $[***] for each batch manufactured in conformance with applicable specifications prior to termination (up to a maximum of $[***]).
[***]: Payment of $[***] for each batch manufactured in conformance with applicable specifications prior to termination (up to a maximum of $[***]).
[***]: Payment of $[***] for each batch manufactured in conformance with applicable specifications prior to termination (up to a maximum of $[***]).
[***]: Provide cGMP hand-cut samples for clinical PK studies: Payment of $[***] for manufacture of cGMP clinical supplies manufactured in conformance with applicable specifications prior to termination.
Stability Test milestones
[***]: Payment of $[***] upon both (i) manufacture of formulation in conformance with applicable specifications prior to termination and (ii) demonstration that such formulation satisfies applicable [***] stability standards (even if this [***] period concludes after termination by RB).
[***]: Payment of $[***] upon (i) manufacture of formulation in conformance with applicable specifications prior to termination and (ii) demonstration that such formulation satisfies applicable [***] stability standards (even if this [***] period concludes after termination by RB).
For the avoidance of doubt, in no case will the total amount payable by RB under this Section 4.4.2 with respect to any particular milestone exceed the total amount which would have been payable if MSX had completed such milestone in the absence of termination by RB.
Termination of this Addendum by either party does not, by itself, affect the remaining portions of the Agreement, nor does it affect any obligations of the parties under this Addendum which survive termination of the Addendum pursuant to the Agreement, including without limitation, the obligation of RB to pay for milestone payments as and when due under this Addendum.
4.5. Inclusions and Exclusions
For all milestones except the “Pre-Signing” and “Analytical Toolkit” milestones, any project activities involving the design of improved formulations prepared by MSX shall include stability analyses performed on sample materials front sample batches and formulations at the following time periods: [***]. The costs of the performance of stability analyses at these intervals are covered and included in the applicable milestone payment, and no additional payments by RB for these stability analyses shall be required. If, however, RB requests stability analyses at time intervals beyond those specified in the previous sentence, additional reasonable charges for the cost of performing the additional requested stability analyses would apply.
Capital purchases required for final solutions (e.g., “[***]”) are not included in the milestone payments, and would be an additional charge. If purchased by MSX, the costs of such capital purchases would be passed through (without markup) to RB.
Except as expressly stated in this Section 4.5 (regarding extra stability tests, capital purchases for [***]) or in Section 4.4 (regarding termination fees), the milestone payments specified for each activity shall be all-inclusive for all project activities pertaining to a particular milestone to be completed. Work outside the scope of such project activities, and the additional fees associated therewith, would require a separate written agreement by both parties.
4.6. Optional Activities
The activities classed as “optional” in Appendix A can only be commenced upon prior written approval by RB.
4.7. API
RB shall timely provide MSX with all necessary API free of charge. In the event that RB fails to provide API meeting the API Specification in a timely manner and MSX can demonstrate that such failure caused delays in MSX’s ability to perform its obligations under this Addendum and MSX notifies RB of such delays in writing at the time such delays are occurring, then MSX may deduct the amount of time its performance of a particular milestone activity was delayed by such failure from the total amount of time MSX took to complete a particular milestone activity for purposes of determining whether MSX receives a bonus or penalty for its performance of the particular milestone under Appendix A. Failure of RB to timely deliver API or at all shall not be used by RB as grounds to avoid its obligation to make any milestone payment provided for in this Addendum.
5. Project Management
5.1. MSX shall be responsible for the project management and for providing appropriate resources to deliver the project. RB shall be responsible for (1) attending monthly project update meetings either in person or via teleconference, (2) providing timely decisions on items requested by MSX, and (3) providing appropriate RB expertise on the project.
5.2. MSX is to present RB with a written project plan which shall be updated on a monthly basis.
5.3. Additionally, MSX shall give verbal updates on a monthly basis. This is to take place in the form of a monthly teleconference or alternatively face- to-face meeting with participation and attendance by the joint technical team (“JTT”) and the supply team.
5.4. The JTT shall consist of an equal number of members front MSX and RB, shall guide the project team and provide technical support when needed.
6. Pricing of Commercial Products
Any products, designs or formulations which are developed pursuant to this Addendum or the performance of the Services herein and which are approved for commercial sale by at least one Regulatory Authority in at least one country or jurisdiction, or which have been supplied by RB or its agents to at least one customer (collectively, “Addendum Products”) shall be considered “Products” as defined in Clause 1.1 of the Agreement and treated as Products for purposes of the Agreement and this Addendum except as expressly stated in the last two paragraphs of this Section 6.
Without limiting the foregoing, the parties agree that the Price payable by RB to MSX for any Addendum Product shall be the same as the then-current Cost of Goods Price for the “analogous Products” as set forth in Clauses 7.2 and 7.14 of the Agreement. An “analogous Product” refers to a Product containing the same amount of Buprenorphine API and dosage strength as an Addendum Product. As an illustrative example, if at a given time the then-current U.S. Cost of Goods Price per pouched single dose of pre-existing Product containing 2 mg Buprenorphine were $[***] and the then-current ROW Cost of Goods Price per pouched single dose of pm-existing Product containing 2 mg Buprenorphine were $[***], then the U.S. price of an Addendum Product containing an API of 2 mg Buprenorphine would also be $[***] per pouched single dose and the ROW price of an Addendum Product containing an API of 2 mg Buprenorphine would also be $[***] per pouched single dose). For the avoidance of doubt, the titles on pricing set forth in this paragraph apply both at the time of Product Launch of an Addendum Product and at all other times.
As the sole exception to the foregoing, in the event that the cost with respect to Raw Materials, Direct Labor, and/or manufacturing line time required to produce an Addendum Product is more or less expensive than that required to produce the analogous Product, then at the request of either party, the price of such Addendum Product shall be increased or decreased (as applicable) on a purely pass-through basis (without any markup by MSX) to account solely for the variations in costs with respect to Raw Materials, Direct Labor, Release Testing, or use of manufacturing line time; provided however, that MSX shall validate with competent evidence any increase in costs with respect to Raw Materials, Direct Labor, Release Testing, or use of manufacturing line time.
The parties acknowledge and agree that RB has completely fulfilled and satisfied its obligations under the Agreement to pay Royalties on Products sold in the U.S. Accordingly, RB shall have no obligation to make any royalty payments for any Products, including any Addendum Products, sold in the U.S. The parties acknowledge and agree that RB has continuing obligations to pay Royalties on the Net Sales Value of Products, including Addendum Products, sold in the ROW, pursuant to Section 7.4.2 of the Agreement.
7. CONFLICTING TERMS
In the event of a conflict between this Addendum and the Agreement, the Agreement shall govern. In the event of a conflict between this Addendum and an Appendix to this Addendum, this Addendum shall govern.
8. EFFECTIVE DATE
This Addendum shall be effective as of the Addendum Effective Date.
9. GOVERNING LAW; JURISDICTION
This Addendum shall be governed by and construed in accordance with the laws of the State of Delaware, United States of America, save as to conflict of law provisions, and the parties hereby agree to submit to the jurisdiction of the federal courts located in the State of Delaware.
IN WITNESS WHEREOF, the parties have caused this Addendum to be executed as of the Addendum Effective Date.
| | |
| MonoSol Rx, LLC |
|
| /s/ Keith Kendall |
|
| Keith Kendall |
| Print Name |
|
| President - COO |
| Print Title |
| | |
| Reckitt Benckiser Pharmaceuticals, Inc. |
|
| /s/ Shaun Thaxter |
|
| Shaun Thaxter |
| Print Name |
|
| CEO |
| Print Title |
| | | | | | | | | | | | | | |
| APPENDIX A | | | | |
| Milestone | Milestone Amount | Target Delivery Date | Milestone Bonus Payment1 | Milestone Reduction Penalty2 |
| [***] | [***] | [***] | | |
| [***] | [***] | [***] | | |
| Analytical Toolkit |
| [***] | [***] | [***] | [***] | [***] |
| [***] | | | | |
| [***] |
| [***] | [***] | [***] | [***] | [***] |
| [***] | [***] | | | |
| [***] | [***] | | | |
| [***] | [***] | | | |
| [***] | | | | |
| | [***] | | | |
| [***] |
| [***] | [***] | [***] | [***] | [***] |
| [***] | | | | |
| [***] | | | | |
| [***] | [***] | [***] | [***] | [***] |
| [***] | | | | |
| [***] | [***] | [***] | [***] | [***] |
| [***] | | | | |
| [***] | [***] | [***] | [***] | [***] |
| [***] | [***] | [***] | [***] | [***] |
| [***] | [***] |
| [***] | [***] |
| [***] | [***] |
| [***] | | | | |
| [***] | | | |
| [***] |
| [***] | [***] | [***] | [***] | [***] |
| [***] | | [***] | | |
| [***] | | | |
| [***] | [***] | [***] | [***] | [***] |
[***]
APPENDIX B
[***]
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 0 | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 | 13 | 14 | 15 | 16 | 17 | 18 | 19 | 20 | 21 | 22 | 23 |
| [***] | [***] | | | | | | | | | | | | | | | | | | | | | | | |
| [***] | | | | | | | [***] | | | | | | | | | | | | | | | | | |
| [***] | [***] | [***] | | | | |
| [***] | [***] | | | | | | | | | [***] | | | | [***] | | | | | | | [***] | | | |
| [***] | [***] | | | | [***] | | | | | [***] | | | | [***] | | | | | | | [***] | | | |
| [***] | [***] | [***] | [***] | [***] | [***] | [***] | [***] | [***] | [***] | [***] | [***] | [***] | [***] | [***] | [***] | [***] | [***] | [***] | [***] | [***] | [***] | [***] | [***] | [***] |
PORTIONS OF THIS EXHIBIT HAVE BEEN REDACTED.
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS BOTH (i) NOT MATERIAL AND (ii) WOULD BE LIKELY TO CAUSE COMPETITIVE HARM IF PUBLICLY DISCLOSED.
REDACTED MATERIAL IS MARKED WITH [***].
ADDENDUM B TO COMMERCIAL EXPLOITATION AGREEMENT:
SUBOXONE STRIP DEVELOPMENT AGREEMENT
This Addendum B to Commercial Exploitation Agreement: Suboxone Strip Development Agreement (this “Addendum B”) is entered into as of this 30th day of July, 2014 the “(“Addendum Effective Date”), by and between Reckitt Benckiser Pharmaceuticals Inc., with offices at 10710 Midlothian Turnpike, Suite 430, Richmond, VA 23235 (“RB”) and MonoSol Rx, LLC, with offices at 30 Technology Drive, Warren, NJ 07059 (“MSX”).
BACKGROUND AND PURPOSE OF PROJECT
A. The parties entered into a Commercial Exploitation Agreement dated August 15, 2008, as amended (the “Agreement”).
B. The parties entered into Addendum A to the Agreement as of October 15, 2013 relating to the development and potential commercialization of improved formulations of the Products (“Appendix A”).
C. Pursuant and subject to the Agreement, the parties now wish to amend Addendum A by entering into a further addendum to the Agreement relating to: (i) the accelerated completion of scale-up work and manufacture of the [***] registration batches of the current development formulation of [***] Suboxone Sublingual Film containing [***] and the new development formulation, to be mutually agreed, of [***] Suboxone Sublingual Film containing [***] (the “[***]”) without [***] as outlined under Addendum A in order to facilitate an accelerated launch of Suboxone Sublingual Film in [***]; and (ii) a reformulation program for Suboxone Sublingual Film ([***] or [***] as determined by RB).
NOW, THEREFORE, for and in consideration of the mutual covenants contained herein, the parties hereto agree as follows:
1. Capitalized Terms
Capitalized terms used in this Addendum without definition shall have the same meanings ascribed to those terms in the Agreement.
2. Addendum is Part of Agreement
This Addendum B is hereby incorporated into and made a part of the Agreement as if fully set forth therein, and is subject to the terms of the Agreement.
Without limiting the foregoing and for the avoidance of doubt rights to and ownership of any inventions and other intellectual property developed or created as a result of the work performed hereunder shall be governed by the Intellectual Property Rights provisions of the Agreement.
3. Project Specifics
3.1. Scope of Work
Within the scope of work set forth in this Addendum B, the following shall apply;
MSX will undertake the scale-up and manufacture of [***] registration batches each for the [***] and [***] dosage strengths required by Addendum A at MSX’s [***] facility (“[***]”).
As part of the scale-up work for each dosage strength, MSX will use commercially reasonable efforts to identify critical process parameters and in-process controls with limits where a control is deemed necessary. Parameters and control limits will be mutually agreed upon in writing between MSX and RB.
As part of the scale-up work for each dosage strength, MSX will use commercially reasonable efforts to conduct an appropriate [***] experiment to establish the working range for [***]. RB and MSX will agree upon the experiment design in writing prior to the start of the experiment.
All methods utilized in the mutually agreed finished product specification (the “Finished Product Specification”) will be validated prior to the delivery of the [***] data for Suboxone [***] Film registration batches.
MSX represents and warrants that it will perform the work under this Addendum B in accordance with prevailing industry standards. MSX further represents and warrants that all personnel who perform work under this Addendum B shall have appropriate training, experience and qualifications.
3.2. Timeline and Payments
Assuming this Addendum B is executed and delivered by the parties on or before August 1, 2014, the [***] registration batches will be placed on stability by October 22, 2014 and the [***] registration batches will be placed on stability by December 31, 2014. (If this Addendum B is not executed and delivered by August 1, then for each day after August 1 before this Addendum B is executed and delivered, the timelines of the previous sentence for placing the registration batches on stability will be pushed back by an equivalent number of days). RB acknowledges that the timeline represents an accelerated approach and that any additional batches (above and beyond the batches described in Section 3.1 or in Addendum A) required to obtain scale-up manufacturing at [***] may impact the timeline. MSX will use commercially reasonable efforts to ensure that the registration batches meet the Finished Product Specifications; however, RB acknowledges and agrees that the accelerated approach outlined in this Addendum B increases the risk of the registration batches failing to meet the Finished Product Specifications. RB will make prompt payment to MSX upon the completion of the registration batches as outlined under Addendum A regardless of the final performance of the batches unless the registration batch failure(s) are due to MSX’s gross negligence, intentional misconduct or breach of this Addendum B, Addendum A or the Agreement.
The parties recognize that the accelerated scope of work and timeline requested by RB related to the [***] product under this Addendum B has a significant impact on MSX’s business. In order to appropriately compensate MSX for this impact, RB will pay MSX [***]. MSX shall invoice RB and RB shall make payment [***] upon the execution and delivery of this Addendum B.
With the exception of the [***] milestone, all other milestones and payments contemplated under Addendum A and any existing statements of work between the parties shall continue to apply. (The [***] milestone, and any associated payment obligations to the extent not already paid on the part of RB, are hereby cancelled). MSX will credit RB [***] Dollars ($[***]) against the [***] for the [***] milestone payment already received by MSX under Addendum A.
RB and MSX will undertake a [***] for Suboxone Sublingual Film ([***] or [***] as determined by RB; the “[***]”). RB and MSX will build a project plan for the [***] and begin work by the earlier of (i) the reported outcome of the planned clinical PK study for Suboxone [***] Film or (ii) [***]. MSX will complete the Reformulation Program at a cost to RB of no more than [***] Dollars ($[***]).
Payments will be invoiced by MSX upon completion of all applicable criteria and will be due [***] after receipt of said invoice by RB.
For all purposes of this Addendum B, the term “completion” as applied to the fulfillment by MSX of any obligation of any obligations under either Addendum A or this Addendum B shall have the same meaning as defined in Section 4.1 of Addendum A.
In the event of any good faith disputes with respect to any such invoice, RB shall pay the undisputed portion of any such invoice within this time period.
3.3. Termination and Termination Fee
MSX may terminate this Addendum B by giving [***] written notice of termination to RB if RB shall fail to make any undisputed payment to MSX as and when due under this Addendum B and such failure remains uncured at the end of such [***] notice period.
RB may terminate this Addendum B at any time with or without cause by giving written notice of termination to MSX. In the event that RB terminates this Addendum B, or otherwise fails to start the Reformulation Program (defined in Appendix A) by
October 1, 2015, RB shall pay MSX a termination fee of [***] Dollars ($[***]) upon the effective date of the applicable triggering event (such fee is in lieu of, and not in addition to, any otherwise applicable termination fee under Addendum A).
Termination of this Addendum B by either party does not, by itself, affect the remaining portions of the Agreement, including without limitation Addendum A, nor does it affect any obligations of the parties under this Addendum B which survive termination of this Addendum B pursuant to the Agreement, including without limitation, the obligation of RB to make payments as and when due under this Addendum B.
3.4. Inclusions and Exclusions
Work outside the scope of this Addendum B or the unmodified portions of Addendum A, and the additional fees associated therewith, would require a separate written agreement by both parties.
3.5. Quality
RB will identify and introduce to MSX the Qualified Person (the “QP”) that RB has assigned to the launch of Suboxone Sublingual Film [***] as soon as is practicable. The QP will engage with MSX on a plan of action for preparing for the necessary [***] regulatory filings.
3.6. Product Risk
RB will be responsible for the product defect risks either associated intrinsically with the [***] or the associated manufacturing process, in each case provided it is carried out in compliance with the mutually agreed upon written process parameters and in-process controls as defined in MSX’s manufacturing batch record.
Any recalls or regulatory actions taken as a result of such [***] product defects will be at RB’s expense except to the extent such product defects result from MSX’s failure to follow GMP or the mutually agreed upon written process parameters and in-process controls as defined in MSX’s manufacturing batch record, or from MSX’s gross negligence, willful misconduct or breach of the Agreement or any Addendum thereof.
Product defect risk for the [***] will revert to the terms set forth in the Agreement upon the earlier of (1) the commercial launch of [***] developed by MSX using an appropriate [***] (although this is not part of the immediate RB strategy) and (2) the usage of [***] doses in the marketplace.
4. CONFLICTING TERMS
In the event of a conflict between this Addendum B and the Agreement, the Agreement shall govern. In the event of a conflict between this Addendum B and Addendum A, this Addendum B shall govern.
5. EFFECTIVE DATE
This Addendum B shall be effective as of the Addendum Effective Date.
6. GOVERNING LAW; JURISDICTION
This Addendum B shall be governed by and construed in accordance with the laws of the State of Delaware, United States of America, save as to conflict of law provisions, and the parties hereby agree to submit to the jurisdiction of the federal courts located in the State of Delaware.
IN WITNESS WHEREOF, the parties have caused this Addendum B to be executed as of the Addendum Effective Date.
| | |
| MonoSol Rx, LLC |
|
| /s/ Keith Kendall |
|
| Keith Kendall |
| Print Name |
|
| COO |
| Print Title |
| | |
| Reckitt Benckiser Pharmaceuticals, Inc. |
|
| /s/ Mark W. Crossley |
|
| Mark Crossley |
| Print Name |
|
| Global Finance Director |
| Print Title |
PORTIONS OF THIS EXHIBIT HAVE BEEN REDACTED.
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS BOTH (i) NOT MATERIAL AND (ii) WOULD BE LIKELY TO CAUSE COMPETITIVE HARM IF PUBLICLY DISCLOSED.
REDACTED MATERIAL IS MARKED WITH [***].
AMENDMENT NO. 8
COMMERCIAL EXPLOITATION AGREEMENT
THIS AMENDMENT NO. 8 (this “Amendment”) is made as of the 12th day of January 2017 (the “Effective Date”) between:
PARTIES
(1) MonoSol Rx, LLC, a company organized and existing under the laws of Delaware with offices at 30 Technology Drive, Warren, New Jersey 07059 (“MSX”),
and
(2) Indivior Inc. (formerly, Reckitt Benckiser Pharmaceuticals Inc.), a company organized and existing under the laws of Delaware with offices at 10710 Midlothian Turnpike, Suite 430, Richmond, Virginia 23235 (“Indivior”).
MSX and Indivior are each referred to herein sometimes as a “Party” and, collectively, as the “Parties”.
WHEREAS, MSX and Indivior entered into a Commercial Exploitation Agreement, dated August 15, 2008, as amended from time to time (collectively referred to herein as the “Agreement”), pursuant to which, among other things, Indivior engaged MSX to be the exclusive manufacturer and supplier of the Products on the terms of the Agreement and MSX agreed to manufacture and supply the Products to Indivior on the terms of the Agreement; and
WHEREAS, Indivior is interested in commercializing and marketing an authorized generic version of the Products through an identified authorized third party distributor; and
WHEREAS, Indivior desires to engage MSX to manufacture and supply the authorized generic Products, and MSX desires to manufacture and supply the authorized generic Products, on the terms and conditions of the Agreement and this Amendment.
NOW, THEREFORE, in consideration of the premises and the mutual agreements, covenants, and conditions set forth in this Amendment, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound hereby, agree to amend and modify certain terms and conditions of the Agreement as set forth in this Amendment.
IT IS AGREED as follows:
A. Definitions. Capitalized terms used in this Amendment without definition shall have the respective meanings ascribed thereto in the Agreement. For purposes of the Agreement, the defined term “Products” shall be deemed to include the authorized generic Products and Schedule Three of the Agreement shall be deemed to be revised to list the authorized generic Products and, as such, whenever the term Product or Products is used in the Agreement, said terms shall be construed to mean and include the authorized generic Products and be subject to all of the terms and conditions of the Agreement.
B. Project Fee. In consideration for the manufacture and supply of the authorized generic Products, Indivior shall pay MSX, in addition to the Price for the authorized generic Products in accordance with Section E below, the sum of [***] dollars ($[***]) payable as follows:
1. [***] dollars ($[***]) previously paid by Indivior to MSX on May 25, 2016 upon commencement of manufacture of the authorized generic Products; and
2. [***] dollars ($[***]) upon (i) execution of this Amendment and (ii) execution of the agreement referred to in Section D below.
C. Restrictive Covenant. Notwithstanding anything to the contrary contained in this Agreement, the parties agree that, in addition to, and not in limitation of, any other restrictive covenants contained in the Agreement, during the last [***] months
of the Term, and for a period of [***] after the expiration or termination of the Term, neither party shall, directly or indirectly, enter into any agreement or arrangement with [***] or any of the Affiliates of [***], or its or their respective successors and/or assigns, for the development, manufacture, marketing, promotion, distribution, offering for sale, sale, offering for license, license or similar activity of the Products in the Field. For the avoidance of doubt, the Parties agree that nothing contained in this Restrictive Covenant is intended to prohibit or prevent the continued manufacture and supply of authorized generic Product by MSX in accordance with the Agreement and this Amendment during the last [***] of the Term.
D. Delivery of the Products.
a. The following shall be added to Clause 5.1:
For the avoidance of doubt, MSX agrees to deliver authorized generic Products directly to Indivior in accordance with the terms of Clause 5 of the Agreement. Indivior shall ensure that any designated authorized generic third party distributor shall enter into a non-disclosure agreement with MSX and Indivior, in form and substance acceptable to MSX, which obligates such designated authorized generic third party distributor, among other things, to maintain the confidentiality of any MSX Confidential Information that may be disclosed by or on behalf of MSX pursuant to this Clause 5.
E. Pricing. For the avoidance of doubt, pricing for the supply of authorized generic Products equals the current U.S. Cost of Goods Price set forth below:
| | | | | |
| Cost/strip |
| |
| [***] | [***] |
| [***] | [***] |
| [***] | [***] |
| [***] | [***] |
The Price payable by Indivior to MSX for the authorized generic Products shall be adjusted according to Section 7.3 of the Agreement.
F. Batch Tracking System. The Parties acknowledge that MSX shall not be obligated to establish and maintain a batch-tracking system that identifies the authorized generic Products for any purpose except as required by the FDA.
G. No Third Party Beneficiaries. This Amendment is for the sole benefit of the Parties and their respective successors and assigns permitted under the Agreement, and nothing herein, express or implied, is intended to or shall confer upon any other person or entity (including, without limitation, any authorized third party distributor of authorized generic Products) any legal or equitable right, benefit or remedy of any nature whatsoever under the Agreement or this Amendment by reason of or with respect to this Amendment.
H. Governing Law. This Amendment shall be governed by and construed in accordance with the laws of the State of Delaware, United States of America, save as to conflict of law provisions, and the parties hereby agree to submit to the jurisdiction of the federal courts located in the State of Delaware.
I. Survival. Except as expressly set forth herein, all other terms and provisions of the Agreement shall remain in full force and effect without modification or change.
| | |
| Signed for and on behalf Indivior Inc. |
|
| /s/ Cary Claiborne |
| Name: Cary Claiborne |
| Title: CFO |
| Date: 1/20/17 |
| | |
| Signed for and on behalf of MonoSol Rx, LLC |
|
| /s/ Keith Kendall |
| Name: Keith Kendall |
| Title: CEO |
| Date: 1/16/17 |
PORTIONS OF THIS EXHIBIT HAVE BEEN REDACTED.
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS BOTH (i) NOT MATERIAL AND (ii) WOULD BE LIKELY TO CAUSE COMPETITIVE HARM IF PUBLICLY DISCLOSED.
REDACTED MATERIAL IS MARKED WITH [***].
AMENDMENT NO. 9
COMMERCIAL EXPLOITATION AGREEMENT
THIS AMENDMENT NO. 9 (this “Amendment”) is made as of the last date of signature below (the “Effective Date”) between:
PARTIES
(1) Aquestive Therapeutics, Inc. (formerly known as MonoSol Rx, LLC), a company organized and existing under the laws of Delaware with offices at 30 Technology Drive, Warren, New Jersey 07059, USA (“Aquestive"),
and
(2) Indivior Inc. (formerly known as Reckitt Benckiser Pharmaceuticals Inc.), a company organized and existing under the laws of Delaware with offices at 10710 Midlothian Turnpike, Suite 125, North Chesterfield, Virginia 23235, USA (“Indivior”).
Aquestive and Indivior are each referred to herein sometimes as a “Party” and, collectively, as the “Parties”.
WHEREAS, Aquestive and Indivior entered into a Commercial Exploitation Agreement, dated August 15, 2008, as amended from time to time (collectively referred to herein as the “Agreement”), pursuant to which, among other things, Indivior engaged Aquestive to be the exclusive manufacturer and supplier the Products (as defined in the Agreement) on the terms of the Agreement and Aquestive agreed to manufacture and supply the Products to Indivior on the terms of the Agreement, and
WHEREAS, for valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties mutually desire to amend and modify certain terms and conditions of the Agreement as set forth in this Amendment,
IT IS AGREED as follows:
A. Capitalized terms used in this Amendment without definition shall have the respective meanings ascribed thereto in the Agreement.
B. Effective as of January 1, 2020 both Parties mutually agree that the Cost of Goods Price for the manufacture per pouched single dose of Product shall be as follows:
| | | | | | | | | | | |
•2 mg Buprenorphine + 1 mg Naloxone (US) | | $[***] | |
•2 mg Buprenorphine + 1 mg Naloxone (ROW) | | $[***] | |
•4 mg Buprenorphine + 1 mg Naloxone (US) | | $[***] | |
•4 mg Buprenorphine + 1 mg Naloxone (ROW) | | $[***] | |
•8 mg Buprenorphine + 2 mg Naloxone (US) | | $[***] | |
•8 mg Buprenorphine + 2 mg Naloxone (ROW) | | $[***] | |
•12 mg Buprenorphine + 3 mg Naloxone (US) | | $[***] | |
•12 mg Buprenorphine + 3 mg Naloxone (ROW) | | $[***] | |
C. The Parties currently anticipate quarterly manufacturing demand in Year 2020 of [***] to [***] doses per Quarter Year. Aquestive will apply a [***] ($[***]) price decrease on Product manufactured above [***] doses but below the maximum contractual capacity of [***] doses (collectively, the "Volume Rebate”). Aquestive will apply a credit equal to the Volume Rebate within [***] days of the end of each Quarter Year. Overage charges as communicated by Aquestive will continue to apply above [***] doses manufactured per Quarter Year. The Parties agree to discuss further adjustments to Aquestive’s cost base and Price if quarterly volumes fall below [***] doses per Quarter Year.
D. Effective January 1, 2020, the Packaging Fee as stated in Section 7 3 2 of the Agreement, as amended under Amendment #6 of the Agreement dated December 9, 2011, shall be [***] US Dollars (USD$[***]) per additional packaging request. For the sake of clarity, if Indivior requests [***] different SKUs during the manufacture of [***] batch, (the maximum number of packaging requests) then the total Packaging Fees for such manufactured batch would be [***] US Dollars (USD$[***]). The maximum number of packaging requests that Indivior may request for any [***] manufactured batch shall be [***] requests.
E. Aquestive agrees that it will continue to use commercially reasonable efforts to improve the electronic capabilities of the manufacturing site including instituting an electronic process for the management of change controls and events. The Parties will meet in the second half of Year 2020 to discuss further investments in electronic systems that may be appropriate in 2021.
F. Aquestive agrees that it will use commercially reasonable efforts to invest in Year 2020 at least [***] US Dollars (USD$[***]) in capital improvements focused on manufacturing capabilities. The Parties will meet in the second half of Year 2020 to discuss the state of Aquestive’s manufacturing capabilities.
G. As of the Effective Date, Aquestive and Indivior each agrees that the ROW Rebate and any manufacturing overage charges will be calculated starting on July 1, 2019 and that neither Party will make any rebate or overage charge claims for Product manufactured prior to July 1, 2019. Furthermore, each Party agrees that is shall not make any claims for disputed batches / scrapped batches manufactured prior to the Effective Date. The Parties agree to split the costs for the currently disputed batches / scrapped batches [***] and [***]. For the sake of clarity, Indivior shall pay Aquestive [***] US Dollars (USD$[***]) within [***] calendar days after the Effective Date and receipt of revised invoice, whichever is later, and Aquestive will destroy the batches and seek no further claim for payment for such destroyed batches against Indivior.
H. Indivior agrees to work in good faith to support Aquestive in reducing its cost base as Indivior volumes decrease. Specifically, Indivior will work with Aquestive to support moving any remaining Product manufacturing from the [***] facility to the [***] facility by Year 2021. Aquestive will continue to manufacture Product for Malaysia and Australia at [***] while both Parties work diligently to gam regulatory approval of manufacturing at [***] for the respective countries. The Parties will assess the viability of continuing to manufacture at [***] after Year 2021 if the regulatory approval and/or technology transfer work has not been completed.
I. This Amendment shall be governed by and construed in accordance with the laws (procedural and substantive) of the State of Delaware, United States of America, save as to conflict of law provisions, and the Parties hereby agree to submit to the jurisdiction of the federal courts located in the State of Delaware.
J. Except as expressly set forth herein, all other terms and provisions of the Agreement shall remain in full force and effect without modification or change.
| | |
| Signed for and on behalf of Indivior Inc. f/k/a Reckitt Benckiser Pharmaceuticals Inc. |
|
| /s/ Shaun Thaxter |
| Name: Shaun Thaxter |
| Title: Chief Executive Officer |
| Date: 11/25/2019 |
| | |
| Signed for and on behalf of Aquestive Therapeutics, Inc. f/k/a MonoSol Rx, LLC |
|
| /s/ Daniel Barber |
| Name: Daniel Barber |
| Title: COO |
| Date: 11/25/2019 |
PORTIONS OF THIS EXHIBIT HAVE BEEN REDACTED.
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS BOTH (i) NOT MATERIAL AND (ii) WOULD BE LIKELY TO CAUSE COMPETITIVE HARM IF PUBLICLY DISCLOSED.
REDACTED MATERIAL IS MARKED WITH [***].
AMENDMENT NO. 10
COMMERCIAL EXPLOITATION AGREEMENT
THIS AMENDMENT NO. 10 (this “Amendment”) is made as of the 29th day of December, 2020 (the “Effective Date”) between:
PARTIES
(1) Aquestive Therapeutics, Inc. (formerly, MonoSol Rx, LLC), a company organized and existing under the laws of Delaware with offices at 30 Technology Drive, Warren, New Jersey 07059, USA (“Aquestive"),
and
(2) Indivior Inc. (formerly, Reckitt Benckiser Pharmaceuticals Inc.), a company organized and existing under the laws of Delaware with offices at 10710 Midlothian Turnpike, Suite 125, North Chesterfield, Virginia 23235 (“Indivior”).
Aquestive and Indivior are each referred to herein sometimes as a “Party” and, collectively, as the “Parties”.
WHEREAS, Aquestive and Indivior entered into a Commercial Exploitation Agreement, dated August 15, 2008, as amended from time to time (collectively referred to herein as the “Agreement”), pursuant to which, among other things, Indivior engaged Aquestive to be the exclusive manufacturer and supplier of the Products (as defined in the Agreement) on the terms of the Agreement and Aquestive agreed to manufacture and supply the Products to Indivior on the terms of the Agreement, and
WHEREAS, for valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties mutually desire to amend and modify certain terms and conditions of the Agreement as set forth in this Amendment,
IT IS AGREED as follows:
A. Capitalized terms used in this Amendment without definition shall have the respective meanings ascribed thereto in the Agreement.
B. Effective as of January 1, 2021, both Parties mutually agree that the Cost of Goods Price for the manufacture per pouched single dose of Product shall be increased by $[***], subject to a maximum Cost of Goods Price of $[***], and is as follows:
| | | | | | | | | | | |
•2 mg Buprenorphine + 1 mg Naloxone (US) | | $[***] | |
•2 mg Buprenorphine + 1 mg Naloxone (ROW) | | $[***] | |
•4 mg Buprenorphine + 1 mg Naloxone (US) | | $[***] | |
•4 mg Buprenorphine + 1 mg Naloxone (ROW) | | $[***] | |
•8 mg Buprenorphine + 2 mg Naloxone (US) | | $[***] | |
•8 mg Buprenorphine + 2 mg Naloxone (ROW) | | $[***] | |
•12 mg Buprenorphine + 3 mg Naloxone (US) | | $[***] | |
•12 mg Buprenorphine + 3 mg Naloxone (ROW) | | $[***] | |
The Parties mutually agree that the above prices and below terms shall supersede and control in the event of any conflict between this Amendment and Amendment No. 9 to the Agreement, dated November 25, 2019.
C. The Parties currently anticipate minimum quarterly manufacturing demand (the “Minimum Quarterly Demand”) in Year 2021 and the first two Quarters of Year 2022 of [***] doses per Quarter Year. Aquestive will maintain the Cost of Goods Price in Paragraph B above during this period as long as the Minimum Quarterly Demand is met or exceeded by Indivior.
D. Effective from January 1,2021 through June 30, 2022, as long as Indivior maintains the Minimum Quarterly Demand, the maximum number of packaging requests that Indivior may request for any [***] manufactured batch shall be [***] requests. Aquestive will continue to invoice Indivior a Packaging Fee, which is maintained through the effective period at [***] US Dollars (USD $[***]), for each split packaging request included in a manufactured batch pursuant to the Section D of Amendment 9.
E. Effective from January 1, 2021 through June 30, 2022, Indivior will pay Aquestive $[***] per dose to support manufacturing improvements and investments (the “Investment Fee”). Aquestive will invoice Indivior for the Investment Fee on a monthly basis. The Investment Fee will be equal to the number of doses invoiced in a given month times $[***] per dose. Indivior will pay the Investment Fee under the same payment terms as invoices for the Cost of Goods Price.
F. In exchange for the Investment Fee, Aquestive will use commercially reasonable efforts to invest a similar amount, $[***] per dose, and will pursue improvements and investments in manufacturing that are of equal or greater value to the Investment Fee received and the investment amount contributed by Aquestive. Improvements and investments considered under this agreement shall provide a benefit to Indivior in the form of reduced costs, improved performance, improved quality, and/or a reduced overhead burden assigned to Indivior. Examples of improvements and investments include but are not limited to investing in new capabilities [***]. Aquestive and Indivior shall meet every six months to review the improvements, investments, and progress made by Aquestive.
G. In addition, Aquestive will lead (and Indivior will participate in) a cross-company project team that will examine (1) the feasibility of increasing packaging requests from [***] to [***] for a manufacturing batch and (2) how to improve the efficiency of providing [***] SKU’s. These improvements could include but are not limited to [***]. It is the intention of both Parties to complete item one (1) above by March 31,2021.
H. Section 19.3 of the Agreement is hereby deleted in its entirety and replaced with the following:
“Any Affiliate of RB may place Orders for Products under this Agreement and may enter into additional quality agreements hereunder on terms and conditions mutually acceptable to the Parties (“Additional Quality Agreements”) and may accordingly in their own right enforce the provisions of this Agreement, as though it were RB, provided, that (a) each Affiliate of RB that places an Order for Products shall by doing so be deemed to have assumed RB’s obligations under this Agreement for the purposes of such Order, (b) each Affiliate of RB that enters into any Additional Quality Agreement(s) hereunder shall be bound by the terms of this Agreement to the same extent as RB, and (c) RB shall remain obligated for the performance of all obligations of RB and the applicable Affiliate of RB arising from this Clause 19.3."
I. This Amendment shall be governed by and construed in accordance with the laws (procedural and substantive) of the State of Delaware, United States of America, save as to conflict of law provisions, and the Parties hereby agree to submit to the jurisdiction of the federal courts located in the State of Delaware.
J. Except as expressly set forth herein, all other terms and provisions of the Agreement shall remain in full force and effect without modification or change.
| | |
| Signed for and on behalf of Indivior Inc. |
|
| /s/ Ryan Preblick |
| Name: Ryan Preblick |
| Title: Chief Financial Officer |
| Date: 12/30/2020 |
| | |
| Signed for and on behalf of Aquestive Therapeutics |
|
| /s/ Daniel Barber |
| Name: Daniel Barber |
| Title: COO |
| Date: 12/30/2020 |
PORTIONS OF THIS EXHIBIT HAVE BEEN REDACTED.
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS BOTH (i) NOT MATERIAL AND (ii) WOULD BE LIKELY TO CAUSE COMPETITIVE HARM IF PUBLICLY DISCLOSED.
REDACTED MATERIAL IS MARKED WITH [***].
AMENDMENT NO. 11 TO
COMMERCIAL EXPLOITATION AGREEMENT
This Eleventh Amendment (this “Amendment”), effective as of March 2, 2023 (the “Amendment Effective Date”), amends and modifies the Commercial Exploitation Agreement, entered into by and between Aquestive Therapeutics, Inc. (formerly, MonoSol Rx, LLC) (“Aquestive”), located at 30 Technology Drive, Warren, New Jersey 07059, and Indivior Inc. (formerly, Reckitt Benckiser Pharmaceuticals Inc.) (“Indivior”), located at 10710 Midlothian Turnpike, Suite 125, North Chesterfield, VA 23235 on August 15, 2008 (as amended, the “Agreement”). Any capitalized terms not defined herein shall have the meanings prescribed in the Agreement.
WHEREAS the parties desire to amend the Agreement as set forth in this Amendment;
NOW, THEREFORE, for good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, the Parties intending to be legally bound do hereby agree as follows:
1. Clause 2.1 of the Agreement is deleted in its entirety and replaced with the following:
2.1 This Agreement shall be effective beginning as of the Commencement Date and shall continue, unless earlier terminated by either party in accordance with the provisions of Clause 17, for a period of seven (7) years (the "Initial Term"). The parties acknowledge that, prior to the Amendment Effective Date, the Initial Term has been automatically renewed for continuous successive one (1) year periods. The parties agree to an additional extension of the term of the Agreement for a period of three (3) years expiring on August 16, 2026, unless earlier terminated by either party in accordance with the provisions of Clause 17 (the “2026 Term”). Upon expiration of the 2026 Term, this Agreement shall thereafter automatically renew for successive one (1) year periods (each, a “Renewal Term”) on a continuous basis, unless and until RB delivers to MSX written notice of RB’s intent not to renew the Agreement, which notice must be delivered at least one (1) year prior to the expiration of the 2026 Term or of a Renewal Term (the Initial Term, 2026 Term and any Renewal Terms, are hereinafter collectively referred to as the “Term”). Notwithstanding anything to the contrary contained in this Agreement, this Agreement shall not be automatically renewed for any Renewal Term that begins after the expiration date of the last to expire of the Patents, unless both parties mutually agree in writing to renew this Agreement for each such Renewal Term.
2. Clause 11.10 of the Agreement is deleted in its entirety and replaced with the following:
11.10 The Recipient will however be permitted to disclose Confidential Information to those of its officers and employees and/or officers and employees of its Affiliates who are required in the course of their duties to receive and acquire the Confidential Information for the purpose of compliance with this Agreement where such Affiliates and/or employees and/or officers are bound by obligations of confidentiality to the Recipient and/or the relevant Affiliate and are first made aware of the other terms of this Agreement. For the avoidance of doubt, MSX shall not, and shall cause its Affiliates not to, use any Confidential Information of RB to develop, manufacture, market or sell any product other than the Products. MSX shall establish appropriate firewall procedures to segregate activities conducted by or on behalf of it or any of its Affiliates in connection with the development, manufacture, marketing or sale of a product other than the Products (and the personnel conducting such activities) from the activities performed by or on behalf of MSX under this Agreement involving Confidential Information of RB with respect to the Product. The Recipient will be liable to the Discloser for any breach of the terms of this Agreement by such Affiliates or by their employees or officers.
3. Each of the parties agrees that the Cost of Goods Price for the manufacture per pouched single dose of Product shall be increased by $[***], effective as of July 1, 2022, through and including June 30, 2023, and by an additional $[***], effective as of July 1, 2023. The Cost of Goods Price will remain unchanged thereafter until [***].
4. Clause 7.14 of the Agreement is deleted in its entirety and replaced with the following:
7.14 Effective January 1, 2025, and each January 1 thereafter the annual Price Change shall be based on [***].
For the sake of clarity, the parties agree that Aquestive will not be required to lower the Cost of Goods Price if the calculation shows an annual decrease, provided that to the extent that such calculation does show a decrease in a year, then for the calculation in the following year, the denominator shall instead be the denominator the last time the calculation showed an annual increase.
5. Indivior will make a one-time prepayment equivalent to the forecasted volumes for 2023 multiplied by the increase in the Cost of Goods Price as provided for in Section 3 of this Amendment. For the sake of clarity, the prepayment will be as follows:
| | | | | | | | | | | |
| Line Item | Volume | Price Increase | Total |
1st Half 2023 Forecast | [***] | $[***] | $[***] |
2nd Half 2023 Forecast | [***] | $[***] | $[***] |
| Total Prepayment | $[***] |
The parties agree to review the volumes associated with the prepayment on January 1, 2024. The parties will calculate the underpayment or overpayment associated with this prepayment and determine if an adjustment should be made. A final calculation of the underpayment or overpayment will be agreed upon by January 15, 2024, with final payment made by the appropriate party within sixty (60) days thereafter.
6. Except as provided herein, all other terms and conditions of the Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment to be executed by its duly authorized representatives, as of the Amendment Effective Date.
| | | | | | | | | | | | | | |
| Aquestive Therapeutics, Inc. | | Indivior Inc. |
| | | | |
| By: | /s/ Dan Barber | | By: | /s/ Ryan Preblick |
| Name: | Dan Barber | | Name: | Ryan Preblick |
| Title: | CEO | | Title: | Treasurer |
| Date: | March 2, 2023 | | Date: | March 2, 2023 |
PORTIONS OF THIS EXHIBIT HAVE BEEN REDACTED.
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS BOTH (i) NOT MATERIAL AND (ii) WOULD BE LIKELY TO CAUSE COMPETITIVE HARM IF PUBLICLY DISCLOSED.
REDACTED MATERIAL IS MARKED WITH [***].
AGREEMENT
This Agreement (this “Agreement”), dated as of September 24, 2017, is by and between MonoSol Rx, LLC, a Delaware limited liability company (“MonoSol”); and Indivior Inc., a Delaware corporation, and Indivior UK Limited, a corporation organized under the laws of England and Wales, as successors in interest to Reckitt Benckiser Pharmaceuticals Inc. and RB Pharmaceuticals Limited, respectively (collectively, “Indivior”).
MonoSol and Indivior are each sometimes referred to herein individually as a “Party” and are referred to collectively as the “Parties.”
WITNESSETH:
WHEREAS, MonoSol and Indivior Inc. are parties to the Commercial Exploitation Agreement, dated August 15, 2008, as amended (the “Commercial Exploitation Agreement”); and
WHEREAS, MonoSol, in the Commercial Exploitation Agreement, has granted certain exclusive rights to Indivior Inc. and its Affiliates, including an exclusive license under MonoSol patents to use and sell Suboxone® (buprenorphine and naloxone) film, a pharmaceutical product containing the active ingredients buprenorphine hydrochloride and naloxone hydrochloride; and
WHEREAS, Indivior Inc., in the Commercial Exploitation Agreement, has granted certain exclusive rights to MonoSol including an exclusive right to manufacture Suboxone® (buprenorphine and naloxone) film, a pharmaceutical product containing the active ingredients buprenorphine hydrochloride and naloxone hydrochloride; and
WHEREAS, the Parties seek to clarify the scope of their relationship, including certain rights and obligations that may be impacted by the possible sale, offer for sale, or distribution of a Generic Buprenorphine Product, as defined below, in the United States, by a Third Party, as defined below.
NOW, THEREFORE, for good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, the Parties intending to be legally bound do hereby agree as follows:
ARTICLE 1: DEFINITIONS
1.1. The capitalized terms used in this Agreement shall have the meanings defined in this Article or elsewhere in this Agreement.
1.2. Unless the context requires otherwise, words referred to in the singular include the plural and vice versa, the words “include,” “includes” and “including” will be deemed to be followed by the phrase “without limitation” (unless already present), the words “herein,” “hereof’ and “hereunder,” and words of similar import, will be construed to refer to this Agreement in its entirety and not to any particular provision hereof, and the word “or” is used in the inclusive sense (and/or).
1.3. The term “Affiliate” shall mean, with respect to a Party, any entity or person that, directly or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with such Party at any time for so long as such entity or person controls, is controlled by or is under common control with such Party. For purposes of this definition, “control” means (a) ownership, directly or through one or more intermediaries, of (i) more than fifty percent (50%) of the shares of stock entitled to vote for the election of directors, in the case of a corporation, or (ii) more than fifty percent (50%) of the equity interests in the case of any other type of legal entity or status as a general partner in any partnership, or (b) any other arrangement whereby an entity or person has the right to elect a majority of the board of directors or equivalent governing body of a corporation or other entity or the right to direct the management and policies of a corporation or other entity.
1.4. The term “Approved Suboxone Product” shall mean any product sold, offered for sale or distributed pursuant to New Drug Application (“NDA”) No. 22-410.
1.5. The term “Generic Buprenorphine Product” shall mean a film dosage drug product containing the buprenorphine and naloxone moieties that is sold, offered for sale or distributed under an ANDA or an application pursuant to 21 U.S.C. § 355(b)(2) that refers to the Approved Suboxone Product as the reference-listed drug.
1.6. The term “Third Party” shall mean any entity or person that is not a Party or an Affiliate of a Party.
ARTICLE 2: PAYMENTS FROM INDIVIOR TO MONOSOL
2.1. Five (5) business days following the date the Parties fully execute this Agreement, Indivior agrees to make a non-refundable payment of USD$[***] ([***] U.S. dollars) to MonoSol.
2.2. On February 1, 2018, Indivior will make a non-refundable payment of USD$[***] ([***] U.S. dollars) to MonoSol.
2.3. Starting on January 1, 2018, Indivior shall make [***] payments to MonoSol of USD$[***] ([***] U.S. dollars) [***]; provided, however, that the payment obligation on Indivior pursuant to this Section shall immediately cease, and be null and void, on the first date a Third Party sells, offers for sale, or distributes an unlicensed Generic Buprenorphine Product in the United States.
2.4. Starting on April 1, 2019, and through and including the first date a Third Party sells, offers for sale, or distributes a Generic Buprenorphine Product in the United States, Indivior shall make [***] payments equal to [***] of the net revenue earned by Indivior on sales of Suboxone sublingual film in the United States for the previous [***] with payment made within [***] after the start of the current [***], where:
(A) the total amount Indivior pays to MonoSol in a calendar year shall be not less than USD$[***] ([***] U.S. dollars) (“Minimum Annual Payment”), and
(B) Notwithstanding the foregoing, Indivior’s obligation to make the Minimum Annual Payment shall immediately cease, and be null and void, once the total amount of the payments made from Indivior to MonoSol under this Article 2.4 is equal to USD$[***] ([***] U.S. dollars).
(C) MonoSol shall have annual audit rights for royalty payments as outlined in the Commercial Exploitation Agreement.
2.5. On the date a new patent issues to MonoSol or a new claim is asserted by MonoSol from an existing patent and/or a divisional, reissue, continuation, or continuation-in-part of a MonoSol patent application with new claims that cover Suboxone® (buprenorphine and naloxone) film, Indivior shall make a one-time, non-refundable payment of USD$[***] ([***] U.S. dollars) to MonoSol in [***] installments; provided, that the applicable conditions to payment are satisfied. The [***] installment of USD$[***] ([***] U.S. dollars) shall be paid within [***] days of the date a new patent issues to MonoSol or a new claim is asserted by MonoSol from an existing patent and/or a divisional, reissue, continuation, or continuation-in-part of a MonoSol patent application with new claims that cover Suboxone® (buprenorphine and naloxone) film, and the [***] installment of USD$[***] ([***] U.S. dollars) shall be paid within [***] days after the first (1st) anniversary of the issuance provided the new patent or new claim is valid and enforceable on this anniversary date. Within [***] days of the date a second new patent issues to MonoSol or a second new claim is asserted by MonoSol from a different existing patent and/or a divisional, reissue, continuation, or continuation-in-part of a MonoSol patent application with new claims that cover Suboxone® (buprenorphine and naloxone) film, Indivior shall make a [***] payment of USD$[***] ([***] U.S. dollars) to MonoSol in [***] installments; provided, that the applicable conditions to payment are satisfied. The [***] installment of USD$[***] ([***] U.S. dollars) shall be paid within [***] days of the date a second new patent issues to MonoSol or a second new claim is asserted by MonoSol from a different existing patent and/or a divisional, reissue, continuation, or continuation-in-part of a MonoSol patent application with new claims that cover Suboxone® (buprenorphine and naloxone) film, and the [***] installment of USD$[***] ([***] U.S. dollars) shall be paid within [***] days after the first (1st) anniversary of the issuance provided the second new patent or second new claim is valid and enforceable on this anniversary date. [***].
2.6. In the event a Third Party sells, offers for sale, or distributes a licensed Generic Buprenorphine Product in the United States pursuant to a settlement agreement with Indivior prior to January 1, 2023, then Indivior will make a one-time non-refundable payment equal to USD$[***] ([***] U.S. dollars), minus total cumulative payments paid by Indivior to MonoSol under this Agreement as of the first date of entry of said licensed Third Party Generic Buprenorphine Product, paid in [***] installments by January 1, 2023, beginning [***] days following the first date of entry of a licensed Third Party Generic Buprenorphine Product. Notwithstanding the foregoing, the payment obligation on Indivior pursuant to this Section shall cease, and be null and void, if the sale, offer for sale, or distribution of a licensed Third Party Generic Buprenorphine Product is triggered by the sale, offer for sale, or distribution of an unlicensed Third Party Generic Buprenorphine Product.
2.7. On January 1, 2023, Indivior will make a non-refundable payment of USD$[***] ([***] U.S. dollars) to MonoSol; provided, however, that if the first date a Third Party sells, offers for sale, or distributes an unlicensed Generic Buprenorphine Product in the United States occurs before January 1, 2023, then the payment obligation of Indivior pursuant to this Section shall immediately cease, and be null and void.
2.8. Notwithstanding the foregoing payment provisions, the Parties agree and acknowledge that the total cumulative amounts payable under the terms of this Agreement by Indivior to MonoSol shall be capped at USD$[***] ([***] U.S. dollars), provided the new patents or new claims pursuant to Article 2.5 hereof are issued, or be capped at USD$[***] ([***] U.S. dollars), if no new patents or new claims pursuant to Article 2.5 hereof are issued, and shall not, under any circumstances, exceed the applicable stated amount.
2.9. Notwithstanding the payment obligations set forth herein, if, at any time during the term of this Agreement, a Third Party sells, offers for sale, or distributes an unlicensed Generic Buprenorphine Product in the United States where Indivior has legal recourse to challenge the sale, offer for sale, or distribution of said product at the United States Court of Appeals for the Federal Circuit (“At-Risk Launch”), then any payments that would otherwise have become due under this Agreement by Indivior from the date of such At-Risk Launch through the date that the Federal Circuit Court of Appeals issues a ruling enjoining said Third Party from selling, offering for sale or distributing a Generic Buprenorphine Product (“At-Risk Launch Period”) shall immediately cease, and be null and void, such that no further payments under this Agreement from Indivior to MonoSol shall be required to be made during the At-Risk Launch Period. If [***], any payments cancelled under this Agreement during such At-Risk Launch Period, shall be paid to MonoSol by Indivior [***] within [***] days of [***]. For clarity, Indivior’s obligation to pay MonoSol for any payments cancelled during the At-Risk Launch period shall not exceed [***]. For further clarity, once the At-Risk Launch Period ends, all payments owed by Indivior to MonoSol under this Agreement shall be reinstated.
2.10. Notwithstanding the payment obligations set forth herein, if, at any time during the term of this Agreement, a Third Party sells, offers for sale, or distributes an unlicensed Generic Buprenorphine Product in the United States where Indivior has no legal recourse to challenge the sale, offer for sale, or distribution of said product at the Federal Circuit Court of Appeals, then Indivior’s payment obligations under this Agreement shall immediately cease, and be null and void, such that no further payments under this Agreement from Indivior to MonoSol shall be required. For the sake of clarity, the Commercial Exploitation Agreement shall remain in effect for the term thereof.
2.11. Indivior agrees to use reasonable efforts, with the objective of prevailing, to exercise its rights to enforce and protect intellectual property relating to Generic Buprenorphine Products. If an unauthorized and/or unlicensed Third Party sells, offers for sale, or distributes a Generic Buprenorphine Product in the United States, but later discontinues such activities as a result of Indivior’s exercising its rights to enforce and protect intellectual property regarding those activities, whether through (1) the issuance of an injunction or damages award from a court of competent jurisdiction, or (2) the resolution of intellectual property rights in an agreement between the Third Party and Indivior, all payments owed to MonoSol under this Article 2 shall be retroactively reinstated.
ARTICLE 3: LICENSE AND ENFORCEMENT
3.1. Subject to the limitations of Article 3.2 below, if and to the extent that Indivior does not already hold the sole, exclusive and irrevocable right and entitlement to pursue, assert, enforce, litigate, settle and resolve all causes of action (whether known or unknown or whether currently pending, filed or otherwise) and all other enforcement rights involving Generic Buprenorphine Products (“the Enforcement Rights”), MonoSol, for itself and its Affiliates, hereby confirms that Indivior and its Affiliates hold and may exercise all such Enforcement Rights, and in connection with any settlement or other resolution of any such causes of action may sublicense rights to make, have made, use, sell or import a Generic Buprenorphine Product under any of the MonoSol patents, present and future, licensed to Indivior under the Commercial Exploitation Agreement. At
the request of Indivior, MonoSol will execute and deliver such other instruments and do and perform such other acts as may be necessary or desirable for effectuating or confirming the provisions of this Article. For clarity, this foregoing Article 3.1 does not alter or affect the supply and/or manufacturing arrangements between Indivior and MonoSol, as provided for under the Commercial Exploitation Agreement, with respect to the Approved Suboxone Product, and this foregoing Article 3.1 does not change the rights and obligations of Indivior and MonoSol under the Commercial Exploitation Agreement with respect to MonoSol’s supply and/or manufacturing of the Approved Suboxone Product. If Indivior terminates this Agreement, and Indivior seeks to engage another party to manufacture the Approved Suboxone Product, nothing in this Agreement prevents MonoSol from seeking to enforce its intellectual property rights in suing either Indivior or that third party manufacturer, or both, consistent with the Commercial Exploitation Agreement, nor does anything in this Agreement prevent Indivior from contesting any such suit brought by MonoSol. For further clarity, nothing in this Agreement prohibits MonoSol, upon termination of the Commercial Exploitation Agreement, from manufacturing any product in the Field, as defined in the Commercial Exploitation Agreement, for anyone anywhere in the world, nor does anything in this Agreement prevent Indivior from contesting MonoSol’s entitlement to engage in such manufacturing.
3.2. MonoSol agrees not to assert its rights regarding any agreements by Indivior with any Third Party under which a sale, offer for sale, or distribution of a Generic Buprenorphine Product by that Third Party would occur on or after [***]. For the sake of clarity, MonoSol does not waive any such rights regarding any agreements by Indivior with any Third Party under which a sale, offer for sale, or distribution of a Generic Buprenorphine Product by a Third Party would occur prior to [***].
ARTICLE 4: BREACH AND INDEMNIFICATION
4.1. Indivior hereby agrees to indemnify MonoSol and to hold it harmless with respect to all costs, including attorneys’ fees and expert fees, and any penalties or monetary damages arising out of or relating to any investigation, enforcement action, and administrative or court proceeding regarding or relating to this Agreement under the Clayton Act § 7A, 15 U.S.C. § 18a and its implementing rules and regulations. For clarity, this Article 4.1 does not apply to any pre-existing investigations, enforcement actions, and administrative or court proceedings and applies only to the terms of this Agreement.
ARTICLE 5: MISCELLANEOUS
5.1. Confidentiality: Except as (a) required by statute, ordinance or regulation, (b) required pursuant to compulsory legal process, or (c) necessary for the exercise of the rights granted to the Parties under this Agreement, neither the Parties nor their Affiliates shall publicly announce or otherwise disclose to Third Parties any of the terms of this Agreement without the prior written approval of the other Party, not to be unreasonably withheld, conditioned or delayed. If a Party intends to disclose information relating to this Agreement because it is required to do so in order to comply with a statute, ordinance or regulation or compulsory legal process, including, without limitation, its reporting requirements under the Securities Exchange Act of 1934, as amended, such Party shall give the other Party at least three (3) business days’ prior notice in writing of the text of the intended disclosure, unless such statute, ordinance, regulation or compulsory legal process would require earlier disclosure, in which event the notice shall be provided as early as practicable. A Party that determines that it is required to file this Agreement with the Securities and Exchange Commission or any other governmental authority, including any court proceeding, shall request confidential treatment with respect to the terms of this Agreement, shall consult in good faith with the other Party regarding such confidential treatment and shall use commercially reasonable efforts to have redacted from any publicly available version such provisions as the Parties may agree. Notwithstanding anything to the contrary above, each Party may disclose the terms of this Agreement to its respective Affiliates, and its and their respective insurers, lenders, attorneys, accountants, and prospective and actual acquirers, subject to such Affiliates, insurers, lenders, attorneys, accountants and prospective and actual acquirers undertaking to keep the terms of this Agreement strictly confidential in accordance with confidentiality terms at least as restrictive as the terms hereof.
5.2. Notice: Any notice or other communication to be given under this Agreement shall be given in the same manner identified in Article 2.1 of the Commercial Exploitation Agreement.
5.3. Modification: This Agreement may only be amended, modified, or varied by the Parties by an instrument in writing signed on behalf of each of the Parties.
5.4. Waiver: No waiver of a breach, failure of any condition, or any right or remedy, contained in or granted by the provisions of this Agreement shall be effective unless it is in writing and signed by the Party waiving the breach, failure, right or remedy. No waiver of any breach, failure, right or remedy shall be deemed a waiver of any other breach, failure, right or remedy, whether or not similar, nor shall any waiver constitute a continuing waiver unless the writing so specifies.
5.5. No Agency: Nothing in this Agreement shall constitute or be deemed to constitute the creation of a partnership, agency, or employer/employee relationship between the parties.
5.6. Entire Agreement: This Agreement represents the entire understanding and agreement between the Parties with regard to the matters addressed herein.
5.7. Enforceability: If any provision of this Agreement is held by any court or other competent authority to be invalid or unenforceable in whole or in part for any reason, the Parties agree to use commercially reasonable efforts to negotiate a provision, in replacement of the provision held illegal, unenforceable, or invalid, that is consistent with applicable law and accomplishes, as nearly as possible, the original intention of the Parties with respect thereto. In any event, the provision held illegal, unenforceable, or invalid shall be deemed severed from this Agreement and the validity of the other provisions and the remainder of the provision in question shall not be affected.
5.8. Counterparts. This Agreement may be executed in any number of counterparts, and through pdf, facsimile or photocopy signatures. Each counterpart shall be deemed an original instrument, but all counterparts together shall be considered as one and the same agreement.
5.9. Governing Law: This Agreement and the rights and obligations of the Parties under this Agreement shall be governed and construed in accordance with the laws of the State of Delaware, without regard to its choice-of-law or conflicts-of-law principles that might otherwise refer construction or interpretation of this Agreement to the substantive law of another jurisdiction, and the Parties agree to submit to the jurisdiction of the federal courts located in the State of Delaware.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the Parties, through their authorized officers, have executed this Agreement as of the Signing Date.
Signed for and on behalf of Indivior Inc.:
| | | | | |
| By: | /s/ Shaun Thaxter |
| Name: | Shaun Thaxter |
| Title: | CEO |
| Date: | 9/23/17 |
Signed for and on behalf of Indivior UK Limited:
| | | | | |
| By: | /s/ Richard Simkin |
| Name: | Richard Simkin |
| Title: | CCO |
| Date: | 9/23/17 |
Signed for an on behalf of MonoSol Rx, LLC:
| | | | | |
| By: | /s/ Keith Kendall |
| Name: | Keith Kendall |
| Title: | CEO |
| Date: | 9/24/17 |
PORTIONS OF THIS EXHIBIT HAVE BEEN REDACTED.
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS BOTH (i) NOT MATERIAL AND (ii) WOULD BE LIKELY TO CAUSE COMPETITIVE HARM IF PUBLICLY DISCLOSED.
REDACTED MATERIAL IS MARKED WITH [***].
PACKAGING AND SUPPLY AGREEMENT
BETWEEN
INDIVIOR UK LIMITED
AND
SHARP CORPORATION
PACKAGING AND SUPPLY AGREEMENT
This Packaging and Supply Agreement (the "Agreement") dated as of the date of last signature below (the "Effective Date"), is entered into by and between Sharp Corporation, a corporation organized and existing under the laws of the Commonwealth of Pennsylvania having its principal office at 7451 Keebler Way, Allentown, Pennsylvania 18106 ("Sharp”) and lndivior UK Limited (CO No. 7183451), a corporation organized and existing under the laws of England and Wales having its registered address at 103-105 Bath Road, Slough, Berkshire SL1 3UH, United Kingdom ("Manufacturer").
WITNESSETH:
WHEREAS. Manufacturer desires to engage Sharp on an exclusive basis, to package and supply to Manufacturer the product(s) listed on Exhibit A in the Territories; and
WHEREAS, Sharp desires to accept such exclusive engagement under the terms and conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of these premises and the covenants, agreements and stipulations hereinafter set forth, and for other good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, agree as follows:
1.Definitions.
1.1"Applicable Law" shall mean the FDCA and all other laws, regulations, rules and guidelines promulgated by a Regulatory Authority relating to the packaging of the Products and the storage of the Products in the Territories, including, but not limited to, current Good Manufacturing Practices ("GMP") as specified in the United States Code of Federal Regulations, as amended from time to time, and similar applicable GMP requirements of other Regulatory Authorities.
1.2“Brand Image” shall have the meaning set forth in Section 8.1
1.3“Facilities” shall mean Sharp’s manufacturing facilities located at [***] (primary facility) and [***] (alternate facility) and/or any other facility as may be mutually agreed by the parties from time to time during the term.
1.4“FDA” shall mean the United States Food and Drug Administration, and any successor agency having substantially the same functions.
1.5“FDCA” shall mean the United States Federal Food, Drug and Cosmetic Act, 21 U.S.C. §§ 321 et seq., as amended from time to time.
1.6“Firm Order” shall mean a firm order as described in Section 4.2(b).
1.7"Forecast" shall have the meaning set forth in Section 4.2(a).
1.8"Manufacturing Carrier" shall mean a carrier identified by Manufacturer to ship Packaged Products upon receipt of them from Sharp in accordance with Section 5.2.
1.9“MHRA” shall mean the Medicines and Healthcare products Regulatory Agency.
1.10“Packaging Materials” shall mean the Primary Packaging Materials and the Secondary Packaging Materials.
1.11“Packaged Product(s)” shall mean the Products in packaged form.
1.12“Price” shall mean the price to be paid by Manufacturer to Sharp for the Packaged Products as set forth on Exhibit A and as may be adjusted in accordance with Section 5.1.
1.13“Primary Packaging Materials” shall mean the components and other materials utilized by Sharp in connection with the packaging of the Products supplied by Manufacturer.
1.14“Products” shall mean the products described on Exhibit A to be manufactured by or on behalf of Manufacturer and shipped in bulk to Sharp for storage, serialization, packaging and labeling. Upon the parties’ mutual written consent, the parties may from time to time during the Term amend Exhibit A to remove, add or substitute Products.
1.15“Purchase Order” shall have the meaning set forth in Section 4.2(b).
1.16“Regulatory Authority” shall mean any agency, authority, department, regulatory body or other instrumentality of any government or country or of any national, federal, state, provincial, regional, county, city or other political subdivision of any such government or any supranational organization of which any such country is a member that has the authority to regulate any aspect of the development, market approval, sale, distribution or use of the Product, the Packaging Materials or the Packaged Product in the Territories. The term “Regulatory Authority” shall include, without limitation, the FDA and MHRA.
1.17“Revised Purchase Order” shall have the meaning set forth in Section 4.2(b).
1.18“Secondary Packaging Materials” shall mean the components and other materials utilized by Sharp in connection with the packaging of the Products and supplied by Sharp on Manufacturer’s behalf.
1.19“Specifications” shall mean the specifications to be followed by Sharp in connection with obtaining and using the Packaging Materials and the storage, labeling and packaging of the Products and the storage and supply of the Packaged Products, which shall include standards of quality control, quality assurance and sanitation to be followed by Sharp. The Specifications are attached hereto as Exhibit B.
1.20“Start-Up Activities” shall have the meaning set forth in Section 3.1.
1.21“Territories” shall mean the countries listed on Exhibit C hereto. Exhibit C may be amended, from time to time, by mutual written consent of the parties.
1.22“Term,” “Initial Term” and “Subsequent Term” shall have the meanings set forth in Section 11.1.
1.23“Tooling” shall mean the tooling made for the packaging and labeling of the Products.
The definitions in this Section 1 shall apply equally to both the singular and plural forms of the terms defined. The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” All references herein to Sections and Exhibits shall be deemed references to Sections of this Agreement and Exhibits to this Agreement unless the context shall otherwise require.
2.Nature of Engagement.
2.1Engagement. Manufacturer hereby engages Sharp, and Sharp hereby accepts Manufacturer's engagement, as Manufacturer's exclusive independent contractor to store, serialize, package and label the Products and store and supply the serialized Packaged Products in accordance with the terms and conditions of this Agreement. Manufacturer agrees that Sharp shall be the sole supplier of such services with respect to the Products and the Packaged Products on the terms set forth herein.
2.2Independent Contractor. Sharp shall be deemed an Independent contractor with respect to the terms and provisions of this Agreement and shall not in any respect act as an agent or employee of Manufacturer. All persons employed by Sharp in connection with the storage, labeling, packaging, control, and supply of the Products and the Packaged Products to Manufacturer shall be employees or agents of Sharp and under no circumstances shall Sharp or any of its employees or agents be deemed to be employees or agents of Manufacturer.
3.Start-Up Activities.
3.1[Reserved.]
3.2Purchase and Installation of Equipment, Molds and Tooling. Sharp shall be responsible for installing at its Facilities any and all new equipment, molds and/or modifications to existing equipment and molds necessary for the packaging and labeling of the Products and for preparing the Packaged Products for shipment, and all costs and
expenses associated therewith; provided, however, that Manufacturer shall be responsible for the costs and expenses associated with the development and manufacturing of the Tooling. Sharp shall maintain and store the Tooling at the Facilities and shall retain all right, title and interest in and to the Tooling during and after the Term; provided, however that during the Term, Sharp shall use the Tooling only in connection with the packaging of Products for Manufacturer and shall not modify the Tooling without the consent of Manufacturer, such consent not to be unreasonably withheld, conditioned or delayed. Notwithstanding the foregoing, in the event that the Agreement is terminated pursuant to Sections 11.2 or 13.2, Sharp shall, within thirty (30) days of the Effective Termination Date, transfer title of the Tooling to Manufacturer or one of Manufacturer's affiliated entitles, at Manufacturer's discretion. Notwithstanding any other language to the contrary in this Agreement, the parties agree that any Manufacturer-affiliated entity to whom title of the Tooling is transferred shall be deemed a third party beneficiary of this Agreement solely with respect to the preceding sentence and shall be entitled to rely upon and enforce the preceding sentence as though it were a party to this Agreement.
4.Agreement to Supply; Forecasts; Purchase Orders.
4.1Generally. During the Term, Sharp shall store, serialize, package and label the Products and store and supply to Manufacturer the serialized Packaged Products, all in accordance with the Specifications, Applicable Law, and the terms of this Agreement, and Manufacturer shall pay for the Packaged Products in accordance with Section 5 of this Agreement.
4.2Forecasts and Purchase Orders.
(a)Beginning on the date hereof and hereafter on or prior to the fifth day preceding each calendar month of the Term, Manufacturer shall provide Sharp with a twelve (12) month rolling forecast (each, a "Forecast") of Manufacturer's quantity and delivery date requirements for the Packaged Products.
(b)The first three (3) months of each Forecast shall constitute a firm order (“Firm Order") and shall be binding upon Manufacturer (whether or not Sharp receives a Purchase Order in connection with such three month period). For the purposes of ordering Secondary Packaging Materials and scheduling capacity, Manufacturer shall provide Sharp with purchase orders (each, a "Purchase Order") in connection with such three (3) month period for the Packaged Products to be supplied during such period, which shall specify the quantities and delivery dates for the Packaged Products for such period. Sharp shall ensure it has sufficient packaging materials necessary to package the volume of Product in the Firm Order. So long as the quantity and delivery date requirements set forth in the Purchase Orders during such three (3) month period are within a tolerance range of minus/plus ten percent (-10%/+10%) of the Firm Order (the "Tolerance Range"), Sharp shall respond with an order acknowledgment within five (5) business days. If the quantity und delivery date requirements set forth In the Purchase Orders are outside the Tolerance Range, or in the event that Manufacturer desires to subsequently amend a Purchase Order, then the parties shall cooperate in good faith to develop a mutually agreeable purchase order (a "Revised Purchase Order") at least thirty (30) days prior to the scheduled start of production; provided, however that in the event a Revised Purchase Order is not agreed upon by the parties, both parties shall be obligated to perform in accordance with the Firm Order, within the tolerances set forth in the Tolerance Range.
(c)Nothing printed or written on any Purchase Order or Sharp order acknowledgement or on any other similar form or document shall modify or expand either party's obligations under this Agreement. In the event of any inconsistency between the terms of any Purchase Order or Sharp order acknowledgement, on the one hand, and the terms of this Agreement, on the other hand, the terms of this Agreement shall prevail.
4.3Production Requirements. Subject to the terms of this Agreement, Sharp shall (a) devote the necessary production capacity to fulfill the quantity and delivery date requirements set forth in each confirmed Purchase Order, and (b) use commercially reasonable efforts to make available sufficient additional production capacity, subject to overtime charges, to support all Forecasts; provided, that the parties shall cooperate in good faith to reach a mutually agreeable accommodation with respect to Sharp's available production capacity in the event that a Forecast is exceeded.
4.4Manufacturer’s Supply Obligations. Sharp's obligations to fulfill any Purchase Order are subject to Manufacturer’s obligation to provide Sharp with the following items within the following time periods:
(a)At least five (5) weeks prior to Sharp's commencement of the production of the Packaged Products, any text, graphics or other artwork to be printed by Sharp on the Packaging Materials, all of which shall be in conformity with all Applicable Laws (the foregoing notwithstanding, the parties agree that with respect to the initial product launch, the parties will cooperate to commence production of the Packaged Products as expeditiously as practicable after receipt of FDA approval);
(b)At least four (4) weeks prior to Sharp's commencement of the production of the Packaged Products, any Packaging Materials that are to be supplied by Manufacturer;
(c)At least three (3) weeks prior to Sharp's commencement of the production of the Packaged Products, the lot and expiry information for the Products; and
(d)At least two (2) weeks prior to Sharp's commencement of the production of the Packaged Products, the Products.
4.5Storage Facilities; Inventory. Sharp agrees to provide adequate storage space for the Products and the Packaged Products. Sharp will maintain adequate inventories of materials on hand or with suppliers to accommodate variations in packaging that may be required by Manufacturer hereunder, including cold chain where required.
4.6Packaged Product Samples. Sharp shall provide Manufacturer with representative lot samples of Packaged Products and/or printed packaging component samples promptly upon request. Such Packaged Product samples shall be shipped to Manufacturer in accordance with the provisions set forth in Section 5.2.
5.Price; Payment; Shipping Instructions.
5.1Determination of Prices.
(a)The Price to be paid to Sharp by Manufacturer for the supply of the Packaged Products shall be as set forth on Exhibit A. The Price will not be increased prior to January 1, 2019 except as expressly set forth below. Thereafter, the Parties will review the Price on an annual basis. Sharp shall submit to Manufacturer revised pricing, reflecting increases or decreases in labor or Packaging Material costs for the upcoming year at least sixty (60) days prior to the date on which such increase or decrease shall become effective, along with documentation in reasonable detail to support such increase or decrease. Manufacturer and Sharp shall execute an amended Exhibit A to this Agreement to reflect the adjustment to the Price. Sharp may adjust the Prices set forth on Exhibit A before January 1, 2019 only if a change in Packaging Materials costs would cause the final price per unit of Packaged Product to increase by [***] percent ([***]%) or more, and Sharp shall adjust the Prices set forth on Exhibit A before January 1, 2019 if a change in Packaging Materials costs would cause the final price per unit of Packaged Product to decrease by [***] percent ([***]%) or more, with each such adjustment to be made in accordance with the following:
(i)Sharp shall be entitled to increase, and shall decrease, the Price for labor charges and any other costs incurred by Sharp as a result of any Revised Purchase Order, whether it relates to quantities expressed or delivery dale requirements; and
(i)In the event that the Packaging Materials cost increases, Sharp shall be entitled to increase the Price by the amount of the actual increase in such costs no more than once per calendar year. ln the event that the Packaging Materials cost decreases, Sharp shall decrease the Price by the amount of the actual decrease in such costs no less frequently than once per year.
(b)Prior to the commencement of any Subsequent Term, the parties shall negotiate in good faith the Price that shall apply to such Subsequent Term. The parties shall take into account in any such negotiations Sharp's production rates and costs of production as of the end of the then current Term.
(c)The Prices set forth on Exhibit A do not include use, consumption, or excise taxes of any taxing authority. The amount of such taxes, if any, will be added to the Price of the Packaged Products in effect at the time of
shipment thereof and shall be reflected in the invoices submitted to Manufacturer by Sharp pursuant to Section 5.3. Manufacturer shall pay the amount of such taxes to Sharp in accordance with the payment provisions relating to shipments of Packaged Products set forth in Section 5.3.
5.2Shipping. Sharp shall arrange for the shipment of the Packaged Products in accordance with Manufacturer's instructions, all of which shipments shalt be made F.O.B., Sharp’s loading docks at the Facilities. For purposes of this Agreement, F.O.B. shall have the meaning ascribed thereto by the Uniform Commercial Code of the State of Delaware. Manufacturer shall provide Sharp with a list of the Manufacturer Carriers and Sharp shall schedule freight pick up by a Manufacturer Carrier, load the Manufacturer Carrier’s trailer and complete any necessary documentation relating thereto. Manufacturer shall pay outbound freight delivery costs.
5.3Invoices. Sharp shall submit invoices to Manufacturer for all shipments of Packaged Products hereunder upon delivery or such Packaged Products to the Manufacturer Carrier at the Facilities (which invoices shall be directed by Sharp personnel to Manufacturer’s Accounts Payable Department, or to such other persons, departments or locations as Manufacturer may instruct from time to time), and each invoice shall be payable within forty five (45) days of the date of such invoice.
5.4Risk of Loss. Title to all Packaged Products, all work in process to produce Packaged Products and/or any other property of Manufacturer, including Primary Packaging Materials, shall at all times remain with Manufacturer; provided, however, that when such Packaged Product or Product is in the possession of Sharp, Sharp shall not be liable for risk of loss or damage to any Packaged Product, any Product, any work in process to produce Packaged Products or any other property of Manufacturer, except in the case of negligence or willful acts or omissions by Sharp.
5.5Non-Conforming Packaged Products and Quantitative Defects. Manufacturer shall have the right, within sixty (60) days of Sharp's delivery of Packaged Products to the Manufacturer Carrier, to give Sharp written notice of rejection of the portion of such shipment of Packaged Products that fails to meet the Specifications or which otherwise breaches Sharp's warranties, covenants and obligations under this Agreement. Sharp, at its sole cost and expense, shall provide Manufacturer with any missing quantities and/or replace as soon as practicable any non-conforming Packaged Products. Manufacturer shall replace, to the extent necessary, applicable Products for such non-conforming Packaged Products and Sharp shall reimburse Manufacturer for its cost of replacing such Products, provided that Sharp's aggregate liability for such costs shall not exceed [***] Dollars (US$[***]) in the aggregate in any given year under this Agreement. Any claim of a non-conforming shipment must be made in writing to Sharp within the sixty (60) day period set forth above or it shall be deemed to have been waived by Manufacturer.
6.Quality Control; Access; Inspection; Samples.
6.1Modification of Specifications. The Specifications may not be modified or changed without the mutual written agreement of the parties.
6.2Storage Requirements. Sharp shall use the Products and the Packaging Material on a first in, first out basis and shall not use either the Products or the Packaging Material beyond the shelf life required under any Applicable Law.
6.3Notices Regarding Packaging Materials. Sharp shall promptly contact Manufacturer, c/o Manufacturer's Quality Assurance Department (or such other persons or departments as Manufacturer may instruct) in the event Sharp considers any current Packaging Material to be nonconforming with the Specifications or Applicable Law.
6.4Quality Tests and Checks. Sharp shall perform all in-process and finished product tests or checks necessary to assure the quality of the Packaged Products and any tests or checks required by the Specifications or Applicable Law. For purposes of this Agreement, such tests shall be considered routine and shall be performed at Sharp’s expense. All tests and test results shall be performed, documented and summarized by Sharp in accordance with the Specifications and Applicable Law. The parties hereto will negotiate in good faith any unanticipated burdens resulting from changes made to any Applicable Law after the date hereof.
6.5Production Codes; Records. For the period set forth in Section 6.9, Sharp shall maintain detailed records on Packaging Material usage and Packaged Product production, including code dates and shipping information relating to the Packaged Products, so that the Packaged Products can be traced in case of a recall. Sharp's Packaged Product records shall be sufficient such that Sharp shall be capable of responding to Packaged Product inquiries by
Manufacturer within twenty-four (24) hours of notification, including providing the code date and the location of the Packaged Products in question.
6.6Recalls; Withdrawals. Manufacturer shall have sole responsibility for initiating and managing any recall or withdrawal of the Packaged Products, and shall bear all costs and expenses relating thereto. At Manufacturer’s cost and expense, Sharp shall provide such assistance as Manufacturer may reasonably request in connection with any such withdrawal or recall. Upon receiving from any authority having jurisdiction any direction to withdraw or recall any Packaged Product from the market, the receiving party shall promptly notify the other party. Sharp shall have no liability with respect to any recall or withdrawal of Packaged Products except to the extent of Sharp's negligence or willful misconduct or breach of the warranties set forth in Section 7.1, in which case Sharp's liability shall be limited to [***].
6.7Maintenance of Facilities. In the event Sharp fails or anticipates it will fail to maintain the Facilities in accordance with the Specifications and all Applicable Laws, or in the event Sharp receives any notice from any Regulatory Authority with respect to its maintenance of the Facilities and only if such maintenance or notice effects the Products or Packaged Products, Sharp shall promptly notify Manufacturer, c/o Manufacturer’s Quality Assurance Department (or such other persons or departments as Manufacturer may instruct), provide copies of such notice to Manufacturer and, if such notice relates specifically to the Products or Packaged Products, provide a copy of Sharp's proposed response to such authority for review and comment by the Manufacturer before submission to such authority.
6.8Inspections and Audits. Manufacturer shall have access at reasonable times and with reasonable frequency to Sharp's Facilities for the purpose of conducting inspections of, performing quality control audits with respect to, or witnessing, the processing, storage or transportation of Products and Packaged Products or Packaging Materials, and Manufacturer shall have access at reasonable times and with reasonable frequency to the results of any tests relating to the Packaged Products performed by Sharp or at Sharp’s direction. Sharp shall use its reasonable efforts to ensure that Manufacturer has similar access to the facilities, data and records of Sharp's suppliers or agents. Such inspections, audits and visits shall be conducted by Manufacturer’s personnel upon reasonable notice and during normal business hours.
6.9Retention of Samples and Records. Sharp shall retain and, upon request at reasonable times and with reasonable frequency by Manufacturer, make available to Manufacturer, (i) copies of the quality control records maintained in accordance with Section 6.5 and otherwise in relation to the Packaged Products, (ii) copies of testing results of all the tests performed in relation to the Packaged Products, and (iii) samples of the Packaging Materials. All quality control and assurance records will be maintained by Sharp for one (1) year following the Packaged Product expiration date or such longer time period as may be required by Applicable Law.
6.10Government Inspections; Seizures and Recalls. If any Regulatory Authority makes an inspection at Sharp's premises, seizes Products or Packaged Products or requests a recall of Packaged Products, Sharp shall promptly notify Manufacturer’s Quality Assurance Department (or such other persons or departments as Manufacturer may instruct), and Sharp shall take such actions as may be required under the Specifications or as may be reasonably requested by Manufacturer; provided, however, that Sharp shall not be required to take any actions in contravention of any Applicable Law. Sharp shall promptly send duplicate reports relating to such inspections to Manufacturer c/o Manufacturer’s Quality Assurance Department (or such other persons or departments as Manufacturer may instruct).
6.11Legal and Regulatory Filings and Requests. Sharp and Manufacturer shall cooperate and be diligent in responding to all requests for information from, and in making all required filings, at Manufacturer’s expense, with any Regulatory Authority having jurisdiction to make such requests or require such filings. Sharp shall, at its own expense, obtain and comply with all licenses, consents, permits and regulations which may from time to time be required by an appropriate Regulatory Authority in the Territories listed on Exhibit C (as in effect on the Effective Date) with respect to the performance of its obligations hereunder. The parties agree that in the event additional Territories are added to Exhibit C, the parties wilt mutually agree the allocation of expenses incurred to obtain and comply with any licenses, consents, permits or regulations with respect thereto.
6.12[Reserved.]
6.13Complaints. In connection with any Packaged Product complaints forwarded by Manufacturer to Sharp, Sharp shall promptly conduct an investigation of such complaint (including reviewing its records) detailing the description of the event, root cause, and corrective actions, at no additional cost to Manufacturer.
7.Warranties; Limitation on Liability.
7.1General Warranties. Sharp warrants that (a) the Products shall be stored, processed, packaged and labeled in accordance with the Specifications and all Applicable Laws; (b) the Packaged Products furnished by Sharp to Manufacturer under this Agreement (i) shall be of the quality specified in, and shall conform with, the Specifications and any Applicable Law, (ii) shall be stored and supplied in conformity with the Specifications and any Applicable Law, and (iii) shall not contain any material provided by or on behalf of Sharp, which material has not been used or stored in accordance with the Specifications and any Applicable Law; (c) it will not introduce any materials not provided for in the Specifications that would cause the Packaged Products to be adulterated within the meaning of Section 501 of the FDCA; (d) the Packaged Products shall not be misbranded within the meaning of the FDCA (except with respect to misbranding resulting from the Specifications, for which Manufacturer shall bear responsibility); and (e) it does not have any obligations, contractual or otherwise, to any third party that would prohibit Sharp from entering into this Agreement and that prior to supplying Packaged Products to Manufacturer, Sharp will have received all necessary licenses (including, but not limited to, licenses under any patents applicable to Sharp's packaging processes) to package and supply Packaged Products. Any claim for breach of warranty under paragraphs (a) through and including (d) that is not brought within the one (1) year of the delivery of the applicable Packaged Product shall be deemed to have been waived by Manufacturer.
7.2Disclaimer; Limit of Liability. NOTWITHSTANDING ANYTHING ELSE IN THIS AGREEMENT TO THE CONTRARY, (A) THE WARRANTIES WITH RESPECT TO THE STORING, PACKAGING, LABELING AND DELIVERY OF THE PRODUCTS AND THE PACKAGED PRODUCTS STATED IN THIS ARTICLE 7 ARE IN LIEU OF ALL OTHER WARRANTIES OF SHARP, ORAL OR WRITTEN, EXPRESSED OR IMPLIED, INCLUDING IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, (B) IN NO EVENT SHALL EITHER PARTY HAVE ANY LIABILITY FOR ANY EXEMPLARY, PUNITIVE, INCIDENTAL, INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES, WHETHER BASED ON CONTRACT, TORT, STRICT LIABILITY OR ANY OTHER THEORY OR FORM OF ACTION IN CONNECTION WITH THIS AGREEMENT AND (C) THE OBLIGATIONS OF SHARP SET FORTH IN SECTION 5.5 TO REPLACE NONCONFORMING PACKAGED PRODUCTS AND REIMBURSE MANUFACTURER'S COSTS, AND, IN SECTION 6.6 WITH RESPECT TO RECALLS, SHALL BE, AS APPLICABLE, MANUFACTURER'S EXCLUSIVE REMEDIES FOR NONCONFORMING PACKAGED PRODUCTS.
8.Intellectual Property Rights.
8.1Intellectual Property Rights of Manufacturer; Grant of License. Sharp acknowledges and agrees that Manufacturer possesses sole and exclusive right, title and interest in and to the Specifications, any and all dies, molds, printing plates and other equipment or supplies provided or paid for by Manufacturer for use by Sharp in connection with processing, labeling and packaging of the Products, any know-how relating to the design and manufacture of the Products and any components thereof, and any and all intellectual property rights, including any patent rights, related to any of the foregoing and any and all modifications and improvements thereof (including any developed or suggested by Sharp). All right, title and interest in and to any trademarks, trade names, slogans, logos, copyrights, trade dress, know-how and goodwill associated with the Products and the Packaged Products ("Brand Image") and all rights to any improvements or modifications to the Brand Image (including any developed or suggested by Sharp) are and shall remain owned solely by Manufacturer. Manufacturer hereby grants to Sharp a non-exclusive, royalty-free license to use the Brand Image as may be necessary for Sharp's fulfillment of its services in accordance with this Agreement (including in accordance with the Specifications) during the Term. Except as set forth in the immediately preceding sentence, Sharp shall have no other rights to use the Brand Image and Specifications.
8.2Ownership of Other Property. Except as provided in Section 8.1, all right, title and interest in and to (i) any and all dies, molds, printing plates and other equipment or supplies owned by Sharp, and any and all methods or processes used by Sharp in connection with processing, labeling and packaging of the Products, and (ii) any and all modifications or improvements to any of the foregoing, are and shall remain owned solely by Sharp (including any developed or suggested by Manufacturer). Nothing in this Agreement shall be construed to grant to Manufacturer any right to any trademark, trade name, copyright, patent or other proprietary technology or know-how owned by Sharp.
9.Indemnification.
9.1Sharp’s Indemnification of Manufacturer. Sharp shall defend, indemnify and hold Manufacturer and its subsidiaries and affiliates and their officers, directors and employees (each, a "Manufacturer Indemnified Party") harmless from and against any and all losses, liabilities, damages, claims for damages, suits, recoveries, judgments or executions resulting from a third party claim (including reasonable attorneys' fees and expenses) (collectively, "Damages") that may be incurred by any Manufacturer Indemnified Party arising out of or on account of: (i) any willful misconduct, negligent or reckless act or omission on the part of Sharp or its officers, directors, employees or agents in connection with the storage, labeling or packaging of the Products or the Packaged Products pursuant to this Agreement; (ii) any breach by Sharp of any of its covenants, agreements, representations and/or warranties set forth herein; or (iii) any claim that the dies, molds, printing plates and other equipment or supplies, and any and all methods or processes, in each case, used by Sharp in connection with processing, labeling and packaging of the Products infringes the proprietary rights of another person or entity.
9.2Manufacturer’s Indemnification of Sharp. Manufacturer shall defend indemnify and hold Sharp and its affiliated companies and the officers, directors and employees thereof (each, a “Sharp Indemnified Party") harmless from and against any and all Damages that may be incurred by any Sharp Indemnified Party arising out of or on account of: (i) the possession, sale, use or consumption of the Products or Packaged Products or any other product of Manufacturer (except lo the extent arising out of or on account of any willful misconduct, negligent or reckless act or omission on the part of Sharp or its officers, directors, employees or agents in connection with the storage, labeling or packaging of the Products or the Packaged Products, or any breach by Sharp of any of its covenants, agreements, representations and/or warranties set forth herein); (ii) Manufacturer's supply of Products to Sharp under this Agreement; (iii) any breach by Manufacturer of any of its covenants, agreements, representations and/or warranties set forth herein; (iv) any willful misconduct, negligent or reckless act or omission on the part of Manufacturer in connection with its performance pursuant to this Agreement; or (v) any claim that the Brand Image, the Products, the Packaged Products or any other product of Manufacturer, or any claim that Sharp's use of the Covectra software in performance of its obligations hereunder, infringes the proprietary rights of another person or entity.
9.3Indemnification Procedure. In the event any claim is asserted or any suit or action is brought against either party for which the other party may be required to indemnity such party under this Article 9, the party to be indemnified will promptly notify the indemnifying party of such claim or suit. Upon receipt of such notice, the indemnifying party shall at its expense undertake the defense of such suit or the settlement of any such claim. No settlement may be made without the consent of both parties, which consent shall not be unreasonably withheld. The indemnified party shall have the right to retain its own counsel at its own expense.
9.4Survival. The indemnification obligations set forth in this Section 9 shall survive the expiration or termination of this Agreement.
10.Insurance.
Sharp shall acquire and maintain at its sole cost and expense throughout the Term hereof and for a period of two (2) years after termination: (i) Statutory Worker's Compensation Insurance and Employer's Liability Insurance; (ii) general liability insurance of not less than [***] dollars ($[***]) per occurrence, and [***] dollars ($[***]) in the aggregate covering the physical loss or damage to Primary Packaging Materials, Products and Packaged Products while at the Facilities or under Sharp's control; and (iii) Products Liability, Bodily Injury and Property Damage Insurance with a combined single limit of not less than [***] dollars ($[***]) per occurrence, and [***] dollars ($[***]) in the aggregate. Sharp shall furnish Manufacturer "Certificates of Insurance" issued by such companies for all insurance required hereunder. The existence of such insurance is not to be construed as a limitation of Sharp's liability hereunder.
11.Term; Termination.
11.1Initial Term; Term. The initial term of this Agreement shall be for a period of three (3) years, beginning on the Effective Date and terminating on the third anniversary of the Effective Date (the "Initial Term"). This Agreement may be extended for additional one-year periods (such additional periods are each a "Subsequent Term," and collectively with the Initial Term, the "Term") by mutual written agreement reached by the parties not later than 180 days prior to the end of the Initial Term or any Subsequent Term. The Term shall end upon the expiration of this Agreement or its earlier termination as set forth herein.
11.2Termination. This Agreement may be terminated upon the occurrence of any of the following:
(a)The parties may terminate this Agreement by mutual written consent at any time by providing 36 months advance written notice to the other party;
(b)Either party may terminate this Agreement by giving thirty (30) days written notice to the other party in the event the other party has breached any representation, warranty or obligation contained in this Agreement and/or has defaulted in the performance of any of its duties or obligations hereunder in any material respect and such breach or default has not been remedied within thirty (30) days after written notice of the breach or default has been received;
(c)Either party may terminate this Agreement if a voluntary petition in bankruptcy should be filed by the other party under the United States Bankruptcy Code, if an involuntary petition under the United States Bankruptcy Code should be filed against the other party, or if a receiver should be appointed for the other party or its property;
(d)Either party may terminate this Agreement pursuant to Section 13.2.
11.3Effect of Expiration or Termination.
(a)The expiration or termination of this Agreement shall not release either party from any of its obligations accrued prior to the effective date of termination, and each party shall remain responsible for the performance of its respective obligations and agreements which are expressly stated to be obligations which survive the termination of this Agreement. Furthermore, the rights to terminate provided for hereinabove are in addition to any other right, remedy, or election either party may have hereunder or at law or in equity.
(b)Within ninety (90) days of the effective date of the expiration or termination of this Agreement for any reason, Manufacturer shall purchase at Sharp's cost any Packaging Materials that Sharp has purchased exclusively for Manufacturer in accordance with this Agreement for the production of the Packaged Products.
(c)Upon the effective date of expiration or termination of this Agreement, Sharp shall immediately deliver to Manufacturer or its designee all Products, and all text, graphics and other artwork and Packaging Materials purchased or provided by Manufacturer. Sharp shall also deliver to Manufacturer or its designee all Packaged Products produced hereunder, and shall invoice Manufacturer therefor in accordance with the terms of Section 5.3.
(d)Upon the effective date of expiration or termination of this Agreement, Sharp shall, except as may be necessary to otherwise comply with its obligations under this Agreement, (i) cease to use the Specifications, dies, molds, printing plates and other equipment or supplies provided or paid for by Manufacturer for use in connection with processing, labeling and packaging of the Products, any trademarks, patents, trade secrets, know-how or other intellectual property of Manufacturer in any manner whatsoever, and (ii) cease to use the Confidential Information of Manufacturer, and at Manufacturer's request, return or destroy all copies of such Confidential Information and all related material in its possession and confirm to Manufacturer in writing that it has complied with this provision; provided that Sharp shall retain one copy of such Confidential Information for archival purposes.
(e)Upon the effective date of expiration or termination of this Agreement, the Tooling Agreement shall terminate and all amounts not yet fully amortized thereunder shall become immediately due and payable by Manufacturer to Sharp and all right, title and Interest to the Tooling shall immediately pass to and vest in Manufacturer upon the making of such payment in accordance with the Tooling Agreement.
11.4No Prejudice. The termination of this Agreement as provided in this Section 11 shall be without prejudice to any rights or remedies of the parties already accrued, including without limitation remedies for breach.
12.Confidentiality.
(a)Confidentiality. Sharp and Manufacturer agree to keep secret and confidential any and all information of the other party ("Confidential Information") disclosed by the other party hereunder or through any prior disclosure and not to disclose such Confidential Information to any person or entity, except (i) to employees of each party having a need to know the information in order to fulfill such party’s obligations hereunder; or (ii) as reasonable requested by an applicable Regulatory Authority. The parties shall use the Confidential Information solely for the purpose of carrying out the obligations contained in the Agreement. The obligations imposed by this Section shall not apply to any Confidential Information:
(i)that, at the time of disclosure, is in the public domain;
(ii)that, after disclosure, becomes part of the public domain by publication or otherwise, through no fault of the receiving party;
(iii)that, at the time of disclosure, is already in the receiving party's possession, except through prior disclosure by the disclosing party, and such possession can be properly documented by the receiving party in its written records, and was not made available to the receiving party by any person or party owing an obligation of confidentiality to the disclosing party;
(iv)that is rightfully made available to the receiving party from sources independent of the disclosing party;
(v)that is required to be disclosed in the course of litigation or other legal or administrative proceedings; provided that in all such cases the party receiving the Confidential Information shall, to the extent permitted, give the other party prompt written notice of the pending disclosure and shall cooperate in such other party’s attempts, at such other party's sole expense, to seek an order maintaining the confidentiality of the Confidential Information; or
(vi)that is required to be disclosed by Applicable Laws; provided that in all such cases the party receiving the Confidential Information shall, to the extent permitted, give the other party prompt written notice of the pending disclosure and shall cooperate in such other party’s attempts, at such other party's sole expense, to seek an order maintaining the confidentiality of the Confidential Information.
(b)Survival. The obligation of confidentiality and nonuse set forth in this Article 12 shall survive for a period of ten (10) years beyond the termination or expiration of this Agreement.
(c)Ownership of Confidential Information. Confidential Information shall remain the exclusive property of the disclosing party. In no event shall any of either party’s Confidential Information, technology, know-how, intellectual property (or rights thereto) become the property of the other party.
(d)Neither party shall release to any third party any non-public information with respect to the terms of this Agreement without the prior written consent of the other party.
13.Miscellaneous.
13.1Authority to Enter Into Agreement. Each party represents and warrants that it is authorized to enter into this Agreement and that in so doing it is not in violation or the terms and conditions of any contract or other agreement to which it may be a party.
13.2Force Majeure. Performance under this Agreement shall be excused to the extent prevented or delayed by any event or circumstance, which is beyond the reasonable control of the party whose performance is to be excused hereunder, including but not limited to fire, flood, explosion, unavoidable breakdown of machinery, widespread product tampering by third parties, changes to governmental acts or regulations, war, labor difficulties, shortages or unavailability of materials, or any act of God. The party affected shall promptly notify in writing the non-affected party of the event of force majeure and the probable duration of the delay. Any delay caused by an event of force majeure shall toll the Term, which shall be extended by the length thereof. In the event the probable duration of the force majeure event is expected to prevent performance by one party for more than eight (8) weeks, the other party shall have the right to terminate this Agreement.
13.3Public Announcements. The parties agree to determine jointly the contents of any public announcement informing the public about the existence of this Agreement between the parties and, except as may be required by law or the rules of any national securities exchange, neither party shall issue or cause the issuance of any such public announcement without the express prior written approval of an executive officer of each party.
13.4Amendments. This Agreement may not be modified, amended or altered except pursuant to a written instrument signed by both parties.
13.5Governing Law; Venue. This Agreement is made subject to the laws of the State of Delaware, without reference to principles of conflicts of laws. Each party agrees that suit may be instituted at the U.S. District Court in Delaware or in the Delaware State Courts and each waives any objection which such party may now or hereafter have to the laying of the venue of any such action, suit or proceeding, and irrevocably submits to the jurisdiction of any such court. Any and all service of process and any other notice in any such action, suit or proceeding shall be effective against a party if given as provided in Section 13.7. Nothing contained herein shall prevent or delay either party from seeking, in any court of competent jurisdiction in Delaware, specific performance or other equitable remedies in the event of any breach or intended breach by the other party of any of its obligations hereunder.
13.6Assignment. Sharp shall not assign, transfer, convey, or pledge this Agreement or any interest herein in whole or part (including, but not limited to, any transfer by operation of law) without the prior written approval of Manufacturer. Manufacturer shall have the right to assign any or all off its rights or obligations under this Agreement without the consent of Sharp; provided however that Manufacturer shall not assign, transfer, convey or pledge this Agreement in whole or part (including, but not limited to, any transfer by operation of law) to any third party whose primary business is the provision of contract packaging services without the prior written approval of Sharp. In the event of a permitted assignment hereunder, the assigning party shall continue to be bound by all pre-existing obligations under this Agreement, including all obligations of confidentiality and non-disclosure.
13.7Notice. Any and all notices permitted or required to be given hereunder will be deemed duly given: (a) upon actual delivery, if delivery is by hand; (b) three (3) business days after delivery into the official mail, if delivery is by postage paid registered or certified return receipt request mail; (c) one business day after delivery to an overnight carrier, if delivery is made by overnight carrier guaranteeing next business day delivery; or (d) upon receipt of evidence of successful transmission, if delivery is by facsimile. Each such notice shall be sent to the respective party at the address of facsimile number indicated below or at any other address as the respective party may designate by notice delivered pursuant hereto.
| | | | | | | | |
| If to Manufacturer: | |
| | |
| Indivior UK Ltd | |
| 215 Bath Road | |
| Slough SL1 4AA | |
| UK | |
| | |
| Attention: Chief Supply Officer and Asst. General Counsel | |
| Telecopier Number: [***] | |
| | |
| -and- | |
| | |
| Indivior Inc. | |
| 10710 Midlothian Turnpike, Suite 430 | |
| Richmond, Virginia 23235 | |
| Attn: Chief Legal Officer | |
| | |
| If to Sharp: | |
| | |
| SHARP CORPORATION | |
| 7451 Keebler Way | |
| Allentown, Pennsylvania 18106 | |
| Attention: CFO | |
| Telecopier Number: [***] | |
13.8Entire Agreement. This Agreement, including all Exhibits attached hereto and made a part hereof contains the entire understanding of the parties, superseding in all respects any and all prior oral or written agreements or understandings pertaining to the subject matter hereof; and shall be amended or modified only by written agreement executed by the parties hereto.
13.9Severability. If and to the extent that any court of competent jurisdiction holds any provision or part of this Agreement to be invalid or unenforceable, such holding shall in no way affect the validity of the remainder of this Agreement.
13.10Waiver. A waiver by either party of any of the terms and conditions of this Agreement in any instance shall not be deemed or construed to be a waiver of such term or condition for the future.
13.11Headings. Headings in this Agreement are included for ease of reference only and have no legal effect.
13.12Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument.
{signatures follow on the next page}
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed in their respective names and on their behalf, as of the date first above written.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
INDIVIOR UK Limited | | SHARP CORPORATION |
| By: | /s/ Frank Stier | | By: | /s/ Jeff Benedict |
| Name: | Frank Stier | | Name: | Jeff Benedict |
| Title: | Chief Supply Officer | | Title: | Senior Vice President |
| Date: | 23 August 2017 | | Date: | September 7, 2017 |
EXHIBIT A
PRODUCTS / PRICES
1. MSA PRICING SMALL POUCH
All purchases shall be made F.O.B. Sharp’s dock. Subject to the adjustments described in Section 5.1, and as offered on the attached quotations, the Prices are as follows:
| | | | | | | | | | | | | | | | | |
Product | | Sharp Design | | Price Per 1000 | |
| RBP 6000 | | | | | |
Overtime Labour Charges
Project Description Summary
1. Customer to supply bulk products for specialty packaging
2. Sharp Packaging Solutions to provide full service packaging
3. Sharp Packaging Solutions to prepare finished packed goods ready for shipment
Pricelist
Pricing is per finished carton (kit), each with one pouch containing [***].
| | | | | | | | | | | | | | |
| Product | Price Per Unit | Lot Size | Campaign | Yearly Volume |
| [***] | [***] | [***] | [***] | [***] |
The foregoing pricing will be subject to modification (whether a decrease or increase in price) as a result of any Manufacturer-approved changes to the kit size volume.
Annual Volumes > [***] – [***]% Rebate
For kits of Packaged Product delivered by Sharp to Manufacturer in any calendar year during the Term which in the aggregate exceed [***] kits, Sharp shall apply a rebate ("Annual Order Quantity Rebate") based on the percentages below against the lowest Price per kits of Packaged Product constituting such aggregate.
The application of the Annual Order Quantity Rebate shall be applied as set forth below. In 2018 through 2021, if the annual volume of delivered kits of Packaged Product exceeds [***] kits, Sharp will rebate to Manufacture no later than February 1 of the follow year an Annual Order Quantity Rebate equal to [***] percent ([***]%) of the Price per kit, based on the lot size and campaign, for the volume of Packaged Product delivered in each preceding applicable year.
For example, if the Manufacturer orders [***] kits of [***], with a Lot Size of [***] kits and Campaign of [***] kits, at a price of $[***] per kit, the total cost would be $[***]. Sharp will rebate to Manufacturer [***] percent ([***]%) of the aggregate total, equalling $[***], reducing the price per kit to $[***].
Annual Volumes > [***] – [***]% Rebate
For kits of Packaged Product delivered by Sharp to Manufacturer in any calendar year during the Term which in the aggregate exceed [***] kits, Sharp shall apply a rebate ("Annual Order Quantity Rebate") based on the percentages below against the lowest Price per kits of Packaged Product constituting such aggregate.
In 2018 through 2021, if the annual volume of delivered kits of Packaged Product exceeds [***] kits, Sharp will rebate to Manufacture no later than February 1 of the follow year an Annual Order Quantity Rebate equal to [***] percent ([***]%) of the Price per kit, based on the lot size and campaign, for the volume of Packaged Product delivered in each preceding applicable year.
For example, if the Manufacturer orders [***] kits of [***], with a Lot Size of [***] kits and Campaign of [***] kits, at a price of $[***] per kit, the total cost would be $[***]. Sharp will rebate to Manufacturer [***] percent ([***]%) of the aggregate total, equalling $[***], reducing the price per kit to $[***].
Annual Volumes > [***] – [***]% Rebate
For kits of Packaged Product delivered by Sharp to Manufacturer in any calendar year during the Term which in the aggregate exceed [***] kits, Sharp shall apply a rebate ("Annual Order Quantity Rebate") based on the percentages below against the lowest Price per kits of Packaged Product constituting such aggregate.
In 2018 through 2021, if the annual volume of delivered kits of Packaged Product exceeds [***] kits, Sharp will rebate to Manufacture no later than February 1 of the follow year an Annual Order Quantity Rebate equal to [***] percent ([***]%) of the Price per kit, based on the lot size and campaign, for the volume of Packaged Product delivered in each preceding applicable year.
For example, if the Manufacturer orders [***] kits of [***], with a Lot Size of [***] kits and Campaign of [***] kits, at a price of $[***] per kit, the total cost would be $[***]. Sharp will rebate to Manufacturer [***] percent ([***]%) of the aggregate total, equalling $[***], reducing the price per kit to $[***].
Packaging Materials
| | | | | | | | |
| Component | Specifications | Supplied By |
| [***] | [***] | [***] |
Detailed Packaging Process Description (Optional):
[***]
Extras
Lot Charge: $[***] per lot
Project Management Fee: $[***]
Cold Chain Controlled Drug Pallet Storage: $[***] per month per pallet
Validation
Validation cost including Serialization: $[***]
Price includes
Labour, Sharp supplied components, pallet handling, engineering, project management, line clearance including cleaning and batch change overs.
Price excludes
Bulk product, retain sample storage, analytical testing costs, and transportation.
Supplied by Customer
MSDS, Melamine and TSE/BSE statement on the bulk product.
Bulk products to Packaging Site, accompanied with Certificate Of Analysis and shipment list stating exact amount of bulk per container.
2. MSA PRICING LARGE POUCH
Project Description Summary
1. Customer to supply bulk products for specialty packaging
2. Sharp Packaging Solutions to provide full service packaging
3. Sharp Packaging Solutions to prepare finished packed goods ready for shipment
Pricelist
Pricing is per finished carton (kit), each with one pouch containing [***].
| | | | | | | | | | | | | | |
| Product | Price Per Unit | Lot Size | Campaign | Yearly Volume |
| [***] | [***] | [***] | [***] | [***] |
In case other bulk specifications and primary & secondary packaging specifications, or supplier prices, differ as opposed to the costs included in our calculations, prices will be re-calculated for that specific SKU. In this case a new pricelist will be provided for that SKU.
Packaging Materials
| | | | | | | | |
| Component | Specifications | Supplied By |
| [***] | [***] | [***] |
Detailed Packaging Process Description (Optional):
[***]
Extras
Lot Charge: $[***] per lot
Project Management Fee: $[***]
Cold Chain Controlled Drug Pallet Storage: $[***] per month per pallet
Validation
Validation cost including Serialization: $[***]
Price includes
Labour, Sharp supplied components, pallet handling, engineering, project management, line clearance including cleaning and batch change overs.
Price excludes
Bulk product, retain sample storage, analytical testing costs, and transportation.
Supplied by Customer
MSDS, Melamine and TSE/BSE statement on the bulk product.
Bulk products to Packaging Site, accompanied with Certificate Of Analysis and shipment list stating exact amount of bulk per container.
3. MULTISTEP LAUNCH BUILD
Project Description Summary
1. Customer to supply bulk products for specialty packaging
2. Sharp Packaging Solutions to provide full service packaging
3. Sharp Packaging Solutions to prepare finished packed goods ready for shipment
Pricelist
Item One Primary WIP Pouches
| | | | | | | | | | | | | | |
| Product | Price Per Unit | Lot Size | Campaign | Yearly Volume |
| [***] | [***] | [***] | [***] | [***] |
In case other bulk specifications and primary & secondary packaging specifications, or supplier prices, differ as opposed to the costs included in our calculations, prices will be re-calculated for that specific SKU. In this case a new pricelist will be provided for that SKU.
Packaging Materials
| | | | | | | | |
| Component | Specifications | Supplied By |
| [***] | [***] | [***] |
Detailed Packaging Process Description (Optional):
[***]
Pricelist
Item Two WIP Pouches to Finished goods
| | | | | | | | | | | | | | |
| Product | Price Per Unit | Lot Size | Campaign | Yearly Volume |
| [***] | [***] | [***] | [***] | [***] |
In case other bulk specifications and primary & secondary packaging specifications, or supplier prices, differ as opposed to the costs included in our calculations, prices will be re-calculated for that specific SKU. In this case a new pricelist will be provided for that SKU.
| | | | | | | | |
| Component | Specifications | Supplied By |
| [***] | [***] | [***] |
Detailed Packaging Process Description:
[***]
Pricelist
Item Three Rework of WIP Pouches to Finished goods
| | | | | | | | | | | | | | |
| Product | Price Per Unit | Lot Size | Campaign | Yearly Volume |
| [***] | [***] | [***] | [***] | [***] |
In case other bulk specifications and primary & secondary packaging specifications, or supplier prices, differ as opposed to the costs included in our calculations, prices will be re-calculated for that specific SKU. In this case a new pricelist will be provided for that SKU.
Packaging Materials
| | | | | | | | |
| Component | Specifications | Supplied By |
| [***] | [***] | [***] |
Detailed Packaging Process Description:
[***]
Extras
Lot Charge: $[***] per lot
Project Management Fee: $[***]
Cold Chain Controlled Drug Pallet Storage: $[***] per month per pallet
Validation
Validation cost including Serialization: $[***]
Price includes
Labour, Sharp supplied components, pallet handling, engineering, project management, line clearance including cleaning and batch change overs.
Price excludes
Bulk product, retain sample storage, analytical testing costs, and transportation.
Supplied by Customer
MSDS, Melamine and TSE/BSE statement on the bulk product.
Bulk products to Packaging Site, accompanied with Certificate Of Analysis and shipment list stating exact amount of bulk per container.
EXHIBIT B
CHANGE PARTS
Tooling: [***]
DESCRIPTION: [***]
Item One.
Tool Set: [***]
Item Two.
Tool Set: [***]
Item Three.
Tool Set: [***]
DESCRIPTION: [***]
Item Four.
Tool Set: [***]
EXHIBIT C
TERRITORIES
Global.
PORTIONS OF THIS EXHIBIT HAVE BEEN REDACTED.
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS BOTH (i) NOT MATERIAL AND (ii) WOULD BE LIKELY TO CAUSE COMPETITIVE HARM IF PUBLICLY DISCLOSED.
REDACTED MATERIAL IS MARKED WITH [***].
FIRST AMENDMENT TO THE PACKAGING AND SUPPLY AGREEMENT
This Amendment ("First Amendment") dated as of the date of last signature below (the "Amendment Effective Date"), is entered into by and between Sharp Corporation, a corporation organized and existing under the laws of the Commonwealth of Pennsylvania having its principal office at 7451 Keebler Way, Allentown, Pennsylvania 18106 ("Sharp") and Indivior UK Limited (CO No. 7183451), a corporation organized and existing under the laws of England and Wales having its registered address at 103-105 Bath Road, Slough, Berkshire SL1 3UH, United Kingdom ("Manufacturer") (collectively "the parties") in relation to the Packaging and Supply Agreement made between the parties which has an effective date of 23rd August 2017 (the "Supply Agreement").
WITNESSETH:
WHEREAS, Manufacturer and Sharp desire to amend the Supply Agreement as set forth herein;
NOW, THEREFORE, for good and valuable consideration the details of which are set out in the amended Annex A to the Supply Agreement which sets out -inter alia-amended prices for Sublocade Products and also introduces a pricing structure for Nalscue and Project [***] products, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
AGREEMENT
1. By virtue of
- clause 5(1)(a) of the Supply Agreement as regards the Sublocade products listed in the amended Annex A (annexed hereto) and
- clause 13(4) of the Supply Agreement for all the products listed in the amended Annex A (annexed hereto),
Exhibit A to the Supply Agreement is hereby amended, such that
a) the figures in table in section 1 marked "Lot Size" and "Price per Unit" (MSA Pricing Small Preprinted Pouch One Step) are deleted and the figures set out below are added in their stead
b) the figures in the table in section 2 marked "Lot Size" and "Price Per Unit" are deleted and the figures set out below ("Sublocade Large Pouch One Step" and "Sublocade Large Pouch Two Step") are added in their stead
c) Two new tables are added in the figures set out below; the first being "Nalscue France" and the second being "Project [***]"
2. The Amendment Effective Date shall be the date upon which this amendment shall come into force, and shall be the date of the last signature below.
3. Except as amended by their First Amendment all terms and conditions of the Supply Agreement are affirmed and remain in full force and effect.
4. The Supply Agreement as modified by this First Amendment contains the entire understanding between the parties hereto with respect to the transactions contemplated by the Supply Agreement and supersedes and replaces all prior and contemporaneous agreements and understandings oral or written with regard to such transactions.
IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment to be executed by its duly authorized representatives, as of the Amendment Effective Date.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
INDIVIOR UK Limited | | SHARP CORPORATION |
| By: | /s/ Frank Stier | | By: | /s/ Jeff Benedict |
| Name: | Frank Stier | | Name: | Jeff Benedict |
| Title: | Chief Manufacturing & Supply Officer | | Title: | Senior Vice President |
| Date: | 23 March 2018 | | Date: | January 12, 2018 |
SCHEDULE A: PRODUCTS / PRICES
All purchases shall be made F.O.B. Sharp’s dock. Subject to the adjustments described in Section 5.1, and as offered on the attached quotations, the Prices are as follows:
| | | | | | | | | | | |
| Product | Sharp Design | Lot Size | Price Per |
| Nalscue France | [***] | [***] | [***] |
Sublocade Large Pouch Two Step (Launch) [***] | [***] | [***] | [***] |
Sublocade Large Pouch One Step [***] | [***] | [***] | [***] |
Sublocade Small Preprinted Pouch One Step [***] | [***] | [***] | [***] |
Project [***] [***] | [***] | [***] | [***] |
Overtime Shift Charges
| | | | | |
| Saturdays | $[***] per shift for one line |
| Sundays | $[***] per shift for one line |
| Holidays | $[***] per shift for one line |
Sharp 2018 Holidays
[***]
SECOND AMENDMENT TO PACKAGING AND SUPPLY AGREEMENT
This SECOND AMENDMENT to PACKAGING AND SUPPLY AGREEMENT ("Second Amendment"), effective as of the date of last signature below (the "Amendment Effective Date"), is entered into between Indivior UK Limited (CO No. 7183451), a corporation organized and existing under the laws of England and Wales having its registered address at 103-105 Bath Road, Slough, Berkshire SL1 3UH, United Kingdom ("Manufacturer") and Sharp Corporation, a Pennsylvania corporation with a principal place of business at 7451 Keebler Way, Allentown, Pennsylvania 18106 ("Sharp") (collectively the “parties").
WITNESSETH:
WHEREAS, Manufacturer and Sharp are parties to a Packaging and Supply Agreement effective as of September 7, 2017, as amended on March 23, 2018 (the “Agreement”), and
WHEREAS, the parties desire to amend the Agreement as described below.
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties, intending to be legally bound, agree as follows:
AGREEMENT
1. Section 11.1 of the Agreement, “Initial Term; Term” is deleted in its entirety and replaced with the following:
“Initial Term; Term. The initial term of this Agreement will begin on the Effective Date and, unless terminated in accordance with this Agreement, continue until December 31, 2020 (the “Initial Term”). This Agreement may be extended for additional periods (such additional periods are each a “Subsequent Term,” and collectively with the Initial Term, the “Term”) by mutual written agreement reached by the parties prior to expiration or termination of this Agreement. The terms and conditions of each Subsequent Term, including but not limited to the applicable Price per Section 5.1(b) and duration thereof, shall be mutually agreed upon in a written document signed by both parties. The Term shall end upon expiration of this Agreement or its earlier termination as set forth herein.”
2. Except as provided in this Amendment, the terms and conditions set forth in the Agreement shall remain unaffected by execution of this Amendment. To the extent any provisions or terms set forth in this Amendment conflict with the terms set forth in the Agreement, the terms set forth in this Amendment shall govern and control.
IN WITNESS WHEREOF, the parties, by their duly authorized representatives, have executed this Amendment as of the Amendment Effective Date.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
INDIVIOR UK Limited | | SHARP CORPORATION |
| By: | /s/ Hillel West | | By: | /s/ Jeff Benedict |
| Name: | Hillel West | | Name: | Jeff Benedict |
| Title: | Chief Manufacturing & Supply Officer | | Title: | Senior Vice President |
| Date: | August 17, 2020 | | Date: | August 17, 2020 |
PORTIONS OF THIS EXHIBIT HAVE BEEN REDACTED.
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS BOTH (i) NOT MATERIAL AND (ii) WOULD BE LIKELY TO CAUSE COMPETITIVE HARM IF PUBLICLY DISCLOSED.
REDACTED MATERIAL IS MARKED WITH [***].
AMENDMENT NO. 3 TO PACKAGING AND SUPPLY AGREEMENT
This Amendment No. 3 (the “Amendment"), entered into and effective on January 1, 2021 (the "Amendment Effective Date"), to the Packaging and Supply Agreement, as amended, entered into by and between Sharp Corporation, a Pennsylvania corporation with principal place of business at 7451 Keebler Way, Allentown, Pennsylvania 18106 ("Sharp"), and Indivior UK Limited located at Chapleo Building, Henry Boot Way, Priory Park, Hull HU4 7BY, United Kingdom ("Manufacturer" or “Indivior”) on September 7, 2017 (the " Agreement").
WHEREAS the parties desire to amend the Agreement as follows:
1. Section 11.1 of the Agreement, “Initial Term; Term” is deleted in its entirety and replaced with the following:
“Initial Term; Term. The initial term of this Agreement will begin on the Effective Date and, unless terminated in accordance with this Agreement, continue until December 31, 2021 (the “Initial Term”). This Agreement may be extended for additional periods (such additional periods are each a “Subsequent Term,” and collectively with the Initial Term, the “Term”) by mutual written agreement reached by the parties prior to expiration or termination of this Agreement. The terms and conditions of each Subsequent Term, including but not limited to the applicable Price per Section 5.1(b) and duration thereof, shall be mutually agreed upon in a written document signed by both parties. The Term shall end upon expiration of this Agreement or its earlier termination as set forth herein.”
2. Exhibit A of the Agreement, as amended by the First Amendment to the Packaging and Supply Agreement, dated March 23, 2018 (the “First Amendment”) is hereby amended, such that
a) The pricing tables for SUBLOCADE® (“SUBLOCADE”) Large Pouch Two Step (Launch), SUBLOCADE Large Pouch One Step, SUBLOCADE Small Preprinted Pouch One Step and Project [***] are hereby deleted; and
b) New pricing tables (Current [***] Operations) are hereby added for SUBLOCADE US, Canada (CA), Australia (AUS), MoW (Most of World) and PERSERIS® (“PERSERIS”) US (formerly referred to as [***] in the First Amendment) as set forth in the attached Exhibit A, which is hereby incorporated by reference into the Agreement as if fully set forth therein; and
c) New lot sizes are hereby added for SUBLOCADE and PERSERIS as set forth in the attached Exhibit A; and
d) New pricing tables with effective date of April 1, 2021 ([***] and [***] Operations) are hereby added as set forth in the attached Exhibit A for SUBLOCADE US, CA, AUS, MoW and PERSERIS US, driven by cost reductions through Indivior funded automation improvements; and
e) Overtime shift charges as defined in the First Amendment are hereby deleted and replaced in their entirety with the SUBLOCADE and PERSERIS overtime shift charges as set forth in the attached Exhibit A; and
f) The Sharp 2018 Holidays table is hereby deleted in its entirety.
g) Storage charges for SUBLOCADE (controlled drug) and PERSERIS (non-controlled drug) are hereby added as set forth in the attached Exhibit A.
3. Except as provided herein, all other terms and conditions of the Agreement shall remain in full force and effect.
4. The Agreement as modified by this Third Amendment contains the entire understanding between the parties hereto with respect to the transactions contemplated by the Agreement and supersedes and replaces all prior and contemporaneous agreements and understandings oral or written with regard to such transactions.
IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment to be executed by its duly authorized representatives, as of the Amendment Effective Date.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
INDIVIOR UK Limited | | SHARP CORPORATION |
| | | | | | | | | | |
| By: | /s/ Hillel West | | By: | /s/ Jeff Benedict |
| | | | | | | | | | |
| Name: | Hillel West | | Name: | Jeff Benedict |
| | | | | | | | | | |
| Title: | Chief Manufacturing & Supply Officer | | Title: | Chief Commercial Officer |
| | | | | | | | | | |
| Date: | 1 January 2021 | | Date: | January 1, 2021 |
EXHIBIT A
SUBLOCADE® (“SUBLOCADE”) and PERSERIS® (“PERSERIS”) Products/Pricing
I. SUBLOCADE® Products/Pricing
PRICELIST:
Overtime Shift Rates:
| | | | | | | | |
| Saturday Overtime | $[***] | Per Shift |
| Sunday Overtime | $[***] | Per Shift |
| Holiday Overtime | $[***] | Per Shift |
Storage Fees:
| | | | | | | | |
Storage – Ambient, Controlled | $[***] per Pallet | Pallet charges will be assessed according to the following schedule: - Customer supplied materials: 90 days after receipt of material - Inventory Destruction Requests: 30 days after issuance of quote - Finished goods: 30 days after production - Special circumstances as needed (for example, safety stock programs) |
Storage – Cold Chain, Controlled | $[***] per Pallet | Pallet charges will be assessed according to the following schedule: - Customer supplied materials: 90 days after receipt of material - Inventory Destruction Requests: 30 days after issuance of quote - Finished goods: 30 days after production - Special circumstances as needed (for example, safety stock programs) |
CURRENT [***] OPERATIONS
Effective Date: January 1st 2021
Price Per Carton:
| | | | | | | | | | | |
| Lot Size | USA | Canada | Australia |
| [***] | [***] | [***] | [***] |
SUBLOCADE US:
• [***]
• [***]
• [***]
• [***]
• [***]
SUBLOCADE CANADA:
• [***]
• [***]
• [***]
• [***]
SUBLOCADE AUSTRALIA:
• [***]
• [***]
• [***]
• [***]
[***] AND [***] OPERATIONS
Effective Date: April 1st 2021
Price Per Carton:
| | | | | | | | | | | |
| Lot Size | US | Canada | AUS |
| [***] | [***] | [***] | [***] |
SUBLOCADE US:
• [***]
• [***]
• [***]
• [***]
SUBLOCADE CANADA:
• [***]
• [***]
• [***]
• [***]
SUBLOCADE AUSTRALIA:
• [***]
• [***]
• [***]
• [***]
SUBLOCADE MOW – 1 LABEL , SERIALIZED (SAME AS US):
• [***]
• [***]
• [***]
• [***]
SUBLOCADE MOW – 1 LABEL, NOT SERIALIZED (SAME AS AUSTRALIA):
• [***]
• [***]
• [***]
• [***]
SUBLOCADE MOW – 2 LABELS, SERIALIZED (SAME AS CANADA):
• [***]
• [***]
• [***]
• [***]
SUBLOCADE MOW – 2 LABELS, NOT SERIALIZED (NEW CONFIGURATION):
• [***]
• [***]
• [***]
• [***]
| | | | | |
| Lot Size | Price Per Carton |
| [***] | [***] |
II. PERSERIS Products/Pricing
PRICELIST:
Spor-Klenz Cleaning: $[***] per clean
Overtime Shift Rates:
| | | | | | | | |
| Saturday Overtime | $[***] | Per Shift |
| Sunday Overtime | $[***] | Per Shift |
| Holiday Overtime | $[***] | Per Shift |
Storage Fees:
| | | | | | | | |
Storage – Ambient | $[***] per Pallet | Pallet charges will be assessed according to the following schedule: - Customer supplied materials: 90 days after receipt of material - Inventory Destruction Requests: 30 days after issuance of quote - Finished goods: 30 days after production - Special circumstances as needed (for example, safety stock programs) |
Storage – Cold Chain | $[***] per Pallet | Pallet charges will be assessed according to the following schedule: - Customer supplied materials: 90 days after receipt of material - Inventory Destruction Requests: 30 days after issuance of quote - Finished goods: 30 days after production - Special circumstances as needed (for example, safety stock programs) |
CURRENT [***] OPERATIONS
Effective Date: January 1st 2021
PERSERIS US WIP A – 90mg Trade, 90mg Sample, 120mg Trade, 120mg Sample:
• [***]
• [***]
| | | | | |
| Lot Size | Price per Pouch |
| [***] | [***] |
PERSERIS US WIP B – 90mg Trade, 90mg Sample, 120mg Trade, 120mg Sample:
• [***]
• [***]
| | | | | |
| Lot Size | Price per Pouch |
| [***] | [***] |
PERSERIS US FINISHED KITS – 90mg Trade, 90mg Sample, 120mg Trade, 120mg Sample:
• [***]
• [***]
• [***]
| | | | | |
| Lot Size | Price per Pouch |
| [***] | [***] |
[***] AND [***] OPERATIONS
Effective Date: April 1st 2021
PERSERIS US WIP A – 90mg Trade, 90mg Sample, 120mg Trade, 120mg Sample:
• [***]
• [***]
| | | | | |
| Lot Size | Price per Pouch |
| [***] | [***] |
PERSERIS US WIP B – 90mg Trade, 90mg Sample, 120mg Trade, 120mg Sample:
• [***]
• [***]
| | | | | |
| Lot Size | Price per Pouch |
| [***] | [***] |
PERSERIS US FINISHED KITS – 90mg Trade, 90mg Sample, 120mg Trade, 120mg Sample:
• [***]
• [***]
• [***]
| | | | | |
| Lot Size | Price per Pouch |
| [***] | [***] |
AMENDMENT NO. 4 TO THE
PACKAGING AND SUPPLY AGREEMENT
This Amendment No. 4 (the “Fourth Amendment"), is entered into and effective as of the last signature date below (the "Effective Date"), between Sharp Corporation, a corporation organized and existing under the laws of Pennsylvania and having its principal office at 7451 Keebler Way, Allentown, Pennsylvania 18106 (“Provider”), and Indivior Inc., a Delaware corporation having its principal office at 10710 Midlothian Turnpike, Suite 125, North Chesterfield, 23235 (“Company”), pursuant to the Packaging and Supply Agreement dated September 15, 2009 (the “Agreement”), as amended, between Provider and Company, formerly known as, Reckitt Benckiser Pharmaceuticals Inc.
WHEREAS, the parties wish to amend the Agreement;
WHEREAS the Federal Supply Schedule requires compliance with all applicable federal contracting laws and regulations;
WHEREAS Company and Provider have complied with all applicable federal contracting laws and Federal Acquisition Regulations (FARs) and seek to ensure Company’s and Provider’s continued compliance with all applicable federal contracting laws and FARs;
WHEREAS Company and Provider each agree to abide by all applicable federal contracting laws and FARs as are applicable to each of them with respect to the commercial relationship between Company and Provider; and
WHEREAS the parties desire to amend the Agreement as follows:
1. Exhibit A to this Fourth Amendment is hereby incorporated into the terms of the Agreement as Exhibit G.
2. Except as provided herein, all other terms and conditions of the Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment to be executed by its duly authorized representatives, as of the Effective Date.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
INDIVIOR UK Limited | | SHARP CORPORATION |
| By: | /s/ Hillel West | | By: | /s/ Jeff Benedict |
| Name: | Hillel West | | Name: | Jeff Benedict |
| Title: | Chief Manufacturing & Supply Officer | | Title: | Chief Commercial Officer |
| Date: | 9 May 2021 | | Date: | May 9, 2021 |
EXHIBIT A
Provider’s Representations & Warranties
To the extent applicable, Sharp Corporation represents and warrants to Company, that it will comply with all applicable federal contracting laws and Federal Acquisition Regulations (FARs), which may include, but are not limited to:
| | | | | | | | |
| Citation | Title | |
FAR 52.203-6 (2020) | Restrictions on Subcontractor Sales to the Government | |
FAR 52.203-13 (2020) | Contractor Code of Business Ethics and Conduct | |
FAR 52.203-17 (2020) | Contractor Employee Whistleblower Rights and Requirement to Inform Employees of Whistleblower Rights | |
FAR 52.203-19 (2017) | Prohibition on Requiring Certain Internal Confidentiality Agreements or Statements | |
FAR 52.204-10 (2016) | Reporting Executive Compensation and First-Tier Subcontract Awards | |
FAR 52.204-21 (2016) | Basic Safeguarding of Covered Conti act Information Systems | |
FAR 52.204-23 (2018) | Prohibition on Contracting for Hardware, Software, and Services Developed or Provided by Kaspersky Lab and Other Covered Entities | |
FAR 52.204-25 (2020) | Prohibition on Contracting for Certain Telecommunications and Video Surveillance Services or Equipment | |
FAR 52.209-6 (2020) | Protecting the Government's Interest when Subcontracting with Contractors Debarred, Suspended, or Proposed for Debarment | |
| FAR 52.209-9 (2013) | Updates of Publicly Available Information Regarding Responsibility Matters | |
| FAR 52.209-10 (2015) | Prohibition on Contracting with Inverted Domestic Corporations | |
| FAR 52.212-5 (2020) | Contract Terms and Conditions Required to Implement Statues or Executive Orders – Commercial Items | |
| FAR 52.219-3 (2011) | Notice of HUBZone Set-Aside or Sole-Source Award | |
| FAR 52.219-6 (2011) | Notice of Total Small Business Set-Aside | |
| FAR 52.219-8 (2016) | Utilization of Small Business Concerns | |
| FAR 52.219-14 (2017) | Limitations on Subcontracting | |
| FAR 52.219-16 (1999) | Liquidated Damages-Subcontracting Plan | |
| FAR 52.219-27 (2011) | Notice of Service-Disabled Veteran-Owned Small Business Set-Aside | |
| FAR 52.219-28 (2013) | Post Award Small Business Program Representation | |
| FAR 52.219-29 (2015) | Notice of Set-Aside for, or Sole Source Award to, Economically Disadvantaged Women-Owned Small Business Concerns | |
| FAR 52.219-30 (2015) | Notice of Set-Aside for, or Sole Source Award to, Women-Owned Small Business Concerns Eligible Under the Women-Owned Small Business Program | |
| FAR 52.222-3 (2003) | Convict Labor | |
FAR 52.222-17 (2014) | Nondisplacement of Qualified Workers | |
| FAR 52.222-19 (2018) | Child Labor-Cooperation with Authorities and Remedies | |
FAR 52.222-21 (2015) | Prohibition of Segregated Facilities | |
FAR 52.222-26 (2015) | Equal Opportunity | |
FAR 52.222-35 (2020) | Equal Opportunity for Veterans | |
FAR 52.222-36 (2020) | Equal Opportunity for Workers with Disabilities | |
FAR 52.222-37 (2020) | Employment Reports on Veterans | |
FAR 52.222-40 (2010) | Notification of Employee Rights Under the National Labor Relations Act | |
FAR 52.222-41 (2018) | Service Contract Labor Standards | |
| FAR 52.222-42 (2014) | Statement of Equivalent Rates for Federal Hires | |
| | | | | | | | |
| FAR 52.222-43 (2018) | Fair Labor Standards Act and Service Contract Labor Standards-Price Adjustment (Multiple Year and Option Contracts) | |
| FAR 52.222-44 (2014) | Fair Labor Standards Act and Service Contract Labor Standards-Price Adjustment | |
FAR 52.222-50 (2020) | Combating Trafficking in Persons | |
FAR 52.222-51 (2014) | Exemption from Application of the Service Contract Labor Standards to Contracts for Maintenance, Calibration, or Repair of Certain Equipment-Requirements | |
FAR 52.222-53 (2014) | Exemption from Application of the Service Contract Labor Standards to Contracts for Certain Services-Requirements | |
FAR 52.222-54 (2015) | Employment Eligibility Verification |
FAR 52.222-55 (2020) | Minimum Wages Under Executive Order 13658 |
FAR 52.222-62 (2017) | Paid Sick Leave Under Executive Order 13706 |
| FAR 52.223-11 (2016) | Ozone-Depleting Substances and High Global Warming Potential Hydrofluorocarbons |
FAR 52.223-18 (2011) | Encouraging Contractor Policies to Ban Text Messaging While Driving |
| FAR 52.223-20 (2016) | Aerosols |
| FAR 52.223-21 (2016) | Foams |
| FAR 52.224-3 (2017) | Privacy Training |
| FAR 52.225-5 (2016) | Trade Agreements |
FAR 52.225-13 (2008) | Restriction of Certain Foreign Purchases |
| FAR 52.225-26 (2016) | Contractors Performing Private Security Functions Outside the United States |
| FAR 52.226-6 (2020) | Promoting Excess Food Donation to Nonprofit Organizations |
| FAR 52.232-33 (2013) | Payment by Electronic Funds Transfer – System for Award Management |
| FAR 52.232-34 (2013) | Payment by Electronic Funds Transfer – Other than System for Award Management |
| FAR 52.232-36 (2014) | Payment by Third Party |
FAR 52.232-40 (2013) | Providing Accelerated Payment to Small Business Subcontractors |
| FAR 52.233-3 (1996) | Protest After Award |
| FAR 52.233-4 (2004) | Applicable Law for Breach of Contract Claim |
| FAR 52.242-5 (2017) | Payments to Small Business Subcontractors |
| FAR 52.247-64 (2006) | Preference for Privately Owned U.S.-Flag Commercial Vessels |
All applicable federal contracting laws and FARs, with respect to the rights, duties, and obligations of Company and Provider, shall be interpreted and construed in such a manner as to recognize and give effect to: (i) the contractual relationship between Company and Provider under this Agreement; and (ii) the rights of the Federal Government with respect thereto.
PORTIONS OF THIS EXHIBIT HAVE BEEN REDACTED.
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS BOTH (i) NOT MATERIAL AND (ii) WOULD BE LIKELY TO CAUSE COMPETITIVE HARM IF PUBLICLY DISCLOSED.
REDACTED MATERIAL IS MARKED WITH [***].
MASTER MANUFACTURING SERVICES AGREEMENT BETWEEN
(1) PATHEON MANUFACTURING SERVICES LLC
AND
(2) INDIVIOR UK LIMITED
Table of Contents
| | | | | | | | | | | |
ARTICLE 1: STRUCTURE OF AGREEMENT AND INTERPRETATION | 5 |
| | | |
| 1.1 | MASTER AGREEMENT. | 5 |
| 1.2 | PRODUCT AGREEMENTS. | 5 |
| 1.3 | DEFINITIONS. | 6 |
| 1.4 | CURRENCY. | 10 |
| 1.5 | SECTIONS AND HEADINGS. | 10 |
| 1.6 | SINGULAR TERMS. | 11 |
| 1.7 | APPENDIX 1, SCHEDULES AND EXHIBITS. | 11 |
| | | |
ARTICLE 2: PATHEON'S MANUFACTURING SERVICES | 12 |
| | | |
| 2.1 | MANUFACTURING SERVICES. | 12 |
| 2.2 | ACTIVE MATERIAL YIELD. | 14 |
| | | |
| ARTICLE 3: INDIVIOR’S OBLIGATIONS | 15 |
| 3.1 | PAYMENT. | 15 |
| 3.2 | ACTIVE MATERIALS AND QUALIFICATION OF ADDITIONAL SOURCES OF SUPPLY. | 15 |
| | | |
ARTICLE 4: FEES AN COMPONENT COSTS | 16 |
| | | |
| 4.1 | PRICING. | 16 |
| 4.3 | PRICE ADJUSTMENTS – CURRENT YEAR PRICING. | 18 |
| 4.4 | ADJUSTMENTS DUE TO TECHNICAL CHANGES OR REGULATORY AUTHORITY REQUIREMENTS. | 18 |
| 4.5 | MULTI-COUNTRY PACKAGING REQUIREMENTS. | 18 |
| | | |
ARTICLE 5: ORDERS, SHIPMENT, INVOICING, PAYMENT | 18 |
| | | |
| 5.1 | ORDERS AND FORECASTS. | 18 |
| 5.2 | RELIANCE BY PATHEON. | 20 |
| 5.3 | MINIMUM ORDERS. | 20 |
| 5.4 | DELIVERY AND SHIPPING. | 20 |
| 5.5 | INVOICES AND PAYMENT. | 21 |
| | | |
ARTICLE 6: PRODUCT CLAIMS AND RECALLS | 22 |
| | | |
| 6.1 | PRODUCT CLAIMS. | 22 |
| 6.2 | PRODUCT RECALLS AND RETURNS. | 22 |
| 6.3 | PATHEON’S RESPONSIBILITY FOR DEFECTIVE AND RECALLED PRODUCTS. | 23 |
| 6.4 | DISPOSITION OF DEFECTIVE OR RECALLED PRODUCTS. | 24 |
| 6.5 | HEALTHCARE PROVIDER OR PATIENT QUESTIONS AND COMPLAINTS. | 24 |
| 6.6 | SOLE REMEDY. | 24 |
| | | |
ARTICLE 7: CO-OPERATION | 24 |
| | | |
| 7.1 | QUARTERLY REVIEW. | 24 |
| 7.2 | GOVERNMENTAL AGENCIES. | 24 |
| 7.3 | RECORDS AND ACCOUNTING BY PATHEON. | 25 |
| 7.4 | INSPECTION. | 25 |
| 7.5 | INSPECTION; RECORD MAINTENANCE; ACCESS. | 25 |
| 7.6 | NOTIFICATION OF REGULATORY INSPECTIONS. | 25 |
| 7.7 | REPORTS. | 25 |
| 7.8 | REGULATORY FILINGS. | 26 |
| | | |
| | | | | | | | | | | |
ARTICLE 8: TERM AND TERMINATION | 27 |
| | | |
| 8.1 | TERM. | 27 |
| 8.2 | TERMINATION FOR CAUSE. | 27 |
| 8.3 | OBLIGATIONS ON TERMINATION. | 28 |
| | | |
ARTICLE 9: REPRESENTATIONS, WARRANTIES AND COVENANTS | 29 |
| | | |
| 9.1 | MUTUAL WARRANTIES. | 29 |
| 9.2 | INDIVIOR WARRANTIES. | 29 |
| 9.3 | PATHEON WARRANTIES. | 30 |
| 9.4 | PERMITS. | 30 |
| 9.5 | NO WARRANTY. | 30 |
| | | |
ARTICLE 10: REMEDIES AND INDEMNITIES | 30 |
| | | |
| 10.1 | CONSEQUENTIAL AND OTHER DAMAGES. | 30 |
| 10.2 | LIMITATION OF LIABILITY. | 31 |
| (C) | MAXIMUM LIABILITY. | 31 |
| 10.3 | PATHEON INDEMNITY. | 31 |
| 10.4 | INDIVIOR INDEMNITY. | 31 |
| 10.5 | REASONABLE ALLOCATION OF RISK. | 32 |
| | | |
ARTICLE 11: CONFINDENTIALITY | 32 |
| | | |
| 11.1 | CONFIDENTIAL INFORMATION. | 32 |
| 11.2 | USE OF CONFIDENTIAL INFORMATION. | 32 |
| 11.3 | EXCLUSIONS. | 32 |
| 11.4 | PHOTOGRAPHS AND RECORDINGS. | 33 |
| 11.5 | PERMITTED DISCLOSURE. | 33 |
| 11.6 | MARKING. | 33 |
| 11.7 | RETURN OF CONFIDENTIAL INFORMATION. | 33 |
| 11.8 | REMEDIES. | 33 |
| | | |
ARTICLE 12: DISPUTE RESOLUTION | 33 |
| | | |
| 12.1 | COMMERCIAL DISPUTES. | 33 |
| 12.2 | TECHNICAL DISPUTE RESOLUTION. | 34 |
| | | |
ARTICLE 13: MISCELLANEOUS | 34 |
| | | |
| 13.1 | INVENTIONS. | 34 |
| 13.2 | INTELLECTUAL PROPERTY. | 34 |
| 13.3 | INSURANCE. | 35 |
| 13.4 | INDEPENDENT CONTRACTORS. | 35 |
| 13.5 | NO WAIVER. | 35 |
| 13.6 | ASSIGNMENT AND SUBCONTRACTING. | 35 |
| 13.7 | FORCE MAJEURE. | 36 |
| 13.8 | ADDITIONAL PRODUCT. | 36 |
| 13.9 | NOTICES. | 36 |
| 13.10 | SEVERABILITY. | 37 |
| 13.11 | ENTIRE AGREEMENT. | 37 |
| 13.12 | OTHER TERMS. | 37 |
| 13.13 | NO THIRD PARTY BENEFIT OR RIGHT. | 37 |
| | | | | | | | | | | |
| 13.14 | EXECUTION IN COUNTERPARTS. | 37 |
| 13.15 | USE OF INDIVIOR NAME. | 37 |
| 13.16 | TAXES. | 38 |
| 13.17 | GOVERNING LAW. | 39 |
| | | |
ARTICLE 14: ANTI-BRIBERY | 39 |
| | | |
ARTICLE 15: BUSINESS CONTINUITY PLAN | 39 |
| | | |
ARTICLE 16: EQUIPMENT | 40 |
MASTER MANUFACTURING SERVICES AGREEMENT
THIS MASTER MANUFACTURING SERVICES AGREEMENT (the "Agreement") is made as of April 6, 2018 (the “Effective Date”)
B E T W E E N:
| | |
| PATHEON MANUFACTURING SERVICES LLC, |
| a limited liability company existing under the laws of the State of Delaware |
|
("Patheon"), |
|
| - and - |
|
| INDIVIOR UK LIMITED, |
| incorporated and registered under the laws of England |
|
("Indivior"). |
THIS AGREEMENT WITNESSES THAT in consideration of the rights conferred and the obligations assumed herein, and for other good and valuable consideration (the receipt and sufficiency of which are acknowledged by each party), and intending to be legally bound the parties agree as follows:
ARTICLE 1
STRUCTURE OF AGREEMENT AND INTERPRETATION
1.1 Master Agreement.
This Agreement establishes the general terms and conditions under which Patheon or any Affiliate of Patheon may contract to perform Manufacturing Services for Indivior or any Affiliate of Indivior, at the Manufacturing Site where the Affiliate of Patheon resides. This “master” form of agreement is intended to allow the parties, or any of their Affiliates, to contract for the manufacture of multiple Products through Patheon’s global network of manufacturing sites through the issuance of specific Product Agreements without having to re-negotiate the basic terms and conditions contained herein. This Agreement may be enforced by or against any such Affiliate of Patheon or Indivior (as applicable) in its own name. Where the context requires, any reference to “Patheon” or “Indivior” in this Agreement or any Product Agreement shall be deemed to include any Affiliate of Patheon or Indivior (as applicable) identified with respect to such Product Agreement. Each party shall cause its Affiliates to comply with the terms of the Agreement and any applicable Product Agreement and shall be responsible for any breach of the Agreement or any applicable Product Agreement by any of its Affiliates. Notwithstanding the foregoing, Patheon shall not subcontract any of its obligations under this Agreement or any Product Agreement to any subcontractor, including but not limited to a Patheon Affiliate, without Indivior’s prior written approval.
1.2 Product Agreements.
This Agreement is structured so that a Product Agreement may be entered into by the parties for the manufacture of a particular Product or multiple Products at a Patheon Manufacturing Site. Each Product Agreement will be governed by the terms and conditions of this Agreement unless the parties to the Product Agreement expressly modify the terms and conditions of this Agreement in the Product Agreement. Unless otherwise agreed by the parties, each Product Agreement will be in the general form and contain the information set forth in Appendix 1 hereto. Unless the applicable portion of a Product Agreement expressly states that it supersedes the terms in the Agreement, to the extent any terms set forth in a Product Agreement conflict with the terms set forth in this Agreement, this Agreement shall control. Nothing in this Agreement obligates either party to enter into any minimum number of, or any, Product Agreements.
1.3 Definitions.
The following terms will, unless the context otherwise requires, have the respective meanings set out below and grammatical variations of these terms will have corresponding meanings:
"Active Materials", “Active Pharmaceutical Ingredients” or “API” means the materials listed in a Product Agreement on Schedule D;
"Active Materials Credit Value" means the value of the Active Materials for certain purposes of this Agreement, as set forth in a Product Agreement on Schedule D;
“Actual Annual Yield” or “AAY” has the meaning specified in Section 2.2(a);
“Actual Yearly Volume” or “AYV” has the meaning specified in Section 4.2.1;
"Affiliate" means:
(a) a business entity which owns, directly or indirectly, a controlling interest in a party to this Agreement, by stock ownership or otherwise; or
(b) a business entity which is controlled by a party to this Agreement, either directly or indirectly, by stock ownership or otherwise; or
(c) a business entity, the controlling interest of which is directly or indirectly common to the majority ownership of a party to this Agreement;
For this definition, "control" means the possession, directly or indirectly, of the power to affirmatively direct or affirmatively cause the direction of the management and policies of an entity, whether through the ownership of more than fifty percent (50%) of voting securities, by contract or otherwise.
“Annual Product Review Report” means the annual product review report prepared by Patheon or an Affiliate of Patheon as described in Title 21 of the United States Code of Federal Regulations, Section 211.180(e);
"Annual Report" means the annual report to the FDA which is required to be prepared and filed by Indivior regarding the Product as described in Title 21 of the United States Code of Federal Regulations, Section 314.81(b)(2);
"Annual Volume" means the minimum volume of Product to be manufactured in any Year of this Agreement as set forth in a Product Agreement on Schedule B;
"Applicable Laws" means (i) for Patheon, any and all laws, rules, regulations, guidance, and policies of the United States (whether federal, state, or local in nature), the United Kingdom (whether national, regional, or local in nature), and the local jurisdiction where the Manufacturing Site is located, that are applicable to the manufacture of the Products; the cGMPs (as defined in this Agreement); and any applicable laws, statutes, rules, regulations, standards, policies, orders, or other requirements promulgated by the United States Food and Drug Administration (the “FDA”); and (ii) for Indivior and the Products, the Laws of all jurisdictions where the Products are manufactured, distributed, and marketed as these are agreed and understood by the parties in this Agreement;
"Authority" means any governmental or regulatory authority, department, body or agency or any court, tribunal, bureau, commission or other similar body, whether federal, state, provincial, county or municipal;
“BCP Plan” has the meaning specified in Section 15.1;
“Benefit” has the meaning specified in Section 14.1(b);
“Breach Notice” has the meaning specified in Section 8.2(a);
"Business Day" means a day other than a Saturday, Sunday or a day that is a statutory holiday in the State of North Carolina;
“Capital Equipment Agreement” means a separate written agreement that the parties may enter into that will address responsibility for the purchase of capital equipment and facility modifications that may be required to perform the Manufacturing Services under a particular Product Agreement;
"cGMPs" means, as applicable, current good manufacturing practices as promulgated under applicable Laws, including those described in:
(a) Parts 210 and 211 of Title 21 of the United States' Code of Federal Regulations;
(b) EC Directive 2001/183/EC, 2003/94/EC, and any applicable guidance on good manufacturing practices adopted pursuant to Article 47 of Directive 2001/83/EC, in particular relevant guidance on good manufacturing practices contained in the Rules Governing Medicinal Products in the European Union, Volume IV Good Manufacturing Practice for Medicinal Products, the principles detailed in the ICH Q7A guidelines; and
(c) Division 2 of Part C of the Food and Drug Regulations (Canada);
together with the latest Health Canada, FDA and EMA guidance documents pertaining to manufacturing and quality control practice, all as updated, amended and revised from time to time;
"Components" means, collectively, all packaging components, raw materials, ingredients, and other materials (including labels, product inserts and other labelling for the Products) required to manufacture the Products in accordance with the Specifications, other than the Active Materials;
“Confidential Information” has the meaning specified in Section 11.1;
“Conversion Fee” means the Price for performing the Manufacturing Services excluding the cost of Components;
“CTD” has the meaning specified in Section 7.8(c);
“C-TPAT” has the meaning specified in Section 2.1(f);
“Deficiencies” have the meaning specified in Section 7.8(d);
"Deficiency Notice" has the meaning specified in Section 6.1(a);
“Delivery” has the meaning specified in Section 5.4(b);
“Delivery Date” means the date scheduled for shipment of Product under a Firm Order as set forth in Section 5.1(d);
“Delivery Point” means the point at which the risk of loss or damage to the Products is transferred from Patheon to Indivior.
“Derivative Product” has the meaning specified in Section 2.1(f);
“Disclosing Party” has the meaning specified in Section 11.1;
“Duties” has the meaning specified in Section 13.16(b);
"EMA" means the European Medicines Agency;
"FDA" means the United States Food and Drug Administration;
"Firm Orders" have the meaning specified in Section 5.1(c);
“Force Majeure Event” has the meaning specified in Section 13.7;
"Health Canada" means the section of the Canadian Government known as Health Canada and includes, among other departments, the Therapeutic Products Directorate and the Health Products and Food Branch Inspectorate;
“Importer of Record” has the meaning specified in Section 3.2(a);
“Indivior Intellectual Property” means Intellectual Property generated or derived by Indivior before entering into this Agreement, or by Patheon while performing any Manufacturing Services or otherwise generated or derived by Patheon in its business which Intellectual Property is specific to, or dependent upon, Indivior’s Active Material or Product or Confidential Information;
“Indivior Property” has the meaning specified in Section 8.3(a)(v);
“Indivior-Supplied Components” means those Components to be supplied by Indivior or that have been supplied by Indivior;
“Initial Set Exchange Rate” means as of the Effective Date of a Product Agreement, the initial exchange rate set forth in the Product Agreement to convert one unit of the billing currency into the Patheon Manufacturing Site local currency, calculated as the daily average interbank exchange rate for conversion of one unit of the billing currency into the Patheon Manufacturing Site local currency during the 90 day period immediately preceding the Effective Date as published by xe.com “The Currency Site” under the heading ‘’xe.com’’: historical currency exchange rates” at http://www.xe.com/currencyconverter/;
"Intellectual Property" includes, without limitation, rights in patents, patent applications, formulae, trademarks, trademark applications, trade-names, Inventions, copyrights, industrial designs, trade secrets, and know how (including trade secrets, technology, methods of manufacture, specifications and other information),utility models, applications for utility models, designs (registered or unregistered and including applications for registered designs), topography rights and other rights in semiconductor chips, rights in Inventions, the right to claim damages for past infringements of any or all such rights and all rights having equivalent or similar effect wherever situated;
"Invention" means information about any innovation, improvement, development, discovery, computer program, device, trade secret, method, know-how, process, technique or the like, whether or not written or otherwise fixed in any form or medium, regardless of the media on which it is contained and whether or not patentable or copyrightable;
"Inventory" means all inventories of Components and work-in-process produced or held by Patheon for the manufacture of the Products but, for greater certainty, does not include the Active Materials;
“Late Delivery” has the meaning specified in Section 5.4(c);
"Laws" means all laws, statutes, ordinances, regulations, rules, by-laws, judgments, decrees or orders of any Authority;
“Long Term Forecast” has the meaning specified in Section 5.1(a);
"Manufacturing Services" means the manufacturing, quality control, quality assurance, stability testing, packaging, and related services, as set forth in this Agreement, required to manufacture Product or Products using the Active Materials and Components;
"Manufacturing Site" means the facility owned and operated by Patheon where the Manufacturing Services will be performed as identified in a Product Agreement;
“Materials” means all Components required to manufacture the Products in accordance with the Specifications, other than the Active Materials;
"Maximum Credit Value" means the maximum value of Active Materials that may be credited by Patheon under this Agreement, as set forth in a Product Agreement on Schedule D;
“Metrics” means the set of quantifiable performance measures set forth in Schedule E of a Product Agreement;
"Minimum Order Quantity" means the minimum number of batches of a Product to be produced during the same cycle of manufacturing as set forth in a Product Agreement on Schedule B;
“Obsolete Stock” has the meaning specified in Section 5.2(b);
“Patheon Competitor” means a business that derives greater than 50% of its revenues from performing contract pharmaceutical development or commercial manufacturing services;
“Patheon Intellectual Property” means Intellectual Property generated or derived by Patheon before performing any Manufacturing Services, developed by Patheon while performing the Manufacturing Services, or otherwise generated or derived by Patheon in its business which Intellectual Property is not specific to, or dependent upon, and does not incorporate or use Indivior’s Active Material or Product or Confidential Information;
“Policies” has the meaning specified in Section 14.1;
“PPI” has the meaning specified in Section 4.2(a);
“Price” means the fees to be charged by Patheon for performing the Manufacturing Services, and includes the cost of Components (other than Indivior-Supplied Components), certain cost items as set forth in a Product Agreement on Schedule B, and annual stability testing fees as set forth in a Product Agreement on Schedule C;
"Product(s)" means the product(s) listed in a Product Agreement on Schedule A;
“Product Agreement” means the agreement between Patheon and Indivior issued under this Agreement in the form set forth in Appendix 1 (including Schedules A to D) under which Patheon will perform Manufacturing Services at a particular Manufacturing Site;
“Product Claims” have the meaning specified in Section 6.3(c);
"Quality Agreement" means the agreement between the parties entering a Product Agreement that sets out the quality assurance standards for the Manufacturing Services to be performed by Patheon for Indivior;
“Recall” has the meaning specified in Section 6.2(a);
“Recipient” has the meaning specified in Section 11.1;
“Regulatory Approval” has the meaning specified in Section 7.8(a);
"Regulatory Authority" means the FDA, EMA, and Health Canada and any other foreign regulatory agencies competent to grant marketing approvals for pharmaceutical products including the Products in the Territory;
“Remediation Period” has the meaning specified in Section 8.2(a);
“Representatives” means a party’s directors, officers, employees, advisers, agents, consultants, subcontractors, service partners, professional advisors, or representatives;
“Set Exchange Rate” means the exchange rate to convert one unit of the billing currency into the Patheon Manufacturing Site local currency for each Year, calculated as the average daily interbank exchange rate for conversion of one unit of the billing currency into the Patheon Manufacturing Site local currency during the full year period (October 1st [preceding year] to September 30th) as published by xe.com “The Currency Site” under the heading “xe.com: historical currency exchange rates” at http://www.xe.com/currencyconverter/;;
“Shortfall” has the meaning specified in Section 2.2(b);
"Specifications" means the file, for each Product, which is given by Indivior to Patheon in accordance with the procedures listed in a Product Agreement on Schedule A and which contains documents relating to each Product, including, without limitation:
(a) specifications for Active Materials and Components;
(b) manufacturing specifications, directions, and processes;
(c) storage requirements;
(d) all environmental, health and safety information for each Product including material safety data sheets; and
(e) the finished Product specifications, packaging specifications and shipping requirements for each Product;
all as updated, amended and revised from time to time by Indivior in accordance with the terms of this Agreement;
“Surplus” has the meaning specified in Section 2.2(c);
“Target Yield” has the meaning specified in Section 2.2(a);
“Target Yield Determination Batches” has the meaning specified in Section 2.2(a);
"Transaction Tax" have the meaning specified in Section 13.16(a);
"Technical Dispute" has the meaning specified in Section 12.2;
“Technology Transfer” means the transfer of technology necessary to enable a recipient to establish and conduct cGMP-compliant manufacture of the Products, as further set out in Exhibit E
“Term” has the meaning specified in Section 8.1;
"Territory" means the geographic area described in a Product Agreement where Products manufactured by Patheon will be distributed by Indivior;
"Third Party Rights" means the Intellectual Property of any third party;
"VAT" has the meaning specified in Section 13.16(a)(i);
"Year" means in the first year of this Agreement or in the first year of a Product Agreement, the period from the Effective Date up to and including December 31 of the same calendar year, and thereafter will mean a calendar year.
“Yearly Forecast Volume” or “YFV” has the meaning specified in Section 4.2.1; and
“Zero Forecast Period” has the meaning specified in Section 5.1(f).
1.4 Currency.
Unless otherwise agreed in a Product Agreement, all monetary amounts expressed in this Agreement are in United States Dollars (USD).
1.5 Sections and Headings.
The division of this Agreement into Articles, Sections, Subsections, an Appendix, Schedules and Exhibits and the insertion of headings are for convenience of reference only and will not affect the interpretation of this Agreement. Unless otherwise indicated, any reference in this Agreement to a Section, Appendix, Schedule or Exhibit refers to the specified Section, Appendix, Schedule or Exhibit to this Agreement. In this Agreement, the terms "this Agreement", "hereof", "herein",
"hereunder" and similar expressions refer to this Agreement as a whole and not to any particular part, Section, Appendix, Schedule or Exhibit of this Agreement.
1.6 Singular Terms.
Except as otherwise expressly stated or unless the context otherwise requires, all references to the singular will include the plural and vice versa.
1.7 Appendix 1, Schedules and Exhibits.
Appendix 1 (including the Schedules thereto) and the following Exhibits are attached to, incorporated in, and form part of this Agreement:
| | | | | | | | |
| Appendix 1 | - | Form of Product Agreement (Including Schedules A to E) |
| Exhibit A | - | Technical Dispute Resolution |
| Exhibit B | - | Quarterly Active Materials Inventory Report |
| Exhibit C | - | Report of Annual Active Materials Inventory Reconciliation and Calculation of
Actual Annual Yield |
| Exhibit D | - | Example of Price Adjustment Due to Currency Fluctuation |
| Exhibit E | - | Form of Technology Transfer Agreement |
| Exhibit F | - | Indivior Code of Business Conduct and Anti-Bribery Policies |
ARTICLE 2
PATHEON'S MANUFACTURING SERVICES
2.1 Manufacturing Services.
Patheon will perform the Manufacturing Services for Indivior in the Territory for the Price, as specified in Schedules B and C to a Product Agreement and shall adhere to the Metrics specified in Schedule E to a Product Agreement. Schedule B to a Product Agreement sets forth a list of cost items and designates those that are included in the Price for Products; all cost items that are not included in the Price are subject to additional fees to be paid by Indivior, such fees to be set forth in the Product Agreement. The parties may amend the fees set out in Schedules B and C to a Product Agreement as set forth in Article 4. Patheon may change the Manufacturing Site for the Products only with the prior written consent of Indivior, this consent not to be unreasonably withheld. To the extent Indivior and Patheon agree that Indivior shall utilize Patheon to fulfill a certain minimum percentage of its commercial manufacturing requirements for a specific Product, language to that effect shall be set forth in the individual Product Agreement. Notwithstanding the foregoing, nothing in this Agreement requires Indivior to utilize Patheon for any specific minimum percentage of its commercial manufacturing requirements for any Product. Patheon will be entitled to any applicable manufacturing tax credits that arise from performing the Manufacturing Services under this Agreement.
In performing the Manufacturing Services, Patheon and Indivior agree that:
(a) Conversion of Active Materials and Components. Patheon will convert Active Materials and Components into Product.
(b) Quality Control and Quality Assurance. Patheon will perform the quality control and quality assurance testing specified in the Quality Agreement and shall, in each instance, manufacture, test, and store the Products and supply the Manufacturing Services strictly in accordance with the Specifications; the Quality Technical Agreement; cGMPs; all Applicable Laws; and the terms of this Agreement. Batch review and release to Indivior will be the responsibility of Patheon’s quality assurance group. Patheon will perform its batch review and release responsibilities in accordance with the terms of the Quality Agreement. Patheon shall be solely responsible for compliance with all Laws, rules, and regulations relating to the handling, generation, transportation, treatment, storage, and disposal or other management of waste and regulated substances, including, without limitation, solid and hazardous waste and hazardous and toxic substances and materials. In the event of any seizure or other similar government action with respect to a Product, Patheon shall cooperate with Indivior and take such other actions in connection therewith as Indivior may reasonably request. Prior to the commencement of the manufacture of the Products, Patheon shall satisfy itself that the know-how and any other information provided by Indivior to Patheon is sufficient to enable Patheon to efficiently perform its obligations under this Agreement. If Patheon concludes that further information is necessary, it shall notify Indivior and obtain such information prior to the commencement of manufacture. Each time Patheon ships Products to Indivior, it will give Indivior a certificate of analysis and certificate of compliance including a statement that the batch has been manufactured and tested in accordance with Specifications and cGMPs. Such certificates shall comply with and be in the form set out in the quality assurance requirements included in the Specifications. Patheon shall not release the Products until the certificates of analysis relating to such Products demonstrate that the Products meet the Specifications and the cGMPs. If Patheon or Indivior becomes aware that any aspect of a Specification is liable to result in the manufacture of a defective Product which may lead to a liability being incurred, it shall, as soon as reasonably practicable, notify the other party in writing. Patheon and Indivior shall promptly meet to discuss and address the risk of manufacture of a defective Product and if Patheon can reasonably demonstrate that manufacture of the Product in accordance with the Specifications would, or would likely, result in a defective Product, Patheon may, while Patheon rectifies such risk, suspend its obligation to supply Product under this Agreement, without prejudice to any right or remedy of Indivior, and provided that Patheon uses all reasonable endeavors to rectify such risk as promptly as possible. Indivior will have sole responsibility for the release of Products to the market. The form and style of batch documents, including, but not limited to, batch production records, lot packaging records, equipment set up control, operating parameters, and data printouts, raw material data, and laboratory notebooks are the exclusive property of Patheon. Patheon hereby grants Indivior an irrevocable, perpetual license to retain, access, disclose, and otherwise use the batch documents solely as necessary to fulfill the terms of this Agreement, to comply with a request from an Authority, or otherwise as required to comply with Applicable Law. Specific Product related information contained in those batch documents is Indivior Property. Indivior will
inform Patheon of any Product manufacturing complaints of which they become aware. Patheon shall investigate the issues promptly and provide a written report to Indivior, which will include a corrective action plan (if applicable). If Patheon becomes aware of any complaints, it will promptly notify Indivior and provide reasonable assistance in investigating such complaints.
(c) Components. Patheon will purchase and test all Components (with the exception of Indivior-Supplied Components) at Patheon's expense and as required by the Specifications.
(d) Stability Testing. Patheon will conduct stability testing on the Products in accordance with the protocols set out in the Specifications for the separate fees and during the time periods set out in Schedule C to a Product Agreement. Patheon will not make any changes to these testing protocols without prior written approval from Indivior in the form of a signed amendment to the applicable Product Agreement. If a confirmed stability test failure occurs, Patheon will notify Indivior within one Business Day, after which Patheon and Indivior will jointly determine the proceedings and methods to be undertaken to investigate the cause of the failure; including which party will bear the cost of the investigation. If the failure is caused in part by Patheon and in part by Indivior, then the cost of the investigation shall be allocated in an equitable manner between the parties. Patheon will not be liable for these costs unless it has failed to perform the Manufacturing Services in accordance with the terms of this Agreement, the Specifications, cGMPs and/or any other Applicable Laws. Within a reasonable time period following completion of the tests, Patheon will send Indivior all stability test data and results at Indivior’s request and at Patheon’s cost.
(e) Packaging and Artwork. Patheon will package the Products in accordance with the Specifications. Indivior will be responsible for the cost of artwork development. Patheon will determine and imprint the batch numbers and expiration dates for each Product shipped. The batch numbers and expiration dates will be affixed on the Products and on the shipping carton of each Product as outlined in the Specifications and as required by cGMPs. Indivior may, in its sole discretion, make changes to labels, Product inserts, and other packaging for the Products. Those changes will be submitted by Indivior to all applicable Regulatory Authorities and other third parties responsible for the approval of the Products. Indivior will be responsible for the cost of labelling obsolescence when changes occur, as contemplated in Section 4.4. Patheon's name will not appear on the label or anywhere else on the Products unless: (i) required by any Laws; or (ii) Patheon consents in writing to the use of its name. At least 120 days prior to the Delivery Date of Product for which new or modified artwork is required, Indivior will provide at no cost to Patheon, final camera-ready artwork for all packaging Components to be used in the manufacture of the Product that meet the Specifications. For the avoidance of doubt, the parties acknowledge and agree that Indivior will be responsible for complying with any and all regulatory requirements for the labeling of the Product.
(f) API and Indivior-Supplied Components. Indivior, at its cost, must deliver the API and any Indivior-Supplied Components to the Manufacturing Site DDP (Incoterms 2010) at least 30 days (unless otherwise agreed in writing) before the scheduled manufacture date for Product covered by a Firm Order in sufficient quantity to enable Patheon to manufacture the agreed quantities of Product and to ship Product on the Delivery Date. Notwithstanding the foregoing or any terms to the contrary, legal title of the API and Indivior-Supplied Components shall remain with Indivior after delivery to Patheon. Patheon will control the unloading of API and Indivior-Supplied Components arriving at the Manufacturing Site and Indivior will comply and use commercially reasonable efforts to ensure that its carrier complies with all reasonable related directions of Patheon. If Indivior fails to deliver the API or Indivior-Supplied Components in accordance with the 30 day (or otherwise agreed in writing) time period and, making commercially reasonable efforts, Patheon is unable to manufacture Product on the scheduled date because of the delay, the Firm Orders will be considered cancelled by Indivior and Indivior will pay Patheon for the Conversion Fee associated with the cancelled Firm Order. Upon the occurrence of the foregoing, Patheon will reschedule manufacture under a replacement Firm Order at Indivior’s request, subject to Patheon’s manufacturing slot availability at the time of the request. Indivior will ensure that: (i) all delivered API meets the specifications for that API; and (ii) all shipments of API are accompanied by the required documentation as specified in the applicable Quality Agreement. For API or Indivior-Supplied Components which may be subject to import or export to or from the United States, Indivior agrees that its vendors and carriers will comply with applicable requirements of the U.S. Customs and Border Protection Service and the Customs Trade Partnership Against Terrorism (“C-TPAT”). Patheon shall ensure that all personnel involved in the manufacture of the Products are suitably trained for the handling of APIs and Indivior-Supplied Components used in the Products. Upon delivery, if applicable, Patheon will test each batch of API delivered in accordance with testing procedures and agreed by both parties to reasonably determine its conformance with the API Specifications. Patheon
shall promptly notify Indivior in writing if the outcome of such test shows the API to be not in compliance with the API Specifications. If Indivior agrees with the non-conformity of the API, Indivior shall replace it without further costs to Patheon. If Indivior disagrees that the API is non-compliant, Indivior reserves the right to retest the API or have the API retested by an independent lab mutually agreed by both parties. The costs associated with the retesting of the API shall be carried by Patheon if the API retests as conforming, and by Indivior if the API retests as non-conforming. Patheon agrees that it shall use the API solely in accordance with the terms of this Agreement. Patheon agrees that it shall not, except as specifically authorized in this Agreement or in writing by Indivior; (a) copy or modify the API; (b) use the Indivior supplied API to develop, create, test, manufacture or distribute any product, system, ingredient, component or other article other than the Product (“Derivative Product”); (c) use the knowledge or information that it obtains from the performance of the Manufacturing Services to develop, create, test, manufacture, or distribute any Derivative Product for itself or any third party; (d) include the Indivior supplied API in any Derivative Product; (e) reverse engineer or otherwise attempt to analyze the API or its compatibility with any other material or system; (f) disclose to any third party any information concerning the Manufacturing Services, including without limitation, formulae, Specifications, analytical test methods/results, and/or compatibility with manufacturing equipment or other systems.
(g) Validation Activities (if applicable). Patheon may assist in the development and approval of the validation protocols for analytical methods and manufacturing procedures (including packaging procedures) for the Products. The fees for this service are not included in the Price and will be set out separately in Schedule C to a Product Agreement.
(h) Additional Services. If Indivior requests services other than those expressly set forth herein or in any Product Agreement (such as qualification of a new packaging configuration or shipping studies, or validation of alternative batch sizes), Patheon will provide a good faith and reasonable written quote of the fee for the additional services and Indivior will advise Patheon whether it wishes to have the additional services performed by Patheon. The scope of work and fees will be set forth in a separate agreement signed by the parties. The terms and conditions of this Agreement will apply to those services.
2.2 Active Material Yield.
(a) Reporting. Patheon will give Indivior a monthly inventory report of the Active Materials held by Patheon using the inventory report form set out in Exhibit B, which will contain the following information for the month:
Quantity Received: The total quantity of Active Materials that complies with the Specifications and is received at the Manufacturing Site during the applicable period.
Quantity Dispensed: The total quantity of Active Materials dispensed at the Manufacturing Site during the applicable period. The Quantity Dispensed is calculated by adding the Quantity Received to the inventory of Active Materials that complies with the Specifications held at the beginning of the applicable period, less the inventory of Active Materials that complies with the Specifications held at the end of the period. The Quantity Dispensed will only include Active Materials received and dispensed in commercial manufacturing of Products, including Active Materials lost in the warehouse prior to and during dispensing, and will not include any (i) Active Materials that must be retained by Patheon as samples, (ii) Active Materials contained in Product that must be retained as samples, (iii) Active Materials used in testing (if applicable), and (iv) Active Materials received or dispensed in technical transfer activities or development activities during the applicable period, including without limitation, any regulatory, stability, validation or test batches manufactured during the applicable period.
Quantity Converted: The total amount of Active Materials contained in the Products manufactured with the Quantity Dispensed (including any additional Products produced in accordance with Section 6.3(a) or6.3(b)), delivered by Patheon, and not rejected, recalled or returned in accordance with Section 6.1or 6.2 because of Patheon’s failure to perform the Manufacturing Services in accordance with Specifications, cGMPs, and Applicable Laws.
Within 60 days after the end of each Year, Patheon will prepare an annual reconciliation of Active Materials on the reconciliation report form set forth in Exhibit C including the calculation of the "Actual Annual Yield"
or "AAY" for the Product at the Manufacturing Site during the Year. AAY is the percentage of the Quantity Dispensed that was converted to Products and is calculated as follows: [***]
After Patheon has produced a minimum of [***] successful commercial production batches of Product and has produced commercial production batches for at least [***] months at the Manufacturing Site (collectively, the "Target Yield Determination Batches"), the parties will agree on the target yield for the Product at the Manufacturing Site (each, a "Target Yield"). The Target Yield will be revised annually to reflect the actual manufacturing experience as agreed to by the parties.
(b) Shortfall Calculation. If the Actual Annual Yield falls more than [***]% below the respective Target Yield in a Year, then the shortfall for the Year (the "Shortfall") will be calculated as follows: [***]
(c) Surplus Calculation. If the Actual Annual Yield is more than the respective Target Yield in a Year, then the surplus for that Year (the "Surplus") will be determined based on the following calculation: [***]
(d) Credits
(i) Shortfall Credit. If there is a Shortfall for a Product in a Year, then Patheon will credit Indivior’s account for the amount of the Shortfall not later than 60 days after the end of each Year.
(ii) Surplus Credit. If there is a Surplus for a Product in a Year, then Patheon will be entitled to apply the amount of the Surplus as a credit against any Shortfall for that Product which may occur in the next Year. If there is no Shortfall in the next Year the Surplus credit will expire.
Each credit under this Section 2.2 will be summarized on the reconciliation report prepared in the form set forth in Exhibit C. Upon expiration or termination of a Product Agreement, any remaining Shortfall credit amount owing under this Section 2.2 will be paid to Indivior.
(e) Maximum Credit. Patheon's liability for Active Materials calculated in accordance with this Section 2.2 for any Product in a Year will not exceed, in the aggregate, the Maximum Credit Value set forth in Schedule D to a Product Agreement.
(f) No Material Breach. It will not be a material breach of this Agreement by Patheon under Section 8.2(a) if the Actual Annual Yield is less than the Target Yield.
ARTICLE 3
INDIVIOR'S OBLIGATIONS
3.1 Payment.
Indivior will pay Patheon for performing the Manufacturing Services according to the Prices specified in Schedules B and C to a Product Agreement. These Prices may be subject to adjustment under other parts of this Agreement. Patheon will remit invoices to the address indicated on the Agreement.
3.2 Active Materials and Qualification of Additional Sources of Supply.
(a) Indivior will at its sole cost and expense deliver the Active Materials to Patheon in accordance with Section 2.1(f). If applicable, Patheon and Indivior will reasonably cooperate to permit the import of the Active Materials to the Manufacturing Site. Indivior’s obligation will include obtaining the proper release of the Active Materials from the applicable Customs Agency and Regulatory Authority. Indivior or Indivior’s designated broker will be the “Importer of Record” for Active Materials imported to the Manufacturing Site. The Active Materials will be held by Patheon on behalf of Indivior as set forth in this Agreement. Title to the Active Materials will at all times remain the property of Indivior. Any Active Materials received by Patheon will only be used by Patheon to perform the Manufacturing Services. Indivior will be responsible for paying
for all rejected Product that arises from defects in the Active Materials which could not be reasonably discoverable by Patheon using the test methods set forth in the Specifications.
(b) If Indivior asks Patheon to qualify an additional source for the Active Material or any Component, Patheon may agree to evaluate the Active Material or Component to be supplied by the additional source to determine if it is suitable for use in the Product. The parties will agree on the scope of work to be performed by Patheon at Indivior’s cost. For an Active Material, this work at a minimum will include: (i) laboratory testing to confirm the Active Material meets existing Specifications; (ii) manufacture of an experimental batch of Product that will be placed on three months accelerated stability; and (iii) manufacture of three full-scale validation batches that will be placed on concurrent stability (one batch may be the registration batch if manufactured at full scale). Section 6.1(d) will apply to all Products manufactured using the newly approved Active Material or Component because of the limited material characterization that is performed on additional sources of supply.
(c) Patheon will promptly advise Indivior if it encounters supply problems, including delays and/or delivery of non-conforming Active Material or Components from an Indivior designated additional source. Patheon and Indivior will cooperate to reduce or eliminate any supply problems from these additional sources of supply. Indivior will be obligated to certify all Indivior designated sources of supply on an annual basis at its expense and will provide Patheon with copies of these annual certifications. If Patheon agrees to certify a Indivior designated additional sources of supply on behalf of Indivior, it will do so at Indivior’s expense.
ARTICLE 4
FEES AND COMPONENT COSTS
4.1 Pricing.
The Price will be listed in Schedules B and C to a Product Agreement and will be subject to the adjustments set forth in Sections 4.2 and4.3. The Price may also be increased or decreased by Patheon if there are changes to the underlying manufacturing, packaging or testing assumptions set forth in Schedule B to the Product Agreement that result in an increase or decrease in the cost of performing the Manufacturing Services. Such changes in Price will be included in an amendment to the Product Agreement that is signed by both parties, the execution of which shall not be unreasonably withheld, conditioned, or delayed.
4.2 Price Adjustments – Subsequent Years’ Pricing.
After the first Year of the Product Agreement, Patheon may adjust the Price effective January 1st of each Year as follows, and such adjusted Price shall be reflected in a fully executed amendment to this Agreement or the applicable Product Agreement(s):
(a) Manufacturing and Stability Testing Costs. For Products manufactured in the United States or Puerto Rico, Patheon may adjust the conversion component of the Price and the annual stability testing costs for inflation, based upon the preliminary number for any increase in the Producer Price Index pcu325412325412 for Pharmaceutical Preparation Manufacturing (“PPI”) published by the United States Department of Labor, Bureau of Labor Statistics in June of the preceding Year compared to the final number for the same month of the Year prior to that (based on the average of the monthly changes over the 12-month period), unless the parties otherwise agree in writing. Patheon will give Indivior a statement setting forth the calculation for the inflation adjustment to be applied in calculating the Price for the next Year. For Products manufactured outside the United States or Puerto Rico, Patheon may similarly adjust the Price for inflation using an inflation index to be agreed by the parties in a Product Agreement.
(b) Component Costs. If Patheon incurs an increase or realizes a decrease in Component costs during the Year, it may increase (in the event of a Component cost increase) and shall decrease (in the event of a Component cost decrease) the Price for the next Year to pass through the additional Component costs or savings (as applicable). Patheon will give Indivior information about the increase or decrease in Component costs which will be applied to the calculation of the Price for the next Year to reasonably demonstrate that the Price adjustment is justified. In the event of an increase, the pass through of the additional Component
costs to Indivior will be such that it matches Patheon’s cost. In the event of a decrease, Patheon and Indivior will equally share the benefit of such savings
(c) Pricing Basis. Indivior acknowledges that the Price in any Year is quoted based upon the Minimum Order Quantity and the Annual Volume specified in Schedule B to a Product Agreement. The Price is subject to change if the specified Minimum Order Quantity changes or if the Annual Volume is not ordered in a Year. For greater certainty, if Patheon and Indivior agree that the Minimum Order Quantity will be reduced or the Annual Volume in the lowest tier will not be ordered in a Year, then Patheon may increase the Price by an amount sufficient to absorb its documented increase in actual costs that result directly from the reduced Minimum Order Quantity or decrease in Annual Volume. Patheon will give Indivior a statement setting forth the information to be applied in calculating those cost increases for the next Year.
(d) Adjustments Due to Currency Fluctuations. If the parties agree in a Product Agreement to invoice in a currency other than the local currency for the Manufacturing Site, Patheon will adjust the Price to reflect currency fluctuations. The adjustment will be calculated after all other annual Price adjustments under this Section 4.2 have been made. The adjustment will proportionately reflect the increase or decrease, if any, in the Set Exchange Rate compared to the Set Exchange Rate established for the prior Year or the Initial Set Exchange Rate, as the case may be. An example of the calculation of the Price adjustment (for a Canadian Manufacturing Site invoiced in USD) is set forth in Exhibit D.
(e) Tier Pricing (if applicable). The pricing in Schedule B to a Product Agreement is set forth in Annual Volume tiers based upon Indivior’s volume forecasts under Section 5.1. Indivior will be invoiced during the Year for the unit price set forth in the Annual Volume tier based on the 12 months forecast provided in September of the previous Year. Within 30 days after the end of each Year or of the termination of the Product Agreement, Patheon will send Indivior a reconciliation of the actual volume of Product ordered by Indivior during the Year with the pricing tiers. If Indivior has overpaid during the Year, Patheon will issue a credit to Indivior for the amount of the overpayment within 60 days after the end of the Year or will issue payment to Indivior for the overpayment within 60 days after the termination of the Agreement. If Indivior has underpaid during the Year, Patheon will issue an invoice to Indivior under Section 5.5 for the amount of the underpayment within 60 days after the end of the Year or termination of the Agreement. If Indivior disagrees with the reconciliation, the parties will work in good faith to resolve the disagreement amicably. If the parties are unable to resolve the disagreement within 30 days, the matter will be handled under Section 12.1.
(f) For all Price adjustments under this Section 4.2, Patheon will deliver to Indivior on or about October 1, but no later than December 1 of each Year, a revised Schedule B to the Product Agreement, inclusive of all changes, to be effective for Product delivered on or after the first day of the next Year. The cumulative impact of all Price adjustments under this Section 4.2 are limited to [***]% of the then-current Price. The revised Schedule B shall include budgetary pricing information, adjusted Component costs, and other documentation reasonably sufficient to demonstrate that a Price adjustment is justified. If in any Year Patheon would have been entitled to increase the Price based on any of the provisions of this Section 4.2 but Patheon did not exercise its right to do so, then at the expiry of any subsequent Year, Patheon will be entitled to make cumulative prospective adjustments as set out in Section 4.2 based on changes during all of the preceding Years since Patheon last adjusted the Price. Patheon will not be entitled to retrospectively invoice for prior unexercised Price adjustments.
4.2.1 Price Adjustment due to Volume Changes from Yearly Forecast Volumes for Sterile Products.
On the execution of a Product Agreement for a sterile Product, Indivior will give to Patheon a forecast of the volume of Product required for the first two Years of the Product Agreement (the “Yearly Forecast Volume” or “YFV”) that will become part of the Product Agreement. The terms of any Price Adjustments that may be required due to volume changes between the Yearly Forecast Volumes and the aggregate actual volume of Product ordered by Indivior during the Year and invoiced by Patheon under Section 5.5. (“Actual Yearly Volume” or “AYV”) shall be negotiated by the parties and set forth in the individual Product Agreement.
4.3 Price Adjustments – Current Year Pricing.
During any Year, the Prices set out in Schedule B to a Product Agreement will be adjusted as follows:
Extraordinary Increases in Component Costs. If, at any time, market conditions result in Patheon's cost of Components being materially greater than normal forecasted increases, then Patheon will be entitled to adjust the Price for any affected Product to compensate it for the increased Component costs. Changes materially greater than normal forecasted increases will have occurred if: (i) the cost of a Component increases by [***]% of the cost for that Component upon which the most recent Price or fee quote was based; or (ii) the aggregate cost for all Components required to manufacture a Product increases by [***]% of the total Component costs for the Product upon which the most recent fee quote was based. If Component costs have been previously adjusted to reflect an increase in the cost of one or more Components, the adjustments set out in (i) and (ii) above will operate based on the last cost adjustment for the Components.
For a Price adjustment under this Section 4.3, Patheon will deliver to Indivior a revised Schedule B to the Product Agreement and budgetary pricing information, adjusted Component costs or other documents reasonably sufficient to demonstrate that a Price adjustment is justified. Patheon will have no obligation to deliver any supporting documents that are subject to obligations of confidentiality between Patheon and its suppliers. The revised Price will be effective for any Product delivered on or after the first day of the month following Indivior’s receipt of the revised Schedule B to the Product Agreement.
4.4 Adjustments Due to Technical Changes or Regulatory Authority Requirements.
Amendments to the Specifications or the Quality Agreement requested by Indivior will be implemented only following a technical and cost review that Patheon will perform at Indivior’s cost and are subject to Indivior and Patheon reaching agreement on Price changes required because of the amendment. Amendments to the Specifications, the Quality Agreement, or the Manufacturing Site requested by Patheon will only be implemented following the written approval of Indivior, the approval not to be unreasonably withheld, conditioned or delayed. If Indivior accepts a proposed Price change, the proposed change in the Specifications or the Quality Agreement and the associated scope of work will be implemented at Indivior’s cost, and the Price change will become effective, only for those orders of Product that are manufactured under the revised Specifications. In addition, Indivior agrees to purchase, at the price paid by Patheon (including all reasonable costs incurred by Patheon for the purchase, handling, and transport of the Inventory), all Inventory held under the "old" Specifications and purchased or maintained by Patheon in order to fill Firm Orders or under Section 5.1, if the Inventory can no longer be used under the revised Specifications. Open purchase orders for Components no longer required under any revised Specifications that were placed by Patheon with suppliers in order to fill Firm Orders or under Section 5.1 will be cancelled where possible, but if the orders may not be cancelled without penalty, they will be assigned to and paid for by Indivior. Additional payments or price increases may also be required to compensate Patheon for fees and other expenses incurred by Patheon to comply with Regulatory Authority requirements or changes in Applicable Laws which apply to the Manufacturing Services.
4.5 Multi-Country Packaging Requirements.
If Indivior decides to have Patheon perform Manufacturing Services for the Product for countries outside the Territory, then Indivior will inform Patheon of the packaging requirements for each new country and Patheon will prepare a quotation for consideration by Indivior of any additional costs for Components (other than Indivior-Supplied Components) and the change-over fees for the Product destined for each new country. The agreed additional packaging requirements and related packaging costs and change over fees will be set out in a written amendment to this Agreement that is signed by both parties.
ARTICLE 5
ORDERS, SHIPMENT, INVOICING, PAYMENT
5.1 Orders and Forecasts.
(a) Long Term Forecast. When each Product Agreement is executed, Indivior will use commercially reasonable efforts to give Patheon a non-binding forecast of up to three years of Indivior’s volume requirements for the
Product for each Year during the term of the Product Agreement (the “Long Term Forecast”). The Long Term Forecast will thereafter be updated every twelve months (as of June 1 and December 1) during the Product Term. If Patheon is unable to accommodate any portion of the Long Term Forecast, it will promptly notify Indivior and the parties will agree on any revisions to the forecast
(b) Rolling 12 Month Forecast. When each Product Agreement is executed, Indivior will give Patheon a non-binding 12 months forecast of the volume of Product that Indivior expects to order in the first 12 months of commercial manufacture of the Product. This forecast will then be updated by Indivior on or before the tenth day of each month on a rolling forward basis.
(c) Firm Orders. On a rolling basis during the term of the Product Agreement, Indivior will issue an updated 12 months forecast on or before the tenth day of each month. This forecast will start on the first day of the next month. Unless otherwise agreed in the Product Agreement, the first three months of this updated forecast will be considered binding Firm Orders. Concurrent with the 12 months forecast, Indivior will issue a new firm written order in the form of a purchase order or otherwise (“Firm Order”) by Indivior to purchase and, when accepted by Patheon, for Patheon to manufacture and deliver the agreed quantity of the Products. The Delivery Date will not be less than 90 days from the first day of the month following the date that the Firm Order is submitted. Firm Orders submitted to Patheon will specify the Delivery Date, Indivior's purchase order number, quantities by Product type, monthly delivery schedule, and any other elements necessary to ensure the timely manufacture and shipment of the Products. The quantities of Products ordered in those written orders will be firm and binding on Indivior and may not be reduced by Indivior. Expedited Firm Orders (i.e., any orders that Patheon, upon Indivior’s request, delivers earlier than the original agreed upon Delivery Date) will be subject to reasonable additional fees, as agreed to by the parties in the Product Agreement or in a signed amendment thereto.
(d) Acceptance of Firm Order. Patheon will accept Firm Orders by sending an acknowledgement to Indivior within five Business Days of its receipt of the Firm Order. The acknowledgement will include, subject to confirmation from Indivior, the Delivery Date for the Product ordered or delivery month for any Firm Orders that do not relate to the first three months of the 12 months forecast, provided that the Delivery Date shall not be later than 90 days from the first day of the month following the date that the Firm Order is submitted. The Delivery Date may be amended by agreement of the parties or as set forth in Section 2.1(f). If Patheon fails to acknowledge receipt of a Firm Order within the five Business Day period, the Firm Order will be deemed to have been accepted by Patheon.
(e) Cancellation of a Firm Order. If Indivior cancels a Firm Order more than two days after its acceptance by Patheon for any reason other than (i) a material breach of this Agreement or an applicable Product Agreement by Patheon or (ii) due to Indivior’s failure to timely deliver API or other Indivior-Supplied Components, as set forth in Section 2.1(f), Indivior will pay Patheon 100% of the Price for the Firm Order.
(f) Zero Volume Forecast. If Indivior forecasts zero volume for twelve successive months period during the term of a Product Agreement (the “Zero Forecast Period”), then Patheon will have the option, at its sole discretion, to provide a 60 day notice to Indivior of Patheon’s intention to terminate the Product Agreement on a stated day within the Zero Forecast Period. Indivior thereafter will have 60 days to either (i) withdraw the zero forecast and re-submit a reasonable volume forecast, or (ii) negotiate other terms and conditions on which the Product Agreement will remain in effect. Otherwise, Patheon will have the right to terminate the Product Agreement at the end of the 60 day notice period.
(g) Controlled Substance Quota Requirements (if applicable). Indivior will give Patheon the information set forth below for obtaining any required DEA or equivalent agency quotas needed to perform the Manufacturing Services. Patheon will be responsible for routine management of DEA quota information in accordance with DEA regulations. Patheon and Indivior will cooperate to communicate the information and to assist each other in DEA information requirements related to the Product as follows: (i) as of April 1 of each Year for the applicable Product, Indivior will provide to Patheon the next Year’s annual quota requirements for the Product; (ii) as of August 1 of each Year, Indivior will provide to Patheon any changes to the next Year’s quota requirements; (iii) Indivior will pro-actively communicate any changes to the quota requirements for the then-current Year in sufficient time to allow Patheon to file and finalize DEA filings supporting the changes; (iv) upon Patheon receiving the necessary forecast information from Indivior in order to request additional quota, Patheon will submit to the DEA, on a timely basis, all filings necessary to obtain DEA or equivalent agency quotas for Active Materials and will use commercially reasonable efforts to
secure sufficient quota from the DEA so as to achieve Delivery Dates for Product as set forth in applicable purchase orders and forecasts submitted to Patheon by Indivior or its designee; and (v) Patheon will not be responsible for DEA’s refusal or failure to grant sufficient quota for reasons beyond the reasonable control of Patheon.
5.2 Reliance by Patheon.
(a) Indivior understands and acknowledges that Patheon will rely on the Firm Orders and rolling forecasts submitted under Sections 5.1(a), and (b) in ordering the Components (other than Indivior-Supplied Components) required to meet the Firm Orders. In addition, Indivior understands that to ensure an orderly supply of the Components, Patheon may want to purchase the Components in sufficient volumes to meet the production requirements for Products during part or all of the forecasted periods referred to in Section 5.1(a) or to meet the production requirements of any longer period agreed to by Patheon and Indivior. Accordingly, Indivior authorizes Patheon to purchase Components to satisfy the Manufacturing Services requirements for Products for the first six months contemplated in the most recent forecast given by Indivior under Section 5.1(a). Patheon may make other purchases of Components to meet Manufacturing Services requirements for longer periods if agreed to in writing by the parties. Indivior will give Patheon written authorization to order Components for any launch quantities of Product requested by Indivior which will be considered a Firm Order when accepted by Patheon.
(b) Indivior will reimburse Patheon for the cost of Components ordered by Patheon under Firm Orders or under Section 5.2(a) that are not included in finished Products manufactured for Indivior within six months after the forecasted month for which the purchases have been made (or for a longer period as the parties may agree) or if the Components have expired or are rendered obsolete due to changes in artwork or applicable regulations during the period (collectively, “Obsolete Stock”). This reimbursement will include Patheon’s cost to purchase (plus a [***]% handling fee) and destroy the Obsolete Stock. If any non-expired Components are used in Products subsequently manufactured for Indivior or in third party products manufactured by Patheon, Indivior will receive credit for any costs of those Components previously paid to Patheon by Indivior. Patheon will provide Indivior with a monthly report of Indivior Supplied Component inventory.
(c) If within 30 days of receipt of written notice from Patheon, Indivior fails to take possession or arrange for the destruction of non-expired Components within 12 months of purchase or, in the case of the delivery of conforming finished Product accepted by Indivior but not yet shipped or otherwise taken possession of by Indivior within one month of manufacture), Indivior will pay Patheon $[***] per pallet, per month thereafter for storing the Components or finished Product. Storage fees for Components or Product which contain controlled substances or require refrigeration will be charged at $[***] per pallet per month. Storage fees are subject to a [***] pallet minimum charge per month.
5.3 Minimum Orders.
Indivior may order Manufacturing Services for batches of Products only in multiples of the Minimum Order Quantities as set out in Schedule B to a Product Agreement.
5.4 Delivery and Shipping.
(a) Delivery of Products will be made EXW (Incoterms 2010) Patheon’s shipping point unless otherwise agreed in a Product Agreement. Subject to Section 8.3(a)(v), risk of loss or of damage to Products will remain with Patheon until Patheon loads the Products onto the carrier’s vehicle for shipment at the shipping point at which time risk of loss or damage will transfer to Indivior. Patheon will, in accordance with Indivior’s instructions and as agent for Indivior, at Indivior’s risk, arrange for shipping to be paid by Indivior. Indivior will arrange for insurance and will select the freight carrier used by Patheon to ship Products and may monitor Patheon’s shipping and freight practices as they pertain to this Agreement. Products will be transported in accordance with the Specifications.
(b) For the purposes of this Agreement, delivery of the Products shall be effectuated on the last to occur of (i) the physical delivery of the Products to the Delivery Point; or (ii) Indivior’s receipt of the certificate of analysis from Patheon confirming such Products meet the Specifications (“Delivery”). Unless otherwise
agreed in writing, Patheon agrees that at the time of Delivery, all Products will have a minimum shelf life remaining of no less [***]% of the then current shelf life as filed with the Regulatory Authority.
(c) Patheon recognizes that late Delivery of the Products will have a significant impact on Indivior’s obligations to its customers. Indivior requires as a condition of this Agreement deliveries to be on time. Accordingly, without prejudice to Indivior’s other rights whether hereunder or at law, if Delivery of the quantity Products set forth in an accepted Firm Order does not occur within 7 calendar days of the Delivery Date (“Late Delivery”) Indivior shall be entitled to deduct from the Price the portion of the Firm Order delivered as a Late-Delivery, or to claim from Patheon by way of liquidated damages for delay, in accordance with the following principles. Patheon agrees that these provisions are a reasonable estimate of Indivior’s loss and shall not constitute a penalty.
| | | | | |
| Delay in delivery | % of Price deducted from the Late Delivery |
| [***] | [***]% |
| [***] | [***]% |
| [***] | [***]% |
| [***] | [***]% |
| [***] | [***]% |
For clarity, a Late Delivery will not include any delay in shipment of Product caused by events outside of Patheon’s reasonable control, such as a Force Majeure Event, a delay in delivery of API or Materials (provided that Patheon ordered Materials with sufficient lead time for such Materials to be delivered on a timely basis), a delay in Product release approval from Indivior, a quality investigation or OOS results which are not determined to be the fault of Patheon, inaccurate Indivior forecasts, or receipt of non-conforming API or Components supplied by Indivior.
The parties acknowledge that any claim under this clause 5.4(c) are without prejudice to any other claims made or to be made by Indivior arising out of such Late Delivery (including for breach), and shall not constitute any acceptance of such Late Delivery or nor a waiver of any possible claims resulting from such Late Delivery.
5.5 Invoices and Payment.
Invoices will be sent by email to the email address given by Indivior to Patheon in writing. Invoices will be issued upon Product Delivery. Patheon will also submit to Indivior, with each shipment of Products, a duplicate copy of the invoice covering the shipment. Patheon will also give Indivior an invoice covering any Inventory or Components which are to be purchased by Indivior under Section 2 of this Agreement. Each invoice will, to the extent applicable, identify Indivior’s Manufacturing Services purchase order number, Product numbers, names and quantities, unit price, freight charges, the total amount to be paid by Indivior, Patheon’s name and address, Indivior point of contact, Patheon point of contact, net terms of payment, and remittance address (where check is to be sent). Indivior will pay all undisputed invoices within 45 days of the date thereof. If any portion of an invoice is disputed, Indivior will pay Patheon for the undisputed amount and the parties will use good faith efforts to reconcile the disputed amount as soon as practicable. Undisputed amounts that remain past due more than 45 days after the original due date will accrue interest at [***]% per month, not to exceed [***]% annually.
ARTICLE 6
PRODUCT CLAIMS AND RECALLS
6.1 Product Claims.
(a) Product Claims. Indivior has the right to reject any portion of any shipment of Product that was not manufactured in accordance with the Specifications, cGMPs, or Applicable Laws, without invalidating any remainder of the shipment. Indivior will inspect the Product manufactured by Patheon upon receipt and will give Patheon written notice (a "Deficiency Notice") of all claims for Product that was not manufactured in accordance with the Specifications, cGMPs, or Applicable Laws, within 30 days after Indivior’s receipt thereof (or, in the case of any defects not reasonably susceptible to discovery upon receipt of the Product, within 30 days after discovery by Indivior, but not after the expiration date of the Product). If Indivior fails to give Patheon the Deficiency Notice within the applicable 30 day period, then the Delivery will be deemed to have been accepted by Indivior on the 30th day after Delivery or discovery, as applicable. Patheon will have no liability for any deficiency for which it has not received notice within the applicable 30 day period.
(b) Determination of Deficiency. Upon receipt of a Deficiency Notice, Patheon will have ten days to advise Indivior by notice in writing that it disagrees with the contents of the Deficiency Notice. Patheon’s failure to issue such written notice to Indivior shall constitute Patheon’s agreement with Indivior’s Deficiency Notice If Indivior and Patheon fail to agree within ten days after Patheon's notice to Indivior as to whether any Product identified in the Deficiency Notice was not manufactured in accordance with the Specifications, cGMPs, or Applicable Laws, the parties will proceed as follows: (i) if the issue is believed to be caused by a raw material deficiency, laboratory error or a suspect analytical method, representatives from both parties will jointly test the Product and/or materials side by side in the same laboratory to determine if a raw material or testing deficiency is the root cause and whether the Product and/or materials is acceptable; or (ii) if the issue is believed to be process related, representatives from both parties will jointly evaluate the Patheon deviation report to determine if any other investigation could identify the root cause and proceed as determined. If, after the joint testing or investigation has been performed, the parties still cannot agree on the root cause, executives from both parties will meet and use good faith efforts to resolve the deficiency and liability issues. If the parties’ executives are unable to resolve the dispute within 30 days, the dispute will be handled as a Technical Dispute under Section 12.2.
(c) Shortages and Price Disputes. Claims for shortages in the amount of Product shipped by Patheon or a Price dispute will be dealt with by reasonable agreement of the parties. Any claim for a shortage or a Price dispute will be deemed waived if it has not been presented within 30 days of the date of invoice.
(d) Product Rejection for Finished Product Specification Failure. Internal process specifications will be defined and agreed upon. If after a full investigation as set forth in Section 6.1(b), it is determined that Patheon manufactured Product in accordance with the agreed upon process Specifications, the batch production record, and Patheon’s standard operating procedures for manufacturing, and a batch or portion of batch of Product does not meet a finished Product Specification, Indivior will pay Patheon the applicable fee per unit for the non-conforming Product. The API in the non-conforming Product will be included in the “Quantity Converted” for purposes of calculating the “Actual Annual Yield” under Section 2.2(a).
6.2 Product Recalls and Returns.
(a) Records and Notice. Patheon and Indivior will each maintain records necessary to permit a Recall of any Product delivered to Indivior or customers of Indivior. Specifically, Patheon shall establish and maintain a batch-tracking process to enable it to identify and procure the Recall (if necessary) of Products which may be affected in any way by manufacturing and production problems. Patheon shall supply details to Indivior of its batch-tracking process upon request to do so. Each party will promptly notify the other by telephone (to be confirmed in writing) of any information which might affect the marketability, safety or effectiveness of the Product or which might result in the Recall or seizure of the Product. Upon receiving this notice or upon this discovery, each party will stop making any further shipments of any Product in its possession or control until a decision has been made whether a Recall or some other corrective action is necessary. The decision to initiate a Recall or to take some other corrective action, if any, will be made and implemented by Indivior. All coordination of any Recall involving a Product shall be handled by Indivior. "Recall" will mean
any action (i) by Indivior to recover title to or possession of quantities of the Product sold or shipped to third parties (including, without limitation, the voluntary withdrawal of Product from the market); or (ii) by any regulatory authorities to detain or destroy any of the Product. Recall will also include any action by either party to refrain from selling or shipping quantities of the Product to third parties which would be subject to a Recall if sold or shipped.
(b) Recalls. If (i) any Regulatory Authority issues a directive, order or, following the issuance of a safety warning or alert about a Product, a written request that any Product be Recalled, (ii) a court of competent jurisdiction orders a Recall, or (iii) Indivior determines that any Product should be Recalled or that a "Dear Doctor" letter is required relating the restrictions on the use of any Product, Patheon will co-operate as reasonably required by Indivior, having regard to all applicable laws and regulations.
(c) Product Returns. Indivior will have the responsibility for handling customer returns of the Product. Patheon will give Indivior any assistance that Indivior may reasonably require to handle the returns.
6.3 Patheon’s Responsibility for Defective and Recalled Products.
(a) Defective Product. If Indivior rejects Product under Section 6.1 and the deficiency is determined to have arisen from Patheon’s failure to provide the Manufacturing Services in accordance with the Specifications, cGMPs or Applicable Laws, Patheon will credit Indivior’s account for Patheon’s invoice price for the defective Product. If Indivior previously paid for the defective Product, Patheon will promptly, at Indivior’s election, either: (i) refund the invoice price for the defective Product; (ii) offset the amount paid against other amounts due to Patheon hereunder; or (iii) replace the Product with conforming Product, (if Patheon is able to manufacture the replacement Product at the same Manufacturing Site as that of the rejected Product), without Indivior being liable for payment therefor under Section 3.1, contingent upon the receipt from Indivior of all Active Materials and Indivior-Supplied Components required for the manufacture of the replacement Product. For greater certainty, Patheon’s responsibility for any loss of Active Materials in defective Product will be captured and calculated in the Active Materials Yield under Section 2.2.
(b) Recalled Product. If a Recall or return results from, or arises out of, a failure by Patheon to perform the Manufacturing Services in accordance with this Agreement, the Specifications, cGMPs, or Applicable Laws, Patheon will be responsible for the documented out-of-pocket expenses of the Recall or return, including, without limitation, reasonable documented costs and expenses relating to communications and meetings with all required regulatory agencies, expenses of replacement stock, the cost of notifying customers and costs associated with shipment of Recalled Product from customers and shipment of an equal amount of replacement Product to those same customers. Patheon will use its commercially reasonable efforts to replace the Recalled or returned Products with new Products, contingent upon the receipt from Indivior of all Active Materials and Indivior-Supplied Components required for the manufacture of the replacement Products. For greater certainty, Patheon’s responsibility for any loss of Active Materials in Recalled Product will be captured and calculated in the Active Materials Yield under Section 2.2. If Patheon is unable to replace the Recalled or returned Products (except where this inability results from a failure to receive the required Active Materials and Indivior-Supplied Components), then, in addition to any other remedies Indivior may have at law or in equity, at Indivior’ request, Patheon shall reimburse Indivior for the price that Indivior paid to Patheon for Manufacturing Services for the affected Products. In all other circumstances, Recalls, returns, or other corrective actions will be made at Indivior's cost and expense; provided, however, that if a Recall is in part the responsibility of Patheon and in part the responsibility of Indivior, the costs and expenses associated with the Recall shall be allocated in an equitable manner between the parties.
(c) Except as set forth in Sections 6.3(a) and (b) above and Sections 6.4, 6.5, and 10.3 below, Patheon will not be liable to Indivior nor have any responsibility to Indivior for any Deficiencies in, or other liabilities associated with, any Product manufactured by it, (collectively, "Product Claims"). For greater certainty but not limitation, Patheon will have no obligation for any Product Claims to the extent the Product Claim (i) is caused by Deficiencies in the Specifications that relate to the safety, efficacy, or marketability of the Product or any distribution thereof, (ii) results from a defect in a Component that is not reasonably discoverable by Patheon using the test methods set forth in the Specifications prior to use of the applicable Component in the performance of the Manufacturing Services, (iii) results from a defect in the Active Materials, Indivior-Supplied Components or Components supplied by a Indivior designated additional source that is not reasonably discoverable by Patheon using the test methods set forth in the Specifications, (iv) is caused by actions of Indivior or third parties occurring after the Product is shipped by Patheon under Section 5.4, (v) is
due to packaging design or labelling defects or omissions for which Patheon has no responsibility, (vi) is due to any unascertainable reason despite Patheon having performed the Manufacturing Services in accordance with the Specifications, cGMPs, and Applicable Laws, or (vii) is due to any other breach by Indivior of its obligations under this Agreement.
(d) Notwithstanding anything to the contrary in this Agreement, Patheon will only be required to replace or refund any batch or portion of a batch of Recalled Product and will only be liable for Active Material contained therein to the extent the Product is unsold, returned, destroyed or otherwise disposed of by Indivior in accordance with the terms of this Agreement. The quantity of API contained in this Product will be included in the Quantity Dispensed but not in the Quantity Converted for purposes of calculating the Shortfall in Section 2.2(b).
6.4 Disposition of Defective or Recalled Products.
Indivior will not dispose of any damaged, defective, returned, or Recalled Products for which it intends to assert a claim against Patheon without Patheon’s prior written authorization to do so. Alternatively, Patheon may instruct Indivior to return the Products to Patheon. Patheon will bear the cost of disposition for any damaged, defective, returned or Recalled Products for which it bears responsibility under Section 6.3. In all other circumstances, Indivior will bear the cost of disposition, including all applicable fees for Manufacturing Services, for any damaged, defective, returned, or Recalled Products.
6.5 Healthcare Provider or Patient Questions and Complaints.
Indivior will have the sole responsibility for responding to questions and complaints from its customers. Questions or complaints received by Patheon from Indivior's customers, healthcare providers or patients will be promptly referred to Indivior. Patheon will co-operate as reasonably required to allow Indivior to determine the cause of and resolve any questions and complaints. This assistance will include follow-up investigations, including testing. In addition, Patheon will give Indivior all agreed upon information that will enable Indivior to respond properly to questions or complaints about the Product as set forth in the Quality Agreement. Unless it is determined that the cause of the complaint resulted from a failure by Patheon to perform the Manufacturing Services in accordance with the Specifications, cGMPs, and Applicable Laws, all costs incurred under this Section 6.5 will be borne by Indivior.
6.6 Sole Remedy.
Except for the indemnity set forth in Section 10.3 and subject to the limitations set forth in Sections 10.1 and 10.2, the remedies described in this Article 6 will be Indivior’s sole remedy in contract, tort, equity or otherwise for any failure by Patheon to provide the Manufacturing Services in accordance with the Specifications, cGMPs, and Applicable Laws.
ARTICLE 7
CO-OPERATION
7.1 Quarterly Review.
Each party will forthwith upon execution of this Agreement appoint one of its employees to be a relationship manager responsible for liaison between the parties. The relationship managers will meet not less than quarterly to review the current status of the business relationship and manage any issues that have arisen.
7.2 Governmental Agencies.
Subject to Section 7.8, each party may communicate with any governmental agency, including but not limited to governmental agencies responsible for granting Regulatory Approval for the Products, regarding the Products if, in the opinion of that party's counsel, the communication is necessary to comply with the terms of this Agreement or the requirements of any law, governmental order or regulation. Unless, in the reasonable opinion of its counsel, there is a legal prohibition against doing so, a party will permit the other party to accompany and take part in any communications with the agency, and to receive copies of all communications from the agency.
7.3 Records and Accounting by Patheon.
Patheon will keep records of the manufacture, testing, and shipping of the Products, and retain samples of the Products as are necessary to comply with manufacturing regulatory requirements applicable to Patheon, as well as to assist with resolving Product complaints and other similar investigations. Unless otherwise agreed to in the Quality Agreement, copies of the records and samples will be retained for ten years after the last Delivery of Products under this Agreement or as otherwise required under cGMP or Applicable Laws. Such records and books shall, in so far as they are applicable, be maintained in accordance with cGMP and Applicable Laws. Patheon reserves the right to destroy or return to Indivior, at Indivior’s sole expense, any document or samples for which the retention period has expired if Indivior fails to arrange for destruction or return within 30 days of receipt of notice from Patheon. Indivior is responsible for retaining samples of the Products necessary to comply with the legal/regulatory requirements applicable to Indivior.
7.4 Inspection.
Indivior may inspect Patheon reports and records relating to this Agreement during normal business hours and with reasonable advance notice, but a Patheon representative must be present during the inspection.
7.5 Inspection; Record Maintenance; Access.
If reasonably required by Indivior, Patheon shall, promptly and at Indivior’s cost, submit samples of the Products for Indivior’s approval before the Products are delivered. Such samples shall be marked by Patheon for identification. The exercise by Indivior of its rights pursuant to the preceding sentence shall not prejudice Indivior’s right to reject or revoke acceptance of, pursuant to the terms of any legislative or contractual rights or otherwise, any Products which are defective or which do not comply with the Specifications or the provisions of this Agreement. (b) Patheon will give Indivior or its authorized representatives reasonable access (such access to be limited to normal business hours unless immediate access is required by Applicable Law) to the areas of the Manufacturing Site in which the Products are manufactured, stored, handled, or shipped, as well as to Products, reference samples, manufacturing records, and books (including without limitation, records relating to manufacturing processes, work in progress, operating procedures, sampling records, testing, packaging procedures and compliance with environmental health and safety regulations), to permit Indivior to verify that the Manufacturing Services are being performed in accordance with the Specifications, cGMPs, this Agreement (including but not limited to Section 14) and Applicable Laws. Indivior shall be entitled to conduct such an audit (i) upon reasonable prior written notice, nor more often than once per Year, lasting no more than two days, and involving no more than two auditors; (ii) if Indivior receives notice from any Regulatory Authority, with respect to the manufacture or packaging of a Product, during the Term of this Agreement or within ten years after the last Delivery of the Product, whichever is later; or (iii) in the event of a breach, or Indivior’s reasonable suspicion or anticipation of a breach, of this Agreement by Patheon; or (iv) following implementation by Patheon of a Corrective and Preventive Action (“CAPA”) in response to a previous audit incident. Indivior may request additional cGMP-type audits, additional audit days, or the participation of additional auditors subject to payment to Patheon of a fee of $[***] for each additional audit day and $[***] per audit day for each additional auditor over [***]. The right of access set forth in Sections 7.4 and 7.5 will not include a right to access or inspect Patheon’s financial records except for invoices and related supporting documentation directly related to the Manufacturing Services. Patheon will support the first Product Approval Inspection (“PAI”) of the FDA or equivalent regulatory inspection for other jurisdictions (where applicable) and provide a copy of the resulting report to Indivior at no cost. Additional PAI or equivalent support will be subject to additional fees.
7.6 Notification of Regulatory Inspections.
Patheon will notify Indivior within one Business Day of any inspections by any governmental agency specifically involving the Products. Patheon will also notify Indivior of receipt of any form 483s or warning letters or any other significant regulatory action which Patheon’s quality assurance group determines could impact the regulatory status of the Products.
7.7 Reports.
Upon request, Patheon will supply on an annual basis a copy of the Annual Product Review Report which includes all Product data in its control, including release test results, complaint test results, and all investigations (in manufacturing, testing, and storage), that Indivior reasonably requires in order to complete any filing under any applicable regulatory regime, including any Annual Report that Indivior is required to file with the FDA. Any additional data or report requested by Indivior beyond the scope of cGMPs and customary FDA requirements, including Continuous Process Verification data, will be subject to an additional fee to be agreed upon between Patheon and Indivior.
7.8 Regulatory Filings.
(a) Regulatory Authority. Indivior will have the sole responsibility at Indivior’s expense for filing all documents with all Regulatory Authorities and taking any other actions that may be required for the receipt and/or maintenance of Regulatory Authority approval for the commercial manufacture, distribution and sale of the Products (“Regulatory Approval”) and will provide copies thereof to Patheon on request. Patheon will assist Indivior, to the extent consistent with Patheon’s obligations under this Agreement, to obtain Regulatory Approval for the commercial manufacture, distribution and sale of all Products as quickly as reasonably possible.
(b) Verification of Data. Prior to filing any documents with any Regulatory Authority that incorporate data generated by Patheon, Indivior will give Patheon a copy of the documents incorporating this data to give Patheon the opportunity to verify the accuracy and regulatory validity of those documents as they relate to Patheon generated data. Patheon requires 21 days to perform this review but the parties may agree to a shorter time for the review as needed.
(c) Verification of CTD. Prior to filing with any Regulatory Authority any documentation which is or is equivalent to the Quality Module (Drug Product Section) of the Common Technical Document (all such documentation herein referred to as “CTD”) related to any Marketing Authorization, such as a US New Drug Application, US Abbreviated New Drug Application, US Biologics Licence Application, or EU Marketing Authorisation Application, Indivior will give Patheon a copy of the CTD as well as all supporting documents which have been relied upon to prepare the CTD. This disclosure will permit Patheon to verify that the CTD accurately describes the validation or scale-up work that Patheon has performed and the manufacturing processes that Patheon will perform under this Agreement. Patheon requires 21 days to perform this review but the parties may agree to a shorter time for the review as needed. Indivior will give Patheon copies of all relevant filings at the time of submission which contain CTD information regarding the Product.
(d) Deficiencies. If, in Patheon’s sole discretion, acting reasonably, Patheon determines that any of the information given by Indivior under clauses (b) and (c) above is inaccurate or deficient in any manner whatsoever (the "Deficiencies"), Patheon will notify Indivior promptly in writing of the Deficiencies. The parties will work together to have the Deficiencies resolved prior to any pre-approval inspection.
(e) Indivior Responsibility. In reviewing the documents referred to in clause (b) above, Patheon’s role will be limited to verifying the accuracy of the description of the work undertaken or to be undertaken by Patheon. Subject to the foregoing, Patheon will not assume any responsibility for the accuracy of any application for receipt of an approval by a Regulatory Authority. Indivior is solely responsible for the preparation and filing of the application for approval by the Regulatory Authority and any relevant costs will be borne by Indivior.
(f) Inspection by Regulatory Authorities. If Indivior does not give Patheon the documents requested under subsections (b) and (c) above within the time specified and if Patheon reasonably believes that Patheon’s standing with a Regulatory Authority may be jeopardized, Patheon may, in its sole discretion, delay or postpone any inspection by the Regulatory Authority until Patheon has reviewed the requested documents and is satisfied with their contents.
(g) Pharmacovigilance. Indivior will be responsible, at its expense, for all pharmacovigilance obligations for the Products pursuant to Applicable Laws. Unless required by Applicable Law, neither party will be obliged to exchange with the other party any information or data which it compiles pursuant to pharmacovigilance obligations or activities.
(h) No Patheon Responsibility. Patheon will not assume any responsibility for the accuracy or cost of any application for Regulatory Approval. If a Regulatory Authority, or other governmental body, requires Patheon to incur fees, costs or activities in relation to the Products which Patheon considers unexpected and extraordinary, then Patheon will notify Indivior in writing within two Business Days and the parties will discuss in good faith appropriate mutually acceptable actions, including fee/cost sharing, or termination of all or any part of this Agreement. Patheon will be not be obliged to undertake these activities or to pay for the fees or costs if, in Patheon’s sole discretion, doing so is commercially inadvisable for Patheon.
ARTICLE 8
TERM AND TERMINATION
8.1 Term.
This Agreement will become effective as of the Effective Date and will continue until December 31, 2022 (the "Term"), unless terminated earlier by one of the parties in accordance herewith; provided that if any Product Agreements are still in effect at the end of the Term, such Product Agreements shall continue until their completion or termination and the legal terms and conditions of this Agreement will continue to govern any Product Agreement in effect as provided in Section 1.2. Each Product Agreement will have a term agreed to by the parties in the Product Agreement.
8.2 Termination for Cause.
(a) Either party at its sole option has the right to terminate this Agreement or a Product Agreement upon written notice where the other party has failed to remedy a material breach of any of its representations, warranties, or other obligations under this Agreement or the Product Agreement within 60 days following receipt of a written notice (the "Remediation Period") of the breach from the aggrieved party that expressly states that it is a notice under this Section 8.2(a) (a "Breach Notice"). The aggrieved party's right to terminate this Agreement or a Product Agreement under this Section 8.2(a) may only be exercised for a period of 60 days following the expiry of the Remediation Period (where the breach has not been remedied) and if the termination right is not exercised during this period then the aggrieved party will be deemed to have waived the breach of the representation, warranty, or obligation described in the Breach Notice.
(b) Either party at its sole option has the right to immediately terminate this Agreement or a Product Agreement upon written notice, but without prior advance notice, to the other party if: (i) the other party is declared insolvent or bankrupt by a court of competent jurisdiction; (ii) a voluntary petition of bankruptcy is filed in any court of competent jurisdiction by the other party; or (iii) this Agreement or a Product Agreement is assigned by the other party for the benefit of creditors.
(c) Indivior, at its sole option, has the right to terminate this Agreement or a Product Agreement immediately upon written notice, but without prior advance notice, to Patheon upon Patheon’s breach of Section 9.3(d).
(d) Indivior may terminate a Product Agreement upon 30 days' prior written notice if any Authority takes any action, or raises any objection, that prevents Indivior from importing, exporting, purchasing, or selling the Product. But if this occurs, Indivior must still fulfill all of its obligations under Section 8.3 below and under any Capital Equipment Agreement regarding the Product.
(e) Indivior may terminate a Product Agreement upon six months' prior written notice if it intends to no longer order Manufacturing Services for a Product due to the Product's discontinuance in the Territory.
(f) Patheon may terminate this Agreement or a Product Agreement upon six months' prior written notice if Indivior assigns under Section 13.6 any of its rights under this Agreement or a Product Agreement to an assignee that, in the opinion of Patheon acting reasonably, is: (i) not a credit worthy substitute for Indivior; or (ii) a Patheon Competitor; or (iii) an entity with whom Patheon has had prior unsatisfactory business relations.
(g) Without prejudice to any other remedy (or to Indivior’s rights generally under this Agreement), if and to the extent that Patheon does not (i) supply or deliver the Products in accordance with the terms of the relevant Product Agreement or (ii) provide the Manufacturing Services in accordance with the terms of this Agreement, then, unless and to the extent such failure is caused by Indivior’s breach of this Agreement or the applicable Product Agreement, Indivior, at its sole option, shall be entitled to treat such failure as a material breach of this Agreement and/or of the relevant Product Agreement, in which case Section 8.2(a) shall apply. Except as otherwise expressly set forth in any Product Agreement, the failure to meet any Metric set forth in a Product Agreement (each a “Missed Metric”) is not a material breach for purposes of this Section 8.1(g). Each Missed Metric shall be addressed according to the requirements of Section 12.1. If, following the Remediation Period as set forth in clause 8.2(a), such material breach has not been remedied and Indivior exercises its option to terminate this Agreement and/or the applicable Product Agreement,
Patheon shall promptly repay Indivior the Price (or any part of the Price) Indivior has paid for any non-conforming Products or Services.
(h) Except as specified in Section 8.1, the termination of this Agreement shall automatically terminate all then-pending Product Agreements, but the termination of an individual Product Agreement will not affect this Agreement or any other Product Agreements where there has been no material breach of the other Product Agreements.
8.3 Obligations on Termination.
(a) If a Product Agreement is completed, expires, or is terminated in whole or in part for any reason, then:
(i) Indivior will take delivery of and pay for all undelivered Products that are manufactured and/or packaged in accordance with this Agreement under a Firm Order, at the Price in effect at the time the Firm Order was placed;
(ii) Indivior will purchase, at Patheon's cost (including all costs incurred by Patheon for the purchase, handling, and processing of the Inventory), the Inventory applicable to the Products which was purchased, maintained or produced by Patheon in contemplation of filling Firm Orders or in accordance with Section 5.2;
(iii) Indivior will satisfy the purchase price payable under Patheon's orders with suppliers of Components, if the orders were made by Patheon in reliance on Firm Orders or in accordance with Section 5.2;
(iv) Indivior acknowledges that no Patheon Competitor will be permitted access to the Manufacturing Site; and
(v) Indivior will make commercially reasonable efforts, at its own expense, to remove from the Manufacturing Site, within 60 days of receipt of written notice, all unused Active Material and Indivior-Supplied Components, all applicable Inventory and Materials (whether current or obsolete), supplies, undelivered Product, chattels, equipment or other moveable property owned by Indivior, related to the Product Agreement and located at a Patheon Manufacturing Site or that is otherwise under Patheon’s care and control (“Indivior Property”). The written notice shall detail the Indivior Property remaining on the Manufacturing Site. If Indivior fails to remove Indivior Property within such timeframe, Indivior will pay Patheon $[***] per pallet, per month, [***] pallet minimum (except that Indivior will pay $[***] per pallet, per month, [***] pallet minimum, for any of Indivior Property that contains controlled substances, requires refrigeration or other special storage requirements) thereafter for storing Indivior Property and will assume any third party storage charges invoiced to Patheon regarding Indivior Property. Patheon will invoice Indivior for the storage charges as set forth in Section 5 of this Agreement. If Indivior fails to remove Indivior Property within 30 days following the completion, termination, or expiration of the Product Agreement, Indivior will assume all risk of loss or damage to the stored Indivior Property and it will be Indivior’s responsibility to have appropriate insurance coverage in place for this risk. If Indivior asks Patheon to destroy any Indivior Property, Indivior will be responsible for the cost of destruction.
(b) Upon termination of this Agreement or any Product Agreement for any reason, Patheon and Indivior will work together in good faith to discontinue any third party agreements used exclusively to support the Manufacturing Services under this Agreement or applicable Product Agreement.
(c) Any completion, termination or expiration of this Agreement or a Product Agreement will not affect any outstanding obligations or payments due prior to the completion, termination or expiration, nor will it prejudice any other remedies that the parties may have under this Agreement or a Product Agreement or any related Capital Equipment Agreement. For greater certainty, completion, termination or expiration of this Agreement or of a Product Agreement for any reason will not affect the obligations and responsibilities of the parties under Articles 6, 10, 11, 12, and 14, and Sections 5.3, 5.4, 7.5(ii), 8.3, 13.1, 13.2, 13.3, 13.9, 13.10, 13.11, 13.15, 13.16, and 13.17, all of which survive any completion, termination or expiration.
ARTICLE 9
REPRESENTATIONS, WARRANTIES AND COVENANTS
9.1 Mutual Warranties.
Each party covenants, represents, and warrants that:
(a) it has the full right and authority to enter into this Agreement and that it is not aware of any impediment that would inhibit its ability to perform its obligations hereunder;
(b) it is duly authorized and is validly existing under the Laws of its jurisdiction of incorporation and has the corporate power and authority to own its assets and to conduct its businesses and to perform its obligations hereunder;
(c) the execution and delivery of this Agreement and the completion of the obligations contemplated therein have been duly approved by the appropriate persons within its organization and this Agreement constitutes legal, valid and binding obligations on each party, enforceable against each in accordance with the terms herein.
9.2 Indivior Warranties.
Indivior covenants, represents, and warrants that:
(a) Non-Infringement. To Indivior’s knowledge:
(i) the Specifications for each of the Products are its or its Affiliate's property and that Indivior may lawfully disclose the Specifications to Patheon;
(ii) any Indivior Intellectual Property, used by Patheon in performing the Manufacturing Services according to the Specifications (A) is Indivior’s or its Affiliate's unencumbered property, (B) may be lawfully used as directed by Indivior, and (C) does not infringe and will not infringe any Third Party Rights;
(iii) the use or other disposition of any Product by Patheon as may be required to perform its obligations under this Agreement or under any Product Agreement does not and will not infringe any Third Party Rights.
(iv) there are no actions or other legal proceedings involving Indivior that concerns the infringement of Third Party Rights related to any of the Specifications, or any of the Active Materials and the Components, or the sale, use, or other disposition of any Product made in accordance with the Specifications;
(b) Quality and Compliance
(i) the Specifications for all Products conform to all applicable cGMPs and Applicable Laws;
(ii) the Products, if labelled and manufactured in accordance with the Specifications and in compliance with applicable cGMPs and Applicable Laws (i) may be lawfully sold and distributed in every jurisdiction in which Indivior markets the Products, (ii) will be fit for the purpose intended, and (iii) will be safe for human consumption;
(iii) on the date of shipment, the API will conform to the Specifications for the API that Indivior has given to Patheon and that the API will be adequately contained, packaged, and labelled and will conform to the affirmations of fact on the container.
9.3 Patheon Warranties.
Patheon covenants, represents, and warrants that:
(a) it will perform the Manufacturing Services in accordance with the Specifications, cGMPs, and Applicable Laws and in a professional manner, in accordance with the standard of care and diligence practiced by recognized organizations in performing the services of a similar nature;
(b) any Patheon Intellectual Property used by Patheon to perform the Manufacturing Services (i) is Patheon’s or its Affiliate's unencumbered property, (ii) may be lawfully used by Patheon, and (iii) does not knowingly infringe and will not knowingly infringe any Third Party Rights.
(c) it will not in the performance of its obligations under this Agreement use the services of any person it knows is debarred or suspended under 21 U.S.C. §335(a) or (b); an
(d) it does not currently have, and it will not hire, as an officer or an employee any person whom it knows has been convicted of a felony under the Laws of the United States for conduct relating to the regulation of any drug product under the United States Federal Food, Drug, and Cosmetic Act (the “Act”) or debarred pursuant to the Act or excluded from any United States federal health care program, including but not limited to Medicare or Medicaid (“Federal Health Care Program”). In addition, Patheon agrees to notify Indivior promptly if Patheon or any officer, director, employee, or subcontractor is debarred under the Act or excluded under a Federal Health Care Program during the Term of this Agreement or upon becoming aware that either Patheon or any officer, director, employee, or subcontractor is the subject of any federal investigation into criminal conduct relating to the development or approval of new drugs, provided such notification does not contravene Applicable Law.
9.4 Permits.
Indivior will be solely responsible for obtaining or maintaining, on a timely basis, any permits or other Regulatory Approvals for the Products or the Specifications excluding those set forth in Section 9.4(b) below, including, without limitation, all marketing and post-marketing approvals.
Patheon will maintain at all relevant times all governmental permits, licenses, approval, and authorities required to enable it to lawfully and properly perform the Manufacturing Services and to otherwise carry out and perform its obligations under this Agreement.
9.5 No Warranty.
PATHEON MAKES NO WARRANTY OR CONDITION OF ANY KIND, EITHER EXPRESSED OR IMPLIED, BY FACT OR LAW, OTHER THAN THOSE EXPRESSLY SET FORTH IN THIS AGREEMENT. PATHEON MAKES NO WARRANTY OR CONDITION OF FITNESS FOR A PARTICULAR PURPOSE NOR ANY WARRANTY OR CONDITION OF MERCHANTABILITY FOR THE PRODUCTS.
ARTICLE 10
REMEDIES AND INDEMNITIES
10.1 Consequential and Other Damages.
Excluding the parties’ indemnity obligations with respect to third party claims, breaches of confidentiality, or any instances of willful misconduct, under no circumstances whatsoever will either party be liable to the other in contract, tort, negligence, breach of statutory duty, or otherwise for (i) any (direct or indirect) loss of profits, of production, of anticipated savings, of business, or goodwill or (ii) any reliance damages, including but not limited to costs or expenditures incurred to evaluate the viability of entering into this Agreement or to prepare for performance under this Agreement or (iii) for any other liability, damage, costs, penalty, or expense of any kind incurred by the other party of an indirect or consequential nature, regardless of any notice of the possibility of these damages.
10.2 Limitation of Liability.
(a) Defective or Recalled Product. Patheon’s maximum aggregate liability to Indivior for any obligation to (i) refund, offset or replace any defective Product under Section 6.3(a) or (ii) replace any Recalled Products under Section 6.3(b), will not exceed [***]% of the Price for the defective or Recalled Product as applicable. This Section 10.2(a) will not be subject to Section 10.2(c).
(b) Active Materials. Except as expressly set forth in Section 2.2, under no circumstances will Patheon be responsible for any loss or damage to the Active Materials. Patheon’s maximum responsibility for loss or damage to the Active Materials will not exceed the Maximum Credit Value set forth in Schedule D to a Product Agreement.
(c) Maximum Liability. Excluding Patheon’s indemnity obligations with respect to third party claims, breach of its confidentiality obligations, and any instance of gross negligence or willful misconduct, Patheon’s maximum liability to Indivior under this Agreement or any Product Agreement for any other reason whatsoever, including, without limitation, any liability arising under Section 6.3(b) relating to the expense of a Recall or Product return, Section 2.2, or resulting from any and all breaches of its representations, warranties, or any other obligations under this Agreement or any Product Agreement will not exceed, on a per Product basis, [***]% of amounts paid or payable by Indivior under the applicable Product Agreement during the Year in which the underlying event occurred that gave rise to the liability (e.g. the date of the incident or manufacture)..
10.3 Patheon Indemnity.
(a) Patheon agrees to defend and indemnify Indivior, its affiliates, and each of their respective officers and employees, against all losses, damages, costs, claims, demands, judgments and liability to, from and in favour of third parties (other than Affiliates) for any claim of infringement or alleged infringement of any Third Party Rights in the course of Patheon’s provision of the Manufacturing Services, or any portion thereof (excluding those claims for which Indivior has an indemnity obligation as set forth in Section 10.4(a) below), or any claim of personal injury or property damage to the extent that the injury or damage is the result of a breach of this Agreement by Patheon, including, without limitation, any representation or warranty contained herein, except to the extent that the losses, damages, costs, claims, demands, judgments, and liability are due to the negligence or wrongful act(s) of Indivior, its officers, employees, or Affiliates.
(b) If a claim occurs, Indivior will: (i) promptly notify Patheon of the claim; (ii) use commercially reasonable efforts to mitigate the effects of the claim; (iii) reasonably cooperate with Patheon in the defense of the claim; and (iv) permit Patheon to control the defense and settlement of the claim, all at Patheon's cost and expense, provided that Patheon shall not make an admission of liability, agreement, compromise, or settlement of any claim or matter which would or might result in additional or continuing liability to or obligation of Indivior without Indivior’s prior written consent.
10.4 Indivior Indemnity.
(a) Indivior agrees to defend and indemnify Patheon, its officers and employees, against all losses, damages, costs, claims, demands, judgments and liability to, from and in favour of third parties (other than Affiliates) for any claim of infringement or alleged infringement of any Third Party Rights in the Products, or any portion thereof, or any claim of personal injury or property damage to the extent that the injury or damage is the result of a breach of this Agreement by Indivior, including, without limitation, any representation or warranty contained herein, except to the extent that the losses, damages, costs, claims, demands, judgments, and liability are due to the negligence or wrongful act(s) of Patheon, its officers, employees, or Affiliates.
(b) If a claim occurs, Patheon will: (i) promptly notify Indivior of the claim; (ii) use commercially reasonable efforts to mitigate the effects of the claim; (iii) reasonably cooperate with Indivior in the defense of the claim; and (iv) permit Indivior to control the defense and settlement of the claim, all at Indivior's cost and expense, provided that Indivior shall not make an admission of liability, agreement, compromise, or settlement of any claim or matter which would or might result in additional or continuing liability to or obligation of Patheon without Patheon’s prior written consent.
10.5 Reasonable Allocation of Risk.
This Agreement (including, without limitation, this Article 10) is reasonable and creates a reasonable allocation of risk for the relative profits the parties each expect to derive from the Products. Patheon assumes only a limited degree of risk arising from the manufacture, distribution, and use of the Products because Indivior has developed and holds the marketing approval for the Products, Indivior requires Patheon to manufacture and label the Products strictly in accordance with the Specifications, and Indivior, not Patheon, is best positioned to inform and advise potential users about the circumstances and manner of use of the Products.
ARTICLE 11
CONFIDENTIALITY
11.1 Confidential Information.
“Confidential Information” means any information disclosed by the Disclosing Party to the Recipient (whether disclosed in oral, written, electronic or visual form) that is non-public, confidential, commercially sensitive, or proprietary including, without limitation, information relating to the Disclosing Party’s patent and trademark applications, process designs, process models, drawings, plans, designs, data, databases and extracts therefrom, formulae, methods, know-how and other intellectual property, its Indiviors or Indivior confidential information, finances, marketing, products and processes and all price quotations, manufacturing or professional services proposals, information relating to composition, proprietary technology, and all other information relating to manufacturing capabilities and operations; the existence of this Agreement and the fact that Patheon is manufacturing the Products for Indivior; any potential future contract manufacturing arrangements on similar or alternate products; any information relating to Indivior Intellectual Property Rights; the Specifications; and the Technical Manual. In addition, all analyses, compilations, studies, reports or other documents prepared by any party's Representatives containing the Confidential Information will be considered Confidential Information. Samples or materials provided hereunder as well as any and all information derived from the approved analysis of the samples or materials will also constitute Confidential Information. For the purposes of this Article 11, a party or its Representative receiving Confidential Information under this Agreement is a “Recipient,” and a party or its Representative disclosing Confidential Information under this Agreement is the “Disclosing Party.”
11.2 Use of Confidential Information.
The Recipient will use the Confidential Information solely for the purpose of meeting its obligations under this Agreement. The Recipient will keep the Confidential Information strictly confidential and will not disclose the Confidential Information in any manner whatsoever, in whole or in part, other than to those of its Representatives who (i) have a need to know the Confidential Information for the purpose of this Agreement; (ii) have been advised of the confidential nature of the Confidential Information and (iii) have obligations of confidentiality and non-use to the Recipient no less restrictive than those of this Agreement. Recipient will protect the Confidential Information disclosed to it by using reasonable precautions to prevent the unauthorized disclosure, dissemination or use of the Confidential Information, which precautions will in no event be less than those exercised by Recipient with respect to its own confidential or proprietary Confidential Information of a similar nature.
11.3 Exclusions.
The obligations of confidentiality will not apply to the extent that the information:
(a) is or becomes publicly known through no breach of this Agreement or fault of the Recipient or its Representatives;
(b) is in the Recipient's possession at the time of disclosure by the Disclosing Party other than as a result of the Recipient's breach of any legal obligation;
(c) is or becomes known to the Recipient on a non-confidential basis through disclosure by sources, other than the Disclosing Party, having the legal right to disclose the Confidential Information, provided that the other source is not known by the Recipient to be bound by any obligations (contractual, legal, fiduciary, or otherwise) of confidentiality to the Disclosing Party with respect to the Confidential Information;
(d) is independently developed by the Recipient without use of or reference to the Disclosing Party's Confidential Information as evidenced by Recipient’s written records; or
(e) is expressly authorized for release by the written authorization of the Disclosing Party.
Any combination of information which comprises part of the Confidential Information are not exempt from the obligations of confidentiality merely because individual parts of that Confidential Information were publicly known, in the Recipient’s possession, or received by the Recipient, unless the combination itself was publicly known, in the Recipient’s possession, or received by the Recipient.
11.4 Photographs and Recordings.
Neither party will take any photographs or videos of the other party’s facilities, equipment or processes, nor use any other audio or visual recording equipment (such as camera phones) while at the other party’s facilities, without that party’s express written consent.
11.5 Permitted Disclosure.
Notwithstanding any other provision of this Agreement, the Recipient may disclose Confidential Information of the Disclosing Party to the extent required, as advised by counsel, in response to a valid order of a court or other governmental body or as required by law, regulation or stock exchange rule. But the Recipient will advise the Disclosing Party in advance of the disclosure to the extent practicable and permissible by the order, law, regulation or stock exchange rule and any other applicable law, will reasonably cooperate with the Disclosing Party, if required, in seeking an appropriate protective order or other remedy, and will otherwise continue to perform its obligations of confidentiality set out herein. If any public disclosure is required by law, the parties will consult concerning the form of announcement prior to the public disclosure being made.
11.6 Marking.
The Disclosing Party will use reasonable efforts to summarize in writing the content of any oral disclosure or other non-tangible disclosure of Confidential Information within 30 days of the disclosure, but failure to provide this summary will not affect the nature of the Confidential Information disclosed if the Confidential Information was identified as confidential or proprietary when disclosed orally or in any other non-tangible form.
11.7 Return of Confidential Information.
Upon the written request of the Disclosing Party, the Recipient will promptly return the Confidential Information to the Disclosing Party or, if the Disclosing Party directs, destroy all Confidential Information disclosed in or reduced to tangible form including any copies thereof and any summaries, compilations, analyses or other notes derived from the Confidential Information except for one copy which may be maintained by the Recipient for its records. The retained copy will remain subject to all confidentiality provisions contained in this Agreement.
11.8 Remedies.
The parties acknowledge that monetary damages may not be sufficient to remedy a breach by either party of this Article 11 and agree that the non-breaching party will be entitled to seek specific performance, injunctive and/or other equitable relief to prevent breaches of this Article 11 and to specifically enforce the provisions hereof in addition to any other remedies available at law or in equity. These remedies will not be the exclusive remedies for breach of this Article 11 but will be in addition to any and all other remedies available at law or in equity.
ARTICLE 12
DISPUTE RESOLUTION
12.1 Commercial Disputes.
If any dispute arises out of this Agreement or any Product Agreement (other than a dispute under Section 6.1(b) or a Technical Dispute, as defined herein), the parties will first try to resolve it amicably. In that regard, any party may
send a notice of dispute to the other, and each party will appoint, within ten Business Days from receipt of the notice of dispute, a single representative having full power and authority to resolve the dispute. The representatives will meet as necessary in order to resolve the dispute. If the representatives fail to resolve the matter within one month from their appointment, or if a party fails to appoint a representative within the ten Business Day period set forth above, the dispute will immediately be referred to the Chief Operating Officer (or another officer as he/she may designate) of each party who will meet and discuss as necessary to try to resolve the dispute amicably. Should the parties fail to reach a resolution under this Section 12.1, the dispute will be referred to a court of competent jurisdiction in accordance with Section 13.17.
12.2 Technical Dispute Resolution.
If a dispute arises (other than disputes under Section 12.1) between the parties that is exclusively related to technical aspects of the manufacturing, packaging, labelling, quality control testing, handling, storage, or other activities under this Agreement (a "Technical Dispute"), the parties will make all reasonable efforts to resolve the dispute by amicable negotiations. In that regard, senior representatives of each party will, as soon as possible and in any event no later than ten Business Days after a written request from either party to the other, meet in good faith to resolve any Technical Dispute. If, despite this meeting, the parties are unable to resolve a Technical Dispute within a reasonable time, and in any event within 30 Business Days of the written request, the Technical Dispute will, at the request of either party, be referred for determination to an expert in accordance with Exhibit A. If the parties cannot agree that a dispute is a Technical Dispute, Section 12.1 will prevail. For greater certainty, the parties agree that the release of the Products for sale or distribution under the applicable marketing approval for the Products will not by itself indicate compliance by Patheon with its obligations for the Manufacturing Services and further that nothing in this Agreement (including Exhibit A) will remove or limit the authority of the relevant qualified person (as specified by the Quality Agreement) to determine whether the Products are to be released for sale or distribution.
ARTICLE 13
MISCELLANEOUS
13.1 Inventions.
(a) For the term of this Agreement, Indivior hereby grants to Patheon a non-exclusive, paid-up, royalty-free, non-transferable license of Indivior’s Intellectual Property which Patheon must use in order to perform the Manufacturing Services.
(b) All Indivior Intellectual Property will be the exclusive property of Indivior.
(c) All Patheon Intellectual Property will be the exclusive property of Patheon. Patheon hereby grants to Indivior a perpetual, irrevocable, non-exclusive, paid-up, royalty-free, transferable license to use the Patheon Intellectual Property used by Patheon to perform the Manufacturing Services to enable Indivior to manufacture, use, sell, offer for sale and import the Product(s).
(d) Each party will be solely responsible for the costs of filing, prosecution, and maintenance of patents and patent applications on its own Inventions.
(e) Either party will give the other party written notice, as promptly as practicable, of all Inventions which can reasonably be deemed to constitute improvements or other modifications of the Products or processes or technology owned or otherwise controlled by the party.
13.2 Intellectual Property.
Neither party has, nor will it acquire, any interest in any of the other party’s Intellectual Property unless otherwise expressly agreed to in writing. Neither party will use any Intellectual Property of the other party, except as specifically authorized by the other party under this Agreement or by an amendment hereto, or as required for the performance of its obligations under this Agreement.
13.3 Insurance.
During the Term and for a period of two (2) years following its expiration or earlier termination, each party, at its own expense, with insurers maintaining an AM Best rating of not less than “A-VII,” will maintain insurance coverage obligations and amounts as follows: commercial general liability insurance, including blanket contractual liability insurance covering the obligations of that party under this Agreement through the term of this Agreement and for a period of three years thereafter. This insurance will have policy limits of not less than (i) $[***] for each occurrence for personal injury or property damage liability; and (ii) $[***] in the aggregate per annum for product and completed operations liability. Patheon shall also retain insurance coverage for the expected inventory of the API and Indivior-Supplied Components to cover damage or loss of the API and/or the Indivior-Supplied Components for so long as the API and/or Indivior-Supplied Components remain at Patheon’s risk. If requested each party will give the other a certificate of insurance evidencing the above and showing the name of the issuing company, the policy number, the effective date, the expiration date, and the limits of liability. The insurance certificate will further provide for a minimum of 30 days' written notice to the insured of a cancellation of, or material change in, the insurance. If a party is unable to maintain the insurance policies required under this Agreement through no fault of its own, then the party will forthwith notify the other party in writing and the parties will in good faith negotiate appropriate amendments to the insurance provision of this Agreement in order to provide adequate assurances. Patheon shall cause its insurers to name Indivior as an additional insured on the above—listed policies, waiving all rights of subrogation for liability arising out of Patheon’s negligence.
13.4 Independent Contractors.
The parties are independent contractors and this Agreement and any Product Agreement will not be construed to create between Patheon and Indivior any other relationship such as, by way of example only, that of employer-employee, principal agent, joint-venturer, co-partners, or any similar relationship, the existence of which is expressly denied by the parties.
13.5 No Waiver.
Neither party's failure to require the other party to comply with any provision of this Agreement or any Product Agreement will be deemed a waiver of the provision or any other provision of this Agreement or any Product Agreement, with the exception of Sections 6.1 and 8.2 of this Agreement.
13.6 Assignment and Subcontracting.
(a) Patheon may not assign or subcontract this Agreement or any Product Agreement (in whole or in part), or any of its associated rights or obligations, without the written consent of Indivior, this consent not to be unreasonably withheld. As between Indivior and Patheon, it shall be Patheon’s responsibility to supervise, coordinate, and compensate any such authorized subcontractors. Patheon shall assure that all such authorized subcontractors are subject to the provisions of this Agreement to the same extent as Patheon, and Patheon shall be responsible and liable for each such authorized subcontractor’s performance of and compliance with this Agreement and any applicable Product Agreement to the same extent as if Patheon itself were performing.
(b) Subject to Section 8.2(e), Indivior may not assign this Agreement, or any Product Agreement, or any of its associated rights or obligations, without approval from Patheon, which such approval shall not be unreasonably withheld, conditioned, or delayed; provided, however, that Indivior has the right, without approval from Patheon, to assign this Agreement or any Product Agreement or any of its associated rights or obligations to any Affiliate of Indivior or to any entity resulting from the merger, consolidation, or other reorganization involving Indivior. Indivior will give Patheon prior written notice of any such assignment and any assignee must covenant in writing with Patheon to be bound by the terms of this Agreement or the Product Agreement. Any partial assignment will be subject to Patheon’s cost review of the assigned Products and Patheon may terminate this Agreement or any Product Agreement or any assigned part thereof, on 12 months’ prior written notice to Indivior and the assignee if good faith discussions do not lead to agreement on amended Manufacturing Service fees within a reasonable time. Indivior will reimburse Patheon for any reasonable costs incurred by Patheon in connection with the partial assignment including any reasonable expenses incurred by Patheon for any due diligence audits in connection with the partial assignment.
(c) Despite the foregoing provisions of this Section 13.6, either party may assign this Agreement or any Product Agreement to any of its Affiliates or to a successor to or purchaser of all or substantially all of its business, but the assignee must execute an agreement with the non-assigning party whereby it agrees to be bound hereunder.
13.7 Force Majeure. Neither party will be liable for the failure to perform its obligations under this Agreement or any Product Agreement if the failure is caused by an event beyond that party's reasonable control, including, but not limited to, strikes or other labor disturbances, lockouts, riots, quarantines, communicable disease outbreaks, wars, acts of terrorism, fires, floods, storms, interruption of or delay in transportation, defective equipment, lack of or inability to obtain fuel, power or components, or compliance with any order or regulation of any government entity acting within colour of right (a "Force Majeure Event"). A party claiming a right to excused performance under this Section 13.7 will immediately notify the other party in writing of the extent of its inability to perform, which notice will specify the event beyond its reasonable control that prevents the performance. If a Force Majeure Event prevents Patheon’s performance of any obligations hereunder for a continuous period in excess of 30 days, then Indivior shall have the right to purchase substitute Products from one or more third parties and such purchase shall count towards Indivior’s fulfillment of any minimum purchase requirements set forth in this Agreement or any Product Agreement. If a Force Majeure Event prevents performance by a party of any obligations hereunder for a continuous period in excess of 12 weeks, the other party shall be entitled to terminate this Agreement by written notice at any time after such 12 week period provided the relevant Force Majeure Event remains subsisting at the time such notice is given.
13.8 Additional Product.
Additional Products may be added to, or existing Products deleted from, any Product Agreement by amendments to the Product Agreement including Schedules A, B, C, and D as applicable.
13.9 Notices.
Unless otherwise agreed in a Product Agreement, any notice, approval, instruction or other written communication required or permitted hereunder will be sufficient if made or given to the other party by personal delivery or by nationally recognized overnight courier service with parcel tracking enabled to the addresses set forth below:
| | |
| If to Indivior: |
|
| Indivior UK Limited |
| 215 Bath Road, Slough SL1 4AA |
| United Kingdom |
| Attention: Co Sec |
|
| With a copy to: |
|
| Indivior UK Limited c/o Indivior Inc. |
| 10710 Midlothian Turnpike, Suite 430 |
| North Chesterfield, VA 23235 |
| Attention: Chief Legal Officer |
|
| If to Patheon: |
|
| Patheon |
| 4815 Emperor Boulevard |
| Durham, NC 27703 |
| Attention: Director Legal Services, GRC |
| Email address: [***] |
| | |
|
| With a copy to: |
|
| Patheon Manufacturing Services LLC |
| 5900 Martin Luther King Jr. Highway |
| Greenville, NC 27834 |
| Attention: Business Management |
or to any other addresses given to the other party in accordance with the terms of this Section 13.9.
13.10 Severability.
If any provision of this Agreement or any Product Agreement is determined by a court of competent jurisdiction to be invalid, illegal, or unenforceable in any respect, that determination will not impair or affect the validity, legality, or enforceability of the remaining provisions, because each provision is separate, severable, and distinct.
13.11 Entire Agreement.
This Agreement, together with the applicable Product Agreement and the Quality Agreement, constitutes the full, complete, final and integrated agreement between the parties relating to the subject matter hereof and supersedes all previous written or oral negotiations, commitments, agreements, transactions, or understandings concerning the subject matter hereof. Any modification, amendment, or supplement to this Agreement or any Product Agreement must be in writing and signed by authorized representatives of both parties. In case of conflict, the prevailing order of documents will be this Agreement, the Product Agreement, and the Quality Agreement.
13.12 Other Terms.
No terms, provisions or conditions of any purchase order or other business form or written authorization used by Indivior or Patheon will have any effect on the rights, duties, or obligations of the parties under or otherwise modify this Agreement or any Product Agreement, regardless of any failure of Indivior or Patheon to object to the terms, provisions, or conditions unless the document specifically refers to this Agreement or the applicable Product Agreement and is signed by both parties.
13.13 No Third Party Benefit or Right.
For greater certainty, nothing in this Agreement or any Product Agreement will confer or be construed as conferring on any third party any benefit or the right to enforce any express or implied term of this Agreement or any Product Agreement.
13.14 Execution in Counterparts.
This Agreement and any Product Agreement may be executed in two or more counterparts, by original, facsimile or “pdf” signature, each of which will be deemed an original, but all of which together will constitute one and the same instrument.
13.15 Use of Indivior Name.
Patheon will not make any use of Indivior’s name, trademarks or logo or any variations thereof, alone or with any other word or words, without the prior written consent of Indivior, which consent will not be unreasonably withheld.
13.16 Taxes.
(a) VAT.
(i) Any payment due to Patheon under this Agreement in consideration for the provision of Manufacturing Services to Indivior by Patheon is exclusive of value added taxes (“VAT”), turnover taxes, sales taxes or similar taxes, including any related interest and penalties (hereinafter all referred to as "Transaction Tax"). If any Transaction Tax is payable on a Manufacturing Service supplied by Patheon to Indivior under this Agreement, this Transaction Tax will be added to the invoice amount and will be for the account of (and reimbursable to Patheon by) Indivior.
(ii) If any Transaction Tax on the supplies by Patheon is payable by Indivior under a reverse charge or withholding procedure (i.e., shifting of liability, accounting or payment requirement to recipient of supplies), Indivior will ensure that Patheon will not effectively be held liable for this Transaction Tax by the relevant taxing authorities or other parties.
(iii) Where applicable, Patheon will use its reasonable commercial efforts to ensure that its invoices to Indivior are issued in such a way that these invoices meet the requirements for deduction of input VAT by Indivior, if Indivior is permitted by law to do so.
(iv) Each party will provide the other with reasonable assistance to enable the recovery, as permitted by Applicable Laws, of Transaction Tax resulting from payments made under this Agreement, this recovery to be for the benefit of the party bearing the Transaction Tax.
(v) If Patheon is acting as Indivior’s buying agent, Patheon will always charge to Indivior the Transaction Tax in the relevant territory in addition to the amount paid by Patheon to supplier.
(vi) For the avoidance of doubt, reference to the Manufacturing Services in this Section 13.16 also includes any element (or the entirety) of the Manufacturing Services characterized as a supply of goods by Patheon, it’s subcontractor or any tax authority for Transaction Tax purposes.
(b) Duties. Indivior will bear the cost of all duties, levies, tariffs and similar charges (and any related interest and penalties) (together “Duties”) however designated, arising from the performance of the Manufacturing Services by Patheon, including (without limitation) those imposed as a result of the shipping of Materials (including drug substance, materials, Components and finished Product) to, from or between Patheon site(s). If these Duties are incurred by Patheon, then Patheon will be entitled to invoice Indivior for these Duties at the time that they are incurred.
(c) Withholding Tax.
(i) Where any sum due to be paid to Patheon under this Agreement is subject to any withholding or similar tax, Indivior will pay the withholding or similar tax to the appropriate government authority without deduction from or offset of the amount then due to Patheon. The parties agree to cooperate with one another and use reasonable efforts to reduce or eliminate or enable the recovery of any tax withholding or similar obligations for royalties, milestone payments, and other payments made by Indivior to Patheon under this Agreement.
(ii) Patheon will provide Indivior any tax forms that may be reasonably necessary for Indivior not to withhold tax or to withhold tax at a reduced rate under an applicable bilateral income tax treaty.
(iii) Each party will provide the other with reasonable assistance to enable the recovery, as permitted by Applicable Laws, of withholding taxes, or similar obligations resulting from payments made under this Agreement, this recovery to be for the benefit of the party bearing the withholding tax.
(d) No Offset. Any Transaction Tax, Duty, withholding tax or other tax that Indivior pays, or is required to pay, but which Indivior believes should properly be paid by Patheon under this Section 13.16 may not be offset against sums due by Indivior to Patheon whether due under this Agreement or otherwise.
13.17 Governing Law.
This Agreement and any Product Agreement, unless otherwise agreed by the parties in the Product Agreement and then only for purposes of that Product Agreement, will be construed and enforced in accordance with the laws of the State of Delaware and the laws of the United States of America applicable therein and subject to the exclusive jurisdiction of the courts thereof. The UN Convention on Contracts for the International Sale of Goods will not apply to this Agreement.
ARTICLE 14
ANTI-BRIBERY
14.1 Patheon shall comply with Indivior’s Code of Business Conduct and Anti-Bribery Policy as amended from time to time (“Policies”), copies of which are attached as Exhibit F. The parties agree that:
(a) Indivior and Patheon are committed to conduct business with the highest degree of ethics and integrity and will comply with the letter and spirit of all relevant local and international laws and regulations such as the US Foreign Corrupt Practices Act (FCPA) and the UK Bribery Act 2010 and all other applicable anti-corruption laws, as well as any laws implementing the UN Convention Against Corruption and the OECD Anti-Bribery Convention;
(b) In connection with this Agreement, each party undertakes that its directors, employees and officers have not and shall not directly or indirectly (i) offer, provide, authorise for or promise to another person, or (ii) request, accept or agree to accept from another person any financial or other advantage or anything of value (“Benefit”), if such Benefit is for the purpose of influencing the receiving person improperly in his/her official capacity for the purpose of obtaining a business advantage, or where such Benefit would constitute a violation of any Applicable Law;
(c) In order to demonstrate compliance with Article 14 of this Agreement, Patheon shall devise and maintain a system of adequate internal controls for expenditures made under this Agreement and keep books and records complete and accurate in order to reflect in reasonable detail the character and value of transactions and expenditures made under this Agreement.
(d) Neither party shall take any action in violation of the laws mentioned in this Article 14 as it relates to this Agreement.
(e) Each party shall give prompt written notice to the other if it has failed to comply with or has breached Article 14 of this Agreement.
(f) If in the reasonable opinion of a party, the other party fails to comply with applicable anti-corruption laws in any material respect, then such party shall be entitled to terminate this Agreement upon written notice to the other arty.
(g) Any breach of the provisions of Article 14 shall constitute a material breach of this Agreement.
ARTICLE 15
BUSINESS CONTINUITY PLAN
15.1 The parties acknowledge that the regulatory requirements and associated timescales involved in switching manufacture of the Products to an alternative supplier are significant and as such Patheon’s business continuity plan shall focus on risk minimisation and mitigation to maintain Patheon as the manufacturer of the Products. Within three months of start of production or 30 days of Indivior’s request, whichever is the sooner, Patheon will provide Indivior with a detailed, written business interruption and recovery plan, including business impact and risk assessment, crisis management, information technology disaster recovery, and business continuity (the “BCP Plan”). Patheon agrees to adhere to the BCP Plan. Patheon
will notify Indivior in writing within 24 hours of any activation of the BCP Plan which directly impacts the Manufacture of Client Product.
15.2 Subject to Section 13.7 (Force Majeure), Patheon agrees that in the event that the BCP Plan is activated which directly impacts the Manufacture of Client Product and during such activation Patheon is not able to fulfil its obligations under this Agreement and this results in the Products going out of stock in the Territory, on Indivior’s request Patheon will perform an emergency Technology Transfer to a third party identified by Indivior as an alternative source of manufacture of the Products in accordance with terms and conditions set forth in Exhibit E and Indivior’s obligations to purchase Products exclusively from the Patheon as set out under this Agreement shall cease to apply. Save where such an emergency Technology Transfer arises as a result of the Patheon’s breach of this Agreement, such an emergency Technology Transfer shall be at Indivior’s cost (as to reasonable expenses properly incurred) and on terms and conditions to be agreed upon by the Parties at such time.
ARTICLE 16
EQUIPMENT
16.1 To the extent any new equipment, modifications to existing equipment, or facility modifications are necessary for Patheon to provide the Manufacturing Services under this Agreement or any Product Agreement or are otherwise requested by Indivior, then prior to any purchase or installation of the new equipment or modifications, the parties shall negotiate in good faith a Capital Equipment Agreement, to be signed by both parties, that contains each party’s rights and responsibilities regarding such equipment and/or modifications, including but not limited to their purchase, ownership, development, manufacture, installation, and maintenance.
[Signature page to follow]
IN WITNESS WHEREOF, the duly authorized representatives of the parties have executed this Agreement as of the Effective Date.
| | | | | | | | | | | | | | | | | | | | |
| PATHEON MANUFACTURING SERVICES LLC | |
| | | | | | |
| By: | /s/ Nick Buschur | | |
| | | | | | |
| Name: | Nick Buschur | | |
| | | | | | |
| Title: | Executive Director and General Manager |
| | | | | | |
| Date: | 20 April 2018 | | |
| | | | | | |
| | | | | | |
| | | | | | |
| INDIVIOR UK LIMITED | |
| | | | | | |
| By: | /s/ Frank Stier | | | |
| | | | | | |
| Name: | Frank Stier | | | |
| | | | | | |
| Title: | Chief Manufacturing & Supply Officer |
| | | | | | |
| Date: | April 25, 2018 | | |
APPENDIX 1
FORM OF PRODUCT AGREEMENT
(Includes Schedules A to E)
PRODUCT AGREEMENT
This Product Agreement (this “Product Agreement”) is issued under the Master Manufacturing Services Agreement dated [insert date] between Patheon Manufacturing Services LLC, and Indivior UK Limited (the “Master Agreement”), and is entered into on [insert effective date] (the “Effective Date”), between Patheon Manufacturing Services LLC, [or applicable Patheon Affiliate]a limited liability company existing under the laws of the State of Delaware [or applicable founding jurisdiction for Patheon Affiliate] having a principal place of business at 5900 Martin Luther King Jr. Hwy, Greenville, NC 27834 [or Patheon Affiliate address](“Patheon”) and Indivior UK Limited, incorporated and registered in England with company number 7183451 with its registered office at 103-105 Bath Road, Slough, Berkshire, SL1 3UH, United Kingdom (“Indivior”).
The terms and conditions of the Master Agreement are incorporated herein except to the extent this Product Agreement expressly references the specific provision in the Master Agreement to be modified by this Product Agreement. All capitalized terms that are used but not defined in this Product Agreement will have the respective meanings given to them in the Master Agreement.
The Schedules to this Product Agreement are incorporated into and will be construed in accordance with the terms of this Product Agreement.
1. Product List and Specifications (See Schedule A attached hereto)
2. Minimum Order Quantity, Annual Volume, and Price (See Schedule B attached hereto)
3. Annual Stability Testing and Validation Activities (if applicable) (See Schedule C attached hereto)
4. Active Materials, Active Materials Credit Value, and Maximum Credit Value (See Schedule D attached hereto)
5. Metrics: (See Schedule E attached hereto)
6. Yearly Forecasted Volume: (insert for sterile products if applicable under Section 4.2.1 of the Master Agreement)
7. Incoterm for Transport (if other than EXW):
8. Territory: (insert the description of the Territory here)
9. Manufacturing Site: (insert address of Patheon Manufacturing Site where the Manufacturing Services will be performed)
10. Governing Law: (per Section 13.17 of the Master Agreement)
11. Inflation Index: (if applicable under Section 4.2(a) of the Master Agreement for Products manufactured outside of the Unites States or Puerto Rico)
12. Currency: (per Section 1.4 of the Master Agreement)
13. Initial Set Exchange Rate: (if applicable under Section 4.2(c) of the Master Agreement)
14. Product Term: (per Section 8.1 of the Master Agreement) from the Effective Date until December 31, 20__
15. Notices: (if applicable under Section 13.9 of the Master Agreement)
16. Other Modifications to the Master Agreement: (if applicable under Section 1.2 of the Master Agreement)
IN WITNESS WHEREOF, the duly authorized representatives of the parties have executed this Product Agreement as of the Effective Date set forth above.
| | | | | | | | | | | | | | | | | | | | | | | |
PATHEON MANUFACTURING SERVICES LLC [or applicable
Patheon Affiliate] |
| | | | | | | |
| By: | | | | | | | |
| | | | | | | |
| Name: | | | | |
| | | | | | |
| Title: | | | | | | |
| | | | | | |
| Date: | | | | | | |
| | | | | | | |
| | | | | | | |
| INDIVIOR UK LIMITED | | | | |
| | | | | | | |
| By: | | | | | | | |
| | | | | | | |
| Name: | | | | |
| | | | | | |
| Title: | | | | | | |
| | | | | | |
| Date: | | | | | | |
SCHEDULE A
PRODUCT LIST AND SPECIFICATIONS
Product List
[insert product list]
Specifications
Prior to the start of commercial manufacturing of Product under this Agreement Indivior will give Patheon the originally executed copies of the Specifications as approved by the applicable Regulatory Authority. If the Specifications received are subsequently amended, then Indivior will give Patheon the revised and originally executed copies of the revised Specifications. Upon acceptance of the revised Specifications, Patheon will give Indivior a signed and dated receipt indicating Patheon’s acceptance of the revised Specifications.
SCHEDULE B
MINIMUM ORDER QUANTITY, ANNUAL VOLUME, AND PRICE
[Insert Price Table]
Manufacturing Assumptions:
Packaging Assumptions:
Testing Assumptions:
The following cost items are included in the Price for the Products:
l [***]
l [***]
l [***]
l [***]
l [***]
l [***]
l [***]
l [***]
l [***]
l [***]
l [***]
l [***]
l [***]
l [***]
l [***]
l [***]
The following cost items are not included in the Price for the Products:
l [***]
l [***]
l [***]
l [***]
l [***]
l [***]
l [***]
l [***]
l [***]
l [***]
l [***]
l [***]
l [***]
l [***]
l [***]
l [***]
SCHEDULE C
ANNUAL STABILITY TESTING [and VALIDATION ACTIVITIES (if applicable)]
Patheon and Indivior will agree, in a written amendment to the applicable Product Agreement, on any stability testing to be performed by Patheon on the Products. The amendment will specify the commercial and Product stability protocols applicable to the stability testing and the fees payable by Indivior for this testing including the Price for the Product withdrawn for the stability testing.
SCHEDULE D
ACTIVE MATERIALS
| | | | | |
| Active Materials | Supplier |
| l | l |
ACTIVE MATERIALS CREDIT VALUE
The Active Materials Credit Value will be as follows:
| | | | | | | | |
| PRODUCT | ACTIVE MATERIALS | ACTIVE MATERIALS CREDIT VALUE |
| | Indivior’s actual cost for Active Materials not to exceed $_____per kilogram |
MAXIMUM CREDIT VALUE
Patheon’s liability for Active Materials calculated in accordance with Section 2.2 of the Master Agreement for any Product in a Year will not exceed, in the aggregate, the maximum credit value set forth below:
| | | | | |
| PRODUCT | MAXIMUM CREDIT VALUE |
| ___% of revenues per Year to Patheon under this Product Agreement. |
SCHEDULE E
METRICS
[Insert]
[End of Product Agreement]
EXHIBIT A
TECHNICAL DISPUTE RESOLUTION
Technical Disputes which cannot be resolved by negotiation as provided in Section 12.2 will be resolved in the following manner:
1. Appointment of Expert. Within ten Business Days after a party requests under Section 12.2 that an expert be appointed to resolve a Technical Dispute, the parties will jointly appoint a mutually acceptable expert with experience and expertise in the subject matter of the dispute. If the parties are unable to so agree within the ten Business Day period, or if there is a disclosure of a conflict by an expert under Paragraph 2 hereof which results in the parties not confirming the appointment of the expert, then an expert (willing to act in that capacity hereunder) will be appointed by an experienced arbitrator on the roster of the American Arbitration Association.
2. Conflicts of Interest. Any person appointed as an expert will be entitled to act and continue to act as an expert even if at the time of his appointment or at any time before he gives his determination, he has or may have some interest or duty which conflicts or may conflict with his appointment if before accepting the appointment (or as soon as practicable after he becomes aware of the conflict or potential conflict) he fully discloses the interest or duty and the parties will, after the disclosure, have confirmed his appointment.
3. Not Arbitrator. No expert will be deemed to be an arbitrator and the provisions of the American Arbitration Act or of any other applicable statute (foreign or domestic) and the law relating to arbitration will not apply to the expert or the expert's determination or the procedure by which the expert reaches his determination under this Exhibit A.
4. Procedure. Where an expert is appointed:
(a) Timing. The expert will be so appointed on condition that (i) he promptly fixes a reasonable time and place for receiving representations, submissions or information from the parties and that he issues the authorizations to the parties and any relevant third party for the proper conduct of his determination and any hearing and (ii) he renders his decision (with full reasons) within 15 Business Days (or another date as the parties and the expert may agree) after receipt of all information requested by him under Paragraph 4(b) hereof.
(b) Disclosure of Evidence. The parties undertake one to the other to give to any expert all the evidence and information within their respective possession or control as the expert may reasonably consider necessary for determining the matter before him which they will disclose promptly and in any event within five Business Days of a written request from the relevant expert to do so.
(c) Advisors. Each party may appoint any counsel, consultants and advisors as it feels appropriate to assist the expert in his determination and so as to present their respective cases so that at all times the parties will co-operate and seek to narrow and limit the issues to be determined.
(d) Appointment of New Expert. If within the time specified in Paragraph 4(a) above the expert will not have rendered a decision in accordance with his appointment, a new expert may (at the request of either party) be appointed and the appointment of the existing expert will thereupon cease for the purposes of determining the matter at issue between the parties except if the existing expert renders his decision with full reasons prior to the appointment of the new expert, then this decision will have effect and the proposed appointment of the new expert will be withdrawn.
(e) Final and Binding. The determination of the expert will, except for fraud or manifest error, be final and binding upon the parties.
(f) Costs. Each party will bear its own costs for any matter referred to an expert hereunder and, in the absence of express provision in the Agreement to the contrary, the costs and expenses of the expert will be shared equally by the parties.
For greater certainty, the release of the Products for sale or distribution under the applicable marketing approval for the Products will not by itself indicate compliance by Patheon with its obligations for the Manufacturing Services and further that nothing in this Agreement (including this Exhibit A) will remove or limit the authority of the relevant qualified person (as specified by the Quality Agreement) to determine whether the Products are to be released for sale or distribution.
EXHIBIT B
MONTHLY ACTIVE MATERIALS INVENTORY REPORT
| | | | | |
| TO: | INDIVIOR UK LIMITED |
| |
| FROM: | PATHEON MANUFACTURING SERVICES LLC [or applicable Patheon Affiliate] |
| |
| RE: | Active Materials monthly inventory report under Section 2.2(a) of the Master Manufacturing Services Agreement dated ______ (the "Agreement") |
[***]
EXHIBIT C
REPORT OF ANNUAL ACTIVE MATERIALS INVENTORY RECONCILIATION
AND CALCULATION OF ACTUAL ANNUAL YIELD
| | | | | |
| TO: | INDIVIOR UK LIMITED |
| |
| FROM: | PATHEON MANUFACTURING SERVICES LLC [or applicable Patheon Affiliate] |
| |
| RE: | Active Materials annual inventory reconciliation report and calculation of Actual Annual Yield under Section 2.2(a) of the Master Manufacturing Services Agreement dated ______ (the "Agreement") |
[***]
EXHIBIT D
EXAMPLE OF PRICE ADJUSTMENT DUE TO CURRENCY FLUCTUATION
Section 4.2(c)
[***]
EXHIBIT E
FORM OF TECHNOLOGY TRANSFER AGREEMENT
Upon receipt of written notice from Indivior, Patheon shall promptly and efficiently undertake and complete a Technology Transfer to Indivior or a third party identified by Indivior (Indivior or the third party (or both) being the “Transferee”) to enable the Transferee to establish and conduct cGMP manufacture of the Products.
The parties agree that a Technology Transfer includes, without limitation:
A. making available to the Transferee the then-current manufacturing process specific to the Products and all documentation constituting material support, specifications as to Raw Materials and control methods that are necessary to enable the Transferee to use and practice such manufacturing process;
B. providing reasonable Technology Transfer assistance to Indivior (and its designees) with respect to the manufacture of the Products, including a Technology Transfer, stability studies, analytical method transfer, and transfer of Indivior Confidential Information and Intellectual Property, and, only in cases where Patheon has activated the BCP Plan and this activation directly impacts the Manufacture of Client Product resulting in Client going out of stock in the Territory, providing access to certain Patheon Intellectual Property in order to facilitate such Technology Transfer that permits Indivior to have the applicable Product manufactured by a secondary supplier until such time as the BCP Plan is deactivated and supply may resume with Patheon. Any Patheon Confidential Information or Patheon Intellectual Property shared pursuant to this shall be used strictly for the purpose intended and for no other purposes. Patheon shall be afforded the remedies noted in [Confidentiality] should the information be used for any other purpose. For greater certainty, Patheon shall not be responsible for any regulatory filings costs of Indivior in connection with any Technology Transfer under this Exhibit E.
C. causing an appropriate number of employees and/or representatives of Patheon to meet with employees or representatives of Indivior, at Indivior’s sole cost and expense as to reasonable costs and expenses, properly incurred to assist with transfer of the methods and manufacturing process in accordance with the Specifications relating to the Products to the extent necessary to enable the Transferee to use and practise such manufacturing process;
D. without limiting the generality of paragraph B above, causing an appropriate number of analytical and quality control laboratory employees and representatives of the Supplier to meet with employees or representatives of the Transferee, at Indivior’s sole cost and expense as to reasonable costs and expenses, properly incurred at the manufacturing facility of the Supplier and make available all necessary equipment, at mutually convenient times, to support and execute the transfer of all applicable analytical methods and the validation thereof;
D. without limiting the generality of the preceding clauses, support for Analytical Method Transfers / Establishment of Pharmacopieal Methods (a collaborative inter-laboratory transfer of the analytical test methods required for the Product); and
E. provide such other assistance as the Transferee may reasonably request, at Indivior’s sole cost and expense.
EXHIBIT F
INDIVIOR POLICIES
| | | | | | | | |
| Subject | Number |
| | |
| CODE OF BUSINESS CONDUCT | Version 1.0 |
| |
| Section | |
| |
| POLICY STATEMENT | |
| |
| Sponsor | Effective Date |
| |
| CHIEF LEGAL OFFICER | December 2014 |
| |
Code of Business Conduct
Indivior PLC ts committed to responsible corporate behavior, this includes high standards of business conduct in our relationships with employees, contractors, customers, consumers, shareholders, suppliers, governments, competitors and the local communities in which we operate.
1. INTRODUCTION
1.1 The purpose of this Code of Business Conduct (the “Code”) is to promote and ensure the legal and ethical conduct of persons acting on behalf of Indivior PLC and its subsidiaries (the “Company”) and to ensure that employees and contractors across the Company have a clear understanding of the principles and ethical values that the Company wants to uphold. It applies to all employees and contractors globally. Where the Company participates in joint ventures, the Code's standards should also be actively promoted.
1.2 Compliance with the Code is an important factor in maintaining and building the reputation of Indivior PLC as a responsible and trustworthy business partner, employer, client, supplier and corporate citizen.
1.3 Each director-employee, contractor and agent of the Company should read this Code thoroughly. Keep in mind that this Code is only a guide and if you are concerned about a legal or ethical situation, or are not sure whether specific conduct meets the Company’s standards, feel free to discuss the situation with your supervisor, the Human Resources Department, or the Legal Department.
1.4 The Code forms the core element of Indivior's Corporate Responsibility Framework; this comprises a set of policies and control arrangements that govern how we act as a Company and how we interact with our stakeholders in conducting the Company's business.
1.5 It is not possible to anticipate every situation. The Code is necessarily broad and general in nature and is not intended to replace more detailed policies and procedures. Nevertheless, these basic principles and ethical values should serve as a guide to each person in his or her dealings with consumers, customers, suppliers, governments and regulators, shareholders, competitors, colleagues and others with whom the Company has relationships.
1.6 The Code outlines the way the Company wants business conducted now and in the future.
2. COMPANY MISSION
To be the global leader who is a pioneer in developing innovative prescription treatments for addicted patients.
3. GOVERNING PRINCIPLES / STANDARDS OF CONDUCT
The Company is committed to conducting its business on a foundation of strong ethical and moral principles. These principles apply from the top down and we seek to ensure that our board of directors (the “Board”), employees, consultants, contractors, agents and other persons engaged by the Company conduct themselves in accordance with the following policies which govern specific areas of Indivior's business and operations. In some areas, specific policies (or parts of them) are mandated by law, while others are considered by Indivior's board of directors (the “Board”) to be vital to the ethical operations of the Company. Some of the policies expand on the principles out lined in this Code and all are subject to the Code's general provisions.
> Animal Care and Use Policy
> Anti-Bribery Policy
> Anti-Bribery Policy: Guidance
> Communicating with Care Policy
> Competition Law Compliance Manual
> Competitor Contact Policy
> Computer Resources Acceptable Usage Pol icy
> Corporate Diversity and Inclusion Policy
> Data Classification Policy
> Data Protection Policy
> Document Retention and File Maintenance Policy
> Electronic Device Security Policy
> Employee Communications with News Media Policy
> Environmental Policy
> Global Policy on Healthcare Business Ethics
> Global Security Policy
> Inside Information and Disclosure Policy
> Investor Relations Policy
> Occupational Health and Safety Policy
> Password Policy
> Product Safety Policy
> Protection of Proprietary Information Policy
> Quality Policy
> Share Dealing Policy
> Social Media Engagement Policy
> US-EU Safe Harbor Employee Data Privacy Policy
> Whistleblower Policy
4. ETHICAL BUSINESS CONDUCT AND FAIR DEALING
All employees and contractors must accept responsibility for maintaining and enhancing the Company's reputation for integrity and fairness in its business dealings. In its everyday business transactions, the Company must be seen to be dealing even-handedly and honestly with all its consumers, customers, suppliers, employees, contractors, governments and regulators and others with whom the Company has a relationship.
5. COMPLIANCE WITH LAWS, REGULATIONS AND COMPANY POLICIES
General Principles
5.1 There are many laws and regulations applicable to the Company's business. All employees and contractors must be aware of and observe all laws and regulations governing their activities. Some specific areas of legal and regulatory attention include: health and safety; anti-bribery laws, employment and work place practices; protection of the environment; competition; intellectual property; and the payment of taxes and social security. Compliance with the Company's internal operating policies and procedures is of equal importance.
Regulatory Compliance
5.2 The Company's global operations include products that are highly regulated by local laws, regulations, and government agencies. Failure to comply with local registration, manufacturing, sales, and reporting obligations can expose the Company, individual employees, contracting firms and individual contractors to significant penalties, including personal fines and imprisonment. All employees and contractors are required to support the Company's regulatory compliance obligations, which include the appropriate reporting of adverse events.
Competition Law
5.3 It is Company policy that all Indivior companies and their employees and contractors comply with the competition, antitrust and anti-monopoly laws of all countries in which they conduct Company business. Directors, managers and others with supervisory responsibility have a duty to ensure that employees and contractors under their supervision are aware of and comply with this policy. Violation of this policy may subject the individual to disciplinary action, including dismissal and cessation of contract. Severe civil, and in some cases criminal, penalties may be imposed on the Company and the responsible employee or contractors if you authorise or participate in a violation of competition laws.
5.4 Without limiting the general Company policy stated above, there are several specific guidelines that apply to all Indivior colleagues (employees and contractors) in every country:
> Indivior PLC colleagues do not share non-public price information or sensitive product information with competitors under any circumstances. Indivior PLC colleagues also strive to ensure that such information is not indirectly shared with competitors, whether purposefully or inadvertently, through third parties.
> Indivior PLC, as well at its customers and consumers, benefit from a competitive market in which all companies are able to fairly present their product and benefits in the market. Indivior PLC competes actively in this marketplace, but Indivior PLC will not use its market position to illegally prohibit the legitimate activity of a competitor.
6. INTERACTIONS WITH HEALTHCARE PROFESSIONALS
6.1 The Company adheres to its Governing Principles when interacting with healthcare professionals (“HCPs”), committing to the highest ethical standards and legal requirements. We act responsibly and with integrity and interact with HCPs in accordance with applicable laws when providing information about our products, which are at all times intended to provide up-to-date data regarding the use of our products and associated benefits to consumers and to the larger public.
6.2 We promote dissemination of information based on empirical results and do not allow business pressures to influence our interactions with HCPs. Our goal is to ensure that HCPs are provided with all data and information relating to our products that helps to improve end-user treatment and care.
6.3 All representatives of the Company must adhere strictly to our Anti-Bribery policy when interacting with HCPs. In particular, employees and contractors must not offer anything to HCPs that could be considered or construed as a bribe or an attempt to solicit favourable treatment.
7. PRODUCT PROMOTION
7.1 The U.S., European and wider global pharmaceutical industry is highly regulated because our products directly impact on consumer health. We comply with the wide array of applicable laws and regulations concerning promotion of our products.
7.2 We have adopted an internal "Promotional Review" policy that requires all product promotional materials to be cleared before use to ensure that they are appropriate from a medical, regulatory and legal perspective. We consult with appropriate professionals on a case-by-case basis where independent advice is required. Use of any unapproved promotional materials or advertisements is strictly prohibited.
7.3 Our strict policy is to solicit and obtain business only through marketing programmes that have been reviewed and approved by the Company. We build our customer relationships on the basis of integrity and mutual trust, in line with our Governing Principles. Our promotions comply with applicable standards and regulations while our product labels are dearly printed and contain accurate information that is not misleading to HCPs or consumers. We are committed to promoting our products in a transparent and accurate manner.
7.4 The Company will never -- and its employees and contractors are prohibited from -- marketing to consumers directly unless permitted by local law. Regardless whether such direct promotion is permitted, our employees and contractors are required in each case to seek appropriate internal approvals prior to engaging with consumers.
8. ANTI-BRIBERY
8.1 Indivior has a zero tolerance policy towards bribery and anti-corruption.
8.2 It is Company policy that all Indivior companies and their employees and contractors comply with the anti-bribery/anti-corruption laws of the U.K., U.S., and all other countries in which they conduct Company business (including the U.K. Bribery Act 2010 and the U.S. Foreign Corrupt Practices Act). Directors, managers and others with supervisory responsibility have a duty to ensure that employees and contractors under their supervision are aware of and comply with this policy.
8.3 Company employees are prohibited from directly or indirectly making, promising, authorizing, or offering anything of value to a government official on behalf of Indivior. A “government official” includes elected and unelected individuals that hold administrative, judicial or legislative functions (e.g., a person who performs public functions for any branch of national, municipal or local government or even for public enterprises or agencies, such as public health agencies) and can include political parties, international governmental organisations, state-owned enterprises or enterprises controlled by a government entity. HCPs can be considered government officials when working in public hospitals.
8.4 All persons engaged by the Company must consult with their supervisor or the Legal Department if they have any doubts as to whether a proposed gift or hospitality event might infringe the Company's anti-bribery policy.
8.5 Violation of this policy may subject the individual to disciplinary action, including dismissal and cessation of contract. Severe civil, and in some cases criminal, penalties may be imposed on the Company and the responsible employee or contractors if you authorise or participate in a violation of anti-bribery laws. Employees and contractors must read the Company's Anti-Bribery Policy and associated documents.
9. CONSUMER SAFETY & RESEARCH AND DEVELOPMENT
9.1 Promoting and maintaining patient health and safety are top priorities for the Company and we continually monitor our research and development processes to maintain product quality. We take seriously our responsibility to detect and report adverse events and quality complaints associated with our products, including unfavourable side effects, dosing errors, misuse, malfunctions and concerns about performance or efficacy of a product. If you are aware of any such adverse events, please ensure you report to the Pharmacovigilance Department.
9.2 We work actively alongside regulatory authorities to combat counterfeiting and it is each employee and contractor's responsibility to report any counterfeit products to their- supervisor or the Legal Department.
9.3 The Company has established policies and procedures to assure compliance with Food and Drug Administration and other applicable European and national regulatory authorities (including, for example, the MHRA) regulations and guidance in regards to current good manufacturing, laboratory and clinical practices, as well as certain activities conducted in connection with the sales and marketing of pharmaceuticals. The Company has also adopted SOPs applicable to certain activities regarding the reporting of safety information about our products and maintaining the integrity of our automated record keeping systems. The appropriate departments draft, review, approve and update written procedures relevant to their group functions and responsibilities. Appropriate company departments then perform a final review and approval and issues these written procedures as SOPs. Employees and other Company representatives acting on our behalf in connection with the testing, manufacturing or selling of our products must read, be familiar with, and comply with those SOPs that impact their activities. In certain cases, specific training on such SOPs (and employee certification of completion of training} may also be required.
9.4 The Company complies with all applicable laws and regulations regarding our research, development, manufacturing and distribution activities, including Good Clinical Practices, Good Manufacturing Practices, and Good Laboratory Practices.
9.5 We ensure that appropriate informed consent procedures are followed where necessary in connection with our research and development activities. Any research involving animals is carefully considered and in each case justified and continually monitored to the highest professional and ethical standards.
9.6 The Company investigates all substantive quality-related complaints with due process, and will ensure that such complaints are properly reported, as required, to the appropriate regulatory authorities.
10. EMPLOYEES & CONTRACTORS
10.1 Equal opportunities / no discrimination - in employment related matters (including recruitment, access to training and promotion, transfers, employment termination, discipline, compensation and benefits), decisions are made on the basis of the qualifications, performance record and abilities needed for the work to be undertaken, and relevant business circumstances. The Company is committed to equal opportunities at work and in the work place; colleagues should not engage in or support discrimination based on race, colour, language, caste, national origin, indigenous status, religion, disability, gender, marital status, sexual orientation, union membership, political affiliation, or age.
10.2 Working environment - the Company is committed to providing a safe and healthy working environment and to assuring, so far as is reasonably practicable, the health, safety and welfare at work of its colleagues. The Company's premises are alcohol and drug-free and employees and contractors must report any breach of this policy.
10.3 Occupational health & safety - employees and contractors have a duty to take reasonable care for their own health & safety and that of others who may be affected by their acts or omissions. Employees and contractors must be aware of applicable health and safety laws and regulations and must use all work items provided by the Company correctly; in accordance with their training and the instructions they received to use them safely. All hazardous materials must be handled appropriately and disposed of in accordance with applicable laws and regulations.
10.4 Colleague Communication - the Company is committed to providing timely and effective communication with its colleagues.
11. CONFLICTS OF INTEREST
11.1 Employees and contractors must avoid situations where their personal interests might, or might appear to be, in conflict with the interests of the Company. In particular, employees may not exploit knowledge or information gained from employment within the Company or take advantage of a corporate opportunity in order to obtain a personal gain or benefit for themselves, family members or any other connected person.
11.2 Any situation which gives rise, or might give rise to a conflict of interest should be disclosed as soon as it arises and, where required, written authority to proceed should be sought from the Company. Examples of situations where conflicts of interest may arise and the principles that should be applied include, but are not limited to, the following:
11.2.1 Outside engagements - employees of the Company should not undertake any other business or profession, be an employee or agent of any other company, or have any financial interest in any other business or profession, other than: non-executive positions approved by the Company; community voluntary activities; and bona fide investment holdings of shares or other securities in entities that are not direct competitors of the Company, or minor holdings in competitors. Any exceptions to this requirement, which could for example apply to a part-time employee, must be approved by the Company.
11.2.2 Dealings with related parties - employees and contractors should not enter into any business dealings on behalf of the Company with a family member, any business controlled by a family member or any other connected person with whom business dealings may result in a potential conflict of interest without first disclosing this to the Company and obtaining approval.
11.2.3 Insider trading - employees and contractors in possession of information on the basis of which an effect on the Company's securities may reasonably be predicted, may not trade in any of the Company's securities as long as they could take advantage of such sensitive information. Additional trading restrictions exist for senior executives during the two months prior to publication of the year-end results and for one month prior to the publication of quarterly results, and at other times indicated by the Executive Committee when the Company may be deemed to be in receipt of insider information.
11.2.4 Gifts and entertainment - employees and contractors of the Company must ensure that they deal with customers, suppliers and other business relationships in a way that avoids their independent judgment on behalf of the Company being influenced by personal advantage, or any appearance that this may be the case. Local Company entities shall have in place specific rules governing gifts and entertainment, which reflects and is consistent with this Code and the Company's Anti-Bribery policy. In no instance, however, will any local policy conflict with the goals of this Code.
12. SUPPLIERS AND THEIR CONTRACTORS
12.1 The Company is committed to proactively encouraging its suppliers and contractors to demonstrate responsible business behaviour and high standards of business conduct. This commitment is presently focussed on direct suppliers involved in the manufacture, assembly or distribution of products on behalf of Indivior companies, and on those suppliers' contractors who are actively engaged in work at Company facilities.
12.2 The Company sets out minimum levels of performance and performance expectations for all suppliers manufacturing, assembling or distributing products on behalf of Indivior companies.
12.3 The Company's environmental and occupational health and safety management systems include in their scope the activities of suppliers and contractors who are actively engaged in work at Company facilities.
13. SUSTAINABILITY AND THE ENVIRONMENT
13.1 Indivior views corporate responsibility and sustainability as one and the same and is committed to moving its business towards greater sustainability across the economic, social and environmental dimensions of its activities. The Company believes that a more sustainable business will not only better fulfil our responsibilities to society but also contribute to delivering our vision of better consumer solutions and greater long-term shareholder value.
13.2 The Company’s Environmental Policy is publicly available and in place to coordinate environmental management across the Company.
14. COMPANY ASSETS
14.1 Protecting Company assets - employees and contractors are responsible for the proper use, the protection and the maintaining of company assets, including intellectual property (e.g., patents, trademarks and designs). Company assets may only be used in relation to the Company’s business. Our intellectual property rights are some of the Company’s most variable assets and protecting them is critical to our continued success and growth. All employees and contractors are required to acknowledge their written agreement to maintain the confidentiality of the Company’s proprietary information and the information of its business partners.
14.2 Authorities - the existence of an agreed authorities structure is an essential requirement for establishing an effective financial and operational control environment. All business units are required to establish and maintain appropriate levels of authority, including appropriate signature authorities, to cover all items of asset value / expenditure and all transactions which need to be subject to management approval.
14.3 Integrity of company financial records - the books and records of the Company must accurately reflect the nature of the underlying transactions and no undisclosed or unrecorded liabilities or assets shall be established or maintained. Books and records must be maintained in all respects according to law and the accounting principles, policies and procedures that the Company has adopted. The Company will not evade tax obligations and all taxable benefits which employees may receive will be listed and declared for tax purposes.
14.4 Protecting confidential information - employees and contractors must ensure that confidential information is preserved and protected. Confidential information is that which is not generally known outside the organisation and either gives or could give the Company a competitive advantage or disadvantage, or could lead to the loss of an existing competitive advantage, if it became known to others or became known in the public domain. This kind of information may not be revealed to anyone outside of the organisation unless an appropriate confidentiality agreement is in place and such disclosure is necessary for business purposes. Employees and contractors are required to respect these confidentiality provisions after their employment with the Company comes to an end.
15. DATA PRIVACY
15.1 The Company values the personal data entrusted to it and respects the privacy of its employees, contractors and consumers and it will exercise appropriate and due care to legally ensure that sensitive personal information about employees, contractors and customers is not publicly disclosed.
15.2 The Company is committed to collecting, using, retaining and disclosing personal data in a fair, transparent and secure way, which is at all times in accordance with applicable law. We may from time to time hold personal data about our employees, suppliers, patients/consumers and HCPs, among others, and where we collect and retain such data, we ensure that it is the minimum necessary for our business needs (e.g., administrative, scientific or legal purposes). In certain cases we will seek consent from individuals to process their personal data, for example, when we conduct clinical trials.
15.3 We ensure the protection of the personal data we collect with appropriate safe-guards and filters to ensure that it does not fall into the wrong hands.
16. OTHER ISSUES
16.1 Product safety and quality - the Company is committed to delivering quality products to its customers and consumers that are safe when used as directed for their intended purpose. We believe that this is implicit in our Company Mission and fundamental to our brands, our business and our long-term success. The Company has in place:
> a Product Safety Policy to fulfill our commitment to developing and marketing products that can be manufactured and used safely as directed; and
> a Quality Policy and Quality Management Systems (QMS) to control the quality of our products.
16.2 Human rights - the Company believes that human rights are an absolute and universal standard. The Company subscribes to the United Nations Universal Declaration of Human Rights and the Convention on the Rights of the Child. In countries where the Company is present, we will aim to support progress on human rights issues in accordance with what reasonably can be expected from a commercial organisation.
16.3 Political activities - the Company is not a political organsation. It neither supports political parties nor contributes to the funds of groups whose activities are calculated to promote party interests or the election of a specific candidate. In some limited instances, where permitted by local law and regulation and specifically approved by the Area Business Director, the Company may contribute funds toward organizations or entities that engage in the political process to address an issue that directly affects the Company and its business activity.
17. WHISTLE-BLOWING
Indivior has in place a confidential “whistle blower” policy and process, communicated globally, to encourage the reporting of any non-compliance with this Code. If in any doubt, employees and contractors can obtain full information on this process from the local Human Resources and Legal Departments. Whenever needed, the Company provides a confidential “whistle blower” hotline that employees and contractors anywhere in the world may use to report any violation of this Code, as well as any violation of any local law or regulation or any unethical behaviour.
18. COMPLIANCE WITH THIS CODE
18.1 All employees and contractors are required to comply with this Code and are personally responsible for doing so. It is the responsibility of the Board to ensure, so far as is reasonably practicable, that the principles and ethical values embodied in this Code are communicated to all colleagues of the Company.
18.2 Employees and contractors must comply with any rules set out in this Code. Breach of any of the principles within the Code may result in disciplinary action, and a serious breach – such as if an employee or contractor is found to be in wanton abuse of the code and their actions cause reputational risk or damage and/or financial loss to the business – may amount to gross misconduct, which may result in summary dismissal and contract cessation. Fines to a company or part of a company within the group will impact on the P&L and performance payments of that business. In addition, the Company reserves the right to seek redress and damages from the individual(s) who has been found to have breached the code of conduct, irrespective of the position and location the individual(s) might hold, in or out of the company, at the time the breach of this Code comes to light.
18.3 Employees and contractors at all levels will be required to certify, annually, that they understand the code and that they (and those they supervise who do not have a Company email address) are in full compliance with this Code for the operations for which they have responsibility. On an annual basis by Internal Audit, the Board monitors the findings of this certification. Those who do not have a Company email address will have the Code communicated to them. Those that supervise these colleague groups will be required to sign that these groups are in full compliance with the Code.
18.4 The Board will not criticise management for any loss of business resulting from adherence to this Code. The Company undertakes that no employee or contractor will suffer as a consequence of bringing to the attention of the Board or senior management a known or suspected breach of this Code nor will any employee or contractors suffer any adverse employment or contract decision for abiding by this Code.
| | | | | | | | |
| Subject | Number |
| | |
| ANTI-BRIBERY POLICY | Version 1.0 |
| |
| Section | |
| |
| POLICY STATEMENT | |
| |
| Sponsor | Effective Date |
| |
| CHIEF LEGAL OFFICER | December 2014 |
| |
Anti-Bribery Policy
Indivior PLC, its subsidiaries and related companies (the “Company”) is committed to observing the laws and regulations which govern our operations in ever, country where we do business. This policy explains our individual responsibility in complying with anti-bribery or anti-corruption laws around the world and ensuring that any third parties that we engage to act on our behalf, do the same.
If you have any questions about this policy you should contact the Legal Department.
Any Company employee who violates the rules in this policy or who permits anyone to violate those rules may be subject to appropriate disciplinary action, up to and including dismissal, and may be subject to personal civil or criminal sanction.
1. Background
Our Code or Business Conduct requires all employees and contractors to accept responsibility for maintaining and enhancing the Company's reputation for integrity and fairness in its business dealings. We do not tolerate bribery. This policy is intended to help employees, contractors and other third parties acting on the Company's behalf to understand where issues might arise and to support them in making the right decisions in line with our corporate position as stated in this policy.
2. Board endorsement
The Board of Indivior PLC wilt not criticise management for any loss of business resulting from adherence to this policy. No employee or contractor will suffer as a consequence of bringing to the attention of the Board or senior management, in good faith, a known or suspected breach of this policy nor will any employee or contractors suffer any adverse employment or contract decision for abiding by this policy.
3. What's the risk?
Potential penalties for the Company include unlimited fines, costly litigation and adverse publicity. For individuals, penalties can include very large fines. Additionally, in the UK, US and some other countries, long terms of imprisonment are also possible.
4. What do we mean by bribery?
Bribery is the offering, promising or giving of a financial or other non-financial advantage to somebody, directly or indirectly, in order to influence improperly their views or actions. It also covers requesting, agreeing to receive or receiving a financial or other non-financial advantage, directly or indirectly, to influence improperly your views or actions. The law defines improper performance as a breach of trust, lack of impartiality or performance in bad faith.
Bribery of public officials (directly or indirectly, and in order to obtain or retain business or an advantage in doing business) as well as companies and private individuals are all equally prohibited under the laws of many countries and under this policy. The law Is intentionally drafted to cover a wide range of behaviour.
There is an accompanying Anti-Bribery Guidance document which gives specific examples to assist with compliance.
5. What is my responsibility?
| | | | | | | | | | | |
| You must not | | You must | |
•offer, promise or give a bribe or utilise a third party to do so as the Company can be prosecuted for breaches of anti-bribery laws by third parties acting on its behalf | | •be vigilant to the "red flag” issues set out (in section 11) below which indicate where further investigation or due diligence is necessary | |
•request, agree to receive or actually receive a bribe intended for your benefit or the benefit of your family, friends or acquaintances | | •report concerns to your local management, where possible, or through the Legal Department or through the The Company's confidential whistleblowing hotline | |
6. Third parties
The Company could be held responsible for the actions of a third party (e.g. distributor, agent, contractor, supplier, joint venture partner) acting on its behalf. As such, care must be taken to ensure that those third parties do not attempt to engage in bribery.
All Indivior companies shall implement due diligence and approval procedures relating to the engagement of third parties. In general terms, all Indivior companies shall:
> ensure that any new third parties (or third parties whose contracts are being renewed) who provide services on behalf of the Company contractually agree to abide by applicable anti-bribery and anti-corruption laws, the principles set out in our Code of Business Conduct and this policy.
> undertake sufficient due diligence in relation to any proposed acquisition or joint venture to ensure that bribery is unlikely. This shall include checking for relationships with public officials. The results of the due diligence process shall be documented and produced on request by Internal Audit or the Legal Department.
> undertake sufficient due diligence (including checking of responses) in relation to the new third party’s background, capability and reputation to ensure that bribery is unlikely, where any of the “red flags” and financial thresholds in section 11 of this policy are met. This shall include checking for relationships with public officials and documenting the reasons for choosing a particular third party. The results of the due diligence process shall be documented and produced on request by Internal Audit or the Legal Department. Further details are provided in the Anti-Bribery Guidance document. If the due diligence process raises concerns, you must contact the Legal Department immediately.
> repeat due diligence every two years for ongoing third party relationships or those which have not previously been checked but which meet the requirements above
A third party may only be engaged pursuant to a written contract that accurately and completely describes the goods or services to be provided, as well as the remuneration that the third party is to receive in return for those goods or services. Payment of third parties should be on commercially reasonable terms. Any payments to third parties shall be as provided under their contract which shall also set out the detail of the services which they shall provide. Requests for one-off changes to the payments shall be rejected unless the reason is clearly documented in writing.
7. Gifts and hospitality
There are legitimate reasons for the occasional giving/receiving of gifts and business-related hospitality but this area can pose a risk where excessive gifts or hospitality could be viewed as a bribe and/or a conflict of interest. The principles set out here apply regardless of whether the gift or hospitality is to be provided to a Company employee, a third party employee or to members of their respective families, friends or acquaintances. Indivior companies shall implement local spending limits and approval procedures relating to the provision of gifts and hospitality, as well as local procedures regarding the reporting of gifts received by Company employees above specified values.
General principles:
> Company employees must never ask or encourage a third party to provide a gift or hospitality to them
> The impression should never be given that the award of business is conditional on gifts or hospitality
> Under no circumstances should gifts of cash be given or received
> Gifts and hospitality should be provided on an occasional basis and always in accordance with local laws
> Tickets to sporting events may be acceptable (provided that they are not offered or given to public officials or healthcare professionals) if they comply with the General Principles in this section
> Gifts and hospitality around the time of contracts being awarded/tendered should be avoided
> A useful test could be to consider whether you or the third party would have the resources to or would be likely to buy the gift/hospitality themselves
> Cultural sensitivities are important but they must not be used as an excuse to avoid the effect of this policy
> Gifts or hospitality of excessive value are not permitted
> All gifts and hospitality provided by the Company must be accurately recorded in the books of the relevant Indivior company
> Consider whether you would be happy to defend giving or receiving the relevant gift or hospitality to your peers, to senior management, to the media or to a judge.
Special requirements for procurement of goods or services:
When discussing tenders or award of contracts to provide goods or services to the Company, the relevant employees must not accept:
> payment of any travel or accommodation costs by the potential supplier
> kickbacks for awarding the business to that supplier
> tickets to entertainment events (e.g. sports events, theatre, opera)
> anything of value resulting from the Company awarding business to a third party which would benefit that individual or another third party, rather than the Company.
8. Facilitation payments
Facilitation payments are small unofficial payments to public officials to ensure or speed up performance of routine and non-discretionary governmental actions such as processing a visa application, securing a mail service, or connecting utilities. These will be seen as bribes under UK law, regardless of whether they may be a part of the “way of doing business” in a particular country. As a representative of the Company, you must not make any facilitation payment.
The prohibition on facilitation payments does not apply to situations in which a Company employee is faced with a serious medical or safety emergency. An employee faced with such an emergency must either seek prior approval from the Legal Department or, in circumstances where seeking prior approval is deemed impossible, record the details of any such payment and submit that information in writing to the Legal Department within 48 hours of the payment being made. Any such payments should be accurately recorded as facilitation payments in the Company's books and records.
9. Political contributions
As stated in our Code of Business Conduct (the “Code”), the Company is not a political organisation. It does not support political parties or contribute funds to groups whose activities are calculated to promote party interests or the election of a specific candidate. In some limited instances, if permitted by local law and regulation and with specific approval from the respective Area Business Director, the Company may contribute funds toward organisations or entities that engage in the political process to address an issue that directly affects the Company and its business activity. Any such request for approval for such payments and the permission must be documented in writing and the payments property recorded.
10. Charitable contributions
Charitable contributions may only be given to recognised non-profit charitable organisations with the prior approval of senior management. Indivior companies shall implement approval procedures regarding the making of charitable donations.
All donations must be:
> approved in accordance with applicable procedures;
> transparent and properly recorded in our books and records, and
> receipted or have a letter of acknowledgement from the charity to ensure that the donations receive the proper tax treatment
Donations must not:
> be made to individuals or in cash;
> be made at the request of a public official as an inducement to or reward for acting improperly.
11. “Red flags"
There are a number of issues which should cause us to do some further investigation into whether a particular transaction or relationship may present a potential bribery issue. Please see the accompanying guidance for a list of countries where there is perceived to be high levels of corruption.
Potential issues which call for further investigation include:
> the prevalence of bribery in a country
> payments of unusually high fees or commissions
> requests for cash payments
> requests for payments to different companies or through different countries
> undefined or unreported payments to third parties made on the Company's behalf
> no written agreements
> unusually close relationships with government officials
> a refusal to certify compliance with this policy.
Financial thresholds for third party due diligence: where expected fees or commissions with a third party are likely
to exceed 10,000 GBP per year or 100,000 GBP in the case of suppliers to an individual Company factory. In addition, due diligence should be conducted on any prospective third party that will be interacting with healthcare professionals, public officials and customers on behalf of the Company, regardless of the fee or commission values.
12. Guidance and Training
Training is an important part of the implementation of the Company’s Anti-Bribery Policy and procedures. Online training will be provided to all employees with computer access and more detailed face to face training will be provided to certain groups of employees.
In recognition of the large number of queries which this policy may raise, there is an accompanying Anti-Bribery Guidance document which gives specific examples to assist with compliance.
13. Review, certification and Audit
This policy shall be reviewed regularly by the Legal Department and shall be amended to reflect any changes in law or practice. Under the annual certification procedure in relation to the Code, employees and contractors must certify compliance with that Code which includes a prohibition of bribery. The Board will monitor this policy at least annually and through periodic review of Internal Audit findings by the Audit Committee.
AMENDMENT NO. 1 TO THE
MASTER MANUFACTURING SERVICES AGREEMENT
This Amendment No. 1 (this “Amendment”), is entered into and effective as of the last signature date below (the “Effective Date”), to the Master Manufacturing Services Agreement between Patheon Manufacturing Services LLC, a limited liability company existing under the laws of the State of Delaware, located at 1675 S State Street, Suite B, Dover, DE 19901 (“Patheon”), and Indivior UK Limited (CO No. 7183451), a corporation organized and existing under the laws of England and Wales having its registered address at Chapleo Building, Henry Boot Way, Priory Park, Hull, HU4 7BY, United Kingdom (“Indivior”) on April 6, 2018 (the “Agreement”).
WHEREAS the Federal Supply Schedule requires compliance with all applicable federal contracting laws and regulations;
WHEREAS Indivior and Patheon have complied with all applicable federal contracting laws and Federal Acquisition Regulations (FARs) and seek to ensure Indivior’s and Patheon’s continued compliance with all applicable federal contracting laws and FARs;
WHEREAS Indivior and Patheon each agree to abide by all applicable federal contracting laws and FARs as are applicable to each of them with respect to the commercial relationship between Indivior and Patheon; and
WHEREAS the parties desire to amend the Agreement as follows:
1. Exhibit A to this Amendment is hereby incorporated into the terms of the Agreement as Exhibit G.
2. Except as provided herein, all other terms and conditions of the Agreement shall remain in full force and effect.
3.
IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment to be executed by its duly authorized representatives, as of the Effective Date.
| | | | | |
| Patheon Manufacturing Services LLC | Indivior UK Limited |
| |
By: /s/ Michelle Logan | By: Miriam McCloskey |
| |
Name: Michelle Logan | Name: Miriam McCloskey |
| |
Title: VP GM Greenville, NC | Title: Head of Global Direct Procurement |
| |
Date: May 27, 2021 | Date: May 27, 2021 |
Exhibit A
Patheon’s Representations & Warranties
To the extent applicable, Patheon represents and warrants to Indivior, that it will comply with all applicable federal contracting laws and Federal Acquisition Regulations (FARs), which may include, but are not limited to:
| | | | | |
| Citation | Title |
| FAR 52.203-6 (2020) | Restrictions on Subcontractor Sales to the Government |
| FAR 52.203-13 (2020) | Contractor Code of Business Ethics and Conduct” |
| FAR 52.203-17 (2020) | Contractor Employee Whistleblower Rights and Requirement to Inform Employees of Whistleblower Rights |
| FAR 52.203-19 (2017) | Prohibition on Requiring Certain Internal Confidentiality Agreements or Statements |
| FAR 52.204-10 (2016) | Reporting Executive Compensation and First-Tier Subcontract Awards |
| FAR 52.204-21 (2016) | Basic Safeguarding of Covered Contract Information Systems |
| FAR 52.204-23 (2018) | Prohibition on Contracting for Hardware, Software, and Services Developed or Provided by Kaspersky Lab and Other Covered Entities |
| FAR 52.204-25 (2020) | Prohibition on Contracting for Certain Telecommunications and Video Surveillance Services or Equipment |
| FAR 52.209-6 (2020) | Protecting the Government’s Interest when Subcontracting with Contractors Debarred, Suspended, or Proposed for Debarment |
| FAR 52.209-9 (2013) | Updates of Publicly Available Information Regarding Responsibility Matters |
| FAR 52.209-10 (2015) | Prohibition on Contracting with Inverted Domestic Corporations |
| FAR 52.212-5 (2020) | Contract Terms and Conditions Required to Implement Statues or Executive Orders - Commercial Items |
| FAR 52.219-3 (2011) | Notice of HUBZone Set-Aside or Sole-Source Award |
| FAR 52.219-6 (2011) | Notice of Total Small Business Set-Aside |
| FAR 52.219-8 (2016) | Utilization of Small Business Concerns |
| FAR 52.219-14 (2017) | Limitations on Subcontracting |
| FAR 52.219-16 (1999) | Liquidated Damages-Subcontracting Plan |
| FAR 52.219-27 (2011) | Notice of Service-Disabled Veteran-Owned Small Business Set-Aside |
| FAR 52.219-28 (2013) | Post Award Small Business Program Rerepresentation |
| FAR 52.219-29 (2015) | Notice of Set-Aside for, or Sole Source Award to, Economically Disadvantaged Women-Owned Small Business Concerns |
| FAR 52.219-30 (2015) | Notice of Set-Aside for, or Sole Source Award to, Women-Owned Small Business Concerns Eligible Under the Women-Owned Small Business Program |
| FAR 52.222-3 (2003) | Convict Labor |
| FAR 52.222-17 (2014) | Nondisplacement of Qualified Workers |
| FAR 52.222-19 (2018) | Child Labor-Cooperation with Authorities and Remedies |
| FAR 52.222-21 (2015) | Prohibition of Segregated Facilities |
| FAR 52.222-26 (2015) | Equal Opportunity |
| FAR 52.222-35 (2020) | Equal Opportunity for Veterans |
| FAR 52.222-36 (2020) | Equal Opportunity for Workers with Disabilities |
| FAR 52.222-37 (2020) | Employment Reports on Veterans |
| FAR 52.222-40 (2010) | Notification of Employee Rights Under the National Labor Relations Act |
| FAR 52.222-41 (2018) | Service Contract Labor Standards |
| FAR 52.222-42 (2014) | Statement of Equivalent Rates for Federal Hires |
| FAR 52.222-43 (2018) | Fair Lavor Standards Act and Service Contract Labor Standards-Price Adjustment (Multiple Year and Option Contracts) |
| | | | | |
| FAR 52.222-44 (2014) | Fair Labor Standards Act and Service Contract Labor Standards-Price Adjustment |
| FAR 52.222-50 (2020) | Combating Trafficking in Persons |
| FAR 52.222-51 (2014) | Exemption from Application of the Service Contract Labor Standards to Contracts for Maintenance, Calibration, or Repair of Certain Equipment-Requirements |
| FAR 52.222-53 (2014) | Exemption from Application of the Service Contract Labor Standards to Contracts for Certain Services-Requirements |
| FAR 52.222-54 (2015) | Employment Eligibility Verification |
| FAR 52.222-55 (2020) | Minimum Wages Under Executive Order 13658 |
| FAR 52.222-62 (2017) | Paid Sick Leave Under Executive Order 13706 |
| FAR 52.223-11 (2016) | Ozone-Depleting Substances and High Global Warming Potential Hydrofluorocarbons |
| FAR 52.223-18 (2011) | Encouraging Contractor Policies to Ban Text Messaging While Driving |
| FAR 52.223-20 (2016) | Aerosols |
| FAR 52.223-21 (2016) | Foams |
| FAR 52.224-3 (2017) | Privacy Training |
| FAR 52.225-5 (2016) | Trade Agreements |
| FAR 52.225-13 (2008) | Restriction of Certain Foreign Purchases |
| FAR 52.225-26 (2016) | Contractors Performing Private Security Functions Outside the United States |
| FAR 52.226-6 (2020) | Promoting Excess Food Donation to Nonprofit Organizations |
| FAR 52.232-33 (2013) | Payment by Electronic Funds Transfer—System for Award Management |
| FAR 52.232-34 (2013) | Payment by Electronic Funds Transfer—Other than System for Award Management |
| FAR 52.232-36 (2014) | Payment by Third Party |
| FAR 52.232-40 (2013) | Providing Accelerated Payment to Small Business Subcontractors |
| FAR 52.233-3 (1996) | Protest After Award |
| FAR 52.233-4 (2004) | Applicable Law for Breach of Contract Claim |
| FAR 52.242-5 (2017) | Payments to Small Business Subcontractors |
| FAR 52.247-64 (2006) | Preference for Privately Owned U.S.-Flag Commercial Vessels |
All applicable federal contracting laws and FARs, with respect to the rights, duties, and obligations of Indivior and Patheon, shall be interpreted and construed in such a manner as to recognize and give effect to: (i) the contractual relationship between Indivior and Patheon under this Agreement; and (ii) the rights of the Federal Government with respect thereto. To the extent that any FAR listed above is not applicable to the Manufacturing Services provided by Patheon under the Agreement, that FAR will be considered self-deleting.
PORTIONS OF THIS EXHIBIT HAVE BEEN REDACTED.
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS BOTH (i) NOT MATERIAL AND (ii) WOULD BE LIKELY TO CAUSE COMPETITIVE HARM IF PUBLICLY DISCLOSED.
REDACTED MATERIAL IS MARKED WITH [***].
RISPERIDONE PRODUCT AGREEMENT
(Includes Schedules A to E)
PRODUCT AGREEMENT
This Product Agreement (this “Product Amendment”) is issued under the Master Manufacturing Services Agreement dated April 6, 2018 between Patheon Manufacturing Services LLC, and lndivior UK Limited (the “Master Agreement”), and is entered into on the date of last signature below (the “Effectlve Date”), between Patheon Manufacturing Services LLC, a limited liability company existing under the laws of the State of Delaware having a principal place of business at 5900 Martin Luther King Jr. Hwy, Greenville, NC 27834 ("Patheon") and lndivior UK Limited, incorporated and registered in England with company number 7183451 with its registered office at 103-105 Bath Road, Slough, Berkshire, SL1 3UH, United Kingdom ("lndivior").
The terms and conditions of the Master Agreement are incorporated herein except to the extent this Product Agreement expressly references the specific provision in the Master Agreement to be modified by this Product Agreement. All capitalized terms that are used but not defined in this Product Agreement will have the respective meanings given to them in the Master Agreement.
The Schedules to this Product Agreement are incorporated into and will be construed in accordance with the terms of this Product Agreement.
1. Product List and Specifications (See Schedule A attached hereto)
2. Minimum Order Quantity, Annual Volume, and Price (See Schedule B attached hereto)
3. Annual Stability Testing and Validation Activities (if applicable) (See Schedule C attached hereto)
4. Active Materials, Active Materials Credit Value, and Maximum Credit Value (See Schedule D attached hereto)
5. Metrics: (See Schedule E attached hereto)
6. Yearly Forecasted Volume: Not applicable
7. lncoterm for Transport (If other than EXW): FCA
8. Territory: United States
9. Manufacturing Site: [***]
10. Governing Law: Per Section 13.17 of the Master Agreement
11. Inflation Index: Per Section 4.2(a) of the Master Agreement
12. Currency: $USD
13. Initial Set Exchange Rate: Not applicable
14. Initial Product Term: From the Effective Date until December 31, 2020, unless otherwise terminated as set forth in Section 8.2 of the Master Agreement. This Product Agreement may be renewed after the Initial Product Term for further successive terms of two Years each (each a "Renewal Product Term"), as reflected in an amendment to this Product Agreement that is signed by both parties . The parties shall agree to any such extension at least 18 months prior to the end of the Initial Product Term or then current Renewal Product Term, as applicable. The Initial Product Term and the Renewal Product Term shall be referred to collectively herein as the "Product Term."
It is the understanding of the parties that they will negotiate the purchase of an automated filler pursuant to the terms of a separate written Capital Equipment Agreement between the parties and the parties will use commercially reasonable efforts to install and have the automated filler validated by September 30, 2019. If the automated filler is not validated by December 31, 2019, beginning January 1, 2020, the Price in Schedule B will be increased by [***]%. If the automated filler is not validated by September 30, 2020, Patheon may terminate this Product Agreement by providing lndivior with three months' prior written notice . The parties will negotiate in good faith to amend this Product Agreement to reflect the inclusion of the automated filler in the manufacturing process. Both parties agree that the Price of the Product produced on the automated filler will reflect the efficiencies gained in the change from manual to automatic process . Both parties agree to use commercially reasonable efforts to execute the Capital Equipment Agreement by July 31, 2018.
15. Notices: Per Section 13.9 of the Master Agreement
16. Other Modifications to the Master Agreement: Not applicable
IN WITNESS WHEREOF, the duly authorized representatives of the parties have executed this Product Agreement as of the Effective Date set forth above.
| | |
PATHEON MANUFACTURING SERVICES LLC |
By: /s/ Lukas Utiger |
Name: Lukas Utiger |
Title: President DSS & PDS |
Date: 20 April 2018 |
|
|
INDIVIOR UK LIMITED |
By: /s/ Frank Stier |
Name: Frank Stier |
Title: Chief Manufacturing & Supply Officer |
Date: April 25, 2018 |
SCHEDULE A
PRODUCT LIST AND SPECIFICATIONS
Product List
Risperidone Powder Filled Syringes, 90mg and 120mg 1.2 ml syringe
Specifications
Prior to the start of commercial manufacturing of Product under this Product Agreement, lndivior will give Patheon the originally executed copies of the Specifications as approved by the applicable Regulatory Authority. If the Specifications received are subsequently amended, then lndivior will give Patheon the revised and originally executed copies of the revised Specifications. Upon acceptance of the revised Specifications, Patheon will give lndivior a signed and dated receipt indicating Patheon's acceptance of the revised Specifications. Current specifications are as follows.
90mg Drug Product Analytical Standard [***]
120mg Drug Product Analytical Standard [***]
SCHEDULE B
MINIMUM ORDER QUANTITY, ANNUAL VOLUME, AND PRICE
Annual Volume Assumptions
For this Product Agreement, Patheon is assuming a minimum of [***] commercial batches ([***] per strength) in 2018 (after PVs but prior to approval) per lndivior's request. For efficiency purposes, the commercial batch campaign (Post PVs) should commence within [***] weeks of completion of the PV campaign and run continuously until completion. For 2019, Patheon is assuming a minimum of [***] commercial batches ([***] per strength). For efficiency purposes, lndivior will provide the timing for manufacture at least [***] months in advance prior to each campaign and the batches should be executed in [***] campaigns. For the purposes of this Product Agreement, "campaign" means a series of batches manufactured continuously until completion of the Firm Order. Beginning in 2020, Patheon assumes that commercial batches will be produced utilizing the automated filler and pricing for these batches is not included in this Product Agreement. If the automated filler is not validated in 2020, Patheon shall not be obligated to support more than [***] campaigns in 2020.
Pricing Tables
Commercial Batch Prices:
| | | | | | | | |
Product | Product Strength | Price per batch ($) |
Risperidone Powder Filled Syringes | 90mg | $[***] |
Risperidone Powder Filled Syringes | 120mg | $[***] |
Minimum Annual Revenue Commitment
lndivior will pay Patheon a minimum annual revenue of $[***] for each calendar year during the Product Term (the "Minimum Annual Revenue Commitment"). The parties acknowledge and agree that the Product volume and total fees set forth in Project Proposal [***] between the parties dated 5 March 2018 shall count towards Indivior’s fulfillment of the Minimum Annual Revenue Commitment for calendar year 2018. If lndivior fails to order sufficient Product volume to reach the Minimum Annual Revenue Commitment during any such calendar year, Patheon shall invoice lndivior for a true-up payment within 30 days of the end of the calendar year.
Costs Included in Price
1.1 [***].
1.2 [***].
1.3 [***].
1.4 [***].
1.5 [***].
1.6 [***].
1.7 [***].
2. Costs Not Included in Price
2.1 [***].
2.2 [***].
2.3 [***].
2.4 [***].
2.5 [***].
2.6 [***].
2.7 [***].
2.8 [***].
2.9 [***].
2.10 [***].
2.11 [***].
2.12 [***].
3. Capital Requirements
This Product Agreement assumes no additional capital is required at this time.
Key Technical Parameters
The following technical parameters apply to the production of Product and the Materials used therein. Pricing may be adjusted to reflect any technical changes foreseen during the technology transfer project or after the manufacture of validation batches to reflect any Specification or process changes.
1. Manufacturing Parameters
1.1 API – [***]
1.2 Batch size – [***].
1.3 Manufacturing campaign – [***].
1.4 Product filling process: [***].
1.5 Weight Checks – [***].
1.6 Visual inspection – [***].
2. Packaging Parameters
2.
2.1 Primary packaging Components (Indivior-Supplied Components):
| | | | | |
Component | Specification |
[***] | [***] |
[***] | [***] |
2.2 Secondary packaging – [***]
3. Testing Conditions
3.
3.1 QC test methods must be fully validated and robust at the time of manufacture.
| | | | | |
Testing Requirements |
In-Process Controls | Finished Product Testing |
[***] | [***] |
- | [***] |
- | [***] |
4. Supply Chain
4.
4.1 [***].
4.2 [***].
4.3 [***].
4.4 [***].
4.5 [***].
SCHEDULE C
ANNUAL STABILITY TESTING
Patheon and lndivior will agree in writing on any stability testing to be performed by Patheon on the Products. This agreement will specify the commercial and Product stability protocols applicable to the stability testing and the fees payable by lndivior for this testing including the Price for the Product withdrawn for the stability testing.
SCHEDULE D
ACTIVE MATERIALS
| | | | | |
Active Materials | Supplier |
Risperidone | [***] |
ACTIVE MATERIALS CREDIT VALUE
The Active Materials Credit Value will be as follows:
| | | | | | | | |
PRODUCT | ACTIVE MATERIALS | ACTIVE MATERIALS CREDIT VALUE |
Risperidone | Risperidone | [***] |
MAXIMUM CREDIT VALUE
Patheon's liability for Active Materials calculated in accordance with Section 2.2 of the Master Agreement for any Product in a Year will not exceed, in the aggregate, the maximum credit value set forth below:
| | | | | |
PRODUCT | MAXIMUM CREDIT VALUE |
Risperidone | [***] |
SCHEDULE E
METRICS
| | | | | | | | | | | | | | |
# | Metric | Definition | Time of measurement | Target |
1 | [***] | [***] | [***] | [***] |
2 | [***] | [***] | [***] | [***] |
3 | [***] | [***] | [***] | [***] |
4 | [***] | [***] | [***] | [***] |
5 | [***] | [***] | [***] | [***] |
PORTIONS OF THIS EXHIBIT HAVE BEEN REDACTED.
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS BOTH (i) NOT MATERIAL AND (ii) WOULD BE LIKELY TO CAUSE COMPETITIVE HARM IF PUBLICLY DISCLOSED.
REDACTED MATERIAL IS MARKED WITH [***].
FIRST AMENDMENT TO RISPERIDONE PRODUCT AGREEMENT
THIS FIRST AMENDMENT TO RISPERIDONE PRODUCT AGREEMENT (this “Amendment”), effective as of January 1, 2019 (“Amendment Effective Date”), is made between Indivior UK Limited (“Indivior”) and Patheon Manufacturing Services LLC (“Patheon”). Indivior and Patheon may be referred to herein individually as a “Party” or collectively, as “Parties.”
Background
The Parties entered into a Master Manufacturing Services Agreement effective April 6, 2018 (the “MSA”) under which they entered into the Risperidone Product Agreement effective April 25, 2018 (the “Product Agreement”). The Parties desire to revise Section 14 and update the pricing for 2019 in Schedule B of the Product Agreement (“Schedule B”).
Agreement
NOW THEREFORE in consideration of the rights conferred and the obligations assumed herein, and for other good and valuable consideration (the receipt and sufficiency of which are acknowledged by each Party), and intending to be legally bound the Parties agree as follows:
1. Section 14, Initial Product Term, is hereby deleted in its entirety and replaced with the following:
Initial Product Term: From the Effective Date until December 31, 2022, unless otherwise terminated as set forth in Section 8.2 of the Master Agreement. The parties will agree to any extension at least 18 months prior to the end of the Initial Product Term. The Initial Product Term and the Renewal Product Term will be referred to collectively herein as the “Product Term.”
2. Schedule B is hereby deleted in its entirety and replaced with the new Schedule B attached hereto.
3. Except as expressly provided in this Amendment, all other terms, conditions and provisions of the MSA and Product Agreement remain in full force and effect. To the extent there are any inconsistencies or ambiguities between the terms of this Amendment and the MSA or Product Agreement, the terms of this Amendment will prevail.
4. The Background section of this document is expressly incorporated into this Amendment.
5. This Amendment may be executed in two counterparts each of which will be deemed an original but both of which taken together will constitute one and the same instrument.
6. The Parties agree that all statements requiring the negotiation and purchase of an automated filler pursuant to the terms of a separate written Capital Equipment Agreement, whether stated in the Product Agreement, MSA, or Project Proposal [***], are hereby declared null and void and of no effect.
IN WITNESS WHEREOF, the Parties have caused their duly appointed representatives to execute this Amendment as of the Amendment Effective Date.
| | | | | |
| Patheon Manufacturing Services LLC | Indivior UK Limited |
By: /s/ Nick Buschur Name: Nick Buschur Title: Vice President and General Manager Date: January 1, 2019 | By: /s/ Frank Stier Name: Frank Stier Title: Chief Supply Officer Date: January 1, 2019 |
SCHEDULE B
MINIMUM ORDER QUANTITY, ANNUAL VOLUME, AND PRICE
Annual Volume Assumptions
For 2019, Patheon is assuming a minimum of [***] commercial batches ([***] per strength). For efficiency purposes, Indivior will provide the timing for manufacture at least [***] months in advance prior to each campaign and the batches should be executed in [***] campaigns. For the purposes of this Product Agreement, “campaign” means a series of batches manufactured continuously until completion of the Firm Order.
Pricing Tables
Commercial Batch Prices: The following manual filling commercial Prices will be in effect for 2019 and include the PPI increases for the Year per Agreement
| | | | | | | | |
Product | Product Strength | Price per batch ($) |
Risperidone Powder Filled Syringes | 90mg | $[***] |
Risperidone Powder Filled Syringes | 120mg | $[***] |
Minimum Annual Revenue Commitment
Indivior will pay Patheon a minimum annual revenue of $[***] for each calendar year during the Product Term (the “Minimum Annual Revenue Commitment”). If Indivior fails to order sufficient Product volume to reach the Minimum Annual Revenue Commitment during any calendar year, Patheon will invoice Indivior for a true-up payment within 30 days of the end of the calendar year.
Costs Included in Price
1.8 [***].
1.9 [***].
1.10 [***].
1.11 [***].
1.12 [***].
1.13 [***].
1.14 [***].
Costs Not Included in Price
2.13 [***].
2.14 [***].
2.15 [***].
2.16 [***].
2.17 [***].
2.18 [***].
2.19 [***].
2.20 [***].
2.21 [***].
2.22 [***].
2.23 [***].
2.24 [***].
Capital Requirements
Capital Requirements for the manufacture of the Product will be addressed in a separate Capital Expenditure and Equipment Agreement between the Parties.
Key Technical Parameters
The following technical parameters apply to the production of Product and the Materials used therein. Pricing may be adjusted to reflect any technical changes foreseen during the technology transfer project or after the manufacture of validation batches to reflect any Specification or process changes.
Manufacturing Parameters
4.6 API – [***]
4.7 Batch size – [***].
4.8 Manufacturing campaign – [***].
4.9 Product filling process: [***].
4.10 Weight Checks – [***].
4.11 Visual inspection – [***].
Packaging Parameters
5.
Primary packaging Components (Indivior-Supplied Components):
| | | | | |
Component | Specification |
[***] | [***] |
[***] | [***] |
5.1 Secondary packaging – [***]
Testing Conditions
6.
6.1 QC test methods must be fully validated and robust at the time of manufacture.
| | | | | |
Testing Requirements |
In-Process Controls | Finished Product Testing |
[***] | [***] |
- | [***] |
- | [***] |
Supply Chain
7.
7.1 [***].
7.2 [***].
7.3 [***].
7.4 [***].
7.5 [***].
PORTIONS OF THIS EXHIBIT HAVE BEEN REDACTED.
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS BOTH (i) NOT MATERIAL AND (ii) WOULD BE LIKELY TO CAUSE COMPETITIVE HARM IF PUBLICLY DISCLOSED.
REDACTED MATERIAL IS MARKED WITH [***].
SECOND AMENDMENT TO RISPERIDONE PRODUCT AGREEMENT
THIS SECOND AMENDMENT TO THE RISPERIDONE PRODUCT AGREEMENT (this “Amendment”), effective as of March 1, 2019 (“Amendment Effective Date”), is made between Indivior UK Limited (“Indivior”) and Patheon Manufacturing Services LLC (“Patheon”). Indivior and Patheon may be referred to herein individually as a “Party” or collectively, as “Parties.”
Background
The Parties entered into a Master Manufacturing Services Agreement effective dated April 6, 2018 (the “MSA”) under which they entered into the Risperidone Product Agreement effective April 25, 2018 as amended by the First Amendment to the Risperidone Product Agreement (the “First Amendment”) effective January 1, 2019 (collectively, the “Product Agreement”). The Parties are currently negotiating, and intend to finalize by June 1, 2019, a Capital Expenditure and Equipment Agreement (the “Capital Equipment Agreement”) to install an automated filler in the Manufacturing Site. In this Amendment the Parties intend to confirm the business terms arising from the installation of the automated filler for the Product, transfer the current manual process to the automated filler, and amend the Prices in Schedule B of the Product Agreement (“Schedule B”).
Agreement
NOW THEREFORE in consideration of the rights conferred and the obligations assumed herein, and for other good and valuable consideration (the receipt and sufficiency of which are acknowledged by each Party), and intending to be legally bound the Parties agree as follows:
7. Section 14 is hereby deleted in its entirety and replaced with the following:
Initial Product Term: From the Effective Date until December 31, 2027, unless otherwise terminated as set forth in Section 8.2 of the Master Agreement. This Product Agreement may be renewed after the Initial Product Term for further successive terms of two Years each (each a “Renewal Product Term”), as reflected in an amendment to this Product Agreement that is signed by both parties. The parties will agree to any such extension at least 18 months prior to the end of the Initial Product Term or then current Renewal Product Term, as applicable. The Initial Product Term and the Renewal Product Term will be referred to collectively herein as the “Product Term.”
8. For purposes of this Product Agreement only, Section 8.3 (a) of the MSA is modified to include the following new Section 8.3 (a)(vi):
If the Agreement is terminated by Indivior under Section 8.2(a), Patheon will support Indivior in the transfer of the Product to a third party and will pay for the reasonable costs of the transfer. Patheon will use commercially reasonable efforts to transfer from the Manufacturing Site, within 60 days of receipt of written notice from Indivior, all unused Active Material and Indivior-Supplied Components, all applicable Inventory and Materials (whether current or obsolete), supplies, undelivered Product, chattels, equipment or other moveable property owned by Indivior, related to the Product Agreement and located at the Manufacturing Site or that is otherwise under Patheon’s care and control (“Indivior Property”) at Patheon’s reasonable cost. The costs for the transfer to the third party and the costs to transfer the Indivior Property will not exceed $[***].
9. Schedule B is hereby deleted in its entirety and replaced with the new Schedule B attached hereto.
10. The following will be added to Section 16 of the Product Agreement:
“For the purposes of this Product Agreement only, the following additional termination provision will apply:
After December 31, 2022, Indivior may terminate this Product Agreement at any time and for any reason upon 12 months prior written notice to Patheon. If this occurs, Indivior will pay Patheon a termination fee of $[***] on the termination date. In addition, after December 31, 2022, Indivior may terminate this Product Agreement at any time and for any reason upon 60 days’ prior written notice to Patheon. If this occurs, Indivior will pay Patheon a termination fee of $[***] on the termination date.”
11. Except as expressly provided in this Amendment, all other terms, conditions and provisions of the MSA and Product Agreement remain in full force and effect. To the extent there are any inconsistencies or ambiguities between the terms of this Amendment and the MSA or Product Agreement, the terms of this Amendment will prevail.
