Dr. Reddy's Laboratories Limited (RDY) 20-F2021 FY Annual report (foreign)

Exhibit 4.2.1

CERTAIN IDENTIFIED INFORMATION MARKED WITH [***] HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS NOT MATERIAL AND IS OF THE TYPE THAT THE REGISTRANT TREATS AS PRIVATE AND CONFIDENTIAL.

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DATED FEBRUARY 12,2020

BUSINESS TRANSFER AGREEMENT

WOCKHARDT LIMITED
as the Seller

AND

DR. REDDY’S LABORATORIES LIMITED
as the Purchaser

 

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TABLE OF CONTENTS

 

(i) 

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(ii) 

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BUSINESS TRANSFER AGREEMENT

This BUSINESS TRANSFER AGREEMENT is made on this 12^th day of February, 2020 at Mumbai, India, by and between:

The Seller and the Purchaser are hereinafter referred to individually as a “Party” and collectively as the “Parties”.

WHEREAS:

DRL IRN: 100029724 

 

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NOW THEREFORE, IN CONSIDERATION OF THE MUTUAL COVENANTS AND PROMISES CONTAINED HEREIN, AND OTHER GOOD AND VALUABLE CONSIDERATION, THE RECEIPT AND ADEQUACY OF WHICH IS HEREBY ACKNOWLEDGED, THE PARTIES, WITH THE INTENT TO BE LEGALLY BOUND, HEREBY AGREE AS FOLLOWS:

The following words and expressions used in this Agreement shall, to the extent not inconsistent with the context thereof, have the following meanings respectively:

“Accounting Principles” shall mean the most recent edition of the Indian Accounting Standards or any other accounting standards prescribed under the Act.

“Accounts” shall mean the unaudited carved-out financial statements of the Business, comprising a statement of the Business Current Assets and the Business Current Liabilities as of the Accounts Date, together with any trial balance, schedules or documents included in or annexed to them, a copy of which has been attached hereto as Annexure 1 (Accounts).

“Accounts Date” shall mean December 31,2019.

“Actuary” shall mean an independent actuary, mutually agreed by the Parties.

“Act” shall mean the Companies Act, 2013, along with any amendments, modifications, etc., thereto and the rules, regulations and circulars issued thereunder.

“Affiliate” shall mean, in respect of any specified Person (other than a natural Person), any other Person that directly or indirectly, through one or more intermediate Persons, Controls, is Controlled by, or is under common Control with, such specified Person; and where the specified Person is a natural Person, any Relative of such specified Person or any Person (other than a natural Person) Controlled by or under common Control of such specified Person.

“Agreement” shall mean this business transfer agreement and includes the preamble, recitals, annexures and schedules attached to it, and any amendments made hereto and thereto in accordance with the provisions hereof.

“Ancillary Agreements” shall mean: (a) the agreements listed in Schedule B (List of Ancillary Agreements)’, and (b) any other agreement that is mutually designated by the Parties, in writing, to be an ancillary agreement for the purpose of this Agreement.

“API Supply Agreement” shall mean the agreement to be entered into between the Parties in the agreed form for the continued supply of the active pharmaceutical ingredients (API) currently supplied by the Seller from its in-house API manufacturing sites for the use of the Business Undertaking at the Baddi Facility for the manufacture of the Products.

 

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“Applicable Law” shall mean: (a) all applicable national, state, local or other law, statute, enactments, acts of legislature or parliament, rule of common law, ordinances, rules, bye-laws, regulations, circulars, notifications, press notes issued by the government, listing agreements, guidelines or policies issued by any Authority of any applicable country and/ or jurisdiction; and (b) writ, injunction, direction, directive, judgment, arbitral award, decree, order or governmental approval of, or agreement with, agreement by, ruling or decision of, any Authority, in each case having the force of law and applicable to the subject matter in question.

“Assigned Trade Marks and Patents” shall mean the Business Intellectual Property specified in Part A of Schedule F (Trade Marks and Patents) and assigned by the Seller to the Purchaser with effect from the Closing Date, by way of the Deed(s) of Trade Mark and Patent Assignment,

“Authority” shall mean any governmental, regulatory, statutory or administrative authority, agency, branch, department, commission or instrumentality (whether local, municipal, provincial, state, national or otherwise), domestic or foreign court, judicial body, stock exchange, board or tribunal or other law, rule or regulation making entity and shall include any non-governmental regulatory or administrative authority, body or other organization to the extent that the rules, regulations, standards, requirements, procedures or orders of such authority, body or other organization have the force of law.

“Authorization” shall mean any consent, registration, certificate, license, approval, permit, ratification or exemption from, by or with any Authority or Person or under Applicable Law, and includes al! corporate, creditors’ and shareholders’ approvals and consents.

“Baddi Facility” shall mean the manufacturing facility owned by the Seller and situated on the freehold land bearing Khewat/ Khatoni numbers [***]/ [***] comprised under Khasras number [***], kitats - 4 and Khewat/ Khatoni numbers [***]/ [***] comprised under Khasra numbers [***], kitat 9 at Village Kunjahal, Hadbast No. 216, Pargana Dharampur, Tehsil Nalagarh Baddi, District Solan, Himachal Pradesh and the buildings, plants and machinery which are embedded into the earth thereat or attached to whatever is so embedded.

“Big Five” shall mean KPMG, PricewaterhouseCoopers, Ernst & Young, Grant Thornton and Deloitte Touche Tohmatsu and their respective Affiliates in India.

