Stock Purchase Agreement, by and among Roche Holdings, Inc., Roivant Sciences Ltd., Pfizer Inc. and Telavant Holdings, Inc., dated as of October 22, 2023

THIS STOCK PURCHASE AGREEMENT (this “Agreement”) is entered into as of October 22, 2023 (the “Effective Date”), by and among Roche Holdings, Inc., a Delaware corporation (the “Buyer”), Roivant Sciences Ltd., an exempted company limited by shares incorporated under the laws of Bermuda (“Rome”), and Telavant Holdings, Inc., a Delaware corporation (the “Company”), and will subsequently be entered into by Pfizer Inc., a Delaware corporation (“Paris”) (collectively with Rome, the “Sellers”), pursuant to the Joinder Agreement referred to herein.

WHEREAS, (a) Rome is the direct beneficial owner and holder of record of 70,000,000 shares of Common Stock and 35,000,000 shares of Series A-1 Preferred Stock (collectively, the “Rome Company Shares”) and (b) Paris is the direct beneficial owner and holder of record of 35,000,000 shares of Series A-2 Preferred Stock (the “Paris Company Shares” and, together with the Rome Company Shares, the “Company Shares”);

WHEREAS, the Buyer wishes to purchase from the Sellers, and the Sellers wish to sell to the Buyer, all of the Company Shares upon the terms and subject to the conditions of this Agreement (such purchase and sale, together with all other transactions contemplated by this Agreement, the “Acquisition”); and

WHEREAS, the Parties desire to make certain representations, warranties, covenants and agreements in connection with, and to prescribe certain conditions to, the Acquisition as set forth in this Agreement.

NOW, THEREFORE, in consideration of the foregoing and the respective representations, warranties, covenants and agreements set forth in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

1.1         Definitions. For purposes of this Agreement, the following terms have the respective meanings set forth below:

“280G Gross-up Liabilities” means the aggregate amount of gross-up payments required to make Company Group Service Providers whole for any excise taxes and related penalties owed by the Company Group Service Providers under Section 4999 of the Code, as determined by KPMG LLP (the “280G Gross-up Payments”), and the employer portion of any employment or payroll Taxes related thereto.

“Accounting Principles” means the accounting principles, policies, procedures and methodologies set forth on Schedule A attached hereto.

“Accrued Bonus Obligations” means any unpaid cash incentive bonuses and commissions payable to any Company Group Employee pursuant to the terms of any Benefit Plan with respect to the portion of the year up to and including the Closing Date (the “Accrued Bonus Amounts”), and the employer portion of any employment or payroll Taxes related thereto.

“Action” means any judicial or administrative claim, action, charge, suit, arbitration, litigation or proceeding, by or before any Governmental Authority.

“Affiliate” means, with respect to any Person, any other Person which, at the time of determination, directly or indirectly (through one of more intermediaries), controls, is controlled by or is under common control with such Person. For purposes of this definition, “control” (including correlative meanings, the terms “controlled by,” “controlling” or “under common control”) means (a) the direct or indirect ownership of 50% or more of the voting stock or other voting interests of the Person or (b) the ability to otherwise control or direct the decisions of the board of directors or equivalent governing body of the Person. Notwithstanding the foregoing, (w) no member of the Company Group shall be deemed to be an Affiliate of Rome or Paris, (x) Rome and Paris shall not be considered Affiliates of each other (y) Chugai Pharmaceutical Co., Ltd. shall not be deemed to be an Affiliate of Buyer and (z) Immunovant, Inc. and its Subsidiaries shall not be considered Affiliates of any member of the Rome Group.

 

“Antitrust Laws” means the Sherman Act of 1890, the Clayton Act of 1914, the Federal Trade Commission Act of 1914, the HSR Act and all other federal, state and foreign applicable Laws in effect from time to time that are designed or intended to prohibit, restrict or regulate actions having the purpose or effect of monopolization or restraint of trade, or lessening of competition through merger or acquisition.

 

“Approved 280G Gross-up Liabilities” means the portion of the 280G Gross-Up Payments that Rome determines will be payable to the Company Group Service Providers, in an aggregate amount up to [***] (the “Approved 280G Gross-up Payments”), and the employer portion of any employment or payroll Taxes related thereto.

 

“Base Purchase Price” means $7,100,000,000.

 

“Biologic” means any composition of matter comprising proteins, nucleic acids, carbohydrates or a combination of these substances, including monoclonal antibodies (derivatives or fragments thereof), other binding proteins, peptide molecules, RNA molecules, DNA molecules, viruses, gene therapy vectors or genetically engineered cells, or any other article regulated by a Regulatory Authority as a biologic.

 

“BLA” means a Biologics License Application as described in 21 C.F.R. §601.2 or equivalent application in any applicable foreign jurisdiction.

 

“Business Day” means any day other than a Saturday, a Sunday or a day on which banks in New York City, New York; Hamilton, Bermuda; or London, United Kingdom are authorized or obligated by applicable Law to close.