12. The Background section of this document is expressly incorporated into this Amendment.
IN WITNESS WHEREOF, the Parties have caused their duly appointed representatives to execute this Amendment as of the Amendment Effective Date.
| | | | | |
| Patheon Manufacturing Services LLC | Indivior UK Limited |
By: /s/ Nick Buschur Name: Nick Buschur Title: Vice President and General Manager Date: 26 July 2019 | By: /s/ Frank Stier Name: Frank Stier Title: Chief Supply Officer Date: 25 July 2019 |
SCHEDULE B
MINIMUM ORDER QUANTITY, ANNUAL VOLUME, AND PRICE
Manual Filling Annual Volume Assumptions
The manual filling Price will start in Year 2019 and continue until the manufacturing process is transferred and commercialized on the automated filler. Indivior must provide the timing for manufacture at least [***] months prior to each campaign and the batches should be manufactured in no more than [***] campaigns. For the purposes of this Product Agreement, “campaign” means a series of batches manufactured continuously until completion of the Firm Order. Manual filling of Product will continue as provided in the First Amendment until the automated filler line can be commercialized but in no case later than December 31, 2022 unless otherwise agreed to by the Parties in writing.
Manual Filling Pricing Tables
Commercial Batch Prices for the manual filling are set forth below. These Prices will apply until the first commercial batches are manufactured for Indivior on the automated filler line. When this occurs, manual filling will cease and automated line filling will continue.
Commercial Batch Prices:
| | | | | | | | |
Product | Product Strength | Price per batch ($) |
Risperidone Powder Filled Syringes | 90mg | $[***] |
Risperidone Powder Filled Syringes | 120mg | $[***] |
[***].
INDIVIOR NEW AUTOMATED POWDER FILLER
Executive Summary
Following execution of this Amendment and in parallel with the ongoing manual filling commercial operations, Patheon will purchase, install, and qualify an automated filler for the production of [***] as will be set forth in the Capital Equipment Agreement. The scope includes development work to install the new line and transfer the manufacturing process to the automated line, registration activities and validation work, and creation of a commercial pricing model for the automated filler. The work will occur at the Manufacturing Site.
Patheon will provide the following core services:
•[***].
•[***].
•[***].
•[***].
•[***].
Indivior will provide:
•[***].
•[***].
•[***].
•[***]:
o [***].
o [***].
o [***].
Automated Filling Budget Summary
The Capital Equipment Agreement will cover the design and construction of a suitable suite and installation of the [***] powder filler. In addition to the fees to manufacture Product in the manual filling suite, Indivior will also pay to Patheon Base and Batch fees for the automated filler suite during the 2019-2021 construction period (the “Construction Period”) and from the earlier of commercial launch of the automated filler Product or January 1, 2022 going forward (the “Commercial Period”) as follows:
Base Fees for Operation
Indivior will pay the following Base Fees during the Construction and Commercial Periods. These annual fees are payable regardless of whether Patheon manufactures Product for Indivior on the Automated Line or uses the equipment. The fees will be paid equally in monthly payments starting on [***].
| | | | | | | | | | | |
| Period | Base Fee | Included PFS unit volume | Price per PFS
in excess of included
volume |
| [***] | $[***]/Year | [***] | NA |
| [***] | $[***]/Year | [***] | NA |
| [***] | $[***]/Year | [***] | NA |
| [***] | $[***]/Year | [***] | $[***] |
| [***] | $[***]/Year | [***] | $[***] |
| [***] | $[***]/Year | [***] | $[***] |
| [***] | $[***]/Year | [***] | $[***] |
No discount in Base Fee is due if Indivior takes less than [***] units in a Year as applicable. The Base Fees and the Price per pre-filled syringe for incremental volumes in excess of the included PFS volumes will not be subject to Price adjustments as set forth in the MSA until January 1, 2026.
Base fee and pricing above was established assuming batch sizes of [***] units. Smaller batch sizes are possible with no further costs except that minimum commercial batch size is [***] units. If batch sizes below [***] units are required, additional costs may be involved and both parties will work together to define the appropriate incremental pricing depending on the chosen batch size.
[***].
Costs Included in Construction Pricing:
1.1 [***]
[***].
[***].
[***].
[***].
1.2 [***]
[***].
[***].
[***].
1.3 [***].
Costs Included in Automated Filler Commercial Pricing:
2.1 [***].
2.2 [***].
2.3 [***].
2.4 [***].
2.5 [***].
Costs Not Included in Auto Filler Construction and Commercial Pricing:
3.1 [***].
3.2 [***].
3.3 [***].
3.4 [***].
3.5 [***].
3.6 [***].
3.7 [***].
3.8 [***].
Key Pricing Requisites:
4.1 [***].
4.2 [***].
4.3 [***].
Project Activities
Patheon will perform the following activities to ensure commercial readiness of the automated filler line and the suite:
Project Start Up
[***]
Project/Operational Documentation
[***]
Analytical Transfer and Validation Services
[***]
Visual Inspection Assessment (Semiautomatic)
[***]
Cleaning Process Verification/Validation
[***]
Engineering Batch Manufacturing
[***]
Feasibility Batch Manufacturing
[***]
Process Validation Batches ([***] batches)
[***]
Regulatory Management or Documentation Support
[***]
Subject to the Product’s specifications and following detailed discussions with Indivior, Patheon can provide additional services as listed below:
Stability Testing Program
[***]
Container Closure Integrity - Microbial Intrusion Test
[***]
Key Technical Parameters
The following technical parameters apply to the production of [***] and the materials used therein. Pricing may be adjusted to reflect any technical changes foreseen during the project or after the manufacture of validation batches to reflect any specification or process changes.
Manufacturing Parameters
•Manufacturing campaign – [***].
•Cleaning – [***].
•Visual inspection – [***]
Testing Conditions
•[***].
•QC test methods must be fully validated and robust at the time of manufacture.
| | | | | |
| Testing Requirements |
| In-Process Controls | Finished Product Testing |
•[***] •[***] •[***] | •[***] •[***] •[***] •[***] •[***] •[***] •[***] •[***] •[***] •[***] •[***] •[***] |
[***].
Analytical method transfer/validation and/or QC testing may be performed by Patheon or outsourced to Patheon’s third party laboratory. Analytical method transfer/validation and QC testing costs to be conducted by third party/Patheon are not included in the batch Price proposed. Third party services will be charged at direct cost to Patheon plus Patheon’s handling fee of [***]%.
Supply Chain
•[***].
•[***].
•[***].
•[***].
•[***].
•[***].
THIRD AMENDMENT TO RISPERIDONE PRODUCT AGREEMENT
THIS THIRD AMENDMENT TO THE RISPERIDONE PRODUCT AGREEMENT (this “Amendment”), effective as of April 17, 2020 (“Amendment Effective Date”), is made between Indivior UK Limited (“Indivior”) and Patheon Manufacturing Services LLC (“Patheon”). Indivior and Patheon may be referred to herein individually as a “Party” or collectively, as “Parties.”
Background
The Parties entered into a Master Manufacturing Services Agreement effective dated April 6, 2018 (the “MSA”) under which they entered into the Risperidone Product Agreement effective April 25, 2018 as amended by the First Amendment to the Risperidone Product Agreement (the “First Amendment”) effective January 1, 2019 and amended by the Second Amendment to the Risperidone Product Agreement (the “Second Amendment”) effective March 1, 2019 (collectively, the “Product Agreement”).
Agreement
NOW THEREFORE in consideration of the rights conferred and the obligations assumed herein, and for other good and valuable consideration (the receipt and sufficiency of which are acknowledged by each Party), and intending to be legally bound the Parties agree as follows:
13. Section 8 of the Product Agreement is hereby deleted in its entirety and replaced with the following:
8. Territory (as may be amended from time to time): United States and Canada.
14. Except as expressly provided in this Amendment, all other terms, conditions and provisions of the MSA and Product Agreement, as amended, remain in full force and effect. To the extent there are any inconsistencies or ambiguities between the terms of this Amendment and the MSA or Product Agreement, the terms of this Amendment will prevail.
| | | | | |
| Patheon Manufacturing Services LLC | Indivior UK Limited |
By: /s/ Michelle P. Logan Name: Michelle P. Logan Title: VP GM Greenville NC Date: April 17, 2020 | By: /s/ Miriam McCloskey Name: Miriam McCloskey Title: Head of Global Direct Procurement Date: April 17, 2020 |
PORTIONS OF THIS EXHIBIT HAVE BEEN REDACTED.
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS BOTH (i) NOT MATERIAL AND (ii)
WOULD BE LIKELY TO CAUSE COMPETITIVE HARM IF PUBLICLY DISCLOSED.
REDACTED MATERIAL IS MARKED WITH [***].
CAPITAL EXPENDITURE AND EQUIPMENT AGREEMENT
THIS CAPITAL EXPENDITURE AND EQUIPMENT AGREEMENT (this “Agreement”) is made as of June 30, 2019 (the “Effective Date”) between:
Indivior UK Limited, incorporated and registered under the laws of England and Wales with company number 7183451, having its registered office at The Chapleo Building, Henry Boot Way, Priory Park, Hull HU4 7DY, United Kingdom (“Indivior”).
- and -
Patheon Manufacturing Services LLC, a limited liablity company existing under the laws of the State of Delaware, having a principal place of business at 5900 Martin Luther King Jr. Highway, Greenville, North Carolina 27834 (“Patheon”).
BACKGROUND
Indivior and Patheon entered into a Master Manufacturing Services Agreement effective April 6, 2018, (the “MSA”) under which Patheon Manufacturing Services LLC entered into the Risperidone Product Agreement to perform certain commercial manufacturing services for Indivior effective April 25, 2018 (the “Product Agreement”) for Indivior’s Risperidone Pre-Filled Syringe Powder (the “Product”). In order for Patheon to perform the commercial manufacturing services under the Product Agreement, (the “Services”), certain capital expenditures will be required for the purchase and installation of capital equipment at Patheon’s facility (the “Facility”) to automate the filling of Product. The purpose of this Agreement is to set out the parties’ agreement and undertakings regarding the capital expenditures.
AGREEMENT
NOW, THEREFORE, in consideration of the rights conferred and the obligations assumed herein, and intending to be legally bound, the parties hereby agree as follows:
1. Definitions
“Automated Filling Equipment” means the machine purchased by Indivior and provided to Patheon to fulfil the manufacture of the product as specified in the URS in Schedule C
“Facility Modifications” means the items listed in that category on Schedule A.
2. Expenditures and Payment
The estimated cost for the purchase and installation of the Automated Filling Equipment and Facility Modifications and the support and SAT for the installation of the Automated Filling Equipment for the project are set forth in Schedule A. Notwithstanding any other provisions of this Agreement, the individual amount of each item on Schedule A may be increased or decreased to reflect Patheon’s actual cost but the aggregate amount contributed by Indivior for the Facility Modifications and support of the installation and SAT of the Automated Filling Equipment will not exceed $[***] unless there are modifications or changes in the Services or related assumptions or subsequent changes requested by Client. If this occurs, the parties will agree on revised cost estimates and a revised maximum aggregate amount to be contributed by Indivior. No change in the aggregate cost of the Facility Modifications will be made without Indivior’s prior written consent. Patheon will give Indivior a final Schedule A with the actual costs for each item.
Subject to these limitations, Indivior hereby agrees to to be invoiced by Patheon for $[***] towards the Facility Modifications shown on Schedule A immediately upon execution of this Agreement (the “Initial Payment”) and Indivior directs Patheon to incur, on its behalf, pre-approved, direct, out-of-pocket costs for the Facility Modifications listed on Schedule A. Patheon will give Indivior copies of third party invoices for these items (where applicable) within 30 days after Patheon’s receipt thereof and will issue its invoice to Indivior.
Indivior will pay all invoiced amounts owing to Patheon within 45 days of the date of Patheon’s invoice after the Initial Payment has been spent to enable Patheon to pay all amounts owed under the third party invoices. Indivior’s payment of these costs in advance of the performance of the Services is made in contemplation of those Services to be performed by Patheon.
3. Patheon Use of Automated Filling Equipment and Facility Modifications
Patheon may use the Automated Filling Equipment and Facility Modifications to manufacture products for third parties. Notwithstanding the prior sentence, Indivior’s needs will be prioritized over Patheon’s use of the Automated Filling Equipment and Facility Modifications for third parties and Patheon will ensure that Indivior’s Product supply will not be adversely impacted by this use. Should Patheon use the Automated Filling Equipment for any third parties, Indivior will receive $[***] per batch for each third-party batch manufactured on the Automated Filling Equipment up to 100% of the annual fees due from Indivior. Patheon will provide Indivior with detailed written records of all third party batches that have been manufactured during any Year on the Automated Filling Equipment and will credit Indivior for the cumulative third–party use fees by March 1 of the Year immediately following the Year that the batches were manufactured.
4. Maintenance of the Automated Filling Equipment
(a) Patheon will, at its own expense, perform routine repairs, preventive maintenance, and calibration on the Automated Filling Equipment.
(b) Patheon will give Indivior reasonable access during normal working hours for the inspection of the Automated Filling Equipment.
(c) Patheon will immediately notify Indivior if the Automated Filling Equipment fails to meet the KPIs demonstrated at SAT. KPIs will be included in SAT certification.
(d) Patheon will immediately notify Indivior if any breakdown, accident, loss of or damage occurs to the Automated Filling Equipment.
5. Title and Risk of Loss of the Equipment
The Automated Filling Equipment will be owned by Indivior which will be the sole legal and beneficial owner thereof. The Facility Modifications will be owned by Patheon which will be the sole legal and beneficial owner thereof. Patheon will at all times keep the Automated Filling Equipment and Facility Modifications insured at replacement cost with inflation adjustment, and Patheon will replace any of these items that are lost, damaged or destroyed.
Notwithstanding any limitation or exclusion prescribed by Section 5 or any other provision of this Agreement, Patheon will hold harmless Indivior, its directors, officers, employees, agents, and contractors for, against, and from any and all claims for personal injury, death, or damage to the property of any third party arising from or out of (i) the negligence, gross negligence, or willful misconduct of Patheon, its affiliates, or their respective directors, officers, employees, agents, contractors, or (ii) any event, circumstance, act, or incident first occurring or existing during the period when the Automated Filling Equipment is installed at Patheon, but the obligations set forth in this sentence will not apply to the extent these claims are determined to be attributable to the negligence, gross negligence, or willful misconduct of Indivior, its affiliates, or their respective directors, officers, employees, agents or contractors.
6. Term; Termination; Effect of Termination on Future Funding
(a) Term; Termination. This Agreement will commence on the Effective Date and, unless earlier terminated as set forth in this Section 6, will continue in effect until the expiration or termination of the Product Agreement, including any extensions thereof. Either party at its sole option may terminate this Agreement upon written notice where the other party has failed to remedy a material breach of any of its obligations under this Agreement within 60 days following receipt of a written notice of the breach that expressly states in reasonable detail the nature of the breach. Patheon’s failure to meet the estimated timeline set forth in Schedule B will not be considered a material breach of this Agreement.
(b) Effect of Termination on Future Funding. If this Agreement or the Product Agreement is terminated by Indivior, Indivior’s obligation to further fund expenditures under this Agreement will cease upon Patheon’s receipt of the notice of termination, except for the cost of non-cancellable commitments that are made by Patheon prior to receiving written notice of the termination, and for which Indivior is responsible under Section 2 of this Agreement. If this Agreement or the Product Agreement is terminated by Indivior for reasons other than Patheon’s failure to remedy a material breach, Indivior will remove the Automated Filling Equipment from the Facility at Indivior’s expense. If this Agreement or the Product Agreement is terminated by Indivior due to Patheon’s failure to to remedy a material breach, Patheon will be responsible for the cost of removal of Automated Filling Equipment from the Facility.
7. General
(a) All monetary amounts are expressed in the lawful currency of the United States of America.
(b) This Agreement will be construed and enforced in accordance with the laws of the State of Delaware (without regard to principles of conflicts of law).
(c) This Agreement contains the entire understanding of the parties about the subject matter herein and supersedes all previous agreements (oral and written), negotiations and discussions.
(d) The parties may modify or amend the provisions hereof only by an instrument in writing duly executed by both of the parties.
(e) Neither party may assign or otherwise transfer its rights or obligations hereunder without the prior written consent of the other party.
(f) This Agreement may be signed by facsimile or in two counterparts, each of which when executed and delivered or transmitted, will be considered an original and both of which together will constitute one and the same instrument.
(g) The “Background” section of this document is expressly incorporated into the Agreement.
IN WITNESS WHEREOF the duly authorized representatives of the parties have executed this Agreement.
| | | | | |
| Patheon Manufacturing Services LLC | Indivior UK Limited |
| |
| |
By: /s/ Nick Buschur | By: /s/ Frank Stier |
| |
Name: Nick Buschur | Name: Frank Stier |
| |
Title: Vice President and General Manager | Title: Chief Supply Officer |
| |
| Date: 26 July 2019 | Date: 25 July 2019 |
SCHEDULE A
An Indivior affiliate is purchasing and will own the Automated Filling Equipment, and will supply the equipment without charge to Patheon for purposes of performing those commercial manufacturing services as specified in the User Requirement Specificiation (URS) in Schedule C and installed per the estimated timeline in Schedule B. The list of equipment and services included in the Automated Filling Equipment provided by Indivior is listed below and the estimated cost to Indivior for the sole purpose of documenting the expected deliverables.
| | | | | |
| The Automated Filling Equipment | Estimated Cost (€) |
| [***] | [***] € |
| [***] | [***] € |
| [***] | [***] € |
| [***] | [***] € |
| [***] | [***] € |
| [***] | [***] € |
| [***] | [***] € |
| [***] | [***] € |
| [***] | [***] € |
| [***] | [***] € |
| [***] | [***] € |
| [***] | [***] € |
| [***] | [***] € |
| [***] | [***] € |
| [***] | [***] € |
| [***] | [***] € |
| [***] | [***] € |
| [***] | [***] € |
| [***] | [***] € |
| [***] | [***] € |
| [***] | [***] € |
| [***] | [***] € |
| [***] | [***] € |
| [***] | [***] € |
| [***] | [***] € |
| [***] | [***] € |
| [***] | [***] € |
| [***] | [***] € |
| TOTAL | [***] € |
| | | | | |
| Facility Modifications | Costs (USD) |
| [***] | $[***] |
| [***] | $[***] |
| [***] | $[***] |
| [***] | $[***] |
| [***] | $[***] |
| [***] | $[***] |
| [***] | $[***] |
| [***] | $[***] |
| [***] | $[***] |
| [***] | $[***] |
| [***] | $[***] |
| GRAND TOTAL | $[***] |
Schedule B
The parties will meet within [***] month of the execution of this Agreement to agree on the estimated timeline for the installation of the Automated Filling Equipment.
| | | | | | | | | | | |
| Indivior Engineering Timeline |
| ACTIVITY | 2019 (by month) | 2020 (by month) | 2021 (by month) |
| [***] | [***] | [***] | [***] |
| [***] | [***] | [***] | [***] |
| [***] | [***] | [***] | [***] |
| [***] | [***] | [***] | [***] |
| [***] | [***] | [***] | [***] |
| [***] | [***] | [***] | [***] |
| [***] | [***] | [***] | [***] |
| [***] | [***] | [***] | [***] |
| [***] | [***] | [***] | [***] |
| [***] | [***] | [***] | [***] |
| [***] | [***] | [***] | [***] |
Schedule C
User Requirement Specification for Automated Filling Equipment
To be updated based on agreement between the Parties
Supplier Response Matrix (SRM)
[***]
| | | | | | | | | | | |
| URS ID | URS Requirement Description Section | Supplier Response | Classification |
| 1 | [***] | [***] | [***] |
| 2 | [***] | [***] | [***] |
| 3 | [***] | [***] | [***] |
| 4 | [***] | [***] | [***] |
| 5 | [***] | [***] | [***] |
| 6 | [***] | [***] | [***] |
| 7 | [***] | [***] | [***] |
| 8 | [***] | [***] | [***] |
| 9 | [***] | [***] | [***] |
PORTIONS OF THIS EXHIBIT HAVE BEEN REDACTED.
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS BOTH (i) NOT MATERIAL AND (ii) WOULD BE LIKELY TO CAUSE COMPETITIVE HARM IF PUBLICLY DISCLOSED.
REDACTED MATERIAL IS MARKED WITH [***].
LICENSE AGREEMENT
BY AND AMONG
INDIVIOR UK LIMITED
AND
AELIS FARMA
DATED JUNE 3, 2021
CONTENTS
| | | | | | | | | | | | | | |
Page | | | | |
| | | | |
1. | | SECTION 1: DEFINITIONS | | 1 |
| | | | |
| 2. | | SECTION 2: LICENSE OPTION; LICENSE GRANT; NON-COMPETITION | | 14 |
| | | | |
| 3. | | SECTION 3: INDIVIOR STUDIES; JOINT STEERING COMMITTEE | | 17 |
| | | | |
| 4. | | SECTION 4: DEVELOPMENT | | 20 |
| | | | |
| 5. | | SECTION 5: REGULATORY RESPONSIBILITIES | | 20 |
| | | | |
| 6. | | SECTION 6: TECHNOLOGY TRANSFER | | 20 |
| | | | |
| 7. | | SECTION 7: COMMERCIALIZATION | | 21 |
| | | | |
| 8. | | SECTION 8: PAYMENTS | | 23 |
| | | | |
| 9. | | SECTION 9: PAYMENT TERMS | | 25 |
| | | | |
| 10. | | SECTION 10: CONFIDENTIALITY AND PUBLICITY | | 26 |
| | | | |
| 11. | | SECTION 11: INTELLECTUAL PROPERTY RIGHTS | | 29 |
| | | | |
| 12. | | SECTION 12: REPRESENTATIONS, WARRANTIES AND UNDERTAKINGS | | 33 |
| | | | |
| 13. | | SECTION 13: INDEMNIFICATION | | 37 |
| | | | |
| 14. | | SECTION 14: LIABILITY | | 38 |
| | | | |
| 15. | | SECTION 15: ANTI-BRIBERY | | 38 |
| | | | |
| 16. | | SECTION 16: TERM | | 39 |
| | | | |
| 17. | | SECTION 17: TERMINATION | | 39 |
| | | | |
| 18. | | SECTION 18 EFFECTS OF TERMINATION | | 40 |
| | | | |
| 19. | | SECTION 19: INJUNCTIVE RELIEF | | 42 |
| | | | |
| 20. | | SECTION 20: INSURANCE | | 42 |
| | | | |
| 21. | | SECTION 21: MISCELLANEOUS | | 42 |
LICENSE AGREEMENT
This License Agreement (this “Agreement”) is entered into as of this 3rd day of June 2021 (the “Effective Date”), by and between Indivior UK Limited, a company incorporated in England and Wales with a registered number of 07183451 and registered office at The Chapleo Building, Henry Boot Way, Priory Park, Hull, United Kingdom, HU4 7DY (“Indivior”), and Aelis Farma, a company organized under the laws of France with a registered number of 797 707 627 and registered office at 146 rue Léo Saignat Institut François Magendie, 33000 Bordeaux, France (“Aelis”). Indivior and Aelis may be referred to herein collectively as the “Parties” and individually as a “Party”.
WHEREAS:
(A)Aelis, a clinical stage biotech company, owns or controls certain rights to the Licensed Compounds and Licensed Technology, including the right to develop, make and sell Licensed Compounds and Licensed Products (each as defined below).
(B)Indivior is engaged in the business of, among other things, developing, marketing and distributing pharmaceutical products.
(C)Indivior wishes to obtain from Aelis an option to obtain an exclusive license to develop, make and sell Licensed Products in the Field, and Aelis wishes to (i) grant such option and (ii) subject to the exercise of the option, grant such exclusive license to Indivior, on the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants contained herein, the Parties, intending to be legally bound, agree as follows:
1.SECTION 1: DEFINITIONS
1.1Capitalized terms used in this Agreement shall have the following definitions:
| | | | | | | | |
“505(b)(2) Application” | | means a new drug application filed with the FDA pursuant to 21 U.S.C. § 355(b)(2) (Section 505(b)(2) of the U.S. Food, Drug and Cosmetic Act, as amended). |
| | |
“Aelis Indemnitees” | | shall have the meaning set out in Section 13.1. |
| | |
“Aelis Know-How” | | means all Know-How Controlled by Aelis as of the Effective Date or during the Term that is reasonably necessary or useful to Develop, Manufacture or use Licensed Compounds or to Develop, Manufacture, Commercialize, use, import, offer to sell or sell Licensed Products. provided that, with respect to any Know-How that becomes Controlled by Aelis after the Effective Date that (i) is not necessary for the Development, Manufacture or Commercialization of the Licensed Compound and Licensed Product in the Field and (ii) would trigger payments to a Third Party if included in the License herein, then such Know-How will not be included in the Aelis Know-How unless and until Indivior makes such payments. |
| | |
| | | | | | | | |
“Aelis Patents” | | means all Patents Controlled by Aelis or its Affiliate(s) at any time during the Term that claim the composition, Development, Manufacture, Commercialization or use of Licensed Compounds and/or Licensed Products, including, but not limited to, those listed in Schedule I, and excluding Joint Patents. provided that with respect to any Patent that becomes Controlled by Aelis after the Effective Date that (i) is not necessary for the Development, Manufacture or Commercialization of the Licensed Compound and Licensed Product in the Field and (ii) would trigger payments to a Third Party if included in the License herein, then such Patent will not be included in the Aelis Patents unless and until Indivior makes such payments. |
| | |
“Aelis Studies” | | means all the studies that are performed by Aelis, directly or through subcontractors, during the License Term. These could be Phase I, Phase II or Phase III Studies, CMC and ADMET studies or any other studies that the JSC decides should be performed by Aelis. |
| | |
“Affiliate” | | means, with respect to a Party, any Person that, directly or indirectly, controls, is controlled by or is under common control with such Party; for the purposes of this definition, “control” shall refer to: (i) the possession, directly or indirectly, of the power to direct the management or policies of an entity whether through ownership of interests representing equity, securities, or partnership interests, by contract, or otherwise, or (ii) the ownership, directly or indirectly, of more than fifty per cent (50%) of the voting securities or capital stock or other ownership interest of an entity. For the purposes of the definition of Aelis Know-How, Aelis Patents and Section 2.4 of this Agreement, this definition shall exclude any direct or indirect acquirer of Aelis (the “Acquirer”) or any Affiliates of such Acquirer other than Aelis and its Affiliates prior to the acquisition of Aelis, subject to the confidentiality requirements set forth in Section 10.1.3. |
| | |
“ANDA” | | means an abbreviated new drug application filed with the FDA pursuant to 21 U.S.C. § 355(j) and 21 C.F.R. § 314.3. |
| | |
“Applicable Law(s)” | | means all federal, state, national and local laws, statutes, ordinances, rules, regulations, codes, guidelines as amended, re- enacted or in force from time to time applicable to the particular activities and jurisdictions hereunder, including, as applicable, Bribery Legislation, GCP, GDP, GMP, GLP and the rules and regulations of relevant Governmental Authorities having jurisdiction over the Research, Development, Manufacture and/or Commercialization of the Licensed Products. |
| | |
| | | | | | | | |
“Bribery Legislation” | | means the U.S. Foreign Corrupt Practices Act, as amended, the UK Bribery Act 2010, as amended, and all other Applicable Laws relating to anti-corruption or anti-bribery laws affecting companies doing business in the Territory, as well as Applicable Laws related to the prevention of fraud, racketeering, money laundering or terrorism. |
| | |
“Business Day” | | means a day on which banking institutions in London, England, Paris, France and Richmond, Virginia are all open for business, excluding any Saturday or Sunday. |
| | |
“Calendar Quarter” | | means a period of three (3) consecutive months ending on the last day of March, June, September, and December, respectively. |
| | |
“Claim(s)” | | means all charges, complaints, actions, suits, proceedings, hearings, investigations, claims and demands. |
| | |
“CMC” | | means chemistry, manufacturing, control and other activities that deal with the nature of the drug substance and drug product, the manner in which they were developed and are made, and the control aspects of the manufacturing process. |
| | |
“Commercialization” and “Commercialize” | | means activities directed to marketing, promoting, packaging and distributing, supplying, offering for sale, selling or other commercial exploitation of a Licensed Product and/or importing a Licensed Product for sale. |
| | |
“Control” | | means, with respect to any Intellectual Property Right or other tangible or intangible property, that a Party or one of its Affiliates owns or has a license or sublicense to such right, or property, and has the ability to grant access, a license or sublicense to such right, or property, without violating the terms of any agreement or other arrangement with any Third Party. |
| | |
“Controlling Party” | | shall have the meaning set out in Section 11.3.1(b). |
| | |
“Develop” and “Development” | | means activities necessary or desirable to develop Licensed Compounds and/or Licensed Products and to obtain and maintain Regulatory Approval of Licensed Products, including, as applicable, development activities related to the process development, optimisation use and production of Licensed Products, test method development and stability testing, toxicology, clinical trials, quality assurance/quality control, delivery systems, formulation, statistical analysis, report writing, generation of data, product approval and registration activities and all activities related thereto, but excluding Research. |
| | |
“Development Milestone Event” | | shall have the meaning set out in Section 8.4.1. |
| | |
“Development Milestone Payment” | | shall have the meaning set out in Section 8.4.1. |
| | |
“Disclosing Party” | | shall have the meaning set out in Section 10.1.1. |
| | |
“Effective Date” | | has the meaning set forth in the introductory paragraph. |
| | |
| | | | | | | | |
“EMA” | | means the European Medicines Agency or any successor agency thereto. |
| | |
“Europe” | | means the European Union as of the Effective Date. |
| | |
“Ex-US Countries” | | means all countries of the world excluding the US. |
| | |
“FDA” | | means the United States Food and Drug Administration or any successor agency thereto. |
| | |
“Field” | | means all addiction and substance use disorders, compulsive disorders (e.g. gambling, binge eating, OCD, intermittent explosive disorder (IED)), cannabis use disorder, cannabis intoxication, cannabis withdrawal, other cannabis-induced disorders (e.g. cannabis-induced psychotic disorder, cannabis- induced anxiety disorder, cannabis-induced sleep disorder, and cannabis intoxication delirium), unspecified cannabis-related disorders and, subject to Indivior’s exercise of the Pain Option pursuant to Section 2.3.1, pain Indications. |
| | |
“Filing Acceptance” | | means, as applicable, the acceptance for filing of a complete NDA (or its equivalent) by the FDA in the United States, or acceptance for filing of a comparable application by a Regulatory Authority in another applicable jurisdiction in the Territory for the Commercialization of a pharmaceutical product. |
| | |
“First Commercial Sale” | | means, with respect to any given Licensed Product, on a country- by-country and Indication-by-Indication basis, the first commercial sale of such Licensed Product to a Third Party by Indivior or any of its Affiliates or any of their respective sublicensees in such country for such Indication following the applicable Regulatory Approval of the Licensed Product in such country for such Indication. |
| | |
“Force Majeure Event” | | has the meaning set out in Section 21.1.2. |
| | |
“GCP” | | means, as to the US, the UK and the European Union, good clinical practices as in effect in the US, the UK and the European Union, respectively, during the Term and, with respect to any other jurisdiction, clinical practices equivalent to good clinical practices as then in effect in the US, the UK or the European Union, in each case to the extent relating to the pharmaceutical products hereunder regulations of any Governmental Authority and applicable ICH GCP. |
| | |
“GDP” | | means current good distribution practices with respect to the wholesale distribution of medicinal products for human use as set forth in Applicable Laws and regulations, including Directive 2001/83/EC and Commission Guideline 2013/C 343/01. |
| | |
| | | | | | | | |
“Generic Competition” | | means that, with respect to any Licensed Product in a country, the market share of the Generic Product exceeds 50%, i.e., the total sales amount of the Generic Products of such Licensed Product in such country exceeds 50% of the aggregated sales amount of such Licensed Product and Generic Products for the current Calendar Quarter (i.e., the Calendar Quarter for which Royalties are due). Such sales amount shall be determined based on data provided by a reputable Third Party data source generally accepted in the pharmaceutical industry in the relevant country and mutually agreed by the Parties, such as IQVIA. |
| | |
“Generic Product” | | means, with respect to any Licensed Product, (a) a drug product that is a pharmaceutical equivalent to such Licensed Product meaning that it (i) contains the same active ingredient(s), has the same dosage form and route of administration, (ii) is identical in strength or concentration to that of the given Licensed Product and (iii) is A rated in the United States (or similar designation outside the United States) (“ANDA Product”) or (b) any other drug product that (i) contains the same active ingredient(s) and the same dosage form and route of administration as the Licensed Product and (ii) references the Licensed Product as a Reference Listed Drug in the 505(b)(2) Application for such drug product or, with respect to jurisdictions outside of the US, references the data provided by Indivior in its Regulatory Submission for such Licensed Product (“505(b)(2) Product”). |
| | |
“GLP” | | means regulations of any Governmental Authority (including Directives 2004/9/EC and 2004/10/EC and any similar or equivalent legislation in any other relevant jurisdiction) for conducting non-clinical laboratory studies that support or are intended to support applications for Research or Regulatory Approvals, as applicable to the Development in the Territory from time to time. |
| | |
“GMP” | | means (a) as to the US and the European Union, good manufacturing practices and general biological products standards as promulgated by the FDA pursuant to 21 CFR Parts 210, 211, 600 and 610 and as promulgated by the European Union pursuant to Commission Directive 2003/94/EC, respectively, each as may be amended from time to time, and (b) with respect to any other jurisdiction, manufacturing practices substantially equivalent to the aforementioned good manufacturing practices as then in effect in the US or the European Union, in each case to the extent relating to the pharmaceutical products hereunder. |
| | |
“Governmental Authority” | | means any court, tribunal, arbitrator, agency, legislative body, commission, official or other instrumentality of (a) any government of any country, (b) a federal, state, province, county, city or other political subdivision thereof or (c) any supranational body. |
| | |
| | | | | | | | |
“Handle” | | shall mean preparing, filing, prosecuting (including interference and opposition proceedings) and maintaining (including interferences, reissue, re-examination, post-grant reviews, derivation proceedings, cancellation or nullity proceedings and opposition proceedings). |
| | |
“Head License” | | means the license agreement [***] dated January 21, 2020, entered into between Inserm Transfert SA, Université Bordeaux, SC Belenos (together the “Head Licensor”) and Aelis. |
| | |
“ICH GCP” | | means the ICH Harmonised Tripartite Guideline for Good Clinical Practice (CPMP/ICH/135/95) and also such other good clinical practice requirements which are specified in Directive 2001/20/EC and relating to medicinal products for human use and in guidance published by the European Commission pursuant to such Directive. |
| | |
“IFRS” | | means International Financial Reporting Standards (IFRS). |
| | |
“Indication” | | means a disease classification as defined within the “International Statistical Classification of Diseases and Related Health Problems” as published on the date hereof by the World Health Organization or the DSM5; provided that, for purposes hereof, the following shall be considered different Indications: a) cessation of cannabis use in non-abstinent cannabis addicts; b) prevention of relapse in abstinent cannabis users; and c) reduction of psychotic symptomatology induced by cannabis or in dual diagnosis patients. |
| | |
“Indivior Indemnitees” | | shall have the meaning set out in Section 13.2. |
| | |
“Indivior Patents” | | any Patent that is (a) Controlled by Indivior (or its Affiliates) as of the Effective Date or at any time during the Term and/or (b) based on an invention made while carrying out the clinical studies or other activities pursuant to this Agreement where there is at least one inventor that is an employee, contractor or other agent of Indivior or otherwise obligated to assign their rights in the invention to Indivior, excluding Joint Patents. |
| | |
“Indivior Studies” | | means all the studies that are performed by Indivior, its Affiliates or sublicensees, directly or through subcontractors, during the License Term. These could be Phase I, Phase II or Phase III Studies, CMC and ADMET studies or any other studies that are necessary to the Development and Regulatory Approval of the Licensed Product. |
| | |
“Infringement Actions” | | has the meaning set forth in Section 11.3.2(c). |
| | |
“Infringement Claim” | | shall have the meaning set out in Section 11.3.1(a) |
| | |
“Initiation” | | means, with respect to a clinical study, the first dosing of the first patient in such clinical study. |
| | |
| | | | | | | | |
“Insolvency Event” | | means, with respect to either Party, that such Party: a.gives notice to any of its creditors that it has suspended or is about to suspend payment of its debts or is unable to pay its debts as they fall due or admits inability to pay its debts or (being a company or limited liability partnership) is deemed unable to pay its debts within the meaning of section 123 of the Insolvency Act 1986 or (being an individual) is deemed either unable to pay its debts or as having no reasonable prospect of so doing, in either case, within the meaning of section 268 of the Insolvency Act 1986 or (being a partnership) has any partner to whom any of the foregoing apply; b.commences negotiations with all or any class of its creditors with a view to rescheduling any of its debts, or makes a proposal for or enters into any compromise or arrangement with any of its creditors or makes a proposal for or enters into a reorganisation (by way of voluntary arrangement, scheme or arrangement or otherwise), other than, in each case, for the purpose of a scheme for a solvent amalgamation of the other Party with one or more other companies or the solvent reconstruction of such Party or a solvent reorganisation of such Party; c.a petition is filed, a notice is given, a resolution is passed, or an order is made, for or in connection with the winding up of any of such Party, other than, in each case, a solvent liquidation of such Party; d.an application is made to court, or an order is made, for the appointment of an administrator, or a notice of intention to appoint an administrator is filed or if an administrator is appointed, over such Party; e.the holder of a qualifying floating charge over the assets of such Party has become entitled to appoint or has appointed an administrative receiver; f.a person becomes entitled to appoint a receiver, compulsory manager or other similar officer over all or any of the assets of such Party or a receiver is appointed over all or any of its assets; or g.a distress, execution, sequestration or other such process is levied or enforced on or sued against, the whole or any part of any of their assets and such attachment or process is not discharged within 90 days; h.the opening of a judicial reorganization proceedings (procédure de redressement judiciaire) or judicial liquidation proceedings (procédure de liquidation judiciaire); or i.any event occurs, or proceeding is taken, with respect to such Party in any jurisdiction to which it is subject that has an effect equivalent or similar to any of the events mentioned in (a) to (h) above. |
| | | | | | | | |
| | |
“Intellectual Property Rights” | | means Patents, rights to inventions, copyright (including software) and related rights, trade marks, business names and domain names, rights in get-up, goodwill and the right to sue for passing off, rights in designs, database rights, rights in Know- How and all other intellectual property rights, in each case whether registered or unregistered and including all applications and rights to apply for and be granted, renewals or extensions of, and rights to claim priority from, such rights and all similar or equivalent rights or forms of protection which subsist or will subsist now or in the future in any part of the world. |
| | |
“Joint Patent” | | means any Patent based on an invention made while carrying out the activities pursuant to this Agreement, where there is at least one inventor that is an employee, contractor or other agent of Aelis or is otherwise obligated to assign its rights in the invention to Aelis, and at least one inventor that is an employee, contractor or agent of Indivior or is otherwise obligated to assign its rights in the invention to Indivior. |
| | |
“Joint Steering Committee” or “JSC” | | shall have the meaning set out in Section 3.2.1. |
| | |
“Know-How” | | means any information or material, whether proprietary or not and whether patentable or not, which is not in the public domain including inventions, discoveries, concepts, data, formulae, ideas, specifications, procedures for experiments and tests and results of experiments, experimentation and testing, results of research and development, laboratory records, clinical trials data, case reports, data analysis and summaries, and information in submissions to and information from ethics committees and Governmental Authorities. |
| | |
“License” | | shall have the meaning set out in Section 2.2.1. |
| | |
“License Exercise Notice” | | shall have the meaning set out in Section 2.1.2. |
| | |
“License Fee” | | means $[***]. |
| | |
“License Option Period” | | means the period commencing on the Effective Date and ending three (3) months following the completion of the End-of-Phase 2 meeting (as defined in 21 CFR 312.47) between Aelis and FDA relating to the Option Study 1. |
| | |
“License Term” | | means with respect to any given country, the period of time commencing on the date of delivery of the License Exercise Notice by Indivior and ending on the earlier of (a) expiration of the Royalty Term in such country or (b) the termination of the Agreement in such country. |
| | |
| | | | | | | | |
“Licensed Compound” | | means (i) AEF0117 as described on Schedule II, (ii) all other pregnenolone derivatives disclosed in (a) PCT/EP2013/074886 (b) PCT/EP2019/054217 and (c) all patents and patent applications, substitutions, divisions, continuations, continuations-in-part, reissues, re-examinations, renewals, and patents of addition thereof, including all foreign equivalents thereof, substitutions, divisions, continuations, continuations-in- part, reissues, re-examinations, renewals, and patents of addition that claim priority to or from PCT/EP2013/074886 or PCT/EP2019/054217 in whole or in part. |
| | |
“Licensed Product” | | means a pharmaceutical product in finished form (in all formulations, dosages and delivery systems) that incorporate a Licensed Compound. |
| | |
“Licensed Product Trademarks and Trade Dress” | | shall have the meaning set out in Section 7.3. |
| | |
“Licensed Technology” | | means the (i) Aelis Know-How and (ii) the Aelis Patents and (iii) Aelis’ ownership interest in the Joint Patents. |
| | |
“Losses” | | means any and all damages, awards, deficiencies, settlement amounts, defaults, assessments, fines, dues, penalties, costs, fees, liabilities, obligations, Taxes, liens, losses, and expenses (including reasonable fees of attorneys). |
| | |
“Manufacture” | | means all activities related to the manufacture of Licensed Compounds and/or Licensed Products including manufacturing supplies for Development and Commercialization, packaging, in-process and finished product testing, release of product or any component or ingredient thereof, quality assurance and quality control activities related to manufacturing and release of product, ongoing stability tests, storage, shipment, and regulatory activities related to any of the foregoing. |
| | |
| | | | | | | | |
“Net Sales” | | means the gross amounts invoiced by Indivior, its Affiliates or their respective Third Party sublicensees (each, an “Indivior Party”) for the sale of a Licensed Product to Third Parties, less the following deductions to the extent solely related to the Licensed Product and consistently applied through Indivior’s range of products: (i)customary trade, quantity and cash discounts and any other adjustments, including granted on account of price adjustments, billing errors, rejected goods, damaged or defective goods, recalls, returns, rebates, chargeback rebates, reimbursements or similar payments granted or given to wholesalers or distributors, buying groups, health care insurance carriers, governments, government-subsidized programs or managed care organizations, or other institutions, adjustments arising from consumer discount programs, in each case actually allowed and taken by a Third Party with respect to amounts invoiced for such Licensed Product; (ii)sales taxes or similar taxes, including duties or other governmental charges imposed on the sale of Licensed Product to a Third Party (excluding any taxes imposed on or measured by the net income or profits of the Indivior Party), not refundable or creditable to the Indivior Party; and (iii)prepaid freight, insurance and handling fees actually invoiced (that are not refundable or creditable to the Indivior Party); in each case (i)-(iii) to the extent reasonable and consistent with customary practices, as determined from books and records of the Indivior Party maintained in accordance with IFRS. Amounts invoiced for sales or other transfer of such Licensed Product between or among Indivior, its Affiliates and other Indivior Parties shall be excluded from the computation of Net Sales unless such sales are intended for end use. If a sale or transfer of Licensed Product involves consideration other than cash or is not at arm’s length, then the Net Sales from such sale or transfer shall be the arm’s length fair market value, which generally will mean the Indivior Party’s average sales price for the Calendar Quarter. |
| | |
“Option Studies” | | shall have the meaning set out in Section 2.1.5(b). |
| | |
“Option Study 1” | | shall have the meaning set out in Section 2.1.5(b). |
| | |
“Option Study 2” | | shall have the meaning set out in Section 2.1.5(b). |
| | |
“Orange Book” | | means the FDA publication Approved Drug Products with Therapeutic Equivalence Evaluations, as may be amended from time to time. |
| | |
“Pain Option” | | shall have the meaning set out in Section 2.3.1. |
| | |
“Pain Option Period” | | means the period commencing on the Effective Date and ending upon expiry of the License Option Period. |
| | |
| | | | | | | | |
“Patent” | | means patents and patent applications and all substitutions, divisions, continuations, continuations-in-part, any patent issued with respect to any such patent applications (including certificates of invention and certificates of correction), any reissue, re-examination, utility models or designs, renewal or extension of any such patent, any term extension, any term adjustment, a supplementary protection certificate and any confirmation patent or registration patent or patent of addition based on any such patent, all counterparts and patents and patent applications based on, corresponding to or claiming the priority date thereof in any country, and all foreign equivalents of such patents and patent applications. |
| | |
“Payee” | | shall have the meaning set out in Section 9.3.2. |
| | |
“Payor” | | shall have the meaning set out in Section 9.3.2. |
| | |
“Person” | | means any natural person, corporation, firm, business trust, joint venture, association, organisation, company, partnership or other business entity, or any government, or any agency or political subdivisions thereof. |
| | |
“Phase II Study” | | means a controlled clinical study in a relatively small number of subjects (usually no more than several hundred) designed to evaluate the effectiveness of a pharmaceutical product for a particular Indication or Indications in patients with the disease or condition under study and to determine the common short-term side effects and risks associated with such pharmaceutical product, as further described in 21 C.F.R. §312.21(b) or equivalent studies outside of the US. By way of example, such a study may be designed to establish a dose and/or dose range for the study drug or to obtain additional safety or efficacy data to support the development of research methods and the design of Phase III research protocols in a patient population with the disease or condition under study. |
| | |
“Phase III Study” | | means an expanded controlled clinical study in a large number of patients (usually more than several hundred to several thousand) that is performed after preliminary evidence suggesting effectiveness of a pharmaceutical product has been obtained, and is intended to gather the additional information about effectiveness and safety that is needed to evaluate the overall benefit-risk relationship of such pharmaceutical product and to provide an adequate basis for physician labelling, as further described in 21 C.F.R. §312.21(c) or equivalent studies outside of the US. Such a study is designed and intended to be of a size and statistical power sufficient to serve as a pivotal study to support the Regulatory Submission for the Indication being studied. |
| | |
| | | | | | | | |
“Product Liability Claim” | | means any Claim that is commenced or threatened against a Party alleging product liability, product defect, design, packaging or labelling defect, failure to warn, or any similar action relating to the use or safety of the Licensed Products, as well as all resulting Losses. |
| | |
“Recipient” | | has the meaning set out in Section 10.1.1. |
| | |
“Regulatory Approval” | | means, as applicable, the approval of an NDA by the FDA in the United States or approval of a comparable application by a Regulatory Authority in another jurisdiction in the Territory for the manufacture, supply, marketing and sale of a pharmaceutical product. For clarity, “Regulatory Approval” shall not include any governmental pricing and/or reimbursement approvals and/or authorizations issued by a Regulatory Authority or any other governmental agency in any country or jurisdiction. |
| | |
“Regulatory Authority” | | means, with respect to any jurisdiction, the applicable Governmental Authority responsible for regulating the manufacture, distribution, marketing and/or sale of pharmaceutical products in such jurisdiction. |
| | |
“Regulatory Exclusivity” | | means, with respect to a Licensed Product, exclusive marketing rights or data exclusivity rights conferred by an applicable Regulatory Authority in a particular country with respect to such Licensed Product in such country. |
| | |
“Regulatory Materials” | | means any regulatory applications, submissions, notifications, communications, correspondence, registrations, Regulatory Approvals and/or other filings made to, received from or otherwise conducted with a Governmental Authority that are related to Developing, Manufacturing, obtaining marketing authorisation, and/or Commercialising in a particular country or regulatory jurisdiction. |
| | |
“Regulatory Submission” | | means a marketing authorisation application filed with the FDA, EMA, or any comparable application or filing with any analogous Governmental Authority in the Territory. |
| | |
“Research” | | means the discovery, identification, research, characterization, modification, derivatization and optimization of pharmaceutical compounds and products. |
| | |
“Royalty” | | has the meaning set forth in Section 8.5. |
| | |
| | | | | | | | |
“Royalty Term” | | means, with respect to each Licensed Product on a country-by- country basis, the period of time beginning on the Effective Date and ending on the last of: (a) the date of expiration in such country of the last to expire Valid Claim of any Aelis Patents or (b) the date of expiration in such country of the last to expire Valid Claim of a Joint Patent, which Valid Claim was covering the composition-of-matter, formulation or method of use of the Licensed Compound or the Licensed Product that meets the requirements for listing in the Orange Book, (c) the ten (10) year anniversary of the First Commercial Sale of such Licensed Product in such country, and (d) the date of the last expiration or other termination of any applicable Regulatory Exclusivity for such Licensed Product in such country. |
| | |
“Sales Milestones” | | shall have the meaning set out in Section 8.4.2. |
| | |
“Sales Milestone Payment” | | shall have the meaning set out in Section 8.4.2. |
| | |
“Scientific Paper” | | shall have the meaning set out in Section 10.3 |
| | |
“Side Letter” | | shall have the meaning set out in Section 7.4. |
| | |
“Tax” or “Taxes” | | means any present or future sales, turnover, income, revenue, value added taxes, levies, imposts, duties, charges, assessments and/or fees in each case in the nature of tax (including any interest thereon). |
| | |
“Term” | | shall have the meaning set out in Section 16. |
| | |
“Territory” | | means worldwide, subject to Section 17.2. |
| | |
“Third Party” | | means a person other than (a) Aelis or any of its Affiliates, or (b) Indivior or any of its Affiliates. |
| | |
“UK” | | means the United Kingdom as at the Effective Date. |
| | |
“US” | | means the United States of America and its territories, possessions and commonwealths. |
| | |
“Valid Claim” | | means a claim of (a) an issued Patent that (i) has not been rejected, revoked or held to be invalid or unenforceable by a court or other authority of competent jurisdiction, from which decision no appeal can be further taken or (ii) has not expired, been finally abandoned, disclaimed or admitted to be invalid or unenforceable through reissue or disclaimer or (b) a Patent application that has been pending for not more than seven (7) years. |
| | |
“VAT” | | means value added tax chargeable under or pursuant to the Council Directive 2006/112/EC or any legislation implementing such Directive, or any other sales, purchase or turnover tax and any customs or excise duties or import levies. |
| | |
| | | | | | | | |
“Viable” | | means, with respect to a Licensed Product, at the relevant time there is/are not and have not been (a) occurrences of serious adverse events in clinical trials relating to such Licensed Product, or (b) failure to achieve the efficacy endpoints of one or more clinical trials relating to such Licensed Product, but in any event in each case of (a) or (b), only if the Parties agree such occurrence or failure does render the program no longer viable in accordance with Applicable Laws. |
| | |
2.SECTION 2: LICENSE OPTION; LICENSE GRANT; NON-COMPETITION
2.1License Option.
2.1.1During the License Option Period, Aelis hereby grants Indivior an exclusive option to receive an exclusive (even as to Aelis), sublicensable and transferable License (as defined below) in the Territory (the “License Option”).
2.1.2Indivior may exercise the License Option by delivering written notice thereof (“License Exercise Notice”) to Aelis within the License Option Period, and by paying Aelis the License Fee within fifteen (15) days after delivery of the License Exercise Notice. The License Option shall lapse and be of no effect should Indivior fail to deliver the License Exercise Notice within the License Option Period and pay the License Fee within the said period of fifteen days. The License Option Period shall terminate for purposes hereof upon payment of the License Fee following delivery by Indivior of the License Exercise Notice.
2.1.3If Indivior has decided to not exercise the License Option before the end of the License Option Period, Indivior may elect to terminate the License Option Period by sending a written notice to Aelis waiving its right to exercise the License Option. This Agreement shall automatically terminate upon receipt of such written notice.
2.1.4If Indivior fails to deliver a License Exercise Notice within the License Option Period, it shall be deemed to have waived any right to exercise the License Option and this Agreement shall automatically terminate upon expiration of the License Option Period.
2.1.5During the License Option Period:
(a)Aelis shall deliver to Indivior all studies, study results, chemical structure information, records and other materials related to the Licensed Compounds that are reasonably requested by Indivior in connection with its due diligence and evaluation of the Licensed Compounds and its exercise of the License Option. Indivior and its representatives shall be permitted to make reasonable inquiries of Aelis to the extent possible through the JSC or otherwise through its CEO or the point of contact designated by the CEO regarding the Licensed Compounds and the Option Studies.
(b)Promptly after the Effective Date, Aelis will use commercially reasonable efforts to perform (i) a multicentric Phase IIb study with Columbia University as coordinating center that evaluates the effects of AEF0117 on cannabis intake in Cannabis Use Disorders patient CUD in demand for
treatment, which protocol may, for the avoidance of doubt, be modified by Aelis for regulatory reasons, including upon request by the FDA, subject to discussion and review by the JSC (the “Option Study 1”); (ii) the Fertility and Embryonic Development Study (FEED), also named Segment I of the Developmental and Reproductive Toxicity Studies (DART) according to guidance ICH S5(R3): Detection of Reproductive and Developmental Toxicity for Human Pharmaceuticals (Revision 3, May, 2021) in full compliance with GLP (the “Option Study 2”, and together with the Option Study 1, the “Option Studies”). The protocol for the Option Study 1 and a description of the Option Study 2 are set forth in Schedule III.
2.2License Grant
2.2.1During the License Term and subject to Aelis’ retained rights as set forth in Section 2.2.4, Aelis hereby grants to Indivior an exclusive (even as to Aelis), sublicensable, transferable license under the Licensed Technology to Develop, use, Manufacture, have Manufactured, import, export, obtain Regulatory Approval and Commercialize the Licensed Compound(s) and/or Licensed Product(s) for use in the Field and in the Territory (“License”).
2.2.2Indivior shall have the right to grant sublicenses under the License to its Affiliates and Third Parties, subject to this Section 2.2.2. Indivior shall provide Aelis with written notice at least twenty-five (25) days prior to granting any sublicense under the License to enable Aelis to seek approval for such sublicense from the Head Licensor pursuant to the Head License. Aelis shall promptly, but in any event, within five (5) days after receiving the Sublicense Notice, deliver the Sublicense Notice to the Head Licensor pursuant to the Head License. In the event that, within twenty (20) days of delivery by Aelis of such notice to the Head Licensor (“Notice Period”), the Head Licensor does not approve such sublicense pursuant to the terms of the Head License, then Aelis shall promptly notify Indivior and Indivior shall not grant such sublicense. Notwithstanding the foregoing, failure by Head Licensor to respond within the Notice Period shall constitute acceptance of the sublicense. A copy of each sublicense granted by Indivior will be provided to Aelis promptly after execution thereof.
2.2.3All such sublicenses shall be consistent with this Agreement including, without limitation, that the Sublicensee shall be bound by the provisions of Section 2.4 (Non- Competition) as if it is a Party to this Agreement and shall terminate automatically on the termination of this Agreement. Indivior shall not grant sublicenses or appoint sublicensees other than in accordance with Section 2.2.2 and Section 2.2.3 and shall in all cases remain responsible for any acts or omissions of its sublicensees exercising rights under a sublicense of the rights granted by Aelis to Indivior under this Agreement to the same extent as if such acts or omissions had been taken by Indivior itself. For the avoidance of doubt, Aelis shall have no right to, and shall not, grant any sublicenses to any Person under the Licensed Technology with respect to the Licensed Compound(s) and/or Licensed Product(s) in the Field and in the Territory.
2.2.4Except as expressly provided in this Agreement, neither Party grants to the other Party any right or license in any Intellectual Property Rights, whether by implication, estoppel or otherwise. In particular, subject to Section 2.4 and Section 10.3 with respect to publications, Aelis retains the right (i) to conduct Research with the Licensed Compound and Licensed Product inside and outside
of the Field solely for the purpose of conducting lab experiments and for publishing certain Scientific Papers, (ii) to exploit directly or indirectly the Licensed Technology for compounds and products other than the Licensed Compounds and Licensed Products inside or outside of the Field.
2.2.5Indivior acknowledges and agrees that the Know-How licensed by Aelis pursuant to the Head License has been licensed on a non-exclusive basis and that the Head Licensor has retained the right to use certain Licensed Technology for certain educational, academic and research purposes pursuant to the terms of the Head License; provided that Aelis covenants and agrees that it shall not, directly or indirectly, provide Licensed Compounds to the Head Licensor except as approved by the JSC.
2.3Option for Pain Indication
2.3.1Aelis hereby grants to Indivior the option to expand the Field to include pain Indications (“Pain Option”) at any time during the Pain Option Period. Indivior may exercise the Pain Option by delivering written notice thereof to Aelis within the Pain Option Period.
2.3.2In the event that Indivior does not exercise the Pain Option during the Pain Option Period, the Pain Option shall terminate and Aelis shall have the right to pursue pain Indications for pregnenolone derivatives and any other compounds that are not Licensed Compounds, subject to Section 2.4. In the event that Aelis pursues such pain Indications, Aelis shall keep Indivior informed of (i) the start of a Development program in the pain Indication and (ii) Aelis’ decision to start a partnering process for this Indication so that the Parties may consider strategic partnerships with respect thereto.
2.4Non-Competition
2.4.1During the License Option Period, Indivior and its Affiliates shall not Research, Develop, Manufacture or otherwise Commercialize any Licensed Compound, Licensed Product or any pregnenolone derivatives inside or outside of the Field in the Territory.
2.4.2During the License Term in any country:
(a)neither Party, by itself, its Affiliates or through any Third Party (including, with respect to Indivior, its sublicensees pursuant to Section 2.2.2), shall Research, Develop, Manufacture or otherwise Commercialize any Licensed Compound or Licensed Product inside or outside of the Field in such country, except as permitted pursuant to this Agreement;
(b)neither Party may, by itself or its Affiliates or through any Third Party (including, with respect to Indivior, its sublicensees pursuant to Section 2.2.2), Develop, Manufacture or Commercialize any pregnenolone derivatives in the Field in such country, other than Licensed Compounds or Licensed Products pursuant to this Agreement, including Section 2.3;
(c)neither Party may, by itself or its Affiliates, or through any Third Party (including with respect to Indivior, its sublicensees pursuant to Section 2.2.2), Develop, Manufacture or Commercialize any CB1 antagonists in the Field in such country; and
(d)Indivior, its Affiliates or its sublicensees pursuant to Section 2.2.2 shall not Research, Develop, Manufacture or Commercialize Licensed Compounds or Licensed Products outside of the Field in the Territory.
2.4.3Notwithstanding the foregoing, (i) during the License Option Period, Aelis shall have the right to engage in Research and Development activities with respect to the Licensed Compounds or Licensed Products inside or outside of the Field; provided that Aelis shall consult with the JSC with respect to any such Development activities; and (ii) during the Term, Aelis shall have the right to engage in Research activities with respect to the Licensed Compounds or Licensed Products inside or outside of the Field solely for the purpose of conducting lab experiments and for publishing certain Scientific Papers, subject to Section 10.3.
2.5Rights Under Bankruptcy
If Aelis or an Affiliate become subject to bankruptcy proceedings in the US, then the Parties agree that all rights and licenses granted under or pursuant to any section of this Agreement in connection with US intellectual property rights are and will otherwise be deemed to be for purposes of Section 365(n) of the United States Bankruptcy Code (Title 11, U.S. Code), as amended (the “Bankruptcy Code”), licenses of rights to “intellectual property” as defined in Section 101(35A) of the Bankruptcy Code. Indivior, as licensee of such rights under this Agreement, shall retain and may fully exercise all of its rights and elections under the Bankruptcy Code. In the event of the commencement of a bankruptcy proceeding by or against an Affiliate of Aelis under the Bankruptcy Code, Indivior will be entitled to a complete duplicate of (or complete access to, as appropriate) such intellectual property and all embodiments of such intellectual property, which, if not already in Indivior’s possession, will be promptly delivered to it upon Indivior’s written request thereof. Any agreements supplemental hereto will be deemed to be “agreements supplementary to” this Agreement for purposes of Section 365(n) of the Bankruptcy Code. Aelis agrees that it shall not take any action in any bankruptcy proceeding or in any other judicial, administrative, arbitral or other proceeding to reject, object to or challenge the legality, validity or enforceability of any of this Agreement or any rights granted herein.
3.SECTION 3: INDIVIOR STUDIES; JOINT STEERING COMMITTEE
3.1Indivior Studies.
3.1.1As soon as reasonably practicably after commencement of the License Term, Indivior shall use commercially reasonable efforts to conduct the Phase III Study and any other necessary, clinical, non-clinical, and CMC, studies required by Regulatory Authorities to submit a Regulatory Approval application to the FDA and in Europe. These studies, clinical, non-clinical, and CMC, on AEF0117 will be first approved by the JSC. It is agreed that after the commencement of the License Term, clinical, non-clinical, and CMC studies may be conducted simultaneously in order to satisfy the regulatory requirements necessary for the submission of the Regulatory Approval of a Licensed Compound.
3.1.2Pursuant to Section 3.2, the JSC may also propose to Aelis to perform some of the Indivior Studies. Aelis may accept to perform one or more of such studies and, subject to Section 3.1.4, at Indivior’s costs, on a full cost basis.
3.1.3Without limiting the foregoing, the Parties agree that Indivior shall use commercially reasonable efforts to (i) obtain approval by the applicable institutional review board to perform and (ii) if such approval is obtained, perform, one or two Phase III Studies to evaluate the effects of AEF0117 in one or more Indications, such Indications selected by Indivior at its sole discretion. The following separate clinical Indications are foreseen at the time of the Agreement:
(i)psychotic symptomatology in cannabis-induced psychosis or in dual diagnosis patients (schizophrenic using cannabis) and/or other toxic effect of cannabis requiring hospitalization.
(ii)the prevention of relapse in cannabis use in abstinent cannabis addicts; and
(iii)the cessation of cannabis use in non-abstinent cannabis addicts.
3.1.4If, at any time during the License Term, Aelis receives grants or other Third Party funding to finance any of Aelis Studies, the Parties will equally share the revenues from such sources (the “Shared Grants”), excluding any tax credit, loans and grants from French national, regional or local authorities or organizations, which will be retained by Aelis. For clarity, half of the amount of Shared Grants covering expenses of the Aelis Studies, will be deducted from the amount of the costs of the study that should have been repaid by Indivior or refunded to Indivior if Indivior has already made such payments.
3.1.5Subject to Section 3.1.4 and Section 3.2, Indivior will bear the full reasonable and documented costs of the Aelis Studies which will be paid to Aelis on quarterly basis.
3.2Joint Steering Committee.
3.2.1Within sixty (60) days after the Effective Date, the Parties shall establish a joint development committee (the “Joint Steering Committee” or “JSC”). The JSC shall be responsible during the License Option Period and the License Term for:
(a)determining (i) the scope of the Indivior and Aelis Studies, including the Indications that will be evaluated, (ii) the design and scientific coordination of such studies, (iii) the costs of such studies and payment schedule thereof if any of these study are Aelis Studies and (iv) the regulatory strategy and interactions with worldwide Regulatory Authorities related to the CMC, preclinical and clinical development (including any required paediatric study);
(b)determining the Party that will conduct the Indivior Studies or any other study necessary to the development of AEF0117;
(c)during the License Option Period, discussing the status of the Option Studies and any developments relating thereto, including reviewing and discussing any proposed changes to the protocol of the Option Studies;
(d)during the License Option Period, establishing a Development plan for nonclinical and CMC studies in order to satisfy the regulatory requirements necessary for a Licensed Compound to enter a Phase III Study and obtain Regulatory Approval. The JSC will determine when it is the ideal time to
conduct these studies. If Indivior decides that one or more of these studies should be performed during the License Option Period by Aelis and the studies are approved by the JSC, the reasonable and documented costs of these studies shall be refunded by Indivior to Aelis on a full cost basis;
(e)discussing additional studies that Aelis may conduct in its sole discretion during the License Option Period to accelerate the Development, provided that, notwithstanding Section 3.2.4(a), if and only if such studies are approved by Indivior, their reasonable and documented costs will be refunded by Indivior to Aelis on a full cost basis; and
(f)during the License Term, discussing Indivior’s Development and, when applicable, Commercialization plans and timelines in reasonable detail and any update thereof, including a summary of the work performed in the past 12 months, the works in progress and the anticipated activities including the anticipated timeline of achievement of the Development Milestones, Regulatory Approvals, launch, the status of Manufacture and any sublicensing process (the “Plans”).
3.2.2The JSC will be composed of an equal number of representatives appointed by each of Indivior and Aelis. Each individual appointed will be an employee or contractor of such Party or such Party’s Affiliate. Each Party may replace any of its JSC representatives at any time upon written notice to the other Party, which notice may be given by e-mail, sent to the other Party. Each JSC representative will be subject to confidentiality obligations no less stringent than those in Section 10.
3.2.3From and after establishment of the JSC until the approval of the last filing of a Regulatory Submission hereunder by Indivior with respect to a Licensed Compound or Licensed Product, the JSC shall meet at least once each Calendar Quarter. Such meetings shall place on the dates and times, and may be in person or by audio or video conference, as the JSC representatives may agree. No action taken at a meeting will be effective unless at least one representative of each Party is present or participating. Neither Party will unreasonably withhold attendance of at least one representative of such Party at any meeting of the JSC for which reasonable advance notice was provided. Each Party shall bear the costs and expenses incurred by its own JSC representatives in participating in the JSC meetings.
3.2.4The Parties will endeavor in good faith to reach unanimous agreement with respect to all matters within the JSC’s authority. Should the JSC not be able to reach unanimous agreement with respect to such matter at a duly called meeting of the JSC, then:
(a)Subject to sub clause (b) below, for all matters during the License Option Period, including any Option Studies or other study to be performed during the License Option Period, the decision of Aelis shall prevail, provided that Aelis shall use good faith efforts to take into account Indivior’s comments.
(b)For all matters during the License Term including all studies that will be initiated after the exercise of the License Option by Indivior, and will be performed either by Aelis or Indivior, the decision of Indivior shall prevail,
provided that Indivior shall use good faith efforts to take into account Aelis’ comments.
3.2.5Notwithstanding the foregoing, Indivior shall not take the following decision without Aelis’ consent:
(a)decrease the number of Phase III Studies or nonclinical and CMC studies necessary to file for Regulatory Approval in the US and EU after such number of studies is approved by the JSC, provided that such approval is mutually agreed by both Indivior and Aelis.
4.SECTION 4: DEVELOPMENT
4.1Except as set forth in Section 3.1, during the License Term, Indivior shall have the sole right to Develop the Licensed Compounds and Licensed Products in the Field and shall control all aspects of such Development at its own cost and expense (except as otherwise expressly set forth herein).
4.2Upon request by Indivior, Aelis shall provide reasonable assistance to Indivior in connection with Development of the Licensed Compounds and Licensed Products. The first [***] hours of such assistance shall be at Aelis’ cost but any hours of Aelis’ personnel time in excess of [***] hours shall be charged to and be payable by Indivior; provided that Aelis shall not exceed such initial [***] hours of service without the prior consent of Indivior. All reasonable and documented amounts owed by Indivior to Aelis pursuant to this Section 4.2 shall be reimbursed to Aelis within thirty (30) days after receipt of an invoice therefor.
5.SECTION 5: REGULATORY RESPONSIBILITIES
5.1As between the Parties, during the License Term, on a Licensed Product-by-Licensed Product basis, and except for the Aelis Studies and the other activities to be conducted by Aelis pursuant to Section 3.1, Indivior (through its Affiliates and agents) shall have the sole right to (a) prepare and file all Regulatory Materials and seek and maintain all Regulatory Approvals for Licensed Products, including preparation of all Regulatory Materials (including in connection with labeling and packaging for Licensed Products) and communications with applicable Governmental Authorities and (b) complete all pharmacovigilance responsibilities required under and in accordance with Applicable Laws. Through the JSC, Indivior shall provide to Aelis (a) copies of Regulatory Submissions with respect to the Licensed Compounds or Licensed Products prior to the filing thereof and all material correspondence it receives from, a Regulatory Authority, and, (b) copies of the proposed labeling for the Licensed Product.
5.2As between the Parties, Indivior shall own all Regulatory Approvals for Licensed Products in the Territory.
6.SECTION 6: TECHNOLOGY TRANSFER
6.1Technology Transfer
6.1.1Within thirty (30) days after the commencement of the License Term or at such other time as determined by the JSC, Aelis shall disclose to Indivior all relevant information as shall become available to it relating to the Licensed Technology, Licensed Compounds and Licensed Products. If and as requested by Indivior, Aelis will disclose to Indivior or any Regulatory Authority all relevant
information in its possession required for Indivior to register for sale or obtain Regulatory Approval for the Licensed Products.
6.1.2Within thirty (30) days after commencement of the License Term or at such other time as determined by the JSC, Aelis will make available to Indivior all Aelis Know-How that is reasonably necessary, or useful, for Indivior to Develop and/or Commercialize Licensed Products, including all research data, pharmacology data, preclinical data, and/or clinical data for the Licensed Compounds.
6.1.3Within ninety (90) days after commencement of the License Term, Aelis shall promptly provide technical assistance to Indivior as Indivior reasonably requests regarding the Licensed Technology for the Licensed Compound and/or the Licensed Product, and Indivior’s efforts with respect to obtaining Regulatory Approval for any Licensed Products.
6.1.4Aelis shall use commercially reasonable efforts to transfer to Indivior all rights Aelis may have in any agreements with Third Parties to the extent such rights relate to Manufacturing; provided that if Indivior requests Aelis to transfer such agreements to a Third-Party, Indivior shall bear Aelis’ out-of-pocket costs of such transfer.
7.SECTION 7: COMMERCIALIZATION
7.1Right to Commercialize
7.1.1As between the Parties, Indivior shall have the sole right to Commercialize the Licensed Products in the Field and shall control all aspects of Commercialization, including: (a) receiving, accepting and filling orders for Licensed Products in the Field, (b) handling all returns of Licensed Product in the Field, (c) controlling invoicing, order processing and collection of accounts receivable for the sales of Licensed Product in the Field, (d) distributing and managing inventory of Licensed Product in the Field, and (e) the sale of Licensed Products in the Field, including the price or prices at which each Licensed Product will be sold, any discount applicable to payments or receivables, and similar matters.
7.1.2Upon Indivior’s reasonable request, Aelis shall provide reasonable assistance to Indivior in connection with Commercialization of the Licensed Product in the Field, provided that Indivior shall bear all Third Party expenses related to such assistance, as applicable.
7.2Diligence & Reporting. Indivior shall use commercially reasonable efforts to Develop at least one Licensed Product and use commercially reasonable efforts to Commercialize at least one Licensed Product in the Territory. For purposes of the foregoing, commercially reasonable efforts means the commitment of efforts and resources by Indivior, consistent with those normally applied in the pharmaceutical industry by companies of similar size and with similar resources as Indivior with respect to a compound or product having similar regulatory factors and similar market potential, profit potential and strategic value, and that is at a similar stage in its development or product life cycle as the Licensed Compound or Licensed Product; provided that in no event shall commercially reasonable efforts require Indivior to take any actions that require Indivior to incur costs or liabilities out of proportion to the benefits under this Agreement. Indivior shall not be in breach of this Section 7.2 to the extent any failure or delay by Indivior in Developing or Commercializing any Licensed Product is the result of any action or omission by Aelis, including any delays or failure to
provide Licensed Product as clinical trial material. Without limitation to the foregoing, Indivior’s Development and Commercialization activities shall include and be consistent with the obligations set forth in the Head License, subject to the Side Letter (as defined below). Following dismantlement of the JSC, Indivior shall submit its update of the Plans to Aelis in June and December of each year, and will offer to Aelis the ability to discuss the same by telephone or in person.
7.3Trademarks and Trade Dress. Indivior shall have the right, in its sole discretion, to select, register and own the trade marks, trade dress, logos, slogans and internet domain names with respect to the Licensed Products (collectively, the “Licensed Product Trademarks and Trade Dress”), except for the name and trademark, if any, that define the pharmacological class (i.e. CB1-SSi) or the pharmacological name of the compound as will be notified by Aelis to Indivior. If Aelis files a trade mark or other Intellectual Property Right on such names and trade mark, Aelis will grant to Indivior a non-exclusive, fully paid-up license thereunder for the Licensed Product in the Field and for the duration of the License Term. As between the Parties, Indivior shall own all rights to Licensed Product Trademarks and Trade Dress (in each case, together with all goodwill associated therewith).
7.4Side Letter Agreement. Prior to the Effective Date, Aelis and the Head Licensor shall enter into a side letter agreement, in the form of Exhibit A (“Side Letter”), which provides, in pertinent part, that the Head Licensor shall have no right to terminate the Head License or convert the license thereunder into a non-exclusive license as a result of any failure by Indivior or Aelis to obtain Regulatory Approval for, or Commercialize, the Licensed Product so long as Indivior is not in material breach of Section 7.2 hereof. Aelis shall deliver a duly executed copy of such Side Letter to Indivior on the Effective Date.
7.5Head License. Aelis will maintain in full effect and perform all of its obligations in a timely manner under the Head License. Aelis will not take any action or omit to take any action that would cause Aelis to be in breach of the Head License or give rise to a right by Head Licensor to terminate the Head License. Aelis will use commercially reasonable efforts to facilitate any communications between Indivior and the Head Licensor required for Indivior to exercise the rights granted to Indivior under this Agreement and will use commercially reasonable efforts to cause the Head Licensor to perform all of its obligations under the Head License. In the event that the Head License is terminated by the Head Licensor for reasons not attributable to Indivior's breach of this Agreement, and, as of the effective date of such termination, this Agreement has not otherwise expired or been terminated, Indivior, to the extent permitted by the Head License, will have the right without prejudice to its other remedies against Aelis, at Indivior’s election, to convert the sublicenses granted under this Agreement by Aelis to Indivior under the Head License to a direct license from the Head Licensor to Indivior on the terms and conditions contained in the Head License (with Indivior assuming the applicable obligations of Aelis thereunder) or such other terms and conditions as may be negotiated by Indivior and the Head Licensor. In such case, Indivior may deduct all payments that it will owe to the Head Licensor under such direct license from the payments due to Aelis under this Agreement, provided that, subject to the Head Licensor agreeing in the Side Letter that it will not require in such direct license any payments in consideration of the license rights currently granted pursuant to this Agreement that exceed the payments due to the Head Licensor that are currently contemplated in case of (i) direct exploitation under the Head License pursuant to Section 5.4.1 of the Head License and (ii) payments under Section 5.3 of the Head License (together, the “Current Head License Payments”), then such deductions cannot exceed the Current Head License Payments.
8.SECTION 8: PAYMENTS
8.1License Option Fee. As consideration for the exclusive License Option granted to Indivior pursuant to Section 2.1, Indivior shall pay to Aelis an amount equal to $[***], payable within 15 days after the Effective Date.
8.2License Fee. In the event that Indivior exercises the License Option, as partial consideration for the License granted to Indivior hereunder, Indivior shall pay to Aelis the License Fee within fifteen (15) days after delivery by Indivior of the License Exercise Notice.
8.3Pain Option Fee. In the event that Indivior exercises the Pain Option, in consideration thereof, Indivior shall pay Aelis an amount equal to $[***] within fifteen (15) days after exercise by Indivior of such option.
8.4Milestones
8.4.1Development Milestone Payments. In partial consideration for the License granted to Indivior hereunder, after first achievement by Indivior or its Affiliates, or by Aelis or its Affiliates, pursuant to this Agreement, of any of the milestone events set forth in the following table (each, a “Development Milestone Event”), Indivior shall pay to Aelis the corresponding amount set forth in the following table (each, a “Development Milestone Payment”).
| | | | | |
Development Milestone Events | With respect to one Indication for a Licensed Product |
| 1. [***] | $[***] |
| 2. [***] | $[***] |
3. [***] | $[***] |
4. [***] | $[***] |
5. [***] | $[***] |
6. [***] | $[***] |
7. [***] | $[***] |
(a)For the avoidance of doubt:
(i)each Development Milestone Payment shall be payable one- time only upon the first occurrence of the event triggering the respective milestone set forth above and no payments would be owed with respect to supplementary trials of the same stage;
(b)Indivior shall notify Aelis of the achievement of each Development Milestone Event within thirty (30) days after the achievement thereof. Aelis shall notify Indivior of the achievement of each Development Milestone Event in the case of any Aelis Studies or further studies that, pursuant to this Agreement, will be performed by Aelis, within thirty (30) days after the achievement thereof.
8.4.2Sales Milestone Payments. As additional consideration for the rights granted to Indivior herein, Indivior shall pay to Aelis a one-time milestone payment (“Sales Milestone Payments”) upon first achieving each of the thresholds for the annual global Net Sales aggregated for all Licensed Products set forth below (“Sales
Milestones”). For the avoidance of doubt, each Sales Milestone Payment shall be payable one-time only upon the first occurrence of the event triggering the respective milestone provided below.
| | | | | |
Sales Milestones | Sales Milestone Payment |
[***] $[***] | $[***] |
[***] $[***] | $[***] |
[***] $[***] | $[***] |
[***] $[***] | $[***] |
[***] $[***] | $[***] |
[***] $[***] | $[***] |
[***] $[***] | $[***] |
[***] $[***] | $[***] |
Total potential Sales Milestone Payments | $[***] |
8.5Royalty
8.5.1As additional consideration for the rights granted to Indivior herein, during the Royalty Term (on a country-by-country and Licensed Product by Licensed Product basis), Indivior shall pay to Aelis tiered royalty payments at the rates set out below on Net Sales (“Royalty”):
| | | | | |
Annual aggregated global Net Sales of Licensed Products | Royalty Rate |
Portion of Annual aggregated global Net Sales of Licensed Products less than $[***] | [***]% |
Portion of Annual aggregated global Net Sales of Licensed Products equal to or greater than $[***] but less than $[***] | [***]% |
Portion of Annual aggregated global Net Sales of Licensed Products equal to or greater than $[***] but less than $[***] | [***]% |
Portion of Annual aggregated global Net Sales of Licensed Products equal to or greater than $[***] | [***]% |
8.5.2Notwithstanding Section 8.5.1 above, the Royalty payable with respect to any Licensed Product shall be reduced by 50% on a country-by-country basis as long as there is a Generic Competition with respect to such Licensed Product in such country.
8.6Third Party Licenses.
8.6.1In the event that it is reasonably necessary or useful for Indivior, in consultation with Aelis, to pay royalties to a Third Party (other than an Affiliate) in connection with a license for a Patent (to which such Third Party has rights), for the Development, Manufacture and/or Commercialization of a Licensed Product, then Indivior and Aelis shall equally share the responsibility for such royalties payable with respect to such Third Party licenses. Indivior shall pay such royalties to such Third Party. To recover Aelis’ share of the responsibility, Indivior may deduct fifty percent (50%) of the royalties paid to the relevant Third Party from the
Royalty due to Aelis under Section 8.5 up to a maximum amount of fifty per cent (50%) of such Royalty due to Aelis under Section 8.5.1. Indivior shall make all payments other than royalties with respect to such Third Party licenses.
8.6.2All existing licenses or contractual obligations of Aelis that are necessary for the maintenance of the licenses under the Licensed Technology for the Licensed Compound and Licensed Product in the Field as set forth in Section 2.2.1 shall be, except as otherwise expressly set forth herein, maintained by Aelis and Aelis shall pay all royalties and other fees therefor.
8.6.3Notwithstanding anything to the contrary, the Royalty rate shall not be less than 1% of the sales of the Licensed Products by Indivior Parties in the Territory as required by the Head License.
9.SECTION 9: PAYMENT TERMS
9.1Payment Methods. All amounts due hereunder will be paid in US Dollars, and all references to “$” or “Dollars” shall refer to US Dollars. For the purpose of converting any amount owed hereunder to $, such conversion shall be calculated using the exchange rate sourced at each month end from Bloomberg. All payments due to Aelis under this Agreement shall be made by wire transfer in immediately available funds to an account in designated by the applicable Party in writing.
9.2Payments.
9.2.1Royalty payments due pursuant to Section 8.5 shall be due and payable quarterly, sixty (60) days after the end of each Calendar Quarter. Indivior will accompany each payment of royalties under this Agreement with a report setting forth, on a Licensed Product-by-Licensed Product and country-by-country basis, the amount invoiced from gross sales of each Licensed Product, the number of units of Licensed Products, a calculation of Net Sales, and a calculation of the amount of Royalty payment due on such Net Sales.
9.2.2Development Milestone Payments shall be due and payable by Indivior within sixty (60) days after completion of the applicable Development Milestone Event. Together with any such payment, Indivior shall deliver a written statement of completion and other pertinent and available information.
9.2.3Sales Milestone Payments shall be due and payable by Indivior within sixty (60) days after the last day of the Calendar Quarter in which the relevant milestone event was achieved. Together with any such payment, Indivior shall deliver a report specifying, with respect to such Calendar Quarter: the total gross invoiced amount from sales of each Licensed Product in such country by or on behalf of Indivior, amounts deducted by category from such gross invoiced amounts to calculate Net Sales, and a calculation of the Sales Milestone Payment payable.
9.3Taxes
9.3.1Indivior will make all payments to Aelis under this Agreement without deduction or withholding for Taxes except to the extent that such payments are made from the UK or the US and any such deduction or withholding is required by Applicable Laws. In such case, , Indivior shall notify Aelis of such withholding requirement at least thirty (30) days in advance of the payment, cooperate with Aelis and take all reasonable actions as may be necessary to ensure that no
withholding or the lowest withholding Tax possible is made on payments under this Agreement. Any Tax required to be withheld on amounts payable under this Agreement will be properly and timely paid by Indivior on behalf of Aelis to the appropriate Tax authority, Indivior shall further send evidence of the obligation together with proof of Tax payment to Aelis within thirty (30) days following such payment.
9.3.2All amounts set out or expressed in this Agreement to be payable by any Party (the “Payor”) to the other Party (the “Payee”) which (in whole or in part) constitute the consideration for a supply or supplies which attract VAT (for which the Payee (or another member of the Payee’s group) is accountable to the relevant Tax authority) shall be deemed to be exclusive of any VAT which is chargeable on such supply or supplies, and accordingly, if VAT is or becomes chargeable on any such supply or supplies, then the Payor shall pay to the Payee (in addition to and at the same time as paying any other consideration for such supply) an amount equal to the amount of such VAT at the rate prevailing at the time the supply is made on the provision by, or the procurement by, the Payee to the Payor of a VAT invoice or such other documentary evidence as the Applicable Law may require. All amounts specified in this Agreement are exclusive of VAT and any other similar taxes. Those amounts shall be payable by the Payor to the Payee against the presentation of a valid VAT invoice. If applicable, VAT, or any other similar taxes, shall become payable in addition to the amounts specified in this Agreement, subject to the normal rules.
9.4Inspection of Records.
Indivior shall keep records of its sales of Licensed Products reasonably necessary for the calculation of payment to be made to Aelis hereunder. During the Term, and for a period of one (1) year thereafter, Aelis shall have the right to have an independent certified public accountant, mutually agreed upon by Indivior, audit the records of Indivior. Aelis, upon providing at least thirty (30) days’ prior written notice to Indivior, may initiate such an audit no more than once per calendar year during the Term and one year thereafter. Any such audit shall be conducted during the normal business hours of Indivior, at a single location where Indivior shall make the records sought to be audited available, and in such a manner as shall not disrupt Indivior’ business operations. All personnel conducting the audit on behalf of the independent auditor shall enter into confidentiality agreements with Indivior. Each such audit shall be conducted at the expense of Aelis; provided that if the inspection and audit shows an underpayment of more than five percent (5%) of the amount due for the applicable period covered by the inspection, then Indivior shall reimburse Aelis for all costs incurred in connection with such inspection within thirty (30) days thereafter. Indivior shall pay to Aelis the amount of any undisputed underpayment revealed by an examination and review. Any overpayment by Indivior revealed by an examination and review shall be deducted by Indivior from the next payment due to Aelis or, if after the Term, refunded by Aelis to Indivior within thirty (30) days.
10.SECTION 10: CONFIDENTIALITY AND PUBLICITY
10.1Confidentiality
10.1.1In carrying out the terms of this Agreement, either Party may disclose (the “Disclosing Party”) to the other Party (the “Recipient”) information regarding the Disclosing Party and/or its Affiliates which is of a proprietary and of
confidential nature, including any and all information, information regarding its business, know-how, methods, trade secrets, financial information, customers and technology (collectively, “Confidential Information”). Confidential Information also includes the terms of this Agreement. The Recipient shall not use the Disclosing Party’s Confidential Information for any purpose other than as permitted herein and shall not disclose the Confidential Information to any Third Party, except to its employees, directors, contractors and other representatives who have a need to know such information to fulfill the provisions and intent of this Agreement, and who are bound by written obligations of confidentiality with respect to such information. Aelis may disclose the Confidential Information to current and prospective investors or possible acquirers or partners, provided that they are bound by written obligations of confidentiality with respect to such information in a form consistent with the provisions of this clause. The Recipient agrees that it will exercise the same degree of care and protection to preserve the proprietary and confidential nature of the Confidential Information disclosed by the Disclosing Party, as Recipient would exercise to preserve its own proprietary and confidential information, and in any case no less than a reasonable degree of care. The Recipient shall promptly notify the Disclosing Party of any unauthorized use or disclosure, or suspected unauthorized use or disclosure, of the Disclosing Party’s Confidential Information of which the Recipient becomes aware. Each Party shall be liable for any failure of its employees, directors, other representatives or other persons with whom they disclose Confidential Information to comply with the terms of this Section 10.
10.1.2The confidentiality obligations set forth in this Section 10 shall not apply to confidential information which: (a) is or becomes publicly known through no wrongful act or inaction of the Recipient; (b) the Recipient can demonstrate by written records was lawfully received by it from a Third-Party that is not legally or contractually prohibited from disclosing such information; (c) the Recipient can demonstrate by written records was developed by or for such Recipient independently of, and without the use of, such information disclosed by the Disclosing Party, (d) the Recipient is required by legal order to disclose, provided that the Recipient shall, where permitted, give the Disclosing Party immediate written notice of any such request so that the Disclosing Party may seek a protective order or other reliable assurance that confidential treatment will be accorded to the information so disclosed, (e) the Recipient must disclose to comply with the reporting requirements of any Applicable Laws or any securities exchange on which the securities of the Receiving Party or its Affiliates are traded, provided that the Recipient shall, where permitted, give the Disclosing Party immediate written notice of any such request so that the Disclosing Party may seek a protective order or other reliable assurance that confidential treatment will be accorded to the information so disclosed, (f) to any actual or bona fide potential investors or acquirors solely for the purpose of evaluating or carrying out an actual or potential investment or acquisition; provided that in each such case on the condition that such actual or potential investors or acquirors are bound by confidentiality and non-use obligations substantially consistent with those contained in the Agreement, or (g) Indivior discloses to Regulatory Authorities in connection with obtaining Regulatory Approval or other communications relating to Commercialization of the Licensed Products.
10.1.3In the event the stock or assets of Aelis are acquired by an Acquirer during the Term, Aelis shall ensure that the Acquirer remains subject to a confidentiality agreement with respect to the Licensed Technology as it relates to the Licensed
Compound(s) and/or Licensed Product(s) in the Field and any Confidential Information of Indivior and shall create an internal firewall to protect against the use by the Acquirer of such information; provided that the aforementioned obligation shall not apply to any Aelis Know-How that does not exclusively relate to the Licensed Compounds and Licensed Products in the Field.
10.1.4In the event that Aelis desires to disclose any Confidential Information of Indivior with the Head Licensor where such Confidential Information is required by the terms of the Head License to be disclosed to the Head Licensor, Aelis shall: (i) first provide written notice to Indivior, (ii) only disclose such Confidential Information pursuant to the confidentiality provisions of the Head License, and (iii) only disclose such Confidential Information as is necessary for Aelis to comply with the terms of the Head License. The disclosure of the following information is hereby notified to Indivior for purposes of subclause (i) of the preceding sentence: (A) a copy of this Agreement, (B) Development updates pursuant to Section 3.11 of the Head License, (C) financial reports pursuant to Section 5.7.1 of the Head License, and (D) patent prosecution and infringement updates pursuant to Section 6 of the Head License, provided that such notified disclosures shall be subject to the remaining requirements of this Section 10.1.4.
10.1.5The confidentiality obligations set forth in this Sections 10.1 and 10.2 shall survive for ten (10) years after termination or expiration of this Agreement.
10.2Publicity. The Parties agree that the terms and contents of this Agreement shall be treated as Confidential Information of both Parties and neither Party shall make any press release or public announcement regarding the execution or terms of this Agreement or the transaction contemplated by this Agreement without the consent of the other Party.
10.3Publications. Each Party, through the JSC or its designee shall provide to the other, prior to submission for publication, a draft of any articles and papers containing unpublished data relating to the Licensed Compounds or Licensed Products which have been prepared by or on behalf of such Party (the “Scientific Paper”). With respect to Scientific Papers prepared by Aelis, Indivior shall have forty-five (45) days after receipt thereof to notify Aelis of its observations and suggestions with respect thereto (it being understood that, during such forty- five (45) day period, no submission for publication thereof shall take place) and the Parties shall discuss these observations and suggestions. With respect to Scientific Papers prepared by Indivior, Aelis shall have thirty (30) days after receipt thereof to notify Indivior of its observations and suggestions with respect thereto (it being understood that, during such thirty (30) day period, no submission for publication thereof shall take place) and the Parties shall discuss these observations and suggestions.
10.3.1With respect to publications of Scientific Papers during the License Option Period, Aelis shall reasonably incorporate the comments made by Indivior, particularly if disclosure may be prejudicial to Indivior’s opportunity to obtain, maintain, enforce or defend any Patent. Without limiting the foregoing, Indivior may require that the publication be suspended for a period of time not exceeding ninety (90) days if a Patent may be filed using Know-How covered in the proposed publication. Aelis shall provide to Indivior copies of any final Scientific Paper accepted by the journal, within ten (10) days after the approval thereof (upon availability and distribution of such information assuming that providing such information is acceptable taking into consideration the publishers’ need to comply with any healthcare compliance guidelines). This provision will apply mutatis mutandis to the presentations, abstracts, posters or slides decks at
symposia or other meetings of healthcare professionals, or congresses, conferences or meetings organized by a professional society or organization, except if these presentations abstracts, posters or slide decks incorporate data that have been approved in the context of a Scientific Paper or that have been already presented before the exercise of the License Option.
10.3.2With respect to publications of Scientific Papers during the License Term, Aelis shall incorporate the comments made by Indivior, particularly if disclosure may be prejudicial to Indivior’s opportunity to obtain, maintain, enforce or defend any Patent, and Indivior shall incorporate reasonable comments made by Aelis. Without limiting the foregoing, Indivior may also require that the publication be (a) suspended for a period of time not exceeding ninety (90) days if a Patent may be filed using Know- How covered in the proposed publication or (b) delayed indefinitely if Indivior reasonably determines that such publication would be detrimental to its patent prosecution, litigation, or other intellectual property strategy or position.
10.3.3The party submitting the paper shall provide to the other party copies of any final Scientific Paper accepted by the journal, within ten (10) days after the approval thereof (upon availability and distribution of such information assuming that providing such information is acceptable taking into consideration the publishers’ need to comply with any healthcare compliance guidelines). This provision will apply mutatis mutandis to the presentations, abstracts, posters or slides desks at symposia or other meetings of healthcare professionals, or congresses, conferences or meetings organized by a professional society or organization.
11.SECTION 11: INTELLECTUAL PROPERTY RIGHTS
11.1Filing, Prosecution and Maintenance of Patents
11.1.1Aelis shall have the first right, but not the obligation, to Handle the Aelis Patents in each applicable country, in each case in consultation with Indivior pursuant to Section 11.1.3, at Aelis’ cost. Aelis shall notify Indivior of any intent or decision to cease prosecution of or abandon any Aelis Patents at least thirty (30) days prior to any filing deadline or payment due date. In such event, Indivior shall have the right at its costs to take over prosecution and maintenance of the Aelis Patents in such country in Aelis’ name.
11.1.2As between the Parties, Joint Patents shall be jointly owned by the Parties and inventorship thereof shall be determined in accordance with, and subject to, United States or other applicable patent law. Except to the extent a Party is expressly limited by the terms hereof, including Section 2.2.1 and Section 2.4, each Party shall be entitled to exploit its co-ownership interest in the Joint Patents, including through Third Party licenses, without consent or otherwise accounting to the other Party. Each Party shall obtain proper assignments from each inventor that is (a) an employee, contractor or other agent of such Party (b) or that is otherwise obligated to assign their rights in the invention to such Party, in each case to effectuate the foregoing ownership of the Joint Patents. A joint patent committee to be formed by the JSC will decide which Party will Handle the Joint Patents. If such joint patent committee is unable to reach unanimous agreement, Aelis shall have the right to do so at its cost. Each Party shall notify the other Party of any intent or decision to cease prosecution of or abandon any Joint Patents at least thirty (30) days prior to any filing deadline or payment due date.
In such event, the other Party shall have the right at its costs to take over prosecution and maintenance of the Joint Patents in such country and, if necessary, in the other Party’s name.
11.1.3The Party Handling a Patent agrees to inform with sufficient advance notice and coordinate with the other Party with respect to patent prosecution or other proceedings with respect to the Patents. The Handling Party shall provide the other Party with copies of each office action received from the relevant patent offices and intended response, with enough lead time where reasonably practicable, to enable the other Party to review and comment on such action or proposed response, which the Handling Party shall take into account in good faith. Additionally, the Handling Party will provide the other Party with copies of the responses to offices actions it ultimately files with the patent offices.
11.2Cooperation. Each Party shall make available to the other Party (and to the other Party’s authorised attorneys, agents or representatives) its employees, agents, subcontractors and consultants and relevant information and documentation in such Party’s Control, in each case to the extent reasonably available, necessary and appropriate to enable the prosecuting Party to Handle Aelis Patents and Joint Patents as set forth in Section 11.1 and 11.1.2, and for periods of time reasonably sufficient for such Party to obtain the assistance it needs from such personnel. Where appropriate and without prejudice to Section 11.1 and 11.1.2, each Party shall execute or use commercially reasonable efforts to procure the execution of all documents relating to such Aelis Patent or Joint Patent applications or Aelis Patents or Joint Patents at no charge to the other Party.
11.3Infringement Claims
11.3.1Infringement of Third Party Rights
(a)Each Party shall promptly, but in any event no later than ten (10) days after receipt of notice of such action (but no less than ten (10) Business Days before the expiry of any statutory timeline for taking action), notify the other in writing if any Third Party at any time provides written notice of a claim to, or brings an action, suit or proceeding against, either Party, or any of their respective Affiliates or sublicensees or subcontractors, claiming that the Development, Manufacture or Commercialization of the Licensed Compound or Licensed Product infringes a Third Party Patent or constitutes an unauthorised use or misappropriation of Third Party Know-How (an “Infringement Claim”).
(b)Indivior shall have the first right but not the obligation to control the defence of any Infringement Claim. If Indivior assumes the defence of such Infringement Claim, Indivior shall bear the costs of such defence (unless such Infringement Claim is indemnifiable by Aelis pursuant to Section 13.2). Aelis will cooperate and assist Indivior in any such litigation controlled by Indivior. For purposes of Section 11, the Party that defends the Infringement Claim and/or Infringement Actions (as defined below in Section 11.3.2(b)) shall be referred to as the “Controlling Party”.
(c)In the event that Indivior is the Controlling Party in any action that was brought solely against Aelis, Aelis shall take actions to enable Indivior to assume control of such action, in the name of Aelis if reasonably necessary.
(d)The Controlling Party will have the exclusive right to hire, dismiss and direct attorney(ies) and/or solicitor(s) to represent it (and in the event that the claim is brought against both Parties, to represent it and the other Party) with respect to the applicable Infringement Claims. The Controlling Party will have the exclusive right to settle any Infringement Claim, in consultation with the other Party but without consent of the other Party, unless such settlement: (i) would have an adverse impact on the other Party’s rights or ability to perform its obligations under this Agreement, (ii) makes any admission regarding wrongdoing by the other Party, or the invalidity, unenforceability, limitation or absence of infringement of any Licensed Technology; (iii) subjects the other Party to an injunction or other equitable relief; or (iv) obligates the other Party to make a monetary payment, in each such case of (i)-(iv), the consent of the other Party shall be required and shall not be unreasonably withheld, conditioned or delayed. For purposes of clarity, any settlement that would involve the waiver of rights shall be deemed to have an adverse impact and shall require the consent of such other Party.
(e)If Indivior wishes to assume control of the defence of any such Infringement Claim pursuant to Section 11.3.1(b), then Indivior may do so upon written notice to Aelis. If Indivior does not exercise its right to control the defence of an Infringement Claim pursuant to Section 11.3.1(b), then Aelis shall have the right, but no obligation, to control the defence of such Infringement Claim.
(f)If either Party becomes engaged in or participates in any suit described in this Section 11.3, the other Party shall cooperate, and shall cause its and its Affiliates’ employees to cooperate, with such Party in all reasonable respects in connection therewith.
11.3.2Infringement by Third Parties
(a)In the event that either Party becomes aware of actual or suspected infringement of Aelis Patents, Joint Patents or misappropriation of Aelis Know-How by a Third Party, such Party shall promptly provide written notice thereof to the other Party, provided that if Aelis is the receiving Party for such notice, Aelis shall promptly provide written notice to the Head Licensor pursuant to the terms of the Head License. In the event of such actual or suspected infringement, including the defence of declaratory judgement actions or counterclaims challenging the validity or enforceability of the Aelis Patents, Joint Patents or Aelis Know-How, the following provisions in Section 11.3.2 shall apply.
(b)Indivior shall have the first right to send written notices, warnings, or claims of infringement to such Third Party that may be infringing or misappropriating the (i) Aelis Patents, (ii) Joint Patents inside of the Field or (iii) Aelis Know- How (“Indivior Infringement Actions”). Indivior shall have the first right, but not the obligation, to institute and prosecute Indivior Infringement Actions, including the right to settle such Indivior Infringement Actions pursuant to Section 11.3.2(d). In the event a declaratory judgement action is brought against Indivior or Aelis, including any counterclaims challenging the validity or enforceability of the Aelis Patents, Joint Patents inside of the Field or Aelis Know-How, Indivior shall
have the right, but not the obligation to be the Controlling Party for such action, even if Aelis is the named defendant.
(c)Aelis shall have the first right to send written notices, warnings, or claims of infringement to such Third Party that may be infringing or misappropriating the Joint Patents outside of the Field (“Aelis Infringement Actions,” together with Indivior Infringement Actions, “Infringement Actions”) and the first right, but not the obligation, to institute and prosecute Aelis Infringement Actions, including the right to settle such Aelis Infringement Actions pursuant to Section 11.3.2(d). In the event a declaratory judgement action is brought against Indivior or Aelis, including any counterclaims challenging the validity or enforceability of the Joint Patents outside of the Field, Aelis shall have the right, but not the obligation to be the Controlling Party for such action, even if Indivior is the named defendant.
(d)With respect to any such action or proceeding that a Party initiates and maintains pursuant to this Section 11.3.2, the other Party shall cooperate as may be reasonably requested by the Controlling Party, including by joining as a party claimant if required to do so by Applicable Laws to maintain such action or proceeding, to collect any and all damages, profits and awards of any nature recoverable for such infringements, by executing and making available such documents and witnesses as the Controlling Party may reasonably request, and by performing all other acts which are or may become necessary to vest in the Controlling Party the right to institute any such suit, including by using commercially reasonable efforts to obtain any necessary joinder and/or cooperation in any such action or proceeding from applicable Third Parties.
(e)If the Party with the first right to be the Controlling Party does not initiate such action within ninety (60) days of becoming aware of a notice of such infringement or misappropriation (but no less than ten (10) Business Days before the expiry of any statutory timeline for taking action), then the other Party shall have the right, but not the obligation, at its own cost, to be the Controlling Party in such action.
(f)The Controlling Party will have the exclusive right to settle any Infringement Claim without consent of the other Party, unless such settlement would have an adverse impact on the other Party’s rights or ability to perform its obligations under this Agreement (including a waiver of such Party’s rights) or subjects the other Party to any obligations, which, in each such case, the consent of the other Party shall be required and shall not be unreasonably withheld, conditioned or delayed.
(g)If the Parties obtain any damages, license fees, royalties or other compensation (including any amount received in settlement of such litigation) from a Third Party in connection with a suit brought by a Party pursuant to this Section 11.3.2, such amounts shall be allocated as follows: (i) each Party shall be reimbursed for its out-of-pocket expenses incurred in connection with such litigation, including reasonable attorneys’ fees and disbursements, court costs and other litigation expenses, if any, and (ii) the balance, (x) if Indivior is the Controlling Party, shall be retained by Indivior, with Indivior paying a Royalty on such recovery as if such
recovery were Net Sales of Licensed Product hereunder, (y) if Aelis is the Controlling Party, shall be retained by Aelis.
11.4Patent Term Extensions. The Parties shall discuss the strategy with respect to Patent term extensions or supplemental protection certificates and use good faith efforts to consider in priority extending one or more Aelis Patents or Joint Patents. The Party responsible for filing, prosecuting and maintaining the Aelis Patents or Joint Patents shall control these proceedings in accordance with the Head License. The non-controlling Party shall cooperate with the other Party to obtain any Patent term extensions or supplemental protection certificates, including making available all required regulatory data and information under its Control and executing any required authorizations in a timely fashion to enable the timely filing of any and all documents for procurement of such extensions.
11.5Indivior Patents. As between the Parties, Indivior shall be and shall remain the sole owner of all right, title and interest in and to the Indivior Patents, subject to any license granted to Aelis pursuant to Section 18.1.2(a).
12.SECTION 12: REPRESENTATIONS, WARRANTIES AND UNDERTAKINGS
12.1Representations and Warranties
12.1.1Mutual Representations and Warranties
Each of the Parties hereby represents and warrants to the other Party that, as of the Effective Date:
(a)such Party is duly incorporated and validly existing under the laws of its jurisdiction of incorporation or organisation, as applicable. Such Party has full corporate (or other organisational) right, power and authority, and has taken all action necessary, to enter into this Agreement and to perform its respective obligations under this Agreement and that it has the right to grant the rights, licenses and sub-licenses granted pursuant to this Agreement;
(b)this Agreement is a legal and valid obligation binding upon such Party and enforceable in accordance with its terms, except to the extent that the enforceability may be limited by applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or similar laws from time to time in effect affecting generally the enforcement of creditors’ rights and general principles of equity The execution, delivery and performance of this Agreement by such Party does not conflict with any agreement, instrument or understanding, oral or written, to which it (or any of its Affiliates) is a Party or by which it (or any of its Affiliates) is bound, nor, to its knowledge, violate any Applicable Law of any Governmental Authority having jurisdiction over it (or any of its Affiliates);
(c)the Person executing this Agreement on behalf of such Party is duly authorised to do so by all requisite corporate action (or other organisational action, as applicable); and
(d)each Party has obtained all necessary consents, approvals and authorisations of all Governmental Authorities and other Persons required to be obtained by it as of the Effective Date in connection with the execution, delivery and performance of this Agreement.
12.1.2Representations and Warranties of Aelis
Aelis hereby represents and warrants to Indivior that, as of the Effective Date:
(a)except as set forth on Schedule 12.1.2(a), Aelis exclusively Controls all right, title and interest in and to the Licensed Compounds and Licensed Technology, free and clear of all liens, security interests, licenses and encumbrances, except for the license granted to Indivior herein. Schedule 12.1.2(a) sets forth a true and complete list of all existing licenses and other agreements relating to the Licensed Technology with respect to the Licensed Compounds in the Field;
(b)except for the Head License, no existing licenses or other agreements relating to the Licensed Technology will impact Indivior’s rights herein or impose any obligations on Indivior;
(c)all the Aelis Patents existing as of the Effective Date are identified in Schedule I;
(d)all material transfer agreements regarding the Licensed Compounds to which Aelis is a party or which it is subject were made available to Indivior in the virtual data room entitled “[***]” at least fifteen (15) days prior to the Effective Date;
(e)each institution and other Third Party that received Licensed Compounds from Aelis prior to the Effective Date are listed on Schedule 12.1.2(e);
(f)prior to the Effective Date, Aelis has not authorized the Head Licensor or any other Third Party to prepare or issue articles or publications with respect to the Licensed Compounds;
(g)Aelis has not withheld from Indivior any material information relating to the Licensed Technology which would result in the statements contained in this Section 12.1.2 being misleading;
(h)Aelis has not received written notice from a Third Party alleging that the practice of the Aelis Patents or the Licensed Technology infringe the Patent or other proprietary rights of such Third Party;
(i)Aelis has not received any claim made against it in writing asserting the invalidity or unenforceability of any of the Aelis Patents, and no claim or demand of any Person has been asserted in writing to Aelis that challenges Aelis’ ownership of or the rights of Aelis to use or license any of the Licensed Technology;
(j)Aelis has not granted any Third Party (including any Affiliate or investor in Aelis) any right, title or interest to, or any encumbrances over, the Licensed Technology with respect to the Licensed Compound or the Licensed Product in the Field;
(k)Aelis, its Affiliates, and any inventors of the Aelis Patents Controlled by Aelis have complied with their duty of candor and disclosure to the United States Patent and Trademark Office with respect to those Aelis Patents being prosecuted in the United States, and have also complied with any
similar rules applicable in any relevant foreign patent office where such Aelis Patents are being prosecuted; and to Aelis’ actual knowledge, all prior art to the Aelis Patents has been cited in each applicable country;
(l)Aelis does not have any actual knowledge that the Development, Manufacture, sale or Commercialization of the Licensed Compounds as currently anticipated would infringe any Patent of any Third Party;
(m)Aelis has not misappropriated trade secrets or misused the confidential information of any Third Party in developing the Licensed Technology;
(n)To Aelis’ actual knowledge, no Third Party is infringing or misappropriating the Licensed Technology;
(o)Aelis has taken reasonable measures to protect the confidentiality of the Aelis Know-How owned by Aelis;
(p)all renewals and fees payable in respect of the Aelis Patents have been made/paid when due and none is outstanding;
(q)All inventors named on Aelis Patents have executed appropriate assignment documents to assign or have a legal obligation to assign their rights in any invention to Aelis or the Head Licensor; and
(r)All studies that have been conducted by Aelis with respect to the Licensed Compounds were conducted in accordance with all Applicable Laws and industry standards;
(s)Neither Aelis nor any of its officers, directors, employees or, to Aelis’ actual knowledge, its subcontractors performing services under this Agreement:
(i)has been convicted for an offense related to any federal, state or international anti-bribery or corruption laws; or
(ii)has been excluded from participation in any federal healthcare program (as that term is defined by 42 U.S.C. § 1320a-7b(f)) or is currently listed on the U.S. Department of Health Office of Inspector General’s List of Excluded Individuals or Entities; or
(iii)has been convicted of any crime that could result in exclusion from federal health care programs under 42 U.S.C. §§ 1320a-7, 1320-7a; or
(iv)has been excluded, suspended, debarred, or is otherwise ineligible to participate in federal procurement or non- procurement programs, or is currently listed on the General Services Administration System or Award Management; or
(v)has been, will be, or are currently the subject of a proceeding that could lead to their or their employees, agents, or subcontractors becoming a debarred individual
or debarred entity under Section 306 of the Food Drug and Cosmetic Act (21 U.S.C § 335a); or
(vi)is on any of the FDA Clinical Investigator enforcement lists, including without limitation:
(1)the Disqualified/Totally Restricted List, or
(2)the Restricted List, or
(3)the Adequate Assurances List, or
(4)is subject to an ongoing disqualification proceeding as defined by FDA.
12.2Covenants of Aelis
Aelis shall, during the Term:
12.2.1not provide Licensed Compounds to the Head Licensor or any other Third Parties except as approved by the JSC;
12.2.2promptly after the Effective Date, cause the Head Licensor to return to Aelis any Licensed Compounds that are not being used in connection with an ongoing study with respect to the Licensed Compounds as of the Effective Date;
12.2.3not permit or grant approval to the Head Licensor or other Third Parties to prepare or issue articles or publications regarding the Licensed Compounds without JSC approval;
12.2.4not assign, transfer, convey or otherwise encumber its right, title and interest in the Licensed Compounds or Licensed Technology in the Field without the prior written consent of Indivior;
12.2.5not amend or modify the Head License without the prior written consent of Indivior;
12.2.6not grant any rights to any Third Party in or relating to the Licensed Compounds or Licensed Technology that are inconsistent with, or adversely impact, the license granted to Indivior herein; and
12.2.7comply with all Applicable Laws and good scientific practices in connection with the performance of its obligations hereunder, including the completion of the Aelis Studies.
12.2.8if, at any time after execution of this Agreement, it becomes aware of any circumstances that may affect the accuracy of the representations under Section 12.1.2(s) or that it or any of its officers, directors, employees or subcontractors performing services under this Agreement has become or is in the process of being charged, convicted, debarred, excluded, proposed to be excluded, suspended or otherwise rendered ineligible, or is on an enforcement list, Aelis will immediately notify Indivior in writing via email to ciacompliance@indivior.com and a hard-copy sent to Indivior Inc., Attn: Chief Compliance Officer, 10710 Midlothian Turnpike, Suite 125, North Chesterfield, VA 23235. Aelis understands
that debarment or exclusion may result in termination for cause and for a material breach of this Agreement.
12.3Covenants of Indivior.
12.3.1Indivior shall, during the Term, comply with Applicable Laws in the performance of its obligations hereunder.
12.3.2Indivior shall, directly or indirectly, Develop, Manufacture and Commercialize the Licensed Compounds and Licensed Products in compliance with Applicable Laws and good scientific practices.
13.SECTION 13: INDEMNIFICATION
13.1Indemnification by Indivior
Indivior shall defend, indemnify and hold harmless Aelis, its Affiliates and the Head Licensor and each of their officers, directors, shareholders, employees, successors and permitted assigns (“Aelis Indemnitees”) from and against all Losses resulting from Third Parties’ claims arising out of: (a) Indivior’s gross negligence or willful misconduct in performing any of its obligations under this Agreement; (b) a breach by Indivior of any of its representations, warranties, covenants or obligations under this Agreement; and (c) the Development, Manufacture and Commercialization of the Licensed Compounds and Licensed Products by or on behalf of Indivior, its Affiliates or sublicensees, including any Product Liability Claim; provided, however, that Indivior shall not be liable to indemnify Aelis Indemnitees for any Losses of Aelis Indemnitees to the extent that such Losses result from Aelis’ gross negligence or willful misconduct in performing any of its obligations under this Agreement.
13.2Indemnification by Aelis
Aelis shall defend, indemnify and hold harmless Indivior and its Affiliates and each of their officers, directors, shareholders, and employees successors and permitted assigns (“Indivior Indemnitees”) from and against all Losses resulting from Third Parties’ claims arising out of: (a) breach by Aelis of any of its representations, warranties, covenants or obligations under this Agreement and (b) Aelis’ gross negligence or willful misconduct in performing any of its obligations under this Agreement, provided, however, that Aelis shall not be liable to indemnify Indivior Indemnitees for any Losses of Indivior Indemnitees to the extent that such Losses of Indivior Indemnitees are indemnifiable by Indivior pursuant to Section 13.1.
For the avoidance of doubt, each Party will be liable to the other in contract for its breach of its representations or warranties, covenants or obligations under this Agreement.
13.3Procedure for Indemnification
13.3.1Each Party, on behalf of itself and its respective Aelis Indemnitees or Indivior Indemnitees (each such Person, an “Indemnitee”), shall provide the other Party (“Indemnifying Party”) prompt written notice of any Claim for which such Indemnitee intends to seek indemnification under this Agreement; provided, however, that failure to give such notification shall not affect each applicable Indemnitee’s entitlement to indemnification (or the corresponding indemnifying Party’s indemnification obligations) hereunder except to the extent that the indemnifying Party shall have been materially prejudiced as a result of such failure. The Indemnifying Party shall have the initial right (but not obligation) to
defend any Claim for which an Indemnitee seeks indemnification under this Agreement as contemplated in the preceding sentence so long as the Indemnifying Party provides notice of its assumption of defence within thirty (30) days of receiving such indemnification notice. If the Indemnifying Party fails to state in a written notice during such thirty (30) day period its willingness to assume the defence of such a Claim, Aelis Indemnitee(s) or Indivior Indemnitee(s), as the case may be, shall have the right to defend, settle or otherwise dispose of such Claim at the Indemnifying Party’s cost, subject to the terms hereof.
13.3.2The Indemnifying Party may enter into any settlement with respect to, any such Claim for which it has assumed defence; provided that such settlement (a) includes an unconditional release of the Indemnitee from any and all liability to any Third Party, (b) does not adversely affect the Indemnitee’s rights hereunder or impose any obligations on the Indemnitee in addition to those set forth herein, (c) does not involve any injunctive or other equitable relief which would be imposed on Indemnitee, and (d) does not provide for any finding or admission of a violation of law or violation of the rights of any Person by the Indemnitee or any of its Affiliates. The Indemnitee, its employees, agents and Affiliates shall cooperate with the Indemnifying Party and its legal representatives in the investigation and defense of any action, claim or liability covered by this indemnification. The Indemnitee shall have the right to be represented by counsel of its own selection and at its own expense.
14.SECTION 14: LIABILITY
14.1Subject to Section 14.2, under no circumstances shall either Party be liable to the other Party under any legal or equitable claim or cause of action, whether in contract, tort or otherwise, for indirect, special, punitive or consequential damages.
14.2Notwithstanding any other provision of this Agreement, the liability of the Parties shall not be limited in any way in respect of (a) death or personal injury caused by negligence, (b) fraud or fraudulent misrepresentation, or (c) Losses resulting from Third Party claims that are indemnifiable pursuant to Sections 13.1 or 13.2.
15.SECTION 15: ANTI-BRIBERY
15.1The Parties are committed to conduct business with the highest degree of ethics and integrity and will comply with the letter and spirit of all applicable local and international laws and regulations such as the US Foreign Corrupt Practices Act (“FCPA”) and the UK Bribery Act 2010 and all other applicable anti-corruption laws, as well as any laws implementing the UN Convention Against Corruption and the OECD Anti-Bribery Convention.
15.2In connection with this Agreement, each Party undertakes that it, its directors, employees, and officers have not and shall not directly or indirectly (a) offer, provide, authorize for or promise to another person, or (b) request, accept, or agree to accept from another person, any financial or other advantage or anything of value (“Benefit”), if such Benefit is for the purpose of influencing the receiving person improperly in his/her official capacity for the purpose of obtaining a business advantage, or where such Benefit would constitute a violation of any Applicable Law.
15.3Each Party shall take no action in violation of the laws and regulations mentioned in this Section 15 as it relates to this Agreement.
15.4A Party shall give prompt written notice to the other Party if it has failed to comply with or has breached any provision contained within this Section 15.
16.SECTION 16: TERM
The term of this Agreement shall commence on the Effective Date and shall continue on a Licensed Product-by-Licensed Product basis until the expiration of the last Royalty Term with respect to such Licensed Product anywhere in the world (the “Term”), in each case, unless earlier terminated by a Party in accordance with Section 17. Upon expiration of this Agreement with respect to a Licensed Product, Indivior shall have a non-exclusive, perpetual, fully paid-up, royalty-free license of the scope described in Section 2.2 above.
17.SECTION 17: TERMINATION
17.1Termination by Either Party.
Either Party may terminate this Agreement upon delivery of written notice:
17.1.1in the event that the other Party fails to make a payment hereunder and fails to cure such breach within sixty (60) days after receipt of a written notice thereof, unless the obligation to make such payment has been disputed by such other Party in good faith;
17.1.2in the event that the other Party commits a material breach of its obligations under this Agreement (other than, in each case, a breach set forth in Section 17.3.1, 17.3.2 or Section 18.1.3) and fails to cure such breach within ninety (90) days after receipt of a written notice thereof; provided, however, that, if the material breach is due to a licensee or sublicensee of such other Party, the termination of the license or sublicense with such licensee or sublicensee within ninety (90) days of the notice of breach would be deemed to cure such breach for the purposes of this Section 17.1.2;
17.1.3pursuant to Section 21.1.2 due to a Force Majeure Event; and
17.1.4upon an Insolvency Event of the other Party.
17.2Termination by Indivior.
17.2.1Indivior shall have the right to terminate this Agreement in its entirety or with respect to one or more Regions, without cause, upon ninety (90) days’ prior written notice to Aelis. For purposes of the foregoing, a “Region” shall mean (i) the United States, (ii) Europe, the United Kingdom and Canada, (iii) Australia, Japan and China, (iv) each other country individually;
17.2.2Indivior shall have further rights to terminate this Agreement as set forth in Section 18.1.3.
17.2.3Indivior shall have the right to terminate this Agreement in the event that the Head License is terminated by the Head Licensor, except if Indivior chooses to execute a direct license with the Head Licensor pursuant to Section 7.5.
17.3Termination by Aelis. Aelis shall have the right to terminate this Agreement upon delivery of written notice to Indivior:
17.3.1In case of any breach by Indivior of Section 2.4 (Non-Competition) which Indivior fails to cure within ninety (90) days after receipt of a written notice thereof;
17.3.2In case of any intentional breach by Indivior of Section 10.1 (Confidentiality) for commercial gain; provided that, if such breach was committed by an employee or agent of Indivior without the knowledge of Indivior’s executives or management, Aelis shall have no right to terminate this Agreement pursuant to this Section 17.3.2 if, after such breach, Indivior promptly takes appropriate measures to limit disclosure and the use of such Confidential Information, at Indivior’s cost, including pursuing legal and equitable remedies against such employee, agent and other third-parties.
17.4Automatic Termination. This Agreement shall terminate automatically without any further action by either Party in the event that Indivior does not exercise the License Option within the License Option Period in accordance with Section 2.1.2.
18.SECTION 18 EFFECTS OF TERMINATION
18.1Termination of Rights and Licenses.
18.1.1In the event that this Agreement is terminated pursuant to Section 17.1.1, 17.3.1 or 17.3.2 by Aelis or by either Party pursuant to Section 17.1.2, or by Indivior pursuant to Sections 17.2.1 or 17.2.3:
(a)all rights and licenses granted to Indivior in respect of the Licensed Compound and/or Licensed Products that are subject to such termination shall terminate as of such termination date, and Indivior shall cease Developing, Manufacturing and Commercializing such Licensed Product (except as otherwise set forth in this Section 18.1.1). Notwithstanding the foregoing, at Indivior’s option Indivior may complete and sell any work-in-progress and inventory of the Licensed Products that exist in the Field as of the termination date for a period of six (6) months after the termination date to Aelis or to Third-Parties, at Aelis’ option, provided that Indivior pays Aelis the applicable amounts due on such sales of Licensed Products in accordance with Section 8.
(b)Unless otherwise agreed between the Parties, each Party shall complete in accordance with the established protocols and Applicable Laws and ethical practices any clinical studies on Licensed Compounds and/or Licensed Products that it commenced prior to the termination of this Agreement, provided that Indivior shall pay for the costs of the Aelis Studies that have been commenced.
18.1.2In the event that this Agreement is terminated with respect to any Region or in its entirety for any reason (other than as set forth in Section 18.1.3) with respect to a Licensed Product that is Viable, Indivior:
(a)hereby grants to Aelis a non-exclusive license, with the right to sublicense, under the Patents, Know-How and Licensed Product Trademarks and Trade Dress (excluding Indivior’s corporate trademarks and brand names) owned
by or licensed to (to the extent sublicensable by) Indivior at the time of the termination and that are necessary or reasonably useful to continue to Develop, Manufacture and Commercialize the terminated Licensed Compound and Licensed Product in the Field in the applicable Region;
(b)shall use reasonable efforts to assign and transfer to Aelis, within sixty (60) days of the date of termination, any and all Regulatory Approvals and Regulatory Materials for the Licensed Products subject to such termination. In the event that such a transfer is not possible, Indivior shall use reasonable efforts to provide Aelis with the benefit of the existing Regulatory Approvals and applications therefor for such Licensed Products, including, without limitation, granting Aelis and/or its designees rights to cross-refer to the data and information on file with Regulatory Authorities as may be necessary to facilitate the granting of separate Regulatory Approvals to Aelis; and
(c)shall use reasonable efforts to cooperate with Aelis and/or its designee to transition the Development, Manufacture, and Commercialization of the Licensed Product, including by assigning at Aelis’ request all related agreements, to the extent assignable, at Aelis’ cost.
18.1.3In the event that this Agreement is terminated by Indivior as a result of any of the following acts by Aelis (subject to the cure period set forth in Section 17.1.2), then Indivior shall retain all Regulatory Approvals and Regulatory Materials and the License granted herein shall survive such termination and shall become fully paid-up (subject to payments due to the Head Licensor pursuant to the Head License, which shall be made to Aelis on a pass through basis):
(a)any breach by Aelis of Section 2.4 (Non-Competition) which Aelis fails to cure within ninety (90) days of written notice thereof;
(b)a knowing and intentional false representation by Aelis of a material fact or matter set forth in the representations and warranties in Section 12.1.2 which has the effect of depriving Indivior of significant value under this Agreement;
(c)any intentional breach by Aelis of Section 10.1 (Confidentiality) for commercial gain; provided that, if such breach was committed by an employee or agent of Aelis without the knowledge of Aelis’ executives or management, Indivior shall have no right to terminate this Agreement pursuant to this Section 18.1.3 if, after such breach, Aelis promptly takes appropriate measures to limit disclosure and the use of such Confidential Information, at Aelis’ cost, including pursuing legal and equitable remedies against such employee, agent and other third-parties, at Aelis’ cost; or
(d)any breach by Aelis of Section 2.5 (Rights under Bankruptcy).
18.1.4The Parties acknowledge and agree that upon the Insolvency Event of Aelis, this Agreement shall not terminate and shall remain in full force and effect in accordance with the terms hereof. The Parties acknowledge and agree that upon the Insolvency Event of Indivior, Aelis may terminate this Agreement and shall recover any and all Regulatory Approvals and Regulatory Materials for the Licensed Products.
18.2Return of Confidential Information
18.2.1Upon termination of this Agreement other than by Indivior pursuant to Section 18.1.3, Indivior shall, at Aelis’ option, either return to Aelis all tangible Confidential Information disclosed to Indivior by or on behalf of Aelis (including all copies thereof) or destroy such Confidential Information; provided that Indivior shall have the right to retain one (1) copy of the Confidential Information in a secure location for purposes of identifying its confidentiality obligations under Section 10.
18.2.2Upon termination of this Agreement for any reason, subject to Aelis’ rights in Section 18.1.2, Aelis shall, at Indivior’s option, either return to Indivior all tangible Confidential Information disclosed to Aelis by or on behalf of Indivior (including all copies thereof) or destroy such Confidential Information; provided that Aelis shall have the right to retain one (1) copy of the Confidential Information in a secure location solely for purposes of identifying its confidentiality obligations under Section 10.
18.3Accrued Rights. Termination or expiration of this Agreement for any reason will be without prejudice to and shall not affect any accrued rights, remedies and/or liabilities of either Party at any time up to the date of termination or expiry of this Agreement.
18.4Survival. The following Sections, together with any definitions used and Schedules referenced therein, will survive any termination or expiration of this Agreement: Section 8.1, Sections 10.1, 10.2, 18, 19, 20 (as set forth therein) and 21.
19.SECTION 19: INJUNCTIVE RELIEF
Notwithstanding anything to the contrary in this Agreement, either Party will have the right to seek temporary or permanent injunctive relief in any court of competent jurisdiction as may be available to such Party with respect to any matters arising out of the other Party’s performance of its obligations under this Agreement.
20.SECTION 20: INSURANCE
Each Party shall, during the Term and two (2) years thereafter, carry comprehensive insurance and in such amounts as a prudent business person would carry to cover such Party’s obligations under this Agreement.
21.SECTION 21: MISCELLANEOUS
21.1.1Expenses. Except as otherwise expressly provided herein, each Party shall bear its respective expenses incurred in connection with the preparation, execution and performance of this Agreement and the transactions contemplated hereby, including without limitation all fees and expenses of agents, legal counsel, accountants, tax and financial advisors and other facilitators and advisors.
21.1.2Force Majeure. A Party shall not be liable for non-performance or delay in performance of its obligations hereunder to the extent that and solely for so long as such non-performance or delay in performance is not due to its negligence or breach of this Agreement and is caused by any event reasonably beyond the control of such Party, including wars, hostilities, revolutions, riots, civil commotion, national emergency, unavailability of supplies, epidemics, fire, flood, earthquake, force of nature, explosion, terrorist act, embargo, or any other Act of
God, or any law, proclamation, regulation, ordinance, or other act or order of any court or Governmental Authority (each, a “Force Majeure Event”). In the event of any such Force Majeure Event, the delayed Party shall give the other Party written notice thereof promptly and, in any event, within five (5) Business Days of discovery thereof. If either Party is unable to perform its obligations hereunder as a result of a Force Majeure Event for a period of 270 days or longer and is not continuously exercising diligent good faith efforts to remedy, overcome or work around the Force Majeure Event, then the other Party shall have the right, upon its issuance of written notice to the other Party, to terminate this Agreement.
21.1.3Recordation. Indivior may record the License granted herein, including by use of a short form document, as permitted or required by Applicable Law or otherwise, including recording a security interest in those jurisdictions which permit a licensee to do so. Aelis hereby irrevocably designates and appoints Indivior and its duly authorized officers and agents, as Aelis’s agent and attorney-in-fact to execute such documents and to do all other acts necessary or useful to record the license granted herein. Aelis shall, upon request, give to Indivior such reasonable assistance as Indivior may reasonably request in connection with recording the License.
21.1.4Independent Contractors. It is understood and agreed that nothing in this Agreement nor any agreement related hereto is intended to nor shall be deemed or construed to create a partnership or any relationship between the Parties. The Parties are independent contractors and neither Party is to be considered the agent, partner, joint venturer or employee of the other Party for any purpose whatsoever and neither Party shall have any authority to act in the name or on behalf of the other or otherwise to bind the other Party in any way.
21.1.5Further Assurances. Each of the Parties shall use commercially reasonable efforts to take, or cause to be taken, all actions necessary, proper, or advisable under Applicable Laws to give effect to the provisions of this Agreement.
21.1.6Assignment; Binding Effect. Neither Party shall, without the prior written consent of the other Party, assign, novate, transfer or convey this Agreement (in whole or in part) or any of its rights and obligations hereunder to any Affiliate or Third Party without the written consent of the other Party, which shall not be unreasonably withheld or delayed; provided that Indivior’s right to grant sublicenses hereunder shall be governed by Section 2.2.2.
21.1.7Entire Agreement. This Agreement constitutes the entire contract between the Parties pertaining to the subject matter hereof, and supersedes all prior and contemporaneous agreements, understandings, negotiations, and discussions, whether written or oral, of the Parties; and there are no representations, warranties, or other agreements between the Parties in connection with the subject matter hereof except as specifically set forth herein.
21.1.8Waiver. The waiver by either Party of any right hereunder, or the failure to exercise such right, shall be deemed not to be a waiver of exercising such right in the future or of any other right hereunder in case of breach or failure by the other Party whether of a similar nature or otherwise.
21.1.9Amendments. No amendment and/or modification to this Agreement shall be effective unless set forth in a writing signed by both Parties.
21.1.10Notice. Any notice or other communication to be given under this Agreement by any Party to the other Party shall be in writing and shall be either (a) personally delivered, (b) mailed by registered or certified mail, postage prepaid with return receipt requested, (c) delivered by overnight express delivery service or same-day local courier service, or (d) delivered by facsimile transmission (followed by a copy by the preceding methods in clause (a), (b) or (c)), to the email address of the applicable Party as set forth below, or to such other address as may be designated by the Parties from time to time in accordance with this Section 21.1.10. Notices delivered personally, by overnight express delivery service or by local courier service shall be deemed given as of actual receipt. Mailed notices shall be deemed given five (5) Business Days after mailing. Notices delivered by facsimile transmission shall be deemed given upon receipt by the sender of the transmission confirmation (in the case of a facsimile transmission) if transmitted before 5:00 p.m. (recipient’s local time) on a Business Day, and otherwise on the following Business Day.
Notices sent to Aelis shall be addressed to:
Aelis Farma
146 rue Léo Saignat Institut François Magendie
33000 Bordeaux, France
Email : [***]
With a copy to:
McDermott Will & Emery AARPI
23 rue de l'Université,
75007 Paris, France
Attn : [***]
Email [***]
Notices sent to Indivior shall be addressed to:
Indivior UK Limited
The Chapleo Building
Henry Boot Way, Priory Park, Hull
United Kingdom, HU4 7DY
Attention: [***]
Facsimile: [***]
Email: [***]
With a copy to:
Indivior Inc.
10710 Midlothian Turnpike
Suite 430
Richmond, VA 23235
Attention: [***]
Facsimile: [***]
Email: [***]
and
Clifford Chance US LLP
31 West 52nd Street
New York, NY 10019
Attention: [***]
Facsimile: [***]
Email: [***]
21.1.11Governing Law; Arbitration
(a)This Agreement shall be governed by and construed in accordance with the laws of England and Wales, except that the construction or effect of a patent or patent application licensed under this Agreement shall be decided in accordance with the laws of the country in which the patent or patent application was granted or filed. Subject to disputes being determined by arbitration in accordance with the remainder of this section, the Parties irrevocably submit to the exclusive jurisdiction of the Courts of England and Wales.
(b)All disputes arising out of or in connection with this Agreement shall be finally settled under the Rules of Arbitration of the International Chamber of Commerce by one or more arbitrators appointed in accordance with the said Rules. The arbitration shall be seated in London, England. The language of arbitration shall be English. The Parties and the Arbitration Tribunal shall endeavour to complete any arbitration within twelve (12) months following the full constitution of the Arbitration Tribunal, provided that failure to comply with such timeline shall not be a ground to invalidate the award. Unless the Parties expressly agree in writing to the contrary, the Parties undertake as a general principle to keep confidential all awards in their arbitration, together with all materials in the proceedings created for the purpose of the arbitration and all other documents produced to the other Party in the proceedings not otherwise in the public domain - save and to the extent that disclosure may be required of a Party by legal duty, to protect or pursue a legal right or to enforce or challenge an award in bona fide legal proceedings before a court or other judicial authority.
(c)The parties hereby exclude all rights to seek a determination by the court of a preliminary point of law under section 45 of the Arbitration Act 1996 and all rights of appeal on a point of law from any arbitration award under section 69 of the Arbitration Act 1996.
(d)Notwithstanding anything to the contrary herein, in the event that a Party alleges that the other Party is in breach of this Agreement pursuant to Section 17.1.2, Section 17.1.5 or Section 18.1.3 and the other Party disputes such allegation, the Parties shall refer such dispute to arbitration in accordance with Section 21.1.11. The Party alleging such breach shall have no right to terminate this Agreement pursuant to Section 17.1.2, Section 17.1.5 or Section 18.1.3, as the case may be, unless and until such breach is confirmed in arbitration.
21.1.12Severability. If any provision in this Agreement is held to be invalid, void or unenforceable, then the remainder of this Agreement, or the application of such provision to the Parties or to the circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby and shall be enforced to the fullest extent permitted by law. The Parties agree to renegotiate any such invalid, void or unenforceable provision in good faith in order to provide a reasonably acceptable alternative consistent with the basic purposes of this Agreement.
21.1.13Counterparts. This Agreement may be executed in one or more counterparts, none of which need contain the signatures of both Parties, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument. Counterparts may be delivered via facsimile, electronic mail (including pdf) or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered.
21.1.14Interpretation and Construction. Unless the context of this Agreement otherwise requires, (a) the terms “include,” “includes,” or “including” shall be deemed to be followed by the words “without limitation” unless otherwise indicated; (b) the terms “hereof,” “herein,” “hereby,” and derivative or similar words refer to this entire Agreement; and (c) the terms “Section” and “Schedule” refer to the specified Section and Schedule of this Agreement. Whenever this Agreement refers to a number of days, unless otherwise specified, such number shall refer to calendar days. The headings and paragraph captions in this Agreement are for reference and convenience purposes only and shall not affect the meaning or interpretation of this Agreement. This Agreement shall not be interpreted or constructed in favor of or against either Party because of its effort in preparing it.
21.1.15Third Party Rights. Unless expressly stated in this Agreement, a Third Party shall have no right under the Contracts (Rights of Third Parties) Act 1999 to enforce or enjoy the benefit of any term of this Agreement. Notwithstanding any right of a third party arising hereunder, this Agreement may be amended, varied or terminated by the written agreement of the Parties hereto without reference to, consultation with or the consent of any such third party.
21.1.16Agent for Service. Aelis irrevocably appoints London Central Services Ltd to be its agent for the receipt of service of process in England and Wales and agrees that any Process Document may be effectively served on Aelis by service on London Central Services Ltd. A Process Document shall be deemed to have been duly served if delivered by hand or by courier or sent by prepaid first class post to London Central Services Ltd, at 4, Old Park Lane, London W1K 1QW and shall be deemed to have been received by London Central Services Ltd in accordance with Section 21.1.10.
21.1.17Language. This Agreement was drafted and negotiated in English and, to be valid, any notice or other communication given or made under or in connection with this Agreement must also be in English. If, for any reason, this Agreement or any such notice or other communication (or any part thereof) is translated into any language other than English, the English text shall prevail.
[Signature Page Follows]
The Parties have executed and delivered this Agreement as of the date first written above.
| | |
Indivior UK Limited |
|
By: /s/ Thomas Weis |
Name: Thomas Weis |
Title: Director |
|
Aelis Farma |
|
By: /s/ Pier Vincenzo Piazza |
Name: Pier Vincenzo Piazza |
Title: Chief Executive Officer |
SCHEDULE I
AELIS PATENTS
I.3-(4’-substituted)-benzyl-ether derivatives of pregnenolone
•PCT /EP13/074886 filed on November 27,2013
•Publication number: WO2014083068 A1
| | | | | | | | | | | | | | |
Country | Application Number | Status | Grant Date | Grant Number |
| Australia | 2013351190 | Granted | 12-Jul-18 | 2013351190 |
| Brazil | 112015012194-2 | Pending | na | na |
| Canada | 2892347 | Granted | 2-Apr-19 | 2892347 |
| Chile | 2015/1438 | Granted | 5-Sep-17 | 54727 |
| China | 201380062354.2 | Granted | 5-Sep-17 | 201380062354.2 |
| Colombia | 15144580 | Granted | 23-Nov-16 | 30575 |
| India | 01087/MUMNP/15 | Pending | na | na |
| Japan | 2015-544455 | Granted | 11-May-18 | 6335915 |
| Mexico | MX/A/15/006724 | Granted | 8-Aug-17 | 349703 |
New Zealand | 708086 | Granted | 21-Apr-20 | 708086 |
| Peru | 001377-2017-DIN | Granted | 25-May-18 | 9161 |
Russian Federation | 2015125568 | Granted | 14-Sep-18 | 2667065 |
South Africa | 2015/03326 | Granted | 30-Nov-16 | 2015/03326 |
United States of America | 14/443778 | Granted | 16-Apr-19 | 10259839 |
United States of America | 17/108163a | Pending | na | na |
| Europe | 13795536.5 | Granted | 18-Jan-17 | 2925770 |
Albania | 13795536.5 | Granted | 18-Jan-17 | AL/P/17/181 |
Austria | 13795536.5 | Granted | 18-Jan-17 | 2925770 |
Belgium | 13795536.5 | Granted | 18-Jan-17 | 2925770 |
Bulgaria | 13795536.5 | Granted | 18-Jan-17 | 2925770 |
Croatia | 13795536.5 | Granted | 18-Jan-17 | 2925770 |
Cyprus | 13795536.5 | Granted | 18-Jan-17 | 2925770 |
Czech Republic | 13795536.5 | Granted | 18-Jan-17 | 2925770 |
Denmark | 13795536.5 | Granted | 18-Jan-17 | 2925770 |
Estonia | 13795536.5 | Granted | 18-Jan-17 | 2925770 |
Finland | 13795536.5 | Granted | 18-Jan-17 | 2925770 |
France | 13795536.5 | Granted | 18-Jan-17 | 2925770 |
Germany | 13795536.5 | Granted | 18-Jan-17 | 602013016801.6 |
Greece | 13795536.5 | Granted | 18-Jan-17 | 2925770 |
Hungary | 13795536.5 | Granted | 18-Jan-17 | 2925770 |
Iceland | 13795536.5 | Granted | 18-Jan-17 | 2925770 |
Ireland | 13795536.5 | Granted | 18-Jan-17 | 2925770 |
Italy | 13795536.5 | Granted | 18-Jan-17 | 502017000035590 |
Latvia | 13795536.5 | Granted | 18-Jan-17 | 2925770 |
Lithuania | 13795536.5 | Granted | 18-Jan-17 | 2925770 |
Luxembourg | 13795536.5 | Granted | 18-Jan-17 | 2925770 |
Macedonia | 13795536.5 | Granted | 18-Jan-17 | MK/P/2017/227 |
Malta | 13795536.5 | Granted | 18-Jan-17 | 2925770 |
Monaco | 13795536.5 | Granted | 18-Jan-17 | 2925770 |
Netherlands | 13795536.5 | Granted | 18-Jan-17 | 2925770 |
Norway | 13795536.5 | Granted | 18-Jan-17 | 2925770 |
Poland | 13795536.5 | Granted | 18-Jan-17 | 2925770 |
Portugal | 13795536.5 | Granted | 18-Jan-17 | 2925770 |
Romania | 13795536.5 | Granted | 18-Jan-17 | 2925770 |
San Marino | 13795536.5 | Granted | 18-Jan-17 | SM-T-201700194 |
Serbia | 13795536.5 | Granted | 18-Jan-17 | 55803 |
Slovakia | 13795536.5 | Granted | 18-Jan-17 | 2925770 |
Slovenia | 13795536.5 | Granted | 18-Jan-17 | 2925770 |
Spain | 13795536.5 | Granted | 18-Jan-17 | 2925770 |
Sweden | 13795536.5 | Granted | 18-Jan-17 | 2925770 |
Switzerland | 13795536.5 | Granted | 18-Jan-17 | 2925770 |
Turkey | 13795536.5 | Granted | 18-Jan-17 | 2925770 |
United Kingdom | 13795536.5 | Granted | 18-Jan-17 | 2925770 |
na: not applicable, (a) Continuation filed on December 01, 2020
II.3β-(4-methoxybenzyloxy)pregn-5-en-20-one for use in the treatment of Cannabinoids- Related Disorders
•PCT /EP19/054217 filed on February 20, 2019
•Publication number: WO2019162328 A1
| | | | | | | | | | | | | | |
Country | Application Number | Status | Grant Date | Grant Number |
| Australia | 2019223049 | Pending | na | na |
| Brazil | 11 2020 017026 7 | Pending | na | na |
| Canada | 3 090 975 | Pending | na | na |
| Chile | 2020-2147 | Pending | na | na |
| China | 201980013958.5 | Pending | na | na |
| Europe | 19705190.7 | Pending | na | na |
| Israel | 276697 | Pending | na | na |
| Japan | EP2019/054217 | Pending | na | na |
| Mexico | MX/a/2020/008687 | Pending | na | na |
New Zealand | 766623 | Pending | na | na |
Russian Federation | 2020130586 | Pending | na | na |
South Africa | 2020/04602 | Pending | na | na |
South Korea | 10-2020-7024076 | Pending | na | na |
United States of America | 16/968,237 | Pending | na | na |
na: not applicable
SCHEDULE II
LICENSED COMPOUNDS
AEF0117 Chemical Structure
IUPAC Name: 1-((3S,8S,9S,10R,13S,14S,17S)-3-((4-methoxybenzyl)oxy)-10,13-dimethyl- 2,3,4,7,8,9,10,11,12,13,14,15,16,17-tetradecahydro-1H-cyclopenta[a]phenanthren-17-yl)ethan-1- one
Chemical names: 3ß-(4-methoxybenzyloxy)pregn-5-en-20-one; Pregnenolone, 3ß-(4- methoxybenzyl)ether
Chemical Abstracts Service (CAS) registry number: 1610878-71-1
Other pregnenolone derivatives chemical structures
disclosed in PCT/EP2013/074886
wherein:
R1 is: C1-8 alkyl, C1-8 alkoxy, CN, NO2, amino, COOH, COOCH3, OH, N3, or halogen
and
R2 is: H, OH, C1-8 alkyl, C1-8 alkoxy, C2-C6 alkenyl, halogen, Bn-O-, Bn- optionally
substituted with C1-8 alkyl, C1-8 alkoxy, CN, NO2, amino, COOH or halogen or Ph-
optionally substituted with C1-8 alkyl, C1-8 alkoxy, CN, NO2, amino, COOH or halogen.
SCHEDULE III
OPTION STUDIES
[*** draft option study(s) protocol(s) (97 pages) ***]
SCHEDULE 12.1.2(A)
EXISTING LICENSES AND OTHER AGREEMENTS RELATING TO THE LICENSED TECHNOLOGY WITH RESPECT TO THE LICENSED COMPOUNDS IN THE FIELD
I.Existing licenses relating to the Licensed Technology with respect to the Licensed Compound in the Field:
A.[***].
[***]
II.Other agreements relating to the Licensed Technology with respect to the Licensed Compound in the Field:
A.[***] :
•[***].
[***]
•[***].
[***]
•[***].
[***]
B.[***].
[***]
[***]
SCHEDULE 12.1.2(E)
INSTITUTION AND OTHER THIRD PARTY THAT RECEIVED LICENSED COMPOUNDS FROM AELIS PRIOR TO THE EFFECTIVE DATE
I.List of R&D subcontractors / CROs / CDMOs which received the Licensed Compounds under a commercial / service contract
| | | | | | | | |
| Categories | Names of the subcontractors | Locations |
PRE-CLINICAL DVLPMT | [***] | [***] |
| [***] | [***] |
[***] | [***] |
| [***] | [***] |
| [***] | [***] |
| [***] | [***] |
| [***] | [***] |
| [***] | [***] |
| [***] | [***] |
| [***] | [***] |
| [***] | [***] |
| [***] | [***] |
| [***] | [***] |
| [***] | [***] |
| [***] | [***] |
CHEMISTRY, CMC | [***] | [***] |
| [***] | [***] |
| [***] | [***] |
| [***] | [***] |
| [***] | [***] |
| [***] | [***] |
| [***] | [***] |
CLINICAL DVLPMT | [***] | [***] |
| [***] | [***] |
II.List of academic partners which received the Licensed Compounds
| | | | | | | | | | | | | | | | | | | | |
Categories | Institution Names | Contractual relationships | Addresses | Status |
MTA (a) | Under INSERM collabo- ration contract (b) | Other |
PRE- CLINICAL PROOF OF CONCEPT | [***] | [***] | [***] | [***] | [***] | [***] |
[***] | [***] | [***] | [***] | [***] | [***] |
[***] | [***] | [***] | [***] | [***] | [***] |
[***] | [***] | [***] | [***] | [***] | [***] |
[***] | [***] | [***] | [***] | [***] | [***] |
[***] | [***] | [***] | [***] | [***] | [***] |
[***] | [***] | [***] | [***] | [***] | [***] |
[***] | [***] | [***] | [***] | [***] | [***] |
[***] | [***] | [***] | [***] | [***] | [***] |
CLINICAL STUDIES | [***] | [***] | [***] | [***] | [***] | [***] |
[***]
EXHIBIT A
SIDE LETTER BETWEEN AELIS AND HEAD LICENSOR
Side Letter / Lettre Accord
2 juin 2021
| | | | | | | | | | | |
Inserm Transfert SA 7 rue Watt 75013 Paris | | | Inserm Transfert SA 7 rue Watt 75013 Paris |
| | | |
Université Bordeaux
35 place Pey Berland
33000 Bordeaux | | | Université Bordeaux
35 place Pey Berland
33000 Bordeaux |
| | | |
SC Belenos
6 rue de Candale
33000 Bordeaux | | | SC Belenos
6 rue de Candale
33000 Bordeaux |
| | | |
| Ladies and Gentlemen: | | | Mesdames, Messieurs : |
| | | |
Reference is made to the Licensing Contract, No.[***], between Inserm Transfert SA, Université Bordeaux, SC Belenos (collectively, the “Head Licensor”) and Aelis Farma (“Aelis”), dated January 21, 2020 (“Head License Agreement”). All capitalized terms used but not herein defined shall have the meanings set forth in the Head License Agreement. | | | Il est fait référence au Contrat de Licence n° [***], entre Inserm Transfert SA, Université Bordeaux, SC Belenos (collectivement, le « Concédant Principal ») et Aelis Farma (« Aelis »), en date du 21 janvier 2020 (le « Contrat de Licence Principal »). Tous les termes en majuscules utilisés mais non définis dans la présente lettre accord ont la signification qui leur est donnée dans le Contrat de Licence Principal. |
| | | |
As previously discussed, Aelis is in the process of negotiating a license agreement with Indivior UK Limited (“Indivior”) pursuant to which Aelis will grant Indivior an option to obtain an exclusive license under the Patents to develop, manufacture and commercialize products in the field of addiction and substance use disorders, compulsive disorders, cannabis related disorders and, subject to Indivior’s exercise of an additional option, pain indications (“Indivior License Agreement”), it being specified that Aelis shall remain entirely responsible for the proper performance of Indivior and shall be solely responsible towards the Head Licensor for the performance by Indivior of all obligations binding upon Aelis under the Head License Agreement. This letter agreement, when countersigned, shall evidence the agreement among Aelis and the Head Licensor to amend the Head License Agreement. | | | Comme discuté précédemment, Aelis négocie un contrat de licence avec Indivior UK Limited (« Indivior ») aux termes duquel Aelis accordera à Indivior une option pour obtenir une licence exclusive sur les Brevets pour développer, fabriquer et commercialiser des produits dans le domaine de la dépendance et des troubles liés à l’utilisation de drogues, des troubles compulsifs, des troubles liés au cannabis et, sous réserve de l'exercice par Indivior d'une option supplémentaire, les indications de la douleur (« Contrat de Licence Indivior »), étant précisé qu’Aelis restera entièrement responsable de la bonne exécution par Indivior et sera seule responsable vis-à-vis du Concédant Principal pour l’exécution par Indivior de toutes les obligations d’Aelis au titre du Contrat de Licence Principal. Cette lettre accord, lorsqu'elle sera contresignée, constituera la preuve de l’accord entre Aelis et le Concédant Principal pour modifier le Contrat de Licence Principal. |
| | | |
| | | | | | | | | | | |
1.Section 6.1 paragraph 2 of the Head License is amended as follows: | | | 1.L’Article 6.1 paragraphe 2 du Contrat de Licence Principal est modifié comme suit : |
| | | |
“If Licensee, directly or through its Sublicensees, does not wish to maintain in force, or to continue the procedures for filing, granting, extending, maintaining in force and defending the Patent(s) in a country, it shall inform Inserm Transfert in a timely manner so that Inserm Transfert may, if it so desires, continue the procedures for applying for, defending and maintaining the Patents in the name of the Joint-Owners and at their expense, in that country, in France or abroad”. | | | « Si le Licencié, directement ou par l’intermédiaire de ses Sous-Licenciés, ne souhaite pas maintenir en vigueur, ou poursuivre les procédures de dépôt, de délivrance, d'extension, de maintien en vigueur et de défense de(s) Brevet(s) dans un pays, il en informera Inserm Transfert en temps utile afin que celle-ci puisse, si elle le désire, poursuivre les procédures de demande, de défense et de maintien de(s) Brevet(s) au nom des Copropriétaires et à leurs frais, dans ce pays, en France ou à l'étranger ». |
| | | |
2.A new Section 8.8 is added to the Head License Agreement: | | | 2.Un nouvel Article 8.8 est ajouté au Contrat de Licence Principal : |
| | | |
“Inserm Transfert may terminate the Agreement in case of breach of this confidentiality provision by Licensee, directly or through its Sublicensees or subcontractors, only if such breach is intentional or for commercial gain.” | | | « Inserm Transfert peut résilier le Contrat en cas de violation de la présente clause de confidentialité par le Licencié, directement ou par l'intermédiaire de ses Sous-Licenciés ou sous-traitants, uniquement si cette violation est intentionnelle ou à des fins commerciales ». |
| | | |
3.Notwithstanding anything to the contrary in the Head License Agreement, during the term of the Indivior License Agreement, as long as the Indivior License Agreement is valid and with regard to the license granted to Indivior only, the Head Licensor shall have no right to, and shall not attempt to, terminate the Head License Agreement in any country or convert the license with respect to the Patents in any country into a non-exclusive license pursuant to Sections 3.5 or 3.6 of the Head License Agreement as long as Indivior uses commercially reasonable efforts to develop and commercialize at least one Product as soon as practicable. For purposes of the foregoing, commercially reasonable efforts means the commitment of efforts and resources by Indivior, consistent with those normally applied in the pharmaceutical industry by companies of similar size and with similar resources as Indivior and its Affiliates with respect to a compound or product having similar regulatory | | | 3.Nonobstant toute disposition contraire dans le Contrat de Licence Principal, pendant la durée du Contrat de Licence Indivior, aussi longtemps que le Contrat de Licence Indivior est valide et en ce qui concerne la licence accordée à Indivior uniquement, le Concédant Principal n’aura pas le droit de, et ne tentera pas de, résilier le Contrat de Licence Principal dans un quelconque pays ou de convertir la licence sur les Brevets dans un quelconque pays en une licence non exclusive conformément aux articles 3.5 ou 3.6 du Contrat de Licence Principal tant qu’Indivior fait des efforts commercialement raisonnables pour développer et commercialiser au moins un Produit dès que possible. Aux fins de ce qui précède, des efforts commercialement raisonnables signifient l’engagement d'efforts et de ressources par Indivior, en accord avec ceux normalement appliqués dans l'industrie pharmaceutique par des sociétés de taille et de ressources similaires à celles d'Indivior et de ses Affiliées en ce qui concerne un composé |
| | | |
| | | | | | | | | | | |
factors and similar market potential, profit potential and strategic value, and that is at a similar stage in its development or product life cycle as the Product; provided that in no event shall commercially reasonable efforts require Indivior to take any actions that require Indivior to incur costs or liabilities out of proportion to the benefits under the Indivior License Agreement. In particular, but not exclusively, Indivior shall use commercially reasonable efforts to: | | | ou un produit soumis à des contraintes réglementaires et ayant un potentiel de marché, un potentiel de profits et une valeur stratégique similaires, et qui est à un stade similaire de son développement ou du cycle de vie du Produit ; étant entendu qu’en aucun cas les efforts commercialement raisonnables n'obligeront Indivior à prendre des mesures qui l’obligent à engager des coûts ou des responsabilités hors de proportion avec les avantages prévus par le Contrat de Licence Indivior. En particulier, mais pas exclusivement, Indivior doit faire des efforts commercialement raisonnables pour : |
| | | |
i.not interrupt the development the Product for more than eighteen (18) months; ii.not interrupt the commercialization of the Product for more than twelve (12) months after a first commercialization in a country of the Territory; iii.market the Product within two (2) years following the obtaining of its marketing approval or any other equivalent authorization in a country of the Territory. | | | i.ne pas interrompre le développement du Produit pendant plus de dix-huit (18) mois ; ii.ne pas interrompre la commercialisation du Produit pendant plus de douze (12) mois après une première commercialisation dans un pays du Territoire ; iii.commercialiser le Produit dans les deux (2) ans suivant l'obtention de son autorisation de mise sur le marché ou toute autre autorisation équivalente dans un pays du Territoire. |
| | | |
Consequently, the Head Licensor shall be entitled to terminate the Head License Agreement in the event it considers, in light of the development report provided by Aelis pursuant to Section 3.11 of the Head License Agreement and in accordance with the aforementioned conditions, Indivior does not use its commercially reasonable efforts to develop at least one Product, and Aelis does not seek to terminate the Indivior License Agreement in accordance with the terms thereof and take over the development of the Products pursuant to the Head License Agreement. | | | En conséquence, le Concédant Principal sera en droit de résilier le Contrat de Licence Principal s’il considère, au vu du compte-rendu de développement fourni par Aelis conformément à l’Article 3.11 du Contrat de Licence Principal et conformément aux conditions susmentionnées, qu’Indivior ne fait pas des efforts commercialement raisonnables pour développer au moins un Produit, et qu’Aelis ne cherche pas à résilier le Contrat de Licence Indivior conformément aux termes de celui-ci et à reprendre le développement des Produits conformément au Contrat de Licence Principal. |
| | | |
For the avoidance of doubt and subject to the foregoing, nothing in this letter agreement shall be construed as preventing the Head Licensor to terminate the Head License Agreement for breach by Aelis of its obligations under the Head License Agreement. | | | Pour éviter toute ambiguïté, et sous réserve de ce qui précède, rien dans cette lettre accord ne doit être interprété comme empêchant le Concédant Principal de résilier le Contrat de Licence Principal en cas de violation par Aelis de ses obligations en vertu du Contrat de Licence Principal. |
| | | | | | | | | | | |
| | | |
4. In the event that the Head License Agreement is terminated and the Indivior License Agreement as of the effective date of such termination has not otherwise expired or been terminated, the Head Licensor shall give full effect to Section 9.9 of the Head License Agreement and shall, upon Head Licensor’s request directly or through Indivior's request, undertake to sign with Indivior a license agreement under the same conditions as the Head License Agreement, it being however specified that with regard to payment obligations, only payments set forth in Section 5 of the Head License would be due by Indivior. If the conditions requested by Indivior are different from the Head License Agreement, the Head Licensor nevertheless undertakes to negotiate such conditions in good faith but shall be under no obligation to sign a license agreement with Indivior. | | | 4. Dans le cas où le Contrat de Licence Principal est résilié et le Contrat de Licence Indivior, à la date effective de cette résiliation, n'a pas autrement expiré ou été résilié, le Concédant Principal devra donner plein effet à l’Article 9.9 du Contrat de Licence Principal et devra, à la demande du Concédant Principal, directement ou à travers la demande d’Indivior, s’engager à signer avec Indivior un contrat de licence dans les mêmes conditions que le Contrat de Licence Principal, étant cependant précisé s’agissant des obligations de paiement qu’Indivior sera seulement tenue aux conditions financières de l’article 5 du Contrat de Licence Principal. Si les conditions demandées par Indivior sont différentes du Contrat de Licence Principal, le Concédant Principal s’engage néanmoins à négocier de telles conditions de bonne foi mais n’est pas tenu de signer un contrat de licence avec Indivior. |
| | | |
5.Section 9.1 of the Head License Agreement is amended as follows: | | | 5.L’article 9.1 du Contrat de Licence Principal est modifié comme suit : |
| | | |
“This Agreement may be terminated as of right by either Party (or in the event of non-performance by the Licensee, be converted into a non- exclusive license with respect to Patents at the discretion of Inserm Transfert) in the event of non-performance by the other Party of any of its obligations hereunder, and in particular under Article 5, if the said Party has not remedied the said non-performance within a maximum period of ninety (90) days from the receipt of a written notification of the said non-performance, except in the event of force majeure”. | | | « Le présent Contrat pourra être résilié de plein droit par l'une ou l'autre des Parties (ou en cas d'inexécution par le Licencié, être converti en licence non-exclusive s’agissant des Brevets à la discrétion d'Inserm Transfert) en cas d'inexécution par l'autre Partie de l'une quelconque de ses obligations au titre des présentes, et en particulier au titre de l'article 5, si ladite Partie n'a pas remédié à ladite inexécution dans un délai maximum de quatre-vingt-dix (90) jours à compter de la date de notification écrite de ladite inexécution, sauf cas de force majeure ». |
| | | | | | | | | | | |
| | | |
6.Section 10.8 of the Head License Agreement is amended as follows: | | | 6.L’Article 10.8 du Contrat de Licence Principal est modifié comme suit : |
| | | |
“A Party shall not be liable for non-performance or delay in performance of its obligations hereunder to the extent that and solely for so long as such non-performance or delay in performance is not due to its negligence or breach of this Agreement and is caused by any event reasonably beyond the control of such Party, including wars, hostilities, revolutions, riots, civil commotion, national emergency, unavailability of supplies, epidemics, fire, flood, earthquake, force of nature, explosion, terrorist act, embargo, or any other Act of God, or any law, proclamation, regulation, ordinance, or other act or order of any court or Governmental Authority (each, a “Force Majeure Event”). In the event of any such Force Majeure Event, the delayed Party shall give the other Party written notice thereof promptly and, in any event, within five (5) business days of discovery thereof. If either Party is unable to perform its obligations hereunder as a result of a Force Majeure Event for a period of two hundred and seventy (270) days or longer and is not continuously exercising diligent good faith efforts to remedy, overcome or work around the Force Majeure Event, then the other Party shall have the right, upon its issuance of written notice to the other Party, to terminate this Agreement”. | | | « Une Partie ne sera pas responsable de l'inexécution ou du retard dans l’exécution de ses obligations au titre des présentes dans la mesure où et uniquement pour autant que cette inexécution ou ce retard d'exécution ne soit pas dû à sa négligence ou à une violation du présent Contrat et qu'elle/il soit causé par tout événement raisonnablement hors du contrôle de cette Partie, y compris les guerres, hostilités, révolutions, émeutes, troubles civils, urgences nationales, indisponibilité des fournitures, épidémies, incendies, inondations, tremblements de terre, forces de la nature, explosions, actes terroristes, embargos ou tout autre cas de force majeure, ou toute loi, proclamation, réglementation, ordonnance ou autre acte ou jugement d'une juridiction ou d'une Autorité Gouvernementale (« Cas de Force Majeure »). Dans l'éventualité d'un tel Cas de Force Majeure, la Partie empêchée en informera l'autre Partie par écrit dans les meilleurs délais et, en tout état de cause, dans les cinq (5) jours ouvrables suivant sa découverte. Si l'une des Parties n'est pas en mesure d'exécuter ses obligations en vertu des présentes en raison d'un Cas de Force Majeure pendant une période de deux cent soixante-dix (270) jours ou plus et qu'elle ne déploie pas continuellement des efforts diligents et de bonne foi pour remédier, surmonter ou contourner le Cas de Force Majeure, l'autre Partie aura le droit, dès notification écrite à l'autre Partie, de résilier le présent Contrat ». |
| | | |
| | | | | | | | | | | |
7. The terms of this letter agreement shall be incorporated in the Head License Agreement and all references to the Head License Agreement shall be deemed to refer to such agreement as amended by this letter agreement. Except as modified hereby, the Head License Agreement shall remain in full force and effect. As to Paragraphs 3 and 4 of the present letter agreement, Indivior shall be considered as a third party beneficiary within the meaning of Article 1205 of the Civil Code whereby Aelis requires the Head Licensor to promise to make a commitment to Indivior. As a result, the parties already agree to notify the present letter agreement to Indivior for acceptance by the later. | | | 7. Les termes de cette lettre accord seront integres dans le Contrat de Licence Principal et toutes les references au Contrat de Licence Principal seront considerees comme faisant reference a ce contrat tel que modifie par la presente lettre accord. Sous reserve des modifications apportees par la presente, le Contrat de Licence Principal reste pleinement en vigueur. En ce qui concerne les articles 3 et 4 de la presente lettre accord, ils doivent etre interpretes comme une stipulation pour autrui au sens de l'article 1205 du Code civil au terme de laquelle Aelis fait promettre au Concedant Principal de prendre un engagement au benefice d'Indivior. A ce titre, les parties conviennent expressement que la presente lettre accord sera notifiee a Indivior pour acceptation. |
| | | |
Sincerely, | | | Cordialement, |
| | | |
Aelis Farma | | | Aelis Farma |
| | | |
By: /s/ Pier Vincenzo Piazza | | | Par: /s/ Pier Vincenzo Piazza |
Name: Pier Vincenzo Piazza | | | Nom: Pier Vincenzo Piazza |
Title: President | | | Titre: President |
| | | |
| | | |
In four (4) originals, | | | En quatre (4) exemplaires originaux, |
Bon pour accord:
Inserm Transfert SA
Par: /s/ Pascale AUGE
Nom: Pascale AUGE
Titre: President du Directoire
Date: 02 Juin 2021
[Page de Signature de la Lettre Accord en/re Aelis Farma, 1nserm Transfer/ SA, Universite Bordeazcr: et SC Belenos Signature Page of the Side Letter between Aelis Farma, Inserm Transfer/ SA, Universite Bordeazcc et SC Belenos]
Bon pour accord:
Universite Bordeaux
Par: /s/ Manuel Tunon de Lara
Nom: Manuel Tunon de Lara
Titre: President de l’Univesite de Bordeaux
Date: 02 Juin 2021
[Page de Signature de la Lettre Accord entre Aelis Farma, Inserm Transfert SA, Université Bordeaux et SC Belenos / Signature Page of the Side Letter between Aelis Farma, Inserm Transfert SA, Université Bordeaux et SC Belenos]
Bon pour accord:
SC Belenos
Par: /s/ Chantal Balateau
Nom: Chantal Balateau
Titre: Gerante
Date: 02 Juin 2021
[Page de Signature de la Lettre Accord entre Aelis Farma, Inserm Transfer! SA, Universite Bordeaux et SC Belenos I Signature Page of the Side Letter between Aelis Farma, lnserm Transfer! SA, Universite Bordeaux et SC Belenos]
PORTIONS OF THIS EXHIBIT HAVE BEEN REDACTED.
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS BOTH (i) NOT MATERIAL AND (ii) WOULD BE LIKELY TO CAUSE COMPETITIVE HARM IF PUBLICLY DISCLOSED.
REDACTED MATERIAL IS MARKED WITH [***].
MASTER COLLABORATION AGREEMENT
THIS MASTER COLLABORATION AGREEMENT (the “Agreement”) is made between the parties listed below on the date of the last signature set out below (the “Effective Date”).
| | | | | | | | | | | | | | |
| “Indivior” | | “Aelis” |
| Name (and Co No): | Indivior UK Limited 07183451 | | Name and address | Aelis Farma SAS Institut Magendie 146 Rue Leo Saignat, 33077 Bordeaux |
| Signed: | /s/ Frank Gray | | Signed: | /s/ Pier Vincenzo Piazza |
| Name, Title and date | Frank Gray, SVP – GMD August 3, 2021 | | Name, Title and date | Pier Vincenzo Piazza, CEO August 3, 2021 |
Recitals
Whereas on June 3, 2021, Indivior and Aelis entered into an agreement pursuant to which Aelis granted Indivior an option to obtain an exclusive license (the “License Agreement”);
Whereas Indivior wishes for Aelis to perform certain activities to enable the Parties to move forward with the Development of the Licensed Compounds, in the Field (as defined in the License Agreement);
Whereas Aelis (the “Provider”), wishes to supply such activities subject to the following (i) Key Commercial Terms and (ii) the attached MCA Terms and Conditions.
The Parties hereby agree as follows:
Key Commercial Terms
| | | | | |
| Scope | This Agreement, including the Key Commercial Terms and the MCA Terms and Conditions, shall govern all Activities during the Term (as the terms are defined in the MCA Terms and Conditions). |
| Option Period Aelis Studies | Complemental pharmaceutical, clinical and pre-clinical activities to be Phase III ready at completion of Phase lib of AEF0117 in cannabis addiction or other Licensed Compounds (as defined in the License Agreement). |
| Statements of Work | If the Parties agree to perform an Option Period Aelis Study, the Parties shall submit the proposed Option Period Aelis Study to the JSC (as defined in the License Agreement) for prior approval. The Parties shall negotiate and agree the terms and conditions of all activities related to the Option Period Aelis Study in writing (“Statement of Work” or “SOW”). Each SOW shall include the description of the Activities, the timelines for performance of the Activities, the deliverables, if any, and the Fees. No SOW shall be effective or binding on the Parties until it has been signed by an authorized representative of each Party. Nothing in this Agreement or any SOW shall oblige any Party to enter into any SOW. When signed, each SOW shall be a separate contract that is subject to the terms and conditions of this Agreement. Each SOW shall become effective on the date it is signed by the Parties and shall continue until the earlier of (i) the date specified in the SOW, or if no such date is specified, the date the Option Period Aelis Study, or part of the Option Period Aelis Study referred to in the SOW, is completed, or (ii) termination of this Agreement or the relevant SOW in accordance with the terms of this Agreement. |
| | | | | |
| Aelis Key Contact | Account Mgr: [***] Address: [***] Tel: |
| Indivior Key Contact | Indivior Contact: [***] Address: [***] Tel: |
| Fees | The fees set out in an SOW to be paid by Indivior in consideration for Aelis performing Activities set out in that SOW. |
| Payment term | 60 days following receipt of the Aelis’ invoice. |
| Pharmacovigilance | The Provider will ensure that in respect of the Activities it complies when appropriate with the requirements of Schedule 1. |
| Date Protection Legislation | The Parties shall comply with all applicable legislation and regulatory requirements in force from time to time relating to the use of personal data and the privacy of electronic communications, including without limitation the Data Protection Act 2018 and, for so long as it applies to either party the General Data Protection Regulation ((EU) 2016/679). |
Master Collaboration Agreement Terms and Conditions (“Terms”)
1. DEFINITIONS
When used in this Agreement the following capitalized terms shall have the meanings set forth below:
“Activities” means the Option Period Aelis Studies and activities related thereto to be performed by the Provider as set out in more detail in each SOW.
“Affiliates” shall have the meaning in the License Agreement.
“Applicable Laws” has the meaning set out in the License Agreement.
“Commercially Reasonable Efforts” means with respect to the performance of Activities and its other obligations under this Agreement, the carrying out of such activities in a sustained and diligent manner and using efforts and resources that Aelis would typically devote to products at a similar stage in development or product life.
“Direct costs” means invoiced costs of Subcontractor to perform an activity and external costs directly connected to the performance of an activity such as, but not limited to, travel expenses and audit costs.
“Effective Date” has the meaning set out on the first page of this Agreement.
“Fees” shall have the meaning set out in the Key Commercial Terms.
“Force Majeure Event” any event or circumstances outside the reasonable control of a Party affecting its ability to perform any of its obligations under this Agreement including act of God, fire, flood, severe weather, epidemic or pandemic, war, revolution, acts of terrorism, not or civil commotion, acts of government, trade embargo, labor disputes (excluding labor disputes involving the Party in question), lockouts, interruption of utility service, restraints or delays affecting shipping or carriers, inability or delay in obtaining supplies of adequate or suitable materials, inability or delay in obtaining Third Party services, breakdown or failure in equipment or machinery, cyber-attack, currency restrictions.
“Intellectual Property Rights” or “IPR” shall have the meaning in the License Agreement.
“Joint Steering Committee” or “JSC” has the meaning as described in Section 3.2.1 of the License Agreement.
“Option Period Aelis Studies” shall have the meaning set out in the Key Commercial Terms.
“Party” means Indivior and Aelis individually.
“Parties” means Indivior and Aelis jointly.
“Provider” has the meaning in the Recitals, or if the context so requires, any of Aelis’ Affiliates undertaking work pursuant to SOW.
“Statement of Work” or “SoW” shall have the meaning set out in the Key Commercial Terms.
“Subcontractor(s)” means any contract research organization, academic institution, or other service provider that a Party may wish to engage to perform the activities Subcontractors must be specifically approved by Indivior.
“Third Party” shall have the meaning set out in the License Agreement.
“Term” has the meaning set out in Section 12.1.
“Territory” those countries described in the relevant SOW or as otherwise agreed or updated between the parties in writing.
Any capitalized term that is not defined in this Agreement shall have the meaning set out in the License Agreement.
2. APPOINTMENT
2.1 In consideration of the payment of the Fees by Indivior, and subject to the terms and conditions of this Agreement, Aelis agrees to perform the Activities, including the Option Period Aelis Studies, and share the results of the Option Period Aelis Studies with Indivior in accordance with this Agreement and the terms of the SoW under which such Activities are performed.
2.2 Aelis shall have no obligation to perform any Option Period Aelis Studies, including clinical, non-clinical, and CMC, on AEF0117 that have not obtained the prior approval of the JSC.
2.3 Aelis shall have the right to subcontract the Activities to Subcontractors.
2.4 For all Option Period Aelis Studies performed during the License Option Period (as defined in the License Agreement), Aelis will be the Sponsor, as defined under Applicable Laws.
3. COVENANTS
3.1 Aelis undertakes to Indivior that in performing the Activities, including the Option Period Aelis Studies:
3.1.1 Aelis and its employees, agents or Sub-contractors shall devote, such time, attention and skill as is necessary for the proper performance of the Aelis’ obligations under this Agreement,
3.1.2 Aelis has the necessary skill and expertise to provide the Activities,
3.1.3 Aelis shall perform the Activities as set out in any SOW and in a professional manner and shall use Commercially Reasonable Efforts to meet the time frames set out in the SOW,
3.1.4 Aelis shall comply with all Applicable Laws regarding the Activities in the Territory in which the Activities are performed or take place (and where the Activities includes market research, the European Pharmaceutical Market Research Association Code of Conduct as applied in the Territory (or equivalent local code where outside Europe), and
3.1.5 Aelis shall comply with International Conference Harmonization (ICH) guidelines. The Parties agree that it shall not be considered a breach of this Agreement by Aelis if an objective of an SOW is not achieved provided that Aelis has complied with its obligations set out in Section 3.1. Notwithstanding any contrary provisions in this Agreement, the Parties acknowledge and agree that the Activities are by their nature developmental and, Aelis cannot (and consequently does not) guarantee to Indivior the achievement of a successful outcome of an SOW.
3.2 Additional Covenants
3.2.1 Aelis shall comply with Indivior’s Code of Conduct & Anti-Bribery Policies (at http//www.indivior.com/corporate-governance/conduct-policies/) as amended from time to time (“Policies”) and promptly report any violation of the Policies to Indivior,
3.2.2 Aelis shall maintain during the Term professional indemnity insurance and will not do or omit to do anything whereby this insurance may be wholly or partially vitiated,
3.2.3 Aelis shall obtain any approval or license required in any country to perform the Activities in the Territory (including without limitation any ethics committee or regulatory authority approval) and shall always act in accordance with such approval, immediately informing Indivior of any deviations from, or variations to, such approval,
3.2.4 Aelis shall allow Indivior to audit Aelis on reasonable notice, at Indivior cost, during regular business hours, and in a manner that does not adversely impact Aelis’ regular business activities (at Indivior’s discretion and expense but no more frequently than annually),
3.2.5 Aelis shall not, and undertakes to have adequate and appropriate procedures to ensure that it shall not, partake in or facilitate any tax avoidance, and will promptly report to Indivior any breach or suspected breach of this clause, and in the event of such breach, will allow Indivior to reasonably audit Aelis in this regard,
3.2.6 Indivior shall reasonably assist Aelis in performing the Activities by timely providing any materials or information as set out in the SOW,
3.2.7 Payments made pursuant to this Agreement may be subject to disclosure by Indivior to Governmental Authorities and/or Regulatory Authorities, in accordance with Applicable Laws. Aelis shall retain all records, including but not limited to consents, contracts, invoices, proof of payment, of all funds expended under this Agreement, and will promptly provide such records to Indivior upon Indivior’s request, in no case less than one (1) week, as may be required for Indivior to comply with Applicable Laws. Indivior shall make such disclosures deemed necessary in its reasonable discretion for compliance with such laws without the need to request or obtain consent from Aelis. Aelis shall be responsible for ensuring its and its Affiliates’, as applicable, officers, directors, employees, agents, advisors, consultants, representatives, subcontractors, investigators, and Option Period Aelis Studies personnel comply with the requirements of this Section 3.2.7,
3.2.8 Aelis shall, under any SOW, obtain any necessary prior approval and ongoing review as required by: (i) any appropriate and necessary review authorities, including without limitation, any applicable ethics committee or institutional review board (IRB) that is properly constituted in accordance with applicable country, national, state and local laws and standards to act as a human subjects research review board ("Ethics Committee”) (“IRB”), and all Applicable Laws,
3.2.9 Aelis shall comply with all Applicable Laws with respect to the reporting of adverse events ("AE”) or serious adverse events (“SAE”). Aelis shall report all AE and SAE to Indivior, as applicable, in accordance with the outlined process and timelines stipulated in the SOW and the relevant protocol.
3.3 ALL WARRANTIES, CONDITIONS AND OTHER TERMS, EXPRESS (OTHER THAN THOSE SET OUT IN THIS AGREEMENT) OR IMPLIED, STATUTORY, CUSTOMARY OR OTHERWISE WHICH BUT FOR THIS CLAUSE WOULD OR MIGHT SUBSIST IN FAVOR OF INDIVIOR, ARE (TO THE FULLEST EXTENT PERMITTED BY LAW) EXCLUDED FROM THIS AGREEMENT INCLUDING, IN PARTICULAR, ANY IMPLIED WARRANTIES RELATING TO MERCHANTABILITY, FITNESS FOR A PARTICULAR USE AND NON-INFRINGEMENT.
4. FEES AND EXPENSES
4.1 Save as set out in the SOW, the Fees are inclusive of all costs and expenses (including without limitation reasonable travel expenses, Third Party costs or other expenses).
4.2 Indivior shall only reimburse Aelis for direct costs on a pass-through basis as per the SOW (or otherwise approved in writing in advance) and subject to Aelis providing receipts.
4.3 If any payment due to either Party under this Agreement is not paid when due, then such paying Party shall pay interest thereon (before and after any judgment) at an annual rate (but with interest accruing on a daily basis) of two hundred (200) basis points above the U.S. effective federal funds rate (or in the event that the U.S. effective federal funds rate is no longer an applicable reference rate, such reasonably equivalent alternative as may be selected by Aelis in its reasonable discretion), such interest to run from the date on which payment of such sum became due until payment thereof in full together with such interest. Notwithstanding the previous sentence, the total payable interest rate shall never be less than two hundred (200) basis points.
5. INVOICES AND PAYMENT
5.1 Aelis will submit invoices to Indivior as per the SOW. Invoices will include PO number, approved expenses (if any) and VAT (if any). Indivior shall make payment on undisputed invoices, or portions thereof, within sixty (60) days from receipt of the invoice.
5.2 Aelis shall not submit any invoices nor make any charges until SOW is agreed and signed.
5.3 Invoiced amounts shall include only Direct Costs.
5.4 Aelis shall be responsible for the indirect costs incurred in the performance of the Activities.
5.5 Without prejudice to any other right or remedy that it may have, if the Indivior fails to pay any sum to Aelis on the due date for payment, Aelis may notify the Indivior that if it does not pay, Aelis will suspend work on the SOW in respect of which payment is overdue, and if payment is not made within 10 (ten) days after such notice, Aelis may suspend such work until payment has been made in full.
6. LIABILITY
6.1 AELIS’ TOTAL LIABILITY, IN CONTRACT, TORT (INCLUDING NEGLIGENCE OR BREACH OF STATUTORY DUTY), MISREPRESENTATION, RESTITUTION OR OTHERWISE ARISING UNDER THIS AGREEMENT OR AN SOW OR IN CONNECTION WITH THE PERFORMANCE OR CONTEMPLATED PERFORMANCE OF THIS AGREEMENT OR AN SOW SHALL IN ALL CIRCUMSTANCES BE LIMITED TO THE AMOUNTS PAID BY INDIVIOR UNDER THE SOW UNDER WHICH THE LIABILITY AROSE.
6.2 UNDER NO CIRCUMSTANCES SHALL EITHER PARTY BE LIABLE TO THE OTHER, WHETHER IN CONTRACT, TORT (INCLUDING NEGLIGENCE), FOR BREACH OF STATUTORY DUTY OR OTHERWISE, ARISING UNDER OR IN CONNECTION WITH THIS AGREEMENT FOR: LOSS OF PROFIT; LOSS OF BUSINESS; DEPLETION OF GOODWILL; LOSS OF ANTICIPATED SAVINGS; LOSS OR CORRUPTION OF DATA OR INFORMATION; OR ANY SPECIAL, INDIRECT, CONSEQUENTIAL LOSSES, COSTS, DAMAGES, CHARGES OR EXPENSES INCLUDING THE COSTS OF ANY RECALL.
7. INTELLECTUAL PROPERTY
The ownership and rights to Intellectual Property Rights that are generated during the performance of Activities will be governed by Section 11 of the License Agreement.
8. CONFIDENTIALITY
The managing of Confidential Information during the performance of the Activities will be governed by Section 10.1 of the License Agreement.
9. PUBLICATIONS
Any publication that may result from the Activities will be governed by Section 10.3 of the License Agreement.
10. REPRESENTATIONS, WARRANTIES, AND UNDERTAKINGS
The Parties' respective representations, warranties, and undertakings under this Agreement shall be governed by Section 12 of the License Agreement.
11. ANTI-BRIBERY
The Parties’ rights and obligations with regard to anti-bribery shall be governed by Section 15 of the License Agreement.
12. TERM AND TERMINATION
12.1 This Agreement shall become effective on the Effective Date and, unless earlier terminated in accordance with this Article, shall expire on the fifth (5) anniversary of the Effective Date (“Term”).
12.2 This Agreement or any SOWs may be terminated immediately by a Party on written notice if:
12.2.1 The other Party shall have a receiver appointed, or a moratorium declared, pass a resolution (or have an order made) for winding-up or administration, enter into any voluntary arrangement with its creditors or cease or threaten to cease to carry on business; or
12.2.2 The other Party is in material breach of this Agreement, or the SOW and has failed to cure such breach (if capable of remedy) within 30 days after receiving a written notice requiring it to do so (“Cure Period”), provided that unless the material breach relates to a payment obligation, such Cure Period shall be suspended during any time that a Party seeks good faith resolution of a dispute as to whether an alleged material breach occurred pursuant to this Section 12.2.2; or
12.2.3 (a) The License Option Period expires without Indivior having exercised the License Option or (b) if Indivior has sent a notice to Aelis waiving its right to exercise the License Option.
12.3 Indivior shall have the right to terminate this Agreement or any SOW on two weeks’ written notice to the Provider. In such an event or if a Party terminates this Agreement pursuant to Section 12.2.3, Indivior shall pay the Provider (a) on a pro-rata basis for the Activities actually and demonstrably (by Aelis, to Indivior's satisfaction) performed and (b) any approved costs which the Provider can show it has (prior to the date of notice of termination) contractually committed to pay, and for which such payment cannot be cancelled or refunded to Aelis as part of the Activities. In the event that there has been any overpayment, this will be refunded to Indivior within 60 days following the termination date.
12.4 Any termination of an SOW shall not affect the continuation of other SOWs or of this Agreement. Upon any termination or expiry of this Agreement itself, the terms of this Agreement shall continue to apply to any SOWs then existing until completion (or if applicable termination) of such SOWs.
12.5 The following provisions shall survive expiration or termination of this Agreement: Article 1 (to the extent necessary to interpret the other surviving provision), Section 3.3, Article 0 (to the extent of accrued rights to payment that were not satisfied prior to expiration or termination), Section 5.1 (to the extent of accrued rights to payment that were not satisfied prior to expiration or termination), Articles 6, 7, 8, and 9 and Section 12.3, Section 12.4, Section 12.5, Section 13.1, Section 13.3, and Section 13.4.
13. GENERAL
13.1 This Agreement shall be governed by the laws of England and Wales and subject to the exclusively jurisdiction of English Courts.
13.2 The rights arising under this Agreement may not be assigned or otherwise transferred by either Party without the prior written consent of the other Party, provided, however, that either Party may assign such rights without the consent of the other Party to any of its Affiliates. No assignment of rights under this Agreement shall act as a novation. Any assignment not in accordance with this Section 13.2 shall be void.
13.3 Sections 19 (Injunctive Relief), 20 (Insurance), 21.1.1 (Expenses), 21.1.4 (Independent Contractors), 21.1.5 (Further Assurances), 21.1.8 (Waiver), 21.1.9 (Amendments), 21.1.10 (Notices), 21.1.12 (Severability), 21.1.12 (Counterparts), 21.1.14 (Interpretation and Construction), 21.1.15 (Third Party Rights), 21.1.17 (Language) of the License Agreement are incorporated herein and shall apply to this Agreement.
13.4 This Agreement and the License Agreement constitute the entire Agreement of the Parties with respect to the subject matter and shall supersede any previous agreement, whether written or oral, in respect to the subject matter of this Agreement and the Agreement shall apply to the exclusion of all other terms (including any estimates, quotes, or pitches) and no variation or amendment to this Agreement, SOW nor any Activities shall be made except in writing signed by both Parties. In the event of conflict between the provisions of the License Agreement and this Agreement, the terms and conditions of this Agreement shall prevail. In the event of conflict between an SOW and this Agreement, the terms of this Agreement shall prevail.
13.5 No Party shall be liable to the other Party for any delay or non-performance of its obligations under any SOW (except for the payment of money) arising from a Force Majeure Event. If a Party is delayed or prevented from performing its obligations due to a Force Majeure Event such Party shall: (i) give notice of such delay or prevention due to the Force Majeure Event to the non-affected Party as soon as reasonably practical stating the commencement date and extent of such delay or prevention, the cause thereof and its estimated duration, (ii) use reasonable endeavors to mitigate the effects of such Force Majeure Event provided that such Party shall not be required to procure materials or services at unreasonable prices or under unreasonable terms, and (iii) resume performance of its obligations as soon as reasonably practicable.
13.6 Each Party’s Affiliates may enforce a SOW and this Agreement in their own right, save Aelis and Indivior may vary or rescind this Agreement without any Affiliates’ consent.
PORTIONS OF THIS EXHIBIT HAVE BEEN REDACTED.
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS BOTH (i) NOT MATERIAL AND (ii) WOULD BE LIKELY TO CAUSE COMPETITIVE HARM IF PUBLICLY DISCLOSED.
REDACTED MATERIAL IS MARKED WITH [***].
January 6, 2022
Aelis Farma
146 rue Leo Saignat Institut Francoise Magendie
33000 Bordeux, France
Re: License Agreement by and among Indivior UK Limited ("Indivior UK") and Aelis Farma ("Aelis"), dated June 3, 2021 (the "License Agreement") and that certain Letter Agreement regarding an Irrevocable Subscription Agreement and Irrevocable Lock-Up Commitment, dated January 6, 2022 (the "Subscription Agreement").
Dear Mr. Piazza:
This letter agreement is to memorialize certain agreements between Indivior UK and Aelis.
Pursuant to Section 3.2.1(d) of the License Agreement, Indivior UK has decided that certain studies approved by the JSC as set forth on Schedule A attached hereto should be performed during the License Option Period, as such term is defined in the License Agreement (the "Development Nonclinical and CMC Studies"). Pursuant to Section 3.2.1(d) of the License Agreement, the reasonable and documented costs of these studies shall be refunded by Indivior to Aelis on a full cost basis.
Indivior UK has agreed to participate in the private placement described in the Subscription Agreement with a total subscription amount set forth therein.
Aelis agrees that if the fund raise described in the Subscription Agreement occurs, then notwithstanding the terms of the License Agreement and Section 3.2.1(d), Indivior UK shall not be required to refund the reasonable and document costs of these studies and instead Aelis shall be responsible for the costs and expenses of the these Development Nonclinical and CMC studies up to the amount set forth in Schedule A, with any further costs to be subject to the approval and review of the JSC pursuant to the terms of the License Agreement.
It is hereby agreed that, as a matter of evidence agreement (convention de preuve), this letter is signed electronically in accordance with the European and French Laws in force, in particular Regulation (EU) No 910/2014 of the European Parliament and of the Council dated 23 July 2014 and Articles 1366 et seq. of the French Civil Code. For this purpose, it is agreed to use the online platform DocuSign (www.docusign.com). It is further agreed (i) that the electronic signature which it attaches to this document has the same legal value as its handwritten signature and (ii) that the technical means implemented in the context of this signature confer a definite date (date certaine) to this document.
It is acknowledged and accepted that the signature process used to electronically sign this document enables the parties to have a copy of this document on a durable medium or to have access to it, in accordance with Article 1375 paragraph 4 of the French Civil Code.
Please indicate your agreement by executing below.
Sincerely,
| | | | | | | | | | | |
| INDIVIOR UK LIMITED | | |
| | | |
| By: | /s/ Gilles Picard | |
| Name: | Gilles Picard | | |
| Title: | Head of EUCAN Operations |
Agreed to this date of January 6, 2022 by:
| | | | | | | | |
| AELIS PHARMA | |
| | |
| By: | /s/ Pier Vincenzo Piazza |
| Name: | Pier Vicenzo Piazza | |
| Title: | Chief Executive Officer |
SCHEDULE A
| | | | | | | | | | | | | | |
| Studies and budgets approved by the JSC and internal Indivior team | Budget | Date JSC Approval |
| Non Clinical Development | [***] | [***] | $[***] | [***] |
| [***] | $[***] | [***] |
| [***] | [***] | $[***] | [***] |
| [***] | [***] | $[***] | [***] |
| [***] | $[***] | [***] |
| [***] | $[***] | [***] |
| [***] | $[***] | [***] |
| Clinical Development | [***] | [***] | $[***] | [***] |
| [***] | $[***] | [***] |
| [***] | [***] | $[***] | [***] |
| [***] | $[***] | [***] |
| TOTAL | $[***] | |
| | | | | | | | | | | |
| CMC activities approved by the JSC and internal Indivior team | Adjusted Budget | Date JSC Approval |
| CMC | [***] | $[***] | [***] |
| [***] | $[***] | [***] |
| TOTAL CMC COSTS | $[***] | |
January 6, 2022
To:
AELIS FARMA
Institut Frangois Magendie
146 rue Leo Saignat, 33000 Bordeaux
(the “Company”)
Bryan Garnier & Co. Ltd
16 Old Queen Street,
London SW1H 9HP,
United Kingdom
Bryan Garnier Securities
26 avenue des Champs Elysees,
75008 Paris
France
ODDO BHF SCA,
12 boulevard de la Madeleine,
75440 Paris Cedex 09
France
Re: Subscription and Lock-Up Agreement
Dear Sirs,
We, Indivior UK Limited, a private limited company organized under the laws of the United Kingdom, whose registered office is located at The Chapleo Building Henry Boot Way, Priory Park, Hull, United Kingdom, HU4 7DY, registered with the Companies house under number 07183451, understand that Aelis Farma, a societe par actions organized under the laws of France, whose registered office is located at Institut Francois Magendie, 146 rue Leo Saignat, 33000 Bordeaux, France, registered with the Registre du Commerce et des Societes of Bordeaux under number 797 707 627, intends, subject to market conditions and the approval by the AMF of the Prospectus (as such terms are defined below), to offer newly issued ordinary shares of the Company on a non pre-emptive basis (the “New Shares”) in the context of the admission of the New Shares and of all the existing ordinary shares of the Company (together with the New Shares, the “Shares”) to listing and trading on the regulated market of Euronext in Paris (the “Admission”, and together with the Offering (as defined below), the “IPO”).
We also understand and acknowledge that:
–The offering of Shares of the Company (the “Offered Shares”) is expected to be made through (i) an offering to retail investors in France pursuant to a public offering (the “French Public Offering”), (ii) a private placement to selected investors outside the United States, Canada, Australia and Japan in offshore transactions as defined in accordance with, and in reliance on, Regulation S (“Regulation S”) under the U.S. Securities Act of 1933, as amended (the “Securities Act”) (the “Reg S Tranche”), and (iii) a private placement in the United States to a limited number of qualified institutional buyers (“QIBs”) as defined in Rule 144A (“Rule 144A”) under the Securities Act pursuant to the exemption from registration under Section 4(a)(2) of the Securities Act or another exemption from, or in a transaction not subject to, the registration requirements of the Securities Act (the “US Tranche”, and together with the Reg S Tranche, the “International Private Placement” and, together with the French Public Offering, the “Offering”). The Offered Shares have not been and will not be registered under the Securities Act.
–The Company has appointed Bryan Garnier & Co, Ltd., Bryan Garnier Securities and Oddo BHF SCA as joint global coordinators and joint bookrunners for the Offering (together, the “Managers”.
–Based on the current indicative timetable, the French Public Offering is expected to take place from February 2 to February 14, 2022 at 18.00 and the International Private Placement is expected to take place from February 2 to February 15, 2022 at noon (Paris time) (the “Offering Period”).
–The initial proposed Offering price per Offered Share for both the French Public Offering and the International Private Placement, as indicated in the Offering Documents, is to be freely set by the Company’s Board of Directors pursuant to applicable Euronext Paris and French offering and listing rules for open price offers (Offre a prix ouvert) within a maximum range between minus 15% to plus 15% around the midpoint of the range (the “Offering Price Range”).
–The final Offer Price per Offered Share (the “Final Offer Price”) is to be freely determined within the Offering Price Range by the Company’s Board of directors on the final day of the Offering Period (as defined below), in consultation with the Managers, following, and on the basis of, the International Private Placement bookbuilding process as undertaken under standard professional market practices.
–In accordance with French corporate law, the issuance of the New Shares shall only be realized (and accordingly the listing of the Company’s shares shall only take place), if, as a result of the Offering, a minimum of 75% of the IPO capital increase is being subscribed by investors at a Final Offer Price at least equal to the lower point of the Offering Price Range.
–The Final Offering Price in the International Private Placement and the French Public Offering will be identical.
–The final number of Offered Shares and the Final Offer Price of the Offered Shares will be decided by the Company’s board of directors (the “Board of Directors”) on the final day of the Offering Period based on the outcome of a standard market practice bookbuilding process and will be published on the same date by means of an ad hoc press release through an electronic dissemination system across the entire European Economic Area and on the Company’s website (www.aelisfarma.com).
–Based on the current indicative timetable, the Offered Shares are currently expected to be delivered through the book-entry facilities of Euroclear France S.A. against payment on February 17, 2022 and the first day of trading of all the existing shares of the Company and the New Shares is expected to occur on February 18, 2022.
–The terms and conditions of the Offering will be set out (i) in connection with the French Public Offering, in a prospectus drafted in French, to be approved by the French Financial Markets Authority (the “AMF”) hereinafter the “Prospectus”, as such Prospectus may be amended or supplemented and including any documents incorporated by reference therein, as the case may be, and (ii) in connection with the Reg S Tranche, an offering memorandum drafted in English and containing an English language translation of relevant sections of the Prospectus (the “Preliminary International Offering Memorandum”) and (iii) in connection with the US Tranche, an English language Private Placement Memorandum prepared by the Company (the “Preliminary US PPM”), in the case of each of (ii) and (iii), as will be amended or supplemented respectively by a final international offering memorandum (the “Final International Offering Memorandum”) and a final US PPM (the “Final US PPM”), including the pricing of the New Shares and certain amendments to, respectively, the Preliminary International Offering Memorandum and the Preliminary US PPM (each of the Prospectus, the Final International Offering Memorandum and the Final US PPM being collectively referred to, together with any press release on the Offering - including relating to the price (the “Offering Price”) - as the “Offering Documents”, and each individually an “Offering Document”).
–As of the date hereof, the issued share capital of the Company amounts to 3996,98 euros, divided into 399.680 ordinary shares, each having a nominal value of 0.01 euro; it is expected that the general shareholders meeting of the Company expected to take place on January 11, 2022 shall decide that the share capital of the Company will be increased to 38,371.01 euros and that the nominal value of the shares of the Company will be subsequently divided by 24 resulting in 9,592,752 shares, each having a nominal value of 0,004 euros. Subject to any exercise of outstanding warrants of the Company prior to the Offering, the number of shares of the Company, and as a result the share capital of the Company, may be higher than such number and amount.
Based on the foregoing, we undertake, represent and agree to the following:
1. IRREVOCABLE SUBSCRIPTION AGREEMENT
(a) Subject to (i) the terms of this letter, and (ii) the approval by the AMF of the Prospectus, and publication of the price range, we irrevocably and unconditionally undertake to the Company and the Managers to place a subscription order in the context of the Offering for (i) an aggregate amount in euro equal to USD 11 million, as calculated on the basis of the Federal Reserve Bank of New York noon buying rate for euro/USD exchange rate two days prior to the date the Board of Directors shall determine the Offering Price Range (the “Subscription Amount”), to be paid exclusively in cash (the “Subscription Agreement”) and (ii) for the number of Offered Shares (rounded down to the nearest whole number) corresponding to the Subscription Amount, for a price per Offered Share within the Offering Price Range to be freely determined by the Board of the Company, which shall be the same price paid by all investors in the Offering.
(b) We acknowledge and understand that our order pursuant to the Subscription Agreement should in principle be fulfilled in full but may be reduced based on, among other things, market demand, in accordance with market practice allocation by the Managers (including notably if market demand is significantly higher than the number of Offered Shares).
(c) The payment of our Subscription Amount shall be made in accordance with § 100 of Schedule 1.
(d) Notwithstanding any other provision of this letter, we will rely on, and base our investment decision solely on, the information contained in (i) the Preliminary International Offering Memorandum made available to us after the opening date of the Offering book-building and (ii) the Final International Offering Memorandum.
(e) We understand that the information to be contained in the Preliminary International Offering Memorandum and the Final International Offering Memorandum restores the equal access to sensitive and confidential information pertaining to the Company between the current shareholders of the Company and the public or third party institutional investors, as applicable.
2. IRREVOCABLE LOCK-UP COMMITMENT
(a) We unconditionally and irrevocably undertake, agree and covenant to the Managers, not to, directly or indirectly, except with the prior written agreement of the Managers, during the period beginning from the date hereof and continuing to and including the date which is 365 calendar days after the settlement-delivery date of the IPO, in relation to the totality of the Offered Shares to be subscribed by Indivior in the IPO (the “Indivior Offered Shares”) pursuant to the Subscription Agreement (the “Lock Up Period”):
A. offer, lend, mortgage, assign, charge, pledge, sell, contract to sell or sell any option or contract to purchase, purchase any option or contract to sell or grant any option, right or warrant to purchase, lend or otherwise transfer or dispose of, directly or indirectly, any of the Indivior Offered Shares, or any interest in such Indivior Offered Shares;
B. enter into any derivative or other agreement or transaction that transfers, in whole or in part, any of the economic consequences of ownership of the Indivior Offered Shares; and
C. publicly announce such an intention to effect any transaction mentioned in the two paragraphs above.
provided however, that (i) this will not prevent Indivior accepting, or voting in favour of, an offer made to all investors in the Company by way of public tender offer or equivalent structure and (ii) these restrictions shall not prevent us to transfer shares of the Company between controlled (within the meaning of Article L. 233-3 of the French Commercial Code) entities or companies of the Indivior group, provided that the acquirer shall continue to be bound by the foregoing restrictions for the remainder of the Lock-Up Period (the “Lock-Up Commitment”).
3. DURATION
In the event that the Admission does not occur by March 31, 2022 at the latest, the provisions of this letter (notably including the Subscription Agreement and the Lock-Up Commitment provisions), other than in Article 5.5 below, shall automatically lapse. No other termination shall be permitted.
4. REPRESENTATIONS
We agree, acknowledge, represent, warrant and undertake to the Company and each Manager that, on the date hereof and the date of our subscription for Offered Shares:
(a) We have the requisite power and authority to enter into and to perform this letter. This letter and any act, agreement and any other document to be executed by us in accordance with this letter constitute or will, when executed, constitute our binding obligations in accordance with their terms. No consent, approval, authorisation, order, filing, registration or qualification of or with any court, governmental authority or third person is required to be obtained by us in connection with the execution and delivery of this letter by us or the performance of our obligations under this letter.
(b) We agree that irreparable damage may occur if any provision of this letter were not performed in accordance with the terms hereof and that each Manager shall be entitled to an injunction or injunctions to prevent breaches of the undertakings contained in this letter or to enforce specifically the performance of the terms and provisions hereof in any court, in addition to any other remedy to which it is entitled at law or in equity.
(c) The representations, warranties and undertakings contained in Schedule 1 are true and correct.
(d) Any authorized signatory purchasing the Offered Shares on our behalf per the Subscription Agreement shall furthermore be deemed to represent and warrant that (i) such person has the power, capacity and authority to represent such purchasing entity and to make and subscribe to each of the representations, warranties and undertakings on behalf of such purchasing entity contained in Schedule 1, and (ii) each of the representations, warranties and undertakings contained in Schedule 1 is true and correct as regards such purchasing entity, and such purchasing entity is bound by all such representations, warranties and undertakings.
(e) The Company and the Managers will rely upon the truth and accuracy of the representations, warranties and undertakings set forth in this letter, and we agree to notify the Company which will notify each Manager as soon as practicable in writing if any of the representations, warranties or undertakings contained in this letter cease to be accurate and complete or become misleading on or before the closing date of the Offering.
5. MISCELLANEOUS
5.1 Partial Invalidity – Interpretation
(a) The preamble of this letter forms a full part of this letter.
(b) If, at any time, any provision of this letter is or becomes illegal, invalid or unenforceable in any respect under any applicable laws of any relevant jurisdiction, neither the legality, validity or enforceability of the remaining provisions will in any way be affected or impaired.
(c) The titles of the Articles in this letter are for convenience only and shall not be taken into account in the interpretation of this letter.
5.2 Third Party Stipulation
This letter is enforceable by any Manager and their respective affiliates (as defined in Rule 501 of Regulation D under the Securities Act (the “Affiliates”)) as a third party stipulation (stipulation pour autrui). The Managers and each of their respective Affiliates are entitled to rely and will rely upon the truth and accuracy of the representations, warranties, agreements and acknowledgements contained in this letter, and have the benefit of the provisions of this letter as if they were a party.
5.3 Amendments
Changes and amendments made to the provisions of this letter shall only be made in writing in a document signed by us and the Company and with the prior written consent of the Managers.
5.4 Waiver
If the Company or the Managers do not exercise a right hereunder, none of them shall be deemed to have waived their right and their respective capacity to exercise their right shall not be affected in any way.
5.5 Confidentiality – Publicity
(a) We undertake to treat as confidential and not disclose to a third party this letter, the provisions of this letter, the transactions consummated pursuant to this letter and any confidential information concerning any of the Company or the Managers that may come into our possession, without the prior written consent of such person.
(b) Notwithstanding the preceding paragraph, we may disclose or use any such confidential information to the extent that:
(i) such disclosure or use is authorized by this letter;
(ii) such disclosure or use is required by any law or any governmental authority;
(iii) such disclosure or use is necessary to defend our interests in connection with any judicial or administrative proceedings; or
(iv) the relevant confidential information becomes publicly available, other than by a breach of a confidentiality undertaking on our part,
provided that, prior to such disclosure or use, we shall promptly notify the Company and each Manager, to the extent legally permitted.
(c) Notwithstanding the preceding paragraphs, we agree that the existence of this letter, its terms and conditions (including the Subscription Agreement and the Lock-Up Commitment) may be disclosed (i) in the context of the IPO, to the AMF and to the public, including the Registration Document (and any translation thereof), the Offering Documents, the press releases (including in the intention to float press release that will be published following the approval by the AMF of the Registration Document) and in any other document relating to the IPO and, more generally (ii) by the Company and each Manager following its execution, including if required by applicable laws or regulations or any competent regulator.
(d) If the undertakings of this letter terminate pursuant to Article 3 above, this Article 5.5 shall remain in full force and effect for a period of one (1) year after such termination.
5.5 Entire Agreement
(a) This letter, its forewords, its schedule and exhibit, and any documents referred to therein, shall constitute our whole undertaking with respect to the purpose of this letter.
(b) This letter replaces and cancels all previous undertaking or agreement between the Company and us relating specifically to such purpose.
5.6 Electronic Signature
(a) It is hereby agreed that, as a matter of evidence agreement (convention de preuve), this letter is signed electronically in accordance with the European and French Laws in force, in particular Regulation (EU) No. 910/2014 of the European Parliament and of the Council dated 23 July 2014 and Articles 1366 et seq of the French Civil Code. For this purpose, it is agreed to use the online platform DocuSign (www.docusign com). It is further agreed (i) that the electronic signature which it attaches to this document has the same legal value as its handwritten signature and (ii) that the technical means implemented in the context of this signature confer a definite date (date certaine) to this document.
(b) It is acknowledged and accepted that the signature process used to electronically sign this document enables the parties to have a copy of this document on a durable medium or to have access to it, in accordance with Article 1375 paragraph 4 of the French Civil Code.
5.7 Applicable Law – Disputes
(a) This letter shall be governed in all respects, including as to validity, interpretation and effect, by the laws of France, without giving effect to its principles of conflict of laws.
(b) All disputes arising out of or in connection with this letter shall be submitted to the exclusive jurisdiction of the commercial court of Paris (Tribunal de commerce de Pans).
* * *
Executed on January 6, 2022, in London by:
| | | | | |
| INDIVIOR UK LIMITED |
| |
| /s/ Gilles Picard | |
| Represented by Mr. Gilles Picard, Head of EUCAN operations |
Accepted on January 6, 2022, in Bordeaux by:
| | | | | |
| AELIS FARMA SAS |
| |
| /s/ Pier Vincenzo Piazza | |
| Represented by Mr. Pier Vincenzo Piazza, President |
Accepted in relation to the Lock-Up Commitment on January 6, 2022, in Paris by:
| | | | | |
| /s/ Olivier Garnier | |
| Bryan Garnier & Co. Ltd |
| Represented by Olivier Garnier |
| | | | | |
| /s/ Gregoire Gillingham | |
| Bryan Garnier Securities | |
| Represented by Gregoire Gillingham |
| | | | | |
| /s/ Nicolas Delage | |
| ODDO BHF SCA | |
| Represented by Nicolas Delage |
SCHEDULE 1
Representations, Warranties and Undertakings
We hereby agree, acknowledge, represent, warrant and undertake as follows:
1. None of Aelis Farma and the Managers or any of their respective Affiliates and then and their respective Affiliates’ officers, directors, employees, advisors, agents, representatives, or associates makes any representations or gives any warranty or undertaking that the Offering will be launched or completed (within any particular time period or at all) or will be under any liability whatsoever to us in the event that the Offering is not launched or completed for any reason.
2. Each Manager is acting on behalf of the Company and no one else in connection with the Offering. They will not regard any other person as their client in relation to the Offering and will not be responsible to anyone other than the Company for providing the protections afforded to their respective clients nor for providing advice in relation to the Offering or the contents of any Offering Document. Our subscription and acquisition of Offered Shares is not deemed to constitute a client relation between us and any of the Managers or any of their respective Affiliates.
3. None of the Managers or any of their respective Affiliates or any of their respective officers, directors, employees, advisors, agents, representatives or associates accepts any responsibility or liability whatsoever for, or makes any representation, warranty or undertaking, express or implied, as to the truth, accuracy, completeness or fairness of the information or opinions in any Offering Document (or whether any information has been omitted from any Offering Document) or any other information relating to the Company or its Affiliates, whether written, oral or in a visual or electronic form, and howsoever transmitted or made available or for any loss howsoever arising from any use of any Offering Document or their contents or otherwise arising in connection therewith and/oi our participation in the Offering. Accordingly, each of the Managers and then respective Affiliates disclaims, to the fullest extent permitted by applicable law, all and any liability, whether arising in tort or contract or that they might otherwise be found to have in respect of any Offering Document, any such statement and/or our participation in the Offering.
4. We have not relied on and are not and will not be entitled to rely on any investigation that any of the Managers or their respective Affiliates or any person acting on them or their Affiliates behalf may have conducted with respect to the Shares or the Company.
5. We have conducted our own investigation and made our own investment decision regarding our investment in the Shares based on our own judgement, knowledge, due diligence and analysis with respect to the Shares and the Company and have satisfied ourselves concerning the relevant financial, intellectual property and other considerations relevant to our undertakings in this letter and our investment in the Shares.
6. We have available to us, and have reviewed, all information that we believe is necessary or appropriate in connection with our investment in the Shares.
7. We have had the opportunity to ask management of the Company questions while making our investment decision and received answers fully satisfactory to us from representatives of the Company.
8. We have sufficient knowledge, sophistication and experience in financial and business matters to be capable of evaluating the merits and risks of an investment decision in the Company by subscribing for the Shares, and we are able to bear the economic risk, have adequate means of providing for our current and contingent needs, have no need for liquidity with respect to our investment in the Shares, and are able to withstand a complete loss of an investment in the Shares.
9. We agree that the Offering Price Range will be freely determined by the Company, and that the and the Final Offer Price will be freely determined (within the Offer Price Range) by the Company following consultations with the Managers, and on the basis of a bookbuilding process undertaken under standard professional market practices.
10. We agree to have our order corresponding to the Subscription Amount of the Indivior Investment being entered by the Managers in the order book of the International Private Placement maintained by the Managers, and to transfer the cash corresponding to the Subscription Amount at the latest five business days before the settlement date of the Offering (the “Settlement Date”) on an account opened by us with one of the Managers. Arrangements shall be made by us, with the
assistance of the Managers, reasonably prior to the launch of the IPO (including in relation to KYC requirements) in order for the cash transfer of the Subscription Amount to be made on the Settlement Date as described below.
Payment of the aggregate subscription price for the Offered Shares will be made in accordance with French delivery versus payment settlement procedures.
On the Settlement Date, simultaneously against receipt by the Company of a certificat du depositaire des fonds conforming to Article L 225-146 of the French Code de commerce from the financial institution appointed by the Company to act as centralizing bank in relation to the IPO (which name and details will be provided to us prior to the Prospectus approval by the AMF) confirming receipt of payment of the aggregate amount of the Subscription Amount for the Offered Shares, the centralizing bank shall credit the number of shares subscribed and purchased by us in a securities account opened in each of the books of the custodians for the Managers. The shares subscribed pursuant to this letter will be subsequently delivered to us by the relevant Manager to the account specified by us against payment by us of the aggregate subscription price of such shares .The centralizing bank will then deliver the subscription monies to the Company.
We and the Company acknowledge that the intermediation of the settlement and delivery process of the Offered Shares in connection with the settlement as described herein is undertaken by the Managers (i) solely in their capacity as agent of the Company and not as principal and (ii) to facilitate the settlement of the subscription of the Offered Shares and delivery of the Offered Shares as provided herein. In no event shall the Managers have any liability or obligation in respect of any failure on the part of the Company or the subscribers to perform their respective obligations.
11. The Company and the Managers may enter into agreements similar to the letter entered into with us with one or more investors as part of the Offering.
12. We are purchasing the Offered Shares in the context of the Offering pursuant to the terms of the Offering Documents.
13. We are not an Affiliate of the Company, and are not acting on behalf of an Affiliate of the Company.
14. We are purchasing the Offered Shares solely for our account, for investment purposes.
15. We acknowledge that the Offered Shares are being offered in a transaction not involving any public offering in the United States within the meaning of the Securities Act, and that the Shares have not been and will not be registered under the Securities Act or with any state or other jurisdiction of the United States. We agree and acknowledge that we are purchasing the Shares in an “offshore transaction” as defined in Rule 902 of the Securities Act, in reliance on Regulation S of the Securities Act.
16. We are knowledgeable of, or have been independently advised as to the applicable securities laws of the securities regulatory authorities (the "Authorities") having application in the jurisdiction in which we are resident (the "International Jurisdiction") which would apply to the acquisition by us of the Shares, if any.
17. Neither we nor any of our Affiliates and our and their respective directors, officers, agents or, to the best of our knowledge, employees, affiliates or other persons acting on its behalf, (i) is a person, or is owned or controlled by a person that is, designated in the most current version of the Specially Designated Nationals and Blocked Persons List or the List of Foreign Financial Institutions Subject to Part 561, which are both maintained by the Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”), or any applicable prohibited party list maintained by any U.S. government agency, French government agency, the European Union, or Her Majesty’s Treasury, (ii) has been or is currently subject to, and the aggregate Offering Price has not been or will not be directly or indirectly derived, obtained, received, taken, acquired or gained from sources prohibited under, any sanctions programs administered by OFAC, the United Nations Security Council, the European Union, Her Majesty’s Treasury, or any French government agency, or (iii) is located or registered or is a resident in a country subject to these sanctions.
18. (i) Our operations are, and have been conducted at all times, in compliance with applicable financial record keeping and reporting requirements of the anti-money laundering laws and regulations of the European Union, United States, United Kingdom and France, the rules and regulations thereunder and any related or similar applicable rules, regulations or guidelines, issued, administered or enforced by any governmental agency (collectively, the “Money Laundering Laws”), in each case to the extent applicable to our activities, (ii) no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving us with respect to Money Laundering Laws is pending or, to our knowledge, threatened, and (iii) neither us nor any of our Affiliates and our and their respective directors or
officers, nor, to the best of our knowledge after due enquiry, our and their respective agents, employees, affiliates, representatives, or any person associated with or acting on behalf, of any of them has caused us to be in violation of any law, directive, national statute or administrative regulation relating to money-laundering, unlawful financial activities or unlawful use or appropriation of corporate funds.
19. We undertake not to, directly or indirectly, take any steps or measures that (i) aim to influence or manipulate the market price of the Company’s Shares and (ii) constitute a market manipulation under section 12 of regulation (EU) no 596/2014 of the European parliament and of the council of 16 April 2014 on market abuse;
20. We have full power and authority to make the representations, warranties, agreements and acknowledgements made herein.
INDIVIOR PLC
And
SCOPIA CAPITAL MANAGEMENT LP
| | |
| SECOND AMENDED RELATIONSHIP AGREEMENT |
INCORPORATING SECOND DEED OF AMENDMENT DATED APRIL 26, 2023
THIS AGREEMENT is made by way of Deed
BETWEEN:
(A) Indivior PLC a company incorporated and registered in the United Kingdom (with company number 09237894) and whose registered office is at 234 Bath Road, Slough, Berkshire, United Kingdom, SL1 4EE (the "Company"); and
(B) Scopia Capital Management LP a limited partnership, incorporated and registered in the United State of America and whose registered office is 152 West 57th Street, 33rd Floor, New York, NY 10019, United States of America ("Scopia" and together with the Company the "Parties" and each a "Party" to this Agreement).
RECITALS:
(A) Scopia manages Interests in approximately 8.46 per cent. of the issued share capital of the Company.
(B) The Parties have agreed to enter into this Agreement in order to govern certain matters related to the Interests in Shares managed by Scopia and the ongoing relationship between the Parties, and have further agreed to amend and restate this Agreement as set out below. The date of this Agreement means 24 March 2021, the date of the First Deed of Amendment means 7 July 2022, and the date of the Second Deed of Amendment means 26 April 2023. The Parties have agreed that this Agreement shall not be treated as being terminated prior to being amended and shall instead continue in full force and effect, as amended in the manner set out herein, with effect from the date of the Second Deed of Amendment.
IT IS AGREED AS FOLLOWS:
1. INTERPRETATION
The definitions and other interpretative provisions set out in Schedule 2 shall apply throughout this Agreement, unless the contrary intention appears.
2. ANNOUNCEMENT
[Intentionally blank / deleted]
3. APPOINTMENT OF NEW NON-EXECUTIVE DIRECTORS AND RETIREMENT AND REPLACEMENT OF CERTAIN EXISTING NON-EXECUTIVE DIRECTORS
3.1 [Intentionally blank / deleted]
3.2 The Company agrees that the Current Board will unanimously recommend to Shareholders in the notice convening the 2023 AGM, that each of Jerome Lande; Joanna Le Couilliard; Mark Stejbach; Juliet Thompson; and Barbara Ryan (together the "New NEDs") be re-appointed as Directors by Shareholders with effect from the conclusion of that meeting and that the Company will otherwise generally support the re-appointment of each of the New NEDs in the same way and to the same standard. The Company further agrees and undertakes to:
3.2.1 [Intentionally blank / deleted]
3.2.2 recommend and support the re-election of Jerome Lande, Barbara Ryan and Mark Stejbach (the "Continuing Directors") at any subsequent Annual General Meeting (unless any of the same voluntarily resign or retire, or, in respect of Continuing Directors other than Jerome Lande, are validly removed from office on grounds of serious misconduct by resolution of the Directors acting reasonably and in good faith);
3.2.3 recommend that Shareholders vote against any resolution put to Shareholders to remove any of the Continuing Directors; and
3.2.4 not to remove any of the Continuing Directors from office pursuant to the operation of article 83(iii) of the Company’s articles of association other than, in respect of the Continuing Directors other than Jerome Lande, on grounds of serious misconduct by resolution of the Directors acting reasonably and in good faith,
in each case, during the term of this Agreement.
3.3 [Intentionally blank / deleted]
3.4 [Intentionally blank / deleted]
3.5 Further, the Company agrees that notwithstanding the maximum number of Directors of 15 (fifteen) specified in article 74 of the articles of association of the Company, the Board shall not appoint or recommend to Shareholders to appoint Directors in excess of a maximum of 12 (twelve) up to 30 September 2023 reducing to 10 (ten) in the remainder of the calendar year ending 31 December 2023 (being the maximum number of Directors to be appointed or recommended for appointment by the Board at the 2024 AGM and any subsequent general meetings of the Company).
3.6 [Intentionally blank / deleted]
3.7 [Intentionally blank / deleted]
3.8 [Intentionally blank / deleted]
3.9 [Intentionally blank / deleted]
3.10 [Intentionally blank / deleted]
4. APPOINTMENT AND REMOVAL OF THE SCOPIA REPRESENTATIVE DIRECTOR
4.1 Prior to the expiry or earlier termination of this Agreement, Scopia shall be entitled from time to time to nominate for appointment to the Board one non-executive Director (the "Scopia Representative Director"). The Parties acknowledge and agree that: Jerome Lande has been duly appointed to the Board; that he is the initial Scopia Representative Director; and for so long as he continues to be appointed as a Director, the Company has and will have satisfied its obligations under this Clause 4.
4.2 Any nomination of an individual for appointment as the Scopia Representative Director under this Clause 4 shall be by notice in writing delivered to the Company, marked for the attention of the Chair of the Nomination & Governance Committee and signed on behalf of Scopia.
4.3 Scopia shall ensure that any individual nominated for appointment as the Scopia Representative Director is suitable and appropriate for the position as a director of a premium listed, English incorporated company. The Parties acknowledge and agree that any individual will not, and need not, meet the definition of "independent" for the purposes of the UK Corporate Governance Code in order to be nominated and appointed to the Board.
4.4 Scopia agrees with the Company that it shall consult with the Company prior to the making of any nomination under this Clause 4, in particular (but without limitation) as to whether the individual nominated is appropriately qualified to act as a Director, and shall take reasonable account of the Company's views in relation thereto.
4.5 The Nomination & Governance Committee, or the Board, may refuse to appoint the individual nominated by Scopia for appointment to the Board solely on the grounds that they do not consider (acting reasonably) such individual as being suitable and appropriate for the position as a director of a premium listed, English incorporated company. In such an event, Scopia shall be entitled to nominate for appointment another individual in his or her place in accordance with Clause 4.2.
4.6 Subject to Clauses 4.3 and 4.4, Scopia may at any time while it is entitled to nominate an individual under this Clause 4 procure that its Scopia Representative Director resigns or otherwise ceases to be a Director and nominate another person to be appointed as the Scopia Representative Director in his or her place by notice in writing to the Company. Where the Scopia Representative Director does not comply with such notice by resigning or otherwise ceasing to be a Director, Scopia shall be responsible for the cost and expenses incurred in connection with procuring such removal or replacement in such circumstances. If the Board considers (acting reasonably and with reasonable grounds) that the Scopia Representative Director has committed an offence or is otherwise responsible for serious misconduct that would have resulted in the Board removing the Scopia Representative Director from office in accordance with article 83(iii) of the Company’s articles of association but for the provisions of Clause 3.2.3, the Company shall notify Scopia and the Parties shall cooperate to agree the resignation or removal from office of such Scopia Representative
Director. In such an event, Scopia shall be entitled to nominate for appointment another individual in his or her place in accordance with Clause 4.2.
4.7 In the event that the Scopia Representative Director refuses to resign, following an instruction to do so from Scopia as contemplated by Clause 4.6, the Parties shall use all reasonable endeavours to ensure that such Scopia Representative Director is removed pursuant to the provisions in the Company's articles of association relating to a person ceasing to be a Director or pursuant to a special notice and ordinary resolution of the Shareholders under section 168 of the Companies Act as soon as practicable thereafter, provided however that Scopia shall not be obliged to requisition any general meeting of the Company or add any resolution to the agenda of any Annual General Meeting for this purpose.
4.8 In the event that any Scopia Representative Director leaves office other than in circumstances where Clause 4.6 applies (including for the avoidance of doubt upon failing to be re-elected at any general meeting or being removed at any general meeting), Scopia shall be entitled to nominate another individual for appointment as a Director in his or her place in accordance with Clause 4.2.
4.9 The Scopia Representative Director shall be entitled to be paid the equivalent fees for the performance of his or her duties as any other Non-Executive Director of the Company on the same terms and shall be entitled to have reimbursed any reasonable expenses, reasonably incurred in the performance of his or her duties as a Non-Executive Director of the Company on the same basis as any other Non-Executive Director of the Company. The Company undertakes to enter into its usual form of letter of appointment with the Scopia Representative Director for the purposes of this Clause 4.9, provided that such letter of appointment shall include a written notice of resignation from the Scopia Representative Director for the purposes of article 83(i) of the Company's article of association conditional on termination of this Amended Relationship Agreement in accordance with Clause 8.
4.10 The Parties agree that the Scopia Representative Director shall not be a member of the Audit Committee of the Company but shall be entitled to attend as an observer, and in such capacity the Company undertakes to provide the Scopia Representative Director with all notices, agenda and minutes of meetings and other documents, information and materials at the same time and in the same manner as they are provided to members of the Audit Committee.
4.11 Scopia will use all reasonable endeavours to procure any Scopia Representative Director acts at all times consistently with this Agreement.
5. DUTIES AND OBLIGATIONS RELATING TO THE SCOPIA REPRESENTATIVE DIRECTOR
5.1 The Parties acknowledge that any Scopia Representative Director shall owe the same duties to the Company as are owed by the other Directors by reason of his or her appointment as a Director. In particular, Scopia acknowledges that the Scopia Representative Director is obligated to comply with the same, including compliance with:
5.1.1 the fiduciary and statutory duties (pursuant to the Companies Act), including without limitation:
(A) as required by section 171 of the Companies, to act in accordance with the Company's constitution and only exercise his powers as a director for the purposes for which they are conferred;
(B) as required by section 172 of the Companies Act, to act in the way the Scopia Representative Director considers, in good faith, would be most likely to promote the success of the Company for the benefit of its members as a whole;
(C) as required by sections 173 and 174 of the Companies Act, to exercise independent judgment, reasonable care, skill and diligence;
(D) as required by section 175 of the Companies Act, to avoid conflicts of interest and, in particular, to comply with Clause 5.2;
(E) as required by section 176 of the Companies Act, not to accept a benefit from a third party conferred by reason of being a Director, it being acknowledged by the Company that any remuneration, distribution or other payment from Scopia shall not be considered by the Company as being conferred by reason of being a Director;
(F) as required by section 177 of the Companies Act, disclose any interest in a proposed transaction or arrangement with the Company, it being acknowledged by the Company that any interest arising solely as a consequence of Scopia or any of its Affiliates holding any Interest in the issued share capital of the Company shall be considered disclosed to the Board as a result of entering into this Agreement;
(G) to comply with UK MAR, including not dealing when in possession of inside information or during a closed period; and to comply with the Company's Group-Wide Dealing Policy and Dealing Code, provided that it is agreed and confirmed by the Company that for these purposes: (i) Scopia and its Affiliates shall be entitled to deal under the Company's Group-Wide Dealing Policy and Dealing Code in respect of proposed dealing by Scopia and/or its Affiliates outside of a Closed Period (as defined in the Company’s Dealing Code provided to Scopia on or around the date of this Agreement) where no inside information (as defined in Article 7 of UK MAR) is held by the dealing party and the Company shall provide clearance to deal in such circumstances without delay and as soon as is reasonably practicable; (ii) where there is a reference to “date” or “price” in the definition of “Trading Policy” within the Company’s Dealing Code such terms shall include a range of dates or a range of prices, as applicable; and (iii) this Clause 5.1.1(G) is subject to Clause 5.3;
(H) to comply with the requirements of the Listing Rules applicable to Directors, including ensuring that the Company pays due regard to the Listing Principles and Listing Rules;
(I) to comply with all of the terms set out in the DoJ Resolution Agreement applicable to Directors, which includes, among other things, an obligation on each Director to confirm, to the best of their knowledge and belief, that: (i) the Company has had in effect policies and procedures designed to ensure that the Company fully complied with all US federal laws and regulations pursuant to the FDCA and 18 U.S.C. § 1347 (Health Care Fraud) for the preceding year; and (ii) any deficiencies have been remedied, specifying the remedial measures put in place; and
(J) to comply with all of the terms of a Corporate Integrity Agreement imposed on the Company by the Office of Inspector General, including taking responsibility for the review and oversight of matters related to compliance with the US Federal Health Care Program requirements and FDA requirements, including the oversight of the compliance program, the issue of an annual report to the Office of Inspector General and participation in a training regarding the corporate governance and compliance oversight responsibilities of Directors.
5.2 The Scopia Representative Director shall not, unless otherwise agreed in writing by the Chair of the Board, be entitled to receive information, participate in any discussions of the Board, vote on any Board resolution or be counted in the quorum of any Board meeting in respect of any of the following matters:
5.2.1 this Agreement;
5.2.2 any assignment, variation, amendment, novation, termination, waiver or grant of any consent by a member of the Group under or in relation to this Agreement;
5.2.3 any other actual or proposed agreement, arrangement, transaction or other relationship between any member of the Group and Scopia or any of its Affiliates or in
which Scopia or any of its Affiliates is interested (it being acknowledged that neither Scopia nor any of its Affiliates will be considered by the Company to be interested in any agreement or arrangement where such interest arises solely as a consequence of holding any Interest in the share capital of the Company); or
5.2.4 any claim, or threat or possibility of claim, made by Scopia or any of its Affiliates in relation to this Agreement, or against the Company or any member of the Group or any Director; or any claim or threat or possibility of claim, made by the Company or any of its Affiliates in relation to this Agreement, or against Scopia or any of its Affiliates.
5.3 The Company acknowledges and agrees that the Scopia Representative Director may from time to time disclose to and discuss with Scopia Confidential Information which he or she comes into possession of in his or her role as a Director, provided that Scopia complies with: the provisions of this Agreement in particular Clause 9 (Confidentiality); and UK MAR.
6. STANDSTILL
6.1 Scopia represents and warrants to the Company that, as at the date of this Second Deed of Amendment, it and its Affiliates have Interests in 11,670,921 Shares representing approximately 8.46 per cent. of the issued share capital of the Company which provides Scopia with the ability to exercise or direct the exercise of 11,670,921 Voting Rights representing approximately 8.46 per cent. of the Voting Rights currently exercisable in the Company (the "Current Voting Rights"). Scopia represents and warrants that as at the as at the date of this Second Deed of Amendment it and its Affiliates have no other Interests in Shares and are not able to exercise or direct the exercise of any Voting Rights other than the Current Voting Rights.
6.2 Scopia agrees that it shall not, and shall procure that none of its Affiliates shall, prior to the expiry or earlier termination of this Agreement:
6.2.1 exercise Voting Rights in excess of 15% of the total Voting Rights exercisable from time to time in the Company (the “Voting Cap”), even where Scopia and its Affiliates hold Shares that provide the ability to exercise additional Voting Rights and the Company shall provide Scopia with all reasonably required assistance in ensuring that Scopia and its Affiliates can exercise Voting Rights subject to the Voting Cap; or
6.2.2 make any announcement with respect to any offer or potential offer by Scopia or any of its Affiliates to acquire control (within the meaning of the Takeover Code) of the Company or take any step which would, under the Takeover Code, require such an announcement to be made.
6.3 Nothing in this Agreement shall prohibit Scopia or its Affiliates from selling or acquiring any Interest in Shares or from accepting an offer made by a third party for the entire issued share capital of the Company, or voting in favour of a scheme of arrangement to implement an acquisition of the entire issued share capital of the Company by a third party, or giving an irrevocable undertaking to a third party to do any or all of the foregoing.
7. VOTING AND NON-DISPARAGEMENT
7.1 Scopia undertakes to exercise (or procure the exercise of) all Current Voting Rights (to the extent continued to be held by Scopia or its Affiliates) on any resolution to appoint or re-appoint the New NEDs or any Ordinary Course Resolution in accordance with the recommendation of the Board.
7.2 Scopia undertakes that, from the date of this Agreement until the expiry of this Agreement, in relation to each meeting of the Company's Shareholders at which any resolution referred to in Clause 7.1 is to be considered, in respect of any such resolution it shall or shall procure that the relevant Affiliate shall, in relation to all Voting Rights in respect of which Scopia or any of its Affiliates has the right to exercise or direct their exercise:
7.2.1 instruct the registered holder to complete and return, or procure the completion and return of, relevant forms of proxy in respect of the exercise of all Voting Rights as are from time to time able to be exercised by Scopia or the relevant Affiliate (or in respect of which Scopia or any Affiliate is able to procure the exercise) by not less than 2
(two) Business Days before the latest time for submission of proxies for the relevant meeting; and
7.2.2 instruct the registered holder of the Shares to which such Voting Rights relate not to revoke or amend the proxy referred to in Clause 7.2.1 or submit new forms of proxy voting against any resolution referred to in Clause 7.1 or attend in person or by proxy or appoint any corporate representative to attend at the relevant Shareholders meetings and vote on any resolution referred to in Clause 7.1 otherwise than in accordance with the Board's recommendation.
7.3 From the date of this Agreement until the expiry of this Agreement, Scopia shall not exercise any Voting Rights, and shall procure that none of its Affiliates shall exercise any Voting Rights, and shall use all reasonable endeavours to procure that the registered holder of any Shares in respect of which Scopia or any of its Affiliates is entitled to direct the exercise of Voting Rights shall not exercise such Voting Rights, in order to:
7.3.1 remove or propose the removal of any Director (other than the Scopia Representative Director in the manner contemplated by Clauses 4.6 and 4.8);
7.3.2 put forward (or procure that another person puts forward) a resolution, an item on the agenda, or an amendment to a resolution or an agenda item at an Annual General Meeting;
7.3.3 vote:
(A) in favour of any resolution at a general meeting of the Company which the Board has recommended that Shareholders vote against: or
(B) against any resolution at a general meeting of the Company which the Board has recommended that Shareholders vote in favour of,
in either case, unless the Scopia Representative Director has given written notice (in accordance with Clause 10 and expressly for the purposes of this Clause 7.3.3) of his objection to such recommendation of the Board at (or before) the relevant meeting of the Board prior to the convening of such general meeting of the Company in respect of any such resolution other than an Ordinary Course Resolution;
7.3.4 request an independent report on a poll;
7.3.5 require the Board to call a general meeting of the Company pursuant to section 303(1) of the Companies Act;
7.3.6 call a general meeting of the Company at the Company's expense pursuant to section 305 of the Companies Act;
7.3.7 include in the requisition notice the text of a resolution that may be properly moved at a general meeting of the Company pursuant to section 303(4) of the Companies Act;
7.3.8 require circulation of a statement relating to a proposed resolution or any other business to be dealt with at the Company's general meeting pursuant to section 314 of the Companies Act;
7.3.9 propose a resolution at an Annual General Meeting pursuant to section 338 of the Companies Act;
7.3.10 include matters on the agenda to be dealt with at an Annual General Meeting pursuant to section 338A of the Companies Act; or
7.3.11 nominate any person to serve as a Director pursuant to article 81(iii) of the Company's articles of association.
7.4 Scopia shall not, and shall procure that none of its Affiliates shall, solicit or knowingly encourage, publicly or privately, any Shareholder or person entitled to direct the exercise of Voting Rights, to exercise their Voting Rights during the term of this Agreement:
7.4.1 to vote against any resolution to appoint or re-appoint the New NEDs or against the recommendation of the Board on any Ordinary Course Resolution; or
7.4.2 to take any action referred to in Clause 7.3.
7.5 Each Party agrees that, from the date of this Agreement until the expiry of this Agreement, it shall, and shall procure that its Affiliates and its and their principals, directors, general partners and officers shall, refrain from making or causing to be made publicly or privately, or soliciting or knowingly encouraging any other person to make or cause to be made publicly, any statement or announcement that:
7.5.1 constitutes an ad hominem attack on;
7.5.2 otherwise disparages, defames, slanders, impugns or is reasonably likely to damage the reputation of; or
7.5.3 comment publicly on the announced strategy of, or any actions of or decisions taken by,
the other Party or any of its Affiliates, or any of their current or former officers, directors or key employees, in each case including:
(i) in any press release or other publicly available format (including social media); or
(ii) to any journalist or member of the media (including in a television, radio, newspaper or magazine interview),
provided that none of the foregoing shall restrict the ability of such persons to comply with Applicable Law, or respond to a lawful and valid request for information from any regulatory or governmental authority with jurisdiction over such persons or enforce their rights hereunder.
7.6 Scopia shall, and procure that its Affiliates shall, refrain from bringing or supporting, or causing to be brought or supported during the term of this Agreement:
7.6.1 any legal claim or action against the Company or any of its Directors, officers or key employees, any of the Company's Affiliates or any of its directors, officers or key employees; or
7.6.2 any derivative action against any Director or director of any of the Company's Affiliates,
other than a claim against the Company for material breach of this Agreement.
7.7 Scopia shall, and procure that its Affiliates shall, use all reasonable endeavours to refrain from taking or causing to be taken any action that would have the effect of preventing the Company from complying with its obligations under the Listing Rules or the UK Corporate Governance Code.
8. TERM
8.1 This Agreement shall terminate with immediate effect on the earlier of:
8.1.1 31 December 2023;
8.1.2 provided that the Scopia Representative Director has resigned with effect from or prior to such date, the date which is either: (i) where the notice convening the 2023 AGM has not been published on or before the date which is 9 (nine) weeks prior to the 2023 AGM, the date which is 5 (five) Business Days following the circulation of such notice; or (ii) in all other circumstances, 8 (eight) weeks prior to the 2023 AGM, and, in each case, provided that the Parties have not agreed in writing by such date (subject to and in accordance with the operation of Clauses 3.2 and 3.4) the identity of those Directors to be recommended by the Board for re-election at the 2023 AGM; or
8.1.3 the date on which Scopia publicly discloses that it has ceased to hold directly or indirectly at least 5 (five) per cent. of the issued share capital of the Company;
or, in each case, unless terminated earlier, or extended, by the agreement of the Parties in writing.
8.2 Termination of this Agreement pursuant to this Clause 8 shall be without prejudice to any breach of this Agreement by either Party prior to the date of termination.
8.3 Scopia agrees that termination of this Agreement in accordance with Clause 8.1 shall constitute notice of resignation from the office of Director by the Scopia Representative
Director and further undertakes to take any steps reasonably required by the Company to ensure that such resignation is effective upon termination of this Agreement.
8.4 The Company confirms and agrees that Scopia’s ceasing to hold 10% or more of the issued share capital of the Company does not terminate this Agreement or the appointment of Mr. Jerome Lande as the Scopia Representative Director or as a Director, which appointments shall continue in accordance with the terms of this Agreement (as amended) irrespective of any provision to the contrary (express or implied) in any other document.
8.5 Clauses 1, 8, 9, 10, 11, 12 and 13 shall survive the termination of this Agreement.
9. CONFIDENTIALITY
9.1 From the date of this Agreement, Scopia shall:
9.1.1 keep the Confidential Information confidential at all times and for a period of 9 (nine) months following termination of this Agreement;
9.1.2 subject to Clause 9.2, not disclose the Confidential Information to anyone other than to its Permitted Disclosees, in each case in confidence and only to the extent reasonably necessary;
9.1.3 keep a list of the names of the individuals to whom Confidential Information has been disclosed by Scopia;
9.1.4 ensure that each Permitted Disclosee to whom the Confidential Information is disclosed (whether by Scopia, or by the Company or any of its professional advisers (in each case, at Scopia's request)) is aware of Scopia's obligations of confidence under this Clause 9, and shall use reasonable endeavours to procure that each such Permitted Disclosee complies with the terms of this Clause 9 with respect to protecting the confidentiality of the Confidential Information; and
9.2 Clause 9.1 shall not prohibit Scopia or its Affiliates from disclosing Confidential Information to the extent required by: (i) Applicable Law; or (ii) any order of any court of competent jurisdiction or any competent judicial or governmental body or any competent regulatory authority to whose jurisdiction Scopia is subject.
9.3 If Scopia is or becomes required, in circumstances contemplated in Clause 9.2, to disclose any Confidential Information, it shall (to the extent permitted by Applicable Laws) give to the Company such notice as is reasonably practical in the circumstances of such disclosure and shall co-operate with the Company, having due regard to the Company's views, and take such steps as the Company may reasonably require in order to enable it to mitigate the effects of, or avoid the requirements for, any such disclosure and, where the disclosure is to be by way of a public announcement, make all reasonable endeavours to agree the wording of the announcement with the Company in advance to the extent practicable to do so.
9.4 Scopia will promptly inform the Company of the full circumstances of any disclosure of Confidential Information in breach of this agreement upon becoming aware of the same.
9.5 Scopia will, within 10 (ten) Business Days of receipt of a written demand from the Company:
9.5.1 return or procure the return to the Company all documents, held by Scopia and any Permitted Disclosee, containing or based on or generated from Confidential Information relating to the Company or the Scopia Discussions provided that Scopia may retain documents containing or based on such Confidential Information to the extent required by law, regulation or the rules of any applicable governmental, regulatory or supervisory authority or in order to comply with its internal compliance policies or insurance policies;
9.5.2 permanently remove any Confidential Information held on any computer, disk or other device, to the extent reasonably practicable, provided that it may retain such Confidential Information as is contained in an electronic record created as part of automated business continuity procedures operated by or on behalf of it, subject always to the duties of confidentiality in respect of such Confidential Information contained in this agreement; and
9.5.3 certify in writing to the Company that it has complied with the requirements of this Clause 9.5.
10. NOTICES
10.1 Requirements for notices
A notice (including any approval, consent or other communication) given in connection with this Agreement and the documents referred to in it must be in writing in the English language and must be given by one or more of the following methods:
10.1.1 by hand (including by courier or process server) to the address of the addressee;
10.1.2 by pre-paid recorded delivery to the address of the addressee; or
10.1.3 by email to the email address of the addressee,
being the address or email address which is specified in Clause 10.2 in relation to the Party or Parties to whom the notice is addressed, and marked for the attention of the person so specified, or to such other address or email address, or marked for the attention of such other person, as the relevant Party may from time to time specify by notice given to all of the other Parties in accordance with this Clause.
10.2 Parties' contact details
The relevant address, email address and specified details for each of the Parties at the date of this Agreement are as follows:
Company
Address: 234 Bath Road, Slough, Berkshire SL1 4EE United Kingdom
Email address(es): Mark.Crossley@indivior.com; Ryan.Preblick@indivior.com
For the attention of: Mark Crossley and Ryan Preblick
With copy to:
By post: Herbert Smith Freehills, Exchange House, Primrose Street, London, United Kingdom, EC2A 2EG, for the attention of: Mark Bardell
By email: [****]
Scopia
Address: 152 West 57th Street, 33rd Floor, New York, NY 10019 United States of America
Email address(es): [****] and [****]
For the attention of: Jerome Lande and Craig Rosenblum
With a copy to:
By post: Akin Gump Strauss Hauer & Feld LLP, Ten Bishops Square, London, United Kingdom, E1 6EG, for the attention of Vance Chapman
By email: [****]
10.3 Deemed receipt
Unless it is proved that it was received earlier and subject to Clause 10.4 below, a notice is deemed to be received:
10.3.1 in the case of a notice given by hand (including by courier or process server), at the time when the notice is left at the relevant address;
10.3.2 in the case of a notice given by posted letter: (i) in case of domestic mail, on the third day after posting; or in case of international mail, on the seventh day after posting; and
10.3.3 in the case of a notice given by email, on the day after sending.
10.4 A notice received or deemed to be received in accordance with Clause 10.3 on a day which is not a Business Day, or after 5pm (EST) on any Business Day, shall be deemed to be received on the next following Business Day.
11. ENTIRE AGREEMENT
11.1 Each Party agrees on behalf of itself and its Affiliates that this Agreement:
11.1.1 constitutes the whole agreement in relation to its subject matter and supersedes any previous agreement between the Parties in relation to its subject matter; and
11.1.2 to the extent permitted by law, excludes any warranty, condition or other undertaking implied at law or by custom, usage or course of dealing.
11.2 Each Party agrees that this Agreement is made on the basis that, neither Party has been induced to enter into this Agreement by, nor has relied on, any statement, representation, warranty, assurance, covenant, indemnity, undertaking or commitment ("Representation") which is not expressly set out in this Agreement.
11.3 Each Party agrees that its only right of action in relation to any innocent or negligent Representation set out in this Agreement or given in connection with this Agreement shall be for breach of contract. All other rights and remedies in relation to any such Representation (including those in tort or arising under statute) are excluded.
12. MISCELLANEOUS
12.1 Announcements
12.1.1 Subject to Clauses 2 and 12.1.2, no Party shall release any stock market announcement, make any press release or despatch any announcement or circular, relating to this Agreement.
12.1.2 Nothing in Clause 12.1.1 shall prohibit the Company from making any announcement or despatching any circular as required by Applicable Law, in which case the announcement shall only be released or the circular despatched after consultation with Scopia and after taking into account the reasonable requirements of Scopia as to the content of such announcement or circular.
12.2 Assignment
No Party may assign (whether absolutely or by way of security and whether in whole or in part), transfer, mortgage, charge, declare itself a trustee for a third party of, or otherwise dispose of (in any manner whatsoever) the benefit of this Agreement or sub contract or delegate in any manner whatsoever its performance under this Agreement and any such purported dealing in contravention of this Clause 12.2 shall be ineffective.
12.3 Legal relationship
Nothing in this Agreement or in any matter or any arrangement contemplated by it is intended to constitute a partnership, association, joint venture, fiduciary relationship or other co-operative entity between the Parties for any purpose whatsoever. Except as expressly provided in this Agreement, neither Party has any power or authority to bind the other Party or impose any obligations on it and neither Party shall purport to do so or hold itself out as capable of doing so.
12.4 Third Party rights
No term of this Agreement is enforceable under the Contracts (Rights of Third Parties) Act 1999 by a person who is not a Party, other than Clause 8.4 the terms of which may be relied upon and enforced by Mr. Jerome Lande as if he were a party to this Agreement.
12.5 Variation and waiver
12.5.1 No variation of this Agreement shall be effective unless it is in writing (which for this purpose, does not include email) and signed by, or on behalf of, each of the Parties. The expression "variation" includes any variation, supplement, deletion or replacement however effected.
12.5.2 No waiver of any right or remedy provided by this Agreement or by law shall be effective unless it is in writing (which for this purpose, does not include email) and signed by, or on behalf of, the Party granting it.
12.5.3 The failure to exercise, or delay in exercising, any right or remedy provided by this Agreement or by law does not:
(A) constitute a waiver of that right or remedy;
(B) restrict any further exercise of that right or remedy; or
(C) affect any other rights or remedies.
12.5.4 A single or partial exercise of any right or remedy does not prevent any further or other exercise of that right or remedy or the exercise of any other right or remedy.
12.6 Counterparts
This Agreement may be executed in any number of counterparts and by each Party on separate counterparts, each of which when executed and delivered shall be an original, but all the counterparts together constitute one instrument.
12.7 Costs
Each Party shall bear all costs incurred by it in connection with the preparation, negotiation and entry into this Agreement and the documents to be entered into pursuant to it.
12.8 Severance
12.8.1 If any provision or part of any provision of this Agreement is or becomes invalid or unenforceable in any respect under the law of any relevant jurisdiction, such invalidity or unenforceability shall not affect:
(A) the validity or enforceability in that jurisdiction of any other provision of this Agreement; or
(B) the validity or enforceability under the law of any other jurisdiction of that provision or of any other provision of this Agreement.
12.8.2 If any provision of this Agreement is or becomes invalid or unenforceable in any respect under the law of any relevant jurisdiction, but would be valid and enforceable if some part of the provision were deleted, the provision in question shall apply in respect of such jurisdiction with such deletion as may be necessary to make it valid and enforceable.
12.9 Equitable remedies
Without prejudice to any other rights or remedies that the Parties may have, the Parties acknowledge and agree that damages alone would not be an adequate remedy for any breach of the provisions of this Agreement. The remedies of injunction and specific performance as well as any other equitable relief for any threatened or actual breach of the provisions of this Agreement would be more appropriate remedies.
13. GOVERNING LAW AND JURISDICTION
13.1 This Agreement and any dispute or claim arising out of or in connection with it or its subject matter, existence, negotiation, validity, termination or enforceability (including non-contractual disputes or claims) shall be governed by, and construed in accordance with, English law.
13.2 Each Party irrevocably agrees that the Courts of England shall have exclusive jurisdiction in relation to any dispute or claim arising out of or in connection with this Agreement or its subject matter, existence, negotiation, validity, termination or enforceability (including non-contractual disputes or claims).
13.3 Each Party irrevocably waives any right that it may have to object to an action being brought in those Courts, to claim that the action has been brought in an inconvenient forum, or to claim that those Courts do not have jurisdiction.
SCHEDULE 1
DRAFT COMPANY ANNOUNCEMENT
[Intentionally blank / deleted]
SCHEDULE 2
DEFINITIONS AND INTERPRETATION
1. DEFINITIONS
Each of the following words and expressions has the following meanings unless expressly stated otherwise:
"2023 AGM" the Annual General Meeting of the Company required to be held in respect of the period following its accounting reference date of 31 December 2022;
"2024 AGM" the Annual General Meeting of the Company required to be held in respect of the period following its accounting reference date of 31 December 2023;
"Acquire" means acquire, directly or indirectly or agree to, or offer to, or receive an option to, acquire directly or indirectly;
"Affiliate" means in relation to any person:
(a) its subsidiaries, any holding company and any subsidiary of that holding company;
(b) any person who directly, or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, the person;
(c) any manager or advisor of the person and such manager's subsidiaries and holding companies, any entity managed or advised by that manager or advisor and any other person that is managed or advised by the person in its capacity as manager or advisor; and
(d) its managed investment funds.
"Annual General Meeting" means any annual general meeting of the Company required to be held in accordance with section 336 of the Companies Act;
"Applicable Law" means all laws, regulations, directives, statutes, subordinate legislation, common law and civil codes of any jurisdiction, all judgments, orders, notices, instructions, decisions and awards of any court or competent authority or tribunal exercising statutory or delegated powers and all codes of practice having force of law, statutory guidance and policy notes, in each case to the extent applicable to the Parties or any of them;
"Board" means the board of Directors from time to time;
"Business Day" means a day (other than a Saturday or Sunday) on which banks are open for general business in New York and London;
"Companies Act" means the Companies Act 2006;
"Confidential Information" means:
(a) all information relating to the Company or its subsidiaries which is or has been made available by the Company or its Related Persons to Scopia or its Permitted Disclosees;
(b) analyses, compilations, studies and other material prepared by Scopia or its Permitted Disclosees which contain, reflect or are otherwise generated from the information described in (a) above; and
(c) the existence and contents of the Scopia Discussions (including the Scopia Letter, its contents or the fact of its existence) or subsequent discussions between the Parties in relation to the same,
in each case in whatever form or medium (including written, electronic, visual and oral) such information is recorded or kept and whether disclosed or created before or after the date of this agreement, but excluding Excluded Information and whether disclosed during the term of the Non-Disclosure Agreement or of this Agreement;
"control" means:
(a) in relation to a body corporate ("company A"), the power of a person ("P") to secure:
(i) by means of the holding of shares or the possession of voting power in relation to that or any other body corporate; or
(ii) as a result of any powers conferred by the articles of association or other document regulating that or any other body corporate,
that the affairs of company A are conducted in accordance with P's wishes; or
(b) in relation to a partnership, the right to a share of more than half the assets, or of more than half the income, of the partnership,
and "controlled" and "controlling" shall be construed accordingly;
"Corporate Integrity Agreement" means the agreement dated 24 July 2020 whereby the OIG agreed to waive its permissive exclusion authority over the Company in exchange for the Company’s agreement to undertake enhanced compliance commitments;
"Current Board" means the Board at the time of entering into this Agreement;
"Current Voting Rights" has the meaning given in Clause 6.1;
"Director" means a director of the Company;
"DoJ Resolution Agreements" means the agreement dated 24 July 2020 between the Company, on the one hand, and the United States Attorney’s Office for the Western District of Virginia and the United States Department of Justice Office of Consumer Protection on the other hand, that resulted in dismissal of the Superseding Indictment against the Company, its commitments to enhanced compliance, the agreement for subsidiary Indivior Solutions, Inc. to plead guilty to a misdemeanour Food Drug & Cosmetics Act charge and pay criminal restitution and penalties, and the Civil False Claims Act settlement;
"Employee Plan" means any employee share ownership plan, joint share ownership plan, share incentive plan or similar or equivalent employee share ownership plan in respect of Shares operated by the Company from time to time;
"Excluded Information" means any information which:
(a) is or becomes publicly available (other than as a direct or indirect result of any breach of the terms of this agreement);
(b) is known to Scopia or its Permitted Disclosees before it is disclosed by the Company or its Related Persons or is lawfully obtained by Scopia after such disclosure, other than from the Company or its professional advisers and which, in either case and as far as Scopia is aware, has not been obtained in violation of, and is not otherwise subject to, any obligation of confidentiality to the Company or its subsidiaries; and
(c) was independently developed by Scopia or its Affiliates without reliance on the Confidential Information;
"FCA" means the Financial Conduct Authority of the United Kingdom;
"FDA" means the US Food and Drug Administration;
"FDCA" means the US Food, Drug and Cosmetics Act;
"FSMA" means the Financial Services and Markets Act 2000;
"Group" means the Company and its subsidiary undertakings from time to time and a "member of the Group" means any one of them;
"Interest" means, in relation to Shares, any interest in Shares including by way of ownership, the right to exercise or direct the exercise of the Voting Rights attaching to Shares, any agreement to purchase, option or derivative giving the right to acquire or call for delivery of Shares or which obliges the holder to take delivery of Shares, and any derivative whose value is determined by reference to the price of Shares and which results or may result in the holder having a long position in Shares;
"Listing Rules" means the Listing Rules of the FCA made under Part 6 of the FSMA as modified from time to time and "Listing Rule" or "LR" means any one of them;
"New NEDs" has the meaning given to it in Clause 3.2;
"Nomination & Governance Committee" means the nomination and governance committee of the Board;
"Non-Disclosure Agreement" means the agreement between Scopia and the Company dated 12 February 2021 in relation to the disclosure of confidential information;
"Office of Inspector General" or "OIG" means the Office of Inspector General for the United States Department of Health and Human Services;
"Ordinary Course Resolution" means a resolution of the Company proposed by the Board at an Annual General Meeting of the Company in relation to:
(a) receiving and adopting the Directors' report, the Remuneration Report, and the financial statement of the Company and approving the Company's remuneration policy
(b) the annual retirement and re-election of any Director in accordance with article 78 of the Company’s articles of association;
(c) appointing or re-appointing the Company's auditors;
(d) authorising the audit committee of the Company to determine the remuneration of the Company's auditors;
(e) authorising the allotment of shares in the Company in accordance with section 551 of the Companies Act, subject to such authority being in accordance with market practice (including any Investment Association guidelines) as at the proposed date for such resolution for companies incorporated in England and Wales that are listed on the Official List and that are traded on the London Stock Exchange's main market for listed securities;
(f) authorising the Directors to allot equity securities for cash pursuant to section 570 of the Companies Act, subject to the maximum level of disapplication being over (i) 5% of the Company's issued share capital for use on an unrestricted basis; and (ii) an additional authority over a further 5% of the Company's issued share capital for use in connection with an acquisition or specified capital investment announced at the same time as the issue, or which has taken place in the six month period preceding the announcement of the issue;
(g) authorising the Company for the purposes of section 693 of the Companies Act to make market purchases of its Shares, subject to such authority not exceeding 10 per cent. of the Company's issued equity share capital;
(h) approving any Employee Plan, subject to the dilution of such Employee Plan(s) not exceeding market practice (including, any Investment Association guidelines) as at the proposed date for such resolution being applicable to companies incorporated in England and Wales that are listed on the Official List and that are traded on the London Stock Exchange's main market for listed securities;
(i) payment of a final or interim dividend; or
(j) authorising the Company to call a general meeting of the Company other than an Annual General Meeting on not less than 14 clear days' notice;
"Permitted Disclosee" means, in respect of Scopia, each of its Affiliates and to each of its and their respective directors, officers, managers, employees, agents, contractors or legal advisers who, in Scopia's reasonable opinion, need to know the Confidential Information for the purposes of the ongoing Scopia Discussions, in each case in confidence and only to the extent reasonably necessary;
"Related Person" means, in relation to the Company, each of its Affiliates, directors, employees and professional advisers at any time when the provisions of this Agreement apply;
"Scopia Discussions" means discussions between the Company and Scopia regarding the matters raised in the Scopia Letter;
"Scopia Letter" means the letter from Scopia to the Company dated 29 October 2020;
"Scopia Representative Director" has the meaning given to in Clause 4.1;
"Shareholder" means a holder of Shares;
"Shares" means the ordinary shares of the Company;
"UK Corporate Governance Code" means the UK Corporate Governance Code published by the Financial Reporting Council (or any successor body) as modified from time to time;
"UK MAR" means the UK version of the EU Market Abuse Regulation (2014/596/EU) which is part of UK law by virtue of the European Union (Withdrawal) Act 2018;
"UK Takeover Code" means the City Code on Takeovers and Mergers of the United Kingdom, as modified from time to time; and
"Voting Rights" means the rights attaching to Shares or any other securities issued by the Company to vote at general meetings of the Company on all, or substantially all, matters and any direct or indirect rights (whether or not conditional) to control or influence the exercise of such voting rights.
2. INTERPRETATION
2.1 Statutory references
A reference to an enactment or statutory provision shall include a reference to any subordinate legislation made under the relevant enactment or statutory provision and is a reference to that enactment, statutory provision or subordinate legislation as from time to time amended, modified, incorporated or reproduced and to any enactment, statutory provision or subordinate legislation that from time to time (with or without modifications) re-enacts, replaces, consolidates, incorporates or reproduces it.
2.2 References to the singular etc.
Save where the context otherwise requires, the singular includes the plural and vice versa and reference to any gender includes a reference to all other genders.
2.3 Headings
Save where the context otherwise requires, headings and the use of bold typeface shall be ignored.
2.4 Defined terms
In this Agreement, words and expressions defined in the Acts shall bear the same meaning as in the Acts unless expressly provided otherwise.
2.5 References to a person
Save where the context otherwise requires, a reference to a person includes a reference to a firm, a body corporate, an unincorporated association or to a person's executors or administrators.
2.6 Writing
Save where the context otherwise requires, references to writing shall include any typewriting, printing, lithography, photography and any other modes of representing or reproducing words in a legible and non-transitory form and documents and information sent or supplied in electronic form are "in writing" for the purpose of this Agreement;
2.7 References to agreements
Save where the context otherwise requires, references in this Agreement to any other agreement or other instrument (other than an enactment or statutory provision) shall be deemed to be references to such agreement or instrument as from time to time amended, varied, supplemented, substituted, novated or assigned.
2.8 Meaning of includes and including
"Includes" and "including" shall be construed without limitation.
This Second Amended Relationship Agreement has been executed as a deed and is delivered on the date shown above.
| | | | | | | | |
EXECUTED as a DEED by | ) | |
INDIVIOR PLC acting by | ) | |
| ) | |
| Mark Crossley | ) | /s/ Mark Crossley |
| ) | (Signature of director) |
| ) | |
| ) | |
| and | ) | |
| ) | |
| Kathryn Hudson | ) | /s/ Kathryn Hudson |
| ) | (Signature of secretary) |
| ) | |
| ) | |
| ) | |
| | | | | | | | |
EXECUTED as a DEED by | ) | |
| SCOPIA CAPITAL MANAGEMENT LP | ) | |
| acting by | ) | |
| ) | |
| Aaron Morse, Chief Operating Officer | ) | /s/ Aaron Morse |
| ) | (Authorised signatory) |
| who, in accordance with the laws of the State of New York, USA, is acting under the authority of the limited partnership | ) | |
Exhibit 4.3
| | | | | | | | | | | | | | |
| United States v. Indivior Solutions, Inc.and Indivior plc | | | | Resolution Agreement |
UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF VIRGINIA
ABINGDON
| | | | | | | | |
| UNITED STATES OF AMERICA | ) | |
| ) | |
| v. | ) | |
| ) | Case No. 1:19cr00016 |
INDIVIOR INC. (a/k/a Reckitt | ) | |
Benckiser Pharmaceuticals Inc.) and | ) | |
| INDIVIOR PLC, | ) | |
| Defendants | ) | |
RESOLUTION AGREEMENT
1. The United States Attorney's Office for the Western District of Virginia ("USAO-WDVA") and the United States Department of Justice's Consumer Protection Branch ("CPB") and Indivior Inc., and Indivior plc (Indivior Inc., Indivior plc, and all subsidiaries of either company are collectively referred to as "INDIVIOR"), pursuant to authority granted by their Board of Directors, enter into this Agreement to resolve the prosecution of INDIVIOR related to the marketing, sale, promotion and distribution of Suboxone Film in the United States.
2. This Agreement resolves all of INDIVIOR' s potential federal criminal liability (except as to potential criminal tax violations, as to which the Government makes no agreement) based on the subject matter of the investigation and facts known by the USAO-WDVA and CPB and the allegations in the superseding indictment in United States v. Indivior Inc. et al., Case No. 1:19CR16 (W.D. Va. August 14, 2019) ("Indictment").
3. The USAO-WDVA and CPB enter into this agreement based on the individual circumstances presented by this case, including that this resolution coupled with the July 11, 2019, resolution with INDIVIOR's former parent, Reckitt Benckiser Group, will result in a total financial recovery of $2,000,000,000 (two billion dollars), and INDIVIOR's additional commitments to:
a. Comply fully with the terms of the Civil Settlement Agreement (attached as Attachment 1);
b. Comply fully with the terms of the Federal Trade Commission's ("FTC") Stipulated Order For Permanent Injunction to be entered in the United States District Court for the Western District of Virginia (attached as Attachment 2);
| | | | | | | | |
Exhibit A to Plea Agreement United States v. Indivior Solutions, Inc. | | Authorized Corporate Officer’s Initials: ___ |
Page 1 of 11
| | | | | | | | | | | | | | |
| United States v. Indivior Solutions, Inc.and Indivior plc | | | | Resolution Agreement |
c. Guarantee the performance of all financial obligations agreed to by Indivior Solutions, Inc. (Indivior Solutions), in its plea agreement (attached as Attachment 3);
d. Comply fully with the Compliance Program set forth in Addendum A to this Agreement; and
e. Fulfill all terms of this Agreement.
4. INDIVIOR agrees it will fulfill all of the obligations set forth in the subparagraphs of Paragraph 3 of this Agreement.
5. The Term of INDIVIOR's obligations under this Agreement will be 5 (five) years from the date all parties have signed this Agreement ("Effective Date"). However, the Term will be extended to include any time prior to INDIVIOR fully complying with all of its commitments, financial and otherwise, set forth in this Agreement.
6. INDIVIOR will pay or guarantee payment of a total of $600,000,000 (six hundred million dollars) plus interest accrued on first payment, such that if its subsidiary, Indivior Solutions, is unable to meet its financial commitments in its plea agreement (Attachment 3 hereto), INDIVIOR guarantees those commitments will be paid. If Indivior Solutions does not make payments due on or before the dates below, INDIVIOR will honor its guarantee and will pay those amounts on or before the dates below. This total payment and/or guarantee amount shall be allocated as follows:
a. $300,000,000 (three hundred million dollars) plus interest at a rate of 1.25% (one and one quarter percent) per annum to be paid by INDIVIOR pursuant to the Civil Settlement Agreement (payments designated in table below as "Civil");
b. $10,000,000 (ten million dollars) to be paid by INDIVIOR to resolve claims by the FTC as set forth in the Stipulated Permanent Injunction (payment designated in table below as "FTC");
c. $245,000,000 (two hundred forty-five million dollars) [plus interest accrued on the first payment] to be paid by Indivior Solutions to be allocated between a fine, additional forfeiture, and, if the Court deems it appropriate, restitution. The Court has absolute discretion to determine how this money should be allocated between these items. If the Court deems restitution to be appropriate, pursuant to 18 U.S.C. 3663(a)(3), the parties agree the Court may order restitution in any manner it deems appropriate (payments designated in table below as "Court's Discretionary Fund");
d. $44,000,000 (forty-four million dollars) to be paid by Indivior Solutions for forfeiture of proceeds (payments designated in table below as "Forfeiture"); and
| | | | | | | | |
Exhibit A to Plea Agreement United States v. Indivior Solutions, Inc. | | Authorized Corporate Officer’s Initials: ___ |
Page 2 of 11
| | | | | | | | | | | | | | |
| United States v. Indivior Solutions, Inc.and Indivior plc | | | | Resolution Agreement |
e. $1,000,000 (one million dollars) to be paid by Indivior Solutions to the Virginia Medicaid Fraud Control Unit to be used for the 25% state match of the Medicaid Fraud Control Unit grant (payment designated in table below as "VA-MFCU").
7. The payments shall be made as follows, as directed by the United States:
| | | | | | | | | | | | | | |
TABLE OF PAYMENTS BY INDIVIOR SOLUTIONS
AND GUARANTEED BY INDIVIOR INC. AND INDIVIOR PLC |
| Designation of Payments |
| Due Date | Payment Due* | Court’s Discretionary Fund | Forfeiture | VA-MFCU |
Put in Escrow Prior to Indivior Solutions Pleading Guilty# | $ | 54,000,000 | $ | 31,000,000 | $ | 22,000,000 | $ | 1,000,000 |
| 1/15/2022 | $ | 25,000,000 | $ | 25,000,000 | | |
| 1/15/2023 | $ | 25,000,000 | $ | 25,000,000 | | |
| 1/15/2024 | $ | 25,000,000 | $ | 25,000,000 | | |
| 1/15/2025 | $ | 25,000,000 | $ | 25,000,000 | | |
| 1/15/2026 | $ | 25,000,000 | $ | 25,000,000 | | |
| 1/15/2027 | $ | 25,000,000 | $ | 25,000,000 | | |
| 12/15/2027 | $ | 86,000,000 | $ | 64,000,000 | $ | 22,000,000 | |
| TOTAL | $ | 290,000,000 | $ | 245,000,000 | $ | 44,000,000 | $ | 1,000,000 |
/
/
/
/
/
/
/
/
/
/
/
/
| | | | | | | | |
Exhibit A to Plea Agreement United States v. Indivior Solutions, Inc. | | Authorized Corporate Officer’s Initials: ___ |
Page 3 of 11
| | | | | | | | | | | | | | |
| United States v. Indivior Solutions, Inc.and Indivior plc | | | | Resolution Agreement |
| | | | | | | | | | | |
| TABLE OF PAYMENTS BY INDIVIOR INC. AND INDIVIOR PLC |
| Designation of Payments |
| Due Date | Payment Due* | Civil* | FTC |
Put in Escrow Prior to
Indivior Solutions
Pleading Guilty# | $ | 46,000,000 | $ | 36,000,000 | $ | 10,000,000 |
| 1/15/2022 | $ | 25,000,000 | $ | 25,000,000 | |
| 1/15/2023 | $ | 25,000,000 | $ | 25,000,000 | |
| 1/15/2024 | $ | 25,000,000 | $ | 25,000,000 | |
| 1/15/2025 | $ | 25,000,000 | $ | 25,000,000 | |
| 1/15/2026 | $ | 25,000,000 | $ | 25,000,000 | |
| 1/15/2027 | $ | 25,000,000 | $ | 25,000,000 | |
| 12/15/2027 | $ | 114,000,000 | $ | 114,000,000 | |
| TOTAL | $ | 310,000,000 | $ | 300,000,000 | $ | 10,000,000 |
#Payments due prior to Indivior Solutions pleading guilty will be placed in an escrow account. Within 3 (three) days of the Court imposing sentence, the escrow funds will be disbursed as set forth herein. For all of the escrowed amounts, in addition to the escrowed payments, Indivior Solutions will pay, and INDIVIOR will guarantee payment of, interest at the rate of 1.25% (one and one quarter percent) per annum calculated from April 9, 2020, to the time payment is made from the escrow account. The interest paid on the escrowed funds will not be credited toward the total amount due and will make the Court's Discretionary Fund greater than $245,000,000 (two hundred forty-five million dollars).
*All payment due for the Civil Settlement will include the amount listed plus interest of 1.25% (one and one-quarter percent) per annum calculated from April 9, 2020.
8. Any payments made shall be credited to the earliest payments due and pro rata between the different designated purposes. After the initial payment, any payments for forfeiture, fines, or restitution made ahead of the due date shall be reduced by an early payment discount of 3% (three percent) per annum. Any such payments made past the due date shall be increased by a late fee of 3% (three percent) per annum on the amount that is late, only. Imposition of a late fee is in addition to any other remedy the USAO-WDVA and CPB may pursue if INDIVIOR violates this agreement by (a) failing to make its civil payments when due or (b) failing to honor its agreement to guarantee the payments of Indivior Solutions when due.
9. Other than money returned from the State Settlement Accounts, if any, as set forth in agreements with the Medicaid Participating States, no money paid by INDIVIOR will be returned and INDIVIOR expressly releases any and all claims it may have to the money. INDIVIOR will not file any claim or otherwise contest the payment of money set forth in this Agreement, and it will not assist anyone in asserting a claim to the money.
| | | | | | | | |
Exhibit A to Plea Agreement United States v. Indivior Solutions, Inc. | | Authorized Corporate Officer’s Initials: ___ |
Page 4 of 11
| | | | | | | | | | | | | | |
| United States v. Indivior Solutions, Inc.and Indivior plc | | | | Resolution Agreement |
10. Nothing in this Agreement or any related document is an admission by the USAO-WDVA or CPB that the amounts paid by INDIVIOR are the maximum amounts that could, in the absence of this agreement, be recovered from INDIVIOR. If INDIVIOR does not comply with all of its obligations under this Agreement, the USAO-WDVA and CPB are not precluded from arguing or presenting evidence that the total amount to be paid by INDIVIOR should be higher.
11. INDIVIOR must notify the USAO as soon as reasonably practicable, in writing, of any event (including, but not limited to, sale, merger, dissolution, etc.) that would jeopardize its ability to pay any amounts under this Agreement. If an adverse event (including, but not limited to, sale, merger, dissolution, etc.) would jeopardize INDIVIOR's ability to pay any amounts under this Agreement, or if any payment would cause INDIVIOR to either (a) violate an existing debt covenant for which the holder(s) will not forbear, forgive or otherwise extend, or (b) incur a negative going concern or viability assessment by its auditors as required by any applicable domestic or foreign corporate governance code, accounting standard or related rule or regulation, INDIVIOR shall notify the USAO as soon as reasonably practicable. Should unrelated, unanticipated economic circumstances create a material risk that INDIVIOR may reasonably incur any of the events identified herein, INDIVIOR may request that the USAO-WDVA and CPB agree to delay any payment identified in the Table of Payments in paragraph 7 of the Resolution Agreement. The USAO-WDVA and CPB may consider such request.
12. INDIVIOR represents and warrants that it has reviewed its financial situation, it currently is not insolvent as such term is defined in 11 U.S.C. § 101(32), and it reasonably believes it shall remain solvent following payment of the financial obligations set forth in this Agreement. Further, the parties warrant that, in evaluating whether to execute this Agreement, they have (a) intended that the mutual promises, covenants, and obligations set forth constitute a contemporaneous exchange for new value given to INDIVIOR, within the meaning of 11 U.S.C. § 547(c)(l); and (b) concluded that these mutual promises, covenants, and obligations do, in fact, constitute such a contemporaneous exchange. Further, the parties warrant that the mutual promises, covenants, and obligations set forth herein are intended to, and do, in fact, represent a reasonably equivalent exchange of value that is not intended to hinder, delay, or defraud any entity to which INDIVIOR was or became indebted to on or after the Agreement Date, within the meaning of 11 U.S.C. §548(a)(l). INDIVIOR agrees its obligations under this Agreement may not be avoided pursuant to 11 U.S.C. § 547, and INDIVIOR shall not argue or otherwise take the position in any such case, action, or proceeding that (1) INDIVIOR's obligations under this Agreement may be avoided under 11 U.S.C. § 547; (2) INDIVIOR was insolvent at the time this Agreement was entered into; or (3) the mutual promises, covenants, and obligations set forth in this Agreement do not constitute a contemporaneous exchange for new value given to INDIVIOR. INDIVIOR acknowledges that the agreements in this Paragraph are provided in exchange for valuable consideration provided in this Agreement. INDIVIOR agrees all amounts payable under this agreement are not dischargeable in bankruptcy and shall be considered debt for a fine, penalty, or forfeiture payable to and for the benefit of a governmental unit pursuant to 11 U.S.C. § 523(a)(7). INDIVIOR will not contest
| | | | | | | | |
Exhibit A to Plea Agreement United States v. Indivior Solutions, Inc. | | Authorized Corporate Officer’s Initials: ___ |
Page 5 of 11
| | | | | | | | | | | | | | |
| United States v. Indivior Solutions, Inc.and Indivior plc | | | | Resolution Agreement |
that all forfeiture amounts ordered by the Court against Indivior Solutions represent criminal proceeds subject to forfeiture, and as such, the Government's interest in those proceeds arose on the date Indivior Solutions received those proceeds pursuant to 21 U.S.C. 853(c).
13. Within 5 (five) days of filing of the publicly filed documents that are related to the below listed documents, INDIVIOR shall provide for the exclusive use of the United States the following financial reports to the USAO and CPB (to the extent any below listed document is not related to a publicly filed quarterly document, INDIVIOR shall provide the reports by the 15th day of the month following the conclusion of the quarter):
a. quarterly operating reports which report net disbursements and net receipts, bank account balances, and statement of operations and balance sheet for the preceding month, for Indivior plc, Indivior Finance (2014) LLC, Indivior Finance SARL, Indivior Global Holdings Ltd (a/k/a RBP Global Holdings Limited); Indivior Inc. (a/k/a Reckitt Benckiser Pharmaceuticals Inc.), Indivior PLC, Indivior Solutions Inc. (a/k/a Reckitt Benckiser Pharmaceuticals Solutions Inc.), and Indivior US Holdings Inc. (f/k/a RBP US Holdings Inc.) and any successor in interest; and
b. a quarterly cash flow forecast that shows anticipated consolidated cash receipts and disbursements for the next quarter on a consolidated basis.
14. INDIVIOR's United States Suboxone sales force will be disbanded prior to execution of this Agreement and INDIVIOR will not reinstate a United States Suboxone sales force.
15. Neither INDIVIOR nor any affiliated U.S. entity (including, but not limited to, joint ventures) will make any false or misleading statements in the promotion of any pharmaceutical product during the term of this Agreement.
16. INDIVIOR will fully cooperate with all investigations and prosecutions, if any, by the Department of Justice related, in any way, to Suboxone or any other drug marketed or promoted by INDIVIOR. INDIVIOR's cooperation in the investigation and prosecution of individuals and entities pursuant to this paragraph includes, but is not limited to, using best efforts promptly to secure the attendance and testimony of any current or former officer, director, agent, or employee of INDIVIOR at any meeting or interview or before the grand jury or at any trial or other court proceeding; and truthfully disclosing all factual information, documents, records, or other tangible evidence not protected by a valid claim of privilege or work product. INDIVIOR's cooperation is subject to applicable laws and regulations, including relevant data privacy and national security laws and regulations, as well as valid claims of attorney-client privilege or attorney work product doctrine. INDIVIOR expressly understands, to the extent there is conduct disclosed by INDIVIOR that does not relate to Suboxone or Subutex, such conduct will not be exempt from prosecution and is not within the scope of the non-prosecution terms of this Agreement.
| | | | | | | | |
Exhibit A to Plea Agreement United States v. Indivior Solutions, Inc. | | Authorized Corporate Officer’s Initials: ___ |
Page 6 of 11
| | | | | | | | | | | | | | |
| United States v. Indivior Solutions, Inc.and Indivior plc | | | | Resolution Agreement |
17. INDIVIOR will execute and transmit all documents needed to effectuate the terms of this Agreement.
18. INDIVIOR stipulates (a) the facts and allegations set forth in the Information to which Indivior Solutions is pleading guilty are true and correct, (b) the United States had probable cause to bring all the counts in the Indictment and Superseding Indictment ("Indictment Counts") which are being dismissed under this agreement, (c) the Indictment Counts were not frivolous, vexatious or in bad faith, and (d) INDIVIOR is not, in any way, a "prevailing party" with regard to the Indictment Counts. INDIVIOR waives any claim for attorney's fees and other litigation expenses arising out of the investigation or prosecution of this matter.
19. INDIVIOR will not, through its present or future directors, officers, employees, or agents, (1) make any public statement or (2) make any statement or take any position in litigation in which any United States department or agency is a party, contradicting any statement or provision set forth in the Agreement or its attachments. If INDIVIOR makes a public statement that in whole or in part contradicts any such statement or provision, INDIVIOR may avoid being in violation of this Agreement by promptly publicly repudiating such statement. For the purposes of this paragraph, the term "public statement" means any statement made or authorized by INDIVIOR's directors, officers, employees, or attorneys and includes, but is not limited to, a statement in (1) a press release, (2) public relations material, or (3) INDIVIOR's websites. Notwithstanding the above, INDIVIOR may avail itself of any legal or factual arguments available in defending litigation brought by a party other than the United States. This paragraph does not apply to any statement made by any individual in the course of any actual or contemplated criminal, regulatory, administrative, or civil case initiated by any governmental or private party against such individual.
20. The conduct for which INDIVIOR was investigated and that led to the Indictment relates solely to INDIVIOR's products Subutex, Suboxone Tablet, and Suboxone Film and not to its products launched in 2018 and thereafter.
21. Except as may otherwise be agreed by the parties in connection with a particular transaction, INDIVIOR agrees if, during the term of this Agreement, it undertakes any material change in corporate form, including if it sells, merges, or transfers any portion of its business operations material to INDIVIOR's consolidated operations as they existed as of April 9, 2020, whether such change is structured as a sale, asset sale, merger, transfer, or other material change in corporate form, it shall include in any contract for sale, merger, transfer, or other change in corporate form a provision binding the purchaser, or any successor in interest thereto, to the obligations described in this Agreement unless the USAO-WDVA and CPB otherwise agree in writing. INDIVIOR shall provide notice to the USAO-WDVA and CPB at least 30 (thirty) days prior to undertaking any such sale, merger, transfer, or other change in corporate form. Nothing herein shall restrict INDIVIOR from indemnifying (or otherwise holding harmless) the purchaser or successor in interest for penalties or other costs arising from any conduct that may have occurred prior to the date of the transaction, so long as such
| | | | | | | | |
Exhibit A to Plea Agreement United States v. Indivior Solutions, Inc. | | Authorized Corporate Officer’s Initials: ___ |
Page 7 of 11
| | | | | | | | | | | | | | |
| United States v. Indivior Solutions, Inc.and Indivior plc | | | | Resolution Agreement |
indemnification does not have the effect of circumventing or frustrating the enforcement purposes of this Agreement, as determined by the USAO-WDVA and CPB.
22. If INDIVIOR is in compliance with all of the terms of this Agreement and the Court enters a judgment and conviction order against Indivior Solutions, upon the Court entering an order requiring INDIVIOR to fully comply with this Agreement the United States will move for dismissal of the Indictment and will not prosecute or seek forfeiture against INDIVIOR or its present or former affiliates, divisions, or subsidiaries or their successors, or assigns for any criminal conduct occurring prior to the date this agreement is signed and covered by (a) the Indictment or any violations of law that were the subject matter of the Indictment, (b) the investigation by the USAO-WDVA and CPB, and/or (c) the facts currently known to the USAO-WDVA and CPB regarding the sale, promotion, or marketing of Suboxone or Subutex products in the United States.
23. Notwithstanding any other provision of this Agreement, if the USAO- WDVA or CPB, in their sole discretion, determine INDIVIOR (a) provided deliberately false, incomplete, or misleading information at any time in connection with this Agreement; (b) committed a felony during the term of this Agreement; or (c) knowingly and intentionally violated any provision of this Agreement, (1) the USAOWDVA and CPB will not be bound to their agreement not to prosecute INDIVIOR for the matters covered in the Indictment, (2) INDIVIOR will not assert any claim under the United States Constitution, Rule 1l(f) of the Federal Rules of Criminal Procedure, Rule 410 of the Federal Rules of Evidence, or any other rule or law, that any statements or testimony made by or on behalf of INDIVIOR prior or subsequent to this Agreement, or any leads derived therefrom, should be suppressed or are otherwise inadmissible, and (3) the United States may file any charges which were filed or could have been filed against INDIVIOR relating to the Indictment. It is understood any prosecution not time-barred by the applicable statute of limitations on the Effective Date of this Agreement, including time protected as the result of existing agreements to toll the applicable statute of limitations, may be commenced against INDIVIOR in the event of its knowing or intentional violation of a provision of this Agreement. Accordingly, INDIVIOR has executed and agrees to be bound by the tolling agreement included as Attachment 4 to this Agreement. Should the USAO-WDVA or CPB determine that INDIVIOR has violated any provision of this Agreement, the USAOWDVA or CPB shall provide prompt written notice to INDIVIOR addressed to its Chief Legal Officer, and to its outside counsel, James R. Wooley, Jones Day, North Point 90I Lakeside Avenue, Cleveland, Ohio 44114-1190 or to any successor INDIVIOR may designate, of the alleged violation and provide INDIVIOR with a 45 (forty-five) day period from the date of receipt of notice in which to make a presentation to the USAO-WDVA or CPB to demonstrate that no violation occurred, that any violation was unintentional or inadvertent, or, to the extent applicable, that the violation should not result in adverse action, including because the violation has been cured by INDIVIOR.
24. INDIVIOR will agree to the entry of an order of the Court (attached as Attachment 5), as a condition of the Court's dismissal of the pending Indictment, in which INDIVIOR is ordered to comply with the terms of this Agreement and be subject to, in
| | | | | | | | |
Exhibit A to Plea Agreement United States v. Indivior Solutions, Inc. | | Authorized Corporate Officer’s Initials: ___ |
Page 8 of 11
| | | | | | | | | | | | | | |
| United States v. Indivior Solutions, Inc.and Indivior plc | | | | Resolution Agreement |
addition to the other remedies available in this Agreement, the jurisdiction of the Court whether for a proceeding that could result in contempt or any other remedy the Court deems appropriate should it fail to comply with any term of the Agreement. For the purposes of a dispute over an alleged violation of the Agreement, a determination by the USAO-WDVA or CPB that INDIVIOR failed to comply with a term of the agreement shall not be binding on the Court. INDIVIOR agrees nothing will divest the Court of jurisdiction, including, but not limited to, any proceeding relating to bankruptcy, insolvency, reorganization, or relief of debtors.
25. INDIVIOR shall comply with (a) the FDCA and implementing regulations governing the manufacture, marketing, sale, promotion, and distribution of Indivior products in the United States, and (b) Title 18, United States Code, Section 1347.
26. This Agreement binds the Department of Justice. Notwithstanding the foregoing, it does not bind the Tax Division of the Department of Justice, other federal agencies, or any state, local, or foreign law enforcement or regulatory agencies, or any other authorities.
27. Indivior waives all rights, whether asserted directly or by a representative, to request or receive from the United States Department of Justice, United States Food and Drug Administration - Office of Criminal Investigations, United States Department of Health and Human Services - Office of Inspector General, United States Postal Service - Office of Inspector General, and Virginia Office of the Attorney General Medicaid Fraud Control Unit any records pertaining to the investigation or prosecution of this case, including, without limitation, any records that may be sought under the Freedom of Information Act, 5 U.S.C. § 552, the Privacy Act of 1974, 5 U.S.C. § 552a, or the Virginia Freedom of Information Act, Va. Code § 2.2-3700- 3714.
28. Nothing in this Agreement resolves, in any way, any liability of any individual.
29. If the Court rejects either the Plea Agreement of Indivior Solutions or Civil Settlement with INDIVIOR, either party may withdraw from this agreement by giving written notice to the other party within 10 (ten) days of the Court's rejection.
30. This Agreement, its Addendum A and Attachments 1, 2, 4, and 5, set forth all the terms of the agreement between INDIVIOR on the one hand, and the USAO-WDVA and CPB on the other. No amendments, modifications, or additions to this Agreement will be valid unless they are in writing signed by the USAO-WDVA and CPB, an attorney for INDIVIOR, and a duly authorized representative of INDIVIOR.
31. INDIVIOR acknowledges its acceptance of this Agreement by the signature of its counsel and Officer(s). A copy of a resolution by INDIVIOR's Boards of Directors
| | | | | | | | |
Exhibit A to Plea Agreement United States v. Indivior Solutions, Inc. | | Authorized Corporate Officer’s Initials: ___ |
Page 9 of 11
| | | | | | | | | | | | | | |
| United States v. Indivior Solutions, Inc.and Indivior plc | | | | Resolution Agreement |
authorizing the Officer(s) to execute this Agreement and all other documents to resolve this matter on behalf of INDIVIOR is attached as Addendum B.
Agreed to:
Indivior Inc.
Indivior plc
| | | | | | | | | | | |
| BY: | /s/ Javier Rodriguez | | 7/24/20 |
| Javier Rodriguez | | DATE |
| Authorized Corporate Representative for Indivior Inc. and Indivior plc | | |
Counsel has fully explained to the Boards of Directors of INDIVIOR the facts and circumstances of the prosecution and the consequences of entering into this Agreement. Counsel has reviewed this entire Agreement and documents referenced herein with the client, through its Officer. INDIVIOR understands the terms and conditions of this Agreement, and INDIVIOR's decision to enter into this Agreement is knowing and voluntary. INDIVIOR's execution of and entry into this Agreement is done with Counsel's consent.
| | | | | | | | |
Exhibit A to Plea Agreement United States v. Indivior Solutions, Inc. | | Authorized Corporate Officer’s Initials: ___ |
Page 10 of 11
| | | | | | | | | | | | | | |
| United States v. Indivior Solutions, Inc.and Indivior plc | | | | Resolution Agreement |
| | | | | | | | |
| /s/ James R. Wooley | | 7/24/20 |
| James R. Wooley | | DATE |
| Counsel for Indivior Inc. and Indivior plc | |
| | |
| /s/ Thomas W. Beimers | | 7/24/20 |
| Thomas W. Beimers | | DATE |
| Counsel for Indivior Inc. and Indivior plc | |
The United States Attorney’s Office for the Western District of Virginia:
| | | | | | | | | | | |
| BY: | /s/ Daniel P. Bubar | | 7/23/20 |
| DANIEL P. BUBAR | | DATE |
| Attorney for the United States, | | |
| Acting Under Authority Conferred by 28 U.S.C. Section 515 |
| ALBERT P. MAYER | | |
| Trial Attorney, Department of Justice, Civil Division, |
| Commercial Litigation Branch | | |
| RANDY RAMSEYER | | |
| Assistant United States Attorney | | |
| KRISTIN L. GRAY | | |
| JOSEPH S. HALL | | |
| JANINE M. MYATT | | |
| Special Assistant United States Attorneys / Assistant Attorneys General, |
| Medicaid Fraud Control Unit, Virginia Office of the Attorney General |
| GARTH W. HUSTON | | |
| Special Assistant United States Attorney / Attorney, Federal Trade Commission |
| CAROL L. WALLACK | | |
| Trial Attorney, Department of Justice, Civil Division, |
| Commercial Litigation Branch | | |
The United States Department of Justice, Consumer Protection Branch:
| | | | | | | | | | | |
| BY: | /s/ Gustav W. Wyler | | 7/23/20 |
| GUSTAV W. EYLER | | DATE |
| Director | | |
| JILL P. FURMAN | | |
| Deputy Director | | |
| CHARLES J. BIRO | | |
| MATTHEW J. LASH | | |
| Trial Attorneys | | |
| | | | | | | | |
Exhibit A to Plea Agreement United States v. Indivior Solutions, Inc. | | Authorized Corporate Officer’s Initials: ___ |
Page 11 of 11
| | | | | | | | | | | | | | |
Addendum A to Resolution Agreement | | | | |
| United States v. Indivior Solutions, Inc.and Indivior plc | | | Compliance Measures and Certifications |
ADDENDUM A
COMPLIANCE MEASURES AND CERTIFICATIONS
INDIVIOR in connection with its US operations agrees to comply with the requirements set forth below and to maintain the policies and procedures described below for the Term of the Agreement:
I. COMPLIANCE MEASURES
A. INDIVIOR will establish and maintain compliance policies and procedures designed to prevent, detect and correct violations of the applicable Risk Evaluation Mitigation Strategy (“REMS”) program approved by the Food and Drug Administration (“FDA”), the Food Drug and Cosmetic Act (“FDCA”), and FDA’s requirements relating to the marketing, promotion, and sale of pharmaceutical products which INDIVIOR markets, promotes, or sells. These policies and procedures will also address INDIVIOR’s interactions with prescribers in relation to the Drug Addiction Treatment Act (“DATA 2000”) and any relevant amendments thereto and reporting at-risk buprenorphine prescribers to the USAO and CPB and/or their designee (collectively “Reportees”). Such policies and procedures include, but are not limited to, the following:
1. INDIVIOR will utilize prescribing data it obtains in the ordinary course of business and develop risk identification models using data analytics tools tied in part to historical oral buprenorphine prescribing risk factors to identify prescribers who may be engaged in non-legitimate buprenorphine prescribing practices.
2. INDIVIOR will maintain policies and processes that require customer-facing employees to report field observations of prescriber activity (“prescriber concern reports”) that (a) appears to violate requirements of DATA 2000 and any relevant amendments thereto; and (b) otherwise indicates through objective factors potential violation of the Controlled Substances Act. INDIVIOR will further maintain and implement policies and procedures for its consideration of such reports in connection with its risk identification and related delisting processes.
3. INDIVIOR will “delist” prescribers from “INDIVIOR Programs” according to policies and procedures it will maintain and implement for utilizing risk identification and for addressing customer-facing employee prescriber concern reports to inform the prescriber delisting process. In addition, any prescriber will be delisted who INDIVIOR has actual knowledge: (1) is above that health care provider’s legally permitted patient limit for more than four consecutive months; (2) has been convicted of a felony controlled substance and/or health care fraud offense; (3) has, at any time, had his/her license to practice revoked or suspended in relation to a controlled substance and/or health care fraud offense; (4) has, at any time, surrendered his/her license to practice in relation to a controlled substance and/or health care fraud offense; (5) has been excluded by the United States Department of Health and Human Services from participation in federal health care programs; and/or (6) does not have a United States Drug Enforcement
| | | | | | | | |
Exhibit A (Addendum A) to Plea Agreement United States v. Indivior Solutions, Inc. | | Authorized Corporate Officer’s Initials: /s/ JR |
Page 1 of 7
| | | | | | | | | | | | | | |
Addendum A to Resolution Agreement | | | | |
| United States v. Indivior Solutions, Inc.and Indivior plc | | | Compliance Measures and Certifications |
Administration (“DEA”) registration or had his/her DEA registration revoked or suspended.
4. INDIVIOR will provide the identity of prescribers delisted from INDIVIOR Programs, every 60 (sixty) days and will quarterly provide all of the documentation supporting its delisting decision to the Reportees, excluding internal deliberations.
5. INDIVIOR will suspend prescribers from INDIVIOR Programs pending resolution of prescriber concern reports filed by employees. INDIVIOR will train employees other than those involved in only manufacturing, research and development, and the supply chain on prescriber concern reports policies and procedures; it will make compliance with such reporting an element in evaluations and compensation; and it will institute appropriate discipline for knowing violation of these policies and procedures.
B. The compensation (including, but not limited to, salaries, bonuses, contests, stock options, etc.) of INDIVIOR’s United States sales representatives (or “Clinical Specialists” ) and their supervisors (or “Area Sales Managers” and “National Sales Directors”) will be designed so that financial incentives do not inappropriately motivate such individuals to engage in or tolerate marketing, promoting, or selling of pharmaceutical products (1) for unapproved uses, (2) at dosages above maximum recommended doses listed in the package insert, (3) to prescribers who are not DATA 2000-certified (if applicable to the pharmaceutical product), and (4) to delisted prescribers.
C. INDIVIOR will implement and maintain policies and procedures designed to ensure that INDIVIOR’s consultant or other fee-for-service arrangements entered into with health care providers or health care institutions (including, but not limited to speaker programs, speaker training programs, presentations, advisory boards, and any other financial consultant or financial engagement or arrangement with a health care provider or health care institution and all events and expenses relating to such engagements or arrangements) will be used for only lawful purposes in accordance with applicable Federal health care program and FDA requirements.
D. INDIVIOR will ensure that any materials and information that it distributes or makes available in the United States through social media and/or direct-to-consumer advertising for its pharmaceutical products comply with applicable Federal health care and FDA laws and regulations, and have been approved by the applicable review committee(s) of INDIVIOR before they are posted or disseminated. INDIVIOR will ensure all of INDIVIOR’s activities on United States-based third- party websites, social media, or other media accounts, comply with applicable Federal health care and FDA laws and regulations, and have been approved by the applicable review committee(s) of INDIVIOR before they are posted or disseminated.
E. INDIVIOR’s Continuing Medical Education (“CME”) grant-making decisions will be approved by persons without responsibility for sales and marketing, and financial support will be provided only to programs that foster increased understanding of scientific, clinical, or healthcare issues. INDIVIOR will only provide educational grant support to third-party CME providers who maintain full responsibility for, and control over, the
| | | | | | | | |
Exhibit A (Addendum A) to Plea Agreement United States v. Indivior Solutions, Inc. | | Authorized Corporate Officer’s Initials: /s/ JR |
Page 2 of 7
| | | | | | | | | | | | | | |
Addendum A to Resolution Agreement | | | | |
| United States v. Indivior Solutions, Inc.and Indivior plc | | | Compliance Measures and Certifications |
selection of content, faculty, educational methods, materials, and venue for CME programs.
F. INDIVIOR’s medical information letters will be accurate, evidence-based and contain fair balance. INDIVIOR will not solicit requests for information about company products for indications that are not approved or in a manner that falls outside the recommendations of the FDA in the Prescribing Information.
G. INDIVIOR will maintain standards, policies and practices regarding full, fair, and accurate reporting and transparency in clinical research sponsored and executed by INDIVIOR in the following ways:
1. Clinical research sponsored and executed by INDIVIOR will be approved by INDIVIOR’s medical and/or scientific organization. Scientific research and any resulting publications will foster increased understanding of scientific, clinical, or healthcare issues. INDIVIOR will not approve scientific research purely for the purpose of developing an article or reprint for sales personnel use.
2. All clinical trial investigators must disclose INDIVIOR’s support for their research and financial relationships between them and INDIVIOR (including any interest in any INDIVIOR product) in any publications or presentations related to research sponsored by INDIVIOR.
3. INDIVIOR will select and identify authors of journal articles about INDIVIOR- sponsored research based on International Committee of Medical Journal Editors (“ICMJE”) requirements regarding authorship except when a journal requires an alternative procedure. INDIVIOR will require that a person can be considered an “author” only if he or she has made substantial contributions to the conception and design of the study, acquisition or analysis of data, and has final approval of the version to be published.
4. INDIVIOR will register summary results from all applicable clinical research sponsored and executed by INDIVIOR of INDIVIOR prescription pharmaceutical products, and report results of such clinical trials when available to INDIVIOR on the National Institutes of Health sponsored website (www.clinicaltrials.gov) in compliance with federal requirements.
5. INDIVIOR will require acknowledgement in all related scientific publications of its role as the funding source of all research and clinical trials sponsored and executed by INDIVIOR. INDIVIOR will establish and maintain policies and procedures that are designed to ensure that specific details about clinical research to be sponsored and executed by INDIVIOR and scientific publications to be funded by INDIVIOR (including a description of the proposed work to be done, type of work product to be generated, and the purpose of the work) are documented. Any deviations from the publications plan will also be documented
| | | | | | | | |
Exhibit A (Addendum A) to Plea Agreement United States v. Indivior Solutions, Inc. | | Authorized Corporate Officer’s Initials: /s/ JR |
Page 3 of 7
| | | | | | | | | | | | | | |
Addendum A to Resolution Agreement | | | | |
| United States v. Indivior Solutions, Inc.and Indivior plc | | | Compliance Measures and Certifications |
and will be subject to review and approval by INDIVIOR’s U.S. Compliance Administration Council.
6. INDIVIOR will properly report adverse event data to the FDA. INDIVIOR will maintain policies and procedures designed to ensure that all periodic reports to the FDA contain all required information and data regarding clinical research sponsored and executed by the company. INDIVIOR will require investigators participating in clinical research sponsored and executed by the company to report study-related information and data, including data about adverse events before receiving final payment from INDIVIOR.
H. Recognizing the risks of misuse, INDIVIOR will not use survey information from surveys of health care providers to make promotional claims about its products.
I. INDIVIOR will not use clinical decision support modules or alerts, or similar items, in electronic health record systems for any marketing, sales, or promotional purpose.
J. INDIVIOR will not hire a third party for the purpose of engaging in any activity that INDIVIOR may not engage in under the terms of this Addendum.
K. INDIVIOR will maintain policies and procedures that address the company’s commitment to full compliance with all federal health care program and FDA requirements.
L. INDIVIOR will maintain a compliance training program for U.S. company employees, officers, directors and contingent workers (“Company Personnel”). INDIVIOR shall maintain a policy requiring Code of Conduct and compliance training for U.S. Company Personnel upon hire or contracting, as well as ongoing training regular and ad hoc training, and shall provide compliance training to health care providers who are consultants as may be appropriate for the contracted services.
M. INDIVIOR will maintain policies and procedures that require Company Personnel performance evaluations to consider the Company Personnel’s adherence to company’s Code of Conduct and compliance policies and procedures and completion of Code of Conduct and compliance training.
| | | | | | | | |
Exhibit A (Addendum A) to Plea Agreement United States v. Indivior Solutions, Inc. | | Authorized Corporate Officer’s Initials: /s/ JR |
Page 4 of 7
| | | | | | | | | | | | | | |
Addendum A to Resolution Agreement | | | | |
| United States v. Indivior Solutions, Inc.and Indivior plc | | | Compliance Measures and Certifications |
II. CERTIFICATIONS AND REPORTING TO DOJ
In addition to any commitment to provide any certifications and reports to other government agencies or entities, INDIVIOR shall provide the following reports and certifications to the Reportees and the Court for any period included with the Term of the Agreement.
A. Annual INDIVIOR CEO’s Certification
Within 60 (sixty) days of the end of INDIVIOR’s fiscal year, its Chief Executive Officer will execute, under penalty of perjury, and provide to the Reportees and the Court a (1) certification that, to the best of the CEO’s knowledge, after a reasonable inquiry, INDIVIOR was in compliance with the FDCA and implementing regulations governing the manufacture, marketing, sale, promotion, and distribution of Indivior products in the United States, and Title 18, United States Code, Section 1347 (Health Care Fraud) in the preceding year (or, in the instance of the first such certification, the period from execution of the Resolution Agreement through the end of INDIVIOR’s fiscal year), or (2) certified list of all non-compliant activity and the steps taken by INDIVIOR to remedy such non- compliant activity. Any listing of non-compliant activity shall not be considered by the government or the Court as a per se violation of the terms of the Resolution Agreement. Instead, other factors will be taken into account, including, but not limited to, whether the conduct violated policies INDIVIOR has adopted, whether INDIVIOR provided training addressing the subject matter of the reported conduct, whether it was an isolated or systemic occurrence, INDIVIOR’s response, and any remedial actions taken after INDIVIOR learned of the conduct reported.
B. Annual Board of Directors Resolution
Within 60 (sixty) days of the end of INDIVIOR’s fiscal year, INDIVIOR’s Board of Directors (“Board”) or a designated Committee of the Board of Directors (“Board Committee”) shall conduct a review of the effectiveness of INDIVIOR’s COMPLIANCE MEASURES described herein. This review shall consist of updates and reports by INDIVIOR’s Chief Executive Officer, Chief Integrity and Compliance Officer, Chief Medical Officer, and/or a representative from INDIVIOR’s Compliance Committee about INDIVIOR’s U.S. Compliance Program and the effectiveness of that program during the preceding twelve-month period. Based on the review described above, INDIVIOR’s Board shall submit to the Reportees and Court a resolution adopted by the Board stating, to the best of its knowledge, INDIVIOR has had in effect policies and procedures designed to ensure INDIVIOR fully complied with all federal laws and regulations pursuant to the FDCA and Title 18, United States Code, Section 1347 (Health Care Fraud) in the preceding year (or, in the instance of the first such certification, the period from execution of the Resolution Agreement through the end of INDIVIOR’s fiscal year). The Board’s resolution shall summarize the review described above that it, or the Board Committee, conducted to provide the required statement. If the Board determines there are deficiencies, it will provide a resolution which sets forth the deficiencies and the changes made to correct them.
| | | | | | | | |
Exhibit A (Addendum A) to Plea Agreement United States v. Indivior Solutions, Inc. | | Authorized Corporate Officer’s Initials: /s/ JR |
Page 5 of 7
| | | | | | | | | | | | | | |
Addendum A to Resolution Agreement | | | | |
| United States v. Indivior Solutions, Inc.and Indivior plc | | | Compliance Measures and Certifications |
C. Reportable Events
30 (thirty) days after the end of each calendar quarter (that is, by January 30 for the calendar quarter ending December 31, April 30 for the calendar quarter ending March 31, July 30 for the calendar quarter ending June 30, and October 30 for the calendar quarter ending September 30) and ten (10) days prior to the termination of the Term (“Final Report”), INDIVIOR shall submit a report to the Reportees stating whether any Reportable Events have been determined (after a reasonable opportunity to conduct an appropriate review or investigation of the allegations) to have occurred during the preceding calendar quarter (or, in the case of the Final Report, during the period since the calendar quarter last covered by a regular quarterly report) and providing updated information about Reportable Events that occurred during any prior calendar quarters. A Reportable Event is any matter that a reasonable person would consider a probable violation of (a) any term of this Addendum; (b) the FDCA; or (c) Title 18, United States Code, Section 1347 (Health Care Fraud). A Reportable Event may be the result of an isolated event or a series of occurrences. Any Reportable Event determined (after a reasonable opportunity to conduct an appropriate review or investigation of the allegations) to have occurred by INDIVIOR shall be promptly reported to INDIVIOR’s Chief Executive Officer.
D. Timing of Reports
All annual certifications and reports shall be submitted within 60 (sixty) days of the end of INDIVIOR’s fiscal year. The first year’s report shall cover the period of time commencing from the date INDIVIOR SOLUTIONS pleads guilty through the end of the fiscal year. Each succeeding report shall cover the entire fiscal year and shall continue throughout the Term of the Agreement.
E. Definitions
For the purpose of this Addendum, the following terms shall have the following meanings:
1. The term “INDIVIOR” refers to Indivior Inc. and Indivior plc, and any entity affiliated in any way to either or both of those entities.
2. The term “Chief Integrity and Compliance Officer” refers to the person at INDIVIOR with ultimate responsibility for developing and implementing policies, procedures, and practices designed to ensure compliance with the FDCA and FDA’s regulations and guidance documents relating to the applicable REMS program for INDIVIOR’s pharmaceutical products. During the term of this Addendum, the Chief Integrity and Compliance Officer shall be a member of INDIVIOR’s senior management and INDIVIOR’s Compliance Committee. Not more than 30 (thirty) days from the imposition of sentence of Indivior Solutions, INDIVIOR shall notify the Reportees in writing of the name of INDIVIOR’s Chief Integrity and Compliance Officer and provide a written description of that person’s responsibilities with respect to complying with the FDCA and FDA’s regulations and guidance documents. INDIVIOR shall, in writing, report to the Reportees any changes in the identity of or any material changes in the position
| | | | | | | | |
Exhibit A (Addendum A) to Plea Agreement United States v. Indivior Solutions, Inc. | | Authorized Corporate Officer’s Initials: /s/ JR |
Page 6 of 7
| | | | | | | | | | | | | | |
Addendum A to Resolution Agreement | | | | |
| United States v. Indivior Solutions, Inc.and Indivior plc | | | Compliance Measures and Certifications |
and responsibilities of the Chief Integrity and Compliance Officer. This report shall be provided within 15 (fifteen) days after such a change.
3. The term “delist” is defined as removal from INDIVIOR Programs.
4. The term “INDIVIOR Programs” means Sales platforms, Sales call target lists, Treatment Advocate (“TA”) speaker programs and events, consulting services, advisory boards (for both Commercial and Medical Affairs), clinical research, and physician locator, related to any of its pharmaceutical products. This does not include a prescriber’s ability to contact the Medical Information Unit (“MIU”) and Risk Evaluation and Mitigation Strategies (“REMS”) programs.
5. The term “Compliance Committee” refers to the committee established or to be established by INDIVIOR to, in conjunction with the Chief Integrity and Compliance Officer, assist in the implementation and enhancement of the Compliance Program’s policies and procedures relating to compliance with (1) the FDCA and FDA’s regulations and guidance documents and (2) the terms of this Addendum. During the term of this Addendum, this committee shall, at a minimum, include INDIVIOR’s Chief Integrity and Compliance Officer and other members of INDIVIOR’s senior management with responsibilities concerning compliance with the FDCA. Not more than 30 (thirty) days from the imposition of sentence in this matter, INDIVIOR shall notify the Reportees in writing of the names of INDIVIOR’s senior managers on the Compliance Committee and provide a written description of their responsibilities with respect to complying with the FDCA and FDA’s regulations and guidance. INDIVIOR shall, in writing, report to the Reportees any changes in the identity of or any material changes in the position and responsibilities of these senior managers. This report shall be provided within 15 (fifteen) days after such a change.
6. The term “Compliance Program” refers to the policies, procedures, practices, and other measures INDIVIOR has established or will establish to address U.S. regulatory compliance issues, including INDIVIOR’s compliance with FDCA and FDA regulations and guidance documents.
7. The term “pharmaceutical products” means drugs marketed, promoted, or sold in the United States and intended for use in the diagnosis, cure, mitigation, treatment, or prevention of disease in humans or drugs intended to affect the structure or any function of the body of humans. 21 U.S.C. § 321(g)(1)(B) & (C).
| | | | | | | | |
Exhibit A (Addendum A) to Plea Agreement United States v. Indivior Solutions, Inc. | | Authorized Corporate Officer’s Initials: /s/ JR |
Page 7 of 7
CORPORATE INTEGRITY AGREEMENT
BETWEEN THE
OFFICE OF INSPECTOR GENERAL
OF THE
DEPARTMENT OF HEALTH AND HUMAN SERVICES
AND
INDIVIOR INC.
I. PREAMBLE
Indivior Inc. (Indivior) hereby enters into this Corporate Integrity Agreement (CIA) with the Office of Inspector General (OIG) of the United States Department of Health and Human Services (HHS) to promote compliance with the statutes, regulations, and written directives of Medicare, Medicaid, and all other Federal health care programs (as defined in 42 U.S.C. § 1320a-7b(f)) (Federal health care program requirements) and with the statutes, regulations, and written directives of the Food and Drug Administration (FDA requirements). Contemporaneously with this CIA, Indivior is entering into a Settlement Agreement with the United States. Indivior is also entering into settlement agreements with various states (State Settlement Agreements) and Indivior’s agreement to this CIA is a condition precedent to those agreements.
Prior to the Effective Date, Indivior established a compliance program that Indivior represents addresses all seven elements of an effective compliance program and that is designed to address compliance with Federal health care program and FDA requirements (Compliance Program). Indivior shall continue the Compliance Program throughout the term of the CIA and shall do so in accordance with the terms set forth below. Indivior may modify the Compliance Program as appropriate. However, at a minimum, Indivior shall ensure that during the term of this CIA, it shall maintain a compliance program to comply with the obligations set forth in this CIA.
II. TERM AND SCOPE OF THE CIA
A. The period of the compliance obligations assumed by Indivior under this CIA shall be five years from the effective date of this CIA. The “Effective Date” shall be the date on which the final signatory of this CIA executes this CIA. The first Reporting Period shall be the period between the Effective Date and July 23, 2021. The second Reporting Period shall be the period from July 24, 2021, through December 31, 2022. The third and fourth Reporting Periods shall be the calendar years 2023 and 2024, respectively. The fifth Reporting Period shall begin on January 1, 2025 and expire on the anniversary of the Effective Date in 2025.
Indivior Corporate Integrity Agreement
1
B. Sections VII, X, and XI shall expire no later than 120 days after OIG’s receipt of: (1) Indivior’s final Annual Report; or (2) any additional materials submitted by Indivior pursuant to OIG’s request, whichever is later.
C. The scope of this CIA is governed by the following definitions:
1. For purposes of this CIA, the term “Covered Persons” includes:
(a) all owners of Indivior who are natural persons (other than shareholders who: (i) have an ownership interest of less than 5% and (ii) acquired the ownership interest through public trading), all officers and directors of Indivior and all directors of Indivior PLC;
(b) all employees of Indivior; and
(c) all contractors, subcontractors, agents, and other persons who perform any of the Covered Functions on behalf of Indivior and in that capacity either: (i) interact directly with health care professionals (HCPs), health care institutions (HCIs) or consumers; or (ii) perform activities, provide services, or create materials relating to the Covered Functions and those activities, services, or materials are not reviewed or supervised by an Indivior employee who is a Covered Person prior to execution or dissemination.
Notwithstanding the above, the term Covered Persons does not include part-time or per- diem employees, contractors, subcontractors, agents, and other persons who are not reasonably expected to work more than 160 hours per year, except that any such individuals shall become “Covered Persons” at the point when they work more than 160 hours during the calendar year.
2. “Government Reimbursed Products” refers to all Indivior products that are: (a) marketed or sold by Indivior in the United States (or pursuant to contracts with the United States) and (b) reimbursed by Federal health care programs.
3. The term “Promotional Functions” includes: (a) the selling, detailing, marketing, advertising, promoting, or branding of Government Reimbursed Products; and (b) the preparation or external dissemination of promotional materials or information about, or the provision of promotional services relating to, Government Reimbursed Products, including those functions relating to Indivior’s review and approval processes for promotional materials and any applicable review committee(s).
Indivior Corporate Integrity Agreement
2
4. The term “Product Related Functions” includes: (a) the preparation or external dissemination of non-promotional materials that are governed by Federal healthcare program and/or FDA requirements and distributed to HCPs, HCIs, and Payors about Government Reimbursed Products, including those functions relating to any applicable review committees and those functions relating to Medical Affairs or involved in scientific exchange; (b) contracting with HCPs licensed in the United States or with HCIs to conduct post-marketing clinical trials, Investigator-Sponsored Studies (ISSs), and any other types of post-marketing studies relating to Government Reimbursed Products; (c) authorship, publication, and disclosure of articles or study results relating to Government Reimbursed Products; and (d) activities related to the submission of information about Government Reimbursed Products to Compendia (such as Drugdex or other compendia of information about Government Reimbursed Products).
5. The term “Covered Functions” refers to “Promotional Functions” and “Product Related Functions,” collectively.
6. The term “Third-Party Educational Activity” shall mean any scientific, educational, or professional program, meeting, or event for HCPs conducted by a third party and supported by Indivior but intended to be independent of Indivior’s control or influence, including but not limited to, continuing medical education (CME), disease awareness, or sponsorship of symposia at medical conferences.
7. The term “Indivior Affiliate” shall mean any entity, including Indivior Treatment Services, Inc. that is owned or controlled directly or indirectly by Indivior, Inc. and whose employees or contractors perform any Covered Functions. All obligations set forth in Section III below shall apply to the Covered Functions performed by any Indivior Affiliate and all references to “Indivior” in the defined terms set forth in this Section II shall mean Indivior and any Indivior Affiliate. In addition, the notice requirements in Section IV and the certification obligations set forth in Section V.C. below shall apply to both Indivior and any Indivior Affiliate.
8. The term “Third Party Personnel” shall mean personnel who perform in Promotional Functions or Product Related Functions who are employees of entities with which Indivior has or may in the future (during the term of this CIA) enter into agreements to co-promote a Government Reimbursed Product or to engage in joint promotional activities in the United States relating to such a product. Indivior has represented that: (a) Third Party Personnel are employed by entities other than Indivior; (b) Indivior does not control the Third Party Personnel; (c) it would be commercially impracticable to compel the compliance of Third Party Personnel with the requirements set forth in this CIA. Indivior agrees to promote compliance by Third Party Personnel with Federal health care program and FDA requirements by complying with the provisions set forth below in Sections III.B.2, V.A.7, and V.B.7. Provided that Indivior
Indivior Corporate Integrity Agreement
3
complies with the requirements of Sections III.B.2, V.A.7, and V.B.7, Indivior shall not be required to fulfill the other CIA obligations that would otherwise apply to Third Party Personnel who meet the definition of Covered Persons.
III. CORPORATE INTEGRITY OBLIGATIONS
Indivior shall establish and maintain a Compliance Program that includes the following elements:
A. Compliance Officer and Committee, Board of Directors, and Management Compliance Obligations
1. Compliance Officer. Within 90 days after the Effective Date, Indivior shall appoint a Compliance Officer and shall maintain a Compliance Officer for the term of the CIA. The Compliance Officer shall be an employee and a member of senior management of Indivior; shall report directly to the Chief Executive Officer of Indivior; and shall not be, or be subordinate to, the Chief Legal Officer or Chief Financial Officer or have any responsibilities that involve acting in any capacity as legal counsel or supervising legal counsel functions for Indivior. The Compliance Officer shall be responsible for, without limitation:
(a) developing and implementing policies, procedures, and practices designed to ensure compliance with the requirements set forth in this CIA and with Federal health care program and FDA requirements;
(b) making periodic (at least quarterly) reports regarding compliance matters in person to the Nomination & Governance Committee (NGC) of the Board of Directors of Indivior PLC and shall be authorized to report on such matters to the NGC at any time. Written documentation of the Compliance Officer’s reports to the NGC shall be made available to OIG upon request; and
(c) monitoring the day-to-day compliance activities engaged in by Indivior as well as any reporting obligations created under this CIA.
Any noncompliance job responsibilities of the Compliance Officer shall be limited and must not interfere with the Compliance Officer’s ability to perform the duties outlined in this CIA.
Indivior Corporate Integrity Agreement
4
Indivior shall report to OIG, in writing, any changes in the identity of the Compliance Officer, or any actions or changes that would affect the Compliance Officer’s ability to perform the duties necessary to meet the obligations in this CIA, within five business days after such a change.
2. Compliance Committee. Within 90 days after the Effective Date, Indivior shall appoint a Compliance Committee. The Compliance Committee shall, at a minimum, include the Compliance Officer and other members of senior management necessary to meet the requirements of this CIA (e.g., senior executives of relevant departments, such as sales, marketing, legal, medical affairs, regulatory affairs, research and development, human resources, audit, finance, manufacturing, and operations). The Compliance Officer shall chair the Compliance Committee and the Compliance Committee shall support the Compliance Officer in fulfilling his/her responsibilities (e.g., shall assist in the analysis of Indivior’s risk areas and shall oversee monitoring of internal and external audits and investigations). The Compliance Committee shall meet at least quarterly. The minutes of the Compliance Committee meetings shall be made available to OIG upon request.
Indivior shall report to OIG, in writing, any actions or changes that would affect the Compliance Committee’s ability to perform the duties necessary to meet the obligations in this CIA, within 15 business days after such a change.
3. Board Compliance Obligations. The Nominating & Governance Committee of the Indivior PLC Board (NGC) shall be responsible for the review and oversight of matters related to compliance with Federal health care program requirements, FDA requirements, and the obligations of this CIA. The NGC must include independent (i.e., non-employee and non-executive) members.
The NGC shall, at a minimum, be responsible for the following:
(a) meeting at least quarterly to review and oversee Indivior’s Compliance Program, including but not limited to the performance of the Compliance Officer and Compliance Committee;
(b) submitting to OIG a description of the documents and other materials it reviewed, as well as any additional steps taken, such as the engagement of an independent advisor or other third-party resources, in its oversight of the compliance program and in support of making the resolution below during each Reporting Period;
Indivior Corporate Integrity Agreement
5
(c) for each Reporting Period of the CIA, adopting a resolution, signed by each member of the NGC, summarizing its review and oversight of Indivior’s compliance with Federal health care program requirements, FDA requirements, and the obligations of this CIA; and
(d) for the first and third Reporting Periods of the CIA, the NGC shall retain an individual or entity with expertise in compliance with Federal health care program and FDA requirements (Compliance Expert) to perform a review of the effectiveness of Indivior’s Compliance Program (Compliance Program Review). The Compliance Expert shall prepare a written report about the Compliance Program Review. The written report (Compliance Program Review Report) shall include a description of the Compliance Program Review and any recommendations with respect to Indivior’s compliance program. The NGC shall review the Compliance Program Review Report as part of its review and oversight of Indivior’s compliance program. A copy of the Compliance Program Review report shall be provided to OIG in the first and third Annual Reports submitted by Indivior. In addition, copies of any materials provided to the NGC by the Compliance Expert, along with minutes of any meetings between the Compliance Expert and the NGC, shall be made available to OIG upon request.
At minimum, the resolution shall include the following language:
“The Nominating & Governance Committee of the Indivior PLC Board (NGC) has made a reasonable inquiry into the operations of Indivior’s Compliance Program including the performance of the Compliance Officer and the Compliance Committee. Based on its inquiry and review, the NGC has concluded that, to the best of its knowledge, Indivior has implemented an effective Compliance Program to meet Federal health care program requirements, FDA requirements, and the obligations of the Corporate Integrity Agreement.”
If the NGC is unable to provide such a conclusion in the resolution, the NGC shall include in the resolution a written explanation of the reasons why it is unable to provide the conclusion and the steps it is taking to implement an effective Compliance Program at Indivior.
Indivior Corporate Integrity Agreement
6
Indivior shall report to OIG, in writing, any changes in the composition of the NGC, or any actions or changes that would affect the NGC’s ability to perform the duties necessary to meet the obligations in this CIA, within 15 business days after such a change.
4. Management Certifications. In addition to the responsibilities set forth in this CIA for all Covered Persons, certain Indivior employees (Certifying Employees) are specifically expected to monitor and oversee activities within their areas of authority and shall annually certify that the applicable Indivior business unit is in compliance with applicable Federal health care program and FDA requirements and with the obligations of this CIA. These Certifying Employees shall include, at a minimum, the following: Chief Medical Officer; Chief Scientific Officer; Chief Commercial and Strategy Officer; Chief Financial Officer; Senior Vice President of Regulatory Affairs; Senior Vice President Global Medicines Development; Senior Director and Head, MSL and Medical Outcomes and Value Team; Senior Vice President for US Sales and Marketing; and Senior Vice President for US Treatment Access, Support Programs and Business Insights. For each Reporting Period, each Certifying Employee shall sign a certification that states:
“I have been trained on and understand the compliance requirements and responsibilities as they relate to [insert name of department or functional area], an area under my supervision. My job responsibilities include ensuring compliance with regard to the _______ [insert name of the department or functional area] with all applicable Federal health care program requirements, FDA requirements, obligations of the Corporate Integrity Agreement, and Indivior policies, and I have taken steps to promote such compliance. To the best of my knowledge, the _______ [insert name of department or functional area] of Indivior is in compliance with all applicable Federal health care program requirements, FDA requirements, and the obligations of the Corporate Integrity Agreement. I understand that this certification is being provided to and relied upon by the United States.”
If any Certifying Employee is unable to provide such a certification, the Certifying Employee shall provide a written explanation of the reasons why he or she is unable to provide the certification outlined above.
Within 90 days after the Effective Date, Indivior shall develop and implement a written process for Certifying Employees to follow for the purpose of completing the certification required by this section (e.g., reports that must be reviewed, assessments that must be completed, sub-certifications that must be obtained, etc. prior to the Certifying Employee making the required certification).
Indivior Corporate Integrity Agreement
7
B. Written Standards
1. Policies and Procedures. Within 90 days after the Effective Date, Indivior shall develop and implement written policies and procedures regarding the operation of its compliance program, including the compliance program requirements outlined in this CIA and Indivior’s compliance with Federal health care program and FDA requirements (Policies and Procedures). Throughout the term of this CIA, Indivior shall enforce its Policies and Procedures and shall make compliance with its Policies and Procedures an element of evaluating the performance of all employees. The Policies and Procedures shall be made available to all Covered Persons. At a minimum, the Policies and Procedures shall address the following:
(a) appropriate ways to conduct Promotional Functions in compliance with all: (i) applicable Federal healthcare program requirements, including, but not limited to the Federal Anti-Kickback Statute (codified at 42 U.S.C. § 1320a-7b(b)) and the False Claims Act (codified at 31 U.S.C. §§ 3729-3733); and (ii) all applicable FDA requirements;
(b) appropriate ways to conduct Product Related Functions in compliance with: (i) all applicable Federal healthcare program requirements, including, but not limited to the Federal Anti-Kickback Statute (codified at 42 U.S.C. § 1320a-7b(b)) and the False Claims Act (codified at 31 U.S.C. §§ 3729-3733); and (ii) all applicable FDA requirements;
(c) the materials and information that may be distributed by Indivior sales representatives (including any contract sales force) about Government Reimbursed Products and the manner in which Indivior sales representatives respond to requests for information about non-FDA approved (or “off- label”) uses of Government Reimbursed Products;
(d) the materials and information that may be distributed by Medical Information about Government Reimbursed Products and the mechanisms through, and manner in which, Medical Information receives and responds to requests for information from an HCP or another individual or entity about off-label uses of Government Reimbursed Products; the form and content of information disseminated by Indivior in response to such requests; and the internal review process for the information disseminated;
Indivior Corporate Integrity Agreement
8
(e) the manner and circumstances under which medical personnel interact with or participate in meetings or events with HCPs, HCIs, or Payors (either alone or with Indivior sales representatives) and the role of the medical personnel at such meetings or events, as well as how they handle responses to requests for information about off-label uses of Government Reimbursed Products;
(f) the materials and information that may be distributed or made available by Indivior through social media and/or direct-to- consumer advertising;
(g) the development, implementation, and review of call plans for sales representatives (including any contract sales force) and other Indivior representatives who promote and sell Government Reimbursed Products;
(h) the development, implementation, and review of all plans for the distribution of samples of, or coupons or vouchers for, Government Reimbursed Products (Sample Distribution Plans). This shall include a review of the bases upon, and circumstances under, which HCPs and HCIs belonging to specified medical specialties or types of clinical practice may receive samples, coupons, or vouchers from Indivior (including, separately, from sales representatives, or through other channels);
(i) consultant or other fee-for-service arrangements entered into with HCPs or HCIs (including but not limited to speaker programs, speaker training programs, presentations, consultant task force meetings, advisory boards, ad hoc advisory activities, and any other financial engagement or arrangement with an HCP or HCI) and all events and expenses relating to such engagements or arrangements;
(j) programs by HCPs to educate sales representatives, including but not limited to presentations by HCPs at sales meetings, preceptorships, tutorials, and experience-based learning activities;
(k) sponsorship or funding of grants (including educational grants) or charitable contributions;
Indivior Corporate Integrity Agreement
9
(l) funding of, or participation in, any Third-Party Educational Activity as defined in Section II.C.6 above;
(m) review of promotional, coding, billing, reimbursement, and disease state materials and information intended to be disseminated outside Indivior by appropriate qualified personnel (such as regulatory, medical, and/or legal personnel) in a manner designed to ensure that legal, regulatory, and medical concerns are properly addressed during Indivior’s review and approval process and are elevated when appropriate;
(n) compensation (including through salaries, bonuses, or other means) for Covered Persons engaged in Promotional Functions;
(o) the submission of information about any Government Reimbursed Product to any compendia such as Drugdex or other published source of information used in connection with the determination of coverage by a Federal health care program for the product (hereafter “Compendia”). This includes any initial submission of information to any Compendia and the submission of any additional, updated, supplemental, or changed information (including any changes based on Indivior’s discovery of erroneous or scientifically unsound information or data associated with the information in the Compendia and the publication of new study results.);
(p) sponsorship or other support of post-marketing clinical trials and all other post-marketing studies of Government Reimbursed Products and support of ISSs (collectively, “Research”), including the decision to provide financial or other support for such Research; the manner in which Research support is provided; the publication of information about the Research (including the publication of information about the Research results and trial outcomes); and uses made of publications relating to Research;
(q) authorship of journal articles or other publications about Government Reimbursed Products or about therapeutic areas or disease states that may be treated with Government Reimbursed Products, including, but not limited to, the disclosure of any and all financial relationships between the author and Indivior
Indivior Corporate Integrity Agreement
10
or other potential conflicts of interest that might bias the author’s work; the identification of all authors or contributors (including professional writers) associated with a given publication; and the scope and breadth of research results made available to each author or contributor; and
(r) disciplinary policies and procedures for violations of Indivior’s Policies and Procedures, including policies relating to Federal health care program and FDA requirements.
At least annually (and more frequently, if appropriate), Indivior shall assess and update, as necessary, the Policies and Procedures. Any new or revised Policies and Procedures shall be made available to all Covered Persons.
All Policies and Procedures shall be made available to OIG upon request.
2. Third Party Personnel. Within 90 days after the Effective Date, and annually thereafter by the anniversary of the Effective Date, Indivior shall send, electronically or in hard copy format, a letter to each entity employing Third Party Personnel. The letter shall outline Indivior’s obligations under the CIA and its commitment to full compliance with all Federal health care program and FDA requirements. The letter shall include a description of Indivior’s Compliance Program. Indivior shall include with the letter a copy of its Code of Conduct and shall request the entity employing Third Party Personnel to either: (a) make a description of Indivior’s Compliance Program available to its Third Party Personnel; or (b) represent to Indivior that it has and enforces a substantively comparable compliance program for its Third Party Personnel.
C. Training and Education
1. Covered Persons Training. Within 90 days after the Effective Date, Indivior shall develop a written plan (Training Plan) that outlines the steps Indivior will take to ensure that: (a) all Covered Persons receive at least annual training regarding Indivior’s CIA requirements and compliance program, and (b) all Covered Persons who engage in Covered Functions receive at least annual training regarding: (i) all applicable Federal health care program and FDA requirements relating to Covered Functions and (ii) all Indivior Policies and Procedures and other requirements applicable to Covered Functions. The Training Plan shall include information regarding the following: training topics, categories of Covered Persons and required to attend each training session, length of the training session(s), schedule for training, and format of the training. Indivior shall furnish training to its Covered Persons pursuant to the Training Plan during each Reporting Period.
Indivior Corporate Integrity Agreement
11
2. NGC Training. In addition to the training described in Section III.C.1, within 90 days after the Effective Date, each member of the NGC shall receive training regarding the corporate governance responsibilities of board members, and the responsibilities of board members with respect to review and oversight of the Compliance Program. Specifically, the training shall address the unique responsibilities of health care board members, including the risks, oversight areas, and strategic approaches to conducting oversight of a health care entity. This training may be conducted by an outside compliance expert hired by the NGC and should include a discussion of OIG’s guidance on board member responsibilities.
New members of the NGC shall receive the NGC Training described above within 30 days after becoming a member or within 90 days after the Effective Date, whichever is later.
3. Training Records. Indivior shall make available to OIG, upon request, training materials and records verifying that the training described in Sections III.C.1 and III.C.2 has been provided as required.
D. Risk Assessment and Mitigation Process
Within 120 days after the Effective Date, Indivior shall develop and implement a centralized annual risk assessment and mitigation process to identify and address risks associated with Indivior’s compliance with Federal health care program requirements and FDA requirements, including risks associated with the sales, marketing, and promotion of Government Reimbursed Products. The Compliance Committee shall be responsible for implementation and oversight of the risk assessment and mitigation process. The Risk Assessment and Mitigation Process (RAMP) shall require compliance, legal, and business unit leaders, at least annually, to: (1) evaluate and identify emerging risks (e.g., new products or activities) and assess relevant, material changes to previously identified RAMP risk areas, (2) prioritize, develop, update (as relevant), and implement specific risk mitigation plans related to the identified, prioritized risks, (3) implement the risk mitigation plans (which may include compliance auditing and monitoring activities), and (4) track the implementation of the risk mitigation plans to assess the effectiveness of such plans. Indivior shall maintain the RAMP for the term of the CIA.
E. Review Procedures
1. General Description.
(a) Engagement of Independent Review Organization. Within 90 days after the Effective Date, Indivior shall engage an entity (or entities), such as an accounting, auditing, or consulting firm (hereinafter “Independent Review Organization” or “IRO”), to
Indivior Corporate Integrity Agreement
12
perform the reviews listed in this Section III.E. The applicable requirements relating to the IRO are outlined in Appendix A to this CIA, which is incorporated by reference.
(b) Retention of Records. The IRO and Indivior shall retain and make available to OIG, upon request, all work papers, supporting documentation, correspondence, and draft reports (those exchanged between the IRO and Indivior) related to the reviews.
(c) Access to Records and Personnel. Indivior shall ensure the IRO has access to all records and personnel necessary to complete the reviews listed in this Section III.E., and that all records furnished to the IRO are accurate and complete.
2. System, Transaction, and Additional Items Reviews. As set forth more fully in Appendix B, the IRO reviews shall consist of three components: Systems Reviews and Transactions Reviews relating to the Covered Functions and an Additional Items Review.
(a) Systems Review. The Systems Reviews shall assess Indivior’s systems, processes, policies, and procedures relating to the Covered Functions. If there are no material changes in Indivior’s relevant systems, processes, policies, and procedures, the Systems Reviews shall be performed for the first and fourth Reporting Periods. If Indivior materially changes its relevant systems, processes, policies, and procedures, the IRO shall perform a Systems Review for the Reporting Period in which such changes were made in addition to conducting the Systems Review for the first and fourth Reporting Periods, as set forth more fully in Appendix B.
(b) Transactions Review. The Transactions Reviews shall be performed annually and shall cover each of the five Reporting Periods. The IRO(s) shall perform all components of each annual Transaction Review. As set forth more fully in Appendix B, the Transactions Review shall include several components.
(c) Additional Items Review. Each IRO review shall also include a review of up to three additional areas or practices of Indivior identified by OIG in its discretion (hereafter “Additional Items”). For purposes of identifying the Additional Items to be
Indivior Corporate Integrity Agreement
13
included in the IRO review for a particular Reporting Period, OIG will consult with Indivior and may consider internal audit and monitoring work conducted by Indivior, the Government Reimbursed Product portfolio, the nature and scope of Indivior’s promotional and other practices, the nature and scope of Indivior’s arrangements with HCPs and HCIs, and other information known to OIG.
3. IRO Review Reports. The IRO shall prepare a report based upon each IRO review performed (IRO Review Report). Information to be included in the IRO Review Report is described in Appendices A-B.
4. Independence and Objectivity Certification. The IRO shall include in its report(s) to Indivior a certification that the IRO has: (a) evaluated its professional independence and objectivity with respect to the reviews required under this Section III.E; and (b) concluded that it is, in fact, independent and objective in accordance with the requirements specified in Appendix A to this CIA. The IRO’s certification shall include a summary of current and prior engagements between Indivior and IRO.
F. Disclosure Program
Within 90 days after the Effective Date, Indivior shall establish a Disclosure Program that includes a mechanism (e.g., a toll free compliance telephone line) to enable individuals to disclose, to the Compliance Officer or some other person who is not in the disclosing individual’s chain of command, any identified issues or questions associated with Indivior’s policies, conduct, practices, or procedures with respect to a Federal health care program or an FDA requirement believed by the individual to be a potential violation of criminal, civil, or administrative law. Indivior shall appropriately publicize the existence of the Disclosure Program and the disclosure mechanism (e.g., via periodic e-mails to employees, or by posting the information in prominent common areas).
The Disclosure Program shall emphasize a nonretribution, nonretaliation policy and shall include a reporting mechanism for anonymous communications for which appropriate confidentiality shall be maintained. The Disclosure Program also shall include a requirement that all of Indivior’s Covered Persons shall be expected to report suspected violations of any Federal health care program or FDA requirements to the Compliance Officer or other appropriate individual designated by Indivior. Upon receipt of a disclosure, the Compliance Officer (or designee) shall gather all relevant information from the disclosing individual. The Compliance Officer (or designee) shall make a preliminary, good faith inquiry into the allegations set forth in every disclosure to ensure that he or she has obtained all of the information necessary to determine whether a further review should be conducted. For any disclosure that is sufficiently specific so that it
Indivior Corporate Integrity Agreement
14
reasonably: (1) permits a determination of the appropriateness of the alleged improper practice; and (2) provides an opportunity for taking corrective action, Indivior shall conduct an internal review of the allegations set forth in the disclosure and ensure that proper follow-up is conducted.
The Compliance Officer (or designee) shall maintain a disclosure log and shall record all disclosures, whether or not related to a potential violation of criminal, civil or administrative law related to Federal health care programs or FDA requirements, in the disclosure log within two business days of receipt of the disclosure. The disclosure log shall include a summary of each disclosure received (whether anonymous or not), the individual or department responsible for reviewing the disclosure, the status of the review, and any corrective action taken in response to the review.
G. Ineligible Persons
1. Definitions. For purposes of this CIA:
(a) an “Ineligible Person” shall include an individual or entity who:
i. is currently excluded from participation in the Federal health care programs; or
ii. has been convicted of a criminal offense that falls within the scope of 42 U.S.C. § 1320a-7(a), but has not yet been excluded.