“Break Fee” shall have the meaning ascribed to it in Clause 5.7.2.

“Business” shall mean the business of manufacture, import, storage, sale, marketing and distribution of the Products by or on behalf of Seller in the Territory

“Business Accounts Receivable” shall mean all amounts owing to the Seller by trade debtors, which relate exclusively to the Business, in respect of goods or services supplied by the Seller (whether or not due and payable at that time).

“Business Assets” shall mean the Business Movable Assets, the Business Immovable Assets and the Business Current Assets of the Seller.

 

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“Business Contracts” shall mean all purchase orders, manufacture and supply agreements, bids, tenders, in-licensing contracts, loan license contracts, logistics agreements, agreements with customers and distributors, purchasers and other agreements with the suppliers/ manufacturers of goods or service providers, and all rights, title, interests, claims and benefits thereunder in each case entered into by the Seller, each of which relates exclusively to the Business. The Business Contracts as of Execution Date are listed out in Schedule C (Business Contracts). The Business Contracts shall not include contracts with C&F agents.

“Business Current Assets” shall mean all Inventory, Business Accounts Receivables, the benefit of any deposits including earnest, suppliers and security deposits, of the Seller, each of which relates exclusively to the Business.

“Business Current Liabilities” shall mean all amounts owed by the Seller to the trade creditors relating exclusively to the Business, in respect of goods or services supplied to the Seller (whether or not due and payable at that time).

“Business Day” shall mean a day on which commercial banks are open for normal banking business in Mumbai and Hyderabad, India.

“Business Employees” shall mean all Persons set out in Schedule D (Business Employees) which schedule shall stand updated in accordance with Clause 6.5.1(h).

“Business Immovable Assets” shall mean the Baddi Facility. A list of all the Business Immovable Assets is set out in Schedule E (Business Immovable Assets).

“Business Intellectual Property” shall mean all rights, title and interest of the Seller whether owned or permitted to be used by or licensed to it, in, under or in respect of the following arising under Applicable Law, whether or not filed, perfected, registered or recorded:

 

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each of which relates exclusively to the Business. The list of all Trade Marks And Patents is set out in Schedule F (Trade Marks and Patents).

“Business Movable Assets” shall mean all movable assets, movable properties, facilities, accessories, utilities, services, all instruments, vehicles, spares, tools, vessels, stabilizers, furniture and fixtures, office equipment, communication facilities, communication devices and other tangible movable properties; each of which (i) relate exclusively to the Business and / or (ii) pertain to the Baddi Facility (except the Excluded Baddi Lines). A list of all the Business Movable Assets is set out in Schedule G (Business Movable Assets).

“Business Permits and Licenses” shall mean:

and which are required to operate the Business in the Territory as conducted by the Seller. A list of all the Business Permits and Licenses as of Execution Date is set out in Schedule H (Business Permits and Licenses) hereto.

“Business Records” shall mean the original of all records (including records of Transferring Employees), written or electronic information, files, papers, manuals, data, catalogues, quotations, sales and advertising materials, promotional literature, list of doctors (and only to the extent that such list relates to the Business), distributors, stockists, institutions (if any), agents and suppliers, customer pricing information, Business Contracts, Business Permits and Licenses, Authorizations, Dossier including but not limited to the DMF, vouchers, registers, ledgers, documents, and customer and supplier correspondence, all records and documents related to product development, Technology Transfer Document, validations (process, method, cleaning) equipment /utility/facility qualifications, entire GMP/manufacturing/quality data, formulae, designs, specifications, drawings, data manuals, instructions, forecasts, sales and market share statistics and also records maintained under record keeping or reporting requirements of any Authority or in relation to the Authorizations and Business Permits and Licenses and other books and records for the preceeding 3 (three) financial years and which are reasonably necessary to conduct the Business in the Territory, as conducted by the Seller as on or immediately preceding the Closing Date, in any media or format that is available with the Seller, including but not limited to machine readable or electronic media/ format.

 

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For the avoidance of doubt and subject to Clause 14, it is clarified that in relation to (a) common ledgers, registers, databases, books or other documents which also relate to any part of the other businesses of the Seller, or to any product other than the Products or to any Excluded Asset or in relation to any Excluded Liability; (b) records of the Seller pertaining to the accounting, tax or regulatory affairs of the Business Undertaking which are required to be kept only in the control of the Seller pursuant to the provisions of any Applicable Law, “Business Records” shall only include certified extracts and/or read-only copies (as may be practicable) of such documents; and the Purchaser may retain copies of such Business Records, subject to the confidentiality provisions specified in Clause 14.1.

“Business Undertaking” shall mean all the businesses, undertakings, activities, operations and properties primarily and substantially forming part of the Business, as a going concern along with related goodwill, as set out below:

“Claim Notice” shall have the meaning ascribed to it in Paragraph 5.1 of Schedule Q (Limitations on Liability).

“Closing” shall mean the completion of the sale and purchase of the Business Undertaking in accordance with Clause 7.

“Closing Date” shall have the meaning ascribed to it in Clause 7.1.

 

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“Closing Date Employee Dues” shall have the meaning ascribed to it in Clause 3.6.1,

“Closing Date Net Working Capital” shall have the meaning ascribed to it in Clause 3.5.1.

“Closing Date Payment” shall have the meaning ascribed to it in Clause 3.1(a).

“Conditions Precedent” shall mean the Seller Conditions Precedent, the Purchaser Conditions Precedent and the Joint Conditions Precedent, collectively.

“Confidential Information” shall have the meaning ascribed to it in Clause 14.1.1.