“Business Material Adverse Effect” means any change, event, circumstance, occurrence, effect, state of facts or development that has had or would reasonably be expected to have, individually or in the aggregate, a material adverse effect on the business, condition (financial or otherwise) or results of operations of the Company Group, taken as a whole; provided, however, that no change, event, circumstance, occurrence, effect, state of facts or development to the extent resulting or arising from any of the following matters shall be deemed, either alone or in combination, to constitute or contribute to, or be taken into account in determining whether there has been, or whether there would reasonably be expected to be, a “Business Material Adverse Effect”: (i) changes generally affecting the U.S. or global economy or financial or securities markets, including changes in interest or exchange rates; (ii) the negotiation, execution, public announcement, pendency or consummation of the Acquisition and the identity of, or the effects of any facts and circumstances relating to, the Buyer, including any impact thereof on the suppliers, vendors, employees, service providers or other business relations of the Company Group (provided that this clause (ii) shall not apply to any representation or warranty to the extent the purpose of such representation or warranty is to address the consequences arising from the execution or delivery of this Agreement or the consummation of the Acquisition); (iii) (A) any act of war (whether or not declared), hostility, terrorism, riot, political unrest, calamity or crisis, or similar activities or events, (B) earthquake, landslide, tsunami, flood, hurricane, cyclone, tornado, volcanic activity, wildfire or other fire, drought, famine or other natural disaster, (C) epidemic, pandemic, endemic, disease or virus outbreak or public health emergency (including in respect of COVID-19) and (D) any continuation, escalation, worsening or other change in respect of any of the items or matters referenced in the foregoing clauses (A), (B) and (C); (iv) to the extent arising after the Effective Date and not resulting from knowing and intentional misconduct by the Rome Group, (A) any results, outcomes, data, adverse events, side effects or safety observations arising from any Clinical Trials being conducted by or on behalf of the Company Group relating to any Program Compound or Program Product or by any competitor of the Company Group (or the announcements thereof), (B) the determination by, or the delay of a determination by, the FDA or any other Governmental Authority, or any panel or advisory body empowered or appointed thereby, with respect to the hold (including clinical hold), acceptance, filing, designation, approval, clearance, non-acceptance, refusal to file, refusal to designate, non-approval, disapproval or non-clearance of any Program Compound or Program Product or any competitor’s product candidates, (C) FDA approval (or other clinical or regulatory developments), market entry or threatened market entry of any product competitive with or related to any Program Compound or Program Product, or any guidance, announcement or publication by the FDA or other Governmental Authority relating to any Program Compound or Program Product or product of any competitor or (D) any manufacturing or supply chain disruptions or delays affecting any Program Compound or Program Product or developments relating to reimbursement, coverage or payor rules with respect to any Program Compound or Program Product (provided that this clause (iv) shall not apply to any representation or warranty to the extent the Person making such representation or warranty has committed Fraud with respect thereto); (v) any change generally in business, regulatory or other conditions in the industry in which the Company Group operates; (vi) any failure by the Company Group to meet any internal or published projections, forecasts or revenue or earnings predictions (it being understood that any change, event, circumstance, occurrence, effect, state of facts or development giving rise to or contributing to any such failure may be deemed, constitute or be taken into account in determining whether there has been, or there would reasonably be expected to be, a Business Material Adverse Effect, to the extent not otherwise excluded in this definition); (vii) any adoption, change, implementation, repeal, modification, reinterpretation or proposal of GAAP or any applicable Law by any Governmental Authority, in each case, after the Effective Date; (viii) any action taken or not taken by the Company Group or a Seller (A) at the Buyer’s prior written request or with the Buyer’s written consent or (B) in order to comply with the express terms of this Agreement; or (ix) to the extent [***] not resulting from knowing and intentional misconduct by the Rome Group, any results, outcomes, data, observations or any other information relating to or arising from any research, experiment, analysis or other testing (including any such testing with respect to chemistry, manufacturing and controls matters) conducted by or on behalf of the Buyer, the Sellers or any of their respective Affiliates, [***] (provided that this clause (ix) shall not apply to any representation or warranty to the extent the Person making such representation or warranty has committed Fraud with respect thereto), except, in the case of the foregoing clauses (i), (iii), (v) or (vii), to the extent that the Company Group, taken as a whole, is disproportionately and adversely affected thereby relative to other Persons operating in the industry in which the Company Group operates (in which case the incremental disproportionate adverse effect may be taken into account in determining whether there has been or would reasonably be expected to be a Business Material Adverse Effect).

“Buyer Material Adverse Effect” means any change, event, circumstance, occurrence, effect, state of facts or development that, individually or in the aggregate, would reasonably be expected to prevent or materially delay the ability of the Buyer to consummate the Acquisition.

“Calculation Time” means 11:59 p.m. (New York City time) on the day immediately prior to the Closing Date.

“Capital Stock” means the Common Stock and the Preferred Stock.

“CARES Act” means (a) the Coronavirus Aid, Relief, and Economic Security Act (Pub. L. 116-136) and any administrative or other guidance published with respect thereto by any Governmental Authority (including IRS Notices 2020-22 and 2020-65), or any other law or executive order or executive memorandum (including the Memorandum on Deferring Payroll Tax Obligations in Light of the Ongoing COVID-19 Disaster, dated August 8, 2020) intended to address the consequences of COVID-19 (in each case, including any comparable provisions of state, local or non-U.S. Law and including any related or similar orders or declarations from any Governmental Authority) and (b) any extension of, amendment, supplement, correction, revision or similar treatment to any provision of the CARES Act contained in the Consolidated Appropriations Act, 2021, H.R. 133.

“Clearances” means all consents, clearances, approvals, permissions, licenses, variances, exemptions, authorizations, acknowledgements, permits, nonactions, Orders and waivers to be obtained from, and all registrations, applications, notices and filings to be made with or provided to, any Governmental Authority or other Third Party in connection with the consummation of the Acquisition, including the expiration or termination of any waiting period (and any extensions thereof) under any applicable Laws.

“Clinical Trials” means any human clinical trials, including any Phase 1 Clinical Trials, Phase 2 Clinical Trials, Phase 3 Clinical Trials, Phase 4 Clinical Trials or variations or subsets of such trials.

“Closing Cash” means the aggregate amount of cash and cash equivalents held by the Company Group as of the Calculation Time, calculated in accordance with the Accounting Principles; provided that if any member of the Company Group uses any such cash or cash equivalents to pay any Indebtedness or Transaction Expenses or to repurchase or redeem any capital stock or other securities or to make any dividend or distribution, in each case, following such time and prior to immediately prior to the Closing, then Closing Cash shall be calculated as if such actions had been taken prior to such time. Closing Cash shall (a) exclude (i) the amount of any outstanding checks, outstanding drafts, outstanding wire transfers and outstanding debit transactions written or made for the accounts of any member of the Company Group that have not yet settled and (ii) the aggregate amount of all cash or cash equivalents that are not freely usable, distributable or transferable by the Company Group (including security or similar deposits, bond guarantees, amounts held as collateral in respect of outstanding letters of credit) and (b) include, to the extent not already reflected in the immediately preceding sentence, the amount of all cash subject to received checks, drafts, wire transfers and credit transactions written or made for the benefit of any member of the Company Group but not yet cleared.

 

“Closing Indebtedness” means any Indebtedness of the Company Group outstanding as of immediately prior to the Closing, calculated in accordance with the Accounting Principles.

 

“Closing Net Working Capital” means (a) the current assets of the Company Group, minus (b) the current liabilities of the Company Group, in each case as of the Calculation Time, in each case without duplication and without giving effect to the Acquisition, and calculated in accordance with the Accounting Principles, which current assets and current liabilities shall include only the line items set forth on Exhibit A attached hereto under the headings “Current Assets” and “Current Liabilities,” respectively, and no other assets or liabilities; provided that in no event shall “Closing Net Working Capital” include (i) any amounts to the extent included in Closing Cash or Closing Indebtedness, (ii) amounts outstanding pursuant to intercompany accounts, arrangements, understandings or Contracts to be settled or eliminated at or prior to the Closing, or (iii) liabilities or payments that are expressly required to be paid at or following the Closing by a Seller or any of its Affiliates (excluding, for clarity, all members of the Company Group); and provided, further that “Closing Net Working Capital” (A) shall include all current Tax assets and liabilities (other than with respect to income Taxes) and (B) shall not include any income Tax assets or liabilities, deferred Tax assets or liabilities or any amounts included in the calculation of Transaction Expenses.