(b) “Exclusion List” means the HHS/OIG List of Excluded Individuals/Entities (LEIE) (available through the Internet at http://www.oig.hhs.gov).
2. Screening Requirements. Indivior shall ensure that all prospective and current Covered Persons are not Ineligible Persons by implementing the following screening requirements.
(a) Indivior shall screen all prospective Covered Persons against the Exclusion List prior to engaging their services and, as part of the hiring or contracting process, shall require such Covered Persons to disclose whether they are Ineligible Persons.
(b) Indivior shall screen all current Covered Persons against the Exclusion List within 90 days after the Effective Date and on an annual basis thereafter.
Indivior Corporate Integrity Agreement
15
(c) Indivior shall maintain a policy requiring all Covered Persons to disclose immediately if they become an Ineligible Person.
Nothing in this Section III.G affects Indivior’s responsibility to refrain from (and liability for) billing Federal health care programs for items or services furnished, ordered, or prescribed by an excluded person. Indivior understands that items or services furnished, ordered, or prescribed by excluded persons are not payable by Federal health care programs and that Indivior may be liable for overpayments and/or criminal, civil, and administrative sanctions for employing or contracting with an excluded person regardless of whether Indivior meets the requirements of Section III.G.
3. Removal Requirement. If Indivior has actual notice that a Covered Person has become an Ineligible Person, Indivior shall remove such Covered Person from responsibility for, or involvement with, Indivior’s business operations related to the Federal health care program(s) from which such Covered Person has been excluded and shall remove such Covered Person from any position for which the Covered Person’s compensation is paid in whole or part, directly or indirectly, by any Federal health care program(s) from which the Covered Person has been excluded at least until such time as the Covered Person is reinstated into participation in such Federal health care program(s).
4. Pending Charges and Proposed Exclusions. If Indivior has actual notice that a Covered Person is charged with a criminal offense that falls within the scope of 42 U.S.C. §§ 1320a-7(a), 1320a-7(b)(1)-(3), or is proposed for exclusion during the Covered Person’s employment or contract term, Indivior shall take all appropriate actions to ensure that the responsibilities of that Covered Person have not and shall not adversely affect the quality of care rendered to any beneficiary, or the accuracy of any claims submitted to any Federal health care program.
H. Incentive Compensation Restriction and Financial Recoupment Programs
1. Employee and Executive Incentive Compensation Restriction Program. Indivior agrees to develop and maintain throughout the term of the CIA policies and procedures that shall: (1) be designed to ensure that financial incentives do not improperly motivate sales representatives or their direct managers to engage in or tolerate improper promotion, sales and marketing of Indivior’s products; and (2) include mechanisms, where appropriate, to exclude from incentive compensation any sales that may indicate off-label promotion of Indivior’s products (Employee and Executive Incentive Compensation Program). The specific terms and conditions of the Employee and Executive Incentive Compensation Program are described in Appendix C to this CIA.
2. Executive Financial Recoupment Program. Indivior agrees to establish and maintain throughout the term of this CIA a financial recoupment program
Indivior Corporate Integrity Agreement
16
that puts at risk of forfeiture and recoupment an amount equivalent to up to two years of annual performance pay for a Covered Executive who is discovered to have been involved in any significant misconduct (Executive Financial Recoupment Program). The specific terms and conditions of the Executive Financial Recoupment Program are described in Appendix C to this CIA.
I. Notification of Government Investigation or Legal Proceeding
Within 30 days after discovery, Indivior shall notify OIG, in writing, of any ongoing investigation or legal proceeding known to Indivior conducted or brought by a governmental entity or its agents involving an allegation that Indivior has committed a crime or has engaged in fraudulent activities. This notification shall include a description of the allegation, the identity of the investigating or prosecuting agency, and the status of such investigation or legal proceeding. Indivior also shall provide written notice to OIG within 30 days after the resolution of the matter and describe the findings and/or results of the investigation or proceeding, if any.
J. Reportable Events
1. Definition of Reportable Event. For purposes of this CIA, a “Reportable Event” means anything that involves:
(a) a matter that a reasonable person would consider a probable violation of criminal, civil, or administrative laws applicable to any Federal health care program for which penalties or exclusion may be authorized;
(b) a matter that a reasonable person would consider a probable violation of FDA requirements relating to the promotion of Government Reimbursed Products, unless otherwise reported to the FDA in accordance with Section III.K below;
(c) the employment of or contracting with a Covered Person who is an Ineligible Person as defined by Section III.G.1.a; or
(d) the filing of a bankruptcy petition by Indivior.
A Reportable Event may be the result of an isolated event or a series of occurrences.
2. Reporting of Reportable Events. If Indivior determines (after a reasonable opportunity to conduct an appropriate review or investigation of the allegations) through any means that there is a Reportable Event, Indivior shall notify OIG, in writing, within 30 days after making the determination that the Reportable Event
Indivior Corporate Integrity Agreement
17
exists. Indivior shall not be required to report as a Reportable Event a matter that is the subject of an ongoing investigation or legal proceeding by a government entity or its agents if disclosed under Section III.I above.
3. Reportable Events under Sections III.J.1.a and III.J.1.b. For Reportable Events under Sections III.J.1.a and b, the report to OIG shall include:
(a) a complete description of all details relevant to the Reportable Event, including, at a minimum, the types of claims, transactions or other conduct giving rise to the Reportable Event, the period during which the conduct occurred, and the names of individuals and entities believed to be implicated, including an explanation of their roles in the Reportable Event;
(b) a statement of the Federal criminal, civil or administrative laws that are probably violated by the Reportable Event, if any;
(c) the Federal health care programs affected by the Reportable Event, if any;
(d) a statement of the FDA requirements probably violated by the Reportable Event, if any; and
(e) a description of Indivior’s actions taken to correct the Reportable Event and prevent it from recurring.
4. Reportable Events under Section III.J.1.c. For Reportable Events under Section III.J.1.c, the report to OIG shall include:
(a) the identity of the Ineligible Person and the job duties performed by that individual;
(b) the dates of the Ineligible Person’s employment or contractual relationship;
(c) a description of the Exclusion List screening that Indivior completed before and/or during the Ineligible Person’s employment or contract and any flaw or breakdown in the screening process that led to the hiring or contracting with the Ineligible Person;
(d) a description of how the Ineligible Person was identified; and
Indivior Corporate Integrity Agreement
18
(e) a description of any corrective action implemented to prevent future employment or contracting with an Ineligible Person.
5. Reportable Events under Section III.J.1.d. For Reportable Events under Section III.J.1.d, the report to OIG shall include documentation of the bankruptcy filing and a description of any Federal health care program and/or FDA requirements implicated.
K. Notification of Communications with FDA
Within 30 days after the date of any written report, correspondence, or communication between Indivior and the FDA that materially discusses Indivior’s or a Covered Person’s actual or potential unlawful or improper promotion of Indivior’s products (including any improper dissemination of information about off-label indications), Indivior shall provide a copy of the report, correspondence, or communication to OIG. Indivior shall also provide written notice to OIG within 30 days after the resolution of any such disclosed improper promotional matter, and shall provide OIG with a description of the findings and/or results of the matter, if any.
L. Field Force Monitoring and Review Efforts
Within 90 days after the Effective Date, Indivior shall establish a comprehensive Field Force Monitoring Program (FFMP) to evaluate and monitor its sales personnel’s interactions with HCPs and HCIs. The FFMP shall be a formalized process designed to directly and indirectly observe the appropriateness of sales personnel’s interactions with HCPs and HCIs and to identify potential off-label promotional activities or other improper conduct. As described in more detail below, the FFMP shall include: (1) a Speaker Monitoring Program; (2) direct field observations (Observations) of sales personnel; and (3) the monitoring and review of other records relating to sales personnel’s interactions with HCPs and HCIs (Records Reviews).
1. Speaker Program Activities.
Within 90 days after the Effective Date:
(a) Indivior shall establish a process to develop an annual budget and needs assessment process that identifies the business needs for, and the estimated numbers of, speaker program activities for the following year. As part of the process, Indivior shall identify the business need for the planned speaker programs and shall collect specific details about the speaker programs (e.g., the expected number of programs, the topics of the programs, and the identity and qualifications of the proposed
Indivior Corporate Integrity Agreement
19
speakers.) The annual speaker program budget shall identify the total budgeted amounts to be spent on speaker programs. Indivior compliance personnel shall be involved in the review and approval of such plans, including any subsequent modification of approved plans. The purpose of this review shall be to ensure that speaker programs and related events (including speaker training events) are used for legitimate and lawful purposes in accordance with applicable Federal health care program and FDA requirements and Indivior Policies and Procedures;
(b) Indivior shall implement a process to require all speakers to complete training and enter written agreements that describe the scope of work to be performed, the speaker fees to be paid, and compliance obligations for the speakers (including requirements regarding the use of Indivior approved materials and requirements that speakers may not directly or indirectly promote the product for off-label uses.).
(c) Indivior shall establish a centralized system to initiate and track all speaker programs that includes controls designed to ensure that speaker programs are used for legitimate and lawful purposes in accordance with all applicable Federal health care program and FDA requirements.
(d) Indivior shall ensure that speakers are paid according to a centrally managed, pre-set rate structure determined based on a third-party fair-market value analysis.
(e) Indivior shall maintain a comprehensive list of speaker program attendees through a centralized system. In addition, Indivior shall use a centralized system to handle all logistics and spending associated with speaker programs, including the tracking and review of the aggregate amount (including speaker fees, travel, and other expenses) paid to each speaker in connection with speaker programs.
(f) Indivior shall require certifications by sales representatives or other Indivior personnel that a speaker program complied with Indivior requirements, or in the event of non- compliance, Indivior shall require the identification of the policy violation
Indivior Corporate Integrity Agreement
20
and ensure appropriate follow up activity to address the violation.
(g) Indivior shall institute a Speaker Monitoring Program under which Indivior compliance or other appropriately trained Indivior personnel who are independent from the functional area being monitored (Monitoring Personnel) or third party consultants appropriately trained by Indivior and under the supervision of Indivior shall attend 30 speaker programs during each Reporting Period and conduct live audits of the programs (Speaker Program Audits). The programs subject to Speaker Program Audits shall be selected using either a risk-based targeting approach or a random sampling approach. For each program reviewed, Monitoring Personnel shall review slide materials and other materials used as part of the speaker program, speaker statements made during the program, and Indivior sales representative activities during the program to assess whether the programs were conducted in a manner consistent with Indivior’s Policies and Procedures.
Indivior shall maintain the controls around speaker programs as described above and shall conduct its Speaker Program Audits as described above throughout the term of the CIA.
2. Observations. As a component of the FFMP, Monitoring Personnel shall conduct observations of Indivior field sales representatives (including any contract sales personnel) to assess whether the messages delivered and materials distributed to HCPs and HCIs are consistent with applicable legal requirements and with Indivior’s Policies and Procedures. These observations shall be full day ride-alongs with field sales representatives (Observations), and each Observation shall consist of directly observing all meetings between a sales representative and HCPs and HCIs during the workday. The Observations shall be scheduled throughout the year, judgmentally selected by Monitoring Personnel, include a review of each therapeutic area and actively promoted product, and be conducted across the United States.
At the completion of each Observation, Monitoring Personnel shall prepare a report which includes:
1) the identity of the sales representative;
2) the identity of the Monitoring Personnel who conducted the Observation;
3) the date and duration of the Observation;
Indivior Corporate Integrity Agreement
21
4) the product(s) promoted during the Observation;
5) an overall assessment of compliance with Indivior Policies and Procedures; and
6) the identification of any potential off-label promotional activity or other improper conduct by the field sales representative.
Monitoring Personnel shall conduct at least 20 Observations during each Reporting Period.
Monitoring Personnel shall have access to all relevant records and information necessary to assess field representatives’ interactions with HCPs and HCIs and to identify potential or actual compliance violations.
3. Records Reviews. As a component of the FFMP, Indivior shall also review various types of records to assess field sales representatives’ interactions with HCPs and HCIs and to identify potential or actual compliance violations.
(a) For each Reporting Period, Indivior shall develop and implement a plan for conducting Records Reviews associated with at least two Government Reimbursed Products. The Records Reviews shall include a review of records relating to the activities of sales representatives using either a risk-based targeting approach or a random sampling approach.
(b) The Records Reviews shall include the monitoring and review of:
(i) records and systems associated with field sales representatives’ interactions with HCPs and HCIs (including records relating to speaker program activities, samples, travel and entertainment, expense reports, any payments to HCPs or HCIs, and sales communications from managers);
(ii) message recall studies or other similar records (such as Verbatims) purporting to reflect the details of representatives’ interactions with HCPs and HCIs;
(iii) records relating to requests for medical information about or inquiries relating to, the Government Reimbursed Products under review;
(iv) field sales representative call notes;
Indivior Corporate Integrity Agreement
22
(v) field sales representatives’ e-mails and other electronic records; and
(vi) recorded results of the Observations of field sales force representatives, coaching guides, and district manager notes.
4. Reporting and Follow-up. Results from the FFMP shall be compiled and reported to the Compliance Officer for review and remediation as appropriate. Potential violations related to improper promotion of a Government Reimbursed Product or potential violations of Federal health care program or FDA requirements shall be reported to the Compliance Officer for appropriate follow-up activity. In the event that a compliance issue, including but not limited to any potential improper promotion or noncompliance with Indivior’s Policies and Procedures or legal or compliance requirements, is identified during any portion of the FFMP, Indivior shall investigate the incident consistent with established Policies and Procedures for the handling of investigations. As part of the investigative procedures, findings shall be made and all necessary and appropriate responsive action (including disciplinary action) and corrective action shall be taken, including the disclosure of Reportable Events pursuant to Section III.J above, as applicable. Any compliance issues identified during the FFMP and any corrective action shall be recorded in the files of the Compliance Officer.
M. Monitoring of Non-Promotional Activities
Within 90 days after the Effective Date, Indivior shall develop and implement a monitoring program for the following types of activities: (1) consultant arrangement activities; (2) Research-related activities; (3) publication activities; and (4) medical education grants. This program shall be referred to as the Non-Promotional Monitoring Program (NPMP).
1. Consulting Arrangement Activities. To the extent that Indivior engages HCPs for services other than for speaker programs, Research-related activities, or publication activities (e.g., as a member of an advisory board or to attend consultant meetings), such HCPs shall be referred to herein as Consultants.
(a) Indivior shall require all Consultants to enter written agreements describing the scope of work to be performed, the consultant fees to be paid, and compliance obligations for the Consultants. Consultants shall be paid according to a centrally managed, pre-set rate structure that is determined based on a third-party fair-market value analysis.
Indivior Corporate Integrity Agreement
23
(b) Within 90 days after the Effective Date, Indivior shall establish a process and an Indivior Consultant Review Committee to review and approve each business needs assessment for each Consultant arrangement. Indivior compliance personnel shall chair the Consultant Review Committee and shall be involved in the review and approval of the business needs assessment for each Consultant engagement, including any subsequent modification of an approved Consulting activity. The sales and marketing functions shall not be represented on the Consultant Review Committee. The purpose of the Consultant Review Committee review shall be to ensure that Consultant arrangements and activities are used for legitimate and lawful purposes in accordance with applicable Federal health care program and FDA requirements and Indivior Policies and Procedures. Indivior shall maintain the process within its annual budget planning cycle that requires oversight and approval by senior management responsible for annual budget setting, including any budget allocated toward Consultant engagements.
(c) Within 90 days after the Effective Date, Indivior shall establish a process that requires an HCP nomination to be submitted to justify the retention of a named Consultant prior to the retention of the named Consultant. The HCP nomination shall identify the criteria and business need for the retention of the Consultant and provide specific details about the consulting arrangement (e.g., information about the qualifications of the HCP to be engaged, a description of the proposed work to be done, the type of work product to be generated, and, based on a FMV analysis, the proposed amount to be paid to the Consultant). Any deviations from an approved HCP nomination shall be documented in the centralized consultant review system and shall be subject to review and approval by Indivior compliance personnel.
(d) Within 90 days after the Effective Date, Indivior shall amend its policies and procedures in a manner designed to ensure that each Consultant performed the work for which the Consultant was engaged and that, as applicable, Indivior received the work product generated by the Consultant.
Indivior Corporate Integrity Agreement
24
(e) Within 90 days after the Effective Date, Indivior shall establish a Consultant Monitoring Program through which it shall conduct audits (Consultant Arrangement Audits) of at least ten Consultant arrangements with HCPs during each Reporting Period. The Consultant Monitoring Program shall select Consultant arrangements for review using either a risk- based targeting approach or a random sampling approach. Monitoring Personnel shall review Indivior Consultant Review Committee documents (including HCP nominations), Consultant contracts, and materials relating to the program or work of the Consultant (including work product resulting from any program or event), in order to assess whether the programs and arrangements were conducted in a manner consistent with Indivior’s Policies and Procedures. Results from the Consultant Arrangement Audits, including the identification of potential violations of Indivior policies, shall be compiled and reported to the Compliance Officer (or compliance personnel designee) for review and follow up as appropriate.
2. Research-Related Activities. To the extent that Indivior engages or supports U.S.-based HCPs or HCIs to conduct Research (as defined above in Section III.B.1.p), such HCPs and HCIs shall be referred to collectively as “Researchers.”
(a) Indivior shall require all Researchers to enter written agreements describing the scope of the clinical research or other work to be performed, the fees to be paid or support to be given by Indivior, and compliance obligations for the Researchers, including the requirement that the Researchers disclose the financial and other support received from Indivior and any other current financial relationship with Indivior.
(b) Researchers retained to conduct Research shall be paid according to a centrally managed, pre-set rate structure that is determined based on a third-party fair-market value analysis conducted.
(c) Within 90 days after the Effective Date, Indivior shall establish a process to develop an annual budgeting plan for Researchers that identifies the business or scientific need or scientific opportunity for, and the estimated numbers of, the Researcher arrangements to be entered into during the year. The annual Researcher budgeting plan shall also identify the budgeted
Indivior Corporate Integrity Agreement
25
amounts to be spent on Researcher arrangements during the year. Indivior compliance personnel shall be involved in the review and approval of such budgeting plans, including any subsequent modification of an approved plan. The purpose of this review shall be to ensure that Research arrangements are used for legitimate purposes in accordance with Indivior Policies and Procedures and with Federal health care program and FDA requirements.
(d) Within 90 days after the Effective Date, Indivior shall establish a process to ensure that a needs assessment has been completed to justify the retention of the Researcher prior to the retention of the Researcher. The needs assessment shall identify the business or scientific need for the information to be provided by the Researcher and provide specific details about the Research arrangement (including, for example, information about the numbers and qualifications of the HCPs or HCIs to be engaged, a description of the proposed research to be done (including the research protocol) and type of work product to be generated). Any deviations from the Researcher budgeting plans shall be documented in the needs assessment form (or elsewhere, as appropriate) and shall be subject to review and approval by Indivior compliance personnel.
(e) Within 90 days after the Effective Date, Indivior shall amend its policies and procedures in a manner designed to ensure that each Researcher performed the work for which the Researcher was engaged.
(f) Within 90 days after the Effective Date, Indivior shall establish a Researcher Monitoring Program through which it shall conduct audits for each Reporting Period (Researcher Arrangement Audits). Indivior shall review three Researcher arrangements with HCPs or HCIs for each Reporting Period. The Researcher Monitoring Program shall select Researcher arrangements for review using either a risk-based targeting approach or a random sampling approach. Monitoring Personnel conducting the Researcher Arrangement Audits shall review needs assessment documents, proposal and/or protocol documents, approval documents, contracts, and payments in order to assess whether the arrangements were supported by Indivior (financially or otherwise) and performed by the
Indivior Corporate Integrity Agreement
26
Researchers in a manner consistent with Indivior’s Policies and Procedures. Results from the Researcher Arrangement Audits, including identification of potential violations of policies, shall be compiled and reported to the Compliance Officer (or compliance personnel designee) for review and follow-up as appropriate.
3. Publication Activities. To the extent that Indivior engages HCPs or HCIs to produce articles or other publications relating to Government Reimbursed Products (collectively “Publication Activities”) such HCPs or HCIs shall be referred to as Authors.
(a) Indivior shall require all Authors to enter written agreements describing the scope of work to be performed, the fees to be paid in connection with the Publication Activities, and compliance obligations of the Authors, including the requirement that Authors disclose the financial and other current relationships with Indivior. Authors shall be paid according to a centrally managed, pre-set rate structure that is determined based on a third-party fair-market value analysis.
(b) Within 90 days after the Effective Date, Indivior shall establish a process to develop annual plans that identify the business needs for and the estimated number of Publication Activities (Publication Plan). The annual Publication Plan shall also identify the budgeted amounts to be spent on Publication Activities. Indivior’s compliance personnel shall be involved in the review and approval of each annual Publication Plan, including any modification of an approved plan. The purpose of this review shall be to ensure that Publication Activities are used for legitimate purposes in accordance with Indivior Policies and Procedures and with Federal health care program and FDA requirements.
(c) Within 90 days after the Effective Date, Indivior shall establish a needs assessment process for Publication Activities. This process shall ensure that a needs assessment has been completed prior to the retention of an Author to undertake a Publication Activity. The needs assessment shall provide specific details about Publication Activities to be performed (including a description of the proposed work to be done, type of work product to be generated, and the purpose for the work.)
Indivior Corporate Integrity Agreement
27
Any deviations from the Publication Plan shall be documented in the needs assessment form (or elsewhere, as appropriate) and shall be subject to review and approval by Indivior compliance personnel.
(d) Within 90 days after the Effective Date, Indivior shall establish a Publication Monitoring Program through which it shall conduct audits for each Reporting Period of at least five Publication Activities. The Publication Monitoring Program shall select Publication Activities for review both on either a risk-based targeting approach or a random sampling approach. Monitoring Personnel shall review needs assessment documents, proposal documents, approval documents, contracts, payments and materials relating to the Publication Activities (including work product resulting from the Publication Activities), in order to assess whether the Publication Activities were conducted in a manner consistent with Indivior’s Policies and Procedures. Results from the Publication Monitoring Program, including the identification of potential violations of policies, shall be compiled and reported to the Compliance Officer (or compliance personnel designee) for review and follow-up as appropriate.
4. Grant and Charitable Contribution Activities. To the extent that Indivior awards grants for independent medical education or other educational activities or provides charitable contributions, to HCPs or HCIs, such awards shall be referred to as “Grants.”
(a) Within 90 days after the Effective Date, Indivior shall establish a centralized process which shall be the exclusive mechanism though which requestors may request or be awarded Grants.
(b) Grants requests shall be processed in accordance with standardized, objective criteria developed by Indivior. In addition, Grants shall be provided only pursuant to a written agreement with the funding recipient and in a manner consistent with the written agreement. Indivior’s sales and marketing personnel shall have no involvement in, or influence over, the review and approval of Grants.
(c) Within 90 days after the Effective Date, Indivior shall establish a Grants Monitoring Program through which it shall conduct
Indivior Corporate Integrity Agreement
28
audits for each Reporting Period of at least three Grants. The Grants Monitoring Program shall select Grants for review on either a risk-based targeting approach or a random sampling approach. Monitoring Personnel shall review proposal documents (including Grants requests), approval documents, written agreements, payments and materials relating to the review of the requests, and documents and materials relating to the Grants and any events or activities funded through the Grants to assess whether the activities were conducted in a manner consistent with Indivior’s Policies and Procedures. Results from the Grants Monitoring Programs, including the identification of potential violations of policies, shall be compiled and reported to the Compliance Officer (or compliance personnel designee) for review and follow-up as appropriate.
5. Follow Up Reviews and Reporting. In the event that a potential violation of Indivior’s Policies and Procedures or of legal or compliance requirements, including but not limited to potential improper promotion, are identified during any aspect of the NPMP, Indivior shall investigate the incident consistent with established policies and procedures for the handling of investigations and shall take all necessary and appropriate responsive action (including disciplinary action) and corrective action, including the disclosure of Reportable Events pursuant to Section III.J above, if applicable.
N. Notice to Health Care Providers and Entities
Within 30 days after the Effective Date, Indivior shall post in a prominent place on the main page of the health care professional section of its company website (or other placement agreed to in advance by OIG), a copy of a letter signed by Indivior’s Chief Executive Officer containing the language set forth below:
As you may be aware, Indivior recently entered into a civil, criminal, and administrative settlement with the United States and individual states in connection with Indivior’s sales and promotion of Suboxone Film. This letter provides you with additional information about the global settlement, explains Indivior’s commitments going forward, and provides you with access to information about those commitments.
In general terms, the Government alleges that Indivior engaged in certain unlawful and improper conduct relating to the promotion of Suboxone Film. To address criminal liability, a subsidiary of Indivior agreed to plead
Indivior Corporate Integrity Agreement
29
guilty to criminal charges of making materially false statements relating to health care matters and agreed to pay almost $300 million in criminal fines and forfeiture. In addition, to resolve liability under the Federal False Claims Act, Indivior agreed to enter into a civil settlement agreement and pay $300 million. Further, Indivior has agreed to a stipulated injunction with the Federal Trade Commission. More information about this settlement may be found at the following: [Indivior shall include a link to the USAO, OCL, and Indivior websites in the letter.]
As part of the global settlement, Indivior also entered into a five-year corporate integrity agreement with the Office of Inspector General of the U.S. Department of Health and Human Services. The corporate integrity agreement is available at http://oig.hhs.gov/fraud/cia/index.html. Under this agreement, Indivior agreed to undertake certain obligations designed to promote compliance with Federal health care program and FDA requirements. We also agreed to notify healthcare providers about the settlement and inform them that they can report any questionable practices by Indivior’s representatives to Indivior’s Compliance organization or the FDA using the information set out below.
Please call Indivior at [insert toll free number] or visit us at [insert web link] if you have questions about the settlement referenced above. Please call Indivior at [insert toll free number] or visit us at [insert web address] to report any instances in which you believe that an Indivior representative inappropriately promoted a product or engaged in other questionable conduct. Alternatively, you may report any improper conduct associated with prescription drug marketing committed by an Indivior Representative to the FDA’s Office of Prescription Drug Promotion at 301-796-1200. You should direct medical questions or concerns about Indivior products to [insert toll free number].
The Compliance Officer (or a designee) shall maintain a log of all calls and messages received in response to the notice. The log shall include a record and summary of each call and message received (whether anonymous or not), the status of the call or message, and any corrective action taken in response to the call or message. The log of all calls and messages received in response to the notice shall be made available to OIG upon request.
O. Reporting of Physician Payments
1. Reporting of Payment Information. Within 90 days after the Effective Date, Indivior shall post on its website a description of the types of Payments it
Indivior Corporate Integrity Agreement
30
makes to Covered Recipients and include a link to CMS’s Open Payments Data website (www.openpaymentsdata.cms.gov) and this information and link shall be maintained on the Indivior website at least throughout the term of the CIA. Indivior also shall include on its website instructions regarding how to utilize the CMS Open Payments Data search tool to search for information regarding Payments provided to Covered Recipients from Indivior.
2. Definitions. For purposes of this Section III.O, the terms “Payments” and “Covered Recipient” are defined as specified in 42 U.S.C. § 1320a-7h and the related regulations and guidance (including FAQs) published by CMS.
IV. SUCCESSOR LIABILITY
In the event that, after the Effective Date, Indivior proposes to (a) sell any or all of its business, business units or locations (whether through a sale of assets, sale of stock or other type of transaction) that are subject to this CIA; or (b) purchases or establishes a new business, business unit or location related to or engaged in any of the Covered Functions, the CIA shall be binding on the purchaser of any business, business unit or location. Any such new business, business unit or location (and all Covered Persons at each new business, business unit or location) shall be subject to the applicable requirements of this CIA, unless otherwise determined and agreed to in writing by OIG. Indivior shall give notice of such sale or purchase to OIG within 30 days following the closing of the transaction.
If, in advance of a proposed sale or a proposed purchase, Indivior wishes to obtain a determination by OIG that the proposed purchaser or the proposed acquisition will not be subject to the requirements of the CIA, Indivior must notify OIG in writing of the proposed sale or purchase at least 30 days in advance. This notification shall include a description of the business, business unit, or location to be sold or purchased, a brief description of the terms of the transaction and, in the case of a proposed sale, the name and contact information of the prospective purchaser.
V. IMPLEMENTATION AND ANNUAL REPORTS
A. Implementation Report
Within 120 days after the Effective Date, Indivior shall submit a written report to OIG summarizing the status of its implementation of the requirements of this CIA (Implementation Report). The Implementation Report shall, at a minimum, include:
1. the name, business address, business phone number, and position description of the Compliance Officer required by Section III.A.1, and a summary of other noncompliance job responsibilities the Compliance Officer may have;
Indivior Corporate Integrity Agreement
31
2. the names and positions of the members of the Compliance Committee required by Section III.A.2;
3. the names of the NGC members who are responsible for satisfying the NGC compliance obligations described in Section III.A.3;
4. the names and positions of the Certifying Employees required by Section III.A.4 and a copy of the written process for Certifying Employees to follow in order to complete the certification required by Section III.A.4;
5. a list of the Policies and Procedures required by Section III.B.1;
6. the Training Plan required by Section III.C.1 and a description of the NGC training required by Section III.C.2 (including a summary of the topics covered, the length of the training and when the training was provided);
7. (a) a copy of the letter (including all attachments) required by Sections II.C.8 and III.B.2 sent to each party employing Third Party Personnel; (b) a list of all existing co-promotion and other applicable agreements with the party employing the Third Party Personnel; and (c) a description of the entities’ responses to Indivior’s letter;
8. a description of the risk assessment and mitigation process required by Section III.D;
9. the following information regarding the IRO(s): (a) identity, address, and phone number; (b) a copy of the engagement letter; (c) information to demonstrate that the IRO has the qualifications outlined in Appendix A to this CIA; and (d) a certification from the IRO regarding its professional independence and objectivity with respect to Indivior that includes a summary of all current and prior engagements between Indivior and the IRO;
10. a description of the Disclosure Program required by Section III.F;
11. a description of the Ineligible Persons screening and removal process required by Section III.G;
12. a certification by the Compliance Officer that the notice required by Section III.N was posted in the manner required by Section III.N and a summary of the calls or messages received in response to the notice;
13. a certification from the Compliance Officer that information regarding Payments has been posted on Indivior’s website as required by Section III.O;
Indivior Corporate Integrity Agreement
32
14. a list of all of Indivior’s locations (including locations and mailing addresses); the corresponding name under which each location is doing business; and the locations’ Medicare and state Medicaid provider number and/or supplier number(s) if any;
15. a description of Indivior’s corporate structure, including identification of any parent and sister companies, subsidiaries, and their respective lines of business; and
16. the certifications required by Section V.C.
B. Annual Reports
Indivior shall submit a written report to OIG on its compliance with the CIA requirements for each of the five Reporting Periods (Annual Report). Each Annual Report shall include, at a minimum, the following information:
1. any change in the identity, position description, or other noncompliance job responsibilities of the Compliance Officer; a current list of the Compliance Committee members; a current list of the NGC members who are responsible for satisfying the NGC compliance obligations; and a current list of the Certifying Employees, along with the identification of any changes made during the Reporting Period to the Compliance Committee, NGC, and Certifying Employees;
2. a description of any changes to the written process for Certifying Employees to follow in order to complete the certification required by Section III.A.4;
3. the dates of each report made by the Compliance Officer to the NGC (written documentation of such reports shall be made available to OIG upon request);
4. the NGC Board resolution required by Section III.A.3 and a description of the documents and other materials reviewed by the NGC, as well as any additional steps taken, in its oversight of the compliance program and in support of making the resolution;
5. for the first and third Reporting Periods, a copy of the Compliance Review Report prepared by the Compliance Expert for the NGC;
6. a list of any new or revised Policies and Procedures required by Section III.B.1 developed during the Reporting Period;
7. (a) a copy of the letter (including all attachments) required by Sections II.C.8 and III.B.2 sent to each party employing Third Party Personnel; (b) a list of all existing co-promotion and other applicable agreements with the party employing
Indivior Corporate Integrity Agreement
33
the Third Party Personnel; and (c) a description of the entities’ responses to Indivior’s letter;
8. a description of any changes to Indivior’s Training Plan developed pursuant to Section III.C and a summary of any NGC training provided during the Reporting Period;
9. a description of any changes to the risk assessment and mitigation process required by Section III.D, including the reasons for such changes;
10. a summary of the following components of the risk assessment and mitigation process during the Reporting Period: (a) identification of new or updated risks; (b) mitigation plans developed; (c) implementation of mitigation plans; and (d) steps taken to track the implementation of the mitigation plans. Copies of any identified risks, mitigation plans, records relating to the implementation of the mitigation plans, and tracking reports shall be made available to OIG upon request;
11. a complete copy of all reports prepared pursuant to Section III.E and Indivior’s response to the reports, along with corrective action plan(s) related to any issues raised by the reports;
12. a certification from the IRO regarding its professional independence and objectivity with respect to Indivior, including a summary of all current and prior engagements between Indivior and the IRO;
13. a summary of the disclosures in the disclosure log required by Section III.F that relate to Federal health care programs, FDA requirements, or Government Reimbursed Products, including at least the following information: (a) a description of the disclosure, (b) the date the disclosure was received, (c) the resolution of the disclosure, and (d) the date the disclosure was resolved (if applicable). The complete disclosure log shall be made available to OIG upon request;
14. a description of any changes to the Ineligible Persons screening and removal process required by Section III.G, including the reasons for such changes;
15. a description of the Incentive Compensation Restriction and Financial Recoupment programs required by Section III.H, including any changes to the programs during the Reporting Period and the reasons for the changes, and the annual reports to OIG required under Section E of Appendix C;
16. a summary describing any ongoing investigation or legal proceeding required to have been reported pursuant to Section III.I. The summary shall include a
Indivior Corporate Integrity Agreement
34
description of the allegation, the identity of the investigating or prosecuting agency, and the status of such investigation or legal proceeding;
17. a summary of Reportable Events (as defined in Section III.J) identified during the Reporting Period;
18. a summary describing any written communication with the FDA required to have been reported pursuant to Section III.K. This summary shall include a description of each matter and the status of each matter;
19. a summary of the FFMP and the results of the FFMP required by Section III.L, including copies of the Observations for any instances in which it was determined that improper promotion occurred and a description of the action (s) that Indivior took as a result of such determinations;
20. a summary of the NPMP and the results of the program described in Section III.M, including detailed description of any identified instances in which it was determined that the activities violated Indivior’s policies or that improper promotion of Government Reimbursed Products occurred and a description of the action(s) Indivior took as a result of such determinations;
21. a summary of the calls and messages received in response to the notice required by Section III.N and the disposition of those calls and messages;
22. a certification from the Compliance Officer that information regarding Payments has been posted on Indivior’s website as required by Section III.O;
23. a description of all changes to the most recently provided list of Indivior’s locations (including addresses) as required by Section V.A.13;
24. a description of any changes to Indivior’s corporate structure, including any parent and sister companies, subsidiaries, and their respective lines of business; and
25. the certifications required by Section V.C.
The first Annual Report shall be received by OIG no later than 60 days after the end of the first Reporting Period. Subsequent Annual Reports shall be received by OIG no later than the anniversary date of the due date of the first Annual Report.
C. Certifications
1. Certifying Employees. In each Annual Report, Indivior shall include the certifications of Certifying Employees as required by Section III.A.4;
Indivior Corporate Integrity Agreement
35
2. Compliance Officer and Chief Executive Officer. The Implementation Report and each Annual Report shall include a certification by the Compliance Officer and Chief Executive Officer that:
(a) to the best of his or her knowledge, except as otherwise described in the report, Indivior has implemented and is in compliance with all requirements of this CIA;
(b) he or she has reviewed the report and has made reasonable inquiry regarding its content and believes that the information in the report is accurate and truthful; and
(c) he or she understands that the certification is being provided to and relied upon by the United States.
D. Designation of Information
Indivior shall clearly identify any portions of its submissions that it believes are trade secrets, or information that is commercial or financial and privileged or confidential, and therefore potentially exempt from disclosure under the Freedom of Information Act (FOIA), 5 U.S.C. § 552. Indivior shall refrain from identifying any information as exempt from disclosure if that information does not meet the criteria for exemption from disclosure under FOIA.
VI. NOTIFICATIONS AND SUBMISSION OF REPORTS
Unless otherwise stated in writing after the Effective Date, all notifications and reports required under this CIA shall be submitted to the following entities:
OIG:
Administrative and Civil Remedies Branch Office of Counsel to the Inspector General Office of Inspector General
U.S. Department of Health and Human Services Cohen Building, Room 5527
330 Independence Avenue, S.W. Washington, DC 20201
Telephone: 202.619.2078
Facsimile: 202.205.0604
Indivior:
Cindy Cetani
Indivior Corporate Integrity Agreement
36
Chief Integrity & Compliance Officer Indivior Inc.
10710 Midlothian Turnpike North Chesterfield, VA 23235 Telephone: 804-594-1880
Email: Cindy.cetani@indivior.com
Unless otherwise specified, all notifications and reports required by this CIA may be made by electronic mail, overnight mail, hand delivery, or other means, provided that there is proof that such notification was received. Upon request by OIG, Indivior may be required to provide OIG with an additional copy of each notification or report required by this CIA in OIG’s requested format (electronic or paper).
VII. OIG INSPECTION, AUDIT, AND REVIEW RIGHTS
In addition to any other rights OIG may have by statute, regulation, or contract, OIG or its duly authorized representative(s) may conduct interviews, examine and/or request copies of or copy Indivior’s books, records, and other documents and supporting materials and/or conduct on-site reviews of any of Indivior’s locations for the purpose of verifying and evaluating: (a) Indivior’s compliance with the terms of this CIA and (b) Indivior’s compliance with Federal health care program requirements and with all applicable FDA requirements. The documentation described above shall be made available by Indivior to OIG or its duly authorized representative(s) at all reasonable times for inspection, audit, and/or reproduction. Furthermore, for purposes of this provision, OIG or its duly authorized representative(s) may interview any of Indivior’s owners, employees, contractors and directors who consent to be interviewed at the individual’s place of business during normal business hours or at such other place and time as may be mutually agreed upon between the individual and OIG. Indivior shall assist OIG or its duly authorized representative(s) in contacting and arranging interviews with such individuals upon OIG’s request. Indivior’s owners, employees, contractors and directors may elect to be interviewed with or without a representative of Indivior present.
VIII. DOCUMENT AND RECORD RETENTION
Indivior shall maintain for inspection all documents and records relating to reimbursement from the Federal health care programs and to compliance with this CIA for six years (or longer if otherwise required by law) from the Effective Date.
IX. DISCLOSURES
Consistent with HHS’s FOIA procedures, set forth in 45 C.F.R. Part 5, OIG shall make a reasonable effort to notify Indivior prior to any release by OIG of information submitted by Indivior pursuant to its obligations under this CIA and identified upon submission by Indivior as trade secrets, or information that is commercial or financial and
Indivior Corporate Integrity Agreement
37
privileged or confidential, under the FOIA rules. With respect to such releases, Indivior shall have the rights set forth at 45 C.F.R. § 5.42 (a).
X. BREACH AND DEFAULT PROVISIONS
Indivior is expected to fully and timely comply with all of its CIA obligations.
A. Stipulated Penalties for Failure to Comply with Certain Obligations
As a contractual remedy, Indivior and OIG hereby agree that failure to comply with certain obligations as set forth in this CIA may lead to the imposition of the following monetary penalties (hereinafter referred to as “Stipulated Penalties”) in accordance with the following provisions.
1. A Stipulated Penalty of $2,500 (which shall begin to accrue on the day after the date the obligation became due) per obligation for each day Indivior fails to establish, implement or comply with any of the following obligations as described in Section III:
(a) a Compliance Officer;
(b) a Compliance Committee;
(c) the NGC compliance obligations and the engagement of a Compliance Expert, the performance of a Compliance Program Review, and the preparation of a Compliance Program Review Report, as required by Section III.A.3;
(d) the management certification obligations and the development and implementation of a written process for Certifying Employees, as required by Section III.A.4;
(e) written Policies and Procedures;
(f) the development of a written training plan and the training and education of Covered Persons and NGC members;
(g) a risk assessment and mitigation process;
(h) a Disclosure Program;
(i) Ineligible Persons screening and removal requirements;
(j) the Incentive Compensation Restriction and Financial Recoupment Programs;
Indivior Corporate Integrity Agreement
38
(k) notification of Government investigations or legal proceedings;
(l) reporting of Reportable Events;
(m) notification of written communications with FDA;
(n) the FFMP;
(o) the NPMP;
(p) notification to HCPs and HCIs; and
(q) posting of any Payment-related information.
2. A Stipulated Penalty of $2,500 (which shall begin to accrue on the day after the date the obligation became due) for each day Indivior fails to engage and use an IRO as required by Section III.E and Appendix B.
3. A Stipulated Penalty of $2,500 (which shall begin to accrue on the day after the date the obligation became due) for each day Indivior fails to timely submit (a) a complete Implementation Report or Annual Report, (b) a certification to OIG in accordance with the requirements of Section V, or (c) a complete response to any request for information from OIG.
4. A Stipulated Penalty of $2,500 (which shall begin to accrue on the day after the date the obligation became due) for each day Indivior fails to submit any IRO Review report in accordance with the requirements of Section III.E and Appendix B.
5. A Stipulated Penalty of $1,500 for each day Indivior fails to grant access as required in Section VII. (This Stipulated Penalty shall begin to accrue on the date Indivior fails to grant access.)
6. A Stipulated Penalty of $50,000 for each false certification submitted by or on behalf of Indivior as part of its Implementation Report, any Annual Report, additional documentation to a report (as requested by OIG), or otherwise required by this CIA.
7. A Stipulated Penalty of $2,500 for each day Indivior fails to grant the IRO access to all records and personnel necessary to complete the reviews required by Section III.E and for each day Indivior fails to furnish accurate and complete records to the IRO, as required by Section III.E and Appendix A; and
8. A Stipulated Penalty of $1,000 for each day Indivior fails to comply fully and adequately with any obligation of this CIA. OIG shall provide notice to Indivior
Indivior Corporate Integrity Agreement
39
stating the specific grounds for its determination that Indivior has failed to comply fully and adequately with the CIA obligation(s) at issue and steps Indivior shall take to comply with the CIA. (This Stipulated Penalty shall begin to accrue 10 business days after the date Indivior receives this notice from OIG of the failure to comply.) A Stipulated Penalty as described in this Subsection shall not be demanded for any violation for which OIG has sought a Stipulated Penalty under Subsections 1- 7 of this Section.
B. Timely Written Requests for Extensions
Indivior may, in advance of the due date, submit a timely written request for an extension of time to perform any act or file any notification or report required by this CIA. Notwithstanding any other provision in this Section, if OIG grants the timely written request with respect to an act, notification, or report, Stipulated Penalties for failure to perform the act or file the notification or report shall not begin to accrue until one day after Indivior fails to meet the revised deadline set by OIG. Notwithstanding any other provision in this Section, if OIG denies such a timely written request, Stipulated Penalties for failure to perform the act or file the notification or report shall not begin to accrue until three business days after Indivior receives OIG’s written denial of such request or the original due date, whichever is later. A “timely written request” is defined as a request in writing received by OIG at least five business days prior to the date by which any act is due to be performed or any notification or report is due to be filed.
C. Payment of Stipulated Penalties
1. Demand Letter. Upon a finding that Indivior has failed to comply with any of the obligations described in Section X.A and after determining that Stipulated Penalties are appropriate, OIG shall notify Indivior of: (a) Indivior’s failure to comply; and (b) OIG’s exercise of its contractual right to demand payment of the Stipulated Penalties (this notification is referred to as the “Demand Letter”).
2. Response to Demand Letter. Within 10 business days after the receipt of the Demand Letter, Indivior shall either: (a) cure the breach to OIG’s satisfaction and pay the applicable Stipulated Penalties or (b) request a hearing before an HHS administrative law judge (ALJ) to dispute OIG’s determination of noncompliance, pursuant to the agreed upon provisions set forth below in Section X.E. In the event Indivior elects to request an ALJ hearing, the Stipulated Penalties shall continue to accrue until Indivior cures, to OIG’s satisfaction, the alleged breach in dispute. Failure to respond to the Demand Letter in one of these two manners within the allowed time period shall be considered a material breach of this CIA and shall be grounds for exclusion under Section X.D.
3. Form of Payment. Payment of the Stipulated Penalties shall be made by electronic funds transfer to an account specified by OIG in the Demand Letter.
Indivior Corporate Integrity Agreement
40
4. Independence from Material Breach Determination. Except as set forth in Section X.D.1.d, these provisions for payment of Stipulated Penalties shall not affect or otherwise set a standard for OIG’s decision that Indivior has materially breached this CIA, which decision shall be made at OIG’s discretion and shall be governed by the provisions in Section X.D, below.
D. Exclusion for Material Breach of this CIA
1. Definition of Material Breach. A material breach of this CIA means any of the following:
(a) repeated violations or a flagrant violation of any of the obligations under this CIA, including, but not limited to, the obligations addressed in Section X.A;
(b) a failure by Indivior to report a Reportable Event and take corrective action as required in Section III.I;
(c) a failure to engage and use an IRO in accordance with Section III.E and Appendix B;
(d) a failure to respond to a Demand Letter concerning the payment of Stipulated Penalties in accordance with Section X.C;
(e) the continued employment of a Suboxone sales force by Indivior in the United States or continued sales of Suboxone through Indivior sales representatives following the Effective Date of the CIA; or
(f) the involvement of Shaun Thaxter, former CEO of Indivior, Inc., in the daily activities, business decisions, operations, Board of Directors duties, management, or control of Indivior following the Effective Date of the CIA.
2. Notice of Material Breach and Intent to Exclude. The parties agree that a material breach of this CIA by Indivior constitutes an independent basis for Indivior’s exclusion from participation in the Federal health care programs. The length of the exclusion shall be in OIG’s discretion, but not more than five years per material breach. Upon a determination by OIG that Indivior has materially breached this CIA and that exclusion is the appropriate remedy, OIG shall notify Indivior of: (a) Indivior’s material breach; and (b) OIG’s intent to exercise its contractual right to impose exclusion (this notification is hereinafter referred to as the “Notice of Material Breach and Intent to Exclude”).
Indivior Corporate Integrity Agreement
41
3. Opportunity to Cure. Indivior shall have 30 days from the date of receipt of the Notice of Material Breach and Intent to Exclude to demonstrate to OIG’s satisfaction that:
(a) the alleged material breach has been cured; or
(b) the alleged material breach cannot be cured within the 30 day period, but that: (i) Indivior has begun to take action to cure the material breach; (ii) Indivior is pursuing such action with due diligence; and (iii) Indivior has provided to OIG a reasonable timetable for curing the material breach.
4. Exclusion Letter. If, at the conclusion of the 30 day period, Indivior fails to satisfy the requirements of Section X.D.3, OIG may exclude Indivior from participation in the Federal health care programs. OIG shall notify Indivior in writing of its determination to exclude Indivior (this letter shall be referred to hereinafter as the “Exclusion Letter”). Subject to the Dispute Resolution provisions in Section X.E, below, the exclusion shall go into effect 30 days after the date of Indivior’s receipt of the Exclusion Letter. The exclusion shall have national effect. Reinstatement to program participation is not automatic. At the end of the period of exclusion, Indivior may apply for reinstatement by submitting a written request for reinstatement in accordance with the provisions at 42 C.F.R. §§ 1001.3001-.3004.
E. Dispute Resolution
1. Review Rights. Upon OIG’s delivery to Indivior of its Demand Letter or of its Exclusion Letter, and as an agreed-upon contractual remedy for the resolution of disputes arising under this CIA, Indivior shall be afforded certain review rights comparable to the ones that are provided in 42 U.S.C. § 1320a-7(f) and 42 C.F.R. Part 1005 as if they applied to the Stipulated Penalties or exclusion sought pursuant to this CIA. Specifically, OIG’s determination to demand payment of Stipulated Penalties or to seek exclusion shall be subject to review by an HHS ALJ and, in the event of an appeal, the HHS Departmental Appeals Board (DAB), in a manner consistent with the provisions in 42 C.F.R. § 1005.2-1005.21. Notwithstanding the language in 42 C.F.R. § 1005.2(c), the request for a hearing involving Stipulated Penalties shall be made within 10 days after receipt of the Demand Letter and the request for a hearing involving exclusion shall be made within 25 days after receipt of the Exclusion Letter. The procedures relating to the filing of a request for a hearing can be found at http://www.hhs.gov/dab/divisions/civil/procedures/divisionprocedures.html.
2. Stipulated Penalties Review. Notwithstanding any provision of Title 42 of the United States Code or Title 42 of the Code of Federal Regulations, the only issues in a proceeding for Stipulated Penalties under this CIA shall be: (a) whether
Indivior Corporate Integrity Agreement
42
Indivior was in full and timely compliance with the obligations of this CIA for which OIG demands payment; and (b) the period of noncompliance. Indivior shall have the burden of proving its full and timely compliance and the steps taken to cure the noncompliance, if any. OIG shall not have the right to appeal to the DAB an adverse ALJ decision related to Stipulated Penalties. If the ALJ agrees with OIG with regard to a finding of a breach of this CIA and orders Indivior to pay Stipulated Penalties, such Stipulated Penalties shall become due and payable 20 days after the ALJ issues such a decision unless Indivior requests review of the ALJ decision by the DAB. If the ALJ decision is properly appealed to the DAB and the DAB upholds the determination of OIG, the Stipulated Penalties shall become due and payable 20 days after the DAB issues its decision.
3. Exclusion Review. Notwithstanding any provision of Title 42 of the United States Code or Title 42 of the Code of Federal Regulations, the only issues in a proceeding for exclusion based on a material breach of this CIA shall be whether Indivior was in material breach of this CIA and, if so, whether:
(a) Indivior cured such breach within 30 days of its receipt of the Notice of Material Breach; or
(b) the alleged material breach could not have been cured within the 30 day period, but that, during the 30 day period following Indivior’s receipt of the Notice of Material Breach:
(i) Indivior had begun to take action to cure the material breach within that period;
(ii) Indivior pursued such action with due diligence; and
(iii) Indivior provided to OIG within that period a reasonable timetable for curing the material breach.
For purposes of the exclusion herein, exclusion shall take effect only after an ALJ decision favorable to OIG, or, if the ALJ rules for Indivior, only after a DAB decision in favor of OIG. Indivior’s election of its contractual right to appeal to the DAB shall not abrogate OIG’s authority to exclude Indivior upon the issuance of an ALJ’s decision in favor of OIG. If the ALJ sustains the determination of OIG and determines that exclusion is authorized, such exclusion shall take effect 20 days after the ALJ issues such a decision, notwithstanding that Indivior may request review of the ALJ decision by the DAB. If the DAB finds in favor of OIG after an ALJ decision adverse to OIG, the exclusion shall take effect 20 days after the DAB decision. Indivior shall waive its right to any notice of such an exclusion if a decision upholding the exclusion is rendered by the ALJ or DAB. If the DAB finds in favor of Indivior, Indivior shall be reinstated effective on the date of the original exclusion.
Indivior Corporate Integrity Agreement
43
4. Finality of Decision. The review by an ALJ or DAB provided for above shall not be considered to be an appeal right arising under any statutes or regulations. Consequently, the parties to this CIA agree that the DAB’s decision (or the ALJ’s decision if not appealed) shall be considered final for all purposes under this CIA.
XI. EFFECTIVE AND BINDING AGREEMENT
Indivior and OIG agree as follows:
A. This CIA shall become final and binding on the date the final signature is obtained on the CIA.
B. This CIA constitutes the complete agreement between the parties and may not be amended except by written consent of the parties to this CIA.
C. All requirements and remedies set forth in this CIA are in addition to and do not affect (1) Indivior’s responsibility to follow all applicable Federal health care program and FDA requirements or (2) the government’s right to impose appropriate remedies for failure to follow applicable Federal health care program or FDA requirements.
D. The undersigned Indivior signatories represent and warrant that they are authorized to execute this CIA. The undersigned OIG signatories represent that they are signing this CIA in their official capacity and that they are authorized to execute this CIA.
E. This CIA may be executed in counterparts, each of which constitutes an original and all of which constitute one and the same CIA. Electronically-transmitted signatures shall constitute acceptable, binding signatures for purposes of this CIA.
Indivior Corporate Integrity Agreement
44
ON BEHALF OF INDIVIOR, INC.
| | | | | | | | |
| /Cynthia C. Cetani/ | | 7/24/2020 |
| CYNTHIA (CINDY) CETANI | | DATE |
| Chief Integrity & Compliance Officer | | |
| Indivior, Inc. | | |
| | |
| | |
| | |
| | |
| | |
| /Javier Rodriguez/ | | 7/24/2020 |
| JAVIER RODRIGUEZ | | DATE |
| Chief Legal Officer | | |
| Indivior, Inc. | | |
| | |
| | |
| | |
| | |
| | |
| /Thomas Beimers/ | | 7/24/2020 |
| VIRGINIA A. GIBSON | | DATE |
| THOMAS BEIMERS | | |
| ELIZA ANDONOVA | | |
| Hogan Lovells US LLP | | |
| Counsel for Indivior | | |
Indivior Corporate Integrity Agreement
45
ON BEHALF OF THE OFFICE OF INSPECTOR GENERAL OF THE DEPARTMENT OF HEALTH AND HUMAN SERVICES
| | | | | | | | |
| /Lisa M. Re/ | | 7/23/2020 |
| LISA M. RE | | DATE |
| Assistant Inspector General for Legal Affairs | | |
| Office of Inspector General | | |
| U.S. Department of Health and Human Services | | |
| | |
| | |
| | |
| | |
| | |
| /Mary E. Riordan/ | | 7/24/2020 |
| MARY E. RIORDAN, Senior Counsel | | DATE |
| MADELINE BAINER, Senior Counsel | | |
| Office of Inspector General | | |
| U.S. Department of Health and Human Services | | |
Indivior Corporate Integrity Agreement
46
APPENDIX A
INDEPENDENT REVIEW ORGANIZATION
This Appendix contains the requirements relating to the Independent Review Organization (IRO) required by Section III.E of the CIA.
A. IRO Engagement
1. Indivior shall engage an IRO that possesses the qualifications set forth in Paragraph B, below, to perform the responsibilities in Paragraph C, below. The IRO shall conduct the review in a professionally independent and objective fashion, as set forth in Paragraph E. Within 30 days after OIG receives the information identified in Section V.A.9 of the CIA or any additional information submitted by Indivior in response to a request by OIG, whichever is later, OIG will notify Indivior if the IRO is unacceptable. Absent notification from OIG that the IRO is unacceptable, Indivior may continue to engage the IRO.
2. If Indivior engages a new IRO during the term of the CIA, that IRO must also meet the requirements of this Appendix. If a new IRO is engaged, Indivior shall submit the information identified in Section V.A.9 of the CIA to OIG within 30 days of engagement of the IRO. Within 30 days after OIG receives this information or any additional information submitted by Indivior at the request of OIG, whichever is later, OIG will notify Indivior if the IRO is unacceptable. Absent notification from OIG that the IRO is unacceptable, Indivior may continue to engage the IRO.
B. IRO Qualifications
The IRO shall:
1. assign individuals to conduct the IRO Reviews who have expertise in the pharmaceutical industry and in all applicable Federal health care program and FDA requirements relating to the Covered Functions, including but not limited to expertise relating to marketing and promotional activities associated with pharmaceutical products and the Federal Anti-Kickback Statute and False Claims Act.
2. assign individuals to design and select the samples for the IRO Transactions Reviews who are knowledgeable about the appropriate statistical sampling techniques; and
3. have sufficient staff and resources to conduct the reviews required by the CIA on a timely basis.
| | | | | | | | |
Indivior Corporate Integrity Agreement
Appendix A | 1 | |
C. IRO Responsibilities
The IRO shall:
1. perform each component of the IRO Reviews in accordance with the specific requirements of the CIA;
2. follow all applicable Federal health care program and FDA requirements in making assessments in the IRO Reviews;
3. respond to all OIG inquires in a prompt, objective, and factual manner; and
4. prepare timely, clear, well-written reports that include all the information required by Appendix B to the CIA.
D. Indivior Responsibilities
Indivior shall ensure that the IRO has access to all records and personnel necessary to complete the reviews listed in III.E of this CIA and that all records furnished to the IRO are accurate and complete.
E. IRO Independence and Objectivity
The IRO must perform each component of the IRO Reviews in a professionally independent and objective fashion, as defined in the most recent Government Auditing Standards issued by the U.S. Government Accountability Office.
F. IRO Removal/Termination
1. Indivior and IRO. If Indivior terminates its IRO or if the IRO withdraws from the engagement during the term of the CIA, Indivior must submit a notice explaining (a) its reasons for termination of the IRO or (b) the IRO’s reasons for its withdrawal to OIG, no later than 30 days after termination or withdrawal. Indivior must engage a new IRO in accordance with Paragraph A of this Appendix and within 60 days of termination or withdrawal of the IRO.
2. OIG Removal of IRO. In the event OIG has reason to believe the IRO does not possess the qualifications described in Paragraph B, is not independent and objective as set forth in Paragraph E or has failed to carry out its responsibilities as described in Paragraph C, OIG shall notify Indivior in writing regarding OIG’s basis for determining that the IRO has not met the requirements of this Appendix. Indivior shall have 30 days from the date of OIG’s written notice to provide information regarding the IRO’s qualifications, independence or performance of its responsibilities in order to resolve the concerns identified by OIG. If, following OIG’s review of any information provided by
| | | | | | | | |
Indivior Corporate Integrity Agreement
Appendix A | 2 | |
Indivior regarding the IRO, OIG determines that the IRO has not met the requirements of this Appendix, OIG shall notify Indivior in writing that Indivior shall be required to engage a new IRO in accordance with Paragraph A of this Appendix. Indivior must engage a new IRO within 60 days of its receipt of OIG’s written notice. The final determination as to whether or not to require Indivior to engage a new IRO shall be made at the sole discretion of OIG.
| | | | | | | | |
Indivior Corporate Integrity Agreement
Appendix A | 3 | |
APPENDIX B
INDEPENDENT REVIEW ORGANIZATION REVIEWS
I. Covered Functions Review, General Description
As specified more fully below, Indivior shall retain an Independent Review Organization (IRO) (or IROs) to perform reviews (IRO Reviews) to assist Indivior in assessing and evaluating certain systems, processes, policies, procedures, and practices. The IRO Review shall consist of two components - a systems review (Systems Review) and a transactions review (Transactions Review) as described more fully below. Indivior may engage, at its discretion, a single IRO to perform both components of the IRO Reviews provided that the entity has the necessary expertise and capabilities to perform both.
If there are no material changes in the applicable systems, processes, policies, and procedures of Indivior relating to reviewed Policies and Procedures described below, the IRO shall perform the Systems Review for the first and fourth Reporting Periods. If Indivior materially changes applicable systems, processes, policies, and procedures, the IRO shall perform a Systems Review for the Reporting Period(s) in which such changes were made in addition to conducting the Review for the first and fourth Reporting Periods. The additional Systems Review(s) shall consist of: 1) an identification of the material changes; 2) an assessment of whether other systems, processes, policies, and procedures previously reported did not materially change; and 3) a review of the systems, processes, policies, and procedures that materially changed. The IRO shall conduct the Transactions Review for each Reporting Period of the CIA.
II. Systems Review
A. Promotional and Product Related Functions Systems Review
The Promotional and Product Related Functions Systems Review shall be a review of systems, processes, policies, and procedures (including the controls on those systems, processes, policies, and procedures) of Indivior relating to Promotional Functions, Product Related Functions, and other systems as described below. Where practical, Indivior personnel may compile documentation, schedule and organize interviews, and undertake other efforts to assist the IRO in performing the Systems Review. The IRO is not required to undertake a de novo review of the information gathered or activities undertaken by Indivior in accordance with the preceding sentence.
| | | | | | | | |
| 1 | |
Indivior Corporate Integrity Agreement
Appendix B | | |
Specifically, the IRO shall review systems, processes, policies, and procedures of Indivior associated with the following (hereafter “Reviewed Policies and Procedures”):
1. Indivior’s systems, policies, processes and procedures applicable to the manner in which sales representatives and personnel from Medical Affairs handle requests or inquiries relating to information about the uses of Government Reimbursed Products (including non-FDA-approved (i.e., off-label) uses of Government Reimbursed Products) and the dissemination of materials relating to the uses of these products. This review shall include: (a) the manner in which Indivior sales representatives handle requests for information about off-label uses of Government Reimbursed Products, (b) the manner in which Medical Affairs personnel, including those at Indivior’s headquarters, handle and respond to requests for information about off-label uses of Government Reimbursed Products; (c) the form and content of information and materials related to Government Reimbursed Products disseminated to HCPs, HCIs, payors, and formulary decision-makers by Indivior; (d) the systems, processes, policies, and procedures to track requests to Medical Affairs for information about off-label uses of products and responses to those requests; (e) the manner in which Indivior collects and supports information reported in any systems used to track and respond to requests to Medical Affairs for Government Reimbursed Product information; (f) the processes and procedures by which Medical Affairs or other appropriate individuals within Indivior identify situations in which it appears that off-label or other improper promotion may have occurred; and (g) Indivior’s processes and procedures for investigating, documenting, resolving, and taking appropriate disciplinary action for potential situations involving improper promotion;
2. Indivior’s systems, policies, processes, and procedures applicable to the manner and circumstances under which Indivior’s medical personnel (including those from Medical Affairs) participate in meetings or events with HCPs or HCIs (either alone or with sales representatives) regarding Government Reimbursed Products, and the role of the medical personnel at such meetings or events;
3. Indivior’s systems (including any centralized systems), processes, policies, and procedures relating to speaker programs, speaker training programs, and all events and expenses relating to such engagements or arrangements;
4. Indivior’s systems, processes, policies, and procedures relating to the engagement of non-speaker related consultants or other fee-for-service arrangements (including, but not limited to, presentations, advisory boards, preceptorships, mentorships, and ad hoc advisory activities, and any other financial engagement) that Indivior entered with HCPs or HCIs and all events and expenses associated with such activities;
| | | | | | | | |
| 2 | |
Indivior Corporate Integrity Agreement
Appendix B | | |
5. Indivior’s systems, policies, processes, and procedures applicable to Indivior’s internal review of promotional materials related to Government Reimbursed Products that are disseminated to HCPs, HCIs, and payors or individuals or entities acting on behalf of HCPs, HCIs or payors (e.g.¸ PBMs);
6. Indivior’s systems, policies, processes, and procedures applicable to Indivior’s internal review of non-promotional materials related to Government Reimbursed Products (e.g.¸ disease state awareness materials, information on social media platforms, etc.) disseminated to HCPs, HCIs, payors, patients, or other individuals or entities;
7. Indivior’s systems, policies, processes, and procedures applicable to patient outreach efforts and materials used in connection with such efforts, including direct-to-consumer advertising, patient education, and the dissemination of materials/information through social media;
8. Indivior’s systems, policies, processes, and procedures applicable to the development and review of Indivior processes relating to incentive compensation for Covered Persons who are sales representatives and their direct managers, with regard to whether the systems, policies, processes, and procedures are designed to ensure that financial incentives do not inappropriately motivate such individuals to engage in or tolerate the improper promotion, sales, and marketing of Government Reimbursed Products. To the extent that Indivior establishes different methods of compensation for different Government Reimbursed Products, the IRO shall review each type of compensation arrangement separately;
9. Indivior’s systems, policies, processes, and procedures applicable to the development and review of Indivior’s call plans for Government Reimbursed Products. This shall include a review of the bases upon which HCPs and HCIs belonging to specified medical specialties are included in, or excluded from, the call plans based on expected utilization of Government Reimbursed Products for FDA-approved uses or non- FDA-approved uses;
10. Indivior’s systems, policies, processes, and procedures applicable to the development and review of Sample Distribution Plans (as defined in Section III.B.1.h of the CIA). This shall include a review of the bases upon, and circumstances under, which HCPs and HCIs belonging to specified medical specialties or types of clinical practice may receive samples from Indivior (including, separately, from Indivior sales representatives and other Indivior personnel or components). It shall also include a review of whether samples of Government Reimbursed Products are distributed by Indivior through sales representatives or are distributed from a central location and the rationale for the manner of distribution;
| | | | | | | | |
| 3 | |
Indivior Corporate Integrity Agreement
Appendix B | | |
11. Indivior’s systems, processes, policies, and procedures applicable to the submission of information about any Government Reimbursed Product to any Compendia (as defined in Section III.B.1.o of the CIA) such as Drugdex or other published source of information used in connection with the determination of coverage by a Federal health care program for the product;
12. Indivior’s systems, processes, policies, and procedures of Indivior’s funding, directly or indirectly, of Third-Party Educational Activities (as defined in Section II.C.6 of the CIA) and all events and expenses relating to such activities;
13. Indivior’s systems, processes, policies, and procedures applicable to Research (as defined in Section III.B.1.p), including the decision to provide financial or other support for Research; the manner in which Research support is provided; the publication of information about the Research, including the publication of information about the Research results and trial outcomes; and uses made of publications relating to such Research;
14. Indivior’s systems, processes, policies, and procedures relating to authorship-related practices (as defined in Section III.B.1.q of the CIA), including, but not limited to, the disclosure of all financial relationships between the author and Indivior, the identification of all authors or contributors (including professional writers, if any) associated with a given publication, and the scope and breadth of research results made available to each author or contributor;
15. Indivior’s systems, processes, policies, and procedures applicable to the provision of any reimbursement and/or coding support, advice, or assistance (including relating to prior authorization issues) to any HCPs, HCIs, or payers and the internal review and approval of any materials used in connection with such activities;
16. Indivior’s systems, processes, policies, and procedures relating to its risk assessment and mitigation process outlined in Section III.D of the CIA. This review shall assess whether the risk assessment and mitigation process identifies and addresses relevant and appropriate risks for Indivior’s compliance with Federal health care program and FDA requirements, including risks relating to Government Reimbursed Products and other applicable risks.
| | | | | | | | |
| 4 | |
Indivior Corporate Integrity Agreement
Appendix B | | |
B. IRO Systems Review Report
The IRO shall prepare a report based upon each Systems Review. For each of the Reviewed Policies and Procedures identified in Section II.A above, the report shall include the following items:
1. a description of the documentation (including policies) reviewed and any personnel interviewed;
2. a detailed description of systems, policies, processes, and procedures relating to the items identified in Section II.A above, including a general description of the control and accountability systems (e.g., documentation and approval requirements, and tracking mechanisms) and written policies regarding the Reviewed Policies and Procedures;
3. a description of the manner in which the control and accountability systems and the written policies relating to the items identified in Section II.A above are made known or disseminated within the Indivior;
4. a detailed description of any system(s) used to track and respond to requests for information about Government Reimbursed Products;
5. a detailed description of the incentive compensation system for Covered Persons who are sales representatives and their direct managers, including a description of the bases upon which compensation is determined. To the extent that Indivior may establish compensation differently for individual products, the IRO shall report separately on each such type of compensation arrangement;
6. findings relating to whether the risk assessment and mitigation processes identify and address relevant prioritized risks associated with Indivior’s compliance with Federal health care program and FDA requirements;
7. findings relating to whether the risk assessment and mitigation processes result in the implementation of appropriate prioritized mitigation plans and appropriate tracking and monitoring of such mitigation plans;
8. findings and supporting rationale regarding any weaknesses in the systems, processes, policies, and procedures relating to the Reviewed Policies and Procedures identified in Section II.A above, if any; and
9. recommendations to improve any of the systems, policies, processes, or procedures relating to any of the Reviewed Policies and Procedures identified in Section II.A above, if any.
| | | | | | | | |
| 5 | |
Indivior Corporate Integrity Agreement
Appendix B | | |
III. Transactions Review
As described more fully below, the Transactions Review shall include: (1) a review of Indivior’s call plans and the call plan review process; (2) a review of Consulting Activities; (3) a review of selected compliance auditing and monitoring activities; and (4) a review of up to three additional items identified by the OIG in accordance with Section III.E.2.c of the CIA (hereafter “Additional Items”). The IRO shall report on all aspects of its reviews in the Transactions Review Reports.
A. Review of Call Plans and Call Plan Review Process.
The IRO shall conduct a review and assessment of Indivior’s review of its call plans for Government Reimbursed Products.
1. Provision of Materials to the IRO. Indivior shall provide the IRO with: i) a list of Government Reimbursed Products promoted by Indivior during the Reporting Period; ii) information about the FDA-approved uses for each such product; and iii) the call plans for each such product. Indivior shall also provide the IRO with information about the reviews of call plans that Indivior conducted during the relevant Reporting Period (if any) and any modifications to the call plans made as a result of Indivior’s reviews.
2. Selection of Sample. For each call plan, the IRO shall select a sample of 50 of the HCPs and HCIs included on the call plan. For each call plan, the IRO shall compare the sampled HCPs and HCIs against the criteria (e.g., medical specialty or practice area) used by Indivior in conducting its review and/or modifying the call plan. The IRO shall seek to determine whether Indivior followed its criteria and Policies and Procedures in reviewing and modifying the call plan.
3. Scope of Review. The IRO shall note any instances in which it appears that the sampled HCPs or HCIs on a call plan are inconsistent with Indivior’s criteria relating to the call plan and/or Indivior’s Policies and Procedures. The IRO shall also note any instances in which it appears that the Indivior failed to follow its criteria or Policies and Procedures.
B. IRO Review of Consulting Activities.
1. Consulting Activities. For purposes of this Appendix B, the term “Consulting Activities” shall include all consulting and other fee-for-service arrangements entered with HCPs or HCIs. This shall include, but not be limited to, speaker programs, speaker training programs, presentations, consultant task force meetings, advisory boards, research and development meetings, product training and education sessions, ad hoc advisory activities, research and any other financial
| | | | | | | | |
| 6 | |
Indivior Corporate Integrity Agreement
Appendix B | | |
engagements or arrangements with an HCP or HCI and all expenses relating to the engagements or arrangements.
2. Selection of Sample. For the first Reporting Period, the IRO shall select and review a sample of 30 of the Consulting Activities for which Indivior retained HCPs or HCIs and all related expenses. Of this number, at least 20 speaker program activities shall be reviewed. The IRO shall select at least 3 of the remaining Consulting Activities from the Advisory Board Services category, 2 from the Conferences and Meetings category, and 5 from the General Consulting Services category
For the second and subsequent Reporting Periods, at least 60 days prior to the end of the applicable Reporting Period, Indivior shall provide the following information to OIG: (a) a description of each type of Consulting Activity undertaken during the Reporting Period and a description of the services to be provided under each Consulting Activity; (b) the number of each type of Consulting Activity undertaken during the Reporting Period; and (c) the overall budgeted amount spent in connection with each type of Consulting Activity during the Reporting Period. For the second and subsequent Reporting Periods, the IRO shall review 30 Consulting Activities which shall include a review of specified numbers of each type of Consulting Activities as determined by OIG.
3. Scope of Review. For each Consulting Activity reviewed the IRO shall determine whether:
a. a written agreement was in place for each Consulting Activity that describes the scope of work to be performed, the fees and related expenses to be paid for the Consulting Activity, and the compliance obligations for the Consultant;
b. the compensation paid for the Consulting Activity was determined in accordance with a centrally managed, pre-set rate structure established by Indivior and was consistent with any compensation limits for the Consulting Activity established by Indivior Policies and procedures;
c. the rate structure referenced in Section III.B.3.b was established based on an independent FMV analysis;
d. the Consulting Activity was approved by the Consultant Review Committee in accordance with Indivior policies and procedures, including with regard to an assessment of the business need for the Consulting Activity;
| | | | | | | | |
| 7 | |
Indivior Corporate Integrity Agreement
Appendix B | | |
e. the HCP or HCI was reviewed and approved by the Consultant Review Committee for the Consulting Activity in accordance with Indivior’s policies relating to the identification, selection, and approval of a Consultant;
f. Indivior collected and retained a record of the specific activity performed by the HCP or HCI and, if applicable, a copy of the work product generated by the HCP or HCI in connection with the Consulting Activity; and
g. the activity undertaken by the Consultant and/or the work product generated by the HCP or HCI was used by Indivior in a manner consistent with the need identified by the Consultant Review Committee process that was completed prior to the initiation of the Consulting Activity.
In addition, for each Consulting Activity selected for review, Indivior shall provide the IRO with information about the total aggregate annual Payments (as defined in Section III.O of the CIA) by Indivior to the associated HCP or HCI (including, e.g., Payments for Consulting Activities other than the particular Consulting Activity selected for review.) The IRO shall assess whether Indivior paid the HCP or HCI an amount that exceeded the annual cap on compensation established in accordance with Indivior’s Policies and procedures.
C. IRO Review of Select Audits. Each year, Indivior conducts a Risk Assessment and Mitigation Process (RAMP) as described in Section III.D of the CIA. As part of the annual risk assessment process, Indivior develops and implements specific risk mitigation plans related to identified, prioritized risk areas which may include compliance auditing and monitoring activities.
For the second through fifth Reporting Periods, Indivior shall provide the IRO and OIG with: i) the output of the RAMP from the prior year and ii) Indivior’s mitigation plan(s) relating to identified risk areas. The OIG will select for review by the IRO seven of the Indivior compliance auditing and monitoring activities conducted at the Indivior business units performing Covered Functions and identified in the mitigation plans for prioritized risk areas (“Selected Audits”).
For each of the Selected Audits, Indivior shall provide the IRO with: i) the compliance auditing and monitoring activities work plan; ii) the compliance auditing and monitoring activities report(s); iii) any materials or documentation reviewed as part of the compliance auditing and monitoring activities, and iv) documentation of any corrective action taken by Indivior as a result of the compliance auditing and monitoring activities.
| | | | | | | | |
| 8 | |
Indivior Corporate Integrity Agreement
Appendix B | | |
For each of the Selected Audits, the IRO shall: i) evaluate whether the compliance auditing and monitoring work plan was reasonably designed to address the identified risk the plan was meant to address; and ii) note any instances in which Indivior failed to follow its compliance auditing and monitoring work plan or failed appropriately to identify and address the compliance related concerns related to the identified risk areas. The IRO shall report on its findings from the reviews in the Transactions Review Reports.
D. IRO Review of Additional Items. As set forth in Section III.E.2.c of the CIA, for each Reporting Period, the OIG at its discretion may identify up to three additional items for the IRO to review (hereafter “Additional Items”).
1. No later than 120 days prior to the end of the applicable Reporting Period, the OIG shall notify Indivior of the nature and scope of the IRO review to be conducted for each of the Additional Items. Prior to undertaking the review of the Additional Items, the IRO and/or Indivior shall submit an audit work plan to the OIG for approval and the IRO shall conduct the review of the Additional Items based on a work plan approved by the OIG. The IRO shall include information about its review of each Additional Item in the Transactions Review Report (including a description of the review conducted for each Additional Item; the IRO’s findings based on its review for each Additional Item; and the IRO’s recommendations for any changes in Indivior’s systems, processes, policies, and procedures based on its review of each Additional Item).
2. Indivior may propose to the OIG that its internal audit(s), reviews, or monitoring activities, including those conducted as part of the Field Force Monitoring Program described in Section III.L or the Monitoring of Non-Promotional Activities described in Section III.M of the CIA and/or other reviews conducted by outside entities at Indivior’s request be substituted, subject to the Verification Review requirements set forth below, for one or more of the Additional Items that would otherwise be reviewed by the IRO for the applicable Reporting Period. The OIG retains sole discretion over whether, and in what manner, to allow Indivior’s internal audit work to be substituted for a portion of the Additional Items review conducted by the IRO.
3. In making its decision, the OIG agrees to consider, among other factors, the nature and scope of Indivior’s planned internal audit work or compliance monitoring or audit activities, the results of the Transactions Review(s) during prior Reporting Period(s), and Indivior’s demonstrated audit capabilities to perform the proposed audit work internally. If the OIG denies Indivior’s request to permit its internal audit work or compliance monitoring or audit activities to be substituted for a portion of the IRO’s review of Additional Items in a given Reporting Period, Indivior shall engage the IRO to perform the Review as outlined in this Section III.E.
| | | | | | | | |
| 9 | |
Indivior Corporate Integrity Agreement
Appendix B | | |
4. If the OIG agrees to permit certain of Indivior’s internal audit work or compliance monitoring or audit activities for a given Reporting Period to be substituted for a portion of Additional Items review, such internal work would be subject to verification by the IRO (Verification Review). In such an instance, the OIG would provide additional details about the scope of the Verification Review to be conducted by the IRO.
E. Transactions Review Report. For each Reporting Period, the IRO shall prepare a report based on its Transactions Review. The report shall include the following:
1. General Elements to Be Included in Report
a. Review Objectives: A clear statement of the objectives intended to be achieved by each part of the review;
b. Review Protocol: A detailed narrative description of the procedures performed and a description of the sampling unit and universe utilized in performing the procedures for each sample reviewed; and
c. Sources of Data: A full description of documentation and other information, if applicable, relied upon by the IRO in performing the Transactions Review.
2. Results to be Included in Report. The following items shall be included in each Transaction Review Report:
a. Relating to the Call Plan Review:
i. a list of the Government Reimbursed Products promoted by Indivior during the Reporting Period and a summary of the FDA-approved uses for such products;
ii. for each Government Reimbursed Product which was promoted during the Reporting Period: i) a description of the criteria used by Indivior in developing or reviewing the call plans and for including or excluding specified types of HCPs or HCIs from the call plans; ii) a description of all instances for each call plan in which it appears that the HCPs and HCIs included on the call plan are inconsistent with Indivior’s criteria relating to the call plan and/or Indivior’s Policies and
| | | | | | | | |
| 10 | |
Indivior Corporate Integrity Agreement
Appendix B | | |
Procedures; and iv) a description of all instances in which it appears that Indivior failed to follow its criteria or Policies and Procedures relating to call plans;
iii. the findings and supporting rationale regarding any weaknesses in Indivior’s systems, processes, policies, procedures, and practices relating to call plans, if any; and
iv. recommendations, if any, for changes in Indivior’s systems, processes, policies, procedures, and practices that would correct or address any weaknesses or deficiencies uncovered during the Transactions Review with respect to call plans.
b. Relating to the Review of Consulting Activities.
i. A description of each type of Consulting Activity reviewed, including the number of each type of Consulting Activity reviewed and an identification of the types of documents and information reviewed for each Consulting Activity;
ii. For each Consulting Activity, the aggregate annual amount paid by Indivior to the associated HCP or HCI for all purposes;
iii. The IRO’s findings and supporting rationale as to whether:
a. a written agreement was in place for each Consulting Activity that describes the scope of work to be performed, the fees and expenses to be paid for each Consulting Activity, and the compliance obligations for the Consultant;
b. the compensation to be paid for the Consulting Activity was determined in accordance with a centrally managed, pre-set rate structure set by
| | | | | | | | |
| 11 | |
Indivior Corporate Integrity Agreement
Appendix B | | |
Indivior and was consistent with any compensation limits for the Consulting Activity established by Indivior policies and procedures;
c. the rate structure was established based on an independent FMV analysis;
d. the Consulting Activity was approved by the Consultant Review Committee in accordance with Indivior Policies and procedures, including Policies and procedures relating to the identification, selection and approval of a given HCP or HCI and the completion of a needs assessment;
e. Indivior collected and retained a record of the specific activity performed by the HCP or HCI and, if applicable, a copy of the work product generated in connection with the Consulting Activity;
f. the activity undertaken by the Consultant and/or the work product generated was used by Indivior in a manner consistent with Consultant Review Committee approval completed prior to the initiation of the Consulting Activity;
g. the aggregate amount paid by Indivior to the HCP or HCI exceeded the applicable cap established under Indivior’s Policies and procedures;
h. the IRO identified any weaknesses in Indivior’s systems, processes, policies, procedures and/or practices relating to Consulting Activities; and
i. the IRO has recommendations for improvements to Indivior’s systems, processes, policies, procedures and/or practices relating to Consulting Activities.
| | | | | | | | |
| 12 | |
Indivior Corporate Integrity Agreement
Appendix B | | |
c. Relating to IRO Review of Selected Audits
i. A description of each Selected Audit reviewed by the IRO, including the documentation reviewed for each Selected Audit;
ii. The IRO’s findings and supporting rationale regarding whether:
a. Indivior’s report from the compliance auditing and monitoring activities was consistent with the compliance auditing and monitoring activities work plan and documentation reviewed by Indivior in the process;
b. the IRO agreed with the findings in Indivior’s compliance auditing and monitoring report or, if applicable, the basis for the IRO’s disagreement;
c. the compliance auditing and monitoring work plan was reasonably designed to address the identified risk areas;
d. Indivior took appropriate corrective action in response to any compliance auditing and monitoring findings and, if applicable, the IRO’s recommendations regarding any additional or alternative corrective action;
e. Indivior took appropriate follow-up steps to ensure that any corrective action was appropriately implemented and, if applicable, the IRO’s recommendations regarding any additional or alternative follow-up steps; and
f. the compliance auditing and monitoring activities were reasonably designed to identify and address any compliance related concerns related to the Selected Audit risk areas and, if applicable, a description of any compliance related concerns that were not reasonably identified and addressed.
| | | | | | | | |
| 13 | |
Indivior Corporate Integrity Agreement
Appendix B | | |
d. Relating to the Review of Additional Items
i. for each Additional Item reviewed, a description of the review conducted;
ii. for each Additional Item reviewed, the IRO’s findings based on its review;
iii. for each Additional Item reviewed, the findings and supporting rationale regarding any weaknesses in Indivior’s systems, processes, policies, procedures, and practices relating to the Additional Item, if any; and
iv. for each Additional Item reviewed, recommendations, if any, for changes in Indivior’s systems, processes, policies, and procedures that would correct or address any weaknesses or deficiencies uncovered during the review.
| | | | | | | | |
| 14 | |
Indivior Corporate Integrity Agreement
Appendix B | | |
Appendix C
Incentive Compensation Restriction and
Executive Financial Recoupment Program
Within 120 days after the Effective Date of the CIA, Indivior shall establish and maintain throughout the term of the CIA two programs relating to compensation for its employees and executives. The first shall be an Employee and Executive Incentive Compensation Restriction Program as described below in Section A. The second shall be an Executive Financial Recoupment Program as described below in Section B.
(A) Employee and Executive Incentive Compensation Restriction Program
Indivior’s Incentive Compensation Policy (“ICP”) outlines the criteria that Indivior Employees must satisfy as a prerequisite to earning incentive compensation. Incentive compensation is designed to reward and drive performance and behaviors consistent with Indivior’s mission, Code of Conduct, and policies, values, and strategy. For the Addiction Sciences business unit, incentive compensation is designed so that financial incentives do not inappropriately incentivize Employees to engage in or tolerate marketing, promoting, or selling of Company products (1) for unapproved uses, (2) to prescribers of buprenorphine products who are not DATA 2000-waivered or prescribers who practice within an excluded specialty, and (3) to prescribers on a government debarred list or who have been delisted pursuant to Indivior’s Prescriber Concern Report Policy. For the Behavioral Health business unit, incentive compensation is designed so that financial incentives do not inappropriately incentivize Employees to engage in or tolerate marketing, promoting, or selling of Company products (1) for unapproved uses, (2) to prescribers who practice within an excluded specialty, and (3) to prescribers on a government debarred list or who have been delisted pursuant to Indivior’s Prescriber Concern Report Policy. Under the ICP, Employees may not be eligible or may have limited eligibility for incentive compensation where they have been found to have committed violations of company policies and procedures, have not completed compliance training, or have unsatisfactory job performance.
(B) Executive Financial Recoupment Program
Within 120 days after the Effective Date of the CIA, Indivior shall establish a financial recoupment program that puts at risk of forfeiture and recoupment an amount equivalent to up to 2 years of annual performance pay (including Cash and Equity Awards as defined below) for any Covered Executive (as defined below) who is the subject of an Affirmative Recoupment Determination. This program shall be known as the Executive Financial Recoupment Program. This recoupment program shall apply to Covered Executives who, at the time of a Recoupment Determination, are either current
| | | | | | | | |
Indivior Corporate Integrity Agreement
Appendix C | 1 | |
Indivior employees or became former Indivior employees at any time 120 days or more after the Effective Date of the CIA.
Within 120 days after the Effective Date of the CIA, Indivior shall establish policies and procedures (and modify employment and other contracts as necessary) to provide that incentive awards, bonuses, and other similar awards on an after tax/net basis (collectively “Cash Awards”) for each Covered Executive is at risk of forfeiture in the event of Significant Misconduct (i.e., a violation of a law or regulation or a significant violation of an Indivior policy) that is discovered by Indivior before the bonus is paid. In the event of Significant Misconduct by any Covered Executive, Indivior shall also reserve the right and full discretion to void and forfeit any unvested market value options, unvested conditional awards, unvested deferred bonus awards, and other unvested rights to receive company ordinary shares (collectively, “Equity Awards”) which are granted 120 days or more after the Effective Date of the CIA. If Indivior discovers any Significant Misconduct that would implicate the forfeitures described in this Paragraph by a Covered Executive, it shall evaluate the situation in accordance with the process outlined below and make a determination about whether any forfeiture, and the terms of such forfeiture, shall be implemented.
Within 120 days after the Effective Date of the CIA, Indivior shall modify and supplement the Annual Incentive Plans, Long-Term Incentive Plan and Deferred Bonus Plan applicable to Covered Executives (and any employment agreements, as appropriate) by imposing the eligibility and repayment conditions described below on future Cash and Equity Awards and making the additional remedies discussed below applicable to all U.S.-based Executive Committee Members and Senior Vice Presidents (collectively, “Covered Executives”). Indivior shall implement policies and procedures and, as necessary, shall modify contracts with Covered Executives so that, beginning no later than calendar year 2021, Cash and Equity Awards which are granted 120 days or more after the Effective Date of the CIA may be recouped if an Affirmative Recoupment Determination is made. The forfeiture and recoupment rights described in this Paragraph shall apply prospectively to Covered Executives beginning no later than the calendar year 2021 bonus plan and Equity Award years.
(i) Cash Award Eligibility and Repayment Conditions. Within 120 days after the Effective Date of the CIA, Indivior shall implement an eligibility and repayment condition on Cash Awards that will allow Indivior, as a consequence of a Triggering Event, to pursue repayment from Covered Executives of an amount equivalent to up to two years of Cash Awards paid to the individual. These eligibility and repayment conditions shall be designed to survive the payment of the Covered Executive’s Cash Award and the separation of the Covered Executive’s employment for a period of two years from the payment of the Cash Award. If payment of any portion of a Cash Award is
| | | | | | | | |
Indivior Corporate Integrity Agreement
Appendix C | 2 | |
deferred on a mandatory or voluntary basis, the two-year period shall be measured from the date the bonus would have been paid in the absence of deferral.
If an Affirmative Recoupment Determination is made, Indivior shall endeavor to collect repayment of any Cash Award from the Covered Executive through reasonable and appropriate means according to the terms of its Cash Award plan (or executive contract if applicable), and to the extent permitted by controlling law of the relevant jurisdiction. If necessary and appropriate to collect the repayment, Indivior shall file suit against the Covered Executive unless good cause exists not to do so. For purposes of the Executive Financial Recoupment Program, good cause shall include, but not be limited to, a financial inability on the part of the Covered Executive to repay any recoupment amount or Indivior’s inability to bring such a suit under the controlling law of the relevant jurisdiction.
(ii) Equity Awards and Repayment Conditions. Within 120 days after the Effective Date of the CIA, Indivior shall implement an eligibility and repayment condition on Indivior’s Equity Awards that will allow Indivior, as a consequence of a Triggering Event, to pursue repayment from Covered Executives of all or a portion of the value of Equity Awards provided to the Covered Executive for the two years prior to the Affirmative Recoupment Determination Equity Awards. These eligibility and repayment conditions shall be designed to survive the vesting or distribution of the Equity Award and the separation of a Covered Executive’s employment for a period of two years from the vesting or distribution.
If an Affirmative Recoupment Determination is made, Indivior shall endeavor to collect repayment of all or a portion of the value of Equity Awards for the two years prior to an Affirmative Recoupment Determination from a Covered Executive through reasonable and appropriate means (including by means of filing suit against the executive, as may be appropriate) to the extent permitted by controlling law of the relevant jurisdiction.
(iii) Additional Remedies.
To the extent permitting by controlling law, for the two years during which the Cash and Equity Award eligibility and repayment conditions exist, if Indivior reasonably anticipates that a Triggering Event has occurred, and Indivior has recoupment rights remaining under Paragraphs B(i)-(ii), Indivior shall have the right to notify the Covered Executive that those rights shall be tolled and thereby extended for an additional two years or until the Recoupment Committee determines that a Triggering Event has not occurred, whichever is earlier, to the extent permitted by controlling law of the relevant jurisdiction.
| | | | | | | | |
Indivior Corporate Integrity Agreement
Appendix C | 3 | |
If, after expiration of the time period specified in Paragraphs B(i)-(ii) above, the Recoupment Committee determines that a Triggering Event has occurred, Indivior shall make a determination as to whether to pursue available remedies (e.g., filing suit against the Covered Executive) existing under statute or common law to the extent available.
(C) Definition of Triggering Events. The forfeiture and repayment conditions described above shall be triggered upon a Recoupment Determination that finds either of the following (each, a “Triggering Event”):
(i) Significant Misconduct (i.e., a violation of a law or regulation or a significant violation of an Indivior policy) relating to Covered Functions by the Covered Executive that, if discovered prior to payment, would have made the Covered Executive ineligible for a Cash or Equity Award in that plan year or subsequent plan years; or
(ii) Significant Misconduct (as defined above) relating to Covered Functions by subordinate employees in the business unit for which the Covered Executive had responsibility on or after 120 days after the Effective Date of the CIA that does not constitute an isolated occurrence and which the Covered Executive knew or should have known was occurring that, if discovered prior to payment, would have made the Covered Executive ineligible for a Cash or Equity Award in that plan year or subsequent plan years.
(D) Administration of Recoupment Programs. Indivior shall engage in a standardized, formal process to determine whether a Triggering Event has occurred, and, if so, the extent of the Cash and Equity Awards that will be subject to repayment or forfeiture by the Covered Executive, and the most appropriate method for securing recoupment of relevant monies previously paid to a Covered Executive. The findings and conclusions resulting from this process shall be referred to as the “Recoupment Determination.” A determination that Cash and/or Equity Award amounts shall be forfeited by or recouped from a Covered Executive shall be referred to as an “Affirmative Recoupment Determination.”
(i) Initiation. Indivior shall initiate the Recoupment Determination process within 30 days after: (1) discovery of potential Significant Misconduct that may rise to the level of a Triggering Event, or (2) written notification by a United States federal government agency to Indivior’s Chief Integrity & Compliance Officer of a situation that may rise to the level of a Triggering Event and either occurred in the United States or gives rise to liability relating to Federal healthcare programs. This written notification shall either identify the Covered Executive(s) potentially at issue or provide
| | | | | | | | |
Indivior Corporate Integrity Agreement
Appendix C | 4 | |
information (e.g., a description of the alleged misconduct and the applicable time period) to allow Indivior to identify the Covered Executive.
(ii) Indivior Oversight Committee. The Recoupment Determination or Recoupment Recommendation shall be made by a committee of senior executives representing the Compliance, Legal, and Human Resources groups (Indivior Oversight Committee). The Indivior Oversight Committee shall make a Recoupment Recommendation for all Executive Officers or Executive Committee members of Indivior and shall make a Recoupment Determination for all other Covered Executives. A Covered Executive shall not participate in the Indivior Oversight Committee while that individual is subject to a Recoupment Determination. If a Recoupment Determination involves an Executive Officer or Executive Committee member of Indivior, a Recoupment Determination for such individual shall be subject to approval by the Board of Directors (or appropriate committee thereof) of Indivior.
(iii) Recoupment Determination Process. Indivior shall initiate the Recoupment Determination process within 30 days after discovery by Indivior, or notification pursuant to Paragraph D(i)(2), of a potential Triggering Event.
As part of the Recoupment Determination process, the Indivior Oversight Committee or appropriate Delegate (as defined below) shall: i) undertake an appropriate and substantive review or investigation of the facts and circumstances associated with the Triggering Event or any written notifications about potential Triggering Events received pursuant to Paragraph D(i)(2) above; ii) make written findings regarding the facts and circumstances associated with the Triggering Event and any written notifications about potential Triggering Events received pursuant to Paragraph D(i)(2) above; and iii) set forth in writing its determinations (and the rationale for such determinations) about: 1) whether a Triggering Event occurred; 2) the extent of Cash or Equity Awards (collectively “performance pay”) that will be subject to forfeiture and/or repayment by the Covered Executive, if any; 3) the means that will be followed to implement the forfeiture and/or secure the recoupment of performance pay from the Covered Executive; and 4) the timetables under which Indivior will implement the forfeiture and/or attempt to recoup the performance pay.
For purposes of this Paragraph, a “Delegate” shall refer to the Indivior personnel to whom the Recoupment Committee has delegated one or more of its required tasks in furtherance of the Executive Financial Recoupment Program.
(E) Reporting. The Indivior Oversight Committee shall provide annual reports to the Board of Directors (or an appropriate committee thereof) of Indivior PLC about: i) the number and circumstances of any Triggering Events that occurred during the preceding year and any written notifications about potential Triggering Events received
| | | | | | | | |
Indivior Corporate Integrity Agreement
Appendix C | 5 | |
pursuant to Paragraph D(i)(2) above; ii) a description of any Recoupment Determinations where a Triggering Event occurred during the preceding year (including any decision to require or not require forfeiture/recoupment from any Covered Executives, the amount and type of any forfeiture/recoupment, the means for collecting any recoupment and the rationale for such decisions); and iii) a description of the status of any forfeitures and/or recoupments required under prior Affirmative Recoupment Determinations that were not fully completed in prior years.
The Indivior Oversight Committee shall also provide annual reports to OIG about: i) the number and circumstances of any Triggering Events that occurred during the preceding year and any written notifications about potential Triggering Events received pursuant to Paragraph D(i)(2) above; ii) a summary description of any Recoupment Determinations where a Triggering Event occurred during the preceding year (including any decision to require or not require forfeiture/recoupment from any Covered Executives, the amount and type of any forfeiture/recoupment, the method for collecting any recoupment, and the rationale for such decisions); and iii) a description of the status of any forfeitures and/or recoupments required under prior Affirmative Recoupment Determinations that were not fully completed in prior years. Indivior shall provide OIG with additional information regarding any Recoupment Determination where a Triggering Event has occurred upon OIG’s request.
Indivior commits, to the extent permitted by controlling law, to maintaining all of the forfeiture and recoupment commitments set forth in Paragraphs B-E above for at least the duration of the CIA, absent agreement otherwise with OIG.
| | | | | | | | |
Indivior Corporate Integrity Agreement
Appendix C | 6 | |
Exhibit 4.5
| | | | | |
Attachment 2 to Resolution Agreement United States v. Indivior Inc. and Indivior plc | FTC Stipulated Order for Permanent Injunction |
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF VIRGINIA
ABINGDON
| | | | | | | | | | | | | | |
| | | | |
| FEDERAL TRADE COMMISSION, | | |
| | | | |
| | Plaintiff, | | |
| | | | Civil Action No. |
| v. | | |
| | | |
| INDIVIOR INC. | | |
| | | |
| | Defendant. | | |
| | | | |
| | | | |
[PROPOSED] STIPULATED ORDER FOR PERMANENT INJUNCTION AND
EQUITABLE MONETARY RELIEF
Plaintiff, the Federal Trade Commission ("Commission" or "FTC"), filed its Complaint for Permanent Injunctive and Other Equitable Relief ("Complaint") in this matter pursuant to Section 13(b) of the Federal Trade Commission Act ("FTC Act") 15 U.S.C. § 53(b). The Commission and Indivior Inc., by their respective attorneys, have reached an agreement to resolve this case through settlement, and without trial or final adjudication of any issue of fact or law, and stipulate to entry of this Stipulated Order for Permanent Injunction and Other Equitable Monetary Relief ("Order") to resolve all matters in dispute in this action.
1
| | |
Exhibit A (Attachment 2) to Plea Agreement United States v. Indivior Solutions, Inc. |
| | | | | |
Attachment 2 to Resolution Agreement United States v. Indivior Inc. and Indivior plc | FTC Stipulated Order for Permanent Injunction |
FINDINGS
1. The Court has jurisdiction over the subject matter and the parties to this action.
2. Venue for this matter is proper in this Court under 15 U.S.C. § 22 and 28 U.S.C. § 139l(b) and (c), and under Section 13(b) of the FTC Act, 15 U.S.C. §53(b).
3. The Complaint alleges that Defendant engaged in unfair methods of competition in violation of Section 5(a) of the FTC Act, 15 U.S.C. §§ 45(a), by engaging in anticompetitive activities designed to impede competition from generic equivalents of the brand-name drug Suboxone.
4. This Order does not constitute any evidence against Defendant, nor an admission of liability or wrongdoing by Defendant in this case or in other litigation. Rather, the terms of this injunction reflect a negotiated compromise, entered into as a means to resolve contested issues without the burdens of litigation. This Order shall not be used in any way, as evidence or otherwise, in any other litigation or proceeding; provided that, nothing in this provision prevents the Commission or Defendant from using this Order in any proceeding regarding enforcement or modification of this Order or as otherwise required by law.
5. Entry of this Order is in the public interest.
STIPULATIONS
1. Defendant and Plaintiff, by and through their counsel, have agreed that entry of this Order fully and finally resolves all issues between them arising from the specific events giving rise to the allegations described in the Complaint, in the indictment in United States v. Indivior Inc. et al., Case No. 1:19CR16 (W.D. Va. Apr. 9, 2019), and in the complaints filed in In re Suboxone, MDL No. 2445 (E.D. Pa.) and State of Wisconsin, et al v. Indivior Inc., et al., No. 2:16-cv-5037 (E.D, Pa.) and precludes further litigation between Plaintiff and Defendant on the resolved issues except for the purposes of enforcing or modifying this Order. Plaintiff states that entry of this Order resolves all of its open antitrust investigations pertaining to
2
| | |
Exhibit A (Attachment 2) to Plea Agreement United States v. Indivior Solutions, Inc. |
| | | | | |
Attachment 2 to Resolution Agreement United States v. Indivior Inc. and Indivior plc | FTC Stipulated Order for Permanent Injunction |
Indivior Inc., to its ultimate parent (Indivior PLC), to any company owned (directly or indirectly) by Indivior PLC, or to any affiliated company related to the allegations in the indictment and complaints referenced above.
2. Defendant admits the facts necessary to establish personal and subject matter jurisdiction of this Court in this matter.
3. Defendant denies the charges in the Complaint and disputes that the Commission is entitled to obtain relief.
4. Defendant stipulates that it shall comply with the provisions of this Order pending its entry by the Court.
5. Defendant stipulates that it will bear its own costs in this matter and shall not make any claims against Plaintiff for attorney's fees or costs.
6. Defendant waives all rights to appeal or otherwise challenge or contest the validity of this Order.
7. Defendant waives any claim that it may have under the Equal Access to Justice Act, 28 U.S.C. § 2412, concerning the prosecution of this action through the date of this Order, and agrees to bear its own costs and attorney fees in this litigation.
8. The obligations set out below relate solely to business operations within the United States.
DEFINITIONS
l. "Commission'' means the United States Federal Trade Commission.
2. "Indivior" or "Defendant" means Indivior Inc., Indivior PLC, and any joint venture, subsidiary, division, group, or affiliate Controlled currently or in the future by Indivior.
3. "505(b)(2) Application" means an application filed with the United States Food and Drug Administration pursuant to Section 505(b)(2) of the Federal Food, Drug and Cosmetic Act, 21 U.S.C. § 355(b)(2).
3
| | |
Exhibit A (Attachment 2) to Plea Agreement United States v. Indivior Solutions, Inc. |
| | | | | |
Attachment 2 to Resolution Agreement United States v. Indivior Inc. and Indivior plc | FTC Stipulated Order for Permanent Injunction |
4. "ANDA" means Abbreviated New Drug Application filed with the United States Food and Drug Administration pursuant to Section 505(j) of the Federal Food, Drug and Cosmetic Act, 21 U.S.C. § 355(j).
5. "Authorized Generic" means a Drug Product that is manufactured pursuant to an NDA and Marketed in the United States under a name other than the proprietary name identified in the NDA.
6. "Citizen Petition" means a public request that the FDA issue, amend, or revoke a regulation or order or take or refrain from taking any other form of administrative action pursuant to 21 C.F.R. § 10.30.
7. "Commerce" has the same definition it has in 15 U.S.C. § 44.
8. "Control" or "Controlled" means the holding of more than 50% of the common voting stock or ordinary shares in, or the right to appoint more than 50% of the directors of, or any other arrangement resulting in the right to direct the management of, the said corporation, company, partnership, joint venture, or entity.
9. "Direct Cost" means the variable costs incurred to produce or sell an Original Drug Product or Follow-on Drug Product, including the costs of ingredients and manufacturing, as well as the costs of marketing that product. The term Direct Cost does not include any allocation of overhead costs, administrative costs, research and development costs, or any other fixed costs.
10. "Drug Product" means a finished dosage form (e.g., tablet, capsule, solution, or patch) as defined in 21 C.F.R. § 314.3(b), approved under a single NDA, ANDA, or 505(b)(2) Application, and available by prescription, that contains a drug substance, generally, but not necessarily, in association with one or more other ingredients. Notwithstanding the foregoing,
4
| | |
Exhibit A (Attachment 2) to Plea Agreement United States v. Indivior Solutions, Inc. |
| | | | | |
Attachment 2 to Resolution Agreement United States v. Indivior Inc. and Indivior plc | FTC Stipulated Order for Permanent Injunction |
the term Drug Product, as used in this Order, shall not include products that are predominantly purchased over-the-counter ("OTC") in the United States.
11. "Effective Price'' means the net price paid by a payor, on a monthly basis, for a patient's course of treatment with a Drug Product, taking into account all discounts, refunds, reimbursements, and rebates.
12. The ''Escrow Account" is the escrow account established by the Resolution Agreement (defined below).
13. "FDA" means the U.S. Food and Drug Administration.
14. ''Follow-on Drug Product" means a Drug Product a) for which Defendant has submitted an NDA, controls an approved NDA, or has the right to distribute in the United States; b) that contains an active ingredient that is (i) the same as an active ingredient in a previously approved Original Drug Product, or (ii) an isomer, salt form variant, or metabolite of an active ingredient in a previously approved Original Drug Product; and c) that treats the same condition or targets the same patient population as the previously approved Original Drug Product. Notwithstanding the foregoing, for purposes of this Order, the term Follow-on Drug Product shall not include an Authorized Generic version of the Original Drug Product.
15. "Market," "Marketed," or "Marketing" means the promotion, offering for sale, sale, or distribution of a Drug Product.
16. "NDA" means a New Drug Application filed with the United States Food and Drug Administration pursuant to Section 505(b) of the Federal Food, Drug and Cosmetic Act,
21 U.S.C. § 355(b), including all changes or supplements thereto that do not result in the submission of a new NDA.
17. "Original Drug Product" means a Drug Product that is Marketed in the United States and for which Defendant controls the NDA or has the right to distribute in the United States.
5
| | |
Exhibit A (Attachment 2) to Plea Agreement United States v. Indivior Solutions, Inc. |
| | | | | |
Attachment 2 to Resolution Agreement United States v. Indivior Inc. and Indivior plc | FTC Stipulated Order for Permanent Injunction |
18. "Person" means any individual, partnership, joint venture, firm, corporation, association, trust, unincorporated organization, or other business, and any subsidiaries, divisions, groups, or affiliates thereof.
19. The "Resolution Agreement" is the agreement entered into between Indivior and the United States Department of Justice. This Resolution Agreement, among other terms, (i) calls upon Indivior to fund an Escrow Account and (ii) designates $10 million of the amounts to be paid into the Escrow Account as money that will then be paid to FTC.
20. "Saleable Expiration Date" means 6 months before a Drug Product's expiration date.
21. "Status Quo Period" means a period beginning the day Defendant begins Marketing a Follow-on Drug Product in the United States and ends on the earlier of (i) 6 months after a Third Party begins Marketing a Drug Product approved under an ANDA or 505(b)(2) Application for which the Original Drug Product is the reference listed drug, or (ii) 3 years after the day Defendant or a licensee of Defendant begins Marketing the Follow-on Drug Product in the United States. For clarity, if a Third Party began Marketing a Drug Product as described in (i) of this definition six months or more before Defendant begins Marketing a Follow-on Drug Product in the United States, then there is no applicable Status Quo Period, and the restrictions of Paragraph II.C do not apply.
22. "Sublocade" means the buprenorphine extended-release injection Drug Product that is the subject of NDA 209819 and is sold in the dosage strengths of 100mg and 300mg.
23. "Third Party" means any Person other than Defendant.
6
| | |
Exhibit A (Attachment 2) to Plea Agreement United States v. Indivior Solutions, Inc. |
| | | | | |
Attachment 2 to Resolution Agreement United States v. Indivior Inc. and Indivior plc | FTC Stipulated Order for Permanent Injunction |
ORDER
I. PROHIBITED ACTIVITY: CITIZEN PETITION PROCESS
IT IS ORDERED that if Defendant files a Citizen Petition, Defendant shall simultaneously disclose to both the FDA and the Commission:
A. All studies and data on which the Citizen Petition relies; and
B. All studies and data within the knowledge or possession of Defendant that address the validity or strength of one or more of the material contentions in the Citizen Petition.
Defendant shall provide such disclosure to the Commission by sending an electronic copy of the disclosure submission to the Compliance Division of the Bureau of Competition of the FTC at bccompliance@ftc.gov.
II. PROHIBITED ACTIVITY: PRODUCT SWITCHING CONDUCT
IT IS FURTHER ORDERED that:
A. Defendant shall provide a notification to the Plaintiff 30 calendar days after Defendant files an NDA for a Follow-on Drug Product in the United States. This notification shall be sent by electronic transmission to the Compliance Division of the Bureau of Competition of the FTC at bccompliance@ftc.gov and shall include, inter alia, the following information: (i) a reference to the Order, (ii) the NDA number for the Follow on Drug Product, and (iii) the associated Original Drug Product and NDA number under which it is approved.
B. Defendant shall provide a second notification six months before the date specified for FDA approval of the Follow-on Drug Product under the Prescription Drug User Fee Act. This notification shall reference this Order and the previous notification submitted under
7
| | |
Exhibit A (Attachment 2) to Plea Agreement United States v. Indivior Solutions, Inc. |
| | | | | |
Attachment 2 to Resolution Agreement United States v. Indivior Inc. and Indivior plc | FTC Stipulated Order for Permanent Injunction |
Paragraph II.A. above for the Follow-on Drug Product. Defendants shall submit the following documents and information with the notification:
1. Documents sufficient to show the company's pricing plans for the Original Drug Product and Follow-on Drug Product;
2. Documents sufficient to show the forecasted sales for the Original Drug Product and Follow-on Drug Product;
3. Transcripts of any of the Defendant's investor calls during the prior twelve months that discuss the Follow-on Drug Product;
4. A statement of all claimed benefits of the Follow-on Drug Product compared to the Original Drug Product; and
5. A statement of whether Defendant intends to materially alter the terms on which it sells the Original Drug Product, and, if so, identification of these terms, and all reasons for materially altering them.
Defendant shall deliver this notification and the required documents to the Assistant Director of the Compliance Division of the Bureau of Competition of the FTC, either through electronic transmission to bccompliance@ftc.gov or hand-delivery to the FTC.
C. If, on the date when Defendant or its licensee begins Marketing a Follow-on Drug Product in the United States, a Third Party has submitted an ANDA or 505(b)(2) Application for which the Original Drug Product is the reference listed drug, then during the Status Quo Period, Defendant shall be prohibited from:
1. Destroying inventory or withdrawing from the market any strength or formulation of the associated Original Drug Product; provided, however, Defendant may destroy Drug Product that has passed its Saleable Expiration Date.
8
| | |
Exhibit A (Attachment 2) to Plea Agreement United States v. Indivior Solutions, Inc. |
| | | | | |
Attachment 2 to Resolution Agreement United States v. Indivior Inc. and Indivior plc | FTC Stipulated Order for Permanent Injunction |
2. Failing to fill orders for the Original Drug Product on the same terms and conditions (except for those terms and conditions relating to Effective Price, which are addressed below in Paragraph II.C.3) within the same time frame and with the same convenience as are orders for the Follow-on Drug Product. For the avoidance of doubt, this clause does not prohibit Defendant from offering different terms or conditions for a given Original Drug Product or Follow-on Drug Product to different customers, so long as each customer is offered the same terms and conditions for the Original Drug Product as for the Follow-on Drug Product.
3. Offering an Effective Price for the associated Original Drug Product to any Customer that is higher than the Effective Price Defendant offers to that Customer for the Follow-on Drug Product;
Provided, however, this prohibition does not apply (a) if the Effective Price of the Original Drug Product is not increased by more than the corresponding increase in the prescription drug price component of the Consumer Price Index at any time during the eighteen months prior to introduction of the Follow-on Drug Product or during the Status Quo Period; or (b) if the difference in Effective Price is attributable solely to a difference in the Direct Costs of the products.
4. Deleting the National Drug Code for the associated Original Drug Product from the National Drug Data File;
Provided, however, that Defendant shall have no obligations under this Paragraph II.C with respect to an Original Drug Product: (a) for which the associated Follow-on Drug is no longer Marketed in the United States, or (b) that the FDA has determined should no longer be Marketed in the United States because of safety concerns. Defendant may recall and destroy products consistent with 21 C.F.R. Part 7, Subpart C; may take reasonable steps to
9
| | |
Exhibit A (Attachment 2) to Plea Agreement United States v. Indivior Solutions, Inc. |
| | | | | |
Attachment 2 to Resolution Agreement United States v. Indivior Inc. and Indivior plc | FTC Stipulated Order for Permanent Injunction |
protect safety in the event of manufacturing defects; and may take any action that is requested by FDA;
Provided further, for clarity, this Paragraph II.C does not apply to Sublocade because any relevant Status Quo Period with respect to that Drug Product has ended.
III. EQUITABLE MONETARY RELIEF IT
IS FURTHER ORDERED that:
A. Judgment in the amount of ten million dollars ($10,000,000) is entered in favor of Plaintiff against Defendant as equitable monetary relief.
B. At the time specified by the Resolution Agreement FTC shall be paid (and Defendant shall provide all necessary consents so that FTC is paid) $10 million from the Escrow Account. Defendant is not obligated to furnish any other funds to satisfy the judgment entered as described in paragraph III.A above.
C. Notwithstanding any other provision of this Order: All money paid to Plaintiff pursuant to this Order may be deposited into a fund administered by Plaintiff or its designee to be used for equitable relief, including consumer redress and other equitable relief Plaintiff determines to be reasonably related to Defendant's alleged violative practices and injury, and any attendant expenses for the administration of such fund. Plaintiff shall deposit any money not used for such equitable relief in the U.S. Treasury. Any interest earned on amounts deposited into the fund will remain in the fund and become part of the fund.
D. Within 10 business days of entry of the Order, Defendant shall submit its Taxpayer Identification Number (Employer Identification Number) to Plaintiff.
E. Defendant shall have no rights to challenge any actions Plaintiff or its representatives may take pursuant to this Paragraph III. of the Order.
10
| | |
Exhibit A (Attachment 2) to Plea Agreement United States v. Indivior Solutions, Inc. |
| | | | | |
Attachment 2 to Resolution Agreement United States v. Indivior Inc. and Indivior plc | FTC Stipulated Order for Permanent Injunction |
F. The payments provided for herein are provided for the purposes of settlement only, are remedial, and are neither a penalty nor a fine.
G. The $10 million that the FTC shall be paid through this Order is intended to be, to the extent practicable (as set out in Section III.C of this Order), "restitution" within the meaning of 26 U.S.C. § 162(f)(2). In connection with this payment, FTC shall comply with any applicable statutory or regulatory reporting requirements.
IV. NOTIFICATION REQUIREMENT
IT IS FURTHER ORDERED that Defendant shall notify the Commission within 30 calendar days of starting to Market, either directly or through a licensee, Drug Products in the United States by:
A. Receiving FDA approval to Market a Drug Product in the United States;
B. Acquiring Control of a Person that has FDA approval to Market a Drug Product in the United States; or
C. Acquiring or licensing a Drug Product that, at the time of such acquisition, has FDA approval to be Marketed in the United States.
Defendant shall provide such notification to the Commission by sending an electronic copy of the notification to the Compliance Division of the Bureau of Competition of the FTC at bccomplianc@ftc.gov.
V. REPORTING REQUIREMENTS
IT IS FURTHER ORDERED that:
A. Defendant shall submit to Plaintiff a verified written report within 60 calendar days after the date this Order is entered, one year after the date this Order is entered, and annually for 9 years thereafter, setting forth in detail the manner and form in which Defendant has complied and is complying with this Order.
11
| | |
Exhibit A (Attachment 2) to Plea Agreement United States v. Indivior Solutions, Inc. |
| | | | | |
Attachment 2 to Resolution Agreement United States v. Indivior Inc. and Indivior plc | FTC Stipulated Order for Permanent Injunction |
B. Defendant shall submit each report required under this Paragraph to the Secretary of the Commission and shall send an electronic copy of each report to the Compliance Division of the Bureau of Competition of the FTC at bccompliance@ftc.gov.
VI. CHANGE OF CORPORATE CONTROL
IT IS FURTHER ORDERED that
A. Defendant shall notify Plaintiff at least 30 calendar days prior to:
1. Any proposed dissolution of Indivior Inc.;
2. Any proposed acquisition, merger, or consolidation of Indivior Inc.; or
3. Any other change in Defendant, including, but not limited to, assignment and the creation, sale or dissolution of subsidiaries, if such change might affect the compliance obligations arising out of this Order.
B. No information or documents obtained by the means provided in this Paragraph VI. shall be divulged by the Commission to any person other than an authorized representative of the Commission, except in the course of a legal proceeding regarding enforcement of the Order, or as otherwise required by law.
VII. ACCESS TO INFORMATION
IT IS FURTHER ORDERED that:
A. For the purpose of determining or securing compliance with this Order or facilitating consumer redress pursuant to this order, and subject to any legally recognized privilege or any applicable privacy laws and regulations, Defendant shall, upon reasonable notice and in response to a written request by FTC staff:
1. Provide the FTC with documents and other electronically stored information in Defendant's possession, custody, or control, that are relevant to compliance or consumer redress under the Order; and
12
| | |
Exhibit A (Attachment 2) to Plea Agreement United States v. Indivior Solutions, Inc. |
| | | | | |
Attachment 2 to Resolution Agreement United States v. Indivior Inc. and Indivior plc | FTC Stipulated Order for Permanent Injunction |
2. Permit Commission staff to interview officers, directors, or employees of Defendant, who may have counsel (representing the Defendant, the individual, or both) present, regarding matters that are relevant to compliance or consumer redress under the Order.
B. No information or documents obtained by the means provided in this Paragraph VII. shall be divulged by the Commission to any person other than an authorized representative of the Commission, except in the course of a legal proceeding regarding enforcement of the Order, or as otherwise required by law.
VIII. RETENTION OF JURISDICTION
IT IS FURTHER ORDERED that this Court shall retain jurisdiction of this matter for purposes of construction, modification, and enforcement of this Order.
IX. EXPIRATION OF THE ORDER
IT IS FURTHER ORDERED that this order shall expire 10 years after the date it is entered.
X. DISMISSAL AND COSTS
IT IS FURTHER ORDERED that this action shall be dismissed with prejudice and each party shall bear its own costs.
SO ORDERED this ___ day of ______, 2020
| | |
| United States District Judge |
13
| | |
Exhibit A (Attachment 2) to Plea Agreement United States v. Indivior Solutions, Inc. |
Exhibit 4.6
EXECUTION VERSION
CREDIT AGREEMENT
Dated as of December 19, 2014
as amended as of March 16, 2015
as further amended as of December 18, 2017
as further amended as of June 30, 2021
and as further amended as of April 27, 2022
among
INDIVIOR FINANCE S.À R.L.,
as a Term Borrower,
INDIVIOR SMTM LLC,
as a Term Borrower,
RBP GLOBAL HOLDINGS LIMITED,
as the Revolver Borrower,
THE PERSONS PARTY HERETO,
as Lenders,
MORGAN STANLEY SENIOR FUNDING, INC.,
as Administrative Agent,
MORGAN STANLEY SENIOR FUNDING, INC. and
DEUTSCHE BANK SECURITIES INC.,
as Joint Lead Arrangers
and Joint Bookrunners
DEUTSCHE BANK SECURITIES INC.,
as Syndication Agent
and Documentation Agent
MORGAN STANLEY SENIOR FUNDING, INC.,
as 2021 Replacement Facility Lead Arranger
| | | | | | | | |
| | Page |
| | |
| TABLE OF CONTENTS |
| | |
| | |
ARTICLE 1 |
| | |
DEFINITIONS |
| | |
Section 1.01 | Defined Terms | 1 |
| Section 1.02 | Classification of Loans and Borrowings | 75 |
| Section 1.03 | Terms Generally | 76 |
| Section 1.04 | Accounting Terms; GAAP | 76 |
| Section 1.05 | Effectuation of Transactions | 78 |
| Section 1.06 | Timing of Payment of Performance | 78 |
| Section 1.07 | Exchange Rates; Currency Equivalents | 78 |
| Section 1.08 | Additional Alternative Currencies | 78 |
| Section 1.09 | Times of Day | 79 |
| Section 1.10 | Currency Generally | 79 |
| Section 1.11 | Cashless Rollovers | 80 |
| Section 1.12 | Certain Calculations and Tests | 81 |
| Section 1.13 | Rounding | 81 |
| Section 1.14 | Special Luxembourg Provisions | 82 |
| Section 1.15 | Special Jersey Provisions | 82 |
| Section 1.16 | Benchmark Replacement | 82 |
| | |
| ARTICLE 2 | |
| | |
| THE CREDITS | |
| | |
Section 2.01 | Commitments | 83 |
Section 2.02 | Loans and Borrowings | 84 |
Section 2.03 | Requests for Borrowings | 85 |
Section 2.04 | Swingline Loans | 86 |
Section 2.05 | Letters of Credit | 87 |
Section 2.06 | [Reserved] | 93 |
Section 2.07 | Funding of Borrowings | 93 |
Section 2.08 | Type; Interest Elections | 94 |
Section 2.09 | Termination and Reduction of Commitments | 95 |
Section 2.10 | Repayment of Loans; Evidence of Debt | 96 |
Section 2.11 | Prepayment of Loans | 98 |
Section 2.12 | Fees | 102 |
Section 2.13 | Interest | 104 |
Section 2.14 | Alternate Rate of Interest | 105 |
Section 2.15 | Increased Costs | 107 |
Section 2.16 | Break Funding Payments | 109 |
Section 2.17 | Taxes | 109 |
Section 2.18 | Payments Generally; Allocation of Proceeds; Sharing of Payments | 117 |
Section 2.19 | Mitigation Obligations; Replacement of Lenders | 119 |
Section 2.20 | Illegality | 120 |
Section 2.21 | Defaulting Lenders | 121 |
| | | | | | | | |
| | Page |
| | |
| Section 2.22 | Incremental Credit Extensions | 123 |
| Section 2.23 | Extensions of Loans and Revolving Commitments | 130 |
| Section 2.24 | Joint and Several Liability of Term Borrowers | 133 |
| | |
| ARTICLE 3 | |
| | |
| REPRESENTATIONS AND WARRANTIES | |
| | |
Section 3.01 | Organization; Powers | 135 |
Section 3.02 | Authorization; Enforceability | 135 |
| Section 3.03 | Governmental Approvals; No Conflicts | 136 |
| Section 3.04 | Financial Condition; No Material Adverse Effect | 136 |
| Section 3.05 | Properties | 136 |
| Section 3.06 | Litigation and Environmental Matters | 137 |
| Section 3.07 | Compliance with Laws | 137 |
| Section 3.08 | Investment Company Status | 137 |
| Section 3.09 | Taxes | 137 |
| Section 3.10 | ERISA | 137 |
| Section 3.11 | Disclosure | 138 |
| Section 3.12 | Solvency | 138 |
| Section 3.13 | Capitalization and Subsidiaries | 138 |
| Section 3.14 | Security Interest in Collateral | 138 |
| Section 3.15 | Labor Disputes | 139 |
| Section 3.16 | Federal Reserve Regulations | 139 |
| Section 3.17 | Use of Proceeds | 139 |
| Section 3.18 | Senior Debt | 140 |
| Section 3.19 | Economic and Trade Sanctions and Anti-Corruption Laws | 140 |
| Section 3.20 | Center of Main Interests and Establishments | 140 |
| Section 3.21 | Pensions | 141 |
| Section 3.22 | Luxembourg Regulatory Matters | 141 |
| | |
| ARTICLE 4 |
| | |
| CONDITIONS |
| | |
Section 4.01 | Closing Date | 141 |
Section 4.02 | Each Credit Extension | 145 |
| | |
| ARTICLE 5 |
| | |
| AFFIRMATIVE COVENANTS |
| | |
Section 5.01 | Financial Statements and Other Reports | 146 |
Section 5.02 | Existence | 149 |
Section 5.03 | Payment of Taxes | 149 |
Section 5.04 | Maintenance of Properties | 149 |
Section 5.05 | Insurance | 150 |
Section 5.06 | Inspections | 150 |
| | | | | | | | |
| | Page |
| | |
| Section 5.07 | Maintenance of Book and Records | 150 |
| Section 5.08 | Compliance with Laws | 151 |
| Section 5.09 | Environmental | 151 |
| Section 5.10 | Designation of Subsidiaries | 152 |
| Section 5.11 | Use of Proceeds | 153 |
| Section 5.12 | Covenant to Guarantee Obligations and Give Security | 153 |
| Section 5.13 | Maintenance of Ratings | 154 |
| Section 5.14 | Center of Main Interests | 155 |
| Section 5.15 | Further Assurances | 155 |
| Section 5.16 | Certain Post-Closing Events | 155 |
| Section 5.17 | Pensions | 157 |
| Section 5.18 | Financial Assistance | 157 |
| Section 5.19 | Listing of the Intercompany Notes | 157 |
| Section 5.20 | Intermediate Holdings | 158 |
| | |
| ARTICLE 6 |
| | |
| NEGATIVE COVENANTS |
| | |
Section 6.01 | Indebtedness | 159 |
Section 6.02 | Liens | 165 |
Section 6.03 | No Further Negative Pledges | 168 |
Section 6.04 | Restricted Payments; Certain Payments of Indebtedness | 169 |
Section 6.05 | Restrictions on Subsidiary Distributions | 173 |
Section 6.06 | Investments | 175 |
Section 6.07 | Fundamental Changes; Disposition of Assets | 178 |
Section 6.08 | Sale and Lease-Back Transactions | 182 |
Section 6.09 | Transactions with Affiliates | 182 |
Section 6.10 | Conduct of Business | 183 |
Section 6.11 | Amendments or Waivers of Organizational Documents | 184 |
Section 6.12 | Amendments of or Waivers with Respect to Certain Debt | 184 |
Section 6.13 | Fiscal Year | 184 |
Section 6.14 | Minimum Liquidity | 184 |
| | |
| ARTICLE 7 |
| | |
| EVENTS OF DEFAULT |
| | |
Section 7.01 | Events of Default | 184 |
| ARTICLE 8 |
| | | | | | | | |
| | Page |
| | |
| | |
| THE ADMINISTRATIVE AGENT |
| | |
| ARTICLE 9 |
| | |
| MISCELLANEOUS |
| | |
Section 9.01 | Notices | 199 |
| Section 9.02 | Waivers; Amendments | 201 |
| Section 9.03 | Expenses; Indemnity | 208 |
| Section 9.04 | Waiver of Claim | 209 |
| Section 9.05 | Successors and Assigns | 209 |
| Section 9.06 | Survival | 218 |
| Section 9.07 | Counterparts; Integration; Effectiveness | 218 |
| Section 9.08 | Severability | 219 |
| Section 9.09 | Right of Setoff | 219 |
| Section 9.10 | Governing Law; Jurisdiction; Consent to Service of Process | 219 |
| Section 9.11 | Waiver of Jury Trial | 221 |
| Section 9.12 | Headings | 221 |
| Section 9.13 | Confidentiality | 221 |
| Section 9.14 | No Fiduciary Duty | 222 |
| Section 9.15 | Several Obligations | 223 |
| Section 9.16 | USA PATRIOT Act; Beneficial Ownership Regulation Compliance | 223 |
| Section 9.17 | Disclosure | 223 |
| Section 9.18 | Appointment for Perfection | 223 |
| Section 9.19 | Interest Rate Limitation | 223 |
| Section 9.20 | Conflicts | 224 |
| Section 9.21 | Release of Guarantors | 224 |
| Section 9.22 | Judgment Currency | 224 |
| Section 9.23 | Waiver of Sovereign Immunity. | 225 |
| Section 9.24 | Acknowledgement and Consent to Bail-In of Affected Financial Institutions. | 225 |
| Section 9.25 | Acknowledgement Regarding Any Supported QFCs. | 225 |
| | | | | | | | |
| SCHEDULES: | | |
| | |
| Schedule 1.01(a) | – | Commitment Schedule |
| Schedule 1.01(aa) | – | Initial Euro Term Loan Commitments |
| Schedule 1.01(aaa) | – | 2017 Replacement Revolving Credit Commitments |
| Schedule 1.01(b) | – | Mortgages |
| Schedule 1.01(c) | – | Agreed Guarantee and Security Principles |
| Schedule 3.05 | – | Fee Owned Real Estate Assets |
| Schedule 3.13 | – | Subsidiaries |
| Schedule 5.16 | – | Closing Date Post-Closing Deliverables |
| Schedule 6.01 | – | Existing Indebtedness |
| Schedule 6.02 | – | Existing Liens |
| Schedule 6.06 | – | Existing Investments |
| Schedule 6.07 | – | Certain Dispositions |
| | | | | | | | |
Schedule 9.01 | – | Holdings’ Website Address for Electronic Delivery |
| Schedule 9.05(i) | – | Form of Substitute Affiliate Lender Designation Notice |
| | |
| EXHIBITS: | | |
| | |
| Exhibit A-1 | – | Form of Assignment and Assumption |
| Exhibit A-2 | – | Form of Affiliated Lender Assignment and Assumption |
| Exhibit B | – | Form of Borrowing Request |
| Exhibit C | – | Form of Compliance Certificate |
| Exhibit D | – | Form of Interest Election Request |
| Exhibit E | – | Form of Perfection Certificate |
| Exhibit F | – | Form of Perfection Certificate Supplement |
| Exhibit G | – | Form of Promissory Note |
| Exhibit H | – | Form of Global Intercompany Note |
| Exhibit I | – | Form of Guaranty Agreement |
| Exhibit J | – | Form of U.S. Security Agreement |
| Exhibit K | – | Form of Letter of Credit Request |
| Exhibit L-1 | – | Form of U.S. Tax Compliance Certificate (For Foreign Lenders That Are Not Partnerships For U.S. Federal Income Tax Purposes) |
| Exhibit L-2 | – | Form of U.S. Tax Compliance Certificate (For Foreign Participants That Are Not Partnerships For U.S. Federal Income Tax Purposes) |
| Exhibit L-3 | – | Form of U.S. Tax Compliance Certificate (For Foreign Participants That Are Partnerships For U.S. Federal Income Tax Purposes) |
| Exhibit L-4 | – | Form of U.S. Tax Compliance Certificate (For Foreign Lenders That Are Partnerships For U.S. Federal Income Tax Purposes) |
| Exhibit M | – | Form of Solvency Certificate |
| Exhibit N | – | Form of Pari First Lien Intercreditor Agreement |
| Exhibit O | – | Form of First Lien/Second Lien Intercreditor Agreement |
| Exhibit P | – | Form of Holdings Pledge |
| Exhibit Q | – | Form of Flexible Apportionment Arrangement |
CREDIT AGREEMENT
CREDIT AGREEMENT, dated as of December 19, 2014 and as amended as of March 16, 2015, as further amended as of December 18, 2017 and as further amended as of June 30, 2021 (this “Agreement”), by and among Indivior Finance S.à r.l., a private limited liability company (société à responsabilité limitée) incorporated under the laws of the Grand Duchy of Luxembourg, having its registered office at 21, rue de Fort Elisabeth, L-1463 Luxembourg, Grand Duchy of Luxembourg, registered with the Luxembourg Trade and Companies Register (R.C.S. Luxembourg) under number B 191.812 (the “Lux Borrower”), Indivior SMTM LLC, a limited liability company organized under the laws of Delaware (the “US Co-Borrower”), RBP Global Holdings Limited, a limited company organized under the laws of England and Wales (the “Borrower Representative” or the “Revolver Borrower”, and together with the Term Borrowers (as defined below), the “Borrowers” and each a “Borrower”), the other Loan Parties from time to time party hereto, the Lenders from time to time party hereto, Morgan Stanley Senior Funding, Inc. in its capacities as an administrative agent and collateral agent for the Lenders (in its capacities as administrative and collateral agent, the “Administrative Agent”), with Morgan Stanley Senior Funding, Inc. and Deutsche Bank Securities Inc., as joint lead arrangers and joint bookrunners (in such capacities, collectively, the “Arrangers”).
RECITALS
A. WHEREAS, Reckitt Benckiser Group plc (“RBG plc”) intends to undertake a transaction whereby (a)(i) RBG plc will undertake certain reorganization steps to facilitate the separation of the Borrower Representative and its subsidiaries from RBG plc and its subsidiaries (excluding the Borrower Representative and its subsidiaries) (the “RB Reorganization”), (ii) the Borrower Representative (a wholly-owned subsidiary of RBG plc) shall pay a cash dividend to Reckitt Benckiser Investments Limited (a wholly-owned subsidiary of RBG plc) in an amount not to exceed $600,000,000 (the “Transaction Dividend”) (provided, that to the extent such Transaction Dividend exceeds $500,000,000, such excess amount shall result in a corresponding increase, on a dollar-for-dollar basis, in cash retained by Borrower Representative and its subsidiaries that would otherwise be required to be transferred to RBG plc and/or any of its subsidiaries (other than the Borrower Representative and its subsidiaries) under the Steps Plan (as defined below)) and (iii) the Borrower Representative and its subsidiaries shall be subsequently demerged from RBG plc and its subsidiaries (excluding the Borrower Representative and its subsidiaries), to be effected by way of a dividend in kind that will be satisfied by the transfer by RBG plc to Indivior plc of the shares of the Borrower Representative, in return for which Indivior plc will allot and issue shares of Indivior plc to RBG plc shareholders, in each case, in accordance with the Steps Plan (as defined below) and the Demerger Documents (as defined below) (the “Demerger”);
B. WHEREAS, the Borrowers have requested the Lenders and the Issuing Banks extend credit as set forth herein;
NOW, THEREFOR, the Lenders and the Issuing Banks are willing to extend such credit to the Borrowers on the terms and subject to the conditions set forth herein. Accordingly, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
Section 1.01 Defined Terms. As used in this Agreement, the following terms have the meanings specified below:
“2017 Replacement Euro Term Loan Commitment” has the meaning assigned to such term in the Second Amendment.
“2017 Replacement Euro Term Loans” has the meaning assigned to such term in the Second Amendment.
“2017 Replacement Facilities Lead Arrangers” has the meaning assigned to such term in the Second Amendment.
“2017 Replacement Revolving Credit Commitment” has the meaning assigned to such term in the Second Amendment.
“2017 Replacement Revolving Lender” has the meaning assigned to such term in the Second Amendment.
“2017 Replacement Revolving Loans” means the Revolving Loans made by the Revolving Lenders to the Revolver Borrower pursuant to Section 2.01(a)(ii).
“2017 Replacement Term Lender” has the meaning assigned to such term in the Second Amendment.
“2017 Replacement Term Loans” has the meaning assigned to such term in the Second Amendment.
“2017 Replacement Term Loan Maturity Date” means the date that is five years after the Second Amendment Effective Date.
“2017 Replacement USD Term Loan Commitment” has the meaning assigned to such term in the Second Amendment.
“2017 Replacement USD Term Loans” has the meaning assigned to such term in the Second Amendment.
“2021 Replacement Facility Lead Arranger” has the meaning assigned to such term in the Third Amendment.
“2021 Replacement Term Lender” has the meaning assigned to such term in the Third Amendment.
“2021 Replacement Term Loans” has the meaning assigned to such term in the Third Amendment.
“2021 Replacement Term Loan Maturity Date” means the date that is five years after the Third Amendment Effective Date.
“2021 Replacement Term Loan Commitment” has the meaning assigned to such term in the Third Amendment.
“ABR”, when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, bear interest at a rate determined by reference to the Alternate Base Rate.
“ABR Term SOFR Determination Day” has the meaning assigned to such term in the definition of “Term SOFR”.
“ACH” means automated clearing house transfers.
“Additional Agreement” has the meaning assigned to such term in Article 8.
“Additional Commitments” means any commitments hereunder added pursuant to Section 2.22, 2.23 or 9.02(c).
“Additional Lender” has the meaning assigned to such term in Section 2.22(b).
“Additional Loans” means the Additional Revolving Loans and the Additional Term Loans.
“Additional Revolving Commitments” means any revolving credit commitment added pursuant to Section 2.22, 2.23 or 9.02(c)(ii).
“Additional Revolving Facility” means any revolving credit facility added pursuant to Section 2.22, 2.23 or 9.02(c)(ii).
“Additional Revolving Loans” means any revolving loan made hereunder pursuant to Section 2.22, 2.23 or 9.02(c)(ii).
“Additional Term Commitments” means any term commitment added pursuant to Section 2.22, 2.23 or 9.02(c)(i).
“Additional Term Loans” means any term loan made pursuant to Section 2.22, 2.23 or 9.02(c)(i).
“Adjusted Term SOFR” means, for purposes of any calculation, the rate per annum equal to (a) Term SOFR for such calculation plus (b) the Term SOFR Adjustment; provided that if Adjusted Term SOFR as so determined shall ever be less than the Floor, then Adjusted Term SOFR shall be deemed to be the Floor.
“Adjustment Date” means the date of delivery of financial statements required to be delivered pursuant to Section 5.01(a) or Section 5.01(b), as applicable.
“Administrative Agent” has the meaning assigned to such term in the preamble to this Agreement.
“Administrative Questionnaire” means an Administrative Questionnaire in a form supplied by the Administrative Agent from time to time.
“Adverse Proceeding” means any action, suit, proceeding (whether administrative, judicial or otherwise), governmental investigation or arbitration (whether or not purportedly on behalf of Holdings, any Borrower or any of their respective Restricted Subsidiaries) at law or in equity, or before or by any Governmental Authority, domestic or foreign (including any Environmental Claim), whether pending or, to the knowledge of Holdings, any Borrower or any of their respective Restricted Subsidiaries, threatened in writing, against or affecting Holdings, any Borrower or any of their respective
Restricted Subsidiaries or any property of Holdings, any Borrower or any of their respective Restricted Subsidiaries.
“Affiliate” means, as applied to any Person, any other Person directly or indirectly Controlling, Controlled by, or under common Control with, that Person. None of the Administrative Agent, the Arrangers, any Lender (other than any Affiliated Lender) or any of their respective Affiliates shall be considered an Affiliate of Holdings or any subsidiary thereof.
“Affiliated Lender” means any of Holdings, any Borrower and/or any subsidiary of Holdings.
“Affiliated Lender Assignment and Assumption” means an assignment and assumption entered into by a Lender and an Affiliated Lender (with the consent of any party whose consent is required by Section 9.05) and accepted by the Administrative Agent in the form of Exhibit A-2 or any other form approved by the Administrative Agent and the Borrower.
“Agent Parties” has the meaning assigned to such term in Section 9.01(d).
“Aggregate Revolving Credit Exposure” means, at any time, the aggregate amount of the Lenders’ Revolving Credit Exposures at such time.
“Agreed Guarantee and Security Principles” means the Agreed Guarantee and Security Principles set forth on Schedule 1.01(c).
“Agreement” has the meaning assigned to such term in the preamble to this Credit Agreement.
“Agreement Currency” has the meaning assigned to such in Section 9.22.
“Alternate Base Rate” means, for any day, with respect to Loans denominated in Dollars, a rate per annum equal to the highest of (a) the Federal Funds Effective Rate in effect on such day (provided that if the Federal Funds Effective Rate in effect shall be less than zero, such rate shall be deemed to be zero for the purposes of this Agreement) plus 0.50%, (b) to the extent ascertainable, Adjusted Term SOFR (which rate shall be calculated based upon an Interest Period of one month and shall be determined on a daily basis) plus 1.00% and (c) the Prime Rate; provided that, solely in the case of the 2021 Replacement Term Loans, the Alternate Base Rate shall not be less than 1.75%. Any change in the Alternate Base Rate due to a change in the Prime Rate, the Federal Funds Effective Rate or Adjusted Term SOFR, as the case may be, shall be effective from and including the effective date of such change in the Prime Rate, the Federal Funds Effective Rate or Adjusted Term SOFR, as the case may be.
“Alternative Currency” shall mean each currency (other than Dollars) that is approved in accordance with Section 1.08.
“Alternative Currency Equivalent” shall mean, at any time, with respect to any amount denominated in Dollars, the equivalent amount thereof in the applicable Alternative Currency as determined by the Administrative Agent or the applicable Issuing Bank, as the case may be, at such time on the basis of the Spot Rate (determined in respect of the most recent Revaluation Date) for the purchase of such Alternative Currency in Dollars.
“Applicable Obligations” means the Obligations relating to the Term Facility.
“Applicable Percentage” means, (a) with respect to any Term Lender for any Class, a percentage equal to a fraction the numerator of which is the aggregate outstanding principal amount of the Loans and unused Additional Commitments of such Term Lender for such Class and the denominator of which is the aggregate outstanding principal amount of the Loans and unused Commitments of all Term Lenders for such Class and (b) with respect to any Revolving Lender for any Class, the percentage of the Total Revolving Credit Commitment for such Class represented by such Lender’s Revolving Credit Commitment for such Class; provided that for purposes of Section 2.21 and otherwise herein, when there is a Defaulting Lender, any such Defaulting Lender’s Revolving Credit Commitment shall be disregarded in the relevant calculations. In the case of clause (b), in the event the Revolving Credit Commitments for any Class shall have expired or been terminated, the Applicable Percentages of any Revolving Lender of such Class shall be determined on the basis of the Revolving Credit Exposure of the applicable Revolving Lenders of such Class, giving effect to any assignments and to any Revolving Lender’s status as a Defaulting Lender at the time of determination.
“Applicable Price” has the meaning assigned to such term in the definition of “Dutch Auction”.
“Applicable Rate” means, for any day:
(a) with respect to the 2021 Replacement Term Loans, the rate per annum set forth below under the caption “ABR Spread” or “Adjusted Term SOFR Spread”, as the case may be:
| | | | | |
ABR Spread for 2021 Replacement Term Loans | Adjusted Term SOFR Spread for 2021 Replacement Term Loans |
| 4.25% | 5.25% |
(b) with respect to 2017 Replacement Revolving Loans, the rate per annum set forth below under the caption “ABR Spread” (solely with respect to 2017 Replacement Revolving Loans denominated in Dollars) or “Adjusted Term SOFR Spread”, as the case may be, based upon the Total Leverage Ratio as of the last day of the most recently ended Test Period; provided that until the first Adjustment Date following the completion of at least one full Fiscal Quarter ended after the Closing Date, the “Applicable Rate” shall be the applicable rate per annum set forth below in Category 1:
| | | | | | | | |
| Total Leverage Ratio | ABR Spread for 2017 Replacement Revolving Loans | Adjusted Term SOFR Spread for 2017 Replacement Revolving Loans |
| Category 1 | | |
| | |
Greater than 1.25 to 1.00 | 3.25% | 4.25% |
| | |
| Category 2 | | |
| | |
Less than or equal to 1.25 to 1.00, but greater than 1.00 to 1.00 | 3.00% | 4.00% |
| | |
| Category 3 | | |
| | | | | | | | |
| Total Leverage Ratio | ABR Spread for 2017 Replacement Revolving Loans | Adjusted Term SOFR Spread for 2017 Replacement Revolving Loans |
Less than or equal to 1.00 to 1.00 | 2.75% | 3.75% |
The Applicable Rate with respect to the 2017 Replacement Revolving Loans shall be adjusted quarterly on a prospective basis on each Adjustment Date based upon the Total Leverage Ratio in accordance with the tables above; provided that (x) if financial statements are not delivered when required pursuant to Section 5.01(a) or (b), as applicable, the “Applicable Rate” shall be the rate per annum set forth above in Category 1 until such financial statements are delivered in compliance with Section 5.01(a) or (b), as applicable and (y) if an Event of Default has occurred and is continuing, the “Applicable Rate” shall be the rate per annum set forth in Category 1 until such Event of Default is waived or cured in accordance with this Agreement. For the avoidance of doubt, the Applicable Rate shall be determined (I) for all periods prior to the First Amendment Effective Date, in accordance with the definition of “Applicable Rate” (as in effect prior to the First Amendment Effective Date), (II) for all periods on and after the First Amendment Effective Date but prior to the Second Amendment Effective Date, in accordance with the definition of “Applicable Rate” (as in effect on the First Amendment Effective Date), (III) for all periods on and after the Second Amendment Effective Date but prior to the Third Amendment Effective Date, in accordance with the definition of “Applicable Rate” (as in effect on the Second Amendment Effective Date), (IV) for all periods on and after the Third Amendment Effective Date, in accordance with the definition of “Applicable Rate” (as in effect on the Third Amendment Effective Date).
“Applicable Time” shall mean, with respect to any borrowings and payments in any Alternative Currency, the local time in the place of settlement for such Alternative Currency as may be determined by the Administrative Agent or the Issuing Bank, as the case may be, to be necessary for timely settlement on the relevant date in accordance with normal banking procedures in the place of payment.
“Approved Stock Exchange” has the meaning assigned to such term in Section 5.19(a).
“Approved Fund” means, with respect to any Lender, any Person (other than a natural person) that is engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its activities and is administered, advised or managed by (a) such Lender, (b) any Affiliate of such Lender or (c) any entity or any Affiliate of any entity that administers, advises or manages such Lender.
“Arrangers” has the meaning assigned to such term in the preamble to this Agreement, and shall also include (a) Deutsche Bank Securities Inc. in its capacities as syndication agent and documentation agent hereunder, (b) the 2017 Replacement Facilities Lead Arrangers and (c) the 2021 Replacement Facility Lead Arranger.
“Assignment and Assumption” means an assignment and assumption entered into by a Lender and an Eligible Assignee (with the consent of any party whose consent is required by Section 9.05), and accepted by the Administrative Agent in the form of Exhibit A-1 or any other form approved by the Administrative Agent and the Borrower Representative.
“Auction” has the meaning assigned to such term in the definition of “Dutch Auction”.
“Auction Agent” means (a) the Administrative Agent or any of its Affiliates or (b) any other financial institution or advisor engaged by a Borrower (whether or not an Affiliate of the Administrative Agent) to act as an arranger in connection with any Auction pursuant to the definition of “Dutch Auction”; provided that no Borrower shall designate the Administrative Agent as the Auction Agent without the written consent of the Administrative Agent (it being understood that the Administrative Agent shall be under no obligation to agree to act as the Auction Agent); provided, further, that no Borrower, nor any of its Affiliates, may act as the Auction Agent.
“Auction Amount” has the meaning assigned to such term in the definition of “Dutch Auction”.
“Auction Notice” has the meaning assigned to such term in the definition of “Dutch Auction”.
“Auction Party” has the meaning set forth in the definition of “Dutch Auction”.
“Auction Response Date” has the meaning assigned to such term in the definition of “Dutch Auction”.
“Availability Period” means, with respect to any Class of Revolving Credit Commitments, the period from and excluding the date on which such Revolving Credit Commitments become effective to but excluding the earliest of (a) the date of termination of such Revolving Credit Commitments pursuant to Section 2.09, (b) the date of termination of the Revolving Credit Commitment of each Revolving Lender to make Revolving Loans and the obligation of the Issuing Bank to issue Letters of Credit pursuant to Section 7.01 and (c) the Revolving Credit Maturity Date.
“Available Amount” means, at any time, an amount equal to, without duplication:
(a) the sum of:
(i) $50,000,000; plus
(ii) an amount, determined on a cumulative basis equal to 50% of the amount of Consolidated Net Income of the Borrowers and their Restricted Subsidiaries for the period from the Third Amendment Effective Date and ending on September 30, 2021 and for each completed Fiscal Quarter thereafter; provided that the amount under this clause (ii) shall be reduced on a dollar-for-dollar basis by the amount of any Restricted Payment made in reliance on Section 6.04(a)(xii); plus
(iii) the amount of any capital contributions or other proceeds of any issuance of Capital Stock after the Third Amendment Effective Date (other than any amounts (x) constituting an Available Excluded Contribution Amount or an Excluded Debt Contribution or proceeds of an issuance of Disqualified Capital Stock, (y) received from any Borrower or any Restricted Subsidiary or (z) incurred from the proceeds of any loan or advance made pursuant to Section 6.06(h)(ii)) received as Cash equity by any Borrower or any of their Restricted Subsidiaries, plus the fair market value, as reasonably determined by the Borrower Representative, of Cash Equivalents, marketable securities or other property received by the Borrowers or any Restricted Subsidiary as a capital contribution or in return for any issuance of Capital Stock (other than any amounts (x) constituting an Available Excluded Contribution Amount or an Excluded Debt Contribution or proceeds of any issuance of Disqualified Capital Stock or (y) received
from any Borrower or any Restricted Subsidiary), in each case, during the period from and including the day immediately following the Third Amendment Effective Date through and including such time; plus
(iv) the aggregate principal amount of any Indebtedness (including any Disqualified Capital Stock) of any Borrower or any Restricted Subsidiary issued after the Third Amendment Effective Date (other than Indebtedness or such Disqualified Capital Stock issued to any Borrower or any Restricted Subsidiary), which has been converted into or exchanged for Capital Stock of any Borrower, any Restricted Subsidiary or any Parent Company that does not constitute Disqualified Capital Stock or an Available Excluded Contribution Amount, together with the fair market value of any Cash Equivalents and the fair market value (as reasonably determined by the Borrower Representative) of any property or assets received by such Borrower or such Restricted Subsidiary upon such exchange or conversion, in each case, during the period from and including the day immediately following the Third Amendment Effective Date through and including such time; plus
(v) to the extent not included in clause (ii) above, the net proceeds received by any Borrower or any Restricted Subsidiary during the period from and including the day immediately following the Third Amendment Effective Date through and including such time in connection with the Disposition to any Person (other than any Borrower or any Restricted Subsidiary) of any Investment made pursuant to Section 6.06(r)(i) (in an amount not to exceed the original amount of such Investment); plus
(vi) to the extent not (A) included in clause (ii) above or (B) already reflected as a return of capital with respect to such Investment for purposes of determining the amount of such Investment, the proceeds received by any Borrower or any Restricted Subsidiary during the period from and including the day immediately following the Third Amendment Effective Date through and including such time in connection with cash returns, cash profits, cash distributions and similar cash amounts, including cash principal repayments of loans, in each case received in respect of any Investment made after the Third Amendment Effective Date pursuant to Section 6.06(r)(i) (in an amount not to exceed the original amount of such Investment); plus
(vii) an amount equal to the sum of (A) the amount of any Investments by any Borrower or any Restricted Subsidiary pursuant to Section 6.06(r)(i) in any Unrestricted Subsidiary (in an amount not to exceed the original amount of such Investment) that has been redesignated as a Restricted Subsidiary or has been merged, consolidated or amalgamated with or into, or is liquidated, wound up or dissolved into, any Borrower or any Restricted Subsidiary and (B) the fair market value (as reasonably determined by the Borrower Representative) of the property or assets of any Unrestricted Subsidiary that have been transferred, conveyed or otherwise distributed (in an amount not to exceed the original amount of the Investment in such Unrestricted Subsidiary pursuant to Section 6.06(r)(i)) to any Borrower or any Restricted Subsidiary, in each case, during the period from and including the day immediately following the Third Amendment Effective Date through and including such time; plus
(viii) the amount of any Declined Proceeds; minus
(b) an amount equal to the sum of (i) Restricted Payments made pursuant to Section 6.04(a)(iii)(A), plus (ii) Restricted Debt Payments made pursuant to
Section 6.04(b)(vi)(A), plus (iii) Investments made pursuant to Section 6.06(r)(i), in each case, after the Third Amendment Effective Date and prior to such time, or contemporaneously therewith.
For the avoidance of doubt, as of the Third Amendment Effective Date, the amount available under each of clauses (a)(ii) through (viii) and (b) shall be $0.
“Available Excluded Contribution Amount” means the aggregate amount of Cash or Cash Equivalents or the fair market value of other assets or property (as reasonably determined by the Borrower Representative) received by any Borrower or any Restricted Subsidiary after the Third Amendment Effective Date from:
(1) contributions in respect of Qualified Capital Stock (other than any amounts received from any Borrower or any Restricted Subsidiary), and
(2) the sale of Qualified Capital Stock of any Borrower or any Restricted Subsidiary (other than (x) to any Borrower or any Restricted Subsidiary, (y) pursuant to any management equity plan or stock option plan or any other management or employee benefit plan or (z) with the proceeds of any loan or advance made pursuant to Section 6.06(h)(ii)),
in each case, designated as Available Excluded Contribution Amounts pursuant to a certificate of a Responsible Officer on or promptly after the date the relevant capital contribution is made or the relevant proceeds are received, as the case may be, and which are excluded from the calculation of the Available Amount. For the avoidance of doubt, as of the Third Amendment Effective Date, the Available Excluded Contribution Amount is $0.
“Bail-In Action” means the exercise of any Write-Down and Conversion Powers by the applicable Resolution Authority in respect of any liability of an Affected Financial Institution.
“Bail-In Legislation” means, (a) with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law, regulation, rule or requirement for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule and (b) with respect to the United Kingdom, Part I of the United Kingdom Banking Act 2009 (as amended from time to time) and any other law, regulation or rule applicable in the United Kingdom relating to the resolution of unsound or failing banks, investment firms or other financial institutions or their affiliates (other than through liquidation, administration or other insolvency proceedings).
“Banking Services” means each and any of the following bank services provided to any Loan Party (a) under any arrangement that is in effect on the Closing Date between any Loan Party and a counterparty that is (or is an Affiliate of) the Administrative Agent, any Lender or any Arranger as of the Closing Date or (b) under any arrangement that is entered into after the Closing Date by any Loan Party with any counterparty that is (or is an Affiliate of) the Administrative Agent, any Lender or any Arranger at the time such arrangement is entered into: commercial credit cards, stored value cards, purchasing cards, treasury management services, netting services, overdraft protections, check drawing services, automated payment services (including depository, overdraft, controlled disbursement, ACH transactions, return items and interstate depository network services), employee credit card programs, cash pooling services and any arrangements or services similar to any of the foregoing and/or otherwise in connection with Cash management and Deposit Accounts.
“Banking Services Obligations” means any and all obligations of any Loan Party, whether absolute or contingent and however and whenever created, arising, evidenced or acquired (including all renewals, extensions and modifications thereof and substitutions therefor), in connection with Banking Services, in each case, that has been designated to the Administrative Agent in writing by the Borrower Representative as being Banking Services Obligations for the purposes of the Loan Documents, it being understood that each counterparty thereto shall be deemed (A) to appoint the Administrative Agent as its agent under the applicable Loan Documents and (B) to agree to be bound by the provisions of Article 8, Section 9.03 and Section 9.10 as if it were a Lender.
“Bankruptcy Code” means Title 11 of the United States Code (11 U.S.C. § 101 et seq.).
“Beneficial Ownership Certification” means a certification regarding beneficial ownership as required by the Beneficial Ownership Regulation.
“Beneficial Ownership Regulation” means 31 C.F.R. § 1010.230.
“Benefit Plan” means any of (a) an “employee benefit plan” (as defined in ERISA) that is subject to Title I of ERISA, (b) a “plan” as defined in and subject to Section 4975 of the Code or (c) any Person whose assets include (for purposes of ERISA Section 3(42) or otherwise for purposes of Title I of ERISA or Section 4975 of the Code) the assets of any such “employee benefit plan” or “plan”.
“Board” means the Board of Governors of the Federal Reserve System of the U.S.
“Bona Fide Debt Fund” means any debt fund, investment vehicle, regulated bank entity or unregulated lending entity that is engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of business which is managed, sponsored or advised by any Person controlling, controlled by or under common control with (a) any competitor of any Borrower and/or any of its subsidiaries or (b) any Affiliate of such competitor, but with respect to which no personnel involved with any investment in such Person (i) makes, has the right to make or participates with others in making any investment decisions with respect to such debt fund, investment vehicle, regulated bank entity or unregulated lending entity or (ii) has access to any information (other than information that is publicly available) relating to Holdings, the Borrowers or their respective subsidiaries or any entity that forms a part of any of their respective businesses; it being understood and agreed that the term “Bona Fide Debt Fund” shall not include any Person that is separately identified to the Arrangers in accordance with clause (i) of the definition of “Disqualified Institution” or any Affiliate of any such Person that is reasonably identifiable on the basis of such Affiliate’s name.
“Borrowers” shall have the meaning assigned to such term in the introductory paragraph of this Agreement.
“Borrower Materials” shall have the meaning assigned to such term in Section 5.01.
“Borrower Representative” shall have the meaning assigned to such term in the introductory paragraph of this Agreement.
“Borrowing” means any Loans of the same currency, Type and Class made, converted or continued on the same date and, in the case of SOFR Loans, as to which a single Interest Period is in effect. Notwithstanding the foregoing, (i) upon the First Amendment Effective Date, the Initial USD Term Loans and the Initial Euro Term Loans shall each constitute separate Borrowings having the terms provided for in the First Amendment (and in the case of the Initial Euro Term Loans, as set forth in the
applicable borrowing request), (ii) upon the Second Amendment Effective Date, the initial Borrowings with respect to the 2017 Replacement USD Term Loans and the 2017 Replacement Euro Term Loans shall be as provided in the Second Amendment and (iii) upon the Third Amendment Effective Date, the initial Borrowings with respect to the 2021 Replacement Term Loans shall be as specified in the Borrowing Request delivered in connection with the Third Amendment.
“Borrowing Minimum” shall mean (i) in the case of Revolving Loans denominated in Dollars, $1,000,000, or (ii) in the case of a Revolving Loan denominated in an Alternative Currency, such minimums as the Administrative Agent shall reasonably require.
“Borrowing Multiple” shall mean (i) in the case of Revolving Loans denominated in Dollars, $100,000, or (ii) in the case of a Revolving Loan denominated in an Alternative Currency, such multiple as the Administrative Agent shall reasonably require.
“Borrowing Request” means a request by any Borrower for a Borrowing in accordance with Section 2.03 and substantially in the form attached hereto as Exhibit B or such other form that is reasonably acceptable to the Administrative Agent and the Borrower Representative.
“Business Day” means any day that is not a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to remain closed; provided that (i) when used in connection with a SOFR Loan, the term “Business Day” shall also exclude any day that is not a U.S. Government Securities Business Day), (ii) when used in connection with any Borrowing denominated in an Alternative Currency, the term “Business Day” shall also exclude any day on which banks are not open for dealings in Dollar deposits in the principal financial center of the country, if any, of such Alternate Currency (and, if the Borrowings or LC Disbursements which are the subject of a borrowing, drawing, payment, reimbursement or rate selection are denominated in Euro, the term “Business Day” shall also exclude any day on which the TARGET payment system is not open for the settlement of payments in Euro).
“Capital Lease” means, as applied to any Person, any lease of any property (whether real, personal or mixed) by that Person as lessee that, in conformity with GAAP, is or should be accounted for as a capital lease on the balance sheet of that Person under IFRS (provided that after IFRS 16, Leases applies to the Borrower Representative or any other Loan Party, the term “finance lease” shall be replaced by the term “lease liability” in this definition).
“Capital Stock” means any and all shares, interests, participations or other equivalents (however designated) of capital stock of a corporation, any and all equivalent ownership interests in a Person (other than a corporation), including partnership interests and membership interests, and any and all warrants, rights or options to purchase or other arrangements or rights to acquire any of the foregoing, but excluding, for the avoidance of doubt, any Indebtedness convertible into or exchangeable for any of the foregoing.
“Cash” means money, currency or a credit balance in any Deposit Account, in each case determined in accordance with GAAP.
“Cash Equivalents” means, as at any date of determination, (a) readily marketable securities (i) issued or directly and unconditionally guaranteed or insured as to interest and principal by the U.S. government or (ii) issued by any agency or instrumentality of the U.S. the obligations of which are backed by the full faith and credit of the U.S., in each case maturing within one year after such date and, in each case, repurchase agreements and reverse repurchase agreements relating thereto; (b) readily marketable direct obligations issued by any state of the U.S. or any political subdivision of any such state
or any public instrumentality thereof, in each case maturing within one year after such date and having, at the time of the acquisition thereof, a rating of at least A-2 from S&P or at least P-2 from Moody’s (or, if at any time neither S&P nor Moody’s shall be rating such obligations, an equivalent rating from another nationally recognized statistical rating agency) and, in each case, repurchase agreements and reverse repurchase agreements relating thereto; (c) commercial paper maturing no more than one year from the date of creation thereof and having, at the time of the acquisition thereof, a rating of at least A-2 from S&P or at least P-2 from Moody’s (or, if at any time neither S&P nor Moody’s shall be rating such obligations, an equivalent rating from another nationally recognized statistical rating agency); (d) deposits, money market deposits, time deposit accounts, certificates of deposit or bankers’ acceptances (or similar instruments) maturing within one year after such date and issued or accepted by any Lender or by any bank organized under, or authorized to operate as a bank under, the laws of the U.S., any state thereof or the District of Columbia or any political subdivision thereof and that has capital and surplus of not less than $100,000,000 and, in each case, repurchase agreements and reverse repurchase agreements relating thereto; and (e) shares of any money market mutual fund that has (i) substantially all of its assets invested in the types of investments referred to in clauses (a) through (d) above, (ii) net assets of not less than $250,000,000 and (iii) a rating of at least A-2 from S&P or at least P-2 from Moody’s.
In the case of any Investment by any Foreign Subsidiary, “Cash Equivalents” shall also include (x) Investments of the type and maturity described in clauses (a) through (e) above of foreign obligors, which Investments or obligors (or the parent companies thereof) have the ratings described in such clauses or equivalent ratings from comparable foreign rating agencies and (y) other short-term Investments utilized by Foreign Subsidiaries in accordance with normal investment practices for cash management in Investments analogous to the Investments described in clauses (a) through (e) and in this paragraph.
“Change in Law” means (a) the adoption of any law, treaty, rule or regulation after the Closing Date, (b) any change in any law, treaty, rule or regulation or in the interpretation or application thereof by any Governmental Authority after the Closing Date or (c) compliance by any Lender or any Issuing Bank (or, for purposes of Section 2.15(b), by any lending office of such Lender or such Issuing Bank or by such Lender’s or such Issuing Bank’s holding company, if any) with any request, guideline or directive (whether or not having the force of law) of any Governmental Authority made or issued after the Closing Date (other than any such request, guideline or directive to comply with any law, rule or regulation that was in effect on the Closing Date). For purposes of this definition and Section 2.15, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines, requirements and directives thereunder or issued in connection therewith or in implementation thereof and (y) all requests, rules, guidelines, requirements or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or U.S. regulatory authorities, in each case pursuant to Basel III, shall in each case described in clauses (a), (b) and (c) above, be deemed to be a Change in Law, regardless of the date enacted, adopted, issued or implemented.
“Change of Control” means the earliest to occur of:
(a) the acquisition by any Person or group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act), including any group acting for the purpose of acquiring, holding or disposing of Securities (within the meaning of Rule 13d-5(b)(1) under the Exchange Act, but excluding any employee benefit plan and/or Person acting as the trustee, agent or other fiduciary or administrator therefor), of Capital Stock representing more than 35% of the total voting power of all of the outstanding voting stock of Indivior plc;
(b) occupation of a majority of the seats (other than vacant seats) on the board of directors of Indivior plc by persons who (i) were not members of the board of directors of Indivior plc on the Closing Date and (ii) whose election to the board of directors of Indivior plc or whose nomination for election by the stockholders of Indivior plc was not approved by a majority of the members of the board of directors of Indivior plc then still in office who were either members of the board of directors on the Closing Date or whose election or nomination for election was previously so approved;
(c) the Borrower Representative (and on and from the date on which Intermediate Holdings becomes a party hereto pursuant to Section 5.20, Intermediate Holdings) or any Term Borrower ceasing to be a direct or indirect Wholly-Owned Subsidiary of Indivior plc; or
(d) any “Change of Control” (or any comparable term) in any document or instrument pertaining to any Indebtedness in excess of the Threshold Amount.
“Charge” means any charge, fee, expense, cost, accrual or reserve of any kind.
“Charged Amounts” has the meaning assigned to such term in Section 9.19.
“Class”, when used in reference to any Loan, Borrowing or Commitment, refers to whether such Loan, or the Loans comprising such Borrowing, are Initial USD Term Loans, Initial Euro Term Loans, 2017 Replacement USD Term Loans, 2017 Replacement Euro Term Loans, 2021 Replacement Term Loans, 2017 Replacement Revolving Loans, other Revolving Loans, Swingline Loans or respective Commitments related thereto or other loans or commitments added as a separate Class pursuant to Section 2.22, 2.23 or 9.02(c).
“Closing Date” means December 19, 2014.
“Code” means the Internal Revenue Code of 1986 as amended.
“Collateral” means any and all property of any Loan Party subject (or purported to be subject) to a Lien under any Collateral Document and any and all other property of any Loan Party, now existing or hereafter acquired, that is or becomes subject (or purported to be subject) to a Lien pursuant to any Collateral Document to secure the Secured Obligations.
“Collateral and Guarantee Requirement” means, at any time, subject to (x) the applicable limitations set forth in this Agreement and/or any other Loan Document and (y) the time periods (and extensions thereof) set forth in Section 5.12, the requirement that:
(a) the Administrative Agent shall have received:
(i) (A) a joinder to the Loan Guaranty in substantially the form attached as an exhibit thereto (or, in the case of any Person not incorporated or organized in the U.S., as modified as required in order to comply with local laws in accordance with the Agreed Guarantee and Security Principles, or such other form of joinder or Loan Guaranty as is reasonably acceptable to the Administrative Agent), (B) a supplement to the U.S. Security Agreement in substantially the form attached as an exhibit thereto (or, in the case of any Person not incorporated or organized in the U.S., any other joinder (or any other Collateral Document) that is sufficient to grant to the Administrative Agent, for the benefit of the Secured Parties, perfected Liens in all of the assets of such Person (other than Excluded Assets) to secure the Secured Obligations on a first priority basis, subject to no other Liens other than Permitted Liens and otherwise in accordance with the Agreed
Guarantee and Security Principles) and, in the case of any Person which executes an English Security Document, an Irish Security Document or a Jersey Security Document, an accession agreement to the relevant Security Trust Deed, (C) if the respective Restricted Subsidiary required to comply with the requirements set forth in this definition pursuant to Section 5.12 owns registrations of or applications for U.S. Patents, Trademarks and/or Copyrights that constitute Collateral, any Notices of Grant of Security Interest in Intellectual Property, (D) a completed Perfection Certificate, (E) UCC financing statements (or the equivalents thereof in any applicable jurisdiction) in appropriate form for filing in such jurisdictions as the Administrative Agent may reasonably request, (F) in the case of any Person not incorporated or organized in the U.S., evidence that all other actions and documents (including, without limitation, documents of title, share certificates and stock transfer forms or their equivalent) reasonably requested by the Administrative Agent (including those required by applicable Requirements of Law) to be delivered, filed, registered or recorded to create the Liens intended to be created by the Collateral Documents (in each case, including any supplements thereto) and/or perfect such Liens to the extent required by, and with the priority required by, the Collateral Documents, shall have been delivered, filed, registered or recorded or delivered to the Administrative Agent for filing, registration or the recording concurrently with, or promptly following, the execution and delivery of each such Collateral Document and (G) (i) evidence that each Borrower, Intermediate Holdings and each subsidiary thereof, in each case incorporated in the U.K., have done all that is necessary (if anything, including, without limitation, by re-registering as a private company) to comply with section 677 to 683 of the Companies Act 2006 in order to enable each such Person to enter into the applicable Loan Documents and perform its obligations under the applicable Loan Documents and (ii) evidence that each subsidiary of Holdings incorporated in Ireland, has done all that is necessary (if anything, including, without limitation, by re-registering as a private company) to comply with sections 82 and 239 of the Companies Act 2014 of Ireland in order to enable each such Person to enter into the applicable Loan Documents and perform its obligations under the applicable Loan Documents; and
(ii) (A) in the case of any Person incorporated or organized in the U.S. or otherwise party to the U.S. Security Agreement, each item of Collateral that such Restricted Subsidiary (and each Loan Party that holds any Capital Stock in, or Material Debt Instruments issued by, such Restricted Subsidiary, as applicable) is required to deliver under Section 2.02 of the Security Agreement and (B) in the case of a Person not incorporated or organized in the U.S., evidence that all outstanding Capital Stock of such Person, and all Material Debt Instruments issued by such Person, shall have been pledged pursuant to the Collateral Documents, together with stock powers or other instruments of transfer with respect thereto (as applicable) endorsed in blank (which, in each case, for the avoidance of doubt, shall be delivered within the time periods set forth in Section 5.12(a));
(b) the Administrative Agent shall have received with respect to any Material Real Estate Assets, a Mortgage and any necessary UCC fixture filing (or any equivalent thereof in any applicable jurisdiction) in respect thereof, in each case together with, to the extent customary and appropriate (as reasonably determined by the Administrative Agent and the Borrower Representative):
(i) evidence that (A) counterparts of such Mortgage have been duly executed, acknowledged and delivered and such Mortgage and any corresponding UCC
or equivalent fixture filing are in form suitable for filing or recording in all filing or recording offices that the Administrative Agent may deem reasonably necessary in order to create a valid and subsisting Lien on such Material Real Estate Asset in favor of the Administrative Agent for the benefit of the Secured Parties, (B) such Mortgage and any corresponding UCC or equivalent fixture filings have been duly recorded or filed, as applicable, and (C) all filing and recording taxes and fees have been paid or otherwise provided for in a manner reasonably satisfactory to the Administrative Agent;
(ii) one or more fully paid policies of title insurance (the “Mortgage Policies”) in an amount reasonably acceptable to the Administrative Agent (not to exceed the fair market value of the Material Real Estate Asset covered thereby (as reasonably determined by the Borrower Representative)) issued by a nationally recognized title insurance company in the applicable jurisdiction that is reasonably acceptable to the Administrative Agent, insuring the relevant Mortgage as having created a valid subsisting Lien on the real property described therein with the ranking or the priority which it is expressed to have in such Mortgage, subject only to Permitted Liens, together with such endorsements, coinsurance and reinsurance as the Administrative Agent may reasonably request to the extent the same are available in the applicable jurisdiction;
(iii) customary legal opinions of local counsel for the relevant Loan Party in the jurisdiction in which such Material Real Estate Asset is located, and if applicable, in the jurisdiction of formation of the relevant Loan Party, in each case as the Administrative Agent may reasonably request;
(iv) surveys and appraisals (if required under the Financial Institutions Reform Recovery and Enforcement Act of 1989, as amended) and “Life-of-Loan” flood certifications and any required borrower notices under Regulation H (together with evidence of federal flood insurance for any such Flood Hazard Property located in a flood hazard area); provided that the Administrative Agent may in its reasonable discretion accept any such existing survey so long as such existing survey is satisfactory to the title insurance company and enables it to remove the standard survey exception from the applicable Mortgage Policies and provide customary survey and other endorsements as required by clause (ii) above; and
(v) such other evidence that all other actions that the Administrative Agent may reasonably request and deem necessary in order to create a valid and subsisting Lien on such Material Real Estate Assets have been taken;
provided that, notwithstanding the foregoing, with respect to any Person not incorporated or organized in the U.S. or the United Kingdom, the requirements of this definition shall be subject to the Agreed Guarantee and Security Principles.
“Collateral Documents” means, collectively, (i) the U.S. Security Agreement, (ii) the English Security Documents, (iii) the Lux Security Documents, (iv) each Mortgage, (v) each Notice of Grant of Security Interest in Intellectual Property, (vi) any supplement (or other document or instrument) to any of the foregoing delivered to the Administrative Agent pursuant to the definition of “Collateral and Guarantee Requirement”, (vii) the Perfection Certificate (including any Perfection Certificate delivered to the Administrative Agent pursuant to the definition of “Collateral and Guarantee Requirement”) and any Perfection Certificate Supplement (including any Perfection Certificate Supplement delivered to the Administrative Agent pursuant to the definition of “Collateral and Guarantee Requirement”) and (viii) each of the other instruments and documents (including the Irish Security Documents and the Jersey
Security Documents) pursuant to which Holdings or any Loan Party grants a Lien on any Collateral as security for payment of the Secured Obligations.
“COMI Regulation” means Regulation (EU) 2015/848 of the European Parliament and of the Council of 20 May 2015 on insolvency proceedings (recast).
“Commercial Letter of Credit” means any Letter of Credit issued for the purpose of providing the primary payment mechanism in connection with the purchase of any materials, goods or services by a Borrower or any of its subsidiaries in the ordinary course of business of such Person.
“Commercial Tort Claim” has the meaning set forth in Article 9 of the UCC.
“Commitment” means, with respect to each Lender, at any time, such Lender’s Initial Term Loan Commitment, Initial Euro Term Loan Commitment, 2017 Replacement USD Term Loan Commitment, 2017 Replacement Euro Term Loan Commitment, 2021 Replacement Term Loan Commitment, Revolving Credit Commitment and/or Additional Commitment, as applicable, in effect as of such time.
“Commitment Fee Rate” means for each calendar quarter or portion thereof, the applicable rate per annum set forth below based upon the Total Leverage Ratio as of the last day of the last Test Period; provided that until the first Adjustment Date following the completion of at least one full Fiscal Quarter after the Closing Date, “Commitment Fee Rate” shall be the applicable rate per annum set forth below in Category 1:
| | | | | |
| Total Leverage Ratio | Commitment Fee Rate |
| Category 1 | |
| |
Greater than 1.25 to 1.00 | 0.375% |
| |
| Category 2 | |
| |
Equal to or less than 1.25 to 1.00 | 0.25% |
The Commitment Fee Rate shall be adjusted quarterly on a prospective basis on each Adjustment Date based upon the Total Leverage Ratio in accordance with the table set forth above; provided that (x) if financial statements are not delivered when required pursuant to Section 5.01(a) or (b), as applicable, the Commitment Fee Rate shall be the rate per annum set forth above in Category 1 until such financial statements are delivered in compliance with Section 5.01(a) or (b), as applicable and (y) if an Event of Default has occurred and is continuing, the Commitment Fee Rate shall be the rate per annum set forth in Category 1 until such Event of Default is waived or cured in accordance with the requirements of this Agreement. For the avoidance of doubt, the Commitment Fee Rate shall be determined (i) for all periods prior to the Second Amendment Effective Date, in accordance with the definition of “Commitment Fee Rate” (as in effect prior to the Second Amendment Effective Date) and (ii) for all periods on and after the Second Amendment Effective Date, in accordance with the definition of “Commitment Fee Rate” (as in effect on the Second Amendment Effective Date).
“Commitment Schedule” means the Schedule attached hereto as Schedule 1.01(a).
“Commodity Exchange Act” means the Commodity Exchange Act (7 U.S.C. § 1 et seq.).
“Company Competitor” means any competitor of a Borrower and/or any of its subsidiaries.
“Compliance Certificate” means a Compliance Certificate substantially in the form of Exhibit C.
“Confidential Information” has the meaning assigned to such term in Section 9.13.
“Connection Income Taxes” means Other Connection Taxes that are imposed on or measured by net income, profits or gains (however denominated) or that are franchise Taxes or branch profits Taxes.
“Consolidated Adjusted EBITDA” means, as to any Person for any period, an amount determined for such Person on a consolidated basis equal to the total of (a) Consolidated Net Income for such period plus (b) the sum, without duplication, of (to the extent deducted in calculating Consolidated Net Income for such period, other than in respect of clauses (xix), (xxi) (xxiii) below) the amounts of:
(i) Taxes paid (including pursuant to any Tax sharing arrangement or any Tax distribution) and provisions for Taxes of such Person and its subsidiaries, including domestic, foreign state, franchise, excise and similar taxes and foreign withholding taxes paid or accrued during such period, and including, in each case, arising out of tax examinations relating to any of the foregoing deducted (and not added back) in computing Consolidated Net Income;
(ii) interest expense, amortization or write-off of debt discount, debt issuance, warrant and other equity issuance costs and commissions, discounts, redemption premium and other fees and charges associated with the Loans, any Permitted Securitization Financing and other indebtedness permitted hereunder (including fees and expenses paid to the Administrative Agent in connection with its services hereunder, and other bank, administrative agency (or trustee) and financing fees), letters of credit permitted hereunder, Capital Leases or the acquisition or repayment of any debt securities of a Borrower or its subsidiaries permitted hereunder, and net costs associated with Hedge Agreements to which a Borrower is a party in respect of the Loans and/or other indebtedness permitted hereunder (including commitment fees and other periodic bank charges);
(iii) costs of surety bonds (whether amortized or immediately expensed);
(iv) depreciation and amortization expense (including, without limitation, amortization of goodwill, software and other intangible assets, but excluding amortization of prepaid cash expenses that were paid in a prior period unless such prepaid expenses were deducted (and not added back) in determining Consolidated Adjusted EBITDA in a prior period);
(v) amortization of inventory write-up, deferred revenue adjustment or other non-cash adjustments required under Statement of Financial Accounting Standards No. 141 – Business Combinations, amortization of intangibles (including, but not limited to, goodwill and costs of interest-rate caps and the cost of non-competition agreements) and organization costs including any non-cash charges associated with any impairment analysis required under Statement of Financial Accounting Standards No. 36 – Impairment of Assets and International Accounting Standards No. 38 – Intangible Assets;
(vi) non-cash amortization of Capital Leases;
(vii) the amount of board of director fees and expenses (including out of pocket director fees and expenses) actually paid by or on behalf of, or accrued by, such Person to the extent permitted to be paid under this Agreement;
(viii) all cash dividend payments (and non-cash dividend expenses) on any series of preferred stock or Disqualified Capital Stock;
(ix) (A) Transaction Costs, and (B) transaction Charges (1) incurred in connection with the consummation of any transaction (or any transaction proposed and not consummated) permitted under this Agreement, including the issuance or offering of Capital Stock, Investments, acquisitions, Dispositions, recapitalizations, mergers, consolidations or amalgamations, option buyouts or incurrences, repayments, refinancings, amendments or modifications of Indebtedness (including any amortization or write-off of debt issuance or deferred financing costs, premiums and prepayment penalties) or similar transactions, and/or (2) that are actually reimbursed or reimbursable by third parties pursuant to indemnification or reimbursement provisions or similar agreements or insurance; provided that in respect of any fee, cost, expense or reserve that is added back in reliance on clause (2) above, such Person in good faith expects to receive reimbursement for such fee, cost, expense or reserve within the next four Fiscal Quarters (it being understood that to the extent any reimbursement amount is not actually received within such Fiscal Quarters, such reimbursement amount shall be deducted in calculating Consolidated Adjusted EBITDA for such Fiscal Quarters);
(x) (A) any other write-downs, write-offs, minority interests and other non-cash Charge and (B) any non-cash restructuring or other type of non-cash special charge or reserve (provided that to the extent any such non-cash charge represents an accrual or reserve for potential cash items in any future period, (x) such Person may determine not to add back such non-cash charge in the then current period and (y) to the extent such Person elects to add back such non-cash charge, the cash payment in respect thereof in such future period shall be subtracted from Consolidated Adjusted EBITDA to such extent);
(xi) internal software development costs that are expensed during the period but could have been capitalized in accordance with GAAP;
(xii) non-recurring litigation or claim settlement Charges;
(xiii) non-cash compensation Charges associated with any stock options, restricted stock or other equity instruments;
(xiv) income associated with bill and hold arrangements required by GAAP to be deferred;
(xv) any net after-tax extraordinary, nonrecurring or unusual gains or losses (including, without limitation, any costs relating to severance, relocation or other strategic initiative or restructuring) and Charges related thereto;
(xvi) [Reserved];
(xvii) [Reserved];
(xviii) the amount of any minority interest expense consisting of subsidiary income attributable to minority equity interests of third parties in any non-Wholly-Owned Subsidiary deducted in calculating Consolidated Net Income;
(xix) expected cost savings (including sourcing), operating expense reductions, operating improvements and synergies (net of actual amounts realized) that are reasonably identifiable and factually supportable (in the good faith determination of such Person, as certified by a chief financial officer, treasurer or equivalent officer of such Person) related to (A) the Transactions and (B) after the Closing Date, permitted asset sales, acquisitions, Investments, Dispositions, operating improvements, restructurings, cost saving initiatives and certain other similar initiatives and/or Specified Transaction; provided that (x) any such cost savings, operating expense reductions, operating improvements and synergies are projected in good faith to be reasonably anticipated to be realized within 12 months of the applicable event to which they relate, (y) substantial steps have been taken or procedures are in place for realizing such cost savings, operating expense reductions, operating improvements and synergies and (z) the aggregate amount of cost savings, operating expense reductions, operating improvements and synergies added back pursuant to this clause (xix) in any Test Period shall not exceed 15.0% of Consolidated Adjusted EBITDA (calculated prior to giving effect to this clause (xix));
(xx) Charges attributable to the undertaking and/or implementation of cost savings initiatives, operating expense reductions, transition, opening and pre-opening expenses, business optimization and other restructuring and integration Charges (including inventory optimization programs, software development costs, costs related to the closure or consolidation of facilities and plants, costs relating to curtailments, costs related to entry into new markets, strategic initiatives and contracts, consulting fees, signing or retention costs, retention or completion bonuses, expansion and relocation expenses, severance payments, modifications to pension and post-retirement employee benefit plans, new systems design and implementation costs and startup costs);
(xxi) proceeds of business interruption insurance in an amount representing the earnings for the applicable period that such proceeds are intended to replace (whether or not then received so long as such Person in good faith expects to receive such proceeds within the next four Fiscal Quarters (it being understood that to the extent not actually received within such Fiscal Quarters, such proceeds shall be deducted in calculating Consolidated Adjusted EBITDA for such Fiscal Quarters));
(xxii) to the extent not added back in reliance on clause (ii) above, unrealized net losses in the fair market value of any arrangements under Hedge Agreements;
(xxiii) the amount of Cash actually received (or the amount of the benefit of any netting arrangement resulting in reduced Cash expenditures) during such period, and not included in Consolidated Net Income in any period, to the extent that the related non-Cash gain in respect of such Cash receipt or such netting arrangement was deducted in the calculation of Consolidated Adjusted EBITDA pursuant to clause (c)(i) below for any previous period and not added back;
(xxiv) without duplication of clause (ii) above, the amount of loss or discount in connection with a Permitted Securitization Financing; and
(xxv) other add-backs and adjustments reflected in the model delivered by the Borrower Representative to the Arrangers on November 13, 2014;
minus (c) to the extent such amounts increase Consolidated Net Income for such period:
(i) non-cash gains or income; provided that to the extent any non-cash gain or income represents an accrual or deferred income in respect of potential Cash items in any future period, such Person may determine not to deduct such non-cash gain or income in the then current period;
(ii) unrealized net gains in the fair market value of any arrangements under Hedge Agreements;
(iii) the amount added back to Consolidated Adjusted EBITDA pursuant to clause (b)(ix)(B)(2) above (as described in such clause) to the extent the relevant reimbursement amounts were not received within the time period required by such clause;
(iv) the amount added back to Consolidated Adjusted EBITDA pursuant to clause (b)(xxi) above (as described in such clause) to the extent the relevant business interruption insurance proceeds were not received within the time period required by such clause; and
(v) to the extent that such Person adds back the amount of any non-Cash charge to Consolidated Adjusted EBITDA pursuant to clauses (b)(x) above, the cash payment in respect thereof in the relevant future period.
Notwithstanding anything to the contrary herein, it is agreed that for the purpose of calculating the Total Leverage Ratio and the First Lien Leverage Ratio for any period that includes the Fiscal Quarters ended September 30, 2014, June 30, 2014, March 31, 2014 or December 31, 2013, (i) Consolidated Adjusted EBITDA for the Fiscal Quarter ended September 30, 2014 shall be deemed to be $137.0 million, (ii) Consolidated Adjusted EBITDA for the Fiscal Quarter ended June 30, 2014 shall be deemed to be $172.0 million, (iii) Consolidated Adjusted EBITDA for the Fiscal Quarter ended March 31, 2014 shall be deemed to be $170.0 million and (iv) Consolidated Adjusted EBITDA for the Fiscal Quarter ended December 31, 2013 shall be deemed to be $173.0 million; provided that for any subsequent four Fiscal Quarter period that includes any of the Fiscal Quarters described under clauses (i) through (iv) above, Consolidated Adjusted EBITDA shall include the applicable amounts set forth in such clauses and the Pro Forma Basis calculation shall be in accordance with the terms thereof.
“Consolidated First Lien Debt” means, as to any Person at any date of determination, the aggregate principal amount of Consolidated Total Debt outstanding on such date that is secured by a first priority Lien on any Collateral or by a Lien on any other asset or property of such Person or its Restricted Subsidiaries.
“Consolidated Net Income” means, as to any Person (the “Subject Person”) for any period, the net income (or loss) of the Subject Person on a consolidated basis for such period taken as a single accounting period determined in accordance with GAAP; provided that there shall be excluded, without duplication,
(a) (i) the income of (x) any Person (other than a Restricted Subsidiary of the Subject Person) in which any other Person (other than the Subject Person or any of its Restricted Subsidiaries) has an interest, (y) any Unrestricted Subsidiary or (z) any Person that is accounted for by the equity method of accounting, in each case except to the extent of the amount of dividends or distributions or other payments (including any ordinary course dividend, distribution or other payment) paid in cash (or to the extent converted into cash) to the Subject Person or any of its Restricted Subsidiaries by such Person during such period or (ii) the loss of (x) any Person
(other than a Restricted Subsidiary of the Subject Person) in which any other Person (other than the Subject Person or any of its Restricted Subsidiaries) has an interest, (y) any Unrestricted Subsidiary or (z) any Person that is accounted for by the equity method of accounting, in each case other than to the extent that the Subject Person or any of its Restricted Subsidiaries has contributed cash or Cash Equivalents to such Person in respect of such loss during such period,
(b) solely for the purpose of determining the amount available under paragraph (a)(ii) of the definition of Available Amount, the net income of any Restricted Subsidiary (other than any Subsidiary Guarantor) to the extent the declaration or payment of dividends or similar distributions by that Restricted Subsidiary of its net income is not at the date of determination permitted without any prior governmental approval (which has not been obtained) or, directly or indirectly, by the operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule, or governmental regulation applicable to that Restricted Subsidiary or its stockholders, unless such restriction with respect to the payment of dividends or similar distributions has been legally waived; provided that Consolidated Net Income of the Subject Person will be increased by the amount of dividends or other distributions or other payments actually paid by such Restricted Subsidiary in cash (or to the extent converted into cash) to such Subject Person or a Restricted Subsidiary (subject to the provisions of this clause (b)) thereof in respect of such period to the extent not already included therein,
(c) gains or losses (less all fees and expenses chargeable thereto) attributable to any sales or dispositions of Capital Stock or assets (including asset retirement costs) or of returned surplus assets of any employee benefit plan outside of the ordinary course of business,
(d) gains or losses from (i) extraordinary items and (ii) nonrecurring or unusual items (including costs of and payments of actual or prospective legal settlements, fines, judgments or orders),
(e) any unrealized or realized net foreign currency translation or transaction gains or losses impacting net income (including currency re-measurements of Indebtedness),
(f) any net gains, Charges or losses with respect to (i) any disposed, abandoned, divested and/or discontinued asset, property or operation (other than, at the option of the Borrower Representative, any asset, property or operation pending the disposal, abandonment, divestiture and/or termination thereof), (ii) any disposal, abandonment, divestiture and/or discontinuation of any asset, property or operation and/or (iii) facilities or plants that have been closed during such period or with respect to such Charges and losses that were required to be recorded pursuant to GAAP,
(g) any net income or loss (less all fees and expenses or charges related thereto) attributable to the early extinguishment of Indebtedness (and the termination of any associated Hedge Agreements),
(h) (i) any Charges incurred pursuant to any management equity plan, profits interest or stock option plan or any other management or employee benefit plan or agreement, pension plan, any stock subscription or shareholder agreement or any distributor equity plan or agreement and (ii) any Charges in connection with the rollover, acceleration or payout of Capital Stock held by management of any Parent Company, the Borrowers and/or any Restricted Subsidiary, in each case, to the extent that any such cash Charge is funded with net cash proceeds contributed to the Subject Person as a capital contribution or as a result of the sale or issuance of Qualified Capital
Stock of the Subject Person, solely to the extent that such net cash proceeds are excluded from the calculation of the Available Amount,
(i) accruals and reserves that are established or adjusted within 12 months after the Closing Date that are required to be established or adjusted as a result of the Transactions in accordance with GAAP or as a result of the adoption or modification of accounting policies in accordance with GAAP,
(j) any (A) write-off or amortization made in such period of deferred financing costs and premiums paid or other expenses incurred directly in connection with any early extinguishment of Indebtedness, (B) goodwill or other asset impairment charges, write-offs or write-downs and (C) amortization of intangible assets; provided that in no event shall amortization of intangibles so excluded in any period of four consecutive Fiscal Quarters exclude 10% of Consolidated Net Income for such period (before giving effect to such exclusion), and
(k) (A) effects of adjustments (including the effects of such adjustments pushed down to the Subject Person and its subsidiaries) in the Subject Person’s consolidated financial statements pursuant to GAAP (including in the inventory, property and equipment, software, goodwill, intangible assets, in-process research and development, deferred revenue, deferred rent, deferred trade incentives and other lease-related items, advanced billings and debt line items thereof) resulting from the application of recapitalization accounting or acquisition accounting, as the case may be, in relation to the Transactions or any consummated acquisition or the amortization or write-off of any amounts thereof, net of Taxes and (B) the cumulative effect of changes in accounting principles or policies made in such period in accordance with GAAP which affect Consolidated Net Income.
Notwithstanding the foregoing, for the purpose of calculating the Available Amount only, there shall be excluded from Consolidated Net Income, without duplication, any income consisting of dividends, repayments of loans or advances or other transfers of assets from non-wholly owned Restricted Subsidiaries, Unrestricted Subsidiaries or joint ventures to a Borrower or a Restricted Subsidiary, and any income consisting of a return of capital, repayment or other proceeds from dispositions or repayments of Investments, in each case to the extent such income would be included in Consolidated Net Income and such related dividends, repayments, transfers, return of capital or other proceeds are applied by the Loan Parties to increase the Available Amount.
“Consolidated Secured Debt” means, as to any Person at any date of determination, the aggregate principal amount of Consolidated Total Debt outstanding on such date that is secured by a Lien on any asset or property of such Person or its Restricted Subsidiaries.
“Consolidated Total Assets” means, at any date, all amounts that would, in conformity with GAAP, be set forth opposite the caption “total assets” (or any like caption) on a consolidated balance sheet of the applicable Person at such date.
“Consolidated Total Debt” means, as to any Person at any date of determination, the aggregate principal amount of all third party debt for borrowed money (including LC Disbursements that have not been reimbursed in accordance with the terms hereof and the outstanding principal balance of all Indebtedness of such Person represented by notes, bonds and similar instruments), Capital Leases, purchase money Indebtedness, obligations in respect of Disqualified Capital Stock, the amount of any Receivables Net Investment and Guarantee obligations with respect to any of the foregoing (but excluding, for the avoidance of doubt, undrawn letters of credit).
“Consolidated Working Capital” means, as at any date of determination, the excess of Current Assets over Current Liabilities.
“Consolidated Working Capital Adjustment” means, for any period on a consolidated basis, the amount (which may be a negative number) by which Consolidated Working Capital as of the beginning of such period exceeds (or is less than) Consolidated Working Capital as of the end of such period; provided that there shall be excluded (a) the effect of reclassification during such period between current assets and long term assets and current liabilities and long term liabilities (with a corresponding restatement of the prior period to give effect to such reclassification), (b) the effect of any Disposition of any Person, facility or line of business or acquisition of any Person, facility or line of business during such period, (c) the effect of any fluctuations in the amount of accrued and contingent obligations under any Hedge Agreement, and (d) the application of purchase or recapitalization accounting.
“Consummation Date” has the meaning assigned to such term in Section 5.16.
“Contract Consideration” has the meaning assigned to such term in the definition of “Excess Cash Flow”.
“Contractual Obligation” means, as applied to any Person, any provision of any Security issued by that Person or of any indenture, mortgage, deed of trust, contract, undertaking, agreement or other instrument to which that Person is a party or by which it or any of its properties is bound or to which it or any of its properties is subject.
“Contribution Notice” means a contribution notice issued by the Pensions Regulator under section 38 or section 47 of the Pensions Act 2004.
“Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. “Controlling” and “Controlled” have meanings correlative thereto.
“Copyright” means the following: (a) all copyrights, rights and interests in copyrights, works protectable by copyright whether published or unpublished, copyright registrations and copyright applications; (b) all renewals of any of the foregoing; (c) all income, royalties, damages, and payments now or hereafter due and/or payable under any of the foregoing, including, without limitation, damages or payments for past or future infringements for any of the foregoing; (d) the right to sue for past, present, and future infringements of any of the foregoing; and (e) all rights corresponding to any of the foregoing.
“Credit Extension” means each of (i) the making of a Revolving Loan or Swingline Loan or (ii) the issuance, amendment, modification, renewal or extension of any Letter of Credit (other than any such amendment, modification, renewal or extension that does not increase the Stated Amount of the relevant Letter of Credit).
“Credit Facilities” means the Revolving Facility and the Term Facility.
“CTA” means the Corporation Tax Act 2009.
“Current Assets” means, at any time, the sum of (a) the consolidated current assets (other than Cash and Cash Equivalents, the current portion of current and deferred Taxes, permitted loans made to third parties, assets held for sale, pension assets, deferred bank fees and derivative financial instruments) of any Person and its Restricted Subsidiaries plus (b) in the event that a Permitted Securitization Financing is accounted for off balance sheet, (x) gross accounts receivable comprising part
of the Securitization Assets subject to such Permitted Securitization Financing less (y) collections against the amounts sold pursuant to clause (x).
“Current Liabilities” means, at any time, the consolidated current liabilities of any Person and its Restricted Subsidiaries at such time, but excluding, without duplication, (a) the current portion of any long-term Indebtedness, (b) outstanding revolving loans, (c) the current portion of interest expense (excluding interest expense that is due and unpaid), (d) the current portion of any Capital Lease, (e) the current portion of current and deferred Taxes, (f) liabilities in respect of unpaid earn-outs, (g) the current portion of any other long-term liabilities, (h) accruals relating to restructuring reserves, (i) liabilities in respect of funds of third parties on deposit with a Borrower or any of its Restricted Subsidiaries and (j) any liabilities recorded in connection with stock-based awards, partnership interest-based awards, awards of profits interests, deferred compensation awards and similar incentive based compensation awards or arrangements.
“Debtor Relief Laws” means the Bankruptcy Code, the Insolvency Act, 1986, the Companies Act 2014 of Ireland and all other liquidation, conservatorship, bankruptcy, general assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, examinership or similar debtor relief laws of the U.S., the United Kingdom, Ireland, Jersey or other applicable jurisdictions from time to time in effect and affecting the rights of creditors generally. Without limiting the foregoing, in respect of the Lux Borrower and any other Lux Loan Party, Debtor Relief Laws shall also include a Luxembourg Insolvency Event.
“Declined Proceeds” has the meaning assigned to such term in Section 2.11(b)(v).
“Default” means any event or condition which upon notice, lapse of time or both would become an Event of Default.
“Defaulting Lender” means any Lender that has (a) defaulted in its obligations under this Agreement, including without limitation, (x) to make a Loan within two Business Days of the date required to be made by it hereunder or (y) to fund its participation in a Letter of Credit or Swingline Loan required to be funded by it hereunder within two Business Days of the date such obligation arose or such Loan, Letter of Credit or Swingline Loan was required to be made or funded, (b) notified the Administrative Agent, any Issuing Bank or the Swingline Lender or the any Loan Party in writing that it does not intend to satisfy any such obligation or has made a public statement to the effect that it does not intend to comply with its funding obligations under this Agreement or under agreements in which it commits to extend credit generally, (c) failed, within two Business Days after the request of Administrative Agent or the Borrower Representative, to confirm in writing that it will comply with the terms of this Agreement relating to its obligations to fund prospective Loans and participations in then outstanding Letters of Credit and Swingline Loans; provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon receipt of such written confirmation by the Administrative Agent, (d) become (or any parent company thereof has become) insolvent or been determined by any Governmental Authority having regulatory authority over such Person or its assets, to be insolvent, or the assets or management of which has been taken over by any Governmental Authority or (e) become the subject of a bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee, administrator, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business or custodian, appointed for it, or has taken any action in furtherance of, or indicating its consent to, approval of or acquiescence in, any such proceeding or appointment, or has become the subject of a Bail-In Action, unless in the case of any Lender subject to this clause (e), the Borrower Representative and the Administrative Agent shall each have determined that such Lender intends, and has all approvals required to enable it (in form and substance satisfactory to each of the Borrower Representative and the Administrative Agent), to continue to perform its obligations as a
Lender hereunder; provided that no Lender shall be deemed to be a Defaulting Lender solely by virtue of the ownership or acquisition of any Capital Stock in such Lender or its parent by any Governmental Authority; provided that such action does not result in or provide such Lender with immunity from the jurisdiction of courts within the U.S. or from the enforcement of judgments or writs of attachment on its assets or permit such Lender (or such Governmental Authority) to reject, repudiate, disavow or disaffirm any contract or agreement to which such Lender is a party.
“Demerger” has the meaning assigned to such term in the Recitals to this Agreement.
“Demerger Documents” means the prospectus to be filed by Indivior plc with the Financial Conduct Authority with respect to the Demerger (the “Prospectus”), together with the Demerger Agreement, the Demerger Tax Deed, the US Tax Matters Agreement, the RB Shareholder Circular, the Sponsors’ Agreement, the Transitional Services Agreement, the Supply Agreement, the Copacker Supply Agreement, the lease of the FCP and the agreement with respect to the R&D Facilities, the QC Facilities and related services (in each case as described in (and with capitalized terms as defined in) the Prospectus), in each case as in effect as of November 13, 2014 and as same may be amended, restated, supplemented and otherwise modified in accordance with Section 4.01(k)(ii) and Section 5.16(a).
“Deposit Account” means a demand, time, savings, passbook or like account with a bank, savings and loan association, credit union or like organization, other than an account evidenced by a negotiable certificate of deposit.
“Derivative Transaction” means (a) any interest-rate transaction, including any interest-rate swap, basis swap, forward rate agreement, interest rate option (including a cap, collar or floor), and any other instrument linked to interest rates that gives rise to similar credit risks (including when-issued securities and forward deposits accepted), (b) any exchange-rate transaction, including any cross-currency interest-rate swap, any forward foreign-exchange contract, any currency option, and any other instrument linked to exchange rates that gives rise to similar credit risks, (c) any equity derivative transaction, including any equity-linked swap, any equity-linked option, any forward equity-linked contract, and any other instrument linked to equities that gives rise to similar credit risk , (d) any commodity (including precious metal) derivative transaction, including any commodity-linked swap, any commodity-linked option, any forward commodity-linked contract, and any other instrument linked to commodities that gives rise to similar credit risks and (e) any and all transactions of any kind, and the related confirmations, in each case which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc. or any International Foreign Exchange Master Agreement; provided that no phantom stock or similar plan providing for payments only on account of services provided by current or former directors, officers, employees, members of management, managers or consultants of a Borrower or its subsidiaries shall be a Derivative Transaction.
“Designated Extensions of Credit” has the meaning assigned to such term in Section 9.05(i)(i).
“Designating Lender” has the meaning assigned to such term in Section 9.05(i)(i).
“Designated Non-Cash Consideration” means the fair market value (as determined by the Borrower Representative in good faith) of non-Cash consideration received by any Borrower or any Restricted Subsidiary in connection with any Disposition pursuant to Section 6.07(h) that is designated as Designated Non-Cash Consideration pursuant to a certificate of a Responsible Officer of the Borrower Representative, setting forth the basis of such valuation (which amount will be reduced by the amount of
Cash or Cash Equivalents received in connection with a subsequent sale or conversion of such Designated Non-Cash Consideration to Cash or Cash Equivalents).
“Direction” has the meaning assigned to such term in Section 2.17(f)(ii)(A).
“Disclosure Documents” means (i) all matters disclosed by Indivior plc in any regulatory news announcement (for the avoidance of doubt, excluding any forward looking statement(s) (including any risk factors)) made by Indivior plc, including those made pursuant to its obligations under: (a) Articles 17 to 19 of the Market Abuse Regulation (Regulation 596/2014); (b) the Listing Rules sourcebook published by the UK Financial Conduct Authority; and (c) the Disclosure Guidance and Transparency Rules sourcebook published by the UK Financial Conduct Authority; and (ii) all reports of Indivior plc on Form 20-F and any amendments thereto and documents incorporated by reference therein that shall have been filed with or furnished to the SEC, in each case prior to the Second Amendment Effective Date.
“Discount Range” has the meaning assigned to such term in the definition of “Dutch Auction”.
“Disposition” or “Dispose” means the sale, lease, sublease, or other disposition of any property of any Person.
“Disqualified Capital Stock” means any Capital Stock which, by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable), or upon the happening of any event, (a) matures (excluding any maturity as the result of an optional redemption by the issuer thereof) or is mandatorily redeemable (other than for Qualified Capital Stock), pursuant to a sinking fund obligation or otherwise, or is redeemable at the option of the holder thereof (other than for Qualified Capital Stock), in whole or in part, on or prior to 91 days following the Latest Maturity Date at the time such Capital Stock is issued (it being understood that if any such redemption is in part, only the portion of such Capital Stock that is so redeemable prior to 91 days following the Latest Maturity Date shall constitute Disqualified Capital Stock), (b) is or becomes convertible into or exchangeable (unless at the sole option of the issuer thereof) for (i) debt securities or (ii) any Capital Stock that would constitute Disqualified Capital Stock, in each case at any time on or prior to 91 days following the Latest Maturity Date at the time such Capital Stock is issued, (c) contains any mandatory repurchase obligation or any other repurchase obligation at the option of the holder thereof (other than for Qualified Capital Stock), in whole or in part, which may come into effect prior to 91 days following the Latest Maturity Date at the time such Capital Stock is issued (it being understood that if any such repurchase obligation is in part, only the portion of such Capital Stock that is subject to such repurchase obligation prior to 91 days following the Latest Maturity Date shall constitute Disqualified Capital Stock) or (d) provides for the scheduled payments of dividends in Cash on or prior to 91 days following the Latest Maturity Date at the time such Capital Stock is issued; provided that any Capital Stock that would not constitute Disqualified Capital Stock but for provisions thereof giving holders thereof (or the holders of any security into or for which such Capital Stock is convertible, exchangeable or exercisable) the right to require the issuer thereof to redeem such Capital Stock upon the occurrence of any change in control or any Disposition occurring prior to 91 days following the Latest Maturity Date at the time such Capital Stock is issued shall not constitute Disqualified Capital Stock if such Capital Stock provides that the issuer thereof will not redeem any such Capital Stock pursuant to such provisions prior to the Termination Date.
Notwithstanding the preceding sentence, (A) if such Capital Stock is issued pursuant to any plan for the benefit of directors, officers, employees, members of management, managers or consultants or by any such plan to such directors, officers, employees, members of management, managers or consultants, in each case in the ordinary course of business of Holdings, any Borrower or any
Restricted Subsidiary, such Capital Stock shall not constitute Disqualified Capital Stock solely because it may be required to be repurchased by the issuer thereof in order to satisfy applicable statutory or regulatory obligations, and (B) no Capital Stock held by any future, present or former employee, director, officer, manager, member of management or consultant (or their respective Affiliates or Immediate Family Members) of any Borrower (or any Parent Company or any subsidiary) shall be considered Disqualified Capital Stock solely because such stock is redeemable or subject to repurchase pursuant to any management equity subscription agreement, stock option, stock appreciation right or other stock award agreement, stock ownership plan, put agreement, stockholder agreement or similar agreement that may be in effect from time to time.
“Disqualified Institution” means (i) any Person that is or becomes a Company Competitor and is designated by the Borrower Representative as such in a writing provided to the Administrative Agent after the date hereof, which designation shall not apply retroactively to disqualify any Person that has previously acquired any assignment or participation interest in any Loan or Commitment and (ii) any Affiliate of any such Company Competitor (other than a Bona Fide Debt Fund) that is reasonably identifiable on the basis of such Affiliate’s name; provided that an entity becoming an Affiliate of a Company Competitor shall not retroactively disqualify any Person that has previously acquired any assignment or participation interest in any Loan or Commitment.
“Dollar Equivalent” shall mean, at any time, (a) with respect to any amount denominated in Dollars, such amount, and (b) with respect to any amount denominated in any currency other than Dollars, the equivalent amount thereof in Dollars as determined by the Administrative Agent at such time on the basis of the Spot Rate (determined in respect of the most recent Revaluation Date or other applicable date of determination) for the purchase of Dollars with such currency.
“Dollars” or “$” refers to lawful money of the U.S.
“Domestic Subsidiary” means any Restricted Subsidiary incorporated or organized under the laws of the U.S., any state thereof or the District of Columbia.
“DQ List” has the meaning assigned to such term in Section 9.05(f)(iv).
“Dutch Auction” means an auction (an “Auction”) conducted by any Affiliated Lender (any such Person, the “Auction Party”) in order to purchase Initial Term Loans, 2017 Replacement Term Loans or 2021 Replacement Term Loans of any Class (or any Additional Term Loans), in accordance with the following procedures; provided that no Auction Party shall initiate any Auction unless (I) at least five Business Days have passed since the consummation of the most recent purchase of Term Loans pursuant to an Auction conducted hereunder; or (II) at least three Business Days have passed since the date of the last Failed Auction which was withdrawn pursuant to clause (c)(i) below:
(a) Notice Procedures. In connection with any Auction, the Auction Party will provide notification to the Auction Agent (for distribution to the relevant Lenders) of the Term Loans that will be the subject of the Auction (an “Auction Notice”). Each Auction Notice shall be in a form reasonably acceptable to the Auction Agent and shall (i) specify the maximum aggregate principal amount of the Term Loans subject to the Auction, in a minimum amount of $10,000,000 and whole increments of $1,000,000 in excess thereof (or, in any case, such lesser amount of such Term Loans then outstanding or which is otherwise reasonably acceptable to the Auction Agent and the Administrative Agent (if different from the Auction Agent)) (the “Auction Amount”), (ii) specify the discount to par (which may be a range (the “Discount Range”) of percentages of the par principal amount of the Term Loans subject to such Auction), that represents the range of purchase prices that the Auction Party would be willing to accept in
the Auction, (iii) be extended, at the sole discretion of the Auction Party, to (x) each Term Lender and/or (y) each Lender with respect to any Term Loan on an individual Class basis and (iv) remain outstanding through the Auction Response Date. The Auction Agent will promptly provide each appropriate Lender with a copy of the Auction Notice and a form of the Return Bid to be submitted by a responding Lender to the Auction Agent (or its delegate) by no later than 5:00 p.m. on the date specified in the Auction Notice (or such later date as the Auction Party may agree with the reasonable consent of the Auction Agent) (the “Auction Response Date”).
(b) Reply Procedures. In connection with any Auction, each Lender holding the relevant Term Loans subject to such Auction may, in its sole discretion, participate in such Auction and may provide the Auction Agent with a notice of participation (the “Return Bid”) which shall be in a form reasonably acceptable to the Auction Agent, and shall specify (i) a discount to par (that must be expressed as a price at which it is willing to sell all or any portion of such Term Loans) (the “Reply Price”), which (when expressed as a percentage of the par principal amount of such Term Loans) must be within the Discount Range, and (ii) a principal amount of such Term Loans, which must be in whole increments of $1,000,000 (or, in any case, such lesser amount of such Term Loans of such Lender then outstanding or which is otherwise reasonably acceptable to the Auction Agent) (the “Reply Amount”). Lenders may only submit one Return Bid per Auction, but each Return Bid may contain up to three bids only one of which may result in a Qualifying Bid. In addition to the Return Bid, the participating Lender must execute and deliver, to be held in escrow by the Auction Agent, an Assignment and Assumption with the dollar amount of the Term Loans to be assigned to be left in blank, which amount shall be completed by the Auction Agent in accordance with the final determination of such Lender’s Qualifying Bid pursuant to clause (c) below. Any Lender whose Return Bid is not received by the Auction Agent by the Auction Response Date shall be deemed to have declined to participate in the relevant Auction with respect to all of its Term Loans.
(c) Acceptance Procedures. Based on the Reply Prices and Reply Amounts received by the Auction Agent prior to the applicable Auction Response Date, the Auction Agent, in consultation with the Auction Party, will determine the applicable price (the “Applicable Price”) for the Auction, which will be the lowest Reply Price for which the Auction Party can complete the Auction at the Auction Amount; provided that, in the event that the Reply Amounts are insufficient to allow the Auction Party to complete a purchase of the entire Auction Amount (any such Auction, a “Failed Auction”), the Auction Party shall either, at its election, (i) withdraw the Auction or (ii) complete the Auction at an Applicable Price equal to the highest Reply Price. The Auction Party shall purchase the relevant Term Loans (or the respective portions thereof) from each Lender with a Reply Price that is equal to or lower than the Applicable Price (“Qualifying Bids”) at the Applicable Price; provided that if the aggregate proceeds required to purchase all Term Loans subject to Qualifying Bids would exceed the Auction Amount for such Auction, the Auction Party shall purchase such Term Loans at the Applicable Price ratably based on the principal amounts of such Qualifying Bids (subject to rounding requirements specified by the Auction Agent in its discretion). If a Lender has submitted a Return Bid containing multiple bids at different Reply Prices, only the bid with the lowest Reply Price that is equal to or less than the Applicable Price will be deemed to be the Qualifying Bid of such Lender (e.g., a Reply Price submitted by a Lender of $100 with a discount to par of 2%, when compared to an Applicable Price of $100 with a 1% discount to par, will not be deemed to be a Qualifying Bid, while, however, a Reply Price submitted by a Lender of $100 with a discount to par of 2.50% would be deemed to be a Qualifying Bid). The Auction Agent shall promptly, and in any case within five Business Days following the Auction Response Date with respect to an Auction, notify (I) the Borrower Representative of the respective Lenders’ responses to such solicitation, the effective date of the purchase of Term Loans pursuant to such Auction, the Applicable Price, and the
aggregate principal amount of the Term Loans and the tranches thereof to be purchased pursuant to such Auction, (II) each participating Lender of the effective date of the purchase of Term Loans pursuant to such Auction, the Applicable Price, and the aggregate principal amount and the tranches of Term Loans to be purchased at the Applicable Price on such date, (III) each participating Lender of the aggregate principal amount and the tranches of the Term Loans of such Lender to be purchased at the Applicable Price on such date and (IV) if applicable, each participating Lender of any rounding and/or proration pursuant to the second preceding sentence. Each determination by the Auction Agent of the amounts stated in the foregoing notices to the Borrower Representative and Lenders shall be conclusive and binding for all purposes absent manifest error.
(d) Additional Procedures.
(i) Once initiated by an Auction Notice, the Auction Party may not withdraw an Auction other than a Failed Auction. Furthermore, in connection with any Auction, upon submission by a Lender of a Qualifying Bid, such Lender (each, a “Qualifying Lender”) will be obligated to sell the entirety or its allocable portion of the Reply Amount, as the case may be, at the Applicable Price.
(ii) To the extent not expressly provided for herein, each purchase of Term Loans pursuant to an Auction shall be consummated pursuant to procedures consistent with the provisions in this definition, established by the Auction Agent acting in its reasonable discretion and as reasonably agreed by the Borrower.
(iii) In connection with any Auction, the Borrower Representative and the Lenders acknowledge and agree that the Auction Agent may require as a condition to any Auction, the payment of customary fees and expenses by the Auction Party in connection therewith as agreed between the Auction Party and the Auction Agent.
(iv) Notwithstanding anything in any Loan Document to the contrary, for purposes of this definition, each notice or other communication required to be delivered or otherwise provided to the Auction Agent (or its delegate) shall be deemed to have been given upon the Auction Agent’s (or its delegate’s) actual receipt during normal business hours of such notice or communication; provided that any notice or communication actually received outside of normal business hours shall be deemed to have been given as of the opening of business on the next Business Day.
(v) The Borrowers and the Lenders acknowledge and agree that the Auction Agent may perform any and all of its duties under this definition by itself or through any Affiliate of the Auction Agent and expressly consent to any such delegation of duties by the Auction Agent to such Affiliate and the performance of such delegated duties by such Affiliate. The exculpatory provisions pursuant to this Agreement shall apply to each Affiliate of the Auction Agent and its respective activities in connection with any Auction, and any purchase of Term Loans provided for in this definition as well as activities of the Auction Agent.
“Eligible Assignee” means (a) any Lender, (b) any Approved Fund of any Lender, (c) any Affiliate of any Lender, (d) to the extent permitted under Section 9.05(g), any Affiliated Lender and (e) any other Person that is a commercial bank, insurance company, or finance company, financial institution, any fund that invests in loans or any other “accredited investor” (as defined in Regulation D of the Securities Act); provided that in any event, “Eligible Assignee” shall not include (i) any natural
person, (ii) any Disqualified Institution or (iii) except as permitted under Section 9.05(g), Holdings, any Borrower or any of its Affiliates.
“EEA Financial Institution” means (a) any credit institution or investment firm established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition or (c) any financial institution established in an EEA Member Country which is a subsidiary of an institution described in clause (a) or (b) of this definition and is subject to consolidated supervision with its parent.
“EEA Member Country” means any of the member states of the European Union, Iceland, Liechtenstein and Norway.
“EEA Resolution Authority” means any public administrative authority or any person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.
“EMU Legislation” shall mean the legislative measures of the European Union relating to Economic and Monetary Union.
“English Group Member” means each English Loan Party and each Restricted Subsidiary incorporated under the laws of England and Wales.
“English Loan Party” means Holdings, together with any Loan Party incorporated under the laws of England and Wales.
“English Security Documents” means (a) the Holdings Pledge, (b) the English law governed debenture entered into or to be entered into among the Borrower Representative, RB Pharmaceuticals Limited and RB Pharmaceuticals (EU) Limited as chargors and the Administrative Agent as the security trustee for the benefit of the Secured Parties, (c) the English law governed assignment agreement with respect to the Intercompany Notes entered into or to be entered into among the Lux Borrower and the Administrative Agent as the security trustee for the benefit of the Secured Parties and (d) each other English law governed document or instrument which creates or evidences or which is expressed to create or evidence any Lien granted or required to be granted pursuant to Section 5.12 and/or the definition of “Collateral and Guarantee Requirement”, or which is entered into by Holdings or any subsidiary of Holdings to create or evidence, or which is expressed to create or evidence, security for the Secured Obligations.
“English Security Trust Deed” means any English law security trust deed entered into or to be entered into by the Administrative Agent and certain Loan Parties whereby, inter alia, the Administrative Agent declares the rights, interests, benefits and other property comprised in the Liens the subject of the English Security Documents are held on trust for the other Secured Parties, together with each accession agreement with respect thereto.
“Environment” means ambient air, indoor air, surface water, groundwater, drinking water, land surface and subsurface strata & natural resources such as wetlands, flora and fauna.
“Environmental Claim” means any investigation, notice, notice of violation, claim, action, suit, proceeding, demand, abatement order or other order or directive (conditional or otherwise), by any Governmental Authority or any other Person, arising (a) pursuant to or in connection with any actual or alleged violation of any Environmental Law; (b) in connection with any Hazardous Material or
any actual or alleged Hazardous Materials Activity; or (c) in connection with any actual or alleged damage, injury, threat or harm the Environment.
“Environmental Laws” means any and all current or future foreign or domestic, federal or state (or any subdivision of either of them), statutes, ordinances, orders, rules, regulations, judgments, Governmental Authorizations, or any other applicable requirements of Governmental Authorities and the common law relating to (a) environmental matters, including those relating to any Hazardous Materials Activity; or (b) the generation, use, storage, transportation or disposal of or exposure to Hazardous Materials, in any manner applicable to a Borrower or any of its Restricted Subsidiaries or any Facility.
“Environmental Liability” means any liability, contingent or otherwise (including any liability for damages, costs of environmental investigation or remediation, fines, penalties or indemnities), directly or indirectly resulting from or based upon (a) violation of any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the Release or threatened Release of any Hazardous Materials into the Environment or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the rules and regulations promulgated thereunder.
“ERISA Affiliate” means, as applied to any Person, (a) any corporation which is a member of a controlled group of corporations within the meaning of Section 414(b) of the Code of which that Person is a member; and (b) any trade or business (whether or not incorporated) which is a member of a group of trades or businesses under common control within the meaning of Section 414(c) of the Code of which that Person is a member.
“ERISA Event” means (a) a “reportable event” within the meaning of Section 4043 of ERISA and the regulations issued thereunder with respect to any Pension Plan (excluding those for which the 30-day notice period has been waived); (b) the failure to meet the minimum funding standard of Section 412 of the Code with respect to any Pension Plan, or the filing of any request for or receipt of a minimum funding waiver under Section 412 of the Code with respect to any Pension Plan or a failure to make a required contribution to a Multiemployer Plan; (c) the provision by the administrator of any Pension Plan pursuant to Section 4041(a)(2) of ERISA of a notice of intent to terminate such plan in a distress termination described in Section 4041(c) of ERISA; (d) the withdrawal by any of Intermediate Holdings, the Borrowers, any of their Restricted Subsidiaries or any of their respective ERISA Affiliates from any Pension Plan with two or more contributing sponsors or the termination of any such Pension Plan resulting in liability to any of Intermediate Holdings, the Borrowers, any of their Restricted Subsidiaries or any of their respective ERISA Affiliates pursuant to Section 4063 or 4064 of ERISA; (e) the institution by the PBGC of proceedings to terminate any Pension Plan; (f) the imposition of liability on any of Intermediate Holdings, the Borrowers, any of their Restricted Subsidiaries or any of their respective ERISA Affiliates pursuant to Section 4062(e) or 4069 of ERISA or by reason of the application of Section 4212(c) of ERISA; (g) a complete or partial withdrawal (within the meaning of Sections 4203 and 4205 of ERISA) of any of Intermediate Holdings, the Borrowers, any of their Restricted Subsidiaries or any of their respective ERISA Affiliates from any Multiemployer Plan, or the receipt by any of Intermediate Holdings, the Borrowers, any of their Restricted Subsidiaries or any of their respective ERISA Affiliates of notice from any Multiemployer Plan that it is in insolvency pursuant to Section 4245 of ERISA, or that it intends to terminate or has terminated under Section 4041A or 4042 of ERISA or is in “endangered” or “critical” status, within the meaning of Section 432 of the Code or Section 305 of ERISA; (h) a failure by any of Intermediate Holdings, the Borrowers, any of their Restricted Subsidiaries or any of their respective ERISA Affiliates to pay when due (after expiration of any applicable grace
period) any installment payment with respect to withdrawal liability under Section 4201 of ERISA; (i) a determination that any Pension Plan is, or is reasonably expected to be, in “at-risk” status, within the meaning of Section 430(i)(4) of the Code or Section 303(i)(4) of ERISA; or (j) the incurrence of liability or the imposition of a Lien pursuant to Section 436 or 430(k) of the Code or pursuant to ERISA with respect to any Pension Plan.
“Erroneous Payment” has the meaning assigned to it in Article 8.
“Erroneous Payment Deficiency Assignment” has the meaning assigned to it in Article 8.
“Erroneous Payment Impacted Class” has the meaning assigned to it in Article 8.
“Erroneous Payment Return Deficiency” has the meaning assigned to it in Article 8.
“Erroneous Payment Subrogation Rights” has the meaning assigned to it in Article 8.
“EU Bail-In Legislation Schedule” means the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor person), as in effect from time to time.
“Euro” or “€” shall mean the single currency of those member states of the European Union that have the euro as their lawful currency in accordance with EMU Legislation.
“Euro Listing Date” has the meaning assigned to such term in Section 5.19(a).
“European Union” shall mean the political and economic community of European member states with supranational and intergovernmental features, located in Europe.
“Event of Default” has the meaning assigned to such term in Article 7.
“Excess Cash Flow” means, for any Test Period ending on the last day of any Fiscal Year, an amount (if positive) equal to:
(a) the sum, without duplication, of the amounts for such period of the following:
(i) Consolidated Adjusted EBITDA for such period without giving effect to clause (b)(xix) of the definition thereof, plus
(ii) the Consolidated Working Capital Adjustment for such period, plus
(iii) cash gains of the type described in clauses (c), (d), (e), (f) and (g) of the definition of “Consolidated Net Income”, to the extent not otherwise included in calculating Consolidated Adjusted EBITDA (except to the extent such gains consist of proceeds applied pursuant to Section 2.11(b)(ii)), plus
(iv) to the extent not otherwise included in the calculation of Consolidated Adjusted EBITDA for such period, cash payments received by Holdings or any of its Restricted Subsidiaries with respect to amounts deducted from Excess Cash Flow in a prior period pursuant to clause (b)(vii) below, minus
(b) the sum, without duplication, of the amounts for such period of the following:
(i) permanent repayments of long-term Indebtedness, including for purposes of clarity, the current portion of any such Indebtedness (including (x) payments under Section 2.09(b), Section 2.10(a) or (b) and (subject to clause (A) below) Section 2.11(a) (other than the prepayment of Original Term Loans as contemplated in the First Amendment) and (y) prepayments of Initial Term Loans, 2017 Replacement Term Loans, 2021 Replacement Term Loans and Additional Term Loans to the extent (and only to the extent) made with the Net Proceeds of a Prepayment Asset Sale or Net Insurance/Condemnation Proceeds that resulted in an increase to Consolidated Net Income and not in excess of the amount of such increase, but excluding (A) the amount of all deductions and reductions to the amount of mandatory prepayments pursuant to clause (B) of Section 2.11(b)(i), (B) all other repayments or prepayments of the Initial Term Loans, 2017 Replacement Term Loans, 2021 Replacement Term Loans or Additional Term Loans and (C) repayments of the Revolving Loans, any Additional Revolving Loans or loans under any revolving credit facility or arrangement, except to the extent a corresponding amount of the commitments under such revolving credit facility or arrangement are permanently reduced in connection with such repayments), in each case, to the extent not financed with long-term Indebtedness (other than revolving Indebtedness), plus
(ii) without duplication of amounts deducted from Excess Cash Flow pursuant to this clause (ii) or clause (ix) below in respect of a prior period, all Cash payments in respect of capital expenditures as would be reported in the Borrower Representative’s consolidated statement of cash flows made during such period and, at the option of the Borrower Representative, any Cash payments in respect of any such capital expenditures made after such period and prior to the date of the applicable Excess Cash Flow payment (except, in each case, to the extent financed with long-term Indebtedness (other than revolving Indebtedness)), plus
(iii) consolidated interest expense added back pursuant to clause (b)(ii) of the definition of “Consolidated Adjusted EBITDA” to the extent paid in Cash, plus
(iv) Taxes (including pursuant to any Tax sharing arrangement or any Tax distribution) paid and provisions for Taxes, to the extent payable in Cash with respect to such period and added back pursuant to clause (b)(i) of the definition of “Consolidated Adjusted EBITDA”, plus
(v) without duplication of amounts deducted from Excess Cash Flow pursuant to this clause (v) or (ix) below in respect of a prior period, Cash payments made during such period in respect of Permitted Acquisitions and other Investments permitted by Section 6.06 or otherwise consented to by the Required Lenders (other than Investments in (x) Cash and Cash Equivalents and (y) the Borrowers or any of their Restricted Subsidiaries), or, at the option of the Borrower Representative, any Cash payments in respect of Permitted Acquisitions and other Investments permitted by Section 6.06 or otherwise consented to by the Required Lenders (other than Investments in (x) Cash and Cash Equivalents and (y) the Borrowers or any of their Restricted Subsidiaries) made after such period and prior to the date of the applicable Excess Cash Flow payment (except, in each case, to the extent financed with long-term Indebtedness (other than revolving Indebtedness)), plus
(vi) the aggregate amount of all Restricted Payments made under Sections 6.04(a)(i), (ii), (iv) and (x) or otherwise consented to by the Required Lenders,
in each case to the extent actually paid in Cash during such period, or, at the option of the Borrower Representative (without duplication of amounts deducted from Excess Cash Flow in respect of a prior period), made after such period and prior to the date of the applicable Excess Cash Flow payment (except, in each case, to the extent financed with long-term Indebtedness (other than revolving Indebtedness)), plus
(vii) amounts added back under clause (b)(ix)(B)(2) or (b)(xxi) of the definition of “Consolidated Adjusted EBITDA” to the extent such amounts have not yet been received by the Borrowers or their Restricted Subsidiaries, plus
(viii) an amount equal to all expenses, charges and losses either (A) excluded in calculating Consolidated Net Income or (B) added back in calculating Consolidated Adjusted EBITDA, in the case of clauses (A) and (B), to the extent paid in Cash, plus
(ix) without duplication of amounts deducted from Excess Cash Flow in respect of a prior period, at the option of the Borrower Representative, the aggregate consideration required to be paid in Cash by the Borrowers or their Restricted Subsidiaries pursuant to binding contracts (the “Contract Consideration”) entered into prior to or during such period relating to capital expenditures, acquisitions or Investments, in each case permitted by Section 6.06 (other than Investments in (x) Cash and Cash Equivalents and (y) any Borrower or any of its Restricted Subsidiaries) to be consummated or made during the period of four consecutive Fiscal Quarters of the Borrowers following the end of such period (except, in each case, to the extent financed with long-term Indebtedness (other than revolving Indebtedness)); provided that to the extent the aggregate amount actually utilized to finance such capital expenditures, acquisitions or Investments during such subsequent period of four consecutive Fiscal Quarters is less than the Contract Consideration, the amount of the resulting shortfall shall be added to the calculation of Excess Cash Flow at the end of such subsequent period of four consecutive Fiscal Quarters, plus
(x) to the extent not expensed (or exceeding the amount expensed) during such period or not deducted (or exceeding the amount deducted) in calculating Consolidated Net Income, the aggregate amount of expenditures, fees, costs and expenses paid in Cash by the Borrowers and their Restricted Subsidiaries during such period, other than to the extent financed with long-term Indebtedness (other than revolving Indebtedness), plus
(xi) Cash payments (other than in respect of Taxes, which are governed by clause (iv) above) made during such period for any liability the accrual of which in a prior period did not increase Excess Cash Flow in such prior period (provided there was no other add-back to Consolidated Adjusted EBITDA or deduction to Excess Cash Flow related to such payment), except to the extent financed with long-term Indebtedness (other than revolving Indebtedness), plus
(xii) Cash expenditures made in respect of any Hedge Agreement during such period to the extent (A) not otherwise deducted in the calculation of Consolidated Net Income or added back to Consolidated Adjusted EBITDA and (B) not financed with long-term Indebtedness (other than revolving Indebtedness), plus
(xiii) amounts paid in Cash (except to the extent financed with long-term Indebtedness (other than revolving Indebtedness)) during such period on account of (A)
items that were accounted for as non-Cash reductions of Consolidated Net Income or Consolidated Adjusted EBITDA in a prior period (and were not expensed during such period in calculating Consolidated Net Income or added back in the calculation of Consolidated Adjusted EBITDA) and (B) reserves or amounts established in purchase accounting to the extent such reserves or amounts are added back to, or not deducted from, Consolidated Net Income, plus
(xiv) without duplication of clause (b)(i) above, cash payments made by Holdings or its Restricted Subsidiaries during such period in respect of long-term liabilities, including for purposes of clarity, the current portion of any such liabilities (other than Indebtedness) of the Borrowers or their Restricted Subsidiaries, except to the extent such cash payments were (A) deducted in the calculation of Consolidated Net Income or added back to Consolidated Adjusted EBITDA for such period or (B) financed with long-term Indebtedness (other than revolving Indebtedness).
“Exchange Act” means the Securities Exchange Act of 1934 and the rules and regulations of the SEC promulgated thereunder.
“Excluded Assets” means each of the following:
(a) any contract, instrument, lease, licenses, agreement or other document as to which the grant of a security interest would (i) constitute a violation of a restriction in favor of a third party (other than Indivior plc, Intermediate Holdings, a Borrower or any of their Restricted Subsidiaries) or result in the abandonment, invalidation or unenforceability of any right of the relevant Loan Party, unless and until any required consents shall have been obtained, or (ii) result in a breach, termination (or a right of termination) or default under such contract, instrument, lease, license, agreement or other document (including pursuant to any “change of control” or similar provision); provided, however, that any such asset will only constitute an Excluded Asset under clause (i) or clause (ii) above to the extent such violation or breach, termination (or right of termination) or default would not be rendered ineffective pursuant to Sections 9-406, 9-407, 9-408 or 9-409 of the UCC (or any successor provision or provisions) of any relevant jurisdiction or any other applicable law; provided further that any such asset shall cease to constitute an Excluded Asset at such time as the condition causing such violation, breach, termination (or right of termination) or default or right to amend or require other actions no longer exists and to the extent severable, the security interest granted under the applicable Collateral Document shall attach immediately to any portion of such contract, instrument, lease, license, agreement or document that does not result in any of the consequences specified in clauses (i) and (ii) above,
(b) the Capital Stock of any (i) Immaterial Subsidiary (except to the extent the security interest in such Capital Stock may be perfected by the filing of a Form UCC-1 (or similar) financing statement or be created by the execution and delivery by any Loan Party owning such Capital Stock of a fixed and floating charge or similar instrument providing for the creation of a security interest in all or substantially all of the assets of such Loan Party under the laws of any applicable jurisdiction), (ii) Unrestricted Subsidiary (except to the extent the security interest in such Capital Stock may be perfected by the filing of a Form UCC-1 (or similar) financing statement or be created by the execution and delivery by any Loan Party owning such Capital Stock of a fixed and floating charge or similar instrument providing for the creation of a security interest in all or substantially all of the assets of such Loan Party under the laws of any applicable jurisdiction), (iii) not-for-profit subsidiary, and (iv) Special Purpose Securitization Subsidiary,
(c) any intent-to-use (or similar) Trademark application prior to the filing and acceptance of a “Statement of Use”, “Amendment to Allege Use” or similar filing with respect thereto, only to the extent, if any, that, and solely during the period, in which, if any, the grant of a security interest therein may impair the validity or enforceability of such intent-to-use Trademark application under applicable law,
(d) any asset or property, the grant or perfection of a security interest in which would (A) require any governmental consent, approval, license or authorization that has not been obtained, (B) be prohibited by enforceable anti-assignment provisions of applicable Requirements of Law, except, in the case of this clause (B), to the extent such prohibition would be rendered ineffective under the UCC or other applicable law notwithstanding such prohibition, or (C) be prohibited by enforceable anti-assignment provisions of contracts governing such asset in existence on the Closing Date (or on the date of acquisition of the relevant asset (and in each case not entered into in anticipation of the Closing Date or such acquisition and except, in each case, to the extent that term in such contract providing for such prohibition purports to prohibit the granting of a security interest over all assets of such Loan Party or any other Loan Party)) other than to the extent such prohibition would be rendered ineffective under the UCC or other applicable law,
(e) (i) any leasehold Real Estate Asset and (ii) any owned Real Estate Asset that is not a Material Real Estate Asset,
(f) any interest in any partnership, joint venture or non-Wholly-Owned Subsidiary which cannot be pledged without (i) the consent of one or more third parties other than Indivior plc, Intermediate Holdings, a Borrower or any of their Restricted Subsidiaries (after giving effect to Section 9-406, 9-407, 9-408 or 9-409 of the UCC (or any successor provision or provisions) of any relevant jurisdiction or any other applicable law) or (ii) giving rise to a “right of first refusal”, a “right of first offer” or a similar right that may be exercised by any third party (other than Indivior plc, Intermediate Holdings, a Borrower or any of their Restricted Subsidiaries),
(g) any Margin Stock,
(h) [Reserved],
(i) Commercial Tort Claims with a value (as reasonably estimated by the Borrower Representative) of less than $5,000,000,
(j) any Cash or Cash Equivalents comprised of (a) funds specially and exclusively used or to be used for payroll and payroll taxes and other employee benefit payments to or for the benefit of any Loan Party’s employees, (b) funds used or to be used to pay all Taxes required to be collected, remitted or withheld (including, without limitation, U.S. federal and state withholding Taxes (including the employer’s share thereof)) and (c) any other funds which any Loan Party holds as an escrow or fiduciary for the benefit of another Person,
(k) any accounts receivable and related assets that are sold or disposed of in connection with any factoring or similar arrangement permitted by this Agreement, including Permitted Securitization Financings,
(l) any motor vehicle or other asset subject to a certificate of title (except to the extent a security interest therein may be perfected or created by the execution and delivery by any Loan Party of a fixed and floating change or similar instrument providing for the creation of a
security interest in all or substantially all of the assets of such Loan Party under the laws of any applicable jurisdiction), and
(m) any asset with respect to which the Administrative Agent and the relevant Loan Party have reasonably determined that the cost, burden, difficulty or consequence (including any effect on the ability of the relevant Loan Party to conduct its operations and business in the ordinary course of business) of obtaining or perfecting a security interest therein outweighs the benefit of a security interest to the relevant Secured Parties afforded thereby.
“Excluded Debt Contribution” has the meaning assigned to such term in Section 6.01(r)
“Excluded Subsidiary” means:
(a) any Restricted Subsidiary that is not a Wholly-Owned Subsidiary,
(b) any Immaterial Subsidiary,
(c) any Restricted Subsidiary that is prohibited by law, regulation or contractual obligation existing on the Closing Date or at the time such Restricted Subsidiary becomes a subsidiary (which Contractual Obligation was not entered into in contemplation of such Restricted Subsidiary becoming a subsidiary) from providing a Loan Guaranty or that would require a governmental (including regulatory) consent, approval, license or authorization to provide a Loan Guaranty (unless such consent has been received, provided that the Borrowers shall not be under any obligation to seek such consent),
(d) any not-for-profit subsidiary,
(e) any Special Purpose Securitization Subsidiary,
(f) any captive insurance subsidiary;
(g) [Reserved],
(h) any Unrestricted Subsidiary,
(i) in the case of any obligation under any Swap Obligation, any Subsidiary of a Borrower that is not an “Eligible Contract Participant” as defined under the Commodity Exchange Act (determined after giving effect to Section 3.21 of the Loan Guaranty and any other “keepwell” support or other agreement for the benefit of such Subsidiary, and
(j) any other Restricted Subsidiary with respect to which, in the reasonable judgment of the Administrative Agent and the Borrower Representative, the burden or cost of providing a Loan Guaranty outweighs the benefits afforded thereby.
“Excluded Swap Obligation” means, with respect to any Guarantor under the Loan Guaranty, any Swap Obligation if, and to the extent that, all or a portion of the Loan Guaranty of such Guarantor of, or the grant by such Guarantor of a security interest to secure, such Swap Obligation (or any Loan Guaranty thereof) is or becomes illegal under the Commodity Exchange Act or any rule, regulation or order of the Commodity Futures Trading Commission (or the application or official interpretation of any thereof) by virtue of such Guarantor’s failure for any reason to constitute an “eligible contract participant” as defined in the Commodity Exchange Act and the regulations thereunder (determined after
giving effect to Section 3.21 of the Loan Guaranty and any other “keepwell,” support or other agreement for the benefit of such Guarantor) at the time the Loan Guaranty of such Guarantor or the grant of such security interest becomes effective with respect to such Swap Obligation. If a Swap Obligation arises under a master agreement governing more than one swap, such exclusion shall apply only to the portion of such Swap Obligation that is attributable to swaps for which such Loan Guaranty or security interest is or becomes illegal.
“Excluded Taxes” means, with respect to the Administrative Agent, any Lender or Issuing Bank, or any other recipient of any payment to be made by or on account of any obligation of any Loan Party hereunder, (a) Taxes imposed on (or measured by) its net income, profits, gains or net assets or franchise Taxes (i) by the jurisdiction under the laws of which such recipient is organized or in which its principal office is located or (solely in the case of any Loan made to a U.K. Revolver Borrower) in which it is resident for tax purposes or, in the case of any Lender, in which its applicable lending office is located or (ii) that are Other Connection Taxes, (b) any branch profits taxes imposed under Section 884(a) of the Code by the U.S. or any similar tax imposed by any other jurisdiction described in clause (a), (c) in the case of any Foreign Lender, any U.S. federal withholding tax that is imposed on amounts payable to such Foreign Lender pursuant to a Requirement of Law in effect at the time such Foreign Lender becomes a party to this Agreement (or designates a new lending office), except (i) pursuant to an assignment or designation of a new lending office under Section 2.19 and (ii) to the extent that such Foreign Lender (or its assignor, if any) was entitled, immediately prior to the designation of a new lending office (or assignment), to receive additional amounts from any Loan Party with respect to such withholding tax pursuant to Section 2.17, (d) any tax imposed as a result of a failure by the Administrative Agent, any Lender or any Issuing Bank to comply with Section 2.17(k) and (e) any U.S. withholding tax under FATCA.
“Existing Euro Term Loans” has the meaning assigned to such term in the Second Amendment.
“Existing Term Loans” has the meaning assigned to such term in the Second Amendment.
“Existing USD Term Loans” has the meaning assigned to such term in the Second Amendment.
“Extended Revolving Credit Commitment” has the meaning assigned to such term in Section 2.23(a)(ii).
“Extended Revolving Loans” has the meaning assigned to such term in Section 2.23(a)(ii).
“Extended Term Loans” has the meaning assigned to such term in Section 2.23(a).
“Extension” has the meaning assigned to such term in Section 2.23(a).
“Extension Offer” has the meaning assigned to such term in Section 2.23(a).
“Facility” means any real property (including all buildings, fixtures or other improvements located thereon) now, hereafter or, except with respect to Articles 5 and 6, hereof owned, leased, operated or used by a Borrower or any of its Restricted Subsidiaries.
“Failed Auction” has the meaning assigned to such term in the definition of “Dutch Auction”.
“FATCA” means Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof, any agreements entered into pursuant to Section 1471(b)(1) of the Code (or any amended or successor version described above), and any treaty, law, regulation or other official guidance enacted in any other jurisdiction relating to any intergovernmental agreement between the U.S. and any other jurisdiction that facilitates the implementation of such Sections of the Code.
“FCPA” has the meaning assigned to such term in Section 3.19.
“Federal Funds Effective Rate” means, for any day, the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average of the quotations for such day for such transactions received by Administrative Agent from three Federal funds brokers of recognized standing selected by it; provided, that, if the Federal Funds Effective Rate shall be less than zero, such rate shall be deemed to be zero for purposes of this Agreement.
“Fee Letter” means that certain Fee Letter, dated as of November 15, 2014, by and among, inter alios, the Borrower Representative, the Arrangers and the Administrative Agent.
“Financial Support Direction” means a financial support direction issued by the Pensions Regulator under section 43 of the Pensions Act 2004.
“First Amendment” means that certain First Amendment to Credit Agreement, dated as of March 16, 2015, among the Borrowers, the Administrative Agent and the Lenders party thereto.
“First Amendment Effective Date” has the meaning set forth in the First Amendment.
“First Lien Leverage Ratio” means the ratio, as of any date of determination, of (a) Consolidated First Lien Debt as of such date to (b) Consolidated Adjusted EBITDA for the Test Period then most recently ended or the Test Period otherwise specified where the term “First Lien Leverage Ratio” is used in this Agreement, in each case for the Borrowers and their Restricted Subsidiaries on a consolidated basis.
“First Lien/Second Lien Intercreditor Agreement” means an intercreditor agreement substantially in the form of Exhibit O hereto, or such other customary form reasonably acceptable to the Administrative Agent and the Borrower Representative, as such document may be amended, restated, supplemented or otherwise modified from time to time.
“First Priority” means, with respect to any Lien purported to be created in any Collateral pursuant to any Collateral Document, that, subject to any applicable Intercreditor Agreement such Lien is senior in priority to any other Lien to which such Collateral is subject, other than any Permitted Lien (excluding any Permitted Lien that is expressly required by this Agreement to be subordinated to the Liens purported to be created in any Collateral pursuant to any Collateral Document).
“Fiscal Quarter” means a fiscal quarter of any Fiscal Year.
“Fiscal Year” means the fiscal year of the Borrowers ending December 31 of each calendar year.
“Fixed Amounts” has the meaning assigned to such term in Section 1.12(c).
“Flexible Apportionment Arrangement” means the flexible apportionment arrangement in relation to the Reckitt Benckiser Pension Fund in the form attached hereto as Exhibit Q to this Agreement.
“Flood Hazard Property” means any parcel of any Material Real Estate Asset subject to a Mortgage located in the U.S. in an area designated by the Federal Emergency Management Agency as having special flood or mud slide hazards.
“Flood Insurance Laws” means, collectively, (i) the National Flood Insurance Act of 1968 as now or hereafter in effect or any successor statute thereto, (ii) the Flood Disaster Protection Act of 1973 as now or hereafter in effect or any successor statue thereto, (iii) the National Flood Insurance Reform Act of 1994 as now or hereafter in effect or any successor statute thereto, (iv) the Flood Insurance Reform Act of 2004 as now or hereafter in effect or any successor statute thereto and (iv) Biggert-Waters Flood Insurance Reform Act of 2012 as now or hereafter in effect or any successor statute thereto.
“Floor” shall mean a rate of interest equal to 0.75%.
“Foreign Lender” means any Lender that is not a “United States person” within the meaning of Section 7701(a)(30) of the Code.
“Foreign Loan Party” has the meaning assigned to such term in Section 9.23.
“Foreign Subsidiary” means any Restricted Subsidiary that is not a Domestic Subsidiary.
“Fourth Amendment” means that certain Fourth Amendment to Credit Agreement, dated as of April 27, 2022, among the Borrowers, the other Loan Parties party thereto, the Administrative Agent and the Lenders party thereto.
“Fourth Amendment Effective Date” has the meaning set forth in the Fourth Amendment.
“Funding Account” has the meaning assigned to such term in Section 2.03(g).
“GAAP” means generally accepted accounting principles in the U.K., including IFRS, in effect and applicable to the accounting period in respect of which reference to GAAP is made; provided, however, that Holdings may (or may as a result of the election of the Parent Company) at any time, upon no less than 10 days written notice to the Administrative Agent, make a one-time irrevocable election to prepare its financial statements in accordance with generally accepted accounting principles in the United States, in which case "GAAP" shall, from and after the date of such election (to be set forth in such written notice) mean generally accepted accounting principles in the United States, in effect and applicable to the accounting period in respect of which reference to GAAP is made; provided that, if the Parent Company notifies the Administrative Agent that the Parent Company requests an amendment to any provision hereof to eliminate the effect of any change occurring as a result of the adoption of generally accepted accounting principles in the United States or in the application thereof on the operation of such provision (or if the Administrative Agent notifies the Parent Company that the Administrative Agent or the Required Lenders request an amendment to any provision hereof for such purpose), then such provision shall be interpreted on the basis of IFRS as otherwise required above (and without regard
to this sentence) until such notice shall have been withdrawn or such provision amended in accordance herewith.
“General Intangibles” has the meaning set forth in Article 9 of the UCC.
“Global Intercompany Note” means the Global Intercompany Note in the form attached hereto as Exhibit H.
“Governmental Authority” means any federal, state, municipal, national or other government, governmental department, commission, board, bureau, court, agency or instrumentality or political subdivision thereof or any entity or officer exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to any government or any court, in each case whether associated with a state or locality of the U.S., the U.S., or a foreign government or any other political subdivision thereof (including any supra-national bodies such as the European Union or the European Central Bank).
“Governmental Authorization” means any permit, license, authorization, plan, directive, consent order or consent decree of or from any Governmental Authority.
“Granting Lender” has the meaning assigned to such term in Section 9.05(e).
“Guarantee” of or by any Person (the “Guarantor”) means any obligation, contingent or otherwise, of the Guarantor guaranteeing or having the economic effect of guaranteeing any Indebtedness or other monetary obligation of any other Person (the “Primary Obligor”) in any manner and including any obligation of the Guarantor, direct or indirect, (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other monetary obligation or to purchase (or to advance or supply funds for the purchase of) any security for the payment thereof, (b) to purchase or lease property, securities or services for the purpose of assuring the owner of such Indebtedness or other monetary obligation of the payment thereof, (c) to maintain working capital, equity capital or any other financial statement condition or liquidity of the Primary Obligor so as to enable the Primary Obligor to pay such Indebtedness or other monetary obligation, (d) as an account party in respect of any letter of credit or letter of guaranty issued to support such Indebtedness or monetary obligation, (e) entered into for the purpose of assuring in any other manner the obligee in respect of such Indebtedness or other monetary obligation of the payment or performance thereof or to protect such obligee against loss in respect thereof (in whole or in part) or (f) secured by any Lien on any assets of such Guarantor securing any Indebtedness or other monetary obligation of any other Person, whether or not such Indebtedness or monetary other obligation is assumed by such Guarantor (or any right, contingent or otherwise, of any holder of such Indebtedness or other monetary obligation to obtain any such Lien); provided that the term “Guarantee” shall not include endorsements for collection or deposit in the ordinary course of business, or customary and reasonable indemnity obligations in effect on the Closing Date or entered into in connection with any acquisition, Disposition or other transaction permitted under this Agreement (other than such obligations with respect to Indebtedness). The amount of any Guarantee shall be deemed to be an amount equal to the stated or determinable amount of the related primary obligation, or portion thereof, in respect of which such Guarantee is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by the guaranteeing Person in good faith.
“Hazardous Materials” means any chemical, material, substance or waste, or any constituent thereof, which is prohibited, limited or regulated as “toxic”, “hazardous” or as a “pollutant” or “contaminant” or words of similar meaning or effect by any Environmental Law or any Governmental Authority.
“Hazardous Materials Activity” means any past, current, proposed or threatened activity, event or occurrence involving any Hazardous Material, including the use, manufacture, possession, storage, holding, presence, existence, location, Release, threatened Release, discharge, placement, generation, transportation, processing, construction, treatment, abatement, removal, remediation, disposal, disposition or handling of any Hazardous Material, and any corrective action or response action with respect to any of the foregoing.
“Hedge Agreement” means any agreement with respect to any Derivative Transaction between any Loan Party or any Restricted Subsidiary and any other Person.
“Hedging Obligations” means, with respect to any Person, the obligations of such Person under any Hedge Agreement.
“Holdings” means (a) prior to the Intermediate Holdings Joinder Date, Indivior plc, a public limited company organized under the laws of England and Wales and (b) from and after the Intermediate Holdings Joinder Date, Intermediate Holdings (including, in each case, any successor to Holdings following a transaction not prohibited by any Loan Document); provided that, solely for purposes of the definition of “Change of Control”, “Holdings” shall at all times refer to Indivior plc (including any successor thereto following a transaction not prohibited by any Loan Document).
“Holdings Pledge” means the mortgage over the shares in RBP Global Holdings Limited, substantially in the form of Exhibit P, among Indivior plc and the Administrative Agent for the benefit of the Secured Parties.
“IFRS” means the International Financial Reporting Standards promulgated from time to time by the International Accounting Standards Board (or any successor board or agency, together the “IASB”) and as adopted in the United Kingdom and statements and pronouncements of the IASB or in such other statements by such other entity as have been approved by a significant segment of the accounting profession, which are in effect from time to time.
“Immaterial Subsidiary” means, as of any date, any Restricted Subsidiary of a Borrower (a) that does not have assets in excess of 5.0% of Consolidated Total Assets of the Borrowers and their Restricted Subsidiaries and (b) that does not contribute Consolidated Adjusted EBITDA in excess of 5.0% of the Consolidated Adjusted EBITDA of the Borrowers and their Restricted Subsidiaries, in each case, as of the last day of the most recently ended Test Period; provided that the Consolidated Total Assets and Consolidated Adjusted EBITDA (as so determined) of all Immaterial Subsidiaries shall not exceed 10.0% of Consolidated Total Assets and 10.0% of Consolidated Adjusted EBITDA, in each case, of the Borrowers and their Restricted Subsidiaries for the relevant Test Period; provided further that, at all times prior to the first delivery of financial statements pursuant to Section 5.01(a) or (b), this definition shall be applied based on the pro forma consolidated financial statements of the Borrower Representative delivered pursuant to Section 4.01.
“Immediate Family Member” means, with respect to any individual, such individual’s child, stepchild, grandchild or more remote descendant, parent, stepparent, grandparent, spouse, former spouse, domestic partner, former domestic partner, sibling, mother-in-law, father-in-law, son-in-law and daughter-in-law (including adoptive relationships), any trust, partnership or other bona fide estate-planning vehicle the only beneficiaries of which are any of the foregoing individuals, such individual’s estate (or an executor or administrator acting on its behalf), heirs or legatees or any private foundation or fund that is controlled by any of the foregoing individuals or any donor-advised fund of which any such individual is the donor.
“Increased Cost” has the meaning assigned to such term in Section 2.15.
“Incremental Cap” means:
(a) (i) $75,000,000 less (ii) the aggregate principal amount of all Incremental Facilities and Incremental Equivalent Debt incurred or issued in reliance on clause (a)(i) of this definition, plus
(b) in the case of any Incremental Facility that effectively extends the Maturity Date with respect to any Class of Loans and/or commitments hereunder, an amount equal to the portion of the relevant Class of Loans or commitments that will be replaced by such Incremental Facility, plus
(c) in the case of any Incremental Facility that effectively replaces any Revolving Credit Commitment terminated in accordance with Section 2.19(b), an amount equal to the relevant terminated Revolving Credit Commitment, plus
(d) the amount of any optional prepayment of any Loan in accordance with Section 2.11(a) (other than the prepayment of Original Term Loans as contemplated in the First Amendment) and/or the amount of any permanent reduction of any Revolving Credit Commitment or Additional Revolving Commitment so long as, in the case of any optional prepayment, such prepayment was not funded (i) with the proceeds of any long-term Indebtedness (other than revolving Indebtedness) or (ii) with the proceeds of any Incremental Facility incurred in reliance on clause (b) above, plus
(e) an unlimited amount so long as, in the case of this clause (e), (i) if such Incremental Facility is secured by a Lien on all or any portion of the Collateral that ranks pari passu with the Lien securing the Secured Obligations on the Third Amendment Effective Date, the First Lien Leverage Ratio would not exceed 2.00:1.00 (it being understood and agreed that any Indebtedness incurred under this clause (e)(i), together with any permitted refinancing indebtedness (and successive permitted refinancing indebtedness) with respect thereto, shall at all times be included in the calculation of the First Lien Leverage Ratio unless such Indebtedness is separately justified under clause (e)(ii) below) or (ii) if such Incremental Facility is unsecured or secured by a Lien on all or any portion the Collateral that ranks junior to the Lien securing the Secured Obligations on the Third Amendment Effective Date, the Total Leverage Ratio would not exceed 3.00:1.00, in each case of clauses (i) through (ii), calculated on a Pro Forma Basis, including the application of the proceeds thereof (determined on the basis of the financial statements for the most recently ended Test Period), and, in the case of any Incremental Revolving Facility, assuming a full drawing under such Incremental Revolving Facility.
Any Incremental Facility shall be deemed to have been incurred in reliance on clause (d) above (to the extent capacity exists thereunder) prior to any amounts under clause (a) or (e) above. Any Incremental Facility shall be deemed to have been incurred in reliance on clause (e) (to the extent capacity exists thereunder) above prior to any amounts under clause (a) above, unless the Borrower Representative specifies otherwise.
“Incremental Commitment” means any commitment made by a Lender to provide all or any portion of any Incremental Facility or Incremental Loans.
“Incremental Equivalent Debt” has the meaning assigned to such term in Section 6.01(z).
“Incremental Facilities” has the meaning assigned to such term in Section 2.22(a).
“Incremental Loans” has the meaning assigned to such term in Section 2.22(a).
“Incremental Revolving Commitment” means any commitment made by a Lender to provide all or any portion of any Incremental Revolving Facility.
“Incremental Revolving Facility” has the meaning assigned to such term in Section 2.22(a).
“Incremental Revolving Facility Lender” means, with respect to any Incremental Revolving Facility, each Revolving Lender providing any portion of such Incremental Revolving Facility.
“Incremental Revolving Loans” has the meaning assigned to such term in Section 2.22(a).
“Incremental Term Facility” has the meaning assigned to such term in Section 2.22(a).
“Incremental Term Loans” has the meaning assigned to such term in Section 2.22(a).
“Incremental Term Loan Borrowing Date” means, with respect to each Class of Incremental Term Loans, each date on which Incremental Term Loans of such Class are incurred pursuant to Section 2.01(b) or as otherwise specified in any amendment providing for such Class of Incremental Term Loans in accordance with Section 2.22.
“Incurrence-Based Amounts” has the meaning assigned to such term in Section 1.12(c).
“Indebtedness” as applied to any Person means, without duplication, (a) all indebtedness for borrowed money; (b) that portion of obligations with respect to Capital Leases to the extent recorded as a liability on a balance sheet (excluding the footnotes thereto) of such Person prepared in accordance with GAAP; (c) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments to the extent the same would appear as a liability on a balance sheet (excluding the footnotes thereto) of such Person prepared in accordance with GAAP; (d) any obligation owed for all or any part of the deferred purchase price of property or services (excluding (w) any earn out obligation or purchase price adjustment until such obligation (A) becomes a liability on the statement of financial position or balance sheet (excluding the footnotes thereto) in accordance with GAAP and (B) has not been paid within 30 days after becoming due and payable, (x) any such obligations incurred under ERISA, (y) accrued expenses and trade accounts payable in the ordinary course of business (including on an inter-company basis) and (z) liabilities associated with customer prepayments and deposits), which purchase price is (i) due more than six months from the date of incurrence of the obligation in respect thereof or (ii) evidenced by a note or similar written instrument; (e) all Indebtedness of others secured by any Lien on any property or asset owned or held by such Person regardless of whether the Indebtedness secured thereby shall have been assumed by such Person or is non-recourse to the credit of such Person; (f) the face amount of any letter of credit issued for the account of such Person or as to which such Person is otherwise liable for reimbursement of drawings; (g) the Guarantee by such Person of the Indebtedness of another; (h) all obligations of such Person in respect of any Disqualified Capital Stock and (i) all net obligations of such Person in respect of any Derivative Transaction, including any Hedge Agreement, whether or not entered into for hedging or speculative purposes; provided that (i) in no event shall obligations under any Derivative Transaction be deemed “Indebtedness” for any calculation of any financial ratio under this Agreement (except to the extent of any unpaid or settlement amounts then due thereunder) and (ii) the amount of Indebtedness of any Person for purposes of clause (e) shall be deemed
to be equal to the lesser of (A) the aggregate unpaid amount of such Indebtedness and (B) the fair market value of the property encumbered thereby as determined by such Person in good faith. For all purposes hereof, the Indebtedness of any Person shall include the Indebtedness of any partnership or any joint venture (other than any joint venture that is itself a corporation or limited liability company) in which such Person is a general partner or a joint venturer, except to the extent such Person’s liability for such Indebtedness is otherwise limited and only to the extent such Indebtedness would otherwise be included in the calculation of Consolidated Total Debt; provided that, notwithstanding anything herein to the contrary, the term “Indebtedness” shall not include, and shall be calculated without giving effect to, the effects of Accounting Standards Codification Topic 815 and related interpretations to the extent such effects would otherwise increase or decrease an amount of Indebtedness for any purpose hereunder as a result of accounting for any embedded derivatives created by the terms of such Indebtedness and any such amounts that would have constituted Indebtedness hereunder but for the application of this proviso shall not be deemed an incurrence of Indebtedness hereunder. Notwithstanding the foregoing, Indebtedness of the Borrowers and their Restricted Subsidiaries shall exclude (1) operating leases, (2) liabilities under vendor agreements to the extent such liabilities may be satisfied exclusively through non-cash means such as purchase volume earning credits, (3) reserves for deferred taxes and (4) for all purposes other than for purposes of Article 6 or 7 (or any defined term used therein), intercompany indebtedness among Holdings and its Restricted Subsidiaries. To the extent not otherwise included, Indebtedness shall include the amount of any Receivables Net Investment.
“Indemnified Person” has the meaning assigned to such term in Section 9.03(b).
“Indemnified Taxes” means (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of any Loan Party under any Loan Document and (b) to the extent not otherwise described in clause (a), Other Taxes.
“Information” has the meaning set forth in Section 3.11(a).
“Initial Euro Term Lender” means (a) as of the First Amendment Effective Date, each Person that has executed and delivered in its capacity as an “Initial Euro Term Lender” a counterpart of the First Amendment to the Administrative Agent in accordance with the terms thereof and (b) at any time thereafter, any Lender with an outstanding Initial Euro Term Loan.
“Initial Euro Term Loan Commitment” means, with respect to each Initial Euro Term Lender, the commitment of such Initial Euro Term Lender to make Initial Euro Term Loans hereunder in an aggregate amount not to exceed the amount set forth opposite such Initial Euro Term Lender’s name on Schedule 1.01(aa) hereto, as the same may be (a) reduced from time to time pursuant to Section 2.09 and (b) reduced or increased from time to time pursuant to (i) assignments by or to such Initial Euro Term Lender pursuant to Section 9.05 or (ii) an Additional Term Commitment providing for the making of additional Initial Euro Term Loans. The aggregate amount of the Initial Euro Term Lenders’ Initial Euro Term Loan Commitments is €100,000,000.
“Initial Euro Term Loans” means the term loans made by the Initial Euro Term Lenders to the Original Term Borrowers pursuant to Section 2.01(d) and the First Amendment.
“Initial Revolving Loans” means the Revolving Loans made by the Revolving Lenders to the Revolver Borrower prior to the Second Amendment Effective Date pursuant to Section 2.01(a)(ii).
“Initial Term Loan Commitment” means, with respect to each Term Lender, the commitment of such Term Lender to make Original Term Loans hereunder in an aggregate amount not to exceed the amount set forth opposite such Term Lender’s name on the Commitment Schedule, as the
same may be (a) reduced from time to time pursuant to Section 2.09 and (b) reduced or increased from time to time pursuant to (i) assignments by or to such Term Lender pursuant to Section 9.05 or (ii) an Additional Term Commitment providing for the making of additional Initial Term Loans. The aggregate amount of the Term Lenders’ Initial Term Loan Commitments is $750,000,000.
“Initial Term Loan Maturity Date” means the date that is five years after the Closing Date.
“Initial Term Loans” means (a) prior to the First Amendment Effective Date, the Original Term Loans and (b) upon and following the First Amendment Effective Date, collectively, (i) the Initial USD Term Loans and (ii) the Initial Euro Term Loans.
“Initial USD Term Loans” means the Original Term Loans, other than the portion thereof that is prepaid pursuant to Section 4(f) of the First Amendment.
“Intercompany Notes” has the meaning assigned to such term in the definition of “Intercompany Proceeds Loan”.
“Intercompany Proceeds Loan” means the intercompany loan made by the Lux Borrower with respect to proceeds of Original Term Loans and Initial Euro Term Loans (to the extent permitted by Section 5.11) to the Borrower Representative; provided that (a) the Intercompany Proceeds Loan shall be unsecured, (b) the Intercompany Proceeds Loan shall be evidenced by one or more notes (any such notes, the “Intercompany Notes”) and shall be payable to (and at all times owned by) the Lux Borrower, (c) each such Intercompany Note is delivered and pledged to the Administrative Agent pursuant to the Collateral Documents and (d) each such Intercompany Note (and any related documentation) is in form and substance reasonably satisfactory to the Administrative Agent.
“Intercreditor Agreement” means any Permitted Junior Intercreditor Agreement or any Permitted Pari Passu Intercreditor Agreement.
“Interest Election Request” means a request by a Borrower in the form of Exhibit D or another form reasonably acceptable to the Administrative Agent to convert or continue a Borrowing in accordance with Section 2.08.
“Interest Payment Date” means (a) with respect to any ABR Loan, the last Business Day of each March, June, September and December ((i) prior to the Second Amendment Effective Date, commencing on March 31, 2015, (ii) after the Second Amendment Effective Date and prior to the Third Amendment Effective Date, commencing on March 31, 2018 and (iii) after the Third Amendment Effective Date, commencing on September 30, 2021) and the Revolving Credit Maturity Date or the maturity date applicable to such Loan and (b) with respect to any SOFR Loan, the last day of the Interest Period applicable to the Borrowing of which such Loan is a part and, in the case of a SOFR Borrowing with an Interest Period of more than three months’ duration, each day that would have been an Interest Payment Date had successive Interest Periods of three months’ duration been applicable to such Borrowing.
“Interest Period” means with respect to any SOFR Borrowing, the period commencing on the date of such Borrowing and ending on the numerically corresponding day in the calendar month that is one, three or six months thereafter, as the applicable Borrower may elect (in each case, subject to the availability thereof); provided that (i) if any Interest Period would end on a day other than a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless such next succeeding Business Day would fall in the next calendar month, in which case such Interest Period shall
end on the immediately preceding Business Day, (ii) any Interest Period that commences on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the last calendar month of such Interest Period) shall end on the last Business Day of the last calendar month of such Interest Period and (iii) no tenor that has been removed from this definition pursuant to Section 2.14(b)(iv) shall be available for specification in any Borrowing Request or Interest Election Request. For purposes hereof, the date of a Borrowing initially shall be the date on which such Borrowing is made and thereafter shall be the effective date of the most recent conversion or continuation of such Borrowing. Notwithstanding the foregoing, the initial Interest Periods with respect to the Initial USD Term Loans and the Initial Euro Term Loans shall be as provided in the First Amendment.
“Intermediate Holdings” shall have the meaning assigned to such term in Section 5.20(a).
“Intermediate Holdings Joinder Date” shall have the meaning assigned to such term in Section 5.20(b).
“Investment” means (a) any purchase or other acquisition by a Borrower or any of its Restricted Subsidiaries of any of the Securities of any other Person other than any Loan Party (other than Intermediate Holdings), (b) the acquisition by purchase or otherwise (other than any purchase or other acquisition of inventory, materials, supplies and/or equipment in the ordinary course of business) of all or a substantial portion of the business, property or fixed assets of any other Person or any division or line of business or other business unit of any other Person, (c) any loan, advance (other than any advance to any current or former employee, officer, director, member of management, manager, consultant or independent contractor of the Borrowers, any Restricted Subsidiary or any Parent Company for moving, entertainment and travel expenses, drawing accounts and similar expenditures in the ordinary course of business) or capital contribution by a Borrower or any of its Restricted Subsidiaries to any other Person or (d) any Guarantee of the Indebtedness of any Person by a Borrower or any of its Restricted Subsidiaries. Subject to Section 5.10, the amount of any Investment shall be the original cost of such Investment, plus the cost of all additions thereto, without any adjustments for increases or decreases in value, or write-ups, write-downs or write-offs with respect thereto, but giving effect to any repayments of principal in the case of any Investment in the form of a loan and any return of capital or return on Investment in the case of any equity Investment (whether as a distribution, dividend, redemption or sale but not in excess of the amount of the relevant initial Investment).
“IP Rights” has the meaning assigned to such term in Section 3.05(c).
“Irish Group Member” means the Irish Guarantor and each Restricted Subsidiary incorporated under the laws of Ireland.
“Irish Guarantor” means Indivior Europe Limited, a private limited company incorporated in Ireland with registered number 616151 and its registered office at 27 Windsor Place, Lower Pembroke Street, Dublin 2, D02 DK44, Ireland.
“Irish Security Documents” means (a) the Irish law governed debenture dated June 12, 2020 between the Irish Guarantor as chargor and the Administrative Agent as the security trustee for the benefit of the Secured Parties, (b) the equitable charge over shares in the Irish Guarantor dated June 12, 2020 between Indivior UK Limited and the Administrative Agent as the security trustee for the benefit of the Secured Parties and (c) each other Irish law governed document or instrument which creates or evidences or which is expressed to create or evidence any Lien granted or required to be granted pursuant to Section 5.12 and/or the definition of “Collateral and Guarantee Requirement”, or which is entered into
by Holdings or any subsidiary of Holdings to create or evidence, or which is expressed to create or evidence, security for the Secured Obligations.
“Irish Security Trust Deed” means the Irish law security trust deed dated February, 15 2016 and entered into by the security trustee, the Borrower Representative and Indivior Ireland (Investments) Limited, and acceded to by the Irish Guarantor and Indivior UK Limited, whereby, inter alia, the Administrative Agent declares the rights, interests, benefits and other property comprised in the Liens the subject of the Irish Security Documents to be held on trust for the other Secured Parties, together with each accession agreement with respect thereto.
“IRS” means the U.S. Internal Revenue Service.
“Issuing Bank” means, as the context may require, any Revolving Lender that, at the request of the Borrower Representative and with the consent of the Administrative Agent (not to be unreasonably withheld or delayed), agrees to become an Issuing Bank. Each Issuing Bank may, in its discretion, arrange for one or more Letters of Credit to be issued by any Affiliate of such Issuing Bank, in which case the term “Issuing Bank” shall include any such Affiliate with respect to Letters of Credit issued by such Affiliate. For the avoidance of doubt, as of the Third Amendment Effective Date there are no Issuing Banks party to this Agreement.
“ITA” means the Income Tax Act 2007.
“Jersey Group Member” means each Loan Party and Restricted Subsidiary organized under the laws of Jersey.
“Jersey Security Documents” means (a) the Jersey law governed security interest agreement dated March, 11 2021 over the shares in Indivior Jersey Finance (2021) Limited between Indivior Jersey Finance LLC and the Administrative Agent as Security Trustee (b) the Jersey law governed security interest agreement dated March, 11 2021 over all of Indivior Jersey Finance (2021) Limited’s Jersey situs intangible moveable property between Indivior Jersey Finance (2021) Limited and the Administrative Agent as Security Trustee, (c) a Jersey law governed supplemental security interest agreement to be entered into on Third Amendment Effective Date over the shares in Indivior Jersey Finance (2021) Limited between Indivior Jersey Finance LLC and the Administrative Agent as Security Trustee, (d) a Jersey law governed supplemental security interest agreement to be entered into on Third Amendment Effective Date over all of Indivior Jersey Finance (2021) Limited’s Jersey situs intangible moveable property between Indivior Jersey Finance (2021) Limited and the Administrative Agent as Security Trustee and (e) each other Jersey law governed document or instrument which creates or evidences or which is expressed to create or evidence any Lien granted or required to be granted pursuant to Section 5.12 and/or the definition of “Collateral and Guarantee Requirement”, or which is entered into by Holdings or any subsidiary of Holdings to create or evidence, or which is expressed to create or evidence, security for the Secured Obligations.
“Jersey Security Trust Instrument” means the Jersey law security trust instrument dated July, 1 2019 and entered into by Administrative Agent as security trustee, the Borrower Representative and Indivior (Jersey) Limited, and acceded to by Indivior Jersey Finance LLC and Indivior Jersey Finance (2021) Limited, whereby, inter alia, the Administrative Agent declares the rights, interests, benefits and other property comprised in the Liens the subject of the Jersey Security Documents to be held on trust for the other Secured Parties, together with each accession agreement with respect thereto.
“Judgment Currency” has the meaning assigned to such term in Section 9.22.
“Junior Indebtedness” means any Subordinated Indebtedness (other than Indebtedness among the Borrower Representative and/or its subsidiaries) with an individual outstanding principal amount in excess of the Threshold Amount.
“Junior Lien Indebtedness” means any Indebtedness that is secured by a security interest on all or any portion of the Collateral (other than Indebtedness among the Borrower Representative and/or its subsidiaries) that is expressly junior or subordinated to the Lien securing the Secured Obligations with an individual outstanding principal amount in excess of the Threshold Amount.
“Latest Maturity Date” means, as of any date of determination, the latest maturity or expiration date applicable to any Loan or commitment hereunder at such time, including the latest maturity or expiration date of any Initial Term Loan, 2017 Replacement Term Loans, 2021 Replacement Term Loans, Additional Term Loan, Revolving Loan, Additional Revolving Loan, Revolving Credit Commitment or Additional Commitment at such time.
“Latest Revolving Loan Maturity Date” means, as of any date of determination, the latest maturity or expiration date applicable to any revolving loan or revolving credit commitment hereunder at such time, including the latest maturity or expiration date of any Revolving Loan, any Additional Revolving Loan, the Revolving Credit Commitment or any Additional Revolving Commitment at such time.
“Latest Term Loan Maturity Date” means, as of any date of determination, the latest maturity or expiration date applicable to any term loan or term commitment hereunder at such time, including the latest maturity or expiration date of any Term Loan or any Additional Term Commitment at such time.
“LC Collateral Account” has the meaning assigned to such term in Section 2.05(j)(i).
“LC Disbursement” means a payment or disbursement made by an Issuing Bank pursuant to a Letter of Credit.
“LC Exposure” means, at any time, the sum of (a) the aggregate undrawn amount of all outstanding Letters of Credit at such time (calculated, in the case of Letters of Credit denominated in an Alternative Currency, based on the Dollar Equivalent thereof) and (b) the aggregate principal amount of all LC Disbursements that have not yet been reimbursed at such time (calculated, in the case of Letters of Credit denominated in an Alternative Currency, based on the Dollar Equivalent thereof). The LC Exposure of any Revolving Lender at any time shall equal its Applicable Percentage of the aggregate LC Exposure at such time.
“Legal Reservations” means the application of relevant Debtor Relief Laws, general principles of equity and/or principles of good faith and fair dealing and, with respect to any Loan Document governed by the laws of a particular jurisdiction, any other matters which are set out as qualifications or reservations as to matters of law in any legal opinion(s) supplied to the Administrative Agent as a condition precedent under this Agreement on or before the Closing Date, to the extent such opinion(s) relate to the validity or enforceability of such Loan Document and/or any other Loan Documents governed by the laws of such jurisdiction.
“Lenders” means the Term Lenders, the Revolving Lenders, any Additional Lender, any lender with an Additional Commitment or an outstanding Additional Loan and any other Person that becomes a party hereto pursuant to an Assignment and Assumption, other than any such Person that
ceases to be a party hereto pursuant to an Assignment and Assumption or as a result of any termination of Commitments and/or prepayment or repayment of Loans permitted or required hereunder.
“Letter of Credit” means any Standby Letter of Credit or Commercial Letter of Credit issued pursuant to this Agreement.
“Letter-of-Credit Right” has the meaning set forth in Article 9 of the UCC.
“Letter of Credit Percentage” means with respect to any Issuing Bank, a percentage to be agreed between the Borrower Representative and such Issuing Bank.
“Letter of Credit Sublimit” means $0.
“Lien” means any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge, or preference, priority or other security interest or preferential arrangement of any kind or nature whatsoever (including any conditional sale or other title retention agreement, any easement, right of way or other encumbrance on title to real property, and any Capital Lease having substantially the same economic effect as any of the foregoing), in each case, in the nature of security; provided that in no event shall an operating lease in and of itself be deemed to constitute a Lien.
“Limited Condition Acquisition” means a Permitted Acquisition or any other Investment permitted hereunder that constitutes an acquisition (other than intercompany Investments) by a Borrower or one or more of the Restricted Subsidiaries, the consummation of which is not conditioned on the availability of, or on obtaining, third party financing.
“Liquidity” means the aggregate of (a) unrestricted Cash and Cash Equivalents and (b) Cash and Cash Equivalents restricted in favor of the Secured Parties (including any such Cash and Cash Equivalents securing other Indebtedness secured by a Permitted Lien on all or a portion of the Collateral).
“Loan Documents” means this Agreement, the First Amendment, the Second Amendment, the Third Amendment, any Promissory Note, each Loan Guaranty, the Collateral Documents, each Security Trust Deed (and each accession deed or similar instrument with respect thereto), any Intercreditor Agreement required to be entered into pursuant to the terms of this Agreement and any other document or instrument designated by the Borrower Representative and the Administrative Agent as a “Loan Document.” Any reference in this Agreement or any other Loan Document to a Loan Document shall include all appendices, exhibits or schedules thereto.
“Loan Guaranty” means (a) the Guaranty Agreement, substantially in the form of Exhibit I, executed by each Loan Party party thereto and the Administrative Agent for the benefit of the Secured Parties and (b) each other guaranty agreement executed by any Person pursuant to Section 5.12 in substantially the form attached as Exhibit I or another form that is otherwise reasonably satisfactory to the Administrative Agent and the Borrower.
“Loan Installment Date” has the meaning assigned to such term in Section 2.10(a).
“Loan Parties” means each Borrower, each Subsidiary Guarantor, Intermediate Holdings and in each case their respective successors and permitted assigns.
“Loans” means any Initial Term Loan, any 2017 Replacement Term Loan, any 2021 Replacement Term Loan, any Additional Term Loan, any Initial Revolving Loan, any 2017 Replacement Revolving Loan, any Swingline Loan or any Additional Revolving Loan.
“Local Time” shall mean New York City time.
“Lux Borrower” shall have the meaning assigned to such term in the introductory paragraph of this Agreement.
“Luxembourg” means the Grand Duchy of Luxembourg.
“Luxembourg Account Pledge Agreement” means a Luxembourg law governed account pledge agreement dated on or around the Consummation Date and made between the Lux Borrower as “Pledgor” and the Administrative Agent with respect to the Lux Borrower’s bank accounts situated in Luxembourg.
“Luxembourg Companies Register” means the Luxembourg Register of Commerce and Companies (R.C.S Luxembourg).
“Luxembourg Insolvency Event” means the occurrence of a Luxembourg Insolvency Proceeding.
“Luxembourg Insolvency Proceeding” means, in relation to the Lux Borrower or any other Lux Loan Party or any of their respective assets, any corporate action, legal proceedings or other procedure or step in relation to bankruptcy (faillite), insolvency, judicial or voluntary liquidation (liquidation judiciaire ou volontaire), composition with creditors (concordat préventif de faillite), moratorium or reprieve from payment (sursis de paiement), controlled management (gestion contrôlée),fraudulent conveyance (action paulienne), general settlement with creditors, reorganization or similar laws affecting the rights of creditors generally.
“Luxembourg Share Pledge Agreement” means a Luxembourg law governed share pledge agreement dated on or around the Consummation Date and made between the Borrower Representative as “Pledgor” and the Administrative Agent in the presence of the Lux Borrower over the shares issued by the Lux Borrower.
“Lux Loan Party” shall mean any Loan Party whose registered office or place of central administration is located in Luxembourg.
“Lux Security Documents” means each of the Luxembourg Account Pledge Agreement and the Luxembourg Share Pledge Agreement.
“Margin Stock” has the meaning assigned to such term in Regulation U.
“Lux Subordinated Debt” has the meaning assigned to such term in Section 2.24(h)(i).
“Material Adverse Effect” means a material adverse effect on (i) the business, assets, financial condition or results of operations, in each case, of Holdings, the Borrowers and their Restricted Subsidiaries, taken as a whole, (ii) the rights and remedies (taken as a whole) of the Administrative Agent or the Lenders under the applicable Loan Documents or (iii) the ability of Holdings and the Loan Parties (taken as a whole) to perform their payment obligations under the applicable Loan Documents.
“Material Debt Instrument” means any physical instrument evidencing any Indebtedness for borrowed money which is required to be pledged to the Administrative Agent (or its bailee) pursuant to any Collateral Document.
“Material Real Estate Asset” means (a) on the Closing Date, each Real Estate Asset listed on Schedule 1.01(b) and (b) any “fee-owned” Real Estate Asset acquired by any Loan Party after the Closing Date having a fair market value (as reasonably determined by the Borrower Representative after taking into account any liabilities with respect thereto that impact such fair market value) in excess of $10,000,000.
“Maturity Date” means (a) with respect to the Revolving Facility, the Revolving Credit Maturity Date, (b) with respect to the Initial Term Loans, the Initial Term Loan Maturity Date, (c) with respect to the 2017 Replacement Term Loans, the 2017 Replacement Term Loan Maturity Date, (d) with respect to the 2021 Replacement Term Loans, the 2021 Replacement Term Loan Maturity Date, (e) as to any Replacement Term Loans or Replacement Revolving Facility incurred pursuant to Section 9.02(c), the final maturity date for such Replacement Term Loan or Replacement Revolving Facility, as the case may be, as set forth in the applicable Refinancing Amendment, (f) with respect to any Incremental Term Loans, the final maturity date set forth in the applicable amendment to this Agreement with respect thereto, (g) with respect to any Incremental Revolving Facility, the final maturity date set forth in the applicable amendment to this Agreement with respect thereto and (h) with respect to any Extended Revolving Credit Commitment or Extended Term Loans, the final maturity date set forth in the applicable Extension Offer accepted by the respective Lender or Lenders.
“Maximum Rate” has the meaning assigned to such term in Section 9.19.
“Minimum Extension Condition” has the meaning assigned to such term in Section 2.23(b).
“Moody’s” means Moody’s Investors Service, Inc.
“Mortgage Policies” has the meaning assigned to such term in the definition of “Collateral and Guarantee Requirement”.
“Mortgages” means any mortgage, deed of trust or other agreement which conveys or evidences a Lien in favor of the Administrative Agent, for the benefit of the Administrative Agent and the other Secured Parties, on any Material Real Estate Asset constituting Collateral.
“Multiemployer Plan” means any employee benefit plan which is a “multiemployer plan” as defined in Section 3(37) of ERISA, that is subject to the provisions of Title IV of ERISA, and in respect of which Intermediate Holdings, any Borrower or any of their Restricted Subsidiaries, or any of their respective ERISA Affiliates, makes or is obligated to make contributions or with respect to which any of them has any ongoing obligation or liability, contingent or otherwise.
“Narrative Report” means, with respect to the financial statements with respect to which it is delivered, a management discussion and narrative report describing the operations of Indivior plc, Intermediate Holdings, the Borrowers and their Restricted Subsidiaries for the applicable Fiscal Quarter or Fiscal Year and for the period from the beginning of the then-current Fiscal Year to the end of the period to which the relevant financial statements relate.
“Net Insurance/Condemnation Proceeds” means an amount equal to: (a) any Cash payments or proceeds (including Cash Equivalents) received by any Borrower or any of its Restricted
Subsidiaries (i) under any casualty insurance policy in respect of a covered loss thereunder of any assets of any Borrower or any of its Restricted Subsidiaries or (ii) as a result of the taking of any assets of any Borrower or any of its Restricted Subsidiaries by any Person pursuant to the power of eminent domain, condemnation or otherwise, or pursuant to a sale of any such assets to a purchaser with such power under threat of such a taking, minus (b) (i) any actual out-of-pocket costs incurred by a Borrower or any of its Restricted Subsidiaries in connection with the adjustment, settlement or collection of any claims of a Borrower or the relevant Restricted Subsidiary in respect thereof, (ii) payment of the outstanding principal amount of, premium or penalty, if any, and interest and other amounts on any Indebtedness (other than the Loans and any Indebtedness secured by a Lien that is pari passu with or expressly subordinated to the Lien on the Collateral securing the Secured Obligations) that is secured by a Lien on the assets in question and that is required to be repaid or otherwise comes due or would be in default under the terms thereof as a result of such loss, taking or sale, (iii) the reasonable out-of-pocket costs of putting any affected property in a safe and secure position, (iv) any selling costs and out-of-pocket expenses (including reasonable legal fees, transfer and similar Taxes and the applicable Borrower’s good faith estimate of income Taxes paid or payable) in connection with any sale or taking of such assets as described in clause (a) of this definition and (v) any amounts provided as a reserve in accordance with GAAP against any liabilities under any indemnification obligation or purchase price adjustments associated with any sale or taking of such assets as referred to in clause (a) of this definition (provided that to the extent and at the time any such amounts are released from such reserve, such amounts shall constitute Net Insurance/Condemnation Proceeds).
“Net Proceeds” means (a) with respect to any Disposition (including any Prepayment Asset Sale), the Cash proceeds (including Cash Equivalents and Cash proceeds subsequently received (as and when received) in respect of non-cash consideration initially received), net of (i) selling costs and out-of-pocket expenses (including reasonable broker’s fees or commissions, legal fees, transfer and similar Taxes and the Borrower Representative’s good faith estimate of income Taxes paid or payable (including pursuant to Tax sharing arrangements or any Tax distributions) in connection with such Disposition), (ii) amounts provided as a reserve in accordance with GAAP against any liabilities under any indemnification obligation or purchase price adjustment associated with such Disposition (provided that to the extent and at the time any such amounts are released from such reserve, such amounts shall constitute Net Proceeds), (iii) the principal amount, premium or penalty, if any, interest and other amounts on any Indebtedness (other than the Loans and any other Indebtedness secured by a Lien that is pari passu with or expressly subordinated to the Lien on the Collateral securing the Secured Obligations) which is secured by the asset sold in such Disposition and which is required to be repaid or otherwise comes due or would be in default and is repaid (other than any such Indebtedness that is assumed by the purchaser of such asset) and (iv) Cash escrows (until released from escrow to the Borrower Representative or any of its Restricted Subsidiaries) from the sale price for such Disposition; and (b) with respect to any issuance or incurrence of Indebtedness or Capital Stock, the Cash proceeds thereof, net of all Taxes and customary fees, commissions, costs, underwriting discounts and other fees and expenses incurred in connection therewith.
“Non-Consenting Lender” has the meaning assigned to such term in Section 2.19(b).
“Non-Qualified Loan Party” means a Loan Party incorporated or organized in a jurisdiction other than a Qualified Jurisdiction.
“Notices of Grant of Security Interest in Intellectual Property” means the notices of grant of security interest substantially in the form attached as Exhibit II to the Security Agreement or such other form as shall be reasonably acceptable to the Administrative Agent.
“Obligations” means all unpaid principal of and accrued and unpaid interest (including interest accruing during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding) on the Loans, all LC Exposure, all accrued and unpaid fees and all expenses, reimbursements, indemnities and all other advances to, debts, liabilities and obligations of the Loan Parties to the Lenders or to any Lender, the Administrative Agent, any Issuing Bank or any Indemnified Person arising under the Loan Documents, whether direct or indirect (including those acquired by assumption), absolute, contingent, due or to become due, now existing or hereafter arising.
“OFAC” has the meaning assigned to such term in Section 3.17.
“Organizational Documents” means (a) with respect to any corporation, its certificate or articles of incorporation or organization and its by-laws, (b) with respect to any limited partnership, its certificate of limited partnership and its partnership agreement, (c) with respect to any general partnership, its partnership agreement, (d) with respect to any limited liability company, its articles of organization or certificate of formation, and its operating agreement, and (e) with respect to any other form of entity or any entity which is not incorporated or organized in the U.S., such other organizational documents required by local law or customary under its jurisdiction of organization to document the formation and governance principles of such type of entity. In the event that any term or condition of this Agreement or any other Loan Document requires any Organizational Document to be certified by a secretary of state or similar governmental official, the reference to any such “Organizational Document” shall only be to a document of a type customarily certified by such governmental official.
“Original Term Borrowers” means the Lux Borrower and Indivior Finance (2014) LLC, a limited liability company organized under the laws of Delaware.
“Original Currency” has the meaning assigned to such term in Section 2.18(a).
“Original Jurisdiction” means, in relation to a Loan Party, the jurisdiction under whose laws that Loan Party is incorporated or organized as at the date of this Agreement or, in the case of any Person that becomes a Loan Party pursuant to Section 5.12 or Section 5.16, as at the date on which such Person becomes a Loan Party.
“Original Listing Date” has the meaning assigned to such term in Section 5.19(a).
“Original Term Loans” means the term loans made by the Term Lenders to the Original Term Borrowers pursuant to Section 2.01(a), prior to giving effect to the First Amendment and the transactions contemplated thereby.
“Other Applicable Indebtedness” has the meaning assigned to such term in Section 2.11(b)(ii).
“Other Connection Taxes” means, with respect to any Lender or Administrative Agent, Taxes imposed as a result of a present or former connection between such recipient and the jurisdiction imposing such Tax (other than connections arising solely from such recipient having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, or engaged in any other transaction pursuant to or enforced any Loan Document, or sold or assigned an interest in any Loan or Loan Document).
“Other Taxes” means any and all present or future stamp, court or documentary taxes or any intangible, recording, filing or other excise or property taxes, charges or similar levies arising from any payment made hereunder or from the execution, delivery or enforcement of, or otherwise with respect to, this Agreement, but not including, for the avoidance of doubt, (a) any Excluded Taxes or (b) any stamp or registration tax payable as a result of any voluntary registration by a Secured Party of a Loan Document in Luxembourg when such registration is not required to protect, preserve, maintain or enforce the rights of that Secured Party under such Loan Document.
“Outstanding Amount” means (a) with respect to Term Loans, Revolving Loans and Swingline Loans on any date, the amount of the aggregate outstanding principal amount thereof after giving effect to any borrowings and prepayments or repayments of Term Loans, Revolving Loans and Swingline Loans, as the case may be, occurring on such date, (b) with respect to any Letters of Credit, the aggregate amount available to be drawn under such Letters of Credit after giving effect to any changes in the aggregate amount available to be drawn under such Letters of Credit or the issuance or expiry of any Letters of Credit, including as a result of any LC Disbursements and (c) with respect to any LC Disbursements on any date, the amount of the aggregate outstanding amount of such LC Disbursements on such date after giving effect to any disbursements with respect to any Letter of Credit occurring on such date and any other changes in the aggregate amount of the LC Disbursements as of such date, including as a result of any reimbursements by a Borrower of unreimbursed LC Disbursements.
“Overnight Foreign Currency Rate” shall mean, for any amount payable in an Alternative Currency, the rate of interest per annum as determined by the Administrative Agent at which overnight or weekend deposits in the relevant currency (or if such amount due remains unpaid for more than three (3) Business Days, then for such other period of time as the Administrative Agent may elect) for delivery in immediately available and freely transferable funds would be offered by the Administrative Agent to major banks in the interbank market upon request of such major banks for the relevant currency as determined above and in an amount comparable to the unpaid principal amount of the related Credit Extension, plus any taxes, levies, imposts, duties, deductions, charges or withholdings imposed upon, or charged to, the Administrative Agent by any relevant correspondent bank in respect of such amount in such relevant currency.
“Own Funds” has the meaning assigned to such term in Section 2.24(h)(i).
“Parent Company” means (a) Holdings and (b) any other Person of which each Borrower is an indirect Wholly-Owned Subsidiary.
“Pari First Lien Intercreditor Agreement” means an intercreditor agreement substantially in the form of Exhibit N hereto, or such other customary form reasonably acceptable to the Administrative Agent and the Borrowers, as such document may be amended, restated, supplemented or otherwise modified from time to time.
“Participant” has the meaning assigned to such term in Section 9.05(c).
“Participant Register” has the meaning assigned to such term in Section 9.05(c).
“Patent” means the following: (a) any and all patents and patent applications; (b) all inventions described and claimed therein; (c) all reissues, divisions, continuations, renewals, extensions and continuations in part thereof; (d) all income, royalties, damages, claims, and payments now or hereafter due or payable under and with respect thereto, including, without limitation, damages and payments for past and future infringements thereof; (e) all rights to sue for past, present, and future infringements thereof; and (f) all rights corresponding to any of the foregoing.
“Payment Recipient” has the meaning assigned to it in Article 8.
“PBGC” means the Pension Benefit Guaranty Corporation.
“Pension Plan” means any “employee pension benefit plan”, as defined in Section 3(2) of ERISA (other than a Multiemployer Plan), that is subject to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA, which Intermediate Holdings, any Borrower or any of their Restricted Subsidiaries, or any of their respective ERISA Affiliates, maintains or contributes to or has an obligation to contribute to, or otherwise has any liability, contingent or otherwise.
“Pensions Regulator” means the body corporate by that name established under Part 1 of the Pensions Act 2004.
“Perfection Certificate” means a certificate substantially in the form of Exhibit E.
“Perfection Certificate Supplement” means a supplement to the Perfection Certificate substantially in the form of Exhibit F.
“Perfection Requirements” means the filing of appropriate financing statements (or their equivalents in any applicable jurisdictions) with the office of the Secretary of State or other appropriate office of the state of organization of each Loan Party, the filing of appropriate assignments or notices with the U.S. Patent and Trademark Office and the U.S. Copyright Office, the proper recording or filing, as applicable, of Mortgages and fixture filings with respect to any Material Real Estate Asset constituting Collateral, in each case in favor of the Administrative Agent for the benefit of the Secured Parties and the delivery to the Administrative Agent of any stock certificate or promissory note required to be delivered pursuant to the applicable Loan Documents, together with instruments of transfer executed in blank, together with, in the case of a Foreign Subsidiary, all other actions reasonably requested by the Administrative Agent (including those required by applicable Requirements of Law) to be delivered, filed, registered or recorded to perfect the Liens intended to be created by the Collateral Documents to the extent required by, and with the priority required by, the Collateral Documents.
“Periodic Term SOFR Determination Day” has the meaning assigned to such term in the definition of “Term SOFR”.
“Permitted Acquisition” means any acquisition by any Borrower or any of its Restricted Subsidiaries, whether by purchase, merger or otherwise, of all or substantially all of the assets of, or any business line, unit or division of, any Person or of a majority of the outstanding Capital Stock of any Person (but in any event including any Investment in (x) any Restricted Subsidiary which serves to increase the applicable Borrower’s or any Restricted Subsidiary’s respective equity ownership in such Restricted Subsidiary or (y) any joint venture for the purpose of increasing the applicable Borrower’s or its relevant Restricted Subsidiary’s ownership interest in such joint venture); provided that:
(a) (i) on the date of signing of the definitive acquisition agreement for such Permitted Acquisition, no Event of Default shall have occurred and be continuing and (ii) at the closing of such Permitted Acquisition, no Event of Default under Section 7.01(a), (f) or (g) exists or would result after giving pro forma effect to such acquisition;
(b) the total consideration paid by Persons that are Loan Parties for (i) the Capital Stock of any Person that does not become a Guarantor and (ii) in the case of an asset acquisition, assets that are not acquired by any Borrower or any Guarantor, when taken together with the total consideration for all such Persons and assets so acquired after the Closing Date, shall not exceed
the sum of (A) the greater of $50,000,000 and 10.0% of Consolidated Total Assets as of the last day of the most recent Test Period and (B) amounts otherwise available under clauses (q), (r), (x) and (dd) of Section 6.06 (so long as any such additional amounts are incurred in compliance with, and justified as outstanding under, such provisions); provided, that the limitation described in this clause (b) shall not apply to any acquisition to the extent (x) such acquisition is made with the proceeds of sales of the Qualified Capital Stock of, or common equity capital contributions to, any Borrower or any Restricted Subsidiary or (y) the Person so acquired (or the Person owning the assets so acquired) becomes a Subsidiary Guarantor even though such Person owns Capital Stock in Persons that are not otherwise required to become Subsidiary Guarantors, if, in the case of this clause (y), not less than 75.0% of the Consolidated Adjusted EBITDA of the Person(s) acquired in such acquisition (for this purpose and for the component definitions used therein, determined on a consolidated basis for such Persons and their respective Restricted Subsidiaries) is directly generated by Person(s) that will become Subsidiary Guarantors (i.e., disregarding any Consolidated Adjusted EBITDA generated by Restricted Subsidiaries of such Subsidiary Guarantors that are not (or will not become) Subsidiary Guarantors); and
(c) the business of such Person, or the business conducted with such assets, as the case may be, constitutes a business permitted by Section 6.10.
“Permitted Junior Intercreditor Agreement” shall mean, with respect to any Liens on all or any portion of the Collateral that are intended to be junior to any Liens securing the Initial Term Loans, Initial Revolving Loans, 2017 Replacement Term Loans, 2017 Replacement Revolving Loans and 2021 Replacement Term Loans (and other Secured Obligations that are pari passu with the Initial Term Loans, Initial Revolving Loans, 2017 Replacement Term Loans, 2017 Replacement Revolving Loans and 2021 Replacement Term Loans), either (as the Borrower Representative shall elect) (x) the First Lien/Second Lien Intercreditor Agreement if such Liens secure “Second-Priority Obligations” (as defined therein) or (y) another intercreditor agreement not materially less favorable to the Lenders vis-à-vis such junior Liens than the First Lien/Second Lien Intercreditor Agreement (as determined by the Borrower Representative in good faith).
“Permitted Liens” means Liens permitted pursuant to Section 6.02.
“Permitted Pari Passu Intercreditor Agreement” shall mean, with respect to any Liens on all or any portion of the Collateral that are intended to be pari passu with the Liens securing the Initial Term Loans, Initial Revolving Loans, 2017 Replacement Term Loans, 2017 Replacement Revolving Loans and 2021 Replacement Term Loans (and other Secured Obligations that are pari passu with the Initial Term Loans, Initial Revolving Loans, 2017 Replacement Term Loans, 2017 Replacement Revolving Loans and 2021 Replacement Term Loans), either (as the Borrower Representative shall elect) (x) the Pari First Lien Intercreditor Agreement or (y) another intercreditor agreement not materially less favorable to the Lenders vis-à-vis such pari passu Liens than the Pari First Lien Intercreditor Agreement (as determined by the Borrower Representative in good faith).
“Permitted Securitization Documents” shall mean all documents and agreements evidencing, relating to or otherwise governing a Permitted Securitization Financing, in each case as such documents and agreements may be amended, modified, supplemented, refinanced or replaced from time to time, so long as the relevant Permitted Securitization Financing would still meet the requirements of the definition thereof after giving effect to such amendment, modification, supplement, refinancing or replacement.
“Permitted Securitization Financing” shall mean one or more transactions that are designated as a “Permitted Securitization Financing” as provided below, pursuant to which
(i) Securitization Assets or interests therein are sold to or financed by one or more Special Purpose Securitization Subsidiaries, and (ii) such Special Purpose Securitization Subsidiaries finance their acquisition of such Securitization Assets or interests therein, or the financing thereof, by selling or borrowing against Securitization Assets and any Hedge Agreements entered into in connection with such Securitization Assets; provided, that (x) none of Holdings, any Borrower or any Restricted Subsidiary guarantees any obligations (contingent or otherwise) under such transactions, (y) no property or asset (other than Securitization Assets or the Capital Stock of any Special Purpose Securitization Subsidiary) of Holdings, any Borrower or any Restricted Subsidiary (other than a Special Purpose Securitization Subsidiary) is, directly or indirectly, contingently or otherwise, subject to the satisfaction of any such transaction and (z) there shall be no recourse to Holdings, any Borrower or any Subsidiary (other than the Special Purpose Securitization Subsidiaries) in connection with such transactions, in each case except to the extent customary (as determined by the Borrower Representative in good faith) for similar transactions in the applicable jurisdictions (including, to the extent applicable, in a manner consistent with the delivery of a “true sale”/“absolute transfer” opinion with respect to any transfer by any Borrower or any Subsidiary (other than a Special Purpose Securitization Subsidiary)). Any such designation shall be evidenced to the Administrative Agent by filing with the Administrative Agent a certificate signed by a Responsible Officer of the Borrower Representative certifying that, to the best of such officer’s knowledge and belief after consultation with counsel, such designation complied with the foregoing conditions.
“Person” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or any other entity.
“Plan” means any “employee pension benefit plan” (within the meaning of Section 3(2) of ERISA) maintained by Intermediate Holdings, any Borrower or any of their Restricted Subsidiaries or, with respect to any such plan that is subject to Section 412 of the Code or Title IV of ERISA, any of their ERISA Affiliates, other than any Multiemployer Plan.
“Platform” has the meaning assigned to such term in Section 5.01.
“Prepayment Asset Sale” means any Disposition by any Borrower or its Restricted Subsidiaries made pursuant to, Section 6.07(h), Section 6.07(n), Section 6.07(q), clause (ii) to the proviso to Section 6.07(r) (to the extent provided therein) and Section 6.08.
“Primary Obligor” has the meaning assigned to such term in the definition of “Guarantee”.
“Prime Rate” means (a) the rate of interest publicly announced, from time to time, by the Administrative Agent at its principal office in New York City as its “prime rate”, with the understanding that the “prime rate” is one of the Administrative Agent’s base rates (not necessarily the lowest of such rates) and serves as the basis upon which effective rates of interest are calculated for those loans making reference thereto and is evidenced by the recording thereof after its announcement in such internal publications as the Administrative Agent may designate or (b) if the Administrative Agent has no “prime rate”, the rate of interest last quoted by The Wall Street Journal as the “Prime Rate” in the U.S. or, if The Wall Street Journal ceases to quote such rate, the highest per annum interest rate published by the Federal Reserve Board in Federal Reserve Statistical Release H.15 (519) (Selected Interest Rates) as the “bank prime loan” rate or, if such rate is no longer quoted therein, any similar rate quoted therein (as reasonably determined by the Administrative Agent) or any similar release by the Federal Reserve Board (as reasonably determined by the Administrative Agent).
“Pro Forma Basis” or “pro forma effect” means, as to any calculation of the Total Leverage Ratio, the First Lien Leverage Ratio, any other financial ratio, Consolidated Adjusted EBITDA or Consolidated Total Assets (including component definitions thereof), for any events as described below that occur subsequent to the commencement of any period of four consecutive Fiscal Quarters (the “Reference Period”) for which the financial effect of such events is being calculated, and giving effect to the events for which such calculation is being made, such calculation as will give pro forma effect to such events as if such events occurred as of the first day of the Reference Period (or, in the case of Consolidated Total Assets, as of the last day of such Reference Period) and that: (i) in making any determination of Consolidated Adjusted EBITDA, effect shall be given to (without duplication of any add-back to Consolidated Adjusted EBITDA pursuant to clause (xix) of the definition thereof) any Disposition, acquisition, Investment, capital expenditure, cost saving (including sourcing), operating improvement, expense reduction, synergies, merger, amalgamation, consolidation (including the Transactions) (or any similar transaction or transactions not otherwise permitted under Section 6.01 or 6.06 that require a waiver or consent of the Required Lenders and such waiver or consent has been obtained), any dividend, distribution or other similar payment, any designation of any subsidiary of a Borrower as an Unrestricted Subsidiary (or of an Unrestricted Subsidiary as a Restricted Subsidiary), which adjustments such Borrower determines in good faith as set forth in a certificate of a chief financial officer, treasurer or similar officer of such Borrower (the foregoing, together with any transactions related thereto or in connection therewith, and any other events that by the terms of the Loan Documents require pro forma compliance or determination on a pro forma basis, the “Subject Transactions”), in each case that occurred during the Reference Period (or, unless otherwise specified, occurring during the Reference Period or thereafter and through and including the date of determination, if applicable), (ii) in making any determination on a Pro Forma Basis, (x) all Indebtedness (including Indebtedness issued, incurred or assumed as a result of, or to finance, any relevant transactions and for which the financial effect is being calculated, whether incurred under this Agreement or otherwise, and excluding normal fluctuations in revolving Indebtedness incurred for working capital purposes and amounts outstanding under any Permitted Securitization Financing) issued, incurred, assumed or permanently repaid, as applicable, during the Reference Period (or, unless otherwise specified, occurring during the Reference Period or thereafter and through and including the date of determination, if applicable) shall be deemed to have been issued, incurred, assumed or permanently repaid at the beginning of such period, (y) interest charges attributable to interest on any Indebtedness, for which pro forma effect is being given as provided in preceding clause (x), bearing floating interest rates shall be computed on a pro forma basis as if the rate that is or would be in effect with respect to such Indebtedness as at the relevant date of determination would have been in effect during the period for which pro forma effect is being given and (z) the acquisition of any assets included in calculating Consolidated Total Assets, whether pursuant to any Subject Transaction or any Person becoming a subsidiary or merging, amalgamating or consolidating with or into any Borrower or any of its subsidiaries, or the Disposition of any assets included in calculating Consolidated Total Assets pursuant to any Subject Transaction shall be deemed to have occurred as of the last day of the applicable Reference Period, and (iii) with respect to (A) any designation of an Unrestricted Subsidiary as a Restricted Subsidiary, effect shall be given to such designation and all other designations of Unrestricted Subsidiaries as Restricted Subsidiaries after the first day of the relevant Reference Period and on or prior to the date of the then applicable designation of an Unrestricted Subsidiary as a Restricted Subsidiary, collectively, and (B) any designation of a Restricted Subsidiary as an Unrestricted Subsidiary, effect shall be given to such designation and all other designations of Restricted Subsidiaries as Unrestricted Subsidiaries after the first day of the relevant Reference Period and on or prior to the date of the then applicable designation of a Restricted Subsidiary as an Unrestricted Subsidiary, collectively.
Pro forma calculations made pursuant to the definition of the term “Pro Forma Basis” shall be determined in good faith by a Responsible Officer of the Borrower Representative and, to the extent applicable, in compliance with Section 1.10.
Notwithstanding anything to the contrary set forth in this definition, for the avoidance of doubt, when calculating the First Lien Leverage Ratio or the Total Leverage Ratio (as applicable) for purposes of the definitions of “Applicable Rate” and “Commitment Fee Rate”, the events described in the second preceding paragraph that occurred subsequent to the end of the applicable Reference Period shall not be given pro forma effect.
“Process Agent” has the meaning assigned to such term in Section 9.10(e).
“Projections” means the projections of the Borrowers and their subsidiaries provided to the Arrangers on November 15, 2014.
“Promissory Note” means a promissory note of the applicable Borrowers payable to any Lender or its registered assigns, in substantially the form of Exhibit G, evidencing the aggregate outstanding principal amount of Loans of a particular Class of such Borrowers to such Lender resulting from the Loans of such Class made by (or otherwise owing to) such Lender.
“PTE” means a prohibited transaction class exemption issued by the U.S. Department of Labor, as any such exemption may be amended from time to time.
“Public Company Costs” shall mean, as to any Person, costs associated with, or in anticipation of, or preparation for, compliance with the requirements of the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated in connection therewith and costs relating to compliance with the provisions of the Securities Act and the Exchange Act, or compliance with any similar rules in any applicable jurisdiction, as applicable to companies with equity or debt securities held by the public, the rules of national securities exchange companies with listed equity, directors’, managers’ and/or employees’ compensation, fees and expense reimbursement, costs relating to investor relations, shareholder meetings and reports to shareholders or debtholders, directors’ and officers’ insurance and other executive costs, legal and other professional fees, and listing fees and other costs and/or expenses associated with being a public company.
“Public Lender” has the meaning assigned to such term in Section 5.01.
“Qualified Capital Stock” of any Person means any Capital Stock of such Person that is not Disqualified Capital Stock.
“Qualified Jurisdiction” shall mean (a) the United States, the United Kingdom and Luxembourg and (b) any other jurisdiction where the Administrative Agent has determined (acting reasonably and following a request by the Borrower Representative and based on advice of local counsel) that Wholly-Owned Subsidiaries organized in such jurisdiction may provide guarantees and security which, after giving effect to the Agreed Guarantee and Security Principles, would provide substantially the same benefits as guarantees and security provided with respect to the Collateral owned by such entities as would have been obtained if the respective subsidiary were instead organized in any of the jurisdictions listed in preceding clause (a).
“Qualified Loan Party” shall mean any Loan Party incorporated or organized in a Qualified Jurisdiction.
“Qualifying Bid” has the meaning assigned to such term in the definition of “Dutch Auction”.
“Qualifying Lender” has the meaning assigned to such term in the definition of “Dutch Auction”.
“RB Reorganization” has the meaning assigned to such term in the Recitals to this Agreement.
“Real Estate Asset” means, at any time of determination, all right, title and interest (fee, leasehold or otherwise) of any Loan Party in and to real property (including, but not limited to, land, improvements and fixtures thereon).
“Receivables Net Investment” shall mean the aggregate cash amount paid by the lenders or purchasers under any Permitted Securitization Financing in connection with their purchase of, or the making of loans secured by, Securitization Assets or interests therein, as the same may be reduced from time to time by collections with respect to such Securitization Assets or otherwise in accordance with the terms of the Permitted Securitization Documents (but excluding any such collections used to make payments of commissions, discounts, yields and other fees and charges incurred in connection with any Permitted Securitization Financing payable to any person other than a Borrower or a Subsidiary Guarantor); provided, however, that if all or any part of such Receivables Net Investment shall have been reduced by application of any distribution and thereafter such distribution is rescinded or must otherwise be returned for any reason, such Receivables Net Investment shall be increased by the amount of such distribution, all as though such distribution had not been made.
“Receiver” means a receiver or receiver and manager or administrative receiver of the whole or any part of the assets which from time to time are expressed to be the subject of any English Security Document, any Irish Security Document or any Jersey Security Document.
“Recipient” has the meaning assigned to such term in Section 2.17(p)(ii).
“Reckitt Benckiser Pension Fund” means the U.K. registered occupational scheme currently governed by a definitive deed dated 16 September 2008 (as amended).
“Refinancing Amendment” means an amendment to this Agreement in form and substance reasonably satisfactory to the Administrative Agent and the Borrower Representative executed by (a) Holdings and the Borrowers, (b) the Administrative Agent and (c) each Lender that agrees to provide all or any portion of the Replacement Term Loans or the Replacement Revolving Facility being incurred pursuant thereto and in accordance with Section 9.02(c).
“Refinancing Indebtedness” has the meaning assigned to such term in Section 6.01(p).
“Refunding Capital Stock” has the meaning assigned to such term in Section 6.04(a)(viii).
“Register” has the meaning assigned to such term in Section 9.05(b)(iv).
“Regulation D” means Regulation D of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof.
“Regulation H” means Regulation H of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof.
“Regulation T” means Regulation T of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof.
“Regulation U” means Regulation U of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof.
“Regulation X” means Regulation X of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof.
“Related Funds” shall mean with respect to any Lender that is an Approved Fund, any other Approved Fund that is managed by the same investment advisor as such Lender or by an Affiliate of such investment advisor.
“Related Parties” means, with respect to any specified Person, such Person’s Affiliates and the respective officers, directors, employees, agents, controlling persons, trustees and members of such Person and such Person’s Affiliates.
“Release” means any release, spill, emission, leaking, pumping, pouring, injection, escaping, deposit, disposal, discharge, dispersal, dumping, leaching or migration of any Hazardous Material into the Environment (including the abandonment or disposal of any barrels, containers or other closed receptacles containing any Hazardous Material), including the movement of any Hazardous Material through the air, soil, surface water or groundwater.
“Relevant Party” has the meaning assigned to such term in Section 2.17(p)(ii).
“Relevant Lender” has the meaning assigned to such term in Section 9.05(i)(vii).
“Replaced Revolving Facility” has the meaning assigned to such term in Section 9.02(c).
“Replaced Term Loans” has the meaning assigned to such term in Section 9.02(c).
“Replacement Revolving Facility” has the meaning assigned to such term in Section 9.02(c).
“Replacement Term Loans” has the meaning assigned to such term in Section 9.02(c).
“Reply Amount” has the meaning assigned to such term in the definition of “Dutch Auction”.
“Reply Price” has the meaning assigned to such term in the definition of “Dutch Auction”.
“Representatives” has the meaning assigned to such term in Section 9.13.
“Repricing Transaction” means each of (a) the prepayment, repayment, refinancing, substitution or replacement of all or a portion of the 2021 Replacement Term Loans of any Class substantially concurrently with the incurrence by any Loan Party of any secured term loans (including any Replacement Term Loans) having an effective interest cost or weighted average yield (with the comparative determinations to be made by the Administrative Agent in a manner consistent with generally accepted financial practices, and in any event consistent with the second proviso to Section 2.22(a)(v))
that is less than the effective interest cost or weighted average yield (as determined by the Administrative Agent on the same basis) applicable to the 2021 Replacement Term Loans of such Class so prepaid, repaid, refinanced, substituted or replaced and (b) any amendment, waiver or other modification to this Agreement that would have the effect of reducing the effective interest cost of, or weighted average yield (to be determined by the Administrative Agent on the same basis as set forth in preceding clause (a)) of, the 2021 Replacement Term Loans of any Class; provided that the primary purpose (as reasonably determined by the Administrative Agent and the Borrower Representative) of such prepayment, repayment, refinancing, substitution, replacement, amendment, waiver or other modification was to reduce the effective interest cost or weighted average yield of the 2021 Replacement Term Loans of such Class; provided, further, that in no event shall any such prepayment, repayment, refinancing, substitution, replacement, amendment, waiver or other modification in connection with a Change of Control or Transformational Event constitute a Repricing Transaction. Any determination by the Administrative Agent contemplated by preceding clauses (a) and (b) shall be conclusive and binding on all Lenders, and the Administrative Agent shall have no liability to any Person with respect to such determination absent bad faith, gross negligence or willful misconduct (as determined by a count of competent jurisdiction in a final, non-appealable judgment).
“Required Lenders” means, at any time, Lenders having Term Loans, Revolving Credit Exposure or unused Commitments representing more than 50% of the sum of the total Term Loans, Revolving Credit Exposure and such unused Commitments at such time.
“Required Revolving Lenders” means, at any time, Lenders having Revolving Loans, Additional Revolving Loans, other Revolving Credit Exposure, unused Revolving Credit Commitments and unused Additional Revolving Commitments representing more than 50% of the sum of the total Revolving Loans, Additional Revolving Loans, other Revolving Credit Exposure and such unused Commitments at such time.
“Requirements of Law” means, with respect to any Person, collectively, the common law and all federal, state, local, foreign, multinational or international laws, statutes, codes, treaties, standards, rules and regulations, guidelines, ordinances, orders, judgments, writs, injunctions, decrees (including administrative or judicial precedents or authorities) and the interpretation or administration thereof by, and other determinations, directives, requirements or requests of any Governmental Authority, in each case whether or not having the force of law and that are applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject.
“Resolution Authority” means an EEA Resolution Authority or, with respect to any UK Financial Institution, a UK Resolution Authority.
“Responsible Officer” of any Person means the chief executive officer, the president, the chief financial officer, the treasurer, any assistant treasurer, any executive vice president, any senior vice president, any vice president or the chief operating officer of such Person, any authorized signatory appointed by the board of directors (conseil d'administration) or board of managers (conseil de gérance) of such person (as applicable) and any other individual or similar official thereof responsible for the administration of the obligations of such Person in respect of this Agreement, and, as to any document delivered on the Closing Date, shall (subject to the express requirements of Section 4.01) include any secretary or assistant secretary or any other individual or similar official thereof with substantially equivalent responsibilities of a Loan Party. Any document delivered hereunder that is signed by a Responsible Officer of any Loan Party shall be conclusively presumed to have been authorized by all necessary corporate, partnership, limited liability company and/or other action on the part of such Loan Party, and such Responsible Officer shall be conclusively presumed to have acted on behalf of such Loan Party.
“Responsible Officer Certification” means, with respect to the financial statements for which such certification is required, the certification of a Responsible Officer of the Borrower Representative that such financial statements fairly present, in all material respects, in accordance with GAAP, the consolidated financial condition of such Borrower as at the dates indicated and its consolidated income and cash flows for the periods indicated, subject to changes resulting from audit and normal year-end adjustments.
“Restricted Debt” has the meaning set forth in Section 6.04(b).
“Restricted Debt Payment” has the meaning set forth in Section 6.04(b).
“Restricted Payment” means (a) any dividend or other distribution on account of any shares of any class of the Capital Stock of any Borrower, except a dividend payable solely in shares of Qualified Capital Stock to the holders of such class; (b) any redemption, retirement, sinking fund or similar payment, purchase or other acquisition for value of any shares of any class of the Capital Stock of a Borrower and (c) any payment made to retire, or to obtain the surrender of, any outstanding warrants, options or other rights to acquire shares of any class of the Capital Stock of a Borrower now or hereafter outstanding.
“Restricted Subsidiary” means, as to any Person, any subsidiary of such Person that is not an Unrestricted Subsidiary. Unless otherwise specified, “Restricted Subsidiary” shall mean any Restricted Subsidiary of a Borrower.
“Retained Excess Cash Flow Amount” has the meaning assigned to such term in the definition of “Available Amount”.
“Return Bid” has the meaning assigned to such term in the definition of “Dutch Auction”.
“Revaluation Date” shall mean (a) with respect to any Alternative Currency Letter of Credit, each of the following: (i) each date of issuance, extension or renewal of an Alternative Currency Letter of Credit, (ii) each date of an amendment of any Alternative Currency Letter of Credit having the effect of increasing the amount thereof, (iii) each date of any payment by the applicable Issuing Bank under any Alternative Currency Letter of Credit, and (iv) such additional dates as the Administrative Agent or the applicable Issuing Bank shall determine or the Required Revolving Lenders shall require and (b) with respect to any Alternative Currency Revolving Loan, each of the following: (i) each date occurring two Business Days prior to the date of a SOFR Borrowing of Revolving Loans denominated in an Alternative Currency, (ii) each date of a continuation of a SOFR Revolving Loan denominated in an Alternative Currency pursuant to Section 2.08, and (iii) the last Business Day of each Fiscal Quarter, and such additional dates as the Administrative Agent shall determine or the Required Revolving Lenders shall require.
“Revolver Borrower” shall have the meaning assigned to such term in the introductory paragraph of this Agreement.
“Revolving Credit Commitment” means, with respect to each Lender, the commitment of such Lender to make Revolving Loans (and acquire participations in Letters of Credit and Swingline Loans) hereunder as set forth on Schedule 1.01(aaa), or in the Assignment and Assumption pursuant to which such Lender assumed its Revolving Credit Commitment, as applicable, as the same may be (a) reduced from time to time pursuant to Section 2.09, Section 2.11, Section 2.19 or Section 9.02(c), (b) reduced or increased from time to time pursuant to assignments by or to such Lender pursuant to
Section 9.05 or (c) increased as part of an Incremental Revolving Facility. For the avoidance of doubt, as of the Third Amendment Effective Date, the Revolving Credit Commitments shall be $0.
“Revolving Credit Exposure” means, with respect to any Lender at any time, the aggregate Outstanding Amount at such time of all Revolving Loans of such Lender (calculated, in the case of Revolving Loans denominated in an Alternative Currency, based on the Dollar Equivalent thereof), plus the aggregate amount at such time of such Lender’s LC Exposure, plus the aggregate amount at such time of such Lender’s participations in the Outstanding Amount of any Swingline Loans.
“Revolving Credit Maturity Date” means, (x) prior to the Second Amendment Effective Date, the date that is five years after the Closing Date, and (y) after the Second Amendment Effective Date, the date that is five years after the Second Amendment Effective Date.
“Revolving Facility” means, at any time, the Revolving Lenders’ Revolving Credit Commitments at such time. For the avoidance of doubt, as of the Third Amendment Effective Date, no Revolving Facility exists hereunder.
“Revolving Lender” means a Lender with a Revolving Credit Commitment or an Additional Revolving Commitment or an outstanding Revolving Loan or Additional Revolving Loan. Unless the context otherwise requires, the term “Revolving Lenders” shall include the Swingline Lender. For the avoidance of doubt, as of the Third Amendment Effective Date, no Revolving Lenders are party to this Agreement.
“Revolving Loans” means the revolving Loans made by the Lenders to the Revolver Borrower pursuant to Section 2.01(a)(ii), 2.22, 2.23 or 9.02(c)(ii). For the avoidance of doubt, as of the Third Amendment Effective Date, no Revolving Loans exist hereunder.
“S&P” means S&P Global Ratings, and its successors and assigns.
“Sale and Lease-Back Transaction” has the meaning assigned to such term in Section 6.08.
“Sanctions” has the meaning assigned to such term in Section 3.19(a).
“SEC” means the Securities and Exchange Commission, or any Governmental Authority succeeding to any or all of its functions.
“Second Amendment” means that certain Second Amendment to Credit Agreement, dated as of December 18, 2017, among the Borrowers, the other Loan Parties party thereto, the Administrative Agent and the Lenders party thereto.
“Second Amendment Effective Date” has the meaning set forth in the Second Amendment.
“Secured Hedging Obligations” means all Hedging Obligations (other than any Excluded Swap Obligations) under each Hedge Agreement that (a) is in effect on the Closing Date between any Loan Party and a counterparty that is the Administrative Agent, a Lender, an Arranger or any Affiliate of the Administrative Agent, a Lender or an Arranger as of the Closing Date or (b) is entered into after the Closing Date between any Loan Party and any counterparty that is (or is an Affiliate of) the Administrative Agent, any Lender or any Arranger at the time such Hedge Agreement is entered into, for which such Loan Party agrees to provide security and in each case that has been designated to the
Administrative Agent in writing by the Borrower Representative as being a Secured Hedging Obligation for purposes of the Loan Documents, it being understood that each counterparty thereto shall be deemed (A) to appoint the Administrative Agent as its agent under the applicable Loan Documents and (B) to agree to be bound by the provisions of Article 8, Section 9.03 and Section 9.10 as if it were a Lender. For purposes of the preceding sentence, the Borrower Representative may deliver a single notice designating all Hedging Obligations with respect to Derivative Transactions under a single master agreement as “Secured Hedging Obligations”.
“Secured Obligations” means all Obligations, together with (a) all Banking Services Obligations, (b) all Secured Hedging Obligations and (c) all Erroneous Payment Subrogation Rights.
“Secured Parties” means (i) the Lenders, (ii) the Administrative Agent, (iii) each counterparty to a Hedge Agreement with a Loan Party the obligations under which constitute Secured Hedging Obligations, (iv) each provider of Banking Services to any Loan Party the obligations under which constitute Banking Services Obligations, (v) the Arrangers and (vi) the Indemnified Persons and any other beneficiaries of each indemnification obligation undertaken by any Loan Party under any Loan Document and (vii) any Receiver.
“Securities” means any stock, shares, partnership interests, voting trust certificates, certificates of interest or participation in any profit-sharing agreement or arrangement, options, warrants, bonds, debentures, notes, or other evidences of indebtedness, secured or unsecured, convertible, subordinated or otherwise, or in general any instruments commonly known as “securities” or any certificates of interest, shares or participations in temporary or interim certificates for the purchase or acquisition of, or any right to subscribe to, purchase or acquire, any of the foregoing; provided that “Securities” shall not include any earn-out agreement or obligation or any employee bonus or other incentive compensation plan or agreement.
“Securitization Assets” shall mean any of the following assets (or interests therein) from time to time originated, acquired or otherwise owned by any Borrower or any Restricted Subsidiary or in which any Borrower or any Restricted Subsidiary has any rights or interests, in each case, without regard to where such assets or interests are located: (a) any right to payment created by or arising from sales of goods, leases of goods or the rendition of services rendered no matter how evidenced whether or not earned by performance (whether constituting accounts, general intangibles, chattel paper or otherwise) (b) royalty and other similar payments made related to the use of trade names and other intellectual property, business support, training and other services, (c) revenues related to distribution and merchandising of the products of the Borrowers and their Restricted Subsidiaries, (d) IP Rights relating to the generation of any of the foregoing types of assets and (e) any other assets and property to the extent customarily included in securitization transactions of the relevant type in the applicable jurisdictions (as determined by the Borrower Representative in good faith).
“Security Trust Deed” means each of (i) the English Security Trust Deeds, (ii) the Irish Security Trust Deed and (iii) the Jersey Security Trust Instrument.
“SOFR” means a rate equal to the secured overnight financing rate as administered by the SOFR Administrator.
“SOFR Administrator” means the Federal Reserve Bank of New York (or a successor administrator of the secured overnight financing rate).
“SOFR Loan” means a Loan that bears interest at a rate based on Adjusted Term SOFR, other than pursuant to clause (b) of the definition of “Alternate Base Rate”.
“SPC” has the meaning assigned to such term in Section 9.05(e).
“Special Notice Currency” shall mean at any time an Alternative Currency other than the currency of a country that is a member of the Organization for Economic Cooperation and Development at such time located in North America or Europe.
“Special Purpose Securitization Subsidiary” shall mean (i) a direct or indirect subsidiary of a Borrower established in connection with a Permitted Securitization Financing for the acquisition of Securitization Assets or interests therein, and which is designated (as provided below) as a “Special Purpose Securitization Subsidiary” (x) with which no Borrower, Intermediate Holdings nor any of their Restricted Subsidiaries has any contract, agreement, arrangement or understanding (other than pursuant to the Permitted Securitization Documents (including with respect to fees payable in the ordinary course of business in connection with the servicing of accounts receivable and related assets)) on terms less favorable to such Borrower, Intermediate Holdings or such Restricted Subsidiary than those that might be obtained at the time from persons that are not Affiliates of the Borrower Representative (as determined by the Borrower Representative in good faith) and (y) to which no Borrower, Intermediate Holdings, nor any other Restricted Subsidiary has any obligation to maintain or preserve such entity’s financial condition or cause such entity to achieve certain levels of operating results (other than as contemplated in the definition of “Permitted Securitization Financing”) and (ii) any subsidiary of a Special Purpose Securitization Subsidiary. Any such designation shall be evidenced to the Administrative Agent by filing with the Administrative Agent an officer’s certificate of the Borrower Representative certifying that, to the best of such officer’s knowledge and belief after consultation with counsel, such designation complied with the foregoing conditions.
“Specified Acquisition Agreement Representations” means in connection with any Limited Condition Acquisition, the representations and warranties made by or on behalf of the target of such Limited Condition Acquisition, its subsidiaries or their respective businesses in the applicable acquisition agreement which are material to the interest of the Lenders, but only to the extent that the applicable Loan Party has the right to terminate its obligations under such acquisition agreement or to decline to consummate such Limited Condition Acquisition as a result of a breach of such representations and warranties.
“Specified Event of Default” means an Event of Default under Sections 7.01(a), (c) (to the extent resulting from a violation of Section 6.01, 6.02, 6.04, 6.06, 6.07 or 6.10), (f), (g) or (k)(i).
“Specified Representations” means the representations and warranties set forth in Section 3.01(a)(i), Section 3.02 (as it relates to power and authority and the due authorization, execution, delivery and performance of the Loan Documents and the enforceability thereof), Section 3.03(b)(i), Section 3.08, Section 3.12, Section 3.14 (as it relates to the creation, validity and perfection of the security interests in the Collateral, to the extent same are required hereunder as of the Closing Date), Section 3.16 and Section 3.17.
“Specified Transaction” shall have the meaning ascribed to such term in Section 1.10(a).
“Spot Rate” for a currency shall mean the rate determined by the Administrative Agent or the applicable Issuing Bank, as applicable, to be the rate quoted by the person acting in such capacity as the spot rate for the purchase by such person of such currency with another currency through its principal foreign exchange trading office at approximately 11:00 a.m. Local Time on the date three Business Days prior to the date as of which the foreign exchange computation is made (or if such rate cannot be computed as of such date, such other date as the Administrative Agent or the Issuing Bank shall
reasonably determine is appropriate under the circumstances); provided that (x) the Spot Rate may, at the election of the Administrative Agent or respective Issuing Bank, be made on the date on which the foreign exchange computation is made for any payment actually made or to be made, or cash collateralization required, of any amounts pursuant to this Agreement (rather than the date which is three Business Days prior to such date), and (y) the Administrative Agent or the applicable Issuing Bank may obtain such spot rate from another financial institution designated by the Administrative Agent or the applicable Issuing Bank if the person acting in such capacity does not have as of the date of determination a spot buying rate for any such currency.
“Standby Letter of Credit” means any Letter of Credit other than any Commercial Letter of Credit.
“Stated Amount” means, with respect to any Letter of Credit, at any time, the maximum amount available to be drawn thereunder, in each case determined (x) as if any future automatic increases in the maximum available amount provided for in any such Letter of Credit had in fact occurred at such time and (y) without regard to whether any conditions to drawing could then be met but after giving effect to all previous drawings made thereunder.
“Steps Plan” means that certain “Project Blue 2 – Proposed Step Plan” prepared by Ernst & Young, dated as of December 1, 2014, as same may be amended, restated, supplemented or otherwise modified in accordance with Section 4.01(k)(ii) and Section 5.16(a).
“Sterling” or “£” shall mean the lawful currency of the United Kingdom.
“Subject Person” has the meaning assigned to such term in the definition of “Consolidated Net Income”.
“Subject Proceeds” has the meaning assigned to such term in Section 2.11(b)(ii).
“Subject Transactions” has the meaning ascribed to such term in the definition of “Pro Forma Basis”.
“Subordinated Indebtedness” means any Indebtedness of any Borrower or any of its Restricted Subsidiaries that is expressly subordinated in right of payment to the Obligations.
“subsidiary” or “Subsidiary” means, with respect to any Person, any corporation, partnership, limited liability company, association, joint venture or other business entity of which more than 50% of the total voting power of stock or other ownership interests entitled (without regard to the occurrence of any contingency) to vote in the election of the Person or Persons (whether directors, trustees or other Persons performing similar functions) having the power to direct or cause the direction of the management and policies thereof is at the time owned or controlled, directly or indirectly, by such Person or one or more of the other subsidiaries of such Person or a combination thereof; provided that in determining the percentage of ownership interests of any Person controlled by another Person, no ownership interests in the nature of a “qualifying share” of the former Person shall be deemed to be outstanding. Unless otherwise specified, “subsidiary” or “Subsidiary” shall mean any subsidiary of the Borrower Representative.
“Subsidiary Guarantor” means (x) on the Closing Date, each subsidiary of a Borrower (other than any subsidiary that is an Excluded Subsidiary on the Closing Date) and (y) thereafter, each subsidiary of a Borrower that guarantees the Secured Obligations pursuant to the terms of this Agreement,
in each case, until such time as the relevant subsidiary is released from its obligations under the Loan Guaranty in accordance with the terms and provisions hereof.
“Substitute Affiliated Lender” has the meaning assigned to such term in Section 9.05(i)(i)(B).
“Substitute Facility Office” has the meaning assigned to such term in Section 9.05(i)(i)(A).
“Supplier” has the meaning assigned to such term in Section 2.17(p)(ii).
“Swap Obligations” means, with respect to any Loan Party, any obligation to pay or perform under any agreement, contract or transaction that constitutes a “swap” within the meaning of Section 1a(47) of the Commodity Exchange Act.
“Swingline Lender” means a Revolving Lender that has agreed to be a lender of Swingline Loans hereunder.
“Swingline Loan” means any Loan made pursuant to Section 2.04.
“TARGET” shall mean the Trans-European Automated Real-time Gross Settlement Express Transfer (TARGET) payment system (or, if such payment system ceases to be operative, such other payment system (if any) reasonably determined by the Administrative Agent to be a suitable replacement) for the settlement of payments in Euro.
“Taxes” means any and all present and future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any Governmental Authority and “Tax” shall have the corresponding meaning.
“Tax Credit” means a credit against, relief or remission for, or repayment of any Tax.
“Term SOFR” means:
(a) for any calculation with respect to a SOFR Loan, the Term SOFR Reference Rate for a tenor comparable to the applicable Interest Period on the day (such day, the “Periodic Term SOFR Determination Day”) that is two (2) U.S. Government Securities Business Days prior to the first day of such Interest Period, as such rate is published by the Term SOFR Administrator; provided, however, that if as of 5:00 p.m. (New York City time) on any Periodic Term SOFR Determination Day the Term SOFR Reference Rate for the applicable tenor has not been published by the Term SOFR Administrator and a Benchmark Replacement Date with respect to the Term SOFR Reference Rate has not occurred, then Term SOFR will be the Term SOFR Reference Rate for such tenor as published by the Term SOFR Administrator on the first preceding U.S. Government Securities Business Day for which such Term SOFR Reference Rate for such tenor was published by the Term SOFR Administrator so long as such first preceding U.S. Government Securities Business Day is not more than three (3) U.S. Government Securities Business Days prior to such Periodic Term SOFR Determination Day, and
(b) for any calculation with respect to an ABR Loan on any day, the Term SOFR Reference Rate for a tenor of one month on the day (such day, the “ABR Term SOFR Determination Day”) that is two (2) U.S. Government Securities Business Days prior to such day, as such rate is published by the Term SOFR Administrator; provided, however, that if as of
5:00 p.m. (New York City time) on any ABR Term SOFR Determination Day the Term SOFR Reference Rate for the applicable tenor has not been published by the Term SOFR Administrator and a Benchmark Replacement Date with respect to the Term SOFR Reference Rate has not occurred, then Term SOFR will be the Term SOFR Reference Rate for such tenor as published by the Term SOFR Administrator on the first preceding U.S. Government Securities Business Day for which such Term SOFR Reference Rate for such tenor was published by the Term SOFR Administrator so long as such first preceding U.S. Government Securities Business Day is not more than three (3) U.S. Government Securities Business Days prior to such ABR SOFR Determination Day.