“Consideration” shall have the meaning ascribed to it in Clause 3.

“Control” shall have the meaning ascribed to it in Regulation 2(e) of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 and the words “Controlling” or “Controlled by” shall be construed accordingly.

“Data Room” shall mean the electronic data room hosted by EthosData, comprising the documents and other information relating to the Business made available by the Seller from 2000 Hours 1ST on October 01, 2019 until 0000 Hours 1ST on January 31, 2020, and any additional documents uploaded in folders 1.32 (Balance Documents), 1.34 (Relevant back-up documents against Disclosure Letter), 1.35 (Information requested on January 31, 2020), 1.36 (Information requested on February 03, 2020), 1.37 (CP documents uploaded on February 05, 2020) and 1.38 (DL documents uploaded on February 05, 2020) of the Data Room between 0000 Hours on January 31, 2020 and 2359 Hours on February 10, 2020, pursuant to specific requests from the Purchaser.

“Deed of Conveyance” shall mean the deed of conveyance for the sale and transfer of the Business Immovable Assets from the Seller to the Purchaser with effect from the Closing Date, in agreed form.

“Deed(s) of Novation/ Assignment” shall mean the deeds of novation/ assignment to be executed between the Seller and the Purchaser, and also by the relevant counterparty to a Material Business Contract, which shall be substantially similar to the form set out in Schedule I (Deed of Novation/ Assignment), for the novation or assignment, as applicable, of such Material Business Contracts, on the Closing Date.

“Deed(s) of Trade Mark and Patent Assignment” shall mean the intellectual property assignment deed to be executed on the Closing Date between the Seller and the Purchaser, for the assignment of the Business Intellectual Property specified in Part A of Schedule F (Trade Marks and Patents), which shall be in agreed form.

“Disclosed Materials” shall mean information Fairly Disclosed in, collectively:

 

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provided that the disclosure therein (in each of (a) and (b) above) shall be reasonably apparent therefrom.

“Disclosing Party” shall have the meaning ascribed to it in Clause 14.1.3(a).

“Disclosure Letter” shall mean the letter from the Seller to the Purchaser, containing a description of the matters disclosed against the Seller Warranties:

“Dispute” shall have the meaning ascribed to it in Clause 13.2.1.

“Dossier” means in relation to the Product, such package of technical or clinical information in relation to that Product (including any and all information, processes, techniques, data and intellectual property rights) which allows for compilation into the relevant country format according to the regulatory requirements necessary to obtain and maintain marketing authorizations for the relevant Product in any country in the Territory and includes information about the chemistry, formulation, manufacture, toxicology, pharmacology, pharmacokinetics related to a drug, analytical methods, stability and pharmaceutical data concerning the Product, bioequivalence data, the administrative, safety, efficacy, quality, non-clinical and clinical data for the Product as it may change from time to time and all regulatory filings and supporting documents created, submitted to an Authority and all data contained therein, including, without limitation, any investigator’s brochures, study protocols, DMF (drug master file), correspondence to and from an Authority, registrations and licences, regulatory drug lists, advertising and promotion documents shared with Authorities, adverse event files, complaint files, clinical studies and pre-clinical studies to the extent related to the Product and manufacturing records.

“DMF” means that part of the Dossier comprising the drug master file filed with the applicable regulatory Authority in the Territory relating to a Product.

“Encumbrance” shall mean any (a) security interest, claim, mortgage, pledge, charge, hypothecation, lien, lease, assignment, deposit by way of security, beneficial ownership (including usufruct and similar entitlements), or any other interest held by a third Person or any of the foregoing having a similar economic effect recognised under Applicable Law; (b) encumbrance of any kind securing, or conferring any priority of payment in respect of, any obligation of any Person, (c) any interest, option, right of first offer, refusal or transfer restriction in favour of any Person, or any other preferential arrangement having a similar effect, of any kind or nature, whether arising by agreement or by Applicable Law; (d) any adverse claim as to title, possession or use; or (e) an agreement to create any of the foregoing over or in respect of the relevant asset or right, and the term “Encumbered” shall be construed accordingly.

 

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“Escrow Account” shall mean a cash escrow account maintained with the Escrow Agent, in terms of the Escrow Agreement, in which the Escrow Amount shall be deposited by the Purchaser on the Closing Date.

“Escrow Amount” shall have the meaning ascribed to it in Clause 3.1(b).

“Escrow Agent” shall mean a bank in India, as specified by the Seller.

“Escrow Agreement” shall mean the agreement to be entered into between the Seller, the Purchaser and the Escrow Agent, in agreed form.

“Estimated Employee Dues” shall have the meaning ascribed to it in Clause 3.4.1(b).

“Estimated Net Working Capital” shall have the meaning ascribed to it in Clause 3.4.1(a).

“Excluded Assets” shall mean all assets (whether owned, used or held for use) and rights relating to the business of the Seller and/or its Affiliates and related goodwill other than the Business Undertaking, including:

 

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“Excluded Baddi Lines” shall mean (i) the capsule lines and the laser line machines as specified in Schedule S (Excluded Baddi Lines) installed at the Baddi Facility; and (ii) all inventories at the Baddi Facility including all semi-finished and finished products, drugs, injectables, nutraceuticals, work in process, raw materials, components, samples, packaging materials and all other materials and supplies, in each case, to be used for any of the Seller’s businesses other than the Business.

“Excluded Liabilities” shall mean any liability of the Seller, other than the Business Current Liabilities, and shall include without limitation, the following:

 

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“Execution Date” shall mean the date of execution of this Agreement.