 

“Code” means the U.S. Internal Revenue Code of 1986.

 

“Commercialization” means activities directed to obtaining pricing and reimbursement approvals or marketing, promoting, branding, distributing, importing, exporting, using, offering for sale, selling or otherwise commercializing a product, including interacting with Regulatory Authorities regarding the foregoing.

 

“Common Stock” means the common stock, par value $0.01 per share, of the Company.

“Company Exclusively Licensed Intellectual Property” means all Company Licensed Intellectual Property that is exclusively licensed to any member of the Company Group, including, for the avoidance of doubt, the Intellectual Property exclusively licensed to Telavant under the Paris License Agreement.

“Company Group” means the Company and its Subsidiaries.

 

“Company Group Employee” means, as of any relevant time, each employee of the Company Group other than any officer who does not receive any compensation or benefits directly from any member of the Company Group.

 

“Company Group Service Provider” means, as of any relevant time, (a) each Company Group Employee, (b) each director or officer of the Company Group who receives compensation or benefits directly from any member of the Company Group and (c) each individual independent contractor who is a party to a written contract with any member of the Company Group to provide services to the Company Group.

 

“Company Intellectual Property” means the Company Owned Intellectual Property and Company Licensed Intellectual Property.

 

“Company Licensed Intellectual Property” means any and all Intellectual Property owned by a Third Party and licensed or sublicensed to any member of the Company Group or for which any member of the Company Group has obtained a covenant not to be sued.

 

“Company Owned Intellectual Property” means (a) any and all Intellectual Property that is owned (or purported to be owned) by any member of the Company Group and (b) the Telavant Trademarks. For purposes of this Agreement, “purported to be owned” means, with respect to any Intellectual Property, to be named the owner of record of any such Intellectual Property registered or recorded with a Governmental Authority for the purposes of establishing or providing notice of ownership of such Intellectual Property or to otherwise be claimed by any member of the Company Group as being owned or licensed by any member of the Company Group.

 

“Company RSU” means each restricted stock unit granted pursuant to the Company Stock Plan or otherwise (whether vested or unvested) that represents the right to receive payment in shares of Common Stock or an amount in cash equal to the fair market value of such shares of Common Stock.

 

“Company RSU Holder” means each Person holding any Company RSU as of immediately prior to the Closing.

 

“Company Stock Plan” means the Telavant Holdings, Inc. 2023 Equity Incentive Plan, as may be amended from time to time.

 

“Constitutive Documents” means the certificate of incorporation, certificate of formation, limited liability company agreement, bylaws or equivalent organizational documents of a Person.

“Contract” means any contract, commitment, agreement, instrument, obligation, subcontract, lease, license, sublicense, mortgage, indenture, bond, guaranty, promissory note, purchase order, undertaking or other legally binding arrangement or understanding, in each case, whether written or oral.

 

“Copyright” means any copyrights or copyrightable works, including all works for hire, all rights of authorship, use, publication, reproduction, distribution, performance, transformation, moral rights and rights of ownership of copyrightable works, all registrations, applications for registration and renewals of any of the foregoing anywhere in the world, and all rights to register and obtain renewals and extensions of registrations, together with all other interests accruing by reason of copyright Law anywhere in the world.

 

“Cover” or “Covered” means, with respect to any Patent, that any Manufacture, use, offer for sale, sale, importation or exportation of any product or practice of any method would infringe a claim of such Patent in the country in which such activity occurs absent a license thereto (or ownership thereof), and, in the case of a pending Patent application, that any Manufacture, use, offer for sale, sale, importation or exportation of any product or practice of any method would infringe a pending claim thereof, assuming that such pending claim had been issued.

 

“COVID-19” means SARS-CoV-2 or COVID-19, and any evolutions 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, safety or similar Laws, guidelines or recommendations promulgated by any Governmental Authority, including the Centers for Disease Control and Prevention and the World Health Organization, in each case, in connection with or in response to COVID-19 (including the CARES Act, together with any administrative or other guidance published with respect thereto by any Governmental Authority).

 

“D&O Insurance” has the meaning set forth in Section 7.11(b).

 

“Data Protection Laws” means all applicable Laws, including the relevant Healthcare Laws, relating to the access, collection, use, processing, storage, sharing, distribution, transfer, disclosure, security, destruction or disposal of Personal Data, data privacy, data security or data breach notification.

 

“Data Requirements” means all of the following to the extent relating to the access, collection, use, processing, storage, sharing, distribution, transfer, disclosure, security, destruction or disposal of any Personal Data or any sensitive or confidential information or data (whether in electronic or any other form or medium) with respect to the Program Business by any member of the Company Group: (a) the Rome Group’s own published privacy policies applicable to the Program Business; (b) all Data Protection Laws; (c) industry standards and certifications binding on any member of the Company Group with respect to the Program Business (including, to the extent applicable, the Payment Card Industry Data Security Standards (PCI-DSS)) and (d) contractual obligations of any member of the Company Group.

 

“Development” means Pre-Clinical Development and clinical drug development activities reasonably relating to the development of a compound or product and submission of information regarding a compound or product to a Regulatory Authority in connection therewith, including Clinical Trials (including pre- and post-Regulatory Approval studies and statistical analysis), but excluding Commercialization activities. When used as a verb, “Develop” means to engage in Development.

“Development Plan” means the written Development plan that sets forth the anticipated Development activities to be performed by or on behalf of the Company Group related to any Program Compound or Program Product during the Pre-Closing Period, including a budget therefor, as may be amended from time to time by the Company Group in accordance with the terms of this Agreement. The Development Plan as of the Effective Date is attached hereto as Exhibit B.

 

“DOJ” means the United States Department of Justice.

 

“EMA” means the European Medicines Agency.

 

“Encumbrance” means any charge, lien, mortgage, hypothecation, deed of trust, pledge, charge, security interest, easement, servitude, encroachment, license or other similar encumbrance (any action of correlative meaning, to “Encumber”).

 

“Environmental Claim” means any claim, action, cause of action, suit, proceeding, investigation, information request, order, demand or notice (written or oral) by any Person alleging actual or potential liability (including actual or potential liability for investigatory costs, cleanup costs, governmental response costs, natural resources damages, property damages, personal injuries, attorneys’ fees, fines or penalties or corrective actions) arising out of, based on, resulting from or relating to (a) the presence, release or threatened release into the environment, of, or exposure to, any Materials of Environmental Concern at any location, now or in the past or (b) conditions, facts or circumstances forming the basis of any violation, or alleged violation, of any Environmental Law.