“Term SOFR Adjustment” means, for any calculation with reflect to an ABR Loan or a SOFR Loan, a percentage per annum as set forth below for the applicable Type of such Loan and (if applicable) Interest Period therefor:
(a) ABR Loans: 0.11448% (11.448 basis points); and
(b) SOFR Loans:
| | | | | |
| Interest Period | Percentage |
| |
| One Month | 0.11448% (11.448 basis points) |
| |
| Three Months | 0.26161% (26.161 basis points) |
| |
| Six Months | 0.42826% (42.826 basis points) |
| |
“Term SOFR Administrator” means CME Group Benchmark Administration Limited (CBA) (or a successor administrator of the Term SOFR Reference Rate selected by the Administrative Agent in its reasonable discretion).
“Term SOFR Reference Rate” means the forward-looking term rate based on SOFR.
“Termination Date” has the meaning assigned to such term in the introductory paragraph to Article 5.
“Term Borrower” means (a) prior to the Third Amendment Effective Date, the Original Term Borrowers and (b) from and after the Third Amendment Effective Date, the Lux Borrower and the US Co-Borrower.
“Term Facility” means the Term Loans provided to or for the benefit of the Term Borrowers pursuant to the terms of this Agreement.
“Term Lender” means a Lender with an Initial Term Loan Commitment, an Initial Euro Term Loan Commitment, a 2017 Replacement Euro Term Loan Commitment, a 2017 Replacement USD Term Loan Commitment, a 2021 Replacement Term Loan Commitment or an Additional Term Commitment or an outstanding Initial Term Loan, 2017 Replacement Term Loan, 2021 Replacement Term Loan or Additional Term Loan.
“Term Loan” means the Initial Term Loans, 2017 Replacement Term Loans, 2021 Replacement Term Loans and, if applicable, any Additional Term Loans.
“Test Period” means, as of any date, the period of four consecutive Fiscal Quarters then most recently ended for which financial statements under Section 5.01(a) or Section 5.01(b), as applicable, have been delivered (or are required to have been delivered); it being understood and agreed that prior to the first delivery of financial statements of Section 5.01(a), “Test Period” means the most recent period of four consecutive Fiscal Quarters in respect of which financial statements were delivered pursuant to Section 4.01(c).
“Third Amendment” means that certain Third Amendment to Credit Agreement, dated as of June 30, 2021, among the Borrowers, the other Loan Parties party thereto, the Administrative Agent and the Lenders party thereto.
“Third Amendment Effective Date” has the meaning set forth in the Third Amendment.
“Threshold Amount” means $25,000,000.
“Total Leverage Ratio” means the ratio, as of any date of determination, of (a) Consolidated Total Debt outstanding as of such date to (b) Consolidated Adjusted EBITDA for the Test Period then most recently ended or the Test Period otherwise specified where the term “Total Leverage Ratio” is used in this Agreement in each case for the Borrowers and their Restricted Subsidiaries.
“Total Revolving Credit Commitment” means, at any time, the aggregate amount of the Revolving Credit Commitments, as in effect at such time. The Total Revolving Credit Commitment as of the Third Amendment Effective Date is $0.
“Trade Date” has the meaning assigned to such term in Section 9.05(f)(i).
“Trademark” means the following: (a) all trademarks (including service marks), common law marks, trade names, trade dress, Internet domain names and logos, slogans and other indicia of origin under the laws of any jurisdiction in the world, and the registrations and applications for registration thereof and the goodwill of the business symbolized by the foregoing; (b) all renewals of the foregoing; (c) all income, royalties, damages, and payments now or hereafter due or payable with respect thereto, including, without limitation, damages, claims, and payments for past and future infringements thereof; (d) all rights to sue for past, present, and future infringements of the foregoing, including the right to settle suits involving claims and demands for royalties owing; and (e) all domestic rights corresponding to any of the foregoing.
“Transaction Costs” means fees, premiums, expenses and other transaction costs (including original issue discount or upfront fees) payable or otherwise borne by Indivior plc and its subsidiaries in connection with the Transactions and the transactions contemplated thereby.
“Transaction Dividend” has the meaning set forth in the preamble hereto.
“Transactions” means, collectively, (a) the execution, delivery and performance by the Loan Parties of the Loan Documents to which they are a party and the Borrowing of Loans hereunder, (b) the RB Reorganization, (c) the Transaction Dividend, (d) the Demerger, (e) the Intercompany Proceeds Loan and the listing of the Intercompany Notes as contemplated by Section 4.01(r) and (f) the payment of Transaction Costs.
“Transformational Event” means any acquisition or investment by any Borrower or any Restricted Subsidiary that is either (a) not permitted by the terms of this Agreement immediately prior to the consummation of such acquisition or investment or (b) if permitted by the terms of this Agreement immediately prior to the consummation of such acquisition or investment, would not provide the Borrowers and their Restricted Subsidiaries with adequate flexibility under this Agreement for the continuation and/or expansion of their combined operations following such consummation, as determined by the Borrower Representative acting in good faith.
“Treasury Capital Stock” has the meaning assigned to such term in Section 6.04(a)(viii).
“Treasury Regulations” means the U.S. federal income tax regulations promulgated under the Code.
“Type”, when used in reference to any Loan or Borrowing, refers to whether the rate of interest on such Loan, or on the Loans comprising such Borrowing, is determined by reference to Adjusted Term SOFR or (in the case of a Loan or Borrowing denominated in Dollars) the Alternate Base Rate.
“UCC” means the Uniform Commercial Code as in effect from time to time in the State of New York or any other state the laws of which are required to be applied in connection with the issue or perfection of security interests.
“UK Financial Institution” means any BRRD Undertaking (as such term is defined under the PRA Rulebook (as amended form time to time) promulgated by the United Kingdom Prudential Regulation Authority) or any person falling within IFPRU 11.6 of the FCA Handbook (as amended from time to time) promulgated by the United Kingdom Financial Conduct Authority, which includes certain credit institutions and investment firms, and certain affiliates of such credit institutions or investment firms.
“UK Resolution Authority” means the Bank of England or any other public administrative authority having responsibility for the resolution of any UK Financial Institution.
“Unfunded Advances/Participations” means (a) with respect to the Administrative Agent, the aggregate amount, if any (i) made available to a Borrower on the assumption that each Lender has made available to the Administrative Agent such Lender’s share of the applicable Borrowing available to the Administrative Agent as contemplated by Section 2.07(b) and/or Section 2.18(d) and (ii) with respect to which a corresponding amount shall not in fact have been returned to the Administrative Agent by such Borrower or made available to the Administrative Agent by any such Lender, (b) with respect to the Swingline Lender, the aggregate Outstanding Amount, if any, of Swingline Loans in respect of which any Revolving Lender fails to make available to the Administrative Agent for the account of the Swingline Lender any amount required to be paid by such Lender pursuant to Section 2.04(b) and (c) with respect to any Issuing Bank, the aggregate amount, if any, of LC Disbursements in respect of which a Revolving Lender shall have failed to make Revolving Loans to reimburse such Issuing Bank pursuant to Section 2.05(e).
“United Kingdom” and “U.K.” mean the United Kingdom of Great Britain and Northern Ireland (or any jurisdiction within the United Kingdom).
“U.K. Qualifying Lender” means:
(a) a Lender which is beneficially entitled to interest payable to that Lender in respect of an advance under a Loan Document and is:
(i) a Lender:
a. which is a bank (as defined for the purpose of section 879 of the ITA) making an advance under a Loan Document and is within the charge to United Kingdom corporation tax as respects any payment of interest made in respect of that advance or would be within such charge as respects such payments apart from section 18A of the CTA; or
b. in respect of an advance made under a Loan Document by a person that was a bank (as defined for the purpose of section 879 of the ITA) at the time that that advance was made and within the charge to United Kingdom corporation tax as respects any payments of interest made in respect of that advance; or
(ii) a Lender which is:
a. a company resident in the United Kingdom for United Kingdom tax purposes;
b. a partnership each member of which is:
i. a company so resident in the United Kingdom; or
ii. a company not so resident in the United Kingdom which carries on a trade in the United Kingdom through a permanent establishment and which brings into account in computing its chargeable profits (within the meaning of section 19 of the CTA) the whole or any share of interest payable in respect of that advance that falls to it by reason of Part 17 of the CTA;
c. a company not so resident in the United Kingdom which carries on a trade in the United Kingdom through a permanent establishment and which brings into account interest payable in respect of that advance in computing the chargeable profits (within the meaning of section 19 of the CTA) of that company; or
(iii) a U.K. Treaty Lender; or
(b) a lender which is a building society (as defined for the purpose of section 880 of the ITA) making an advance under a Loan Document.
“U.K. Revolver Borrower” means the Revolver Borrower with respect to a Loan or Letter of Credit whose payments under that Loan are treated for United Kingdom tax purposes as arising in the United Kingdom and “U.K. Revolver Borrowers” shall have the corresponding meaning.
“U.K. Tax Confirmation” means a confirmation by a Lender that the person beneficially entitled to interest payable to that Lender in respect of an advance under a Loan Document is either:
(a) a company resident in the United Kingdom for United Kingdom tax purposes;
(b) a partnership each member of which is:
(i) a company so resident in the United Kingdom; or
(ii) a company not so resident in the United Kingdom which carries on a trade in the United Kingdom through a permanent establishment and which brings into account in computing its chargeable profits (within the meaning of section 19 of the CTA) the whole of any share of interest payable in respect of that advance that falls to it by reason of Part 17 of the CTA; or
(c) a company not so resident in the United Kingdom which carries on a trade in the United Kingdom through a permanent establishment and which brings into account interest payable in respect of that advance in computing the chargeable profits (within the meaning of section 19 of the CTA) of that company.
“U.K. Tax Deduction” means a deduction or withholding for or on account of Tax from payment under a Loan Document, other than any U.S. withholding tax under FATCA.
“U.K. Tax Payment” means the increase in a payment made by a Loan Party under Section 2.17(a)(Y).
“U.K. Treaty Lender” means a Lender which:
(a) is treated as a resident of a U.K. Treaty State for purposes of the Treaty;
(b) does not carry on a business in the United Kingdom through a permanent establishment with which that Lender’s participation in the relevant Loan is effectively connected; and
(c) meets all other conditions in the Treaty for full exemption from the United Kingdom taxation on interest which relate to the Lender.
“U.K. Treaty State” means a jurisdiction having a double taxation agreement (a “Treaty”) with the United Kingdom which makes provision for full exemption from Tax imposed by the United Kingdom on interest.
“Unrestricted Subsidiary” means any subsidiary of a Borrower designated by the Borrower as an Unrestricted Subsidiary after the Closing Date pursuant to Section 5.10. Notwithstanding the foregoing, in no circumstances shall any Borrower be permitted to be an Unrestricted Subsidiary.
“Unused Revolving Credit Commitment” of any Lender, at any time, means the Dollar Equivalent of the remainder of the Revolving Credit Commitment of such Lender at such time, if any, less the sum of (a) the aggregate Outstanding Amount of Revolving Loans made by such Lender, (b) such Lender’s LC Exposure at such time and (c) except for purposes of Section 2.12(a), such Lender’s Applicable Percentage of the aggregate Outstanding Amount of Swingline Loans.
“U.S.” means the United States of America.
“U.S. Government Securities Business Day” means any day except for (a) a Saturday, (b) a Sunday or (c) a day on which the Securities Industry and Financial Markets Association recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in United States government securities.
“USA PATRIOT Act” means the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (Title III of Pub. L. No. 107-56 (signed into law October 26, 2001)).
“U.S. Security Agreement” means the U.S. Security Agreement, substantially in the form of Exhibit J, among the Loan Parties (to the extent that such Persons are incorporated or organized under (or own Capital Stock in, or any Material Debt Instrument issued by, any Person incorporated or organized under) the laws of the U.S., any state thereof or the District of Columbia) and the Administrative Agent for the benefit of the Secured Parties.
“U.S. Tax Compliance Certificate” has the meaning assigned to such term in Section 2.17(k)(ii)(B)(3).
“VAT” means (a) any Tax imposed in compliance with the Council Directive of 28 November 2006 on the common system of value added tax (EC Directive 2006/112); and (b) any other Tax of a similar nature, whether imposed in a member state of the European Union in substitution for, or levied in addition to, the Tax referred to in clause (a) above, or imposed elsewhere.
“Weighted Average Life to Maturity” means, when applied to any Indebtedness at any date, the number of years obtained by dividing: (a) the sum of the products obtained by multiplying (i) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect thereof, by (ii) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment; by (b) the then outstanding principal amount of such Indebtedness.
“Wholly-Owned Subsidiary” of any Person means a subsidiary of such Person, 100% of the Capital Stock of which (other than directors’ qualifying shares or shares required by law to be owned by a resident of the relevant jurisdiction) shall be owned by such Person or by one or more Wholly-Owned Subsidiaries of such Person.
“Write-Down and Conversion Powers” means, (a) with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule and (b) with respect to the United Kingdom, any powers of the applicable Resolution Authority under the Bail-In Legislation to cancel, reduce, modify or change the form of a liability of any UK Financial Institution or any contract or instrument under which that liability arises, to convert all or part of that liability into shares, securities or obligations of that person or any other person, to provide that any such contract or instrument is to have effect as if a right had been exercised under it or to suspend any obligation in respect of that liability or any of the powers under that Bail-In Legislation that are related to or ancillary to any of those powers.
Section 1.02 Classification of Loans and Borrowings. For purposes of this Agreement, Loans may be classified and referred to by Class (e.g., a “Term Loan”) or by Type (e.g., a “SOFR Loan”) or by currency (i.e. “Dollar Loans”) or by Class and Type (e.g., a “SOFR Term Loan”). Borrowings also may be classified and referred to by Class (e.g., a “Term Borrowing”) or by Type (e.g., a
“SOFR Borrowing”) or by currency (i.e. “Dollar Borrowings”) or by Class and Type (e.g., a “SOFR Term Borrowing”).
Section 1.03 Terms Generally. The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” The word “will” shall be construed to have the same meaning and effect as the word “shall.” Unless the context requires otherwise (a) any definition of or reference to any agreement, instrument or other document herein or in any Loan Document shall be construed as referring to such agreement, instrument or other document as from time to time amended, restated, amended and restated, supplemented or otherwise modified or extended, replaced or refinanced (subject to any restrictions or qualifications on such amendments, restatements, amendment and restatements, supplements or modifications or extensions, replacements or refinancings set forth herein), (b) any reference to any law in any Loan Document shall include all statutory and regulatory provisions consolidating, amending, replacing, supplementing or interpreting such law, (c) any reference herein or in any Loan Document to any Person shall be construed to include such Person’s successors and permitted assigns, (d) the words “herein,” “hereof” and “hereunder,” and words of similar import, when used in any Loan Document, shall be construed to refer to such Loan Document in its entirety and not to any particular provision hereof, (e) all references herein or in any Loan Document to Articles, Sections, clauses, paragraphs, Exhibits and Schedules shall be construed to refer to Articles, Sections, clauses and paragraphs of, and Exhibits and Schedules to, such Loan Document, (f) in the computation of periods of time in any Loan Document from a specified date to a later specified date, the word “from” means “from and including”, the words “to” and “until” mean “to but excluding” and the word “through” means “to and including” and (g) the words “asset” and “property”, when used in any Loan Document, shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including Cash, securities, accounts and contract rights. For purposes of determining compliance at any time with Sections 6.01, 6.02 and 6.05, in the event that any Indebtedness, Lien or Investment, as applicable, meets the criteria of more than one of the categories of transactions or items permitted pursuant to any clause of such Sections 6.01 (other than Sections 6.01(a), (i), (p) (to the extent relating to Indebtedness incurred under Section 6.01(a), (i), (q), (w) or (z) (or, in each case, permitted refinancing Indebtedness with respect thereto)) (q), (w) and (z), and so long as in no circumstances shall Indebtedness owing to Intermediate Holdings, any Borrower or any Restricted Subsidiary be justified as incurred or outstanding under Section 6.01(a), (q), (p) (to the extent relating to Indebtedness incurred under Section 6.01(a), (q), (w) or (z) (or, in each case, permitted refinancing Indebtedness or successive permitted refinancing Indebtedness with respect thereto)), (q), (w) or (z)), 6.02 (other than Sections 6.02(a), (k) (to the extent relating to Liens incurred under Section 6.02(a), (l), (q) (t) or (jj) (or, in each case, modifications, replacements, refinancings, renewals and extensions thereof)), (o), (t) and (jj)) and 6.05 (other than Section 6.05(f)), the Borrowers, in their sole discretion, may, from time to time, classify or reclassify such transaction or item (or portion thereof) and will only be required to include the amount and type of such transaction (or portion thereof) in any one category. It is understood and agreed that any Indebtedness, Lien, Restricted Payment, Restricted Debt Payment, Investment, Disposition and/or Affiliate transaction need not be permitted solely by reference to one category of permitted Indebtedness, Lien, Restricted Payment, Restricted Debt Payment, Investment, Disposition and/or Affiliate transaction under Sections 6.01, 6.02, 6.04, 6.05, 6.06, 6.07 or 6.09, respectively, but may instead be permitted in part under any combination thereof.
Section 1.04 Accounting Terms; GAAP.
(a) All financial statements to be delivered pursuant to this Agreement shall be prepared in accordance with GAAP as in effect from time to time and, except as otherwise expressly provided herein, all terms of an accounting or financial nature that are used in calculating the Total
Leverage Ratio, the First Lien Leverage Ratio, Consolidated Adjusted EBITDA or Consolidated Total Assets shall be construed and interpreted in accordance with GAAP, as in effect from time to time; provided that if the Borrower Representative notifies the Administrative Agent that the Borrower Representative requests an amendment to any provision hereof to eliminate the effect of any change occurring after the date of delivery of the financial statements described in Section 3.04(a) in GAAP or in the application thereof on the operation of such provision (or if the Administrative Agent notifies the Borrower Representative that the Required Lenders request an amendment to any provision hereof for such purpose), regardless of whether any such notice is given before or after such change in GAAP or in the application thereof, then such provision shall be interpreted on the basis of GAAP as in effect and applied immediately before such change becomes effective until such notice shall have been withdrawn or such provision amended in accordance herewith; provided, further, that if such an amendment is requested by the Borrower Representative or the Required Lenders, then the Borrower Representative and the Administrative Agent shall negotiate in good faith to enter into an amendment of the relevant affected provisions (without the payment of any amendment or similar fee to the Lenders) to preserve the original intent thereof in light of such change in GAAP or the application thereof; provided, further, that all terms of an accounting or financial nature used herein shall be construed, and all computations of amounts and ratios referred to herein shall be made without giving effect to (i) any election under Accounting Standards Codification 825-10-25 (previously referred to as Statement of Financial Accounting Standards 159) (or any other Accounting Standards Codification or Financial Accounting Standard having a similar result or effect) to value any Indebtedness or other liabilities of Intermediate Holdings, the Borrowers or any subsidiary at “fair value”, as defined therein and (ii) any treatment of Indebtedness in respect of convertible debt instruments under Accounting Standards Codification 470-20 (or any other Accounting Standards Codification or Financial Accounting Standard having a similar result or effect) to value any such Indebtedness in a reduced or bifurcated manner as described therein, and such Indebtedness shall at all times be valued at the full stated principal amount thereof.
(b) Notwithstanding anything to the contrary herein, but subject to Section 1.12, all financial ratios and tests (including the Total Leverage Ratio, the First Lien Leverage Ratio and the amount of Consolidated Total Assets and Consolidated Adjusted EBITDA) contained in this Agreement that are calculated with respect to any Test Period during which any Subject Transaction occurs shall be calculated with respect to such Test Period and such Subject Transaction on a Pro Forma Basis. Further, if since the beginning of any such Test Period and on or prior to the date of any required calculation of any financial ratio or test (x) any Subject Transaction has occurred or (y) any Person that subsequently became a Restricted Subsidiary or was merged, amalgamated or consolidated with or into any Borrower or any of its Restricted Subsidiaries or any joint venture since the beginning of such Test Period has consummated any Subject Transaction, then, in each case, any applicable financial ratio or test shall be calculated on a Pro Forma Basis for such Test Period as if such Subject Transaction had occurred at the beginning of the applicable Test Period (it being understood, for the avoidance of doubt, that solely for purposes of calculating the Total Leverage Ratio for purposes of the definitions of “Applicable Rate” and “Commitment Fee Rate”, in each case, the date of the required calculation shall be the last day of the Test Period, and no Subject Transaction occurring thereafter shall be taken into account).
(c) Notwithstanding anything to the contrary contained in paragraph (a) above or in the definition of “Capital Lease”, in the event of an accounting change requiring all leases to be capitalized, only those leases (assuming for purposes hereof that such leases were in existence on the date hereof) that would constitute Capital Leases in conformity with GAAP on the date hereof shall be considered Capital Leases, and all calculations and deliverables under this Agreement or any other Loan Document shall be made or delivered, as applicable, in accordance therewith (provided that together with all financial statements delivered to the Administrative Agent in accordance with the terms of this Agreement after the date of any such accounting change, the Borrowers shall deliver a schedule showing
the adjustments necessary to reconcile such financial statements with GAAP as in effect immediately prior to such accounting change).
Section 1.05 Effectuation of Transactions. Each of the representations and warranties contained in this Agreement (and all corresponding definitions) is made after giving effect to the Transactions (or in the case of representations and warranties to be made on the Closing Date, such portions of the Transactions as have been or are to be consummated on or prior to such date), unless the context otherwise requires.
Section 1.06 Timing of Payment of Performance. When payment of any obligation or the performance of any covenant, duty or obligation is stated to be due or required on a day which is not a Business Day, the date of such payment (other than as described in the definition of “Interest Period”) or performance shall extend to the immediately succeeding Business Day, and, in the case of any payment accruing interest, interest thereon shall be payable for the period of such extension.
Section 1.07 Exchange Rates; Currency Equivalents.
(a) The Administrative Agent or the applicable Issuing Bank, as applicable, shall determine the Spot Rates as of each Revaluation Date to be used for calculating Dollar Equivalent and Alternative Currency Equivalent (as applicable) amounts of Revolving Loans, Letters of Credit, LC Disbursements and any other applicable amount denominated in currencies other than Dollars. Such Spot Rates shall become effective as of such Revaluation Date and shall be the Spot Rates employed in converting any amounts between the applicable currencies until the next Revaluation Date to occur. Except for purposes of financial statements delivered by Loan Parties hereunder or calculating financial covenants hereunder or except as otherwise provided herein, the applicable amount of any currency (other than Dollars) for purposes of the Loan Documents shall be such Dollar Equivalent amount as so determined by the Administrative Agent or the Issuing Bank, as applicable.
(b) Wherever in this Agreement in connection with a Borrowing of Initial Euro Term Loans, 2017 Replacement Euro Term Loans or under the Revolving Facility, continuation or prepayment of an Initial Euro Term Loan, a 2017 Replacement Euro Term Loan or a Revolving Loan, the issuance, amendment or extension of a Letter of Credit or the assignment of any Loan or Commitment denominated in any Alternative Currency, an amount, such as a required minimum or multiple amount, is expressed in Dollars, but such Borrowing, Loan, Commitment or Letter of Credit is denominated in an Alternative Currency, such amount shall be the relevant Alternative Currency Equivalent of such Dollar amount (rounded to the nearest unit of such Alternative Currency, with 0.5 of a unit being rounded upward), as determined by the Administrative Agent or the applicable Issuing Bank, as the case may be.
Section 1.08 Additional Alternative Currencies.
(a) The Revolver Borrower may from time to time request that Revolving Loans be made and/or Letters of Credit be issued in a currency other than those specifically listed in the definition of “Alternative Currency”; provided that such requested currency is a lawful currency (other than Dollars) that is readily available and freely transferable and convertible into Dollars. In the case of any such request with respect to the making of Revolving Loans, such request shall be subject to the approval of the Administrative Agent and all of the Revolving Lenders; and in the case of any such request with respect to the issuance of Letters of Credit, such request shall be subject to the approval of the Administrative Agent, the applicable Issuing Bank and all of the Revolving Lenders.
(b) Any such request shall be made to the Administrative Agent not later than 11:00 a.m., Local Time, 20 Business Days prior to the date of the desired Credit Extension (or such other
time or date as may be agreed by the Administrative Agent and, in the case of any such request pertaining to Letters of Credit, the applicable Issuing Bank, in its sole discretion). In the case of any such request pertaining to Revolving Loans, the Administrative Agent shall promptly notify each Revolving Lender thereof; and in the case of any such request pertaining to Letters of Credit, the Administrative Agent shall promptly notify the applicable Issuing Bank thereof. Each Revolving Lender, and (in the case of a request pertaining to Letters of Credit the applicable Issuing Bank), shall notify the Administrative Agent, not later than 11:00 a.m., Local Time, ten Business Days after receipt of such request whether it consents, in its sole discretion, to the making of Revolving Loans or the issuance of Letters of Credit, as the case may be, in such requested currency.
(c) Any failure by a Lender or an Issuing Bank, as the case may be, to respond to such request within the time period specified in the preceding sentence shall be deemed to be a refusal by such Lender or Issuing Bank, as the case may be, to permit Revolving Loans to be made or Letters of Credit to be issued in such requested currency. If the Administrative Agent and all the Revolving Lenders consent to making Revolving Loans in such requested currency, the Administrative Agent shall so notify the Revolver Borrower and such currency shall (subject to any amendments to this Agreement as may be required pursuant to Section 9.02(e)) thereupon be deemed for all purposes to be an Alternative Currency hereunder for purposes of any Revolving Facility Borrowings; and if the Administrative Agent and the Issuing Bank consent to the issuance of Letters of Credit in such requested currency, the Administrative Agent shall so notify the Revolver Borrower and such currency shall (subject to any amendments to this Agreement as may be required pursuant to Section 9.02(e)) thereupon be deemed for all purposes to be an Alternative Currency hereunder for purposes of any Letter of Credit issuances. If the Administrative Agent shall fail to obtain consent to any request for an additional currency under this Section 1.08, the Administrative Agent shall promptly so notify the Revolver Borrower.
Section 1.09 Times of Day. Unless otherwise specified, all references herein to times of day shall be references to New York City time (daylight or standard, as applicable).
Section 1.10 Currency Generally.
(a) For purposes of any determination under Article 5, Article 6 (other than Section 6.14 and the calculation of compliance with any financial ratio for purposes of taking any action hereunder) or Article 7 with respect to the amount of any Indebtedness, Lien, Restricted Payment, Restricted Debt Payment, Investment, Disposition, Sale and Lease-Back Transaction, affiliate transaction or other transaction, event or circumstance, or any determination under any other provision of this Agreement (other than in connection with any Initial Euro Term Loans, 2017 Replacement Euro Term Loans and any Revolving Loans or Letters of Credit denominated in any Alternative Currency) (any of the foregoing, a “Specified Transaction”), in a currency other than Dollars, (i) the Dollar equivalent amount of a Specified Transaction in a currency other than Dollars shall be calculated based on the rate of exchange quoted by the Bloomberg Foreign Exchange Rates & World Currencies Page (or any successor page thereto, or in the event such rate does not appear on any Bloomberg Page, by reference to such other publicly available service for displaying exchange rates as may be agreed upon by the Administrative Agent and the Borrower) for such foreign currency, as in effect at 11:00 a.m. (London time) on the date of such Specified Transaction (which, in the case of any Restricted Payment, shall be deemed to be the date of the declaration thereof and, in the case of the incurrence of Indebtedness, shall be deemed to be on the date first committed); provided that if any Indebtedness is incurred (and, if applicable, associated Lien granted) to refinance or replace other Indebtedness denominated in a currency other than Dollars, and the relevant refinancing or replacement would cause the applicable Dollar-denominated restriction to be exceeded if calculated at the relevant currency exchange rate in effect on the date of such refinancing or replacement, such Dollar-denominated restriction shall be deemed not to have been exceeded so long as the principal amount of such refinancing or replacement Indebtedness (and, if applicable, associated Lien
granted) does not exceed an amount sufficient to repay the principal amount of such Indebtedness being refinanced or replaced, except by an amount equal to (x) unpaid accrued interest and premiums (including tender premiums) thereon plus other reasonable and customary fees and expenses (including upfront fees and original issue discount) incurred in connection with such refinancing or replacement, (y) any existing commitments unutilized thereunder and (z) additional amounts permitted to be incurred under Section 6.01 (so long as any such additional amounts are justified under and incurred in accordance with one or more of the applicable exceptions to Section 6.01 (other than Section 6.01(p)) and (ii) for the avoidance of doubt, no Default or Event of Default shall be deemed to have occurred solely as a result of a change in the rate of currency exchange occurring after the time of any Specified Transaction so long as such Specified Transaction was permitted at the time incurred, made, acquired, committed, entered or declared as set forth in clause (i). For purposes of Section 6.14 and the calculation of compliance with any financial ratio for purposes of taking any action hereunder (other than in connection with any Initial Euro Term Loans, 2017 Replacement Euro Term Loans and any Revolving Loans or Letters of Credit denominated in any Alternative Currency), on any relevant date of determination, amounts denominated in currencies other than Dollars shall be (other than in connection with any Initial Euro Term Loans, 2017 Replacement Euro Term Loans and any Revolving Loans or Letters of Credit denominated in any Alternative Currency) translated into Dollars at the applicable currency exchange rate used in preparing the financial statements delivered pursuant to Section 5.01(a) or (b), as applicable, for the relevant Test Period and will, with respect to any Indebtedness, reflect the currency translation effects, determined in accordance with GAAP, of any Hedge Agreement permitted hereunder in respect of currency exchange risks with respect to the applicable currency in effect on the date of determination for the Dollar equivalent amount of such Indebtedness.
(b) Each provision of this Agreement shall be subject to such reasonable changes of construction as the Administrative Agent may from time to time specify with the Borrower Representative’s consent to appropriately reflect a change in currency of any country and any relevant market convention or practice relating to such change in currency.
(c) Each obligation of a Borrower to make a payment denominated in the national currency unit of any member state of the European Union that adopts the Euro as its lawful currency after the date hereof shall be redenominated into Euro at the time of such adoption (in accordance with the EMU Legislation). If, in relation to the currency of any such member state, the basis of accrual of interest expressed in this Agreement in respect of that currency shall be inconsistent with any convention or practice in the European syndicated loan market for the basis of accrual of interest in respect of the Euro, such expressed basis shall be replaced by such convention or practice with effect from the date on which such member state adopts the Euro as its lawful currency; provided that if any Borrowing in the currency of such member state is outstanding immediately prior to such date, such replacement shall take effect, with respect to such Borrowing, at the end of the then current Interest Period.
(d) Each provision of this Agreement shall be subject to such reasonable changes of construction as the Administrative Agent may from time to time specify to be appropriate to reflect the adoption of the Euro by any member state of the European Union and any relevant market conventions or practices relating to the Euro.
Section 1.11 Cashless Rollovers. Notwithstanding anything to the contrary contained in this Agreement or in any other Loan Document, to the extent that any Lender extends the maturity date of, or replaces, renews or refinances, any of its then-existing Loans with Incremental Loans, Replacement Term Loans, Loans in connection with any Replacement Revolving Facility, Extended Term Loans, Extended Revolving Loans or loans incurred under a new credit facility, in each case, to the extent such extension, replacement, renewal or refinancing is effected by means of a “cashless roll” by such Lender, such extension, replacement, renewal or refinancing shall be deemed to comply with any requirement
hereunder or any other Loan Document that such payment be made “in Dollars”, “in immediately available funds”, “in Cash” or any other similar requirement.
Section 1.12 Certain Calculations and Tests.
(a) Notwithstanding anything to the contrary herein, to the extent that the terms of this Agreement require (i) compliance with any financial ratio or test (including, without limitation, any First Lien Leverage Ratio test, any Total Leverage Ratio test) and/or the amount of Consolidated Adjusted EBITDA or Consolidated Total Assets or (ii) the absence of a Default or Event of Default (or any type of Default or Event of Default) as a condition to (A) the making of any Restricted Payment and/or (B) the making of any Restricted Debt Payment, the determination of whether the relevant condition is satisfied may be made, at the election of the Borrower Representative, (1) in the case of any Restricted Payment, at the time of (or on the basis of the financial statements for the most recently ended Test Period at the time of) (x) the declaration of such Restricted Payment or (y) the making of such Restricted Payment and (2) in the case of any Restricted Debt Payment, at the time of (or on the basis of the financial statements for the most recently ended Test Period at the time of) (x) delivery of irrevocable (which may be conditional) notice with respect to such Restricted Debt Payment or (y) the making of such Restricted Debt Payment, in each case, after giving effect to the relevant acquisition, Restricted Payment and/or Restricted Debt Payment on a Pro Forma Basis; provided that if the Borrower Representative has made such an election, in connection with the calculation of any ratio, test or basket with respect to the incurrence of any Indebtedness (including any Incremental Facilities) or Liens, or the making of any Investments, Restricted Payments, Restricted Debt Payments, Dispositions, fundamental changes or the designation of a Restricted Subsidiary or Unrestricted Subsidiary on or following such date and prior to the earlier of the date on which such Restricted Payment or Restricted Debt Payment (as applicable) is made, any such ratio, test or basket shall be calculated on a Pro Forma Basis assuming such Restricted Payment or Restricted Debt Payment (as applicable) and other pro forma events in connection therewith (including any incurrence of Indebtedness) have been consummated.
(b) For purposes of determining the permissibility of any action, change, transaction or event that requires a calculation of any financial ratio or test (including, without limitation, any First Lien Leverage Ratio test, any Total Leverage Ratio test and/or the amount of Consolidated Adjusted EBITDA or Consolidated Total Assets), such financial ratio or test shall be calculated at the time such action is taken (subject to clause (a) above), such change is made, such transaction is consummated or such event occurs, as the case may be, and no Default or Event of Default shall be deemed to have occurred solely as a result of a change in such financial ratio or test occurring after the time such action is taken, such change is made, such transaction is consummated or such event occurs, as the case may be.
(c) Notwithstanding anything to the contrary herein, with respect to any amounts incurred or transactions entered into (or consummated) in reliance on a provision of this Agreement that does not require compliance with a financial ratio based test (including, without limitation, any First Lien Leverage Ratio test and/or any Total Leverage Ratio test) but that does require compliance with a fixed dollar basket (any such amounts, the “Fixed Amounts”) substantially concurrently with any amounts incurred or transactions entered into (or consummated) in reliance on a provision of this Agreement that requires compliance with a financial ratio based test (including, without limitation, any First Lien Leverage Ratio test and/or any Total Leverage Ratio test) (any such amounts, the “Incurrence-Based Amounts”), it is understood and agreed that the Fixed Amounts shall be disregarded in the calculation of the financial ratio or test applicable to the Incurrence-Based Amounts.
Section 1.13 Rounding. Any financial ratios required to be maintained by the Borrowers pursuant to this Agreement (or required to be satisfied in order for a specific action to be permitted under this Agreement) shall be calculated by dividing the appropriate component by the other
component, carrying the result to one place more than the number of places by which such ratio is expressed herein and rounding the result up or down to the nearest number (with a rounding-up for five).
Section 1.14 Special Luxembourg Provisions. Without prejudice to the generality of any provision of this Agreement, to the extent this Agreement relates to the Lux Borrower or any other Lux Loan Party, a reference to (a) a receiver, administrative receiver, administrator, trustee, custodian, sequestrator, conservator or similar officer appointed for the reorganization or liquidation of the business of a person includes, without limitation, a juge délégué, commissaire, juge-commissaire, mandataire ad hoc, administrateur provisoire, liquidateur or curateur, (b) a lien or security interest includes any hypothèque, nantissement, gage, privilège, sûreté réelle, droit de rétention and any type of security in rem (sûreté réelle) or agreement or arrangement having a similar effect and any transfer of title by way of security, (c) a Person being unable to pay its debts includes that person being in a state of cessation de paiements; (d) creditors process means an executory attachment (saisie exécutoire) or conservatory attachment (saisie conservatoire), (e) by-laws or constitutional documents includes its up-to-date (restated) articles of association (statuts coordonnés), and (f) a director includes an administrateur or a gérant.
Section 1.15 Special Jersey Provisions. Without prejudice to the generality of any provision of this Agreement, to the extent this Agreement relates to any Jersey Group Member or a Loan Party that has tangible immovable property in Jersey, a reference to (a) a composition, compromise, assignment or arrangement with any creditor, winding up, liquidation, administration, dissolution, insolvency event or insolvency includes, without limitation, bankruptcy (as that term is interpreted pursuant to Article 8 of the Interpretation (Jersey) Law 1954), a compromise or arrangement of the type referred to in Article 125 of the Companies (Jersey) Law 1991 and any procedure or process referred to in Part 21 of the Companies (Jersey) Law 1991, (b) a liquidator, receiver, administrative receiver, administrator or the like includes, without limitation, the Viscount of the Royal Court of Jersey, Autorisés or any other person performing the same function of each of the foregoing, (c) a security interest includes, without limitation, any hypothèque whether conventional, judicial or arising by operation of law and any security interest created pursuant to the Security Interests (Jersey) Law 1983 or Security Interests (Jersey) Law 2012 and any related legislation (d) any equivalent or analogous procedure or step being taken in connection with insolvency includes any corporate action, legal proceedings or other formal procedure or step being taken in connection with an application for a declaration of en désastre being made in respect of any assets of such person (or the making of such declaration) and (e) constitutional documents includes all consents issued to that entity pursuant to the Control of Borrowing (Jersey) Order 1958.
Section 1.16 Benchmark Replacement. The Administrative Agent does not warrant nor accept any responsibility for, and shall not have any liability with respect to (a) the continuation of, administrative of, submission of, calculation of or any other matter related to ABR, the Term SOFR Reference Rate, Adjusted Term SOFR or Term SOFR, or any component definition thereof or rates referred to in the definition thereof, or any alternative, successor or replacement rate thereto (including any Benchmark Replacement), including whether the composition or characteristics of any such alternative, successor or replacement rate (including any Benchmark Replacement) will be similar to, or produce the same value or economic equivalence of, or have the same volume or liquidity as, ABR, the Term SOFR Reference Rate, Adjusted Term SOFR, Term SOFR or any other Benchmark prior to its discontinuance or unavailability, or (b) the effect, implementation or composition of any Benchmark Replacement Conforming Changes. The Administrative Agent and its affiliates or other related entities may engage in transactions that affect the calculation of ABR, the Term SOFR Reference Rate, Term SOFR, Adjusted Term SOFR, any alternative, successor or replacement rate (including any Benchmark Replacement) or any relevant adjustments thereto, in each case, in a manner adverse to any Borrower. The Administrative Agent may select information sources or services in its reasonable discretion to
ascertain ABR, the Term SOFR Reference Rate, Term SOFR, Adjusted Term SOFR or any other Benchmark, in each case pursuant to the terms of this Agreement, and shall have no liability to any Borrower, any Lender or any other person or entity for damages of any kind, including direct or indirect, special, punitive, incidental or consequential damages, costs, losses or expenses (whether in tort, contract or otherwise and whether at law or in equity), for any error or calculation of any such rate (or component thereof) provided by any such information source or service.
ARTICLE 2
THE CREDITS
Section 2.01 Commitments.
(a) Subject to the terms and conditions set forth herein, (i) each Term Lender severally, and not jointly, agrees to make Original Term Loans to the Lux Borrower on the Closing Date in Dollars in a principal amount not to exceed its Initial Term Loan Commitment and (ii) each Revolving Lender severally, and not jointly, agrees to make Revolving Loans to the Revolver Borrower at any time and from time to time on and after the Closing Date, and until the earlier of the Revolving Credit Maturity Date and the termination of the Revolving Credit Commitment of such Revolving Lender in accordance with the terms hereof, in Dollars or one or more Alternative Currencies; provided that after giving effect to any Borrowing of Revolving Loans, the Dollar Equivalent of the Outstanding Amount of such Revolving Lender’s Revolving Credit Exposure shall not exceed such Revolving Lender’s Revolving Credit Commitment. Within the foregoing limits and subject to the terms, conditions and limitations set forth herein, the Revolver Borrower may borrow, pay or prepay and reborrow Revolving Loans. Amounts paid or prepaid in respect of the Term Loans may not be reborrowed.
(b) Subject to the terms and conditions of this Agreement, each Lender and each Additional Lender with an Additional Term Commitment for a given Class of Incremental Term Loans severally, and not jointly, agrees to make Incremental Term Loans to the Term Borrowers (or one or more wholly-owned subsidiaries of the Borrower Representative in accordance with Section 2.22(a)(xvi)(A)), which Incremental Term Loans shall not exceed for any such Lender or Additional Lender at the time of any incurrence thereof, the Additional Term Commitment of such Lender or Additional Lender for such Class on the respective Incremental Term Loan Borrowing Date. Notwithstanding the foregoing, if the applicable Additional Term Commitment in respect of any Incremental Term Loan Borrowing Date is not drawn on such Incremental Term Loan Borrowing Date, the undrawn amount shall automatically be cancelled. Amounts repaid or prepaid in respect of such Incremental Term Loans may not be reborrowed.
(c) Subject to the terms and conditions of this Agreement, each Lender and each Additional Lender with an Additional Revolving Commitment for a given Class of Incremental Revolving Loans severally, and not jointly, agrees to make Incremental Revolving Loans to the Revolver Borrower (or one or more Wholly-Owned Subsidiaries of the Borrower Representative in accordance with Section 2.22(a)(xvi)(B)), at any time and from time to time on and after the initial incurrence thereof, and until the earlier of the maturity thereof and the termination of the Additional Revolving Commitment of such Lender or Additional Lender (as applicable) in accordance with the terms hereof; provided that after giving effect to any Borrowing of Incremental Revolving Loans, the Outstanding Amount of such Lender’s Revolving Credit Exposure in respect of Additional Revolving Loans shall not exceed such Lender’s Additional Revolving Commitment in respect of Additional Revolving Loans.
(d) On the First Amendment Effective Date, (i) each Initial Euro Term Lender, severally, and not jointly, agrees to make Initial Euro Term Loans to the Lux Borrower in Euros in an aggregate principal amount equal to its Initial Euro Term Loan Commitment and (ii) without any further
action or notice on the part of any Person, all Original Term Loans (other than the portion thereof prepaid on the First Amendment Effective Date pursuant to the terms of the First Amendment) shall remain outstanding denominated in Dollars, and shall be redesignated as “Initial USD Term Loans” for all purposes of this Agreement, in each case, accordance with the terms and conditions of the First Amendment.
(e) On the Second Amendment Effective Date, (i) each 2017 Replacement Term Lender severally, and not jointly, agrees to make 2017 Replacement Euro Term Loans to the Lux Borrower in an aggregate principal amount equal to such Lender’s 2017 Replacement Euro Term Loan Commitment and (ii) each 2017 Replacement Term Lender severally, and not jointly, agrees to make 2017 Replacement USD Term Loans to the Lux Borrower in an aggregate principal amount equal to such Lender’s 2017 Replacement USD Term Loan Commitment, in each case in accordance with the terms and conditions of the Second Amendment.
(f) On the Third Amendment Effective Date, each 2021 Replacement Term Lender severally, and not jointly, agrees to make 2021 Replacement Term Loans to the Lux Borrower in an aggregate principal amount equal to such Lender’s 2021 Replacement Term Loan Commitment in accordance with the terms and conditions of the Third Amendment.
Section 2.02 Loans and Borrowings.
(a) Each Loan (other than a Swingline Loan) shall be made as part of a Borrowing consisting of Loans of the same Class, currency and Type made by the Lenders ratably in accordance with their respective Commitments of the applicable Class; provided that (i) Initial USD Term Loans and Initial Euro Term Loans shall be created pursuant to, and in accordance with, the First Amendment and Section 2.01(d), (ii) 2017 Replacement USD Term Loans and 2017 Replacement Euro Term Loans shall be created pursuant to, and in accordance with, the Second Amendment and Section 2.01(e) and (iii) 2021 Replacement Term Loans shall be created pursuant to, and in accordance with, the Third Amendment and Section 2.01(f). Each Swingline Loan shall be made in accordance with the terms and procedures set forth in Section 2.04.
(b) Subject to Section 2.01 and Section 2.14, each Borrowing shall be comprised entirely of ABR Loans or SOFR Loans as the applicable Borrower may request in accordance herewith; provided that (x) each Swingline Loan shall be denominated in Dollars and, shall be an ABR Loan and (y) each ABR Loan shall only be made in Dollars. Each Lender at its option may make any SOFR Loan by causing any domestic or foreign branch or Affiliate of such Lender to make such Loan; provided that (i) any exercise of such option shall not affect the obligation of the applicable Borrower to repay such Loan in accordance with the terms of this Agreement, (ii) such SOFR Loan shall be deemed to have been made and held by such Lender, and the obligation of the applicable Borrower to repay such SOFR Loan shall nevertheless be to such Lender for the account of such domestic or foreign branch or Affiliate of such Lender and (iii) in exercising such option, such Lender shall use reasonable efforts to minimize increased costs to the Borrowers resulting therefrom (which obligation of such Lender shall not require it to take, or refrain from taking, actions that it determines would result in increased costs for which it will not be compensated hereunder or that it otherwise determines would be disadvantageous to it and in the event of such request for costs for which compensation is provided under this Agreement, the provisions of Section 2.15 shall apply); provided further that any such domestic or foreign branch or Affiliate of such Lender shall not be entitled to any greater indemnification under Section 2.17 with respect to such SOFR Loan than that to which the applicable Lender was entitled on the date on which such Loan was made (except in connection with any indemnification entitlement arising as a result of a Change in Law after the date on which such Loan was made).
(c) At the commencement of each Interest Period for any Borrowing of Revolving Loans, such Borrowing shall comprise an aggregate principal amount that is an integral multiple of the Borrowing Multiple and not less than the Borrowing Minimum; provided that an ABR Revolving Loan Borrowing may be made in a lesser aggregate amount that is (x) equal to the entire aggregate Unused Revolving Credit Commitments or (y) required to finance the reimbursement of an LC Disbursement as contemplated by Section 2.05(e). Borrowings of more than one Type and Class may be outstanding at the same time; provided that there shall not at any time be more than a total of 10 different Interest Periods in effect for SOFR Borrowings at any time outstanding (or such greater number of different Interest Periods as the Administrative Agent may agree from time to time).
(d) Notwithstanding any other provision of this Agreement, no Borrower shall, nor shall any Borrower be entitled to, request, or to elect to convert or continue, any Borrowing if the Interest Period requested with respect thereto would end after the Maturity Date applicable to such Loans.
Section 2.03 Requests for Borrowings. Each Borrowing of Term Loans, each Borrowing of Revolving Loans, each conversion of Term Loans or Revolving Loans from one Type to the other, and each continuation of SOFR Loans shall be made upon irrevocable notice by the applicable Borrower to the Administrative Agent. Each such notice must be in writing or by telephone (and promptly confirmed in writing) and must be received by the Administrative Agent (by hand delivery, fax or other electronic transmission (including “.pdf” or “.tif”)) not later than 12:00 p.m., Local Time, (i) three Business Days prior to the requested day of any Borrowing, conversion or continuation of SOFR Loans denominated in Dollars, (ii) on the requested date of any Borrowing of ABR Loans (other than Swingline Loans) denominated in Dollars, or (iii) four Business Days (or five Business Days in the case of a Special Notice Currency) prior to the requested day of any Borrowing, conversion or continuation of SOFR Loans (including Swingline Loans) denominated in an Alternative Currency (or, in the case of clause (iii), such later time as shall be acceptable to the Administrative Agent). Each written notice (or confirmation of telephonic notice) with respect to a Borrowing by the applicable Borrower pursuant to this Section 2.03 shall be delivered to the Administrative Agent in the form of a written Borrowing Request, appropriately completed and signed by a Responsible Officer of the applicable Borrower. Each such telephonic and written Borrowing Request shall specify the following information in compliance with Section 2.02:
(a) the Class of such Borrowing;
(b) the aggregate principal amount of the requested Borrowing;
(c) the date of such Borrowing, which shall be a Business Day;
(d) whether such Borrowing is to be an ABR Borrowing or a SOFR Borrowing;
(e) in the case of a SOFR Borrowing, the initial Interest Period to be applicable thereto, which shall be a period contemplated by the definition of the term “Interest Period”;
(f) the currency of such Borrowing (which shall be Dollars or, in the case of (i) the Initial Euro Term Loans or 2017 Replacement Euro Term Loans, Euros and (ii) a Revolving Loan, Dollars or an Alternative Currency); and
(g) the location and number of the applicable Borrower’s account or any other designated account(s) to which funds are to be disbursed (the “Funding Account”).
If no election as to the Type of Borrowing is specified, then the requested Borrowing shall be an ABR Borrowing (unless the requested Borrowing is of Revolving Loans denominated in an Alternative Currency, in which case the requested Borrowing shall be ineffective). If no Interest Period is specified with respect to any requested SOFR Borrowing, then the applicable Borrower shall be deemed to have selected an Interest Period of one month’s duration. If no currency is specified with respect to any Borrowing of Revolving Loans, then the applicable Borrower shall be deemed to have selected Dollars. The Administrative Agent shall advise each Lender of the details thereof and of the amount of the Loan to be made as part of the requested Borrowing (x) in the case of any ABR Borrowing, on the same Business Day of receipt of a Borrowing Request in accordance with this Section 2.03 or (y) in the case of any SOFR Borrowing, no later than one Business Day following receipt of a Borrowing Request in accordance with this Section 2.03.
Section 2.04 Swingline Loans.
(a) Subject to the terms and conditions set forth herein, the Swingline Lender agrees to make Swingline Loans in Dollars, Euro or Sterling to the Revolver Borrower from time to time during the Availability Period in an aggregate principal amount at any time outstanding not to exceed the Dollar Equivalent of $0 (based on the Dollar Equivalent of any Swingline Loans denominated in an Alternative Currency); provided that (x) the Swingline Lender shall not be required to make any Swingline Loan to refinance an outstanding Swingline Loan and (y) after giving effect to any Swingline Loan, the Dollar Equivalent of the aggregate Outstanding Amount of all Revolving Loans, Swingline Loans and LC Exposure shall not exceed the Total Revolving Credit Commitment. Each Swingline Loan shall be in a minimum principal amount of not less than $100,000 (or, in the case of any Swingline Loan denominated in an Alternative Currency, the Alternative Currency Equivalent amount thereof) or such lesser amount as may be agreed by the Swingline Lender; provided that, notwithstanding the foregoing minimum amount (but subject to the cap on Swingline Loans described above), a Swingline Loan may be in an aggregate amount that is (x) equal to the entire unused balance of the aggregate Unused Revolving Credit Commitments or (y) required to finance the reimbursement of an LC Disbursement as contemplated by Section 2.05(e). Within the foregoing limits and subject to the terms and conditions set forth herein, Swingline Loans may be borrowed, prepaid and reborrowed. To request a Swingline Loan, the Revolver Borrower shall notify the Swingline Lender (with a copy to the Administrative Agent) of such request in writing or by telephone (promptly confirmed in writing), not later than 2:00 p.m. on the day of a proposed Swingline Loan (or in the case of a Swingline Loan denominated in an Alternative Currency, not later than 11:00 a.m., Applicable Time, at least two Business Days prior to the date of such Borrowing). Each such notice shall be irrevocable and shall specify the requested date (which shall be a Business Day) and amount of the requested Swingline Loan. The Swingline Lender shall make each Swingline Loan available to the Revolver Borrower by means of a credit to the Funding Account or otherwise in accordance with the instructions of the Revolver Borrower (including, in the case of a Swingline Loan made to finance the reimbursement of an LC Disbursement as provided in Section 2.05(e), by remittance to the applicable Issuing Bank).
(b) The Swingline Lender may by written notice given to the Administrative Agent not later than 12:00 p.m., Local Time, on any Business Day (or in the case of a Swingline Loan denominated in an Alternative Currency, not later than 9:00 a.m., Local Time, on any Business Day) require the Revolving Lenders to acquire participations on the second Business Day following receipt of such notice in all or a portion of the Swingline Loans outstanding. Such notice shall specify the aggregate amount of Swingline Loans in which Revolving Lenders will participate and the proposed currency thereof. Promptly upon receipt of such notice, the Administrative Agent will give notice thereof to each Revolving Lender, specifying in such notice such Revolving Lender’s Applicable Percentage of such Swingline Loan or Swingline Loans. Each Revolving Lender hereby absolutely and unconditionally agrees, upon receipt of notice as provided above, to pay to the Administrative Agent, for the account of
the Swingline Lender, such Lender’s Applicable Percentage of such Swingline Loan or Swingline Loans. Each Revolving Lender acknowledges and agrees that its obligation to acquire participations in Swingline Loans pursuant to this paragraph is absolute and unconditional and shall not be affected by any circumstance whatsoever, including the occurrence and continuance of a Default or Event of Default or any reduction or termination of the Revolving Credit Commitments, and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever. Each Revolving Lender shall comply with its obligation under this paragraph by wire transfer of immediately available funds, in the same manner as provided in Section 2.07 with respect to Revolving Loans made by such Revolving Lender (and Section 2.07 shall apply, mutatis mutandis, to the payment obligations of the Revolving Lenders pursuant to this Section 2.04(b)), and the Administrative Agent shall promptly remit to the Swingline Lender the amounts so received by it from the Revolving Lenders. The Administrative Agent shall notify the Revolver Borrower of any participation in any Swingline Loan acquired pursuant to this Section 2.04(b), and thereafter payments in respect of such Swingline Loan shall be made to the Administrative Agent and not to the Swingline Lender. Any amounts received by the Swingline Lender from the Revolver Borrower (or other Person on behalf of the Revolver Borrower) in respect of any Swingline Loan after receipt by the Swingline Lender of the proceeds of any sale of participations therein shall be promptly remitted by the Swingline Lender to the Administrative Agent and any such amounts received by the Administrative Agent shall be promptly remitted by the Administrative Agent to the Revolving Lenders that have made their payments pursuant to this Section 2.04(b) and to the Swingline Lender, as their interests may appear; provided that any such payment so remitted shall be repaid to the Swingline Lender or the Administrative Agent, as the case may be, and thereafter to the Revolver Borrower, if and to the extent such payment is required to be refunded to the Revolver Borrower for any reason. The purchase of participations in a Swingline Loan pursuant to this Section 2.04(b) shall not relieve the Revolver Borrower of any default in the payment thereof.
(c) If any Revolving Lender fails to make available to the Administrative Agent for the account of the Swingline Lender any amount required to be paid by such Revolving Lender pursuant to the foregoing provisions of this Section 2.04 by the time specified in Section 2.04(b), the Swingline Lender shall be entitled to recover from such Revolving Lender (acting through the Administrative Agent), on demand, such amount with interest thereon for the period from the date such payment is required to the date on which such payment is immediately available to the Swingline Lender at a rate per annum equal to the greater of the Federal Funds Effective Rate from time to time in effect and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation. A certificate of the Swingline Lender submitted to any Revolving Lender (through the Administrative Agent) with respect to any amounts owing under this clause (c) shall be conclusive absent manifest error.
Section 2.05 Letters of Credit.
(a) General. Subject to the terms and conditions set forth herein, (i) each Issuing Bank agrees, in each case in reliance upon the agreements of the other Revolving Lenders set forth in this Section 2.05, (A) from time to time on any Business Day during the period from the Closing Date to the fifth Business Day prior to the Revolving Credit Maturity Date, upon the request of the Revolver Borrower, to issue Letters of Credit denominated in Dollars or in any Alternative Currency issued on sight basis only for the account of the Revolver Borrower (or any Restricted Subsidiary of the Revolver Borrower in a form reasonably acceptable to the Administrative Agent and such Issuing Bank; provided that (x) the Revolver Borrower will be the applicant and (y) the Revolver Borrower or any Restricted Subsidiary of the Revolver Borrower will be the account party with respect to such Letter of Credit); provided that in no circumstances shall Morgan Stanley Bank, N.A., or any Affiliate thereof be required to issue Commercial Letters of Credit and to amend or renew Letters of Credit previously issued by it, in accordance with Section 2.05(b), and (B) to honor drafts under the Letters of Credit, and (ii) the
Revolving Lenders severally agree to participate in the Letters of Credit issued pursuant to Section 2.05(d). For the avoidance of doubt, as of the Third Amendment Effective Date, no Letters of Credit may be issued under this Agreement.
(b) Notice of Issuance, Amendment, Renewal, Extension; Certain Conditions. To request the issuance of a Letter of Credit, the Revolver Borrower shall deliver to the applicable Issuing Bank and the Administrative Agent, at least three Business Days in advance (or in the case of a Letter of Credit denominated in an Alternative Currency at least five Business Days in advance) of the requested date of issuance (or such shorter period as is acceptable to the applicable Issuing Bank or, in the case of any issuance to be made on the Closing Date, one Business Day prior to the Closing Date), a request to issue a Letter of Credit, which shall specify that it is being issued under this Agreement, in the form of Exhibit K attached hereto. To request an amendment, extension or renewal of an outstanding Letter of Credit, (other than any automatic extension of a Letter of Credit permitted under Section 2.05(c)) the Revolver Borrower shall submit such a request to the applicable Issuing Bank (with a copy to the Administrative Agent) at least three Business Days in advance of the requested date of amendment, extension or renewal (or such shorter period as is acceptable to the applicable Issuing Bank), identifying the Letter of Credit to be amended, extended or renewed, and specifying the proposed date (which shall be a Business Day) and other details of the amendment, extension or renewal. Requests for the issuance, amendment, extension or renewal of any Letter of Credit must be accompanied by such other information as shall be necessary to issue, amend, extend or renew such Letter of Credit. If requested by the applicable Issuing Bank, the Revolver Borrower also shall submit a letter of credit application on such Issuing Bank’s standard form in connection with any request for a Letter of Credit. In the event of any inconsistency between the terms and conditions of this Agreement and the terms and conditions of any form of letter of credit application or other agreement submitted by the Revolver Borrower to, or entered into by the Revolver Borrower with, the applicable Issuing Bank relating to any Letter of Credit, the terms and conditions of this Agreement shall control. No Letter of Credit, letter of credit application or other document entered into by the Revolver Borrower with the applicable Issuing Bank relating to any Letter of Credit shall contain any representations or warranties, covenants or events of default not set forth in this Agreement (and to the extent inconsistent herewith shall be rendered null and void), and all representations and warranties, covenants and events of default set forth therein shall contain standards, qualifications, thresholds and exceptions for materiality or otherwise consistent with those set forth in this Agreement (and, to the extent inconsistent herewith, shall be deemed to automatically incorporate the applicable standards, qualifications, thresholds and exceptions set forth herein without action by any Person). A Letter of Credit may be issued, amended, extended or renewed only if (and on the issuance, amendment, extension or renewal of each Letter of Credit the Revolver Borrower shall be deemed to represent and warrant that), after giving effect to such issuance, amendment, extension, or renewal, (i) the LC Exposure does not exceed the Letter of Credit Sublimit, (ii) the sum of (x) the aggregate outstanding principal amount of all Revolving Loans and Swingline Loans (calculated, in the case of Revolving Loans denominated in an Alternative Currency, based on the Dollar Equivalent thereof), plus (y) the aggregate amount of all LC Exposure (calculated, in the case of Letters of Credit denominated in an Alternative Currency, based on the Dollar Equivalent thereof) would not exceed the Total Revolving Credit Commitment and (iii) unless otherwise consented to in writing by the applicable Issuing Bank, the LC Exposure with respect to Letters of Credit issued by any Issuing Bank does not exceed such Issuing Bank’s Letter of Credit Percentage of the Letter of Credit Sublimit. Promptly after the delivery of any Letter of Credit or any amendment to a Letter of Credit to an advising bank with respect thereto or to the beneficiary thereof, the applicable Issuing Bank will also deliver to the Revolver Borrower and the Administrative Agent a true and complete copy of such Letter of Credit or amendment.
(c) Expiration Date. (i) No Standby Letter of Credit shall expire later than the earlier of (A) the date that is one year after the date of the issuance of such Letter of Credit and (B) the date that is five Business Days prior to the Revolving Credit Maturity Date; provided that any Standby Letter of
Credit may provide for the automatic extension thereof for any number of additional periods each of up to one year in duration (none of which, in any event, shall extend beyond the date referred to in the preceding clause (B) unless 102% of the then-available face amount thereof is Cash collateralized or backstopped on or before the date that such Letter of Credit is extended beyond the date referred to in clause (B) above pursuant to arrangements reasonably satisfactory to the relevant Issuing Bank) so long as such Letter of Credit permits the Issuing Bank to prevent any such extension at least once in each twelve-month period (commencing with the date of issuance of such Letter of Credit) by giving prior notice to the beneficiary thereof within a time period during such twelve month period to be agreed upon at the time such Letter of Credit is issued.
(ii) No Commercial Letter of Credit shall expire later than the earlier to occur of (A) 180 days after the issuance thereof and (B) the date that is five Business Days prior to the Revolving Credit Maturity Date.
(d) Participations. By the issuance of a Letter of Credit (or an amendment to a Letter of Credit increasing the amount thereof) and without any further action on the part of the applicable Issuing Bank or the Revolving Lenders, the applicable Issuing Bank hereby grants to each Revolving Lender, and each Revolving Lender hereby acquires from such Issuing Bank, a participation in such Letter of Credit equal to such Revolving Lender’s Applicable Percentage of the aggregate amount available to be drawn under such Letter of Credit. In consideration and in furtherance of the foregoing, each Revolving Lender hereby absolutely and unconditionally agrees to pay to the Administrative Agent, for the account of the applicable Issuing Bank, such Lender’s Applicable Percentage of each LC Disbursement made by such Issuing Bank and not reimbursed by the Revolver Borrower on the date due as provided in paragraph (e) of this Section 2.05, or of any reimbursement payment required to be refunded to the Revolver Borrower for any reason, in each case, in Dollars at the Dollar Equivalent of such LC Disbursement (regardless of the actual currency of such LC Disbursement), except that any amounts which the respective Issuing Bank requires to be repaid in an Alternative Currency permitted pursuant to following paragraph (e) shall also be required to be reimbursed by the respective Revolving Lenders as provided in this paragraph (d) in the respective Alternative Currency in which such amount is owing by the Borrowers. Each Revolving Lender acknowledges and agrees that its obligation to acquire participations pursuant to this paragraph in respect of Letters of Credit is absolute and unconditional and shall not be affected by any circumstance whatsoever, including any amendment, renewal or extension of any Letter of Credit or the occurrence and continuance of a Default or Event of Default or reduction or termination of the Revolving Credit Commitments or the fact that, as a result of changes in currency exchange rates, such Revolving Lender’s Revolving Credit Exposure at any time might exceed its Revolving Credit Commitment at such time (in which case Section 2.11(b)(ix) shall apply), and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever.
(e) Reimbursement.
(i) If the applicable Issuing Bank makes any LC Disbursement in respect of a Letter of Credit, the Revolver Borrower shall reimburse such LC Disbursement by paying to the Administrative Agent an amount in Dollars or the applicable Alternative Currency equal to such LC Disbursement not later than 1:00 p.m., Local Time, (or the Applicable Time if such LC Disbursement was made in an Alternative Currency) on the Business Day immediately following the date on which the Revolver Borrower receives notice under paragraph (g) of this Section 2.05 of such LC Disbursement (or, if such notice is received less than two hours prior to the deadline for requesting ABR Borrowings pursuant to Section 2.03, on the second Business Day immediately following the date on which the Revolver Borrower receives such notice); provided that the Revolver Borrower may, subject to the conditions to borrowing set forth herein, request in accordance with Section 2.03 or 2.04 that such payment be financed with an ABR Revolving Loan Borrowing or Swingline Loan in an equivalent amount and currency and, to the extent so financed,
the Revolver Borrower’s obligation to make such payment shall be discharged and replaced by the resulting ABR Revolving Loan Borrowing or Swingline Loan. If the Revolver Borrower fails to make such payment when due, the Administrative Agent shall notify each Revolving Lender of the applicable LC Disbursement, the payment then due from the Revolver Borrower in respect thereof and such Revolving Lender’s Applicable Percentage thereof. Promptly following receipt of such notice, each Revolving Lender shall pay to the Administrative Agent in Dollars (at the Dollar Equivalent of such LC Disbursement, if same was made in an Alternative Currency), its Applicable Percentage of the payment then due from the Revolver Borrower, in the same manner as provided in Section 2.07 with respect to Loans made by such Revolving Lender (and Section 2.07 shall apply, mutatis mutandis, to the payment obligations of the Revolving Lenders), and the Administrative Agent shall promptly pay to the applicable Issuing Bank the amounts so received by it from the Revolving Lenders. Promptly following receipt by the Administrative Agent of any payment from the Revolver Borrower pursuant to this paragraph, the Administrative Agent shall distribute such payment to the applicable Issuing Bank or, to the extent that Revolving Lenders have made payments pursuant to this paragraph to reimburse such Issuing Bank, then to such Revolving Lenders in Dollars (based on the Dollar Equivalent of such payment, if same was made in an Alternative Currency) and such Issuing Bank as their interests may appear.
(ii) If any Revolving Lender fails to make available to the Administrative Agent for the account of the applicable Issuing Bank any amount required to be paid by such Revolving Lender pursuant to the foregoing provisions of this Section 2.05(e) by the time specified therein, such Issuing Bank shall be entitled to recover from such Revolving Lender (acting through the Administrative Agent), on demand, such amount with interest thereon for the period from the date such payment is required to the date on which such payment is immediately available to such Issuing Bank at a rate per annum equal to the greater of the Federal Funds Effective Rate from time to time in effect and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation (including, without limitation, the Overnight Foreign Currency Rate in the case of Revolving Loans denominated in an Alternative Currency). A certificate of the applicable Issuing Bank submitted to any Revolving Lender (through the Administrative Agent) with respect to any amounts owing under this clause (ii) shall be conclusive absent manifest error.
(iii) If the Borrowers’ reimbursement of, or obligation to reimburse, any amounts in any Alternative Currency would subject the Administrative Agent, the Issuing Bank or any Revolving Lender to any stamp duty, ad valorem charge or similar tax that would not be payable if such reimbursement were made or required to be made in Dollars, the Borrowers shall, at their option, either (x) pay the amount of any such tax requested by the Administrative Agent, the Issuing Bank or the relevant Revolving Lender or (y) reimburse each LC Disbursement made in such Alternative Currency in Dollars, in an amount equal to the Dollar Equivalent thereof, calculated using the applicable exchange rates, on the date such LC Disbursement is made, of such LC Disbursement.
(f) Obligations Absolute. The obligations of the Revolver Borrower to reimburse LC Disbursements as provided in paragraph (e) of this Section 2.05 shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Agreement under any and all circumstances whatsoever and irrespective of (i) any lack of validity or enforceability of any Letter of Credit or this Agreement, or any term or provision therein, (ii) any draft or other document presented under any Letter of Credit proving to be forged, fraudulent or invalid in any respect or any statement therein being untrue or inaccurate in any respect, (iii) payment by the applicable Issuing Bank under any Letter of Credit against presentation of a draft or other document that does not comply with the terms of such Letter of Credit or (iv) any other event or circumstance whatsoever, whether or not similar to any of the foregoing, that might, but for the provisions of this Section 2.05, constitute a legal or equitable discharge of, or provide a right of setoff against, the Revolver Borrower’s obligations hereunder. Neither the Administrative Agent, the Revolving Lenders nor any Issuing Bank, nor any of their Related Parties,
shall have any liability or responsibility by reason of or in connection with the issuance or transfer of any Letter of Credit or any payment or failure to make any payment thereunder (irrespective of any of the circumstances referred to in the preceding sentence), or any error, omission, interruption, loss or delay in transmission or delivery of any draft, notice or other communication under or relating to any Letter of Credit (including any document required to make a drawing thereunder), any error in interpretation of technical terms or any consequence arising from causes beyond the control of such Issuing Bank; provided that the foregoing shall not be construed to excuse such Issuing Bank from liability to the Revolver Borrower to the extent of any direct damages (as opposed to consequential damages, claims in respect of which are hereby waived by the Revolver Borrower to the extent permitted by applicable law) suffered by the Revolver Borrower that are determined by a final and binding decision of a count of competent jurisdiction to have been caused by such Issuing Bank’s failure to exercise care when determining whether drafts and other documents presented under a Letter of Credit comply with the terms thereof. The parties hereto expressly agree that, in the absence of gross negligence, bad faith or willful misconduct on the part of applicable Issuing Bank (as finally determined by a court of competent jurisdiction), such Issuing Bank shall be deemed to have exercised care in each such determination. In furtherance of the foregoing and without limiting the generality thereof, the parties agree that, with respect to documents presented which appear on their face to be in substantial compliance with the terms of a Letter of Credit, the applicable Issuing Bank may, in its sole discretion, either accept and make payment upon such documents without responsibility for further investigation, regardless of any notice or information to the contrary, or refuse to accept and make payment upon such documents if such documents are not in strict compliance with the terms of such Letter of Credit.
(g) Disbursement Procedures. The applicable Issuing Bank shall, promptly following its receipt thereof, examine all documents purporting to represent a demand for payment under a Letter of Credit. Such Issuing Bank shall promptly notify the Administrative Agent and the Revolver Borrower in writing or by telephone (promptly confirmed in writing) of such demand for payment and whether such Issuing Bank has made or will make an LC Disbursement thereunder; provided that no failure to give or delay in giving such notice shall relieve the Revolver Borrower of its obligation to reimburse such Issuing Bank and the Revolving Lenders with respect to any such LC Disbursement.
(h) Interim Interest. If any Issuing Bank makes any LC Disbursement, then, unless the Revolver Borrower reimburses such LC Disbursement in full on the date such LC Disbursement is made, the unpaid amount thereof shall bear interest, for each day from and including the date such LC Disbursement is made to but excluding the date that the Revolver Borrower reimburses such LC Disbursement, at the rate per annum then applicable to Revolving Loans that are ABR Loans (or in the case such LC Disbursement required to be reimbursed is in an Alternative Currency, at the Overnight Foreign Currency Rate for such Alternative Currency plus the then effective Applicable Rate with respect to ABR Revolving Loans of the applicable Class); provided that if the Revolver Borrower fails to reimburse such LC Disbursement when due pursuant to paragraph (e) of this Section 2.05, then Section 2.13(d) shall apply. Interest accrued pursuant to this paragraph shall be for the account of the applicable Issuing Bank, except that interest accrued on and after the date of payment by any Revolving Lender pursuant to paragraph (e) of this Section 2.05 to reimburse such Issuing Bank shall be for the account of such Revolving Lender to the extent of such payment and shall be payable on the date on which the Revolver Borrower is required to reimburse the applicable LC Disbursement in full (and, thereafter, on demand).
(i) Replacement or Resignation of an Issuing Bank or Addition of New Issuing Banks.
(i) Any Issuing Bank may be replaced with the consent of the Administrative Agent (not to be unreasonably withheld or delayed) at any time by written
agreement among the Borrower Representative, the Administrative Agent and the successor Issuing Bank. The Administrative Agent shall notify the Revolving Lenders of any such replacement of an Issuing Bank. At the time any such replacement becomes effective, the Revolver Borrower shall pay all unpaid fees accrued for the account of the replaced Issuing Bank pursuant to Section 2.12(b)(ii). From and after the effective date of any such replacement, (i) the successor Issuing Bank shall have all the rights and obligations of the replaced Issuing Bank under this Agreement with respect to Letters of Credit to be issued thereafter and (ii) references herein to the term “Issuing Bank” shall be deemed to refer to such successor or to any previous Issuing Bank, or to such successor and all previous Issuing Banks, as the context shall require. After the replacement of any Issuing Bank hereunder, the replaced Issuing Bank shall remain a party hereto and shall continue to have all the rights and obligations of an Issuing Bank under this Agreement with respect to Letters of Credit issued by it prior to such replacement, but shall not be required to issue additional Letters of Credit. The Borrower Representative may, at any time and from time to time with the consent of the Administrative Agent (which consent shall not be unreasonably withheld or delayed) and the relevant Revolving Lender, designate one or more additional Revolving Lenders to act as an issuing bank under the terms of this Agreement. Any Revolving Lender designated as an issuing bank pursuant to this paragraph (i) who agrees in writing to such designation shall be deemed to be an “Issuing Bank” (in addition to being a Revolving Lender) in respect of Letters of Credit issued or to be issued by such Revolving Lender, and, with respect to such Letters of Credit, such term shall thereafter apply to the other Issuing Bank and such Revolving Lender.
(ii) Notwithstanding anything to the contrary contained herein, each Issuing Bank may, upon ten days’ prior written notice to the Borrower Representative, each other Issuing Bank and the Lenders, resign as Issuing Bank, which resignation shall be effective as of the date referenced in such notice (but in no event less than ten days after the delivery of such written notice); it being understood that in the event of any such resignation, any Letter of Credit then outstanding shall remain outstanding (irrespective of whether any amounts have been drawn at such time). In the event of any such resignation as an Issuing Bank, the Borrower Representative shall be entitled to appoint any Revolving Lender that accepts such appointment in writing as successor Issuing Bank. Upon the acceptance of any appointment as Issuing Bank hereunder, the successor Issuing Bank shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Issuing Bank, and the retiring Issuing Bank shall be discharged from its duties and obligations in such capacity hereunder; provided that, the resigning Issuing Bank shall remain a party hereto and shall continue to have all the rights and obligations of an Issuing Bank under this Agreement with respect to Letters of Credit issued by it prior to such resignation (but shall not be required to issue additional Letters of Credit).
(j) Cash Collateralization.
(i) If any Event of Default exists, then on the Business Day that the Borrower Representative receives notice from the Administrative Agent at the direction of the Required Revolving Lenders demanding the deposit of Cash collateral pursuant to this paragraph (j), the Revolver Borrower shall deposit, in an interest-bearing account with the Administrative Agent, in the name of the Administrative Agent and for the benefit of the Revolving Lenders (the “LC Collateral Account”), an amount in Cash in Dollars equal to 102% of the LC Exposure as of such date (minus the Dollar Equivalent of the amount then on deposit in the LC Collateral Account); provided that the obligation to deposit such Cash collateral shall become effective immediately, and such deposit shall become immediately due and payable, without demand or other notice of any kind, upon the occurrence of any Event of Default with respect to any Borrower described in Section 7.01(f) or (g). For the purposes of this paragraph, the LC Exposure shall be calculated using the applicable Spot Rate on the date notice
demanding cash collateralization is delivered to the Borrowers (or if the proviso to the immediately preceding sentence is applicable, as of the date on which the Event of Default described therein occurs).
(ii) Any such deposit under clause (i) above shall be held by the Administrative Agent as collateral for the payment and performance of the Secured Obligations in accordance with the provisions of this paragraph (j). The Administrative Agent shall have exclusive dominion and control, including the exclusive right of withdrawal, over such account, and the Revolver Borrower hereby grants the Administrative Agent, for the benefit of the Secured Parties, a First Priority security interest in the LC Collateral Account. Interest or profits, if any, on such investments shall accumulate in such account. Moneys in such account shall be applied by the Administrative Agent to reimburse the applicable Issuing Bank for LC Disbursements for which it has not been reimbursed and, to the extent not so applied, shall be held for the satisfaction of the reimbursement obligations of the Revolver Borrower for the LC Exposure at such time or, if any Obligations have been accelerated (but subject to the consent of the Required Revolving Lenders) be applied to satisfy other Secured Obligations. If the Revolver Borrower is required to provide an amount of Cash collateral hereunder as a result of the occurrence of an Event of Default, such amount (together with all interest and other earnings with respect thereto, to the extent not applied as aforesaid) shall be returned to the Revolver Borrower promptly but in no event later than three Business Days after such Event of Default has been cured or waived.
Section 2.06 [Reserved].
Section 2.07 Funding of Borrowings.
(a) Each Lender shall make each Loan to be made by it hereunder on the proposed date thereof by wire transfer of immediately available funds by 1:00 p.m., Local Time, in the case of Initial Euro Term Loans, 2017 Replacement Euro Term Loans or any Loan denominated in Dollars, and not later than the Applicable Time specified by the Administrative Agent in the case of any Revolving Loan denominated in an Alternative Currency, to the account of the Administrative Agent most recently designated by it for such purpose by notice to the Lenders in an amount equal to such Lender’s respective Applicable Percentage; provided that Swingline Loans shall be made as provided in Section 2.04; provided, further, that (i) Initial USD Term Loans shall be “made” as provided in the First Amendment and Section 2.01(d), (ii) 2017 Replacement USD Term Loans and 2017 Replacement Euro Term Loans shall be “made” as provided in the Second Amendment and Section 2.01(e), (ii) 2021 Replacement Term Loans shall be “made” as provided in the Third Amendment and Section 2.01(f). The Administrative Agent will make such Loans available to the applicable Borrowers by promptly crediting the amounts so received, in like funds, to the Funding Account or as otherwise directed by the applicable Borrowers; provided that ABR Revolving Loans made to finance the reimbursement of any LC Disbursement as provided in Section 2.05(e) shall be remitted by the Administrative Agent to the applicable Issuing Bank.
(b) Unless the Administrative Agent has received notice from any Lender prior to the proposed date of any Borrowing that such Lender will not make available to the Administrative Agent such Lender’s share of such Borrowing, the Administrative Agent may assume that such Lender has made such share available on such date in accordance with paragraph (a) of this Section 2.07 and may, in reliance upon such assumption, make available to the applicable Borrower a corresponding amount. In such event, if any Lender has not in fact made its share of the applicable Borrowing available to the Administrative Agent, then the applicable Lender and the applicable Borrower severally agree to pay to the Administrative Agent forthwith on demand (without duplication) such corresponding amount with interest thereon, for each day from and including the date such amount is made available to the applicable Borrower(s) to but excluding the date of payment to the Administrative Agent, at (i) in the case of such Lender, the greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation (including, without
limitation, the Overnight Foreign Currency Rate in the case of Revolving Loans denominated in an Alternative Currency) or (ii) in the case of such Borrower, the interest rate applicable to Loans comprising such Borrowing at such time. If such Lender pays such amount to the Administrative Agent, then such amount shall constitute such Lender’s Loan included in such Borrowing and such Borrower’s obligation to repay the Administrative Agent such corresponding amount pursuant to this Section 2.07(b) shall cease. If such Borrower pays such amount to the Administrative Agent, the amount so paid shall constitute a repayment of such Borrowing by such amount. Nothing herein shall be deemed to relieve any Lender from its obligation to fulfill its Commitment or to prejudice any rights which the Administrative Agent or any Borrower or any other Loan Party may have against any Lender as a result of any default by such Lender hereunder.
Section 2.08 Type; Interest Elections.
(a) Each Borrowing initially shall be of the Type specified in the applicable Borrowing Request (or in the case of the initial Borrowing of (i) Initial USD Term Loans, as specified in the First Amendment and (ii) 2017 Replacement USD Term Loans or 2017 Replacement Euro Term Loans, as specified in the Second Amendment, and in each case (for the avoidance of doubt), the requirements of clauses (b) and (c) below shall not apply to such initial Borrowing of Initial USD Term Loans, 2017 Replacement USD Term Loans or 2017 Replacement Euro Term Loans) and, in the case of a SOFR Borrowing, shall have an initial Interest Period as specified in such Borrowing Request. Thereafter, the applicable Borrower may elect to convert any Borrowing to a Borrowing of a different Type or to continue such Borrowing and, in the case of a SOFR Borrowing, may elect Interest Periods therefor, all as provided in this Section 2.08. The applicable Borrower may elect different Types with respect to different portions of the affected Borrowing, in which case each such portion shall be allocated ratably among the applicable Lenders based upon their Applicable Percentages and the Loans comprising each such portion shall be considered a separate Borrowing. This Section 2.08 shall not apply to Swingline Loans, which may not be converted or continued.
(b) To make an election pursuant to this Section 2.08, the applicable Borrower shall notify the Administrative Agent of such election either in writing in the form of an Interest Election Request (by hand delivery, fax or other electronic transmission (including “.pdf” or “.tif”)) or (in the case of a Borrowing denominated in Dollars) by telephone by the time that a Borrowing Request would be required under Section 2.03 if such Borrower were requesting a Borrowing of the Type resulting from such election to be made on the effective date of such election. Each such telephonic Interest Election Request shall be irrevocable and shall be confirmed promptly by hand delivery, fax or other electronic transmission (including “.pdf” or “.tif”) to the Administrative Agent of a written Interest Election Request signed by a Responsible Officer of such Borrower.
(c) Each telephonic and written Interest Election Request shall specify the following information in compliance with Section 2.02:
(i) the Borrowing to which such Interest Election Request applies and, if different options are being elected with respect to different portions thereof, the portions thereof to be allocated to each resulting Borrowing (in which case the information to be specified pursuant to clauses (iii) and (iv) below shall be specified for each resulting Borrowing);
(ii) the effective date of the election made pursuant to such Interest Election Request, which shall be a Business Day;
(iii) whether the resulting Borrowing is to be an ABR Borrowing or a SOFR Borrowing; and
(iv) if the resulting Borrowing is a SOFR Borrowing, the Interest Period to be applicable thereto after giving effect to such election, which shall be a period contemplated by the definition of the term “Interest Period”.
If any such Interest Election Request requests a SOFR Borrowing but does not specify an Interest Period, then the applicable Borrower shall be deemed to have selected an Interest Period of one month’s duration.
(d) Promptly following receipt of an Interest Election Request, the Administrative Agent shall advise each applicable Lender of the details thereof and of such Lender’s portion of each resulting Borrowing.
(e) If any applicable Borrower fails to deliver a timely Interest Election Request with respect to a SOFR Borrowing prior to the end of the Interest Period applicable thereto, then, unless such Borrowing is repaid as provided herein, such Borrowing shall be converted at the end of such Interest Period to a SOFR Borrowing with an Interest Period of one month. Notwithstanding any contrary provision hereof, if an Event of Default exists and the Administrative Agent, at the request of the Required Lenders, so notifies the Borrower Representative, then, so long as such Event of Default exists (i) no outstanding Borrowing may be converted to or continued as a SOFR Borrowing and (ii) unless repaid, each SOFR Borrowing shall be converted to an ABR Borrowing (and any such SOFR Borrowing denominated in an Alternative Currency shall bear interest at the applicable Overnight Foreign Currency Rate plus the Applicable Rate) at the end of the then-current Interest Period applicable thereto.
(f) No Borrowing of Revolving Loans may be continued as a Borrowing of Revolving Loans denominated in a different currency, but instead must be prepaid in the original currency of such Borrowing of Revolving Loans and, subject to the requirements of this Article II and Section 4.02, reborrowed in the other currency. No Borrowing of Term Loans may be continued as a Borrowing of Term Loans denominated in a different currency.
Section 2.09 Termination and Reduction of Commitments.
(a) Unless previously terminated, (i) the Initial Term Loan Commitments shall automatically terminate upon the making of the Original Term Loans on the Closing Date, (ii) the Initial Euro Term Loan Commitments shall automatically terminate upon the making of the Initial Euro Term Loans on the First Amendment Effective Date, (iii) the 2017 Replacement Euro Term Loan Commitments shall automatically terminate upon the making of the 2017 Replacement Euro Term Loans on the Second Amendment Effective Date, (iv) the 2017 Replacement USD Term Loan Commitments shall automatically terminate upon the making of the 2017 Replacement USD Term Loans on the Second Amendment Effective Date, (v) the 2021 Replacement Term Loan Commitments shall automatically terminate upon the making of the 2021 Replacement Term Loans on the Third Amendment Effective Date, (vi) the Revolving Credit Commitments existing immediately prior to the Second Amendment Effective Date shall terminate on the Second Amendment Effective Date and (vii) the Revolving Credit Commitments existing immediately prior to the Third Amendment Effective Date shall terminate on the Third Amendment Effective Date.
(b) Upon delivering the notice required by Section 2.09(d), the Borrower Representative may at any time terminate the Revolving Credit Commitments upon (i) the payment in full in Cash of all outstanding Revolving Loans, together with accrued and unpaid interest thereon, (ii) the cancellation and return of all outstanding Letters of Credit (or alternatively, with respect to each outstanding Letter of Credit, the furnishing to the Administrative Agent of a Cash deposit in Dollars (or, if reasonably satisfactory to the applicable Issuing Bank, a backup standby letter of credit) equal to 102% of the LC Exposure (minus the Dollar Equivalent of the amount then on deposit in the LC Collateral
Account) as of such date) and (iii) the payment in full of all accrued and unpaid fees and all reimbursable expenses and other non-contingent Obligations with respect to the Revolving Facility then due, together with accrued and unpaid interest (if any) thereon.
(c) Upon delivering the notice required by Section 2.09(d), the Borrower Representative may from time to time reduce the Revolving Credit Commitments; provided that (i) each reduction of the Revolving Credit Commitments shall be in an amount that is an integral multiple of $1,000,000 and not less than $1,000,000 and (ii) the Borrower Representative shall not reduce the Revolving Credit Commitments if, after giving effect to any concurrent prepayment of the Revolving Loans in accordance with Section 2.10 or Section 2.11, the Aggregate Revolving Credit Exposure would exceed the Total Revolving Credit Commitment.
(d) The Borrower Representative shall notify the Administrative Agent of any election to terminate or reduce the Revolving Credit Commitments under paragraph (b) or (c) of this Section 2.09 in writing at least three Business Days prior to the effective date of such termination or reduction (or such later date to which the Administrative Agent may agree), specifying such election and the effective date thereof. Promptly following receipt of any notice, the Administrative Agent shall advise the Revolving Lenders of the contents thereof. Each notice delivered by the Borrower Representative pursuant to this Section 2.09 shall be irrevocable; provided that a notice of termination of the Revolving Credit Commitments delivered by the Borrower Representative may state that such notice is conditioned upon the effectiveness of other transactions, in which case such notice may be revoked by the Borrower Representative (by notice to the Administrative Agent on or prior to the specified effective date) if such condition is not satisfied. Any termination or reduction of the Revolving Credit Commitments pursuant to this Section 2.09 shall be permanent. Upon any reduction of the Revolving Credit Commitments, the Revolving Credit Commitment of each Revolving Lender shall be reduced by such Revolving Lender’s Applicable Percentage of such reduction amount.
Section 2.10 Repayment of Loans; Evidence of Debt.
(a) The Term Borrowers hereby, jointly and severally, unconditionally promise to repay each Class of Initial Term Loans, 2017 Replacement Term Loans and 2021 Replacement Term Loans (as applicable) to the Administrative Agent for the account of each Term Lender under such Class (i) commencing March 31, 2015, on the last Business Day of each March, June, September and December (each such date being referred to as a “Loan Installment Date”) prior to March 31, 2017, in each case in an amount equal to 1.25% of the principal amount of such Class of Initial Term Loans as in effect as of the First Amendment Effective Date (for the avoidance of doubt, after giving effect to the incurrence of the Initial Euro Term Loans and the prepayment of Original Term Loans on such date as provided in the First Amendment) (as such payments may be reduced from time to time as a result of the application of prepayments in accordance with Section 2.11 and repurchases in accordance with Section 9.05(g), increased as a result of any increase in the amount of such Initial Term Loans pursuant to Section 2.22(a) or otherwise adjusted pursuant to Section 2.23(b)(ii)), (ii) commencing March 31, 2017 and ending on September 30, 2017, on the last Business Day of each Loan Installment Date occurring on or prior to September 30, 2017, in each case in an amount equal to 2.50% of the principal amount of such Class of Initial Term Loans as in effect as of the First Amendment Effective Date (for the avoidance of doubt, after giving effect to the incurrence of the Initial Euro Term Loans and the prepayment of Original Term Loans on such date as provided in the First Amendment) (as such payments may be reduced from time to time as a result of the application of prepayments in accordance with Section 2.11 and repurchases in accordance with Section 9.05(g), increased as a result of any increase in the amount of such Initial Term Loans pursuant to Section 2.22(a) or otherwise adjusted pursuant to Section 2.23(b)(ii)), (iii) commencing on March 31, 2018, on the last Business Day of each Loan Installment Date occurring on or prior to June 30, 2021, in each case in an amount equal to 0.25% of the principal amount of such Class of 2017
Replacement Term Loans as in effect as of the Second Amendment Effective Date (as such payments may be reduced from time to time as a result of the application of prepayments in accordance with Section 2.11 and repurchases in accordance with Section 9.05(g), increased as a result of any increase in the amount of such 2017 Replacement Term Loans pursuant to Section 2.22(a) or otherwise adjusted pursuant to Section 2.23(b)(ii)), (iv) commencing on September 30, 2021, on each Loan Installment Date occurring on or prior to the 2021 Replacement Term Loan Maturity Date, in each case in an amount equal to 0.25% of the principal amount of such Class of 2021 Replacement Term Loans as in effect as of the Third Amendment Effective Date (as such payments may be reduced from time to time as a result of the application of prepayments in accordance with Section 2.11 and repurchases in accordance with Section 9.05(g), increased as a result of any increase in the amount of such 2021 Replacement Term Loans pursuant to Section 2.22(a) or otherwise adjusted pursuant to Section 2.23(b)(ii)) and (v) on the 2021 Replacement Term Loan Maturity Date, in an amount equal to the remainder of the principal amount of such Class of 2021 Replacement Term Loans, outstanding on such date, together in each case with accrued and unpaid interest on the principal amount to be paid to but excluding the date of such payment.
(b) The Revolver Borrower hereby unconditionally promises to pay (i) to the Administrative Agent for the account of each Revolving Lender the then unpaid principal amount of each Revolving Loan on the Revolving Credit Maturity Date and (ii) to the Swingline Lender the then unpaid principal amount of each Swingline Loan on the earlier of (x) the 5th Business Day following the incurrence of such Swingline Loan and (y) the Revolving Credit Maturity Date. In addition, on the Revolving Credit Maturity Date, the Revolver Borrower shall (A) cancel and return all outstanding Letters of Credit in respect of which it was the applicant (or alternatively, with respect to any outstanding Letter of Credit, furnish to the Administrative Agent a Cash deposit (or if reasonably acceptable to the relevant Issuing Bank, a backup standby letter of credit) equal to 102% of the LC Exposure (minus the amount then on deposit in the LC Collateral Account) as of such date) and (B) make payment in full in Cash of all accrued and unpaid fees and all reimbursable expenses and other Obligations with respect to the Revolving Facility then due, together with accrued and unpaid interest (if any) thereon.
(c) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of each Borrower to such Lender resulting from each Loan made by such Lender, including the amounts of principal and interest payable and paid to such Lender from time to time hereunder.
(d) The Administrative Agent shall maintain accounts in which it shall record (i) the amount of each Loan made (or otherwise created) hereunder, the Class, currency and Type thereof and the Interest Period (if any) applicable thereto, (ii) the amount of any principal or interest due and payable or to become due and payable from each Borrower to each Lender hereunder and (iii) the amount of any sum received by the Administrative Agent hereunder for the account of the Lenders and each Lender’s share thereof.
(e) The entries made in the accounts maintained pursuant to paragraph (c) or (d) of this Section 2.10 shall be prima facie evidence of the existence and amounts of the obligations recorded therein (absent manifest error); provided that the failure of any Lender or the Administrative Agent to maintain such accounts or any manifest error therein shall not in any manner affect the obligations of the Borrowers to repay the Loans in accordance with the terms of this Agreement; provided, further, that in the event of any inconsistency between the accounts maintained by the Administrative Agent pursuant to paragraph (d) of this Section 2.10 and any Lender’s records, the accounts of the Administrative Agent shall govern.
(f) Any Lender may request that Loans made (or otherwise held) by it be evidenced by a Promissory Note. In such event, each applicable Borrower shall prepare, execute and deliver to such
Lender a Promissory Note payable to such Lender and its registered assigns; it being understood and agreed that such Lender (and/or its applicable assign) shall be required to return such Promissory Note to the applicable Borrower(s) in accordance with Section 9.05(b)(iii), as required by the First Amendment, as required by the Second Amendment, as required by the Third Amendment and upon the occurrence of the Termination Date (or as promptly thereafter as practicable).
Section 2.11 Prepayment of Loans.
(a) Optional Prepayments.
(i) Upon prior notice in accordance with paragraph (a)(iii) of this Section 2.11, the Term Borrowers shall have the right at any time and from time to time to prepay any Borrowing of Term Loans in whole or in part without premium or penalty (but subject to Sections 2.12(f) and 2.16). Each such prepayment shall be paid to the Term Lenders under the applicable Class(es) in accordance with their respective Applicable Percentages.
(ii) Upon prior notice in accordance with paragraph (a)(iii) of this Section 2.11, the Revolver Borrower shall have the right at any time and from time to time to prepay any Borrowing of Revolving Loans, including any Additional Revolving Loans, in whole or in part without premium or penalty (but subject to Section 2.16). Prepayments made pursuant to this Section 2.11(a)(ii), first, shall be applied ratably to the Swingline Loans and to outstanding LC Disbursements and, second, shall be applied ratably to the outstanding Revolving Loans, including any Additional Revolving Loans. Each such prepayment shall be paid to the Revolving Lenders under the applicable Class(es) in accordance with their respective Applicable Percentages.
(iii) The Borrower Representative shall notify the Administrative Agent (and, in the case of a prepayment of a Swingline Loan, the Swingline Lender) in writing or by telephone (promptly confirmed in writing) of any prepayment under this Section 2.11(a) (A) in the case of a prepayment of a SOFR Borrowing denominated in Dollars, not later than 1:00 p.m., Local Time, three Business Days before the date of prepayment (or, in the case of the prepayment of the Original Term Loans contemplated by the First Amendment, not later than 1:00 p.m., Local Time, one Business Day before the date of such prepayment), (B) in the case of a prepayment of an ABR Borrowing, not later than 1:00 p.m. one Business Day before the date of prepayment, (C) in the case a Borrowing denominated in an Alternative Currency, four Business Days (or five Business Days in the case of a Special Notice Currency), before the date of prepayment or (D) in the case of a prepayment of a Swingline Loan, not later than 1:00 p.m. on the date of prepayment (or, in the case of clauses (A), (B) and (C), such later time as shall be acceptable to the Administrative Agent). Each such notice shall be irrevocable and shall specify the prepayment date and the principal amount of each Borrowing or portion thereof to be prepaid; provided that a notice of prepayment delivered by the applicable Borrower may state that such notice is conditioned upon the effectiveness of other transactions, in which case such notice may be revoked by the Borrower Representative (by notice to the Administrative Agent on or prior to the specified effective date) if such condition is not satisfied. Promptly following receipt of any such notice relating to any Borrowing, the Administrative Agent shall advise the relevant Lenders of the contents thereof. Each partial prepayment of any Borrowing shall be in an amount at least equal to the amount that would be permitted in the case of an advance of a Borrowing of the same Type as provided in Section 2.02(c). Each prepayment of Term Loans made pursuant to this Section 2.11(a) shall be applied against the remaining scheduled installments of principal due in respect of the Term Loans of such Class in the manner specified by the Borrower Representative or, if not so specified on or prior to the date of such optional prepayment, in direct order of maturity.
(b) Mandatory Prepayments.
(i) No later than the fifth Business Day after the date on which the financial statements with respect to each Fiscal Year of Borrower Representative are required to be delivered pursuant to Section 5.01(b), commencing with the Fiscal Year ending December 31, 2022, the Borrowers shall, jointly and severally, prepay the outstanding principal amount of 2021 Replacement Term Loans and Additional Term Loans (unless specified otherwise in the applicable amendment relating to such Additional Term Loans in accordance with Section 2.22(a)(ix), Section 2.23(a)(vi) or Section 9.02(c)(i)(F)) in accordance with clause (vi) of this Section 2.11(b) below in an aggregate principal amount equal to (A) 50% of Excess Cash Flow of the Borrowers and their Restricted Subsidiaries for the Fiscal Year then ended, minus (B) at the option of the Borrower Representative, (x) the aggregate principal amount of any Initial Term Loans (other than the prepayment of Original Term Loans as contemplated by the First Amendment), 2017 Replacement Term Loans, 2021 Replacement Term Loans, Additional Term Loans, Revolving Loans or Additional Revolving Loans (in each case, to the extent ranking pari passu in right of payment and with respect to security with the Initial Term Loans, the 2017 Replacement Term Loans or the 2021 Replacement Term Loans) prepaid pursuant to Section 2.11(a) prior to such date (calculated by reference to the Dollar Equivalent thereof, in the case of any such prepayments made in a currency other than Dollars) and (y) the amount of any reduction in the outstanding amount of any Initial Term Loans, 2017 Replacement Term Loans, 2021 Replacement Term Loans or Additional Term Loans retired and cancelled as a result of any assignment made in accordance with Section 9.05(g) of this Agreement (including in connection with any Dutch Auction), in the case of this clause (y) prior to such date and in an amount equal to the actual amount of cash paid in connection with the relevant assignment (calculated by reference to the Dollar Equivalent thereof, in the case of any such payments made in a currency other than Dollars), excluding any such optional prepayments made during such Fiscal Year that reduced the amount required to be prepaid pursuant to this Section 2.11(b)(i) in the prior Fiscal Year (and in the case of any prepayment of Revolving Loans and/or Additional Revolving Loans, to the extent accompanied by a permanent reduction in the relevant commitment, and in the case of all such prepayments, to the extent that such prepayments were not financed with the proceeds of other Indebtedness (other than revolving Indebtedness) of the Borrowers or their Restricted Subsidiaries); provided that (I) such percentage of Excess Cash Flow shall be reduced to 25% of Excess Cash Flow if the Total Leverage Ratio calculated on a Pro Forma Basis as of the last day of the relevant Fiscal Year (but without giving effect to the payment required hereby) is less than or equal to 1.00 to 1.00, but greater than 0.50 to 1.00, (II) such prepayment shall not be required if the Total Leverage Ratio calculated on a Pro Forma Basis as of the last day of the relevant Fiscal Year (but without giving effect to the payment required hereby) is less than or equal to 0.50 to 1.00 and (III) no such prepayment shall be required if the amount that would be required to be prepaid is less than or equal to $1,000,000 and then, only to the extent of any amount in excess of $1,000,000.
(ii) No later than the fifth Business Day following the receipt of Net Proceeds in respect of any Prepayment Asset Sale or Net Insurance/Condemnation Proceeds, in each case, in excess of $10,000,000 in any Fiscal Year, the Borrowers shall, jointly and severally, apply an amount equal to 100% of the Net Proceeds or Net Insurance/Condemnation Proceeds received with respect thereto in excess of such thresholds (the “Subject Proceeds”) to prepay the outstanding principal amount of Initial Term Loans, 2017 Replacement Term Loans, 2021 Replacement Term Loans and (unless specified otherwise in the applicable amendment relating to such Additional Term Loans in accordance with Section 2.22(a)(ix), Section 2.23(a)(vi) or Section 9.02(c)(i)(F)) Additional Term Loans in accordance with clause (vi) below; provided that if, prior to the date any such prepayment is required to be made, the Borrower Representative notifies the Administrative Agent of its intention to reinvest the Subject Proceeds in assets used or useful in the business (other than Cash or Cash Equivalents) of the Borrower Representative or any of its Restricted Subsidiaries, then so long as no Event of Default then exists, the Term Borrowers shall not be required to make a mandatory prepayment under this clause (ii) in respect of
the Subject Proceeds to the extent (A) the Subject Proceeds are so reinvested within 12 months following receipt thereof or (B) the Borrower Representative or any of its Restricted Subsidiaries has committed to so reinvest the Subject Proceeds during such 12-month period and the Subject Proceeds are so reinvested within six months after the expiration of such 12-month period; provided, however, that if the Subject Proceeds have not been so reinvested prior to the expiration of the applicable period, the Term Borrowers shall, jointly and severally, promptly prepay the outstanding principal amount of Initial Term Loans, 2017 Replacement Term Loans, 2021 Replacement Term Loans and Additional Term Loans with the Subject Proceeds not so reinvested as set forth above (without regard to the immediately preceding proviso); provided further that if, at the time that any such prepayment would be required hereunder, a Term Borrower or any of its Restricted Subsidiaries is required to offer to repay or repurchase any other Indebtedness permitted hereunder to be secured on a pari passu basis with the Secured Obligations pursuant to the terms of the documentation governing such Indebtedness with the Subject Proceeds (such Indebtedness required to be offered to be so repaid or repurchased, the “Other Applicable Indebtedness”), then the relevant Person may apply the Subject Proceeds on a pro rata basis to the prepayment of the Initial Term Loans, 2017 Replacement Term Loans, 2021 Replacement Term Loans and (to the extent required) Additional Term Loans and to the repurchase or repayment of the Other Applicable Indebtedness (determined on the basis of the aggregate outstanding principal amount of the applicable Initial Term Loans, 2017 Replacement Term Loans, 2021 Replacement Term Loans, Additional Term Loans and Other Applicable Indebtedness (or accreted amount if such Other Applicable Indebtedness is issued with original issue discount) at such time (using the Dollar Equivalent thereof as of the date of determination, in the case of any such Term Loans or Other Applicable Indebtedness denominated in a currency other than Dollars); provided that the portion of the Subject Proceeds allocated to the Other Applicable Indebtedness shall not exceed the amount of the Subject Proceeds required to be allocated to the Other Applicable Indebtedness pursuant to the terms thereof, and the remaining amount, if any, of the Subject Proceeds shall be allocated to the Initial Term Loans, 2017 Replacement Term Loans, 2021 Replacement Term Loans and Additional Term Loans in accordance with the terms hereof), and the amount of the prepayment of the Initial Term Loans, 2017 Replacement Term Loans, 2021 Replacement Term Loans and Additional Term Loans that would have otherwise been required pursuant to this Section 2.11(b)(ii) shall be reduced accordingly; provided further that to the extent the holders of the Other Applicable Indebtedness decline to have such Indebtedness prepaid or repurchased, the declined amount shall promptly (and in any event within ten Business Days after the date of such declination) be applied to prepay the Initial Term Loans, 2017 Replacement Term Loans, 2021 Replacement Term Loans and Additional Term Loans in accordance with the terms hereof.
(iii) In the event that any Borrower or any of its Restricted Subsidiaries receives Net Proceeds from the issuance or incurrence of Indebtedness by any Borrower or any of its Restricted Subsidiaries (other than with respect to Indebtedness permitted under Section 6.01, except to the extent the relevant Indebtedness constitutes Refinancing Indebtedness incurred to refinance all or a portion of the Initial Term Loans, 2017 Replacement Term Loans, 2021 Replacement Term Loans or Additional Term Loans pursuant to Section 6.01(p) or Replacement Term Loans incurred to refinance all or a portion of the Initial Term Loans, 2017 Replacement Term Loans, 2021 Replacement Term Loans or Additional Term Loans in accordance with the requirements of Section 9.02(c)), the Term Borrowers shall, jointly and severally, substantially simultaneously with (and in any event not later than the next succeeding Business Day) the receipt of such Net Proceeds by such Borrower or its applicable Restricted Subsidiary, apply an amount equal to 100% of such Net Proceeds to prepay the outstanding principal amount of Initial Term Loans, 2017 Replacement Term Loans, 2021 Replacement Term Loans and Additional Term Loans in accordance with clause (vi) below.
(iv) [Reserved];
(v) Each Lender may elect, by notice to the Administrative Agent at or prior to the time and in the manner specified by the Administrative Agent, prior to any prepayment of Initial Term Loans, 2017 Replacement Term Loans, 2021 Replacement Term Loans and Additional Term Loans required to be made by the Term Borrowers pursuant to this Section 2.11(b), to decline all (but not a portion) of its Applicable Percentage of such prepayment (such declined amounts, solely to the extent not applied to any other Indebtedness of the Borrowers or their subsidiaries as a mandatory prepayment of such Indebtedness, the “Declined Proceeds”); provided that, for the avoidance of doubt, no Lender may reject any prepayment made under Section 2.11(b)(iii) above to the extent that such prepayment is made with the Net Proceeds of Refinancing Indebtedness incurred to refinance all or a portion of the Initial Term Loans, 2017 Replacement Term Loans, 2021 Replacement Term Loans or Additional Term Loans pursuant to Section 6.01(p) or Replacement Term Loans incurred to refinance all or a portion of the Initial Term Loans, 2017 Replacement Term Loans, 2021 Replacement Term Loans or Additional Term Loans in accordance with the requirements of Section 9.02(c). If any Lender fails to deliver a notice to the Administrative Agent of its election to decline receipt of its Applicable Percentage of any mandatory prepayment within the time frame specified by the Administrative Agent, such failure will be deemed to constitute an acceptance of such Lender’s Applicable Percentage of the total amount of such mandatory prepayment of Initial Term Loans, 2017 Replacement Term Loans, 2021 Replacement Term Loans and Additional Term Loans. Any Declined Proceeds shall be retained by the Borrowers for application for any purpose not prohibited by this Agreement.
(vi) Except as may otherwise be set forth in any amendment to this Agreement in connection with any Additional Term Loan in accordance with Section 2.22(a)(ix), Section 2.23(a)(vi) or Section 9.02(c)(i)(F), (A) each prepayment of Initial Term Loans, 2017 Replacement Term Loans, 2021 Replacement Term Loans and Additional Term Loans pursuant to this Section 2.11(b) shall be applied ratably to each Class of Term Loans (based upon the then outstanding principal amounts of the respective Classes of Term Loans (using the Dollar Equivalent thereof as of the date of determination, in the case of any such Term Loans not denominated in Dollars)) (provided that (x) any prepayment of 2017 Replacement Term Loans pursuant to this Section 2.11(b) shall be applied to the 2017 Replacement USD Term Loans and the 2017 Replacement Euro Term Loans as directed by the Borrower Representative (or in the absence of such direction, ratably to such Classes of Term Loans) and (y) any prepayment of Initial Term Loans, 2017 Replacement Term Loans, 2021 Replacement Term Loans or Additional Term Loans constituting Refinancing Indebtedness incurred to refinance all or a portion of the Initial Term Loans, 2017 Replacement Term Loans, 2021 Replacement Term Loans or Additional Term Loans pursuant to Section 6.01(p) or Replacement Term Loans incurred to refinance all or a portion of the Initial Term Loans, 2017 Replacement Term Loans, 2021 Replacement Term Loans or Additional Term Loans in accordance with the requirements of Section 9.02(c) shall be applied solely to each applicable Class of refinanced or replaced Term Loans), (B) with respect to each Class of Initial Term Loans, 2017 Replacement Term Loans, 2021 Replacement Term Loans and Additional Term Loans, all accepted prepayments under Section 2.11(b)(i), (ii) or (iii) shall be applied against the remaining scheduled installments of principal due in respect of the Initial Term Loans, 2017 Replacement Term Loans and Additional Term Loans of such Class as directed by the Borrower Representative (or, in the absence of direction from the Borrower Representative, to the remaining scheduled amortization payments in respect of the Initial Term Loans, 2017 Replacement Term Loans, 2021 Replacement Term Loans and Additional Term Loans of such Class in direct order of maturity), and (C) each such prepayment shall be paid to the Term Lenders of each applicable Class in accordance with their respective Applicable Percentages. The amount of such mandatory prepayments shall be applied on a pro rata basis to the then outstanding Initial Term Loans, 2017 Replacement Term Loans, 2021 Replacement Term Loans and Additional Term Loans being prepaid irrespective of whether such outstanding Loans are ABR Loans or SOFR Loans; provided that, within each Class of Term Loans, the amount thereof shall be applied first to ABR Loans to the full extent thereof before application to the SOFR Loans in a manner that minimizes the amount of any payments required to be made by the applicable Borrower(s) pursuant to Section 2.16. Any prepayment
of 2021 Replacement Term Loans made on or prior to the date that is twelve months after the Third Amendment Effective Date pursuant to Section 2.11(b)(iii) as part of a Repricing Transaction shall be accompanied by the fee set forth in Section 2.12(f).
(vii) In the event that the Aggregate Revolving Credit Exposure exceeds the Total Revolving Credit Commitment then in effect (other than solely as a result of changes in currency exchange rates), the Revolver Borrower shall, within five Business Days of receipt of notice from the Administrative Agent, prepay the Revolving Loans or Swingline Loans and/or reduce LC Exposure in an aggregate amount sufficient to reduce such Aggregate Revolving Credit Exposure as of the date of such payment to an amount not to exceed the Total Revolving Credit Commitment then in effect by taking any of the following actions as it shall determine at its sole discretion: (A) prepayment of Revolving Loans or Swingline Loans or (B) with respect to the excess LC Exposure, deposit of Cash in the LC Collateral Account or “backstopping” or replacement of the relevant Letters of Credit, in each case, in an amount equal to 102% of such excess LC Exposure (minus the amount then on deposit in the LC Collateral Account).
(viii) At the time of each prepayment required under Section 2.11(b)(i), (ii) or (iii), the Borrower Representative shall deliver to the Administrative Agent a certificate signed by a Responsible Officer of the Borrower Representative setting forth in reasonable detail the calculation of the amount of such prepayment. Each such certificate shall specify the Borrowings being prepaid and the principal amount of each Borrowing (or portion thereof) to be prepaid. Prepayments shall be accompanied by accrued interest as required by Section 2.13. All prepayments of Borrowings under this Section 2.11(b) shall be subject to Section 2.16 and, in the case of prepayments under clause (iii) above as part of a Repricing Transaction, Section 2.12(f), but shall otherwise be without premium or penalty.
(ix) If solely as a result of changes in currency exchange rates, on any Revaluation Date, the Dollar Equivalent of the total Revolving Credit Exposure of all Revolving Lenders of any Class exceeds the total Revolving Credit Commitments of such Class, the Borrowers shall, at the request of the Administrative Agent (provided, that such a request shall be deemed to have been made if the Dollar Equivalent of the total Revolving Credit Exposure of all Revolving Lenders under the respective Class is more than 105% of the total Revolving Credit Commitments of such Class (on any Revaluation Date), within 5 days of such Revaluation Date (A) prepay Revolving Loans and/or Swingline Loans or (B) provide Cash collateral pursuant to Section 2.05(j), in an aggregate amount such that the applicable exposure does not exceed the applicable commitment set forth above.
Section 2.12 Fees.
(a) The Revolver Borrower agrees to pay to the Administrative Agent for the account of each Revolving Lender (other than any Defaulting Lender) a commitment fee, which shall accrue at a rate equal to the Commitment Fee Rate per annum on the average daily amount of the Unused Revolving Credit Commitment of such Revolving Lender during the period from and including the Closing Date to the date on which such Lender’s Revolving Credit Commitments terminate. Accrued commitment fees shall be payable in arrears on the last Business Day of each March, June, September and December for the quarterly period then ended (commencing on March 31, 2015) and on the date on which the Revolving Credit Commitments terminate. For purposes of calculating the commitment fees only, no portion of the Revolving Credit Commitments shall be deemed utilized as a result of outstanding Swingline Loans.
(b) Subject to Section 2.21, the Revolver Borrower agrees to pay (i) to the Administrative Agent for the account of each Revolving Lender a participation fee with respect to its participation in each Letter of Credit, which shall accrue at the Applicable Rate used to determine the
interest rate applicable to SOFR Revolving Loans denominated in the same currency as the applicable Letter of Credit on the daily face amount of such Lender’s LC Exposure in respect of such Letter of Credit (excluding any portion thereof attributable to unreimbursed LC Disbursements), during the period from and including the Closing Date to the later of the date on which such Revolving Lender’s Revolving Credit Commitment terminates and the date on which such Revolving Lender ceases to have any LC Exposure in respect of such Letter of Credit and (ii) to each Issuing Bank, for its own account, a fronting fee, in respect of each Letter of Credit issued by such Issuing Bank for the period from the date of issuance of such Letter of Credit to the expiration date of such Letter of Credit (or if terminated on an earlier date, to the termination date of such Letter of Credit), computed at a rate equal to the rate agreed by such Issuing Bank and the Revolver Borrower (but in any event not to exceed 0.125% per annum) of the Dollar Equivalent of the daily face amount of such Letter of Credit, as well as such Issuing Bank’s standard fees with respect to the issuance, amendment, renewal or extension of any Letter of Credit or processing of drawings thereunder. Participation fees and fronting fees accrued to and including the last Business Day of each March, June, September and December shall be payable in arrears for the quarterly period then ended on the last Business Day of such calendar quarter; provided that all such fees shall be payable on the date on which the Revolving Credit Commitments terminate, and any such fees accruing after the date on which the Revolving Credit Commitments terminate shall be payable on demand. Any other fees payable to any Issuing Bank pursuant to this paragraph shall be payable within 30 days after receipt of a written demand (accompanied by reasonable back-up documentation) therefor.
(c) [Reserved].
(d) The Borrowers jointly and severally agree to pay to the Administrative Agent, for its own account, the fees in the amounts and at the times separately agreed upon by the Borrower Representative and the Administrative Agent in writing.
(e) All fees payable hereunder shall be paid on the dates due, in Dollars and in immediately available funds, to the Administrative Agent (or to the applicable Issuing Bank, in the case of fees payable to it) for distribution, in the case of commitment fees and participation fees, to the Revolving Lenders. Fees paid shall not be refundable under any circumstances. Fees payable hereunder shall accrue through and including the last day of the month immediately preceding the applicable fee payment date.
(f) In the event that, on or prior to the date that is twelve months after the Fourth Amendment Effective Date, any Borrower (x) prepays, repays, refinances, substitutes or replaces any 2021 Replacement Term Loans in connection with a Repricing Transaction (including, for the avoidance of doubt, any prepayment made pursuant to Section 2.11(b)(iii) that constitutes a Repricing Transaction), or (y) effects any amendment, modification or waiver of, or consent under, this Agreement resulting in a Repricing Transaction, the Term Borrowers shall, jointly and severally, pay to the Administrative Agent, for the ratable account of each of the applicable Term Lenders, (I) in the case of clause (x), a premium of 1.00% of the aggregate principal amount of the 2021 Replacement Term Loans so prepaid, repaid, refinanced, substituted or replaced and (II) in the case of clause (y), a fee equal to 1.00% of the aggregate principal amount of the 2021 Replacement Term Loans that are the subject of such Repricing Transaction outstanding immediately prior to such amendment. If, on or prior to the date that is twelve months after the Fourth Amendment Effective Date, all or any portion of the 2021 Replacement Term Loans held by any Term Lender are prepaid, repaid, refinanced, substituted or replaced pursuant to Section 2.19(b)(iv) as a result of, or in connection with, such Term Lender becoming a Non-Consenting Lender with respect to any waiver, consent, modification or amendment referred to in clause (y) above (or otherwise in connection with a Repricing Transaction), such prepayment, repayment, refinancing, substitution or replacement will be made at 101% of the principal amount so prepaid, repaid, refinanced, substituted or
replaced. All such amounts shall be due and payable on the date of effectiveness of such Repricing Transaction.
(g) Unless otherwise indicated herein, all computations of fees shall be made on the basis of a 360-day year and shall be payable for the actual days elapsed (including the first day but excluding the last day). Each determination by the Administrative Agent of a fee hereunder shall be conclusive and binding for all purposes, absent manifest error.
Section 2.13 Interest.
(a) The Term Loans and Revolving Loans comprising each ABR Borrowing (including Swingline Loans, to the extent denominated in Dollars) shall bear interest at the Alternate Base Rate plus the Applicable Rate.
(b) The Term Loans and Revolving Loans comprising each SOFR Borrowing shall bear interest at Adjusted Term SOFR for the Interest Period in effect for such Borrowing plus the Applicable Rate.
(c) [Reserved].
(d) Notwithstanding the foregoing and subject to Section 2.21, if any principal of or interest on any Initial Term Loan, 2017 Replacement Term Loans, 2021 Replacement Term Loan, Revolving Loan or Additional Loan, any LC Disbursement or any fee payable by a Borrower hereunder is not, in each case, paid or reimbursed when due, whether at stated maturity, upon acceleration or otherwise, the relevant overdue amount shall bear interest, to the fullest extent permitted by law, after as well as before judgment, at a rate per annum equal to (i) in the case of overdue principal or interest of any Initial Term Loan, 2017 Replacement Term Loans, 2021 Replacement Term Loan, Revolving Loan, Additional Loan or unreimbursed LC Disbursement, 2.00% plus the rate otherwise applicable to such Initial Term Loan, 2017 Replacement Term Loans, 2021 Replacement Term Loan, Revolving Loan, Additional Loan or LC Disbursement as provided in the preceding paragraphs of this Section 2.13, Section 2.05(h) or in the amendment to this Agreement relating thereto or (ii) in the case of any other amount, 2.00% plus the rate applicable to 2021 Replacement Term Loans denominated in Dollars that are ABR Loans as provided in paragraph (a) of this Section 2.13; provided that no amount shall accrue pursuant to this Section 2.13(d) on any overdue amount, reimbursement obligation in respect of any LC Disbursement or other amount payable to a Defaulting Lender so long as such Lender is a Defaulting Lender.
(e) Accrued interest on each Initial Term Loan, 2017 Replacement Term Loans, 2021 Replacement Term Loan, Revolving Loan or Additional Loan shall be payable in arrears on each Interest Payment Date for such Initial Term Loan, 2017 Replacement Term Loans, 2021 Replacement Term Loan, Revolving Loan or Additional Loan and on the Maturity Date or upon the termination of the Revolving Credit Commitments or any Additional Commitments, as applicable; provided that (i) interest accrued pursuant to paragraph (d) of this Section 2.13 shall be payable on demand, (ii) in the event of any repayment or prepayment of any Initial Term Loan, 2017 Replacement Term Loans, 2021 Replacement Term Loan, Revolving Loan or Additional Loan (other than a prepayment of an ABR Revolving Loan prior to the termination of the relevant revolving Commitments), accrued interest on the principal amount repaid or prepaid shall be payable on the date of such repayment or prepayment and (iii) in the event of any conversion of any SOFR Loan prior to the end of the current Interest Period therefor, accrued interest on such Initial Term Loan, 2017 Replacement Term Loans, 2021 Replacement Term Loan, Revolving Loan or Additional Loan shall be payable on the effective date of such conversion.
(f) All interest hereunder shall be computed on the basis of a year of 360 days, except that (i) interest computed for ABR Loans based on the Prime Rate shall be computed on the basis of a year of 365 days (or 366 days in a leap year) and (ii) Borrowings denominated in Sterling, interest shall be computed on the basis of a year of 365 days, and in each case shall be payable for the actual number of days elapsed (including the first day but excluding the last day). The applicable Alternate Base Rate or Adjusted Term SOFR shall be determined by the Administrative Agent, and such determination shall be conclusive absent manifest error. Interest shall accrue on each Loan for the day on which the Loan is made, and shall not accrue on a Loan, or any portion thereof, for the day on which the Loan or such portion is paid; provided that any Loan that is repaid on the same day on which it is made shall bear interest for one day; provided further that, in the case of any ABR Loan, interest shall accrue through and including the last day of the month preceding the applicable Interest Payment Date.
Section 2.14 Alternate Rate of Interest.
(a) If at least two Business Days prior to the commencement of any Interest Period for a SOFR Borrowing:
(ii) the Administrative Agent determines (which determination shall be conclusive absent manifest error) that adequate and reasonable means do not exist for ascertaining Adjusted Term SOFR for such Interest Period; or
(iii) the Administrative Agent is advised by the Required Lenders that the Adjusted Term SOFR for such Interest Period will not adequately and fairly reflect the cost to such Lenders of making or maintaining their Loans included in such Borrowing for such Interest Period;
then the Administrative Agent shall promptly give notice thereof to the Borrower Representative and the Lenders by telephone or facsimile or other electronic transmission as promptly as practicable thereafter and, until the Administrative Agent notifies the Borrower Representative and the Lenders that the circumstances giving rise to such notice no longer exist, which the Administrative Agent agrees promptly to do, (i) any Interest Election Request that requests the conversion of any Borrowing to, or continuation of any Borrowing as, a SOFR Borrowing shall be ineffective and such Borrowing shall be converted to an ABR Borrowing on the last day of the Interest Period applicable thereto, (ii) any Interest Election Request that requests the continuation of any Borrowing in any affected Alternative Currency shall be ineffective and such Borrowing denominated in an Alternative Currency shall be prepaid on the last day of the Interest Period applicable thereto, and (iii) if any Borrowing Request requests a SOFR Borrowing, such Borrowing shall be made as an ABR Borrowing (and if any Borrowing Request requests a Borrowing of Revolving Loans denominated in an Alternative Currency, such Borrowing Request shall be ineffective).
(b) Notwithstanding anything to the contrary herein or in any other Loan Document:
(i) Upon the occurrence of a Benchmark Transition Event, the Benchmark Replacement will replace the then-current Benchmark for all purposes hereunder and under any Loan Document in respect of any Benchmark setting at or after 5:00 p.m. on the fifth (5th) Business Day after the date notice of such Benchmark Replacement is provided to the Lenders without requiring any amendment to, or requiring any further action by or consent of any other party to, this Agreement or any other Loan Document so long as the Administrative Agent has not received, by such time, written notice of objection to such Benchmark Replacement from Lenders comprising the Required Lenders. At any time that the administrator of the then-current Benchmark has permanently or indefinitely ceased to provide such Benchmark or such Benchmark has been announced by the regulatory supervisor for the administrator of such
Benchmark pursuant to public statement or publication of information to be no longer representative of the underlying market and economic reality that such Benchmark is intended to measure and that representativeness will not be restored, the Borrower Representative may revoke any request for a borrowing of, conversion to or continuation of Loans to be made, converted or continued that would bear interest by reference to such Benchmark until the Borrower Representative’s receipt of notice from the Administrative Agent that a Benchmark Replacement has replaced such Benchmark, and, failing that, the Borrowers will be deemed to have converted any such request into a request for a borrowing of or conversion to ABR Loans. During the period referenced in the foregoing sentence, the component of Alternate Base Rate based upon the Benchmark will not be used in any determination of the Alternate Base Rate.
(ii) In connection with the implementation and administration of a Benchmark Replacement, the Administrative Agent will have the right to make Benchmark Replacement Conforming Changes from time to time and, notwithstanding anything to the contrary herein or in any other Loan Document, any amendments implementing such Benchmark Replacement Conforming Changes will become effective without any further action or consent of any other party to this Agreement.
(iii) The Administrative Agent will promptly notify the Borrower Representative and the Lenders of (i) the implementation of any Benchmark Replacement and (ii) the effectiveness of any Benchmark Replacement Conforming Changes. Any determination, decision or election that may be made by the Administrative Agent or, if applicable, any Lender (or group of Lenders) pursuant to this Section 2.14(b), including any determination with respect to a tenor, rate or adjustment or of the occurrence or non-occurrence of an event, circumstance or date and any decision to take or refrain from taking any action, will be conclusive and binding absent manifest error and may be made in its or their sole discretion and without consent from any other party hereto, except, in each case, as expressly required pursuant to this Section 2.14(b).
(iv) At any time (including in connection with the implementation of a Benchmark Replacement), (i) if the then-current Benchmark is a term rate (including Term SOFR), then the Administrative Agent may remove any tenor of such Benchmark that is unavailable or non-representative for Benchmark (including Benchmark Replacement) settings and (ii) the Administrative Agent may reinstate any such previously removed tenor for Benchmark (including Benchmark Replacement) settings.
(v) As used in this Section 2.14(b):
“Available Tenor” means, as of any date of determination and with respect to the then-current Benchmark, as applicable, (x) if the then-current Benchmark is a term rate, any tenor for such Benchmark that is or may be used for determining the length of an Interest Period or (y) otherwise, any payment period for interest calculated with reference to such Benchmark, as applicable, pursuant to this Agreement as of such date.
“Benchmark” means, initially as of the Fourth Amendment Effective Date, Term SOFR; provided that if a replacement of the Benchmark has occurred after the Fourth Amendment Effective Date pursuant to this Section 2.14(b), then “Benchmark” means the applicable Benchmark Replacement to the extent that such Benchmark Replacement has replaced such prior benchmark rate. Any reference to “Benchmark” shall include, as applicable, the published component used in the calculation thereof.
“Benchmark Replacement” means, for any Available Tenor, the sum of (x) the alternate benchmark rate and (y) an adjustment (which may be a positive or negative value or zero), in each case, that has been selected by the Administrative Agent and the Borrower Representative as the replacement for such Available Tenor of such Benchmark giving due consideration to any evolving or then-prevailing market convention, including any applicable recommendations made by the Relevant Governmental Body, for U.S. dollar-denominated syndicated credit facilities at such time; provided that, if the Benchmark Replacement would be less than the Floor, the Benchmark Replacement will be deemed to be the Floor for the purposes of this Agreement and the other Loan Documents.
“Benchmark Replacement Conforming Changes” means, with respect to any Benchmark Replacement, any technical, administrative or operational changes (including changes to the definition of “Alternate Base Rate,” the definition of “Business Day,” the definition of “Interest Period,” timing and frequency of determining rates and making payments of interest, timing of borrowing requests or prepayment, conversion or continuation notices, the applicability and length of lookback periods, the applicability of breakage provisions, and other technical, administrative or operational matters) that the Administrative Agent decides may be appropriate to reflect the adoption and implementation of such Benchmark Replacement and to permit the administration thereof by the Administrative Agent in a manner substantially consistent with market practice (or, if the Administrative Agent decides that adoption of any portion of such market practice is not administratively feasible or if the Administrative Agent determines that no market practice for the administration of such Benchmark Replacement exists, in such other manner of administration as the Administrative Agent decides is reasonably necessary in connection with the administration of this Agreement and the other Loan Documents).
“Benchmark Transition Event” means, with respect to any then-current Benchmark, the occurrence of a public statement or publication of information by or on behalf of the administrator of the then-current Benchmark, the regulatory supervisor for the administrator of such Benchmark, the Board, the Federal Reserve Bank of New York, an insolvency official with jurisdiction over the administrator for such Benchmark, a resolution authority with jurisdiction over the administrator for such Benchmark or a court or an entity with similar insolvency or resolution authority over the administrator for such Benchmark, announcing or stating that (a) such administrator has ceased or will cease on a specified date to provide all Available Tenors of such Benchmark, permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark or (b) all Available Tenors of such Benchmark are or will no longer be representative of the underlying market and economic reality that such Benchmark is intended to measure and that representativeness will not be restored.
“Relevant Governmental Body” means the Board or the Federal Reserve Bank of New York, or a committee officially endorsed or convened by the Board or the Federal Reserve Bank of New York, or any successor thereto.
Section 2.15 Increased Costs.
(a) If any Change in Law:
(i) imposes, modifies or deems applicable any reserve, special deposit or similar requirement against assets of, deposits with or for the account of, or credit extended by, any Lender or Issuing Bank,
(ii) subjects any Lender or Issuing Bank to any Taxes (other than (A) Indemnified Taxes, (B) Taxes described in clauses (b) through (e) of the definition of Excluded Taxes and (C) Connection Income Taxes) on its loans, loan principal, letters of credit, commitments, or other obligations, or its deposits, reserves, other liabilities or capital attributable thereto, or
(iii) imposes on any Lender or Issuing Bank any other condition affecting this Agreement or SOFR Loans made by any Lender or any Letter of Credit or participation therein,
and the result of any of the foregoing is to increase the cost to the relevant Lender of making or maintaining any SOFR Loan or of maintaining its obligation to make any such Loan (including, without limitation, pursuant to any conversion of any Borrowing denominated in Dollars or any Alternative Currency into a Borrowing denominated in Dollars or any other Alternative Currency) or to increase the cost to such Lender or Issuing Bank of participating in, issuing or maintaining any Letter of Credit or to reduce the amount of any sum received or receivable by such Lender or Issuing Bank hereunder, whether of principal, interest or otherwise (including, without limitation, pursuant to any conversion of any Borrowing denominated in Dollars or any Alternative Currency into a Borrowing denominated in Dollars or any other Alternative Currency) in respect of any SOFR Loan or Letter of Credit in an amount deemed by such Lender or Issuing Bank to be material (such amount being an “Increased Cost”), then, within 30 days after the Borrower Representative’s receipt of the certificate contemplated by paragraph (c) of this Section 2.15, the applicable Borrower(s) will, subject to Section 2.15(e), pay to such Lender or Issuing Bank, as applicable, such additional amount or amounts as will compensate such Lender or Issuing Bank, as applicable, for such additional costs incurred or reduction suffered; provided that such Borrower(s) shall not be liable for such compensation if (x) the relevant Change in Law occurs on a date prior to the date such Lender becomes a party hereto, (y) such Lender invokes Section 2.20 or (z) in the case of requests for reimbursement under clause (ii) above resulting from a market disruption, the relevant circumstances are not generally affecting the banking market.
(b) If any Lender or Issuing Bank determines that any Change in Law regarding liquidity or capital requirements has or would have the effect of reducing the rate of return on such Lender’s or Issuing Bank’s capital or on the capital of such Lender’s or Issuing Bank’s holding company, if any, as a consequence of this Agreement or the Loans made by, or participations in Letters of Credit held by, such Lender, or the Letters of Credit issued by such Issuing Bank, to a level below that which such Lender or such Issuing Bank or such Lender’s or such Issuing Bank’s holding company could have achieved but for such Change in Law other than due to Taxes, which shall be dealt with exclusively pursuant to Section 2.17 (taking into consideration such Lender’s or Issuing Bank’s policies and the policies of such Lender’s or such Issuing Bank’s holding company with respect to liquidity and capital adequacy), then within 30 days of receipt by the Borrower Representative of the certificate contemplated by paragraph (c) of this Section 2.15 the applicable Borrower(s) will pay to such Lender or such Issuing Bank, as applicable, such additional amount or amounts as will compensate such Lender or such Issuing Bank or such Lender’s or such Issuing Bank’s holding company for any such reduction suffered.
(c) A certificate of a Lender or an Issuing Bank setting forth the amount or amounts necessary to compensate such Lender or Issuing Bank or its holding company, as applicable, as specified in paragraph (a) or (b) of this Section 2.15 and setting forth in reasonable detail the manner in which such amount or amounts were determined and certifying that such Lender is generally charging such amounts to similarly situated borrowers shall be delivered to the Borrower Representative and shall be conclusive absent manifest error.
(d) Failure or delay on the part of any Lender or Issuing Bank to demand compensation pursuant to this Section 2.15 shall not constitute a waiver of such Lender’s or Issuing
Bank’s right to demand such compensation; provided that the applicable Borrower(s) shall not be required to compensate a Lender or an Issuing Bank pursuant to this Section 2.15 for any increased costs or reductions incurred more than 180 days prior to the date that such Lender or Issuing Bank notifies the Borrower Representative of the Change in Law giving rise to such increased costs or reductions and of such Lender’s or Issuing Bank’s intention to claim compensation therefor; provided further that if the Change in Law giving rise to such increased costs or reductions is retroactive, then the 180-day period referred to above shall be extended to include the period of retroactive effect thereof.
(e) Section 2.15(a) does not apply to the extent that any Increased Cost is (a) attributable to a U.K. Tax Deduction required by law to be made by a U.K. Revolver Borrower; or (b) solely in the case of any Loan made to a U.K. Revolver Borrower, compensated for by Section 2.17(c) (or would have been compensated for under Section 2.17(c) but was not so compensated solely because any of the exclusions in Section 2.17(c) applied).
Section 2.16 Break Funding Payments. In the event of (a) the conversion or prepayment of any principal of any SOFR Loan other than on the last day of an Interest Period applicable thereto (whether voluntary, mandatory, automatic, by reason of acceleration or otherwise), (b) the failure to borrow, convert, continue or prepay any SOFR Loan on the date or in the amount specified in any notice delivered pursuant hereto or (c) the assignment of any SOFR Loan of any Lender other than on the last day of the Interest Period applicable thereto as a result of a request by the Borrower Representative pursuant to Section 2.19, then, in any such event, the applicable Borrower(s) shall compensate each Lender for the loss, cost and expense incurred by such Lender that is attributable to such event (other than loss of profit. In the case of a SOFR Loan, the loss, cost or expense of any Lender shall be the amount reasonably determined by such Lender to be the excess, if any, of (i) the amount of interest which would have accrued on the principal amount of such Loan had such event not occurred, at the SOFR that would have been applicable to such Loan, for the period from the date of such event to the last day of the then current Interest Period therefor (or, in the case of a failure to borrow, convert or continue, for the period that would have been the Interest Period for such Loan), over (ii) the amount of interest which would accrue on such principal amount for such period at the interest rate which such Lender would bid were it to bid, at the commencement of such period, for deposits in the applicable currency of a comparable amount and period from other banks; it being understood that such loss, cost or expense shall in any case exclude any interest rate floor and all administrative, processing or similar fees. A certificate of any Lender setting forth any amount or amounts that such Lender is entitled to receive pursuant to this Section 2.16, the basis therefor and, in reasonable detail, the manner in which such amount or amounts were determined shall be delivered to the Borrower Representative and shall be conclusive absent manifest error. The applicable Borrower(s) shall pay such Lender the amount shown as due on any such certificate within 30 days after receipt thereof. Notwithstanding the foregoing, it is acknowledged and agreed that (i) no amounts shall become payable under this Section 2.16 as a result of the incurrence of the Initial Euro Term Loans, the prepayment of the Original Term Loans contemplated by the First Amendment or any of the transactions otherwise contemplated by the First Amendment, (ii) any amounts payable under this Section 2.16 in connection with the issuance of the 2017 Replacement Term Loans and the transactions contemplated by the Second Amendment shall be subject to the terms and conditions of the Second Amendment and (iii) any amounts payable under this Section 2.16 in connection with the issuance of the 2021 Replacement Term Loans and the transactions contemplated by the Third Amendment shall be subject to the terms and conditions of the Third Amendment.
Section 2.17 Taxes.
(a) Any and all payments by or on account of any obligation of any Loan Party under any Loan Document shall be made free and clear of and without deduction for any Taxes, except as required by applicable Requirements of Law. If any applicable Requirement of Law requires the deduction or withholding of any Tax from any such payment, then (X) in the case of any deduction or
withholding on account of Tax other than U.K. Tax (i) if such Tax is an Indemnified Tax and/or Other Tax, the amount payable by the applicable Loan Party shall be increased as necessary so that after all required deductions and withholdings have been made (including deductions and withholdings applicable to additional sums payable under this Section 2.17), each Lender and each Issuing Bank (as applicable), or, in the case of any payment made to the Administrative Agent for its own account, the Administrative Agent, receives an amount equal to the sum it would have received had no such deductions or withholdings been made, (ii) the applicable withholding agent shall make such deductions and (iii) the applicable withholding agent shall timely pay the full amount deducted to the relevant Governmental Authority in accordance with applicable Requirements of Law and (Y) in the case of any deduction or withholding on account of U.K. Tax, subject to Section 2.17(f), the amount of the payment due from the relevant Loan Party shall be increased to an amount which (after making any U.K. Tax Deduction) leaves an amount equal to the payment which would have been due if no U.K. Tax Deduction had been required. If at any time any applicable withholding agent is required by applicable Requirements of Law to make any deduction or withholding from any amount payable under any Loan Document, the applicable Borrowers shall promptly notify the relevant Lender or Issuing Bank and the Administrative Agent upon any Responsible Officer becoming aware of the same. In addition, each relevant Lender and/or Issuing Bank and/or Administrative Agent, as applicable, shall promptly notify the Borrowers upon becoming aware of any circumstances as a result of which any Loan Party is or would be required to deduct or withhold from any amount payable under any Loan Document.
(b) In addition, the Loan Parties shall pay any Other Taxes to the relevant Governmental Authority in accordance with applicable Requirements of Law.
(c) Each Loan Party shall jointly and severally indemnify the Administrative Agent, each Lender and each Issuing Bank within 30 days after written demand therefor, for the full amount of any Indemnified Taxes or Other Taxes payable or paid by the Administrative Agent, such Lender or Issuing Bank, as applicable, on or with respect to any payment by or any payment on account of any obligation of any Loan Party hereunder (including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section 2.17) and any penalties (other than any penalties attributable to the gross negligence, bad faith or willful misconduct of the Administrative Agent or such Lender or Issuing Bank), interest and, in each case, any reasonable expenses arising therefrom or with respect thereto; provided that if such Loan Party reasonably believes that such Taxes were not correctly or legally asserted, the Administrative Agent or such Lender or Issuing Bank, as applicable, will use reasonable efforts to cooperate with such Loan Party to obtain a refund of such Taxes (which shall be repaid to such Loan Party in accordance with Section 2.17(l)) so long as such efforts would not, in the sole determination of the Administrative Agent or such Lender or Issuing Bank, result in any additional out-of-pocket costs or expenses not reimbursed by such Loan Party or be otherwise materially disadvantageous to the Administrative Agent or such Lender or Issuing Bank, as applicable. In connection with any request for reimbursement under this Section 2.17(c), the relevant Lender, Issuing Bank or the Administrative Agent, as applicable, shall deliver a certificate to the Borrowers (i) setting forth, in reasonable detail, the basis and calculation of the amount of the relevant payment or liability and (ii) certifying that it is generally charging the relevant amounts to similarly situated borrowers, which certificate shall be conclusive absent manifest error. Notwithstanding anything to the contrary contained in this Section 2.17(c):
(i) the Loan Parties shall not be required to indemnify the Administrative Agent or any Lender pursuant to this Section 2.17 for any Indemnified Taxes or Other Taxes incurred more than 180 days prior to the date that the Administrative Agent or such Lender makes such written demand to the Loan Parties; provided, further, that if such Indemnified Taxes or Other Taxes are imposed retroactively, the 180-day period referred to above shall be extended to include the period of retroactive effect thereof; and
(ii) the Loan Parties shall not be under any obligation to make any payments under this Section 2.17(c) to the extent that the Indemnified Taxes or Other Taxes are compensated for by an increased payment under Section 2.17(a)(Y) or would have been compensated for by an increased payment under Section 2.17(a)(Y) but were not so compensated solely because one of the exclusions in Section 2.17(f) applied.
(d) Each Lender and each Issuing Bank shall severally indemnify the Administrative Agent, within 30 days after demand therefor, for (i) any Indemnified Taxes or Other Taxes imposed on or with respect to any payment under any Loan Document that is attributable to such Lender or Issuing Bank (but only to the extent that no Loan Party has already indemnified the Administrative Agent for such Indemnified Taxes or Other Taxes and without limiting the obligation of the Loan Parties to do so), (ii) any Taxes attributable to such Lender’s or Issuing Bank’s failure to comply with the provisions of Section 9.05(c) relating to the maintenance of a Participant Register and (iii) any Excluded Taxes attributable to such Lender or Issuing Bank, in each case, that are payable or paid by the Administrative Agent in connection with any Loan Document and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to any Lender or Issuing Bank by the Administrative Agent shall be conclusive absent manifest error. Each Lender and Issuing Bank hereby authorize the Administrative Agent to set off and apply any and all amounts at any time owing to such Lender or Issuing Bank under any Loan Document or otherwise payable by the Administrative Agent to any Lender or Issuing Bank under any Loan Document or otherwise payable by the Administrative Agent to any Lender or Issuing Bank from any other source against any amount due to the Administrative Agent under this clause (d).
(e) As soon as practicable after any payment of Indemnified Taxes or Other Taxes by any Loan Party to a Governmental Authority, such Loan Party shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment that is reasonably satisfactory to the Administrative Agent.
(f) A payment shall not be increased under Section 2.17(a)(Y) above by reason of a U.K. Tax Deduction on account of Tax imposed by the United Kingdom if on the date on which the payment falls due:
(i) the payment could have been made to the relevant Lender without a U.K. Tax Deduction if the Lender had been a U.K. Qualifying Lender, but on that date that Lender is not or has ceased to be a U.K. Qualifying Lender other than as a result of any change after the date it became a Lender under this Agreement in (or in the interpretation, administration, or application of) any law or Treaty, or any published practice or published concession of any relevant Governmental Authority;
(ii) the relevant Lender is a U.K. Qualifying Lender solely by virtue of paragraph (a)(ii) of the definition of U.K. Qualifying Lender and;
(A) an officer of H.M. Revenue & Customs has given (and not revoked) a direction (a “Direction”) under section 931 of the ITA which relates to the payment and that Lender has received from the relevant Loan Party making the payment a certified copy of that Direction; and
(B) the payment could have been made to the Lender without any U.K. Tax Deduction if that Direction had not been made; or
(iii) the relevant Lender is a U.K. Qualifying Lender solely by virtue of paragraph (a)(ii) of the definition of U.K. Qualifying Lender and;
(A) the relevant Lender has not given a U.K. Tax Confirmation to the relevant Loan Party; and
(B) the payment could have been made to the Lender without any U.K. Tax Deduction if the Lender had given a U.K. Tax Confirmation to the relevant Loan Party, on the basis that the U.K. Tax Confirmation would have enabled the relevant Loan Party to have formed a reasonable belief that the payment was an “excepted payment” for the purpose of section 930 of the ITA; or
(iv) the relevant Lender is a U.K. Treaty Lender and the relevant Loan Party making the payment is able to demonstrate that the payment could have been made to the Lender without the U.K. Tax Deduction had that Lender complied with its obligations under Section 2.17(i) below.
(g) If a relevant Loan Party is required to make a U.K. Tax Deduction, that relevant Loan Party shall make that U.K. Tax Deduction and any payment required in connection with that U.K. Tax Deduction within the time allowed and in the minimum amount required by applicable Requirements of Law.
(h) Within thirty days of making either a U.K. Tax Deduction or any payment required in connection with that U.K. Tax Deduction, the relevant Loan Party making that U.K. Tax Deduction shall deliver to the Administrative Agent for the Lender entitled to the payment a statement under section 975 of the ITA or other evidence reasonably satisfactory to that Lender that the U.K. Tax Deduction has been made or (as applicable) any appropriate payment paid to the relevant Governmental Authority.
(i) A U.K. Treaty Lender and each relevant Loan Party which makes a payment to which that U.K. Treaty Lender is entitled shall cooperate in completing any procedural formalities necessary for that Loan Party to obtain authorization to make that payment without a U.K. Tax Deduction.
(j) [Reserved].
(k) Status of Lenders.
(i) Any Lender that is entitled to an exemption from or reduction of any withholding Tax with respect to any payments made under any Loan Document shall deliver to the applicable Borrowers and the Administrative Agent, at the time or times reasonably requested by such Borrowers or the Administrative Agent, such properly completed and executed documentation as such Borrowers or the Administrative Agent may reasonably request to permit such payments to be made without withholding or at a reduced rate of withholding. In addition, any Lender, if reasonably requested by any applicable Borrower or the Administrative Agent, shall deliver such other documentation prescribed by applicable Requirements of Law or reasonably requested by such Borrower or the Administrative Agent as will enable such Borrower or the Administrative Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements.
(ii) Without limiting the generality of the foregoing:
(A) each Lender that is not a Foreign Lender shall deliver to the applicable Borrowers and the Administrative Agent on or prior to the date on which such Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of such Borrowers or the Administrative Agent), two executed original copies of IRS Form W-9 certifying that such Lender is exempt from U.S. federal backup withholding tax;
(B) each Foreign Lender shall deliver to the applicable Borrowers and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of such Borrowers or the Administrative Agent), whichever of the following is applicable:
(1) in the case of any Foreign Lender claiming the benefits of an income tax treaty to which the U.S. is a party (x) with respect to payments of interest under any Loan Document, executed original copies of IRS Form W-8BEN or IRS Form W-8BEN-E establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “interest” article of such tax treaty and (y) with respect to any other applicable payments under any Loan Document, IRS Form W-8BEN or IRS Form W-8BEN-E establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “business profits” or “other income” article of such tax treaty;
(2) executed original copies of IRS Form W-8ECI;
(3) in the case of any Foreign Lender claiming the benefits of the exemption for portfolio interest under Section 871(h) or 881(c) of the Code, (x) a certificate substantially in the form of Exhibit L-1 to the effect that such Foreign Lender is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, a “10 percent shareholder” of any applicable Borrower within the meaning of Section 871(h)(3)(B) of the Code, or a “controlled foreign corporation” described in Section 881(c)(3)(C) of the Code (a “U.S. Tax Compliance Certificate”) and (y) executed original copies of IRS Form W-8BEN or IRS Form W-8BEN-E; or
(4) to the extent any Foreign Lender is not the beneficial owner, executed original copies of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN, IRS Form W-8BEN-E, a U.S. Tax Compliance Certificate substantially in the form of Exhibit L-2 or Exhibit L-3, IRS Form W-9, and/or other certification documents from each beneficial owner, as applicable; provided that if such Foreign Lender is a partnership and one or more direct or indirect partners of such Foreign Lender are claiming the portfolio interest exemption, such Foreign Lender may provide a U.S. Tax Compliance Certificate substantially in the form of Exhibit L-4 on behalf of each such direct or indirect partner;
(C) each Foreign Lender shall deliver to the applicable Borrowers and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of such Borrower or the Administrative Agent), executed original copies of any other form prescribed by applicable Requirements of Law as a basis for claiming exemption from or a reduction in U.S. federal withholding Tax, duly completed, together with such supplementary documentation as may be prescribed by applicable
Requirements of Law to permit such Borrower or the Administrative Agent to determine the withholding or deduction required to be made; and
(D) if a payment made to any Lender under any Loan Document would be subject to U.S. federal withholding Tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall deliver to the applicable Borrowers and the Administrative Agent at the time or times prescribed by applicable Requirements of Law and at such time or times reasonably requested by such Borrowers or the Administrative Agent such documentation as is prescribed by applicable Requirements of Law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and may be necessary for such Borrowers and the Administrative Agent to comply with their obligations under FATCA, to determine whether such Lender has complied with such Lender’s obligations under FATCA, or to determine the amount, if any, to deduct and withhold from such payment.
Each Lender agrees that if any form or certification it previously delivered expires or becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify the applicable Borrowers and the Administrative Agent in writing of its legal inability to do so. Notwithstanding anything to the contrary in this Section 2.17(k), no Lender shall be required to provide any documentation that such Lender is not legally eligible to deliver. Notwithstanding the preceding sentence, each Lender which becomes a party to this Agreement on the date hereof represents that it is legally eligible to deliver documentation establishing its exemption from U.S. federal withholding tax, and each such Lender has delivered such documentation prior to such date or shall deliver such documentation on such date.
(l) Other than in relation to a U.K. Tax Payment, if the Administrative Agent or any Lender or Issuing Bank determines, in its sole discretion, that it has received a refund of any Indemnified Taxes or Other Taxes as to which it has been indemnified by any Loan Party or with respect to which such Loan Party has paid additional amounts pursuant to this Section 2.17, it shall pay over such refund to such Loan Party (but only to the extent of indemnity payments made, or additional amounts paid, by such Loan Party under this Section 2.17 with respect to the Indemnified Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket expenses of the Administrative Agent, such Lender or Issuing Bank (including any Taxes imposed with respect to such refund), and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund); provided that such Loan Party, upon the request of the Administrative Agent, such Lender or Issuing Bank, agrees to repay the amount paid over to such Loan Party (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to the Administrative Agent, such Lender or Issuing Bank in the event the Administrative Agent, such Lender or Issuing Bank is required to repay such refund to such Governmental Authority. Notwithstanding anything to the contrary in this paragraph (l), in no event shall the Administrative Agent, any Issuing Bank or any Lender be required to pay any amount to a Loan Party pursuant to this paragraph (l) to the extent that the payment thereof would place the Administrative Agent, such Issuing Bank or such Lender in a less favorable net after-Tax position than the position that the Administrative Agent, such Issuing Bank or such Lender would have been in if the Tax subject to indemnification had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts giving rise to such refund had never been paid. This Section 2.17 shall not be construed to require the Administrative Agent, any Lender or any Issuing Bank to make available its Tax returns (or any other information relating to its Taxes which it deems confidential) to the relevant Loan Party or any other Person.
(m) Survival. Each party’s obligations under this Section 2.17 shall survive the resignation or replacement of the Administrative Agent or any assignment of rights by, or the replacement
of, any Lender, the termination of the Commitments and the repayment, satisfaction or discharge of all obligations under any Loan Document.
(n) Lender Status – U.K. Revolver Borrowers: Each Revolving Lender which becomes a party to this Agreement after the date of this Agreement shall indicate in writing to each U.K. Revolver Borrower on the date on which it becomes party to this Agreement (including pursuant to the applicable Assignment and Assumption) which of the following categories it falls in:
(i) not a U.K. Qualifying Lender;
(ii) a U.K. Qualifying Lender (other than a U.K. Treaty Lender); or
(iii) a U.K. Treaty Lender,
and if such Revolving Lender fails to indicate its status in accordance with this Section 2.17(n) then such Revolving Lender shall be treated for the purposes of this Agreement (including by each U.K. Revolver Borrower) as if it is not a U.K. Qualifying Lender until such time as it notifies the Administrative Agent which category applies (and the Administrative Agent, upon receipt of such notification, shall inform each U.K. Revolver Borrower).
Each Revolving Lender which becomes a party to this Agreement on the date of this Agreement indicates to the U.K. Revolver Borrower by entering into this Agreement that it is a U.K. Treaty Lender.
(o) Tax Credit. If a Loan Party makes a U.K. Tax Payment and the relevant Lender determines that:
(ii) a Tax Credit is attributable to an increased payment of which that U.K. Tax Payment forms part, to that U.K. Tax Payment or to a U.K. Tax Deduction in consequence of which that U.K. Tax Payment was required; and
(iii) that Lender has obtained and utilized that Tax Credit,
the Lender shall pay an amount to the relevant Loan Party which that Lender determines will leave it (after that payment) in the same after-Tax position as it would have been in had the U.K. Tax Payment not been required to be made by the relevant Loan Party.
(p) VAT.
(i) All amounts expressed to be payable under a Loan Document by any party to the Administrative Agent, an Arranger, a Lender or an Issuing Bank which (in whole or in part) constitute the consideration for any supply for VAT purposes are deemed to be exclusive of any VAT which is chargeable on that supply and, accordingly, subject to Section 2.17(p)(ii) below, if VAT is or becomes chargeable on any supply made by the Administrative Agent, the relevant Arranger, a Lender or an Issuing Bank to any party under a Loan Document and the Administrative Agent, the relevant Arranger, the relevant Lender or the relevant Issuing Bank is required to account to the relevant tax authority for the VAT, that party must pay to the Administrative Agent, the Arrangers, the relevant Lender or the relevant Issuing Bank (as applicable and in addition to and at the same time as paying any other consideration for such supply) an amount equal to the amount of the VAT (and the Administrative Agent, the relevant Arranger, the relevant Lender or the relevant Issuing Bank must promptly provide an appropriate VAT invoice to that party).
(ii) If VAT is or becomes chargeable on any supply made by the Administrative Agent, the Arrangers, a Lender or an Issuing Bank (the “Supplier”) to any of the Administrative Agent, the Arrangers, a Lender or an Issuing Bank (the “Recipient”) under a Loan Document, and any party (the “Relevant Party”) is required by the terms of any Loan Document to pay an amount equal to the consideration for that supply to the Supplier (rather than being required to reimburse or indemnify the Recipient in respect of that consideration):
(A) (where the Supplier is the person required to account to the relevant tax authority for the VAT) the Relevant Party must also pay to the Supplier (at the same time as paying that amount) an additional amount equal to the amount of the VAT. The Recipient must (where this Section 2.17(p)(A) applies) promptly pay to the Relevant Party an amount equal to any credit or repayment the Recipient receives from the relevant tax authority which the Recipient reasonably determines relates to the VAT chargeable on that supply; and
(B) (where the Recipient is the person required to account to the relevant tax authority for the VAT) the Relevant Party must promptly, following demand from the Recipient, pay to the Recipient an amount equal to the VAT chargeable on that supply but only to the extent that the Recipient reasonably determines that it is not entitled to credit or repayment from the relevant tax authority in respect of that VAT.
(iii) Where a Loan Document requires a party to reimburse or indemnify the Administrative Agent, the Arrangers, a Lender or an Issuing Bank for any cost or expense, that party shall reimburse or indemnify (as the case may be) the Administrative Agent, the relevant Arranger, the relevant Lender or the relevant Issuing Bank (as applicable) for the full amount of such cost or expense, including such part thereof as represents VAT, save to the extent that the Administrative Agent, the relevant Arranger, the relevant Lender or the relevant Issuing Bank reasonably determines that it is entitled to credit or repayment in respect of such VAT from the relevant tax authority.
(iv) Any reference in this Section 2.17(p) to any party shall, at any time when such party is treated as a member of a group for VAT purposes, include (where appropriate and unless the context otherwise requires) a reference to the person who is treated as making the supply or (as appropriate) receiving the supply under the grouping rules (as provided for in Article 11 of the Council Directive 2006/112/EC (or as implemented by the relevant member state of the European Union or any other similar provision in any jurisdiction which is not a member state of the European Union) so that a reference to a party shall be construed as a reference to that party or the relevant group or unity (or fiscal unity) of which that party is a member for VAT purposes at the relevant time or the relevant representative member (or head) of that group or unity (or fiscal unity) at the relevant time (as the case may be).
(v) In relation to any supply made by the Administrative Agent, the Arrangers, a Lender or an Issuing Bank to any party under a Loan Document, if reasonably requested by the Administrative Agent, the relevant Arranger, the relevant Lender or the relevant Issuing Bank (as applicable), that party must promptly provide the Administrative Agent, the relevant Arranger, the relevant Lender or the relevant Issuing Bank with details of that party’s VAT registration and such other information as is reasonably requested in connection with the Administrative Agent, the relevant Arranger, the relevant Lender or the relevant Issuing Bank’s VAT reporting requirements in relation to such supply.
Section 2.18 Payments Generally; Allocation of Proceeds; Sharing of Payments.
(a) Unless otherwise specified, each Borrower shall make each payment required to be made by it hereunder (whether of principal, interest (except for principal of and interest on Initial Euro Term Loans, 2017 Replacement Euro Term Loans or Revolving Loans denominated in an Alternative Currency), fees or reimbursement of LC Disbursements or of amounts payable under Section 2.15, 2.16 or 2.17, or otherwise) prior to the time expressed hereunder or under such Loan Document (or, if no time is expressly required, by 2:00 p.m., Local Time) and, in the case of any payment of principal of or interest on Initial Euro Term Loans, 2017 Replacement Euro Term Loans or Revolving Loans denominated in an Alternative Currency, prior to the Applicable Time, in each case, on the date when due, in immediately available funds, without set-off (except as otherwise provided in Section 2.17) or counterclaim. Any amounts received after such time on any date may, in the discretion of the Administrative Agent, be deemed to have been received on the next succeeding Business Day for purposes of calculating interest thereon. All such payments shall be made (i) in the same currency in which the applicable Credit Extension (with such term including, solely for purposes of this sentence, the making of any Term Loan) was made (or where such currency has been converted into Euro, in Euro) and (ii) to the Administrative Agent to the applicable account designated to the Borrower Representative by the Administrative Agent, except payments to be made directly to the applicable Issuing Bank or the Swingline Lender as expressly provided herein and except that payments pursuant to Sections 2.15, 2.16 or 2.17 and 9.03 shall be made directly to the Persons entitled thereto. The Administrative Agent shall distribute any such payments denominated in the same currency received by it for the account of any other Person to the appropriate recipient promptly following receipt thereof. Each Lender agrees that in computing such Lender’s portion of any Borrowing to be made hereunder, the Administrative Agent may, in its discretion, round such Lender’s percentage of such Borrowing to the next higher or lower whole dollar amount. All payments (including accrued interest) hereunder shall be made in Dollars (or, in the case of Initial Euro Term Loans, 2017 Replacement Euro Term Loans or Revolving Loans or Letters of Credit denominated in an Alternative Currency, in the applicable Alternative Currency unless (and then to the extent) a payment in Dollars is required under this Agreement). Any payment required to be made by the Administrative Agent hereunder shall be deemed to have been made by the time required if the Administrative Agent shall, at or before such time, have taken the necessary steps to make such payment in accordance with the regulations or operating procedures of the clearing or settlement system used by the Administrative Agent to make such payment. Notwithstanding the foregoing provisions of this Section 2.18(a), if, after the making of any Credit Extension (with such term including, solely for purposes of this sentence, the making of any Term Loan) in any Alternative Currency, currency control or exchange regulations are imposed in the country which issues such currency with the result that the type of currency in which the Credit Extension was made (the “Original Currency”) no longer exists or the respective Borrower is not able to make payment to the Administrative Agent for the account of the applicable Lenders in such Original Currency, then all payments to be made by the respective Borrower hereunder in such currency shall instead be made when due in Dollars or in another Alternative Currency reasonably agreed between the Borrower Representative and the Administrative Agent in an amount equal to the Dollar Equivalent or Alternative Currency Equivalent (as of the date of repayment), as applicable, of such payment due, it being the intention of the parties hereto that the respective Borrower takes all risks of the imposition of any such currency control or exchange regulations.
(b) Subject to any Permitted Pari Passu Intercreditor Agreement, proceeds of Collateral received by the Administrative Agent at any time when an Event of Default exists and all or any portion of the Loans have been accelerated hereunder pursuant to Section 7.01 shall, upon election by the Administrative Agent or at the direction of the Required Lenders, be applied first, to the payment of all costs and expenses then due incurred by the Administrative Agent or any Receiver in connection with any collection, sale or realization on Collateral or otherwise in connection with this Agreement, any other Loan Document or any of the Secured Obligations, including all court costs and the fees and expenses of
agents and legal counsel, the repayment of all advances made by the Administrative Agent hereunder or under any other Loan Document on behalf of any Loan Party and any other costs or expenses incurred in connection with the exercise of any right or remedy hereunder or under any other Loan Document, second, to payment in full of Unfunded Advances/Participations (the amounts so applied to be distributed between or among, as applicable, the Administrative Agent, the Swingline Lender and any Issuing Bank pro rata in accordance with the amounts of Unfunded Advances/Participations owed to them on the date of any such distribution), third, on a pro rata basis, to pay any fees, indemnities or expense reimbursements then due to the Administrative Agent (other than those covered in clause first above) or to the Swingline Lender or any Issuing Bank from the Borrowers constituting Secured Obligations, fourth, on a pro rata basis in accordance with the amounts of the Secured Obligations (other than contingent indemnification obligations for which no claim has yet been made) owed to the Secured Parties on the date of any such distribution (with such calculation to be made using the Dollar Equivalent (as of the date of determination) of any such Secured Obligations denominated in a currency other than Dollars), to the payment in full of the Secured Obligations (including, with respect to LC Exposure, an amount to be paid to the Administrative Agent equal to 102% of the LC Exposure (minus the amount then on deposit in the LC Collateral Account and any amount applied pursuant to clause “third” above) on such date, to be held in the LC Collateral Account as Cash collateral for such Obligations); provided that if any Letter of Credit expires undrawn, then any Cash collateral held to secure the related LC Exposure shall be applied in accordance with this Section 2.18(b), beginning with clause “first” above, and fifth, to, or at the direction of, the Borrower Representative or as a court of competent jurisdiction may otherwise direct.
(c) If any Lender obtains payment (whether voluntary, involuntary, through the exercise of any right of set-off or otherwise) in respect of any principal of or interest on any of its Loans of any Class or participations in LC Disbursements or Swingline Loans held by it resulting in such Lender receiving payment of a greater proportion of the aggregate amount of its Loans of such Class and participations in LC Disbursements or Swingline Loans and accrued interest thereon than the proportion received by any other Lender with Loans of such Class and participations in LC Disbursements or Swingline Loans, then the Lender receiving such greater proportion shall purchase (for Cash at face value) participations in the Loans of such Class and sub-participations in LC Disbursements or Swingline Loans of other Lenders of such Class at such time outstanding to the extent necessary so that the benefit of all such payments shall be shared by the Lenders of such Class ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Loans of such Class and participations in LC Disbursements or Swingline Loans; provided that (i) if any such participations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations shall be rescinded and the purchase price restored to the extent of such recovery, without interest, and (ii) the provisions of this paragraph shall not apply to (x) any payment made by any Borrower pursuant to and in accordance with the express terms of this Agreement or (y) any payment obtained by any Lender as consideration for the assignment of or sale of a participation in any of its Loans or Commitments to any permitted assignee or participant, including any payment made or deemed made in connection with Sections 2.22, 2.23 and 9.02(c). Each Borrower consents to the foregoing and agrees, to the extent it may effectively do so under applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against such Borrower rights of set-off and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of such Borrower in the amount of such participation. The Administrative Agent will keep records (which shall be conclusive and binding in the absence of manifest error) of participations purchased under this Section 2.18(c) and will, in each case, notify the Lenders following any such purchases or repayments. Each Lender that purchases a participation pursuant to this Section 2.18(c) shall from and after such purchase have the right to give all notices, requests, demands, directions and other communications under this Agreement with respect to the portion of the Obligations purchased to the same extent as though the purchasing Lender were the original owner of the Obligations purchased.
(d) Unless the Administrative Agent has received notice from the Borrower Representative prior to the date on which any payment is due to the Administrative Agent for the account of any Lender or any Issuing Bank hereunder that the applicable Borrower will not make such payment, the Administrative Agent may assume that such Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the applicable Lender or Issuing Bank the amount due. In such event, if the applicable Borrower has not in fact made such payment, then each Lender or the applicable Issuing Bank severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Lender or Issuing Bank with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Administrative Agent, at the greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation (including, without limitation, the Overnight Foreign Currency Rate in the case of Initial Euro Term Loans, 2017 Replacement Euro Term Loans and Revolving Loans denominated in an Alternative Currency).
(e) If any Lender fails to make any payment required to be made by it pursuant to Section 2.07(b) or Section 2.18(d), then the Administrative Agent may, in its discretion (notwithstanding any contrary provision hereof), apply any amounts thereafter received by the Administrative Agent for the account of such Lender to satisfy such Lender’s obligations under such Sections until all such unsatisfied obligations are fully paid.
Section 2.19 Mitigation Obligations; Replacement of Lenders.
(a) If any Lender requests compensation under Section 2.15 or such Lender determines it can no longer make or maintain SOFR Loans pursuant to Section 2.20, or any Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.17, then such Lender shall use reasonable efforts to designate a different lending office for funding or booking its Loans hereunder or its participation in any Letter of Credit affected by such event, or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the reasonable judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 2.15 or 2.17, as applicable, in the future or mitigate the impact of Section 2.20, as the case may be, and (ii) would not subject such Lender to any material unreimbursed out-of-pocket cost or expense and would not otherwise be disadvantageous to such Lender in any material respect. The Borrowers hereby agree to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment.
(b) If (i) any Lender requests compensation under Section 2.15 or such Lender determines it can no longer make or maintain SOFR Loans pursuant to Section 2.20, (ii) any Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.17, (iii) any Lender is a Defaulting Lender or (iv) in connection with any proposed amendment, waiver or consent requiring the consent of “each Lender”, “each Revolving Lender” or “each Lender directly affected thereby” (or any other Class or group of Lenders other than the Required Lenders) with respect to which Required Lender or Required Revolving Lender consent (or the consent of Lenders holding loans or commitments of such Class or lesser group representing more than 50% of the sum of the total loans and unused commitments of such Class or lesser group at such time) has been obtained, as applicable, any Lender does not consent to such amendment, waiver or consent (each such Lender described in this clause (iv), a “Non-Consenting Lender”), then the applicable Borrowers may, at their sole expense and effort, upon notice from the Borrower Representative to such Lender and the Administrative Agent, (x) terminate the applicable Commitments and/or Additional Commitments of such Lender, and repay all Obligations of such Borrowers owing to such Lender relating to the applicable Loans and participations held by such Lender as of such termination date (provided that if, after giving
effect such termination and repayment, the aggregate amount of the Revolving Credit Exposure exceeds the aggregate amount of the Revolving Credit Commitments then in effect, then the Revolver Borrower shall, not later than the next Business Day, prepay one or more Revolving Loan Borrowings or Swingline Loans (and, if no Revolving Loan Borrowings are outstanding, deposit Cash collateral in the LC Collateral Account) in an amount necessary to eliminate such excess) or (y) replace such Lender by requiring such Lender to assign and delegate (and such Lender shall be obligated to assign and delegate), without recourse (in accordance with and subject to the restrictions contained in Section 9.05), all of its interests, rights and obligations under this Agreement to an Eligible Assignee that shall assume such obligations (which Eligible Assignee may be another Lender, if any Lender accepts such assignment); provided that (A) such Lender shall have received payment of an amount equal to the outstanding principal amount of its Loans and, if applicable, participations in LC Disbursements and Swingline Loans, in each case of such Class of Loans, Commitments and/or Additional Commitments, accrued interest thereon, accrued fees and all other amounts payable to it under any Loan Document with respect to such Class of Loans, Commitments and/or Additional Commitments, (B) in the case of any assignment resulting from a claim for compensation under Section 2.15 or payments required to be made pursuant to Section 2.17, such assignment will result in a reduction in such compensation or payments and (C) such assignment does not conflict with applicable law. No Lender (other than a Defaulting Lender) shall be required to make any such assignment and delegation, and the applicable Borrowers may not repay the Obligations of such Lender or terminate its Commitments or Additional Commitments, if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling such Borrowers to require such assignment and delegation cease to apply. Each Lender agrees that if it is replaced pursuant to this Section 2.19(b), it shall execute and deliver to the Administrative Agent an Assignment and Assumption to evidence such sale and purchase and shall deliver to the Administrative Agent any Promissory Note (if the assigning Lender’s Loans are evidenced by one or more Promissory Notes) subject to such Assignment and Assumption (provided that the failure of any Lender replaced pursuant to this Section 2.19(b) to execute an Assignment and Assumption or deliver any such Promissory Note shall not render such sale and purchase (and the corresponding assignment) invalid), such assignment shall be recorded in the Register, any such Promissory Note shall be deemed cancelled. Each Lender hereby irrevocably appoints the Administrative Agent (such appointment being coupled with an interest) as such Lender’s attorney-in-fact, with full authority in the place and stead of such Lender and in the name of such Lender, from time to time in the Administrative Agent’s discretion, with prior written notice to such Lender, to take any action and to execute any such Assignment and Assumption or other instrument that the Administrative Agent may deem reasonably necessary to carry out the provisions of this clause (b). To the extent that any Lender is replaced pursuant to Section 2.19(b)(iv) in connection with a Repricing Transaction requiring payment of a fee pursuant to Section 2.12(f), the Term Borrowers shall, jointly and severally, pay to each Lender being replaced as a result of such Repricing Transaction the fee set forth in Section 2.12(f).
Section 2.20 Illegality. If any Lender reasonably determines that any Change in Law has made it unlawful, or that any Governmental Authority has asserted after the Closing Date that it is unlawful, for such Lender or its applicable lending office to make, maintain or fund Loans whose interest is determined by reference to SOFR, Term SOFR or Adjusted Term SOFR, or to determine or charge interest rates based upon SOFR, Term SOFR or Adjusted Term SOFR, then, on notice thereof by such Lender to the Borrower Representative through the Administrative Agent, (i) any obligation of such Lender to make or continue SOFR Loans in Dollars or to convert ABR Loans to SOFR Loans shall be suspended and (ii) if such notice asserts the illegality of such Lender making or maintaining ABR Loans the interest rate on which is determined by reference to the Adjusted Term SOFR component of the Alternate Base Rate, the interest rate on which ABR Loans of such Lender, shall, if necessary to avoid such illegality, be determined by the Administrative Agent without reference to the Adjusted Term SOFR component of the Alternate Base Rate, in each case until such Lender notifies the Administrative Agent and the Borrower Representative that the circumstances giving rise to such determination no longer exist
(which notice such Lender agrees to give promptly). Upon receipt of such notice, (x) the applicable Borrowers shall, upon demand from such Lender to the Borrower Representative (with a copy to the Administrative Agent), in the case of any such SOFR Loans, prepay or convert all of such Lender’s SOFR Loans to ABR Loans (the interest rate on which ABR Loans of such Lender shall, if necessary to avoid such illegality, be determined by the Administrative Agent without reference to the Adjusted Term SOFR component of the Alternate Base Rate), either on the last day of the Interest Period therefor, if such Lender may lawfully continue to maintain such SOFR Loans to such day, or immediately, if such Lender may not lawfully continue to maintain such SOFR Loans (in which case the applicable Borrowers shall not be required to make payments pursuant to Section 2.16 in connection with such payment) and (y) if such notice asserts the illegality of such Lender determining or charging interest rates based upon SOFR, Term SOFR or Adjusted Term SOFR, the Administrative Agent shall during the period of such suspension compute the Alternate Base Rate applicable to such Lender without reference to the SOFR, Term SOFR or Adjusted Term SOFR, as applicable, component thereof until the Administrative Agent is advised in writing by such Lender that it is no longer illegal for such Lender to determine or charge interest rates based upon SOFR, Term SOFR or Adjusted Term SOFR, as applicable. Upon any such prepayment or conversion, the applicable Borrowers shall also pay accrued interest on the amount so prepaid or converted. Each Lender agrees to designate a different lending office if such designation will avoid the need for such notice and will not, in the determination of such Lender, otherwise be materially disadvantageous to such Lender.
Section 2.21 Defaulting Lenders. Notwithstanding any provision of this Agreement to the contrary, if any Lender becomes a Defaulting Lender, then the following provisions shall apply for so long as such Lender is a Defaulting Lender:
(a) Fees shall cease to accrue on the unfunded portion of any Commitment of such Defaulting Lender pursuant to Section 2.12(a) and, subject to clause (d)(iv) below, on the participation of such Defaulting Lender in Letters of Credit pursuant to Section 2.12(b) and pursuant to any other provisions of this Agreement or other Loan Document.
(b) The Commitments and the Revolving Credit Exposure of such Defaulting Lender shall not be included in determining whether all Lenders, each affected Lender, the Required Lenders, the Required Revolving Lenders or such other number of Lenders as may be required hereby or under any other Loan Document have taken or may take any action hereunder (including any consent to any waiver, amendment or modification pursuant to Section 9.02); provided that any waiver, amendment or modification requiring the consent of all Lenders or each affected Lender which affects such Defaulting Lender disproportionately and adversely relative to other affected Lenders shall require the consent of such Defaulting Lender.
(c) Any payment of principal, interest, fees or other amounts received by the Administrative Agent for the account of any Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to Section 2.10, Section 2.11, Section 2.15, Section 2.16, Section 2.17, Section 2.18, Article 7, Section 9.05 or otherwise, and including any amounts made available to the Administrative Agent by such Defaulting Lender pursuant to Section 9.09), shall be applied at such time or times as may be determined by the Administrative Agent and, where relevant, the Borrower Representative as follows: first, to the payment of any amounts owing by such Defaulting Lender to the Administrative Agent hereunder; second, to the payment on a pro rata basis of any amounts owing by such Defaulting Lender to any applicable Issuing Bank and/or Swingline Lender hereunder; third, if so reasonably determined by the Administrative Agent or reasonably requested by the applicable Issuing Bank, to be held as Cash collateral for future funding obligations of such Defaulting Lender in respect of any Revolving Loans or any participation in any Letter of Credit; fourth, so long as no Default or Event of Default exists as the Borrower Representative may request, to the funding of any Loan in respect of which such Defaulting
Lender has failed to fund its portion thereof as required by this Agreement; fifth, as the Administrative Agent or the Borrower Representative may elect, to be held in a deposit account and released in order to satisfy obligations of such Defaulting Lender to fund Loans under this Agreement; sixth, to the payment of any amounts owing to the non-Defaulting Lenders, Issuing Banks or Swingline Lenders as a result of any judgment of a court of competent jurisdiction obtained by any non-Defaulting Lender, any Issuing Bank or any Swingline Lender against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement; seventh, to the payment of any amounts owing to a Borrower as a result of any judgment of a court of competent jurisdiction obtained by such Borrower against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement; and eighth, to such Defaulting Lender or as otherwise directed by a court of competent jurisdiction; provided that if (x) such payment is a payment of the principal amount of any Loan or LC Exposure in respect of which such Defaulting Lender has not fully funded its appropriate share and (y) such Loan or LC Exposure was made or created, as applicable, at a time when the conditions set forth in Section 4.02 were satisfied or waived, such payment shall be applied solely to pay the Loans of, and LC Exposure owed to, all non-Defaulting Lenders on a pro rata basis prior to being applied to the payment of any Loans of, or LC Exposure owed to, such Defaulting Lender. Any payments, prepayments or other amounts paid or payable to any Defaulting Lender that are applied (or held) to pay amounts owed by any Defaulting Lender or to post Cash collateral pursuant to this Section 2.21(c) shall be deemed paid to and redirected by such Defaulting Lender, and each Lender irrevocably consents hereto.
(d) If any Swingline Loans or LC Exposure exists at the time any Lender becomes a Defaulting Lender then:
(i) all or any part of Swingline Loans and LC Exposure of such Defaulting Lender shall be reallocated among the Revolving Lenders that are non-Defaulting Lenders in accordance with their respective Applicable Percentages but only to the extent the sum of all non-Defaulting Lenders’ Revolving Credit Exposures does not exceed the total of all non-Defaulting Lenders’ Revolving Credit Commitments;
(ii) subject to Section 9.24, no reallocation hereunder shall constitute a waiver or release of any claim of any party hereunder against a Defaulting Lender arising from that Lender having become a Defaulting Lender, including any claim of a non-Defaulting Lender as a result of such non-Defaulting Lender’s increased exposure following such reallocation;
(iii) if the reallocation described in clause (i) above cannot, or can only partially, be effected, the Revolver Borrower shall, without prejudice to any other right or remedy available to them hereunder or under law, within two Business Days following notice by the Administrative Agent, Cash collateralize 102% of such Defaulting Lender’s LC Exposure and any obligations of such Defaulting Lender to fund participations in any Swingline Loan (after giving effect to any partial reallocation pursuant to paragraph (i) above and any Cash collateral provided by such Defaulting Lender or pursuant to Section 2.21(c) above) or make other arrangements reasonably satisfactory to the Administrative Agent and to the applicable Issuing Bank and/or Swingline Lender with respect to such LC Exposure and/or Swingline Loans and obligations to fund participations. Cash collateral (or the appropriate portion thereof) provided to reduce LC Exposure or other obligations shall be released promptly following (A) the elimination of the applicable LC Exposure or other obligations giving rise thereto (including by the termination of the Defaulting Lender status of the applicable Lender (or, as appropriate, its assignee following compliance with Section 2.19)) or (B) the Administrative Agent’s good faith determination that there exists excess Cash collateral (including as a result of any subsequent reallocation of Swingline Loans and LC Exposure among non-Defaulting Lenders described in clause (i) above);
(iv) if the LC Exposure of the non-Defaulting Lenders is reallocated pursuant to this Section 2.21(d), then the fees payable to the Revolving Lenders pursuant to Sections 2.12(a) and (b), as the case may be, shall be adjusted to give effect to such reallocation; and
(v) if any Defaulting Lender’s LC Exposure is not Cash collateralized, prepaid or reallocated pursuant to this Section 2.21(d), then, without prejudice to any rights or remedies of the applicable Issuing Bank or any Revolving Lender hereunder, all letter of credit fees payable under Section 2.12(b) with respect to such Defaulting Lender’s LC Exposure shall be payable to the applicable Issuing Bank until such Defaulting Lender’s LC Exposure is Cash collateralized or reallocated.
(e) So long as any Revolving Lender is a Defaulting Lender, the Swingline Lender shall not be required to fund any Swingline Loan, and no Issuing Bank shall be required to issue, extend, create, incur, amend or increase any Letter of Credit unless, in each case, it is reasonably satisfied that the related exposure will be 100% covered by the Revolving Credit Commitments of the non-Defaulting Lenders, Cash collateral provided pursuant to Section 2.21(c) and/or Cash collateral provided by the Revolver Borrower in accordance with Section 2.21(d), and participating interests in any such or newly issued, extended or created Letter of Credit or newly made Swingline Loan shall be allocated among Revolving Lenders that are non-Defaulting Lenders in a manner consistent with Section 2.21(d)(i) (it being understood that Defaulting Lenders shall not participate therein).
(f) In the event that the Administrative Agent and the Borrower Representative agree that any Defaulting Lender has adequately remedied all matters that caused such Lender to be a Defaulting Lender, then the Applicable Percentage of Swingline Loans and LC Exposure of the Revolving Lenders shall be readjusted to reflect the inclusion of such Lender’s Revolving Credit Commitment, and on such date such Revolving Lender shall purchase at par such of the Revolving Loans of the other Revolving Lenders or participations in Revolving Loans as the Administrative Agent shall determine as are necessary in order for such Revolving Lender to hold such Revolving Loans or participations in accordance with its Applicable Percentage. Notwithstanding the fact that any Defaulting Lender has adequately remedied all matters that caused such Lender to be a Defaulting Lender, (x) no adjustments will be made retroactively with respect to fees accrued or payments made by or on behalf of any Borrower while such Lender was a Defaulting Lender and (y) except to the extent otherwise expressly agreed by the affected parties, no change hereunder from Defaulting Lender to Lender will constitute a waiver or release of any claim of any party hereunder arising from such Lender’s having been a Defaulting Lender.
Section 2.22 Incremental Credit Extensions.
(a) The Borrower Representative may, at any time, on one or more occasions deliver a written request to the Administrative Agent (whereupon the Administrative Agent shall promptly deliver a copy of such request to each of the Lenders) to (i) add one or more new tranches of term facilities and/or increase the principal amount of any Class of Initial Term Loans, 2017 Replacement Term Loans, 2021 Replacement Term Loans or any Additional Term Loans by requesting new term loan commitments to be added to such Loans (any such new tranche or increase, an “Incremental Term Facility” and any loans made pursuant to an Incremental Term Facility, “Incremental Term Loans”) and/or (ii) add one or more new tranches of revolving commitments and/or increase the Total Revolving Credit Commitment or any Additional Revolving Commitment (any such new tranche or increase, an “Incremental Revolving Facility” and, together with any Incremental Term Facility, “Incremental Facilities”; and the loans thereunder, “Incremental Revolving Loans” and, together with any Incremental Term Loans, “Incremental Loans”) in an aggregate principal amount not to exceed the Incremental Cap; provided that:
(i) no Incremental Commitment may be less than $10,000,000,
(ii) except as separately agreed from time to time between the Borrower Representative and any Lender, no Lender shall be obligated to provide any Incremental Commitment, and the determination to provide such commitments shall be within the sole and absolute discretion of such Lender,
(iii) no Incremental Facility or Incremental Loan (or the creation, provision or implementation thereof) shall require the approval of any existing Lender other than in its capacity, if any, as a Lender providing all or part of any Incremental Commitment or Incremental Loan,
(iv) (A) except as otherwise provided herein, the terms of each Incremental Revolving Facility (other than any terms which are applicable only after the then-existing maturity date with respect to the Revolving Facility or any Additional Revolving Facility, as applicable, and other than as permitted under clause (v) below), will be substantially similar to those applicable to the Revolving Facility or otherwise reasonably acceptable to the Administrative Agent (other than in the case of any Incremental Revolving Facility that is implemented by increasing the amount of then-existing Total Revolving Credit Commitments (rather than by implementing a new tranche of Revolving Credit Commitments), which shall have identical terms to such then-existing Total Revolving Credit Commitments) and (B) no Incremental Revolving Facility will mature earlier than the then-applicable Latest Revolving Loan Maturity Date or require any scheduled amortization or mandatory commitment reduction prior to such Maturity Date,
(v) the interest rate applicable to any Incremental Facility or Incremental Loans will be determined by the Borrower Representative and the lenders providing such Incremental Facility or Incremental Loans; provided that (A) in the case of any Incremental Term Facility or Incremental Term Loans which rank pari passu with the 2021 Replacement Term Loans in right of payment and with respect to security, such interest rate will not be more than 0.50% higher than the corresponding interest rate applicable to such 2021 Replacement Term Loans unless the interest rate margin with respect to such 2021 Replacement Term Loans is adjusted to be equal to the interest rate with respect to the relevant Incremental Term Facility or Incremental Term Loans, minus 0.50%; provided further that in determining the applicable interest rate under this clause (v): (w) original issue discount or upfront fees paid by any Borrower (or any new Borrower in accordance with clause (xvi) below) in connection with any Class of 2021 Replacement Term Loans or any Incremental Term Facility (based on a four-year average life to maturity), shall be included (it being acknowledged and agreed that the original issue discount or upfront fees paid in connection with any Class of 2021 Replacement Term Loans shall not, for purposes of the clause (v), be affected by any subsequent Incremental Term Facility that is implemented by increasing the amount of such Class of Term Loans (rather than by implementing a new tranche of 2021 Replacement Term Loans)), (x) any amendments to the Applicable Rate in respect of any Class of 2021 Replacement Term Loans that became effective subsequent to the Third Amendment Effective Date but prior to the time of the addition of the relevant Incremental Term Facility or Incremental Term Loans shall be included, (y) arrangement, commitment, structuring and underwriting fees and any amendment fees (regardless of whether such fees are paid to or shared in whole or in part with any lender) paid or payable to the Arrangers (or their Affiliates) in their respective capacities as such in connection with any 2021 Replacement Term Loans or any Incremental Term Facility or to one or more arrangers (or their affiliates) in their capacities as such applicable to the relevant Incremental Term Facility or Incremental Term Loans and any other fees not paid to all relevant lenders generally shall be
excluded and (z) if the relevant Incremental Term Facility or Incremental Term Loans include any Adjusted Term SOFR floor (or any equivalent floor) that is greater than the Floor, and such floor is greater than Adjusted Term SOFR applicable to such 2021 Replacement Term Loans having an Interest Period of three months on the date of determination, the excess amount shall be equated to interest margin for determining the applicable interest rate, and (B) in the case of any Incremental Revolving Facility or Incremental Revolving Loans which rank pari passu with any then existing Revolving Facility in right of payment and with respect to security, such interest rate will not be more than 0.50% higher than the corresponding interest rate applicable to the such existing Revolving Facility unless the interest rate margin with respect to such existing Revolving Facility is adjusted to be equal to the interest rate with respect to the relevant Incremental Revolving Facility or Incremental Revolving Loans, minus 0.50%; provided further that in determining the applicable interest rate under this clause (v): (w) original issue discount or upfront fees paid by the Revolver Borrower in connection with an existing Revolving Facility (based on a four-year average life to maturity), shall be included, (x) any amendments to the Applicable Rate in respect of the then existing Revolving Facility that became effective subsequent to the establishment of such Revolving Facility but prior to the time of the addition of the relevant Incremental Revolving Facility or Incremental Revolving Loans shall be included, (y) arrangement, commitment, structuring and underwriting fees and any amendment fees (regardless of whether such fees are paid to or shared in whole or in part with any lender) paid or payable to the Arrangers (or their Affiliates) in their respective capacities as such in connection with such existing Revolving Facility or to one or more arrangers (or their affiliates) in their capacities as such applicable to the relevant Incremental Revolving Facility or Incremental Revolving Loans and any other fees not paid to all relevant lenders generally shall be excluded and (z) if the relevant Incremental Revolving Facility or Incremental Revolving Loans include any Adjusted Term SOFR floor (or any equivalent floor) that is greater than that applicable to any then existing Revolving Facility, and such floor is greater than Adjusted Term SOFR applicable to such existing Revolving Facility having an Interest Period of three months on the date of determination, the excess amount shall be equated to interest margin for determining the applicable interest rate.
(vi) the final maturity date with respect to any Incremental Facility shall be no earlier than the Latest Term Loan Maturity Date at the time of the incurrence thereof,
(vii) the Weighted Average Life to Maturity of any Incremental Term Facility shall be no shorter than the remaining Weighted Average Life to Maturity of the then-existing tranche(s) of Term Loans (without giving effect to any prepayments thereof),
(viii) (A) any Incremental Term Facility shall rank pari passu with any then-existing tranche of Term Loans in right of payment and may rank pari passu with or junior to any then-existing tranche of Term Loans with respect to security or may be unsecured (and to the extent the relevant Incremental Facility ranks pari passu with or is subordinated to the Term Loans in right of security or is unsecured and documented in a separate agreement to this Agreement) (it being acknowledged and agreed that any such Incremental Term Facility that is subordinated to the Term Loans in right of security shall be documented in a separate agreement to this Agreement, it shall be subject to a Permitted Pari Passu Intercreditor Agreement (in the case of an Incremental Facility that ranks pari passu with any then-existing tranche of Term Loans with respect to security) or a Permitted Junior Intercreditor Agreement (in the case of an Incremental Facility that ranks junior to any then-existing tranche of Term Loans with respect to security) and (B) no Incremental Facility may be (x) guaranteed by any Person which is not a Loan Party (but need not be guaranteed by all such Persons) or (y) secured by any assets other than the Collateral (but need not be secured by all such assets),
(ix) (A) any prepayment (other than any scheduled amortization payment) of Incremental Term Loans that are pari passu with any then-existing Term Loans in right of payment and security shall be made on a pro rata basis with such existing Term Loans and (B) any prepayment (other than any scheduled amortization payment) of Incremental Term Loans that are subordinated to any then-existing Term Loans in right of payment or security shall be made on a junior basis with respect to such existing Term Loans (and all other then-existing Additional Term Loans requiring ratable prepayment), except, in the case of preceding clause (A); that the Term Borrowers and the lenders providing the relevant Incremental Term Loans shall be permitted, in their sole discretion, to elect to prepay or receive, as applicable, any prepayments on a less than pro rata basis (but not on a greater than pro rata basis),
(x) except as otherwise agreed by the lenders providing the relevant Incremental Facility in connection with any Limited Condition Acquisition (which shall be subject to Section 2.22(i)), no Event of Default shall exist immediately prior to or after giving effect to such incremental facility,
(xi) except as otherwise agreed by the lenders providing the relevant Incremental Facility in connection with any Limited Condition Acquisition (which shall be subject to Section 2.22(i)), all representations and warranties set forth in Article 3 and in each other Loan Document shall be true and correct in all material respects (or, if qualified by materiality, in all respects) on and as of the applicable closing date in respect of such Incremental Facility with the same effect as though made on and as of such date, except to the extent such representations and warranties expressly relate to an earlier day, in which case they shall be true and correct in all material respects (or, if qualified by materiality, in all respects) as of such earlier date.
(xii) except as otherwise required or permitted in clauses (v) through (ix) above (and other than in the case of any Incremental Term Facility that is implemented by increasing the amount of then-existing Term Loans of any Class (rather than by implementing a new Class of Term Loans), which shall have identical terms to such then-existing Class of Term Loans), all other terms of any Incremental Term Facility, if not substantially similar to the terms of the 2021 Replacement Term Loans, shall be reasonably satisfactory to the Borrower Representative and the Administrative Agent (it being understood that any terms which are not consistent with the terms of the 2021 Replacement Term Loans and are applicable only after the then-existing Latest Term Loan Maturity Date are deemed to be reasonably acceptable to the Administrative Agent),
(xiii) the proceeds of any Incremental Facility may be used for working capital and other general corporate purposes and any other use not prohibited by this Agreement,
(xiv) on the date of the making of any Incremental Term Loans that will be added to any Class of Initial Term Loans, 2017 Replacement Term Loans, 2021 Replacement Term Loans or Additional Term Loans, and notwithstanding anything to the contrary set forth in Section 2.08 or 2.13, such Incremental Term Loans shall be added to (and constitute a part of) each borrowing of outstanding Initial Term Loans, 2017 Replacement Term Loans, 2021 Replacement Term Loans or Additional Term Loans, as applicable, of the same Type with the same Interest Period of the respective Class on a pro rata basis (based on the relative sizes of the various outstanding Borrowings), so that each Term Lender providing such Incremental Term Loans will participate proportionately in each then outstanding borrowing of Initial Term Loans, 2017 Replacement Term Loans, 2021 Replacement Term Loans or Additional Term Loans, as applicable, of the same type with the same Interest Period of the respective Class;
(xv) at no time shall there be more than three separate Maturity Dates in effect with respect to the Revolving Facility and any existing Additional Revolving Facility at any time;
(xvi) (A) any Term Borrower or (subject to this inclusion of “collateral allocation mechanism” provisions reasonably satisfactory to the Administrative Agent) one or more Wholly-Owned Subsidiaries of the Borrower Representative reasonably acceptable to the Administrative Agent shall be the borrower(s) under any Incremental Term Facility and, (B) the Revolver Borrower or (subject to this inclusion of “collateral allocation mechanism” provisions reasonably satisfactory to the Administrative Agent) one or more Wholly-Owned Subsidiaries of the Borrower Representative reasonably acceptable to the Administrative Agent shall be the borrower(s) under any Incremental Revolving Facility
(xvii) the currency of any Incremental Facility shall be Dollars or, if agreed by all of the Lenders or Additional Lenders providing such Incremental Facility, an Alternative Currency.
(b) Incremental Commitments may be provided by any existing Lender, or by any other lender (other than any Disqualified Institution) (any such other lender being called an “Additional Lender”); provided that the Administrative Agent (and, in the case of any Incremental Revolving Facility, the Swingline Lender and any Issuing Bank) shall have consented (such consent not to be unreasonably withheld) to the relevant Additional Lender’s provision of Incremental Commitments if such consent would be required under Section 9.05(b) for an assignment of Loans to such Additional Lender; provided further that any Additional Lender that is an Affiliated Lender shall be subject to the provisions of Section 9.05(g), mutatis mutandis, to the same extent as if Incremental Commitments and related Obligations had been obtained by such Lender by way of assignment.
(c) Each Lender or Additional Lender providing a portion of any Incremental Commitment shall execute and deliver to the Administrative Agent and the Borrower Representative all such documentation (including an amendment to this Agreement or any other Loan Document) as may be reasonably required by the Administrative Agent to evidence and effectuate such Incremental Commitment and/or the Incremental Loans thereunder. On the effective date of such Incremental Commitment, each such Additional Lender shall become a Lender for all purposes in connection with this Agreement.
(d) As a condition precedent to the effectiveness of any Incremental Facility or the making of any Incremental Loans, (i) upon its reasonable request, the Administrative Agent shall have received customary written opinions of counsel, as well as such reaffirmation agreements, supplements and/or amendments as it shall reasonably require, (ii) the Administrative Agent shall have received, from each Additional Lender, an Administrative Questionnaire and such other documents as it shall reasonably require from such Additional Lender, and the Administrative Agent and Lenders shall have received all fees required to be paid in respect of such Incremental Facility or Incremental Loans and (iii) the Administrative Agent shall have received a certificate of the applicable Borrowers signed by a Responsible Officer thereof:
(A) certifying and attaching a copy of the resolutions adopted by the governing body of the applicable Borrowers approving or consenting to such Incremental Facility and/or Incremental Loans, and
(B) to the extent applicable, certifying that the conditions set forth in clause (a)(x) and clause (a)(xi) above have been satisfied.
(e) Upon the implementation of any Incremental Revolving Facility pursuant to this Section 2.22:
(i) if such Incremental Revolving Facility is implemented by increasing the amount of then-existing Total Revolving Credit Commitments (rather than by implementing a new tranche of Revolving Credit Commitments), (i) each Revolving Lender immediately prior to such increase will automatically and without further act be deemed to have assigned to each relevant Incremental Revolving Facility Lender, and each relevant Incremental Revolving Facility Lender will automatically and without further act be deemed to have assumed a portion of such Revolving Lender’s participations hereunder in outstanding Letters of Credit and Swingline Loans such that, after giving effect to each deemed assignment and assumption of participations, all of the Revolving Lenders’ (including each Incremental Revolving Facility Lender) (A) participations hereunder in Letters of Credit and (B) participations hereunder in Swingline Loans shall be held on a pro rata basis on the basis of their respective Revolving Credit Commitments (after giving effect to any increase in the Revolving Credit Commitment pursuant to this Section 2.22) and (ii) the existing Revolving Lenders of the applicable Class shall assign Revolving Loans to certain other Revolving Lenders of such Class (including the Revolving Lenders providing the relevant Incremental Revolving Facility), and such other Revolving Lenders (including the Revolving Lenders providing the relevant Incremental Revolving Facility) shall purchase such Revolving Loans, in each case to the extent necessary so that all of the Revolving Lenders of such Class participate in each outstanding Borrowing of Revolving Loans pro rata on the basis of their respective Revolving Credit Commitments of such Class (after giving effect to any increase in the Revolving Credit Commitment pursuant to this Section 2.22); it being understood and agreed that the minimum borrowing, pro rata borrowing and pro rata payment and sharing requirements contained elsewhere in this Agreement shall not apply to the transactions effected pursuant to this clause (i); and
(ii) if such Incremental Revolving Facility is implemented pursuant to a request to add one or more new tranches of revolving commitments, (1) the borrowing and repayment (except for (A) payments of interest and fees at different rates on the existing Revolving Facilities and such Incremental Revolving Facility, (B) repayments required upon the Maturity Date of the then-existing Revolving Facility and such Incremental Revolving Facility and (C) repayments made in connection with any permanent repayment and termination of commitments (subject to clause (3) below)) of Incremental Revolving Loans after the effective date of such Incremental Revolving Commitments shall be made on a pro rata basis with the then-existing Revolving Facility and any other then outstanding Incremental Revolving Facility, (2) all swingline loans and/or letters of credit made or issued, as applicable, under such Incremental Revolving Facility shall be participated on a pro rata basis by all Revolving Lenders and (3) the permanent repayment of Revolving Loans with respect to, and termination of commitments under, such Incremental Revolving Facility shall be made on a pro rata basis with the then-existing Revolving Facility and any other then outstanding Incremental Revolving Facility, except that the Revolver Borrower shall be permitted to permanently repay and terminate commitments under such Incremental Revolving Facility on a greater than pro rata basis as compared with any other revolving facility with a later Maturity Date than such revolving facility.
(f) Effective on the date of effectiveness of each Incremental Revolving Facility, the maximum amount of LC Exposure permitted hereunder shall increase by an amount, if any, agreed upon by Administrative Agent, the Issuing Banks and the Revolver Borrower.
(g) The Lenders hereby irrevocably authorize the Administrative Agent to enter into such amendments to this Agreement and the other Loan Documents with the Borrowers and/or any other
applicable Loan Parties as may be necessary in order to establish new tranches or sub-tranches in respect of Loans or commitments increased or extended pursuant to this Section 2.22 and such technical amendments as may be necessary or appropriate in the reasonable opinion of the Administrative Agent and the Borrowers in connection with the establishment of such new tranches or sub-tranches, in each case on terms consistent with this Section 2.22.
(h) To the extent that any Incremental Term Loans are added to any then outstanding Class of Initial Term Loans, 2017 Replacement Term Loans, 2021 Replacement Term Loans or Additional Term Loans, as applicable, it is acknowledged that (i) the scheduled amortization payments set forth in Section 2.10 shall be adjusted to give effect to the increase in the relevant Class and (ii) the operation of clause (a)(xiv) above may result in such new Incremental Term Loans having short Interest Periods (i.e., an Interest Period that began during an Interest Period then applicable to outstanding SOFR Loans of the respective Class and which will end on the last day of such Interest Period).
(i) Limited Condition Acquisitions. Notwithstanding the foregoing provisions of this Section 2.22 or in any other provision of any Loan Document:
(i) if the proceeds of any Incremental Facility are intended to be applied to finance a Limited Condition Acquisition, the conditions precedent to the Borrower Representative’s right to request such Incremental Facility for a Limited Condition Acquisition shall (so long as the requirements of Section 2.22(a) (other than clauses (x) and (xi) thereof) are met with respect to such Incremental Facility) be limited to the following: (a) on the date of the signing of the definitive acquisition agreement for such Limited Condition Acquisition (x) no Event of Default shall have occurred and be continuing (y) each of the representations and warranties contained in the Loan Documents shall be true and correct in all material respects (except (I) with respect to representations and warranties expressly made as of an earlier date, in which case such representations and warranties were true and correct in all material respects as of such earlier date and (II) that if any such representation or warranty contains any materiality qualifier, such representation or warranty shall be true and correct in all respects); and (b) at the date of closing of such Limited Condition Acquisition and the funding of the applicable Incremental Facility, (A) no Event of Default under Section 7.01(a), (f) or (g) shall have occurred and be continuing, (B) the only representations and warranties the accuracy of which shall be a condition to funding such advance shall be the Specified Representations and the Specified Acquisition Agreement Representations, and
(ii) in the case of the incurrence of any indebtedness or liens or the making of any investments, restricted payments, prepayments of subordinated or junior debt, asset sales or fundamental changes or the designation of any restricted subsidiaries or unrestricted subsidiaries in connection with a Limited Condition Acquisition, at the Borrower Representative’s option, the relevant ratios and baskets (other than those set forth in clause (a), (b), (c) and (d) of the definition of “Incremented Cap”) shall be determined, and any default or event of default blocker shall be tested, as of the date the definitive acquisition agreements for such Limited Condition Acquisition are entered into and, subject to the second proviso contained in this clause (ii), calculated as if the acquisition and other pro forma events in connection therewith were consummated on such date; provided that if the Borrower Representative has made such an election, in connection with the calculation of any ratio or basket with respect to the incurrence of any debt or liens, or the making of any investments, restricted payments, prepayments of subordinated, junior or unsecured debt, asset sales, fundamental changes or the designation of a restricted subsidiary or unrestricted subsidiary on or following such date and prior to the earlier of the date on which such acquisition is consummated or the definitive agreement for such acquisition is terminated, any such ratio shall, subject to the proviso below, be
calculated on a pro forma basis assuming such acquisition and other pro forma events in connection therewith (including any incurrence of indebtedness) have been consummated; provided that the consolidated net income (and any other financial defined term derived therefrom) shall not include any consolidated net income of or attributable to the target company or assets associated with any such Limited Condition Acquisition unless and until the closing of such Limited Condition Acquisition shall have actually occurred.
(j) This Section 2.22 shall supersede any provision in Section 2.18 or 9.02 to the contrary.
Section 2.23 Extensions of Loans and Revolving Commitments.
(a) Notwithstanding anything to the contrary in this Agreement, pursuant to one or more offers (each, an “Extension Offer”) made from time to time by the Borrower Representative to all Lenders holding Loans of any Class with a like Maturity Date or commitments with a like Maturity Date, in each case on a pro rata basis (based on the aggregate outstanding principal amount of the respective Loans or commitments with a like Maturity Date) and on the same terms to each such Lender, the Borrowers are hereby permitted from time to time to consummate transactions with any individual Lender who accepts the terms contained in any such Extension Offer to extend the Maturity Date of such Lender’s Loans and/or commitments and otherwise modify the terms of such Loans and/or commitments pursuant to the terms of the relevant Extension Offer (including by increasing the interest rate or fees payable in respect of such Loans and/or commitments (and related outstandings) and/or modifying the amortization schedule in respect of such Loans) (each, an “Extension”, and each group of Loans or commitments, as applicable, in each case as so extended, as well as the original Loans and the original commitments (in each case not so extended), being a “tranche”; any Extended Term Loans shall constitute a separate tranche (and Class) of Loans from the tranche of Loans from which they were converted and any Extended Revolving Credit Commitments shall constitute a separate tranche (and Class) of revolving commitments from the tranche of revolving commitments from which they were converted), so long as the following terms are satisfied:
(i) no Default under Section 7.01(a), (f) or (g) or Event of Default shall exist at the time the notice in respect of an Extension Offer is delivered to the applicable Lenders, and no Default under Section 7.01(a), (f) or (g) or Event of Default shall exist immediately prior to or after giving effect to the effectiveness of any Extension;
(ii) except as to (x) interest rates, fees and final maturity (which shall, subject to clause (iv)(y) below, be determined by the Revolver Borrower and any Lender who agrees to an Extension and set forth in the relevant Extension Offer) and (y) any covenants or other provisions applicable only to periods after the Latest Revolving Loan Maturity Date (in each case, as of the date of such Extension), the commitment of any Revolving Lender that agrees to an Extension (an “Extended Revolving Credit Commitment”; and the Loans thereunder, “Extended Revolving Loans”), and the related outstandings, shall be a Revolving Credit Commitment (or related outstandings, as the case may be) with the same terms (or terms not less favorable to existing Revolving Lenders) as the original Revolving Credit Commitments (and related outstandings) provided hereunder; provided that (I) to the extent any non-extended portion of the Revolving Facility and/or any Additional Revolving Facility then exists, (1) the borrowing and repayment (except for (A) payments of interest and fees at different rates on such revolving facilities (and related outstandings), (B) repayments required upon the Maturity Date of such revolving facilities and (C) repayments made in connection with any permanent repayment and termination of commitments (subject to clause (3) below)) of Extended Revolving Loans after the effective date of such Extended Revolving Credit Commitments shall be made on a pro rata basis
with such portion of the Revolving Facility and/or the relevant Additional Revolving Facility, as applicable, (2) all Swingline Loans and/or Letters of Credit made or issued, as applicable, under any Extended Revolving Credit Commitment shall be participated on a pro rata basis by all Revolving Lenders and (3) the permanent repayment of Extended Revolving Loans with respect to, and termination of commitments under, any such Extended Revolving Credit Commitment after the effective date of such Extended Revolving Credit Commitments shall be made on a pro rata basis with such portion(s) of the Revolving Facility and/or any Additional Revolving Facility, except that the Revolver Borrower shall be permitted to permanently repay and terminate commitments of any such Revolving Facility and/or Additional Revolving Facility on a greater than pro rata basis as compared with any other revolving facility with a later Maturity Date than such Revolving Facility and/or Additional Revolving Facility and (II) at no time shall there be more than three separate Classes of revolving commitments hereunder (including Revolving Credit Commitments, Incremental Revolving Commitments, Extended Revolving Credit Commitments and Replacement Revolving Facilities);
(iii) except as to (x) interest rates, fees, amortization, final maturity date, premiums, required prepayment dates and participation in prepayments (which shall, subject to immediately succeeding clauses (iv)(x), (v) and (vi), be determined by the Term Borrowers and any Lender who agrees to an Extension and set forth in the relevant Extension Offer) and (y) any covenants or other provisions applicable only to periods after the Latest Term Loan Maturity Date (in each case, as of the date of such Extension), the Term Loans of any Lender extended pursuant to any Extension (any such extended term Loans, the “Extended Term Loans”) shall have the same terms as the tranche of Term Loans subject to the relevant Extension Offer; provided, however, that with respect to representations and warranties, affirmative and negative covenants (including financial covenants) and events of default that are applicable to any such tranche of Extended Term Loans, such provisions may be more favorable to the lenders of the applicable tranche of Extended Term Loans than those originally applicable to the tranche of Term Loans subject to the relevant Extension Offer, so long as (and only so long as) such provisions also expressly apply to (and for the benefit of) the tranche of Term Loans subject to the relevant Extension Offer and each other Class of Term Loans hereunder;
(iv) (x) the final maturity date of any Extended Term Loans shall be no earlier than the then applicable Latest Term Loan Maturity Date at the time of Extension and (y) no Extended Revolving Credit Commitments or Extended Revolving Loans shall have a final maturity date earlier than (or require commitment reductions prior to) the then applicable Latest Revolving Loan Maturity Date;
(v) the Weighted Average Life to Maturity of any Extended Term Loans shall be no shorter than the remaining Weighted Average Life to Maturity of the Term Loans extended thereby (or any other Extended Term Loans then outstanding);
(vi) any Extended Term Loans may participate on a pro rata basis or a less than pro rata basis (but not greater than a pro rata basis) in any voluntary or mandatory repayments or prepayments (but, for purposes of clarity, not scheduled amortization payments) in respect of the Initial Term Loans (and any Additional Term Loans then subject to ratable repayment requirements with respect to the Initial Term Loans), in each case as specified in the respective Extension Offer;
(vii) if the aggregate principal amount of Loans or commitments, as the case may be, in respect of which Lenders shall have accepted the relevant Extension Offer exceeds the maximum aggregate principal amount of Loans or commitments, as the case may be, offered to
be extended by the Borrower Representative pursuant to such Extension Offer, then the Loans or commitments, as the case may be, of such Lenders shall be extended ratably up to such maximum amount based on the respective principal amounts (but not to exceed actual holdings of record) with respect to which such Lenders have accepted such Extension Offer;
(viii) each Extension shall be in a minimum amount of $20,000,000;
(ix) any applicable Minimum Extension Condition shall be satisfied or waived by the Borrower Representative; and
(x) all documentation in respect of such Extension shall be consistent with the foregoing.
(b) With respect to any Extension consummated pursuant to this Section 2.23, (i) no such Extension shall constitute a voluntary or mandatory prepayment for purposes of Section 2.11, (ii) the scheduled amortization payments (in so far as such schedule affects payments due to Lenders participating in the relevant Class) set forth in Section 2.10 shall be adjusted to give effect to such Extension of the relevant Class and (iii) except as set forth in clause (a)(viii) above, no Extension Offer is required to be in any minimum amount or any minimum increment; provided that the Borrower Representative may, at its election, specify as a condition (a “Minimum Extension Condition”) to consummating such Extension that a minimum amount (to be determined and specified in the relevant Extension Offer in the Borrower Representative’s sole discretion and which may be waived by the Borrower Representative) of Loans or commitments (as applicable) of any or all applicable tranches be tendered. The Administrative Agent and the Lenders hereby consent to the transactions contemplated by this Section 2.23 (including, for the avoidance of doubt, any payment of any interest, fees or premium in respect of any tranche of Extended Term Loans and/or Extended Revolving Credit Commitments on such terms as may be set forth in the relevant Extension Offer) and hereby waive the requirements of any provision of this Agreement (including Section 2.10, 2.11 or 2.18) or any other Loan Document that may otherwise prohibit any Extension or any other transaction contemplated by this Section 2.23.
(c) No consent of any Lender or the Administrative Agent shall be required to effectuate any Extension, other than (A) the consent of each Lender agreeing to such Extension with respect to one or more of its Loans and/or commitments under any Class (or a portion thereof), (B) with respect to any Extension of the Revolving Credit Commitments, the consent of each Issuing Bank to the extent the commitment to provide Letters of Credit is to be extended and (C) the consent of the Swingline Lender to the extent the swingline facility is to be extended (in each case which consent shall not be unreasonably withheld or delayed). All Extended Term Loans and Extended Revolving Credit Commitments and all obligations in respect thereof shall constitute Secured Obligations under this Agreement and the other Loan Documents that are secured by the Collateral and guaranteed on a pari passu basis in right of payment and with respect to security with all other applicable Secured Obligations under this Agreement and the other Loan Documents. The Lenders hereby irrevocably authorize the Administrative Agent to enter into such amendments to this Agreement and the other Loan Documents with the applicable Borrower(s) and/or any other applicable Loan Parties as may be necessary in order to establish new tranches or sub-tranches in respect of Loans or commitments so extended and such technical amendments as may be necessary or appropriate in the reasonable opinion of the Administrative Agent and the Borrower Representative in connection with the establishment of such new tranches or sub-tranches, in each case on terms consistent with this Section 2.23.
(d) In connection with any Extension, the Borrower Representative shall provide the Administrative Agent at least ten Business Days’ (or such shorter period as may be agreed by the Administrative Agent) prior written notice thereof, and shall agree to such procedures (including
regarding timing, rounding and other adjustments and to ensure reasonable administrative management of the credit facilities hereunder after such Extension), if any, as may be established by, or acceptable to, the Administrative Agent, in each case acting reasonably to accomplish the purposes of this Section 2.23.
Section 2.24 Joint and Several Liability of Term Borrowers.
(a) Subject to paragraphs (g) and (h) below, notwithstanding anything else in this Agreement or any other Loan Documents to the contrary, each Term Borrower, jointly and severally, in consideration of the financial accommodations to be provided by the Administrative Agent and Term Lenders under this Agreement and the other Loan Documents, for the mutual benefit, directly and indirectly, of each Term Borrower and in consideration of the undertakings of the other Term Borrower to accept joint and several liability for the Applicable Obligations, hereby irrevocably and unconditionally accepts, not merely as a surety but also as a co-debtor, joint and several liability with the other Term Borrower, with respect to the payment and performance of all of the Applicable Obligations, it being the intention of the parties hereto that all of the Applicable Obligations shall be the joint and several obligations of each Term Borrower without preferences or distinction among them. The Term Borrowers shall be liable for all amounts due to Administrative Agent and the Term Lenders under this Agreement, regardless of which Term Borrower actually receives the relevant Term Loans hereunder or the amount of such Term Loans received or the manner in which the Administrative Agent or any relevant Term Lender accounts for such Term Loans or other extensions of credit on its books and records. The Applicable Obligations of the Term Borrowers with respect to Term Loans made to one of them, and the Applicable Obligations arising as a result of the joint and several liability of one of the Term Borrowers hereunder with respect to Term Loans made to the other Term Borrower hereunder, shall be separate and distinct obligations, but all such other Applicable Obligations shall be primary obligations of both Term Borrowers.
(b) If and to the extent that any Term Borrower shall fail to make any payment with respect to any of the Applicable Obligations as and when due or to perform any of the Applicable Obligations in accordance with the terms thereof, then in each such event, the other Term Borrower will make such payment with respect to, or perform, such Applicable Obligation.
(c) The obligations of each Term Borrower under this Section 2.24 shall not be diminished or rendered unenforceable by any winding up, reorganization, arrangement, liquidation, reconstruction or similar proceeding with respect to any Term Borrower. The joint and several liability of the Term Borrowers hereunder shall continue in full force and effect notwithstanding any absorption, merger, amalgamation or any other change whatsoever in the name, membership, constitution or place of formation of any Term Borrower or any of the Term Lenders.
(d) The provisions of this Section 2.24 hereof are made for the benefit of the Term Lenders and their successors and assigns, and subject to Article 7 hereof, may be enforced by them from time to time against any Term Borrower as often as occasion therefor may arise and without requirement on the part of Administrative Agent or any Term Lender first to marshal any of its claims or to exercise any of its rights against the other Term Borrower or to exhaust any remedies available to it against the other Term Borrower or to resort to any other source or means of obtaining payment of any of the Applicable Obligations hereunder or to elect any other remedy. The provisions of this Section 2.24 shall remain in effect until the Termination Date. If at any time, any payment, or any part thereof, made in respect of any of the Applicable Obligations is rescinded or must otherwise be restored or returned by Administrative Agent or any Term Lender upon the insolvency, bankruptcy or reorganization of any Term Borrower, or otherwise, the provisions of this Section 2.24 hereof will forthwith be reinstated and in effect as though such payment had not been made.
(e) Notwithstanding any provision to the contrary contained herein or in any of the other Loan Documents, to the extent the obligations of a Term Borrower shall be adjudicated to be invalid or unenforceable for any reason (including, without limitation, because of any applicable state, federal or foreign law relating to fraudulent conveyances or transfers) then the obligations of such Term Borrower hereunder shall be limited to the maximum amount that is permissible under applicable law (whether federal, state, provincial or foreign and including, without limitation, the Bankruptcy Code).
(f) With respect to the Applicable Obligations arising as a result of the joint and several liability of the Term Borrowers hereunder with respect to Term Loans or other extensions of credit made to the other Term Borrower hereunder, to the maximum extent permitted by applicable law, each Term Borrower waives, until the occurrence of the Termination Date, any right to enforce any right of subrogation or any remedy which Administrative Agent or any Term Lender now has or may hereafter have against the other Term Borrower, any endorser or any guarantor of all or any part of the Applicable Obligations, and any benefit of, and any right to participate in, any security or collateral given to Administrative Agent or any Term Lender. Any claim which any Term Borrower may have against the other Term Borrower with respect to any payments to the Administrative Agent or the Term Lenders hereunder or under any of the other Loan Documents are hereby expressly made subordinate and junior in right of payment, without limitation as to any increases in the Applicable Obligations arising hereunder or thereunder, to the occurrence of the Termination Date. Upon the occurrence of any Event of Default and for so long as the same is continuing, to the maximum extent permitted under applicable law, the Administrative Agent and the Term Lenders may proceed directly and at once, without notice (to the extent notice is waivable under applicable law), against (i) with respect to the Applicable Obligations of the Term Borrowers, any or all of them or (ii) with respect to Applicable Obligations of any Term Borrower, to collect and recover the full amount, or any portion of the Applicable Obligations, without first proceeding against the other Term Borrower or any other Person, or against any security or collateral for the Applicable Obligations. Each Term Borrower consents and agrees that Administrative Agent and Term Lenders shall be under no obligation to marshal any assets in favor of the Term Borrower(s) or against or in payment of any or all of the Applicable Obligations. Subject to the foregoing, in the event that a Term Loan or other extension of credit is made to, or with respect to business of, one Term Borrower and any other Term Borrower makes any payments with respect to such Term Loan or extension of credit, the first Term Borrower shall promptly reimburse such other Term Borrower for all payments so made by such other Term Borrower.
(g) Section 2.24(a) above does not apply to any liability to the extent that it would result in the obligations assumed by an English Loan Party constituting unlawful financial assistance within the meaning of sections 678 or 679 of the Companies Act 2006.
(h) (i) Notwithstanding any provisions to the contrary in any Loan Document, the aggregate obligations and liabilities of the Lux Borrower under this Section 2.24 for the obligations of the US Co-Borrower shall be limited at any time to a maximum amount payable by the Lux Borrower not exceeding ninety-five per cent. (95%) of the sum of the Lux Borrower's “capitaux propres” (as referred to in Annex I to the Grand-Ducal Regulation dated 18 December 2015 setting out the form and content of the presentation of the balance sheet and profit and loss account, enforcing the Luxembourg Act of 19 December 2002 concerning the register of commerce and companies and the accounting and annual accounts of undertakings, as amended) (the “Own Funds”) and the Lux Borrower’s debt which is subordinated in right of payment (whether generally or specifically) to any claim of any Secured Party under any of the Loan Documents (the “Lux Subordinated Debt”), as determined on the basis of the then latest available annual accounts of the Lux Borrower duly established in accordance with applicable accounting rules, as at the date on which any obligation of the Lux Borrower under this Section 2.24 is called.
(ii) Where, for the purpose of any determination under clause (h)(i) above, no duly established annual accounts of the Lux Borrower are available for the relevant reference period (which, for the avoidance of doubt, includes a situation where, in respect of any determination to be made under clause (h)(i) above, no final annual accounts have been established in due time in respect of the then most recently ended financial year) the Lux Borrower shall, promptly, establish unaudited interim accounts (as of the date of the end of the then most recent financial quarter) or annual accounts (as applicable) duly established in accordance with applicable accounting rules, pursuant to which the Lux Borrower’s Own Funds and Lux Subordinated Debt will be determined. If the Lux Borrower fails to provide such unaudited interim accounts or annual accounts (as applicable) within 20 Business Days as from the request of the Administrative Agent, the Administrative Agent may appoint, at the cost of the Borrowers, an independent auditor (réviseur d'entreprises agréé) or an independent reputable investment bank which, acting reasonably, shall undertake the determination of the Lux Borrower’s Own Funds and Lux Subordinated Debt in accordance with Luxembourg accounting principles. In order to prepare such determination, the independent auditor (réviseur d'entreprises agréé) or the independent reputable investment bank, as applicable, shall take into consideration such available elements and facts at such time including, without limitation, the latest annual accounts of the Lux Borrower and its subsidiaries, any recent valuation of the assets of the Lux Borrower and its subsidiaries (if available), the market value of the assets of the Lux Borrower and its subsidiaries as if sold between a willing buyer and a willing seller as a going concern using a standard market multi criteria approach combining market multiples, book value, discounted cash flow or comparable public transaction of which price is known (taking into account circumstances at the time of the valuation and making all necessary adjustments to the assumption being used) and acting in a reasonable manner.
(iii) The limitation set forth in this clause (h) shall not apply to any Obligations of any of the Lux Borrower’s direct or indirect subsidiaries.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
On the Closing Date, and thereafter on the dates and to the extent required pursuant to Section 4.02, each of Intermediate Holdings and the Borrowers hereby represent and warrant to the Administrative Agent and each of the Lenders that:
Section 3.01 Organization; Powers. Holdings, each of the Loan Parties and each of its Restricted Subsidiaries (a) is (i) duly organized or incorporated and validly existing and (ii) in good standing (to the extent such concept or an equivalent concept exists in the relevant jurisdiction) under the laws of its jurisdiction of organization or incorporation, (b) has all requisite organizational power and authority to own its property and assets and to carry on its business as now conducted and (c) is qualified to do business in, and is in good standing (to the extent such concept exists in the relevant jurisdiction) in, every jurisdiction where its ownership, lease or operation of properties or conduct of its business requires such qualification; except, in each case referred to in this Section 3.01 (other than clause (a) with respect to the Borrowers and clause (b) with respect to Holdings and the Loan Parties) where the failure to do so, individually or in the aggregate, would not reasonably be expected to result in a Material Adverse Effect.
Section 3.02 Authorization; Enforceability. The execution, delivery and performance of each of the Loan Documents are within Holdings’ and/or each applicable Loan Party’s corporate or other organizational power and have been duly authorized by all necessary corporate or other organizational action of Holdings and such Loan Party. Each Loan Document to which Holdings and/or
any Loan Party is a party has been duly executed and delivered by Holdings and/or such Loan Party and is a legal, valid and binding obligation of Holdings and/or such Loan Party, enforceable in accordance with its terms, subject to the Legal Reservations.
Section 3.03 Governmental Approvals; No Conflicts. The execution and delivery of the Loan Documents by Holdings and/or each Loan Party party thereto and the performance by Holdings and/or such Loan Party thereof (a) do not require any consent or approval of, registration or filing with, or any other action by, any Governmental Authority, except (i) such as have been obtained or made and are in full force and effect, (ii) in connection with the Perfection Requirements and (iii) such consents, approvals, registrations, filings, or other actions the failure to obtain or make which could not be reasonably expected to have a Material Adverse Effect, (b) will not violate any (i) of such Loan Party’s Organizational Documents or (ii) Requirements of Law applicable to Holdings and/or such Loan Party which violation, in the case of this clause (b)(ii), could reasonably be expected to have a Material Adverse Effect and (c) will not violate or result in a default under any other material Contractual Obligation to which Holdings and/or such Loan Party is a party which violation, in the case of this clause (c), could reasonably be expected to result in a Material Adverse Effect.
Section 3.04 Financial Condition; No Material Adverse Effect.
(a) The financial statements described in Sections 4.01(c)(i) and (ii) (or if applicable, the financial statements most recently provided pursuant to Section 5.01(a) or (b), as applicable), present fairly, in all material respects, the financial position and results of operations and cash flows of the Borrower Representative on a consolidated basis as of such dates and for such periods in accordance with GAAP, subject, in the case of financial statements provided pursuant to Section 4.01(c)(i) or Section 5.01(a), to the absence of footnotes and normal year-end adjustments.
(b) Except as set forth in the Disclosure Documents, since December 31, 2020, there have been no events, developments or circumstances that have had, or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
Section 3.05 Properties.
(a) As of the Closing Date, Schedule 3.05 sets forth the address of each Real Estate Asset (or each set of such assets that collectively comprise one operating property) that is owned in fee simple by the Borrowers or any of their Restricted Subsidiaries.
(b) The Borrowers and each of their Restricted Subsidiaries have good and valid fee simple title to or rights to purchase, or valid leasehold interests in, or easements or other limited property interests in, all of their respective Real Estate Assets and have good title to their personal property and assets, in each case, except (i) for defects in title that do not materially interfere with their ability to conduct their business as currently conducted or to utilize such properties and assets for their intended purposes or (ii) where the failure to have such title would not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect. All such properties and assets are free and clear of Liens, other than Permitted Liens.
(c) The Borrowers and their Restricted Subsidiaries own or otherwise have a license or right to use all rights in Patents, Trademarks, Copyrights and other rights in works of authorship (including all copyrights embodied in software) and all other intellectual property rights (collectively, the “IP Rights”) used to conduct the businesses of the Borrowers and their Restricted Subsidiaries as presently conducted without, to the knowledge of any Borrower, any infringement or misappropriation of the IP Rights of third parties, except to the extent such failure to own or license or have rights to use
would not, or where such infringement or misappropriation would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
Section 3.06 Litigation and Environmental Matters.
(a) Except as set forth in the Disclosure Documents, there are no actions, suits or proceedings by or before any arbitrator or Governmental Authority pending against or, to the knowledge of any Borrower, threatened in writing against or affecting Holdings, any Borrower or any of their Restricted Subsidiaries which would reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect.
(b) Except for any matters that, individually or in the aggregate, would not reasonably be expected to result in a Material Adverse Effect, (i) no Borrower nor any of its Restricted Subsidiaries is subject to or has received notice of any Environmental Claim or any Environmental Liability or knows of any basis for any Environmental Liability of such Borrower or any of its Restricted Subsidiaries and (ii) no Borrower nor any of its Restricted Subsidiaries has failed to comply with any Environmental Law or to obtain, maintain or comply with any permit, license or other approval required under any Environmental Law.
(c) Neither any Borrower nor any of its Restricted Subsidiaries has treated, stored, transported or Released any Hazardous Materials on, at or from any currently or formerly operated real estate or facility in a manner that would reasonably be expected to have a Material Adverse Effect.
Section 3.07 Compliance with Laws. Each of Holdings, the Borrowers and each of the Borrowers’ Restricted Subsidiaries is in compliance with all Requirements of Law applicable to it or its property, except, in each case where the failure to do so, individually or in the aggregate, would not reasonably be expected to result in a Material Adverse Effect.
Section 3.08 Investment Company Status. No Loan Party, nor Holdings, is an “investment company” as defined in, or is required to be registered under, the Investment Company Act of 1940.
Section 3.09 Taxes. Each of Holdings, the Borrowers and each of the Borrowers’ Restricted Subsidiaries has timely filed or caused to be filed all Tax returns and reports required to have been filed and has paid or caused to be paid all Taxes required to have been paid by it that are due and payable, including in its capacity as a withholding agent, except (a) Taxes that are being contested in good faith by appropriate proceedings and for which Holdings, the Borrowers or such Restricted Subsidiary, as applicable, has set aside on its books adequate reserves in accordance with GAAP or (b) to the extent that the failure to do so, individually or in the aggregate, would not reasonably be expected to result in a Material Adverse Effect.
Section 3.10 ERISA.
(a) Each Plan is in compliance in form and operation with its terms and with ERISA and the Code and all other applicable laws and regulations, except where any failure to comply would not reasonably be expected to result in a Material Adverse Effect.
(b) No ERISA Event has occurred and is continuing or is reasonably expected to occur that, when taken together with all other such ERISA Events for which liability is reasonably expected to occur, would reasonably be expected to result in a Material Adverse Effect.
Section 3.11 Disclosure.
(a) As of the Closing Date, all written information (other than the Projections, other forward-looking information and information of a general economic or industry-specific nature) concerning Indivior plc, Intermediate Holdings, the Borrowers and the Borrowers’ Restricted Subsidiaries and the Transactions and prepared by or on behalf of the Borrower Representative or its subsidiaries or their respective representatives and made available to any Lender or the Administrative Agent in connection with the Transactions on or before the Closing Date (the “Information”), when taken as a whole, did not, when furnished, contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements contained therein not materially misleading in light of the circumstances under which such statements are made (after giving effect to all supplements and updates thereto from time to time).
(b) The Projections have been prepared in good faith based upon assumptions believed by the Borrowers to be reasonable at the time furnished (it being recognized that such Projections are not to be viewed as facts and are subject to significant uncertainties and contingencies many of which are beyond the Borrowers’ control, that no assurance can be given that any particular financial projections (including the Projections) will be realized, that actual results may differ from projected results and that such differences may be material).
(c) As of the Third Amendment Effective Date, the information included in any Beneficial Ownership Certification (if applicable) is true and correct in all respects.
Section 3.12 Solvency. As of the Third Amendment Effective Date, immediately after the consummation of the Transactions to occur on the Third Amendment Effective Date and the incurrence of indebtedness and obligations on the Third Amendment Effective Date in connection with this Agreement and the other Transactions, (i) the fair value of the assets of the Borrowers and their Restricted Subsidiaries on a consolidated basis, at a fair valuation, will exceed the debts and liabilities, direct, subordinated, contingent or otherwise, of the Borrowers and their Restricted Subsidiaries on a consolidated basis; (ii) the present fair saleable value of the property of the Borrowers and their Restricted Subsidiaries on a consolidated basis will be greater than the amount that will be required to pay the probable liability of the Borrowers and their Restricted Subsidiaries on a consolidated basis on their debts and other liabilities, direct, subordinated, contingent or otherwise, as such debts and other liabilities become absolute and matured; (iii) the Borrowers and their Restricted Subsidiaries on a consolidated basis will be able to pay their debts and liabilities, direct, subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured; and (iv) the Borrowers and their Restricted Subsidiaries on a consolidated basis will not have unreasonably small capital with which to conduct the businesses in which they are engaged as such businesses are now conducted and are proposed to be conducted following the Third Amendment Effective Date.
Section 3.13 Capitalization and Subsidiaries. Schedule 3.13 sets forth, in each case as of the Closing Date, (a) a correct and complete list of the name of each subsidiary of Holdings and the ownership interest therein held by Holdings or its applicable subsidiary, (b) the type of entity of Holdings and each of its subsidiaries and (c) the jurisdiction of incorporation or organization thereof.
Section 3.14 Security Interest in Collateral. Subject to the terms of the last paragraph of Section 4.01, the Legal Reservations, the Perfection Requirements, the provisions of this Agreement and the other relevant Loan Documents, the Collateral Documents will, upon execution and delivery thereof in accordance with Section 4.01(a), Section 5.12 or Section 5.18 hereof (as applicable), create legal, valid and enforceable Liens on all of the Collateral in favor of the Administrative Agent, for the benefit of itself and the other Secured Parties, and upon the satisfaction of the Perfection Requirements,
such Liens constitute perfected Liens (with the priority that such Liens are expressed to have under the relevant Collateral Documents) on the Collateral (to the extent such Liens are required to be perfected under the terms of the Loan Documents) securing the Secured Obligations, in each case as and to the extent set forth therein.
Section 3.15 Labor Disputes. Except as individually or in the aggregate would not reasonably be expected to have a Material Adverse Effect: (a) there are no strikes, lockouts or slowdowns against the Borrowers or any of their Restricted Subsidiaries pending or, to the knowledge of the Borrowers or any of their Restricted Subsidiaries, threatened and (b) the hours worked by and payments made to employees of the Borrowers and their Restricted Subsidiaries have not been in violation of the Fair Labor Standards Act or any other applicable Federal, state, local or foreign law dealing with such matters.
Section 3.16 Federal Reserve Regulations.
(a) On the Closing Date, not more than 25% of the value of the assets of Holdings, the Borrowers and the Borrowers’ Restricted Subsidiaries taken as a whole is represented by Margin Stock.
(b) None of the Borrowers nor any of the Borrowers’ Restricted Subsidiaries is engaged principally, or as one of its important activities, in the business of extending credit for the purpose of buying or carrying Margin Stock.
(c) No part of the proceeds of any Loan or any Letter of Credit will be used, whether directly or indirectly, and whether immediately, incidentally or ultimately, for any purpose that results in a violation of the provisions of Regulation T, Regulation U or Regulation X.
Section 3.17 Use of Proceeds. Subject to Section 5.18, (a) the Revolver Borrower will use the proceeds of the Revolving Loans and Swingline Loans, and may request the issuance of Letters of Credit (in each case subject to clause (b) below), solely for general corporate purposes (including, without limitation, for Permitted Acquisitions and, in the case of Letters of Credit, for the back-up or replacement of existing letters of credit), (b) the Lux Borrower will use the proceeds of the Original Term Loans made on the Closing Date to finance (i) directly or indirectly, the prompt payment by Borrower Representative of the Transaction Dividend (including by making the Intercompany Proceeds Loan, with the proceeds thereof to be promptly applied by the Borrower Representative towards payment of the Transaction Dividend) and (ii) for the general corporate purposes of the Borrowers and their subsidiaries (including for the payment of Transaction Costs, solely to the extent relating to the Loan Documents and/or the Credit Facilities), in an aggregate amount not to exceed $250.0 million, (c) the Lux Borrower will use the proceeds of the Initial Euro Term Loans for the general corporate purposes of the Borrowers and their subsidiaries (including for the payment of any fees and expenses incurred in connection with the First Amendment or any of the transactions contemplated thereby), (d) the Lux Borrower will use the proceeds of 2017 Replacement Term Loans incurred on the Second Amendment Effective Date to replace and refinance in full all the Initial Term Loans outstanding immediately prior to the closing on the Second Amendment Effective Date, together with all accrued and unpaid interest thereon and to pay the fees and expenses in connection with the transactions contemplated by the Second Amendment, and for the general corporate purposes of the Borrowers and their subsidiaries and (e) the Lux Borrower will use the proceeds of 2021 Replacement Term Loans incurred on the Third Amendment Effective Date (x) to replace and refinance in full all the 2017 Replacement Term Loans outstanding immediately prior to the closing on the Third Amendment Effective Date, together with all accrued and unpaid interest thereon and to pay the fees and expenses in connection with the transactions contemplated by the Third Amendment,
and (y) to the extent any such proceeds remain after application pursuant to preceding clause (x), for working capital and other general corporate purposes of the Borrowers and their subsidiaries.
Section 3.18 Senior Debt. The Obligations constitute “Senior Debt” (or the equivalent thereof) under the documentation governing or evidencing any Indebtedness in excess of the Threshold Amount of any Loan Party permitted to be incurred hereunder constituting Indebtedness that is subordinated in right of payment to the Obligations.
Section 3.19 Economic and Trade Sanctions and Anti-Corruption Laws.
(a) (i) None of Holdings, the Borrowers nor any of the Borrowers’ Restricted Subsidiaries nor, to the knowledge of any Borrower, any director, officer, agent, employee or Affiliate of any of the foregoing is (A) the subject of any U.S. sanctions administered or enforced by the Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”) or the U.S. State Department, the United Nations, the European Union, Her Majesty’s Treasury, or other relevant sanctions authority (collectively, “Sanctions”), or (B) located, organized or resident in a country, region or territory that is, or whose government is, the subject of Sanctions (currently Cuba, Iran, North Korea, Syria and Crimea); and (ii) no Borrower will directly or indirectly, use the proceeds of the Loans or Letters of Credit or lend, contribute, or otherwise make available such proceeds to any Person, for the purpose of financing the activities of or with any Person, or in any country or territory, that currently is, or whose government is, the subject of any Sanctions, except to the extent licensed or otherwise approved, or in any other manner that will result in a violation of Sanctions by any Person (including any Person participating in the Loans or other Credit Extensions, whether as lender, advisor, investor or otherwise).
(b) To the extent applicable, each Loan Party is in compliance in all material respects with (i) each of the foreign assets control regulations of the U.S. Treasury Department (31 CFR, Subtitle B, Chapter V), and any other enabling legislation or executive order relating thereto and (ii) the USA PATRIOT Act.
(c) No part of the proceeds of any Loan or any Letter of Credit will be used, directly or, to the knowledge of any Borrower, indirectly, for any payments to any governmental official or employee, political party, official of a political party, candidate for political office, or anyone else acting in an official capacity, in order to improperly obtain, retain or direct business or obtain any improper advantage, in violation of the U.S. Foreign Corrupt Practices Act of 1977 (the “FCPA”) or any other applicable anti-bribery law.
(d) The representations and undertakings in this Section 3.19 shall only be given by Intermediate Holding and the Borrowers and shall, except in respect of the U.S. Co-Borrower, only apply for the benefit of any Lender or the Administrative Agent to the extent that giving, complying with or receiving the benefit of (as applicable) such representations and undertakings does not result in any violation of Regulation (EU) No 2271/96 of the European Parliament and of the Council of 22 November 1996 protecting against the effects of the extraterritorial application of legislation adopted by a third country, and actions based on or resulting therefrom.
Section 3.20 Center of Main Interests and Establishments. For purposes of the COMI Regulation, the center of main interest (as that term is used in Article 3(1) of the COMI Regulation) of each Loan Party whose Original Jurisdiction is a member state of the European Union is situated in its Original Jurisdiction and it has no “establishment” (as that term is used in Article 2(10) of the COMI Regulation) in any other jurisdiction.
Section 3.21 Pensions. Except in relation to (i) any arrangement which provides only benefits on death which are wholly insured and (ii) RB Pharmaceuticals Limited in relation to the Reckitt Benckiser Pension Fund, no Parent Company nor any of its subsidiaries is or has at any time been an employer (for the purposes of sections 38 to 51 of the Pensions Act 2004) of a UK registered occupational pension scheme which is not a money purchase scheme (both terms as defined in the Pensions Schemes Act 1993).
Section 3.22 Luxembourg Regulatory Matters. The head office (administration centrale) and (for the purposes of the COMI Regulation) the center of main interests (centre des intérets principaux) of the Lux Borrower in Luxembourg is located at the place of its registered office (siège statutaire) in Luxembourg. The Lux Borrower (i) does not carry out (a) any activity in the financial sector on a professional basis (as referred to in the Luxembourg law dated 5 April 1993 on the financial sector, as amended from time to time) or (b) any activity requiring the granting of a business license under the Luxembourg law dated 2 September 2011 governing the access to the professions of skilled craftsman, tradesman, manufacturer, as well as to certain liberal professions, (ii) complies with all requirements of the Luxembourg law of 31 may 1999 on the domiciliation of companies, as amended, and all related regulations, (iii) has not filed and, to the best of its knowledge, no Person has filed a request with any competent court seeking that the Lux Borrower be declared subject to bankruptcy (faillite), general settlement or composition with creditors (concordat préventif de faillite) controlled management (gestion controlee), reprieve from payment (sursis de paiement), judicial or voluntary liquidation (liquidation judiciaire ou volontaire), such other proceedings listed at Article 13, items 2 to 12, and Article 14 of the Luxembourg Act dated December 19, 2002 on the Register of Commerce and Companies, on Accounting and on Annual Accounts of the Companies (as amended from time to time), (and which include foreign court decision as to faillite, concordat or analogous procedures according to the COMI Regulation), (iv) is not, and will not, as a result of its entry into the Loan Documents or the performance of its obligations thereunder, be in a state of cessation of payments (cessation des paiements), or be deemed to be in such state, and has not lost, and will not, as a result of its entry into the Loan Documents or the performance of its obligations thereunder, lose its creditworthiness (ébranlement de crédit), or be deemed to have lost such creditworthiness and is not aware, or may be not reasonably be aware, of such circumstances and (v) is in compliance with any reporting requirements applicable to it pursuant to the to the Central Bank of Luxembourg regulation 2011/8 or Regulation (EU) N°648/2012 of the European Parliament and of the Council dated 4 July 2012 on OTC derivatives, central counterparties and trade repositories, except in each case referred to in (i)(b), (ii) and (v) where the failure to do so, individually or in the aggregate, would not reasonably be expected to result in a Material Adverse Effect.
ARTICLE 4
CONDITIONS
Section 4.01 Closing Date. The obligations of (i) any Lender to make Loans and (ii) any Issuing Bank to issue Letters of Credit shall not become effective until the date on which each of the following conditions is satisfied (or waived in accordance with Section 9.02):
(a) Credit Agreement and Loan Documents. The Administrative Agent (or its counsel) shall have received from each Loan Party party thereto (i) a counterpart signed by each such Loan Party (or written evidence satisfactory to the Administrative Agent (which may include a copy transmitted by facsimile or other electronic method) that such Borrower has signed a counterpart) of (A) this Agreement, (B) the Loan Guaranty and (C) any Promissory Note requested by a Lender at least three Business Days prior to the Closing Date and (ii) a Borrowing Request as required by Section 2.03.
(b) Legal Opinions. The Administrative Agent shall have received a customary written opinion of each of (i) Paul Weiss Rifkind Wharton & Garrison LLP, in its capacity as special counsel for Indivior plc, the Borrowers and the Subsidiary Guarantors, (ii) White & Case LLP in its capacity as English counsel for the Administrative Agent and the Lenders, (iii) Elvinger, Hoss & Prussen, in its capacity as special counsel for Indivior plc, the Borrowers and the Subsidiary Guarantors relating to the capacity of the Lux Borrower to enter into the Loan Documents described in clause (a) above to which it is a party, the absence of stamp duty or filing requirements, the validity and enforceability of the choice of law and choice of jurisdiction clauses, the recognition of foreign judgments relating to such Loan Documents and other related matters and (iv) NautaDutilh Avocats Luxembourg S.à r.l., in its capacity as Luxembourg counsel for the Administrative Agent and the Lenders, in each case with respect to the Loan Documents described in clause (a) above, dated the Closing Date and addressed to the Administrative Agent, the Lenders and each Issuing Bank and in form and substance reasonably satisfactory to the Administrative Agent.
(c) Financial Statements. The Administrative Agent shall have received (i) an audited consolidated balance sheet for each of the three most recent fiscal years and related audited consolidated statements of income, stockholders’ equity and cash flows of the Borrower Representative and its Subsidiaries, for the three most recently completed fiscal years, in each case ended at least 90 days before the Closing Date; (ii) unaudited consolidated balance sheets and related statements of income, stockholders’ equity and cash flows of the Borrower Representative and its subsidiaries, for each subsequent fiscal quarter ended at least 45 days before the Closing Date (other than any fiscal fourth quarter) after the most recent fiscal period for which audited financial statements have been provided pursuant to clause (i) hereof, in each case prepared in accordance with GAAP and (iii) detailed projected consolidated financial statements of the Borrower Representative and its subsidiaries for at least the five fiscal years ending after the Closing Date, prepared after giving effect to the Transactions as if the Transactions had occurred at the beginning of such period.
(d) Pro Forma Financial Statements. The Administrative Agent shall have received a pro forma consolidated balance sheet and related pro forma consolidated statement of income of the Borrower Representative and its subsidiaries (based on the financial statements referred to in paragraph (c) above) as of and for the twelve-month period ending on the last day of the most recently completed four-fiscal quarter period ended at least 45 days before the Closing Date, prepared after giving effect to the Transactions as if the Transactions had occurred as of such date (in the case of such balance sheet) or at the beginning of such period (in the case of such statement of income).
(e) Closing Certificates; Certified Charters; Good Standing Certificates. (i) The Administrative Agent shall have received (A) a certificate of Indivior plc and each Loan Party (other than the Lux Borrower), dated the Closing Date and executed by a secretary, assistant secretary or other senior officer (as the case may be) thereof, which shall (1) certify that attached thereto is a true and complete copy of the resolutions or written consents of its shareholders, board of directors (or if applicable, committee of the board of directors), board of managers, members and/or other governing body approving the terms of and authorizing the execution, delivery and performance of the Loan Documents to which it is a party and, in the case of the Borrowers, the borrowings and other credit extensions hereunder, and that such resolutions or written consents have not been modified, rescinded or amended and are in full force and effect, (2) identify by name and title and bear the signatures of the officers, managers, directors or authorized signatories of Indivior plc or such Loan Party authorized to sign the Loan Documents to which it is a party on the Closing Date and which it is required to execute pursuant to Section 5.16, (3) certify (x) that attached thereto is a true and complete copy of the certificate or articles of incorporation or organization (or memorandum of association or other equivalent thereof) of Indivior plc or such Loan Party certified by the relevant authority of the jurisdiction of organization of Indivior plc or such Loan Party and a true and correct copy of its by-laws or operating, management, partnership or similar
agreement and (y) that such documents or agreements have not been amended (except as otherwise attached to such certificate and certified therein as being the only amendments thereto as of such date) and (4) in the case of an English Loan Party, confirm that the borrowing or guaranteeing or securing the borrowings and other credit extensions contemplated by the Loan Documents would not cause any borrowing, guarantee, security or similar limit binding on such English Loan Party to be exceeded and (B) a good standing (or equivalent) certificate as of a recent date for Indivior plc or such Loan Party from its jurisdiction of organization (to the extent such concept, or an equivalent concept, exists in such jurisdiction).
(ii) The Administrative Agent shall have received, in respect of the Lux Borrower, a manager’s certificate dated as of the Closing Date and signed by a manager of the Lux Borrower, certifying the following items: (i) an up-to-date copy of the articles of association of the Lux Borrower; (ii) an electronic true and complete certified excerpt of the Luxembourg Companies Register pertaining to the Lux Borrower dated as of the Closing Date; (iii) an electronic certified true and complete certificate of non-registration of judgment (certificat de non-inscription d’une décision judiciaire) dated as of the Closing Date issued by the Luxembourg Companies Register and reflecting the situation no more than one Business Day prior to the Closing Date certifying that, as of the date of the day immediately preceding such certificate, the Lux Borrower has not been declared bankrupt (en faillite), and that it has not applied for general settlement or composition with creditors (concordat préventif de faillite), controlled management (gestion contrôlée), or reprieve from payment (sursis de paiement), judicial or voluntary liquidation (liquidation judiciaire ou volontaire), such other proceedings listed at Article 13, items 4 to 8, 11 and 13 of the Luxembourg Act dated December 19, 2002 on the Register of Commerce and Companies, on Accounting and on Annual Accounts of the Companies (as amended from time to time), (and which include foreign court decisions as to faillite, concordat or analogous procedures according to Council Regulation (EC) n°1346/2000 of May 29, 2000 on insolvency proceedings), (iv) true, complete and up-to-date board resolutions approving the entry by the Lux Borrower into, among others, the Loan Documents; and (v) a true and complete specimen of signatures for each of the directors or authorized signatories having executed for and on behalf of the Lux Borrower respectively the Loan Documents.
(f) Representations and Warranties. The Specified Representations shall be true and correct in all material respects on and as of the Closing Date; provided that in the case of any Specified Representation which expressly relates to a given date or period, such representation and warranty shall be true and correct in all material respects as of the respective date or for the respective period, as the case may be.
(g) Fees. Prior to or substantially concurrently with the funding of the Original Term Loans hereunder, the Administrative Agent shall have received (i) all fees required to be paid by any Borrower or any Affiliate thereof on the Closing Date pursuant to the Fee Letter and (ii) all expenses required to be paid by the Borrowers for which invoices have been presented at least three Business Days prior to the Closing Date or such later date to which the Borrowers may agree (including the reasonable fees and expenses of legal counsel), in each case on or before the Closing Date, which amounts may be offset against the proceeds of the Loans.
(h) No Default. On the Closing Date, no Specified Event of Default is continuing or will result from the making of any Loans or the issuance of any Letters of Credit on such date.
(i) Solvency. The Administrative Agent shall have received a certificate dated as of the Closing Date in substantially the form of Exhibit M from the chief financial officer (or other officer with reasonably equivalent responsibilities) of the Borrower Representative certifying as to the matters set
forth therein (or, at the Borrower Representative’s option, a solvency opinion from an independent investment bank or valuation firm of nationally recognized standing in form and substance satisfactory to the Arrangers).
(j) Perfection Certificate. The Administrative Agent shall have received a duly completed Perfection Certificate dated the Closing Date and signed by a Borrower Representative, together with all attachments contemplated thereby.
(k) Transactions. (i) The Administrative Agent shall have received a certificate from the chief financial officer of Borrower Representative confirming that the completion of the Demerger (other than the RB Reorganization, to the extent not required to be consummated prior to or concurrently with the initial funding under the Term Facility under clause (ii) below) will occur in accordance with the Steps Plan and the Demerger Documents substantially concurrently with, or not later than eight Business Days following, the first extension of credit under the Term Facility.
(ii) Prior to or concurrently with the initial funding under the Term Facility, the RB Reorganization (to the extent described in Steps 1 through 8 of the Steps Plan) shall have been consummated in accordance with the terms and conditions of the Steps Plan and the Demerger Documents, and neither the Steps Plan, nor any Demerger Document, shall have been altered, amended or otherwise changed or supplemented (including by filing any additional or supplemental prospectus) or any provision or condition therein waived, and neither Indivior plc nor any Affiliate thereof shall have consented to any action which would require the consent of Indivior plc or such Affiliate under the Steps Plan or any Demerger Document, if such alteration, amendment, change, supplement, waiver or consent (or the circumstances giving rise thereto) would require publication of a an additional or supplementary prospectus, in any such case without the prior written consent of the Arrangers (such consent not to be unreasonably withheld).
(l) USA PATRIOT Act. No later than three Business Days in advance of the Closing Date, the Administrative Agent shall have received all documentation and other information reasonably requested by any Lender that is party hereto on the Closing Date in writing with respect to any Loan Party at least ten days in advance of the Closing Date, which documentation or other information is required by regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including the USA PATRIOT Act.
(m) Process Agent. The Arrangers shall have received a copy of a letter appointing a process agent reasonably acceptable to the Arrangers as process agent for each Borrower and Guarantor not organized under the laws of the United States or any State thereof.
(n) Officer’s Certificate. The Administrative Agent shall have received a certificate signed by a Responsible Officer or director of the Borrower Representative certifying as of the Closing Date to the matters set forth in Section 4.01(f) and (h).
(o) Absence of Other Indebtedness. On the Closing Date, after giving effect to the initial borrowings under the Term Facility, none of the Borrower Representative or any of its subsidiaries shall have any third party Indebtedness for borrowed money other than (i) the Obligations, (ii) ordinary course capital leases, purchase money indebtedness, equipment financings and surety bonds and (iii) other indebtedness described on Schedule 6.01.
(p) Extensions of Credit Lawful. As at the date on which the initial borrowings under the Term Facility are made, it is not unlawful in any applicable jurisdiction for a Lender to perform any of its obligations as contemplated herein or to fund or maintain its participation in any such advance.
(q) Dispositions. No Disposition of all or substantially all of the assets of Indivior plc and its subsidiaries shall have occurred.
(r) Pensions. The Administrative Agent (or its counsel) shall have received written evidence satisfactory to the Administrative Agent that the Flexible Apportionment Arrangement has been executed by RB Pharmaceuticals Limited, the Trustees of the Reckitt Benckiser Pension Fund and Reckitt Benckiser Healthcare (UK) Limited.
For purposes of determining whether the conditions specified in this Section 4.01 have been satisfied on the Closing Date, by funding the Loans hereunder, the Administrative Agent and each Lender that has executed this Agreement (or an Assignment and Assumption on the Closing Date) shall be deemed to have consented to, approved or accepted, or to be satisfied with, each document or other matter required hereunder to be consented to or approved by or acceptable or satisfactory to the Administrative Agent or such Lender, as the case may be.
Section 4.02 Each Credit Extension. After the Closing Date, the obligation of each Revolving Lender to make a Credit Extension (which, for the avoidance of doubt, shall not include any Incremental Loans advanced in connection with a Limited Condition Acquisition to the extent not otherwise required by the Lenders of such Incremental Loans) is subject to the satisfaction of the following conditions:
(a) (i) In the case of a Borrowing, the Administrative Agent shall have received a Borrowing Request as required by Section 2.03, (ii) in the case of the issuance of a Letter of Credit, the applicable Issuing Bank and the Administrative Agent shall have received a notice requesting the issuance of such Letter of Credit as required by Section 2.05(b) or (iii) in the case of a Borrowing of Swingline Loans, the Swingline Lender and the Administrative Agent shall have received a request as required by Section 2.04(a).
(b) The representations and warranties of the Loan Parties set forth in this Agreement and the other Loan Documents shall be true and correct in all material respects on and as of the date of any such Credit Extension with the same effect as though such representations and warranties had been made on and as of the date of such Credit Extension; provided that to the extent that any representation and warranty specifically refers to a given date or period, it shall be true and correct in all material respects as of such date or for such period.
(c) At the time of and immediately after giving effect to the applicable Credit Extension, no Event of Default or Default exists.
Each Credit Extension after the Closing Date shall be deemed to constitute a representation and warranty by the Borrowers on the date thereof as to the matters specified in paragraphs (b) and (c) of this Section 4.02.
ARTICLE 5
AFFIRMATIVE COVENANTS
From the Closing Date until the date that all the Revolving Credit Commitments and any Additional Commitments have expired or terminated and the principal of and interest on each Loan and all fees, expenses and other amounts payable under any Loan Document (other than contingent indemnification obligations for which no claim or demand has been made) have been paid in full in Cash and all Letters of Credit have expired or have been terminated (or have been collateralized or back-stopped by a letter of credit or otherwise in a manner reasonably satisfactory to the Administrative Agent and the Issuing Banks) and all LC Disbursements have been reimbursed (such date, the “Termination Date”), each of Intermediate Holdings and each Borrower hereby covenants and agrees with the Administrative Agent and the Lenders that:
Section 5.01 Financial Statements and Other Reports. The Borrower Representative will deliver to the Administrative Agent for delivery to each Lender:
(a) Quarterly Financial Statements. Within 45 days (or 60 days in the case of the first Fiscal Quarter ending after the Closing Date) after the end of each of the first three Fiscal Quarters of each Fiscal Year, commencing with the Fiscal Quarter ending March 31, 2015, the consolidated balance sheet of Borrower Representative as at the end of such Fiscal Quarter and the related consolidated statements of income and cash flows of Borrower Representative for such Fiscal Quarter and for the period from the beginning of the then current Fiscal Year to the end of such Fiscal Quarter, and setting forth, in reasonable detail, in comparative form the corresponding figures for the corresponding periods of the previous Fiscal Year, all in reasonable detail, together with a Responsible Officer Certification with respect thereto and a Narrative Report with respect thereto;
(b) Annual Financial Statements. Within 120 days after the end of each Fiscal Year ending thereafter, (i) the consolidated balance sheet of Borrower Representative as at the end of such Fiscal Year and the related consolidated statements of income, stockholders’ equity and cash flows of the Borrower Representative for such Fiscal Year and setting forth, in reasonable detail, in comparative form the corresponding figures for the previous Fiscal Year and (ii) with respect to such consolidated financial statements, (A) a report thereon of an independent certified public accountant of recognized national standing (which report shall be unqualified as to “going concern” and scope of audit (except for any such qualification pertaining to the maturity of any Credit Facility occurring within 12 months of the relevant audit), and shall state that such consolidated financial statements fairly present, in all material respects, the consolidated financial position of the Borrowers as at the dates indicated and its income and cash flows for the periods indicated in conformity with GAAP and (B) a Narrative Report with respect to such Fiscal Year;
(c) Compliance Certificate. Together with each delivery of financial statements of the Borrower Representative pursuant to Sections 5.01(a) and 5.01(b), (i) a duly executed and completed Compliance Certificate (A) certifying that no Default or Event of Default exists (or if a Default or Event of Default exists, describing in reasonable detail such Default or Event of Default and the steps being taken to cure, remedy or waive the same), (B) in the case of financial statements delivered pursuant to Section 5.01(b), setting forth reasonably detailed calculations of (x) Excess Cash Flow of the Borrowers and their Restricted Subsidiaries for each Fiscal Year beginning with the financial statements for the Fiscal Year ending December 31, 2015, (y) Net Proceeds in respect of any Prepayment Asset Sale or Net Insurance/Condemnation Proceeds received during the applicable period by or on behalf of any Borrower or any of the Restricted Subsidiaries subject to prepayment pursuant to Section 2.11(b), and the portion of such Net Proceeds that have been invested or are intended to be reinvested in accordance with Section
2.11(b)(ii) and (z) in the case of financial statements delivered pursuant to Sections 5.01(a) and 5.01(b), setting forth reasonably detailed calculations of Consolidated Total Assets, the Available Amount and the Available Excluded Contribution Amount as of the last day of the Fiscal Quarter or Fiscal Year, as the case may be, covered by such financial statements or stating that there has been no change to such amounts since the date of delivery of the last Compliance Certificate and (C) setting forth in reasonable detail calculations necessary for determining compliance with Section 6.14 and (ii) (A) a summary of the pro forma adjustments necessary to eliminate the accounts of Unrestricted Subsidiaries (if any) from such financial statements and (B) a list identifying each subsidiary of the Borrowers as a Restricted Subsidiary or an Unrestricted Subsidiary as of the date of delivery of such Compliance Certificate or confirming that there is no change in such information since the later of the Closing Date and the date of the last such list;
(d) Notice of Change in Beneficial Ownership Information. Promptly upon any Responsible Officer of any Borrower obtaining knowledge of any change in the information provided in any Beneficial Ownership Certification (if applicable) that would result in a change to the list of beneficial owners identified in parts (c) or (d) of such certification.
(e) Notice of Default. Promptly upon any Responsible Officer of any Borrower obtaining knowledge of (i) any Default or Event of Default or (ii) the occurrence of any event or change that has caused or evidences or would reasonably be expected to cause or evidence, either individually or in the aggregate, a Material Adverse Effect, a reasonably-detailed notice specifying the nature and period of existence of such condition, event or change and what action the Borrowers have taken, are taking and propose to take with respect thereto;
(f) Notice of Litigation. Promptly upon any Responsible Officer of a Borrower obtaining knowledge of (i) the institution of, or threat of, any Adverse Proceeding not previously disclosed in writing by a Borrower to the Administrative Agent, or (ii) any material development in any Adverse Proceeding that, in the case of either of clause (i) or (ii), could reasonably be expected to have a Material Adverse Effect, written notice thereof from such Borrower together with such other non-privileged information as may be reasonably available to the Loan Parties to enable the Lenders to evaluate such matters;
(g) ERISA. Promptly upon any Responsible Officer of a Borrower becoming aware of the occurrence of any ERISA Event that could reasonably be expected to have a Material Adverse Effect, a written notice specifying the nature thereof;
(h) Financial Plan. As soon as available and in any event no later than 90 days after the beginning of each Fiscal Year, commencing in respect of the Fiscal Year ending December 31, 2015, a consolidated plan and financial forecast for each Fiscal Quarter of such Fiscal Year, including a forecasted consolidated statement of the Borrower Representative’s financial position and forecasted consolidated statements of income and cash flows of the Borrowers for such Fiscal Year, prepared in reasonable detail setting forth, with appropriate discussion, the principal assumptions on which such financial plan is based in a manner consistent with the level of detail provided in the Projections;
(i) Information Regarding Collateral. Prompt (and in any event, within 30 days of the relevant change) written notice of any change (i) in any Loan Party’s legal name, (ii) in any Loan Party’s type of organization, (iii) in any Loan Party’s jurisdiction of organization or (iv) in any Loan Party’s organizational identification number, in each case to the extent such information is necessary to enable the Administrative Agent to perfect or maintain the perfection and priority of its security interest in the Collateral of the relevant Loan Party, together with a certified copy of the applicable Organizational Document reflecting the relevant change;
(j) Annual Collateral Verification. Together with the delivery of each Compliance Certificate provided with the financial statements required to be delivered pursuant to Section 5.01(b), a Perfection Certificate Supplement;
(k) Certain Reports. Promptly upon their becoming available and without duplication of any obligations with respect to any such information that is otherwise required to be delivered under the provisions of any Loan Document, copies of (i) all financial statements, reports, notices and proxy statements sent or made available generally by Indivior plc or its applicable Parent Company to its security holders acting in such capacity and (ii) all regular and periodic reports and all registration statements (other than on Form S-8 or a similar form) and prospectuses, if any, filed by Indivior plc or its applicable Parent Company with any securities exchange or with the SEC or any analogous governmental or private regulatory authority with jurisdiction over matters relating to securities; and
(l) Other Information. Such other certificates, reports and information (financial or otherwise) as the Administrative Agent may reasonably request from time to time in connection with the financial condition or business of Holdings, the Borrowers and their Restricted Subsidiaries or that for purposes of compliance with applicable “know your customer” requirements under the USA PATRIOT Act, the Beneficial Ownership Regulation (if applicable) or other applicable anti-money laundering laws.
Documents required to be delivered pursuant to this Section 5.01 may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date (i) on which Indivior plc or any Borrower (or a representative thereof) (x) posts such documents or (y) provides a link thereto on the website of Indivior plc on the Internet at the website address listed on Schedule 9.01; provided that, other than with respect to items required to be delivered pursuant to Section 5.01(k), the Borrowers shall promptly notify (which may be by facsimile or electronic mail) the Administrative Agent of the posting of any such documents on the website of Indivior plc (or its applicable subsidiary) and provide to the Administrative Agent by electronic mail electronic versions (i.e., soft copies) of such documents; (ii) on which such documents are delivered by any Borrower to the Administrative Agent for posting on behalf of the Borrowers on Intralinks, SyndTrak or another relevant website, if any, to which each Lender and the Administrative Agent have access (whether a commercial, third-party website or whether sponsored by the Administrative Agent); (iii) on which executed certificates or other documents are faxed to the Administrative Agent (or electronically mailed to an address provided by the Administrative Agent); or (iv) in respect of the items required to be delivered pursuant to Section 5.01(k) in respect of information filed by Indivior plc or its applicable Parent Company with any securities exchange or with the SEC or any analogous governmental or private regulatory authority with jurisdiction over matters relating to securities (including, without limitation, the Financial Conduct Authority), on which such items have been made available on the SEC website or the website of the relevant analogous governmental or private regulatory authority or securities exchange.
Notwithstanding the foregoing, the obligations in paragraphs (a), (b) and (h) of this Section 5.01 may be satisfied with respect to any financial statements of Indivior plc by furnishing (A) the applicable financial statements of any Parent Company of Indivior plc or (B) Indivior plc’s (or any other Parent Company’s), as applicable, Form 10-K or 10-Q, as applicable, filed with the SEC or any securities exchange, in each case, within the time periods specified in such paragraphs; provided that, with respect to each of clauses (A) and (B), (i) to the extent such financial statements relate to any Parent Company, such financial statements shall be accompanied by consolidating information that summarizes in reasonable detail the differences between the information relating to such Parent Company, on the one hand, and the information relating to the Borrowers and their subsidiaries on a standalone basis, on the other hand, which consolidating information shall be certified by a Responsible Officer of Indivior plc as having been fairly presented in all material respects and (ii) to the extent such statements are in lieu of
statements required to be provided under Section 5.01(b), such statements shall be accompanied by a report and opinion of an independent registered public accounting firm of nationally recognized standing, which report and opinion shall satisfy the applicable requirements set forth in Section 5.01(b).
Each Borrower hereby acknowledges that (a) the Administrative Agent and/or the Arrangers will make available to the Lenders materials and/or information provided by or on behalf of Indivior plc and/or the Borrowers hereunder (collectively, “Borrower Materials”) by posting Borrower Materials on IntraLinks or another similar electronic system (the “Platform”) and (b) certain of the Lenders (each, a “Public Lender”) may have personnel who do not wish to receive material non-public information with respect to Indivior plc, the Borrowers or their respective subsidiaries, or the respective securities of any of the foregoing, and who may be engaged in investment and other market-related activities with respect to such Persons’ securities. Each Borrower hereby agrees that (w) all Borrower Materials that are to be made available to Public Lenders shall be clearly and conspicuously marked “PUBLIC” which, at a minimum, shall mean that the word “PUBLIC” shall appear prominently on the first page thereof; (x) by marking Borrower Materials “PUBLIC,” each Borrower shall be deemed to have authorized the Administrative Agent, the Arrangers and the Lenders to treat such Borrower Materials as not containing any material non-public information with respect to Indivior plc, each Borrower or their respective securities for purposes of U.S. Federal, state and foreign securities laws (provided, however, that to the extent such Borrower Materials constitute Information, they shall be treated as set forth in Section 9.13); (y) all Borrower Materials marked “PUBLIC” are permitted to be made available through a portion of the Platform designated “Public Side Information”; and (z) the Administrative Agent and the Arrangers shall be entitled to treat any Borrower Materials that are not marked “PUBLIC” as being suitable only for posting on a portion of the Platform not designated “Public Side Information”.
Section 5.02 Existence. Except as otherwise permitted under Section 6.07, each Borrower will, and each Borrower will cause each of Holdings and their Restricted Subsidiaries to, at all times preserve and keep in full force and effect its existence and all rights, franchises, licenses and permits material to its business except, other than with respect to the preservation of the existence of Holdings and the Borrowers, to the extent that the failure to do so could not reasonably be expected to result in a Material Adverse Effect; provided that neither Holdings, nor any Borrower nor any of the Borrowers’ Restricted Subsidiaries shall be required to preserve any such existence (other than with respect to the preservation of existence of Holdings and the Borrowers), right, franchise, license or permit if a Responsible Officer of such Person or such Person’s board of directors (or similar governing body) determines that the preservation thereof is no longer desirable in the conduct of the business of such Person, and that the loss thereof is not disadvantageous in any material respect to such Person or to the Lenders.
Section 5.03 Payment of Taxes. Each Borrower will, and each Borrower will cause each of their Restricted Subsidiaries to, pay all Taxes imposed upon it or any of its properties or assets or in respect of any of its income or businesses or franchises before any penalty or fine accrues thereon; provided that no such Tax need be paid if (a) it is being contested in good faith by appropriate proceedings promptly instituted and diligently conducted, so long as (i) adequate reserves or other appropriate provisions, as are required in conformity with GAAP, have been made therefor, and (ii) in the case of a Tax which has or may become a Lien against any of the Collateral, such contest proceedings conclusively operate to stay the sale of any portion of the Collateral to satisfy such Tax or (b) failure to pay or discharge the same could not reasonably be expected to result in a Material Adverse Effect.
Section 5.04 Maintenance of Properties. Each Borrower will, and will cause each of its Restricted Subsidiaries to, maintain or cause to be maintained in good repair, working order and condition, ordinary wear and tear and casualty and condemnation excepted, all property reasonably necessary to the normal conduct of business of the Borrowers and their Restricted Subsidiaries and from
time to time will make or cause to be made all needed and appropriate repairs, renewals and replacements thereof except as expressly permitted by this Agreement or where the failure to maintain such properties or make such repairs, renewals or replacements could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
Section 5.05 Insurance. Except where the failure to do so would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, each Borrower will maintain or cause to be maintained, with financially sound and reputable insurers, such insurance coverage with respect to liabilities, losses or damage in respect of the assets, properties and businesses of the Borrowers and their Restricted Subsidiaries as may customarily be carried or maintained under similar circumstances by Persons of established reputation engaged in similar businesses, in each case in such amounts (giving effect to self-insurance), with such deductibles, covering such risks and otherwise on such terms and conditions as shall be customary for such Persons. Each Borrower will also maintain, or cause to be maintained, flood insurance coverage with respect to each Flood Hazard Property, in each case in compliance with the Flood Insurance Laws (where applicable). Each of the foregoing policies of insurance shall (i) name the Administrative Agent on behalf of the Secured Parties as an additional insured thereunder as its interests may appear and (ii) to the extent available from the relevant insurance carrier, in the case of each casualty insurance policy (excluding any business interruption insurance policy), contain a loss payable clause or endorsement that names the Administrative Agent, on behalf of the Secured Parties as the loss payee thereunder and, to the extent available, provide for at least 30 days’ prior written notice to the Administrative Agent of any modification or cancellation of such policy (or 10 days’ prior written notice in the case of the failure to pay any premiums thereunder).
Section 5.06 Inspections. Each Borrower will, and will cause each of its Restricted Subsidiaries to, permit any authorized representative designated by the Administrative Agent to visit and inspect any of the properties of such Borrower and any of its Restricted Subsidiaries at which the principal financial records and executive officers of the applicable Person are located, to inspect, copy and take extracts from its and their respective financial and accounting records, and to discuss its and their respective affairs, finances and accounts with its and their Responsible Officers and independent public accountants (provided that such Borrower (or any of its subsidiaries) may, if it so chooses, be present at or participate in any such discussion), all upon reasonable notice and at reasonable times during normal business hours; provided that, excluding such visits and inspections during the continuation of an Event of Default, (x) only the Administrative Agent on behalf of the Lenders may exercise the rights of the Administrative Agent and the Lenders under this Section 5.06, (y) the Administrative Agent shall not exercise such rights more often than one time during any calendar year and (z) only one such time per calendar year shall be at the expense of the Borrowers; provided further that when an Event of Default exists, the Administrative Agent (or any of its representatives or independent contractors) may do any of the foregoing at the expense of Borrowers at any time during normal business hours and upon reasonable advance notice; provided further that, notwithstanding anything to the contrary herein, neither any Borrower nor any Restricted Subsidiary shall be required to disclose, permit the inspection, examination or making of copies of or taking abstracts from, or discuss any document, information, or other matter (i) that constitutes non-financial trade secrets or non-financial proprietary information of any Borrower or its subsidiaries and/or any of its customers and/or suppliers, (ii) in respect of which disclosure to the Administrative Agent or any Lender (or any of their respective representatives or contractors) is prohibited by applicable law or (iii) that is subject to attorney-client or similar privilege or constitutes attorney work product.
Section 5.07 Maintenance of Book and Records. Each Borrower will, and will cause each of its Restricted Subsidiaries to, maintain proper books of record and account containing entries of all material financial transactions and matters involving the assets and business of the Borrowers and their
Restricted Subsidiaries that are full, true and correct in all material respects and permit the preparation of consolidated financial statements in accordance with GAAP.
Section 5.08 Compliance with Laws. Each Borrower will, and will cause Holdings and each of their Restricted Subsidiaries to, comply with the requirements of (i) OFAC and the FCPA and (ii) all applicable laws, rules, regulations and orders of any Governmental Authority (including ERISA, all Environmental Laws and the USA PATRIOT Act), except, in the case of clause (ii), to the extent the failure to so comply could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
Section 5.09 Environmental.
(a) Environmental Disclosure. Each Borrower will deliver to the Administrative Agent:
(i) as soon as practicable following receipt thereof, copies of all non-privileged environmental audits, investigations, analyses and reports of any kind or character, whether prepared by personnel of such Borrower or any of its Restricted Subsidiaries or by independent consultants, governmental authorities or any other Persons, with respect to significant environmental matters at the applicable Borrower’s real property or with respect to any Environmental Claims that, in each case might reasonably be expected to have a Material Adverse Effect;
(ii) promptly upon the occurrence thereof, written notice describing in reasonable detail (A) any Release required to be reported by such Borrower or any of its Restricted Subsidiaries to any federal, state or local governmental or regulatory agency under any applicable Environmental Laws that could reasonably be expected to have a Material Adverse Effect, (B) any remedial action taken by such Borrower or any of its Restricted Subsidiaries or any other Person of which such Borrower or any of its Restricted Subsidiaries has knowledge in response to (1) any Hazardous Materials Activity the existence of which has a reasonable possibility of resulting in one or more Environmental Claims having, individually or in the aggregate, a Material Adverse Effect or (2) any Environmental Claim that, individually or in the aggregate, has a reasonable possibility of resulting in a Material Adverse Effect and (C) discovery by such Borrower of any occurrence or condition on any real property adjoining or in the vicinity of any Facility that reasonably could be expected to have a Material Adverse Effect;
(iii) as soon as practicable following the sending or receipt thereof by such Borrower or any of its Restricted Subsidiaries, a copy of any and all written communications with respect to (A) any Environmental Claim that, individually or in the aggregate, has a reasonable possibility of giving rise to a Material Adverse Effect, (B) any Release required to be reported by such Borrower or any of its Restricted Subsidiaries to any federal, state or local governmental or regulatory agency that reasonably could be expected to have a Material Adverse Effect, and (C) any request made to such Borrower or any of its Restricted Subsidiaries for information from any governmental agency that suggests such agency is investigating whether such Borrower or any of its Restricted Subsidiaries may be potentially responsible for any Hazardous Materials Activity which is reasonably expected to have a Material Adverse Effect;
(iv) prompt written notice describing in reasonable detail (A) any proposed acquisition of stock, assets, or property by such Borrower or any of its Restricted Subsidiaries that could reasonably be expected to expose such Borrower or any of its Restricted Subsidiaries to, or result in, Environmental Claims that could reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect and (B) any proposed action to be taken by such Borrower or any of its Restricted Subsidiaries to modify current operations in a manner that could subject such Borrower or any of its Restricted Subsidiaries to any additional obligations or requirements under any Environmental Law that are reasonably likely to have a Material Adverse Effect; and
(v) with reasonable promptness, such other documents and information as from time to time may be reasonably requested by the Administrative Agent in relation to any matters disclosed pursuant to this Section 5.09(a).
(b) Hazardous Materials Activities, Etc. Each Borrower will, and will cause each of its Restricted Subsidiaries to promptly take, any and all actions necessary to (i) cure any violation of applicable Environmental Laws by such Borrower or its Restricted Subsidiaries, and address with appropriate corrective or remedial action any Release or threatened Release of Hazardous Materials at or from any Facility, in each case, that could reasonably be expected to have a Material Adverse Effect and (ii) make an appropriate response to any Environmental Claim against such Borrower or any of its Restricted Subsidiaries and discharge any obligations it may have to any Person thereunder, in each case, where failure to do so could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
Section 5.10 Designation of Subsidiaries. Any Borrower may at any time after the Closing Date designate any subsidiary as an Unrestricted Subsidiary or any Unrestricted Subsidiary as a Restricted Subsidiary; provided that (i) immediately before and after such designation, no Default or Event of Default exists (including after giving effect to the reclassification of Investments in, Indebtedness of and Liens on the assets of, the applicable Restricted Subsidiary or Unrestricted Subsidiary), (ii) the Borrowers shall be in compliance with Section 6.14 calculated on a Pro Forma Basis after giving effect to such designation (and determined as of the most recently ended Test Period at or prior to such time), (iii) no Subsidiary previously designated as an Unrestricted Subsidiary may be re-designated as an Unrestricted Subsidiary, (iv) as of the date of the designation thereof, no Unrestricted Subsidiary shall own any Capital Stock in any Restricted Subsidiary of any Borrower or hold any Indebtedness of or any Lien on any property of any Borrower or its Restricted Subsidiaries, (v) no subsidiary may be designated as an Unrestricted Subsidiary hereunder if it is a Restricted Subsidiary that Guarantees (or is otherwise treated as a “restricted subsidiary” with respect to) any Incremental Facilities, Incremental Equivalent Debt or Indebtedness permitted under Section 6.01(q), 6.01(w) or 6.01(p) (to the extent relating to Indebtedness initially incurred or pursuant to any of the foregoing, and any subsequent permitted refinancing (or successive permitted refinancing) thereof), in each case above the Threshold Amount and (vi) no Loan Party nor any of their Restricted Subsidiaries shall transfer, or grant any exclusive license in respect of, any material intellectual property to any Unrestricted Subsidiary. The designation of any subsidiary as an Unrestricted Subsidiary shall constitute an Investment by the Borrowers therein at the date of designation in an amount equal to the portion of the fair market value of the net assets of such Restricted Subsidiary attributable to the Borrower Representative’s equity interest therein as reasonably estimated by the Borrower Representative (and such designation shall only be permitted to the extent such Investment is permitted under Section 6.06). The designation of any Unrestricted Subsidiary as a Restricted Subsidiary shall constitute the incurrence or making, as applicable, at the time of designation of any then-existing Investment, Indebtedness or Lien of such Restricted Subsidiary, as applicable; provided that upon a designation of any Unrestricted Subsidiary as a Restricted Subsidiary, the Borrowers shall be deemed to continue to have an Investment in the resulting Restricted Subsidiary in an amount (if positive) equal to (a) the applicable Borrower’s “Investment” in such Restricted Subsidiary at the time of such re-designation, less (b) the portion of the fair market value of the net assets of such Restricted Subsidiary attributable to such Borrower’s equity therein at the time of such re-designation.
Section 5.11 Use of Proceeds. The Revolver Borrower shall use the proceeds of the Revolving Loans to finance the working capital needs and other general corporate purposes of the Borrowers and their subsidiaries (including for capital expenditures, acquisitions, working capital and/or purchase price adjustments, the payment of transaction fees and expenses (in each case, including in connection with the Loan Documents), other Investments, Restricted Payments and any other purpose not prohibited by the terms of the Loan Documents), but excluding, in all cases, any use which would breach Section 5.18. The Borrowers shall use the proceeds of the Swingline Loans made after the Closing Date to finance the working capital needs and other general corporate purposes of the Borrowers and their subsidiaries and any other purpose not prohibited by the terms of the Loan Documents, but excluding, in all cases, any use which would breach Section 5.18. The Lux Borrower shall use proceeds of the Original Term Loans solely to finance (i) directly or indirectly, the prompt payment by Borrower Representative of the Transaction Dividend (including by making the Intercompany Proceeds Loan, with the proceeds thereof to be promptly applied by the Borrower Representative towards payment of the Transaction Dividend) and (ii) general corporate purposes of the Borrowers and their subsidiaries (including for the payment of Transaction Costs, solely to the extent relating to the Loan Documents and/or the Credit Facilities) in an aggregate amount not be exceed $250.0 million. The Lux Borrower shall use the proceeds of the Initial Euro Term Loans for the general corporate purposes of the Borrowers and their subsidiaries (including for the payment of any fees and expenses incurred in connection with the First Amendment or any of the transactions contemplated thereby). The Lux Borrower shall use the proceeds of the 2017 Replacement Term Loans to replace and refinance in full all the Initial Term Loans outstanding immediately prior to the closing on the Second Amendment Effective Date, together with accrued and unpaid interest thereon and to pay fees and expenses in connection with the transactions contemplated by the Second Amendment. The Lux Borrower shall use the proceeds of the 2021 Replacement Term Loans (x) to replace and refinance in full all the 2017 Replacement Term Loans outstanding immediately prior to the closing on the Third Amendment Effective Date, together with accrued and unpaid interest thereon and to pay fees and expenses in connection with the transactions contemplated by the Third Amendment and (y) to the extent any such proceeds remain after application pursuant to preceding clause (x), for working capital and other general corporate purposes of the Borrowers and their subsidiaries. No part of the proceeds of any Loan will be used, whether directly or indirectly, for any purpose that would entail a violation of Regulation T, U or X. The Borrowers shall use the proceeds of the Incremental Term Loans for working capital, capital expenditures and other general corporate purposes of the Borrowers and their subsidiaries (including for Restricted Payments, Investments, Permitted Acquisitions and any other purpose, in each case not prohibited by the terms of the Loan Documents), but excluding, in all cases, any use which would breach Section 5.18.
Section 5.12 Covenant to Guarantee Obligations and Give Security.
(a) Upon (i) the formation or acquisition after the Closing Date of any Restricted Subsidiary, (ii) the designation of any Unrestricted Subsidiary as a Restricted Subsidiary, (iii) any Restricted Subsidiary ceasing to be an Immaterial Subsidiary or (iv) any Restricted Subsidiary that is an Immaterial Subsidiary ceasing to be an Excluded Subsidiary, (x) if the event giving rise to the obligation under this Section 5.12(a) occurs during the first three Fiscal Quarters of any Fiscal Year, on or before the date on which financial statements are required to be delivered pursuant to Section 5.01(a) for the Fiscal Quarter in which the relevant formation, acquisition, designation or cessation occurred or (y) if the event giving rise to the obligation under this Section 5.12(a) occurs during the fourth Fiscal Quarter of any Fiscal Year, on or before the date that is 60 days after the end of such Fiscal Quarter (or, in the cases of clauses (x) and (y), such longer period as the Administrative Agent may reasonably agree); the Borrowers shall (A) cause such Restricted Subsidiary (other than any Excluded Subsidiary), and each Loan Party that is a holder of Capital Stock and/or Material Debt Instruments issued by such Restricted Subsidiary, in each case to comply with the requirements set forth in clause (a) of the definition of “Collateral and Guarantee Requirement” and (B) upon the reasonable request of the Administrative Agent, cause the
relevant Restricted Subsidiary to deliver to the Administrative Agent a signed copy of a customary opinion of counsel for such Restricted Subsidiary, addressed to the Administrative Agent and the other relevant Secured Parties.
(b) Within 90 days after the acquisition by any Loan Party of any Material Real Estate Asset other than any Excluded Asset (or such longer period as the Administrative Agent may reasonably agree), the Borrowers shall cause such Loan Party to comply with the requirements set forth in clause (b) of the definition of “Collateral and Guarantee Requirement”, it being understood and agreed that, with respect to any Material Real Estate Asset owned by any Restricted Subsidiary at the time such Restricted Subsidiary is required to become a Loan Party under Section 5.12(a), such Material Real Estate Asset shall be deemed to have been acquired by such Restricted Subsidiary on the first day of the time period within which such Restricted Subsidiary is required to become a Loan Party under Section 5.12(a).
Notwithstanding anything to the contrary herein or in any other Loan Document, (i) the Administrative Agent may grant extensions of time for the creation and perfection of security interests in, or obtaining of title insurance, legal opinions, surveys or other deliverables with respect to, particular assets or the provision of any Loan Guaranty by any Restricted Subsidiary (in connection with assets acquired, or Restricted Subsidiaries formed or acquired, after the Closing Date) where it reasonably determines, in consultation with the Borrower Representative, that such action cannot be accomplished without undue effort or expense by the time or times at which it would otherwise be required to be accomplished by this Agreement or the Collateral Documents, and each Lender hereby consents to any such extension of time, (ii) any Lien required to be granted from time to time pursuant to the definition of “Collateral and Guarantee Requirement” shall be subject to the exceptions and limitations set forth in the Collateral Documents, (iii) perfection by control shall not be required with respect to assets requiring perfection through control agreements or other control arrangements, including deposit accounts, securities accounts and commodities accounts (other than control of pledged Capital Stock and/or Material Debt Instruments), (iv) no Loan Party shall be required to seek any landlord lien waiver, bailee letter, estoppel, warehouseman waiver or other collateral access or similar letter or agreement, and notices shall not be required to be sent to account debtors or other contractual third parties, except (x) in the case of any Loan Party not incorporated or organized in the U.S. or the U.K., in accordance with the Agreed Guarantee and Security Principles and (y) in all other cases, after the occurrence and continuation of an Event of Default; (v) in no event will the Collateral include any Excluded Assets, (vi) no action shall be required to perfect any Lien with respect to Letter-of-Credit Rights to the extent that a security interest therein cannot be perfected by filing a Form UCC-1 (or similar) financing statement or by execution and delivery by any Loan Party of a fixed and floating charge or similar instrument providing for the creation of a security interest in all or substantially all of the assets of such Loan Party under the laws of any applicable jurisdiction and (vii) the Administrative Agent shall not require the taking of a Lien on, or require the perfection of any Lien granted in, those assets as to which the cost of obtaining or perfecting such Lien (including any mortgage, stamp, intangibles or other tax or expenses relating to such Lien) is excessive in relation to the benefit to the Lenders of the security afforded thereby as reasonably determined by the Borrower Representative and the Administrative Agent.
Notwithstanding anything to the contrary herein or in any other Loan Document, with respect to any Person not incorporated or organized in the U.S. or the United Kingdom, the requirements of this Section 5.12 shall be subject to the Agreed Guarantee and Security Principles.
Section 5.13 Maintenance of Ratings. The Borrowers will use commercially reasonable efforts to (i) obtain public corporate credit facility and public corporate family ratings from each of S&P and Moody’s with respect to the Original Term Loans and the Borrower Representative (as applicable) within 30 days of the Closing Date (it being understood and agreed that, in each case, if such ratings are not obtained within such time period notwithstanding the use of such commercially reasonable
efforts, the Borrowers shall continue to use such commercially reasonable efforts) and (ii) to maintain such ratings (which credit ratings shall include, (x) on and from the First Amendment Effective Date and prior to the Second Amendment Effective Date, ratings with respect to each of the Initial USD Term Loans and the Initial Euro Term Loans, (y) on and from the Second Amendment Effective Date and prior to the Third Amendment Effective Date, ratings with respect to each of the 2017 Replacement USD Term Loans and the 2017 Replacement Euro Term Loans and (z) on and from the Third Amendment Effective Date, ratings with respect to the 2021 Replacement Term Loans) until the Maturity Date; provided that in no event shall any Borrower be required to maintain any specific rating with any such agency.
Section 5.14 Center of Main Interests. Each Loan Party whose Original Jurisdiction is a member state of the European Union as at the date it executes this Agreement or becomes a Loan Party pursuant to Section 5.12 or Section 5.16, shall (a) take no action which would result in it changing its center of main interest (as that term is used in Article 3(1) of the COMI Regulation) from that of its Original Jurisdiction and (b) create no “establishment” (as that term is defined in Article 2(10) of the COMI Regulation in any other jurisdiction.
Section 5.15 Further Assurances. Promptly upon request of the Administrative Agent and subject to the limitations described in Section 5.12 (and in the case of any Loan Party not incorporated or organized in the U.S. or the United Kingdom, subject to the Agreed Guarantee and Security Principles):
(a) The Borrowers will, and will cause each other Loan Party to, execute any and all further documents, financing statements, agreements, instruments, certificates, notices and acknowledgments and take all such further actions (including the filing and recordation of financing statements, fixture filings, Mortgages and/or amendments thereto and other documents), that may be required under any applicable law or which the Administrative Agent may request to ensure the creation, perfection and priority of the Liens created or intended to be created under the Collateral Documents, all at the expense of the relevant Loan Parties.
(b) The Borrowers will, and will cause each other Loan Party to, (i) correct any material defect or error that may be discovered in the execution, acknowledgment, filing or recordation of any Collateral Document or other document or instrument relating to any Collateral and (ii) do, execute, acknowledge, deliver, record, re-record, file, re-file, register and re-register any and all such further acts (including notices to third parties), deeds, certificates, assurances and other instruments as the Administrative Agent may reasonably request from time to time in order to carry out more effectively the purposes of the Collateral Documents.
Section 5.16 Certain Post-Closing Events. Not more than eight Business Days following the Closing Date (or such later date as the Administrative Agent may agree in its sole discretion) (the “Consummation Date”):
(a) The Demerger (including the Transaction Dividend and the RB Reorganization (to the extent not required to be consummated on or prior to the Closing Date pursuant to Section 4.01(k)(ii))) shall have been consummated, in each case in accordance with the Steps Plan and the Demerger Documents (and no such document shall have been subject to any alteration, amendment or other change or supplement thereto, or any waiver of any provision or condition therein, or any consent by Indivior plc or any Affiliate thereof to any action which would require the consent of Indivior plc or such Affiliate under any such document, if such alteration, amendment, change, supplement, waiver or consent (or the circumstances giving rise thereto) would require the publication of an additional or supplementary prospectus, in any such case without the prior written consent of the Administrative Agent (such consent not to be unreasonably withheld));
(b) The Administrative Agent (or its counsel) shall have received (I) from each Loan Party thereto (including Indivior plc, where applicable) a counterpart to (i) the U.S. Security Agreement, (ii) each English Security Document, (iii) the English Security Trust Deed and (iv) each Lux Security Document, together with a true, complete and up-to-date shareholders register of the Lux Borrower reflecting the registration of the pledge created over the shares of the Lux Borrower pursuant to the Luxembourg Share Pledge Agreement and (II) from each Loan Party executing any Loan Document pursuant to clause (I) above (including Indivior plc, where applicable), a certificate in form and substance similar to that delivered by Indivior plc or such Loan Party pursuant to Section 4.01(e) (or a certificate of a Responsible Officer of Indivior plc or such Loan Party, confirming that the matters certified by Indivior plc or such Loan Party pursuant to Section 4.01(e) are and remain true and correct as of such date); and
(c) Subject to the final paragraph of this Section 5.16, the Administrative Agent (or its bailee) shall have received (i) except as otherwise provided in clause (iii) below, the certificates representing the Capital Stock (if any) required to be pledged pursuant to each Collateral Document, together with an undated stock or similar power for each such certificate executed in blank by a duly authorized officer of the pledgor thereof, (ii) each Material Debt Instrument (including each Intercompany Note) endorsed (without recourse) in blank (or accompanied by an executed transfer form in blank) by the pledgor thereof and (iii) a copy of all share certificates, transfers and stock transfer forms or their equivalent in relation to 100% of the issued share capital in each English Loan Party duly executed by the holder of such share capital in blank and any other documents of title required to be provided under the English Security Documents (provided that, solely in the case of share certificates with respect to the issued share capital of the Borrower Representative, the requirement to deliver such share certificates shall be subject to the requirements of Clause 3 of the Holdings Pledge).
(d) Subject to the last paragraph of this Section 5.16, each document (including any UCC (or similar) financing statement) required by any Collateral Document or under law to be filed, registered or recorded in order to create in favor of the Administrative Agent, for the benefit of the Secured Parties, a perfected Lien on the Collateral required to be delivered pursuant to such Collateral Document, prior and superior in right to any other Person (other than with respect to Permitted Liens), shall be in proper form for filing, registration or recordation.
(e) The Administrative Agent shall have received a customary written opinion of each of (i) Paul Weiss Rifkind Wharton & Garrison LLP, in its capacity as special counsel for Indivior plc, the Borrowers and the Subsidiary Guarantors, (ii) White & Case LLP in its capacity as English counsel for the Administrative Agent and the Lenders, (iii) Elvinger, Hoss & Prussen, in its capacity as special counsel for Indivior plc, the Borrowers and the Subsidiary Guarantors relating to the capacity of the Lux Borrower to enter into the Loan Documents described in clause (b) above to which it is a party, the absence of stamp duty or filing requirements, the validity and enforceability of the choice of law and choice of jurisdiction clauses, the recognition of foreign judgments relating to such Loan Documents and other related matters and (iv) NautaDutilh Avocats Luxembourg S.à r.l., in its capacity as Luxembourg counsel for the Administrative Agent and the Lenders in respect of the validity and the enforceability of the Lux Security Documents and other related matters, in each case with respect to the Loan Documents described in clause (b) above, dated as of the date on which such Loan Documents are executed and addressed to the Administrative Agent, the Lenders and each Issuing Bank and in form and substance reasonably satisfactory to the Administrative Agent.
Notwithstanding the foregoing, to the extent the Lien on any Collateral (including the creation or perfection of any security interest) is not or cannot be provided on the Consummation Date (as defined above) (other than, (i) a Lien on Collateral of any Loan Party that may be perfected by the filing of a financing statement under the UCC (or any equivalent thereof in any applicable jurisdiction) or that may be created or evidenced by execution and delivery of any Collateral Document specifically described in
clause (b) above, (ii) a pledge of the Intercompany Notes and Capital Stock of (x) any Borrower and (y) the Subsidiary Guarantors with respect to which a Lien may be perfected on the Consummation Date by the delivery of a stock or equivalent certificate and (iii) the filing of a Notice of Grant of Security Interest in Intellectual Property with the United States Patent and Trademark Office or the United States Copyright Office) after Borrowers’ use of commercially reasonable efforts to do so without undue burden or expense, then the provision and/or perfection of such Collateral shall not be required by the Consummation Date, but shall, if required, instead be delivered and/or perfected within the time periods set forth in Schedule 5.16.
The parties hereto acknowledge and agree that the requirements of this Section 5.16 have been satisfied in full.
Section 5.17 Pensions.
(a) Except in relation to any arrangement which provides benefits on death which are wholly insured, the Reckitt Benckiser Pension Fund, the London International Group UK Pension Scheme, the Scholl Pension Plan, and the Seton Healthcare Group plc Pension and Life Assurance Scheme, the Borrowers shall ensure that no Parent Company or subsidiary thereof is an employer (for the purposes of sections 38 to 51 of the Pensions Act 2004) of any UK registered occupational pension scheme which is not a money purchase scheme (both terms as defined in the Pension Schemes Act 1993) or, to the extent such connection or association has or may be likely to have a Material Adverse Effect, “connected” with or an “associate” of (as those terms are used in sections 38 or 43 of the Pensions Act 2004) such an employer.
(b) Each Borrower shall immediately notify the Administrative Agent of (i) any investigation by the Pensions Regulator which may lead to the issue of a Financial Support Direction or a Contribution Notice and (ii) the issue of a Financial Support Direction or a Contribution Notice to it, to any Parent Company or any subsidiary thereof.
Section 5.18 Financial Assistance. Each Loan Party will comply (and will ensure that each Parent Company and each subsidiary thereof complies) in all respects with sections 678 and 679 of the Companies Act 2006 and any equivalent legislation in other jurisdictions (including, in respect of any Loan Party which is registered in Ireland, section 82 of the Companies Act 2014 of Ireland) including in relation to the execution of the Collateral Documents and payment of amounts due under this Agreement.
Section 5.19 Listing of the Intercompany Notes.
(a) Within (i) in the case of any Intercompany Notes issued in connection with Intercompany Proceeds Loans made with the proceeds of Original Term Loans, one month of the Consummation Date (the “Original Listing Date”) or (ii) in the case of any Intercompany Notes issued in connection with Intercompany Proceeds Loans made with the proceeds of Initial Euro Term Loans, the period commencing on the First Amendment Effective Date and ending not later than April 30, 2015 or such later date as the Administrative Agent may agree in its sole discretion (the “Euro Listing Date”), the Borrower Representative shall use commercially reasonable efforts to cause such Intercompany Notes to be admitted for listing on the Channel Island Stock Exchange (the “Approved Stock Exchange”) in accordance with the listing rules promulgated by the Approved Stock Exchange and applicable law.
(b) From and after the Original Listing Date or the Euro Listing Date, as applicable, the Borrowers shall cause the Intercompany Notes to continue to be listed on the Approved Stock Exchange (in the case of any Intercompany Note issued in connection with Intercompany Proceeds Loans made with the proceeds of Initial Euro Term Loans, only until the Third Amendment Effective Date) and
(ii) comply with all obligations required pursuant to the Approved Stock Exchange relating to the continued listing of such Intercompany Notes on the Approved Stock Exchange, in each case, except to the extent that (i) the failure to do so would not give rise to the payment or withholding of any Taxes on account of any payments by the Borrower Representative to the Lux Borrower in connection with the Intercompany Proceeds Loan, (ii) the Approved Stock Exchange cease to be a “recognized stock exchange” as defined in Section 1005 of the United Kingdom’s Income Tax Act 2007 or (iii) the “quoted Eurobond exemption” is no longer applicable to the Term Loans and/or there ceases to be any material tax effect resulting from such listing. Promptly following receipt thereof by any Borrower, such Borrower shall deliver to the Administrative Agent copies of all financial information, reports, documents or other materials filed with the Approved Stock Exchange in connection with any Intercompany Proceeds Loan.
Section 5.20 Intermediate Holdings.
(a) Within 90 days after the First Amendment Effective Date (or such later date as the Administrative Agent may agree in its sole discretion), the Borrowers shall have procured that (a) Indivior plc shall have formed a direct Wholly-Owned Subsidiary under the laws of England and Wales (in the form of a private limited company) (“Intermediate Holdings”), (c) the Borrower Representative shall have become a direct, Wholly-Owned Subsidiary of Intermediate Holdings (and, for the avoidance of doubt, the transfer to Intermediate Holdings of the shares in the Borrower Representative shall be made subject to any security interest created by the Holdings Pledge), (b) the Collateral and Guarantee Requirement shall have been satisfied with respect to Intermediate Holdings and (d) Intermediate Holdings and the Administrative Agent shall have executed a joinder agreement to this Agreement in form and substance reasonably satisfactory to the Administrative Agent (which shall not require the consent of any Lenders or any other Person) pursuant to which Intermediate Holdings shall become subject to, and bound by, the covenants, representations and warranties, Events of Default and other obligations of the Borrowers hereunder (it being acknowledged and agreed that Intermediate Holdings shall not be a Borrower hereunder), which joinder agreement shall, among other things, (i) replace certain references to the “Borrower Representative” with “Intermediate Holdings”, including for purposes of prospective provisions of financial statements and for purposes of calculating financial covenants and financial terms as used herein, (ii) add references to “Intermediate Holdings” in certain instances where the Borrower Representative (or any Borrower) is referenced, (iii) provide for a customary “passive holding company” covenant on behalf of Intermediate Holdings and (iv) make such other technical changes as may be agreed or required by the Administrative Agent. Each of the Lenders hereby authorizes and directs the Administrative Agent to take the actions contemplated by this Section 5.20.
(b) Upon the consummation of the steps described in clause (a) of this Section 5.20 (such date, the “Intermediate Holdings Joinder Date”), Indivior plc may deliver a statement to the Registrar of Companies under section 859L of the UK Companies Act 2006 (or such similar or successor provisions), for the purposes of registering that all of the property charged has ceased to form part of Indivior plc’s property.
The parties hereto acknowledge and agree that the requirements of this Section 5.20 have been satisfied in full.
ARTICLE 6
NEGATIVE COVENANTS
From the Closing Date and until the Termination Date has occurred, each of Intermediate Holdings and each Borrower covenants and agrees with the Lenders that:
Section 6.01 Indebtedness. No Borrower shall, nor shall it permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, assume or otherwise become or remain liable with respect to any Indebtedness, except:
(a) the Secured Obligations (including any Additional Term Loans and any Additional Revolving Loans);
(b) Indebtedness of a Borrower to any Restricted Subsidiary and/or of any Restricted Subsidiary to a Borrower or any other Restricted Subsidiary (including the Intercompany Proceeds Loan); provided that in the case of any Indebtedness of any Restricted Subsidiary that is not a Loan Party owing to a Loan Party, such Indebtedness shall be permitted as an Investment by Section 6.06; provided further that any Indebtedness of any Loan Party to any Restricted Subsidiary that is not a Loan Party must be expressly subordinated to the Obligations of such Loan Party on terms that are reasonably acceptable to the Administrative Agent (it being understood that the subordination provisions in the Global Intercompany Note are acceptable to the Administrative Agent);
(c) [Reserved];
(d) Indebtedness arising from any agreement providing for indemnification, adjustment of purchase price or similar obligations (including contingent earn-out obligations) incurred in connection with any Disposition permitted hereunder, any acquisition permitted hereunder or consummated prior to the Closing Date or any other purchase of assets or Capital Stock, and Indebtedness arising from guaranties, letters of credit, bank guaranties, surety bonds, performance bonds or similar instruments securing the performance of a Borrower or any such Restricted Subsidiary pursuant to any such agreement;
(e) Indebtedness of any Borrower and/or any Restricted Subsidiary (i) pursuant to tenders, statutory obligations, bids, leases, governmental contracts, trade contracts, surety, stay, customs, appeal, performance and/or return of money bonds or other similar obligations incurred in the ordinary course of business and (ii) in respect of letters of credit, bank guaranties, surety bonds, performance bonds or similar instruments to support any of the foregoing items;
(f) Indebtedness of any Borrower and/or any Restricted Subsidiary in respect of commercial credit cards, stored value cards, purchasing cards, treasury management services, netting services, overdraft protections, check drawing services, automated payment services (including depository, overdraft, controlled disbursement, ACH transactions, return items and interstate depository network services), employee credit card programs, cash pooling services and any arrangements or services similar to any of the foregoing and/or otherwise in connection with Cash management and Deposit Accounts, including Banking Services Obligations and dealer incentive, supplier finance or similar programs;
(g) (i) guaranties by any Borrower and/or any Restricted Subsidiary of the obligations of suppliers, customers and licensees in the ordinary course of business, (ii) Indebtedness incurred in the ordinary course of business in respect of obligations of any Borrower and/or any Restricted Subsidiary to pay the deferred purchase price of goods or services or progress payments in connection with such goods and services and (iii) Indebtedness in respect of letters of credit, bankers’ acceptances, bank guaranties or similar instruments supporting trade payables, warehouse receipts or similar facilities entered into in the ordinary course of business;
(h) Guarantees by any Borrower and/or any Restricted Subsidiary of Indebtedness or other obligations of the Borrowers, any Restricted Subsidiary and/or any joint venture with respect to
Indebtedness otherwise permitted to be incurred pursuant to this Section 6.01 or other obligations not prohibited by this Agreement; provided that in the case of any Guarantee by any Loan Party of the obligations of any non-Loan Party, the related Investment is permitted under Section 6.06;
(i) Indebtedness of any Borrower and/or any Restricted Subsidiary existing, or pursuant to commitments existing, on the Closing Date and described on Schedule 6.01;
(j) Indebtedness of Restricted Subsidiaries that are not Loan Parties; provided that the aggregate outstanding principal amount of such Indebtedness shall not exceed the greater of $50,000,000 and 10.0% of Consolidated Total Assets as of the last day of the most recently ended Test Period;
(k) Indebtedness of any Borrower and/or any Restricted Subsidiary consisting of obligations owing under incentive, supply, license or similar agreements entered into in the ordinary course of business;
(l) Indebtedness of any Borrower and/or any Restricted Subsidiary consisting of (i) the financing of insurance premiums in the ordinary course of business, (ii) take-or-pay obligations contained in supply arrangements in the ordinary course of business and/or (iii) obligations to reacquire assets or inventory in connection with customer financing arrangements in the ordinary course of business;
(m) Indebtedness of any Borrower and/or any Restricted Subsidiary with respect to Capital Leases and purchase money Indebtedness incurred prior to or within 270 days of the acquisition, lease, completion of construction, repair of, replacement, improvement to or installation of assets acquired in connection with the incurrence of such Indebtedness in an aggregate outstanding principal amount not to exceed the greater of $50,000,000 and 10.0% of Consolidated Total Assets as of the last day of the most recently ended Test Period;
(n) [Reserved];
(o) Indebtedness consisting of unsecured subordinated promissory notes in form and substance reasonably satisfactory to the Administrative Agent issued by a Borrower or any Restricted Subsidiary to any stockholder of any Parent Company or any current or former director, officer, employee, member of management, manager or consultant of any Parent Company, Borrower or any subsidiary (or their respective Immediate Family Members) and not guaranteed by any Subsidiary of Holdings to finance the purchase or redemption of Capital Stock of any Parent Company permitted by Section 6.04(a);
(p) each Borrower and its Restricted Subsidiaries may become and remain liable for any Indebtedness refinancing, refunding or replacing any Indebtedness permitted under clauses (a), (i), (j), (m), (q), (r), (u), (v), (w), (y) and (z) of this Section 6.01 (in any case, including any refinancing Indebtedness incurred in respect thereof, “Refinancing Indebtedness”) and any subsequent Refinancing Indebtedness in respect thereof; provided that (i) the principal amount of such Indebtedness does not exceed the principal amount of the Indebtedness being refinanced, refunded or replaced, except by (A) an amount equal to unpaid accrued interest and premiums (including tender premiums) thereon plus underwriting discounts, other reasonable and customary fees, commissions and expenses (including upfront fees, original issue discount or initial yield payments) incurred in connection with the relevant refinancing, refunding or replacement, (B) an amount equal to any existing commitments unutilized thereunder and (C) additional amounts permitted to be incurred pursuant to this Section 6.01 (provided that (1) any additional Indebtedness referenced in this clause (C) satisfies the other applicable
requirements of this definition (with additional amounts incurred in reliance on this clause (C) constituting a utilization of the relevant basket or exception under Section 6.01 pursuant to which such additional amount is permitted) and (2) if such additional Indebtedness is secured, the Lien securing such Indebtedness satisfies the applicable requirements of Section 6.02 and constitutes a utilization of the relevant basket or exception), (ii) other than in the case of Refinancing Indebtedness with respect to clause (i), (m) or (u), (A) such Indebtedness has a final maturity on or later than (and, in the case of revolving Indebtedness, does not require mandatory commitment reductions, if any, prior to) the final maturity of the Indebtedness being refinanced, refunded or replaced and (B) other than with respect to revolving Indebtedness, such Indebtedness has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of the Indebtedness being refinanced, refunded or replaced, (iii) the terms of any Refinancing Indebtedness with an original principal amount in excess of the Threshold Amount (excluding pricing, fees, premiums, rate floors, optional prepayment or redemption terms (and, if applicable, subordination terms) and, with respect to Refinancing Indebtedness incurred in respect of Indebtedness permitted under clause (a) above, security), are not, taken as a whole (as reasonably determined by the Borrower Representative), more favorable to the lenders providing such Indebtedness than those applicable to the Indebtedness being refinanced, refunded or replaced (other than any covenants or any other provisions applicable only to periods after the Latest Maturity Date as of such date or any covenants or provisions which are then-current market terms for the applicable type of Indebtedness), (iv) in the case of Refinancing Indebtedness with respect to Indebtedness permitted under clauses (j), (m), (u) and (y) of this Section 6.01, the incurrence thereof shall be without duplication of any amounts outstanding in reliance on the relevant clause (and such Refinancing Indebtedness shall be deemed to be outstanding under such clause for purposes of determining compliance therewith), (v) except in the case of Refinancing Indebtedness incurred in respect of Indebtedness permitted under clause (a) of this Section 6.01 (it being understood that Holdings may not be the primary obligor of the applicable Refinancing Indebtedness if Holdings was not the primary obligor on the relevant refinanced Indebtedness), (A) such Indebtedness is secured only by Permitted Liens securing the Indebtedness being refinanced, refunded or replaced at the time of such refinancing, refunding or replacement (it being understood that secured Indebtedness may be refinanced with unsecured Indebtedness), (B) such Indebtedness is incurred by the obligor or obligors in respect of the Indebtedness being refinanced, refunded or replaced, except to the extent otherwise permitted pursuant to Section 6.01 and (C) if the Indebtedness being refinanced, refunded or replaced was originally contractually subordinated to the Obligations in right of payment (or the Liens securing such Indebtedness were originally contractually subordinated to the Liens on the Collateral securing the Secured Obligations), such Indebtedness is contractually subordinated to the Obligations in right of payment (or the Liens securing such Indebtedness are subordinated to the Liens on the Collateral securing the Secured Obligations) on terms not materially less favorable (as reasonably determined by the Borrower Representative), taken as a whole, to the Lenders than those applicable to the Indebtedness (or Liens, as applicable) being refinanced, refunded or replaced, taken as a whole, (vi) except in the case of Refinancing Indebtedness with respect to clause (a) of this Section 6.01, as of the date of the incurrence of such Indebtedness and after giving effect thereto, no Event of Default exists, (vii) in the case of Refinancing Indebtedness incurred in respect of Indebtedness permitted under clause (a) of this Section 6.01, (A) such Indebtedness shall rank pari passu or junior in right of payment and shall be secured by all or portion of the Collateral on a pari passu or junior basis with respect to the remaining Obligations hereunder, or shall be unsecured; provided that any such Indebtedness that ranks pari passu or junior with respect to the Collateral shall be subject to a Permitted Pari Passu Intercreditor Agreement or a Permitted Junior Intercreditor Agreement, as applicable, (B) if the Indebtedness being refinanced, refunded or replaced is secured, it is not secured by any assets other than the Collateral (but need not be secured by all such assets), (C) if the Indebtedness being refinanced, refunded or replaced is guaranteed, it shall not be guaranteed by any Person other than a Loan Party (but need not be guaranteed by all such Persons), (D) such Indebtedness is incurred under (and pursuant to) documentation other than this Agreement, (E) any such Indebtedness that ranks pari passu with the 2021 Replacement Term Loans hereunder in right of payment and secured by all or a portion of
the Collateral on a pari passu basis with respect to the Secured Obligations hereunder that are secured on a first lien basis may participate on a pro rata basis or a less than pro rata basis (but not greater than a pro rata basis) in any voluntary or mandatory prepayment in respect of the 2021 Replacement Term Loans (and any Additional Term Loans then subject to ratable repayment requirements), in each case as the applicable Borrower and the relevant lender may agree and (F) the Indebtedness being refinanced, refunded or replaced shall be repaid, defeased or satisfied and discharged, and all accrued interest, fees and premiums (if any) in connection therewith, shall be paid, in each case substantially concurrently with the issuance of such Refinancing Indebtedness and (viii) no Borrower nor any of its Restricted Subsidiaries may refinance any Indebtedness incurred by an Unrestricted Subsidiary pursuant to this clause;
(q) Indebtedness incurred to finance acquisitions permitted hereunder after the Closing Date, or Indebtedness of any Person that becomes a Restricted Subsidiary or Indebtedness assumed in connection with an acquisition permitted hereunder after the Closing Date; provided that (i) before and after giving effect to such acquisition on a Pro Forma Basis, no Event of Default exists, (ii) after giving effect to such acquisition on a Pro Forma Basis, (A) if such Indebtedness is secured by a Lien on all or any portion of the Collateral that ranks pari passu with the Lien securing the Secured Obligations, the First Lien Leverage Ratio would not exceed the greater of (x) 2.00:1.00 and (y) the First Lien Leverage Ratio as of the last day of the most recently ended test period, it being understood and agreed that any indebtedness incurred under this clause (A), together with any permitted refinancing indebtedness (and successive permitted refinancing indebtedness) with respect thereto, shall at all times be included in the calculation of the First Lien Leverage Ratio unless such Indebtedness is separately justified under clause (B) below or (B) if such Indebtedness is secured by a Lien on all or any portion of the Collateral that ranks junior to the Lien securing the Secured Obligations or is unsecured, the Total Leverage Ratio would not exceed the greater of (x) 3.00:1.00 and (y) the Total Leverage Ratio as of the last day of the most recently ended Test Period, provided that (1) such Indebtedness does not mature or require any scheduled amortization or scheduled payment of principal or require any mandatory redemption, repurchase, repayment or sinking fund obligation (other than (A) payments as part of an “applicable high yield discount obligation” catch-up payment, (B) customary offers to repurchase in connection with any change of control, Disposition or casualty event and (C) customary acceleration rights after an event of default), in each case, prior to the date which is 91 days after the Latest Maturity Date as of the date of incurrence thereof, (2) the Weighted Average Life to Maturity of such Indebtedness shall be no shorter than the remaining Weighted Average Life to Maturity of the then-existing tranche(s) of Term Loans (without giving effect to any prepayments thereof), (3) one or more of the Borrowers shall be the direct borrower or issuer of such Indebtedness, and such Indebtedness shall not be guaranteed by any Person other than the Guarantors (but need not be guaranteed by all such Persons), (4) to the extent secured, such Indebtedness shall not be secured by any asset that is not Collateral (but need not be secured by all such assets), (5) any such Indebtedness described under clause (A) hereof shall be subject to a Permitted Pari Passu Intercreditor Agreement, (6) any such Indebtedness described under clause (B) hereof shall, to the extent secured, be subject to a Permitted Junior Intercreditor Agreement, (7) any such Indebtedness described under clause (A) hereof shall shall be subject to the “MFN” provision in Section 2.22(a)(v) (the terms of which are incorporated into this clause (q), mutatis mutandis) and (8) the terms of such Indebtedness shall reflect market terms at the time of incurrence or issuance thereof (as determined in good faith by the Borrower Representative);
(r) without duplication of clause (v) below, Indebtedness of any Borrower and/or Restricted Subsidiary in an aggregate outstanding principal amount not to exceed 100% of the amount of Net Proceeds received by the Borrowers after the Third Amendment Effective Date (an “Excluded Debt Contribution”) from (i) the issuance or sale of Qualified Capital Stock or (ii) any cash contribution to its common equity with the Net Proceeds from the issuance and sale by any Parent Company of its Qualified Capital Stock or a contribution to the common equity of any Parent Company, in each case, (A) other than
any Net Proceeds received from the sale of Capital Stock to, or contributions from, any Borrower or any of its Restricted Subsidiaries and (B) to the extent the relevant Net Proceeds have not otherwise been applied to make Investments, Restricted Payments or Restricted Debt Payments hereunder;
(s) Indebtedness of any Borrower and/or any Restricted Subsidiary under any Derivative Transaction not entered into for speculative purposes;
(t) Indebtedness in connection with Permitted Securitization Financings in an aggregate principal amount not to exceed the greater of $50,000,000 and 10.0% of Consolidated Total Assets, in either case, at any one time outstanding;
(u) Indebtedness of any Borrower and/or any Restricted Subsidiary in an aggregate outstanding principal amount not to exceed $75,000,000;
(v) Indebtedness in an amount not to exceed the portion of the Available Excluded Contribution Amount on such date that the Borrower Representative elect to apply to this clause 6.01(v);
(w) additional Indebtedness of any Borrower and/or any Restricted Subsidiary so long as, on a Pro Forma Basis as of the last day of the most recently ended Test Period, (A) if such Indebtedness is secured by a Lien on all or any portion of the Collateral that ranks pari passu with the Lien securing the Secured Obligations, the First Lien Leverage Ratio would not exceed 2.00:1.00, it being understood and agreed that any indebtedness incurred under this clause (A), together with any permitted refinancing indebtedness (and successive permitted refinancing indebtedness) with respect thereto, shall at all times be included in the calculation of the First Lien Leverage Ratio unless such Indebtedness is separately justified under clause (B) below or (B) if such Indebtedness is secured by a Lien on all or any portion of the Collateral that ranks junior to the Lien securing the Secured Obligations or is unsecured, the Total Leverage Ratio would not exceed 3.00:1.00, provided that (1) no Event of Default shall have occurred and be continuing or shall result therefrom, (2) such Indebtedness does not mature or require any scheduled amortization or scheduled payment of principal or require any mandatory redemption, repurchase, repayment or sinking fund obligation (other than (A) payments as part of an “applicable high yield discount obligation” catch-up payment, (B) customary offers to repurchase in connection with any change of control, Disposition or casualty event and (C) customary acceleration rights after an event of default), in each case, prior to the date which is 91 days after the Latest Maturity Date as of the date of incurrence thereof, (3) the Weighted Average Life to Maturity of such Indebtedness shall be no shorter than the remaining Weighted Average Life to Maturity of the then-existing tranche(s) of Term Loans (without giving effect to any prepayments thereof), (4) one or more of the Borrowers shall be the direct borrower or issuer of such Indebtedness, and such Indebtedness shall not be guaranteed by any Person other than the Guarantors (but need not be guaranteed by all such Persons), (5) to the extent secured, such Indebtedness shall not be secured by any asset that is not Collateral (but need not be secured by all such assets), (6) any such Indebtedness described under clause (A) hereof shall be subject to a Permitted Pari Passu Intercreditor Agreement, (7) any such Indebtedness described under clause (B) hereof shall, to the extent secured, be subject to a Permitted Junior Intercreditor Agreement, (8) any such Indebtedness described under clause (A) hereof shall be subject to the “MFN” provision in Section 2.22(a)(v) (the terms of which are incorporated into this clause (w), mutatis mutandis) and (9) the terms of such Indebtedness shall reflect market terms at the time of incurrence or issuance thereof (as determined in good faith by the Borrower Representative);
(x) Indebtedness consisting of Replacement Term Loans or any Replacement Revolving Facility, in each case to the extent permitted under Section 9.02(c);
(y) Indebtedness of any Borrower and/or any Restricted Subsidiary incurred in connection with Sale and Lease-Back Transactions permitted pursuant to Section 6.08;
(z) secured or unsecured notes and/or loans (and/or commitments in respect thereof) issued or incurred by a Borrower in lieu of Incremental Loans (such notes or loans, “Incremental Equivalent Debt”); provided that (i) the aggregate outstanding principal amount (or committed amount, if applicable) of all Incremental Equivalent Debt, together with the aggregate outstanding principal amount (or committed amount, if applicable) of all Incremental Loans and Incremental Commitments provided pursuant to Section 2.22, shall not exceed the Incremental Cap, (ii) any Incremental Equivalent Debt shall be subject to clauses (vi), (vii), (ix) and (x) (except, in the case of clause (x), as otherwise agreed by the Persons providing such Incremental Equivalent Debt) and (xvi)(A) of the proviso to Section 2.22(a), (iii) any Incremental Equivalent Debt that is secured shall be secured only by all or a portion of the Collateral and on a pari passu or junior basis with all or a portion of the Collateral securing the Secured Obligations (but need not be secured by all such assets), (iv) any Incremental Equivalent Debt that ranks pari passu with the 2021 Replacement Term Loans in right of payment and with respect to security shall be subject to the proviso to clause (v) of Section 2.22(a) (the terms of which are incorporated into this clause (z), mutatis mutandis), (v) any Incremental Equivalent Debt that ranks pari passu in right of security with the Secured Obligations shall be subject to a Permitted Pari Passu Intercreditor Agreement; (vi) any Incremental Equivalent Debt that is secured by a lien that ranks junior in right of security to the Secured Obligations shall be subject to a Permitted Junior Intercreditor Agreement, (vii) any Incremental Equivalent Debt that is subordinated in right of payment shall be subject to subordination arrangements reasonably satisfactory to the Administrative Agent and (viii) no Incremental Equivalent Debt may be guaranteed by any Person that is not a Loan Party (but need not be guaranteed by all such Persons);
(aa) Indebtedness (including obligations in respect of letters of credit, bank guaranties, surety bonds, performance bonds or similar instruments with respect to such Indebtedness) incurred by any Borrower and/or any Restricted Subsidiary in respect of workers compensation claims, unemployment insurance (including premiums related thereto), other types of social security, pension obligations, vacation pay, health, disability or other employee benefits;
(bb) Indebtedness of any Borrower and/or any Restricted Subsidiary representing (i) deferred compensation to directors, officers, employees, members of management, managers, and consultants of any Parent Company, any Borrower and/or any Restricted Subsidiary in the ordinary course of business and (ii) deferred compensation or other similar arrangements in connection with the Transactions, any Permitted Acquisition or any other Investment permitted hereby;
(cc) Indebtedness of any Borrower and/or any Restricted Subsidiary in respect of any letter of credit or bank guarantee issued in favor of any Issuing Bank, or the Swingline Lender to support any Defaulting Lender’s participation in Letters of Credit issued, or Swingline Loans made, hereunder;
(dd) Indebtedness of any Borrower or any Restricted Subsidiary supported by any Letter of Credit (in a principal amount not in excess of the stated or face amount of such Letter of Credit);
(ee) unfunded pension fund and other employee benefit plan obligations and liabilities incurred by any Borrower and/or any Restricted Subsidiary in the ordinary course of business to the extent that the unfunded amounts would not otherwise cause an Event of Default under Section 7.01(i);
(ff) to the extent constituting Indebtedness and without duplication of any other Indebtedness, all premiums (if any), interest (including post-petition interest and payment in kind
interest), accretion or amortization of original issue discount, fees, expenses and charges with respect to Indebtedness of any Borrower and/or any Restricted Subsidiary hereunder; and
(gg) customer deposits and advance payments received in the ordinary course of business from customers for goods and services purchased in the ordinary course of business.
Section 6.02 Liens. No Borrower shall, nor shall it permit any of its Restricted Subsidiaries to, create, incur, assume or permit or suffer to exist any Lien on or with respect to any property of any kind owned by it, whether now owned or hereafter acquired, or any income or profits therefrom, except:
(a) Liens securing the Secured Obligations created pursuant to the Loan Documents;
(b) Liens for Taxes which are (i) for amounts not yet overdue by more than 30 days or (ii) being contested in accordance with Section 5.03(a);
(c) statutory Liens (and rights of set-off) of landlords, banks, carriers, warehousemen, mechanics, repairmen, workmen and materialmen, and other Liens imposed by law, in each case incurred in the ordinary course of business (i) for amounts not yet overdue by more than 30 days or (ii) for amounts that are overdue by more than 30 days and that are being contested in good faith by appropriate proceedings, so long as adequate reserves or other appropriate provisions required by GAAP shall have been made for any such contested amounts;
(d) Liens incurred (i) in the ordinary course of business in connection with workers’ compensation, unemployment insurance and other types of social security laws and regulations, (ii) in the ordinary course of business to secure the performance of tenders, statutory obligations, surety, stay, customs and appeal bonds, bids, leases, government contracts, trade contracts, performance and return-of-money bonds and other similar obligations (exclusive of obligations for the payment of borrowed money), (iii) pursuant to pledges and deposits of Cash or Cash Equivalents in the ordinary course of business securing (x) any liability for reimbursement or indemnification obligations of insurance carriers providing property, casualty, liability or other insurance to the Borrowers and their subsidiaries or (y) leases or licenses of property otherwise permitted by this Agreement and (iv) to secure obligations in respect of letters of credit, bank guaranties, surety bonds, performance bonds or similar instruments posted with respect to the items described in clauses (i) through (iii) above;
(e) Liens consisting of easements, rights-of-way, restrictions, encroachments, and other minor defects or irregularities in title, in each case which do not, in the aggregate, materially interfere with the ordinary conduct of the business of the Borrowers and/or their Restricted Subsidiaries, taken as a whole, or the use of the affected property for its intended purpose;
(f) Liens consisting of any (i) interest or title of a lessor or sub-lessor under any lease of real estate permitted hereunder, (ii) landlord lien permitted by the terms of any lease, (iii) restriction or encumbrance to which the interest or title of such lessor or sub-lessor may be subject or (iv) subordination of the interest of the lessee or sub-lessee under such lease to any restriction or encumbrance referred to in the preceding clause (iii);
(g) Liens solely on any Cash earnest money deposits made by any Borrower and/or any of its Restricted Subsidiaries in connection with any letter of intent or purchase agreement with respect to any Investment permitted hereunder;
(h) purported Liens evidenced by the filing of precautionary UCC financing statements relating solely to operating leases or consignment or bailee arrangements entered into in the ordinary course of business;
(i) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods;
(j) Liens in connection with any zoning, building or similar law or right reserved to or vested in any Governmental Authority to control or regulate the use of any or dimensions of real property or the structure thereon;
(k) Liens securing Indebtedness permitted pursuant to Section 6.01(p) (solely with respect to the permitted refinancing of Indebtedness permitted pursuant to Sections 6.01(a), (i), (j), (m), (q), (u), (v), (w) and (z), in each case, so long as such Indebtedness is secured by Liens permitted under this Section 6.02 (other than this clause (k)); provided that (i) no such Lien extends to any asset not covered by the Lien securing the Indebtedness that is being refinanced, (ii) if the Indebtedness being refinanced was subject to intercreditor arrangements, then any refinancing Indebtedness in respect thereof shall be subject to intercreditor arrangements not materially less favorable to the Secured Parties, taken as a whole, than the intercreditor arrangements governing the Indebtedness that is refinanced or the intercreditor arrangements governing the relevant refinancing Indebtedness shall be otherwise reasonably acceptable to the Administrative Agent and (iii) any such Liens shall count towards any basket pursuant to which the applicable refinanced Lien was justified when originally incurred;
(l) Liens described on Schedule 6.02 and any modification, replacement, refinancing, renewal or extension thereof; provided that (i) no such Lien extends to any additional property other than (A) after-acquired property that is affixed or incorporated into the property covered by such Lien or financed by Indebtedness permitted under Section 6.01 and (B) proceeds and products thereof, accessions thereto and improvements thereon (it being understood that individual financings of the type permitted under Section 6.01(m) provided by any lender may be cross-collateralized to other financings of such type provided by such lender or its affiliates) and (ii) such modification, replacement, refinancing, renewal or extension of the obligations secured or benefited by such Liens, if constituting Indebtedness, is permitted by Section 6.01;
(m) Liens arising out of Sale and Lease-Back Transactions permitted under Section 6.08;
(n) Liens securing Indebtedness permitted pursuant to Section 6.01(m); provided that any such Lien shall encumber only the asset acquired with the proceeds of such Indebtedness and proceeds and products thereof, accessions thereto and improvements thereon (it being understood that individual financings of the type permitted under Section 6.01(m) provided by any lender may be cross-collateralized to other financings of such type provided by such lender or its affiliates);
(o) Liens securing Indebtedness incurred pursuant to Section 6.01(q); provided that, with respect to any such Liens on all or any portion of the Collateral, such Liens shall rank pari passu with, or junior to, the Liens securing the Secured Obligations pursuant to a Permitted Pari Passu Intercreditor Agreement or Permitted Junior Intercreditor Agreement, as applicable; provided, further, that with respect to Liens securing Indebtedness of Persons that become, or Indebtedness assumed by, a Restricted Subsidiary, no such Lien (x) extends to or covers any other assets (other than the proceeds or products thereof, accessions or additions thereto and improvements thereon) or (y) was created in contemplation of the applicable acquisition of assets or Capital Stock;
(p) Liens (i) that are contractual rights of set-off or netting relating to (A) the establishment of depositary relations with banks not granted in connection with the issuance of Indebtedness, (B) pooled deposit or sweep accounts of any Borrower and/or any Restricted Subsidiary to permit satisfaction of overdraft or similar obligations incurred in the ordinary course of business of any Borrower and/or any Restricted Subsidiary, (C) purchase orders and other agreements entered into with customers of any Borrower and/or any Restricted Subsidiary in the ordinary course of business and (D) commodity trading or other brokerage accounts incurred in the ordinary course of business and (ii) encumbering reasonable customary initial deposits and margin deposits;
(q) Liens on assets and Capital Stock of Restricted Subsidiaries that are not Loan Parties (other than Capital Stock owned directly by any Loan Party) securing Indebtedness of Restricted Subsidiaries that are not Loan Parties permitted pursuant to Section 6.01;
(r) Liens securing obligations (other than obligations representing Indebtedness for borrowed money) under operating, reciprocal easement or similar agreements entered into in the ordinary course of business of any Borrower and/or its Restricted Subsidiaries;
(s) Liens disclosed in any Mortgage Policy delivered pursuant to Section 5.12(b) with respect to any Material Real Estate Asset and any replacement, extension or renewal of any such Lien; provided that (i) no such replacement, extension or renewal Lien shall cover any property other than the property that was subject to such Lien prior to such replacement, extension or renewal (and additions thereto, improvements thereon and the proceeds thereof) and (ii) such Liens do not, in the aggregate, materially interfere with the ordinary conduct of the business of any Borrower and/or its Restricted Subsidiaries, taken as a whole, or the use of the affected property for its intended purpose;
(t) Liens securing Indebtedness incurred pursuant to Section 6.01(z), so long as the conditions described therein are satisfied;
(u) other Liens on assets securing Indebtedness or other obligations in an aggregate principal amount at any time outstanding not to exceed $75,000,000;
(v) Liens on assets securing judgments, awards, attachments and/or decrees and notices of lis pendens and associated rights relating to litigation being contested in good faith not constituting an Event of Default under Section 7.01(h);
(w) leases, licenses, subleases or sublicenses granted to others in the ordinary course of business which do not (i) interfere in any material respect with the business of the Borrowers and their Restricted Subsidiaries (other than any Immaterial Subsidiary) or (ii) secure any Indebtedness;
(x) Liens on Securities that are the subject of repurchase agreements constituting Investments permitted under Section 6.06 arising out of such repurchase transaction;
(y) Liens securing obligations in respect letters of credit, bank guaranties, surety bonds, performance bonds or similar instruments permitted under Section 6.01(d), (e), (g)(iii), (aa) and (cc);
(z) Liens arising (i) out of conditional sale, title retention, consignment or similar arrangements for the sale of any assets or property in the ordinary course of business and permitted by this Agreement or (ii) by operation of law under Article 2 of the UCC (or similar law of any jurisdiction);
(aa) Liens (i) in favor of any Loan Party and/or (ii) granted by any non-Loan Party in favor of any Restricted Subsidiary that is not a Loan Party, in the case of each of clauses (i) and (ii), securing intercompany Indebtedness permitted under Section 6.01;
(bb) Liens on insurance policies and the proceeds thereof securing the financing of the premiums with respect thereto;
(cc) Liens on specific items of inventory or other goods and the proceeds thereof securing the relevant Person’s obligations in respect of documentary letters of credit or banker’s acceptances issued or created for the account of such Person to facilitate the purchase, shipment or storage of such inventory or goods;
(dd) Liens on cash collateral securing (i) obligations under Hedge Agreements in connection with any Derivative Transaction of the type described in Section 6.01(s) and/or (ii) obligations of the type described in Section 6.01(f), in each case, to the extent such obligations do not constitute Secured Obligations;
(ee) (i) Liens on Capital Stock of joint ventures or Unrestricted Subsidiaries securing capital contributions to, or obligations of, such Persons and (ii) customary rights of first refusal and tag, drag and similar rights in joint venture agreements and agreements with respect to non-Wholly-Owned Subsidiaries;
(ff) Liens on cash or Cash Equivalents arising in connection with the permitted defeasance, discharge or redemption of Indebtedness;
(gg) Liens evidenced by the filing of UCC financing statements relating to factoring or similar arrangements entered into in the ordinary course of business;
(hh) Liens in respect of Permitted Securitization Financings that extend only to Securitization Assets;
(ii) [Reserved];
(jj) Liens securing Indebtedness incurred in reliance on Section 6.01(w) so long as the condition described in clause (A) or clause (B), as applicable, of Section 6.01(w) has been satisfied.
Section 6.03 No Further Negative Pledges. No Borrower shall, nor shall it permit any of its Restricted Subsidiaries to, enter into any agreement prohibiting the creation or assumption of any Lien upon any of its properties, whether now owned or hereafter acquired, for the benefit of the Secured Parties with respect to the Secured Obligations, except with respect to:
(a) specific property to be sold pursuant to any Disposition permitted by Section 6.07;
(b) restrictions contained in any agreement with respect to Indebtedness permitted by Section 6.01 that is secured by a Permitted Lien, but only if such restrictions apply only to the Person or Persons obligated under such Indebtedness and its or their Restricted Subsidiaries or the property or assets securing such Indebtedness;
(c) restrictions by reason of customary provisions restricting assignments, subletting or other transfers (including the granting of any Lien) contained in leases, subleases, licenses, sublicenses
and other agreements entered into in the ordinary course of business (provided that such restrictions are limited to the relevant leases, subleases, licenses, sublicenses or other agreements and/or the property or assets secured by such Liens or the property or assets subject to such leases, subleases, licenses, sublicenses or other agreements, as the case may be);
(d) Permitted Liens and restrictions in the agreements relating thereto that limit the right of any Borrower or any of its Restricted Subsidiaries to Dispose of, or encumber the assets subject to such Liens;
(e) provisions limiting the Disposition or distribution of assets or property in joint venture agreements, sale-leaseback agreements, stock sale agreements and other similar agreements, which limitation is applicable only to the assets that are the subject of such agreements (or the Persons the Capital Stock of which is the subject of such agreement);
(f) any encumbrance or restriction assumed in connection with an acquisition of the property or Capital Stock of any Person, so long as such encumbrance or restriction relates solely to the property so acquired (or to the Person or Persons (and its or their subsidiaries) bound thereby) and was not created in connection with or in anticipation of such acquisition;
(g) restrictions imposed by customary provisions in partnership agreements, limited liability company organizational governance documents, joint venture agreements and other similar agreements, in each case, with respect to Restricted Subsidiaries that are not Wholly-Owned Subsidiaries of a Borrower, that restrict the transfer of the assets of, or ownership interests in, the relevant partnership, limited liability company, joint venture or any similar Person;
(h) restrictions on Cash or other deposits imposed by Persons under contracts entered into in the ordinary course of business or for whose benefit such Cash or other deposits exist;
(i) restrictions set forth in documents which exist on the Closing Date;
(j) restrictions set forth in any Loan Document, any Hedge Agreement and/or any agreement relating to any Banking Services Obligation;
(k) restrictions contained in documents governing Indebtedness permitted hereunder of any Restricted Subsidiary that is not a Loan Party; and
(l) other restrictions or encumbrances imposed by any amendment, modification, restatement, renewal, increase, supplement, refunding, replacement or refinancing of the contracts, instruments or obligations referred to in clauses (a) through (k) above; provided that no such amendment, modification, restatement, renewal, increase, supplement, refunding, replacement or refinancing is, in the good faith judgment of the Borrower Representative, more restrictive with respect to such encumbrances and other restrictions, taken as a whole, than those in effect prior to the relevant amendment, modification, restatement, renewal, increase, supplement, refunding, replacement or refinancing.