“Existing Stock” shall have the meaning ascribed to it in Clause 8.2.2.

“Fairly Disclosed” shall mean fairly and specifically disclosed in the Disclosed Materials and by reference to a particular Seller Warranty. For the avoidance of doubt, any information contained in the Disclosure Letter is to be treated as being disclosed in respect of the Seller Warranty against which it is referenced.

“Group” means in relation to a company (wherever incorporated), that company, any company of which it is a subsidiary from time to time (its holding company) and any other subsidiaries from time to time of that company or its holding company.

“Independent Auditor” shall mean one of the Big Five appointed by the Purchaser, not being the statutory auditor of the Purchaser or the Seller at the time of such appointment.

“Independent Auditor’s Report” shall have the meaning ascribed to it in Clause 3.5.2.

“Initial Actuarial Assessment” shall have the meaning ascribed to it in Clause 3.4.1(b).

“Inventory” shall mean all inventories including all semi-finished and finished Products, drugs, injectables, nutraceuticals, work in process, raw materials, components, samples, packaging materials and all other materials and supplies to be used in the production of the finished Products, each of which relates exclusively to the Business, wherever located within the Territory or in transit, including at the manufacturing facilities, warehouses, customs depots.

“Inventory Criteria” shall mean the Inventory whose remaining shelf life as on the Closing Date, shall in the case of finished goods, be not less than [***] and in respect of all other components of Inventory, be not less than [***].

“IT Act” shall mean the (Indian) Income Tax Act, 1961 and any modifications or amendments made thereto.

“Joint Conditions Precedent” shall have the meaning ascribed to it in Clause 5.1.

“Key Employees” shall mean such of the Business Employees specified in Part A of Schedule D (Business Employees).

“Knowledge of the Seller” shall mean the actual knowledge of the following persons and shall include such knowledge that a person occupying such roles shall while holding such office, be reasonably expected to have or could have with reasonable enquiry, had, towards the discharge of his/her work responsibilities:

 

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“Liability” shall mean any obligation or liability whether known or unknown, whether asserted or unasserted, whether absolute or contingent, whether accrued or unaccrued, whether liquidated or unliquidated, and whether due or to become due, and whether as principal or surety, including any undertaking for the payment or repayment of money (whether in respect of interest, principal or otherwise) of monies borrowed or raised; any acceptance credit, bill discounting, note to purchase, factoring or documentary credit; any financing lease, bond, bank guarantees, letter of credit or other instrument issued in connection with the performance of any contract.

“License Period” shall have the meaning ascribed to it in Clause 8.2.2.

“Long Stop Date” shall have the meaning ascribed to it in Clause 5.3.

“Loss” shall mean any and all direct and/ or actual losses, damages, costs and expenses (including reasonable legal fees) on an after tax basis.

“Material Adverse Effect” means any fact, event, circumstance or condition or series of facts, circumstances or conditions occurring after the Execution Date but before the Closing Date, that:

 

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and in each case, which is not remedied by the Long Stop Date.

Provided, however, that notwithstanding the foregoing, any event, fact, effect, change or occurrence resulting from any of the following shall not be construed, either alone or in combination, to constitute a Material Adverse Effect, or be taken into account in determining whether there has been a Material Adverse Effect:

 

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“Master Batch Record” shall mean the document, as may be amended from time to time, specifying: (a) specifications of the active pharmaceutical ingredient (API) used in the Products, (b) the procedures for testing and releasing the APIs, (iii) the excipients, and such other detail as recorded in the said document.

“Material Business Contracts” shall mean the Business Contracts identified as material Business Contracts in Part A of Schedule C (Business Contracts).

“Master Formula Record” shall mean a document or set of documents specifying the starting materials with their quantities and the packaging materials, together with a description of the procedures and precautions required to produce a specified quantity of a finished product as well as the processing instructions, including the in-process controls, list of specified equipments and their capacities, list of packing material with quantities, packing process, storage conditions, special instructions and atmospheric conditions in any stage of the manufacturing process along with process time and yield.

“Material Shared Contracts” shall mean the Shared Contracts identified as material Shared Contracts in Part A of Schedule J (Shared Contracts).

“Negative CEL Adjustment Amounts” shall have the meaning ascribed to it in Clause 3.6.2(b).

“Negative CWC Adjustment Amounts” shall have the meaning ascribed to it in Clause 3.5.3(b).

“Net Working Capital” shall mean the working capital of the Business and the Parties agree that in relation to Net Working Capital, and Inventory for the purposes of this definition shall only mean and refer to the Inventory that meets the Inventory Criteria.

“Ordinary Course” shall mean any action taken by or on behalf of the Seller that is taken in the ordinary course of the Seller’s normal day-to-day operations in relation to the Business and is substantially consistent with past practice and in either case, on an arm’s length basis or on terms not prejudicial to the Business.

“Permitted Encumbrances” shall mean; (a) Encumbrances arising under contracts which pertain to the Business, entered into in the Ordinary Course as Fairly Disclosed in the Disclosed Materials; (b) Encumbrances for Taxes and other governmental charges arising in the Ordinary Course that may thereafter be paid without penalty.

“Person” shall mean any individual, partnership, corporation, company, unincorporated organization, association, joint venture, trust, society or other entity (whether or not having a separate legal personality) and includes an Authority.

“Positive CEL Adjustment Amounts” shall have the meaning ascribed to it in Clause 3.6.2(a).