 

“Environmental Laws” means all Laws relating to pollution, human and worker health or safety, or protection of the environment (including indoor and ambient air, surface water, ground water, land surface or subsurface strata, and natural resources), including Laws relating to (a) emissions, discharges, releases or threatened releases of, or exposure to, Materials of Environmental Concern, (b) the manufacture, processing, distribution, marketing, sale, use, treatment, generation, storage, containment (whether above ground or underground), disposal, transport or handling of Materials of Environmental Concern, (c) recordkeeping, notification, disclosure and reporting requirements regarding Materials of Environmental Concern, (d) endangered or threatened species of flora and fauna (including fish, wildlife and plants), and the management or use of natural resources, (e) the preservation of the environment or mitigation of adverse effects on or to human health or the environment or (f) emissions or control of greenhouse gases.

“Equity Securities” means (a) any capital stock or share capital of, other voting securities of, other equity, membership or other ownership interest in any Person, (b) any securities (including debt securities) directly or indirectly convertible into, or exchangeable or exercisable for, any capital stock or share capital of, other voting securities of, other equity, membership or other ownership interest in any Person, (c) any rights, warrants or options (including exchange rights, put rights and call rights) directly or indirectly to subscribe for or to purchase any capital stock or share capital of, other voting securities of or other equity, membership or other ownership interest in, any Person, or to subscribe for or to purchase any securities (including debt securities) convertible into, or exchangeable or exercisable for, any capital stock or share capital of, other voting securities of or other equity, membership or other ownership interest in, any Person or (d) any share appreciation rights, phantom share rights, other rights the value of which is linked to the value of any securities or interests referred to in clauses (a) through (c) above or other similar rights.

 

“ERISA” means the Employee Retirement Income Security Act of 1974.

 

“ERISA Affiliate” means any Person that, at any relevant time, is treated as a single employer with any member of the Company Group pursuant to Section 414(b), (c), (m) or (o) of the Code or Section 4001(b) of ERISA.

 

“Estimated Purchase Price” means an amount equal to the Base Purchase Price (a) plus the amount of Estimated Closing Cash, (b) plus the amount of the Estimated Net Working Capital Adjustment Amount, (c) less the Estimated Closing Indebtedness and (d) less the amount of all Estimated Transaction Expenses.

 

“FD&C Act” means the United States Federal Food, Drug, and Cosmetic Act.

 

“FDA” means the U.S. Food and Drug Administration.

 

“Filing” means any registration, petition, statement, application, schedule, form, declaration, notice, notification, report, submission or other filing.

 

“Fraud” means, with respect to a Party, an actual and intentional fraud with respect to any representation or warranty made by such Party set forth in Article III, Article IV or Article V, as applicable. For the avoidance of doubt, Fraud does not include (a) constructive fraud or other similar fraud claims based on constructive knowledge, negligence, misrepresentation or any similar theory or (b) equitable fraud, promissory fraud, unfair dealings fraud or any other tort (including fraud) based on negligence or recklessness or any similar theory.

 

“FTC” means the United States Federal Trade Commission.

 

“Fully Diluted Share Number” means the sum (without duplication) of (a) the aggregate number of shares of Common Stock issued and outstanding as of immediately prior to the Closing, (b) the aggregate number of shares of Common Stock issuable upon conversion of all shares of Preferred Stock issued and outstanding as of immediately prior to the Closing and (c) the aggregate number of shares of Common Stock issuable upon the settlement of all Company RSUs issued and outstanding as of immediately prior to the Closing.

 

“Fundamental Representations” means the representations and warranties of the Sellers and the Company in (a) Sections 3.1 and 3.2(a) and (b) Sections 4.1, 4.2, 4.3(a), 4.3(b), the last sentence of 4.4(c), 4.6(b) (solely with respect to the Paris License Agreement), 4.16(g), 4.16(i), 4.20(e), 4.23 and 4.26.

“GCP” means the applicable then-current FDA requirements for the design, conduct, performance, monitoring, auditing, recording, analysis and reporting of clinical trials contained in 21 C.F.R. Parts 50, 54, 56 and 58, and all analogous guidelines promulgated by the EMA or the ICH, as applicable.

 

“GLP” means the applicable then-current good laboratory practice standards promulgated or endorsed by the FDA as defined in 21 C.F.R. Part 58, and comparable regulatory standards promulgated by other applicable Regulatory Authorities, as they may be updated from time to time, including applicable guidelines promulgated under the ICH.

 

“GMP” means the applicable then-current good manufacturing practices required by the FDA, as set forth in the FD&C Act and 21 C.F.R. Parts 210, 211 and 600-680, for the manufacture and testing of pharmaceutical materials, and comparable laws or regulations applicable to the manufacture and testing of pharmaceutical materials promulgated by other applicable Regulatory Authorities, as they may be updated from time to time.

 

“Governmental Authority” means any (a) nation, state, commonwealth, province, territory, county, municipality, district or other jurisdiction of any nature, (b) international, supranational, transnational, multinational, federal, state, local, municipal, foreign or other government, agency or authority or (c) governmental or quasi-governmental authority of any nature (including any governmental or non-governmental self-regulating, division, department, agency, Regulatory Authority, commission, instrumentality, organization, unit or body and any court, arbitral body or other tribunal).

 

“Governmental Authorizations” means all licenses, permits (including insurance permits), variances, waivers, orders, registrations, consents, certificates, certifications, clearances, concessions, grants, approvals, franchises and other authorizations and approvals of or by a Governmental Authority required (a) with respect to the Parties, to perform their respective obligations hereunder and (b) to carry on the Program Business or the business of the Company Group.

 

“Healthcare Laws” means any applicable Laws (a) pertaining to the research, Development, testing, production, Manufacture, transfer, storing, distribution, approval, labeling, marketing, pricing, Third Party reimbursement or sale and other Commercialization of pharmaceutical products and Biologics, (b) governing the development, conduct, monitoring, patient informed consent, auditing, analysis and reporting of Clinical Trials and (c) all regulations promulgated pursuant to (a) and (b) and analogous or similar applicable Laws governing the testing, approval, manufacturing, marketing, sale and other Commercialization of pharmaceutical products and Biologics and relationships with payors, patients and healthcare professionals, including the FD&C Act, the federal Anti-Kickback Statute (42 U.S.C. § 1320a-7b(b)), the Physician Payments Sunshine Act (42 U.S.C. § 1320a-7h), the civil False Claims Act (31 U.S.C. §§ 3729 et seq.), the criminal False Claims Law (42 U.S.C. § 1320a-7b(a)), the exclusion laws (42 U.S.C. § 1320a-7), the civil monetary penalties law (42 U.S.C. § 1320a-7a) and HIPAA.