Section 6.04 Restricted Payments; Certain Payments of Indebtedness.
(a) No Borrower shall pay or make, directly or indirectly, any Restricted Payment, except that:
(i) the Borrowers may make Restricted Payments to the extent necessary to permit any Parent Company (and so long as such amounts are promptly applied by such Parent Company):
(A) to pay general administrative costs and expenses (including corporate overhead, legal or similar expenses and customary salary, bonus and other benefits payable to directors, officers, employees, members of management, managers and/or consultants of any Parent Company) and franchise fees and Taxes and similar fees, Taxes and expenses required to enable such Parent Company to maintain its organizational existence or qualification to do business, in each case, which are reasonable and customary and incurred in the ordinary course of business, plus any reasonable and customary indemnification claims made by directors, officers, members of management, managers, employees or consultants of any Parent Company, in each case, to the extent attributable to the ownership or operations of any Parent Company and its subsidiaries (but excluding the portion of such amount that is attributable to the ownership or operations of any subsidiary of any Parent Company other than the Borrowers and their subsidiaries)
(B) to discharge the consolidated combined, unitary or similar Tax liabilities of such Parent Company and its subsidiaries when and as due determined without taking into account adjustments pursuant to Section 743 of the Code and using an assumed uniform tax rate, and to the extent such liabilities are attributable to the Parent Company’s direct or indirect ownership of the Borrowers and their subsidiaries;
(C) to pay audit and other accounting and reporting expenses of such Parent Company to the extent attributable to any Parent Company (but excluding, for the avoidance of doubt, the portion of any such expenses, if any, attributable to the ownership or operations of any subsidiary of any Parent Company other than the Borrowers and/or their subsidiaries), the Borrowers and their subsidiaries;
(D) for the payment of insurance premiums to the extent attributable to any Parent Company (but excluding, for the avoidance of doubt, the portion of any such premiums, if any, attributable to the ownership or operations of any subsidiary of any Parent Company other than the Borrower Representative and/or its subsidiaries), any Borrowers and its subsidiaries;
(E) pay (x) fees and expenses related to debt or equity offerings, investments or acquisitions permitted or not restricted by this Agreement (whether or not consummated) relating to any Borrower and its Restricted Subsidiaries and (y) Public Company Costs;
(F) to finance any Investment permitted under Section 6.06 (provided that (x) any Restricted Payment under this clause (a)(i)(F) shall be made substantially concurrently with the closing of such Investment and (y) the relevant Parent Company shall, promptly following the closing thereof, cause (I) all property acquired to be contributed to a Borrower or one or more of its Restricted Subsidiaries, or (II) the merger, consolidation or amalgamation of the Person formed or acquired into a Borrower or one or more of its Restricted Subsidiaries, in order to consummate such Investment in compliance with the applicable requirements of Section 6.06 as if undertaken as a direct Investment by such Borrower or the relevant Restricted Subsidiary);
(G) to pay customary salary, bonus, severance and other benefits payable to current or former directors, officers, members of management, managers, employees or consultants of any Parent Company (or any Immediate Family Member of any of the foregoing) to the extent such salary, bonuses and other benefits are attributable and reasonably allocated to the operations of the Borrowers and/or their subsidiaries, in each case, so long as such Parent Company applies the amount of any such Restricted Payment for such purpose; and
(H) to pay costs, expenses and fees associated with litigation or governmental proceedings, investigations or inquires, in each case to the extent such costs, expenses and fees are attributable and reasonably allocated to the operations of the Borrowers and/or their subsidiaries, in each case, so long as such Parent Company applies the amount of any such Restricted Payment for such purpose;
provided, that with respect to Restricted Payments under clauses (A), (B), (C), (D), (G) and (H) above, such Restricted Payments that are attributable to any Unrestricted Subsidiary shall be permitted only to the extent that either (x) such Unrestricted Subsidiary has made one or more cash distributions, advances or loans to a Borrower or any of its Restricted Subsidiaries for such purpose in an amount up to the amount of such Unrestricted Subsidiary’s proportionate share of such Restricted Payment or (y) the amount of any such Restricted Payment made by a Borrower on behalf of such Unrestricted Subsidiary is treated as an Investment subject to Section 6.06 hereof;
(ii) the Borrowers may pay (or make Restricted Payments to allow any Parent Company to pay) for the repurchase, redemption, retirement or other acquisition or retirement for value of Capital Stock of any Parent Company or any subsidiary held by any future, present or former employee, director, member of management, officer, manager or consultant (or any Affiliate or Immediate Family Member thereof) of any Parent Company, any Borrower or any subsidiary:
(A) in exchange for promissory notes issued pursuant to Section 6.01(o), so long as the aggregate amount of all Cash payments made in respect of such promissory notes, together with the aggregate amount of Restricted Payments made pursuant to sub-clause (D) of this clause (ii) below, does not exceed $10,000,000 in any Fiscal Year, which, if not used in any Fiscal Year, may be carried forward to the next subsequent Fiscal Year;
(B) with the proceeds of any sale or issuance of the Capital Stock of any Borrower or any Parent Company (to the extent such proceeds are contributed in respect of Qualified Capital Stock to any Borrower or any Restricted Subsidiary);
(C) with the net proceeds of any key-man life insurance policies; or
(D) with Cash and Cash Equivalents in an amount not to exceed, together with the aggregate amount of all cash payments made pursuant to sub-clause (A) of this clause (ii) in respect of promissory notes issued pursuant to Section 6.01(o), $10,000,000 in any Fiscal Year, which, if not used in any Fiscal Year, may be carried forward to the next subsequent Fiscal Year;
(iii) so long as no Event of Default then exists or would result therefrom, the Borrowers may make additional Restricted Payments in an amount not to exceed (A) the portion,
if any, of the Available Amount on such date that such Borrower elects to apply to this clause (iii)(A) plus (B) the portion, if any, of the Available Excluded Contribution Amount on such date that such Borrower elects to apply to this clause (iii)(B); provided that, in the case of clause (A) above, the Total Leverage Ratio, calculated on a Pro Forma Basis, would not exceed 3.00:1.00;
(iv) the Borrowers may make Restricted Payments (i) to any Parent Company to enable such Parent Company to make Cash payments in lieu of the issuance of fractional shares in connection with the exercise of warrants, options or other securities convertible into or exchangeable for Capital Stock of such Parent Company and (ii) consisting of (A) payments made or expected to be made in respect of withholding or similar Taxes payable by any future, present or former officers, directors, employees, members of management, managers or consultants of any Borrower, any Restricted Subsidiary or any Parent Company or any of their respective Immediate Family Members and/or (B) repurchases of Capital Stock in consideration of the payments described in sub-clause (A) above, including demand repurchases in connection with the exercise of stock options;
(v) the Borrowers may repurchase (or make Restricted Payments to any Parent Company to enable it to repurchase) Capital Stock upon the exercise of warrants, options or other securities convertible into or exchangeable for Capital Stock if such Capital Stock represents all or a portion of the exercise price of such warrants, options or other securities convertible into or exchangeable for Capital Stock as part of a “cashless” exercise;
(vi) the Borrowers may make Restricted Payments, the proceeds of which are applied on the Closing Date, solely to effect the consummation of the Transactions (including the Transaction Dividend);
(vii) any Borrower may make Restricted Payments to any other Borrower;
(viii) the Borrowers may make Restricted Payments to (i) redeem, repurchase, retire or otherwise acquire any (A) Capital Stock (“Treasury Capital Stock”) of any Borrower and/or any Restricted Subsidiary or (B) Capital Stock of any Parent Company, in the case of each of subclauses (A) and (B), in exchange for, or out of the proceeds of the substantially concurrent sale (other than to a Borrower and/or any Restricted Subsidiary) of, Qualified Capital Stock of any Borrower or any Parent Company to the extent any such proceeds are contributed to the capital of any Borrower and/or any Restricted Subsidiary in respect of Qualified Capital Stock (“Refunding Capital Stock”) and (ii) declare and pay dividends on any Treasury Capital Stock out of the proceeds of the substantially concurrent sale (other than to a Borrower or a Restricted Subsidiary) of any Refunding Capital Stock;
(ix) to the extent constituting a Restricted Payment, any Borrower may consummate any transaction permitted by Section 6.06 (other than Sections 6.06(j) and (t)) and Section 6.07 (other than Section 6.07(g));
(x) the Borrowers may make other Restricted Payments in an aggregate amount not to exceed $50,000,000, so long as no Event of Default shall have occurred and be continuing or shall result therefrom;
(xi) the Borrowers may pay any dividend or consummate any redemption within 60 days after the date of the declaration thereof or the provision of a redemption notice with respect thereto, as the case may be, if at the date of such declaration or notice, the dividend or redemption notice would have complied with the provisions hereof; and
(xii) the Borrowers may make Restricted Payments in an aggregate amount not to exceed $100,000,000 to allow Indivior plc to repurchase, redeem and/or retire Capital Stock of Indivior plc from time to time, so long as no Event of Default shall have occurred and be continuing or shall result therefrom.
(b) Neither Holdings nor any Borrower shall, nor shall they permit any Restricted Subsidiary to, make any payment (whether in Cash, securities or other property) on or in respect of principal of or interest on (x) any Junior Lien Indebtedness or (y) any unsecured Indebtedness or Junior Indebtedness (such Indebtedness under clauses (x), (y) and (z), the “Restricted Debt”), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any Restricted Debt prior to its scheduled maturity (collectively, “Restricted Debt Payments”), except:
(i) any purchase, defeasance, redemption, repurchase, repayment or other acquisition or retirement of any Restricted Debt made by exchange for, or out of the proceeds of, the substantially concurrent incurrence of Refinancing Indebtedness permitted by Section 6.01(p);
(ii) payments as part of an “applicable high yield discount obligation” catch-up payment;
(iii) payments of regularly scheduled interest as and when due in respect of any Restricted Debt, except for any payments with respect to any Subordinated Indebtedness that are prohibited by the subordination provisions thereof;
(iv) [Reserved];
(v) (A) Restricted Debt Payments in exchange for, or with proceeds of any issuance of, Qualified Capital Stock of any Borrower and/or any Restricted Subsidiary and/or any capital contribution in respect of Qualified Capital Stock of any Borrower or any Restricted Subsidiary, (B) Restricted Debt Payments as a result of the conversion of all or any portion of any Restricted Debt into Qualified Capital Stock of any Borrower and/or any Restricted Subsidiary and (C) to the extent constituting a Restricted Debt Payment, payment-in-kind interest with respect to any Restricted Debt to the extent that the incurrence of such additional Restricted Debt is permitted under Section 6.01; and
(vi) so long as no Event of Default exists or would result therefrom, Restricted Debt Payments in an aggregate amount not to exceed (A) the portion, if any, of the Available Amount on such date that any Borrower elects to apply to this clause (vi)(A) plus (B) the portion, if any, of the Available Excluded Contribution Amount on such date that any Borrower elects to apply to this clause (vi)(B); provided that, in the case of clause (A) above, the Total Leverage Ratio, calculated on a Pro Forma Basis, would not exceed 3.00:1.00.
Section 6.05 Restrictions on Subsidiary Distributions. Except as provided herein or in any other Loan Document, any document with respect to any Incremental Equivalent Debt and/or in agreements with respect to refinancings, renewals or replacements of such Indebtedness that are permitted by Section 6.01, (so long as such refinancing, renewal or replacement does not expand the scope of such contractual obligation) no Borrower shall, nor shall it permit any of its Restricted Subsidiaries to, enter into or cause to exist any agreement restricting the ability of (i) any subsidiary of a Borrower to pay dividends or other distributions to a Borrower or any Loan Party, (ii) any Restricted Subsidiary to make cash loans or advances to a Borrower or any Loan Party or to repay or prepay any Loans or advances
made by any such Person or (iii) transfer any of its property or assets to any Borrower or any other Loan Party, except:
(a) in any agreement evidencing (i) Indebtedness of a Restricted Subsidiary that is not a Loan Party permitted by Section 6.01, (ii) Indebtedness permitted by Section 6.01 that is secured by a Permitted Lien if the relevant restriction applies only to the Person obligated under such Indebtedness and its Restricted Subsidiaries or the property or assets intended to secure such Indebtedness and (iii) Indebtedness permitted pursuant to clauses (m), (n), (p) (as it relates to Indebtedness in respect of clauses (m), (n), (r), (u), (v), (q), (w) and/or (z) of Section 6.01), (q), (r), (u), (v), (w) and/or (z) of Section 6.01; provided that, in the case of Indebtedness permitted pursuant to clauses (r), (u), (v) or (p) (as it relates to Indebtedness permitted pursuant to clauses (r), (u) or (v)) of Section 6.01, such restrictions are not materially more restrictive, taken as a whole, than the restrictions contained in this Agreement or are market terms at the time of incurrence or issuance of such Indebtedness.
(b) by reason of customary provisions restricting assignments, subletting or other transfers contained in leases, subleases, licenses, sublicenses, joint venture agreements and similar agreements entered into in the ordinary course of business;
(c) that are or were created by virtue of any Lien granted upon, transfer of, agreement to transfer or grant of, any option or right with respect to any property, assets or Capital Stock not otherwise prohibited under this Agreement;
(d) assumed in connection with any acquisition of property or the Capital Stock of any Person, so long as the relevant encumbrance or restriction relates solely to the Person and its subsidiaries (including the Capital Stock of the relevant Person or Persons) and/or all or a portion of the property so acquired and was not created in connection with or in anticipation of such acquisition;
(e) in any agreement for any Disposition of any Restricted Subsidiary (or all or substantially all of the property and/or assets thereof) that restricts the payment of dividends or other distributions or the making of cash loans or advances by such Restricted Subsidiary pending such Disposition;
(f) in provisions in agreements or instruments which prohibit the payment of dividends or the making of other distributions with respect to any class of Capital Stock of a Person other than on a pro rata basis;
(g) imposed by customary provisions in partnership agreements, limited liability company organizational governance documents, joint venture agreements and other similar agreements, in each case, with respect to Restricted Subsidiaries that are not Wholly-Owned Subsidiaries of a Borrower;
(h) on Cash, other deposits or net worth or similar restrictions imposed by any Person under any contract entered into in the ordinary course of business or for whose benefit such Cash, other deposits or net worth or similar restrictions exist;
(i) set forth in documents which exist on the Closing Date and not created in contemplation thereof;
(j) those arising pursuant to an agreement or instrument relating to any Indebtedness permitted to be incurred after the Closing Date if the relevant restrictions, taken as a whole, are not
materially less favorable to the Lenders than the restrictions contained in this Agreement, taken as a whole (as determined in good faith by the Borrower Representative);
(k) those arising under or as a result of applicable law, rule, regulation or order or the terms of any governmental license, authorization, concession or permit;
(l) those arising in any Hedge Agreement and/or any agreement relating to any Banking Services Obligation;
(m) those contained in any Permitted Securitization Document with respect to any Special Purpose Securitization Subsidiary; and
(n) those imposed by any amendment, modification, restatement, renewal, increase, supplement, refunding, replacement or refinancing of any contract, instrument or obligation referred to in clauses (a) through (m) above; provided that no such amendment, modification, restatement, renewal, increase, supplement, refunding, replacement or refinancing is, in the good faith judgment of the Borrower Representative, more restrictive with respect to such restrictions, taken as a whole, than those in existence prior to such amendment, modification, restatement, renewal, increase, supplement, refunding, replacement or refinancing.
Section 6.06 Investments. No Borrower shall, nor shall it permit any of its Restricted Subsidiaries to, make or own any Investment in any other Person except:
(a) Cash or Investments that were Cash Equivalents at the time made;
(b) (i) Investments existing on the Closing Date in any subsidiary, (ii) Investments made after the Closing Date among any Borrower and/or one or more Restricted Subsidiaries that are Loan Parties (including pursuant to the Intercompany Proceeds Loan), (iii) Investments made after the Closing Date by any Loan Party in any Restricted Subsidiary that is not a Loan Party in an aggregate outstanding amount not to exceed the greater of $50,000,000 and 10% of Consolidated Total Assets as of the last day of the most recently ended Test Period (iv) Investments made by any Loan Party and/or any Restricted Subsidiary that is not a Loan Party in the form of any contribution or Disposition of the Capital Stock of any Person that is not a Loan Party; provided that, prior to such contribution or Disposition or series of transactions resulting in such contribution or Disposition, such Capital Stock was not owned directly by a Loan Party and (v) Investments made by any Restricted Subsidiary that is not a Loan Party in any Loan Party;
(c) Investments (i) constituting deposits, prepayments and/or other credits to suppliers and/or (ii) in the form of advances made to distributors, suppliers, licensors and licensees, in each case, in the ordinary course of business or, in the case of clause (ii), to the extent necessary to maintain the ordinary course of supplies to any Borrower or any Restricted Subsidiary;
(d) [Reserved];
(e) (i) Permitted Acquisitions and (ii) Investments in Restricted Subsidiaries that are not Loan Parties in amounts required to permit such Restricted Subsidiaries to consummate Permitted Acquisitions, so long as the consideration for such Investments shall be included for the purpose of calculating any amount available for Permitted Acquisitions pursuant to clause (b) of the proviso to the definition of “Permitted Acquisition”;
(f) Investments (i) existing on, or contractually committed to or contemplated as of, the Closing Date and described on Schedule 6.06 and (ii) any modification, replacement, renewal or extension of any Investment described in clause (i) above so long as no such modification, renewal or extension thereof increases the amount of such Investment except by the terms thereof or as otherwise permitted by this Section 6.06 (in which case, such increase shall be required to be justified under one or more other exceptions to this Section 6.06);
(g) Investments received in lieu of Cash in connection with any Disposition permitted by Section 6.07;
(h) loans or advances to present or former employees, directors, members of management, officers, managers or consultants or independent contractors (or their respective Immediate Family Members) of any Parent Company, any Borrower and its subsidiaries to the extent permitted by Requirements of Law, in connection with such Person’s purchase of Capital Stock of any Parent Company, either (i) in an aggregate principal amount not to exceed $5,000,000 at any one time outstanding or (ii) so long as the proceeds of such loan or advance are substantially contemporaneously contributed to a Borrower or a Restricted Subsidiary for the purchase of Qualified Capital Stock thereof;
(i) Investments consisting of extensions of credit in the nature of accounts receivable or notes receivable arising from the grant of trade credit in the ordinary course of business;
(j) Investments consisting of Indebtedness permitted under Section 6.01 (other than Indebtedness permitted under Sections 6.01(b) and (h)), Permitted Liens, Restricted Payments permitted under Section 6.04 (other than Section 6.04(a)(ix)), Restricted Debt Payments permitted by Section 6.04(b) and mergers, consolidations, amalgamations, liquidations, windings up, dissolutions or Dispositions permitted by Section 6.07 (other than Section 6.07(a) (if made in reliance on subclause (ii)(y) of the proviso thereto), Section 6.07(b) (if made in reliance on clause (ii) therein), Section 6.07(c)(ii) (if made in reliance on clause (B) therein) and Section 6.07(g));
(k) Investments in the ordinary course of business consisting of endorsements for collection or deposit and customary trade arrangements with customers;
(l) Investments (including debt obligations and Capital Stock) received (i) in connection with the bankruptcy or reorganization of any Person, (ii) in settlement of delinquent obligations of, or other disputes with, customers, suppliers and other account debtors arising in the ordinary course of business, (iii) upon foreclosure with respect to any secured Investment or other transfer of title with respect to any secured Investment and/or (iv) as a result of the settlement, compromise, resolution of litigation, arbitration or other disputes;
(m) loans and advances of payroll payments or other compensation to present or former employees, directors, members of management, officers, managers or consultants of any Parent Company (to the extent such payments or other compensation relate to services provided to such Parent Company (but excluding, for the avoidance of doubt, the portion of any such amount, if any, attributable to the ownership or operations of any subsidiary of any Parent Company other than a Borrower and/or its subsidiaries)), any Borrower and/or any subsidiary in the ordinary course of business;
(n) Investments to the extent that payment therefor is made solely with Capital Stock of any Parent Company or Capital Stock (other than Disqualified Capital Stock) of any Borrower or any Restricted Subsidiary, in each case, to the extent not resulting in a Change of Control;
(o) (i) Investments of any Restricted Subsidiary acquired after the Closing Date, or of any Person acquired by, or merged into or consolidated or amalgamated with, any Borrower or any Restricted Subsidiary after the Closing Date, in each case as part of an Investment otherwise permitted by this Section 6.06 to the extent that such Investments were not made in contemplation of or in connection with such acquisition, merger, amalgamation or consolidation and were in existence on the date of the relevant acquisition, merger, amalgamation or consolidation (it being acknowledged and agreed that the “grandfathering” of Investments pursuant to this clause (o)(i) is not intended to limit the application of clause (b) of the definition of “Permitted Acquisition” to existing Investments in non-Loan Parties acquired pursuant to a Permitted Acquisition) and (ii) any modification, replacement, renewal or extension of any Investment permitted under clause (i) of this Section 6.06(o) so long as no such modification, replacement, renewal or extension thereof increases the amount of such Investment except as otherwise permitted by this Section 6.06 (in which case, such increase shall be required to be justified under one or more other exceptions to this Section 6.06);
(p) Investments made in connection with the Transactions;
(q) Investments made after the Closing Date by any Borrower and/or any of its Restricted Subsidiaries in an aggregate amount at any time outstanding not to exceed:
(i) the greater of $75,000,000 and 15.0% of Consolidated Total Assets as of the last day of the most recently ended Test Period, plus
(ii) in the event that (A) any Borrower or any of its Restricted Subsidiaries makes any Investment after the Closing Date in any Person that is not a Restricted Subsidiary otherwise permitted hereunder and (B) such Person subsequently becomes a Restricted Subsidiary, an amount equal to 100.0% of the fair market value of such Investment as of the date on which such Person becomes a Restricted Subsidiary, to the extent that such amount is not included in the calculation of the Available Amount;
(r) so long as no Event of Default then exists or would result therefrom, Investments made after the Closing Date by any Borrower and/or any of its Restricted Subsidiaries in an aggregate outstanding amount not to exceed (i) the portion, if any, of the Available Amount on such date that such Borrower elects to apply to this clause (r)(i) plus (ii) the portion, if any, of the Available Excluded Contribution Amount on such date that such Borrower elects to apply to this clause (r)(ii);
(s) (i) Guarantees of leases (other than Capital Leases) or of other obligations not constituting Indebtedness and (ii) Guarantees of the lease obligations of suppliers, customers, franchisees and licensees of any Borrower and/or its Restricted Subsidiaries, in each case, in the ordinary course of business;
(t) Investments in any Parent Company in amounts and for purposes for which Restricted Payments to such Parent Company are permitted under Section 6.04(a); provided that any Investment made as provided above in lieu of any such Restricted Payment shall reduce availability under the applicable Restricted Payment basket under Section 6.04(a);
(u) Investments made by any Restricted Subsidiary that is not a Loan Party with the proceeds received by such Restricted Subsidiary from an Investment made by any Loan Party in such Restricted Subsidiary pursuant to this Section 6.06 (other than Investments made pursuant to clause (ii) of Section 6.06(e) or Section 6.06(x));
(v) [Reserved];
(w) Investments under any Derivative Transaction of the type permitted under Section 6.01(s);
(x) Investments made in connection with the creation, formation and/or acquisition of any joint venture, or in any Restricted Subsidiary to enable such Restricted Subsidiary to create, form and/or acquire any joint venture, in an aggregate outstanding amount not to exceed the greater of $25,000,000 and 5.0% of Consolidated Total Assets as of the last day of the most recently ended Test Period;
(y) Investments made in any joint venture existing on the Closing Date as required by, or made pursuant to, buy/sell arrangements between the joint venture parties set forth in joint venture agreements and similar binding arrangements in effect on the Closing Date (other than any modification, replacement, renewal or extension of such Investments so long as no such modification, renewal or extension thereof increases the amount of any such Investment except by the terms thereof or as otherwise permitted by this Section 6.06);
(z) unfunded pension fund and other employee benefit plan obligations and liabilities to the extent that they are permitted to remain unfunded under applicable law;
(aa) Investments in any Borrower, any subsidiary and/or any joint venture in connection with intercompany cash management arrangements and related activities in the ordinary course of business;
(bb) Investments consisting of the licensing or contribution of IP Rights pursuant to joint marketing arrangements with other Persons in the ordinary of course of business; and
(cc) Investments consisting of Securitization Assets or arising as a result of Permitted Securitization Financings.
Section 6.07 Fundamental Changes; Disposition of Assets. No Borrower shall, nor shall it permit any of its Restricted Subsidiaries to, enter into any transaction of merger, consolidation or amalgamation, or liquidate, wind up or dissolve themselves (or suffer any liquidation or dissolution), or make any Disposition, in a single transaction or in a series of related transactions, except:
(a) any Restricted Subsidiary may be merged, consolidated or amalgamated with or into any Borrower or any other Restricted Subsidiary; provided that (i) in the case of any such merger, consolidation or amalgamation with or into a Borrower, such Borrower shall be the continuing or surviving Person and (ii) in the case of any such merger, consolidation or amalgamation with or into any Subsidiary Guarantor, either (x) such Subsidiary Guarantor shall be the continuing or surviving Person or the continuing or surviving Person shall expressly assume the guarantee obligations of the Subsidiary Guarantor in a manner reasonably satisfactory to the Administrative Agent or (y) the relevant transaction shall be treated as an Investment and shall comply with Section 6.06;
(b) Dispositions (including of Capital Stock) among any Borrower and/or any Restricted Subsidiary (upon voluntary liquidation or otherwise); provided that any such Disposition by any Loan Party to any Person that is not a Loan Party shall be (i) for fair market value (as reasonably determined by such Person) with at least 75% of the consideration for such Disposition consisting of Cash or Cash Equivalents at the time of such Disposition or (ii) treated as an Investment and otherwise made in compliance with Section 6.06 (other than in reliance on clause (j) thereof); provided, further, that any such Disposition by any Loan Party (whether as a single transaction or any series of transactions) to any Non-Qualified Loan Party of any intellectual property that, individually or in the aggregate, is material to
the business of the Borrowers and their Restricted Subsidiaries, taken as a whole, shall be treated as an Investment and otherwise made in compliance with Section 6.06 (other than in reliance on clauses (b)(ii) or (j) thereof);
(c) (i) the liquidation or dissolution of any Restricted Subsidiary if the Borrower Representative determines in good faith that such liquidation or dissolution is in the best interests of the Borrowers, is not materially disadvantageous to the Lenders and any Borrower or any Restricted Subsidiary receives any assets of the relevant dissolved or liquidated Restricted Subsidiary; provided that in the case of any liquidation or dissolution of any Loan Party that results in a distribution of assets to any Restricted Subsidiary that is not a Loan Party, such distribution shall be treated as an Investment and shall comply with Section 6.06 (other than in reliance on clause (j) thereof); (ii) any merger, amalgamation, dissolution, liquidation or consolidation, the purpose of which is to effect (A) any Disposition otherwise permitted under this Section 6.07 (other than clause (a), clause (b) or this clause (c)) or (B) any Investment permitted under Section 6.06 (other than in reliance on clause (j) thereof); and (iii) any Restricted Subsidiary (other than a Borrower) may be converted into another form of entity, in each case, so long as such conversion does not adversely affect the value of the Loan Guaranty or Collateral, if any;
(d) (x) Dispositions of inventory or equipment in the ordinary course of business (including on an intercompany basis) and (y) the leasing or subleasing of real property in the ordinary course of business;
(e) Dispositions of surplus, obsolete, used or worn out property or other property that, in the reasonable judgment of the Borrower Representative, is (A) no longer useful in its business (or in the business of any Restricted Subsidiary of such Borrower) or (B) otherwise economically impracticable to maintain;
(f) Dispositions of Cash Equivalents or other assets that were Cash Equivalents when the relevant original Investment was made;
(g) Dispositions, mergers, amalgamations, consolidations or conveyances that constitute Investments permitted pursuant to Section 6.06 (other than Section 6.06(j)), Permitted Liens, Restricted Payments permitted by Section 6.04(a) (other than Section 6.04(a)(ix)) and Sale and Lease-Back Transactions permitted by Section 6.08;
(h) Dispositions for fair market value; provided that with respect to any such Disposition with a purchase price in excess of the greater of $10,000,000 at least 75% of the consideration for such Disposition shall consist of Cash or Cash Equivalents (provided that for purposes of the 75% Cash consideration requirement, (w) the amount of any Indebtedness or other liabilities (other than Indebtedness or other liabilities that are subordinated to the Obligations or that are owed to any Borrower or any Restricted Subsidiary) of any Borrower or any Restricted Subsidiary (as shown on such Person’s most recent balance sheet or statement of financial position (or in the notes thereto) that are assumed by the transferee of any such assets and for which any Borrower and/or its applicable Restricted Subsidiary have been validly released by all relevant creditors in writing, (x) the amount of any trade-in value applied to the purchase price of any replacement assets acquired in connection with such Disposition, (y) any Securities received by any Borrower or any Restricted Subsidiary from such transferee that are converted by such Person into Cash or Cash Equivalents (to the extent of the Cash or Cash Equivalents received) within 180 days following the closing of the applicable Disposition and (z) any Designated Non-Cash Consideration received in respect of such Disposition having an aggregate fair market value, taken together with all other Designated Non-Cash Consideration received pursuant to this clause (z) that is at that time outstanding, not in excess of the greater of $10,000,000 and 2.0% of Consolidated Total Assets as of the last day of the most recently ended Test Period, in each case, shall be deemed to be Cash);
provided, further, that (x) immediately prior to and after giving effect to such Disposition, as determined on the date on which the agreement governing such Disposition is executed, no Event of Default shall exist and (y) the Net Proceeds of such Disposition shall be applied and/or reinvested as (and to the extent) required by Section 2.11(b)(ii);
(i) to the extent that (i) the relevant property is exchanged for credit against the purchase price of similar replacement property or (ii) the proceeds of the relevant Disposition are promptly applied to the purchase price of such replacement property;
(j) Dispositions of Investments in joint ventures to the extent required by, or made pursuant to, buy/sell arrangements between joint venture or similar parties set forth in the relevant joint venture arrangements and/or similar binding arrangements;
(k) Dispositions of accounts receivable in the ordinary course of business (including any discount and/or forgiveness thereof and any factoring or similar arrangement) or in connection with the collection or compromise thereof (other than in connection with a Permitted Securitization Financing);
(l) Dispositions and/or terminations of leases, subleases, licenses or sublicenses (including the provision of software under any open source license), which (i) do not materially interfere with the business of the Borrowers and their Restricted Subsidiaries or (ii) relate to closed facilities or the discontinuation of any product line;
(m) (i) any termination of any lease in the ordinary course of business, (ii) any expiration of any option agreement in respect of real or personal property and (iii) any surrender or waiver of contractual rights or the settlement, release or surrender of contractual rights or litigation claims (including in tort) in the ordinary course of business;
(n) Dispositions of property subject to foreclosure, casualty, eminent domain or condemnation proceedings (including in lieu thereof or any similar proceeding);
(o) Dispositions or consignments of equipment, inventory or other assets (including leasehold interests in real property) with respect to facilities that are temporarily not in use, held for sale or closed;
(p) Dispositions in connection with the Transactions;
(q) Dispositions of non-core assets acquired in connection with any acquisition permitted hereunder and sales of Real Estate Assets acquired in any acquisition permitted hereunder which, within 90 days of the date of such acquisition, are designated in writing to the Administrative Agent as being held for sale and not for the continued operation of the Borrowers or any of their Restricted Subsidiaries or any of their respective businesses; provided that (i) the Net Proceeds received in connection with any such Disposition shall be applied and/or reinvested as (and to the extent required) by Section 2.11(b)(ii) and (ii) no Event of Default exists on the date on which the definitive agreement governing the relevant Disposition is executed;
(r) exchanges or swaps, including transactions covered by Section 1031 of the Code (or any comparable provision of any foreign jurisdiction), of property or assets so long as any such exchange or swap is made for fair value (as reasonably determined by the Borrower Representative) for like property or assets; provided that (i) upon the consummation of any such exchange or swap by any Loan Party, to the extent the property received does not constitute an Excluded Asset, the Administrative
Agent has a perfected Lien with the same priority as the Lien held on the Real Estate Assets so exchanged or swapped and (ii) any Net Proceeds received as “cash boot” in connection with any such transaction shall be applied and/or reinvested as (and to the extent required) by Section 2.11(b)(ii);
(s) the purchase and Disposition (including by capital contribution) of Securitization Assets including pursuant to Permitted Securitization Financings;
(t) (i) licensing and cross-licensing arrangements involving any technology, intellectual property or IP Rights of any Borrower or any Restricted Subsidiary in the ordinary course of business and (ii) Dispositions, abandonments, cancellations or lapses of IP Rights, or issuances or registrations, or applications for issuances or registrations, of IP Rights, which, in the reasonable good faith determination of the Borrower Representative, are not material to the conduct of the business of the Borrowers or their Restricted Subsidiaries, or are no longer economical to maintain in light of its use;
(u) terminations or unwinds of Derivative Transactions;
(v) Dispositions of Capital Stock of, or sales of Indebtedness or other Securities of, Unrestricted Subsidiaries so long as (i) no Default or Event of Default then exists or would result therefrom (ii) substantially all of the assets of such Unrestricted Subsidiary does not consist of Cash, Cash Equivalents and/or assets that were contributed and/or otherwise transferred to such Unrestricted Subsidiary by any Borrower or any Restricted Subsidiary in the form of one or more Investments and (iii) the fair market value of the Capital Stock in such Unrestricted Subsidiary does not exceed 10% of the Consolidated Adjusted EBITDA of the Borrowers and their Restricted Subsidiary as of the most recently ended Test Period;
(w) Dispositions of Real Estate Assets and related assets in the ordinary course of business in connection with relocation activities for directors, officers, employees, members of management, managers or consultants of any Parent Company, any Borrower and/or any Restricted Subsidiary;
(x) Dispositions made to comply with any order of any agency of the U.S. Federal government, any state, authority or other regulatory body or any applicable Requirement of Law;
(y) any merger, consolidation, Disposition or conveyance the sole purpose of which is to reincorporate or reorganize any Domestic Subsidiary in another jurisdiction in the U.S.;
(z) Dispositions to effectuate the Transactions in accordance with the Steps Plan;
(aa) any sale of motor vehicles and information technology equipment purchased at the end of an operating lease and resold thereafter;
(bb) [Reserved]; and
(cc) Dispositions contemplated on the Closing Date and described on Schedule 6.07.
To the extent that any Collateral is Disposed of as expressly permitted by this Section 6.07 to any Person other than a Loan Party, such Collateral shall be sold free and clear of the Liens created by the Loan Documents, which Liens shall be automatically released upon the consummation of such Disposition; it being understood and agreed that the Administrative Agent shall be authorized to take, and shall take, any actions deemed appropriate in order to effect the foregoing in accordance with Article 8.
Section 6.08 Sale and Lease-Back Transactions. No Borrower shall, nor shall it permit any of its Restricted Subsidiaries to, directly or indirectly, become or remain liable as lessee or as a guarantor or other surety with respect to any lease of any property (whether real, personal or mixed), whether now owned or hereafter acquired, which such Borrower or the relevant Restricted Subsidiary (a) has sold or transferred or is to sell or to transfer to any other Person (other than any Borrower or any of its Restricted Subsidiaries) and (b) intends to use for substantially the same purpose as the property which has been or is to be sold or transferred by such Borrower or such Restricted Subsidiary to any Person (other than any Borrower or any of its Restricted Subsidiaries) in connection with such lease (such a transaction described herein, a “Sale and Lease-Back Transaction”); provided that any Sale and Lease-Back Transaction shall be permitted so long as the Net Proceeds of such Disposition are applied and/or reinvested as (and to the extent) required by Section 2.11(b)(ii) and such Sale and Lease-Back Transaction is (A) permitted by Section 6.01(m) or (B)(1) made in exchange for cash consideration, (2) such Borrower or its applicable Restricted Subsidiary would otherwise be permitted to enter into, and remain liable under, the applicable underlying lease and (3) the aggregate fair market value of the assets sold subject to all Sale and Lease-Back Transactions under this clause (B) shall not exceed the greater of $50,000,000 and 10.0% of Consolidated Total Assets as of the last day of the most recently ended Test Period.
Section 6.09 Transactions with Affiliates. No Borrower shall, nor shall it permit any of its Restricted Subsidiaries to, enter into any transaction (including the purchase, sale, lease or exchange of any property or the rendering of any service) with any of their respective Affiliates on terms that are less favorable to such Borrower or such Restricted Subsidiary, as the case may be (as reasonably determined by the Borrower Representative), than those that might be obtained at the time in a comparable arm’s-length transaction from a Person who is not an Affiliate; provided that the foregoing restriction shall not apply to:
(a) any transaction between or among any Borrower and/or one or more Restricted Subsidiaries (or any entity that becomes a Restricted Subsidiary as a result of such transaction) to the extent permitted or not restricted by this Agreement;
(b) any issuance, sale or grant of securities or other payments, awards or grants in cash, securities or otherwise pursuant to, or the funding of employment arrangements, stock options and stock ownership plans approved by the board of directors (or equivalent governing body) of any Parent Company or of any Borrower or any Restricted Subsidiary;
(c) (i) any collective bargaining, employment or severance agreement or compensatory (including profit sharing) arrangement entered into by any Borrower or any of its Restricted Subsidiaries with their respective current or former officers, directors, members of management, managers, employees, consultants or independent contractors or those of any Parent Company, (ii) any subscription agreement or similar agreement pertaining to the repurchase of Capital Stock pursuant to put/call rights or similar rights with current or former officers, directors, members of management, managers, employees, consultants or independent contractors and (iii) transactions pursuant to any employee compensation, benefit plan, stock option plan or arrangement, any health, disability or similar insurance plan which covers current or former officers, directors, members of management, managers, employees, consultants or independent contractors or any employment contract or arrangement;
(d) (i) transactions permitted by Sections 6.01(d), (o), (bb) and (ee), 6.04 and 6.06(h), (m), (q), (t), (v), (x), (y), (z), (aa) and (cc) and (ii) issuances of Capital Stock not restricted by this Agreement;
(e) transactions in existence on the Closing Date and any amendment, modification or extension thereof to the extent such amendment, modification or extension, taken as a whole, is not (i) materially adverse to the Lenders or (ii) more disadvantageous to the Lenders than the relevant transaction in existence on the Closing Date;
(f) [Reserved];
(g) the Transactions, including the payment of Transaction Costs and the Transaction Dividend;
(h) customary compensation to Affiliates in connection with financial advisory, financing, underwriting or placement services or in respect of other investment banking activities and other transaction fees, which payments are approved by the majority of the members of the board of directors (or similar governing body) or a majority of the disinterested members of the board of directors (or similar governing body) of the Borrower Representative in good faith;
(i) Guarantees permitted by Section 6.01 or Section 6.06;
(j) loans and other transactions among the Loan Parties to the extent permitted under this Article 6;
(k) the payment of customary fees and reasonable out-of-pocket costs to, and indemnities provided on behalf of, members of the board of directors (or similar governing body), officers, employees, members of management, managers, consultants and independent contractors of any Borrower and/or any of its Restricted Subsidiaries in the ordinary course of business and, in the case of payments to such Person in such capacity on behalf of any Parent Company, to the extent attributable to the operations of any Borrower or its Restricted Subsidiaries;
(l) transactions with customers, clients, suppliers, joint ventures, purchasers or sellers of goods or services or providers of employees or other labor entered into in the ordinary course of business, which are (i) fair to a Borrower and/or its applicable Restricted Subsidiary in the good faith determination of the board of directors (or similar governing body) of such Borrower or the senior management thereof or (ii) on terms at least as favorable as might reasonably be obtained from a Person other than an Affiliate;
(m) the payment of reasonable out-of-pocket costs and expenses related to registration rights;
(n) [Reserved]; and
(o) any transaction in respect of which a Borrower delivers to the Administrative Agent a letter addressed to the board of directors (or equivalent governing body) of such Borrower from an accounting, appraisal or investment banking firm of nationally recognized standing stating that such transaction is on terms that are no less favorable to such Borrower or the applicable Restricted Subsidiary than might be obtained at the time in a comparable arm’s length transaction from a Person who is not an Affiliate.
Section 6.10 Conduct of Business. From and after the Closing Date, no Borrower shall, nor shall it permit any of its Restricted Subsidiaries to, engage in any material line of business other than (a) the businesses engaged in by any Borrower or any Restricted Subsidiary on the Closing Date and similar, complementary, ancillary or related businesses and, in the case of a Special Purpose
Securitization Subsidiary, Permitted Securitization Financings and (b) such other lines of business to which the Required Lenders may consent.
Section 6.11 Amendments or Waivers of Organizational Documents. No Borrower shall, nor shall it permit any Subsidiary Guarantor to, amend or modify their respective Organizational Documents, in each case in a manner that is materially adverse to the Lenders (in their capacities as such) without obtaining the prior written consent of the Required Lenders; provided that, for purposes of clarity, it is understood and agreed that any Borrower and/or any Subsidiary Guarantor may effect a change to its organizational form and/or consummate any other transaction that is permitted under Section 6.07.
Section 6.12 Amendments of or Waivers with Respect to Certain Debt. No Borrower shall, nor shall it permit any of its Restricted Subsidiaries to, amend or otherwise modify the terms of any Restricted Debt or the Intercompany Proceeds Loan (or the documentation governing or evidencing the foregoing) if the effect of such amendment or modification, together with all other amendments or modifications made, is materially adverse to the interests of the Lenders (in their capacities as such); provided that, for purposes of clarity, it is understood and agreed that the foregoing limitation shall not otherwise prohibit any Refinancing Indebtedness or any other replacement, refinancing, amendment, supplement, modification, extension, renewal, restatement or refunding of any Junior Indebtedness, in each case, that is permitted under this Agreement in respect thereof.
Section 6.13 Fiscal Year. The Borrowers shall not change their Fiscal Year-end to a date other than December 31; provided, that, the Borrowers may, upon written notice to the Administrative Agent, change the Fiscal Year-end of the Borrowers to another date, in which case the Borrowers and the Administrative Agent will, and are hereby authorized to, make any adjustments to this Agreement that are necessary to reflect such change in Fiscal Year.
Section 6.14 Minimum Liquidity. On the last day of any Test Period, the Borrowers shall not permit Liquidity of the Borrowers and their Restricted Subsidiaries to be less than the greater of (a) $100,000,000 and (b) 50% of the aggregate amount of then outstanding Loans and other Indebtedness secured by a Lien on all or any portion of the Collateral that ranks pari passu with the Lien securing the Secured Obligations.
ARTICLE 7
EVENTS OF DEFAULT
Section 7.01 Events of Default. If any of the following events (each, an “Event of Default”) shall occur:
(a) Failure To Make Payments When Due. Failure by any Borrower to pay (i) any installment of principal of any Loan or any reimbursement obligation in respect of any LC Disbursement when due, whether at stated maturity, by acceleration, by notice of voluntary prepayment, by mandatory prepayment or otherwise; or (ii) any interest on any Loan or any fee or any other amount due hereunder within five Business Days after the date due; or
(b) Default in Other Agreements. (i) Failure by any Loan Party or any of its Restricted Subsidiaries or Holdings to pay when due any principal of or interest on or any other amount payable in respect of one or more items of Indebtedness (other than Indebtedness referred to in clause (a) above) with an aggregate outstanding principal amount exceeding the Threshold Amount, in each case beyond the grace period, if any, provided therefor; or (ii) breach or default by any Loan Party or any of its
Restricted Subsidiaries or Holdings with respect to any other term of (A) one or more items of Indebtedness with an aggregate outstanding principal amount exceeding the Threshold Amount or (B) any loan agreement, mortgage, indenture or other agreement relating to such item(s) of Indebtedness (other than, for the avoidance of doubt, with respect to Indebtedness consisting of Hedging Obligations, termination events or equivalent events pursuant to the terms of the relevant Hedge Agreement which are not the result of any default thereunder by any Loan Party or any Restricted Subsidiary or Holdings), in each case beyond the grace period, if any, provided therefor, if the effect of such breach or default is to cause, or to permit the holder or holders of such Indebtedness (or a trustee or agent on behalf of such holder or holders) to cause, such Indebtedness to become or be declared due and payable (or redeemable) prior to its stated maturity or the stated maturity of any underlying obligation, as the case may be; provided that clause (ii) of this paragraph (b) shall not apply to secured Indebtedness that becomes due as a result of the voluntary sale or transfer of the property securing such Indebtedness if such sale or transfer is permitted hereunder and under the documents governing or evidencing such Indebtedness, and so long as repayments are made as required by the terms of such Indebtedness; provided, further, that any failure described under clause (i) or (ii) above is unremedied and is not waived by the holders of such Indebtedness prior to any termination of the Commitments or acceleration of the Loans pursuant to Article 7 or other exercise of remedies under any Loan Document; or
(c) Breach of Certain Covenants. Failure of any Loan Party, as required by the relevant provision, to perform or comply with any term or condition contained in Section 5.01(e)(i), Section 5.02 (as it applies to the preservation of the existence of Holdings or the Borrowers), Section 5.16, Section 5.19, Section 5.20 or Article 6; or
(d) Breach of Representations, Etc. Any representation, warranty or certification made or deemed made by any Loan Party or Holdings in any Loan Document or in any certificate required to be delivered in connection herewith or therewith (including, for the avoidance of doubt, any Perfection Certificate and any Perfection Certificate Supplement) being untrue in any material respect as of the date made or deemed made; or
(e) Other Defaults Under Loan Documents. Default by any Loan Party or Holdings in the performance of or compliance with any term contained herein or any of the other Loan Documents, other than any such term referred to in any other Section of this Article 7, which default has not been remedied or waived within 30 days after receipt by the Borrower Representative of written notice thereof from the Administrative Agent; or
(f) Involuntary Bankruptcy; Appointment of Receiver, Etc. (i) The entry by a court of competent jurisdiction of a decree or order for relief in respect of Holdings, any Borrower or any of its Restricted Subsidiaries (other than any Immaterial Subsidiary) in an involuntary case under any Debtor Relief Law now or hereafter in effect, which decree or order is not stayed (or the declaration of or any procedure or step is taken in relation to a moratorium in respect of the Indebtedness of any English Group Member, any Irish Group Member or any Jersey Group Member (other than an Immaterial Subsidiary)); or any other similar relief shall be granted under any applicable federal, state or local law; or (ii) the commencement of an involuntary case against Holdings, any Borrower or any of its Restricted Subsidiaries (other than any Immaterial Subsidiary) under any Debtor Relief Law; the entry by a court having jurisdiction in the premises of a decree or order for the appointment of (or in respect of any English Group Member, any Irish Group Member any Jersey Group Member of, any corporate action, legal proceeding or other procedure or step is taken in relation to the appointment of) a receiver, an administrative receiver, an administrator, a receiver and manager, a compulsory manager, a (preliminary) insolvency receiver, liquidator, sequestrator, trustee, custodian, examiner or other officer having similar powers over Holdings, any Borrower or any of its Restricted Subsidiaries (other than any Immaterial Subsidiary), or over all or a substantial part of its property, or (in respect of an English Group Member, an
Irish Group Member or a Jersey Group Member (other than an Immaterial Subsidiary) the enforcement of any security over any of its assets); or the involuntary appointment of an interim receiver, trustee or other custodian of Holdings, any Borrower or any of its Restricted Subsidiaries (other than any Immaterial Subsidiary) for all or a substantial part of its property, which remains undismissed, unvacated, unbounded or unstayed pending appeal for 60 consecutive days; or
(g) Voluntary Bankruptcy; Appointment of Receiver, Etc. (i) The entry against Holdings, any Borrower or any of its Restricted Subsidiaries (other than any Immaterial Subsidiary) of an order for relief, the commencement by Holdings, any Borrower or any of its Restricted Subsidiaries (other than any Immaterial Subsidiary) of a voluntary case under any Debtor Relief Law, or the consent by Holdings, any Borrower or any of its Restricted Subsidiaries (other than any Immaterial Subsidiary) to the entry of an order for relief in an involuntary case or to the conversion of an involuntary case to a voluntary case, under any Debtor Relief Law, or the consent by Intermediate Holdings, any Borrower or any of their Restricted Subsidiaries (other than any Immaterial Subsidiary) to the appointment of or taking possession by a receiver, receiver and manager, trustee or other custodian for all or a substantial part of its property; (ii) the making by Holdings, any Borrower or any of its Restricted Subsidiaries (other than any Immaterial Subsidiary) of a general assignment for the benefit of creditors; (iii) any English Group Member (or any Irish Group Member or Jersey Group Member) (other than any Immaterial Subsidiary) is unable to pay its debts as they fall due or is deemed to, or is declared to, be unable to pay its debts under English law (or Irish law or Jersey law as the case may be) or suspends or resolves or declares in writing an intention to suspend making payments on any of its debts; (iv) the admission by Holdings, any Borrower or any of its Restricted Subsidiaries (other than any Immaterial Subsidiary) in writing of their inability to pay their respective debts as such debts become due; or (v) a Luxembourg Insolvency Event, shall have occurred with respect to any Lux Loan Party, provided that, in the case of an involuntary filing for bankruptcy (faillite) or judicial liquidation (liquidation forcée), such proceeding shall have been undismissed, unvacated, unbounded or unstayed pending appeal for 60 consecutive days; or
(h) Judgments and Attachments. The entry or filing of one or more final money judgments, writs or warrants of attachment or similar process against Holdings, any Borrower or any of its Restricted Subsidiaries or any of their respective assets involving in the aggregate at any time an amount in excess of the Threshold Amount (in either case to the extent not adequately covered by self-insurance (if applicable) or by insurance as to which the relevant third party insurance company has been notified and not denied coverage), which judgment, writ, warrant or similar process remains unpaid, undischarged, unvacated, unbonded or unstayed pending appeal for a period of 60 days; or
(i) Employee Benefit Plans. The occurrence of one or more ERISA Events, which individually or in the aggregate result in liability of Holdings, any Borrower or any of its Restricted Subsidiaries in an aggregate amount which would reasonably be expected to result in a Material Adverse Effect; or
(j) Change of Control. The occurrence of a Change of Control; or
(k) Guaranties, Collateral Documents and Other Loan Documents. At any time after the execution and delivery thereof (i) any material Loan Guaranty for any reason ceasing to be in full force and effect (other than in accordance with its terms or as a result of the occurrence of the Termination Date) or being declared to be null and void or the repudiation in writing by any Loan Party of its obligations thereunder (other than as a result of the discharge of such Loan Party in accordance with the terms thereof), (ii) this Agreement, any Intercreditor Agreement or any material Collateral Document ceasing to be in full force and effect (other than by reason of a release of Collateral in accordance with the terms hereof or thereof, the occurrence of the Termination Date or any other termination of such Collateral Document in accordance with the terms thereof) or being declared null and void or (iii) the
contesting by any Loan Party of the validity or enforceability of any material provision of any Loan Document (or any Lien purported to be created by the Collateral Documents or Loan Guaranty) in writing or denial by any Loan Party in writing that it has any further liability (other than by reason of the occurrence of the Termination Date), including with respect to future advances or other credit extensions by the Lenders, under any Loan Document to which it is a party; or
(l) Subordination. The Obligations ceasing or the assertion in writing by any Loan Party that the Obligations cease to constitute senior indebtedness under the subordination provisions of any document or instrument evidencing any permitted Subordinated Indebtedness in excess of the Threshold Amount or any such subordination provision being invalidated or otherwise ceasing, for any reason, to be valid, binding and enforceable obligations of the parties thereto; or
(m) Pensions. The Pensions Regulator issues a Financial Support Direction or a Contribution Notice to any Parent Company or subsidiary thereof imposing liability on one or more Borrowers in an aggregate amount which has or would reasonably be expected to have a Material Adverse Effect;
then, and in every such event (other than an event with respect to a Borrower (other than the Borrower Representative, to the extent such event does not arise under a Debtor Relief Law of the U.S.) described in clause (f) or (g) of this Article) and at any time thereafter during the continuance of such event, the Administrative Agent may, and at the request of the Required Lenders shall, by notice to the Borrower Representative, take any of the following actions, at the same or different times: (i) terminate the Revolving Credit Commitments, or any Additional Commitments, and thereupon such Commitments and/or Additional Commitments shall terminate immediately, (ii) declare the Loans then outstanding to be due and payable in whole (or in part, in which case any principal not so declared to be due and payable may thereafter be declared to be due and payable), and thereupon the principal of the Loans so declared to be due and payable, together with accrued interest thereon and all fees and other obligations of the Borrowers accrued hereunder, shall become due and payable immediately, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrowers and (iii) require that the Borrowers deposit in the LC Collateral Account an additional amount in Cash as reasonably requested by the Issuing Banks (not to exceed 102% of the relevant face amount) of the then outstanding LC Exposure (minus the amount then on deposit in the LC Collateral Account); provided that upon the occurrence of an event with respect to a Borrower (other than the Borrower Representative, to the extent such event does not arise under a Debtor Relief Law of the U.S.) described in clause (f) or (g) of this Article, any such Commitments and/or Additional Commitments shall automatically terminate and the principal of the Loans then outstanding, together with accrued interest thereon and all fees and other obligations of the Borrowers accrued hereunder, shall automatically become due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrowers, and the obligation of the Borrowers to Cash collateralize the outstanding Letters of Credit as aforesaid shall automatically become effective, in each case without further action of the Administrative Agent or any Lender. Upon the occurrence and during the continuance of an Event of Default, the Administrative Agent may, and at the request of the Required Lenders shall, exercise any rights and remedies provided to the Administrative Agent under the Loan Documents or at law or equity, including all remedies provided under the UCC or any other applicable law.
ARTICLE 8
THE ADMINISTRATIVE AGENT
Each of the Lenders and the Issuing Banks hereby irrevocably appoints Morgan Stanley Senior Funding, Inc. (or any successor appointed pursuant hereto) as Administrative Agent and authorizes
the Administrative Agent to take such actions on its behalf, including execution of the other Loan Documents, and to exercise such powers as are delegated to the Administrative Agent by the terms of the Loan Documents, together with such actions and powers as are reasonably incidental thereto.
The Administrative Agent shall act as security trustee in relation to the security created or evidenced by the English Security Documents, the Irish Security Documents and the Jersey Security Documents. Each Lender hereby authorizes the Administrative Agent to enter into each Security Trust Deed on its behalf. Each Person that becomes a Lender hereunder after the Closing Date hereby confirms that it shall be bound by the terms of the Security Trust Deeds on and from the date on which it becomes an Additional Lender as if it were an original Lender party thereto. In addition, each reference to the Administrative Agent in this Article 8 (including in connection with any indemnification or exculpation provided herein for the benefit of the Administrative Agent) shall be deemed to apply to the Administrative Agent acting in its capacity as security trustee under the Security Trust Deeds.
Any Person serving as Administrative Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not the Administrative Agent, and the term “Lender” or “Lenders” shall, unless otherwise expressly indicated, unless the context otherwise requires or unless such Person is in fact not a Lender, include each Person serving as Administrative Agent hereunder in its individual capacity. Such Person and its Affiliates may accept deposits from, lend money to, act as the financial advisor or in any other advisory capacity for and generally engage in any kind of business with any Loan Party or any subsidiary of any Loan Party or other Affiliate thereof as if it were not the Administrative Agent hereunder. The Lenders acknowledge that, pursuant to such activities, the Administrative Agent or its Affiliates may receive information regarding any Loan Party or any of its Affiliates (including information that may be subject to confidentiality obligations in favor of such Loan Party or such Affiliate) and acknowledge that the Administrative Agent shall not, except as expressly provided herein, be under any obligation to provide such information to them.
The Administrative Agent shall not have any duties or obligations except those expressly set forth in the Loan Documents. Without limiting the generality of the foregoing, (a) the Administrative Agent shall not be subject to any fiduciary or other implied duties, regardless of whether a Default or Event of Default exists, and the use of the term “agent” herein and in the other Loan Documents with reference to the Administrative Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable law; it being understood that such term is used merely as a matter of market custom, and is intended to create or reflect only an administrative relationship between independent contracting parties, (b) the Administrative Agent shall not have any duty to take any discretionary action or exercise any discretionary power, except discretionary rights and powers that are expressly contemplated by the Loan Documents and which the Administrative Agent is required to exercise in writing as directed by the Required Lenders or Required Revolving Lenders (or such other number or percentage of the Lenders as shall be necessary under the relevant circumstances as provided in Section 9.02); provided that the Administrative Agent shall not be required to take any action that, in its opinion or the opinion of its counsel, may expose the Administrative Agent to liability or that is contrary to any Loan Document or applicable laws, and (c) except as expressly set forth in the Loan Documents, the Administrative Agent shall not have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to Intermediate Holdings, the Borrowers or any of their Restricted Subsidiaries that is communicated to or obtained by the Person serving as Administrative Agent or any of its Affiliates in any capacity. The Administrative Agent shall not be liable to the Lenders or any other Secured Party for any action taken or not taken by it with the consent or at the request of the Required Lenders or Required Revolving Lenders (or such other number or percentage of the Lenders as shall be necessary, or as the Administrative Agent shall believe in good faith shall be necessary, under the relevant circumstances as provided in Section 9.02) or in the
absence of its own gross negligence or willful misconduct, as determined by the final judgment of a court of competent jurisdiction, in connection with its duties expressly set forth herein. The Administrative Agent shall not be deemed to have knowledge of any Default or Event of Default unless and until written notice thereof is given to the Administrative Agent by the Borrowers or any Lender, and the Administrative Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with any Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder or in connection with any Loan Document, (iii) the performance or observance of any covenant, agreement or other term or condition set forth in any Loan Document or the occurrence of any Default or Event of Default, (iv) the validity, enforceability, effectiveness or genuineness of any Loan Document or any other agreement, instrument or document, (v) the creation, perfection or priority of any Lien on the Collateral or the existence, value or sufficiency of the Collateral, (vi) the satisfaction of any condition set forth in Article 4 or elsewhere in any Loan Document, other than to confirm receipt of items expressly required to be delivered to the Administrative Agent or (vii) any property, book or record of any Loan Party or any Affiliate thereof.
If any Lender acquires knowledge of a Default or Event of Default, it shall promptly notify the Administrative Agent and the other Lenders thereof in writing. Each Lender agrees that, except with the written consent of the Administrative Agent, it will not take any enforcement action hereunder or under any other Loan Document, accelerate the Obligations under any Loan Document, or exercise any right that it might otherwise have under applicable law or otherwise to credit bid at any foreclosure sale, UCC sale, any sale under Section 363 of the Bankruptcy Code or other similar Dispositions of Collateral. Notwithstanding the foregoing, however, a Lender may take action to preserve or enforce its rights against a Loan Party where a deadline or limitation period is applicable that would, absent such action, bar enforcement of the Obligations held by such Lender, including the filing of a proof of claim in a case under the Bankruptcy Code.
Notwithstanding anything to the contrary contained herein or in any of the other Loan Documents, each Borrower, the Administrative Agent and each Secured Party agree that (i) no Secured Party shall have any right individually to realize upon any of the Collateral or to enforce the Loan Guaranty; it being understood and agreed that all powers, rights and remedies hereunder may be exercised solely by, the Administrative Agent, on behalf of the Secured Parties in accordance with the terms hereof and all powers, rights and remedies under the other Loan Documents may be exercised solely by, the Administrative Agent, and (ii) in the event of a foreclosure by the Administrative Agent on any of the Collateral pursuant to a public or private sale or in the event of any other Disposition (including pursuant to Section 363 of the Bankruptcy Code or any other applicable law), (A) the Administrative Agent, as agent for and representative of the Secured Parties, shall be entitled, for the purpose of bidding and making settlement or payment of the purchase price for all or any portion of the Collateral sold at any such sale, to use and apply any of the Obligations as a credit on account of the purchase price for any Collateral payable by the Administrative Agent at such Disposition and (B) the Administrative Agent or any Lender may be the purchaser or licensor of any or all of such Collateral at any such Disposition.
No holder of any Secured Hedging Obligation or Banking Services Obligation in its respective capacity as such shall have any rights in connection with the management or release of any Collateral or of the obligations of any Loan Party under this Agreement.
Each of the Lenders hereby irrevocably authorizes (and by entering into a Hedge Agreement with respect to any Secured Hedging Obligation and/or by entering into documentation in connection with, or otherwise providing, any Banking Services Obligation, each of the other Secured Parties hereby authorizes and shall be deemed to authorize) the Administrative Agent, on behalf of all Secured Parties to take any of the following actions upon the instruction of the Required Lenders:
(a) consent to the Disposition of all or any portion of the Collateral free and clear of the Liens securing the Secured Obligations in connection with any Disposition pursuant to the applicable provisions of the Bankruptcy Code, including Section 363 thereof;
(b) credit bid all or any portion of the Secured Obligations, or purchase all or any portion of the Collateral (in each case, either directly or through one or more acquisition vehicles), in connection with any Disposition of all or any portion of the Collateral pursuant to the applicable provisions of the Bankruptcy Code, including under Section 363 thereof;
(c) credit bid all or any portion of the Secured Obligations, or purchase all or any portion of the Collateral (in each case, either directly or through one or more acquisition vehicles), in connection with any Disposition of all or any portion of the Collateral pursuant to the applicable provisions of the UCC, including pursuant to Sections 9-610 or 9-620 of the UCC;
(d) credit bid all or any portion of the Secured Obligations, or purchase all or any portion of the Collateral (in each case, either directly or through one or more acquisition vehicles), in connection with any foreclosure or other Disposition conducted in accordance with applicable law following the occurrence of an Event of Default, including by power of sale, judicial action or otherwise; and/or
(e) estimate the amount of any contingent or unliquidated Secured Obligations of such Lender or other Secured Party; provided that, in the case of a Secured Hedging Obligation, the Administrative Agent shall be entitled to rely upon (without any further investigation) the termination or mark-to-market value, if any, provided to the Administrative Agent by the relevant counterparty;
it being understood that no Lender shall be required to fund any amount in connection with any purchase of all or any portion of the Collateral by the Administrative Agent pursuant to the foregoing clause (b), (c) or (d) without its prior written consent.
Each Secured Party agrees that the Administrative Agent is under no obligation to credit bid any part of the Secured Obligations or to purchase or retain or acquire any portion of the Collateral; provided that, in connection with any credit bid or purchase described under clause (b), (c) or (d) of the preceding paragraph, the Secured Obligations owed to all of the Secured Parties (other than with respect to contingent or unliquidated liabilities as set forth in the next succeeding paragraph) may be, and shall be, credit bid by the Administrative Agent on a ratable basis.
With respect to each contingent or unliquidated claim that is a Secured Obligation, the Administrative Agent is hereby authorized, but is not required, to estimate the amount thereof for purposes of any credit bid or purchase described in the second preceding paragraph so long as the estimation of the amount or liquidation of such claim would not unduly delay the ability of the Administrative Agent to credit bid the Secured Obligations or purchase the Collateral in the relevant Disposition. In the event that the Administrative Agent, in its sole and absolute discretion, elects not to estimate any such contingent or unliquidated claim or any such claim cannot be estimated without unduly delaying the ability of the Administrative Agent to consummate any credit bid or purchase in accordance with the second preceding paragraph, then any contingent or unliquidated claims not so estimated shall be disregarded, shall not be credit bid, and shall not be entitled to any interest in the portion or the entirety of the Collateral purchased by means of such credit bid.
Each Secured Party whose Secured Obligations are credit bid under clause (b), (c) or (d) of the third preceding paragraph shall be entitled to receive interests in the Collateral or any other asset acquired in connection with such credit bid (or in the Capital Stock of the acquisition vehicle or vehicles
that are used to consummate such acquisition) on a ratable basis in accordance with the percentage obtained by dividing (x) the amount of the Secured Obligations of such Secured Party that were credit bid in such credit bid or other Disposition, by (y) the aggregate amount of all Secured Obligations that were credit bid in such credit bid or other Disposition.
In addition, in case of the pendency of any proceeding under any Debtor Relief Law or any other judicial proceeding relative to any Loan Party, each Secured Party agrees that the Administrative Agent (irrespective of whether the principal of any Loan or LC Exposure is then due and payable as herein expressed or by declaration or otherwise and irrespective of whether the Administrative Agent shall have made any demand on the Borrowers) shall be entitled and empowered, by intervention in such proceeding or otherwise:
(i) to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loans or LC Exposure and all other Secured Obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Lenders, the Issuing Banks and the Administrative Agent (including any claim for the reasonable compensation, expenses, disbursements and advances of the Lenders, the Issuing Banks and the Administrative Agent and their respective agents and counsel and all other amounts to the extent due to the Lenders and the Administrative Agent under Sections 2.12 and 9.03) allowed in such judicial proceeding; and
(ii) to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same, and if the Administrative Agent collects or receives any money or other property payable or deliverable on other claims of Secured Parties, to distribute the same to such Secured Parties as their interests may appear hereunder.
Any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender and each Issuing Bank to make such payments to the Administrative Agent and, in the event that the Administrative Agent consents to the making of such payments directly to the Lenders and the Issuing Banks, to pay to the Administrative Agent any amount due for the reasonable compensation, expenses, disbursements and advances of the Administrative Agent and its agents and counsel, and any other amount due to the Administrative Agent under Sections 2.12 and 9.03.
Nothing contained herein shall be deemed to authorize the Administrative Agent to authorize or consent to or accept or adopt on behalf of any Lender or any Issuing Bank any plan of reorganization, arrangement, adjustment or composition affecting the Secured Obligations or the rights of any Lender or any Issuing Bank or to authorize the Administrative Agent to vote in respect of the claim of any Lender or any Issuing Bank in any such proceeding.
The Administrative Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic message, Internet or intranet website posting or other distribution) believed by it to be genuine and to have been signed, sent or otherwise authenticated by the proper Person. The Administrative Agent also may rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper Person, and shall not incur any liability for relying thereon. In determining compliance with any condition hereunder to the making of a Loan, or the issuance of a Letter of Credit, that by its terms must be fulfilled to the satisfaction of a Lender or the applicable Issuing Bank, the Administrative Agent may presume that such condition is satisfactory to such Lender unless the Administrative Agent has received notice to the contrary from such Lender or
Issuing Bank prior to the making of such Loan or the issuance of such Letter of Credit. The Administrative Agent may consult with legal counsel (who may be counsel for any Loan Parties), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.
The Administrative Agent may perform any and all of its duties and exercise its rights and powers by or through any one or more sub-agents appointed by it. The Administrative Agent and any such sub-agent may perform any and all of their respective duties and exercise their respective rights and powers through their respective Related Parties. The exculpatory provisions of this Article shall apply to any such sub-agent and to the Related Parties of the Administrative Agent and any such sub-agent and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as the Administrative Agent.
The Administrative Agent may resign at any time by giving ten days’ written notice to the Lenders, the Issuing Banks and the Borrower Representative. If the Administrative Agent becomes subject to an insolvency proceeding, either the Required Lenders or the Borrower Representative may, upon ten days’ notice, remove the Administrative Agent. Upon receipt of any such notice of resignation or delivery of any such notice of removal, the Required Lenders shall have the right, with the consent of the Borrower Representative (not to be unreasonably withheld or delayed), to appoint a successor Administrative Agent which shall be a commercial bank or trust company with offices in the U.S. having combined capital and surplus in excess of $1,000,000,000; provided that during the existence and continuation of an Event of Default under Section 7.01(a) or, with respect to Holdings or any Borrower, Section 7.01(f) or (g), no consent of the Borrower Representative shall be required. If no successor shall have been appointed as provided above and accepted such appointment within ten days after the retiring Administrative Agent gives notice of its resignation or the Administrative Agent receives notice of removal, then (a) in the case of a retirement, the retiring Administrative Agent may (but shall not be obligated to), on behalf of the Lenders and the Issuing Banks, appoint a successor Administrative Agent meeting the qualifications set forth above (including, for the avoidance of doubt, consent of the Borrower Representative, to the extent required) or (b) in the case of a removal, the Borrower Representative may, after consulting with the Required Lenders, appoint a successor Administrative Agent meeting the qualifications set forth above; provided that (x) in the case of a retirement, if the Administrative Agent notifies the Borrower Representative, the Lenders and the Issuing Banks that no qualifying Person has accepted such appointment or (y) in the case of a removal, the Borrower Representative notifies the Required Lenders that no qualifying Person has accepted such appointment, then, in each case, such resignation or removal shall nonetheless become effective in accordance with and on the 30th day following delivery of such notice and (i) the retiring or removed Administrative Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents (except that in the case of any collateral security held by the Administrative Agent in its capacity as collateral agent for the Secured Parties for perfection purposes, the retiring or removed Administrative Agent shall continue to hold such collateral security until such time as a successor Administrative Agent is appointed) and (ii) all payments, communications and determinations required to be made by, to or through the Administrative Agent shall instead be made by or to each Lender and each Issuing Bank directly (and each Lender and each Issuing Bank will cooperate with the Borrowers to enable the Borrowers to take such actions), until such time as the Required Lenders or the Borrowers, as applicable, appoint a successor Administrative Agent, as provided for above in this Article 8. Upon the acceptance of its appointment as Administrative Agent hereunder as a successor Administrative Agent, such successor Administrative Agent shall succeed to and become vested with all the rights, powers, privileges and duties of the retiring or removed Administrative Agent (other than any rights to indemnity payments owed to the retiring Administrative Agent), and the retiring or removed Administrative Agent shall be discharged from its duties and obligations hereunder (other than its obligations under Section 9.13). The fees payable by the Borrowers to a successor Administrative Agent shall be the same as those payable to its predecessor unless otherwise agreed
between the Borrowers and such successor Administrative Agent. After the Administrative Agent’s resignation or removal hereunder, the provisions of this Article and Section 9.03 shall continue in effect for the benefit of such retiring or removed Administrative Agent, its sub-agents and their respective Related Parties in respect of any action taken or omitted to be taken by any of them while the relevant Person was acting as Administrative Agent (including for this purpose holding any collateral security following the retirement or removal of the Administrative Agent). Notwithstanding anything to the contrary herein, no Disqualified Institution (nor any Affiliate thereof) may be appointed as a successor Administrative Agent.
Each Lender and each Issuing Bank acknowledges that it has, independently and without reliance upon the Administrative Agent or any other Lender or any of their Related Parties and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender and each Issuing Bank also acknowledges that it will, independently and without reliance upon the Administrative Agent or any other Lender or any of their respective Related Parties and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Loan Document or related agreement or any document furnished hereunder or thereunder. Except for notices, reports and other documents expressly required to be furnished to the Lenders and the Issuing Banks by the Administrative Agent herein, the Administrative Agent shall not have any duty or responsibility to provide any Lender or any Issuing Bank with any credit or other information concerning the business, prospects, operations, property, financial and other condition or creditworthiness of any of the Loan Parties or any of their respective Affiliates which may come into the possession of the Administrative Agent or any of its Related Parties.
Notwithstanding anything to the contrary herein, the Arrangers shall not have any right, power, obligation, liability, responsibility or duty under this Agreement, except in their respective capacities as the Administrative Agent, an Issuing Bank or a Lender hereunder, as applicable.
Each Secured Party irrevocably authorizes and instructs the Administrative Agent to, and the Administrative Agent shall,
(a) release any Lien on any property granted to or held by Administrative Agent under any Loan Document (i) upon the occurrence of the Termination Date, (ii) that is sold or transferred as part of or in connection with any Disposition permitted under the Loan Documents to a Person that is not, or is not required to become, a Loan Party, (iii) that does not constitute (or ceases to constitute) Collateral, (iv) if the property subject to such Lien is owned by a Subsidiary Guarantor, upon the release of such Subsidiary Guarantor from its Loan Guaranty otherwise in accordance with the Loan Documents or (v) if approved, authorized or ratified in writing by the Required Lenders (or all Lenders, as required) in accordance with Section 9.02;
(b) subject to Section 9.21, release any Subsidiary Guarantor from its obligations under the Loan Guaranty if such Person ceases to be a Restricted Subsidiary (or becomes an Excluded Subsidiary as a result of a single transaction or series of related transactions permitted hereunder; provided that the release of any Subsidiary Guarantor from its obligations under the Loan Guaranty if such Subsidiary Guarantor becomes an Excluded Subsidiary of the type described in clause (a) of the definition thereof shall only be permitted if at the time such Guarantor becomes an Excluded Subsidiary of such type (1) no Event of Default exists, (2) after giving pro forma effect to such release and the consummation of the transaction that causes such Person to be an Excluded Subsidiary of such type, the applicable Borrower is deemed to have made a new Investment in such Person for purposes of Section 6.06 (as if such Person were then newly acquired) in an amount equal to the portion of the fair market value of the net assets of
such Person attributable to such Borrower’s equity interest therein as reasonably estimated by the applicable Borrower and such Investment is permitted pursuant to Section 6.06 (other than Section 6.06(f)) at such time and (3) a Responsible Officer of the applicable Borrower certifies to the Administrative Agent compliance with preceding clauses (1) and (2)); and
(c) subordinate any Lien on any property granted to or held by the Administrative Agent under any Loan Document to the holder of any Lien on such property that is permitted by Sections 6.02(d), 6.02(e), 6.02(g), 6.02(m), 6.02(n), 6.02(r), 6.02(x), 6.02(y), 6.02(z)(i), 6.02(bb), 6.02(cc), 6.02(ee), and 6.02(ff) (and any Refinancing Indebtedness in respect of any thereof to the extent such Refinancing Indebtedness is permitted to be secured under Section 6.02(k)); provided, that the subordination of any Lien on any property granted to or held by the Administrative Agent shall only be required to the extent that the Lien of the Administrative Agent with respect to such property is required to be subordinated to the relevant Permitted Lien in accordance with applicable law or the documentation governing the Indebtedness that is secured by such Permitted Lien; and
(d) enter into subordination, intercreditor and/or similar agreements with respect to Indebtedness that is (i) required or permitted to be subordinated hereunder and/or (ii) secured by Liens, and with respect to which Indebtedness, this Agreement contemplates an intercreditor, subordination or collateral trust agreement.
Upon the request of the Administrative Agent at any time, the Required Lenders will confirm in writing the Administrative Agent’s authority to release or subordinate its interest in particular types or items of property, or to release any Loan Party from its obligations under the Loan Guaranty or its Lien on any Collateral pursuant to this Article 8. In each case as specified in this Article 8, the Administrative Agent will (and each Lender, and Issuing Bank hereby authorizes the Administrative Agent to), at the Borrowers’ expense, execute and deliver to the applicable Loan Party such documents as such Loan Party may reasonably request to evidence the release of such item of Collateral from the assignment and security interest granted under the Collateral Documents or to subordinate its interest therein, or to release such Loan Party from its obligations under the Loan Guaranty, in each case in accordance with the terms of the Loan Documents and this Article 8 and without recourse or warranty of any kind; provided that upon the request of the Administrative Agent, the Borrowers shall deliver a certificate of a Responsible Officer certifying that the relevant transaction has been consummated in compliance with the terms of this Agreement.
The Administrative Agent is authorized to enter into any Intercreditor Agreement (including any Permitted Pari Passu Intercreditor Agreement or any Permitted Junior Intercreditor Agreement) contemplated hereby with respect to Indebtedness that is (i) required or permitted to be subordinated hereunder and/or (ii) secured by Liens and which Indebtedness contemplates an intercreditor, subordination or collateral trust agreement (any such intercreditor agreement, an “Additional Agreement”), and the parties hereto acknowledge that any such Additional Agreement is binding upon them. Each Lender and Issuing Bank (a) hereby consents to the subordination of the Liens on the Collateral securing the Secured Obligations on the terms set forth in the any such Additional Agreement, to the extent that such subordination is expressly permitted hereunder, (b) hereby agrees that it will be bound by, and will not take any action contrary to any Additional Agreement and (c) hereby authorizes and instructs the Administrative Agent to enter into any Additional Agreement and to subject the Liens on the Collateral securing the Secured Obligations to the provisions thereof. The foregoing provisions are intended as an inducement to the Secured Parties to extend credit to the Borrowers, and the Secured Parties are intended third-party beneficiaries of such provisions and the provisions of any Additional Agreement.
To the extent that the Administrative Agent (or any Affiliate thereof) is not reimbursed and indemnified by the Borrowers pursuant to Section 9.03, the Lenders will reimburse and indemnify the Administrative Agent (and any Affiliate thereof) in proportion to their respective Applicable Percentages (for this purpose, calculated to include all Classes of Term Loans and Revolving Credit Commitments then in existence, but determined as if there were no Defaulting Lenders) for and against any and all liabilities, obligations, losses, damages, penalties, claims, actions, judgments, costs, expenses or disbursements of whatsoever kind or nature which may be imposed on, asserted against or incurred by the Administrative Agent (or any Affiliate thereof) in performing its duties hereunder or under any other Loan Document or in any way relating to or arising out of this Agreement or any other Loan Document; provided that no Lender shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, claims, actions, judgments, suits, costs, expenses or disbursements resulting from the Administrative Agent’s (or such affiliate’s) gross negligence or willful misconduct (as determined by a court of competent jurisdiction in a final and non-appealable decision).
Furthermore:
(a) If the Administrative Agent (x) notifies a Lender, Issuing Bank or other Secured Party, or any Person who has received funds on behalf of a Lender, Issuing Bank or other Secured Party (any such Lender, Issuing Bank, other Secured Party or other recipient, a “Payment Recipient”) that the Administrative Agent has determined in its reasonable discretion (whether or not after receipt of any notice under immediately succeeding clause (b)) that any funds (as set forth in such notice from the Administrative Agent) received by such Payment Recipient from the Administrative Agent or any of its Affiliates were erroneously or mistakenly transmitted to, or otherwise erroneously or mistakenly received by, such Payment Recipient (whether or not known to such Lender, Issuing Bank, other Secured Party or other Payment Recipient on its behalf) (any such funds, whether transmitted or received as a payment, prepayment or repayment of principal, interest, fees, distribution or otherwise, individually and collectively, an “Erroneous Payment”) and (y) demands in writing the return of such Erroneous Payment (or a portion thereof), such Erroneous Payment shall at all times remain the property of the Administrative Agent pending its return or repayment as contemplated below in this Article 8 and held in trust for the benefit of the Administrative Agent, and such Lender, Issuing Bank or other Secured Party shall (or, with respect to any Payment Recipient who received such funds on its behalf, shall cause such Payment Recipient to) promptly, but in no event later than two Business Days thereafter (or such later date as the Administrative Agent may, in its sole discretion, specify in writing), return to the Administrative Agent the amount of any such Erroneous Payment (or portion thereof) as to which such a demand was made, in same day funds (in the currency so received), together with interest thereon (except to the extent waived in writing by the Administrative Agent) in respect of each day from and including the date such Erroneous Payment (or portion thereof) was received by such Payment Recipient to the date such amount is repaid to the Administrative Agent in same day funds at the greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation from time to time in effect. A notice of the Administrative Agent to any Payment Recipient under this clause (a) shall be conclusive, absent manifest error.
(b) Without limiting immediately preceding clause (a), each Lender, Issuing Bank or other Secured Party, or any Person who has received funds on behalf of a Lender, Issuing Bank or other Secured Party, hereby further agrees that if it receives a payment, prepayment or repayment (whether received as a payment, prepayment or repayment of principal, interest, fees, distribution or otherwise) from the Administrative Agent (or any of its Affiliates) (x) that is in a different amount than, or on a different date from, that specified in this Agreement or in a notice of payment, prepayment or repayment sent by the Administrative Agent (or any of its Affiliates) with respect to such payment, prepayment or repayment, (y) that was not preceded or accompanied by a notice of payment, prepayment or repayment sent by the Administrative Agent (or any of its Affiliates), or (z) that such Lender, Issuing Bank or other Secured Party,
or other such recipient, otherwise becomes aware was transmitted, or received, in error or by mistake (in whole or in part), then in each such case:
(i) it acknowledges and agrees that (A) in the case of immediately preceding clauses (x) or (y), an error and mistake shall be presumed to have been made (absent written confirmation from the Administrative Agent to the contrary) or (B) an error and mistake has been made (in the case of immediately preceding clause (z)), in each case, with respect to such payment, prepayment or repayment; and
(ii) such Lender, Issuing Bank or other Secured Party shall (and shall use commercially reasonable efforts to cause any other recipient that receives funds on its respective behalf to) promptly (and, in all events, within one Business Day of its knowledge of the occurrence of any of the circumstances described in the immediately preceding clauses (x), (y) and (z)) notify the Administrative Agent of its receipt of such payment, prepayment or repayment, the details thereof (in reasonable detail) and that it is so notifying the Administrative Agent pursuant to this clause (b).
For the avoidance of doubt, the failure to deliver a notice to the Administrative Agent pursuant to this clause (b) shall not have any effect on a Payment Recipient’s obligations pursuant to clause (a) above or on whether or not an Erroneous Payment has been made.
(c) Each Lender, Issuing Bank or other Secured Party hereby authorizes the Administrative Agent to set off, net and apply any and all amounts at any time owing to such Lender, Issuing Bank or other Secured Party under any Loan Document, or otherwise payable or distributable by the Administrative Agent to such Lender, Issuing Bank or other Secured Party under any Loan Document with respect to any payment of principal, interest, fees or other amounts, against any amount that Administrative Agent has demanded to be returned under immediately preceding clause (a) or under the indemnification provisions of this Agreement.
(d) (i) In the event that an Erroneous Payment (or portion thereof) is not recovered by the Administrative Agent for any reason, after demand therefor in accordance with immediately preceding clause (a), from any Lender or Issuing Bank that has received such Erroneous Payment (or portion thereof) (and/or from any Payment Recipient who received such Erroneous Payment (or portion thereof) on its respective behalf) (such unrecovered amount, an “Erroneous Payment Return Deficiency”), upon the Administrative Agent’s notice to such Lender or Issuing Lender at any time, then effective immediately (with the consideration therefor being acknowledged by the parties hereto), (A) such Lender or Issuing Bank shall be deemed to have assigned its Loans (but not its Commitments) of the relevant Class with respect to which such Erroneous Payment was made (the “Erroneous Payment Impacted Class”) in an amount equal to the Erroneous Payment Return Deficiency (or such lesser amount as the Administrative Agent may specify) (such assignment of the Loans (but not Commitments) of the Erroneous Payment Impacted Class, the “Erroneous Payment Deficiency Assignment”) (on a cashless basis and such amount calculated at par plus any accrued and unpaid interest (with the assignment fee to be waived by the Administrative Agent in such instance)), and is hereby (together with the Borrower Representative) deemed to execute and deliver an Assignment and Assumption (or, to the extent applicable, an agreement incorporating an Assignment and Assumption by reference pursuant to an approved electronic platform as to which the Administrative Agent and such parties are participants) with respect to such Erroneous Payment Deficiency Assignment, and such Lender or Issuing Bank shall deliver any Notes evidencing such Loans to the Borrowers or the Administrative Agent (but the failure of such Person to deliver any such Notes shall not affect the effectiveness of the foregoing assignment), (B) the Administrative Agent as the assignee Lender shall be deemed to have acquired the Erroneous
Payment Deficiency Assignment, (C) upon such deemed acquisition, the Administrative Agent as the assignee Lender shall become a Lender or Issuing Bank, as applicable, hereunder with respect to such Erroneous Payment Deficiency Assignment and the assigning Lender or assigning Issuing Bank shall cease to be a Lender or Issuing Bank, as applicable, hereunder with respect to such Erroneous Payment Deficiency Assignment, excluding, for the avoidance of doubt, its obligations under the indemnification provisions of this Agreement and its applicable Commitments which shall survive as to such assigning Lender or assigning Issuing Bank, (D) the Administrative Agent and the Borrower shall each be deemed to have waived any consents required under this Agreement to any such Erroneous Payment Deficiency Assignment and (E) the Administrative Agent will reflect in the Register its ownership interest in the Loans subject to the Erroneous Payment Deficiency Assignment.
(ii) Subject to Section 9.05 (but excluding in all events, any assignment consent or approval requirements (whether from the Borrower or otherwise)), the Administrative Agent may, in its discretion, sell any Loans acquired pursuant to an Erroneous Payment Deficiency Assignment and upon receipt of the proceeds of such sale, the Erroneous Payment Return Deficiency owing by the applicable Lender or Issuing Bank shall be reduced by the net proceeds of the sale of such Loan (or portion thereof), and the Administrative Agent shall retain all other rights, remedies and claims against such Lender or Issuing Bank (and/or against any recipient that receives funds on its respective behalf). In addition, an Erroneous Payment Return Deficiency owing by the applicable Lender (x) shall be reduced by the proceeds of prepayments or repayments of principal and interest, or other distribution in respect of principal and interest, received by the Administrative Agent on or with respect to any such Loans acquired from such lender pursuant to an Erroneous Payment Deficiency Assignment (to the extent that any such Loans are then owned by the Administrative Agent) and (y) may, in the sole discretion of the Administrative Agent, be reduced by any amount specified by the Administrative Agent in writing to the applicable Lender from time to time.
(e) The parties hereto agree that (x) irrespective of whether the Administrative Agent may be equitably subrogated, in the event that an Erroneous Payment (or portion thereof) is not recovered from any Payment Recipient that has received such Erroneous Payment (or portion thereof) for any reason, the Administrative Agent shall be subrogated to all the rights and interests of such Payment Recipient (and, in the case of any Payment Recipient who has received funds on behalf of a Lender, Issuing Bank or other Secured Party, to the rights and interests of such Lender, Issuing Bank or other Secured Party, as the case may be) under the Loan Documents with respect to such amount (the “Erroneous Payment Subrogation Rights”) (provided that the Loan Parties’ Secured Obligations under the Loan Documents in respect of the Erroneous Payment Subrogation Rights shall not be duplicative of such Secured Obligations in respect of Loans that have been assigned to the Administrative Agent under an Erroneous Payment Deficiency Assignment) and (y) an Erroneous Payment shall not pay, prepay, repay, discharge or otherwise satisfy any Secured Obligations owed by the Borrower or any other Loan Party; provided that, for the avoidance of doubt, immediately preceding clauses (x) and (y) shall not apply to the extent any such Erroneous Payment is, and solely with respect to the amount of such Erroneous Payment that is, comprised of funds received by the Administrative Agent from the Borrower for the purpose of making such Erroneous Payment.
(f) The parties hereto agree that an Erroneous Payment shall not pay, prepay, repay, discharge or otherwise satisfy any Obligations owed by the Borrowers or any other Loan Party, except, in each case, to the extent such Erroneous Payment is, and solely with respect to the amount of such Erroneous Payment that is, comprised of funds received by the Administrative Agent from the Borrowers or any other Loan Party for the purpose of making such Erroneous Payment.
(g) To the extent permitted by applicable law, no Payment Recipient shall assert any right or claim to an Erroneous Payment, and hereby waives, and is deemed to waive, any claim, counterclaim,
defense or right of set-off or recoupment with respect to any demand, claim or counterclaim by the Administrative Agent for the return of any Erroneous Payment received, including without limitation, any defense based on “discharge for value” or any similar doctrine.
(h) Each party’s obligations, agreements and waivers under these clauses (a) through (f) shall survive the resignation or replacement of the Administrative Agent, the termination of the Commitments and/or the repayment, satisfaction or discharge of all Secured Obligations (or any portion thereof) under any Loan Document.
In addition:
(a) Each Lender (x) represents and warrants, as of the date such Person became a Lender party hereto, to, and (y) covenants, from the date such Person became a Lender party hereto to the date such Person ceases being a Lender party hereto, for the benefit of, the Administrative Agent and not, for the avoidance of doubt, to or for the benefit of the Borrowers or any other Loan Party, that at least one of the following is and will be true::
(i) such Lender is not using “plan assets” (within the meaning of Section 3(42) of ERISA or otherwise) of one or more Benefit Plans with respect to such Lender’s entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments or this Agreement,
(ii) the transaction exemption set forth in one or more PTEs, such as PTE 84-14 (a class exemption for certain transactions determined by independent qualified professional asset managers), PTE 95-60 (a class exemption for certain transactions involving insurance company general accounts), PTE 90-1 (a class exemption for certain transactions involving insurance company pooled separate accounts), PTE 91-38 (a class exemption for certain transactions involving bank collective investment funds) or PTE 96-23 (a class exemption for certain transactions determined by in-house asset managers), is applicable with respect to such Lender’s entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement,
(iii) ((A) such Lender is an investment fund managed by a “Qualified Professional Asset Manager” (within the meaning of Part VI of PTE 84-14), (B) such Qualified Professional Asset Manager made the investment decision on behalf of such Lender to enter into, participate in, administer and perform the Loans, the Letters of Credit, the Commitments and this Agreement, (C) the entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement satisfies the requirements of sub-sections (b) through (g) of Part I of PTE 84-14 and (D) to the best knowledge of such Lender, the requirements of subsection (a) of Part I of PTE 84-14 are satisfied with respect to such Lender’s entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement, or
(iv) such other representation, warranty and covenant as may be agreed in writing between the Administrative Agent, in its sole discretion, and such Lender.
(b) In addition, unless either (1) sub-clause (i) in the immediately preceding clause (a) is true with respect to a Lender or (2) a Lender has provided another representation, warranty and covenant in accordance with sub-clause (iv) in the immediately preceding clause (a), such Lender further (x) represents and warrants, as of the date such Person became a Lender party hereto, to, and (y) covenants, from the date such Person became a Lender party hereto to the date such Person ceases being a Lender party hereto, for the benefit of, the Administrative Agent and not, for the avoidance of doubt, to or for the benefit of the Borrower or any other Loan Party, that the Administrative Agent is not a fiduciary with
respect to the assets of such Lender involved in such Lender’s entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement (including in connection with the reservation or exercise of any rights by the Administrative Agent under this Agreement, any Loan Document or any documents related hereto or thereto).
ARTICLE 9
MISCELLANEOUS
Section 9.01 Notices.
(a) Except in the case of notices and other communications expressly permitted to be given by telephone (and subject to paragraph (b) below), all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by facsimile or email, as follows:
(i) if to any Loan Party, to such Loan Party in the care of the Borrower Representative at:
RBP Global Holdings Limited
215 Bath Road
Slough
Berkshire
SL1 4AA
United Kingdom
Attn: William Lundeen
Email: William.lundeen@indivior.com
with copy to (which shall not constitute notice to any Loan Party):
Clifford Chance US LLP
31 West 52nd Street
New York, NY 10019
Attn: Daniel Winick
Email: Daniel.Winick@cliffordchance.com
(ii) if to the Administrative Agent, at:
Morgan Stanley Senior Funding, Inc.
1300 Thames Street, 4th Floor
Thames Street Wharf
Baltimore, MD, 21231
Email for Borrowers: AGENCY.BORROWERS@morganstanley.com
Email for Lenders: MSAGENCY@morganstanley.com
Email for data site postings: Borrower.Documents@morganstanley.com
(iii) if to the Collateral Agent, at:
Morgan Stanley Senior Funding, Inc.
1300 Thames Street, 4th Floor
Thames Street Wharf
Baltimore, MD, 21231
Email: DOCS4LOANS@morganstanley.com
(iv) if to any Lender, to it at its address or facsimile number set forth in its Administrative Questionnaire.
All such notices and other communications (A) sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when delivered in person or by courier service and signed for against receipt thereof or three Business Days after dispatch if sent by certified or registered mail, in each case, delivered, sent or mailed (properly addressed) to the relevant party as provided in this Section 9.01 or in accordance with the latest unrevoked direction from such party given in accordance with this Section 9.01 or (B) sent by facsimile shall be deemed to have been given when sent and when receipt has been confirmed by telephone; provided that received notices and other communications sent by telecopier shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, such notices or other communications shall be deemed to have been given at the opening of business on the next Business Day for the recipient). Notices and other communications delivered through electronic communications to the extent provided in clause (b) below shall be effective as provided in such clause (b).
(b) Notices and other communications to the Lenders hereunder may be delivered or furnished by electronic communications (including e-mail and Internet or Intranet websites) pursuant to procedures set forth herein or otherwise approved by the Administrative Agent. The Administrative Agent or the Borrower Representative (on behalf of any Loan Party) may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures set forth herein or otherwise approved by it; provided that approval of such procedures may be limited to particular notices or communications. All such notices and other communications (i) sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgement); provided that if not given during the normal business hours of the recipient, such notice or communication shall be deemed to have been given at the opening of business on the next Business Day for the recipient, and (ii) posted to an Internet or Intranet website shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address as described in the foregoing clause (b)(i) of notification that such notice or communication is available and identifying the website address therefor.
(c) Any party hereto may change its address or facsimile number or other notice information hereunder by notice (i) the Administrative Agent, in the case of any Borrower or Intermediate Holdings, (ii) the Administrative Agent and each Borrower, in the case of a Lender and (iii) the parties hereto, in the case of the Administrative Agent.
(d) THE PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE”. THE AGENT PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE BORROWER MATERIALS OR THE ADEQUACY OF THE PLATFORM, AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS IN OR OMISSIONS FROM THE BORROWER MATERIALS. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY ANY AGENT PARTY IN CONNECTION WITH THE BORROWER MATERIALS OR THE PLATFORM. In no event shall the Administrative Agent or any of its Related Parties or any Arranger (collectively, the “Agent Parties”)
have any liability to any Parent Company, any Borrower, any Lender, or any other Person for losses, claims, damages, liabilities or expenses of any kind (whether in tort, contract or otherwise) arising out of any Parent Company’s, any Borrower’s or the Administrative Agent’s transmission of Borrower Materials through the Internet, except to the extent that such losses, claims, damages, liabilities or expenses are determined by a court of competent jurisdiction by a final and non-appealable judgment to have resulted from the gross negligence or willful misconduct of such Agent Party; provided, however, that in no event shall any Agent Party have any liability to any Parent Company, any Borrower, any Lender or any other Person for indirect, special, incidental, consequential or punitive damages (as opposed to direct or actual damages).
(e) Each Public Lender agrees to cause at least one individual at or on behalf of such Public Lender to at all times have selected the “Private Side Information” or similar designation on the content declaration screen of the Platform in order to enable such Public Lender or its delegate, in accordance with such Public Lender’s compliance procedures and applicable Law, including U.S. Federal and state and foreign securities laws, to make reference to Borrower Materials that are not made available through the “Public Side Information” portion of the Platform and that may contain material non-public information with respect to Indivior plc, Intermediate Holdings, the Borrowers or their respective subsidiaries and its or their securities for purposes of U.S. Federal or state and foreign securities laws.
Section 9.02 Waivers; Amendments.
(a) No failure or delay by the Administrative Agent, any Issuing Bank or any Lender in exercising any right or power hereunder or under any other Loan Document shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the Administrative Agent, the Issuing Banks and the Lenders hereunder and under any other Loan Document are cumulative and are not exclusive of any rights or remedies that they would otherwise have. No waiver of any provision of any Loan Document or consent to any departure by any Loan Party therefrom shall in any event be effective unless the same is permitted by paragraph (b) of this Section 9.02, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. Without limiting the generality of the foregoing, to the extent permitted by law, the making of a Loan or the issuance of any Letter of Credit shall not be construed as a waiver of any Default or Event of Default, regardless of whether the Administrative Agent, any Lender or any Issuing Bank may have had notice or knowledge of such Default or Event of Default at the time.
(b) Subject to clauses (A), (B), (C) and (D) of this Section 9.02(b) and Sections 9.02(c) and (d) below, neither this Agreement nor any other Loan Document nor any provision hereof or thereof may be waived, amended or modified, except (i) in the case of this Agreement, pursuant to an agreement or agreements in writing entered into by the Borrowers and the Required Lenders (or the Administrative Agent with the consent of the Required Lenders) or (ii) in the case of any other Loan Document (other than any waiver, amendment or modification to effectuate any modification thereto expressly contemplated by the terms of such other Loan Documents), pursuant to an agreement or agreements in writing entered into by the Administrative Agent and each Loan Party that is party thereto, with the consent of the Required Lenders; provided that, notwithstanding the foregoing:
(A) except with the consent of each Lender directly and adversely affected thereby (but without the consent of the Required Lenders other than with respect to (i) an increase in the aggregate amount of Commitments or (ii) provision of additional Collateral to support any increase in the aggregate amount of Commitments), no such waiver, amendment or modification shall:
(1) increase the Commitment of such Lender (other than with respect to any Incremental Facility pursuant to Section 2.22 in respect of which such Lender has agreed to be an Additional Lender); it being understood that no amendment, modification or waiver of, or consent to departure from, any condition precedent, representation, warranty, covenant, Default, Event of Default, mandatory prepayment or mandatory reduction of the Commitments or Additional Commitments shall constitute an increase of any Commitment or Additional Commitment of such Lender;
(2) reduce or forgive the principal amount of any Loan or any reimbursement obligation with respect to any LC Disbursement or any amount due on any Loan Installment Date;
(3) (x) extend the scheduled final maturity of any Loan or (y) postpone any Loan Installment Date, any Interest Payment Date or the date of any scheduled payment of any fee or other amount payable hereunder;
(4) reduce the rate of interest (other than to waive any Default or Event of Default or obligation of the Borrowers to pay interest at the default rate of interest under Section 2.13(d), which shall only require the consent of the Required Lenders) or the amount of any fee owed to such Lender; it being understood that no change in the definition of “First Lien Leverage Ratio”, “Total Leverage Ratio” or any other ratio used in the calculation of the Applicable Rate or the Commitment Fee Rate, or in the calculation of any other interest or fee due hereunder (including any component definition thereof) shall constitute a reduction in any rate of interest or fee hereunder;
(5) extend the expiry date of such Lender’s Commitment; it being understood that no amendment, modification or waiver of, or consent to departure from, any condition precedent, representation, warranty, covenant, Default, Event of Default, mandatory prepayment or mandatory reduction of the Commitments or Additional Commitments shall constitute an extension of any Commitment or Additional Commitment of any Lender;
(6) waive, amend or modify the provisions of (i) Section 2.18(b) or (ii) 2.18(c) of this Agreement, in the case of this clause (ii), in a manner that would by its terms alter the pro rata sharing of payments required thereby (except in connection with any transaction permitted under Sections 2.22, 2.23, 9.02(c) and/or 9.05(g) or as otherwise provided in this Section 9.02); and
(7) reduce, waive or forgive, or extend the due date of, any premium due in connection with a prepayment or otherwise payable pursuant to Section 2.11(f).
(B) no such waiver, amendment or modification shall:
(1) change (x) any of the provisions of Section 9.02(a) or Section 9.02(b) or the definition of “Required Lenders” to reduce any voting percentage required to waive, amend or modify any right thereunder or make any determination or grant any consent thereunder, without the prior written consent of each Lender or (y) the definition of “Required Revolving Lenders” without the prior written consent of each Revolving Lender (it being understood that the consent of the Required Lenders shall not be required in connection with any change to the definition of “Required Revolving Lenders”);
(2) release all or substantially all of the Collateral from the Lien granted pursuant to the Loan Documents (except as otherwise permitted herein or in the other Loan Documents, including pursuant to Article 8 or Section 9.21), without the prior written consent of each Lender;
(3) release all or substantially all of the value of the Guarantees under the Loan Guaranty (except as otherwise permitted herein or in the other Loan Documents, including pursuant to Section 9.21 hereof), without the prior written consent of each Lender;
(4) adversely affect the Lenders under any Class disproportionately to the Lenders under any other Class, without the prior written consent of Lenders under such disproportionately affected Class holding Term Loans, Revolving Credit Exposure or unused Commitments under such Class representing more than 50% of the sum of the Term Loans, Revolving Credit Exposure and unused Commitments under such Class at such time; or
(5) result in the subordination of the Obligations (or any portion thereof) or the Liens on the Collateral securing the Secured Obligations (or any portion thereof) to any other Indebtedness or claim, without the prior written consent of each Lender;
(C) [Reserved]; and
(D) solely with the consent of each Issuing Bank, the Administrative Agent and the Required Revolving Lenders (but without the consent of the Required Lenders or any other Lender), any such agreement may waive, amend or modify the definitions of “Letter of Credit Sublimit” or “Letter of Credit Percentage”;
provided, further, that no agreement shall amend, modify or otherwise affect the rights or duties of the Administrative Agent, any Issuing Bank or the Swingline Lender hereunder without the prior written consent of the Administrative Agent, such Issuing Bank or the Swingline Lender, as the case may be. The Administrative Agent may also amend the Commitment Schedule to reflect assignments made pursuant to Section 9.05, Commitment reductions or terminations pursuant to Section 2.09, incurrences of Additional Commitments, Additional Loans, Replacement Term Loans or Replacement Revolving Facilities pursuant to Section 2.22, 2.23 or 9.02(c) and reductions or terminations of any such Additional Commitments or Additional Loans. Notwithstanding anything to the contrary herein, no Defaulting Lender shall have any right to approve or disapprove any amendment, waiver or consent hereunder, except that the Commitment of any Defaulting Lender may not be increased without the consent of such Defaulting Lender (it being understood that any Commitment or Loan held or deemed held by any Defaulting Lender shall be excluded from any vote hereunder that requires the consent of any Lender, except as expressly provided in Section 2.21(b)). Notwithstanding the foregoing, this Agreement may be amended (or amended and restated) with the written consent of the Required Lenders, the Administrative Agent and the Borrowers (i) to add one or more additional credit facilities to this Agreement and to permit any extension of credit from time to time outstanding thereunder and the accrued interest and fees in respect thereof to share ratably in the relevant benefits of this Agreement and the other Loan Documents and (ii) to include appropriately the Lenders holding such credit facilities in any determination of the Required Lenders on substantially the same basis as the Lenders prior to such inclusion.
(c) Notwithstanding the foregoing, this Agreement may be amended:
(i) with the written consent of the Borrowers and the Lenders providing the relevant Replacement Term Loans to permit the refinancing or replacement of all or any portion of the outstanding Initial Term Loans, 2017 Replacement Term Loans, 2021 Replacement Term Loans or any then-existing Additional Term Loans under the applicable Class (any such loans being refinanced or replaced, the “Replaced Term Loans”) with one or more replacement term loans hereunder (“Replacement Term Loans”) pursuant to a Refinancing Amendment; provided that:
(A) the aggregate principal amount of any Replacement Term Loans shall not exceed the aggregate principal amount of the Replaced Term Loans (plus (1) any additional amounts permitted to be incurred under Section 6.01(a), (q), (u), (w) and/or (z) and, to the extent any such additional amounts are secured, the related Liens are permitted under Section 6.02(k) (with respect to Liens securing Indebtedness permitted by Section 6.01(a), (q), (u), (w) or (z)), (o), (u) and/or (ii), in each case, so long as such additional amounts, and any indebtedness, are incurred in accordance with, and justified under, such provisions and plus (2) the amount of accrued interest and premium (including tender premium) thereon and underwriting discounts, fees (including upfront fees and original issue discount), commissions and expenses associated therewith),
(B) any Replacement Term Loans must have a final maturity date that is equal to or later than the final maturity date of, and have a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of, the Replaced Term Loans at the time of the relevant refinancing,
(C) any Replacement Term Loans may rank pari passu or junior in right of payment and pari passu or junior with respect to all or a portion of the Collateral with the remaining portion of the Initial Term Loans, 2017 Replacement Term Loans, 2021 Replacement Term Loans or Additional Term Loans (provided that if such Indebtedness ranks pari passu with or junior as to payment or Collateral, such Replacement Term Loans shall be subject to a Permitted Pari Passu Intercreditor Agreement, a Permitted Junior Intercreditor Agreement and/or subordination provisions reasonably satisfactory to the Administrative Agent, as applicable, and may be, at the option of the Administrative Agent and the Borrower Representative, documented in a separate agreement or agreements), or be unsecured,
(D) if any Replacement Term Loans are secured, such Replacement Term Loans may not be secured by any assets other than the Collateral (but need not be secured by all such assets),
(E) if any Replacement Term Loans are guaranteed, such Replacement Term Loans may not be guaranteed by any Person other than one or more Loan Parties (but need not be guaranteed by all such Persons),
(F) any Replacement Term Loans that rank pari passu in right of payment and pari passu in right of security may participate on a pro rata basis or a less than pro rata basis (but not greater than a pro rata basis) (or, if ranking junior in right of payment or security, shall be on a junior basis with respect thereto) in any voluntary or mandatory repayment or prepayment in respect of the Initial Term Loans, the 2017 Replacement Term Loans and the 2021 Replacement Term Loans (and any Additional Term Loans then subject to ratable repayment requirements), in each case as agreed by the Borrowers and the Lenders providing the relevant Replacement Term Loans,
(G) any Replacement Term Loans shall have pricing (including interest, fees and premiums, and as to which the proviso in Section 2.22(a)(v) shall not apply, except to the extent additional amounts are utilized pursuant to clause (c)(i)(A)(1) above and Section 2.22(a)(v) applies to any of the relevant debt baskets that are utilized) and, subject to preceding clause (F), optional prepayment and redemption terms as the Borrowers and the lenders providing such Replacement Term Loans may agree,
(H) no Default under Section 7.01(a), 7.01(f) or 7.01(g) or Event of Default shall exist immediately prior to or after giving effect to the effectiveness of the relevant Replacement Term Loans, and
(I) either (i) the other terms and conditions of any Replacement Term Loans (excluding pricing, interest, fees, rate floors, premiums, optional prepayment or redemption terms, security and maturity, subject to preceding clauses (B) through (G)) shall be substantially identical to, or (taken as a whole) no more favorable (as reasonably determined by the Borrower Representative) to the lenders providing such Replacement Term Loans than those applicable to the Replaced Term Loans (other than covenants or other provisions applicable only to periods after the Latest Term Loan Maturity Date (in each case, as of the date of incurrence of such Replacement Term Loans)) or (ii) such Replacement Term Loans shall be provided on then-current market terms for the applicable type of Indebtedness,
(J) one or more of the Borrowers shall be the direct borrower or issuer of such Indebtedness,
(K) the commitments in respect of the Replaced Term Loans are terminated, and all outstanding Replaced Term Loans and fees in connection therewith shall be paid in full, in each case on the date such Replacement Term Loans are made, and
(ii) with the written consent of the Borrowers and the Lenders providing the relevant Replacement Revolving Facility to permit the refinancing or replacement of all or any portion of the Revolving Credit Commitment or any Additional Revolving Commitment under the applicable Class (any such Revolving Credit Commitment or Additional Revolving Commitment being refinanced or replaced, a “Replaced Revolving Facility”) with a replacement revolving facility hereunder (a “Replacement Revolving Facility”) pursuant to a Refinancing Amendment; provided that:
(A) the aggregate principal amount of any Replacement Revolving Facility shall not exceed the aggregate principal amount of the Replaced Revolving Facility (plus (x) any additional amounts permitted to be incurred under Section 6.01(a), (q), (u), (w) and/or (z) and, to the extent any such additional amounts are secured, the related Liens are permitted under Section 6.02(k) (with respect to Liens securing Indebtedness permitted by Section 6.01(a), (q), (u), (w) or (z)), (o), (u) and/or (ii), in each case, so long as such additional amounts, and any indebtedness, are incurred in accordance with, and justified under, such provisions and plus (y) the amount of accrued interest and premium thereon, any committed but undrawn amounts and underwriting discounts, fees (including upfront fees and original issue discount), commissions and expenses associated therewith),
(B) no Replacement Revolving Facility may have a final maturity date (or require commitment reductions) prior to the final maturity date of the relevant Replaced Revolving Facility at the time of such refinancing,
(C) any Replacement Revolving Facility may rank pari passu or junior in right of payment and pari passu or junior with respect to all or a portion of the Collateral with the remaining portion of the Revolving Credit Commitments or Additional Revolving Commitments (and shall be subject to a Permitted Pari Passu Intercreditor Agreement, Permitted Junior Intercreditor Agreement and/or subordination provisions reasonably satisfactory to the Administrative Agent, as applicable, and may be, at the option of the Administrative Agent and the Borrower Representative, documented in a separate agreement or agreements), or be unsecured,
(D) if any Replacement Revolving Facility is secured, it may not be secured by any assets other than the Collateral (but need not be secured by all such assets),
(E) if any Replacement Revolving Facility is guaranteed, it may not be guaranteed by any Person other than one or more Loan Parties (but need not be guaranteed by all such Persons),
(F) any Replacement Revolving Facility that ranks pari passu in right of payment and pari passu in right of security may participate on a pro rata basis or a less than pro rata basis (but not greater than a pro rata basis) (or, if ranking junior in right of payment or security, shall be on a junior basis with respect thereto) in any voluntary or mandatory repayment or prepayment in respect of the Replaced Revolving Facility (and any Additional Revolving Loans then subject to ratable repayment requirements), in each case as agreed by the Borrowers and the Lenders providing the relevant Replacement Revolving Facility,
(G) any Replacement Revolving Facility shall be subject to the “ratability” provisions applicable to Extended Revolving Credit Commitments and Extended Revolving Loans set forth in the proviso to clause (ii) of Section 2.23(a), mutatis mutandis, to the same extent as if fully set forth in this Section 9.02(c)(ii),
(H) any Replacement Revolving Facility shall have pricing (including interest, fees and premiums, and as to which the proviso in Section 2.22(a)(v) shall not apply, except to the extent that additional amounts are utilized pursuant to clause (c)(ii)(A)(x) above and Section 2.22(a)(v) applies to any of the relevant debt baskets that are utilized) and, subject to preceding clause (F), optional prepayment and redemption terms as the Borrowers and the lenders providing such Replacement Revolving Facility may agree,
(I) no Default under Section 7.01(a), 7.01(f) or 7.01(g) or Event of Default shall exist immediately prior to or after giving effect to the effectiveness of the relevant Replacement Revolving Facility, and
(J) either (i) the other terms and conditions of any Replacement Revolving Facility (excluding pricing, interest, fees, rate floors, premiums, optional prepayment or redemption terms, security and maturity, subject to preceding clauses (B) through (G)) shall be substantially identical to, or (taken as a whole) no more favorable
(as reasonably determined by the Borrower) to the lenders providing such Replacement Revolving Facility than those applicable to the Replaced Revolving Facility (other than covenants or other provisions applicable only to periods after the Latest Revolving Loan Maturity Date (in each case, as of the date of incurrence of the relevant Replacement Revolving Facility)) or (ii) such Replacement Revolving Facility shall be provided on then-current market terms for the applicable type of Indebtedness, and
(K) the commitments in respect of the Replaced Revolving Facility shall be terminated, and all loans outstanding thereunder and all fees in connection therewith shall be paid in full, in each case on the date such Replacement Revolving Facility is implemented;
Each party hereto hereby agrees that, upon the effectiveness of any Refinancing Amendment, this Agreement shall be amended by the Borrowers, the Administrative Agent and the lenders providing the relevant Replacement Term Loans or the Replacement Revolving Facility, as applicable, to the extent (but only to the extent) necessary to reflect the existence and terms of such Replacement Term Loans or Replacement Revolving Facility, as applicable, incurred or implemented pursuant thereto (including any amendment necessary to treat the loans and commitments subject thereto as a separate “tranche” and “Class” of Loans and/or commitments hereunder). It is understood that any Lender approached to provide all or a portion of any Replacement Term Loans or any Replacement Revolving Facility may elect or decline, in its sole discretion, to provide such Replacement Term Loans or Replacement Revolving Facility.
(d) Notwithstanding anything to the contrary contained in this Section 9.02 or any other provision of this Agreement or any provision of any other Loan Document, (i) the Borrowers and the Administrative Agent may, without the input or consent of any Lender, amend, supplement and/or waive any guaranty, collateral security agreement, pledge agreement and/or related document (if any) executed in connection with this Agreement to (x) comply with Requirements of Law or the advice of counsel or (y) cause any such guaranty, collateral security agreement, pledge agreement or other document to be consistent with this Agreement and/or the relevant other Loan Documents, (ii) the Borrowers and the Administrative Agent may, without the input or consent of any other Lender (other than the relevant Lenders (including Additional Lenders) providing Loans under such Sections), effect amendments to this Agreement and the other Loan Documents as may be necessary in the reasonable opinion of the Borrowers and the Administrative Agent to effect the provisions of Section 2.22, 2.23, 5.12, 6.13 or 9.02(c), or any other provision specifying that any waiver, amendment or modification may be made with the consent or approval of the Administrative Agent and (iii) if the Administrative Agent and the Borrowers have jointly identified any ambiguity, mistake, defect, inconsistency, obvious error or any error or omission of a technical nature or any necessary or desirable technical change, in each case, in any provision of any Loan Document, then the Administrative Agent and the Borrowers shall be permitted to amend such provision solely to address such matter as reasonably determined by them acting jointly and such amendment shall become effective without any further action or consent of any other party to any Loan Documents if the same is not objected to in writing by the Required Lenders within five (5) Business Days following receipt of notice thereof.
(e) Notwithstanding the foregoing, this Agreement may be amended, with the written consent of each Revolving Lender, the Administrative Agent and the Borrowers to the extent necessary to integrate any Alternative Currency (other than any Alternative Currency permitted as of the Closing Date) in accordance with Section 1.08.
(f) Notwithstanding the foregoing, this Agreement may be amended pursuant to a joinder agreement executed by the Administrative Agent and Intermediate Holdings in accordance with Section 5.20.
Section 9.03 Expenses; Indemnity.
(a) The Borrowers and Intermediate Holdings shall jointly and severally pay (i) all reasonable and documented out-of-pocket expenses incurred by each Arranger, the Administrative Agent and their respective Affiliates (but limited, in the case of legal fees and expenses, to the reasonable and documented out-of-pocket fees, disbursements and other charges of one firm of outside counsel to all such Persons taken as a whole and, if necessary, of one local counsel in each relevant jurisdiction to all such Persons, taken as a whole) in connection with the syndication and distribution (including via the Internet or through a service such as Intralinks or SyndTrak) of the Credit Facilities, the preparation, negotiation, execution, delivery and administration of the Loan Documents and any related documentation, including in connection with any amendment, modification or waiver of any provision of any Loan Document (whether or not the transactions contemplated thereby are consummated, but only to the extent the preparation of any such amendment, modification or waiver was requested by the Borrowers and except as otherwise provided in a separate writing between the Borrowers, the relevant Arranger and/or the Administrative Agent) and (ii) all reasonable and documented out-of-pocket expenses incurred by the Administrative Agent, the Arrangers, the Issuing Banks or the Lenders or any of their respective Affiliates (but limited, in the case of legal fees and expenses, to the reasonable and documented out-of-pocket fees, disbursements and other charges of one firm of outside counsel to all such Persons taken as a whole and, if necessary, of one local counsel in each relevant jurisdiction to all such Persons, taken as a whole, and solely in the case of an actual or perceived conflict of interest, (x) one additional counsel to all affected Persons, taken as a whole and (y) one additional local counsel in each appropriate jurisdiction to all such affected Persons, taken as a whole) in connection with the enforcement, collection or protection of their respective rights in connection with the Loan Documents, including their respective rights under this Section 9.03, or in connection with the Loans made and/or Letters of Credit issued hereunder. Except to the extent required to be paid on the Closing Date, all amounts due under this paragraph (a) shall be payable by the Borrowers within 30 days of receipt of an invoice setting forth such expenses in reasonable detail, together with backup documentation supporting the relevant reimbursement request.
(b) (I) The Borrowers and Intermediate Holdings shall jointly and severally indemnify each of the Administrative Agent, Arrangers, Lenders, each Issuing Bank, Swingline Lender, their respective affiliates and the officers, directors, employees, advisors, agents, controlling persons and members of each of the foregoing (each, an “Indemnified Person”) for losses, claims, damages, liabilities or expenses arising out of or in connection with or as a result of (i) the Transactions or the execution or delivery of the Loan Documents or any agreement or instrument contemplated thereby and/or the enforcement of the Loan Documents, the performance by the parties hereto of their respective obligations thereunder or the consummation of the Transactions or any other transactions contemplated hereby or thereby, (ii) the use of the proceeds of the Loans or any Letter of Credit, (iii) any actual or alleged Release or presence of Hazardous Materials on, at, under or from any property currently or formerly owned or operated by Holdings, any Borrower, any of their Restricted Subsidiaries or any other Loan Party or any Environmental Liability related to Holdings, any Borrower, any of their Restricted Subsidiaries or any other Loan Party and/or (iv) any actual or prospective claim, litigation, investigation or other proceeding relating to any of the foregoing, whether based on contract, tort or any other theory (regardless of whether such Indemnified Person is a party thereto and regardless of whether such matter is initiated by the equity holders or creditors of Holdings or any Borrower or any other third party or by Holdings, any Borrower, any other Loan Party or any of their respective Affiliates), or to the actual or
alleged Release or presence of Hazardous Materials on, at, under, or from any property currently or formerly owned or operated by Holdings, any Borrower or any Restricted Subsidiary.
(II) Notwithstanding anything to the contrary in clause (I) above, no Indemnified Person will be indemnified under the indemnity in clause (I) above for (A) any cost, expense or liability (i) to the extent determined by a court of competent jurisdiction in a final, non-appealable judgment to have resulted from the gross negligence, bad faith or willful misconduct of such Indemnified Person or any of such Indemnified Person’s Related Parties, (ii) arising from a material breach of such Indemnified Person’s (or any of its Related Parties’) obligations under any Loan Document, as determined by a court of competent jurisdiction in a final, non-appealable judgment or (iii) arising from any claim, actions, suits, inquiries, litigation, investigation or proceeding that does not involve an act or omission of Holdings, any Borrower or any of their Affiliates and that is brought by an Indemnified Person against any other Indemnified Person (other than any claim, actions, suits, inquiries, litigation, investigation or proceeding against the Administrative Agent, any Arranger, any Issuing Bank or any Swingline Lender in its capacity as such), or (B) any settlement entered into by such Indemnified Person (or any of its affiliates, successors, assigns or Related Parties) without the Borrower Representative’s written consent (such consent not to be unreasonably withheld, delayed or conditioned), but if settled with the Borrower Representative’s written consent, or if there is a final judgment against an Indemnified Person in any such proceeding, the Borrowers and Intermediate Holdings shall jointly and severally indemnify and hold harmless each Indemnified Person to the extent and in the manner set forth above; provided, however, that the indemnity in clause (I) above will apply to any such settlement in the event that Intermediate Holdings or the Borrowers were offered the ability to assume the defense of the action that was the subject matter of such settlement and elected not to assume such defense.
Section 9.04 Waiver of Claim. To the extent permitted by applicable law, no party to this Agreement shall assert, and each hereby waives, any claim against any other party hereto or any Related Party thereof, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement or any agreement or instrument contemplated hereby (including any other Loan Document), the Transactions, any Loan or any Letter of Credit or the use of the proceeds thereof, except, in the case of any claim by any Indemnified Person against any of the Borrowers or Intermediate Holdings, to the extent such damages would otherwise be subject to indemnification pursuant to the terms of Section 9.03.
Section 9.05 Successors and Assigns.
(a) The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns; provided that (i) neither Intermediate Holdings nor any Borrower may assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of each Lender (and any attempted assignment or transfer by Intermediate Holdings or any Borrower without such consent shall be null and void) and (ii) no Lender may assign or otherwise transfer its rights or obligations hereunder except in accordance with the terms of this Section 9.05 (any attempted assignment or transfer not complying with the terms of this Section 9.05 shall be null and void). Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and permitted assigns, Participants (to the extent provided in paragraph (c) of this Section 9.05) and, to the extent expressly contemplated hereby, Indemnified Persons and the Related Parties of each of the Arrangers, the Administrative Agent, the Issuing Banks and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.
(b) (i) Subject to the conditions set forth in paragraph (b)(ii) below, any Lender may assign to one or more Eligible Assignees all or a portion of its rights and obligations under this
Agreement (including all or a portion of any Loan or Additional Commitment added pursuant to Section 2.22, 2.23 or 9.02(c) at the time owing to it) with the prior written consent (not to be unreasonably withheld or delayed) of:
(A) the Borrower Representative; provided that the Borrower Representative shall be deemed to have consented to any such assignment unless it has objected thereto by written notice to the Administrative Agent within 10 Business Days after receiving written notice thereof (such notice to be provided irrespective of whether an Event of Default under Section 7.01(a) or 7.01(f) or 7.01(g) has occurred and is continuing); provided, further, that no consent of the Borrower Representative shall be required (x) for any assignment of (1) Revolving Loans, Additional Revolving Loans, Revolving Credit Commitments or Additional Revolving Commitments to another Revolving Lender, an Affiliate of any Revolving Lender or an Approved Fund of any Revolving Lender or (2) Initial USD Term Loans, Initial Euro Term Loans, 2017 Replacement USD Term Loans, 2017 Replacement Euro Term Loans, 2021 Replacement Term Loans, Additional Term Loans, Initial Term Loan Commitments, Initial Euro Term Loan Commitments, 2017 Replacement USD Term Loan Commitments, 2017 Replacement Euro Term Loan Commitments, 2021 Replacement Term Loan Commitments or Additional Term Commitments to another Lender, an Affiliate of any Lender or an Approved Fund, or (y) if an Event of Default under Section 7.01(a) or Section 7.01(f) or 7.01(g) (solely with respect to Holdings or a Borrower) exists;
(B) the Administrative Agent; provided, that no consent of the Administrative Agent shall be required for any assignment to another Lender, any Affiliate of a Lender or any Approved Fund; and
(C) in the case of the Revolving Facility or any Additional Revolving Facility, each Issuing Bank and the Swingline Lender.
(ii) Assignments shall be subject to the following additional conditions:
(A) except in the case of any assignment to another Lender, any Affiliate of any Lender or any Approved Fund or any assignment of the entire remaining amount of the relevant assigning Lender’s Loans or Commitments of any Class, the principal amount of Loans or Commitments of the assigning Lender subject to the relevant assignment (determined as of the date on which the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent and determined on an aggregate basis in the event of concurrent assignments to Related Funds or by Related Funds) shall not be less than (x) $1,000,000, in the case of Initial Term Loans, 2017 Replacement USD Term Loans, 2021 Replacement Term Loans, Additional Term Loans, Initial Term Loan Commitments, Initial Euro Term Loan Commitments and Additional Term Commitments and shall be in a multiple of $1,000,000 in excess thereof (or, if smaller, the entire remaining amount of the assigning Lender’s Loans or Commitments unless the Borrower Representative and the Administrative Agent otherwise consent), (y) €1,000,000, in the case of any Initial Euro Term Loans and 2017 Replacement Euro Term Loans and shall be in a multiple of €1,000,000 in excess thereof (or, if smaller, the entire remaining amount of the assigning Lender’s Loans or Commitments unless the Borrower Representative and the Administrative Agent otherwise consent) and (z) $5,000,000 in the case of Revolving Loans, Additional Revolving Loans, Revolving Credit Commitments or Additional Revolving Commitments unless the Borrower Representative and the Administrative Agent otherwise consent;
(B) any partial assignment shall be made as an assignment of a proportionate part of all the relevant assigning Lender’s rights and obligations under this Agreement; provided that this clause shall not be construed to prohibit the assignment of a proportionate part of all the assigning Lenders’ rights and obligations in respect of one Class of Commitments or Loans;
(C) the parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption via an electronic settlement system acceptable to the Administrative Agent (or, if previously agreed with the Administrative Agent, manually), and shall pay to the Administrative Agent a processing and recordation fee of $3,500 (which fee may be waived or reduced in the sole discretion of the Administrative Agent); and
(D) the relevant Eligible Assignee, if it is not a Lender, shall deliver on or prior to the effective date of such assignment, to the Administrative Agent (1) an Administrative Questionnaire and (2) any IRS form required under Section 2.17.
(iii) Subject to the acceptance and recording thereof pursuant to paragraph (b)(iv) of this Section 9.05, from and after the effective date specified in any Assignment and Assumption, the Eligible Assignee thereunder shall be a party hereto and, to the extent of the interest assigned pursuant to such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be (A) entitled to the benefits of Sections 2.15, 2.16, 2.17 and 9.03 with respect to facts and circumstances occurring on or prior to the effective date of such assignment and (B) subject to its obligations thereunder and under Section 9.13). If any assignment by any Lender holding any Promissory Note is made after the issuance of such Promissory Note, the assigning Lender shall, upon the effectiveness of such assignment or as promptly thereafter as practicable, surrender such Promissory Note to the Administrative Agent for cancellation, and, following such cancellation, if requested by either the assignee or the assigning Lender, the Borrowers shall issue and deliver a new Promissory Note to such assignee and/or to such assigning Lender, with appropriate insertions, to reflect the new commitments and/or outstanding Loans of the assignee and/or the assigning Lender.
(iv) The Administrative Agent, acting for this purpose as a non-fiduciary agent of the Borrowers, shall maintain at one of its offices a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders and their respective successors and assigns, and the commitment of, and principal amount of and interest on the Loans and LC Disbursements owing to, each Lender or Issuing Bank pursuant to the terms hereof from time to time (the “Register”). The entries in the Register shall be conclusive, absent manifest error, and the Borrowers, the Administrative Agent, the Issuing Banks and the Lenders may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by the Borrowers, each Issuing Bank and each Lender (but only as to its own holdings), at any reasonable time and from time to time upon reasonable prior notice.
(v) Upon its receipt of a duly completed Assignment and Assumption executed by an assigning Lender and an Eligible Assignee, the Eligible Assignee’s completed Administrative Questionnaire and any tax certification required by Section 9.05(b)(ii)(D)(2) (unless the assignee is already a Lender hereunder), the processing and recordation fee referred to in paragraph (b) of this Section 9.05, if applicable, and any written consent to the relevant assignment required by paragraph (b) of this Section 9.05, the Administrative Agent shall promptly accept such Assignment and Assumption
and record the information contained therein in the Register. No assignment shall be effective for purposes of this Agreement unless it has been recorded in the Register as provided in this paragraph.
(vi) By executing and delivering an Assignment and Assumption, the assigning Lender and the Eligible Assignee thereunder shall be deemed to confirm and agree with each other and the other parties hereto as follows: (A) such assigning Lender warrants that it is the legal and beneficial owner of the interest being assigned thereby free and clear of any adverse claim and that the amount of its commitments, and the outstanding balances of its Loans, in each case without giving effect to any assignment thereof which has not become effective, are as set forth in such Assignment and Assumption, (B) except as set forth in clause (A) above, such assigning Lender makes no representation or warranty and assumes no responsibility with respect to any statement, warranty or representation made in or in connection with this Agreement, or the execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement, any other Loan Document or any other instrument or document furnished pursuant hereto, or the financial condition of Intermediate Holdings, any Borrower or any Restricted Subsidiary or the performance or observance by Intermediate Holdings, any Borrower or any Restricted Subsidiary of any of its obligations under this Agreement, any other Loan Document or any other instrument or document furnished pursuant hereto; (C) such assignee represents and warrants that it is an Eligible Assignee, legally authorized to enter into such Assignment and Assumption; (D) such assignee confirms that it has received a copy of this Agreement, together with copies of the financial statements referred to in Section 4.01(c) or the most recent financial statements delivered pursuant to Section 5.01 and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into such Assignment and Assumption; (E) such assignee will independently and without reliance upon the Administrative Agent, the assigning Lender or any other Lender and based on such documents and information as it deems appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement; (F) such assignee appoints and authorizes the Administrative Agent to take such action as agent on its behalf and to exercise such powers under this Agreement as are delegated to the Administrative Agent, by the terms hereof, together with such powers as are reasonably incidental thereto; and (G) such assignee agrees that it will perform in accordance with their terms all the obligations which by the terms of this Agreement are required to be performed by it as a Lender.
(c) (i) Any Lender may, without the consent of the Borrower Representative, the Administrative Agent, any Issuing Bank, the Swingline Lender or any other Lender, sell participations to any bank or other entity (other than to any Disqualified Institution, any natural Person or any Borrower or any of its Affiliates) (a “Participant”) in all or a portion of such Lender’s rights and obligations under this Agreement (including all or a portion of its commitments and the Loans owing to it); provided that (A) such Lender’s obligations under this Agreement shall remain unchanged, (B) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (C) the Borrowers, the Administrative Agent, the Issuing Banks and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement. Any agreement or instrument pursuant to which any Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided that such agreement or instrument may provide that such Lender will not, without the consent of the relevant Participant, agree to any amendment, modification or waiver described in (x) clause (A) of the first proviso to Section 9.02(b) that directly and adversely affects the Loans or commitments in which such Participant has an interest and (y) clause (B)(1), (2) or (3) of the first proviso to Section 9.02(b). Subject to paragraph (c)(ii) of this Section 9.05, each Borrower agrees that each Participant shall be entitled to the benefits of Sections 2.15, 2.16 and 2.17 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (b) of this Section 9.05 (it being understood that the documentation required under Section 2.17(k) shall be delivered to the participating Lender). To the extent permitted by law, each
Participant also shall be entitled to the benefits of Section 9.09 as though it were a Lender; provided that such Participant agrees to be subject to Section 2.18(c) as though it were a Lender.
(ii) No Participant shall be entitled to receive any greater payment under Section 2.15, 2.16 or 2.17 than the participating Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with the Borrower Representative’s prior written consent expressly acknowledging that such Participant’s entitlement to benefits under Sections 2.15, 2.16 and 2.17 is not limited to what the participating Lender would have been entitled to receive absent the participation.
Each Lender that sells a participation shall, acting solely for this purpose as a non-fiduciary agent of the Borrowers, maintain a register on which it enters the name and address of each Participant and their respective successors and assigns, and the principal amounts and stated interest of each Participant’s interest in the Loans or other obligations under the Loan Documents (the “Participant Register”); provided that no Lender shall have any obligation to disclose all or any portion of the Participant Register (including the identity of any Participant or any information relating to any Participant’s interest in any Commitment, Loan, Letter of Credit or any other obligation under any Loan Document) to any Person except to the extent that such disclosure is necessary to establish that such Commitment, Loan, Letter of Credit or other obligation is in registered form under Section 5f.103-1(c) of the Treasury Regulations and Proposed Treasury Regulations Section 1.163-5(b) (or any amended or successor version). The entries in the Participant Register shall be conclusive absent manifest error, and each Lender shall treat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary. For the avoidance of doubt, the Administrative Agent (in its capacity as Administrative Agent) shall have no responsibility for maintaining a Participant Register.
(d) Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement (other than to any Disqualified Institution or any natural person) to secure obligations of such Lender, including without limitation any pledge or assignment to secure obligations to any Federal Reserve Bank or other central bank having jurisdiction over such Lender, and this Section 9.05 shall not apply to any such pledge or assignment of a security interest; provided that no such pledge or assignment of a security interest shall release any Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.
(e) Notwithstanding anything to the contrary contained herein, any Lender (a “Granting Lender”) may grant to a special purpose funding vehicle (an “SPC”), identified as such in writing from time to time by the Granting Lender to the Administrative Agent and the Borrowers, the option to provide to the applicable Borrowers all or any part of any Loan that such Granting Lender would otherwise be obligated to make to such Borrowers pursuant to this Agreement; provided that (i) nothing herein shall constitute a commitment by any SPC to make any Loan and (ii) if an SPC elects not to exercise such option or otherwise fails to provide all or any part of such Loan, the Granting Lender shall be obligated to make such Loan pursuant to the terms hereof. The making of any Loan by an SPC hereunder shall utilize the Commitment of the Granting Lender to the same extent, and as if, such Loan were made by such Granting Lender. Each party hereto hereby agrees that (i) neither the grant to any SPC nor the exercise by any SPC of such option shall increase the costs or expenses or otherwise increase or change the obligations of the Borrowers under this Agreement (including its obligations under Section 2.15, 2.16 or 2.17) and no SPC shall be entitled to any greater amount under Section 2.13, 2.14 or 2.15 or any other provision of this Agreement or any other Loan Document that the Granting Lender would have been entitled to receive, (ii) no SPC shall be liable for any indemnity or similar payment obligation under this Agreement (all liability for which shall remain with the Granting Lender) and (iii) the Granting Lender shall for all purposes including approval of any amendment, waiver or other modification of any
provision of the Loan Documents, remain the Lender of record hereunder. In furtherance of the foregoing, each party hereto hereby agrees (which agreement shall survive the termination of this Agreement) that, prior to the date that is one year and one day after the payment in full of all outstanding commercial paper or other senior indebtedness of any SPC, it will not institute against, or join any other Person in instituting against, such SPC any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings under the laws of the U.S. or any State thereof; provided that (i) such SPC’s Granting Lender is in compliance in all material respects with its obligations to the Borrowers hereunder and (ii) each Lender designating any SPC hereby agrees to indemnify, save and hold harmless each other party hereto for any loss, cost, damage or expense arising out of its inability to institute such a proceeding against such SPC during such period of forbearance. In addition, notwithstanding anything to the contrary contained in this Section 9.05, any SPC may (i) with notice to, but without the prior written consent of, the Borrowers or the Administrative Agent and without paying any processing fee therefor, assign all or a portion of its interests in any Loan to the Granting Lender and (ii) disclose on a confidential basis any non-public information relating to its Loans to any rating agency, commercial paper dealer or provider of any surety, guaranty or credit or liquidity enhancement to such SPC.
(f) Disqualified Institutions.
(i) No assignment or participation shall be made to any Person that was a Disqualified Institution as of the date (the “Trade Date”) on which the assigning Lender entered into a binding agreement to sell and assign all or a portion of its rights and obligations under this Agreement to such Person (unless the Borrower Representative has consented to such assignment in writing in its sole and absolute discretion, in which case such Person will not be considered a Disqualified Institution for the purpose of such assignment or participation). For the avoidance of doubt, with respect to any assignee that becomes a Disqualified Institution after the applicable Trade Date, (x) such assignee shall not retroactively be disqualified from becoming a Lender and (y) the execution by the Borrower Representative of an Assignment and Assumption with respect to such assignee will not by itself result in such assignee no longer being considered a Disqualified Institution. Any assignment in violation of this clause (f)(i) shall not be void, but the other provisions of this clause (f) shall apply.
(ii) If any assignment or participation is made to any Disqualified Institution without the Borrower Representative’s prior written consent in violation of clause (i) above, or if any Person becomes a Disqualified Institution after the applicable Trade Date, the Borrower Representative may, at its sole expense and effort, upon notice to the applicable Disqualified Institution and the Administrative Agent, (A) terminate any Revolving Credit Commitment of such Disqualified Institution and repay all obligations of the Borrowers owing to such Disqualified Institution in connection with such Revolving Credit Commitment, (B) in the case of outstanding Term Loans held by Disqualified Institutions, purchase or prepay such Term Loan by paying the lowest of (x) the principal amount thereof, (y) the amount that such Disqualified Institution paid to acquire such Term Loans and (z) the market price of such Term Loans, in each case plus accrued interest, accrued fees and all other amounts (other than principal amounts) payable to it hereunder and/or (C) require such Disqualified Institution to assign, without recourse (in accordance with and subject to the restrictions contained in this Section 9.05), all of its interest, rights and obligations under this Agreement to one or more Eligible Assignees at the lowest of (x) the principal amount thereof, (y) the amount that such Disqualified Institution paid to acquire such interests, rights and obligations and (z) the market price of such Term Loans, in each case plus accrued interest, accrued fees and all other amounts (other than principal amounts) payable to it hereunder.
(iii) Notwithstanding anything to the contrary contained in this Agreement, Disqualified Institutions (A) will not (x) have the right to receive information, reports or other materials provided to Lenders by any Borrower, the Administrative Agent or any other Lender, (y) attend or participate in meetings attended by the Lenders and the Administrative Agent, or (z) access any electronic site established for the Lenders or confidential communications from counsel to or financial advisors of the Administrative Agent or the Lenders and (B) (x) for purposes of any consent to any amendment, waiver or modification of, or any action under, and for the purpose of any direction to the Administrative Agent or any Lender to undertake any action (or refrain from taking any action) under this Agreement or any other Loan Document, each Disqualified Institution will be deemed to have consented in the same proportion as the Lenders that are not Disqualified Institutions consented to such matter, and (y) for purposes of voting on any plan of reorganization, each Disqualified Institution party hereto hereby agrees (1) not to vote on such plan of reorganization, (2) if such Disqualified Institution does vote on such plan of reorganization notwithstanding the restriction in the foregoing clause (1), such vote will be deemed not to be in good faith and shall be “designated” pursuant to Section 1126(e) of the Bankruptcy Code (or any similar provision in any other Debtor Relief Laws), and such vote shall not be counted in determining whether the applicable class has accepted or rejected such plan of reorganization in accordance with Section 1126(c) of the Bankruptcy Code (or any similar provision in any other Debtor Relief Laws) and (3) not to contest any request by any party for a determination by the Bankruptcy Court (or other applicable court of competent jurisdiction) effectuating the foregoing clause (2).
(iv) The Administrative Agent shall have the right, and the Borrowers hereby expressly authorizes the Administrative Agent, to (A) post the list of Disqualified Institutions provided by the Borrowers and any updates thereto from time to time (collectively, the “DQ List”) on the Platform, including that portion of the Platform that is designated for “public side” Lenders and/or (B) provide the DQ List to each Lender requesting the same.
(v) The Administrative Agent shall not be responsible or have any liability for, or have any duty to ascertain, inquire into, monitor or enforce, compliance with the provisions hereof relating to Disqualified Institutions. Without limiting the generality of the foregoing, the Administrative Agent shall not (x) be obligated to ascertain, monitor or inquire as to whether any Lender or Participant or prospective Lender or Participant is a Disqualified Institution or (y) have any liability with respect to or arising out of any assignment or participation of Loans, or disclosure of confidential information, to any Disqualified Institution.
(g) Notwithstanding anything to the contrary contained herein, any Lender may, at any time, assign all or a portion of its rights and obligations under this Agreement in respect of its Initial Term Loans, 2017 Replacement Term Loans, 2021 Replacement Term Loans or Additional Term Loans of any Class to an Affiliated Lender on a non-pro rata basis (A) through Dutch Auctions open to all Lenders holding the relevant Initial Term Loans, 2017 Replacement Term Loans, 2021 Replacement Term Loans or such Additional Term Loans, as applicable, on a pro rata basis or (B) through open market purchases, in each case with respect to clauses (A) and (B), without the consent of the Administrative Agent; provided that:
(i) any Initial Term Loans, 2017 Replacement Term Loans, 2021 Replacement Term Loans or Additional Term Loans acquired by an Affiliated Lender shall be retired and cancelled immediately upon the acquisition thereof; provided that upon any such retirement and cancellation, the aggregate outstanding principal amount of the Initial Term Loans, 2017 Replacement Term Loans, 2021 Replacement Term Loans or Additional Term Loans, as applicable, shall be deemed reduced by the full par value of the aggregate principal amount of the
Initial Term Loans, 2017 Replacement Term Loans, 2021 Replacement Term Loans or Additional Term Loans so retired and cancelled, and each principal repayment installment with respect to the Term Loans pursuant to Section 2.10(a) shall be reduced on a pro rata basis by the full par value of the aggregate principal amount of Term Loans so cancelled;
(ii) the relevant Affiliated Lender and assigning Lender shall have executed an Affiliated Lender Assignment and Assumption;
(iii) the aggregate amount of Term Loans that may be purchased through open market repurchases pursuant to this Section 9.05(g) shall not exceed 20% of the aggregate principal amount of the 2021 Replacement Term Loans outstanding on the Third Amendment Effective Date;
(iv) in connection with any assignment effected pursuant to a Dutch Auction and/or open market purchase conducted by Holdings, any Borrower or any of its Restricted Subsidiaries, (A) the relevant Person may not use the proceeds of any Revolving Loans or Additional Revolving Loans to fund such assignment and (B) no Default or Event of Default exists at the time of acceptance of bids for the Dutch Auction or the confirmation of such open market purchase, as applicable;
(v) the Affiliated Lender shall either (i) make a customary representation to the seller at the time of the assignment that it does not possess material non-public information (or, if any Parent Company or the applicable Borrower is not at the time a public-reporting company, material information of a type that would not be reasonably expected to be publicly available if the Borrower Representative were a public reporting company) with respect to any Parent Company, the Borrowers and/or any subsidiary thereof and/or their respective securities that has not been disclosed to the seller or the Lenders generally (other than Lenders that have elected not to receive such information) in connection with any assignment permitted by this Section 9.05(g) or (ii) the related assignment agreement shall contain a customary “big boy” representation (but no requirement to make a representation as to the absence of any material non-public information); and
(vi) at the time such assignment is consummated and after giving effect thereto, the Borrowers and their Restricted Subsidiaries shall be in pro forma compliance with Section 6.14.
(h) The Lux Borrower hereby expressly accepts, agrees and confirms, and each other party hereby expressly reserves, for the purposes of articles 1278 et s. and 1281 of the Luxembourg civil code, that notwithstanding any assignment, transfer and/or novation permitted under, and made in accordance with the provisions of, this Agreement, any security created or guarantee given in relation to this Agreement or any other Loan Document shall be preserved for the benefit of any assignee.
(i) In addition:
(i) In respect of a Revolving Loan, Swingline Loan or Letter of Credit made to or issued for the account of a particular Borrower (collectively, “Designated Extensions of Credit”), a Revolving Lender (a “Designating Lender”) may at any time and from time to time designate (by written notice to the Administrative Agent and the Borrower Representative):
(A) a substitute office or branch from or through which it will make, issue and/or participate in such Designated Extensions of Credit (a “Substitute Facility Office”); or
(B) nominate an Affiliate to act as the Lender of Designated Extensions of Credit (a “Substitute Affiliate Lender”).
(ii) A notice to nominate a Substitute Affiliate Lender must be in the form set forth in Schedule 9.05(i) and be countersigned by the relevant Substitute Affiliate Lender confirming it shall be bound as a Lender and (if applicable) an Issuing Bank under this Agreement and any applicable Intercreditor Agreement in respect of the Designated Extensions of Credit in respect of which it shall act as Lender and/or Issuing Bank (as applicable).
(iii) Each Designating Lender will act as the representative of any Substitute Affiliate Lender it nominates for all administrative purposes under this Agreement. The Loan Parties, the Administrative Agent and the other Secured Parties will be entitled to deal only with such Designating Lender, except that payments will be made in respect of the applicable Designated Extensions of Credit to the Substitute Facility Office of the applicable Substitute Affiliate Lender. In particular, the Commitments of any Designating Lender will not be treated as having been reduced or terminated by the introduction of a Substitute Affiliate Lender under this Agreement or the other Loan Documents.
(iv) Except as expressly set forth in clause (iii) above, a Substitute Affiliate Lender will be treated as a Lender (and Issuing Bank, if applicable) for all purposes under the Loan Documents and having a Commitment equal to the principal amount of all Designated Extensions of Credit in which it is providing and/or participating in, if and for so long as it continues to be a Substitute Affiliate Lender under this Agreement; provided that upon any designation of a Substitute Affiliate Lender, the Designating Lender shall at all times remain obligated to fund Revolving Loans and (to the extent such Designating Lender is a Swingline Lender) Swingline Loans and issue (to the extent such Designating Lender is an Issuing Bank) Letters of Credit, in each case that are not funded or issued, respectively by the applicable Substitute Affiliate Lender, for the account of each applicable Borrower in the full amount of its Commitment, which, for the avoidance of doubt, shall include the principal amount of all Designated Extensions of Credit by such Designating Lender.
(v) A Designating Lender may revoke its designation of an Affiliate as a Substitute Affiliate Lender by notice in writing to the Administrative Agent and the Borrower Representative; provided that such notice may only take effect when there are no Designated Extensions of Credit outstanding to or in favor of such Substitute Affiliate Lender. Upon such Substitute Affiliate Lender ceasing to be a Substitute Affiliate Lender, the applicable Designating Lender will automatically assume (and be deemed to assume without further action by any party hereto) all rights and obligations previously vested in the Substitute Affiliate Lender.
(vi) If a Designating Lender designates a Substitute Facility Office or Substitute Affiliate Lender in accordance with this Section 9.05(i), any Substitute Affiliate Lender shall be treated for the purposes of Section 2.17 as having become a Lender on the date on which the applicable Designating Lender became a Lender hereunder.
(vii) Notwithstanding the foregoing, for purposes of the English Security Documents: Each Loan Party hereby irrevocably and unconditionally undertakes to pay to each Designating Lender (each a “Relevant Lender”), as creditor in its own right, sums equal to and
in the currency of each amount payable by such Loan Party to each of such Relevant Lender’s nominated Substitute Affiliate Lenders under each of the Loan Documents as and when such amounts fall due for payment under the relevant Loan Document (or would have fallen due but for any discharge resulting from the failure of the Substitute Affiliate Lender to take appropriate steps) in insolvency proceedings affecting the relevant Loan Party, to preserve its entitlement to be paid that amount. Each Relevant Lender shall have its own independent right to demand payment of the amounts payable by each Loan Party under this Section 9.05(i)(vii) (irrespective of any discharge of that Loan Party’s obligation to pay those amounts to any Substitute Affiliate Lender related to such Relevant Lender resulting from the failure by such Relevant Lender to take appropriate steps) in insolvency proceedings affecting that Loan Party, to preserve its entitlement to be paid those amounts. Any amount due and payable by a Loan Party to a Relevant Lender under this Section 9.05(i)(vii) shall be decreased to the extent that the relevant Substitute Affiliate Lender has received (and, in any insolvency proceedings of such Loan Party, is able to retain) payment in full of the corresponding amount under the Loan Documents and any amount due and payable by a Loan Party to the relevant Substitute Affiliate Lender under the Loan Documents shall be decreased to the extent that the applicable Relevant Lender has received (and, in any insolvency proceedings of such Loan Party, is able to retain) payment in full of the corresponding amount under this Section 9.05(i)(vii). For the avoidance of doubt, notwithstanding anything to the contrary in this Section 9.05(i)(vii), in no event shall any Loan Party be obligated to pay to any Relevant Lender and any of such Relevant Lender’s Substitute Affiliate Lenders an aggregate amount in excess of the amount that such Loan Party would have been required to pay to such Relevant Lender had such Relevant Lender not designated any Substitute Affiliate Lender/s.
Section 9.06 Survival. All covenants, agreements, representations and warranties made by the Loan Parties in the Loan Documents and in the certificates or other instruments delivered in connection with or pursuant to this Agreement or any other Loan Document shall be considered to have been relied upon by the other parties hereto and shall survive the execution and delivery of the Loan Documents and the making of any Loans and issuance of any Letter of Credit regardless of any investigation made by any such other party or on its behalf and notwithstanding that the Administrative Agent may have had notice or knowledge of any Default or Event of Default or incorrect representation or warranty at the time any credit is extended hereunder, and (subject to the immediately following sentence) shall continue in full force and effect until the Termination Date. The provisions of Sections 2.15, 2.16, 2.17, 9.03 and 9.13 and Article 8 shall survive and remain in full force and effect regardless of the consummation of the transactions contemplated hereby, the repayment of the Loans, the expiration or termination of the Letters of Credit and the Revolving Credit Commitment or any Additional Commitment, the occurrence of the Termination Date or the termination of this Agreement or any provision hereof but in each case, subject to the limitations set forth in this Agreement.
Section 9.07 Counterparts; Integration; Effectiveness. This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement, the other Loan Documents and the Fee Letter and any separate letter agreements with respect to fees payable to the Administrative Agent constitute the entire agreement among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. This Agreement shall become effective when it has been executed by the Borrowers and the Administrative Agent and when the Administrative Agent has received counterparts hereof which, when taken together, bear the signatures of each of the other parties hereto, and thereafter shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. Delivery of an executed counterpart of a signature page to this Agreement by facsimile or by email as a “.pdf” or “.tif” attachment shall be effective as delivery of a manually executed counterpart of this Agreement. The words “execution,” “execute,” “signed,”
“signature,” and words of like import in or related to this Agreement, any other Loan Document or any other document to be signed in connection with this Agreement or any other Loan Document and the transactions contemplated hereby or thereby, or in any Assignment and Assumption or amendment or other modification hereof (including waivers and consents), shall be deemed to include electronic signatures, the electronic matching of assignment terms and contract formations on electronic platforms approved by the Administrative Agent, or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based record-keeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act; provided that, notwithstanding anything contained herein to the contrary, the Administrative Agent is under no obligation to agree to accept electronic signatures in any form or in any format unless expressly agreed to by the Administrative Agent pursuant to procedures approved by it.
Section 9.08 Severability. To the extent permitted by law, any provision of any Loan Document held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions thereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction.
Section 9.09 Right of Setoff. At any time when an Event of Default exists, upon the written consent of the Administrative Agent and each Issuing Bank, each Lender and each of their respective Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other obligations (in any currency) at any time owing by the Administrative Agent, such Issuing Bank or such Lender or Affiliate (including by branches and agencies of the Administrative Agent, such Issuing Bank or such Lender, wherever located) to or for the credit or the account of the Borrowers or any Loan Party against any of and all the Secured Obligations held by the Administrative Agent, such Issuing Bank or such Lender or Affiliate, irrespective of whether or not the Administrative Agent, such Issuing Bank or such Lender or Affiliate shall have made any demand under the Loan Documents and although such obligations may be contingent or unmatured or are owed to a branch or office of such Lender or Issuing Bank different than the branch or office holding such deposit or obligation on such Indebtedness. Any applicable Lender, Issuing Bank or Affiliate shall promptly notify the Borrowers and the Administrative Agent of such set-off or application; provided that any failure to give or any delay in giving such notice shall not affect the validity of any such set-off or application under this Section 9.09. The rights of each Lender, each Issuing Bank, the Administrative Agent and each Affiliate under this Section 9.09 are in addition to other rights and remedies (including other rights of setoff) which such Lender, such Issuing Bank, the Administrative Agent or such Affiliate may have.
Section 9.10 Governing Law; Jurisdiction; Consent to Service of Process.
(a) THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (OTHER THAN AS EXPRESSLY SET FORTH IN OTHER LOAN DOCUMENTS) AND ANY CLAIM, CONTROVERSY OR DISPUTE ARISING UNDER OR RELATED TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (OTHER THAN AS EXPRESSLY SET FORTH IN THE OTHER LOAN DOCUMENTS), WHETHER IN TORT, CONTRACT (AT LAW OR IN EQUITY) OR OTHERWISE, SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
(b) EACH PARTY HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE EXCLUSIVE JURISDICTION OF ANY U.S. FEDERAL OR NEW YORK STATE COURT SITTING IN THE BOROUGH OF MANHATTAN, IN THE CITY OF NEW YORK (OR ANY APPELLATE COURT THEREFROM) OVER ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENTS OR THE TRANSACTIONS RELATING HERETO OR THERETO AND AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING SHALL (EXCEPT AS PERMITTED BELOW) BE HEARD AND DETERMINED IN SUCH NEW YORK STATE OR, TO THE EXTENT PERMITTED BY LAW, FEDERAL COURT. EACH PARTY HERETO AGREES THAT SERVICE OF ANY PROCESS, SUMMONS, NOTICE OR DOCUMENT BY REGISTERED MAIL ADDRESSED TO SUCH PERSON SHALL BE EFFECTIVE SERVICE OF PROCESS AGAINST SUCH PERSON FOR ANY SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT. EACH PARTY HERETO AGREES THAT, SUBJECT TO CLAUSE (e) BELOW, A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. EACH PARTY HERETO AGREES THAT THE ADMINISTRATIVE AGENT RETAINS THE RIGHT TO BRING PROCEEDINGS AGAINST ANY LOAN PARTY IN THE COURTS OF ANY OTHER JURISDICTION SOLELY IN CONNECTION WITH THE EXERCISE OF ANY RIGHTS UNDER ANY COLLATERAL DOCUMENT.
(c) EACH PARTY HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT IT MAY LEGALLY AND EFFECTIVELY DO SO, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY COURT REFERRED TO IN PARAGRAPH (B) OF THIS SECTION 9.10. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY CLAIM OR DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION, SUIT OR PROCEEDING IN ANY SUCH COURT.
(d) TO THE EXTENT PERMITTED BY LAW, EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT AND AGREES THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY REGISTERED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL) DIRECTED TO IT AT ITS ADDRESS FOR NOTICES AS PROVIDED FOR IN SECTION 9.01. EACH PARTY HERETO HEREBY WAIVES ANY OBJECTION TO SUCH SERVICE OF PROCESS AND FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY ACTION OR PROCEEDING COMMENCED HEREUNDER OR UNDER ANY LOAN DOCUMENT THAT SERVICE OF PROCESS WAS INVALID AND INEFFECTIVE. NOTHING IN THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT WILL AFFECT THE RIGHT OF ANY PARTY TO THIS AGREEMENT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.
(e) Each of the Borrower Representative and the Lux Borrower hereby irrevocably and unconditionally appoints RBP US Holdings Inc., with an office on the date hereof at 10710 Midlothian Turnpike, Suite 430, Richmond, Virginia 23235, and its successors hereunder (the “Process Agent”), as its agent to receive on behalf of the Borrower Representative and the Lux Borrower (as applicable) and their respective property all writs, claims, process and summonses in any action or proceeding brought against it in the State of New York. Such service may be made by mailing or delivering a copy of such process to the Borrower Representative or the Lux Borrower (as applicable) in care of the Process Agent at the address specified above for the Process Agent, and each of the Borrower Representative and the Lux Borrower irrevocably authorizes and directs the Process Agent to accept such
service on its behalf. Failure by the Process Agent to give notice to the Borrower Representative or the Lux Borrower (as applicable) or failure of the Borrower Representative or the Lux Borrower to receive notice of such service of process shall not impair or affect the validity of such service on the Process Agent or the Borrower Representative or the Lux Borrower (as applicable), or of any judgment based thereon. The Borrower Representative and the Lux Borrower each covenant and agree that it shall take any and all reasonable action, including the execution and filing of any and all documents, that may be necessary to continue the delegation of the Process Agent above in full force and effect, and to cause the Process Agent to act as such. The Borrower Representative and the Lux Borrower hereto further covenants and agrees to maintain at all times an agent with offices in New York City to act as its Process Agent. Nothing herein shall in any way be deemed to limit the ability to serve any such writs, process or summonses in any other manner permitted by applicable law.
Section 9.11 Waiver of Jury Trial. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY SUIT, ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY) DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. EACH PARTY HERETO (a) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (b) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.11.
Section 9.12 Headings. Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and shall not affect the construction of, or be taken into consideration in interpreting, this Agreement.
Section 9.13 Confidentiality. Each of the Administrative Agent, each Lender and each Issuing Bank agrees (and each Lender agrees to cause its SPC, if any) to maintain the confidentiality of the Confidential Information (as defined below), except that Confidential Information may be disclosed (a) to its Affiliates and its and its Affiliates’ respective directors, officers, managers, employees, independent auditors, or other experts and advisors, including accountants, legal counsel and other advisors (collectively, the “Representatives”) on a “need to know” basis solely in connection with the transactions contemplated hereby and who are informed of the confidential nature of the Confidential Information and are or have been advised of their obligation to keep the Confidential Information of this type confidential; provided that such Person shall be responsible for its Affiliates’ and their Representatives’ compliance with this paragraph; provided, further, that unless the Borrower Representative otherwise consents, no such disclosure shall be made by the Administrative Agent, any Issuing Bank, any Lender or any Affiliate or Representative thereof to any Affiliate or Representative of the Administrative Agent, any Issuing Bank, any Arranger, or any Lender that (i) is engaged as a principal primarily in private equity, mezzanine financing or venture capital or (ii) is a Disqualified Institution, (b) upon the demand or request of any regulatory or governmental authority (including any self-regulatory body) purporting to have jurisdiction over such Person or its Affiliates (in which case such Person shall, except with respect to any audit or examination conducted by bank accountants or any Governmental Authority or regulatory or self-regulatory authority exercising examination or regulatory authority, to the extent practicable and permitted by law, (i) inform the Borrower Representative promptly in advance thereof and (ii) use commercially reasonable efforts to ensure that any information so disclosed is accorded confidential treatment), (c) to the extent compelled by legal process in, or reasonably necessary
to, the defense of such legal, judicial or administrative proceeding, in any legal, judicial or administrative proceeding or otherwise as required by applicable Requirements of Law (in which case such Person shall (i) to the extent practicable and permitted by law, inform the Borrower Representative promptly in advance thereof and (ii) use commercially reasonable efforts to ensure that any such information so disclosed is accorded confidential treatment), (d) to any other party to this Agreement, (e) subject to an acknowledgment and agreement by the relevant recipient that the Confidential Information is being disseminated on a confidential basis (on substantially the terms set forth in this paragraph or as otherwise reasonably acceptable to the Borrower Representative and the Administrative Agent) in accordance with the standard syndication process of the Arrangers or market standards for dissemination of the relevant type of information, which shall in any event require “click through” or other affirmative action on the part of the recipient to access the Confidential Information and acknowledge its confidentiality obligations in respect thereof, to (i) any Eligible Assignee of or Participant in, or any prospective Eligible Assignee of or prospective Participant in, any of its rights or obligations under this Agreement, including any SPC (in each case other than a Disqualified Institution), (ii) any pledgee referred to in Section 9.05, (iii) any actual or prospective, direct or indirect contractual counterparty (or its advisors) to any Derivative Transaction (including any credit default swap) or similar derivative product to which any Loan Party is a party and (iv) subject to the Borrower Representative’s prior approval of the information to be disclosed (not to be unreasonably withheld or delayed), to Moody’s or S&P on a confidential basis in connection with obtaining or maintaining ratings as required under Section 5.13, (f) with the prior written consent of the Borrower Representative and (g) to the extent (1) the Confidential Information becomes publicly available other than as a result of a breach of this Section 9.13 by such Person, its Affiliates or their respective Representatives or (2) becomes available to the Administrative Agent, any Lender, any Issuing Bank or any Arranger or any of their respective Affiliates from a third-party source that is not known to be subject to a confidentiality obligation to the Borrowers and/or any of its subsidiaries. For purposes of this Section 9.13, “Confidential Information” means all information relating to the Borrowers and/or any of their subsidiaries and their respective businesses, or the Transactions (including any information obtained by the Administrative Agent, any Issuing Bank, any Lender or any Arranger, or any of their respective Affiliates or Representatives, based on a review of the books and records relating to the Borrowers and/or any of its subsidiaries and their respective Affiliates from time to time, including prior to the date hereof) other than any such information that is publicly available to the Administrative Agent or any Arranger, Issuing Bank, or Lender on a non-confidential basis prior to disclosure by the Borrowers or any of its subsidiaries. For the avoidance of doubt, in no event shall any disclosure of any Confidential Information be made to Person that is a Disqualified Institution at the time of disclosure.
Section 9.14 No Fiduciary Duty. Each of the Administrative Agent, the Arrangers, each Lender, each Issuing Bank and their respective Affiliates (collectively, solely for purposes of this paragraph, the “Lenders”), may have economic interests that conflict with those of the Loan Parties, their stockholders and/or their respective affiliates. Each Loan Party agrees that nothing in the Loan Documents or otherwise will be deemed to create an advisory, fiduciary or agency relationship or fiduciary or other implied duty between any Lender, on the one hand, and such Loan Party, each Parent Company, their respective stockholders or their respective affiliates, on the other. Each Loan Party acknowledges and agrees that: (i) the transactions contemplated by the Loan Documents (including the exercise of rights and remedies hereunder and thereunder) are arm’s-length commercial transactions between the Lenders, on the one hand, and the Loan Parties and each Parent Company, on the other, and (ii) in connection therewith and with the process leading thereto, (x) no Lender has assumed an advisory or fiduciary responsibility in favor of any Loan Party, any Parent Company, their respective stockholders or their respective affiliates with respect to the transactions contemplated hereby (or the exercise of rights or remedies with respect thereto) or the process leading thereto (irrespective of whether any Lender has advised, is currently advising or will advise any Loan Party, its respective stockholders or its respective Affiliates on other matters) or any other obligation to any Loan Party except the obligations expressly set
forth in the Loan Documents and (y) each Lender is acting solely as principal and not as the agent or fiduciary of such Loan Party, its respective management, stockholders, creditors or any other Person. Each Loan Party acknowledges and agrees that such Loan Party has consulted its own legal, tax and financial advisors to the extent it deemed appropriate and that it is responsible for making its own independent judgment with respect to such transactions and the process leading thereto. To the fullest extent permitted by law, the Borrowers and Intermediate Holdings hereby waive and release any claims that they may have against each of the Lenders and their Affiliates with respect to any breach or alleged breach of agency or fiduciary duty in connection with any aspect of any transaction contemplated hereby.
Section 9.15 Several Obligations. The respective obligations of the Lenders hereunder are several and not joint and the failure of any Lender to make any Loan, issue any Letter of Credit or perform any of its obligations hereunder shall not relieve any other Lender from any of its obligations hereunder.
Section 9.16 USA PATRIOT Act; Beneficial Ownership Regulation Compliance. Each Lender that is subject to the requirements of the USA PATRIOT Act and the Beneficial Ownership Regulation hereby notifies the Loan Parties that pursuant to the requirements of the USA PATRIOT Act and the Beneficial Ownership Regulation (if applicable), it is required to obtain, verify and record information that identifies each Loan Party, which information includes the name and address of such Loan Party and other information that will allow such Lender to identify such Loan Party in accordance with the USA PATRIOT Act and the Beneficial Ownership Regulation.
Section 9.17 Disclosure. Each Loan Party, each Issuing Bank and each Lender hereby acknowledges and agrees that the Administrative Agent and/or its Affiliates from time to time may hold investments in, make other loans to or have other relationships with any of the Loan Parties and their respective Affiliates.
Section 9.18 Appointment for Perfection. Each Lender hereby appoints each other Lender and each Issuing Bank as its agent for the purpose of perfecting Liens for the benefit of the Administrative Agent, the Issuing Banks, the Lenders and the other Secured Parties, in assets which, in accordance with Article 9 of the UCC or any other applicable law can be perfected only by possession. If any Lender or Issuing Bank (other than the Administrative Agent) obtains possession of any Collateral, such Lender, Issuing Bank shall notify the Administrative Agent thereof; and, promptly upon the Administrative Agent’s request therefor shall deliver such Collateral to the Administrative Agent or otherwise deal with such Collateral in accordance with the Administrative Agent’s instructions.
Section 9.19 Interest Rate Limitation. Notwithstanding anything herein to the contrary, if at any time the interest rate applicable to any Loan or Letter of Credit, together with all fees, charges and other amounts which are treated as interest on such Loan or Letter of Credit under applicable law (collectively the “Charged Amounts”), shall exceed the maximum lawful rate (the “Maximum Rate”) which may be contracted for, charged, taken, received or reserved by the Lender or Issuing Bank holding such Loan or Letter of Credit in accordance with applicable law, the rate of interest payable in respect of such Loan or Letter of Credit hereunder, together with all Charged Amounts payable in respect thereof, shall be limited to the Maximum Rate and, to the extent lawful, the interest and Charged Amounts that would have been payable in respect of such Loan or Letter of Credit but were not payable as a result of the operation of this Section 9.19 shall be cumulated and the interest and Charged Amounts payable to such Lender or Issuing Bank in respect of other Loans or Letters of Credit or periods shall be increased (but not above the Maximum Rate therefor) until such cumulated amount, together with interest thereon at the Federal Funds Effective Rate to the date of repayment, shall have been received by such Lender or Issuing Bank.
Section 9.20 Conflicts. Notwithstanding anything to the contrary contained herein or in any other Loan Document, in the event of any conflict or inconsistency between this Agreement and any other Loan Document, the terms of this Agreement shall govern and control.
Section 9.21 Release of Guarantors. Notwithstanding anything in Section 9.02(b) to the contrary, any Subsidiary Guarantor shall automatically be released from its obligations hereunder (and its Loan Guaranty shall be automatically released) (a) upon the consummation of any permitted transaction or series of related transactions if as a result thereof such Subsidiary Guarantor ceases to be a Restricted Subsidiary (or becomes an Excluded Subsidiary as a result of a single transaction or series of related transactions permitted hereunder; provided, that the release of any Subsidiary Guarantor from its obligations under the Loan Guaranty if such Subsidiary Guarantor becomes an Excluded Subsidiary of the type described in clause (a) of the definition thereof shall only be permitted if at the time such Guarantor becomes an Excluded Subsidiary of such type (i) no Event of Default exists, (ii) after giving pro forma effect to such release and the consummation of the transaction that causes such Person to be an Excluded Subsidiary of such type, the applicable Borrower is deemed to have made a new Investment in such Person for purposes of Section 6.06 (as if such Person were then newly acquired) in an amount equal to the portion of the fair market value of the net assets of such Person attributable to such Borrower’s equity interest therein as reasonably estimated by the applicable Borrower and such Investment is permitted pursuant to Section 6.06 (other than Section 6.06(f)) at such time, (iii) such Subsidiary is or becomes an Excluded Subsidiary for a bona fide legitimate business purpose of the Borrower and its Restricted Subsidiaries and not for the primary purpose of causing such Subsidiary to be released as a Subsidiary Guarantor and/or evading the Collateral and Guarantee Requirement and (iv) a Responsible Officer of the applicable Borrower certifies to the Administrative Agent compliance with preceding clauses (i), (ii) and (iii)) and/or (b) upon the occurrence of the Termination Date. In connection with any such release, the Administrative Agent shall promptly execute and deliver to the relevant Loan Party, at such Loan Party’s expense, all documents that such Loan Party shall reasonably request to evidence termination or release; provided, that upon the request of the Administrative Agent, the Borrower Representative shall deliver a certificate of a Responsible Officer certifying that the relevant transaction has been consummated in compliance with the terms of this Agreement. Any execution and delivery of documents pursuant to the preceding sentence of this Section 9.22 shall be without recourse to or warranty by the Administrative Agent (other than as to the Administrative Agent’s authority to execute and deliver such documents).
Section 9.22 Judgment Currency. If, for the purposes of obtaining judgment in any court, it is necessary to convert a sum due hereunder or any other Loan Document in one currency into another currency, the rate of exchange used shall be that at which in accordance with normal banking procedures the Administrative Agent could purchase the first currency with such other currency on the Business Day preceding that on which final judgment is given. The obligation of any Loan Party in respect of any such sum due from it to the Administrative Agent, any Issuing Bank or any Lender hereunder or under the other Loan Documents shall, notwithstanding any judgment in a currency (the “Judgment Currency”) other than that in which such sum is denominated in accordance with the applicable provisions of this Agreement (the “Agreement Currency”), be discharged only to the extent that on the Business Day following receipt by the Administrative Agent, such Issuing Bank or such Lender (as applicable) of any sum adjudged to be so due in the Judgment Currency, the Administrative Agent, such Issuing Bank or such Lender (as applicable) may in accordance with normal banking procedures purchase the Agreement Currency with the Judgment Currency. If the amount of the Agreement Currency so purchased is less than the sum originally due to the Administrative Agent, such Issuing Bank or such Lender (as applicable) from any Loan Party in the Agreement Currency, the Borrowers agree jointly and severally, as a separate obligation and notwithstanding any such judgment, to indemnify the Administrative Agent, such Issuing Bank or such Lender (as applicable) or such other person to whom such obligation was owing against such loss. If the amount of the Agreement Currency so purchased is greater than the sum originally due to the Administrative Agent, such Issuing Bank or
such Lender (as applicable) in such currency, the Administrative Agent, such Issuing Bank or such Lender (as applicable) agrees to return the amount of any excess to such Loan Party (or to any other person who may be entitled thereto under applicable law).
Section 9.23 Waiver of Sovereign Immunity. Each Loan Party that is organized under the laws of any jurisdiction other than the United States of America or any state thereof (each, a “Foreign Loan Party”), in respect of itself, its Subsidiaries, its process agents, and its properties and revenues, hereby irrevocably agrees that, to the extent that such Foreign Loan Party or its respective Subsidiaries or any of its or its respective Subsidiaries’ properties has or may hereafter acquire any right of immunity, whether characterized as sovereign immunity or otherwise, from any legal proceedings, whether in the United States or elsewhere, to enforce or collect upon the Loans or any other Secured Obligations or any Loan Document or any other liability or obligation of such Foreign Loan Party, or any of their respective Subsidiaries related to or arising from the transactions contemplated by any of the Loan Documents, including, without limitation, immunity from service of process, immunity from jurisdiction or judgment of any court or tribunal, immunity from execution of a judgment, and immunity of any of its property from attachment prior to any entry of judgment, or from attachment in aid of execution upon a judgment, such Foreign Loan Party, for itself and on behalf of its Subsidiaries, hereby expressly waives, to the fullest extent permissible under applicable law, any such immunity, and agrees not to assert any such right or claim in any such proceeding, whether in the United States or elsewhere. Without limiting the generality of the foregoing, each Foreign Loan Party, as the case may be, further agrees that the waivers set forth in this Section 9.23 shall have the fullest extent permitted under the Foreign Sovereign Immunities Act of 1976 of the United States and are intended to be irrevocable for purposes of such Act.
Section 9.24 Acknowledgement and Consent to Bail-In of Affected Financial Institutions. Notwithstanding anything to the contrary in any Loan Document or in any other agreement, arrangement or understanding among any parties hereto, each party hereto acknowledges that any liability of any Affected Financial Institution arising under any Loan Document, to the extent such liability is unsecured, may be subject to the write-down and conversion powers of the applicable Resolution Authority and each party hereto agrees and consents to, and acknowledges and agrees to be bound by:
(a) the application of any Write-Down and Conversion Powers by the applicable Resolution Authority to any such liabilities arising hereunder which may be payable to it by any party hereto that is an Affected Financial Institution; and
(b) the effects of any Bail-in Action on any such liability, including, if applicable:
(i) a reduction in full or in part or cancellation of any such liability;
(ii) a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such Affected Financial Institution, its parent undertaking, or a bridge institution that may be issued to it or otherwise conferred on it, and that such shares or other instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability under this Agreement or any other Loan Document; or
(iii) the variation of the terms of such liability in connection with the exercise of the Write-Down and Conversion Powers of the applicable Resolution Authority.
Section 9.25 Acknowledgement Regarding Any Supported QFCs. To the extent that the Loan Documents provide support, through a guarantee or otherwise, for any hedge agreements or any other agreement or instrument that is a QFC (such support, “QFC Credit Support” and each such QFC a “Supported QFC”), the parties acknowledge and agree as follows with respect to the resolution power of
the Federal Deposit Insurance Corporation under the Federal Deposit Insurance Act and Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act (together with the regulations promulgated thereunder, the “U.S. Special Resolution Regimes”) in respect of such Supported QFC and QFC Credit Support (with the provisions below applicable notwithstanding that the Credit Documents and any Supported QFC may in fact be stated to be governed by the laws of the State of New York and/or of the United States or any other state of the United States):
(a) in the event a Covered Entity that is party to a Supported QFC (each, a “Covered Party”) becomes subject to a proceeding under a U.S. Special Resolution Regime, the transfer of such Supported QFC and the benefit of such QFC Credit Support (and any interest and obligation in or under such Supported QFC and such QFC Credit Support, and any rights in property securing such Supported QFC or such QFC Credit Support) from such Covered Party will be effective to the same extent as the transfer would be effective under the U.S. Special Resolution Regime if the Supported QFC and such QFC Credit Support (and any such interest, obligation and rights in property) were governed by the laws of the United States or a state of the United States. In the event a Covered Party or a BHC Act Affiliate of a Covered Party becomes subject to a proceeding under a U.S. Special Resolution Regime, Default Rights under the Credit Documents that might otherwise apply to such Supported QFC or any QFC Credit Support that may be exercised against such Covered Party are permitted to be exercised to no greater extent than such Default Rights could be exercised under the U.S. Special Resolution Regime if the Supported QFC and the Credit Documents were governed by the laws of the United States or a state of the United States. Without limitation of the foregoing, it is understood and agreed that rights and remedies of the parties with respect to a Defaulting Lender shall in no event affect the rights of any Covered Party with respect to a Supported QFC or any QFC Credit Support.
(b) As used in this Section 9.25, the following terms have the following meanings:
“BHC Act Affiliate” of a party means an “affiliate” (as such term is defined under, and interpreted in accordance with, 12 U.S.C. 1841(k)) of such party.
“Covered Entity” means any of the following:
(i) a “covered entity” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 252.82(b);
(ii) a “covered bank” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 47.3(b); or
(iii) a “covered FSI” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 382.2(b).
“Default Right” has the meaning assigned to that term in, and shall be interpreted in accordance with, 12 C.F.R. §§ 252.81, 47.2 or 382.1, as applicable.
“QFC” has the meaning assigned to the term “qualified financial contract” in, and shall be interpreted in accordance with, 12 U.S.C. 5390(c)(8)(D).
[Signature Pages Follow]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written.
| | | | | |
INDIVIOR FINANCE S.À R.L.,
as a Term Borrower |
| |
| By: | |
| Name: |
| Title: |
| |
INDIVIOR FINANCE (2014) LLC,
as a Term Borrower |
| |
| By: | |
| Name: |
| Title: |
| |
RBP GLOBAL HOLDINGS LIMITED,
as the Revolver Borrower |
| |
| By: | |
| |
| Name: |
| Title: |
| |
INDIVIOR GLOBAL HOLDINGS LIMITED,
as Intermediate Holdings |
| |
| By: | |
| |
| Name: |
| Title: |
Signature Page to Credit Agreement
| | | | | |
MORGAN STANLEY SENIOR FUNDING, INC., as Administrative Agent, Swingline
Lender and as a Term Lender |
| |
| By: | |
| |
| Name: |
| Title: |
| |
MORGAN STANLEY BANK, N.A.,
as Issuing Bank and as a Revolving Lender |
| |
| By: | |
| |
| Name: |
| Title: |
Signature Page to Credit Agreement
| | | | | |
DEUTSCHE BANK AG NEW YORK
BRANCH, as a Lender |
| |
| By: | |
| |
| Name: |
| Title: |
Signature Page to Credit Agreement
DATED 1 DECEMBER 2014
RECKITT BENCKISER HEALTHCARE (UK) LIMITED
and
RB PHARMACEUTICALS LIMITED
LEASE
of land and buildings at
Dansom Lane, Hull HU8 7DS
| | | | | |
| Commencement: | 1 December 2014 |
| |
| Term: | 150 years |
Slaughter and May
One Bunhill Row
London EC1Y 8YY
Tel No: 020 7600 1200
Fax No: 020 7090 5000
Ref: JEE / RXZA
PARTICULARS
| | | | | | | | | | | |
| LR1. | Date of lease | : | 1 December 2014 |
| LR2. | Title number(s) | : | LR2.1 Landlord’s title number(s) HS304843, HS286962, HS321544 |
| | | LR2.2 Other title numbers HS210510, HS341298, HS189949 |
| LR3. | Parties to this Lease | : | Landlord RECKITT BENCKISER HEALTHCARE (UK) LIMITED (registered in England number 00261312) whose registered office is at 103-105 Bath Road, Slough, Berkshire SL1 3UH |
| | | Tenant RB PHARMACEUTICALS LIMITED (registered in England number 07183451) whose registered office is at 103-105 Bath Road, Slough, Berkshire SL1 3UH |
| | | Other parties None |
| LR4. | Property | : | The land and buildings at Dansom Lane, Hull HU8 7DS as registered at the Land Registry under title numbers HS304843, HS286962 and HS321544 shown edged red on the Plan. In the case of a conflict between this clause and the remainder of this Lease then, for the purposes of registration, this clause shall prevail. |
| LR5. | Prescribed statements etc. | : | None |
| LR6. | Term for which the Property is leased | : | The Term is as follows. 150 years commencing on and including the date of this Lease |
| LR7. | Premium | : | Four hundred and seventy five thousand pounds (£475,000) |
| LR8. | Prohibitions or restrictions on disposing of this Lease | : | This lease contains a provision that prohibits or restricts dispositions |
| LR9. | Rights of acquisition etc. | : | LR9.1 Tenant’s contractual rights to renew this Lease, to acquire the reversion or another lease of the Property, or to acquire an interest in other land Schedule 7 LR9.2 Tenant’s covenant to (or offer to) surrender this Lease Schedule 6 LR9.3 Landlord’s contractual rights to acquire this Lease Schedule 6 |
| | | | | | | | | | | |
| LR10. | Restrictive covenants given in this Lease by the Landlord in respect of land other than the Premises | : | None |
| LR11. | Easements | : | LR11.1 Easements granted by this Lease for the benefit of the Property Schedule 1 LR11.2 Easements granted or reserved by this Lease over the Property for the benefit of other property Schedule 2 |
| LR12. | Estate rentcharge burdening the Property | : | None |
| LR13. | Application for standard form of restriction | : | The parties to this Lease apply to enter the following standard form of restriction against the title of the Premises
"No disposition of the registered estate by the proprietor of the registered estate or by the proprietor of any registered charge, not being a charge registered before the entry of this restriction, is to be registered without a certificate signed by Reckitt Benckiser Healthcare (UK) Limited or their conveyancer that the provisions of paragraph 3.20(E) of Schedule 3 to the Lease dated 1 December 2014 and made between Reckitt Benckiser Healthcare (UK) Limited (1) and RB Pharmaceuticals Limited (2) have been complied with or do not apply to the disposition." The parties to this Lease apply to enter the following standard form of restriction against the Landlord's title numbers HS304843, HS286962 and HS321544. "No transfer of the registered estate by the proprietor of the registered estate is to be registered without a certificate signed by a conveyancer that the provisions of paragraph 5.4(A) of Schedule 5 to the Lease dated 1 December 2014 and made between Reckitt Benckiser Healthcare (UK) Limited (1) and RB Pharmaceuticals Limited (2) have been complied with or do not apply to the disposition." |
| LR14. | Declaration of trust where there is more than one person comprising the Tenant | : | Not applicable |
THIS LEASE is made on the date specified in the Particulars between the Landlord and the Tenant.
THIS DEED WITNESSES as follows:
1. INTERPRETATION
1.1 In this Lease, except where the context otherwise requires, the following words and expressions have the following meanings:
"Break Date" means, as applicable, the 50th, 70th, 90th, 110th and 130th anniversaries of the date of this Lease, namely 1 December 2064, 1 December 2084, 1 December 2104, 1 December 2124 and 1 December 2144;
"Business Day" means a day which is not a Saturday, a Sunday, Christmas Day, Good Friday or a bank holiday in England and Wales;
"Car Parking" has the meaning given to it in paragraph 1.4 of Schedule 1;
"Car Parking Rent" has the meaning ascribed in Schedule 4, Part B;
"Change of Control" means a change in control of a company where "control" means in relation to a company, the ability of a person to ensure that the activities and business of that company are conducted in accordance with the wishes of that person, and a person shall be deemed to have Control of a company if it possesses or is entitled to acquire the majority of the issued share capital or the voting rights in that company or the right to receive the majority of the income of that company on any distribution by it of all of its income or the majority of its assets on a winding up, and "controls" "controlled" and the expression "change of control" shall be construed accordingly but excluding the Demerger;
"Conduits" means any existing or future media for the passage of substances, matter or energy and all other utilities, data communications and services whether or not they are available at the date hereof and any ancillary apparatus attached to them and any enclosures for them;
"Consents" means all requisite licences, consents, permissions and approvals from the relevant local and other competent authorities and from the insurers and any other persons interested in the Premises;
"Contractual Term" means the term of years specified in the Particulars;
"Default Interest Rate" means three per cent per annum above the base rate of Barclays Bank PLC from time to time;
"Demerger" means the transaction pursuant to which the addiction pharmaceutical treatment business, the majority of which is currently earned on within the Reckitt Benckiser group by RBP Global Holdings Limited and its subsidiary undertakings, ceases to be directly or indirectly controlled by Reckitt Benckiser Group PLC;
"Estate" means the Hull industrial estate shown edged green on the Plan registered with title numbers HS304843, HS286962, HS321544, HS210510, HS341298 and HS189949 and as may be varied from time to time by the Landlord;
"Estate Common Parts" means the roads, accessways, passages and landscaped areas within the Estate from time to time available for the use in common by more than one tenant or occupier of the Estate and their respective employees, agents, visitors or licensees;
"Estate Roads" means the access roads and footpaths on the Estate Common Parts at the date of this Lease, as the same may be amended and/or re-routed from time to time;
"lndivior Group" means Indivior PLC (registered in England number 9237894) whose registered office is at 103-105 Bath Road, Slough, Berkshire SL1 3UH ("lndivior PLC"), all of the subsidiaries of lndivior PLC from time to time and any other members of the same group;
"Insured Risks" means (to the extent available in the London insurance market on terms commercially acceptable to the Tenant (acting reasonably)) fire, lightning, explosion, riot, civil commotion, strikes, labour and political disturbances, malicious damage, aircraft and aerial devices (other than hostile aircraft and devices) and articles accidentally dropped from them, acts of terrorism, storm, tempest, bursting or overflowing of water tanks and pipes, impact, earthquake, subsidence, ground slip and heave and such other property risks as the Tenant may from time to time elect to insure;
"Landlord" means the Landlord specified in the Particulars or such other person as may from time to time be entitled to the Reversion;
"Lease" means this Lease and any instrument made under it or collateral to it;
"Mortgagee" means a mortgagee or chargee of the Premises notice of whose interest the Landlord has been given in accordance with the terms of this Lease;
"Permitted Underlease" means an underlease of the whole of the Premises which is granted:
(i) on the same terms and conditions as this Lease so far as applicable;
(ii) at not less than the then open market rent payable at the date of the underletting;
(iii) without any fine or premium being given by any party;
(iv) containing an absolute prohibition against the undertenant assigning, charging, underletting, parting with possession or sharing the occupation of part only of the premises underlet;
(v) containing a prohibition against the undertenant assigning or underletting the whole of the premises except with the Tenant's consent provided that such consent shall only be given after the Tenant has first complied with the provisions of paragraph 3.20(E) of Schedule 3 and Schedule 6 as if the proposed assignment or underletting by the Tenant's undertenant were an assignment or underletting (as applicable) by the Tenant itself;
(vi) without allowing a rent free or concessionary rent period in excess of that reasonably obtainable in the open market at the date of the underletting; and
(vii) on terms that the provisions of sections 24 to 28 of the Landlord and Tenant Act 1954 are excluded;
"Permitted Use" means any use within Use Classes B1, B2 and B8 of the Town and Country Planning (Use Classes) Order 1987 as at the date that this Lease is granted, including as a fine chemical plant, for research and development, offices, distribution and other industrial purposes;
"Plan" means the plan annexed to this Lease;
"Planning Acts" means the Town and Country Planning Act 1990, the Planning (Listed Buildings and Conservation Areas) Act 1990, the Planning (Consequential Provisions) Act 1990, the Planning and Compensation Act 1991, the Planning and Compulsory Purchase Act 2004 and the Planning Act 2008;
"Premises" means the Property specified in the Particulars;
"Premium" has the meaning specified in the Particulars;
"Principal Rent" means a peppercorn per annum;
"RB Group" means Reckitt Benckiser PLC whose registered office is at 103-105 Bath Road, Slough, Berkshire SL1 3UH (registered in England and Wales No 00527217) ("Reckitt Benckiser PLC"), all of the subsidiaries of Reckitt Benckiser PLC from time to time and any other members of the same group;
"Rent Payment Dates" means the usual quarter days being 25 March, 24 June, 29 September and 25 December;
"Reversion" means the reversion in the whole of the Premises immediately expectant on the determination of the Term;
"Services" means the services referred to in Part II of Schedule 4;
"Service Charge Rent" has the meaning ascribed in Schedule 4, Part A;
"Statute" means:
(i) an Act of Parliament or sub-ordinate legislation; and
(ii) a law, decree or direction of the European Community or other supranational body having effect as law in the United Kingdom;
now or from time to time in force;
"Tenant" means the Tenant specified in the Particulars and its successors in title;
"Term" means the Contractual Term and the period of any statutory or other holding over, continuation or extension of it;
"Title Matters" means the matters contained or referred to in the registers of the title number(s) HS304843, HS286962 and HS321544 (other than any financial charges) as at 17 February 2014 in respect of the first title and 18 September 2014 in respect of the second title and 8 September 2014 in respect of the third title insofar as the same affect the Premises and are subsisting and cable of being enforced; and
"VAT'' means value added tax.
1.2 This Lease incorporates the Particulars.
1.3 In this Lease, unless otherwise specified:
(A) a reference to a Clause or a Schedule is a reference to a Clause of or a Schedule to this Lease;
(B) a reference to a paragraph is a reference to a paragraph of the Schedule in which the reference appears;
(C) headings to Clauses and paragraphs are for convenience only and do not affect the interpretation of this Lease;
(D) words in this Lease denoting the singular include the plural meaning and vice versa;
(E) a covenant by the Tenant not to do any act, matter or thing includes a covenant not to cause, permit or suffer the doing of it;
(F) a reference to a particular Statute or a statutory provision is a reference to it as it may have been or may in the future be amended, modified or re-enacted and to any regulation, statutory instrument, order, byelaw, direction or other provision that may have been made or may in the future be made under it;
(G) the expressions "landlord covenant" and "tenant covenant" have the meanings ascribed to them in section 28(1) of the Landlord and Tenant (Covenants) Act 1995;
(H) where a party consists of two or more persons the obligations of such persons are joint and several;
(I) a reference to "Premises" includes a reference to any part of the Premises and improvements and additions made to, and fixtures, fittings and appurtenances in, the Premises (other than tenant's and trade fixtures and fittings);
(J) a reference to "end of the Term" includes the coming to an end of the Term in any way including termination, expiration, surrender, frustration and forfeiture; and
(K) for the purposes of this Lease, two companies are "members of the same group" if one is the subsidiary of the other, or both are subsidiaries of a third company, "subsidiary" having the meaning given to it in the Companies Act 2006.
2. DEMISE
In consideration of the Premium paid by the Tenant to the Landlord (receipt of which the Landlord acknowledges) the Landlord demises the Premises to the Tenant with full title guarantee together with the easements and rights specified in Schedule 1 except and reserved to the Landlord and all persons authorised by the Landlord or otherwise entitled the easements and rights specified in Schedule 2 to hold the Premises subject to the Title Matters for the Contractual Term yielding and paying to the Landlord:
(i) the Principal Rent if demanded;
(ii) the Service Charge Rent at the times set out in Schedule 4, Part A, the first payment in respect of the period commencing on the date of this Lease to be made on the date of this Lease; and
(iii) the Car Parking Rent at the times set Out in Schedule 4, Part B, the first payment in respect of the period commencing on the date of this Lease to be made on the date of this Lease.
3. TENANT COVENANTS
The Tenant covenants with the Landlord to comply with the obligations in Schedule 3.
4. LANDLORD COVENANTS
The Landlord covenants with the Tenant that the Tenant may peaceably hold and enjoy the Premises without any interruption by the Landlord or any person lawfully claiming under or in trust for it or by title paramount.
5. PROVISIONS
This Lease incorporates:
(i) the service charge provisions and the Car Parking Rent provisions in Schedule 4; and
(ii) the further provisions in Schedule 5;
and the Landlord and the Tenant covenant with one another to comply with their respective obligations in such Schedules.
6. RE-ENTRY
6.1 Subject to Clause 6.2 and 6.3, without prejudice to any other rights or remedies of the Landlord, if:
(i) any undisputed rents reserved by this Lease is in arrears for more than three calendar months after it becomes due and being legally demanded; or
(ii) there is any material breach of any of the tenant covenants in this Lease and (where remediable) the Tenant has failed to remedy the breach within three months of written notice from the Landlord;
then the Landlord may notwithstanding any previous waiver re-enter the Premises or any part thereof in the name of the whole and forfeit this Lease whereupon the Term shall come to an end without prejudice to either party's rights against the other or any other person.
6.2 The Landlord may not exercise the right of re-entry contained in Clause 6.1 unless it has first given to any Mortgagee not less than 20 Business Days' notice of its intention to do so and specifying the relevant breach. The Landlord may serve such notice on the Mortgagee on or around the same time as it serves notice on the Tenant.
6.3 The Landlord may not exercise the right of re-entry contained in Clause 6.1 for so long as the Tenant is RB Pharmaceuticals Limited or any other member of the lndivior Group, unless and until the earlier of:
(i) the Tenant ceasing to be a member of the lndivior Group; or
(ii) a Change in Control of Indivior PLC;
after which this Clause 6.3 is of no further effect.
7. NEW TENANCY
This Lease is a new tenancy for the purposes of the Landlord and Tenant (Covenants) Act 1995.
8. TENANT’S OPTION TO BREAK
8.1 Subject to Clause 8.2, if the Tenant gives to the Landlord not less than 12 months' prior written notice before a Break Date then this Lease and the Contractual Term shall come to an end on the next relevant Break Date without prejudice to the parties' subsisting rights of action.
8.2 This Lease and the Contractual Term shall not come to an end on a Break Date unless at the relevant Break Date:
(i) the rents reserved by this Lease and all other undisputed amounts payable under it have been paid up to and including the Break Date in cleared funds, provided that the Landlord has notified the Tenant of all such sums due as at the Break Date not later than 30 days prior to the relevant Break Date; and
(ii) the Tenant yields up the whole of the Premises with vacant possession provided that the Tenant will not be in breach of this requirement if there remains on the Premises any of the Tenant's loose chattels fixtures or fittings of a minor or inconsequential nature.
8.3 Time shall be of the essence for Clauses 8.1 and 8.2 but this shall not make time of the essence for any other clause or paragraph of this Lease.
IN WITNESS of which the Landlord and the Tenant have executed this document as a deed on the date specified in the Particulars.
SCHEDULE 1
Easements and rights granted
1.1 Passage of utilities
The right of passage and running of services now or at any time during the Term in and through the Conduits in the Estate which serve the Premises and to make connection thereto subject to the Landlord's rights to re-route the same provided that the Landlord gives prior notice in writing and provides suitable alternative supplies and any means of connection to the same shall be approved by the Landlord (such approval not to be unreasonably withheld or delayed).
1.2 Access over Estate Roads
The right for the Tenant, any other permitted occupier or their employees or visitors to use on a 24-hour basis 365 days a year by foot or car the Estate Roads provided for the purpose for access to and from the Premises and the Car Parking (but subject to temporary interruptions where necessary for repairs, maintenance and renewal from time to time, provided that the Landlord shall use reasonable endeavours to minimize the period of any such interruptions and to provide a suitable alternative route for access during such period of interruption, save in emergencies), provided that the Landlord may from time to time vary, re-route or amend the Estate Roads in accordance with paragraph 5.2 of Schedule 5 and subject to paragraph 3.17(A) of Schedule 3.
1.3 Electricity Substation
The right of access to and egress from the electricity substation adjacent to the Premises on the Estate on reasonable prior notice (save in emergency), provided that in exercising this right the Tenant shall comply with the Landlord's reasonable security arrangements and allow the Tenant's representative to be accompanied by a representative of the Landlord if the Landlord so requires (save in an emergency).
1.4 Car parking
Subject to the payment of Car Parking Rent in accordance with Schedule 4, Part B, the use of up to 70 car parking spaces, such number to be determined in accordance with Schedule 4, Part B, for the parking of private cars and/or motorbikes belonging to the Tenant or any other permitted occupier or their employees or visitors on a 24-hour basis 365 days a year within the numbered spaces to be determined by the Landlord (acting reasonably) and notified to the Tenant from time to time (the "Car Parking").
1.5 Entry
(A) The right to enter the Estate Common Parts at reasonable times after prior written notice (except in an emergency) so far as is reasonably necessary to carry out any works or alterations to the Premises required or permitted by this Lease (including redevelopment, for the avoidance of doubt), but subject to the persons entering making good any damage caused to the Estate Common Parts without unreasonable delay.
(B) The right to enter the Estate Common Parts at reasonable times after prior written notice (except in an emergency) so far as is reasonably necessary to maintain or connect into any Conduits on the Premises, but subject to the persons entering making good any damage caused to the Estate Common Parts or the Estate without unreasonable delay.
1.6 Display of nameplates or signs
The right at the Tenant's reasonable request to have signs displayed in such locations on the Estate as the Landlord may approve (such approval not to be unreasonably withheld or delayed) showing the Tenant's name and any other details reasonably required by the Tenant to include the Tenant's usual corporate or trade logo.
1.7 Rights of support and protection
The rights of support and protection as enjoyed by the Premises at the date of this Lease.
1.8 New Conduits
The right to lay or construct Conduits in, on or under the Estate Roads with the Landlord's consent (such consent not to be unreasonably withheld or delayed) and to connect into such Conduits.
SCHEDULE 2
Easements and rights reserved
2.1 Light and air
All rights of light and air and the right to erect or alter or to consent to the erection or alteration of any building now or from time to time on any adjoining or neighbouring property notwithstanding that such erection or alteration may diminish the access of light and air enjoyed by the Premises and, subject to the provisions of Schedule 7, the right to deal with any such property as it may think fit.
2.2 Passage of utilities
The right of free and uninterrupted use of all Conduits as are now or may after the date of this Lease be in on or under the Premises and serving or capable of serving other parts of the Estate or adjoining or neighbouring property together with the right to enter upon the Premises on reasonable prior notice (save in an emergency) provided that in exercising this right the Landlord shall comply with the Tenant's reasonable security arrangements and allow the Landlord's representative to be accompanied by a representative of the Tenant it the Tenant so requires (save in an emergency) to inspect, repair or maintain any such Conduits but only where such inspection repair or maintenance would not otherwise be reasonably practicable.
2.3 New Conduits
The right to lay or construct new Conduits in, on or under the Premises with the Tenant's consent (such consent not to be unreasonably withheld or delayed) and to connect into such Conduits as are now or may after the date of this Lease be in on or under the Premises other than Conduits capable of serving only the Premises.
2.4 Maintenance of the Estate
The right to enter upon the Premises on reasonable prior notice (save in emergency) in connection with the erection, alteration, improvement, repair or maintenance of any other parts of the Estate or any adjoining or neighbouring property but only where such erection, alteration, improvement, repair or maintenance would not otherwise be reasonably practicable and provided that in exercising this right the Landlord shall comply with the Tenant's reasonable security arrangements and allow the Landlord's representative to be accompanied by a representative of the Tenant if the Tenant so requires (save in emergency).
2.5 Covenants
The right to enter upon the Premises in the circumstances in which in the tenant covenants in this Lease the Tenant covenants to permit such entry.
2.6 Support
The right of protection and support as enjoyed by other parts of the Estate over the Premises.
2.7 Access over pathways
For such time as the Tenant may provide and maintain any pedestrian pathways on the Premises which abut an Estate Road, the right for the Landlord, any other permitted occupier or their employees or visitors to use on a 24-hour basis 365 days a year by foot such pedestrian pathways for purposes in connection with this Lease or the Estate, provided that the Tenant shall not be required to provide or maintain any such pedestrian pathways.
SCHEDULE 3
Tenant covenants
3.1 Rent
To pay the rents reserved by this Lease at the times and in the manner specified without any deduction (save where required by statute), counterclaim or set off.
3.2 Outgoings
(A) To pay and indemnify the Landlord against all existing and future rates, taxes, duties, charges, assessments, outgoings and impositions (whether of a capital, revenue, nonrecurring or wholly novel nature) which are now or may at any time be assessed, charged or imposed upon or in relation to the Premises or on the owner or occupier in respect of them other than tax payable by the Landlord (excluding VAT) occasioned by receipt of the rents, on the grant of this Lease or on any dealing with its reversionary interest.
(B) Pending the separate assessment of the Premises, to pay and indemnify the Landlord against a fair proportion (as shall be determined by the Landlord acting reasonably) of any sum payable in respect of the Premises and any other part of the Estate.
3.3 Utilities
To pay for all gas, electricity, water, telephone, cable, oil and other utilities and services supplied to the Premises and all costs and charges in relation to the supply and disconnection of any such utilities and services and a fair proportion (as shall be determined by the Landlord acting reasonably) of any joint charges.
3.4 Repair
To keep the Premises properly maintained.
3.5 Cleaning
To keep the exterior parts of the Premises clean, tidy and free from rubbish.
3.6 Decoration
In 2019 and in every subsequent fifth year of the Term or more frequently if necessary and also in the three months immediately before the end of the Term to paint, clean or otherwise treat as the case may be all the exterior structure and other exterior parts of the Premises usually or requiring to be painted, cleaned or otherwise treated.
3.7 Yielding up
(A) At the end of the Term quietly to yield up the Premises in a condition consistent with the due performance and observance of the tenant covenants in this Lease and for the avoidance of doubt it is acknowledged and agreed that the Tenant shall not be obliged to reinstate the Premises to the condition it was in at the beginning of the Term.
(B) To remove from the Premises all tenant's and trade fixtures and fittings and chattels prior to the end of the Term, unless otherwise agreed by the parties.
(C) To make good all physical damage caused to the Premises by the removal of fittings, furniture and effects.
3.8 Statutory Requirements
(A) To comply with all Statutes and the requirements or directions of all local and other competent authorities affecting the Premises or their use and occupation whether imposed on the Landlord or the Tenant.
(B) Not to do or omit to do anything by reason of which the Landlord may under any Statute or any such requirement or direction incur or have imposed upon it or become liable to pay any penalty, damages, compensation, costs, levies, charges or expenses.
3.9 Planning
To comply with the Planning Acts and any planning permission relating to the Premises.
3.10 Entry upon the Premises
(A) Where the same cannot otherwise be undertaken, to permit the Landlord and persons authorised by the Landlord to enter the Premises at reasonable times after reasonable prior written notice (except in an emergency) and where required to remain with or without workmen, materials and equipment:
(i) in connection with the easements and rights reserved by this Lease; and
(ii) to remedy any breach of the tenant covenants in this Lease;
without payment for any loss, nuisance, annoyance, damage or inconvenience caused to the occupiers of the Premises but subject to the persons entering causing as little inconvenience, nuisance and annoyance as reasonably practicable and making good any damage caused to the Premises without unreasonable delay provided that in exercising this right the Landlord shall comply and procure the compliance by those persons authorised by it with the Tenant's reasonable security arrangements and allow the Landlord's representative or person authorised by it to be accompanied by a representative of the Tenant if the Tenant so requires.
(B) As soon as it becomes aware of the same to give immediate notice to the Landlord of any defect in the Premises which would or might give rise to any obligation on the Landlord's part to do or refrain from doing any act or thing in order to comply with the duty of care imposed by the Defective Premises Act 1972.
3.11 Breaches
(A) To make good all breaches of the tenant covenants in this Lease within 20 Business Days after the giving of written notice by the Landlord to the Tenant or sooner if necessary.
(B) If the Tenant continues to default in the performance of any of such covenants of which notice has been given, to permit the Landlord and all persons authorised by the Landlord to take steps to remedy the breaches.
3.12 Costs
(A) To indemnify the Landlord against all costs properly incurred by the Landlord and arising from or in contemplation of:
(i) the enforcement of any of the tenant covenants in this Lease;
(ii) the remedying of any breach of the tenant covenants in this Lease;
(iii) the lawful and proper preparation and service of any notices or proceedings under sections 146 and 147 of the Law of Property Act 1925 or the Leasehold Property (Repairs) Act 1938;
(iv) the lawful and proper preparation and service of all notices and schedules (whether statutory or otherwise) relating to the state of repair and condition of the Premises or other breaches of any of the tenant covenants in this Lease; and
(v) the preparation and service of any notices, applications or proceedings under the Landlord and Tenant (Covenants) Act 1995.
(B) To indemnify the Landlord against all reasonable costs properly incurred by the Landlord and arising from any application for consent under this Lease whether it is granted, refused or the application is withdrawn unless the same is unlawfully or unreasonably withheld or delayed or offered subject to some unlawful or unreasonable conditions.
3.13 Alterations
(A) The Tenant may make structural and non-structural alterations to the Premises, including for the avoidance of doubt demolishing and rebuilding the existing buildings on the Premises and redeveloping the Premises, without having to obtain the Landlord's consent, but the Tenant shall:
(i) Prior to work commencing:
(a) provide reasonable prior written notice to the Landlord of any structural alterations to the Premises, including the proposed commencement date and the estimated duration of the works;
(b) supply the Landlord with plans showing the proposed layout and all other relevant details together with particulars of the type and design of such works;
(c) use its reasonable endeavours to provide additional information to the Landlord that the Landlord reasonably requests, provided that any such request is made promptly and within 60 calendar days of the Landlord's receipt of the information provided pursuant to (a) and (b) above; and
(d) obtain all requisite Consents;
(ii) carry out such works in a good and workmanlike manner with suitable materials of good quality and causing as little nuisance to the Estate as reasonably practicable;
(iii) comply with the requirements of all Consents and Statutes applicable to the works being carried out; and
(iv) promptly and within no more than 15 Business Days after substantial completion of the works, provide the Landlord with three sets of final 'as-built' plans and specifications (both hard copy and CAD disk) for retention.
(B) If the Tenant is required by any authority or Statute or the Tenant reasonably considers that it would be prudent to have an independent point of access to the Premises directly from the publicly maintained highway and without passing through the Estate Common Parts, the Landlord shall not raise any objection and shall provide its written consent (not to be unreasonably withheld or delayed) to the extent that any planning authority requires such consent and shall use all reasonable endeavours to facilitate such independent point of access provided that such assistance shall be at the Tenant's sole cost and reasonable request.
3.14 Use
(A) Not to use the Premises otherwise than for the Permitted Use.
(B) Not to use the Premises for:
(i) any dangerous, noxious, noisy, offensive, illegal or immoral purpose;
(ii) any purpose which causes an unlawful nuisance, damage or inconvenience to the Landlord or the owners or occupiers of any neighbouring property or which involves any substance which may be harmful, polluting or contaminating;
(iii) residential purposes;
(iv) any animal testing; or
(v) any oil or other heavy chemical refinery;
provided that the proper use by the Tenant of the Premises for the Permitted Use shall not in any circumstances constitute a breach of the obligations under 3.14(B)(i) or 3.14(B)(ii) above.
3.15 Security arrangements
Not to leave the Premises continuously unoccupied for more than 30 Business Days without notifying the Landlord in advance and providing security and caretaking arrangements approved by the Landlord and the Tenant's insurers (if required) such approval not to be unreasonably withheld or delayed provided that in the event that the Tenant proposes to cease occupying the Premises (otherwise than by an assignment or underletting of the Premises in whole it shall first give the Landlord not less than six months' prior notice in writing).
3.16 Conduits
To keep the Conduits in the Premises clear and free from any noxious, harmful or deleterious substance, and to remove any obstruction and repair any damage to the Conduits in the Premises as soon as reasonably practicable after it becomes aware of the same and to the Landlord's reasonable satisfaction.
3.17 Entrances and service areas
(A) Not to enter or to leave the Estate otherwise than through the entrances and exits designated in writing by the Landlord (acting reasonably) from time to time.
(B) Not to load or unload or receive delivery of or dispatch goods otherwise than in the areas and through the entrances designated in writing by the Landlord (acting reasonably) from time to time.
(C) Not to obstruct the Estate Common Parts or to otherwise interfere with access by the Landlord or the tenants or occupiers of other parts of the Estate.
3.18 Rights of light
(A) To preserve all rights of light and other easements enjoyed by the Premises and to take at the Landlord's sole cost and request all reasonable steps to preserve such rights of light and other easements and not to permit or suffer anyone to acquire any right of light or other easement or right over the Premises.
(B) As soon as reasonably practicable after becoming aware of the same, to give notice to the Landlord of any third party making or acquiring or attempting to make or acquire any encroachment or easement against the Estate and at the request and cost of the Landlord to take such steps as the Landlord may reasonably require to prevent any such encroachment or easement being acquired.
3.19 Insurance
(A) To keep the Premises insured against the Insured Risks for their full reinstatement cost with a reputable insurance office.
(B) To ensure that the insurance policy in respect of the Premises required under paragraph (A) above is composite insurance covering the interests of the Landlord and the Tenant in the Premises.
(C) On request to supply the Landlord (but not more frequently than once in any period of 12 months) with particulars of any such policies of insurance, evidence of payment of the current year's premium and a schedule showing the total reinstatement cost insured against by the Tenant.
(D) If the Premises are destroyed or damaged, the Tenant shall in its absolute discretion either:
(i) subject to obtaining all necessary Consents, apply all insurance monies received (except sums received in respect of property owner's and third party liability and business
interruption) in rebuilding, repairing and reinstating the Premises as soon as reasonably practicable provided that the Tenant shall not be required to reinstate the Premises in facsimile; or
(ii) if the Tenant is unable or unwilling to reinstate the Premises, promptly clear any debris and landscape the Premises to the reasonable satisfaction of the Landlord;
and the Tenant shall notify the Landlord within 12 months of the date of damage or destruction whether or not the Tenant has chosen to reinstate the Premises.
(E) From the date of any damage or destruction until such time as the Premises have been reinstated in full or landscaped pursuant to paragraph 3.19(D), to ensure that, so far as reasonably practicable, the Premises remain clean and tidy, free from debris and suitably hoarded if necessary.
(F) If the Tenant elects to rebuild, repair and reinstate the Premises in accordance with paragraph 3.19(D), to:
(i) promptly use all reasonable endeavours to obtain any planning permissions and other Consents which are needed to enable the Tenant to reinstate the Premises;
(ii) commence any reinstatement works promptly, and in any event within a maximum of two calendar years, after the last of the requisite Consents is issued;
(iii) subject to such reasonable extensions of time as the parties may agree both acting reasonably, the Tenant shall complete all reinstatement works to the Landlord's reasonable satisfaction within a maximum of three calendar years after the last of the requisite Consents is issued; and
(iv) comply with its obligations under paragraph 3.13(A).
(G) The Landlord shall be entitled to insure against property owner's liability, third party liability and the employer's liability of the Landlord in relation to the Premises and anything done in them and the rest of the Estate. The Tenant shall pay to the Landlord within 14 days of receipt by the Tenant of a written demand a due and fair proportion of the cost of any insurance which the Landlord properly puts in place pursuant to this paragraph 3.19(G), plus any tax charged on the premium for the said insurance.
3.20 Alienation
(A) Not to assign, underlet or charge any part (as distinct from the whole) of the Premises or hold upon trust for another the whole or any part of the Premises.
(B) Not to go out of occupation of the whole of the Premises otherwise than by an assignment or underletting of the whole.
(C) Not to assign or to underlet the whole of the Premises:
(i) to a person entitled to claim diplomatic or sovereign immunity;
(ii) to a corporation registered or resident in a jurisdiction in which an order or a judgment of a court obtained in England and Wales will not necessarily be enforced against it without any consideration of the merits of the case.
(D) Not to underlet the whole of the Premises otherwise than by way of a Permitted Underlease.
(E) To give the Landlord notice of its intention to assign the whole of the Premises or underlet the whole of the Premises and not to so assign or underlet the Premises without first complying with the provisions of Schedule 6, provided that this shall not apply to the transactions referred to in paragraph (F).
(F) Paragraph (E) above shall not apply to any assignment or underlease of the whole of the Premises where the Tenant and the assignee or undertenant are members of the same group.
(G) If the same is not entered automatically by the Land Registry on the registration of this Lease, promptly to apply for the entry of a restriction in the following form against the registered title to this Lease:
"No disposition of the registered estate by the proprietor of the registered estate or by the proprietor of any registered charge, not being a charge registered before the entry of this restriction, is to be registered without a certificate signed by Reckitt Benckiser Healthcare (UK) Limited or their conveyancer that the provisions of paragraph 3.20(E) of Schedule 3 to the Lease dated 1 December 2014 and made between Reckitt Benckiser Healthcare (UK) Limited (1) and RB Pharmaceuticals Limited (2) have been complied with or do not apply to the disposition";
and the Tenant hereby authorises the Landlord to apply for the registration of the above restriction if the Tenant fails to do so.
(H) Not to part with or share occupation of the whole or any part of the Premises otherwise than to companies which are members of the same group as the Tenant upon terms such that:
(i) no estate or interest in the Premises is created or transferred and no right to exclusive possession or occupation is conferred; and
(ii) any rights of occupation come to an end immediately the relevant company ceases to be a member of the same group as the Tenant.
3.21 Direct Competitors
Notwithstanding clause 3.20, not to assign or underlet the whole of the Premises unless:
(i) the Tenant has provided reasonable notice to the Landlord of the identity of the proposed assignee; and
(ii) the Landlord has provided its written confirmation that it does not consider (acting reasonably) that the proposed assignee is a direct competitor of the Landlord's business.
3.22 Registration of dealings
(A) Within ten (10) Business Days after any assignment, underletting, sharing of occupation, mortgage or charge or the release or vacation of any mortgage or charge or devolution of or other instrument relating to the Premises or any estate or interest in the Premises however remote or inferior to give notice to the Landlord and produce to it for its retention a certified copy of the deed or instrument effecting the transaction.
(B) If the Landlord so requests, the Tenant shall promptly supply the Landlord with full details of the occupiers of the Premises and the terms upon which they occupy.
3.23 Indemnity
(A) To indemnify the Landlord against all actions, costs, claims, demands, expenses, damage and loss arising directly or indirectly from any breach of the Tenant's obligations under this Lease, provided that the Landlord:
(i) takes reasonable steps to mitigate any losses which might result in a claim for indemnification being made;
(ii) as soon as reasonably practicable gives notice in writing to the Tenant of any claims brought or made against the Landlord which may cause the Tenant to be liable under the indemnity; and
(iii) does not admit liability or settle any relevant claim against it without the written consent of the Tenant (such consent not to be unreasonably withheld or delayed).
(B) Notwithstanding paragraph 3.23(A):
(i) for so long as the Tenant is RB Pharmaceuticals Limited or any other member of the lndivior Group, then until the earlier of:
(a) the Tenant ceasing to be a member of the Indivior Group; and
(b) a Change of Control of Indivior PLC; and
(ii) for so long as the Landlord is Reckitt Benckiser Healthcare (UK) Limited or any other member of the RB Group, then until the earlier of:
(a) the Landlord ceasing to be a member of the RB Group; and
(b) a Change of Control of Reckitt Benckiser PLC;
the Tenant shall not be liable to the Landlord whether in contract, tort (including negligence and breach of statutory duty) for:
(i) any indirect or consequential loss or damage;
(ii) any loss of profits, loss of revenue, loss of use, loss of anticipated savings, loss of goodwill or loss of contracts (in each case whether direct or indirect or consequential); or
(iii) any punitive or exemplary damages.
3.24 Interest
(A) If any sum due under this Lease has not been paid by the date it is due, whether or not it has been formally demanded and without prejudice to the Landlord's other remedies, to pay on demand interest at the Default Interest Rate (both before and after any judgment) on that amount for the period from the due date to and including the date of payment.
(B) To pay interest under paragraph (A) for any period during which the Landlord properly refuses to accept the tender of payment because of an unremedied breach of a tenant covenant.
3.25 VAT
(A) Each sum payable under this Lease is exclusive of any amounts in respect of VAT chargeable on the supply for which that sum is the consideration.
(B) If anything done under this Lease constitutes, for VAT purposes, the making of a supply by the Landlord to another person (the "Recipient") and VAT is or becomes chargeable on that supply (i) the Landlord shall issue a valid VAT invoice to the Recipient, and (ii) the Recipient shall pay to the Landlord, in addition to any amounts otherwise payable under this Lease, an amount equal to any amount of VAT so chargeable for which the Landlord is liable to account. If there is subsequently any adjustment to the consideration for the relevant supply:
(i) where the adjustment is upward (i) the Landlord shall issue a valid additional or revised VAT invoice, and (ii) the Recipient will pay to the Landlord an amount equal to any additional VAT arising in respect of the supply for which the Landlord is liable to account; and
(ii) where the adjustment is downward (i) the Landlord shall issue a valid VAT credit note or a revised VAT invoice; and (ii) the Landlord will pay to the Recipient an amount equal to any reduction in the VAT arising in respect of the supply for which the Landlord Is liable to account.
3.26 Matters affecting the Reversion
To observe and perform the Title Matters.
SCHEDULE 4
Part A: Service Charge
PART I
4.1 Interpretation
In this Schedule, except where the context otherwise requires:
"Service Charge Period" means a period of 12 months ending on and including 31st. December in each year or such other period as the Landlord may acting reasonably determine from time to time;
"Service Charge Rent'' means a fair and reasonable proportion of the Total Expenditure for the Service Charge Period concerned as appearing in the summary submitted pursuant to paragraph 4.3(A); and
"Total Expenditure" means the aggregate of the reasonable and proper costs and
expenses incurred by the Landlord in providing the Services.
4.2 Estimate of the Total Expenditure
(A) The Landlord shall submit to the Tenant an estimate of the Total Expenditure for each Service Charge Period.
(B) The Landlord may revise such estimate at any time before the end of the relevant Service Charge Period to allow for unusual or unexpected expenditure.
4.3 Summary of the Total Expenditure
(A) Within six months after the end of each Service Charge Period, the Landlord shall submit to the Tenant a full and accurate summary of the Total Expenditure for such period audited by an independent accountant.
(B) At any time within 20 Business Days from the date such summary is submitted, the Tenant may after reasonable prior notice have access to the accounts, invoices and other materials from which such summary is derived and at its own expense be provided with copies.
(C) After the expiration of a period of 40 Business Days from the date such summary is submitted, such summary shall be final and binding on the Tenant subject only to representations it has raised in writing during such period.
(D) The Tenant may not object to the Total Expenditure or any item comprised in it or otherwise on the ground that:
(i) an item of the Total Expenditure included at a proper cost might have been provided or performed at a lower cost;
(ii) an item of the Total Expenditure fails to comply with an estimate which was given; or
(iii) the Tenant disagrees with any estimate of future expenditure for which the Landlord requires to make provision so long as the Landlord has acted reasonably and in good faith.
4.4 Payment of the Service Charge Rent
(A) The Tenant shall pay to the Landlord the Service Charge Rent for each Service Charge Period falling wholly within the Term and an apportioned part of the Service Charge Rent for any Service Charge Period falling partly within the Term.
(B) Subject to any adjustment in the estimate of the Total Expenditure after the beginning of the relevant Service Charge Period, the Tenant shall make payments on account of the Service Charge Rent by four equal payments in advance on Rent Payment Date in each year of such amount as the Landlord may reasonably require.
(C) After the Landlord has submitted the summary of the Total Expenditure for a Service Charge Period, if the aggregate of the on account payments made by the Tenant differs from the Service Charge Rent for the Service Charge Period concerned then any shortfall shall be paid by the Tenant to the Landlord within 20 Business Days of receipt by the Tenant of written demand and any over-payment shall either be allowed to the Tenant against the next on account payment due under this Schedule or, after the end of the Term and the discharge by the Tenant of any outstanding amounts under this Lease, returned to the Tenant within 20 Business Days of agreeing the amount due.
(D) For the purpose of any apportionment in respect of a period shorter than a Service Charge Period, the Service Charge Rent for the Service Charge Period concerned shall be apportioned on a daily basis.
4.5 Further costs
The Landlord may include in the Total Expenditure for any Service Charge Period:
(i) any item of the Total Expenditure for an earlier Service Charge Period not recovered in full from the tenants and occupiers of the Estate;
(ii) interest at the base rate of Barclays Bank PLC from time to time from the date of expenditure until the date of recovery on any item of the total Expenditure met by the Landlord from its own resources whether because of an insufficiency of service charges received from the tenants and occupiers of the Estate or otherwise;
(iii) any tax assessed upon the Landlord during such period in respect of sums received from the tenants or occupiers of the Estate by way of or on account of the service charge;
(iv) any amounts in respect of VAT comprised in the Total Expenditure which the Landlord is unable to recover as input tax.
4.6 Deposit account
(A) The Landlord shall keep the sums paid by the tenants and occupiers of the Estate by way of service charge in a separate, interest earning, deposit account (designated "The Service Charge Account'') until and save to the extent that they may be required for the purposes provided for in this Schedule.
(B) Interest on the amounts standing to the credit of the account shall be credited to the account quarterly net of any tax payable in respect of such interest.
(C) Until actual disbursement, such amounts shall be held by the Landlord to be applied by it for the benefit of the tenants and occupiers of the Estate from time to time.
(D) Upon any transfer of the Reversion, the Landlord may retain out of such account an amount sufficient to discharge the Total Expenditure incurred by the Landlord but remaining outstanding.
(E) The receipt of the Landlord's successor to the Reversion shall be a good receipt for the Landlord and relieve the Landlord from any liability as to the future application of amounts handed over.
4.7 Tenant’s protection provisions
(A) There shall be excluded from the Total Expenditure all costs and expenses relating to:
(i) the enforcement of the covenants and obligations of the tenants and occupiers of the Estate;
(ii) the collection of rents and licence fees from the tenants and occupiers of the Estate and any costs relating to the administration of applications for consents to assign, sublet or alter by tenants or occupiers of the Estate;
(iii) the review of rent, the letting and reletting of any part of the Estate and the grant of licences;
(iv) any liability or expense which is the responsibility of any tenant or occupier of the Estate under the terms of the lease or other arrangement by which such tenant or occupier uses or occupies the Estate;
(v) the capital costs incurred in carrying out improvements to the Estate except insofar as such work constitutes normal repair, renewal or refurbishment;
(vi) the initial construction, equipping and fitting out of the Estate;
(vii) the cost of making good any damage or destruction to the Estate arising from any risk covered by any policy or policies of insurance arranged by the Landlord pursuant to paragraph 4.12(F) to the extent the cost of doing so has been recovered under such policy or policies of insurance, the Landlord having used reasonable endeavours to recover such costs pursuant to any relevant policy or policies of insurance;
(viii) any costs, fees or expenses arising or incurred by reason of any neglect, act or omission of the Landlord or those for whom it is legally responsible; and/or any other tenant or permitted occupier of any part of the Estate or those for whom it is legally responsible, and/or any breach by the Landlord of its obligations under this Lease; and/or any breach by any other tenant or permitted occupier of any part of the Estate of its obligations under their lease or other right of occupation;
(ix) any contribution to a sinking fund;
(x) the cost of special concessions given by the Landlord to any other tenant or occupier of the Estate;
(xi) the costs incurred by or in connection with any proposed sale of the Landlord's interest under this Lease;
(xii) all costs (including those of renewal, rebuilding and reinstatement) relating to Conduits that exclusively serve some other tenant or occupier (including the Landlord) of the Estate; and
(xiii) any costs associated with the provision of the Car Parking pursuant to Part B of this Schedule.
(B) The Service Charge Rent is not to be increased by reason of any part of the Estate being vacant or being occupied by the Landlord or because any other tenant or occupier of the Estate defaults in the payment of its service charge.
4.8 Landlord’s obligation to provide the Services
(A) Subject to the following provisions of this paragraph, the Landlord shall provide the Services.
(B) The Landlord may at its reasonable discretion discontinue, suspend, vary, extend, alter or add to the Services if the Landlord considers that by doing so the Estate, its services or amenities may be improved or the management of the Estate may be more efficiently conducted.
4.9 Disputes
Any dispute arising under this schedule shall be determined by a single arbitrator in accordance with the Arbitration Act 1996.
PART II
4.10 Repairs to the Estate
Repair, renewal (where beyond economic repair), decoration, cleaning, maintenance and lighting of:
(A) any party walls or fences and other party structures and amenities which may belong to or be capable of being used or enjoyed by the Estate in common with any land or building adjoining or neighbouring the Estate;
(B) Conduits, plant, machinery, apparatus and equipment (which are not the responsibility of and do not exclusively serve any tenant or occupier of the Estate (including the Landlord)); and
(C) the Estate Common Parts, including the Estate Roads.
4.11 Fire Fighting and Security
(A) Provision, operation, repair, renewal (where beyond economic repair), cleaning and maintenance of:
(i) fire alarms, sprinkler systems, fire prevention and fire fighting equipment and ancillary apparatus within the Estate Common Parts; and
(ii) security alarms, apparatus, CCTV surveillance systems and other systems and amenities as the Landlord (acting reasonably) considers appropriate for the security of the Estate.
(B) Erection, repair, renewal (where beyond economic repair), decoration, cleaning, maintenance of a perimeter fence around the Estate and the Premises that complies with the Medicines and Healthcare Products Regulatory Agency and Home Office guidance for Home Office Controlled Drug Licensees (or such equivalent regulatory regime as applicable from time to time), provided that if the Premises becomes subject to a more onerous security regime than the Landlord then the Tenant shall be responsible for fulfilling such additional security arrangements.
4.12 Estate Common Parts
(A) Repair, renewal (where beyond economic repair), decoration, cleaning, maintenance and lighting of the Estate Common Parts;
(B) Equipping the Estate Common Parts;
(C) Providing, maintaining and replacing any plants in the Estate Common Parts;
(D) Providing, maintaining and replacing signs, nameboards and other notices within the Estate Common Parts;
(E) The operation, maintenance and replacement (where beyond economic repair) of public address and access control systems, entry barriers, metal detectors and baggage scanning apparatus and other amenities within the Estate Common Parts;
(F) Insuring the Estate Common Parts; and
(G) Providing, maintaining and replacing refuse bins and operating a refuse storage collection and disposal service (including facilities for the segregation of rubbish).
4.13 Induction of Employees
Providing induction training or materials for the induction of the Tenant's new employees in respect of the rules for use of the Estate Common Parts.
4.14 Other services
Providing vermin and pest control.
4.15 Statutory Requirements
(A) Paying all existing and future rates, taxes, charges, assessments and outgoings payable to any competent authority or for utilities in respect of the Estate Common Parts;
(B) Complying with the effect of any Statute in respect of the Estate Common Parts; and
(C) Carrying out any works to the Estate Common Parts required to comply with Statute.
4.16 Fees and Management Charges
(A) Paying managing agents' reasonable and proper fees and disbursements or if the Landlord itself manages the Estate making provision for a reasonable fee; and
(B) Paying the reasonable and proper fees and disbursements of accountants, surveyors, engineers, solicitors and others in connection with the provision of the Services and the administration of the Service Charge Rent.
4.17 Staff
Providing staff as the Landlord reasonably considers necessary in the interests of good estate management in connection with the Services and the general management, operation, maintenance and security of the Estate (including security guards) and all other reasonable incidental expenditure including but not limited to:
(i) salaries and health, insurance, welfare and pension benefits;
(ii) uniforms, special clothing, tools and other materials for the proper performance of the duties of any such staff;
(iii) providing maintaining repairing decorating and lighting any office accommodation and other facilities for building management staff and paying all rates gas electricity water and other utility charges in respect thereof and any actual or notional rent for such office accommodation; and
(iv) redundancy and similar or ancillary payments that the Landlord may be required by Statute or otherwise to pay in respect of staff.
4.18 Miscellaneous items
(A) Leasing or hiring any machinery and equipment required and used in connection with the provision of the Services;
(B) Paying commitment fees interest and any other cost of borrowing money at competitive rates where reasonably necessary to finance the Total Expenditure in relation to any unusual items of capital expenditure; and
(C) Providing any other services, carrying out any other works and paying any other reasonable and proper expenses which the Landlord reasonably and properly deems appropriate in accordance with good estate management and in the overall interests of the tenants and occupiers of the Estate.
Part B: Car Parking Rent
4.19 Interpretation
In this Schedule, except where the context otherwise requires:
"Car Parking Rent" means rent at an initial rate of £200 per annum for each car parking space provided in accordance with paragraph 1.4 of Schedule 1 and paragraph 4.22 of this Schedule from time to time and then as revised pursuant to this Schedule 4, Part B of this Lease;
"Base RPI Month" means October in each calendar year;
"Base Rent" means £200 per annum per car parking space and then as revised pursuant to this Schedule 4, Part B of this Lease;
"Index" means the "all items'' figure of the RPI;
"Interest Rate" means three per cent per annum below the Default Interest Rate from time to time;
"RPI" means the Retail Prices Index published by the Office for National Statistics or such body as may from time to time succeed the functions of such Office in relation to the Retail Prices Index or any official index replacing it; and
"Review Date" means 25 December 2015 and every anniversary of that date.
4.20 Payment of Car Parking Rent
The Tenant shall pay the Car Parking Rent by four equal payments in advance on the Rent Payment Dates in respect of the number of car parking spaces to be used for the relevant period as determined from time to time by paragraph 4.22 of this Schedule.
4.21 Review of Car Parking Rent
(A) In this paragraph, the "President" is the President for the time being of the Royal Institution of Chartered Surveyors or a person acting on his behalf, and the Surveyor is the independent valuer appointed pursuant to paragraph 4.21(J).
(B) The Car Parking Rent shall be reviewed on each Review Date with effect from and including the relevant Review Date, the reviewed rent to become payable as the Car Parking Rent reserved by this Lease.
(C) The reviewed rent for a Review Date shall be determined by multiplying the relevant Base Rent by the Index for the month of October immediately before the relevant Review Date, then dividing the product by the Index value for the Base RPI Month in the previous calendar year, provided that:
(i) if this calculation would result in an annual increase of more than three per cent, the increase will be deemed to be three per cent; and
(ii) if this calculation would result in an increase of less than one per cent or a decrease, the increase will be deemed to be an increase of one per cent.
(D) The Landlord shall calculate the indexed rent as soon as reasonably practicable and shall give the Tenant written notice of the indexed rent as soon as it has been calculated.
(E) If the revised Car Parking Rent has not been calculated by the Landlord and notified to the Tenant at least five Business Days before a Review Date, the Car Parking Rent payable from that Review Date shall continue at the rate payable immediately before that Review Date. No later than five Business Days after the revised Car Parking Rent is notified by the Landlord to the Tenant, the Tenant shall pay:
(i) the shortfall (if any) between the amount that it has paid for the period from the Review Date until the Rent Payment Date following the date of notification of the revised Car Parking Rent and the amount that would have been payable had the revised Car Parking Rent been notified on or before that Review Date; and
(ii) interest at the Interest Rate on that shortfall calculated on a daily basis by reference to the Rent Payment Dates on which parts of the shortfall would have been payable if the revised Car Parking Rent had been notified on or before that Review Date and the date payment is received by the Landlord.
(F) Time shall not be of the essence for the purposes of this clause.
(G) Subject to paragraph 4.21(H), if there is any change to the methods used to compile the RPI, Including any change to the items from which the Index is compiled, or if the reference case used to compile the RPI changes, the calculation of the indexed rent shall be made taking into account the effect of this change.
(H) The Landlord and the Tenant shall endeavour, within a reasonable time, to agree an alternative mechanism for setting the Car Parking Rent if either:
(i) the Landlord and the Tenant reasonably believes that any change referred to in paragraph 4.21(G) would fundamentally alter the calculation of the indexed rent in accordance with this paragraph 4.21, and has given notice to the other party of this belief; or
(ii) it becomes impossible or impracticable to calculate the indexed rent in accordance with this paragraph 4.21.
This alternative mechanism may (where reasonable) include, or consist of, substituting an alternative index for the RPI. In default of agreement between the Landlord and the Tenant on an alternative mechanism for setting the Car Parking Rent, the Surveyor shall determine an alternative mechanism.
(I) The Surveyor shall determine a question, dispute or disagreement that arises between the parties in the following circumstances:
(i) where any question or dispute arises between the parties as to the amount of the Car Parking Rent payable or as to the interpretation, application or effect of any part of this paragraph 4.21; or
(ii) where the Landlord and the Tenant fail to reach agreement under paragraph 4.21(H).
The Surveyor shall have full power to determine the question, dispute or disagreement. When determining such a question, dispute or disagreement, the Surveyor may, if he considers it appropriate, specify that an alternative mechanism for setting the Car Parking Rent should apply to this lease, and this includes (but is not limited to) substituting an alternative index for the RPI.
(J) The Surveyor shall be an independent valuer who is a Member or Fellow of the Royal Institution of Chartered Surveyors. The Landlord and the Tenant may, by agreement, appoint the Surveyor at any time before either of them applies to the President for the Surveyor to be appointed.
(K) The Surveyor shall act as an expert and not as an arbitrator. The Surveyor's decision shall be given in writing, and the Surveyor shall provide reasons for any determination. The Surveyor's written decision on the matters referred to him shall be final and binding in the absence of manifest error or fraud.
(L) The Surveyor shall give the Landlord and the Tenant an opportunity to make written representations to the Surveyor and to make written counter-representations commenting on the representations of the other party to the Surveyor. The parties will provide (or procure that others provide) the Surveyor with such assistance and documents as the Surveyor reasonably requires for the purpose of reaching a decision.
(M) Either the Landlord or the Tenant may apply to the President to discharge the Surveyor if the Surveyor:
(a) dies;
(b) becomes unwilling or incapable of acting; or
(c) unreasonably delays in making any determination.
Paragraph 4.21(J) shall then apply in relation to the appointment of a replacement.
(N) The fees and expenses of the Surveyor and the cost of the Surveyor's appointment and any counsel's fees, or other fees, reasonably incurred by the surveyor shall be payable by the Landlord and the Tenant in the proportions that the Surveyor directs (or if the Surveyor makes no direction, then equally). The Landlord and the Tenant shall otherwise each bear their own costs in connection with the rent review.
4.22 Review of the number of Car Parking spaces
(A) The Tenant may vary the number of car parking spaces over which it has rights pursuant to paragraph 1.4 of Schedule 1 with effect from 25 December in any year of the Term by providing at least two months' written notice to the Landlord.
(B) Notwithstanding paragraph 4.22(A), the Landlord shall not be required to provide the Tenant with the use of any more than 70 Car Parking spaces at any one time and, for the avoidance of doubt, if the Tenant specifies any number greater than 70 in its notice to the Landlord served in accordance with paragraph 4.22(A), the notice shall be deemed to require 70 Car Parking spaces exactly.
SCHEDULE 5
Further provisions
5.1 Licences to be obtained
(A) Any licence, consent or approval required from the Landlord under this Lease is to be obtained before the act or event to which it applies is earned out or done and is effective only when given by deed expressly made collateral to this Lease.
(B) Whether or not it says so expressly, a requirement to obtain the licence, consent or approval of the Landlord under this Lease includes a requirement to also obtain before the act or event all relevant Consents.
5.2 Estate Common Parts
(A) The Landlord shall not materially alter the Estate Roads and other access routes across the Estate Common Parts without:
(i) providing no less than three months' notice to the Tenant of the proposed alteration; and
(ii) obtaining the Tenant's prior approval (such approval not to be unreasonably withheld or delayed);
PROVIDED THAT the Landlord shall ensure that sufficient areas of the Estate Common Parts and sufficient access routes are available for use by the Tenant to enable the Tenant or any lawful sub tenant or other occupier to undertake its lawful usual business at the Premises without a materially detrimental effect on such business.
5.3 No implied warranty
Nothing contained or implied in this Lease or in any licence, consent or approval given by the Landlord is to be taken to be a covenant, warranty or representation by the Landlord or its agents that the Premises can be or are fit to be used for the Permitted Use or any other purpose or that any alteration or addition or change of use which the Tenant may intend to carry out will not require relevant Consents.
5.4 Landlord covenants
(A) The Landlord shall give the Tenant notice of its intention to assign or sell the Reversion and shall not assign or sell the Reversion without first complying with the provisions of Schedule 7, provided that this paragraph 5.4(A) does not apply:
(i) if the Tenant is not either RB Pharmaceuticals Limited or another member of the lndivior Group; or
(ii) to any transfer or assignment of the Reversion by the Landlord to members of the same group.
(B) The Landlord consents to the Tenant applying for the entry of a restriction in the following form against each of the Landlord's registered titles to the Reversion:
"No transfer of the registered estate by the proprietor of the registered estate is to be registered without a certificate signed by a conveyancer that the provisions of Schedule 5 paragraph 5.4(A) of an agreement dated 1 December 2014 and made between Reckitt Benckiser Healthcare (UK) Limited (1) and RB Pharmaceuticals Limited (2) have been complied with or that they do not apply to the disposition"
and the Tenant consents to the Landlord applying to remove this restriction when the Tenant ceases to be RB Pharmaceuticals Limited or another member of the lndivior Group.
5.5 Unwanted property
If after the end of the Term any property remains on the Premises or the Estate the landlord may either in so far as the same is annexed to the Premises treat it as having reverted to the Landlord or as the agent of the Tenant (and the Landlord is appointed by the Tenant to act in that behalf) remove, store, and sell such property and then hold the proceeds of sale after deducting the reasonable and proper costs and expenses of removal, storage and sale incurred by it to the order of the Tenant and the Tenant shall indemnify the Landlord against liability incurred by it to any third party whose property is dealt with by the Landlord.
5.6 No implied easements
Except as expressly set out, this Lease does not confer upon or include by reason of section 62 of the Law of Property Act 1925 or otherwise in favour of the Tenant any right, privilege, estate or interest in, through, over or upon any land or property adjoining or near to the Premises.
5.7 Costs
Costs payable to the Landlord or against which the Landlord is entitled to be indemnified under this Lease include but are not limited to all solicitors', surveyors', architects' and other fees, disbursements and irrecoverable VAT and other expenditure properly incurred by the Landlord on its own account or by the local or any other competent authority or the insurers or any other person interested In the Premises.
5.8 Arrears
Where the Landlord agrees to the Tenant deferring to some later date any amount falling due under this Lease, such later date shall be deemed to be the due date for payment for the purpose of section 17 of the Landlord and Tenant (Covenants) Act 1995.
5.9 Exclusion of liability
The Landlord shall not be liable or responsible to the Tenant or any person deriving title under it or any occupier of the Premises or their respective employees, agents, visitors or licensees for any loss, injury, damage, nuisance, annoyance or inconvenience which may be sustained either personally or to their property caused in whole or in part by any failure of or defect in any plant, machinery, conduits or services in the Premises.
5.10 Interest rates
If it ceases to be practicable to determine interest rates by reference to the base rate of Barclays Bank PLC the Landlord may specify a reasonable alternative.
5.11 Contracts (Rights of Third Parties) Act 1999
The parties do not intend that any provision of this Lease is to be enforceable by virtue of the Contracts (Rights of Third Parties) Act 1999 by a person who is not a party to it or a successor of such a party.
5.12 No waiver
No demand for or receipt of rent, no grant of any licence, consent or approval and no acceptance of any document for registration under this Lease by the Landlord or its agent with notice of a breach of any of the tenant covenants in this Lease is or is to be deemed to be a waiver, wholly or partially, of any such breach but any such breach shall be deemed a continuing breach of covenant and neither the Tenant nor any person taking any estate or interest under or through the Tenant may set up any such demand, receipt, grant or acceptance in any action for forfeiture or otherwise.
5.13 Entire agreement
(A) This Lease constitutes the whole and only agreement between the parties relating to the subject matter of this Lease.
(B) Each party acknowledges that in entering into this Lease, it is not relying upon any pre-contractual statement which is not set out in this Lease other than those contained in any written replies that the Landlord's solicitors have given to the CPSE 1 issued by the Tenant and dated 13 October 2014 and written replies dated 16 October 2014 to the Tenant's further enquiries dated 15 October 2014.
(C) Subject to the provisions of paragraph 5.13(B) and except in the case of fraud or negligence, no party shall have any right of action against any other party to this Lease arising out of or in connection with any pre-contractual statement except to the extent that it is repeated in this Lease.
(D) For the purposes of this paragraph 5.13, "pre-contractual statement" means any draft, agreement, undertaking, representation, warranty, promise, assurance or arrangement of any nature whatsoever, whether or not in writing, relating to the subject matter of this Lease made or given by any person at any time prior to this Lease becoming legally binding.
5.14 Notices
(A) Any notice to be given under or in connection with this Lease shall be:
(i) in writing (which for this purpose shall not include e-mail or fax); and
(ii) delivered by hand or sent by first class post, special delivery or recorded delivery to the addressee at its registered office or such other address as previously notified in writing to the giver of the notice by the addressee.
(B) In the absence of evidence of earlier receipt, a notice given in accordance with paragraph 5.14(A)(ii) is deemed to be given:
(i) if delivered by hand before 5:00pm on a Business Day, on the day it is delivered;
(ii) if delivered by hand after 5:00pm on any day, on the first Business Day after the day it is delivered; and
(iii) if sent by first class post, special delivery or recorded delivery, on the second Business Day after it is posted.
5.15 Jurisdiction
(A) This lease and any dispute or claim arising out of or in connection with it or its subject matter or formation (including non-contractual disputes or claims) shall be governed by and construed in accordance with the law of England and Wales.
(B) The parties irrevocably agree that the courts of England and Wales shall have exclusive jurisdiction to settle any dispute or claim that arises out of or in connection with this Lease or its subject matter or formation (including non-contractual disputes or claims).
5.16 Invalidity
Each of the provisions of this Lease is separate and severable from the others and if at any time any provision of this Lease is or becomes illegal, invalid or unenforceable, that shall not affect or impair the legality, validity or enforceability of any other provision of this Lease.
SCHEDULE 6
Right of First Refusal
Part I
Right of First Refusal on proposed assignment or underletting of the whole of the Premises
6.1 Definitions
(A) In this Schedule 6, the following definitions apply:
"Consideration" the consideration specified for the surrender of this Lease in the Offer (or Revised Offer pursuant to paragraph 6.3(C) of this Part I of this Schedule), whether or not monetary and whether payable by the Landlord or the Tenant;
"Landlord's Warning Notice" a notice in a form complying with the requirements of schedules 3 and 4 of the Order;
"Offer" an offer complying with the provisions of paragraph 6.3(A) of this Part I of this Schedule;
"Order'' the Regulatory Reform (Business Tenancies) (England and Wales) Order 2003; and
"Right of First Refusal" the right of first refusal of the Landlord under this Part I of this Schedule.
6.2 Making an Offer
(A) If the Tenant wishes to assign this Lease or underlet this Lease the Tenant must first make an Offer to the Landlord.
(B) The Right of First Refusal operates in respect of each party who is or becomes the Tenant.
6.3 The Offer
(A) An "Offer" for the purposes of this Schedule is an offer to surrender this Lease to the Landlord free from encumbrances (other than any subject to which this Lease was granted) and which:
(i) is unconditional;
(ii) is made irrevocably by the Tenant unless and until rejected or treated as rejected by the Landlord pursuant to paragraph 6.3(C) of this Part I of this Schedule;
(iii) is made in the form set out in Part II of this Schedule;
(iv) is submitted by the Tenant to the Landlord in duplicate, both parts of which are signed by the Tenant;
(v) specifies the Consideration; and
(vi) specifies whether any tenant's fixtures are included and if so itemises them.
(B) Within 25 Business Days of receipt (or deemed receipt) of an Offer, the Landlord shall be entitled (but not obliged) to give notice in writing to the Tenant stating either:
(i) that it does not wish to accept the Offer in which event the provisions of paragraph 6.3(C) will apply; or
(ii) that it is minded to accept the Offer at the Consideration, subject to compliance with section 38A(4) of the Landlord and Tenant Act 1954 in which event subject to compliance by the Landlord and the Tenant with paragraph 6.4 the Landlord will accept the Offer in accordance with paragraph 6.5 within 5 (five) Business Days of compliance by the Tenant with the provisions of paragraph 6.4(B).
(C) In the event (1) the Landlord declines to accept the Offer pursuant to paragraph 6.3(B)(i) or (ii) at the expiry of the 25 Business Days' period specified in paragraph 6.3(B) the Landlord has not notified the Tenant that it is minded (subject to compliance with Section 38A(4) of the Landlord and Tenant Act 1954) to accept a surrender of this Lease and the Offer is thereby treated as rejected by the Landlord or (iii) the Landlord has not within 20 Business Days after notifying the Tenant pursuant to paragraph 6.3(B)(ii) that it is minded to accept the Offer then complied with the provisions of Section 38A(4) of the Landlord and Tenant Act 1954 and paragraph 6.4(A) and following compliance by the Tenant with paragraph 6.4(B) accepted the Offer pursuant to paragraph 6.5, the Tenant may assign or underlet this Lease to a third party for a consideration determined by the Tenant, provided that:
(i) the Tenant must comply with the provisions of paragraph 3.20 (other than paragraph 3.20(E)) of Schedule 3;
(ii) the Tenant shall keep the Landlord fully informed of its negotiations with third parties in respect of any proposed assignment or underletting, including promptly disclosing drafts of any heads of terms (provided that such heads of terms may be redacted by the Tenant if the Tenant reasonably considers it to be necessary, save that the key terms including the consideration must be disclosed to the Landlord);
(iii) the third party transaction must be bona fide and on arm's length terms; and
(i) if the proposed assignment or underlease to a third party would be for less than the Consideration specified in the Offer, the Tenant must first offer to surrender this Lease to the Landlord for the price which has been agreed with the proposed assignee or undertenant (the "Revised Offer") and the Landlord shall be entitled but not obliged within 10 Business Days of receipt (or deemed receipt), time being of the essence, of the Revised Offer to decline the Revised Offer or to notify the Tenant that it is minded to accept the Revised Offer subject to compliance with Section 38A(4) of the Landlord and Tenant Act 1954. In the event that the Landlord fails to respond to the Revised Offer within the said 10 Business Day period the Revised Offer will be treated as having been rejected by the Landlord. The Revised Offer shall comply in all respects with the provisions of paragraph 6.3(A) subject to any necessary revisions to the form set out in Part II of this Schedule and the Consideration for the purposes of the Revised Offer shall be the consideration for which the Tenant is intending to dispose of this Lease whether monetary or not monetary and the terms of this paragraph (C) apply to the Revised
Offer as if it were an Offer, save in respect of the time in which the Landlord must notify the Tenant of whether it intends to accept.
6.4 Advance validation of the Offer or Revised Offer
(A) The Offer or Revised Offer is only capable of acceptance by the Landlord if it is preceded by compliance with section 38A(4) of the Landlord and Tenant Act 1954 and the service by the Landlord of a Landlord's Warning Notice on the Tenant in relation to the offer to surrender this Lease contained in the Offer or Revised Offer.
(B) In response to any Landlord's Warning Notice and as a precondition to the acceptance of an Offer or Revised Offer, the Tenant must first have made a declaration or statutory declaration as appropriate in a form complying with the requirements of schedule 4 of the Order, such declaration or statutory declaration to be provided to the Landlord within 10 Business Days of receipt of the Landlord's Warning Notice.
(C) For the avoidance of doubt, neither the service of a Landlord's Warning Notice nor the making of a declaration or statutory declaration by the Tenant pursuant to paragraph 6.4(B) will bind the Landlord to accept the Offer or Revised Offer.
6.5 Acceptance of the Offer or Revised Offer
(A) The method of acceptance of the Offer or Revised Offer by the Landlord is to be effected by the return to the Tenant of one part of the Offer or Revised Offer duly signed by or on behalf of the Landlord, with a reference to the Landlord's Warning Notice and the Tenant's declaration or statutory declaration endorsed on it in compliance with the requirements of schedule 4 of the Order. The Offer or Revised Offer shall be accepted within 5 (five) Business Days of the Tenant making a declaration or statutory declaration as appropriate in accordance with paragraph 6.4(B) and providing a copy of the same to the Landlord.
(B) If the Offer or Revised Offer is duly accepted by the Landlord:
(i) the Tenant will surrender and yield up to the Landlord and the Landlord will accept a surrender of the Premises so that the Term created by this Lease will merge in the reversion immediately expectant on this Lease;
(ii) completion of the said surrender is to take place on the date 20 Business Days after the date that the Offer or Revised Offer is accepted by the Landlord or on such earlier date as the Landlord may prescribe;
(iii) on completion of the surrender, the Consideration is to be paid;
(iv) the surrender is to be in such form as the Landlord reasonably requires, reciting the Consideration, and shall not relieve the Tenant from any subsisting liability under or in connection with this Lease up to the time of the surrender;
(v) the Premises shall be surrendered with vacant possession, provided that the Tenant will not be in breach of this requirement if there remains on the Premises any of the Tenant's loose chattels fixtures or fittings of a minor or inconsequential nature; and
(vi) the Standard Commercial Property Conditions (Second Edition) are to apply to the agreement for the surrender constituted by the acceptance by the Landlord of the Offer or Revised Offer.
(C) On completion of the surrender:
(i) the Tenant will hand over to the Landlord:
(a) this Lease;
(b) the duly executed original of the deed of surrender;
(c) duly executed discharges in form DS1 of all registered changes (if applicable);
(d) certificates of non-crystallisation in respect of any floating charges (if applicable); and
(e) duly executed deeds of release in respect of any equitable charges (if applicable); and
(f) the Landlord will hand over to the Tenant the duly executed counterpart of the deed of surrender.
Part II
Prescribed form of offer
To the Landlord, and to whom it may concern:
Right of First Refusal in the Lease dated [ ] 2014 and made between (1) Reckitt Benckiser Healthcare (UK) Limited and (2) RB Pharmaceuticals Limited (the "Lease") relating to the right of the Landlord to require a surrender of the Lease if the Tenant wishes to assign or underlet.
Take notice that we, the Tenant, having made a decision to dispose of the Lease by way of assignment or underletting to a third party make an Offer to you in accordance with Part I of Schedule 6 of the Lease on the following terms:
(A) the Consideration is [ ];
(B) the Offer [excludes tenant's fixtures] [includes the tenant's fixtures itemised in the attached list];
(C) if the Offer is not accepted by you, it is intended to assign or underlet the Lease, subject to the provisions of paragraph 3.20 (other than paragraph 3.20(E)) of Schedule 3 and the provisions of Part I of Schedule 6 of the Lease to a third party;
(D) this notice constitutes an Offer to you to surrender the Lease for the Consideration, capable of acceptance by you in accordance with the provisions of Part I of Schedule 6 of the Lease;
(E) the terms of Part I of Schedule 6 of the Lease are incorporated by reference into this Offer; and
(F) the words and expressions designated by initial capital letters in this Offer are defined in Part I of Schedule 6 of the Lease and have the same meanings in this Offer.
You have 25 Business Days to notify us that you are minded to accept the Offer and thereafter to serve a Landlord's Warning Notice on us, and to then accept this Offer by signing the duplicate of this letter, or another copy of it, in a manner indicating acceptance and sending it to us within 5 Business Days following the date on which you receive our Landlord and Tenant Act 1954 declaration or statutory declaration.
This Offer is not capable of acceptance unless and until section 38A(4) of the Landlord and Tenant Act 1954 has been complied with in accordance with paragraph 6.4(A) of Part I of Schedule 6 of the Lease.
You are referred to Part I of Schedule 6 of the Lease as to your rights, and the consequences of failure to accept this Offer in time or to comply with the conditions of exercise of the Right of First Refusal.
We acknowledge receipt of the Offer of which this is the duplicate [a copy], and having:
given a Landlord's Warning Notice in respect of the Offer; and
received from you on [insert date] a [declaration] [statutory declaration] in a form complying with the requirements of section 38A(4) of the Landlord and Tenant Act 1954, in response;
| | |
| we accept the Offer. |
|
| [The Landlord] |
SCHEDULE 7
First Right of Refusal
Part I
Right of First Refusal on proposed sale of the freehold title of the Premises
7.1 Definitions
(A) In this Schedule 7, the following definitions apply:
"Consideration" the consideration specified for the Reversion in the Offer (or Revised Offer pursuant to paragraph 7.3(C)(iii) of this Part I of this Schedule), whether or not monetary;
"Offer" an offer complying with the provisions of paragraph 7.3 of this Part I of this Schedule; and
"Right of First Refusal" the right of first refusal of the Tenant under this Part I of this Schedule.
7.2 Making an Offer
(A) If the Landlord wishes to sell the Reversion the Landlord must first make an Offer to the Tenant.
(B) The Right of First Refusal operates in respect of each party who is or becomes the Landlord.
7.3 The Offer
(A) An "Offer'' for the purposes of this Schedule is an offer to sell the Reversion to the Tenant free from encumbrances (other than this Lease and the Title Matters) and which:
(i) is unconditional;
(ii) is made irrevocably by the Landlord unless and until rejected or treated as rejected by the Tenant pursuant to paragraph 7.3(C) of this Part I of this Schedule;
(iii) is made in the form set out in Part II of this Schedule;
(iv) is submitted by the Landlord to the Tenant in duplicate, both parts of which are signed by the Landlord;
(v) specifies the Consideration;
(i) specifies whether any landlord's fixtures are included and if so itemises them.
(B) Within 25 Business Days of receipt (or deemed receipt of an Offer), the Tenant shall be entitled (but not obliged) to give notice in writing to the Landlord stating either:
(i) that it rejects the Offer in which event the provisions of paragraph 7.3(C) will apply; or
(ii) that it wishes to accept the Offer.
(C) In the event (i) the Tenant declines to accept the Offer pursuant to paragraph 7.3(B)(i) or (ii) at the expiry of the 25 Business Days' period specified in paragraph 7.3(B) the Tenant has not notified the Landlord that it wishes to acquire the Reversion and the Offer is thereby treated as rejected by the Tenant or (iii) the Tenant has not within 5 (five) Business Days after notifying the Landlord pursuant to paragraph 7.3(B)(ii) that it wishes to accept the Offer then accepted the Offer pursuant to paragraph 7.4, the Landlord may dispose of the Reversion to a third party for a consideration determined by the Landlord and which may be less than the Consideration specified in the Offer provided that:
(i) the Landlord shall keep the Tenant fully informed of its negotiations with third parties in respect of any transfer of the Reversion, including promptly disclosing drafts of any heads of terms (provided that such heads of terms may be redacted by the Landlord if the Landlord reasonably considers it to be necessary, save that the key terms including the consideration must be disclosed to the Tenant);
(ii) the third party transaction must be bona fide and on arm's length terms; and
(i) if the proposed disposal to a third party would be for less than the Consideration specified in the Offer, the Landlord shall first offer to sell the Reversion to the Tenant for the price which has been agreed with the proposed purchaser of the Reversion (the "Revised Offer") and the Tenant shall be entitled but not obliged within 10 Business Days of receipt (or deemed receipt), time being of the essence, of the Revised Offer to decline the Revised Offer or to accept the Revised Offer. In the event that the Tenant fails to respond to the Revised Offer within the said 10 Business Day period the Revised Offer will be treated as having been rejected by the Tenant. The Revised Offer shall comply in all respects with the provisions of paragraph 7.3(A) subject to any necessary revisions to the form set out in Part II of this Schedule and the Consideration for the purposes of the Revised Offer shall be the consideration for which the Landlord is intending to dispose of the Reversion whether monetary or not monetary and the terms of this paragraph (C) apply to the Revised Offer as if it were an Offer, save in respect of the time in which the Tenant must notify the Landlord of whether it intends to accept.
7.4 Acceptance of the Offer or Revised Offer
(A) The method of acceptance of the Offer or Revised Offer by the Tenant is to be effected by the return to the Landlord of one part of the Offer or Revised Offer duly signed by or on behalf of the Tenant.
(B) If the Offer or Revised Offer is duly accepted by the Tenant:
(i) the Landlord will transfer to the Tenant and the Tenant will accept a transfer of the Reversion;
(ii) completion of the said transfer is to take place within 20 Business Days after the date that the Offer or Revised Offer is accepted by the Tenant or on such earlier date as the Tenant may prescribe;
(iii) on completion of the transfer, the Consideration is to be paid;
(iv) the transfer is to be in such form as the Tenant reasonably requires, reciting the Consideration; and
(v) the Standard Commercial Property Conditions (Second Edition) are to apply to the agreement for the transfer constituted by the acceptance by the Tenant of the Offer or Revised Offer, provided that the Landlord shall not be required to transfer the Reversion with the benefit of vacant possession.
(C) On completion of the transfer:
(i) the Landlord will hand over to the Tenant:
(a) any relevant title deeds, including this Lease;
(b) the duly executed original form TR1 or TP1, as applicable;
(c) duly executed discharges in form DS1 of all registered charges (if applicable);
(d) certificates of non-crystallisation in respect of any floating charges (if applicable); and
(e) duly executed deeds of release in respect of any equitable charges (if applicable);
(ii) the Tenant will hand over to the Landlord the duly executed counterpart of form TR1 or TP1, as applicable.
Part II
Prescribed form of offer
To the Tenant, and to whom it may concern:
Right of First Refusal in the Lease dated [ ] 2014 and made between (1) Reckitt Benckiser Healthcare (UK) Limited and (2) RB Pharmaceuticals Limited (the "Lease") relating to the right of the Tenant to require a transfer of the reversion of the Lease (the “Reversion”) if the Landlord wishes to sell.
Take notice that we, the Landlord, having made a decision to sell the Reversion now make an Offer to you in accordance with Part I of Schedule 7 of the Lease on the following terms:
(A) the Consideration is [ ];
(B) if the Offer is not accepted by you, it is intended to sell the Reversion to a third party;
(C) this notice constitutes an Offer to you to sell the Reversion for the Consideration, capable of acceptance by you in accordance with the provisions of Part I of Schedule 7 of the Lease;
(D) the terms of Part I of Schedule 7 of the Lease are incorporated by reference into this Offer; and
(E) the words and expressions designated by initial capital letters in this Offer are defined in Part I of Schedule 7 of the Lease and have the same meanings in this Offer.
You have 25 Business Days to accept the Offer by signing the duplicate of this letter, or another copy of it, in a manner indicating acceptance and sending it to us within the aforementioned 25 Business Days.
You are referred to Part I of Schedule 7 of the Lease as to your rights, and the consequences of failure to accept this Offer in time or to comply with the conditions of exercise of the Right of First Refusal.
We acknowledge receipt of the Offer of which this is the duplicate and we accept the Offer.
| | | | | | | | |
Executed as a deed by | ) | |
| RECKITT BENCKISER | ) | |
| HEALTHCARE (UK) LIMITED | ) | |
| ) | |
| acting by a director | ) | |
| in the presence of: | ) | /s/ W.R. Mordan |
| | Director |
| | | | | |
| Witness’s signature: | /s/ Christine Logan |
| Name (print): | Christine Logan |
| Occupation: | Company Secretary |
| Address: | 103-105 Bath Road, |
| Slough, Berkshire SL1 3UH |
| | | | | | | | |
Executed as a deed by | ) | |
| RB PHARMACEUTICALS | ) | |
| LIMITED | ) | |
| ) | |
| acting by a director | ) | |
| in the presence of: | ) | /s/ Andrew Gawman |
| | Director |
| | | | | |
| Witness’s signature: | /s/ Steven Lucas |
| Name (print): | Steven Lucas |
| Occupation: | Solicitor |
| Address: | 103-105 Bath Road, |
| Slough, Berkshire SL1 3UH |
DATED 3 AUGUST 2017
RECKITT BENCKISER HEALTHCARE (UK) LIMITED
-and-
INDIVIOR UK LIMITED
-to-
NORTHERN POWERGRID (YORKSHIRE) PLC
COUNTERPART
LEASE
of substation accommodation and easements at
Dansom Lane Hull
Jacksons Law Firm
Innovation House
Yarm Road
Stockton-on-Tees TS18 3TN
Tel No: 01642 356500
Fax No: 01642 356501
PARTICULARS
| | | | | | | | | | | |
| LR1. | Date of lease | : | 3 August 2017 |
| LR2. | Title number(s) | : | LR2.1 Landlord’s title number(s)
HS286962 |
| | | LR2.2 Other title numbers
HS378157 and HS341298 |
| LR3. | Parties to this Lease | : | Landlord RECKITT BENCKISER HEALTHCARE (UK) LIMITED of 103-105 Bath Road, Slough, Berkshire SL1 3UH (Company Number 00261312) |
| | | Tenant NORTHERN POWERGRID (YORKSHIRE) PLC whose registered office is at Lloyds Court 78 Grey Street, Newcastle upon Tyne, Tyne & Wear NE1 6AF (Company Number 4112320) |
| | | Other parties INDIVIOR UK LIMITED of 103-105 Bath Road, Slough SL1 3UH (Company Number 07183451) |
| LR4. | Property | : | In the case of a conflict between this clause and the remainder of this lease then, for the purposes of registration, this clause shall prevail See the First Schedule. |
| LR5. | Prescribed statements etc. | : | LR5.1 Statements prescribed under rules 179 (dispositions in favour of a charity), 180 (dispositions by a charity) or 196 (leases under the Leasehold Reform, Housing and Urban Development Act 1993) of the Land Registration Rules 2003 Not Applicable.
LR5.2 This lease is made under, or by reference to, provisions of: Not Applicable. |
| LR6. | Term for which the Property is leased | : | The term as specified in this lease at the definition of “Term” on page 4 of this lease. |
| LR7. | Premium | : | None |
| LR8. | Prohibitions or restrictions on disposing of this Lease | : | This lease contains a provision that prohibits or restricts dispositions |
| LR9. | Rights of acquisition etc. | : | LR9.1 Tenant’s contractual rights to renew this lease, to acquire the reversion or another lease of the Property, or to acquire an interest in other land None.
LR9.2 Tenant’s covenant to (or offer to) surrender this lease None.
LR9.3 Landlord’s contractual rights to acquire this lease None. |
| | | | | | | | | | | |
| LR10. | Restrictive covenants given in this lease by the Landlord in respect of land other than the Premises | : | See the Fourth Schedule. |
| LR11. | Easements | : | LR11.1 Easements granted by this lease for the benefit of the Property See the Second Schedule.
LR11.2 Easements granted or reserved by this lease over the Property for the benefit of other property Not Applicable. |
| LR12. | Estate rentcharge burdening the Property | : | Not Applicable. |
LAND REGISTRY
LAND REGISTRATION ACTS 1925 TO 2002
DISTRICT : City of Kingston upon Hull
PROPERTY : Land at Dansom Lane Kingston Upon Hull
1. Definitions and Interpretation
1.1 In this Lease the following words and expressions shall where the context so admits be deemed to have the following meanings:
Apparatus means the Underground Lines laid or placed or to be laid or placed pursuant to the provisions of this Lease;
Cable Reserve means the land shown coloured green on the Plans of the width shown;
Commencement Date means the date of this Lease;
Company means Northern Powergrid (Yorkshire) plc which expression shall include the Company's successors and assigns;
Demised Premises means the accommodation of the Lessor as briefly described in the First Schedule;
Group has the meaning specified in section 42 of the Landlord and Tenant Act 1954;
Lease means the lease dated 1 December 2014 and made between (1) the Lessor and (2) the Tenant;
Leased Land means the land demised by the Lease being land on the south-west side of Mount Pleasant, Hull and registered at HM Land Registry with title number HS378157;
Lessor means Reckitt Benckiser Healthcare (UK) Limited which expression shall include the Lessor's successors and assigns;
Plan 1 means that part of Drawing Number C1058396 attached to this Lease marked "Location Plan";
Plan 2 means that part of Drawing Number C1058396 attached to this Lease marked "Detail Plan";
Plans means Plan 1 and Plan 2 as the context requires;
Rent means the yearly rent of a peppercorn (if demanded);
Rights means each or any of the rights and liberties specified in the Second Schedule;
Specified Distance means the Cable Reserve and the land within a lateral distance of 0.5 metres measured from either side of the Cable Reserve;
Tenant means lndivior UK Limited which expression shall include the Tenant's successors and assigns;
Term means the term of 60 years commencing on the Commencement Date and thereafter from year to year unless or until determined at the end of the 60th year or any subsequent year by either party giving to the other six calendar months previous notice in writing in that behalf and includes any period of continuation or holding over after the expiration or termination of the contractual term;
Underground Lines means the electric cables electric lines inspection covers manholes joint boxes and all apparatus appertaining thereto as may from time to time be laid in or under the Cable Reserve;
1.2 words importing the singular include the plural and vice versa;
1.3 words importing the masculine include the feminine and neuter;
1.4 words importing natural persons include corporations bodies and firms and all such words shall be construed interchangeably in that manner;
1.5 where a party consists of one or more persons all agreements and obligations of that party shall take effect as joint and several agreements and obligations;
1.6 references to any Act include references to any statutory modification or re-enactment of such Act for the time being in force and any order instrument regulation or bye-law made or issued thereunder;
1.7 references to a clause or a schedule are to a clause or schedule of this Lease and the schedules to this Lease are deemed to be incorporated in it;
1.8 the clause and any paragraph headings in the body of this Lease and the schedules are for the convenience of the parties only and do not affect its construction or interpretation;
1.9 a covenant by the Lessor or the Tenant with the Company not to do an act or thing shall include a covenant not to permit suffer or allow such act or thing.
2. Operative Provisions
2.1 In consideration of the Rent the Lessor hereby demises unto the Company the Demised Premises together with the Rights TO HOLD unto the Company for the Term YIELDING AND PAYING therefor in arrear during the Term the Rent.
2.2 The Company hereby covenants with the Lessor and (where applicable) the Tenant to observe and perform the covenants contained in the Third Schedule.
2.3 The Lessor hereby covenants with the Company to observe and perform the covenants contained in the Fourth Schedule.
2.4 The Company, the Tenant and the Lessor hereby agree those matters contained in the Fifth Schedule.
2.5 The Tenant covenants and agrees with the Company in the terms set out in the Sixth Schedule.
2.6 Unless the right of enforcement is expressly provided it is not intended that a third party should have the right to enforce a provision of this Lease under the Contracts (Rights of Third Parties) Act 1999.
2.7 This Lease shall incorporate the regulations as to Notices contained in Section 196 of the Law of Property Act 1925 (except sub-section (3) thereof) as modified by the Recorded Delivery Services Act 1962.
2.8 For the avoidance of doubt the Rights granted by the Lessor and the Tenant pursuant to this Lease are granted only to the extent that each party is able to do so in relation to their respective interests in title numbers HS286962, HS378157 and HS341298.
IN WITNESS whereof the parties have executed this Lease and the Counterpart thereof respectively as a Deed and delivered this deed the day and year first before written.
THE FIRST SCHEDULE
The Demised Premises
ALL THAT accommodation containing by ad measurement 11 square metres or thereabouts comprising the interior of the building situate at Dansom Lane Hull shown coloured red on Plan 1 and coloured round with red on Plan 2 which accommodation comprises part of the above mentioned Title Number HS286962.
THE SECOND SCHEDULE
Rights granted by this Lease
1. A right of way at all times over Dansom Lane South and Chapman Street only and for all purposes with or without vehicles plant and equipment to and from the Demised Premises and the Apparatus from and to the public highway.
2. To lay and place from time to time and to maintain repair renew inspect and use Underground Lines in the Cable Reserve.
3. To enjoy the benefit of support for the Apparatus from the subjacent and adjacent land of the Lessor and the Tenant.
4. For the Company and all persons authorised by it with or without vehicles plant and equipment to enter upon the Cable Reserve and so much of the adjoining land of the Lessor and the Tenant as may from time to time be reasonably necessary for all purposes in connection with the Apparatus.
5. To lop trim fell or remove any bush or tree (including the roots thereof) which may reasonably interfere with or endanger the Apparatus or impede the Company's access thereto.
6. To construct and use ventilators in and upon the walls of the building on the Demised Premises and to enjoy the free flow of air thereto.
THIRD SCHEDULE
The Company’s Covenants
1. To pay the Rent at the times and in the manner aforesaid.
2. To pay all existing and future rates taxes assessments and outgoings of an annual or recurring nature payable by law in respect of the Demised Premises and/or any Rights (except only such as the owner is by law bound to pay notwithstanding any contract to the contrary).
3. To maintain the Interior of the Demised Premises in good decorative order and in a clean and tidy order and to keep the doors of the Demised Premises in good repair and condition.
4. To make good to the reasonable satisfaction of the Lessor and (where applicable) the Tenant any damage to the land of the Lessor and (where applicable) the Tenant caused by the Company in exercise of the Rights provided that if for any reason such damage cannot be made good the Company shall in lieu of making good such damage pay reasonable compensation to the Lessor and (to the extent that any part of the compensation relates to the Leased Land) the Tenant.
5. Except insofar as it may be reasonably necessary for the proper exercise of the Rights not to unduly impede the free and uninterrupted user of the land of the Lessor and the Tenant.
6. To indemnify the Lessor and the Tenant against all actions proceedings claims demands costs charges and expenses arising out of death injury loss or damage occurring to any person or to any property which shall be occasioned by any breach by the Company or by the servants contractors agents licensees or invitees of the Company of the covenants on the Company's part contained in this Lease and to make good to the Lessor and the Tenant any such loss or damage of or to the property of the Lessor and the Tenant arising from any such breach.
7. Not to use the Demised Premises for any purpose other than as an electrical substation and other purposes ancillary to the business of the distribution of electricity.
8. Not to assign or transfer the benefit of this Lease except to another company or body carrying on the business of or associated with the sale or distribution of electricity without the previous consent in writing of the Lessor and the Tenant such consent not to be unreasonably withheld or delayed.
9. Not to affix or exhibit or permit to be affixed or exhibited to or upon any part of the Demised Premises any placard poster or signboard or other advertisement except the Company's name plate or any statutory or other notices as may from time to time be required by law or such as shall have previously been approved in writing by the Lessor.
10. Except in cases of emergency to exercise the Rights at all reasonable times and with all reasonable despatch.
11. At the expiration or sooner determination of the Term quietly to yield up the Demised Premises to the Lessor and if so requested by the Lessor (and the Tenant in the case of the Leased Land) to take down and remove for the Company's own benefit all Apparatus at any time placed by it upon or under the Demised Premises or in and under the Cable Reserve the Company making good any damage caused thereby and restoring the surface of any land disturbed so far as reasonably possible provided that the Company may if it so prefers leave the Underground Lines in situ having made them safe.
FOURTH SCHEDULE
The Lessor’s Covenants
1. Not to alter remove or conceal or permit or suffer to be altered removed or concealed any name plate or inscription intimating that any apparatus is the property of the Company.
2. To maintain and keep in good repair and condition the walls and roof surrounding the Demised Premises and to ensure that the Demised Premises are and at all times during the Term hereby created remain wind and watertight.
3. Not at any time to do any act or thing which may interfere with damage endanger or cause a leakage of electricity from the Apparatus or impede the Company's access thereto.
4. Without prejudice to the generality of paragraph 3 above:
4.1 Not to erect or place any buildings stacks or structures within the Specified Distance;
4.2 Not to place or deposit any articles materials or things within the Specified Distance;
4.3 Not to plant or grow trees or bushes within the Specified Distance;
4.4 Not to alter the level of the surface of that part of the land within the Specified Distance;
4.5 Not to lay any concrete or other substance within the Specified Distance;
4.6 Not to bring anything into contact with the Underground Lines or so near to the Underground Lines as to cause a leakage of electricity therefrom;
4.7 Not to obstruct the flow of air to any ventilators in any building comprised in the Demised Premises.
5. To keep the Company indemnified against all actions proceedings claims demands costs charges and expenses arising out of death injury loss or damage occurring to any person or to any property which shall be occasioned by any breach by the Lessor or by the Lessor's other tenants (for the avoidance of doubt excluding the Tenant) or the servants contractors agents licensees or invitees of the Lessor or of such tenants of, the covenants on the Lessor's part contained in
this Lease to make good to the Company any such loss or damage of or to the property of the Company arising from any such breach.
6. The Company paying any Rent and performing and observing the several covenants and conditions hereinbefore contained and on its part to be performed and observed shall and may hold and enjoy the Demised Premises and the Rights during the Term without any interruption by the Lessor or any person rightfully claiming through or under the Lessor.
7. To do all such acts or things (if any) which may be reasonably necessary to enable notice of the Company's interest and the Rights granted by this Lease and the covenants hereinbefore contained to be entered in the register of the Lessor's title and to enable the Company to be registered as the proprietor of the Demised Premises at the Land Registry with absolute leasehold title.
FIFTH SCHEDULE
Agreements
1. The Demised Premises may be occupied by and the Rights may be exercised by any member of the same Group as the Company as well as by the Company.
2. If at any time the Rent or any part thereof shall be in arrear for at least twenty eight days next after the same ought to have been paid (if demanded) or if there shall be any breach or non-observance of any of the covenants by the Company herein contained then and in such case the Lessor may at any time thereafter re-enter upon the Demised Premises and thereupon this demise shall absolutely determine.
3. If at any time during the Term the Company shall no longer require the Demised Premises for the purpose of its undertaking then it shall be lawful for the Company to determine this demise by three months’ notice in writing in that behalf to the Lessor expiring at any time such determination however shall be without prejudice to the other terms conditions covenants and reservations contained herein and to any action or actions which may arise therefrom.
4. Any dispute or difference arising under the Third Schedule of this Lease (other than paragraph 6 thereof) and the Fourth Schedule of this Lease (other than paragraph 5 thereof) shall be submitted to arbitration in the manner provided by the Arbitration Act 1996 or any statutory modification or re-enactment thereof for the time being in force.
5. Nothing contained in this Lease shall prejudice restrict interfere with or otherwise affect any of the statutory or other rights powers obligations and duties for the time being vested in the Company howsoever arising as the electricity distributor for the distribution of electricity for the region in which the Demised Premises is situated or the performance by the Company of any such obligations or duties or the means by which the Company shall in its absolute discretion exercise its rights or powers or fulfil or discharge any such obligations or duties.
6. If any inconsistency shall be found between the Plans the contents of Plan 2 shall prevail over the contents of Plan 1.
7. At the end or sooner determination of the Term or within six months thereafter the Company may for its own benefit remove any buildings or apparatus installed in the Demised Premises or the adjoining land under the provisions hereof making good to the reasonable satisfaction of the Lessor and (if applicable) the Tenant all damage caused thereby.
8. In the event that the Lessor receives notice from the Company relating to vehicular access on to the Leased Land under the terms of this Lease then the Lessor will as soon as reasonably practicable send this to the Tenant for their information.
SIXTH SCHEDULE
PART I
The Tenant’s Agreements and Covenants
1. The Tenant for the remainder of the term of years demised by the Lease and for any period of extension or holding over of the same hereby grants and confirms the Rights to the extent that the same touches and concerns the Leased Land and consents to the payment of the Rent by the Company to the Lessor.
2. The Tenant hereby covenants with the Company (to the intent that the burden of this covenant may run with and bind the Leased Land and each and every part thereof into whosoever hands the same may come and to the further intent that the benefit of this covenant may be annexed to and enure for the protection and benefit of the Company's property undertaking and the Rights and each and every part thereof) to observe and perform the covenants conditions and stipulations contained in paragraphs 1, 3, 4 and 6 of the Fourth Schedule.
3. In all other respects the Lease shall remain in full force and effect.
4. There shall be deemed to be incorporated in this Deed covenants by the Tenant with the Company for title and further assurance in respect of the Rights to the same effect as the covenants referred to in Sections 2 and 3 (1) and (2) of the Law of Property (Miscellaneous Provisions) Act 1994.
| | | | | | | | |
Executed by NORTHERN POWERGRID | |
(YORKSHIRE) plc acting by | /s/ J.M. France |
| J.M. France, | | Director |
a director, in the presence of: | |
| | |
| Signature of witness: | /s/ Andrew Laws |
| Name of witness: | Andrew Laws | |
| Address of witness: | Lloyds Court, 78 Grey Street |
| Newcastle upon Tyne, NE1 6AF |
| Occupation of Witness: | Secretariat Compliance Officer |
Exhibit 4.8
| | |
Incentive Compensation Policy
|
1 PURPOSE
The Incentive Compensation Policy (“Policy”) describes the governing principles for Incentive Compensation through the Annual Incentive Plan (“AIP”), Sales Incentive Plan (“SIP”), awards programs and any individual written employment agreement between an Employee and their employing Company (collectively referred to as “Incentive Compensation”) for eligible United States (“US”) Employees (as defined below) of Indivior Inc. and Indivior Treatment Services, Inc. (each a “Company” and collectively the “Companies”).
2 SCOPE
This Policy applies to all full-time and part-time employees, (collectively, “Employee”) who are eligible for Incentive Compensation in the US.
3 POLICY DETAILS
3.1 Key Principles
3.1.1 Incentive Compensation is designed to drive performance and behaviors consistent with Indivior’s purpose, Indivior Code of Conduct policies, values, and strategy.
3.1.2 Incentive Compensation provides a variable pay component as an incentive, in addition to an Employee’s regular salary. The combination of the base salary compensation and the Incentive Compensation is designed to yield a competitive total compensation opportunity.
3.1.3 For the Addiction Sciences business unit, Incentive Compensation is designed so that financial incentives do not inappropriately incentivize Employees to engage in or tolerate marketing, promoting, or selling of Indivior’s products (1) for unapproved uses, (2) to prescribers of buprenorphine products who are not DATA 2000-waivered or prescribers who practice within an excluded specialty, and (3) to prescribers on a government debarred list or who have been delisted pursuant to the Prescriber Concern Reporting Policy.
3.1.4 For the Behavioral Health business unit, Incentive Compensation is designed so that financial incentives do not inappropriately incentivize Employees to engage in or tolerate marketing, promoting, or selling of Indivior’s products (1) for unapproved uses, (2) to prescribers who practice within an excluded specialty, and (3) to prescribers on a government debarred list or who have been delisted pursuant to the Prescriber Concern Reporting Policy.
| | | | | |
| As Amended 03 Oct 2022 | Page 1 of 14 |
| | |
Incentive Compensation Policy
|
3.2 Eligibility Rules
3.2.1 All Employees are eligible for Incentive Compensation through only one of the following three ways: the AIP, the SIP, or an employment agreement. Employees are never eligible for Incentive Compensation through both the AIP and SIP or through an employment agreement and the AIP or SIP. Contingent Workers and Consultants are not eligible for AIP or SIP. An Employee must receive written confirmation from the Company to be eligible for Incentive Compensation. Incentive Compensation targets, multipliers, and levels shall be designated in an Employee’s offer letter, employment agreement or other written correspondence from the Company as well as the Annual Incentive Plan SOP or the Sales Incentive Plan SOP. Non- Promotional Field-based Employees (e.g., Field Medical Employees) are generally eligible for the AIP and Promotional Field-based Employees are generally eligible for the SIP. Refer to the Sales Incentive Plan SOP for further information on the development, implementation, and execution of the SIP.
3.2.2 The Company reserves the right to, in its absolute discretion, cancel or modify any Employee’s eligibility for Incentive Compensation at any time. Employees may not be eligible, or may have limited eligibility for Incentive Compensation in the following cases:
l Employees who have been found to have committed violations of Indivior’s policies and procedures, as tracked by Integrity & Compliance;
l Employees who have not completed their compliance training;
l Employees with unsatisfactory job performance, which includes, but is not limited to, Employees with a rating of ‘needs improvement’ or lower on their annual Performance and Development Review (“PDR”), or who are on a performance improvement plan, as tracked by Human Resources (“HR”).
3.2.3 The Company reserves the right to, in its absolute discretion, withhold payment of Incentive Compensation to an Employee who is relevant to an ongoing internal investigation. Based on the outcome of an internal investigation, the Company reserves the right to, in its absolute discretion, pay the full amount of Incentive Compensation to the Employee, pay only a partial amount of Incentive Compensation to the Employee, or not pay any Incentive Compensation to the Employee.
3.2.4 The ability to participate in Incentive Compensation in any one year does not guarantee participation in future years. The Company reserves the right to amend or terminate the terms of the Incentive Compensation programs at any time, either on an individual Employee or global basis.
| | | | | |
| As Amended 03 Oct 2022 | Page 2 of 14 |
| | |
Incentive Compensation Policy
|
3.2.5 If an Employee’s employment commenced part-way through the fiscal year, any Incentive Compensation payment will be made on a pro rata basis from the Employee’s start date.
3.2.6 If an Employee changes jobs, or receives a base salary increase during the fiscal year, be it in the same country or via international transfer, resulting in changed targets, the Employee’s Incentive Compensation payout will be based, pro rata, on the achievements of each set of targets over the course of the fiscal year.
3.2.7 Employees will not be paid Incentive Compensation during any periods of long- term sickness or disability, or unpaid leave unless required by local laws and regulations.
3.2.8 Pro rata Incentive Compensation payments may be granted, at the sole discretion of the Company, to Company Employees who retire or become disabled during the fiscal year, or to the estate of former Employees who is deceased where the deceased Employee died while employed during the fiscal year.
3.2.9 Acquisitions, divestments, or major launches will be considered on a case-by-case basis and may result in an adjustment of Incentive Compensation results at the end of the year in the sole discretion of the Company.
3.2.10 The Company may, in compliance with the principles and requirements of this Policy, adjust the formulaic bonus outcomes, as needed, both upwards and downwards (including to zero) to ensure alignment of pay with performance.
3.2.11 Participation in Incentive Compensation will end if the Company determines that:
l Payment of Incentive Compensation becomes unreasonable or inappropriate due to collective bargaining, statutory provisions, or other reasons; or,
l It is no longer in a position to make Incentive Compensation payments.
3.3 Supplemental Payments
3.3.1 There may be additional supplemental payments provided by the Company to eligible Employees in the sole discretion of the Company. All supplemental payments must be reviewed and approved, at a minimum, by Integrity & Compliance and HR prior to payment. Integrity & Compliance and HR may request counsel from Legal and other relevant business stakeholders, as needed, particularly when the supplemental payment is available to Sales personnel.
| | | | | |
| As Amended 03 Oct 2022 | Page 3 of 14 |
| | |
Incentive Compensation Policy
|
3.4 Termination of Employment
3.4.1 Participation in Incentive Compensation does not alter the “Employment at Will” status of Employees or the right of the Company or the right of the Employee to terminate his or her employment at any time, with or without Cause.
3.4.2 Subject to the terms of a written employment agreement, if employment is terminated by reason of resignation or by Cause prior to Incentive Compensation payout (whether such termination occurs during or after the fiscal year), Employees are not entitled to an Incentive Compensation payment.
3.4.3 Subject to the terms of a written employment agreement, the Company may exercise its judgment to determine what, if any, Incentive Compensation payment should be paid in the event of an elimination of a position, a change in job responsibilities, or a reduction-in-force during the fiscal year. Factors that may be considered include, but are not limited to the following:
l When in the fiscal year the separation occurred
l If the Employee’s objectives were met
l The overall performance of the Indivior Group
3.5 Clawback
3.5.1 The Company reserves the right to, in its absolute discretion and subject to applicable law, seek redress from individuals in circumstances where there has been a material misstatement of the Indivior Group or business unit results, or a failure to comply with the Indivior Code of Conduct, policies or procedures, irrespective of the position the Employee might hold and whether they are employed or not employed by the Company at the time of the breach of the Indivior Code of Conduct.
3.5.2 The Company shall in its absolute discretion decide on the amount of the Incentive Compensation payment subject to Clawback in light of the circumstances triggering the Clawback. The amount subject to Clawback shall be limited to the net (post- witholding) portion of the Incentive Compensation that was paid or is otherwise payable that the Company determines exceeds the amount that would have been paid or would otherwise be payable but for the events described in Section 3.5.1.
3.5.3 The Company may use any lawful methods to satisfy the Clawback, including the following:
l Reduce (including, if appropriate, to zero) the amount of any future Incentive Compensation; or,
| | | | | |
| As Amended 03 Oct 2022 | Page 4 of 14 |
| | |
Incentive Compensation Policy
|
l Require an Employee to pay the Company or any associated entity (e.g., subsidiary) the amount required to satisfy the Clawback in full, on terms directed by the Company (including, without limitation, on terms that the relevant amount is to be withheld or deducted from the Employee’s salary or from any other payment to be made to the Employee by the Company or associated entity).
3.5.4 Employees, as a condition to participating in, and being eligible to receive Incentive Compensation, agree to:
l Authorize the Company and/or associated entities to deduct the Clawback amount from the Employee’s remuneration or payments due to them if permitted by applicable law;
l Repay to the Company or associated entity the Clawback amount on demand as a debt; and,
l Pay and indemnify, and keep indemnified, the Company and all associated entities against any costs and expenses, which may include reasonable legal expenses, incurred by the Company or any associated entity in enforcing the Clawback provisions.
3.5.5 No delay or omission on the part of the Company or any associated entity in exercising its rights under this Policy shall operate as a waiver of any such rights to seek redress.
3.5.6 The Company may terminate the employment of any Employee who fails to cooperate with the Company in satisfying any Clawback.
4 TIMING OF PAYMENT
4.1 Payment of Annual Incentive Compensation will be made in the year following the performance year, but not later than March 15th of such following year.
5 CORPORATE INTEGRITY AGREEMENT
5.1 Notwithstanding any other provision of this Policy, the rights and obligations of the Company and Employees with respect to Incentive Compensation shall be subject to the applicable terms and conditions of Appendix C of the Corporate Integrity Agreement dated July 24, 2020 between the Office of Inspector General of the Department of Health and Human Services and Indivior Inc., a copy of which is included in Appendix 1 of this Policy.
6 TRAINING
6.1 HR is responsible for ensuring that relevant Employees read and acknowledge their understanding of this Policy annually.
| | | | | |
| As Amended 03 Oct 2022 | Page 5 of 14 |
| | |
Incentive Compensation Policy
|
7 ENFORCEMENT
7.1 Non-compliance with this Policy can subject Employees to disciplinary actions up to and including termination.
7.2 This Policy and any dispute or claim arising out of or in connection with it shall be governed by and construed in accordance with Virginia law. The state or federal courts of Virginia shall have exclusive jurisdiction to settle any dispute or claim that arises out of or in connection with this Policy or its subject matter or formation (including non-contractual disputes or claims).
8 REFERENCES
l Annual Incentive Plan SOP
l Anti-Bribery Policy
l Indivior Code of Conduct
l Competition Law Compliance Manual
l Equal Employment Opportunity (EEO) Policy (USA)
l Global Policy on Healthcare Business Ethics
l Harassment Policy (USA)
l Prescriber Concern Report Policy
l Sales Incentive Plan SOP
9 DEFINITIONS/ABBREVIATIONS
9.1 “Cause” shall have the meaning as defined in any employment agreement then in effect between the Employee and their employing Company, or if not defined therein, or if there is no such agreement, “Cause” refers to an Employee’s (a) failure to substantially perform the Employee’s duties and obligations to the Company as an Employee, including one or more acts of gross negligence or insubordination or a material breach of Indivior’s policies and procedures; (b) material breach of Indivior’s Code of Conduct, its Equal Opportunity and Anti-Harassment policies (including the Equal Employment Opportunity (EEO) Policy (USA) and Harassment Policy (USA)), or compliance policies (including the Anti-Bribery Policy, the Competition Law Compliance Manual, and the Global Policy on Healthcare Business Ethics); (c) indictment for, conviction of, or plea of guilty or nolo contendere to, a felony or any other crime involving fraud, dishonesty, theft, breach of trust or moral turpitude; (d) willful engagement in conduct which results in, or could reasonably be expected to result in, material injury to the Company’s financial condition, reputation, or ability to do business; (e) breach of
| | | | | |
| As Amended 03 Oct 2022 | Page 6 of 14 |
| | |
Incentive Compensation Policy
|
any other agreement with the Company; (f) violation of state or federal securities laws or regulations; (g) discharge for poor performance; or (h) willful failure to cooperate with a bona fide internal investigation or an investigation by regulatory or law enforcement authorities, after being instructed by the Company to cooperate, willful destruction or failure to preserve documents or other materials relevant to such investigation, or willful inducement of others to fail to cooperate or to produce documents or other materials in connection with such investigation. The determination of the existence of Cause shall be made by the Company, and such determination shall be conclusive.
9.2 “Clawback” refers to any reduction or forfeiture of, or obligation to repay, an amount of compensation otherwise payable or paid pursuant to Section 3.5.
9.3 “Consultant” refers to any entity or individual the Company engages and contracts with to perform tasks, activities or services on behalf of the Company, including Healthcare Professionals. Consultants are not intended by the Company to be Employees.
9.4 “Contingent Worker” refers to a temporary worker hired to cover vacancies due to promotions, terminations, illness, leave of absence, etc. Their tasks are generally expected to be performed by regular Employees in the medium to long-term. Contingent Workers are not intended by the Company to be Employees.
9.5 “Field Medical Employees” refers to Employees who are responsible for carrying out medical affairs activities in the field.
9.6 “Incentive Compensation” refers to payment under plans (i.e., AIP and SIP), which are designed to reward and drive performance and behaviors consistent with Indivior’s purpose, Indivior Code of Conduct, and policies, values, and strategy as well as any bonuses payable under an employment agreement between the Company and any Employee.
9.7 “Promotional Field-Based Employees” refers to Addiction Sciences and Behavioral Health Clinical Specialists, Area Sales Managers, Sale Trainers, Business Directors, other Sales Employees, Field Reimbursement Specialists (FRSs), and Managed Care Employees as well as other Company Employees when engaging in promotional activities.
9.8 “Indivior Group” refers to the Companies and each of their parents, subsidiaries, and affiliates.
10 APPENDICES
l Appendix 1 – Corporate Integrity Agreement (Appendix C)
| | | | | |
| As Amended 03 Oct 2022 | Page 7 of 14 |
| | |
Incentive Compensation Policy
|
11 REVISION HISTORY
| | | | | | | | | | | |
| Version | Date of Revision | Summary of Changes | Reason for Changes |
| 1.0 | Oct 2019 | New Policy | New Policy |
| 2.0 | Sept 2020 | New legal entity, added CIA language | Consistency with CIA |
| 3.0 | September 2021 | Removal of Indivior Solutions Inc, minor clarification of processes | Annual review |
| 4.0 | August 2022 | Clarification of definitions, minor clarification of policy | Annual review |
| | | | | |
| As Amended 03 Oct 2022 | Page 8 of 14 |
| | |
Incentive Compensation Policy
|
APPENDIX 1
Corporate Integrity Agreement (Appendix C)
Incentive Compensation Restriction and
Executive Financial Recoupment Program
Within 120 days after the Effective Date of the CIA, Indivior shall establish and maintain throughout the term of the CIA two programs relating to compensation for its Employees and executives. The first shall be an Employee and Executive Incentive Compensation Restriction Program as described below in Section A. The second shall be an Executive Financial Recoupment Program as described below in Section B.
(A) Employee and Executive Incentive Compensation Restriction Program
Indivior’s Incentive Compensation Policy (“ICP”) outlines the criteria that Indivior Employees must satisfy as a prerequisite to earning Incentive Compensation. Incentive Compensation is designed to reward and drive performance and behaviors consistent with Indivior’s mission, Code of Conduct, and policies, values, and strategy. For the Addiction Sciences business unit, Incentive Compensation is designed so that financial incentives do not inappropriately incentivize Employees to engage in or tolerate marketing, promoting, or selling of Company products (1) for unapproved uses, (2) to prescribers of buprenorphine products who are not DATA 2000-waivered or prescribers who practice within an excluded specialty, and (3) to prescribers on a government debarred list or who have been delisted pursuant to Indivior’s Prescriber Concern Report Policy. For the Behavioral Health business unit, Incentive Compensation is designed so that financial incentives do not inappropriately incentivize Employees to engage in or tolerate marketing, promoting, or selling of Company products (1) for unapproved uses, (2) to prescribers who practice within an excluded specialty, and (3) to prescribers on a government debarred list or who have been delisted pursuant to Indivior’s Prescriber Concern Report Policy. Under the ICP, Employees may not be eligible or may have limited eligibility for Incentive Compensation where they have been found to have committed violations of Company policies and procedures, have not completed compliance training, or have unsatisfactory job performance.
(B) Executive Financial Recoupment Program
Within 120 days after the Effective Date of the CIA, Indivior shall establish a financial recoupment program that puts at risk of forfeiture and recoupment an amount equivalent to up to 2 years of annual performance pay (including Cash and Equity Awards as defined below) for any Covered Executive (as defined below) who is the
| | | | | |
| As Amended 03 Oct 2022 | Page 9 of 14 |
| | |
Incentive Compensation Policy
|
subject of an Affirmative Recoupment Determination. This program shall be known as the Executive Financial Recoupment Program. This recoupment program shall apply to Covered Executives who, at the time of a Recoupment Determination, are either current Indivior Employees or became former Indivior Employees at any time 120 days or more after the Effective Date of the CIA.
Within 120 days after the Effective Date of the CIA, Indivior shall establish policies and procedures (and modify employment and other contracts as necessary) to provide that incentive awards, bonuses, and other similar awards on an after tax/net basis (collectively “Cash Awards”) for each Covered Executive is at risk of forfeiture in the event of Significant Misconduct (i.e., a violation of a law or regulation or a significant violation of an Indivior policy) that is discovered by Indivior before the bonus is paid. In the event of Significant Misconduct by any Covered Executive, Indivior shall also reserve the right and full discretion to void and forfeit any unvested market value options, unvested conditional awards, unvested deferred bonus awards, and other unvested rights to receive Company ordinary shares (collectively, “Equity Awards”) which are granted 120 days or more after the Effective Date of the CIA. If Indivior discovers any Significant Misconduct that would implicate the forfeitures described in this Paragraph by a Covered Executive, it shall evaluate the situation in accordance with the process outlined below and make a determination about whether any forfeiture, and the terms of such forfeiture, shall be implemented.
Within 120 days after the Effective Date of the CIA, Indivior shall modify and supplement the Annual Incentive Plans, Long-Term Incentive Plan and Deferred Bonus Plan applicable to Covered Executives (and any employment agreements, as appropriate) by imposing the eligibility and repayment conditions described below on future Cash and Equity Awards and making the additional remedies discussed below applicable to all U.S.-based Executive Committee Members and Senior Vice Presidents (collectively, “Covered Executives”). Indivior shall implement policies and procedures and, as necessary, shall modify contracts with Covered Executives so that, beginning no later than calendar year 2021, Cash and Equity Awards which are granted 120 days or more after the Effective Date of the CIA may be recouped if an Affirmative Recoupment Determination is made. The forfeiture and recoupment rights described in this Paragraph shall apply prospectively to Covered Executives beginning no later than the calendar year 2021 bonus plan and Equity Award years.
(i) Cash Award Eligibility and Repayment Conditions. Within 120 days after the Effective Date of the CIA, Indivior shall implement an eligibility and repayment condition on Cash Awards that will allow Indivior, as a consequence of a Triggering Event, to pursue repayment from Covered Executives of an amount equivalent to up to two years of Cash Awards paid to
| | | | | |
| As Amended 03 Oct 2022 | Page 10 of 14 |
| | |
Incentive Compensation Policy
|
the individual. These eligibility and repayment conditions shall be designed to survive the payment of the Covered Executive’s Cash Award and the separation of the Covered Executive’s employment for a period of two years from the payment of the Cash Award. If payment of any portion of a Cash Award is deferred on a mandatory or voluntary basis, the two-year period shall be measured from the date the bonus would have been paid in the absence of deferral.
If an Affirmative Recoupment Determination is made, Indivior shall endeavor to collect repayment of any Cash Award from the Covered Executive through reasonable and appropriate means according to the terms of its Cash Award plan (or executive contract if applicable), and to the extent permitted by controlling law of the relevant jurisdiction. If necessary and appropriate to collect the repayment, Indivior shall file suit against the Covered Executive unless good Cause exists not to do so. For purposes of the Executive Financial Recoupment Program, good Cause shall include, but not be limited to, a financial inability on the part of the Covered Executive to repay any recoupment amount or Indivior’s inability to bring such a suit under the controlling law of the relevant jurisdiction.
(ii) Equity Awards and Repayment Conditions. Within 120 days after the Effective Date of the CIA, Indivior shall implement an eligibility and repayment condition on Indivior’s Equity Awards that will allow Indivior, as a consequence of a Triggering Event, to pursue repayment from Covered Executives of all or a portion of the value of Equity Awards provided to the Covered Executive for the two years prior to the Affirmative Recoupment Determination Equity Awards. These eligibility and repayment conditions shall be designed to survive the vesting or distribution of the Equity Award and the separation of a Covered Executive’s employment for a period of two years from the vesting or distribution.
If an Affirmative Recoupment Determination is made, Indivior shall endeavor to collect repayment of all or a portion of the value of Equity Awards for the two years prior to an Affirmative Recoupment Determination from a Covered Executive through reasonable and appropriate means (including by means of filing suit against the executive, as may be appropriate) to the extent permitted by controlling law of the relevant jurisdiction.
(iii) Additional Remedies.
To the extent permitting by controlling law, for the two years during which the Cash and Equity Award eligibility and repayment conditions exist, if
| | | | | |
| As Amended 03 Oct 2022 | Page 11 of 14 |
| | |
Incentive Compensation Policy
|
Indivior reasonably anticipates that a Triggering Event has occurred, and Indivior has recoupment rights remaining under Paragraphs B(i)-(ii), Indivior shall have the right to notify the Covered Executive that those rights shall be tolled and thereby extended for an additional two years or until the Recoupment Committee determines that a Triggering Event has not occurred, whichever is earlier, to the extent permitted by controlling law of the relevant jurisdiction.
If, after expiration of the time period specified in Paragraphs B(i)-(ii) above, the Recoupment Committee determines that a Triggering Event has occurred, Indivior shall make a determination as to whether to pursue available remedies (e.g., filing suit against the Covered Executive) existing under statute or common law to the extent available.
(C) Definition of Triggering Events. The forfeiture and repayment conditions described above shall be triggered upon a Recoupment Determination that finds either of the following (each, a “Triggering Event”):
(i) Significant Misconduct (i.e., a violation of a law or regulation or a significant violation of an Indivior policy) relating to Covered Functions by the Covered Executive that, if discovered prior to payment, would have made the Covered Executive ineligible for a Cash or Equity Award in that plan year or subsequent plan years; or
(ii) Significant Misconduct (as defined above) relating to Covered Functions by subordinate Employees in the business unit for which the Covered Executive had responsibility on or after 120 days after the Effective Date of the CIA that does not constitute an isolated occurrence and which the Covered Executive knew or should have known was occurring that, if discovered prior to payment, would have made the Covered Executive ineligible for a Cash or Equity Award in that plan year or subsequent plan years.
(D) Administration of Recoupment Programs. Indivior shall engage in a standardized, formal process to determine whether a Triggering Event has occurred, and, if so, the extent of the Cash and Equity Awards that will be subject to repayment or forfeiture by the Covered Executive, and the most appropriate method for securing recoupment of relevant monies previously paid to a Covered Executive. The findings and conclusions resulting from this process shall be referred to as the “Recoupment Determination.” A determination that Cash and/or Equity Award amounts shall be forfeited by or recouped from a Covered Executive shall be referred to as an “Affirmative Recoupment Determination.”
| | | | | |
| As Amended 03 Oct 2022 | Page 12 of 14 |
| | |
Incentive Compensation Policy
|
(i) Initiation. Indivior shall initiate the Recoupment Determination process within 30 days after: (1) discovery of potential Significant Misconduct that may rise to the level of a Triggering Event, or (2) written notification by a United States federal government agency to Indivior’s Chief Integrity & Compliance Officer of a situation that may rise to the level of a Triggering Event and either occurred in the United States or gives rise to liability relating to federal healthcare programs. This written notification shall either identify the Covered Executive(s) potentially at issue or provide information (e.g., a description of the alleged misconduct and the applicable time period) to allow Indivior to identify the Covered Executive.
(ii) Indivior Oversight Committee. The Recoupment Determination or Recoupment Recommendation shall be made by a committee of senior executives representing the Compliance, Legal, and HR groups (Indivior Oversight Committee). The Indivior Oversight Committee shall make a Recoupment Recommendation for all Executive Officers or Executive Committee members of Indivior and shall make a Recoupment Determination for all other Covered Executives. A Covered Executive shall not participate in the Indivior Oversight Committee while that individual is subject to a Recoupment Determination. If a Recoupment Determination involves an Executive Officer or Executive Committee member of Indivior, a Recoupment Determination for such individual shall be subject to approval by the Board of Directors (or appropriate committee thereof) of Indivior.
(iii) Recoupment Determination Process. Indivior shall initiate the Recoupment Determination process within 30 days after discovery by Indivior, or notification pursuant to Paragraph D(i)(2), of a potential Triggering Event.
As part of the Recoupment Determination process, the Indivior Oversight Committee or appropriate Delegate (as defined below) shall: i) undertake an appropriate and substantive review or investigation of the facts and circumstances associated with the Triggering Event or any written notifications about potential Triggering Events received pursuant to Paragraph D(i)(2) above; ii) make written findings regarding the facts and circumstances associated with the Triggering Event and any written notifications about potential Triggering Events received pursuant to Paragraph D(i)(2) above; and iii) set forth in writing its determinations (and the rationale for such determinations) about: 1) whether a Triggering Event occurred; 2) the extent of Cash or Equity Awards (collectively “performance pay”) that will be subject to forfeiture and/or repayment by the Covered Executive, if any; 3) the means that will be followed to implement the forfeiture and/or secure the recoupment of
| | | | | |
| As Amended 03 Oct 2022 | Page 13 of 14 |
| | |
Incentive Compensation Policy
|
performance pay from the Covered Executive; and 4) the timetables under which Indivior will implement the forfeiture and/or attempt to recoup the performance pay.
For purposes of this Paragraph, a “Delegate” shall refer to the Indivior personnel to whom the Recoupment Committee has delegated one or more of its required tasks in furtherance of the Executive Financial Recoupment Program.
(E) Reporting. The Indivior Oversight Committee shall provide annual reports to the Board of Directors (or an appropriate committee thereof) of Indivior PLC about: i) the number and circumstances of any Triggering Events that occurred during the preceding year and any written notifications about potential Triggering Events received pursuant to Paragraph D(i)(2) above; ii) a description of any Recoupment Determinations where a Triggering Event occurred during the preceding year (including any decision to require or not require forfeiture/recoupment from any Covered Executives, the amount and type of any forfeiture/recoupment, the means for collecting any recoupment and the rationale for such decisions); and iii) a description of the status of any forfeitures and/or recoupments required under prior Affirmative Recoupment Determinations that were not fully completed in prior years.
The Indivior Oversight Committee shall also provide annual reports to OIG about: i) the number and circumstances of any Triggering Events that occurred during the preceding year and any written notifications about potential Triggering Events received pursuant to Paragraph D(i)(2) above; ii) a summary description of any Recoupment Determinations where a Triggering Event occurred during the preceding year (including any decision to require or not require forfeiture/recoupment from any Covered Executives, the amount and type of any forfeiture/recoupment, the method for collecting any recoupment, and the rationale for such decisions); and iii) a description of the status of any forfeitures and/or recoupments required under prior Affirmative Recoupment Determinations that were not fully completed in prior years. Indivior shall provide OIG with additional information regarding any Recoupment Determination where a Triggering Event has occurred upon OIG’s request.
Indivior commits, to the extent permitted by controlling law, to maintaining all of the forfeiture and recoupment commitments set forth in Paragraphs B-E above for at least the duration of the CIA, absent agreement otherwise with OIG.
| | | | | |
| As Amended 03 Oct 2022 | Page 14 of 14 |
RULES OF THE INDIVIOR LONG-TERM INCENTIVE PLAN
Directors’ Adoption: 5 November, 2014
Amended by the Committee: 16 November 2016
Amended by the Committee: 14 November 2018
Expiry Date: 5 November 2024
SLAUGHTER AND MAY
One Bunhill Row,
London EC1Y 8YY
Ref: RXD
523547609
Table of Contents
| | | | | | | | |
| Contents | Page |
| | |
| 1 | Granting Awards | 3 |
| 2 | Awards | 4 |
| 3 | Options and Conditional Awards | 5 |
| 4 | Vesting of Awards | 5 |
| 5 | Consequences of Vesting and Release | |
| 6 | Leaving the Group | 10 |
| 7 | Variations in share capital, demergers and special distributions | 13 |
| 8 | Takeovers and restructurings | 13 |
| 9 | Exchange of Awards | 14 |
| 10 | Plan limits | 15 |
| 11 | Terms of employment | 16 |
| 12 | General | 17 |
| 13 | Changing the Plan and termination | 19 |
| 14 | Governing law and jurisdiction | 19 |
The Indivior Long-term Incentive Plan
Introduction
An Award under the Plan can take the form of:
•A Nil-cost Option - which is a right to buy Shares on Vesting for nothing or a nominal amount.
•A Market Value Option - which is a right to buy Shares at a price set by reference to the market value of the Shares at the Award Date.
•A Conditional Award - which is a right to be given Shares on Vesting.
Grant, Vesting and Release of all types of Award work in similar ways but there are some differences in the mechanics of how they are granted and what happens after they Vest.
The schedules allow for grants of particular types of Awards in a way which attracts favourable tax treatment or complies with special rules in various countries.
This introduction does not form part of the rules.
Definitions
In these rules:
“Acquiring Company” means a person who obtains Control of the Company;
“Award” means a Conditional Award or an Option;
“Award Date” means the date which the Committee sets for the grant of an Award;
“Business Day” means a day on which the London Stock Exchange (or, if relevant and if the Committee determines, any stock exchange nominated by the Committee on which the Shares are traded) is open for the transaction of business;
“Committee” means, subject to rules 8.5 and 9.3, in the case of Awards to executive of directors of the Company, the remuneration committee or a sub-committee of it, and in other cases, any committee or body authorised to operate the Plan;
“Company” means Indivior plc;
“Conditional Award” means a conditional right to acquire Shares granted under the Plan;
“Control” means in relation to a body corporate, the power of a person to secure by means of the holding of shares or the possession of voting power in or in relation to that or any other body corporate, or by virtue of any powers conferred by the articles of association, or other document regulating that or any other body corporate, that the affairs of the first mentioned body corporate are conducted in accordance with the wishes of that person;
“Dealing Restrictions” means restrictions imposed by statute, order, regulation or Government directive, or by the Market Abuse Regulation or any code adopted by the Company based on the Market Abuse Regulation;
“Expiry Date” means 30 November, 2024;
“GDPR” means the EU General Data Protection Regulation 2016/679;
“Holding Period” means a period commencing on the Vesting Date and ending on the second anniversary of the Vesting Period (or other such date as the Committee may determine);
“Listing Rules” means the rules relating to admission to the Official List;
“London Stock Exchange” means London Stock Exchange plc;
“Market Value” means on any day not less than the average of the closing middle market quotations of a Share (taken from the Daily Official List of the London Stock Exchange) over the immediately preceding 5 Business Days;
“Market Abuse Regulation” means Regulation (EU) No. 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse;
“Market Value Option” means an Option, the Option Price of which is set by reference to the Market Value of a Share on the Award Date;
“Member of the Group” means:
(i) the Company; and
(ii) its Subsidiaries from time to time; and
(iii) any other company which is associated with the Company and is so designated by the Committee,
and “Group” shall be construed accordingly;
“Normal Release Date” means the date on which an Award will normally be Released, which will be:
(i) in relation to an Award to which no Holding Period applies, the Planned Vesting Date; and
(ii) in relation to an Award to which a Holding Period applies, the day immediately following the end of the Holding Period;
“Official List” means the list maintained by the Financial Conduct Authority for the purposes of section 74(1) of the Financial Services and Markets Act 2000;
“Option” means a right to acquire Shares granted under the Plan;
“Option Price” means zero, or the amount payable on the exercise of an Option, as specified under rules 2.1 and 2.2;
“Participant” means a person holding an Award or his personal representatives;
“Performance Conditions” means any performance conditions imposed under rule 1.4 (Performance Conditions);
“Performance Period” means the period in respect of which the Performance Conditions are to be satisfied which will not normally be less than 3 consecutive years of the Company;
“PIP” means a service that is approved by the Financial Conduct Authority as meeting the primary information provider criteria and is on the list of such providers maintained by the Financial Conduct Authority;
“Plan” means these rules known as “The Indivior Long-term Incentive Plan” as changed from time to time;
“Planned Vesting Date” means the date set under rule 2.1 (Terms of Awards) and which will normally be the third anniversary of the Award Date;
“Release” in relation to an Option, means an Option becoming capable of exercise and in relation to a Conditional Award, means a Participant becoming entitled to have the Shares under his Award transferred to him subject to these rules and “Released” will be construed accordingly;
“Shares” means fully paid ordinary shares in the capital of the Company;
“Social Security Liability” means a liability to pay national insurance contributions in the United Kingdom (or their equivalent, in the opinion of the Committee, outside the United Kingdom) in relation to an Award or the benefits received or capable of being received in respect of an Award;
“Subsidiary” means a company which is a subsidiary of the Company within the meaning of Section 1159 of the Companies Act 2006;
“Vest” in relation to an Award, means the Award reaching its Vesting Date and “Vesting”, “Vested” and “Unvested” will be construed accordingly; and
“Vesting Date” means the date an Award Vests in accordance with in rules 4.1 (Timing of Vesting), 6 (Leaving the Group) or 8 (Takeovers and restructuring).
1 Granting Awards
1.1 Awards
Awards will be made by the Company or the Committee. Where an Award is granted by the Company, the terms of that Award must be approved in advance by the Committee.
1.2 Eligibility
The Company may grant an Award to any employee (including an executive director) of the Company or any Subsidiary. However, unless the Committee considers that special circumstances exist, an Award may not be granted to an employee who on the Award Date has given or received notice of termination of employment, whether or not such termination is lawful.
1.3 Timing of Award
Awards may not be granted at any time after the Expiry Date and Awards may only be granted within 42 days starting on the date that the Company is first listed on the London Stock Exchange and thereafter 42 days starting on any of the following:
(i) the day after the announcement of the Company’s results through a PIP for any period;
(ii) any day on which the Committee resolves that exceptional circumstances exist which justify the grant of Awards;
(iii) any day on which changes to the legislation or regulations affecting share plans are announced, effected or made; or
(iv) the lifting of Dealing Restrictions which prevented the granting of Awards during any period specified above.
1.4 Performance Conditions
When granting an Award, the Company may, or in the case of directors of the Company must (except as noted below), make its Vesting conditional on the satisfaction of one or more conditions determined by the Committee at least one of which must be linked to the performance of the Company. Performance Conditions must be objective and specified at the
Award Date and may provide that an Award will lapse if the Performance Conditions are not satisfied. However where an award is granted to a director by way of replacement of an award previously held by that director under the Reckitt Benckiser Group 2007 Long Term Incentive Plan which was not subject to any performance condition, the replacement award also need not be subject to any such condition. The Committee may waive or change the Performance Conditions if anything happens which causes the Committee reasonably to consider it appropriate, provided that any changed Performance Conditions will not be materially easier or more difficult to satisfy.
1.5 Other conditions
The Company may impose other conditions when granting an Award. Any such condition must be objective, specified at the Award Date and may provide that an Award will lapse if it is not satisfied. The other conditions may include a condition that the Participant must reimburse any person for some or all of any Social Security Liability arising on any event in connection with his Award or that the Participant must enter into an election and transfer some or all of that Social Security Liability to himself. The Company, with the consent of the Committee, may waive or change a condition in accordance with its terms or if anything happens which causes the Company reasonably to consider it appropriate provided that any changed condition will be no more difficult to satisfy. Notwithstanding anything else in the Plan, an Award will only Vest to the extent that any condition is satisfied or waived.
1.6 Award statement
Each Participant will receive a statement setting out the terms of the Award as soon as practicable after the Award Date. The statement may be the deed referred to in 2.1 (Terms of Awards) or any other document. If any statement is lost or damaged the Company may replace it on such terms as it decides.
1.7 No payment
A Participant is not required to pay for the grant of any Award.
1.8 Disclaimer of Award
A Participant may disclaim all or part of his Award within 30 days after the Award Date by notice in writing to any person nominated by the Company. If this happens, the Award will be deemed never to have been granted under the Plan. A Participant is not required to pay for the disclaimer.
1.9 Administrative errors
If the Company tries to grant an Award which is inconsistent with rule 10 (Plan limits), the Award will be limited and will take effect from the Award Date on a basis consistent with those rules.
2 Awards
2.1 Terms of Awards
Awards must be granted by deed. The terms of the Award, as determined by the Company and approved by the Committee, must be specified in the deed and must include:
(i) whether the Award is:
(I) a Conditional Award;
(II) an Option; or
(III) a Market Value Options;
or a combination of these;
(ii) the number of Shares subject to the Award;
(iii) the Performance Conditions (where applicable);
(iv) the Planned Vesting Date;
(v) whether the Award is subject to a Holding Period and the date on which that Holding Period ends;
(vi) any other condition specified under rule 1.5 (Other conditions);
(vii) whether the Participant is entitled to receive any cash or shares under rule 5.5 (Dividend equivalent);
(viii) the Award Date; and
(ix) the Option Price (if relevant).
2.2 Option Price of Market Value Options
In the case of a Market Value Option, the Option Price will not be less than the Market Value of a Share on the Award Date.
2.3 Individual Limit
Each Award must be limited and must therefore take effect so that the total Market Value of the Shares which are subject to the Award when then added to total Market Value of the Shares, if any, subject to Awards granted to the Participant in the same financial year of the Company does not exceed ten times the Participant’s pay. For these purposes a Participant’s pay on any date is the rate of his basic annual salary (excluding bonus, commissions and benefits in kind) from all Members of the Group on that date.
3 Options and Conditional Awards
3.1 Rights
A Participant shall not be entitled to vote, to receive dividends or to have any other rights of a shareholder in respect of Shares subject to an Option or a Conditional Award until the Shares are issued or transferred to the Participant.
3.2 Transfer
A Participant may not transfer, assign or otherwise dispose of an Option or Conditional Award or any rights in respect of it. If he does, whether voluntarily or involuntarily, then it will immediately lapse. This rule 3.2 does not apply to the transmission of an Option or Conditional Award on the death of a Participant to his personal representatives.
4 Vesting of Awards
4.1 Timing of Vesting
Subject to rules 6 (Leaving the Group) and 8 (Takeovers and restructurings), the Vest Date of an Award shall be the latest of the following:
(i) the date on which the Committee makes its determination under rule 4.2 of the extent to which any Performance Conditions are satisfied or waived;
(ii) the Planned Vesting Date;
(iii) the date the Committee decides that any other condition (rule 1.5) are satisfied or waived; and
(iv) the date on which any Dealing Restrictions which prevent Vesting on the dates specified above cease to apply.
4.2 Determination of Performance Conditions and other conditions
As soon as reasonably practicable after the end of the Performance Period, the Committee will determine whether and to what extent any Performance Conditions and any other conditions under rule 1.5 (Other conditions) have been satisfied and how many Shares will Vest for each Award. To the extent that any Performance Conditions or other conditions are not satisfied, the Award lapses. Where an Award has been granted to a director of the Company the Performance Conditions and any other conditions may only be tested once; there may not be any re-testing.
4.3 Lapse
If an Award lapses under the Plan it cannot Vest and be Released and a Participant has no rights in respect of it.
5 Consequences of Vesting and Release
5.1 Subject to rules 6 (Leaving the Group) and 8 (Takeovers and restructurings), an Award will be Released:
(i) on the Normal Release Date; or
(ii) if on the Normal Release Date (or on any other date on which an Award is due to be Released under rule 6 (Leaving the Group) or 8 (Takeovers and restructurings) a Dealing Restriction applies to the Award, on the date on which such Dealing Restriction lifts.
5.2 Conditional Award
As soon as reasonably practicable after the Release of a Conditional Award, the Company will arrange (subject to rule 5.7 (Withholding) and 12.7 (Consents)) for the transfer (including a transfer out of treasury) or issue to or to the order of the Participant of the number of Shares subject to the Released Award.
5.3 Options
(i) Following its Release, an Option may be exercised by a Participant at any time during the Exercise Period (see rule 6.7) by giving notice in the prescribed form to the Company or any person nominated by the Company and by:
(I) paying the Option Price (if any) for the number of Shares being acquired (or giving details of arrangements agreed between the Participant and the Company for the payment of the Option Price for the number of Shares being acquired); and
(II) enclosing the relevant award certificate (if required by the Company).
(ii) The “Option Exercise Date” will be the date of receipt by the Company or other duly appointed agent of the notice and, if appropriate, documents and the payment referred to in rule (i). However, if an option exercise notice is delivered at a time when any Dealing Restrictions prohibits the exercise of Options, the Option Exercise Date will be the date when the Participant is permitted to exercise an Option under such Dealing Restrictions.
(iii) An Option will lapse as set out in rules 6.7 and 6.8.
(iv) Subject to rules 5.7 (Withholding) and 12.7 (Consents) the Company will arrange for Shares to be transferred to or issued to the Participant within 30 days of the Option Exercise Date.
5.4 Rights
Shares issued on the exercise of an Option or the Release of an Award will rank equally in all respects with the Shares in issue on the date of allotment. They will not rank for any rights attaching to Shares by reference to a record date preceding the date of allotment. Where Shares are transferred (including a transfer out of treasury) on the exercise of an Option or the Release of an Award, the Participant will be entitled to all rights attaching to the Shares by reference to a record date on or after the transfer date. The Participant will not be entitled to rights before that date.
5.5 Dividend equivalent
The Committee may determine that a Conditional Award or Option will include the right to receive an amount equal in value to the dividends which were payable on the number of Vested Shares between the Award Date and the date of Release (“dividend equivalents”), subject to rule 5.7 (Withholding). This amount will be paid in cash unless the Committee decides it will be paid in Shares. Dividend equivalents will be paid to any relevant Participant as soon as practicable after Release or, in the case of an Option, after exercise. For the avoidance of doubt the dividend does not include the tax credit.
The Committee may at any time decide to disapply this rule 5.5 in relation to all or part of a special dividend or dividend in specie which may otherwise be included in rule 5.5.
5.6 Alternative ways to satisfy Options and Conditional Awards
The Company may, subject to the approval of the Committee, decide to satisfy an Option or a Conditional Award by paying an equivalent amount in cash (subject to rule 5.7 (Withholding)). For Options, the cash amount must be equal to the amount by which the Market Value of the Shares in respect of which the Option is exercised exceeds the Option Price on the Option Exercise Date (see rule 5.3(ii)). Alternatively, the Company may, subject to the approval of the Committee, decide to satisfy an Option by procuring the issue or transfer of Shares to the value of the cash amount specified above.
If the Committee does this, the Participant need not pay the Option Price or, if he has paid it, the Company will repay it to him.
The Company may determine that Awards will be satisfied in cash at the Award Date or at any time subsequently.
5.7 Withholding
The Company, any employing company or the trustee of any employee benefit trust may make such arrangements as it considers necessary to meet any liability to taxation, duties, social security contributions or other amounts in respect of Awards or otherwise in connection with a person’s participation in the Plan, whether the liability is a liability of, or is payable by, the Participant, the Company, the employing company or the trustee and whether such liability arises before or after the adoption of this Rule. These arrangements may include a reduction in the number of Shares subject to an Award and/or the exercise of an Option on behalf of the Participant and/or the sale on behalf of the Participant of any of the Shares to which he is entitled under the Plan and the retention of the sale proceeds to meet the liability. References to social security contributions include anything in a jurisdiction outside the United Kingdom which, in the opinion of the Committee, is reasonably comparable to social security contributions.
5.8 Joining a competitor
The following will apply if a Participant ceases to be an employee or director of a Member of the Group and within 12 months of cessation joins a competitor organisation (as determined by the Committee). All Unvested Awards and Awards that Vested on or after cessation which have not been Released will lapse. In respect of Vested Awards that have Vested and been Released on or after the Participant’s cessation of employment for which the Participant has received Shares or cash in respect of the Award the Committee will issue the Participant with a notice requiring him to make a payment to the Company equal to the Market Value of the Shares comprised in the Award as at the date of Vesting less any tax paid, and less in the case of an Option, the Option Price. The payment must be made within two months of receipt of the notice.
5.9 Adjustments in event of Misstatement, Misconduct and Serious Reputational Damage (Malus)
(i) This rule 5.9 applies in circumstances where there has been, as the Committee determines in its absolute discretion, either:
(I) (having taken advice from the Company’s auditors) a material misstatement of the Company’s or its group’s results in respect of any of the Company’s financial years which fall wholly or partly within a Performance Period; or
(II) at any time during a Participant’s employment, serious misconduct by that Participant which affects the extent to which a Performance Condition is, or would be, satisfied; or
(III) at any time from the Award Date (or the start of the Performance Period if earlier), serious reputational damage to any Member of the Group.
(ii) If this rule applies then the Committee may, to the extent that it considers appropriate, taking account of the extent of the relevant misstatement, misconduct, or reputational damage, determine, in respect of any Unvested Awards and any Vested Awards which have not yet been Released or exercised but relate to the Performance Period, that any of the following actions may be undertaken:
(I) the number of Shares or number of Shares subject to such Award may be adjusted in such manner as the Committee considers appropriate; or
(II) the Award shall lapse with immediate effect; or
(III) the Performance Period may be extended (provided that a Performance Period may not end later than the day before the ninth anniversary of the relevant Grant Date) and the Performance Target adjusted; or
(IV) the Exercise Period (if applicable) may be deferred (provided that it may not end later than the day before the tenth anniversary of the relevant Grant Date).
5.10 Clawback
This Rule 5.10 applies in circumstances where at any time before the later of (i) the second anniversary of the date a Conditional Award Vests or an Option becomes exercisable, as applicable, and (ii) the fifth anniversary of the Award Date the Committee determines in its absolute discretion either:
(I) (having taken advice from the Company’s auditors) there is a material mis-statement of the Company’s or its group’s results in respect of any of the Company’s financial years which fall wholly or partly between the Date of Grant of an Award and the date the Award Vests; or
(II) there has been, at any time during a Participant’s employment, serious misconduct by that Participant; or
(III) at any time from the Award Date (or the start of the Performance Period if earlier), serious reputational damage to any Member of the Group.
If this Rule 5.10 applies then the Committee may, to the extent that it considers appropriate, taking account of the extent of the relevant misconduct, mis-statement, or reputational damage, determine in its absolute discretion:
(A) in respect of any Conditional Awards which have been Released or Options that have been exercised that the relevant Participant must by way of clawback repay to the Company such amount as the Committee may determine in cash or transfer to the Company such number of Shares as the Committee may determine, in each case taking account of the number of Shares which were comprised in the relevant Award and their value.
Following any such determination the Committee may:
(1) make a reduction of an equivalent amount to:
(i) any unvested Awards which the Participant may have under the Plan or any other employee share scheme operated by the Company; and/or
(ii) any future bonus payment which would otherwise have been payable; and/or
(iii) any salary payments or other remuneration which are due or would otherwise have been payable, and/or
(2) require the relevant Participant to repay to the Company an equivalent amount or to transfer a specified number of Shares to the Company within such period as it determines,
in each case, to the extent permitted under applicable law; and
(B) in respect of any Options that have not been exercised or Conditional Awards that have not been Released, to reduce the number of Shares subject to the Option or to cancel the Option in its entirety.
6 Leaving the Group
6.1 General rules on leaving employment:
(i) Any outstanding Award will lapse immediately on the date the Participant ceases to be an employee or a director of a Member of the Group by reason of dismissal for misconduct (unless the Committee decides otherwise);
(ii) Subject to rule 6.1(i) a Vested Award which has not yet been Released will not lapse on the date the Participant ceases to be an employee but instead will continue and be Released, subject to rule 8 (Takeovers and restructurings), on the Normal Release Date unless the Committee decides in its discretion in any particular case that the Vested Award should be Released at an earlier date or immediately;
(iii) Subject to rule 6.1(i), a Vested Option which has been Released will not lapse on the date the Participant ceases to be an employee and will lapse in accordance with rule 6.7;
(iv) An Award which has not Vested will lapse on the date the Participant ceases to be an employee unless rule 6.2 applies. Where rule 6.2 applies to an Option, rules 6.7 and 6.8 will apply to determine the Exercise Period.
6.2 Leaving in exceptional circumstances - Unvested Awards
(i) If a Participant ceases to be an employee of any Member of the Group prior to the Vesting Date for any of the reasons set out below, then his Awards which have not Vested will Vest and be Released as described in rule 6.3 or rule 6.4 (as applicable) and lapse as to the balance. The reasons are:
(I) ill-health, injury or permanent disability, established to the satisfaction of the Company;
(II) retirement with the agreement of the Company;
(III) the Participant’s employing company ceasing to be under the Control of the Company;
(IV) a transfer of the undertaking, or the part of the undertaking, in which the Participant works to a person which is neither under the Control of the Company nor a Member of the Group;
(V) redundancy;
(VI) any other reason, at the discretion of the Committee.
(ii) The Committee must exercise any discretion provided for in rule (i) within 14 days after cessation of the relevant Participant’s employment or office and the
Award will lapse or Vest and be Released (as appropriate) on the earlier of the date on which the discretion is exercised and the end of the 14 day period.
6.3 Vesting and Release - Awards subject to Performance Conditions
(i) Where rule 6.2 applies, and the Award is subject to a Performance Condition, then the Award does not lapse but will Vest, subject to rule 1.5 (Other conditions), after the end of the Performance Period in accordance with rules 4.1 (Timing of Vesting) and 4.2 (Determination of Performance Conditions and other conditions) and be Released on the Normal Release Date. The Award will also be reduced pro rata to reflect the period from the date of cessation of employment until the date of the end of the Performance Period as a proportion of the Performance Period unless the Committee decides otherwise. The Award then lapses as to the balance.
(ii) As an alternative to rule (i) and subject to rule 1.5 (Other conditions), the Committee may decide in its discretion in any particular case that an Award should Vest and be Released at an earlier date in which case the extent to which it will Vest, is measured in accordance with rule 4.2 (Determination of Performance Conditions and other conditions) at the end of the financial year in which the cessation of employment occurs. The Award will also be reduced pro rata to reflect the period from the date of cessation of employment until the end of the Performance Period, as a proportion of the Performance Period unless the Committee decides otherwise. The proportion of the Award that Vests will then be Released, and the Award then lapses as to the balance.
6.4 Vesting and Release – Award not subject to Performance Condition
Where rule 6.2 applies, and the Award is not subject to a Performance Condition, then, the Award does not lapse but will Vest, subject to rule 1.5 (Other conditions), on the Planned Vesting Date and be Released on the Normal Release Date. The Committee may decide in its discretion in any particular case that the Award should Vest and be Released either immediately or on any other date, subject to rule 1.5 (Other conditions). Unless the Committee decides otherwise, the amount of the Award which Vests will also be reduced pro rata to reflect the period from the date of cessation of employment to the Planned Vesting Date as a proportion of the period from the Award Date until the Planned Vesting Date.
6.5 Death
If a Participant dies, his Awards will Vest and be Released on the date of death and any Performance Conditions will not apply but the Award will be reduced pro rata to reflect the period from the date of death until the end of the Performance Period or where there was no Performance Period, to the Planned Vesting Date, as a proportion of the original Performance Period or, where there was no Performance Period, the period from the Award Date to the Planned Vesting Date unless the Committee decides otherwise. The Award will then lapse as to the balance.
6.6 Meaning of “ceasing to be an employee”
For the purposes of this rule 6, a Participant will not be treated as ceasing to be an employee of a Member of the Group until he ceases to be an employee of all Members of the Group or if he recommences employment with a Member of the Group within 7 days.
6.7 Lapsing of Options and Exercise Periods
This rule sets out when an Option will lapse. An Option will lapse on the earlier of:
(i) the end of the Exercise Period (see rule 6.8);
(ii) in the case of a Vested Option, the date the Participant ceases to be an employee or a director of a Member of the Group by reason of dismissal for misconduct (unless the Committee decides otherwise);
(iii) in the case of a Vested Market Value Option 12 months after the date on which the Participant ceased to be an employee of a Member of the Group or such longer period (not exceeding 42 months) as the Committee may decide;
(iv) in the case of an Option which Vests under this rule 6, 12 months after the date on which the Option is Released or in the case of a Market Value Option such longer period (not exceeding 42 months) as the Committee may decide;
(v) 6 months after an event which gives rise to an Option being Released under rule 8 (Takeovers and restructurings) unless (vi) below applies;
(vi) 6 weeks after the date on which a notice to acquire Shares under Chapter 3 of Part 28 of the Companies Act 2006 (compulsory purchase of shares) is first served;
(vii) the date on which a Participant joins a competitor organisation (rule 5.8); and
(viii) 12 months from the date of death.
6.8 “Exercise Period” means:
(i) for an Option which is not a Market Value Option, the 12 month period following its Release (unless the Committee determines a different period under rule 2.1); and
(ii) for a Market Value Option, the period starting on the date of its Release and ending on the tenth anniversary of the Award Date (unless the Committee determines a different period under rule 2.1).
If more than one Exercise Period or lapse date applies then the provision which results in the shortest Exercise Period and the earliest lapse of the Option will apply. However, the Committee may permit a Participant to exercise Options within any applicable longer periods set out in these rules.
7 Variations in share capital, demergers and special distributions
7.1 Adjustment of Awards
If there is:
(i) a variation in the equity share capital of the Company, including a capitalisation or rights issue, sub-division, consolidation or reduction of share capital; or
(ii) a demerger (in whatever form) or exempt distribution by virtue of Section 1075 of the Corporation Tax Act 2010;
(iii) a special dividend or distribution; or
(iv) other circumstances which the Committee considers appropriate.
the Committee may adjust the number or class of Shares or securities comprised in an Option or Conditional Award and, in the case of an Option, the Option Price.
The Option Price to subscribe for Shares may be adjusted to a price less than nominal value only if the Committee resolves to capitalise the reserves of the Company, subject to any necessary conditions. This capitalisation will be of an amount equal to the difference between the adjusted Option Price payable for the Shares to be issued on exercise and the nominal value of such Shares on the date of allotment of the Shares. If, at the time of exercise, the Committee does not resolve to capitalise the reserves of the Company for this purpose then the adjustment under this rule 7.1 will be deemed not to have taken place.
7.2 Notice
The Company may notify Participants of any adjustment made under this rule 7.
8 Takeovers and restructurings
8.1 Subject to rule 8.6, if any of the events described in rules 8.2 to 8.4 occur, all Vested Awards (including those that Vested as a result of such event) will be Released.