 

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“Positive CWC Adjustment Amounts” shall have the meaning ascribed to it in Clause 3.5.3(a).

“Product Registrations” shall mean all Authorizations and comparable regulatory filings granted to a Seller by or applications therefor in the name of the Seller that are pending with, any governmental Authority (including applications that are in the process of being prepared by the Seller) required to manufacture, commercialize, develop, package, label, store, use, market, import, export, distribute and/or sell any of the Products.

“Products” shall mean the pharmaceutical products set out in Schedule A (Products).

“Purchaser Conditions Precedent” shall have the meaning ascribed to it in Clause 5.2.

“Purchaser CP Certificate” shall have the meaning ascribed to it in Clause 5.5.2.

“Purchaser Trade Mark and Patent License Agreement(s)” shall mean the license agreement to be executed on the Closing Date between the Seller and the Purchaser, for the perpetual, sub-licensable, irrevocable, royalty-free license of the Assigned Trade Marks and Patents, by the Purchaser to the Seller, for use in relation to the other businesses of the Seller (including manufacturing or labelling any of the Products within the Territory for sale and distribution outside the Territory), in agreed form.

“Purchaser Warranties” shall have the meaning ascribed to it in Clause 9.2.1.

“Qualifying Loss” shall have the meaning ascribed to it in Paragraph 2.1(a) of Schedule Q (Limitations on Liability).

“Receiving Party” shall mean the Party receiving any Confidential Information from the Disclosing Party.

“Related Party” shall have the meaning ascribed to such term under the Act or under the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015;

“Relative” shall have the meaning ascribed to it in Section 2(77) of the Act;

“Representatives” shall have the meaning ascribed to it in Clause 14.1.3(b).

“Restricted Molecule(s)” shall mean each of the molecule (or combination thereof) set out in Part A and Part B of Schedule U (List of Restricted Molecule(s) and Restricted Periods)..

“Restricted Period” shall mean the period specified in Part A and Part B of Schedule U (List of Restricted Molecule(s) and Restricted Periods) against each of the Restricted Molecule(s), in each case commencing from the Closing Date.

“Resultant Amount” shall have the meaning ascribed to it in Clause 3.7.1(a).

 

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“Seller Bank Account” shall mean bank account of the Seller at [***].

“Seller Business Warranties” shall have the meaning ascribed to it in Clause 9.1.2,

“Seller Conditions Precedent” shall have the meaning ascribed to it in Clause 5.1.

“Seller CP Certificate” shall have the meaning ascribed to it in Clause 5.5.1.

“Seller Fundamental Warranties” shall have the meaning ascribed to it in Clause 9.1.1.

“Seller Trade Mark License Agreement(s)” shall mean the license agreement to be executed on the Closing Date between the Seller and the Purchaser, for the perpetual, sub-licensable, irrevocable, royalty-free license of the Business Intellectual Property specified in Part B of Schedule F (Trade Marks and Patents'), by the Seller to the Purchaser, in agreed form.

“Seller Representatives” shall have the meaning ascribed to it in Clause 6.5.4(b).

“Seller Warranties” shall mean collectively, the Seller Fundamental Warranties and the Seller Business Warranties.

“Shared Contracts” shall mean all purchase orders, manufacture and supply agreements, bids, tenders, lease agreements, leave and license agreements, logistics and warehousing agreements, agreements with customers, purchasers and other agreements with the suppliers/ manufacturers of goods or service providers, and all rights, title, interests, claims and benefits thereunder in each case entered into by the Seller, which relates both to:

A list of all the Shared Contracts is set out in Schedule J (Shared Contracts). The Business Contracts shall not include contracts with C&F agents.

“Specific Indemnity Events” shall have the meaning ascribed to it in Schedule R (Specific Indemnity Events);

“Target Net Working Capital” shall mean [***].

“Tax” shall mean all forms of present and future taxation (including but not limited to direct and indirect taxes such as income-tax, documentary stamps, goods and services tax or other similar taxes), deductions, withholdings, duties, cess, surcharge, imposts, levies, fees, charges, social security contributions and rates imposed, levied, collected, withheld or assessed by any Taxing Authority or other taxing authority in the Territory, in relation to the Business Undertaking and any interest, additional taxation penalty, surcharge or fine in connection therewith and “Taxes” shall be construed accordingly.

 

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“Taxing Authority” shall mean any Authority or other authority competent to impose Tax, including the assessing officer appointed under the provisions of the IT Act and the assessing officer under the provisions of Applicable Law pertaining to indirect Taxes.

“Technology Transfer” shall mean the transfer by the Seller to the satisfaction of the Purchaser, of any technology for the commercial manufacture of the Products, its documentation and all analysis methods, processes and manufacturing formula, methods, trade-secrets, know-how and processes which are useful or necessary for the manufacture of the Products by the Purchaser at its/designated site on or after the Closing Date and so as to not cause any disruption in the Business on account of the transfer of the Business Undertaking between the Parties.

“Technology Transfer Document” shall mean, in each case relating to Technology Transfer, the methods, standard operating procedures, guidelines, checklists, protocols, manuals, drawings, flow-charts, specifications and other written/documentary record of the step-by-step and detailed description of the manufacturing process of or in relation to each of the Products and includes without limitation, data on analytical method for the active pharmaceutical ingredients inclusive of critical tests like assay, related substances and residual solvents, in- process analytical methods, finished product analytical methods including critical tests like assay, dissolution, related substances and dissolution profile and Master Formula Record and process instructions, Master Batch Records, validation protocol, batch packaging records and specifications for APIs, excipients, in- process and finished products. It is clarified that Technology Transfer Document shall also include training material and supporting literature (if any) for provision of necessary training to the people involved in the process of manufacture.

“Territory” shall mean all or any of the territories of India, Nepal, Bhutan, Sri Lanka and Maldives.

“Threshold Loss” shall have the meaning ascribed to it in Paragraph 2.1(b) of Schedule Q (Limitations on Liability).

“Transaction Costs” shall mean the aggregate of all the costs and expenses incurred, paid or payable, for or in connection with the Transaction Documents and the transfer of the Business Undertaking to the Purchaser.

“Transaction Documents” shall mean this Agreement and the Ancillary Agreements.

“Transfer Letter” shall have the meaning ascribed to it in Clause 6.5.1(b).

“Transferring Employees” shall have the meaning ascribed to it in Clause 6.5.1 (e).

 

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“Transitional Manufacturing Agreement” shall mean the agreement to be executed between the Seller and the Purchaser, in relation to the manufacture by the Purchaser of certain product(s) for the Seller at the Baddi Facility, in agreed form.

“Transitional Services Agreement” shall mean the transitional services agreement to be executed between the Seller and the Purchaser, for provision by the Seller of certain services to the Purchaser in connection with the Business for the Transition Term, in agreed form.

“Transition Period Assets” shall have the meaning ascribed to it in Clause 6.5.5(a).

“Transition Term” shall mean a period of [***] from the Closing Date, or as otherwise mutually agreed to in writing between the Parties in respect of specified services under the Transitional Services Agreement.

“Unregistered Copyrights” means those copyrights that are not the subject of a pending application for registration with, or that are not registered with any copyright office.

“Unregistered Trademarks” shall mean those trademarks that are not the subject of a pending application for registration, or that are not registered, with any trademark or intellectual property office.

“Wockhardt Names and Marks” shall have the meaning ascribed to it in Clause 8.2.1.

 

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received by it or which may become due to it whether prior to or following the Closing Date. The Seller shall not be entitled to any dues arising or pertaining to the period on or after the Closing Date.

In the event that the Purchaser receives after the Closing Date, any sums that the Seller is entitled to retain under this Clause 2.3, it shall promptly refund the same to the Seller in accordance with the provisions of Clause 8.4.3.

 

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shall be apportioned on a time basis, so that such part of the relevant charges attributable to the period ending on the Closing Date shall be borne by the Seller and such part of the relevant charges attributable to the period commencing on the Closing Date shall be borne by the Purchaser. All rents, licence fees, royalties and other periodical receipts of the Business shall be apportioned between the Seller and the Purchaser on a like basis.

 

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The Parties agree and acknowledge that the transaction contemplated in this Agreement is a purchase and sale of the Business Undertaking free and clear of any Encumbrances (other than under sub-clause (b) of the definition of Permitted Encumbrance) as a going concern on a slump sale basis, and the Consideration is a lump sum consideration in lieu thereof, and no specific part of the Consideration is (nor can it be) allocated to any specific asset or right of the Seller comprised in the Business Undertaking. Determination of the value of any Business Asset or Business Current Liabilities for the purpose of payment of stamp duty, registration fees or other similar taxes or fees, shall not be regarded as assignment of values to any Business Asset or Business Current Liabilities.

 

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The foregoing mechanism and the manner of instructions to the Escrow Agent to give effect to the agreed principles as set out above shall be elaborated in the Escrow Agreement.

On the Execution Date:

The obligation of the Purchaser to purchase the Business Undertaking from the Seller on the Closing Date in accordance with the terms of this Agreement is subject to the fulfillment of the conditions listed in Part C of Schedule L (Joint Conditions Precedent) (“Joint Conditions Precedent”) by the Parties and the following conditions (“Seller Conditions Precedent”) by the Seller, any one or more of which may be waived in writing by the Purchaser (in whole or in part), conditionally or unconditionally, at its sole discretion but subject to Applicable Law:

 

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Provided that only events or circumstances approved by the Purchaser in accordance with Clause 6 shall constitute a disclosure against a Seller Fundamental Warranties; and

The obligation of the Seller to sell the Business Undertaking to the Purchaser on the Closing Date is subject to the fulfillment of the Joint Conditions Precedent by the Parties and the following conditions (“Purchaser Conditions Precedent”) by the Purchaser, any one or more of which may be waived in writing by the Seller (in whole or in part), conditionally or unconditionally, at its sole discretion but subject to Applicable Law:

Each of the Parties undertake to use best efforts to ensure satisfaction of the Conditions Precedent applicable to them, as soon as practicable, and in any event not later than 3 (three) months from the Execution Date, or such extended date as may be mutually agreed to by the Parties in writing (“Long Stop Date”).

Each Party shall provide all reasonable information and co-operation required by the other Party for the consummation of the transactions contemplated by this Agreement, including for the purposes of preparing and filing of any applications or intimations to any Authority or for preparing responses to any queries raised by such Authorities. If any Party becomes aware of anything which could, will or may prevent any of the Conditions Precedent from being satisfied, before the Long Stop Date, the relevant Party shall notify the other in writing as soon as practicable.