 

“HIPAA” means the Health Insurance Portability and Accountability Act of 1996 and the Health Information and Technology for Economic and Clinical Health Act of 2009.

 

“HSR Act” means the U.S. Hart-Scott-Rodino Antitrust Improvements Act of 1976.

“ICH” means the International Conference on Harmonisation of Technical Requirements for Registration of Pharmaceuticals for Human Use.

“IND” means an Investigational New Drug Application under 21 C.F.R. Part 312 in the United States or similar clinical trial application in other countries.

“Indebtedness” of any Person means, without duplication, (a) all indebtedness of such Person for borrowed money (including all obligations for principal, interest, penalties, fees, expenses, breakage costs, prepayment premiums or penalties incurred in connection with the repayment of such borrowed money and bank overdrafts thereunder), (b) all obligations of such Person evidenced by debt securities, bonds, debentures, notes or similar instruments, (c) all obligations of such Person under conditional sale or other title retention agreements relating to property or assets purchased by such Person, (d) all Indebtedness of others secured by (or for which the holder of such indebtedness has an existing right, contingent or otherwise, to be secured by) any Encumbrance (other than Permitted Encumbrances or Permitted Licenses) on property owned or acquired by such Person, whether or not the obligations secured thereby have been assumed (calculated, in the case of Indebtedness for which recourse is limited solely to the property subject to the applicable Encumbrance, as an amount equal to the lesser of (i) the value (as determined in good faith by the Company) of the property of such Person subject to such Encumbrance securing such Indebtedness and (ii) the amount of such Indebtedness), (e) all guarantees by such Person of Indebtedness of others, (f) the capitalized amount of all capital lease obligations of such Person (excluding, for the avoidance of doubt, any operating leases), (g) all reimbursement obligations of such Person as an account party in respect of letters of credit, performance bonds and banker’s acceptances (to the extent drawn), (h) all accrued and unpaid income Taxes of the Company Group with respect to all Pre-Closing Tax Periods, taking into account and netting out Tax credits and other Tax assets of any member of the Company Group, including all Transaction Tax Deductions, to the extent such credits and assets would actually reduce the tax liability accrued hereunder (which amount under this clause (h) shall not be less than zero for any jurisdiction in which such Taxes are accrued for any Pre-Closing Tax Period), (i) any net cash payment obligations of such Person under any currency swaps, forward contracts, currency or other derivative or hedging arrangements of such Person, in each case to the extent payable as a result of the consummation of the Acquisition, (j) any declared but unpaid dividends, or other distributions or loans payable by such Person to its equityholders or Affiliates (excluding those set forth in Section 7.8 of the Company Disclosure Schedule), (k) to the extent not settled or eliminated prior to Closing, any amounts owed by any member of the Company Group to any Affiliate of the Sellers that is not a member of the Company Group and (l) subject to clause (v) of the immediately following sentence, the maximum gross amount of any “earn-out” or similar obligation; provided, however, that for clarity, Indebtedness shall exclude any Transaction Expenses and any amounts included (or required to be included) in the Net Working Capital Adjustment Amount. For the avoidance of doubt, Indebtedness shall not include (i) any trade credit or trade payables, (ii) any Indebtedness incurred or arranged by the Buyer and its Affiliates (and subsequently assumed or guaranteed by the Company Group) on or after the Closing Date, (iii) any obligations or liabilities under any Contract between the Company Group, on the one hand, and the Buyer or any of its Affiliates, on the other hand, (iv) any Intercompany Obligations and (v) any milestone, royalty or other deferred or contingent payment obligations, including any of the foregoing under the Paris License Agreement, any of [***] or any Contract with any contract manufacturing organization or contract research organization entered into in the Ordinary Course.

“Intellectual Property” means any and all of the following in any jurisdiction throughout the world and all rights associated therewith: (a) Patents and other indicia of ownership of an invention recognized or issued by or filed with any Governmental Authority; (b) inventions, discoveries and other Know-How, including articles of manufacture, business methods, compositions of matter, improvements, machines, methods and processes and new uses for any of the preceding items; (c) Trademarks; (d) published and unpublished works of authorship, including audiovisual works, collective works and Copyrights; (e) improvements, derivatives, modifications, enhancements, revisions and releases relating to any of the foregoing; (f) instantiations of any of the foregoing in any form and embodied in any media; (g) software (including source code, executable code, systems, network tools, data, databases, applications, firmware and all related documentation); (h) other intellectual property and proprietary rights; (i) rights to claim priority to, and to collect royalties and proceeds in connection with, any of the foregoing; and (j) rights to sue and recover and retain damages, costs and attorneys’ fees for past, present or future infringement, misappropriation or violation of any of the foregoing.

“Intercompany Obligations” means all intercompany accounts, all intercompany Indebtedness and all other intercompany obligations between either Seller or any of its Affiliates, on the one hand, and any member of the Company Group, on the other hand.

“International Plan” means a Benefit Plan maintained primarily for employees and former employees located outside of the United States.

 

“Joinder Agreement” means the Joinder Agreement, substantially in the form attached hereto as Exhibit C, with such modifications thereto as the Buyer and Rome may agree.

 

“Know-How” means all confidential and proprietary commercial, technical, scientific and other data, results, know-how and information, trade secrets, inventions, technology, methods, processes, practices, formulae, instructions, skills, techniques, procedures, knowledge, experiences, ideas, technical assistance, designs, drawings, assembly procedures, computer programs and specifications (including biological, chemical, structural, pharmacological, toxicological, clinical, safety, assay, method of screening, study designs and protocol and related know-how and trade secrets, and manufacturing data, non-clinical information, pre-clinical and clinical data, specifications of ingredients, manufacturing processes, formulation, specifications, sourcing information, quality control and testing procedures and related know-how and trade secrets), in all cases, whether or not confidential, proprietary, reduced to practice, patented or patentable, in written, electronic or any other form now known or hereafter developed.

 

“Law” means local, state, supranational, federal, national, regional, municipal, provincial or international statute, law, act, constitution, ordinance, code, rule, treaty, regulation, common law or other legal requirement.

“Liabilities” means all liabilities and obligations of every kind and nature, whether accrued, direct or indirect, fixed or contingent, mature or inchoate, known or unknown, reflected on a balance sheet or otherwise, including those arising under any Law or any judgment of any court of any kind or any award of any arbitrator of any kind, and those arising under any Contract, commitment or undertaking.

 

[***]

 

“MAA” means a marketing authorization application, including a BLA, to market a pharmaceutical product or Biologic in any country or group of countries, as defined in the applicable Laws and filed with the Regulatory Authority of a given country or group of countries.