8.2 Takeovers
Subject to rule 8.6, where a person (or a group of persons acting in concert) obtains Control of the Company as a result of making an offer to acquire Shares, an Award Vests, subject to rule 1.5 (Other conditions), on the date the person obtains Control but only to the extent that any Performance Conditions have been satisfied at that date as determined by the Committee, unless the Committee determines that the Performance Conditions and other conditions should not apply. In addition, unless the Committee decides otherwise, the extent to which the Award Vests shall be reduced pro rata to reflect the period from the date of the event until the date of the end of the Performance Period as a proportion of the Performance Period. The Award lapses as to the balance.
8.3 Schemes of arrangement
Subject to rule 8.6, when a court sanctions a compromise or arrangement in connection with the acquisition of Shares, an Award Vests, subject to rule 1.5 (Other conditions), but only to the extent that any Performance Conditions have been satisfied at that date as determined by the Committee unless the Committee determines that the Performance Conditions and other conditions should not apply. In addition, unless the Committee decides otherwise, the extent to which the Award Vests shall be reduced pro rata to reflect the period from the date of the event until the date of the end of the Performance Period as a proportion of the Performance Period. The Award lapses as to the balance.
8.4 Demergers or other corporate events
If the Committee becomes aware that the Company is or is expected to be affected by any demerger, distribution (other than an ordinary dividend) or other transaction not falling within rules 8.2 (Takeover), or 8.3 (Schemes of arrangement) which, in the opinion of the Committee would affect the current or future value of any Award, the Committee may allow an Award to Vest subject to rule 1.5 (Other conditions) but only to the extent that any Performance Condition has been satisfied at that date as determined by the Committee unless the Committee determines that the Performance Conditions and other conditions should not apply. In addition, unless the Committee decides otherwise, the extent to which the Award Vests shall be reduced pro rata to reflect the period from the date of the event until the date of the
end of the Performance Period as a proportion of the Performance Period. The Award lapses as to the balance.
8.5 Committee
In this rule, “Committee” means those people who were members of the remuneration committee of the Company immediately before the change of Control.
8.6 Exchange
An Award will not Vest or be Released under rules 8.1, 8.2, 8.3 or 8.4 but will be exchanged under rule 9 (Exchange of Awards) to the extent that:
(i) an offer to exchange the Award is made and accepted by the Participant; or
(ii) the Committee decides that the Award will be automatically exchanged.
9 Exchange of Awards
9.1 Timing of exchange
Where an Award is to be exchanged under rule 8 (Takeovers and restructurings) the exchange will take place as soon as practicable after the relevant event.
9.2 Exchange terms
Where a Participant is granted a new award in exchange for an existing Award, the new Award:
(i) must confer a right to acquire shares in the Acquiring Company or another body corporate determined by the Acquiring Company;
(ii) must be equivalent to the existing Award, subject to rule (iv);
(iii) is treated as having been acquired at the same time as the existing Award and, subject to rule (iv), Vests and is Released in the same manner and at the same time;
(iv) may, at the discretion of the Committee, be subject to a performance condition which is, so far as possible, equivalent to any Performance Condition applying to the existing Award;
(v) is governed by the Plan as if references to Shares were references to the shares over which the new award is granted and references to the Company were references to the Acquiring Company or the body corporate determined under rule (i).
9.3 Committee
In this rule 9, “Committee” means those people who were members of the remuneration committee immediately before the change of Control which led to the exchange.
10 Plan limits
10.1 The nominal amount of Shares over which the Committee may grant Awards on any date shall be limited so that it does not exceed the limits set out in Rule 10.2. This limitation only applies to Awards which are to be satisfied (directly or indirectly) by the issue of new Shares or the transfer of treasury Shares.
10.2 The limit is 10% of the nominal amount of the Company’s equity share capital on the day preceding the Date of Grant less the aggregate of the nominal amounts of:
(i) Shares allocated in respect of awards granted within the previous 10 years under any employee share scheme; and
(ii) Shares remaining to be allocated in respect of awards granted on the same date or within the previous 10 years under any employee share scheme; and
(iii) Shares allocated on the same date or within the previous 10 years under any employee share scheme otherwise than in respect of an award.
10.3 For the purposes of Rule 10:
(i) “allocate” means the issue of new Shares or the transfer of treasury Shares in satisfaction (directly or indirectly) of a person’s right under an award;
(ii) an “award” means any right to acquire or receive Shares whether conditional or unconditional and whether or not for payment;
(iii) an “employee share scheme” means any scheme for employees of the Group which has been approved by the Company prior to its admission to listing on the London Stock Exchange or thereafter in general meeting;
(iv) “equity share capital” has the meaning given to it by Section 548 of the Companies Act 2006;
(v) “treasury Shares” has the same meaning as in Chapter 6 of the Companies Act 2006;
(vi) no account will be taken of Shares acquired by an employee or former employee (or the personal representatives of such a person) where the Shares are acquired for a price equal to their market value at or about the date of acquisition and the cost of those Shares is borne by (or by the estate of) the employee or former employee;
(vii) subject to Rule 10.3(viii), no account will be taken of an award if and to the extent to which the Committee considers that it will be satisfied by the transfer of existing Shares other than treasury Shares;
(viii) any Shares allocated or remaining to be allocated to the trustee of any trust which were used or which are to be sued to satisfy awards granted under an employee shares scheme must be treated as having been allocated or as remaining to be allocated in respect of those awards unless the Shares were acquired by the trustee pursuant to a rights issue or other opportunity offered to the trustee in respect of Shares, other than Shares previously allocated to it; and
(ix) where an award was granted in consideration of the release by the holder of an award previously granted to him under an employee share scheme, then the earlier award shall be ignored and the later award shall be deemed to have been granted at the same time as the earlier award.
10.4 Where an individual is granted two options on terms that the exercise of one will automatically result in a reduction to the extent to which the other may be exercised and vice versa, then for the purposes of this Rule 10 it shall only be necessary to take into account that number of Shares which could be acquired in respect of those options having regard to those terms.
11 Terms of employment
11.1 For the purposes of this rule, “Employee” means any employee of a Member of the Group.
11.2 This rule applies during an Employee’s employment and after the termination of an Employee’s employment, whether or not the termination is lawful.
11.3 Nothing in the rules or the operation of the Plan forms part of the contract of employment of an Employee. The rights and obligations arising from the employment relationship between the Employee and the Company are separate from, and are not affected by, the Plan. Participation in the Plan does not create any right to, or expectation of, continued employment.
11.4 No employee has a right to participate in the Plan. Participation in the Plan or the grant of Awards on a particular basis in any year does not create any right to or expectation of participation in the Plan or the grant of Awards on the same basis, or at all, in any future year.
11.5 The terms of the Plan do not entitle the Employee to the exercise of any discretion in his favour.
11.6 The Employee will have no claim or right of action in respect of any decision, omission or discretion, which may operate to the disadvantage of the Employee even if it is unreasonable, irrational or might otherwise be regarded as being in breach of the duty of trust and confidence (and/or any other implied duty) between the Employee and his employer.
11.7 No Employee has any right to compensation for any loss in relation to the Plan, including any loss in relation to:
(i) any loss or reduction of rights or expectations under the Plan in any circumstances (including lawful or unlawful termination of employment);
(ii) any exercise of a discretion or a decision taken in relation to an Award or to the Plan, or any failure to exercise a discretion or take a decision;
(iii) the operation, suspension, termination or amendment of the Plan;
11.8 Benefits under the Plan will not form part of the Employee’s remuneration for pension purposes.
11.9 Participation in the Plan is permitted only on the basis that the Participant accepts all the provisions of the rules, including this rule. By participating in the Plan, an Employee waives all rights under the Plan, other than the right to acquire shares subject to and in accordance with the express terms of the Plan and the Performance Condition, in consideration for, and as a condition of, the grant of an Award under the Plan.
11.10 Nothing in this Plan confers any benefit, right or expectation on a person who is not an Employee. No such third party has any rights under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of this Plan. This does not affect any other right or remedy of a third party which may exist.
12 General
12.1 Committee’s decisions final and binding
The decision of the Committee on the interpretation of the Plan or in any dispute relating to an Award or matter relating to the Plan will be final and conclusive.
12.2 Documents sent to shareholders
The Company may send to Participants copies of any documents or notices normally sent to the holders of its Shares at or around the same time as issuing them to the holders of its Shares.
12.3 Costs
The Company will pay the costs of introducing and administering the Plan. The Company may ask a Participant’s employer to bear the costs in respect of an Award to that Participant.
12.4 Regulations
The Committee has the power from time to time to make or vary regulations for the administration and operation of the Plan but these must be consistent with its rules.
12.5 Employee trust
The Company and any Subsidiary may provide money to the trustee of any trust or any other person to enable them or him to acquire Shares to be held for the purposes of the Plan, or enter into any guarantee or indemnity for those purposes, to the extent permitted by Chapter 2 of Part 18 of the Companies Act 2006.
12.6 Data protection
The personal data of any employee eligible to be granted an Award under Rule 1.2 (“Eligible Employee”) and of any Participant who holds or who has held an Award may be processed in connection with the operation of the Plan in accordance with the Group’s prevailing data protection policy and as notified to Eligible Employees in accordance with GDPR. By participating in the Plan, a Participant consents (otherwise than for the purposes of GDPR) to the processing of their personal data in connection with the operation of the Plan.
12.7 Consents
All allotments, issues and transfers of Shares will be subject to any necessary consents under any relevant enactments or regulations for the time being in force in the United Kingdom or elsewhere. The Participant will be responsible for complying with any requirements he needs to fulfil in order to obtain or avoid the necessity for any such consent.
12.8 Articles of association
Any Shares acquired under the Plan are subject to the articles of association of the Company from time to time in force.
12.9 Listing
If and so long as the Shares are listed on the Official List and traded on the London Stock Exchange, the Company will apply for listing of any Shares issued under the Plan as soon as practicable.
12.10 Notices
(i) Save as otherwise provided in this Plan any notice or communication to be given to any person who is or will be eligible to be a Participant may be:
(I) delivered by electronic mail and it shall be deemed to have been received upon electronic confirmation of such delivery; or
(II) personally delivered or sent by ordinary post to his last known address and where a notice or communication is sent by post it
shall be deemed to have been received 48 hours after the same was put into the post properly addressed and stamped.
(ii) Share certificates and other communications sent by post will be sent at the risk of the recipient concerned and neither the Company nor any of its Subsidiaries shall have any liability whatsoever to any such person in respect of any notification, document, share certificate or other communication so given, sent or made.
(iii) Any notice to be given to the Company or the Trustees shall be delivered or sent to the Company at its registered office, marked for the attention of the Company Secretary, and shall be effective upon receipt. The Board may make other arrangements to receive notices.
13 Changing the Plan and termination
13.1 Committee’s powers
Except as described in the rest of this rule 13, the Committee may at any time change the Plan in any way.
13.2 Shareholder approval
(i) Except as described in rule (ii), the Company in general meeting must approve in advance by ordinary resolution any proposed change to the Plan to the advantage of present or future Participants, which relates to the following:
(I) the persons to or for whom Shares may be provided under the Plan;
(II) the limitations on the number of Shares which may be issued under the Plan;
(III) the rights of a Participant in the event of a capitalisation issue, rights issue or open offer, sub-division or consolidation of shares or reduction of capital or any other variation of capital of the Company;
(IV) the terms of this rule (i).
(ii) The Committee can change the Plan and need not obtain the approval of the Company in general meeting for any minor changes:
(I) to benefit the administration of the Plan;
(II) to comply with or take account of the provisions of any proposed or existing legislation;
(III) to take account of any changes to legislation; or
(IV) to obtain or maintain favourable tax, exchange control or regulatory treatment of the Company, any Subsidiary or any present or future Participant.
13.3 Notice
The Committee may give written notice of any changes made to any Participant affected.
14 Governing law and jurisdiction
English law governs the Plan and all Awards and their construction. The English Courts have non-exclusive jurisdiction in respect of disputes arising under or in connection with the Plan or any Award.
Schedule 1
United Kingdom – Approved Options
The Company may designate a Market Value Option as an approved option granted under this schedule (“Approved Option”). If it does, the provisions of the rules relating to Market Value Options will apply to such Approved Option, as amended by this schedule. No other types of Awards may be designated as Approved Options under this schedule.
The following definitions apply to this Schedule 1 as well as those set out in the Definitions section of the rules:
“HMRC” means “HM Revenue and Customs”;
“ITEPA” means “Schedule 4 to the Income Tax (Earnings and Pensions) Act 2003”.
The purpose of the Plan (including, without limitation, this Schedule 1) is to provide benefits for employees and directors in the form of Options.
1 Eligibility to be granted Approved Options
Approved Options cannot be granted to anybody who is:
(i) excluded from participation because of paragraph 9 of ITEPA (material interest provisions); or
(ii) a director who is required to work less than 25 hours a week (excluding meal breaks) for the Company.
2 Timing of grant and conditions
2.1 A Holding Period will not be applicable to an Approved Option.
2.2 Any additional conditions imposed under rule 1.5 must relate to the Vesting, Release or exercise of Approved Options.
2.3 If the Shares under Option are subject to any restriction, then details of that restriction must be stated and notified to the Participant. The Participant must also be notified at the time of grant of the Option Price, the number of Shares, the exercise period, details of any performance conditions and the circumstances in which the Options may lapse.
3 Shares subject to an Approved Option
The Shares subject to an Approved Option (both at the time of grant and at the time of exercise) must satisfy paragraphs 16 to 20 of ITEPA. If they cease to satisfy paragraphs 16 to 20 of ITEPA the Committee will notify HMRC that it wishes the terms of Approved Options to be disapproved, so that the definition of “Market Value Option” will continue in effect, but the Market Value Option will cease to be an Approved Option and will be treated, for the purposes of the rules, as a Market Value Option.
4 Individual limit on Approved Options
The Committee must not grant an Approved Option to an employee which would cause the aggregate market value of:
(i) the Shares subject to that Approved Option; and
(ii) the Shares which he may acquire on exercising other Approved Options; and
(iii) the shares which he may acquire on exercising his options under any other HMRC approved discretionary scheme established by the Company or by any of its associated companies (as defined in paragraph 35 of ITEPA)
to exceed the amount permitted under paragraph 6(1) of ITEPA (currently £30,000). For the purposes of this paragraph, market value is calculated as at the date of grant of the options as described in the relevant plan rules.
If the Committee tries to grant an Approved Option which is inconsistent with this paragraph 4, the Approved Option will be limited and will take effect from the Award Date on a basis consistent with this paragraph 4.
5 Variations in share capital, demergers and special distributions
5.1 Adjustments may not be made to Approved Options under rule 7 where there is a demerger (in whatever form), an exempt distribution by virtue of Section 1075 of the Corporation Tax Act 2010 or a special dividend or distribution.
5.2 The Committee cannot adjust the class of Shares comprised in an Approved Option.
5.3 Any adjustment of Approved Options under rule 7 must secure:
(a) that the total market value of the Shares which may be acquired by the exercise of the Option is immediately after the variation substantially the same as what it was immediately before the variation; and
(b) the total Option Price at which those Shares may be acquired is immediately after the variation substantially the same as what it was immediately before the variation.
6 Restrictions on exercise of an Approved Option
A Participant may not exercise an Approved Option while he is excluded from being granted an Approved Option under paragraph 9 of ITEPA (material interest provisions).
7 Redundancy
Redundancy, for the purposes of rule 6.2, has the meaning given to that term by the Employment Rights Act 1996.
8 Death
If the Participant dies, the Approved Option may be exercised by his personal representatives within 12 months after his death, after which it will lapse.
9 Exercise and lapse of Approved Options
If the Committee exercises any discretion in relation to an Approved Option, it must do so fairly and reasonably.
10 Takeovers and restructurings
10.1 Rule 8.3 shall only apply where the court has sanctioned a compromise or arrangement under Section 899 of the Companies Act 2006 applicable to or affecting:
(a) all the ordinary share capital of the Company or all the shares in the same class of the shares to which the Approved Option relates, or
(b) all the Shares or all the shares in that same class which are held by a class of shareholders identified otherwise than by reference to their employment or directorships or their participation in the Plan.
10.2 Rule 8.4 shall not apply.
10.3 The following replaces rule 8.6 in relation to Approved Options:
If:
8.5.1 the events referred to in rules 8.2 or 8.3 are part of an arrangement which will mean that the Company will be under the Control of another company; and
8.5.2 the persons who own Shares in the Company immediately before the change of Control will immediately afterwards own at least 75% of the shares in that other company; and
8.5.3 Participants are to be offered substitute options under rule 11,
options, which are not exercisable otherwise than under rule 8.2 or 8.3, as the case may be, may not be exercised.
11 Exchange of Approved Options
11.1 If HMRC approval of the terms of Approved Options is to be maintained, Approved Options can only be exchanged, as described in rule 9, if the Acquiring Company:
11.1.1 obtains Control of the Company as a result of making a general offer to acquire:
(a) the whole of the issued ordinary share capital of the Company (other than that which is already owned by it and its subsidiary or holding company) made on a condition such that, if satisfied, the Acquiring Company will have Control of the Company; or
(b) all the Shares (or all those Shares not already owned by the Acquiring Company or its subsidiary or holding company); or
11.1.2 obtains Control of the Company under a compromise or arrangement sanctioned by the court under Section 899 of the Companies Act 2006 applicable to or affecting:
(a) all the ordinary share capital of the Company or all the shares in the same class of the shares to which the Approved Option relates, or
(b) all the Shares or all the shares in that same class which are held by a class of shareholders identified otherwise than by reference to their employment or directorships or their participation in the Plan; or
11.1.3 becomes bound or entitled to acquire Shares under Chapter 3 of Part 28 of the Companies Act 2006 or other local legislation which HMRC agrees is equivalent.
11.2 Approved Options must be exchanged within the period referred to in paragraph 26(3) of ITEPA and subject to paragraph 11.4, by agreement between the Participant and the Acquiring Company.
11.3 The new Award will be in respect of shares which satisfy the conditions of paragraph 27(4) of ITEPA, in a body corporate falling within paragraph 16(b) or (c) of ITEPA and any performance condition applying to the new Award must be no more difficult to satisfy than the Performance Condition applying to the existing Award.
11.4 The new Award must be equivalent to the old options and thus for the new Awards
(a) the shares to which they relate must meet the conditions in paragraphs 16 to 20 (types of share that may be used),
(b) they must be exercisable in the same manner as the old options and subject to the provisions of the Plan as it had effect immediately before the release of the old options,
(c) the total market value of the shares subject to the old options immediately before the release of those options by the participant must be substantially the same as the total market value, immediately after the grant of the new Awards to the participant, of the shares subject to those Awards, and
(d) the total amount payable by the participant for the acquisition of shares under the new Awards must be substantially the same as the total amount that would have been so payable under the old options.
For the purposes of this paragraph the market value of any shares is to be determined using a methodology agreed by HMRC.
11.5 The following replaces rule 9.2.5:
9.2.5 is governed by the Plan as if references to Shares were references to shares over which the new award is granted and as if references to the Company in rules 3-14 and this Schedule 1 (other than rule 13) (including any such references as occur in expressions which are defined in rule 1 and used in those rules) were references to the Acquiring Company or the body corporate determined under rule 9.2.1.
12 Alternative ways to satisfy Options and adjustment
Rules 5.6 and 5.9 do not apply in relation to Approved Options.
13 Joining a competitor
The following replaces rule 5.7 in relation to Approved Options:
If a Participant ceases to be an employee or director of a Member of the Group and within 12 months of cessation joins a competitor organisation (as determined by the Committee), all unvested Approved Options will forthwith lapse.
14 Changing the terms of Approved Options
14.1 The Committee need not obtain the approval of the Company in general meeting for any minor changes which are necessary or desirable in order to obtain or maintain HMRC approval for the terms of Approved Options under ITEPA or any other enactment.
15 Withholding of tax
The following replaces rule 5.7 in relation to Approved Options:
Unless the Optionholder discharges any liability that may arise himself, the Company, any employing company or the trustee of any employee benefit trust from which Shares may be provided may make the necessary arrangements after the exercise of an Option to withhold an amount sufficient to meet any liability to taxation or social security contributions in respect of that exercise for which the Company is obliged to account on behalf of an Optionholder. These arrangements may include the sale of sufficient Shares on behalf of an Optionholder.
16 Terms of employment
The following replaces rule 11 in relation to Approved Options:
16.1 For the purposes of this rule, “Employee” means any employee of a Member of the Group.
16.2 This rule applies during an Employee’s employment and after the termination of an Employee’s employment, whether or not the termination is lawful.
16.3 Nothing in the rules or the operation of the Plan forms part of the contract of employment of an Employee. The rights and obligations arising from the employment relationship between the Employee and the Company are separate from, and are not affected by, the Plan. Participation in the Plan does not create any right to, or expectation of, continued employment.
16.4 No employee has a right to participate in the Plan. Participation in the Plan or the grant of Options on a particular basis in any year does not create any right to or expectation of participation in the Plan or the grant of Approved Options on the same basis, or at all, in any future year.
16.5 Subject to paragraph 9 of this Schedule 1, the terms of the Plan do not entitle the Employee to the exercise of any discretion in his favour.
16.6 The Employee will have no claim or right of action in respect of any decision, omission or discretion, not relating to a subsisting option, which may operate to the disadvantage of the Employee even if it is unreasonable, irrational or might otherwise be regarded as being in breach of the duty of trust and confidence (and/or any other implied duty) between the Employee and his employer.
16.7 Subject to paragraph 9 of this Schedule 1, the Employee will have no claim or right of action in respect of any decision, omission or discretion relating to a subsisting option which may operate to the disadvantage of the Employee.
16.8 Subject to paragraph 9 of this Schedule 1, no Employee has any right to compensation for any loss in relation to the Plan, including any loss in relation to:
(i) any loss or reduction of rights or expectations under the Plan in any circumstances (including lawful or unlawful termination of employment);
(ii) any exercise of a discretion or a decision taken in relation to an Approved Option or to the Plan, or any failure to exercise a discretion or take a decision;
(iii) the operation, suspension, termination or amendment of the Plan.
16.9 Participation in the Plan is permitted only on the basis that the Participant accepts all the provisions of the Rules, including this Rule. By participating in the Plan, an Employee waives all rights under the Plan, other than the right to exercise an Approved Option subject to and in accordance with the express terms of the rules and the Performance Condition, in consideration for, and as a condition of, the grant of an Approved Option under the Plan.
Nothing in this Plan confers any benefit, right or expectation on a person who is not an Employee. No such third party has any rights under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of this Plan. This does not affect any other right or remedy of a third party which may exist.
Schedule 2
US Participants
The purpose of this Schedule 2 is to ensure that Options granted to and held by US Participants have an Exercise Price that is at least Fair Market Value, and that Conditional Awards granted to and held by US Participants either meet the requirements of the short term deferral exemption to s.409A of the Code, or are compliant with s.409A of the Code. As such, Schedule 2 comprises of three parts:
Part A: Options
Part B: Conditional Awards within the short term deferral exemption to s.409A of the Code
Part C: Awards that are compliant with s.409A of the Code.
The rules of the Indivior Long-Term Incentive Plan (the “Plan”) will apply to Awards held by Participants, who are or who may become, subject to a US tax or social security contributions liability in connection with an Award, as amended by this Schedule 2. Where there is any conflict between the rules of the Plan and this Schedule 2, the terms of this Schedule 2 will prevail.
In this Schedule 2, references to “rules” are to rules of the Plan and references to “paragraphs” are to paragraphs of Schedule 2. Words and phrases shall have the same meaning as in the rules, except that the following additions will be made to the words and expressions in the rules:
“Code” means the United States Internal Revenue Code 1986, as amended;
“Fair Market Value” means an amount equal to the fair market value (as determined in accordance with US Treasury Regulation Section 1.409A-1(b)(5)(iv)(A)) of a Share; and
“US Participants” means a Participant who is a:
(i) US citizen;
(ii) US permanent resident (evidenced by a green-card);
(iii) non-US citizen who is posted to the United States on or after the Grant Date and who is (or is expected to become) subject to US taxation as a resident alien; or
(iv) non-US citizen to the extent that he or she is or becomes subject to s.409A of the Code, as amended, with regard to an Award including a non-resident alien taxpayer, with respect to some portion of an Award that is deemed to be income from a US source.
Schedule 2, Part A (“Part A”)
US Participants: Options
Part A will apply to Options granted to or held by US Participants.
Part A is intended to ensure that Options granted to and held by US Participants have an Option Price that is at least Fair Market Value
1 Option Price
1.1 Rule 2.2 will be deleted and replaced with the following wording:
“In the case of a Market Value Option, the Option Price will not be less than the Fair Market Value of a Share on the Award Date.”
2 Nil-Cost Options
2.1 Nil-cost Options may not be granted to US Participants.
2.2 The following rule 2.4 will be added to rule 2:
“If a Participant holding an Unvested Nil-Cost Option becomes a US Participant, the following will apply without any further actions on the part of the US Participant or the Company:
(i) Rule 6.2(i)(II) will cease to apply to any Unvested Nil-Cost Option that is not subject to a Holding Period;
(ii) Nil-cost Options that are not subject to a Holding Period will be automatically exercised on the date of Release; and
(iii) any Nil-cost Options that are subject to a Holding Period will become immediately subject to the terms of Part C of Schedule 2.”
Schedule 2, Part B (“Part B”)
US Participants: Conditional Awards within the short term deferral exemption to s.409A of the Code
Part B will apply to Conditional Awards granted to or held by US Participants provided that the Conditional Award is not subject to a Holding Period.
Part B is intended to fall within the short-term deferral exemption to s.409A of the Code. All Awards subject to this Part B shall be administered and interpreted in a manner which complies with this intent.
1 Granting Awards
1.1 An Award granted under Part B may only be made in the form of a Conditional Award and the rules of the Plan, as amended by this Part.
1.2 The following wording will be added to rule 1.5 after the words “The Company may impose other conditions when granting an Award”:
“provided that such other conditions are consistent with the short-term deferral exemption to s.409A of the Code.”
1.3 A Holding Period will not be applicable to a Conditional Award granted under this Part.
2 Impact of Participant becomes a US Participant
2.1 If a Participant holding a Conditional Award that is not subject to a Holding Period becomes a US Participant, the provisions of this Part B will become applicable to the Conditional Award without any further actions on the part of the US Participant or the Company.
3 Consequences of Vesting and Release
3.1 The following wording in rule 5.2 will be deleted:
“As soon as reasonably practicable after the Release of a Conditional Award” and be replaced with “By no later than 31 December of the calendar year in which the Award Vests”
3.2 The following wording in rule 5.5 will be deleted “as soon as reasonably practicable after Vesting or, in the case of an Option, after exercise.” and be replaced with “no later than 31 December of the calendar year in which the Award Vests.”
3.3 The following wording will be added to rule 5.6 after the words “subject to rule 5.7 (Withholding))”:
“by no later than 31 December of the calendar year in which the Award Vests”
4 Leaving the Group
4.1 Rule 6.1(ii) will be deleted.
4.2 Rule 6.4 will be deleted and replaced with the following:
“Where rule 6.2 applies, and the Award is not subject to a Performance Condition, then, the Award does not lapse but will Vest and be Released on the date of cessation of the Participant’s employment. Unless the Committee decides otherwise, the amount of the Award which Vests will also be reduced pro rata to reflect the period from the date of cessation of employment to the Planned Vesting Date as a proportion of the period from the Award Date until the Planned Vesting Date.”
5 Changing the Plan and termination
5.1 The following rule 13.4 will be added to rule 13:
“Notwithstanding the provisions of this rule 13, any such amendment will only be effective to the extent that it complies with s.409A of the Code or an exemption thereto.”
Schedule 2, Part C (“Part C”)
United States – Awards that are compliant with s.409A of the US Internal Revenue Code 1986
Part C will apply to any Award granted to or held by a US Participant that is subject to a Holding Period.
Part C is intended to comply with s.409A of the Code. All Awards subject to this Part C shall be administered and interpreted in a manner which complies with this intent.
1 Granting Awards
1.1 An Award granted under Part C may only be made in the form of a Conditional Award and the rules of the Plan, as amended by this Part.
1.2 The following wording will be added to rule 1.5 after the words “The Company may impose other conditions when granting an Award”:
“provided that such other conditions are consistent with s.409A of the Code”
1.3 The following wording in rule 1.6 will be deleted:
“The statement may be the deed referred to in 2.1 (Terms of Awards) or any other document” and will be replaced with “The statement will be in the form of a certificate.”
2 Impact of Participant becomes a US Participant
2.1 If a Participant holding a Conditional Award or Nil-Cost Option that is subject to a Holding Period becomes a US Participant, the provisions of this Part C will become applicable to the Award without any further actions on the part of the US Participant or the Company.
3 Consequences of Vesting and Release
3.1 Rule 5.2 will be deleted and replaced with the following:
“5.2 Conditional Award
The Company will arrange (subject to rule 5.7 (Withholding) and 12.7 (Consents)) for the transfer (including a transfer out of treasury) or issue to or to the order of the Participant of the number of Shares in respect of which the Award has Vested as soon as reasonably practicable after the Release of a Conditional Award, and in any event by the later of:
(i) 31 December of the year in which the Conditional Award is Released; or
(ii) two and a half months after the date of Release,
save that any Shares delivered in respect of Conditional Awards granted under this Part C will be delivered in accordance with paragraph 3.5 of Schedule 2, Part C.”
3.2 The following wording will be deleted from rule 5.5:
“Dividend equivalents will be paid to any relevant Participant as soon as practicable after Release or, in the case of an Option, after exercise.” and will be replaced with “Dividend equivalents will be paid, transferred or issued (as applicable, and subject to rule 5.7 (Withholding) and 12.7 (Consents)) to any relevant Participant as soon as practicable after Release, and in the case of a Conditional Award, by the later of 31 December of the year in which the Conditional Award is Released, or two and a half months after the date of Release
save that any Shares delivered in respect of Conditional Awards granted under this Part C will be delivered in accordance with paragraph 3.5 of Schedule 2, Part C.”
3.3 The following wording will be added to the end of rule 5.6 after the words “at the Award Date or at any time subsequently”:
“Any cash sum to be paid to the Participant under this rule will be paid to any relevant Participant as soon as practicable after Release and in any case, no later than the date on which the Shares in respect of which the Award was originally granted would have been delivered pursuant to rule 5.2 and 5.3”.
3.4 The following wording will be added to the end of rule 5,7 after the words “reasonably comparable to social security contributions”:
“If a liability as described above arises in relation to an Award granted under this Part C before that Award would otherwise be Released, a proportion of the Award will be Released at that time in respect of such amount of cash or such number of Shares as have a market value (as determined by the Board) as nearly as possible equal to the amount of that liability unless alternative arrangements are made to the satisfaction of the Company to cover such liability (including the Participant agreeing to the withholding of such liability from other pay due to him from any Member of the Group).”
3.5 Where Shares to be delivered in respect of an Award under this Part C are delivered via the trustee of any employee benefit trust:
(i) the Participant will not have any interest in those Shares until the Award has Vested in accordance with the rules of the Plan and the terms of this Part C; and
(ii) the Trustee will not allocate any Shares or other trust assets in favour of the Participant until such Vest.
3.6 Where cash is to be paid in respect of an Award the cash will not be paid by or otherwise delivered via the trustee of any employee benefit trust.
4 Leaving the Group
4.1 The following wording will be deleted from rule 6:1(ii): “unless the Committee decides in its discretion in any particular case that the Vested Award should be Released at an earlier date or immediately”.
4.2 Rule 6.3 (Vesting and Release – Awards subject to Performance Conditions) will be deleted and replaced with the following:
“Where rule 6.2 applies, an Award will Vest at the end of the Performance Period in accordance with rule 4.2 (Determination of Performance Conditions and other conditions) and be Released on the Normal Release Date. The Award will also be reduced pro rata to reflect the period from the date of cessation of employment until the date of the end of the Performance Period as a proportion of the Performance Period unless the Committee decides otherwise. The Award then lapses as to the balance.”
4.3 The following wording will be deleted from rule 6.4:
“The Committee may decide in its discretion in any particular case that the Award should Vest and be Released either immediately or on any other date, subject to rule 1.5 (Other Conditions).”
4.4 Rule 6.8 will be deleted and replaced with the following:
““Exercise Period” means the period during which an Option may be exercised, such period to end no later than midnight on 31 December of the calendar year in which it is Released.”
5 Takeovers and restructurings
5.1 The following wording in rule 8.2 will be deleted:
“where a person (or a group of persons acting in concert) obtains Control of the Company as a result of making an offer to acquire Shares, an Award is Released, subject to rule 1.5 (Other conditions), on the date the person obtains Control”
and will be replaced with:
“Where there is a change of ownership or effective control, as provided in IRC s.409A(a)(2)(v), an Award Vests, subject to rule 1.5 (Other conditions), on the date of such event”
5.2 The following wording will be added to the end of rule 8.4 after the words “The Award lapses as to the balance”:
“Where the Committee resolves to allow an Award to Vest pursuant to this rule 8.4, it is the intent that any such resolution will be made such that the Award will be Vest and be Released in accordance with s.409A of the Code, provided no individual tax treatment is guaranteed by the Company or any other Member of the Group”.
6 Changing the Plan and termination
6.1 The following rule 13.4 will be added to rule 13:
“No amendment will be made under this rule 13 if it would prevent Part C from meeting the requirements of s.409A.”
Schedule 3
Canadian Participants
The purpose of this Schedule is to ensure that an Award made to a Participant who is subject to taxation under the law of Canada is not taxed as a “Salary Deferral Arrangement”. All Awards subject to this Schedule 3 shall be administered and interpreted in a manner which complies with this intent.
The rules of the Indivior Long-Term Incentive Plan (the “Plan”) will apply to Awards held by Participants who are, or who may become, subject to Canadian tax or social security contributions liability in connection with an Award (“Canadian Participants”), as amended by this Schedule 3. Where there is any conflict between the rules of the Plan and this Schedule 3, the terms of this Schedule 3 will prevail.
1 Definitions
In this Schedule 3, references to “rules” are to rules of the Plan and references to “paragraphs” are to paragraphs of Schedule 3. Words and phrases shall have the same meaning as in the rules, except that the following additions and amendments will be made to words and expressions in the rules:
“Performance Period” means the period in respect of which the Performance Conditions are to be satisfied which will not normally be less than 3 consecutive years of the Company and will not be more than 3 consecutive years of the Company, and in any event the start of the Performance Period shall be no earlier than 1st January prior to the Award Date and the end of the Performance Period shall be no later than three years after the Award Date; and
“Planned Vesting Date” the date set under rule 2.1 (Terms of Awards) which will be no later than three years after the Award Date.
2 Granting Awards
2.1 Rule 2.1(v) shall be deleted and the following rule 2.4 inserted:
“Awards granted to Canadian Participants will not be subject to a Holding Period.”
3 Consequences of Vesting and Release
3.1 Rule 5.2 will be deleted and replaced with the following:
“As soon as practicable after the Release of a Conditional Award, and in no event later than 31 December following the Vesting Date, the Company will arrange (subject to Rule 5.7 (Withholding) and 12.7 (Consents)) for the transfer (including a transfer out of treasury) or issue to or to the order of the Participant of the number of Shares subject to the Released Award.”
3.2 Rule 5.3(iv) will be deleted and replaced with the following:
“Options
(i) An Option held by a Canadian Participant will be automatically exercised on the date of Release without any further action being required by the
Participant or the Company and this date shall be the “Option Exercise Date”.
(ii) The Company or any employing company may make such arrangements as it considers necessary to meet the Option Price (if any) payable by the Participant for the number of Shares being acquired. These arrangements may include a reduction in the number of Shares subject to the exercise of the Option on behalf of the Participant and/or the sale on behalf of the Participant of any of the Shares to which he is entitled under the Plan and the retention of the sale proceeds to meet the liability.
(iii) Subject to rules 5.7(Withholding) and 12.7 (Consents) the Company will arrange for the Shares to be transferred to or issued to the Participant as soon as practicable after the Option Exercise Date, and in no event later than 31 December following the Vesting Date.”
3.3 The first paragraph of Rule 5.5 will be deleted and replaced with the following:
“The Committee may determine that a Conditional Award or Option will include the right to receive an amount equal in value to the dividends which were payable on the number of Vested Shares between the Award Date and the date of Release (“dividend equivalents”), subject to rule 5.7 (Withholding). This amount will be paid in cash unless the Committee decides it will be paid in Shares. Dividend equivalents will be paid to any relevant Participant at the same time that the Shares underlying the Award to which the dividend equivalent relates (or cash if the Award is so satisfied pursuant to rule 5.6) are transferred to the Participant. For the avoidance of doubt the dividend does not include the tax credit.
3.4 The following additional wording will be added to Rule 5.6 after the words “satisfied in cash at the Award Date or at any time subsequently”:
“If an Award is to be settled in cash, the Company will arrange for the cash to be paid to the Participant as soon as practicable after the date of Release of a Conditional Award or the Option Exercise Date of an Option, and in no event later than 31 December following the Vesting Date.”
Dated 29th February 2016
1. INDIVIOR PLC
AND
2. SANNE FIDUCIARY SERVICES LIMITED
THE INDIVIOR PLC EMPLOYEE BENEFIT TRUST
| | | | | |
| CLAUSE | |
1. Interpretation | 1 |
2. The parties' obligations | 3 |
3. Discretionary trust of capital and income | 3 |
4. Perpetuity period | 3 |
5. Exclusion of participators from benefit | 3 |
6. Trusts at the expiration of the Trust Period | 4 |
7. Additions to the Trust Fund | 4 |
8. Waiver of dividends | 4 |
9. Investment powers | 4 |
10. Additional powers | 5 |
11. Power of resettlement | 5 |
12. Voting | 6 |
13. Dealing with Shares held in the Trust | 6 |
14. Personal interests of Trustees | 7 |
15. Protection of Trustee | 8 |
16. Changes of Trustee | 8 |
17. Information supplied by any member of the Group | 9 |
18. Power to amend | 9 |
19. Costs | 10 |
20. Receipts | 10 |
21. Remuneration of Trustee | 10 |
22. Governing law | 11 |
23. Jurisdiction | 11 |
24. Changing of governing law | 11 |
25. Irrevocability | 12 |
26. Exclusions and limitations | 12 |
27. Assignment and other dealings | 12 |
28. Notices | 12 |
29. Power given to company is not a fiduciary power | 13 |
30. Claimants' obligations | 13 |
31. Application of statutory and equitable rules | 13 |
32. Counterparts | 13 |
| | | | | |
| SCHEDULE | |
| |
SCHEDULE ADDITIONAL POWERS OF TRUSTEE | |
THIS DEED is dated 29th February 2016
PARTIES
(1) Indivior PLC incorporated and registered in England and Wales with company number 9237894 whose registered office is at 103-105 Bath Road, Slough, Berkshire, United Kingdom, SL1 3UH (Company).
(2) Sanne Fiduciary Services Limited incorporated and registered in Jersey with company number 41570 whose registered office is at 13 Castle Street, St Helier, Jersey, JE4 5UT (Original Trustee).
BACKGROUND
(A) The Company has decided to establish a trust, to be constituted as an employees' share scheme under section 1166 of the Companies Act 2006, on the terms of this deed.
(B) The Original Trustee has agreed to act as the first trustee of the Trust on the terms of this deed.
(C) The Company has paid £200 to the Original Trustee to be held on the trusts declared in this deed.
OPERATIVE PARTS
1. INTERPRETATION
The following definitions and rules of interpretation apply in this deed.
1.1 Definitions:
Beneficiary: an Employee or former Employee, or a spouse, civil partner, surviving spouse, surviving civil partner, minor child or minor step-child of an Employee or former Employee, excluding any person resident for tax purposes in Jersey.
Business Day: a day (other than a Saturday, Sunday or public holiday in England or Jersey) when banks in London and St Helier are open for business.
Employee: an employee (including an executive director) of the Group from time to time.
Employees' Share Scheme: has the meaning given in section 1166 of the Companies Act 2006.
FSMA 2000: the Financial Services and Markets Act 2000.
Group: the Company and any Subsidiary of the Company. Group Company and member of the Group shall be construed accordingly.
IHTA 1984: the Inheritance Tax Act 1984.
Property: any property, including any chose in action and any interest in real or personal property.
Shares: ordinary shares in the capital of the Company.
Subsidiary: a subsidiary as defined in section 1159 of the Companies Act 2006.
Trust: the trust established by this deed (as amended) and known as the Indivior PLC Employee Benefit Trust.
Trustee: the Original Trustee, or other trustee(s) of the Trust for the time being.
Trust Fund: shall comprise:
(a) the sum of £200 (referred to in Background (C));
(b) Property added to it at any time through accumulation of income, capital accretion, payment, transfer, gift, loan or otherwise; and
(c) all money, investments and other Property representing, or derived from, (a) and (b).
Trust Period: the period beginning with the date of this deed and ending on the first to happen of:
(a) the end of the period set out in clause 4; or
(b) an order for the winding up of the Company being made, or a resolution for the voluntary winding up of the Company being passed (other than for the purposes of, and followed by, an amalgamation or reconstruction in circumstances where substantially the whole of the undertaking, assets and liabilities of the Company pass to a successor company that becomes the Company for the purposes of this deed, as envisaged by clause 1.2); or
(c) the date the Trustee declares, by deed, to be the end of the Trust Period (not being a date earlier than the date of that deed).
1.2 A reference to the Company shall include, where appropriate, any successor company resulting from any reconstruction or amalgamation of the Company.
1.3 Words and expressions not defined in this deed have the meaning given in the Income Tax Act 2007.
1.4 Clause, Schedule and paragraph headings shall not affect the interpretation of this deed.
1.5 A person includes a natural person, corporate or unincorporated body (whether or not having separate legal personality).
1.6 The Schedule forms part of this deed and shall have effect as if set out in full in the body of this deed. Any reference to this deed includes the Schedule.
1.7 A reference to a company shall include any company, corporation or other body corporate, wherever and however incorporated or established.
1.8 Unless the context otherwise requires, words in the singular shall include the plural and in the plural shall include the singular.
1.9 Unless the context otherwise requires, a reference to one gender shall include a reference to the other genders.
1.10 A reference to a statute or statutory provision is a reference to it as amended, extended or re-enacted from time to time.
1.11 A reference to a statute or statutory provision shall include all subordinate legislation made from time to time under that statute or statutory provision.
1.12 A reference to writing or written includes fax and e-mail.
1.13 Any obligation on a party not to do something includes an obligation not to allow that thing to be done.
1.14 A reference to this deed or to any other agreement or document referred to in this deed is a reference to this deed or such other agreement or document as varied or novated (in each case, other than in breach of the provisions of this deed) from time to time.
1.15 References to clauses and the Schedule are to the clauses and the Schedule of this deed and references to paragraphs are to paragraphs of the Schedule.
1.16 Any words following the terms including, include, in particular, for example or any similar expression shall be construed as illustrative and shall not limit the sense of the words, description, definition, phrase or term preceding those terms.
2. THE PARTIES’ OBLIGATIONS
The Trustee and the Company shall procure that the Trust constitutes and remains part of an Employees' Share Scheme and a trust for the benefit of employees (as defined in section 86 of IHTA 1984).
3. DISCRETIONARY TRUST OF CAPITAL AND INCOME
3.1 Subject to clause 9, the Trustee shall hold the Trust Fund on trust for all or any one or more of the Beneficiaries, in such shares, on such trusts and subject to the powers and provisions that the Trustee appoints in its discretion during the Trust Period, by any deed(s) revocable during the Trust Period or irrevocable.
3.2 Subject to clause 3.1, during the Trust Period, the Trustee shall hold the Trust Fund on trust to pay or apply the whole or any part of the income or capital of the Trust Fund to or for the benefit of all or any of the Beneficiaries in such shares and in a manner as it thinks fit.
3.3 No power, authority or discretion conferred on the Trustee by this deed or by law shall (despite anything to the contrary expressed or implied in this deed) be exercised if it causes:
(a) any part of the Trust Fund to become applicable for the benefit of any member of the Group. However, the Trustee shall be empowered to:
(i) repay all loans to the Trustee made by any member of the Group out of the Trust Fund; and
(ii) pay any amount to subscribe for Shares out of the Trust Fund to the Company;
(b) a breach of clause 2; or
(c) an infringement of the rule against perpetuities.
3.4 Without affecting the rest of this clause 3, the Trustee may operate the Trust in conjunction with any one or more Employees' Share Schemes operated by the Group, or may itself operate any one or more Employees' Share Schemes through the Trust. If the Trustee grants options that may be options to subscribe for Shares under the rules of an Employees' Share Scheme, the limits on the number of Shares that the Trustee may subscribe shall be decided by the rules of that Employees' Share Scheme.
4. PERPETUITY PERIOD
The perpetuity period that applies to this Trust is the period beginning on the date this deed takes effect and ending on the day before the 125th anniversary of that date.
5. EXCLUSION OF PARTICIPATORS FROM BENEFIT
If any Property has been transferred to the Trust Fund by any close company (as defined in section 102(1) of IHTA 1984), and that disposition would have been a transfer of value but for section 13(1) of IHTA 1984, no part of that Property shall be applied for the benefit of any person falling within any of the categories specified in
section 13(2) of IHTA 1984 (as modified by section 13(3) of IHTA 1984), except to the extent permitted by section 13(4) of IHTA 1984.
6. TRUSTS AT THE EXPIRATION OF THE TRUST PERIOD
6.1 At the expiry of the Trust Period, the Trustee shall hold the Trust Fund on trust (after paying or providing for any costs, charges or expenses incurred, or to be incurred, by the Trustee):
(a) for the Beneficiaries then living, in such proportions as the Trustee shall determine before the end of the Trust Period; or
(b) if the Trustee has not made any decision before the end of the Trust Period:
(i) for all of the Employees then living in equal shares; or
(ii) if there are no Employees at that time, for a charity (or charities) chosen by the Trustee and if no choice has been made, for charitable purposes generally.
6.2 There shall be no resulting trust in favour of any member of the Group at the expiration of the Trust Period.
7. ADDITIONS TO THE TRUST FUND
The Trustee may receive any gift or donation (whether of money or other Property) to be held as an addition to the Trust Fund at any time, from any person, company or corporation. Any additions to the Trust Fund shall be held by the Trustee on the trusts declared in this deed, unless the donor gives a contrary direction.
8. WAIVER OF DIVIDENDS
Until the Company directs the Trustee otherwise, the Trustee shall waive its entitlement to dividends on Shares held in the Trust Fund for which the Trustee holds the whole of the beneficial interest.
9. INVESTMENT POWERS
9.1 Without affecting the full and unrestricted investment powers set out below, the Trust Fund or any part of it may, at the Trustee's discretion, be:
(a) applied in the acquisition or disposal of Shares from any person, or in the acquisition or disposal of securities issued by the Company or any member of the Group. However, the Trustee shall not hold or acquire more than 5% of the ordinary share capital of the Company in issue from time to time;
(b) placed on current or deposit account with:
(i) any bank or financial institution that is an authorised person for the purposes of FSMA 2000;
(ii) a bank or financial institution established and operating in the Channel Islands or the Isle of Man; or
(iii) invested in negotiable instruments issued by any bank or financial institution;
(c) invested in fixed-interest Government securities of the UK or any local authority of the UK;
(d) used to buy or sell assets or Property of any nature (whether involving liabilities, producing income or on personal credit), in any place with or without security;
(e) used to buy any reversionary interest, or any other investments not producing income or of a wasting nature; or
(f) placed with an agent of the Trustee to place on current or deposit account with any bank or financial institution described in clause 9.1(b) above so that the Trustee shall have the same full and unrestricted powers of investing the Trust Fund as if it were the absolute beneficial owner of it.
9.2 Despite clause 9.1, the Trustee shall not be required to invest, or to invest at interest, the Trust Fund or any part of it. If it does invest in a non-interest bearing account, it shall not be liable for any loss arising from that investment. The Trustee may not exercise its investment powers to cause the Trust to be a collective investment scheme (as defined under section 235 of FSMA 2000). The Trustee shall be under no duty to diversify investments or to preserve or enhance the value of the Trust Fund.
9.3 The Trustee shall not be obliged to:
(a) diversify the investment of the Trust Fund; or
(b) become a director or officer of, or interfere in the management or affairs of, the Group or any company whose shares or stock are held in the Trust Fund for the time being, even if the Trustee has a substantial holding in, or control of, that company (whether directly or indirectly); or
(c) seek information about the affairs of the Company. The Trustee may leave the conduct of the Company's affairs to its directors (or other persons managing the Company), so long as the Trustee has no notice of any act of dishonesty by the directors (or others) in connection with the management of the Company.
9.4 The Trust Fund shall be held in the name of, or to the order of, the Trustee. The Trust Fund or any part of it may be held in the name of a nominee (or nominees) for and on behalf of the Trustee on the terms as the Trustee shall decide. The Trustee shall have power to pay the nominee(s) reasonable fees for their services.
10. ADDITIONAL POWERS
In addition to the powers vested in trustees by law or statute, and without restriction to them, the Trustee shall have the additional, separate powers regarding the Trust Fund set out in the Schedule, subject to clause 2. The Trustee may exercise all or any of those additional powers without the intervention of any Beneficiary, in the manner and to the extent as it thinks fit.
11. POWER OF RESETTLEMENT
11.1 Subject to clause 11.2, at any time during the Trust Period, the Trustee may, if it thinks fit, transfer the Trust Fund (or any part of it) into the names or legal control of the trustee(s) (whether resident in the UK or abroad) of, and for the purposes of, any settlement or trust (Transferee Settlement) administered and taking effect in any part of the world and governed, as its proper law, by the law of that or any other part of the world. Any Property transferred shall be held on the trusts and with, and subject to, the powers and provisions of the Transferee Settlement, free of all the trusts, powers and provisions of this deed.
11.2 No transfer under clause 11.1 shall be made:
(a) if it offends any applicable rules against perpetuities or excessive accumulations; or
(b) unless the Trustee (whose decision shall be final and binding on all persons beneficially interested in this deed) is satisfied that the Transferee Settlement:
(i) is such that the transfer will only be for the benefit of some or all of the Beneficiaries;
(ii) excludes from benefit any person to the extent that they are excluded under clause 5;
(iii) is fully enforceable in law, for which purpose the Trustee shall be entitled to rely on advice received from professional advisers practising in the territory where the Transferee Settlement is intended to take effect; and
(iv) will constitute an Employees' Share Scheme and a trust for the benefit of employees (as defined in section 86 of IHTA 1984).
12. VOTING
12.1 Unless the Company directs that the Trustee may vote on any particular occasion, the Trustee shall abstain from voting at any general meeting of any member of the Group any Shares held in the Trust Fund for which the Trustee holds the whole of the beneficial interest.
12.2 If the Company directs that the Trustee may vote Shares for which the Trustee holds the whole of the beneficial interest, the Company cannot direct the manner in which the Trustee exercises its vote, and the Trustee may in its absolute discretion vote (or abstain from voting) in the manner that it thinks fit.
12.3 If a beneficial interest in any Share held in the Trust (other than a right to acquire any Share) is held by a Beneficiary:
(a) the Trustee may, but shall not be obliged to, seek irrevocable directions from each relevant Beneficiary regarding the exercise of voting rights attaching to his interest in Shares;
(b) the Trustee shall comply with each relevant Beneficiary's directions regarding voting his interest in Shares; and
(c) if the Trustee does not receive a Beneficiary's directions by any deadline specified in writing by the Trustee, the Trustee shall abstain from voting that Beneficiary's interest in Shares.
12.4 The Trustee shall not be entitled to vote on a show of hands on a particular resolution in respect of Shares held on behalf of Beneficiaries unless all directions received from those Beneficiaries who have given directions in respect of that resolution are identical.
12.5 The Trustee shall not be under any obligation to call for a poll, but in the event of any poll, the Trustee shall vote each Beneficiary's interest in Shares in accordance with the Beneficiary's directions.
13. DEALING WITH SHARES HELD IN THE TRUST
If any offer is made to the holders of Shares to acquire their Shares:
(a) the Trustee shall, in relation to any Share held in the Trust in which a beneficial interest (other than a right to acquire any Share) is held by a
Beneficiary, seek irrevocable directions from each relevant Beneficiary regarding the sale of that Beneficiary's Shares (or interest in Shares) pursuant to the offer; and
(b) if the Trustee holds the whole beneficial interest in any Shares that it proposes to use to satisfy options or awards held by Beneficiaries that will vest at or after the completion of the acquisition of Shares under the offer, the Trustee may, but shall not be obliged to seek an expression of wishes from each relevant Beneficiary regarding the offer made for any Shares to which that Beneficiary will become entitled, but if it does so, the Trustee shall comply with each relevant Beneficiary's directions; and
(c) if the Trustee decides not to seek expressions of wishes from each relevant Beneficiary in relation to an offer as set out in clause 13(b), the Trustee may take, or refrain from taking, such action in relation to the Shares as it thinks fair, having regard to all the circumstances.
14. PERSONAL INTERETS OF TRUSTEES
14.1 Subject to clause 14.2, no decision of, or exercise of a power by, the Trustee shall be invalidated or questioned because the Trustee (or any individual Trustee, or any director or other officer of a corporate Trustee) had a direct or personal interest in the result of any decision or in the exercising of any power. Any person may vote on the decision or exercise of power, and be taken into account for the purposes of a quorum, despite his interest.
14.2 If the interest of the Trustee or any other person concerned for the purposes of clause 14.1:
(a) arises other than solely because the Trustee or other person concerned is a Beneficiary, director or other officer or shareholder of any member of the Group; and
(b) is material, then the nature of that interest must (unless otherwise agreed) have been declared at the meeting of the Trustee (or, if there is a sole corporate Trustee, the meeting of the board of directors of the sole Trustee) at which the item of business to which the interest relates was discussed. If the Trustee or other person concerned was not present at that meeting, the nature of that interest must have been declared at the next meeting of the Trustee (or next meeting of the board of directors of the sole corporate Trustee, as appropriate) at which he was present.
14.3 A Trustee (or director or other officer of a corporate Trustee) who is or becomes a Beneficiary may retain, and not be liable to account for, any benefits to which he becomes entitled under this deed. The exercise of any power or discretion by any such person shall not be invalidated or questioned because he had a direct or indirect interest in it.
14.4 A Trustee (or any director or other officer of a corporate Trustee) shall not be precluded from buying, holding or dealing with any debentures, debenture stock, shares or securities of any member of the Group, or from entering into or being interested in any contract or other transaction with any member of the Group. No Trustee (or any director or other officer of a corporate Trustee) shall be liable to account to any member of the Group or the Beneficiaries for any profits made or benefits obtained in connection with the acquisition, contract or transaction.
14.5 Any Trustee (or any employee, director or officer of a corporate Trustee) may be employed and remunerated as a director or other officer, employee, agent or
adviser of any corporation, body or firm connected with the Trust Fund. He may keep as his property any remuneration, fees or profits he receives in this capacity, even though his position may have been obtained, held or retained because of his status as a Trustee (or as an employee, director or officer of a corporate Trustee).
15. PROTECTION OF TRUSTEE
15.1 The Company shall keep the Trustee and each director, officer or employee of any corporate trustee fully indemnified against any actions, claims, costs, demands, expenses and all other liabilities to which it is or becomes liable as Trustee because of any act, event or thing except where any actions, claims, costs, demands, expenses and other liabilities are attributable to fraud, wilful misconduct or negligence by that person.
15.2 The Trustee shall have the benefit of all the powers, privileges and immunities conferred on trustees by statute or by law.
15.3 In the execution of the Trust and the powers and discretions conferred it by the Trust Deed or by law, the Trustee (and, where the Trustee is a corporate body, any directors, officers and employees of the Trustee) shall not be liable for any loss which may occur to the capital or income of the Trust Fund arising by reason of any mistake or omission made in good faith by him or by reason of any other matter or thing including fraud, negligence or default of another Trustee, nominee, agent, officer or other delegate provided that no Trustee shall be relieved of liability under this Clause 15.3 for any fraud, wilful misconduct or negligence on his part.
16. CHANGES OF TRUSTEE
16.1 The minimum number of persons to be the Trustee (or the trustee of any part of the Trust Fund for which a separate set of trustees has been appointed) shall be:
(a) one, in the case of a corporate Trustee; or
(b) two, in any other case.
16.2 A continuing Trustee shall not be entitled to exercise any discretion or power under this deed if the number of persons acting as the Trustee is below the minimum number.
16.3 At any time, any Trustee may retire from his office by written notice given to the Company and any co-trustee. Such notice will take effect 90 days after the date when it is received by the Company (or any shorter period agreed in writing by the Company). If any retirement of a trustee would cause the number of Trustees to fall below the minimum number set out in clause 16.1, the Company shall appoint a replacement Trustee such that there will be at least the minimum number of persons required by clause 16.1 to be the Trustee (whether by virtue of an appointment taking effect immediately on the retirement or otherwise). For the avoidance of doubt, the responsibility to ensure the minimum number of Trustees set out in clause 16.1 is maintained is that of the Company and no incumbent corporate Trustee shall have any obligation to arrange a replacement Trustee nor shall any lack of replacement Trustee prevent any incumbent corporate Trustee from retiring from office.
16.4 The Company shall have power by deed:
(a) to remove any Trustee from office by 60 days' written notice to that Trustee (unless waived by the Trustee) without giving any reason for the removal. This power can only be exercised if there will be at least the minimum number of persons as Trustee required by clause 16.1 (whether
by virtue of an appointment taking effect immediately upon the removal or otherwise) immediately after its exercise;
(b) to appoint a person (or persons) in place of any Trustee who ceases to be a Trustee for any reason, whether or not the number of persons acting as Trustee is below the minimum number required by clause 16.1 before that appointment; and
(c) to appoint an additional Trustee (without limitation as to number).
16.5 If the number of persons acting as Trustee falls below the minimum number required by clause 16.1, the Company shall immediately appoint the number of new or additional trustees necessary to comply with clause 16.1.
16.6 Any person (including any other corporation and any director, officer or employee of the Company or any member of the Group) may be appointed as a Trustee, on the terms and conditions the Company agrees with that person, wherever that person is domiciled or resident (or is incorporated or carries on business, if it is a corporation).
16.7 A retiring or removed Trustee shall execute all transfers or other documents, and do all acts, necessary to vest the Trust Fund in the new or continuing Trustees. A retiring or removed Trustee who is liable under this deed in any way shall not be bound to transfer the Trust Fund unless reasonable security is provided to indemnify that Trustee against the liability.
16.8 Unless there is a sole corporate Trustee, this clause 16.8 shall govern the proceedings of the Trustee:
(a) subject to clause 20.1, the trusts, powers and discretions vested in the Trustees by this deed shall be exercised by all the Trustees acting unanimously; and
(b) unless otherwise agreed by the Trustees a resolution in writing signed by each Trustee (whether on the same document or in counterparts) shall be as valid as if it has been passed at a meeting of the Trustees.
16.9 A Trustee may be discharged even though there is neither a trust corporation nor two persons to act as trustees, provided that there remains at least one Trustee. A Trustee may be appointed under section 36(1) of the Trustee Act 1925 in place of more than one Trustee.
17. INFORMATION SUPPLIED BY ANY MEMBER OF THE GROUP
The Trustee shall be entitled to rely on all information supplied to it by any member of the Group without further enquiry.
18. POWER TO AMEND
18.1 Subject to clause 18.2, the Trustee shall have power to amend, restrict, release or extend the trusts, powers and provisions of this deed in any manner by deed during the Trust Period.
18.2 No exercise of the power contained in clause 18.1 may:
(a) breach or remove the restrictions in clause 3.3;
(b) amend or remove the restrictions in clause 5;
(c) extend the power conferred by clause 18.1 or remove the restrictions contained in this clause 18.2;
(d) alter or affect the rights of any person accrued before the date of the amendment (except with that person's prior consent in writing); or
(e) invalidate any previous payment or application of the Trust Fund, or affect any part of the Trust Fund to which any person has previously become absolutely entitled.
18.3 Every power, authority or discretion conferred on the Trustee (or any other person) and not expressly made exercisable only during a period allowed by law shall (despite anything else in this deed) only be exercisable during the Trust Period and during any further period (whether definite or indefinite) that the law allows in respect of the particular power, authority or discretion.
19. COSTS
19.1 All costs charges and expenses of, and incidental to, the preparation, operation and determination of the Trust (including any stamp duty and stamp duty reserve tax payable and remuneration of the Trustee) shall be payable by the Company (or any member of the Group) to the extent that they are not paid by the Trustee under this deed.
19.2 From time to time, the Company may determine that some or all of the costs, charges and expenses of the administration of the Trust or management of the Trust Fund shall be met by any member of the Group in such proportions as the Company shall determine.
19.3 Despite clause 19.2, the Trustee may pay all of the costs, charges and expenses of the administration of the Trust or the management of the Trust Fund from the Trust Fund, but no cost, charge or expense shall be paid more than once. The Company shall reimburse the Trustee for payment of any cost, charge or expense paid by the Trustee that the Company or any member of the Group were liable to pay under clause 19.2.
20. RECEIPTS
20.1 From time to time, the Trustee may authorise any one or more of its number (or any other person(s) as it thinks fit) in writing to make any payments or transfers of Property, and to give receipts and discharges for any Property payable, transferable or deliverable to the Trustee. Each receipt or discharge shall be as valid as if it were given by the Trustee.
20.2 The production of the Trustee's written authority given under clause 20.1 shall be a sufficient protection to any person taking any receipt or discharge mentioned in clause 20.1. Unless that person received express notice in writing of the revocation of the authority, he may assume and act on the assumption that the authority remains unrevoked.
20.3 The receipt of a person as a Trustee reasonably believes to be the treasurer or other proper officer of any charity shall be of sufficient discharge to the Trustee for any Property so paid or transferred, and the Trustee shall not be obliged to see to the application of any Property.
21. REMUNERATION OF TRUSTEE
21.1 Any corporate Trustee shall act in accordance with the terms and conditions it has agreed with the Company. In the absence of any agreement, the Trustee shall notify the Company of its published standard terms and conditions in force for the time being and that the Trustee shall be entitled to receive remuneration in accordance with those terms and conditions.
21.2 Any individual Trustee, who is a person engaged in any profession or business (but not an Employee or former Employee), shall be entitled to be paid all usual professional or proper charges for the business transacted, time expended and acts done by him (or his firm) in connection with the Trust, including acts that a Trustee who was not in any profession or business could have done personally.
21.3 Any corporate Trustee:
(a) may transact, in its own office, on behalf of the Trust or any Beneficiary, any business that it is authorised to undertake its constitution and in which it is then ordinarily engaged, on the same terms as would be made with an ordinary customer. If the Trustee is a bank, it shall be entitled to act as a banker to, and make advances to, the Trustee in connection with the Trust, without accounting for any profit made by so acting and in all respects as if it were not a Trustee; and
(b) may employ as a banker, investment adviser or other agent, on behalf of the Trust, any corporation, firm or enterprise associated with it. However, the agent must be authorised to undertake the business for which it is employed, and ordinarily be engaged in that business. All the charges it makes for work done or services provided in connection with the Trust must be reasonable and normal.
21.4 Any Trustee (or company associated with a trustee) who carries on the business of the provision of accounting, auditing, banking, custodian fiscal insurance, legal or other professional financial services of any kind may provide those services for the Trust on the same terms as those made with an ordinary customer, and without accounting for any profit made.
22. GOVERNING LAW
This deed and any dispute or claim arising out of or in connection with it or its subject matter or formation (including non-contractual disputes or claims) shall be governed by and construed in accordance with the law of England and Wales.
23. JURISDICTION
23.1 Each party irrevocably agrees that the courts of England and Wales shall have exclusive jurisdiction to settle any dispute or claim arising out of or in connection with this deed or its subject matter or formation (including non-contractual disputes or claims).
23.2 Each party irrevocably consents to any process in any legal action or proceedings under clause 23.1 above being served on it in accordance with the provisions of this deed relating to service of notices. Nothing contained in this deed shall affect the right to serve process in any other manner permitted by law.
24. CHANGING OF GOVERNING LAW
Despite anything else in this deed, the Company may, at any time during the Trust Period, but only with the consent of the Trustee, declare by deed that the trust powers and provisions of this deed shall take effect in accordance with the law of the territory specified in the deed (with the necessary modifications specified in that deed) from the date of the declaration. From the date of that declaration, the law of that other territory shall apply to this deed and the courts in that other territory shall administer the Trust, subject to the powers conferred by this clause 24 and until further declaration is made under this deed. This power shall not be exercisable in any way that might cause this deed to become illegal, void or voidable under the
law applicable to it, or which might change the beneficial interests under it in any way.
25. IRREVOCABILITY
The trusts declared in this deed are irrevocable.
26. EXCLUSIONS AND LIMITATIONS
Subject to clause 3.3(a), no trust, discretion or power conferred on the Trustee by this deed or by law shall be exercised and no provision of this deed shall operate at any time to cause the Trust Fund (or any part of it) to be paid, lent, applied or transferred to or for the benefit of any member of the Group.
27. ASSIGNMENT AND OTHER DEALINGS
27.1 This deed is personal to the parties and neither party shall assign, transfer, mortgage, charge, subcontract, declare a trust over or deal in any other manner with any of its rights and obligations under this deed.
27.2 No payment shall be made in respect of any benefit or right if:
(a) the person entitled to it has, to the knowledge of the Trustee, purported to assign or charge that payment (or any part of it or any interest in it); or
(b) the Trustee knows of any act or event that would result in the benefit or right (or any part of or interest in it) belonging to that person to become vested in, or charged in favour of, any person(s) other than that person or his legal personal representatives.
27.3 Subject to clause 2 and clause 3, the Trustee shall have full discretion as to the payment or application of any benefit forfeited to, or for the benefit of, the person.
28. NOTICES
28.1 Any notice or other communication given under or in connection with this deed shall be in writing and shall be:
(a) delivered by hand or by pre-paid first-class post or other next working day delivery service at the appropriate address;
For the purposes of this clause 28, the appropriate address means:
(i) in the case of the Company, its registered office; and
(ii) in the case of the Trustee, its registered office,
(b) sent by fax to the fax number notified in writing by the recipient to the sender; or
(c) sent by email to the email address notified in writing by the recipient to the sender.
28.2 Any notice or other communication given under this clause 28 shall be deemed to have been received:
(a) if delivered by hand, on signature of a delivery receipt, or at the time the notice is left at the proper address;
(b) if sent by pre-paid first-class post or other next working day delivery service, at 9.00am on the second Business Day after posting, or at the time recorded by the delivery service;
(c) if send by fax, at 9.00am on the next Business Day after transmission; and
(d) if sent by email, at 9.00am on the next Business Day after sending.
28.3 This clause 28 does not apply to the service of any proceedings or other documents in any legal action or, where applicable, any arbitration or other method of dispute resolution.
29. POWER GIVEN TO COMPANY IS NOT A FIDUCIARY POWER
Each power and discretion given to the Company in this deed (whether acting alone or jointly with any other person) is given to it for its own benefit and not in a fiduciary capacity. The Company may exercise, or refrain from exercising, its powers under this deed at its discretion.
30. CLAIMANTS’ OBLIGATIONS
30.1 Any person entitled to, or claiming, any benefit under the Trust shall produce any evidence and information required by the Trustee or the Company for the purposes of the Trust. Payment of any benefit under the Trust to any person shall be conditional on that person producing any evidence or information that the Trustee or the Company may require.
30.2 The Trustee shall be entitled to deduct from any benefit payable any tax or duty for which the Trustee is liable in respect of the benefit concerned.
30.3 The Trustee shall not be accountable for, or obliged to see to, the application of any payment made under this deed if it is made:
(a) directly to a minor, to his parent or guardian or to the person with whom he resides; or
(b) to any individual or institution who or that is or appears to be responsible for the care of a person to whom the payment may be made under this deed if the Trustee in its absolute discretion considers that the person's incapacity does not warrant their making the payment to him direct.
31. APPLICATION OF STATUTORY AND EQUITABLE RULES
31.1 Sections 31 and 32 of the Trustee Act 1925 apply to interests under this Trust unless expressly excluded.
31.2 Section 11(1) of the Trusts of Land and Appointment of Trustees Act 1996 shall not apply to this Trust. Accordingly, the Trustee may exercise all its powers relating to land without consulting any Beneficiary.
31.3 The equitable rules of apportionment shall not apply to the Trust.
32. COUNTERPARTS
32.1 This deed may be executed in any number of counterparts, each of which when executed and delivered shall constitute a duplicate original, but all the counterparts shall together constitute the one deed.
32.2 Transmission of an executed counterpart of this deed (but for the avoidance of doubt not just a signature page) by (a) fax or (b) e-mail (in PDF, JPEG or other agreed format) shall take effect as delivery of an executed counterpart of this deed. If either method of delivery is adopted, without prejudice to the validity of the agreement thus made, each party shall provide the others with the original of such counterpart as soon as reasonably possible thereafter.
32.3 No counterpart shall be effective until each party has executed and delivered at least one counterpart.
Schedule Additional powers of Trustee
1. Power to promote (alone or with others) and approve, concur in, acquiesce to, or agree to carry into effect (alone or with others) any scheme, proposal or offer for, leading to or as a step in:
(a) the issue or sale of Shares or shares in any member of the Group to any persons; or
(b) the reconstruction or amalgamation with any other company or corporation in whose securities the Trust Fund or any part of it is invested; or
(c) the alteration of the rights attached to any investments or other Property forming part of the Trust Fund, or attached to any Property that has rights affecting any investments or other Property; or
(d) the exchange of any investments or other Property forming part of the Trust Fund for any other investments or other Property.
2. Subject to clause 3, power to grant options to acquire some or all of the assets of the Trust Fund to any Beneficiary. The Trustee shall be entitled to determine the consideration for the grant of any options and the price at which options may be exercised.
3. Subject to clause 3, power to apply the Trust Fund (or any part of it) in paying any stamp duty or stamp duty reserve tax payable on any transfer of (or agreement to transfer) Shares to any Beneficiary.
4. Power to borrow money or otherwise receive credit from any person, corporation or company for any purpose on terms as the Trustee thinks fit, whether on the security of the Trust Fund (or any part of it), on personal security only or without security. The Trustee may provide for the repayment of borrowings or credit, or the payment of any associated costs, out of the Trust Fund.
5. Power to pay any duties or taxes (together with any related interest, penalties or surcharges) for which the Trustee becomes liable to pay and/or account for on behalf of the Trust in any part of the world, even if the liability might not enforceable through the courts of the place where the trusts declared in this deed are administered at that time and to have discretion regarding the time and manner in which any duties or taxes are paid. No person interested in this Trust shall be entitled to make any claim against the Trustee because it pays any tax or duty.
6. If and when directed by the Company (or any other member of the Group), the Trustees shall deduct and withhold from any amount to be paid (or any assets to be transferred) to a Beneficiary any tax and National Insurance contributions for which the Beneficiary is liable (including under contract) in respect of any payment or transfer.
7. Power to arrange for any member of the Group to account to HMRC (or any other authority concerned) for:
(a) any amounts deducted from the sums of money paid or credited to the Trustee by any member of the Group; or
(b) any income tax (or any other deductions required by law) on amounts paid, or Property transferred by, the Trustee to Beneficiaries under clause 3 or clause 6.
8. Power to delegate all or any of the administrative, management functions and powers (including investment powers) vested in it (either under this deed or due to its office as Trustee) to any other person(s) and to pay the person(s) for their services. However, this paragraph 8 does not entitle the Trustee to delegate the exercise of discretionary or powers in relation to the Trust Fund that require or empower the determination of beneficial interests in the Trust.
9. Power to effect any transaction not authorised by this deed concerning or affecting any part of the Trust Fund, if the Trustee thinks the transaction is for the benefit of the Trust Fund or the Beneficiaries, as if the Trustee were the sole absolute beneficial owner of the Trust Fund. For the purposes of this paragraph 9, transaction includes:
(a) any option, sale, exchange, assurance, grant, lease, surrender, reconveyance, release, reservation, subordination or other disposition;
(b) any assignment, pledge, charge or mortgage or other security provision;
(c) any purchase or other acquisition;
(d) any covenant, guarantee, contract, licence or right of pre-emption; and
(e) any compromise, waiver, release, forbearance, partition or other dealing or arrangement, and effect has the meaning appropriate to the particular transaction.
10. Power to instruct, and act on the advice or opinion of, any lawyer, actuary, accountant, investment adviser, broker or other professional person and, instead of acting personally, appoint or employ agents and advisers to transact any business and to do all acts to be done by the Trustee under this deed (including without limitation the day-to-day management of any investments and the payment of any benefits). The Trustee shall determine the remuneration of any agents or advisers, and may meet the fees incurred by such persons out of the Trust Fund (or if the net assets of the Trust Fund are insufficient then the Company shall meet such costs, charges and expenses pursuant to clauses 15.1 and 19.3). The Trustee shall not be liable for the default of any agent or adviser appointed or employed in good faith, or for any loss arising from the appointer acting in accordance with the advice. However, this paragraph 10 shall not entitle the Trustee to delegate the exercise of discretionary trusts and powers in relation to the Trust Fund that require or empower the determination of beneficial interests in the Trust.
11. Power to cause any Property included in the Trust Fund to be registered in the name or names of any other persons or corporations on behalf of the Trustee from time to time, and to pay any connected expenses out of the Trust Fund. The Trustee shall not be liable for any loss to the Trust Fund caused by the exercise of this power.
12. Power to have any assets valued at any time and for any purpose, in the manner the Trustee thinks fit.
This document has been executed as a deed and is delivered and takes effect on the date stated at the beginning of it.
| | | | | |
Executed as a deed by INDIVIOR PLC acting by two directors or one director and the company secretary | /s/ |
| Director |
/s/ |
| Secretary |
| |
Executed as a deed by SANNE FIDUCIARY SERVICES LIMITED acting by two authorised signatories | /s/ |
| Authorised signatory |
/s/ |
| Authorised signatory |
RULES OF THE
INDIVIOR UK
SAVINGS RELATED SHARE OPTION PLAN
Adopted November 2014
Amended by the Remuneration Committee of the Board on May 16, 2017
SLAUGHTER AND MAY
One Bunhill Row
London EC1Y 8YY
Ref: RXD
524158273
Table of Contents
| | | | | |
| Contents | Page |
1 Definitions and interpretation | 1 |
2 Invitations to apply for Options | 4 |
3 Scaling down | 5 |
4 Grant of Options | 6 |
5 Plan limits | 6 |
6 Rights of Exercise and Lapse of Options | 7 |
7 Exercise of Options | 9 |
8 Takeovers and Liquidation | 10 |
9 Exchange of Options on a Takeover | 11 |
10 Variation of Share Capital | 12 |
11 Administration | 13 |
12 Amendments | 13 |
13 General | 14 |
1 Definitions and interpretation
1.1 In this Plan, the following words and expressions shall, where the context so permits, have the following meanings:
“Act” means the Income Tax (Earnings and Pensions) Act 2003;
“Associated Company” has the meaning given by paragraph 47 (1) of Schedule 3 to the Act except in relation to Rule 6 where it will have the meaning given by paragraph 35 (4) of Schedule 3;
“Auditors” means the auditors for the time being of the Company;
“Bonus” means any sum payable by way of terminal bonus under a Savings Contract being the additional payment made by the nominated Savings Authority when repaying contributions under a Savings Contract and:
(a) “Three Year Bonus” shall mean the Bonus payable under a Three Year Savings Contract; and
(b) “Five Year Bonus” shall mean the Bonus payable under a Five Year Savings Contract.
“Bonus Date” means the earliest date on which the relevant Bonus is payable;
“Company” means Indivior PLC registered in England and Wales under no.9237894, which for the purposes of the Rules may act through the Directors, or any employee or employees of it authorised to act;
“Control” has the meaning given by section 995 of the Income Tax Act 2007 except for the purposes of Rule 6.4.5 where it will have the meaning given by sections 450 and 451 of the Corporation Tax Act 2010;
“Date of Grant” means the date on which an Option is granted;
“Dealing Day” means a day on which the London Stock Exchange is open for business;
“Dealing Restrictions” means restrictions imposed by the Company’s Dealing Code, the listing rules of the UK Listing Authority, the Market Abuse Regulation or any applicable laws or regulations which impose restrictions on share dealing;
“Directors” means the board of directors from time to time of the Company or a duly authorised committee of it;
“Eligible Employee” means:
(a) any person who is an employee or Full-Time Director of any Participating Company who:
(i) has such qualifying period (if any) of continuous service (being a period commencing not earlier than five years prior to the Date of Grant) as the Directors may in their absolute discretion and from time to time determine; and
(ii) receives earnings in respect of his office or employment which are general earnings to which section 15 of the Act applies (or would apply if there were any);
(b) any other director or employee of any Participating Company whom the Directors may in their absolute discretion and from time to time select.
“Equity Share Capital” has the meaning given to it by Section 548 of the Companies Act 2006;
“Exercise Price” means the price at which each Share the subject of an Option may be acquired on the exercise of that Option, being (subject to Rule 10) not less than:
(a) eighty per cent (80%) of the Market Value of a Share (or such other percentage as shall from time to time be specified in paragraph 28 (1)(b) of Schedule 3); or
(b) if greater, and Shares are to be acquired by subscription, the nominal value of a Share;
“Full-Time Director” means an employee who is a director of any Participating Company and normally devotes not less than 25 hours per week (excluding meal breaks and normal holiday entitlement or such other number of hours as may be required by HMRC for the purposes of paragraph 6 of Schedule 3) to his duties;
“Grant Period” means the period during which the Directors may invite Eligible Employees to apply for Options as specified in Rule 2.1;
“Group” means the Company and all its Subsidiaries;
“Group Company” means any company in the Group;
“HMRC” means H. M. Revenue & Customs;
“London Stock Exchange” means The London Stock Exchange plc;
“Market Abuse Regulation” means Regulation (EU) No. 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse;
“Market Value” means the lowest of the following:
(a) the market value of a Share on the date on which the invitation is made in accordance with Rule 2 (the “relevant date”);
(b) the average of the market values of a Share for the three Dealing Days immediately preceding the relevant date;
(c) the average of the market values of a Share for the five Dealing Days immediately preceding the relevant date,
with the market value of a Share being determined in accordance with Part VIII of the Taxation of Chargeable Gains Act 1992 and for these purposes the Market Value of a Share subject to a restriction is to be determined as if it was not subject to a restriction;
“Maximum Contribution” means the maximum aggregate Monthly Contribution which an Optionholder may make under all Savings Contracts linked to options granted to him under the Plan or any other savings-related share option plan approved by HMRC under Part 8 of Schedule 3, being the lesser of:
(a) £500 per month or, if higher, the maximum amount specified in paragraph 25(3) of Schedule 3 from time to time; and
(b) such other maximum Monthly Contribution as may be determined from time to time by the Directors which need not be the same in relation to all Eligible
Employees provided that it does not infringe the requirements of paragraph 7 of Schedule 3 (participation on similar terms);
“Monthly Contribution” means the monthly contribution agreed to be paid by an Optionholder under the relevant Savings Contract;
“Non-UK Company Reorganisation Arrangement” has the meaning given by paragraph 47A of Schedule 3;
“Option” means a right granted or to be granted to acquire Shares pursuant to the Rules;
“Optionholder” means any person (including where the context permits the personal representatives of such a person) who holds an Option;
“Participating Company” means any Group Company which the Company has determined shall be a participating company for the purposes of the Plan;
“Plan” means this plan, being the Indivior UK Savings Related Share Option Plan constituted by the Rules as from time to time amended;
“Repayment” means in relation to a Savings Contract, the aggregate of the Monthly Contributions which the Participant has made and, subject to Rules 2.2.5 and 3.1.1, any Bonus due at the Bonus Date;
“Rules” means these rules together with any amendment effected in accordance with Rule 12;
“Savings Authority” means the building society or bank recognised by the Directors from time to time for the purpose of receiving Monthly Contributions under Savings Contracts;
“Savings Contract” means a savings contract under a certified SAYE savings arrangement (within the meaning of paragraph 48(1) of Schedule 3) and “Three Year Savings Contract” and “Five Year Savings Contract” shall be construed accordingly;
“Schedule 3” means Schedule 3 to the Act;
“Share” means a fully paid ordinary share in the capital of the Company which satisfies the requirements of paragraphs 18 to 22 of Schedule 3 at both the Date of Grant and date of exercise of an Option;
“Subsidiary” means a company which is a subsidiary of the Company within the meaning of section 1159 of the Companies Act 2006;
“TUPE Regulations” means the Transfer of Undertakings (Protection of Employment) Regulations 2006; and
“UK Listing Authority” The Financial Conduct Authority in its capacity as the competent authority for the purposes of the Financial Services and Markets Act 2000.
1.2 References to any statutory provision are to that provision as amended or re-enacted from time to time (and any regulations made under it), and, unless the context otherwise requires, words in the singular shall include the plural and vice versa and words importing the masculine shall include the feminine and vice versa.
1.3 The purpose of the Plan is to provide in accordance with Schedule 3 benefits to Eligible Employees in the form of share options. The Plan may not provide benefits to employees or directors other than in accordance with Schedule 3.
2 Invitations to apply for Options
2.1 The Directors may, in their absolute discretion, decide whether or not to operate the Plan. If they do so decide, subject to Rule 2.8 they will invite all Eligible Employees to apply for the grant of Options at any time during the period of 30 days (or 42 days in the event that applications are scaled down under Rule 3) after any of the following:
2.1.1 the announcement by the Company of its results for any period or the issue by the Company of any prospectus, listing particulars or other document containing equivalent information relating to Shares; or
2.1.2 a day on which an announcement is made of a new prospectus for certified SAYE savings arrangements (within the meaning of section 703(1) of the Income Tax (Trading and Other Income) Act 2005) for the purposes of Schedule 3; or
2.1.3 a day on which an announcement is made of amendments to be made to the Act (so far as those changes affect savings – related share option plans approved by HMRC) or a day on which any such amendments come into force; or
2.1.4 any general meeting of the Company’s shareholders; or
2.1.5 any day on which they resolve that exceptional circumstances exist which justify the grant of Options.
2.2 Such invitations shall be made in writing to all Eligible Employees and shall include details of the following matters which shall be determined by the Directors:
2.2.1 the Exercise Price or the means by which it will be notified to Eligible Employees;
2.2.2 the latest date by which applications must be received, being neither earlier than 14 days nor later than 28 days after the date of the invitations;
2.2.3 the Maximum Contribution;
2.2.4 whether the applicable Savings Contract(s) being offered are:
(i) a Three Year Savings Contract; or
(ii) a Five Year Savings Contract; or
(iii) either a Three Year Savings Contract or a Five Year Savings Contract, as the applicant shall select; or
(iv) a combination of a Three Year Savings Contract and a Five Year Saving Contract (subject always to the Maximum Contribution); and
2.2.5 whether, for the purpose of determining the number of Shares over which an Option is to be granted, the Repayment under the Savings Contract is to be taken as including any Bonus or not.
2.3 Each invitation shall be accompanied by:
2.3.1 a proposal form for a Savings Contract; and
2.3.2 an application form.
2.4 An application form shall be in such form as the Directors may from time to time prescribe save that it must provide for the applicant to state:
2.4.1 the Monthly Contribution (being a multiple of £1 and not less than £10) which he wishes to make under the related Savings Contract; and
2.4.2 that his proposed Monthly Contribution (when taken together with any Monthly Contribution he makes under any other Savings Contract linked to an option granted to him under the Plan or any other savings-related share option plan which satisfies the requirements of Schedule 3) will not exceed the Maximum Contribution; and
2.4.3 if the Directors have determined that an applicant may select either a Three Year Savings Contract and/or a Five Year Savings Contract, his selection in that respect.
2.5 Each application shall provide that, in the event of scaling down in accordance with Rule 3, the Directors are authorised by the applicant to modify his application to reflect such scaling down.
2.6 Subject to Rule 2.7 and Rule 3, each application shall be deemed to be for an Option over such number of whole Shares as can be acquired at the Exercise Price with the expected Repayment under the related Savings Contract at the appropriate Bonus Date.
2.7 If an application for a Savings Contract specifies a Monthly Contribution which, when added to any other Monthly Contributions already being made or proposed to be made by the Eligible Employee, exceeds the Maximum Contribution, that application may be modified by the Company down to the maximum possible amount.
2.8 Invitations to apply for Options must not be issued at any time if it would be unlawful, or in breach of Dealing Restrictions.
3 Scaling down
3.1 To the extent that valid applications are received in excess of any maximum number of Shares which may be determined by the Directors or the limit in Rule 5, the Directors shall scale down applications in the same manner in order to eliminate the excess by:
3.1.1 excluding the Bonuses under the relevant Savings Contracts; and/or
3.1.2 reducing pro-rata the proposed Monthly Contributions in excess of £10; and/or
3.1.3 deeming each application for a Savings Contract with a Five Year Bonus to be an application for a Savings Contract with a Three Year Bonus; and/or
3.1.4 so far as necessary, selecting by lot.
3.2 Where applications are scaled down in accordance with Rule 3.1 all relevant applications shall be deemed to have been amended or withdrawn, as the case may be.
3.3 If the number of Shares is insufficient to enable an Option based on a £10 per month contribution to be granted to each Eligible Employee who has made a valid application, the Company may, as an alternative to selecting by lot, determine in its absolute discretion that no Options will be granted.
4 Grant of Options
4.1 No Option shall be granted after whichever is the earlier of:
4.1.1 30 days (or 42 days, or such longer period as may be agreed with HMRC, in the event that applications are scaled down under Rule 3) after the day(s) by reference to which the Exercise Price was fixed; and
4.1.2 the last day of the applicable Grant Period.
4.2 No Option shall be granted to a person unless at the Date of Grant he is an Eligible Employee. No payment will be required for the grant of an Option.
4.3 As soon as is practicable after having granted an Option to an Eligible Employee the Company shall issue to him, or procure the issue to him of, an option certificate. The option certificate shall be in such form determined by the Directors from time to time and shall state:
4.3.1 the Date of Grant of the Option;
4.3.2 the number of Shares over which the Option is granted;
4.3.3 the Exercise Price payable for each Share subject to the Option; and
4.3.4 if the Shares are subject to any restriction, details of the restriction.
4.4 Subject to the right of an Optionholder’s personal representatives to exercise an Option as provided in Rule 6.4, every Option shall be personal to the Eligible Employee to whom it is granted and any purported assignment, transfer, charge, disposal or dealing with the rights or interests of the Optionholder under the Plan shall render the Option void.
4.5 Options must not be granted at any time when that grant is prohibited by or in breach of any Dealing Restrictions.
5 Plan limits
5.1 On or before the date upon which invitations are issued on any occasion the Board may determine a limit on the number of Shares over which applications for Options will be accepted on that occasion.
5.2 The nominal amount of Shares over which the Board may grant Options on any date shall be limited so that it does not exceed the limit set out in Rule 5.3. This limitation only applies to Options which are to be satisfied (directly or indirectly) by the issue of new Shares or the transfer of treasury Shares.
5.3 The limit is 10 per cent of the nominal amount of the Company’s Equity Share Capital on the day preceding the Date of Grant, less the total nominal amount of:
5.3.1 Shares allocated in respect of awards granted within the previous 10 years under any employee share scheme, and
5.3.2 Shares remaining to be allocated in respect of awards granted on the same date or within the previous 10 years under any employee share scheme, and
5.3.3 Shares allocated on the same date or within the previous 10 years under any employee share scheme otherwise than in respect of an award.
5.4 Where an individual is granted two options on terms that the exercise of one will automatically result in a reduction to the extent to which the other may be exercised and vice versa, then for the purposes of this Rule 5 it shall only be necessary to take into account that number of Shares which could be acquired in respect of those options having regards to those terms.
5.5 For the purposes of Rule 5:
5.5.1 “allocate” means the issue of new Shares or the transfer of treasury Shares in satisfaction (directly or indirectly) of a person’s rights under an award;
5.5.2 an “award” means any right to acquire or receive Shares whether conditional or unconditional;
5.5.3 an “employee share scheme” means any scheme for employees of the Group which has been approved by the Company in general meeting;
5.5.4 “treasury Shares” has the same meaning as in Chapter 6 of the Companies Act 2006;
5.5.5 no account will be taken of Shares acquired by an employee or former employee (or the personal representatives of such a person) where the Shares are acquired for a price equal to their market value at or about the date of acquisition and the cost of those Shares is borne by (or by the estate of) the employee or former employee;
5.5.6 subject to Rule 5.5.7, no account will be taken of an award if and to the extent to which the Board considers that it will be satisfied by the transfer of existing Shares other than treasury Shares;
5.5.7 any Shares allocated or remaining to be allocated to the trustee of any trust which were used or which are to be used to satisfy awards granted under an employee share scheme must be treated as having been allocated or as remaining to be allocated in respect of those awards unless the Shares were acquired by the trustee pursuant to a rights issue or other opportunity offered to the trustee in respect of Shares other than Shares previously allocated to it; and
5.5.8 where an award was granted in consideration of the release by the holder of an award previously granted to him under an employee share scheme, then the earlier award shall be ignored and the later award shall be deemed to have been granted at the same time as the earlier award.
5.6 No Option shall be granted under this Scheme after 30 November, 2024.
6 Rights of Exercise and Lapse of Options
6.1 Save as provided in Rules 6.3 (death), 6.4 (good leavers) and 8 (takeovers etc), an Option may be exercised only during the period commencing with the Bonus Date under the related Savings Contract.
6.2 Save as provided in Rules 6.3 and 6.4, an Option may only be exercised by an Optionholder while he is a director or employee of a Participating Company.
6.3 An Option may be exercised by the personal representatives of a deceased Optionholder:
6.3.1 during the period of one year following the date of the Optionholder’s death if such death occurs before the Bonus Date; or
6.3.2 during the period of one year following the Bonus Date if the Optionholder’s death occurs on or within the period of six months of the Bonus Date.
6.4 Subject to Rule 6.5, if an Optionholder ceases to hold any office or employment with a Participating Company on account of:
6.4.1 Injury or disability (evidenced to the satisfaction of the Company); or
6.4.2 redundancy (within the meaning of the Employment Rights Act 1996); or
6.4.3 retirement; or
6.4.4 the transfer of the undertaking or part-undertaking in which the Optionholder is employed to a person other than a Group Company where such transfer is a relevant transfer within the meaning of the TUPE Regulations; or
6.4.5 the Associated Company by which the Optionholder is employed ceasing to be under the Control of the Company; or
6.4.6 in respect of Options granted before 16 May 2017, provided more than three years have elapsed since the relevant Date of Grant pregnancy, and for the purposes of the Plan, a woman who leaves employment due to pregnancy or confinement will be regarded as having left such employment on the earlier of the date she notifies the relevant Participating Company of her intention not to return or the date on which she ceases to have a statutory or contractual right to return to work;
6.4.7 in respect of Options granted on or after 16 May 2017, ceasing to hold employment with a Participating Company provided more than three years have elapsed since the relevant Date of Grant and cessation is not by reason of dismissal for misconduct; or
6.4.8 in respect of Options granted on or after 16 May 2017, the transfer or sale of the undertaking or part-undertaking in which the Optionholder is employed to a person who is not an Associated Company of the Company where the transfer is not a relevant transfer within the meaning of the TUPE Regulations,
the Option may be exercised within the period of six months following such cessation.
6.5 An Optionholder shall not be treated as having ceased to hold any office or employment with a Participating Company for the purposes of this Rule 6 until that person ceases to hold any office or employment with the Company or any company which is an Associated Company.
6.6 An Option shall lapse on the occurrence of the earliest of the following:
6.6.1 subject to Rule 6.6.2 below, the expiry of the period of six months after the Bonus Date;
6.6.2 where the Optionholder has died, the expiry of the period during which the Option may be exercised in accordance with Rule 6.3;
6.6.3 the expiry of any of the applicable periods specified in Rules 6.3 (exercise by personal representatives) and 6.4 (good leavers) but if an Optionholder dies
while time is running under Rule 6.4, the Option shall not lapse until the expiry of the relevant period in Rule 6.3;
6.6.4 subject to Rule 9 (exchange of options on a takeover), the expiry of any of the applicable periods in Rules 8.1, 8.2, 8.3 and 8.4 (takeovers etc);
6.6.5 subject to Rule 6.5 (determining cessation of office or employment etc), the date on which an Optionholder ceases to be a director or employee of a Participating Company for any reason other than his death or those specified in Rule 6.4 (good leavers);
6.6.6 the date on which a resolution is passed, or an order is made by the Court, for the compulsory winding up of the Company;
6.6.7 the date on which the Optionholder becomes bankrupt or does or omits to do anything as a result of which he is deprived of the legal or beneficial ownership of the Option; and
6.6.8 where, before an Option has become capable of being exercised, the date on which the Optionholder:
(i) gives notice that he intends to stop paying Monthly Contributions;
(ii) is deemed under the terms of the Savings Contract to have given such notice; or
(iii) makes an application for the repayment of Monthly Contributions.
7 Exercise of Options
7.1 An Option may only be exercised with monies not exceeding the amount of Repayment made under the related Savings Contract. For this purpose, Repayment under the Savings Contract shall exclude the repayment of any Monthly Contribution the due date for payment of which falls more than one month after the date on which Repayment is made.
7.2 Save as otherwise provided in the Rules, an Option shall be exercisable in whole or in part but only on one occasion, by notice in writing (in the form prescribed by the Directors) given by the Optionholder (or his personal representatives) to the Company (or to a duly authorised agent of the Company). The notice of exercise of the Option shall be accompanied by the relevant option certificate and a remittance in cleared funds for the aggregate Exercise Price payable.
7.3 As soon as reasonably practicable (and not later than 30 days) after the Option exercise the Directors shall allot or procure the transfer of the Shares to the Optionholder (or his nominee) in respect of which the Option has been validly exercised.
7.4 The exercise of an Option and the issue or transfer of Shares under the Plan will be subject to complying with the requirements of or obtaining any approval or consent required by the UK Listing Authority (or other relevant authority), any Dealing Restrictions or any other applicable laws or regulations (whether in the UK or overseas).
7.5 Shares allotted under the Plan shall rank pari passu in all respects with the Shares of the same class for the time being in issue save as regards any rights attaching to such Shares by reference to a record date prior to the date of allotment and, in the case of a
transfer of existing Shares, the transferee shall not acquire any rights attaching to such Shares by reference to a record date prior to the date of such transfer.
7.6 If and so long as the Shares are listed on the London Stock Exchange, the Company shall apply to the London Stock Exchange for the Shares allotted pursuant to the Plan to be admitted to the Official List of the UK Listing Authority.
8 Takeovers and Liquidation
8.1 Subject to Rule 8.5, if any person (either alone or together with any person acting in concert with him) obtains Control of the Company as a result of making:
8.1.1 a general offer to acquire the whole of the issued ordinary share capital of the Company (or such part as is not already owned by the offeror or any person acting in concert with the offeror) which is made on a condition such that if it is satisfied the person making the offer together with persons acting in concert with him, will have Control of the Company; or
8.1.2 a general offer to acquire all the shares in the Company (other than shares which are already owned by the offeror or any person acting in concert with the offeror) which are of the same class as the Shares,
any Option may be exercised immediately before and conditionally upon such change of Control or within six months thereafter.
8.2 Subject to Rule 8.5,
8.2.1 if under section 899 of the Companies Act 2006, the Court sanctions a compromise or arrangement applicable to or affecting:
(a) all the ordinary share capital of the Company or all the Shares of the same class as the Shares to which the Option relates; or
(b) all the Shares or all the Shares of that same class, which are held by a class of shareholders identified otherwise than by reference to their employment or directorships or their participation in an approved SAYE Option Scheme,
then any Option may be exercised within 6 months of the Court sanctioning such compromise or arrangement.
8.2.2 if a Non-UK Company Reorganisation Arrangement becomes binding on shareholders is applicable to or affecting:
(a) all the ordinary share capital of the Company or all of the shares as are of the same class as the Shares to which the Options relate; or
(b) all the shares, or all of the shares of that same class, which are held by a class of shareholders identified otherwise than by reference to their employment or directorships or their participation in a plan that meets the requirements of Schedule 3,
then any Option may be exercised within 6 months thereafter.
8.3 Subject to Rule 8.5, if any person becomes bound or entitled to acquire Shares under Chapter 3 of Part 28 of the Companies Act 2006, any unexercised Option may be exercised at any time when that person remains so bound or entitled.
8.4 Subject to Rule 8.5, if the Company passes a resolution for the voluntary winding up of the Company, any outstanding Option may be exercised within 60 days of the passing of the resolution after which, to the extent not exercised, it will lapse.
8.5 If:
8.5.1 the events referred to in rule 8.1, 8.2, 8.3 or 8.4 are part of an arrangement which will mean that the Company will be under the Control of another company; and
8.5.2 the persons who owned Shares in the Company immediately before the change of Control will immediately afterwards own at least 75% of the shares in that other company; and
8.5.3 Optionholders are to be offered substitute options under Rule 9,
then Options which are not exercisable otherwise than as a consequence of those Rules may not be exercised.
8.6 The Board may in its discretion allow Options to be exercised, in circumstances where Shares no longer meet the requirements of Schedule 3 due to events where Rules 8.1 to 8.4 apply, during the period of 20 days ending on:
8.6.1 where Rule 8.1, 8.2 and 8.4 apply, the date of the relevant event; and
8.6.2 where Rules 8.3 applies the date on which the person becomes bound; or entitled to acquire Shares.
8.7 Notwithstanding that as a result of an event referred to in rules 8.1 to 8.4 Shares in the Company cease to satisfy the requirements of paragraph 18 to 22 of Schedule 3, any Shares acquired from the exercise of an Option granted under the Plan within a period of 20 days from the relevant event will be treated as Shares for the purposes of the Plan.
9 Exchange of Options on a Takeover
9.1 Notwithstanding the provisions of Rule 8, if any company (the “Acquiring Company") obtains Control of the Company or becomes bound or entitled to acquire shares in the Company within any of the sets of circumstances specified in Rules 8.1, 8.2 and 8.3, any Optionholder may at any time within the periods specified in those Rules, by agreement with the Acquiring Company, release his Option (the “Old Option”) in consideration of the grant to him of a new option (the “New Option”) which is equivalent to the Old Option (by virtue of satisfying the requirements of paragraph 39 of Schedule 3 but relates to shares in a different company (whether the Acquiring Company itself or some other company falling within paragraph (b) or (c) of paragraph 18 of Schedule 3).
9.2 Where the “New Options” are granted pursuant to Rule 9.1 they shall be regarded for the purposes of the subsequent application of the provisions of the Plan as having been granted at the time when the corresponding Old Options were granted and, with effect from the date on which the New Options are granted:
9.2.1 save for the definitions of “Participating Company” and “Group Company” in Rule 1, references to the “Company” (including the definition in Rule 1 shall be construed as being references to the Acquiring Company or such other company to whose shares the New Option relates;
9.2.2 references to “Shares” (including the definition in Rule 1) shall be construed as being references to shares in the Acquiring Company or shares in such other company to which the New Options relate but references to Participating Company shall continue to be construed as if references to the Company were references to Indivior PLC;
9.2.3 the Savings Contract made in connection with the Old Option has been made in connection with the New Option; the Bonus Date in relation to the New Option was the same as in relation to the Old Option; and
9.2.4 notwithstanding the above, Indivior PLC shall remain the scheme organiser of the Plan (as defined in paragraph 2(2) of Schedule 3).
10 Variation of Share Capital
10.1 In the event of any capitalisation (other than a scrip issue), rights issue, consolidation, subdivision, reduction or other variation of the share capital of the Company:
10.1.1 the number of Shares comprised in an Option;
10.1.2 their Exercise Price;
10.1.3 where an Option has been exercised but no Shares have been allotted or transferred in satisfaction of such exercise, the number of Shares to be so allotted or transferred and their Exercise Price;
may be varied in such manner as the Directors shall determine provided that:
(i) the variation or variations made under this Rule 10 must (in particular) secure:
(a) that the total market value of the Shares which may be acquired by the exercise of the Option is immediately after the variation or variations substantially the same as what it was immediately before the variation or variations; and
(b) that the total price at which those Shares may be acquired is immediately after the variation or variations substantially the same as what it was immediately before the variation or variations; and
(ii) except as provided in Rules 10.2 and 10.3, no variation shall be made which would result in the Exercise Price for an allotted Share being less than its nominal value.
10.2 Any adjustment made to the Exercise Price of unissued Shares which would have the effect of reducing the Exercise Price to less than the nominal value of the Shares shall only be made if and to the extent that the Directors are authorised to capitalise from the reserves of the Company a sum equal to the amount by which the nominal value of the Shares in respect of which the Option is exercisable exceeds the adjusted Exercise Price. The Directors may apply such sum in paying up such amount on such Shares so that on the exercise of any Option in respect of which such a reduction shall have been made, the Directors shall capitalise such sum (if any) and apply the same in paying up such amount as aforesaid.
10.3 Where an Option subsists over both issued and unissued Shares, an adjustment may be only be made under Rule 10.2 if the reduction of the Exercise Price in relation to Options over both issued and unissued Shares can be made to the same extent.
10.4 The Directors may take such steps as they consider necessary to notify Optionholders of any adjustment made under this Rule 10 and to call in, cancel, endorse, issue or re-issue any option certificate consequent upon such adjustment.
11 Administration
11.1 The Directors shall have power from time to time to make and vary such regulations (not being inconsistent with this Plan) for the implementation and administration of this Plan as they think fit.
11.2 The decision of the Directors shall be final and binding in all matters relating to this Plan (other than in the case of matters to be determined or confirmed by the auditors for the time being of the Company in accordance with this Plan).
11.3 The costs of establishing and administering this Plan shall be borne by the Company. However, the Company may require any Participating Company to enter into such arrangement with it as it shall deem necessary for each Participating Company to bear the costs borne by the Company directly or indirectly in respect of such participating Company’s employees.
11.4 The Company may, but shall not be obliged to, provide Eligible Employees or Optionholders with copies of any notices circulars or other documents sent to shareholders of the Company.
12 Amendments
12.1 Subject to Rules 12.2 and 12.3 the Rules may be amended in any respect by the Directors.
12.2 If and for so long as the Shares are admitted to the “Official List” of the London Stock Exchange no amendment to the advantage of Optionholders or Eligible Employees (except for an amendment which could be included in an additional section adopted under this Rule 12) can be made to the provisions in the Rules (if any) relating to:
12.2.1 who can be an Optionholder or Eligible Employee;
12.2.2 the number of Shares which can be allocated under the Plan; and
12.2.3 the basis for determining an Optionholder’s entitlement to and the terms of the Shares and any adjustment in the event of a variation in the share capital of the Company as described in Rule 10.
without the approval by ordinary resolution of the Company in general meeting, except for minor amendments to benefit the administration of the Plan, to take account of a change in legislation or to obtain or maintain favourable tax, exchange control or regulatory treatment for Optionholders or Eligible Employees or for a member of the Group.
12.3 No amendment will be made under Rule 12.2 which would abrogate or materially affect adversely the existing rights of an Optionholder unless it is made with his written consent or by a resolution passed as if the Options constituted a separate class of share capital and the provisions of the Articles of Association of the Company and of the Companies Act 2006 relating to class meetings (with the necessary amendments) applied to that class.
12.4 Written notice of any amendment to the Plan shall be given to all Optionholders affected thereby.
12.5 The Company can adopt additional sections of the Rules, applicable in any jurisdiction, under which Options may be subject to additional and/or modified terms and conditions, having regard to any securities, exchange control or taxation laws, which may apply to the Optionholder, the Company, any Participating Company or Associated Company. Any additional sections must conform to the basic principles of the Plan and must not enlarge to the benefit of Optionholders the limits in the Rules.
13 General
13.1 The Plan will terminate on 30 November, 2024. On termination, no further Options may be granted but such termination shall be without prejudice to any accrued rights in existence at the date thereof.
13.2 The Company will at all times keep available sufficient authorised and unissued Shares, or shall ensure that sufficient Shares will be available, to satisfy the exercise to the full extent still possible of all subsisting Options, taking account of any other obligations of the Company to issue Shares.
13.3 In the event that the Directors decide to grant options over issued Shares then the Company and/or any Participating Company may give or procure financial assistance (whether by way of loan, gift, guarantee to a third party lender or otherwise) to the trustee or trustees for the time being of any employee benefit trust established by any Group Company to facilitate the acquisition by such trustee or trustees of the relevant number of Shares, provided that any such financial assistance shall only be given to the extent permitted by Chapter 2 of Part 18 of the Companies Act 2006.
13.4 Notwithstanding any other provision of this Plan:
13.4.1 this Plan shall not form part of any contract of employment between any Participating Company and any employee of any such company and the rights and obligations of any individual under the terms of his office or employment with any Group Company shall not be affected by his participation in this Plan or any right which he may have to participate in it and this Plan shall afford such an individual no additional rights to compensation or damages in consequence of the termination of such office or employment for any reason whatsoever;
13.4.2 no Optionholder shall be entitled to any compensation or damages for any loss or potential loss which he may suffer by reason of being unable to exercise an Option in consequence of the loss or termination of his office or employment with any Group Company for any reason whatsoever;
13.4.3 Participation in the Plan does not affect the rights of any Eligible Employee (whether beneficially or adversely) under any pension scheme which relates to his employment. In particular (but without limitation), the contributions payable to such a pension scheme by his employer, and the benefits provided to or in respect of any Eligible Employee under the pension scheme, are not to be increased as a result of their participation in the Plan or the benefits received by them under the Plan;
13.4.4 this Plan shall not confer on any person any legal or equitable rights (other than those constituting the Options themselves) against any Group Company directly
or indirectly, or give rise to any cause of action at law or in equity against any Group Company.
13.5 Save as otherwise provided in this Plan any notice or communication to be given to any Eligible Employee or Optionholder may be:
13.5.1 delivered by electronic mail and it shall be deemed to have been received upon electronic confirmation of such delivery; or
13.5.2 personally delivered or sent by ordinary post to his last known address and where a notice or communication is sent by post it shall be deemed to have been received 48 hours after the same was put into the post properly addressed and stamped.
Share certificates and other communications sent by post will be sent at the risk of the Eligible Employee or Optionholder concerned and neither the Company nor any of its Subsidiaries shall have any liability whatsoever to any such person in respect of any notification, document, share certificate or other communication so given, sent or made.
13.6 Any notice to be given to the Company shall be delivered or sent to the Company at its registered office, marked for the attention of the Company Secretary, and shall be effective upon receipt. The Board may make other arrangements to receive notices.
13.7 This Plan and all Options granted under it shall be governed by and construed in accordance with English law.
Indivior PLC
U. S. Employee Stock Purchase Plan
Approved by shareholders of the Company on May 12, 2016
and amended by resolution of the Board of Directors on September 24, 2020
TABLE OF CONTENTS
| | | | | | | | | | | |
| Article I | | Purpose and Effective Date | 1 |
| | | |
| Article II | | Definitions | 1 |
| | | |
| Article III | | Administration | 3 |
| | | |
| Article IV. | | Number of Shares | 4 |
| | | |
| Article V. | | Eligibility Requirements | 4 |
| | | |
| Article VI. | | Enrollment | 5 |
| | | |
| Article VII. | | Grant of Options on Enrollment | 6 |
| | | |
| Article VIII. | | Payroll Deductions | 6 |
| | | |
| Article IX. | | Purchase of Shares | 7 |
| | | |
| Article X. | | Withdrawal From the Plan; Termination of Employment; Leave of Absence; | 8 |
| | | |
| Article XI. | | Miscellaneous | 10 |
ARTICLE I
PURPOSE AND EFFECTIVE DATE
1.1 The purpose of the Indivior PLC U.S. Employee Stock Purchase Plan (the “Plan”) is to provide an opportunity for eligible employees to acquire a proprietary interest in Indivior PLC (the “Company”) through accumulated payroll deductions. It is the intent of the Company to have the Plan qualify as an “employee stock purchase plan” under Section 423 of the Code, including any amendments or replacements of such section. The provisions of the Plan shall be construed to extend and limit participation in a manner consistent with the requirements of Section 423 of the Code.
1.2 The Plan was initially approved by the Remuneration Committee of the Board of Indivior PLC, a company registered in England and Wales, on 19 November 2015 (the “Effective Date”). No option shall be granted under the Plan after the date as of which the Plan is terminated by the Board in accordance with Section 11.7 of the Plan.
1.3 The Plan shall be subject to approval by the shareholders of the Company within twelve months after the Effective Date. Such shareholder approval shall be obtained in the manner and to the degree required under Code Section 423 and other applicable laws. If such shareholder approval is not obtained prior to the first Purchase Date, the Plan shall be null and void and all Participants shall be deemed to have withdrawn all payroll deductions credited to their Accounts on such Purchase Date.
ARTICLE II
DEFINITIONS
2.1 “Account” means a recordkeeping account maintained for a Participant to which payroll deductions are credited in accordance with Article VIII of the Plan.
2.2 “Accumulation Period” means, as to the Company or a Participating Subsidiary, a period of six (6) months commencing with the first regular payroll period commencing on or after each successive January 1 and ending on each successive June 30 and a period of six (6) months commencing with the first regular payroll period commencing on or after each successive July 1 and ending on each successive December 31. The Committee may modify (including increasing or decreasing the length of time covered) or suspend Accumulation Periods at any time and from time to time.
2.3 “Administrator” means the persons or committee appointed under Section 3.1 to administer the Plan.
2.4 “Article” means an Article of this Plan.
2.5 “Base Earnings” means base salary and wages payable by the Company or a Participating Subsidiary to an Eligible Employee, prior to pre-tax deductions for contributions to qualified or non-qualified (under the Code) benefit plans or arrangements, and excluding bonuses, incentives and overtime pay but including commissions.
2.6 “Board” means the Board of Directors of the Company or a duly authorized Committee thereof.
2.7 “Code” means the Internal Revenue Code of 1986, as amended.
2.8 “Company” means Indivior PLC, a company registered in England and Wales.
2.9 “Cut-Off Date” means the date established by the Administrator from time to time by which enrollment forms must be received with respect to an Accumulation Period.
2.10 “Eligible Employee” means an Employee, including an employee on an Authorized Leave of Absence (as defined in Section 10.3), but shall exclude any executive directors unless and until the Plan is approved by ordinary resolution of the Company’s shareholders in General Meeting.
2.11 “Employee” means an individual who performs services for the Company or a Participating Subsidiary pursuant to an employment relationship described in Treasury Regulations Section 1.421-1(h) or any successor provision, or an individual who would be performing such services but for such individual’s Authorized Leave of Absence (as defined in Section 10.3).
2.12 “Enrollment Date” means the first Trading Day of an Accumulation Period beginning on or after January 1, 2016.
2.13 “Exchange Act” means the Securities Exchange Act of 1934.
2.14 “Fair Market Value” means, as of any applicable date:
(a) If the security is listed on any established stock exchange or traded on the London Stock Exchange, the closing price of the security on such exchange (or the mean between the bid and asked prices for the security if the security is so quoted instead) on the date of determination, as reported in The Wall Street Journal or such other source as the Board deems reliable, or if no such reported sale of the security shall have occurred on such date, on the latest preceding date on which there was such a reported sale, in all cases, as reported in The Wall Street Journal or such other source as the Board deems reliable. Unless otherwise provided by the Board, if there is no closing sales price (or closing bid if no sales were reported) for the security on the date of determination, then the Fair Market Value shall be the mean between the bid and asked prices for the security on the last preceding date for which such quotation exists.
(b) In the absence of such markets for the security, the value determined by the Board in good faith in accordance with the requirements of Section 423 of the Code.
2.15 “Participant” means an Eligible Employee who has enrolled in the Plan pursuant to Article VI. A Participant shall remain a Participant until the applicable date set forth in Article X.
2.16 “Participating Subsidiary” means a Subsidiary incorporated under the laws of any state in the United States, a territory of the United States, Puerto Rico, or the District of Columbia, or such foreign Subsidiary approved under Section 3.4, which has adopted the Plan as a Participating Subsidiary by action of its board of directors and which has been designated by the Board in accordance with Section 3.4 as covered by the Plan, subject to the requirements of Section 423 of the Code except as noted in Section 3.4.
2.17 “Plan” means the Indivior PLC U.S. Employee Stock Purchase Plan, as amended from time to time.
2.18 “Purchase Date” means the specific Trading Day during an Accumulation Period on which Shares are purchased under the Plan in accordance with Article IX. For each Accumulation Period, the Purchase Date shall be the last Trading Day occurring in such Accumulation Period. The Administrator may, in its discretion, designate a different Purchase Date with respect to any Accumulation Period.
2.19 “Qualified Military Leave” means an absence due to service in the uniformed services of the United States (as defined in Chapter 43 of Title 38 of the United States Code) by an individual employee of the Company or a Participating Subsidiary, provided the individual’s rights to reemployment under the Uniformed Services Employment and Reemployment Rights Act of 1994 have not expired or terminated.
2.20 “Section” means a section of this Plan, unless indicated otherwise.
2.21 “Securities Act” means the Securities Act of 1933, as amended.
2.22 “Share” means a share, par value, of Indivior PLC
2.23 “Subsidiary” means any corporation in an unbroken chain of corporations beginning with the Company if, as of the applicable Enrollment Date, each of the corporations other than the last corporation in the chain owns stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in the chain.
2.24 “Trading Day” means a day the national exchange on which the Shares are listed for trading or, if not so listed, a day the London Stock Exchange is open for trading.
ARTICLE III
ADMINISTRATION
3.1 Subject to Section 11.7, the Plan shall be administered by the Board, or a duly appointed committee of the Board (“Committee”). The Committee shall consist of at least one Board member, but may additionally consist of individuals who are not members of the Board. The Committee shall serve at the pleasure of the Board. If the Board does not so appoint a Committee, the Board shall administer the Plan. Any references herein to “Administrator” are, except as the context requires otherwise, references to the Board or the Committee, as applicable.
3.2 If appointed under Section 3.1, the Committee may select one of its members as chairman and may appoint a secretary. The Committee shall make such rules and regulations for the conduct of its business as it shall deem advisable; provided, however, that all determinations of the Committee shall be made by a majority of its members.
3.3 The Administrator shall have the power, in addition to the powers set forth elsewhere in the Plan, and subject to and within the limits of the express provisions of the Plan, to construe and interpret the Plan and options granted under it; to establish, amend and revoke rules and regulations for administration of the Plan including determination of beneficiary designation requirements; to determine all questions of policy and expediency that may arise in the administration of the Plan; to allocate and delegate such of its powers as it deems desirable to facilitate the administration and operation of the Plan; and, generally, to exercise such powers and perform such acts as it deems necessary or expedient to promote the best interests of the Company. The Administrator’s determinations as to the interpretation and operation of this Plan shall be final and conclusive.
3.4 The Board may designate from time to time which Subsidiaries of the Company shall be Participating Subsidiaries. Without amending the Plan, the Board may adopt special or different rules for the operation of the Plan which allow employees of any foreign Subsidiary to participate in the purposes of the Plan. In furtherance of such purposes and to the extent not inconsistent with Code Section 423, the Board may approve such modifications, procedures, rules or sub-plans as it deems necessary or desirable, including those deemed necessary or desirable to comply with any foreign laws or to realize tax benefits under foreign law. Any such different or special rules for employees of any foreign Subsidiary who are not U.S. taxpayers shall not be subject to Code Section 423 and for purposes of the Code shall be treated as separate and apart from the balance of the Plan.
3.5 This Article III relating to the administration of the Plan may be amended by the Board from time to time as may be desirable to satisfy any requirements of or under the federal securities and/ or other applicable laws of the United States, or to obtain any exemption under such laws.
ARTICLE IV
NUMBER OF SHARES
4.1 The number of Shares reserved under the Plan is equal to 25,000,000, subject to (a) the additional limit set forth in Section 4.2 and (b) adjustment as described in Section 4.3.
4.2 Subject to the Plan being approved by ordinary resolution of the shareholders of the Company in General Meeting, the nominal amount of Shares that may be authorized for issuance pursuant to the Plan shall be limited so that it does not exceed the limit set out in this Section 4.2. This limitation only applies to the issuance of new Shares or the transfer of Treasury Shares. The number of Shares that may be allocated under the Plan on any day cannot, when added to the aggregate of the number of Shares allocated in the period of 10 years ending at that time under the Plan and any other employees' share plan adopted by the Company, exceed the number of Shares that is equal to 10 per cent. of the ordinary share capital of the Company in issue at that time.
4.3 In the event of any reorganization, recapitalization, stock split, stock dividend, combination of shares, merger, consolidation, acquisition of property or shares, separation, asset spin-off, stock rights offering, liquidation or other similar change in the capital structure of the Company, the Board shall make such adjustment, if any, as it deems appropriate in the number, kind and purchase price of the Shares available for purchase under the Plan in order to prevent the dilution or enlargement of a Participant’s rights under the Plan. In the event that, at a time when options are outstanding hereunder, there occurs a dissolution or liquidation of the Company, except pursuant to a transaction to which Section 424(a) of the Code applies, each option to purchase Shares shall terminate, but the Participant holding such option shall have the right to exercise his or her option prior to such termination of the option upon the dissolution or liquidation. The Company reserves the right to reduce the number of Shares which Employees may purchase pursuant to their enrollment in the Plan.
4.4 No new Shares may be issued, or treasury shares transferred, to a Participant for the purposes of the Plan, unless and until the Plan is approved by ordinary resolution of the Company’s shareholders in general meeting.
4.5 Any new Shares issued pursuant to the Plan must rank equally in all respects with other Shares then in issue except for rights which attach to Shares by reference to a record time or date prior to the time or date of issue.
4.6 The Company must apply to the UK Listing Authority to have any new Shares issued under the Plan admitted to the Official List and to the London Stock Exchange for permission to trade in those Shares. The Company need not do so, however, if the Shares are not traded on the London Stock Exchange. If the Shares are traded on any other stock exchange, the Company must also apply to have the Shares admitted to trading on that exchange.
ARTICLE V
ELIGIBILITY REQUIREMENTS
5.1 Except as provided in Section 5.2, each individual who is an Eligible Employee of the Company or a Participating Subsidiary on the applicable Cut-Off Date shall become eligible to participate in the Plan in accordance with Article VI as of the first Enrollment Date following the date the individual becomes an Employee of the Company or a Participating Subsidiary, provided that the individual remains an Eligible Employee on the first day of the Accumulation Period associated with such Enrollment Date. Participation in the Plan is entirely voluntary.
5.2 Employees meeting any of the following restrictions are not eligible to participate in the Plan:
(a) Employees who, immediately upon enrollment in the Plan or upon grant of an Option would own directly or indirectly, or hold options or rights to acquire, an aggregate of five percent (5%) or more of the total combined voting power or value of all outstanding shares of all classes of stock of the Company or any Subsidiary (and for purposes of this paragraph, the rules of Code Section 424(d) shall apply, and stock which the Employee may purchase under outstanding options shall be treated as stock owned by the Employee);
(b) Employees (other than individuals on Authorized Leave of Absence (as defined in Section 10.3)) who are customarily employed by the Company or a Participating Subsidiary for not more than twenty (20) hours per week; or
(c) Employees (other than individuals on Authorized Leave of Absence (as defined in Section 10.3)) who are customarily employed by the Company or a Participating Subsidiary for not more than five (5) months in any calendar year.
5.3 The Plan is intended to conform to the extent necessary with all provisions of the Securities Act and the Exchange Act and any and all regulations and rules promulgated by the Securities and Exchange Commission thereunder. Notwithstanding anything herein to the contrary, the Plan shall be administered, and the options shall be granted and may be exercised, only in such a manner as to conform to such laws, rules and regulations. To the extent permitted by applicable law, the Plan and the options granted hereunder shall be deemed amended to the extent necessary to conform to such laws, rules and regulations.
ARTICLE VI
ENROLLMENT
6.1 Eligible Employees who meet the requirements of Article V are able to enroll in the Plan on the first day of each Accumulation Period. Any Eligible Employee may consent to enrollment in the Plan for an Accumulation Period by completing and signing an enrollment form (which authorizes payroll deductions during such Accumulation Period in accordance with Section 8.1) and submitting such enrollment form to the Company or the Participating Subsidiary on or before the Cut-Off Date specified by the Administrator. Payroll deductions pursuant to the enrollment form shall be effective as of the first payroll period with a pay day after the Enrollment Date for the Accumulation Period to which the enrollment form relates, and shall continue in effect until the earliest of:
(a) The end of the last payroll period with a payday in the Accumulation Period;
(b) The date during the Accumulation Period as of which the Employee elects to cease his or her enrollment in accordance with Section 8.3; and
(c) The date during the Accumulation Period as of which the Employee withdraws from the Plan or has a termination of employment in accordance with Article X.
ARTICLE VII
GRANT OF OPTIONS ON ENROLLMENT
7.1 The enrollment by an Eligible Employee in the Plan as of an Enrollment Date will constitute the grant as of such Enrollment Date by the Company to such Participant of an option to purchase Shares from the Company pursuant to the Plan.
7.2 An option granted to a Participant pursuant to this Plan shall expire, if not terminated earlier for any reason, on the earliest to occur of: (a) the end of the Purchase Date with respect to the Accumulation Period in which such option was granted; (b) the completion of the purchase of Shares under the option under Article IX; or (c) the date on which participation of such Participant in the Plan terminates for any reason.
7.3 As of each Enrollment Date, except as otherwise provided below, on the Enrollment Date of each Accumulation Period, each Participant in such Accumulation Period shall automatically be granted an option to purchase on each Purchase Date during such Accumulation Period (at the applicable purchase price) up to a maximum number of Shares, subject to the terms of the Plan, equal to the quotient of ten thousand dollars ($10,000) divided by the Fair Market Value of a Share on the Enrollment Date of such Accumulation Period, subject to adjustment under Section 4.2 above. The Administrator may, in its discretion and prior to the Enrollment Date of an Accumulation Period change the maximum number of Shares that may be purchased by a Participant in such Accumulation Period or on any Purchase Date within an Accumulation Period.
7.4 Notwithstanding any other provision of this Plan, no Participant may be granted an option which permits his or her rights to purchase Shares under the Plan and any other Code Section 423 employee stock purchase plan of the Company or any of its Subsidiaries or parent companies to accrue (when the option first becomes exercisable) at a rate which exceeds twenty-five thousand dollars ($25,000) of Fair Market Value of such Shares (determined at the time such option is granted) for each calendar year in which such option is outstanding at any time.
ARTICLE VIII
PAYROLL DEDUCTIONS
8.1 An Employee who files an enrollment form pursuant to Article VI shall elect and authorize in such form to have deductions made from his or her pay on each payday he or she receives a paycheck during the Accumulation Period to which the enrollment form relates, and he or she shall designate in such form the percentage (in whole percentages) of Base Earnings to be deducted each payday during such Accumulation Period. The minimum an Employee may elect and authorize to have deducted is one percent (1%) of his or her Base Earnings paid per pay period in such Accumulation Period, and the maximum is ten percent (10%) of his or her Base Earnings paid per pay period in such Accumulation Period (or such larger or smaller percentage as the Administrator may designate from time to time).
8.2 Except as provided in the last paragraph of Section 6.1, deductions from a Participant’s Base Earnings shall commence upon the first payday on or after the commencement of the Accumulation Period, and shall continue until the date on which such authorization ceases to be effective in accordance with Article VI. The amount of each deduction made for a Participant shall be credited to the Participant’s Account. All payroll deductions received or held by the Company or a Participating Subsidiary may be, but are not required to be, used by the Company or Participating Subsidiary for any corporate purpose, and the Company or Participating Subsidiary shall not be obligated to segregate such payroll deductions, but may do so at the discretion of the Board.
8.3 As of the last day of any month during an Accumulation Period, a Participant may elect to cease (but not to increase or decrease) payroll deductions made on his or her behalf for the remainder of
such Accumulation Period by filing the applicable election with the Company or Participating Subsidiary in such form and manner and at such time as may be permitted by the Administrator. A Participant who has ceased payroll deductions may have the amount which was credited to his or her Account prior to such cessation applied to the purchase of Shares as of the Purchase Date, in accordance with Section 9.1, and receive the balance of the Account with respect to which the enrollment is ceased, if any, in cash. A Participant who has ceased payroll deductions may also voluntarily withdraw from the Plan pursuant to Section 10.1. Any Participant who ceases payroll deductions for an Accumulation Period may re-enroll in the Plan on the next subsequent Enrollment Date following the cessation in accordance with the provisions of Article VI. A Participant who ceases to be employed by the Company or any Participating Subsidiary will cease to be a Participant in accordance with Section 10.2.
8.4 A Participant may not make any separate or additional contributions to his Account under the Plan. Neither the Company nor any Participating Subsidiary shall make separate or additional contributions to any Participant’s Account under the Plan.
ARTICLE IX
PURCHASE OF SHARES
9.1 Subject to Section 9.2, any option held by the Participant which was granted under this Plan and which remains outstanding as of a Purchase Date shall be deemed to have been exercised on such Purchase Date for the purchase of the number of Shares (including partial or fractional Shares) which the funds accumulated in his or her Account as of the Purchase Date will purchase at the applicable purchase price (but not in excess of the number of Shares for which options have been granted to the Participant pursuant to Section 7.3). Any purchase of Shares will be based on the applicable currency in which the Shares are listed and traded on an established stock exchange on the Purchase Date, and any required currency conversion shall be based on the closing day exchange rates as reported in The Wall Street Journal or such other source as the Board deems reliable. No Shares will be purchased on behalf of any Participant who fails to file an enrollment form authorizing payroll deductions for an Accumulation Period.
9.2 A Participant who holds an outstanding option as of a Purchase Date shall not be deemed to have exercised such option if the Participant elected not to exercise the option by withdrawing from the Plan in accordance with Section 10.1.
9.3 Except as otherwise set forth in this Section 9.3, the purchase price for each Share purchased under any option shall be eighty-five percent (85%) of the lower of:
(a) The Fair Market Value of a Share on the Enrollment Date on which such option is granted; or
(b) The Fair Market Value of a Share on the Purchase Date, but, in the case of newly issued Shares, not lower than the par value of a Share.
Notwithstanding the above, the Board may establish a different purchase price for each Share purchased under any option provided that such purchase price is determined at least thirty (30) days prior to the Accumulation Period for which it is applicable and provided that such purchase price may not be less than (i) the purchase price set forth above and (ii)—in the case of newly issued Shares—than the par value per Share.
9.4 If Shares are purchased by a Participant pursuant to Section 9.1, then such Shares shall be held in non-certificated form at a bank or other appropriate institution selected by the Administrator until the earlier of the Participant’s termination of employment or the time a Participant requests delivery of certificates representing such shares, which would only be possible if the Board resolved that share certificates shall be issued. If any law governing corporate or securities matters, or any applicable
regulation of the Securities and Exchange Commission or other body having jurisdiction with respect to such matters, shall require that the Company or the Participant take any action in connection with the Shares being purchased under the option, delivery of such Shares shall be postponed until the necessary action shall have been completed, which action shall be taken by the Company at its own expense, without unreasonable delay. Shares transferred pursuant to this Section 9.4 shall be registered in the name of the Participant or, if the Participant so elects, in the names of the Participant and one or more such other persons as may be designated by the Participant in joint tenancy with rights of survivorship or in tenancy by the entireties or as spousal community property, or in such forms of trust as may be approved by the Administrator, to the extent permitted by law.
9.5 In the case of Participants employed by a Participating Subsidiary, the Board may provide for Shares to be sold through the Subsidiary to such Participants, to the extent consistent with and governed by Section 423 of the Code.
9.6 If the total number of Shares for which an option is exercised on any Purchase Date in accordance with this Article IX, when aggregated with all Shares previously granted under this Plan, exceeds the maximum number of Shares reserved in Section 4.1 (as may be adjusted pursuant to Section 4.2 or Section 4.3), the Administrator shall make a pro rata allocation of the Shares available for delivery and distribution in as nearly a uniform manner as shall be practicable and as it shall determine to be equitable, and the balance of the cash amount credited to the Account of each Participant under the Plan shall be returned to him or her as promptly as administratively practical.
9.7 If a Participant or former Participant sells, transfers, or otherwise makes a disposition of Shares purchased pursuant to an option granted under the Plan within two years after the date such option is granted or within one (1) year after the Purchase Date to which such option relates, or if the Participant or former Participant otherwise has a taxable event relating to Shares purchased under the Plan, and if such Participant or former Participant is subject to U.S. federal income tax, then such Participant or former Participant shall notify the Company or Participating Subsidiary in writing of any such sale, transfer or other disposition within ten (10) days of the consummation of such sale, transfer or other disposition, and shall remit to the Company or Participating Subsidiary or authorize the Company or Participating Subsidiary to withhold from other sources such amount as the Company may determine to be necessary to satisfy any federal, state, or local tax withholding obligations of the Company or Participating Subsidiary. A Participant must reply to a written request, within ten (10) days of the receipt of such written request, from the Company, Participating Subsidiary, or Administrator regarding whether such a sale, transfer or other disposition has occurred.
9.8 The Administrator may from time to time establish rules and procedures (including but not limited to postponing delivery of Shares until the earlier of the expiration of the two (2) year or one (1) year period or the disposition of such Shares by the Participant) to cause the withholding requirements to be satisfied.
ARTICLE X
WITHDRAWAL FROM THE PLAN; TERMINATION OF EMPLOYMENT;
LEAVE OF ABSENCE;
10.1 Withdrawal from the Plan. Effective as of the last day of any calendar quarter during an Accumulation Period, a Participant may withdraw from the Plan in full (but not in part) by delivering a notice of withdrawal to the Company (in a manner prescribed by the Administrator) at least ten (10) business days prior to the end of such calendar quarter (but in no event later than the June 1 or December 1 immediately preceding the Purchase Date for the Plan’s two Accumulation Periods, respectively). Upon such withdrawal from participation in the Plan, all funds then accumulated in the Participant’s Account shall not be used to purchase Shares, but shall instead be distributed to the Participant as soon as administratively practical after the end of such calendar quarter, and the
Participant’s payroll deductions shall cease as of the end of such calendar quarter. An Employee who has withdrawn during an Accumulation Period may not return funds to the Company or a Participating Subsidiary during the same Accumulation Period and require the Company or Participating Subsidiary to apply those funds to the purchase of Shares, nor may such Participant’s payroll deductions continue, in accordance with Article VI. Any Eligible Employee who has withdrawn from the Plan may, however, re-enroll in the Plan on the next subsequent Enrollment Date following withdrawal in accordance with the provisions of Article VI.
10.2 Termination of Employment. Participation in the Plan terminates immediately when a Participant ceases to be employed by the Company or any Participating Subsidiary for any reason whatsoever, including but not limited to termination of employment, whether voluntary or involuntary, or on account of death, disability, or retirement, or if the participating Subsidiary employing the Participant ceases for any reason to be a Participating Subsidiary. Participation in the Plan also terminates immediately when a Participant ceases to be an Eligible Employee under Article V or withdraws from the Plan. Upon termination of participation such terminated Participant’s outstanding options shall thereupon terminate. As soon as administratively practical after termination of participation, the Company shall pay to the Participant or legal representative all amounts accumulated in the Participant’s Account and held by the Company at the time of termination of participation, and any Participating Subsidiary shall pay to the Participant or legal representative all amounts accumulated in the Participant’s Account and held by the Participating Subsidiary at the time of termination of participation.
10.3 Leaves of Absence.
(a) If a Participant takes a leave of absence (other than an Authorized Leave of Absence) without terminating employment, such Participant will be deemed to have discontinued contributions to the Plan in accordance with Section 8.3, but will remain a Participant in the Plan through the balance of the Accumulation Period in which his or her leave of absence begins, so long as such leave of absence does not exceed ninety (90) days. If a Participant takes a leave of absence (other than an Authorized Leave of Absence) without terminating employment, such Participant will be deemed to have withdrawn from the Plan in accordance with Section 10.1 if such leave of absence exceeds ninety (90) days.
(b) An Employee on an Authorized Leave of Absence shall remain a Participant in the Plan and, in the case of a paid Authorized Leave of Absence, shall have deductions made under Section 8.1 from payments that would, but for the Authorized Leave of Absence, be Base Earnings. An Employee who does not return from an Authorized Leave of Absence on the scheduled date (or, in the case of Qualified Military Leave, prior to the date such individual’s reemployment rights under the Uniformed Services Employment and Reemployment Rights Act of 1994 have expired or terminated) shall be deemed to have terminated employment on the last day of such Authorized Leave of Absence (or, in the case of Qualified Military Leave, the date such reemployment rights expire or are terminated).
(c) An “Authorized Leave of Absence” means (a) a Qualified Military Leave, and (b) an Employee’s absence of more than ninety (90) days which has been authorized, either pursuant to a policy of the Company or the Participating Subsidiary that employs the Employee, or pursuant to a written agreement between the employer and the Employee, which policy or written agreement guarantees the Employee’s rights to return to employment.
10.4 Exercise on change in control
Unless a Participant has previously given written notice to the Company as provided in Section 10.1 (Withdrawal from the Plan), he will be deemed in any of the events specified below to have exercised automatically the Option granted to him in respect of any Accumulation Period, on the date of the event in question:
(a) any person obtains Control (as defined below) of the Company as a result of making:
(i) a general offer to acquire the whole of the issued ordinary share capital of the Company which is made on a condition such that if it is satisfied the person making the offer (together with any person acting in concert with him) will have Control of the Company, and such condition is satisfied; or
(ii) a general offer to acquire all the shares in the Company which are of the same class as the Shares over which the Options have been granted.
(b) a person becomes bound or entitled to acquire Shares in the Company under Chapter 3 of Part 28 of the UK Companies Act 2006 (or equivalent legislation);
(c) a court sanctions a compromise or arrangement pursuant to Section 899 of the UK Companies Act 2006 (or equivalent legislation) which is proposed for the purposes of or in connection with a scheme for the reconstruction of the Company or its amalgamation with any other company or companies;
(d) an effective resolution for the voluntary winding-up of the Company is passed.
On such date the accumulated payroll deductions in the Participant’s Account (converted at the exchange rate on the date of exercise) will be used to purchase Shares at the applicable purchase price. In no event may the savings in the Account be used to acquire more than the number of Shares over which Options were granted to the Participant pursuant to Section 7.3.
Any remaining part of the Option will immediately expire.
For purposes of this Section 10.4, “Control” means in relation to a body corporate, the power of a person to secure by means of the holding of shares or the possession of voting power in or in relation to that or any other body corporate, or by virtue of powers conferred by the articles of association, or other document regulating that or any other body corporate, that the affairs of the first mentioned body corporate are conducted in accordance with the wishes of that person.
ARTICLE XI
MISCELLANEOUS
11.1 Interest. Interest or earnings will not be paid or accrued on any Employee Accounts.
11.2 Restrictions on Transfer. The rights of a Participant under the Plan shall not be assignable or transferable by such Participant, and an option granted under the Plan may not be exercised during a Participant’s lifetime other than by the Participant. Any such attempt at assignment, transfer, pledge or other disposition shall be without effect, except that the Company may treat such act as an election to withdraw from the Plan in accordance with Section 10.1.
11.3 Administrative Assistance. If the Administrator in its discretion so elects, it may retain a brokerage firm, bank, other financial institution or other appropriate agent to assist in the purchase of Shares, delivery of reports or other administrative aspects of the Plan. If the Administrator so elects, each Participant shall (unless prohibited by applicable law) be deemed upon enrollment in the Plan to have
authorized the establishment of an account on his or her behalf at such institution. Shares purchased by a Participant under the Plan shall be held in the account in the Participant’s name, or if the Participant so indicates in the enrollment form, in the Participant’s name together with the name of one or more other persons in joint tenancy with right of survivorship or in tenancy by the entireties or as spousal community property, or in such forms of trust as may be approved by the Administrator, to the extent permitted by law.
11.4 Costs. All costs and expenses incurred in administering the Plan shall be paid by the Company or Participating Subsidiaries, including any brokerage fees on the purchased Shares; excepting that any stamp duties, transfer taxes, fees to issue stock certificates, and any brokerage fees on the sale price applicable to participation in the Plan after the initial purchase of the Shares on the Purchase Date shall be charged to the Account or brokerage account of such Participant.
11.5 Equal Rights and Privileges. All Eligible Employees shall have equal rights and privileges with respect to the Plan so that the Plan qualifies as an “employee stock purchase plan” within the meaning of Section 423 or any successor provision of the Code and the related regulations. Notwithstanding the express terms of the Plan, any provision of the Plan which is inconsistent with Section 423 or any successor provision of the Code shall without further act or amendment by the Company or the Board be reformed to comply with the requirements of Code Section 423. This Section 11.5 shall take precedence over all other provisions in the Plan.
11.6 Applicable Law. The Plan shall be governed by the substantive laws (excluding the conflict of laws rules) of the State of Delaware.
11.7 Amendment. The Board may amend or modify the Plan at any time; provided, however, that no amendment which would amend or modify to the advantage of Participants (i) the definition of Eligible Employees entitled to participate in the Plan, (ii) the maximum number of Shares reserved for sale and issuance under the Plan pursuant to Section 4.2, (iii) the number, kind and purchase price of the Shares available for purchase in order to permit the enlargement of a Participant’s rights under the Plan pursuant to Section 4.3, (iv) the maximum Fair Market Value option amount that a Participant may be granted in a calendar year under the Plan pursuant to Section 7.4, , or (v) the requirements of any securities exchange on which the Shares are traded shall be effective unless, it is approved by ordinary resolution of the shareholders of the Company in general meeting. Notwithstanding the above, the Committee may without such approval make minor amendments to benefit the administration of the Plan or to take account of changes in relevant legislation or to obtain or maintain favourable tax, exchange control or regulatory treatment for Participants, the Company or Participating Subsidiaries. No amendment or modification of the Plan requiring stockholder approval under Code Section 423 shall be effective until such approval has been given in accordance with the requirements of Code Section 423.
In addition, the Committee (if appointed under Section 3.1) may amend the Plan as provided in Section 3.3, subject to the conditions set forth therein and in this Section 11.7.
11.8 Termination. The Plan will remain in effect until the first to occur of: (i) its termination by the Board, or (ii) the expiry of ten years from the date of by the Company’s shareholders of the Plan.
11.9 If the Plan is terminated, the Board may elect to terminate all outstanding options either prior to their expiration or upon completion of the purchase of Shares on the next Purchase Date, or may elect to permit options to expire in accordance with the terms of this Plan (and participation to continue through such expiration dates). If the options are terminated prior to expiration, all funds accumulated in Participants’ Accounts as of the date the options are terminated shall be returned to the Participants as soon as administratively feasible.
11.10 No Right of Employment. Neither the grant nor the exercise of any rights to purchase Shares under this Plan nor anything in this Plan shall impose upon the Company or Participating Subsidiary any obligation to employ or continue to employ any employee. The right of the Company or
Participating Subsidiary to terminate any employee shall not be diminished or affected because any rights to purchase Shares have been granted to such employee.
11.11 No Impact on Benefits. Any grant of an option to purchase Shares pursuant to the Plan shall not be considered compensation for purposes of calculating a Participant’s rights under any employee benefit or pension plan that does not specifically require the inclusion of such grant of an option to purchase Shares in calculating benefits.
11.12 Requirements of Law. The Company shall not be required to sell, issue, or deliver any Shares under this Plan if such sale, issuance, or delivery might constitute a violation by the Company or the Participant of any provision of law. Unless a registration statement under the Securities Act is in effect with respect to the Shares proposed to be delivered under the Plan, the Company shall not be required to issue such Shares if, in the opinion of the Company or its counsel, such issuance would violate the Securities Act. Regardless of whether such Shares have been registered under the Securities Act or registered or qualified under the securities laws of any state, the Company may impose restrictions upon the hypothecation or further sale or transfer of such shares if, in the judgment of the Company or its counsel, such restrictions are necessary or desirable to achieve compliance with the provisions of the Securities Act, the securities laws of any state, or any other law or are otherwise in the best interests of the Company. Any determination by the Company or its counsel in connection with any of the foregoing shall be final and binding on all parties.
The Company may, but shall not be obligated to, register or qualify any securities covered by the Plan. The Company shall not be obligated to take any other affirmative action in order to cause the grant or exercise of any right or the issuance, sale, or deliver of Shares pursuant to the exercise of any right to comply with any law.
11.13 Gender. When used herein, masculine terms shall be deemed to include the feminine, except when the context indicates to the contrary.
11.14 Data Protection. The Board, the Committee, and any other person or entity empowered by the Board or the Committee to administer the Plan may process, store, transfer or disclose personal data of the Participants to the extent required for the implementation and administration of the Plan. The Board, the Committee and any other person or entity empowered by the Board or the Committee to administer the Restated Plan shall comply with any applicable data protection laws.
11.15 Withholding of Taxes. The Company or Participating Subsidiary may withhold from any purchase of Shares under this Plan or any sale, transfer or other disposition thereof any local, state, federal or foreign taxes, employment taxes, social taxes or other taxes at such times and from such other amounts as it deems appropriate. The Company or Participating Subsidiary may require the Participant to remit an amount in cash sufficient to satisfy any required withholding amounts to the Company or Participating Subsidiary, as the case may be.
INDIVIOR PLC
| | |
Rules of Indivior Group Deferred Bonus Plan 2018 |
Approved by a resolution of the Remuneration Committee
of the Board on July 19, 20181
Amended by a resolution of the Remuneration Committee of the
Board on November 14, 2018
1 Note: this Plan has not been approved by shareholders. Therefore, Awards may not be satisfied by newly issued Shares or Shares transferred from treasury.
THE INDIVIOR GROUP DEFERRED BONUS PLAN 2018
The Indivior Group Deferred Bonus Plan 2018 is intended to align the interests of executives with those of shareholders by providing a mechanism for Group Companies to defer a proportion of such persons’ annual bonuses in the form of Shares for a period of time, under the terms of this Plan.
1.Definitions
1.1In this Plan references to the following words shall bear the following meanings:
ADRs means American depositary receipts representing American depositary shares deposited by the Company with a depository pursuant to a deposit agreement;
Adoption Date means July 19, 2018;
Award means an award granted under Rule 2 in the form of a Conditional Award, an Option or a Phantom Award as the Committee may determine, which is for the time being subsisting;
the Board means the board of directors of the Company;
Committee means the Remuneration Committee of the Company or some other duly authorised committee of the Board;
Company means Indivior PLC (incorporated in the UK with registered number 09237894);
Conditional Award means an Award which takes the form of a contingent right to receive Shares or a conditional allocation of Shares;
Control has the meaning given to that word by section 995 of the UK Income Tax Act 2007;
Date of Grant means the date on which the Committee grants an Award;
Dealing Day means any day on which the London Stock Exchange is open for the transaction of business;
Deferral Period means the period(s) specified by the Committee pursuant to Rule 2.3(b);
Executive means any employee or executive director of any member of the Group;
Financial Year means a financial year of the Company within the meaning of section 390 of the UK Companies Act 2006;
Grant Letter means the notification to a Participant setting out the terms of an Award;
Grant Period means the period of 42 days commencing on:
(a)the Adoption Date;
(b)the day immediately following the day on which the Company makes an announcement of its results for the last preceding Financial Year, half year or other period; or
(c)any day on which the Committee resolves that exceptional circumstances exist which justify the grant of Awards;
Group means the Company and the Subsidiaries from time to time and the expressions member of the Group and Group Company shall be construed accordingly;
Legal Representative means a deceased Participant’s duly appointed legal personal representative, or equivalent representative in jurisdictions other than the UK, as evidenced by such representative to the satisfaction of the Committee;
Listing Rules means the Listing Rules published by the UK Financial Conduct Authority (as amended from time to time);
London Stock Exchange means London Stock Exchange plc or any successor body thereto;
Market Abuse Regulation means Regulation (EU) No. 596/2014 of the European Parliament and of the Council of 16 April 2014, and related guidance issued by the European Securities and Markets Authority and the UK Financial Conduct Authority on market abuse;
Market Value means, in relation to a Share on any day:
(a)if and for so long as the Shares are admitted to trading on the London Stock Exchange:
(i)the closing middle-market quotation for a Share on that day (as derived from the Daily Official List of the London Stock Exchange); or
(ii)the average of the closing middle-market quotations during such period as the Committee may determine but not exceeding 30 Dealing Days ending on that day and provided such Dealing Day(s) fall within a Grant Period; or
(b)if the Shares are not admitted to trading on the London Stock Exchange, the market value of a Share on that day as determined in accordance with Part VIII of the UK Taxation of Chargeable Gains Act 1992;
Notional Share means a share equal in value to a Share, but having no legal rights attributable to a Share;
Option means an Award which takes the form of an option to acquire Shares at a nil cost upon Vesting;
Participant means an Executive who has been granted an Award (including, where the context permits his personal representatives) which has not lapsed or been surrendered or forfeited;
Phantom Award means a conditional right to receive a cash amount determined by reference to the Market Value of the Notional Shares subject to the Award on the Vesting Date;
Plan means the Indivior Group Deferred Bonus Plan 2018 as set out in these rules (as amended from time to time);
Restricted Period means any period in which dealings in shares would be prohibited by statute, order, regulation or government directive, or by the Market Abuse Regulation or any code adopted by the Company based on the Market Abuse Regulation;
Shares means fully paid ordinary shares in the capital of the Company or where appropriate the ADR representing such shares and shares or ADRs representing those shares or ADRs following any reorganisation of the share capital of the Company;
Subsidiary means any subsidiary of the Company within the meaning of section 1159 of and schedule 6 to the UK Companies Act 2006 (or its equivalent under applicable law) over which the Company has Control;
Tax Liability means any amount of tax or social security contributions for which a Participant would or may be liable and for which a member of the Group or former member of the Group would or may be obliged to (or would or may suffer a disadvantage if it were not to) account to any relevant tax authority;
Trustee means the trustee or trustees of any employee benefit trust established by the Company (or any Group Company); and
Vesting Date means the date on which an Award (or part thereof) Vests.
1.2An Award Vests when the Participant becomes entitled to the transfer of Shares or the payment of cash (as the case may be), under Rule 11. The terms Vested and Vesting shall have corresponding meanings.
1.3References to any statute or statutory instrument or to any part or parts thereof include any modification, amendment or re-enactment thereof for the time being in force.
1.4Words of the masculine gender shall include the feminine and vice versa and words in the singular shall include the plural and vice versa unless in either case the context otherwise requires or is otherwise stated.
2.Grant of Awards
2.1Subject to Rules 2 and 3, the Committee may, during a Grant Period, grant an Award to any Executive who at any time during the Financial Year immediately preceding the proposed Date of Grant (the Bonus Year) was a participant in any annual bonus plan operated by the Company or any Group Company.
2.2An Award shall be granted in the form of an Option, a Conditional Award or a Phantom Award as the Committee may determine in its absolute discretion.
2.3The Committee shall on or prior to the Date of Grant determine:
(a)the number of Shares or Notional Shares subject to the Award, which shall be equal to A/B where:
A= 25 % (or such other percentage as the Committee may determine) of the amount of the annual bonus that would have been paid to the Executive in respect of the relevant Bonus Year if the Executive did not participate in this Plan or any other deferral arrangements (including but not limited to the Indivior Inc. . Deferred Compensation Plan), such amount to be gross of income tax and social security contributions unless it is not possible to defer the payment of such income tax and social security contributions to the Vesting Date in which case the Committee may specify such amount as it, acting fairly and reasonably, determines appropriate; and
B= the Market Value of a Share on the Dealing Day immediately preceding the Date of Grant or, if that Dealing Day would otherwise fall within a Restricted Period, the first Dealing Day following the cessation of the Restricted Period,
and any fraction of a Share shall be rounded down to the nearest whole Share;
(b)the period for which the Award must be held before it Vests (the Deferral Period), which shall be the period of two years from the Date of Grant or such other period or periods as the Committee considers is appropriate;
(c)whether the Award will accrue dividend equivalents in respect of the Award and the basis on which it shall do so pursuant to Rule 12; and
(d)any other restrictions or requirements that the Committee shall determine are appropriate.
2.4The grant of an Award shall be evidenced by a deed of grant executed by or on behalf of the Company. A single deed of grant may be executed in favour of
any number of Executives. As soon as reasonably practicable after the Date of Grant, the Company will notify each Participant of the grant of his Award by means of a Grant Letter.
2.5The Company may require a Participant to sign and return such notification acknowledging their agreement to be bound by the terms of the Plan and may determine that failure to do so within any period specified in that notification shall cause the Award to lapse and be treated as if it had never been granted.
2.6No payment shall be required for the grant of an Award.
3.Prohibition on issue of Shares
3.1No Award may be granted to subscribe for unissued Shares or Shares transferred from treasury and the Vesting of an Award may not be satisfied by the issue of new Shares or the transfer of Shares from treasury.
4.Vesting
4.1Subject to any other provision in these Rules, Awards will Vest in full on the expiry of the Deferral Period.
4.2Notwithstanding any other provision in these Rules, if dealing in Shares by the Company is precluded by law, the Listing Rules, the Market Abuse Regulation and/or the Company’s dealing rules on the date on which the Deferral Period expires, an Award shall not Vest and an Option may not be exercised until the date on which any such restriction is lifted.
5.Rights of Participant before Vesting
5.1An Award shall be personal to a Participant and shall not (except to the extent necessary to enable a Legal Representative to realise the Award following the death of a Participant) be capable of being transferred, changed or otherwise alienated and shall lapse immediately if the Participant purports to transfer, charge or otherwise alienate the Award or if he is declared bankrupt.
5.2A Participant will have no rights in respect of any Shares subject to an Award until the Shares are transferred to him pursuant to Rule 11.
6.Cessation of employment
6.1If, before an Award has Vested, a Participant ceases to be an employee of a member of the Group by voluntary resignation or by reason of misconduct, or after a Participant has ceased to be an employee of a member of the Group the Company becomes aware of facts or circumstances that would have entitled it to dismiss the Participant for misconduct, then the Award shall lapse on the date of such cessation or the date the Company becomes so aware.
6.2If, before an Award has Vested, a Participant ceases to be an employee of a member of the Group for any reason other than one mentioned in Rule 6.1, then the Participant’s Award shall continue subject to the rules of the Plan and
will vest subject to and in accordance with Rule 4, save that in the event of a Participant’s death or other circumstances which the Committee considers sufficiently exceptional the Committee may, in its absolute discretion, determine that the Award shall instead Vest at the date of death or cessation of employment (as applicable).
7.Takeover / general offer
7.1Save as provided in Rule 7.2, if any person (either alone or together with any person acting in concert with him) obtains Control of the Company as a result of making:
(a)a general offer to acquire the whole of the issued ordinary share capital of the Company which is made on a condition such that if it is satisfied, the person making the offer will have Control of the Company; or
(b)a general offer to acquire all of the Shares, all Awards shall Vest.
7.2Save as provided in Rule 7.3, if any person becomes bound or entitled to give notice to acquire Shares under sections 979 or 983 of the UK Companies Act 2006 or its equivalent under applicable law, all Awards shall Vest on the date on which such person becomes so bound or entitled.
7.3The Committee may, acting fairly and reasonably and having regard to the circumstances of the change of Control or compulsory acquisition, determine, at any time before Awards Vest, that the Participant may agree to exchange any Award or that Awards will not Vest under Rule 7.1 but shall be automatically exchanged, in either case, under Rule 10 below.
8.Scheme of Arrangement
8.1Save as provided in Rules 8.2 and 8.3, if any person proposes to obtain Control of the Company in pursuance of a compromise or arrangement sanctioned by the Court under section 899 of the UK Companies Act 2006 or its equivalent under applicable law, an Award shall Vest on the scheme of arrangement being sanctioned by the court.
8.2The Committee, may, acting fairly and reasonably and having regard to the circumstances of the scheme of arrangement, determine, at any time before Awards Vest, that the Participant may agree to exchange any Award or Awards will not Vest under Rule 8.1 but shall be automatically exchanged, in either case, under Rule 10 below.
8.3If the Committee, in its absolute discretion, considers that the purpose and effect of the scheme of arrangement is to create a new holding company for the Company and the holding company has substantially the same shareholders and proportionate shareholdings as those of the Company immediately before the scheme of arrangement, Awards will not Vest under Rule 8.1 and shall be automatically exchanged under Rule 10 below.
9.Voluntary winding-up
9.1If notice is duly given of a resolution for a voluntary winding-up of the Company then the Committee, acting fairly, reasonably and objectively, may in its absolute discretion allow some or all Awards to Vest.
10.Exchange of Awards
10.1Where Awards are to be exchanged under this Rule, any Award (the Old Right) will be surrendered in consideration of the grant to the Participant of a new award (the New Right) which, in the opinion of the Committee, is equivalent to the Old Right but relates to shares in a different company. The provisions of the Plan shall be construed in relation to the New Right as if:
(a)the New Right were an Award granted under the Plan at the same time as the Old Right;
(b)references to the Company and the Group were references to the company whose shares are subject to the New Right and its group;
(c)references to Shares were references to shares in the new grantor.
11.Consequences of Vesting
11.1Subject to Rule 4.2 and 14, the Committee shall, as soon as reasonably practicable following Vesting of an Award, procure that:
(a)a Conditional Award shall be satisfied by the transfer to the Participant or to such person as the Participant may direct such number of Shares as are the subject of the Conditional Award;
(b)a Phantom Award shall be satisfied by the payment of a cash sum to the Participant equal to the Market Value of such number of Notional Shares as are the subject of the Phantom Award; and
(c)an Option shall be treated as automatically exercised in respect of such number of Shares as are the subject of the Option.
11.2Shares transferred pursuant to the Plan will rank pari passu in all respects with the Shares then in issue except for any rights attaching to Shares by reference to a record date before the date of such transfer.
11.3Any transfer of Shares under the Plan shall be subject to such consent of any of the authorities wherever situated as may from time to time be required and the Participant shall be required, so far as he is able, to procure compliance with the requirements of, or to obtain or obviate the necessity for, such consents.
11.4The Participant shall have no rights in respect of any Shares which are the subject of an Award until such Shares are transferred to him. The Participant shall be entitled to all rights in respect of Shares transferred to him with effect
from the date of transfer (save for rights in respect of which the record date was prior to that date).
12.Dividend Equivalents
12.1Participants shall, if the Committee so determines at the Date of Grant, be entitled either:
(a)to be paid on Vesting of any Award a cash amount equal to the aggregate amount of the dividends that the Participant would have accrued had the Participant held the number of Shares Vesting under the Award during the period commencing on the Date of Grant and ending on the date on which the Award Vests; or
(b)to receive on Vesting of any Award, in addition to the Shares subject to that Award, such number of further Shares as could have been acquired, either at the time each dividend is paid or when the Award Vests (as the Committee may determine), with the amount of each cash dividend payable on the Shares Vesting under the Award for which the record date falls during the period commencing on the Date of Grant and ending on the date on which the Award Vests.
12.2The Committee shall determine at the Date of Grant whether the amount of the cash dividend shall be the amount net of any associated tax credit or the gross amount. This Rule 12.2 shall not apply in respect of any super dividend, dividend in specie or other distribution paid by the Company (each being a Distribution) which would otherwise materially affect the value of an Award and for which an Award is adjusted pursuant to Rule 13. For the purpose of this rule 12.2 and rule 13, a Distribution shall not materially affect the value of an Award if the Company undertakes a share consolidation in conjunction with the Distribution that has the effect that the Market Value of a Share before and after the Distribution is substantially equivalent.
12.3For the purpose of this Rule 12, a Notional Share shall be treated as carrying a right to dividends as if it was a Share.
13.Rights issues, demergers and variations of capital
13.1If there is a rights issue, super dividend, demerger, dividend in specie or any capitalisation issue or sub-division or consolidation of or other variation in the share capital in respect of Shares or the Company, the Committee may adjust the number of Shares subject to an Award in such manner as it, in its absolute discretion, thinks fit.
13.2If a demerger or super dividend, dividend in specie or other distribution paid by the Company or any capitalisation issue or sub-division or consolidation of or other variation in the share capital in respect of Shares or the Company which, in the opinion of the Committee, would materially affect the value of an Award, the Committee may, in its absolute discretion, permit Awards to Vest on or shortly prior to the date of such event.
14.Tax
14.1Any liability of a Participant to taxation or social security contributions in respect of an Award shall be for the account of the relevant Participant.
14.2The transfer of any Shares on the Vesting of a Participant’s Award shall be conditional upon the Participant having (a) discharged the Tax Liability which arises on Vesting or exercise to the satisfaction of the Company, or (b) otherwise having complied with any arrangements specified by the Company to secure that such Tax Liability is satisfied, including irrevocably authorising the Company to sell or procure the sale of sufficient Vested Shares on or following the Vesting Date on his behalf to ensure that any relevant member of the Group receives the amount required to discharge the Tax Liability which arises as a result of the Vesting or exercise of his Award. By participating in the Plan a Participant is deemed to have given such authorisation.
14.3The Committee may require the Participant, as a condition to the grant or Vesting of any Award or the transfer of any Shares, to enter into an election under Chapter 2 of Part 7 of the Income Tax (Earnings & Pensions) Act 2003 in respect of any Shares to which he is or may become entitled under the Plan.
15.Effect on employment rights
15.1Nothing in these Rules, the operation of the Plan or in a Participant’s or Executive’s contract of employment shall be construed as giving to any Participant or Executive a right to be considered for participation in the Plan to receive the grant of any Award.
15.2Neither an Award nor the Shares nor the Notional Shares nor cash the subject of an Award shall be pensionable for any purpose.
15.3The rights and obligations of any Participant under the terms of his office or employment shall not be affected by his participation in the Plan. Each Participant shall be deemed to waive all and any rights to compensation or damages in consequence of the termination of his office or employment for any reason whatsoever (whether such cessation is lawful or unlawful) insofar as those rights arise or may arise from his ceasing to have rights under the Plan as a result of such termination or from the loss or diminution in value of such rights or entitlements. If necessary, the Participant’s terms of employment shall be deemed to be varied accordingly.
16.Malus and Clawback
16.1In circumstances where there has been, as the Committee determines in its absolute discretion, either (i) (having taken advice from the Company’s auditors) a material misstatement of the Company’s or the Group’s results in respect of the Bonus Year or (ii) at any time during a Participant’s employment, serious misconduct by that Participant or (iii) serious reputational damage to any member of the Group whether during or after the
Bonus Year, then the Committee may determine, to the extent it considers appropriate after taking account of the extent of the relevant misstatement, misconduct, or reputational damage, that any of the following actions may be undertaken in respect of any Awards not Vested (or, in case of Options, not exercised):
(a)the number of Shares or Notional Shares subject to such Award may be adjusted in such manner as the Committee considers appropriate; or
(b)the Award shall lapse with immediate effect; or
(c)the Deferral Period may be extended.
16.2In circumstances where at any time before the second anniversary of the Vesting Date there has been, as the Committee determines in its absolute discretion, either (i) (having taken advice from the Company’s auditors) a material misstatement of the Company’s or the Group’s results in respect of the Bonus Year or (ii) at any time during a Participant’s employment, serious misconduct by that Participant or (iii) serious reputational damage to any member of the Group whether during or after the Bonus Year, then the Committee may determine, to the extent that the Committee considers appropriate after taking account of the extent of the relevant misstatement, misconduct, or reputational damage, in respect of any Vested Awards that the relevant Participant must by way of clawback repay to the Company such amount as the Committee may determine in cash or transfer to the Company such number of Shares as the Committee may determine, in each case taking account of the number of Shares or Notional Shares subject to the Award and their value.
16.3Following any such determination under rule16.1 or 16.2, the Committee may, to the extent permitted under applicable law:
(a)make a reduction of an equivalent amount to any unvested Awards which the Participant may have under the Plan or any other employee share scheme operated by the Company; and/or
(b)make a reduction of an equivalent amount to any future annual bonus payment which would otherwise have been payable; and/or
(c)make a reduction of an equivalent amount to any salary payments or other remuneration which are due or would otherwise have been payable, and/or
(d)require the relevant Participant to repay to the Company an equivalent amount or to transfer a specified number of Shares to the Company within such period as it determines.
17.Amendment
17.1The Committee may make such amendments to the Rules as it considers necessary or desirable from time to time. However, no amendment will be
made under this Rule that would adversely and materially affect the existing rights of a Participant unless such amendment is made with his written consent or with the written consent of a majority of the Participants affected by the amendments.
17.2Notwithstanding Rule 17.1, the Committee may make minor amendments to the Rules:
(a)to benefit the administration of the Plan, to take account of a change in legislation or to obtain or maintain favourable tax, exchange control or regulatory treatment for Participants or for any member of the Group; and
(b)to take account of local tax, exchange control or securities law in order to operate this Plan in any jurisdictions in which Executives are situated. The Committee may implement such amendments in the form of schedules to this Plan applicable to the specified jurisdiction.
18.Data Protection
18.1The Participant’s attention is drawn to the Company’s data privacy policy, which sets out how the Executive’s personal data will be used and shared by the Company and other Group Companies. The data privacy policy does not form part of this Plan and may be updated from time to time. Any such updates will be notified to the Executive in writing.
18.2The Executive undertakes to comply in full with the Company’s privacy policy in force from time to time.
19.General
19.1Any member of the Group may provide money to the Trustee or any other person to enable them or him to acquire Shares to be held for the purposes of the Plan, or enter into any guarantee or indemnity for those purposes, to the extent not prohibited by applicable law.
19.2The existence of any Award shall not affect in any way the right or power of the Company or its shareholders to make or authorise any or all adjustments, recapitalisations, reorganisations or other changes in the Company’s capital structure, or any merger or consolidation of the Company, or any issue of shares, bonds, debentures, preferred or prior preference stocks ahead of or convertible into, or otherwise affecting the Shares or the rights thereof, or the dissolution or liquidation of the Company or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding, whether of a similar character or otherwise.
19.3Any notice or other document required to be given under or in connection with the Plan may be delivered to a Participant or sent by post to him at his home address according to the records of his employing company or such other address as may appear to the Company to be appropriate, or sent to him by email. Notices sent by post shall be deemed to have been given on the day
following the date of posting. Any notice or other document required to be given to the Company under or in connection with the Plan may be delivered or sent by post to it at its corporate services office at 103-105 Bath Road, Slough, Berkshire, United Kingdom, SL1 3UH (or such other place or places as the Committee may from time to time determine and notify to Participants).
19.4The Company, or where the Committee so directs any Subsidiary, shall pay the appropriate stamp duty on behalf of the Participants in respect of any transfer of Shares on the Vesting or exercise of the Awards.
19.5Benefits under this Plan shall not be pensionable.
19.6These rules and any contractual and non-contractual obligations arising from them shall be governed by, and construed in accordance with, the laws of England. Neither the Plan nor any Grant Letter shall be construed or interpreted with any presumption against the Company by reason of the Company causing the Plan or Grant Letter to be drafted.
19.7Unless specifically stated otherwise, each Participant, the Company and any other member of the Group submits to the exclusive jurisdiction of the English courts in relation to all disputes arising out of or in connection with the Plan. By accepting the grant of an Award and not renouncing it, Participants are deemed to have agreed to submit to such jurisdiction.
Appendix 1
US
1.General
1.1This Appendix 1 shall apply to all US Taxpayers and the rules of the Plan and the terms of Awards held by US Taxpayers shall at all times be construed and interpreted in a manner consistent with this Appendix 1.
1.2In the event that a Participant becomes a US Taxpayer subsequent to the Date of Grant of an Award under the Plan, then, pursuant to Rule 18 of the Plan, such Award shall immediately be deemed to be amended in a manner consistent with this Appendix 1.
1.3In this Appendix 1, the following expressions shall have the following meanings respectively:
Code means the US Internal Revenue Code of 1986, as it may be amended from time to time, and all regulations, interpretations and administrative guidance issued thereunder;
US means the United States of America;
US Tax means federal income taxation by the US;
US Taxpayer means a Participant who is subject to US Tax at the Date of Grant, is expected to become subject to US Tax following the Date of Grant or does become subject to US Tax following the Date of Grant but prior to the date upon which any part of an Award is paid.
1.4References to a Rule shall be to the rules of the Plan.
2.Provisions applicable to US taxpayers
2.1A new Rule 2.9 shall be added to Rule 2 of the Plan to read in full as follows:
“2.9 For the avoidance of doubt and notwithstanding any other provisions of this Rule 2 to the contrary, (a) participation in, and the grant of Awards under, the Plan to any US Taxpayer shall be at the sole discretion of the Committee and (b) no US Taxpayer shall have any unilateral right to elect to defer any compensation under the Plan.”
2.2A new Rule 6.2 shall replace Rule 6.2 of the Plan to read in full as follows:
“6.2 If, before an Award has Vested, a Participant ceases to be an employee of a member of the Group for any reason other than one mentioned in Rule 6.1, then the Participant’s Award shall continue subject to the rules of the Plan and will vest subject to and in accordance with Rule 4, save that in the event of a Participant’s death, the Award shall instead Vest at the date of death.”
2.3A new Rule 11.5 shall be added to Rule 11 of the Plan to read in full as follows:
“11.5 Notwithstanding any other provision of the Plan or individual Award agreement to the contrary, the Vesting and transfer of Shares (in the case of a Conditional Award), the Vesting and payment in cash (in the case of a Phantom Award) or the Vesting and automatic exercise (in the case of an Option) under an Award, as well as the payment of any dividend equivalent amounts, shall occur on the earliest of the following events:
(a)the occurrence of an event falling within Rule 7, 8 and 9 provided that such event also constitutes a “change in control event”, within the meaning of Section 409A of the Code;
(b)the last day of the Deferral Period applicable to the Award; and
(c)the US Taxpayer’s death per Rule 2.2 of this Appendix 1;
provided, however, that, with respect to any Award payable in, or exercisable for, Shares, in the event that any trading, dealing or other securities law restrictions would prevent the issuance or transfer of Shares on the applicable date specified above, such issuance or transfer may be delayed and made upon the lapse of all such restrictions, but in no case later than the last day of the US Taxpayer’s taxable year which includes the date specified above, or, if later, the 15th day of the third calendar month following the date specified above, so long as the US Taxpayer is not permitted, directly or indirectly, to designate the taxable year of the issuance or transfer of the Shares.
2.4Where Shares to be delivered in respect of an Award under this Appendix 1 are delivered via the Trustee:
(a)the US Taxpayer will not have any interest in those Shares until the Award has Vested (in the case of a Conditional Award) or been automatically exercised (in the case of an Option) in accordance with the rules of the Plan and the terms of this Appendix 1; and
(b)the Trustee will not allocate any Shares or other trust assets in favour of the Participant until such Vest or automatic exercise.”
2.5Where cash is to be paid in respect of an Award under this Appendix 1, the cash will not be paid by or otherwise delivered via the Trustee.”
2.6A new Rule 21 shall be added as follows:
“21. Section 409A of the United States Internal Revenue Code
21.1 Awards granted to US Taxpayers are intended to comply with, the requirements of Section 409A of the Code, and the Plan and any Award granted to a US Taxpayer shall be interpreted, operated and administered in a manner consistent with such intention.
21.2 No setoffs or deductions against any amounts owed to a US Taxpayer by the Company or any member of the Group may be made hereunder to satisfy the clawback contemplated by Rule 16.2 to the extent that such setoff or
deduction would result in adverse tax consequences to a US Taxpayer under Section 409A of the Code.
21.3 Any extension of the Deferral Period pursuant to Rule 17.1 shall only be effected in a manner that complies with the rules under Section 409A of the Code governing the valid extension of a “substantial risk of forfeiture”.
21.4 To the extent that any exchange of an Award occurs under Rule 7, 8 or 10 of the Plan, the terms and conditions of any New Right shall not modify the timing or schedule of payments in effect under the corresponding Old Right or otherwise result in any change to the terms and conditions applicable under the Old Right if such modification or change would result in adverse tax consequences to a US Taxpayer under Section 409A of the Code.
21.5 Notwithstanding any other provision of the Plan to the contrary, the Committee, to the extent it deems necessary or advisable in its sole discretion, reserves the right, but shall not be required, to unilaterally amend or modify the Plan, this Appendix 1 and any Award granted under the Plan so that the Award is exempt from, or complies with, the requirements of Section 409A of the Code; provided, however, that the Committee makes no representations that Awards granted under the Plan will be exempt from Section 409A of the Code and makes no undertaking to preclude Section 409A of the Code from applying to Awards granted under the Plan.”
PORTIONS OF THIS EXHIBIT HAVE BEEN REDACTED.
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS BOTH (i) NOT
MATERIAL AND (ii) WOULD BE LIKELY TO CAUSE COMPETITIVE HARM IF PUBLICLY DISCLOSED.
REDACTED MATERIAL IS MARKED WITH [***].
MASTER DEVELOPMENT AND SUPPLY AGREEMENT
This MASTER DEVELOPMENT AND SUPPLY AGREEMENT ("Agreement") is made effective the first (1st) day of January 2022 ("Effective Date"), by and between Curia Massachusetts, Inc., formerly known as AMRI Burlington, Inc. ("Curia"), with a place of business at 99 South Bedford Street, Burlington, MA 01803 and Indivior UK Limited ("Indivior"), with its registered address at Chapleo Building, Henry Boot Way, Priory Park, Hull HU4 7BY, UK.
WHEREAS, Indivior is engaged in the business of developing pharmaceutical products;
WHEREAS, Curia is engaged in the business of providing contract pharmaceutical development, manufacturing, packaging and analytical services to the pharmaceutical industry;
WHEREAS, Indivior desires to engage Curia to manufacture and supply certain Product(s) (as defined below), and to provide related development services, and Curia desires to provide such manufacture, supply, and development services, pursuant to the terms and conditions set forth in this Agreement; and
WHEREAS, Indivior and Curia executed this Agreement as of the date of last signature below ("Execution Date"), but each intend for this Agreement to be effective and binding on the parties as of the Effective Date above; and
WHEREAS, Indivior and Curia each conducted themselves in accordance with the terms of this Agreement as of the Effective Date, notwithstanding the Execution Date.
NOW, THEREFORE, in consideration of the mutual covenants, terms and conditions set forth below, the parties agree as follows:
ARTICLE 1
DEFINITIONS
The following terms have the following meanings in this Agreement:
1.1 "Affiliate(s)" means any corporation, firm, partnership or other entity which controls, is controlled by or is under common control with a party for as long as such control exists. For purposes of this definition, "control" shall mean the ownership of at least fifty percent (50%) of the voting share capital of such entity or any other comparable equity or ownership interest, provided that Affiliates of Curia shall be limited to its direct and indirect subsidiaries.
1.2 "Annual Forecast" means the twelve (12) month forecast of Indivior's projected total volume of Product to be ordered in the applicable Calendar Year (beginning 2023); such forecast to be provided by Indivior to Curia by December 31 of the prior Calendar Year (beginning in 2022).
1.3 "API" means the active pharmaceutical ingredient required to Process the Products which has been released by Indivior and provided to Curia, along with a Certificate of Analysis.
1.4 "APMF" shall have the meaning set forth in Section 2.4.
1.5 "Applicable Laws" means all laws, ordinances, rules and regulations within the Territory applicable to the Processing of the Product or any aspect thereof and the obligations of Curia or Indivior, as the context requires under this Agreement, including, without limitation, (i) all applicable federal, state and local laws and regulations of each Territory; (ii) the U.S. Federal Food, Drug and Cosmetic Act, and (iii) cGMPs.
1.6 "Batch" means the quantity of Product comprising a specified number of units (e.g., syringes) as mutually agreed upon between the parties, that (a) is intended to have uniform character and quality within specified limits, and (b) is Processed according to a single manufacturing order during the same cycle of Processing.
1.7 "Batch Record Review Period" shall have the meaning set forth in Section 6.1.
1.8 "Calendar Quarter" means a period of three (3) consecutive months commencing on January 1, April 1, July 1 or October 1 of any Calendar Year.
1.9 "Calendar Year" means the period from January 1 to December 31 of each year.
1.10 "Certificate of Analysis" means (i) with reference to a Batch of Product, the certificate that accompanies each shipment of a Batch of Product and which lists the test methods, acceptance limits and release test results for that specific Batch of Product; and (ii) with reference to Indivior Materials, the certificate that accompanies each shipment of Indivior Materials and which lists the test methods, acceptance limits and release test results for that specific batch of Indivior Materials.
1.11 "Certificate of Compliance" means (i) with reference to a Batch of Product, a certificate attesting that the particular Batch of Product was Processed in accordance with the applicable Manufacturing Standards, and (ii) with reference to Indivior Materials, a certificate attesting that the Indivior Materials were manufactured in accordance with cGMPs as applicable to such Indivior Materials and conform to applicable regulatory requirements.
1.12 "cGMP" or "GMP" means the current good manufacturing practices in the United States for the manufacture, control and storage of human pharmaceutical products, and equivalent regulations in such other Territories as are expressly agreed upon by the parties in writing, in each case as applicable to Product or Indivior Materials, as the context may require, provided that in the event of any conflict among the applicable laws of the United States and other Territories, current good manufacturing practices in the applicable Territory shall be applied unless the parties otherwise agree in writing. In the event Indivior does not provide Curia with advance notice of the intended destination Territory for any Batch of Product, Curia shall default to current good manufacturing practices in the United States. For clarity, the current good manufacturing practices in the United States applicable to Product shall mean those set forth in 21 C.F.R. 210 and 21 C.F.R. 211, as may be amended or supplemented, and the related regulations and FDA guidance documents in effect from time to time.
1.13 "Commercial Product" means Product which has completed the required clinical trials, if any, and has been approved by an applicable Regulatory Authority for commercial distribution.
1.14 "Commercially Reasonable Efforts" shall mean, with respect to the efforts expended by a party under this Agreement, that degree of effort consistent with the practices and standards of the pharmaceutical industry in the United States normally used to achieve the fulfillment of obligations similar to those assumed by a party under this Agreement as expeditiously as possible.
1.15 "Confidential Information" shall have the meaning set forth in Section 11.1.
1.16 "Contract Year" means each period of twelve (12) consecutive months during the Term of this Agreement, with the first Contract Year commencing on the Effective Date, and with each subsequent Contract Year commencing on the anniversary of the Effective Date.
1.17 "Curia Background Technology" means any Technology (i) owned or controlled by Curia or any of its Affiliates as of the Effective Date; or (ii) developed or obtained by or on behalf of Curia or any of its Affiliates after the Effective Date independent of this Agreement, and all intellectual property rights in any of the foregoing.
1.18 "Curia Indemnitees" shall have the meaning set forth in Section 13.2.
1.19 "Curia Program Technology" means Program Technology that (i) consists of improvements to Curia Background Technology, (ii) is developed using Confidential Information of Curia and does not incorporate Indivior Confidential Information, or (iii) consists of improvements to the manufacturing process that are generally applicable to multiple products (but which do not incorporate Indivior Confidential Information), and in each case of (i), (ii) and (iii), is not Product-specific Program Technology, and all intellectual property rights in any of the foregoing clauses (i), (ii) and (iii).
1.20 "Curia Technology" means Curia Background Technology and Curia Program Technology.
1.21 "Delivery" shall have the meaning set forth in Section 5.3.
1.22 "Effective Date" shall have the meaning set forth in the Preamble.
1.23 "Facility" or "Facilities" means Curia's facility in Burlington, MA, located at 99 South Bedford Street, Burlington, MA 01803.
1.24 "FDA" means the United States Food and Drug Administration, and any successor agency thereto.
1.25 "Firm Period Forecast" shall have the meaning set forth in Section 4.3.
1.26 "Indivior Equipment" shall have the meaning set forth in Section 3.3.
1.27 "Indivior Existing Technology" means (i) API; (ii) any intermediates or derivatives of API; (iii) any other Technology owned or controlled by Indivior or any of its Affiliates as of the Effective Date; or (iv) any Technology, other than Program Technology, developed or obtained by or on behalf of Indivior or any of its Affiliates after the Effective Date, and all intellectual property rights in any of the foregoing.
1.28 "Indivior Indemnitees" shall have the meaning set forth in Section 13.1.
1.29 "Indivior Materials" means API, Raw Materials, components, and any reference standards used in the Processing of Product that are to be provided by Indivior or as to which Indivior has specified a supplier who is not already on Curia's list of approved qualified suppliers, in each case as specified in this Agreement, the applicable Purchase Order or as otherwise agreed in writing by the parties.
1.30 "lndivior Technology" means Indivior Existing Technology and rights assigned to Indivior under Section 12.3 of this Agreement in Product-specific Program Technology.
1.31 "Latent Defect" means Non-conforming Product which could not have been ascertained by Indivior by the exercise of reasonable diligence and after the parties' investigation regarding the cause of such defect in accordance with Section 6.1, such defect is determined to have been caused by Curia's gross negligence or willful misconduct.
1.32 "Losses" shall have the meaning set forth in Section 13.1.
1.33 "Manufacturing Standards" means Processing of Product in accordance with procedures set forth in the Master Batch Record and cGMP (if applicable as per intended use of Product), and in conformance with Specifications, provided that a failure to conform to Specifications due to the use of any (i) defective, adulterated or misbranded API or other Indivior Materials as supplied by Indivior (including, but not limited to failure of API or other Indivior Materials to meet applicable Specifications or to have been manufactured in accordance with cGMP), or (ii) defective Other Raw Materials (other than Indivior Materials), where the defects were not reasonably discoverable by Curia as a result of testing in accordance with its standard operating procedures shall not prevent Product from being considered to have been Processed in accordance with Manufacturing Standards.
1.34 "Master Batch Record" shall mean the document approved in writing by both parties, and as may be amended from time to time in accordance with this Agreement and the Quality Agreement, specifying or referencing the complete set of formal instructions agreed upon by the parties for the Processing of Product, including, but not limited to material descriptions, the formula, processing procedures, in-process testing specifications, Product Specifications and packaging and shipping specifications. For the avoidance of doubt, upon finalization, Indivior shall have full and sole rights, titles, and ownership to, in and of the Master Batch Record, provided, however, Indivior shall in no event have any ownership rights to Curia's Confidential Information contained therein. As of the Effective Date, the parties agree that no Curia Confidential Information is included in the Master Batch Record. In the event Curia does add any of its Confidential Information to the Master Batch Record, Curia shall give Indivior written notice of which such information is being added to the Master Batch Record that is identified as Curia's Confidential Information.
1.35 "Minimum Requirement" shall have the meaning set forth in Section 4.1.
1.36 "MSDS" shall have the meaning set forth in Section 3.1. "Non-commercial Product" means Product which is in developmental/clinical trial phases and has not yet been approved by an applicable Regulatory Authority for commercial distribution. Non-commercial Product includes Stability/Validation Batches.
1.37 "Non-conforming Product" means Product, which, at the time of Delivery, was not Processed in accordance with Manufacturing Standards.
1.38 "Notice Period" shall have the meaning set forth in Section 6.1.
1.39 "Order Deficit" shall have the meaning set forth in Section 4.5.
1.40 "Other Raw Materials" shall have the meaning set forth in Section 3.2.
1.41 "Packaging" means the filling of syringes, and bulk packaging of naked syringes into containers for Delivery. For the avoidance of doubt, this shall exclude syringe labelling and Secondary Packaging.
1.42 "Performance Standards" means key performance indicators against which Curia's performance will be continually measured as set out in Exhibit D.
1.43 "PPI" shall have the meaning set forth in Section 7.2(i).
1.44 "Price Increase Date" shall have the meaning set forth in Section 7.2(i).
1.45 "Process," "Processed," or "Processing" means the compounding, filling, producing and/or Packaging of the API and Raw Materials into Product in accordance with the Specifications, Master Batch Record, Manufacturing Standards (if applicable) and the terms and conditions set forth in this Agreement.
1.46 "Processing Date" means the day on which Curia will commence Processing a given Batch of Product.
1.47 "Product" means the fully compounded bulk drug product in its final dosage form Processed under this Agreement as further described in Exhibit B, attached hereto, and includes both Commercial Product and Non-commercial Product.
1.48 "Product-specific Program Technology" means any Program Technology that constitutes an improvement, modification, derivative, or new use of Indivior' s API, Product, or Indivior's Confidential Information, but which is not an improvement of general applicability to the manufacturing process, and, in each case, all intellectual property rights in any of the foregoing.
1.49 "Program Technology" means Technology developed by or on behalf of either party or any of its Affiliates in the course of the activities contemplated by this Agreement.
1.50 "Project Plan" shall have the meaning set forth in Section 2.1.
1.51 "Purchase Order" shall mean the written order placed by Indivior for quantities of Product required to be Processed and released by Curia under this Agreement as well as for any services to be provided by Curia.
1.52 "Quality Agreement" shall mean the agreement specifying the roles and responsibilities of the parties with respect to quality assurance/quality control activities, in a form mutually agreeable to both parties.
1.53 "Raw Materials" means all raw materials, supplies, components and packaging necessary to manufacture and ship the Product in accordance with the Specifications, but not including the APL
1.54 "Regulatory Approval" shall have the meaning set forth in Section 7.6.
1.55 "Regulatory Authority" means any governmental regulatory authority within a Territory involved in regulating any aspect of the development, manufacture, market approval, sale, distribution, packaging or use of the Product.
1.56 "Rolling Forecast" shall have the meaning set forth in Section 4.3.
1.57 "Secondary Packaging" means all packaging components or packaging activities not specifically included under the definition for Packaging, which activities are not and will not be in direct contact with the dosage form (for the avoidance of doubt, Secondary Packaging shall include the labelling of syringes containing the Product).
1.58 "Specifications" shall mean, (a) with respect to Product, the written specifications and quality standards, including tests, analytical procedures and acceptance criteria established to confirm the characteristics and quality of Product, as set forth in the Master Batch Record applicable to the Product, and as amended from time to time in accordance with the terms of Section 8 of this Agreement; and (b) with respect to Indivior Materials, including API, the written specifications and quality standards, including tests, analytical procedures and acceptance criteria, to which such Indivior Materials must conform in order to be considered acceptable for use in Processing of Product.
1.59 "Technology" means all discoveries, inventions, know-how, developments, methods, techniques, trade secrets, innovations, updates, modifications, enhancements, improvements, copyrights, data, documentation, processes, procedures, specifications and other intellectual property of any kind, whether or not protectable under patent, trademark, copyright or similar laws.
1.60 "Technology Transfer" means the transfer from Curia to Indivior or any third party designated by Indivior of the full and complete procedures and tangible and intangible information that is reasonably necessary to Process Product, inclusive of, without limitation, documents, Process instructions, Master Batch Records, analytical methods, stability samples, retention samples and materials (including Specifications for Raw Materials).
1.61 "Term" shall have the meaning set forth in Section 15.1.
1.62 "Territory" means, as of the Effective Date and as applicable, the United States, Canada, countries within the European Union, Australia, Israel, New Zealand, Switzerland, and Norway, where such country or countries may be amended or added to from time to time by Indivior, as mutually agreed by the parties, where such consent shall not be unreasonably withheld by Curia.
1.63 "Unit Pricing" or "Unit Price" shall have the meaning set forth in Section 7.1(i).
1.64 "Validation Batches" shall mean a specified number of consecutive Batches, as agreed in the validation protocol, that have been processed in accordance with the Manufacturing Standards and such Validation Batch will be intended to be commercializable unless specified otherwise in the relevant validation protocol or SOW (defined below) for such Validation Batch.
1.65 "Validated Manufacturing Process" shall mean the manufacturing process for Product that is established after the completion of Processing, at scale, of the Validation Batches in accordance with the Manufacturing Standards.
ARTICLE 2
DEVELOPMENT, VALIDATION, PROCESSING & RELATED SERVICES
2.1 Development and Stability/Validation Services. Curia shall perform any process development, qualification, validation and stability services described in the applicable SOW for the prices specified therein. With respect to the development and validation services described in the SOW, the parties shall agree on a project Gantt chart at the commencement of services (the "Project Plan"). The Project Plan shall specify the dates for receipt of information and materials, review and approval of documentation, scheduled engineering and manufacturing run dates and dates for other tasks for which Indivior is responsible consistent with the terms of this Agreement and the SOW. Upon mutual written approval of the Project Plan, any delay or departure from the specified dates caused solely by Indivior for Validation Batches shall result in the application of rescheduling or cancellation fees under Section 7.3.
2.2 Failures Prior to Validation and Additional Validation Batches. Notwithstanding anything in this Agreement to the contrary, Indivior shall pay for all Validation Batches that fail to meet the Manufacturing Standards in accordance with this Agreement and assume responsibility for all costs, including but not limited to the cost of API or other Indivior Materials, associated with such Validation Batch failures until such time as there exists a Validated Manufacturing Process for the Product, provided, however, that Curia shall be responsible for Validation Batch failures due to Curia's gross negligence or willful misconduct. In the event of a Validation Batch failure due to Curia's gross negligence or willful misconduct, Indivior shall have, in its sole discretion, the right to either (i) have Curia re-make the relevant Validation Batch at no further cost to Indivior (provided Indivior pays for the conforming replacement services solely in the event Indivior has not already paid for the non-conforming
services) or (ii) to have Curia credit to Indivior the amount paid by Indivior for such failed Validation Batch. Indivior shall be responsible for supplying, at Indivior's expense, sufficient quantities of API and other Indivior Materials, as necessary for Curia to complete such replacement. The foregoing remedy shall be Indivior's sole and exclusive remedy for any failure of a Validation Batch to conform to the Manufacturing Standards. Indivior acknowledges that a change in Specifications, manufacturing Process or Master Batch Records may require a new Validated Manufacturing Process using the new Specifications, manufacturing Process or Master Batch Records, provided, however, the parties agree that Validation Batches Processed without changes to the Specifications or Process which are required solely for Indivior to make use of a previously validated Process for a Product in a new Territory shall not constitute a need for a new Validated Manufacturing Process and in such circumstances, each such Batch Processed by Curia shall remain subject to the terms of Section 6. In the event that Purchase Orders do not provide a continuity of processing so as to keep Curia's personnel trained on Product, the processing of additional Validation Batches before the next commercial manufacturing run may be necessary at Curia's discretion and, at Indivior's expense.
2.3 Supply and Purchase of Product. During the Term, Curia shall Process the Product in accordance with the terms and conditions of this Agreement. Indivior shall purchase the Product from Curia in accordance with Section 4 and other terms and conditions of this Agreement.
2.4 Annual Product Maintenance Fee. Indivior shall pay to Curia an Annual Product Maintenance Fee ("APMF") for each Product manufactured per Facility. For clarity, the APMF shall apply per Product family per Facility (i.e., SUBLOCADE® is one Product family Processed at the Facility and PERSERIS® is the second Product family Processed at the Facility). The APMF will cover an array of Product support activities, which are irrespective of manufactured Product volumes, and include the following:
• dedicated primary point of contact for all commercial manufacturing activities;
• scheduling, planning, and communicating all commercial manufacturing activities;
• Drug Master File (DMF) updates with the FDA and EU;
• annual audit conducted by Indivior;
• annual Product Review in accordance with 21 CFR § 211.180;
• host all person-in-plant activities;
• Product license or permits from local, state and all federal authorities;
• access to document library (additional copies of Batch paperwork or other Batch documentation when requested);
• storage of Indivior dedicated equipment;
• access to Curia common change parts for filling equipment;
• Product documentation and sample storage (retains) relating to cGMP requirements;
• re-qualification of Raw Material vendors;
• maintenance and storage of Raw Material vendor audit reports; and
• storage of project dedicated components and excipients in Curia W.I.P. cages.
The APMF will be payable within sixty (60) days after the Effective Date, and then within sixty (60) days after the start of every subsequent Contract Year for the remainder of the Term. The APMF for the first Product manufactured at a Facility is fixed at [***] dollars ($[***]) per twelve (12) months, for the Term of the Agreement. Each additional Product at the same Facility will incur an APMF of [***] dollars ($[***]) per twelve (12) months, for the Term of the Agreement. As of the Effective Date, the APMF under this Agreement shall be [***] dollars ($[***]) (i.e., $[***] for SUBLOCADE® + $[***] for PERSERIS®), subject to adjustment in the event additional Product families are added or removed at any time during the Term. In the event that this Agreement is terminated prior to the expiration of the Term, Curia would provide a credit to Indivior for the pro-rated portion of the APMF for such partial Contract Year, unless Curia terminates based on Indivior's material breach of this Agreement, in which case, no such proration shall occur.
2.5 Technology Transfer. Indivior may, during the course of this Agreement, name an alternate manufacturer for supply of the Product. Curia will cooperate in any Technology Transfer, and will cooperate in all reasonable requests made by Indivior to coordinate supply of Product, Indivior Materials, applicable Technology (including but not limited to Indivior Technology), and all other information or materials necessary to complete the Technology Transfer between such alternate manufacturer and Curia. All costs associated with a Technology Transfer shall be borne by Indivior in accordance with then-current market rates and reasonable man-hours as agreed by both parties in writing; provided, however, Curia shall use Commercially Reasonable Efforts to help complete the Technology Transfer. Each party shall continue to fulfill its obligations under the terms of this Agreement during any Technology Transfer.
2.6 Other Related Services. Curia shall provide services other than the Processing of Product upon terms and conditions agreed to by the parties in writing from time to time, such other services to be set forth in a Scope of Work (each, an "SOW") signed by both parties. A sample form of an SOW is attached hereto as Exhibit C.
ARTICLE 3
MATERIALS
3.1 API and Indivior Materials. Indivior shall supply to Curia for Processing, at Indivior' s sole cost, the API and other applicable Indivior Materials in quantities sufficient to meet Indivior's requirements for each Product as further set forth in Section 4. Prior to delivery of any of the API or other Indivior Material to Curia for Processing, Indivior shall provide to Curia a copy of the Material Safety Data Sheet ("MSDS") for such material, and follow up with any subsequent revisions thereto. Indivior shall supply the API, other Indivior Materials, and Certificates of Analysis and Certificates of Compliance DDP the Facility (Incoterm 2020). Indivior shall use Commercially Reasonable Efforts to at all times maintain at least a sixty (60) day supply of Indivior Materials with Curia. Upon receipt of the API/other Indivior Materials, Curia shall conduct the testing set forth in Exhibit A, attached hereto. Curia shall not be responsible for any further testing or for confirming that the API and other Indivior Materials meet applicable Specifications, unless otherwise agreed by the parties in writing. Curia shall use the Indivior Materials solely and exclusively for Processing under this Agreement. Title to and risk of loss of API and other Indivior Materials shall at all times remain with Indivior, and Curia shall have no liability with respect to cost, or loss of, API or other Indivior Materials, except to the extent of any losses attributable to Curia's gross negligence or willful misconduct. In the event of any API or Indivior Materials loss caused by Curia's gross negligence or willful misconduct, Curia shall provide Indivior with a credit for such API or Indivior Materials in the amount of the lesser of the replacement value of the API or Indivior Materials; or (ii) $[***] (in the aggregate for the API and Indivior Materials) per event. The remedy set forth in the immediately foregoing sentence shall be Indivior's sole remedy in the event of any loss or damage to API or other Indivior Materials.
3.2 Other Raw Materials. The parties may agree in writing that Curia shall be responsible for procuring, inspecting and releasing certain Raw Materials necessary to meet Purchase Orders ("Other Raw Materials"). Curia shall procure such Other Raw Materials in sufficient quantities to meet the Firm Period Forecast. If lndivior requires a specific supplier for any Other Raw Material, Indivior will be responsible for all costs associated with qualification of that supplier, if not previously qualified by Curia, and such Other Raw Material will be deemed Indivior Material. If Indivior does not so request a specific supplier, then Curia shall be responsible for the costs of qualifying any supplier it so selects to the extent Curia has not already qualified such supplier. Unless a particular Other Raw Material can be replaced with the same raw material from another supplier, Curia shall not be liable for any delay in Processing of Product if (i) Curia is unable to obtain that Other Raw Material in a timely manner, and (ii) Curia placed orders for such Other Raw Material promptly following receipt of Indivior’s Firm Period Forecast/Purchase Order. Curia shall test and release the Other Raw Materials for use in Processing activities in accordance with its standard operating procedures. Provided Curia has complied with such standard operating procedures with regard to testing of any batch of Other Raw Materials, Curia shall not be responsible for the consequences of any defects in that batch of Other Raw Materials that are not reasonably discoverable as a result of such testing.
3.3 Equipment. Indivior shall provide, or has provided, to Curia, at Indivior's expense, the equipment set forth in the applicable SOW, if any ("Indivior Equipment"). Indivior may alternatively request that such equipment be purchased by Curia on behalf of Indivior in which case, Indivior shall pay for such equipment at cost plus [***] percent ([***]%). Indivior shall be responsible for all freight, insurance and other costs of transporting Indivior Equipment to the Facility. Title to, and risk of loss of, all such Indivior Equipment shall be retained by Indivior at all times and Indivior shall obtain adequate insurance for such equipment if desired. The parties agree that they shall put into place appropriate documentation, such as a Purchase Order, specifically authorizing and identifying Indivior Equipment. Curia shall keep Indivior Equipment free and clear of any liens and/or encumbrances and provide reasonable documentation supporting the purchase (or allocation) of such equipment on behalf of Indivior. Curia shall be responsible for keeping all Indivior Equipment in good repair and in working order, scheduling and performing maintenance on Indivior Equipment as recommended by the applicable equipment manufacturer, and repairing Indivior Equipment, in each case, at Indivior's cost and expense. Indivior agrees that any delay in providing Indivior Equipment or reimbursing Curia for acquiring Indivior Equipment may cause a delay in Processing activities and that Curia will not be responsible for such a delay. In the event Curia's failure to properly maintain Indivior Equipment causes a delay in any scheduled Processing Date, Curia shall not charge Indivior any applicable rescheduling or cancellation fee for such Batch. Upon completion of the use of the Indivior Equipment, unless otherwise mutually agreed by the parties, the Indivior Equipment shall be shipped to Indivior, at Indivior's cost and expense. Notwithstanding the above, Curia shall be responsible for any repair or replacement costs for Indivior Equipment in the event such repair or replacement is necessary as a result of Curia's gross negligence, willful misconduct, or failure to perform its responsibilities as described in this Section 3.3.
3.4 Packaging. Indivior shall provide or approve, prior to the procurement of applicable components, all Packaging information necessary to Process the Product. For purposes of this Agreement, Curia's obligations relating to packaging shall be limited to Packaging. Such Packaging information is and shall remain the exclusive property of lndivior, and Indivior shall be solely responsible for the content thereof. Any changes or supplements to Packaging information should be submitted to Curia, in accordance with the applicable Curia SOP, in writing at least ninety (90) days prior to the desired implementation date (or as otherwise agreed by the parties in writing), together with the required documentation. Notwithstanding the forgoing, in the
event of a required emergency change or supplement, changes may be requested by Indivior with less than ninety (90) days' prior written notice. Indivior shall reimburse Curia for any costs and/or expenses related to any such change, amendment or supplement and its implementation. Indivior shall also reimburse Curia for its actual costs plus [***] percent ([***]%) for any prior versions of Packaging that become obsolete due to the implementation of changes. Curia shall not use any Packaging information provided by Indivior or any reproduction thereof following the termination of this Agreement, or during the Term of this Agreement in any manner other than solely for the purpose of performing its obligations hereunder. Curia shall make changes to the syringes, for the purpose of Packaging, as may be requested by Indivior from time to time. Curia will make no changes to the syringes for Packaging without the prior written approval of Indivior. Any changes or supplements pursuant hereto should be submitted to Curia in writing at least one hundred twenty (120) days prior to the desired implementation date, together with the required documentation, provided that any changes or supplements that require new equipment, change parts, requalification of the manufacturing line may require a longer lead time, and with such longer lead time being established through good faith discussions by the parties. Indivior shall reimburse Curia for any costs and/or expenses related to any such change, amendment or supplement and its implementation. Indivior shall also reimburse Curia for any prior syringes that become obsolete due to the implementation of changes to the extent such stock of syringes does not exceed Curia's requirements for the Firm Period Forecast or any minimum supplier pack/delivery quantity required by the suppliers. Moreover, Indivior acknowledges that the manufacturing line may not be able to accommodate certain changes to the syringes.
3.5 Reimbursement for Other Raw Materials. In the event of (i) a Specification change for any reason, (ii) termination or expiration of this Agreement; or (iii) obsolescence of any Other Raw Material, Indivior shall bear the cost of any unused Other Raw Materials, provided that Curia purchased such Other Raw Materials in quantities consistent with the Firm Period Forecast/Purchase Order and any minimum purchase obligations required by the Other Raw Material supplier. In the event Indivior wishes to instead purchase such unused Other Raw Materials from Curia, Indivior shall pay to Curia the cost of such Other Raw Materials, plus [***]%. Indivior shall also pay for all shipping costs associated with shipping such unused Other Raw Materials to Indivior and title to and risk of loss of such Other Raw Materials shall transfer to Indivior upon Curia's submission of an invoice to Indivior for such Other Raw Materials.
3.6 Storage of lndivior Materials. Curia shall use Commercially Reasonable Efforts to store all quantities of Indivior Materials at the Facility, at no cost to Indivior, for the period required to meet the Firm Period Forecast and thereafter at a monthly storage charge at Curia's then-current rates plus [***]%. To the extent Curia's Facility does not have capacity to store such Indivior Materials, Curia shall store such excess Indivior Materials at a third party warehouse (qualified by Curia to store such Indivior Materials) at a monthly storage charge to Indivior for the duration of storage, billed at the third party's then current standard monthly storage fees and minimums, plus [***]%, pro-rated for any partial month. For the avoidance of doubt, in no event shall Curia charge Indivior any amounts in excess of the cost of such third party storage services plus [***]% and Curia shall absorb any excess costs associated with storing Indivior Materials at a third party facility (e g, transportation costs). In the event that a monthly storage fee will be incurred as described above, Curia will provide reasonable advance notice to Indivior of the amount of such fee(s) and projected date of implementation of the same.
3.7 Physical Inventory Count. Indivior shall have the right to conduct one (1) full, "wall-towall" physical inventory count once each twelve (12) month period ("Inventory Count") during the Term. To schedule the Inventory Count, Indivior shall give Curia reasonable advance notice, but not less than three (3) months' notice. At Indivior's request, Curia shall permit Indivior, and its external auditor(s) ("Inventory Auditor"), to conduct a full physical count of its Inventory (defined below) as close to the year-end as possible, preferably during the year-end shut down at Curia, to minimize inventory movements. The number of visitors during the Inventory Count shall be limited to two (2) Indivior personnel, and one (1) Inventory Auditor, for two (2) days. The Inventory Count shall be conducted in a manner that is consistent with the method historically used by Indivior to conduct a full physical count of its inventory, as conducted during the Indivior' s year-end book closing process. Curia agrees to provide reasonable support to Indivior during the Inventory Count. Indivior agrees to provide Curia with reasonable compensation for their efforts in preparation and execution of the Inventory Count, such compensation to be set forth in an SOW or other written documentation signed by both parties. The cost of such Inventory Count shall be $[***] per day for Calendar Year 2022 and thereafter $[***] shall be the base cost of an Inventory Count, subject to a price increase based on PPI for each subsequent Calendar Year during the Term.
3.8 Inventory and Consumption Reports.
(i) Inventory Reports. Month-end closing inventory reports ("Inventory Reports") shall be provided by Curia to Indivior no less than three (3) business days before each month-end; and no less than four (4) business days before each quarter-end. The Inventory Reports shall be inclusive of all Indivior owned inventory including but not limited to API and Indivior Materials and all Products (collectively, the "Inventory").
(ii) Consumption Reports. Curia shall use Commercially Reasonable Efforts to provide Consumption Reports (defined below) to Indivior within forty-five (45) days of the Processing Date of the applicable Batch. Consumption Reports shall detail the Inventory "consumption quantities" allocated to the Purchase Orders still being Processed, or pending Quality Assurance approval, net of any items returned to stock (the "Consumption Report"). Curia shall include the following information in each Consumption Report to ensure records are maintained with integrity:
• Material Description
• Curia Lot Number
• Indivior Batch Number
• Quantity issued (net of returns)
For those Products already Processed, released, and in the process of being shipped, or have already shipped, Curia will provide to Indivior the relevant Consumption Reports.
ARTICLE 4
FORECASTS & PURCHASE ORDERS
4.1 Minimum Requirement. For Calendar Year 2022 only, Indivior agrees to purchase from Curia a minimum of [***] units of Product, subject to Curia's ability to make such quantity ("Minimum Requirement"). Accordingly, Curia agrees to dedicate its Optima/Inova H3-5V with RABS line at the Facility (the "Line") to Processing Product for Indivior during Calendar Year 2022.
4.2 Capacity Guarantee. For each subsequent Calendar Year during the Term, if Indivior's volume demand drops below the output of the Line (i.e., the demonstrated performance) during Calendar Year 2022 ("2022 Line Output"), then Curia shall not be required to dedicate the Line to Processing Product for Indivior; provided, however, Curia shall give Indivior the right of first refusal with respect to any unutilized capacity on the Line during the first Calendar Year in which Indivior's volume demand (based on the Annual Forecast) drops below the 2022 Line Output. Accordingly, Indivior may elect to have the Line dedicated to Indivior in any subsequent Calendar Year during the Term by paying a capacity reservation fee, based on the types of units of Product ordered during the previous Calendar Year and the associated Unit Pricing (i.e., the average per unit price) set forth in Column B in the table set fo1th in Exhibit B, subject to adjustment in accordance with Section 7.2 ("Capacity Reservation Fee"). In the event Indivior does not elect to pay the Capacity Reservation Fee during any Calendar Year during the Term, Curia shall have the right to sell the unutilized capacity to other customers and Indivior's right of first refusal set forth in this Section 4.2 shall lapse. Within ten (10) calendar days of the first (1st) day of each Calendar Year during the Term, Indivior shall provide Curia with notice of whether Indivior would like to reserve such unutilized capacity by paying the Capacity Reservation Fee. By way of example, if the 2022 Line Output is 800,000 units of Product and Indivior's volume demand for Calendar Year 2023 is 700,000 units of Product, then Indivior may elect to have the Line dedicated to Indivior during Calendar Year 2023 by paying a Capacity Reservation Fee for the 100,000 units of unutilized capacity. For clarity, for each Calendar Year in which Indivior elects to pay a Capacity Reservation Fee, if applicable, such Capacity Reservation fee shall be credited towards any amount of Product Curia Processes and Delivers in excess of the Annual Forecast during such Calendar Year.
4.3 Forecasts and Purchase Orders. On or before the twelfth (12th) day of each month, beginning on January 12, 2022, Indivior shall furnish to Curia a written twelve (12) month rolling forecast of the quantities of Product that Indivior intends to order from Curia during such period ("Rolling Forecast"). The first six (6) months of such Rolling Forecast shall constitute a firm and binding commitment to order quantities of Product specified therein ("Firm Period Forecast"), and the following six (6) months of the Rolling Forecast shall be non-binding, good faith estimates. Each month of the Rolling Forecast shall begin on the twelfth (12th) of the calendar month in which such Rolling Forecast is submitted and end on the eleventh (11th) day of the following calendar month. With exception to the Firm Period Forecast, Curia reserves the right to reject any Rolling Forecast that does not align with the physical Processing capabilities of the Facility(ies) and the parties shall work in good faith to adjust the Rolling Forecast based on available resources, Facility capacity and other relevant factors. Indivior shall have the right to request an increase of the Firm Period Forecast to include additional units of Product. Curia may, in its sole discretion, supply such additional quantities, subject to Curia's other supply commitments and manufacturing capacity. In the event Curia agrees to supply such additional quantities, Indivior shall submit a Purchase Order for such additional quantities, with the required lead times as specified below. In no event shall Curia's inability to fulfill Purchase Orders for quantities in excess of the Firm Period Forecast be deemed a breach of this Agreement, nor relieve Indivior of its obligations under this Agreement.
Indivior shall submit with each Rolling Forecast, a non-cancelable Purchase Order for the Firm Period Forecast (or such portion of the Firm Period Forecast not covered by previously submitted Purchase Orders). Indivior may alternatively submit Purchase Orders for certain portions of the Firm Period Forecast subsequent to the submission of the Rolling Forecast, provided the Purchase Orders provide the required lead time for Processing as set forth below. Curia shall notify Indivior of acceptance of the
Rolling Forecast and any Purchase Order within seven (7) business days of receipt. Curia shall be deemed to have accepted Purchase Orders which it does not acknowledge within seven (7) business days of receipt. Curia shall have the right to reject Rolling Forecasts and Purchase Orders that are inconsistent with this Agreement. Each Purchase Order shall specify the quantity of Product being ordered, and the desired delivery date.
Upon mutual agreement in writing for additional quantities of Product beyond the Firm Period Forecast, including projected delivery date(s), Indivior shall issue the applicable Purchase Order to be accepted by Curia as described above. Once placed, all Purchase Orders for Product shall be non-cancelable. No different or additional terms or conditions set forth in any Purchase Order shall modify in any way the terms and conditions of this Agreement, and in the event of a conflict between terms in any Purchase Order and this Agreement, the terms of this Agreement shall control.
All Purchase Orders submitted in accordance with the terms of this Agreement shall be effective and binding on the parties upon acceptance by Curia. Except as otherwise provided herein, neither party shall have the right or power to refuse, reduce, or otherwise modify their obligations under any Purchase Order; however, Purchase Orders may be amended (i) upon written mutual agreement regarding such modification that is signed by both parties; or (ii) as otherwise provided in this Section 4.3 or Section 4.4.
4.4 Indivior's Right to Modify. For the avoidance of doubt, the parties expressly acknowledge and agree that (a) the Firm Period Forecast constitutes a reservation by Indivior of the corresponding manufacturing slots and that Indivior shall have the right to schedule the Processing of any Product (whether Commercial Product or a Validation Batch) in each such manufacturing slot (subject to Curia's right to reject a Purchase Order as set forth in Section 4.3 or cancel a Purchase Order as set forth in Section 4.6); and (b) Indivior shall be permitted to change the Product to be Processed in each such manufacturing slot, provided, (i) Curia otherwise possesses or can timely obtain the necessary Raw Materials and Indivior Materials necessary to Process the same; (ii) the alternative Product is on the same manufacturing line; and (iii) Indivior provides at least thirty (30) days' prior written notice to Curia of the requested change.
4.5 Failure to Purchase. In the event (i) for Calendar Year 2022 only, the quantities purchased by Indivior are less than the Minimum Requirement, or (ii) the quantities purchased by Indivior in a given Calendar Quarter are below the Firm Period Forecast for that Calendar Quarter (the difference in quantities deemed an "Order Deficit"), Curia shall invoice Indivior for the Order Deficit, and Indivior shall pay for the Order Deficit, at the Unit Pricing. The preceding sentence shall not apply, and Indivior shall not be liable nor responsible, nor shall pay for, any Order Deficit resulting from Curia's failure or inability, not due to the fault of Indivior, to Process the quantities defined in the Firm Period Forecast for the applicable Calendar Quarter. For clarity, Curia shall not be deemed to have failed to supply quantities defined in the Firm Period Forecast due to Indivior's failure to provide materials or documentation or otherwise fulfill its obligations pursuant to this Agreement.
4.6 Curia's Cancellation of Purchase Orders or Purchase Orders Not Placed. In the event Indivior refuses or fails to make scheduled deliveries of the API or other Indivior Materials with sufficient time before the scheduled Processing Date (which failure shall be deemed to include the delivery of API or other Indivior Materials which do satisfy the applicable Specifications), Curia reserves the right to cancel all, or any part of, a Purchase Order upon as much advance notice as possible, in writing, to Indivior, and Curia shall have no further obligations or liability with respect to such Purchase Order. Curia shall invoice Indivior for such Purchase Order amount not supplied for reasons outlined herein and payments shall be made by Indivior within sixty (60) days of the receipt of the invoice. Notwithstanding the forgoing, the parties shall work together in good faith to substitute a Product in any affected manufacturing slots pursuant to Section 4.4 prior to Curia's cancellation of any such affected Purchase Order, taking into consideration whether Curia has sufficient API, Indivior Materials, and Raw Materials in its possession to Process the requested Product. For the avoidance of doubt, Purchase Orders for Commercial Product are non-cancellable and, except as set forth in Section 4.4, any rescheduling or delays by Indivior will be deemed a cancellation by Indivior of the applicable Purchase Order, unless otherwise agreed by both parties in writing. In the event of any such cancellation or rescheduling of Purchase Orders by Indivior for Commercial Product, Indivior shall be charged I 00% of the aggregate Unit Price based on the theoretical yield, unless such rescheduling or cancellation of a Purchase Order for Commercial Product is due to events that are under Curia's control.
4.7 Notice for Unplanned Delay. Curia shall provide Indivior with as much advance notice as possible (and will use its best efforts to provide at least fifteen (15) days advance notice where possible) if Curia determines that any Processing will be delayed, cancelled, or will deviate from the terms of an accepted Purchase Order for any reason.
4.8 Penalties for Delay. Beginning on January 1, 2023 and for the remainder of the Term, in the event Curia does not Deliver Product on or before the date set forth in the applicable Purchase Order, the penalties set forth in the table below shall apply to the Unit Price of the Product ("Delay Penalties"). For clarity, Delay Penalties shall apply only to small and/or medium scale Batches of Product for Most of World ("MOW Batches"). In addition, Delay Penalties shall in no event apply if a delivery
delay is due to: (i) Indivior’s failure to provide Indivior Materials and other required documentation or information in accordance with this Agreement which is required for Curia to Process the Product on the scheduled Processing Date; (ii) the applicable Product fails to meet the target molecular weight as defined in the Specifications; (iii) there is a delay caused by third party testing of the applicable Product; or (iv) Indivior exercises its right to modify a Purchase Order in accordance with Section 4.4 above within four (4) months of the scheduled Processing Date of the applicable Batch of Product.
| | | | | | | | |
Number of Days Delivery is Late | % of Price Deducted* | |
30-59 days | [***]% | |
60 days or more | [***]% | |
*The Percentage of Price Deducted shall be applied to Column B of the table set forth in Exhibit B. By way of example, if a Batch of Product SKU# [***] is Delivered 30 days after the delivery date set forth in the applicable Purchase Order, the Unit Price paid by Indivior for each unit of Product in such Batch shall be reduced by [***]%; the Unit Price for each unit in such Batch would therefore be $[***] - ($[***] * [***]) = $[***].
4.9 Exclusivity. Nothing in this Agreement shall prevent Curia from processing product for parties other than Indivior, provided, however, Curia shall not process any generic version of Product for another customer at the Facility during the Term, or shall prevent Indivior from engaging other contractors to provide services with respect to Product, subject in each case to the obligations of confidentiality and restrictions on use contained in this Agreement with respect to the parties' Confidential Information and Technology. For purposes of this Section 4.9, a "generic version of Product" means an AB rated generic version of the Product.
ARTICLE 5
RELEASE; BATCH RECORD REVIEW; DELIVERY AND STORAGE
5.1 Release. Curia shall be responsible for release testing of the Product, and, subject to the terms of the Quality Agreement, shall release each Batch to Indivior on the basis of its manufacturing and controls documentation review. In connection with the release of the Product, Curia shall deliver Product documentation (such as executed Batch records, Certificate of Analysis, Certificate of Compliance or other quality document as determined by Curia) to its customer portal. Notwithstanding anything in this Agreement to the contrary, Indivior shall be responsible for final release of Product prior to distribution for its intended use.
5.2 Review of Batch Records. Curia shall provide written notice to Indivior that the Batch records for a given Batch have been delivered to Curia's Indivior portal and are available for review. Indivior shall have ten (10) calendar days from the date of such notice to review and approve or reject such Batch records (the "Batch Record Review Period"). During the Batch Record Review Period, the parties agree to respond promptly, but in any event within ten (10) calendar days, to any reasonable inquiry by the other party with respect to such Batch records.
5.3 Delivery. Title to and risk of loss of Product shall transfer from Curia to Indivior upon delivery of the Product EXW the Facility (Incoterms 2010) ("Delivery"). Evidence of Delivery will be through the issuance of the completed stamped Batch record, Certificate of Conformance and Certificate of Analysis to Indivior. Indivior is responsible for transportation of the Product to Indivior's final destination at the sole risk and expense of Indivior. For avoidance of doubt, Indivior is responsible for arranging pick up by the carrier and all shipping costs and risks. Should Indivior request Curia to assist with any arrangements with the carrier, such arrangements will be made by Curia on behalf of lndivior in accordance with Indivior's applicable instructions and at the sole risk and expense of Indivior.
5.4 Failure to Take Delivery and Storage. If lndivior does not pick up Product upon Delivery by Curia, Curia shall store such Product at the Facility or a third-party storage location for thirty (30) days at no cost and, thereafter, at a monthly storage charge to Indivior for the duration of storage, billed at Curia's (or third-party’s as applicable) then current standard monthly storage fees and minimums, pro-rated for any partial month. For all Product stored by Curia upon Delivery, lndivior agrees that: (i) Indivior has title and risk of ownership; (ii) Indivior has made a fixed commitment to purchase such Product; (iii) Indivior is responsible for any decrease in market value of such Product that relates to factors and circumstances outside of Curia's control; (iv) Indivior is responsible for obtaining insurance for such Product during the storage period, if desired; and (v) lndivior is responsible for transportation of the Product to Indivior's final destination, at the sole risk and expense of the lndivior.
5.5 Curia's Release Cycle of Product. Curia shall perform all release activities for which it is responsible (i) within five (5) months of the Processing Date for all MOW Batches of Product, and (ii) within seven (7) months of the Processing Date for all other Batches of Product that are not MOW Batches (each, as applicable, the "Release Deadline"). Each party agrees to use Commercially Reasonable Efforts to respond promptly to the other party during all release activities. In addition, Curia shall not be deemed to have failed to meet the Release Deadline due to: (i) Indivior's failure to provide Indivior Materials and other required documentation or information in accordance with this Agreement which is required for Curia to Process the Product on the scheduled Processing Date; (ii) there is a molecular weight issue associated with the applicable Batch of Product; or (iii) there is a delay caused by third party testing (e.g, sterility testing) of the applicable Batch of Product that is not under Curia's control. In the event Curia does not meet the Release Deadline for an applicable Batch of Product, Indivior shall have the right, in its sole discretion, to (a) have Curia Process a replacement Batch at no additional cost to Indivior (provided Indivior provides sufficient quantities of Indivior Materials to perform such replacement), or (b) have Curia credit to Indivior the amount paid for such Batch of Product. The remedy set forth in the immediately forgoing sentence shall be Indivior's sole and exclusive remedy for any Batch of Product for which Curia does not meet the Release Deadline.
ARTICLE 6
REMEDIES FOR NON-CONFORMING PRODUCT
6.1 Notice of Rejection; Remedies. All Batches and/or Products are deemed accepted upon Delivery unless rejected by Indivior in accordance with this Section. Indivior may reject a Batch or Product solely if such Batch is determined to be Non-conforming Product. Indivior shall notify Curia in writing of its rejection of any Batch or Product by (a) the earlier to occur of (i) the end of the Batch Record Review Period or (ii) ten (10) business days from notification of the availability for testing of quality control samples, if applicable, and (b) with respect to Latent Defects, promptly upon discovery of such Latent Defect but no later than fourteen (14) days following such discovery; provided that Indivior must so inform Curia of any Latent Defects within three (3) months of Delivery of such Product (as applicable, the "Notice Period"). Said notice of rejection by Indivior shall specify Indivior's reasons for rejection and be accompanied by any supporting analyses or documentation. Within (30) days of receiving a notice of rejection from the Indivior, Curia shall respond stating whether (i) it accepts the rejection or (ii) it disputes the rejection, in which case the parties shall, after good faith negotiation as to whether the rejection is justified, refer such dispute to a mutually acceptable independent third party with the appropriate expertise to assess the conformity or non-conformity of rejected Product to the Manufacturing Standards at the time of Delivery. Such independent third party shall test the applicable Product and shall review the relevant Batch Records and other relevant documentation to determine whether such Product was Processed in accordance with the Manufacturing Standards or not. The parties agree that such third party's determination shall be final and binding upon the parties. The party against whom the independent third party rules shall bear the costs of testing and review by such independent third party. If such third party determines that Indivior's rejection of Product was incorrect, Indivior shall purchase and pay for both the initially rejected Product and any replacement Product produced at Indivior's request. In the event that Indivior rightfully rejects a Batch after a Validated Manufacturing Process has been established, Curia shall have, in its sole discretion, the right to either (a) replace, as soon as possible, the rejected Batch or portion thereof (provided that Indivior pays for the conforming replacement Product solely to the extent it has not already paid for the Non-conforming Product), or (b) credit Indivior a pro-rata portion of the amount paid by Indivior to Curia with respect to such Batch based on the percentage of such Batch that is unusable. In the event Curia replaces or credits Indivior for Non-conforming Product per the immediately foregoing sentence, Curia shall provide Indivior with a credit for API or Indivior Materials in the amount of the lesser of (i) the replacement value of the API or Indivior Materials; or (ii) $[***] (in the aggregate for the API and Indivior Materials) per Batch. The remedy set forth in the two immediately foregoing sentences shall be Indivior's sole remedy for failure of Non-conforming Product to have been Processed in accordance with the Manufacturing Standards and the other terms of this Agreement.
6.2 Supply of Material for Replacement Product. In the event Curia replaces Non-conforming Product pursuant to Section 6.1 above, Indivior shall supply Curia with sufficient quantities of API and other Indivior Materials at its sole cost as necessary for Curia to complete such replacement.
6.3 Other Latent Defects. In the event of any discovery of any latent defect other than a Latent Defect, each party shall use Commercially Reasonable Efforts to determine the cause of such latent defect and, in the event Curia is determined to have contributed to any such latent defect, the parties will negotiate in good faith how to address the issue, taking into account the extent to which such latent defect is reasonably associated with Curia's Processing failures under this Agreement.
ARTICLE 7
PRICING AND PAYMENT
7.1 Pricing.
(i) Unit Pricing. Indivior shall pay for Product upon Delivery in the manner set forth in Exhibit B, attached hereto and incorporated by reference. Indivior and Curia agree that Indivior shall pay for Product on a per-unit basis ("Unit Price" or "Unit Pricing") which includes all costs to complete Delivery of the Product, including but not limited to, planning, Processing, release testing, Other Raw Materials, documentation, and project management. Indivior shall also pay Curia for any development, validation and regulatory support services as set forth in an SOW or change order. The parties acknowledge and agree that the pricing set forth in this Agreement benefits from the investments Indivior has made in the Facility and that this statement is applicable to this Agreement only and shall not set a precedent or impact any other agreement between the parties.
(ii) Other Services. In the event Indivior requests any other services in connection with the Processing of Product, Curia shall provide a written quote of the proposed fee, for such additional services and Indivior shall advise Curia whether it wishes to have such additional services performed by Curia. If the parties mutually agree that such additional services shall be performed by Curia, the parties shall enter into an SOW defining the services and fee in sufficient detail, and Curia shall perform, and Indivior shall pay Curia for, such additional services as set forth in the applicable, fully executed SOW.
(iii) Third Party Costs. For any third party expense incurred by Curia on behalf of Indivior, in accordance with this Agreement, an applicable SOW or change order, Indivior agrees to reimburse Curia for such expense and pay Curia an additional fee of not more than [***] percent ([***]%) of such third party cost.
7.2 Price Increase.
(i) Beginning in Calendar Year 2024 and for each subsequent year during the Term, Curia may implement an increase in the Unit Pricing once annually, on January 1 of each Calendar Year ("Price Increase Date"), in an amount equal to the total percentage change in the Producer Price Index, Pharmaceutical Preparations (Series ID PCU325412325412) as published by the U.S. Department of Labor, Bureau of Labor Statistics ("PPI") during the immediately preceding twelve (12) month period ending September 30 (or if such PPI data is not available for the timely implementation of the increase in Unit Pricing, the most recent twelve (12) month period for which such PPI data is available). In addition, if Curia's cost for any Raw Material increases by more than two percent (2%) during the relevant period, Curia shall be entitled to increase Unit Pricing by the amount of such price increase for the Raw Material, over and above the increase on account of PPL In the event of an increase tied to a change in Curia's cost of Raw Materials, Curia shall provide Indivior copies of invoices evidencing the increased cost of such Raw Materials.
(ii) Curia reserves the right to increase the Unit Pricing or other fees if the parties mutually agree to implement changes in the Process or Specifications, and where such changes result in an increase in Processing costs to Curia. Such changes and price increase shall be agreed by the parties in writing and signed by each party.
(iii) Curia shall be required to notify Indivior in writing of any increase in Unit Pricing under Section 7.2(i) no less than thirty (30) days prior to the Price Increase Date (i.e., on or before December 1 of the preceding Calendar Year). Indivior shall be notified of an increase in Unit Pricing or other fees under Section 7.2(ii) at least sixty (60) days prior to the date on which such increase is to take effect, which shall be deemed the Price Increase Date for such increase. Any increase in Unit Pricing shall be applicable to all Product Delivered on or after the Price Increase Date, and Purchase Orders for Product ordered prior to the Price Increase Date but to be delivered on or after the Price Increase Date shall be modified/re-issued by Indivior to account for the increase in Unit.
7.3 Rescheduling and Cancellation Fees for other Services and Validation Batches.
(i) If Indivior cancels or reschedules any services that make use of Processing equipment but are not manufacture of Product services, then Indivior shall pay to Curia 100% of the fees of such services having a scheduled start date within thirty (30) days after the date of Curia's receipt of the notice of cancellation or rescheduling, as applicable.
(ii) If Indivior cancels or reschedules any Validation Batch for which the parties have signed a slot booking form, or if Curia needs to cancel or reschedule any Validation Batch due to delay by Indivior (including but not limited to delay in performance of Indivior's obligation to provide documentation, approvals, API and other materials) in Processing such Validation Batch, then Indivior shall pay to Curia the fee set forth in the table below. For clarity, upon full execution by the parties of any slot booking form, the date(s) set forth in the applicable slot booking form are firm and binding on both parties. Curia may not reschedule or cancel the date set forth in a fully executed slot booking form without the prior written consent of Indivior, provided that in no event shall Indivior incur a rescheduling/cancellation fee for a Processing date modification agreed to, in Indivior's sole discretion, at Curia's request. For the avoidance of doubt, in the event the manufacturing slot for a Validation Batch is replaced with a Batch of Commercial Product due to events that are under Curia's control, or pursuant to Section 4.4 above, Indivior shall not pay a rescheduling/cancellation fee for such rescheduled/cancelled Validation Batch.
| | | | | | | | |
Number of days before scheduled Processing Date or when delay, rescheduling or cancellation occurs* | Rescheduling/Cancellation Fee (expressed as a percentage of the Validation Batch fee) | |
Greater than 60 days | [***]% | |
30 to 60 days | [***]% | |
14 to 29 days | [***]% | |
Less than 14 days | [***]% | |
*In the event any cancellation by Indivior occurs after the commencement of Processing but prior to completion/release, it shall be deemed to have occurred with zero days' notice. Further, tasks/services rescheduled, delayed or put on hold more than once or rescheduled, delayed or put on hold beyond ninety (90) days of the initial scheduled date shall be deemed to have been cancelled, unless otherwise mutually agreed upon in writing.
7.4 Invoicing Schedule. Indivior shall be invoiced for payments due under this Agreement as follows:
(i) Processing and Supply of Commercial Product: Purchase Orders for Commercial Product will be invoiced upon Delivery and due within sixty (60) days of the date of receipt of the invoice (which date shall be deemed to be the same date the invoice is issued to Indivior, provided the invoice is issued electronically). For clarity, administrative changes to invoices do not reset the clock with respect to the sixty (60) day payment window.
(ii) Other Services: Any additional services (other than Processing of Commercial Product) shall be invoiced as set forth in the applicable SOW. Payment schedules shall be as set forth in the applicable SOW. Unless otherwise set forth in the applicable SOW, any payments in advance of performance shall not exceed [***] percent ([***]%), with any remaining balance to be invoiced upon performance and/or delivery by Curia.
7.5 Taxes; Duty. All taxes, duties and other amounts assessed on the Raw Materials, API or otherwise in connection with delivery of Product and the other services prior to or upon sale to Indivior are the responsibility of Indivior, and Indivior shall reimburse Curia for any such taxes, duties or other expenses paid by Curia.
7.6 Product Approval. Notwithstanding the terms set forth above, Indivior shall use its best efforts to expedite and obtain all regulatory approvals necessary for Curia to commence production at a Facility, as applicable ("Regulatory Approvals").
7.7 Payment Terms. Unless otherwise set forth in this Agreement, Indivior shall pay all undisputed invoices under this Agreement in full, or the portion of any invoice not in dispute, within sixty (60) days after the date of receipt of such invoice (which date shall be deemed to be the same date the invoice is issued to Indivior provided the invoice is issued electronically).
All invoices and payments required to be paid hereunder shall be paid in U.S. dollars, and all such payments shall be made electronically in immediately available funds to an account designated by Curia, unless the parties agree to settle such payments through other means. Indivior shall notify Curia of any errors in an invoice submitted by Curia within fifteen (15) days of Indivior’s receipt of such invoice and if such notice of any errors is not provided to Curia within such fifteen (15) day period, the invoice shall be deemed accepted as-is by Indivior and shall be paid within sixty (60) days of receipt by Indivior. Curia shall resolve any errors in an invoice of which it receives notice within fifteen (15) days of receipt of notice from Indivior. In the event such error is resolved by Curia within such fifteen (15) day period, payment of such invoice shall remain due within sixty (60) days of the date on which the defective invoice was received by Indivior. In the event such error is not resolved by Curia within its fifteen (15) day cure period, the payment due date shall be automatically extended to sixty (60) days from the date of Indivior's receipt of a corrected invoice. In the event payment is not received by Curia on or before the sixtieth (60th) day after the date of receipt of any undisputed invoice, then such unpaid amount shall accrue interest at the rate of one percent (1%) per month compounded monthly until paid in full. In addition, if Indivior fails to pay undisputed invoices when due, in addition to its other rights under this Agreement, in law or under equity, Curia will have the right, upon written notice to Indivior, to cease all activities hereunder until all outstanding invoices have been paid in full; provided, however, the foregoing shall not apply to any portions of an invoice that are subject to a good faith dispute. For purposes of this Section 7.7, "good faith dispute" shall mean that, within fifteen (15) days of receipt of an invoice, Indivior has substantiated with sufficient documentation the reason for any disputed portion of an invoice in writing to Curia.
ARTICLE 8
SPECIFICATIONS
8.1 Curia will maintain, as part of its quality documentation, all Specifications as listed within global drug product applications and, additionally, will maintain internal Specifications for Raw Materials as agreed in writing between both parties. The parties agree that internal Specifications for molecular weight of the Indivior polymer may define stricter criteria for certain identified parameters than comparable parameters within global drug product Specifications and/or may be used to group together certain parameters or criteria to meet multiple-country specification commitments.
8.2 Any changes to the Specifications as agreed to by the parties from time to time shall be in writing, dated and signed by the parties through the appropriate change control processes. No change in the Specifications, Facility, or Processes shall be implemented by Curia, whether requested by Indivior or requested or required by any Regulatory Authority, until the parties have agreed in writing to such change, the implementation date of such change, and any increase or decrease in fees associated with such change. Curia shall respond promptly to any request made by Indivior for a change in the Specifications, and both parties shall use commercially reasonable, good faith efforts to agree to the terms of such change in a timely manner. As soon as possible after a request is made for any change in Specifications or Processes, Curia shall notify Indivior of the fees associated with such change. Indivior shall pay all fees associated with such agreed upon changes.
Curia shall notify Indivior as soon as reasonably practical after Curia becomes aware of any changes in Applicable Laws which are likely to affect the supply of the Product under this Agreement (including rationale, expected timings, risk assessment, price impact and any impact on business continuity).
ARTICLE 9
QUALITY & REGULATORY MATTERS; RECORDS; BUSINESS CONTINUITY
9.1 Quality Agreement. Prior to Processing of the first Batch of Product, or at such other time as the parties may mutually agree upon, the parties shall execute a Quality Agreement. The Quality Agreement shall in no way determine liability or financial responsibility of the parties for the responsibilities set forth therein. In the event of a conflict between the terms of this Agreement and the Quality Agreement, this Agreement shall control except to the extent that such provision relates to compliance with cGMP requirements and/or applicable regulatory laws and regulations, in which the Quality Agreement's provision shall govern.
9.2 Regulatory Compliance. Indivior shall be solely responsible for all permits and licenses required by any regulatory agency with respect to Product and the Processing under this Agreement, including any product licenses, applications and amendments in connection therewith. Curia will be responsible for maintaining all applicable licensures and permits required by any Regulatory Authority with respect to a Facility so required for Curia to meet its obligations under this Agreement, subject to Indivior' s obligations set forth in the first sentence of this Section 9.2. During the Term, Curia will assist Indivior with all regulatory matters relating to Processing under this Agreement, at Indivior' s request and at Indivior' s expense. Each party intends and commits to cooperate to satisfy all Applicable Laws relating to Processing under this Agreement.
9.3 Regulatory Correspondence. Indivior shall make available to Curia the Curia-specific portions of all regulatory applications and amendments thereto and all correspondence with a Regulatory Authority, in each case relating to the Product, including without limitation, an IND, NDA, ANDA, 505(6)(2) and DMF or their equivalent applications in foreign jurisdictions. For purposes of the foregoing sentence, "Curia-specific portions" shall mean those sections of the regulatory applications, amendments or correspondence that reference Curia's systems, documentation, facilities or capabilities. Indivior agrees to incorporate all changes provided by Curia which correct for factual inaccuracies and to reasonably consider all other comments.
Indivior shall provide this information, and Curia shall review, in accordance with the following:
(a) Original Applications/ Amendments Not Requested by Regulatory Authority: Indivior shall provide sixty (60) days prior notice of its intent to file. Upon receipt of the draft application or amendment, Curia shall provide any comments to Indivior within ten (10) business days.
(b) Amendments/ Responses Requested by a Regulatory Authority: Indivior shall notify Curia of the request by the Regulatory Authority within twenty-four hours of receipt of request. Upon receipt of the draft amendment or response, Curia shall provide any comments to Indivior within four (4) business days.
9.4 GMP Audits. Indivior shall have the right to conduct one GMP audit, at no cost to Indivior, during each twelve (12) month period during the Term (i) to observe, inspect, and audit the manner in which Curia conducts Processing of Product; and (ii) inspect Curia's Facilities and records relating to Processing of Product, including Curia's quality and other controls related to its Processing of Product. Except for "for cause" audits which shall be conducted at no cost to Indivior, Indivior shall be charged for all additional audits, including any pre-approval inspections, at rates agreed upon by the parties based on timing of the audit, resource demand and any production disruption that may be caused by such an audit. The cost of any such additional GMP audit during the applicable twelve (12) month period shall be $[***] per day for Calendar Year 2022 and thereafter such amount shall be the base cost and subject to a price increase based on PPI for each subsequent Calendar Year during the Term. To schedule any audit under this Section, except for a "for cause" audit, Indivior shall give Curia reasonable advance notice, but not less than four (4) weeks' notice. All audits shall be carried out during normal business hours, and performed in such a manner as not to unduly delay the performance of the services or interfere with Curia's business. The number of visitors during any audit is limited to two (2) persons for two (2) days. No financial information shall be made available for audit except with respect to supporting documentation for specific out-of-pocket expenses charged to Indivior. All findings from any audit conducted under this Section shall be communicated to Curia, in writing, within thirty (30) business days of such audit.
Curia shall notify Indivior of any audits by a Regulatory Authority which are Productspecific. Indivior shall cooperate with Curia with respect to any Product-specific audits and, at Curia's request, shall make one or more of its employees with relevant knowledge, available on site during any such audit to answer questions in connection with any such audit.
9.5 Facility Audit. Curia shall give Indivior or each of its authorized representatives, which are not competitors of Curia, access to the Facility for a site and/or Facility risk evaluation, any such audit to be at Indivior's cost and expense, as set forth in an SOW or other written documentation signed by the parties. The aforementioned access shall be granted if requested by Indivior, once per Calendar Year. The cost of such Facility audit shall be $6,700 per day for Calendar Year 2022 and thereafter such amount shall be the base cost and subject to a price increase based on PPI for each subsequent Calendar Year during the Term. Curia shall use reasonable endeavors to ensure that its employees, its Affiliates and their employees cooperate with and provide reasonable assistance to Indivior during such audit. To schedule any audit under this Section 9.5, Indivior shall give Curia reasonable advance notice, but not less than two (2) weeks' prior written notice. All audits shall be carried out during normal business hours and performed in such a manner as not to unduly delay the performance of the services hereunder or interfere with Curia's business. The number of visitors during any audit is limited to two (2) persons for two (2) days. Indivior shall ensure that any of its representatives who are sent to the Facility to perform an audit pursuant to this Section 9.5 shall comply with all confidentiality, security, safety, quality or similar guidelines that apply to persons present in the Facility and that are communicated by Curia, and Indivior shall be responsible for any breach of these guidelines by such representatives.
9.6 Maintenance of Records. Curia shall maintain complete and accurate records of all data obtained or generated by Curia relating to its performance of services under this Agreement. Curia shall retain such records in a secure area, reasonably protected from fire, theft, and destruction, for at least three (3) years following the completion of the relevant services, or as otherwise provided by Applicable Law, whichever time period is longer.
9.7 Recalls. In the event Curia believes a recall, field alert, Product withdrawal or field correction may be necessary with respect to any Product Processed and supplied under this Agreement, Curia shall immediately notify Indivior in writing. Curia will not act to initiate a recall, field alert, Product withdrawal or field correction without the express prior written approval of Indivior, unless otherwise required by Applicable Laws. In the event Indivior believes a recall, field alert, Product withdrawal or
field correction may be necessary with respect to any Product Processed and supplied under this Agreement, Indivior shall immediately notify Curia in writing and Curia shall provide all reasonable cooperation and assistance to Indivior, at Indivior's expense. Indivior shall be financially responsible for the cost of, or expenses incurred in connection with, any recall, field alert, Product withdrawal or field correction, unless a recall, field alert, Product withdrawal or field correction is a result of Curia's gross negligence or willful misconduct. In the event a recall, field alert, Product withdrawal or field correction is caused by Curia's gross negligence or willful misconduct, Curia shall bear the reasonable, actual and documented administrative costs incurred by Indivior for such recall, field ale1t, Product withdrawal or field correction (e.g., expenses related to communications with regulatory authorities, cost of notifying customers, reasonable professional fees). Further, in the event of any recall, each patty shall use Commercially Reasonable Efforts to determine the cause of such recall and, in the event Curia is determined to have contributed to any necessary recall, the parties will negotiate in good faith how to address such recall, taking into account the extent to which such recall is reasonably associated with Curia's Processing failures under this Agreement. For the avoidance of doubt, in the event Indivior's use of Non-conforming Product results in a recall, field alert, Product withdrawal or field correction, Indivior shall be entitled to both the remedy set forth in this Section 9.7 with respect to the recall and the remedy set forth in Section 6.1 with respect to the Non-conforming Product.
9.8 Business Continuity Plan. Curia shall maintain a business continuity plan ("BCP") for the Facility at which Product is Processed under this Agreement. The parties agree that in Calendar Year 2022, they will align on the expectations and timeline for implementation of the BCP. Curia shall share broadly what it may cover in any current, applicable BCP so the parties may work together to address any gaps in an applicable BCP.
ARTICLE 10
REPRESENTATIONS AND WARRANTIES; FLOWDOWN TERMS
10.1 Indivior. Indivior represents and warrants to Curia that:
(i) Indivior Materials will comply with all applicable Specifications and will have been produced in compliance with the Applicable Laws;
(ii) it has all necessary authority and all right, title and interest in and to any Technology related to each Product as well as any Technology that is provided by Indivior to Curia under this Agreement, and Curia's use or application, in accordance with this Agreement, of any Technology provided by Indivior will not, to the best of Indivior's knowledge, infringe any third party intellectual property rights;
(iii) it has provided all safe handling instructions, health and environmental information and MSDS(s) applicable to the Product or to any Indivior Materials, in sufficient time for review and training by Curia prior to delivery;
(iv) all Product delivered to Indivior by Curia will be held, used and/or disposed of by Indivior in accordance with all Applicable Laws;
(v) it will comply with all Applicable Laws relating to Indivior's performance under this Agreement, and in particular, Indivior has obtained, and shall maintain, all necessary approvals from Regulatory Authorities for its use of any materials or Products provided by Curia under this Agreement;
(vi) it will not release Product for further distribution or use if the Batch record for a particular Batch of Product indicates that the Product does not comply with the Specifications or Applicable Laws; and
(vii) prior to distributing any Batch of Commercial Product, Indivior will review all Product-specific validation records and confirm that the Product has been validated in compliance with Applicable Laws.
10.2 Curia. Curia represents and warrants to Indivior that:
(i) at the time of Delivery, Product will have been Processed in accordance with the Manufacturing Standards, provided, however, this Section 10.2(i) shall in no event apply to Product that is Processed by Curia in accordance with Section 2.2 of this Agreement;
(ii) it shall perform the services hereunder in a professional manner and in accordance with all Applicable Laws at a Facility that complies with all Applicable Laws;
(iii) Any services supplied by Curia under this Agreement will be supplied by appropriately qualified and trained personnel, whom, to the best of Curia's knowledge:
(1) are not currently listed on the U.S. Department of Health Office of lnspector General's List of Excluded Individuals or Entities; or
(2) have not been or are currently the subject of a proceeding that could lead to their becoming a debarred individual or debarred entity under Section 306 of the Food Drug and Cosmetic Act (21 U.S.C § 335a).
Curia further agrees that if, at any time after execution of this Agreement, it becomes aware of itself or any employees providing services under this Agreement that (a) become excluded from participation in any federal healthcare program (as that term is defined by 42 U.S.C § 1320a-7b(f)); (b) are convicted of any crime that could result in exclusion from federal health care programs under 42 U.S.C. §§ 1320a-7, 1320-7a, or (c) become excluded, suspended, debarred or otherwise ineligible to participate in federal procurement or non-procurement programs, or (d) becomes listed on the General Services Administration System or Award Management, then Curia shall promptly provide notice of such to Indivior in accordance with the following sentence. In the event that Curia or any of its officers, directors, or employees performing services under this Agreement has become or, to the best of its knowledge, is in the process of being charged, convicted, debarred, excluded, proposed to be excluded, suspended or otherwise rendered ineligible, or is on an enforcement list, Curia will immediately, but in any event within two (2) business days of becoming aware of such event, notify Indivior in writing via email to ciacompliance@indivior.com and a hard-copy sent to Indivior Inc., Attn: Chief Compliance Officer, 10710 Midlothian Turnpike, Suite 125, North Chesterfield, VA 23235. Curia understands that debarment or exclusion of itself or an employee performing services under this Agreement may result in termination by Indivior in accordance with Section 15.2(i) below; and
(iv) Curia will not use the intellectual property of any third party in the Processing of the Product under this Agreement, without the prior written consent of Indivior.
10.3 Mutual Representations. Each party represents and warrants that:
(i) It is duly organized and validly existing under the laws of the jurisdiction of its incorporation and has full corporate power and authority to enter into this Agreement and to carry out the provisions hereof.
(ii) This Agreement is a legal and valid obligation of it, binding upon it and enforceable against it in accordance with the terms of this Agreement.
(iii) The execution, delivery and performance of this Agreement by it does not conflict with any agreement, instrument or understanding, oral or written, to which it is a party or by which such party may be bound, and does not violate any law or regulation of any court, governmental body or other administrative authority having authority over it.
(iv) Compliance with Anti-Corruption Laws.
(a) Indivior and Curia are committed to conduct business with the highest degree of ethics and integrity and will comply with all applicable local and international laws and regulations relating to anti-corruption including the U.S. Foreign Corrupt Practices Act (FCPA) and the U.K. Bribery Act 2010, as well as any applicable laws implementing the UN Convention Against Corruption and the OECD Anti-Bribery Convention.
(b) Each party undertakes that in connection with its obligations under this Agreement, it, its directors, employees and officers have not and shall not directly or indirectly (a) offer, provide, authorize for or promise to another person, or (b) request, accept or agree to accept from another person, any financial or other advantage or anything of value ("Benefit"), if such Benefit is for the purpose of influencing the receiving person improperly in his/her official capacity for the purpose of obtaining a business advantage, or where such Benefit would constitute a violation of any Applicable Law.
(c) In order to demonstrate compliance with Section 10.3(iv)(b) of this Agreement, each party shall keep books and records complete and accurate in order to reflect in reasonable detail the character and
value of transact ions and expenditures made under this Agreement. Each party shall give prompt written notice to the other patty if it has failed to comply with or has breached Section 10.4(iv)(b) of this Agreement.
(d) If in the reasonable opinion of a party, the other party has failed to comply with Section 10.4(iv)(b) of this Agreement in any material respect, then the non-breaching party may be entitled to terminate this Agreement in accordance with Section l 5.2(i) below.
10.4 Limitations; Disclaimer. THE REPRESENTATIONS AND WARRANTIES SET FORTH IN THIS ARTICLE 10 ARE THE SOLE AND EXCLUSIVE REPRESENTATIONS AND WARRANTIES MADE BY EACH PARTY TO THE OTHER AND NEITHER PARTY MAKES ANY OTHER REPRESENTATIONS, WARRANTIES OR GUARANTEES OF ANY KIND WHATSOEVER, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION ANY IMPLIED WARRANTIES OF MERCHANTABILITY, NON-INFRINGEMENT OR FITNESS FOR A PARTICULAR PURPOSE.
10.5 Flowdown Terms. The parties acknowledge and agree that this Agreement will be considered to be a US Government subcontract pursuant to Indivior's Federal Supply Schedule (Contract#: 36F79720D0156) with the US Government and that this Agreement is subject to FAR 52.244-6 (Subcontracts for Commercial Items). Curia understands and agrees that its performance of services under this Agreement will be subject to certain applicable government requirements (the "Flowdown Terms") as set forth in Exhibit E, attached hereto. The parties further agree and acknowledge that (i) Curia is at all times responsible for determining which government requirements may apply as Flowdown Terms and ensuring its own compliance with the same; and (ii) the Flowdown Terms may be updated from time to time upon written notice from Indivior to Curia, which such written notice shall not require an amendment to this Agreement but shall be set forth in a separate writing.
ARTICLE 11
CONFIDENTIAL INFORMATION
11.1 Confidential Information. As used in this Agreement, the term "Confidential Information" includes all confidential or proprietary scientific, technical, trade, business and/or financial information furnished by Curia or Indivior, or any of their respective representatives or Affiliates (collectively the "disclosing party"), to the other or its representatives or Affiliates (collectively the "receiving party"), whether furnished before, on or after the Effective Date and furnished in any form, including but not limited to written, verbal, visual, electronic or in any other media or manner, and whether or not identified as confidential. Confidential Information of Indivior includes, but is not limited to Indivior Existing Technology and Product-specific Program Technology. Confidential Information of Curia includes, but is not limited to Curia Background Technology, Curia Program Technology, the pricing information contained in any SOW, and the portions of the Master Batch Record and information provided in connection with Indivior's regulatory filings that are not Product-specific. Notwithstanding the other provisions of this Agreement, a party's Confidential Information does not include information which the receiving party can establish by competent proof (A) is or becomes generally available to the public other than as a result of a breach of this Agreement, or (B) is already known by the receiving party at the time of disclosure as evidenced by the receiving Party's written records, or (C) becomes available to the receiving party on a non-confidential basis from a source that is entitled to disclose it on a non-confidential basis, or (D) was or is independently developed by or for the receiving patty without reference to the disclosing patty's Confidential Information, as evidenced by the receiving patty's written records.
11.2 Confidentiality Obligation. The receiving party agrees to hold the Confidential Information of the disclosing party in trust and confidence and not to disclose such Confidential Information except (i) to those of its employees (including employees of its Affiliates) who have a need to know such information for purposes of performing such party's obligations under this Agreement and who are under an obligation of confidentiality no less restrictive than the obligations set forth in this Agreement that would apply to such information, (ii) by Curia to third parties who are involved in performing services under this Agreement and who are bound by written confidentiality restrictions no less stringent than those contained in this Agreement, (iii) by either party to Regulatory Authorities in connection with regulatory filings related to the Facilities or to Product Processed under this Agreement or (iv) as otherwise approved by the disclosing party in writing. Notwithstanding the foregoing limitations on disclosure, the receiving party may disclose such Confidential Information of the disclosing party as is required by any law, rule, regulation, order, decision, decree, subpoena or other legal process to be disclosed. If such disclosure is requested by legal process, the receiving party shall, if legally permitted, notify the disclosing party of such request promptly prior to any disclosure so as to permit the disclosing party to oppose or limit such disclosure by appropriate legal action.
11.3 Restrictions on Use; No Implied License. The receiving party agrees that it shall not use the disclosing patty's Confidential Information except for purposes of fulfilling its obligations under this Agreement or as otherwise expressly contemplated by this Agreement. The receiving party will obtain no right of any kind or license under any patent application or
patent by reason of this Agreement, except as explicitly granted under this Agreement. All Confidential Information will remain the sole property of the party disclosing such information or data.
11.4 Protective Measures. In protecting the secrecy of and avoiding disclosure and unauthorized use of disclosing party's Confidential Information, the receiving pa1ty shall take at least those measures that it uses to protect its own confidential information; however, in no event, shall less than a reasonable standard of care be used. The receiving party shall immediately notify the disclosing party in the event of any unauthorized use or disclosure of the disclosing party's Confidential Information of which the receiving party is or becomes aware, provided that in no event shall such notification be deemed an admission for evidentiary purposes.
11.5 Return of Confidential Information. Upon the written request of the disclosing party, except as set forth in Section 9, the receiving party shall promptly return to disclosing party or destroy all of the tangible Confidential Information of the disclosing party in its possession or control, except that one (1) copy may be retained by receiving party solely for the purpose of determining the scope of obligations incurred under this Agreement and except that neither party shall have any obligation to return or destroy computer files that are created during automatic system back-up and that cannot be reasonably returned or destroyed. Any Confidential Information of the disclosing party retained by the receiving party under this section shall continue to be subject to the confidentiality and non-use obligations according to the terms and conditions set forth herein.
11.6 Terms of Agreement. The parties hereby acknowledge and agree that the terms of this Agreement and any SOW executed hereunder, but not the existence thereof, shall be considered Confidential Information of both parties.
11.7 Term of Obligation. The parties' obligations under this Section 11 shall continue in effect during the Term and for a period of seven (7) years following termination or expiration of the applicable SOW. Notwithstanding the foregoing, the parties' obligations with regard to confidentiality and non-disclosure of Trade Secrets shall survive the termination or expiration of this Agreement until such time as the Trade Secret is no longer a Trade Secret under Applicable Law. "Trade Secret" shall be defined as defined by Applicable Law.
ARTICLE 12
INTELLECTUAL PROPERTY
12.1 Indivior Pre-Existing Technology. Curia agrees that Indivior has and shall retain sole and exclusive rights of ownership in and to any Indivior Confidential Information and other Indivior Existing Technology. Curia does not acquire any license or other right to Indivior Confidential Information or lndivior Existing Technology except for the limited purpose of carrying out its obligations under this Agreement.
12.2 Curia Pre-Existing Technology. Indivior agrees that Curia has and shall retain sole and exclusive rights of ownership in and to any Curia Confidential Information and other Curia Background Technology whether or not incorporated into the services under this Agreement. Indivior does not acquire any license or other right to Curia Confidential Information or Curia Background Technology except for the limited purpose of using Product Processed under this Agreement as expressly set forth in this Agreement.
12.3 Program Technology. All Product-specific Program Technology shall be the exclusive property of Indivior, and Curia hereby assigns any rights it may have in Product-specific Program Technology to Indivior, and further agrees to take such actions as are reasonably requested by Indivior, at Indivior's expense, to effect the foregoing assignment and in connection with Indivior’s efforts to secure patent protection for such Product-specific Program Technology. All Curia Program Technology shall be the exclusive property of Curia, and Indivior agrees to assign its rights in Curia Program Technology to Curia, and to take such actions as are reasonably requested by Curia, at Curia expense, to effect the foregoing assignment and in connection with Curia efforts to secure patent protection for such Curia Program Technology.
12.4 No Other Licenses. Except as expressly set forth in this Agreement, nothing in this Agreement shall be deemed to grant to either party any right or license under any patents, patent applications, know-how, technology, inventions or other Technology of the other party.
ARTICLE 13
INDEMNIFICATION
13.1 Indemnification by Curia. Curia shall indemnify, defend and hold harmless Indivior, its Affiliates, and their respective directors, officers, employees, agents, successors and assigns ("Indivior Indemnitees") from and against any and all suits, claims,
losses, demands, liabilities, damages, costs and expenses (including reasonable attorneys' fees) resulting from or arising out of, directly or indirectly, any suit, demand or action by any third party ("Losses") incurred in connection with, or arising out, of (A) any material breach by Curia of any of its representations, warranties, or covenants set forth in this Agreement, (B) any gross negligence or willful misconduct of any Curia Indemnitee (defined below), or (C) any violation of Applicable Laws, including cGMP (if applicable), by Curia or its Affiliates in performing Curia's obligations under this Agreement; except, in each case, to the extent that any of the foregoing Losses arises out of claims for which Indivior is obligated to indemnify Curia pursuant to Section 13.2.
13.2 Indemnification by lndivior. Indivior shall indemnify, defend and hold harmless Curia, its Affiliates, and their respective directors, officers, employees and agents ("Curia Indemnitees") from and against all Losses incurred in connection with, or arising out of (A) any material breach by Indivior of any of its representations, warranties or covenants set forth in this Agreement; (B) the marketing, sale, distribution or use of Product, including, but not limited to, use in clinical trials (if applicable), or any side effects, contraindications, illness, and/or death resulting from use of Product (whether based on strict liability, inherent design defect, negligence, failure to warn, breach of contracts or any other theory of liability); (C) the gross negligence or willful misconduct of any Indivior Indemnitees, as defined in Section 13.1, or (D) a claim by a third party that Curia's use of API or other Indivior Materials or of Technology provided to Curia by Indivior infringes such third party's intellectual prope1ty right; or (E) any violation of Applicable Laws by Indivior or its Affiliates in performing Indivior's obligations under this Agreement; except, in each case, to the extent that any of the foregoing Losses arises out of claims for which Curia is obligated to indemnify Indivior pursuant to Section 13.1.
13.3 Indemnification Procedures. In the event that either patty seeks indemnification under the terms of Sections 13.1 or 13.2 (the "Indemnified Party"), it shall promptly, but in any event within fifteen (15) days, inform the other party (the "Indemnifying Party") of the claim or liability of which the Indemnified Party becomes aware (including a copy of any related complaint, summons, notice or other instrument ), provided that failure to provide such notice shall not eliminate the Indemnifying Party's obligation under this Section 13 except to the extent the Indemnifying Party has been prejudiced by such failure. The Indemnifying Party shall have the right to assume direction and control of the defense of any indemnified claim, provided that if the Indemnifying Party does not assume direction and control of the defense, the Indemnified Party shall do so, provided that such defense shall be, in both cases, solely at the Indemnifying Party's cost. The Indemnified Party shall cooperate as requested by, and at the expense of, the Indemnifying Party, in the defense of the claim. The Indemnifying Party shall not settle or otherwise compromise any claim or suit in any manner which requires the Indemnified Party to provide any consideration, admit fault or take any other action that would be binding on such Indemnified Party without the prior written consent of the Indemnified Party. The Indemnifying Party shall not have any obligation to the Indemnified Party under this Section 13 for any claim settled by the Indemnified Party without the Indemnifying Party's prior written consent.
ARTICLE 14
INSURANCE
14.1 Curia. Curia shall, at its own cost and expense, obtain and maintain in full force and effect the following insurance during the term of this Agreement: (i) Commercial General Liability insurance with per-occurrence and general aggregate limits of not less than $[***]; (ii) Products and Completed Operations Liability Insurance with per-occurrence and general aggregate limits of not less than $[***]; (iii) Workers' Compensation and Employer's Liability Insurance with statutory limits for Workers' Compensation and Employer's Liability insurance limits of not less than $[***]; (iv) Professional Services Errors & Omissions Liability Insurance with per claim and aggregate limits of not less than $[***] covering sums that Curia becomes legally obligated to pay as damages resulting from claims made by Indivior for errors or omissions committed in the conduct of the services outlined in the Agreement. In lieu of insurance, Curia may self-insure any or a portion of the above required insurance. In the event that any of the required policies of insurance are written on a claims-made basis, then such policies shall be maintained during the entire term of this Agreement and for a period of not less than three (3) years following the termination or expiration of this Agreement. Each insurance policy that is required under this Section shall be obtained from an insurance carrier with an A.M. Best rating of at least A- VII.
14.2 Indivior Insurance. Indivior shall, at its own cost and expense, obtain and maintain in full force and effect the following insurance during the term of this Agreement: (i) Products and Completed Operations Liability Insurance with per-occurrence and general aggregate limits of not less than $[***]; (ii) Workers' Compensation and Employer's Liability Insurance with statutory limits for Workers' Compensation and Employer's Liability insurance limits of not less than $[***]; (iii) All Risk Property Insurance, including transit coverage, in an amount equal to full replacement value covering Indivior's property, including Indivior Materials, while it is at a Facility or in transit to or from a Facility. In the event that any of the required policies of insurance are written on claims-made basis, then such policies shall be maintained during the entire term of this Agreement and for a period of not less than three (3) years following the termination or expiration of this Agreement. Indivior shall not seek reimbursement for any property claim, or portion thereof that is not fully recovered from Indivior's Property Insurance policy.
Each insurance policy that is required under this Section shall be obtained from an insurance carrier with an A.M. Best rating of at least A- VII.
ARTICLE 15
TERM AND TERMINATION
15.1 Term. This Agreement shall commence on the Effective Date and shall continue for five (5) years unless earlier terminated under Section 15.2 below (the "Term"). The term of this Agreement may be extended upon mutual agreement of the parties.
15.2 Termination by Either Party.
(i) Material Breach. Either party may terminate this Agreement effective upon sixty (60) days prior written notice to the other party, if the other party commits a material breach of this Agreement and fails to cure such breach by the end of such sixty (60) day period.
(ii) Bankruptcy. Either party may terminate this Agreement effective upon written notice to the other party, if the other party becomes insolvent or admits in writing its inability to pay its debts as they become due, files a petition for bankruptcy, makes an assignment for the benefit of its creditors or has a receiver, trustee or other court officer appointed for its prope1iies or assets; and such filings or assignments are not voided within sixty (60) days.
15.3 Effect of Termination. In the event of any termination or expiration of this Agreement, Indivior shall be responsible for payment of (i) any outstanding invoices, (ii) any in-process Product not yet delivered or Product ordered pursuant to a Purchase Order, (iii) any Product specified in the most recent Firm Period Forecast for which a Purchase Order has not yet been submitted, (iv) any applicable cancellation fees pursuant to Section 7.3, (v) other actual costs and expenses incurred by Curia prior to the date of notice of termination, and (vi) costs relating to decommissioning activities, including Curia's documented costs, including the costs of packaging equipment and inventory. Without limiting the foregoing, upon termination of this Agreement, Curia shall ship to Indivior all Indivior Materials, Indivior Equipment and Product in Curia's possession and Indivior shall pay all costs associated therewith. Payment shall be due within sixty (60) days of the date of the final invoice. In the event any credit towards future payments is or will by owed by Curia to Indivior as of the date of termination or expiration of this Agreement, Curia shall pay Indivior directly the full balance of any such unused credit(s). Such payment shall be made no less than sixty (60) days after the date of termination or expiration of this Agreement.
15.4 Termination by Indivior. This Agreement may be terminated by Indivior upon twelve (12) months' prior written notice to Curia in the event a court of competent jurisdiction or a Regulatory Authority (1) withholds marketing approval of a Product; and/or (2) infringement litigation makes it impracticable for Indivior to continue production of the Product.
ARTICLE 16
LIMITATIONS OF LIABILITY
16.1 EXCEPT AS SET FORTH IN SECTION 3.1 AND 6.1, OR AS MAY OTHERWISE BE AGREED BY THE PARTIES IN A SEPARATE WRITING SIGNED BY THE PARTIES PURSUANT TO SECTIONS 6.3 OR 9.7, CURIA SHALL HAVE NO LIABILITY FOR THE COST OF, OR LOSS OR DAMAGE TO, API AND OTHER INDIVIOR MATERIALS , AT ANY TIME, WHETHER OR NOT SUCH API OR OTHER INDIVIOR MATERIALS ARE INCORPORATED INTO PRODUCT.
16.2 EXCEPT IN THE EVENT OF CURIA'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, CURIA'S AGGREGATE LIABILITY UNDER THIS AGREEMENT SHALL IN NO EVENT EXCEED THE TOTAL FEES PAID BY INDIVIOR TO CURIA FOR THE SERVICES AT ISSUE/BATCH OF PRODUCT GIVING RISE TO SUCH LIABILITIES, CLAIMS OR OBLIGATIONS, MINUS ANY THIRD-PARTY PASS THROUGH EXPENSES. THE FOREGOING CAP SHALL NOT INCLUDE ANY AMOUNTS PAID BY CURIA TO INDIVIOR IN ACCORDANCE WITH SECTION 16.1.
16.3 EXCEPT IN THE EVENT OF A PARTY'S (I) GROSS NELIGENCE OR WILLFUL MISCONDUCT, (II) BREACH OF ITS CONFIDENTIALITY OBLIGATIONS PURSUANT TO ARTICLE 11, AND/OR (III) INDEMNITY OBLIGATIONS PURSUANT TO ARTICLE 13, NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY FOR INDIRECT, INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES OF THE OTHER PARTY OR ITS RELATED INDEMNIFIED PARTIES ARISING OUT OF PERFORMANCE UNDER THIS AGREEMENT, INCLUDING WITHOUT LIMITATION, LOSS OF REVENUES, PROFITS OR DATA, OR PENALTIES ARISING UNDER THIRD PARTY
CONTRACTS, WHETHER IN CONTRACT OR TORT, EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. THE FOREGOING WAIYER SHALL IN NO EVENT LIMIT A PARTY'S INDEMNITY OBLIGATIONS HEREUNDER.
ARTICLE 17
NOTICE
All notices and other communications hereunder shall be in writing and shall be deemed given: (A) when delivered personally; (B) when delivered by facsimile transmission (receipt verified); (C) when received or refused, if mailed by registered or certified mail (return receipt requested), postage prepaid; or (D) when delivered if sent by express courier service, to the parties at the following addresses (or at such other address for a party as shall be specified by like notice; provided, that notices of a change of address shall be effective only upon receipt thereof):
| | | | | |
| To Indivior: | Indivior UK Limited |
| Chapleo Building |
| Henry Boot Way, |
| Priory Park, |
| Hull HU4 7BY, United Kingdom |
| Attn: Assistant General Counsel, EMEA |
| |
| With a copy to: | Indivior Inc. |
| 10710 Midlothian Turnpike, Suite 125 |
| North Chesterfield, VA 23235 |
| Attn: Chief Legal Officer |
| |
| To Curia: | Curia Global, Inc. |
| 26 Corporate Circle |
| Albany, New York 12203 |
| Attn: Legal Department |
ARTICLE 18
MISCELLANEOUS
18.1 Entire Agreement; Amendments. This Agreement, the attachments/Exhibits, Product Addenda and any amendments thereto constitute the entire understanding between the parties and supersede any contracts, agreements or understanding (oral or written) of the parties with respect to the subject matter hereof. The Burlington Supply Agreement dated October 31, 2017, as amended, between the parties (the "BUR Agreement") is hereby terminated, replaced and superseded by this Agreement, notwithstanding any provisions therein to the contrary, and the rights and obligations of the parties with respect to the services set forth in the BUR Agreement shall be subject to the terms and conditions of this Agreement. Any outstanding Purchase Orders issued pursuant to the BUR Agreement shall be governed by this Agreement as of the Effective Date without the need to amend the same. Further, the parties hereby agree the Development and Clinical Supply Master Services Agreement dated January 2, 2013, as amended, by and between Curia and Indivior Inc. (formerly known as Reckitt Benckiser Pharmaceuticals Inc.) (the "Development Agreement") is hereby terminated, replaced, and superseded by this Agreement, notwithstanding any provisions therein to the contrary, and the rights and obligations of the parties with respect to the services set forth in such agreement shall be subject to the terms and conditions of this Agreement. Any outstanding Work Orders, as defined in the Development Agreement, issued pursuant to the Development Agreement shall be governed by this Agreement as of the Effective Date without the need to amend the same. For the avoidance of doubt, the ABQ Agreement is not superseded by this Agreement and shall remain in full force and effect in accordance with its terms. No term of this Agreement may be amended except upon written agreement of both parties, unless otherwise provided in this Agreement. Except as expressly set forth herein, the terms and conditions set forth in this Agreement shall govern over any conflicting terms and conditions. Any additional terms and conditions proposed by or contained in any form provided by Indivior (including a purchase order, order acknowledgement/acceptance, or otherwise) are hereby rejected. The recitals at the start of this Agreement are hereby incorporated into and made a part of this Agreement.
18.2 Captions. The captions and Section headers in this Agreement are for convenience only and are not to be interpreted or construed as a substantive part of this Agreement.
18.3 Further Assurances. The parties agree to execute, acknowledge and deliver such further instruments and to take all such other incidental acts as may be reasonably necessary or appropriate to carry out the purpose and intent of this Agreement.
18.4 No Waiver. Failure by either party to insist upon strict compliance with any term of this Agreement in any one or more instances will not be deemed to be a waiver of its rights to insist upon such strict compliance with respect to any subsequent failure.
18.5 Severability. If any term of this Agreement is declared invalid or unenforceable by a court or other body of competent jurisdiction, the remaining terms of this Agreement will continue in full force and effect.
18.6 Independent Contractors. The relationship of the parties is that of independent contractors, and neither party will incur any debts or make any commitments for or on behalf of the other party except to the extent expressly provided in this Agreement. Nothing in this Agreement is intended to create or will be construed as creating between the parties the relationship of joint venturers, co partners, employer/employee or principal and agent.
18.7 Successors and Assigns. This Agreement will be binding upon and inure to the benefit of the parties, their successors and permitted assigns, and any entity that acquires rights to the services and/or Products that are subject hereof. Neither party may assign this Agreement, in whole or in part, without the prior written consent of the other party, except that either party may, without the other party's consent, assign this Agreement to an Affiliate or to a successor to all of the business or assets of the assigning party (which for the avoidance of doubt, shall include a sale of a division, site or specific business unit), provided that the assigning party provides written notice to the nonassigning party within thirty (30) days of such assignment not requiring consent.
18.8 Governing Law. This Agreement shall be governed by and construed under the laws of the State of Delaware, excluding its conflicts of law provisions.
18.9 Dispute Resolution. The parties shall first attempt in good faith to resolve any claim or controversy between the parties that arises out of this Agreement or breach thereof promptly by negotiations between senior executives who have authority to settle the controversy and who are not the persons with direct responsibility for the day-to-day administration of services provided under and received pursuant to this Agreement. Any such dispute that has not been resolved by negotiation as provided above shall be determined by binding arbitration.
All disputes arising from or related to this Agreement, which the parties are unable to resolve pursuant to the paragraph above, shall be submitted to arbitration before a single arbitrator, mutually agreeable to the parties, and administered by the American Arbitration Association (AAA) in Wilmington, DE (or at a location mutually agreed to by the parties) under the Commercial Arbitration Rules then existing of the AAA, and judgment on the award may be entered in a court of competent jurisdiction. The parties acknowledge and agree that the United Nations Convention on Contracts for the International Sale of Goods is specifically excluded from application to this Agreement.
The arbitrator shall have exclusive authority to resolve any dispute relating to the interpretation, applicability, enforceability, or formation of the agreement to arbitrate, including but not limited to, any claim that all or part of the agreement to arbitrate is void or voidable for any reason.
Unless the parties agree otherwise, the parties and the arbitrator shall treat the proceedings, any related discovery, and the decisions, as confidential, except in connection with judicial proceedings ancillary to the arbitration, such as a judicial challenge to, or enforcement of, an award, and unless otherwise required by law or to protect a legal right of a party. The arbitrator is empowered to impose reasonable limits on discovery, if any, and the time and manner for presenting evidence, with the goal of an efficient and economical arbitration process. The arbitrator must follow the rule of law in entering any award or relief in the arbitration.
Except as may be required by law, neither party nor an arbitrator may disclose the existence, content, or results of any arbitration hereunder without the prior written consent of both parties.
18.10 Counterparts. This Agreement may be executed in one or more counterparts, each of which will be deemed an original but all of which together will constitute one and the same instrument. Any photocopy, facsimile or electronic reproduction of the executed Agreement shall constitute an original.
18.11 Publicity. Neither party will make any press release or other public disclosure regarding this Agreement or the transactions contemplated hereby without the other party’s express prior written consent, except as required under applicable law or by any governmental agency, in which case the party required to make the press release or public disclosure shall use commercially reasonable efforts to obtain the approval of the other party as to the form, nature and extent of the press release or public disclosure prior to issuing the press release or making the public disclosure. Neither party shall use the names, logos, or trademarks of any other party for publicity or advertising purposes without the prior written consent of such other party.
18.12 Survival. Termination or expiration of this Agreement will not affect any rights and obligation of the parties that arose prior to such termination or expiration. In addition, Sections 6 (Remedies for Non-conforming Product), 11 (Confidentiality), 12 (Intellectual Property), 13 (Indemnification), 14 (Insurance), 16 (Limitations of Liability), 17 (Notice), 18 (Miscellaneous), and Sections 9.7 (Recalls) and 15.3 (Effect of Termination), and any other provisions of this Agreement which by their nature are intended to survive shall survive expiration or termination of this Agreement, provided that the obligations under Sections 11 and 6 shall survive only for the period stated therein.
18.13 Force Majeure. Except as to payments required under this Agreement, neither party shall be liable in damages for, nor shall this Agreement be terminable or cancelable by reason of, any delay or default in such party's performance hereunder if such default or delay is caused by events beyond such party's reasonable control including, but not limited to, acts of God, regulation or law or other action or failure to act of any government or agency thereof, war or insurrection, civil commotion, destruction of production facilities or materials by earthquake, fire, flood or storm, labor disturbances, epidemic, or failure of suppliers, public utilities or common carriers; provided however, that the party seeking relief hereunder shall immediately notify the other party of such cause(s) beyond such party's reasonable control. The party that may invoke this Section 18.13 shall use all reasonable endeavors to reinstate its ongoing obligations to the other. If the cause(s) shall continue unabated for one hundred eighty (180) days, then both parties shall discuss and negotiate in good faith any required modifications to this Agreement.
18.14 Data Protection. Indivior and Curia acknowledge and agree as follows: (i) in the performance of this Agreement, and the delivery of any documentation hereunder, certain Personal Data may be generated, disclosed to a party to this Agreement, and may be incorporated into files processed by either party or by the Affiliates of either party; (ii) Personal Data will be processed and stored solely for purposes of performing this Agreement and will be maintained for no longer than is necessary; (iii) each party represents and warrants that it has all legal right and authority to disclose any Personal Data of any third party it discloses to the other party to this Agreement, and that it has obtained the necessary consents from the relevant third party data subjects to so disclose such Personal Data; (iv) each party is aware that an individual whose Personal Data is processed hereunder has ce1tain rights to request access to, removal of or restriction on the processing of its Personal Data, and each patty will provide reasonable cooperation to the other as may be requested in the processing of any such request from such an individual. As used herein, "Personal Data" shall be as defined in Section 4 of Regulation (EU) 2016/679 (General Data Protection Regulation).
ARTICLE 19
COLD STORAGE ROOM BUILD-OUT AND CAPITAL INVESTMENT
19.1 Cold Storage Room. Curia and Indivior shall arrange for the design and construction of a cold storage room at the Facility, as more specifically described in Exhibit F (the "Cold Storage Room"). Title to, and risk of loss of, the Cold Storage Room shall be retained by Curia. Subject to Section 19.8 herein, Curia shall enter into a contract with a third party firm (the "Design and Construction Contract"), pursuant to which the development of detailed design drawings and construction of the Cold Storage Room (the "Build-Out") shall be conducted in conformance with Indivior's requirements (as mutually agreed by the Parties) and the terms and conditions of this Amendment. The parties agree that the Build-Out shall be a joint effort between the parties who shall share responsibility in ensuring that the Cold Storage Room satisfies Indivior's objectives.
19.2 [Intentionally Omitted].
19.3 Person-In-Plant. A representative from Indivior and his/her designees (who shall be employees or contractors of Indivior) shall be permitted to be present during the period of the Build-Out to assess progress and monitor work as Indivior deems necessary. Such Indivior personnel shall comply with any and all confidentiality, security, safety, quality or similar guidelines that apply to persons present in the Facility and that are communicated in advance by Curia, and such other terms and conditions as further set forth in Exhibit G.
19.4 Indivior Capital Investment. Indivior agrees to finance the costs of the Build-Out (such aggregate amount, the "Indivior Capital Investment"). Indivior has previously provided Curia with $[***] (the "Deposit"). Curia issued a credit to Indivior in the amount of [***] Dollars ($[***]). Accordingly, the remaining balance of the Deposit is [***] Dollars ($[***]). The parties agree that no further payments are pending as of the Effective Date of this Agreement from Indivior for the Cold Storage Room. Curia shall use the Deposit to cover the costs of all goods and services provided by the third-party contractors and vendors in connection with the Build-Out as they are incurred by Curia, and shall provide a monthly report to Indivior accounting for such expenditures.
19.5 Insufficient/ Excess Funds.
(a) In the event that the aggregate Build-Out costs exceed the Deposit, the parties shall work together in good faith to eliminate or minimize such excess amounts. In the event there continues to be excess amounts owed following such good faith efforts, Indivior shall be solely responsible for all costs over the Deposit. Curia shall invoice Indivior for any such amounts in accordance with Section 7.4 and Indivior shall pay such invoices in accordance with Section 7.7.
(b) In the event that the aggregate Build-Out costs are less than the Deposit, Curia shall credit Indivior the amount of any such excess which can be applied by Indivior against other invoices issued by Curia pursuant to this Agreement.
19.6 [Intentionally Omitted].
19.7 Indivior' s Rights to Cold Storage Room. During the Term and in exchange for the Indivior Capital Investment, Curia agrees that the Cold Storage Room shall be for priority use of Indivior, pursuant to the terms and conditions set forth in this Amendment. In the event Indivior' s storage needs do not fill the capacity of the Cold Storage Room at any given time, Curia may use the Cold Storage Room for the storage needs of other customers. Curia shall prioritize Indivior's storage needs with respect to the Cold Storage Room at all times during the Term, including moving materials that do not belong to Indivior out of the Cold Storage Room should the need arise. In the event Indivior's storage needs have filled the entire capacity of the Cold Storage Room and Indivior requires additional storage space, Product shall be sent to a third-party storage facility and Indivior will pay the applicable third-party monthly storage fee for such third-party storage in accordance with Section 5.4. Following the expiration or termination of this Agreement, nothing shall restrict or prevent Curia from using the Cold Storage Room for other parties, in its sole discretion.
19.8 Build-Out Timing. The parties expressly agree that the Design and Construction Contract shall be structured such that following the delivery of the detailed design and approval thereof by the pa1ties, Curia must expressly authorize the third patty contractor to begin construction and no construction-related costs shall be incurred until such authorization is provided. The decision to commence construction, and ongoing decisions to continue construction, shall be made by Curia, in consultation with Indivior, taking into account a variety of factors, including without limitation, the impact of the COVID-19 pandemic on local construction projects and any federal, state or local government or authoritative agency's orders, mandates, recommendations or requests related thereto. Curia shall in no event be responsible for any delay relating to the Build-Out caused by such factors or any other factors outside of Curia's direct control.
19.9 Consents. Indivior acknowledges that the initiation of any construction relating to the Build-Out is further conditioned upon (i) receipt of all government permits required relating to the Build-Out, and (ii) receipt of approval from the landlord pursuant to the lease agreement governing the Facility. Curia shall not be required to seek any such permits, approvals or consents until such time as a decision is made to proceed with the construction pursuant to Section 19.8 above.
19.10 DISCLAIMER. CURIA EXPRESSLY DISCLAIMS AND MAKES NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, OF MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OR OTHERWISE WITH RESPECT TO THE COLD STORAGE ROOM OR THE EQUIPMENT. CURIA IS NOT RESPONSIBLE NOR LIABLE FOR ANY DIRECT, INDIRECT, INCIDENTAL, OR CONSEQUENTIAL DAMAGES OR LOSSES OF INDIVIOR OR ANY THIRD PARTY RESULTING FROM INSTALLATION, OPERATION OR USE OF THE COLD STORAGE ROOM OR THE EQUIPMENT.
IN WITNESS WHEREOF, the parties have caused their duly authorized representative to execute this Agreement as of the Execution Date, the same to binding and effective as of the Effective Date.
| | | | | |
| Curia Massachusetts, Inc. | Indivior UK Limited |
By: /s/ Diane Beno | By: /s/ Hillel West |
Name: Diane Beno | Name: Hillel West |
Title: SVP, Quality and Interim President, Manufacturing | Title: Chief Manufacturing and Supply Officer |
Date: Feb 25, 2022 | Date: Feb 27, 2022 |
EXHIBIT A
INDIVIOR MATERIALS TESTING
Curia shall perform the testing listed in the table below, as applicable, for Indivior Materials. The parties agree all such testing is included in the Unit Price and shall not be a separate charge to Indivior, unless the parties agree in writing to any modifications to the testing and the costs associated with such modifications.
| | | | | | | | | | | | | | |
| Indivior Materials |
| Client | Part Number | Name | Test | Testing Site |
| [***] | [***] | [***] | [***] | [***] |
EXHIBIT B
UNIT PRICING
Indivior shall pay to Curia the Unit Pricing set forth in the table below for all Commercial Product. The pricing for any Non-Commercial Product or Validation Batches shall be set forth in the applicable SOW. Indivior shall pay the Unit Price set forth in Column B for each unit Delivered during a Calendar Year, provided the parties shall do a final accounting of the amount due for each such unit of Product Delivered when the final unit count for each Calendar Year is available (i.e., Curia may owe Indivior a certain amount or Indivior may owe Curia a certain amount based on the total number of units of Product Delivered in the applicable Calendar Year), subject to any further pricing adjustment pursuant to Section 4.8 (Penalties for Delay). The Unit Price will be adjusted by end of February of the following Calendar Year (i.e., the 2022 reconciliation will be performed by February 28, 2023). For example, if Curia Delivered 800,001 units of SUBLOCADE® SKU # [***] that met the Manufacturing Standards, and no penalties were applied to the Unit Price per Section 4.8, in Calendar Year 2022, then Indivior shall pay a price of $[***] for each such unit, totaling ($[***] x 800,001) = $[***] and resulting in an end of year reconciliation amount due to Curia of $[***] = $[***] - (800,001 x $[***]).
The parties agree that the Unit Pricing set forth herein shall be paid by Indivior to Curia in accordance with the terms of this Agreement for each unit of Product Delivered which is not Non-conforming Product, irrespective of the intended use of each unit of Product by Indivior.
The parties agree that the Unit Pricing for Calendar Years beyond 2022 shall be based on the Annual Forecast or, if the cumulative Firm Period Forecasts during the applicable Calendar Year are less than the Annual Forecast, the cumulative Firm Period Forecasts during the applicable Calendar Year. The following examples are to demonstrate various year-end accounting scenarios:
(a) For example, if Indivior's Annual Forecast for Calendar Year 2023 is for 800,000 units of Product, but Indivior's orders for Product in accordance with the Firm Period Forecasts for Calendar Year 2023 are for 700,000 units of Product and Curia Delivered 750,000 units of Product during Calendar Year 2023 in accordance with the applicable Purchase Orders, then Curia shall be entitled to the Unit Pricing set forth in Column C of the table below for each of the 750,000 units of Product Delivered by Curia in Calendar Year 2023.
(b) For example, if Indivior's Annual Forecast for Calendar Year 2023 is for 800,000 units of Product, and Indivior's orders for Product in accordance with the Firm Period Forecasts for Calendar Year 2023 are for 800,000 units of Product and Curia Delivered 750,000 units of Product during Calendar Year 2023, then Curia shall be entitled to the Unit Pricing set forth in Column B of the table below for each of the 750,000 units of Product Delivered by Curia in Calendar Year 2023.
(c) For example, if Indivior's Annual Forecast for Calendar Year 2023 is for 800,000 units of Product, and Indivior's orders for Product in accordance with the Firm Period Forecasts for Calendar Year 2023 are for 800,000 units of Product but Curia Delivered only 650,000 units of Product during Calendar Year 2023, then Curia shall be entitled to the Unit Pricing set forth in Column A of the table below for each of the 650,000 units of Product Delivered by Curia in Calendar Year 2023.
| | | | | | | | | | | | | | | | | | | | | | | |
| Curia Material No. (SKU #) | Indivior Product No. | MD # | Description | Target Batch Size (No. Syringes) | A | B | C |
| [***] | [***] | [***] | [***] | [***] | [***] | [***] | [***] |
Columns:
A: Unit Price for <[***] units in 2022. For 2023 and beyond, the Unit Price applies to <[***]% units of Product Delivered of the Annual Forecast (or the cumulative Firm Period Forecasts for the applicable Calendar Year in the event such quantity is less than the Annual Forecast).
B: Unit Price for [***]-[***] units in 2022. For 2023 and beyond, the Unit Price applies for [***]-[***]% units of Product Delivered of the Annual Forecast (or the cumulative Firm Period Forecasts for the applicable Calendar Year in the event such quantity is less than the Annual Forecast).
C: Unit Price for >[***] Units in 2022. For 2023 and beyond, the Unit Price applies for >[***]% units of Product Delivered of the Annual Forecast (or the cumulative Firm Period Forecasts for the applicable Calendar Year in the event such quantity is less than the Annual Forecast).
EXHIBIT C
FORM OF SCOPE OF WORK
Scope of Work
This Statement of Work ("SOW"), effective as of the date of last signature hereto (the "SOW Effective Date"), is entered into by and between [Curia Massachusetts, Inc. or other Curia entity performing the services], having an address of [99 S Bedford St., Burlington, MA 01803 or other Curia entity address] ("Curia") and Indivior UK Limited, having an address of Chapleo Building, Henry Boot Way, Priory Park, Hull HU4 7BY, UK ("Indivior") and is issued pursuant to the Master Development and Supply Agreement by and between Curia and Indivior, effective January 1, 2022 (the "Agreement"). This SOW is subject to the terms and conditions of the Agreement and is made a part thereof by reference. Any term not otherwise defined herein shall have the meaning specified in the Agreement. To the extent any terms or conditions of this SOW conflict with the terms and conditions of the Agreement, the terms and conditions of the Agreement shall control, unless this SOW expressly states the intent of the parties that a particular provision of this SOW supersede the Agreement with respect to a particular matter.
1. Services. [describe services with specificity]
2. Costs and Fees.
a. [describe fees with specificity]
b. Fees shall not exceed: [AMOUNT] ($XXX); and Expenses shall not exceed: [AMOUNT] ($XXX), for a total not to exceed amount of [AMOUNT] ($XXX) (the "NTE Amount"). Expenses may include travel, shipping, conference calls, materials duplication, and other expenses related to performing the services. The NTE Amount may be increased upon written approval by Indivior, which must be documented in an amendment to this SOW and signed by both parties.
3. Term. The term of this SOW shall commence on the SOW Effective Date and shall continue until completion of the Services, unless earlier terminated by a party in accordance with the Agreement.
4. Entire Agreement; Change Order. This SOW and the Agreement form the basis for the parties' agreement. Any change to this SOW shall be documented in a written change order mutually agreed upon and executed by the parties.
5. Counterparts. This SOW may be executed in one or more counterparts, each of which will be deemed an original but all of which together will constitute one and the same instrument. Any photocopy, facsimile or electronic reproduction of the executed SOW shall constitute an original.
6. Changes. Any alterations or amendments to this SOW (including any handwritten changes) will be null and void except by an instrument in writing, signed by authorized representatives of both parties.
IN WITNESS WHEREOF, this SOW has been executed by the parties hereto through their duly authorized representatives effective as of the SOW Effective Date.
[Curia Massachusetts, Inc. or other Curia entity performing the services]
Indivior UK Limited
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| By: | | | By: | |
| Name: | | | Name: | |
| Title: | | | Title: | |
| Date: | | | Date: | |
EXHIBIT D
PERFORMANCE STANDARDS
The parties agree that the Performance Standards set forth herein represent the ideal targets of the parties as of the Effective Date. The parties will work in good faith to establish the final targets throughout Calendar Year 2022 and shall agree in writing to the final parameters of the Performance Standards, whether by SOW, an amendment to this Agreement or other written documentation signed by both parties. In no event will the Performance Standards be applied prior to January 1, 2023 unless otherwise agreed by the parties in writing, signed by an authorized representative of each party.
| | | | | | | | | | | |
Key Performance
Indicator | Definition | Indivior Target | Curia Target |
| [***] | [***] | [***] | [***] |
EXHIBIT E
FLOWDOWN TERMS
| | | | | |
| Citation | Title |
FAR 52.203-6 (2020) | Restrictions on Subcontractor Sales to the Government |
FAR 52.203-13 (2020) | Contractor Code of Business Ethics and Conduct |
FAR 52.203-17 (2020) | Contractor Employee Whistleblower Rights and Requirement to Inform Employees of Whistleblower Rights |
FAR 52.203-19 (2017) | Prohibition on Requiring Certain Internal Confidentiality Agreements or Statements |
FAR 52.204-10 (2016) | Reporting Executive Compensation and First-Tier Subcontract Awards |
FAR 52.204-21 (2016) | Basic Safeguarding of Covered Conti act Information Systems |
FAR 52.204-23 (2018) | Prohibition on Contracting for Hardware, Software, and Services Developed or Provided by Kaspersky Lab and Other Covered Entities |
FAR 52.204-25 (2020) | Prohibition on Contracting for Certain Telecommunications and Video Surveillance Services or Equipment |
FAR 52.209-6 (2020) | Protecting the Government's Interest when Subcontracting with Contractors Debarred, Suspended, or Proposed for Debarment |
FAR 52.222-17 (2014) | Nondisplacement of Qualified Workers |
FAR 52.222-21 (2015) | Prohibition of Segregated Facilities |
FAR 52.222-26 (2015) | Equal Opportunity |
FAR 52.222-35 (2020) | Equal Opportunity for Veterans |
FAR 52.222-36 (2020) | Equal Opportunity for Workers with Disabilities |
FAR 52.222-37 (2020) | Employment Reports on Veterans |
FAR 52.222-40 (2010) | Notification of Employee Rights Under the National Labor Relations Act |
FAR 52.222-41 (2018) | Service Contract Labor Standards |
FAR 52.222-50 (2020) | Combating Trafficking in Persons |
FAR 52.222-51 (2014) | Exemption from Application of the Service Contract Labor Standards to Contracts for Maintenance, Calibration, or Repair of Certain Equipment-Requirements |
FAR 52.222-53 (2014) | Exemption from Application of the Service Contract Labor Standards to Contracts for Certain Services-Requirements |
FAR 52.222-54 (2015) | Employment Eligibility Verification |
FAR 52.222-55 (2020) | Minimum Wages Under Executive Order 13658 |
FAR 52.222-62 (2017) | Paid Sick Leave Under Executive Order 13706 |
FAR 52.223-18 (2011) | Encouraging Contractor Policies to Ban Text Messaging While Driving |
FAR 52.225-13 (2008) | Restriction of Certain Foreign Purchases |
FAR 52.232-40 (2013) | Providing Accelerated Payment to Small Business Subcontractors |
EXHIBIT F
COLD STORAGE ROOM
• Dimensions, internal: [***]
• Layout: [***]
• Internal volume: [***]
• Internal configuration: [***]
• Temp range: [***]
o [***]
o [***]
o [***]
• Dual, redundant refrigeration systems:
o [***]
o [***]
o [***]
• Security (DEA) cage:
o Size: [***]
o Construction:
• [***]
• [***]
• [***]
o Security features:
• [***]
• [***]
• [***]
EXHIBIT G
CONDITIONS FOR INDIVIOR PERSONNEL AT FACILITY FOR BUILD-OUT
1. Definitions
a. "Person-in-Plant" means the lndivior employee or employees on-site at the Facility for the Build-Out.
b. "Purpose" means observing and facilitating the Build-Out, in accordance with the terms and conditions set forth in the Agreement.
Capitalized terms used but not defined herein have the meanings assigned to them in the Agreement.
2. Restricted Access
Person-in-Plant agrees and understands that due to certain confidentiality concerns and requirements of Curia, Person-in-Plant's access shall be restricted solely to the Cold Storage Room area and such other areas in the Facility as may be determined by Curia, at Curia's reasonable discretion. The Person-in-Plant shall be accompanied at all times by a Curia employee at the Facility. The Person-in-Plant understands that he/ she will not be provided access to Curia computer networks.
3. Specific Obligations
a. Indivior's Obligations: As between the parties, the Person-in-Plant shall be considered Indivior’s employee.
b. lndivior shall further be responsible for all actual expenses and/or costs incurred by Person-in-Plant relating to the Purpose, including all expenses relating to travel, accommodation and all other costs incurred by the Person-in-Plant.
c. Curia's Obligations: Curia shall provide the Person-in-Plant reasonable access to areas of the Facility in direct connection with the Build-Out, subject to the restrictions set forth herein.
d. Person-in-Plant's Obligations: In addition to complying with all the terms set forth herein, Person-in-Plant shall follow all security, safety, and other policies of Curia for the Facility.
4. Confidentiality
The rights and obligations of Person-in-Plant with respect to Curia's Confidential Information shall be governed by Section 11 of the Agreement.
5. Indemnification
Indivior shall solely be responsible and shall indemnify, defend and hold harmless Curia and its Affiliates, their directors, officers, employees and agents ("Curia Indemnitees") for any and all claims, damages, liabilities, losses, costs and expenses, including but not limited to reasonable attorneys' fees (collectively, "Claims") arising from or related to Person-in-Plant's activities, including but not limited to any Claim brought by Person-in-Plant, except to the extent such Claims are caused by the negligence or willful misconduct of any of the Curia lndemnitees.
AGREEMENT AND PLAN OF MERGER
by and among
INDIVIOR INC.,
OLIVE ACQUISITION SUBSIDIARY, INC.
and
OPIANT PHARMACEUTICALS, INC.
dated as of November 13, 2022
TABLE OF CONTENTS
Page
| | | | | |
Article I. THE MERGER | |
Section 1.1 The Merger | |
Section 1.2 Closing | |
Section 1.3 Effective Time | |
Section 1.4 Governing Documents | |
Section 1.5 Officers and Directors of the Surviving Corporation | |
| |
Article II. TREATMENT OF SECURITIES | |
Section 2.1 Effect on Capital Stock | |
Section 2.2 Payment for Securities; Surrender of Certificates | |
Section 2.3 Appraisal Rights. | |
Section 2.4 Treatment of Company Options and Company Equity Awards. | |
Section 2.5 Withholding | |
Section 2.6 Treatment of Company Warrants | |
Section 2.7 Notice to Convertible Noteholders | |
| |
Article III. REPRESENTATIONS AND WARRANTIES OF THE COMPANY | |
Section 3.1 Qualification, Organization, Subsidiaries, etc | |
Section 3.2 Capitalization. | |
Section 3.3 Corporate Authority Relative to this Agreement; No Violation | |
Section 3.4 Reports and Financial Statements | |
Section 3.5 Internal Controls and Procedures | |
Section 3.6 No Undisclosed Liabilities | |
Section 3.7 Compliance with Laws; Permits | |
Section 3.8 Environmental Laws and Regulations | |
Section 3.9 Employee Benefit Plans | |
Section 3.10 Absence of Certain Changes or Events | |
Section 3.11 Investigations; Litigation | |
Section 3.12 Information Supplied | |
Section 3.13 Regulatory Matters | |
Section 3.14 Privacy and Data Security | |
Section 3.15 Tax Matters | |
Section 3.16 Labor Matters | |
Section 3.17 Intellectual Property | |
Section 3.18 Property | |
Section 3.19 Opinion of Financial Advisor | |
Section 3.20 Required Vote; State Takeover Statutes | |
Section 3.21 Material Contracts | |
| | | | | |
Section 3.22 Insurance | |
Section 3.23 Finders and Brokers | |
Section 3.24 Anti-Corruption; Sanctions | |
Section 3.25 Affiliate Transactions | |
Section 3.26 No Other Representations and Warranties | |
Article IV. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB | |
Section 4.1 Qualification, Organization, etc | |
Section 4.2 Corporate Authority Relative to this Agreement; No Violation | |
Section 4.3 Investigations; Litigation | |
Section 4.4 Information Supplied | |
Section 4.5 No Required Vote | |
Section 4.6 Finders and Brokers | |
Section 4.7 Financing | |
Section 4.8 Solvency | |
Section 4.9 Stock Ownership | |
Section 4.10 No Merger Sub Activity | |
Section 4.11 No Other Representations and Warranties | |
Article V. COVENANTS RELATING TO CONDUCT OF BUSINESS PENDING THE MERGER | |
Section 5.1 Conduct of Business by the Company | |
Section 5.2 Solicitation by the Company. | |
Section 5.3 SEC Filings; Stockholders’ Meeting. | |
Section 5.4 Tax Matters | |
Section 5.5 Interim Communications by the Company | |
Article VI. ADDITIONAL AGREEMENTS | |
Section 6.1 Access; Confidentiality; Notice of Certain Events | |
Section 6.2 Reasonable Best Efforts | |
Section 6.3 Publicity | |
Section 6.4 Directors’ and Officers’ Insurance and Indemnification | |
Section 6.5 Takeover Statutes | |
Section 6.6 Obligations of Merger Sub | |
Section 6.7 Employee Benefits Matters | |
Section 6.8 Rule 16b-3 | |
Section 6.9 Security Holder Litigation | |
Section 6.10 Delisting | |
Section 6.11 Treatment of Note Purchase Agreement. | |
Article VII. CONDITIONS TO CONSUMMATION OF THE MERGER | |
Section 7.1 Conditions to Each Party’s Obligations to Effect the Merger | |
Section 7.2 Conditions to Obligations of Parent and Merger Sub | |
Section 7.3 Conditions to Obligations of the Company | |
| | | | | |
Article VIII. TERMINATION | |
Section 8.1 Termination | |
Section 8.2 Effect of Termination | |
Article IX. MISCELLANEOUS | |
Section 9.1 Amendment and Modification; Waiver | |
Section 9.2 Non-Survival of Representations and Warranties | |
Section 9.3 Expenses | |
Section 9.4 Notices | |
Section 9.5 Certain Definitions | |
Section 9.6 Terms Defined Elsewhere | |
Section 9.7 Interpretation | |
Section 9.8 Counterparts | |
Section 9.9 Entire Agreement; Third-Party Beneficiaries | |
Section 9.10 Severability | |
Section 9.11 Governing Law; Jurisdiction | |
Section 9.12 Waiver of Jury Trial | |
Section 9.13 Assignment | |
Section 9.14 Enforcement; Remedies | |
Section 9.15 Company Disclosure Letter | |
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this “Agreement”), dated as of November 13, 2022, is by and among INDIVIOR INC., a Delaware corporation (“Parent”), OLIVE ACQUISITION SUBSIDIARY, INC., a Delaware corporation and a wholly owned subsidiary of Parent (“Merger Sub”), and OPIANT PHARMACEUTICALS, INC., a Delaware corporation (the “Company”). All capitalized terms used in this Agreement shall have the meanings ascribed to such terms in Section 9.5 or as otherwise defined elsewhere in this Agreement unless the context clearly provides otherwise. Parent, Merger Sub and the Company are each sometimes referred to as a “Party” and collectively as the “Parties.”
RECITALS
WHEREAS, the respective boards of directors of Parent, Merger Sub and the Company have each approved this Agreement pursuant to which, among other things, Parent would acquire the Company by means of a merger of Merger Sub with and into the Company on the terms and subject to the conditions set forth in this Agreement (the “Merger”);
WHEREAS, the respective boards of directors of Parent, Merger Sub and the Company each have approved this Agreement;
WHEREAS, as a condition and inducement to Parent’s and Merger Sub’s willingness to enter into this Agreement and to consummate the Merger, Parent has entered into a voting agreement, dated as of the date hereof (the “Voting Agreement”), with certain stockholders of the Company (the “Supporting Stockholders”), pursuant to which, subject to the terms thereof, such Supporting Stockholders have agreed, among other things, to vote shares of common stock, par value $0.001 per share, of the Company (the “Company Common Stock”) held by them in favor of the adoption of this Agreement;
WHEREAS, the Parties desire to make certain representations, warranties, covenants and agreements in connection with the Merger and also prescribe various conditions to the Merger; and
NOW, THEREFORE, in consideration of the mutual covenants and agreements contained in this Agreement and for other good and valuable consideration, the receipt and adequacy of which are acknowledged, the Parties agree as follows:
ARTICLE I.
THE MERGER
Section 1.1 The Merger. Upon the terms and subject to the satisfaction or waiver of the conditions set forth in this Agreement, and in accordance with General Corporation Law of the State of Delaware (the “DGCL”), at the Effective Time, Merger Sub shall be merged with and into the Company, whereupon the separate corporate existence of Merger Sub shall cease, and the Company shall continue as the surviving corporation in the Merger (the “Surviving Corporation”). The Merger shall have the effects set forth in this Agreement and the applicable
provisions of the DGCL. Without limiting the generality of the foregoing, from and after the Effective Time, all of the property, rights, privileges, immunities, powers and franchises of the Company and Merger Sub shall vest in the Surviving Corporation, and all of the debts, liabilities and duties of the Company and Merger Sub shall become the debts, liabilities and duties of the Surviving Corporation.
Section 1.2 Closing. The closing of the Merger (the “Closing”) will take place at 10:00 a.m., Eastern Time, as soon practicable, but no later than on the third (3rd) business day after the satisfaction or, to the extent permissible, waiver of, but subject to the continued satisfaction or, to the extent permissible, waiver of, the conditions set forth in Article VII (other than any such conditions that by their nature are to be satisfied at the Closing, but subject to the satisfaction or, to the extent permissible, waiver of such conditions at the Closing) unless this Agreement has been terminated pursuant to its terms or unless another time or date is agreed to in writing by the Parties hereto. The date on which the Closing actually takes place is referred to as the “Closing Date”. The Closing shall take place at the offices of Covington & Burling LLP, The New York Times Building, 620 Eighth Avenue, New York, New York 10018 or remotely via electronic exchange of required Closing documentation in lieu of an in-person Closing unless another place is agreed to in writing by the Company and Parent. Section 1.3 Effective Time. On the Closing Date, the Company shall cause a certificate of merger with respect to the Merger (the “Certificate of Merger”) to be duly executed and filed with the Secretary of State of the State of Delaware as provided under the DGCL and make any other filings, recordings or publications required to be made by the Company under the DGCL in connection with the Merger. The Merger shall become effective at such time as the Certificate of Merger is duly filed with the Secretary of State of the State of Delaware or on such later date and time as shall be agreed to by the Company and Parent and specified in the Certificate of Merger in accordance with the DGCL (such date and time being hereinafter referred to as the “Effective Time”).
Section 1.4 Governing DocumentsSection 1.5 . Subject to Section 6.4, at the Effective Time, by virtue of the Merger (a) the Company Certificate shall be amended and restated so as to read in its entirety as set forth in Exhibit A, and, as so amended and restated, shall be the certificate of incorporation of the Surviving Corporation, until thereafter amended as provided therein or by applicable Law and (b) the by-laws of the Company shall be amended and restated in their entirety to read as set forth in the by-laws of Merger Sub as in as of the date hereof, except that references therein to Merger Sub’s name shall be replaced with references to the Surviving Corporation’s name, until thereafter amended as provided therein, the certificate of incorporation of the Surviving Corporation and applicable Law. Section 1.5 Officers and Directors of the Surviving CorporationSection 1.6 . The Parties shall take all actions necessary so that (a) the directors of Merger Sub immediately prior to the Effective Time shall, from and after the Effective Time, be the directors of the Surviving Corporation until their successors shall have been duly elected or appointed and qualified or until their earlier death, resignation or removal in accordance with the certificate of incorporation and bylaws of the Surviving Corporation, and (b) the officers of Merger Sub immediately prior to the
Effective Time shall, from and after the Effective Time, be the officers of the Surviving Corporation until their successors shall have been duly elected or appointed and qualified or until their earlier death, resignation or removal in accordance with the certificate of incorporation and bylaws of the Surviving Corporation.
ARTICLE II.
TREATMENT OF SECURITIES
Section 2.1 Effect on Capital Stock.
(a) At the Effective Time, by virtue of the Merger and without any action on the part of the Parties or holders of any securities of the Parties:
(i) Conversion of Company Common Stock. Subject to the other provisions of this Article II, each share of Company Common Stock issued and outstanding immediately prior to the Effective Time (excluding shares of Company Common Stock to be cancelled in accordance with Section 2.1(a)(ii) and any Dissenting Shares) shall be automatically converted into the right to receive, in accordance with the terms of this Agreement, (A) $20.00 net to the seller in cash, without interest (the “Upfront Consideration”) and (B) one contingent value right per share (a “CVR”) which shall represent the right to receive the Milestone Payment Amounts (as defined in the CVR Agreement), net to the seller in cash, without interest, at the times provided for in the CVR Agreement (the Upfront Consideration plus one CVR, collectively, being the “Merger Consideration”). From and after the Effective Time, all such shares of Company Common Stock shall no longer be outstanding and shall automatically be cancelled and shall cease to exist, and each applicable holder of such shares of Company Common Stock shall cease to have any rights with respect thereto, except the right to receive the Merger Consideration therefor upon the surrender of such shares of Company Common Stock in accordance with Section 2.2 and the CVR Agreement. (ii) Cancellation of Certain Shares. Each share of Company Common Stock issued and outstanding immediately prior to the Effective Time that is owned or held in treasury by the Company or owned by Parent, Merger Sub or any of their respective Subsidiaries shall be automatically cancelled and shall cease to exist, and no consideration shall be delivered in exchange therefor.
(iii) Conversion of Merger Sub Common Stock. Each share of common stock, par value $0.01 per share, of Merger Sub (the “Merger Sub Common Stock”) issued and outstanding immediately prior to the Effective Time shall be automatically converted into and become one validly issued, fully paid and nonassessable share of common stock, par value $0.01 per share, of the Surviving Corporation and those shares of the Surviving Corporation shall constitute the only outstanding shares of capital stock of the Surviving Corporation.
(b) Adjustment to Merger Consideration. The Merger Consideration and any other amounts payable pursuant to this Agreement or the CVR Agreement shall be adjusted appropriately, without duplication, to reflect the effect of any stock split, reverse stock split, stock or other dividend (including any dividend or distribution of securities convertible into Company Common Stock), reorganization, recapitalization, reclassification, combination, exchange of shares or other like change with respect to the shares of Company Common Stock outstanding after the date hereof and prior to the Effective Time; provided, however, that nothing in this Section 2.1(b) shall be construed to permit the Company or the Company Subsidiary to take any action with respect to its securities that is prohibited by the terms of this Agreement.
Section 2.2 Payment for Securities; Surrender of Certificates.
(a) Exchange Fund. Prior to the Effective Time, Parent shall designate a bank or trust company reasonably acceptable to the Company to act as the exchange agent in connection with the Merger (the “Exchange Agent”). The Exchange Agent shall also act as the agent for the Company’s stockholders for the purpose of receiving and holding their certificate or certificates which immediately prior to the Effective Time represented outstanding shares of Company Common Stock (the “Certificates”) and non-certificated shares of Company Common Stock represented by book-entry (“Book-Entry Shares”) and shall obtain no rights or interests in the shares represented thereby. At or immediately after the Effective Time, Parent shall deposit, or cause to be deposited, with the Exchange Agent cash in immediately available funds in an amount sufficient to pay the aggregate Upfront Consideration (the “Exchange Fund”) for the sole benefit of the holders of shares of Company Common Stock. For the avoidance of doubt, Parent shall not be required to deposit any funds relate to any CVR with the Rights Agent unless and until such deposit is required pursuant to the terms of the CVR Agreement. In the event the Exchange Fund shall be insufficient to pay the aggregate Upfront Consideration, Parent shall promptly deposit, or cause to be promptly deposited, additional funds with the Exchange Agent in an amount which is equal to the deficiency in the amount required to make such payment. Parent shall cause the Exchange Agent to make, and the Exchange Agent shall make, delivery of the Upfront Consideration out of the Exchange Fund in accordance with this Agreement. The Exchange Fund shall not be used for any purpose that is not expressly provided for in this Agreement. The Exchange Fund shall be invested by the Exchange Agent as reasonably directed by Parent; provided, however, that no such investment or loss thereon shall affect the amounts payable to holders of Certificates or Book-Entry Shares pursuant to this Article II, and, to the extent of any such loss, Parent shall fund additional cash amounts into the Exchange Fund to enable such payments to be made. Any interest or other income from such investments shall be payable to Parent or the Surviving Corporation, as Parent directs. At or prior to the Effective Time, Parent shall duly authorize, execute and deliver, and shall ensure that the Rights Agent duly authorizes, executes and delivers, the CVR Agreement.
(b) Procedures for Surrender.
(i) As soon as reasonably practicable after the Effective Time, Parent shall, and shall cause the Surviving Corporation to, cause the Exchange Agent to mail to each holder of record of shares of Company Common Stock whose shares of Company
Common Stock were converted pursuant to Section 2.1 into the right to receive the Merger Consideration (i) a letter of transmittal, which shall specify that delivery shall be effected, and risk of loss and title to the Certificates shall pass, only upon delivery of the Certificates (or affidavits of loss in lieu thereof) or transfer of the Book-Entry Shares to the Exchange Agent and shall be in such form and have such other provisions as Parent may reasonably specify and (ii) customary instructions for effecting the surrender of the Certificates or transfer of the Book-Entry Shares in exchange for payment of the Merger Consideration issuable and payable in respect of such shares of Company Common Stock pursuant to Section 2.1. (ii) Upon (A) surrender to the Exchange Agent of a Certificate for cancellation, together with such letter of transmittal properly completed and validly executed in accordance with the instructions thereto, such other documents as may be required pursuant to such instructions or (B) receipt by the Exchange Agent of an “agent’s message” in the case of Book-Entry Shares and, in each case, the holder of such Certificate or Book-Entry Share shall be entitled to receive in exchange therefor, and the Exchange Agent shall, and Parent shall cause the Exchange Agent to, issue and pay to such holder, the applicable Merger Consideration pursuant to the provisions of this Article II for each share of Company Common Stock formerly represented by such Certificate or Book-Entry Share, and each Certificate or Book-Entry Share so surrendered shall be forthwith cancelled. The Exchange Agent shall accept such Certificates (or affidavits of loss in lieu thereof) or Book-Entry Shares upon compliance with such reasonable terms and conditions as the Exchange Agent may impose to effect an orderly exchange thereof in accordance with normal exchange practices. In the event of a transfer of ownership of shares of Company Common Stock that is not registered in the transfer or stock records of the Company, any portion of the Merger Consideration (including payment in the form of or with respect to any CVR) to be paid upon due surrender of the Certificate or Book-Entry Share formerly representing such shares of Company Common Stock may be paid to such a transferee if such Certificate or Book-Entry Share is presented to the Exchange Agent, accompanied by all documents required to evidence and effect such transfer and to evidence that any applicable stock transfer or other similar Taxes have been paid or are not applicable. Until surrendered as contemplated by this Section 2.2, each Certificate and Book-Entry Share shall be deemed at any time after the Effective Time to represent only the right to receive the applicable Merger Consideration as contemplated by this Article II, without interest thereon. (c) Transfer Books; No Further Ownership Rights in Shares. At the Effective Time, the stock transfer books of the Company shall be closed and thereafter there shall be no further registration of transfers of shares of Company Common Stock on the records of the Company. From and after the Effective Time, the holders of Certificates outstanding immediately prior to the Effective Time shall cease to have any rights with respect to such shares of Company Common Stock except as otherwise provided for herein or by applicable Law. If, after the Effective Time, Certificates or Book-Entry Shares are presented to the Surviving Corporation for any reason, they shall be cancelled and exchanged as provided in this Agreement.
(d) Termination of Exchange Fund; No Liability. At any time following six (6) months after the Effective Time, Parent shall be entitled to require the Exchange Agent to deliver to it any funds (including any interest received with respect thereto) remaining in the Exchange Fund that have not been disbursed, or for which disbursement is pending subject only to the Exchange Agent’s routine administrative procedures, to holders of Certificates or Book-Entry Shares, and thereafter such holders shall be entitled to look only to the Surviving Corporation and Parent (subject to abandoned property, escheat or other similar Laws) as general creditors thereof with respect to the applicable Merger Consideration payable upon due surrender of their Certificates or Book-Entry Shares and compliance with the procedures in Section 2.2(b), without any interest thereon. Notwithstanding the foregoing, none of the Surviving Corporation, Parent or the Exchange Agent shall be liable to any holder of a Certificate or Book-Entry Share for any Merger Consideration or other amounts delivered to a public official pursuant to any applicable abandoned property, escheat or similar Law. (e) Lost, Stolen or Destroyed Certificates. In the event that any Certificates shall have been lost, stolen or destroyed, the Exchange Agent shall issue in exchange for such lost, stolen or destroyed Certificates, upon the making of an affidavit of that fact by the holder thereof and, if required by Parent or the Exchange Agent, the posting by such holder of a bond in such reasonable amount as Parent or the Exchange Agent may determine as indemnity against any claim that may be made against it or the Surviving Corporation with respect to any such Certificates, the applicable Merger Consideration payable in respect thereof pursuant to Section 2.1 hereof. Section 2.3 Appraisal Rights.
(a) Notwithstanding anything in this Agreement to the contrary, shares of Company Common Stock, if any, as to which the holder (or, in the case of a beneficial owner making a demand in its own name) thereof shall have (i) properly demanded appraisal and otherwise complied with the provisions of Section 262 of the DGCL (“Section 262”) and (ii) not effectively withdrawn or lost such holder’s (or such beneficial owner’s) rights to appraisal (each, a “Dissenting Share”), shall not be converted into the right to receive the Merger Consideration pursuant to Section 2.1 and Section 2.2, but instead at the Effective Time shall become entitled only to payment of the fair value of such shares of Company Common Stock determined in accordance with Section 262 (it being understood and acknowledged that at the Effective Time, such Dissenting Shares shall no longer be outstanding, shall automatically be cancelled and shall cease to exist, and such holder (or beneficial owner, as applicable) shall cease to have any rights with respect thereto other than the right to receive the fair value of such Dissenting Shares as determined in accordance with Section 262); provided, however, that if any such holder (or beneficial owner, as applicable) shall fail to perfect or otherwise shall waive, withdraw or lose the right to payment of the fair value of such Dissenting Shares under Section 262, then the right of such holder (or beneficial owner, as applicable) to be paid the fair value of such holder’s (or such beneficial owner’s) Dissenting Shares shall cease and such Dissenting Shares shall be deemed to have been converted as of the Effective Time into, and to have become exchangeable solely for the right to receive, without interest or duplication, the Merger Consideration pursuant to Section 2.1 and Section 2.2.
(b) The Company shall give prompt notice to Parent of any written demands received by the Company for appraisal of any shares of Company Common Stock, or any withdrawals of such written demands and of any other instruments served and received by the Company under Section 262, and Parent shall have the opportunity to participate in and direct all negotiations and proceedings with respect to such written demands. Prior to the Effective Time, the Company shall not, without the prior written consent of Parent, make any payment with respect to, or settle or compromise or offer to settle or compromise, any such written demand, or agree to do any of the foregoing.
Section 2.4 Treatment of Company Options and Company Equity Awards.
(a) Effective as of immediately prior to the Effective Time, by virtue of the Merger and without any action on the part of the holders thereof, each option to purchase Company Common Stock granted under any Company Equity Plan or otherwise (each, a “Company Stock Option”), that is outstanding and unexercised immediately prior to the Effective Time, whether vested or unvested, shall be cancelled and terminated and converted into the right of the holder thereof to receive (without interest, and less any applicable withholding Taxes) in accordance with the terms of this Agreement:
(i) with respect to each In the Money Option: (A) an amount in cash equal to the product of (I) the excess, if any, of the Upfront Consideration over the applicable per share exercise price of such cancelled In the Money Option multiplied by (II) the number of shares of Company Common Stock subject to such In the Money Option immediately prior to the Effective Time; and (B) a CVR with respect to each share of Company Common Stock subject to such In the Money Option immediately prior to the Effective Time; and
(ii) with respect to each Out of the Money Option, such cash payments, if any, from Parent with respect to each share of Company Common Stock subject to the Out of the Money Option upon any Milestone Payment Date, equal to the product of (A) (1) the amount by which the Per Share Value Paid as of the Milestone Payment Date exceeds the exercise price payable per share of Company Common Stock under such Out of the Money Option, less (2) the amount per share of Company Common Stock of all payments previously made with respect to such Out of the Money Option pursuant to this Section 2.4(a)(ii), multiplied by (B) the number of shares of Company Common Stock subject to such Out of the Money Option as of immediately prior to the Effective Time. Notwithstanding anything herein to the contrary, (A) any Underwater Option shall be cancelled at the Effective Time without any consideration payable therefor and (B) with respect to each Out of the Money Option, if no contingent payment becomes payable with respect to the CVRs under the CVR Agreement that would result in the Per Share Value Paid as of the applicable Milestone Payment Date exceeding the exercise price per share of such Out of the Money Option, then no payment shall be made hereunder in respect of such Out of the Money Option following the Effective Time.
(b) Effective as of immediately prior to the Effective Time, by virtue of the Merger and without any action on the part of the holders thereof, each award of restricted stock units that
corresponds to Company Common Stock granted under any Company Equity Plan or otherwise and that vests solely on the passage of time (each, a “Company RSU Award”) that is outstanding immediately prior to the Effective Time, shall automatically be cancelled and terminated and converted into the right of the holder thereof to receive (without interest, and less applicable withholding Taxes) in accordance with the terms of this Agreement (i) an amount in cash equal to the product of (A) the Upfront Consideration multiplied by (B) the number of shares of Company Common Stock subject to such Company RSU Award immediately prior to the Effective Time; and (ii) a CVR with respect to each share of Company Common Stock subject to such Company RSU Award immediately prior to the Effective Time.
(c) Effective as of immediately prior to the Effective Time, by virtue of the Merger and without any action on the part of the holders thereof, each award of restricted stock units, performance stock units or performance units that corresponds to Company Common Stock granted under any Company Equity Plan or otherwise and that vests based on the achievement of performance goals (a “Company PSU Award”) that is outstanding immediately prior to the Effective Time shall automatically be cancelled and terminated and converted into the right of the holder thereof to receive (without interest, and less any applicable withholding Taxes) in accordance with the terms of this Agreement (i) an amount in cash equal to the product of (A) the Upfront Consideration multiplied by (B) the number of shares of Company Common Stock subject to such Company PSU Award immediately prior to the Effective Time determined, if any, based on the assumed achievement of Milestone Tranche 4, unless the deadline for achievement of Milestone Tranche 4 has passed without the achievement thereof (in which case Milestone Tranche 4 will be treated as unachieved), but for avoidance of doubt (i) treating Milestone Tranches 2 and 3 as unachieved under all circumstances and (ii) treating Milestone Tranche 4 as unachieved if the deadline for Milestone Tranche 4 has occurred, but such milestone was not achieved, each in accordance with the terms of the applicable award agreement, (such number of shares, the “Company PSU Shares”) and (ii) a CVR with respect to each Company PSU Share.
(d) Prior to the Effective Time, the board of directors of the Company (the “Company Board”) (or, if appropriate, the committee administering the Company Equity Plans) shall adopt such resolutions as are necessary to effect the treatment of the Company Stock Options, Company RSU Awards and Company PSU Awards (collectively, the “Company Equity Awards”) as contemplated by this Section 2.4. (e) As of the Effective Time, the Company Equity Plans shall be terminated, effective as of and contingent upon the occurrence of the Closing, and no further Company Stock Options, Company RSU Awards, Company PSU Awards or other awards with respect to the Company Common Stock shall be granted thereunder from or after the Effective Time. Prior to the Effective Time, the Company shall take all actions, including adopting any necessary resolutions, to effectuate the termination of the Company Equity Plans and the treatment of the Company Stock Options, Company RSU Awards, and Company PSU Awards specified in this Section 2.4. Such resolutions and actions shall be subject to review and approval by Parent, which approval shall not be unreasonably withheld.
(f) Notwithstanding anything else to the contrary in Article II, any payment pursuant to this Section 2.4 shall be made through the Surviving Corporation’s (or any Subsidiary’s) payroll (i) with respect to any Upfront Consideration as promptly as practicable following the Effective Time (and in no event later than the second regularly scheduled payroll date to occur following the Effective Time) and (ii) with respect to any CVR, at the time provided for in the CVR Agreement. Notwithstanding anything to the contrary contained in this Agreement or the CVR Agreement, any payment in respect of any Company RSU Award or Company PSU Award that, immediately prior to such cancellation, constitutes “nonqualified deferred compensation” subject to Section 409A of the Code shall be made on the applicable settlement date for such Company RSU Award or Company PSU Award to the extent required in order to comply with Section 409A of the Code. Parent may cause the Exchange Agent to make any payments under Section 2.4 payable to holders who are not current or former employees of the Company or any Subsidiary in accordance with Section 2.2. Section 2.5 Withholding. Each of Parent, Merger Sub, and the Surviving Corporation shall be entitled to deduct and withhold, or cause the Exchange Agent to deduct and withhold, from the consideration otherwise payable pursuant to this Agreement or the CVR Agreement, any amounts as are required to be withheld or deducted with respect to such consideration under the Code, or any applicable provisions of state, local or foreign Tax Law. To the extent that amounts are so withheld and timely remitted to the appropriate Governmental Entity, such withheld amounts shall be treated for all purposes of this Agreement or the CVR Agreement, as applicable, as having been paid to the Person in respect of which such deduction and withholding was made.
Section 2.6 Treatment of Company Warrants. From and after the Effective Time, each outstanding and unexercised warrant to purchase shares of Company Common Stock (a “Company Warrant”), by virtue of the Merger and without any action on the part of Parent, shall no longer be exercisable by the former holder thereof, shall be cancelled and shall only entitle such holder to receive (a) a cash payment equal to (i) the excess, if any, of (A) the Upfront Consideration over (B) the exercise price payable per share of Company Common Stock under such Company Warrant, multiplied by (ii) the number of shares of Company Common Stock such holder could have purchased (assuming full vesting of all warrants) had such holder exercised such Company Warrant in full immediately prior to the Effective Time, and (b) a CVR with respect to each share of Company Common Stock subject to such Company Warrant immediately prior to the Effective Time.
Section 2.7 Notice to Convertible Noteholders. The Company shall deliver notice regarding the Merger promptly following the date of this Agreement to the Lenders under that certain Note Purchase Agreement (collectively the “Convertible Noteholders”). Any amount of the Term Loans (as defined in the Note Purchase Agreement) that the Convertible Noteholders so elect to convert to shares of Company Common Stock pursuant to the Note Purchase Agreement (including pursuant to Section 8.7(f) of the Note Purchase Agreement) shall be treated at the Effective Time as the same as, and have the same rights and be subject to the same conditions as each share of Company Common Stock described in Section 2.1 above. Any
amount of the Term Loans not converted pursuant to this Section 2.7 shall be paid at or promptly following Closing pursuant to Section 6.11. ARTICLE III. REPRESENTATIONS AND
WARRANTIES OF THE COMPANY
Except (a) as disclosed in the Company SEC Documents filed or furnished with the SEC since January 1, 2021 (including exhibits and other information incorporated by reference therein) and publicly available prior to the date hereof (other than as set forth in the forward-looking statements or as set forth in any “risk factors” section contained therein); provided that this clause (a) shall not apply to any of the representations and warranties set forth in Sections 3.1, 3.2, 3.3, 3.12, 3.19, 3.20, 3.23 or 3.26 or (b) as disclosed in the applicable sections or subsections of the disclosure letter delivered by the Company to Parent immediately prior to the execution of this Agreement (the “Company Disclosure Letter”) (it being agreed that disclosure of any item in any section of the Company Disclosure Letter shall be deemed to apply and qualify (or, as applicable, a disclosure for purposes of) each other section of this Agreement to which the relevance of such item is reasonably apparent from a reading of the Company Disclosure Letter), the Company represents and warrants to Parent as set forth below. Section 3.1 Qualification, Organization, Subsidiaries, etc.
(a) The Company is a legal entity duly organized, validly existing and in good standing under the Laws of the State of Delaware. The Company has all requisite corporate or similar power and authority to own, lease and operate its properties and assets and to carry on its business as presently conducted. The Company is qualified to do business and is in good standing as a foreign corporation or other entity in each jurisdiction where the ownership, leasing or operation of its assets or properties or conduct of its business requires such qualification, except where the failure to be so organized, validly existing, qualified or, where relevant, in good standing, or to have such power or authority, would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect. The Company Subsidiary is a legal entity duly organized, validly existing and, where relevant, in good standing under the Laws of its jurisdiction of organization and has all requisite corporate or similar power and authority to own, lease and operate its properties and assets and to carry on its business as presently conducted and is qualified to do business and is in good standing as a foreign corporation or other entity in each jurisdiction where the ownership, leasing or operation of its assets or properties or conduct of its business requires such qualification, except where the failure to be so organized, validly existing, qualified or, where relevant, in good standing, or to have such power or authority, would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect.
(b) The copies of the Company Governing Documents most recently filed with the Company SEC Documents are accurate and complete copies of such documents as in effect as of the date of this Agreement. The Company has made available to Parent accurate and complete copies of the certificates of incorporation and by-laws or comparable organizational and governing documents of the Company Subsidiary, as amended to the date of this Agreement, and as so delivered is in full force and effect.
Section 3.2 Capitalization.
(a) The authorized capital stock of the Company consists of 200,000,000 shares of Company Common Stock. As of November 11, 2022 (the “Company Capitalization Date”), (i)(A) 5,167,814 shares of Company Common Stock were issued and outstanding, (B) no shares of Company Common Stock were held in treasury and (C) no shares of Company Common Stock were held by the Company Subsidiary, (ii) (A) 2,459,565 shares of Company Common Stock are issuable upon the exercise of outstanding In the Money Options, and the weighted-average exercise price of such In the Money Options is $8.42, (B) 134,750 shares of Company Common Stock are issuable upon the exercise of outstanding Out of the Money Options, and the weighted-average exercise price of such Out of the Money Options is $25.10, (C) 270,130 shares of Company Common Stock were issuable upon the settlement of outstanding Company RSU Awards and (D) 20,185 shares of Company Common Stock were issuable upon the settlement of outstanding Company PSU Awards (assuming the achievement of Milestone Tranche 4 and treating Milestone Tranches 2 and 3 as unachieved) and (iii) 196,675 shares of Company Common Stock remained available for issuance pursuant to the Company Equity Plans. 278,800 shares of Company Common Stock were issuable upon the settlement of outstanding Company Warrants. As of November 11, 2022, the outstanding balance of the Term Loans issued pursuant to the Note Purchase Agreement (including accrued and unpaid interest of $161,910.23 thereon) is $14,528,510.23. As of November 11, 2022, up to $4,366,600 of the outstanding balance of the Term Loans is eligible to convert into a maximum of 222,332 shares of Company Common Stock at a per share price of $19.64. All the outstanding shares of Company Common Stock are, and all shares of Company Common Stock reserved for issuance as noted above shall be, when issued in accordance with the respective terms thereof, duly authorized, validly issued, fully paid and non-assessable and free of pre-emptive rights. All issued and outstanding shares of capital stock of, or other equity interests in, the Company Subsidiary are wholly owned directly by the Company free and clear of all Liens, other than Company Permitted Liens. Section 3.2(a) of the Company Disclosure Letter sets forth an accurate and complete list of all Company Equity Awards outstanding as of the Company Capitalization Date, specifying, on a holder-by-holder basis, (i) the name of each holder, (ii) the number of shares of Company Common Stock subject to each such Company Equity Award, (iii) the grant date of each such Company Equity Award, (iv) for each Company Equity Award, the year(s) of vesting of each such Company Equity Award, and (v) for each Company Stock Option the exercise price per share for each such Company Stock Option.
(b) Except as set forth in Section 3.2(a) above, as of the date of this Agreement: (i) the Company does not have any shares of capital stock issued or outstanding other than the shares of Company Common Stock that were outstanding on the Company Capitalization Date or that have become outstanding after the Company Capitalization Date but were reserved for issuance as set forth in Section 3.2(a) above as of the Company Capitalization Date and (ii) there are no outstanding subscriptions, options, warrants, puts, calls, exchangeable or convertible securities or other similar rights, agreements or commitments relating to the issuance of capital stock or other equity interests to which the Company or the Company Subsidiary is a party or otherwise obligating the Company or the Company Subsidiary to (A) issue, transfer or sell any shares of capital stock or other equity interests of the Company or the Company Subsidiary or
securities convertible into or exchangeable for such shares or equity interests (in each case other than to the Company or the Company Subsidiary); (B) grant, extend or enter into any such subscription, option, warrant, put, call, exchangeable or convertible securities or other similar right, agreement or commitment; (C) redeem or otherwise acquire any such shares of capital stock or other equity interests of the Company or the Company Subsidiary; or (D) make any payment to any Person the value of which is derived from or calculated based on the value of the Company Common Stock. Between the Company Capitalization Date and the date of this Agreement, the Company has not granted any equity or equity-based award to any of the directors, employees or independent contractors of the Company or the Company Subsidiary.
(c) With respect to each grant of Company Equity Awards and Company Warrants, each such grant was made in accordance with the terms of the applicable Company Equity Plan (if applicable), the Exchange Act and all other applicable Laws, in each case, in all material respects, including the rules of the NASDAQ.
(d) Neither the Company nor the Company Subsidiary has outstanding bonds, debentures, notes or other similar obligations, the holders of which have the right to vote (or which are convertible into or exercisable for securities having the right to vote) on any matters on which the stockholders of the Company or the Company Subsidiary may vote.
(e) There are no voting trusts or other agreements or understandings to which the Company or the Company Subsidiary is a party with respect to the voting of shares of capital stock or other equity interest of the Company or the Company Subsidiary.
(f) The Company Subsidiary and its jurisdiction of organization is identified in Section 3.2(f) of the Company Disclosure Letter. The Company owns, directly or indirectly, all of the issued and outstanding shares of capital stock or other equity interests of the Company Subsidiary, free and clear of any preemptive rights and any Liens other than Company Permitted Liens, and all of such shares of capital stock or other equity interests are duly authorized, validly issued, fully paid and nonassessable and free of preemptive rights. Except for equity interests in the Company Subsidiary, neither the Company nor the Company Subsidiary owns, directly or indirectly, any equity interest in any Person (or any security or other right, agreement or commitment convertible or exercisable into, or exchangeable for or measured by reference to, any equity interest in any Person). Neither the Company nor the Company Subsidiary has any obligation to acquire any equity interest, security, right, agreement or commitment or to provide funds to or make any investment (in the form of a loan, capital contribution or otherwise) in, any Person, other than guarantees by the Company of any Indebtedness or other obligations of the Company Subsidiary as set forth in Section 3.2(f) of the Company Disclosure Letter.
Section 3.3 Corporate Authority Relative to this Agreement; No Violation.
(a) The Company has all requisite corporate power and authority to enter into this Agreement and, subject to receipt of the Company Stockholder Approval, to consummate the Transactions, including the Merger. The execution and delivery of this Agreement and the consummation of the Transactions have been duly and validly authorized by the Company Board, acting unanimously, and, except for the filing of the Certificate of Merger with the
Secretary of State of the State of Delaware, no other corporate proceedings on the part of the Company or the Company Subsidiary are necessary to authorize the consummation of the Transactions other than, with respect to the Merger, obtaining the Company Stockholder Approval. Prior to the execution of this Agreement, at a meeting duly called and held, the Company Board unanimously (i) determined that this Agreement and the Transactions, including the Merger, are advisable, and fair to and in the best interests of, the Company and its stockholders, (ii) approved and declared advisable this Agreement and the Transactions, including the Merger, on the terms and subject to the conditions set forth herein, in accordance with the requirements of the DGCL and (iii) resolved to recommend that the Company’s stockholders approve the adoption of this Agreement (such recommendation, the “Company Board Recommendation”) and to include the Company Board Recommendation in the Proxy Statement, in each case subject to Section 5.2. This Agreement has been duly and validly executed and delivered by the Company and, assuming this Agreement constitutes the valid and binding agreement of Parent and Merger Sub, constitutes the valid and binding agreement of the Company, enforceable against the Company in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or similar Laws of general application affecting or relating to the enforcement of creditors’ rights generally and equitable principles of general applicability (the “Bankruptcy and Equity Exception”). (b) Other than in connection with or in compliance with (i) the filing of the Certificate of Merger with the Secretary of State of the State of Delaware, (ii) the Exchange Act, (iii) the HSR Act, (iv) EA 2002, (v) Section 721 and (vi) any applicable requirements of the NASDAQ, no authorization, consent or approval of, or filing with, any Governmental Entity is necessary, under applicable Law, for the consummation by the Company of the Transactions, except for such authorizations, consents, approvals or filings that, if not obtained or made, would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect or materially impair the ability of the Parties to consummate the Transactions.