 

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Without prejudice to the generality of Clause 6,1, during the period between the Execution Date and the Closing Date, the Seller shall not do or agree to do, any of the following in relation to the Business Undertaking (other than those actions specifically set out in Clause 6.1 and 6.3 above), without the prior written consent of the Purchaser which consent shall not be unreasonably withheld and shall be provided within 5 (five) Business Days from the date of the request by the Seller:

 

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[***]

 

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On or prior to the Closing Date, the Purchaser shall, with effect from the Closing Date, have procured or furnished guarantees in substitution of any guarantees, letters of comfort, indemnities or similar arrangements entered into by the Seller to the extent the same relates exclusively to the Business, a list of which shall be provided to the Purchaser at least 5 (five) Business Days prior to Closing Date.

and the Seller shall offer and provide all reasonable support and assistance, to the Purchaser for the foregoing and shall, if required under Applicable Law, also cause to be submitted to the Authorities, an intimation in writing of the transfer of the Business Undertaking from it to the Purchaser, such intimation to be in agreed form.

 

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At the Seller’s request, the Purchaser may elect to:

 

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The Closing shall take place on the 5^th (fifth) day (or such extended date as the Parties may mutually agree in writing) from the date of delivery of the Seller CP Certificate to the Purchaser or the Purchaser CP Certificate to the Seller in accordance with the terms of this Agreement, whichever is later and in any event prior to the Long Stop Date (“Closing Date”), at Mumbai or at a place mutually agreed to in writing between the Parties.

On the Closing Date, the following actions shall take place simultaneously:

The Purchaser shall remit through wire transfer the Closing Date Payment (after making the adjustments specified in Clause 3.4) to the Seller Bank Account and the Escrow Amount to the Escrow Account.

The Seller shall transfer the Business Undertaking to the Purchaser in the following manner and perform the following actions:

 

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shall be to the account of and the sole responsibility of the Purchaser.

The provident fond balance of the Transferring Employees with the Seller shall be transferred to the Purchaser in a manner mutually agreed between the Parties and subject to Applicable Law.

 

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Notwithstanding anything in this Agreement to the contrary, the Purchaser hereby acknowledges and agrees that in the event of any breach or threatened breach of this Clause 8.2, the Seller shall suffer irreparable harm, and the Seller in addition to any other remedies available to it (including a claim for damages) shall be entitled to a preliminary injunction, temporary restraining order or other equivalent relief restraining the Purchaser from committing any such breach or threatened breach.

is retained or not transferred to the Purchaser by the Seller on Closing, the Seller shall, as soon as it becomes aware of the same or promptly at the Purchaser’s request, cause the transfer of such Business Asset, Business Current Liabilities or interest to the Purchaser at the Seller’s sole cost and without any additional consideration for the same.

 

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Without prejudice to Clause 6.5.4 above, where the Business Permits and Licenses (which are capable of being transferred under Applicable Law) could not be transferred on or prior to the Closing Date, the Parties shall complete all necessary actions to achieve the foregoing as soon as possible following the Closing Date.

 

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in each case in relation to the Business and the Business Undertaking prior to the Closing Date.

The Seller shall cooperate, and shall cause its officers, employees, agents, auditors and representatives to co-operate with the Purchaser, and the Purchaser shall cooperate and shall cause its officers, employees, agents, auditors and representatives to co-operate with the Seller, after the Closing, for the Transition Term to ensure the orderly transition of the Business to the Purchaser (including registration of the Deed of Conveyance), and to minimize any disruption to the Business that might result from the transactions contemplated under this Agreement and the Ancillary Agreements.

The Seller shall procure that the Material Business Contracts and the Material Shared Contracts, in respect of which the Deed(s) of Novation/ Assignment and/ or amendment and restatement agreements, have not been executed in terms of Paragraph 4 of Part A of Schedule L (Seller Conditions Precedent), then such Deed(s) of Novation/ Assignment and/ or amendment and restatement agreements shall be executed within a period of 60 Business Days from the Closing Date.

For a period of 12 (twelve) months after the Closing Date, the Seller shall take al! commercially reasonable efforts to refer to the Purchaser any inquiry that the Seller receives relating to the Business, so that the same shall be addressed by the Purchaser and towards this, the Seller shall support and co-operate with the Purchaser as reasonably requested for.

 

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Execution Version

Except as qualified by the Disclosed Materials, the Seller hereby represents and warrants to the Purchaser that each of the following statements in relation to the Seller (“Seller Fundamental Warranties”) is and shall be true and correct as on the Execution Date and as on the Closing Date:

 

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Except as qualified by the Disclosed Materials, the Seller hereby represents and warrants to the Purchaser that each of the statements set out in Schedule P (Seller Business Warranties) (“Seller Business Warranties”) is and shall be true, complete, accurate and correct and not misleading as on the Execution Date and as on the Closing Date. The Seller Warranties are deemed to be repeated on the Execution Date and the Closing Date, by reference to the facts then existing. Any reference made to the date of this Agreement (whether express or implied) in relation to any Seller Warranty shall be construed, in connection with the repetition of the Seller Warranties under this Clause 9.1.2, as a reference to the date of such repetition.

 

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The Purchaser, hereby represents and warrants to the Seller as follows (“Purchaser Warranties”) as on the Execution Date and as on the Closing Date:

 

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Subject to the Closing having occurred in accordance with the terms of this Agreement, the Seller hereby agrees to indemnify and keep indemnified, save, defend and hold harmless, the Purchaser, its officers and directors (collectively, the “Purchaser Indemnified Persons”) from and against any and all Losses suffered or incurred or as may be suffered or incurred by any Purchaser Indemnified Person which arises out of or results from or in connection with:

Subject to the Closing having occurred in accordance with the terms of this Agreement and subject to the limitations set out in Schedule Q (Limitations on Liability), the Purchaser hereby agrees to indemnify and keep indemnified, save, defend and hold harmless, the Seller, its officers and directors (collectively, the “Seller Indemnified Persons”) from and against any and all Losses suffered or incurred or as may be suffered or incurred by any Seller Indemnified Person which arises out of or results from or in connection with:

 

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Provided that in such a case, the Indemnified Person shall keep the Indemnifying Person informed of the said defence proceedings undertaken and conducted by the Indemnified Person.

 

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Notwithstanding the aforesaid, the Parties agree that nothing in this Agreement shall ill prevent the Seller from:

 

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This Agreement shall come into effect on and from the Execution Date and shall remain in force until terminated in accordance with Clause 12.2.

 

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This Agreement will be governed by and construed in accordance with the laws of India and subject to Clause 13.2 below, the courts in Mumbai, India shall have exclusive jurisdiction.

 

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The Purchaser acknowledges that any and all other information provided to it by the Seller or its Representatives shall continue to remain subject to the confidentiality obligations set out in this Agreement after the Closing Date.

 

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Except as may be agreed in this Agreement or the Ancillary Agreements or otherwise in writing between the Parties:

 

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This Agreement may be executed simultaneously in any number of counterparts, each of which when executed and delivered shall be deemed an original, but all of which will constitute one and the same instrument.

If any provision of this Agreement, not being of a fundamental nature to the Parties, is invalid or unenforceable or prohibited by Applicable Law, it shall be treated for all purposes as severed from this Agreement and ineffective to the extent of such invalidity or unenforceability, without affecting in any way the remaining provisions hereof, which shall continue to be valid and binding. In the event any Authority determines that any provisions of this Agreement are not enforceable as written, the Parties agree that they shall co-operate in good faith to amend such provisions so that they are fully enforceable to the fullest extent permissible under the Applicable Law, and affords the Parties to the extent possible, the same basic rights and obligations and the same economic effect as prior to amendment.

This Agreement, together with the Transaction Documents, constitutes and contains the entire agreement and understanding between the Parties with respect to the subject matter hereof and supersedes all prior communications, negotiations, commitments, agreements and undertakings, whether written and oral, between the Parties with respect to the subject matter hereof.

This Agreement may be modified, amended or supplemented only by the mutual written agreement of the Parties.

No rights, liabilities or obligations under this Agreement may be assigned (whether absolutely or by way of security) by any Party, and no Party shall declare any trust over any of its rights under this Agreement without the prior written consent of the other Party.

 

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Each Party acknowledges that the breach of this Agreement would cause irreparable damage to the other Parties and that the other Parties shall not have an adequate remedy at law by way of damages. Therefore, the obligations of each Party under this Agreement, shall be enforceable by a decree of specific performance issued by any court of competent jurisdiction, and appropriate injunctive relief may be applied for and granted in connection therewith. Such remedies shall, however, be cumulative and not exclusive and shall be in addition to any other remedies which any Party may have under this Agreement or otherwise in Applicable Law.

Except as expressly provided in this Agreement, a waiver or any failure or delay by any Party to require the enforcement of the obligations, agreements, undertakings or covenants in this Agreement shall not be construed as a waiver by such Party of any of its rights, unless made in writing referring specifically to the relevant provisions of this Agreement and signed by a duly authorized representative of such Party. Any such waiver shall not affect in any way the validity of this Agreement or the right to enforce such obligation, agreement, undertaking or covenant at any other time as may be specified therein. No single or partial exercise of any right, power or remedy under this Agreement by any Party shall preclude any further exercise thereof or the exercise of any other right, power or remedy by that Party. Without limiting the foregoing, no waiver by any Party to this Agreement of any breach by any other Party of any provision hereof shall be deemed to be a waiver of any subsequent breach of that or any other provision hereof.

No public release or announcement concerning the transactions contemplated hereby shall be issued by any Party without the prior written consent of the other Parties (which consent shall not be unreasonably withheld, delayed or conditioned), except as such release or announcement may be required by Applicable Law applicable to such Party or its Affiliate or the rules or regulations of any applicable securities exchange or listing authority, in which case the Party required to make such release or announcement shall allow the other parties reasonable time to comment on such release or announcement in advance of such issuance.

In the case of notices to the Purchaser:

 

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In the case of notices to the Seller:

Each of the Parties hereto shall, co-operate with the other Party and execute and deliver to the other Party, such instruments and documents and take such other actions as may be reasonably requested by the other Party, and shall use commercially reasonable efforts in order to carry out and give effect to this Agreement provided that no such document or agreement shall be inconsistent with the spirit and intent of this Agreement.

Any date or period as set out in any Clause of this Agreement may be extended with the prior written consent of the Parties failing which time shall be of the essence.

Subject to the terms and conditions hereof, this Agreement is binding upon and will inure to the benefit of the Parties and their respective successors

[SIGNATURE PAGE FOLLOWS]

 

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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed by their respective duly authorized officers as of the date first above written.

For and on behalf of Wockhardt Limited

DRL IRN: 100029724

 

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For and on behalf of Dr. Reddy’s Laboratories Limited

DRL IRN: 100029724

 

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SCHEDULE A TO SCHEDULE S [***]

SCHEDULE U [***]

ANNEXURE-A [***]

ANNEXURE-I [***] 

 

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SCHEDULE T

BUSINESS LOCATIONS

Set out below are details of the locations (except distribution hubs, depots and loan licensed facilities) from which the Seller, by itself, does not carry on any part of the Business at any other location, either in or outside India:

 

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