 

“Manufacturing” means all activities directed to making, sourcing of necessary raw materials, manufacturing, producing, processing, packaging, labeling, finishing, quality assurance testing, shipping, holding (prior to distribution) and release of a product (or any component of such product). When used as a verb, “Manufacture” means to engage in Manufacturing.

 

“Materials of Environmental Concern” means any hazardous, acutely hazardous, or toxic substance or waste or any other substance, in each case, as defined by or regulated under Environmental Laws, including the federal Comprehensive Environmental Response, Compensation and Liability Act and the federal Resource Conservation and Recovery Act.

 

[***]

 

“Most Recent Balance Sheet Date” means September 30, 2023.

 

[***]

 

“Net Working Capital Adjustment Amount” means an amount (which may be a positive or negative number) equal to (a) the Closing Net Working Capital minus (b) the Target Net Working Capital.

“Order” means, with respect to any Person, any judgment, decision, writ, decree, award, consent decree, injunction, ruling or order of any federal, state, local or other domestic or foreign court or Governmental Authority or arbitrator (in each case, whether temporary, preliminary or permanent) that, in each case, is binding on such Person or its property under applicable Laws.

 

“Ordinary Course” means the ordinary course of the Company Group’s business.

 

“Paris License Agreement” means that certain License and Collaboration Agreement, dated as of November 21, 2022, by and between Paris, Rome and Telavant.

 

“Paris Transaction Agreements” means the (a) Voting Agreement, dated as of November 21, 2022, among Rome, Paris and the Company, (b) Investor Rights Agreement, dated as of November 21, 2022 among Rome, Paris and the Company (the “Investor Rights Agreement”), (c) Right of First Refusal and Co-Sale Agreement, dated as of November 21, 2022 among Rome, Paris and the Company (the “ROFR and Co-Sale Agreement”) and (d) the Commitment Letter, dated as of November 21, 2022, by and between Rome and the Company (the “Equity Commitment Letter”).

 

“Parties” means Rome, Paris (solely upon the execution and delivery of the Joinder Agreement and solely with respect to the sections of this Agreement specified therein), the Company and the Buyer.

 

“Patents” means (a) all patents and patent applications (provisional and non-provisional) anywhere in the world, including PCT applications, (b) all divisionals, continuations, continuations in-part thereof, or any other patent application claiming priority, or entitled to claim priority, directly or indirectly, to (i) any such patents or patent applications or (ii) any patent or patent application from which such patents or patent applications claim, or are entitled to claim, direct or indirect priority, and (c) all patents issuing on any of the foregoing anywhere in the world (including from PCT applications), together with all registrations, reissues, re-examinations, patents of addition, utility models or designs, renewals, substitutions, revisions, provisionals, supplemental protection certificates, inventors’ certificates and all disclosures, or extensions of any of the foregoing and counterparts thereof anywhere in the world.

 

“Per Share Value” means an amount equal to the quotient of (a) an amount equal to the Estimated Purchase Price divided by (b) the Fully Diluted Share Number.

 

“Per Share Milestone Payment Amount” means, if applicable, with respect to the Milestone Payment payable under Exhibit G, an amount equal to the quotient of (a) an amount equal to (i) the Milestone Payment, less (ii) the aggregate amount of the employer portion of any employment or payroll Taxes required to be paid in respect of the portion of the Milestone Payment allocable to Company RSUs, whether or not such employment or payroll Taxes are due and payable at the time of payment of the underlying compensatory obligation, divided by (b) the Fully Diluted Share Number.

“Permitted Encumbrances” means the following: (a) Encumbrances expressly disclosed in the Company’s balance sheet as of the Most Recent Balance Sheet Date; (b) Encumbrances for Taxes (i) not yet due or payable or (ii) that are being contested in good faith by appropriate proceedings and, if so contested, for which adequate reserves have been established in accordance with GAAP; (b) Encumbrances for assessments and other governmental charges or Encumbrances of landlords, carriers, warehousemen, mechanics and repairmen incurred in the Ordinary Course, in each case (i) for sums not yet due and payable or (ii) due but not delinquent or (iii) being contested in good faith by appropriate proceedings and, in the case of this clause (iii), for which adequate accruals or reserves have been established on the books and records of the Company Group in accordance with GAAP; (d) security given in the Ordinary Course to any public utility or Governmental Authority; (e) Encumbrances in the nature of zoning restrictions, easements, rights or restrictions of record on the use of real property if the same do not materially detract from the value of the property encumbered thereby or materially impair the use of such property in the business of the Company Group; (f) Encumbrances that do not materially interfere with the use or operation of the property subject thereto and (g) Permitted Licenses.

 

“Permitted License” means any non-exclusive license of Intellectual Property granted by any member of the Company Group in the Ordinary Course in furtherance of the Development or Manufacturing activities of the Company Group to be performed on behalf of any member of the Company Group by a services provider; provided that the agreement under which such non-exclusive license is granted (a) does not grant the applicable licensee any Commercialization rights with respect to any of the Program Products or any Intellectual Property licensed thereunder, (b) does not include any royalty or other similar contingent payment obligation of any member of the Company Group based upon the Manufacture, use or sale of services, processes or products or the grant of sublicenses under such license for the Manufacture, use or sale of services, processes or products, and (c) shall not cease to be valid and binding and in full force and effect on terms identical in all material respects to those currently in effect as a result of the consummation of the transactions contemplated by this Agreement, nor shall the consummation of such transactions constitute a material breach or default under such license or otherwise give the counterparty thereto or any other Person a right to terminate such license.

 

“Person” means any individual, a limited liability company, a joint venture, a corporation, a company, a partnership, an association, a business trust, a trust, a Governmental Authority or any other entity or organization, whether or not a legal entity.

 

“Personal Data” means all data or other information (a) that can identify an individual or, in combination with any other information or data available to any member of the Company Group, is capable of identifying an individual or (b) that is otherwise considered “personally identifiable information,” “personal information,” “individually identifiable health information,” “personal data” or the like under any applicable Data Protection Laws.

 

“Phase 1 Clinical Trial” means a human clinical trial of a product designed to satisfy the requirements of 21 C.F.R. § 312.21(a) and is intended to determine metabolism and pharmacologic actions of the drug in humans, the side effects associated with increasing doses and, if possible, to gain early evidence of efficacy, or any comparable trial under applicable Laws.

 

“Phase 2 Clinical Trial” means a human clinical trial of a product designed to satisfy the requirements of 21 C.F.R. § 312.21(b) and intended to explore a variety of doses, dose responses and durations of effect, and to generate data on side effects and clinical efficacy for a particular indication or indications in a target patient population, or any comparable trial under applicable Laws.