(c) Assuming the accuracy of the representation set forth in Section 4.9, the execution and delivery by the Company of this Agreement do not, and, except as described in Section 3.3(b), the consummation of the Transactions and compliance with the provisions of this Agreement will not (i) result in any violation or breach of, or default or change of control (with or without notice or lapse of time, or both) under, or give rise to a right of, or result in, termination, modification, cancellation or acceleration of any obligation or to the loss of a benefit under any Contract, loan, guarantee of Indebtedness or credit agreement, note, bond, mortgage, indenture, lease, permit, concession, franchise or right binding upon the Company or the Company Subsidiary or result in the creation of any Lien upon any of the properties, rights or assets of the Company or the Company Subsidiary, other than Company Permitted Liens, (ii) subject to obtaining the Company Stockholder Approval, conflict with or result in any violation of any provision of the Company Governing Documents or any of the organizational documents of any Company Subsidiary or (iii) conflict with or violate any Laws applicable to the Company or the Company Subsidiary or any of their respective properties or assets, except as would not, in the case of clauses (i) and (iii), reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect or materially impair the ability of the Parties to consummate the Transactions.
Section 3.4 Reports and Financial Statements.
(a) From January 1, 2020 through the date of this Agreement, the Company has filed or furnished all forms, documents and reports with the SEC required to be filed or furnished by it with the SEC under the Securities Act or the Exchange Act (the “Company SEC Documents”). As of their respective dates (or, if amended or superseded by a filing prior to the date of this Agreement, as of the date of such filing (and, in the case of registration statements and proxy statements, on the date of effectiveness and the dates of the relevant meetings, respectively)), the Company SEC Documents (excluding, in each case information supplied by Parent or any of its affiliates in writing for inclusion therein) complied in all material respects with the applicable requirements of the Securities Act, the Exchange Act and the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), as the case may be, and the applicable rules and regulations promulgated thereunder, and none of the Company SEC Documents (excluding, in each case information supplied by Parent or any of its affiliates in writing for inclusion therein) contained any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. As of the date hereof, to the knowledge of the Company, none of the Company SEC Documents is the subject of ongoing SEC review or outstanding or unresolved comments. The Company has, prior to the date hereof, delivered, or otherwise made available through filings with the SEC, to Parent with accurate and complete copies of all comment letters received by the Company since January 1, 2020 relating to the Company SEC Documents, together with all written responses of the Company thereto. The Company Subsidiary is, or at any time since January 1, 2020 has been, required to file any forms, reports or other documents with the SEC.
(b) The consolidated financial statements (including all related notes and schedules) of the Company included in the Company SEC Documents (i) complied as to form, as of their respective filing dates, in all material respects with the applicable accounting requirements and the published rules and regulations of the SEC with respect thereto, in each case in effect as of their respective filing dates, (ii) fairly presented in all material respects the consolidated financial position of the Company and the Company Subsidiary, as of the respective dates thereof, and the consolidated results of their operations and their consolidated cash flows for the respective periods then ended (subject, in the case of the unaudited interim financial statements, to normal year-end audit adjustments and to any other adjustments described therein, including the notes thereto), and (iii) were prepared in accordance with United States generally accepted accounting principles (“GAAP”) (except, in the case of the unaudited interim financial statements, to the extent permitted by the SEC) applied on a consistent basis during the periods involved (except as may be indicated therein or in the notes thereto).
(c) Neither the Company nor the Company Subsidiary is a party to, nor does it have any commitment to become a party to any “off-balance sheet arrangements” (as defined in Item 303(a) of Regulation S-K under the Exchange Act), where the result, purpose or effect of such Contract is to avoid disclosure of any material transaction involving, or material liabilities of, the Company or the Company Subsidiary in the Company SEC Documents.
Section 3.5 Internal Controls and Procedures.
(a) The Company has established and maintains disclosure controls and procedures and internal control over financial reporting (as such terms are defined in paragraphs (e) and (f), respectively, of Rule 13a-15 under the Exchange Act) as required by Rule 13a-15 under the Exchange Act. The Company’s disclosure controls and procedures are reasonably designed to ensure that (i) all material information required to be disclosed by the Company in the reports that it files or furnishes under the Exchange Act is recorded, processed, summarized and reported to the individuals responsible for preparing such reports within the time periods specified in the rules and forms of the SEC, and (ii) all such material information is accumulated and communicated to the Company’s management as appropriate to allow timely decisions regarding required disclosure and to make the certifications required pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act. There were no significant deficiencies or material weaknesses identified in the management’s assessment of internal controls as of and for the year ended December 31, 2021 and the subsequent quarters thereafter ended March 31, 2022 and June 30, 2022 (nor has any such deficiency or weakness been identified since such date). The Company has disclosed to Parent (i) any significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting that are reasonably likely to adversely affect in any material respect the Company’s ability to report financial information and (ii) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting, in each case, that was disclosed to the Company’s auditors or the audit committee of the Company Board in connection with its most recent evaluation of internal controls over financial reporting prior to the date hereof.
(b) The Company has complied with and is in compliance in all material respects with all current listing and corporate governance requirements of the NASDAQ, and is in compliance in all material respects with all applicable rules, regulations and requirements of the SEC and with the Sarbanes-Oxley Act.
Section 3.6 No Undisclosed Liabilities. Neither the Company nor the Company Subsidiary has any liabilities or obligations of any nature (including as a result of COVID-19 or any COVID-19 Measures), whether or not accrued, contingent or otherwise, that would be required by GAAP to be recorded or disclosed on a consolidated balance sheet of the Company and the Company Subsidiary (or in the notes thereto), except (a) for liabilities or obligations disclosed, reflected or reserved against in the Company’s consolidated balance sheet (or the notes thereto) as of June 30, 2022 included in the Company SEC Documents filed or furnished and publicly available prior to the date hereof, (b) for liabilities or obligations incurred in the Ordinary Course of Business since June 30, 2022, (c) for liabilities or obligations arising out of or in connection with this Agreement, the CVR Agreement or the Transactions and (d) for liabilities or obligations as would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect.
Section 3.7 Compliance with Laws; Permits.
(a) The Company and the Company Subsidiary are, and since January 1, 2020 have been, in compliance with all Laws applicable to the Company and the Company Subsidiary,
except where such non-compliance would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect. Since January 1, 2020, neither the Company nor the Company Subsidiary has received any written notice or, to the knowledge of the Company, other communication from any Governmental Entity regarding any violation of, or failure to comply with, any Law, except where such violation or failure to comply would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.
(b) The Company and the Company Subsidiary are in possession of all franchises, grants, authorizations, licenses, permits, easements, variances, exceptions, consents, certificates, approvals and orders of any Governmental Entity necessary for the Company and the Company Subsidiary to own, lease and operate their properties and assets as currently held or to carry on their businesses as they are now being conducted, including as required under the Health Care Laws (the “Company Permits”), except where the failure to have any of the Company Permits would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect. Except as would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, to the knowledge of the Company, (i) all Company Permits are in full force and effect and are not subject to any administrative or judicial proceeding that could result in modification, termination or revocation thereof and (ii) the Company and the Company Subsidiary is in compliance with the terms and requirements of all Company Permits.
Section 3.8 Environmental Laws and Regulations(a) . Except for such matters as would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect: (i) no unresolved notice, notification, demand, request for information, citation, summons or order has been received and no investigation, action, claim, complaint, suit, or proceeding is pending or, to the knowledge of the Company, is threatened by any Governmental Entity or other Person relating to the Company or the Company Subsidiary and arising under any Environmental Law and (ii) the Company and the Company Subsidiary is, and since January 1, 2020 has been, in compliance with all Environmental Laws and all Environmental Permits and (iii) there are no liabilities of the Company or the Company Subsidiary arising under any Environmental Law or relating to the Release of any Hazardous Substance, whether accrued, contingent, absolute, determined, or determinable, and to the knowledge of the Company there is no condition or circumstances that could reasonably be expected to result in or be the basis for any such liability.
Section 3.9 Employee Benefit Plans.
(a) Section 3.9(a) of the Company Disclosure Letter sets forth, as of the date hereof, each material Company Benefit Plan, which shall exclude any Company Benefit Plan that is an employment offer letter or individual independent contractor or consultant agreement that is terminable upon no more than thirty (30) days’ notice without further liability and does not provide any retention, change in control or severance payments or benefits. For purposes of this Agreement, “Company Benefit Plan” means each employee benefit plan (as defined in Section 3(3) of ERISA) and each bonus, stock, stock option or other equity-based compensation
arrangement or plan, incentive, deferred compensation, retirement or supplemental retirement, severance, employment, change-in-control, profit sharing, pension, vacation, cafeteria, dependent care, medical care, employee assistance program, education or tuition assistance programs, and each insurance and other similar fringe or employee benefit plan, program or arrangement, in each case for the benefit of current employees, directors or individual consultants (for the avoidance of doubt, any reference to individual consultants shall include consultants who provided services through a wholly-owned or majority-owned entity) (or any dependent or beneficiary thereof) of the Company or the Company Subsidiary or with respect to which the Company or the Company Subsidiary may have any obligation or liability (whether actual or contingent). With respect to each Company Benefit Plan disclosed on Section 3.9(a) of the Company Disclosure Letter, the Company has made available to Parent accurate and complete copies of (or, to the extent no such copy exists, a description of), in each case, to the extent applicable, (i) the plan document(s), as amended through the date of this Agreement, or a written summary of any unwritten Company Benefit Plan, (ii) the summary plan description (if required) and any material employee communications, (iii) the most recent annual report on Form 5500 to the extent required under applicable Law, (iv) the most recent actuarial valuation, (v) material contracts including trust agreements, insurance contracts, and administrative services agreements, (vi) the most recent determination or opinion letters for any plan intended to be qualified under section 401(a) of the Code, and (vii) any correspondence with the Department of Labor, Internal Revenue Service, or any other Governmental Entity regarding a Company Benefit Plan within the last three (3) years.
(b) Except as would not, individually or in the aggregate, reasonably be expected to result in a Company Material Adverse Effect, (i) each of the Company Benefit Plans has been operated and administered in compliance with applicable Laws, including, but not limited to, ERISA, the Code and in each case the regulations thereunder; (ii) no Company Benefit Plan is subject to Title IV or Section 302 of ERISA or Section 412 or 4971 of the Code; (iii) no Company Benefit Plan provides health, medical, disability or life insurance benefits (whether or not insured), with respect to current or former employees or directors of the Company or the Company Subsidiary beyond their retirement or other termination of service, other than coverage mandated to comply with Section 4980B of the Code or any other applicable Law; (iv) no liability under Title IV of ERISA has been incurred by the Company, the Company Subsidiary or any of their respective ERISA Affiliates, in any case, that has not been satisfied in full (other than with respect to amounts not yet due), and no condition exists that is likely to cause the Company, the Company Subsidiary or to the knowledge of the Company, any of their ERISA Affiliates to incur a liability thereunder; (v) no Company Benefit Plan is a “multiemployer plan” (as such term is defined in Section 3(37) of ERISA) or a plan that has two or more contributing sponsors at least two of whom are not under common control, within the meaning of Section 4063 of ERISA; (vi) all contributions or other amounts payable by the Company or the Company Subsidiary pursuant to each Company Benefit Plan in respect of current or prior plan years have been contributed or paid, as applicable, within the time periods prescribed by the terms of such plan and applicable Law; (vii) neither the Company nor the Company Subsidiary has engaged in a transaction in connection with which the Company or the Company Subsidiary has been or could be subject to either a civil penalty assessed pursuant to Section 409 or 502(i) of ERISA or a tax imposed pursuant to Section 4975 or 4976 of the Code; and (viii) there are no
pending, or to the knowledge of the Company, threatened or anticipated claims, actions, investigations or audits (other than routine claims for benefits) by, on behalf of or against any of the Company Benefit Plans or any trusts related thereto.
(c) Except as would not, individually or in the aggregate, reasonably be expected to result in a Company Material Adverse Effect, (i) each of the Company Benefit Plans intended to be “qualified” within the meaning of Section 401(a) of the Code has received a favorable determination letter or opinion letter as to its qualification, or has pending or has time remaining in which to file an application for such determination from the IRS, and (ii) to the knowledge of the Company, there are no existing circumstances or events that have occurred that would reasonably be expected to adversely affect the qualified status of any such plan.
(d) Except as would not, individually or in the aggregate, reasonably be expected to result in a Company Material Adverse Effect, neither the execution and delivery of this Agreement nor the consummation of the Transactions (either alone or in conjunction with any other event) will (i) result in any payment (including severance, unemployment compensation, “excess parachute payment” (within the meaning of Section 280G of the Code), forgiveness of Indebtedness or otherwise) becoming due to any current or former director or any employee of the Company or the Company Subsidiary under any Company Benefit Plan or otherwise, (ii) increase any benefits otherwise payable under any Company Benefit Plan or (iii) result in any acceleration of the time of payment, funding or vesting of any such benefits.
(e) Except as would not, individually or in the aggregate, reasonably be expected to result in a Company Material Adverse Effect, each Company Benefit Plan, if any, which is maintained outside of the United States has been operated in compliance with the applicable Law.
(f) Except as would not, individually or in the aggregate, reasonably be expected be result in a Company Material Adverse Effect, each Company Benefit Plan has been maintained and operated in documentary and operational compliance with Section 409A of the Code or an available exemption therefrom. The Company is not a party to nor does it have any obligation under any Company Benefit Plan to reimburse any person for excise Taxes payable pursuant to Section 4999 of the Code or for additional Taxes payable pursuant to Section 409A of the Code.
Section 3.10 Absence of Certain Changes or Events. From December 31, 2021 through the date of this Agreement, (a) there has not occurred any Effect that has had, or would reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect and (b) the business of the Company and the Company Subsidiary has been conducted in the Ordinary Course of Business, except for actions taken in connection with the negotiation and execution of this Agreement.
Section 3.11 Investigations; Litigation. Except as would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect or, as of the date of this Agreement, materially impair the ability of the Parties to consummate the Transactions, (a) there is no investigation or review pending (or, to the knowledge of the Company, threatened) by any Governmental Entity with respect to the Company or the Company Subsidiary or any of
their respective properties, rights, assets, (b) there is no Proceeding pending (or, to the knowledge of the Company, threatened) against the Company or the Company Subsidiary or any of their respective properties, rights, assets and (c) there is no judgment, decree, injunction, rule or order of any arbitrator or Governmental Entity outstanding against the Company or the Company Subsidiary.
Section 3.12 Information Supplied. The information relating to the Company and the Company Subsidiary to be contained in or incorporated by reference in, or otherwise supplied by or on behalf of the Company in writing for inclusion in, the Proxy Statement will not, on the date the Proxy Statement (and any amendment or supplement thereto) is first mailed to the stockholders of the Company or at the time of the Stockholders’ Meeting (as it may be adjourned or postponed in accordance with the terms hereof), contain any untrue statement of any material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, at the time and in light of the circumstances under which they were made, not false or misleading. The Proxy Statement will comply in all material respects as to form with the requirements of the Exchange Act and the rules and regulations promulgated thereunder, and any other applicable federal securities Laws. Notwithstanding the foregoing provisions of this Section 3.12, no representation or warranty is made by the Company with respect to information or statements made or incorporated by reference in the Proxy Statement or any amendments or supplements thereto based on information supplied by Parent, Merger Sub or any of their respective Representatives expressly for use or incorporation by reference therein.
Section 3.13 Regulatory Matters.
(a) All activities of the Company, the Company Subsidiary are now, and since January 1, 2020, have been, in compliance in all respects with all applicable Health Care Laws except where such non-compliance would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect. Since January 1, 2020, neither the Company nor the Company Subsidiary has received any written notice or other written communication alleging any violation of any applicable Health Care Laws with respect to such activities or has received any warning letters or untitled letters, except where such non-compliance would not reasonably be expected to have, individually or in the aggregate a Company Material Adverse Effect.
(b) To the knowledge of the Company, since January 1, 2020, each Company Product is being or has been developed, manufactured, tested, distributed or marketed by or on behalf of the Company or the Company Subsidiary in compliance with all applicable Health Care Laws, including all requirements relating to research, investigational use, development, security, manufacture, sale, packaging, labeling, storing, testing, distribution, record-keeping, reporting, import, export, marketing, and promotion, except where such non-compliance would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect. Since January 1, 2020, neither the Company nor the Company Subsidiary has received any unresolved (i) FDA Form 483, (ii) warning letter, (iii) untitled letter, (iv) requests or requirements to make changes to any Company Product or any manufacturing processes or procedures related to any Company Product due to allegations of material noncompliance with
applicable Laws or Company Permits, or (v) other similar written notice from the FDA or any other Governmental Entity alleging or asserting material noncompliance with any applicable Health Care Laws or Company Permits with respect to any Company Product.
(c) All animal studies or other preclinical tests performed in connection with or as the basis for any Company Permit required by applicable Health Care Laws for the Company Products have been conducted in all material respects in accordance with applicable Good Laboratory Practice requirements contained in 21 CFR Part 58. Neither the Company nor the Company Subsidiary has received any written notice or, to the knowledge of the Company, any other written communication from a Governmental Entity requiring the termination or suspension or material modification of any preclinical study with respect to any Company Product.
(d) Accurate and complete copies of all material reports with respect to material human clinical trials that relate to the Company Products have been provided or made available to Parent. The Company has heretofore provided or made available to Parent all material correspondence between the Company or the Company Subsidiaries, on the one hand, and the FDA and other Governmental Entities, on the other hand, regarding such clinical trials.
(e) All clinical trials conducted by or on behalf of the Company or the Company Subsidiary have been, and are being, conducted in material compliance with the Health Care Laws. Since January 1, 2020, neither the Company nor the Company Subsidiary has received any written notice from the FDA, any institutional review board, or any domestic or foreign Governmental Entity that the FDA, any Institutional Review Board, or Governmental Entity, has initiated, or, to the knowledge of the Company, threatened to initiate, any clinical hold or other similar action to suspend any ongoing clinical trial sponsored by or on behalf of Company, or any action to suspend or terminate any active Investigational New Drug Application (“IND”) sponsored by or on behalf of the Company.
(f) As it relates to any clinical trial conducted by or on behalf of the Company or the Company Subsidiary (with respect to the applicable Company Products) in connection with or as the basis for any submission to the FDA or other comparable Governmental Entity, filed under an IND, or other foreign equivalent or that the Company anticipates will be submitted to the FDA or other comparable Governmental Entity, (i) all such clinical trials have been properly registered in compliance with all applicable Health Care Laws, except where such failure to comply would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect and (ii) the results of all such clinical trials have been disclosed in all material respects in accordance with all applicable Health Care Laws, in each case including section 402 of the PHSA, except where such failure to comply would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.
(g) There is not and since January 1, 2020, there has not been, and to the Company’s knowledge, there is no threat by any Governmental Entity or clinical investigators of, any return or defect of any Company Product proposed to be used during a clinical investigation, nor has the Company issued any replacements, safety alerts or any other written notice to an investigator or Governmental Entity asserting a lack of safety or regulatory compliance with respect to any
Company Product used in or to be used during a clinical investigation, and to the Company’s knowledge, there are no facts that would be reasonably likely to result in the foregoing, except where such failure to comply would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.
(h) Neither the Company nor the Company Subsidiary is, or has been since January 1, 2020, a party to any corporate integrity agreement, monitoring agreement, consent decree, settlement order or similar agreement with or imposed by any Governmental Entity.
(i) Since January 1, 2020, neither the Company nor the Company Subsidiary, or any officer, director, managing employee or agents of the Company or the Company Subsidiary (as those terms are defined in 42 C.F.R. § 1001.1001): (i) has (A) been placed under or otherwise made subject to or (B) committed an act, made a statement, or failed to make a statement that, at the time such disclosure was made, would reasonably be expected to provide a basis for the FDA or any other Governmental Entity to invoke its policy respecting “Fraud, Untrue Statements of Material Facts, Bribery, and Illegal Gratuities,” set forth in 56 Fed. Reg. 46191 (September 10, 1991) or any similar policy; (ii) has been convicted of or, to the Company’s knowledge, is under investigation for any offense related to any Bribery Legislation or Sanctions Laws; (iii) has been charged with or convicted of any criminal offense relating to the delivery of an item or service under Medicare, Medicaid, TRICARE or any similar government health care program (collectively, “Federal Health Care Programs”) (in the case of the Company’s managing employees and agents, the representation and warranty in this clause (iii) is only being made to the Company’s knowledge); (iv) has been excluded from participation in any Federal Health Care Program or is currently listed on the U.S. Department of Health Office of Inspector General’s List of Excluded Individuals/Entities; (v) has been subject to, or convicted of any crime that would reasonably be expected to result in, debarment, exclusion, or suspension from participation in any Federal Health Care Program, or otherwise under 21 U.S.C. Section 335a or any similar Law; (vi) has had a civil monetary penalty assessed against it, him or her under Section 1128A of the Social Security Act, codified at Title 42, Chapter 7, of the United States Code; (vii) has been excluded, suspended, debarred, or is otherwise ineligible to participate federal procurement or non-procurement programs, or is currently listed on the United States General Services Administration published list of parties excluded from federal procurement programs and non-procurement programs; (viii) has been or are currently the subject of a proceeding that could lead to their becoming a debarred individual or debarred entity under Section 306 of the FDCA; (ix) is on any of the FDA Clinical Investigator enforcement lists (including without limitation, the Disqualified/Totally Restricted List, the Restricted List, the Adequate Assurance List) or is subject to an ongoing disqualification proceeding as defined by the FDA; or (x) is the target or subject of any current investigation relating to any Federal Health Care Program-related offense.
Section 3.14 Privacy and Data Security
(a) None of the Company or any of its affiliates is a “covered entity” or is engaging in activities that make it a “business associate” as those terms are defined in the Health Insurance Portability and Accountability Act and the regulations promulgated thereunder and codified at 45
C.F.R. Parts 160 and 164 (collectively, “HIPAA”). Since, January 1, 2020, the Company and the Company Subsidiary has been in compliance with applicable Privacy Laws and, to the knowledge of the Company, the Company is not under investigation by any Governmental Entity for a violation of such Privacy Laws, except, in each case, as would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.
(b) At all times since January 1, 2020, the Company and Company Subsidiary have provided appropriate notice and obtained any necessary consents from Persons required for the processing of Personal Data as conducted by or for the Company or the Company Subsidiary, in each case to the extent required by applicable Privacy Laws, except where the failure to do so would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect. The Company and the Company Subsidiary have in place all legally required, and have complied in all respects with each of their respective, written and published policies and procedures concerning the privacy and security of Personal Data (the “Privacy Policies”), except where the failure to do so would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect. Since January 1, 2020, neither the Company nor the Company Subsidiary have received, in writing, any asserted or threatened claims by any Person alleging a violation of Privacy Laws and/or Privacy Policies. To the knowledge of the Company, the Transactions and the execution, delivery and performance of this Agreement will not cause, constitute or result in a breach or violation of any applicable Privacy Law or Privacy Policies, except where such failure to comply would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.
(c) At all times since January 1, 2020, the Company and the Company Subsidiary have maintained a commercially reasonable information security program in accordance with applicable Privacy Laws in all material respects. The Company has implemented at all times since January 1, 2020, commercially reasonable administrative, technical, and physical security measures with respect to Personal Data and other confidential data collected by or on behalf of the Company or the Company Subsidiary and the networks, equipment, software, and other systems and assets of the Company and the Company Subsidiary. Since January 1, 2020, neither the Company nor the Company Subsidiary have experienced any security breach or cyber security event, including, without limitation, any theft, loss, or unauthorized access or acquisition of Personal Data (each, a “Security Incident”), except for any Security Incidents that would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.
Section 3.15 Tax Matters.
(a) All income and other material Tax Returns required by applicable Law to be filed by the Company and the Company Subsidiary have been timely filed (taking into account any extensions of the due date for filing) in accordance with applicable Law. All material Tax Returns filed by or with respect to the Company or the Company Subsidiary are true, correct and complete in all material respects. No extension or waiver of the statute of limitations with respect to the time to assess material Taxes of the Company or the Company Subsidiary has been
granted, which grant remains in effect, or has been requested where such request remains currently pending.
(b) No written claim have been made by any Governmental Entity in a jurisdiction in which the Company or the Company Subsidiary does not file a Tax Return to the effect that the Company or the Company Subsidiary, as applicable, is or may be subject to taxation by, or required to file any Tax Return in, such jurisdiction.
(c) All material amounts of Taxes due and payable by the Company and the Company Subsidiary have been timely paid in full or are being contested in good faith by adequate Proceedings (and with respect to which an adequate accrual has been reserved for on the books of the Company or the Company Subsidiary in accordance with GAAP). The Company and the Company Subsidiary has properly withheld, and paid over to the appropriate Governmental Entity, all material amounts of Tax required to be withheld from any payment (including any dividend, royalty or interest payment) to any Service Provider, creditor, stockholder, vendor or other Person and has complied in all material respects with all record keeping and information reporting obligation under applicable Law in connection therewith.
(d) There is no notice, claim, audit, action, suit, proceeding or investigation (including any refund litigation, deficiency, proposed adjustment or other matter in controversy) now pending or, to the knowledge of the Company, threatened in writing against or with respect to the Company or the Company Subsidiary in respect of any material amount of Taxes, Tax asset, or any income or material other Tax Return.
(e) Any deficiency of Taxes in respect of the Company or the Company Subsidiary that has been asserted in writing as a result of any pending or completed audit or examination by any Governmental Entity has been timely paid, or is being contested in good faith and has been reserved for on the books of the Company or the Company Subsidiary in accordance with GAAP.
(f) Section 3.15(f) of the Company Disclosure Letter contains a complete and correct list of all jurisdictions outside of the United States in which the Company or the Company Subsidiary currently has a taxable presence.
(g) Neither the Company nor the Company Subsidiary will be required to include any material item of income in, or to exclude any material item of deductions from, taxable income for any Tax period (or portion thereof) ending after the Closing as a result of any (i) change in method of accounting made on or prior to the Closing for a Tax period (or portion thereof) ending prior to the Closing, (ii) closing agreement as described in Section 7121 of the Code executed prior to the Closing, (iii) installment method of accounting, the completed contract method of accounting, the long-term contract method of accounting, or cash method of accounting, in each case, adopted or used prior to the Closing, (iv) open transaction disposition entered into prior to the Closing, (v) prepaid amount received outside the Ordinary Course of Business prior to the Closing, (vi) excess loss account in existence at Closing, (vii) gain recognition agreement (within the meaning of the U.S. Treasury Regulations Section 1.367-8) entered into before Closing, or (viii) any comparable provisions of foreign, supranational, state
or local Tax Law. Neither the Company nor the Company Subsidiary has made an election under Section 965(h) of the Code to pay the net Tax liability under Section 965 of the Code in installments.
(h) Neither the Company nor the Company Subsidiary has entered into a closing agreement pursuant to Section 7121 of the Code or any closing agreement under any similar provision of state, local or foreign applicable Tax Law. Neither the Company nor the Company Subsidiary has ever submitted any request for, or received, any private letter ruling, technical advice memorandum and similar document from the IRS or any other taxing authority.
(i) Neither the Company nor the Company Subsidiary (i) was a distributing corporation or a controlled corporation in any transaction intended to qualify under Section 355 of the Code (or any similar provision of state, local or foreign applicable Tax Law) in the five (5) year period ending on the date of this Agreement, (ii) is or has been a United States real property holding corporation (as defined in Section 897(c)(2) of the Code) during the applicable period specified in Section 897(c)(1)(A) of the Code, or (iii) is or has ever been a surrogate foreign corporation as described in Section 7874(b) of the Code.
(j) To the knowledge of the Company, neither the Company nor the Company Subsidiary (i) holds any interest in any entity that has ever been a passive foreign investment company within the meaning of Section 1297(a) of the Code, (ii) is a “United States shareholder” (within the meaning of Section 951(b) of the Code) in respect of any entity that is a “controlled foreign corporation” (within the meaning of Section 957(a) of the Code) or (iii) is party to any joint venture, partnership or other arrangement with any Person that is treated as a partnership for U.S. federal, state, local or non-U.S. Tax purposes.
(k) Neither the Company nor the Company Subsidiary is a party to any Tax Sharing Agreement (other than any Tax Sharing Agreement to which only the Company and its Subsidiaries are party) or has any material liability for Taxes of any Person (other than the Company or the Company Subsidiary) under U.S. Treasury Regulations Section 1.1502-6 (or any similar provision of state, local, or non-U.S. Law) as transferee or successor, by Contract or otherwise.
(l) There are no Liens for material Taxes upon any property or assets of the Company or the Company Subsidiary, except for the Company Permitted Liens.
(m) Neither the Company nor the Company Subsidiary has been a party to, or a material advisor with respect to, a “reportable transaction” within the meaning of Section 6707A(c)(1) of the Code and U.S. Treasury Regulations Section 1.6011-4(b).
(n) The Company and the Company Subsidiary have (i) to the extent deferred, properly complied in all material respects with all applicable Laws in order to defer the amount of the employer’s share of any “applicable employment taxes” under Section 2302 of the CARES Act, (ii) to the extent applicable, eligible, and claimed, or intended to be claimed, properly complied in all material respects with all Laws and duly accounted for any available Tax credits under Sections 7001 through 7004 of the Families First Coronavirus Response Act
and Section 2301 of the CARES Act, (iii) not deferred any payroll tax obligations (including those imposed by Sections 3101(a) and 3201 of the Code) (for example, by a failure to timely withhold, deposit or remit such amounts in accordance with the applicable provisions of the Code and the U.S. Treasury Regulations promulgated thereunder) pursuant to or in connection with any U.S. presidential memorandum or executive order, and (iv) not sought any PPP Loan.
(o) Section 3.15(o) of the Company Disclosure Letter sets forth a list of the entity classification of the Company and the Company Subsidiary for U.S. federal income Tax purposes, and, unless otherwise noted in Section 3.15(o) of the Company Disclosure Letter, to the knowledge of the Company, each entity has had such classification at all times since its incorporation or formation, as applicable.
Section 3.16 Labor Matters.
(a) As of the date hereof, neither the Company nor the Company Subsidiary is a party to, or bound by, any collective bargaining agreement or other Contract with a labor union or labor organization. Except as would not, individually or in the aggregate, reasonably be expected to result in a Company Material Adverse Effect, neither the Company nor the Company Subsidiary is subject to a labor dispute, strike or work stoppage. To the knowledge of the Company, there are no pending or, to the Company’s knowledge, threatened, campaigns or proceedings conducted to authorize representation of any employees of the Company or the Company Subsidiary by any labor union or trade union or other employee representative group.
(b) Except as would not, individually or in the aggregate, reasonably be expected to result in a Company Material Adverse Effect, the businesses of the Company and the Company Subsidiary are being conducted in compliance with all Privacy Laws applicable to the Company or the Company Subsidiary pertaining to the privacy, data protection, and information security of employee information.
(c) Since January 1, 2020, and except as would not, individually or in the aggregate, reasonably be expected to result in a Company Material Adverse Effect, the Company and the Company Subsidiary (i) are and have been in compliance with all applicable Laws regarding employment and employment practices and those Laws relating to terms and conditions of employment, classification of employees, wages and hours, occupational safety and health and workers’ compensation and (ii) have no charges or complaints relating to unfair labor practices or unlawful employment practices pending or, to the knowledge of the Company, threatened against it before any Governmental Entity.
(d) Section 3.16(d) of the Company Disclosure Letter separately sets forth all of the Company’s and the Company Subsidiary’s employees and individual independent contractors, and consultants (“Service Providers”) as of the date of this Agreement, including for each such Service Provider, as applicable: employee identification number, job title, Fair Labor Standards Act designation for employees located in the United States, work location, current base salary or base wage rate, and current target bonus or commission opportunity.
(e) To the knowledge of the Company, no employee with managerial responsibility is a party to, or is otherwise bound by, any agreement or arrangement with any third party, including any confidentiality or non-competition agreement, that adversely affects or restricts in material respects the performance of such employee’s duties for the Company.
Section 3.17 Intellectual Property.
(a) Section 3.17(a) of the Company Disclosure Letter sets forth an accurate and complete list of all material registrations and applications for registration included in the Owned Intellectual Property Rights and Licensed Intellectual Property Rights specifying as to each such item, as applicable (i) the owner (or the co-owners) thereof, (ii) the jurisdiction in which such item is issued or registered or in which any application for issuance or registration has been filed, (iii) the respective issuance, registration, or application number of such item, and (iv) the date of application and issuance or registration of such item.
(b) The Company and the Company Subsidiary are the sole and exclusive owners of all Owned Intellectual Property Rights and hold all right, title and interest in and to all Owned Intellectual Property Rights, free and clear of any Lien other than Company Permitted Liens. The Company and the Company Subsidiary hold a valid license to all Licensed Intellectual Property Rights free and clear of any Lien other than Company Permitted Liens and the restrictions in the licenses granted pursuant to the Contracts set forth on Section 3.21(a)(vii)(A) of the Company Disclosure Letter. The Licensed Intellectual Property Rights and the Owned Intellectual Property Rights together constitute all of the Intellectual Property Rights necessary to, or used or held for use in, the conduct of the business of the Company and the Company Subsidiary as currently conducted and as proposed by the Company or the Company Subsidiary to be conducted in the Company SEC Documents. There exist no material restrictions on the disclosure, use, license or transfer of the Owned Intellectual Property Rights. Following the Closing, the Surviving Corporation will have all of the rights of the Company under the Company’s Intellectual Property Rights, to the same extent that the Company would have had if the Transactions had not occurred, and without (i) the payment of any additional amounts or consideration other than ongoing fees, royalties, or payments that the Company would otherwise be required to pay, (ii) any alteration, additional encumbrance, impairment or extinction of any rights thereunder, (iii) any additional impairment of the right of the Surviving Corporation to develop, use, sell, license or dispose of, or to bring any action for the infringement of any Owned Intellectual Property Rights or, to the extent such rights thereunder are currently held by the Company or any of its Subsidiaries, any Licensed Intellectual Property Rights, or (iv) any additional encumbrance of any of the Intellectual Property Rights owned or licensed to Parent through the operation of any agreements to which the Company or any of the Company Subsidiaries is a party or otherwise bound, except where individually or in the aggregate, would not reasonably be expected to have, a Company Material Adverse Effect. To the knowledge of the Company, each of the Patents included in the Owned Intellectual Property Rights or Licensed Intellectual Property Rights properly identifies by name each and every inventor of the claims thereof as determined in accordance with the applicable Laws of the jurisdiction in which such Patent is issued or the relevant patent application is pending.
(c) Except pursuant to the terms of the Contracts set forth in Section 3.21(a) of the Company Disclosure Letter, neither the Company nor the Company Subsidiary has granted any license with respect to, or authorized the retention of any material rights in, any Owned Intellectual Property Rights (other than any customary grant of non-exclusive licenses to contract research organizations or other service providers, in each case entered into in the Ordinary Course of Business).
(d) To the knowledge of the Company, neither the Company nor the Company Subsidiary has infringed, contributed to the infringement of, misappropriated or otherwise violated any Intellectual Property Right of any Person, except where such violation would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect. To the knowledge of the Company, the conduct of the business of the Company and the Company Subsidiary as it is currently being conducted and as it currently is contemplated to be conducted, including the research, development, manufacture, marketing, use, importation, offer for sale and sale of the Company Products, would not infringe, contribute to the infringement of, misappropriate or otherwise violate any Intellectual Property Right of any Person in any material respect.
(e) There is no claim, action, suit, investigation or proceeding pending against, or, to the knowledge of the Company, threatened against, the Company or the Company Subsidiary (i) challenging or seeking to deny or restrict, any right of the Company or the Company Subsidiary in any of the Owned Intellectual Property Rights and Licensed Intellectual Property Rights, (ii) alleging that any of the issued Patents, registered Trademarks or registered Copyrights included in the Owned Intellectual Property Rights or, to the Company’s knowledge, Licensed Intellectual Property Rights is invalid, unenforceable, or unpatentable, (iii) alleging that the use of any of the Owned Intellectual Property Rights or, to the Company’s knowledge, Licensed Intellectual Property Rights or any services provided, processes used or products manufactured, used, imported, offered for sale or sold by the Company or the Company Subsidiary do or may conflict with, misappropriate, infringe, contribute to the infringement of, or otherwise violate any Intellectual Property Right of any Person or (iv) alleging that the Company or the Company Subsidiary have infringed, misappropriated or otherwise violated any Intellectual Property Right of any Person. Neither the Company nor the Company Subsidiary has received from any Person any written offer to license any Intellectual Property Rights of such Person in connection with any asserted claim of infringement, misappropriation or other violation of any such Intellectual Property Rights.
(f) None of the issued Patents, registered Trademarks or registered Copyrights included in the Owned Intellectual Property Rights and, to the knowledge of the Company, the Licensed Intellectual Property Rights has been adjudged invalid, unenforceable, or unpatentable in whole or part, and none of the pending Patent applications included in the Owned Intellectual Property Rights or, to the Company’s knowledge, the Licensed Intellectual Property Rights, have been the subject of a final and unappealable finding of unpatentability. To the knowledge of the Company, all issued Patents, registered Trademarks and registered Copyrights included in the Owned Intellectual Property Rights or Licensed Intellectual Property Rights are valid, enforceable, in full force and effect and subsisting in all material respects.
(g) To the knowledge of the Company, no Person has infringed, misappropriated or otherwise violated any Owned Intellectual Property Right or Licensed Intellectual Property Right in any material respect.
(h) The Company and the Company Subsidiary have taken reasonable steps in accordance with normal industry practice to (i) record, protect and maintain their rights, title and interests in and to all material Intellectual Property Rights of the Company or the Company Subsidiary, (ii) maintain the confidentiality of all Intellectual Property Rights of the Company or the Company Subsidiary, the value of which to the Company or the Company Subsidiary is contingent upon maintaining the confidentiality thereof.
(i) To the extent that any material Owned Intellectual Property Right has been developed or created by a third party (including any current or former employee of the Company or the Company Subsidiary) for the Company or the Company Subsidiary, the Company or the Company Subsidiary, as the case may be, has a written agreement with such third party with respect thereto, and the Company or the Company Subsidiary thereby either (i) has obtained ownership and is the exclusive owner or is the co-owner of or (ii) has obtained a valid right to exploit, sufficient for the conduct of its business as currently conducted or proposed to be conducted in the Company SEC Documents, such material Owned Intellectual Property Right.
(j) The Company IT Assets operate and perform in a manner that permits the Company and the Company Subsidiary to conduct their respective businesses as currently conducted in all material respects. To the knowledge of the Company, no Person has gained unauthorized access to any material confidential or proprietary business information or trade secret information of the Company by breaching the Company IT Assets, except as would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect. The Company and the Company Subsidiary take commercially reasonable actions to protect the confidentiality, integrity and security of the material Company IT Assets (and all information and transactions stored or contained therein or transmitted thereby) against any unauthorized use, access, interruption, modification or corruption.
Section 3.18 Property.
(a) Neither the Company nor the Company Subsidiary owns any real property.
(b) Except as would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, (i) each material lease, sublease and other agreement (the “Company Real Property Leases”) under which the Company or the Company Subsidiary uses or occupies or has the right to use or occupy any material real property at which the material operations of the Company and the Company Subsidiary are conducted as of the date hereof (the “Company Leased Real Property”), is valid, binding and in full force and effect, subject to the Bankruptcy and Equity Exception, (ii) no uncured default of a material nature on the part of the Company or, if applicable, the Company Subsidiary or, to the knowledge of the Company, the landlord thereunder exists with respect to any Company Real Property Leases and (iii) the Company and the Company Subsidiary has a good and valid leasehold interest in or contractual right to use or occupy, subject to the terms of the applicable Company Real Property
Leases, the Company Leased Real Property, free and clear of all Liens, other than Company Permitted Liens.
(c) The Company and the Company Subsidiary have good and valid title to, or good and valid leasehold interests in or other comparable contract rights to use, all of the tangible personal property and other tangible assets reflected as owned, leased or used by it on the most recent consolidated balance sheet of the Company contained in the Company SEC Documents filed prior to the date hereof (except for properties or assets that have been sold or disposed of in the Ordinary Course of Business since the date of such balance sheet), in each case free and clear of any Liens (other than Company Permitted Liens), and except where the failure to do so would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect. No representation or warranty is made under this Section 3.18(c) with respect to any Intellectual Property Rights. Section 3.19 Opinion of Financial Advisor. The Company Board has received the opinion of Lazard Frères & Co. LLC (the “Company Financial Advisor”) to the effect that, as of the date of such opinion and subject to the various limitations, qualifications, assumptions and other matters set forth therein, the consideration to be received by the holders of Company Common Stock pursuant to this Agreement and the CVR Agreement is fair, from a financial point of view, to such holders. Solely for informational purposes, promptly following the execution of this Agreement by the Parties, the Company shall furnish to Parent an accurate and complete copy of such opinion. The Company and Parent have been authorized by the Company Financial Advisor to permit the inclusion of such opinion in its entirety and references thereto in the Proxy Statement, subject to prior review and consent by the Company Financial Advisor.
Section 3.20 Required Vote; State Takeover Statutes.
(a) The Company Stockholder Approval is the only vote of the holders of securities of the Company required to adopt this Agreement and to consummate the Transactions.
(b) Assuming the accuracy of the representations and warranties set forth in Section 4.9, the Company Board has taken all action necessary to render Section 203 of the DGCL, and any similar provisions in the Company Governing Documents or any other Takeover Statute, inapplicable to this Agreement, the CVR Agreement, the Voting Agreement and the Transactions and no other Takeover Statute is applicable to this Agreement, the CVR Agreement, the Voting Agreement or the Transactions. There is no stockholder rights plan, “poison pill” or similar device in effect to which the Company or the Company Subsidiary is subject, party or otherwise bound. Section 3.21 Material Contracts.
(a) Except for this Agreement, Section 3.21 of the Company Disclosure Letter contains an accurate and complete list, as of the date of this Agreement, of each Contract (other than any Company Benefit Plan) described below in this Section 3.21(a) under which the Company or the Company Subsidiary has any current or future rights, responsibilities, obligations or liabilities (in each case, whether contingent or otherwise) or to which any of their
respective properties or assets is subject, in each case as of the date of this Agreement (all Contracts of the type described in this Section 3.21(a) or otherwise set forth in Section 3.21(a) of the Company Disclosure Letter being referred to herein as the “Material Contracts”): (i) each Contract that (A) limits in any material respect the freedom of the Company or any of its affiliates to compete in any line of business, therapeutic area or geographic region, or with any Person or (B) containing “most favored nation” provisions, any exclusive dealing arrangement or any arrangement that grants any right of first refusal, first offer, first negotiation or similar preferential right;
(ii) any partnership, joint venture, strategic alliance, collaboration, co-promotion or research and development project Contract which is material to the Company and the Company Subsidiary;
(iii) each Contract that (A) (1) involved the expenditure by the Company and/or the Company Subsidiary of more than (x) $250,000 for the one-year period ended December 31, 2021 or (y) $500,000 in the aggregate or (2) is reasonably expected to involve future expenditures by the Company and/or the Company Subsidiary of more than (x) $250,000 in the one-year period following the date hereof or (y) $500,000 in the aggregate, and (B) cannot be terminated by the Company or the Company Subsidiary on less than sixty (60) days’ notice without material payment or penalty;
(iv) each acquisition or divestiture Contract or material licensing agreement that contains representations, covenants, indemnities or other obligations (including “earn-out” or other contingent payment obligations) that (A) involved the receipt or making of payments of more than (1) $250,000 for the one-year period ended December 31, 2021 or (2) $500,000 in the aggregate or (B) would reasonably be expected to result in the receipt or making of future payments by the Company and/or the Company Subsidiary in excess of (1) $250,000 in the one-year period following the date hereof or (2) $500,000 in the aggregate;
(v) each Contract relating to outstanding Indebtedness of the Company or the Company Subsidiary for borrowed money or any financial guaranty thereof (whether incurred, assumed, guaranteed or secured by any asset) in an amount in excess of $250,000 other than (A) Contracts solely among the Company and the Company Subsidiary and (B) financial guarantees entered into in the Ordinary Course of Business not exceeding $250,000, individually or in the aggregate;
(vi) any Contract with a Related Party, except any employment or similar agreements or confidentiality agreements, invention assignment agreements and non-competition agreements in favor of the Company or indemnification agreements with director and officers, Company Benefit Plans or Contracts in connection therewith;
(vii) any Contract (excluding licenses for commercial off the shelf computer software that are generally available on nondiscriminatory pricing terms or licenses contained in service Contracts related to pre-clinical or clinical development of any
medicine to the extent the licenses contained therein are incidental to such Contract, immaterial, non-exclusive and granted in the Ordinary Course of Business) to which the Company or the Company Subsidiary is a party or otherwise bound and pursuant to which the Company or the Company Subsidiary (A) is granted any license, option or other right or immunity (including a covenant not to be sued or right to enforce or prosecute any Patents) with respect to any Intellectual Property Right of a third party or (B) has granted to a third party any license, option or other right or immunity (including a covenant not to be sued or right to enforce or prosecute any Patents) with respect to any Intellectual Property Right, and, in the case of both (A) and (B), which Contract is material to the Company and the Company Subsidiary, taken as a whole;
(viii) any stockholders, investors rights, registration rights or similar agreement or arrangement;
(ix) any Contract (A) with sole-source or single-source suppliers of material tangible products or services, and which Contract is material to the Company and the Company Subsidiary, taken as a whole, or (B) pursuant to which the Company or the Company Subsidiary has agreed to purchase a minimum quantity of goods relating to any product or product candidate or has agreed to purchase goods relating to any product or product candidate exclusively from a certain party, and which Contract is reasonably expected to involve future expenditures by the Company or the Company Subsidiary of more than $250,000 in any one-year period following the date hereof;
(x) any Contract pursuant to which the Company or the Company Subsidiary has continuing obligations or interests involving (A) “milestone” or other similar contingent payments, including upon the achievement of regulatory or commercial milestones, or (B) payment of royalties or other amounts calculated based upon any revenues or income of the Company or the Company Subsidiary, in each case that cannot be terminated by the Company or the Company Subsidiary without penalty without more than sixty (60) days’ notice without material payment or penalty;
(xi) any Contract that relates to any swap, forward, futures, or other similar derivative transaction with a notional value in excess of $100,000;
(xii) each Contract (A) relating to the employment of, or the performance of services by, any director, officer of the Company subject to the reporting requirements of Section 16(a) of the Exchange Act with respect to the Company or employee which obligate or may in the future obligate the Company or the Company Subsidiary to make any severance, termination or similar payment to any current or former employee, or pursuant to which the Company or the Company Subsidiary may be obligated to make any bonus or similar payment to any current or former employee or director upon the consummation of the Transactions or (B) that provides for indemnification of any current or former officer, director or employee;
(xiii) any Contract involving the settlement of any Proceeding or threatened Proceeding (or series of related, Proceedings) (A) which (x) can reasonably be expected
to (x) involve payments after the date hereof, or involved payments, in excess of $250,000 or (y) impose monitoring or reporting obligations to any other Person outside the Ordinary Course of Business or material restrictions on the Company or the Company Subsidiary or (B) with respect to which material conditions precedent to the settlement have not been satisfied;
(xiv) each Company Real Property Lease;
(xv) any Contract relating to any loan or other extension of credit made by the Company or the Company Subsidiary in an amount in excess of $250,000 other than Contracts solely among the Company and the Company Subsidiary;
(xvi) any Contract with any Governmental Entity; and
(xvii) any Contract not otherwise described in any other subsection of this Section 3.21(a) that would constitute a “material contract” (as such term is defined in Item 601(b)(10) of Regulation S-K of the SEC) with respect to the Company and not otherwise filed with the SEC prior to the date of this Agreement. (b) The Company has provided to Parent prior to the date of this Agreement, an accurate and complete copy of each Material Contract as in effect on the date of this Agreement. Except as would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect, each of the Material Contracts is valid, binding and in full force and effect and is enforceable in accordance with its terms by the Company and the Company Subsidiary, as applicable, subject to the Bankruptcy and Equity Exception. Neither the Company nor the Company Subsidiary is in default under any Material Contract, nor, to the knowledge of the Company, does any condition exist that, with notice or lapse of time or both, would constitute a default thereunder by the Company or the Company Subsidiary, except, in each case, as would not, individually or in the aggregate reasonably be expected to have a Company Material Adverse Effect. To the knowledge of the Company, no other party to any Material Contract is in default thereunder, nor does any condition exist that, with notice or lapse of time or both, would constitute a default thereunder of such other party, except in each case as would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect. Neither the Company nor the Company Subsidiary has received any notice of termination or cancellation under any Material Contract or received any notice of breach or default in any respect under any Material Contract, which breach has not been cured, except, in each case, as would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect.
(c) Neither the Company nor the Company Subsidiary has received any notices seeking (i) to excuse a third-party’s non-performance, or delay a third party’s performance, under existing Material Contracts due to interruptions caused by COVID-19 (through invocation of force majeure or similar provisions, or otherwise) or (ii) to modify any existing contractual relationships due to COVID-19, except, in each case, as would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect.
Section 3.22 Insurance. Section 3.22 of the Company Disclosure Letter lists all material insurance policies, fidelity bonds and all material self-insurance programs and arrangements relating to the business, assets and operations of the Company and the Company Subsidiary (collectively, the “Insurance Policies”). Except as would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect, all of the Insurance Policies are in full force and effect and are valid and enforceable and cover against the risks as are customary in all material respects for companies of similar size in the same or similar lines of business, all premiums thereon have been timely paid or, if not yet due, accrued. As of the date of this Agreement, there is no material claim pending under the Insurance Policies as to which coverage has been questioned, denied or disputed by the underwriters of the Insurance Policies or bonds. Except as would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect, the Company and the Company Subsidiary are in compliance in all material respects with the terms of the Insurance Policies. To the knowledge of the Company, as of the date of this Agreement, there is no threatened termination of, or material premium increase with respect to, any of the Insurance Policies. Except as would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect, neither the Company nor the Company Subsidiary has made any claims on the Insurance Policies, including business interruption insurance, as a result of COVID-19.
Section 3.23 Finders and Brokers. Except for the Company Financial Advisor, an accurate and complete copy of whose engagement agreement has been provided to Parent, there is no investment banker, broker, finder or other intermediary that has been retained by or is authorized to act on behalf of the Company or the Company Subsidiary who might be entitled to any fee or commission from the Company or any of its affiliates in connection with the Transactions.
Section 3.24 Anti-Corruption; Sanctions.
(a) Except as would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect, (i) neither the Company nor the Company Subsidiary, nor any of their respective directors, officers or employees, nor, to the knowledge of the Company, any other Person acting on behalf of the Company or the Company Subsidiary, has, at any time during the past five (5) years, taken any action in violation of the FCPA or other applicable Bribery Legislation (in each case to the extent applicable) and (ii) neither the Company nor the Company Subsidiary, nor any of their respective directors, officers or employees, are, or at any time during the past five (5) years have been, subject to any actual, pending, or, to the knowledge of the Company threatened Proceedings, or made any voluntary disclosures to any Governmental Entity, involving the Company or the Company Subsidiary in any way relating to applicable Bribery Legislation, including the FCPA. The Company and the Company Subsidiary has made and kept books and records, accounts and other records, which, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company and the Company Subsidiary as required by the FCPA in all material respects. The Company and the Company Subsidiary has instituted policies and procedures reasonably designed to ensure compliance in all material respects with the FCPA and other applicable Bribery Legislation and maintain such policies and procedures in force. To the knowledge of the
Company, no officer, director, or employee of the Company or the Company Subsidiary is a Government Official.
(b) Neither the Company nor the Company Subsidiary, nor any of their respective directors, officers or employees, nor, to the knowledge of the Company, any other Person acting on behalf of the Company or the Company Subsidiary (i) is or has been a Sanctioned Person, (ii) has in the past five (5) years engaged in, has any plan or commitment to engage in, direct or indirect dealings with any Sanctioned Person or in any Sanctioned Country on behalf of the Company or the Company Subsidiary, or (iii) has in the past five (5) years violated, or engaged in any conduct sanctionable under, any Sanctions Law, U.S. or applicable foreign law or regulation pertaining to export controls, or applicable antiboycott Laws or regulations, nor to the knowledge of the Company, been the subject of an investigation or allegation of such a violation or sanctionable conduct.
Section 3.25 Affiliate Transactions. No (a) present or former officer or director of the Company or the Company Subsidiary, (b) beneficial owner (as defined in Rule 13d-3 under the 1934 Act) of 5% or more of the outstanding shares of Company Common Stock or (c) affiliate or “associate” or any member of the “immediate family” (as such terms are respectively defined in Rules 12b-2 and 16a-1 of the Exchange Act) of any Person described in the foregoing clauses (a) or (b) (each of the foregoing, a “Related Party”) is a party to any actual or proposed transaction, agreement, commitment, arrangement or understanding with the Company or the Company Subsidiary or has engaged in any transaction with the Company or the Company Subsidiary since January 1, 2020, excluding any employment or similar agreement, confidentiality agreement, invention assignment agreement, noncompetition agreement, indemnification agreement with any present or former officer or director the Company or the Company Subsidiary, Company Benefit Plan or Contract in connection therewith.
Section 3.26 No Other Representations and Warranties. Except for the representations and warranties made by Parent and Merger Sub that are expressly set forth in Article IV or for factual statements or assertions contained in any notice or certificate delivered pursuant to this Agreement, the Company acknowledges and agrees that (a) it has not relied on, and hereby disclaims reliance on, (i) any representations or warranties (whether express or implied, arising at Law or otherwise or oral or written) and (ii) the information and materials made available by or on behalf of Parent, Merger Sub, their affiliates and any of their respective Representatives and the accuracy or completeness of such information or materials, and (b) Parent, Merger Sub and their respective affiliates and any of their respective Representatives disclaim (i) all representations and warranties, (ii) all information and materials that have been made available, including any information, documents, projections, forecasts or other material made available to the Company or to the Company’s Representatives or management presentations in expectation of the Transactions, and the accuracy and completeness thereof, and (iii) all liability for all representations or warranties and all information and materials that have been made available and the accuracy and completeness thereof. Notwithstanding anything to the contrary in this Agreement (including the foregoing), nothing in this Agreement shall relieve any Person for liability for Fraud.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES
OF PARENT AND MERGER SUB
Parent and Merger Sub jointly and severally represent and warrant to the Company as set forth below.
Section 4.1 Qualification, Organization, etc. Each of Parent and Merger Sub is a legal entity duly organized, validly existing and, where relevant, in good standing under the Laws of its respective jurisdiction of organization and has all requisite corporate or similar power and authority to own, lease and operate its properties and assets and to carry on its business as presently conducted and is qualified to do business and is in good standing as a foreign corporation or other entity in each jurisdiction where the ownership, leasing or operation of its assets or properties or conduct of its business requires such qualification, except where the failure to be so organized, validly existing, qualified or, where relevant, in good standing, or to have such power or authority, would not, individually or in the aggregate, reasonably be expected to have a Parent Material Adverse Effect.
Section 4.2 Corporate Authority Relative to this Agreement; No Violation.
(a) Parent and Merger Sub have all requisite corporate power and authority to enter into this Agreement and the CVR Agreement and to consummate the Transactions, including the Merger. The execution and delivery of this Agreement and the CVR Agreement and the consummation of the Transactions have been duly and validly authorized by the board of directors of Parent (the “Parent Board”) and, except for the filing of the Certificate of Merger with the Secretary of State of the State of Delaware no other corporate proceedings on the part of Parent or Merger Sub are necessary to authorize the consummation of the Transactions. Prior to the execution of this Agreement, the Parent Board unanimously authorized and approved this Agreement, the CVR Agreement and the Transactions on the terms and subject to the conditions set forth herein. Parent, as sole stockholder of Merger Sub, has duly executed and delivered to Merger Sub a written consent adopting this Agreement, such written consent by its terms to become effective immediately following the execution of this Agreement, and promptly following the execution of this Agreement, Merger Sub shall promptly deliver to the Company a copy of such written consent. This Agreement has been, and as of the Effective Time the CVR Agreement will have been, duly and validly executed and delivered by Parent and Merger Sub. Assuming this Agreement constitutes the valid and binding agreement of the Company, constitutes the valid and binding agreement of Parent and Merger Sub, enforceable against Parent and Merger Sub in accordance with its terms, subject to the Bankruptcy and Equity Exception.
(b) Other than in connection with or in compliance with (i) the filing of the Certificate of Merger with the Secretary of State of the State of Delaware, (ii) the Exchange Act, (iii) the HSR Act, (iv) EA 2002, (v) Section 721 and (vi) any applicable requirements of the LSE, no authorization, consent or approval of, or filing with, any Governmental Entity is necessary, under applicable Law, for the consummation by Parent and Merger Sub of the
Transactions, except for such authorizations, consents, approvals or filings that, if not obtained or made, would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect.
(c) The execution and delivery by Parent and Merger Sub of this Agreement and the CVR Agreement do not, and, the consummation of the Transactions and compliance with the provisions of this Agreement and the CVR Agreement will not, (i) result in any violation or breach of, or default or change of control (with or without notice or lapse of time, or both) under, or give rise to a right of, or result in, termination, modification, cancellation or acceleration of any obligation or to the loss of a benefit under any Contract, loan, guarantee of Indebtedness or credit agreement, note, bond, mortgage, indenture, lease, permit, concession, franchise or right binding upon Parent or any Parent Subsidiaries or result in the creation of any Lien upon any of the properties, rights or assets of Parent or any Parent Subsidiaries, other than Parent Permitted Liens, (ii) conflict with or result in any violation of any provision of the Parent Governing Documents or any of the organizational documents of any Parent Subsidiary or Merger Sub or (iii) conflict with or violate any Laws applicable to Parent or any of Parent’s Subsidiaries or any of their respective properties or assets, except as would not, in the case of clauses (i) and (iii), reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect.
Section 4.3 Investigations; Litigation. Except as would not, individually or in the aggregate, reasonably be expected to have a Parent Material Adverse Effect, (a) there is no investigation or review pending (or, to the knowledge of Parent, threatened) by any Governmental Entity with respect to Parent or any Parent Subsidiary or any of their respective properties, rights or assets, (b) there is no Proceeding pending (or, to the knowledge of Parent, threatened) against Parent or any Parent Subsidiary or any of their respective properties, rights or assets and (c) there is no judgment, decree, injunction, rule or order of any arbitrator or Governmental Entity outstanding against Parent or any Parent Subsidiaries.
Section 4.4 Information Supplied. The information relating to Parent and the Parent Subsidiaries to be contained in or incorporated by reference in, or otherwise supplied by or on behalf of Parent in writing for inclusion in, the Proxy Statement will not, on the date the Proxy Statement or any amendment or supplement thereto is first mailed to the stockholders of the Company or at the time of the Stockholders’ Meeting (as it may be adjourned or postponed in accordance with the terms hereof), contain any untrue statement of any material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, at the time and in light of the circumstances under which they were made, not false or misleading. Notwithstanding the foregoing provisions of this Section 4.4, no representation or warranty is made by Parent or Merger Sub with respect to statements made or incorporated by reference in the Proxy Statement or any amendments or supplements thereto based on information supplied by or on behalf of the Company for inclusion or incorporation by reference therein. Section 4.5 No Required Vote. No vote of the holders of securities of Parent is required for Parent to consummate the Transactions.
Section 4.6 Finders and Brokers. Except for Centerview Partners, no investment banker, broker, finder or other intermediary has been retained by or is authorized to act on behalf of Parent or any of the Parent Subsidiaries who might be entitled to any fee or commission from Parent or any of its affiliates in connection with the Transactions.
Section 4.7 Financing. Parent will have at Closing, directly or through one or more affiliates, all funds necessary to consummate the Transactions, including the making of all required payments in connection with the Transactions, including payment of the Upfront Consideration and all other amounts to be paid pursuant to this Agreement and associated costs and expenses of the Transactions on the Closing Date (for the avoidance of doubt other than the payment obligations described in the second sentence of this Section 4.7). On each Milestone Payment Date (as defined in the CVR Agreement), Parent will have sufficient cash, available lines of credit or other sources of immediately available funds to satisfy Parent’s cash payment obligations under the CVR Agreement, including payment of the applicable Milestone Payment and any fees and expenses of, or payable by, Parent in connection with the transactions contemplated by the CVR Agreement. Section 4.8 Solvency. Neither Parent nor Merger Sub is entering into this Agreement with the intent to hinder, delay or defraud either present or future creditors of the Company. Assuming (a) that the Company and the Company Subsidiary have complied with and satisfied in all material respects all of their respective covenants, agreements and obligations hereunder, (b) the representations and warranties set forth in Article III are true and correct in all material respects as of the Closing, and (c) that the Company and the Company Subsidiary are Solvent immediately prior to Closing, then immediately after giving effect to all of this Agreement, the payment of the aggregate Merger Consideration and any other repayment or refinancing of debt that may be contemplated, and payment of all related fees and expenses, the Surviving Corporation will be Solvent. For purposes of this Section 4.8, the term “Solvent” with respect to the Surviving Corporation means that, as of any date of determination, (i) the amount of the fair saleable value of the assets of the Surviving Corporation and its Subsidiaries, taken as a whole, exceeds, as of such date, the sum of (x) the value of all liabilities of the Surviving Corporation and its Subsidiaries, taken as a whole, including contingent and other liabilities, as of such date, as such quoted terms are generally determined in accordance with the applicable Laws governing determinations of the solvency of debtors, and (y) the amount that will be required to pay the probable liabilities of the Surviving Corporation and its Subsidiaries, taken as a whole on its existing debts (including contingent liabilities) as such debts become absolute and matured; (ii) the Surviving Corporation will not have, as of such date, an unreasonably small amount of capital for the operation of the business in which it is engaged or proposed to be engaged by Parent following such date; and (iii) the Surviving Corporation will be able to pay its liabilities, including contingent and other liabilities, as they mature. Section 4.9 Stock Ownership. Neither Parent, Merger Sub or any of their respective “affiliates” or “associates” (as defined in Section 203 of the DGCL) is, nor at any time during the past three (3) years has been, an “interested stockholder” of the Company as defined either in the Company Certificate or in Section 203 of the DGCL. Neither Parent nor any Parent Subsidiaries directly or indirectly owns, and at all times for the past three (3) years, neither Parent nor any
Parent Subsidiaries has owned, beneficially or otherwise, in excess of 1% of the shares of Company Common Stock, except pursuant to the Voting Agreement.
Section 4.10 No Merger Sub Activity. Since the date of its formation, Merger Sub has not engaged in any activities other than in connection with this Agreement.
Section 4.11 No Other Representations and Warranties. Except for the representations and warranties made by the Company that are expressly set forth in Article III or for factual statements or assertions contained in any notice or certificate delivered pursuant to this Agreement, Parent acknowledges and agrees that (a) it has not relied on, and hereby disclaims reliance on, (i) any representations or warranties (whether express or implied, arising at Law or otherwise or oral or written) and (ii) the information and materials made available by or on behalf of the Company or any of its affiliates or any of their respective Representatives and the accuracy or completeness of such information or materials (except to the extent that such matters are the subject of a representation or warranty expressly made by the Company in Article III), and (b) the Company, its affiliates and its and their respective Representatives disclaim (i) all representations and warranties, (ii) all information and materials that have been made available, including any information, documents, projections, forecasts or other material made available to Parent, Merger Sub or their respective Representatives or management presentations in expectation of the Transactions, and the accuracy and completeness thereof, and (iii) all liability for all representations or warranties and all information and materials that have been made available and the accuracy and completeness thereof. Notwithstanding anything to the contrary in this Agreement (including the foregoing), nothing in this Agreement shall relieve any Person for liability for Fraud. ARTICLE V.
COVENANTS RELATING TO CONDUCT
OF BUSINESS PENDING THE MERGER
Section 5.1 Conduct of Business by the Company. The Company agrees that between the date of this Agreement and the earlier of the Effective Time and the termination of this Agreement in accordance with Section 8.1, except (1) as set forth in Section 5.1 of the Company Disclosure Letter, (2) as specifically permitted or required by this Agreement, (3) as required by Law, (4) any actions reasonably undertaken by the Company or the Company Subsidiary to protect the health and safety of Company and Company Subsidiary employees and to ensure compliance with COVID-19 Measures, or (5) as consented to in writing by Parent (which consent shall not be unreasonably withheld, delayed or conditioned), (a) the Company shall and shall cause the Company Subsidiary to conduct its business in the Ordinary Course of Business, and (b) use their respective reasonable best efforts to preserve intact its and their present business organizations, insurance coverage, relationships with Governmental Entities and suppliers with whom it and they have material business relations, and retain the services (subject to the limitations imposed on the Company and the Company Subsidiary in this Agreement) of its present executive officers, directors and director-level employees, and (c) without limiting the generality of the foregoing, except as specifically permitted or required by this Agreement, as set forth in Section 5.1 of the Company Disclosure Letter, as specifically required by Law, or for
COVID-19 Measures, the Company shall not, and shall not permit the Company Subsidiary to, do any of the following without the prior written consent of Parent (which consent shall not be unreasonably withheld, delayed or conditioned):
(i) authorize or pay any dividends on or make any distribution with respect to its outstanding shares of capital stock (whether in cash, assets, shares or other securities of the Company or the Company Subsidiary), except dividends and distributions paid or made by the Company Subsidiary to the Company, distributions under the Company Equity Plans and distributions resulting from the vesting or exercise of Company Stock Options or Company Warrants or the vesting and settlement of Company RSU Awards or Company PSU Awards;
(ii) split, combine, reduce or reclassify any of its capital stock, or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for, shares of its capital stock;
(iii) in each case except as required by applicable Law, the provisions of the Company Benefit Plans as in effect on the date hereof or the provisions of this Agreement: (A) establish, adopt, amend or terminate any Company Benefit Plan (other than consulting agreements terminable on notice of 30 days or less without any termination obligations of the Company, and offer letters that contemplate “at will” employment with severance, change in control or retention benefits consistent with current arrangements with similarly situated employees) or amend the terms of any outstanding Company Equity Awards, (B) grant or provide any severance or termination payments or benefits to any director, officer, employee or other service provider of the Company or the Company Subsidiary, (C) increase the compensation, bonus or pension, welfare, severance or other benefits of or pay any bonus to any director, officer, employee or other individual service provider of the Company or the Company Subsidiary, (D) take any action to accelerate the vesting, payment, or funding of compensation or benefits under any Company Benefit Plan (including any Company Equity Awards), (E) forgive any loans to directors, officers or employees of the Company or the Company Subsidiary, or (F) hire or terminate the employment or services of (other than for cause or due to death or disability) any officer, employee in a position of Vice President or higher or any individual consultant who has a target annual cash compensation greater than $250,000; provided, that nothing contained herein shall prohibit the Company from (x) increasing or otherwise modifying or supplementing salaries, wages, benefits or other compensation with respect to the 2023 calendar year in the Ordinary Course of Business; or (y) hiring an employee or entering into a contract for services to be provided by a consultant to replace an employee or consultant of the Company or the Company Subsidiary whose employment or consulting relationship is terminated for any reason on or after the date hereof, so long as the terms of the salary, target annual bonus opportunity and other benefits offered to such replacement employee or consultant are substantially similar, or not materially different than, those of the employee or consultant of the Company or the Company Subsidiary whose employment or consulting relationship has been terminated;
(iv) make any change in financial accounting policies, principles, practices or procedures or any of its methods of reporting income, deductions or other material items for financial accounting purposes, except as required by GAAP, applicable Law or Governmental Entity;
(v) acquire, including by merger, consolidation or acquisition of stock or assets or any other business combination or by any other manner, any corporation, partnership, other business organization or any business, division or equity interest thereof;
(vi) amend or propose to amend (A) the Company Governing Documents or (B) any of the equivalent organizational documents of the Company Subsidiary;
(vii) issue, deliver, grant, sell, pledge, dispose of or encumber, or authorize the issuance, delivery, grant, sale, pledge, disposition or encumbrance of, any shares in its capital stock, voting securities or other equity interest in the Company or the Company Subsidiary or any securities convertible into or exchangeable for any such shares, voting securities or equity interest, or any rights, warrants or options to acquire any such shares in its capital stock, voting securities or equity interest or any “phantom” stock, “phantom” stock rights, stock appreciation rights or stock based performance units or take any action to cause to be exercisable any otherwise unexercisable Company Equity Award under any existing Company Equity Plan (except as otherwise required by the express terms of any Company Equity Award outstanding on the date hereof), other than issuances of shares of Company Common Stock in respect of the Company Equity Awards or loans outstanding under the Note Purchase Agreement (in accordance with the terms thereof) or in connection with any exercise of Company Stock Options or Company Warrants or the vesting or settlement of Company Equity Awards outstanding on the date hereof and in accordance with their respective present terms (or as amended in accordance with this Agreement) or granted following the date hereof in accordance with this Agreement;
(viii) directly or indirectly, purchase, redeem or otherwise acquire any shares of capital stock or any rights, warrants or options to acquire any such shares of capital stock of the Company or the Company Subsidiary, except for (A) acquisitions of shares of Company Common Stock in satisfaction by holders of Company Equity Awards in order to satisfy obligations to pay the exercise price and/or Tax withholding obligations with respect thereto and (B) the acquisition by the Company of Company Equity Awards in connection with the forfeiture of such Company Equity Awards;
(ix) incur, assume, endorse, guarantee or otherwise become liable for or modify in any material respect the terms of any Indebtedness for borrowed money or issue or sell any debt securities or calls, options, warrants or other rights to acquire any debt securities (directly, contingently or otherwise), except for transactions at the stated maturity of such Indebtedness and required amortization or mandatory prepayments;
(x) make any loans to any other Person, except for loans among the Company and the Company Subsidiary;
(xi) (A) sell, lease, license, transfer, exchange, swap or otherwise dispose of, or subject to any Lien (other than Company Permitted Liens), any of its material properties or assets (including shares of capital stock or other equity interests of the Company or the Company Subsidiary), except for sales of inventory, or dispositions of obsolete or worthless equipment, in each case, in the Ordinary Course of Business or (B) waive or assign any claims or rights of material value;
(xii) (A) compromise or settle any claim, litigation, investigation or proceeding, in each case made or pending by or against the Company or the Company Subsidiary (for the avoidance of doubt, including any compromise or settlement with respect to matters in which any of them is a plaintiff), or any of their employees, officers or directors in their capacities as such, other than the compromise or settlement of claims, litigation, investigations or Proceedings that: (1) are for an amount not to exceed $10,000, individually or in the aggregate, (2) do not involve an admission of guilt or impose any injunctive relief or a material restriction on the Company and the Company Subsidiary and (3) do not provide for the license of any material Intellectual Property Right or (B) commence any material claim, litigation, investigation or proceeding, other than in the Ordinary Course of Business;
(xiii) make, revoke or change any material Tax election, change any Tax accounting period or method of Tax accounting, file any amended Tax Return, settle or compromise any audit or proceeding relating to a material amount of Taxes, agree to an extension or waiver of the statute of limitations with respect to a material amount of Taxes, enter into any “closing agreement” within the meaning of Section 7121 of the Code (or any similar provision of state, local, or non-U.S. Law) with respect to any material Tax, or surrender any right to claim a material Tax refund;
(xiv) except for $100,000 in capital expenditures incurred in the Ordinary Course of Business, make any new capital expenditure or expenditures, or commit to do so;
(xv) take any of the actions set forth on Section 5.1(xv) of the Company Disclosure Letter; (xvi) without limitation of clause (xv), except in the Ordinary Course of Business or in connection with any transaction to the extent specifically permitted by any other subclause of this Section 5.1, (A) enter into any Contract that would, if entered into prior to the date hereof, be a Material Contract, or (B) materially modify, materially amend or terminate any Material Contract or waive, release or assign any material rights or claims under any Material Contract; or (xvii) agree, in writing or otherwise, to take any of the foregoing actions.
Section 5.2 Solicitation by the Company.
(a) No Solicitation or Negotiation. From and after the date of this Agreement until the earlier of the Effective Time and the termination of this Agreement in accordance with Section 8.1, and except as otherwise specifically provided for in this Section 5.2, the Company shall not, and shall cause the Company Subsidiary and its and their respective officers, directors and employees not to, and shall use its reasonable best efforts to cause its and their respective other Representatives on behalf of the Company (including directing them) not to, directly or indirectly: (i) solicit, initiate, or knowingly encourage or facilitate (including by way of furnishing information) any inquiry regarding, or the submission of any proposal or offer that constitutes, or would reasonably be expected to lead to, a Competing Proposal;
(ii) engage or otherwise participate in any discussions or negotiations regarding, or furnish to any Person any non-public information or data with respect to any Competing Proposal or any inquiry, proposal or offer that would reasonably be expected to lead to a Competing Proposal; or
(iii) take any action to exempt any Person (other than Parent and the Parent Subsidiaries) from the restrictions on “business combinations” or any similar provision contained in any applicable Takeover Statute or the Company Governing Documents
The Company shall, shall cause the Company Subsidiary and its and their respective officers, directors and employees to, and shall use commercially reasonable efforts to cause (including by directing them) its and their respective other Representatives to, immediately cease any solicitation, encouragement, discussions or negotiations with any Persons that may be ongoing with respect to any Competing Proposal or any inquiry, proposal or offer that could reasonably be expected to lead to a Competing Proposal, and promptly instruct or otherwise request (in each case, to the extent it has contractual authority to do so and has not already done so prior to the date of this Agreement), any Person that has executed a confidentiality or non-disclosure agreement in connection with any such Competing Proposal or potential Competing Proposal to return or destroy all such non-public information or documents or material incorporating confidential information in the possession of such Person or its Representatives in accordance with the terms of such confidentiality or non-disclosure agreement. Notwithstanding anything to the contrary contained in this Agreement, the Company and the Company Subsidiary and its and their respective Representatives may in response to a bona fide, written Competing Proposal (or any written indication by any Person that it may be considering making a Competing Proposal) (A) seek to clarify and understand the terms and conditions of any such Competing Proposal (or indication or amended proposal) solely to determine whether such Competing Proposal or indication constitutes or would reasonably be expected to lead to a Superior Proposal and (B) inform a Person that has made any such Competing Proposal of the provisions of this Section 5.2, in each case, so long as the Company, the Company Subsidiary and such Representatives otherwise comply with this Section 5.2 in connection therewith.
(b) Fiduciary Exception to No Solicitation or Negotiation Provision. Notwithstanding the limitations set forth in Section 5.2(a) and subject to Section 5.2(c), if after the date hereof the Company receives, prior to the Company Stockholder Approval being obtained, a bona fide, written Competing Proposal from any Person that did not result from a breach of this Section 5.2 (other than any such breach that is immaterial in effect) and the Company Board determines in good faith (after consultation with the Company’s outside legal counsel and the Company Financial Advisor) that such Competing Proposal constitutes or would reasonably be expected to lead to a Superior Proposal, then the Company may (i) furnish information with respect to the Company and the Company Subsidiary (including non-public information) to the Person that has made such Competing Proposal and its Representatives (including, for these purposes, sources of financing), if, prior to so furnishing such information, the Company receives from such Person an Acceptable Confidentiality Agreement; provided, in the case of this clause (i), that such information has previously been, or is substantially concurrently, made available to Parent, and (ii) engage in or otherwise participate in discussions or negotiations with the Person making such Competing Proposal regarding such Competing Proposal; provided, in the case of clauses (i) and (ii), that within twenty-four (24) hours of the first time that the Company furnishes any nonpublic information to or participates in any discussions or negotiations with any Person, the Company shall provide written notice to Parent of the identity of such Person and of the Company’s intention to furnish information to or participate in discussions or negotiations with such Person. The Company shall provide Parent with a summary of the material terms and conditions or a copy of the Acceptable Confidentiality Agreement entered into pursuant to this Section 5.2(b) for informational purposes only within twenty-four (24) hours of execution thereof (it being understood that the Company shall only be required to provide the notice required by this Section 5.2(b) on one occasion with respect to a particular Person). (c) Notice. The Company shall promptly (and, in any event, within forty-eight (48) hours) notify Parent in writing of the receipt by the Company or any of its Representatives of receipt of a Competing Proposal(or any written indication by any Person that it may be considering making a Competing Proposal). Any such notice to Parent shall include summaries of or copies of any written materials submitted in connection with such Competing Proposal (or indication) and indicate the identity of the Person making such Competing Proposal (or indication) and the material terms and conditions thereof. Thereafter the Company shall on a reasonable and prompt basis (and, in any event, within twenty-four (24) hours) (i) keep Parent reasonably informed on a current basis regarding any material change (including of any amendment, development, discussion or negotiation) to the material terms of any such Competing Proposal and the nature of any information requested of the Company or the Company Subsidiary or any of their respective Representatives with respect thereto and (ii) provide to Parent copies of any material written proposals, indications of interest or draft documentation (or, in the case of proposals or indications of interest delivered orally, shall provide to Parent a written summary of the material terms thereof). The Company agrees that it and the Company Subsidiary will not enter into any agreement with any Person subsequent to the date of this Agreement which prohibits the Company from providing any information to Parent in accordance with this Section 5.2.
(d) No Change of Recommendation. Except as expressly permitted by Section 5.2(e), the Company Board shall not (i) (A) withdraw, withhold, qualify or modify in a manner adverse to Parent, or resolve to or publicly propose to withdraw, withhold, qualify or modify in a manner adverse to Parent, the Company Board Recommendation, (B) fail to include the Company Board Recommendation in the Proxy Statement, (C) adopt, approve, endorse or recommend, or resolve to or publicly propose to adopt, approve, endorse or recommend, any Competing Proposal, (D) after receipt or public announcement of a Competing Proposal (other than a tender offer or exchange offer as discussed in (E) below), fail to publicly affirm the Company Board Recommendation within five (5) business days after a request by Parent to do so (or, if earlier, by the close of business on the business day immediately preceding the scheduled date of the Stockholders’ Meeting) (which such request may not be made by Parent more than once with respect to any such Competing Proposal; provided that any subsequent modification to a Competing Proposal shall be treated as a new Competing Proposal for purposes of this limitation), or (E) following the commencement of a tender offer or exchange offer relating to the Company Common Stock by a Person unaffiliated with Parent, fail to affirm the Company Board Recommendation and recommend that the Company’s stockholders reject such tender offer or exchange offer within five (5) business days after the commencement of such tender offer or exchange offer pursuant to Rule 14d-9(f) under the Exchange Act (or, if earlier, by the close of business on the business day immediately preceding the scheduled date of the Stockholders’ Meeting), it being agreed that the taking of no position or a neutral position by the Company Board in respect of the acceptance of any such tender offer or exchange offer as of the end of such period shall constitute a failure to recommend against acceptance of any such offer; (any action in this clause (i) being referred to as a “Change of Recommendation”) or (ii) cause or allow the Company or the Company Subsidiary to execute or enter into, any letter of intent, memorandum of understanding, agreement in principle, term sheet, Contract or commitment (other than an Acceptable Confidentiality Agreement referred to in Section 5.2(b)) constituting or relating to, or that is intended to or could reasonably be expected to lead to, any Competing Proposal (a “Company Acquisition Agreement”). (e) Fiduciary Exception to No Change of Recommendation Provision.
(i) Notwithstanding anything to the contrary set forth in this Agreement, prior to the time the Company Stockholder Approval is obtained, the Company Board may make a Change of Recommendation and/or, if applicable, terminate this Agreement pursuant to Section 8.1(d)(i) if after receiving a bona fide, written Competing Proposal that did not result from a breach of Section 5.2 (other than any such breach that is immaterial in effect) the Company Board has determined in good faith (after consultation with the Company’s outside legal counsel and the Company Financial Advisor) that (A) such Competing Proposal constitutes a Superior Proposal and (B) in light of such Competing Proposal, the failure to take such action would be inconsistent with the fiduciary duties owed by the members of the Company Board under applicable Law; provided, however, that, prior to making such Change of Recommendation or terminating this Agreement pursuant to Section 8.1(d)(i), (1) the Company has given Parent at least five (5) business days’ prior written notice of its intention to take such action or actions with respect to a Superior Proposal (which notice shall specify the material terms and
conditions of any such Superior Proposal, and which notice, or the public disclosure thereof, shall not constitute a Change of Recommendation) and has contemporaneously provided to Parent a reasonably detailed summary of the material terms of or a copy of the Superior Proposal, a copy of any proposed Company Acquisition Agreement with the Person making such Superior Proposal and a reasonably detailed summary of the material terms of or a copy of any financing commitments relating thereto (or, if not provided in writing to the Company, a written summary of the material terms thereof) (the “Matching Period”), (2) if requested by Parent, the Company has negotiated, and has made its Representatives reasonably available to negotiate, in good faith with Parent during the Matching Period, to the extent Parent wishes to negotiate, to enable Parent to propose revisions to the terms of this Agreement such that it would cause such Superior Proposal to no longer constitute a Superior Proposal, (3) following the end of the Matching Period, the Company Board shall have considered in good faith any written revisions to the terms of this Agreement proposed by and binding on Parent, and shall have determined in good faith (after consultation with the Company’s outside legal counsel and the Company Financial Advisor) that the Superior Proposal would nevertheless continue to constitute a Superior Proposal if the revisions proposed by and binding on Parent were to be given effect, and (4) in the event of any material change to any of the financial terms (including material changes to the form, amount and timing of payment of consideration) or any other material terms of such Superior Proposal, the Company shall, in each case, have delivered to Parent an additional notice consistent with that described in clause (1) above of this proviso and a new Matching Period under clause (1) of this proviso shall commence (except that the five (5) business day period notice period referred to in clause (1) above of this proviso shall instead be equal to three (3) business days) during which time the Company shall be required to comply with the requirements of this Section 5.2(e)(i) anew with respect to such additional notice pursuant to clauses (1) through (4) above of this proviso; provided, further, that the Company has complied in all material respects with its obligations under this Section 5.2. (ii) Other than in connection with a Superior Proposal (which shall be subject to Section 5.2(e)(i) and shall not be subject to this Section 5.2(e)(ii)), nothing in this Agreement shall prohibit or restrict the Company Board from making a Change of Recommendation in response to an Intervening Event if the Company Board has determined in good faith (after consultation with the Company’s outside legal counsel) that the failure to take such action would be inconsistent with the fiduciary duties owed by the members of the Company Board under applicable Law; provided, however, that, prior to making such Change of Recommendation, (1) the Company has given Parent at least five (5) business days’ prior written notice of its intention to take such action, which notice shall specify the reasons therefor (and which notice, or the public disclosure thereof, shall not constitute a Change of Recommendation), (2) if requested by Parent, the Company has negotiated, and has made its Representatives reasonably available to negotiate, in good faith with Parent during such notice period after giving any such notice, to the extent Parent wishes to negotiate, to enable Parent to propose revisions to the terms of this Agreement such that such Intervening Event would not warrant the Company Board to make an Change of Recommendation (to the extent permitted)
pursuant to this Section 5.2(e)(ii), and (3) following the end of such notice period, the Company Board shall have considered in good faith any written revisions to the terms of this Agreement proposed by Parent, and shall have determined in good faith (after consultation with the Company’s outside legal counsel) that failure to make a Change of Recommendation in response to such Intervening Event would be inconsistent with the fiduciary duties owed by the members of the Company Board under applicable Law (f) Limits on Release of Standstill and Confidentiality. The Company and the Company Subsidiary shall not release any third party from, or waive, amend or modify any provision of, or grant permission under, any standstill provision in any agreement to which the Company or the Company Subsidiary is a party, other than to the extent the Company Board has determined in good faith (after consultation with the Company’s outside legal counsel) that the failure to take such action would be inconsistent with the fiduciary duties owed by the members of the Company Board under applicable Law; provided that, in the case of any such action with respect to any standstill provision or similar obligation, such Person shall have agreed to the disclosure to Parent of any Competing Proposal made by such Person and the Company shall, concurrently and on substantially the same terms, offer to release, waive, amend, modify or grant permission under any corresponding standstill provision or similar obligation in any agreement to which Parent or any of its Subsidiaries is a party, including the Confidentiality Agreement.
(g) Certain Permitted Disclosure. Nothing contained in this Section 5.2 shall prohibit the Company or the Company Board from (i) taking and disclosing to the Company’s stockholders a position contemplated by Rule 14e-2(a), Rule 14d-9 or Item 1012(a) of Regulation M-A promulgated under the Exchange Act, (ii) making any disclosure to the Company’s stockholders if the Company Board has determined in good faith, after consultation with its outside legal advisors, that the failure to do so would be inconsistent with the fiduciary duties owed by the members of the Company Board under applicable Laws with respect to the fact that a Competing Proposal has been made, the identity of the party making such Competing Proposal or the material terms of such Competing Proposal or that an Intervening Event has occurred (and, subject to the following proviso, no such disclosure shall, taken by itself, be deemed to be a Change of Recommendation), or (iii) from making any “stop, look and listen” communication or any other similar disclosure to the Company’s stockholders pursuant to Rule 14d-9(f) under the Exchange Act; provided, however, that the foregoing shall in no way eliminate or modify the effect that any such position or disclosure would otherwise have under this Agreement and any such position or disclosure that relates to a Competing Proposal or Intervening Event (other than any “stop, look and listen” communication) shall be deemed to be a Change of Recommendation unless the Company Board expressly and concurrently reaffirms the Company Board Recommendation. (h) Certain Definitions.
(i) For purposes of this Agreement:
“Acceptable Confidentiality Agreement” shall mean a customary confidentiality agreement (which need not prohibit the making of a Competing Proposal) with terms no less favorable in the aggregate to the Company than those contained in the Confidentiality
Agreement; provided that an Acceptable Confidentiality Agreement need not include a standstill or other similar obligation so long as the Company offers to amend the Confidentiality Agreement concurrently with execution of such Acceptable Confidentiality Agreement to remove any standstill or similar obligation in the Confidentiality Agreement.
“Competing Proposal” means any proposal or offer made by a Person or group (other than a proposal or offer by Parent or any of the Parent Subsidiaries), including any amendment or modification to any existing proposal or offer, which (1) is structured to permit (A) such Person or group to acquire beneficial ownership of at least twenty percent (20%) of the assets of, equity interest in, or businesses of, the Company (whether pursuant to a merger, consolidation or other business combination, sale of shares of capital stock, sale of assets, tender offer or exchange offer or otherwise, including any single or multi-step transaction or series of related transactions), or (B) a merger, consolidation, recapitalization or other transaction that results in the stockholders of the Company immediately preceding such transaction holding less than eighty percent (80%) of the equity interests of the surviving or resulting entity of such transaction, in each case other than the Merger or (2) involves any sale or license of, or joint venture or partnership with respect to rights to OPNT003.
“Superior Proposal” means a bona fide written Competing Proposal (with references to 20% and 80% being deemed to be replaced with references to 50%) made after the date hereof and that did not result from or arise in connection with a breach of the Company’s obligations set forth in Section 5.2 (other than any such breach that is immaterial in effect), that the Company Board determines in good faith after consultation with the Company’s outside legal and financial advisor (A) would be more favorable to the stockholders of the Company from a financial point of view than the Merger, taking into account all financial, legal, regulatory and other relevant factors (including all the terms and conditions of such proposal or offer and this Agreement (including any changes to the terms of this Agreement proposed in writing by and binding on Parent in response to such offer or otherwise)) and (B) reasonably expected to be consummated on the terms proposed. References to the “Company Board” shall mean the Company Board or, to the extent applicable, a duly authorized committee thereof.
References to a “Person” means any Person or “group,” as defined in Section 13(d) of the Exchange Act, other than, with respect to the Company, Parent or any Parent Subsidiaries.
Section 5.3 SEC Filings; Stockholders’ Meeting.
(a) As promptly as reasonably practicable following the execution date of this Agreement, the Company shall prepare and file with the SEC a preliminary version of the proxy statement relating to the adoption of this Agreement by the Company’s stockholders (as amended and supplemented from time to time, the “Proxy Statement”). The Company shall use its reasonable best efforts to ensure that the Proxy Statement complies in all material respects with
the applicable provisions of the Exchange Act. Parent shall furnish all information concerning itself, its affiliates and the holders of its shares to the Company and provide such other assistance as may be reasonably requested in connection with the preparation, filing and distribution of the Proxy Statement. The Company shall promptly notify Parent upon the receipt of any comments from the SEC or any request from the SEC for amendments or supplements to the Proxy Statement or any other proxy or consent solicitation statement with respect to any meeting of the Company stockholders and shall, as promptly as practicable after receipt thereof, provide Parent with copies of all written correspondence between it and its Representatives, on one hand, and the SEC, on the other hand, and all written comments with respect to the Proxy Statement or any other proxy or consent solicitation statement with respect to any meeting of the Company stockholders received from the SEC and advise Parent of any oral comments with respect to the Proxy Statement or any other proxy or consent solicitation statement with respect to any meeting of the Company stockholders received from the SEC. The Company shall use its reasonable best efforts to respond as promptly as practicable to any comments from the SEC with respect to the Proxy Statement and to have the preliminary version of the Proxy Statement cleared by the SEC and its staff under the Exchange Act as promptly as practicable after the initial filing thereof. Notwithstanding the foregoing, prior to mailing the Proxy Statement or any other proxy or consent solicitation statement with respect to any meeting of the Company stockholders or responding to any comments of the SEC with respect thereto, the Company shall cooperate and provide Parent a reasonable opportunity to review and comment on such document or response in advance (including the proposed final version of such document or response) and consider in good faith any reasonable comments provided by Parent or any of its Representatives with respect thereto. No amendment or supplement to the Proxy Statement will be made by the Company without first providing Parent and its counsel a reasonable opportunity to review and comment thereon.
(b) If, at any time prior to the receipt of the Company Stockholder Approval, any information relating to the Company or Parent, respectively, or any of their respective affiliates, should be discovered by the Company or Parent which, in the reasonable judgment of the Company or Parent, respectively, should be set forth in an amendment of, or a supplement to, the Proxy Statement, so that the Proxy Statement would not include any misstatement of a material fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, the Party which discovers such information shall promptly notify the other Parties, and the Company and Parent shall cooperate in the prompt filing with the SEC of any necessary amendment of, or supplement to, the Proxy Statement and, to the extent required by Law, in disseminating the information contained in such amendment or supplement to stockholders of the Company. Nothing in this Section 5.3(b) shall limit the obligations of any Party under Section 5.3(a). For purposes of this Section 5.3, any information concerning or related to the Company, its affiliates or the Stockholders’ Meeting will be deemed to have been provided by the Company, and any information concerning or related to Parent or its affiliates will be deemed to have been provided by Parent. (c) As promptly as practicable following the date on which the SEC confirms that it has no further comments on the Proxy Statement or that the Company may commence mailing the definitive Proxy Statement, the Company shall, in accordance with applicable Law and the
Company Governing Documents, establish a record date for, duly call and give notice of, the Stockholders’ Meeting and file the definitive Proxy Statement. The Company shall use its reasonable best efforts to cause the Proxy Statement to be mailed to the stockholders of the Company entitled to vote at the Stockholders’ Meeting and to convene and hold the Stockholders’ Meeting as soon as practicable after the filing of the definitive Proxy Statement (or such later date as the Parties shall agree). Except in each case to the extent that the Company Board shall have made a Change of Recommendation as permitted by Section 5.2 and subject to Section 5.2(h), the Company shall, through the Company Board, recommend to its stockholders that they give the Company Stockholder Approval, include such recommendation in the Proxy Statement and solicit and use its reasonable best efforts to obtain the Company Stockholder Approval. Notwithstanding the foregoing provisions of this Section 5.3(c), if, on a date for which the Stockholders’ Meeting is scheduled, the Company has not received proxies representing a sufficient number of shares of Company Common Stock to obtain the Company Stockholder Approval, whether or not a quorum is present, the Company shall have the right to make one or more successive postponements or adjournments of the Stockholders’ Meeting; provided that the Stockholders’ Meeting is not postponed or adjourned to a date that is in the aggregate more than thirty (30) days after the date for which the Stockholders’ Meeting was originally scheduled (other than, following consultation with Parent, any adjournments or postponements required by applicable Law, including adjournments or postponements to the extent required under applicable Law to ensure that any required supplement or amendment to the Proxy Statement is provided or made available to the Company stockholders or to permit dissemination of information which is material to stockholders voting at the Stockholders’ Meeting and to give the Company stockholders sufficient time to evaluate any such supplement or amendment or other information, provided that in no event shall the number of days by such the Stockholders’ Meeting is adjourned or postponed exceed thirty (30) days in the aggregate, less the number of days by which the Stockholders’ Meeting has been adjourned or postponed in order to obtain the Company Stockholder Approval). Once the Company has established a record date for the Stockholders’ Meeting, the Company shall not change such record date or establish a different record date for the Stockholders’ Meeting without the prior written consent of Parent (such consent not to be unreasonably withheld, conditioned or delayed), unless, following consultation with Parent, required to do so by applicable Law or the Company Governing Documents. Without the prior written consent of Parent (such consent not to be unreasonably withheld, conditioned or delayed), the adoption of this Agreement shall be the only matter (other than matters of procedure and matters required by applicable Law to be voted on by the Company’s stockholders in connection with the adoption of this Agreement) that the Company shall propose to be acted on by the stockholders of the Company at the Stockholders’ Meeting. Section 5.4 Tax Matters.
(a) The Company shall cause all Tax Sharing Agreements (if any) to be terminated with respect to the Company and the Company Subsidiary on or prior to the Closing Date.
(b) The Company and the Company Subsidiary (i) shall timely file all Tax Returns required to be filed on or prior to the Closing Date (taking into account any valid extensions of time to file such Tax Returns obtained in the Ordinary Course of Business) in a manner
consistent with past practice (expect to the extent otherwise required by applicable Law or as otherwise required pursuant to this Agreement) and pay any Tax shown due thereon and (ii) shall maintain their respective books and records in a manner consistent with past practice.
Section 5.5 Interim Communications by the Company. The Company shall keep Parent reasonably informed of any material communications broadly disseminated to Service Providers, lenders, material suppliers or other Persons having material business relationships with the Company or the Company Subsidiary relating to the Transactions, which communications shall not, without the prior written consent of Parent, be inconsistent in substance with any public statements made jointly by the Parties or made by one Party in accordance with Section 6.3. ARTICLE VI.
ADDITIONAL AGREEMENTS
Section 6.1 Access; Confidentiality; Notice of Certain Events.
(a) From the date of this Agreement until the earlier of the Effective Time and the termination of this Agreement in accordance with Section 8.1, to the extent permitted by applicable Law, the Company shall, and shall cause the Company Subsidiary to, (i) upon request, provide to Parent and Parent’s Representatives reasonable access at reasonable times upon reasonable prior notice to the officers, employees and other personnel, agents, properties, offices and other facilities of the Company and the Company Subsidiary and to the books and records thereof (including for purposes of conducting regulatory compliance reviews and audits to allow Parent to be in compliance with its policies and procedures and any applicable Law at the Effective Time); and (ii) use reasonable best efforts to furnish promptly to Parent such information concerning the business, properties, contracts, assets, liabilities, personnel and other aspects of the Company and the Company Subsidiary as Parent or its Representatives may reasonably request (including for purposes of conducting regulatory compliance reviews and audits to allow Parent to be in compliance with its policies and procedures and any applicable Law at the Effective Time); provided, however, that such investigation shall not unduly disrupt the Company’s operations, provided, further, that the Company shall not be required to provide access to or disclose any such information to the extent such access or disclosure would (A) based on the advice of Parent’s outside legal counsel and in the reasonable good faith judgment of the Company, result in the loss of attorney-client privilege of the Company or the Company Subsidiary, (B) violate applicable Law or (C) in the reasonable good faith judgment of the Company, violate confidentiality obligations owed to a Person and such confidentiality obligations that were in effect prior to the execution and delivery of this Agreement; provided, however, with respect to clauses (A), (B) and (C) of this Section 6.1, the Company shall use its reasonable best efforts to develop and alternative method for providing such information. (b) Parent will hold, and will cause its Representatives to hold, any nonpublic information, including any information exchanged pursuant to this Section 6.1, in confidence to the extent required by and in accordance with the terms of the Confidentiality Agreement.
(c) No inspection by Parent or any of its Representatives shall affect or be deemed to modify or waive any of the representations and warranties of the Company, the Company Subsidiary, Parent or Merger Sub set forth in this Agreement.
(d) Notwithstanding anything to the contrary contained herein, each of the Company and Parent shall promptly notify the other of:
(i) any written notice or other communication received by such Party from any Governmental Entity in connection with this Agreement, the Merger or other Transactions, or from any Person alleging that the consent of such Person is or may be required in connection with the Merger or the other Transactions;
(ii) any legal proceeding commenced or, to any Party’s knowledge, threatened in writing against, such Party or any of its Subsidiaries or affiliates or otherwise relating to, involving or affecting such Party or any of its Subsidiaries or affiliates, in each case in connection with, arising from or otherwise relating to the Merger or any other Transaction;
(iii) the occurrence or impending occurrence of any event or circumstance relating to it or the Company Subsidiary or any of the Parent Subsidiaries, respectively, which would reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect or a Parent Material Adverse Effect, as the case may be, or which would reasonably be expected to prevent or materially delay or impede the consummation of the Transactions; and
(iv) any inaccuracy of any representation or warranty or breach of covenant contained in this Agreement at any time during the term hereof that would reasonably be expected to cause the conditions set forth in Article VII not to be satisfied prior to the Outside Date; provided, however, that the delivery of any notice pursuant to this Section 6.1(d) shall not cure any breach of any representation or warranty requiring disclosure of such matter prior to the date of this Agreement or otherwise limit or affect the remedies available hereunder to any Party. The failure to deliver any such notice shall not affect any of the conditions set forth in Article VII or give rise to any right to terminate under Article VIII, except for any such failure that constitutes a willful breach of this Agreement. Section 6.2 Reasonable Best Efforts.
(a) Subject to the terms and conditions of this Agreement, each Party will use its reasonable best efforts to 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 Merger and the other Transactions as soon as practicable after the date hereof, including (i) preparing and filing, in consultation with the other Party and as promptly as practicable and advisable after the date hereof, all documentation to effect all necessary applications, notices, petitions, filings, and other documents and to use its reasonable best efforts to obtain as promptly as practicable all waiting
period expirations or terminations, consents, clearances, waivers, licenses, orders, registrations, approvals, permits, and authorizations necessary or advisable to be obtained by such Party from any third party and/or any Governmental Entity in order to consummate the Merger or any of the other Transactions and (ii) using reasonable best efforts to take all steps as may be necessary to obtain all such waiting period expirations or terminations, consents, clearances, waivers, licenses, registrations, permits, authorizations, orders and approvals as promptly as practicable. In furtherance and not in limitation of the foregoing, (A) each Party agrees to make (or cause to be made) an appropriate filing of a Notification and Report Form pursuant to the HSR Act with respect to the Transactions as promptly as practicable (and unless otherwise agreed by the Parties, within fourteen (14) business days after the date of this Agreement), and to supply as promptly as practicable any additional information and documentary material that may be requested pursuant to the HSR Act, including responding to any Request for Additional Information and Documentary Material under the HSR Act as promptly as reasonably practicable, or any other Antitrust Information or Document Requests made of the Parties, and to take all other actions necessary to cause the expiration or termination of the applicable waiting periods under the HSR Act as soon as practicable; (B) each Party agrees to submit (or cause to be submitted) a briefing paper to the CMA as promptly as practicable (and unless otherwise agreed by the Parties within fourteen (14) business days) after the date of this Agreement, and to supply as promptly as practicable any additional information and documentary material that the CMA may request, and to take all other actions to resolve or conclude any formal review under the EA 2002 and obtain clearance and approval to complete the Merger and the other Transactions from the CMA and (C) unless otherwise agreed by the Parties in writing, Parent and the Company shall submit, or cause to be submitted, (1) as promptly as practicable (and unless otherwise agreed by the Parties, within fourteen (14) business days) after the date of this Agreement, a draft of the joint notice to CFIUS (“CFIUS Notice”) contemplated under 31 C.F.R. § 800.501(g) with respect to the Transactions, (2) as promptly as practicable after receiving feedback from CFIUS regarding the draft CFIUS Notice referenced in clause (1), a formal CFIUS Notice as contemplated by 31 C.F.R. § 800.501(a), and (3) as soon as possible (and in any event in accordance with applicable regulatory requirements) any other submissions that are formally requested by CFIUS to be made, or which Parent determines should be made, in each case in connection with this Agreement and the Transactions. Parent shall bear the cost of any filing fees payable to Governmental Entities in connection with the filing of the Notification and Report Forms filed under the HSR Act or filings under EA 2002, and, the CFIUS Notice.
(b) Each of Parent and the Company shall, in connection with the efforts referenced in Section 6.2(a) to obtain all waiting period expirations or terminations, consents, clearances, waivers, licenses, orders, registrations, approvals, permits, and authorizations for the Transactions under the HSR Act or any other Antitrust Law, Section 721, and the CFIUS Approval, (i) cooperate in all respects and consult with each other in connection with any filing or submission and in connection with any investigation or other inquiry, including any proceeding initiated by a private party under any Antitrust Law, including by allowing the other Party to have a reasonable opportunity to review in advance and comment on drafts of filings and submissions; (ii) promptly inform the other Party of any communication received by such Party from, or given by such Party to, the Antitrust Division of the Department of Justice (the “DOJ”), the Federal Trade Commission (the “FTC”) or any other Governmental Entity with respect to
any Antitrust Law, or CFIUS, by promptly providing copies to the other Party of any such written communications, and of any material communication received or given in connection with any proceeding by a private party under any Antitrust Law, in each case regarding any of the Transactions; provided, however, that materials may be redacted (A) to remove references concerning the valuation of Parent, Company or any of their Subsidiaries, (B) as necessary to comply with contractual arrangements, and (C) as necessary to address reasonable privilege or confidentiality concerns; and (iii) permit the other Party to review in advance any communication that it gives to, and consult with each other in advance of any meeting, substantive telephone call or conference with, the DOJ, the FTC, CFIUS or any other Governmental Entity with respect to the subject matter of this Section 6.2(b), or, in connection with any proceeding by a private party under any Antitrust Law, with any other Person (provided, however, that materials may be redacted (A) to remove references concerning the valuation of Parent, Company or any of their Subsidiaries, (B) as necessary to comply with contractual arrangements, and (C) as necessary to address reasonable privilege or confidentiality concerns), and to the extent permitted by the DOJ, the FTC, CFIUS, or any other applicable Governmental Entity or other Person with respect to the subject matter of this Section 6.2(b), give the other Party the opportunity to attend and participate in any in-person meetings with the DOJ, the FTC, CFIUS, or any other Governmental Entity or other Person with respect to the subject matter of this Section 6.2(b). Parent shall, on behalf of the Parties, control and lead all communications and strategy relating to the Antitrust Laws and Section 721 (provided that the Company is not constrained from complying with applicable Law); provided, further, that the Parties shall consult and cooperate with one another, and consider in good faith the views of one another, regarding the form and content of any analyses, appearances, presentations, memoranda, briefs, arguments, opinions and proposals made or submitted by or on behalf of either Party in connection with Proceedings under or relating to any Antitrust Law prior to their submission. (c) Without limiting the generality of the foregoing, if any action or proceeding is instituted challenging the Merger as violating any Antitrust Law, or if any decree, order, judgment, or injunction (whether temporary, preliminary, or permanent) is entered or enforced, by any Governmental Entity that would make the Merger illegal or otherwise delay or prohibit the consummation of the Merger, Parent and its affiliates shall take any and all actions to contest, resolve and defend any such claim, cause of action, or proceeding to avoid entry of, or to have vacated, lifted, reversed, repealed, rescinded, or terminated, any decree, order, judgment, or injunction (whether temporary, preliminary, or permanent) that prohibits, prevents, or restricts consummation of the Merger, in each case no later than thirty (30) days prior to the Outside Date. In addition, Parent shall use reasonable best efforts to enter into such commercially reasonable assurances or agreements requested or required by CFIUS or the President of the United States to obtain CFIUS Approval. Notwithstanding the foregoing or any other provision of this Agreement, in no event shall Parent or Merger Sub be required to offer, accept or agree to, and the Company shall not, without Parent’s prior written consent, offer, accept or agree to (i) divest, dispose of or hold separate, or cause the Company Subsidiary to dispose of or hold separate, (A) any portion of the businesses, operations, assets or products lines of Parent or any of its affiliates (including for the avoidance of doubt, any equity interests in the Company or the Company Subsidiary) or (B) except, in the case of this clause (B) as would not be material to the Company and the Company Subsidiary (taken as a whole), any portion of the businesses,
operations, assets or product lines of the Company or the Company Subsidiary, (ii) restrict, prohibit or limit the ability of Parent or its affiliates, or the Company or the Company Subsidiary to (A) conduct its business or own any of its assets (other than the business or assets of the Company and the Company Subsidiary) or (B) except, in the case of this clause (B) as would not be material to the Company and the Company Subsidiary (taken as a whole), conduct any of the business or assets of the Company or the Company Subsidiary, (iii) restrain, prohibit or limit the ownership or operation by Parent, the Company or any of their respective Subsidiaries of (A) any of the business or assets of Parent or its affiliates (other than the business or assets of the Company and the Company Subsidiary) or (B) except, in the case of this clause (B) as would not be material to the Company and the Company Subsidiary (taken as a whole), any of the business or assets of the Company or the Company Subsidiary, (iv) cause Parent or any of the Parent Subsidiaries to divest any shares of Company Common Stock or (v) impose limitations on the ability of Parent or any of the Parent Subsidiaries effectively to acquire, hold or exercise full rights of ownership of, any shares of capital stock of the Surviving Corporation, including the right to vote any shares of capital stock of the Surviving Corporation acquired or owned by Parent or any of the Parent Subsidiaries on all matters properly presented to the stockholders of the Surviving Corporation or (vi) in connection with obtaining the CFIUS Approval, take any action that (X) would limit in any material respect its ability to own, control and operate the Company and the Company Subsidiary or integrate the Company and the Company Subsidiary (and their respective businesses, assets and properties) with those of Indivior PLC and its Subsidiaries at any point following the Effective Time or (Y) would reasonably be expected to adversely affect Indivior PLC and its Subsidiaries (assuming completion of the Merger and the other Transactions) in any material respect.
(d) Without limitation of the other provisions of this Section 6.2, each of Parent and the Company shall use its reasonable best efforts to obtain all consents, waivers, authorizations and approvals of all third parties, other than Governmental Entities, necessary, proper or advisable for the consummation of the Transactions and to provide any notices to such third parties required to be provided prior to the Effective Time; provided, however, that without the prior written consent of Parent, the Company shall not incur any significant expense or liability, enter into any significant new commitment or agreement or agree to any significant modification to any contractual arrangement to obtain such consents or certificates in each case, that would have a Company Material Adverse Effect. Nothing in this Agreement shall require any Party to take or agree to take any action unless the effectiveness of such agreement or action is conditioned upon the Closing. (e) Parent will not, and will not permit any of the Parent Subsidiaries or affiliates to (i) acquire or agree to acquire (by merging or consolidating with, or by purchasing a substantial portion of equity in), any Person that is engaged in the development or commercialization of products for the reversal of opioid overdose or (ii) acquire or agree to acquire any assets or rights to products for the reversal of opioid overdose, if such acquisition, merger or consolidation would reasonably be expected to (A) impose any delay in the obtaining of, or increase the risk of not obtaining, any consents, orders or other approvals of any Governmental Entity necessary to consummate the Merger or the expiration or termination of any applicable waiting period, (B) increase the risk of any Governmental Entity entering an order prohibiting the consummation of
the Merger, (iii) increase the risk of not being able to remove any such order on appeal or otherwise or (iv) delay or prevent the consummation of the Merger.
Section 6.3 Publicity. So long as this Agreement is in effect, neither the Company nor Parent, nor any of their respective affiliates, shall issue or cause the publication of any press release or other public announcement with respect to the Merger or this Agreement without the prior consent of the other Party (such consent not to be unreasonably withheld, conditioned or delayed), unless such Party reasonably determines, after consultation with outside counsel, that it is required by applicable Law or by any listing agreement with or the listing rules of a national securities exchange, the LSE, or trading market to issue or cause the publication of any press release or other public announcement with respect to the Merger, this Agreement or the other Transactions, in which event such Party shall endeavor, on a basis reasonable under the circumstances, to provide a meaningful opportunity to the other Party to review and comment upon such press release or other announcement as far in advance as practicable and shall give due consideration to all reasonable additions, deletions or changes suggested thereto; provided, however, that each Party and their respective affiliates may make statements that substantially reiterate (and are not inconsistent with) previous press releases, public disclosures or public statements made by Parent and the Company in compliance with this Section 6.3; provided, further, that the Company’s obligations regarding any communications regarding a Competing Proposal or Change of Recommendation shall be governed by Section 5.2 and not this Section 6.3. Section 6.4 Directors’ and Officers’ Insurance and Indemnification. For not less than six (6) years from and after the Effective Time, Parent shall cause the Surviving Corporation to, and the Surviving Corporation shall and shall cause each of its Subsidiaries to, indemnify, defend and hold harmless all past and present directors and officers of the Company and the Company Subsidiary (collectively, the “Indemnified Parties”) against any costs or expenses (including advancing reasonable attorneys’ fees and expenses in advance of the final disposition of any actual or threatened claim, suit, proceeding or investigation to each Indemnified Party to the fullest extent permitted by Law; provided, however, that such Indemnified Party agrees in advance to return any such funds to which a court of competent jurisdiction has determined in a final, nonappealable judgment such Indemnified Party is not ultimately entitled), judgments, fines, losses, claims, damages, liabilities and amounts paid in settlement in connection with any actual or threatened claim, action, investigation, suit or proceeding in respect of acts or omissions occurring or alleged to have occurred at or prior to the Effective Time (including acts or omissions occurring in connection with the approval of this Agreement and the consummation of the Merger or any of the other Transactions), whether asserted or claimed prior to, at or after the Effective Time, in connection with such Persons serving as an officer or director of the Company or the Company Subsidiary or of any Person serving at the request of the Company or the Company Subsidiary as a director, officer, employee or agent of another Person, to the fullest extent permitted by Law or provided pursuant to the Company Governing Documents or the organizational documents of the Company Subsidiary or any indemnification agreements, if any, in existence on the date of this Agreement. The Parties agree that for six (6) years after the Effective Time all rights to elimination or limitation of liability, indemnification and advancement of expenses for acts or omissions occurring or alleged to have occurred at or prior
to the Effective Time, whether asserted or claimed prior to, at or after the Effective Time, now existing in favor of the Indemnified Parties as provided in their respective certificate of incorporation or by-laws (or comparable organizational documents) or in any agreement shall survive the Merger and shall continue in full force and effect. For six (6) years after the Effective Time, the Surviving Corporation shall cause to be maintained in effect the provisions in (i) the Company Governing Documents and the organizational documents of the Company Subsidiary and (ii) any other agreements of the Company and the Company Subsidiary with any Indemnified Party, in each case, regarding elimination or limitation of liability, indemnification of officers, directors, employees and agents or other fiduciaries and advancement of expenses that are in existence on the date of this Agreement, and no such provision shall be amended, modified or repealed in any manner that would adversely affect the rights or protections thereunder of any such Indemnified Party in respect of acts or omissions occurring or alleged to have occurred at or prior to the Effective Time (including acts or omissions occurring in connection with the approval of this Agreement and the consummation of the Merger or any of the other Transactions) without the consent of such Indemnified Party. At or prior to the Effective Time, Parent shall purchase a single premium directors’ and officers’ liability insurance “tail policy” with a claims period of not less than six (6) years from the Effective Time for the benefit of the Company’s current directors and officers that provides coverage for acts and omissions as directors, officers, employees and agents of the Company or the Company Subsidiary occurring prior to the Effective Time (the “D&O Insurance Policy”) that is no less favorable than the Company’s existing policy as of the date of this Agreement or, if insurance coverage that is no less favorable is unavailable, the best available coverage; provided, that Parent shall not be required to pay an aggregate cost for the D&O Insurance Policy in excess of 300% of the last annual premium paid prior to the date of this Agreement; provided, further, that, if Parent is unable to obtain such D&O Insurance Policy as of the Effective Time, the Company may purchase such a D&O Insurance Policy with an aggregate cost not in excess of 300% of the last annual premium paid prior to the date of this Agreement; provided, further, that if the D&O Insurance Policy is not obtained by either Parent or the Company at or prior to the Effective Time, Parent shall, and shall cause the Surviving Corporation to, maintain in effect, for a period of six (6) years from the Effective Time, for the benefit of the Company’s current directors and officers with respect to their acts and omissions as directors, officers, employees or agents of the Company or the Company Subsidiary occurring at or prior to the Effective Time, a directors’ and officers’ liability insurance policy that is no less favorable than the Company’s existing policy as of the date of this Agreement or, if insurance coverage that is no less favorable is unavailable, the best available coverage; provided that the Surviving Corporation shall not be required to pay an annual premium for such insurance policy in excess of 300% of the last annual premium paid prior to the date of this Agreement, in which case the Surviving Corporation shall obtain the maximum amount of coverage reasonably available for 300% of the last annual premium paid prior to the date of this Agreement. Notwithstanding anything in this Section 6.4 to the contrary, if any Indemnified Party notifies Parent on or prior to the sixth anniversary of the Effective Time of a matter in respect of which such Person may seek indemnification pursuant to this Section 6.4, the provisions of this Section 6.4 that require the Surviving Corporation to indemnify and advance expenses shall continue in effect with respect to such matter until the final disposition of all claims, actions, investigations, suits and Proceedings relating thereto. In the event Parent or the Surviving Corporation or any of their respective successors or assigns (i) consolidates with or
merges into any other Person and shall not be the continuing or surviving corporation or entity of such consolidation or merger or (ii) transfers all or substantially all of its properties and assets to any Person or consummates any division transaction, then, and in each such case, proper provision shall be made so that the successors and assigns of Parent or the Surviving Corporation, as the case may be, shall assume the obligations set forth in this Section 6.4. The rights and obligations under this Section 6.4 shall survive consummation of the Merger and shall not be terminated or amended in a manner that is adverse to any Indemnified Party without the written consent of such Indemnified Party. The provisions of Section 6.4 are intended to be for the benefit of, and shall be enforceable by, the Indemnified Parties and their respective heirs. Section 6.5 Takeover Statutes. The Parties shall (a) take all action necessary so that no Takeover Statute or, in the case of the Company, any similar provision of the Company Governing Documents, is or becomes applicable to the Agreement, the Voting Agreement, the Merger or any of the other Transactions and (b) if any such Takeover Statute or, in the case of the Company, any similar provision of the Company Governing Documents, is or becomes applicable to any of the foregoing, to take all reasonably necessary action so that the Merger and the other Transactions may be consummated as promptly as practicable on the terms contemplated by this Agreement and otherwise to eliminate or minimize the effect of such Takeover Statute on the Agreement, the Voting Agreement, the Merger and the other Transactions.
Section 6.6 Obligations of Merger Sub. Parent shall take all action necessary to cause each of Merger Sub and the Surviving Corporation to perform their respective obligations under this Agreement and to cause Merger Sub to consummate the Transactions, including the Merger, upon the terms and subject to the conditions set forth in this Agreement.
Section 6.7 Employee Benefits Matters.
(a) Following the Closing, Parent shall, or shall cause the Surviving Corporation to, assume, honor and fulfill all of the Company Benefit Plans in accordance with their terms as in effect immediately prior to the Effective Time or as subsequently amended as permitted pursuant to the terms of such Company Benefit Plans. Notwithstanding the generality of the foregoing, for a period of twelve (12) months following the Effective Time, unless otherwise noted, Parent shall provide (or cause the Surviving Corporation or another affiliate of Parent to provide) to each employee of the Company or the Company Subsidiary who continues in employment with the Surviving Corporation or any of their respective affiliates following the Effective Time (each, a “Continuing Employee”) with (i) a base salary or hourly wage rate, as applicable, that, in each case, is no less than the base salary or hourly wage rate, as applicable, provided to such Continuing Employee immediately prior to the Effective Time, (ii) a cash bonus opportunity, but only through the end of the calendar year during which the Closing occurs, that is no less than the cash bonus opportunity provided to such Continuing Employee immediately prior to the Effective Time, (iii) other employee benefits (including, without limitation, employee health, welfare, retirement, and fringe benefits), other than defined benefit pension, deferred compensation, equity incentive compensation, and severance or post-termination benefits, which are no less favorable in the aggregate than those employee benefits provided to such Continuing
Employee immediately prior to the Effective Time; and (iv) solely in the case of Continuing Employees who do not receive severance or post-termination benefits pursuant to any individual agreement, the severance benefits set forth on Schedule 6.7(a)(iii). Effective as of the Effective Time and thereafter, Parent shall provide, or shall cause the Surviving Corporation to provide, that periods of employment with the Company (including any current or former affiliate of the Company or any predecessor of the Company to the extent recognized by the Company) shall be taken into account for all purposes under all employee benefit plans maintained by Parent or an affiliate of Parent for the benefit of the Continuing Employees, including vacation or other paid time-off plans or arrangements, 401(k), pension or other retirement plans and any severance or health or welfare plans (other than for purposes of equity incentive compensation and determining any accrued benefit under any defined benefit pension plan or as would result in a duplication of benefits).
(b) To the extent Parent offers coverage to a Continuing Employee under an employee benefit plan of Parent and its Subsidiaries (each, a “Parent Plan”) Parent shall, and shall cause the Surviving Corporation to, to the extent applicable, use reasonable best efforts to (i) cause such Continuing Employee to be immediately eligible to participate, without any waiting time, in such Parent Plan to the extent that coverage under such Parent Plan is comparable to a Company Benefit Plan in which such Continuing Employee participated immediately prior to the Effective Time, (ii) cause to be waived any eligibility waiting periods, actively-at-work requirements or pre-existing condition limitations or exclusions with respect to such Continuing Employees under the applicable health and welfare benefits of such Parent Plan (except to the extent applicable under the comparable Company Benefit Plan immediately prior to the Effective Time), (iii) cause to be waived any and all evidence of insurability requirements with respect to such Continuing Employees to the extent such evidence of insurability requirements were not applicable to the Continuing Employees under the comparable Company Benefit Plan immediately prior to the Effective Time, and (iv) with respect to a health plan, credit such Continuing Employee with all deductible payments, out-of-pocket or other co-payments paid by such employee under the Company Benefit Plans prior to the Closing Date during the year in which the Closing occurs for the purpose of determining the extent to which any such employee has satisfied his or her deductible and whether he or she has reached the out-of-pocket maximum for such year.
(c) If requested by Parent in writing delivered to the Company not less than ten (10) business days before the Closing Date, the Company Board (or the appropriate committee thereof) shall adopt resolutions and take such corporate action as is necessary to terminate any Company Benefit Plan intended to qualify under Section 401(a) of the Code that contains a cash or deferred arrangement (collectively, the “Company 401(k) Plans”), effective as of the day prior to the Closing Date. If Parent requests such termination, Parent shall cause a defined contribution plan maintained by Parent or its affiliates that is intended to qualify under Section 401(a) of the Code (the “Parent 401(k) Plan”), (and a related trust exempt from tax under Section 501(a) of the Code) to (i) permit participation by Continuing Employees as soon as practicable following the Closing Date, subject to and on terms and conditions no less favorable than those applicable to similarly situated employees of Parent and its affiliates, and (ii) permit the Continuing Employees who are then actively employed to make rollover contributions of “eligible rollover
distributions” (within the meaning of Section 401(a)(31) of the Code and, for the avoidance of doubt, inclusive of loans), in the form of cash and, with respect to loans, notes, in an amount equal to the full account balance (inclusive of loans) distributed to such Continuing Employees from the Company 401(k) Plans to the Parent 401(k) Plan. The resolutions and actions required to effectuate such termination shall be subject to review and approval by Parent, which approval shall not be unreasonably withheld.
(d) Nothing in this Agreement shall confer upon any Continuing Employee any right to continue in the employ or service of Parent, the Surviving Corporation or any affiliate of Parent, or shall interfere with or restrict in any way the rights of Parent, the Surviving Corporation or any affiliate of Parent, which rights are hereby expressly reserved, to discharge or terminate the services of any Continuing Employee at any time for any reason whatsoever, with or without cause, except to the extent expressly provided otherwise in a Company Benefit Plan or a written agreement between Parent, the Surviving Corporation, the Company or any affiliate of Parent and the Continuing Employee or any severance, benefit or other applicable plan or program covering such Continuing Employee. Nothing in this Agreement shall (i) be deemed or construed to be an amendment or other modification of any Company Benefit Plan or employee benefit plan of Merger Sub, (ii) create any third party rights in any current or former service provider of the Company or its affiliates (or any beneficiaries or dependents thereof) or (iii) alter or limit the ability of the Surviving Corporation, Parent or any of their respective affiliates to amend, modify or terminate any Company Benefit Plan or other employee benefit, program, agreement or arrangement at any time assumed, established, sponsored or maintained by any of them.
(e) As soon as reasonably practicable following the date hereof, the Company shall deliver to Parent a list of each “disqualified individual” (as defined in Section 280G of the Code) of the Company and the Company Subsidiary and (i) the Company’s reasonable, good faith estimate of the maximum amount (separately identifying single and double-trigger amounts and tax gross-up payments, if any) that could be paid to such disqualified individual as a result of any of the Transactions (alone or in combination with any other event) and (ii) the “base amount” (as defined in Section 280G(b)(3) of the Code) for each such disqualified individual. Following the date hereof, the Company shall reasonably cooperate with Parent to minimize any negative tax consequences under Section 280G of the Code.
(f) The Company shall provide Parent with a copy of any material written communications intended for broad-based and general distribution to any current or former employees of the Company or the Company Subsidiary if such communications relate to any of the Transactions, and will provide Parent with a reasonable opportunity to review and comment on such communications prior to distribution.
(g) In the event the Closing Date occurs prior to the payment of annual bonuses with respect to calendar year 2023, then Parent shall, or shall cause the Surviving Corporation to, pay to each Continuing Employee such employee’s 2023 annual bonus, determined pursuant to the terms and conditions set forth in the applicable annual bonus program and based on actual achievement of performance goals. Such annual bonuses (less any applicable withholding Taxes)
shall be paid no later than December 31, 2023, subject to the Continuing Employee’s continued employment through the payment date; provided, however, if any such Continuing Employee’s employment is terminated by the Surviving Corporation (or Parent or any of its affiliates) without Cause or for Good Reason, in either case, prior to or on December 31, 2023, then such employee shall remain entitled to receive such employee’s 2023 bonus, to the extent earned based on actual achievement of such performance goals through December 31, 2023 and prorated for the portion of calendar year 2023 elapsed prior to the date of termination, on the date on which annual bonuses are paid to Continuing Employees generally under the annual bonus program.
Section 6.8 Rule 16b-3. Prior to the Effective Time, the Company and Parent shall, as applicable, take all such steps as may be reasonably necessary or advisable hereto to cause any dispositions of Company equity securities (including derivative securities) by each individual who is a director or officer of the Company subject to the reporting requirements of Section 16(a) of the Exchange Act with respect to the Company to be exempt under Rule 16b-3 promulgated under the Exchange Act.
Section 6.9 Security Holder Litigation. Each Party shall provide the other Party prompt oral notice (but in any event within forty-eight (48) hours) of any litigation brought or threatened by any stockholder of that Party against such Party, any of its Subsidiaries and/or any of their respective directors or officers relating to the Merger, this Agreement or any of the Transactions. Unless, in the case of such litigation with respect to the Company, the Company Board has made a Change of Recommendation, the Company shall give Parent the opportunity to participate (at Parent’s expense) in the defense, prosecution or settlement of any such litigation, and the Company shall not offer to settle any such litigation, nor shall any such settlement be agreed to without Parent’s prior written consent (such consent not to be unreasonably withheld, conditioned or delayed). In the event of, and to the extent of, any conflict or overlap between the provisions of this Section 6.9 and Section 5.1 or Section 6.2, the provisions of this Section 6.9 shall control. Section 6.10 Delisting. Prior to the Effective Time, each of the Parties agrees to cooperate with the other Parties using its reasonable best efforts to take, or cause to take, all actions necessary to delist the Company Common Stock from the NASDAQ and terminate its registration under the Exchange Act; provided, however, that such delisting and termination shall not be effective until after the Effective Time.
Section 6.11 Treatment of Note Purchase Agreement.
(a) The Company shall use commercially reasonable efforts to deliver to Parent a customary payoff letter (the “Payoff Letter”) executed by the Lenders (or their duly authorized agent or representative) with respect to the Note Purchase Agreement, to allow for the payoff, discharge and termination of such indebtedness (other than with respect to contingent obligations for which no claim has been made) and the security interests and guarantees thereto no later than the Closing.
(b) Contemporaneously with the Closing, Merger Sub shall pay (or cause to be paid) the amount specified in the applicable Payoff Letter with respect thereto (including after giving effect to any per diem amount specified therein and any prepayment penalties, to the extent applicable) in cash in immediately available funds to the bank account(s) specified therein and, if requested by any Lender under the Note Purchase Agreement, enter into any Supplemental Agreement (as defined therein).
ARTICLE VII.
CONDITIONS TO CONSUMMATION OF THE MERGER
Section 7.1 Conditions to Each Party’s Obligations to Effect the Merger. The respective obligations of each Party to consummate the Merger shall be subject to the satisfaction at the Effective Time of each of the following conditions, any and all of which may be waived in whole or in part by Parent and the Company, as the case may be, to the extent permitted by applicable Law:
(a) Stockholder Approval. The Company Stockholder Approval shall have been obtained;
(b) Adverse Laws or Orders. (i) No Law shall have been enacted, promulgated or deemed applicable to the Merger by (A) any Governmental Entity of competent jurisdiction, acting pursuant to or seeking to enforce any Law other than any Antitrust Law, or (B) any Specified Governmental Entity, which prohibits or makes illegal the consummation of the Merger and (ii) there shall not be in effect any judgment, order, injunction, decree or ruling (whether temporary, preliminary or permanent) of (A) any Governmental Entity of competent jurisdiction, acting pursuant to or seeking to enforce any Law other than any Antitrust Law, or (B) any Specified Governmental Entity restraining, enjoining or otherwise prohibiting the consummation of the Merger;
(c) Required Antitrust Clearances. (i) All waiting periods (and any extensions thereof) applicable to the Merger under the HSR Act shall have expired or been terminated, and (ii) no enquiry letter shall have been received by the Company or by either Party in respect of the Transactions from the CMA, and no formal review of the transactions shall have been commenced by the CMA, in either case pursuant to its powers under the EA 2002, that has not been resolved or concluded (in the case of a formal review, with the granting of clearance and approval to complete the Merger and the other Transactions) without the requirement or imposition of any measure described in the last sentence of Section 6.2(c). (d) No Governmental Litigation. There shall not be pending any claim, action, suit or proceeding by any Governmental Entity, acting pursuant to or to enforce any Law other than any Antitrust Law, that has not been resolved challenging or seeking to restrain or prohibit the consummation of the Merger. There shall not be pending any claim, action, suit or proceeding by any Specified Governmental Entity challenging or seeking to (i) (A) restrict, prohibit or limit the ownership or operation by Parent or any of the Parent Subsidiaries of all or any portion of the business or assets of Parent, the Company or any of their respective Subsidiaries or (B) compel
Parent or any of the Parent Subsidiaries to dispose of or hold separately all or any portion of the business or assets of Parent, the Company or any of their respective Subsidiaries (including for the avoidance of doubt, any equity interests in the Company and the Company Subsidiary), or impose any limitation, restriction or prohibition on the ability of Parent, the Company or any of their respective Subsidiaries to conduct its business or own such assets, (ii) impose limitations on the ability of Parent or any of the Parent Subsidiaries effectively to acquire, hold or exercise full rights of ownership of the shares of capital stock of the Surviving Corporation, including the right to vote any shares of capital stock of the Surviving Corporation acquired or owned by Parent or any of the Parent Subsidiaries on all matters properly presented to the stockholders of the Surviving Corporation or (iii) require Parent or any of its affiliates to divest, dispose of or hold separate all or any portion of the business or assets of the Company or any of the Company Subsidiaries or of Parent or its affiliates.
(e) CFIUS. The CFIUS Approval shall have been obtained.
Section 7.2 Conditions to Obligations of Parent and Merger Sub. The obligations of Parent and Merger Sub to consummate the Merger are also subject to the satisfaction (or waiver (in writing) by Parent) at the Effective Time of each of the following additional conditions:
(a) Representations and Warranties. (i) The representations and warranties of the Company set forth in the second sentence of Section 3.1(a), the last sentence of Section 3.2(a), Section 3.2 (b)-(f), Section 3.3(a), Section 3.19, and Section 3.20(b) shall be true and correct (without giving effect to any qualification as to materiality or Company Material Adverse Effect contained therein) in all material respects as of the Closing as though made on and as of the Closing (except to the extent such representations and warranties expressly relate to a specified date, in which case as of such specified date), (ii) the representations and warranties of the Company set forth in the first sentence of Section 3.1(a), the first sentence of Section 3.1(b), Section 3.2(a) (except for the last sentence), Section 3.3(c)(ii), Section 3.20(a), and Section 3.23 (without giving effect to any qualification as to materiality contained therein) shall be true and correct (other than de minimis inaccuracies) as of the Closing as though made on and as of the Closing (except to the extent such representations and warranties expressly relate to a specified date, in which case as of such specified date), and (iii) each of the other representations and warranties of the Company set forth in this Agreement (without giving effect to any qualification as to materiality or Company Material Adverse Effect contained therein) shall be true and correct as of the Closing as though made on and as of the Closing (except to the extent such representations and warranties expressly relate to a specified date, in which case as of such specified date), except, in the case of this clause (iii), where any failures of any such representations and warranties to be true and correct would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect; and Parent shall have received a certificate signed on behalf of the Company by a duly authorized executive officer of the Company to the foregoing effect; (b) Performance of Obligations of the Company. The Company shall have performed or complied in all material respects with the covenants and agreements required to be performed or complied with by it under this Agreement at or prior to the Effective Time; and Parent shall
have received a certificate signed on behalf of the Company by a duly authorized executive officer of the Company to such effect; and
(c) No Company Material Adverse Effect. Since the date of this Agreement, there has been no Company Material Adverse Effect has occurred that is continuing.
Section 7.3 Conditions to Obligations of the Company. The obligation of the Company to consummate the Merger is also subject to the satisfaction (or waiver (in writing) by the Company) at the Effective Time of each of the following additional conditions:
(a) Representations and Warranties. Each of the representations and warranties of Parent and Merger Sub set forth in this Agreement (without giving effect to any qualification as to materiality or Parent Material Adverse Effect contained therein) shall be true and correct as of the Closing as though made on and as of the Closing (except to the extent such representations and warranties expressly relate to a specified date, in which case as of such specified date), except where any failures of any such representations and warranties to be true and correct would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect; and the Company shall have received a certificate signed on behalf of Parent by a duly authorized executive officer of Parent to the foregoing effect; and
(b) Performance of Obligations of Parent and Merger Sub. Parent and Merger Sub shall have performed or complied in all material respects with the covenants and agreements required to be performed or complied with by them under this Agreement at or prior to the Effective Time, and the Company shall have received a certificate signed on behalf of Parent by a duly authorized executive officer of Parent to such effect.
ARTICLE VIII.
TERMINATION
Section 8.1 Termination. This Agreement may be terminated and the Merger and the other Transactions may be abandoned at any time prior to the Effective Time, whether before or after the Company Stockholder Approval has been obtained (except as otherwise stated below), by action taken or authorized by the board of directors of the terminating Party or Parties, as follows:
(a) by the mutual written consent of Parent and the Company; or
(b) by either Parent or the Company:
(i) if the Effective Time shall not have occurred by midnight, Eastern Time, on May 15, 2023 (the “Outside Date”); provided, however, that at any time in the five (5) business days prior to the then-effective Outside Date, if as of such time any of the conditions set forth in Section 7.1(b), Section 7.1(c), Section 7.1(d) or Section 7.1(e) are not satisfied, either Party may if all conditions to the other Party’s obligations to effect the Closing (other than those set forth in Section 7.1(b), Section 7.1(c), Section 7.1(d)
and Section 7.1(e) are satisfied (other than those conditions that by their terms are to be satisfied at the Closing)), extend the Outside Date by three (3) calendar months upon written notice thereof to the other Party (and such extended date will then be the Outside Date); provided, further, that (A) the Outside Date may only be extended one (1) time and except as provided in clause (C), not beyond August 15, 2023, (B) the right to terminate this Agreement pursuant to this Section 8.1(b)(i) shall not be available to any Party whose breach of any representation, warranty, covenant or agreement set forth in this Agreement has been the cause of, or results in, the Effective Time not occurring prior to the Outside Date; and (C) the Outside Date shall automatically extend until the date that is five (5) business days after the last day of any then pending Matching Period; (ii) (A) if any Governmental Entity of competent jurisdiction, acting pursuant to any other Law other than Antitrust Law, or (B) a Specified Governmental Entity, acting pursuant to an Antitrust Law shall have issued a final, non-appealable judgment, order, injunction, decree or ruling, in each case permanently restraining, enjoining or otherwise prohibiting the consummation of the Merger; or
(iii) if the Company Stockholder Approval shall not have been obtained upon a vote taken thereon at the Stockholders’ Meeting (or at any adjournment or postponement thereof, at which the Company Stockholder Approval was voted upon); or
(c) by Parent, if:
(i) prior to receipt of the Company Stockholder Approval, a Change of Recommendation shall have occurred (it being understood and agreed that any disclosure or written notice to Parent required to be made under this Agreement in advance of the fact stating the Company Board’s intention to make a Change of Recommendation shall not result in Parent having any termination rights under Section 8.1(c)(i)); (ii) the Company shall have breached in any material respect its obligations under Section 5.2; or (iii) there has been a breach by the Company of any representation, warranty, covenant or agreement made by the Company in this Agreement, which breach would result in the conditions in Section 7.2(a) or (b) not being satisfied and such breach is not curable prior to the Outside Date, or if curable prior to the Outside Date, has not been cured within the thirty (30) calendar days after the receipt of notice thereof by the Company from Parent; provided, however, that Parent shall not have the right to terminate this Agreement pursuant to this Section 8.1(c)(iii) if either Parent or Merger Sub is then in material breach of any of their respective representations, warranties, covenants or agreements set forth in this Agreement; or (d) by the Company, if:
(i) prior to receipt of the Company Stockholder Approval, if (A) the Company Board authorizes the Company, subject to complying in all material respects
with the terms of Section 5.2, to enter into a Superior Proposal Acquisition Agreement with respect to a Superior Proposal and (B) concurrently with the termination of this Agreement the Company, subject to complying in all material respects with the terms of Section 5.2, enters into such Superior Proposal Acquisition Agreement and pays the Termination Fee to Parent in accordance with Section 8.2(b)(ii); or (ii) there has been a breach by Parent or Merger Sub of any representation, warranty, covenant or agreement made by Parent or Merger Sub in this Agreement, which breach would result in the conditions in Section 7.3(a) or (b) not being satisfied and such breach is not curable prior to the Outside Date, or if curable prior to the Outside Date, has not been cured within thirty (30) calendar days after the receipt of notice thereof by Parent from the Company; provided, however, that the Company shall not have the right to terminate this Agreement pursuant to this Section 8.1(d)(ii) if the Company is then in material breach of any of its representations, warranties, covenants or agreements set forth in this Agreement. Section 8.2 Effect of Termination.
(a) In the event of the termination of this Agreement as provided in Section 8.1, written notice thereof shall forthwith be given to the other Party or Parties specifying the provision hereof pursuant to which such termination is made, and this Agreement shall forthwith become null and void and there shall be no liability on the part of Parent, Merger Sub or the Company or any Representative of any Party, except that the Confidentiality Agreement, this Section 8.2 and Section 9.3 through Section 9.13 shall survive such termination; provided, however, that subject to Section 8.2(c), nothing herein shall relieve any Person from liability for Fraud or for any willful or intentional breach of this Agreement. (b) Termination Fee.
(i) In the event that (A) Parent or the Company terminates this Agreement pursuant to Section 8.1(b)(i) or Section 8.1(b)(iii) or Parent terminates this Agreement pursuant to Section 8.1(c)(iii) and (B) after the date of this Agreement and prior to such termination, a Competing Proposal shall have been communicated to the Company Board or the Company’s stockholders and not publicly and unconditionally withdrawn or abandoned, then if, within twelve (12) months of such termination, the Company enters into a definitive agreement providing for, or recommends to its stockholders, a Competing Proposal or a Competing Proposal is consummated, then, in either such case within three (3) business days after the consummation of the applicable Competing Proposal the Company shall pay to Parent (or a Parent Subsidiary designated by Parent) a fee of $4,711,000 in cash (the “Termination Fee”). Solely for purposes of this Section 8.2(b)(i), the term “Competing Proposal” shall have the meaning assigned to such term in Section 5.2(h)(i), except that all references to “20%” therein shall be deemed to be “50%” and all references to “80%” therein shall be deemed to be “50%”.
(ii) If the Company terminates this Agreement pursuant to Section 8.1(d)(i), concurrently with such termination, the Company shall pay to Parent (or a Parent Subsidiary designated by Parent) the Termination Fee. (iii) If Parent terminates this Agreement pursuant to Section 8.1(c)(i) or Section 8.1(c)(ii) (or this Agreement is terminated by Parent or the Company pursuant to Section 8.1(b)(i) or Section 8.1(b)(iii) or Parent pursuant to Section 8.1(c)(iii), in each case, following any time at which Parent was entitled to terminate this Agreement pursuant to Section 8.1(c)(i) or Section 8.1(c)(ii)), within three (3) business day after such termination, the Company shall pay to Parent (or a Parent Subsidiary designated by Parent) the Termination Fee. (iv) In the event any amount is payable pursuant to the preceding clauses (i), (ii) or (iii), such amount shall be paid by wire transfer of immediately available funds to an account designated in writing by Parent (and, if any amount becomes payable pursuant to any such clause, such amount shall not be or become due unless and until Parent has provided such wire transfer instructions for such designated account in writing).
(v) For the avoidance of doubt, in no event shall the Company be obligated to pay the Termination Fee on more than one occasion.
(c) Each of the Parties acknowledges that the agreements contained in this Section 8.2 are an integral part of the Transactions and that neither the Termination Fee nor any amount payable under Section 8.2(b) is a penalty, but rather is a reasonable amount that will compensate Parent and Merger Sub in the circumstances in which such payment is payable for the efforts and resources expended and opportunities foregone while negotiating this Agreement and in reliance on this Agreement and on the expectation of the consummation of the Transactions, each of which amounts would otherwise be impossible to calculate with precision. In addition, if the Company fails to pay in a timely manner any amount due pursuant to Section 8.2(b) then (i) the Company shall reimburse Parent for all reasonable costs and expenses (including reasonable disbursements and fees of counsel) incurred in the collection of such overdue amount, including in connection with any related claims, actions or Proceedings commenced and (ii) the Company shall pay Parent interest on the amount payable pursuant to Section 8.2(b) from and including the date payment of such amount was due to but excluding the date of actual payment at the prime rate set forth in The Wall Street Journal in effect on the date such payment was required to be made plus 2%. Notwithstanding anything to the contrary in this Agreement, upon payment of the Termination Fee pursuant to this Section 8.2, none of the Company, the Company Subsidiary or any of their respective former, current or future officers, directors, partners, stockholders, managers, members, affiliates or agents shall have any further liability or obligation relating to or arising out of this Agreement or the Transactions, except for Fraud.
ARTICLE IX.
MISCELLANEOUS
Section 9.1 Amendment and Modification; Waiver.
(a) Subject to applicable Law and except as otherwise provided in this Agreement, this Agreement may be amended, modified and supplemented, whether before or after receipt of the Company Stockholder Approval, by written agreement of the Parties (by action taken by their respective boards of directors); provided, however, that after the adoption of this Agreement by the stockholders of the Company, no amendment shall be made which by Law requires further approval by the Company’s stockholders without obtaining such further approval. This Agreement may not be amended except by an instrument in writing signed on behalf of each of the Parties.
(b) At any time and from time to time prior to the Effective Time, either the Company, on the one hand, or any Parent Entity, on the other hand, may, to the extent legally allowed and except as otherwise set forth herein, (i) extend the time for the performance of any of the obligations or other acts of any Parent Entity or the Company, as applicable, (ii) waive any inaccuracies in the representations and warranties made to Parent or the Company, as applicable, contained herein or in any document delivered pursuant hereto and (iii) waive compliance with any of the agreements or conditions for the benefit of any Parent Entity or the Company, as applicable, contained herein. Any agreement on the part of a Parent Entity or the Company to any such extension or waiver shall be valid only if set forth in an instrument in writing signed on behalf of Parent or the Company, as applicable. Any delay in exercising any right under this Agreement shall not constitute a waiver of such right.
Section 9.2 Non-Survival of Representations and Warranties. None of the representations and warranties in this Agreement or in any schedule, instrument or other document delivered pursuant to this Agreement shall survive the Effective Time. This Section 9.2 shall not limit any covenant or agreement of the Parties which by its terms contemplates performance after the Effective Time. The Confidentiality Agreement will survive the termination of this Agreement in accordance with its terms. Notwithstanding anything to the contrary in this Agreement, nothing in this Agreement shall relieve any Person for liability for Fraud. Section 9.3 Expenses. Except as otherwise expressly provided in this Agreement, all Expenses incurred in connection with this Agreement and the Transactions shall be paid by the Party incurring such Expenses.
Section 9.4 Notices. All notices and other communications hereunder shall be in writing and shall be deemed given if delivered personally (notice deemed given upon receipt), or sent by a nationally recognized overnight courier service, such as Federal Express (notice deemed given upon receipt of proof of delivery), or sent by email (notice deemed given three (3)
business days after sending), to the Parties at the following addresses (or at such other address for a Party as shall be specified by like notice):
if to Parent or Merger Sub, to:
| | | | | |
Indivior Inc. |
10710 Midlothian Tpke, Suite 125 |
North Chesterfield, VA 23235 |
Attention: | General Counsel |
Email: | Legal@Indivior.com |
| |
with a copy (which shall not constitute notice) to: |
| |
Covington & Burling LLP |
The New York Times Building |
620 Eighth Avenue |
New York, New York 10018 |
Attention: | Andrew W. Ment |
Email: | ament@cov.com |
| |
and | |
| |
if to the Company, to: |
| |
Opiant Pharmaceuticals, Inc. |
233 Wilshire Blvd., Suite 40 |
Santa Monica, CA 90401 |
Attention: | General Counsel |
Email: | bgorman@opiant.com |
| |
with a copy (which shall not constitute notice) to: |
| |
Latham & Watkins LLP |
330 N. Wabash Ave., Suite 2800 |
Chicago, IL 60613 |
Attention: | Christopher R. Drewry |
Max Schleusener |
Email: | Christopher.Drewry@lw.com |
Max.Schleusener@lw.com |
Section 9.5 Certain Definitions. As used herein, the following terms have the following meanings:
“Antitrust Authority” means the Antitrust Division of the United States Department of Justice, the United States Federal Trade Commission or the Antitrust Law authorities of any other jurisdiction (whether United States, foreign or multinational).
“Antitrust Information or Document Request” means any request or demand for the production, delivery or disclosure of documents or other evidence, or any request or demand for the production of witnesses for interviews or depositions or other oral or written testimony, by any Antitrust Authority relating to the transactions contemplated hereby or by any third party challenging the transactions contemplated hereby, including any so called “second request” for additional information or documentary material or any civil investigative demand made or issued by the Antitrust Division of the United States Department of Justice or the United States Federal Trade Commission or any subpoena, interrogatory or deposition by any Antitrust Authority.
“Antitrust Laws” mean any antitrust, competition or trade regulation Laws that are designed or intended to prohibit, restrict or regulate actions having the purpose or effect of monopolization or restraint of trade or lessening competition through merger or acquisition, including the HSR Act.
“Bribery Legislation” means all and any of the following: the United States Foreign Corrupt Practices Act of 1977; the Organization For Economic Co-operation and Development Convention on Combating Bribery of Foreign Public Officials in International Business Transactions and related implementing legislation; the relevant common law or legislation in England and Wales relating to bribery and/or corruption, including, the Public Bodies Corrupt Practices Act 1889; the Prevention of Corruption Act 1906 as supplemented by the Prevention of Corruption Act 1916 and the Anti-Terrorism, Crime and Security Act 2001; the Bribery Act 2010; the Proceeds of Crime Act 2002; any anti-bribery or anti-corruption related provisions administered by the United States Department of Treasury’s Office of Foreign Assets Control; and any anti-bribery or anti-corruption related provisions in criminal and anti-competition Laws and/or anti-bribery, anti-corruption and/or anti-money laundering Laws of any jurisdiction in which Parent or the Company operates.
“business days” has the meaning set forth in Rule 14d-1(g)(3) of the Exchange Act; provided, however, that a day on which banks in the City of New York are authorized or obligated by Law or executive order to close shall not be a “business day”.
“CARES Act” means the Coronavirus Aid, Relief, and Economic Security Act, Pub. L. 116-136 (116th Cong.) (Mar. 27, 2020).
“Cause” has the meaning provided in an applicable employment or severance agreement between the Company or an affiliate and the Continuing Employee, if such an agreement exists as of immediately prior to the Effective Time and contains a definition of Cause, or, if no such agreement exists or such agreement does not contain a definition of Cause, then Cause shall mean the occurrence of any of the following conditions: (i) any material failure by the employee
to comply with any valid and legal directives of Parent or its affiliates; (ii) any act of fraud, embezzlement, theft or misappropriation of the funds of Parent or its affiliates by the employee, or the employee’s admission to or conviction of a felony or any crime involving moral turpitude, fraud, embezzlement, theft or misrepresentation; (iii) the employee’s engagement in illegal conduct or misconduct that is materially injurious to Parent or its affiliates; (iv) employee’s breach of any material obligation under any other written agreement between the employee and Parent or its affiliates; or (v) a material violation of a rule, policy, regulation or guideline imposed by Parent or its affiliates or a regulatory or self-regulatory body having jurisdiction over Parent and its affiliates. With respect to subsections (i), (iv) and (v) of this definition, the Surviving Corporation shall give the employee written notice of any alleged breach or violation of these subsections and afford the employee thirty (30) days in which to remedy the condition.
“CFIUS” means the Committee on Foreign Investment in the United States and each member agency thereof, acting in such capacity.
“CFIUS Approval” means (a) CFIUS has issued a written notice to Indivior PLC and the Company that it has concluded its review, assessment, or if applicable investigation pursuant to Section 721 and has determined that there are no unresolved national security concerns with respect to the Merger and the other Transactions; (b) CFIUS has sent a report to the President of the United States requesting the President’s decision and either (i) the President has announced a decision not to take any action to suspend or prohibit the Merger and the other Transactions or (ii) the President has not taken any action within 15 days from the date the President received the report from CFIUS; or (c) CFIUS has issued a written notice that the Merger and other Transactions are not a “covered transaction” within the meaning of Section 721;.
“CMA” means the Competition and Markets Authority in the United Kingdom.
“Code” means the Internal Revenue Code of 1986, as amended.
“Company Bylaws” means the Amended and Restated Bylaws of the Company, as amended prior to the date of this Agreement.
“Company Certificate” means the First Amended and Restated Certificate of Incorporation of the Company, as amended prior to the date of this Agreement.
“Company Equity Plans” means the Company 2017 Long-Term Incentive Plan and the Company’s 2021 Inducement Equity Incentive Plan.
“Company Governing Documents” means the Company Bylaws and the Company Certificate.
“Company IT Assets” means computers, computer software, firmware, middleware, servers, workstations, routers, hubs, switches, data communications lines and all other information technology equipment, and all associated documentation owned by the Company or the Company Subsidiary or licensed or leased by the Company or the Company Subsidiary pursuant to written agreement (excluding any public networks).
“Company Material Adverse Effect” means any Effect that, individually or in the aggregate, has had or would reasonably be expected to have a material adverse effect on the business, assets, liabilities, financial condition, operations or results of operations of the Company and the Company Subsidiary, taken as a whole; provided, however, that no Effects to the extent resulting or arising from the following, either alone or in the aggregate, shall be deemed to constitute a Company Material Adverse Effect or shall be taken into account when determining whether a Company Material Adverse Effect exists or has occurred or is reasonably likely to exist or occur: (i) any changes in United States, regional or global economic conditions, (ii) conditions (or changes therein) in any industry or industries in which the Company operates, (iii) legal, tax, economic, political and/or regulatory conditions (or changes therein), including any changes affecting financial, credit or capital market conditions, (iv) any change in GAAP, applicable accounting standards or any interpretation thereof, (v) any adoption, implementation, promulgation, repeal, modification, amendment, or change of any applicable Law of and by any Governmental Entity (including with respect to Taxes), (vi) the negotiation, pendency, announcement, the identity of Parent, Merger Sub, execution and delivery of this Agreement or the consummation of the Transactions or actions specifically required to be undertaken by the Company pursuant to the terms of this Agreement, including any Effect on retention or hiring of employees (other than Effects resulting from any failure to comply with Section 5.1 and it being understood that this clause (vi) shall not apply with respect to the representations and warranties set forth in Section 3.3, Section 3.9(d), and the fifth sentence of Section 3.17(b) in each case to the extent the purpose of such representation or warranty is to address the consequences resulting from the execution or delivery of this Agreement or the consummation of the Transactions), (vii) changes in the Company Common Stock price, in and of itself (it being understood that the Effects giving rise or contributing to such changes that are not otherwise excluded from the definition of a “Company Material Adverse Effect” may be taken into account in determining whether there has been or would reasonably be expected to become, a Company Material Adverse Effect), (viii) any failure by the Company to meet any internal or published projections, estimates or expectations of the Company’s revenue, earnings or other financial performance or results of operations for any period, in and of itself, or any failure by the Company to meet its internal budgets, plans or forecasts of its revenues, earnings or other financial performance or results of operations, in and of itself (it being understood that the Effects giving rise or contributing to such failure that are not otherwise excluded from the definition of a “Company Material Adverse Effect” may be taken into account in determining whether there has been or would reasonably be expected to become, a Company Material Adverse Effect), (ix) Effects arising out of acts of terrorism, war or the escalation thereof, (x) changes due to natural disasters or changes in the weather or changes due to the worsening of an epidemic health crisis (including COVID-19 or any measures reasonably undertaken by the Company after the date of this Agreement to protect health and ensure compliance with COVID-19 Measures or changes such COVID-19 Measures), (xi) actions or omissions taken at the specific written request of, or with the prior written consent of, Parent or any of its affiliates, (xii) any Proceeding arising from allegations of breach of fiduciary duty or violation of Law relating to this Agreement or the Transactions, or (xiii) any downgrade of the Company’s credit rating, except, in the case of clauses (i), (v), (ix), or (x), to the extent the Company and the Company Subsidiary, taken as a whole, are materially and disproportionately adversely impacted thereby relative to other similarly situated entities operating in the same industry or industries in which the Company and
the Company Subsidiary operate (in which case the incremental disproportionate adverse impact or impacts may be taken into account in determining whether there has been a Company Material Adverse Effect).
“Company Permitted Lien” means any Lien (i) for Taxes or governmental assessments, charges or claims of payment not yet due and payable, being contested in good faith or for which adequate accruals or reserves have been established, (ii) which is a carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s or other similar Lien arising in the Ordinary Course of Business, (iii) which is disclosed on the most recent (as of the date hereof) consolidated balance sheet of the Company or notes thereto or securing liabilities reflected on such balance sheet, (iv) with respect to the Company Leased Real Property or fee estate related thereto, easements, rights of way, encroachments, covenants, conditions, restrictions or other similar encumbrances, in each case which do not materially impair the business of the Company or the Subsidiary at such Company Leased Real Property as currently conducted, (v) statutory or contractual landlord’s, lessor’s or similar Liens, (vi) securing obligations under Contracts entered into in the Ordinary Course of Business since the date of the most recent consolidated balance sheet of the Company, (vii) other than any Liens securing indebtedness for borrowed money or any financial guaranty thereof, (viii) Liens granted pursuant to the Note Purchase Agreement to secure the obligations thereunder, (ix) customary grants of non-exclusive licenses to Intellectual Property Rights to contract research organizations or other service providers and subject to limitations on scope of use to the services to be provided to the Company, in each case entered into in the Ordinary Course of Business or (x) which would not reasonably be expected to materially impair the continued use of the applicable property for the purposes for which the property is currently being used.
“Company Product” means all products that are being researched, tested, developed, commercialized, manufactured, sold or distributed by the Company or the Company Subsidiary, including but not limited to OPNT003, and all products with respect to which the Company or the Company Subsidiary has royalty rights.
“Company Stockholder Approval” means the affirmative vote of the holders of a majority of the outstanding Company Common Stock entitled to vote upon the adoption of this Agreement at the Stockholders’ Meeting.
“Company Subsidiary” means the Subsidiary of the Company.
“Confidentiality Agreement” means the Confidentiality Agreement, dated December 6, 2021, between Parent and the Company, as amended by Amendment No. 1 on December 22, 2021, as further amended by Amendment No. 2 on November 4, 2022.
“Contract” means any written legally binding, agreement, contract, subcontract, settlement agreement, lease, sublease, binding understanding, note, option, bond, mortgage, indenture, trust document, loan or credit agreement, license, sublicense, insurance policy or other legally binding commitment or undertaking of any nature, as in effect as of the date hereof or as may hereinafter be in effect.
“COVID-19” means SARS-CoV-2 or COVID-19 and any and all additional strains, variations or mutations thereof, or related or associated epidemics, pandemic or disease outbreaks.
“COVID-19 Measures” means any quarantine, “shelter in place,” “stay at home,” workforce reduction, social distancing, shut down, closure, sequester or any other Law (including any Pandemic Response Law), order, directive, guideline or recommendation by any Governmental Entity or public health agency in connection with or in response to COVID- 19, including the CARES Act and all guidelines and requirements of the Occupational Safety and Health Administration and the Centers for Disease Control and Prevention, such as social distancing, cleaning, and other similar or related measures.
“CSA” means the U.S. Controlled Substances Act.
“CVR Agreement” means the Contingent Value Rights Agreement in the form attached hereto as Exhibit B to be entered into between Parent and the Rights Agent, with such revisions thereto requested by the Rights Agent that are not, individually or in the aggregate, materially detrimental to the holders of CVRs.
“EA 2002” means the United Kingdom Enterprise Act 2002 (as amended and in force from time to time).
“Effect” means any change, effect, development, circumstance, condition, state of facts, event or occurrence.
“Environmental Law” means any and all applicable Laws which (i) regulate or relate to the protection or clean-up of the environment (including waterways, groundwater, drinking water, air, wildlife, plants or other natural resources); the use, treatment, storage, transportation, handling, disposal or Release of Hazardous Substances; or the health and safety of persons, including protection of the health and safety of employees, solely to the extent relating to exposure to Hazardous Substances; or (ii) impose liability or responsibility with respect to any of the foregoing, including the Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C. § 9601 et seq.), or any other Law of similar effect.
“Environmental Permits” means any material permit, license, authorization or approval required under applicable Environmental Laws.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the regulations promulgated and rulings issued thereunder.
“ERISA Affiliate” means, with respect to any entity, trade or business, any other entity, trade or business that is a member of a group described in Section 414(b), (c), (m) or (o) of the Code or Section 4001(b)(1) of ERISA that includes the first entity, trade or business, or that is a member of the same “controlled group” as the first entity, trade or business pursuant to Section 4001(a)(14) of ERISA.
“Exchange Act” means the United States Securities Exchange Act of 1934.
“Expenses” means all reasonable out-of-pocket expenses (including all fees and expenses of counsel, accountants, investment bankers, experts and consultants to a Party and its affiliates) incurred by a Party or on its behalf in connection with or related to the authorization, preparation, negotiation, execution and performance of this Agreement, the preparation, printing, filing and mailing of the Proxy Statement, the solicitation of equityholders and equityholder approvals, any filings with the SEC and all other matters related to the closing of the Merger and the other Transactions.
“FCPA” means the Foreign Corrupt Practices Act of 1977.
“FDA” means the United States Food and Drug Administration.
“FDCA” means the Federal Food, Drug, and Cosmetic Act.
“Fraud” means, with respect to any Person, actual and intentional common law fraud under Delaware law by such Person with respect to the representations and warranties expressly set forth in Article III or Article IV or in any certificate delivered pursuant to this Agreement and not with respect to any other matters; such actual and intentional common law fraud of such Person hereto specifically excludes any statement, representation or omission made negligently and shall only be deemed to exist if (i) such Person had actual knowledge (as opposed to with constructive knowledge or negligence) that a representation or warranty was inaccurate when made, (ii) that such representation or warranty was made with the express intent to induce the other Person to rely thereon and that such other Person would take action or inaction to such other Person’s detriment, and (iii) such action or inaction resulted in actual material damages to such other Person.
“Good Reason” has the meaning provided in an applicable employment or severance agreement between the Company and the Continuing Employee, if such an agreement exists as of immediately prior to the Effective Time and contains a definition of Good Reason or, if no such agreement exists or such agreement does not contain a definition of Good Reason, then Good Reason shall mean (i) such employee’s delivery of written notice to the Surviving Corporation objecting to one or more of the following events, within thirty (30) days after the date on which such employee knows or reasonably should know of the initial existence of such event: (A) a material diminution in such employee’s base salary or target annual bonus opportunity in effect immediately prior to such reduction; or (B) requiring such employee to move his or her principal place of employment to a location more than thirty (30) miles outside of the location as of the immediately prior to the Effective Time, (ii) such condition remaining uncured by the Surviving Corporation thirty (30) days after such employee’s delivery of such written notice and (iii) such employee’s resignation of employment within thirty (30) days of the expiration of such thirty (30) day period.
“Government Official” means (i) any official, officer, employee, or representative of, or any Person acting in an official capacity for or on behalf of, any Governmental Entity, (ii) any candidate for political office, or (iii) any political party or party official.
“Governmental Entity” means (i) any national, federal, state, county, municipal, local, or foreign government or any entity exercising executive, legislative, judicial, regulatory, taxing, or administrative functions of or pertaining to government, including any arbitral body, (ii) any public international governmental organization, or (iii) any agency, division, bureau, department, or other political subdivision of any government, entity or organization described in the foregoing clauses (i) or (ii) of this definition.
“Hazardous Substances” means any pollutant, or contaminant, and any toxic, infectious, carcinogenic, reactive, corrosive, ignitable or flammable chemical, chemical compound, hazardous substance, material or waste, whether solid, liquid or gas, that is subject to regulation, control or remediation under any Environmental Laws, including any quantity of petroleum product or byproduct, solvent, flammable or explosive material, radioactive material, asbestos, lead paint, polychlorinated biphenyls (or PCBs), dioxins, dibenzofurans, heavy metals, radon gas, and toxic mold.
“Health Care Laws” means (i) all U.S. federal and state fraud and abuse Laws, including the federal Anti-Kickback Statute (42 U.S.C. § 1320a-7b(b)), the civil False Claims Act (31 U.S.C. § 3729 et seq.), Sections 1320a-7 and 1320a-7a of Title 42 of the United States Code and the regulations promulgated pursuant to such statutes, (ii) the administrative simplification provisions of HIPAA (18 U.S.C. §§ 1035 and 1347) and the regulations promulgated thereunder, (iii) Titles XVIII (42 U.S.C. §1395 et seq.) and XIX (42 U.S.C. §1396 et seq.) of the SSA and the regulations promulgated thereunder, (iv) TRICARE (10 U.S.C. Section 1071 et seq.), (v) the Veterans Health Care Program (38 U.S. Code §8126 ), (vi) the U.S. federal Physician Payments Sunshine Act (42 U.S.C. § 1320a-7h) and state or local Laws regulating or requiring reporting of transfers of value by pharmaceutical manufacturers to healthcare providers and regulations promulgated thereunder, (vii) the FDCA and the CSA, and (viii) any foreign equivalent Laws in respect of any of the foregoing, including, in the case of the European Union, any such comparable Laws, whether of the United States or any applicable jurisdiction.
“HSR Act” means the United States Hart-Scott-Rodino Antitrust Improvements Act of 1976, and the rules and regulations promulgated thereunder.
“In the Money Option” means each Company Stock Option which has a per share exercise price that is less than or equal to the Upfront Consideration.
“Indebtedness” means with respect to any Person,
(a) all obligations of such Person for borrowed money and all obligations of such Person evidenced by bonds, debentures, notes, loan agreements or other similar instruments;
(b) all direct or contingent obligations of such Person arising under letters of credit (including standby and commercial), bankers’ acceptances, bank guarantees, surety bonds and similar instruments;
(c) net obligations of such Person under any interest rate, swap, currency swap, forward currency or interest rate contracts or other interest rate or currency hedging arrangements;
(d) all obligations of such Person to pay the deferred purchase price of property or services (other than trade accounts payable in the Ordinary Course of Business);
(e) indebtedness (excluding prepaid interest thereon) secured by a Lien on property owned or being purchased by such Person (including indebtedness arising under conditional sales or other title retention agreements), whether or not such indebtedness will have been assumed by such Person or is limited in recourse;
(f) all obligations of such Person as lessee under leases that have been or should be, in accordance with GAAP, recorded as capital leases;
(g) synthetic lease obligations;
(h) obligations outstanding under securitization facilities; and
(i) any guarantee (other than customary non-recourse carve-out or “badboy” guarantees) of any of the foregoing, whether or not evidenced by a note, mortgage, bond, indenture or similar instrument, provided that Indebtedness shall not include any performance guarantee or any other guarantee that is not a guarantee of other Indebtedness.
“Intellectual Property Rights” means (i) trademarks, service marks, brand names, certification marks, trade dress, domain names and other indications of origin, the goodwill associated with the foregoing and registrations in any jurisdiction of, and applications in any jurisdiction to register, the foregoing, including any extension, modification or renewal of any such registration or application (“Trademarks”), (ii) national and multinational statutory invention registrations, patents and patent applications issued or applied for in any jurisdiction, including all certificates of invention, provisionals, nonprovisionals, substitutions, divisionals, continuations, continuations-in-part, reissues, extensions, supplementary protection certificates, reexaminations and the equivalents of any of the foregoing in any jurisdiction (“Patents”), (iii) trade secrets, information, data, specifications, processes, methods, know-how, knowledge, experience, formulae, skills, techniques, schematics, drawings, blue prints, utility models, designs, technology, software, inventions (whether patented or not), discoveries, ideas and improvements, including manufacturing information and processes, assays, engineering and other manuals and drawings, standard operating procedures, flow diagrams, regulatory, chemical, pharmacological, toxicological, pharmaceutical, physical and analytical, safety, quality assurance, quality control and clinical data, technical information, research records and similar data and information, (iv) writings and other works, whether copyrightable or not, in any jurisdiction, and any and all copyright rights, whether registered or not, and registrations or applications for registration of copyrights in any jurisdiction, and any renewals or extensions thereof (“Copyrights”), (v) moral rights, database rights, design rights, industrial property rights, publicity rights and privacy rights and (vi) any similar intellectual property or proprietary rights.
“Intervening Event” means a material event, occurrence, fact, effect, development, circumstance, condition, state of facts or change that was not known or reasonably foreseeable to the Company Board as of the date hereof, which event, occurrence, fact, effect, development, circumstance, condition, state of facts or change becomes known to the Company Board prior to the Effective Time, other than (i) changes in the Company Common Stock price, in and of itself (however, the underlying reasons for such changes may constitute an Intervening Event), (ii) the timing of any consents, registrations, approvals, permits, clearances or authorizations required to be obtained prior to the Effective Time by the Company or Parent or any of their respective Subsidiaries from any Governmental Entity in connection with this Agreement and the consummation of the Transactions, (iii) any Competing Proposal, or any inquiry, proposal or offer that could reasonably be expected to lead to a Competing Proposal, or the consequences thereof, or (iv) the fact that, in and of itself, the Company exceeds any internal or published projections, estimates or expectations of the Company’s revenue, earnings or other financial performance or results of operations for any period, in and of itself (however, the underlying reasons for such events may constitute an Intervening Event).
“knowledge” will be deemed to be, as the case may be, the actual knowledge of the Persons listed in Section 9.5 of the Company Disclosure Letter with respect to the Company, and the actual knowledge of the members of the executive leadership team of Parent, in the case of Parent, in each case after reasonable inquiry.
“Law” means any law, statute, code, rule, regulation, order, ordinance, judgment or decree or other pronouncement of any Governmental Entity having the effect of law.
“Lenders” has the meaning set forth in the Note Purchase Agreement.
“Licensed Intellectual Property Rights” means all Intellectual Property Rights owned by a third party and exclusively licensed or exclusively sublicensed (with respect to any field or territory) to the Company or the Company Subsidiary.
“Lien” means any lien, pledge, hypothecation, mortgage, security interest, encumbrance, deed of trust, claim, lease, charge, option, preemptive right, subscription right, easement, servitude, proxy, voting trust or agreement, transfer restriction under any shareholder or similar agreement or other restriction or other lien of any kind.
“LSE” means the London Stock Exchange plc.
“Milestone Payment” has the meaning ascribed to such term in the CVR Agreement.
“Milestone Payment Date” has the meaning ascribed to such term in the CVR Agreement.
“NASDAQ” means the NASDAQ Global Select Market.
“Note Purchase Agreement” means that certain Note Purchase and Security Agreement, dated as of December 10, 2020, by and between the Opiant Pharmaceuticals, Inc., a Delaware
corporation, Opiant Pharmaceuticals UK Ltd., a corporation incorporated in the United Kingdom, the other borrowers from time to time party thereto, the Lenders and Pontifax Medison Finance GP, L.P., in its capacity as administrative agent and collateral agent for itself and the Lenders, as amended, restated, supplemented or otherwise modified from time to time.
“OPNT003” shall mean an intranasal formulation of nalmefene.
“Ordinary Course of Business” means, with respect to any Person, the conduct of such Person’s business that is consistent in all material respects with the past practices of such Person prior to the date of this Agreement and taken in the ordinary course of normal, day-to-day operations of such Person.
“Out of the Money Option” means each Company Stock Option which has a per share exercise price that is greater than the Upfront Consideration but less than $28.00.
“Owned Intellectual Property Rights” means all Intellectual Property Rights owned or purported to be owned by the Company or the Company Subsidiary.
“Pandemic Response Law” means any financial assistance program implemented by any Governmental Entity in connection with or in response to COVID- 19 (including, for the avoidance of doubt, the interpretation or administration thereof by any Governmental Entity charged with the enforcement, interpretation or administration thereof), including the Families First Coronavirus Response Act, Pub. L. No. 116-127 (116th Cong.) (Mar. 18, 2020), the CARES Act, and the Memorandum on Deferring Payroll Tax Obligations in Light of the Ongoing COVID-19 Disaster, dated August 8, 2020) and any amendment of, or subsequent guidance issued in respect of, those Laws, and any other similar or additional federal, state, local, or non-U.S. Law, or administrative guidance intended to benefit taxpayers in response to COVID- 19 and the associated economic downturn.
“Parent Entities” means Parent and Merger Sub.
“Parent Governing Documents” means the Memorandum and Articles of Association of Indivior PLC and the certificate of incorporation and bylaws of Parent.
“Parent Material Adverse Effect” means any Effect that, individually or in the aggregate, has a material adverse effect on the ability of Parent or Merger Sub to consummate the Transactions at or prior to the Outside Date.
“Parent Permitted Lien” means any Lien (i) for Taxes or governmental assessments, charges or claims of payment not yet due and payable, being contested in good faith or for which adequate accruals or reserves have been established, (ii) which is a carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s or other similar Lien arising in the Ordinary Course of Business, (iii) which is disclosed on the most recent (as of the date hereof) consolidated balance sheet of Indivior PLC or notes thereto or securing liabilities reflected on such balance sheet, (iv) with respect to the Company Leased Real Property or fee estate related thereto, easements, rights of way, encroachments, covenants, conditions, restrictions or other similar encumbrances, (v)
statutory or contractual landlord’s, lessor’s or similar Liens, (vi) securing obligations under Contracts entered into in the Ordinary Course of Business since the date of the most recent consolidated balance sheet of Parent, (vii) other than any Liens securing indebtedness for borrowed money or any financial guaranty thereof, (viii) customary grants of non-exclusive licenses to Intellectual Property Rights to contract research organizations or other service providers and subject to limitations on scope of use to the services to be provided to the Parent and its affiliates, in each case entered into in the Ordinary Course of Business, or (ix) which would not reasonably be expected to materially impair the continued use of the applicable property for the purposes for which the property is currently being used.
“Parent Subsidiaries” means the Subsidiaries of Parent.
“Per Share Value Paid” shall mean, as of any Milestone Payment Date, the sum of (i) the Upfront Consideration, (ii) the amount per share of Company Common Stock in cash previously paid in respect of any earlier Milestone Payment Date and (iii) the amount per Share in cash to be paid at such Milestone Payment Date under the CVR Agreement.
“Person” means a natural person, partnership, corporation, limited liability company, business trust, joint stock company, trust, unincorporated association, joint venture, Governmental Entity or other entity or organization.
“Personal Data” means “personal data,” “personal information,” “protected health information,” or “personally identifiable information” under any applicable Laws.
“PPP Loan” means (i) any covered loan under paragraph (36) of Section 7(a) of the Small Business Act (15 U.S.C. 636(a)), as added by Section 1102 of the CARES Act, or (ii) any loan that is an extension or expansion of, or is similar to, any covered loan described in clause (i).
“Privacy Laws” means foreign or domestic Laws relating to privacy and/or data security of Personal Data, including HIPAA.
“Proceedings” means all actions, suits, claims, litigation, proceedings, in each case, by or before any Governmental Entity, arbitrator or other tribunal with power to issue legally binding judgments and orders.
“Release” means any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, placing, discarding, abandonment, or disposing into the environment (including the placing, discarding or abandonment of any barrel, container or other receptacle containing any Hazardous Substance or other material).
“Representatives” means, when used with respect to any Person, such Person’s directors, officers, employees, consultants, financial advisors, accountants, legal counsel, investment bankers, and other agents, advisors and representatives.
“Rights Agent” means the financial institution designated by Parent to act as the rights agent under the CVR Agreement.
“Sanctioned Country” means any country or territory that is itself the subject of Sanctions Laws, as of the date of this agreement, including Crimea, Cuba, Iran, North Korea, and Syria.
“Sanctioned Person” means any Person with whom dealings are restricted or prohibited under the Sanctions Laws of the United States, the United Kingdom, the European Union, any EU member state, or the United Nations, including (i) any Person identified in any list of sanctioned Persons maintained by (a) the United States Department of the Treasury, Office of Foreign Assets Control, the United States Department of Commerce, Bureau of Industry and Security, or the United States Department of State; (b) His Majesty’s Treasury of the United Kingdom; (c) any committee of the United Nations Security Council; or (d) the European Union or any EU member state; (ii) any Person located, organized, or resident in, or a Governmental Entity or government instrumentality of, any Sanctioned Country and (iii) any Person directly or indirectly 50% or more owned or controlled by, or acting for the benefit or on behalf of, a Person described in (i) or (ii).
“Sanctions Laws” means all Laws concerning economic sanctions, including embargoes, export restrictions, the ability to make or receive international payments, the freezing or blocking of assets of targeted Persons, the ability to engage in transactions with specified persons or countries, or the ability to take an ownership interest in assets of specified Persons or located in a specified country, including any Laws threatening to impose economic sanctions on any person for engaging in proscribed behavior.
“SEC” means the United States Securities and Exchange Commission.
“Section 721” shall mean Section 721 of Title VII of the Defense Production Act of 1950, as amended and including the regulations of CFIUS promulgated thereunder, codified at 31 C.F.R. Part 800, et seq.
“Securities Act” means the United States Securities Act of 1933.
“Specified Governmental Entity” means any Governmental Entity administering or enforcing the Antitrust Laws of: (a) the United States; (b) the United Kingdom; or (c) any other jurisdiction where the enforcement of Antitrust Law (i) would reasonably likely result in criminal sanctions or criminal liability on (A) Indivior PLC, the Company or any of their respective Subsidiaries (assuming consummation of the Merger) or (B) the directors and officers of Indivior PLC, the Company or any of their respective Subsidiaries (assuming consummation of the Merger); or (ii) would reasonably likely adversely impact the business of Indivior PLC and its Subsidiaries (assuming consummation of the Merger) taken as a whole, in any material respect.
“Stockholders’ Meeting” means the meeting of the holders of shares of Company Common Stock for the purpose of seeking the Company Stockholder Approval, including any postponement or adjournment thereof.
“Subsidiary” or “Subsidiaries” means with respect to any Person, any corporation, limited liability company, partnership or other organization, whether incorporated or unincorporated, of which (i) at least a majority of the outstanding shares of capital stock of, or other equity interests,
having by their terms ordinary voting power to elect a majority of the board of directors or others performing similar functions with respect to such corporation or other organization is directly or indirectly owned or controlled by such Person or by any one or more of its Subsidiaries, or by such Person and one or more of its Subsidiaries or (ii) with respect to a partnership, such Person or any other Subsidiary of such Person is a general partner of such partnership.
“Superior Proposal Acquisition Agreement” shall mean a written definitive acquisition agreement providing for a Superior Proposal to be entered into by and between the Company and the Person making a Superior Proposal.
“Takeover Statutes” mean any “business combination,” “control share acquisition,” “fair price,” “moratorium” or other takeover or anti-takeover statute or similar Law.
“Tax” or “Taxes” means any and all taxes, levies, duties, tariffs, imposts and other similar charges, assessments and fees of any kind, including taxes, charges or other fees based upon, measured by, or determined with reference to income, franchise, windfall or other profits, gross receipts, base erosion, alternative minimum, digital services, premiums, property, sales, use, net worth, capital stock, payroll, employment, social security, workers’ compensation, unemployment compensation, excise, withholding, ad valorem, stamp, transfer, value-added, goods and services, gains tax and license, registration and documentation fees, severance, occupation, environmental, customs duties, disability, real property, personal property, registration, alternative or add-on minimum, or estimated tax, including any interest, penalty, additions to tax or additional amounts imposed with respect thereto, and any penalties imposed for any failure to timely, correctly, or completely file any Tax Return.
“Tax Return” means any report, return, certificate, claim for refund, election, estimated tax filing or declaration filed with, or required to be filed with any Governmental Entity or domestic or foreign taxing authority with respect to Taxes, including any schedule or attachment thereto, and including any amendments thereof.
“Tax Sharing Agreement” means any Tax allocation, apportionment, sharing, or indemnification agreement or arrangement to which the Company or the Company Subsidiary is party, other than any agreement that is pursuant to an ordinary-course commercial Contract the primary purpose of which does not relate to Taxes or any agreement to which no Person other than the Company or the Company Subsidiary is a party.
“Transactions” means the transactions contemplated by this Agreement, including the Merger.
“Underwater Option” means each Company Stock Option which has a per share exercise price that is equal to or greater than $28.00.
“willful breach” means with respect to any representation, warranty, agreement or covenant, an action or omission that the breaching party knows and intends is or would constitute a material breach, or would reasonably be expected to result in a material breach, of such representation, warranty, agreement or covenant.
Section 9.6 Terms Defined Elsewhere. Each of the following terms is defined in the Section of this Agreement set forth opposite such term below:
| | | | | |
| Term | Section |
“Acceptable Confidentiality Agreement” | Section 5.2(j)(i) |
“Agreement” | Preamble |
“Bankruptcy and Equity Exception” | Section 3.3(a) |
“Book-Entry Shares” | Section 2.2(a) |
“Certificate of Merger” | Section 1.3 |
“Certificates” | Section 2.2(a) |
“Change of Recommendation” | Section 5.2(d) |
“Closing” | Section 1.2 |
“Closing Date” | Section 1.2 |
“Company” | Preamble |
“Company 401(k) Plans” | Section 6.7(c) |
“Company Acquisition Agreement” | Section 5.2(d) |
“Company Benefit Plans” | Section 3.9(a) |
“Company Board” | Section 2.4(c) |
“Company Board Recommendation” | Section 3.3(a) |
“Company Capitalization Date” | Section 3.2(a) |
“Company Common Stock” | Recitals |
“Company Disclosure Letter” | Article III |
“Company Equity Awards” | Section 2.4(e) |
“Company Financial Advisor” | Section 3.18 |
“Company Leased Real Property” | Section 3.17(b) |
“Company Permits” | Section 3.7(b) |
“Company Real Property Leases” | Section 3.18(b) |
“Company RSU Awards” | Section 2.4(a) |
“Company SEC Documents” | Section 3.4(a) |
“Company Stock Option” | Section 2.4(a) |
“Company Warrant” | Section 2.6 |
“Competing Proposal” | Section 5.2(j)(i) |
“Continuing Employee” | Section 6.7(a) |
“Convertible Noteholders” | Section 2.7 |
“CVR” | Section 2.1 |
“D&O Insurance Policy” | Section 6.4 |
“DGCL” | Section 1.1 |
“Dissenting Share” | Section 2.3(a) |
“DOJ” | Section 6.2(b) |
“Effective Time” | Section 1.3 |
“Exchange Agent” | Section 2.2(a) |
| | | | | |
“Exchange Fund” | Section 2.2(a) |
“Federal Health Care Programs” | Section 3.13(j) |
“FTC” | Section 6.2(b) |
“GAAP” | Section 3.4(b) |
“HIPAA” | Section 3.13(k) |
“IND” | Section 3.13(d) |
“Indemnified Parties” | Section 6.4 |
“Matching Period” | Section 5.2(e)(i) |
“Material Contracts” | Section 3.20(a) |
“Merger” | Recitals |
“Merger Consideration” | Section 2.1(a)(i) |
“Merger Sub” | Preamble |
“Merger Sub Common Stock” | Section 2.1(a)(iii) |
“Note Purchase and Security Agreement” | Section 2.7(a) |
“Outside Date” | Section 8.1(b)(i) |
“Parent” | Preamble |
“Parent 401(k) Plan” | Section 6.7(c) |
“Parent Board” | Section 4.2 |
“Party” | Preamble |
“Payoff Letter” | Section 6.11(a) |
“Privacy Policies” | Section 3.13(n) |
“Proxy Statement” | Section 5.3(a) |
“Related Party” | Section 3.24 |
“Sarbanes-Oxley Act” | Section 3.5(a) |
“Section 262” | Section 2.3(a) |
“Service Providers” | Section 3.15(d) |
“Superior Proposal” | Section 5.2(j)(i) |
“Supporting Stockholders” | Recitals |
“Surviving Corporation” | Section 1.1 |
“Termination Fee” | Section 8.2(b)(i) |
“Voting Agreement” | Recitals |
| |
Section 9.7 Interpretation. When a reference is made in this Agreement to Sections, such reference shall be to a Section of this Agreement unless otherwise indicated. Whenever the words “include”, “includes” or “including” are used in this Agreement they shall be deemed to be followed by the words “without limitation.” As used in this Agreement, the term “affiliates” shall have the meaning set forth in Rule 12b-2 of the Exchange Act. The table of contents and headings set forth in this Agreement are for convenience of reference purposes only and shall not affect or be deemed to affect in any way the meaning or interpretation of this Agreement or any term or provision hereof. When reference is made herein to a Person, such reference shall be deemed to include all successors and permitted assigns of such Person. All references herein to
the Subsidiaries of a Person shall be deemed to include all direct and indirect Subsidiaries of such Person. The Parties agree that they have been represented by counsel during the negotiation and execution of this Agreement and, therefore, waive the application of any Law, holding or rule of construction providing that ambiguities in an agreement or other document will be construed against the party drafting such agreement or document. The words “hereof”, “herein” and “hereunder” and word of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. The definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms and to the masculine as well as to the feminine and neuter genders of such terms. References in this Agreement to specific Laws or to specific provisions of Laws shall include all rules and regulations promulgated thereunder, and any statute defined or referred to herein or in any agreement or instrument referred to herein shall mean such statute as from time to time amended, modified or supplemented, including by succession of comparable successor statutes. The term “dollars” and character “$” shall mean United States dollars.
Section 9.8 Counterparts. This Agreement may be executed manually or by facsimile by the Parties, in any number of counterparts, each of which shall be considered one and the same agreement and shall become effective when a counterpart hereof shall have been signed by each of the Parties and delivered to the other Parties. Delivery of an executed counterpart of a signature page to this Agreement by facsimile transmission or by e-mail of a .pdf attachment shall be effective as delivery of a manually executed counterpart of this Agreement.
Section 9.9 Entire Agreement; Third-Party Beneficiaries.
(a) This Agreement (including the Company Disclosure Letter), the CVR Agreement, the Voting Agreement and the Confidentiality Agreement constitute the entire agreement among the Parties with respect to the subject matter hereof and thereof and supersede all other prior agreements and understandings, both written and oral, among the Parties or any of them with respect to the subject matter hereof and thereof.
(b) Except as (i) provided in Section 6.4 (but only following the Effective Time) and (ii) for the rights of the stockholders of the Company to receive the Merger Consideration in accordance with Article II following the Effective Time, neither this Agreement (including the Company Disclosure Letter) nor the Confidentiality Agreement are intended to confer upon any Person other than the Parties any rights or remedies hereunder. Section 9.10 Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by rule of Law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the Merger is not affected in any manner adverse to any Party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in an acceptable manner to the end that the Merger are fulfilled to the extent possible.
Section 9.11 Governing Law; Jurisdiction.
(a) This Agreement shall be governed by, and construed in accordance with, the Laws of the State of Delaware, without giving effect to conflicts of laws principles that would result in the application of the Law of any other state.
(b) Each of the Parties hereby irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction of the Court of Chancery of the State of Delaware, or, if (and only if) such court finds it lacks subject matter jurisdiction, the Superior Court of the State of Delaware (Complex Commercial Division) or, if subject matter jurisdiction over the matter that is the subject of the action or proceeding is vested exclusively in the federal courts of the United States of America, the federal court of the United States of America sitting in the district of Delaware, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement or the agreements delivered in connection herewith or the transactions contemplated hereby or thereby or for recognition or enforcement of any judgment relating thereto, and each of the Parties hereby irrevocably and unconditionally (i) agrees not to commence any such action or proceeding except in the Court of Chancery of the State of Delaware, or, if (and only if) such court finds it lacks subject matter jurisdiction, the Superior Court of the State of Delaware (Complex Commercial Division) or, if subject matter jurisdiction over the matter that is the subject of the action or proceeding is vested exclusively in the federal courts of the United States of America, the federal court of the United States of America sitting in the district of Delaware, as applicable, and any appellate court from any thereof, (ii) agrees that any claim in respect of any such action or proceeding may be heard and determined in the Court of Chancery of the State of Delaware, or, if (and only if) such court finds it lacks subject matter jurisdiction, the Superior Court of the State of Delaware (Complex Commercial Division) or, if subject matter jurisdiction over the matter that is the subject of the action or proceeding is vested exclusively in the federal courts of the United States of America, the federal court of the United States of America sitting in the district of Delaware, as applicable, and any appellate court from any thereof, (iii) waives, to the fullest extent it may legally and effectively do so, any objection that it may now or hereafter have to the jurisdiction or laying of venue of any such action or proceeding in such courts and (iv) waives, to the fullest extent permitted by Law, the defense of an inconvenient forum to the maintenance of such action or proceeding in such courts. Each of the Parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by Law. Each Party to this Agreement irrevocably consents to service of process inside or outside the territorial jurisdiction of the courts referred to in this Section 9.11(b) in the manner provided for notices in Section 9.4. Nothing in this Agreement will affect the right of any Party to this Agreement to serve process in any other manner permitted by Law. Section 9.12 Waiver of Jury Trial. EACH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT AND ANY OF THE AGREEMENTS DELIVERED IN CONNECTION HEREWITH OR THE MERGER AND OTHER TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. EACH PARTY CERTIFIES AND
ACKNOWLEDGES THAT (A) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE EITHER OF SUCH WAIVERS, (B) IT UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF SUCH WAIVERS, (C) IT MAKES SUCH WAIVERS VOLUNTARILY, AND (D) IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.12.
Section 9.13 Assignment. Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned or delegated by any of the Parties (whether by operation of Law or otherwise) without the prior written consent of the other Parties; provided, however, that each of Merger Sub and Parent may, from time to time, assign any of their rights hereunder to a wholly owned direct or indirect Subsidiary of Parent without the prior written consent of the Company, but no such assignment shall relieve Parent or Merger Sub of any of its obligations hereunder. Subject to the preceding sentence, but without relieving any Party of any obligation hereunder, this Agreement will be binding upon, inure to the benefit of and be enforceable by the Parties and their respective successors and assigns.
Section 9.14 Enforcement; Remedies.
(a) Except as otherwise expressly provided herein, any and all remedies herein expressly conferred upon a Party will be deemed cumulative with and not exclusive of any other remedy conferred hereby, or by Law or equity upon such Party, and the exercise by a Party of any one remedy will not preclude the exercise of any other remedy.
(b) The Parties agree that irreparable injury will occur in the event that any of the provisions of this Agreement is not performed in accordance with its specific terms or is otherwise breached. It is agreed that prior to the termination of this Agreement pursuant to Article VIII, each Party shall be entitled to an injunction or injunctions to prevent or remedy any breaches or threatened breaches of this Agreement by any other Party, to a decree or order of specific performance to specifically enforce the terms and provisions of this Agreement and to any further equitable relief. (c) The Parties’ rights in this Section 9.14 are an integral part of the Transactions and each Party hereby waives any objections to any remedy referred to in this Section 9.14 (including any objection on the basis that there is an adequate remedy at Law or that an award of such remedy is not an appropriate remedy for any reason at Law or equity). For the avoidance of doubt, each Party agrees that there is not an adequate remedy at Law for a breach of this Agreement by any Party. In the event any Party seeks any remedy referred to in this Section 9.14, such Party shall not be required to obtain, furnish, post or provide any bond or other security in connection with or as a condition to obtaining any such remedy. Section 9.15 Company Disclosure Letter. Any reference to a particular section of the Company Disclosure Letter shall be deemed to be an exception to the representations and warranties (but not any covenant,) of the Company that are contained in the corresponding
Section of this Agreement and any other representations and warranties, of the Company that are contained in this Agreement as would be reasonably apparent from a reading of the Company Disclosure Letter, whether or not an explicit reference or cross-reference is made.
[The remainder of this page is intentionally blank.]
IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be duly executed as of the date first written above.
| | | | | |
| INDIVIOR INC. |
| |
| |
| |
| By: | /s/ Ryan Preblick |
| Name: Ryan Preblick |
| Title: Treasurer |
| | | | | |
| OLIVE ACQUISITION SUBSIDIARY, INC. |
| By: | /s/ Ryan Preblick |
| Name: Ryan Preblick |
| Title: Director |
| | | | | |
| OPIANT PHARMACEUTICALS, INC. |
| By: | /s/ Dr. Roger Crystal |
| Name: Dr. Roger Crystal |
| Title: Chief Executive Officer |
EXHIBIT A
FORM OF SURVIVING CORPORATION CERTIFICATE OF INCORPORATION
[SEE ATTACHED]
FORM OF SECOND AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
OPIANT PHARMACEUTICALS, INC.
ARTICLE I
NAME
The name of the Corporation is Opiant Pharmaceuticals, Inc.
ARTICLE II
REGISTERED OFFICE AND REGISTERED AGENT
The address of the Corporation’s registered office in the State of Delaware is Corporation Service Company, 251 Little Falls Drive, City of Wilmington, County of New Castle, Delaware 19808. The name of the Corporation’s registered agent at such address is Corporation Service Company.
ARTICLE III
CORPORATE PURPOSE
The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware (the “DGCL”).
ARTICLE IV
CAPITAL STOCK
The total number of shares of capital stock that the Corporation shall have authority to issue is one hundred (100) shares, which shall be shares of common stock with a par value of $0.01 per share.
ARTICLE V
RESERVATION OF RIGHT TO AMEND BY-LAWS
In furtherance and not in limitation of the powers conferred by statute, the board of directors of the Corporation is expressly authorized to adopt, amend or repeal the Bylaws of the Corporation to the fullest extent permitted by the provisions of the DGCL.
ARTICLE VI
ELECTION OF DIRECTORS
The election of directors need not be conducted by written ballot except and to the extent provided in the Bylaws of the Corporation.
ARTICLE VII
INDEMNIFICATION; LIMITATION ON LIABILITY
(a) The Corporation shall, to the fullest extent permitted by, and in accordance with the provisions of, the DGCL, indemnify each director or officer or employee of the Corporation against expenses (including attorneys’ fees), judgments, taxes, fines and amounts paid in settlement, incurred by him or her in connection with, and shall advance expenses (including attorneys’ fees) incurred by him or her in defending, any threatened, pending or completed action, suit or proceeding (whether civil, criminal, administrative or investigative) to which he or she is, or is threatened to be made, a party by reason of the fact that he or she is or was a director or officer or employee of the Corporation, or is or was serving at the request of the Corporation as a director, officer, partner, employee or agent of another domestic or foreign corporation, partnership, joint venture, trust or other enterprise. Advancement of expenses shall be made upon receipt of an undertaking, with such security, if any, as the Board of Directors or stockholders may reasonably require, by or on behalf of the person seeking indemnification to repay amounts advanced if it shall ultimately be determined that he or she is not entitled to be indemnified by the Corporation as authorized herein.
(b) The indemnification provided for by this Article VII shall not be deemed exclusive of any other rights to which directors or officers or employees of the Corporation may be entitled under any statute, agreement, by-law or action of the Board of Directors or stockholders of the Corporation, or otherwise, and shall continue as to a person who has ceased to be a director or officer or employee of the Corporation, and shall inure to the benefit of the heirs, executors and administrators of such a person.
(c) The Corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, partner, employee or agent of another domestic or foreign corporation, partnership, joint venture, trust or other enterprise, against any liability asserted against him or her and incurred by him or her in such capacity or arising out of his status as such, whether or not the Corporation would have the power or be obligated to indemnify him or her against such liability under the provisions of this Article VII need not be limited to the power of indemnification of the Corporation under the provisions of Section 145 of the DGCL.
(d) The Corporation shall indemnify each director, officer or employee of the Corporation who is, or is threatened to be made, a party to any threatened, pending, or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, including
actions by or in the right of the Corporation, by reason of the fact that such director, officer or employee is or was serving at the request of the Corporation as a “fiduciary” (as defined by Section 3(21)(A) of the Employee Retirement Income Security Act of 1974 (“ERISA”) with regard to any employee benefit plan adopted by the Corporation, against expenses (including attorneys’ fees), claims, fines, judgments, taxes, causes of action or liability and amounts paid in settlement, actually and reasonably incurred by him or her in connection with such action or proceeding, unless such expense, claim, fine, judgment, taxes, cause of action, liability or amount arose from his or her gross negligence, fraud or willful breach of his or her fiduciary responsibilities under ERISA, except, that with respect to an action by or in the right of the Corporation, indemnification shall be made only against expenses (including attorneys’ fees).
(e) The Corporation shall advance all expenses (including attorneys’ fees) incurred by any director, officer or employee in defending any such civil, criminal, administrative or investigative action, suit or proceeding pending the final disposition of such action, suit or proceeding, unless (a) the Board of Directors, by a majority vote of a quorum consisting of directors who were not or are not parties to the action, suit or proceeding concerned, or (b) the stockholders, determined that under the circumstances the person, by his or her conduct, is not entitled to indemnification because of his or her gross negligence, fraud or willful breach of his or her fiduciary responsibilities under ERISA. Advancement of expenses shall be made upon receipt of an undertaking, with such security, if any, as the Board of Directors or stockholders may reasonably require, by or on behalf of the director, officer or employee, to repay such amounts unless it shall ultimately be determined that he or she is entitled to be indemnified by the Corporation as authorized herein.
(f) A director of the Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, expect for liability (i) for any breach of the director’s duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the DGCL or (iv) for any transaction from which the director derives any improper personal benefit. If the DGCL hereafter is amended to further eliminate or limit the liability of a director, then a director of the Corporation, in addition to the circumstances in which a director is not personally liable as set forth in the preceding sentence, shall be relieved of liability to the fullest extent permitted by the DGCL, as amended. Any repeal or modification of this Article VII (f) by the stockholders of the Corporation shall not adversely affect any right of or protection afforded to a director of the Corporation existing at the time of such repeal or modification.
ARTICLE VIII
RESERVATION OF RIGHT TO AMEND
CERTIFICATE OF INCORPORATION
The Corporation reserves the right to amend, alter, restate, change or repeal any provisions contained in this Second Amended and Restated Certificate of Incorporation (this “Certificate of Incorporation”), and other provisions authorized by the laws of the State of Delaware at the time in force may be added or inserted, in the manner now or hereafter
prescribed by law and all the provisions of this Certificate of Incorporation and all rights, preferences, privileges and powers conferred in this Certificate of Incorporation on stockholders, directors, officers or any other persons are subject to the rights reserved in this Article VIII.
EXHIBIT B
FORM OF CVR AGREEMENT
[SEE ATTACHED]
FORM OF CONTINGENT VALUE RIGHTS AGREEMENT
THIS CONTINGENT VALUE RIGHTS AGREEMENT, dated as of [●], (this “Agreement”), is entered into by and between Indivior Inc., a Delaware corporation (“Parent”), and [RIGHTS AGENT], a [●], as Rights Agent (the “Rights Agent”).
RECITALS
WHEREAS, Parent, Olive Acquisition Subsidiary, Inc., a Delaware corporation (“Merger Sub”), and Opiant Pharmaceuticals, Inc., a Delaware corporation (the “Company”), have entered into an Agreement and Plan of Merger, dated as of November 13, 2022 (as it may be amended or supplemented from time to time pursuant to the terms thereof, the “Merger Agreement”), pursuant to which Merger Sub will merge with and into the Company (the “Merger”), with the Company surviving the Merger as a subsidiary of Parent;
WHEREAS, pursuant to the Merger Agreement, Parent has agreed to provide to the holders of shares of Company Common Stock (excluding the holders of any Dissenting Shares), the holders of Company Warrants that are cancelled as of the Effective Time pursuant to the Merger Agreement, the holders of the Convertible Notes that are converted as of the Effective Time, the holders of In the Money Options, Company RSU Awards and Company PSU Awards immediately prior to the Effective Time that are validly converted into Merger Consideration pursuant to terms set forth in the Merger Agreement, the right to receive contingent cash payments (each, a “CVR”) as hereinafter described; and
WHEREAS, pursuant to this Agreement, the maximum potential amount payable per CVR (as hereinafter defined) is $8.00 in cash, without interest.
NOW, THEREFORE, in consideration of the foregoing and the consummation of the transactions referred to above, Parent and Rights Agent agree, for the equal and proportionate benefit of all Holders, as follows:
DEFINITIONS; CERTAIN RULES OF CONSTRUCTION
Definitions. Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in the Merger Agreement. As used in this Agreement, the following terms will have the following meanings:
“225M Annual Net Sales Milestone” means, during the Sales Milestone Period, the first achievement in any Sales Measurement Period of worldwide Net Sales of the Product exceeding $225,000,000.
“225M Annual Net Sales Milestone Payment” means $2.00 per CVR.
“300M Annual Net Sales Milestone” means, during the Sales Milestone Period, the first achievement in any Sales Measurement Period of worldwide Net Sales of the Product exceeding $300,000,000.
“300M Annual Net Sales Milestone Payment” means $2.00 per CVR.
“325M Annual Net Sales Milestone” means, during the Sales Milestone Period, the first achievement in any Sales Measurement Period of worldwide Net Sales of the Product exceeding $325,000,000.
“325M Annual Net Sales Milestone Payment” means $2.00 per CVR.
“Acting Holders” means, at the time of determination, Holders of at least thirty percent (30%) of the outstanding CVRs as set forth in the CVR Register.
“Affiliate” of any particular Person means any other Person controlling, controlled by or under common control with such particular Person. For the purposes of this definition, “controlling,” “controlled” and “control” mean the possession, directly or indirectly, of the power to direct the management and policies of a Person whether through the ownership of voting securities, contract or otherwise.
“Annual Net Sales Milestone” means any of the 225M Annual Net Sales Milestone, the 300M Annual Net Sales Milestone or the 325M Annual Net Sales Milestone.
“Assignee” has the meaning set forth in Section 6.3.
“Authorized Officer” means an employee of Parent with the title of President, Vice President, Secretary, Treasurer or Assistant Treasurer.
“Board of Directors” means the board of directors of Ultimate Parent.
“Board Resolution” means a copy of a resolution certified by an Authorized Officer to have been duly adopted by the Board of Directors and to be in full force and effect on the date of such certification, and delivered to the Rights Agent.
“Business Day” means any day other than a Saturday, Sunday or a day on which banking institutions in New York, New York, or London, United Kingdom, are authorized or obligated by law or executive order to remain closed.
“Code” shall mean the Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder.
“Commercially Reasonable Efforts” means, with respect to the performance of development activities with respect to the Product, the carrying out of such activities using reasonable and diligent efforts in good faith and the expending of such resources that Parent would expend with respect to a product candidate at a similar stage in its development or product life as the Product, considering conditions then prevailing and taking into account, without limitation, issues of safety and efficacy, expected time to develop, market potential, anticipated pricing and reimbursement rates, costs, expected profitability (including development costs, intellectual property defense costs, distribution and logistics, marketing and promotional expense and all other costs associated with the Product), anticipated product labeling, pricing
reimbursement, methods of distribution, the competitiveness of alternative products in the marketplace or under development, market exclusivity (including the patent, regulatory and other proprietary position of the Product), the applicable regulatory environment, anticipated timing of commercial entry, and all other relevant commercial, financial, technical, legal, scientific and/or medical factors. For the avoidance of doubt, Commercially Reasonable Efforts will not mean that a party guarantees that it will actually obtain FDA Approval of the Product or to achieve U.S. Commercial Launch, and a failure to obtain FDA Approval of the Product or to achieve U.S. Commercial Launch may still be consistent with Commercially Reasonable Efforts.
“CVR Register” has the meaning set forth in Section 2.3(b).
“CVR Shortfall” has the meaning set forth in Section 4.7(b).
“Delaware Courts” has the meaning set forth in Section 6.5(b).
“DTC” means The Depository Trust Company or any successor thereto.
“Early Achievement Milestone” means, during the Early Achievement Period, the first achievement in any Sales Measurement Period of worldwide Net Sales of the Product exceeding $250,000,000. For the avoidance of doubt, the Early Achievement Milestone cannot be achieved following the expiration of the Early Achievement Period.
“Early Achievement Milestone Payment” means $2.00 per CVR.
“Early Achievement Period” means the period beginning at the beginning of the Sales Milestone Period and ending on the third (3rd) anniversary thereof.
“Entity” means any corporation (including any non-profit corporation), general partnership, limited partnership, limited liability partnership, joint venture, estate, trust, company (including any company limited by shares, limited liability company or joint stock company), firm, society or other enterprise, association, organization or entity.
“Equity Award Holders” means the Holders of CVRs granted with respect to Company Stock Options, Company RSU Awards and Company PSU Awards.
“FDA” means the United States Food and Drug Administration, or any successor agency.
“FDA Approval” means written receipt from the FDA of approval for marketing a Product in the United States with an approved label including an indication for the Opioid Overdose Indication.
“GAAP” means, with respect to Parent, either (a) generally accepted accounting principles in the United States or (b) International Financial Reporting Standards, in either case, which principals or standards are currently used at the applicable time by Ultimate Parent in the preparation of the consolidated financial statements of Ultimate Parent included the Annual Report and Accounts of Ultimate Parent, and as applied by the Ultimate Parent for external reporting in its primary listed market.
“Governmental Body” means any: (a) nation, state, commonwealth, province, territory, county, municipality, district or other jurisdiction of any nature; (b) federal, state, local, municipal, foreign or other government; or (c) governmental or quasi-governmental authority of any nature including any governmental division, department, agency, commission, instrumentality, official, ministry, fund, foundation, center, organization, unit, body or Entity and any court, arbitrator or other tribunal.
“Holder” means a Person in whose name a CVR is registered in the CVR Register at the applicable time.
“Independent Accountant” means an independent certified public accounting firm of nationally recognized standing designated either (a) jointly by the Acting Holders and Parent, or (b) if such parties fail to make a designation, jointly by an independent public accounting firm selected by Parent and an independent public accounting firm selected by the Acting Holders.
“Milestone” means any of the Annual Net Sales Milestones or the Early Achievement Milestone.
“Milestone Determination Date” means, with respect to any Milestone, the date that is sixty (60) days following the last day of the Sales Measurement Period in which such Milestone was achieved.
“Milestone Notice” has the meaning set forth in Section 2.4(a).
“Milestone Payment” means any of the 225M Annual Net Sales Milestone Payment, the 300M Annual Net Sales Milestone Payment, the 325M Annual Net Sales Milestone Payment or the Early Achievement Milestone Payment.
“Milestone Payment Amount” means, in respect of a Milestone, for a given Holder, the product of (a) the Milestone Payment in respect of such Milestone and (b) the number of CVRs held by such Holder as reflected on the CVR Register as of the close of business on the date of the applicable Milestone Notice.
“Milestone Payment Date” has the meaning set forth in Section 2.4(b).
“Net Sales” means the gross amount charged or invoiced by each Selling Entity for the Product sold to third parties, plus any additional amount pursuant to the proviso contained in clause (6) of the definition of “Permitted Deductions”, less the Permitted Deductions, all as determined in accordance with the Selling Entity’s usual and customary accounting methods consistent with the treatment of other branded prescription products commercialized by the applicable Selling Entity, which shall be in accordance with GAAP, including the accounting methods for translating activity denominated in foreign currencies into United States dollar amounts. In the case of any sale of the Product between or among Parent, its Affiliates, licensees and sublicensees, for resale, Net Sales will be calculated as above only on the value charged or invoiced on the first arm’s-length sale thereafter to a third party. If a Product is sold or otherwise commercially disposed of for consideration other than cash or in a transaction that is not at arm’s
length between the buyer of such Product and the applicable Selling Entity (other than with respect to Products supplied expressly for sampling purposes), then the gross amount to be included in the calculation of Net Sales shall be the amount that would have been received had the transaction been conducted at arm’s length and for cash. Such amount that would have been received shall be determined, wherever possible, by reference to the average selling price of such Product in arm’s length transactions in the relevant jurisdiction for that type of customer (Governmental Entity, retail, etc.). Notwithstanding the foregoing, the following shall not be included in Net Sales: (i) Product provided for administration to patients enrolled in clinical trials or for other research purposes, or (ii) Product provided without consideration or for nominal consideration for any bona fide charitable, compassionate use or indigent patient program purpose or as a sample.
“Net Sales Statement” means, for a given Sales Measurement Period, a written statement of Parent, setting forth with reasonable detail (a) a delineation and calculation of Net Sales during such Sales Measurement Period, (b) a delineation and calculation of the Permitted Deductions during such Sales Measurement Period, and (c) to the extent that sales for the Product is recorded in currencies other than United States dollars during such Sales Measurement Period, the exchange rates used for conversion of such foreign currency into United States dollars.
“Officer’s Certificate” means a certificate signed by an Authorized Officer of Parent, in his or her capacity as such an officer, and delivered to the Rights Agent.
“Opioid Overdose Indication” means the complete or partial reversal of opioid drug effects, including respiratory depression, induced by either natural or synthetic opioids and for the emergency treatment of known or suspected opioid overdose.
“OPNT003” shall mean an intranasal formulation of nalmefene.
“Permitted Deductions” means, to the extent not already excluded from Net Sales, the following deductions that are either included in the billing as a line item as part of the amount charged or invoiced, or otherwise documented as a deduction and accrued in accordance with GAAP specifically attributable to sales of the Product:
normal and customary trade, quantity and prompt settlement discounts;
accrued price reductions or discounts by reasons of defects, recalls, returns, rebates or allowances of goods or because of retroactive price reductions specifically attributable to the Product;
chargebacks, rebates (or the equivalent thereof) and other amounts accrued on sale of the Product, including such amounts mandated by programs of Governmental Entities;
accruals for rebates (or the equivalent thereof) and administrative fees payable to medical healthcare organizations, to group purchasing organizations or to trade customers in line with approved contract terms or other normal and customary understandings and arrangements; and
accruals for tariffs, duties, excise, sales, value-added and other Taxes (other than Taxes based on net income) and charges of Governmental Entities;
bad debts not exceeding five percent (5%) of the value of the sales of Product during the then-current calendar year, provided that any recovery of bad debts shall be included in Net Sales in the period in which recovered;
transportation, freight, postage, importation, insurance and other handling expenses to the extent included in gross amounts invoiced;
discounts pursuant to patient discount programs and coupon discounts;
accruals for amounts payable to wholesalers for services related to sales or distribution of the Product; and
accruals for distribution commissions and fees (including administrative fees and fees related to services provided pursuant to distribution service agreements with wholesalers, fee-for-service wholesaler fees and inventory management fees) payable to any third party providing distribution services to the Selling Entities.
For the avoidance of doubt, if a single item falls into more than one of the categories set forth in clauses (1) through (10) above, such item may not be deducted more than once.
True-ups, changes in estimate, and other adjustments to Permitted Deduction amounts (whether positive or negative) shall be included in Permitted Deductions in the calendar quarter as such items are recorded in accordance with GAAP.
“Permitted Transfer” means: a Transfer of CVRs (a) upon death of a Holder by will or intestacy; (b) pursuant to a court order; (c) by operation of law (including by consolidation or merger) or without consideration in connection with the dissolution, liquidation or termination of any corporation, limited liability company, partnership or other Person; or (d) in the case of CVRs held in book-entry or other similar nominee form, from a nominee to a beneficial owner and, if applicable, through an intermediary, to the extent allowable by DTC.
“Person” means any individual, Entity or Governmental Entity.
“Product” means any pharmaceutical product combined with an intranasal delivery device that contain(s) OPNT003 as an active pharmaceutical ingredient, alone or in combination with one or more additional active pharmaceutical ingredients and formulated for intranasal administration.
“Review Request Period” has the meaning set forth in Section 4.7(a).
“Rights Agent” means the Rights Agent named in the first paragraph of this Agreement, until a successor Rights Agent will have become such pursuant to the applicable provisions of this Agreement, and thereafter “Rights Agent” will mean such successor Rights Agent.
“Sales Measurement Period” means any four (4) consecutive calendar quarters commencing with the first calendar quarter of the Sales Milestone Period.
“Sales Milestone Period” means the period beginning with the U.S. Commercial Launch (provided that if the U.S. Commercial Launch occurs less than forty-five (45) days prior to the end of the calendar quarter, then the period beginning with the first day of the first calendar quarter immediately following the quarter in which the U.S. Commercial Launch occurred) and ending on the seventh (7th) anniversary of the beginning of such period.
“Selling Entity” means Parent, any Assignee and each of their respective Affiliates, licensees and sublicensees with respect to rights to develop or commercialize the Product, and any direct or indirect transferee, successor or assignee (including through any change of control) of the rights to sell the Product of any of the foregoing (but not a distributor of the Product acting solely in the capacity of a distributor and not otherwise an Assignee, licensee or sublicensee with respect to development or commercialization rights as to the Product or transferee, successor or assignee of the rights to sell the Product).
“Status Report” has the meaning set forth in Section 4.5.
“Tax” shall mean any tax (including any income tax, franchise tax, capital gains tax, gross receipts tax, value-added tax, surtax, estimated tax, unemployment tax, national health insurance tax, excise tax, premium, alternative or minimum tax, ad valorem tax, transfer tax, stamp tax, sales tax, use tax, property tax, business tax, escheat or unclaimed property, withholding tax or payroll tax), levy, assessment, tariff, impost, imposition, duty (including any customs duty) or other tax or charge of any kind whatsoever, including any charge or amount (including any fine, penalty, interest or other additions thereto) related thereto, imposed, assessed or collected by or under the authority of any Governmental Body, including as a result of being or having been a member of an affiliated, consolidated, controlled, fiscal, combined, unitary or aggregate group or being a transferee of or successor to any Person or as a result of any express obligation to assume such Taxes or to indemnify any other Person.
“Transfer” means any transfer, pledge, hypothecation, encumbrance, assignment or other disposition (whether by sale, merger, consolidation, liquidation, dissolution, dividend, distribution or otherwise), the offer to make such a transfer or other disposition, and each contract, arrangement or understanding, whether or not in writing, to effect any of the foregoing.
“U.S. Commercial Launch” means the first sale for monetary value for commercial use in the United States in an arm’s length transaction to a third party by a Selling Entity of the Product whose approved label includes an indication for the Opioid Overdose Indication following receipt of FDA Approval of the Product. U.S. Commercial Launch may only be achieved once and only for the first Product to satisfy the foregoing conditions.
“Ultimate Parent” means [IRIS PLC], a company registered under the laws of England and Wales, and an Affiliate of Parent, or the successor thereto.
Rules of Construction. Except as otherwise explicitly specified to the contrary, (a) references to a Section means a Section of this Agreement unless another agreement is specified, (b) the word “including” (in its various forms) means “including without limitation,” (c) references to a particular statute or regulation include all rules and regulations thereunder and any successor statute, rules or regulation, in each case as amended or otherwise modified from time to time, (d) words in the singular or plural form include the plural and singular form, respectively, (e) references to a particular Person include such Person’s successors and assigns to the extent not prohibited by this Agreement and (f) all references to dollars or “$” refer to United States dollars.
CONTINGENT VALUE RIGHTS
CVRs. The CVRs represent the rights of Holders to receive contingent cash payments pursuant to this Agreement. The initial Holders will be the holders of shares of Company Common Stock (excluding the holders of any Dissenting Shares), the holders of Company Warrants that are cancelled as of the Effective Time pursuant to the Merger Agreement, the holders of the Convertible Notes that are converted as of the Effective Time, and the holders of In the Money Options, Company RSU Awards and Company PSU Awards immediately prior to the Effective Time that are validly converted into Merger Consideration pursuant to terms set forth in the Merger Agreement.
Nontransferable. The CVRs may not be sold, assigned, Transferred, pledged, encumbered or in any other manner transferred or disposed of, in whole or in part, other than through a Permitted Transfer. Any attempted Transfer, pledge, encumbrance or disposition of CVRs, in whole or in part, in violation of this Section 2.2 shall be void ab initio and of no effect.
No Certificate; Registration; Registration of Transfer; Change of Address.
The CVRs will not be evidenced by a certificate or other instrument.
The Rights Agent will keep a register (the “CVR Register”) for the purpose of registering CVRs and Permitted Transfers thereof. The CVR Register will initially show one position for Cede & Co. representing all the shares of Company Common Stock held by DTC on behalf of the street holders of the shares of Company Common Stock held by such holders as of immediately prior to the Effective Time. The Rights Agent will have no responsibility whatsoever to the street name holders with respect to Transfers of CVRs unless and until such CVRs are Transferred into the name of such street name holders in accordance with Section 2.2 of this Agreement. With respect to any payments to be made under Section 2.4 below, the Rights Agent will accomplish the payment to any former street name holders of shares of Company Common Stock by sending one lump payment to DTC. The Rights Agent will have no responsibilities whatsoever with regard to the distribution of payments by DTC to such street name holders.
Subject to the restrictions on transferability set forth in Section 2.2, every request made to Transfer a CVR must be in writing and accompanied by a written instrument of Transfer in form reasonably satisfactory to the Rights Agent pursuant to its guidelines, duly executed by the
Holder thereof, the Holder’s attorney or other personal representative duly authorized in writing or the Holder’s survivor, and setting forth in reasonable detail the circumstances relating to the Transfer. Upon receipt of such written notice, the Rights Agent will, subject to its reasonable determination that the Transfer instrument is in proper form and the Transfer otherwise complies with the other terms and conditions of this Agreement (including the provisions of Section 2.2), register the Transfer of the CVRs in the CVR Register. The Rights Agent shall not be obligated to undertake any action with respect to the Transfer of the CVRs until it shall have been provided with such additional information or material as it may reasonably require to determine that the Transfer complies with the terms and conditions of this Agreement. No service charge shall be required of a Holder or its representative or survivor for any Transfer of a CVR, but Parent and Rights Agent may require payment of a sum sufficient to cover any stamp or other Tax or governmental charge that is imposed in connection with any such registration of Transfer. The Rights Agent shall have no duty or obligation to take any action under any section of this Agreement that requires the payment by a Holder of applicable Taxes or charges unless and until the Rights Agent is satisfied that all such Taxes or charges have been paid. All duly Transferred CVRs registered in the CVR Register will be the valid obligations of Parent and will entitle the transferee to the same benefits and rights under this Agreement as those held immediately prior to the Transfer by the transferor. No Transfer of a CVR will be valid until registered in the CVR Register in accordance with this Agreement.
A Holder may make a written request to the Rights Agent to change such Holder’s address of record in the CVR Register. The written request must be duly executed by the Holder. Upon receipt of such written notice, the Rights Agent will promptly record the change of address in the CVR Register.
Payment Procedures; Notices.
If a Milestone is attained, then, on or prior to the applicable Milestone Determination Date, Parent shall deliver to the Rights Agent written notice indicating that a Milestone has been achieved and specifying such Milestone (a “Milestone Notice”). Parent will duly deposit or cause to be deposited with the Rights Agent, upon or prior to the delivery of the Milestone Notice, the applicable Milestone Payment Amount to be made to the Holders in accordance with the terms of this Agreement other than Equity Award Holders (with respect to which any such amounts payable shall be retained by Parent for payment pursuant to Section 2.4(b)). Such amounts shall be considered paid if on such date the Rights Agent has received in accordance with this Agreement money sufficient to pay all such amounts required by Section 4.2.
The Rights Agent will, within twenty (20) calendar days of receipt of the Milestone Notice (each such date, a “Milestone Payment Date”), send each Holder at its registered address a copy of the Milestone Notice. At the time the Rights Agent sends a copy of the Milestone Notice to the Holders, the Rights Agent will also pay the applicable Milestone Payment Amount to each of the Holders by check mailed to the address of each Holder as reflected in the CVR Register as of the close of business on the last Business Day prior to such Milestone Payment Date. Notwithstanding the foregoing, with respect to any Milestone Payment that is payable in respect of Company Equity Awards, Parent shall, as soon as reasonably practicable following the
Milestone Payment Date (but in any event no later than the second regular payroll date following the Milestone Payment Date, and in all events no later than March 15th of the year following the year in which the Milestone is attained), or shall cause the Company or an Affiliate thereof to, pay, through Parent’s or any of its Affiliate’s (including the Surviving Corporation’s) payroll system, the applicable Milestone Payment Amount to the applicable Equity Award Holder in accordance with the Merger Agreement.
Parent or its Affiliate (including the Surviving Corporation) shall be entitled to deduct and withhold, or cause the Rights Agent to deduct and withhold, from any Milestone Payment Amount or any other amounts otherwise payable pursuant to this Agreement such amounts as may be required to be deducted and withheld therefrom under applicable Tax law, as may be determined by Parent or the Rights Agent. Any such withholding shall be made, or caused to be made, by Parent through making payments with respect to Equity Award Holders through Parent’s or any of its Affiliate’s (including the Surviving Corporation’s) payroll system or any successor payroll system. To the extent any amounts are so deducted and withheld and properly remitted to the appropriate Governmental Entity, such amounts shall be treated for all purposes of this Agreement as having been paid to the Person in respect of whom such deduction and withholding was made, and as soon as practicable after any payment of such Taxes by Parent or the Rights Agent, Parent shall deliver (or shall cause the Rights Agent to deliver) to the Person to whom such amounts would otherwise have been paid an original IRS Form 1099 (or in the case of payments to Equity Award Holders, an original IRS Form W-2, if applicable) or other reasonably acceptable evidence of such withholding.
Any portion of any Milestone Payment Amount that remains undistributed to a Holder six (6) months after the date of the delivery of the Milestone Notice will be delivered by the Rights Agent to Parent, upon demand, and any Holder will thereafter look only to Parent for payment of such Milestone Payment Amount, without interest, but such Holder will have no greater rights against Parent than those accorded to general unsecured creditors of Parent under applicable law.
Neither Parent nor the Rights Agent will be liable to any person in respect of any Milestone Payment Amount delivered to a public official pursuant to any applicable abandoned property, escheat or similar law.
The indemnification provided by Parent to the Rights Agent pursuant to this Section 2.4 shall survive the resignation, replacement or removal of the Rights Agent and the termination of this Agreement.
No Voting, Dividends or Interest; No Equity or Ownership Interest in Parent.
The CVRs will not have any voting or dividend rights, and interest will not accrue on any amounts payable on the CVRs to any Holder.
The CVRs will not represent any equity or ownership interest in Parent, any constituent company to the Merger or any of their respective Affiliates. The sole right of each Holder to
receive property hereunder is the right to receive the Milestone Payment Amount, in accordance with the terms hereof.
Ability to Abandon CVR. A Holder may at any time, at such Holder’s option, abandon all of such Holder’s remaining rights in a CVR by transferring such CVR to Parent or a Person nominated in writing by Parent (with written notice thereof from Parent to the Rights Agent) without consideration therefor, and such rights will be cancelled, with the Rights Agent being promptly notified in writing by Parent of such Transfer and cancellation. Nothing in this Agreement shall prohibit Parent or any of its Affiliates from offering to acquire or acquiring any CVRs for consideration from the Holders, in private transactions or otherwise, in its sole discretion. Any CVRs acquired by Parent or any of its Affiliates shall be automatically deemed extinguished and no longer outstanding for purposes of this Agreement.
THE RIGHTS AGENT
Certain Duties and Responsibilities. The Rights Agent will not have any liability for any actions taken or not taken in connection with this Agreement, except to the extent of its willful misconduct, bad faith or gross negligence. Notwithstanding anything in this Agreement to the contrary, in no event will the Rights Agent be liable for special, punitive, indirect, incidental or consequential loss or damages of any kind whatsoever (including, without limitation, lost profits), even if the Rights Agent has been advised of the likelihood of such loss or damages and regardless of the form of action.
Certain Rights of Rights Agent. Parent hereby appoints the Rights Agent to act as rights agent for Parent in accordance with the express terms and conditions hereof and the Rights Agent undertakes to perform such duties and only such duties as are specifically set forth in this Agreement, and no implied covenants or obligations will be read into this Agreement against the Rights Agent. In addition:
the Rights Agent may rely and will be protected and held harmless by Parent in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties;
whenever the Rights Agent will deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Rights Agent may, in the absence of bad faith, gross negligence or willful misconduct on the part of the Rights Agent, rely upon an Officer’s Certificate delivered to the Rights Agent;
the Rights Agent may engage and consult with counsel of its selection and the written advice of such counsel or any written opinion of counsel will be full and complete authorization and protection to the Rights Agent and the Rights Agent shall be held harmless by Parent in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon;
the permissive rights of the Rights Agent to do things enumerated in this Agreement will not be construed as a duty;
the Rights Agent will not be required to give any note or surety in respect of the execution of such powers or otherwise in respect of the premises;
Parent agrees to indemnify the Rights Agent for, and hold the Rights Agent harmless against, any loss, liability, claim, demands, suits or expense arising out of or in connection with the Rights Agent’s duties under this Agreement, including the reasonable costs and expenses of defending the Rights Agent against any claims, charges, demands, suits or loss, unless such loss has been determined by a court of competent jurisdiction to be a result of the Rights Agent’s gross negligence, bad faith or willful misconduct; and
Parent agrees (i) to pay the fees and expenses of the Rights Agent in connection with this Agreement in accordance with the fee schedule agreed upon by the Rights Agent and Parent and incorporated herein by reference and (ii) to reimburse the Rights Agent for all Taxes and governmental charges (other than Taxes imposed on or measured by the Rights Agent’s net income and franchise or similar Taxes imposed on it (in lieu of net income Taxes)). The Rights Agent will also be entitled to reimbursement from Parent for all reasonable and necessary out-of-pocket expenses paid or incurred by it in connection with the administration by the Rights Agent of its duties hereunder.
Resignation and Removal; Appointment of Successor.
The Rights Agent may resign at any time by giving written notice thereof to Parent specifying a date when such resignation will take effect, which notice will be sent at least sixty (60) days prior to the date so specified but in no event will such resignation become effective until a successor Rights Agent has been appointed. Parent has the right to remove Rights Agent at any time by a Board Resolution specifying a date when such removal will take effect but no such removal will become effective until a successor Rights Agent has been appointed. Notice of such removal will be given by Parent to Rights Agent, which notice will be sent at least sixty (60) days prior to the date so specified.
If the Rights Agent provides notice of its intent to resign, is removed pursuant to Section 3.3(a) or becomes incapable of acting, Parent, by a Board Resolution, will promptly appoint a qualified successor Rights Agent who, unless otherwise consented to in writing by the Acting Holders, shall be a stock transfer agent of national reputation or the corporate trust department of a commercial bank. The successor Rights Agent so appointed will, forthwith upon its acceptance of such appointment in accordance with Section 3.4, become the successor Rights Agent.
Parent will give notice of each resignation and each removal of a Rights Agent and each appointment of a successor Rights Agent by mailing written notice of such event by first-class mail to the Holders as their names and addresses appear in the CVR Register. Each notice will include the name and address of the successor Rights Agent. If Parent fails to send such notice within ten (10) days after acceptance of appointment by a successor Rights Agent in accordance
with Section 3.4, the successor Rights Agent will cause the notice to be mailed at the expense of Parent.
The Rights Agent will reasonably cooperate with Parent and any successor Rights Agent in connection with the transition of the duties and responsibilities of the Rights Agent to the successor Rights Agent, including the transfer of all relevant data, including the CVR Register, to the successor Rights Agent.
Acceptance of Appointment by Successor. Every successor Rights Agent appointed pursuant to Section 3.3(b) hereunder will execute, acknowledge and deliver to Parent and to the predecessor Rights Agent an instrument accepting such appointment and a counterpart of this Agreement, and thereupon such successor Rights Agent, without any further act, deed or conveyance, will become vested with all the rights, powers, trusts and duties of the predecessor Rights Agent. On request of Parent or the successor Rights Agent, the predecessor Rights Agent will execute and deliver an instrument transferring to the successor Rights Agent all the rights, powers and trusts of the predecessor Rights Agent, but such predecessor Rights Agent shall not be required to make any additional expenditure or assume any additional liability in connection with the foregoing, unless, if requested by Rights Agent, it has been furnished with assurances of repayment or indemnity satisfactory to it.
COVENANTS
List of Holders. Parent will furnish or cause to be furnished to the Rights Agent in such form as Parent receives from the Company’s transfer agent (or other agent performing similar services for the Company), the names and addresses of the Holders (other than Holders with respect to their Company Equity Awards) within twenty (20) Business Days of the Effective Time.
Payment of Milestone Payment Amounts. If a Milestone has been achieved in accordance with this Agreement, Parent will, promptly following the delivery of the applicable Milestone Notice to the Rights Agent, deposit with the Rights Agent, for payment to the Holders in accordance with Section 2.4, the aggregate amount necessary to pay the Milestone Payment Amount to each Holder (other than the Equity Award Holders, in respect of which any Milestone Payment Amounts shall be paid in accordance with Section 2.4(b)). For the avoidance of doubt, the Milestone Payment Amount shall only be paid in respect of each given Milestone, if at all, one time under this Agreement.
Efforts to Achieve Milestones Until the earlier of (a) the seventh (7th) anniversary of the Closing and (b) the achievement of U.S. Commercial Launch, Parent shall, and shall cause its controlled Affiliates and Ultimate Parent to, use their Commercially Reasonable Efforts to (i) develop and seek FDA Approval for the Product, and (ii) following receipt of FDA Approval for the Product, achieve U.S. Commercial Launch; provided, that the use of Commercially Reasonable Efforts in accordance with this Agreement does not guarantee that Parent will obtain FDA Approval for the Product, achieve U.S. Commercial Launch, or guarantee that Parent will achieve any of the Milestones at all or by a specific date. Notwithstanding anything in this Agreement to the contrary, in no event shall Parent or any of its Affiliates be required to
undertake any level of efforts, or employ any level of resources, to (A) conduct, or commit to conduct, any additional clinical, safety or efficacy studies (including any randomized controlled trial) in connection with obtaining regulatory approvals of the Product, (B) achieve any Milestone, (C) seek regulatory approval for, maintain market availability or commercialize, the Product outside the United States or (D) develop, market or commercialize any Product at any time following achievement of U.S. Commercial Launch.
Books and Records. Parent shall, and shall cause its Affiliates to, keep true, complete and accurate records in sufficient detail to enable the Holders and the Independent Accountant to determine the amounts payable hereunder.
Status Reports. Prior to the occurrence of the U.S. Commercial Launch, within thirty (30) days after each of June 30 and December 31 in each calendar year, Parent shall provide the Rights Agent with a written report describing in reasonable detail the activities Parent and its Affiliates have undertaken in the preceding 6-month period to develop, achieve U.S. Commercial Launch of and seek FDA Approval for the Product (each, a “Status Report”).
Net Sales Statements. Following the U.S. Commercial Launch and until the earlier of (a) achievement of each of the Annual Net Sales Milestones or (b) delivery of the Net Sales Statement with respect to the final calendar quarter of the Sales Milestone Period, on or prior to the Milestone Determination Date with respect to each calendar quarter, Parent shall provide the Rights Agent with a Net Sales Statement covering the preceding four calendar quarters (or shorter period to have elapsed since the beginning of the Sales Milestone Period).
Audits.
Upon the written request of the Acting Holders provided to Parent within forty-five (45) days of the delivery of any Net Sales Statement pursuant to Section 4.6 of this Agreement (the “Review Request Period”), but no more than once during any period of four consecutive calendar quarters and not more than three times during the term of this Agreement, Parent shall permit, and shall cause its Affiliates to permit, the Independent Accountant to have access during normal business hours to such of the records of Parent or its Affiliates as may be reasonably necessary to verify the accuracy of the Net Sales Statement and the figures underlying the calculations set forth therein, provided that such access does not unreasonably interfere with the conduct of the business of Parent or any of its Affiliates. The Independent Accountant shall be charged to come to a final determination with respect to those specific items in the Net Sales Statement that the parties disagree on and submit to it for resolution. All other items in the Net Sales Statement that the parties do not submit, prior to the end of the Review Request Period, to the Independent Accountant for resolution shall be deemed to be agreed by the parties and the Independent Accountant shall not be charged with calculating or validating those agreed upon items. If issues are submitted to the Independent Accountant for resolution, Parent shall, and shall cause its Affiliates to, furnish to the Independent Accountant such access, work papers and other documents and information related to those disputed issues as the Independent Accountant may request and as are available to Parent or any other Selling Entity. The Independent Accountant shall disclose to the Acting Holders whether a Milestone was achieved and such additional information directly related to its findings. The Independent Accountant shall provide Parent
with a copy of all disclosures made to the Acting Holders. The fees charged by such accounting firm shall be paid by Parent.
If the Independent Accountant concludes that a Milestone Payment that was properly due was not paid to the Holders, Parent shall pay or cause to be paid to the Rights Agent (for further distribution to the Holders) or to each Holder the applicable Milestone Payment, plus interest on such Milestone Payment at the “prime rate” as published in the Wall Street Journal or similar reputable data source from time to time calculated from when the Milestone Payment should have been paid (if Parent had given notice of achievement of the Milestone pursuant to the terms of this Agreement), as applicable, to the date of actual payment (such amount, including interest, being the “CVR Shortfall”). The CVR Shortfall shall be paid by Parent within twenty (20) calendar days of the date the Independent Accountant’s written report is provided to Parent. Absent manifest error, the decision of the Independent Accountant shall be final, conclusive and binding on Parent and the Holders, shall be non-appealable and shall not be subject to further review.
If, upon the expiration of the applicable Review Request Period, the Acting Holders have not requested a review of the Net Sales Statement in accordance with this Section 4.7, the calculations set forth in the Net Sales Statement shall be binding and conclusive upon the Holders.
Each Person seeking to receive information from Parent in connection with a review pursuant to this Section 4.7 shall enter into, and shall cause its accounting firm to enter into, a reasonable and mutually satisfactory confidentiality agreement with Parent or any Affiliate obligating such party to retain all such information disclosed to such party in confidence pursuant to such confidentiality agreement.
Parent shall not, and shall cause its Affiliates not to, enter into any license or distribution agreement with any third party (other than Parent or its Affiliates) with respect to a Product unless such agreement contains provisions that would allow any Independent Accountant appointed pursuant to this Section 4.7 such access to the records of the other party to such license or distribution agreement as may be reasonably necessary to perform its duties pursuant to this Section 4.7; provided that Parent and its Affiliates shall not be required to amend any of its existing licenses or distribution agreements. The parties hereto agree that, if Parent or its Affiliates have exercised audit rights under any license or distribution agreement prior to the Acting Holders’ request for an audit under this Section 4.7 and under such license or distribution agreement Parent and its Affiliates cannot request another audit, the results of Parent’s prior audit of such licensee or distributor shall be used for purposes of the audit requested by the Acting Holders under this Section 4.7 and that Parent shall not have any further obligation to provide access to an Independent Accountant with respect to such licensee or distributor until such time as Parent may again exercise its rights of audit under the license or distribution agreement with such licensee or distributor.
AMENDMENTS
Amendments without Consent of Holders.
Without the consent of any Holders, Parent, when authorized by a Board Resolution, at any time and from time to time, may and the Rights Agent shall, if directed by the Parent, enter into one or more amendments hereto, for any of the following purposes:
to evidence the succession of another Person to Parent and the assumption by any such successor of the covenants of Parent herein as provided in Section 6.3;
to add to the covenants of Parent such further covenants, restrictions, conditions or provisions as Parent and the Rights Agent will consider to be for the protection of the Holders; provided that, in each case, such provisions do not adversely affect the interests of the Holders;
to cure any ambiguity, to correct or supplement any provision herein that may be defective or inconsistent with any other provision herein, or to make any other provisions with respect to matters or questions arising under this Agreement; provided that, in each case, such provisions do not adversely affect the interests of the Holders;
as may be necessary or appropriate to ensure that the CVRs are not subject to registration under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder; provided that, in each case, such provisions do not adversely affect the interests of the Holders;
to evidence the succession of another Person as a successor Rights Agent and the assumption by any such successor of the covenants and obligations of the Rights Agent herein in accordance with Sections 3.3 and 3.4;
as may be necessary to comply with or be exempt from the requirements of Section 409A of the Code;
to cancel CVRs in the event that (i) any Holder has abandoned its rights to such CVRs in accordance with Section 2.6 or (ii) following a Transfer of such CVRs to Parent or its Affiliates in accordance with Section 2.2 or Section 2.3;
as may be necessary to ensure that Parent complies with applicable Law; provided that in each case, such amendments shall not adversely affect the interests of the Holders; or
any other amendments hereto for the purpose of adding, eliminating or changing any provisions of this Agreement, unless such addition, elimination or change is adverse to the interests of the Holders.
Promptly after the execution by Parent and the Rights Agent of any amendment pursuant to the provisions of this Section 5.1, Parent will mail (or cause the Rights Agent to mail, at
Parent’s expense) a notice thereof by first class mail to the Holders at their addresses as they appear on the CVR Register, setting forth such amendment.
Amendments with Consent of Holders.
Subject to Section 5.1 (which amendments pursuant to Section 5.1 may be made without the consent of the Holders), with the consent of the Holders of at least a majority of the outstanding CVRs, whether evidenced in writing or taken at a meeting of the Holders, Parent, when authorized by a Board Resolution, and the Rights Agent may enter into one or more amendments hereto for the purpose of adding, eliminating or changing any provisions of this Agreement, even if such addition, elimination or change is materially adverse to the interest of the Holders; provided, however, that no such amendment shall, without the consent of the Holders of sixty-five percent (65%) of the outstanding CVRs:
modify in a manner adverse to the Holders (A) any provision contained herein with respect to the termination of this Agreement or the CVRs, (B) the time for, and amount of, any payment to be made to the Holders pursuant to this Agreement, or (C) the Milestones;
reduce the number of CVRs (except as contemplated by Section 5.1(a)(vii)); or
modify any provisions of this Section 5.2, except to increase the percentage of Holders from whom consent is required or to provide that certain provisions of this Agreement cannot be modified or waived without the consent of the Holder of each outstanding CVR affected thereby.
Promptly after the execution by Parent and the Rights Agent of any amendment pursuant to the provisions of this Section 5.2, Parent will mail (or cause the Rights Agent to mail, at Parent’s expense) a notice thereof by first class mail to the Holders at their addresses as they appear on the CVR Register, setting forth such amendment.
Execution of Amendments. In executing any amendment permitted by this Article V, the Rights Agent will be entitled to receive, and will be fully protected in relying upon, an opinion of counsel selected by Parent stating that the execution of such amendment is authorized or permitted by this Agreement. The Rights Agent may, but is not obligated to, enter into any such amendment that affects the Rights Agent’s own rights, privileges, covenants or duties under this Agreement or otherwise, including any amendments pursuant to Section 5.1(a)(viii).
Effect of Amendments. Upon the execution of any amendment under this Article V, this Agreement will be modified in accordance therewith, such amendment will form a part of this Agreement for all purposes and every Holder will be bound thereby.
OTHER PROVISIONS OF GENERAL APPLICATION
Notices to Rights Agent and Parent. Any notice or other communication required or permitted hereunder shall be in writing and shall be deemed given when delivered in person, by
overnight courier, by email (with receipt confirmed by telephone) or two (2) Business Days after being sent by registered or certified mail (postage prepaid, return receipt requested), as follows:
If to the Rights Agent, to it at:
[●]
[●]
Attention: [●]
Email: [●]
with copies to:
[●]
[●]
Attention: [●]
Email: [●]
and
Latham & Watkins LLP
330 N Wabash Ave, Suite 2800
Chicago, IL 60613
Attention: Christopher R. Drewry
Max Schleusener
Email: Christopher.Drewry@lw.com
Max.Schleusener@lw.com
If to Parent, to it at:
Indivior Inc.
10710 Midlothian Tpke, Suite 125
North Chesterfield, VA 23235
Attention: General Counsel
Email: Legal@Indivior.com
with a copy to:
Covington & Burling LLP
The New York Times Building
620 Eighth Avenue
New York, NY 10018-1405
Attention: Andrew Ment
Email: ament@cov.com
The Rights Agent or Parent may specify a different address or facsimile number by giving notice in accordance with this Section 6.1.
Notice to Holders. Where this Agreement provides for notice to Holders, such notice will be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, to each Holder affected by such event, at the Holder’s address as it appears in the CVR Register, not later than the latest date, and not earlier than the earliest date, if any, prescribed for the giving of such notice. In any case where notice to Holders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Holder will affect the sufficiency of such notice with respect to other Holders.
Parent Successors and Assigns. Parent may assign any or all of its rights, interests and obligations hereunder to (a) in its sole discretion and without the consent of any other party, (i) any controlled Affiliate of Parent, but only for so long as it remains a controlled Affiliate of Parent, (ii) to any purchaser or licensee of substantial rights to OPNT003 or (b) with the prior written consent of the Acting Holders, any other Person (any permitted assignee under clause (a) or (b), an “Assignee”), in each case provided that the Assignee agrees to assume and be bound by all of the terms of this Agreement. Any Assignee may thereafter assign any or all of its rights, interests and obligations hereunder in the same manner as Parent pursuant to the prior sentence. In connection with any assignment to an Assignee described in clause (a) above in this Section 6.3, Parent (and such other assignor, if applicable) shall agree to remain liable for the performance by each Assignee (and such other assignor, if applicable) of all obligations of Parent hereunder (provided that no assignor shall be obligated with respect to any amendment to the obligations hereunder effected following such assignee’s assignment). This Agreement will be binding upon, inure to the benefit of and be enforceable by Parent’s successors and each Assignee. Each of Parent’s successors and Assignees shall expressly assume by an instrument supplemental hereto, executed and delivered to the Rights Agent, the due and punctual payment of the CVRs and the due and punctual performance and observance of all of the covenants and obligations of this Agreement to be performed or observed by Parent. Unless a successor assignee meets the requirements set forth in Section 3.3(b) and, as of the date of such assignment, is an Affiliate of the Rights Agent, the Rights Agent may not assign this Agreement without Parent’s written consent. Any attempted assignment of this Agreement or any such rights in violation of this Section 6.3 shall be void and of no effect.
Benefits of Agreement. Nothing in this Agreement, express or implied, will give to any Person (other than the Rights Agent and its successors and assigns, Parent, Parent’s successors and Assignees, the Holders and the Holders’ successors and assigns pursuant to a Permitted Transfer) any benefit or any legal or equitable right, remedy or claim under this Agreement or under any covenant or provision herein contained, all such covenants and provisions being for the sole benefit of the foregoing. The rights of Holders and their successors and assigns pursuant to Permitted Transfers are limited to those expressly provided in this Agreement and the Merger Agreement. Notwithstanding anything to the contrary contained herein, any Holder or Holder’s successor or assign pursuant to a Permitted Transfer may agree to renounce, in whole or in part, its rights under this Agreement by written notice to the Rights Agent and Parent, which notice, if given, shall be irrevocable.
Governing Law; Jurisdiction; Waiver of Jury Trial
This Agreement, the CVRs and all actions arising under or in connection therewith shall be governed by and construed in accordance with the laws of the State of Delaware, regardless of the laws that might otherwise govern under applicable principles of conflicts of law thereof.
Each of the parties hereto (i) irrevocably and unconditionally consents and submits to the exclusive jurisdiction and venue of the Chancery Court of the State of Delaware and any state appellate court therefrom or, if (but only if) such court lacks subject matter jurisdiction, the United States District Court sitting in New Castle County in the State of Delaware and any appellate court therefrom (collectively, the “Delaware Courts”); and (ii) consents to service of process by first class certified mail, return receipt requested, postage prepaid, to the address at which such party is to receive notice in accordance with Section 6.1. Each of the parties irrevocably and unconditionally (1) agrees not to commence any such action or proceeding except in the Delaware Courts, (2) agrees that any claim in respect of any such action or proceeding may be heard and determined in the Delaware Courts, (3) waives, to the fullest extent it may legally and effectively do so, any objection that it may now or hereafter have to the jurisdiction or laying of venue of any such action or proceeding in the Delaware Courts and (4) waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in the Delaware Courts.
EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING BETWEEN THE PARTIES (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE), INCLUDING ANY COUNTERCLAIM, ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THE ACTIONS OF ANY PARTY IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT THEREOF. EACH PARTY HERETO (A) MAKES THIS WAIVER VOLUNTARILY AND (B) ACKNOWLEDGES THAT SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS CONTAINED IN THIS SECTION 6.5(C).
Severability. If any provision of this Agreement is held invalid or unenforceable by any court of competent jurisdiction, the other provisions of this Agreement shall remain in full force and effect. Any provision of this Agreement held invalid or unenforceable only in part or degree shall remain in full force and effect to the extent not held invalid or unenforceable. The parties further agree to replace such invalid or unenforceable provision of this Agreement with a valid and enforceable provision that will achieve, to the extent possible, the economic, business and other purposes of such invalid or unenforceable provision.
Counterparts and Signature. This Agreement may be executed in two or more counterparts (including by facsimile or by an electronic scan delivered by electronic mail), each of which shall be deemed an original but all of which together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each of the parties hereto and delivered to the other party, it being understood that the parties need not sign the same counterpart.
Termination. This Agreement will be terminated and of no force or effect, the parties hereto will have no liability hereunder (including the monies due and owing by Parent to Rights Agent) and no payments will be required to be made, upon the earliest to occur of (a) the mailing by the Rights Agent to the address of each Holder as reflected in the CVR Register the full amount of all potential Milestone Payment Amounts required to be paid under the terms of this Agreement, (b) the delivery of a written notice of termination duly executed by Parent and the Acting Holders, (c) expiration of the Review Request Period following the expiration of the Sales Milestone Period (provided no written request is received during such Review Request Period pursuant to Section 4.7(a)), (d) if a written request is received during the Review Request Period immediately following the expiration of the Sales Milestone Period, the decision of the Independent Accountant (and, if applicable, payment of any CVR Shortfall as determined to be owing by the Independent Accountant) pursuant to Section 4.7(a).
Entire Agreement. This Agreement (including the fee schedule referred to in Section 3.2(g)) and the Merger Agreement contains the entire understanding of the parties hereto with reference to the transactions and matters contemplated hereby and supersedes all prior agreements, written or oral, between the parties hereto.
Legal Holiday. In the event that a Milestone Payment Date shall not be a Business Day, then, notwithstanding any provision of this Agreement to the contrary, any payment required to be made in respect of the CVRs on such date need not be made on such date, but may be made on the next succeeding Business Day with the same force and effect as if made on the applicable Milestone Payment Date.
Force Majeure. Notwithstanding anything to the contrary contained herein, the Rights Agent shall not be liable for any delays or failures in performance resulting from acts beyond its reasonable control including, without limitation, acts of God, terrorist acts, shortage of supply, breakdowns or malfunctions, interruptions or malfunctions of any utilities, communications, or computer facilities, or loss of data due to power failures or mechanical difficulties with information storage or retrieval systems, labor difficulties, war or civil unrest.
[Remainder of page intentionally left blank]
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be executed on its behalf by its duly authorized officers as of the day and year first above written.
| | | | | | | | |
| INDIVIOR INC. | |
| | |
| | |
| By: | | |
| Name: | | |
| Title: | | |
| | | | | | | | |
| [RIGHTS AGENT] | |
| | |
| | |
| By: | | |
| Name: | | |
| Title: | | |
[Signature Page to Contingent Value Rights Agreement]
PORTIONS OF THIS EXHIBIT HAVE BEEN REDACTED.
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS BOTH (i) NOT MATERIAL AND (ii) WOULD BE LIKELY TO CAUSE COMPETITIVE HARM IF PUBLICLY DISCLOSED.
REDACTED MATERIAL IS MARKED WITH [***].
CONTINGENT VALUE RIGHTS AGREEMENT
THIS CONTINGENT VALUE RIGHTS AGREEMENT, dated as of March 2, 2023, (this “Agreement”), is entered into by and between Indivior Inc., a Delaware corporation (“Parent”), and Computershare Inc. (“Computershare”) and its affiliate, Computershare Trust Company, N.A., together, as Rights Agent (in such capacity, the “Rights Agent”).
RECITALS
WHEREAS, Parent, Olive Acquisition Subsidiary, Inc., a Delaware corporation (“Merger Sub”), and Opiant Pharmaceuticals, Inc., a Delaware corporation (the “Company”), have entered into an Agreement and Plan of Merger, dated as of November 13, 2022 (as it may be amended or supplemented from time to time pursuant to the terms thereof, the “Merger Agreement”), pursuant to which Merger Sub will merge with and into the Company (the “Merger”), with the Company surviving the Merger as a subsidiary of Parent;
WHEREAS, pursuant to the Merger Agreement, Parent has agreed to provide to the holders of shares of Company Common Stock (excluding the holders of any Dissenting Shares), the holders of Company Warrants that are cancelled as of the Effective Time pursuant to the Merger Agreement, the holders of the Convertible Notes that are converted as of the Effective Time, the holders of In the Money Options, Company RSU Awards and Company PSU Awards immediately prior to the Effective Time that are validly converted into Merger Consideration pursuant to terms set forth in the Merger Agreement, the right to receive contingent cash payments (each, a “CVR”) as hereinafter described; and
WHEREAS, pursuant to this Agreement, the maximum potential amount payable per CVR (as hereinafter defined) is $8.00 in cash, without interest.
NOW, THEREFORE, in consideration of the foregoing and the consummation of the transactions referred to above, Parent and Rights Agent agree, for the equal and proportionate benefit of all Holders, as follows:
ARTICLE I
DEFINITIONS; CERTAIN RULES OF CONSTRUCTION
Section 1.1 Definitions. Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in the Merger Agreement. As used in this Agreement, the following terms will have the following meanings:
“225M Annual Net Sales Milestone” means, during the Sales Milestone Period, the first achievement in any Sales Measurement Period of worldwide Net Sales of the Product exceeding $225,000,000.
“225M Annual Net Sales Milestone Payment” means $2.00 per CVR.
“300M Annual Net Sales Milestone” means, during the Sales Milestone Period, the first achievement in any Sales Measurement Period of worldwide Net Sales of the Product exceeding
$300,000,000.
“300M Annual Net Sales Milestone Payment” means $2.00 per CVR.
“325M Annual Net Sales Milestone” means, during the Sales Milestone Period, the first achievement in any Sales Measurement Period of worldwide Net Sales of the Product exceeding
$325,000,000.
“325M Annual Net Sales Milestone Payment” means $2.00 per CVR.
“Acting Holders” means, at the time of determination, Holders of at least thirty percent (30%) of the outstanding CVRs as set forth in the CVR Register.
“Affiliate” of any particular Person means any other Person controlling, controlled by or under common control with such particular Person. For the purposes of this definition, “controlling,” “controlled” and “control” mean the possession, directly or indirectly, of the power to direct the management and policies of a Person whether through the ownership of voting securities, contract or otherwise.
“Annual Net Sales Milestone” means any of the 225M Annual Net Sales Milestone, the 300M Annual Net Sales Milestone or the 325M Annual Net Sales Milestone.
“Authorized Representative” means an employee of Parent with the title of President, Vice President, Secretary, Treasurer or Assistant Treasurer, or a director of Ultimate Parent, as the case may be.
“Board of Directors” means the board of directors of Ultimate Parent.
“Board Resolution” means a copy of a resolution certified by an Authorized Representative of the Ultimate Parent to have been duly adopted by the Board of Directors and to be in full force and effect on the date of such certification, and delivered to the Rights Agent.
“Business Day” means any day other than a Saturday, Sunday or a day on which banking institutions in New York, New York, or London, United Kingdom, are authorized or obligated by law or executive order to remain closed.
“Code” shall mean the Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder.
“Commercially Reasonable Efforts” means, with respect to the performance of development activities with respect to the Product, the carrying out of such activities using reasonable and diligent efforts in good faith and the expending of such resources that Parent would expend with respect to a product candidate at a similar stage in its development or product life as the Product, considering conditions then prevailing and taking into account, without limitation, issues of safety and efficacy, expected time to develop, market potential, anticipated pricing and reimbursement rates, costs, expected profitability (including development costs, intellectual property defense costs, distribution and logistics, marketing and promotional expense and all other costs associated with the Product), anticipated product labeling, pricing reimbursement, methods of distribution, the competitiveness of alternative products in the marketplace or under development, market exclusivity (including the patent, regulatory and other proprietary position of the Product), the applicable regulatory environment, anticipated timing of commercial entry, and all other relevant commercial, financial, technical, legal, scientific and/or medical factors. For the avoidance of doubt, Commercially Reasonable Efforts will not mean that a party guarantees that it will actually obtain FDA Approval of the Product or to achieve U.S. Commercial Launch, and a failure to obtain FDA Approval of the Product or to achieve U.S. Commercial Launch may still be consistent with Commercially Reasonable Efforts.
“CVR Shortfall” has the meaning set forth in Section 4.7(b).
“DTC” means The Depository Trust Company or any successor thereto.
“Early Achievement Milestone” means, during the Early Achievement Period, the first achievement in any Sales Measurement Period of worldwide Net Sales of the Product exceeding
$250,000,000. For the avoidance of doubt, the Early Achievement Milestone cannot be achieved following the expiration of the Early Achievement Period.
“Early Achievement Milestone Payment” means $2.00 per CVR.
“Early Achievement Period” means the period beginning at the beginning of the Sales Milestone Period and ending on the third (3rd) anniversary thereof.
“Entity” means any corporation (including any non-profit corporation), general partnership, limited partnership, limited liability partnership, joint venture, estate, trust, company (including any company limited by shares, limited liability company or joint stock company), firm, society or other enterprise, association, organization or entity.
“Equity Award Holders” means the Holders of CVRs granted with respect to Company Stock Options, Company RSU Awards and Company PSU Awards.
“FDA” means the United States Food and Drug Administration, or any successor agency. “FDA Approval” means written receipt from the FDA of approval for marketing
a Product in the United States with an approved label including an indication for the Opioid Overdose Indication.
“GAAP” means, with respect to Parent, either (a) generally accepted accounting principles in the United States or (b) International Financial Reporting Standards, in either case, which principals or standards are currently used at the applicable time by Ultimate Parent in the preparation of the consolidated financial statements of Ultimate Parent included the Annual Report and Accounts of Ultimate Parent, and as applied by the Ultimate Parent for external reporting in its primary listed market.
“Governmental Body” means any: (a) nation, state, commonwealth, province, territory, county, municipality, district or other jurisdiction of any nature; (b) federal, state, local, municipal, foreign or other government; or (c) governmental or quasi-governmental authority of any nature including any governmental division, department, agency, commission, instrumentality, official, ministry, fund, foundation, center, organization, unit, body or Entity and any court, arbitrator or other tribunal.
“Holder” means a Person in whose name a CVR is registered in the CVR Register at the applicable time.
“Independent Accountant” means an independent certified public accounting firm of nationally recognized standing designated either (a) jointly by the Acting Holders and Parent, or
(b) if such parties fail to make a designation, jointly by an independent public accounting firm selected by Parent and an independent public accounting firm selected by the Acting Holders.
“Milestone” means any of the Annual Net Sales Milestones or the Early Achievement Milestone.
“Milestone Determination Date” means, with respect to any Milestone, the date that is sixty (60) days following the last day of the Sales Measurement Period in which such Milestone was achieved.
“Milestone Payment” means any of the 225M Annual Net Sales Milestone Payment, the 300M Annual Net Sales Milestone Payment, the 325M Annual Net Sales Milestone Payment or the Early Achievement Milestone Payment.
“Milestone Payment Amount” means, in respect of a Milestone, for a given Holder, the product of (a) the Milestone Payment in respect of such Milestone and (b) the number of CVRs held by such Holder as reflected on the CVR Register as of the close of business on the date of the applicable Milestone Notice.
“Milestone Payment Date” has the meaning set forth in Section 2.4(b).
“Net Sales” means the gross amount charged or invoiced by each Selling Entity for the Product sold to third parties, plus any additional amount pursuant to the proviso contained in clause (6) of the definition of “Permitted Deductions”, less the Permitted Deductions, all as
determined in accordance with the Selling Entity’s usual and customary accounting methods consistent with the treatment of other branded prescription products commercialized by the applicable Selling Entity, which shall be in accordance with GAAP, including the accounting methods for translating activity denominated in foreign currencies into United States dollar amounts. In the case of any sale of the Product between or among Parent, its Affiliates, licensees and sublicensees, for resale, Net Sales will be calculated as above only on the value charged or invoiced on the first arm’s- length sale thereafter to a third party. If a Product is sold or otherwise commercially disposed of for consideration other than cash or in a transaction that is not at arm’s length between the buyer of such Product and the applicable Selling Entity (other than with respect to Products supplied expressly for sampling purposes), then the gross amount to be included in the calculation of Net Sales shall be the amount that would have been received had the transaction been conducted at arm’s length and for cash. Such amount that would have been received shall be determined, wherever possible, by reference to the average selling price of such Product in arm’s length transactions in the relevant jurisdiction for that type of customer (Governmental Entity, retail, etc.). Notwithstanding the foregoing, the following shall not be included in Net Sales: (i) Product provided for administration to patients enrolled in clinical trials or for other research purposes, or(ii) Product provided without consideration or for nominal consideration for any bona fide charitable, compassionate use or indigent patient program purpose or as a sample.
“Net Sales Statement” means, for a given Sales Measurement Period, a written statement of Parent, setting forth with reasonable detail (a) a delineation and calculation of Net Sales during such Sales Measurement Period, (b) a delineation and calculation of the Permitted Deductions during such Sales Measurement Period, and (c) to the extent that sales for the Product is recorded in currencies other than United States dollars during such Sales Measurement Period, the exchange rates used for conversion of such foreign currency into United States dollars.
“Officer’s Certificate” means a certificate signed by an Authorized Representative of Parent or Ultimate Parent, as applicable, in such capacity, and delivered to the Rights Agent.
“Opioid Overdose Indication” means the complete or partial reversal of opioid drug effects, including respiratory depression, induced by either natural or synthetic opioids and for the emergency treatment of known or suspected opioid overdose.
“OPNT003” shall mean an intranasal formulation of nalmefene.
“Permitted Deductions” means, to the extent not already excluded from Net Sales, the following deductions that are either included in the billing as a line item as part of the amount charged or invoiced, or otherwise documented as a deduction and accrued in accordance with GAAP specifically attributable to sales of the Product:
(1) normal and customary trade, quantity and prompt settlement discounts;
(2) accrued price reductions or discounts by reasons of defects, recalls, returns, rebates or allowances of goods or because of retroactive price reductions specifically attributable to the Product;
(3) chargebacks, rebates (or the equivalent thereof) and other amounts accrued on sale of the Product, including such amounts mandated by programs of Governmental Entities;
(4) accruals for rebates (or the equivalent thereof) and administrative fees payable to medical healthcare organizations, to group purchasing organizations or to trade customers in line with approved contract terms or other normal and customary understandings and arrangements; and
(5) accruals for tariffs, duties, excise, sales, value-added and other Taxes (other than Taxes based on net income) and charges of Governmental Entities;
(6) bad debts not exceeding five percent (5%) of the value of the sales of Product during the then-current calendar year, provided that any recovery of bad debts shall be included in Net Sales in the period in which recovered;
(7) transportation, freight, postage, importation, insurance and other handling expenses to the extent included in gross amounts invoiced;
(8) discounts pursuant to patient discount programs and coupon discounts;
(9) accruals for amounts payable to wholesalers for services related to sales or distribution of the Product; and
(10) accruals for distribution commissions and fees (including administrative fees and fees related to services provided pursuant to distribution service agreements with wholesalers, fee- for-service wholesaler fees and inventory management fees) payable to any third party providing distribution services to the Selling Entities.
For the avoidance of doubt, if a single item falls into more than one of the categories set forth in clauses (1) through (10) above, such item may not be deducted more than once.
True-ups, changes in estimate, and other adjustments to Permitted Deduction amounts (whether positive or negative) shall be included in Permitted Deductions in the calendar quarter as such items are recorded in accordance with GAAP.
“Permitted Transfer” means: a Transfer of CVRs (a) upon death of a Holder by will or intestacy; (b) pursuant to a court order; (c) by operation of law (including by consolidation or merger) or without consideration in connection with the dissolution, liquidation or termination of any corporation, limited liability company, partnership or other Person; or (d) in the case of CVRs held in book-entry or other similar nominee form, from a nominee to a beneficial owner and, if applicable, through an intermediary, to the extent allowable by DTC.
“Person” means any individual, Entity or Governmental Entity.
“Product” means any pharmaceutical product combined with an intranasal delivery device that contain(s) OPNT003 as an active pharmaceutical ingredient, alone or in combination with one or more additional active pharmaceutical ingredients and formulated for intranasal administration.
“Rights Agent” means the Rights Agent named in the first paragraph of this Agreement, until a successor Rights Agent will have become such pursuant to the applicable provisions of this Agreement, and thereafter “Rights Agent” will mean such successor Rights Agent.
“Sales Measurement Period” means any four (4) consecutive calendar quarters commencing with the first calendar quarter of the Sales Milestone Period.
“Sales Milestone Period” means the period beginning with the U.S. Commercial Launch (provided that if the U.S. Commercial Launch occurs less than forty-five (45) days prior to the end of the calendar quarter, then the period beginning with the first day of the first calendar quarter immediately following the quarter in which the U.S. Commercial Launch occurred) and ending on the seventh (7th) anniversary of the beginning of such period.
“Selling Entity” means Parent, any Assignee and each of their respective Affiliates, licensees and sublicensees with respect to rights to develop or commercialize the Product, and any direct or indirect transferee, successor or assignee (including through any change of control) of the rights to sell the Product of any of the foregoing (but not a distributor of the Product acting solely in the capacity of a distributor and not otherwise an Assignee, licensee or sublicensee with respect to development or commercialization rights as to the Product or transferee, successor or assignee of the rights to sell the Product).
“Status Report” has the meaning set forth in Section 4.5.
“Tax” shall mean any tax (including any income tax, franchise tax, capital gains tax, gross receipts tax, value-added tax, surtax, estimated tax, unemployment tax, national health insurance tax, excise tax, premium, alternative or minimum tax, ad valorem tax, transfer tax, stamp tax, sales tax, use tax, property tax, business tax, escheat or unclaimed property, withholding tax or payroll tax), levy, assessment, tariff, impost, imposition, duty (including any customs duty) or other tax or charge of any kind whatsoever, including any charge or amount (including any fine, penalty, interest or other additions thereto) related thereto, imposed, assessed or collected by or under the authority of any Governmental Body, including as a result of being or having been a member of an affiliated, consolidated, controlled, fiscal, combined, unitary or aggregate group or being a transferee of or successor to any Person or as a result of any express obligation to assume such Taxes or to indemnify any other Person.
“Transfer” means any transfer, pledge, hypothecation, encumbrance, assignment or other disposition (whether by sale, merger, consolidation, liquidation, dissolution, dividend, distribution or otherwise), the offer to make such a transfer or other disposition, and each contract, arrangement or understanding, whether or not in writing, to effect any of the foregoing.
“U.S. Commercial Launch” means the first sale for monetary value for commercial use in the United States in an arm’s length transaction to a third party by a Selling Entity of the Product whose approved label includes an indication for the Opioid Overdose Indication following receipt of FDA Approval of the Product. U.S. Commercial Launch may only be achieved once and only for the first Product to satisfy the foregoing conditions.
“Ultimate Parent” means Indivior plc, a company registered under the laws of England and Wales, and an Affiliate of Parent, or the successor thereto.
Section 1.2 Rules of Construction. Except as otherwise explicitly specified to the contrary, (a) references to a Section means a Section of this Agreement unless another agreement is specified, (b) the word “including” (in its various forms) means “including without limitation,” (c) references to a particular statute or regulation include all rules and regulations thereunder and any successor statute, rules or regulation, in each case as amended or otherwise modified from time to time, (d) words in the singular or plural form include the plural and singular form, respectively, (e) references to a particular Person include such Person’s successors and assigns to the extent not prohibited by this Agreement and (f) all references to dollars or “$” refer to United States dollars.
ARTICLE II
CONTINGENT VALUE RIGHTS
Section 2.1 CVRs. The CVRs represent the rights of Holders to receive contingent cash payments pursuant to this Agreement. The initial Holders will be the holders of shares of Company Common Stock (excluding the holders of any Dissenting Shares), the holders of Company Warrants that are cancelled as of the Effective Time pursuant to the Merger Agreement, the holders of the Convertible Notes that are converted as of the Effective Time, and the holders of In the Money Options, Company RSU Awards and Company PSU Awards immediately prior to the Effective Time that are validly converted into Merger Consideration pursuant to terms set forth in the Merger Agreement. A list of all the initial Holders shall be furnished to the Rights Agent by or on behalf of Parent in accordance with Section 4.1 hereof.
Section 2.2 Nontransferable. The CVRs may not be sold, assigned, Transferred, pledged, encumbered or in any other manner transferred or disposed of, in whole or in part, other than through a Permitted Transfer. Any attempted Transfer, pledge, encumbrance or disposition of CVRs, in whole or in part, in violation of this Section 2.2 shall be void ab initio and of no effect. Section 2.3 No Certificate; Registration; Registration of Transfer; Change of Address.
(a) The CVRs will not be evidenced by a certificate or other instrument.
(b) The Rights Agent will keep a register (the “CVR Register”) for the purpose of registering CVRs and Permitted Transfers thereof. The CVR Register will initially show one position for Cede & Co. representing all the CVRs provided to the holders of shares of Company Common Stock held by DTC on behalf of the street holders of the shares of Company Common Stock held by such holders as of immediately prior to the Effective Time. The Rights Agent will have no responsibility whatsoever to the street name holders with respect to Transfers of CVRs unless and until such CVRs are Transferred into the name of such street name holders in accordance with Section 2.2 of this Agreement. With respect to any payments to be made under Section 2.4 below, the Rights Agent will accomplish the payment to any
former street name holders of shares of Company Common Stock by sending one lump-sum payment to DTC. The Rights Agent will have no responsibilities whatsoever with regard to the distribution of payments by DTC to such street name holders.
(c) Subject to the restrictions on transferability set forth in Section 2.2, every request made to Transfer a CVR must be in writing and accompanied by a written instrument of Transfer and other reasonably requested documentation in form reasonably satisfactory to the Rights Agent pursuant to its guidelines, duly executed by the Holder thereof, the Holder’s attorney or other personal representative duly authorized in writing or the Holder’s survivor, and setting forth in reasonable detail the circumstances relating to the Transfer. Promptly upon receipt of such written notice from such Holder, and in any event within ten (10) Business Days of receipt of such written notice, the Rights Agent will, subject to its reasonable determination that the Transfer instrument is in proper form, notify Parent that it has received such written notice. Promptly upon receipt of such notice from the Rights Agent, and in any event within ten (10) Business Days of receipt of such notice, Parent shall, subject to its reasonable determination that the Transfer otherwise complies with the other terms and conditions of this Agreement (including the provisions of Section 2.2), instruct the Rights Agent in writing to register the Transfer of the CVRs in the CVR Register. The Rights Agent shall not be obligated to undertake any action with respect to the Transfer of the CVRs until it shall have been provided with such additional information or material as it may reasonably require to determine that the Transfer complies with the terms and conditions of this Agreement. No service charge shall be required of a Holder or its representative or survivor for any Transfer of a CVR, but Parent and Rights Agent may require payment of a sum sufficient to cover any stamp or other Tax or governmental charge that is imposed in connection with any such registration of Transfer. The Rights Agent shall have no duty or obligation to take any action under any section of this Agreement that requires the payment by a Holder of applicable Taxes or charges unless and until the Rights Agent is satisfied that all such Taxes or charges have been paid. All duly Transferred CVRs registered in the CVR Register will be the valid obligations of Parent and will entitle the transferee to the same benefits and rights under this Agreement as those held immediately prior to the Transfer by the transferor. No Transfer of a CVR will be valid until registered in the CVR Register in accordance with this Agreement. (d) A Holder may make a written request to the Rights Agent to change such Holder’s address of record in the CVR Register. The written request must be duly executed by the Holder. Upon receipt of such written request, the Rights Agent will promptly record the change of address in the CVR Register.
Section 2.4 Payment Procedures; Notices.
(a) If a Milestone is attained, then, on or prior to the applicable Milestone Determination Date, Parent shall deliver to the Rights Agent written notice indicating that a Milestone has been achieved and specifying such Milestone and the applicable Milestone Payment Amount (a “Milestone Notice”). Parent will duly deposit or cause to be deposited with the Rights Agent, upon or prior to the delivery of the Milestone Notice, the applicable Milestone Payment Amount to be made to the Holders in accordance with the terms of this Agreement other than Equity Award Holders (with respect to which any such amounts payable
shall be retained by Parent for payment pursuant to Section 2.4(b)) and instruct the Rights Agent to deliver the Milestone Payment Amount to the Holders (other than Equity Award Holders). Such amounts shall be considered paid if on such date the Rights Agent has received in accordance with this Agreement money sufficient to pay all such amounts required by Section 4.2. (b) The Rights Agent will, within twenty (20) calendar days of receipt of the Milestone Notice (each such date, a “Milestone Payment Date”), send each Holder at its registered address a copy of the Milestone Notice. At the time the Rights Agent sends a copy of the Milestone Notice to the Holders, the Rights Agent will also pay the applicable Milestone Payment Amount (less any applicable tax withholding) to each of the Holders (other than Equity Award Holders) by check mailed to the address of each Holder as reflected in the CVR Register as of the close of business on the last Business Day prior to such Milestone Payment Date. Notwithstanding the foregoing, with respect to any Milestone Payment that is payable in respect of Company Equity Awards, Parent shall, as soon as reasonably practicable following the Milestone Payment Date (but in any event no later than the second regular payroll date following the Milestone Payment Date, and in all events no later than March 15th of the year following the year in which the Milestone is attained), or shall cause the Company or an Affiliate thereof to, pay, through Parent’s or any of its Affiliate’s (including the Surviving Corporation’s) payroll system, the applicable Milestone Payment Amount to the applicable Equity Award Holder in accordance with the Merger Agreement.
(c) Parent or its Affiliate (including the Surviving Corporation) shall be entitled to deduct and withhold, or cause the Rights Agent to deduct and withhold, from any Milestone Payment Amount or any other amounts otherwise payable pursuant to this Agreement such amounts as may be required to be deducted and withheld therefrom under applicable Tax law, as may be determined by Parent or the Rights Agent. Any such withholding shall be made, or caused to be made, by Parent through making payments with respect to Equity Award Holders through Parent’s or any of its Affiliate’s (including the Surviving Corporation’s) payroll system or any successor payroll system. To the extent any amounts are so deducted and withheld and properly remitted to the appropriate Governmental Entity, such amounts shall be treated for all purposes of this Agreement as having been paid to the Person in respect of whom such deduction and withholding was made, and as soon as practicable after any payment of such Taxes by Parent or, at the written instruction of the Parent, the Rights Agent, Parent shall deliver (or shall cause the Rights Agent to deliver) to the Person to whom such amounts would otherwise have been paid an original IRS Form 1099 (or in the case of payments to Equity Award Holders, an original IRS Form W-2, if applicable) or other reasonably acceptable evidence of such withholding.
(d) Any portion of any Milestone Payment Amount that remains undistributed to a Holder six (6) months after the date of the delivery of the Milestone Notice will be delivered by the Rights Agent to Parent, upon demand, and any Holder will thereafter look only to Parent for payment of such Milestone Payment Amount, without interest, but such Holder will have no greater rights against Parent than those accorded to general unsecured creditors of Parent under applicable law.
(e) Neither Parent nor the Rights Agent will be liable to any person in respect of any Milestone Payment Amount delivered to a public official pursuant to any applicable abandoned property, escheat or similar law.
(f) The indemnification provided by Parent to the Rights Agent pursuant to this Section 2.4 shall survive the resignation, replacement or removal of the Rights Agent and the termination of this Agreement.
Section 2.5 No Voting, Dividends or Interest; No Equity or Ownership Interest in Parent.
(a) The CVRs will not have any voting or dividend rights, and interest will not accrue on any amounts payable on the CVRs to any Holder.
(b) The CVRs will not represent any equity or ownership interest in Parent, any constituent company to the Merger or any of their respective Affiliates. The sole right of each Holder to receive property hereunder is the right to receive the Milestone Payment Amount, in accordance with the terms hereof.
Section 2.6 Ability to Abandon CVR. A Holder may at any time, at such Holder’s option, abandon all of such Holder’s remaining rights in a CVR by transferring such CVR to Parent or a Person nominated in writing by Parent (with written notice thereof from Parent to the Rights Agent) without consideration therefor, and such rights will be cancelled, with the Rights Agent being promptly notified in writing by Parent of such Transfer and cancellation. Nothing in this Agreement shall prohibit Parent or any of its Affiliates from offering to acquire or acquiring any CVRs for consideration from the Holders, in private transactions or otherwise, in its sole discretion. Any CVRs acquired by Parent or any of its Affiliates shall be automatically deemed extinguished and no longer outstanding for purposes of this Agreement.
ARTICLE III
THE RIGHTS AGENT
Section 3.1 Certain Duties and Responsibilities. The Rights Agent will be authorized and protected and will not have any liability for or in respect of any actions taken, suffered or omitted to be taken by it in connection with its acceptance and administration of this Agreement and the exercise and performance of its duties hereunder, except to the extent of its willful misconduct, bad faith or gross negligence (each as determined by a final non-appealable judgment of a court of competent jurisdiction). Notwithstanding anything in this Agreement to the contrary, in no event will the Rights Agent be liable for special, punitive, indirect, incidental or consequential loss or damages of any kind whatsoever (including, without limitation, lost profits), even if the Rights Agent has been advised of the likelihood of such loss or damages and regardless of the form of action.
Section 3.2 Certain Rights of Rights Agent. Parent hereby appoints the Rights Agent to act as rights agent for Parent in accordance with the express terms and conditions hereof and the Rights Agent undertakes to perform such duties and only such duties as are specifically set forth in this Agreement, and no implied duties, covenants or obligations will be read into this
Agreement against the Rights Agent. The Rights Agent shall not assume any obligations or relationship of agency or trust with any Holder. In addition:
(a) the Rights Agent may rely and will be protected and held harmless by Parent in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties;
(b) whenever the Rights Agent will deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Rights Agent may, request and rely upon an Officer’s Certificate with respect to such matter delivered to the Rights Agent, which Officer’s Certificate shall be full authorization and protection to the Rights Agent, and the Rights Agent shall, in the absence of gross negligence, bad faith or willful or intentional misconduct (each as determined by a final non appealable judgment of a court of competent jurisdiction) on its part, incur no liability and be held harmless by Parent for or in respect of any action taken, suffered or omitted to be taken by it in reliance upon such Officer’s Certificate;
(c) the Rights Agent may engage and consult with counsel of its selection (who may be legal counsel for the Rights Agent or the Parent or an employee of the Rights Agent) and the written advice of such counsel or any written opinion of counsel will be full and complete authorization and protection to the Rights Agent and the Rights Agent shall be held harmless by Parent and shall incur no liability for or in respect of any action taken, suffered or omitted by it hereunder in the absence of bad faith and in reliance thereon;
(d) the permissive rights of the Rights Agent to do things enumerated in this Agreement will not be construed as a duty;
(e) the Rights Agent will not be required to give any note or surety in respect of the execution of such powers or otherwise in respect of the premises;
(f) Parent agrees to indemnify the Rights Agent for, and hold the Rights Agent harmless against, any loss, liability, damage, judgment, fine, penalty, settlement, claim, demands, suits, cost or expense (including without limitation, the reasonable and documented fees and expenses of legal counsel) for any action taken, suffered or omitted to be taken by the Rights Agent or arising out of or in connection with the Rights Agent’s duties under this Agreement, including the reasonable costs and expenses of defending the Rights Agent against any claims, charges, demands, suits or loss arising therefrom, directly or indirectly, or enforcement of its rights hereunder, unless such loss has been determined by a a final non-appealable judgment of court of competent jurisdiction to be a result of the Rights Agent’s gross negligence, bad faith or willful misconduct;
(g) anything to the contrary notwithstanding, except with respect to the Rights Agent’s own fraud, bad faith or willful misconduct (each as determined by a final non-appealable judgment of a court of competent jurisdiction), any liability of the Rights Agent under this Agreement will be limited to the aggregate amount of the annual fees (but not reimbursed expenses) paid by Parent to the Rights Agent under this Agreement during the twelve months immediately preceding the event for which recovery is sought;
(h) Parent agrees (i) to pay the fees and expenses of the Rights Agent in connection with the Rights Agent’s duties under this Agreement in accordance with the fee schedule agreed upon in writing by the Rights Agent and Parent on or prior to the date hereof and incorporated herein by reference and (ii) to reimburse the Rights Agent for all Taxes and governmental charges (other than Taxes imposed on or measured by the Rights Agent’s net income and franchise or similar Taxes imposed on it (in lieu of net income Taxes)). The Rights Agent will also be entitled to reimbursement from Parent for all reasonable and necessary out-of- pocket expenses paid or incurred by it in connection with the administration, preparation, delivery, amendment and execution of this Agreement by the Rights Agent of its duties hereunder;
(i) in the event the Rights Agent reasonably believes any ambiguity or uncertainty exists hereunder or in any notice, instruction, direction, request or other communication, paper or document received by the Rights Agent hereunder, the Rights Agent, may, in its sole discretion, refrain from taking any action, and shall be fully protected and shall not be liable in any way to Parent, any Holder or any other person or entity for refraining from taking such action, unless the Rights Agent receives written instructions from the Parent which eliminates such ambiguity or uncertainty to the satisfaction of the Rights Agent;
(j) the Rights Agent shall not be liable for or by reason of, and shall be held harmless by Parent with respect to any of the statements of fact or recitals contained in this Agreement or be required to verify the same, but all such statements and recitals are and shall be deemed to have been made by the Parent only and the Rights Agent will have no liability and shall be held harmless by Parent in respect of the validity of this Agreement or the execution and delivery hereof (except the due execution and delivery hereof by the Rights Agent), nor shall the Rights Agent be responsible for any breach by Parent of any covenant or condition contained in this Agreement;
(k) the Rights Agent shall not be deemed to have knowledge of any event of which it was supposed to receive notice thereof hereunder, and the Rights Agent shall be fully protected and shall incur no liability for failing to take action in connection therewith, unless and until it has received such notice in writing from the Parent and all notices or other instruments required by this Agreement to be delivered to the Rights Agent must, in order to be effective, be received by the Rights Agent as specified herein, and in the absence of such notice so delivered the Rights Agent may conclusively assume no such event or condition exists;
(l) subject to any applicable restrictions of applicable law (including laws restricting trading based on non-public information), the Rights Agent and any shareholder, affiliate, director, officer or employee of the Rights Agent may buy, sell or deal in any securities of the Parent or become peculiarly interested in any transaction in which the Parent may be interested, or contract with or lend money to the Parent or otherwise act as fully and freely as though it were not the Rights Agent under this Agreement. Nothing herein shall preclude the Rights Agent from acting in any other capacity for the Parent or for any other Person;
(m) the Rights Agent may execute and exercise any of the rights or powers hereby vested in it or perform any duty hereunder either itself or by or through its attorneys or agents;
(n) no provision of this Agreement shall require the Rights Agent to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or in the exercise of its rights if there shall be reasonable grounds for believing that repayment of such funds or adequate indemnification against such risk or liability is not reasonably assured to it (it being understood that this Section 3.2(n) shall not apply to the ordinary course operating expenses of Rights Agent in connection with the services contemplated hereby for which the fees payable to the Rights Agent are intended compensation);
(o) the Rights Agent shall not have any duty or responsibility in the case of the receipt of any written demand from any Holder with respect to any action or default by the Parent or its Affiliates, including, without limiting the generality of the foregoing, any duty or responsibility to initiate or attempt to initiate any proceedings at law or otherwise or to make any demand upon the Parent;
(p) the Rights Agent shall neither be responsible for, nor chargeable with, knowledge of, nor have any requirements to comply with, the terms and conditions of any other agreement, instrument or document, including, without limitation, the Merger Agreement, nor shall the Rights Agent be required to determine if any person or entity has complied with any such agreements, instruments or documents, nor shall any additional obligations of the Rights Agent be inferred from the terms of such agreements, instruments or documents even though reference thereto may be made in this Agreement. In the event of any conflict between the terms and provisions of this Agreement and those of any other agreement, instrument or document, including but not limited to the Merger Agreement, the terms and conditions of this Agreement shall control as they relate to the Rights Agent; and
(q) The provisions of Section 2.4(d), Section 3.1 and this Section 3.2 shall survive the termination of this Agreement, the resignation, replacement or removal of the Rights Agent, and the payment, termination and the expiration of the CVRs.
Section 3.3 Resignation and Removal; Appointment of Successor.
(a) The Rights Agent may resign at any time by giving written notice thereof to Parent specifying a date when such resignation will take effect, which notice will be sent at least sixty (60) days prior to the date so specified but in no event will such resignation become effective on the earlier of (i) the date so specified in such notice, or (ii) the appointment of a successor Rights Agent has been appointed. Parent has the right to remove Rights Agent at any time by a Board Resolution specifying a date when such removal will take effect (or, if earlier, the appointment of the successor Rights Agent). Notice of such removal will be given by Parent to Rights Agent, which notice will be sent at least sixty (60) days prior to the date so specified. Notwithstanding anything to the contrary contained herein, such replacement or removal of the Rights Agent shall not affect any of the provisions of this Agreement that expressly survive the termination of this Agreement, or the resignation, replacement or removal of the Rights Agent.
(b) If the Rights Agent provides notice of its intent to resign, is removed pursuant to Section 3.3(a) or becomes incapable of acting, Parent, by a Board Resolution, will promptly appoint a qualified successor Rights Agent who, unless otherwise consented to in writing by the
Acting Holders, shall be a stock transfer agent of national reputation or the corporate trust department of a commercial bank. The successor Rights Agent so appointed will, forthwith upon its acceptance of such appointment in accordance with Section 3.4, become the successor Rights Agent. Notwithstanding the foregoing, if Parent shall fail to make such appointment within a period of sixty (60) days after giving notice of such removal or after it has been notified in writing of such resignation or incapacity by the resigning or incapacitated Rights Agent, then the incumbent Rights Agent may apply to any court of competent jurisdiction for the appointment of a new Rights Agent. (c) Parent will give notice of each resignation and each removal of a Rights Agent and each appointment of a successor Rights Agent by delivering a written notice of such event in accordance with Section 6.2 to the Holders as their names and addresses appear in the CVR Register. Each notice will include the name and address of the successor Rights Agent. If Parent fails to send such notice within ten (10) days after acceptance of appointment by a successor Rights Agent in accordance with Section 3.4, the successor Rights Agent will cause the notice to be mailed at the expense of Parent. Failure to give any notice provided for in this Section 3.3, however, and any defect therein, shall not affect the legality or validity of the resignation or removal of the Rights Agent or the appointment of the successor Rights Agent, as the case may be. (d) The Rights Agent will reasonably cooperate with Parent and any successor Rights Agent in connection with the transition of the duties and responsibilities of the Rights Agent to the successor Rights Agent, including the transfer of all relevant data, including the CVR Register, to the successor Rights Agent.
Section 3.4 Acceptance of Appointment by Successor. Every successor Rights Agent appointed pursuant to Section 3.3(b) hereunder will execute, acknowledge and deliver to Parent and to the predecessor Rights Agent an instrument accepting such appointment and a counterpart of this Agreement, and thereupon such successor Rights Agent, without any further act, deed or conveyance, will become vested with all the rights, powers, trusts and duties of the predecessor Rights Agent. On request of Parent or the successor Rights Agent, the predecessor Rights Agent will execute and deliver an instrument transferring to the successor Rights Agent all the rights (except such rights of the predecessor Rights Agent which survive pursuant to Section 3.3 of this Agreement), powers and trusts of the predecessor Rights Agent, but such predecessor Rights Agent shall not be required to make any additional expenditure or assume any additional liability in connection with the foregoing, unless, if requested by Rights Agent, it has been furnished with assurances of repayment or indemnity satisfactory to it. ARTICLE IV
COVENANTS
Section 4.1 List of Holders. Parent will furnish or cause to be furnished to the Rights Agent in such form as Parent receives from the Company’s transfer agent (or other agent performing similar services for the Company), the names and addresses of the Holders within twenty (20) Business Days of the Effective Time. Until such initial list of Holders is furnished
to the Rights Agent, the Rights Agent shall have no duties, responsibilities or obligations with respect to such Holders.
Section 4.2 Payment of Milestone Payment Amounts. If a Milestone has been achieved in accordance with this Agreement, Parent will, promptly following the delivery of the applicable Milestone Notice to the Rights Agent, deposit with the Rights Agent, for payment to the Holders in accordance with Section 2.4, the aggregate amount necessary to pay the Milestone Payment Amount to each Holder (other than the Equity Award Holders, in respect of which any Milestone Payment Amounts shall be paid in accordance with Section 2.4(b)). For the avoidance of doubt, the Milestone Payment Amount shall only be paid in respect of each given Milestone, if at all, one time under this Agreement. Section 4.3 Efforts to Achieve Milestones. Until the earlier of (a) the seventh (7th) anniversary of the Closing and (b) the achievement of U.S. Commercial Launch, Parent shall, and shall cause its controlled Affiliates and Ultimate Parent to, use their Commercially Reasonable Efforts to (i) develop and seek FDA Approval for the Product, and (ii) following receipt of FDA Approval for the Product, achieve U.S. Commercial Launch; provided, that the use of Commercially Reasonable Efforts in accordance with this Agreement does not guarantee that Parent will obtain FDA Approval for the Product, achieve U.S. Commercial Launch, or guarantee that Parent will achieve any of the Milestones at all or by a specific date. Notwithstanding anything in this Agreement to the contrary, in no event shall Parent or any of its Affiliates be required to undertake any level of efforts, or employ any level of resources, to (A) conduct, or commit to conduct, any additional clinical, safety or efficacy studies (including any randomized controlled trial) in connection with obtaining regulatory approvals of the Product, (B) achieve any Milestone, (C) seek regulatory approval for, maintain market availability or commercialize, the Product outside the United States or (D) develop, market or commercialize any Product at any time following achievement of U.S. Commercial Launch.
Section 4.4 Books and Records. Parent shall, and shall cause its Affiliates to, keep true, complete and accurate records in sufficient detail to enable the Holders and the Independent Accountant to determine the amounts payable hereunder.
Section 4.5 Status Reports. Prior to the occurrence of the U.S. Commercial Launch, within thirty (30) days after each of June 30 and December 31 in each calendar year, Parent shall provide the Rights Agent with a written report describing in reasonable detail the activities Parent and its Affiliates have undertaken in the preceding 6-month period to develop, achieve U.S. Commercial Launch of and seek FDA Approval for the Product (each, a “Status Report”). The Rights Agent shall keep a copy of the Status Report in its records and shall have no other duty or obligation with respect to the Status Report.
Section 4.6 Net Sales Statements. Following the U.S. Commercial Launch and until the earlier of (a) achievement of each of the Annual Net Sales Milestones or (b) delivery of the Net Sales Statement with respect to the final calendar quarter of the Sales Milestone Period, on or prior to the Milestone Determination Date with respect to each calendar quarter, Parent shall provide the Rights Agent with a Net Sales Statement covering the preceding four calendar quarters (or shorter period to have elapsed since the beginning of the Sales Milestone Period).
The Rights Agent keep a copy of the Net Sales Statement in its records and shall have no other duty or obligation with respect to the Net Sales Statement.
Section 4.7 Audits.
(a) Upon the written request of the Acting Holders provided to Parent within forty-five (45) days of the delivery of any Net Sales Statement pursuant to Section 4.6 of this Agreement (the “Review Request Period”), but no more than once during any period of four consecutive calendar quarters and not more than three times during the term of this Agreement, Parent shall permit, and shall cause its Affiliates to permit, the Independent Accountant to have access during normal business hours to such of the records of Parent or its Affiliates as may be reasonably necessary to verify the accuracy of the Net Sales Statement and the figures underlying the calculations set forth therein, provided that such access does not unreasonably interfere with the conduct of the business of Parent or any of its Affiliates. The Independent Accountant shall be charged to come to a final determination with respect to those specific items in the Net Sales Statement that the parties disagree on and submit to it for resolution. All other items in the Net Sales Statement that the parties do not submit, prior to the end of the Review Request Period, to the Independent Accountant for resolution shall be deemed to be agreed by the parties and the Independent Accountant shall not be charged with calculating or validating those agreed upon items. If issues are submitted to the Independent Accountant for resolution, Parent shall, and shall cause its Affiliates to, furnish to the Independent Accountant such access, work papers and other documents and information related to those disputed issues as the Independent Accountant may request and as are available to Parent or any other Selling Entity. The Independent Accountant shall disclose to the Acting Holders whether a Milestone was achieved and such additional information directly related to its findings. The Independent Accountant shall provide Parent with a copy of all disclosures made to the Acting Holders. The fees charged by such accounting firm shall be paid by Parent.
(b) If the Independent Accountant concludes that a Milestone Payment that was properly due was not paid to the Holders, Parent shall pay or cause to be paid to the Rights Agent (for further distribution to the Holders) or to each Holder the applicable Milestone Payment, plus interest on such Milestone Payment at the “prime rate” as published in the Wall Street Journal or similar reputable data source from time to time calculated from when the Milestone Payment should have been paid (if Parent had given notice of achievement of the Milestone pursuant to the terms of this Agreement), as applicable, to the date of actual payment (such amount, including interest, being the “CVR Shortfall”). The CVR Shortfall shall be paid by Parent within twenty (20) calendar days of the date the Independent Accountant’s written report is provided to Parent. Absent manifest error, the decision of the Independent Accountant shall be final, conclusive and binding on Parent and the Holders, shall be non-appealable and shall not be subject to further review.
(c) If, upon the expiration of the applicable Review Request Period, the Acting Holders have not requested a review of the Net Sales Statement in accordance with this Section 4.7, the calculations set forth in the Net Sales Statement shall be binding and conclusive upon the Holders. (d) Each Person seeking to receive information from Parent in connection with a review pursuant to this Section 4.7 shall enter into, and shall cause its accounting firm to enter
into, a reasonable and mutually satisfactory confidentiality agreement with Parent or any Affiliate obligating such party to retain all such information disclosed to such party in confidence pursuant to such confidentiality agreement.
(e) Parent shall not, and shall cause its Affiliates not to, enter into any license or distribution agreement with any third party (other than Parent or its Affiliates) with respect to a Product unless such agreement contains provisions that would allow any Independent Accountant appointed pursuant to this Section 4.7 such access to the records of the other party to such license or distribution agreement as may be reasonably necessary to perform its duties pursuant to this Section 4.7; provided that Parent and its Affiliates shall not be required to amend any of its existing licenses or distribution agreements. The parties hereto agree that, if Parent or its Affiliates have exercised audit rights under any license or distribution agreement prior to the Acting Holders’ request for an audit under this Section 4.7 and under such license or distribution agreement Parent and its Affiliates cannot request another audit, the results of Parent’s prior audit of such licensee or distributor shall be used for purposes of the audit requested by the Acting Holders under this Section 4.7 and that Parent shall not have any further obligation to provide access to an Independent Accountant with respect to such licensee or distributor until such time as Parent may again exercise its rights of audit under the license or distribution agreement with such licensee or distributor. ARTICLE V
AMENDMENTS
Section 5.1 Amendments without Consent of Holders.
(a) Without the consent of any Holders, Parent, when authorized by a Board Resolution, at any time and from time to time, may and the Rights Agent shall, if directed by the Parent, enter into one or more amendments hereto, for any of the following purposes:
(i) to evidence the succession of another Person to Parent and the assumption by any such successor of the covenants of Parent herein as provided in Section 6.3; (ii) to add to the covenants of Parent such further covenants, restrictions, conditions or provisions as Parent and the Rights Agent will consider to be for the
protection of the Holders; provided that, in each case, such provisions do not adversely affect the interests of the Holders;
(iii) to cure any ambiguity, to correct or supplement any provision herein that may be defective or inconsistent with any other provision herein, or to make any other provisions with respect to matters or questions arising under this Agreement; provided that, in each case, such provisions do not adversely affect the interests of the Holders;
(iv) as may be necessary or appropriate to ensure that the CVRs are not subject to registration under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder; provided that, in each case, such provisions do not adversely affect the interests of the Holders;
(v) to evidence the succession of another Person as a successor Rights Agent and the assumption by any such successor of the covenants and obligations of the Rights Agent herein in accordance with Sections 3.3 and 3.4;
(vi) as may be necessary to comply with or be exempt from the requirements of Section 409A of the Code;
(vii) to cancel CVRs in the event that (i) any Holder has abandoned its rights to such CVRs in accordance with Section 2.6 or (ii) following a Transfer of such CVRs to Parent or its Affiliates in accordance with Section 2.2 or Section 2.3;
(viii) as may be necessary to ensure that Parent complies with applicable Law; provided that in each case, such amendments shall not adversely affect the interests of the Holders; or
(ix) any other amendments hereto for the purpose of adding, eliminating or changing any provisions of this Agreement, unless such addition, elimination or change is adverse to the interests of the Holders.
(b) Promptly after the execution by Parent and the Rights Agent of any amendment pursuant to the provisions of this Section 5.1, Parent will deliver (or cause the Rights Agent to deliver, at Parent’s expense) a notice thereof in accordance with Section 6.2 to the Holders at their addresses as they appear on the CVR Register, setting forth such amendment. Section 5.2 Amendments with Consent of Holders.
(a) Subject to Section 5.1 (which amendments pursuant to Section 5.1 may be made without the consent of the Holders), with the consent of the Holders of at least a majority of the outstanding CVRs, whether evidenced in writing or taken at a meeting of the Holders, Parent, when authorized by a Board Resolution, and the Rights Agent may enter into one or more amendments hereto for the purpose of adding, eliminating or changing any provisions of this Agreement, even if such addition, elimination or change is materially adverse to the interest of the Holders; provided, however, that no such amendment shall, without the consent of the Holders of sixty-five percent (65%) of the outstanding CVRs: (i) modify in a manner adverse to the Holders (A) any provision contained herein with respect to the termination of this Agreement or the CVRs, (B) the time for, and amount of, any payment to be made to the Holders pursuant to this Agreement, or (C) the Milestones;
(ii) reduce the number of CVRs (except as contemplated by Section 5.1(a)(vii)); or
(iii) modify any provisions of this Section 5.2, except to increase the percentage of Holders from whom consent is required or to provide that certain provisions of this Agreement cannot be modified or waived without the consent of the Holder of each outstanding CVR affected thereby.
(b) Promptly after the execution by Parent and the Rights Agent of any amendment pursuant to the provisions of this Section 5.2, Parent will deliver (or cause the Rights Agent to deliver, at Parent’s expense) a notice thereof in accordance with Section 6.2 to the Holders at their addresses as they appear on the CVR Register, setting forth such amendment. Section 5.3 Execution of Amendments. In executing any amendment permitted by this Article V, the Rights Agent will be entitled to receive, and will be fully protected in relying upon, an opinion of counsel selected by Parent stating that the execution of such amendment is authorized or permitted by this Agreement. The Rights Agent may, but is not obligated to, enter into any such amendment that affects the Rights Agent’s own rights, privileges, covenants or duties under this Agreement or otherwise, including any amendments pursuant to Section 5.1(a)(viii). No supplement or amendment to this Agreement shall be effective unless duly executed by the Rights Agent. Section 5.4 Effect of Amendments. Upon the execution of any amendment under this Article V, this Agreement will be modified in accordance therewith, such amendment will form a part of this Agreement for all purposes and every Holder will be bound thereby. ARTICLE VI
OTHER PROVISIONS OF GENERAL APPLICATION
Section 6.1 Notices to Rights Agent and Parent. Any notice or other communication required or permitted hereunder shall be in writing and shall be deemed given when delivered in person, by overnight courier, by email (with receipt confirmed by telephone) or two (2) Business Days after being sent by registered or certified mail (postage prepaid, return receipt requested), as follows:
If to the Rights Agent, to it at:
Computershare Inc. and Computershare Trust Company, N.A.
150 Royall Street, 2nd Floor
Canton, MA 02021
Attention: Relationship Manager
with a copy to:
Computershare Inc. and Computershare Trust Company, N.A.
150 Royall Street, 2nd Floor
Canton, MA 02021
Attention: General Counsel
If to Parent, to it at:
Indivior Inc.
10710 Midlothian Tpke, Suite 125
North Chesterfield, VA 23235
Attention: General Counsel
Email [***]
with a copy to:
Covington & Burling LLP
The New York Times Building
620 Eighth Avenue
New York, NY 10018-1405
Attention: [***]
Email: [***]
The Rights Agent or Parent may specify a different address by giving notice in accordance with this Section 6.1. Section 6.2 Notice to Holders. Where this Agreement provides for notice to Holders, such notice will be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, or, if applicable, transmitted through the facilities of DTC in accordance with DTC’s procedures, to each Holder affected by such event, at the Holder’s address as it appears in the CVR Register, not later than the latest date, and not earlier than the earliest date, if any, prescribed for the giving of such notice. In any case where notice to Holders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Holder will affect the sufficiency of such notice with respect to other Holders.
Section 6.3 Parent Successors and Assigns. Parent may assign any or all of its rights, interests and obligations hereunder to (a) in its sole discretion and without the consent of any other party, (i) any controlled Affiliate of Parent, but only for so long as it remains a controlled Affiliate of Parent, (ii) to any purchaser or licensee of substantial rights to OPNT003 or (b) with the prior written consent of the Acting Holders, any other Person (any permitted assignee under clause (a) or (b), an “Assignee”), in each case provided that the Assignee agrees to assume and be bound by all of the terms of this Agreement. Any Assignee may thereafter assign any or all of its rights, interests and obligations hereunder in the same manner as Parent pursuant to the prior sentence. In connection with any assignment to an Assignee described in clause (a) above in this Section 6.3, Parent (and such other assignor, if applicable) shall agree to remain liable for the performance by each Assignee (and such other assignor, if applicable) of all obligations of Parent hereunder (provided that no assignor shall be obligated with respect to any amendment to the obligations hereunder effected following such assignee’s assignment). This Agreement will be binding upon, inure to the benefit of and be enforceable by Parent’s successors and each Assignee. Each of Parent’s successors and Assignees shall expressly assume by an instrument supplemental hereto, executed and delivered to the Rights Agent, the due and punctual payment of the CVRs and the due and punctual performance and observance of all of the covenants and obligations of this Agreement to be performed or observed by Parent. Unless a successor assignee meets the requirements set forth in Section 3.3(b) and, as of the date of such assignment, is an Affiliate of the Rights Agent, the Rights Agent may not assign this Agreement or its rights hereunder without Parent’s written consent. Any attempted assignment in violation of this Section 6.3 shall be void ab initio and of no effect. Section 6.4 Benefits of Agreement. Nothing in this Agreement, express or implied, will give to any Person (other than the Rights Agent and its successors and assigns, Parent,
Parent’s successors and Assignees, the Holders and the Holders’ successors and assigns pursuant to a Permitted Transfer) any benefit or any legal or equitable right, remedy or claim under this Agreement or under any covenant or provision herein contained, all such covenants and provisions being for the sole benefit of the foregoing. The rights of Holders and their successors and assigns pursuant to Permitted Transfers are limited to those expressly provided in this Agreement and the Merger Agreement. Notwithstanding anything to the contrary contained herein, any Holder or Holder’s successor or assign pursuant to a Permitted Transfer may agree to renounce, in whole or in part, its rights under this Agreement by written notice to the Rights Agent and Parent, which notice, if given, shall be irrevocable.
Section 6.5 Governing Law; Jurisdiction; Waiver of Jury Trial.
(a) This Agreement, the CVRs and all actions arising under or in connection therewith shall be governed by and construed in accordance with the laws of the State of Delaware, regardless of the laws that might otherwise govern under applicable principles of conflicts of law thereof.
(b) Each of the parties hereto (i) irrevocably and unconditionally consents and submits to the exclusive jurisdiction and venue of the Chancery Court of the State of Delaware and any state appellate court therefrom or, if (but only if) such court lacks subject matter jurisdiction, the United States District Court sitting in New Castle County in the State of Delaware and any appellate court therefrom (collectively, the “Delaware Courts”); and (ii) consents to service of process by first class certified mail, return receipt requested, postage prepaid, to the address at which such party is to receive notice in accordance with Section 6.1. Each of the parties irrevocably and unconditionally (1) agrees not to commence any such action or proceeding except in the Delaware courts, (2) agrees that any claim in respect of any such action or proceeding may be heard and determined in the Delaware Courts, (3) waives, to the fullest extent it may legally and effectively do so, any objection that it may now or hereafter have to the jurisdiction or laying of venue of any such action or proceeding in the Delaware Courts and (4) waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in the Delaware Courts. (c) EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING BETWEEN THE PARTIES (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE), INCLUDING ANY COUNTERCLAIM, ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THE ACTIONS OF ANY PARTY IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT THEREOF. EACH PARTY HERETO (A) MAKES THIS WAIVER VOLUNTARILY AND(B) ACKNOWLEDGES THAT SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS CONTAINED IN THIS SECTION 6.5(C). Section 6.6 Severability. If any provision of this Agreement is held invalid or unenforceable by any court of competent jurisdiction, the other provisions of this Agreement shall remain in full force and effect. Any provision of this Agreement held invalid or unenforceable only in part or degree shall remain in full force and effect to the extent not held
invalid or unenforceable. The parties further agree to replace such invalid or unenforceable provision of this Agreement with a valid and enforceable provision that will achieve, to the extent possible, the economic, business and other purposes of such invalid or unenforceable provision. Notwithstanding anything to the contrary herein, if any such excluded provision shall affect the rights, immunities, liabilities, duties or obligations of the Rights Agent, the Rights Agent shall be entitled to resign upon ten (10) days’ prior written notice to Parent.
Section 6.7 Counterparts and Signature. This Agreement may be executed in two or more counterparts (including by facsimile or by an electronic scan delivered by electronic mail), each of which shall be deemed an original but all of which together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each of the parties hereto and delivered to the other party, it being understood that the parties need not sign the same counterpart.
Section 6.8 Termination. This Agreement will be terminated and of no force or effect, the parties hereto will have no liability hereunder (including the monies due and owing by Parent to Rights Agent) and no payments will be required to be made, upon the earliest to occur of (a) the delivery by the Rights Agent to the address of each Holder as reflected in the CVR Register the full amount of all potential Milestone Payment Amounts required to be paid under the terms of this Agreement, (b) the delivery of a written notice of termination duly executed by Parent and the Acting Holders, (c) expiration of the Review Request Period following the expiration of the Sales Milestone Period (provided no written request is received during such Review Request Period pursuant to Section 4.7(a)), (d) if a written request is received during the Review Request Period immediately following the expiration of the Sales Milestone Period, the decision of the Independent Accountant (and, if applicable, payment of any CVR Shortfall as determined to be owing by the Independent Accountant) pursuant to Section 4.7(a). Section 6.9 Entire Agreement. As between Parent and the Holders, this Agreement (including the fee schedule referred to in Section 3.2(g)) and the Merger Agreement contains the entire understanding of the parties hereto with reference to the transactions and matters contemplated hereby and supersedes all prior agreements, written or oral, between the parties hereto. As between Parent and the Rights Agent, this Agreement (including the fee schedule referred to in Section 3.2(g)) contains the entire understanding of the parties hereto with reference to the transactions and matters contemplated hereby and supersedes all prior agreements, written or oral, between the parties hereto. Section 6.10 Legal Holiday. In the event that a Milestone Payment Date shall not be a Business Day, then, notwithstanding any provision of this Agreement to the contrary, any payment required to be made in respect of the CVRs on such date need not be made on such date, but may be made on the next succeeding Business Day with the same force and effect as if made on the applicable Milestone Payment Date.
Section 6.11 Force Majeure. Notwithstanding anything to the contrary contained herein, the Rights Agent shall not be liable for any delays or failures in performance resulting from acts beyond its reasonable control including, without limitation, acts of God, terrorist acts, pandemics, epidemics, shortage of supply, breakdowns or malfunctions, interruptions or
malfunctions of any utilities, communications, or computer facilities, or loss of data due to power failures or mechanical difficulties with information storage or retrieval systems, labor difficulties, war or civil unrest.
Section 6.12 Funds. All funds received by the Rights Agent under this Agreement that are to be distributed or applied by Computershare in the performance of services hereunder (the “Funds”) shall be held by Computershare as agent for Parent and deposited in one or more bank accounts to be maintained by Computershare in its name as agent for Parent. Until paid pursuant to the terms of this Agreement, Computershare will hold the Funds through such accounts in: deposit accounts of commercial banks with Tier 1 capital exceeding $1 billion or with an average rating above investment grade by S&P (LT Local Issuer Credit Rating), Moody’s (Long Term Rating) and Fitch Ratings, Inc. (LT Issuer Default Rating) (each as reported by Bloomberg Finance L.P.). The Rights Agent shall have no responsibility or liability for any diminution of the Funds that may result from any deposit made by the Rights Agent in accordance with this paragraph, including any losses resulting from a default by any bank, financial institution or other Third Party. The Rights Agent may from time to time receive interest, dividends or other earnings in connection with such deposits. The Rights Agent shall not be obligated to pay such interest, dividends or earnings to Parent, any Holder or any other party.
[Remainder of page intentionally left blank]
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be executed on its behalf by its duly authorized officers as of the day and year first above written.
| | | | | |
| INDIVIOR INC. |
| |
| |
| By: | /s/ Ryan Preblick |
| Name: Ryan Preblick |
| Title: Chief Financial Officer |
| |
| |
COMPUTERSHARE INC. and
COMPUTERSHARE TRUST COMPANY,
N.A., jointly as Rights Agent |
| |
| |
| By: | /s/ Collin Ekeogu |
| Name: Collin Ekeogu |
| Title: Manager, Corporate Affairs |
PORTIONS OF THIS EXHIBIT HAVE BEEN REDACTED.
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS BOTH (i) NOT MATERIAL AND (ii) WOULD BE LIKELY TO CAUSE COMPETITIVE HARM IF PUBLICLY DISCLOSED.
REDACTED MATERIAL IS MARKED WITH [***].
DATED 28 MARCH 2018
(1) C4X DISCOVERY LIMITED
(2) INDIVIOR UK LIMITED
LICENSE AGREEMENT
CONTENTS
| | | | | | | | | | | | | | | | | | | | |
| 1 | | CLAUSE | | 1 | | DEFINITIONS |
| 2 | | CLAUSE | | 2 | | License AND OTHER COVENANTS |
| 3 | | CLAUSE | | 3 | | REPORTING |
| 4 | | CLAUSE | | 4 | | DEVELOPMENT |
| 5 | | CLAUSE | | 5 | | REGULATORY RESPONSIBILITIES |
| 6 | | CLAUSE | | 6 | | MANUFACTURING |
| 7 | | CLAUSE | | 7 | | COMMERCIALISATION |
| 8 | | CLAUSE | | 8 | | FINANCIAL TERMS |
| 9 | | CLAUSE | | 9 | | PAYMENT TERMS |
| 10 | | CLAUSE | | 10 | | CONFIDENTIALITY, PUBLICITY AND PUBLICATIONS |
| 11 | | CLAUSE | | 11 | | OWNERSHIP OF INTELLECTUAL PROPERTY RIGHTS |
| 12 | | CLAUSE | | 12 | | REPRESENTATIONS, WARRANTIES AND UNDERTAKINGS |
| 13 | | CLAUSE | | 13 | | INDEMNIFICATION |
| 14 | | CLAUSE | | 14 | | LIABILITY |
| 15 | | CLAUSE | | 15 | | SET-OFF |
| 16 | | CLAUSE | | 16 | | ANTI-BRIBERY |
| 17 | | CLAUSE | | 17 | | TERM |
| 18 | | CLAUSE | | 18 | | TERMINATION |
| 19 | | CLAUSE | | 19 | | EFFECTS OF TERMINATION |
| 20 | | CLAUSE | | 20 | | DISPUTE RESOLUTION |
| 21 | | CLAUSE | | 21 | | INJUNCTIVE RELIEF |
| 22 | | CLAUSE | | 22 | | INSURANCE |
| 23 | | CLAUSE | | 23 | | ENTIRE AGREEMENT |
| 24 | | CLAUSE | | 24 | | FORCE MAJEURE |
| 25 | | CLAUSE | | 25 | | NOTICES |
| 26 | | CLAUSE | | 26 | | INDEPENDENT CONTRACTORS |
| 27 | | CLAUSE | | 27 | | RECORDATION |
| 28 | | CLAUSE | | 28 | | ASSIGNMENT |
| 29 | | CLAUSE | | 29 | | COUNTERPARTS |
| 30 | | CLAUSE | | 30 | | FURTHER ASSURANCE |
| 31 | | CLAUSE | | 31 | | THIRD PARTY RIGHTS |
| 32 | | CLAUSE | | 32 | | SEVERABILITY |
| 33 | | CLAUSE | | 33 | | EXPENSES |
| 34 | | CLAUSE | | 34 | | VARIATION |
| 35 | | CLAUSE | | 35 | | WAIVERS |
| 36 | | CLAUSE | | 36 | | GOVERNING LAW |
| 37 | | CLAUSE | | 37 | | JURISDICTION |
| SCHEDULES LIST | | |
LICENSE AGREEMENT
THIS LICENSE AGREEMENT (this “Agreement”) is dated as of 28 March 2018 (the “Effective Date”)
BETWEEN
(1) C4X DISCOVERY LIMITED, a company incorporated in England and Wales under company number 06324250, whose registered office is at Manchester One, 53 Portland Street, Manchester, M1 3LD ("C4X"), and
(2) Indivior UK Limited (Co.), a company incorporated in England and Wales under company number 7183451, whose registered office is at 103-105 Bath Road, Slough, Berkshire, SL1 SUH ("Company"),
each a “Party” and together the “Parties”.
WHEREAS
(A) C4X, a drug discovery company, owns rights to the Licensed Compounds, including the right to develop, make and sell Licensed Products for use in the Field (each as defined below).
(B) Company is engaged in the business of, among other things, developing, marketing and distributing pharmaceutical products.
(C) Company wishes to obtain from C4X an exclusive license to develop, make and sell Licensed Products for use in the Field, and C4X wishes to grant such rights to Company, on the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants contained herein, the Parties, intending to be legally bound, agree as follows:
1. CLAUSE 1: DEFINITIONS
1.1 The following terms shall have the following meanings as used in this Agreement:
| | | | | | | | |
| “505(b)(2) Application" | | means a new drug application filed with the FDA pursuant to 21 U.S.C §355(b)(2)(Section 505(b)(2), |
| | |
| "Affiliate" | | means, with respect to a Party, any Person that, directly or indirectly, controls, is controlled by or is under common control with such Party, for the purposes of this definition, “control" shall refer to (i) the possession, directly or indirectly, of the power to direct the management or policies of an entity whether through ownership of interests representing equity, securities, or partnership interests, by contract, or otherwise, or (n) the ownership, directly or indirectly, of more than fifty percent (50%) of the voting securities or capital stock or other ownership interest of an entity, |
| | |
| | | | | | | | |
| “ANDA" | | means an abbreviated new drug application filed with the FDA pursuant to 21 U.S.C § 355(j) and 21 C.F.R § 314.3, |
| | |
| "API" | | means an active pharmaceutical ingredient, |
| | |
| "Applicable Law(s)" | | means all federal, state, national and local laws, statutes, ordinances, rules, regulations, codes, guidelines as amended, re-enacted or in force from time to time applicable to the particular activities and jurisdictions hereunder, including, as applicable, Bribery Legislation, GOP, GDP, GMP, GLP and the rules and regulations of relevant Governmental Authority having jurisdiction over the Development, Manufacture and/or Commercialisation of the Licensed Products, |
| | |
| "Bi-Annual Report" | | means a written report with the contents set out in Schedule 4, |
| | |
| "Bribery Legislation" | | means the Bribery Act 2010 and all other applicable UK legislation, regulations and codes in relation to bribery and/or corruption and any similar or equivalent legislation in any other relevant jurisdiction, |
| | |
| "Business Day" | | means a day on which banking institutions in London, England and Richmond, Virginia are open for business, excluding any Saturday or Sunday, |
| | |
| "C4X Attorneys" | | means HGF Limited, a company registered in England and Wales, under company number 08998652, whose registered office is at 1 City Walk, Leeds, West Yorkshire, LS11 9DX, |
| | |
| "C4X Indemnitees" | | shall have the meaning set out in Clause 13.1, |
| | |
| "C4X Know-How" | | means all Know-How (including the Data) Controlled by C4X as of the Effective Date that is reasonably necessary or useful to develop, make or use Licensed Compounds or to Develop, Manufacture, Commercialise, use, import, offer to sell or sell Licensed Products in the Field, |
| | |
| | | | | | | | |
| "C4X Patents" | | means all Patents Controlled by C4X or its Affiliate(s) at any time during the Term that claim the composition, Development, Manufacture, Commercialisation or use of Licensed Compounds and/or Licensed Products, including, but not limited to, those specifically listed in Schedule 1 For the avoidance of doubt, C4X Patents do not include Company Applied Patents |
| | |
| "C4X Press Release" | | means the press release set out in Schedule 5, |
| | |
| "Calendar Quarter" | | means a period of three (3) consecutive months ending on the last day of March, June, September, and December, respectively, |
| | |
| "Calendar Year" | | means a period of four (4) consecutive Calendar Quarters ending on the last day of December, |
| | |
| "Claims" | | means all charges, complaints, actions, suits, proceedings, hearings, investigations, claims and demands, |
| | |
| "Clinical Overview" | | means an overview of Company's clinical plans for the Development of a Licensed Compound and Licensed Product, |
| | |
| "Combination Product" | | means any pharmaceutical product that comprises both a Licensed Compound and other active compounds and/or APIs, |
| | |
| "Commercialisation" and "Commercialise" | | means activities directed to marketing, promoting, packaging and distributing, supplying, offering for sale, selling or other commercial exploitation of a Licensed Product and/or importing a Licensed Product for sale. When used as a verb, "Commercialise" means to engage in Commercialisation, |
| | |
"Commercially
Reasonable Efforts" | | means those efforts reasonably used by a pharmaceutical company of similar size and resource to Company in relation to one of its own products in active development of equivalent market potential, having regard in particular to the stage of development of the Licensed Compounds, any clinical trial results relating to a Licensed Compound, and the Patent landscape of an applicable country or jurisdiction, and in all cases the use of sound scientific and commercial judgment, |
| | |
| | | | | | | | |
“Company Applied
Know-How” | | means all Know-How that meets the following criteria (a) is developed by Company, its Affiliates, or other Persons with an obligation to assign such Know How to Company, in connection with the exercise of the license under Clause 2, (b) is Controlled by Company (or any of its Affiliates) during the Term (other than C4X Know-How licensed to Company under this Agreement), (c) is used in a Licensed Product, a Licensed Compound, a method of using the Licensed Product, or a method of manufacturing the Licensed Product, and (d) is necessary for Development, Manufacture and/or Commercialisation of such Licensed Product. For the avoidance of doubt, Know How Controlled by any entity that becomes an Affiliate of Company pursuant to a merger or acquisition after the Effective Date shall not be deemed “Company Applied Know-How” if such Know-How was Controlled by such entity prior to such merger or acquisition, |
| | |
“Company Applied
Patents” | | means Patents that meet all of the following criteria: (a) have claimed inventions that are conceived by Company, its Affiliates or other Persons with an obligation to assign such inventions to Company in connection with the exercise of the license under Clause 2, (b) are Controlled by Company (or any of its Affiliates) (other than C4X Patents licensed to Company under this Agreement), (c) claims a Licensed Product, a Licensed Compound, a method of using the Licensed Product, or a method of manufacturing the Licensed Product, and (d) are necessary for the Development, Manufacture and/or Commercialisation of such Licensed Product. For the avoidance of doubt, Patents Controlled by any entity that becomes an Affiliate of Company pursuant to a merger or acquisition after the Effective Date shall not be deemed “Company Applied Patents” if such Patents were filed, claim a priority date or are based on an invention made by or on behalf of such entity prior to such merger or acquisition, |
| | |
“Company
Indemnitees” | | shall have the meaning set out in Clause 13.2, |
| | |
| “Compound Variant” | | means any development, improvement, enhancement or derivative of a Licensed Compound, including but not limited to any polymorph, crystalline form, salt, ester, hydrate or other solvate, prodrug, metabolite, reformulation, enantiomer or other stereoisomer of such Licensed Compound, |
| | |
| | | | | | | | |
“Confidential
Information” | | means, with respect to a Party, all information regarding such Party or its Affiliates which is non-public and of confidential nature, in whatever form (including in written, oral or electronic form or on any magnetic or optical disk or memory and wherever located), including information relating to: (a) the research, development, data and/or results, pharmaceutical or biologic candidates and product information (including replacement costs and the reasons for any product recall), (b) inventions, works of authorship, processes, operations, intentions, methodologies, (c) the business, sales targets, sales statistics, market share statistics, prices, market research reports and surveys, and advertising and other promotional materials, future projects, (d) business development or planning, commercial relationships and negotiations, customers, products, affairs and finances and employees of a Party or its Affiliates, (e) trade secrets and all commercial information relating to a Party’s products including technology, technical data and Know-How relating to the business of such Party or its Affiliates or any of their suppliers, customers, agents, distributors, shareholders, management or business contacts, in each case (a)-(e), whether or not such information is marked or identified as confidential, including information relating to the terms of this Agreement, |
| | |
| "Control" | | means, with respect to any Intellectual Property Right or other tangible or intangible property, that a Party or one of its Affiliates owns or has a license or sublicense to such right, or property, and has the ability to grant access, a license or sublicense to such right, or property, without violating the terms of any agreement or other arrangement with any Third Party, |
| | |
| "Controlling Party" | | shall have the meaning set out in Clause 11.3.1(b), |
| | |
"Co-Packaged
Product" | | means any pharmaceutical product(s) or regulated medical device(s) with which the Licensed Product is bundled or packaged and the two (2) (or more) products (or devices) are sold together, |
| | |
| "Data" | | means the following data: (a) pre-clinical study results and (b) chemical structure information, to the extent such data relates to a Licensed Compound and is in the Control of C4X, |
| | |
| | | | | | | | |
| "Data Room" | | means the data room operated and managed by C4X and using the corporate version of Google Drive and relating to the Licensed Technology, provided by and accessible to Company as part of the due diligence process relating to this Agreement, a copy of the Data Room's index is set out in Schedule 6, |
| | |
| "Designee" | | shall have the meaning set out in Clause 20.2, |
| | |
"Develop" and
"Development" | | means activities necessary or desirable to research and develop Licensed Products and to obtain and maintain Regulatory Approval of Licensed Products, including, as applicable, research and development activities related to the generation, characterisation, optimisation, construction, expression, process development, use and production of Licensed Products, test method development and stability testing, toxicology, clinical trials, quality assurance/quality control, delivery systems, formulation, statistical analysis, report writing, generation of data, product approval and registration activities and all activities related thereto, |
| | |
"Development
Milestone Event" | | shall have the meaning set out in Clause 8.2.1, |
| | |
“Development Milestone Event” | | shall have the meaning set out in Clause 8.2.1, |
| | |
"Diligence
Obligations” | | shall have the meaning set out in Clause 18.1.2, |
| | |
| "Disclosing Party" | | means a Party that discloses or makes available directly or indirectly any Confidential Information to the other Party or its Affiliates, employees and/or agents in connection with this Agreement, |
| | |
| "EMA" | | means the European Medicines Agency or any successor agency thereto, |
| | |
| "Ex-US Countries" | | means all countries of the world excluding the US, |
| | |
| | | | | | | | |
"Ex-US Generic
Competition" | | means, with respect to a Licensed Product in an Ex-US Country after one or more Generic Products have been commercially launched in such Ex-US Country, that during any Calendar Quarter after such launch (including the Calendar Quarter such Generic Product is launched), the aggregate Net Sales of such Licensed Product in such country in such Calendar Quarter equal less than fifty percent (50%) of the average aggregate Net Sales of the Licensed Product in such country over the four (4) Calendar Quarters immediately prior to the Calendar Quarter in which one or more Generic Products first became commercially available in such country, |
| | |
| "Expert" | | shall have the meaning set out in Schedule 2, |
| | |
| "FDA" | | means the United States Food and Drug Administration or any successor agency thereto, |
| | |
| "Field" | | means all human and veterinary applications (including without limitation diagnosis, therapeutic treatment and prevention), |
| | |
| "Filing Acceptance” | | means, as applicable, the acceptance for filing of a complete NDA (or its equivalent) by the FDA in the United States, or acceptance for filing of a comparable application by a Governmental Authority in another applicable jurisdiction in the Territory for the Commercialisation of a pharmaceutical product, |
| | |
"First Commercial
Sale" | | means, on a country-by-country and Indication-by-lndication basis, the first commercial sale of any Licensed Product to a Third Party by Company or any of its Affiliates or any of their respective Sublicensees in such country for such Indication following the applicable Regulatory Approval of the Licensed Product in such country for such Indication, |
| | |
| | | | | | | | |
| "Force Majeure" | | means in relation to either Party, any cause affecting the performance of this Agreement arising from or attributable to any acts, events, non-happenings, omissions or accidents beyond the reasonable control of the Party and in particular, but without limiting the generality thereof, shall include (to the extent they are beyond the reasonable control of the Party) strikes, lock-outs, industrial action, civil commotion, not, invasion, war, threat of or preparation for war, terrorist activity, fire, explosion, storm, flood, earthquake, subsidence, epidemic or other natural physical disaster, impossibility of the use of railways, shipping, aircraft, motor transport, or other means of public or private transport, failure or suspension of utilities, and political interference with the normal operation of such Party, |
| | |
| “GAAP” | | means United States generally accepted accounting principles in effect from time to time, |
| | |
| "OCR" | | means, as to the US and the European Union, good clinical practices as in effect in the US and the European Union, respectively, during the Term and, with respect to any other jurisdiction, clinical practices equivalent to good clinical practices as then in effect in the US or the European Union, in each case to the extent relating to the pharmaceutical products hereunder regulations of any Governmental Authority and applicable ICH GCP, |
| | |
| "GDP" | | means current good distribution practices with respect to the wholesale distribution of medicinal products for human use as set forth in applicable laws and regulations, including Directive 2001/83/EC and Commission Guideline 2013/C 343/01, |
| | |
| | | | | | | | |
| “Generic Product” | | means, with respect to any Licensed Product, (a) a drug product that is a pharmaceutical equivalent to such Licensed Product meaning that it (i) contains the same active ingredient(s), has the same dosage form and route of administration, (ii) is identical in strength or concentration to that of the given Licensed Product and (iii) is A rated in the United States (or similar designation outside the United States) (“ANDA Product”) or (b) any other drug product that (i) contains the same active ingredient(s) and the same dosage form and route of administration as the Licensed Product and (ii) references the Licensed Product as a Reference Listed Drug in the 505(b)(2) Application for such drug product or, with respect to jurisdictions outside of the US, references the data provided by Company in its Regulatory Submission for such Licensed Product (“505(b)(2) Product”), |
| | |
| "GLP" | | means regulations of any Governmental Authority (including Directives 2004/9/EC and 2004/10/EC and any similar or equivalent legislation in any other relevant jurisdiction) for conducting non-clinical laboratory studies that support or are intended to support applications for research or Regulatory Approvals, as applicable to the Development in the Territory from time to time, |
| | |
| "GMP" | | means (a) as to the US and the European Union, good manufacturing practices and general biological products standards as promulgated by the FDA pursuant to 21 CFR Parts 210, 211, 600 and 610 and as promulgated by the European Union pursuant to Commission Directive 2003/94/EC, respectively, each as may be amended from time to time, and (b) with respect to any other jurisdiction, manufacturing practices equivalent to the aforementioned good manufacturing practices as then in effect in the US or the European Union, in each case to the extent relating to the pharmaceutical products hereunder, |
| | |
"Governmental
Authority" | | means any court, tribunal, arbitrator, agency, legislative body, commission, official or other instrumentality of (a) any government of any country, (b) a federal, state, province, county, city or other political subdivision thereof or (c) any supranational body, |
| | |
| | | | | | | | |
| "Handle" | | shall mean preparing, filing, prosecuting (including interference and opposition proceedings) and maintaining (including interferences, reissue, re-examination, post-grant reviews, derivation proceedings, cancellation or nullity proceedings and opposition proceedings), |
| | |
| "ICH GCP" | | means the ICH Harmonised Tripartite Guideline for Good Clinical Practice (CPMP/ICH/135/95) and also such other good clinical practice requirements which are specified in Directive 2001/20/EC and relating to medicinal products for human use and in guidance published by the European Commission pursuant to such Directive, |
| "IFRS” | | means International Financial Reporting Standards (IFRS), |
| | |
| "Indication" | | means a disease classification as defined within the “International Statistical Classification of Diseases and Related Health Problems” as published on the date hereof by the World Health Organization (e.g. F10 Mental and Behavioral Disorders due to the use of Alcohol is a distinct indication from F14 Mental and Behavioral Disorders due to the use of Cocaine), |
| | |
| "Infringement Claim" | | shall have the meaning set out in Clause 11.3.1(a), |
| | |
| “Initiation” | | means, with respect to a clinical study, the first dosing of the first patient in such client study, |
| | |
"Intellectual Property
Rights” | | means Patents, rights to inventions, copyright (including software) and related rights, trade marks, business names and domain names, rights in get-up, goodwill and the right to sue for passing off, rights in designs, database rights and all other intellectual property rights, in each case whether registered or unregistered and including all applications and rights to apply for and be granted, renewals or extensions of, and rights to claim priority from, such rights and all similar or equivalent rights or forms of protection which subsist or will subsist now or in the future in any part of the world, |
| | |
| "Interest" | | means simple interest on the amount of the applicable payment of [***] percent ([***]%) above the Bank of England base rate (which is current on the date such payment became overdue) and accruing on a daily basis from the final date for such payment until the date such payment is actually received, |
| | | | | | | | |
| | |
| "Inventory" | | means the API specified in Schedule 3, |
| | |
| “Joint Patent” | | means any Patent based on an invention made while carrying out the activities pursuant to this Agreement which has multiple inventors as defined by US patent law, where there is at least one inventor employed by or otherwise obligated to assign their rights in the invention to C4X and at least one inventor employed by or otherwise obligated to assign their rights in the invention to Company, |
| | |
| "Know-How" | | means any information or material, whether proprietary or not and whether patentable or not, which is not in the public domain including inventions, discoveries, concepts, data, formulae, ideas, specifications, procedures for experiments and tests and results of experiments, experimentation and testing, results of research and development, laboratory records, clinical trials data, case reports, data analysis and summaries, and information in submissions to and information from ethics committees and Governmental Authorities, |
| | |
| "Licensed Compound" | | means (i) C4X_3256, (ii) any other compound covered by the claims of the C4X Patents, (iii) any Compound Variant of (i) and/or (ii) that has the same Mechanism of Action as the molecules described in (i) and/or (ii), (iv) any molecules that are specifically derived from any of the molecules described in (i), (ii) and/or (iii) using the C4X Know-How and identified to have the same Mechanism of Action as the molecules described in (i), (ii) and/or (iii) above, and (v) any molecules created using the C4X Know-How or in connection with the Development of any Licensed Products and identified to have the same Mechanism of Action as the molecules described in (i), (ii) and/or (iii) above, |
| | |
| "Licensed Product" | | means a pharmaceutical product in finished form (in all formulations, dosages and delivery systems) that incorporate a Licensed Compound, |
| | |
Licensed Product
Trademarks and
Trade Dress | | shall have the meaning set out in Clause 7.3.1, |
| | |
Licensed
Technology | | means the C4X Know-How and the C4X Patents, |
| | | | | | | | |
| | |
| "Losses" | | means any and all damages, awards, deficiencies, settlement amounts, defaults, assessments, fines, dues, penalties, costs, fees, liabilities, obligations, Taxes, hens, losses, and expenses (including court costs, interest and reasonable fees of attorneys, accountants and other experts but excluding, in each case, any recoverable VAT) incurred by or awarded to Third Parties and required to be paid to Third Parties with respect to a Claim by reason of any judgment, order, decree, stipulation or injunction, or any settlement entered into in accordance with the provisions of this Agreement, |
| | |
| “Major Market” | | means any of the following United States, Canada, UK, Australia, Japan, China, France, Germany, Italy and Spain, |
| | |
| “Manufacture” | | means all activities related to the manufacture of Licensed Compounds and/or Licensed Products including manufacturing supplies for Development and Commercialisation, packaging, in-process and finished product testing, release of product or any component or ingredient thereof, quality assurance and quality control activities related to manufacturing and release of product, ongoing stability tests, storage, shipment, and regulatory activities related to any of the foregoing, |
| | |
“Mechanism of
Action” | | means Orexin-1 receptor antagonism, |
| | |
| “Milestone Payment” | | means a Development Milestone Payment and/or a Sales Milestone Payment, as applicable, |
| | |
| | | | | | | | |
| “Net Sales” | | means the gross amount invoiced on sales of Licensed Product in the Territory by Company, its Affiliates and Sublicensees (“Company Party”) to any Third Party purchaser in an arm's length transaction, less all applicable deductions to the extent incurred, allowed, paid or accrued by Company with respect to such Licensed Product, including (without duplication)the following deductions, in each case determined in accordance with GAAP or IFRS (as determined by the applicable Company Party) and standard internal policies and procedures and accounting standards of the applicable Company Party, consistently applied (a) customary trade, cash and/or quantity discounts, allowances, fees, credits and any other adjustments, including granted on account of price adjustments, billing errors, rejected goods, damaged or defective goods, recalls, returns, rebates, chargeback rebates, reimbursements or similar payments granted or given to wholesalers or distributors, buying groups, health care insurance carriers, governments, government subsidized programs or managed care organizations, or other institutions, or adjustments arising from consumer discount programs, allowed or paid, in the form of deductions allowed or taken by the Third Party or fees paid by a Company Party with respect to sales of such Licensed Product (to the extent not already reflected in the amount invoiced), (b) retroactive price reductions, allowances or credits granted upon rejections or returns of Licensed Product, including for recalls or damaged good and billing errors, (c) discounts, chargeback payments, rebates, and reimbursements (or equivalent thereof) granted to managed health care organisations, group purchasing organisations or other buying groups, pharmacy benefit management companies (or equivalent thereof), health maintenance organisations, federal, state/provincial, local or other governments or their agencies or purchasers, reimbursers or trade customers, and any other providers of health insurance coverage, health care organisations or other health care institutions (including hospitals), health care administrators or patient assistance or other similar programs, (d) compulsory payments and cash rebates related to the sales of such Licensed Product paid to a Governmental Authority (or agent thereof) pursuant to governmental regulations by reason of any national or local health insurance program or similar program, to the extent allowed and taken, including government levied fees as a result of healthcare reform policies, (e) outbound freight, shipping, insurance and other transportation expenses to the extent included in the price and separately itemised on the invoice price, |
| | | | | | | | |
| | |
| | (f) tariffs, duties, excise, sales, use, value-added and other similar Taxes (other than Taxes based on income), customs duties, or other government charges, in each case imposed on the sale of Licensed Product to the extent included in the price and separately itemised on the invoice, including VAT, but only to the extent that such VAT is not reimbursable or refundable, and (g) amounts previously included in Net Sales of Licensed Product that are written off as uncollectible after reasonable collection efforts, in accordance with standard practices of the applicable Party |
| | |
| | | | | | | | |
| | Notwithstanding anything in this Agreement to the contrary, the transfer of a Licensed Product between or among Company, its Affiliates and Sublicensees (and Affiliates of the Sublicensees) will not be considered a sale, provided, that in the event an Affiliate or Sublicensee is the end-user of Licensed Product, the transfer of Licensed Product to such Affiliate or Sublicensee shall be included in the calculation of Net Sales at the average selling price charged in an arm's length sale to a Third Party who is not an Affiliate or Sublicensee (or an Affiliate of the Sublicensee) in the relevant period. Net Sales will include the cash consideration received on a sale and the fair market value of all non-cash consideration, which generally will mean the Company Party’s average sales price for the applicable time period. Disposition of Licensed Product for, or use of the Licensed Product in, clinical trials or other scientific testing, as free samples, or under compassionate use, named patient sales, patient assistance, or test marketing programs or other similar programs or studies where a Licensed Product is supplied without charge shall not result in any Net Sales, [however, if any Company Party charges for such Licensed Product, the amount billed will be included in the calculation of Net Sales], but for the sake of clarity such disposition or use of the Licensed Product shall never constitute a First Commercial Sale. In the event a Licensed Product is sold as part of a Combination Product or a Co-Packaged Product, the Net Sales from the Combination Product or the Co-Packaged Product, for the purposes of determining royalty payments, shall be determined by multiplying the Net Sales of the Combination Product or the Co-Packaged Product (as defined in the Net Sales definition), during the applicable royalty reporting period, by the fraction A/A+B where A is the average sale price of the Licensed Product when sold separately in finished form and B is the average sale price of the other product(s) included in the Combination Product or Co-Packaged Product when sold separately in finished form, in each case during the applicable royalty reporting period or, if sales of both the Licensed Product and the other product(s) did not occur in such period, then in the most recent royalty reporting period in which sales of both occurred. In the event that such average sale price cannot be determined for the Licensed Product and all other product(s) included in the Combination Product or Co-Packaged Product, then the Net Sales for the purposes of determining royalty payments for a Combination Product or a Co-Packaged Product shall be calculated by multiplying the Net Sales of the Combination Product by the fraction of |
| | | | | | | | |
| | |
| | C/C+D where C is the direct Manufacturing cost (or, if acquired from a Third Party, the direct acquisition cost) of the Licensed Product and D is the direct Manufacturing cost (or, if acquired from a Third Party, the direct acquisition cost) of all other pharmaceutical product(s) included in the Combination Product or Co-Packaged Product (such definition of direct Manufacturing cost to be used mutatis mutandis in the circumstances of other pharmaceutical product(s)) In such event, Company shall in good faith make a determination of the respective Manufacturing or acquisition costs of the Licensed Product and all other pharmaceutical products included in the Combination Product or Co-Packaged Product, and shall notify C4X of such determination and provide C4X with data to support such determination. In the event that the Licensed Product is never sold individually and is only ever sold as a Co-Packaged Product, then the gross invoiced sales figure to be used in the determination of the Net Sales shall be the volume of Licensed Product sold multiplied by the difference between the price of the Co-Packaged Product and the price of the other product (or aggregate price of the other products, as the case may be) with which the Licensed Product is co-packaged or combined, less (a) through (d) (inclusive) of the first paragraph of this definition, |
| | |
| “Patent” | | means patents and patent applications and all substitutions, divisions, continuations, continuations-m-part, any patent issued with respect to any such patent applications (including certificates of invention), any reissue, re-examination, utility models or designs, renewal or extension of any such patent, any term extension, a supplementary protection certificate and any confirmation patent or registration patent or patent of addition based on any such patent, and all counterparts and patents and patent applications based on, corresponding to or claiming the priority date thereof in any country, |
| | |
| “Payee” | | shall have the meaning set out in Clause 9.3.5, |
| | |
| “Payor” | | shall have the meaning set out in Clause 9.3.5, |
| | |
| | | | | | | | |
| “Person” | | means any natural person, corporation, firm, business trust, joint venture, association, organisation, company, partnership or other business entity, or any government, or any agency or political subdivisions thereof, |
| | |
| “Phase II Trial” | | means a controlled clinical study in a relatively small number of subjects (usually no more than several hundred) designed to evaluate the effectiveness of a pharmaceutical product for a particular indication or indications in patients with the disease or condition under study and to determine the common short-term side effects and risks associated with such pharmaceutical product, as further described in 21 C.F.R §312 21(b). By way of example, such a study may be designed to establish a dose and/or dose range for the study drug or to obtain additional safety or efficacy data to support the development of research methods and the design of Phase III research protocols in a patient population with the disease or condition under study, |
| | |
| "Phase III Trial" | | means an expanded controlled or uncontrolled clinical study in a large number of patients (usually more than several hundred to several thousand) that is performed after preliminary evidence suggesting effectiveness of a pharmaceutical product has been obtained, and is intended to gather the additional information about effectiveness and safety that is needed to evaluate the overall benefit-risk relationship of such pharmaceutical product and to provide an adequate basis for physician labelling, as further described in 21 C.F.R §312 21(c). Such a study is designed and intended to be of a size and statistical power sufficient to serve as a pivotal study to support the Regulatory Submission for the indication being studied, |
| | |
"Promotional
Materials" | | means all written, printed, video and/or graphic advertising, promotional and educational communication materials for the purposes of marketing, advertising and promoting of Licensed Product, |
| | |
| "Receiving Party" | | means a Party that receives or has had made available to it directly or indirectly any Confidential Information from the other Party or its Affiliates, employees and/or agents in connection with this Agreement, |
| | |
| | | | | | | | |
| "Regulatory Approval" | | means, as applicable, the approval of an NDA by the FDA in the United States or approval of a comparable application by a Regulatory Authority in another jurisdiction in the Territory for the manufacture, supply, marketing and sale of a pharmaceutical product. For clarity, “Regulatory Approval” shall not include any governmental pricing and/or reimbursement approvals and/or authorizations issued by a Regulatory Authority or any other governmental agency in any country or jurisdiction, |
| | |
| “Regulatory Authority” | | means, with respect to any jurisdiction, the applicable Governmental Authority responsible for regulating the manufacture, distribution, marketing and/or sale of pharmaceutical products in such jurisdiction, |
| | |
"Regulatory
Exclusivity” | | means, with respect to a Licensed Product, exclusive marketing rights or data exclusivity rights conferred by an applicable Regulatory Authority in a particular country with respect to such Licensed Product in such country |
| | |
| "Regulatory Materials" | | means any regulatory applications, submissions, notifications, communications, correspondence, registrations, Regulatory Approvals and/or other filings made to, received from or otherwise conducted with a Governmental Authority that are related to Developing, Manufacturing, obtaining marketing authorisation, and/or Commercialising in a particular country or regulatory jurisdiction, |
| | |
"Regulatory
Submission" | | means a marketing authorisation application filed with the FDA, EMA, or any comparable application or filing with any analogous Governmental Authority in the Territory, |
| | |
| "Representatives" | | means the directors, officers and/or employees of the Receiving Party and/or its Affiliates and its professional advisers (meaning solicitors and/or accountants or financial advisers), |
| | |
| “Royalty” | | has the meaning set forth in Clause 8.3.1, |
| | |
| | | | | | | | |
| "Royalty Term" | | means, with respect to each Licensed Product on a country-by-country basis, the period of time (a) beginning upon the later of (i) the First Commercial Sale of such Licensed Product in a country and (ii) the issuance of a Valid Claim in such country covering the composition-of-matter of the Licensed Compound in the Licensed Product, and (b) with respect to each Ex-US Country, ending on the later date of (i) the expiration in a country of the last to expire Valid Claim covering the composition-of-matter of the Licensed Compound in the Licensed Product, (ii) the tenth (10th) year anniversary of the First Commercial Sale of such Licensed Product in such country, (iii) the last expiration or other termination of any applicable Regulatory Exclusivity for such Licensed Product in such country, but, in any event, ending on Ex-US Generic Competition with respect to such Licensed Product in such country, or (c) with respect to the US, ending on the later of the (i) expiration in the US of the last to expire Valid Claim covering the composition-of-matter of the Licensed Compound in the Licensed Product, or (ii) first expiration or other termination of any applicable Regulatory Exclusivity for such Licensed Product in the US, but, in any event ending upon US Generic Competition with respect to such Licensed Product, |
| | |
| "Sales Milestones" | | shall have the meaning set out in Clause 8.2.2, |
| | |
"Sales Milestone
Payment" | | shall have the meaning set out in Clause 8.2.2, |
| | |
| "Sublicensee" | | means a Third Party to which Company or its Affiliate has granted or grants rights to develop, make, have made, use, import, sell, have sold or offer for sale Licensed Product(s), or any further sublicensee of such rights (regardless of the number of tiers, layers or levels of sublicenses of such rights), |
| | |
| "Tax" or "Taxes" | | means any present or future sales, turnover, income, revenue, value added taxes, levies, imposts, duties, charges, assessments and/or fees in each case in the nature of tax (including any interest thereon), |
| | |
| | | | | | | | |
| "Tax Authority" | | means any government, state or municipality or any local, state, federal or other fiscal, revenue, customs or excise authority, body or official anywhere in the world having functions in relation to Tax, |
| | |
| "Tax Credit" | | means a credit against, relief or remission for, or repayment of any Tax, |
| | |
| "Term" | | shall have the meaning set out in Clause 17, |
| | |
| "Territory" | | means worldwide, |
| | |
| "Third Party" | | means a person other than (a) C4X or any of its Affiliates, or (b) Company or any of its Affiliates, |
| | |
| "UK" | | means the United Kingdom as at the Effective Date, |
| | |
| "US" | | means the United States of America and its territories, possessions and commonwealths, |
| | |
| “US Generic Competition” | | means, with respect to a Licensed Product in the US, (a) the date of commercial launch of an ANDA Product (as defined in the definition of Generic Product) in the US or (b) after one or more 505(b)(2) Products (as defined in the definition of Generic Product) have been commercially launched in the US and during any Calendar Quarter after such launch (including the Calendar Quarter such 505(b)(2) Product is launched), the aggregate Net Sales of such Licensed Product in the US in such Calendar Quarter equal less than fifty percent (50%) of the average aggregate Net Sales of the Licensed Product in the US over the four (4) Calendar Quarters immediately prior to the Calendar Quarter in which one or more 505(b)(2) Products first became commercially available in the US, |
| | |
| "Valid Claim" | | means a claim of a C4X issued Patent that (a) has not been rejected, revoked or held to be invalid or unenforceable by a court or other authority of competent jurisdiction, from which decision no appeal can be further taken or (b) has not expired, been finally abandoned, disclaimed or admitted to be invalid or unenforceable through reissue or disclaimer, |
| | |
| | | | | | | | |
| "VAT" | | means value added tax chargeable under or pursuant to the Council Directive 2006/112/EC or any legislation implementing such Directive, or any other sales, purchase or turnover tax and any customs or excise duties or import levies, and |
| | |
| "Viable" | | means, with respect to a Licensed Product, at the relevant time there is/are not and have not been (a) occurrences of serious adverse events in clinical trials relating to such Licensed Product, or (b) failure to achieve the efficacy endpoints of one or more clinical trials relating to such Licensed Product, as to render the programme no longer technically viable or viable in accordance with Applicable Laws. |
1.2 Clause headings shall not affect the interpretation or construction of this Agreement.
1.3 References to Clauses and Schedules are to the Clauses and Schedules of this Agreement.
1.4 Unless the context otherwise requires, words in the singular include the plural and in the plural, include the singular and a reference to one gender shall include a reference to all other genders.
1.5 A reference to a statute, statutory provision or subordinated legislation is a reference to it as it is in force from time to time A reference to a statute or statutory provision shall include any subordinate legislation made from time to time under that statute or statutory provision.
1.6 A reference to a company shall include any company, corporation or other body corporate, wherever and however incorporated or established.
1.7 A reference to this Agreement or to any other agreement or document referred to in this Agreement is a reference to this Agreement or such other agreement or document as varied or novated (in each case, other than in breach of the provisions of this Agreement) from time to time.
1.8 Any words following the terms including, include, in particular or any similar expression shall be construed as illustrative and shall not limit the sense of the words preceding those terms.
2. CLAUSE 2: License AND OTHER COVENANTS
2.1 license
Effective on the Effective Date, C4X hereby grants to Company an exclusive (even as to C4X), sublicensable (subject to Clause 2.2), and perpetual (subject to Clause 18), transferable (subject to Clause 28) license under the Licensed Technology to Develop, use, Manufacture, have Manufactured, import, export, obtain Regulatory Approval and Commercialise the Licensed Compound(s) and/or Licensed Product(s) for use in the Field and in the Territory.
2.2 Sublicensing
2.2.1 Subject to Clauses 2.2.3 and 2.2.4, Company shall have the right to grant sublicenses under the Licensed Technology to its Affiliates without the prior approval of C4X.
2.2.2 Subject to Clauses 2.2.3 and 2.2.4, Company shall have the right to grant written sublicenses under the Licensed Technology to Third Parties without the prior approval of C4X.
2.2.3 Each sublicense agreement shall:
(a) contain terms and conditions which are consistent with the terms and conditions of this Agreement,
(b) not in any way diminish, reduce or eliminate any of Company's obligations under this Agreement,
(c) impose on the Sublicensee all applicable obligations under the terms of this Agreement including the confidentiality and restricted use, reporting, audit and inspection provisions hereunder, and
(d) upon termination of this Agreement, automatically terminate.
2.2.4 Company shall:
(a) following execution of an agreement under Clause 2.2.3 for the promotion, distribution, sale or other commercialisation of Licensed Compounds and/or Licensed Products, promptly notify C4X of the same giving C4X the (a) name of the Sublicensee and (b) scope of any territory rights granted including the countries applicable to such sublicense agreement,
(b) be responsible for the performance of all obligations imposed on the Sublicensees and to C4X for any breaches of the Agreement that occur as a result of actions or omissions by any Sublicensees that would, if such actions or omissions had been those of Company, have caused Company to be in breach of its obligations under this Agreement, and
(c) itself account to C4X for all payments due under this Agreement by reason of such sublicense.
2.2.5 In the event that Company sublicenses any rights hereunder to a Third Party, Company shall ensure that C4X shall receive the same Milestone Payments and the same Royalty payments in respect of Development Milestone Events, Sales Milestones and Net Sales achieved by the Third Party as C4X would have obtained in the case that Company itself had achieved the Development Milestone Events, Sales Milestones and Net Sales. For the sake of clarity, it is the intention of the Parties that C4X's Royalty entitlement shall be calculated on the basis of in market sales to Third Parties of any Licensed Product.
2.3 Implied licenses
Except as expressly provided in this Agreement, neither Party grants to the other Party any right or license in any Intellectual Property Rights, whether by implication, estoppel or otherwise. No implied licenses are granted under this Agreement. Company hereby covenants and agrees not to use or
sublicense any of its rights under the licenses hereunder except as expressly permitted in this Agreement. C4X hereby covenants and agrees not to use or sublicense any of its rights under the licenses hereunder except as expressly permitted in this Agreement.
2.4 Retained Rights
2.4.1 Any rights of C4X not expressly granted to Company under the provisions of this Agreement shall be retained by C4X.
2.4.2 Any rights of Company not expressly granted to C4X under the provisions of this Agreement, and any rights that may be considered as joint rights between C4X and Company, shall be retained by Company.
2.5 Non-Competition
2.5.1 Except where permitted by Company in writing, during the Term, neither C4X nor its Affiliates will, by itself or through any Third Party, Develop or Commercialise compounds, molecules, and/or products with the Mechanism of Action.
2.5.2 For clarity and subject to Clause 2.5.1, nothing in this Agreement shall restrict C4X's ability and right to (including without limitation) conduct research, develop, manufacture and/or commercialise compounds, molecules and/or products without the Mechanism of Action, including but not limited to Orexin-1 receptor agonists.
2.6 Rights Under Bankruptcy
2.6.1 If C4X or an Affiliate become subject to bankruptcy proceedings in the US, then the Parties agree that all rights and licenses granted under or pursuant to any section of this Agreement in connection with US intellectual property rights are and will otherwise be deemed to be for purposes of Section 365(n) of the United States Bankruptcy Code (Title 11, U.S. Code), as amended (the "Bankruptcy Code"), licenses of rights to “intellectual property" as defined in Section 101(35A) of the Bankruptcy Code. Company, as licensee of such rights under this Agreement, shall retain and may fully exercise all of its rights and elections under the Bankruptcy Code. In the event of the commencement of a bankruptcy proceeding by or against an Affiliate of C4X under the Bankruptcy Code, Company will be entitled to a complete duplicate of (or complete access to, as appropriate) such intellectual property and all embodiments of such intellectual property, which, if not already in Company’s possession, will be promptly delivered to it upon Company's written request thereof. Any agreements supplemental hereto will be deemed to be “agreements supplementary to” this Agreement for purposes of Section 365(n) of the Bankruptcy Code. C4X agrees that it shall not take any action in any bankruptcy proceeding or in any other judicial, administrative, arbitral or other proceeding to reject, object to or challenge the legality, validity or enforceability of any of this Agreement or any rights granted herein.
3. CLAUSE 3: REPORTING
3.1 Company shall provide a Bi-Annual Report to C4X twice (2) each Calendar Year. The first Bi-Annual Report shall be provided to C4X before the final day of the month of December 2018, and each subsequent Bi-Annual Report shall be provided by the final day of the month of (a) June and (b)
December each Calendar Year. Each Bi-Annual Report shall contain the information set out in Schedule 4.
3.2 Company shall also provide the Clinical Overview to C4X with Company's provision of the first Bi-Annual Report in accordance with Clause 3.1.
3.3 Promptly upon C4X's request, prior to the First Commercial Sale in a Major Market, Company shall provide in writing to C4X (to the extent the below relates to Licensed Compounds and/or Licensed Products):
3.3.1 copies Clinical Trial reports,
3.3.2 raw study data,
3.3.3 copies of Clinical Trial applications,
3.3.4 copies of correspondence with Governmental Authorities, and
3.3.5 copies of minutes of meetings with Governmental Authorities.
4. CLAUSE 4: DEVELOPMENT
4.1 Development
4.1.1 Company shall have the sole right to Develop the Licensed Compounds and Licensed Products and shall control all aspects of such Development at its own cost and expense (except as otherwise expressly set forth herein).
4.1.2 C4X shall not be required to conduct any Development (preclinical or clinical) activities. Notwithstanding the foregoing, upon request by Company, C4X shall provide reasonable assistance to Company in connection with aspects of Development that are within C4X’s expertise or ability, all at Company's cost except as otherwise set forth herein.
5. CLAUSE 5: REGULATORY RESPONSIBILITIES
5.1 As between the Parties, during the Term, on a Licensed Product-by-Licensed Product basis, Company have the sole right (at its cost) to:
5.1.1 prepare and file all Regulatory Materials and seek and maintain all Regulatory Approvals for Licensed Products in the Field, including preparation of all Regulatory Materials (including in connection with labelling and packaging for Licensed Products) and communications with applicable Governmental Authorities, and
5.1.2 complete all pharmacovigilance responsibilities required under and in accordance with Applicable Laws.
5.2 As between the Parties, Company shall own all Regulatory Approvals for Licensed Products in the Territory. C4X shall have no responsibility with respect to the Regulatory Materials, Regulatory Submissions and/or Regulatory Approvals (whether through assisting Company at the Company's cost or otherwise), except as expressly set forth herein.
6. CLAUSE 6: MANUFACTURING
6.1 Relationships with Third Parties
6.1.1 C4X shall use commercially reasonable efforts to conduct the activities and manage the Third Party relationships that relate to the Licensed Technology as set out in Schedule 7, upon Company’s request. C4X shall conduct the foregoing in consultation with Company, at Company's cost. Company shall reimburse C4X for reasonable out-of-pocket costs arising from such management of Third Party relationships requested by Company within thirty (30) days of receiving each invoice from C4X. C4X shall promptly provide Company with copies of all material documents relating to such Third Party relationships.
6.1.2 Without prejudice to the other provisions of this Clause 6, Company shall have the right, but not the obligation, to take over the activities and management of the Third Party relationships and the agreements listed in Schedule 7. The Company may exercise such right at any time. If Company wishes to take over such activities, management and agreements, Company shall notify C4X and C4X shall, with the co-operation of Company, use commercially reasonable efforts to transfer, to the extent transferable, such activities, management and agreements within any timelines set out in such notice, at Company’s cost.
6.2 Inventory, Technology Transfer
6.2.1 Upon request by Company, C4X shall transfer to Company, at C4X's reasonable cost and expense, the physical possession and control of all Inventory and tangible C4X Know-How promptly following the Effective Date.
6.2.2 Promptly after the Effective Date and as applicable during the Term, C4X shall disclose to Company all Licensed Technology that would be necessary or useful for the development of Licensed Compounds or Licensed Products. If and as requested by Company, C4X will disclose to Company or any Regulatory Authority all relevant Licensed Technology in its possession required for Company to register for sale or obtain Regulatory Approval for the Licensed Products.
6.2.3 C4X shall provide to Company copies of all Data in its possession or Control promptly after the Effective Date.
6.2.4 C4X shall (and shall procure that its Affiliates and agents shall) transfer to Company all Manufacturing-related documents, related materials and information in C4X’s Control or possession that may be reasonably necessary for Company to Manufacture or have Manufactured a Licensed Product, at C4X’s cost and expense.
6.2.5 C4X shall promptly provide technical assistance to Company as Company reasonably requests regarding the Licensed Technology, and Company’s efforts with respect to obtaining Regulatory Approval for any Licensed Products. Company shall reimburse C4X for C4X’s reasonable out-of-pocket costs incurred in connection with such technical assistance, except as otherwise set forth in this Clause 6.2.
6.3 Manufacturing
6.3.1 As between the Parties, Company shall have the sole right to Manufacture and supply Licensed Compounds and Licensed Product and shall control all aspects of such Manufacturing at its own cost and expense (except as otherwise expressly set forth herein).
6.3.2 Without limiting Clause 6.2, C4X shall promptly after the Effective Date, support the transfer of such Manufacturing activities to Company or Company's designee.
6.3.3 Company shall perform its Manufacturing activities in accordance with Applicable Laws and all applicable Regulatory Approvals for the Licensed Products.
7. CLAUSE 7: COMMERCIALISATION
7.1 Responsibility
7.1.1 As between the Parties, Company shall have the sole right to Commercialise the Licensed Products and shall control all aspects of Commercialisation at its own cost and expense (except as otherwise expressly set forth herein), including (a) receiving, accepting and filling orders for Licensed Products, (b) handling all returns of Licensed Product, (c) controlling invoicing, order processing and collection of accounts receivable for the sales of Licensed Product, (d) distributing and managing inventory of Licensed Product, and (e) the sale of Licensed Products in the Field, including the price or prices at which each Licensed Product will be sold, any discount applicable to payments or receivables, and similar matters.
7.1.2 C4X shall have no responsibility with respect to Commercialisation (whether through assisting Company at Company's cost or otherwise).
7.2 Diligence
Company shall use Commercially Reasonable Efforts to Develop at least one Licensed Product and use Commercially Reasonable Efforts to Commercialise such Licensed Product in the US and two (2) additional Major Markets.
7.3 Trademarks, Trade Dress and Promotional Materials
7.3.1 Company shall have the right, in its sole discretion and at its cost, to select, register and own the trade marks, trade dress, logos, slogans and internet domain names with respect to the Licensed Products in the Field (collectively, the "Licensed Product Trademarks and Trade Dress"). All uses of the Licensed Product Trademarks and Trade Dress by Company in connection with Commercialisation shall be in accordance with the applicable Regulatory Approvals and Applicable Laws. As between the Parties, Company shall own all rights to Licensed Product Trademarks and Trade Dress (in each case, together with all goodwill associated therewith).
7.3.2 Company, in its sole discretion, will create and develop Promotional Materials for the Licensed Products, which Promotional Materials shall be in accordance with the applicable Regulatory Approvals and Applicable Laws.
8. CLAUSE 8: FINANCIAL TERMS
8.1 license Fee
In partial consideration for the license rights granted to Company hereunder, Company shall pay C4X [***] Dollars ($[***]) within ten (10) days after the Effective Date. This payment shall be made in accordance with Clause 9 and shall be non-creditable and non-refundable.
8.2 Milestones
8.2.1 Development Milestone Payments. In partial consideration for the license rights granted to Company hereunder, after first achievement by Company or its Affiliates of any of the milestone events set forth in the following table (each, a "Development Milestone Event"), Company shall pay to C4X the corresponding amount set forth in the following table (each, a "Development Milestone Payment"). For the avoidance of doubt, each Development Milestone Payment shall be payable one-time only upon the first occurrence of the event triggering the respective milestone set forth below:
| | | | | | | | | | | |
| Development Milestone Events | Development Milestone Payment |
A [***] | B [***] | C [***] |
| 1 [***] | $[***] | $[***] | $[***] |
| 2 [***] | $[***] | $[***] | $[***] |
| 3 [***] | $[***] | $[***] | $[***] |
| 4 [***] | $[***] | $[***] | $[***] |
| 5 [***] | $[***] | $[***] | $[***] |
| 6 [***] | $[***] | $[***] | $[***] |
| 7 [***] | $[***] | $[***] | $[***] |
| 8 [***] | $[***] | $[***] | $[***] |
(a) For the avoidance of doubt, Indications shall be determined by Company and may include, but shall not be limited to, any of the following (i) mental and behavioural disorders due to use of alcohol, (ii) mental and behavioural disorders due to use of cocaine, (iii) mental and behavioural disorders due to use of opioids, (iv) mental and behavioural disorders due to use of other stimulants, including caffeine, (v) eating disorders, (vi) anxiety disorders, (vii) mood affective disorders, and (viii) habit and impulse disorders.
(b) Company shall notify C4X of the achievement of each Development Milestone Event within thirty (30) days after the achievement thereof.
8.2.2 Sales Milestone Payments. As additional consideration for the rights granted to Company herein, Company shall pay to C4X a one-time milestone payment (“Sales Milestone Payments”) upon first achieving each of the annual Net Sales thresholds set forth below (“Sales Milestones”). For the avoidance of doubt, each Sales Milestone Payment shall be
payable one-time only upon the first occurrence of the event triggering the respective milestone provided below:
| | | | | |
| Sales Milestones | Sales Milestone Payment |
| [***] | $[***] |
| [***] | $[***] |
| [***] | $[***] |
| [***] | $[***] |
| [***] | $[***] |
| [***] | $[***] |
8.3 Royalty and Sub-license Revenues
8.3.1 Subject to Clause 8.3.2, as additional consideration for the rights granted to Company herein, during the Royalty Term for each Licensed Product in each country as applicable, Company shall pay a royalty of [***] percent ([***]%) on annual Net Sales of such Licensed Product (“Royalty”).
8.3.2 During the Royalty Term, when the last Valid Claim in the US covering the composition of matter of a Licensed Product is no longer in effect, the Royalty payable with respect to such Licensed Product in the US shall be reduced to [***] percent ([***]%) for the remainder of the Royalty Term, commencing on the date that such Valid Claim is no longer in effect.
8.3.3 Except as set forth herein, all Royalty payments shall be non-creditable and non-refundable.
8.3.4 Company will pay to C4X [***] percent ([***]%) of any Sub-license Revenues received and/or invoiced during the first [***] years of the Term.
8.4 Third Party Licenses
8.4.1 In the event that it is reasonably necessary for Company to pay royalties or other fees to a Third Party (other than an Affiliate) in connection with a license for a Patent (to which such Third Party has rights), for the Development, Manufacture and/or Commercialisation of a Licensed Product, then Company and C4X shall equally share the responsibility for such royalties or fees payable with respect to such Third Party licenses. Company shall pay such royalties or fees to such Third Party. To recover C4X's share of the responsibility, Company may deduct up to fifty percent (50%) of the royalties or fees paid to the relevant Third Party from the Royalty due to C4X under Clause 8.3 up to a maximum amount of fifty percent (50%) of such Royalty due to C4X under Clause 8.3.
8.4.2 All existing licenses or contractual obligations of C4X that are necessary for the exploitation of the Licensed Technology shall be, except as otherwise expressly set forth herein, maintained by C4X and C4X shall pay all royalties and other fees therefor.
9. CLAUSE 9: PAYMENT TERMS
9.1 Payment Methods
9.1.1 All amounts due hereunder will be paid in US Dollars, and all references to or “Dollars” shall refer to US Dollars. For the purpose of converting any amount owed hereunder to $, such conversion shall be calculated using the exchange rate sourced at each month end from Bloomberg and provided to the Parties by Company. All payments due to C4X under this Agreement shall be made by wire transfer in immediately available funds to an account in designated by C4X in writing.
9.2 Payments
9.2.1 Royalty payments due pursuant to Clause 8.3 shall be due and payable quarterly, sixty (60) days after the end of each Calendar Quarter. Company will accompany each payment of royalties under this Agreement with a report setting forth, on a Licensed Product-by-Licensed Product and country-by-country basis, [***], any currency conversions made in accordance with Clause 9.11, and a calculation of the amount of Royalty payment due on such Net Sales.
9.2.2 Development Milestone Payments shall be due and payable by Company within sixty (60) days after completion of the applicable Development Milestone Event. Together with any such payment, Company shall deliver a written statement of completion and other pertinent and available information.
9.2.3 Sales Milestone Payments shall be due and payable by Company on an annual basis within sixty (60) days after the last day of each calendar year during the Royalty Term. Together with any such payment, Company shall deliver a report specifying, with respect to such calendar year [***], and a calculation of the Sales Milestone Payment payable.
9.3 Taxes
9.3.1 Company will make all payments to C4X under this Agreement without deduction or withholding for Taxes except to the extent that any such deduction or withholding is required by Applicable Laws in effect at the time of payments.
9.3.2 Any Tax required to be withheld on amounts payable under this Agreement will be paid by Company on behalf of C4X to the appropriate Tax Authority, and Company will furnish C4X with proof of payment of such Tax. If any such Tax is required to be withheld or deducted, Company shall pay such additional amounts as shall be required to ensure that the net amount received and retained by C4X (after Tax) will equal the full amount as would have been received and retained by it had no withholding or deduction been made.
9.3.3 If Company pays an additional amount pursuant to Clause 9.3.2 (a "Tax Payment") and C4X reasonably determines that both: (a) a Tax Credit is attributable such amount, and (b) C4X has obtained and utilised that Tax Credit, then C4X shall pay an amount to Company which C4X reasonably determines will leave it (after that payment) in the same after-Tax position it would have been in had the Tax Payment not been required to be made by Company.
9.3.4 Each Party shall reasonably assist and cooperate with the other Party (a) with respect to all documentation required by any Tax Authority or reasonably requested by Company or C4X to secure a reduction in the rate of applicable withholding Taxes, and/or (b) in claiming exemption from such deductions or withholdings under double taxation or similar agreement or treaty from time to time in force and in minimising the amount required to be so withheld or deducted.
9.3.5 All amounts set out or expressed in this Agreement to be payable by any Party (the "Payor") to the other Party (the "Payee") which (in whole or in part) constitute the consideration for a supply or supplies which attract VAT (for which the Payee (or another member of the Payee's group) is accountable to the relevant Tax Authority) shall be deemed to be exclusive of any VAT which is chargeable on such supply or supplies, and accordingly, if VAT is or becomes chargeable on any such supply or supplies, then the Payor shall pay to the Payee (in addition to and at the same time as paying any other consideration for such supply) an amount equal to the amount of such VAT at the rate prevailing at the time the supply is made on the provision by, or the procurement by, the Payee to the Payor of a VAT invoice or such other documentary evidence as the Applicable Law may require.
9.3.6 All amounts specified in this Agreement are exclusive of VAT and any other similar taxes. Those amounts shall be payable by the Payor to the Payee against the presentation of a valid VAT invoice. If applicable, VAT, or any other similar taxes, shall become payable in addition to the amounts specified in this Agreement, subject to the normal rules.
9.3.7 Any reference in Clause 9.3.5 and Clause 9.3.6 to any Party shall, at any time when such Party is treated as a member of a group for VAT purposes, include (where appropriate and unless the context otherwise requires) a reference to any representative or nominated member of such group charged at such time with the administration, collection and/or payment of VAT to the relevant Tax Authority under Applicable Law.
9.4 Records Retention, Audit and Certification
9.4.1 Records Retention
Company will, and will cause its Affiliates and Sublicensees to maintain complete and accurate books, records and accounts containing all particulars necessary for the purpose of the calculation of Net Sales and Sales Milestone Payments payable to C4X hereunder, in sufficient detail to confirm the accuracy of the Royalty and Sales Milestone Payments, which books, records and accounts will be retained by Company, and its Affiliates and Sublicensees as applicable, for two (2) years after the end of the period to which such books, records and accounts pertain.
9.4.2 Audit
C4X will have the right to have an independent certified public accounting firm of internationally recognised standing, reasonably acceptable to Company, have access during normal business hours, upon reasonable prior written notice from time to time but not more often than once per Calendar Year (but in any event within thirty (30) days of such notice) during the Term and for one (1) year thereafter, to such records of Company (and its Affiliates and Sublicensees) that are necessary to verify the accuracy of the calculation of the
Royalty and Sales Milestone Payments (including calculation of Net Sales). Such audits shall be subject to the auditor entering into a customary confidentiality agreement with Company and shall not cover any payment previously audited pursuant hereto .Results of such audits shall be made available to both C4X and Company and shall be final and binding on the Parties (absent manifest error). Unless Company disputes the results of such audit pursuant to Clause 9.4.3, C4X will bear all costs of such audit save where the audit shows an underpayment to C4X of more than [***] percent ([***]%) of the sum actually paid in which case Company shall reimburse C4X for the costs of such audit. If a Party disputes whether or not there is any manifest error in relation to such results, such Party may refer such dispute to an Expert for determination in accordance with Schedule 2.
9.4.3 Over or Underpayment
(a) If, based on the results of any audit, additional payments are owed to C4X under this Agreement, then Company shall have the right to obtain, at its sole expense, a second independent certified public accounting firm of internationally recognised standing reasonably acceptable to C4X to verify the accuracy of the calculation of royalties or any other amount payable hereunder (including calculation of Net Sales). If Company does not obtain a second audit or the second audit concurs with the first audit, Company will make such additional payments within forty-five (45) days after the last accounting firm's written report is delivered to the Parties and such payment shall include Interest on the additional payment. If the audits do not concur, the Parties shall and shall procure that their respective accounting firms discuss diligently, reasonably and in good faith to identify the discrepancy between the firms' audit results and agree on a final determinative result. In the event they are unable to agree, the matter shall be finally resolved by an Expert in accordance with Schedule 2.
(b) If the audit reveals an overpayment by Company, C4X shall reimburse Company the amount of overpayment within forty-five (45) days after the accounting firm's written report is delivered to the Parties and such payment shall include Interest on the overpayment.
9.4.4 Confidentiality
All information that is shared in connection with any audit under this Clause 9.4 shall be treated by the Parties in accordance with the provisions of Clause 10.
10. CLAUSE 10: CONFIDENTIALITY, PUBLICITY AND PUBLICATIONS
10.1 Confidentiality
10.1.1 The Receiving Party shall keep confidential by not disclosing to any Third Party any Confidential Information of the Disclosing Party, and shall not use such Confidential Information except to meet its obligations or exercise its rights expressly given under this Agreement.
10.1.2 Clause 10.1.1 does not prohibit the disclosure or use of Confidential Information if and to the extent the Receiving Party may demonstrate with written evidence:
(a) it is lawfully in the possession of the Receiving Party at the time of disclosure and was not communicated to the Receiving Party subject to any restrictions on disclosure or use,
(b) it is in the public domain at the time of disclosure hereunder or later enters the public domain through no fault of the Receiving Party or its Affiliates (whether in breach of this Agreement or breach of any other obligation of confidentiality to which the Confidential Information relates),
(c) it is received in good faith by the Receiving Party from a Third Party and is not subject to an obligation of confidentiality, or
(d) it is independently developed by the Receiving Party without the aid, use of or reference to Confidential Information received hereunder.
10.1.3 Notwithstanding the foregoing, the Receiving Party may disclose Confidential Information which is required to be disclosed by a court or Governmental Authority (including any stock exchange on which securities issued by the Receiving Party are traded and any Tax Authority) provided, however, that the Receiving Party has, where legally possible, provided reasonable advance notice of the impending disclosure to the Disclosing Party and provided further that the Receiving Party shall only disclose the Confidential Information to the extent legally required (or, in the case of a Tax Authority, in accordance with the common practice of such taxation authority) and to such Governmental Authority only.
10.1.4 The Receiving Party agrees to limit disclosure, copying and analysis of the Confidential Information of the Disclosing Party to only those of its Representatives who have a need to know such information to fulfill the provisions and intent of this Agreement, and who are bound by written obligations of confidentiality with respect to such information. The Receiving Party shall be liable for any failure by such Representatives to comply with the confidentiality obligations hereunder.
10.1.5 The obligations in this Clause 10 shall survive for a period of three (3) years following the expiry or termination of this Agreement.
10.2 Publicity and Publications
10.2.1 Any publication, news release or other public announcement of a Party relating to this Agreement, or a Party's performance hereunder, shall first be reviewed and approved by the other Party, provided, however, that a Party may, once a press release or other public announcement is approved in writing by both Parties (and for clarity, the information in the C4X Press Release in Schedule 5 is deemed approved by Company), make subsequent public disclosure of the information contained in such press release or other public announcement without the further approval of the other Party.
10.2.2 The Parties agree that the results of clinical trials to be conducted pursuant to the Development will be published as required by and in accordance with Applicable Laws.
11. CLAUSE 11: INTELLECTUAL PROPERTY RIGHTS
11.1 Filing, Prosecution and Maintenance of Patents
11.1.1 Subject to Clause 11.1.2, C4X shall use commercially reasonable efforts to prosecute and maintain the C4X Patents in each Major Market and each other country requested by Company, in each case in consultation with Company and at Company's cost. Company shall reimburse C4X for C4X’s reasonable out-of-pocket costs arising from such prosecution and maintenance within thirty (30) days of receiving each invoice therefor. In the event that C4X desires to prosecute and maintain Patents in any country that Company has not so requested (“Additional Country”), C4X shall notify Company of such desire and, if Company does not instruct C4X to commence prosecution in such Additional Country within thirty (30) after such notice, then C4X may prosecute and maintain C4X Patents in such Additional Country, at C4X’s cost. C4X shall provide Company with copies of all material documents relating to the Handling of the C4X Patents in a timely manner. Without limiting the foregoing, C4X shall provide to Company, for review and comment, drafts of filings relating to the C4X Patents no less than seven (7) days prior to making such filing. C4X shall (a) use best efforts to accommodate Company’s comments and suggestions in the Handling of C4X Patents (including with respect to Additional Countries) and (b) not take patent prosecution positions in any Additional Countries that would undermine or contradict positions taken in the prosecution of the C4X Patents in any Major Markets or other countries selected by Company or that would otherwise negatively impact the scope or validity of the C4X Patents in any Major Markets or other countries selected by Company.
11.1.2 Company shall have the right, but not the obligation, to take over prosecution and maintenance of the C4X Patents on a country-by-country basis, the costs of which shall be borne by Company. The Company may exercise such right at any time. If Company wishes to take over such prosecution and maintenance Company shall notify C4X and C4X shall, with the co-operation of Company, use commercially reasonable efforts to transfer such prosecution and maintenance within any timelines set out in such notice. Company shall provide C4X with copies of all material documents relating to the Handling of such Patents in a timely manner following C4X's request.
11.1.3 Should Company wish to exercise its right under Clause 11.1.2, C4X shall use commercially reasonable efforts to make available to Company its authorised attorneys, agents or representatives, such of its employees as are reasonably necessary to assist Company in obtaining and maintaining the patent protection described under Clause 11.1.2. C4X further consents to the use by Company of the C4X Attorneys for the Handling of the C4X Patents. C4X shall execute or use commercially reasonable efforts to have executed all legal documents necessary to file and prosecute the applicable C4X Patents or to obtain or maintain such C4X Patents.
11.1.4 Should Company, following taking over the maintenance and prosecution of the C4X Patents, decide that it does not desire to Handle any C4X Patent, it shall promptly advise C4X thereof in writing in sufficient time as is reasonably needed so that C4X’s rights in such C4X’s Patent are not extinguished. C4X may thereafter Handle the same at C4X's own cost and expense, at its sole discretion.
11.1.5 Should C4X wish to exercise its right to Handle the C4X Patents under Clause 11.1.4, Company shall, at C4X’s cost, use commercially reasonable efforts to make available to C4X its authorised attorneys, agents or representatives, such of its employees as are reasonably necessary to assist C4X in obtaining and maintaining the patent protection described under Clause 11.1.4. Company shall execute or use commercially reasonable efforts to have executed all legal documents necessary to file and prosecute the applicable C4X Patents or to obtain or maintain such C4X Patents, at C4X’s cost.
11.1.6 As between the Parties, Company shall own all rights in and to any Company Applied Patents. Company shall have the first right, but not the obligation, to Handle Company Applied Patents, at its sole cost and expense.
11.1.7 As between the Parties, Company shall own all rights in and to any Joint Patents and such Joint Patents shall be deemed Company Applied Patents. C4X hereby assigns its entire interest in such Joint Patents to Company and shall execute, or cause its employees (or other persons with an obligation to assign their interest in such Joint Patents to C4X) to execute, any documents reasonably requested by Company to perfect Company’s title in such Joint Patents.
11.2 Cooperation
Each Party shall make available to the other Party (and to the other Party's authorised attorneys, agents or representatives) its employees, agents, subcontractors and consultants and relevant information and documentation in such Party's Control, in each case to the extent reasonably available, necessary and appropriate to enable the prosecuting Party to Handle Patents as set forth in Clause 11.1 and for periods of time reasonably sufficient for such Party to obtain the assistance it needs from such personnel. Where appropriate and without prejudice to Clause 11.1, each Party shall execute or use commercially reasonable efforts to procure the execution of all documents relating to such Patent applications or Patents at no charge to the other Party.
11.3 Infringement Claims
11.3.1 Infringement of Third Party Rights
(a) Each Party shall promptly, but in any event no later than ten (10) days after receipt of notice of such action, notify the other in writing if any Third Party at any time provides written notice of a claim to, or brings an action, suit or proceeding against, either Party, or any of their respective Affiliates or sublicensees or subcontractors, claiming infringement of its Patent rights or unauthorised use or misappropriation of its Know-How, based upon an assertion or claim arising out of the Development, Manufacture or Commercialisation of a Licensed Product (an "Infringement Claim").
(b) In the event that such Infringement Claim is brought (i) solely against Company in respect of a Licensed Product or Licensed Compound, (ii) jointly against Company and C4X in respect of a Licensed Product or Licensed Compound or (iii) solely against C4X in respect of a Licensed Product or Licensed Compound which claim against C4X, if successful, would adversely affect Company’s rights hereunder, then, in each case, Company shall have the first right but not the obligation to control the defence of such Infringement Claim. If Company assumes the defence of such Infringement Claim,
Company shall bear the costs of such defence (unless such Infringement Claim is indemnifiable by C4X pursuant to Clause 13.2). C4X will cooperate and assist Company in any such litigation controlled by Company and, unless such Infringement Claim is indemnifiable by C4X pursuant to Clause 13.2, Company shall reimburse C4X for any reasonable out of pocket costs in providing such assistance. For purposes of Clause 11, the Party that defends the Infringement Claim shall be referred to as the “Controlling Party”. In the event that Company is the Controlling Party in any action that was brought solely against C4X, C4X shall take actions to enable Company to assume control of such action, in the name of C4X if reasonably necessary.
(c) In the event that such Infringement Claim is brought solely against C4X in respect of a Licensed Product or Licensed Compound, which claim, if successful, would not adversely affect Company’s rights hereunder, then C4X shall have the right but not obligation to defend such Infringement Claim at its sole expense, except to the extent such Infringement Claim is indemnifiable by Company pursuant to Clause 13.1. Company shall have the right to participate in (but not control), the defence of such action, at its cost and with its own counsel.
(d) The Controlling Party will have the exclusive right to hire, dismiss and direct attorney(ies) and/or solicitor(s) to represent it (and in the event that the claim is brought against both Parties, to represent it and the other Party) with respect to the applicable Infringement Claims. The Controlling Party will have the exclusive right to settle any Infringement Claim without consent of the other Party, unless such settlement (i) would have an adverse impact on the other Party’s rights or ability to perform its obligations under this Agreement, (ii) makes any admission regarding wrongdoing by the other Party, or the invalidity, unenforceability or absence of infringement of any Licensed Technology, (iii) subjects the other Party to an injunction or other equitable relief, or (iv) obligates the other Party to make a monetary payment, in each such case of (i)-(iv), the consent of the other Party shall be required and shall not be unreasonably withheld or delayed. For purposes of clarity, any settlement that would involve the waiver of rights shall be deemed to have an adverse impact and shall require the consent of such other Party.
(e) If Company wishes to assume control of the defence of any such Infringement Claim pursuant to Clause 11.3.1(b)(ii) or (iii), then Company may do so upon written notice to C4X. If Company does not exercise its right to control the defence of an Infringement Claim pursuant to Clause 11.3.1(b)(ii) or (iii), then the Parties shall jointly control the defence of such Infringement Claim. In such event, each Party shall have the right to retain its own counsel to participate in the defence of such Infringement Claim at its sole expense, and neither Party may settle such Infringement Claim without the consent of the other Party, which consent shall not be unreasonably withheld.
(f) If either Party becomes engaged in or participate in any suit described in this Clause 11.3, the other Party shall cooperate, and shall cause its and its Affiliates' employees to cooperate, with such Party in all reasonable respects in connection therewith.
(g) If, as a result of any Infringement Claim, any royalties or other Losses are payable to a Third Party as a result of the Development, Manufacture or Commercialisation of a Licensed Product in the Field, then Company shall be solely responsible for the payment
of all such amounts, unless such Infringement Claim is indemnifiable by C4X pursuant to Clause 13.2. Any such royalties payable by Company shall be treated as a Third Party royalty payments subject to Clause 8.4.
11.3.2 Infringement by Third Parties
(a) In the event that either Party becomes aware of actual or suspected infringement of C4X Patents or misappropriation of C4X Know-How by a Third Party, such Party shall provide written notice thereof to the other Party. In the event of such actual or suspected infringement or defence of declaratory judgement actions regarding Third Party infringement or misappropriation, or the validity or enforceability of the C4X Patents, the following provisions in this Clause 11.3.2 shall apply.
(b) Company shall have the sole right to send written notices, warnings, or claims of infringement to such Third Party that may be infringing or misappropriating the C4X Patents, Company Applied Patents or C4X Know How. Company shall have the first right, but not the obligation, to institute and prosecute an action or proceeding to abate such infringement or misappropriation and to resolve such matter by settlement or otherwise. In the event a declaratory judgement action is brought regarding such Third-Party infringement, misappropriation, or the validity or enforceability of the C4X Patents, Company shall have the right, but not the obligation to be the Controlling Party for such action, even if C4X is the named defendant.
(c) Company shall be responsible for all costs and expenses of any action or proceeding that Company initiates and maintains C4X shall cooperate fully as may be reasonably requested by Company upon reasonable notice, including by joining as a party claimant if required to do so by Applicable Laws to maintain such action or proceeding, to collect for Company's sole and exclusive benefit any and all damages, profits and awards of any nature recoverable for such infringements, by executing and making available such documents as Company may reasonably request, and by performing all other acts which are or may become necessary to vest in Company the right to institute any such suit, including by using commercially reasonable efforts to obtain any necessary joinder and/or cooperation in any such action or proceeding from applicable Third Parties. Company shall reimburse C4X for its reasonable out-of-pocket expenses in providing such cooperation.
(d) If the Parties obtain any damages, license fees, royalties or other compensation (including any amount received in settlement of such litigation) from a Third Party in connection with a suit brought by a Party pursuant to this Clause 11.3.2, such amounts shall be allocated as follows: (i) in all cases to reimburse each Party for all expenses of such litigation, including reasonable attorneys' fees and disbursements, court costs and other litigation expenses (except attorneys’ fees incurred pursuant to Clause 11.3.3) and (ii) the balance shall be retained by Company, with Company paying a Royalty on such recovery as if such recovery were Net Sales of Licensed Product hereunder.
11.3.3 Right to Participate. C4X may, at its option and cost, participate in an advisory (and not controlling) capacity in any action brought pursuant to Clause 11.3 in which Company is the Controlling Party.
11.4 Patent Term Extensions
C4X shall and shall use reasonable efforts to procure that its Affiliates and any relevant Third Parties cooperate fully with Company to obtain any Patent term extensions, adjustment, restorations or supplemental protection certificates, including making available all required regulatory data and information under its Control and executing any required authorisations. All reasonable out-of-pocket expenses incurred by C4X in connection with cooperation under this Clause 11.4 shall be borne by Company.
12. CLAUSE 12: REPRESENTATIONS, WARRANTIES AND UNDERTAKINGS
12.1 Representations and Warranties
12.1.1 Mutual Representations and Warranties
Each of the Parties hereby represents and warrants to the other Party that, as of the Effective Date:
(a) such Party is duly organised, validly existing and in good standing under the laws of its jurisdiction of incorporation or organisation, as applicable. Such Party has full corporate (or other organisational) right, power and authority to enter into this Agreement and to perform its respective obligations under this Agreement and that it has the right to grant the rights, licenses and sub-licenses granted pursuant to this Agreement,
(b) this Agreement is a legal and valid obligation binding upon such Party and enforceable in accordance with its terms, except to the extent that the enforceability may be limited by applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or similar laws from time to time in effect affecting generally the enforcement of creditors’ rights and general principles of equity. The execution, delivery and performance of this Agreement by such Party does not conflict with any agreement, instrument or understanding, oral or written, to which it (or any of its Affiliates) is a Party or by which it (or any of its Affiliates) is bound, nor, to its knowledge, violate any Applicable Law of any Governmental Authority having jurisdiction over it (or any of its Affiliates),
(c) the Person executing this Agreement on behalf of such Party is duly authorised to do so by all requisite corporate action (or other organisational action, as applicable), and
(d) each Party has obtained all necessary consents, approvals and authorisations of all Governmental Authorities and other Persons required to be obtained by it as of the Effective Date in connection with the execution, delivery and performance of this Agreement.
12.1.2 Additional Representations and Warranties of C4X
C4X hereby represents and warrants to Company that, as of the Effective Date:
(a) except as set forth on Schedule 7, C4X exclusively owns all right, title and interest in and to the Licensed Technology, free and clear of all liens, security interests and encumbrances, except for the license granted to Company herein. Schedule 7 sets forth
a true and complete list of all (i) existing licenses and CMO agreements relating to the Licensed Technology and (ii) any other agreements with respect to the Licensed Technology that could impact Company’s Development or Commercialization of the Licensed Compounds or Licensed Products,
(b) no existing licenses, CMO or other agreements relating to the Licensed Technology will impact Company’s rights herein or impose any obligations on Company, unless such agreements are transferred to Company pursuant to Clause 6.12,
(c) all the C4X Patents existing as of the Effective Date are identified in Schedule 1,
(d) the contents of the Data Room are accurate and complete in all material respects,
(e) C4X has not withheld from Company any material information relating to the Licensed Technology which would result in the contents in the Data Room or the statements contained herein being misleading,
(f) C4X has not received written notice from a Third Party alleging that the practice of the C4X Patents or the Licensed Technology infringe the Patent or other proprietary rights of such Third Party,
(g) C4X has not received any claim made against it in writing asserting the invalidity or unenforceability of any of the C4X Patents (excluding any search reports and correspondence or communications with patent offices), and no claim or demand of any Person has been asserted in writing to C4X that challenges C4X’s ownership of or the rights of C4X to use or license any of the Licensed Technology,
(h) C4X has not granted any Third Party (including any Affiliate or investor in C4X) any right, title or interest to, or any encumbrances over, the Licensed Technology, and
(i) C4X its Affiliates, and any inventors of the C4X Patents have complied with their duty of candor and disclosure to the United States Patent and Trademark Office ("USPTO”) with respect to those C4X Patents being prosecuted in the United States, and have also complied with any similar rules applicable in any relevant foreign patent office where C4X Patents are being prosecuted, and all material prior art to the C4X Patents has been cited the USPTO,
(j) C4X does not have any actual knowledge that the development manufacture, sale or commercialisation of the C4X_3256 would infringe any Intellectual Property Rights of any Third Party,
(k) C4X has not misappropriated trade secrets or misused the confidential information of any Third Party in developing the Licensed Technology,
(l) C4X does not have actual knowledge that a Third Party is infringing or misappropriating the Licensed Technology (for clarity C4X has not conducted any literature searches or competitor analysis),
(m) C4X has taken reasonable measures to protect the confidentiality of the C4X Know How and, to C4X’s knowledge, the C4X Know How remains a protected trade secret of C4X,
(n) all applications, filings, registrations, renewals and fees payable in respect of the C4X Patents have been made/paid when due and none is outstanding.
12.1.3 Additional Representations and Warranties of Company
Company hereby represents and warrants to C4X that, as of the Effective Date, it:
(a) has the financial, technical and human resources and expertise to comply with its obligations hereunder, and
(b) does not have any actual knowledge that it does Control or otherwise have any rights in any compound that has the Mechanism of Action.
12.2 Disclaimer
12.2.1 C4X has not conducted human clinical testing of any Licensed Product.
12.2.2 Save as expressly provided in Clause 12.1.2, to the fullest extent permissible by law, and save as expressly set forth above, C4X does not make any warranties of any kind including warranties with respect to:
(a) merchantability or fitness for a particular purpose of the Data,
(b) the Data not being subject to errors or defects,
(c) the quality of the Licensed Technology,
(d) the suitability of the Licensed Technology for any particular use,
(e) whether use of the Licensed Technology and/or Data will infringe Third Party rights, or
(f) whether any relevant Patent applications will be granted or the validity of any Patent that issues in response to such applications.
12.2.3 Each Party acknowledges that the Licensed Technology and the Development (including without limitation any clinical trials) is experimental and exploratory in nature and that neither C4X nor Company makes any representation or warranty that it shall be successful nor that it shall result in any Licensed Products or Commercialisation.
12.2.4 Except as otherwise provided in this Agreement, the foregoing representations and warranties are the sole and exclusive representations and warranties, express, statutory or implied and whether written or oral related to the subject matter of this Agreement, including without limitation, warranties of merchantability or fitness for a particular purpose of products (including Licensed Products) or non-infringement. Further, any advice given to Company under Clauses 6.2.5 and/or 6.3.2 by C4X comes with no representations or warranties, express or implied, including any warranty of merchantability or fitness for a particular purpose or non-infringement.
12.2.5 Company acknowledges that it has relied solely upon (a) its own investigation and analysis, (b) the representations and warranties of C4X expressly set forth in this Agreement and (c) the contents of the Data Room in entering into this Agreement.
12.3 Undertakings of C4X
C4X shall, during the Term:
12.3.1 not assign, transfer, convey or otherwise encumber its right, title and interest in the Licensed Technology without the prior written consent of Company, except (a) as expressly set forth in Clause 28 and (b) C4X may assign its rights to payments or revenues hereunder,
12.3.2 not grant any rights to any Third Party in or relating to the Licensed Technology that are inconsistent with, or impose any limitations on, the license granted to Company herein,
12.3.3 comply with all Applicable Laws in connection with the performance of its obligations hereunder, and
12.3.4 not to employ or directly or indirectly solicit or endeavour to entice away from the employment of Company any of Company’s employees, contractors or consultants, either now or in the future, involved in the Commercialisation of the Licensed Compounds or Licensed Products.
C4X shall deliver to Company one copy of a compact disc or DVD-ROM containing a true, correct and complete copy of the materials in the Data Room no more than ten (10) days after the Effective Date.
12.4 Undertakings of Company
Company shall, during the Term:
12.4.1 comply with all Applicable Laws in the Development, Manufacturing, Commercialisation and disposal of the Licensed Products and the elements contained therein,
12.4.2 to the extent permitted by Applicable Law, notify C4X in writing after Company determines that a clinical trial for a Licensed Product or Licensed Compound will be put on a long-term or indefinite hold or will be terminated. Company will use its best efforts to notify C4X within forty-eight (48) hours of making such determination, and
12.4.3 not employ or directly or indirectly solicit or endeavour to entice away from the employment of C4X any of C4X's employees, contractors or consultants involved in the discovery and development of Licensed Compounds.
13. CLAUSE 13: INDEMNIFICATION
13.1 Indemnification by Company
Company shall defend, indemnify and hold harmless C4X and its Affiliates and each of their officers, directors, shareholders, employees, successors and permitted assigns ("C4X Indemnitees") from and against all Third Party Claims, and all associated Losses arising out of (a) Company's negligence,
recklessness or wilful misconduct in performing any of its obligations under this Agreement, (b) a breach by Company of any of its representations, warranties, covenants or obligations under this Agreement, and (c) the Development, Manufacture, use, or Commercialisation of the Licensed Compounds and/or Licensed Products by, or on behalf of, Company, its Affiliates and/or its Sublicensees, provided, however, that in all cases referred to in this Clause 13.1, Company shall not be liable to indemnify C4X Indemnitees for any Losses of C4X Indemnitees to the extent that such Losses are indemnifiable by C4X pursuant to Clause 13.2.
13.2 Indemnification by C4X
C4X shall defend, indemnify and hold harmless Company and its Affiliates and each of their officers, directors, shareholders, and employees successors and permitted assigns ("Company Indemnitees") from and against all Third Party Claims, and all associated Losses arising out of (a) C4X's negligence, recklessness or wilful misconduct in performing any of its obligations under this Agreement, or (b) a breach by C4X of any of its representations or warranties, covenants or obligations under this Agreement, provided however, that in all cases referred to in this Clause 13.2, C4X shall not be liable to indemnify Company Indemnitees for any Losses of Company Indemnitees to the extent that such Losses of Company Indemnitees are indemnifiable by Company pursuant to Clause 13.1.
13.3 Procedure for Indemnification
13.3.1 Each Party, on behalf of itself and its respective C4X Indemnitees or Company Indemnitees (each such Person, an "Indemnitee"), shall provide the other Party (“Indemnifying Party") prompt written notice of any Claim for which such Indemnitee intends to seek indemnification under this Agreement, provided, however, that failure to give such notification shall not affect each applicable Indemnitee's entitlement to indemnification (or the corresponding indemnifying Party's indemnification obligations) hereunder except to the extent that the indemnifying Party shall have been materially prejudiced as a result of such failure. The Indemnifying Party shall have the initial right (but not obligation) to defend any Claim for which an Indemnitee seeks indemnification under this Agreement as contemplated in the preceding sentence so long as the Indemnifying Party provides notice of its assumption of defence within thirty (30) days of receiving such indemnification notice. If the Indemnifying Party fails to state in a written notice during such thirty (30) day period its willingness to assume the defence of such a Claim, C4X Indemnitee(s) or Company Indemnitee(s), as the case may be, shall have the right to defend, settle or otherwise dispose of such Claim at the Indemnifying Party’s cost, subject to the terms hereof.
13.3.2 The Indemnifying Party may enter into any settlement with respect to, any such Claim for which it has assumed defence, provided that such settlement (a) includes an unconditional release of the Indemnitee from any and all liability to any Third Party, (b) does not adversely affect the Indemnitee’s rights hereunder or impose any obligations on the Indemnitee in addition to those set forth herein, (c) does not involve any injunctive or other equitable relief which would be imposed on Indemnitee, and (d) does not provide for any finding or admission of a violation of law or violation of the rights of any Person by the Indemnitee or any of its Affiliates. The Indemnitee, its employees, agents and Affiliates shall cooperate fully with the Indemnitor and its legal representatives in the investigation and defence of any action, claim or liability covered by this indemnification. The Indemnitee shall have the right, but not the obligation to be represented by counsel of its own selection and at its own expense.
13.3.3 Notwithstanding Clauses 13.3.1 and 13.3.2, upon written notice to the Indemnifying Party, an Indemnitee shall be entitled to assume the defence of any Third Party Claim for which it has sought indemnification hereunder, in which case the Indemnifying Party shall be relieved of liability under Clause 13.1 or 13.2, as applicable, solely for such Third Party Claim and related Losses. In such event, the Indemnitee may enter into any settlement with respect to, such Third Party Claim, provided that such settlement (a) does not adversely affect the Indemnifying Party’s rights hereunder or impose any obligations on the Indemnifying Party in addition to those set forth herein, (b) does not involve any injunctive or other equitable relief which would be imposed on Indemnifying Party, and (c) does not provide for any finding or admission of a violation of law or violation of the rights of any Person by the Indemnifying Party or any of its Affiliates.
14. CLAUSE 14: LIABILITY
14.1 Subject to Clause 14.2, under no circumstances shall either Party be liable to the other Party under any legal or equitable claim or cause of action, whether in contract, tort or otherwise, for indirect, special or consequential damages (including, without limitation, loss of profits).
14.2 Notwithstanding any other provision of this Agreement, the liability of the Parties shall not be limited in any way in respect of the following:
14.2.1 death or personal injury caused by negligence,
14.2.2 fraud or fraudulent misrepresentation, or
14.2.3 any other losses which cannot be excluded or limited by Applicable Laws.
15. CLAUSE 15: SET-OFF
15.1 Subject to Clauses 8.4.1 and 15.2, each Party must pay all sums that it owes to the other Party under this Agreement free and clear without any set-off, counterclaim, deduction or withholding of any kind, save as may be required by law.
15.2 The Parties acknowledge and agree that if C4X should breach its obligations in Clauses 2.5.1 and/or 10, any award of damages that C4X owes to Company may be set off from any amount due to C4X from Company.
16. CLAUSE 16: ANTI-BRIBERY
16.1 Each Party shall comply with applicable Bribery Legislation, including ensuring that it has in place adequate procedures to ensure compliance with the Bribery Legislation and each shall ensure that:
16.1.1 all of such Party’s personnel,
16.1.2 all others associated with such Party, and
16.1.3 each of such Party’s sub-contractors,
involved with this Agreement so comply. The expressions 'adequate procedures' and 'associated' shall be construed in accordance with the Bribery Act 2010 and documents published by or on behalf of the applicable Governmental Authority in connection with it.
16.2 Without limitation to Clause 16.1, neither Party shall make or receive any bribe (as defined in the Bribery Act 2010) or other improper payment, or allow any such to be made or received on its behalf, either in the UK or elsewhere, and will implement and maintain adequate procedures to ensure that such bribes or payments are not made or received directly or indirectly on its behalf.
17. CLAUSE 17: TERM
The term of this Agreement shall commence on the Effective Date and shall continue on a Licensed Product-by-Licensed Product basis until the expiration of the last Royalty Term with respect to such Licensed Product anywhere in the world (the "Term"), in each case, unless earlier terminated by a Party in accordance with Clause 18. Upon expiration of this Agreement with respect to a Licensed Product, Company shall have a non-exclusive, perpetual, fully paid-up, royalty-free license of the scope described in Clause 2.1 above.
18. CLAUSE 18: TERMINATION
18.1 Both Parties
18.1.1 Subject to Clause 18.1.2, without prejudice to any other rights under this Agreement, each Party shall be entitled to terminate this Agreement with immediate effect by written notice to the other Party in the event that the other Party commits a material breach of its obligations under this Agreement (being one that deprives such Party of the whole or substantially the whole of its benefit under this Agreement) and fails to cure such breach within six months after receipt of a written notice thereof from the Party not in breach giving full particulars of the breach and requiring it to be remedied.
18.1.2 Without prejudice to any other rights that C4X may have under this Agreement, the Parties acknowledge and agree that C4X may only terminate this Agreement for material breach of Company's obligations under Clause 7.2 ("Diligence Obligations"), until the date upon which Company or any of its Affiliates, or Sublicensees achieves the first commercial sale of any Licensed Product to a Third Party in the US following the applicable Regulatory Approval of the Licensed Product in the US. Following such date, C4X may no longer terminate this Agreement for material breach of the Diligence Obligations.
18.2 C4X Termination. Without prejudice to any other rights under this Agreement, C4X shall have the right to terminate this Agreement immediately:
18.2.1 upon (a) the insolvency of, assignment for the benefit of creditors by, or the initiation of insolvency proceedings by Company or (b) the initiation of insolvency proceedings against Company without Company’s consent if such proceeding is not dismissed within 90 days, or
18.2.2 if Company opposes or challenges the validity of the Licensed Technology.
18.3 Company Termination. Without prejudice to any other rights under this Agreement, Company shall have the right to terminate this Agreement in its entirety or with respect to one or more
countries or Products, without cause, upon ninety (90) days’ prior written notice to C4X. Company shall include in such notice whether or not the applicable Licensed Product is Viable.
18.4 The Parties acknowledge and agree that upon the insolvency of, assignment for the benefit of creditors by, or the initiation of administration proceedings by or against, C4X this Agreement shall not terminate and shall remain in full force and effect in accordance with the terms hereof.
19. CLAUSE 19: EFFECTS OF TERMINATION
19.1 The following provisions in this Clause 19 shall apply upon termination of this Agreement by C4X under Clause 18.1 or 18.2 or by Company under Clause 18.3 (without prejudice to any other remedies which may be available to a Party under Applicable Laws or in equity).
19.1.1 Termination of Rights and Licenses
In the event that this Agreement is terminated in pursuant to Clause 18.1 or 18.2 by C4X or by Company pursuant to Clause 18.3 in its entirety or in respect of certain Licensed Products, all rights and licenses granted to Company in respect of the Licensed Products subject to such termination shall terminate as of such termination date, and Company shall (and shall procure that its Affiliates and Sublicensees shall) immediately cease Developing, Manufacturing and Commercialising such Licensed Product (except as otherwise set forth in this Clause 19.1). Notwithstanding the foregoing, Company may complete and sell any work-in-progress and inventory of the Licensed Products that exist as of the termination date for a period of six (6) months after the termination date, provided that Company pays C4X the applicable amounts due on such sales of Licensed Products in accordance with Clause 8. Upon expiration of such six (6) month period, at C4X's option, Company shall sell to C4X at cost any stock of Licensed Product remaining.
19.1.2 Company Obligations
In the event that this Agreement is terminated (a) pursuant to Clause 18.1 or 18.2 by C4X or (b) pursuant to Clause 18.3 by Company with respect to a Licensed Product that is Viable, Company shall:
(a) subject to Clause 19.1.2(b), at Company's cost and expense, bring to a close any existing clinical trial for the Licensed Product(s) subject to such termination in a controlled and ordered manner and at all times in accordance with the directions and guidance of the relevant Governmental Authority,
(b) if so requested by C4X, assign and transfer to C4X, at C4X's cost and expense, to the extent assignable by Company in accordance with Applicable Laws, the management and continued performance of any clinical trials for any Licensed Product that is subject to such termination ongoing as of the effective date of such termination (provided that if the management and continued performance thereof is not assignable, then at the request of C4X, Company shall be responsible for completing (in accordance with the established protocols and its customary business practices) such clinical trials),
(c) use reasonable efforts to assign and transfer to C4X, within sixty (60) days of the date of termination, any and all Regulatory Approvals and Regulatory Materials for the Licensed Products subject to such termination,
(d) to the extent that any of the foregoing items set forth in this Clause 19.1.2 are owned or otherwise controlled by an Affiliate or Sublicensee of Company, use reasonable efforts to procure that such Affiliate or Sublicensee make the assignments to C4X or otherwise meets the obligations as set forth in this Clause 19.1.2,
(e) grant to C4X a non-exclusive, irrevocable, transferable, royalty-free license (or sub-license as applicable), solely in the country(ies) that the license granted in Clause 2 has been terminated, with unrestricted rights to sub-license and sub-contract to use any and all (i) Company Applied Patents exclusively related to the Licensed Compounds and Company Applied Know-How exclusively related to the Licensed Compounds, in each case to Develop, make, use, import, sell and offer for sale Licensed Product in the Field, and (ii) other Intellectual Property Rights owned by Company and exclusively related to the Licensed Products (including any trade mark or brand name, being a Licensed Product Trade Mark or otherwise) to use, research, develop, have developed, make, have made, sell, offer to sell, import, export or otherwise dispose of any Licensed Products. For clarity, the use of any trade mark or brand name under this Clause 19.1.2(e), shall exclude any general corporate branding, such as Company's company name and logo or the company name and logo of its Affiliates,
(f) within a reasonable time after such termination, use commercially reasonable efforts to assist Company in identifying the Company Applied Patents and accessing any documentation reasonably necessary to allow C4X to enjoy its non-exclusive license rights under Clause 19.1.2(e), and
(g) with respect to any Company Applied Know-How referenced in Clause 19.1.2(e), (i) deliver to C4X a copy of the physical embodiment of such Company Applied Know-How exclusively related to the Licensed Compound and is embodied in documents or biological or chemical materials, and to the extent that such Company Applied Know-How is not fully embodied in documents or biological or chemical materials, Company shall procure that its employees and agents who have knowledge of such Company Applied Know-How use commercially reasonable efforts to fully embody the same and (ii) provide such technical assistance and documentation (including the Drug Master File) as is necessary to enable transfer of the Manufacturing technology to C4X's chosen Third Party manufacturer.
(h) In the event this Agreement is terminated (a) pursuant to Clause 18.1 or 18.2 by C4X or (b) pursuant to Clause 18.3 by Company with respect to a Licensed Product that is not Viable, the Company shall fulfil the obligations set forth in sub-Clauses (c), (d), (e), (f), and (g) above.
19.1.3 Return of Confidential Information
Upon termination of this Agreement in its entirety pursuant to Clause 18.1 or 18.2 by C4X or by Company pursuant to Clause 18.3, Company shall, at C4X’s option, either return to C4X all tangible Confidential Information disclosed to Company by or on behalf of C4X or destroy such Confidential Information, provided that Company shall have the right to retain one (1) copy of the Confidential Information in a secure location solely for purposes of identifying its confidentiality obligations under Clause 10. Upon termination by C4X or by Company, Company shall use reasonable efforts to delete all electronic copies of such Confidential
Information from its systems (other than Confidential Information stored on electronic archival, back-up, security, or disaster recovery systems). Upon termination, C4X shall, at Company’s option, either return to Company all tangible Confidential Information disclosed to C4X by or on behalf of Company (including all copies thereof) or destroy such Confidential Information, provided that C4X shall have the right to retain one (1) copy of the Confidential Information in a secure location solely for purposes of identifying its confidentiality obligations under Clause 10. C4X shall use reasonable efforts to delete all electronic copies of such Confidential Information from its systems other than Confidential Information stored on electronic archival, back-up, security, or disaster recovery systems).
19.1.4 Company Applied Patents
Nothing in this Agreement shall require Company to assign or transfer any rights in the Company Applied Patents to C4X.
19.2 Accrued Rights
Termination or expiration of this Agreement for any reason will be without prejudice to and shall not affect any accrued rights, remedies and/or liabilities of either Party at any time up to the date of termination or expiry of this Agreement. Such termination or expiration will not relieve a Party from obligations that are expressly indicated to survive the termination or expiration of this Agreement nor shall it relieve Company of any obligation to make payments under Clauses 8.2 and 8.3 in respect of Development Milestone Events and Sales Milestones achieved or Net Sales of the Licensed Product made up to the effective date of termination or pursuant to Clause 19.1.1.
19.3 Survival
The following Clauses, together with any definitions used and Schedules referenced therein, will survive any termination or expiration of this Agreement: Clauses 1, 2.6, 8.4, 9.4.2, 10, 11.1.4, 11.1.5, 11.1.6, 11.1.7, 11.3, 12.2, 13, 14, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 30, 31, 32, 34, 35, 36 and 37.
20. CLAUSE 20: DISPUTE RESOLUTION
20.1 The Parties recognise that, from time to time during the Term, disputes may arise as to certain matters which relate to either Party's rights and/or obligations hereunder. It is the objective of the Parties to establish procedures to facilitate the resolution of disputes arising under this Agreement in an expedient manner by mutual cooperation and without resort to litigation. To accomplish this objective, the Parties agree to follow the procedures set forth in this Clause 20 to resolve any controversy or claim arising out of, relating to or in connection with any provision of this Agreement.
20.2 With respect to all disputes arising between the Parties, including any alleged failure to perform, or breach, of this Agreement, or any issue relating to the interpretation or application of this Agreement, if the Parties are unable to resolve such dispute within [***] days after such dispute is first identified by either Party in writing to the other, the Parties shall refer such dispute to a designee from senior management with decision-making authority (the "Designee") for attempted resolution by good-faith negotiations within [***] days after such notice is received.
20.3 If the Designees are not able to resolve such dispute referred to them under Clause 20.2 within such [***] day period, then the dispute shall be referred to the respective Chief Executive Officers of the Parties.
20.4 If the Chief Executive Officers are not able to resolve such dispute referred to them under Clause 20.3 within a [***] day period from the date of such referral to the Chief Executive Officers, then the dispute shall be referred to the respective Chairs of the Board of the Parties.
20.5 If the Chairs of the Board cannot resolve the dispute within [***] days of it having been referred to them the matter may be submitted for litigation in accordance with the terms of this Agreement save that any matters that are specifically stated herein to be for reference for determination by an Expert, shall be so referred to the Expert.
21. CLAUSE 21: INJUNCTIVE RELIEF
Notwithstanding anything to the contrary in this Agreement, either Party will have the right to seek temporary or permanent injunctive relief in any court of competent jurisdiction as may be available to such Party under the laws and rules applicable in such jurisdiction with respect to any matters arising out of the other Party's performance of its obligations under this Agreement and, for clarity, the Parties are not required to comply with Clause 20 before seeking interim injunctive relief.
22. CLAUSE 22: INSURANCE
Each Party shall, during the Term and [***] years thereafter, carry comprehensive insurance and in such amounts as a prudent business person would carry to cover such Party’s obligations under this Agreement.
23. CLAUSE 23: ENTIRE AGREEMENT
23.1 This Agreement (including the Schedules) contains all the terms agreed by the Parties in relation to its subject matter and supersedes any and all prior agreements, understandings or arrangements between them, whether oral or in writing in relation to such matters. Without limiting Clause 14.2 neither Party shall have any right or liability in respect of any statement, representation or promise made prior to the date of this Agreement. Nothing herein shall prevent or restrict either Party's rights to pursue remedies for breach provided for in this Agreement. The Parties acknowledge and agree that Third Party Claims shall be exclusively governed by Clause 13.
23.2 Each Party acknowledges and accepts that, in entering into this Agreement, it has not relied upon any statement, representation, warranty or promise except as set out in this Agreement.
24. CLAUSE 24: FORCE MAJEURE
The failure of either of the Parties to perform any obligation under this Agreement solely by reason of Force Majeure shall not be deemed to be a breach of this Agreement, provided, however, that the Party so prevented from complying herewith shall continue to take all reasonable actions within its power to comply as fully as possible herewith.
25. CLAUSE 25: NOTICES
Any notice or written communication given under or in relation to this Agreement shall be in writing and sent to a Party's address as set forth below or to such other address as it has previously notified to the sending Party in writing Notices may be given, and shall be deemed received by express courier service (signature required), the next Business Day, by registered or certified mail (return
receipt requested or its equivalent), seven (7) Business Days after posting, and by hand, upon delivery.
Notices sent to C4X shall be addressed to:
C4X Discovery Limited
Manchester One
53 Portland Street
Manchester
M1 3LD
Notices sent to Company shall be addressed to:
Indivior UK Limited
103-105 Bath Road
Slough, Berkshire
SL1 SUH
Attention: Assistant General Counsel, EMEA
With a copy to:
Indivior Inc.
10710 Midlothian Turnpike
Suite 430
North Chesterfield, VA 23235
Attention: Chief Legal Officer
and
K&L Gates LLP
599 Lexington Avenue
New York, NY 10022
Attn: [***]
26. CLAUSE 26: INDEPENDENT CONTRACTORS
For the purposes of this Agreement, each Party shall be an independent contractor and nothing in this Agreement shall create a partnership or joint venture. Neither Party is an agent or employee of the other Party and neither Party shall have the authority or power to make any statements, representations or commitments of any kind, nor to take any action which is binding on the other Party, except as may be explicitly provided for herein or authorised by the other Party in writing.
27. CLAUSE 27: RECORDATION
Company may, at its cost and discretion, record in any country the license granted herein, including by use of a short form document, as permitted or required by Applicable Law or otherwise, including recording a security interest in those jurisdictions which permit a licensee to do so. C4X hereby irrevocably designates and appoints Company and its duly authorized officers and agents, as C4X’s agent and attorney-in-fact to execute such documents and to do all other acts necessary or useful to record the license granted herein. C4X shall, upon request and at Company’s cost, give to Company
such reasonable assistance as Company may reasonably request in connection with recording the license.
28. CLAUSE 28: ASSIGNMENT
28.1 This Agreement and all rights and obligations hereunder are personal to the Parties hereto and may not be assigned, novated or subcontracted without the prior written consent of the other Party hereto, except (a) as set forth in Clauses 2.2 and 12.3 and (b) either Party shall be entitled to assign, novate, subcontract or delegate this Agreement (in whole or in part) to a Third Party taking over all or substantially all of its business or, subject to Clause 28.2, to an Affiliate of such Party provided such Affiliate or Third Party agrees to be bound by all terms and conditions hereof. The identity of such Affiliate or Third Party to whom a Party assigns, novates or subcontracts this Agreement in accordance with the foregoing shall be disclosed in writing to the other Party upon such assignment, novation or subcontracting. Except as expressly set out herein, any assignment or sub-contracting, or attempt at the same, in the absence of such prior written consent shall be void and without effect.
28.2 Company acknowledges and agrees that to the extent that any of Company's obligations herein are sublicensed, sub-contracted or delegated to an Affiliate of Company, Company shall be responsible for any breaches by such Affiliate to such obligations as if such breach was committed by Company.
29. CLAUSE 29: COUNTERPARTS
This Agreement may be executed in any number of counterparts, each of which when executed and delivered shall constitute an original of this Agreement, but all the counterparts shall together constitute the same agreement.
30. CLAUSE 30: FURTHER ASSURANCE
Each of the Parties shall take, or cause to be taken, all actions necessary, proper, or advisable under Applicable Laws to give effect to the provisions of this Agreement. Without limiting the foregoing, each Party shall, at its own cost and expense, use commercially reasonable efforts procure that any necessary Third Party shall, promptly execute and deliver such documents and perform such acts as may be required for the purpose of giving full effect to this Agreement.
31. CLAUSE 31: THIRD PARTY RIGHTS
The Contracts (Rights of Third Parties) Act 1999 shall not apply to this Agreement and no person other than the Parties shall have any rights under it.
32. CLAUSE 32: SEVERABILITY
32.1 If any provision of this Agreement (or part of a provision) is found by any court or administrative body of competent jurisdiction to be invalid, unenforceable or illegal, the other provisions shall remain in force.
32.2 If any provision of this Agreement (or part of any provision) is or becomes illegal, invalid or unenforceable but would be legal, valid and enforceable if some part of it was deleted or modified, the provision or part-provision in question shall apply with such deletions or modifications as may
be necessary to make the provision legal, valid and enforceable. In the event of such deletion or modification, the Parties shall negotiate in good faith and acting reasonably in order to agree the terms of a mutually acceptable alternative provision.
33. CLAUSE 33: EXPENSES
Except as expressly provided for in this Agreement, each Party shall pay its own costs and expenses incurred in connection with negotiating, preparing and executing this Agreement.
34. CLAUSE 34: VARIATION
No variation of or amendment to this Agreement shall be effective unless made in writing and signed by authorised representatives of the Parties.
35. CLAUSE 35: WAIVERS
The failure or delay of either Party to enforce or to exercise, at any time or for any period of time, any term of or any right, power or privilege arising pursuant to this Agreement does not constitute and shall not be construed as a waiver of such term, right, power or privilege and shall in no way affect either Party's right later to enforce or exercise it, nor shall any single or partial exercise of any remedy, right, power or privilege preclude any further exercise of the same or the exercise of any other remedy, right, power or privilege.
36. CLAUSE 36: GOVERNING LAW
This Agreement and any dispute or claim arising out of, or in connection with, it, its subject matter or formation (including non-contractual disputes or claims) shall be governed by, and construed in accordance with, the laws of England and Wales.
37. CLAUSE 37: JURISDICTION
The Parties irrevocably agree that the courts of England shall have exclusive jurisdiction to settle any dispute or claim arising out of, or in connection with, this Agreement, its subject matter or formation (including non-contractual disputes or claims).
IN WITNESS WHEREOF, the Parties have executed this Agreement through their duly authorised representatives.
SIGNED for and on behalf of C4X DISCOVERY LIMITED
| | | | | |
| /s/ Craig Fox |
| Name: | Craig Fox |
| Title: | Chief Scientific Officer |
| Date: | 3/28/2018 |
| |
| /s/ Brad Hoy |
| Name: | Brad Hoy |
| Title: | Chief Financial Officer |
| Date: | 3/28/2018 |
SIGNED for and on behalf of INDIVIOR UK LIMITED
| | | | | |
| /s/ Gilles Picard |
| Name: | Gilles Picard |
| Title: | SVP, Strategy & EMEA, Commercial |
| Date: | 43187 |
SCHEDULES LIST
1 - C4X Patents
2 - Expert
3 - Inventory
4 - Bi-Annual Report
5 - C4X Press Release
6 - Data Room Index
7- Material Agreements
SCHEDULE 1
C4X PATENTS
1. Patents covering potential PET ligand C4X_3172 and backup compounds (‘ethyl case’) - PCT published as WO 2016/034882 on 10 March 2016.
| | | | | | | | | | | | | | | | | |
| Country | Application no | Filing date | Priority Date | Status | Estimated Expiry date # |
| AU | 2015310662 | 03-Sep-15 | 03-Sep-14 | pending | 03-Sep-35 |
| BR | 112017004173-1 | 03-Sep-15 | 03-Sep-14 | pending | 03-Sep-35 |
| CA | 2959942 | 03-Sep-15 | 03-Sep-14 | pending | 03-Sep-35 |
| CN | 2015800576964 | 03-Sep-15 | 03-Sep-14 | pending | 03-Sep-35 |
| EA* | 201790519 | 03-Sep-15 | 03-Sep-14 | pending | 03-Sep-35 |
| EP** | EP157626789 | 03-Sep-15 | 03-Sep-14 | pending | 03-Sep-35 |
| GB*** | 1516146.6 | 03-Sep-15 | 03-Sep-14 | pending | 03-Sep-35 |
| HK**** | TBC | 03-Sep-15 | 03-Sep-14 | pending | 03-Sep-35 |
| ID | P00201702070 | 03-Sep-15 | 03-Sep-I4 | pending | 03-Sep-35 |
| IL | 250883 | 03-Sep-15 | 03-Sep-14 | pending | 03-Sep-35 |
| IN | 201727008919 | 03-Sep-15 | 03-Sep-14 | pending | 03-Sep-35 |
| JP | 2017-513035 | 03-Sep-15 | 03-Sep-14 | pending | 03-Sep-35 |
| KR | 2017-7008975 | 03-Sep-15 | 03-Sep-14 | pending | 03-Sep-35 |
| MX | MX/A/2017/002877 | 03-Sep-15 | 03-Sep-14 | pending | 03-Sep-35 |
| MY | 2017700738 | 03-Sep-15 | 03-Sep-14 | pending | 03-Sep-35 |
| NZ | 730422 | 03-Sep-15 | 03-Sep-14 | pending | 03-Sep-35 |
| PCT | PCT/GB2015/052546 | 03-Sep-15 | 03-Sep-14 | converted | 03-Sep-35 |
| PH | 12017500401 | 03-Sep-15 | 03-Sep-14 | pending | 03-Sep-35 |
| SO | 11201701715P | 03-Sep-15 | 03-Sep-14 | pending | 03-Sep-35 |
| US | 15/508,392 | 03-Sep-15 | 03-Sep-14 | pending | 03-Sep-35 |
| ZA | 2017/01644 | 03-Sep-15 | 03-Sep-14 | pending | 03-Sep-35 |
# Standard 20-yearpatent term. Does not include potential additional 5 year SPC/PTA extension
*EPC states in which the EP patent is to be validated have not yet been nominated
**Eurasian (EA) states are Armenia, Azerbaijan, Belarus, Kazakhstan, Kyrgyzstan, Moldova, Russia, Tajikistan and Turkmenistan. *** Separate GB filing allows prosecution strategy to be tested ahead of EP prosecution - granted GB patent may be achieved via GB application or EPO validation
****HONG KONG PATENT APPLICATION WILL BE OBTAINED VIA CHINA PROSECUTION
2. Patents covering C4X_3256 and analogue compound (primary ‘methyl’ case) - PCT published as WO 2017/129829 on 03 August 2017.
| | | | | | | | | | | | | | | | | |
| Country | Application no | Filing date | Priority Date | Status | Estimated Expiry date # |
| PCT | PCT/EP2017/051960 | 30-Jan-17 | 29-Jan-16 | Published | 30-Jan-37 |
For information national phase nomination will be due 30 months after priority date - August 2018
3. Priority filings covering novel analogues of C4X_3256.
| | | | | | | | | | | | | | | | | |
| Country | Application no | Filing date | Priority Date | Status | Estimated Expiry date # |
| GB | 1712388.6 | | 01-Aug-17 | pending | 01-Aug-38 |
| GB | 1712390.2 | | 01-Aug-17 | pending | 01-Aug-38 |
| GB | 1712392.8 | | 01-Aug-17 | pending | 01-Aug-38 |
| GB | 1712393.6 | | 01-Aug-17 | pending | 01-Aug-38 |
| GB | 1712394.4 | | 01-Aug-17 | pending | 01-Aug-38 |
| GB | 1712395.1 | | 01-Aug-17 | pending | 01-Aug-38 |
SCHEDULE 2
EXPERT
If any Party wishes to appoint an independent expert (the "Expert") to resolve any matter pursuant to Clauses 9.4.2, 9.4.3(a), or 20.5, of this Agreement, the following procedures will apply:
1. The Party wishing to appoint the Expert (the "Appointing Party") will serve a written notice on the other Party (the "Responding Party"). The written notice will specify the Clause pursuant to which the appointment is to be made and will contain reasonable details of the matter(s) which the Appointing Party wishes to refer to the Expert for determination.
2. The relevant Parties shall within [***] days following the date of the Appointing Party's written notice use commercially reasonable efforts to agree who is to be appointed as the Expert to determine the relevant matter(s). If the relevant Parties are unable to agree upon the identity of the Expert within that timescale, the Expert shall be appointed by the President (for the time being) of the Licensing Executives Society Britain and Ireland upon written request of a Party.
3. Each Party will, within [***] days following appointment of the Expert, prepare and submit to the Expert and the other Party a detailed written statement setting out its position on the matter(s) in question and including any proposals which it may wish to make for settlement or resolution of the relevant matter.
4. Each Party will have [***] days following receipt of the other Party's written statement to respond in writing thereto. Any such response shall be submitted to the other Party and the Expert.
5. The Expert will if he/she deems appropriate be entitled to seek clarification from each Party as to any of the statements or proposals made by such Party in their written statement or responses. Each Party will on request make available all information in its possession and shall give such assistance to the Expert as may be reasonably necessary to permit the Expert to make his/her determination.
6. The Expert will issue his/her decision on the matter(s) referred to him/her in writing as soon as reasonably possible, but at latest within [***] months following the date of his/her appointment. The Expert's decision shall (except in the case of manifest error) be final and binding on the Parties.
7. The Expert will at all times act as an independent and impartial expert and not as an arbitrator.
8. The Expert's charges will be borne as he/she determines in his/her written decision.
SCHEDULE 3
INVENTORY
[*** fifteen (15) pages ***]
SCHEDULE 4
BI-ANNUAL REPORT
The Bi-Annual Report shall include the following information –
1. the Development activities undertaken by or on behalf of Company in the previous six (6) months including but not limited to updates or regulatory and Manufacturing progress pertaining to Licensed Product,
2. Development, regulatory and Manufacturing activities relating to the Licensed Products planned for the next 6 months,
3. the status of and strategy relating to any Company Applied Patents,
4. the status of and strategy relating to the C4X Patents,
5. details of any changes to the Development Plan (including reasons for such changes),
6. Regulatory Submissions update,
7. once initiated, a detailed update on Commercialisation,
8. chemistry, manufacturing and controls activity updates relating to Licensed Products, and
9. pharmacovigilance update relating to Licensed Products
SCHEDULE 5
C4X PRESS RELEASE
C4X Discovery Holdings plc
("C4XD" or the "Company")
C4X Discovery signs licensing agreement with Indivior for addiction programme worth up to $294m
— C4XD receives $10 million upfront, potential milestones totalling $284 million plus royalties
29 March 2018 - C4X Discovery Holdings plc (AIM: C4XD), a pioneering drug discovery company, today announces that it has signed a licensing agreement with Indivior UK Limited ("Indivior") to further develop and commercialise C4XD's oral Orexin-1 receptor antagonist ("C4X3256") for the treatment of addiction. C4X3256 aims to treat addiction by targeting the "craving" process itself and, therefore, can be applied across a broad range of substance use disorders. The treatment of addiction represents a substantial area of unmet medical need, forecast to be worth an estimated $13 billion per annum in 20181.
Under the terms of the agreement, C4XD will receive an upfront payment of $10 million and could receive up to $284 million of potential development, regulatory and commercialization milestones in addition to royalties. In turn, Indivior receives a global and exclusive license to C4X3256 and all other compounds in the same patent family and is responsible for the cost and execution of all further development of C4X3256. The agreement covers the development of Orexin-1 antagonists for multiple indications
C4X3256 has the potential to represent a major new method of treating addiction and related disorders. The Orexin-1 receptor is considered to be central to the brain's craving and reward pathways but to date a lack of specificity has hindered clinical development. C4XD's drug discovery engine has allowed the discovery of a highly specific Orexin-1 antagonist that targets Orexin-1 but not Orexin-2, which is targeted in the treatment of insomnia. C4X3256 is a novel, potent and selective oral Orexin-1 antagonist. It has demonstrated excellent preclinical efficacy and tolerability in several preclinical models of addiction.
Dr Clive Dix, CEO of C4X Discovery, said: "C4X Discovery is a pioneer in drug discovery and today's licensing agreement with Indivior, a world-leader in developing and commercialising treatments for addiction, highlights the ability of our drug discovery engine to generate best-in-class small-molecule candidates in high value therapeutic areas. Our goal is to drive returns through early-stage revenue-generating deals with the pharmaceutical industry. This agreement will allow us to accelerate the development of our portfolio to similar successful commercial arrangements and validates our business model."
The C4XD portfolio continues to progress as planned, and a full portfolio update will be given in C4XD's Interim Results in April 2018.
-ENDS-
1 Source: GBI Research 2012
For further information, please contact:
| | | | | |
| C4X Discovery Holdings plc | |
| Clive Dix, Chief Executive Officer | 07801 865 803 |
| Panmure Gordon (UK) Limited (NOMAD and Broker) | |
| Freddy Crossley (Corporate Finance) | 020 7886 2500 |
| Tom Salvesen (Corporate Broking) | |
| Consilium Strategic Communications | |
| Mary-Jane Elliott, Chris Gardner, Matthew Neal | 0203 709 5700 |
About C4X Discovery
C4X Discovery aims to become the world's most productive drug discovery engine by exploiting cutting edge technologies to design and create best-in-class small-molecule candidates targeting a range of high value therapeutic areas. The company's goal is to drive returns through early-stage revenue-generating deals with the pharmaceutical industry.
C4X Discovery has a state-of-the-art suite of proprietary technologies across the drug discovery process. The company's innovative DNA-based target identification platform (Taxonomy3®) utilises human genetic datasets to identify novel patient-specific targets leading to greater discovery productivity and increased probability of clinical success. This is complemented by C4XD's novel drug design platform which comprises two innovative chemistry technologies, Conformetrix and Molplex, that combine 4D molecular shape analyses (based on experimental data) with best-in-class computational chemistry. This provides new and unprecedented insight into the behaviour of drug molecules, enabling the production of potent selective compounds faster and more cost effectively than the industry standard.
C4X Discovery is advancing its in-house pipeline in addiction, diabetes and inflammation with a number of new drug candidates identified and further progress made towards the clinic. In selecting new targets C4X Discovery will focus on the high-value disease areas of inflammation and neurodegeneration, and will continue to maximise value from opportunistic areas, for example, immuno-oncology, addiction, and diabetes.
The Company was founded as a spin-out from the University of Manchester. It has a highly experienced management team and Board who have delivered significant value creation within the healthcare sector historically and have enabled C4XD to reach multiple value inflexion points since IPO For additional information please go to www.c4xdiscovery.com.
About Indivior
Indivior is a global specialty pharmaceutical company with a 20-year legacy of leadership in patient advocacy and health policy while providing education on evidence-based treatment models that have revolutionized modern addiction treatment. The name is the fusion of the words individual and endeavour, and the tagline "Focus on you" makes the Company's commitment clear. Indivior is dedicated to transforming addiction from a global human crisis to a recognized and treated chronic disease. Building on its global portfolio of opioid dependence treatments, Indivior has a strong pipeline of product candidates designed to both expand on its heritage in this category and address other chronic conditions and co-occurring disorders of addiction, including alcohol use disorder and schizophrenia. Headquartered in the United States in Richmond, VA, Indivior employs more than 900 individuals globally and its portfolio of products is available in over 40 countries worldwide. Visit www.indivior.com to learn more.
SCHEDULE 6
DATA ROOM INDEX
[*** fifteen (15) pages ***]
SCHEDULE 7
MATERIAL AGREEMENTS
[*** three (3) pages ***]
PORTIONS OF THIS EXHIBIT HAVE BEEN REDACTED.
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS BOTH (i) NOT MATERIAL AND (ii) WOULD BE LIKELY TO CAUSE COMPETITIVE HARM IF PUBLICLY DISCLOSED.
REDACTED MATERIAL IS MARKED WITH [***].
LICENSE AGREEMENT
BETWEEN
INDIVIOR UK LIMITED
AND
ADDEX PHARMA S.A.
TABLE OF CONTENTS
| | | | | |
| 1. | DEFINITIONS |
| |
| 2. | LICENSE |
| |
| 3. | JOINT RESEARCH ACTIVITIES |
| |
| 4. | DEVELOPMENT ACTIVITIES |
| |
| 5. | DILIGENCE |
| |
| 6. | PAYMENT |
| |
| 7. | INTELLECTUAL PROPERTY |
| |
| 8. | WARRANTIES |
| |
| 9. | CERTAIN COVENANTS AND AGREEMENTS |
| |
| 10. | TERM; TERMINATION |
| |
| 11. | INDEMNIFICATION |
| |
| 12. | INSURANCE |
| |
| 13. | CONFIDENTIALITY |
| |
| 14. | MISCELLANEOUS |
LICENSE AGREEMENT
This License Agreement (this “Agreement”) is entered into as of this 2nd day of January 2018, by and between Indivior UK Limited (Co. No. 7183451) with a registered address of 103-105 Bath Road, Slough, Berkshire, SL1 3UH (“Indivior”), and Addex Pharma S.A., a company organized under the laws of Switzerland (“Addex”).
INTRODUCTION
WHEREAS, Indivior is engaged in the business of, among other things, developing, marketing and distributing pharmaceutical products;
WHEREAS, Addex owns certain intellectual property rights related to its GABAb program, including, but not limited to, ADX 71441 compound for the treatment of addictive disorders; and
WHEREAS, the Parties desire to enter into an agreement granting Indivior a license to such intellectual property to enable Indivior to develop, manufacture, market and distribute Product(s) (as defined below), subject to and in accordance with the terms and conditions of this Agreement.
In consideration of the mutual covenants contained herein, and other good and valuable consideration, the receipt of which is hereby acknowledged, Addex and Indivior agree as follows:
1. DEFINITIONS
When used in this Agreement, each of the following terms, whether used in the singular or plural, shall have the meanings set forth in this Section 1:
1.1 “Accounting Standards” means, with respect to a Person, International Financial Reporting Standards (IFRS), as consistently applied by such Person across its operations.
1.2 “Addex Development Patent Rights” means any Patent Right generated from the activities of this Agreement that Covers a Licensed Compound but which Patent Right does not Cover any Addex Retained Compound, and which is not an Indivior Improvement Patent Right or a Joint Patent Right.
1.3 “Addex Existing Patent Rights” means the patents and patent applications set forth on Schedule 1.3 and Patent Rights relating or claiming priority thereto.
1.4 “Addex Improvements” means any improvements, enhancements or modifications of the Licensed IP developed by or on behalf of Addex other than Joint Improvements.
1.5 “Addex Know-How” means all Know-How owned or controlled by (or, to the extent sublicensable, licensed to), Addex or its Affiliates (a) as of the date hereof or (b) which is created or acquired by Addex in the course of carrying out its obligations under this Agreement, in each case that is necessary or useful for the research, development, manufacture, use or commercialization of the Licensed Compounds and/or the Products.
1.6 “Addex Other Patent Rights” means such rights that Addex has in any Patent Rights that are not: (a) Addex Existing Patent Rights, (b) Addex Development Patent Rights or (c) Addex Overlapping Patent Rights, but are other Patent Rights owned or controlled by (or, to the extent sublicensable, licensed to), Addex or its Affiliates and are filed or claim priority to an application filed before or during the Term and that contain a claim that Covers a Licensed Compound.
1.7 “Addex Overlapping Patent Rights” means any Patent Rights generated from the activities of this Agreement that Cover a Licensed Compound and also Cover an Addex Retained Compound, and which are not Indivior Improvement Patent Rights or Joint Patent Rights.
1.8 “Addex Patent Rights” means (a) the Addex Existing Patent Rights, (b) the Addex Development Patent Rights, (c) the Addex Overlapping Patent Rights and (d) Addex’s interest in any Addex Other Patent Rights and, to the extent Addex has a non-exclusive right to any Addex Other Patent Rights, reference to the Addex Other Patent Rights shall mean such non-exclusive right.
1.9 “Addex Product” means any pharmaceutical product that contains or comprises an Addex Retained Compound.
1.10 “Addex Retained Compounds” means (a) the Compounds that cease to be Development Compounds and become Addex Retained Compounds pursuant to Section 3.4 and (b) any Compounds discovered by Addex after the expiry of the Research Term.
1.11 “Addex Retained Patent Rights” means Patent Rights generated from the activities of this Agreement that Cover an Addex Retained Compound and that do not Cover any Licensed Compound.
1.12 “Affected Product” has the meaning set forth in Section 6.5(d).
1.13 “Agreed Assay” means the assay set out in Schedule 1.13.
1.14 “Affiliate(s)” means, with respect to a Party, any Person that is directly or indirectly controlled by, controlling, or under common control with such Party. For purposes of this definition only, the term “control” (including, with correlative meaning, the terms “controlling”, “controlled by”, and “under common control with”), as used with respect to the applicable Party, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Party, whether through ownership of interests representing equity, securities, or partnership interests or by contract, or otherwise. Ownership of more than fifty percent (50%) of such equity, securities or partnership interests in a Person shall, without limitation, be deemed to be control for purposes of this definition. For the purposes of this Agreement, an Addex Affiliate shall exclude any entity that, after the Effective Date, acquires control of Addex.
1.15 “ANDA” means an abbreviated new drug application filed with the FDA pursuant to 21 U.S.C. § 355(j) and 21 C.F.R. § 314.3.
1.16 “Annual Net Sales” means, with respect to any jurisdiction, the total Net Sales of all Products sold in such jurisdiction during any twelve (12) month period.
1.17 “Applicable Law” means federal, state, local and national laws, statutes, rules, and regulations, including any rules, regulations, guidelines, or other requirements of the Regulatory Authorities, major national securities exchanges or major securities listing organizations, that may be in effect from time to time during the Term and applicable to a particular activity or country or other jurisdiction hereunder.
1.18 “Bankruptcy Code” has the meaning set forth in Section 2.3.
1.19 “Commercially Reasonable Efforts” means, with respect to the performance of development or commercialization activities with respect to the Licensed Compound, Development Compound or a Product by a Party, the performance of obligations or tasks in a manner consistent with the reasonable practices of a similarly situated biotechnology (in the case of Addex) or pharmaceutical (in the case of Indivior) company having similar resources for the development or commercialization (as applicable) of a product having similar technical and regulatory factors and similar market potential, profit potential and strategic value, and that is at a similar stage in its development or product life cycle as such Licensed Compound, Development Compound or Product; provided that [***] Commercially Reasonable Efforts require a Party to take any actions that (a) require such Party to [***] under this Agreement, (b) would [***] or (c) [***] so long as [***].
1.20 “Compound” means any molecule that is a positive allosteric modulator of the GABAb receptors (a) with [***] or less as determined in the Agreed Assay and (b) at least [***], as determined in the Agreed Assay, and any racemate or enantiomer of such molecule, and any salt or hydrate of any of the foregoing.
1.21 “Cover” means, with respect to a patent or patent application for a Compound or Product, that a Third Party’s unlicensed research on, development, manufacture, or commercialization of such Compound, or a pharmaceutical product containing or comprising such Compound, or such Product would fall within at least one claim of such patent or patent application or would cause indirect infringement of the claim by a Third Party. With respect to a pending patent application, the phrase “would fall within the claim” intends such analysis to be based on the claims of such pending application as if they were contained in an issued or granted patent.
1.22 “Development Compound” has the meaning set forth in Section 3.4.
1.23 “Development Milestone Payments” has the meaning set forth in Section 6.3.
1.24 “Effective Date” means the date first written above.
1.25 “European Major Market” means any of the following countries in Europe: France, Germany, Italy, Spain and the United Kingdom.
1.26 “FDA” means the United States Food and Drug Administration, or any successor entity thereto performing similar functions.
1.27 “Field” means the use of pharmaceutical products containing or comprising Compounds in the treatment, diagnosis and/or prevention of any disease in humans other than for the Reserved Indications.
1.28 “Filing Acceptance” means, as applicable, the acceptance for filing of a complete NDA (or its equivalent) by the FDA in the United States, or acceptance for filing of a comparable application by a Regulatory Authority in Europe for the manufacture, supply, marketing and sale of a pharmaceutical product.
1.29 “FTE” means the equivalent of the work of one appropriately qualified individual working on a full-time basis in performing work in connection with this Agreement for a twelve (12) month period (consisting of at least a total of [***] hours per year of dedicated effort). FTE efforts shall not include the work of general corporate or administrative personnel but a single FTE may comprise the work of one or more individuals.
1.30 “FTE Rate” means, for the period from the Effective Date to 31 December 2018, [***]. Thereafter, the FTE Rate shall be increased or decreased on 1 January of each year by the annual percentage increase or decrease in the UK Consumer Price Inflation published by the UK Office of National Statistics.
1.31 “Generic Product” means, with respect to any Product, a non-proprietary drug product that is a pharmaceutical equivalent to such Product, meaning that: (a) it is placed on the market pursuant to a validly granted marketing authorization by a Third Party and such Third Party has not been granted any rights by Indivior to place such product on the market, except in cases where (i) such Third Party has filed an ANDA and such rights were granted as part of an ANDA litigation settlement, (ii) Indivior did not receive monetary consideration from such Third Party and (iii) the grant of rights by Indivior was a good faith attempt to maximize the expected length of market exclusivity for such Product; (b) it contains the same active ingredient(s), has the same dosage form and route of administration; (c) the marketing authorization for which such product was obtained by making a cross reference to the data provided by Indivior to the relevant Regulatory Authority in the application for Marketing Approval for the corresponding Product; and (d) it is AB rated in the United States (or similar designation of therapeutic substitutability outside the United States).
1.32 “Good Clinical Practice” or “GCP” means, as to the United States and the European Union, good clinical practices as in effect in the United States and the European Union, respectively, during the Term and, with respect to any other jurisdiction, clinical practices equivalent to good clinical practices as then in effect in the United States or the European Union, in each case to the extent relating to the pharmaceutical products hereunder.
1.33 “Good Manufacturing Practice” or “GMP” means (a) as to the United States and the European Union, good manufacturing practices and general biological products standards as promulgated by the FDA pursuant to 21 CFR Parts 210, 211, 600 and 610 and as promulgated by the European Union pursuant to Commission Directive 2003/94/EC, respectively, each as may be amended from time to time, and (b) with respect to any other jurisdiction, manufacturing practices equivalent to the aforementioned good manufacturing practices as then in effect in the United States or the European Union, in each case to the extent relating to the pharmaceutical products hereunder.
1.34 “Governmental Authority” means any court, tribunal, arbitrator, agency, legislative body, commission, official or other instrumentality of any government or a federal, state, province, county, city or other political subdivision thereof.
1.35 “Guaranteed Spend” has the meaning set forth in Section 3.1.
1.36 “IND” means an investigational new drug application filed with the FDA pursuant to 21 C.F.R. §312 or any similar authorization outside the US.
1.37 “Indication(s)” means a disease classification as defined within the “International Statistical Classification of Diseases and Related Health Problems” as published on the date hereof by the World Health Organization (e.g. F10 Mental and Behavioral Disorders due to the use of Alcohol is a distinct indication from F14 Mental and Behavioral Disorders due to the use of Cocaine).
1.38 “Indivior Exclusive Field” means the use of pharmaceutical products containing or comprising Compounds in the treatment, diagnosis and/or prevention of any disease in humans other than for the Reserved Indications and/or the Shared Indications.
1.39 “Indivior Improvements” means any improvements, enhancements or modifications of the Licensed IP developed by or on behalf of Indivior other than Joint Improvements.
1.40 “Indivior Improvement Patent Rights” means any Patent Rights, excluding any Joint Patent Rights, that Cover an Indivior Improvement.
1.41 “Initiation” means, with respect to a clinical study, the first dosing of the first patient in such client study.
1.42 “IP License” has the meaning set forth in Section 2.1.
1.43 “Joint Improvements” has the meaning set forth in Section 7.1(d).
1.44 “Joint Patent Rights” means any Patent Rights based on an invention made while carrying out the Parties’ activities pursuant to this Agreement which have multiple inventors, as defined by U.S. patent law, where there is at least one inventor, employed by or otherwise obligated to assign their rights in the invention to Addex, and at least one inventor employed by or otherwise obligated to assign their rights in the invention to Indivior.
1.45 “Joint Research Committee” and “JRC” have the meaning set forth in Section 3.8.
1.46 “Know-How” means any and all data, inventions, methods, proprietary information, processes, trade secrets, techniques and technology (whether patentable or not) which are confidential to the relevant Party, including discoveries, formulae, materials (including chemicals), biological materials (including expression constructs, nucleic acid sequences, amino acid sequences, and cell lines), practices, test data (including pharmacological, toxicological, pre-clinical and clinical information and test data), analytical and quality control data (including drug stability data), manufacturing technology and data (including formulation data), and sales forecasts, data and descriptions.
1.47 “Knowledge” means, with respect to Addex, facts or other information [***].
1.48 “Launch Date” means, on a country-by-county basis, the date of the first commercial sale of a Product by Indivior, its Affiliate or sublicensee to a Third-Party after Marketing Approval together with any required pricing and reimbursement approvals for such·Product has been obtained in such country; provided that sales prior to receipt of Marketing Approval for such Product, such as so-called “treatment IND sales,” “named patient sales”, “Temporary Authorization for Use in France”, and “compassionate use sales,” shall not be construed as comprising a Launch Date.
1.49 “Licensed Compound” means any molecule that is (a) Covered by the Addex Existing Patent Rights, as well as any enantiomer or racemate of such molecule, and/or any salt or hydrate of any of the foregoing; and/or (b) any Compound that is selected by Indivior as a Licensed Compound pursuant to Section 3.4.
1.50 “Licensed IP” means the Addex Patent Rights and Addex Know-How and Addex’s ownership interest in Joint Improvements and Joint Patent Rights.
1.51 “Major Market” means the United States, Canada, Australia and each of the European Major Markets.
1.52 “Marketing Approval” means, as applicable, the approval of an NDA by the FDA in the United States or approval of a comparable application by a Regulatory Authority in any other country or jurisdiction for the manufacture, supply, marketing and sale of a pharmaceutical product. For clarity, “Marketing Approval” shall not include any governmental
pricing and/or reimbursement approvals and/or authorizations issued by a Regulatory Authority or any other governmental agency in any country or jurisdiction.
1.53 “NDA” means a New Drug Application, as defined in 21 U.S.C. §355(b) et seq., and the regulations promulgated thereunder, as such application may be amended or supplemented from time to time.
1.54 “Net Sales” means the gross amounts invoiced by Indivior, its Affiliates or their respective sublicensees (each, an “Indivior Party”) for the sale of a Licensed Compound or Product to Third Parties, less the following:
(i) customary trade, quantity and cash discounts and any other adjustments, including granted on account of price adjustments, billing errors, rejected goods, damaged or defective goods, recalls, returns, rebates, chargeback rebates, reimbursements or similar payments granted or given to wholesalers or distributors, buying groups, health care insurance carriers, governments, government-subsidized programs or managed care organizations, or other institutions, or adjustments arising from consumer discount programs, in each case actually allowed and taken by a Third Party with respect to amounts invoiced for such Product;
(ii) sales taxes or similar taxes, including duties or other governmental charges imposed on the sale of Product to a Third Party (excluding any taxes imposed on or measured by the net income or profits of the Indivior Party), not reimbursable, refundable or creditable to the Indivior Party; and
(iii) prepaid freight, insurance and handling fees actually invoiced (to the extent that the Indivior Party actually incurs the cost of freight, insurance and handling fees for Product and are not reimbursable, refundable or creditable to the Indivior Party);
in each case (i)-(iii) as determined from books and records of the Indivior Party maintained in accordance with applicable Accounting Standards. Amounts invoiced for sales or other transfer of such Product between or among Indivior, its Affiliates and/or other Indivior Parties shall be excluded from the computation of Net Sales unless such sales are intended for end use, in which case the fair market value of such sale shall be applied. If a sale or transfer of Product involves consideration other than cash or is not at arm’s length, then the Net Sales from such sale or transfer shall be the arm’s length fair market value, which generally will mean the Indivior Party’s average sales price for the Quarter.
1.55 “[***]” means [***].
1.56 “[***]” means [***].
1.57 “Party” means Indivior or Addex, as applicable, and “Parties” means both Indivior and Addex.
1.58 “Patent Filing Jurisdictions” means the United States, the European Major Markets and Japan.
1.59 “Patent Rights” means all issued patents, pending patent applications and additional patent applications, provisionals, continuations, continuations-in-part, divisions, reissues, reexaminations, extensions, supplementary protection certificates, substitutions and renewals of any of the foregoing, all foreign counterparts of any of the foregoing, and all new patents that may issue from or claim priority to any of the foregoing.
1.60 “Person” means an individual, sole proprietorship, partnership, limited partnership, limited liability partnership, corporation, limited liability company, business trust, joint stock company, trust, unincorporated association, joint venture or other similar entity or organization, including a government or political subdivision, department or agency of a government.
1.61 “Phase Ib Study” means a study in healthy subjects (rather than patients in the proposed indication) with a primary endpoint of safety and tolerability and which has the additional purpose of investigating the pharmacokinetics, pharmacodynamics and preliminary indications of efficacy of the Product.
1.62 “Phase II” means a human clinical trial, the principal purpose of which is to establish a dose and/or dose range and which is intended to generate additional safety data that will support the design of Phase III research protocols in a patient population that has the disease or condition being studied, as further described in 21 C.F.R. §312.21(b).
1.63 “Phase III” means a human clinical trial, the principal purpose of which is to establish safety and efficacy in patients with the disease or condition being studied, as further described in 21 C.F.R. §312.21(c), which is designed and intended to be of a size and statistical power sufficient to serve as a pivotal study to support the filing of an application for Marketing Approval for the indication being studied.
1.64 “Post-Grant Proceeding” means any re-examination, inter-partes review, re-issue, opposition, interference, cancellation, prior use, derivation, or other proceeding before an administrative agency or administrative tribunal (but excluding routine ex-parte patent prosecution and its associated administrative appeals) related to the validity, scope, ownership, or inventorship of a patent or allowed patent application, as well as any judicial appeals resulting from such a proceeding.
1.65 “Presentation” means, in relation to a Product or Generic Product, the pharmaceutical form of such product in combination with the route of administration such that, by way of example and without limitation, immediate release oral formulations are distinct presentations from sustained release formulations, buccal delivery is distinct from tablets that release in the digestive tract, injectable formulations are distinct presentations from tablets or inhalers and an injectable depot is a distinct presentation from a liquid injection.
1.66 “Product” means any pharmaceutical product that comprises or contains a Licensed Compound.
1.67 “Quarter” means each successive period of three (3) calendar months commencing on January 1, April 1, July 1 and October 1, except that the first Quarter of the Term shall commence on the Effective Date and end on the day immediately prior to the first to occur of January 1, April 1, July 1 or October 1 after the Effective Date, and the last Quarter shall end on the last day of the Term.
1.68 “Regulatory Authorities” means, with respect to any jurisdiction, the applicable Governmental Authority responsible for regulating the manufacture, distribution and sale of pharmaceutical products in such jurisdiction.
1.69 “Representatives” has the meaning set forth in Section 4.3.
1.70 “Research Activities” means the activities carried out by the Parties in the conduct of the Research Plan.
1.71 “Research Plan” has the meaning set forth in Section 3.2.
1.72 “Research Term” means the period commencing on May 1, 2018 and expiring on the second anniversary thereof unless the Parties agree to extend the Research Term pursuant to Section 3.3.
1.73 “Reserved Indications” means the following Indications:
(a) [***] including but not limited to Charcot Marie Tooth (G60);
(b) [***] including but not limited to [***];
(c) [***] including but not limited to [***]; and
(d) [***].
1.74 “Royalty” has the meaning set forth in Section 6.4.
1.75 “Royalty Term” means, with respect to each Product in a particular country, the period of time commencing on the Launch Date of such Product and ending on the later of (a) ten (10) years after the Launch Date of the applicable Product in such country, (b) expiration in such country of the last Valid Patent Claim of the last-to-expire of any Joint Patent Rights or Addex Patent Rights that Cover such Product in the country of its manufacture or sale, and (c) expiration of any applicable marketing or data exclusivity conferred by, or as a consequence of a right, designation or authorisation granted by, a Regulatory Authority in a particular country with respect to such Product in such country.
1.76 “Sales Milestone Payments” has the meaning set forth in Section 6.6.
1.77 “Shared Field” means the use of pharmaceutical products containing or comprising Compounds in the treatment, diagnosis and/or prevention of any disease in humans for the Shared Indications.
1.78 “Shared Indications” means following Indications: [***].
1.79 “Successful Completion of a Phase I Study of a Product” means the first to occur of the following:
(a) (i) receipt by Indivior, its Affiliate or sublicensee of a statistical analysis of [***] that indicates that the [***] has met its primary endpoint and (ii) a study protocol has been agreed with FDA (or, outside the US, an application for clinical trial approval has been granted by the relevant Regulatory Authority) for a subsequent study in patients with the disease; or
(b) (i) receipt by Indivior, its Affiliate or sublicensee of a statistical analysis of [***] of a Product that indicates that the relevant study has met its primary endpoint and (ii) a study protocol has been agreed with FDA (or, outside the US, an application for clinical trial approval has been granted by the relevant Regulatory Authority) for a subsequent study in patients with the disease; or
(c) the dosing by or on behalf of Indivior, an Affiliate or sublicensee of a Product in a Phase II study for a Product.
1.80 “Term” has the meaning set forth in Section 10.1.
1.81 “Territory” means, subject to Section 10.2, worldwide.
1.82 “Third Party” means any Person other than Indivior, Addex or their respective Affiliates.
1.83 “Third Party Licenses” has the meaning set forth in Section 2.4.
1.84 “Valid Patent Claim” means an issued, unexpired claim of a patent or patent application within the Addex Patent Rights or Joint Patent Rights, in each case, that (a) has not been revoked, cancelled or held unenforceable, unpatentable or invalid by a decision of a court or governmental agency of competent jurisdiction from which no appeal can be, or has been, taken and (b) has not been abandoned or expired, except where such abandonment is a result of Indivior’s failure to maintain the Addex Patent Rights or Joint Patent Rights in the Patent Filing Jurisdictions as required herein, [***].
2. LICENSE
2.1 License Grant. Addex hereby grants to Indivior a world-wide, royalty-bearing, right and license, under the Licensed IP, to develop, conduct research related to, manufacture, make, have made, use, lease, license, import, offer for sale, commercialize, distribute, sell and have sold, or otherwise transfer the Licensed Compounds and/or Products in the Field (“IP License”). The IP License (a) is exclusive to Indivior (even as to Addex) and (b) includes the exclusive right to sublicense as described below.
2.2 Affiliates; Right to Sublicense. Indivior shall have the right to (a) exercise the license granted under Section 2.1 through its Affiliates for so long as such entity remains an Affiliate of Indivior and (b) grant sublicenses of the Licensed IP to Third Parties without the prior written consent of Addex; provided that [***], Indivior shall not grant sublicenses of the Licensed IP to Third Parties for [***] without the prior written consent of Addex, which consent shall not be unreasonably withheld, delayed or conditioned. All such sublicenses shall be consistent with this Agreement and terminate automatically on the termination or expiry of this Agreement. Indivior shall remain responsible to Addex for all activities of its Affiliates and sublicensees to the same extent as if such activities had been undertaken by Indivior itself, subject to Section 10.2(c)(iv).
2.3 Rights Under Bankruptcy. All rights and licenses granted under or pursuant to any section of this Agreement in connection with U.S. intellectual property rights are and will otherwise be deemed to be for purposes of Section 365(n) of the United States Bankruptcy Code (Title 11, U.S. Code), as amended (the “Bankruptcy Code”), licenses of rights to “intellectual property” as defined in Section 101(35A) of the Bankruptcy Code. Indivior, as the licensee of such rights under this Agreement, shall retain and may fully exercise all of its rights and elections under the Bankruptcy Code. In the event of the commencement of a bankruptcy proceeding by or against Addex under the Bankruptcy Code, Indivior will be entitled to a complete duplicate of (or complete access to, as appropriate) such intellectual property and all embodiments of such intellectual property, which, if not already in Indivior’s possession, will be promptly delivered to it upon Indivior’s written
request thereof. Any agreements supplemental hereto will be deemed to be “agreements supplementary to” this Agreement for purposes of Section 365(n) of the Bankruptcy Code. Addex agrees that it shall not take any action in any bankruptcy or similar proceeding related solely to and commenced as a direct consequence of the insolvency of Addex to reject or object to this Agreement or any rights granted herein.
2.4 Third Party Licenses.
(a) In the event that it is necessary or useful to obtain licenses under any Patent Rights claiming the use of, or composition of matter of any Licensed Compound from any Third Party (“Third Party Licenses”) in order to commercialize any Product(s), Indivior may, in its discretion and cost, obtain such Third Party Licenses. For the avoidance of doubt, the term Third Party Licenses shall not include intellectual property licenses for new manufacturing process or formulation technologies that may be selected by Indivior.
(b) Indivior shall be responsible for the royalty costs or other fees payable with respect to such Third Party Licenses; provided that Indivior may deduct up to [***] of the amounts paid to the relevant Third Party under the relevant Third Party License from the Royalty payable by Indivior to Addex pursuant to Section 6.4; provided further that in no event shall any such offset reduce the Royalty payable to Addex in respect of a country to less than [***] of the royalty rates set out in the table in Section 6.4.
2.5 Retained Rights. Addex retains the right under any Licensed IP to research, develop, manufacture, commercialize and otherwise exploit any Addex Retained Compounds and/or Addex Products solely in the Reserved Indications and the Shared Indications by itself, through Affiliates and/or through sublicensees and Addex shall have no obligation to account to Indivior for any consideration it may receive in respect of such Addex activities; provided that any license granted by Addex in respect of any Addex Retained Compounds or Addex Products shall not be inconsistent with the terms of this Agreement. The Parties may, from time to time, discuss any advances in the understanding of the use of Compounds in the treatment, diagnosis and/or prevention of any disease in humans and, subject to the prior written agreement of the Parties, any indications discussed may be included in the Reserved Indications or the Shared Indications.
2.6 Joint Patent Rights. It is agreed between the Parties as follows:
(a) Unless otherwise expressly provided herein, Addex retains all of its ownership rights to the Joint Patent Rights. Addex’s rights to any Joint Patent Rights shall be included in the scope of the Licensed IP, solely to the extent they contain a claim that Covers a Licensed Compound and are applicable in the Field.
(b) Unless otherwise expressly provided herein, Indivior retains all of its ownership rights to the Joint Patent Rights. Indivior’s rights to any Joint Patent Rights which relate solely to an Addex Retained Compound shall be licensed to Addex: (i) for the Reserved Indications only on an exclusive basis (even as to Indivior); and (ii) for the Shared Indications on a non-exclusive basis, and in each case on a sublicensable, perpetual, irrevocable and royalty free basis.
The Parties agree that, except to the extent that Indivior has exclusively licensed the relevant Joint Patent Rights to Addex or Addex has exclusively licensed the Joint Patent Rights to Indivior hereunder, either Party may license, assign, mortgage or exploit its interest in an invention claimed in such Joint Patent Rights without the consent of the other Party and either Party may otherwise undertake all activities a sole owner might undertake with respect to its interest in such joint invention without the consent of the other Party, except as otherwise provided for in this Agreement or as the Parties may otherwise agree in writing.
2.7 Exclusivity. During the Term, neither Party, by itself, its Affiliates or through any Third Party (including licensees or sublicensees), shall develop, seek Marketing Approval for, manufacture, import, market, sell, distribute, license or otherwise commercialize any [***], except pursuant to this Agreement.
2.8 Field Restrictions. During the Term, Indivior shall not, directly or indirectly (including through sublicensees and Affiliates), conduct activities with respect to Compounds, Licensed Compounds or Products outside of the Field and Addex shall not, directly or indirectly (including through licensees and Affiliates), conduct activities with respect to Compounds (except as expressly provided in this Agreement), Addex Retained Compounds or Addex Products within the Indivior Exclusive Field or, with respect to Licensed Compounds or Products, outside the Indivior Exclusive Field.
3. JOINT RESEARCH ACTIVITIES
3.1 Guaranteed Spend. Indivior shall pay to Addex at least $2 million ($2,000,000) per twelve (12) month period during the Research Term and Addex shall use such sums to carry out its research and/or discovery activities into the Compounds (including dedicating the number of FTEs required); provided that in no event shall Indivior be required to pay more than $2 million ($2,000,000) for such research and/or discovery activities in any 12-month period (“Guaranteed Spend”), unless otherwise agreed. Once the Research Plan has been agreed upon pursuant to Section 3.2, the Guaranteed Spend shall be used to fund the Research Plan. During the Research Term, payment of the Guaranteed Spend shall be paid [***] prior to agreement of the Research Plan and thereafter in accordance with the budget agreed as a part of the Research Plan, in each case within [***] days of receipt of an invoice from Addex.
3.2 Research Plan. The Parties shall each use their reasonable endeavors to reach agreement on, and execute, within [***] days of the Effective Date, a written plan for joint research and/or discovery of Compounds pursuant to this Article 3 (“Research Plan”), which plan shall specify, among other things, the obligations of each Party and the budget for implementing such Research Plan. Addex shall, subject to Sections 3.4 and 3.5 carry out its responsibilities (including dedicating the number of FTEs required) under the Research Plan during the Research Term. Any disputes related to the preparation of or amendment to the Research Plan shall be handled in accordance with Section 14.12.
3.3 Research Term. The initial Research Term may be extended [***] if both Parties agree in writing, at least [***] days prior to the expiry of the then-current Research Term, to extend the Research Term, such agreement to include a revised Research Plan to cover the additional work, the number of FTEs to be provided by each Party for such work and a budget for the additional work.
3.4 Selection of Compounds. Within [***] days of the end of the Research Term, Addex shall compile a report that sets out all of the Compounds identified in the course of undertaking the Research Plan and the Parties shall discuss whether any of the Compounds so identified meet the target product profile in the Research Plan and are suitable for further development (each such Compound, subject to this Section 3.4, a “Development Compound”). In the event that Indivior considers any of the Compounds suitable for further development, it shall have the right to select such Compounds as follows for further development on the following basis:
(a) Indivior shall be entitled to designate in writing one (1) Development Compound for further development and, on such selection, the relevant Compound shall become a Licensed Compound and shall cease to be a Development Compound. In making any selection of a Development Compound pursuant to this Section 3.4(a). Indivior shall take account of the desire by both Parties that the Licensed Compounds and the Addex Retained Compounds should, to the extent reasonably practicable, be covered by separate patent rights;
(b) Addex shall then be entitled to designate in writing one (1) Development Compound for further development and, on such selection the relevant Compound shall become an Addex Retained Compound and cease to be a Development Compound. In making any selection of a Development Compound pursuant to this Section 3.4(b), Addex shall take account of the desire by both Parties that the Licensed Compounds and the Addex Retained Compounds should, to the extent reasonably practicable, be covered by separate patent rights; and
(c) to the extent that there are any further Development Compounds that have not been selected by a Party, the process in Sections 3.4(a) and 3.4(b) shall be repeated until no further Development Compounds remain or until one Party decides that it does not wish to designate any further Development Compounds in which case (i) if it is Addex that does not wish to designate any further Development Compounds then all remaining Development Compounds shall become Licensed Compounds and (ii) if it is Indivior that does not wish to designate any further Development Compounds then all remaining Development Compounds shall become Addex Retained Compounds.
3.5 Diligence.
(a) Each Party shall use Commercially Reasonable Efforts to carry out its obligations under the Research Plan. Each Party shall provide the other with [***] reports detailing the progress of its activities under the Research Plan. Further, each Party shall promptly provide a summary report on significant results where the Research Plan identifies an outcome as requiring prompt disclosure.
(b) The Parties acknowledge and agree that no outcome or success is or can be assured and that failure to achieve desired results will not in and of itself constitute a breach or default of any obligation in this Agreement.
3.6 Authority. Indivior (by itself or through its Affiliates) shall have sole responsibility, including sole responsibility for all funding, resourcing and decision-making, for all further research and development with respect to Licensed Compounds and Products.
3.7 Subcontracting. Each Party shall have the right to subcontract its obligations under this Agreement to subcontractors and Affiliates; provided that such subcontractors and Affiliates agree in writing to be subject to the applicable terms and conditions of this Agreement, including the requirements under Section 3.5(a) and the confidentiality provisions of Article 13.
3.8 Joint Research Committee.
(a) Within [***] days after the Effective Date, the Parties shall establish a joint research committee (the “Joint Research Committee” or “JRC”). The JRC shall consist of [***] representatives with voting rights from each of the Parties, each with the requisite experience and seniority to enable such person to make decisions on behalf of the Parties with respect to the Research Plan and each Party’s Research Activities, with each Party having one (1) vote. From time to time, each Party may substitute one (1) or more of its representatives to the JRC on written notice to the other Party. The chair and the co-chair of the JRC shall be one of the Indivior and Addex voting representatives on the JRC, respectively. From time to time, Indivior or Addex may change the representative who will serve as chairperson or co-chair, respectively, upon written notice to the other Party.
(b) The JRC shall provide strategic direction for, and monitor, manage, coordinate and oversee the conduct of, the Research Activities by the Parties under the Research Plan. In particular, the JRC shall: (i) serve as a forum for discussing the proposed Research Activities and periodically review the Research Plan, and review and approve amendments thereto; (ii) oversee the Parties’ performance of the Research Plan; (iii) obtain and review each Party’s written reports detailing the progress of its activities under the Research Plan; and (iv) perform such other functions as are set forth herein or as the Parties may mutually agree in writing, except where in conflict with any provision of this Agreement.
(c) During the Research Term, the JRC shall meet [***], with the location of such meetings alternating between locations designated by Addex and locations designated by Indivior, provided that such meetings may be held via telephone conference upon mutual agreement of the Parties. The chairperson in collaboration with the co-chair of the JRC shall be responsible for calling meetings on no less than [***] days’ notice and the chairperson and co-chair shall collaborate to prepare an agenda for circulation in advance of each such meeting. Each Party shall make all proposals for agenda items and shall provide all appropriate information with respect to such proposed items at least [***] days in advance of the applicable meeting; provided, that under exigent circumstances requiring input by the JRC, a Party may provide its agenda items to the other Party within a shorter period of time in advance of the meeting, or may propose that there not be a specific agenda for a particular meeting, so long as the other Party consents to such later addition of such agenda items or the absence of a specific agenda for such meeting. The chairperson and co-chair of the JRC shall prepare and circulate for review and approval of the Parties minutes of each meeting within [***] days after the meeting. The Parties shall agree on the minutes of each meeting promptly, but in no event later than the next meeting of the JRC.
(d) The JRC shall have the right to adopt such standing rules as shall be necessary for its work, to the extent that such rules are not inconsistent with this Agreement. A quorum of the JRC shall exist whenever there is present at a meeting at least one (1) voting representative appointed by each Party. Representatives of the Parties on the JRC may attend a meeting either in person or by telephone, video conference or similar means in which each participant can hear what is said by, and be heard by, the other participants. Representation by proxy shall be allowed. The JRC shall take action by consensus of the representatives present at a meeting at which a quorum exists, with each Party having a single vote irrespective of the number of representatives of such Party in attendance, or by a written resolution signed by at least one (1) representative appointed by each Party. Employees or consultants of either Party that are not representatives of the Parties on the JRC may attend meetings of the JRC; provided, that such attendees (i) shall not vote or otherwise participate in the decision-making process of the JRC, and (ii) are bound by obligations of confidentiality and non-disclosure equivalent to those set forth in Article 13.
(e) If the JRC cannot, or does not, reach consensus on any matter relating to Research Activities or the Research Plan within [***] days after such dispute or lack of consensus was raised at a JRC meeting, then such dispute shall be escalated to the CEO of each Party, who shall amicably and in good faith attempt to resolve the dispute. The Parties acknowledge that, notwithstanding the creation of the JRC, each Party shall retain the rights, powers and discretion granted to it hereunder. The Parties further acknowledge that the JRC shall not have the power to amend this Agreement and that any amendments to this Agreement shall be subject to Section 14.10.
(f) Each Party shall be responsible for all travel and related costs and expenses for its members and other representatives to attend meetings of, and otherwise participate on, the JRC.
3.9 Records. Each Party shall, and shall ensure that its Affiliates subcontractors, maintain records in sufficient detail and in good scientific manner appropriate for patent and regulatory purposes, and in compliance with Applicable Law and regulatory guidance, which shall be complete and accurate and shall properly reflect all work done and results achieved in the performance of its obligations under the Research Plan, which, after the Effective Date, shall record only such activities and shall not include or be commingled with records of activities outside the scope of this Agreement. Such records shall be retained by each Party and its Affiliates and subcontractors for at least [***] after the expiration or termination of this Agreement, or for such longer period as may be required by Applicable Law. Upon request, Addex shall provide, and shall procure that its Affiliates and subcontractors provide, copies of the records it has maintained pursuant to this Section 3.9 to Indivior.
3.10 Joint Research. This Agreement is intended by the Parties to be considered a “Joint Research Agreement” for the purposes of 35 U.S.C. 102(c), or any successor to that statute in the United States, or other statutes having similar effect in jurisdictions outside the United States. Each Party consents to the other Party disclosing the names of the Parties to this agreement and identifying this Agreement as a “Joint Research Agreement” in any patent application filed pursuant to this Agreement, including, for the avoidance of doubt, patents claiming Indivior Improvements.
4. DEVELOPMENT ACTIVITIES
4.1 Regulatory Matters. As between the Parties, on a Licensed Compound-by-Licensed Compound basis, Indivior shall have the sole right to prepare, obtain, and maintain any applications for Marketing Approval (including the setting of the overall regulatory strategy) other regulatory approvals and other submissions, and to conduct communications with the Regulatory Authorities for Licensed Compounds or Products (which shall include filings of or with respect to INDs or CTAs and other filings or communications with the Regulatory Authorities).
4.2 Pharmacovigilance. Within [***] days after IND effectiveness of the first Licensed Compound, Product, Addex Retained Compound or Addex Product, the Parties shall determine if it is necessary to, and if so, enter into an agreement to initiate a process for the exchange of safety data (including post-marketing spontaneous reports received by each Party and its Affiliates) in a mutually agreed format in order to monitor the safety of the Licensed Compounds, Products, Addex Retained Compounds and Addex Products and to meet reporting requirements with any applicable Regulatory Authority.
4.3 [***] Meetings. Each of the Parties shall keep the other informed about the status and results of its development activities with respect to the Licensed Compounds, Products, Addex Retained Compounds and Addex Products, as applicable. Promptly, and in any event within [***] days, after the Effective Date, each of the Parties shall designate an employee with sufficient knowledge such Party’s obligations hereunder (collectively, “Representatives”). From time to time, each Party may substitute one (1) or more of its Representatives on written notice to the other Party. From and after the Effective Date and until receipt of the first Marketing Approval, upon [***] days’ notice by either Party, the Representatives shall meet [***], to:
(a) discuss the development plans for Licensed Compounds, Products, Addex Retained Compounds and Addex Products;
(b) review of regulatory strategies for obtaining and maintaining Marketing Approval for Products;
(c) share safety and other relevant data related to the development of Licensed Compounds, Products, Addex Retained Compounds and Addex Products;
(d) inform Addex of material development/regulatory events and key Indivior decisions relating to the development activities for Licensed Compounds and Products; and
(e) address safety issues relating to the development of Products and Addex Products.
Unless otherwise agreed by the Parties, at least one meeting per year required by this Section 4.3 will be in person [***] and all other meetings shall be by telephone conference.
4.4 [***] Reports. Following receipt of Marketing Approval for a Product and continuing until such time as Marketing Approval has been obtained for Products under development in four additional Major Markets, Indivior shall provide to Addex, [***], unless agreed otherwise in writing by the Parties, a written report of the status of its efforts to develop such Products hereunder.
5. DILIGENCE
5.1 In General. Indivior shall have the sole right to develop and commercialize (and shall be solely responsible for, and shall control all aspects of, development and commercialization) Licensed Compounds and Products in the Field in the Territory at its own cost and expense (except as otherwise expressly set forth herein).
5.2 Diligence. Indivior will use Commercially Reasonable Efforts to (a) develop one Product [***] and (b) commercialize one Product [***] following receipt of Marketing Approval [***]. Indivior shall undertake such development and commercialization in accordance with GMP, GCP and all Applicable Laws. If at any time Addex has a reasonable basis to believe that Indivior is in material breach of its material obligations under this Section 5.2, then Addex shall so notify Indivior, specifying the basis for its belief, and, without prejudice to any other rights that Addex may have under this Agreement, the Parties, within [***] days after such notice, shall meet, in person or via telephone conference, to discuss in good faith Addex’s concerns and Indivior’s development or commercialization plans, as applicable, with respect to any Products.
5.3 Product Trademarks. Indivior shall have the sole right to determine and own the trademarks to be used with respect to the exploitation of the Products on a worldwide basis.
6. PAYMENT
6.1 Upfront License Fee. As partial consideration for the rights granted to Indivior herein, Indivior shall pay Addex an upfront license fee in the amount of $5,000,000 no later than [***] days after the Effective Date.
6.2 Reserved.
6.3 Development Milestone Payments. As additional consideration for the rights granted to Indivior herein, after the achievement by Indivior of any of the milestones set forth below, Indivior shall pay Addex the applicable milestone payment set forth next to such milestone below (“Development Milestone Payments”). For the avoidance of doubt, each Development Milestone Payment shall be payable one-time only upon the first occurrence of the event triggering the respective milestone set forth in the table below.
| | | | | | | | |
| Development Milestone Event | | Milestone Payment |
| 1. [***] | | [***] |
| 2. [***] | | [***] |
| 3. [***] | | [***] |
| 4. [***] | | [***] |
| 5. [***] | | [***] |
| 6. [***] | | [***] |
| 7. [***] | | [***] |
| 8. [***] | | [***] |
| 9. [***] | | [***] |
| 10. [***] | | [***] |
| Total | | [***] |
6.4 Royalty.
(a) As additional consideration for the rights granted to Indivior herein, during the Royalty Term (subject to Section 6.5(b)), Indivior shall pay to Addex, on a country-by-country basis, tiered royalty payments at the rates
set out below on Net Sales of Products sold, on a country-by-country basis, by Indivior, its Affiliates and/or sublicensees (“Royalty”):
| | | | | | | | | | | |
| Annual Net Sales of Products in a Country | | Royalty Rate | |
| Portion of Annual Net Sales of Products in such country less than [***] | | [***] | % |
| Portion of Annual Net Sales of Products in such country equal to or greater than [***] but less than [***] | | [***] | % |
| Portion of Annual Net Sales of Products in such country equal to or greater than [***] but less than [***] | | [***] | % |
| Portion of Annual Net Sales of Products in such country equal to or greater than [***] | | [***] | % |
(b) Notwithstanding Section 6.4(a) above, with respect to [***], the Royalty payable with respect to each Product [***] shall be [***] once such Product [***].
6.5 Royalty Term; Generic Competition.
(a) Indivior’s obligation to pay a Royalty on Net Sales for each Product in a particular country shall terminate upon the expiration of the Royalty Term with respect to such Product, except as provided in Section 6.5(b) below.
(b) Indivior’s obligation pursuant to Section 6.4 to pay a Royalty in respect of a particular Presentation of a Product (such Presentation being an “Affected Product”) in a country shall be reduced [***] in respect of a Quarter if, in respect of such Quarter, (i) a Generic Product [***] is marketed in such country and (ii) the Net Sales of such Affected Product in such country in the Quarter are less than [***] of the Net Sales generated by [***] such Product in such country in the Quarter immediately prior to the launch of [***] such Generic Product in such country.
6.6 Sales Milestone Payments. As additional consideration for the rights granted to Indivior herein, Indivior shall pay to Addex a one-time milestone payment upon first achieving each of the Annual Net Sales thresholds set forth below (“Sales Milestone Payments”). For the avoidance of doubt, each Milestone Payment shall be payable one-time only upon the first occurrence of the event triggering the respective milestone provided below.
| | | | | | | | |
| Sales Milestone Event | | Milestone Payment |
| First time Annual Net Sales exceed [***] | | [***] |
| First time Annual Net Sales exceed [***] | | [***] |
| First time Annual Net Sales exceed [***] | | [***] |
| First time Annual Net Sales exceed [***] | | [***] |
| First time Annual Net Sales exceed [***] | | [***] |
| First time Annual Net Sales exceed [***] | | [***] |
| First time Annual Net Sales exceed [***] | | [***] |
| First time Annual Net Sales exceed [***] | | [***] |
| Total | | [***] |
6.7 Payment/Reports.
(a) All Development Milestone Payments shall be due and payable by Indivior within [***] days after completion of any of the milestones set forth in Section 6.3 above. Together with any such payment, Indivior shall deliver a written statement of completion and other pertinent and available information.
(b) All Royalty payments owed for each country shall be due and payable by Indivior on a Quarterly basis within [***] days after the last day of each calendar Quarter during the Royalty Term. Together with any such payment, Indivior shall deliver a report specifying, with respect to the applicable calendar Quarter: the (i) total gross invoiced amount from sales of Product in each country by or on behalf of Indivior and its Affiliates; (ii) amounts deducted by category from gross invoiced amounts to calculate Net Sales; (iii) Net Sales for such country; and (iv) the Royalty payment payable.
(c) All Sales Milestone Payments shall be due and payable by Indivior within [***] days after the last day of the Quarter in which the relevant milestone event was achieved. Together with any such payment, Indivior
shall deliver a report specifying, with respect to such 12-month period: the (i) total gross invoiced amount from sales of Product in such country by or on behalf of Indivior and its Affiliates; (ii) amounts deducted by category from such gross invoiced amounts to calculate Net Sales; (iii) Net Sales; and (iv) Sales Milestone Payment payable.
6.8 Inspection of Records. Indivior shall keep records of its sales of Products reasonably necessary for the calculation of payment to be made to Addex hereunder. During the Term, and for a period of [***] thereafter, Addex shall have the right to have an independent certified public accountant, mutually agreed upon by Indivior, audit the records of Indivior. Addex, upon providing at least [***] days’ prior written notice to Indivior, may initiate such an audit no more than [***] during the Term and [***] thereafter. Any such audit shall be conducted during the normal business hours of Indivior, at a single location where Indivior shall make the records sought to be audited available, and in such a manner as shall not disrupt Indivior’s business operations. All personnel conducting the audit on behalf of the independent auditor shall enter into confidentiality agreements with Indivior. Each·such audit shall be conducted at the expense of Addex; provided that if the inspection and audit shows an underpayment of more than [***] of the amount due for the applicable period covered by the inspection, then Indivior shall reimburse Addex for all costs incurred in connection with such inspection within [***] days thereafter. Indivior shall pay to Addex the amount of any undisputed underpayment revealed by an examination and review. Any overpayment by Indivior revealed by an examination and review shall be deducted by Indivior from the next payment due to Addex.
6.9 Payment Method.
(a) All payments due under this Agreement shall be made by bank wire transfer in immediately available funds from the United Kingdom or the United States to an account in Switzerland, the United Kingdom or the United States designated by Addex in writing. In the event that Indivior pays from an account in a country other than the United States or the United Kingdom, then Indivior shall pay an amount such that, when any withholding or other deductions described in Section 6.9(c) have been applied, Addex receives the amount that it would have done had no deduction been made.
(b) All payments hereunder shall be made in the legal currency of the United States of America, and all references to “$” or “Dollars” shall refer to United States dollars. For the purpose of converting any amount owed hereunder to $, such conversion shall be calculated using the average exchange rate for the conversion of foreign currency into United States Dollars, quoted for current transactions for both buying and selling United States Dollars, as reported in The Wall Street Journal (Internet Edition) for the last business day of each month of the calendar Quarter to which such payment pertains. Without limiting any other remedy of Addex, if Indivior fails to make any payment that is due by the due date, Addex may charge interest in the amount overdue at the rate of [***]. Interest will be calculated on a daily basis.
(c) Where any sum due to be paid to either Party hereunder is subject to any withholding or similar tax, the Parties shall use reasonable endeavors to do all such acts and things and to sign all such documents as will enable them to take advantage of any applicable double taxation agreement or treaty. In the event there is no applicable double taxation agreement or treaty, or if an applicable double taxation agreement or treaty reduces but does not eliminate such withholding or similar tax, the payor shall remit such withholding or similar tax to the appropriate government authority, deduct the amount paid from the amount due to payee and secure and send to payee the best available evidence of the payment of such withholding or similar tax. If withholding or similar taxes are paid to a government authority, each Party will provide the other such assistance as is reasonably required to obtain a refund of the withheld or similar taxes, or obtain a credit with respect to such taxes paid.
(d) Indirect Taxes. All payments are exclusive of value added taxes, sales taxes, consumption taxes and other similar taxes (the “Indirect Taxes”). If any Indirect Taxes are chargeable in respect of any payments, the paying Party shall pay such Indirect Taxes at the applicable rate in respect of such payments following receipt, where applicable, of an Indirect Taxes invoice in the appropriate form issued by the receiving Party in respect of those payments. The Parties shall issue invoices for all amounts payable under this Agreement consistent with Indirect Tax requirements and irrespective of whether the sums may be netted for settlement purposes. If the Indirect Taxes originally paid or otherwise borne by the paying Party are in whole or in part subsequently determined not to have been chargeable, all necessary steps will be taken by the receiving Party to receive a refund of these undue Indirect Taxes from the applicable governmental authority or other fiscal authority and any amount of undue Indirect Taxes repaid by such authority to the receiving Party will be transferred to the paying Party within [***] days of receipt.
7. INTELLECTUAL PROPERTY
7.1 Ownership; Improvements.
(a) As between the Parties, Addex shall remain the sole owner of all right, title and interest in and to the Licensed IP, subject to the rights and licenses granted to Indivior herein.
(b) Indivior has the right when exercising its rights under the licenses granted in Section 2.1 hereunder to create Indivior Improvements and to file Indivior Improvement Patent Rights. All right, title and interest in any Indivior Improvements and Indivior Improvement Patent Rights shall remain the sole and exclusive property of Indivior and shall not be licensed to Addex. To the extent that Addex acquires rights in any Indivior Improvements or Indivior Improvement Patent Rights, Addex hereby irrevocably assigns, and shall cause to be assigned, to Indivior, such rights, and Indivior hereby accepts such assignment. Addex further acknowledges and agrees that Indivior is the sole and exclusive owner of, all right, title and interest in and to such Indivior Improvements and Indivior Improvement Patent Rights. Addex shall take all action reasonably requested by Indivior to effect the foregoing, at Indivior’s expense. Indivior shall, in its own name and at its sole expense, take all actions which Indivior deems to be necessary or appropriate to protect and maintain the Indivior Improvements and Indivior Improvement Patent Rights. At Indivior’s request and expense, Addex shall cooperate with Indivior in taking any action reasonably necessary to protect and maintain Indivior Improvements and Indivior Improvement Patent Rights.
(c) All right, title and interest in any Addex Improvements and all patents and patent applications directed to Addex Improvements shall remain the sole and exclusive property of Addex and shall be included in the scope of the Licensed IP. All such Addex Improvements and patents and patent applications directed to Addex Improvements that are made in connection with this Agreement shall constitute (i) Addex Development Patent Rights if they Cover Licensed Compounds but not Addex Retained Compounds, (ii) Addex Overlapping Patent Rights if they cover both Licensed Compounds and Addex Retained Compounds and (iii) Addex Retained Patent Rights if they Cover Addex Retained Compounds but not Licensed Compounds. To the extent that Indivior acquires rights, other than the licenses granted in this Agreement, in any Addex Improvements, Indivior hereby irrevocably assigns, and shall cause to be assigned, to Addex, such rights, and Addex hereby accepts such assignment. Indivior further acknowledges and agrees that Addex is the sole and exclusive owner of, all right, title and interest in and to such Addex Improvements. Indivior shall take all action reasonably requested by Addex to effect the foregoing, at Addex’s expense. Except as otherwise provided in this Article 7, Addex may, in its own name and at its sole expense and in consultation with Indivior, take all actions which Addex deems to be necessary or appropriate to protect and maintain the Addex Improvements. Except where otherwise provided in this Article 7, at Addex’s request and, in respect of Addex Improvements only, at Addex’s expense, Indivior shall cooperate with Addex in taking any action reasonably necessary to protect and maintain the Licensed IP and Addex Improvements.
(d) In the event employees (or consultants) of both Parties (or their respective Affiliates) jointly develop any improvements, enhancements or modifications to the Licensed IP during the Term (“Joint Improvements”), such Joint Improvements shall be jointly owned by·both Parties; provided that Addex’s interest in such Joint Improvements shall be included in the scope of the Licensed IP. Each of Indivior and Addex shall promptly disclose to the other all inventions that it considers to be a Joint Improvement. Indivior shall have the right, but not the obligation, to file, prosecute and maintain any patent application directed to any such Joint Improvement in the name of Indivior and Addex jointly.
7.2 Patent Prosecution and Maintenance.
(a) Addex Existing Patent Rights. Indivior shall be responsible for and shall undertake, and Addex shall cooperate with Indivior with regards to Indivior’s activities associated with, the preparation, filing and prosecution of Addex Existing Patent Rights. Indivior may conduct such activities in Addex’s name where reasonably necessary. If Indivior decides to abandon any Addex Existing Patent Rights, Indivior shall provide prior written notice sufficiently in advance of any abandonment to enable Addex to have the right, at its sole expense to, assume control of the preparation, filing, prosecution and maintenance of such patent application or patent for such Addex Existing Patent Rights in the applicable jurisdiction and Indivior shall transfer control of such prosecution in such jurisdiction to Addex. Upon delivery of such notice, such Addex Existing Patent Right shall cease to be an Addex Existing Patent Right and all of Indivior’s rights and licenses under and in respect of such Addex Existing Patent Right shall terminate. Except where Indivior abandons an Addex Existing Patent Right in accordance with this Section 7.2, Indivior shall pay renewal fees and take reasonable actions to maintain such Addex Existing Patent Rights in the Patent Filing Jurisdictions.
(b) Addex Development Patent Rights. Indivior shall be responsible for and shall undertake, and Addex shall cooperate with Indivior with regards to Indivior’s activities associated with, the preparation, filing and prosecution of Addex Development Patent Rights. Indivior may conduct such activities in Addex’s name where reasonably necessary. If Indivior decides to abandon any Addex Development Patent Rights, Indivior shall provide prior written notice
sufficiently in advance of any abandonment to enable Addex to have the right, at Addex’s sole expense, to assume control of the preparation, filing, prosecution and maintenance of such patent application or patent for such Addex Development Patent Rights in the applicable jurisdiction. In the case of such abandonment, Indivior shall transfer control of such prosecution in such jurisdiction to Addex, except where such abandonment is made as a part of a reasonable prosecution strategy, such as, for example, an abandonment made in favor of another Addex Patent Right covering the same Licensed Compound to improve its term or allowability. Except where Indivior elects not to file or abandons an Addex Development Patent Right in accordance with this Section 7.2, Indivior shall pay renewal fees and take reasonable actions to maintain such Addex Development Patent Rights in the Patent Filing Jurisdictions (including using reasonable endeavors to prosecute any Addex Development Patent Rights not yet granted in the Patent Filing Jurisdictions).
(c) Addex Overlapping Patent Rights. Addex shall, at its cost, be responsible for and shall undertake the preparation, filing and prosecution of Addex Overlapping Patent Rights, and Indivior shall cooperate with Addex in connection therewith. The Parties shall use Commercially Reasonable Efforts to reach agreement on matters involving the preparation, filing, and prosecution of the Addex Overlapping Patent Rights in a manner that does not jeopardize the scope, allowability, validity or term of Addex Development Patent Rights or any claims Covering Addex Retained Compounds, or Licensed Compounds. Where it is reasonable to file separately or divide Addex Overlapping Patent Rights into separate Addex Development Patent Rights and an application or applications that Cover Addex Retained Compounds, and where such action shall not jeopardize the scope or term of such Addex Overlapping Patent Rights, then, at the request of either Party, such Addex Overlapping Patent Rights shall be so filed separately or divided. If Addex decides not to file a patent application reasonably requested by Indivior, or to abandon any Addex Overlapping Patent Rights in a Patent Filing Jurisdiction, Addex shall provide prior written notice sufficiently in advance of such abandonment to enable Indivior to, and Indivior shall have the right at its sole expense to, assume control of the preparation, filing, prosecution and maintenance of such patent application or patent in such jurisdiction at its own expense (in Addex’s name) and Addex shall transfer such prosecution in such jurisdiction to Indivior and such patent application or patent shall be treated as an Addex Development Patent Right for the purposes of this Section 7.2. Unless Addex elects not to file or abandons an Addex Overlapping Patent Right in accordance with this Section 7.2(c), the Parties shall be equally responsible for renewal fees and take reasonable actions to maintain such Addex Overlapping Patent Rights in the Patent Filing Jurisdictions. Addex shall use reasonable endeavors to prosecute any Addex Overlapping Patent Rights not yet granted to cover the Licensed Compounds and the Addex Retained Compounds.
(d) Joint Patent Rights. Indivior shall at its cost be responsible for and shall undertake, and Addex shall cooperate with Indivior with regards to Indivior’s activities associated with, the preparation, filing and prosecution of Joint Patent Rights in the Patent Filing Jurisdictions (it being understood that filings may occur in additional jurisdictions, but that there shall be no obligation hereunder regarding filings in such jurisdictions). If Indivior decides not to file a patent application for a Joint Patent Right or decides to abandon a Joint Patent Right in any country in the Territory, Indivior shall provide prior written notice to Addex sufficiently in advance of any abandonment to enable Addex to, and Addex shall have the right at its sole expense to, assume control of the preparation, filing, prosecution and maintenance of such patent application or patent in such country in the Parties’ joint names. In such case, Indivior shall transfer control of such prosecution in such country to Addex. Unless Indivior elects not to file or abandons a Joint Patent Right in accordance with this Section 7.2(d), Indivior shall pay renewal fees and use reasonable endeavors to maintain and prosecute such Joint Patent Right.
(e) Sharing of Information. Any Party controlling filing and prosecution of Addex Patent Rights or Joint Patent Rights shall keep the other Party reasonably informed of all steps with regard to the preparation, filing, prosecution, and maintenance strategy (including timing of filing, data to be included, and scope of claims of patent applications), and shall discuss steps with regard to the preparation, filing, and strategy (including timing of filing, data to be included, and scope of claims of patent applications) with respect to such Patents and shall reasonably consider the other Parties’ comments in respect of the same. The Parties shall promptly provide copies of all substantive correspondence to and from patent offices and patent attorneys/agents, including any available translations. A Party controlling prosecution shall provide copies of proposed substantive filings or foreign patent agent instructions for such filings reasonably in advance of any due date, to allow comment by the other Party, and shall take reasonable steps to accommodate suggestions or requests of the other Party when received. The obligation hereunder for a Party to use reasonable efforts to pursue a patent application shall not extend to taking a judicial appeal of an administrative decision at its own expense. The obligation hereunder for a Party to pay for the other Party’s prosecution of a patent application shall not extend to payment for a judicial appeal of an administrative decision for such application. When reasonably requested by the Party controlling prosecution, the other Party shall provide reasonable assistance to the Party controlling prosecution, including signing or executing any necessary documents. If the Party controlling prosecution elects to abandon a patent application, or not to pursue a patent application in a particular jurisdiction, it shall provide reasonable advance notice to the other Party to enable the other Party to file such application or assume control of the prosecution, at its own expense, in the name of the original controlling Party if reasonably necessary.
(f) Post-Grant Proceedings. With respect to this Article 7:
(i) the Party controlling prosecution of a patent or patent application (x) shall have the right to control any Post-Grant Proceeding related to such patent or patent application in the other Party’s name if reasonably necessary and (y) use reasonable endeavors to accommodate suggestions or requests made by the non-controlling Party;
(ii) the Party that is not controlling a Post-Grant Proceeding shall cooperate with the other Party as reasonable requested;
(iii) the Party that is responsible for the cost of patent prosecution for the patent or patent application at issue in the Post-Grant Proceeding shall also bear the cost of the Post-Grant Proceeding;
(iv) the Party that is not obligated to prosecute (or pay) for the prosecution of a patent application shall not be obligated to pursue (or pay) for a Post-Grant Proceeding;
(v) the obligation on a Party hereunder to use reasonable endeavors to conduct a Post-Grant Proceeding shall not extend to pursuing a judicial appeal of an administrative tribunal or agency decision; and
(vi) in the event that Party controlling a Post-Grant Proceeding elects not to participate in or continue such proceeding (including any appeal), such Party shall provide reasonable notice to the other Party to allow such other Party to conduct or assume control the Post-Grant Proceeding, which may be assumed in the controlling Party’s name, if necessary.
(g) Disputes. In the event that the Parties have a dispute regarding any of their respective rights or obligations under this Article 7, such dispute shall be escalated to the CEO of each Party, who shall amicably and in good faith attempt to resolve the dispute. The foregoing shall not limit either Party’s remedies at law or equity with respect to a breach by the other Party of this Article 7.
7.3 Patent Term Extensions. Each Party agrees to cooperate with the other, and to do all such acts and provide and sign all documents or copies thereof which may be reasonably necessary or desirable, in connection with the filing or prosecution of any application for any Addex Patent Rights or any Joint Patent Rights.
7.4 Enforcement Actions.
(a) Indivior shall have the initial right, but not the obligation, using counsel of its choice and at its own cost to enforce the Addex Existing Patent Rights, Addex Development Patent Rights, Addex Overlapping Patent Rights, and/or Joint Patent Rights in the Field or defend any declaratory action with respect thereto, as well as any nullity, inventorship or other action brought in a judicial proceeding affecting the scope, validity, or enforceability of the Addex Existing Patent Rights, Addex Development Patent Rights, Addex Overlapping Patent Rights, or Joint Patent Rights. Indivior shall have sole control of any decisions or other aspects of such action, subject to Section 7.4(b), and Addex shall, upon request, give to Indivior such reasonable assistance as Indivior may reasonably request, including by signing or executing any necessary documents and consenting to its name being used in the proceedings; provided that Indivior shall reimburse Addex for any reasonable out-of-pocket expenses incurred while providing such assistance and provide an indemnity in respect of any costs order made against Addex by reason of lending its name to the proceedings, where such costs order did not result from Addex wrongdoing or from conduct that would require Addex to indemnify Indivior under this Agreement. Indivior shall keep Addex reasonably informed of the progress of the action and shall consider the comments and observations of Addex in prosecuting the action. If Indivior does not, within [***] days of a notice from Addex requiring bringing or defending such action, institute or defend such an action, then Addex shall have the right, but not the obligation, at its own cost, to commence proceedings or assume the defense in the Territory regarding the action and, in such case, Addex shall, subject to Section 7.4(b), have sole control of any decisions or other aspects of the action, and Indivior shall, upon request, give to Addex such reasonable assistance as Addex may reasonably request; provided that Addex shall reimburse Indivior for any reasonable out-of-pocket expenses incurred while providing such assistance and provide an indemnity in respect of any costs order made against Indivior in connection therewith, where such costs order did not result from Indivior’s wrongdoing or from conduct that would require Indivior to indemnify Addex under this Agreement; provided further that nothing in this Section 7.4(a) shall oblige Indivior to lend its name to, or be joined in, any proceedings commenced by Addex pursuant to the foregoing.
(b) In the event that Addex desires to bring an action based on Addex Overlapping Patent Rights in the Indivior Exclusive Field, or in the Shared Field if such action relates to Licensed Compounds or Products, Addex shall provide reasonable advance notice to Indivior, and Addex shall consider comments and observations of Indivior before undertaking such action. Addex shall keep Indivior reasonably informed of the progress of any such action, including any issues affecting the validity or enforceability of Addex Overlapping Patent Rights or the scope of the Addex Overlapping Patent Rights with respect to Licensed Compounds or Products. Addex shall not take any position negatively affecting the scope of the Addex Overlapping Patent Rights with respect to their coverage of Licensed Compounds or Products. To the extent an invalidity or unenforceability defense or counterclaim is raised in such action, where permitted by the law of the relevant jurisdiction, Indivior shall have the right to intervene or join in such action to protect its interests in the Addex Overlapping Patent Rights. Addex shall not, without Indivior’s prior written consent (which consent shall not be unreasonably withheld or delayed) bring an action for infringement of (i) Addex Existing Patent Rights or (ii) Addex Development Patent Rights outside of the Field.
(c) Addex shall have the option, but not the duty, to enforce the Addex Retained Patent Rights against Third Party infringement in the Field. Addex shall bear the costs of such enforcement.
(d) Indivior shall not, without the prior written consent of Addex, which shall not be unreasonably withheld, delayed or conditioned, make any admission or enter into a settlement, consent to judgement or other voluntary final disposition in connection with any such proceedings under this Section 7.4 that: (i) extends, or purports to exercise, Indivior’s rights under the Licensed IP beyond the rights granted pursuant to this Agreement, (ii) makes any admission regarding wrongdoing by Addex, or the invalidity, unenforceability or absence of infringement of any Patent Rights within the Licensed IP; (iii) subjects Addex to an injunction or other equitable relief; or (iv) obligates Addex to make a monetary payment. Similarly, in no case may Addex enter into any settlement or consent judgment or other voluntary final disposition that: (a) limits Indivior’s rights under the Licensed IP or under this Agreement other than as expressly stated herein; (b) makes any admission regarding wrongdoing on the part of Indivior, an Affiliate or sublicensee, or the invalidity, unenforceability or absence of infringement of any Licensed IP or Addex Patent Rights; (c) subjects Indivior to an injunction or other equitable relief; or (d) obligates Indivior to make a monetary payment; in all cases without the prior written consent of Indivior, which consent shall not be unreasonably withheld, delayed or conditioned. In no case shall Addex grant or have the power to grant any license for Compounds or pharmaceutical products containing or comprising Compounds in the Indivior Exclusive Field under the Addex Patent Rights, Addex Retained Patent Rights or Licensed IP. In no case shall Addex grant or have the power to grant any license for Licensed Compounds or Products in the Shared Field under the Licensed IP.
(e) Any damages or award (including any award of costs) made in the proceedings shall be used first to reimburse each Party for any costs or expenses that it may have incurred in connection with the infringement proceedings (including without limitation, any amounts paid by the Party bringing the action to the other Party as reimbursement for expenses related to assisting in the proceedings) and any remaining amounts shall be retained by the Party to which they were awarded, save that (i) any award [***] shall be [***] and (ii) any award [***] shall, following reimbursement of costs and expenses in accordance with the foregoing, be [***]; provided that any such award shall [***].
7.5 Third Party Infringement Claims. If the production or use of any Licensed Compound or the production, sale or use any Product pursuant to this Agreement results in a claim, suit or proceeding alleging patent infringement against Indivior or Addex or their respective Affiliates or sublicensees, such Party shall promptly notify the other Party hereto in writing. Indivior shall have the right to direct and control the defense and settlement thereof; provided, however, that Addex may participate in (but not control) the defense of such action and employ counsel at its own expense.
8. WARRANTIES
8.1 General Warranties. Each Party warrants to the other that:
(a) such Party is duly organized and validly existing under the laws of its·jurisdiction of organization, and has full power and authority to enter into this Agreement and to carry out the provisions hereof;
(b) such Party is duly authorized to execute and deliver this Agreement and to perform its obligations hereunder;
(c) this Agreement has been duly executed and delivered by such Party and constitutes the legal, valid and binding obligation of such Party enforceable against such Party in accordance with its terms, except to the extent that the enforceability thereof may be limited by (i) applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or similar laws from time to time in effect affecting generally the enforcement of creditors’ rights and (ii) general principles of equity;
(d) the execution, delivery and performance of this Agreement by such Party does not conflict with its organizational documents or any agreement, instrument or understanding, oral or written, to which it is a party or by which it may be bound, nor violate any material law or regulation of any Governmental Authority having jurisdiction over it;
(e) such Party is aware of no action, suit or inquiry or investigation instituted by any governmental agency that questions or threatens the validity of this Agreement; and
(f) has the full power and authority and has obtained all Third Party consents, approvals, and/or other authorizations required to enter into this Agreement and to carry out its obligations hereunder.
8.2 Addex Warranties. As at the Effective Date, Addex warrants to Indivior that:
(a) Addex exclusively owns all right, title, and interest to the Addex Existing Patent Rights, free and clear of all liens, security interests and encumbrances. As of the Effective Date, there are no existing licenses with respect to the Licensed IP, except for the IP License granted to Indivior herein.
(b) The Addex Patent Rights listed on Schedule 1.3 are, as of the Effective Date, the only patents or patent applications owned or controlled by Addex or its Affiliates that Cover Licensed Compounds.
(c) Addex and/or its Affiliates have obtained and properly recorded previously executed assignments for the Licensed IP as necessary to fully perfect its rights and title therein in accordance with governing law and regulations in each applicable jurisdiction.
(d) There are no actions, suits, investigations, lawsuits, claims or proceedings pending or, to Addex’s Knowledge, threatened, involving the Licensed IP.
(e) No invention claimed or described in the Addex Existing Patent Rights was made with government funding in circumstances that could negatively affect Indivior’s rights to exclusivity under this Agreement.
(f) None of the Addex Patent Rights has been declared abandoned, or been found invalid, unpatentable, or unenforceable for any reason including in a final decision in any administrative, arbitration, judicial, or other proceeding. Addex does not have Knowledge of existing facts and circumstances that would reasonably lead it to believe that any of the Addex Existing Patent Rights are invalid, unpatentable, or unenforceable for any reason. Addex does not have any Knowledge of existing facts and circumstances that would reasonably lead it to believe that material prior art was withheld from the United States Patent Office during the prosecution of Addex Existing Patent Rights.
(g) Addex does not have Knowledge of existing facts and circumstances that·would reasonably lead it to believe that the development manufacture, sale or commercialization of the ADX 71441 Compound in the Field will infringe any rights of any Third Party.
(h) Addex has not misappropriated trade secrets or misused the confidential information of any Third Party in developing the Licensed IP.
(i) To Addex’s Knowledge, no Third Party is infringing the Addex Existing Patent Rights. Addex has taken reasonable measures to protect the confidentiality of the Addex Know How and, to Addex’s Knowledge, the Addex Know How remains a protected trade secret of Addex.
(j) Neither Addex, nor to Addex’s Knowledge, any Third Party, owns or has rights to any Marketing Approvals for any Products.
(k) Neither Addex nor any of its Affiliates is a party to or otherwise bound by any oral or written contract or agreement that will result in any Third Party obtaining any interest in, or that would give to any Third Party any right to assert any claim in or with respect to, any rights granted to Indivior under this Agreement.
(l) [***] that would adversely affect the rights of Indivior hereunder.
8.3 No Other Warranties. The representations and warranties provided in this Article 8 are in lieu of any other representations or warranties, express or implied, and nothing herein shall be construed as a representation or warranty by either Party of any kind, including without limitation, any implied warranty of fitness for a specific purpose or merchantable quality, all of which are expressly and specifically excluded. No director, officer, employee or agent of any Party or its Affiliates is authorized to make any further representation or warranty to the other Party which is not contained in this Agreement and, without limiting Section 11.1, each Party acknowledges that it has not relied on any such oral or written representations or warranties.
9. CERTAIN COVENANTS AND AGREEMENTS
9.1 Disclosure; Technology Transfer.
(a) Promptly after the Effective Date and as applicable during the Term, Addex shall disclose to Indivior all Licensed IP that Addex reasonably considers would be necessary or useful, or that Indivior reasonably requests, for the development of Licensed Compounds or Products as the same shall become available to it. If and as requested by Indivior, Addex will use reasonable efforts to disclose to Indivior or any Regulatory Authority all relevant Licensed IP in its possession required for Indivior to register for sale or obtain Marketing Approval for the Products.
(b) Promptly after the Effective Date, Addex will, [***], make available to Indivior all Addex Know-How that Addex, acting reasonably, considers necessary or useful for Indivior to develop and/or commercialize Products, and Addex Know-How that Indivior reasonably requests, including all research data, pharmacology data, preclinical data, and/or clinical data for the Licensed Compounds.
9.2 No Third-Party Rights; Liens. During the Term, Addex shall not (a) grant any rights to any Third Party in or relating to Licensed IP or (b) encumber any portion of the Licensed IP with liens, mortgages, security interests or another similar interest in any way that would have a negative effect on Indivior’s rights hereunder; provided that for the avoidance of doubt any such liens, mortgages, and security interests shall be expressly subordinate to Indivior’s rights hereunder; and provided further that Addex shall be entitled to grant licenses in respect of Addex Retained Compounds and Addex Products, in each case solely outside the Indivior Exclusive Field.
9.3 [***]. Addex will [***] (which, for clarity, shall not require Addex to [***] other than [***]), to facilitate [***]. Addex has delivered to Indivior all [***] with respect to the Licensed Compounds as of the date hereof and, after the date hereof, Addex shall not [***] with respect to the Licensed Compounds without the prior written consent of Indivior.
9.4 Compliance with Laws. Each Party shall comply with all Applicable Laws related to its performance of this Agreement.
9.5 Restructuring. Promptly after the Effective Date, Indivior and Addex will discuss ways to protect Indivior’s rights herein in the event of insolvency of Addex and, in its sole discretion, Addex will take such protective steps as agreed upon by the Parties.
9.6 Insolvency Notice. Addex will promptly notify Indivior if (a) to its Knowledge, Addex becomes subject to bankruptcy or similar proceedings or if a receiver or trustee is appointed to take possession of its assets, (b) Addex gives notice to any of its creditors that it has suspended payment of, or is unable to pay, its debts generally or (c) Addex takes or suffers any similar or analogous action in any jurisdiction in consequence of its insolvency.
9.7 No Assignment. During the Term, Addex shall not transfer or assign the Licensed IP to any Person without the prior written consent of Indivior, except to an Affiliate of Addex or to an acquirer of all or substantially all of the business of Addex to which this Agreement relates who, in each case, has expressly agreed in writing to be bound by the terms hereof.
10. TERM; TERMINATION
10.1 Term. The term of this Agreement shall commence on the Effective Date and continue in full force on a country-by-country or Product-by-Product basis until Indivior has no remaining payment obligations with respect to such
country or Product, unless earlier terminated pursuant to Section 10.2 below (the “Term”). Upon expiration (but not an earlier termination) of this Agreement in a particular country or with respect to a particular Product, then the IP License with respect to such country or with respect to such Product to which the Term has expired, as applicable, shall become an exclusive, perpetual, fully paid-up, royalty-free, license of the scope described in Section 2.1 above.
10.2 Termination.
(a) Indivior may terminate this Agreement in its entirety or with respect to one or more countries or Products (i) if before Indivior’s receipt of Marketing Approval in the applicable country, upon ninety (90) days prior written notice to Addex and (ii) if after Indivior’s receipt of Marketing Approval in the applicable country, upon twelve (12) months prior written notice to Addex; or
(b) Prior to Indivior’s receipt of Marketing Approval in a specific Major Market (“Non-Approval Market”), Addex may terminate this Agreement solely with respect to such Non-Approval Market or in its entirety (subject to Section 10.2(c)) if Indivior commits a material breach of this Agreement and fails to cure such breach within 90 days of Addex’s written notification to Indivior, or, with respect to its payment obligations set forth in Article 3.1 or Article 6, fails to cure such breach within 30 days after receiving two separate notices of such payment breach from Addex at least 30 days apart; provided that, in the case of non-payment pursuant to Article 6, Addex shall not be entitled to serve a notice of termination if such payment obligation has been disputed by Indivior and Indivior has paid any undisputed amounts.
(c) Without prejudice to Addex’s right to seek damages or injunctive relief, Addex’s right to terminate this Agreement in respect of a Major Market where Indivior has received Marketing Approval or in respect of all markets where Indivior has received Marketing Approval in five of the eight Major Markets shall be limited to termination on the following basis;
(i) After Indivior’s receipt of Marketing Approval in a specific Major Market (“Approval Market”), Addex may terminate this Agreement solely with respect to such Approval Market or in its entirety if Indivior commits a material breach of its obligations set forth in Article 13 or Section 6.8 or its payment obligations set forth in Article 6, and with respect to Article 13, fails to cure such breach within 30 days of Addex’s written notification to Indivior or, with respect Section 6.8, fails to cure such breach within 90 days of Addex’s written notification to Indivior or, with respect to Article 6, fails to cure such breach within 30 days after receiving two separate notices of such payment breach from Addex at least 30 days apart; provided that, in the case of non-payment pursuant to Article 6, Addex shall not be entitled to serve a notice of termination if such payment obligation has been disputed by Indivior and Indivior has paid any undisputed amounts.
(ii) This Section 10.2(c) sets out Addex’s sole right to terminate this Agreement in respect of a Major Market where Indivior has received Marketing Approval to the exclusion of any common law or statute based law and after receiving such Marketing Approval, subject to the right of termination set out in this Section 10.2(c), the exclusive licenses granted in Section 2.1 in respect of such Major Market shall become perpetual and irrevocable.
(iii) This Section 10.2(c) sets out Addex’s sole right to terminate this Agreement in respect of all markets where Indivior has received Marketing Approval in respect of at least five of the eight Major Markets to the exclusion of any common law or statute based law and after receiving such Marketing Approval, subject to the right of termination set out in this Section 10.2(c), the exclusive licenses granted in Section 2.1 in respect of all markets shall become perpetual and irrevocable.
(iv) For the avoidance of doubt, Addex’s right of termination under Section 10.2(c) is limited to circumstances in Indivior’s reasonable control and shall not include circumstances where the cause of the breach was outside Indivior’s reasonable control including, in the case of a breach of Section 6.8 because a sublicensee is not permitting an audit provided that Indivior has used its best efforts to secure the compliance of the sublicensee and in the case of Article 13 where such breach was committed by a Person without Indivior’s prior knowledge or consent.
10.3 Effects of Termination.
(a) Termination of Rights. Except as otherwise expressly set forth herein, all of the rights of Indivior in respect of Licensed Compounds and Products in a country shall terminate upon the termination date in respect of such Licensed Compound and/or Products in such country pursuant to Section 10.2.
(b) Supplies of Products After Termination. In the event this Agreement is terminated pursuant to Section 10.2 in its entirety or with respect to any Products or countries, Indivior and its Affiliates and permitted sublicensees shall have the right, for a period of up to six (6) months following such termination, to sell (in the Field) Indivior’s inventory of Licensed Compounds and Products to which such termination applies, subject to all applicable payment and other related obligations in this Agreement. Upon expiration of such six (6) month period, Indivior shall, at Addex’s request, sell to Addex at cost any and all remaining quantities of any Licensed Compound and Products subject to the termination that are in its possession or control.
(c) Clinical Studies After Termination. In the event this Agreement is terminated pursuant to Section 10.2 in its entirety or with respect to a Product, Indivior shall be responsible for completing (in accordance with the established protocols and its customary business practices) any clinical studies on Licensed Compounds and/or Products that it commenced prior to the termination of this Agreement in its entirety or with respect to such terminated Products. The foregoing shall be at Indivior’s cost where this Agreement is terminated by Indivior pursuant to Section 10.2(a) or Addex pursuant to Section 10.2(b). Indivior shall not commence any clinical study of Products at any time after it has given or received a notice of termination with respect to such Products pursuant to Section 10.2.
(d) Transfer of Marketing Approvals and Other Regulatory Approvals After Termination. In the event this Agreement is terminated pursuant to Section 10.2 in its entirety or with respect to any Products or countries pursuant to Section 10.2, Indivior shall, upon request by Addex, use reasonable endeavors to transfer to Addex or to its designee, all Marketing Approvals and any other regulatory approvals relating to any Licensed Compounds or Products subject to such termination, together with any applications for the foregoing (including Marketing Approval applications or other such applications, as well as all existing INDs and other similar regulatory filings for the conduct of clinical trials with respect to Licensed Compounds or Products), together with a copy of all Know-How of Indivior solely relating to such Licensed Compounds or Products. All such transfers shall be completed in accordance with Applicable Laws. In the event that such a transfer is not possible, Indivior shall use reasonable endeavors to provide Addex with the benefit of the existing Marketing Approvals and applications therefor for Products, including, without limitation, granting Addex and/or its designees rights to cross-refer to the data and information on file with Regulatory Authorities as may be necessary to facilitate the granting of separate Marketing Approvals to Addex.
(e) Return of Confidential Information After Termination. Upon termination of this Agreement in its entirety pursuant to Section 10.2, Indivior shall, at Addex’s option, either return to Addex all tangible Confidential Information disclosed to Indivior by or on behalf of Addex (including all copies thereof) or destroy such Confidential Information; provided that Indivior shall have the right to retain one (1) copy of the Confidential Information in a secure location solely for purposes of identifying its confidentiality obligations under Article 13. Upon termination by Addex or by Indivior, Indivior shall use reasonable endeavors to delete all electronic copies of such Confidential Information from its systems (other than Confidential Information stored on electronic archival, back-up, security, or disaster recovery systems). Upon termination, Addex shall, at Indivior’s option, either return to Indivior all tangible Confidential Information disclosed to Addex by or on behalf of Indivior (including all copies thereof) or destroy such Confidential Information; provided that Addex shall have the right to retain one (1) copy of the Confidential Information in a secure location solely for purposes of identifying its confidentiality obligations under Article 13. Addex shall use reasonable endeavors to delete all electronic copies of such Confidential Information from its systems other than Confidential Information stored on electronic archival, back-up, security, or disaster recovery systems).
10.4 Survival. Termination of this Agreement shall not impair or prejudice any cause of action or claim that one Party may have against the other Party for breach of this Agreement. Subject to the foregoing sentence, upon expiration of this Agreement, Articles 7, 11, 12, 13 and 14 and Sections 2.3, 2.4, 2.6, 3.9, 6.8, 10.3 and 10.4 and any other the provisions that expressly survive termination or expiration of the Term, shall be so performed and extended and shall continue to be subject to the terms and conditions of this Agreement.
11. INDEMNIFICATION
11.1 Restriction on Limitation of Liability. Neither Party limits or excludes its liability for fraud, fraudulent concealment or fraudulent misrepresentation, nor for death or personal injury arising from its negligence.
11.2 Indemnification by Indivior. Indivior shall defend, indemnify and hold harmless Addex, its Affiliates and their respective officers, directors, employees and agents (the “Addex Indemnified Parties”) against all claims, liabilities, losses, costs, expenses (including reasonable attorney’s fees and costs of investigation), which arise out of claims that are brought by a Third Party against the Addex Indemnified Parties resulting or arising from (a) any breach by Indivior of its representations and warranties, covenants or other obligations hereunder, (b) the negligent acts or omissions or willful
misconduct of Indivior or its representatives, and (c) Third Party claims or suits in connection with the marketing, sale or distribution of the Products, except to the extent such claim is indemnifiable by Addex pursuant to Section 11.3 below.
11.3 Indemnification by Addex. Addex shall defend, indemnify and hold harmless Indivior, its Affiliates and their respective officers, directors, employees and agents (“Indivior Indemnified Parties”) against all claims, liabilities, losses, costs, expenses (including reasonable attorney’s fees and costs of investigation), which arise out of claims that are brought by a Third Party against the Indivior Indemnified Parties resulting or arising from (a) any breach by Addex of its warranties, covenants or other obligations hereunder and (b) the negligent acts or omissions or willful misconduct of Addex or its representatives except to the extent such claim is indemnifiable by Indivior pursuant to Sections 11.2(a)-(b) above.
11.4 Procedure. Any Party seeking to be indemnified by virtue of this Article 11 (the “Indemnitee”) shall promptly notify the other Party (“Indemnifying Party”) in writing of any Third-Party claim, action, proceeding or liability in respect of which it intends to seek indemnification hereunder. The Indemnitor shall have the right to control the defense of, and enter into any settlement with respect to, any such action, claim or liability; provided, that such settlement (a) includes an unconditional release of the Indemnitee from any and all liability to any Third Party, (b) does not adversely affect the Indemnitee’s rights hereunder or impose any obligations on the Indemnitee in addition to those set forth herein in order for it to exercise such rights, (c) does not involve any injunctive or other equitable relief which would be imposed on Indemnitee, and (d) does not provide for any finding or admission of a violation of law or violation of the rights of any person or entity by the Indemnitee or any of its Affiliates. No such action, claim or liability shall be settled by the Indemnitee without the prior written consent of the Indemnitor, and the Indemnitor shall not be responsible for any fees or other costs incurred other than as provided herein. The Indemnitee, its employees, agents and Affiliates shall cooperate fully with the Indemnitor and its legal representatives in the investigation and defense of any action, claim or liability covered by this indemnification. The Indemnitee shall have the right, but not the obligation to be represented by counsel of its own selection and at its own expense.
11.5 Mitigation. Any Party making a claim under this Article 11 shall take reasonable steps to mitigate and/or minimize the losses or damages suffered.
11.6 LIMITATION OF LIABILITY. NEITHER PARTY WILL HAVE ANY OBLIGATION OR LIABILITY (WHETHER IN CONTRACT, WARRANTY, TORT (INCLUDING NEGLIGENCE) OR OTHERWISE, AND NOTWITHSTANDING ANY FAULT, NEGLIGENCE (WHETHER ACTIVE, PASSIVE, OR IMPUTED), REPRESENTATION, STRICT LIABILITY, OR PRODUCT LIABILITY), OR FOR ANY INCIDENTAL, INDIRECT, CONSEQUENTIAL, MULTIPLIED, PUNITIVE, SPECIAL, OR EXEMPLARY DAMAGES OR LOSS OF REVENUE, PROFIT, SAVINGS OR BUSINESS ARISING FROM OR OTHERWISE RELATED TO THIS AGREEMENT, EVEN IF A PARTY OR ITS REPRESENTATIVES HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, EXCEPT TO THE EXTENT THAT SUCH DAMAGES (A) ARISE FROM THE FRAUD OF SUCH PARTY, OR (B) ARE AWARDED TO A THIRD PARTY IN A CLAIM FOR WHICH SUCH PARTY IS RESPONSIBLE FOR INDEMNIFICATION HEREUNDER.
12. INSURANCE
12.1 Each Party shall maintain at all times during the Term, and for [***] thereafter, comprehensive insurance coverage to cover its activities related to this Agreement, including, in the case of Indivior, products liability insurance and coverage for clinical trials, underwritten by insurers maintaining an AM Best rating of not less than “A-VII” for insurance coverage obligations. Indivior and Addex hereby agree to provide written notice to the other upon becoming aware of any material change, non-renewal or cancellation of insurance.
13. CONFIDENTIALITY
13.1 In carrying out the terms of this Agreement, either Party may disclose (the “Disclosing Party”) to the other Party (the “Recipient”) information regarding the Disclosing Party and/or its Affiliates which is of a proprietary and of confidential nature, including any and all information, information regarding its business, Know-How, methods, trade secrets, financial information, customers and technology (collectively, “Confidential Information”). Confidential Information also includes the terms of this Agreement. The Recipient shall not use the Disclosing Party’s Confidential Information for any purpose other than as permitted herein and shall not disclose the Confidential Information to any Third Party, except to its employees, directors and other representatives who have a need to know such information to fulfill the provisions and intent of this Agreement, and who are bound by written obligations of confidentiality with respect to such information. The Recipient agrees that it will exercise the same degree of care and protection to preserve the proprietary and confidential nature of the Confidential Information disclosed by the Disclosing Party, as Recipient would exercise to preserve its own proprietary and confidential information, and in any case no less than a reasonable degree of care. The Recipient shall promptly notify the Disclosing Party of any unauthorized use or disclosure, or suspected unauthorized use or disclosure, of the Disclosing Party’s
Confidential Information of which the Recipient becomes aware. Each Party shall be liable for any failure of its employees, directors or other representatives to comply with the terms of this Article 13.
13.2 The confidentiality obligations set forth in this Article 13 shall not apply to confidential information which: (a) is or becomes publicly known through no wrongful act or inaction of the Recipient; (b) the Recipient can demonstrate by written records was lawfully received by it from a Third-Party that is not legally or contractually prohibited from disclosing such information; (c) the Recipient can demonstrate by written records was developed by or for such Recipient independently of, and without the use of, such information disclosed by the Disclosing Party, (d) the Recipient is required by legal order to disclose, provided that the Recipient shall, where permitted, give the Disclosing Party immediate written notice of any such request so that the Disclosing Party may seek a protective order or other reliable assurance that confidential treatment will be accorded to the information so disclosed or (e) Indivior discloses to Regulatory Authorities in connection with obtaining Marketing Approval or other communications relating to commercialization of the Products.
13.3 Addex shall not, and shall not permit any of its Affiliates to, grant any license or other right or permission to any entity that, after the Effective Date, acquires control of Addex, to use any confidential or non-public information regarding Addex Know-How in the Indivior Exclusive Field. Addex shall not, and shall not permit any of its Affiliates to, disclose any Addex Know How related solely and exclusively to Licensed Compounds or Products to such an entity.
13.4 The confidentiality obligations set forth in this Article 13 shall survive for [***] years after termination or expiration of this Agreement.
14. MISCELLANEOUS
14.1 Expenses. Except as otherwise expressly provided herein, each Party to this Agreement shall bear its respective expenses incurred in connection with the preparation, execution and performance of this Agreement and the transactions contemplated hereby, including without limitation all fees and expenses of agents, legal counsel, accountants, tax and financial advisors and other facilitators and advisors.
14.2 Force Majeure. Notwithstanding anything to the contrary herein, neither Party shall be liable or in breach of any provision of this Agreement for any failure or delay on their·part to perform any obligation set out in this agreement because of a force majeure event caused by acts of nature, flood, fire, explosion, war, terrorism, civil unrest, national or regional emergency or any cause beyond the reasonable control of the Party affected; provided that such Party gives prompt written notice to the other Party promptly after such event occurs and shall use Commercially Reasonable Efforts to fulfill its commitments hereunder as soon as possible.
14.3 Recordation. Indivior may, at its cost and discretion, record the license granted herein, including by use of a short form document, as permitted or required by Applicable Law or otherwise, including recording a security interest in those jurisdictions which permit a licensee to do so. Addex hereby irrevocably designates and appoints Indivior and its duly authorized officers and agents, as Addex’s agent and attorney-in-fact to execute such documents and to do all other acts necessary or useful to record the license granted herein. Addex shall, upon request and at Indivior’s cost, give to Indivior such reasonable assistance as Indivior may reasonably request in connection with recording the license.
14.4 Publicity. The Parties agree that the terms and contents of this Agreement (including the Schedules hereto) shall be treated as Confidential Information of both Parties, subject to the special authorized disclosure provisions set forth in this Section 14.4. Neither Party shall make any press release or public announcement regarding the execution or terms of this Agreement or the transaction contemplated by this Agreement without the consent of the other Party in accordance with this Section 14.4.
(a) Subject to the other Party’s prior written consent (which shall not be unreasonably withheld), each Party shall have the right to make a press release announcing the achievement of each milestone payment under this Agreement as it is achieved, and the achievements of Marketing Approvals in the Major Markets as they occur. Indivior shall be given at least [***] Business Days to review such Addex announcements and may make specific, reasonable comments on such proposed press release; thereafter, Addex and Indivior may each disclose to Third Parties the information contained in such press release without the need for further approval by the other Party.
(b) Except as set forth in Sections 14.4(a) and 14.4(c), neither Party shall make a public announcement concerning the existence, terms and/or contents of this Agreement, except in the case of a press release or governmental filing required by Applicable Law (where reasonably advised by the disclosing Party’s counsel), in which event the disclosing Party shall provide the other Party with such advance notice as it reasonably can and shall not be required to obtain
approval therefor. A Party commenting on such a proposed press release shall provide its comments, if any, within [***] Business Days (or within [***] Business Days in the event that such shorter period is required to comply with Applicable Law) after receiving the press release for review and the other Party shall give good faith consideration to same.
(c) The Parties acknowledge that either or both Parties may be obligated to file under Applicable Law a copy of this Agreement with the SEC or other government authorities. Each Party shall be entitled to make such a required filing, provided that it requests confidential treatment of at least the financial terms and sensitive technical terms hereof and thereof to the extent such confidential treatment is reasonably available to such Party. In the event of any such filing, each Party will provide the other Party with a copy of this Agreement marked to show provisions for which such Party intends to seek confidential treatment not less than [***] Business Days prior to such filing (and any revisions to such portions of the proposed filing a reasonable time prior to the filing thereof), and shall reasonably consider the other Party’s comments thereon to the extent consistent with the legal requirements, with respect to the filing Party, governing disclosure of material agreements and material information that must be publicly filed, and shall only disclose Confidential Information which it is advised by counsel or the applicable governmental authority is legally required to be disclosed. No such notice shall be required under this Section 14.4(c) if the substance of the description of or reference to this Agreement contained in the proposed filing has been included in any previous filing made by either Party hereunder or otherwise approved by the other Party.
14.5 Independent Contractors. It is understood and agreed that nothing in this Agreement nor any agreement related hereto is intended to nor shall create a partnership between the Parties. The Parties are independent contractors and neither Party is to be considered the agent, partner, joint venturer or employee of the other Party for any purpose whatsoever and neither Party shall have any authority to enter into any contracts or assume any obligations for the other Party.
14.6 Further Assurances. Each of the Parties shall take, or cause to be taken, all actions necessary, proper, or advisable under applicable laws to give effect to the provisions of this Agreement.
14.7 Assignment; Binding Effect. Neither Party shall, without the prior written consent of the other Party, assign, novate, transfer or convey this Agreement (in whole or in part) or any of its rights and obligations hereunder to any Third Party except as set forth in Sections 2.2 and 3.7); provided always that either Party may assign or novate this Agreement (in whole or in part) without such consent to any Affiliate or to an acquirer of all or substantially all of the business of the assigning Party to which this Agreement relates, whether in a merger, sale of stock, sale of assets or otherwise, without such consent; subject only to that assigning or novating Party giving written notice to the non-assigning Party and the acquirer agreeing in writing to be bound by the terms hereof.
14.8 Entire Agreement. This Agreement constitutes the entire contract between the Parties pertaining to the subject matter hereof, and supersedes all prior and contemporaneous agreements, understandings, negotiations, and discussions, whether written or oral, of the Parties; and there are no representations, warranties, or other agreements between the Parties in connection with the subject matter hereof except as specifically set forth herein.
14.9 Waiver. The waiver by either Party of any right hereunder, or the failure to exercise such right, shall not be deemed a waiver of exercising such right in the future or of any other right hereunder in case of breach or failure by the other Party whether of a similar nature or otherwise.
14.10 Amendments. No amendment and/or modification to this Agreement shall be effective unless set forth in a writing signed by both Parties.
14.11 Notice. Any notice, request, delivery, approval or consent required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been sufficiently given upon delivery in person, the next day after delivery by express courier service (signature required) or five (5) days after the date of mailing by registered or certified mail, return receipt requested (or its equivalent), as the address shown below or such other address as a Party provides in accordance with this Section 14.11.
Notices sent to Addex shall be addressed to:
Addex Pharma SA
12, Chemin des Aulx
CH1228 Plan-les-Ouates
Geneva, Switzerland
Attention: Chief Executive Officer
With a copy to:
Addex Pharma SA
12, Chemin des Aulx
CHI 228 Plan-les-Ouates
Geneva, Switzerland
Attention: Chief Financial Officer
and
Cooley (UK) LLP
Dashwood
69 Old Broad Street
London, EC2M 1QS
Attention: John Wilkinson
Notices sent to Indivior shall be addressed to:
Indivior UK Limited
103-105 Bath Road
Slough, Berkshire
SL1 3UH
Attention: Assistant General Counsel, EMEA
With a copy to:
Indivior Inc.
10710 Midlothian Turnpike
Suite 430
Richmond, VA 23235
Attention: Chief Legal Officer
Telephone: (804) 594-4442
and
K&L Gates LLP
599 Lexington Avenue
New York, NY 10022
Attn: Calvina Bostick
Whitney J. Smith
Notwithstanding the foregoing, reports required to be delivered pursuant to Sections 3.8, 4.4 and 6.7 shall be in writing and shall be deemed to have been sufficiently delivered upon transmission by email in accordance with the below (provided that if such email is not sent during normal business hours, such notice or communication shall be deemed to have been sent the next business day:
Addex: [***]
Indivior: [***]
14.12 Governing Law; Jurisdiction. This Agreement shall be governed by and construed in accordance with the laws of England and Wales, except that the construction or effect of a patent or patent application licensed under this Agreement shall be decided in accordance with the laws of the country in which the patent or patent application was granted or filed. Each Party irrevocably agrees that the courts of England and Wales shall have exclusive jurisdiction to settle any dispute arising out of or in connection with this Agreement.
14.13 Severability. If any provision in this Agreement is held to be invalid, void or unenforceable, then the remainder of this Agreement, or the application of such provision to the Parties or to the circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby and shall be enforced to the fullest extent permitted by law. The Parties agree to renegotiate any such invalid, void or unenforceable provision in good faith in order to provide a reasonably acceptable alternative consistent with the basic purposes of this Agreement.
14.14 Counterparts. This Agreement may be executed in one or more counterparts, none of which need contain the signatures of both Parties, each of which shall be deemed an·original, and all of which together shall constitute one and the same instrument. Counterparts may be delivered via facsimile, electronic mail (including pdf or electronic signature, e.g., www.docusign.com) or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered.
14.15 Interpretation and Construction. Unless the context of this Agreement otherwise requires, (a) the terms “include,” “includes,” or “including” shall be deemed to be followed by the words “without limitation” unless otherwise indicated; (b) the terms “hereof,” “herein,” “hereby,” and derivative or similar words refer to this entire Agreement; and (c) the terms “Section” and “Schedule” refer to the specified Section and Schedule of this Agreement.
Whenever this Agreement refers to a number of days, unless otherwise specified, such number shall refer to calendar days. The headings and paragraph captions in this Agreement are for reference and convenience purposes only and shall not affect the meaning or interpretation of this Agreement. This Agreement shall not be interpreted or constructed in favor of or against either Party because of its effort in preparing it.
***
This Agreement is signed by duly authorised representatives of the Parties:
| | | | | | | | |
| Signed for an on behalf of |
| INDIVIOR UK LIMITED |
| |
| By: | /s/ Richard Simkin |
| Name: | Richard Simkin |
| Title: | Chief Commercial Officer |
| |
| Signed for an on behalf of |
| ADDEX PHARMA S.A. |
| |
| By: | /s/ Tim Dyer |
| Name: | Tim Dyer |
| Title: | Chief Executive Officer |
SCHEDULE 1.3
ADDEX EXISTING PATENT RIGHTS
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Reference | | Country | | Application Number | | Patent Number | | Grant Date | | Expiry Date | | Status |
[***] |
| [***] | | [***] | | [***] | | [***] | | [***] | | [***] | | [***] |
| [***] | | [***] | | [***] | | [***] | | [***] | | [***] | | [***] |
| [***] | | [***] | | [***] | | [***] | | [***] | | [***] | | [***] |
| [***] | | [***] | | [***] | | [***] | | [***] | | [***] | | [***] |
| [***] | | [***] | | [***] | | [***] | | [***] | | [***] | | [***] |
| [***] | | [***] | | [***] | | [***] | | [***] | | [***] | | [***] |
| [***] | | [***] | | [***] | | [***] | | [***] | | [***] | | [***] |
| [***] | | [***] | | [***] | | [***] | | [***] | | [***] | | [***] |
| [***] | | [***] | | [***] | | [***] | | [***] | | [***] | | [***] |
| [***] | | [***] | | [***] | | [***] | | [***] | | [***] | | [***] |
| [***] | | [***] | | [***] | | [***] | | [***] | | [***] | | [***] |
| [***] | | [***] | | [***] | | [***] | | [***] | | [***] | | [***] |
| [***] | | [***] | | [***] | | [***] | | [***] | | [***] | | [***] |
| [***] | | [***] | | [***] | | [***] | | [***] | | [***] | | [***] |
| [***] | | [***] | | [***] | | [***] | | [***] | | [***] | | [***] |
| [***] | | [***] | | [***] | | [***] | | [***] | | [***] | | [***] |
| | [***] | | [***] | | [***] | | [***] | | [***] | | [***] |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | [***] | | [***] | | [***] | | [***] | | [***] | | [***] |
| [***] | | [***] | | [***] | | [***] | | [***] | | [***] | | [***] |
| | [***] | | [***] | | [***] | | [***] | | [***] | | [***] |
| | [***] | | [***] | | [***] | | [***] | | [***] | | [***] |
| | [***] | | [***] | | [***] | | [***] | | [***] | | [***] |
| | [***] | | [***] | | [***] | | [***] | | [***] | | [***] |
| | [***] | | [***] | | [***] | | [***] | | [***] | | [***] |
| | [***] | | [***] | | [***] | | [***] | | [***] | | [***] |
| | [***] | | [***] | | [***] | | [***] | | [***] | | [***] |
| | [***] | | [***] | | [***] | | [***] | | [***] | | [***] |
| | [***] | | [***] | | [***] | | [***] | | [***] | | [***] |
| | [***] | | [***] | | [***] | | [***] | | [***] | | [***] |
| | [***] | | [***] | | [***] | | [***] | | [***] | | [***] |
| | [***] | | [***] | | [***] | | [***] | | [***] | | [***] |
| | [***] | | [***] | | [***] | | [***] | | [***] | | [***] |
| | [***] | | [***] | | [***] | | [***] | | [***] | | [***] |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | [***] | | [***] | | [***] | | [***] | | [***] | | [***] |
| | [***] | | [***] | | [***] | | [***] | | [***] | | [***] |
| | [***] | | [***] | | [***] | | [***] | | [***] | | [***] |
| | [***] | | [***] | | [***] | | [***] | | [***] | | [***] |
| | [***] | | [***] | | [***] | | [***] | | [***] | | [***] |
| | [***] | | [***] | | [***] | | [***] | | [***] | | [***] |
| | [***] | | [***] | | [***] | | [***] | | [***] | | [***] |
| | [***] | | [***] | | [***] | | [***] | | [***] | | [***] |
| | [***] | | [***] | | [***] | | [***] | | [***] | | [***] |
| | [***] | | [***] | | [***] | | [***] | | [***] | | [***] |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | [***] | | [***] | | [***] | | [***] | | [***] | | [***] |
| | [***] | | [***] | | [***] | | [***] | | [***] | | [***] |
| | [***] | | [***] | | [***] | | [***] | | [***] | | [***] |
| | [***] | | [***] | | [***] | | [***] | | [***] | | [***] |
| | [***] | | | | [***] | | | | [***] | | [***] |
| | [***] | | | | [***] | | | | [***] | | [***] |
| | [***] | | | | [***] | | | | [***] | | [***] |
| | [***] | | | | [***] | | | | [***] | | [***] |
| | [***] | | | | [***] | | | | [***] | | [***] |
| | [***] | | | | [***] | | | | [***] | | [***] |
| | [***] | | | | [***] | | | | [***] | | [***] |
| | [***] | | | | [***] | | | | [***] | | [***] |
_________________
(1)[***]
(2)[***]
SCHEDULE 1.13
AGREED ASSAY
The details of the Agreed Assay are as follows:
- [***]
OR
- [***]
Exhibit 4.24
Execution Version
Confidential
PORTIONS OF THIS EXHIBIT HAVE BEEN REDACTED. CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS BOTH (i) NOT MATERIAL AND (ii) WOULD BE LIKELY TO CAUSE COMPETITIVE HARM IF PUBLICLY DISCLOSED. REDACTED MATERIAL IS MARKED WITH [***].
LICENSE AGREEMENT
between
OPIANT PHARMACEUTICALS, INC.
and
AEGIS THERAPEUTICS, LLC
Effective Date January 1, 2017
| | | | | | | | | | | |
| | | Page |
| | | |
| 1. | DEFINITIONS | 1 |
| | | |
| 2. | REPRESENTATIONS AND WARRANTIES | 1 |
| | | |
| 2.1 | Both Parties | 1 |
| | | |
| 2.2 | AEGIS Additional Representations and Warranties | 2 |
| | | |
| 2.3 | Disclaimer of Warranties | 4 |
| | | |
| 3. | LICENSE GRANTS; SUBLICENSING AND SUBCONTRACTING | 4 |
| | | |
| 3.1 | AEGIS Technology | 4 |
| | | |
| 3.2 | Sublicenses | 4 |
| | | |
| 3.3 | Manufacture; Right of Reference | 4 |
| | | |
| 3.4 | Contract Research | 5 |
| | | |
| 3.5 | Exclusivity; Non-Competition | 5 |
| | | |
| 3.6 | Technology Disclosure; Assistance | 6 |
| | | |
| 3.7 | Diligence Efforts | 6 |
| | | |
| 3.8 | Research and Development Plans and Reports | 7 |
| | | |
| 3.9 | Excipient Toxicity Studies | 7 |
| | | |
| 4. | PAYMENTS | 8 |
| | | |
| 4.1 | License Issuance Fee | 8 |
| | | |
| 4.2 | Developmental Milestone Payments | 8 |
| | | |
| 4.3 | Commercialization Milestones | 10 |
| | | |
| 4.4 | Royalties | 10 |
| | | |
| 4.5 | Royalty Reports | 12 |
| | | |
| 4.6 | Audits | 12 |
| | | |
| 4.7 | Payment Method | 13 |
| | | |
| 4.8 | Taxes and Duties | 13 |
| | | |
| 4.9 | Sublicense Revenue | 13 |
| | | |
| 5. | OWNERSHIP AND RIGHTS FOR DATA AND TECHNOLOGY | 14 |
| | | |
| 5.1 | AEGIS Technology | 14 |
| | | |
| 5.2 | OPIANT Technology | 14 |
| | | |
| 5.3 | Inventorship | 14 |
| | | |
| 5.4 | Inventions Related to the Compound | 14 |
TABLE OF CONTENTS (continued)
| | | | | | | | | | | |
| | | Page |
| | | |
| 5.5 | Inventions Related to the Excipient | 15 |
| | | |
| 5.6 | Joint Inventions | 15 |
| | | |
| 5.7 | Rights | 15 |
| | | |
| 6. | PATENT RIGHTS | 16 |
| | | |
| 6.1 | Prosecution and Maintenance of AEGIS Patent Rights | 16 |
| | | |
| 6.2 | Prosecution and Maintenance of OPIANT Patent Rights | 16 |
| | | |
| 6.3 | Prosecution and Maintenance of Joint Patent Rights | 17 |
| | | |
| 6.4 | Orange Book Listings | 17 |
| | | |
| 6.5 | Enforcement | 17 |
| | | |
| 6.6 | FDA Matters | 19 |
| | | |
| 6.7 | Joint Research Agreement | 19 |
| | | |
| 7. | CONFIDENTIALITY | 20 |
| | | |
| 7.1 | Confidentiality | 20 |
| | | |
| 7.2 | Terms of License Agreement | 20 |
| | | |
| 7.3 | Permitted Disclosures | 20 |
| | | |
| 7.4 | Publicity | 20 |
| | | |
| 8. | INDEMNIFICATION AND INSURANCE | 21 |
| | | |
| 8.1 | Indemnification by OPIANT | 21 |
| | | |
| 8.2 | Indemnification by AEGIS | 21 |
| | | |
| 8.3 | Procedure | 21 |
| | | |
| 8.4 | Insurance | 22 |
| | | |
| 9. | TERM; TERMINATION | 22 |
| | | |
| 9.1 | Term | 22 |
| | | |
| 9.2 | Termination for Breach or Bankruptcy | 22 |
| | | |
| 9.3 | Termination by OPIANT | 23 |
| | | |
| 9.4 | Effect of Expiration or Termination | 23 |
| | | |
| 10. | GENERAL PROVISIONS | 23 |
| | | |
| 10.1 | Governing Law | 23 |
| | | |
| 10.2 | Arbitration | 23 |
| | | |
| 10.3 | Modification; Waiver | 24 |
| | | |
| 10.4 | Rights Under U.S. Bankruptcy Code | 24 |
TABLE OF CONTENTS (continued)
| | | | | | | | | | | |
| | | Page |
| | | |
| 10.5 | Assignment | 24 |
| | | |
| 10.6 | Independent Contractors | 25 |
| | | |
| 10.7 | Further Actions | 25 |
| | | |
| 10.8 | Notices | 25 |
| | | |
| 10.9 | No Implied Licenses | 26 |
| | | |
| 10.10 | Force Majeure | 26 |
| | | |
| 10.11 | No Consequential Damages | 26 |
| | | |
| 10.12 | Complete Agreement | 26 |
| | | |
| 10.13 | Counterparts | 26 |
| | | |
| 10.14 | Severability | 26 |
| | | |
| 10.15 | Headings | 27 |
| | | |
| | | |
| | | |
| | | |
| | | |
| EXHIBIT A – DEFINITIONS | |
| | | |
| EXHIBIT B – AEGIS PATENT RIGHTS | |
LICENSE AGREEMENT
THIS LICENSE AGREEMENT (this “License Agreement”) effective as of January 1, 2017 (the “Effective Date”), and entered into by the Parties on June 22, 2017 (“Execution Date”) by and between AEGIS THERAPEUTICS, LLC, a California limited liability company (“AEGIS”), and OPIANT PHARMACEUTICALS, INC., a Delaware corporation (“OPIANT” and together with “AEGIS,” the “Parties”).
Recitals
A. AEGIS has rights in certain proprietary technology regarding the chemically synthesizable delivery enhancement and stability agents that, among other things, allow non-invasive systemic delivery of potent peptide, protein, and large molecule drugs.
B. OPIANT desires to develop and commercialize therapeutic products that utilize such proprietary technology of AEGIS for the delivery of the Compound (as defined in Exhibit A).
C. OPIANT desires to obtain from AEGIS, and AEGIS is willing to grant to OPIANT, a license to develop and commercialize such therapeutic products, on the terms and conditions set forth below.
In consideration of the foregoing Recitals and the mutual covenants set forth below, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:
1. DEFINITIONS
For purposes of this License Agreement, the terms defined in Exhibit A attached hereto shall have the defined meanings as set forth in Exhibit A, and the terms defined in this License Agreement shall have the corresponding meanings set forth in this License Agreement.
2. REPRESENTATIONS AND WARRANTIES
2.1 Both Parties. Each Party represents and warrants to the other Party as follows:
2.1.1 Organization. Such Party is duly organized, validly existing and in good standing under the laws of the jurisdiction in which it is organized.
2.1.2 Authorization and Enforcement of Obligations. Such Party (a) has the requisite power and authority and the legal right to enter into this License Agreement and to perform its obligations hereunder; and (b) has taken all requisite action on its part to authorize the execution and delivery of this License Agreement and the performance of its obligations hereunder. This License Agreement has been duly executed and delivered on behalf of such Party, and constitutes a legal, valid, binding obligation, enforceable against such Party in accordance with its terms.
2.1.3 Consents. All necessary consents, approvals and authorizations of all governmental authorities and other persons or entities required to be obtained by such Party in connection with this License Agreement have been obtained.
2.1.4 No Conflict. The execution and delivery of this License Agreement and the performance of such Party’s obligations hereunder (a) do not conflict with or violate any requirement of applicable laws, regulations or orders of governmental bodies; and (b) do not conflict with, or constitute a default under, any contractual obligation of such Party.
2.2 AEGIS Additional Representations and Warranties. AEGIS hereby represents and warrants to OPIANT that:
2.2.1 Intellectual Property Matters.
(a) Exhibit B sets forth a true, correct and complete list of all AEGIS Patents Rights existing as of the Execution Date, and for each such patent and patent application AEGIS has identified (i) the owner, (ii) the countries in which such listed item is patented or registered or in which an application for patent or for registration is pending, (iii) the application number, (iv) the patent or registration number, as applicable, (v) the earliest relied upon priority filing date for determination of the expiration date, (vi) the expiration date, as applicable, including any applicable patent term extensions or supplemental protection certificates, and (vii) the due date(s) for any applicable maintenance, annuity or renewal fee.
(b) Each of the patents and patent applications included on Exhibit B properly identifies each and every inventor of the claims thereof as determined in accordance with the laws of the jurisdiction in which such patent is issued or such application is pending.
(c) Each person, including without limitation any employee, independent contractor, consultant, or agent of AEGIS, who has or has had any rights in or to each of the patents and patent applications included in the AEGIS Patents Rights, has executed an agreement assigning his, her or its entire right, title and interest in and to such AEGIS Patents Rights to the owner thereof as identified on Exhibit B.
(d) To AEGIS’ knowledge, each owner and inventor of each of the AEGIS Patents Rights has complied with all applicable duties of candor and good faith in dealing with any patent office, including the duty to disclose to any applicable patent office all information known to be material to patentability.
(e) To AEGIS’ knowledge, neither AEGIS nor any third party has undertaken or omitted to undertake any acts, and to its knowledge, no circumstances or grounds exist, that would invalidate, reduce or eliminate, in whole or in part, the enforceability, validity or scope of any of the AEGIS Patents Rights.
(f) AEGIS is the sole and exclusive owner or exclusive licensee of the patents and patent applications listed in Exhibit B, free and clear of all Encumbrances. Subject to the license granted to OPIANT hereunder, AEGIS has the exclusive right to Exploit the AEGIS Technology, including without limitation any and all patent rights licensed to AEGIS by UAB pursuant to the UAB Agreement, for use with the Compound in the Field in the Territory. AEGIS has the right to grant all rights and licenses it grants to OPIANT under this License Agreement with respect to the AEGIS Technology, including without limitation any and all patent rights licensed to AEGIS by UAB pursuant to the UAB Agreement.
(g) Other than pursuant to this License Agreement and the Prior Agreements, AEGIS has not assigned, licensed, sublicensed, granted any interest in or options to, nor has AEGIS otherwise entered into any existing agreement with respect to, the AEGIS Technology for use with the Compound in the Field and shall not do so prior to the expiration or termination of this License Agreement.
(h) AEGIS has taken commercially reasonable precautions to protect the secrecy, confidentiality and value of the AEGIS Technology.
(i) To AEGIS’ knowledge, AEGIS Technology constitutes all of the intellectual property that is useful or necessary for the use of the Excipient.
(j) As of the Execution Date, to AEGIS’ knowledge, the use of the AEGIS Technology in accordance with the terms of this License Agreement does not infringe the intellectual property rights of any third party and does not constitute a misappropriation of the trade secrets or other intellectual property rights of any third party in the Territory.
(j) As of the Execution Date, to AEGIS’ knowledge, no third party has interfered with, infringed upon or misappropriated the AEGIS Technology in the Field for use with the Compound.
(k) As of the Execution Date, AEGIS has not been served with notice of any interference action or litigation with respect to the AEGIS Technology nor has AEGIS received any written communication which expressly threatens any interference action, requests that AEGIS obtain a license from any third party or otherwise threatens or contemplates litigation with respect to the AEGIS Technology, whether before any patent and trademark office, court, or any other governmental authority. To AEGIS’ knowledge, as of the Execution Date: (i) no such action or litigation has been threatened, and (ii) no event has occurred or circumstance exists that may give rise to or serve as a basis for the commencement of any such action or litigation.
2.2.2 Regulatory Matters.
(a) As of the Execution Date, to AEGIS’ knowledge, AEGIS holds, and is operating in compliance with, any and all exceptions, permits, licenses, franchises, authorizations and clearances of the FDA and/or any other governmental authority required in connection with the development to date of the Excipients.
(b) AEGIS has not received any warning letters or written correspondence from the FDA and/or any other governmental authority requiring the termination, suspension or modification of any clinical or pre-clinical studies or tests with respect to the Excipients.
(c) As of the Execution Date, there are no actual or, to AEGIS’ knowledge, threatened enforcement actions relating to any Excipient by the FDA or any other governmental authority which has jurisdiction over AEGIS’ or any applicable third-party manufacturer’s operations or products, including, without limitation, any fines, injunctions civil or criminal penalties, investigations, debarments or suspensions.
(d) AEGIS is not, and to AEGIS’ knowledge, no person involved in the performance of AEGIS’ or any services under this License Agreement is, debarred or suspended under 21 U.S.C. §335(a) or (b).
2.2.3 Compliance with Laws. As of the Execution Date, to AEGIS’ knowledge, AEGIS is in compliance in all respects with all Laws that are applicable to the ownership, operation or use of any of the Excipients or AEGIS Technology. To AEGIS’ knowledge, there are no events, conditions, circumstances, activities, practices, incidents or actions of AEGIS relating to the AEGIS Technology that would interfere with or prevent compliance with or give rise to any liabilities or investigative, corrective or remedial obligations with respect to the AEGIS Technology under applicable Laws.
2.2.4 Supply Matters. Any Excipients supplied by AEGIS will be done so in accordance with the Supply Agreement.
2.2.5 UAB Licensing Agreement. The UAB Licensing Agreement is a legal and valid obligation binding upon the parties thereto and enforceable in accordance with its terms. Attached hereto as Exhibit C is a true and correct copy of the UAB Licensing Agreement, with the
financial terms and sponsored research terms redacted. No provisions of the UAB Licensing Agreement or any other agreement with any third party restrict or limit AEGIS’ right to grant OPIANT the rights and licenses granted by AEGIS to OPIANT in this License Agreement. AEGIS has not received any notice of default, and is not in default, of any of its obligations under the UAB Licensing Agreement, and no circumstances or grounds exist that would reasonably be expected to give rise to a claim of material breach or right of rescission, termination, revision, or amendment of the UAB Licensing Agreement. To AEGIS’ knowledge, UAB is not in default, of any of its obligations under the UAB Licensing Agreement. AEGIS has obtained all required consents from UAB for it to grant to OPIANT the rights and licenses granted by AEGIS hereunder.
2.3 Disclaimer of Warranties. EXCEPT AS EXPRESSLY SET FORTH IN THIS SECTION 2, AEGIS MAKES NO REPRESENTATIONS OR WARRANTIES IN THIS LICENSE AGREEMENT, EXPRESS OR IMPLIED, REGARDING THE AEGIS TECHNOLOGY, INCLUDING WITHOUT LIMITATION ANY REPRESENTATION OR WARRANTY REGARDING VALIDITY, ENFORCEABILITY, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR NONINFRINGEMENT, AND ALL RIGHTS IN THE AEGIS TECHNOLOGY PROVIDED TO OPIANT HEREUNDER ARE PROVIDED “AS IS.”
3. LICENSE GRANTS; SUBLICENSING AND SUBCONTRACTING
3.1 AEGIS Technology. AEGIS hereby grants to OPIANT an exclusive (even as against AEGIS except for use pursuant to and in accordance with the Supply Agreement), sublicensable (as set forth in Section 3.2), worldwide, license, under the AEGIS Technology, to Exploit Compound(s) and Product(s) in the Field (the “License”).
3.2 Sublicenses. OPIANT shall have the right to grant sublicenses under any portion or all of the license set forth in Section 3.1 to one or more Affiliates and/or third parties without the prior written consent of AEGIS. OPIANT shall give AEGIS prompt written notice of each sublicense under this License Agreement, and shall deliver a copy of each sublicense to AEGIS within thirty (30) days after execution of the same Each sublicense shall be subject to the applicable terms and conditions of this License Agreement, including an obligation on the sublicensee to file royalty reports to OPIANT, which reports shall be subject to audit by OPIANT (but not AEGIS). OPIANT agrees to audit such sublicensees at AEGIS’ reasonable request; provided that the timing and scope of any such audit are consistent with OPIANT’s business practices and such requests by AEGIS shall not exceed one (1) request per Calendar Year per sublicensee. OPIANT shall remain liable to AEGIS for sublicensee’s exercise of any of OPIANT’s rights and sublicensee’s performance of OPIANT’s obligations under this License Agreement, including, but not limited to, payment of royalties, keeping of records and reporting of sales as if the sublicensee’s sales were OPIANT’s sales. For purposes of clarity, the right to “have manufactured” and to “have sold” shall not be considered to be a sublicense under this License Agreement.
3.3 Manufacture; Right of Reference.
3.3.1 Except as set forth in this Section 3.3 or the Supply Agreement, notwithstanding the license granted under Section 3.1 to manufacture Excipients, OPIANT hereby covenants and agrees to not exercise such right to make or have made Excipients except as specified in the Supply Agreement. Upon termination of the Supply Agreement, a supply failure or supply shortage, or as otherwise set forth for in the Supply Agreement, AEGIS shall provide reasonable assistance to OPIANT to facilitate the disclosure and transfer of copies of any AEGIS Know-How
Rights or other technology reasonably required to permit OPIANT or any such contract manufacturer to manufacture Excipients.
3.3.2 OPIANT shall have the right to reference the AEGIS Data, and all regulatory filings in AEGIS’ control containing such AEGIS Data, in connection with the Exploitation of Product(s), including without limitation the applicable drug master files pertaining to the Excipients. Such right shall extend to any contract manufacturer engaged by OPIANT, any of its Affiliates and/or any sublicensees to manufacture Excipients. As requested by OPIANT, AEGIS shall provide a letter of authorization to the FDA authorizing the FDA to access AEGIS’ drug master files exclusively for submissions associated with the Product(s).
3.4 Contract Research.
3.4.1 The license granted under Section 3.1 to conduct research and to develop Products shall automatically extend to any contract research organization and/or contract analytical organization engaged by OPIANT (without the need to sublicense), any of its Affiliates and/or any sublicensee in connection with research and development efforts for the Products. At OPIANT’s request, AEGIS shall provide reasonable assistance to OPIANT to facilitate the disclosure and transfer of copies of any AEGIS Know-How Rights or other technology reasonably required to permit any such contract research organization and/or contract analytical organization to conduct research and development efforts for the Products, at no additional cost to OPIANT.
3.4.2 In the event that OPIANT desires to engage a contract research organization in connection with its research and development efforts, if any, solely related to the Excipients, OPIANT agrees to provide a request for quotation of services to UAB at the same time as when providing such requests to other potential service providers. Such request shall allow for a commercially reasonable period of time to provide a response from all potential contractors. The Parties understand and agree that OPIANT shall have no obligation to utilize the services of UAB or any other party and that this Section 3.4.2 shall not apply to the development of the Product or any other development matters not related solely to the Excipients.
3.5 Exclusivity; Non-Competition.
3.5.1 Until the expiration of the Royalty Term in each country in the Territory, neither AEGIS nor any of its Affiliates shall, directly or indirectly engage in any activities or participate in any business or otherwise compete with OPIANT (including without limitation by developing, researching, manufacturing, selling, offering for sale, licensing, offering for license, covenant not to sue a third party, agreeing to sell or license, divesting or transferring rights, including without limitation any AEGIS Technology, to any third party) anywhere in the Territory with respect to the Exploitation of any therapeutic containing a Compound or derivative or active metabolite of a Compound without the prior written consent of OPIANT.
3.5.2 Each of the Parties recognizes that the restrictions contained in, and the terms of, this Section 3.5 are properly required for the adequate protection of the license set forth in Section 3.1 and OPIANT’s rights under this License Agreement, and agree that if any provision in this Section 3.5 is determined by any court to be unenforceable by reason of its extending for too great a period of time or over too great a geographic area, or by reason of its being too extensive in any other respect, such covenant shall be interpreted to extend only for the longest period of time and over the greatest geographic area, and to otherwise have the broadest application as shall be enforceable.
3.6 Technology Disclosure; Assistance. Within thirty (30) days after the Execution Date, AEGIS shall deliver, at AEGIS’ expense, to OPIANT, or provide OPIANT with copies of (a) the AEGIS Know-How Rights, consisting of (i) copies of any publications related to the application of Excipients, including without limitation the Excipient known as Intravail®, (ii) basic formulation ingredients, concentration data, formulation protocols, etc., (iii) access to all toxicology and safety information relating to Excipients, including without limitation the Excipient known as Intravail® (excluding third party confidential information), and (iv) access to the drug master file(s) (excluding the CMC portion and third party confidential information) pertaining to the Excipients; and (b) all AEGIS Patent Rights and all relevant material information related thereto available to AEGIS. Additionally, at such time in the future during the term of this License Agreement if AEGIS or its Affiliates acquires additional AEGIS Technology which either Party reasonably believes to be necessary or useful for Opiant to Exploit the Product, Aegis shall promptly disclose the same to Opiant, together with the material information and documents concerning the same which are available to Aegis. At Opiant’s request and expense, throughout the term of this License Agreement, Aegis shall provide reasonable assistance to Opiant to facilitate the disclosure and transfer of copies of any Aegis Data, Aegis Know-How Rights, or other technology reasonably required to permit Opiant to Exploit the Excipients for the Product(s), including without limitation to permit OPIANT or any sublicensee or contract manufacturer of OPIANT to develop and/or manufacture Excipients for purposes of manufacturing Product(s) if and when permitted in accordance with Section 3.3, but subject to the limitation of Section 3.1.
3.7 Diligence Efforts.
3.7.1 OPIANT shall use Commercially Reasonable Efforts (defined below) to obtain regulatory approval for the Product and to thereafter maximize sales of the Product in the Territory.
3.7.2 The term “Commercially Reasonable Efforts” shall mean that level of effort that a biotechnology or pharmaceutical company of comparable size, capabilities and financials would normally apply in the United States and the EU, as applicable, in pursuing the development and commercialization of a pharmaceutical product with a similar efficacy and safety profile to the Product (taking into account at all times the relevant patent, medical/scientific, technical, regulatory, development cost, market potential, or commercial profile of same), subject to intervening Regulatory Authority actions or requests, new legislation, any breach of the AEGIS’ obligations under this License Agreement and/or Supply Agreement or any other third-party action not within the reasonable control of OPIANT.
3.7.3 In the event OPIANT does not (directly or with or through any of its Affiliates or sublicensees) use Commercially Reasonable Efforts to Exploit a Product, then AEGIS will have the right to terminate the License with respect to such Product as provided in this Section 3.7.3, and such termination shall be the sole remedy for such failure. Said termination will occur upon AEGIS delivering to OPIANT a written notice of termination, unless OPIANT responds within sixty (60) days after receipt of said notice with evidence which demonstrates that OPIANT (or any of its Affiliates or sublicensees) is using Commercially Reasonable Efforts to Exploit a Product.
(a) If there is a dispute between the Parties regarding whether OPIANT (or any of its Affiliates or sublicensees) is using Commercially Reasonable Efforts to Exploit a Product, the dispute resolution procedures pursuant to Section 10.2 shall apply and no termination will occur unless and until it is finally determined pursuant to such procedures that OPIANT has not (directly or with or through any of its Affiliates or sublicensees) used Commercially Reasonable Efforts to Exploit such
Product. In the event that it is finally determined pursuant to such procedures that OPIANT has not (directly or with or through any of its Affiliates or sublicensees) used Commercially Reasonable Efforts to Exploit such Product, then AEGIS shall not have the right to terminate the License for such Product if OPIANT puts in place and begins implementation of a commercially reasonable plan, mutually agreed to by the Parties, for compliance with its obligation to use Commercially Reasonable Efforts to Exploit such Product within sixty (60) days after such final determination.
(b) If AEGIS terminates the License granted with respect to a Product as permitted by Section 3.7.3, OPIANT shall assign and transfer exclusively to AEGIS (even as to OPIANT) all data and intellectual property and any Joint Patent Rights owned by OPIANT that relates solely to such Product, at AEGIS’ expense; provided, however, that such assignment and transfer shall exclude any data and intellectual property solely related to the Compound. AEGIS’ rights to terminate the License under this Section 3.7.3 shall not begin until two (2) years after the Execution Date.
3.8 Research and Development Plans and Reports.
3.8.1 During the term of this License Agreement, AEGIS may offer its recommendations to OPIANT for development as to any ways which may be more effective for utilizing the Excipient(s). For avoidance of doubt, neither party shall have any legally binding obligations or liabilities concerning the foregoing recommendations.
3.8.2 Within ninety (90) days following the end of each Calendar Year during the term of this License Agreement, OPIANT shall prepare and deliver to AEGIS a written report which shall describe, in reasonable detail, OPIANT’s efforts and results for researching and developing Products during such Calendar Year.
3.8.3 The plans and report and contents thereof shall be owned exclusively by OPIANT. AEGIS shall treat the foregoing plans and reports and their contents as Confidential Information of OPIANT consistent with Section 7.
3.8.4 OPIANT shall furnish to AEGIS a copy of all clinical protocol(s) and the related patient informed consent form for any clinical trial study, which involves an Excipient or the AEGIS Technology; and AEGIS shall be entitled to share such documents with the AEGIS insurance carriers to the extent required to comply with its contractual obligations to such entities. AEGIS agrees that any personally identifiable information or protected health information, which comes into AEGIS’ possession under this License Agreement will be protected and acted on in accordance with applicable data protection legislation, such as the Health Insurance Portability and Accountability Act of 1996 as well as all other applicable laws and regulations.
3.9 Excipient Toxicity Studies. In the event that OPIANT conducts any toxicity studies solely related to the Excipient or the Material (the “Material Tox Studies”), OPIANT agrees to provide to AEGIS a draft copy of the intended protocol(s) to be used for such Material Tox Studies; and OPIANT will give due considerations to any recommendations which AEGIS may give for improving the protocol(s) for the Material Tox Studies. OPIANT agrees to provide any data arising from the Material Tox Studies (“Material Tox Data”) to AEGIS within thirty (30) days after OPIANT receives the Material Tox Data, which Material Tox Data shall be subject to the confidentiality obligations set forth in this Agreement. AEGIS may include in its Drug Master File(s) (“DMF”) for the Excipient such portions of or information from the Material Tox Data as is required or appropriate for inclusion in its DMF and may provide such redacted copies of such Material Tox Data to its licensees, provided that prior to sharing with any third party, AEGIS and OPIANT shall redact all
OPIANT Confidential Information including all references to OPIANT, the Product and/or the Compound; provided however that the Material Tox Data added to the DMF shall not be redacted.
4. PAYMENTS
4.1 License Issuance Fee. As partial consideration for the grant to OPIANT of the License, OPIANT shall pay to AEGIS a (i) one-time, nonrefundable and noncreditable license fee of [***] as of the Execution Date; and (ii) one-time, nonrefundable and noncreditable license fee of [***] upon the earlier of the manufacture of the first test development batch for a Product containing naltrexone or July 15, 2017.
OPIANT may elect to pay up to 50% of the License Issuance Fee by issuing to AEGIS shares of OPIANT’S common stock subject to the following:
(a) There must be a public market for OPIANT’S shares and OPIANT must be current with all statutory filings;
(b) The shares shall be issued pursuant to Rule 144 of the Securities Act of 1933;
(c) The number of shares to be issued shall be calculated as seventy-five percent (75%) of the average closing price for the previous twenty (20) trading days;
(d) As soon as AEGIS has satisfied the statutory holding period, OPIANT’S legal counsel shall provide a legal opinion so that the shares can be sold in accordance with Rule 144 of the Securities Act of 1933.
4.2 Developmental Milestone Payments. As partial consideration for the grant to OPIANT of the rights under Section 3.1 the Parties agree to the following:
4.2.1 Naloxone Products. As partial consideration for the grant to OPIANT of the rights under Section 3.1 the Parties agree to the following milestones for the first Product containing naloxone:
| | | | | |
| Milestone | Amount |
| Successful Completion of the first pilot PK study in humans | [***] |
| Upon the Successful Completion of the first PK study in humans; provided, that if OPIANT has not initiated a first PK study in humans by December 31, 2018, then such milestone shall be due on December 31, 2018 | [***] |
| Approval of the first NDA or its equivalent | [***] |
At the time when any milestone payment listed in the table above is due, if OPIANT has not paid all other milestone payments (if any) previously listed in such table, then at such time OPIANT shall pay all such unpaid previous milestone payments.
The term “Successful Completion” shall mean the decision made by OPIANT, in its sole discretion, within forty-five (45) days after the availability of top-line data from such study whether to advance the development program for such Product or such other period mutually agreed upon by the
Parties, which decision to advance shall be considered successful completion and achievement of the milestone for such Product. In the event OPIANT fails to advance such program specific to the Product, then all rights granted to OPIANT for such Product shall be terminated.
4.2.2 Nalmefene Products. As partial consideration for the grant to OPIANT of the rights under Section 3.1 the Parties agree to the following milestones for the first Product containing nalmefene:
| | | | | |
| Milestone | Amount |
| Successful Completion of the first pilot PK study in humans | [***] |
Upon the Successful Completion of the first PK study in humans; provided, that if OPIANT has not initiated a first PK study in humans by September 30, 2018, then such milestone shall be due on September 30, 2018 | [***] |
| Approval of the first NDA or its equivalent | [***] |
At the time when any milestone payment listed in the table above is due, if OPIANT has not paid all other milestone payments (if any) previously listed in such table, then at such time OPIANT shall pay all such unpaid previous milestone payments.
4.2.3 Naltrexone Products. As partial consideration for the grant to OPIANT of the rights under Section 3.1 the Parties agree to the following milestones for the first Product containing naltrexone:
| | | | | |
| Milestone | Amount |
| Successful Completion of the first pilot PK study in humans | [***] |
| Upon the Successful Completion of the first PK study in humans; provided, that if OPIANT has not initiated a first PK study in humans by March 31, 2019, then such milestone shall be due on by March 31, 2019 | [***] |
| Successful Completion of the first Phase II study | [***] |
| Successful Completion of the second Phase III study | [***] |
| Approval of the first NDA or its equivalent | [***] |
At the time when any milestone payment listed in the table above is due, if OPIANT has not paid all other milestone payments (if any) previously listed in such table, then at such time OPIANT shall pay all such unpaid previous milestone payments.
Notwithstanding the foregoing, in the event that a Product contains two Compounds in combination, then OPIANT shall: (i) pay to Aegis a one-time fee in the amount of [***]; and (ii) upfront milestones payments for the higher of the two Compounds with respect to such Product under Sections 4.1, 4.2.1, 4.2.2 and 4.2.3.
4.3 Commercialization Milestones. As partial consideration for the grant to OPIANT of the rights under Section 3.1, the following milestone payments will be paid, on a Product-by-Product basis for the first Product for each respective Compound: naltrexone, nalmefene or naloxone. For Annual Net Sales milestones, the first time in the first Calendar Year that the total aggregate Net Sales of the applicable Product in a Calendar Year by OPIANT, its Affiliates and its sublicensees in the Territory reach the amounts set forth in the table in this Section 4.3, below. Within thirty (30) days following the achievement of each of the following milestones, OPIANT shall give written notice to AEGIS thereof and shall pay to AEGIS the corresponding one time only milestone payments described below.
| | | | | |
| Milestone | Amount |
First commercial sale of the first Product containing each of the following Compounds: naltrexone, nalmefene or naloxone | [***] |
First time Annual Net Sales for each Product is greater than or equal to [***] | [***] |
4.4 Royalties.
4.4.1 Within thirty (30) days following the First Commercial Sale of a Product in each country in the Territory, OPIANT shall give written notice to AEGIS thereof.
4.4.2 As partial consideration for the grant to OPIANT of the rights under Section 3.1, during the applicable Royalty Term, OPIANT shall pay to AEGIS royalties on Annual Net Sales of Products, on a country-by-country and Product-by-Product basis in accordance with this Section 4.4, in an amount equal to the applicable rate set forth in the table in this Section 4.4.2, below, times the Annual Net Sales of Products by OPIANT, its sublicensees (subject to Section 4.9) and their respective Affiliates, subject to the applicable reductions as set forth in Sections 4.4.3 through 4.4.5; but in no event will the royalty rate be reduced pursuant to Sections 4.4.3 through 4.4.5 by more than fifty percent (50%) (although any such unused reduction sum will be carried forward and applied against future payments).
| | | | | |
| Annual Net Sales (U.S. $) | Royalty Rate |
| |
Aggregate Annual Net Sales during a Calendar Year less than or equal to [***] | [***] |
| |
Aggregate Annual Net Sales during a Calendar Year greater than [***] and less than or equal to [***] | [***] |
| |
Aggregate Annual Net Sales during a Calendar Year greater than [***] and less than or equal to [***] | [***] |
| |
Aggregate Annual Net Sales during a Calendar Year greater than [***] and less than or equal to [***] | [***] |
| |
Aggregate Annual Net Sales during a Calendar Year greater than [***] | [***] |
4.4.3 The royalty percentage then applicable under this Section 4.4 to Net Sales of any Product made in any country in the Territory shall be reduced by fifty percent (50%) if at the time of the sale of such Product in such country, the use, manufacture, offer for sale, sale and import of such Product in such county is not covered by a Valid Claim.
4.4.4 In the event that a Generic Product enters the market and such Generic Product causes a price reduction of at least 25% for two consecutive Calendar Quarters, OPIANT may reduce the royalty payments for sales of such Product by fifty percent (50%); provided, no payment to AEGIS shall be reduced by more than fifty percent (50%) of the amount payable before any reductions or credits (although any unused excess credit may be carried forward and applied against future payments). After any such reduction, if the Net Sales of the Product are restored for a period of at least two (2) Consecutive Quarters, to the volume and price which existed immediately prior to the entry of a Generic Product, then the royalty rates shall also be restored to the rates in effect prior to the entry of such Generic Product.
4.4.5 If the level of competition, patent protection or the general commercial environment for such Product affects in any material respect the commercial viability of a Product at the then applicable royalty rate due under this Agreement for any country(ies) in the Territory, upon written request from OPIANT, AEGIS will negotiate in good faith with OPIANT for a reduction of such royalty rates, as applicable to such Product in such country.
4.4.6 Third Party Licenses.
(a) If OPIANT determines, in its reasonable judgment (subject to subpart c below), that the intellectual property rights of a third party are necessary for the Exploitation of a Product or practice of any AEGIS Technology in accordance with this License Agreement, then the royalty and milestone amounts owed to AEGIS hereunder for Exploiting the AEGIS Technology in the country (or countries) where such third party intellectual property rights are enforceable shall be subject to a credit reduction in an amount equal to one hundred percent (100%) of the amount of any payments that OPIANT (or any of its sublicensees) pays such third party to use such third party intellectual property rights; provided, no payment to AEGIS shall be reduced by more than fifty percent (50%) of the amount payable before any reductions or credits (although any unused excess credit may be carried forward and applied against future payments).
(b) If OPIANT determines, in its reasonable judgment, that the technology, and/or a license to intellectual property rights, of a third party is useful, but not necessary, for the development, manufacture, or commercialization of any Product or for the practice (or sublicensing) of any AEGIS Technology in accordance with this License Agreement, then the royalty and milestone amounts owed to AEGIS hereunder for Exploiting the AEGIS Technology in the country (or countries) where such third party intellectual property rights are enforceable shall be subject to a credit reduction in an amount equal to fifty percent (50%) of the amount of any third party technology payments that OPIANT (or any of its sublicensees) pays such third party to obtain such technology and/or rights; provided, no payment to AEGIS shall be reduced by more than fifty percent (50%) of the amount payable before any reductions or credits (although any unused excess credit may be carried forward and applied against future payments).
(c) If AEGIS disputes OPIANT’s determination under Section 4.4.5(a) that the technology, and/or a license to intellectual property rights, of such third party is necessary for the
practice of any AEGIS Technology in accordance with this License Agreement, AEGIS may submit such dispute to an independent third party arbiter, mutually agreed to by the Parties, such agreement not to be unreasonably withheld, delayed, or conditioned, and such arbiter to have at least ten (10) years' experience in the biopharmaceutical industry overseeing drug development or patent law, who shall determine within thirty (30) days whether, in the absence of rights granted by such third party, the practice of any AEGIS Technology in accordance with this License Agreement would likely or actually infringe or misappropriate such third party’s intellectual property. Such arbiter’s determination shall be final and binding on the Parties, and any dispute with respect to such arbiter’s determination shall not be submitted for resolution pursuant to Section 10.2. Additionally, any determination of likely or actual infringement shall be deemed a determination that such license to intellectual property rights of a third party is “necessary” for purposes of Section 4.4.5(a).
4.5 Royalty Reports.
4.5.1 After the First Commercial Sale of the first Product, OPIANT shall keep complete and accurate records in sufficient detail to properly reflect all gross sales and Net Sales, and to enable the royalties payable to AEGIS under Section 4.4 to be determined.
4.5.2 Within forty-five (45) days after the end of each Calendar Quarter during the term of this License Agreement following the First Commercial Sale of the first Product by OPIANT, its sublicensees (subject to Section 4.9) or their respective Affiliates, OPIANT shall furnish to AEGIS a written report showing in reasonable detail, on a country-by-country and Product-by-Product basis), (a) the Net Sales of Products sold by OPIANT, its Affiliates and sublicensees during such Calendar Quarter; (b) the calculation of the royalties which shall have accrued based upon such Net Sales; (c) the withholding taxes, if any, required by law to be deducted with respect to such Net Sales; and (d) the exchange rates, if any, used in determining the amount of U.S. dollars.
4.5.3 All royalties shown to have accrued by each royalty report provided under this Section 4.5 shall be payable on the date such royalty report is due. Payment of royalties in whole or in part may be made in advance of such due date. All royalty reports are the Confidential Information of OPIANT.
4.6 Audits.
4.6.1 Upon the written request of AEGIS and not more than once in each Calendar Year, OPIANT shall permit an independent certified public accounting firm of nationally recognized standing, selected by AEGIS and reasonably acceptable to OPIANT, at AEGIS’ expense, to have access during normal business hours to such of the records of OPIANT as may be reasonably necessary to verify the accuracy of the royalty reports under Section 4.5 for any year ending not more than thirty-six (36) months prior to the date of such request. The accounting firm shall be required to sign a confidentiality agreement for the benefit of, and in a form reasonably acceptable to, OPIANT, and shall disclose to AEGIS and OPIANT only whether the reports are correct or not and the specific details concerning any discrepancies. No other information shall be shared.
4.6.2 If such accounting firm concludes that additional royalties were owed during the audited period, OPIANT shall pay such additional royalties within thirty (30) days after the date AEGIS delivers to OPIANT such accounting firm’s written report so concluding. If such accounting firm concludes that OPIANT has overpaid royalties during the audited period, OPIANT shall have the right to credit the amount of the overpayment against each subsequent quarterly payment due to AEGIS until the overpayment has been fully applied to pay such additional royalties. If the overpayment is not fully applied prior to the final quarterly payment of royalties due hereunder, AEGIS shall promptly refund to OPIANT an amount equal to any remaining overpayment. The fees charged by such accounting firm
shall be paid by AEGIS provided, however, if the audit discloses that the royalties payable by OPIANT for such period are more than one hundred ten percent (110%) of the royalties actually paid for such period, then OPIANT shall pay the reasonable fees and expenses charged by such accounting firm.
4.6.3 OPIANT shall include in each permitted sublicense granted by it pursuant to the License Agreement a provision requiring the sublicensee to make reports to OPIANT, and to keep and maintain records of sales made pursuant to such sublicense, and to permit audits by OPIANT of such records. OPIANT shall grant access to such reports by AEGIS’ independent accountant as set forth in Section 4.6.1.
4.6.4 AEGIS shall treat all financial information subject to review under this Section 4.6 as Confidential Information of OPIANT consistent with Section 7, and shall cause its accounting firm to retain all such financial information in confidence.
4.7 Payment Method. All payments owed under this License Agreement shall be paid in United States Dollars in immediately available funds and shall be made by wire transfer from a United States bank located in the United States to such bank account as designated from time to time by AEGIS to OPIANT. For the purposes of computing Net Sales of Products commercialized by OPIANT that are sold in a currency other than U.S. dollars, such currency shall be converted into U.S. dollars as calculated at the actual average rates of exchange for the pertinent month as reported in the Wall Street Journal, or at such other exchange ratio as the Parties may mutually approve in writing.
4.8 Taxes and Duties. If OPIANT is required to withhold any tax to the tax or revenue authorities in any country regarding any payment to AEGIS due to the applicable laws of such country, such amount shall be deducted from the payment to be made by OPIANT, and OPIANT shall promptly notify AEGIS of such withholding. Within a reasonable amount of time after making such deduction, OPIANT shall furnish AEGIS with copies of any documentation evidencing such withholding and the related payment by OPIANT to the applicable tax authority. Each Party agrees to cooperate with the other in claiming exemptions from such deductions or withholdings under any agreement or treaty from time to time in effect, and in obtaining papers from or filing papers with the applicable tax authority. However, any such deduction or withholding shall be an expense of and borne solely by AEGIS.
4.9 Sublicense Revenue. In the event OPIANT, or its Affiliates, grants any sublicenses to third parties pursuant to Section 3.2 of this License Agreement, in lieu of any license maintenance fees, milestones or royalties which may be due to AEGIS under this License Agreement, OPIANT shall pay to AEGIS the Sublicense Rate (defined below) of the Sublicense Revenue (defined below) received by OPIANT or its Affiliate (the “Sublicense Fee”). Upon OPIANT’s request from time to time, AEGIS shall use commercially reasonable efforts to assist OPIANT in establishing any such sublicense agreement, including, without limitation, cooperating in the due diligence review by prospective sublicensees, provided OPIANT shall reimburse AEGIS for any third party expenses, including but not limited to legal fees for support of intellectual property due diligence, incurred by AEGIS in support of such activities. For clarity, the value of any and all equity received by AEGIS from OPIANT shall be specifically excluded from the Sublicense Fee. However, in no event shall AEGIS’s share of royalties received from sublicensees and included in the Sublicense Fee be less than 2.0% of Net Sales of Products by the relevant sublicensee, for sublicenses granted by OPIANT (or its Affiliate).
“Sublicense Rate” shall be negotiated in good faith by the Parties upon the request of OPIANT.
“Sublicense Revenue” means all upfront, milestone and royalty payments and other consideration received by OPIANT and its Affiliates from third party sublicensees to the extent attributable to sublicenses under the AEGIS Technology, excluding: (i) reimbursement or funding for R&D activities performed by or on behalf of OPIANT, (ii) amounts for purchase of stock or other equity or debt interests in OPIANT, (iii) reimbursement of patent costs and other out-of-pocket costs actually incurred by OPIANT, (iv) payments received for the supply of goods (including Products) or services, including sales and marketing support, co-promotion activities and sales force reimbursement, and (v) payments for the sale of substantially all of the business or assets of OPIANT, whether by merger, sale of stock, sale of assets or otherwise. To the extent that a payment made by a sublicensee pursuant to items (i), (ii) or (iv) of the preceding sentence is in excess of the then-current fair market value, as determined in compliance with GAAP, of each of the corresponding items, then such excess shall be considered Sublicense Revenue.
5. OWNERSHIP AND RIGHTS FOR DATA AND TECHNOLOGY
5.1 AEGIS Technology. Subject to the rights and licenses specified in this License Agreement, AEGIS shall solely own all right, title, and interest in the AEGIS Data, AEGIS Inventions, AEGIS Know-How Rights, and AEGIS Patent Rights.
5.2 OPIANT Technology. Subject to the rights and licenses specified in this License Agreement, OPIANT shall solely own all right, title, and interest in the OPIANT Data, OPIANT Inventions, OPIANT Know-How Rights, and OPIANT Patent Rights.
5.3 Inventorship. Inventorship of Inventions shall be determined in accordance with U.S. patent laws (Title 35, United States Code), and, except as expressly provided otherwise in Section 5.4, 5.5 or 5.6, the inventor of an invention (whether AEGIS, OPIANT, or AEGIS and OPIANT jointly) shall be the owner of such Inventions and any patent rights and other intellectual property rights in and to such Inventions. AEGIS personnel have executed, or will cause to be executed, agreements requiring such personnel to assign to AEGIS all Inventions made by such personnel, and OPIANT personnel have executed, or will cause to be executed, agreements requiring such personnel to assign to OPIANT all Inventions made by such personnel.
5.4 Inventions Related to the Compound.
5.4.1 Ownership. As between AEGIS and OPIANT, OPIANT is the owner of all right, title and interest in and to the Compound, which shall be included in OPIANT Technology and:
(a) AEGIS shall not (and shall not attempt or purport to) file or prosecute in any country any patent application which claims or uses or purports to claim or use the Compound or the Product (other than a Joint Invention), or any information or other materials directly or indirectly derived therefrom, without the prior express written consent of OPIANT.
(b) If there is an Invention covering the a Compound (without use of an Excipient) made or conceived by employees, consultants, agents and others conducting work on behalf of AEGIS or its Affiliate, whether alone or jointly with one or more employees, consultants, agents and others conducting work on behalf of OPIANT, AEGIS agrees to promptly disclose such invention to OPIANT and supply OPIANT with a copy of the disclosure for OPIANT’S evaluation purposes. If such invention relates to a Compound (without use of an Excipient), OPIANT shall have the sole right to determine what, if any, patent applications should be filed on such Invention. AEGIS hereby assigns to OPIANT all right, title and interest in any such Inventions and shall execute, and require its and its
Affiliates personnel and contractors to execute, any documents reasonably required to confirm OPIANT’s ownership of such Inventions, and any documents required to apply for, maintain and enforce any patent rights in such Inventions.
5.4.2 No Implied License. This License Agreement shall not grant any license or other rights to AEGIS in any patent rights or other intellectual property rights of OPIANT, and no rights are provided to AEGIS under any patents, patent applications, trade secrets or other proprietary rights of OPIANT. In particular, no rights are provided to use the Compound and any patents or intellectual property of any kind to AEGIS for profit-making, commercial or research purposes, including but not limited to sale of the Compound, use in manufacturing, provision of a service to a third party in exchange for consideration, or use in research or consulting by a commercial or not for-profit entity or by AEGIS itself.
5.5 Inventions Related to the Excipient.
5.5.1 Ownership. As between AEGIS and OPIANT, AEGIS is the owner of all right, title and interest in and to the Excipient, which shall be included in AEGIS Technology and;
(a) OPIANT shall not (and shall not attempt or purport to) file or prosecute in any country any patent application which claims or uses or purports to claim or use the Excipient, without the prior express written consent of AEGIS.
(b) If there is an Invention covering the Excipient made or conceived by employees, consultants, agents and others conducting work on behalf of OPIANT, whether alone or jointly with one or more employees, consultants, agents and others conducting work on behalf of AEGIS, OPIANT agrees to promptly disclose such invention to AEGIS and supply AEGIS with a copy of the disclosure for AEGIS’ evaluation purposes. AEGIS shall have the sole right to determine what, if any, patent applications should be filed on such Invention. OPIANT hereby assigns to AEGIS all right, title and interest in any such Inventions and shall execute, and require its and its Affiliates personnel and contractors to execute, any documents reasonably required to confirm AEGIS’ ownership of such Inventions, and any documents required to apply for, maintain and enforce any patent rights in such Inventions. For the avoidance of doubt, such Inventions shall be AEGIS Technology and be subject to the terms of the License.
5.5.2 No Implied License. Except for the License, this License Agreement shall not be construed to grant any license or other rights to OPIANT in the AEGIS Technology (other than Joint Inventions and Joint Patent Rights).
5.6 Joint Inventions. “Joint Invention” shall mean (a) any Invention that embodies a Product, including without limitation any invention relating to the use of Excipient for administering or stabilizing such Compound, or (b) any Invention that is (i) made or conceived jointly by one or more employees, consultants, agents and others conducting work on behalf of Aegis and one or more employees, consultants, agents and others conducting work on behalf of Opiant in connection with the performance of, and during the term of, this License Agreement and/or the Supply Agreement and/or any of the Prior Agreements and (ii) is not an Invention subject to the provisions of Section 5.4.1 or Section 5.5.1 shall be a “Joint Invention”. As between Aegis and Opiant, Aegis shall be the owner of the Joint Inventions. The Parties shall meet and confer regarding any Joint Invention, and for clarity, all Joint Inventions shall be included in the license grant set forth in Article 3.
5.7 Rights. For clarity, nothing herein shall affect the right of Opiant to invent and seek intellectual property protection for inventions that do not comprise the AEGIS Technology. For further clarity, nothing herein shall affect the right of Aegis to invent and seek intellectual property protection for inventions that do not comprise the OPIANT Technology.
6. PATENT RIGHTS
6.1 Prosecution and Maintenance of AEGIS Patent Rights.
6.1.1 Subject to Section 6.1.4, AEGIS shall have the sole right (but not the obligation), at its expense, to prepare, file, prosecute and maintain the AEGIS Patent Rights. AEGIS shall give OPIANT a reasonable opportunity, before filing, to review and comment on any patent application within the AEGIS Patent Rights that covers the Product and take into good faith consideration OPIANT’S comments. After filing, AEGIS shall provide OPIANT with a copy of such patent application as filed, together with notice of its filing date and serial number. OPIANT shall, at AEGIS’ reasonable expense, cooperate with AEGIS, execute all lawful papers and instruments and make all rightful oaths and declarations as may be necessary in the preparation, prosecution and maintenance of the AEGIS Patent Rights.
6.1.2 To the extent reasonably expected to adversely affect the AEGIS Patent Rights or the Product, AEGIS shall promptly provide OPIANT with copies of correspondence or materials received from the PCT, the U.S. Patent & Trademark Office, or equivalent intellectual property regulatory authority in any other country.
6.1.3 If OPIANT reasonably believes that AEGIS may fail to make any required payments or take any action required for the preparation, filing, prosecution, defense or maintenance of the AEGIS Patent Rights specific to the Product(s) within a reasonable time, OPIANT shall provide AEGIS with written notice of such deficiency. If AEGIS fails to take any action required for the preparation, filing, prosecution, defense or maintenance of the AEGIS Patent Rights specific to the Product(s) within the shorter of (i) forty-five (45) days of notice from OPIANT or (ii) thirty (30) days before the deadline for taking such action, OPIANT shall have the right to thereafter make any such required payments or take any such required action, and deduct and offset such payments and any related costs and expenses from any milestone payments, royalties or other payments which may be required under this License Agreement or otherwise by Opiant, its Affiliates or sublicensees to Aegis. Upon OPIANT taking such action, Aegis shall have thirty (30) days to (a) provide OPIANT with written notice of its intent to have prepared, filed, prosecuted, defended or maintained the Aegis Patent Rights specific to the Product(s), and election to continue preparation, filing, prosecution, or maintenance of such Aegis Patent Rights specific to the Product (s), and (b) reimburse OPIANT for all of its cost and expenses incurred in connection with the filing, preparation, prosecution, defense or maintenance of the foregoing Aegis Patent Rights specific to the Product(s); provided, however, that in the event that Aegis fails to meet subsection (a) and (b), Aegis shall assign all right, title and interest in and to such Aegis Patent Rights specific to the Product(s) to OPIANT for no additional consideration.
6.1.4 OPIANT shall reimburse AEGIS for the reasonable actual costs incurred by AEGIS under the AEGIS Patent Rights that are specific only to the Compound(s) and/or Product(s), including but not limited to all divisionals, continuations, continuations-in-part, reissues, renewals, extensions or additions to any such patents and patent applications; provided, however, that (a) for all AEGIS Patent Rights that are specific only to the Compound(s) (“Compound Specific Aegis Patent Rights”), OPIANT, with patent counsel of its choice shall direct and manage such preparation, prosecution and maintenance of such AEGIS Patent Rights, and (b) for all AEGIS Patent Rights that are specific to the
Compound and Product(s) or Product, AEGIS shall be responsible, with patent counsel of its choice, for the preparation, prosecution and maintenance of such AEGIS Patent Rights subject to the directions provided by OPIANT. For all Compound Specific Aegis Patent Rights, OPIANT shall give AEGIS a reasonable opportunity, before filing, to review and comment on any patent application within the AEGIS Patent Rights and take into good faith consideration AEGIS’ comments. For clarity, the AEGIS Patent Rights do not include Joint Patent Rights and the obligations relating to Joint Patent Rights is set forth in Section 6.3.
6.2 Prosecution and Maintenance of OPIANT Patent Rights. OPIANT shall have the sole right (but not the obligation), at its expense, to prepare, file, prosecute and maintain the OPIANT Patent Rights. At OPIANT’s expense, AEGIS shall cooperate with OPIANT, execute all lawful papers and instruments and make all rightful oaths and declarations as may be necessary in the preparation, prosecution and maintenance of the OPIANT Patent Rights.
6.3 Prosecution and Maintenance of Joint Patent Rights. AEGIS and OPIANT shall cooperate in the review of potential Joint Inventions and in the preparation, filing, prosecution and maintenance the Joint Patent Rights. AEGIS and OPIANT shall meet periodically to discuss the status of the Aegis Patent Rights, the Joint Patent Rights, and potential new inventions that may claim any AEGIS Patent Right or Joint Patent Right. AEGIS shall have the primary right, but not the obligation, at its expense, to prepare, file, prosecute and maintain the Joint Patent Rights. OPIANT shall have the right to cooperate equally in, contribute to, and approve the preparation, filing, and prosecution of Joint Patent Rights, which cooperation, contribution, and approval shall not unreasonably be delayed, withheld or conditioned. Should AEGIS choose not to file, prosecute, or maintain a Joint Patent specific to the Product(s), AEGIS shall provide OPIANT forty-five (45) days advance written notice prior to any event that would abandon or action required to file, prosecute, or maintain such Joint Patent specific to the Product(s), and OPIANT shall have the right, at its cost and expense to prepare, file, prosecute or maintain such Joint Patent specific to the Product(s). Upon such event and OPIANT taking such action, AEGIS shall assign all right, title and interest in and to such Joint Patent specific to the Product(s) to OPIANT and such Joint Patent specific to the Product(s) shall become an OPIANT Patent. At AEGIS’s expense, OPIANT shall cooperate with AEGIS, execute all lawful papers and instruments, and make all rightful oaths and declarations as may be necessary in the preparation, prosecution, and maintenance of the Joint Patent Rights.
6.4 Orange Book Listings. OPIANT shall have the sole right (but not the obligation) to list any appropriate patents within the AEGIS Patent Rights, Joint Patent Rights, and OPIANT Patent Rights in the FDA Orange Book with respect to any Product.
6.5 Enforcement.
6.5.1 Notification. Each Party shall notify the other Party of any infringement known to such Party of any AEGIS Patent Rights, OPIANT Patent Rights, or Joint Patent Rights for any Product for use in the Field and shall provide the other Party with the available evidence, if any, of such infringement.
6.5.2 Paragraph IV Claims. Except to the extent otherwise agreed by the Parties in writing, the costs for any patent infringement litigation suit based on a Paragraph IV certification or any equivalent action outside the United States (i.e., an ANDA patent infringement litigation involving a patent listed pursuant to 21 U.S.C. Section 355(a)(2)(A)(iv)) involving the AEGIS Patent Rights, Joint Patent Rights or OPIANT Patent Right (to the extent covering a Product), in which a third party sends a notice letter or where OPIANT is a named defendant, or by OPIANT where OPIANT is a named plaintiff, in each case irrespective of whether AEGIS is also named as a defendant or
plaintiff (a “Paragraph IV Claim”), shall be borne equally by the Parties; provided however that said costs involve the AEGIS Patent Rights or Joint Patent Rights. OPIANT shall have sole right to institute, prosecute, defend and control such litigation. AEGIS shall cooperate fully in such litigation, and in the case where OPIANT desires to bring such litigation, at OPIANT’s request, AEGIS agrees to join any such litigation to enforce the AEGIS Patent Rights or Joint Patent Rights against the third party or parties that made such Paragraph IV certification. AEGIS shall have the right to approve any settlement that would adversely affect the AEGIS Patent Rights or AEGIS’s rights under this License Agreement or result in any liability or admission on behalf of AEGIS, such approval not to be unreasonably withheld, conditioned or delayed. Any recovery realized as a result of such litigation shall be first applied to the prorata reimbursement of any reasonable litigation expenses of OPIANT and AEGIS under this Section 6.5.2. Any remaining recovery realized from litigation brought pursuant to this Section 6.5.2 shall be treated as profits on sales of Products for purposes of determining Net Sales under this License Agreement, with AEGIS receiving the applicable royalty for purposes of Section 4.4 on such deemed Net Sales, and OPIANT receiving the remainder. For purposes of illustration, if the recovery under this Section 6.5.2 is $100 Million (U.S. $100,000,000), after reimbursement of any reasonable litigation expenses, and OPIANT’s gross margin for the Product as determined for the most-recent Calendar Quarter completed prior to the initial certification or infringing action was eighty percent (80%), then the Net Sales would be deemed to be One Hundred Twenty-Five Million U.S. dollars ($125,000,000) and such amount would be included in the next royalty report pursuant to Section 4.5. All other patent infringement litigation involving the AEGIS Patent Rights shall be subject to the provisions of Sections 6.5.3.
6.5.3 AEGIS Patent Rights. Except as set forth in Section 6.5.2, AEGIS, at its sole expense, shall have the right to determine the appropriate course of action to enforce the AEGIS Patent Rights or otherwise abate the infringement thereof, to take (or refrain from taking) appropriate action to enforce the AEGIS Patent Rights, to control any litigation or other enforcement action and to enter into, or permit, the settlement of any such litigation or other enforcement action with respect to the AEGIS Patent Rights, and shall consider, in good faith, the interests of OPIANT in so doing. If AEGIS does not, within ninety (90) days after receipt of any notice from OPIANT under Section 6.4.1, either abate the infringement of the AEGIS Patent Rights for any Product in the Field or file suit to enforce the AEGIS Patent Rights against at least one infringing party, or, to the extent UAB has the first right to do so pursuant to the UAB Licensing Agreement, cause UAB to do so, OPIANT shall have the right, upon prior written notice to AEGIS, to take whatever action it deems appropriate to enforce the AEGIS Patent Rights for any Product in the Field and if OPIANT provides to AEGIS an opinion issued by a nationally recognized patent attorney opining that AEGIS is an indispensable party plaintiff to such suit then AEGIS shall agree to join such litigation as a party upon OPIANT’S written request.
6.5.4 Joint Patent Rights.
(a) OPIANT, at its sole expense, shall have the right to determine the appropriate course of action to enforce any Joint Patent Rights that claim Compound(s), Product(s), and/or Excipient(s) used in Product(s) or otherwise abate the infringement thereof, to take (or refrain from taking) appropriate action to enforce such Joint Patent Rights, to control any litigation or other enforcement action and to enter into, or permit, the settlement of any such litigation or other enforcement action with respect to such Joint Patent Rights, and shall consider, in good faith, the interests of AEGIS in so doing. If OPIANT does not, within ninety (90) days after receipt of any notice from AEGIS under Section 6.5.1, either abate the infringement of such Joint Patent Rights or file suit to enforce such Joint Patent Rights against at least one infringing party, AEGIS shall have the right, upon prior written notice to OPIANT, to take whatever action it deems appropriate to enforce such Joint
Patent Rights; provided, however, that, within thirty (30) days after receipt of notice of AEGIS’ intent to file such suit, OPIANT shall have the right to join such suit as a co-plaintiff or co-defendant with AEGIS and to fund up to one-half (1/2) the costs of such suit.
(b) AEGIS, at its sole expense, shall have the right to determine the appropriate course of action to enforce the Joint Patent Rights that claims Excipient(s), and do not claim Compound(s), Product(s), and/or Excipient(s) used in Product(s), or otherwise abate the infringement thereof, to take (or refrain from taking) appropriate action to enforce such Joint Patent Rights, to control any litigation or other enforcement action and to enter into, or permit, the settlement of any such litigation or other enforcement action with respect to such Joint Patent Rights, and shall consider, in good faith, the interests of OPIANT in so doing. If AEGIS does not, within ninety (90) days after receipt of any notice from OPIANT under Section 6.5.1, abate the infringement of such Joint Patent Rights or file suit to enforce such Joint Patent Rights against at least one infringing party, OPIANT shall have the right, upon prior written notice to AEGIS, to take whatever action it deems appropriate to enforce such Joint Patent Rights; provided, however, that, within thirty (30) days after receipt of notice of OPIANT’s intent to file such suit, AEGIS shall have the right to join such suit as a co-plaintiff or co-defendant with OPIANT and to fund up to one-half (1/2) the costs of such suit.
6.5.5 Cooperation; Recovery. OPIANT and AEGIS shall reasonably cooperate with each other in the planning and execution of any action under Sections 6.5.3 or 6.5.4. The Party controlling any such enforcement action shall not settle the action or otherwise consent to an adverse judgment in such action that diminishes the rights or interests of the non-controlling Party without the prior written consent of the other Party. Except as otherwise agreed to by the Parties as part of a cost-sharing arrangement, any recovery realized as a result of such litigation shall be first applied to the prorata reimbursement of any reasonable litigation expenses of OPIANT and AEGIS. Any remaining recovery realized from such litigation shall be treated as profits on sales of Products for purposes of determining Net Sales under this License Agreement, with AEGIS receiving the applicable royalty for purposes of Section 4.4 on such deemed Net Sales, and OPIANT receiving the remainder. For purposes of illustration, if the recovery under Sections 6.5.3 or 6.5.4 is One Hundred Million U.S. dollars (U.S. $100,000,000), after reimbursement of any reasonable litigation expenses, and OPIANT’s gross margin for the Product as determined for the most-recent Calendar Quarter completed prior to the initial infringing action was eighty percent (80%), then the Net Sales would be deemed to be One Hundred Twenty-Five Million U.S. dollars ($125,000,000) and such amount would be included in the next royalty report pursuant to Section 4.5.
6.5.6 OPIANT Patent Rights. OPIANT, at its sole expense, shall have the right to determine the appropriate course of action to enforce the OPIANT Patent Rights or otherwise abate the infringement thereof, to take (or refrain from taking) appropriate action to enforce the OPIANT Patent Rights, to control any litigation or other enforcement action and to enter into, or permit, the settlement of any such litigation or other enforcement action with respect to the OPIANT Patent Rights.
6.6 FDA Matters. AEGIS covenants that it will not in the performance of its obligations under this License Agreement use the services of any person debarred or suspended under 21 U.S.C. §335(a) or (b). AEGIS will not hire, as an officer or an employee any person who has been convicted of a felony under the laws of the United States for conduct relating to the regulation of any drug product under the United States Food, Drug and Cosmetic Act.
6.7 Joint Research Agreement. The Parties hereby agree that this Agreement shall constitute a joint research agreement as such term is used and defined in 35 U.S.C. §102(c).
7. CONFIDENTIALITY
7.1 Confidentiality. During the term of this License Agreement and for a period of ten (10) years following the expiration or earlier termination hereof, each Party shall maintain in confidence the Confidential Information of the other Party, shall not use or grant the use of the Confidential Information of the other Party except as expressly permitted hereby, and shall not disclose the Confidential Information of the other Party. Notwithstanding the previous sentence, the receiving Party may disclose the Confidential Information of the disclosing Party solely on a “need to know basis”, to Affiliates, and their and each of the Parties’ respective directors, employees, contractors and agents, each of whom prior to disclosure must be bound by obligations of nondisclosure and non-use no less restrictive than the obligations set forth in this Section 7; provided, however, that, in each of the above situations, the receiving Party shall remain responsible for any failure by any person or entity that receives Confidential Information pursuant to this Section 7.1 to treat such Confidential Information as required under this Section 7. To the extent that disclosure to any person is authorized by this License Agreement, prior to disclosure, a Party shall obtain written agreement of such person to hold in confidence and not disclose, use or grant the use of the Confidential Information of the other Party except as expressly permitted under this License Agreement. Each Party shall notify the other Party promptly upon discovery of any unauthorized use or disclosure of the other party’s Confidential Information.
7.2 Terms of License Agreement. Except as otherwise set forth in this Agreement, neither party shall disclose any terms or conditions of this License Agreement to any third party without the prior consent of the other Party; provided, however, that a Party may disclose the terms or conditions of this License Agreement, (a) on a need-to-know basis to its legal and financial advisors to the extent such disclosure is reasonably necessary, and (b) to a third party in connection with (i) an equity investment in, or lending arrangement with, such third party, (ii) a sublicense, collaboration, co-promotion, strategic partnership, merger, consolidation or similar transaction by such Party, or (iii) the sale of all or substantially all of the assets of such Party. In addition, OPIANT acknowledges that AEGIS is required and shall have the right to provide a copy of this License Agreement (and any subsequent amendment hereto), to UAB under the confidentiality provisions of the UAB Licensing Agreement. AEGIS shall use reasonable efforts to enforce the confidentiality provisions of the UAB Licensing Agreement to the fullest extent permitted thereby so as to preserve the confidentiality of this License Agreement and its terms, and shall not consent to any disclosure of this License Agreement or its terms to any third party by UAB. Notwithstanding the foregoing, either Party may disclose the fact that the Parties have entered into this exclusive license agreement, and a general description of the AEGIS Patent Rights, the Product, and the Field covered by this License Agreement.
7.3 Permitted Disclosures. The confidentiality obligations under this Section 7 shall not apply to any portion of Confidential Information to the extent that a Party is required to disclose such portion by applicable Law, regulation or order of a governmental agency or a court of competent jurisdiction; provided, however, that, to the extent practicable (based on regulation or applicable Law), such Party shall provide written notice thereof to the other Party, consult with the other Party with respect to such disclosure and provide the other Party sufficient opportunity to object to any such disclosure or to request confidential treatment thereof.
7.4 Publicity. If either Party wishes to make a public disclosure concerning this License Agreement, such Party shall provide the other Party in advance with a copy of such proposed disclosure and the other Party shall have two (2) Business Days within which to approve or disapprove the content of the proposed disclosure. Neither Party shall unreasonably withhold approval of such disclosure. Failure to respond within such two (2) Business Day period shall constitute approval. Either Party may disclose the existence of this License Agreement and the terms and conditions hereof, without the prior written consent of the other Party, as may be required by applicable Law (including, without limitation, disclosure requirements of any Regulatory Authority (including without limitation the FDA and the U.S. Securities and Exchange Commission, or the NYSE, NASDAQ or any other stock exchange), in which case the Party seeking to disclose the information shall provide written notice thereof to the other Party, consult with the other Party with respect to such disclosure and provide the other Party sufficient opportunity to object to any such disclosure or to request confidential treatment thereof. Once a Party has approved the substance of any disclosure concerning this License Agreement, whether in a press release, a filing with a Regulatory Authority or otherwise, such Party may thereafter republish such disclosure in any other medium without again obtaining the prior approval of the other Party.
8. INDEMNIFICATION AND INSURANCE
8.1 Indemnification by OPIANT. Except to the extent that AEGIS is obligated to indemnify OPIANT under Section 8.2, OPIANT shall indemnify and hold harmless AEGIS, its Affiliates and its and their directors, officers, employees, agents, successors and assigns from and against all losses, liabilities, damages and expenses, including reasonable attorneys’ fees and costs, arising from any claims, demands, actions or other proceedings by any third party arising from (a) the breach of any representation, warranty or covenant by OPIANT under this License Agreement; or (b) the Exploitation of the AEGIS Technology or Products by OPIANT, its sublicensees or their respective Affiliates; provided, however, that such indemnification right shall not apply to any losses, liabilities, damages or expenses to the extent directly attributable to the negligence, reckless misconduct, or intentional misconduct of a Party seeking indemnification under this Section 8.1.
8.2 Indemnification by AEGIS. AEGIS shall indemnify and hold harmless OPIANT, its Affiliates and sublicensees, and its and their directors, officers, employees, agents, successors and assigns, from and against all losses, liabilities, damages and expenses, including reasonable attorneys’ fees and costs, arising from any claims, demands, actions or other proceedings by any third party arising from (a) the breach of any representation, warranty or covenant by AEGIS under this License Agreement; (b) the Exploitation of the AEGIS Technology or Excipient(s) by AEGIS, its licensees (excluding OPIANT) or their respective Affiliates and sublicensees; (c) any claim of any third party that AEGIS willfully disclosed or made available to OPIANT any AEGIS Technology in violation of an obligation of AEGIS to such third party; or (d) any claim of any third party that the AEGIS TECHNOLOGY infringes or misappropriates any third party intellectual property right; provided, however, that such indemnification right shall not apply to any losses, liabilities, damages or expenses to the extent directly attributable to the negligence, reckless misconduct, or intentional misconduct of a Party seeking indemnification under this Section 8.2.
8.3 Procedure. A Party that intends to claim indemnification under this Section 8 (the “Indemnitee”) shall promptly notify the other Party (the “Indemnitor”) in writing of any claim, demand, action or other proceeding for which the Indemnitee intends to claim indemnification; provided, however, that the failure to provide written notice of such claim within a reasonable period of time will not relieve the Indemnitor of any of its obligation hereunder, except to the extent that
the Indemnitor is prejudiced by such failure to provide prompt notice. The Indemnitor shall have the right to participate in, and to the extent the Indemnitor so desires to assume the defense thereof with counsel selected by the Indemnitor; provided, however, that the Indemnitee, shall have the right to retain its own counsel, with the fees and expenses to be paid by the Indemnitee, if representation of the Indemnitee by the counsel retained by the Indemnitor would be inappropriate due to actual or potential differing interests between the Indemnitee and any other party represented by such counsel in such proceedings. The Indemnitor may not settle or otherwise consent to an adverse judgment in any such claim, demand, action or other proceeding, that diminishes the rights or interests of the Indemnitee without the prior express written consent of the Indemnitee, which consent shall not be unreasonably withheld, delayed, or conditioned, unless (a) there is no finding or admission of any violation of Law or any violation of the rights of any person and no effect on any other claims that may be made against the Indemnitee and (b) the sole relief provided is monetary damages that are paid in full by the Indemnitor.
8.4 Insurance. Each Party shall maintain insurance with respect to its activities under this License Agreement as is normal and customary in the pharmaceutical industry generally for parties similarly situated. Each Party shall, upon request of the other Party, provide the requesting Party with a copy of the foregoing policies of insurance, along with any amendments and revisions thereto. OPIANT shall be named as an additional insured on any such policies maintained hereunder by AEGIS, and AEGIS shall be named as an additional insured on any such policies maintained hereunder by OPIANT. If there are any additional costs for adding a Party as an additional insured, that Party shall pay such additional costs.
9. TERM; TERMINATION
9.1 Term. This License Agreement shall commence on the Effective Date and, unless earlier terminated pursuant to Section 9.2 or 9.3, shall continue in effect until the expiration of OPIANT’s obligation to pay royalties hereunder.
9.2 Termination for Breach or Bankruptcy.
9.2.1 If OPIANT has breached any of its obligations to pay any of the undisputed (in good faith) payments to which AEGIS is entitled under Section 5, and such breach shall continue for thirty (30) days after written notice of such breach was provided to OPIANT by AEGIS, AEGIS shall have the right at its option to terminate this License Agreement effective at the end of such thirty (30) day period.
9.2.2 If a Party has materially breached any of its obligations under this License Agreement (except as specified in Section 9.2.1), and such material breach shall continue for sixty (60) days after written notice of such breach was provided to the breaching Party by the nonbreaching Party, the nonbreaching Party shall have the right at its option to terminate this License Agreement effective at the end of such sixty (60) day period.
9.2.3 Either Party may terminate this License Agreement, to the extent permissible under applicable Law, upon the occurrence of one or more of the following:
(a) immediately upon written notice to the other Party in the event such other Party becomes insolvent or initiates a voluntary proceeding under the U.S. Bankruptcy Code (beginning at 11 U.S.C. 101, as amended) (the “Bankruptcy Code”); or
(b) immediately upon written notice to the other Party in the event such other Party becomes the subject of an involuntary proceeding under the U.S. Bankruptcy Code and such proceeding is not dismissed or stayed within ninety (90) days of its commencement.
9.3 Termination by OPIANT. OPIANT may terminate this License Agreement in whole or in part, on a Product-by-Product, country-by-country basis at any time upon thirty (30) days prior written notice to AEGIS for any reason or no reason.
9.4 Effect of Expiration or Termination.
9.4.1 Expiration or termination of this License Agreement shall be without prejudice to any rights which shall have accrued to the benefit of a Party prior to the effective date of such expiration or termination. Without limiting the foregoing, Sections 1, 5, 7, 8, 10 and Sections 4.6, 6.1, 6.2, 6.4, and 9.4 shall survive any expiration or termination of this License Agreement.
9.4.2 Upon expiration of this License Agreement under Section 9.1, OPIANT shall have a non-exclusive, paid-up license for the same rights previously covered by this License Agreement.
9.4.3 If OPIANT elects to terminate this License Agreement under Section 9.2.2, OPIANT may nevertheless continue to have the same license rights previously covered by this License Agreement, so long as OPIANT continues to pay royalties, milestones, and other sums that are payable to AEGIS under this License Agreement; provided that OPIANT shall have the right to credit against any such royalties, milestones, and other sums payable an amount equal to any actual direct damages suffered by OPIANT as a result of the breach by AEGIS which gave rise to the termination under Section 9.2.2.
9.4.4 Except as may be necessary or useful for the exercise of the licenses set forth in Sections 9.4.1, 9.4.2 and 9.4.3, promptly upon the expiration or earlier termination of this License Agreement, (a) OPIANT shall destroy or return (at AEGIS’ expense) to AEGIS (as AEGIS shall direct) all AEGIS Technology; and (b) each Party shall return to the other Party all tangible items regarding the Confidential Information of the other Party and all copies thereof; provided, however, that each Party shall have the right to retain one (1) copy for its legal files for the sole purpose of determining its obligations hereunder.
10. GENERAL PROVISIONS
10.1 Governing Law. This License Agreement shall be governed by, interpreted and construed in accordance with the laws of the State of California, without giving effect to any conflicts of law principles that would result in the application of the laws of any state other than the State of California.
10.2 Arbitration. Any dispute, controversy or claim initiated by either Party arising out of, resulting from or relating to this License Agreement, or the performance by either Party of any obligation under this License Agreement, whether before or after termination of this License Agreement, shall be finally resolved by binding arbitration. Whenever a Party shall decide to institute arbitration proceedings, it shall give written notice to that effect to the other Party. Any such arbitration shall be conducted under the Commercial Arbitration Rules of the American Arbitration Association by a panel of three arbitrators appointed in accordance with such rules. Any such arbitration shall be held in San Diego, California. The method and manner of discovery in any such arbitration proceeding shall be governed by the Commercial Arbitration Rules of the American Arbitration Association. Each Party shall choose one (1) arbitrator within thirty (30) days after receipt of notice of the intent to arbitrate. Such arbitrators shall thereafter choose a third arbitrator within thirty (30) days of their appointment. If one or both of the Parties fails to make a timely appointment of its arbitrator, then such missing arbitrator(s) will be appointed by the American
Arbitration Association. The arbitrators shall have the authority to grant specific performance and to allocate between the Parties the costs of arbitration in such equitable manner as they determine. The arbitrators shall make their award and decision by majority approval, which shall be made in accordance with the terms of this License Agreement and applicable law. Judgment upon the award so rendered may be entered in any court having jurisdiction or application may be made to such court for judicial acceptance of any award and an order of enforcement, as the case may be. In no event shall a demand for arbitration be made after the date when institution of a legal or equitable proceeding based upon such claim, dispute or other matter in question would be barred by the applicable statute of limitations. Notwithstanding the foregoing, (i) either Party shall have the right, without waiving any right or remedy available to such Party under this License Agreement or otherwise, to seek and obtain from any court of competent jurisdiction any interim or provisional relief that is necessary or desirable to protect the rights or property of such Party, pending the selection of the arbitrators hereunder or pending the arbitrators’ determination of any dispute, controversy or claim hereunder, and (ii) any and all issues regarding the scope, construction, validity, and enforceability of one or more patents shall be determined in a court of competent jurisdiction under the local patent laws of the jurisdictions having issued the patent or patents in question. Each of the Parties agrees that if certain material obligations under this License Agreement are not performed in accordance with their specific terms or are otherwise breached, (a) severe and irreparable damage may occur, (b) no adequate remedy at law would exist and (c) damages would be difficult to determine. Each of the Parties agrees that, in such case, the injured Party or Parties shall be authorized and entitled to seek to obtain from any court of competent jurisdiction injunctive relief, whether preliminary or permanent, as well as any other relief permitted by applicable law, and the breaching Party shall waive any requirement that such Party or Parties post bond as a condition for obtaining any such relief. All proceedings and decisions of the arbitrator(s) shall be deemed Confidential Information of each of the Parties, and shall be subject to Section 7.
10.3 Modification; Waiver. This License Agreement may not be altered, amended, supplemented, or modified in any way except by a writing signed by each Party. No waiver by a Party of any breach or default of any of the covenants or agreements herein set forth shall be deemed a waiver as to any subsequent and/or similar breach or default. The failure by either Party to take any action or assert any right hereunder shall in no way be construed to be a waiver of such right, nor in any way be deemed to affect the validity of this License Agreement or any part hereof, or the right of a Party to thereafter enforce each and every provision of this License Agreement.
10.4 Rights Under U.S. Bankruptcy Code. All rights and licenses granted under or pursuant to this License Agreement by AEGIS are, and shall otherwise be deemed to be, for purposes of Section 365(n) of the Bankruptcy Code, licenses to intellectual property as defined under Section 101 of the Bankruptcy Code. AEGIS agrees that OPIANT shall retain and may fully exercise its rights and elections under the Bankruptcy Code.
10.5 Assignment. Neither this License Agreement nor any right or obligation hereunder may be assigned or delegated, in whole or part, by either Party without the prior express written consent of the other; provided, however, that (i) OPIANT may, without the written consent of AEGIS, assign this License Agreement and its rights and delegate its obligations hereunder in connection with the transfer or sale of all or substantially all of its business related to the Product, or in the event of its merger, consolidation, change in control or similar transaction; (ii) AEGIS may, without the written consent of OPIANT, assign this License Agreement and its rights and delegate its obligations hereunder in connection with the transfer or sale of all or substantially all of its business, or in the event of its merger, consolidation or change in control; and (iii) neither Party shall
unreasonably withhold, delay or condition its consent to any proposed assignment in any situation whereby all of its rights and entitlements are unaffected. Any permitted assignee shall assume all obligations of its assignor under this License Agreement. Any purported assignment in violation of this Section 10.5 shall be void. For avoidance of doubt, AEGIS may have the Excipients manufactured by a third party contract manufacturer for the benefit of AEGIS and/or OPIANT, which shall not be deemed to be an assignment or delegation restricted by this Section 10.5; provided, that AEGIS shall remain responsible for all obligations with respect to any Excipients.
10.6 Independent Contractors. The relationship of the Parties is that of independent contractors. The Parties are not deemed to be agents, partners or joint venturers of the others for any purpose as a result of this License Agreement or the transactions contemplated thereby.
10.7 Further Actions. Each Party agrees to execute, acknowledge and deliver such further documents and instruments and to perform all such other acts as may be necessary or appropriate in order to carry out the purposes and intent of this License Agreement.
10.8 Notices. Any notice, report, communication, or consent required or permitted by this License Agreement shall be in writing and shall be sent by a Party (a) by prepaid registered or certified mail, return receipt requested, (b) by overnight express delivery service by a nationally recognized courier, or (c) via confirmed facsimile, followed within five (5) days by a copy mailed in the preceding manner, addressed to the other Party at the address shown below or at such other address as such Party gives notice hereunder. Such notice will be deemed to have been given when delivered or, if delivery is not accomplished by some fault of the addressee, when tendered.
If to AEGIS:
AEGIS Therapeutics, LLC
11770 Bernardo Plaza Court, Suite 353
San Diego, CA 92128
Attn: Chief Executive Officer
Fax: (858) 618-1441
with a copy to (which alone shall not constitute notice):
DLA Piper US LLP
4365 Executive Drive, Suite 1100
San Diego, California 92121
Attn: Knox Bell, Esq.
Fax: (858) 677-1401
If to OPIANT:
OPIANT Pharmaceuticals, Inc.
401 Wilshire Boulevard, 12th Floor
Santa Monica, CA 90401
Attn: Chief Executive Officer
Fax: (917) 322-2105
with a copy to (which alone shall not constitute notice):
DLA Piper US LLP
1650 Market Street
Suite 4900
Philadelphia, PA 19103
Attn: Fahd M.T. Riaz, Esq.
Fax: (215) 606 -2069
10.9 No Implied Licenses. Only licenses and rights granted expressly herein shall be of legal force and effect. No license or other right shall be created hereunder by implication, estoppel or otherwise.
10.10 Force Majeure. Nonperformance of a Party (other than for the payment of money) shall be excused to the extent that performance is rendered impossible by strike, fire, earthquake, flood, governmental acts or orders or restrictions, failure of suppliers, or any other reason where failure to perform is beyond the reasonable control and not caused by the negligence, intentional conduct or misconduct of the nonperforming Party; provided, however, that the nonperforming Party shall use commercially reasonable efforts to resume performance as soon as reasonably practicable.
10.11 No Consequential Damages. EXCEPT WITH RESPECT TO A BREACH OF SECTION 7, IN NO EVENT SHALL A PARTY BE LIABLE FOR SPECIAL, INCIDENTAL, CONSEQUENTIAL, OR PUNITIVE DAMAGES ARISING OUT OF THIS LICENSE AGREEMENT OR THE EXERCISE OF ITS RIGHTS HEREUNDER, INCLUDING WITHOUT LIMITATION LOST PROFITS ARISING FROM OR RELATING TO ANY BREACH OF THIS LICENSE AGREEMENT, REGARDLESS OF ANY NOTICE OF SUCH DAMAGES. NOTHING IN THIS SECTION 10.11 IS INTENDED TO LIMIT OR RESTRICT THE INDEMNIFICATION RIGHTS OR OBLIGATIONS OF EITHER PARTY UNDER SECTION 8.
10.12 Complete Agreement. This License Agreement, the Supply Agreement, and the Prior Agreements, constitute the entire agreement between the Parties regarding the subject matter hereof, and all prior and contemporaneous representations, understandings and agreements regarding the subject matter hereof, either written or oral, expressed or implied, are superseded and shall be and of no effect; provided, however, that the terms of certain Mutual Confidentiality Agreement between AEGIS and OPIANT dated as of November 13, 2013, shall remain in full force and effect as to all confidential information disclosed thereunder.
10.13 Counterparts. This License Agreement may be executed in counterparts, each of which shall be deemed to be an original and together shall be deemed to be one and the same agreement. A facsimile copy of this License Agreement bearing the signature (original or facsimile or .PDF version) of both Parties shall be binding on the Parties.
10.14 Severability. If any provision of any provision of this License Agreement shall be found by a court to be void, invalid, or unenforceable, the same shall be reformed to comply with applicable law or stricken if not so conformable, so as not to affect the validity or enforceability of this License Agreement; provided that no such reformation or striking shall be effective if the result materially changes the economic benefit of this License Agreement to any Party. In the event that any provision of this License Agreement becomes or is declared by a court of competent jurisdiction to be void, invalid, or unenforceable, and reformation or striking of such provision would materially change the economic benefit of this License Agreement to any Party, the Parties shall modify such
provision in accordance with Section 10.3 to obtain a legal, valid, and enforceable provision and provide an economic benefit to the Parties that most nearly effects the Parties’ intent on entering into this License Agreement.
10.15 Headings. The captions to the several sections hereof are not a part of this License Agreement, but are included merely for convenience of reference only and shall not affect its meaning or interpretation.
[SIGNATURE PAGE NEXT]
IN WITNESS WHEREOF, the Parties have caused this License Agreement to be executed by their respective duly authorized officers as of the Execution Date.
| | | | | |
| AEGIS THERAPEUTICS, LLC |
| |
| |
| |
| By: | /s/ Edward T. Maggio, Ph.D. |
| Edward T. Maggio, Ph.D. |
| Chief Executive Officer |
| |
| |
| |
| |
| |
| OPIANT PHARMACEUTICALS, INC. |
| |
| |
| |
| By: | |
| Roger Crystal |
| Chief Executive Officer |
IN WITNESS WHEREOF, the Parties have caused this License Agreement to be executed by their respective duly authorized officers as of the Execution Date.
| | | | | |
| AEGIS THERAPEUTICS, LLC |
| |
| |
| |
| By: | |
| Edward T. Maggio, Ph.D. |
| Chief Executive Officer |
| |
| |
| |
| |
| |
| OPIANT PHARMACEUTICALS, INC. |
| |
| |
| |
| By: | /s/ Roger Crystal |
| Roger Crystal |
| Chief Executive Officer |
EXHIBIT A
DEFINITIONS
“AEGIS” shall have the meaning set forth in the preamble to the License Agreement and the Supply Agreement.
“AEGIS Data” shall mean any data regarding the Compound(s), Excipient(s), and/or Product(s) in which AEGIS has an ownership or licensable interest at any time during the term of the License Agreement and/or Supply Agreement, including without limitation all relevant and available sections of the drug master file(s) for the Excipients, as filed by AEGIS or its Affiliates with the FDA or any other governmental authority from time to time, but excluding third party confidential information.
“AEGIS Invention” shall mean any Invention made or conceived by employees, consultants, agents and others conducting work on behalf of Aegis that relates to Compound(s), Excipient(s) , and/or Product(s), but excluding a Joint Invention.
“AEGIS Know-How Rights” shall mean, collectively, all trade secret and other know-how rights relating to the Compound(s), Excipient(s), and/or Product(s) in which AEGIS has an ownership or licensable interest at any time during the term of the License Agreement.
“AEGIS Patent Rights” shall mean, collectively, (a) any patent and patent application, which is owned by AEGIS, licensed to AEGIS or otherwise controlled by AEGIS or any of its Affiliates, as of the Effective Date or during the term of this Agreement and is necessary or useful to research, develop, use or Exploit the Excipient or otherwise Exploit the Product, including without limitation those certain patent applications listed on Exhibit B attached to the License Agreement and any patent rights for an AEGIS Invention; (b) all patents that have issued or in the future may issue from any of the foregoing patent applications, including without limitation utility models, design patents and certificates of invention; (c) all divisionals, continuations, continuations-in-part, reissues, renewals, extensions or additions to any such patents and patent applications; and (d) all patents and patent applications that may issue or be prepared in the future based on AEGIS Inventions, including without limitation utility models, design patents, certificates of invention, and all divisionals, continuations, continuations-in-part, reissues, renewals, extensions or additions to any such patents and patent applications.
“AEGIS Technology” shall mean, collectively, (a) AEGIS Data; (b) AEGIS Patent Rights; (c) AEGIS Know-How Rights; (d) AEGIS Inventions; and (e) AEGIS’ interest in any Joint Inventions and/or Joint Patent Rights.
“Affiliate” shall mean, with respect to any person or entity, any other person or entity that controls, is controlled by or is under common control with such person or entity. For purposes of this definition, a person or entity shall be in “control” of an entity if it owns or controls at least fifty percent (50%) of the equity securities of the subject entity entitled to vote in the election of directors (or, in the case of an entity that is not a corporation, for the election of the corresponding managing authority), or otherwise has the power to control the management and policies of such other entity.
“Annual Net Sales” shall mean, with respect to any Annual Net Sales Period, the Net Sales earned in such Annual Net Sales Period.
“Annual Net Sales Period” shall mean each of (a) the period from the date of the First Commercial Sale of the first Product through December 31 of the Calendar Year in which the First Commercial Sale of the first Product takes place, and (b) each Calendar Year thereafter.
“Approval” shall mean, with respect to any Product in any jurisdiction, all approvals from any Regulatory Authority necessary for the sale of the Product in such jurisdiction in accordance with applicable Laws, including without limitation receipt of pricing and reimbursement approvals, where required.
“Bankruptcy Code” shall have the meaning set forth in Section 9.2.3(a) of the License Agreement.
“Business Day” means any day that is not a Saturday or a Sunday or a day on which the New York Stock Exchange is closed.
“Calendar Quarter” means the respective periods of three (3) consecutive calendar months ending on March 31, June 30, September 30 and December 31; provided, however, that (a) the first Calendar Quarter of the License Agreement and the Supply Agreement shall extend from the commencement of such respective agreement to the end of the first complete Calendar Quarter thereafter; and (b) the last Calendar Quarter shall end upon the expiration or termination of the License Agreement or the Supply Agreement, as applicable.
“Calendar Year” means (a) for the first Calendar Year of the term of the License Agreement and the Supply Agreement, the period beginning on the Effective Date and ending on December 31, 2008, (b) for each Calendar Year of the term of the License Agreement or the Supply Agreement, as applicable, thereafter, each successive period beginning on January 1 and ending twelve (12) consecutive calendar months later on December 31, and (c) for the last Calendar Year of the term of the License Agreement or the Supply Agreement, the period beginning on January 1 of the Calendar Year in which the License Agreement or the Supply Agreement, respectively, expires or terminates and ending on the effective date of expiration or termination of the License Agreement or the Supply Agreement, respectively.
“Commercially Reasonable Efforts” shall have the meaning set forth in Section 3.7.2 of the License Agreement.
“Compound” shall mean any of the following: (a) naloxone, naltrexone or nalmephene (or nalmefene) as an active ingredient and (b) any isomers, hydrates, anhydrides, solvates, esters, salt forms, free acids or bases, prodrugs, complexes or polymorphs of the compounds set forth in clause (a) or any compounds covered by this clause (b).
“Confidential Information” shall mean, with respect to a Party, all information (and all tangible and intangible embodiments thereof), that is owned or controlled by such Party, is disclosed by or on behalf of such Party to the other Party pursuant to the License Agreement and/or the Supply Agreement, and (if disclosed in writing or other tangible medium) is marked or identified as confidential at the time of disclosure to the receiving Party or (if otherwise disclosed) is identified as confidential at the time of disclosure to the receiving Party and described as such in writing within thirty (30) days after such disclosure. Notwithstanding the foregoing, Confidential Information of a Party shall not include information which, and only to the extent, the receiving Party can establish by written documentation (a) has been generally known prior to disclosure of such information by the disclosing Party to the receiving Party; (b) has become generally known, without the fault of the
receiving Party, subsequent to disclosure of such information by the disclosing Party to the receiving Party; (c) has been received by the receiving Party at any time from a source, other than the disclosing Party, rightfully having possession of and the right to disclose such information free of confidentiality obligations; (d) has been otherwise known by the receiving Party free of confidentiality obligations prior to disclosure of such information by the disclosing Party to the receiving Party; or (e) has been independently developed by employees or others on behalf of the receiving Party without use of such information disclosed by the disclosing Party to the receiving Party (each, a “Confidentiality Exception”).
“Confidentiality Exception” shall have the meaning set forth in the preceding definition.
“Effective Date” shall have the meaning set forth in the preamble to the License Agreement.
“EMA” shall mean the European Medicines Agency, or the successor thereto.
“Encumbrance” shall mean any lien, mortgage, deed of trust, pledge, security interest, charge, condition, equitable interest, right of first refusal, community property interest, covenant, option, title defect, claim, restriction, variance, exception, license, or other adverse claim or interest or encumbrance of any kind or nature whatsoever, whether or not perfected, including any restriction on use, voting, transfer, receipt of income or exercise of any other attribute of ownership
“Excipients” shall mean AEGIS’s proprietary chemically synthesizable delivery enhancement agents (including without limitation the Intravail® absorption enhancement agents, ProTek® and HydroGel®), that, among other things, allow non-invasive systemic delivery of potent peptide, protein, and small and large molecule drugs.
“EU” shall mean the countries comprising the European Union as it may be constituted from time to time, and any successors to, or new countries created from, any of the foregoing.
“Exploit,” “Exploiting” or “Exploitation” shall mean to research, develop, make, have made, use, sell, have sold, offer for sale, import, export and/or otherwise commercialize and dispose of.
“FDA” shall mean the Food and Drug Administration of the United States, or the successor thereto.
“Field” shall mean any and all indications, uses, or purposes of Compound(s) and/or Product(s) in any and all formulations, including without limitation for the treatment, palliation, diagnosis, or prevention of any human or animal disease, disorder, or condition.
“First Commercial Sale” shall mean, with respect to a Product, the first sale for which payment has been received for use or consumption by the general public of such Product.
“GAAP” shall mean generally accepted accounting principles.
“Generic Product” means, with respect to a Product, a generic drug for which an application under section 505(j) of the U.S. Federal Food, Drug, and Cosmetic Act (21 U.S.C. 355) or section 505(b)(2) of the U.S. Federal Food, Drug and Cosmetic Act, or an equivalent outside the United States, is approved.
“GMP” shall mean Good Manufacturing Practices, as specified by FDA, or similar standards or guidelines promulgated by the FDA from time-to-time, or equivalent Regulatory Authority in countries other than the United States, as applicable.
“Government Approval Application” shall mean, with respect to each country of the Territory, all filings with the FDA or the EMA (or the equivalent health regulatory authority in each country within the Territory) for registrations, permits, licenses, authorizations, approvals, or notifications that are required to develop, make, use, sell, import or export a Product, including without limitation the equivalent of an NDA, as required by the FDA or the EMA or the counterpart of the FDA or the EMA in each such country.
“IND” shall mean an investigational new drug application or similar application which is required to be filed with the FDA prior to commencing a clinical investigation of a drug pursuant to 21 C.F.R. 312.
“Indemnitee” shall have the meaning set forth in Section 8.3 of the License Agreement.
“Indemnitor” shall have the meaning set forth in Section 8.3 of the License Agreement.
“Intravail®” shall mean the Material described on Exhibit B attached to the Supply Agreement, manufactured in compliance with all applicable Laws, including without limitation GMP.
“Invention” shall mean any invention, discovery, know-how, technology or other enhancement, whether or not patentable that is made or conceived by employees, consultants, agents and others conducting work on behalf of AEGIS, OPIANT or both, in connection with the performance of, and during the term of and under the rights of, the License Agreement and/or the Supply Agreement or any of the Prior Agreements.
“Joint Invention” shall have the meaning set forth in Section 5.6 of the License Agreement.
“Joint Patent Rights” shall mean, collectively, all patents and patent applications that may issue or be prepared in the future based on a Joint Invention, including without limitation utility models, design patents, certificates of invention, and all divisionals, continuations, continuations-in-part, reissues, renewals, extensions or additions to any such patents and patent applications.
“Law” shall mean any federal, state or local law, statute or ordinance, or any rule, regulation, or published guidelines promulgated by any governmental authority, including the United States Food, Drug and Cosmetic Act and applicable regulations promulgated thereunder.
“License Agreement” shall have the meaning set forth in the preamble to that certain License Agreement entered into by OPIANT and AEGIS as of the Effective Date.
“Material” shall mean any Excipient supplied by AEGIS to OPIANT pursuant to the Supply Agreement, including without limitation the AEGIS product known as Intravail®, as further described in Exhibit B to the Supply Agreement, manufactured in compliance with all applicable Laws, including without limitation GMP.
“Material Tox Data” shall have the meaning set forth in Section 3.9 of the License Agreement.
“Material Tox Studies” shall have the meaning set forth in Section 3.9 of the License Agreement.
“NDA” shall mean a New Drug Application, Biologics License Application, Product License Application, or similar application which is required to be filed with the FDA to obtain a marketing approval of a Product in the United States.
“Net Sales” with respect to any Product, the invoiced sales price of such Product by OPIANT, its sublicensees and their respective Affiliates billed to independent customers who are not Affiliates, less (a) credits, allowances, discounts and rebates to, and chargebacks from the account of, such independent customers for spoiled, damaged, outdated, rejected or returned Product; (b) actual freight and insurance costs incurred in transporting such Product to such customers; (c) cash, quantity and trade discounts and other price reductions specific to the Product including government levied fees as a result of The Patient Protection and Affordable Care Act of 2010); (d) sales, use, value-added and other direct taxes incurred; (e) customs duties, surcharges and other governmental charges incurred in connection with the exportation or importation of such Product; and (f) bad debt and uncollectible invoiced amounts that are actually written off; and plus (g) subsequent collections of bad debt and uncollectible invoiced amounts that were actually written off. Sales between or among OPIANT and its Affiliates or sublicensees shall be excluded from the computation of Net Sales except where such Affiliates or sublicensees are end users of the Product, but Net Sales shall include the subsequent final sales to third parties by such Affiliates or sublicensees.
“OPIANT” shall have the meaning set forth in the preamble to the License Agreement.
“OPIANT Data” shall mean any data regarding the Compound(s), Excipient(s), and/or Product(s) developed by employees, consultants, agents and others on behalf of OPIANT.
“OPIANT Invention” shall mean any Invention made or conceived by employees, consultants, agents and others conducting work on behalf of OPIANT that relates to Compound(s), Excipients or Product(s), but excluding a Joint Invention.
“OPIANT Know-How Rights” shall mean, collectively, all trade secret and other know-how rights relating to the Compound(s), Excipient(s), and/or Product(s) in which OPIANT has an ownership or licensable interest at any time during the term of the License Agreement.
“OPIANT Patent Rights” shall mean, collectively, (a) any patent and patent application relating to Excipient(s), Compound(s) or Product(s) which is owned, licensed or otherwise controlled by OPIANT or any of its Affiliates as of the Effective Date or thereafter; (b) all patents that have issued or in the future may issue from any of the foregoing patent applications, including without limitation utility models, design patents and certificates of invention; (c) all divisionals, continuations, continuations-in-part, reissues, renewals, extensions or additions to any such patents and patent applications; and (d) all patents and patent applications that may issue or be prepared in the future based on OPIANT Inventions, including without limitation utility models, design patents, certificates of invention, and all divisionals, continuations, continuations-in-part, reissues, renewals, extensions or additions to any such patents and patent applications.
“OPIANT Technology” shall mean, collectively, (a) OPIANT Data; (b) OPIANT Inventions; (c) OPIANT Know-How Rights; and (d) OPIANT Patent Rights.
“Paragraph IV Claim” shall have the meaning set forth in Section 6.4.2 of the License Agreement.
“Party” shall mean either AEGIS or OPIANT.
“Phase I Trial” means a human clinical trial of a product, the principal purpose of which is a preliminary determination of safety in healthy individuals or patients, as described in 21 C.F.R. 312.21(a), or a similar clinical study prescribed by the relevant Regulatory Authorities in a foreign country.
“Prior Agreements” shall mean (a) that certain Material Transfer, Option and Research License Agreement between Aegis and Opiant dated as of December 1, 2014 as amended on December 16, 2014 and May 19, 2015; (b) the Amended and Restated Material Transfer, Option and Research License Agreement executed on April 26, 2016 and effective as of December 1, 2014; (c) the Letter Agreement dated April 26, 2016; and (d) that certain Mutual Confidentiality Agreement between Aegis and Opiant dated as of November 13, 2013.
“Product” shall mean any product containing a Compound and formulated using the Excipient(s).
“Regulatory Authority” shall mean any national or supranational governmental authority, including without limitation the FDA, EMA, or Koseisho, that has responsibility over the development and/or commercialization of a Compound, an Excipient and/or a Product.
“Royalty Term” shall mean, with respect to a Product in a country, the period that begins on the date of First Commercial Sale of such Product in such country and ends on the later of: (a) expiration of the last Valid Claim that covers the manufacture, use, offer for sale, sale, or import of such Product in such country and (b) fifteen (15) years after the date of the First Commercial Sale of such Product in such country.
“Sublicense Fee” shall have the meaning set forth in Section 4.9 of the License Agreement.
“Sublicense Rate” shall have the meaning set forth in Section 4.9 of the License Agreement.
“Sublicense Revenue” shall have the meaning set forth in Section 4.9 of the License Agreement.
“Subsequent Product” shall mean a new Product (in addition to a previous Product) for which a new NDA Approval is required by the FDA for marketing the Product.
“Supply Agreement” shall have the meaning set forth in the preamble to that certain Supply Agreement entered into by OPIANT and AEGIS as of the Effective Date.
“Territory” shall be worldwide.
“UAB” shall mean The UAB Research Foundation, a not-for-profit corporation.
“UAB Licensing Agreement” shall mean the Licensing Agreement between AEGIS and UAB, effective February 12, 2004.
“Valid Claim” shall mean, on a country-by-country basis, either (a) a claim of an issued and unexpired patent in the AEGIS Patent Rights, which has not been held permanently revoked, unenforceable or invalid by a decision of a court or other governmental agency of competent jurisdiction, unappealable or unappealed within the time allowed for appeal, or which has not been admitted to be invalid or unenforceable through reissue or disclaimer or otherwise, or (b) a claim of a pending patent application in the AEGIS Patent Rights, which claim was filed in good faith and has not been abandoned or finally disallowed without the possibility of appeal or refiling of such application, and in any event has not been pending for more than seven (7) years.
EXHIBIT B
AEGIS PATENT RIGHTS
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Reference # | Title | CNTRY | Serial # | Filed Date | Patent # | Issue Date | Status | Expiration |
AEGIS1100/US | Method Of Increasing Nasal Peptide Drug Delivery | US | 60/604,296 | 8/25/2004 | | | EXPIRED | 8/25/2005 |
AEGIS1110/US | Absorption enhancers for drug administration | US | 60/632,038 | 11/30/2004 | | | EXPIRED | 11/30/2005 |
AEGIS1190/US | Absorption Enhancers for Drug Administration | US | 60/609,890 | 9/14/2004 | | | EXPIRED | 9/14/2005 |
| AEGIS1190/US/1 | Absorption Enhancers for Drug Administration | US | 60/649,958 | 2/3/2005 | | | EXPIRED | 2/3/2006 |
AEGIS1200/US | Absorption Enhancers for Drug Administration | US | 60/637,284 | 12/17/2004 | | | EXPIRED | 12/17/2005 |
AEGIS1210/AU/11 | Compositions For Drug Administration | AU | 2009329952 | 12/22/2009 | 2009329952 | 4/24/2014 | ISSUED | 12/22/2029 |
AEGIS1210/AU/13 | Compositions For Drug Administration | AU | 2011317202 | 10/18/2011 | | | ABANDONED | 12/16/2016 |
AEGIS1210/BR/11 | Compositions For Drug Administration | BR | PI0923403-9 | 12/22/2009 | | | PENDING | 12/22/2029 |
AEGIS1210/CA/11 | Compositions For Drug Administration | CA | 2,748,268 | 12/22/2009 | | | PENDING | 12/22/2029 |
AEGIS1210/CA/13 | Compositions For Drug Administration | CA | 2,814,927 | 10/18/2011 | | | ABANDONED | 10/18/2015 |
AEGIS1210/CN/11 | Compositions For Drug Administration | CN | 200980157305.0 | 12/22/2009 | ZL200980157305.0 | 6/17/2015 | ISSUED | 12/22/2029 |
AEGIS1210/CN/13 | Compositions For Drug Administration | CN | 201180053436.1 | 10/18/2011 | | | ABANDONED | 10/8/2014 |
AEGIS1210/EP | Absorption Enhancers for Drug Administration | EP | 05784486.2 | 5/11/2005 | | | ABANDONED | 5/11/2025 |
AEGIS1210/EP/11 | Compositions For Drug Administration | EP | 09835809.6 | 12/22/2009 | | | ALLOWED | 12/22/2029 |
AEGIS1210/EP/13 | Compositions For Drug Administration | EP | 11835002.4 | 10/18/2011 | | | ABANDONED | 2/3/2016 |
AEGIS1210/EP/17 | Compositions For Drug Administration | EP | 14872645.8 | 12/17/2014 | | | PUBLISHED | 12/17/2034 |
AEGIS1210/EP/D1 | Absorption Enhancers for Drug Administration | EP | 11191004.8 | 5/11/2005 | | | ABANDONED | 3/11/2013 |
AEGIS1210/HK/11 | Compositions For Drug Administration | HK | 12105031.6 | 12/22/2009 | HK1164059 | 5/20/2016 | ISSUED | 12/22/2029 |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Reference # | Title | CNTRY | Serial # | Filed Date | Patent # | Issue Date | Status | Expiration |
AEGIS1210/HK/13 | Compositions For Drug Administration | HK | 13113399.5 | 10/18/2011 | | | PUBLISHED | 10/18/2031 |
| AEGIS1210/IN | Absorption Enhancers for Drug Administration | IN | 2126/DELNP/2007 | 5/11/2005 | | | ABANDONED | 12/15/2015 |
AEGIS1210/IN/11 | Compositions For Drug Administration | IN | 4763/CHENP/2011 | 12/22/2009 | | | PUBLISHED | 12/22/2029 |
AEGIS1210/IN/D1 | Absorption Enhancers for Drug Administration | IN | 7078/DELNP/2012 | 8/25/2004 | | | PENDING | 8/25/2024 |
AEGIS1210/JP/11 | Compositions For Drug Administration | JP | 2011-542586 | 12/22/2009 | 5752048 | 5/29/2015 | ISSUED | 12/22/2029 |
| AEGIS1210/JP/11/D1 | Compositions For Drug Administration | JP | 2015-016547 | 12/22/2009 | | | ABANDONED | 4/6/2016 |
AEGIS1210/KR/11 | Compositions For Drug Administration | KR | 10-2011-7017361 | 12/22/2009 | 1719008 | 3/16/2017 | ISSUED | 12/22/2029 |
AEGIS1210/MX/11 | Compositions For Drug Administration | MX | MX/a/2011/006790 | 12/22/2009 | | | PUBLISHED | 12/22/2029 |
AEGIS1210/NZ/11 | Compositions For Drug Administration | NZ | 593782 | 12/22/2009 | 593782 | 3/1/2013 | ISSUED | 12/22/2029 |
AEGIS1210/RU/11 | Compositions For Drug Administration | RU | 2011130526 | 12/22/2009 | 2554814 | | ISSUED | 12/22/2029 |
| AEGIS1210/US | Absorption Enhancers for Drug Administration | US | 11/127,786 | 5/11/2005 | | | ABANDONED | 5/11/2025 |
| AEGIS1210/US/1 | Absorption Enhancers for Drug Administration | US | 11/202,849 | 8/12/2005 | | | ABANDONED | 5/11/2025 |
AEGIS1210/US/10 | Anti-Bacterial Compositions for Drug Administration | US | 12/512,862 | 7/30/2009 | 9,114,069 | 8/25/2015 | ISSUED | 6/2/2026 |
AEGIS1210/US/11 | Compositions for Drug Administration | US | 12/645,376 | 12/22/2009 | 8,440,631 | 5/14/2013 | ISSUED | 11/22/2026 |
AEGIS1210/US/12 | Compositions For Drug Administration | US | 12/906,922 | 10/18/2010 | | | ABANDONED | 10/5/2016 |
AEGIS1210/US/13 | Compositions For Drug Administration | US | 13/191,146 | 7/26/2011 | | | ABANDONED | 10/5/2016 |
AEGIS1210/US/14 | Absorption Enhancers for Drug Administration | US | 13/371,274 | 2/10/2012 | 8,927,497 | 1/6/2015 | ISSUED | 11/4/2024 |
AEGIS1210/US/15 | Compositions For Drug Administration | US | 13/951,284 | 7/25/2013 | | | PUBLISHED | 5/11/2025 |
AEGIS1210/US/16 | Compositions For Drug Administration | US | 13/893,219 | 5/13/2013 | 9,283,280 | 3/15/2016 | ISSUED | 7/1/2025 |
AEGIS1210/US/17 | Compositions For Drug Administration | US | 14/133,350 | 12/18/2013 | | | PUBLISHED | 5/11/2025 |
AEGIS1210/US/18 | Pharmaceutical Composition Including Alkyl Glycoside and Anti-Seizure Agent | US | 14/152,686 | 1/10/2014 | 9,642,913 | 5/9/2017 | ISSUED | 8/25/2024 |
AEGIS1210/US/19 | Anti-Bacterial Compositions for Drug Administration | US | 14/835,628 | 8/25/2015 | | | ABANDONED | 3/21/2017 |
| AEGIS1210/US/2 | Absorption Enhancers for Drug Administration | US | 11/219,337 | 9/1/2005 | | | ABANDONED | 5/11/2025 |
AEGIS1210/US/20 | Anti-Bacterial Compositions For Drug Administration | US | 15/465,406 | 3/21/2017 | | | PENDING | 5/11/2025 |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Reference # | Title | CNTRY | Serial # | Filed Date | Patent # | Issue Date | Status | Expiration |
| AEGIS1210/US/21 | Compositions For Drug Administration | US | 15/482,283 | 4/7/2017 | | | PENDING | 12/18/2033 |
AEGIS1210/US/3 | Anti-Bacterial Compositions for Drug Administration | US | 11/193,825 | 7/29/2005 | | | ABANDONED | 11/3/2013 |
AEGIS1210/US/4 | Absorption Enhancers for Drug Administration | US | 08/083,074 | 6/24/1993 | 5,661,130 | 8/26/1997 | EXPIRED | 8/26/2014 |
AEGIS1210/US/5 | Compositions for Drug Administration | US | 12/036,963 | 2/25/2008 | 8,642,564 | 2/4/2014 | ISSUED | 8/1/2028 |
AEGIS1210/US/6 | Absorption Enhancers For Intranasal Interferon Administration | US | 12/189,722 | 8/11/2008 | 8,551,468 | 10/8/2013 | ISSUED | 4/6/2026 |
AEGIS1210/US/7 | Compositions For Drug Administration | US | 12/195,192 | 8/20/2008 | | | ABANDONED | 11/12/2014 |
AEGIS1210/US/8 | Compositions For Drug Administration | US | 12/341,696 | 12/22/2008 | 8,268,791 | 9/18/2012 | ISSUED | 5/9/2026 |
| AEGIS1210/WO | Absorption Enhancers for Drug Administration | WO | US05/16944 | 5/11/2005 | | | NAT PHASE | 5/11/2009 |
AEGIS1210/WO/10 | Anti-Bacterial Compositions for Drug Administration | WO | PCT/US2010/043955 | 7/30/2010 | | | EXPIRED | 2/29/2012 |
| AEGIS1210/WO/11 | Compositions For Drug Administration | WO | PCT/US2009/069326 | 12/22/2009 | | | EXPIRED | 7/22/2011 |
AEGIS1210/WO/13 | Compositions For Drug Administration | WO | PCT/US2011/056735 | 10/18/2011 | | | EXPIRED | 5/18/2013 |
AEGIS1210/WO/17 | Compositions For Drug Administration | WO | PCT/US2014/070944 | 12/17/2014 | | | EXPIRED | 7/18/2016 |
AEGIS1220/US | Cold-stable compositions and methods thereof | US | 60/701,780 | 7/22/2005 | | | ABANDONED | 7/22/2006 |
AEGIS1230/US | Intranasal PYY to Improve Lipid Profile | US | 60/708,246 | 8/9/2005 | | | EXPIRED | 8/9/2006 |
AEGIS1230/US/1 | Delivery of alkyl saccharide and PYY for effecting weight loss | US | 60/710,962 | 8/23/2005 | | | EXPIRED | 8/23/2006 |
AEGIS1230/US/2 | Alkyl Glycoside Compositions and Methods Thereof | US | 11/502,334 | 8/9/2006 | | | ABANDONED | 8/9/2026 |
AEGIS1240/US | Method of and Compounds for treatment for cystic fibrosis | US | 08/025,627 | 3/2/1993 | 5,384,128 | 1/24/1995 | ABANDONED | 3/2/2013 |
AEGIS1250/AU/6 | Stabilizing Alkylglycoside Compositions and Methods Thereof | AU | 2010266032 | 6/24/2010 | | | ABANDONED | 12/24/2014 |
AEGIS1250/CA/6 | Stabilizing Alkylglycoside Compositions and Methods Thereof | CA | 2,765,727 | 6/24/2010 | | | PENDING | 6/24/2030 |
| AEGIS1250/CA/D1 | Stabilizing Alkylglycoside Compositions and Methods Thereof | CA | 2,743,725 | 6/23/2006 | | | ABANDONED | 12/28/2014 |
AEGIS1250/EP | Stabilizing Alkylglycoside | EP | 06785482.8 | 6/23/2006 | | | ABANDONED | 6/23/2026 |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Reference # | Title | CNTRY | Serial # | Filed Date | Patent # | Issue Date | Status | Expiration |
| Compositions and Methods Thereof | | | | | | | |
AEGIS1250/EP/6 | Stabilizing Alkylglycoside Compositions and Methods Thereof | EP | 10792685.9 | 6/24/2010 | | | ABANDONED | 5/4/2017 |
AEGIS1250/EP/D1 | Stabilizing Alkylglycoside Compositions and Methods Thereof | EP | 09161107.9 | 6/23/2006 | | | ABANDONED | 6/23/2026 |
AEGIS1250/EP/D2 | Stabilizing Alkylglycoside Compositions and Methods Thereof | EP | 09162179.7 | 6/23/2006 | | | ABANDONED | 8/10/2016 |
AEGIS1250/EP/D3 | Stabilizing Alkylglycoside Compositions and Methods Thereof | EP | 12165052.7 | 6/23/2006 | | | PUBLISHED | 6/23/2026 |
AEGIS1250/JP/6 | Stabilizing Alkylglycoside Compositions and Methods Thereof | JP | 2012-517745 | 6/24/2010 | | | ABANDONED | 6/24/2013 |
| AEGIS1250/US | Stabilizing Alkylglycoside Compositions and Methods Thereof | US | 11/474,055 | 6/23/2006 | 7,425,542 | 9/16/2008 | ISSUED | 6/23/2026 |
AEGIS1250/US/1 | Stabilizing Alkylglycoside Compositions And Methods Thereof | US | 11/937,966 | 11/9/2007 | 8,076,290 | 12/13/2011 | ISSUED | 2/28/2028 |
AEGIS1250/US/10 | Stabilizing Alkylglycoside Compositions and Methods Thereof | US | 13/669,376 | 11/5/2012 | | | ABANDONED | 6/29/2013 |
AEGIS1250/US/11 | Stabilizing Alkylglycoside Compositions and Methods Thereof | US | 14/494,990 | 9/24/2014 | 9,446,134 | 9/20/2016 | ISSUED | 6/23/2026 |
AEGIS1250/US/12 | Stabilizing Alkylglycoside Compositions and Methods Thereof | US | 15/264,393 | 9/13/2016 | | | PENDING | 6/23/2026 |
AEGIS1250/US/2 | Stabilizing Alkylglycoside Compositions and Methods Thereof | US | 12/050,038 | 3/17/2008 | 8,084,022 | 12/27/2011 | ISSUED | 4/29/2027 |
AEGIS1250/US/3 | Stabilizing Alkylglycoside Compositions And Methods Thereof | US | 12/119,378 | 5/12/2008 | 7,998,927 | 8/16/2011 | ISSUED | 11/15/2026 |
AEGIS1250/US/4 | Stabilizing Alkylglycoside Compositions and Methods Thereof | US | 12/360,758 | 1/27/2009 | 8,133,863 | 3/13/2012 | ISSUED | 9/9/2027 |
AEGIS1250/US/5 | Stabilizing Alkylglycoside Compositions and Methods Thereof | US | 12/618,558 | 11/13/2009 | 8,226,949 | 7/24/2012 | ISSUED | 6/7/2027 |
AEGIS1250/US/6 | Stabilizing Alkylglycoside Compositions and Methods Thereof | US | 12/491,932 | 6/25/2009 | 8,173,594 | 5/8/2012 | ISSUED | 5/24/2027 |
AEGIS1250/US/7 | Stabilizing Alkylglycoside Compositions and Methods Thereof | US | 12/492,092 | 6/25/2009 | | | ABANDONED | 11/3/2012 |
AEGIS1250/US/8 | Stabilizing Alkylglycoside Compositions And Methods Thereof | US | 12/896,640 | 10/1/2010 | 8,772,231 | 7/8/2014 | ISSUED | 8/19/2026 |
AEGIS1250/US/9 | Stabilizing Alkylglycoside | US | 13/544,851 | 7/9/2012 | 8,846,044 | 9/30/2014 | ISSUED | 11/26/2026 |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Reference # | Title | CNTRY | Serial # | Filed Date | Patent # | Issue Date | Status | Expiration |
| Compositions and Methods Thereof | | | | | | | |
| AEGIS1250/WO | Stabilizing Alkylglycoside Compositions and Methods Thereof | WO | US06/024577 | 6/23/2006 | | | NAT PHASE | 6/23/2010 |
AEGIS1250/WO/6 | Stabilizing Alkylglycoside Compositions and Methods Thereof | WO | PCT/US2010/039870 | 6/24/2010 | | | EXPIRED | 1/25/2012 |
AEGIS1250/WO/7 | Stabilizing Alkylglycoside Compositions and Methods Thereof | WO | PCT/US2010/039874 | 6/24/2010 | | | EXPIRED | 1/25/2012 |
| AEGIS1270/US | Controlled Release Formulations | US | 60/957,960 | 8/24/2007 | | | ABANDONED | 8/24/2008 |
AEGIS1270/US/1 | Controlled Release Formulations | US | 61/086,743 | 8/6/2008 | | | EXPIRED | 8/6/2009 |
AEGIS1270/US/2 | Controlled Release Formulations | US | 61/188,441 | 8/7/2008 | | | EXPIRED | 8/7/2009 |
AEGIS1270/US/3 | Controlled Release Formulations | US | 12/197,179 | 8/22/2008 | 8,329,220 | 12/11/2012 | ISSUED | 11/26/2029 |
AEGIS1270/US/4 | Controlled Release Formulations | US | 13/688,116 | 11/28/2012 | 8,470,370 | 6/25/2013 | ISSUED | 8/22/2028 |
AEGIS1270/US/5 | Controlled Release Formulations | US | 13/915,604 | 6/11/2013 | | | ABANDONED | 5/21/2014 |
AEGIS1270/WO/3 | Controlled Release Formulations | WO | PCT/US2008/074099 | 8/22/2008 | | | EXPIRED | 3/24/2010 |
| AEGIS1280/US | Compositions and Methods for Non- invasive Treatment of Chronic Complications of Diabetes | US | 60/984,327 | 10/31/2007 | | | ABANDONED | 10/31/2008 |
AEGIS1280/US/1 | Compositions And Methods For Non- Invasive Treatment Of Chronic Complications Of Diabetes | US | 61/288,215 | 12/18/2009 | | | EXPIRED | 12/18/2010 |
AEGIS1280/US/2 | Compositions And Methods For Non- Invasive Treatment Of Chronic Complications Of Diabetes | US | 13/514,720 | 7/12/2012 | | | ABANDONED | 10/11/2013 |
AEGIS1280/WO/2 | Compositions And Methods For Non- Invasive Treatment Of Chronic Complications Of Diabetes | WO | PCT/US2010/060900 | 12/16/2010 | | | EXPIRED | 7/18/2012 |
| AEGIS1300/US | Zwitterionic Buffered Acidic Peptide And Protein Formulations | US | 61/149,882 | 2/4/2009 | | | EXPIRED | 2/4/2010 |
AEGIS1300/US/1 | Zwitterionic Buffered Acidic Peptide And Protein Formulations | US | 12/699,776 | 2/3/2010 | | | ABANDONED | 3/21/2012 |
AEGIS1310/EP/1 | Compositions For Enteral Absorption And Sustained Action Of Leptin- Related Peptides Useful In The Treatment Of Obesity And Leptin- Modulated Disease | EP | 10812558.4 | 8/24/2010 | | | ABANDONED | 12/17/2013 |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Reference # | Title | CNTRY | Serial # | Filed Date | Patent # | Issue Date | Status | Expiration |
AEGIS1310/US | Compositions for Enteral Absorption And Sustained Action of Leptin- Related Peptides Useful in the Treatment of Obesity and Leptin- Modulated Disease | US | 61/236,396 | 8/24/2009 | | | EXPIRED | 8/24/2010 |
AEGIS1310/US/1 | Compositions for Enteral Absorption And Sustained Action of Leptin- Related Peptides Useful in the Treatment of Obesity and Leptin- Modulated Disease | US | 12/862,626 | 8/24/2010 | | | ABANDONED | 3/24/2014 |
| AEGIS1310/WO/1 | Compositions For Absorption And Sustained Action Of Leptin-Related Peptides | WO | PCT/US2010/046526 | 8/24/2010 | | | EXPIRED | 3/24/2012 |
AEGIS1320/US | Nasal Absorption Of Mixtures Of FastActing And Long-Acting Insulins | US | 61/299,867 | 1/29/2010 | | | EXPIRED | 1/29/2011 |
AEGIS1320/US/1 | Method For Administration Of Insulin And Pharmaceutical Composition Thereof | US | 13/016,784 | 1/28/2011 | | | ABANDONED | 7/30/2016 |
| AEGIS1320/WO/1 | Method For Administration Of Insulin And Pharmaceutical Composition Thereof | WO | PCT/US2011/023052 | 1/28/2011 | | | EXPIRED | 8/29/2012 |
AEGIS1330/US | Alkylsaccharides Compositions With Nutraceuticals | US | 61/317,201 | 3/24/2010 | | | EXPIRED | 3/24/2011 |
AEGIS1330/US/1 | Alkylsaccharide Compositions With Nutraceuticals | US | 13/069,782 | 3/23/2011 | | | ABANDONED | 8/27/2013 |
AEGIS1340/US | Intranasal Administration Of Active Agents To The Central Nervous System | US | 12/954,219 | 11/24/2010 | 8,883,728 | 11/11/2014 | ISSUED | 1/1/2026 |
AEGIS1350/CN/2 | Orally Bioavailable Peptide Drug Compositions and Methods Thereof | CN | 201280007559.6 | 2/3/2012 | | | ABANDONED | 11/3/2014 |
AEGIS1350/EP/2 | Orally Bioavailable Peptide Drug Compositions and Methods Thereof | EP | 12747094.6 | 2/3/2013 | | | ABANDONED | 3/29/2016 |
AEGIS1350/GB/2 | Orally Bioavailable Peptide Drug Compositions and Methods Thereof | GB | 1314970.3 | 2/3/2012 | | | ABANDONED | 10/12/2016 |
AEGIS1350/US | Orally Bioavailable Peptide Drug Compositions and Methods Thereof | US | 61/439,711 | 2/4/2011 | | | EXPIRED | 2/4/2012 |
AEGIS1350/US/1 | Orally Bioavailable Peptide Drug Compositions And Methods Thereof | US | 61/450,547 | 3/8/2011 | | | EXPIRED | 3/8/2012 |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Reference # | Title | CNTRY | Serial # | Filed Date | Patent # | Issue Date | Status | Expiration |
AEGIS1350/US/2 | Orally Bioavailable Peptide Drug Compositions And Methods Thereof | US | 13/366,108 | 2/3/2012 | | | ABANDONED | 12/23/2016 |
AEGIS1350/US/3 | Orally Bioavailable Peptide Drug Compositions And Methods Thereof | US | 15/390,204 | 12/23/2016 | | | PENDING | 2/3/2032 |
| AEGIS1350/WO/2 | Orally Bioavailable Peptide Drug Compositions and Methods Thereof | WO | PCT/US2012/023869 | 2/3/2012 | | | EXPIRED | 9/4/2013 |
AEGIS1360/EP/1 | Compositions And Methods Thereof For Oral Administration Of Drugs | EP | 12827869.4 | 8/24/2012 | | | PUBLISHED | 8/24/2032 |
AEGIS1360/US | Compositions And Methods Thereof For Oral Administration Of Drugs | US | 61/527,788 | 8/26/2011 | | | EXPIRED | 8/26/2012 |
AEGIS1360/US/1 | Compositions And Methods Thereof For Oral Administration Of Drugs | US | 13/594,478 | 8/24/2012 | | | ABANDONED | 11/21/2014 |
| AEGIS1360/WO/1 | Compositions And Methods Thereof For Oral Administration Of Drugs | WO | PCT/US2012/052352 | 8/24/2012 | | | EXPIRED | 3/26/2014 |
AEGIS1370/US | Regulatory Peptides | US | 61/653,057 | 5/30/2012 | | | EXPIRED | 5/30/2013 |
AEGIS1370/US/1 | Regulatory Peptides | US | 61/728,153 | 11/19/2012 | | | EXPIRED | 11/19/2013 |
AEGIS1380/US | Formulations Comprising Triptan Compounds (ACTIVE MONITORING CASE) | US | 12/817,740 | 6/17/2010 | | | ALLOWED | 6/17/2030 |
AEGIS1390/US | Compositions And Methods Comprising Single Anomeric Forms Of Alkylsaccharides For Administration Of Drugs To The Eye | US | 61/820,050 | 5/6/2013 | | | EXPIRED | 5/6/2014 |
AEGIS1390/US/1 | Compositions And Methods Comprising Single Anomeric Forms Of Alkylsaccharides For Administration Of Drugs To The Eye | US | 61/980,366 | 4/16/2014 | | | EXPIRED | 4/16/2015 |
AEGIS1400/US | Transdermal Absorption Enhancer Compositions | US | 61/970,135 | 3/25/2014 | | | EXPIRED | 3/25/2015 |
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the use in this Registration Statement on Form 20-F of Indivior PLC of our report dated March 9, 2023 relating to the financial statements, which appears in this Registration Statement. We also consent to the reference to us under the heading “Statement by Experts” in such Registration Statement.
| | |
/s/ PricewaterhouseCoopers LLP |
| Richmond, VA |
| May 23, 2023 |
21 November 2022
Securities and Exchange Commission
100 F Street, N.E.
Washington, DC 20549
Commissioners:
We have read the statements made by Indivior PLC (copy attached). We understand Indivior PLC’s statements will be included under Item 16F of its Registration Statement on Form 20-F, which will be filed with the Securities and Exchange Commission on 22 November 2022. We agree with the statements concerning our Firm contained therein.
| | |
| Very truly yours, |
|
| /s/ PricewaterhouseCoopers LLP |
|
| PricewaterhouseCoopers LLP |
| London, United Kingdom |
PricewaterhouseCoopers LLP, 1 Embankment Place, London, WC2N 6RH
T: +44 (0) 2075 835 000, F: +44 (0) 2072 124 652, www.pwc.co.uk
PricewaterhouseCoopers LLP is a limited liability partnership registered in England with registered number OC303525. The registered office of
PricewaterhouseCoopers LLP is 1 Embankment Place, London WC2N 6RH. PricewaterhouseCoopers LLP is authorised and regulated by the Financial Conduct Authority for designated investment business.
SUBSIDIARIES OF THE REGISTRANT
Subsidiaries
The subsidiaries as of December 31, 2022, all of which are included in the consolidated financial statements, are shown below, in accordance with s410 of the Companies Act.
| | | | | |
Name | Country of Incorporation |
Bio-Found Limited | England and Wales |
Indivior Austria GmbH | Austria |
Indivior Belgium SRL | Belgium |
Indivior Canada Ltd | Canada |
Indivior Česko s.r.o | Czech Republic |
Indivior Deutschland GmbH | Germany |
Indivior España S.L.U. | Spain |
Indivior EU Limited | England and Wales |
Indivior Europe Limited | Ireland |
Indivior Finance LLC | US |
Indivior Finance (2014) LLC | US |
Indivior Finance S.àr.l | Luxembourg |
Indivior France SAS | France |
Indivior Global Holdings Limited | England and Wales |
Indivior Hrvatska d.o.o. | Croatia |
Indivior Inc. | US |
Indivior Israel Ltd | Israel |
Indivior Italia S.r.l | Italy |
Indivior Jersey Limited | Jersey |
Indivior Jersey Finance LLC | US |
Indivior Jersey Finance (2021) Limited | Jersey |
Indivior Nederland B.V. | Netherlands |
Indivior Nordics ApS | Denmark |
Indivior Pty Ltd | Australia |
Indivior Schweiz AG | Switzerland |
Indivior SMTM LLC | US |
Indivior Solutions Inc. | US |
Indivior South Africa (Pty) Ltd | South Africa |
Indivior Treatment Services, Inc. | US |
Indivior UK Limited | England and Wales |
Indivior UK Finance No1 Limited | England and Wales |
| | | | | |
Indivior UK Finance No2 Limited | England and Wales |
Indivior UK Finance No3 Limited | England and Wales |
Indivior US Holdings Inc. | US |
| Olive Acquisition Subsidiary, Inc. | US |
RBP Global Holdings Limited | England and Wales |