“Phase 3 Clinical Trial” means a human clinical trial of a product designed to satisfy the requirements of 21 C.F.R. § 312.21(c) and is intended to (a) establish that the product is safe and efficacious for its intended use, (b) define contraindications, warnings, precautions and adverse reactions that are associated with the product in the dosage range to be prescribed and (c) support Regulatory Approval for such product, or any comparable trial under applicable Laws.

 

“Phase 4 Clinical Trial” means a human clinical trial, or other test or study, of a product for an indication that is commenced after receipt of the initial Regulatory Approval for such indication in the country for which such trial is being conducted and that is conducted within the parameters of the Regulatory Approval for the product for such indication (and which may include investigator-sponsored clinical trials), including a clinical trial conducted due to the request or requirement of a Regulatory Authority or as a condition of a previously granted Regulatory Approval.

 

“Pre-Clinical Development” means activities relating to the discovery, research and pre-clinical development of a compound or product, including toxicology, pharmacology and other discovery, optimization and pre-clinical efforts, test method development and stability testing, Manufacturing process development, formulation development, delivery system development, and quality assurance and quality control development, but excluding Clinical Trials (including pre- and post-Regulatory Approval studies and statistical analysis) and Commercialization activities.

 

“Pre-Closing Tax Period” means any Tax Period ending on or before the Closing Date and the portion of any Straddle Period ending on the Closing Date.

 

“Preferred Stock” means the Series A-1 Preferred Stock and the Series A-2 Preferred Stock.

 

“Program Business” means the business of the Company Group as conducted by the Company Group as of the Effective Date and as of immediately prior to the Closing.

 

“Program Compound” means any TL1A Antibody that is Covered by any Patent or incorporates or embodies any Know-How that is owned by or licensed to any member of the Company Group. A complete list of Program Compounds, as of the Effective Date, is set forth in Section 1.1 of the Company Disclosure Schedule.

 

“Program Product” means any pharmaceutical composition, preparation or product that constitutes, incorporates, comprises, or contains any Program Compound, alone or in combination with one or more other active ingredients (that are not Program Compounds), whether co-formulated or co-packaged, in each case in any presentation, form or formulation (including in any dosage strength) for any and all uses.

 

“Pro Rata Portion” means, with respect to each Seller, an amount equal to the quotient of (a) the sum of (i) the aggregate number of shares of Common Stock held by such Seller as of immediately prior to the Closing plus (ii) the aggregate number of shares of Common Stock issuable upon conversion of all shares of Preferred Stock held by such Seller as of immediately prior to the Closing divided by (b) the sum (without duplication) of (i) the aggregate number of shares of Common Stock issued and outstanding as of immediately prior to the Closing and held by the Sellers and (ii) the aggregate number of shares of Common Stock issuable upon conversion of all shares of Preferred Stock issued and outstanding as of immediately prior to the Closing and held by the Sellers and disregarding any conversion of Company RSUs such that the sum of the Pro Rata Portions held by Rome and Paris shall always equal 100%.

“Protected Health Information” shall have the same meaning set forth in 45 C.F.R. §160.103.

“Purchase Price” means an amount equal to the Base Purchase Price (a) plus the amount of Closing Cash, (b) plus the amount of the Net Working Capital Adjustment Amount, (c) less the amount of Closing Indebtedness and (d) less the amount of all Transaction Expenses.

“Registered Company Intellectual Property” means any and all Company Owned Intellectual Property or Company Exclusively Licensed Intellectual Property that is the subject of an application, certificate, filing, registration or other document issued by, filed with or recorded by, any Governmental Authority in any jurisdiction, including internet domain name registrations, websites and social media handles owned or exclusively licensed by the Company Group in the conduct of its business.

“Regulatory Approvals” means, with respect to a country or region, any approvals, clearances, authorizations, registrations, certifications, licenses and permits granted by the relevant Governmental Authority necessary in order to import, distribute, market and sell a pharmaceutical product in such country or region, including any BLAs and MAAs (but excluding pricing and reimbursement approvals).

 

“Regulatory Authority” means, with respect to a jurisdiction, any national (e.g., the FDA), supra-national (e.g., the EMA), regional, state or local regulatory agency, department, subdivision, instrumentality, official, bureau, commission, council or other governmental authority with responsibility for granting any Regulatory Approvals with respect to any pharmaceutical or biologic product.

 

“Regulatory Filings” means, collectively, any and all applications, filings, submissions, approvals (including supplements, amendments, pre- and post-approvals, pricing and reimbursement approvals), licenses, registrations, permits, notifications and authorizations (including MAAs and other Regulatory Approvals) or waivers with respect to the Development, Manufacture, Commercialization or other exploitation of a pharmaceutical product (including any compound, Biologic or product) made to or received from any Regulatory Authority in a given country, including any IND or BLA.

 

“Retained Severance Obligations” means the sum of (a) the aggregate amount for all Terminated Employees of, with respect to each such Terminated Employee, any excess of (i) such Terminated Employee’s Contractual Cash Severance over (ii) the Section 7.10(a) Cash Severance and (b) any excess of (i) the sum of (A) the aggregate Severance Obligations for the New Hires and (B) the employer portion of any employment or payroll Taxes related thereto over (ii) [***].

“Rome Group” means Rome and its Subsidiaries (including, prior to the Closing, the Company Group); provided that Immunovant, Inc. and its Subsidiaries shall not be included in the Rome Group.

 

“Rome’s Knowledge” or the “Knowledge of Rome” means, the actual knowledge, upon reasonable inquiry of their respective direct reports, of [***].

 

“Securities Act” means the Securities Act of 1933.

 

“Seller Material Adverse Effect” means any change, event, circumstance, occurrence, effect, state of facts or development that, individually or in the aggregate, would reasonably be expected to prevent or materially delay the ability of any Seller to consummate the Acquisition.

 

“Series A-1 Preferred Stock” means Series A-1 Preferred Stock, par value $0.01 per share, of the Company.

 

“Series A-2 Preferred Stock” means Series A-2 Preferred Stock, par value $0.01 per share, of the Company.

 

“Services Agreement” means that certain Services Agreement, dated as of November 21, 2022, by and among Roivant Sciences, Inc., the Company and Telavant.

 

“Straddle Period” means any Tax Period beginning before the Closing Date and ending after the Closing Date.

 

“Subsidiary” means, with respect to any Person, any other Person as to which it owns, directly or indirectly, or otherwise controls, more than 50% of the voting shares or other similar interests, or any partnership or limited liability company of which such Person is a general partner or managing member. Notwithstanding the foregoing, Chugai Pharmaceutical Co., Ltd. shall not be deemed to be a Subsidiary of Buyer.

 

“Target Net Working Capital” means [***].

 

“Tax” means all income, capital gains, gross income, gross receipts, sales, use, ad valorem, franchise, capital, profits, license and other withholding, employment, social security, payroll, transfer, conveyance, documentary, stamp, property, value added, customs duties, minimum taxes, estimated and any other taxes, fees, charges, levies, excises, duties or assessments in the nature of a tax, together with additions to tax or additional amounts, interest and penalties relating thereto that may be imposed by the U.S. federal government or any state, local or non-U.S. government.

 

“Tax Authority” means the Internal Revenue Service and any state, local or non-U.S. Governmental Authority responsible for the assessment, collection, imposition or administration of any Taxes.

“Tax Package” means (a) pro forma U.S. federal, state and local combined, consolidated, affiliated, unitary or similar Tax Returns relating to the operations of the Company Group (including all associated workpapers) for the Tax Period of the Company Group ending on the Closing Date and (b) any additional information relating to the operations of the Company Group for the Tax Period including the Closing Date for the jurisdictions listed in Section 4.10(f) of the Company Disclosure Schedule in the case of state and local Tax Returns and such other jurisdictions as Rome and Buyer may reasonably agree that is reasonably necessary to prepare and file any applicable Tax Return required to be filed by Rome; provided that in no event shall the Tax Package include any information related to the operations of the Buyer or any of its Affiliates (other than such information related to the operations of the Company Group covered by clauses (a) and (b) of this definition).

 

“Tax Period” means any period prescribed by any Governmental Authority for which a Tax Return is required to be filed or a Tax is required to be paid.

 

“Tax Return” means any and all returns, reports, information returns, declarations, statements, claims for refund or other written information with respect to any Tax which is supplied to or required to be supplied to any Tax Authority, including any and all attachments, amendments and supplements thereto.

 

“Tax Sharing Agreement” means any agreement or arrangement, including any Tax sharing, allocation, indemnification, reimbursement, receivables or similar agreement entered into prior to the Closing, binding any member of the Company Group that provides for the allocation, apportionment, sharing or assignment of any Tax liability or Tax benefit, in each case other than agreements or arrangements entered into in the Ordinary Course that do not relate primarily to Taxes.

 

“Telavant” means Telavant, Inc., a Delaware corporation.

 

“Telavant Trademarks” means (a) any Trademark that contains the name or mark “Telavant” and (b) any other Trademarks that are similar to, or a variation or derivation of, “Telavant” (including all translations, abbreviations and adaptations thereof and combinations therewith and any Trademark derived from, confusingly similar to or including any of the foregoing), in each case that are owned by any member of the Rome Group.

 

“Third Party” means any Person other than the Buyer, the Sellers (but with respect to Paris, only upon the execution and delivery of the Joinder Agreement, until which point it shall be deemed a Third Party), the members of the Company Group and their respective Affiliates.

 

“TL1A” means [***].

 

“TL1A Antibody” means any antibody or antigen binding portion thereof that is intended to bind to, affect, induce an inhibition, activation, disruption or other modulation of, or is otherwise directed to, TL1A.

“Trademark Assignment Agreement” means the trademark assignment agreement to be entered into by and between Roivant Sciences GmbH and the Company, substantially in the form attached hereto as Exhibit F, pursuant to which Roivant Sciences GmbH will transfer and assign to the Company all of the Telavant Trademarks owned by the Rome Group as of immediately prior to the Closing.

 

“Trademarks” means any and all trademarks, service marks, trade dress, trade names, logos, slogans, words, names, symbols, designs, corporate names, internet domain names, social media handles and accounts, doing business designations, and all other indicia of origin (whether or not registered), and all registrations, applications for registration and renewals of any of the foregoing anywhere in the world, and all goodwill associated with any of the foregoing.

 

“Transaction Expenses” means (a) (i) all fees, costs and expenses payable to legal counsel or to any financial advisor, accountant, consultant, auditor, expert or other similar professional Person who performed services for or on behalf of the Company Group in connection with the negotiation, preparation, execution and consummation of this Agreement, other agreements and arrangements prepared in connection herewith and the Acquisition or the process by which Rome or its Representatives solicited, discussed or negotiated strategic alternatives with respect to the Company Group or the Program Business and (ii) all brokers’ or finders’ fees payable in connection with the Acquisition, in the case of each of clauses (i) and (ii), that were incurred (and whether or not yet invoiced), by the Company Group prior to the Closing and remain unpaid as of immediately prior to the Closing (the amounts set forth in this clause (a), the “Specified Transaction Expenses”), (b) the employer portion of any employment or payroll Taxes related to the Closing Company RSU Consideration, whether or not such employment or payroll Taxes are due and payable at the time of payment of the underlying compensatory obligation, in the case of clause (b), other than amounts that have been paid prior to the Closing and (c) the Retained Severance Obligations and the Accrued Bonus Obligations; provided, however, that in no event shall Transaction Expenses include any amounts to the extent included (or required to be included) in Closing Indebtedness or in the Net Working Capital Adjustment Amount.

 

“Transaction Tax Deductions” means, without duplication and regardless of by whom paid, the aggregate amount of Tax deductions to the extent deductible by any member of the Company Group at a “more likely than not” (or higher) comfort level in a Pre-Closing Tax Period with respect to (i) any and all stay bonuses, sale bonuses, change in control payments, retention payments, severance payments, synthetic equity payments or similar payments made or to be made by the Company Group in connection with or resulting from the Closing (or included as a liability in Closing Net Working Capital or Closing Indebtedness), (ii) all fees, expenses and interest (including amounts treated as interest for U.S. federal income Tax purposes), original issue discount, accelerated, deferred or unamortized debt financing costs, breakage fees, tender premiums, consent fees, redemption, retirement or make whole payments, defeasance in excess of par or similar payments incurred in respect of the Indebtedness in connection with the Closing (or included as a liability in Closing Net Working Capital), (iii) all fees, costs and expenses incurred by the Company Group in connection with or incident to this Agreement and the transactions contemplated hereby (or included as a liability in Closing Net Working Capital or Closing Indebtedness), including any such legal, accounting and investment banking fees, costs and expenses, (iv) any employment Taxes with respect to the amounts set forth in the foregoing clause (i) and (v) any Transaction Expenses not otherwise included in the foregoing clauses (i) through (v). The Parties shall apply the safe harbor election set forth in Internal Revenue Service Revenue Procedure 2011-29 to determine the amount of any success-based fees for purposes of clause (iii) above.

“Willful Breach” means, with respect to any agreement or covenant, a material breach that is the consequence of an action or omission by the breaching party with actual knowledge that such action or omission is, or would reasonably be expected to be or result in, a breach of such agreement or covenant.

1.2          Terms Defined Elsewhere in This Agreement . For purposes of this Agreement, the following terms have meanings set forth in the sections indicated: