8-K

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

September 24, 2018
Date of Report
(Date of earliest event reported)

ELANCO ANIMAL HEALTH INCORPORATED
(Exact name of registrant as specified in its charter)

Indiana (State or other jurisdiction of incorporation)	001-38661 (Commission File Number)	82-5497352 (I.R.S. Employer Identification No.)
2500 Innovation Way, Greenfield, Indiana (Address of principal executive offices)		46140 (Zip Code)

(877) 352-6261
(Registrant's telephone number, including area code)

N/A
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

o    Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    o

Item 1.01    Entry into a Material Definitive Agreement.

        On September 24, 2018, Elanco Animal Health Incorporated (the "Company"), closed the initial public offering (the "IPO") of 72,335,000 shares of its common stock at a price to the public of $24.00 per share, which number of shares included the underwriters' exercise in full of their option to purchase up to an additional 9,435,000 shares of common stock at the initial public offering price, less underwriting discounts. The Company received net proceeds from the IPO of approximately $1.7 billion. Eli Lilly and Company ("Lilly") currently owns approximately 80.2% of the Company's common stock.

        In connection with the IPO and as previously contemplated by, and described, in the Company's IPO Registration Statement on Form S-1 (No. 333-226536) filed with the SEC and declared effective on September 19, 2018 (the "Registration Statement"), the Company entered into various agreements with Lilly and its affiliates. These agreements were entered into on September 24, 2018 and consist of the following:

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Master Separation Agreement, by and between Lilly and the Company, which governs certain pre-IPO transactions, as well as the relationship between Lilly and the Company following the IPO and the separation of the Company from Lilly.

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Transitional Services Agreement, by and between Lilly and the Company, pursuant to which, among other things, Lilly provides to the Company, on a transitional basis, services and resources related to corporate functions such as executive oversight, treasury, legal, finance, human resources, tax, internal audit, financial reporting, information technology and investor relations consistent with the services Lilly provided to the Company before the IPO.

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Tax Matters Agreement, by and between Lilly and the Company, which governs Lilly's and the Company's respective rights, responsibilities and obligations with respect to tax liabilities and benefits, tax attributes, the preparation and filing of tax returns, the control of audits and other tax proceedings and other matters regarding taxes.

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Employee Matters Agreement, between Lilly and the Company, which governs Lilly's, the Company's and the parties' respective subsidiaries' and affiliates' rights, responsibilities and obligations after the IPO with respect to employees, compensation, employment, employee benefit plans and related matters.

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Toll Manufacturing and Supply Agreement, by and between Lilly and the Company, pursuant to which, the Company agrees to continue manufacturing Humatrope drug substance for use in the human health field at the Speke manufacturing site, which site is being transferred from Lilly to the Company in connection with the IPO.

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Registration Rights Agreement, by and between Lilly and the Company, pursuant to which, among other things, the Company agrees that, upon the request of Lilly, the Company will use its reasonable best efforts to effect the registration under applicable federal and state securities laws of the shares of the Company's common stock retained by Lilly following the IPO.

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Transitional Trademark License Agreement, by and between Lilly and the Company, pursuant to which, among other things, Lilly grants the Company a transitional license to use certain of Lilly's trademarks for a period of time following the completion of the IPO. Such license will be non-exclusive and royalty-free, and will allow the Company to use certain of Lilly's trademarks on the Company's product packaging, any advertising materials used in connection with the sale and distribution of the Company's products, and generally in connection with the sale and distribution of the Company's products and in the day-to-day operation of the Company's business (including in the Company's books and records).

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Intellectual Property and Technology License Agreement by and between Lilly and the Company, pursuant to which, among other things, Lilly grants the Company an exclusive, perpetual license to exploit products in the animal health field that utilize or use certain of Lilly's intellectual property (excluding trademarks). In addition, Lilly grants the Company a

non-exclusive, non-sublicenseable license to screen certain compounds in Lilly's compound libraries to exploit products in the animal health field that utilize or use certain of Lilly's intellectual property.

        The foregoing descriptions of these agreements do not purport to be complete and are qualified in their entirely by reference to the full text of these agreements attached hereto and incorporated into this Item 1.01 by reference.

Item 5.02    Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

        Following the IPO, James Meer, 48, who joined the Company in September 2018 as Chief Accounting Officer, will serve as the Company's principal accounting officer. Prior to joining the Company, Mr. Meer served as the Chief Financial Officer of Healthx, Inc. since June of 2017. Prior to joining Healthx, he served as Senior Vice President of Finance at Appirio, as Vice President and Corporate Controller at Salesforce (previously ExactTarget), and also previously held positions at Hill-Rom, Hillenbrand Industries and Ernst & Young LLP.

        In connection with his employment as Chief Accounting Officer, Mr. Meer will receive an annual base salary of $270,000, an annual cash performance bonus with an annual target of 26% of his base salary and he will be eligible to participate in the Company's benefit plans and programs generally offered to its executives. In connection with his appointment, Mr. Meer was given a cash signing bonus of $100,000 and will be granted an equity award valued at $140,000 consisting of restricted stock units that will vest in equal installments over two years.

        There are no material arrangements or understandings between Mr. Meer and any other person pursuant to which he was appointed as an officer of the Company. Mr. Meer does not have any family relationship with any director or officer of the Company or any person nominated or chosen by the Company to become a director or executive officer, and there are no transactions in which Mr. Meer has an interest requiring disclosure under Item 404(a) of Regulation S-K.

Item 9.01    Financial Statements and Exhibits.

(d)   Exhibits

Number		Description
	3.1	Amended and Restated Articles of Incorporation of the Registrant effective September 18, 2018.
	3.2	Amended and Restated Bylaws of the Registrant effective September 19, 2018.
	10.1	Master Separation Agreement, dated September 24, 2018, between Eli Lilly and Company and Elanco Animal Health Incorporated
	10.2	Transitional Services Agreement, dated September 24, 2018, between Eli Lilly and Company and Elanco Animal Health Incorporated
	10.3	Tax Matters Agreement, dated September 24, 2018, between Eli Lilly and Company and Elanco Animal Health Incorporated
	10.4	Employee Matters Agreement, dated September 24, 2018, between Eli Lilly and Company and Elanco Animal Health Incorporated
	10.5	Toll Manufacturing and Supply Agreement, dated September 24, 2018, between Eli Lilly Export S.A. and Elanco UK AH Limited
	10.6	Registration Rights Agreement, dated September 24, 2018, between Eli Lilly and Company and Elanco Animal Health Incorporated

Number		Description
	10.7	Transitional Trademark License Agreement, dated September 24, 2018, among Eli Lilly and Company, Elanco Animal Health Incorporated and Elanco US Inc.
	10.8	Intellectual Property and Technology License Agreement, dated September 24, 2018, among Eli Lilly and Company, Elanco Animal Health Incorporated and Elanco US Inc.

SIGNATURES

        Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	ELANCO ANIMAL HEALTH INCORPORATED
Date: September 26, 2018	By:	/s/ MICHAEL-BRYANT HICKS
		Name:	Michael-Bryant Hicks
		Title:	Executive Vice President, General Counsel and Corporate Secretary

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Item 1.01 Entry into a Material Definitive Agreement.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Item 9.01 Financial Statements and Exhibits.

SIGNATURES

EX-3.1

Exhibit 3.1

ELANCO ANIMAL HEALTH INCORPORATED
(an Indiana corporation)

AMENDED AND RESTATED ARTICLES OF INCORPORATION

1.The name of the Corporation shall be

ELANCO ANIMAL HEALTH INCORPORATED.

2.The purposes for which the Corporation is formed are to engage in any lawful act or activity for which a corporation may be organized under the Indiana Business Corporation Law, as amended from time to time (the “IBCL”).

3.The period during which the Corporation is to continue as a corporation is perpetual.

4.The total number of shares which the Corporation shall have authority to issue is 6,000,000,000 shares, consisting of 5,000,000,000 shares of Common Stock and 1,000,000,000 shares of Preferred Stock.  The Corporation’s shares do not have any par or stated value, except that, solely for the purpose of any statute or regulation imposing any tax or fee based upon the capitalization of the Corporation, each of the Corporation’s shares shall be deemed to have no par value per share.

5.The following provisions shall apply to the Corporation’s shares:

(a)The Corporation shall have the power to acquire (by purchase, redemption, or otherwise), hold, own, pledge, sell, transfer, assign, reissue, cancel, or otherwise dispose of the shares of the Corporation in the manner and to the extent now or hereafter permitted by the laws of the State of Indiana (but such power shall not imply an obligation on the part of the owner or holder of any share to sell or otherwise transfer such share to the Corporation), including the power to purchase, redeem, or otherwise acquire the Corporation’s own shares, directly or indirectly, and without pro rata treatment of the owners or holders of any class or series of shares, unless, after giving effect thereto, the Corporation would not be able to pay its debts as they become due in the usual course of business or the Corporation’s total assets would be less than its total liabilities (and without regard to any amounts that would be needed, if the Corporation were to be dissolved at the time of the purchase, redemption, or other acquisition, to satisfy the preferential rights upon dissolution of shareholders whose preferential rights are superior to those of the holders of the shares of the Corporation being purchased, redeemed, or otherwise acquired, unless otherwise expressly provided with respect to a series of Preferred Stock).  Shares of the Corporation purchased, redeemed, or otherwise acquired by it shall constitute authorized but unissued shares, unless prior to any such

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purchase, redemption or other acquisition or within thirty (30) days thereafter the Board of Directors adopts a resolution providing that such shares constitute authorized and issued but not outstanding shares.

(b)Preferred Stock of any series that has been redeemed (whether through the operation of a retirement or sinking fund or otherwise) or purchased by the Corporation, or which, if convertible, have been converted into shares of the Corporation of any other class or series, may be reissued as a part of such series or of any other series of Preferred Stock, subject to such limitations (if any) as may be fixed by the Board of Directors with respect to such series of Preferred Stock in accordance with the provisions of Article 7 of these Amended and Restated Articles of Incorporation.

(c)The Corporation may, by action of the Board of Directors, dispose of, issue, and sell shares of the Corporation in accordance with, and in such amounts as may be permitted by, the laws of the State of Indiana and the provisions of these Amended and Restated Articles of Incorporation and for such consideration, at such price or prices, at such time or times and upon such terms and conditions (including the privilege of selectively repurchasing the same) as the Board of Directors of the Corporation shall determine, without the authorization or approval by any shareholders of the Corporation.  Shares may be disposed of, issued, and sold to such persons, firms, or corporations as the Board of Directors may determine, without any preemptive or other right on the part of the owners or holders of other shares of the Corporation of any class or kind to acquire such shares by reason of their ownership of such other shares.

6.The following provisions shall apply to the Common Stock:

(a)Except as otherwise provided by the IBCL and subject to such shareholder disclosure and recognition procedures (which may include voting prohibition sanctions) as the Corporation may by action of its Board of Directors establish, shares of Common Stock shall have unlimited voting rights and each outstanding share of Common Stock shall, when validly issued by the Corporation, entitle the record holder thereof to one vote at all shareholders’ meetings on all matters submitted to a vote of the shareholders of the Corporation.

(b)Shares of Common Stock shall be equal in every respect, but such equality of rights shall not imply equality of treatment as to purchase or other acquisition of shares by the Corporation.  Subject to the rights of the holders of any outstanding series of Preferred Stock, the holders of Common Stock shall be entitled to share ratably in such dividends or other distributions (other than purchases or other acquisitions of shares by the Corporation), if any, as are declared and paid from time to time on the Common Stock at the discretion of the Board of Directors.

(c)In the event of any liquidation, dissolution, or winding up of the Corporation, either voluntary or involuntary, after payment shall have been made to the holders of any outstanding series of Preferred Stock of the full amount to which they shall be entitled, the holders of Common Stock shall be entitled, to the exclusion of the holders of the Preferred Stock of any and all series, to share, ratably according to the

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number of shares of Common Stock held by them, in all remaining assets of the Corporation available for distribution to its shareholders, except as otherwise may be provided in an applicable certificate of designation for a series of Preferred Stock.

7.The Board of Directors is hereby expressly authorized to provide, out of the unissued shares of Preferred Stock, for one or more series of Preferred Stock.  Before any shares of any such series are issued, the Board of Directors shall fix, and hereby is expressly empowered to fix, by the adoption and filing in accordance with the IBCL, of an amendment or amendments to these Amended and Restated Articles of Incorporation, the terms of such Preferred Stock or series of Preferred Stock, including the following:

(a)the designation of such series, the number of shares to constitute such series and the stated value thereof if different from the par value thereof;

(b)whether the shares of such series shall have voting rights, in addition to any voting rights provided by law, and, if so, the terms of such voting rights, which may be limited and may include the right, under specified circumstances, to elect directors in addition to those to be elected by the holders of Common Stock;

(c)the dividends, if any, payable on such series, whether any such dividends shall be cumulative, and, if so, from what dates, the conditions and dates upon which such dividends shall be payable, the preference or relation which such dividends shall bear to the dividends payable on any shares of stock of any other class or any other series of Preferred Stock;

(d)whether the shares of such series shall be subject to redemption by the Corporation and, if so, the times, prices and other conditions of such redemption;

(e)the amount or amounts payable upon shares of such series upon, and the rights of the holders of such series in, the voluntary or involuntary liquidation, dissolution or winding up, or upon any distribution of the assets, of the Corporation;

(f)whether the shares of such series shall be subject to the operation of a retirement or sinking fund and, if so, the extent to and manner in which any such retirement or sinking fund shall be applied to the purchase or redemption of the shares of such series for retirement or other corporate purposes and the terms and provisions relative to the operation thereof;

(g)whether the shares of such series shall be convertible into, or exchangeable for, shares of stock of any other class or any other series of Preferred Stock or any other securities (whether or not issued by the Corporation) and, if so, the price or prices or the rate or rates of conversion or exchange and the method, if any, of adjusting the same, and any other terms and conditions of conversion or exchange;

(h)the limitations and restrictions, if any, to be effective while any shares of such series are outstanding upon the payment of dividends or the making of other distributions on, and upon the purchase, redemption or other acquisition by the

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Corporation of, the Common Stock or shares of stock of any other class or any other series of Preferred Stock;

(i)the conditions or restrictions, if any, upon the creation of indebtedness of the Corporation or upon the issue of any additional stock, including additional shares of such series or of any other series of Preferred Stock or of any other class of stock; and

(j)any other powers, preferences and relative, participating, optional and other special rights, and any qualifications, limitations and restrictions thereof.

Except to the extent otherwise expressly provided in these Amended and Restated Articles of Incorporation or required by law, (i) no share of Preferred Stock shall have any voting rights other than those which shall be fixed by the Board of Directors pursuant to this Article 7 and (ii) no share of Common Stock shall have any voting rights with respect to any amendment to the terms of any series of Preferred Stock; provided, however, that in the case of this clause (ii) the terms of such series of Preferred Stock, as so amended, could have been established without any vote of any shares of Common Stock.

8.The Corporation shall have the power to declare and pay dividends or other distributions upon the issued and outstanding shares of the Corporation, subject only to the limitations set forth in the IBCL.  The Corporation shall have the power to issue shares of one class or series as a share dividend or other distribution in respect of that class or series or one or more other classes or series.

9.The following provisions are inserted for the management of the business and for the conduct of the affairs of the Corporation, and it is expressly provided that the same are intended to be in furtherance and not in limitation or exclusion of the powers conferred by statute:

(a)The number of directors of the Corporation, exclusive of directors who may be elected by the holders of any one or more series of Preferred Stock pursuant to Article 9(b) (the “Preferred Stock Directors”), shall not be less than five, the exact number to be fixed from time to time solely by resolution of the Board of Directors, acting by not less than a majority of the directors then in office.

(b)The Board of Directors (exclusive of Preferred Stock Directors, if any) shall be divided into three classes as nearly equal in number as possible, with the term of office of one class expiring at each annual meeting. The Board of Directors may assign members of the Board of Directors already in office upon the effectiveness of the Corporation’s registration statement on Form S-1, as amended, filed with the Securities and Exchange Commission in connection with the initial listing of Common Stock on a stock exchange (the “Effective Time”) to such classes as of the Effective Time.  The term of office of the initial Class I directors shall expire at the first annual meeting following the Effective Time; the term of office of the initial Class II directors shall expire at the second annual meeting following the Effective Time; and the term of office of the initial Class III directors shall expire at the third annual meeting following the Effective Time. Commencing with the first annual meeting of shareholders following the Effective Time,

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each class of directors whose term shall then expire shall be elected to hold office for a three-year term.  In the case of any vacancy on the Board of Directors, including a vacancy created by an increase in the number of directors, the vacancy shall be filled by election of the Board of Directors with the director so elected to serve for the remainder of the term of the director being replaced or, in the case of an additional director, for the remainder of the term of the class to which the director has been assigned.  All directors shall continue in office until the election and qualification of their respective successors in office, their death, their resignation in accordance with Section 2.7 of the bylaws of the Corporation (as amended, restated or otherwise modified from time to time, the “Bylaws”), their removal in accordance with Article 9(c) below and Section 2.8 of the Bylaws, or if there has been a reduction in the number of directors, until the end of their respective terms. When the number of directors is changed, any newly created directorships or any decrease in directorships shall be so assigned among the classes by a majority of the directors then in office, though less than a quorum, as to make all classes as nearly equal in number as possible.  No decrease in the number of directors shall have the effect of shortening the term of any incumbent director.  Election of directors need not be by written ballot unless the Bylaws so provide.

(c)Any director or directors (exclusive of Preferred Stock Directors, if any) may be removed from office at any time, but only for cause and only by the affirmative vote of at least 66 2/3% of the votes entitled to be cast by holders of all the outstanding shares of Voting Stock (as defined below), voting together as a single class.

(d)Notwithstanding any other provision of these Amended and Restated Articles of Incorporation or of law which might otherwise permit a lesser vote or no vote, but in addition to any affirmative vote of the holders of any particular class of Voting Stock required by law or these Amended and Restated Articles of Incorporation, the affirmative vote of at least 66 2/3% of the votes entitled to be cast by holders of all the outstanding shares of Voting Stock, voting together as a single class, shall be required to alter, amend or repeal this Article 9.

(e)For purposes of these Amended and Restated Articles of Incorporation, the term “Voting Stock” shall mean all shares of any class of capital stock of the Corporation which are entitled to vote generally in the election of directors.

10.The Corporation shall, to the fullest extent permitted by applicable law now or hereafter in effect, indemnify any person who is or was a director, officer or employee of the Corporation (an “Eligible Person”) and who is or was involved in any manner (including, without limitation, as a party or a witness) or is threatened to be made so involved in any threatened, pending or completed investigation, claim, action, suit or proceeding, whether civil, criminal, administrative or investigative (including, without limitation, any action, suit or proceeding by or in the right of the Corporation to procure a judgment in its favor) (a “Proceeding”) by reason of the fact that such Eligible Person is or was a director, officer or employee of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee, partner, member, manager, trustee, fiduciary or agent of another corporation, partnership, joint venture, limited liability company, trust or other enterprise (including, without limitation, any employee benefit plan), against all expenses (including attorneys’ fees),

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judgments, fines or penalties (including excise taxes assessed with respect to an employee benefit plan) and amounts paid in settlement actually and reasonably incurred by such Eligible Person in connection with such Proceeding; provided, however, that the foregoing shall not apply to a Proceeding commenced by an Eligible Person except to the extent provided otherwise in the Bylaws or an agreement with an Eligible Person.  The Corporation may establish provisions supplemental to or in furtherance of the provisions of this Article 10, including, but not limited to, provisions concerning the determination of any Eligible Person to indemnification, mandatory or permissive advancement of expenses to an Eligible Person incurred in connection with a Proceeding, the effect of any change in control of the Corporation on indemnification and advancement of expenses and the funding or other payment of amounts necessary to effect indemnification and advancement of expenses, in the Bylaws or in agreements with any Eligible Person.

11.The provisions of IBCL §23-1-42 shall not apply to the acquisition of shares of the Corporation.

12.Except as otherwise expressly provided in these Amended and Restated Articles of Incorporation, the Corporation reserves the right to amend, alter or repeal any provision contained in these Amended and Restated Articles of Incorporation, in the manner now or hereafter prescribed by law, and all rights conferred upon shareholders herein are subject to this reservation.

13.Subject to the rights of the holders of preferred stock to elect any directors voting separately as a class or series, at each annual meeting of shareholders, the directors to be elected at the meeting shall be chosen by a plurality of the votes cast by the holders of shares entitled to vote in the election at the meeting, provided a quorum is present.  For purposes of this Article 13, a “plurality of the votes cast” shall mean that the individuals with the highest number of votes are elected as directors up to the maximum number of directors to be elected.

14.Certain Relationships and Transactions.

(a)General.  The Corporation has been chartered to succeed to and carry on the animal health business of Lilly separate from the other businesses conducted by Lilly.  Notwithstanding the fact that Lilly may continue to hold a significant percentage or even a controlling majority of the Corporation’s stock, no fiduciary duty of any nature shall be deemed to exist between Lilly and the Corporation and no such duty shall be owed one to the other.  The Corporation and each person acquiring at any time any shares of capital stock or other equity securities of the Corporation acquires such shares subject to this limitation and agrees there is no expectancy of any fiduciary duty owed by either Lilly or the Corporation to the other. To the fullest extent permitted by law, any person purchasing or otherwise acquiring any shares of capital stock of the Corporation, or any interest therein, shall be deemed to have notice of and to have consented to the provisions of this Article 14.

In recognition and anticipation that (i) the Corporation will not be a wholly owned subsidiary of Lilly and that Lilly will be a significant shareholder of the Corporation, (ii) directors, officers and/or employees of Lilly may serve as directors

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and/or officers of the Corporation, (iii) subject to any contractual arrangements that may otherwise from time to time be agreed to between Lilly and the Corporation, Lilly may engage in the same, similar or related lines of business as those in which the Corporation, directly or indirectly, may engage and/or other business activities that overlap with or compete with those in which the Corporation, directly or indirectly, may engage, (iv) Lilly may have an interest in the same areas of corporate opportunity as the Corporation and Affiliated Companies thereof, and (v) as a consequence of the foregoing, it is in the best interests of the Corporation that the respective rights and obligations of the Corporation and of Lilly, and the duties of any directors and/or officers of the Corporation who are also directors, officers and/or employees of Lilly, be determined and delineated in respect of any transactions between, or opportunities that may be suitable for both, the Corporation and Affiliated Companies thereof, on the one hand, and Lilly, on the other hand, the sections of this Article 14 shall to the fullest extent permitted by law regulate and define the conduct of certain of the business and affairs of the Corporation in relation to Lilly and the conduct of certain affairs of the Corporation as they may involve Lilly and its directors, officers and/or employees, and the power, rights, duties and liabilities of the Corporation and its officers, directors and shareholders in connection therewith.

Nothing in this Article 14 creates or is intended to create any fiduciary duty on the part of Lilly, the Corporation, any Affiliated Company, or any shareholder, director, officer or employee of any of them that does not otherwise exist under Indiana law and nothing in this Article 14 expands any such duty of any such person that may now or hereafter exist under Indiana law.

(b)Certain Agreements and Transactions Permitted. The Corporation may from time to time enter into and perform, and cause or permit any Affiliated Company of the Corporation to enter into and perform, one or more agreements (or modifications or supplements to pre-existing agreements) with Lilly pursuant to which the Corporation or an Affiliated Company thereof, on the one hand, and Lilly, on the other hand, agree to engage in transactions of any kind or nature with each other and/or agree to compete, or to refrain from competing or to limit or restrict their competition, with each other, including to allocate, and to cause their respective directors, officers and/or employees (including any who are directors, officers and/or employees of both) to allocate opportunities between or to refer opportunities to each other. Subject to Section 14(d) below, no such agreement, or the performance thereof by the Corporation or any Affiliated Company thereof, or Lilly, shall, to the fullest extent permitted by law, be considered contrary to any fiduciary duty that any director and/or officer of the Corporation or any Affiliated Company thereof who is also a director, officer and/or employee of Lilly may owe to the Corporation or may be alleged to owe to such Affiliated Company, or to any shareholder thereof, or any legal duty or obligation Lilly may be alleged to owe on any basis, notwithstanding the provisions of these Amended and Restated Articles of Incorporation stipulating to the contrary. Subject to Section 14(d) below, to the fullest extent permitted by law, no director and/or officer of the Corporation who is also a director, officer and/or employee of Lilly shall have or be under any fiduciary duty to the Corporation or any Affiliated Company thereof to refer any corporate opportunity to the Corporation or any Affiliated Company or to refrain

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from acting on behalf of the Corporation or any Affiliated Company thereof or of Lilly in respect of any such agreement or transaction or performing any such agreement in accordance with its terms.

(c)Authorized Business Activities.  Without limiting the other provisions of this Article 14, Lilly shall have no duty to communicate information regarding a corporate opportunity to the Corporation or to refrain from (i) engaging in the same or similar activities or lines of business as the Corporation or (ii) doing business with any client, customer or vendor of the Corporation.  To the fullest extent permitted by law, except as provided in Section 14(d), no officer, director and/or employee of the Corporation who is also a director, officer or employee of Lilly shall be deemed to have breached his or her fiduciary duties, if any, to the Corporation solely by reason of Lilly’s engaging in any such activity.

(d)Corporate Opportunities.  Except as otherwise agreed in writing between the Corporation and Lilly, for so long as Lilly owns a majority of all the outstanding shares of Voting Stock, in the event that a director and/or officer of the Corporation who is also a director, officer and/or employee of Lilly acquires knowledge of a potential transaction or matter that may be a corporate opportunity for both the Corporation and Lilly, such director and/or officer shall to the fullest extent permitted by law have fully satisfied and fulfilled his or her fiduciary duty, if any, with respect to such corporate opportunity, and the Corporation to the fullest extent permitted by law renounces any interest or expectancy in such business opportunity and waives any claim that such business opportunity constituted a corporate opportunity that should have been presented to the Corporation or any Affiliated Company thereof, if such director and/or officer acts in a manner consistent with the following policy:

(i)such a corporate opportunity offered to any person who is a director but not an officer of the Corporation and who is also a director, officer and/or employee of Lilly shall belong to the Corporation only if such opportunity is expressly offered to such person solely in his or her capacity as a director of the Corporation and otherwise shall belong to Lilly; and

(ii)such a corporate opportunity offered to any person who is an officer of the Corporation and also is a director, officer and/or employee of Lilly shall belong to the Corporation unless such opportunity is expressly offered to such person solely in his or her capacity as a director, officer and/or employee of Lilly, in which case such opportunity shall belong to Lilly.

The foregoing policy, and the action of any director or officer of Lilly, the Corporation or any Affiliated Company taken in accordance with, or in reliance upon, the foregoing policy or in entering into or performing any agreement, transaction or arrangement is deemed and presumed to be fair to the Corporation.

Except as otherwise agreed in writing between the Corporation and Lilly, if a director and/or officer of the Corporation, who also serves as a director, officer and/or employee of Lilly, acquires knowledge of a potential corporate opportunity for both the

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Corporation and Lilly in any manner not addressed by this Article 14, such director and/or officer shall have no duty to communicate or present such corporate opportunity to the Corporation and shall to the fullest extent permitted by law not be liable to the Corporation or its shareholders for breach of fiduciary duty as a director and/or officer of the Corporation by reason of the fact that Lilly pursues or acquires such corporate opportunity for itself, directs such corporate opportunity to another person or does not present such corporate opportunity to the Corporation, and the Corporation to the fullest extent permitted by law renounces any interest or expectancy in such business opportunity and waives any claim that such business opportunity constituted a corporate opportunity that should be presented to the Corporation.

(e)Delineation of Indirect Interests. To the fullest extent permitted by law, no director or officer of the Corporation or any Affiliated Company shall be deemed to have an indirect interest in any matter, transaction or corporate opportunity that may be received or exploited by, or allocated to, Lilly, merely by virtue of being a director or officer or employee of Lilly, unless such director or officer’s role with Lilly involves direct responsibility for such matter, in his or her role with Lilly, such director or officer exercises supervision over such matter, or the compensation of such director or officer is materially affected by such matter. Such director or officer’s compensation shall not be deemed to be materially affected by such matter if it is only affected by virtue of its effect on the value of Lilly capital stock generally or on Lilly’s results or performance on an enterprise-wide basis.

(f)Special Approval Procedures. If, notwithstanding the provisions of this Article 14, it is deemed desirable by Lilly, the Corporation or an Affiliated Company or any other party that the Corporation take action with specific regard to a particular transaction, corporate opportunity or a type or series of transactions or corporate opportunities to ensure, out of an abundance of caution, that such transaction or transactions are not voidable, or that such an opportunity or opportunities are effectively disclaimed, the Corporation may employ any of the following procedures:

(i)the material facts of the transaction and the director’s or officer’s interest are disclosed or known to the Board of Directors of the Corporation or a duly appointed committee of the Board of Directors and the Board of Directors or such committee, as applicable, authorizes, approves, or ratifies the transaction by the affirmative vote or consent of a majority of the directors (or committee members) who have no direct or indirect interest in the transaction and, in any event, of at least two directors (or committee members);

(ii)the material facts of the transaction and the director’s interest are disclosed or known to the shareholders entitled to vote and they authorize, approve or ratify such transaction by vote.

The interested director or directors may be counted in determining the presence of a quorum at such meeting. The presence of, or a vote cast by, a director with a direct or indirect interest in the transaction does not affect the validity of any actions taken under subsection (i) of this section.

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One or more matters, transactions or corporate opportunities approved pursuant to any of the foregoing procedures is not void or voidable and shall not give rise to any equitable relief or damages or other sanctions against any director, officer, or shareholder (including Lilly) of the Corporation on the ground that the matter, transaction or corporate opportunity should have first been offered to the Corporation. Nothing in this Article 14 requires any matter to be considered by the board of directors or the shareholders of the Corporation and, in all cases, officers and directors of the Corporation are authorized to refrain from bringing a matter otherwise addressed in this Article 14 before the Board of Directors or the shareholders for consideration unless such matter is required to be considered by the board of directors or shareholders, as applicable, under Indiana law.  This Article 14 shall not be construed to invalidate any contract or other transaction which would otherwise be valid under the common, equitable, or statutory law applicable thereto.

(g)Certain Definitions. For purposes of this Article 14:

“Affiliated Company” in respect of the Corporation shall mean any entity controlled by the Corporation.

“corporate opportunities” shall include, but not be limited to, business opportunities which the Corporation is financially able to undertake, which are, from their nature, in the line of the Corporation’s business, are of practical advantage to it and are ones in which the Corporation would have an interest or a reasonable expectancy, and in which, by embracing the opportunities or allowing such opportunities to be embraced by Lilly, the self-interest of the Corporation’s directors, officers and/or employees will be brought into conflict with that of the Corporation either directly or indirectly by virtue of such director’s, officer’s or employee’s service as a director, officer or employee of Lilly; and

“Lilly” shall mean Eli Lilly and Company and each other subsidiary of Eli Lilly & Company and each other person that either is controlled directly or indirectly by Eli Lilly and Company (other than the Corporation and any entity that is controlled by the Corporation).

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EX-3.2

Exhibit 3.2

ELANCO ANIMAL HEALTH

INCORPORATED

AMENDED AND RESTATED BYLAWS

Adopted as of

September 5, 2018

(Effective September 19, 2018)

ELANCO ANIMAL HEALTH INCORPORATED

AMENDED AND RESTATED BYLAWS

INDEX

		Page
ARTICLE I
The Shareholders
Section 1.1.	Annual Meetings	1
Section 1.2.	Special Meetings	1
Section 1.3.	Time, Place, and Conduct of Meetings	1
Section 1.4.	Notice of Meetings	1
Section 1.5.	Quorum	1
Section 1.6.	Voting	2
Section 1.7.	Voting Lists	2
Section 1.8.	Fixing of Record Date	2
Section 1.9.	Notice of Shareholder Business	2
Section 1.10.	Notice of Shareholder Nominees	5
ARTICLE II
Board of Directors
Section 2.1.	General Powers	7
Section 2.2.	Number and Qualifications	7
Section 2.3.	Classes of Directors and Terms	7
Section 2.4.	Election of Directors	7
Section 2.5.	Meetings of Directors	8
Section 2.6.	Quorum and Manner of Acting	8
Section 2.7.	Resignations	9
Section 2.8.	Removal of Directors	9
Section 2.9.	Action without a Meeting	9
Section 2.10.	Chairman of the Board of Directors	9

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Section 2.11.	Committees	9
Section 2.12.	Transactions with Corporation	10
Section 2.13.	Compensation of Directors	10
ARTICLE III
Officers
Section 3.1.	Chief Executive Officer	10
Section 3.2.	Chief Financial Officer	10
Section 3.3.	Treasurer and Assistant Treasurers	11
Section 3.4.	Assistant Treasurers	11
Section 3.5.	Secretary and Assistant Secretaries	11
Section 3.6.	Other Officers	11
Section 3.7.	Term of Office	11
Section 3.8.	Resignation	12
Section 3.9.	Removal	12
Section 3.10.	Vacancies	12
ARTICLE IV
Execution of Instruments and Deposit of Corporate Funds
Section 4.1.	Execution of Instruments Generally	12
Section 4.2.	Notes, Checks, Other Instruments	12
Section 4.3.	Proxies	12
ARTICLE V
Shares
Section 5.1.	Certificates for Shares	13
Section 5.2.	Transfer of Shares	13
Section 5.3.	Regulations	14
Section 5.4.	Transfer Agents and Registrars	14
Section 5.5.	Lost or Destroyed Certificates	14

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ARTICLE VI
Indemnification
Section 6.1.	Right to Indemnification	14
Section 6.2.	Insurance, Contracts and Funding	15
Section 6.3.	Non-Exclusive Rights; Applicability to Certain Proceedings	15
Section 6.4.	Advancement of Expenses	16
Section 6.5.	Procedures; Presumptions and Effect of Certain Proceedings; Remedies	16
Section 6.6.	Certain Definitions	18
Section 6.7.	Indemnification of Agents	18
Section 6.8.	Effect of Amendment or Repeal	18
Section 6.9.	Severability	19
ARTICLE VII
Miscellaneous
Section 7.1.	Corporate Seal	19
Section 7.2.	Fiscal Year	19

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AMENDED AND RESTATED BYLAWS
of
ELANCO ANIMAL HEALTH INCORPORATED
(An Indiana Corporation)

ARTICLE I

The Shareholders

SECTION 1.1.  Annual Meetings.  The annual meeting of the shareholders of the Corporation for the election of directors and for the transaction of such other business as properly may come before the meeting shall be held on such date and at such time as shall be designated by resolution of the Board of Directors from time to time.  Failure to hold an annual meeting of the shareholders at such designated time shall not affect otherwise valid corporate acts or work a forfeiture or dissolution of the Corporation.

SECTION 1.2.  Special Meetings.  Special meetings of the shareholders may be called at any time only by the Board of Directors or the Chairman of the Board of Directors.

SECTION 1.3.  Time, Place, and Conduct of Meetings.  Subject to Section 1.1, each meeting of the shareholders shall be held at such time of day and at such place or no place, solely by means of remote communication, as may be fixed by the Board of Directors, either within or without the State of Indiana, as shall be determined by the Board of Directors.  Each adjourned meeting of the shareholders shall be held at such time and place as may be provided in the motion for adjournment.  The chairman of each meeting shall have sole authority to decide questions relating to the conduct of that meeting.

SECTION 1.4.  Notice of Meetings.  The Secretary shall cause a written or printed notice of the place, day and hour and the purpose or purposes of each meeting of the shareholders to be delivered or mailed (which may include by facsimile or other form of electronic communication) at least ten (10) but not more than sixty (60) days prior to the meeting, to each shareholder of record entitled to vote at the meeting, at the shareholder’s address as the same appears on the records maintained by the Corporation.  Notice of any such shareholders meeting may be waived by any shareholder by delivering a written waiver to the Secretary before or after such meeting.  Attendance at any meeting in person or by proxy when the instrument of proxy sets forth in reasonable detail the purpose or purposes for which the meeting is called, shall constitute a waiver of notice thereof.  Notice of any adjourned meeting of the shareholders of the Corporation shall not be required to be given unless otherwise required by statute.

SECTION 1.5.  Quorum.  At any meeting of the shareholders, a majority of the outstanding shares entitled to vote on a matter at such meeting, represented in person or by proxy, shall constitute a quorum for action on that matter.  In the absence of a quorum, the chairman of the meeting or the holders of a majority of the shares entitled to vote present in person or by proxy or if no shareholder entitled to vote is present in person or by proxy any officer entitled to preside at or act as Secretary of such meeting, may adjourn such meeting from time to time, until a quorum shall be present.  At any such adjourned meeting at which a quorum

may be present, any business may be transacted which might have been transacted at the meeting as originally called.

SECTION 1.6.  Voting.  Except as otherwise provided by statute or by the Articles of Incorporation of the Corporation (as amended, restated or otherwise modified from time to time, the “Articles of Incorporation”), at each meeting of the shareholders each holder of shares entitled to vote shall have the right to one vote for each share standing in the shareholder’s name on the books of the Corporation on the record date fixed for the meeting under Section 1.8.  Each shareholder entitled to vote shall be entitled to vote in person or by proxy executed in writing (which shall include facsimile) or transmitted by electronic submission by the shareholder or a duly authorized attorney in fact.  Unless otherwise specified in the Articles of Incorporation or by applicable statute, the vote of shareholders approving any matter, other than the election of directors, shall require that the votes cast in favor of the matter exceed the votes cast opposing the matter at a meeting at which a quorum is present.  In the event that more than one group of shares is entitled to vote as a separate voting group, the vote of each group shall be considered and decided separately. Directors shall be elected by a plurality of the votes properly cast, as set forth in Article 13 of the Articles of Incorporation.

SECTION 1.7.  Voting Lists.  The Secretary shall make or cause to be made, after a record date for a meeting of shareholders has been fixed under Section 1.8 and at least five (5) days before such meeting, a complete list of the shareholders entitled to vote at such meeting, arranged in alphabetical order, with the address of each such shareholder and the number of shares so entitled to vote held by each, which list shall be on file at the principal office of the Corporation and subject to inspection by any shareholder entitled to vote at the meeting.  Such list shall be produced and kept open at the time and place of the meeting and subject to the inspection of any such shareholder during the holding of such meeting or any adjournment.  Except as otherwise required by law, such list shall be the only evidence as to who are the shareholders entitled to vote at any meeting of the shareholders.  In the event that more than one group of shares is entitled to vote as a separate voting group at the meeting, there shall be a separate listing of the shareholders of each group.

SECTION 1.8.  Fixing of Record Date.  For the purpose of determining shareholders entitled to notice of or to vote at any meeting of shareholders or any adjournment thereof, or entitled to receive payment of any dividend, or in order to make a determination of shareholders for any other proper purpose, the Board of Directors shall fix in advance a date as the record date for any such determination of shareholders, not more than seventy (70) days prior to the date on which the particular action requiring this determination of shareholders is to be taken.  When a determination of shareholders entitled to vote at any meeting of shareholders has been made as provided in this section, the determination shall, to the extent permitted by law, apply to any adjournment thereof.

SECTION 1.9.  Notice of Shareholder Business.

(a)At an annual meeting of the shareholders, the only items of business that shall be conducted are those which are proper subjects for action by the shareholders under Indiana law and which have been properly brought before the meeting.  To be properly brought before an annual meeting, business must be (i) specified in the notice of meeting (or any supplement

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thereto) given by or at the direction of the Board of Directors, (ii) otherwise properly brought before the meeting by or at the direction of the Board of Directors, or (iii) otherwise properly brought before the meeting by a shareholder in accordance with this Section 1.9.  Except for proposals properly made in accordance with Rule 14a-8 under the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder (as so amended and inclusive of such rules and regulations, the “Exchange Act”), and included in the notice of meeting given by or at the direction of the Board of Directors, the foregoing clause (iii) shall be the exclusive means by which a shareholder may propose business to be brought before the meeting.  For any item of business (other than nomination of a person for election as a director which is subject to Section 1.10) to be properly brought before an annual meeting by a shareholder, the shareholder proposing the item of business (a “proposing shareholder”) must (A) have beneficial ownership of the Corporation’s common stock both at the time of giving the notice provided for in this Section 1.9 and at the time of the meeting, (B) be entitled to vote at the meeting, (C) have the legal right and authority to make the proposal for consideration at the meeting, (D) have given a notice which is timely as required by subsection (b) and in proper form as required by subsection (c), and (E) appear at the meeting in person or by a designated representative to present the item of business.

(b)To be timely, a proposing shareholder’s notice must be delivered to or mailed and received by the Secretary at the principal executive offices of the Corporation not later than the close of business on the date that is no less than one hundred twenty (120) calendar days nor more than one hundred fifty (150) calendar days in advance of the date of the Corporation’s proxy statement released to shareholders in connection with the previous year’s annual meeting of shareholders; provided, however, that in the event that no annual meeting was held in the previous year or the date of the annual meeting has been changed by more than thirty (30) days from the date contemplated at the time of the previous year’s proxy statement, notice by the proposing shareholder to be timely must be so received not later than the close of business on the later of one hundred twenty (120) calendar days in advance of such annual meeting or ten (10) calendar days following the date on which public disclosure of the date of the meeting is first made.  For purposes of this Section 1.9 and Section 1.10, “public disclosure” means disclosure in a press release reported by a national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Sections 13, 14, or 15(d) of the Exchange Act.  No adjournment of an annual meeting or announcement thereof shall commence a new time period for the giving of a timely notice as described above.

(c)To be in proper form, a proposing shareholder’s notice to the Secretary shall set forth (i) the name and record address of the proposing shareholder(s); (ii) the class and number of the Corporation’s shares which are beneficially owned by the proposing shareholder(s); (iii) a brief description of any derivative instrument (as defined in IND. CODE §23-1-20-6.5 as in effect on October 18, 2010) or other agreement, arrangement, or understanding (including any swaps, warrants, short positions, profits interests, options, hedging transactions, or borrowed or loaned shares) with respect to the Corporation’s shares, engaged in, directly or indirectly by the proposing shareholder(s), where the purpose or effect of such instrument, agreement, arrangement or understanding is to increase or decrease such shareholders’ ability to share in the profits derived from any increase in the value of the Corporation’s shares, mitigate economic exposure to changes in value of the shares, and/or increase or decrease the voting power of such shareholder(s); and (iv) as to each item of business being proposed (A) a brief description of the

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business to be brought before the annual meeting; (B) the reasons for conducting such business at the annual meeting; (C) the text of the proposal or business (including the text of any resolutions proposed for consideration); (D) any material interest of the proposing shareholder(s) in such business; (E) a brief description of all agreements, arrangements or understandings between or among the proposing shareholder(s) or between or among any proposing shareholder and any other person or entity in connection with such business; (F) a representation whether the proposing shareholder intends to deliver a proxy statement and/or form of proxy to holders of at least the percentage of the Corporation’s outstanding shares required to approve the proposal and/or otherwise to solicit proxies from shareholders in support of the proposal; and (G) any other information relating to each such person that would be required to be disclosed in a proxy statement or other filing required to be made in connection with the solicitation of proxies by each such person with respect to the proposed business to be brought by each such person before the annual meeting pursuant to Section 14 of the Exchange Act, and the rules and regulations promulgated thereunder.  For purposes of this Section 1.9 and Section 1.10, the term “beneficial ownership” shall have the meaning specified in IND. CODE §23-1-20-3.5 as in effect on October 18, 2010;

(d)A proposing shareholder shall further update and supplement such notice, if necessary, so that the information provided or required to be provided in the notice shall be true, correct and complete in all material respects (i) as of the record date for the meeting and (ii) as of the date that is ten (10) business days prior to the meeting or any adjournment thereof.  Such updates shall be delivered to or mailed and received by the Secretary at the principal executive offices of the Corporation (A) in the case of the update required under subsection (i), not later than five (5) business days after the record date, and (B) in the case of the update required under subsection (ii), not later than seven (7) business days prior to the meeting or any adjournment thereof.

(e)No business shall be conducted at any annual meeting of shareholders except in accordance with the procedures set forth in this Section 1.9.  The chairman of an annual meeting shall, if the facts warrant, determine and declare to the meeting that business was not properly brought before the meeting in accordance with the provisions of this Section 1.9, and if the chairman should so determine, he or she shall so declare to the meeting any such business not properly brought before the meeting shall not be transacted, notwithstanding that proxies may have been solicited in respect of such business.

(f)The requirements of this Section 1.9 shall apply to any item of business to be brought before an annual meeting of shareholders (other than the election of directors and any proposal properly made pursuant to Rule 14a-8 of the Exchange Act) regardless of whether the business is presented to shareholders directly at the meeting or by means of an independently financed proxy solicitation.  The requirements of this Section 1.9 are included to provide the Corporation notice of a shareholder’s intention to bring business before an annual meeting and shall not be construed as imposing upon any shareholder the requirement to seek approval from the Corporation as a condition precedent to bringing any such business before an annual meeting.

(g)At any special meeting of the shareholders, only such business shall be conducted as shall have been brought before the meeting by or at the direction of the Board of Directors or the Chairman of the Board of Directors.

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SECTION 1.10.  Notice of Shareholder Nominees.

(a)Only persons who are nominated by or at the direction of the Board of Directors or by shareholders in accordance with the procedures set forth in this Section 1.10 shall be eligible for election as Directors.  Nominations of persons for election to the Board of Directors in accordance with this Section 1.10 may be made (i) at or prior to a meeting of shareholders by or at the direction of the Board of Directors or by any nominating committee or person appointed by or at the direction of the Board of Directors, and (ii) at an annual meeting of shareholders or a special meeting of shareholders (but only if the election of Directors is a matter specified in the notice of special meeting) by any shareholder entitled to vote for the election of Directors at the meeting who complies with the notice procedures set forth in this Section 1.10 (a “nominating shareholder”).  Such nominations shall be made pursuant to a notice which is timely as required by subsection (b) and in proper form as required by subsection (c) and any person proposed to be nominated (a “proposed nominee”) must be eligible for election as required by subsection (e).

(b)To be timely, a nominating shareholder’s notice, if it relates to an annual meeting of shareholders, must be delivered to or mailed and received by the Secretary at the principal executive offices of the Corporation not later than the close of business on the date that is not less than one hundred twenty (120) calendar days nor more than one hundred fifty (150) calendar days in advance of the date of the Corporation’s proxy statement released to shareholders in connection with the previous year’s annual meeting of shareholders; provided, however, that in the event that no annual meeting was held in the previous year or the date of the annual meeting has been changed by more than thirty (30) days from the date contemplated at the time of the previous year’s proxy statement, notice by the nominating shareholder to be timely must be so received not later than the close of business on the later of one hundred twenty (120) calendar days in advance of such annual meeting or ten (10) calendar days following the date on which public disclosure of the date of the meeting is first made.  No adjournment of an annual meeting or announcement thereof shall commence a new time period for the giving of a timely notice as described above.  If the notice relates to a special meeting of shareholders, it must be delivered to or mailed and received by the Secretary of the Corporation at the principal executive offices of the Corporation not less than ninety (90) calendar days in advance of the date of the special meeting, or, if later, the tenth (10th) calendar day after public disclosure of the date of the special meeting is made.

(c)To be in proper form for purposes of this Section 1.10, a nominating shareholder’s notice shall set forth: (i) the name and record address of the nominating shareholder(s), (ii) the class and number of the Corporation’s shares which are beneficially owned by the nominating shareholder(s), (iii) a brief description of any derivative instrument (as defined in Section 1.9(c)(iii)) or any other agreement, arrangement, or understanding engaged in, directly or indirectly, by the nominating shareholder(s) with respect to the Corporation’s shares, (iv) as to each proposed nominee, (A) the proposed nominee’s name, age, business address and residence address; (B) the proposed nominee’s principal occupation or employment; (C) the class and number of the Corporation’s shares which are beneficially owned by the proposed nominee; (D) a brief description of any derivative instrument (as defined in Section 1.9(c)(iii)) or any other agreement, arrangement, or understanding engaged in, directly or indirectly, by the proposed nominee with respect to the Corporation’s shares; (E) a brief description of all material agreements, arrangements, understandings or relationships,

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including all direct or indirect compensatory arrangements, between or among the proposed nominee, the nominating shareholder(s) and any of their associates or affiliates; and (F) any other information relating to the proposed nominee that is required to be disclosed in solicitations of proxies for election of directors, or is otherwise required, in each case pursuant to Section 14 of the Exchange Act (including without limitation the proposed nominee’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected).

(d)A nominating shareholder shall further update and supplement such notice, if necessary, so that the information provided or required to be provided in the notice shall be true, correct and complete in all material respects (i) as of the record date for the meeting and (ii) as of the date that is ten (10) business days prior to the meeting or any adjournment thereof.  Such updates shall be delivered to or mailed and received by the Secretary at the principal executive offices of the Corporation (A) in the case of the update required under subsection (i), not later than five (5) business days after the record date, and (B) in the case of the update required under subsection (ii), not later than seven (7) business days prior to the meeting or any adjournment thereof.

(e)To be eligible as a director of the Corporation, a proposed nominee must deliver (in accordance with the time periods prescribed for delivery of notice under paragraph (b) of this Section 1.10) to the Secretary at the principal executive offices of the Corporation a written questionnaire with respect to the background and qualification of the proposed nominee (which questionnaire shall be provided by the Secretary upon written request) and a written representation and agreement (in the form provided by the Secretary upon written request) that the proposed nominee (i) is not and will not become a party to (A) any agreement, arrangement or understanding with, and has not given any commitment or assurance to, any person or entity as to how such person, if elected as a director of the Corporation, will act or vote on any issue or question (a “voting commitment”) that has not been disclosed to the Corporation or (B) any voting commitment that could limit or interfere with such person’s ability to comply, if elected as a director of the Corporation, with such person’s fiduciary duties under applicable law, (ii) is not and will not become a party to any agreement, arrangement or understanding with any person or entity other than the Corporation with respect to any direct or indirect compensation, reimbursement or indemnification in connection with service or action as a director that has not been disclosed therein, and (iii) would be in compliance, if elected as a director of the Corporation, and will comply with all applicable publicly disclosed corporate governance, conflict of interest, confidentiality and stock ownership and trading policies and guidelines of the Corporation.

(f)The Corporation may require any proposed nominee to furnish such other information (i) as may reasonably be required by the Corporation to determine the eligibility of such proposed nominee to serve as an independent director of the Corporation under applicable listing rules or (ii) that could be material to a reasonable shareholder’s understanding of the independence or lack of independence of such proposed nominee.

(g)No person shall be eligible for election as a director of the Corporation unless nominated in accordance with the procedures set forth in this Section 1.10.  The chairman of the meeting may, if the facts warrant, determine and declare to the meeting that a nomination was

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not so declared in accordance with the procedures prescribed by these Bylaws, and if the chairman should so determine, he or she shall so declare to the meeting and the defective nomination shall be disregarded, notwithstanding that proxies in respect of such nomination may have been received by the Corporation.  Notwithstanding the foregoing provisions of this Section 1.10, a shareholder shall also comply with all applicable requirements of the Exchange Act with respect to the nomination of any director that is subject to this Section 1.10.

ARTICLE II

Board of Directors

SECTION 2.1.  General Powers.  The property, affairs and business of the Corporation shall be managed under the direction of the Board of Directors.

SECTION 2.2.  Number and Qualifications.  The number of directors which shall constitute the Board of Directors shall be nine (9), which number may be either increased or diminished by resolution adopted by not less than a majority of the directors then in office; provided that the number may not be diminished below five (5), and no reduction in number shall have the effect of shortening the term of any incumbent director.  In the event that the holders of shares of preferred stock become entitled to elect a certain number of directors, the number of directors and the minimum number of directors shall be increased by such number.  Neither ownership of stock of the Corporation nor residence in the State of Indiana shall be required as a qualification for a director.

SECTION 2.3.  Classes of Directors and Terms.  The classes of directors and terms shall be divided into three classes as nearly equal in number as possible. Except as provided in Article 9 of the Articles of Incorporation fixing one, two and three year terms for the initial classified board, each class of directors shall be elected for a term of three (3) years. In the event of vacancy, either by death, resignation, or removal of a director, or by reason of an increase in the number of directors, each replacement or new director shall serve for the balance of the term of the class of the director he or she succeeds or, in the event of an increase in the number of directors, of the class to which he or she is assigned. All directors elected for a term shall continue in office until the election and qualification of their respective successors, their death, their resignation in accordance with Section 2.7, their removal in accordance with Section 2.8, or if there has been a reduction in the number of directors until the end of their respective terms. The classes and terms of the directors shall not be governed by IND. CODE §23-1-33-6(c).

SECTION 2.4.  Election of Directors.  Subject to the rights of the holders of preferred stock to elect any directors voting separately as a class or series, at each annual meeting of shareholders, the directors to be elected at the meeting shall be chosen by the plurality of the votes cast by the holders of shares entitled to vote in the election at the meeting, provided a quorum is present.  For purposes of this Section 2.4, a “plurality of the votes cast” shall mean that the individuals with the highest number of votes are elected as directors up to the maximum number of directors to be elected.

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The election of directors by the shareholders shall be by written ballot if directed by the chairman of the meeting or if the number of nominees exceeds the number of directors to be elected.

Any vacancy on the Board of Directors shall be filled by the affirmative vote of a majority of the remaining directors.

If the holders of preferred stock are entitled to elect any directors voting separately as a class or series, those directors shall be elected by a plurality of the votes cast by the holders of shares of preferred stock entitled to vote in the election at the meeting, provided a quorum of the holders of shares of preferred stock is present.

SECTION 2.5.  Meetings of Directors.

(a)Annual Meeting.  Unless otherwise provided by resolution of the Board of Directors, the annual meeting of the Board of Directors shall be held at the place of and immediately following the annual meeting of shareholders, for the purpose of organization, the election of officers and the transaction of such other business as properly may come before the meeting.  No notice of the meeting need be given, except in the case an amendment to the Bylaws is to be considered.

(b)Regular Meetings.  The Board of Directors by resolution may provide for the holding of regular meetings and may fix the times and places (within or outside the State of Indiana) at which those meetings shall be held.  Notice of regular meetings need not be given except when an amendment to the Bylaws is to be considered.  Whenever the time or place of regular meetings shall be fixed or changed, notice of this action shall be mailed promptly to each director not present when the action was taken, addressed to the director at his or her residence or usual place of business.

(c)Special Meetings.  Special meetings of the Board of Directors may be called by the Chairman of the Board and shall be called by the Secretary at the request of any three (3) directors.  Except as otherwise required by statute, notice of each special meeting shall be mailed to each director at his or her residence or usual place of business at least three (3) days before the day on which the meeting is to be held, or shall be sent to the director at such place by facsimile transmission or other form of electronic communication or personally delivered, not later than the day before the day on which the meeting is to be held.  The notice shall state the time and place (which may be within or outside the State of Indiana) of the meeting but, unless otherwise required by statute, the Articles of Incorporation or the Bylaws, need not state the purposes thereof.

Notice of any meeting need not be given to any director, however, who shall attend the meeting, or who shall waive notice thereof, before, at the time of, or after the meeting, in a writing signed by the director and delivered to the Corporation.  No notice need be given of any meeting at which every member of the Board of Directors shall be present.

SECTION 2.6.  Quorum and Manner of Acting.  A majority of the actual number of directors established pursuant to Section 2.2, from time to time, shall be necessary to constitute a quorum for the transaction of any business except the filling of vacancies on the Board of

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Directors under Section 2.4 or voting on a conflict of interest transaction under Section 2.12.  The act of a majority of the directors present at a meeting at which a quorum is present, shall be the act of the Board of Directors, unless the act of a greater number is required by statute, by the Articles of Incorporation, or by the Bylaws.  Any or all directors may participate in a meeting of the Board of Directors by means of a conference telephone or similar communications equipment by which all persons participating in the meeting may simultaneously hear each other, and participation in this manner shall constitute presence in person at the meeting.  In the absence of a quorum, a majority of the directors present may adjourn the meeting from time to time until a quorum shall be present.  No notice of any adjourned meeting need be given.

SECTION 2.7.  Resignations.  Any director may resign at any time by giving written notice of resignation to the Board of Directors, the Chairman of the Board, the Chief Executive Officer, or the Secretary.  Unless otherwise specified in the written notice, the resignation shall take effect upon receipt thereof and unless otherwise specified in it, the acceptance of the resignation shall not be necessary to make it effective.

SECTION 2.8.  Removal of Directors.  Any director, other than a director elected by holders of preferred stock voting as a class, may be removed from office at any time but only for cause and only upon the affirmative vote of at least sixty-six and two-thirds percent (66 2/3%) of the votes entitled to be cast by holders of all of the outstanding shares of Voting Stock (as defined in Article 9(e) of the Articles of Incorporation), voting together as a single class.

SECTION 2.9.  Action without a Meeting.  Any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting, if taken by all members of the Board of Directors or such committee, as the case may be, evidenced by a written consent signed by all such members and effective on the date, either prior or subsequent to the date of the consent, specified in the written consent, or if no effective date is specified in the written consent, the date on which the consent is filed with the minutes of proceedings of the Board of Directors or committee.

SECTION 2.10.  Chairman of the Board of Directors.  The Chairman of the Board shall preside at all meetings of the shareholders and of the Board of Directors, if present, and shall have such powers and perform such duties as are assigned to him or her by the Bylaws and by the Board of Directors.  At any time in which the Chairman of the Board is unable to discharge the powers and duties of the office, then until such time as the Board shall appoint a new Chairman or determines that the Chairman is able to resume office, temporary authority to perform such duties and exercise such powers shall be granted to the Chief Executive Officer, or if he or she is unable to perform such duties and exercise such powers, to the Board’s presiding or lead director (if one shall have been previously selected).

SECTION 2.11.  Committees.  The Board of Directors may designate from among its members one or more committees.  Such committees shall have those powers of the Board of Directors which may by law be delegated to such committees and are specified by resolution of the Board of Directors or by committee charters approved by the Board of Directors.

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SECTION 2.12.  Transactions with Corporation.  No transactions with the Corporation in which one or more of its directors has a direct or indirect interest shall be either void or voidable solely because of such interest if any one of the following is true:

(a)the material facts of the transaction and the director’s interest are disclosed or known to the Board of Directors or committee which authorizes, approves, or ratifies the transaction by the affirmative vote or consent of a majority of the directors (or committee members) who have no direct or indirect interest in the transaction and, in any event, of at least two directors (or committee members);

(b)the material facts of the transaction and the director’s interest are disclosed or known to the shareholders entitled to vote and they authorize, approve or ratify such transaction by vote; or

(c)the transaction is fair to the Corporation.

If a majority of the directors or committee members who have no direct or indirect interest in the transaction vote to authorize, approve, or ratify the transaction, a quorum is present for purposes of taking action under subsection (a) of this section.  The presence of, or a vote cast by, a director with a direct or indirect interest in the transaction does not affect the validity of any actions taken under subsection (a) of this section.

SECTION 2.13.  Compensation of Directors.  The Board of Directors is empowered and authorized to fix and determine the compensation of directors and additional compensation for such additional services any of such directors may perform for the Corporation.

ARTICLE III

Officers

SECTION 3.1.  Chief Executive Officer.  The Board of Directors shall appoint a Chief Executive Officer to serve at the pleasure of the Board of Directors.  The Chief Executive Officer shall have general supervisory responsibility over the business of the Corporation and shall see that all orders and resolutions of the Board of Directors are carried into effect. He or she shall be the primary executive officer of the Corporation and shall execute all bonds, mortgages, contracts and other instruments of the Corporation requiring a seal, under the seal of the Corporation, except where required or permitted by law to be otherwise signed and executed and except that the other officers of the Corporation may sign and execute documents when so authorized by these Bylaws, the Board of Directors or the Chief Executive Officer. In the absence or disability of the Chairman of the Board, the Chief Executive Officer shall preside at all meetings of the stockholders and the Board of Directors. The Chief Executive Officer shall also perform such other duties and may exercise such other powers as from time to time may be assigned to him or her by these Bylaws or by the Board of Directors.

SECTION 3.2.  Chief Financial Officer.  The Board of Directors shall appoint a Chief Financial Officer of the Corporation to serve at the pleasure of the Board of Directors.  The Chief Financial Officer shall, subject to the control of the Board of Directors, have the responsibility

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for maintaining the financial records of the Corporation. He or she shall render from time to time an account of the financial condition of the Corporation. The Chief Financial Officer shall also perform such other duties and may exercise such other powers as from time to time may be assigned to him or her by these Bylaws.

SECTION 3.3.  Secretary and Assistant Secretaries.  The Board of Directors shall appoint a Secretary of the Corporation to serve at the pleasure of the Board of Directors. The Secretary of the Corporation shall (a) keep minutes of all meetings of the shareholders and of the Board of Directors, (b) authenticate records of the Corporation, (c) give, or cause to be given, notice of all meetings of the shareholders and special meetings of the Board of Directors, and (d) in general, have such powers and perform such other duties as may be assigned to him or her by these Bylaws, as may from time to time be assigned to him or her by the Board of Directors or the Chief Executive Officer and as may be incident to the office of Secretary of the Corporation. If the Secretary shall be unable or shall refuse to cause to be given notice of all meetings of the shareholders and special meetings of the Board of Directors, and if there be no Assistant Secretary, then the Board of Directors may choose another officer to cause such notice to be given. The Secretary shall have custody of the seal of the Corporation and the Secretary or any Assistant Secretary, if there be one, shall have authority to affix the same to any instrument requiring it and when so affixed, it may be attested by the signature of the Secretary or by the signature of any such Assistant Secretary. The Board of Directors may give general authority to any other officer to affix the seal of the Corporation and to attest to the affixing by such officer’s signature. The Secretary shall see that all books, reports, statements certificates and other documents and records required by law to be kept or filed are properly kept or filed, as the case may be.

SECTION 3.4.  Treasurer.  The Treasurer, if any, shall perform such duties and shall have such powers as may from time to time be assigned by the Board or the Chief Executive Officer. In addition, the Treasurer shall perform such duties and have such powers as are incident to the office of treasurer, including without limitation the duty and power to keep and be responsible for all funds and securities of the Corporation, to deposit funds of the Corporation in depositories selected in accordance with these Bylaws, to disburse such funds as authorized by the Board or the Chief Executive Officer, to make proper accounts of such funds, and to render as required by the Board statements of all such transactions and of the financial condition of the Corporation.

SECTION 3.5.  Other Officers.  At any meeting of the Board of Directors, the Board of Directors may elect a President (who may or may not be the Chief Executive Officer), Vice Presidents, Treasurer, Assistant Treasurers, Assistant Secretaries or such other officers of the Corporation as the Board of Directors may deem necessary, to serve at the pleasure of the Board of Directors. Other officers elected by the Board of Directors shall have such powers and perform such duties as may be assigned to such officers by or pursuant to authorization of the Board of Directors or by the Chief Executive Officer.  Any two (2) or more offices may be held by the same person.

SECTION 3.6.  Term of Office.  Each officer shall hold office until his or her successor shall have been duly elected and shall have qualified or until his or her death or until he or she shall resign, but, subject to the requirements of the Articles of Incorporation, any officer may be

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removed pursuant Section 3.8 of these Bylaws or be removed in the manner provided in Section 3.9 of these Bylaws.

SECTION 3.7.  Resignation.  Any officer may resign at any time by giving written notice of such resignation to the Board of Directors, the Chairman of the Board, the Chief Executive Officer or the Secretary of the Corporation.  Unless otherwise specified in such written notice, such resignation shall take effect upon receipt thereof and unless otherwise specified in it, the acceptance of the resignation shall not be necessary to make it effective.

SECTION 3.8.  Removal.  Officers of the Corporation may be removed, either for or without cause, at any meeting of the Board of Directors called for the purpose, by the vote of a majority of the actual number of directors elected and qualified.  The officers and agents elected or appointed in accordance with the provisions of Section 3.6 may be removed, either for or without cause, at any meeting of the Board of Directors at which a quorum be present, by the vote of a majority of the directors present at such meeting, by any superior officer upon whom such power of removal shall have been conferred by the Board of Directors, or by any officer to whom the power to appoint such officer has been delegated by the Board of Directors pursuant to Section 3.6.  Any removal shall be without prejudice to the contract rights, if any, of the person so removed.

SECTION 3.9.  Vacancies.  A vacancy in any office by reason of death, resignation, removal, disqualification or any other cause, may be filled by the Board of Directors or by an officer authorized under these Bylaws to appoint such office.

ARTICLE IV

Execution of Instruments and Deposit of Corporate Funds

SECTION 4.1.  Execution of Instruments Generally.  All deeds, contracts, and other instruments requiring execution by the Corporation may be signed by the Chairman of the Board, the Chief Executive Officer, the Chief Financial Officer, the Treasurer, the Secretary or any Assistant Treasurer or Assistant Secretary of the Corporation.  Authority to sign any deed, contract, or other instrument requiring execution by the Corporation may be conferred by the Board of Directors upon any person or persons whether or not such person or persons be officers of the Corporation.  Such person or persons may delegate, from time to time, by instrument in writing, all or any part of such authority to any other person or persons if authorized so to do by the Board of Directors.

SECTION 4.2.  Notes, Checks, Other Instruments.  All notes, drafts, acceptances, checks, endorsements, and all evidences of indebtedness of the Corporation whatsoever, shall be signed by such officer or officers or such agent or agents of the Corporation and in such manner as the Board of Directors from time to time may determine.  Endorsements for deposit to the credit of the Corporation in any of its duly authorized depositories shall be made in such manner as the Board of Directors from time to time may determine.

SECTION 4.3.  Proxies.  Proxies, powers of attorney, or consents to vote with respect to shares or units of other corporations or other entities owned by or standing in the name of the

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Corporation may be executed and delivered from time to time on behalf of the Corporation by the Chairman of the Board, the Chief Executive Officer, the President, any Vice President, the Treasurer, any Assistant Treasurer, the Secretary or by any other person or persons thereunto authorized by the Board of Directors.  Persons with authority to execute proxies, powers of attorney, or consents under this Section 4.3 may delegate that authority unless prohibited by the Board of Directors.

ARTICLE V

Shares

SECTION 5.1.  Certificates for Shares.  Shares in the corporation may be issued in book-entry form or evidenced by certificates.  However, every holder of shares in the Corporation shall be entitled upon request to have a certificate evidencing the shares owned by the shareholder, signed in the name of the Corporation by the Chairman of the Board, the Chief Executive Officer, President or a Vice President and the Secretary or an Assistant Secretary, certifying the number of shares owned by the shareholder in the Corporation.  The signatures of such officers, the signature of the transfer agent and registrar, and the Seal of the Corporation may be facsimiles.  In case any officer or employee who shall have signed, or whose facsimile signature or signatures shall have been used on, any certificate shall cease to be an officer or employee of the Corporation before the certificate shall have been issued and delivered by the Corporation, the certificate may nevertheless be adopted by the Corporation and be issued and delivered as though the person or persons who signed the certificate or whose facsimile signature or signatures shall have been used thereon had not ceased to be such officer or employee of the Corporation; and the issuance and delivery by the Corporation of any such certificate shall constitute an adoption thereof.  Every certificate shall state on its face (or in the case of book-entry shares, the statements evidencing ownership of such shares shall state) the name of the Corporation and that it is organized under the laws of the State of Indiana, the name of the person to whom it is issued, and the number and class of shares and the designation of the series, if any, the certificate represents, and shall state conspicuously on its front or back that the Corporation will furnish the shareholder, upon written request and without charge, a summary of the designations, relative rights, preferences and limitations applicable to each class and the variations in rights, preferences and limitations determined for each series (and the authority of the Board of Directors to determine variations for future series).  Every certificate (or book-entry statement) shall state whether such shares have been fully paid and are non-assessable.  If any such shares are not fully paid, the certificate (or book-entry statement) shall be legibly stamped to indicate the percentum which has been paid up, and as further payments are made thereon, the certificate shall be stamped (or book-entry statement updated) accordingly.  Subject to the foregoing provisions, certificates representing shares in the Corporation shall be in such form as shall be approved by the Board of Directors.  There shall be entered upon the stock books of the Corporation at the time of the issuance or transfer of each share the number of the certificates representing such share (if any), the name of the person owning the shares represented thereby, the class of such share and the date of the issuance or transfer thereof.

SECTION 5.2.  Transfer of Shares.   Transfer of shares of the Corporation shall be made on the books of the Corporation by the holder of record thereof, or by the shareholder’s attorney

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thereunto duly authorized in writing and filed with the Secretary of the Corporation or any of its transfer agents, and on surrender of the certificate or certificates (if any) representing such shares. The Corporation and its transfer agents and registrars shall be entitled to treat the holder of record of any share or shares the absolute owner thereof for all purposes, and accordingly shall not be bound to recognize any legal, equitable or other claim to or interest in such share or shares on the part of any other person whether or not it or they shall have express or other notice thereof, except as otherwise expressly provided by the statutes of the State of Indiana.  Shareholders shall notify the Corporation in writing of any changes in their addresses from time to time.

SECTION 5.3.  Regulations.  Subject to the provisions of this Article V, the Board of Directors may make such rules and regulations as it may deem expedient concerning the issuance, transfer and regulation of certificates for shares or book-entry shares of the Corporation.

SECTION 5.4.  Transfer Agents and Registrars.  The Board of Directors may appoint one or more transfer agents, one or more registrars, and one or more agents to act in the dual capacity of transfer agent and registrar with respect to the certificates representing shares and the book-entry shares of the Corporation.

SECTION 5.5.  Lost or Destroyed Certificates.  The holders of any shares of the Corporation shall immediately notify the Corporation or one of its transfer agents and registrars of any loss or destruction of the certificate representing the same.  The Corporation may issue a new certificate in the place of any certificate theretofore issued by it alleged to have been lost or destroyed upon such terms and under such regulations as may be adopted by the Board of Directors or the Secretary, and the Board of Directors or Secretary may require the owner of the lost or destroyed certificate or the owner’s legal representatives to give the Corporation a bond in such form and for such amount as the Board of Directors or Secretary may direct, and with such surety or sureties as may be satisfactory to the Board of Directors or the Secretary to indemnify the Corporation and its transfer agents and registrars against any claim that may be made against it or any such transfer agent or registrar on account of the alleged loss or destruction of any such certificate or the issuance of such new certificate.  A new certificate may be issued without requiring any bond when, in the judgment of the Board of Directors or the Secretary, it is proper so to do.

ARTICLE VI

Indemnification

SECTION 6.1.  Right to Indemnification.

(a)The Corporation shall, to the fullest extent permitted by applicable law now or hereafter in effect, indemnify any person who is or was a director, officer or employee of the Corporation (“Eligible Person”) and who is or was involved in any manner (including, without limitation, as a party or a witness) or is threatened to be made so involved in any threatened, pending or completed investigation, claim, action, suit or proceeding, whether civil, criminal, administrative or investigative (including, without limitation, any action, suit or proceeding by

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or in the right of the Corporation to procure a judgment in its favor) (a “Proceeding”) by reason of the fact that such Eligible Person is or was a director, officer or employee of the Corporation or is or was serving at the request of the Corporation as a director, officer, partner, member, manager, trustee, employee, fiduciary or agent of another corporation, partnership, joint venture, limited liability company, trust or other enterprise (including, without limitation, any employee benefit plan) (a “Covered Entity”), against all expenses (including attorneys’ fees), judgments, fines or penalties (including excise taxes assessed with respect to an employee benefit plan) and amounts paid in settlement actually and reasonably incurred by such Eligible Person in connection with such Proceeding.

(b)Notwithstanding Section 6.1(a), the Corporation shall not be obligated to indemnify an Eligible Person with respect to a Proceeding (or part thereof) commenced by such Eligible Person, except with respect to (i) a judicial adjudication or arbitration commenced by the Eligible Person under Section 6.5(e) or (f), as to which the rights to indemnification are provided pursuant Section 6.5(h), or (ii) a Proceeding (or part thereof) that was authorized or consented to by the Board of Directors of the Corporation.

(c)In the event a Proceeding arises out of an Eligible Person’s service to a Covered Entity, the indemnification provided by the Corporation under this Article VI shall be secondary to and not pari passu with any indemnification provided by the Covered Entity.  However, the Corporation may provide indemnification to the Eligible Person in the first instance, in which case the Corporation shall be subrogated to the extent of such payment to the rights of the Eligible Person with respect to the indemnification provided by the Covered Entity and any insurance coverage maintained by the Covered Entity on behalf of the Eligible Person.

(d)Any right of an Eligible Person to indemnification shall be a contract right and shall include the right to receive, prior to the conclusion of any Proceeding, advancement of any expenses incurred by the Eligible Person in connection with such Proceeding in accordance with Section 6.4.

SECTION 6.2.  Insurance, Contracts and Funding.  The Corporation may purchase and maintain insurance to protect itself and any Eligible Person against any expense, judgments, fines and amounts paid in settlement as specified in Section 6.1 or incurred by any Eligible Person in connection with any Proceeding referred to in such section, to the fullest extent permitted by applicable law now or hereafter in effect.  The Corporation may enter into agreements with any director, officer, employee or agent of the Corporation or any director, officer, employee, fiduciary or agent of any Covered Entity supplemental to or in furtherance of the provisions of this Article VI and may create a trust fund or use other means (including, without limitation, a letter of credit) to ensure the payment of such amounts as may be necessary to effect indemnification and advancement of expenses as provided in this Article VI.

SECTION 6.3.  Non-Exclusive Rights; Applicability to Certain Proceedings.  The rights provided in this Article VI shall not be exclusive of any other rights to which any Eligible Person may otherwise be entitled, and the provisions of this Article VI shall inure to the benefit of the heirs and legal representatives of any Eligible Person and shall be applicable to Proceedings commenced or continuing after the adoption of this Article VI, whether arising from acts or omissions occurring before or after such adoption.

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SECTION 6.4.  Advancement of Expenses.

(a)Except as provided under Sections 6.4(b) and (c) below, all reasonable expenses incurred by or on behalf of an Eligible Person in connection with any Proceeding shall be advanced to the Eligible Person by the Corporation within sixty (60) days after the receipt by the Corporation of a statement or statements from the Eligible Person complying with this section and Section 6.5 requesting such advance or advances from time to time, whether prior to or after final disposition of such Proceeding, unless a determination has been made pursuant to Section 6.5 that such Eligible Person is not entitled to indemnification.  Any such statement or statements shall reasonably evidence the expenses incurred by the Eligible Person and shall include (i) a written representation that, in connection with the matters giving rise to the Proceeding, the Eligible Person was acting in good faith and in what he or she believed to be the best interests of the Corporation or at least not opposed to the best interests of the Corporation, and (ii) a written affirmation or undertaking to repay advances if it is ultimately determined that the Eligible Person is not entitled to indemnification under this Article VI.

(b)Notwithstanding Section 6.4(a), advancement of expenses shall not be mandatory, but shall be permissive at the discretion of the Corporation, for expenses incurred after the Eligible Person’s conviction by a trial court of competent jurisdiction of, or plea of guilty or nolo contendere or its equivalent to, a crime arising from the circumstances giving rise to the Proceeding.

(c)Notwithstanding Section 6.4(a), advancement of expenses shall not be mandatory, but shall be permissive at the discretion of the Corporation, for expenses incurred by or on behalf of Eligible Persons for judicial adjudications or arbitrations under Section 6.5(e) or (f).

SECTION 6.5.  Procedures; Presumptions and Effect of Certain Proceedings; Remedies.  In furtherance, but not in limitation, of the foregoing provisions, the following procedures, presumptions and remedies shall apply with respect to and the right to indemnification and advancement of expenses under this Article VI.

(a)To obtain indemnification under this Article VI, an Eligible Person shall submit to the Secretary of the Corporation a written request, including such documentation and information as is reasonably available to the Eligible Person and reasonably necessary to determine whether and to what extent the Eligible Person is entitled to indemnification (the “Supporting Documentation”).  The determination of the Eligible Person’s entitlement to indemnification shall be made not later than sixty (60) days after receipt by the Corporation of the written request together with the Supporting Documentation.  The Secretary of the Corporation shall, promptly upon receipt of such request, advise the Board in writing of the Eligible Person’s request.

(b)An Eligible Person’s entitlement to indemnification under this Article VI shall be determined in one of the following methods, such method to be selected by the Board of Directors, regardless of whether there are any Disinterested Directors (as hereinafter defined): (i) by a majority vote of the Disinterested Directors, if they constitute a quorum of the Board; (ii) by a written opinion of Special Counsel (as hereinafter defined) if a quorum of the Board consisting of Disinterested Directors is not obtainable or, even if

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obtainable, a majority of such Disinterested Directors so directs; (iii) by the shareholders of the Corporation (but only if a majority of the Disinterested Directors, if they constitute a quorum of the Board, presents the issue of entitlement to the shareholders for their determination); or (iv) as provided in subsection (d).

(c)In the event the determination of entitlement is to be made by Special Counsel, a majority of the Disinterested Directors shall select the Special Counsel, but only Special Counsel to which the Eligible Person does not reasonably object.

(d)In any event, if the person or persons empowered under subsection (c) to determine entitlement shall not have been appointed or shall not have made a determination within sixty (60) days after receipt by the Corporation of the request therefor together with the Supporting Documentation, the Eligible Person shall be deemed to be, and shall be, entitled to indemnification and advancement of expenses unless (i) the Eligible Person misrepresented or failed to disclose a material fact in making the request for indemnification or in the Supporting Documentation or (ii) such indemnification is prohibited by law.  The termination of any Proceeding or of any claim, issue or matter therein, by judgment, order, settlement or conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, adversely affect the right of an Eligible Person to indemnification or create a presumption that the Eligible Person did not act in good faith and in a manner which the Eligible Person reasonably believed to be in or not opposed to the best interests of the Corporation and, with respect to any criminal proceeding, that the Eligible Person had reasonable cause to believe that his or her conduct was unlawful.

(e)In the event that a determination is made that the Eligible Person is not entitled to indemnification (i) the Eligible Person shall be entitled to seek an adjudication of his or her entitlement to such indemnification either, at the Eligible Person’s sole option, in (A) an appropriate court of the State of Indiana or any other court of competent jurisdiction or (B) an arbitration to be conducted in Indianapolis, Indiana, by a single arbitrator pursuant to the rules of the American Arbitration Association; and (ii) in any such judicial proceeding or arbitration the Eligible Person shall not be prejudiced by reason of the prior determination pursuant to this Section 6.5.

(f)If a determination shall have been made or deemed to have been made that the Eligible Person is entitled to indemnification, the Corporation shall be obligated to pay the amounts incurred by the Eligible Person within ten (10) days after such determination has been made or deemed to have been made and shall be conclusively bound by such determination unless (i) the Eligible Person misrepresented or failed to disclose a material fact in making the request for indemnification or in the Supporting Documentation or (ii) such indemnification is prohibited by law.  In the event that (A) any advancement of expenses is not timely made pursuant to Section 6.4 or (B) payment of indemnification is not made within ten (10) days after a determination of entitlement to indemnification has been made, the Eligible Person shall be entitled to seek judicial enforcement of the Corporation’s obligation, to pay to the Eligible Person such advancement of expenses or indemnification.  Notwithstanding the foregoing, the Corporation may bring an action, in an appropriate court in the State of Indiana or any other court of competent jurisdiction, contesting the right of the Eligible Person to receive indemnification hereunder due to the occurrence of an event described in clause (i) or (ii) of

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this subsection (f) (a “Disqualifying Event”); provided, however, that in any such action the Corporation shall have the burden of proving the occurrence of such Disqualifying Event.

(g)The Corporation shall be precluded from asserting in any judicial proceeding or arbitration commenced pursuant to this Section 6.5 that the procedures and presumptions of this Article VI are not valid, binding and enforceable and shall stipulate in any such court or before any such arbitrator that the Corporation is bound by the provisions of this Article VI.

(h)In the event that the Eligible Person seeks a judicial adjudication of or an award in arbitration to enforce his or her rights under, or to recover damages for breach of this Article VI, the Eligible Person shall be entitled to recover from the Corporation, and shall be indemnified by the Corporation, against, any expenses actually and reasonably incurred by the Eligible Person in connection with such adjudication or arbitration if the Eligible Person prevails in such adjudication or arbitration.  If it shall be determined in such judicial adjudication or arbitration that the Eligible Person is entitled to receive part but not all of the indemnification or advancement of expenses sought, the expenses incurred by the Eligible Person in connection with such judicial adjudication or arbitration shall be prorated accordingly.

SECTION 6.6.  Certain Definitions.  For purposes of this Article VI:

(a)“Disinterested Director” means a Director who is not or was not a party to the Proceeding in respect of which indemnification is sought by the Eligible Person.

(b)“Special Counsel” means a law firm or a member of a law firm that neither presently is, nor in the past five years has been, retained to represent any other party to the Proceeding giving rise to a claim for indemnification under this Article VI.  In addition, any person who, under applicable standards of professional conduct, would have a conflict of interest in representing either the Corporation or the Eligible Person in an action to determine the Eligible Person’s rights under this Article VI may not act as Special Counsel.

SECTION 6.7.  Indemnification of Agents.  Notwithstanding any other provisions of this Article VI, the Corporation may, consistent with the provisions of applicable law, indemnify any person other than a director, officer or employee of the Corporation who is or was an agent of the Corporation and who is or was involved in any manner (including, without limitation, as party or a witness) or is threatened to be made so involved in any threatened, pending or completed Proceeding by reasons of the fact that such person is or was an agent of the Corporation or, at the request of the Corporation, a director, officer, partner, member, manager, employee, fiduciary or agent of a Covered Entity against all expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such Proceeding.  The Corporation may also advance expenses incurred by such person in connection with any such Proceeding, consistent with the provisions of applicable law.

SECTION 6.8.  Effect of Amendment or Repeal.  Neither the amendment or repeal of, nor the adoption of a provision inconsistent with, any provision of this Article VI shall adversely affect the rights of any Eligible Person under this Article VI with respect to any Proceeding commenced or threatened prior to such amendment, repeal or adoption of an inconsistent provision without the written consent of such Eligible Person.

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SECTION 6.9.  Severability.  If any of this Article VI shall be held to be invalid, illegal or unenforceable for any reason whatsoever: (a) the validity, legality and enforceability of the remaining provisions of this Article VI (including, without limitation, all portions of any Section of this Article VI containing any such provision held to be invalid, illegal or unenforceable, that are not themselves invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby; and (b) to the fullest extent possible, the provisions of this Article VI (including, without limitation, all portions of any Section of this Article VI containing any such provision held to be invalid, illegal or unenforceable, that are not themselves invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested by the provision held invalid, illegal or unenforceable.

ARTICLE VII

Miscellaneous

SECTION 7.1.  Corporate Seal.  The Seal of the Corporation shall consist of a circular disk around the circumference of which shall appear the words:

“ELANCO ANIMAL HEALTH INCORPORATED, GREENFIELD, INDIANA”.

SECTION 7.2.  Fiscal Year.  The fiscal year of the Corporation shall begin on the first day of January in each year and shall end on the thirty-first day of the following December.

* * *

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EX-10.1

Exhibit 10.1

MASTER SEPARATION AGREEMENT

BY AND BETWEEN

ELI LILLY AND COMPANY

AND

ELANCO ANIMAL HEALTH INCORPORATED

Dated as of September 24, 2018

Table of Contents

			Page
ARTICLE I	DEFINITIONS		2
Section 1.01.		Certain Definitions	2
ARTICLE II	THE SEPARATION		17
Section 2.01.		Transfer of Assets and Assumption of Liabilities; Contribution; Consideration and Proceeds of the IPO and Debt Transactions	17
Section 2.02.		Animal Health Assets	18
Section 2.03.		Animal Health Liabilities	20
Section 2.04.		Transfers Not Effected on or Prior to the Effective Date; Transfers Deemed Effective as of the Effective Date	22
Section 2.05.		Termination of Agreements	24
Section 2.06.		Documents Relating to Other Transfers of Assets and Assumption of Liabilities	25
Section 2.07.		Bank Accounts; Cash Balances	25
Section 2.08.		Other Transaction Documents	26
Section 2.09.		Shared Contracts	26
Section 2.10.		Disclaimer of Representations and Warranties	27
Section 2.11.		Guarantees	28
Section 2.12.		Novation of Animal Health Liabilities	29
Section 2.13.		Novation of Excluded Liabilities	30
Section 2.14.		Insurance Policies	31
ARTICLE III	THE IPO AND ACTIONS PENDING THE IPO; OTHER TRANSACTIONS		32
Section 3.01.		The IPO	32
Section 3.02.		Charter; Bylaws	32
Section 3.03.		The Distribution or Other Disposition	32
ARTICLE IV	MUTUAL RELEASES; INDEMNIFICATION		33
Section 4.01.		Release of Pre-Closing Claims	33
Section 4.02.		Indemnification by the Company	36
Section 4.03.		Indemnification by Lilly	36
Section 4.04.		Indemnification Obligations Net of Insurance Proceeds and Other Amounts	37
Section 4.05.		Procedures for Indemnification of Third Party Claims	38

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Section 4.06.		Additional Matters	40
Section 4.07.		Medicare Reporting	40
Section 4.08.		Remedies Cumulative	41
Section 4.09.		Survival of Indemnities	41
Section 4.10.		Special Damages	41
ARTICLE V	CERTAIN BUSINESS MATTERS		42
Section 5.01.		No Restriction on Competition	42
Section 5.02.		No Solicitation of Employees	42
ARTICLE VI	EXCHANGE OF INFORMATION; CONFIDENTIALITY		43
Section 6.01.		Provision of Corporate Records	43
Section 6.02.		Agreement for Exchange of Information; Archives	43
Section 6.03.		Ownership of Information	45
Section 6.04.		Reimbursement for Providing Information	45
Section 6.05.		Record Retention	45
Section 6.06.		Limitations of Liability	46
Section 6.07.		Other Agreements Providing for Exchange of Information	46
Section 6.08.		Production of Witnesses; Records; Cooperation	46
Section 6.09.		Confidentiality	47
Section 6.10.		Protective Arrangements	48
Section 6.11.		Preservation of Legal Privileges	49
ARTICLE VII	FINANCIAL AND OTHER COVENANTS		50
Section 7.01.		Disclosure and Financial Controls	50
Section 7.02.		Auditors and Audits; Annual Statements and Accounting	56
Section 7.03.		Company Board Representation	58
Section 7.04.		Committees	60
Section 7.05.		Other Covenants	60
Section 7.06.		Covenants Regarding the Incurrence of Indebtedness	62
Section 7.07.		Applicability of Rights in the Event of an Acquisition of the Company	62
Section 7.08.		Lilly Policies and Procedures	62
Section 7.09.		Compliance with Organizational Documents	62
Section 7.10.		Approval Rights	63
Section 7.11.		Company Group Services	63
ARTICLE VIII	DISPUTE RESOLUTION		63
Section 8.01.		Disputes	63

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Section 8.02.		Escalation; Mediation	64
Section 8.03.		Court Actions	64
ARTICLE IX	FURTHER ASSURANCES		65
Section 9.01.		Further Assurances	65
ARTICLE X	TERMINATION		65
Section 10.01.		Termination	65
Section 10.02.		Effect of Termination	65
ARTICLE XI	MISCELLANEOUS		66
Section 11.01.		Counterparts; Entire Agreement; Conflicting Agreements	66
Section 11.02.		No Construction Against Drafter	66
Section 11.03.		Governing Law	66
Section 11.04.		Assignability	66
Section 11.05.		Third Party Beneficiaries	66
Section 11.06.		Notices	67
Section 11.07.		Severability	67
Section 11.08.		Force Majeure	67
Section 11.09.		Late Payments	68
Section 11.10.		Expenses	68
Section 11.11.		Advisors	68
Section 11.12.		Headings	68
Section 11.13.		Survival of Covenants	68
Section 11.14.		Waivers of Default	68
Section 11.15.		Specific Performance	68
Section 11.16.		Amendments	69
Section 11.17.		Interpretation	69
Section 11.18.		Waiver of Jury Trial	69
Section 11.19.		Submission to Jurisdiction; Waivers	70
SCHEDULES
Schedule 2.02(a)		Animal Health Assets
Schedule 2.02(b)		Excluded Assets
Schedule 2.03(b)		Excluded Liabilities
Schedule 2.05(b)		Continuing Agreements
Schedule 7.08		Excluded Lilly Policies and Procedures
Schedule 11.11		Advisors
EXHIBITS
Exhibit A		Amended and Restated Articles of Incorporation
Exhibit B		Amended and Restated Bylaws

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MASTER SEPARATION AGREEMENT

THIS MASTER SEPARATION AGREEMENT, dated as of September 24, 2018, is by and between Eli Lilly and Company, an Indiana corporation (“Lilly”) and Elanco Animal Health Incorporated, an Indiana corporation (the “Company”).  Capitalized terms used herein and not otherwise defined shall have the respective meanings assigned to them in Article I hereof.

R E C I T A L S

WHEREAS, the Company is a direct wholly-owned Subsidiary of Lilly;

WHEREAS, the Board of Directors of Lilly (the “Lilly Board”) has determined that it is appropriate and advisable to separate the Animal Health Business from the other businesses conducted by Lilly (the “Separation”);

WHEREAS, the Lilly Board and the Company Board have each approved the acquisition by the Company and its Subsidiaries of all Animal Health Assets, and the assumption by the Company and its Subsidiaries of all Animal Health Liabilities, all as more fully described in the Transaction Documents;

WHEREAS, the Lilly Board has further determined that it is appropriate and advisable, on the terms and conditions contemplated herein, to cause the Company to offer and sell for its own account a number of shares of Company Common Stock in an initial public offering of the Company Common Stock, to be registered pursuant to a registration statement on Form S-1 (the “IPO”), immediately following the consummation of which Lilly will continue to own at least 80.1% of the outstanding shares of Company Common Stock;

WHEREAS, substantially simultaneously with the entry into this Agreement, pursuant to the Corporate Reorganization, Lilly is contributing to the Company the outstanding Stock of the Specified Entities, which collectively own substantially all of the Animal Health Assets, and are responsible for substantially all of the Animal Health Liabilities (collectively, the “Contribution”);

WHEREAS, following the consummation of the IPO, Lilly intends at a time (or times) to be determined by Lilly, to transfer shares of Company Common Stock to holders of shares of Lilly Common Stock by means of (a) one or more dividend distributions by Lilly to holders of Lilly Common Stock of shares of Company Common Stock, (b) one or more offers to holders of Lilly Common Stock to exchange their shares of Lilly Common Stock for shares of Company Common Stock, or (c) any combination thereof (any such transaction, a “Distribution”);

WHEREAS, if Lilly determines not to effect a Distribution, Lilly may determine instead to effect a disposition of its Company Common Stock pursuant to one or more public or private offerings for sale or other similar transactions (any such transaction, an “Other Disposition”) or continue to hold its shares of Company Common Stock;

WHEREAS, for U.S. federal income tax purposes, the Contribution and a Distribution, if effected, taken together, are intended to qualify as a tax-free spin-off under Section 355 and Section 368(a)(1)(D) of the Code;

WHEREAS, this Agreement is intended to be a “plan of reorganization” within the meaning of Treas. Reg. Section 1.368-2(g); and

WHEREAS, the parties hereto desire to set forth herein (a) the principal corporate transactions required to effect the Separation and the IPO and (b) certain agreements that will, following the consummation of the IPO, govern certain matters relating to the Transactions and the relationship between the Lilly Group and the Company Group.

NOW, THEREFORE, in consideration of the mutual agreements, provisions and covenants contained in this Agreement, the receipt and sufficiency of which are hereby acknowledged, the parties, intending to be legally bound, hereby agree as follows:

ARTICLE I

DEFINITIONS

Section 1.01.Certain Definitions.  For purposes of this Agreement, the following terms shall have the following meanings:

“Action” means any demand, action, claim, dispute, suit, countersuit, arbitration, inquiry, proceeding or investigation by or before any Governmental Authority.

“Additional Transfer Documents” has the meaning set forth in Section 2.06.

“Affiliate” of any Person means a Person that controls, is controlled by, or is under common control with such Person.  As used in this definition, “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such entity, or the power to appoint and remove a majority of the directors, managers or persons holding similar power in respect of such entity, whether through ownership of voting securities or other interests, by contract or otherwise.  It is expressly agreed that, from and after the Effective Date, solely for purposes of this Agreement, (1) no member of the Company Group shall be deemed to be an Affiliate of any member of the Lilly Group and (2) no member of the Lilly Group shall be deemed to be an Affiliate of any member of the Company Group.

“Agreement” means this Master Separation Agreement, including all of the schedules and exhibits hereto.

“Ancillary Agreements” means the Transitional Services Agreement, the Tax Matters Agreement, the Employee Matters Agreement, the Toll Manufacturing and Supply Agreement, the Registration Rights Agreement, the Intellectual Property and Technology License Agreement, the Transitional Trademark License Agreement, the Additional Transfer Documents and other agreements related thereto.

“Animal Health Assets” has the meaning set forth in Section 2.02(a).

“Animal Health Business” means the business of researching, developing, manufacturing, marketing, selling and distributing (a) vaccines, treatments and other veterinary products (other than parasite control products) for farm, companion and aquatic animals, and (b) parasite control products, in the case of each of clauses (a) and (b), under the “Elanco” or “Elanco Animal Health” brand names. For the avoidance of doubt, parasite control products do not include antimicrobial and antiviral products.

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“Animal Health Intellectual Property” means:

(a)the Patent Rights, Trademarks and Internet domain names identified and acknowledged by Lilly and the Company;

(b)the Copyrights (i) identified and acknowledged by Lilly and the Company or (ii) in Marketing Materials Related to the Animal Health Business;

(c)the Know-How Related to the Animal Health Business; and

(d)all other Intellectual Property Related to the Animal Health Business.

“Animal Health IP Contracts” means the IP Contracts Related to the Animal Health Business.

“Animal Health Liabilities” has the meaning set forth in Section 2.03(a).

“Annual Financial Statements” has the meaning set forth in Section 7.01(e).

“Applicable Period” has the meaning set forth in Section 7.02.

“Assets” means the assets, properties, and rights (including goodwill), wherever located (including in the possession of vendors or other third parties or elsewhere), of every kind, character and description, whether real, personal or mixed, tangible, intangible or contingent, in each case whether or not recorded or reflected or required to be recorded or reflected on the books and records or financial statements of the owner thereof, including the following:

(a)all accounting and other books, records, ledgers and files and all personnel records, in each case, whether printed, electronic, contained on storage media or written, or in any other form;

(b)all apparati, computers and other electronic data processing and communication equipment, telephone and facsimile numbers, fixtures, machinery, furniture, office equipment, automobiles, motor vehicles and other transportation equipment, special and general tools, test devices, prototypes and models and other tangible personal property, including all other equipment;

(c)all inventories of materials, parts, active pharmaceutical ingredients, biological materials, including master and working seeds, challenge materials, cell lines and reagents, analytical and research materials, raw materials, supplies, work-in-process and finished goods and products;

(d)all interests in and rights to real property of whatever nature, including easements and rights-of-way, whether as owner, mortgagee, lessor, sublessor, lessee, sublessee or otherwise;

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(e)all interests in any capital stock or other equity interests of any other Person, all bonds, notes, debentures or other securities issued by any other Person, all loans, advances or other extensions of credit or capital contributions to any other Person and all other investments in securities of any other Person;

(f)all license agreements, leases of personal property, open purchase orders for active pharmaceutical ingredients, raw materials, supplies, parts or services and unfilled orders for the manufacture and sale of products;

(g)all deposits, letters of credit, banker’s acceptances and performance and surety bonds;

(h)all Intellectual Property;

(i)all cost information, sales and pricing data, customer prospect lists, supplier records, customer and supplier lists, customer and vendor data, correspondence and lists, product data, artwork, designs, Marketing Materials, quality records and reports and other books, records, studies, surveys, reports, plans and documents;

(j)all prepaid expenses, trade accounts and other accounts and notes receivable;

(k)all Contracts and rights thereunder, all claims or rights against any other Person arising from the ownership or use of any Asset, all rights in connection with any bids or offers and all claims, choses in action and similar rights, whether accrued or contingent;

(l)all licenses, permits, certificates, approvals, consents, registrations and authorizations, including, Marketing Authorizations for any products requiring such to be sold, which have been issued by or obtained by such Person from any Governmental Authority and all pending applications therefor on behalf of such Person;

(m)all cash or cash equivalents, certificates of deposit and other investment securities of any form or maturity and all bank accounts, lock boxes and other deposit arrangements and all brokerage accounts; and

(n)all interest rate, currency, commodity or other swap, collar, cap or other hedging or similar agreements or arrangements.

“Business Day” means any day other than a Saturday, Sunday or a day on which banking institutions are authorized or obligated by Law to be closed in New York, New York.

“Bylaws” has the meaning set forth in Section 3.02.

“Cash and Swaps” means, collectively, cash, cash equivalents, certificates of deposit and other investment securities of any form or maturity and the Assets described in clause (n) of the definition thereof.

“CERCLA” has the meaning set forth in Section 4.08.

“Charter” has the meaning set forth in Section 3.02.

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“CMS” has the meaning set forth in Section 4.07.

“Code” means the Internal Revenue Code of 1986, as amended.

“Commission” means the U.S. Securities and Exchange Commission.

“Company” has the meaning set forth in the preamble hereto.

“Company Auditors” has the meaning set forth in Section 7.02(a).

“Company Balance Sheet” means the condensed combined balance sheet of the Company as of June 30, 2018, included in the IPO Registration Statement.

“Company Board” means the Board of Directors of the Company.

“Company Books and Records” means originals or true and complete copies thereof, including electronic copies (if available), of (a) all minute books, corporate charters and bylaws or comparable Organizational Documents, records of share issuances and related corporate records of each member of the Company Group; (b) all books and records exclusively relating to (i) Company Transferred Employees, (ii) the purchase of materials, supplies and services for the Animal Health Business and (iii) dealings with customers of the Animal Health Business; (c) all files relating exclusively to any Action the Liability with respect to which is an Animal Health Liability; and (d) all other books and records Related to the Animal Health Business.  Notwithstanding the foregoing, in no event shall “Company Books and Records” include any Excluded Company Books and Records.

“Company Cash Balance” means the aggregate balance of the unrestricted cash, cash equivalents and short term investments of the members of the Company Group, taken as a whole.

“Company Common Stock” means the common stock, without par value, of the Company.

“Company Debt Obligations” means all Indebtedness of the Company or any member of the Company Group.

“Company Group” means the Company, each Specified Entity, each Transferred Entity and each other Person that either (x) is controlled directly or indirectly by the Company immediately after the Effective Date or (y) becomes controlled directly or indirectly by the Company following the Effective Date.

“Company Indemnitees” has the meaning set forth in Section 4.03.

“Company Public Documents” has the meaning set forth in Section 7.01(h).

“Company Servicing Subsidiaries” means, collectively, Elanco Saude Animal Ltda., Elanco Salud Animal S.A. de C.V. and Elanco US Inc.

“Company Transferred Employees” has the meaning assigned to such term in the Employee Matters Agreement.

“Company Voting Stock” has the meaning set forth in Section 7.03(a).

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“Confidential Information” has the meaning set forth in Section 6.09(a).

“Consent” means any consent, waiver or approval from, or notification requirement to, any third parties.

“Contract” means any written or oral commitment, contract, subcontract, agreement, lease, sublease, license, understanding, sales order, purchase order, instrument or other commitment that is binding on any Person or any part of its property under applicable Law.

“Contribution” has the meaning set forth in the recitals hereto.

“Contribution Closing” has the meaning set forth in Section 2.01(b).

“Copyrights” has the meaning set forth in the definition of “Intellectual Property.”

“Corporate Reorganization” means the transactions described in the “Project Stallion Macro Step Plan” dated as of the date hereof.

“Coverage End Date” has the meaning set forth in Section 2.14(a).

“Covered Claims” has the meaning set forth in Section 2.14(b).

“Deconsolidation Date” has the meaning assigned to such term in the Tax Matters Agreement.

“Debt Transactions” means, collectively, (a) the issuance by the Company of (i) $500,000,000 aggregate principal amount of 3.912% Senior Notes due 2021, (ii) $750,000,000 aggregate principal amount of 4.272% Senior Notes due 2023 and (iii) $750,000,000 aggregate principal amount of 4.900% Senior Notes due 2028, pursuant to the Indenture dated August 28, 2018, by and between the Company and Deutsche Bank Trust Company Americas and (b) the entry into (i) the Revolving Loan Credit Agreement by and among the Company, the lenders named therein and JPMorgan Chase Bank, N.A., as Administrative Agent, dated as of September 5, 2018 and (ii) the Term Loan Credit Agreement by and among the Company, the lenders named therein and JPMorgan Chase Bank, N.A., as Administrative Agent, dated as of September 5, 2018.

“Deferred Jurisdictions” means Argentina, Austria, Belgium, Chile, Colombia, Czech Republic, Denmark, Hungary, Ireland, Malaysia, Norway, Philippines, Poland, Portugal, South Africa, Sweden and Turkey.

“Disclosing Party” has the meaning set forth in Section 6.09(a).

“Disclosure Documents” means any form, statement, schedule or other materials filed with or furnished to the Commission or any other Governmental Authority by or on behalf of any party or any of its controlled Affiliates, and any information statement, prospectus, offering memorandum, offering circular or similar disclosure document (including in connection with the IPO) and any schedule thereto or document incorporated therein by reference, whether or not filed with or furnished to the Commission or any other Governmental Authority.

“Disposition Date” means (i) the Distribution Date, if the Distribution is effected, or (ii) the date on which Lilly and its Affiliates cease to beneficially own in excess of 50% of the outstanding shares of Company Common Stock, if an Other Disposition is effected.

“Dispute” has the meaning set forth in Section 8.01.

“Distribution” has the meaning set forth in the recitals hereto.

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“Distribution Date” means, if the Distribution is effected, the date on which Lilly no longer holds shares of Company Common Stock as a consequence of the Distribution.

“Effective Date” means the date of the closing of the IPO.

“Employee Matters Agreement” means the Employee Matters Agreement, dated as of the Effective Date, by and between Lilly and the Company.

“Environmental Law” means any means any applicable Law relating to human health and safety, but only to the extent related to human exposure to hazardous substances, pollution or protection of the environment or natural resources.

“Environmental Liabilities” means any and all Liabilities (including the cost of any investigation, remediation, clean-up, abatement, removal or monitoring of hazardous substances), whether existing, occurring or arising on, prior to or after the Effective Date, that in each case arise under or relate to any Environmental Law or Environmental Permit or any spill, emission, Release or disposal into the environment of, or human exposure to, hazardous substances.

“Environmental Permit” means any license, permit, certificate, approval, consent, registration and authorization required under Environmental Law to own or operate the Animal Health Business.

“Escalation Notice” has the meaning set forth in Section 8.02(a).

“Excess Director Number” has the meaning set forth in Section 7.03(d).

“Exchange Act” means the Securities Exchange Act of 1934, as amended, together with the rules and regulations promulgated thereunder.

“Excluded Assets” has the meaning set forth in Section 2.02(b).

“Excluded Company Books and Records” means all Company Books and Records that (a) any member of the Lilly Group is required by Law to retain or that any member of the Lilly Group determines is necessary or advisable to retain, (b) are related to Taxes, including any Tax Returns (which in all cases shall be governed by the Tax Matters Agreement), (c) any member of the Lilly Group is prohibited by Law from delivering to the Company (including by transfer of the equity of the Specified Entities and their Subsidiaries), including any books and records, reports, information or other materials that disclose in any manner the contents of any other books and records, reports, information or other materials that any member of the Lilly Group or any Specified Entity is prohibited by Law from delivering to the Company (including by transfer of the equity of the Specified Entities or their Subsidiaries), or (d) any member of the Lilly Group retains in order to avoid: (x) conflicting with or violating any Law or Governmental Approval applicable to any member of the Lilly Group or to the Lilly Business or (y) resulting in any breach of, or constituting a default (or event which, with the giving of notice or lapse of time, or both, would become a default) under, or giving any Person any rights of termination, amendment, acceleration or cancellation of, or result in the creation of any Lien on any Assets owned, directly or indirectly, by any member of

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the Lilly Group, pursuant to, any Contract to which any member of the Lilly Group is a party or by which its Assets are bound.

“Excluded Environmental Liabilities” has the meaning set forth in Section 2.03(b)(ii).

“Excluded Liabilities” has the meaning set forth in Section 2.03(b).

“Excluded Lilly Books and Records” means all Lilly Books and Records that (a) any member of the Company Group is required by Law to retain or that any member of the Company Group determines is necessary or advisable to retain, (b) any member of the Company Group is prohibited by Law from delivering to Lilly, including any books and records, reports, information or other materials that disclose in any manner the contents of any other books and records, reports, information or other materials that the Company Group is prohibited by Law from delivering to Lilly and (c) any copies of any books and records that any member of the Company Group retains in order to avoid (x) conflicting with or violating any Law or Governmental Approval applicable to any member of the Company Group or to the Animal Health Business or (y) resulting in any breach of, or constituting a default (or event which, with the giving of notice or lapse of time, or both, would become a default) under, or giving any Person any rights of termination, amendment, acceleration or cancellation of, or result in the creation of any Lien on any Animal Heath Assets pursuant to, any Contract to which any member of the Company Group is a party or by which its Assets are bound.

“Financial Statements” means the Annual Financial Statements and Quarterly Financial Statements, collectively.

“Government Official” means (a) any elected or appointed governmental official (e.g., a member of a ministry of health), (b) any employee or Person acting for or on behalf of a governmental official, agency or enterprise performing a governmental function, (c) any candidate for public office, political party officer, employee or person acting for or on behalf of a political party or candidate for public office or (d) any person otherwise categorized as a government official under Law.  As used in this definition, “government” is meant to include all levels and subdivisions of non-U.S. governments (i.e., local, regional or national and administrative, legislative or executive).

“Governmental Approval” means any authorizations, consents, waivers, orders and approvals of any Governmental Authority, including any applicable waiting periods associated therewith.

“Governmental Authority” means any U.S. federal, state or local or any supra-national or non-U.S. government, political subdivision, governmental, regulatory or administrative authority, instrumentality, agency, body or commission, self-regulatory organization or any court, tribunal, or judicial or arbitral body.

“Group” means either the Company Group or the Lilly Group, as the context requires.

“Guarantee” has the meaning set forth in Section 2.11(a).

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“HGH Ancillary Assets” means, other than the HGH Assets, any information, data, documents or materials, whether in physical or digital form, relating to or used to support the manufacture or analysis of Product; Product; Granules (as defined in the Toll Manufacturing and Supply Agreement); reference and retention samples; stability samples; relevant reference standards; technical or cGMP information; process flow documents; analytical methods and supporting method validation information; process validation protocols and reports; technical and development history reports; master and batch production records within Lilly’s global retention guidance (including relevant batch release documentation and supporting certificates); annual reports and other periodic product reviews; deviations, change controls and complaints; specifications; stability protocols and reports; Marketing Authorizations and Intellectual Property.

“HGH Assets” means (a) the HGH Facility, (b) all equipment and fixtures in the HGH Facility used by any member of the Company Group in the manufacture and delivery of Product to the Lilly Group in the twelve (12) months preceding the Effective Date and (c) intermediates corresponding to Product, including raw materials (e.g., resins, enzymes, product packaging materials). For the avoidance of doubt, the HGH Assets shall not include the HGH Ancillary Assets.

“HGH Facility” means the animal health manufacturing plant located at Speke Operations, Fleming Road, Speke, Liverpool, United Kingdom, L24 9LN.

“Indebtedness” of any Person means (a) all obligations of such Person for borrowed money, (b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of such Person upon which interest charges are customarily paid, (d) all obligations of such Person under conditional sale or other title retention agreements relating to property or assets purchased by such Person, (e) all obligations of such Person issued or assumed as the deferred purchase price of property or services, (f) 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 mortgage, lien, pledge, or other encumbrance on property owned or acquired by such Person, whether or not the obligations secured thereby have been assumed, (g) all guarantees by such Person of indebtedness of others, (h) all capital lease obligations of such Person and (i) all securities or other similar instruments convertible or exchangeable into any of the foregoing, but excluding daily cash overdrafts associated with routine cash operations.

“Indemnifying Party” has the meaning set forth in Section 4.04(a).

“Indemnitee” has the meaning set forth in Section 4.04(a).

“Indemnity Payment” has the meaning set forth in in Section 4.04(a).

“Information” means information, whether or not patentable or copyrightable, in written, oral, electronic or other tangible or intangible forms, stored in any medium, including studies, reports, records, books, Contracts, surveys, discoveries, ideas, concepts, Know-How, techniques, designs, specifications, drawings, blueprints, diagrams, models, prototypes, samples, flow charts, data, computer data, disks, diskettes, tapes, computer programs or other Software, marketing plans, customer

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names, communications by or to attorneys (including attorney-client privileged communications), memoranda and other materials prepared by attorneys or under their direction (including attorney work product), and other technical, financial, employee or business information or data, and Personal Data, but excluding the Company Books and Records and the Lilly Books and Records.

“Insurance Proceeds” means those monies:

(a)           received by an insured from a third party insurance carrier;

(b)           paid by a third party insurance carrier on behalf of the insured; or

(c)           received (including by way of setoff) from any third party in the nature of insurance, contribution or indemnification in respect of any Liability;

in each such case net of any applicable premium adjustments (including reserves or retentions and retrospectively rated premium adjustments) and net of any costs or expenses incurred in the collection thereof and excluding, for the avoidance of doubt, proceeds from any self-insurance, captive insurance or similar program.

“Intellectual Property” means all rights, title and interest in or relating to intellectual property, whether protected, created or arising under the laws of the United States or any other foreign jurisdiction, including all: (a)(i) patent applications (along with all patents issuing thereon) and issued patents, invention disclosures, certificates of invention and statutory invention registrations; (ii) reissues, renewals, extensions, substitutions, continuations, continuations-in-part, and divisions, all results of oppositions, reexaminations, supplemental examinations, supplementary protection certificates, and other review procedures (including ex parte reexamination, inter partes review, and post grant review) with respect to (i), and (iii) rights to claim priority with respect to (i) and (ii) (“Patent Rights”); (b) Know-How; (c) trademarks, service marks, names, corporate names, trade names, certification marks, service names, brand names, brand marks, trade dress rights, trade styles, slogans, identifying symbols, logos, emblems, monograms and signs or insignia, and other similar designations of source or origin and all applications and registrations therefor and all reissues, extensions and renewals of any of the foregoing, together with the goodwill symbolized by any of the foregoing (“Trademarks”); (d) Internet domain names; (e) works of authorship, copyrights, database and design rights, whether or not registered, published or unpublished, and registrations and applications therefor along with all reversions, renewals and extensions thereof (“Copyrights”); (f) software, data and databases (“Software”) and (g)(i) all rights in and to all income, royalties, damages and payments previously, now or hereafter due or payable, (ii) all claims, causes of action, rights of recovery and rights of set-off of any kind against any Person (other than a member of the Lilly Group), and (iii) the right to recover for past, present and future infringement against any Person (other than a member of the Lilly Group), in each case of (i) to (iii) with respect to the foregoing (a) through (f).

“Intellectual Property and Technology License Agreement” means the Intellectual Property and Technology License Agreement, dated as of the Effective Date, by and between Lilly and the Company.

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“Intercompany Accounts” has the meaning set forth in Section 2.05(a).

“IP Contracts” means all Contracts pursuant to which a party hereto or any of its Affiliates grants or obtains any rights to use Intellectual Property (other than Contracts in which such Intellectual Property is incidental to such Contracts).

“IPO” has the meaning set forth in the recitals hereto.

“IPO Registration Statement” means the registration statement on Form S-l (File No. 333-226536) filed under the Securities Act, pursuant to which the offer and sale of Company Common Stock in the IPO will be registered, together with all amendments thereto (including post-effective amendments and registration statements filed pursuant to Rule 462(b) under the Securities Act).

“Know-How” means all existing and available technical information, know-how and data, including inventions (whether patentable or not), patent disclosures, discoveries, trade secrets, specifications, instructions, processes and formulae, including all biological, chemical, pharmacological, biochemical, toxicological, pharmaceutical, physical, safety, quality control, preclinical and clinical data (which includes anonymized data as it relates to individuals).

“Law” means any United States or non-United States federal, national, international, multinational, supranational, state, provincial, local or similar law (including common law and privacy and data protection laws), statute, ordinance, regulation, rule, code, order, treaty (including any income tax treaty), license, permit, authorization, registration, approval, consent, decree, injunction, judgment, notice of liability, request for information, binding judicial or administrative interpretation or other requirement or rule of law or legal process, in each case, enacted, promulgated, issued, entered or otherwise put into effect by a Governmental Authority or any rule or requirement of any national securities exchange.

“Liabilities” means any and all Indebtedness, claims, Taxes, liabilities, demands, causes of actions and obligations, whether accrued, fixed or contingent, mature or inchoate, known or unknown, reflected on a balance sheet or otherwise, including those arising under any Law, Action, Contract, commitment or undertaking.

“Lien” means any mortgage, security interest, pledge, lien, charge, claim, option, right to acquire, voting or other restriction, right-of-way, covenant, easement, encroachment, restriction on transfer, or other encumbrance of any nature whatsoever.

“Lilly” has the meaning set forth in the preamble hereto.

“Lilly Accounts” has the meaning set forth in Section 2.07(a).

“Lilly Annual Statements” has the meaning set forth in Section 7.01(e).

“Lilly Auditors” has the meaning set forth in Section 7.02(b).

“Lilly Board” has the meaning set forth in the recitals hereto.

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“Lilly Books and Records” means originals or true and complete copies thereof, including electronic copies (if available) of (a) corporate charters and bylaws or comparable Organizational Documents and related corporate records, of the Lilly Group; (b) all books and records relating to (i) Lilly Employees, (ii) the purchase of materials, supplies and services for the Lilly Business and (iii) dealings with customers of the Lilly Business; (c) all files relating to any Action the Liability with respect to which is an Excluded Liability; and (d) all other books and records used exclusively in, or arising, directly or indirectly, exclusively out of the operation or conduct of, the Lilly Business.  Notwithstanding the foregoing, in no event shall “Lilly Books and Records” include any Excluded Lilly Books and Records.

“Lilly Business” means any business or operations of the Lilly Group (whether conducted independently or in association with one or more third parties through a partnership, joint venture or other mutual enterprise) other than, for the avoidance of doubt, the Animal Health Business.

“Lilly Common Stock” means the common stock, without par value, of Lilly.

“Lilly Designee” has the meaning set forth in Section 7.03(a).

“Lilly Employees” has the meaning assigned to such term in the Employee Matters Agreement.

“Lilly Group” means Lilly, each direct or indirect Subsidiary of Lilly and each other Person that either (x) is controlled directly or indirectly by Lilly immediately after the Effective Date or (y) becomes controlled directly or indirectly by Lilly following the Effective Date; provided, however, that neither the Company nor any other member of the Company Group shall be members of the Lilly Group.

“Lilly Indemnitees” has the meaning set forth in Section 4.02.

“Lilly Public Filings” has the meaning set forth in Section 7.01(l).

“Local Transfer Agreements” means, collectively, the asset transfer agreements, share transfer agreements, business transfer agreements, deeds, certificates of demerger and merger and other agreements and instruments that provide for the transfer or assignment of Animal Health Assets and Animal Health Liabilities (a) by a Subsidiary of Lilly to a Person that is or will be a Specified Entity or a Transferred Entity immediately prior to the Effective Date or (b) by a member of the Lilly Group to a member of the Company Group.

“Losses” means any and all damages, losses, deficiencies, Liabilities, penalties, judgments, settlements, payments, fines, charges, interest, costs and expenses, whether or not resulting from third party claims, including the costs and expenses of any and all Actions and demands, assessments, judgments, settlements and compromises relating thereto and the costs and expenses of attorneys’, accountants’, consultants’ and other professionals’ fees and expenses incurred in the investigation or defense thereof or the enforcement of rights hereunder.

“Marketing Materials” means all labeling, marketing and promotional materials and inserts.

“Measurement Time” means, in the event that the Effective Date occurs (a) prior to the fifteenth (15th) calendar day of a month, 11:59 p.m. Eastern Time on the last day of the month immediately preceding the month in which the Effective Date occurs and (b) on or after the fifteenth (15th) calendar day of a month, 11:59 p.m. Eastern Time on the last day of the month in which the Effective Date occurs.

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“Organizational Documents” has the meaning set forth in Section 7.09.

“Other Disposition” has the meaning set forth in the recitals hereto.

“Patent Rights” has the meaning set forth in the definition of “Intellectual Property.”

“Person” means an individual, a general or limited partnership, a corporation, a trust, a joint venture, an unincorporated organization, a limited liability entity, any other entity and any Governmental Authority.

“Personal Data” means any definition given for any similar term (e.g., “personal information,” “personally identifiable information” or “PII”) under applicable Law, or by the Company or Lilly in any of its privacy policies, notices or contracts, as well as any information relating to an identified or identifiable natural person.  For purposes of this definition, an identifiable natural person is one who can be identified, directly or indirectly, in particular by reference to an identifier such as a name, an identification number, location data, an online identifier or to one or more factors specific to the physical, physiological, genetic, mental, economic, cultural or social identity of that natural person.  Personal Data can be in any media or format, including computerized or electronic records as well as paper-based files.  Personal Data includes: (a) a first or last name or initials; (b) a home or other physical address, including street name and name of city or town; (c) an email address or other online contact information, such as an instant messaging user identifier or a screen name that reveals an individual’s email address; (d) a telephone number; (e) a social security number, tax ID number, identification number, individual number or other government-issued identifier (such as a driver’s license); (f) an internet protocol address or host name that identifies an individual; (g) a persistent identifier, such as a customer number held in a “cookie” or processor serial number, that is combined with other available data that identifies an individual; (h) birth dates or treatment dates; or (i) coded data that is derived from Personal Data. Additionally, to the extent any other information (such as, but not necessarily limited to, case report form information, clinical trial identification codes, personal profile information, other unique identifier, or biometric information) is associated or combined with Personal Data, then such information also will be considered Personal Data.  For the avoidance of doubt, Personal Data that has been pseudonymized, meaning that the information may not be attributed to a natural person without the use of additional Information, also will be considered Personal Data.

“Policies” or “Policy” means insurance policies and insurance contracts of any kind, including primary, excess and umbrella, comprehensive general liability, directors and officers, automobile, products, workers’ compensation, employee dishonesty, property and crime insurance policies and self-insurance and captive insurance company arrangements, and interests in insurance pools and programs held in the name of Lilly or any of its Affiliates, together with the rights, benefits and privileges thereunder.

“Posilac Marketing Authorizations” means the marketing authorizations issued, or applications for marketing authorizations, with respect to a sterile, prolonged-release injectable formulation of a recombinant DNA-derived bovine somatotropin (sometribove zinc or rBST) analog, as sold by or on behalf of Lilly under certain brand names, including Posilac® Lactatropin, Lactotropin, Lactotropina, Somatech brand names (collectively, “Posilac”) and all supplements, amendments and revisions thereto.

“Prime Rate” means the rate last quoted as of the time of determination by The Wall Street Journal as the “Prime Rate” in the United States or, if the Wall Street Journal ceases to quote such rate, the highest per annum interest rate published by the Federal Reserve Board in Federal Reserve Statistical Release H.15 (519) (Selected Interest Rates) as the “bank prime loan” rate as of such time, or, if such rate is no longer quoted therein, any similar rate quoted therein

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(as determined by Lilly) or any similar release by the Federal Reserve Board (as determined by Lilly).

“Privilege” has the meaning set forth in Section 6.11(a).

“Privileged Information” means Information that is or may be protected from disclosure pursuant to the attorney-client privilege, the work product doctrine, the common interest and joint defense doctrines or other applicable privileges.

“Product” has the meaning assigned to such term in the Toll Manufacturing and Supply Agreement.

“Quarterly Financial Statements” has the meaning set forth in Section 7.01(d).

“Receiving Party” has the meaning set forth in Section 6.09(a).

“Registration Rights Agreement” means the Registration Rights Agreement, dated as of the Effective Date, by and between Lilly and the Company.

“Related to the Animal Health Business” means (a) used exclusively in, (b) relating exclusively to, or (c) arising, directly or indirectly, exclusively out of the operation or conduct of, the Animal Health Business as conducted by the Lilly Group and the Company Group.

“Release” means any release, spill, emission, leaking, dumping, pumping, injection, pouring, deposit, disposal, discharge, dispersal, leaching or migration into or through the indoor or outdoor environment (including ambient air, surface water, groundwater, land surface or subsurface strata, soil and sediments) or into, through, or within any property, building, structure, fixture or equipment.

“Representatives” means, when used with respect to any Person, such Person’s directors, officers, employees, agents, accountants, attorneys, consultants and other advisors and representatives.

“Restricted Cash Amount” means an aggregate amount in cash equal to $275,000,000, which the Company shall (a) retain from the proceeds of the IPO and/or the Debt Transactions, (b) hold as restricted cash, and (c) use solely to effect the contributions, assignments, transfers, conveyances, distributions or deliveries of Animal Health Assets and acceptances or assumptions of Animal Health Liabilities in the Deferred Jurisdictions.

“Retained Names” means “Lilly”, “Eli Lilly and Company”, and any Trademarks related thereto or containing or comprising the foregoing, including any Trademarks derivative thereof or confusingly similar thereto.

“Section 111 Report” has the meaning set forth in Section 4.07.

“Securities Act” means the Securities Act of 1933, as amended, together with the rules and regulations promulgated thereunder.

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“Separation” has the meaning set forth in the recitals hereto.

“Services” has the meaning assigned to such term in the Transitional Services Agreement.

“Shared Contract Liability” means any Liability related to, arising out of or resulting from a Shared Contract.

“Shared Contracts” means each Contract entered into prior to the Effective Date that is between Lilly or any of its Subsidiaries (including any member of the Company Group), on the one hand, and one or more third parties, on the other hand, that provides benefits to or imposes obligations on the Animal Health Business, but is not Related to the Animal Health Business.

“Shared Policies” means Policies in existence prior to the Effective Date where both the Animal Health Business and the Lilly Business are eligible for coverage and/or where the employees, officers, directors or agents of both the Animal Health Business and the Lilly Business are eligible for coverage.

“Software” has the meaning set forth in the definition of “Intellectual Property.”

“Specified Entities” means ChemGen Corp., Elanco Europe GmbH, Elanco International, Inc., Elanco US Inc., Ivy Animal Health, Inc., Lohmann Animal Health GmbH and Lohmann Animal Health International, Inc.

“Stock” means shares of capital stock (whether denominated as common stock or preferred stock), beneficial, partnership or membership interests, participations or other equivalents (regardless of how designated) of or in a corporation, partnership, limited liability company or business trust, whether voting or non-voting.

“Stock Equivalents” means all securities convertible into or exchangeable for Stock and all warrants, options or other rights to purchase or subscribe for any Stock, whether or not presently convertible, exchangeable or exercisable, and all voting debt.

“Subsidiary” means, when used with respect to any Person, (a) a corporation in which such Person and/or one or more Subsidiaries of such Person, directly or indirectly, owns Stock having a majority of the total voting power in the election of directors of all outstanding shares of all classes and series of Stock of such corporation entitled generally to vote in such election; and (b) any other Person (other than a corporation) in which such Person and/or one or more Subsidiaries of such Person, directly or indirectly, has (i) a majority ownership interest or (ii) the power to elect or direct the election of a majority of the members of the governing body of such first-named Person.

“Tax Matters Agreement” means the Tax Matters Agreement, dated as of the Effective Date, by and between Lilly and the Company.

“Tax Records” has the meaning assigned to such term in the Tax Matters Agreement.

“Tax Returns” has the meaning assigned to such term in the Tax Matters Agreement.

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“Taxes” has the meaning assigned to such term in the Tax Matters Agreement.

“Third Party Claim” has the meaning set forth in Section 4.05(a).

“Toll Manufacturing and Supply Agreement” means the Toll Manufacturing and Supply Agreement, dated as of the Effective Date, by and between Eli Lilly Export S.A. and Elanco UK AH Limited.

“Trademarks” has the meaning set forth in the definition of “Intellectual Property.”

“Transaction Documents” means this Agreement, the Ancillary Agreements and the Local Transfer Agreements.

“Transactions” means the Separation, the IPO and the Distribution or Other Disposition.

“Transferred Entities” has the meaning set forth in Section 2.02(a)(iv).

“Transitional Services Agreement” means the Transitional Services Agreement, dated as of the Effective Date, by and between Lilly and the Company.

“Transitional Trademark License Agreement” means the Transitional Trademark License Agreement, dated as of the Effective Date, by and between Lilly and the Company.

“Underwriters” means Goldman Sachs & Co. LLC; J.P. Morgan Securities LLC; Morgan Stanley & Co. LLC; Barclays Capital Inc.; BNP Paribas Securities Corp.; Citigroup Global Markets Inc.; Credit Suisse Securities (USA); Deutsche Bank Securities Inc.; Merrill Lynch, Pierce, Fenner & Smith Incorporated; Evercore Group L.L.C.; Cowen and Company, LLC; Academy Securities, Inc.; Drexel Hamilton, LLC; Mischler Financial Group, Inc.; Samuel A. Ramirez & Company, Inc.; and The Williams Capital Group, L.P.

“Underwriting Agreement” means that certain Underwriting Agreement, dated as of September 19, 2018, by and among the Company and the Underwriters in connection with the offering and sale of Company Common Stock in the IPO.

“US GAAP” means the generally accepted accounting principles used in the United States.

“Wholly-Owned Subsidiary” means each Subsidiary in which the Company owns (directly or indirectly) all of the outstanding Stock, except for director’s qualifying shares in nominal amount.

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ARTICLE II

THE SEPARATION

Section 2.01.Transfer of Assets and Assumption of Liabilities; Contribution; Consideration and Proceeds of the IPO and Debt Transactions.

(a)Except to the extent otherwise provided in this Agreement or any Ancillary Agreement, prior to the Effective Date:

(i)Lilly shall have contributed, assigned, transferred, conveyed, distributed and delivered, and shall have caused the applicable members of the Lilly Group to have contributed, assigned, transferred, conveyed, distributed and delivered, to the Specified Entities, and the Specified Entities shall have accepted from Lilly and any applicable member of the Lilly Group, all of Lilly’s and the applicable member of the Lilly Group’s respective right, title and interest in and to all Animal Health Assets (it being understood that if any Animal Health Asset shall be held by a Transferred Entity, this Section 2.01(a)(i) shall be deemed satisfied in respect of such Animal Health Asset as a result of the direct or indirect transfer of the Stock of such Transferred Entity to a Specified Entity); and

(ii)the Specified Entities shall have accepted, assumed and agreed to pay, perform, satisfy or discharge when due and fulfill all the Animal Health Liabilities, in accordance with their respective terms.  The Company and the Specified Entities shall be responsible for all Animal Health Liabilities, regardless of (A) when or where such Animal Health Liabilities arose or arise, (B) whether the facts on which they are based occurred on, prior to, or subsequent to the Effective Date, (C) when, where or against whom such Animal Health Liabilities are asserted or determined (including, subject to Section 4.01(b), any Animal Health Liabilities arising out of claims made by Lilly’s or the Company’s respective directors, officers, employees, agents, Subsidiaries or Affiliates against any member of the Lilly Group or the Company Group), (D) whether asserted or determined on, prior to or subsequent to the Effective Date and (E) except as set forth in Section 2.03(b)(iv), regardless of whether arising from or alleged to arise from negligence, recklessness, violation of Law, fraud or misrepresentation by any Person in the Lilly Group or the Company Group, or any of their respective directors, officers, employees, agents, Subsidiaries or Affiliates (it being understood that if any Animal Health Liabilities shall be held by a Transferred Entity, this Section 2.01(a)(ii) shall be deemed satisfied in respect of such Animal Health Liability as a result of the direct or indirect transfer of the Stock of such Transferred Entity to a Specified Entity).

(b)The consummation of the Contribution shall take place at the offices of Weil, Gotshal & Manges LLP, 767 Fifth Avenue, New York, New York 10153, or at such other place as the parties hereto may agree, or by remote exchange of signatures and documents, immediately prior to the closing of the IPO (the “Contribution Closing”).  At the Contribution Closing, Lilly shall contribute, assign, transfer and convey to the Company, and the Company shall accept, the Stock of the Specified Entities, and in exchange therefor, the Company agrees, on the Effective Date, to (i) pay to Lilly, subject to the

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provisions set forth below, all of the net proceeds of the IPO (including the net proceeds from the exercise of the Underwriters’ overallotment option if it is exercised by the Underwriters, which payment shall be made by the Company promptly following its receipt of such proceeds), after deducting only the underwriters’ discount and (ii) pay to Lilly the net proceeds of the Debt Transactions, together with any interest accrued thereon following the receipt of such proceeds by the Company; provided that the Company shall retain (A) an amount in cash that Lilly reasonably estimates, in its good faith judgment, will result in the Company Cash Balance being no less than $300,000,000 as of the Measurement Time and (B) the Restricted Cash Amount.  Each applicable payment made by the Company to Lilly pursuant to this Section 2.01(b) shall be made by wire transfer of immediately available funds to an account designated by Lilly to the Company in writing.

(c)As promptly as practicable following the Measurement Time, Lilly shall calculate the Company Cash Balance as of the Measurement Time.  The calculation of the Company Cash Balance shall be made by Lilly in good faith and shall be final and binding on the Company.  If Lilly determines that the Company Cash Balance as of the Measurement Time was less than $300,000,000, then Lilly shall, as promptly as practicable, contribute or otherwise transfer to an account designated in writing by the Company, an amount of cash equal to such deficit.  If Lilly determines that the Company Cash Balance as of the Measurement Time was greater than $300,000,000, then the Company shall, as promptly as practicable upon receipt of notice from Lilly, distribute or otherwise transfer to an account designated in writing by Lilly, an amount of cash equal to the excess. The Company shall give to Lilly and its Representatives access at reasonable times to the Company’s books, records, working papers and personnel to the extent requested and reasonably necessary to calculate the Company Cash Balance.

(d)The Company hereby waives compliance by each and every member of the Lilly Group with the requirements and provisions of any “bulk-sale” or “bulk-transfer” Laws of any jurisdiction that may otherwise be applicable with respect to the transfer or sale of any or all of the Animal Health Assets to the Specified Entities or any member of the Company Group.

(e)At any time following the Effective Date, in the event that at any time or from time to time, any party hereto (or Person in such party’s respective Group), shall receive or otherwise possess any Asset or Liability, as applicable, that is allocated to any other Person pursuant to the Transaction Documents, such party shall use its reasonable best efforts to promptly transfer, or cause to be transferred, such Asset or Liability, as applicable, to the Person so entitled thereto or responsible therefor and the Person so entitled thereto or responsible therefor shall accept such transfer.

Section 2.02.Animal Health Assets.

(a)For purposes of this Agreement, “Animal Health Assets” shall mean all of Lilly’s and its Subsidiaries’ right, title and interest as of the Effective Date, in and to:

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(i)all Animal Health Intellectual Property, except as expressly otherwise contemplated in this Agreement or any Ancillary Agreement to be retained by any member of the Lilly Group;

(ii)all Animal Health IP Contracts;

(iii)all Assets (excluding any Intellectual Property or IP Contracts) reflected as assets on the Company Balance Sheet, other than any such Assets disposed of subsequent to the date of the Company Balance Sheet;

(iv)all issued and outstanding Stock of the entities set forth on Schedule 2.02(a)(iv) and each of their Subsidiaries (collectively, the “Transferred Entities”);

(v)to the extent provided by Section 2.14, all insurance proceeds;

(vi)any other Assets (A) that are expressly contemplated by this Agreement or any Ancillary Agreement (including any schedule or exhibit hereto or thereto) as Assets to be transferred or provided to, or retained by, the Company or any other member of the Company Group (excluding any Intellectual Property) or (B) listed or described on Schedule 2.02(a)(vi);

(vii)subject to Section 2.09, all rights made available to the Company Group under Shared Contracts;

(viii)the HGH Assets; and

(ix)any and all other Assets (excluding any Intellectual Property or IP Contracts) of Lilly and its Subsidiaries that are Related to the Animal Health Business, except as expressly otherwise contemplated in this Agreement or the Ancillary Agreements to be retained by any member of the Lilly Group.

Notwithstanding anything to the contrary in this Agreement, the Animal Health Assets shall not in any event include any Assets that are included in the Excluded Assets referred to in Section 2.02(b).

(b)For the purposes of this Agreement, “Excluded Assets” shall mean (without duplication):

(i)all Intellectual Property that is not Animal Health Intellectual Property (including the Retained Names);

(ii)the Stock of each of Lilly’s Subsidiaries (other than the members of the Company Group, including the Specified Entities and the Transferred Entities);

(iii)all Contracts to which Lilly or any member of the Lilly Group is a party or by which its or any of their respective Assets are bound and any rights or claims (whether accrued or contingent) of Lilly or any member of the Lilly Group arising thereunder, other than any Contracts that are Related to the Animal Health Business (other

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than any IP Contracts) and any Animal Health IP Contracts;

(iv)subject to Section 2.09, all rights under Shared Contracts;

(v)all Cash and Swaps, except to the extent set forth on Schedule 2.02(a)(vi);

(vi)the Excluded Company Books and Records;

(vii)the Assets listed or described on Schedule 2.02(b)(vii);

(viii)all HGH Ancillary Assets; and

(ix)any other Assets that are expressly contemplated by this Agreement or any Ancillary Agreement (including any schedule or exhibit hereto or thereto) as Assets to be retained by Lilly or any other Person in the Lilly Group or that are not otherwise expressly contemplated as being included as Animal Health Assets.

Section 2.03.Animal Health Liabilities.

(a)For the purposes of this Agreement, “Animal Health Liabilities” shall mean (without duplication):

(i)any and all Liabilities that are expressly contemplated by this Agreement or any Ancillary Agreement (or any other schedules hereto or thereto) as Liabilities to be retained, assumed or retired by the Company or any Person in the Company Group (including any Specified Entity or Transferred Entity), and all agreements, obligations and Liabilities of any member of the Company Group under the Transaction Documents;

(ii)any and all Liabilities reflected as liabilities or obligations on the Company Balance Sheet, subject to any discharge of such Liabilities subsequent to the date of the Company Balance Sheet and all Liabilities arising or assumed after the date of the Company Balance Sheet that, had they arisen or been assumed on or before such date and been existing obligations as of such date, would have been reflected on the Company Balance Sheet if prepared in accordance with US GAAP applied on a consistent basis;

(iii)any and all Liabilities relating to, resulting from or arising out of any Action Related to the Animal Health Business;

(iv)any and all Liabilities arising out of claims made by the Company’s directors, officers, employees, agents, Subsidiaries or Affiliates against any member of the Lilly Group or the Company Group to the extent relating to the Corporate Reorganization;

(v)any and all Company Debt Obligations (whether incurred prior to, on, or after the Effective Date);

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(vi)any and all Shared Contract Liabilities allocated to the Company pursuant to Section 2.09; and

(vii)any and all other Liabilities, including Environmental Liabilities, to the extent relating to, arising out of or resulting from the ownership, operation or use of any Animal Health Assets or of the Animal Health Business, whether arising prior to, on, or after the Effective Date;

Notwithstanding anything to the contrary in this Agreement, the Animal Health Liabilities shall not in any event include any Liabilities that are included in the Excluded Liabilities referred to in Section 2.03(b).

(b)For the purposes of this Agreement, “Excluded Liabilities” shall mean:

(i)any and all Liabilities that are (A) expressly contemplated by this Agreement or any Ancillary Agreement (or any other schedule hereto or thereto) as Liabilities to be retained or assumed by Lilly or any other Person in the Lilly Group, (B) agreements and obligations of any Person in the Lilly Group under the Transaction Documents or (C) listed or described on Schedule 2.03(b)(i);

(ii)any and all Environmental Liabilities to the extent relating to, arising out of or resulting from the matters set forth or described on Schedule 2.03(b)(ii) (collectively, the “Excluded Environmental Liabilities”);

(iii)any and all Shared Contract Liabilities that are allocated to Lilly pursuant to Section 2.09;

(iv)any and all Liabilities arising from a knowing violation of Law, fraud or misrepresentation by any member of the Lilly Group or any of its directors, officers, employees or agents (other than any individual who at the time of such act was acting in his or her capacity as a director, officer, employee or agent of any member of the Company Group);

(v)any and all Liabilities relating to, arising out of or resulting from any Indebtedness of any member of the Lilly Group (whether incurred prior to, or after the Effective Date);

(vi)any and all other Liabilities, including Environmental Liabilities, to the extent relating to, arising out of or resulting from any Excluded Asset or the Lilly Business, whether arising prior to, on or after the Effective Date; and

(vii)any and all other Liabilities of Lilly and its Subsidiaries that are not Animal Health Liabilities or Liabilities of a member of the Company Group on the date of this Agreement.

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Section 2.04.Transfers Not Effected on or Prior to the Effective Date; Transfers Deemed Effective as of the Effective Date.

(a)To the extent that any contribution, assignment, transfer, conveyance, distribution or delivery of Assets (including the Stock of any Transferred Entity) or acceptance and assumption of Liabilities contemplated by this Article II shall not have been consummated prior to the Effective Date because (i) such contribution, assignment, transfer, conveyance, distribution, delivery, acceptance or assumption would violate applicable Law, (ii) a necessary Consent or Governmental Approval had not been received, (iii) a condition precedent to any such contribution, assignment, transfer, conveyance, distribution, delivery, acceptance or assumption had not been satisfied or (iv) the parties hereto agreed to delay such contribution, assignment, transfer, conveyance, distribution, delivery, acceptance or assumption, then the parties shall cooperate to effect such contribution, assignment, transfer, conveyance, distribution, delivery, acceptance or assumption, as the case may be, as promptly following the Effective Date as shall be practicable, or as otherwise agreed between the parties hereto in writing.  Nothing herein shall be deemed to require the transfer of any Assets or the assumption of any Liabilities which by their terms or operation of Law cannot be transferred or assumed; provided, however, that the parties shall, and shall cause the respective members of their Groups to, cooperate and use commercially reasonable efforts to (A) seek to obtain any necessary Consents or Governmental Approvals for the contribution, assignment, transfer, conveyance, distribution or delivery of all Assets and the acceptance or assumption of all Liabilities contemplated to be contributed, assigned, transferred, conveyed, distributed, delivered, accepted or assumed pursuant to this Article II and (B) take any actions reasonably requested by the other party in respect of such Assets and Liabilities.

(b)In the event that any contribution, assignment, transfer, conveyance, distribution or delivery of Assets or acceptance or assumption of Liabilities contemplated by this Agreement has not been consummated prior to the Effective Date, including in respect of the Deferred Jurisdictions, then, from and after the Effective Date (i) the party (or the relevant member of its Group) retaining such Asset shall thereafter hold (or shall cause such member in its Group to hold) such Asset for the benefit of the party (or the relevant member of its Group) entitled thereto (at the expense of the Person entitled thereto) and (ii) the party intended to accept or assume such Liability shall, or shall cause the applicable member of its Group to, pay or reimburse the party (or the relevant member of its Group) retaining such Liability for all amounts paid or incurred by it in connection with the retention of such Liability; provided that, the net economic benefit (whether positive or negative) relating to the Animal Health Assets and Animal Health Liabilities in the Deferred Jurisdictions shall be allocated to, and paid in accordance with, Section 2.04(c). In addition, the party retaining any such Asset or Liability (or the relevant member of its Group) shall (or shall cause the applicable member of its Group to) treat, insofar as is reasonably practicable, and to the extent permitted by applicable Law, such Asset or Liability in the ordinary course of business in accordance with past practice and shall take (or refrain from taking) such other actions as may be reasonably requested by the party to which such Asset or Liability is to be contributed, assigned, transferred, conveyed, distributed, delivered, accepted or assumed in order to place such party, insofar as is reasonably practicable, in the same position as if such Asset or Liability had been contributed, assigned, transferred, conveyed, distributed, delivered, accepted or assumed on or prior to the Effective Date as contemplated hereby, so that all the benefits and burdens relating to such Asset or Liability, including possession, risk of loss,

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potential for gain, and dominion, control and command over such Asset or Liability, are to inure from and after the Effective Date to the relevant member of the Lilly Group or the Company Group, as the case may be, entitled to the receipt of such Asset or Liability. In furtherance of the foregoing, the parties agree that (x) as of the Effective Date, each party shall be deemed to have acquired or retained complete and sole beneficial ownership over all of the Assets, together with all rights, powers and privileges incident thereto, and shall be deemed to have assumed or retained in accordance with the terms of this Agreement all of the Liabilities, and all duties, obligations and responsibilities incident thereto, which such party is entitled to acquire or required to assume or retain pursuant to the terms of this Agreement or, as applicable, any other Transaction Document and (y) except with respect to the Deferred Jurisdictions, and to the extent permitted by applicable Law, each party hereto shall (and shall cause the applicable members of its respective Group to) (A) treat for all Tax purposes Assets that have not been contributed, assigned, transferred, conveyed, distributed or delivered prior to the Effective Date as having been contributed, assigned, transferred, conveyed, distributed or delivered to and owned by the Person entitled to such Assets not later than the Effective Date, (B) treat for all Tax purposes the Liabilities that have not been accepted or assumed prior to the Effective Date as having been assumed and accepted by the Person intended to be responsible for such Liabilities not later than the Effective Date and (C) neither report nor take any Tax position (on a Tax Return or otherwise) inconsistent with such treatment.

(c)Until such time as the contribution, assignment, transfer, conveyance, distribution or delivery of any Animal Health Assets or the acceptance or assumption of any Animal Health Liabilities contemplated by this Section 2.04 in a Deferred Jurisdiction shall have occurred, the parties shall calculate the net economic benefit (or detriment) arising from or attributable to such Animal Health Assets and Animal Health Liabilities, and make any payments due and owing in connection therewith, in accordance with the procedures and principles mutually agreed upon in writing by the parties hereto. For the avoidance of doubt, it is understood and agreed that if, despite the parties cooperating with one another and using their respective commercially reasonable efforts, the contributions, assignments, transfers, conveyances, distributions, deliveries, acceptances or assumptions of the applicable Animal Health Assets and Animal Health Liabilities in one or more Deferred Jurisdictions has not occurred on or prior to the date previously agreed upon in writing by the parties hereto, then it is understood and agreed that Lilly shall be paid any remaining Restricted Cash Amount, and shall be entitled to retain, sell, transfer or otherwise dispose of any such remaining Animal Health Assets and Animal Health Liabilities, in its sole discretion.

(d)With respect to the Stock of any Transferred Entity that will not indirectly be transferred on the Effective Date, Lilly and the Company agree that from the Effective Date until the earlier of (i) the time such Stock is conveyed to the Company or any of its Subsidiaries and (ii) twenty-four (24) months following the Effective Date, Lilly, or the member of the Lilly Group that directly or indirectly owns such Stock, shall cause the applicable Transferred Entity not to declare or pay any dividends or other distributions, except as required by applicable Law, to Lilly or any other member of the Lilly Group and shall cause such Transferred Entity not to redeem, repurchase or otherwise acquire any of its Stock.  In the event that such a Transferred Entity (A) shall so declare or pay any dividend or other distribution, Lilly or the member of the Lilly Group that directly or indirectly owns such Transferred Entity shall promptly pay the amount so received to the Company or the Subsidiary of the Company designated by the Company and reasonably acceptable to Lilly or (B) shall so redeem, repurchase or otherwise acquire any of its capital stock or other equity interest, then Lilly or the member of the Lilly Group that directly or indirectly owns such Transferred Entity shall promptly pay any amount received thereon to the Company or the Subsidiary of the Company designated by the Company and reasonably acceptable to Lilly. Nothing herein shall be deemed to require any action which is prohibited by Law; provided, however, that the parties shall, and shall cause the respective members of their Groups to, cooperate and use commercially reasonable efforts to take any actions requested by each party in respect of any such Transferred Entity.

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(e)If and when the Consents, Governmental Approvals and/or conditions, the violation, conflict, absence, non-satisfaction or existence of or with which, the violation of Law that, or the agreement between the parties that caused the deferral of the contribution, assignment, transfer, conveyance, distribution or delivery of any Asset or the acceptance or assumption of any Liability pursuant to Section 2.04(a), are received, obtained, satisfied, realized, resolved or concluded, the contribution, assignment, transfer, conveyance, distribution, delivery, acceptance or assumption of the applicable Asset or Liability shall be effected in accordance with and subject to the terms of the Transaction Documents as promptly as practicable thereafter.

Section 2.05.Termination of Agreements.  (a) Except as set forth in Section 2.05(b), in furtherance of the releases and other provisions of Section 4.01, the Company and each other applicable member of the Company Group, on the one hand, and Lilly and each other applicable member of the Lilly Group, on the other hand, hereby terminate the respective rights and obligations under any and all agreements, arrangements, commitments or understandings (including all intercompany accounts payable or receivable between a member of the Lilly Group, on the one hand, and a member of the Company Group, on the other hand (“Intercompany Accounts”) accrued as of the Measurement Time), whether or not in writing, between or among any member of the Company Group, on the one hand, and any member of the Lilly Group, on the other hand, effective as of the Measurement Time. No such agreement, arrangement, commitment, understanding or Intercompany Account (including any provision thereof which purports to survive termination) shall be of any further force or effect as between any member of the Company Group, on the one hand, and any member of the Lilly Group, on the other hand, after the Measurement Time.  Each party shall, at the reasonable request of any other party, take, or cause to be taken, such other actions as may be necessary to effect the foregoing. For the avoidance of doubt, nothing in this Agreement shall terminate any right or obligation with respect to any agreements, arrangements, commitments or understandings, whether or not in writing, that have accrued or exist prior to the Measurement Time or that extend beyond the Measurement Time, in each case, solely between or among (i) the members of the Lilly Group, or (ii) the members of the Company Group, and, in furtherance thereof, Lilly and the Company hereby agree that each such agreement, arrangement, commitment or understanding shall be deemed to continue and be of full force and effect with respect to the members of the Lilly Group, as though no member of the Company Group had been party thereto, and with respect to the members of the Company Group, as though no member of the Lilly Group had been party thereto.

(b)The provisions of Section 2.05(a) shall not apply to (i) the Transaction Documents (and each other agreement or instrument expressly contemplated by any Transaction Document to be entered into by any of the parties hereto or any Person in their respective Groups) or (ii) any agreements, arrangements, commitments, understandings or Intercompany Accounts, or any of the provisions thereof, (A) set forth or described on Schedule 2.05(b)(ii),  (B) to which any Person other than the parties hereto and thereto and their respective Affiliates is a party (it being understood that to the extent that the rights and obligations of the parties and the members of their respective Groups under any such agreements, arrangements, commitments or understandings constitute Animal Health Assets or Animal Health Liabilities, they shall be contributed, assigned, transferred, conveyed, delivered, accepted and assumed, as applicable, pursuant to Section 2.01), including any Shared Contracts, (C) that this Agreement or any other Transaction Document expressly contemplates will survive the Effective Date, (D) to which any non-wholly owned Subsidiary of Lilly or the Company, as the case may be, is a party (it being understood that directors’ qualifying shares or similar interests will be disregarded for purposes of determining whether a Subsidiary is wholly owned) and (E) that are described in Section 13.01(b) of the Tax Matters Agreement.

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Section 2.06.Documents Relating to Other Transfers of Assets and Assumption of Liabilities.  In furtherance of the contribution, assignment, transfer, conveyance, distribution or delivery of the Animal Health Assets and the acceptance or assumption of Animal Health Liabilities set forth in Section 2.01(a) and (b), Lilly shall have executed and delivered, and shall have caused each of its applicable Subsidiaries (including the Company and each other member of the Company Group) to have executed and delivered, such bills of sale, stock powers, certificates of title, deeds, assignments of Contracts and other instruments of contribution, assignment, transfer, conveyance, distribution, delivery, acceptance or assumption (collectively, the “Additional Transfer Documents”) as and to the extent necessary to evidence the contribution, assignment, transfer, conveyance, distribution and delivery of all of Lilly’s and each other applicable member of the Lilly Group’s right, title and interest in and to the Animal Health Assets to the Specified Entities and their respective Subsidiaries, as applicable, and the acceptance and assumption by the Specified Entities or their applicable Subsidiaries of the Animal Health Liabilities.  For the avoidance of doubt, the Additional Transfer Documents shall exclude the Local Transfer Agreements. To the extent that any Additional Transfer Document or Local Transfer Agreement conveys ownership of any Animal Health Intellectual Property that was generated by Lilly or an entity that was a Subsidiary of Lilly at the time of generation to a member of the Company Group, the Additional Transfer Document or Local Transfer Agreement, as applicable, shall contain a nonexclusive license to the Lilly Group to use and practice such Animal Health Intellectual Property in any field other than the field of the Animal Health Business.

Section 2.07.Bank Accounts; Cash Balances.  (a) To the extent not completed prior to the Effective Date, Lilly and the Company each agrees to take, or cause the other members of their respective Groups to take, as promptly as practicable following the Effective Date, all actions necessary to amend all Contracts governing each bank and brokerage account owned by the Company or any other member of the Company Group so that such accounts, if linked (whether by automatic withdrawal, automatic deposit or any other authorization to transfer funds from or to, hereinafter “linked”) to any bank or brokerage account owned by Lilly or any other member of the Lilly Group (collectively, the “Lilly Accounts”) are de-linked from the Lilly Accounts.

(b)It is intended that, following consummation of the actions contemplated by Section 2.07(a), the Company and Lilly will maintain separate bank accounts and separate cash management processes.

(c)With respect to any outstanding checks issued by Lilly or any of its Subsidiaries prior to the Effective Date, such outstanding checks shall be honored following the Effective Date by the Person owning the account on which the check is drawn.  With respect to any outstanding checks issued by Lilly or any of its Subsidiaries following the Effective Date but prior to the requisite de-linking, such outstanding checks shall be honored by the Person owning the account on which the check is drawn; provided that, in the event the Liability associated with such check was, following the Effective Date, intended to be the Liability of a Person in the other Group, then the party hereto whose Group such Liability was intended to be shall, on the date that is (x) 40 days after the Effective Date, (y) 100 days after the Effective Date or (z) 190 days after the Effective Date, whichever such date immediately follows the date such check was drawn, reimburse the Person that issued such check for the amount so drawn.

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(d)Except as provided in Section 2.14, as between Lilly and the Company (and the other members of their respective Groups), all payments made to and reimbursements received by either party (or member of its Group) after the Effective Date, in each case that relate to a business, Asset or Liability of the other party (or member of its Group), shall be held by such party in trust for the use and benefit of the Person entitled thereto and, promptly upon receipt by such party of any such payment or reimbursement, such party shall pay over, or shall cause the applicable member of its Group to pay over to the other party the amount of such payment or reimbursement without right of set-off. In addition, as between Lilly and the Company (and the other members of their respective Groups), any payments made by either party (or member of its Group) after the Effective Date, in each case, that relate to a business, Asset or Liability of the other party (or member of its Group) shall be promptly reimbursed by the party (or member of its Group) to which such business, Asset or Liability was to be, directly or indirectly, contributed, assigned, transferred, conveyed, distributed, delivered, accepted or assumed in accordance with this Agreement. For the avoidance of doubt, this Section 2.07(d) does not apply to payments with respect to Taxes.

Section 2.08.Other Transaction Documents.  Each of Lilly and the Company will execute and deliver, and cause each other applicable member of their respective Groups to execute and deliver, as applicable, all Ancillary Agreements and Local Transfer Agreements as applicable.

Section 2.09.Shared Contracts.  (a) Subject to Section 2.09(d) and other than with respect to the provision of Services under the Transitional Services Agreement or benefits and rights under Shared Contracts that are sublicensed to the Company and other members of the Company Group pursuant to the Intellectual Property and Technology License Agreement, from and after the Effective Date, Lilly may, in its sole discretion, make available to the Company Group the benefits and rights under Shared Contracts to the extent such benefits and rights have historically been provided to the Animal Health Business.  With respect to any Shared Contracts made available to the Company Group pursuant to this Section 2.09(a), (i) no member of the Company Group shall take any action, or refrain from taking any action, if such action or inaction is reasonably likely to or does result in a breach on the part of any member of the Lilly Group under any Shared Contract and (ii) each member of the Company Group shall reasonably cooperate with Lilly and, at Lilly’s reasonable request, take such actions that are permissible and reasonably necessary or desirable to ensure that Lilly is able to perform its obligations constituting Shared Contract Liabilities under any such Shared Contract.

(b)With respect to Shared Contract Liabilities related to, arising out of, or resulting from a given Shared Contract, such Shared Contract Liabilities shall be allocated, unless otherwise allocated pursuant to this Agreement or an Ancillary Agreement, between the parties as follows:

(i)First, if a Liability is incurred exclusively in respect of a benefit received by one party or its Group, the party receiving such benefit (or whose Group member receives such benefit) shall be responsible for such Liability.

(ii)Second, if a Liability cannot be exclusively allocated to one party under clause (i), and such Liability (or a portion thereof) has historically been allocated to the Animal Health Business, then the Liability shall be allocated between both parties in a manner consistent with the historical treatment thereof, with the Company being allocated the portion of the Liability historically allocated to the Animal Health Business.

(iii)Third, if a Liability cannot be exclusively allocated to one party under clause (i), and historically has not been (in whole or in part) allocated to the Animal Health Business, then such Liability shall be allocated between both parties based on the relative proportions of the total benefit received (over the term of the Shared Contract, measured as of the date of allocation) for each party under the relevant Shared Contract.

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(iv)Notwithstanding the foregoing, each party shall be responsible for any and all Liabilities arising out of or resulting from such party’s (or a member of such party’s Group, as applicable) breach of the relevant Shared Contract; provided that, in the case of the Company, the Company was previously made aware of the existence of, and the applicable obligations under, such Shared Contract.

(c)If Lilly or any member of the Lilly Group, on the one hand, or the Company or any other member of the Company Group, on the other hand, receives any benefit or payment under any Shared Contract which was intended for the other party or its Group, Lilly or the Company, respectively will use its commercially reasonable efforts, or will cause any member of its Group to use its commercially reasonable efforts, to deliver, transfer or otherwise afford such benefit or payment to the Company or Lilly or its applicable Group member, respectively.

(d)It shall be the responsibility of the Company, if it so chooses, to obtain the agreement of the third party that is the counterparty to each Shared Contract to enter into a new Contract effective as of the Effective Date pursuant to which the Company and the applicable members of its Group will receive substantially the same benefits (or such benefits as the Company deems advisable) provided by the Shared Contract to the Animal Health Business prior to the Effective Date, and Lilly shall use its commercially reasonable effort to facilitate the entrance into any such new Contracts; provided that nothing in this Agreement shall require Lilly or any other member of the Lilly Group to compensate any third party, commence or participate in any Action or offer or grant any accommodation (financial or otherwise, including any accommodation or arrangement to remain secondarily liable or contingently liable for any Animal Health Liability) to any third party.  In no event shall Lilly be liable to the Company for (i) any Liabilities arising out of such new Contracts, (ii) Liabilities arising out of the failure of the Company to obtain any such new Contract or (iii) Liabilities arising out of the failure of Lilly to make available to any member of the Company Group the benefits or rights under a Shared Contract.  Except as expressly provided under the Transitional Services Agreement, neither Lilly nor any other member of the Lilly Group shall be obligated to make available to any member of the Company Group the benefits and rights under any Shared Contracts.

Section 2.10.Disclaimer of Representations and Warranties.  (a) EACH OF LILLY (ON BEHALF OF ITSELF AND EACH OTHER MEMBER OF THE LILLY GROUP) AND THE COMPANY (ON BEHALF OF ITSELF AND EACH OTHER MEMBER OF THE COMPANY GROUP) UNDERSTANDS AND AGREES THAT, EXCEPT AS EXPRESSLY SET FORTH HEREIN OR IN ANY OTHER TRANSACTION DOCUMENT, NO PARTY TO THE TRANSACTION DOCUMENTS OR ANY OTHER AGREEMENT OR DOCUMENT CONTEMPLATED BY THE TRANSACTION DOCUMENTS OR OTHERWISE, IS REPRESENTING OR WARRANTING TO ANY OTHER PARTY HERETO OR THERETO IN ANY WAY, EXPRESS OR IMPLIED, AS TO THE ASSETS, BUSINESSES OR LIABILITIES TRANSFERRED OR ASSUMED AS CONTEMPLATED HEREBY OR THEREBY, AS TO ANY CONSENTS OR GOVERNMENTAL APPROVALS REQUIRED IN CONNECTION HEREWITH OR THEREWITH, AS TO THE VALUE OF OR FREEDOM FROM ANY LIENS OF, OR ANY OTHER MATTER CONCERNING, ANY

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ASSETS, BUSINESSES OR LIABILITIES OF SUCH PARTY, OR AS TO THE ABSENCE OF ANY DEFENSES OR RIGHT OF SETOFF OR FREEDOM FROM COUNTERCLAIM WITH RESPECT TO ANY CLAIM OR OTHER ASSET, INCLUDING ANY ACCOUNTS RECEIVABLE, OF ANY PARTY, OR AS TO THE LEGAL SUFFICIENCY OF ANY ASSIGNMENT, DOCUMENT, CERTIFICATE OR INSTRUMENT DELIVERED HEREUNDER OR THEREUNDER TO CONVEY TITLE TO ANY ASSET OR THING OF VALUE UPON THE EXECUTION, DELIVERY AND FILING HEREOF OR THEREOF.  EXCEPT AS MAY EXPRESSLY BE SET FORTH HEREIN OR IN ANY OTHER TRANSACTION DOCUMENT OR AS REQUIRED BY LAW, ALL SUCH ASSETS ARE BEING OR HAVE BEEN TRANSFERRED ON AN “AS IS”, “WHERE IS” BASIS (AND, IN THE CASE OF ANY REAL PROPERTY, BY MEANS OF A QUITCLAIM OR SIMILAR FORM DEED OR CONVEYANCE WITHOUT WARRANTY) AND THE RESPECTIVE TRANSFEREES SHALL BEAR THE ECONOMIC AND LEGAL RISKS THAT (I) ANY CONVEYANCE SHALL PROVE TO BE INSUFFICIENT TO VEST IN THE TRANSFEREE GOOD AND MARKETABLE TITLE, FREE AND CLEAR OF ANY LIEN, ENCUMBRANCE, CHARGE, ASSESSMENT OR OTHER ADVERSE CLAIM, AND (II) ANY NECESSARY CONSENTS OR GOVERNMENTAL APPROVALS ARE NOT OBTAINED OR THAT ANY REQUIREMENTS OF LAWS OR JUDGMENTS ARE NOT COMPLIED WITH.  IN ADDITION, ALL WARRANTIES OF HABITABILITY, MERCHANTABILITY, FITNESS FOR ANY PARTICULAR PURPOSE, FUNCTION, ENVIRONMENTAL CONDITION, OPERATIONAL CONDITION, NON-INFRINGEMENT, VALIDITY AND ENFORCEABILITY AND ALL OTHER WARRANTIES ARISING UNDER THE UNIFORM COMMERCIAL CODE (OR SIMILAR NON-U.S. LAWS) ARE HEREBY DISCLAIMED.

Section 2.11.Guarantees.  (a) Lilly and the Company shall each use its reasonable best efforts to cause a member of the Company Group to be substituted in all respects for a member of the Lilly Group and for all members of the Lilly Group to be otherwise removed or released, effective as of the Effective Date, in respect of all obligations of any member of the Company Group under each guarantee, indemnity, surety bond, letter of credit, bankers acceptance and letter of comfort (each, a “Guarantee”), given or obtained by any member of the Lilly Group for the benefit of any member of the Company Group or the Animal Health Business.  If Lilly and the Company have been unable to effect any such substitution, removal or release with respect to any such Guarantee as of the Effective Date then, following the Effective Date, the Company shall use its reasonable best efforts to effect such substitution, removal or release as soon as reasonably practicable; provided that from and after the Effective Date, the Company shall indemnify, hold harmless and promptly reimburse the applicable members of the Lilly Group for any costs of maintaining any such Guarantee and any payments made by them and for any and all Liabilities of the applicable members of the Lilly Group arising out of, in whole or in part, any performance obligation in accordance with the underlying obligation under any such Guarantee (except to the extent the performance obligation under any such Guarantee shall have been triggered solely by an act or failure to act of the applicable guarantor (rather than the underlying obligor)).

(b)Lilly and the Company shall each use its reasonable best efforts to cause a member of the Lilly Group to be substituted in all respects for a member of the Company Group and for all members of the Company Group to be otherwise removed or released, effective as of the Effective Date, in respect of all obligations of any member of the Lilly Group under

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each Guarantee, given or obtained by any member of the Company Group for the benefit of any member of the Lilly Group or the Lilly Business.  If Lilly and the Company have been unable to effect any such substitution, removal or release with respect to any such Guarantee as of the Effective Date then, following the Effective Date, Lilly shall use its reasonable best efforts to effect such substitution, removal or release as soon as reasonably practicable; provided that from and after Effective Date, Lilly shall indemnify against, hold harmless and promptly reimburse the applicable members of the Company Group for any costs of maintaining any such Guarantee and any payments made by them and for any and all Liabilities of the applicable members of the Company Group arising out of, in whole or in part, any performance obligation in accordance with the underlying obligation under or ongoing maintenance of any such Guarantee (except to the extent the performance obligation under any such Guarantee shall have been triggered solely by an act or failure to act of the applicable guarantor (rather than the underlying obligor)).

Section 2.12.Novation of Animal Health Liabilities.  (a) The Company shall use its reasonable best efforts to obtain, or to cause to be obtained, as soon as reasonably practicable following the Effective Date, any consent, substitution, approval, release or amendment requested by Lilly that is required to novate or assign to the applicable member of the Company Group all obligations under Contracts and other obligations or Liabilities of any nature whatsoever that constitute Animal Health Liabilities (other than any Animal Health Liability that constitutes a Shared Contract Liability), or to obtain in writing the unconditional release of all parties to such arrangements, other than any member of the Company Group, so that, in any such case, the Company and its Subsidiaries will be solely responsible for such Liabilities; provided, however, that neither Lilly nor the Company shall be obligated to (i) pay any consideration or surrender, release or modify any rights or remedies therefor to any third party from whom such consents, substitutions, approvals, releases or amendments are requested, except as specifically set forth in this Agreement or any Ancillary Agreement or (ii) take any action pursuant to this Section 2.12 to the extent such action would result in an undue burden on such party or the other members of its Group or would unreasonably interfere with any of the business personnel or operations of such party or the other members of its Group; provided, further, however, that any legal fees or other administrative costs associated with obtaining such consents, substitutions, approvals, releases or amendments shall be borne by the Company.

(b)If the Company is unable to obtain, or to cause to be obtained, any such required consent, substitution, approval, release or amendment, the applicable member of the Lilly Group shall continue to be bound by such Contracts and other obligations that constitute Animal Health Liabilities and, unless not permitted by Law or the terms thereof, the Company shall, as agent or subcontractor for Lilly or such other Person in the Lilly Group, as the case may be, pay, perform and discharge fully all such obligations or other Liabilities of Lilly or such other Person thereunder that constitute Animal Health Liabilities, from and after the Effective Date.  The Company shall indemnify each Lilly Indemnitee, and hold it harmless against any Liabilities (other than any Excluded Liabilities) arising in connection therewith, in accordance with the provisions of Article IV.  Lilly shall, without further consideration, promptly pay or remit, or cause to be paid or remitted, to the Company all money, rights and other consideration received by it or any other member of the Lilly Group in respect of such performance (unless any such consideration is an Excluded Asset).  If and when any such consent, substitution,

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approval, release or amendment shall be obtained or such agreement, lease, license or other obligations shall otherwise become assignable or able to be novated, Lilly shall thereafter assign, or cause to be assigned, all its rights, obligations and other Liabilities thereunder or any rights or obligations of each applicable member of its Group to the Company without payment of further consideration and the Company shall, without the payment of any further consideration, assume such rights and obligations.

Section 2.13.Novation of Excluded Liabilities.  (a) Lilly shall use its commercially reasonable efforts to obtain, or to cause to be obtained, as soon as reasonably practicable following the Effective Date, any consent, substitution, approval, release or amendment requested by the Company that is required to novate or assign to the applicable member of the Lilly Group all obligations under Contracts and other obligations or Liabilities of any nature whatsoever that constitute Excluded Liabilities, or to obtain in writing the unconditional release of all parties to such arrangements, other than any member of the Lilly Group, so that, in any such case, a member of the Lilly Group will be solely responsible for such Liabilities; provided, however, that neither Lilly nor the Company shall be obligated to (i) pay any consideration therefor to any third party from whom such consents, substitutions, approvals, releases and amendments are requested, except as specifically set forth in this Agreement or (ii) take any action pursuant to this Section 2.13 to the extent such action would result in an undue burden on such party or the other members of its Group or would unreasonably interfere with any of the business personnel or operations of such party or the other members of its Group; provided, further, however, that any legal fees or other administrative costs associated with obtaining such consents, substitutions, approvals, releases and amendments shall be borne by Lilly.

(b)If Lilly is unable to obtain, or to cause to be obtained, any such required consent, substitution, approval, release or amendment, the applicable member of the Company Group shall continue to be bound by such Contracts and other obligations that constitute Excluded Liabilities and, unless not permitted by Law or the terms thereof, Lilly shall, or shall cause a member of the Lilly Group to, as agent or subcontractor for the Company or such other Person in the Company Group, as the case may be, pay, perform and discharge fully all such obligations or other Liabilities of the Company or such other Person thereunder that constitute Excluded Liabilities from and after the Effective Date.  Lilly shall indemnify each Company Indemnitee and hold it harmless against any Liabilities (other than any Animal Health Liabilities) arising in connection therewith, in accordance with the provisions of Article IV.  The Company shall, without further consideration, promptly pay or remit, or cause to be paid or remitted, to Lilly or to another member of the Lilly Group specified by Lilly, all money, rights and other consideration received by it or any other member of the Company Group in respect of such performance (unless any such consideration is an Animal Health Asset).  If and when any such consent, substitution, approval, release, or amendment shall be obtained or such agreement, lease, license or obligations shall otherwise become assignable or able to be novated, the Company shall thereafter assign, or cause to be assigned, all its rights, obligations and other Liabilities thereunder or any rights or obligations of each applicable member of its Group to Lilly or to another member of the Lilly Group specified by Lilly without payment of further consideration and Lilly shall, without the payment of any further consideration, or shall cause such other member of the Lilly Group to, assume such rights and obligations.

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Section 2.14.Insurance Policies.

(a)From the Effective Date until the date on which Lilly and its Affiliates cease to hold in excess of 50% of the outstanding shares of Company Common Stock pursuant to a Distribution, Other Disposition or otherwise (the “Coverage End Date”), the members of the Company Group shall continue to be insured on the terms and subject to the limits in place on the Effective Date under the Shared Policies and shall be entitled to receive coverage thereunder to the same extent as Subsidiaries of Lilly, in each case to the extent permitted under such applicable policy. As of the Coverage End Date, the coverage under all Shared Policies shall continue in force only for the benefit of Lilly and its Affiliates and not for the benefit of the Company or any of its Affiliates.  Effective from and after the Coverage End Date, the Company shall arrange for its own insurance policies with respect to the Animal Health Business covering all periods (whether prior to or following the Effective Date) and agrees not to seek, through any means, benefit from any of Lilly’s or its Affiliates’ insurance policies that may provide coverage for claims relating in any way to the Animal Health Business prior to the Coverage End Date.

(b)Where Shared Policies with an unaffiliated third party insurer (and excluding, for the avoidance of doubt, any self-insurance, captive insurance or similar program) cover Animal Health Liabilities reported to such unaffiliated third party insurer after the Effective Date and before the Coverage End Date, with respect to an occurrence prior to the Coverage End Date, under an occurrence-based or claims-made policy (collectively, “Covered Claims”), then the members of the Company Group may claim coverage for such Covered Claims under such Shared Policies and receive any insurance recoverables with respect thereto, without any prejudice or limitation to Lilly seeking insurance under the Shared Policies for its own claims; provided that Lilly may, in its sole discretion, participate in or control the prosecution or defense of any such Covered Claim.  After the Effective Date, Lilly shall procure and administer the Shared Policies, provided that such administration shall in no way limit, inhibit or preclude the right of the members of the Company Group to insurance coverage thereunder in accordance with this Section 2.14(b), in each case, with respect to Covered Claims.  The Company shall promptly notify Lilly of any Covered Claims, and Lilly agrees to reasonably cooperate with the Company concerning the pursuit by the Company of any such Covered Claim, in each case at the expense of the Company (to the extent such expenses are not covered by the applicable Shared Policies).

(c)The Company shall be responsible for complying with the terms of the Shared Policies to obtain coverage for such Covered Claims, including if the Shared Policy requires any payments to be made in connection therewith (including self-insured retentions or deductibles), and the Company shall make any such required payments and maintain any required or appropriate accruals or reserves for such Covered Claims.  Any proceeds received by Lilly from any insurance carrier that relate to Covered Claims shall be paid promptly to the Company.  In the event that Covered Claims relate to the same occurrence for which Lilly is seeking coverage under such Shared Policies and for which the parties have a shared defense, the Company and Lilly shall jointly defend any such claim and waive any conflict of interest necessary to conduct a joint defense, and shall bear any expenses in connection therewith equally (to the extent such expenses are not covered by the applicable Shared Policies), including self-insured retentions or deductibles.  In the event that policy limits under an applicable Shared Policy are not sufficient to fund all claims of Lilly and the other members of the Lilly Group and the

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Company and the other members of the Company Group, amounts due under such Shared Policy shall be paid on a first come, first served basis, and any amounts simultaneously due shall be paid to the respective entities in proportion to the assessed value of each respective entity’s claim or claims; provided that, in the event that claims paid to the Company Group under such Shared Policy exceed 85% of the policy limit thereunder, and any member of the Lilly Group subsequently makes any claim under such policy, then, the Company shall pay (or shall cause payment to be made) to Lilly an amount equal to the lesser of (i) the value of the applicable Lilly Group claim and (ii) the amount by which payments made to the Company Group under such policy exceeded 85% of the applicable policy limit.

(d)Upon receipt of a written request from the Company, Lilly shall use its commercially reasonable efforts to reduce or cancel the Company Group’s coverage under any Policies, effective no earlier than sixty (60) days after Lilly’s receipt of such request, provided, however that (i) any costs associated with or incurred in connection with such reduction or cancellation shall be borne exclusively by the Company Group, (ii) the Company Group understands that there may be no premium refund or credit provided by the relevant insurers as a result of such reduction or cancellation, and (iii) if and to the extent that Lilly actually receives a premium refund or credit from the relevant insurers for the term of the coverage so reduced or cancelled as a direct result of such reduction or cancellation, Lilly shall only be obligated to credit or pay over to the Company Group the lesser of (x) the amount of any such credit or refund or (y) the amount, if any, last charged to the Company Group by Lilly for such coverage during such term.

ARTICLE III

THE IPO AND ACTIONS PENDING THE IPO; OTHER TRANSACTIONS

Section 3.01.The IPO.  The Company shall cooperate with, and take all actions reasonably requested by, Lilly in connection with the IPO.  In furtherance thereof, to the extent not undertaken and completed prior to the execution of this Agreement, the Company shall, at the request of Lilly or an Underwriter, promptly take any and all actions necessary or desirable to consummate the IPO as contemplated by the IPO Registration Statement and the Underwriting Agreement.

Section 3.02.Charter; Bylaws.  Prior to the effectiveness of the IPO Registration Statement, Lilly and the Company shall each have taken all actions that may be required to provide for the adoption by the Company of the Amended and Restated Articles of Incorporation of the Company attached as Exhibit A hereto (the “Charter”) and the Amended and Restated Bylaws of the Company attached as Exhibit B hereto (the “Bylaws”) and the filing of the Charter with the Secretary of State of the State of Indiana.

Section 3.03.The Distribution or Other Disposition.

(a)Subject to applicable Law, the Company acknowledges and agrees that Lilly shall, in its sole and absolute discretion, determine (i) whether and when to proceed with all or part of the Distribution or Other Disposition and (ii) all

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terms of the Distribution or Other Disposition, as applicable, including the form, structure and terms of any transaction(s) and/or offering(s) to effect the Distribution or Other Disposition and the timing of and conditions to the consummation of the Distribution or Other Disposition.  In addition, in the event that Lilly determines to proceed with the Distribution or Other Disposition, the Company acknowledges and agrees that Lilly may, subject to applicable Law, at any time and from time to time until the completion of the Distribution or Other Disposition, abandon, modify or change any or all of the terms of the Distribution or Other Disposition, including by accelerating or delaying the timing of the consummation of all or part of the Distribution or Other Disposition.

(b)The Company shall cooperate with Lilly in all respects to accomplish the Distribution or Other Disposition and shall, at Lilly’s direction, promptly take any and all actions that Lilly may request as necessary or desirable to effect the Distribution or Other Disposition, including the registration under the Securities Act of the offering and sale by Lilly of Company Common Stock on an appropriate registration form or forms to be designated by Lilly and the filing of any necessary documents pursuant to the Exchange Act.  Subject to applicable Law, Lilly shall select any investment bank, manager, underwriter or dealer manager in connection with the Distribution or Other Disposition, as well as any financial printer, solicitation and/or exchange agent and financial, legal, accounting, tax and other advisors and service providers in connection with the Distribution or Other Disposition, as applicable.  The Company and Lilly, as the case may be, will provide to the exchange agent, if any, all share certificates and any information required in order to complete the Distribution or Other Disposition.

(c)Notwithstanding anything to the contrary contained in this Agreement, the Registration Rights Agreement shall control the terms and conditions of any Other Disposition to the extent contemplated therein.

ARTICLE IV

MUTUAL RELEASES; INDEMNIFICATION

Section 4.01.Release of Pre-Closing Claims.

(a)Except as provided in (i) Section 4.01(c), (ii) any exceptions to the indemnification provisions as set forth in Section 4.02 and Section 4.03 and (iii) any Ancillary Agreement, effective as of the Effective Date, the Company does hereby, for itself and for each other member of the Company Group as of the Effective Date and their respective successors and assigns and all Persons who at any time on or prior to the Effective Date have been directors, officers, managers, members, agents or employees of any member of the Company Group (in each case, in their respective capacities as such), release and forever discharge Lilly and each other member of the Lilly Group, their respective successors and assigns, and all Persons who at any time on or prior to the Effective Date have been shareholders, directors, officers, managers, members, agents or employees of any member of the Lilly Group (in each case, in their respective capacities as such), and their respective heirs, executors, administrators, successors and assigns, from any and all Liabilities whatsoever, whether at Law or in equity (including any rights of contribution or recovery), whether arising under any Contract, by operation of Law or otherwise, including for fraud, existing or arising from any acts or events occurring or failing to occur or alleged to have occurred or to have failed to occur or any conditions existing or alleged to have existed in each case on or before the Effective

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Date, including in connection with the Transactions and all other activities to implement the Transactions and any of the other transactions contemplated hereunder, and under any of the other Transaction Documents and pursuant to the Corporate Reorganization.

(b)Except as provided in (i) Section 4.01(c), (ii) any exceptions to the indemnification provisions as set forth in Section 4.02 and Section 4.03 and (iii) any Ancillary Agreement, effective as of the Effective Date Lilly does hereby, for itself and for each other member of the Lilly Group as of the Effective Date and their respective successors and assigns and all Persons who at any time on or prior to the Effective Date have been directors, officers, managers, members, agents or employees of any member of the Lilly Group (in each case, in their respective capacities as such), release and forever discharge the Company and each other member of the Company Group, their respective successors and assigns, and all Persons who at any time on or prior to the Effective Date have been shareholders, directors, officers, managers, members, agents or employees of any member of the Company Group (in each case, in their respective capacities as such), and their respective heirs, executors, administrators, successors and assigns, from any and all Liabilities whatsoever, whether at Law or in equity (including any rights of contribution or recovery), whether arising under any Contract, by operation of Law or otherwise, including for fraud, existing or arising from any acts or events occurring or failing to occur or alleged to have occurred or to have failed to occur or any conditions existing or alleged to have existed in each case on or before the Effective Date, including in connection with the Transactions and all other activities to implement the Transactions and any of the other transactions contemplated hereunder, under any of the other Transaction Documents and pursuant to the Corporate Reorganization.

(c)Nothing contained in Section 4.01(a) or (b) shall (x) impair any right of any Person to enforce any Transaction Document or any Contracts that are specified in Section 2.05(b) or the applicable schedules thereto as not to be terminated as of the Effective Date, in each case in accordance with its terms or (y) release any Person from:

(i)any Liability provided in or resulting from any Contract among any Persons in the Lilly Group or the Company Group that is specified in Section 2.05(b) or the applicable schedules thereto as not to be terminated as of the Effective Date, or any other Liability specified in Section 2.05(b) as not to be terminated as of the Effective Date, including the agreements, arrangements, commitments or understandings (including all Intercompany Accounts) that will not terminate until the Measurement Time, in accordance with Section 2.05;

(ii)any Liability assumed or retained by, or transferred, assigned or allocated to the Group of which such Person is a member in accordance with, or any other Liability of any Person in any Group under, the Transaction Documents, including (A) with respect to the Company, any Animal Health Liability and (B) with respect to Lilly, any Excluded Liability;

(iii)any Liability provided in or resulting from any Contract or understanding that is entered into after the Effective Date between a member of the Lilly Group, on the one hand, and a member of the Company Group, on the other hand;

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(iv)any Liability that the parties or any other Person may have with respect to claims for indemnification, recovery or contribution brought pursuant to this Agreement or any Ancillary Agreement, which Liability shall be governed by the provisions of this Article IV or, if applicable, the appropriate provisions of the Ancillary Agreements; or

(v)any Liability the release of which would result in the release of any Person other than a Person released pursuant to this Section 4.01.

In addition, nothing contained in Section 4.01(a) shall release Lilly from indemnifying and advancing expenses to any director, officer, manager, member or employee of the Company who was a director, officer, manager, member or employee of Lilly or any of its Affiliates on or prior to the Effective Date (including, for the avoidance of doubt, any indemnification or advancement of expenses obligations arising in connection with, or resulting from, the IPO), to the extent such director, officer, manager, member or employee incurs any Losses to which he or she was entitled to such indemnification or advancement of expenses pursuant to obligations existing prior to the Effective Date, it being understood that if the underlying obligation giving rise to such Action is an Animal Health Liability, the Company shall indemnify Lilly for such Liability (including Lilly’s costs to indemnify the director, officer, manager, member or employee) in accordance with the provisions set forth in this Article IV.

(d)The Company shall not, and shall not permit any other Person in the Company Group, to make any claim or demand, or commence any Action asserting any claim or demand, including any claim of contribution, recovery or any indemnification, against Lilly or any other Person in the Lilly Group, or any other Person released pursuant to Section 4.01(a), with respect to any Liabilities released pursuant to Section 4.01(a).  Lilly shall not, and shall not permit any other Person in the Lilly Group, to make any claim or demand, or commence any Action asserting any claim or demand, including any claim of contribution, recovery or any indemnification against the Company or any other Person in the Company Group, or any other Person released pursuant to Section 4.01(b), with respect to any Liabilities released pursuant to Section 4.01(b).

(e)It is the intent of each of Lilly and the Company, by virtue of the provisions of this Section 4.01, to provide for a full and complete release and discharge of all Liabilities existing or arising from all acts and events occurring or failing to occur or alleged to have occurred or to have failed to occur and all conditions existing or alleged to have existed in each case on or before the Effective Date, between or among the Company or any other Person in the Company Group, on the one hand, and Lilly or any other Person in the Lilly Group, on the other hand (including any contractual agreements or arrangements existing or alleged to exist between or among any such Persons on or before the Effective Date), except as expressly set forth in Section 4.01(c).  At any time, at the request of any other party, each party shall cause each other member of its respective Group and to the extent practicable each other Person on whose behalf a release and discharge is granted in Sections 4.01(a) or (b) to execute and deliver releases reflecting the provisions of this Section 4.01.

(f)If any Person associated with either Lilly or the Company (including any member of their respective Group’s and any of their respective directors, officers, managers, members, agents or employees) initiates an Action with respect to claims released by this Section 4.01, the party with which such Person is associated shall indemnify the other party

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against such Action  in accordance with the provisions set forth in this Article IV.

Section 4.02.Indemnification by the Company.  Except (a) as provided in Section 4.04, or (b) as required by applicable Law, the Company shall indemnify, defend and hold harmless each member of the Lilly Group and each of their Affiliates and each member of the Lilly Group’s and their respective Affiliates’ directors, officers, managers, members, agents and employees, and each of the heirs, executors, successors and assigns of any of the foregoing (collectively, the “Lilly Indemnitees”), from and against any and all Losses of the Lilly Indemnitees relating to, arising out of or resulting from any of the following items (without duplication and including any such Losses arising by way of setoff, counterclaim or defense or enforcement of any Lien):

(a)all Animal Health Liabilities;

(b)any untrue statement or alleged untrue statement of a material fact contained in any of Lilly’s Disclosure Documents, or any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, in each case to the extent, but only to the extent, that those Losses are caused by any such untrue statement or omission or alleged untrue statement or omission based upon information that is either furnished by any member of the Company Group or incorporated by reference from any filings made by any member of the Company Group with the Commission pursuant to the Securities Act or the Exchange Act, and then only if that untrue statement or omission was made or occurred after the Effective Date or in connection with the IPO;

(c)any untrue statement or alleged untrue statement of a material fact contained in any of the Company’s Disclosure Documents, or any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statement therein, in light of the circumstances under which they were made, not misleading, in each case to the extent but only to the extent, that those losses are not caused by any such untrue statement or omission based upon information that is either furnished by any member of the Lilly Group or incorporated by reference from any filings made by any member of the Lilly Group with the Commission pursuant to the Securities Act or the Exchange Act, and then only if that untrue statement or omission was made or occurred after the Effective Date or in connection with the IPO; and

(d)any breach by the Company or any other Person in the Company Group of any Transaction Document or any action by the Company in contravention of its Charter or Bylaws.

Notwithstanding anything to the contrary herein, in no event will any Lilly Indemnitee have the right to seek indemnification from the Company with respect to any claim or demand against any member of the Lilly Group for the satisfaction of the Excluded Liabilities.

Section 4.03.Indemnification by Lilly.  Except (a) as provided in Section 4.04, or (b) as required by applicable Law, Lilly shall indemnify, defend and hold harmless each member of the Company Group and each of their Affiliates and each member of the Company Group’s and their respective Affiliates’ directors, officers, managers, members, agents and

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employees, and each of the heirs, executors, successors and assigns of any of the foregoing (collectively, the “Company Indemnitees”), from and against any and all Losses of the Company Indemnitees relating to, arising out of or resulting from any of the following items (without duplication and including any Losses arising by way of setoff, counterclaim or defense or enforcement of any Lien):

(a)all Excluded Liabilities;

(b)any untrue statement or alleged untrue statement of a material fact contained in any of the Company’s Disclosure Documents, or any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, in each case to the extent, but only to the extent, that those Losses are caused by any such untrue statement or omission or alleged untrue statement or omission based upon information that is either furnished by any member of the Lilly Group or incorporated by reference from any filings made by any member of the Lilly Group with the Commission pursuant to the Securities Act or the Exchange Act, and then only if that untrue statement or omission was made or occurred after the Effective Date or in connection with the IPO;

(c)any untrue statement or alleged untrue statement of a material fact contained in any of the Lilly’s Disclosure Documents, or any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statement therein, in light of the circumstances under which they were made, not misleading, in each case to the extent but only to the extent, that those losses are not caused by any such untrue statement or omission based upon information that is either furnished by any member of the Company Group or incorporated by reference from any filings made by any member of the Company Group with the Commission pursuant to the Securities Act or the Exchange Act, and then only if that untrue statement or omission was made or occurred after the Effective Date or in connection with the IPO; and

(d)any breach by Lilly or any member of the Lilly Group of any Transaction Document.

Notwithstanding anything to the contrary herein, in no event will any Company Indemnitee have the right to seek indemnification from any member of the Lilly Group with respect to any claim or demand against any member of the Company Group for the satisfaction of the Animal Health Liabilities.

Section 4.04.Indemnification Obligations Net of Insurance Proceeds and Other Amounts.

(a)The parties intend that any Loss subject to indemnification or reimbursement pursuant to this Article IV will be net of Insurance Proceeds that actually reduce the amount of the Loss.  Accordingly, the amount which any party (an “Indemnifying Party”) is required to pay to any Person entitled to indemnification hereunder (an “Indemnitee”) will be reduced by any Insurance Proceeds actually recovered by or on behalf of such Indemnitee in respect of the related Loss.  If an Indemnitee receives a payment (an “Indemnity Payment”) required by this Agreement from an Indemnifying Party in respect of any Loss and subsequently receives Insurance Proceeds, then the Indemnitee will pay to the Indemnifying Party an amount

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equal to the excess of the Indemnity Payment received over the amount of the Indemnity Payment that would have been due if the Insurance Proceeds had been received, realized or recovered before the Indemnity Payment was made.

(b)An insurer who would otherwise be obligated to pay any claim shall not be relieved of the responsibility with respect thereto or, solely by virtue of the indemnification provisions hereof, have any subrogation rights with respect thereto.  The Indemnitee shall use its commercially reasonable efforts to seek to collect or recover any third-party Insurance Proceeds to which the Indemnitee is entitled in connection with any Loss for which the Indemnitee seeks indemnification pursuant to this Article IV; provided that so long as the Indemnitee has expended its commercially reasonable efforts, the Indemnitee’s inability to collect or recover any such Insurance Proceeds shall not limit the Indemnifying Party’s obligations hereunder.

(c)Any Indemnity Payment made by the Company shall be increased as necessary so that after making all payments in respect of Taxes imposed on or attributable to such Indemnity Payment, each Lilly Indemnitee receives an amount equal to the sum it would have received had no such Taxes been imposed.  Any Indemnity Payment made by Lilly shall be increased as necessary so that after making all payments in respect of Taxes imposed on or attributable to such Indemnity Payment, each Company Indemnitee receives an amount equal to the sum it would have received had no such Taxes been imposed. In the absence of any change in Tax treatment under the Code or except as otherwise required by other applicable Tax Law, any Indemnity Payments made by a party under this Agreement shall be reported for Tax purposes by the payor and the recipient as distributions or capital contributions, as appropriate, occurring immediately before the Deconsolidation Date, or as payments of an assumed or retained liability.

(d)If an indemnification claim is covered by the indemnification provisions of an Ancillary Agreement, the claim shall be made under the Ancillary Agreement to the extent applicable and the provisions thereof shall govern such claim.  In no event shall any party be entitled to double recovery from the indemnification provisions of this Agreement and any Ancillary Agreement.

Section 4.05.Procedures for Indemnification of Third Party Claims.

(a)If an Indemnitee shall receive notice or otherwise learn of the assertion by a Person (including any Governmental Authority) who is not a Person in the Lilly Group or the Company Group of any claim or of the commencement by any such Person of any Action with respect to which an Indemnifying Party may be obligated to provide indemnification to such Indemnitee pursuant to Section 4.02 or Section 4.03, or any other Section of this Agreement or any Ancillary Agreement (collectively, a “Third Party Claim”), such Indemnitee shall give such Indemnifying Party written notice thereof as promptly as practicable (and in any event within fifteen (15) days) after becoming aware of such Third Party Claim.  Any such notice shall describe the Third Party Claim in reasonable detail.  Notwithstanding the foregoing, the failure of any Indemnitee or other Person to give notice as provided in this Section 4.05(a) shall not relieve the related Indemnifying Party of its obligations under this Article IV, except to the extent, and only to the extent, that such Indemnifying Party is materially prejudiced by such failure to give notice.

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(b)An Indemnifying Party may elect (but shall not be required) to defend, at such Indemnifying Party’s own expense and by such Indemnifying Party’s own counsel (which counsel shall be reasonably satisfactory to the Indemnitee), any Third Party Claim; provided that the Indemnifying Party shall not be entitled to defend such Third Party Claim and shall pay the reasonable fees and expenses of one separate counsel for all Indemnitees if the claim for indemnification relates to or arises in connection with any criminal action, indictment or allegation.  Within fifteen (15) days after the receipt of notice from an Indemnitee in accordance with Section 4.05(a) (or sooner, if the nature of such Third Party Claim so requires), the Indemnifying Party shall notify the Indemnitee of its determination as to whether it will assume responsibility for defending such Third Party Claim, which election shall specify any reservations or exceptions to its defense.  After notice from an Indemnifying Party to an Indemnitee of its election to assume the defense of a Third Party Claim, such Indemnitee shall have the right to employ separate counsel and to participate in (but not control) the defense, compromise, or settlement thereof, but the fees and expenses of such counsel shall be the expense of such Indemnitee; provided, however, in the event that (i) the Indemnifying Party has elected to assume the defense of the Third Party Claim but has specified, and continues to assert, any reservations or exceptions in such notice, (ii) the Third Party Claim involves injunctive or equitable relief or (iii) the Indemnitee shall have been advised by counsel that an actual or potential conflict of interest makes representation by the same counsel or the counsel selected by the Indemnifying Party inappropriate, then, in any such case, the reasonable fees and expenses of one separate counsel for all Indemnitees shall be borne by the Indemnifying Party.

(c)If an Indemnifying Party elects not to assume responsibility for defending a Third Party Claim, or fails to notify an Indemnitee of its election within the time period specified in and as otherwise provided in Section 4.05(b), then the applicable Indemnitee may defend such Third Party Claim at the cost and expense of the Indemnifying Party to the extent indemnification is available under the terms of this Agreement.

(d)Unless the Indemnifying Party has failed to assume the defense of the Third Party Claim in accordance with the terms of this Agreement, no Indemnitee may settle or compromise any Third Party Claim without the consent of the Indemnifying Party.  If an Indemnifying Party has failed to assume the defense of the Third Party Claim within the time period specified in clause (b) above, it shall not be a defense to any obligation to pay any amount in respect of such Third Party Claim that the Indemnifying Party was not consulted in the defense thereof, that such Indemnifying Party’s views or opinions as to the conduct of such defense were not accepted or adopted, that such Indemnifying Party does not approve of the quality or manner of the defense thereof or that such Third Party Claim was incurred by reason of a settlement rather than by a judgment or other determination of liability.

(e)In the case of a Third Party Claim, no Indemnifying Party shall consent to entry of any judgment or enter into any settlement of the Third Party Claim without the consent of the Indemnitee if the effect thereof is (i) to permit any injunction, declaratory judgment, other order or other non-monetary relief to be entered, directly or indirectly, against any Indemnitee or (ii) to ascribe any fault to any Indemnitee in connection with such Third Party Claim.

(f)In the event of an Action in which the Indemnifying Party is not a named defendant, if either the

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Indemnitee or Indemnifying Party shall so request, the parties shall endeavor to substitute the Indemnifying Party for the named defendant or otherwise add the Indemnifying Party as a party thereto, if practicable.  If such substitution cannot be achieved for any reason or is not requested, the named defendant shall allow the Indemnifying Party to manage the Action as set forth in this Article IV, and the Indemnifying Party shall fully indemnify the named defendant against all costs of defending the Action (including court costs, sanctions imposed by a court, attorneys’ fees, experts fees and all other external expenses), the costs of any judgment or settlement, and the cost of any interest or penalties relating to any judgment or settlement with respect to such Third Party Claim.

(g)Notwithstanding the foregoing, the Indemnifying Party shall not, without the prior written consent of the Indemnitee, settle or compromise any pending or threatened Third Party Claim or consent to the entry of any judgment which does not include as an unconditional term thereof the delivery by the claimant or plaintiff to the Indemnitee of a written release from all Liability in respect of such Third Party Claim.

(h)Notwithstanding anything to the contrary in this Agreement, Third Party Claims with respect to Taxes shall be governed by the Tax Matters Agreement and not by the provisions of this ARTICLE IV.

Section 4.06.Additional Matters.  (a) Any claim on account of a Loss which does not result from a Third Party Claim shall be asserted by prompt written notice given by the Indemnitee to the applicable Indemnifying Party.  Such Indemnifying Party shall have a period of thirty (30) days after the receipt of such notice within which to respond by either (i) paying the applicable Indemnitee the amount of cash claimed in such notice or (ii) objecting to the claim for indemnification or the amount stated therein.  If the Indemnifying Party objects to the applicable claim, in whole or in part, or if the Indemnifying Party does not respond within such thirty (30) day period, then the applicable Indemnitee shall be free to pursue such remedies as may be available to such Indemnitee as contemplated by this Agreement, without prejudice to its continuing rights to pursue indemnification hereunder.

(b)If payment is made by or on behalf of any Indemnifying Party to any Indemnitee in connection with any Third Party Claim, such Indemnifying Party shall be subrogated to and shall stand in the place of such Indemnitee as to any events or circumstances in respect of which such Indemnitee may have any right, defense or claim relating to such Third Party Claim against any claimant or plaintiff asserting such Third Party Claim or against any other Person.  Such Indemnitee shall cooperate with such Indemnifying Party in a reasonable manner, and at the cost and expense of such Indemnifying Party, in prosecuting any subrogated right, defense or claim.

(c)Indemnification payments in respect of any Losses for which an Indemnitee is entitled to indemnification under this Article IV shall be paid by the Indemnifying Party to the Indemnitee as such Losses are incurred upon demand by the Indemnitee.  In connection therewith, such Indemnitee shall provide reasonably satisfactory documentation setting forth the basis for the amount of such indemnification, including documentation reflecting any Insurance Proceeds that actually reduce the amount of such Losses.

Section 4.07.Medicare Reporting.  The parties hereto acknowledge that the resolution of any Third Party Claim

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(subject to this Agreement) by way of a settlement, judgment, award or other payment to or on behalf of a Medicare beneficiary where medical expenses are claimed or released may impose reporting obligations pursuant to Section 111 of the Medicare, Medicaid and SCHIP Extension Act of 2007 (MMSEA), and the regulations and program guidance then in effect (“Section 111 Report”).  Accordingly, so that the Indemnitee can timely and effectively investigate and discharge its reporting obligations, if any, to the Centers for Medicare and Medicaid Services (“CMS”), the Indemnifying Party agrees to:

(a)Notify the Indemnitee no later than ten (10) days after making a settlement or payment of any award to or on behalf of a Medicare beneficiary and provide and/or confirm information that the Indemnitee will require to meet its Section 111 reporting obligation;

(b)Notify the Indemnitee prior to the settlement of any claim or payment of any award to a plaintiff or claimant for the purpose of providing Indemnitee identifying information on the proposed plaintiff or claimant-recipient, and such other information as may be required, to enable the Indemnitee to ascertain whether a Section 111 Report will be required.  If Medicare’s interests are implicated by the terms of the proposed settlement, judgment, award or other payment, the Indemnitee shall also have the right to suggest proposed terms and processes for the expected payment that will address and protect the Indemnitee’s interests under Section 111 and the Medicare Secondary Payer Act; and

(c)Subject to the terms of this Article IV, indemnify, defend, repay and hold harmless the Indemnitee for any Liabilities (including double damages) for delayed or defective reporting to CMS under Section 111 in the event that the Indemnifying Party fails to timely provide the notice set forth in this Section 4.07.

Section 4.08.Remedies Cumulative.  The remedies provided in this Article IV shall be cumulative and, subject to the provisions of Article VI, shall not preclude assertion by any Indemnitee of any other rights or the seeking of any and all other remedies against any Indemnifying Party, except that the remedies provided in this Article IV shall be the exclusive remedy for claims for contribution or other rights of recovery arising out of or relating to any Environmental Law, including the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”), or any analogous state or foreign Environmental Laws, whether now or hereinafter in effect.

Section 4.09.Survival of Indemnities.  The indemnity agreements contained in this Article IV shall remain operative and in full force and effect, regardless of (a) any investigation made by or on behalf of any Indemnitee; (b) the knowledge by the Indemnitee at any time of Liabilities for which it might be entitled to indemnification hereunder and (c) any termination of this Agreement.  The rights and obligations of each of Lilly and the Company and their respective Indemnitees under this Article IV shall survive the merger or consolidation of any party, the sale or other transfer by any party of any Assets or businesses or the assignment by it of any Liabilities, or the change of form or change of control of any party.

Section 4.10.Special Damages.  NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT OR ANY ANCILLARY AGREEMENT TO THE CONTRARY, IN NO EVENT WILL EITHER PARTY OR ANY OF ITS OTHER GROUP MEMBERS BE LIABLE FOR ANY SPECIAL, INCIDENTAL, INDIRECT, COLLATERAL,

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CONSEQUENTIAL OR PUNITIVE DAMAGES, LOST PROFITS OR SIMILAR ITEMS (INCLUDING LOSS OF REVENUE, INCOME OR PROFITS, DIMINUTION OF VALUE OR LOSS OF BUSINESS REPUTATION OR OPPORTUNITY), OR DAMAGES CALCULATED ON MULTIPLES OF EARNINGS OR OTHER METRICS APPROACHES, SUFFERED BY AN INDEMNIFIED PARTY, HOWEVER CAUSED AND ON ANY THEORY OF LIABILITY, IN CONNECTION WITH ANY DAMAGES ARISING HEREUNDER OR THEREUNDER; PROVIDED, HOWEVER, THAT TO THE EXTENT AN INDEMNIFIED PARTY IS REQUIRED TO PAY ANY SPECIAL, INCIDENTAL, INDIRECT, COLLATERAL, CONSEQUENTIAL OR PUNITIVE DAMAGES, LOST PROFITS OR SIMILAR ITEMS, OR DAMAGES CALCULATED ON MULTIPLES OF EARNING OR OTHER METRIC APPROACHES TO A PERSON WHO IS NOT A MEMBER OF EITHER GROUP IN CONNECTION WITH A THIRD PARTY CLAIM, SUCH DAMAGES WILL CONSTITUTE DIRECT DAMAGES AND NOT BE SUBJECT TO THE LIMITATION SET FORTH IN THIS SECTION 4.10.

ARTICLE V

CERTAIN BUSINESS MATTERS

Section 5.01.No Restriction on Competition.  It is the explicit intent of each of the parties hereto that the provisions of this Agreement shall not include any non-competition or other similar restrictive arrangements with respect to the range of business activities that may be conducted by the parties hereto from and after the Effective Date.  Accordingly, each of the parties hereto acknowledges and agrees that nothing set forth in this Agreement shall be construed to create any explicit or implied restriction or other limitation on the ability of any party hereto to engage in any (a) business or other activity that competes with the business of any other party hereto or (b) specific line of business or engage in any business activity in any specific geographic area.

Section 5.02.No Solicitation of Employees.  For and during the twelve (12) month period following the date on which Lilly and its Affiliates first cease to hold in excess of 50% of the outstanding shares of Company Common Stock pursuant to the Distribution or Other Disposition, none of Lilly, the Company or any other member of their respective Groups will, without the prior written consent of the other party, either directly or indirectly, on their own behalf or in the service or on behalf of others, solicit, aid, induce or encourage any employee at the level of senior director and above of the other party’s Group to leave his or her employment; provided, however, that nothing in this Section 5.02 shall restrict or preclude the rights of Lilly, the Company or any other member of their respective Groups from soliciting or hiring (a) any employee who responds to a general solicitation or advertisement that is not specifically targeted or focused on the employees employed by the other Group (and nothing shall prohibit such generalized searches for employees through various means, including the use of advertisements in the media (including trade media) or the engagement of search firms to engage in such searches); provided that the applicable party has not encouraged or advised such firm to approach any such employee; (b) any employee whose employment has been terminated by the other Group without cause; or (c) any employee whose employment was terminated for cause at least 180 days prior to any such contact.  For purposes of this Section 5.02 only, the written

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consent of the other applicable party shall be secured by seeking permission from, in the case of each of Lilly and the Company, the Sr. Vice President, Human Resources.

ARTICLE VI

EXCHANGE OF INFORMATION; CONFIDENTIALITY

Section 6.01.Provision of Corporate Records.  As soon as practicable after the Effective Date, subject to the provisions of this Section 6.01, Lilly and the Company shall discuss and negotiate in good faith a plan to transition (i) to the Company all Company Books and Records in the possession or control of Lilly or any other member of the Lilly Group, and (ii) to Lilly all Lilly Books and Records in the possession or control of the Company or any other member of the Company Group.  The foregoing shall be limited by the following:

(a)The transition of books and records shall require only deliveries of specific and discrete books and records (i) requested by the other party and (ii) identified by either party in the ordinary course of business and determined by such party to be material to the other’s business.  Without limiting any express delivery requirements under any other provision of this Agreement or any Ancillary Agreement, neither party shall be required to conduct any general search or investigation of its files;

(b)Each party may retain copies of books and records delivered to the other, subject to holding in confidence in accordance with Section 6.09 information contained in such books and records;

(c)Each party may in good faith refuse to furnish any books and records under this Section 6.01 if it reasonably believes in good faith that doing so could materially adversely affect its ability to successfully assert a claim of Privilege;

(d)Neither party shall be required to deliver to the other books and records or portions thereof that are subject to confidentiality agreements that would by their terms prohibit such delivery; provided, however, that if requested by the other party, such party shall use commercially reasonable efforts to seek a waiver of or other relief from such confidentiality restriction; and

(e)Nothing in this Section 6.01 shall affect the rights and obligations of any party to the Tax Matters Agreement with respect to the sharing of information related to Taxes.

In addition, copies of that portion of Excluded Company Books and Records and Excluded Lilly Books and Records that are retained (i) pursuant to the requirements of Law or (ii) because the respective Group determines it is necessary or advisable to do so, will be made available to the other party at such party’s reasonable request and expense, to the extent permitted by Law.

Section 6.02.Agreement for Exchange of Information; Archives.  (a) Each of Lilly and the Company, on behalf of itself and its Group, agrees to provide, or cause to be provided, to the other Group, at any time before or after the Effective Date, as soon as reasonably practicable after written request therefor, access to any Information in the possession or under the

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control of its Group that can be retrieved without unreasonable disruption to its business that the requesting party reasonably needs (i) to comply with reporting, disclosure, filing, or other requirements imposed on the requesting party or an applicable member of its Group (including under applicable securities or Tax Laws) by a Governmental Authority having jurisdiction over the requesting party or such member of its Group, (ii) for use in any judicial, regulatory, administrative, Tax or other proceeding or in order to satisfy audit, accounting, regulatory, litigation, environmental, tax or other similar requirements, in each case other than claims or allegations that one party to this Agreement or any member of its Group has against the other party or any member of its Group, or (iii) subject to the foregoing clause (ii), to comply with its obligations under this Agreement or any Ancillary Agreement.

(b)After the Effective Date, each of the Lilly Group on the one hand, and the Company Group on the other hand, shall provide to the other Group access during regular business hours (as in effect from time to time) to Information or documents and objects of historic significance that relate to the business and operations of such Group prior to the Effective Date that are located in archives retained or maintained by such other Group (or, if such Information does not exclusively relate to a party’s business, to the portions of such Information that do exclusively relate), subject to appropriate restrictions for proprietary, privileged or Confidential Information and to the requirements of any applicable state and/or federal Law such as a Code of Conduct or Standard of Conduct and any restrictions (including prohibitions on removal of specified objects), that are then applicable to the disclosing party, but only insofar as such access is reasonably required by the other party for legitimate business reasons, and only for the duration such access is required, provided that the requesting party shall cause any such objects to be returned promptly in the same condition in which they were delivered to the requesting party.  The Company or Lilly, as applicable, may obtain copies at their own expense of such Information for bona fide business purposes.  The Company or Lilly, as applicable, shall pay the applicable fee or rate per hour for archives research services (subject to increase from time to time to reflect rates then in effect) for the providing party generally.  Nothing herein shall be deemed to restrict the access of the providing party to any Information or to impose any Liability on the providing party if any such Information is not maintained or preserved by such party.

(c)After the Effective Date, without limiting the parties’ other rights and obligations set forth in this Section 6.02, each of Lilly and the Company shall (i) maintain in effect, at its own cost and expense, adequate systems and controls necessary to enable the Persons in the other Group to satisfy their respective reporting, accounting, audit and other obligations of which the first Group is made aware, and (ii) provide, or cause to be provided, to the other party (in such form as the providing party retains such Information for its own use) all financial and other data and Information in such party’s possession or control as such requesting party determines necessary or advisable in order to prepare its financial statements and reports or filings with any Governmental Authority.

(d)After the Effective Date, without limiting the parties’ rights and obligations in this Section 6.02, upon reasonable written notice, the parties shall furnish or cause to be furnished to each other and their employees, counsel, auditors and representatives reasonable access, during normal business hours, to such Information and assistance relating to the Animal Health Business, the Animal Health Assets and the Animal Health Liabilities as is required by applicable Law,

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including Section 404 of the Sarbanes-Oxley Act of 2002, or is reasonably necessary for financial reporting and accounting matters (including with respect to the preparation of any financial statements), letters of representation, reports or forms, the preparation and filing of any Tax Returns or the defense of any Tax claim or assessment.  Each party shall reimburse the other for reasonable out-of-pocket costs and expenses incurred in assisting the other pursuant to this Section 6.02(d).  Neither party shall be required by this Section 6.02(d) to take any action that would unreasonably interfere with the conduct of its business or unreasonably disrupt its normal operations.

(e)Nothing in this Section 6.02 shall affect the rights and obligations of any party to the Tax Matters Agreement with respect to the sharing of information related to Taxes.

(f)In the event any party reasonably determines that any provision of Information otherwise described in this Section 6.02 could be commercially detrimental, violate any Law or Contract, require any consent that the party does not have, or result in the waiver any Privilege, the parties shall, and shall cause each other member of their respective Groups to, take all commercially reasonable measures to permit the compliance with such obligations in a manner that avoids any such harm or consequence, including seeking any such consent.

(g)Each party agrees that it will only process Personal Data provided to it by the members of the other Group but only insofar as such Personal Data processing is required by the other party for legitimate business reasons, and the other party provides access to the Personal Data only to those employees who have a legitimate business reason to process the Personal Data, in accordance with all applicable privacy and data protection Law obligations and will implement and maintain at all times appropriate technical and organizational measures to protect such Personal Data against unauthorized or unlawful processing and accidental loss, destruction, damage, alteration and disclosure.  In addition, each party agrees to abide by any obligations under privacy and data protection Laws affecting the disclosure of such Personal Data to the other party and will not knowingly process such Personal Data in such a way to cause the other party to violate any of its obligations under any applicable privacy and data protection Laws.

(h)For the purposes of this Article VI, any request for information shall be deemed reasonable in content or timing if such request is consistent with past practices.

Section 6.03.Ownership of Information.  Any Information owned by one Group that is provided to a requesting party pursuant to Section 6.02 shall remain the property of the providing party.  Unless expressly set forth in this Agreement, nothing contained in this Agreement shall be construed as granting or conferring any right, title or interest (whether by license or otherwise) in, to or under any such Information.

Section 6.04.Reimbursement for Providing Information.  The party requesting access to Information agrees to reimburse the other party for the reasonable and documented out-of-pocket costs, if any, of providing such access.

Section 6.05.Record Retention.  To facilitate the possible exchange of Information pursuant to this Article VI and other provisions of this Agreement after the Effective Date, the parties agree to use their commercially reasonable efforts to retain all Information in their respective possession or control in accordance with the policies of Lilly as in effect on the

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Effective Date or such other policies as may be reasonably adopted by a party after the Effective Date.  For the avoidance of doubt, such policies shall be deemed to apply to any Information in a party’s possession or control on the Effective Date relating to the other party or members of its Group.  No party will destroy, or permit any other member of its Group to destroy, any Information which the other party may have the right to access pursuant to this Agreement prior to the seventh anniversary of the Effective Date without first using its commercially reasonable efforts to notify the other party of the proposed destruction and giving such party the opportunity to take possession of such Information prior to such destruction; provided, however, that in the case of any Information relating to Environmental Liabilities, such period shall be extended to the expiration of the applicable statute of limitations (giving effect to any extensions thereof). Nothing in this Section 6.05 shall affect the rights and obligations of any party to the Tax Matters Agreement with respect to Tax Records.

Section 6.06.Limitations of Liability.  Except as otherwise provided in this Article VI or required by applicable Law, in the absence of willful misconduct by the party requested to provide such Information, no party shall have any Liability to any other party in the event that (a) any Information which is an estimate or forecast, or which is based on an estimate or forecast is found to be inaccurate or (b) the requested Information is not provided.  No party shall have any Liability to any other party if any Information is destroyed after commercially reasonable efforts by such party to comply with the provisions of Section 6.05.

Section 6.07.Other Agreements Providing for Exchange of Information.  (a) The rights and obligations granted under this Article VI are subject to any specific limitations, qualifications or additional provisions on the sharing, exchange, retention, rights to use, or confidential treatment of Information set forth in any Ancillary Agreement.

(b)When any Information provided by one Group to the other (other than Information provided pursuant to Section 6.05) is no longer needed for the purposes contemplated by this Agreement or any other Ancillary Agreement or is no longer required to be retained by applicable Law, the receiving party will promptly after written request of the other party either return to the other party all Information in a tangible form (including all copies thereof and all notes, extracts or summaries based thereon) or certify to the other party that it has destroyed such Information (and such copies thereof and such notes, extracts or summaries based thereon); provided, however, the obligation to return or destroy such Information shall not apply to Information that is maintained on routine computer system backup tapes, disks or other backup storage devices as long as such backed-up Information is not used, disclosed or otherwise recovered from such back-up devices; provided, however, that any such Information so retained will continue, in each case, to be held confidential pursuant to the terms of Section 6.09.

Section 6.08.Production of Witnesses; Records; Cooperation.  (a) After the Effective Date, except in the case of any Action involving or relating to a conflict or dispute between any member of the Lilly Group, on the one hand, and any member of the Company Group, on the other hand, each party hereto will use its commercially reasonable efforts to make available to each other party, upon written request, the then current directors, officers, employees, other personnel and agents of the member in its respective Group as witnesses and any books, records or other documents within its control or which it otherwise has the ability to make available, to the extent that any such Person (giving consideration to business demands of

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such directors, officers, employees, other personnel and agents) or books, records or other documents may reasonably be required in connection with any Action in which the requesting party may from time to time be involved, regardless of whether such Action is a matter with respect to which indemnification may be sought hereunder, and the parties shall otherwise reasonably cooperate with each other to the extent reasonably necessary with respect to any such Actions.  The requesting party shall bear all costs and expenses in connection therewith.

(b)If an Indemnifying Party or Indemnitee chooses to defend or to seek to compromise or settle any Third Party Claim, the other party shall make available to such Indemnifying Party or Indemnitee, as applicable, upon written request, the then current directors, officers, employees, other personnel and agents of the Persons in its respective Group as witnesses and any Information within its control or possession, to the extent that any such Person (giving consideration to business demands of such directors, officers, employees, other personnel and agents) or books, records or other documents may reasonably be required in connection with such defense, settlement or compromise, or such prosecution, evaluation or pursuit, as the case may be, and shall otherwise reasonably cooperate in such defense, settlement or compromise, or such prosecution, evaluation or pursuit, as the case may be.

(c)In connection with any applicable matter contemplated by this Section 6.08, the parties may enter into a mutually acceptable joint defense agreement so as to maintain to the extent practicable any applicable attorney-client privilege or work product immunity of any member of any Group.

Section 6.09.Confidentiality.  (a) Subject to Section 6.10, each of Lilly and the Company (each, a “Receiving Party”), on behalf of itself and each other Person in its respective Group, agrees to hold, and to cause its respective Representatives to hold, in strict confidence, all Information, including Personal Data, material or documents (i) in the case of Lilly, relating to the Company and solely concerning the Animal Health Business (for which the Company shall be the “Disclosing Party”), and (ii) in the case of the Company, relating to Lilly and concerning the Lilly Business (for which Lilly shall be the “Disclosing Party”), which is: (x) accessible to the respective Receiving Party and its Representatives, (y) in the possession of the respective Receiving Party and its Representatives (including Information in such party’s possession prior to the Effective Date) or (z) furnished by the Disclosing Party or any Person in the Receiving Party’s Group (or any of their respective Representatives) at any time pursuant to this Agreement or otherwise, irrespective of the form of communication (the “Confidential Information”).  Confidential Information includes all notes, analyses, compilations, forecasts, data, translations, studies, memoranda or other documents prepared by any member of the Receiving Party’s Group or its respective Representatives that contain or otherwise reflect such Confidential Information. Notwithstanding the foregoing, Confidential Information shall not include Information that: (i) is or becomes part of the public domain through no breach of this Agreement by the Receiving Party, any  member of their respective Group or its Representatives, (ii) was independently developed following the Effective Date by employees or agents of the Receiving Party, any other Person in its Group or, their respective Representatives who have not accessed or otherwise received the applicable Information; provided that such independent development can be demonstrated by competent, contemporaneous written records of the Receiving Party or any other Person in its Group, or (iii) becomes available to the Receiving Party or any other Person in its Group following the

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Effective Date on a non-confidential basis from a third party who is not known by such Person to be bound directly or indirectly by a confidentiality agreement or other contractual, legal or fiduciary obligation of confidentiality to the Disclosing Party or any member of its Group.  For the avoidance of doubt, the Receiving Parties shall treat the Confidential Information with at least the same degree of care that applies to the confidential and proprietary information of Lilly pursuant to policies in effect as of the Effective Date.

(b)Each party acknowledges that it and the other members of its Group may have in their possession confidential or proprietary Information of third parties that was received under confidentiality or non-disclosure agreements with such third parties prior to the Effective Date.  Such party will hold, and will cause the other members of its Group and their respective Representatives to hold, in strict confidence, the confidential and proprietary information of third parties to which it or any other member of its Group has access, in accordance with the terms of any agreements entered into prior to the Effective Date between one or more members of such party’s Group (whether acting through, on behalf of, or connection with, the separated businesses) and such third parties.

(c)Upon the written request of a party, the other party shall promptly destroy any copies of Confidential Information (including any extracts therefrom) specifically identified by the requesting party to be destroyed.  Upon the written request of such requesting party, the other party shall cause one of its duly authorized officers to certify in writing to such requesting party that the requirements of the preceding sentence have been satisfied in full; provided, however, the obligation to return or destroy such Confidential Information shall not cover Confidential Information that is maintained on routine computer system backup tapes, disks or other backup storage devices as long as such backed-up information is not used, disclosed or otherwise recovered from such back-up devices; provided, however, that any Confidential Information so retained will continue, in each case, to be held confidentially as provided in this Section 6.09.

(d)Notwithstanding anything to the contrary in this Article VI, (i) to the extent that an Ancillary Agreement or other Contract pursuant to which a party hereto or another Person in its respective Group is bound or its Confidential Information is subject provides that certain Information shall be maintained as confidential on a basis that is more protective of such Information or for a longer period of time than provided for herein, then the applicable provisions contained in such Ancillary Agreement or other Contract shall control with respect thereto and (ii) a party and the applicable members of its respective Group shall have no right to use any Information of the Disclosing Party unless otherwise provided for in this Agreement, an Ancillary Agreement or a Contract between the parties hereto or a member of its respective Group.

Section 6.10.Protective Arrangements.  In the event that the Receiving Party or any member of its Group either determines on the advice of its counsel (which may be internal) that it is required to disclose any Information pursuant to applicable Law (including the rules and regulations of the Commission or any national securities exchange) or receives any request or demand from any Governmental Authority to disclose or provide Information of the Disclosing Party (or any member of the Disclosing Party’s Group) that is subject to the confidentiality provisions hereof, such party shall, to the extent legally permissible, use its reasonable best efforts to notify the other party prior to disclosing or providing such Information

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and shall cooperate at the expense of such other party in seeking any reasonable protective arrangements (including by using its reasonable best efforts to ensure that confidential treatment is accorded such Information) requested by such other party.  Subject to the foregoing, the Person that received such a request or determined that it is required to disclose Information may thereafter disclose or provide only that portion of such Information that is legally required to be disclosed as so advised by counsel; provided, however, that such Person provides the other party, to the extent legally permissible, upon request with a copy of the Information so disclosed. For the avoidance of doubt, nothing contained in this Section 6.10 or in Section 6.09 shall prevent Lilly from including in any Lilly Public Filing any Information provided by the Company Group in accordance with ARTICLE VII, to the extent Lilly determines in good faith that such inclusion is necessary or desirable.

Section 6.11.Preservation of Legal Privileges.  (a) Lilly and the Company recognize that the members of their respective Groups possess and will possess information and advice that has been previously developed but is legally protected from disclosure under legal privileges, such as the attorney-client privilege, work product doctrine and other concepts of legal protection (“Privilege”).  Lilly and the Company recognize that they shall be jointly entitled to the Privilege with respect to such Privileged Information and that each of them shall be entitled to maintain, preserve and assert for its own benefit all such information and advice, but both parties shall ensure that such information is maintained so as to protect the Privileges with respect to the other party’s interest.  To that end, neither party will knowingly waive or compromise any Privilege associated with such information and advice without the prior written consent of the other party.  In the event that Privileged Information is required to be disclosed to any arbitrator or mediator in connection with a dispute between the parties, such disclosure shall not be deemed a waiver of Privilege with respect to such information, and any party receiving it in connection with a proceeding shall be informed of its nature and shall be required to safeguard and protect it.

(b)The rights and obligations created by this Section 6.11 shall apply to all Information relating to the Animal Health Business as to which either party would have been entitled to assert or did assert the protection of a Privilege, including (i) any and all Information generated prior to the Effective Date and (ii) all Information generated, received or arising after the Effective Date that refers to or relates to Information described in the preceding clause (i).

(c)Upon receipt by either party of any subpoena, discovery or other request that may call for the production or disclosure of Information that is the subject of a Privilege, or if a party obtains knowledge that any current or former employee of a party has received any subpoena, discovery or other request that may call for the production or disclosure of such Information, such party shall provide the other party a reasonable opportunity to review the Information and to assert any rights it may have under this Section 6.11 or otherwise to prevent the production or disclosure of such Information at the cost and expense of the members of the Group claiming such defenses to disclosure.  Absent receipt of written consent from the other party to the production or disclosure of Information that may be covered by a Privilege, each party agrees that it will not produce or disclose any Information that may be covered by a Privilege unless a court of competent jurisdiction has entered a final, nonappealable order finding that the Information is not entitled to protection under any applicable Privilege.

(d)Lilly’s transfer of Company Books and Records and other Information to the Company, Lilly’s agreement

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to permit the Company to obtain Information existing prior to the Effective Date, the Company’s transfer of Lilly Books and Records and other Information (if any) to the Company and the Company’s agreement to permit Lilly to obtain Information existing prior to the Effective Date are made in reliance on Lilly’s and the Company’s respective agreements, as set forth in Section 6.09, Section 6.10 and this Section 6.11, to maintain the confidentiality of such Information and to take the steps provided herein for the preservation of all Privileges that may belong to or be asserted by Lilly or the Company, as the case may be.  The access to Information being granted pursuant to Section 6.02 hereof, the agreement to provide witnesses and individuals pursuant to Section 6.08 hereof and the disclosure to Lilly and the Company of Privileged Information relating to the Animal Health Business or Lilly Business pursuant to this Agreement in connection with the transactions contemplated hereby shall not be asserted by Lilly or the Company to constitute, or otherwise deemed, a waiver of any Privilege that has been or may be asserted under this Section 6.11 or otherwise.  Nothing in this Agreement shall operate to reduce, minimize or condition the rights granted to Lilly and the Company in, or the obligations imposed upon the parties by, this Section 6.11.

ARTICLE VII

FINANCIAL AND OTHER COVENANTS

Section 7.01.Disclosure and Financial Controls.  The Company agrees that, for so long as Lilly is required to consolidate the results of operations and financial position of the Company and the other members of the Company Group or to account for its investment in the Company under the equity method of accounting (determined in accordance with US GAAP and consistent with Commission reporting requirements):

(a)Disclosure of Financial Controls.  The Company will, and will cause each other member of the Company Group to, maintain, as of and after the Effective Date, disclosure controls and procedures and internal control over financial reporting as defined in Exchange Act Rule 13a-15; the Company will cause each of its principal executive and principal financial officers to sign and deliver certifications to the Company’s periodic reports and will include the certifications in the Company’s periodic reports, in each case, as and when required pursuant to Exchange Act Rule 13a-14 and Item 601 of Regulation S-K; the Company will comply with its obligations under Sections 302 and 404 of the Sarbanes-Oxley Act of 2002; the Company will cause its management to evaluate the Company’s disclosure controls and procedures and internal control over financial reporting (including any change in internal control over financial reporting) as and when required pursuant to Exchange Act Rule 13a-15; the Company will disclose in its periodic reports filed with the Commission information concerning the Company management’s responsibilities for and evaluation of the Company’s disclosure controls and procedures and internal control over financial reporting (including the annual management report and attestation report of the Company’s independent auditors relating to internal control over financial reporting) as and when required under Items 307 and 308 of Regulation S-K and other applicable Commission rules; and, without limiting the general application of the foregoing, the Company will, and will cause each other member of the Company Group to, maintain as of and after the Effective Date internal systems and procedures that will provide reasonable assurance that (i) the Financial Statements are reliable and timely prepared in accordance with US GAAP and applicable Law, (ii) all transactions of members of the Company Group are recorded as necessary to permit the preparation of the Financial Statements, (iii) the receipts and

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expenditures of members of the Company Group are authorized at the appropriate level within the Company, and (iv) unauthorized use or disposition of the assets of any member of the Company Group that could have a material effect on the Financial Statements is prevented or detected in a timely manner. It is understood and agreed that, references in this Section 7.01(a) to reporting or other obligations of the Company shall be deemed to assume, for purposes hereof, that the Company is subject to the same rules and regulations as Lilly.

(b)Fiscal Year.  The Company will, and will cause each member of the Company Group organized in the U.S. to maintain a fiscal year that commences and ends on the same calendar days as Lilly’s fiscal year commences and ends, and to maintain monthly accounting periods that commence and end on the same calendar days as Lilly’s monthly accounting periods commence and end.  The Company will, and will cause each other member of the Company Group organized outside the U.S. to maintain a fiscal year that commences and ends on the same calendar days as the fiscal year of the corresponding members of the Lilly Group (if any) organized outside the U.S. commences and ends, and to maintain monthly accounting periods that commence and end on the same calendar days as the monthly accounting periods of the corresponding members of the Lilly Group (if any) organized outside the U.S. commence and end.

(c)Monthly and Quarterly Financial Information.  The Company will deliver or make available to Lilly a consolidated income statement and balance sheet, or the information required to prepare a consolidated income statement and balance sheet, on a monthly basis for the Company for such period in the same format and manner, with the same detail, and in the same timeframe, as the Animal Health Business delivered or made available such information to Lilly prior to the Effective Date (such practices, the “Financial Delivery Practices”).  The Company will deliver or make available to Lilly a consolidated income statement and balance sheet and supplemental data related to cash flows, or the information required to prepare a consolidated income statement and balance sheet and supplemental data related to cash flows, and other necessary disclosures on a quarterly basis in accordance with the Financial Delivery Practices.  The Company will be responsible for reviewing its results and data and for informing Lilly immediately of any post-closing adjustments that come to its attention.  The Company must provide final sign-off of its results, using Lilly materiality, no later than nine (9) Business Days after the quarterly close period end for the income statement and no later than twelve (12) Business Days after the quarterly close period end for the balance sheet and supplemental data, in each case unless otherwise directed by Lilly.  A certification will be provided by the Controller and Chief Financial Officer and President of the Company that the quarter financials and internal controls appropriately represent the financial position and current financial reporting controls of the Company no later than five (5) Business Days prior to Lilly’s filing of its quarterly financial statements with the Commission.

(d)Quarterly Financial Statements.  As soon as practicable, in accordance with the Financial Delivery Practices, Company will deliver to Lilly drafts of (i) the consolidated financial statements of the Company Group (and notes thereto) for each fiscal quarter and for the period from the beginning of the current fiscal year to the end of such quarter, setting forth in each case in comparative form for each such fiscal quarter of the Company the consolidated figures (and notes thereto) for the corresponding quarter and periods of the previous fiscal year and all in reasonable detail and prepared in

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accordance with Article 10 of Regulation S-X and US GAAP, and (ii) a discussion and analysis by management of the Company Group’s financial condition and results of operations for such fiscal quarter, including an explanation of any material period-to-period change and any off-balance sheet transactions, all in reasonable detail and prepared in accordance with Item 303(b) of Regulation S-K; provided, however, that the Company will deliver such information at such earlier time upon Lilly’s written request with thirty (30) days’ notice resulting from Lilly’s determination to accelerate the timing of the filing of its financial statements with the Commission.  The information set forth in (i) and (ii) above is referred to in this Agreement as the “Quarterly Financial Statements.”  No later than seven (7) Business Days prior to the date the Company publicly files the Quarterly Financial Statements with the Commission or otherwise makes such Quarterly Financial Statements publicly available, the Company will deliver to Lilly the final form of the Quarterly Financial Statements and certifications thereof by the principal executive and financial officers of the Company in substantially the forms required under Commission rules for periodic reports and in form and substance satisfactory to Lilly; provided, however, that the Company may continue to revise such Quarterly Financial Statements prior to the filing thereof in order to make corrections and non-substantive changes which corrections and changes will be delivered by the Company to Lilly as soon as practicable, and in any event within eight (8) hours of making any such corrections or changes; provided, however, that Lilly’s and the Company’s financial representatives will actively consult with each other regarding any changes (whether or not substantive) which the Company may consider making to its Quarterly Financial Statements and related disclosures during the seven (7) Business Days immediately prior to any anticipated filing with the Commission, with particular focus on any changes which would have an effect upon Lilly’s financial statements or related disclosures.  In addition to the foregoing, no Quarterly Financial Statement or any other document which refers, or contains information not previously publicly disclosed with respect to the ownership of the Company by Lilly or the Transactions, will be filed with the Commission or otherwise made public by any Company Group member without the prior written consent of Lilly.  Notwithstanding anything to the contrary in this Section 7.01(d), the Company will not file its Quarterly Financial Statements with the Commission prior to the time that Lilly files the Lilly quarterly financial statements with the Commission unless otherwise required by applicable Law.

(e)Annual Financial Statements.  On an annual basis, in accordance with the Financial Delivery Practices, the Company will deliver to Lilly an income statement and balance sheet and supplemental data related to cash flows and other necessary disclosures for such fiscal year in such format and detail as Lilly may request.  The Company will be responsible for reviewing its results and data and for informing Lilly immediately of any post-closing adjustments in excess of $5 million pre-tax that come to its attention and of any adjustments below $5 million within eight (8) hours of its awareness.  The Company must provide final sign-off of its results, using Lilly materiality, no later than nine (9) Business Days after the annual close period end for the income statement and no later than twelve (12) Business Days after the annual close period end for the balance sheet and supplemental data, in each case unless otherwise directed by Lilly.  A certification will be provided by the CEO and CFO of the Company pertaining to the internal controls no later than five (5) Business Days prior to Lilly’s filing of its audited annual financial statements (the “Lilly Annual Statements”) with the Commission.  As soon as practicable, and in any event no later than fifteen (15) Business Days prior to the date on which Lilly has notified the Company that Lilly intends to file its annual report on Form 10-K or other document containing annual financial statements

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with the Commission, the Company will deliver to Lilly any financial and other information and data with respect to the Company Group and its business, properties, financial position, results of operations and prospects as is reasonably requested by Lilly in connection with the preparation of Lilly’s financial statements and annual report on Form 10-K.  As soon as practicable, and in any event no later than ten (10) Business Days prior to the date on which the Company is required to file an annual report on Form 10-K or other document containing its Annual Financial Statements (as defined below) with the Commission, the Company will deliver to Lilly (i) drafts of the consolidated financial statements of the Company Group (and notes thereto) for such year, setting forth in each case in comparative form the consolidated figures (and notes thereto) for the previous fiscal years and all in reasonable detail and prepared in accordance with Regulation S-X and US GAAP and (ii) a discussion and analysis by management of the Company Group’s financial condition and results of operations for such year, including an explanation of any material period-to-period change and any off-balance sheet transactions, all in reasonable detail and prepared in accordance with Items 303(a) and 305 of Regulation S-K.  The information set forth in (i) and (ii) above is referred to in this Agreement as the “Annual Financial Statements.”  The Company will deliver to Lilly all revisions to such drafts as soon as any such revisions are prepared or made.  No later than seven (7) Business Days prior to the date the Company publicly files the Annual Financial Statements with the Commission or otherwise makes such Annual Financial Statements publicly available, the Company will deliver to Lilly the final form of its annual report on Form 10-K and certifications thereof by the principal executive and financial officers of the Company in substantially the forms required under Commission rules for periodic reports and in form and substance satisfactory to Lilly; provided, however, that the Company may continue to revise such Annual Financial Statements prior to the filing thereof in order to make corrections and non-substantive changes which corrections and changes will be delivered by the Company to Lilly as soon as practicable, and in any event within eight (8) hours of making any such corrections or changes; provided, further, that Lilly and the Company financial representatives will actively consult with each other regarding any changes (whether or not substantive) which the Company may consider making to its Annual Financial Statements and related disclosures during the seven (7) Business Days immediately prior to any anticipated filing with the Commission.  In addition to the foregoing, no Annual Financial Statement or any other document which refers, or contains information not previously publicly disclosed with respect to the ownership of the Company by Lilly or the Transactions will be filed with the Commission or otherwise made public by any Company Group member without the prior written consent of Lilly.  Notwithstanding anything to the contrary in this Section 7.01(e), the Company will not file its Annual Financial Statements with the Commission prior to the time that Lilly files the Lilly Annual Statements with the Commission unless otherwise required by applicable Law.

(f)Affiliate Financial Statements.  The Company will deliver to Lilly all quarterly financial statements and annual financial statements of each Affiliate of the Company which is itself required to file financial statements with the Commission or otherwise make such financial statements publicly available, with such financial statements to be provided in the same manner and detail and on the same time schedule as Quarterly Financial Statements and Annual Financial Statements required to be delivered to Lilly pursuant to this Section 7.01.

(g)Conformance with Lilly Financial Presentation.  All information provided by any member of the Company

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Group to Lilly or filed with the Commission pursuant to Section 7.01(c) through (f) inclusive will be consistent in terms of format and detail and otherwise with Lilly’s policies with respect to the application of US GAAP and practices in effect on the Effective Date with respect to the provision of such financial information by such member of the Company Group to Lilly (and, where appropriate, as presently presented in financial reports to the Lilly Board), with such changes therein as may be requested by Lilly from time to time consistent with changes in such accounting principles and practices, including any changes in the interpretation or application of US GAAP.

(h)Company Reports Generally.  The Company shall, and shall cause each other member of the Company Group that files information with the Commission to, deliver to Lilly: (i) substantially final drafts, as soon as the same are prepared, of (A) all reports, notices and proxy and information statements to be sent or made available by such member(s) of the Company Group to its or their respective security holders, (B) all regular, periodic and other reports to be filed or furnished under Sections 13, 14 and 15 of the Exchange Act (including reports on Forms 10-K, 10-Q and 8-K and annual reports to shareholders), and (C) all registration statements and prospectuses to be filed by any such member of the Company Group with the Commission or any securities exchange pursuant to the listed company manual (or similar requirements) of such exchange (collectively, the documents identified in clauses (A), (B) and (C) are referred to in this Agreement as “Company Public Documents”), and (ii) as soon as practicable, but in no event later than five (5) Business Days (other than with respect to Form 8-Ks) prior to the earliest of the dates the same are printed, sent or filed, current drafts of all such Company Public Documents and, with respect to Form 8-Ks, as soon as practicable, but in no event later than three (3) Business Days prior to the earliest of the dates the same are printed, sent or filed in the case of planned Form 8-Ks and as soon as practicable, but in no event less than two (2) hours in the case of unplanned Form 8-Ks; provided, however, that the Company may continue to revise such Company Public Documents prior to the filing thereof in order to make corrections and non-substantive changes, which corrections and changes will be delivered by the Company to Lilly as soon as practicable, and in any event within eight (8) hours of making any such corrections or changes; provided, further, that financial representatives of Lilly and the Company will actively consult with each other regarding any changes (whether or not substantive) which the Company may consider making to any of its Company Public Documents and related disclosures prior to any anticipated filing with the Commission, with particular focus on any changes which would have an effect upon Lilly’s financial statements or related disclosures.  In addition to the foregoing, no Company Public Document or any other document which refers, or contains information not previously publicly disclosed with respect to the ownership of the Company by Lilly or the Transactions will be filed with the Commission or otherwise made public by any Company Group member without the prior written consent of Lilly.

(i)Budgets and Financial Projections.  The Company will, as promptly as practicable, deliver to Lilly copies of all annual budgets and financial projections (consistent in terms of format and detail mutually agreed upon by the parties) relating to the Company on a consolidated basis and will provide Lilly an opportunity to meet with management of the Company to discuss such budgets and projections. In addition, to the extent requested by Lilly, the Company will participate in Lilly’s annual strategic review planning and other similar meetings and processes in a manner consistent with past practices or with such changes as Lilly may reasonably request.

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(j)Other Information.  With reasonable promptness, the Company will deliver to Lilly such additional financial and other information and data with respect to the Company Group and their business, properties, financial positions, results of operations and prospects as from time to time may be reasonably requested by Lilly.

(k)Press Releases and Similar Information.  The Company and Lilly will consult with each other as to the timing of their annual and quarterly earnings releases and any interim financial guidance for a current or future period and will give each other the opportunity to review the information therein relating to the Company Group and to comment thereon.  Lilly and the Company will make reasonable efforts to issue their respective annual and quarterly earnings releases on the same date.  Lilly and the Company shall coordinate the timing of (i) their respective earnings release conference calls such that the Company shall be permitted to hold such calls prior to those of Lilly and (ii) their respective public earnings release filings with the Commission such that the Company shall make its earnings filing no later than seven (7) days following Lilly’s earnings filing, in each case unless otherwise directed by Lilly.  No later than eight (8) hours prior to the time and date that a party intends to publish its regular annual or quarterly earnings release or any financial guidance for a current or future period, such party will deliver to the other party copies of substantially final drafts of all related press releases and other statements to be made available by any member of that party’s Group to employees of any member of that party’s Group or to the public concerning any matters that could be reasonably likely to have a material financial impact on the earnings, results of operations, financial condition or prospects of any member of the Company Group.  In addition, prior to the issuance of any such press release or public statement that meets the criteria set forth in the preceding sentence, the issuing party will consult with the other party regarding any changes (other than typographical or other similar minor changes) to such substantially final drafts.  Immediately following the issuance thereof, the issuing party will deliver to the other party copies of final drafts of all press releases and other public statements.  Prior to the Effective Date, the Company shall consult with Lilly prior to issuing any press releases or otherwise making public statements with respect to the Transactions or any of the other transactions contemplated hereby and prior to making any filings with any Governmental Authority with respect thereto.

(l)Cooperation on Lilly Filings.  The Company will cooperate fully, and cause the Company Auditors to cooperate fully, with Lilly to the extent requested by Lilly in the preparation of Lilly’s public earnings or other press releases, quarterly reports on Form 10-Q, annual reports to shareholders, annual reports on Form 10-K, any current reports on Form 8-K and any other proxy, information and registration statements, reports, notices, prospectuses and any other filings made by Lilly with the Commission, any national securities exchange or otherwise made publicly available (collectively, the “Lilly Public Filings”).  The Company agrees to provide to Lilly all information that Lilly reasonably requests in connection with any Lilly Public Filings or that, in the judgment of Lilly’s Legal Division, is required to be disclosed or incorporated by reference therein under any Law or rule.  The Company will provide such information in a timely manner on the dates requested by Lilly (which may be earlier than the dates on which the Company otherwise would be required hereunder to have such information available) to enable Lilly to prepare, print and release all Lilly Public Filings on such dates as Lilly will determine but in no event later than as required by applicable Law.  The Company will use its commercially reasonable efforts to cause Company Auditors to consent to any reference to them as experts in any Lilly Public Filings required under

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any Law or rule. If and to the extent requested by Lilly, the Company will diligently and promptly review all drafts of such Lilly Public Filings and prepare in a diligent and timely fashion any portion of such Lilly Public Filing pertaining to the Company.  Prior to any printing or public release of any Lilly Public Filing, an appropriate executive officer of the Company will, if requested by Lilly, certify that the information relating to any member of the Company Group or the Animal Health Business in such Lilly Public Filing is accurate, true, complete and correct in all material respects.  Unless required by Law or rule, the Company will not publicly release any financial or other information which conflicts with the information with respect to any member of the Company Group or the Animal Health Business that is included in any Lilly Public Filing without Lilly’s prior written consent.  Prior to the release or filing thereof, Lilly will provide the Company with a draft of any portion of a Lilly Public Filing containing information relating to the Company Group and will give the Company an opportunity to review such information and comment thereon; provided that Lilly will determine in its sole and absolute discretion the final form and content of all Lilly Public Filings.

Section 7.02.Auditors and Audits; Annual Statements and Accounting.  The Company agrees that for so long as Lilly is required to consolidate the results of operations and financial position of the Company and any other members of the Company Group or to account for its investment in the Company under the equity method of accounting (determined in accordance with US GAAP and consistent with Commission reporting requirements) (an “Applicable Period”), and for purposes of Section 7.02(a) only, for so long as services are being provided under the Transitional Services Agreement, it shall comply with the following additional obligations:

(a)Selection of Company Auditors.  Unless required by Law, the Company will not select an accounting firm other than Ernst & Young LLP (or its affiliate accounting firms) (unless so directed by Lilly in accordance with a change by Lilly in its accounting firm) to serve as its independent certified public accountants (“Company Auditors”) without Lilly’s prior written consent (which will not be unreasonably withheld). Notwithstanding the foregoing, the Company shall obtain the approval of Lilly prior to engaging Ernst & Young LLP (or its affiliate accounting firms) for any non-audit services, including any such services that may affect the accounting firm’s independence.

(b)Audit Timing.  Beginning in the 2019 fiscal year, the Company will use its reasonable best efforts to enable the Company Auditors to complete their audit for the 2018 fiscal year such that they will date their opinion on the Annual Financial Statements on the same date that Lilly’s independent certified public accountants (“Lilly Auditors”) date their opinion on the Lilly Annual Statements, and to enable Lilly to meet its timetable for the printing, filing and public dissemination of the Lilly Annual Statements, all in accordance with Section 7.01(a) hereof and as required by applicable Law.

(c)Quarterly Review.  Beginning in the 2018 fiscal year, the Company shall use its reasonable best efforts to enable Lilly Auditors to complete their quarterly review procedures on the Quarterly Financial Statements on the same date that Lilly Auditors complete their quarterly review procedures on Lilly’s quarterly financial statements.

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(d)Information Needed by Lilly.  The Company will provide to Lilly on a timely basis all information that Lilly reasonably requires to meet its schedule for the preparation, printing, filing, and public dissemination of the Lilly Annual Statements in accordance with Section 7.01(a) hereof and as required by applicable Law.  Without limiting the generality of the foregoing, the Company will provide all required financial information with respect to the Company Group to the Company Auditors in a sufficient and reasonable time and in sufficient detail to permit the Company Auditors to take all steps and perform all reviews necessary to provide sufficient assistance to Lilly Auditors with respect to information to be included or contained in the Lilly Annual Statements.

(e)Access to Company Auditors.  The Company will authorize the Company Auditors to make available to the Lilly Auditors both the personnel who performed, or are performing, the annual audit and quarterly reviews of the Company and work papers related to the annual audit and quarterly reviews of the Company, in all cases within a reasonable time prior to Company Auditors’ opinion date, so that the Lilly Auditors are able to perform the procedures they consider necessary to take responsibility for the work of the Company Auditors as it relates to the Lilly Auditors’ report on Lilly’s statements, all within sufficient time to enable Lilly to meet its timetable for the printing, filing and public dissemination of the Lilly Annual Statements.  It is understood and agreed that the Company’s obligations pursuant to this Section 7.02(e) shall extend beyond an Applicable Period in the event any amendments to, or restatements or modification of, any Lilly Public Filings are necessary.

(f)Access to Records.  If Lilly determines in good faith that there may be some inaccuracy in the financial statements of a member of the Company Group or a deficiency or inadequacy in the internal accounting controls or operations of a member of the Company Group that could materially impact Lilly’s financial statements or breach Section 7.05(d), at Lilly’s request, the Company will provide Lilly Auditors and Lilly’s other Representatives, including Lilly’s internal auditors, with access to the Company Group’s books and records so that Lilly may conduct reasonable audits relating to the financial statements provided by the Company under this Agreement as well as to the internal accounting controls and operations of the Company Group.

(g)Operating Review Process.  The Company shall conduct its strategic and operational review process on a schedule that is consistent with that of Lilly’s.  Lilly acknowledges that, as a supplement to the information furnished by the Company to Lilly pursuant to Section 7.01, Lilly shall conduct its strategic and operational reviews of the Company through participation in meetings or other activities of the Company Board by the Lilly Designees.  To facilitate Lilly’s participation in the process in this manner, the Company shall hold all of its regularly scheduled board meetings at which its strategic and operational reviews are discussed within a time frame consistent with Lilly’s strategic and operational review process.  Lilly shall make a good faith attempt to conduct all other reviews of the Company’s operations, affairs, finances or results (other than those required to comply with applicable financial reporting requirements or its customary financial reporting practices) through participation in meetings or other activities of the Company Board by the Lilly Designees.  In connection with strategic, operational or other reviews, relevant Lilly personnel other than the Lilly Designees may participate at Lilly’s invitation.  Lilly will notify the Company in advance of any such additional attendees.

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(h)Notice of Changes.  The Company will give Lilly as much prior notice as reasonably practicable of any proposed determination of, or any significant changes in, the Company’s accounting estimates or accounting principles from those in effect on the Effective Date.  The Company will consult with Lilly and, if requested by Lilly, the Company will consult with the Lilly Auditors with respect thereto.  The Company will not make any such determination or changes without Lilly’s prior written consent if such a determination or a change would be sufficiently material to be required to be disclosed in the Company’s or Lilly’s financial statements as filed with the Commission or otherwise publicly disclosed therein.

(i)Accounting Changes Requested by Lilly.  Notwithstanding clause (h) above, the Company will make any changes in its accounting practices or accounting principles, including any changes in the interpretation or application of US GAAP, that are requested by Lilly in order for the Company’s accounting practices and principles to be consistent with those of Lilly.

(j)Special Reports of Deficiencies or Violations.  The Company will report in reasonable detail to Lilly the following events or circumstances promptly after any executive officer of the Company or any member of the Company Board becomes aware of such matter: (A) all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information; (B) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal controls over financial reporting; (C) any illegal act within the meaning of Section 10A(b) and (f) of the Exchange Act; and (D) any report of a material violation of Law that an attorney representing any member of the Company Group has formally made to any officers or directors of the Company pursuant to the SEC’s attorney conduct rules (17 C.F.R. Part 205).

Section 7.03.Company Board Representation.

(a)Following the Effective Date, and for so long as Lilly and its Affiliates beneficially own shares of Company Common Stock representing at least 10% of the total voting power of all classes of then outstanding capital stock of the Company entitled to vote generally with respect to the election of directors (“Company Voting Stock”), Lilly shall have the right to designate for nomination by the Company Board (or any nominating committee thereof) for election to the Company Board a number of individuals proportionate to its ownership of Company Voting Stock, as calculated in accordance with Section 7.03(d) (each individual so designated, a “Lilly Designee”).  For the avoidance of doubt, so long as Lilly and its Affiliates beneficially own shares of Company Common Stock representing at least 80% of the Company Voting Stock, Lilly Designees shall constitute at least 80% of the Company Board.  In addition, for so long as Lilly and its Affiliates beneficially own shares of Company Common Stock representing at least a majority of the outstanding Company Voting Stock, Lilly shall have the right to designate the Chairman of the Company Board.  Notwithstanding anything to the contrary set forth herein, the Company’s obligations with respect to the election or appointment of Lilly Designees shall be limited (i) to the obligations set forth under this Section 7.03 and (ii) by the Company’s compliance with Law.

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(b)For so long as Lilly and its Affiliates beneficially own shares of Company Common Stock representing a majority of the total voting power of all of the then outstanding shares of Company Voting Stock, the Company shall use reasonable best efforts to take advantage of all available “controlled company” exemptions under the rules of the stock exchange on which the Company’s shares are listed, including exemptions from compliance with certain corporate governance requirements relating to director independence. Commencing with the annual meeting of shareholders of the Company to be held in 2019 and prior to each annual meeting of shareholders of the Company thereafter, Lilly shall be entitled to present to the Company Board (or any nominating committee thereof) for nomination thereby at such annual meeting such number of Lilly Designees for election to the Company Board (or if there is a classified board, the class of directors up for election) at such annual meeting as would result in Lilly having the appropriate number of Lilly Designees on the Company Board as determined pursuant to this Section 7.03.

(c)The Company shall exercise all authority under applicable Law and use reasonable best efforts to cause all Lilly Designees to be nominated for election as Company Board members by the Company Board (or any nominating committee thereof).  In the event that the Company Board (or any nominating committee thereof) fails to approve the nomination of any particular individual as a Lilly Designee, Lilly shall have the right to designate an alternative Lilly Designee for consideration.  The Company shall cause each Lilly Designee nominated for election to the Company Board to be included in the slate of nominees recommended by the Company Board to holders of Company Voting Stock (including at any special meeting of shareholders held for the election of directors) and shall use the same degree of effort as are used in respect of nominees who are not Lilly Designees to cause the election of each such Lilly Designee, including soliciting proxies in favor of the election of such persons. In the event that any Lilly Designee elected to the Company Board shall cease to serve as a director for any reason, the vacancy resulting therefrom shall be filled by the Company Board with a substitute Lilly Designee.  In the event that as a result of any increase in the size of the Company Board, Lilly is entitled to have one or more additional Lilly Designees elected to the Company Board pursuant to this Section 7.03, the Company Board shall appoint the appropriate number of such additional Lilly Designees.

(d)If at any time Lilly and its Affiliates beneficially own shares of Company Common Stock representing at least 10% of the total voting power of all of the then outstanding shares of Company Voting Stock, the number of persons Lilly shall be entitled to designate for nomination by the Company Board (or any nominating committee thereof) for election to the Company Board shall be equal to the number of directors computed using the following formula (rounded to the nearest whole number): the product of (i) the percentage of the total voting power of all of the then outstanding shares of Company Voting Stock beneficially owned by Lilly and its Affiliates and (ii) the number of directors then on the Company Board (assuming no vacancies exist).  If the number of Lilly Designees serving on the Company Board exceeds the number determined pursuant to the foregoing sentences of this Section 7.03(d) (such difference being herein called the “Excess Director Number”), then Lilly in its sole discretion shall instruct a number of Lilly Designees equal to the Excess Director Number to promptly resign from the Company Board, and, to the extent such persons do not so resign, Lilly shall assist the

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Company in increasing the size of the Company Board, so that after giving effect to such increase, the number of Lilly Designees on the Company Board is in accordance with the provisions of this Section 7.03(d).

(e)The parties hereto agree that the Company Board shall consist of three classes of directors at the Effective Date, which shall include one (1) Lilly Designee in Class I, two (2) Lilly Designees in Class II and two (2) Lilly Designees in Class III.

Section 7.04.Committees.  As of the Effective Date and for so long as Lilly and its Affiliates beneficially own shares of Company Common Stock representing a majority of the total voting power of all of the then outstanding shares of Company Voting Stock, any committee of the Company Board shall, unless Lilly consents otherwise, be composed of directors at least a majority of whom are Lilly Designees; provided, that each such committee, as a result of such designation(s), complies with Law and any applicable Commission or stock exchange director independence requirements.  As of the Effective Date and for so long as Lilly and its Affiliates beneficially own shares of Company Common Stock representing less than a majority but at least 10% of the total voting power of all of the then outstanding shares of Company Voting Stock, each committee of the Company Board (other than the Audit Committee) shall, unless Lilly consents otherwise, include at least one Lilly Designee to the extent permitted by Law or applicable Commission or stock exchange requirement (and, to the extent it would be greater than one Lilly Designee, the number of Lilly Designees (rounded to the nearest whole number) that is equal to the product of (a) the percentage of the total voting power of all of the then outstanding shares of Company Voting Stock beneficially owned by Lilly and its Affiliates and (b) the number of directors then on such committee); provided, that each such committee, as a result of such designation(s), complies with Law and any applicable Commission or stock exchange director independence requirements.

Section 7.05.Other Covenants.  In addition to the other covenants contained in this Agreement and the Ancillary Agreements, the Company and Lilly, as applicable, hereby covenant and agree that:

(a)Prior to the Disposition Date and for so long as Lilly and its Affiliates beneficially own at least 30% of the total voting power of all of the then outstanding shares of Company Voting Stock, the Company will not, without the prior written consent of Lilly (which Lilly may withhold in its sole and absolute discretion), take, or cause to be taken, directly or indirectly, any action, including making or failing to make any election under the Law of any state, which has the effect, directly or indirectly, of restricting or limiting the ability of any member of the Lilly Group to freely sell, transfer, assign, pledge or otherwise dispose of shares of Company Common Stock or would restrict or limit the rights of any transferee of Lilly as a holder of Company Common Stock.  Without limiting the generality of the foregoing, the Company will not, without the prior written consent of Lilly (which Lilly may withhold in its sole and absolute discretion), (i) adopt or thereafter amend, supplement, restate, modify or alter any shareholder rights plan in any manner that would result in (A) an increase in the ownership of Company Common Stock by Lilly causing the rights thereunder to detach or become exercisable and/or (B) Lilly and its transferees not being entitled to the same rights thereunder as other holders of Company Common Stock or (ii) take any action, or take any action to recommend to its shareholders any action, which would among other things, limit the legal rights of, or deny any benefit to, Lilly or any Affiliate of Lilly as a Company shareholder, including as a result of the

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amount of Company Common Stock owned by Lilly and its Affiliates or in a manner not applicable to the Company shareholders generally.

(b)Prior to the Disposition Date, the Company will not, without the prior written consent of Lilly (which it may withhold in its sole and absolute discretion), issue any Stock or Stock Equivalents; provided, that in no case shall any such issuance result in Lilly and its Affiliates owning directly or indirectly less than 80% of the total voting power of the then outstanding shares of Company Common Stock (on a fully-diluted basis), after giving effect to such issuance and considering all of the shares of the Company capital stock acquirable pursuant to such Stock Equivalents outstanding on the date of such issuance (whether or not then exercisable).

(c)For so long as the Company is an Affiliate of Lilly, to the extent that Lilly or any other member of the Lilly Group is a party to any Contract that (i) provides that certain actions or inactions of Lilly’s Affiliates may result in any member of the Lilly Group being in breach of, or in default under, such Contract and (ii) is filed by Lilly with the Commission, then the Company shall not take or fail to take, as applicable, and shall cause each other member of the Company Group not to take or fail to take, as applicable, any actions that reasonably could result in any member of the Lilly Group being in breach of or in default under any such Contract.

(d)For so long as Lilly is an Affiliate of the Company, to the extent that the Company or any other member of the Company Group is a party to any Contract that (i) provides that certain actions or inactions of the Company’s Affiliates may result in any member of the Company Group being in breach of, or in default under, such Contract and (ii) is filed by the Company with the Commission, then Lilly shall not take or fail to take, as applicable, and shall cause each other member of the Lilly Group not to take or fail to take, as applicable, any actions that reasonably could result in any member of the Company Group being in breach of or in default under any such Contract.

(e)For so long as Lilly and its Affiliates beneficially own shares of Company Common Stock representing a majority of the total voting power of all of the then outstanding shares of Company Voting Stock and, for the duration of the Transitional Services Agreement (but only to the extent that the Services provided by Lilly under the Transitional Services Agreement relate to making payments on the Company’s behalf, maintaining books and records, or otherwise present, in Lilly’s reasonable judgment, a potential risk to Lilly under any applicable anticorruption Law):

(i)the Company shall not, and shall cause each other member of the Company Group not to, take any action directly or indirectly to offer or pay, or authorize the offer or payment of, any money or anything of value in order to improperly or corruptly seek to influence any Government Official or any other Person in order to gain an improper advantage, and has not accepted, and will not accept in the future such payment; and

(ii)the Company shall, and shall cause each other member of the Company Group to, implement, maintain and enforce a compliance and ethics program in substance, form and effectiveness reasonably equivalent to

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Lilly’s compliance and ethics program, and in any event designed to prevent and detect violations of applicable anti-corruption Laws throughout its operations (including Subsidiaries) and the operations of its contractors and sub-contractors.

Section 7.06.Covenants Regarding the Incurrence of Indebtedness.

(a)The Company covenants and agrees that after the consummation of the IPO and through the Disposition Date, the Company shall not, and the Company shall not permit any other member of the Company Group to, without Lilly’s prior written consent (such consent not to be unreasonably withheld), directly or indirectly, incur any Company Debt Obligations (including any Indebtedness of any entity acquired by a member of the Company Group, whether or not such Indebtedness is expressly assumed or guaranteed by the Company) other than pursuant to the Company Debt Obligations and such other unsecured lines of credit made available to members of the Company Group as of the Effective Date.

(b)In order to implement this Section 7.06, the Company will notify Lilly in writing as promptly as practicable following the time it or any other member of the Company Group determines it wishes to incur Company Debt Obligations for which Lilly’s consent is required.

Section 7.07.Applicability of Rights in the Event of an Acquisition of the Company.  In the event the Company merges into, consolidates with, sells substantially all of its assets to, or otherwise becomes an Affiliate of a Person (other than Lilly), pursuant to a transaction or series of related transactions in which Lilly or any other member of the Lilly Group receives equity securities of such Person (or of any Affiliate of such Person) in exchange for Company Common Stock held by Lilly or any other member of the Lilly Group, all of the rights of Lilly set forth in this Article VII shall continue in full force and effect and shall apply to the Person the equity securities of which are received by Lilly pursuant to such transaction or series of related transactions (it being understood that all other provisions of this Agreement will apply to the Company notwithstanding this Section 7.07).

Section 7.08.Lilly Policies and Procedures.  Prior to the Disposition Date and (a) except as otherwise agreed between the parties hereto from time to time, (b) as set forth on Schedule 7.08 or (c) as set forth in any Ancillary Agreement, the Company consistently will implement and maintain Lilly’s business practices and standards in accordance with the Lilly policies and procedures in effect as of the Effective Date, as they may be amended or supplemented by Lilly from time to time (and, in any such event, Lilly shall provide notice to the Company of any such amendment or supplement in accordance with Section 11.06). Notwithstanding the foregoing, the Company may apply materiality thresholds that are lower than those contained in any such Lilly policy and procedure. Notwithstanding anything contained in this Section 7.08 to the contrary, in circumstances where a provision of both the Company’s Charter or Bylaws or of any Ancillary Agreement, on the one hand, and a Lilly Policy applicable to Subsidiaries of Lilly, on the other hand, would each apply, the provision in the Company’s Charter or Bylaws or Ancillary Agreement shall control with respect to the Company and its Subsidiaries. For the avoidance of doubt, it is understood and agreed that neither Lilly nor any member of the Lilly Group shall be subject to any policies or procedures implemented by the Company, including any policies, procedures or limitations (other than any applicable federal securities laws and any other applicable Laws) with respect to trading in the Company’s securities.

Section 7.09.Compliance with Organizational Documents.  The Company shall, and shall cause each of its Subsidiaries to, take any and all actions reasonably necessary to ensure continued compliance by the Company and its

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Subsidiaries with the provisions of their respective certificate or articles of incorporation and bylaws (collectively, “Organizational Documents”).  The Company shall notify Lilly in writing promptly after becoming aware of any act or activity taken or proposed to be taken by the Company or any of its Subsidiaries that resulted or would result in non-compliance with any such Organizational Documents, and so long as Lilly or any Affiliate of Lilly owns any shares of Company Common Stock, the Company shall take or refrain from taking all such actions as Lilly shall in its sole discretion determine necessary or desirable to prevent or remedy any such non-compliance.

Section 7.10.Approval Rights.

(a)In addition to any vote required by Law, by the Company’s Charter or as otherwise required herein, until the Disposition Date, the Company shall not (and in the case of clauses (ii), (iii) and (v) below) shall not authorize or permit any Subsidiary to, without the prior written approval of Lilly:

(i)consolidate or merge with or into any Person, provided that to the extent Lilly does grant approval, all requirements pursuant to Section 7.07 have been met;

(ii)permit any Subsidiary to consolidate or merge with or into any Person (other than a consolidation or merger of a Wholly-Owned Subsidiary with or into a Wholly-Owned Subsidiary);

(iii)dissolve, liquidate or wind up;

(iv)unless otherwise required to comply with applicable Law, alter, amend, terminate or repeal, or adopt any provision inconsistent with, in each case whether directly or indirectly, or by merger, consolidation or otherwise, the Company’s Charter or the Company’s Bylaws; or

(v)purchase, redeem or otherwise acquire or retire for value any shares of Company Common Stock or any warrants, options or other rights to acquire Company Common Stock other than (A) the repurchase of Company Common Stock deemed to occur upon exercise of stock options to the extent that shares of Company Common Stock represent a portion of the exercise price of the stock options or are withheld by the Company to pay applicable withholding taxes and (B) the repurchase of Company Common Stock deemed to occur to the extent shares of Company Common Stock are withheld by the Company to pay applicable withholding taxes in connection with any grant or vesting of restricted stock.

Section 7.11Company Group Services.

Following the Effective Date, the Company Servicing Subsidiaries will continue to hold the Posilac Marketing Authorizations in respect of Posilac, an Excluded Asset.  As a result,  the Company hereby agrees to cause each Company Servicing Subsidiary to conduct its business with respect to such Company Servicing Subsidiary’s distribution, sales and support of Posilac in the ordinary course consistent with past practice, in each case, with any such deviations as Lilly may reasonably request, until such Company Servicing Subsidiary no longer holds the applicable Posilac Marketing Authorization; provided that, it is understood and agreed that the net economic benefit (whether positive or negative) relating to Posilac shall be allocated to Lilly and calculated and paid in accordance with the procedures and principles mutually agreed upon in writing by the parties hereto.  In addition, the Company hereby agrees, and agrees to cause each Company Servicing Subsidiary to, use its reasonable best efforts to promptly facilitate the transfer of the Posilac Marketing Authorizations to Lilly’s designee, and to take such other actions and to do such other things as are mutually agreed in writing by the parties hereto.

ARTICLE VIII

DISPUTE RESOLUTION

Section 8.01.Disputes.  Except as otherwise specifically provided in any Ancillary Agreement, the procedures for discussion, negotiation and mediation set forth in this Article VIII shall apply to all disputes, controversies or claims (whether arising in contract, tort or otherwise) that may arise out of, relate to, arise under, or in connection with, this Agreement or the Ancillary Agreements, or the transactions contemplated hereby or thereby (including all actions

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taken in furtherance of the transactions contemplated hereby on or prior to the Effective Date) or the commercial or economic relationship of the parties relating hereto or thereto, between or among any Persons in the Lilly Group and the Company Group (any such dispute, controversies, or claims, a “Dispute”).

Section 8.02.Escalation; Mediation.

(a)It is the intent of the parties to use their respective commercially reasonable efforts to resolve expeditiously any Dispute between or among them with respect to the matters covered by the Transaction Documents that may arise from time to time on a mutually acceptable negotiated basis.  In furtherance of the foregoing, any party involved in a Dispute with respect to such matters may deliver a notice (an “Escalation Notice”) demanding an in person meeting involving representatives of the parties at a senior level of management of the parties (or if the parties agree, of the appropriate strategic business unit or division within such entity).  A copy of any such Escalation Notice shall be given to the General Counsel, or like officer or official, of each party involved in the Dispute (which copy shall state that it is an Escalation Notice pursuant to this Agreement).  Any agenda, location or procedures for such discussions or negotiations between the parties may be established by the parties from time to time; provided, however, that the parties shall use their commercially reasonable efforts to meet within ten (10) days of the Escalation Notice.

(b)If the parties are not able to resolve the Dispute through the escalation process referred to above within thirty (30) days of delivery of an Escalation Notice, then the matter shall be referred to mediation.  The parties shall retain a mediator to aid the parties in their discussions and negotiations by informally providing advice to the parties.  If a mediator cannot be agreed upon by the parties within ten (10) days after the date that is thirty (30) days following delivery of an Escalation Notice, then each party shall nominate a mediator, and those two mediators will select a third mediator who shall act as the mediator for such Dispute.  Any opinion expressed by the mediator shall be strictly advisory and shall not be binding on the parties, nor shall any opinion expressed by the mediator be admissible in any other proceeding.  The mediator may be chosen from a list of mediators previously selected by the parties or by other agreement of the parties.  Costs of the mediation shall be borne equally by the parties involved in the matter, except that each party shall be responsible for its own expenses.  Mediation shall be a prerequisite to the commencement of any action by either party.

Section 8.03.Court Actions.

(a)In the event that any party, after complying with the provisions set forth in Section 8.02 above, desires to commence an Action, such party, subject to Section 11.19, may submit the Dispute (or such series of related Disputes) to any court of competent jurisdiction as set forth in Section 11.19.

(b)Unless otherwise agreed in writing, the parties will continue to provide services to one another (if applicable) and honor all other commitments under the Transaction Documents during the course of dispute resolution pursuant to the provisions of this Article VIII, except to the extent such commitments are the subject of such Dispute.

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ARTICLE IX

FURTHER ASSURANCES

Section 9.01.Further Assurances.

(a)In addition to the actions specifically provided for elsewhere in this Agreement, each of the parties hereto will cooperate with each other and shall use its (and shall cause its Subsidiaries and Affiliates to use their) commercially reasonable efforts, prior to, on and after the Effective Date, to take, or cause to be taken, all actions, and to do, or cause to be done, all things, reasonably necessary, proper or advisable under applicable Laws, regulations and agreements to consummate and make effective the transactions contemplated by the Transaction Documents.

(b)Without limiting the foregoing, prior to, on and after the Effective Date, each party hereto shall, and shall cause any of its applicable Subsidiaries and Affiliates to, cooperate with the other party, and without any further consideration, but at the expense of the requesting party, to execute and deliver, or use its commercially reasonable efforts to cause to be executed and delivered, all instruments, including instruments of conveyance, assignment and transfer (including any Additional Transfer Documents), and to make all filings with, and to obtain all consents, approvals or authorizations of, any Governmental Authority or any other Person under any permit, license, agreement, indenture, order, decree, financial assurance (including letter of credit) or other instrument (including any Consents or Governmental Approvals), and to take all such other actions as such party may reasonably be requested to take by such other party hereto from time to time, consistent with the terms of this Agreement, in order to effectuate the provisions and purposes of the Transaction Documents, the transfer of the Animal Health Assets, the assignment and assumption of the Animal Health Liabilities and the other transactions contemplated hereby and thereby.  Except as otherwise specifically provided in any Ancillary Agreement and without limiting the foregoing and Section 2.10, each party will, at the reasonable request, cost and expense of the other party, take such other actions as may be reasonably necessary to vest in the applicable Person title to the Assets allocated to such party under this Agreement or any Ancillary Agreement.

ARTICLE X

TERMINATION

Section 10.01.Termination.  This Agreement may be terminated only by mutual consent of Lilly and the Company.

Section 10.02.Effect of Termination.  In the event of any termination of this Agreement, no party to this Agreement (or any of its directors, officers, members or managers) shall have any Liability or further obligation to the other party.

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ARTICLE XI

MISCELLANEOUS

Section 11.01.Counterparts; Entire Agreement; Conflicting Agreements.  (a) This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement, and shall become effective when one or more counterparts have been signed by each party and delivered to the other party.  Execution of this Agreement or any other documents pursuant to this Agreement by facsimile or other electronic copy of a signature shall be deemed to be, and shall have the same effect as being, executed by an original signature.

(b)This Agreement, the Ancillary Agreements, the exhibits, the schedules and appendices hereto and thereto contain the entire agreement between the parties with respect to the subject matter hereof, supersede all previous agreements, negotiations, discussions, writings, understandings, commitments and conversations with respect to such subject matter and there are no agreements or understandings between the parties with respect to such subject matter other than those set forth or referred to herein or therein.

(c)In the event of any inconsistency between this Agreement and any other agreement in connection with the Transaction (including the Ancillary Agreements and the Local Transfer Agreements), this Agreement shall prevail.  Subject to Section 4.04(d), in the event and to the extent that there shall be a conflict between the provisions of this Agreement and the provisions of any Ancillary Agreement or a Local Transfer Agreement, this Agreement shall control.

Section 11.02.No Construction Against Drafter.  The parties acknowledge that this Agreement and all the terms and conditions contained herein have been fully reviewed and negotiated by the parties.  Having acknowledged the foregoing, the parties agree that any principle of construction or rule of law that provides that, in the event of any inconsistency or ambiguity, an agreement shall be construed against the drafter of the agreement shall have no application to the terms and conditions of this Agreement.

Section 11.03.Governing Law.  This Agreement shall be governed by and construed and interpreted in accordance with the Laws of the State of Indiana, without regard to the conflict of laws principles thereof that would result in the application of any Law other than the Laws of the State of Indiana.

Section 11.04.Assignability.  This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns; provided, however, that no party hereto may assign its respective rights or delegate its respective obligations under this Agreement without the express prior written consent of the other party or parties hereto.

Section 11.05.Third Party Beneficiaries.  Except for the indemnification rights under this Agreement of any Lilly Indemnitee or Company Indemnitee in their respective capacities as such (a) the provisions of this Agreement are solely for the benefit of the parties hereto and are not intended to confer upon any Person (including employees of the parties hereto)

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except the parties any rights or remedies hereunder, and (b) there are no third party beneficiaries of this Agreement and this Agreement shall not provide any third person (including employees of the parties hereto) with any remedy, claim, liability, reimbursement, claim of action or other right in excess of those existing without reference to this Agreement.

Section 11.06.Notices.  All notices or other communications under this Agreement shall be in writing and shall be deemed to be duly given when (a) delivered in person or (b) deposited in the United States mail or private express mail, postage prepaid, addressed as follows:

If to Lilly, to:

Eli Lilly and Company

Lilly Corporate Center

Indianapolis, Indiana 46285

Attention:General Counsel

If to the Company to:

Elanco Animal Health Incorporated

2500 Innovation Way

Greenfield, Indiana 46140

Attention:General Counsel

Any party may, by notice to the other party, change the address to which such notices are to be given.

Section 11.07.Severability.  If any provision of this Agreement or the application thereof to any Person or circumstance is determined by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions hereof or the application of such provision to Persons or circumstances or in jurisdictions other than those as to which it has been held invalid or unenforceable, shall remain in full force and effect and shall in no way be affected, impaired or invalidated thereby, so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner adverse to any party.  Upon such determination, the parties shall negotiate in good faith in an effort to agree upon such a suitable and equitable provision to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated by this Agreement be consummated as originally contemplated to the greatest extent possible.

Section 11.08.Force Majeure.  No party shall be deemed in default of this Agreement to the extent that any delay or failure in the performance of its obligations under this Agreement results from any cause beyond its reasonable control and without its fault or negligence, such as acts of God, acts of civil or military authority, embargoes, epidemics, war, riots, insurrections, fires, explosions, earthquakes, floods, unusually severe weather conditions, labor problems or unavailability of parts, or, in the case of computer systems, any failure in electrical or air conditioning equipment.  In the event of any such excused delay, the time for performance shall be extended for a period equal to the time lost by reason of the delay.

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Section 11.09.Late Payments.  Except as expressly provided to the contrary in this Agreement or in any Ancillary Agreement, any amount not paid when due pursuant to this Agreement (and any amounts billed or otherwise invoiced or demanded and properly payable that are not paid within thirty (30) days of such bill, invoice or other demand) shall accrue interest at a rate per annum equal to the Prime Rate plus 5%.

Section 11.10.Expenses.  Except as otherwise specified in this Agreement or the Ancillary Agreements, or as otherwise agreed in writing between Lilly and the Company, Lilly and the Company shall each be responsible for its own fees, costs and expenses paid or incurred in connection with the IPO, and the Distribution or Other Disposition.

Section 11.11.Advisors.  It is acknowledged and agreed by each of the parties hereto that Lilly, on behalf of itself and the other members of the Lilly Group, has retained each of the Persons identified on Schedule 11.11 to act as counsel in connection with the Transaction Documents and the other transactions contemplated hereby and thereby and that the Persons listed on Schedule 11.11 have not acted as counsel for the Company or any other member of the Company Group in connection with the Transaction Documents and the other transactions contemplated hereby and thereby and that none of the Company or any other member of the Company Group has the status of a client of the Persons listed on Schedule 11.11 for conflict of interest or any other purposes as a result thereof.  The Company hereby agrees, on behalf of itself and each other member of the Company Group that, in the event that a dispute arises after the Effective Date in connection with the Transaction Documents and the other transactions contemplated hereby and thereby between Lilly and the Company or any other members of their respective Groups, each of the Persons listed on Schedule 11.11 may represent any or all of the members of the Lilly Group in such dispute even though the interests of the Lilly Group may be directly adverse to those of the Company Group.  The Company further agrees, on behalf of itself and each other member of the Company Group that, with respect to the Transaction Documents and the other transactions contemplated hereby and thereby, the attorney-client privilege and the expectation of client confidence belongs to Lilly or the applicable member of the Lilly Group and may be controlled by Lilly or such member of the Lilly Group and shall not pass to or be claimed by the Company or any other member of the Company Group.

Section 11.12.Headings.  The table of contents and article, section and paragraph headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

Section 11.13.Survival of Covenants.  Except as expressly set forth in the Transaction Documents, the covenants and other agreements contained herein and therein and the indemnification obligations and liability for the breach of any obligations contained herein or therein, shall survive the Separation and the IPO, and shall remain in full force and effect.

Section 11.14.Waivers of Default.  Waiver by any party of any default by the other party of any provision of this Agreement shall not be deemed a waiver by the waiving party of any subsequent or other default, nor shall it prejudice the rights of the other party.

Section 11.15.Specific Performance.  In the event of any actual or threatened default or breach of, any of the

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terms, conditions and provisions of this Agreement, the party or parties who are or are to be thereby aggrieved shall be entitled to seek an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof, in each case (a) without the requirement of posting any bond or other indemnity and (b) in addition to any other remedy to which it or they may be entitled, at Law or in equity.  Such remedies shall be cumulative with and not exclusive of and shall be in addition to any other remedies which any party may have under this Agreement, or at Law or in equity or otherwise, and the exercise by a party hereto of any one remedy shall not preclude the exercise of any other remedy.

Section 11.16.Amendments.  No provision of this Agreement shall be deemed waived, amended, supplemented or modified by any party, unless such waiver, amendment, supplement or modification is in writing and signed by the authorized representative of the party against whom it is sought to enforce such waiver, amendment, supplement or modification.

Section 11.17.Interpretation.  Interpretation of this Agreement (except as specifically provided in this Agreement, in which case such specified rules of construction shall govern with respect to this Agreement) shall be governed by the following rules of construction: (a) words in the singular shall be held to include the plural and vice versa, and words of one gender shall be held to include the other gender as the context requires; (b) references to the terms Article, Section, paragraph and Exhibit are references to the Articles, Sections, paragraphs and Exhibits to this Agreement unless otherwise specified; (c) the terms “hereof”, “herein”, “hereby”, “hereto” and derivative or similar words refer to this entire Agreement, including the Schedules and Exhibits hereto; (d) references to “$” shall mean U.S. dollars; (e) the word “including” and words of similar import shall mean “including without limitation,” unless otherwise specified; (f) the word “or” shall not be exclusive; (g) references to “written” or “in writing” include in electronic form; (h) provisions shall apply, when appropriate, to successive events and transactions; (i) a reference to any Person includes such Person’s permitted successors and permitted assigns; (j) any reference to “days” means calendar days unless Business Days are expressly specified; and (k) when calculating the period of time before which, within which or following which any act is to be done or step taken pursuant to this Agreement, the date that is the reference date in calculating such period shall be excluded and, if the last day of such period is not a Business Day, the period shall end on the next succeeding Business Day.

Section 11.18.Waiver of Jury Trial.  SUBJECT TO ARTICLE VIII AND SECTIONS 11.15 AND 11.19 HEREIN, EACH OF THE PARTIES HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY COURT PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF AND PERMITTED UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.  EACH OF THE PARTIES HEREBY (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 11.18.

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Section 11.19.Submission to Jurisdiction; Waivers.  With respect to any Action relating to or arising out of this Agreement, subject to the provisions of Article VIII, each party to this Agreement irrevocably (a) consents and submits to the exclusive jurisdiction of the courts of the State of Indiana and any court of the United States located in the State of Indiana; (b) waives any objection which such party may have at any time to the laying of venue of any Action brought in any such court, waives any claim that such Action has been brought in an inconvenient forum and further waives the right to object, with respect to such Action, that such court does not have jurisdiction over such party; and (c) consents to the service of process at the address set forth for notices in Section 11.06 herein; provided, however, that such manner of service of process shall not preclude the service of process in any other manner permitted under applicable Law.

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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their duly authorized representatives.

ELI LILLY AND COMPANY
By:	/s/ David A. Ricks
Name:	David A. Ricks
Title:	Chairman, President and Chief Financial Officer
ELANCO ANIMAL HEALTH INCORPORATED
By:	/s/ Michael-Bryant Hicks
Name:	Michael-Bryant Hicks
Title:	Executive Vice President, General Counsel and Corporate Secretary

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Schedule 2.02(a)

Animal Health Assets

(iv)

1.Elanco (Thailand) Ltd.

2.Elanco Animal Health, Korea, Ltd.

3.Elanco Animal Health UK Limited

4.Elanco Animal Vaccines Limited

5.Elanco Australasia Pty. Ltd.

6.Elanco Bangladesh Limited

7.Elanco Canada Limited

8.Elanco Colombia S.A.S

9.Elanco Denmark ApS

10.Elanco Europe Ltd.

11.Elanco France S.A.S.

12.Elanco Italia S.p.A.

13.Elanco Nederland B.V.

14.Elanco Rus Ltd.

15.Elanco Salud Animal S.A. de C.V.

16.Elanco Saude Animal Ltda

17.Elanco Spain, S.L.

18.Elanco Financing S.A.

19.Elanco UK AH Limited

20.Vericore Limited

21.Elanco Netherlands Holding B.V.

22.Elanco India Private Limited

23.Dista Products Limited

(vi)

1.The limited partner interest owned by Eli Lilly and Company in Midpoint Food and Ag Fund, L.P., as governered by the Midpoint Food and Ag Fund, L.P. Agreement of Limited Partners.

2.The limited partner interest owned by Eli Lilly and Company in Cultivan Sandbox Food & Agriculture Fund II, LP, as governed by the Cultivan Sandbox Food & Agriculture Fund II, LP Amended and Restated Limited Partnership Agreement, dated December 31, 2014.

3.The 26% ownership interest in Ovotilo GbmH held by Holding GmbH.

4.The unrestricted cash, cash equivalents and short term investments that comprise the Company Cash Balance.

5.The owned sites held by Eli Lilly and Company and known as Buildings 80 and 82 of the Materials Center and the substation located at the Materials Center.

1

Schedule 2.02(b)

Excluded Assets

(vii)

1.The Assets (a) used exclusively in, (b) relating exclusively to or (c) arising, directly or indirectly, exclusively out of the operation or conduct of, Agri Stats, Inc. (the “Agri Stats Assets”), including the lease located at 6510 Mutual Drive, Fort Wayne, Indiana.

2.The Assets (a) used exclusively in, (b) relating exclusively to or (c) arising, directly or indirectly, exclusively out of the operation or conduct of, the research, development, commercialization, manufacture or sale of Posilac (the “Posilac Assets”), including the owned property held by Eli Lilly and Company, located at 1788 Lovers Lane, Augusta, Georgia (including 1584 Levee Road, 1786 Lovers Lane, and 1750 Lovers Lane) and the leases held by Eli Lilly and Company, located at (a) 326 Prep Phillips Drive, (b) 1150 5th Street, (c) 1722 and 1762 Lovers Lane, Augusta, Georgia, USA (including several trailer leases), but excluding the Posilac Marketing Authorizations.

3.The owned site held by Eli Lilly and Company, and known as Lilly Corporate Center, Indianapolis, Indiana.

4.The owned site held by Eli Lilly and Company, and known as Building 83 of the Materials Center, Indianapolis, Indiana.

5.The owned property held by Eli Lilly and Company, located at 427 Thomas Road, Waynesboro, Georgia.

2

Schedule 2.03(b)

Excluded Liabilities

(i)

1.Any and all Liabilities to the extent relating to, arising out of or resulting from the ownership, operation or use of the Agri Stats Assets.

2.Any and all Liabilities to the extent relating to, arising out of or resulting from the ownership, operation or use of the Posilac Assets.

3.Lawsuit against Eli Lilly do Brasil Limitada (“Lilly Brasil”)  brought by the Labor Attorney for 15th Region in the Labor Court of Paulinia, State of Sao Paulo, Brazil (currently on appeal), alleging possible harm to employees and former employees caused by alleged exposure to heavy metals at a former Lilly manufacturing facility in Cosmopolis, Brazil.

4.Lawsuits brought against Lilly Brasil by individual former employees in the Labor Court of Paulinia, State of Sao Paulo, Brazil making claims similar to the Labor Attorney.

5.Two lawsuits brought against Lilly Brasil and Elanco Quimica Ltda. by individual former employees in the Labor Court of Paulinia, State of Sao Paulo, Brazil alleging that the companies failed to provide warnings regarding exposure to heavy metals or proper equipment at the former Cosmopolis facility.

6.Soil and groundwater remediation at the former Lilly manufacturing facility in Cosmopolis, Brazil.

7.Any liabilities arising out of the ongoing epidemiology study for the Clinton, Indiana facility.

(ii)

1.See Schedule 2.03(b)(i).

3

Schedule 2.05 (b)

Continuing Agreements

(ii)

1.All agreements, arrangements, commitments, understandings and Intercompany Accounts, including any amendments or supplements thereto, entered into in order to effectuate Lilly’s global animal health consolidation, known as the “Legal Entity Separation Project”.

2.For the avoidance of doubt, (x) following the Measurement Time, accounts payable and recievable shall continue to exist and to arise in the ordinary course of business between members of the Company Group, on the one hand, and one or more of Eli Lilly Export S.A., Eli Lilly International Corporation and Eli Lilly Interamerica, Inc., on the other hand, in connection with the consignment of inventory by Eli Lilly Export S.A., Eli Lilly International Corporation or Eli Lilly Interamerica, Inc., as applicable, on such Company Group member’s behalf, until such time as a member of the Company Group shall perform such services for the Company Group and (y) no such arrangements shall modify, amend or otherwise impact the net economic benefit arrangements described in this Agreement or otherwise mutually agreed in writing by the parties hereto.

4

Schedule 7.08

Excluded Lilly Policies and Procedures

1.Employee Travel Policy

2.US Recognition Policy

3.Team Building Policy

5

Schedule 11.11

Advisors

1.Weil, Gotshal & Manges LLP

2.Skadden, Arps, Slate, Meagher & Flom LLP

3.Barnes & Thornburg LLP

4.Benesch, Friedlander, Coplan & Aronoff LLP

5.PricewaterhouseCoopers

6.JungAnLaw

7.Dr. Kamal Hossain & Associates

8.Fox Mandal Solicitors & Advocates

9.LMA Ebrahim Hosain

10.Knowles Husain Lindsay Inc.

11.Minden Gross LLP

12.Cox & Palmer LLP

13.Leman Solicitors

14.Raja, Darryl & Loh

6

Exhibit A

ELANCO ANIMAL HEALTH INCORPORATED
(an Indiana corporation)

AMENDED AND RESTATED ARTICLES OF INCORPORATION

1.The name of the Corporation shall be

ELANCO ANIMAL HEALTH INCORPORATED.

2.The purposes for which the Corporation is formed are to engage in any lawful act or activity for which a corporation may be organized under the Indiana Business Corporation Law, as amended from time to time (the “IBCL”).

3.The period during which the Corporation is to continue as a corporation is perpetual.

4.The total number of shares which the Corporation shall have authority to issue is 6,000,000,000 shares, consisting of 5,000,000,000 shares of Common Stock and 1,000,000,000 shares of Preferred Stock.  The Corporation’s shares do not have any par or stated value, except that, solely for the purpose of any statute or regulation imposing any tax or fee based upon the capitalization of the Corporation, each of the Corporation’s shares shall be deemed to have no par value per share.

5.The following provisions shall apply to the Corporation’s shares:

(a)The Corporation shall have the power to acquire (by purchase, redemption, or otherwise), hold, own, pledge, sell, transfer, assign, reissue, cancel, or otherwise dispose of the shares of the Corporation in the manner and to the extent now or hereafter permitted by the laws of the State of Indiana (but such power shall not imply an obligation on the part of the owner or holder of any share to sell or otherwise transfer such share to the Corporation), including the power to purchase, redeem, or otherwise acquire the Corporation’s own shares, directly or indirectly, and without pro rata treatment of the owners or holders of any class or series of shares, unless, after giving effect thereto, the Corporation would not be able to pay its debts as they become due in the usual course of business or the Corporation’s total assets would be less than its total liabilities (and without regard to any amounts that would be needed, if the Corporation were to be dissolved at the time of the purchase, redemption, or other acquisition, to satisfy the preferential rights upon dissolution of shareholders whose preferential rights are superior to those of the holders of the shares of the Corporation being purchased, redeemed, or otherwise acquired, unless otherwise expressly provided with respect to a series of Preferred Stock).  Shares of the Corporation purchased, redeemed, or otherwise acquired by it shall constitute authorized but unissued shares, unless prior to any such

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purchase, redemption or other acquisition or within thirty (30) days thereafter the Board of Directors adopts a resolution providing that such shares constitute authorized and issued but not outstanding shares.

(b)Preferred Stock of any series that has been redeemed (whether through the operation of a retirement or sinking fund or otherwise) or purchased by the Corporation, or which, if convertible, have been converted into shares of the Corporation of any other class or series, may be reissued as a part of such series or of any other series of Preferred Stock, subject to such limitations (if any) as may be fixed by the Board of Directors with respect to such series of Preferred Stock in accordance with the provisions of Article 7 of these Amended and Restated Articles of Incorporation.

(c)The Corporation may, by action of the Board of Directors, dispose of, issue, and sell shares of the Corporation in accordance with, and in such amounts as may be permitted by, the laws of the State of Indiana and the provisions of these Amended and Restated Articles of Incorporation and for such consideration, at such price or prices, at such time or times and upon such terms and conditions (including the privilege of selectively repurchasing the same) as the Board of Directors of the Corporation shall determine, without the authorization or approval by any shareholders of the Corporation.  Shares may be disposed of, issued, and sold to such persons, firms, or corporations as the Board of Directors may determine, without any preemptive or other right on the part of the owners or holders of other shares of the Corporation of any class or kind to acquire such shares by reason of their ownership of such other shares.

6.The following provisions shall apply to the Common Stock:

(a)Except as otherwise provided by the IBCL and subject to such shareholder disclosure and recognition procedures (which may include voting prohibition sanctions) as the Corporation may by action of its Board of Directors establish, shares of Common Stock shall have unlimited voting rights and each outstanding share of Common Stock shall, when validly issued by the Corporation, entitle the record holder thereof to one vote at all shareholders’ meetings on all matters submitted to a vote of the shareholders of the Corporation.

(b)Shares of Common Stock shall be equal in every respect, but such equality of rights shall not imply equality of treatment as to purchase or other acquisition of shares by the Corporation.  Subject to the rights of the holders of any outstanding series of Preferred Stock, the holders of Common Stock shall be entitled to share ratably in such dividends or other distributions (other than purchases or other acquisitions of shares by the Corporation), if any, as are declared and paid from time to time on the Common Stock at the discretion of the Board of Directors.

(c)In the event of any liquidation, dissolution, or winding up of the Corporation, either voluntary or involuntary, after payment shall have been made to the holders of any outstanding series of Preferred Stock of the full amount to which they shall be entitled, the holders of Common Stock shall be entitled, to the exclusion of the holders of the Preferred Stock of any and all series, to share, ratably according to the

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number of shares of Common Stock held by them, in all remaining assets of the Corporation available for distribution to its shareholders, except as otherwise may be provided in an applicable certificate of designation for a series of Preferred Stock.

7.The Board of Directors is hereby expressly authorized to provide, out of the unissued shares of Preferred Stock, for one or more series of Preferred Stock.  Before any shares of any such series are issued, the Board of Directors shall fix, and hereby is expressly empowered to fix, by the adoption and filing in accordance with the IBCL, of an amendment or amendments to these Amended and Restated Articles of Incorporation, the terms of such Preferred Stock or series of Preferred Stock, including the following:

(a)the designation of such series, the number of shares to constitute such series and the stated value thereof if different from the par value thereof;

(b)whether the shares of such series shall have voting rights, in addition to any voting rights provided by law, and, if so, the terms of such voting rights, which may be limited and may include the right, under specified circumstances, to elect directors in addition to those to be elected by the holders of Common Stock;

(c)the dividends, if any, payable on such series, whether any such dividends shall be cumulative, and, if so, from what dates, the conditions and dates upon which such dividends shall be payable, the preference or relation which such dividends shall bear to the dividends payable on any shares of stock of any other class or any other series of Preferred Stock;

(d)whether the shares of such series shall be subject to redemption by the Corporation and, if so, the times, prices and other conditions of such redemption;

(e)the amount or amounts payable upon shares of such series upon, and the rights of the holders of such series in, the voluntary or involuntary liquidation, dissolution or winding up, or upon any distribution of the assets, of the Corporation;

(f)whether the shares of such series shall be subject to the operation of a retirement or sinking fund and, if so, the extent to and manner in which any such retirement or sinking fund shall be applied to the purchase or redemption of the shares of such series for retirement or other corporate purposes and the terms and provisions relative to the operation thereof;

(g)whether the shares of such series shall be convertible into, or exchangeable for, shares of stock of any other class or any other series of Preferred Stock or any other securities (whether or not issued by the Corporation) and, if so, the price or prices or the rate or rates of conversion or exchange and the method, if any, of adjusting the same, and any other terms and conditions of conversion or exchange;

(h)the limitations and restrictions, if any, to be effective while any shares of such series are outstanding upon the payment of dividends or the making of other distributions on, and upon the purchase, redemption or other acquisition by the

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Corporation of, the Common Stock or shares of stock of any other class or any other series of Preferred Stock;

(i)the conditions or restrictions, if any, upon the creation of indebtedness of the Corporation or upon the issue of any additional stock, including additional shares of such series or of any other series of Preferred Stock or of any other class of stock; and

(j)any other powers, preferences and relative, participating, optional and other special rights, and any qualifications, limitations and restrictions thereof.

Except to the extent otherwise expressly provided in these Amended and Restated Articles of Incorporation or required by law, (i) no share of Preferred Stock shall have any voting rights other than those which shall be fixed by the Board of Directors pursuant to this Article 7 and (ii) no share of Common Stock shall have any voting rights with respect to any amendment to the terms of any series of Preferred Stock; provided, however, that in the case of this clause (ii) the terms of such series of Preferred Stock, as so amended, could have been established without any vote of any shares of Common Stock.

8.The Corporation shall have the power to declare and pay dividends or other distributions upon the issued and outstanding shares of the Corporation, subject only to the limitations set forth in the IBCL.  The Corporation shall have the power to issue shares of one class or series as a share dividend or other distribution in respect of that class or series or one or more other classes or series.

9.The following provisions are inserted for the management of the business and for the conduct of the affairs of the Corporation, and it is expressly provided that the same are intended to be in furtherance and not in limitation or exclusion of the powers conferred by statute:

(a)The number of directors of the Corporation, exclusive of directors who may be elected by the holders of any one or more series of Preferred Stock pursuant to Article 9(b) (the “Preferred Stock Directors”), shall not be less than five, the exact number to be fixed from time to time solely by resolution of the Board of Directors, acting by not less than a majority of the directors then in office.

(b)The Board of Directors (exclusive of Preferred Stock Directors, if any) shall be divided into three classes as nearly equal in number as possible, with the term of office of one class expiring at each annual meeting. The Board of Directors may assign members of the Board of Directors already in office upon the effectiveness of the Corporation’s registration statement on Form S-1, as amended, filed with the Securities and Exchange Commission in connection with the initial listing of Common Stock on a stock exchange (the “Effective Time”) to such classes as of the Effective Time.  The term of office of the initial Class I directors shall expire at the first annual meeting following the Effective Time; the term of office of the initial Class II directors shall expire at the second annual meeting following the Effective Time; and the term of office of the initial Class III directors shall expire at the third annual meeting following the Effective Time. Commencing with the first annual meeting of shareholders following the Effective Time,

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each class of directors whose term shall then expire shall be elected to hold office for a three-year term.  In the case of any vacancy on the Board of Directors, including a vacancy created by an increase in the number of directors, the vacancy shall be filled by election of the Board of Directors with the director so elected to serve for the remainder of the term of the director being replaced or, in the case of an additional director, for the remainder of the term of the class to which the director has been assigned.  All directors shall continue in office until the election and qualification of their respective successors in office, their death, their resignation in accordance with Section 2.7 of the bylaws of the Corporation (as amended, restated or otherwise modified from time to time, the “Bylaws”), their removal in accordance with Article 9(c) below and Section 2.8 of the Bylaws, or if there has been a reduction in the number of directors, until the end of their respective terms. When the number of directors is changed, any newly created directorships or any decrease in directorships shall be so assigned among the classes by a majority of the directors then in office, though less than a quorum, as to make all classes as nearly equal in number as possible.  No decrease in the number of directors shall have the effect of shortening the term of any incumbent director.  Election of directors need not be by written ballot unless the Bylaws so provide.

(c)Any director or directors (exclusive of Preferred Stock Directors, if any) may be removed from office at any time, but only for cause and only by the affirmative vote of at least 66 2/3% of the votes entitled to be cast by holders of all the outstanding shares of Voting Stock (as defined below), voting together as a single class.

(d)Notwithstanding any other provision of these Amended and Restated Articles of Incorporation or of law which might otherwise permit a lesser vote or no vote, but in addition to any affirmative vote of the holders of any particular class of Voting Stock required by law or these Amended and Restated Articles of Incorporation, the affirmative vote of at least 66 2/3% of the votes entitled to be cast by holders of all the outstanding shares of Voting Stock, voting together as a single class, shall be required to alter, amend or repeal this Article 9.

(e)For purposes of these Amended and Restated Articles of Incorporation, the term “Voting Stock” shall mean all shares of any class of capital stock of the Corporation which are entitled to vote generally in the election of directors.

10.The Corporation shall, to the fullest extent permitted by applicable law now or hereafter in effect, indemnify any person who is or was a director, officer or employee of the Corporation (an “Eligible Person”) and who is or was involved in any manner (including, without limitation, as a party or a witness) or is threatened to be made so involved in any threatened, pending or completed investigation, claim, action, suit or proceeding, whether civil, criminal, administrative or investigative (including, without limitation, any action, suit or proceeding by or in the right of the Corporation to procure a judgment in its favor) (a “Proceeding”) by reason of the fact that such Eligible Person is or was a director, officer or employee of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee, partner, member, manager, trustee, fiduciary or agent of another corporation, partnership, joint venture, limited liability company, trust or other enterprise (including, without limitation, any employee benefit plan), against all expenses (including attorneys’ fees),

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judgments, fines or penalties (including excise taxes assessed with respect to an employee benefit plan) and amounts paid in settlement actually and reasonably incurred by such Eligible Person in connection with such Proceeding; provided, however, that the foregoing shall not apply to a Proceeding commenced by an Eligible Person except to the extent provided otherwise in the Bylaws or an agreement with an Eligible Person.  The Corporation may establish provisions supplemental to or in furtherance of the provisions of this Article 10, including, but not limited to, provisions concerning the determination of any Eligible Person to indemnification, mandatory or permissive advancement of expenses to an Eligible Person incurred in connection with a Proceeding, the effect of any change in control of the Corporation on indemnification and advancement of expenses and the funding or other payment of amounts necessary to effect indemnification and advancement of expenses, in the Bylaws or in agreements with any Eligible Person.

11.The provisions of IBCL §23-1-42 shall not apply to the acquisition of shares of the Corporation.

12.Except as otherwise expressly provided in these Amended and Restated Articles of Incorporation, the Corporation reserves the right to amend, alter or repeal any provision contained in these Amended and Restated Articles of Incorporation, in the manner now or hereafter prescribed by law, and all rights conferred upon shareholders herein are subject to this reservation.

13.Subject to the rights of the holders of preferred stock to elect any directors voting separately as a class or series, at each annual meeting of shareholders, the directors to be elected at the meeting shall be chosen by a plurality of the votes cast by the holders of shares entitled to vote in the election at the meeting, provided a quorum is present.  For purposes of this Article 13, a “plurality of the votes cast” shall mean that the individuals with the highest number of votes are elected as directors up to the maximum number of directors to be elected.

14.Certain Relationships and Transactions.

(a)General.  The Corporation has been chartered to succeed to and carry on the animal health business of Lilly separate from the other businesses conducted by Lilly.  Notwithstanding the fact that Lilly may continue to hold a significant percentage or even a controlling majority of the Corporation’s stock, no fiduciary duty of any nature shall be deemed to exist between Lilly and the Corporation and no such duty shall be owed one to the other.  The Corporation and each person acquiring at any time any shares of capital stock or other equity securities of the Corporation acquires such shares subject to this limitation and agrees there is no expectancy of any fiduciary duty owed by either Lilly or the Corporation to the other. To the fullest extent permitted by law, any person purchasing or otherwise acquiring any shares of capital stock of the Corporation, or any interest therein, shall be deemed to have notice of and to have consented to the provisions of this Article 14.

In recognition and anticipation that (i) the Corporation will not be a wholly owned subsidiary of Lilly and that Lilly will be a significant shareholder of the Corporation, (ii) directors, officers and/or employees of Lilly may serve as directors

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and/or officers of the Corporation, (iii) subject to any contractual arrangements that may otherwise from time to time be agreed to between Lilly and the Corporation, Lilly may engage in the same, similar or related lines of business as those in which the Corporation, directly or indirectly, may engage and/or other business activities that overlap with or compete with those in which the Corporation, directly or indirectly, may engage, (iv) Lilly may have an interest in the same areas of corporate opportunity as the Corporation and Affiliated Companies thereof, and (v) as a consequence of the foregoing, it is in the best interests of the Corporation that the respective rights and obligations of the Corporation and of Lilly, and the duties of any directors and/or officers of the Corporation who are also directors, officers and/or employees of Lilly, be determined and delineated in respect of any transactions between, or opportunities that may be suitable for both, the Corporation and Affiliated Companies thereof, on the one hand, and Lilly, on the other hand, the sections of this Article 14 shall to the fullest extent permitted by law regulate and define the conduct of certain of the business and affairs of the Corporation in relation to Lilly and the conduct of certain affairs of the Corporation as they may involve Lilly and its directors, officers and/or employees, and the power, rights, duties and liabilities of the Corporation and its officers, directors and shareholders in connection therewith.

Nothing in this Article 14 creates or is intended to create any fiduciary duty on the part of Lilly, the Corporation, any Affiliated Company, or any shareholder, director, officer or employee of any of them that does not otherwise exist under Indiana law and nothing in this Article 14 expands any such duty of any such person that may now or hereafter exist under Indiana law.

(b)Certain Agreements and Transactions Permitted. The Corporation may from time to time enter into and perform, and cause or permit any Affiliated Company of the Corporation to enter into and perform, one or more agreements (or modifications or supplements to pre-existing agreements) with Lilly pursuant to which the Corporation or an Affiliated Company thereof, on the one hand, and Lilly, on the other hand, agree to engage in transactions of any kind or nature with each other and/or agree to compete, or to refrain from competing or to limit or restrict their competition, with each other, including to allocate, and to cause their respective directors, officers and/or employees (including any who are directors, officers and/or employees of both) to allocate opportunities between or to refer opportunities to each other. Subject to Section 14(d) below, no such agreement, or the performance thereof by the Corporation or any Affiliated Company thereof, or Lilly, shall, to the fullest extent permitted by law, be considered contrary to any fiduciary duty that any director and/or officer of the Corporation or any Affiliated Company thereof who is also a director, officer and/or employee of Lilly may owe to the Corporation or may be alleged to owe to such Affiliated Company, or to any shareholder thereof, or any legal duty or obligation Lilly may be alleged to owe on any basis, notwithstanding the provisions of these Amended and Restated Articles of Incorporation stipulating to the contrary. Subject to Section 14(d) below, to the fullest extent permitted by law, no director and/or officer of the Corporation who is also a director, officer and/or employee of Lilly shall have or be under any fiduciary duty to the Corporation or any Affiliated Company thereof to refer any corporate opportunity to the Corporation or any Affiliated Company or to refrain

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from acting on behalf of the Corporation or any Affiliated Company thereof or of Lilly in respect of any such agreement or transaction or performing any such agreement in accordance with its terms.

(c)Authorized Business Activities.  Without limiting the other provisions of this Article 14, Lilly shall have no duty to communicate information regarding a corporate opportunity to the Corporation or to refrain from (i) engaging in the same or similar activities or lines of business as the Corporation or (ii) doing business with any client, customer or vendor of the Corporation.  To the fullest extent permitted by law, except as provided in Section 14(d), no officer, director and/or employee of the Corporation who is also a director, officer or employee of Lilly shall be deemed to have breached his or her fiduciary duties, if any, to the Corporation solely by reason of Lilly’s engaging in any such activity.

(d)Corporate Opportunities.  Except as otherwise agreed in writing between the Corporation and Lilly, for so long as Lilly owns a majority of all the outstanding shares of Voting Stock, in the event that a director and/or officer of the Corporation who is also a director, officer and/or employee of Lilly acquires knowledge of a potential transaction or matter that may be a corporate opportunity for both the Corporation and Lilly, such director and/or officer shall to the fullest extent permitted by law have fully satisfied and fulfilled his or her fiduciary duty, if any, with respect to such corporate opportunity, and the Corporation to the fullest extent permitted by law renounces any interest or expectancy in such business opportunity and waives any claim that such business opportunity constituted a corporate opportunity that should have been presented to the Corporation or any Affiliated Company thereof, if such director and/or officer acts in a manner consistent with the following policy:

(i)such a corporate opportunity offered to any person who is a director but not an officer of the Corporation and who is also a director, officer and/or employee of Lilly shall belong to the Corporation only if such opportunity is expressly offered to such person solely in his or her capacity as a director of the Corporation and otherwise shall belong to Lilly; and

(ii)such a corporate opportunity offered to any person who is an officer of the Corporation and also is a director, officer and/or employee of Lilly shall belong to the Corporation unless such opportunity is expressly offered to such person solely in his or her capacity as a director, officer and/or employee of Lilly, in which case such opportunity shall belong to Lilly.

The foregoing policy, and the action of any director or officer of Lilly, the Corporation or any Affiliated Company taken in accordance with, or in reliance upon, the foregoing policy or in entering into or performing any agreement, transaction or arrangement is deemed and presumed to be fair to the Corporation.

Except as otherwise agreed in writing between the Corporation and Lilly, if a director and/or officer of the Corporation, who also serves as a director, officer and/or employee of Lilly, acquires knowledge of a potential corporate opportunity for both the

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Corporation and Lilly in any manner not addressed by this Article 14, such director and/or officer shall have no duty to communicate or present such corporate opportunity to the Corporation and shall to the fullest extent permitted by law not be liable to the Corporation or its shareholders for breach of fiduciary duty as a director and/or officer of the Corporation by reason of the fact that Lilly pursues or acquires such corporate opportunity for itself, directs such corporate opportunity to another person or does not present such corporate opportunity to the Corporation, and the Corporation to the fullest extent permitted by law renounces any interest or expectancy in such business opportunity and waives any claim that such business opportunity constituted a corporate opportunity that should be presented to the Corporation.

(e)Delineation of Indirect Interests. To the fullest extent permitted by law, no director or officer of the Corporation or any Affiliated Company shall be deemed to have an indirect interest in any matter, transaction or corporate opportunity that may be received or exploited by, or allocated to, Lilly, merely by virtue of being a director or officer or employee of Lilly, unless such director or officer’s role with Lilly involves direct responsibility for such matter, in his or her role with Lilly, such director or officer exercises supervision over such matter, or the compensation of such director or officer is materially affected by such matter. Such director or officer’s compensation shall not be deemed to be materially affected by such matter if it is only affected by virtue of its effect on the value of Lilly capital stock generally or on Lilly’s results or performance on an enterprise-wide basis.

(f)Special Approval Procedures. If, notwithstanding the provisions of this Article 14, it is deemed desirable by Lilly, the Corporation or an Affiliated Company or any other party that the Corporation take action with specific regard to a particular transaction, corporate opportunity or a type or series of transactions or corporate opportunities to ensure, out of an abundance of caution, that such transaction or transactions are not voidable, or that such an opportunity or opportunities are effectively disclaimed, the Corporation may employ any of the following procedures:

(i)the material facts of the transaction and the director’s or officer’s interest are disclosed or known to the Board of Directors of the Corporation or a duly appointed committee of the Board of Directors and the Board of Directors or such committee, as applicable, authorizes, approves, or ratifies the transaction by the affirmative vote or consent of a majority of the directors (or committee members) who have no direct or indirect interest in the transaction and, in any event, of at least two directors (or committee members);

(ii)the material facts of the transaction and the director’s interest are disclosed or known to the shareholders entitled to vote and they authorize, approve or ratify such transaction by vote.

The interested director or directors may be counted in determining the presence of a quorum at such meeting. The presence of, or a vote cast by, a director with a direct or indirect interest in the transaction does not affect the validity of any actions taken under subsection (i) of this section.

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One or more matters, transactions or corporate opportunities approved pursuant to any of the foregoing procedures is not void or voidable and shall not give rise to any equitable relief or damages or other sanctions against any director, officer, or shareholder (including Lilly) of the Corporation on the ground that the matter, transaction or corporate opportunity should have first been offered to the Corporation. Nothing in this Article 14 requires any matter to be considered by the board of directors or the shareholders of the Corporation and, in all cases, officers and directors of the Corporation are authorized to refrain from bringing a matter otherwise addressed in this Article 14 before the Board of Directors or the shareholders for consideration unless such matter is required to be considered by the board of directors or shareholders, as applicable, under Indiana law.  This Article 14 shall not be construed to invalidate any contract or other transaction which would otherwise be valid under the common, equitable, or statutory law applicable thereto.

(g)Certain Definitions. For purposes of this Article 14:

“Affiliated Company” in respect of the Corporation shall mean any entity controlled by the Corporation.

“corporate opportunities” shall include, but not be limited to, business opportunities which the Corporation is financially able to undertake, which are, from their nature, in the line of the Corporation’s business, are of practical advantage to it and are ones in which the Corporation would have an interest or a reasonable expectancy, and in which, by embracing the opportunities or allowing such opportunities to be embraced by Lilly, the self-interest of the Corporation’s directors, officers and/or employees will be brought into conflict with that of the Corporation either directly or indirectly by virtue of such director’s, officer’s or employee’s service as a director, officer or employee of Lilly; and

“Lilly” shall mean Eli Lilly and Company and each other subsidiary of Eli Lilly & Company and each other person that either is controlled directly or indirectly by Eli Lilly and Company (other than the Corporation and any entity that is controlled by the Corporation).

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Exhibit B

ELANCO ANIMAL HEALTH

INCORPORATED

AMENDED AND RESTATED BYLAWS

Adopted as of

September 5, 2018

(Effective September 19, 2018)

ELANCO ANIMAL HEALTH INCORPORATED

AMENDED AND RESTATED BYLAWS

INDEX

		Page
ARTICLE I
The Shareholders
Section 1.1.	Annual Meetings	1
Section 1.2.	Special Meetings	1
Section 1.3.	Time, Place, and Conduct of Meetings	1
Section 1.4.	Notice of Meetings	1
Section 1.5.	Quorum	1
Section 1.6.	Voting	2
Section 1.7.	Voting Lists	2
Section 1.8.	Fixing of Record Date	2
Section 1.9.	Notice of Shareholder Business	2
Section 1.10.	Notice of Shareholder Nominees	5
ARTICLE II
Board of Directors
Section 2.1.	General Powers	7
Section 2.2.	Number and Qualifications	7
Section 2.3.	Classes of Directors and Terms	7
Section 2.4.	Election of Directors	7
Section 2.5.	Meetings of Directors	8
Section 2.6.	Quorum and Manner of Acting	8
Section 2.7.	Resignations	9
Section 2.8.	Removal of Directors	9
Section 2.9.	Action without a Meeting	9
Section 2.10.	Chairman of the Board of Directors	9

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Section 2.11.	Committees	9
Section 2.12.	Transactions with Corporation	10
Section 2.13.	Compensation of Directors	10
ARTICLE III
Officers
Section 3.1.	Chief Executive Officer	10
Section 3.2.	Chief Financial Officer	10
Section 3.3.	Treasurer and Assistant Treasurers	11
Section 3.4.	Assistant Treasurers	11
Section 3.5.	Secretary and Assistant Secretaries	11
Section 3.6.	Other Officers	11
Section 3.7.	Term of Office	11
Section 3.8.	Resignation	12
Section 3.9.	Removal	12
Section 3.10.	Vacancies	12
ARTICLE IV
Execution of Instruments and Deposit of Corporate Funds
Section 4.1.	Execution of Instruments Generally	12
Section 4.2.	Notes, Checks, Other Instruments	12
Section 4.3.	Proxies	12
ARTICLE V
Shares
Section 5.1.	Certificates for Shares	13
Section 5.2.	Transfer of Shares	13
Section 5.3.	Regulations	14
Section 5.4.	Transfer Agents and Registrars	14
Section 5.5.	Lost or Destroyed Certificates	14

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ARTICLE VI
Indemnification
Section 6.1.	Right to Indemnification	14
Section 6.2.	Insurance, Contracts and Funding	15
Section 6.3.	Non-Exclusive Rights; Applicability to Certain Proceedings	15
Section 6.4.	Advancement of Expenses	16
Section 6.5.	Procedures; Presumptions and Effect of Certain Proceedings; Remedies	16
Section 6.6.	Certain Definitions	18
Section 6.7.	Indemnification of Agents	18
Section 6.8.	Effect of Amendment or Repeal	18
Section 6.9.	Severability	19
ARTICLE VII
Miscellaneous
Section 7.1.	Corporate Seal	19
Section 7.2.	Fiscal Year	19

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AMENDED AND RESTATED BYLAWS
of
ELANCO ANIMAL HEALTH INCORPORATED
(An Indiana Corporation)

ARTICLE I

The Shareholders

SECTION 1.1.  Annual Meetings.  The annual meeting of the shareholders of the Corporation for the election of directors and for the transaction of such other business as properly may come before the meeting shall be held on such date and at such time as shall be designated by resolution of the Board of Directors from time to time.  Failure to hold an annual meeting of the shareholders at such designated time shall not affect otherwise valid corporate acts or work a forfeiture or dissolution of the Corporation.

SECTION 1.2.  Special Meetings.  Special meetings of the shareholders may be called at any time only by the Board of Directors or the Chairman of the Board of Directors.

SECTION 1.3.  Time, Place, and Conduct of Meetings.  Subject to Section 1.1, each meeting of the shareholders shall be held at such time of day and at such place or no place, solely by means of remote communication, as may be fixed by the Board of Directors, either within or without the State of Indiana, as shall be determined by the Board of Directors.  Each adjourned meeting of the shareholders shall be held at such time and place as may be provided in the motion for adjournment.  The chairman of each meeting shall have sole authority to decide questions relating to the conduct of that meeting.

SECTION 1.4.  Notice of Meetings.  The Secretary shall cause a written or printed notice of the place, day and hour and the purpose or purposes of each meeting of the shareholders to be delivered or mailed (which may include by facsimile or other form of electronic communication) at least ten (10) but not more than sixty (60) days prior to the meeting, to each shareholder of record entitled to vote at the meeting, at the shareholder’s address as the same appears on the records maintained by the Corporation.  Notice of any such shareholders meeting may be waived by any shareholder by delivering a written waiver to the Secretary before or after such meeting.  Attendance at any meeting in person or by proxy when the instrument of proxy sets forth in reasonable detail the purpose or purposes for which the meeting is called, shall constitute a waiver of notice thereof.  Notice of any adjourned meeting of the shareholders of the Corporation shall not be required to be given unless otherwise required by statute.

SECTION 1.5.  Quorum.  At any meeting of the shareholders, a majority of the outstanding shares entitled to vote on a matter at such meeting, represented in person or by proxy, shall constitute a quorum for action on that matter.  In the absence of a quorum, the chairman of the meeting or the holders of a majority of the shares entitled to vote present in person or by proxy or if no shareholder entitled to vote is present in person or by proxy any officer entitled to preside at or act as Secretary of such meeting, may adjourn such meeting from time to time, until a quorum shall be present.  At any such adjourned meeting at which a quorum

may be present, any business may be transacted which might have been transacted at the meeting as originally called.

SECTION 1.6.  Voting.  Except as otherwise provided by statute or by the Articles of Incorporation of the Corporation (as amended, restated or otherwise modified from time to time, the “Articles of Incorporation”), at each meeting of the shareholders each holder of shares entitled to vote shall have the right to one vote for each share standing in the shareholder’s name on the books of the Corporation on the record date fixed for the meeting under Section 1.8.  Each shareholder entitled to vote shall be entitled to vote in person or by proxy executed in writing (which shall include facsimile) or transmitted by electronic submission by the shareholder or a duly authorized attorney in fact.  Unless otherwise specified in the Articles of Incorporation or by applicable statute, the vote of shareholders approving any matter, other than the election of directors, shall require that the votes cast in favor of the matter exceed the votes cast opposing the matter at a meeting at which a quorum is present.  In the event that more than one group of shares is entitled to vote as a separate voting group, the vote of each group shall be considered and decided separately. Directors shall be elected by a plurality of the votes properly cast, as set forth in Article 13 of the Articles of Incorporation.

SECTION 1.7.  Voting Lists.  The Secretary shall make or cause to be made, after a record date for a meeting of shareholders has been fixed under Section 1.8 and at least five (5) days before such meeting, a complete list of the shareholders entitled to vote at such meeting, arranged in alphabetical order, with the address of each such shareholder and the number of shares so entitled to vote held by each, which list shall be on file at the principal office of the Corporation and subject to inspection by any shareholder entitled to vote at the meeting.  Such list shall be produced and kept open at the time and place of the meeting and subject to the inspection of any such shareholder during the holding of such meeting or any adjournment.  Except as otherwise required by law, such list shall be the only evidence as to who are the shareholders entitled to vote at any meeting of the shareholders.  In the event that more than one group of shares is entitled to vote as a separate voting group at the meeting, there shall be a separate listing of the shareholders of each group.

SECTION 1.8.  Fixing of Record Date.  For the purpose of determining shareholders entitled to notice of or to vote at any meeting of shareholders or any adjournment thereof, or entitled to receive payment of any dividend, or in order to make a determination of shareholders for any other proper purpose, the Board of Directors shall fix in advance a date as the record date for any such determination of shareholders, not more than seventy (70) days prior to the date on which the particular action requiring this determination of shareholders is to be taken.  When a determination of shareholders entitled to vote at any meeting of shareholders has been made as provided in this section, the determination shall, to the extent permitted by law, apply to any adjournment thereof.

SECTION 1.9.  Notice of Shareholder Business.

(a)At an annual meeting of the shareholders, the only items of business that shall be conducted are those which are proper subjects for action by the shareholders under Indiana law and which have been properly brought before the meeting.  To be properly brought before an annual meeting, business must be (i) specified in the notice of meeting (or any supplement

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thereto) given by or at the direction of the Board of Directors, (ii) otherwise properly brought before the meeting by or at the direction of the Board of Directors, or (iii) otherwise properly brought before the meeting by a shareholder in accordance with this Section 1.9.  Except for proposals properly made in accordance with Rule 14a-8 under the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder (as so amended and inclusive of such rules and regulations, the “Exchange Act”), and included in the notice of meeting given by or at the direction of the Board of Directors, the foregoing clause (iii) shall be the exclusive means by which a shareholder may propose business to be brought before the meeting.  For any item of business (other than nomination of a person for election as a director which is subject to Section 1.10) to be properly brought before an annual meeting by a shareholder, the shareholder proposing the item of business (a “proposing shareholder”) must (A) have beneficial ownership of the Corporation’s common stock both at the time of giving the notice provided for in this Section 1.9 and at the time of the meeting, (B) be entitled to vote at the meeting, (C) have the legal right and authority to make the proposal for consideration at the meeting, (D) have given a notice which is timely as required by subsection (b) and in proper form as required by subsection (c), and (E) appear at the meeting in person or by a designated representative to present the item of business.

(b)To be timely, a proposing shareholder’s notice must be delivered to or mailed and received by the Secretary at the principal executive offices of the Corporation not later than the close of business on the date that is no less than one hundred twenty (120) calendar days nor more than one hundred fifty (150) calendar days in advance of the date of the Corporation’s proxy statement released to shareholders in connection with the previous year’s annual meeting of shareholders; provided, however, that in the event that no annual meeting was held in the previous year or the date of the annual meeting has been changed by more than thirty (30) days from the date contemplated at the time of the previous year’s proxy statement, notice by the proposing shareholder to be timely must be so received not later than the close of business on the later of one hundred twenty (120) calendar days in advance of such annual meeting or ten (10) calendar days following the date on which public disclosure of the date of the meeting is first made.  For purposes of this Section 1.9 and Section 1.10, “public disclosure” means disclosure in a press release reported by a national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Sections 13, 14, or 15(d) of the Exchange Act.  No adjournment of an annual meeting or announcement thereof shall commence a new time period for the giving of a timely notice as described above.

(c)To be in proper form, a proposing shareholder’s notice to the Secretary shall set forth (i) the name and record address of the proposing shareholder(s); (ii) the class and number of the Corporation’s shares which are beneficially owned by the proposing shareholder(s); (iii) a brief description of any derivative instrument (as defined in IND. CODE §23-1-20-6.5 as in effect on October 18, 2010) or other agreement, arrangement, or understanding (including any swaps, warrants, short positions, profits interests, options, hedging transactions, or borrowed or loaned shares) with respect to the Corporation’s shares, engaged in, directly or indirectly by the proposing shareholder(s), where the purpose or effect of such instrument, agreement, arrangement or understanding is to increase or decrease such shareholders’ ability to share in the profits derived from any increase in the value of the Corporation’s shares, mitigate economic exposure to changes in value of the shares, and/or increase or decrease the voting power of such shareholder(s); and (iv) as to each item of business being proposed (A) a brief description of the

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business to be brought before the annual meeting; (B) the reasons for conducting such business at the annual meeting; (C) the text of the proposal or business (including the text of any resolutions proposed for consideration); (D) any material interest of the proposing shareholder(s) in such business; (E) a brief description of all agreements, arrangements or understandings between or among the proposing shareholder(s) or between or among any proposing shareholder and any other person or entity in connection with such business; (F) a representation whether the proposing shareholder intends to deliver a proxy statement and/or form of proxy to holders of at least the percentage of the Corporation’s outstanding shares required to approve the proposal and/or otherwise to solicit proxies from shareholders in support of the proposal; and (G) any other information relating to each such person that would be required to be disclosed in a proxy statement or other filing required to be made in connection with the solicitation of proxies by each such person with respect to the proposed business to be brought by each such person before the annual meeting pursuant to Section 14 of the Exchange Act, and the rules and regulations promulgated thereunder.  For purposes of this Section 1.9 and Section 1.10, the term “beneficial ownership” shall have the meaning specified in IND. CODE §23-1-20-3.5 as in effect on October 18, 2010;

(d)A proposing shareholder shall further update and supplement such notice, if necessary, so that the information provided or required to be provided in the notice shall be true, correct and complete in all material respects (i) as of the record date for the meeting and (ii) as of the date that is ten (10) business days prior to the meeting or any adjournment thereof.  Such updates shall be delivered to or mailed and received by the Secretary at the principal executive offices of the Corporation (A) in the case of the update required under subsection (i), not later than five (5) business days after the record date, and (B) in the case of the update required under subsection (ii), not later than seven (7) business days prior to the meeting or any adjournment thereof.

(e)No business shall be conducted at any annual meeting of shareholders except in accordance with the procedures set forth in this Section 1.9.  The chairman of an annual meeting shall, if the facts warrant, determine and declare to the meeting that business was not properly brought before the meeting in accordance with the provisions of this Section 1.9, and if the chairman should so determine, he or she shall so declare to the meeting any such business not properly brought before the meeting shall not be transacted, notwithstanding that proxies may have been solicited in respect of such business.

(f)The requirements of this Section 1.9 shall apply to any item of business to be brought before an annual meeting of shareholders (other than the election of directors and any proposal properly made pursuant to Rule 14a-8 of the Exchange Act) regardless of whether the business is presented to shareholders directly at the meeting or by means of an independently financed proxy solicitation.  The requirements of this Section 1.9 are included to provide the Corporation notice of a shareholder’s intention to bring business before an annual meeting and shall not be construed as imposing upon any shareholder the requirement to seek approval from the Corporation as a condition precedent to bringing any such business before an annual meeting.

(g)At any special meeting of the shareholders, only such business shall be conducted as shall have been brought before the meeting by or at the direction of the Board of Directors or the Chairman of the Board of Directors.

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SECTION 1.10.  Notice of Shareholder Nominees.

(a)Only persons who are nominated by or at the direction of the Board of Directors or by shareholders in accordance with the procedures set forth in this Section 1.10 shall be eligible for election as Directors.  Nominations of persons for election to the Board of Directors in accordance with this Section 1.10 may be made (i) at or prior to a meeting of shareholders by or at the direction of the Board of Directors or by any nominating committee or person appointed by or at the direction of the Board of Directors, and (ii) at an annual meeting of shareholders or a special meeting of shareholders (but only if the election of Directors is a matter specified in the notice of special meeting) by any shareholder entitled to vote for the election of Directors at the meeting who complies with the notice procedures set forth in this Section 1.10 (a “nominating shareholder”).  Such nominations shall be made pursuant to a notice which is timely as required by subsection (b) and in proper form as required by subsection (c) and any person proposed to be nominated (a “proposed nominee”) must be eligible for election as required by subsection (e).

(b)To be timely, a nominating shareholder’s notice, if it relates to an annual meeting of shareholders, must be delivered to or mailed and received by the Secretary at the principal executive offices of the Corporation not later than the close of business on the date that is not less than one hundred twenty (120) calendar days nor more than one hundred fifty (150) calendar days in advance of the date of the Corporation’s proxy statement released to shareholders in connection with the previous year’s annual meeting of shareholders; provided, however, that in the event that no annual meeting was held in the previous year or the date of the annual meeting has been changed by more than thirty (30) days from the date contemplated at the time of the previous year’s proxy statement, notice by the nominating shareholder to be timely must be so received not later than the close of business on the later of one hundred twenty (120) calendar days in advance of such annual meeting or ten (10) calendar days following the date on which public disclosure of the date of the meeting is first made.  No adjournment of an annual meeting or announcement thereof shall commence a new time period for the giving of a timely notice as described above.  If the notice relates to a special meeting of shareholders, it must be delivered to or mailed and received by the Secretary of the Corporation at the principal executive offices of the Corporation not less than ninety (90) calendar days in advance of the date of the special meeting, or, if later, the tenth (10th) calendar day after public disclosure of the date of the special meeting is made.

(c)To be in proper form for purposes of this Section 1.10, a nominating shareholder’s notice shall set forth: (i) the name and record address of the nominating shareholder(s), (ii) the class and number of the Corporation’s shares which are beneficially owned by the nominating shareholder(s), (iii) a brief description of any derivative instrument (as defined in Section 1.9(c)(iii)) or any other agreement, arrangement, or understanding engaged in, directly or indirectly, by the nominating shareholder(s) with respect to the Corporation’s shares, (iv) as to each proposed nominee, (A) the proposed nominee’s name, age, business address and residence address; (B) the proposed nominee’s principal occupation or employment; (C) the class and number of the Corporation’s shares which are beneficially owned by the proposed nominee; (D) a brief description of any derivative instrument (as defined in Section 1.9(c)(iii)) or any other agreement, arrangement, or understanding engaged in, directly or indirectly, by the proposed nominee with respect to the Corporation’s shares; (E) a brief description of all material agreements, arrangements, understandings or relationships,

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including all direct or indirect compensatory arrangements, between or among the proposed nominee, the nominating shareholder(s) and any of their associates or affiliates; and (F) any other information relating to the proposed nominee that is required to be disclosed in solicitations of proxies for election of directors, or is otherwise required, in each case pursuant to Section 14 of the Exchange Act (including without limitation the proposed nominee’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected).

(d)A nominating shareholder shall further update and supplement such notice, if necessary, so that the information provided or required to be provided in the notice shall be true, correct and complete in all material respects (i) as of the record date for the meeting and (ii) as of the date that is ten (10) business days prior to the meeting or any adjournment thereof.  Such updates shall be delivered to or mailed and received by the Secretary at the principal executive offices of the Corporation (A) in the case of the update required under subsection (i), not later than five (5) business days after the record date, and (B) in the case of the update required under subsection (ii), not later than seven (7) business days prior to the meeting or any adjournment thereof.

(e)To be eligible as a director of the Corporation, a proposed nominee must deliver (in accordance with the time periods prescribed for delivery of notice under paragraph (b) of this Section 1.10) to the Secretary at the principal executive offices of the Corporation a written questionnaire with respect to the background and qualification of the proposed nominee (which questionnaire shall be provided by the Secretary upon written request) and a written representation and agreement (in the form provided by the Secretary upon written request) that the proposed nominee (i) is not and will not become a party to (A) any agreement, arrangement or understanding with, and has not given any commitment or assurance to, any person or entity as to how such person, if elected as a director of the Corporation, will act or vote on any issue or question (a “voting commitment”) that has not been disclosed to the Corporation or (B) any voting commitment that could limit or interfere with such person’s ability to comply, if elected as a director of the Corporation, with such person’s fiduciary duties under applicable law, (ii) is not and will not become a party to any agreement, arrangement or understanding with any person or entity other than the Corporation with respect to any direct or indirect compensation, reimbursement or indemnification in connection with service or action as a director that has not been disclosed therein, and (iii) would be in compliance, if elected as a director of the Corporation, and will comply with all applicable publicly disclosed corporate governance, conflict of interest, confidentiality and stock ownership and trading policies and guidelines of the Corporation.

(f)The Corporation may require any proposed nominee to furnish such other information (i) as may reasonably be required by the Corporation to determine the eligibility of such proposed nominee to serve as an independent director of the Corporation under applicable listing rules or (ii) that could be material to a reasonable shareholder’s understanding of the independence or lack of independence of such proposed nominee.

(g)No person shall be eligible for election as a director of the Corporation unless nominated in accordance with the procedures set forth in this Section 1.10.  The chairman of the meeting may, if the facts warrant, determine and declare to the meeting that a nomination was

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not so declared in accordance with the procedures prescribed by these Bylaws, and if the chairman should so determine, he or she shall so declare to the meeting and the defective nomination shall be disregarded, notwithstanding that proxies in respect of such nomination may have been received by the Corporation.  Notwithstanding the foregoing provisions of this Section 1.10, a shareholder shall also comply with all applicable requirements of the Exchange Act with respect to the nomination of any director that is subject to this Section 1.10.

ARTICLE II

Board of Directors

SECTION 2.1.  General Powers.  The property, affairs and business of the Corporation shall be managed under the direction of the Board of Directors.

SECTION 2.2.  Number and Qualifications.  The number of directors which shall constitute the Board of Directors shall be nine (9), which number may be either increased or diminished by resolution adopted by not less than a majority of the directors then in office; provided that the number may not be diminished below five (5), and no reduction in number shall have the effect of shortening the term of any incumbent director.  In the event that the holders of shares of preferred stock become entitled to elect a certain number of directors, the number of directors and the minimum number of directors shall be increased by such number.  Neither ownership of stock of the Corporation nor residence in the State of Indiana shall be required as a qualification for a director.

SECTION 2.3.  Classes of Directors and Terms.  The classes of directors and terms shall be divided into three classes as nearly equal in number as possible. Except as provided in Article 9 of the Articles of Incorporation fixing one, two and three year terms for the initial classified board, each class of directors shall be elected for a term of three (3) years. In the event of vacancy, either by death, resignation, or removal of a director, or by reason of an increase in the number of directors, each replacement or new director shall serve for the balance of the term of the class of the director he or she succeeds or, in the event of an increase in the number of directors, of the class to which he or she is assigned. All directors elected for a term shall continue in office until the election and qualification of their respective successors, their death, their resignation in accordance with Section 2.7, their removal in accordance with Section 2.8, or if there has been a reduction in the number of directors until the end of their respective terms. The classes and terms of the directors shall not be governed by IND. CODE §23-1-33-6(c).

SECTION 2.4.  Election of Directors.  Subject to the rights of the holders of preferred stock to elect any directors voting separately as a class or series, at each annual meeting of shareholders, the directors to be elected at the meeting shall be chosen by the plurality of the votes cast by the holders of shares entitled to vote in the election at the meeting, provided a quorum is present.  For purposes of this Section 2.4, a “plurality of the votes cast” shall mean that the individuals with the highest number of votes are elected as directors up to the maximum number of directors to be elected.

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The election of directors by the shareholders shall be by written ballot if directed by the chairman of the meeting or if the number of nominees exceeds the number of directors to be elected.

Any vacancy on the Board of Directors shall be filled by the affirmative vote of a majority of the remaining directors.

If the holders of preferred stock are entitled to elect any directors voting separately as a class or series, those directors shall be elected by a plurality of the votes cast by the holders of shares of preferred stock entitled to vote in the election at the meeting, provided a quorum of the holders of shares of preferred stock is present.

SECTION 2.5.  Meetings of Directors.

(a)Annual Meeting.  Unless otherwise provided by resolution of the Board of Directors, the annual meeting of the Board of Directors shall be held at the place of and immediately following the annual meeting of shareholders, for the purpose of organization, the election of officers and the transaction of such other business as properly may come before the meeting.  No notice of the meeting need be given, except in the case an amendment to the Bylaws is to be considered.

(b)Regular Meetings.  The Board of Directors by resolution may provide for the holding of regular meetings and may fix the times and places (within or outside the State of Indiana) at which those meetings shall be held.  Notice of regular meetings need not be given except when an amendment to the Bylaws is to be considered.  Whenever the time or place of regular meetings shall be fixed or changed, notice of this action shall be mailed promptly to each director not present when the action was taken, addressed to the director at his or her residence or usual place of business.

(c)Special Meetings.  Special meetings of the Board of Directors may be called by the Chairman of the Board and shall be called by the Secretary at the request of any three (3) directors.  Except as otherwise required by statute, notice of each special meeting shall be mailed to each director at his or her residence or usual place of business at least three (3) days before the day on which the meeting is to be held, or shall be sent to the director at such place by facsimile transmission or other form of electronic communication or personally delivered, not later than the day before the day on which the meeting is to be held.  The notice shall state the time and place (which may be within or outside the State of Indiana) of the meeting but, unless otherwise required by statute, the Articles of Incorporation or the Bylaws, need not state the purposes thereof.

Notice of any meeting need not be given to any director, however, who shall attend the meeting, or who shall waive notice thereof, before, at the time of, or after the meeting, in a writing signed by the director and delivered to the Corporation.  No notice need be given of any meeting at which every member of the Board of Directors shall be present.

SECTION 2.6.  Quorum and Manner of Acting.  A majority of the actual number of directors established pursuant to Section 2.2, from time to time, shall be necessary to constitute a quorum for the transaction of any business except the filling of vacancies on the Board of

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Directors under Section 2.4 or voting on a conflict of interest transaction under Section 2.12.  The act of a majority of the directors present at a meeting at which a quorum is present, shall be the act of the Board of Directors, unless the act of a greater number is required by statute, by the Articles of Incorporation, or by the Bylaws.  Any or all directors may participate in a meeting of the Board of Directors by means of a conference telephone or similar communications equipment by which all persons participating in the meeting may simultaneously hear each other, and participation in this manner shall constitute presence in person at the meeting.  In the absence of a quorum, a majority of the directors present may adjourn the meeting from time to time until a quorum shall be present.  No notice of any adjourned meeting need be given.

SECTION 2.7.  Resignations.  Any director may resign at any time by giving written notice of resignation to the Board of Directors, the Chairman of the Board, the Chief Executive Officer, or the Secretary.  Unless otherwise specified in the written notice, the resignation shall take effect upon receipt thereof and unless otherwise specified in it, the acceptance of the resignation shall not be necessary to make it effective.

SECTION 2.8.  Removal of Directors.  Any director, other than a director elected by holders of preferred stock voting as a class, may be removed from office at any time but only for cause and only upon the affirmative vote of at least sixty-six and two-thirds percent (66 2/3%) of the votes entitled to be cast by holders of all of the outstanding shares of Voting Stock (as defined in Article 9(e) of the Articles of Incorporation), voting together as a single class.

SECTION 2.9.  Action without a Meeting.  Any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting, if taken by all members of the Board of Directors or such committee, as the case may be, evidenced by a written consent signed by all such members and effective on the date, either prior or subsequent to the date of the consent, specified in the written consent, or if no effective date is specified in the written consent, the date on which the consent is filed with the minutes of proceedings of the Board of Directors or committee.

SECTION 2.10.  Chairman of the Board of Directors.  The Chairman of the Board shall preside at all meetings of the shareholders and of the Board of Directors, if present, and shall have such powers and perform such duties as are assigned to him or her by the Bylaws and by the Board of Directors.  At any time in which the Chairman of the Board is unable to discharge the powers and duties of the office, then until such time as the Board shall appoint a new Chairman or determines that the Chairman is able to resume office, temporary authority to perform such duties and exercise such powers shall be granted to the Chief Executive Officer, or if he or she is unable to perform such duties and exercise such powers, to the Board’s presiding or lead director (if one shall have been previously selected).

SECTION 2.11.  Committees.  The Board of Directors may designate from among its members one or more committees.  Such committees shall have those powers of the Board of Directors which may by law be delegated to such committees and are specified by resolution of the Board of Directors or by committee charters approved by the Board of Directors.

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SECTION 2.12.  Transactions with Corporation.  No transactions with the Corporation in which one or more of its directors has a direct or indirect interest shall be either void or voidable solely because of such interest if any one of the following is true:

(a)the material facts of the transaction and the director’s interest are disclosed or known to the Board of Directors or committee which authorizes, approves, or ratifies the transaction by the affirmative vote or consent of a majority of the directors (or committee members) who have no direct or indirect interest in the transaction and, in any event, of at least two directors (or committee members);

(b)the material facts of the transaction and the director’s interest are disclosed or known to the shareholders entitled to vote and they authorize, approve or ratify such transaction by vote; or

(c)the transaction is fair to the Corporation.

If a majority of the directors or committee members who have no direct or indirect interest in the transaction vote to authorize, approve, or ratify the transaction, a quorum is present for purposes of taking action under subsection (a) of this section.  The presence of, or a vote cast by, a director with a direct or indirect interest in the transaction does not affect the validity of any actions taken under subsection (a) of this section.

SECTION 2.13.  Compensation of Directors.  The Board of Directors is empowered and authorized to fix and determine the compensation of directors and additional compensation for such additional services any of such directors may perform for the Corporation.

ARTICLE III

Officers

SECTION 3.1.  Chief Executive Officer.  The Board of Directors shall appoint a Chief Executive Officer to serve at the pleasure of the Board of Directors.  The Chief Executive Officer shall have general supervisory responsibility over the business of the Corporation and shall see that all orders and resolutions of the Board of Directors are carried into effect. He or she shall be the primary executive officer of the Corporation and shall execute all bonds, mortgages, contracts and other instruments of the Corporation requiring a seal, under the seal of the Corporation, except where required or permitted by law to be otherwise signed and executed and except that the other officers of the Corporation may sign and execute documents when so authorized by these Bylaws, the Board of Directors or the Chief Executive Officer. In the absence or disability of the Chairman of the Board, the Chief Executive Officer shall preside at all meetings of the stockholders and the Board of Directors. The Chief Executive Officer shall also perform such other duties and may exercise such other powers as from time to time may be assigned to him or her by these Bylaws or by the Board of Directors.

SECTION 3.2.  Chief Financial Officer.  The Board of Directors shall appoint a Chief Financial Officer of the Corporation to serve at the pleasure of the Board of Directors.  The Chief Financial Officer shall, subject to the control of the Board of Directors, have the responsibility

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for maintaining the financial records of the Corporation. He or she shall render from time to time an account of the financial condition of the Corporation. The Chief Financial Officer shall also perform such other duties and may exercise such other powers as from time to time may be assigned to him or her by these Bylaws.

SECTION 3.3.  Secretary and Assistant Secretaries.  The Board of Directors shall appoint a Secretary of the Corporation to serve at the pleasure of the Board of Directors. The Secretary of the Corporation shall (a) keep minutes of all meetings of the shareholders and of the Board of Directors, (b) authenticate records of the Corporation, (c) give, or cause to be given, notice of all meetings of the shareholders and special meetings of the Board of Directors, and (d) in general, have such powers and perform such other duties as may be assigned to him or her by these Bylaws, as may from time to time be assigned to him or her by the Board of Directors or the Chief Executive Officer and as may be incident to the office of Secretary of the Corporation. If the Secretary shall be unable or shall refuse to cause to be given notice of all meetings of the shareholders and special meetings of the Board of Directors, and if there be no Assistant Secretary, then the Board of Directors may choose another officer to cause such notice to be given. The Secretary shall have custody of the seal of the Corporation and the Secretary or any Assistant Secretary, if there be one, shall have authority to affix the same to any instrument requiring it and when so affixed, it may be attested by the signature of the Secretary or by the signature of any such Assistant Secretary. The Board of Directors may give general authority to any other officer to affix the seal of the Corporation and to attest to the affixing by such officer’s signature. The Secretary shall see that all books, reports, statements certificates and other documents and records required by law to be kept or filed are properly kept or filed, as the case may be.

SECTION 3.4.  Treasurer.  The Treasurer, if any, shall perform such duties and shall have such powers as may from time to time be assigned by the Board or the Chief Executive Officer. In addition, the Treasurer shall perform such duties and have such powers as are incident to the office of treasurer, including without limitation the duty and power to keep and be responsible for all funds and securities of the Corporation, to deposit funds of the Corporation in depositories selected in accordance with these Bylaws, to disburse such funds as authorized by the Board or the Chief Executive Officer, to make proper accounts of such funds, and to render as required by the Board statements of all such transactions and of the financial condition of the Corporation.

SECTION 3.5.  Other Officers.  At any meeting of the Board of Directors, the Board of Directors may elect a President (who may or may not be the Chief Executive Officer), Vice Presidents, Treasurer, Assistant Treasurers, Assistant Secretaries or such other officers of the Corporation as the Board of Directors may deem necessary, to serve at the pleasure of the Board of Directors. Other officers elected by the Board of Directors shall have such powers and perform such duties as may be assigned to such officers by or pursuant to authorization of the Board of Directors or by the Chief Executive Officer.  Any two (2) or more offices may be held by the same person.

SECTION 3.6.  Term of Office.  Each officer shall hold office until his or her successor shall have been duly elected and shall have qualified or until his or her death or until he or she shall resign, but, subject to the requirements of the Articles of Incorporation, any officer may be

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removed pursuant Section 3.8 of these Bylaws or be removed in the manner provided in Section 3.9 of these Bylaws.

SECTION 3.7.  Resignation.  Any officer may resign at any time by giving written notice of such resignation to the Board of Directors, the Chairman of the Board, the Chief Executive Officer or the Secretary of the Corporation.  Unless otherwise specified in such written notice, such resignation shall take effect upon receipt thereof and unless otherwise specified in it, the acceptance of the resignation shall not be necessary to make it effective.

SECTION 3.8.  Removal.  Officers of the Corporation may be removed, either for or without cause, at any meeting of the Board of Directors called for the purpose, by the vote of a majority of the actual number of directors elected and qualified.  The officers and agents elected or appointed in accordance with the provisions of Section 3.6 may be removed, either for or without cause, at any meeting of the Board of Directors at which a quorum be present, by the vote of a majority of the directors present at such meeting, by any superior officer upon whom such power of removal shall have been conferred by the Board of Directors, or by any officer to whom the power to appoint such officer has been delegated by the Board of Directors pursuant to Section 3.6.  Any removal shall be without prejudice to the contract rights, if any, of the person so removed.

SECTION 3.9.  Vacancies.  A vacancy in any office by reason of death, resignation, removal, disqualification or any other cause, may be filled by the Board of Directors or by an officer authorized under these Bylaws to appoint such office.

ARTICLE IV

Execution of Instruments and Deposit of Corporate Funds

SECTION 4.1.  Execution of Instruments Generally.  All deeds, contracts, and other instruments requiring execution by the Corporation may be signed by the Chairman of the Board, the Chief Executive Officer, the Chief Financial Officer, the Treasurer, the Secretary or any Assistant Treasurer or Assistant Secretary of the Corporation.  Authority to sign any deed, contract, or other instrument requiring execution by the Corporation may be conferred by the Board of Directors upon any person or persons whether or not such person or persons be officers of the Corporation.  Such person or persons may delegate, from time to time, by instrument in writing, all or any part of such authority to any other person or persons if authorized so to do by the Board of Directors.

SECTION 4.2.  Notes, Checks, Other Instruments.  All notes, drafts, acceptances, checks, endorsements, and all evidences of indebtedness of the Corporation whatsoever, shall be signed by such officer or officers or such agent or agents of the Corporation and in such manner as the Board of Directors from time to time may determine.  Endorsements for deposit to the credit of the Corporation in any of its duly authorized depositories shall be made in such manner as the Board of Directors from time to time may determine.

SECTION 4.3.  Proxies.  Proxies, powers of attorney, or consents to vote with respect to shares or units of other corporations or other entities owned by or standing in the name of the

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Corporation may be executed and delivered from time to time on behalf of the Corporation by the Chairman of the Board, the Chief Executive Officer, the President, any Vice President, the Treasurer, any Assistant Treasurer, the Secretary or by any other person or persons thereunto authorized by the Board of Directors.  Persons with authority to execute proxies, powers of attorney, or consents under this Section 4.3 may delegate that authority unless prohibited by the Board of Directors.

ARTICLE V

Shares

SECTION 5.1.  Certificates for Shares.  Shares in the corporation may be issued in book-entry form or evidenced by certificates.  However, every holder of shares in the Corporation shall be entitled upon request to have a certificate evidencing the shares owned by the shareholder, signed in the name of the Corporation by the Chairman of the Board, the Chief Executive Officer, President or a Vice President and the Secretary or an Assistant Secretary, certifying the number of shares owned by the shareholder in the Corporation.  The signatures of such officers, the signature of the transfer agent and registrar, and the Seal of the Corporation may be facsimiles.  In case any officer or employee who shall have signed, or whose facsimile signature or signatures shall have been used on, any certificate shall cease to be an officer or employee of the Corporation before the certificate shall have been issued and delivered by the Corporation, the certificate may nevertheless be adopted by the Corporation and be issued and delivered as though the person or persons who signed the certificate or whose facsimile signature or signatures shall have been used thereon had not ceased to be such officer or employee of the Corporation; and the issuance and delivery by the Corporation of any such certificate shall constitute an adoption thereof.  Every certificate shall state on its face (or in the case of book-entry shares, the statements evidencing ownership of such shares shall state) the name of the Corporation and that it is organized under the laws of the State of Indiana, the name of the person to whom it is issued, and the number and class of shares and the designation of the series, if any, the certificate represents, and shall state conspicuously on its front or back that the Corporation will furnish the shareholder, upon written request and without charge, a summary of the designations, relative rights, preferences and limitations applicable to each class and the variations in rights, preferences and limitations determined for each series (and the authority of the Board of Directors to determine variations for future series).  Every certificate (or book-entry statement) shall state whether such shares have been fully paid and are non-assessable.  If any such shares are not fully paid, the certificate (or book-entry statement) shall be legibly stamped to indicate the percentum which has been paid up, and as further payments are made thereon, the certificate shall be stamped (or book-entry statement updated) accordingly.  Subject to the foregoing provisions, certificates representing shares in the Corporation shall be in such form as shall be approved by the Board of Directors.  There shall be entered upon the stock books of the Corporation at the time of the issuance or transfer of each share the number of the certificates representing such share (if any), the name of the person owning the shares represented thereby, the class of such share and the date of the issuance or transfer thereof.

SECTION 5.2.  Transfer of Shares.   Transfer of shares of the Corporation shall be made on the books of the Corporation by the holder of record thereof, or by the shareholder’s attorney

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thereunto duly authorized in writing and filed with the Secretary of the Corporation or any of its transfer agents, and on surrender of the certificate or certificates (if any) representing such shares. The Corporation and its transfer agents and registrars shall be entitled to treat the holder of record of any share or shares the absolute owner thereof for all purposes, and accordingly shall not be bound to recognize any legal, equitable or other claim to or interest in such share or shares on the part of any other person whether or not it or they shall have express or other notice thereof, except as otherwise expressly provided by the statutes of the State of Indiana.  Shareholders shall notify the Corporation in writing of any changes in their addresses from time to time.

SECTION 5.3.  Regulations.  Subject to the provisions of this Article V, the Board of Directors may make such rules and regulations as it may deem expedient concerning the issuance, transfer and regulation of certificates for shares or book-entry shares of the Corporation.

SECTION 5.4.  Transfer Agents and Registrars.  The Board of Directors may appoint one or more transfer agents, one or more registrars, and one or more agents to act in the dual capacity of transfer agent and registrar with respect to the certificates representing shares and the book-entry shares of the Corporation.

SECTION 5.5.  Lost or Destroyed Certificates.  The holders of any shares of the Corporation shall immediately notify the Corporation or one of its transfer agents and registrars of any loss or destruction of the certificate representing the same.  The Corporation may issue a new certificate in the place of any certificate theretofore issued by it alleged to have been lost or destroyed upon such terms and under such regulations as may be adopted by the Board of Directors or the Secretary, and the Board of Directors or Secretary may require the owner of the lost or destroyed certificate or the owner’s legal representatives to give the Corporation a bond in such form and for such amount as the Board of Directors or Secretary may direct, and with such surety or sureties as may be satisfactory to the Board of Directors or the Secretary to indemnify the Corporation and its transfer agents and registrars against any claim that may be made against it or any such transfer agent or registrar on account of the alleged loss or destruction of any such certificate or the issuance of such new certificate.  A new certificate may be issued without requiring any bond when, in the judgment of the Board of Directors or the Secretary, it is proper so to do.

ARTICLE VI

Indemnification

SECTION 6.1.  Right to Indemnification.

(a)The Corporation shall, to the fullest extent permitted by applicable law now or hereafter in effect, indemnify any person who is or was a director, officer or employee of the Corporation (“Eligible Person”) and who is or was involved in any manner (including, without limitation, as a party or a witness) or is threatened to be made so involved in any threatened, pending or completed investigation, claim, action, suit or proceeding, whether civil, criminal, administrative or investigative (including, without limitation, any action, suit or proceeding by

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or in the right of the Corporation to procure a judgment in its favor) (a “Proceeding”) by reason of the fact that such Eligible Person is or was a director, officer or employee of the Corporation or is or was serving at the request of the Corporation as a director, officer, partner, member, manager, trustee, employee, fiduciary or agent of another corporation, partnership, joint venture, limited liability company, trust or other enterprise (including, without limitation, any employee benefit plan) (a “Covered Entity”), against all expenses (including attorneys’ fees), judgments, fines or penalties (including excise taxes assessed with respect to an employee benefit plan) and amounts paid in settlement actually and reasonably incurred by such Eligible Person in connection with such Proceeding.

(b)Notwithstanding Section 6.1(a), the Corporation shall not be obligated to indemnify an Eligible Person with respect to a Proceeding (or part thereof) commenced by such Eligible Person, except with respect to (i) a judicial adjudication or arbitration commenced by the Eligible Person under Section 6.5(e) or (f), as to which the rights to indemnification are provided pursuant Section 6.5(h), or (ii) a Proceeding (or part thereof) that was authorized or consented to by the Board of Directors of the Corporation.

(c)In the event a Proceeding arises out of an Eligible Person’s service to a Covered Entity, the indemnification provided by the Corporation under this Article VI shall be secondary to and not pari passu with any indemnification provided by the Covered Entity.  However, the Corporation may provide indemnification to the Eligible Person in the first instance, in which case the Corporation shall be subrogated to the extent of such payment to the rights of the Eligible Person with respect to the indemnification provided by the Covered Entity and any insurance coverage maintained by the Covered Entity on behalf of the Eligible Person.

(d)Any right of an Eligible Person to indemnification shall be a contract right and shall include the right to receive, prior to the conclusion of any Proceeding, advancement of any expenses incurred by the Eligible Person in connection with such Proceeding in accordance with Section 6.4.

SECTION 6.2.  Insurance, Contracts and Funding.  The Corporation may purchase and maintain insurance to protect itself and any Eligible Person against any expense, judgments, fines and amounts paid in settlement as specified in Section 6.1 or incurred by any Eligible Person in connection with any Proceeding referred to in such section, to the fullest extent permitted by applicable law now or hereafter in effect.  The Corporation may enter into agreements with any director, officer, employee or agent of the Corporation or any director, officer, employee, fiduciary or agent of any Covered Entity supplemental to or in furtherance of the provisions of this Article VI and may create a trust fund or use other means (including, without limitation, a letter of credit) to ensure the payment of such amounts as may be necessary to effect indemnification and advancement of expenses as provided in this Article VI.

SECTION 6.3.  Non-Exclusive Rights; Applicability to Certain Proceedings.  The rights provided in this Article VI shall not be exclusive of any other rights to which any Eligible Person may otherwise be entitled, and the provisions of this Article VI shall inure to the benefit of the heirs and legal representatives of any Eligible Person and shall be applicable to Proceedings commenced or continuing after the adoption of this Article VI, whether arising from acts or omissions occurring before or after such adoption.

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SECTION 6.4.  Advancement of Expenses.

(a)Except as provided under Sections 6.4(b) and (c) below, all reasonable expenses incurred by or on behalf of an Eligible Person in connection with any Proceeding shall be advanced to the Eligible Person by the Corporation within sixty (60) days after the receipt by the Corporation of a statement or statements from the Eligible Person complying with this section and Section 6.5 requesting such advance or advances from time to time, whether prior to or after final disposition of such Proceeding, unless a determination has been made pursuant to Section 6.5 that such Eligible Person is not entitled to indemnification.  Any such statement or statements shall reasonably evidence the expenses incurred by the Eligible Person and shall include (i) a written representation that, in connection with the matters giving rise to the Proceeding, the Eligible Person was acting in good faith and in what he or she believed to be the best interests of the Corporation or at least not opposed to the best interests of the Corporation, and (ii) a written affirmation or undertaking to repay advances if it is ultimately determined that the Eligible Person is not entitled to indemnification under this Article VI.

(b)Notwithstanding Section 6.4(a), advancement of expenses shall not be mandatory, but shall be permissive at the discretion of the Corporation, for expenses incurred after the Eligible Person’s conviction by a trial court of competent jurisdiction of, or plea of guilty or nolo contendere or its equivalent to, a crime arising from the circumstances giving rise to the Proceeding.

(c)Notwithstanding Section 6.4(a), advancement of expenses shall not be mandatory, but shall be permissive at the discretion of the Corporation, for expenses incurred by or on behalf of Eligible Persons for judicial adjudications or arbitrations under Section 6.5(e) or (f).

SECTION 6.5.  Procedures; Presumptions and Effect of Certain Proceedings; Remedies.  In furtherance, but not in limitation, of the foregoing provisions, the following procedures, presumptions and remedies shall apply with respect to and the right to indemnification and advancement of expenses under this Article VI.

(a)To obtain indemnification under this Article VI, an Eligible Person shall submit to the Secretary of the Corporation a written request, including such documentation and information as is reasonably available to the Eligible Person and reasonably necessary to determine whether and to what extent the Eligible Person is entitled to indemnification (the “Supporting Documentation”).  The determination of the Eligible Person’s entitlement to indemnification shall be made not later than sixty (60) days after receipt by the Corporation of the written request together with the Supporting Documentation.  The Secretary of the Corporation shall, promptly upon receipt of such request, advise the Board in writing of the Eligible Person’s request.

(b)An Eligible Person’s entitlement to indemnification under this Article VI shall be determined in one of the following methods, such method to be selected by the Board of Directors, regardless of whether there are any Disinterested Directors (as hereinafter defined): (i) by a majority vote of the Disinterested Directors, if they constitute a quorum of the Board; (ii) by a written opinion of Special Counsel (as hereinafter defined) if a quorum of the Board consisting of Disinterested Directors is not obtainable or, even if

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obtainable, a majority of such Disinterested Directors so directs; (iii) by the shareholders of the Corporation (but only if a majority of the Disinterested Directors, if they constitute a quorum of the Board, presents the issue of entitlement to the shareholders for their determination); or (iv) as provided in subsection (d).

(c)In the event the determination of entitlement is to be made by Special Counsel, a majority of the Disinterested Directors shall select the Special Counsel, but only Special Counsel to which the Eligible Person does not reasonably object.

(d)In any event, if the person or persons empowered under subsection (c) to determine entitlement shall not have been appointed or shall not have made a determination within sixty (60) days after receipt by the Corporation of the request therefor together with the Supporting Documentation, the Eligible Person shall be deemed to be, and shall be, entitled to indemnification and advancement of expenses unless (i) the Eligible Person misrepresented or failed to disclose a material fact in making the request for indemnification or in the Supporting Documentation or (ii) such indemnification is prohibited by law.  The termination of any Proceeding or of any claim, issue or matter therein, by judgment, order, settlement or conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, adversely affect the right of an Eligible Person to indemnification or create a presumption that the Eligible Person did not act in good faith and in a manner which the Eligible Person reasonably believed to be in or not opposed to the best interests of the Corporation and, with respect to any criminal proceeding, that the Eligible Person had reasonable cause to believe that his or her conduct was unlawful.

(e)In the event that a determination is made that the Eligible Person is not entitled to indemnification (i) the Eligible Person shall be entitled to seek an adjudication of his or her entitlement to such indemnification either, at the Eligible Person’s sole option, in (A) an appropriate court of the State of Indiana or any other court of competent jurisdiction or (B) an arbitration to be conducted in Indianapolis, Indiana, by a single arbitrator pursuant to the rules of the American Arbitration Association; and (ii) in any such judicial proceeding or arbitration the Eligible Person shall not be prejudiced by reason of the prior determination pursuant to this Section 6.5.

(f)If a determination shall have been made or deemed to have been made that the Eligible Person is entitled to indemnification, the Corporation shall be obligated to pay the amounts incurred by the Eligible Person within ten (10) days after such determination has been made or deemed to have been made and shall be conclusively bound by such determination unless (i) the Eligible Person misrepresented or failed to disclose a material fact in making the request for indemnification or in the Supporting Documentation or (ii) such indemnification is prohibited by law.  In the event that (A) any advancement of expenses is not timely made pursuant to Section 6.4 or (B) payment of indemnification is not made within ten (10) days after a determination of entitlement to indemnification has been made, the Eligible Person shall be entitled to seek judicial enforcement of the Corporation’s obligation, to pay to the Eligible Person such advancement of expenses or indemnification.  Notwithstanding the foregoing, the Corporation may bring an action, in an appropriate court in the State of Indiana or any other court of competent jurisdiction, contesting the right of the Eligible Person to receive indemnification hereunder due to the occurrence of an event described in clause (i) or (ii) of

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this subsection (f) (a “Disqualifying Event”); provided, however, that in any such action the Corporation shall have the burden of proving the occurrence of such Disqualifying Event.

(g)The Corporation shall be precluded from asserting in any judicial proceeding or arbitration commenced pursuant to this Section 6.5 that the procedures and presumptions of this Article VI are not valid, binding and enforceable and shall stipulate in any such court or before any such arbitrator that the Corporation is bound by the provisions of this Article VI.

(h)In the event that the Eligible Person seeks a judicial adjudication of or an award in arbitration to enforce his or her rights under, or to recover damages for breach of this Article VI, the Eligible Person shall be entitled to recover from the Corporation, and shall be indemnified by the Corporation, against, any expenses actually and reasonably incurred by the Eligible Person in connection with such adjudication or arbitration if the Eligible Person prevails in such adjudication or arbitration.  If it shall be determined in such judicial adjudication or arbitration that the Eligible Person is entitled to receive part but not all of the indemnification or advancement of expenses sought, the expenses incurred by the Eligible Person in connection with such judicial adjudication or arbitration shall be prorated accordingly.

SECTION 6.6.  Certain Definitions.  For purposes of this Article VI:

(a)“Disinterested Director” means a Director who is not or was not a party to the Proceeding in respect of which indemnification is sought by the Eligible Person.

(b)“Special Counsel” means a law firm or a member of a law firm that neither presently is, nor in the past five years has been, retained to represent any other party to the Proceeding giving rise to a claim for indemnification under this Article VI.  In addition, any person who, under applicable standards of professional conduct, would have a conflict of interest in representing either the Corporation or the Eligible Person in an action to determine the Eligible Person’s rights under this Article VI may not act as Special Counsel.

SECTION 6.7.  Indemnification of Agents.  Notwithstanding any other provisions of this Article VI, the Corporation may, consistent with the provisions of applicable law, indemnify any person other than a director, officer or employee of the Corporation who is or was an agent of the Corporation and who is or was involved in any manner (including, without limitation, as party or a witness) or is threatened to be made so involved in any threatened, pending or completed Proceeding by reasons of the fact that such person is or was an agent of the Corporation or, at the request of the Corporation, a director, officer, partner, member, manager, employee, fiduciary or agent of a Covered Entity against all expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such Proceeding.  The Corporation may also advance expenses incurred by such person in connection with any such Proceeding, consistent with the provisions of applicable law.

SECTION 6.8.  Effect of Amendment or Repeal.  Neither the amendment or repeal of, nor the adoption of a provision inconsistent with, any provision of this Article VI shall adversely affect the rights of any Eligible Person under this Article VI with respect to any Proceeding commenced or threatened prior to such amendment, repeal or adoption of an inconsistent provision without the written consent of such Eligible Person.

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SECTION 6.9.  Severability.  If any of this Article VI shall be held to be invalid, illegal or unenforceable for any reason whatsoever: (a) the validity, legality and enforceability of the remaining provisions of this Article VI (including, without limitation, all portions of any Section of this Article VI containing any such provision held to be invalid, illegal or unenforceable, that are not themselves invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby; and (b) to the fullest extent possible, the provisions of this Article VI (including, without limitation, all portions of any Section of this Article VI containing any such provision held to be invalid, illegal or unenforceable, that are not themselves invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested by the provision held invalid, illegal or unenforceable.

ARTICLE VII

Miscellaneous

SECTION 7.1.  Corporate Seal.  The Seal of the Corporation shall consist of a circular disk around the circumference of which shall appear the words:

“ELANCO ANIMAL HEALTH INCORPORATED, GREENFIELD, INDIANA”.

SECTION 7.2.  Fiscal Year.  The fiscal year of the Corporation shall begin on the first day of January in each year and shall end on the thirty-first day of the following December.

* * *

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EX-10.2

Exhibit 10.2

ELANCO ANIMAL HEALTH INCORPORATED

AND

ELI LILLY AND COMPANY

TRANSITIONAL SERVICES AGREEMENT

Dated as of September 24, 2018

Table of Contents

			Page
Article I	DEFINITIONS		1
Section 1.1		Definitions	1
Article II	SERVICES; STANDARD OF PERFORMANCE		5
Section 2.1		Services	5
Section 2.2		Standard and Manner of Performance	6
Section 2.3		In-Flight Projects	7
Section 2.4		Business As Usual Services	7
Section 2.5		Program Services	7
Section 2.6		Protection of Lilly Information	7
Section 2.7		Governance	8
Section 2.8		Service Changes	8
Section 2.9		Changes to the Manner of Performance	10
Section 2.10		Third Party Terms and Conditions; Consents	10
Section 2.11		Transitional Nature of Services; Exit Plan and Assistance	10
Section 2.12		Cooperation	11
Section 2.13		Compliance	12
Section 2.14		Internal Audits of Lilly Managed Controls and Processes	12
Section 2.15		Dependencies	13
Article III	CONFIDENTIALITY		14
Section 3.1		Confidentiality	14
Article IV	TERM; TERMINATION		15
Section 4.1		Term and Service Periods	15
Section 4.2		Termination	16
Section 4.3		Effect of Expiration and Termination; Accrued Rights; Survival	17
Article V	COMPENSATION		17
Section 5.1		Compensation	17
Section 5.2		Taxes	18
Article VI	PAYMENT TERMS		19
Section 6.1		Invoicing	19
Section 6.2		Interest	20

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Table of Contents

(continued)

			Page
Article VII	INTELLECTUAL PROPERTY AND DATA		20
Section 7.1		Ownership of Intellectual Property and Data	20
Section 7.2		License Grants	21
Article VIII	INDEMNIFICATION; LIMITATIONS OF LIABILITY; DISCLAIMERS		21
Section 8.1		Indemnification	21
Section 8.2		Procedures for Indemnification of Third Party Claims	21
Section 8.3		Limitations of Liability	21
Article IX	DISPUTE RESOLUTION		23
Section 9.1		Dispute Resolution	23
Article X	LOCAL SERVICE AGREEMENTS		23
Section 10.1		Local Service Agreements	23
Article XI	MISCELLANEOUS		23
Section 11.1		Counterparts; Entire Agreement; Conflicting Agreements	23
Section 11.2		No Construction Against Drafter	24
Section 11.3		Governing Law	24
Section 11.4		Assignability	24
Section 11.5		Third Party Beneficiaries	24
Section 11.6		Notices	24
Section 11.7		Severability	25
Section 11.8		Force Majeure	26
Section 11.9		Headings	26
Section 11.10		Waivers of Default	26
Section 11.11		Specific Performance	26
Section 11.12		Amendments	26
Section 11.13		Interpretation	26
Section 11.14		Waiver of Jury Trial	27
Section 11.15		Submission to Jurisdiction; Waivers	27
Section 11.16		No Agency	27
EXHIBIT A — LILLY SCHEDULED SERVICES			29
EXHIBIT B — LILLY EXCLUDED SERVICES			30
EXHIBIT C — COMPANY SCHEDULED SERVICES			31

ii

Table of Contents

(continued)

	Page
EXHIBIT D — IN-FLIGHT PROJECTS AND IN-FLIGHT PROJECT COSTS	32
EXHIBIT E — PROGRAM SERVICES AND PROGRAM CHARGES	33
EXHIBIT F — SERVICE CHANGE AND PROGRAM SERVICE REQUEST FORM	34
EXHIBIT G — TSA STEPDOWN TERMINATION APPROACH	35
EXHIBIT H — CURRENCY CONVERSION RATES	36

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TRANSITIONAL SERVICES AGREEMENT

This Transitional Services Agreement (this “Agreement”), dated as of September 24, 2018, is entered into by and between Eli Lilly and Company, an Indiana corporation (“Lilly”) and Elanco Animal Health Incorporated, an Indiana corporation (the “Company”) (each, a “Party” and collectively, the “Parties”).

RECITALS

WHEREAS, pursuant to that certain Master Separation Agreement by and between Lilly and the Company, dated on or about the date hereof (the “Separation Agreement”), and the Ancillary Agreements, Lilly has transferred the Animal Health Business to the Company in contemplation of the Separation and IPO;

WHEREAS, in order to provide for an orderly transition from the Animal Health Business operating as a division of Lilly to operating as a standalone publicly-traded company, Lilly and the Company have agreed to enter into this Agreement, pursuant to which Lilly or a member of the Lilly Group will continue to provide certain services to the Company Group, and the Company or a member of the Company Group will continue to provide certain services to the Lilly Group, as applicable.

NOW, THEREFORE, in consideration of the mutual covenants contained herein, the signatories covenant and agree as follows:

ARTICLE I

DEFINITIONS

SECTION 1.1Definitions.  Capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed to such terms in the Separation Agreement.  The following terms used herein have the following meanings:

“Aggregate Scheduled Service Margin” means an aggregate dollar amount of annualized discrepancy mutually agreed upon by the Parties.

“Approval” shall have the meaning set forth in Section 2.10.

“Approved Service Change” shall have the meaning set forth in Section 2.8(c).

“BAU Services” shall have the meaning set forth in Section 2.4.

“BAU Service Costs” means the Company Group’s proportionate share of the Costs incurred by the Lilly Group after the Effective Date in connection with the Lilly Group’s provision of the relevant BAU Services.

“Breaching Party” shall have the meaning set forth in Section 4.2(b).

“Change of Control” means any (a) change in the ownership of a Party such that a third party acquires, directly or indirectly, more than fifty percent (50%) of the voting capital stock of such Party in one or more related transactions or (b) acquisition by a third party of the right to

direct management or operations of such Party whether through ownership or securities or otherwise.

“Charge Commencement Date” means October 1, 2018.

“Company Services” shall have the meaning set forth in Section 2.1(b).

“Compliance Service Change” shall have the meaning set forth in Section 2.8(d).

“Confidential Information” means, with respect to a Party, all confidential and proprietary information of such Party, any member of its Group or its or their Representatives that is provided to the other Party, any member of such other Party’s Group or its or their Representatives pursuant to this Agreement; provided that Confidential Information shall not include information that (i) is or becomes part of the public domain through no breach of this Agreement by the recipient Party or any member of its Group or its or their respective Representatives; (ii) was independently developed following the Effective Date by employees or agents of the recipient Party, any member of its Group or its or their respective Representatives who have not accessed or otherwise received the applicable information; provided that such independent development can be demonstrated by competent, contemporaneous written records of the recipient Party or any member of its Group; or (iii) becomes available to the recipient Party or any member of its Group following the Effective Date on a non-confidential basis from a third party who is not known by such Party or member of such Party’s Group to be bound directly or indirectly by a confidentiality agreement or other contractual, legal or fiduciary obligation of confidentiality to the disclosing Party of any member of the disclosing Party’s Group.

“Costs” means Internal Costs and Third-Party Costs, collectively.

“Effective Date” shall have the meaning set forth for such term in the Separation Agreement.

“EU VAT Directive” shall mean Council Directive 2006/112/EC.

“Exit Plan” shall have the meaning set forth in Section 2.11.

“In-Flight Projects” shall have the meaning set forth in Section 2.3.

“In-Flight Project Costs” shall have the meaning set forth in Section 2.3.

“Internal Costs” means, collectively, all:  (a) internal resource rates (as determined by the Service Provider) for employees of the Service Provider or a member of the Service Provider’s Group in the provision of the Services and; (b) all other overhead costs and other relevant indirect costs attributable to the performance of the Services (including any travel expenses).

“Lilly Excluded Services” shall have the meaning set forth in Section 2.1(a).

“Lilly Managed Control or Process” shall have the meaning set forth in Section 2.14.

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“Lilly Services” shall have the meaning set forth in Section 2.1(a).

“Lilly Service Addition” shall have the meaning set forth in Section 2.6(b).

“Local Service Agreement” shall have the meaning set forth in Section 10.1.

“Local Service Lead” shall have the meaning set forth in Section 2.7.

“Losses” means any and all damages, losses, deficiencies, Liabilities (as defined in the Separation Agreement), penalties, judgments, settlements, payments, fines, charges, interest, costs and expenses, whether or not resulting from third party claims, including the costs and expenses of any and all Actions and demands, assessments, judgments, settlements and compromises relating thereto and the costs and expenses of attorneys’, accountants’, consultants’ and other professionals’ fees and expenses incurred in the investigation or defense thereof or the enforcement of rights hereunder.

“Non-Breaching Party” shall have the meaning set forth in Section 4.2(b).

“Omitted Service” shall have the meaning set forth in Section 2.1(c).

“Prime Rate” means the rate last quoted as of the time of determination by The Wall Street Journal as the “Prime Rate” in the United States or, if The Wall Street Journal ceases to quote such rate, the highest per annum interest rate published by the Federal Reserve Board in Federal Reserve Statistical Release H.15 (519) (Selected Interest Rates) as the “bank prime loan” rate as of such time, or, if such rate is no longer quoted therein, any similar rate quoted therein (as determined by Lilly) or any similar release by the Federal Reserve Board (as determined by Lilly).

“Program Charges” means the charges for Program Services, as calculated in accordance with Exhibit E.

“Program Services” means the services identified in Exhibit E.

“Representatives” means, when used with respect to any Party, such Party’s directors, officers, employees, agents, accountants, attorneys, consultants and other advisors and representatives.

“Retained Business” shall have the meaning set forth in Section 2.1(b).

“Scheduled Fees” shall have the meaning set forth in Section 5.1(a).

“Scheduled Services” means the Lilly Scheduled Services as set forth on Exhibit A, the Company Services set forth on Exhibit C, or both of them, as the context requires.

“Scheduled Service Margin” means a dollar amount of annualized discrepancy mutually agreed upon by the Parties.

“Service Change” shall have the meaning set forth in Section 2.8(b).

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“Service Exit Costs” means any Costs reasonably incurred by the Service Provider in planning and executing the migration of Services to the Service Recipient or a third party service provider or the termination or completion of Services, including joint migration planning, data extraction, final data migration, and de-commissioning or removal of any Lilly Service Addition, as applicable.  For the avoidance of doubt, any severance payments incurred by the Service Provider with respect to its employees shall not be considered Service Exit Costs.

“Service Fee” shall have the meaning set forth in Section 5.1(a).

“Service Noncompliance” shall mean the Service Provider’s failure to provide the Services in the manner set forth in Section 2.2(a) after receipt of written notice from the Service Recipient specifying the details of such noncompliance and the Service Provider’s failure to cure such noncompliance as soon as reasonably practicable but not later than thirty (30) calendar days after the Service Provider’s receipt of such notice; provided, that notwithstanding the foregoing, a Service Noncompliance shall not be deemed to occur if and to the extent the Service Provider is not able to provide the Services as a result of:  (a) acts, omissions or contingencies not under its control; or (b) the Service Provider’s performance being excused under Section 2.15.

“Service Period” shall have the meaning set forth in Section 4.1(b).

“Service Provider” means:  (a) in respect of Lilly Services, Lilly or the applicable member of the Lilly Group; and (b) in respect of Company Services, the Company or the applicable member of the Company Group.

“Service Recipient” means:  (a) in respect of Lilly Services, the Company or the applicable member of the Company Group; and (b) in respect of Company Services, Lilly or the applicable member of the Lilly Group.

“Service Recipient Change” shall have the meaning set forth in Section 2.8(e).

“Services” means Lilly Services (including Lilly Scheduled Services, In-Flight Projects, Program Services and BAU Services), Company Services, or both of them, as the context requires.

“Set-Up Costs” means any Costs incurred by the Service Provider after the Effective Date in connection with preparation activities reasonably required to make Services available to the Service Recipient.

“Term” shall have the meaning set forth in Section 4.1(a).

“Third Party Claim” shall have the meaning set forth in Section 8.1.

“Third-Party Costs” means all payments by the Service Provider to third parties, other third-party costs or fees, and any other out-of-pocket expenses of the Service Provider reasonably determined to be attributable to the provision of the Services.

“Third Party Recipient” shall have the meaning set forth in Section 2.8(e).

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“TSA Executive” shall have the meaning set forth in Section 2.7.

“TSA Manager” shall have the meaning set forth in Section 2.7.

“VAT” means:  (a) any tax imposed in compliance with the EU VAT Directive; and (b) any other tax of a similar nature, whether imposed in a member state of the European Union in substitution for, or levied in addition to, the tax referred to in the foregoing clause (a), or imposed elsewhere.

ARTICLE II

SERVICES; STANDARD OF PERFORMANCE

SECTION 2.1Services.

(a)Subject to the terms and conditions of this Agreement, Lilly shall use reasonable efforts to provide, or cause a member of the Lilly Group to provide, to Company and the applicable members of the Company Group (i) the services identified in Exhibit A, as such Exhibit A may from time to time be supplemented or modified in accordance with the provisions of this Agreement, and (ii) all services historically attendant to the provision of such identified services in (i) to the Animal Health Business by Lilly in the ordinary course in the twelve (12) months preceding the Effective Date ((i) and (ii) the “Lilly Scheduled Services”), along with the BAU Services, Program Services (if approved in accordance with Section 2.5) and In-Flight Projects (identified in Exhibit D) (such BAU Services, Program Services and In-Flight Projects collectively with the Lilly Scheduled Services, the “Lilly Services”).  It is understood that the Lilly Services do not include, and Lilly will not be obligated hereunder to perform or provide to Company or any members of the Company Group, any services not described herein or expressly set forth in Exhibit A, including, but not limited to, those services set forth in Exhibit B (the “Lilly Excluded Services”).  The provision to the Company or any member of the Company Group of the Lilly Excluded Services shall be discontinued on the Effective Date.

(b)Subject to the terms and conditions of this Agreement, Company shall use reasonable efforts to provide, or cause a member of the Company Group to provide, to Lilly and the Lilly Group (i) the services identified in Exhibit C, as such Exhibit C may from time to time be supplemented or modified in accordance with the provisions of this Agreement, and (ii) all services historically attendant to the provision of such identified services in (i) to any businesses of Lilly other than the Animal Health Business (the “Retained Business”) in the ordinary course in the twelve (12) months preceding the Effective Date ((i) and (ii) the “Company Services”).  It is understood that the Company Services do not include, and the Company will not be obligated hereunder to perform or provide to Lilly or any member of the Lilly Group, any services not described herein or expressly set forth in Exhibit C.  The provision to Lilly or any member of the Lilly Group of any such services shall be discontinued on the Effective Date.

(c)The Service Recipient may, during the five (5) month period following the Effective Date, request that the Service Provider provide any service (excluding Program Services, requests for which shall be governed by Section 2.5) that:  (i) is not a Scheduled Service set forth in Exhibit A or Exhibit C (as applicable) or an In-Flight Project in Exhibit D;

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(ii) was provided to the Animal Health Business or the Retained Business, as applicable, in the twelve (12) month period preceding the Effective Date; (iii) the Service Recipient believes is necessary to ensure the continuity of the Animal Health Business or the Retained Business, as applicable; and (iv) is not a Lilly Excluded Service set forth in Exhibit B (each such service an “Omitted Service”) by providing such request in writing to the Service Provider.  The Service Provider shall have the right, in its sole discretion, to determine whether any Omitted Service request should be approved.  If the Service Provider does approve any such request, the Parties shall, as promptly as reasonably practicable, negotiate in good faith with respect to the scope and duration of such Omitted Service and any other terms as reasonably required, and upon reaching agreement in that negotiation, the Parties shall amend Exhibit A,  Exhibit C or Exhibit D to include the Omitted Service and the Omitted Service shall be deemed included in the definition of Lilly Services or Company Services, as applicable, from and after the date of such amendment. Unless otherwise expressly agreed by the Parties, the Service Fees for any Omitted Services shall be in accordance with the pricing principle set forth in Section 5.1.

SECTION 2.2Standard and Manner of Performance.

(a)Except as otherwise provided herein or set forth on Exhibit A, Exhibit C or Exhibit D, the Service Provider shall use reasonable efforts to provide:  (i) the Services in accordance with applicable Law, at standards of performance and with the degree of care and skill substantially consistent with the standards of performance and degree of care and skill used to provide the Services to the Animal Health Business or the Retained Business, as applicable, in the twelve (12) months preceding the Effective Date; and (ii) the Program Services in accordance with applicable Law, at standards of performance and with a degree of care and skill substantially consistent with the standards of performance and degree of care and skill used to provide similar services to the Retained Business in the twelve (12) months preceding the Effective Date.

(b)The Service Provider shall have the right to perform its obligations under this Agreement through one or more of its Subsidiaries, and each of the foregoing may hire third party service providers to perform any of the Service Provider’s obligations hereunder, including to provide all or part of any Service hereunder; provided, however, that the Service Provider shall in all cases retain responsibility for the provision to the Service Recipient of the Services in accordance with this Agreement.

(c)As between the Parties, except as otherwise agreed by the Parties in writing, the Service Provider shall have sole discretion and authority with respect to designating, employing, assigning, compensating and discharging personnel and third party service providers in connection with performance of the Services.  All such personnel and third party service providers so assigned to perform the Services shall be appropriately skilled and qualified to do so as reasonably determined by the Service Provider.

(d)Notwithstanding anything to the contrary herein, but subject to the Service Provider’s obligations to provide Services under this Agreement, the Service Provider shall not be required to expand or modify any facilities, incur any capital expenditures, acquire any additional equipment or software, or retain any specific personnel or third party service providers in connection with its obligation to provide Services hereunder.

(e)The Parties hereby acknowledge and agree that in the course of providing Services in accordance with the terms of this Agreement, the Service Provider may make certain errors or mistakes, which such errors or mistakes are made in the ordinary course of business, are not in violation of the standard of performance required under Section 2.2(a) and are not the result of any gross negligence or willful misconduct by the Service Provider.  The Parties hereby further acknowledge and agree that the Service Provider shall not have any liability (including to the Service Recipient) in connection with this Agreement whether in contract, tort (including negligence) or otherwise for costs suffered or incurred by the Service Recipient as a result of such errors or mistakes, and in addition, any costs suffered or incurred by the Service Provider as a result of such errors or mistakes shall be reimbursed by the Service Recipient to the Service Provider in accordance with Section 5.1(a) as a Service Fee.

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SECTION 2.3In-Flight Projects.  Company shall, and shall procure that its Subsidiaries shall, participate in the projects set forth in Exhibit D (the “In-Flight Projects”).  Company shall pay Lilly a proportionate share of the Costs incurred by the Lilly Group in implementing the In-Flight Projects, as set forth in Exhibit D (the “In-Flight Project Costs”) in accordance with Section 5.1.

SECTION 2.4Business As Usual Services.  As set forth in Section 2.1(a), Lilly or a member of the Lilly Group shall, as part of the provision of the Lilly Services, provide the services ordinarily carried out by the Lilly Group as business as usual activities and such other measures undertaken by the Lilly Group that are implemented across a material proportion of the Retained Business for the benefit of the Lilly Group and which are required to be provided in connection with the provision of the Lilly Services (the “BAU Services”).  Company shall pay Lilly BAU Service Costs in accordance with Section 5.1.

SECTION 2.5Program Services.  To the extent that Company desires to receive (or desires that a member of the Company Group receive) a Program Service, it shall submit a written request to Lilly for the provision of such Program Service in the form set forth in Exhibit F.  Any such Program Service shall only be provided upon written consent of Lilly and shall be charged as a Program Charge in accordance with Exhibit E or as otherwise agreed upon by the Parties. Company shall pay Lilly Program Charges in accordance with Section 5.1.

SECTION 2.6Protection of Lilly Information.

(a)In providing Lilly Services to the Company Group, Lilly or the applicable member of the Lilly Group shall have the right to implement reasonable services, processes and business activities under which there will be no greater material risk or disruption to the relevant Service Provider than would exist in the absence of the provision of such Lilly Services.

(b)If, in connection with the provision of any Lilly Service under this Agreement, Lilly or the applicable member of the Lilly Group needs to implement any modifications or enhancements, including information technology connections, firewalls or the like (“Lilly Service Additions”) prior to the provision of any such Lilly Service and specifically in connection with the provision of any such Lilly Service and that would otherwise not need to be implemented in the absence of the provision of such Lilly Service, Lilly shall provide the Company with written notice of such Lilly Service Addition and the Costs of such implementation ninety (90) calendar days prior to the implementation of such Lilly Service Addition.  The Company shall have thirty (30) calendar days from the date of receipt of such notice to provide Lilly with written confirmation as to whether it desires for such Lilly Service Addition to be implemented.  If the Company does not timely provide such confirmation or otherwise confirms that it does not desire such Lilly Service Addition to be implemented, Lilly shall not implement such Lilly Service Addition and shall thereafter have no obligation to provide the relevant Lilly Service under this Agreement.  If the Company does timely provide such confirmation that it desires such Lilly Service Addition to be implemented, the Costs of implementing such measures shall be borne by Company and incorporated into the relevant Service Fee.

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SECTION 2.7Governance.  Each Party shall designate:  (a) a local representative with overall responsibility for managing day-to-day service and dealing with operational matters at a local level with respect to each of the local jurisdictions in which Services shall be provided (each, a “Local Service Lead”); (b) global function leads for each functional category of Services (each, a “Global Function Lead”); and (c) one (1) individual to be the primary liaison between the Parties for the provision of and the transfer of responsibility for the Services (each, a “TSA Manager”).  A Party may replace any of its Local Service Leads, Global Function Leads or TSA Manager at any time upon written notice to the other Party.  The Parties agree that any issues arising under this Agreement (including in relation to a particular Service) will be raised first between the Local Service Leads responsible for the local jurisdiction of the relevant Service and then to the Global Function Leads responsible for the relevant Service function before being referred to the TSA Managers.  All of the Local Service Leads and Global Function Leads, under the direction of the TSA Managers, shall meet regularly in person, telephonically, or as they otherwise agree, at regular intervals agreed by the TSA Managers during the Term, to discuss any issues arising under this Agreement that have not been resolved by the Local Service Leads and Global Function Leads and the need for any modifications or additions to this Agreement.  Each Party shall designate a senior executive to supervise the activity of the relevant TSA Managers (the “TSA Executive”).  The TSA Executives shall meet at least quarterly during the Term in person, telephonically or as they otherwise agree, to review delivery of Services and resolve disputes (in accordance with Article IX) and perform such other activities as the TSA Executives may agree.

SECTION 2.8Service Changes.

(a)Subject to Section 2.8(b) and Section 2.8(c) (as applicable), the Service Provider shall be required to provide the Services only for the benefit of the Service Recipient, and if any Service was provided by the Service Provider to the Animal Health Business or the Retained Business, as applicable, only of the same scope, and only for the same volume of Services (plus any organic internal growth in such volume that is reasonably expected as of the Effective Date), and only to the same locations, that such Services were provided by the Service Provider to the Animal Health Business or the Retained Business, as applicable, in the ordinary course as of the Effective Date.

(b)To the extent that Service Recipient desires a change to the scope or volume of a Scheduled Service from the scope or volume at which such Scheduled Service was provided by the Service Provider to the Animal Health Business or the Retained Business, as applicable, in the ordinary course as of the Effective Date (a “Service Change”), it shall submit such a written request for such Service Change to the Service Provider in the form set forth in Exhibit F.  Any Service Change shall only be implemented upon written consent of the Service Provider, to be granted in its sole discretion; such consent will include, if applicable, a good faith agreement in writing by both Parties of the increase or decrease in Service Fees as a result of such Service Change. All Costs incurred by Service Provider (other than those already included in any changed Service Fees) in providing such changed scope or volume of Scheduled Services shall be borne by the Service Recipient.

(c)To the extent that Service Recipient desires to change the location to which:  (i) any Scheduled Service is provided from the location to which such Scheduled Service

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was provided by the Service Provider to the Animal Health Business or the Retained Business, as applicable, in the ordinary course as of the Effective Date; or (ii) any In-Flight Project, BAU Service or Program Service is initially provided (each of (i) and (ii) an “Approved Service Change”), it shall submit written notice of such Approved Service Change to Service Provider, and the Parties will work together in good faith to implement such Approved Service Change, including agreeing in good faith in writing as to the increase or decrease in Service Fees as a result of such Approved Service Change. All Costs incurred by Service Provider (other than those already included in any changed Service Fees) in providing such relocation of Services shall be borne by the Service Recipient.

(d)To the extent that the Service Recipient believes in good faith that a change to the term or scope of a Service or the relocation of a Service is required to remain in compliance with applicable Law (a “Compliance Service Change”), it shall submit a written request for such Compliance Service Change to the Service Provider in the form set forth in Exhibit F.  If the Service Provider agrees that such Compliance Service Change is so required, the Parties will work together in good faith to implement such Compliance Service Change, including agreeing in good faith in writing as to the increase or decrease in Service Fees as a result of such Compliance Service Change.  If the Service Provider does not agree that such Compliance Service Change is so required and the Service Recipient still desires such Compliance Service Change, the Service Recipient shall provide the Service Provider with a good faith written opinion from a relevant subject matter expert which confirms that such Compliance Service Change is so required.  After the Service Provider has had opportunity to review such opinion and engage, as necessary, with the subject matter expert, such Compliance Service Change shall only be implemented upon written consent of the Service Provider, to be granted in its sole discretion; such consent will include, if applicable, a good faith agreement in writing by both Parties of the increase or decrease in Service Fees as a result of such Compliance Service Change.  All Costs incurred by the Service Provider (other than those already included in any changed Service Fees) in providing any changed scope or volume or relocation of Services shall be borne by the Service Recipient.

(e)To the extent that a Service Recipient desires to pass through its receipt of a Service to a third party (“Third Party Recipient”) in connection with a sale or divestiture of a business, product or asset to such Third Party Recipient (whether by sale, license or otherwise) (a “Service Recipient Change”), it shall submit a written request for such Service Recipient Change to the Service Provider in the form set forth in Exhibit F.  Any Service Recipient Change shall only be allowed upon written consent of the Service Provider, to be granted in its sole discretion; with the understanding that the Service Provider anticipates that any such consent would only be granted on condition that the Service Recipient enters into a written agreement (such agreement to be approved in advance by the Service Provider) with the Third Party Recipient whereby such Third Party Recipient agrees to be bound by terms and conditions that are no less restrictive than those set forth in this Agreement.  The Service Recipient shall continue to be fully liable to the Service Provider (including for the payment of all Service Fees related to the relevant Service being passed through to the Third Party Recipient) and, as between the Parties, to all other Persons, for the failure of any Third Party Recipient to comply with such written agreement to the same extent that the Service Recipient would have been had the Service Recipient failed to comply with this Agreement.  Any such written agreement shall automatically terminate upon the termination of this Agreement or the relevant Service that is being passed through to such

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Third Party Recipient.  The Service Provider’s consent of any Service Recipient Change shall also be conditioned upon a ten percent (10%) surcharge on the relevant Service Fees.  All Costs incurred by the Service Provider (other than those already included in any changed Service Fees) in allowing the Service Recipient’s pass-through of any Service to a Third Party Recipient (including the implementation of any new services or protections that are required by the Third Party Provider) shall be borne by the Service Recipient.

SECTION 2.9Changes to the Manner of Performance.  The Service Provider may make changes from time to time in the manner of performing the Services if it is making similar changes in performing services for itself or its Subsidiaries; provided that the Service Provider: (a) may not terminate any Service, except pursuant to Article IV; and (b) will use reasonable efforts to provide the Service Recipient with at least ninety (90) calendar days’ prior written notice of any such changes that are material to the Service Recipient’s operation of its business.  Nothing in this Agreement shall require the Service Provider to provide Services at a level that is greater than the level at which the Service Provider is then providing comparable services to itself or its Subsidiaries; provided, however, that if the Service Provider ceases to provide such a comparable service to itself or its Subsidiaries, then the Service Provider shall, until expiration or termination in accordance with Article IV, continue to provide such Services to the Service Recipient at the same level at which such Services are then being provided to the Service Recipient.

SECTION 2.10Third Party Terms and Conditions; Consents.  Each Service Recipient hereby acknowledges and agrees that the Services provided by the Service Provider through third party service providers or using third party assets, including Intellectual Property, are subject to the terms and conditions of any applicable agreements with such third parties.  Additionally, all Service Recipients shall cooperate with and assist each relevant Service Provider in obtaining any consent, authorization, order or approval of, or any exemption by, any third party (each an “Approval”) required to be obtained by the Service Provider (or its Subsidiaries) or made by third party service providers for the performance of the Service Provider’s obligations under this Agreement, including any Approval, the need for which may arise as the result of the Company no longer qualifying as a Subsidiary or Affiliate of Lilly from and after the Distribution or Other Disposition.  Notwithstanding the foregoing, (a) neither Party shall be obligated to incur any cost to obtain any such Approval, except that if any monies must be expended to pay for an Approval, or for the assignment of or for the purchase of any Intellectual Property or other assets to provide the Services to the Service Recipient, such costs shall be borne by the Service Recipient; (b) in no event shall the Service Recipient communicate directly with any relevant third party with respect to any Approval without the Service Provider’s written consent; and (c) with respect to any Service identified as a “Real Estate” Scheduled Service in Exhibit A or Exhibit C (as applicable), the Service Provider shall seek any relevant Approvals only to the extent such Service Provider, in good faith, deems such course of action to be advisable, taking into consideration certain business factors, including the relevant Service Period and the potential difficulty or consequence of requesting such Approvals.  If the Service Provider is unable to obtain any Approvals required hereunder, the Parties shall use commercially reasonable efforts to: (i) negotiate in good faith reasonable modifications of the Services, if practicable, such that such Approvals are not required; and (ii) implement any such modifications. The Service Provider will not be in breach of this Agreement as a result of any non-performance of, or other effect upon, any applicable Services as a result of any failure to obtain any Approvals, so long as it has otherwise complied with this Section 2.10.

SECTION 2.11Transitional Nature of Services; Exit Plan and Assistance.  The Parties hereto acknowledge the transitional nature of the Services.  Accordingly, as promptly as

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practicable following the execution of this Agreement, each Party agrees to use its reasonable best efforts to make a transition of each Service to its own internal organization or to obtain alternate third party sources to provide the Services.  In connection therewith, each Party shall comply with all provisions of the detailed written exit plan which sets forth how all members of such Party’s Group will transition from each of the Scheduled Services provided to such Party hereunder in a timely and efficient manner without material risk or disruption to either Company or Lilly and no later than the expiration of the relevant Service Period for each such Scheduled Service (each, an “Exit Plan”).  Each Party’s Exit Plan for each Scheduled Service it receives hereunder shall be provided to the other Party no later than October 31, 2018, for any Scheduled Service scheduled to be terminated (in whole or in part) in calendar year 2019. For any Scheduled Service scheduled to be terminated (in whole or in part) on or after January 1, 2020, the Party receiving Services shall provide a preliminary Exit Plan to the other Party no later than March 31, 2019 (which contains, at a minimum, such Party’s good faith estimate of the exit or termination date for such Scheduled Service) and a final and binding Exit Plan no later than June 30, 2019 (which contains an exit or termination date that is substantially the same as the exit or termination date provided for such Scheduled Service in the preliminary Exit Plan).  Each Exit Plan shall be subject to the other Party’s written approval, which shall not be unreasonably withheld or delayed.  Each Party shall, at the other Party’s sole cost and expense, provide the other Party with assistance reasonably necessary to transition the Scheduled Services in accordance with the Exit Plan; provided that each Party shall only be obligated to provide such assistance that is set forth in the Exit Plan.  The specific services and timing in connection with such assistance shall be as mutually agreed to by the Parties.  Any Costs incurred by each Party in connection with providing such assistance shall be a Service Exit Cost and shall be paid by the other Party in accordance with Section 5.1.  For clarity, notwithstanding the foregoing, neither Party shall be obligated to provide any services that either: (a) such Party cannot provide using its then-current ordinary course resources and capabilities, giving due consideration to other obligations; or (b) the other Party is reasonably able to provide to itself or that are reasonably obtainable from third party service providers.  The foregoing assistance is deemed a “Service” for purposes of this Agreement.

SECTION 2.12Cooperation.

(a)The Service Recipient agrees that it shall timely provide to the Service Provider, at no cost to the Service Provider, access to such personnel, facilities, assets and information, books and records of the Service Recipient, and provide timely decisions, approvals and acceptances, in each case as may be reasonably necessary to enable the Service Provider to perform its obligations under this Agreement in a timely and efficient manner.

(b)Without limiting the foregoing in this Section 2.12, each Party shall use commercially reasonable efforts to cooperate with the other Party in all matters relating to the provision and receipt of the Services and to minimize the expense, distraction and disturbance to each Party, and shall perform all obligations hereunder timely and in good faith and in accordance with principles of fair dealing.  Such cooperation shall include: (i) the execution and delivery of such further instruments or documents as may be reasonably requested by the other Party to enable the full performance of each Party’s obligations hereunder; and (ii) notification of the other Party in advance of any changes to a Party’s operating environment or personnel, and working with the other Party to minimize the effect of such changes.

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SECTION 2.13Compliance.

(a)The Services provided hereunder may be provided to all members of the Company Group or the Lilly Group, as applicable, and the receipt of the Services may involve the Company Group’s or the Lilly Group’s, as applicable, third party service providers, subcontractors and consultants.  Each Party shall be responsible for its Subsidiaries’, and its and their third party service providers’, subcontractors’ and consultants’, compliance with the terms and conditions of this Agreement.

(b)Each Party acknowledges and agrees that the other Party shall not be required to provide any Service to the extent that the provision of such Service would require any member of the Lilly Group or the Company Group, as applicable, or any of their respective directors, officers, employees or agents to violate:  (i) any applicable Laws (including the U.S. Foreign Corrupt Practices Act and the U.K. Bribery Act 2010); or (ii) any internal policies or procedures.  Each Party shall at all times comply with all applicable Laws in connection with the provision and receipt of Services.

(c)Unless otherwise agreed by the Parties in writing, each Party shall and shall cause each member of the Company Group or the Lilly Group, as applicable, receiving Services hereunder to follow the policies, procedures, regulations and/or good industry practice (e.g., in accordance with ISO 27001, ISO 27017, ISO 27018, or industry best standards) with respect to the Services followed by the Service Provider, including those in effect immediately prior to the Effective Date and any changes thereto required due to changes in applicable Law (or changes in the interpretation or enforcement of applicable Law) or due to the Transactions following the Effective Date.  Without limiting the foregoing, in connection with Services related to reimbursement of personnel time or expenses, each Party agrees that it shall audit and monitor such reimbursements for improper activity.  Without limiting the foregoing, the Service Recipient shall comply with all Service Provider policies, procedures, regulations, and good industry practice (e.g., in accordance with ISO 27001, ISO 27017, ISO 27018, or industry best standards) relating to the continuity of business, including information technology and security requirements and information protection reasonably requested by Service Provider.  Each Party shall comply with and shall cause each member of the Company Group or the Lilly Group, as applicable, to comply at all times with all applicable Laws in connection with the Services and the operation of the Animal Health Business or the Retained Business, as applicable, from and after the Effective Date.  Any costs or expenses associated with any compliance-related audit of a Party or any member of the Company Group or the Lilly Group, as applicable, shall be borne by such audited Party if any material non-compliance is found, and borne by such auditing Party if the audited Party is found to be materially compliant.

SECTION 2.14Internal Audits of Lilly Managed Controls and Processes.  The Parties acknowledge and agree that Lilly will, in the ordinary course of its business, conduct audits and testing of certain controls, processes and procedures that relate to the Lilly Services provided to Company under this Agreement (a “Lilly Managed Control or Process”).  Lilly agrees that as soon as reasonably practicable following the completion of such audit and testing, Lilly will provide Company with reasonable access to the audit or controls testing documentation for any such Lilly Managed Control or Process that is material to the Company’s business.  Notwithstanding the foregoing, Lilly’s responsibility shall be limited to providing reasonable

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access to audit or controls testing documentation it creates in the ordinary course of its business and Lilly shall have no responsibility to conduct any particular audit or testing, create any specific documentation or to provide any interpretation of testing results, determination of the level of any potential deficiencies, risk assessments or materiality determinations (and, for clarity, the use of any such information provided by Lilly is solely Company’s responsibility, without limiting the last sentence of this Section 2.14).  To the extent required by Company in connection with its auditing requirements, Company shall have the right to perform or have Lilly perform, in each case at Lilly’s option and upon reasonable written notice, an audit and testing of any Lilly Managed Control or Process.  If Lilly agrees that Company may perform such audit and testing then, upon reasonable written notice to Lilly, Lilly shall permit Company representatives access during reasonable business hours and such audit may include reasonable testing procedures to cover key financial and information technology controls within Lilly Managed Controls or Processes, provided that, if any such audit or testing could provide or result in Company having access to any sensitive Information (as defined in the Separation Agreement) of Lilly (including CFR, tax and transfer pricing information), Lilly may request that Company appoint an independent third party audit firm reasonably acceptable to Lilly to conduct such audit and testing.  All costs of any such audits, including the costs of a third party audit firm, shall be borne by Company.  Within thirty (30) calendar days of completing such audit, Company shall submit a report to Lilly with its findings.  Any information obtained or observed by Company during an audit shall be subject to the confidentiality obligations set forth in Article III of this Agreement.  For clarity, unless the remediation or modification is necessitated by a change or discontinuation in Lilly Service or other action by Lilly, Lilly shall have no responsibility to conduct any remediation or modification of any Lilly Managed Control or Process unless otherwise agreed to by Lilly in advance in writing in each instance, and, if any such remediation or modification (to the extent so agreed by Lilly) is primarily for the benefit of Company, Company shall reimburse any Costs incurred by Lilly or a member of the Lilly Group in connection therewith.

SECTION 2.15Dependencies.

(a)To assist the Service Provider in performing the Services, each Service Recipient shall use reasonable efforts to satisfy any dependencies identified by the Service Provider to such Service Recipient that are applicable to the Service Provider’s performance of such dependent Services.

(b)The Service Provider shall not be liable to the Service Recipient for any failure to perform a Service, in whole or in part, to the extent that:

(i)such failure has been caused by the Service Recipient’s failure to satisfy a dependency identified to the Service Recipient; or

(ii)the Service Recipient’s gross negligence or willful misconduct has otherwise caused or contributed to such failure.

(c)If the Service Provider’s performance of its obligations under this Agreement is excused under Section 2.15(b), then the Service Provider shall:

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(i)notify the Service Recipient of the Service Recipient’s failure to satisfy the dependency, or such other instance of gross negligence or willful misconduct, promptly after it becomes aware of them;

(ii)continue to perform those of its obligations under this Agreement that are not prevented by the Service Recipient’s failure to satisfy the dependency or such other relevant instance of gross negligence or willful misconduct; and

(iii)no longer be obligated to provide such excused Service, in whole or in part, as applicable, during the period in which the relevant dependency(ies) are not satisfied in accordance with Section 2.15(a) or the Service Recipient’s gross negligence or willful misconduct continues.

(d)The Service Provider may, in providing Services, rely on the provision of instructions, data and information to it by the Service Recipient. The Service Provider shall not have any liability to the Service Recipient in connection with this Agreement whether in contract, tort (including negligence) or otherwise for Costs suffered or incurred by either Party as a result of:  (i) the inaccuracy, insufficiency or incompleteness of the instructions, data or information provided by the Service Recipient; or (ii) the Service Provider’s fulfillment of any Service Recipient request in connection with this Agreement.

ARTICLE III

CONFIDENTIALITY

SECTION 3.1Confidentiality.

(a)Each Party shall (and shall cause its Subsidiaries to) keep confidential any Confidential Information of the other Party or its Subsidiaries disclosed in connection with this Agreement, except as expressly agreed upon in writing by the other Party.

(b)The confidentiality obligations in Section 3.1(a) shall not apply to information which any Party or Subsidiary can demonstrate is required to be disclosed by applicable Law or the rules of any stock exchange or any Governmental Authority provided that in this event the Party which is obliged to disclose shall to the extent permitted by applicable Law use its commercially reasonable efforts to consult with the other Party in advance as to its form, content and timing.

(c)Each of the Parties undertakes that it (and its respective Subsidiaries) shall only disclose Confidential Information to its Representatives if it is reasonably required for purposes connected with this Agreement and only if the Representatives are informed of the confidential nature of the Confidential Information and the confidentiality obligations related thereto.  Each Party shall, and shall cause its Subsidiaries and its and their Representatives not to use or permit the use of, any Confidential Information of the other Party, except in furtherance of the exercise of such Party’s (or its Subsidiary’s or its or their Representative’s) rights and the performance of such Party’s (or its Subsidiary’s or its or their Representative’s) obligations under this Agreement.

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(d)If this Agreement terminates or expires, except as and solely to the extent required to remain in compliance with applicable Law, each Party shall (and shall cause its Subsidiaries and its and their Representatives to) as soon as practicable on request by the other Party:

(i)return to the other Party all written documents and other materials relating to this Agreement (including any Confidential Information) which the other Party (or its Subsidiaries or its or their Representatives) has provided to it, its Subsidiaries or its or their Representatives, or which has been provided on the other Party’s (or its Subsidiaries’ or its or their Representatives’) behalf, without keeping any copies of them;

(ii)destroy all information or other documents derived from the other Party’s or its Subsidiaries’ or its or their Representatives’ Confidential Information; and

(iii)so far as it is practicable to do so, expunge the other Party’s Confidential Information from any of its computers, word processors or other devices.

ARTICLE IV

TERM; TERMINATION

SECTION 4.1Term and Service Periods.

(a)This Agreement shall become effective upon the Effective Date and expire upon the expiration or termination of the last Service to expire or be terminated (the “Term”), unless earlier terminated in connection with Section 4.2(b) or Section 4.2(c).

(b)The Parties agree that, except as otherwise provided in this Agreement, each Scheduled Service shall commence on the Effective Date and shall terminate at the expiration of the “Service Period” set forth in Exhibit A or Exhibit C with respect to such Scheduled Service (each a “Service Period”), unless earlier terminated pursuant to Section 4.2.

(c)Unless otherwise agreed by the Parties in writing, at any time at least six (6) months prior to the expiration of the initial Service Period for a Scheduled Service, a Party may request that the initial Service Period for such Scheduled Service be extended, with any approval of such request for a Service Period extension being subject to the Service Provider’s sole discretion; provided, however, that the Service Provider shall have no obligation whatsoever to provide any Scheduled Service beyond a period of two (2) years after the expiration of the initial Service Period for such Scheduled Service.  If a Party desires to request that any approved extended Service Period be extended again, it must request such extension at least ninety (90) days prior to the expiration of the extended Service Period, and any approval of such request shall be subject to the Service Provider’s sole discretion.  In the event that Service Provider approves of either of the foregoing types of requests, the Parties shall amend Exhibit A or Exhibit C to extend the relevant Service Period and amend the Service Fees in accordance with Section 5.1(c), and such extended Service Period and amended Service Fees shall be deemed applicable from and after the date of such amendment.

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SECTION 4.2Termination.

(a)The Service Recipient may, in good faith, request termination of a Service (in whole or in part) by submitting a written request to the Service Provider at least ninety (90) calendar days (or any longer period that may be set forth for such Scheduled Service in Exhibit A or Exhibit C, if applicable) prior to the date that the Service Recipient desires such Service to terminate and cease being provided.  The Service Provider shall have thirty (30) calendar days (after receipt of such request) to review and provide the Service Recipient with a good faith estimate of the related Service Exit Costs (including the Service Exit Costs described in this Section 4.2(a)) that would be incurred in connection with such termination.  The Service Recipient shall then have thirty (30) calendar days (after receipt of such disclosed estimated Service Exit Costs) to provide the Service Provider with written confirmation as to whether it desires such requested termination of a Service.  If the Company does not timely provide such confirmation or otherwise confirms that it does not desire for such termination of a Service, the Service shall continue to be provided.  If the Company does timely provide such confirmation that it desires that such Service be terminated, the Service Provider shall have thirty (30) calendar days after receipt of such confirmation to approve such request in its sole discretion in accordance with the approach set forth in Exhibit G.  If the Service Provider approves any such request, the Service Recipient shall pay (in accordance with Section 5.1): (i) any Costs incurred by the Service Provider in connection with terminating such Service and (ii) in addition to the Costs set forth in (i), if such Service is identified as a “Real Estate” Scheduled Service in Exhibit A or Exhibit C (as applicable), any Service Fees the Service Recipient would have been required to pay in connection with its receipt of such “Real Estate” Scheduled Service under the relevant full Service Period.  Each of the foregoing in (i) and (ii) shall be treated as Service Exit Costs.  Upon the termination of a Service, the Service Recipient shall pay all undisputed amounts accrued for the relevant Service Fees that have not yet been paid.  In addition, the Service Recipient shall pay all Service Fees that it would have otherwise been required to pay for such Service for the entire calendar month in which the relevant termination takes effect.  For the avoidance of doubt, no Service Fees shall be charged for a terminated Service beginning on the first (1st) day of the calendar month following the calendar month in which such termination has taken effect.

(b)Either Party (the “Non-Breaching Party”) may terminate this Agreement at any time upon prior written notice to the other Party (the “Breaching Party”) if the Breaching Party has failed (other than pursuant to Section 11.8) to perform any of its material obligations under this Agreement, and such failure shall have continued without cure for a period of thirty (30) calendar days (or with respect to any failure by the Service Recipient to make any undisputed payment as provided for under this Agreement, five (5) Business Days) after receipt by the Breaching Party of a written notice of such failure from the Non-Breaching Party seeking to terminate this Agreement.  For the avoidance of doubt, each Party’s obligations under Section 2.10 shall be deemed to be material obligations under this Agreement.

(c)Either Party may terminate this Agreement at any time upon prior written notice to the other Party if the other Party undergoes a Change of Control.

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SECTION 4.3Effect of Expiration and Termination; Accrued Rights; Survival.

(a)Expiration and termination of this Agreement, in part or in its entirety, shall not extinguish any rights or obligations that have accrued to the benefit of either Party prior to such expiration or termination (as applicable), including any rights of the Service Provider to receive payment under Section 5.1.

(b)The following provisions of this Agreement, together with all other provisions of this Agreement that expressly specify that they survive, shall survive expiration or termination of this Agreement, in part or in its entirety:  Article I, Section 2.15(b), Section 2.15(d), Article III, Article VIII, Article IX and Article XI, and Section 4.3, Section 5.2, and Section 7.1.  For the avoidance of doubt, Lilly shall be under no obligation to provide any technical support for any migrated data, systems or applications following the termination date of any Service in respect thereof except to the extent that the need for technical support is a direct result of Lilly’s breach of this Agreement.

ARTICLE V

COMPENSATION

SECTION 5.1Compensation.

(a)Beginning on the Charge Commencement Date, the Service Recipient shall pay to the Service Provider in accordance with the terms of this Agreement:  (i) the Set-Up Costs; (ii) the Service Exit Costs; (iii) the In-Flight Project Costs; (iv) BAU Service Costs; (v) Program Charges and (vi) a fee for each Scheduled Service provided to the Service Recipient hereunder in accordance with the charges for such Scheduled Service set forth in Exhibit A or Exhibit C ((vi) the “Scheduled Fees” and, together with (i) through (v), the “Service Fees”).  To the extent that any Third-Party Costs are not reflected in the Service Provider’s calculation of the Service Fees under this Section 5.1(a), such Third-Party Costs shall be in addition to the Service Fee.  For clarity, all such Third-Party Costs will be passed through to the Service Recipient at the Service Provider’s cost without markup in accordance with this Article V and the Parties hereby acknowledge and agree that the Service Recipient shall not be doubly billed for any Service Fees, Third-Party Costs, Internal Costs, or any other costs or expenses that are owed under this Agreement.

(b)Pursuant to Section 5.1(a), it is the intent of the Parties that, for the calendar years 2018, 2019 and 2020 and January 1 through March 31, 2021, the Scheduled Fees be based on Costs.  On April 1, 2021, Lilly may by written notice increase all Scheduled Fees by a mark-up of seven percent (7%).  On and after January 1, 2022 and for each calendar year thereafter during the Term, all Scheduled Fees will have their price adjusted by a percentage equal to the percentage change in the Consumer Price Index (All Urban Consumers) issued by the United States Bureau of Labor Statistics over the prior year.  Notwithstanding the foregoing, if at any time a Party believes that (i) the Scheduled Fee contemplated by a specific Scheduled Service in Exhibit A or Exhibit C is materially insufficient or materially excessive, in each case by an amount equal to or greater than the Scheduled Service Margin with respect to compensation for the actual Cost (plus any applicable mark-up or surcharge after April 1, 2021)

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of providing such Scheduled Service it is obligated to provide hereunder or (ii) the aggregate total of the Scheduled Fees contemplated by all of the Scheduled Services in Exhibit A or Exhibit C, is materially insufficient or materially excessive, in each case by an amount equal to or greater than the Aggregate Scheduled Service Margin, in each case including as a result of a change in circumstances, it shall notify the other Party by or before the following August 1, and the Parties hereto will commence good-faith negotiations toward an agreement in writing as to the appropriate course of action with respect to pricing of such Scheduled Service(s) in the context of the annual discussions of each of the Parties’ business plans to ensure that the Service Provider is compensated in accordance with the foregoing principle.  If any such Scheduled Fee(s) are agreed to be adjusted as a result of such discussions, such adjusted Scheduled Fee(s) shall be effective as of the following January 1 and Exhibit A or Exhibit C, as applicable, shall be amended accordingly.  Without limitation of the foregoing, the Parties acknowledge and agree that additional employee hiring or retention costs not covered by any Service Fees may be reasonably incurred by a Service Provider to hire or retain necessary employees to provide a Service, which costs shall be for the account of the Service Recipient and shall be reimbursed by the Service Recipient to Service Provider in accordance with Section 5.1(a) as a Service Fee.  Prior to incurring any such employee hiring or retention costs, the Service Provider shall provide the Service Recipient with ninety (90) days’ written notice of the reasonable need to incur such costs.  The Service Recipient shall have thirty (30) calendar days from the date of receipt of such notice to provide the Service Provider with written confirmation as to whether it desires for such costs to be incurred in connection with the provision of the relevant Service.  If the Service Recipient does not timely provide such confirmation or otherwise confirms that it does not desire such costs to be incurred in connection with the provision of the relevant Service, the Service Provider shall not incur such costs and shall thereafter have no obligation to provide the relevant Service under this Agreement.  If the Service Recipient does timely provide such confirmation that it desires such costs to be incurred in connection with the provision of the relevant Service, such costs shall be borne by the Service Recipient and incorporated into the relevant Service Fee.

(c)If the Service Period of a Scheduled Service has been extended pursuant to Section 4.1(c), or a Service Recipient otherwise fails to exit a Scheduled Service upon the expiration of the initial Service Period of such Scheduled Service, then the Scheduled Fees payable on the expiration date of the initial Service Period with respect to such Scheduled Service, shall be subject to:  (i) a ten percent (10%) surcharge for the three (3) months after the expiration date of such initial Service Period; (ii) a twenty percent (20%) surcharge for the three (3) months following the period set forth in (i); (iii) a thirty percent (30%) surcharge for the six (6) months following the period set forth in (ii); and (iv) a fifty percent (50%) surcharge thereafter.  For the avoidance of doubt, any such surcharges shall be applied in addition to any mark-up on Scheduled Fees pursuant to Section 5.1(b).

SECTION 5.2Taxes.

(a)Service Fees are exclusive of any VAT chargeable with respect to the supply of Services under this Agreement.  To the extent any such Service Fee is subject to any VAT, or in the event of any amendment to VAT legislation or for any other reason the sums invoiced without VAT in accordance with this Agreement become or are subject to VAT, then the Service Recipient receiving such supply (and the invoices relating thereto) shall, in addition

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to the sums payable, pay the Service Provider, or its invoicing Subsidiary, on receipt of a valid VAT invoice, the full amount of VAT chargeable thereon.

(b)The Service Recipient shall be responsible for all goods and services, value added, sales, use, gross receipts, business, consumption and other similar taxes, levies and charges (other than income taxes) imposed by applicable taxing authorities attributable to the supply of Services or any payment hereunder, whether or not such taxes, levies or charges are shown on any invoices.  If the Service Provider is required to pay any part of such taxes, levies or charges, the Service Recipient shall promptly reimburse the Service Provider for such taxes, levies and charges.

(c)If applicable Law requires that an amount in respect of any taxes, levies or charges be withheld from any payment by the Service Recipient to the Service Provider under this Agreement, the amount payable to the Service Provider shall be increased as necessary so that, after the Service Recipient has withheld amounts required by applicable Law, the Service Provider receives an amount equal to the amount it would have received had no such withholding been required, and the Service Recipient shall withhold such taxes, levies or charges and pay such withheld amounts over to the applicable taxing authority in accordance with the requirements of the applicable Law and provide the Service Provider with a receipt confirming such payment.  The Parties shall reasonably cooperate to determine whether any such deduction or withholding applies to the Services, and if so, shall further reasonably cooperate to minimize applicable withholding taxes.

(d)Cross-border Services to be performed hereunder may fall within Article 44 of the EU VAT Directive or the relevant equivalent national provision or any similar provision applying outside the European Union, such that the Service Recipient, and not the Service Provider, is obliged to account for VAT chargeable in relation to the Services.  In such case, the Service Recipient hereby agrees that with respect to each applicable jurisdiction, the Service Recipient Party (whether Lilly or Company) will itself account for VAT in its own jurisdiction on the performance of such cross-border Services made to it hereunder and that the Service Provider Party (whether Lilly or Company) will (to the extent legally possible), issue invoices without local VAT.  The Service Recipient agrees that with respect to each such jurisdiction, it will provide on request to the Service Provider, a valid VAT registration number and certificate (or equivalent documentation) in the jurisdiction with respect to the receipt of such cross-border Services.

(e)References in this Agreement to “Costs” or “costs” incurred by a Party shall include any amount of VAT comprised in such Costs or costs, other than any such amount of VAT which that Party (or, if relevant, any other member of such Party’s Group for VAT purposes) is entitled to recover (whether by credit, repayment or otherwise).

ARTICLE VI

PAYMENT TERMS

SECTION 6.1Invoicing.  Except as otherwise provided herein or otherwise specified in Exhibit A, Exhibit C or Exhibit D, Lilly and Company shall each invoice the other Party for

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the Scheduled Fees and In-Flight Project Costs for each of the applicable Services performed hereunder by it or a member of its Group as a Service Provider as of the Charge Commencement Date for such other Party or a member of its Group as a Service Recipient, and if applicable, any Third-Party Costs incurred in connection therewith and not included in such Scheduled Fees or In-Flight Project Costs, on a monthly basis at the end of each month.  Any Set-Up Costs, Service Exit Costs, BAU Service Costs and Program Charges shall be invoiced by either Party as soon as reasonably practicable after such Party (or a member of its Group) has incurred the relevant Costs as a Service Provider on or after the Charge Commencement Date; provided, however, that any such Set-Up Costs, Service Exit Costs, BAU Service Costs and Program Charges incurred shall, in any event, be invoiced at least on a quarterly basis.  The invoiced Party shall pay the invoicing Party all amounts as may be due hereunder within sixty (60) calendar days from the date of invoice in U.S. dollars; to the extent that any Service Fees are required to be converted into U.S. dollars in connection with the foregoing, such Service Fees shall be converted into U.S. dollars in accordance with the currency conversion rate mechanisms set forth in Exhibit H.  All such invoices shall be delivered to the invoiced Party.  Any correspondence concerning such invoices shall be made to contacts at each Party designated within thirty (30) calendar days after the Effective Date, or as the relevant Service Provider shall later designate to the Service Recipient.

SECTION 6.2Interest.  Except as expressly provided to the contrary in this Agreement, any amounts not paid when due pursuant to this Agreement (and any amounts billed or otherwise invoiced or demanded and properly payable) that are not paid within sixty (60) calendar days of such bill, invoice or other demand shall accrue interest a rate per annum equal to the Prime Rate plus five percent (5%) from but excluding the due date to and including the date of actual payment calculated on a daily basis until such payment is settled.

ARTICLE VII

INTELLECTUAL PROPERTY AND DATA

SECTION 7.1Ownership of Intellectual Property and Data.

(a)Each Party shall be the sole and exclusive owner of all Intellectual Property that it or any member of its Group, or any of its or their third party service providers, as applicable, creates under this Agreement, including any modifications to its systems and software, and any Intellectual Property created in performance of the Services (except as expressly provided in Section 7.1(b)).

(b)All data collected or created pursuant to a Company Service and on behalf of Company shall be owned by Company, except that Lilly shall own technical data generated or created in providing the Company Services that relate to the operation of Lilly’s business infrastructure.

(c)To the extent that any right, title or interest in or to any Intellectual Property or data vests in a member of a Group, by operation of Law or otherwise, in a manner contrary to the agreed upon ownership as set forth in this Agreement, either Lilly or Company, as applicable, shall, and hereby does, on behalf of itself and such member of its Group, perpetually

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and irrevocably assign to the other Party or a member of such Party’s Group any and all such right, title and interest throughout the world in and to such Intellectual Property and data, free and clear of all liens and encumbrances, without the need for any further action by any Group.  Each Party shall execute any documentation reasonably requested by the other Party to memorialize such assignment.  Except as set forth in Section 7.1(a) and Section 7.1(b), Lilly, on the one hand, and Company, on the other hand, retains all right, title and interest in and to their respective Intellectual Property and data, and no other license or other right, express or implied, is granted to any member of either Group to the other Group’s Intellectual Property or data under this Agreement.

SECTION 7.2License Grants.

(a)Lilly hereby grants (and shall cause relevant members of the Lilly Group to grant) to the Company Group a non-exclusive, non-sublicensable, non-transferable, limited license to use during the Term the Intellectual Property provided by Lilly (or any relevant members of the Lilly Group) to the Company Group under this Agreement, solely to the extent required to receive or provide the Services, as applicable.

(b)Company hereby grants (and shall cause relevant members of the Company Group to grant) to the Lilly Group a non-exclusive, non-sublicensable, non-transferable, limited license to use during the Term the Intellectual Property provided by Company (or any relevant members of the Company Group) to the Lilly Group under this Agreement, solely to the extent required to receive or provide the Services, as applicable.

ARTICLE VIII

INDEMNIFICATION; LIMITATIONS OF LIABILITY; DISCLAIMERS

SECTION 8.1Indemnification.  Each Party agrees to indemnify, defend and hold harmless the other Party and any member of such other Party’s Group and its or their Representatives from and against all Losses resulting from or otherwise relating to a third party action, suit, proceeding or claim (“Third Party Claim”) involving gross negligence or willful misconduct by the first Party, any member of such first Party’s Group or its or their Representatives connection with the performance of its obligations under this Agreement.

SECTION 8.2Procedures for Indemnification of Third Party Claims.  For the avoidance of doubt and subject to the provisions set forth in Section 8.1, the procedures for each Party’s indemnification obligations under this Agreement with respect to Third Party Claims shall be governed, mutatis mutandis, by Sections 4.05 and 4.06 of the Separation Agreement.

SECTION 8.3Limitations of Liability.

(a)Limitation of Liability for Service Noncompliance.  Except with respect to a Party’s gross negligence or willful misconduct, each Party’s maximum liability to, and the sole remedy of, the other Party under or in connection with Service Noncompliance under this Agreement (including any breach hereof) shall be a refund of the Service Fees paid for the particular Service, except that if the Service Provider completely fails to provide a Service in its entirety and fails to resume providing such service within thirty (30) calendar days following

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written notice thereof from the Service Recipient, the Service Provider’s liability may also include:  (i) the Service Recipient’s incremental cost of performing the Service itself; or (ii) the Service Recipient’s incremental cost of obtaining the Service from a third party; provided that, in each case, the Service Recipient shall exercise its reasonable best efforts under the circumstances to minimize the cost of any such alternatives to the Services by selecting the most cost-effective alternatives which provide the functional equivalent of the Services replaced and in any event, the Service Provider’s maximum liability shall be subject to Section 8.3(b).  Each Party agrees that the receipt of Services shall be an unqualified acceptance of, and a waiver by, such Party of its rights to assert any claim with respect to Service Noncompliance unless it gives written notice of the Service Noncompliance to the other Party within the later of: (i) thirty (30) calendar days after the date on which such asserting Party became, or should have become, aware of the facts, events, occurrences or circumstances underlying such claim; or (ii) sixty (60) calendar days after receipt of the Service by such asserting Party.

(b)General Limitation of Liability.  Notwithstanding anything to the contrary contained herein, in no event shall either Party’s liability under or in connection with this Agreement or the Services in the aggregate exceed the amount of Service Fees paid by the other Party to such Party under Section 5.1 in the twelve (12) months preceding the related breach, claim or action.

(c)Special Damages.  Notwithstanding any other provision of this Agreement to the contrary, and except as provided below, in no event will either Party or any Person in its respective Group be liable for special, incidental, indirect, collateral, consequential or punitive damages or lost profits suffered by an indemnitee, however caused and on any theory of liability, in connection with any damages arising hereunder or thereunder; provided, however, that to the extent an indemnitee is required to pay any damages, including special, incidental, indirect, collateral, consequential or punitive damages or lost profits, to a Person who is not in either Group in connection with a Third Party Claim and is entitled to indemnification hereunder therefor, such damages will constitute direct damages and will not be subject to the exclusion set forth in this Section 8.3(c).

(d)Disclaimer of Representations and Warranties.  EACH OF LILLY (ON BEHALF OF ITSELF AND EACH MEMBER OF THE LILLY GROUP) AND COMPANY (ON BEHALF OF ITSELF AND EACH MEMBER OF THE COMPANY GROUP) UNDERSTANDS AND AGREES THAT, EXCEPT AS EXPRESSLY SET FORTH HEREIN OR IN THE SEPARATION AGREEMENT OR IN ANY OTHER ANCILLARY AGREEMENT, NEITHER PARTY MAKES ANY EXPRESS REPRESENTATIONS OR WARRANTIES, AND NO REPRESENTATION OR WARRANTY SHALL BE IMPLIED UNDER THIS AGREEMENT OR AT LAW, WITH RESPECT TO THIS AGREEMENT, THE SERVICES TO BE PROVIDED UNDER THIS AGREEMENT OR OTHERWISE, INCLUDING WARRANTIES OF HABITABILITY, MERCHANTABILITY, FITNESS FOR ANY PARTICULAR PURPOSE, NON-INFRINGEMENT, VALIDITY AND ENFORCEABILITY, AND ALL OTHER WARRANTIES ARISING UNDER THE UNIFORM COMMERCIAL CODE (OR SIMILAR FOREIGN LAWS).

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ARTICLE IX

DISPUTE RESOLUTION

SECTION 9.1Dispute Resolution.  Prior to the initiation of any Action relating to this Agreement and subject to the obligations set forth in Section 2.7 and Section 5.1(b), any dispute, controversy or claim arising out of or in connection with this Agreement or the transactions contemplated hereby shall first be referred to the relevant Local Service Leads, Global Function Leads and TSA Managers (in the foregoing order), who shall attempt in good faith to resolve any such dispute, controversy or claim.  If such dispute, controversy or claim cannot be resolved by each of the relevant Local Service Leads, Global Function Leads and TSA Managers within three (3) consecutive thirty (30) calendar day resolution periods beginning on the relevant date of referral to such Local Service Lead, Global Function Lead or TSA Manager, it shall be referred to the TSA Executives, who shall attempt, in good faith, to resolve such dispute, controversy or claim.  Prior to the Distribution or Other Disposition, any dispute, controversy or claim that is not resolved by the TSA Executives may be resolved by Lilly in its sole discretion.  Following the Distribution or Other Disposition, any dispute, controversy or claim that is not resolved by the TSA Executive shall be referred to the Chief Executive Officer of Company and the Chief Financial Officer of Lilly for resolution.

ARTICLE X

LOCAL SERVICE AGREEMENTS

SECTION 10.1Local Service Agreements.  Each of the Parties recognizes and agrees that there may be a need to document separately the Services provided hereunder in various countries from time to time to the extent necessary to comply with applicable Law or as otherwise agreed by the Parties.  If such an agreement is required by applicable Law in the reasonable mutual determination of the Parties, or the Parties mutually determine it is otherwise necessary or desirable, Lilly and the Company shall cause each of their appropriate Subsidiaries, respectively, to enter into local implementing agreements of this Agreement (each, a “Local Service Agreement”); provided, however, that the execution or performance of any such Local Service Agreement shall in no way alter or modify the principle of any term or condition hereof and the sole remedies under such Local Service Agreement shall be the remedies (subject to each and every limitation) set forth herein. Any references herein to this Agreement and the Services to be provided hereunder shall include any Local Service Agreement and the Local Services (as shall be defined in the Local Agreement) to be provided thereunder.

ARTICLE XI

MISCELLANEOUS

SECTION 11.1Counterparts; Entire Agreement; Conflicting Agreements.

(a)This Agreement may be executed in one (1) or more counterparts, all of which shall be considered one (1) and the same agreement, and shall become effective when one (1) or more counterparts have been signed by each Party and delivered to the other Party.  Execution

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of this Agreement or any other documents pursuant to this Agreement by facsimile or other electronic copy of a signature shall be deemed to be, and shall have the same effect as being, executed by an original signature.

(b)This Agreement, the Separation Agreement, the other Ancillary Agreements, the exhibits, the schedules and appendices hereto and thereto contain the entire agreement between the Parties with respect to the subject matter hereof, supersede all previous agreements, negotiations, discussions, writings, understandings, commitments and conversations with respect to such subject matter and there are no agreements or understandings between the Parties with respect to such subject matter other than those set forth or referred to herein or therein.

(c)In the event of any inconsistency between this Agreement and any other agreement entered into in connection with the Transaction (including the Separation Agreement), the Separation Agreement shall prevail.  In the event and to the extent that there shall be a conflict between the provisions of this Agreement and the provisions of the Separation Agreement, the Separation Agreement shall control.

SECTION 11.2No Construction Against Drafter.  The Parties acknowledge that this Agreement and all the terms and conditions contained herein have been fully reviewed and negotiated by the Parties.  Having acknowledged the foregoing, the Parties agree that any principle of construction or rule of Law that provides that, in the event of any inconsistency or ambiguity, an agreement shall be construed against the drafter of the agreement shall have no application to the terms and conditions of this Agreement.

SECTION 11.3Governing Law.  This Agreement shall be governed by and construed and interpreted in accordance with the Laws of the State of Indiana, without regard to the conflict of laws principles thereof that would result in the application of any Law other than the Laws of the State of Indiana.

SECTION 11.4Assignability.  This Agreement shall be binding upon and inure to the benefit of the Parties hereto and their respective successors and permitted assigns; provided, however, that no Party hereto may assign its respective rights or delegate its respective obligations under this Agreement without the express prior written consent of the other Party or Parties hereto.

SECTION 11.5Third Party Beneficiaries.  Except for the indemnification rights under this Agreement of any Lilly Indemnitee or the Company Indemnitee in their respective capacities as such: (a) the provisions of this Agreement are solely for the benefit of the Parties and are not intended to confer upon any Person (including employees of the Parties hereto) except the Parties any rights or remedies hereunder; and (b) there are no third party beneficiaries of this Agreement and this Agreement shall not provide any third person (including employees of the Parties hereto) with any remedy, claim, liability, reimbursement, claim of action or other right in excess of those existing without reference to this Agreement.

SECTION 11.6Notices.  All notices or other communications under this Agreement shall be in writing and shall be deemed to be duly given when (a) delivered in person or (b)

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deposited in the United States mail or private express mail, postage prepaid, addressed as follows:

If to Lilly, to:

Eli Lilly and Company

Lilly Corporate Center

Indianapolis, Indiana 46285

Attention:       Chief Financial Officer

With a copy to:

Eli Lilly and Company

Lilly Corporate Center

Indianapolis, Indiana 46285

Attention:       General Counsel

If to Company to:

Elanco Animal Health Incorporated

2500 Innovation Way

Greenfield, Indiana 46140

Attention:       Chief Financial Officer

With a copy to:

Elanco Animal Health Incorporated

2500 Innovation Way

Greenfield, Indiana 46140

Attention:       General Counsel

Any Party may, by notice to the other Party, change the address to which such notices are to be given.

SECTION 11.7Severability.  If any provision of this Agreement or the application thereof to any Person or circumstance is determined by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions hereof or the application of such provision to Persons or circumstances or in jurisdictions other than those as to which it has been held invalid or unenforceable, shall remain in full force and effect and shall in no way be affected, impaired or invalidated thereby, so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner adverse to any Party.  Upon such determination, the Parties shall negotiate in good faith in an effort to agree upon a suitable and equitable provision to effect the original intent of the Parties as closely as possible in a mutually acceptable manner in order that the rights and obligations contemplated by this Agreement be fulfilled as originally contemplated to the greatest extent possible.

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SECTION 11.8Force Majeure.  No Party shall be deemed in default of this Agreement to the extent that any delay or failure in the performance of its obligations under this Agreement results from any cause beyond its reasonable control and without its fault or negligence, such as acts of God, acts of civil or military authority, embargoes, epidemics, war, riots, insurrections, fires, explosions, earthquakes, floods, unusually severe weather conditions, labor problems or unavailability of parts, or, in the case of computer systems, any failure in electrical or air conditioning equipment.  In the event of any such excused delay, the time for performance shall be extended for a period equal to the time lost by reason of such delay.

SECTION 11.9Headings.  The article, section and paragraph headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

SECTION 11.10Waivers of Default.  Waiver by any Party of any default by the other Party of any provision of this Agreement shall not be deemed a waiver by the waiving Party of any subsequent or other default, nor shall it prejudice the rights of the other Party.

SECTION 11.11Specific Performance.  In the event of any actual or threatened default or breach of, any of the terms, conditions and provisions of this Agreement, the Party or Parties who are or are to be thereby aggrieved shall be entitled to seek an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof, in each case (a) without the requirement of posting any bond or other indemnity and (b) in addition to any other remedy to which it or they may be entitled, at Law or in equity.  Such remedies shall be cumulative with and not exclusive of and shall be in addition to any other remedies which any Party may have under this Agreement, or at Law or in equity or otherwise, and the exercise by a Party hereto of any one remedy shall not preclude the exercise of any other remedy.

SECTION 11.12Amendments.  No provisions of this Agreement shall be deemed waived, amended, supplemented or modified by any Party, unless such waiver, amendment, supplement or modification is in writing and signed by the authorized representative of the Party against whom it is sought to enforce such waiver, amendment, supplement or modification.

SECTION 11.13Interpretation.  Interpretation of this Agreement (except as specifically provided in this Agreement, in which case such specified rules of construction shall govern with respect to this Agreement) shall be governed by the following rules of construction: (a) words in the singular shall be held to include the plural and vice versa, and words of one gender shall be held to include the other gender as the context requires; (b) references to the terms Article, Section, paragraph and Exhibit are references to the Articles, Sections, paragraphs and Exhibits to this Agreement unless otherwise specified; (c) the terms “hereof”, “herein”, “hereby”, “hereto” and derivative or similar words refer to this entire Agreement, including the Schedules and Exhibits hereto; (d) references to “$” shall mean U.S. dollars; (e) the word “including” and words of similar import shall mean “including without limitation,” unless otherwise specified; (f) the word “or” shall not be exclusive; (g) references to “written” or “in writing” include in electronic form; (h) provisions shall apply, when appropriate, to successive events and transactions; (i) a reference to any Person includes such Person’s permitted successors and permitted assigns; (j) any reference to “days” means calendar days unless Business Days are

26

expressly specified; and (k) when calculating the period of time before which, within which or following which any act is to be done or step taken pursuant to this Agreement, the date that is the reference date in calculating such period shall be excluded and, if the last day of such period is not a Business Day, the period shall end on the next succeeding Business Day.

SECTION 11.14Waiver of Jury Trial.  SUBJECT TO Article IX AND Section 11.11 AND Section 11.15 HEREIN, EACH OF THE PARTIES HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY COURT PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF AND PERMITTED UNDER OR IN CONNECTION WITH THIS AGREEMENT.  EACH OF THE PARTIES HEREBY (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS Section 11.14.

SECTION 11.15Submission to Jurisdiction; Waivers.  With respect to any Action relating to or arising out of this Agreement, subject to the provisions of Article IX, each Party to this Agreement irrevocably (a) consents and submits to the exclusive jurisdiction of the courts of the State of Indiana and any court of the United States located in the State of Indiana, (b) waives any objection which such Party may have at any time to the laying of venue of any Action brought in any such court, waives any claim that such Action has been brought in an inconvenient forum and further waives the right to object, with respect to such Action, that such court does not have jurisdiction over such Party and (c) consents to the service of process at the address set forth for notices in Section 11.6 herein; provided, however, that such manner of service of process shall not preclude the service of process in any other manner permitted under applicable Law.

SECTION 11.16No Agency.  Nothing contained herein shall be construed to place the parties in the relationship of partners, joint venturers, principal and agent, or employer and employee.  Neither Party shall have the power to assume, create, or incur liability or any obligation of any kind, express or implied, in the name of or on behalf of the other Party by virtue of this Agreement.

[Signature page follows.]

27

IN WITNESS WHEREOF, the Parties have caused this Transitional Services Agreement to be executed by their duly authorized representatives.

ELI LILLY AND COMPANY
By:	/s/ David A. Ricks
	Name:	David A. Ricks
	Title:	Chairman, President and Chief Executive Officer
ELANCO ANIMAL HEALTH INCORPORATED
By:	/s/ Michael-Bryant Hicks
	Name:	Michael-Bryant Hicks
	Title:	Executive Vice President, General Counsel and Corporate Secretary

28

EXHIBIT A — LILLY SCHEDULED SERVICES

Below is a description of the Lilly Scheduled Services.  In calendar year 2019, the Parties anticipate that the total amount of Scheduled Fees for these Lilly Scheduled Services will be approximately $100,000,000 to $110,000,000 if all such Services are delivered as scheduled as of the Effective Date.  Further details (including Scheduled Fees) are to be mutually agreed by the Parties as needed.

Function	Lilly Scheduled Service Descriptions	Service Period Range
Commercial Operations	Provide fleet management, customer service phone system, and key opinion leader support.	6 - 24 months
Ethics and Compliance	Provide support for Ethics and Compliance activities including the Global Privacy Office and program, anti-corruption program, monitoring program, hotline triage and support, policy and procedure maintenance and support, conflicts of interest, training and communications support, all required regulatory filings, the E&C Resource Center, access to Investigations and Concur data, and E&C support for all E&C systems.	24 months
Finance and Accounting	Provide support for core activities owned by global, local affiliate, and manufacturing finance groups including knowledge transfer and training on global financial reporting, audit, consolidation, and royalty reporting and administration, as well as support in technical accounting (pre-spin only).	4 - 30 months
Global Business Services	Provide support for core Business Services activities including Order to Cash process, Procure to Pay Process, General Accounting activities, and Integrated Services at Lilly’s worldwide locations.	24 - 30 months
Global Travel and Meeting Services	Provide support for global travel and meeting booking capabilities, including expense reporting, travel booking, credit card services and administrative desk support	24 - 30 months
Human Resources	Provide support for core HR activities including learning & development, recruiting, global benefits management, compensation and payroll, global mobility, employee recognition, on-boarding, and workforce services. Provide core and specialized security services, as needed.	3 - 24 months
Information Security	Provide support to identify, protect against and detect cyber and information security threats, as well as services to respond and recover to any breach of information security. Also includes services to maintain information security architecture, governance, and workforce development.	30 months
Information Technology	Provide support and services to maintain global infrastructure services, ERP, non-ERP Global Services applications, manufacturing, quality and research applications.	24 - 30 months
Legal	Provide onboarding support and administer related billing for outside counsel. Deliver IP administrative support, non-attorney litigation support and privileged investigations & data security investigations support.	6 - 30 months

Function	Lilly Scheduled Service Descriptions	Service Period Range
Manufacturing and Quality	Provide services including Engineering, Health, Safety, and Environmental (HSE), Supply Chain, and Technical / Manufacturing Services	6 - 30 months
Procurement	Provide core Procurement services including Global sourcing of certain spend categories, requested local affiliate support, maintenance of category rule execution, and supplier spend analytics support. Lilly may engage in contract negotiations in support of Elanco’s entry into replacement agreements but, the decision to enter into any such agreements will be Elanco’s decision and require Elanco’s execution.	12 - 30 months
Real Estate	Provide access and services for shared international facilities. Real estate surcharges will not apply to approved (at Lilly’s sole discretion) Real Estate office TSA extensions that are scheduled to end before September 30, 2020.	3 - 15 months
Research and Development	Provide support and materials for various ongoing research projects. Continue hosting 3rd party researchers to conduct compound synthesis activities in Lilly labs. Maintain contracts with various contract research organizations. Provide compound management support for ongoing Elanco small molecule studies, and provide consulting support for crystallization studies including Lilly systems support and shipping guidance. Maintain raw data and final reports for toxicology work completed by Lilly Research Labs to support Elanco’s products, and provide access to physical copies as needed.	6 - 24 months
Regulatory	Provide support for informatics, supply chain, medical writing, statistics, and ad hoc analysis. Provide non-managerial support for pharmacovigilance and Chemistry, Manufacturing and Controls regulatory. Allow Elanco to use Lilly marketing authorizations and name in countries where Elanco does not have a legal entity until Elanco can transfer marketing authorization to its own legal entity.	12 - 30 months
Tax	Provide support for Tax activities including U.S. state income tax, U.S. local tax, accounting / reporting, U.S. federal income tax and U.S. international income tax, affiliate tax, and transfer pricing.	24 - 30 months
Treasury	Provide support for treasury activities including insurance / risk management, foreign exchange, debt capital, investment, regional cash, and retirement investment management as well as consolidated cash flow forecasting.	3 - 15 months

EXHIBIT B — LILLY EXCLUDED SERVICES

Function	Lilly Excluded Service Descriptions
Commercial Operations	US order management and capturing and processing of orders. Training of territory managers and reps, sales reporting, management of sales goals as well as design and maintenance of incentive plans. Management of end user program rebates. Advanced analytics, and forecasting and supply signals.
Ethics and Compliance	Support for enterprise risk management and local risk assessment, code of conduct, reporting to the Board of Directors, and code of conduct training.
Finance and Accounting	Internal audit, external reporting sign-off, SEC and investor relations reporting, financial controls, detailed balance sheet / cash flow analysis, and actuarial valuation services. Post-spin, excluded activities will also include technical accounting and overall financial reviews.
Global Travel and Meeting Services	Implementation or service support for countries outside of current Online Booking Tool plan, purchase cards and/or lodge cards in countries without existing services, and system or application implementations outside of previously identified countries.
Human Resources	Job levelling, leadership development programs, and establishment of diversity programs.
Information Security	Third Party Risk Management, Ethical Spear-Phishing, Penetration Tests, Incident Response Simulations
Legal	Legal counsel representation with respect to corporate governance, bankruptcy, environmental, health, safety, regulatory, human resources & labor, immigration, import/export compliance, non-US country specific counsel, litigation & compliance, global privacy, real estate, Foreign Corrupt Practices Act, trade sanctions, and anti-boycott. Additionally, intellectual property manual, copyright clearance, legal exit interview process, and registered agent of service & acceptance of service procedure are excluded from service support.
Manufacturing and Quality	Providing supplier certification & management, receiving materials and executing production. Engineering: Maintaining daily operations / production engineering support, site maintenance and local facilities management services, utilities systems support, resource assessments, and recapitalization. Health, Safety, and Environmental: Managing corporate governance — Policy, standards, public reporting, governance committees and metrics. Quality: Implementing quality systems and governance and providing quality oversight of product lifecycle, including batch release of finished product and quality control testing. Providing quality oversight of Elanco-dedicated third-party suppliers and service providers, including managing audits / compliance. Supply Chain: Forecasting and demand management, production planning and scheduling, sales and operations planning and providing manufacturing customer service and shipping (except North American Logistics Operations support in the US). Technical Services / Manufacturing Services: Providing primary technical support of commercial processes, maintenance of batch records, procedures, and other documents related to the manufacturing processes and serving as primary investigators for process deviations.
Procurement	New sourcing activity outside of TSA scope beyond process consultation.
Real Estate	Real estate project management, administration and transaction management.

Function	Lilly Excluded Service Descriptions
Research and Development	Designing & synthesizing small & large molecules and performing in vitro testing / screening. Managing Chemistry, Manufacturing, and Controls development capabilities (crystallization, form selection, method development, solubility, formulation) and Active Pharmaceutical Ingredient (API) scale up (including shipping and receiving). Conducting compound analysis and performing computational analysis & technology. Providing regulatory support for submissions / responses and writing medical & study reports.
Regulatory	Managing all regulatory relationships (e.g. agency interactions, industry association contribution) and maintaining regulatory licenses / permits in countries where Elanco does have a legal entity. Maintaining Marketing Authorizations and managing related product lifecycle activities in countries where Elanco has a legal entity. Oversite or managerial functions such as monitoring and reporting on pharmacovigilance activities or Chemistry, Manufacturing, and Controls initial submission and maintenance. Managing global innovation registration (e.g. Pharmaceuticals, Vaccines, Nutritional Health products). Managing regulatory information databases and regulatory label approval.
Tax	Tax strategy, transfer pricing strategy, business development, tax risk management, and tax policy.
Treasury	Pension management, regional cash management activities related to opening/managing bank accounts, and establishment of a global clearing center for Elanco.

EXHIBIT C — COMPANY SCHEDULED SERVICES

Below is a description of the Company Scheduled Services. Further details (including Scheduled Fees) are to be mutually agreed by the Parties as needed.

Function	Company Scheduled Service Descriptions	Service Period
Human Resources	Elanco to provide HR services to Lilly employees at Speke site.	15 months
Real Estate	Lilly employees to utilize Speke site services.	15 months

EXHIBIT D — IN-FLIGHT PROJECTS AND IN-FLIGHT PROJECT COSTS

Below is a description of the In-Flight Projects. Further details (including Costs) are to be mutually agreed by the Parties as needed.

Function	In Flight Project Description
Global Business Services	Conversion of manufacturing site into parent system, ERP archiving, Central Europe supply chain Logistics Service Provider updates
Global Travel and Meeting Services	Expense and meeting management tool upgrade
Information Security	Information Security initiatives including network access, endpoint security, firewall upgrade, vulnerability risk management
Information Technology - Global Infrastructure Services	PC Support and Upgrades, Service Desk and other related initiatives
Manufacturing and Quality Information Technology Services	Manufacturing and Quality initiatives related to lab management, analytics and decommissioning of applications

EXHIBIT E — PROGRAM SERVICES AND PROGRAM CHARGES

New Program Services will require detailed cost information that includes Lilly and/or external labor costs. Lilly labor should be estimated and billed utilizing the below Lilly Labor Hourly Rate. External labor should be estimated and billed at cost per the project’s estimate. Requests for new Program Services will utilize the New Program Service Request Form on Exhibit F.

Lilly Labor Hourly Rate: Billed at an hourly cost of $125 per employee

External Labor Rates: Billed at cost per each project’s estimate

EXHIBIT F — SERVICE CHANGE AND PROGRAM SERVICE REQUEST FORM

Program Service Request Form

Application for New Program Services
Submitted By:	Lilly Representative: Elanco Representative:
Lilly Program Service Sponsor:
Elanco Program Service Sponsor:
Date Submitted:

Name of New Program Service:
Description of Program Service:
Estimated Program Service Duration, Target Start and completion Dates:	Duration:                              Start Date:                           Completion Date:
Termination Provisions (if relevant):

Approvals

Approved By:	Approved By:
X	X
Elanco Executive Sponsor	Lilly Executive Sponsor
Date Approved:	Date Approved:

Cost Details

Program Service Expenses	2018	2019	2020	2021	2022	Total Cost
Operating Expense
HC
Cost Assumptions

Service Change Request Form

Application for Service Change Request

Service Recipient:

Service Provider:

Submitted By:

Date Submitted:

Name of Service(s) Involved:

TSA ID(s):

Description of Request:

Reason for Request:

Effective Date:

Service Request Exit Plan
(if relevant):

Approvals

Approved By:	Approved By:
X	X
Elanco TSA Coordinator: Elanco TSA Executive (for terminations):	Lilly TSA Coordinator: Lilly TSA Executive (for terminations):
Date Approved:	Date Approved:

Cost Details

	2018	2019	2020	2021	2022	Total Cost
Current TSA:
Operating Expense
Capital Expense
Headcount
Proposed TSA:
Operating Expense
Capital Expense
Headcount
Difference:
Operating Expense
Capital Expense
Headcount

EXHIBIT G - TSA STEP DOWN TERMINATION APPROACH

Area	TSA	Step Down Key (e.g. %Revenue, Headcount, User ID, Device)	Step Down Interval (e.g. Quarterly, # users, event-based)
ERP	Application Support - Global Services - SAP VC, SCM & HR	Exit by country	Upon 90 Days Notice
	Application Support - Global Services - SAP SF & FG	Exit by TSA line
	Application Support - Global Services - CONCUR - T&E	Exit by TSA line
	Application Support - Global Services - Treasury & Banking	Exit by country
	Application Support - Global Services - Tax	Exit by country
GS IT Non-ERP	Application Support - Global Services (non-ERP) - Corporate Affairs	Exit by TSA line	Upon 90 Days Notice
	Application Support - Global Services (non-ERP) - Ethics & Compliance	Exit by TSA line
	Application Support - Global Services (non-ERP) - Legal Contracts Management	Exit by TSA line
	Application Support - Global Services (non-ERP) - Legal IP Management	Exit by TSA line
	Application Support - Global Services (non-ERP) - Legal Litigation Support	Exit by TSA line
	Application Support - Global Services (non-ERP) - Legal Other Apps	Exit by TSA line
	Application Support - Global Services (non-ERP) - HR HCM US	Exit by TSA line
	Application Support - Global Services (non-ERP) - HR Talent Management	Exit by TSA line
	Application Support - Global Services (non-ERP) - HR Performance Management	Exit by TSA line
	Application Support - Global Services (non-ERP) - HR Other Apps	Exit by TSA line
	Application Support - Global Services (non-ERP) - Global Meeting Services	Exit by TSA line
	Application Support - Global Services (non-ERP) - General Accounting	Exit by TSA line
	Application Support - Global Services (non-ERP) - Salesforce Marketing Cloud	Exit by TSA line
MQ IT	Application Support - M&Q Apps with resource, license and infrastructure support	Step down cost relief by site and/or by application exit	Upon 90 Days Notice
InfoSec	Information Security	Reduce # of “active” and “off-net” users	Upon 90 Days Notice

Area	TSA	Step Down Key (e.g. %Revenue, Headcount, User ID, Device)	Step Down Interval (e.g. Quarterly, # users, event-based)
GIS	Compute / Disaster Recovery	Reduce # of Servers Reduce # of web sites	Upon 90 Days Notice
	Network	Reduce # of “active” and “off-net” users
	Document & Content Mgmt. - Documentum	Reduce the # of Documentum users
	Document & Content Mgmt. - Global Records Info Management	Exit by TSA line
	Document & Content Mgmt. - SharePoint	Reduce the # of SharePoint Sites
	Collaboration Services A/V, Voice	Reduced # of “active users” Exit of all call center technology
	Collaboration Services - Email, Skype, Box	Reduce # of email boxes
	Support Services	Reduce # of authorized users
	Mobility	Reduce Device Count
	Workplace Services	Reduce Device Count
	Workplace Services - EA Agreement & Support	Reduce # of active users (transition to “off-net” status)
	Digital Enablement - EI&P	Reduce Database count
	Digital Enablement - Cirrus	Exit by application / website
	Management & Controls	Reduce # of active users (transition to “off-net” status)
Research IT	Application Support - R&D and MD	Exit by application	Upon 90 Days Notice

EXHIBIT H — CURRENCY CONVERSION RATES

Currency	SAP Code	Currency Conversion*
Algerian Dinar	DZD	113.23
Arab Emirates Dirham	AED	3.67
Argentina Peso	ARS	17.57
Australia Dollar**	AUD	0.78
Bahraini Dinar	BHD	0.38
Bangladeshi Taka	BDT	77.3
Belize Dollar	BZD	1.99
Bosnia and Herzegovina Convertible Marka	BAM	1.75
Brazil Real	BRL	3.17
Brunei Dollar	BND	1.43
Bulgaria Lev	BGN	1.74
Cameroon	XAF	556.29
Canada Dollar	CAD	1.25
Chile Peso	CLP	638.28
China Yuan Renminbi	CNY	6.63
Colombia Peso	COP	2941.07
Costa Rica Colon	CRC	572.83
Croatia Kuna	HRK	6.39
Czech Republic Koruna	CZK	22.11
Denmark Krone	DKK	6.32
Dominican Republic Peso	DOP	47.74
Egypt Pound	EGP	17.65
Euro Member Countries**	EUR	1.18
Fiji Dollar**	FJD	0.49
Ghanaian Cedi	GHS	4.42
Guatemala Quetzal	GTQ	7.67
Honduras Lempira	HNL	23.39
Hong Kong Dollar	HKD	7.80
Hungary Forint	HUF	264.20
Iceland Krona	ISK	106.44
India Rupee	INR	66.00
Indonesia Rupiah	IDR	13500.50
Iran Rial	IRR	35352.00
Iraqi Dinar	IQD	1180.00
Israel Shekel	ILS	3.53
Japan Yen	JPY	113.00
Jordanian Dinar	JOD	0.71
Kazakhstan Tenge	KZT	334.90
Kenyan Shilling	KES	105.35
Korea (South) Won	KRW	1146.70

Currency	SAP Code	Currency Conversion*
Kuwaiti Dinar	KWD	0.30
Lebanon Pound	LBP	1510.00
Malaysia Ringgit	MYR	4.10
Maltese Liri**	MTL	2.62
Mauritian Rupee	MUR	33.75
Mexico Peso	MXN	18.24
Moroccan Durham	MAD	9.70
New Zealand Dollar**	NZD	0.73
Nigeria Naira	NGN	360.00
Norway Krone	NOK	8.05
Oman Rial	OMR	0.39
Pakistan Rupee	PKR	104.40
Peru Nuevo Sol	PEN	3.23
Philippines Peso	PHP	50.94
Poland Zloty	PLN	3.66
Qatar Riyal	QAR	3.64
Romania New Leu	RON	3.94
Russia Ruble	RUB	58.02
Saudi Arabia Riyal	SAR	3.75
Serbia Dinar	RSD	106.62
Singapore Dollar	SGD	1.36
South Africa Rand	ZAR	13.56
Sri Lankan Rupee	LKR	153.11
Sweden Krona	SEK	8.14
Switzerland Franc	CHF	0.97
Syria Pound	SYP	515.00
Taiwan New Dollar	TWD	30.38
Thailand Baht	THB	33.44
Tunisian Dinar	TND	2.47
Turkey Lira	TRY	3.57
Ukraine Hryvna	UAH	25.90
United Kingdom Pound**	GBP	1.34
Venezuela Bolivar Fuerte***	VEF	3345.00
Viet Nam Dong	VND	22470.00
Zambian Kwacha****	ZMW	10.00

*The listed conversions represent the 2018 Lilly Plan rates; these rates will be updated annually as subsequent Lilly plan rates are published

**Quoted as USD per 1 unit of foreign currency (convert local currency to USD by multiplying by the rate); all other currencies quoted as foreign currency per 1 USD (convert local currency to USD by dividing by the rate)

***Venezuela’s market driven rate - Divisa Complementaria (DICOM)

****Zambian Kwacha is listed at the spot rate as of as of August 10, 2018

EX-10.3

Exhibit 10.3

TAX MATTERS AGREEMENT

BY AND BETWEEN

ELI LILLY AND COMPANY

AND

ELANCO ANIMAL HEALTH INCORPORATED

Dated as of September 24, 2018

TABLE OF CONTENTS

									Page
Section 1.							Definition of Terms		2
Section 2.							Allocation of Tax Liabilities		10
Section 2.01								General Rule	10
Section 2.02								Allocation of Taxes	10
Section 2.03								Determination of Taxes Attributable to the Animal Health Business	11
Section 2.04								Certain Taxes Allocated Under Other Transaction Documents	12
Section 2.05								Company Liability	12
Section 2.06								Lilly Liability	12
Section 3.						Preparation and Filing of Tax Returns			12
Section 3.01								Lilly’s Responsibility	12
Section 3.02								Company’s Responsibility	12
Section 3.03								Tax Returns for Separation Taxes	12
Section 3.04								Tax Reporting Practices	13
Section 3.05								Consolidated or Combined Tax Returns	14
Section 3.06								Right to Review Tax Returns	14
Section 3.07								Company Carrybacks and Claims for Refund	15
Section 3.08								Apportionment of Tax Attributes	15
Section 4.					Tax Payments				15
Section 4.01								Payment of Taxes With Respect to Joint Returns	15
Section 4.02								Payment of Taxes With Respect to Separate Returns	16
Section 4.03								Indemnification Payments	16
Section 5.				Tax Refunds					16
Section 5.01								Tax Refunds	16
Section 6.			Tax-Free Status						17
Section 6.01								Restrictions on the Company	17
Section 6.02								Restrictions on Lilly	19
Section 6.03								Procedures Regarding Opinions and Rulings	19
Section 6.04								Liability for Tax-Related Losses	20
Section 7.		Assistance and Cooperation							22
Section 7.01								Assistance and Cooperation	22
Section 7.02								Income Tax Return Information	23
Section 7.03								Reliance by Lilly	24
Section 7.04								Reliance by the Company	24
Section 8.	Tax Records								24
Section 8.01								Retention of Tax Records	24
Section 8.02								Access to Tax Records	24
Section 8.03								Preservation of Privilege	25
Section 9.	Tax Contests								25

i

Section 9.01		Notice	25
Section 9.02		Control of Tax Contests	25
Section 10.	Effective Date		27
Section 11.	Treatment of Payments		27
Section 11.01		Treatment of Tax Indemnity Payments	27
Section 11.02		Interest Under This Agreement	27
Section 12.	Disagreements		27
Section 12.01		Discussion	27
Section 12.02		Escalation	27
Section 12.03		Referral to Tax Advisor	27
Section 12.04		Injunctive Relief	28
Section 13.	General Provisions		28
Section 13.01		Counterparts; Entire Agreement; Conflicting Agreements	28
Section 13.02		No Construction Against Drafter	29
Section 13.03		Governing Law	29
Section 13.04		Assignability	29
Section 13.05		Third Party Beneficiaries	29
Section 13.06		Notices	29
Section 13.07		Severability	30
Section 13.08		Force Majeure	30
Section 13.09		Late Payments	30
Section 13.10		Expenses	30
Section 13.11		Further Action	30
Section 13.12		Headings	31
Section 13.13		Survival	31
Section 13.14		Waivers of Default	31
Section 13.15		Specific Performance	31
Section 13.16		Amendments	31
Section 13.17		Interpretation	31
Section 13.18		Waiver of Jury Trial	32
Section 13.19		Submission to Jurisdiction; Waivers	32
Section 13.20		The Company Subsidiaries	32

ii

TAX MATTERS AGREEMENT

This TAX MATTERS AGREEMENT (this “Agreement”), dated as of September 24, 2018, is by and between Eli Lilly and Company, an Indiana corporation (“Lilly”), and Elanco Animal Health Incorporated, an Indiana corporation (the “Company”) (Lilly and the Company are sometimes collectively referred to herein as the “Parties” and, as the context requires, individually referred to herein as a “Party”). Capitalized terms used herein and not otherwise defined shall have the respective meanings assigned to them in the Master Separation Agreement by and between Lilly and the Company, dated as of the date hereof (the “Separation Agreement”).

RECITALS

WHEREAS, the Company is a direct wholly-owned Subsidiary of Lilly;

WHEREAS, the Lilly Board has determined that it is appropriate and advisable to separate the Animal Health Business from the other businesses conducted by Lilly (the “Separation”);

WHEREAS, the Lilly Board and the Company Board have each approved the acquisition by the Company and its Subsidiaries of all Animal Health Assets, and the assumption by the Company and its Subsidiaries of the Animal Health Liabilities, all as more fully described in the Transaction Documents;

WHEREAS, the Lilly Board has further determined that it is appropriate and advisable, on the terms and conditions contemplated by the Separation Agreement, to cause the Company to offer and sell for its own account a number of shares of Company Common Stock in an initial public offering of the Company Common Stock, to be registered pursuant to a registration statement on Form S-1 (the “IPO”), immediately following the consummation of which Lilly will continue to own at least 80.1% of the outstanding shares of Company Common Stock;

WHEREAS, substantially simultaneously with the entry into this Agreement, pursuant to the Separation Agreement and the Corporate Reorganization, Lilly is contributing to the Company the outstanding Stock of the Specified Entities, which collectively own substantially all of the Animal Health Assets, and are responsible for substantially all of the Animal Health Liabilities (collectively, the “Contribution”);

WHEREAS, following the consummation of the IPO, Lilly intends at a time (or times) to be determined by Lilly, to transfer shares of Company Common Stock to holders of shares of Lilly Common Stock by means of (a) one or more dividend distributions by Lilly to holders of Lilly Common Stock of shares of Company Common Stock, (b) one or more offers to holders of Lilly Common Stock to exchange their shares of Lilly Common Stock for shares of Company Common Stock, or (c) any combination thereof (any such transaction, a “Distribution”);

WHEREAS, if Lilly determines not to effect a Distribution, Lilly may determine instead to effect a disposition of its Company Common Stock pursuant to one or more public or private offerings for sale or other similar transactions (any such transaction, an “Other Disposition”) or continue to hold its shares of Company Common Stock;

WHEREAS, for U.S. federal income Tax purposes, the Contribution and the Distribution, if effected, taken together, are intended to qualify as a tax-free spin-off under Section 355 and Section 368(a)(1)(D) of the Code;

WHEREAS, as of the date hereof, Lilly is the common parent of an affiliated group of corporations, including the Company, which has elected to file consolidated U.S. federal income Tax returns; and

WHEREAS, the Parties desire to provide for and agree upon the allocation between the Parties of liabilities for certain Taxes arising prior to, at the time of, and subsequent to the IPO, and to provide for and agree upon other matters relating to Taxes.

NOW, THEREFORE, in consideration of the mutual agreements, provisions and covenants contained in this Agreement, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, hereby agree as follows:

Section 1.Definition of Terms. For purposes of this Agreement (including the recitals hereof), the following terms shall have the following meanings:

“Active Trade or Business” means, with respect to the Company, the active conduct (as defined in Section 355(b)(2) of the Code and the Treasury Regulations thereunder) of the Animal Health Business as conducted immediately prior to the IPO, or, with respect to another Separation Transaction intended to qualify as tax-free pursuant to Section 355 of the Code or the analogous provisions of state or local Law, the active conduct (as defined in Section 355(b)(2) of the Code and the Treasury Regulations thereunder, or the analogous provisions of state or local Law) by the relevant Company Entity of the Animal Health Business relating to such Company Entity as conducted immediately prior to such Separation Transaction.

“Adjustment Request” means any formal or informal claim or request filed with any Tax Authority, or with any administrative agency or court, for the adjustment, refund, or credit of Taxes, including (i) any amended Tax Return claiming adjustment to the Taxes as reported on the Tax Return or, if applicable, as previously adjusted, (ii) any claim for equitable recoupment or other offset, and (iii) any claim for refund or credit of Taxes previously paid.

“Affiliate” of any Person means a Person that controls, is controlled by, or is under common control with such Person. As used in this definition, “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such entity, or the power to appoint and remove a majority of the directors, managers or persons holding similar power in respect of such entity, whether through ownership of voting securities or other interests, by contract or otherwise. It is expressly agreed that, from and after the date of the closing of the IPO, solely for purposes of this Agreement, (i) no member of the Company Group shall be deemed to be an Affiliate of any member of the Lilly Group and (ii) no member of the Lilly Group shall be deemed to be an Affiliate of any member of the Company Group.

“Agreement” means this Tax Matters Agreement.

“Animal Health Assets” has the meaning set forth in the Separation Agreement.

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“Animal Health Business” has the meaning set forth in the Separation Agreement.

“Animal Health Liabilities” has the meaning set forth in the Separation Agreement.

“Board Certificate” has the meaning set forth in Section 6.01(d).

“Business Day” has the meaning set forth in the Separation Agreement.

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

“Company” has the meaning set forth in the preamble hereto.

“Company Capital Stock” means all classes or series of capital stock of the Company, including (i) the Company Common Stock, (ii) all options, warrants and other rights to acquire such capital stock and (iii) all instruments properly treated as stock in the Company for U.S. federal income Tax purposes.

“Company Carryback” means any net operating loss, net capital loss, excess Tax credit, or other similar Tax Item of any member of the Company Group which may or must be carried from one Tax Period to another prior Tax Period under the Code or other applicable Tax Law.

“Company Common Stock” has the meaning set forth in the Separation Agreement.

“Company Entity” means an entity which will be a member of the Company Group immediately after the IPO.

“Company Group” means (i) the Company and its Affiliates, as determined immediately after the IPO, (ii) the Transferred Entities, and (iii) any entity which (A) was an Affiliate of Lilly or an Affiliate of a member of the Company Group, (B) conducted solely or predominantly the Animal Health Business, and (C) is no longer an Affiliate of Lilly as of the IPO.

“Company Separate Return” means any Tax Return of or including any member of the Company Group (including any consolidated, combined or unitary return) that does not include any member of the Lilly Group.

“Company Tax Notice” has the meaning set forth in Section 4.01(b).

“Contribution” has the meaning set forth in the recitals hereto.

“Controlling Party” has the meaning set forth in Section 9.02(c).

“Corporate Reorganization” has the meaning set forth in the Separation Agreement.

“Deconsolidation Date” means the last date on which the Company qualifies as a member of the affiliated group (as defined in Section 1504 of the Code) of which Lilly is the common parent.

“Dispute” has the meaning set forth in Section 12.

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“Distribution” has the meaning set forth in the recitals hereto.

“Distribution Date” means the date or dates on which the Distribution occurs.

“Effective Date” has the meaning set forth in the Separation Agreement.

“Fifty-Percent or Greater Interest” has the meaning ascribed to such term for purposes of Sections 355(d) and (e) of the Code.

“Filing Date” has the meaning set forth in Section 6.04(d).

“Final Determination” means the final resolution of liability for any Tax, which resolution may be for a specific issue or adjustment or for a Tax Period, (i) by IRS Form 870 or 870-AD (or any successor forms thereto), on the date of acceptance by or on behalf of the taxpayer, or by a comparable form under the Laws of a state, local, or foreign taxing jurisdiction, except that a Form 870 or 870-AD or comparable form shall not constitute a Final Determination to the extent that it reserves (whether by its terms or by operation of law) the right of the taxpayer to file a claim for refund or the right of the Tax Authority to assert a further deficiency in respect of such issue or adjustment or for such Tax Period (as the case may be); (ii) by a decision, judgment, decree, or other order by a court of competent jurisdiction, which has become final and unappealable; (iii) by a closing agreement or accepted offer in compromise under Sections 7121 or 7122 of the Code, or a comparable agreement under the Laws of a state, local, or foreign taxing jurisdiction; (iv) by any allowance of a refund or credit in respect of an overpayment of a Tax, but only after the expiration of all periods during which such refund may be recovered (including by way of offset) by the jurisdiction imposing such Tax; (v) by a final settlement resulting from a treaty-based competent authority determination; or (vi) by any other final disposition, including by reason of the expiration of the applicable statute of limitations or by mutual agreement of the Parties.

“Gain Recognition Agreement” means a gain recognition agreement as described in Treasury Regulations Section 1.367(a)-8 or any successor provision thereto.

“Group” means the Lilly Group or the Company Group, or both, as the context requires.

“Income Tax” means all Taxes based upon, measured by, or calculated with respect to (i) net income or profits (including any capital gains, minimum Tax or any Tax on items of tax preference, but not including sales, use, real or personal property, gross or net receipts, value added, excise, leasing, transfer or similar Taxes), or (ii) multiple bases (including corporate franchise, doing business and occupation Taxes) if one or more bases upon which such Tax is determined is described in clause (i) of this definition, together with any interest, penalty, additions to tax, or additional amounts in respect of the foregoing.

“Indemnitee” has the meaning set forth in Section 11.02.

“Indemnitor” has the meaning set forth in Section 11.02.

“Internal Distribution” means any Separation Transaction or series of Separation Transactions (other than the Contribution and the Distribution) that is intended to qualify as a

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tax-free transaction under Section 355 and/or Section 368(a)(1)(D) of the Code, as described in the Tax Opinions.

“Internal Restructuring” has the meaning set forth in Section 6.01(e).

“IPO” has the meaning set forth in the recitals hereto.

“IRS” means the U.S. Internal Revenue Service, or any successor agency.

“Joint Return” means any Tax Return that actually includes, by election or otherwise, one or more members of the Lilly Group together with one or more members of the Company Group.

“Lilly” has the meaning set forth in the preamble hereto.

“Lilly Affiliated Group” means the affiliated group (as that term is defined in Section 1504 of the Code and the Treasury Regulations thereunder) of which Lilly is the common parent.

“Lilly Business” has the meaning set forth in the Separation Agreement.

“Lilly Federal Consolidated Income Tax Return” means any U.S. federal Income Tax Return for the Lilly Affiliated Group.

“Lilly Group” means Lilly and its Affiliates, excluding any entity that is a member of the Company Group, as determined immediately after the IPO.

“Lilly Separate Return” means any Tax Return of or including any member of the Lilly Group (including any consolidated, combined or unitary return) that does not include any member of the Company Group.

“Lilly Services” has the meaning set forth in the Transitional Services Agreement.

“Local Transfer Agreements” has the meaning set forth in the Separation Agreement.

“Non-Controlling Party” has the meaning set forth in Section 9.02(c).

“Notified Action” has the meaning set forth in Section 6.03(a).

“Other Disposition” has the meaning set forth in the recitals hereto.

“Parties” and “Party” have the meaning set forth in the preamble hereto.

“Past Practices” has the meaning set forth in Section 3.04(b).

“Payment Date” means (i) with respect to any Lilly Federal Consolidated Income Tax Return, (A) the due date for any required installment of estimated Taxes determined under Section 6655 of the Code, (B) the due date (determined without regard to extensions) for filing the return determined under Section 6072 of the Code, or (C) the date the return is filed, as the case may be, and (ii) with respect to any other Tax Return, the corresponding dates determined under the applicable Tax Law.

“Payor” has the meaning set forth in Section 4.03.

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“Person” means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization or a governmental entity or any department, agency or political subdivision thereof, without regard to whether any entity is treated as disregarded for U.S. federal income Tax purposes.

“Post-Deconsolidation Period” means any Tax Period beginning after the Deconsolidation Date and, in the case of any Tax Period beginning before the Deconsolidation Date and ending after the Deconsolidation Date, the portion of such Tax Period beginning on the day after the Deconsolidation Date.

“Post-IPO Period” means any Tax Period beginning after the Effective Date and, in the case of any Straddle Period, the portion of such Straddle Period beginning on the day after the Effective Date.

“Pre-Deconsolidation Period” means any Tax Period ending on or before the Deconsolidation Date and, in the case of any Tax Period beginning before the Deconsolidation Date and ending after the Deconsolidation Date, the portion of such Tax Period ending on the Deconsolidation Date.

“Pre-IPO Period” means any Tax Period ending on or before the Effective Date and, in the case of any Straddle Period, the portion of such Straddle Period ending on the Effective Date.

“Preliminary Tax Advisor” has the meaning set forth in Section 12.03.

“Prime Rate” has the meaning set forth in the Separation Agreement.

“Privilege” means any privilege that may be asserted under applicable Law, including any privilege arising under or relating to the attorney-client relationship (including the attorney-client and work product privileges), the accountant-client privilege and any privilege relating to internal evaluation processes.

“Proposed Acquisition Transaction” means a transaction or series of transactions (or any agreement, understanding or arrangement, within the meaning of Section 355(e) of the Code and Treasury Regulations Section 1.355-7, or any other regulations promulgated thereunder, to enter into a transaction or series of transactions), whether such transaction is supported by the Company management or shareholders, is a hostile acquisition, or otherwise, as a result of which the Company would merge or consolidate with any other Person or as a result of which any Person or any group of related Persons would (directly or indirectly) acquire, or have the right to acquire, from the Company and/or one or more holders of outstanding shares of Company Capital Stock, a number of shares of Company Capital Stock that would, when combined with any other changes in ownership of Company Capital Stock pertinent for purposes of Section 355(e) of the Code, comprise 40% or more of (i) the value of all outstanding shares of stock of the Company as of the date of such transaction, or in the case of a series of transactions, the date of the last transaction of such series, or (ii) the total combined voting power of all outstanding shares of voting stock of the Company as of the date of such transaction, or in the case of a series of transactions, the date of the last transaction of such series. Notwithstanding the foregoing, a Proposed Acquisition Transaction shall not include (i) the adoption by the Company of a shareholder rights plan or (ii) issuances by the Company that satisfy Safe Harbor VIII (relating to

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acquisitions in connection with a person’s performance of services) or Safe Harbor IX (relating to acquisitions by a retirement plan of an employer) of Treasury Regulations Section 1.355-7(d). For purposes of determining whether a transaction constitutes an indirect acquisition, any recapitalization resulting in a shift of voting power or any redemption of shares of stock shall be treated as an indirect acquisition of shares of stock by the non-exchanging shareholders. This definition and the application thereof is intended to monitor compliance with Section 355(e) of the Code and shall be interpreted accordingly. Any clarification of, or change in, the statute or regulations promulgated under Section 355(e) of the Code shall be incorporated in this definition and its interpretation. Solely for purposes of this definition, the “Company” shall include any member of the Company Group that was a “controlled corporation” within the meaning of Section 355(a)(1) of the Code in any of the Internal Distributions.

“Representation Letters” means the statements of facts and representations, officer’s certificates, representation letters and any other materials delivered or deliverable by Lilly, the Company, or any Affiliates or representatives thereof in connection with the rendering by Tax Advisors of the Tax Opinions.

“Required Party” has the meaning set forth in Section 4.03.

“Responsible Party” means, with respect to any Tax Return, the Party having responsibility for preparing and filing such Tax Return under this Agreement.

“Retention Date” has the meaning set forth in Section 8.01.

“Ruling” means a private letter ruling issued by the IRS to Lilly to the effect that a transaction will not affect the Tax-Free Status. Any such ruling must assume that the Contribution and the Distribution would have qualified for the Tax-Free Status if the transaction in question did not occur.

“Ruling Request” means any letter filed by Lilly with the IRS requesting a Ruling (including all attachments, exhibits, and other materials submitted with such ruling request letter) and any amendment or supplement to such ruling request letter.

“Section 336(e) Election” has the meaning set forth in Section 3.04(d).

“Section 336(e) Tax Basis” has the meaning set forth in Section 3.04(d).

“Section 6.01(d) Acquisition Transaction” means any transaction or series of transactions that is not a Proposed Acquisition Transaction but would be a Proposed Acquisition Transaction if the percentage reflected in the definition of Proposed Acquisition Transaction were 25% instead of 40%.

“Separate Return” means a Lilly Separate Return or a Company Separate Return, as the case may be.

“Separation” has the meaning set forth in the recitals hereto.

“Separation Agreement” has the meaning set forth in the preamble hereto.

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“Separation Taxes” means any Taxes (including, for the avoidance of doubt, Income Taxes and Transfer Taxes) imposed on any member of the Lilly Group or the Company Group arising from, or attributable to, any transfer of assets or liabilities pursuant to the Separation Transactions, other than (i) any Taxes which are Tax-Related Losses and (ii) any Transfer Taxes imposed with respect to any transfer of cash between members of the Company Group following the Effective Date.

“Separation Transactions” means those transactions undertaken by the Parties and their Affiliates pursuant to the Corporate Reorganization to separate ownership of the Animal Health Business from ownership of the Lilly Business.

“Straddle Period” means any Tax Period that begins on or before, and ends after, the Effective Date.

“Tax” or “Taxes” means any income, gross income, gross receipts, profits, capital stock, franchise, withholding, payroll, social security, workers compensation, unemployment, disability, property, ad valorem, value added, stamp, excise, severance, occupation, service, sales, use, license, lease, transfer, import, export, alternative minimum, estimated or other tax (including any fee, assessment, or other charge in the nature of or in lieu of any tax), imposed by any governmental entity or political subdivision thereof, and any interest, penalty, additions to tax, or additional amounts in respect of the foregoing.

“Tax Advisor” means a Tax counsel or accountant of recognized national standing.

“Tax Attribute” means a net operating loss, net capital loss, unused investment credit, unused foreign Tax credit, excess charitable contribution, general business credit, research and development credit or any other Tax Item that could reduce a Tax or create a Tax Benefit.

“Tax Authority” means, with respect to any Tax, the governmental entity or political subdivision thereof that imposes such Tax, and the agency (if any) charged with the collection of such Tax for such entity or subdivision.

“Tax Benefit” means any refund, credit, or other reduction in otherwise required liability for Taxes.

“Tax Contest” means an audit, review, examination, or any other administrative or judicial proceeding with the purpose or effect of redetermining Taxes (including any administrative or judicial review of any claim for refund).

“Tax-Free Status” means the qualification of (i) the Contribution and the Distribution, taken together, as (A) a reorganization described in Sections 355(a) and 368(a)(1)(D) of the Code, (B) a transaction in which the stock distributed thereby is “qualified property” for purposes of Sections 355(d), 355(e) and 361(c) of the Code, and (C) a transaction in which Lilly, the Company and the shareholders of the Company recognize no income or gain for U.S. federal income Tax purposes pursuant to Sections 355, 361 and 1032 of the Code, other than, in the case of Lilly and the Company, intercompany items or excess loss accounts taken into account pursuant to the Treasury Regulations promulgated under Section 1502 of the Code, and (ii) each Internal Distribution as a tax-free transaction under Section 355 and/or Section 368(a)(1)(D) of the Code, as described in the Tax Opinions.

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“Tax Item” means any item of income, gain, loss, deduction, or credit, or any other item which increases or decreases Taxes paid or payable in any Tax Period.

“Tax Law” means the Law of any governmental entity or political subdivision thereof relating to any Tax.

“Tax Opinions” means the opinions of Tax Advisors deliverable to Lilly in connection with the Contribution and the Distribution or otherwise with respect to the Separation Transactions.

“Tax Period” means, with respect to any Tax, the period for which the Tax is reported as provided under the Code or other applicable Tax Law.

“Tax Records” means any (i) Tax Returns, (ii) Tax Return workpapers, (iii) documentation relating to any Tax Contests, and (iv) any other books of account or records (whether or not in written, electronic or other tangible or intangible forms and whether or not stored on electronic or any other medium) required to be maintained under the Code or other applicable Tax Laws or under any record retention agreement with any Tax Authority, in each case filed with respect to or otherwise relating to Taxes.

“Tax-Related Losses” means (i) all Taxes (including interest and penalties thereon) imposed pursuant to any settlement, Final Determination, judgment or otherwise; (ii) all accounting, legal and other professional fees, and court costs incurred in connection with such Taxes, as well as any other out-of-pocket costs incurred in connection with such Taxes; and (iii) all costs, expenses and damages associated with stockholder litigation or controversies and any amount paid by Lilly (or any Lilly Affiliate) or the Company (or any Affiliate of the Company) in respect of the liability of shareholders, whether paid to shareholders or to the IRS or any other Tax Authority, in each case, resulting from the failure of the Contribution and the Distribution, or any Internal Distribution, to qualify for the Tax-Free Status.

“Tax Return” means any report of Taxes due, any claim for refund of Taxes paid, any information return with respect to Taxes, or any other similar report, statement, declaration, or document required to be filed under the Code or other Tax Law with respect to Taxes, including any attachments, exhibits, or other materials submitted with any of the foregoing, and including any amendments or supplements to any of the foregoing.

“Transfer Pricing Adjustment” means any proposed or actual allocation by a Tax Authority of any Tax Item between or among any member of the Lilly Group and any member of the Company Group with respect to any Tax Period ending prior to or including the final Distribution Date or the date of any Other Disposition, as the case may be.

“Transfer Taxes” means all transfer, sales, use, excise, stock, stamp, stamp duty, stamp duty reserve, stamp duty land, documentary, filing, recording, registration, value-added and other similar Taxes (excluding, for the avoidance of doubt, any income, gains, profit or similar Taxes, however assessed), together with any interest, penalty, additions to tax, or additional amounts in respect of the foregoing.

“Transferred Entities” has the meaning set forth in the Separation Agreement.

“Transition Services BEAT Amount” means the amount of any Taxes imposed under Section 59A of the Code which are or become payable as a result of “base erosion payments” paid or accrued by any member of the Lilly Group to a foreign Person which is “related” to such member of the Lilly Group (in each case within the meaning of Section 59A(d) of the Code) in respect of Lilly Services supplied to a member of the Company Group pursuant to the Transitional Services Agreement, which amount shall be calculated for a given taxable year by comparing (x) the amount of Taxes imposed on the Lilly Group under Section 59A of the Code for such taxable year without regard to any amounts paid or accrued to any foreign Person in respect of such Lilly Services and (y) the amount of Taxes imposed on the Lilly Group under Section 59A of the Code for such taxable year, in each case as determined by Lilly.

“Transitional Services Agreement” has the meaning set forth in the Separation Agreement.

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“Treasury Regulations” means the regulations promulgated from time to time under the Code as in effect for the relevant Tax Period.

“Unqualified Tax Opinion” means an unqualified “will” opinion of a Tax Advisor, which Tax Advisor is acceptable to Lilly and upon which Lilly may rely, to the effect that a transaction will not affect the Tax-Free Status. Any such opinion must assume that the Contribution and the Distribution would have qualified for the Tax-Free Status if the transaction in question did not occur.

Section 2.Allocation of Tax Liabilities.

Section 2.01General Rule.

(a)Lilly Liability. Lilly shall be liable for, and shall indemnify and hold harmless the Company Group from and against any liability for, Taxes which are allocated to Lilly under this Section 2.

(b)Company Liability. The Company shall be liable for, and shall indemnify and hold harmless the Lilly Group from and against any liability for, Taxes which are allocated to the Company under this Section 2.

Section 2.02Allocation of Taxes Except as provided in Section 2.04, Section 2.05 or Section 2.06, Taxes shall be allocated as follows:

(a)Allocation of Taxes Relating to Joint Returns.

(i)Allocation for Pre-IPO Periods. With respect to any Joint Return, Lilly shall be responsible for any and all Taxes due with respect to or required to be reported on any such Tax Return (including any increase in such Tax as a result of a Final Determination) for all Pre-IPO Periods;

(ii)Allocation to the Company for Post-IPO Periods. The Company shall be responsible for any and all Taxes attributable to the Animal Health Business that are due with respect to or required to be reported on any Joint Return (including any increase in such Tax as a result of a Final Determination) for all Post-IPO Periods.

(iii)Allocation to Lilly for Post-IPO Periods. Lilly shall be responsible for any and all Taxes due with respect to or required to be reported on any Joint Return (including any increase in such Tax as a result of a Final Determination) other than those Taxes described in Section 2.02(a)(ii) for all Post-IPO Periods.

(b)Allocation of Taxes Relating to Separate Returns.

(i)Lilly shall be responsible for any and all Taxes due with respect to or required to be reported on any Lilly Separate Return (including any increase in such Tax as a result of a Final Determination) for all Tax Periods.

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(ii)The Company shall be responsible for any and all Taxes due with respect to or required to be reported on any Company Separate Return (including any increase in such Tax as a result of a Final Determination) for all Tax Periods.

Section 2.03Determination of Taxes Attributable to the Animal Health Business. For purposes of Section 2.02(a)(ii):

(a)The amount of U.S. federal Income Taxes attributable to the Animal Health Business shall be as determined by Lilly on a pro forma basis using the following conventions:

(i)assuming that the members of the Company Group were not included in the Lilly Affiliated Group;

(ii)including only Tax Items of members of the Company Group that were included in the relevant Lilly Federal Consolidated Income Tax Return;

(iii)except as provided in Section 2.03(a)(v), using all elections, accounting methods and conventions used on the Lilly Federal Consolidated Income Tax Return for such Tax Period;

(iv)applying the highest statutory marginal corporate income Tax rate in effect for such Tax Period;

(v)assuming that the Company Group elects not to carry back any net operating losses; and

(vi)assuming that the Company Group’s utilization of any Tax Attribute carryforward or carryback is limited to the Tax Attributes of the Company Group that would be available if the U.S. federal Income Tax of the Company Group for each taxable year ending after December 31, 2017 were determined in accordance with this Section 2.03(a).

(b)The amount of Income Taxes attributable to the Animal Health Business with respect to any Joint Return other than a Lilly Federal Consolidated Income Tax Return shall be as determined by Lilly in a manner consistent with the principles set forth in Section 2.03(a).

(c)The amount of Taxes attributable to the Animal Health Business with respect to any Joint Return not described in Section 2.03(a) or (b) shall be as determined by Lilly on a pro forma basis taking into account only the assets and operations of the Animal Health Business reflected on such Joint Return and in a manner consistent with the past return filing practices of the Lilly Group with respect to such Joint Return (including any past accounting methods, elections and conventions), except as otherwise required by applicable Law.

(d)In the case of any Joint Return for any Straddle Period, the allocation of any Tax Items required to determine any Taxes or other amounts attributable to the Pre-IPO Period and the Post-IPO Period shall be as determined by Lilly in a manner consistent with the past return filing practices of the Lilly Group with respect to such Joint Return (including any past

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accounting methods, elections and conventions), except as otherwise required by applicable Law; provided, that property Taxes and other similar periodic Taxes shall be apportioned on a per diem basis.

(e)The amount of Taxes attributable to the Animal Health Business with respect to any Joint Return for any Tax Period shall not be less than zero.

The Company shall reimburse Lilly for all reasonable costs and expenses paid or incurred by the Lilly Group in connection with determining the amount of Taxes attributable to the Animal Health Business with respect to any Joint Return.

Section 2.04Certain Taxes Allocated Under Other Transaction Documents. The Parties acknowledge and agree that, notwithstanding anything contained herein to the contrary, this Agreement, including Section 2 hereof, shall not (i) apply with respect to any and all Taxes that are expressly allocated pursuant to any Transaction Document (other than this Agreement), for which such other Transaction Document shall govern, or (ii) in any way affect or modify the Parties’ rights and obligations under Section 2.04(c) of the Separation Agreement.

Section 2.05Company Liability. The Company shall be liable for, and shall indemnify and hold harmless the Lilly Group from and against, any liability for:

(a)any Transition Services BEAT Amount;

(b)any Tax resulting from a breach by the Company of any covenant in this Agreement, the Separation Agreement or any Ancillary Agreement; and

(c)any Tax-Related Losses for which the Company is responsible pursuant to Section 6.04.

Section 2.06Lilly Liability. Lilly shall be liable for, and shall indemnify and hold harmless the Company Group from and against, any liability for:

(a)any Separation Tax;

(b)any Tax resulting from a breach by Lilly of any covenant in this Agreement, the Separation Agreement or any Transaction Document; and

(c)any Tax-Related Losses for which Lilly is responsible pursuant to Section 6.04.

Section 3.Preparation and Filing of Tax Returns.

Section 3.01Lilly’s Responsibility. Lilly has the exclusive obligation and right to prepare and file, or to cause to be prepared and filed:

(a)All Joint Returns; and

(b)Lilly Separate Returns.

Section 3.02Company’s Responsibility. The Company shall prepare and file, or shall cause to be prepared and filed, all Tax Returns required to be filed by or with respect to members

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of the Company Group other than those Tax Returns which Lilly is required to prepare and file under Section 3.01 or Section 3.03. The Tax Returns required to be prepared and filed by the Company under this Section 3.02 shall include any Company Separate Returns.

Section 3.03Tax Returns for Separation Taxes. Tax Returns relating to Separation Taxes shall be prepared and filed when due (including extensions) by Lilly. The Company shall provide, and shall cause its Affiliates to provide, assistance and cooperation to Lilly and its Affiliates in accordance with Section 7 with respect to the preparation and filing of Tax Returns, including providing information required to be provided in Section 7 and, where required by applicable Law and at Lilly’s request, filing any such Tax Returns as prepared by Lilly.

Section 3.04Tax Reporting Practices.

(a)Lilly General Rule. Except as provided in Section 3.04(c), Lilly shall prepare any Tax Return which it has the obligation and right to prepare and file, or cause to be prepared and filed, under Section 3.01, in accordance with reasonable Tax accounting practices selected by Lilly.

(b)Company General Rule. Except as provided in Section 3.04(c), with respect to any Tax Return for a Tax Period that begins on or before the date that is two (2) years following the Distribution Date that the Company has the obligation and right to prepare and file, or cause to be prepared and filed, under Section 3.02, such Tax Return shall be prepared in accordance with past practices, accounting methods, elections or conventions (“Past Practices”) used with respect to the Tax Returns in question (unless (i) the Company reasonably determines, upon advice from counsel, that there is no reasonable basis for the use of such Past Practices or (ii) there is no adverse effect to Lilly, as determined in Lilly’s reasonable discretion), and to the extent any items are not covered by Past Practices (or in the event that (i) the Company reasonably determines, upon advice from counsel, that there is no reasonable basis for the use of such Past Practices or (ii) there is no adverse effect to Lilly, as determined in Lilly’s reasonable discretion), in accordance with reasonable Tax accounting practices selected by the Company.

(c)Reporting of Separation Transactions. The Tax treatment of the Separation Transactions reported on any Tax Return shall be consistent with the treatment thereof in the Tax Opinions, taking into account the jurisdiction in which such Tax Returns are filed, unless the Responsible Party reasonably determines, upon advice from counsel, that there is no reasonable basis for such Tax treatment. Such treatment reported on any Tax Return for which the Company is the Responsible Party shall be consistent with that on any Tax Return filed or to be filed by Lilly or any member of the Lilly Group or caused or to be caused to be filed by Lilly, unless the Company reasonably determines, upon advice from counsel, that there is no reasonable basis for such Tax treatment. In the event that a Party shall reasonably determine, upon advice from counsel, that there is no reasonable basis for the Tax treatment described in either of the preceding two sentences, such Party shall notify the other Party 20 Business Days prior to filing the relevant Tax Return and the Parties shall attempt in good faith to agree on the manner in which the relevant portion of the Separation Transactions shall be reported.

(d)Protective Section 336(e) Election. After the date hereof, Lilly shall determine, in its sole and absolute discretion, whether to make a protective election under Section 336(e) of the Code and the Treasury Regulations thereunder (and any corresponding or analogous provisions

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of state and local Law) in connection with the Distribution with respect to the Company and each other member of the Company Group that is a domestic corporation for U.S. federal Income Tax purposes (a “Section 336(e) Election”). If Lilly determines that a Section 336(e) Election would be beneficial:

(i)Lilly, the Company and their respective Affiliates shall cooperate in making the Section 336(e) Election, including by filing any statements, amending any Tax Returns or taking such other actions reasonably necessary to carry out the Section 336(e) Election;

(ii)if the Distribution fails to qualify (in whole or in part) for the Tax-Free Status and the Company or any member of the Company Group realizes an increase in Tax basis as a result of the Section 336(e) Election (the “Section 336(e) Tax Basis”), then the cash Tax savings realized by the Company and each member of the Company Group as a result of the Section 336(e) Tax Basis shall be shared between Lilly and the Company in the same proportion as the Taxes giving rise to the Section 336(e) Tax Basis were borne by Lilly and the Company (after giving effect to the indemnification obligations in this Agreement); and

(iii)to the extent the Section 336(e) Election becomes effective, each Party agrees not to take any position (and to cause each of its Affiliates not to take any position) that is inconsistent with the Section 336(e) Election on any Tax Return, in connection with any Tax Contest or otherwise, except as may be required by a Final Determination.

(e)Exception Where Required by a Final Determination. Notwithstanding any provision herein to the contrary, this Section 3.04 shall not require any Party to file a Tax Return reflecting a particular treatment or in accordance with a particular Past Practice where such treatment or Past Practice, as applicable, is proscribed by a Final Determination.

Section 3.05Consolidated or Combined Tax Returns. The Company will elect and join, and will cause its respective Affiliates to elect and join, in filing any Joint Returns that Lilly determines are required to be filed or that Lilly chooses to file pursuant to Section 3.01(a).

Section 3.06Right to Review Tax Returns.

(a)General. The Responsible Party with respect to any material Tax Return shall make the portion of such Tax Return and related workpapers which are relevant to the determination of the other Party’s rights or obligations under this Agreement available for review by the other Party, if requested, to the extent (i) such Tax Return relates to Taxes for which the requesting Party would reasonably be expected to be liable, (ii) the requesting Party would reasonably be expected to be liable in whole or in part for any additional Taxes owing as a result of adjustments to the amount of the Taxes reported on such Tax Return, (iii) such Tax Return relates to Taxes for which the requesting Party would reasonably be expected to have a claim for Tax Benefits under this Agreement, or (iv) the requesting Party reasonably determines that it must inspect such Tax Return to confirm compliance with the terms of this Agreement. The Responsible Party shall (i) use its reasonable best efforts to make such portion of such Tax

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Return available for review as required under this paragraph sufficiently in advance of the due date for filing of such Tax Return to provide the requesting Party with a meaningful opportunity to analyze and comment on such Tax Return and (ii) use reasonable efforts to have such Tax Return modified before filing to reflect reasonable comments of the requesting Party, taking into account the person responsible for payment of the Tax (if any) reported on such Tax Return and whether the amount of Tax liability allocable to the requesting Party with respect to such Tax Return is material. The Parties shall attempt in good faith to resolve any issues arising out of the review of such Tax Return.

(b)Material Tax Returns. For purposes of Section 3.06(a), a Tax Return is “material” if it could reasonably be expected to reflect (A) Tax liability equal to or in excess of $1 million, (B) a credit or credits equal to or in excess of $1 million or (C) a loss or losses equal to or in excess of $3 million, in each case with respect to the requesting Party.

Section 3.07Company Carrybacks and Claims for Refund. The Company hereby agrees that, unless Lilly consents in writing, (i) no Adjustment Request with respect to any Joint Return shall be filed, and (ii) any available elections to waive the right to claim in any Pre-Deconsolidation Period with respect to any Joint Return any Company Carryback arising in a Post-Deconsolidation Period shall be made, and no affirmative election shall be made to claim any such Company Carryback.

Section 3.08Apportionment of Tax Attributes. Lilly may in good faith advise the Company in writing of the amount, if any, of any Tax Attributes which Lilly determines, in its sole and absolute discretion, shall be allocated or apportioned to the Company Group under applicable Law; provided, that this Section 3.08 shall not be construed as obligating Lilly to undertake any such determination. The Company and all members of the Company Group shall prepare all Tax Returns in accordance with such written notice. The Company agrees that it shall not dispute Lilly’s allocation or apportionment of Tax Attributes. The Company may request that Lilly undertake a determination of the portion, if any, of any particular Tax Attribute to be allocated or apportioned to the Company Group under applicable Law; to the extent that Lilly determines, in its sole and absolute discretion, not to undertake such determination, or does not otherwise advise the Company of its intention to undertake such determination within 20 Business Days of the receipt of such request, the Company shall be permitted to undertake such determination at its own cost and expense and shall notify Lilly of its determination, which determination shall not be binding upon Lilly.

Section 4.Tax Payments.

Section 4.01Payment of Taxes With Respect to Joint Returns. In the case of any Joint Return:

(a)Computation and Payment of Tax Due. At least three Business Days prior to any Payment Date for any such Tax Return, Lilly shall compute the amount of Tax required to be paid to the applicable Tax Authority (taking into account the requirements of Section 3.04 relating to consistent accounting practices, as applicable) with respect to such Tax Return on such Payment Date. Lilly shall pay such amount to such Tax Authority on or before such Payment Date (and provide notice and proof of payment to the Company).

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(b)Computation and Payment of Liability With Respect To Tax Due. Within 20 Business Days following the earlier of (i) the due date (including extensions) for filing any Joint Return (excluding any Joint Return with respect to payment of estimated Taxes or Taxes due with a request for extension of time to file) or (ii) the date on which such Joint Return is filed, Lilly shall provide the Company with a written notice setting forth the amount of Taxes shown on such Joint Return that are allocable to the Company Group under the provisions of Section 2 (the “Company Tax Notice”). The Company shall pay to Lilly the amount of Taxes set forth on the Company Tax Notice, plus interest computed at the Prime Rate on the amount of the payment based on the number of days from the earlier of (i) the due date of the Tax Return (including extensions) or (ii) the date on which such Tax Return is filed, to the date of payment.

(c)Adjustments Resulting in Underpayments. In the case of any adjustment pursuant to a Final Determination with respect to any Joint Return, Lilly shall pay to the applicable Tax Authority when due any additional Tax due with respect to such Joint Return required to be paid as a result of such adjustment pursuant to a Final Determination. Lilly shall compute the amount attributable to the Company Group in accordance with Section 2 and the Company shall pay to Lilly any amount due Lilly (or Lilly shall pay the Company any amount due the Company) under Section 2 within 20 Business Days from the later of (i) the date the additional Tax was paid by the Responsible Party or (ii) the date of receipt of a written notice and demand from the Responsible Party for payment of the amount due, accompanied by evidence of payment and a statement detailing the Taxes paid and describing in reasonable detail the particulars relating thereto. Any payments required under this Section 4.01(c) shall include interest computed at the Prime Rate based on the number of days from the date the additional Tax was paid by the Responsible Party to the date of the payment under this Section 4.01(c).

Section 4.02Payment of Taxes With Respect to Separate Returns. Each Party shall pay, or shall cause to be paid, to the applicable Tax Authority when due all Taxes owed by such Party or a member of such Party’s Group with respect to a Separate Return.

Section 4.03Indemnification Payments.

(a)If any Party (the “Payor”) is required under applicable Tax Law to pay to a Tax Authority a Tax that another Party (the “Required Party”) is liable for under this Agreement, the Required Party shall reimburse the Payor within 20 Business Days of delivery by the Payor to the Required Party of an invoice for the amount due, accompanied by evidence of payment and a statement detailing the Taxes paid and describing in reasonable detail the particulars relating thereto. The reimbursement shall include interest on the Tax payment computed at the Prime Rate based on the number of days from the date of the payment to the Tax Authority to the date of reimbursement under this Section 4.03.

(b)All indemnification payments under this Agreement shall be made by Lilly directly to the Company or by the Company directly to Lilly, as applicable; provided, however, that if the Parties mutually agree with respect to any such indemnification payment, any member of the Lilly Group, on the one hand, may make such indemnification payment to any member of the Company Group, on the other hand, and vice versa. All indemnification payments shall be treated in the manner described in Section 11.01.

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Section 5.Tax Refunds.

Section 5.01Tax Refunds. Lilly shall be entitled to any refund (and any interest thereon received from the applicable Tax Authority) of Taxes for which Lilly is liable hereunder, and the Company shall be entitled to any refund (and any interest thereon received from the applicable Tax Authority) of Taxes for which the Company is liable hereunder. A Party receiving a refund to which another Party is entitled hereunder shall pay over such refund to such other Party within 20 Business Days after such refund is received (together with interest computed at the Prime Rate based on the number of days from the date the refund was received to the date the refund was paid over).

Section 6.Tax-Free Status.

Section 6.01Restrictions on the Company.

(a)The Company agrees that it will not take or fail to take, or permit any Affiliate of the Company, as the case may be, to take or fail to take, any action where such action or failure to act would be inconsistent with or cause to be untrue any statement, information, covenant or representation in any Representation Letters or the Tax Opinions. The Company agrees that it will not take or fail to take, or permit any Affiliate of the Company, as the case may be, to take or fail to take, any action which adversely affects or could reasonably be expected to adversely affect the Tax-Free Status.

(b)The Company agrees that, from the date hereof until the first Business Day after the two-year anniversary of the final Distribution Date, it will (i) maintain its status as a company engaged in the Active Trade or Business for purposes of Section 355(b)(2) of the Code, (ii) not engage in any transaction that would result in it ceasing to be a company engaged in the Active Trade or Business for purposes of Section 355(b)(2) of the Code, (iii) cause each Affiliate of the Company whose Active Trade or Business is relied upon in the Tax Opinions for purposes of qualifying a transaction as tax-free pursuant to Section 355 of the Code or other Tax Law to maintain its status as a company engaged in such Active Trade or Business for purposes of Section 355(b)(2) of the Code and any such other applicable Tax Law, (iv) not engage in any transaction or permit an Affiliate of the Company to engage in any transaction that would result in an Affiliate of the Company described in clause (iii) hereof ceasing to be a company engaged in the relevant Active Trade or Business for purposes of Section 355(b)(2) or such other applicable Tax Law, taking into account Section 355(b)(3) of the Code for purposes of clauses (i) through (iv) hereof, and (v) not dispose of or permit an Affiliate of the Company to dispose of, directly or indirectly, any interest in an Affiliate of the Company described in clause (iii) hereof or permit any such Affiliate of the Company to make or revoke any election under Treasury Regulations Section 301.7701-3.

(c)The Company agrees that, from the date hereof until the first Business Day after the two-year anniversary of the final Distribution Date, it will not and will not permit any Affiliate of the Company described in clause (iii) of Section 6.01(b) to (i) enter into any Proposed Acquisition Transaction or, to the extent the Company has the right to prohibit any Proposed Acquisition Transaction, permit any Proposed Acquisition Transaction to occur (whether by (A) redeeming rights under a shareholder rights plan, (B) finding a tender offer to be

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a “permitted offer” under any such plan or otherwise causing any such plan to be inapplicable or neutralized with respect to any Proposed Acquisition Transaction, (C) approving any Proposed Acquisition Transaction, whether for purposes of Section 203 of the Delaware General Corporation Law or any similar corporate statute, any “fair price” or other provision of the Company’s charter or bylaws, (D) amending its certificate of incorporation to declassify its Board of Directors or approving any such amendment, or (E) otherwise); (ii) merge or consolidate with any other Person or liquidate or partially liquidate; (iii) in a single transaction or series of transactions sell or transfer (other than sales or transfers of inventory in the ordinary course of business) all or substantially all of the assets that were transferred to the Company pursuant to the Contribution or sell or transfer 25% or more of the gross assets of any Active Trade or Business or 25% or more of the consolidated gross assets of the Company and its Affiliates (such percentages to be measured based on fair market value as of the initial Distribution Date); (iv) redeem or otherwise repurchase (directly or through an Affiliate of the Company) any Company stock, or rights to acquire stock, except to the extent such repurchases satisfy Section 4.05(1)(b) of Revenue Procedure 96-30 (as in effect prior to the amendment of such Revenue Procedure by Revenue Procedure 2003-48); (v) amend its certificate of incorporation (or other organizational documents), or take any other action, whether through a stockholder vote or otherwise, affecting the voting rights of the Company Capital Stock (including, without limitation, through the conversion of one class of Company Capital Stock into another class of Company Capital Stock); or (vi) take any other action or actions (including any action or transaction that would be reasonably likely to be inconsistent with any representation made in the Representation Letters or the Tax Opinions) which in the aggregate (and taking into account any other transactions described in this subparagraph (d)) would be reasonably likely to have the effect of causing or permitting one or more persons (whether or not acting in concert) to acquire directly or indirectly stock representing a Fifty-Percent or Greater Interest in the Company or otherwise jeopardize the Tax-Free Status, unless prior to taking any such action set forth in the foregoing clauses (i) through (vi), (x) the Company shall have requested that Lilly obtain a Ruling in accordance with Section 6.03(a) and Section 6.03(b) to the effect that such transaction will not affect the Tax-Free Status and Lilly shall have received such Ruling in form and substance satisfactory to Lilly in its sole and absolute discretion, (y) the Company shall have provided to Lilly an Unqualified Tax Opinion in form and substance satisfactory to Lilly in its sole and absolute discretion (and in determining whether an opinion is satisfactory, Lilly may consider, among other factors, the appropriateness of any underlying assumptions and management’s representations if used as a basis for the opinion and Lilly may determine that no opinion would be acceptable to Lilly) to the effect that such transaction will not affect the Tax-Free Status or (z) Lilly shall have waived the requirement to obtain such Ruling or Unqualified Tax Opinion.

(d)Certain Issuances of Company Capital Stock. If the Company proposes to enter into any Section 6.01(d) Acquisition Transaction or, to the extent the Company has the right to prohibit any Section 6.01(d) Acquisition Transaction, proposes to permit any Section 6.01(d) Acquisition Transaction to occur, in each case, during the period from the date hereof until the first Business Day after the two-year anniversary of the final Distribution Date, the Company shall provide Lilly, no later than ten Business Days following the signing of any written agreement with respect to the Section 6.01(d) Acquisition Transaction, with a written description of such transaction (including the type and amount of any stock to be issued in such transaction) and a certificate of the Board of Directors of the Company to the effect that such Section 6.01(d)

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Acquisition Transaction is not a Proposed Acquisition Transaction or any other transaction to which the requirements of Section 6.01(c) apply (a “Board Certificate”).

(e)Company Internal Restructuring. The Company shall not engage in, cause or permit any internal restructuring (including by making or revoking any election under Treasury Regulations Section 301.7701-3) involving a member of the Company Group or any contribution, sale or other transfer to the Company or any of its Affiliates of any of the assets directly or indirectly contributed to the Company as described in the Separation Agreement, apart from sales in the ordinary course of business or transactions described in the Corporate Reorganization (any such action, an “Internal Restructuring”), during or with respect to any Tax Period (or portion thereof) ending on or prior to the final Distribution Date without obtaining the prior written consent of Lilly. The Company shall provide written notice to Lilly describing any Internal Restructuring proposed to be taken during or with respect to any Tax Period (or portion thereof) beginning after the final Distribution Date and ending on or prior to the two-year anniversary of such Distribution Date, and shall consult with Lilly regarding any such proposed actions reasonably in advance of taking any such proposed actions and shall consider in good faith any comments from Lilly relating thereto.

(f)Gain Recognition Agreements. The Company shall not (i) take any action (including, but not limited to, the sale or disposition of any stock, securities, or other assets), (ii) permit any member of the Company Group to take any such action, (iii) fail to take any action, or (iv) permit any member of the Company Group to fail to take any action, in each case that would cause Lilly or any member of the Lilly Group to recognize gain under any Gain Recognition Agreement. In addition, the Company shall file, and shall cause any member of the Company Group to file, any Gain Recognition Agreement reasonably requested by Lilly which Gain Recognition Agreement is determined by Lilly to be necessary so as to (i) allow for or preserve the tax-free or tax-deferred nature, in whole or part, of any Separation Transaction, or (ii) avoid Lilly or any member of the Lilly Group recognizing gain under any Gain Recognition Agreement.

Section 6.02Restrictions on Lilly. Lilly agrees that it will not take or fail to take, or permit any Lilly Affiliate, as the case may be, to take or fail to take, any action (i) where such action or failure to act would be inconsistent with or cause to be untrue any statement, information, covenant or representation in any Representation Letters or the Tax Opinions, or (ii) which adversely affects or could reasonably be expected to adversely affect the Tax-Free Status; provided, however, that this Section 6.02 shall not be construed as obligating Lilly to consummate the Distribution nor shall it be construed as preventing Lilly from terminating the Separation Agreement pursuant to Section 10.1 thereof.

Section 6.03Procedures Regarding Opinions and Rulings.

(a)If the Company notifies Lilly that it desires to take one of the actions described in clauses (i) through (vi) of Section 6.01(c) (a “Notified Action”), Lilly and the Company shall reasonably cooperate to attempt to obtain the Ruling or Unqualified Tax Opinion referred to in Section 6.01(c), unless Lilly shall have waived the requirement to obtain such Ruling or Unqualified Tax Opinion.

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(b)Rulings or Unqualified Tax Opinions at the Company’s Request. Lilly agrees that at the reasonable request of the Company pursuant to Section 6.01(c), Lilly shall cooperate with the Company and use its reasonable best efforts to seek to obtain, as expeditiously as possible, a Ruling from the IRS or an Unqualified Tax Opinion for the purpose of permitting the Company to take the Notified Action. Further, in no event shall Lilly be required to file any Ruling Request under this Section 6.03(b) unless the Company represents that (i) it has read the Ruling Request, and (ii) all information and representations, if any, relating to any member of the Company Group, contained in the Ruling Request documents are (subject to any qualifications therein) true, correct and complete. The Company shall reimburse Lilly for all reasonable costs and expenses, including expenses relating to the utilization of Lilly personnel, incurred by the Lilly Group in obtaining a Ruling or Unqualified Tax Opinion requested by the Company within ten Business Days after receiving an invoice from Lilly therefor.

(c)Rulings or Unqualified Tax Opinions at Lilly’s Request. Lilly shall have the right to obtain a Ruling or an Unqualified Tax Opinion at any time in its sole and absolute discretion. If Lilly determines to obtain a Ruling or an Unqualified Tax Opinion, the Company shall (and shall cause each Affiliate of the Company to) cooperate with Lilly and take any and all actions reasonably requested by Lilly in connection with obtaining the Ruling or Unqualified Tax Opinion (including, without limitation, by making any representation or covenant or providing any materials or information requested by the IRS or Tax Advisor; provided, that the Company shall not be required to make (or cause any Affiliate of the Company to make) any representation or covenant that is inconsistent with historical facts or as to future matters or events over which it has no control). Lilly shall reimburse the Company for all reasonable costs and expenses, including expenses relating to the utilization of the Company personnel, incurred by the Company Group in connection with such cooperation within ten Business Days after receiving an invoice from the Company therefor.

(d)The Company hereby agrees that Lilly shall have sole and exclusive control over the process of obtaining any Ruling, and that only Lilly shall apply for a Ruling. In connection with obtaining a Ruling pursuant to Section 6.03(b), (i) Lilly shall keep the Company informed in a timely manner of all material actions taken or proposed to be taken by Lilly in connection therewith; (ii) Lilly shall (A) reasonably in advance of the submission of any Ruling Request documents provide the Company with a draft copy thereof, (B) reasonably consider the Company’s comments on such draft copy, and (C) provide the Company with a final copy; and (iii) Lilly shall provide the Company with notice reasonably in advance of, and the Company shall have the right to attend, any formally scheduled meetings with the IRS (subject to the approval of the IRS) that relate to such Ruling. Neither the Company nor any Affiliate of the Company directly or indirectly controlled by the Company shall seek any guidance from the IRS or any other Tax Authority (whether written, verbal or otherwise) at any time concerning the Contribution or the Distribution (including the impact of any transaction on the Contribution or the Distribution).

Section 6.04Liability for Tax-Related Losses.

(a)Notwithstanding anything in this Agreement or the Separation Agreement to the contrary (and in each case regardless of whether any Ruling, Unqualified Tax Opinion or waiver referred to in Section 6.01(c) may have been provided), subject to Section 6.04(c), the Company

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shall be responsible for, and shall indemnify and hold harmless Lilly and its Affiliates and each of their respective officers, directors and employees from and against, one hundred percent (100%) of any Tax-Related Losses that are attributable to or result from any one or more of the following: (i) the acquisition (other than pursuant to the Contribution, the IPO, or the Distribution) of all or a portion of the Company’s stock and/or its or its Subsidiaries’ assets by any means whatsoever by any Person; (ii) any negotiations, understandings, agreements or arrangements by the Company with respect to transactions or events (including, without limitation, stock issuances, pursuant to the exercise of stock options or otherwise, option grants, capital contributions or acquisitions, or a series of such transactions or events) that cause the Distribution to be treated as part of a plan pursuant to which one or more Persons acquire directly or indirectly stock of the Company representing a Fifty-Percent or Greater Interest therein; (iii) any action or failure to act by the Company after the Distribution (including, without limitation, any amendment to the Company’s certificate of incorporation (or other organizational documents), whether through a stockholder vote or otherwise) affecting the voting rights of the Company stock (including, without limitation, through the conversion of one class of Company Capital Stock into another class of Company Capital Stock); (iv) any act or failure to act by the Company or any Affiliate of the Company described in Section 6.01 (regardless whether such act or failure to act may be covered by a Ruling, Unqualified Tax Opinion or waiver described in Section 6.01(c), a Board Certificate described in Section 6.01(d), or a consent described in Section 6.01(e)); or (v) any breach by the Company of its agreement and representation set forth in Section 6.01(a).

(b)Notwithstanding anything in this Agreement or the Separation Agreement to the contrary, subject to Section 6.04(c), Lilly shall be responsible for, and shall indemnify and hold harmless the Company and its Affiliates and each of their respective officers, directors and employees from and against, one hundred percent (100%) of any Tax-Related Losses that are attributable to, or result from any one or more of the following: (i) the acquisition (other than pursuant to the Contribution, the IPO, or the Distribution) of all or a portion of Lilly’s stock and/or its assets by any means whatsoever by any Person; (ii) any negotiations, agreements or arrangements by Lilly with respect to transactions or events (including, without limitation, stock issuances, pursuant to the exercise of stock options or otherwise, option grants, capital contributions or acquisitions, or a series of such transactions or events) that cause the Distribution to be treated as part of a plan pursuant to which one or more Persons acquire directly or indirectly stock of Lilly representing a Fifty-Percent or Greater Interest therein; (iii) any act or failure to act by Lilly or a member of the Lilly Group described in Section 6.02; or (iv) any breach by Lilly of its agreement and representation set forth in Section 6.02.

(c)

(i)To the extent that any Tax-Related Loss is subject to indemnity under both Section 6.04(a) and Section 6.04(b), responsibility for such Tax-Related Loss shall be shared by Lilly and the Company according to relative fault.

(ii)Notwithstanding anything in Section 6.04(b) or Section 6.04(c)(i) or any other provision of this Agreement or the Separation Agreement to the contrary:

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(A)with respect to (I) any Tax-Related Loss resulting from Section 355(e) of the Code (other than as a result of an acquisition of a Fifty-Percent or Greater Interest in Lilly) and (II) any other Tax-Related Loss resulting (for the absence of doubt, in whole or in part) from an acquisition after the Distribution of any stock or assets of the Company (or any Affiliate of the Company) by any means whatsoever by any Person or any action or failure to act by the Company affecting the voting rights of the Company stock, the Company shall be responsible for, and shall indemnify and hold harmless Lilly and its Affiliates and each of their respective officers, directors and employees from and against, one hundred percent (100%) of such Tax-Related Loss; and

(B)for purposes of calculating the amount and timing of any Tax-Related Loss for which the Company is responsible under this Section 6.04, Tax-Related Losses shall be calculated by assuming that Lilly, the Lilly Affiliated Group and each member of the Lilly Group (I) pay Tax at the highest marginal corporate Tax rates in effect in each relevant taxable year and (II) have no Tax Attributes in any relevant taxable year.

(iii)Notwithstanding anything in Section 6.04(a) or Section 6.04(c)(i) or any other provision of this Agreement or the Separation Agreement to the contrary, with respect to (A) any Tax-Related Loss resulting from Section 355(e) of the Code (other than as a result of an acquisition of a Fifty-Percent or Greater Interest in the Company) and (B) any other Tax-Related Loss resulting (for the absence of doubt, in whole or in part) from an acquisition after the Distribution of any stock or assets of Lilly (or any Lilly Affiliate) by any means whatsoever by any Person, Lilly shall be responsible for, and shall indemnify and hold harmless the Company and its Affiliates and each of their respective officers, directors and employees from and against, one hundred percent (100%) of such Tax-Related Loss.

(d)The Company shall pay Lilly the amount of any Tax-Related Losses for which the Company is responsible under this Section 6.04: (A) in the case of Tax-Related Losses described in clause (i) of the definition of Tax-Related Losses no later than two Business Days prior to the date Lilly files, or causes to be filed, the applicable Tax Return for the year of the Contribution or Distribution, as applicable (the “Filing Date”) (provided, that if such Tax-Related Losses arise pursuant to a Final Determination described in clause (i), (ii) or (iii) of the definition of Final Determination, then the Company shall pay Lilly no later than two Business Days after the date of such Final Determination with interest calculated at the Prime Rate plus two percent, compounded semiannually, from the date that is two Business Days prior to the Filing Date through the date of such Final Determination) and (B) in the case of Tax-Related Losses described in clause (ii) or (iii) of the definition of Tax-Related Losses, no later than two Business Days after the date Lilly pays such Tax-Related Losses. Lilly shall pay the Company the amount of any Tax-Related Losses (described in clause (ii) or (iii) of the definition of Tax-Related Loss) for which Lilly is responsible under this Section 6.04 no later than two Business Days after the date the Company pays such Tax-Related Losses.

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Section 7.Assistance and Cooperation.

Section 7.01Assistance and Cooperation.

(a)The Parties shall cooperate (and cause their respective Affiliates to cooperate) with each other and with each other’s agents, including accounting firms and legal counsel, in connection with Tax matters relating to the Parties and their Affiliates including (i) preparation and filing of Tax Returns, (ii) determining the liability for and amount of any Taxes due (including estimated Taxes) or the right to and amount of any refund of Taxes, (iii) examinations of Tax Returns, and (iv) any administrative or judicial proceeding in respect of Taxes assessed or proposed to be assessed. Such cooperation shall include making all information and documents in their possession relating to the other Party and its Affiliates available to such other Party as provided in Section 8. Each of the Parties shall also make available to the other, as reasonably requested and available, personnel (including officers, directors, employees and agents of the Parties or their respective Affiliates) responsible for preparing, maintaining, and interpreting information and documents relevant to Taxes, and personnel reasonably required as witnesses or for purposes of providing information or documents in connection with any administrative or judicial proceedings relating to Taxes. The Parties shall cooperate pursuant to this Section 7 to seek any competent authority relief that may be available with respect to any Tax detriment that would be suffered by a member of the Lilly Group, on the one hand, or a member of the Company Group, on the other hand, absent such competent authority relief. The Company shall cooperate with Lilly and take any and all actions reasonably requested by Lilly in connection with obtaining the Tax Opinions (including, without limitation, by making any new representation or covenant, confirming any previously made representation or covenant or providing any materials or information requested by any Tax Advisor or Tax Authority; provided, that the Company shall not be required to make or confirm any representation or covenant that is inconsistent with historical facts or as to future matters or events over which it has no control).

(b)Any information or documents provided under this Section 7 shall be kept confidential by the Party receiving the information or documents, except as may otherwise be necessary in connection with the filing of Tax Returns or in connection with any administrative or judicial proceedings relating to Taxes. Notwithstanding any other provision of this Agreement or any other agreement, (i) neither Lilly nor any Lilly Affiliate shall be required to provide the Company or any Affiliate of the Company or any other Person access to or copies of any information, documents or procedures (including the proceedings of any Tax Contest) other than information, documents or procedures that relate to the Company, the business or assets of the Company or any Affiliate of the Company and (ii) in no event shall Lilly or any Lilly Affiliate be required to provide the Company, any Affiliate of the Company or any other Person access to or copies of any information or documents if such action could reasonably be expected to result in the waiver of any Privilege. In addition, in the event that Lilly determines that the provision of any information or documents to the Company or any Affiliate of the Company could be commercially detrimental, violate any Law or agreement or waive any Privilege, the Parties shall use reasonable best efforts to permit compliance with its obligations under this Section 7 in a manner that avoids any such harm or consequence.

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Section 7.02Income Tax Return Information. The Company and Lilly acknowledge that time is of the essence in relation to any request for information, assistance or cooperation made by Lilly or the Company pursuant to Section 7.01 or this Section 7.02. The Company and Lilly acknowledge that failure to conform to the reasonable deadlines set by Lilly or the Company could cause irreparable harm. Each Party shall provide to the other Party information and documents relating to its Group required by the other Party to prepare Tax Returns, including, but not limited to, any pro forma returns required by the Responsible Party for purposes of preparing such Tax Returns. Any information or documents the Responsible Party requires to prepare such Tax Returns shall be provided in such form as the Responsible Party reasonably requests and at or prior to the time reasonably specified by the Responsible Party so as to enable the Responsible Party to file such Tax Returns on a timely basis.

Section 7.03Reliance by Lilly. If any member of the Company Group supplies information to a member of the Lilly Group in connection with a Tax liability and an officer of a member of the Lilly Group signs a statement or other document under penalties of perjury in reliance upon the accuracy of such information, then upon the written request of such member of the Lilly Group identifying the information being so relied upon, the chief financial officer of the Company (or any officer of the Company as designated by the chief financial officer of the Company) shall certify in writing that to his or her knowledge (based upon consultation with appropriate employees) the information so supplied is accurate and complete.

Section 7.04Reliance by the Company. If any member of the Lilly Group supplies information to a member of the Company Group in connection with a Tax liability and an officer of a member of the Company Group signs a statement or other document under penalties of perjury in reliance upon the accuracy of such information, then upon the written request of such member of the Company Group identifying the information being so relied upon, the chief financial officer of Lilly (or any officer of Lilly as designated by the chief financial officer of Lilly) shall certify in writing that to his or her knowledge (based upon consultation with appropriate employees) the information so supplied is accurate and complete.

Section 8.Tax Records.

Section 8.01Retention of Tax Records. Each Party shall preserve and keep all Tax Records exclusively relating to the assets and activities of its Group for Pre-Deconsolidation Periods, and Lilly shall preserve and keep all other Tax Records relating to Taxes of the Groups for Pre-Deconsolidation Tax Periods, for so long as the contents thereof may become material in the administration of any matter under the Code or other applicable Tax Law, but in any event until the later of (i) the expiration of any applicable statutes of limitations, or (ii) seven years after the Deconsolidation Date (such later date, the “Retention Date”). After the Retention Date, each Party may dispose of such Tax Records upon 60 Business Days’ prior written notice to the other Party. If, prior to the Retention Date, a Party reasonably determines that any Tax Records which it would otherwise be required to preserve and keep under this Section 8 are no longer material in the administration of any matter under the Code or other applicable Tax Law and the other Party agrees, then such first Party may dispose of such Tax Records upon 60 Business Days’ prior notice to the other Party. Any notice of an intent to dispose given pursuant to this Section 8.01 shall include a list of the Tax Records to be disposed of describing in reasonable detail each file, book, or other record accumulation being disposed. The notified Party shall have

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the opportunity, at its cost and expense, to copy or remove, within such 60 Business Day period, all or any part of such Tax Records.

Section 8.02Access to Tax Records. The Parties and their respective Affiliates shall make available to each other for inspection and copying during normal business hours upon reasonable notice all Tax Records (and, for the avoidance of doubt, any pertinent underlying data accessed or stored on any computer program or information technology system) in their possession and shall permit the other Party and its Affiliates, authorized agents and representatives and any representative of a Taxing Authority or other Tax auditor direct access, at the cost and expense of such other Party, during normal business hours upon reasonable notice to any computer program or information technology system used to access or store any Tax Records, in each case to the extent reasonably required by the other Party in connection with the preparation of Tax Returns or financial accounting statements, audits, litigation, or the resolution of items under this Agreement.

Section 8.03Preservation of Privilege. No member of the Company Group shall provide access to, copies of, or otherwise disclose to any Person any documentation relating to Taxes existing prior to the final Distribution Date to which Privilege may reasonably be asserted without the prior written consent of Lilly, such consent not to be unreasonably withheld.

Section 9.Tax Contests.

Section 9.01Notice. Each of the Parties shall provide prompt notice to the other Party of any written communication from a Tax Authority regarding any pending Tax audit, assessment or proceeding or other Tax Contest of which it becomes aware related to Taxes for Tax Periods for which it is indemnified by the other Party hereunder or for which it may be required to indemnify the other Party hereunder. Such notice shall attach copies of the pertinent portion of any written communication from a Tax Authority and contain factual information (to the extent known) describing any asserted Tax liability in reasonable detail and shall be accompanied by copies of any notice and other documents received from any Tax Authority in respect of any such matters. If an indemnified Party has knowledge of an asserted Tax liability with respect to a matter for which it is to be indemnified hereunder and such Party fails to give the indemnifying Party prompt notice of such asserted Tax liability and the indemnifying Party is entitled under this Agreement to contest the asserted Tax liability, then (i) if the indemnifying Party is precluded from contesting the asserted Tax liability in any forum as a result of the failure to give prompt notice, the indemnifying Party shall have no obligation to indemnify the indemnified Party for any Taxes arising out of such asserted Tax liability, and (ii) if the indemnifying Party is not precluded from contesting the asserted Tax liability in any forum, but such failure to give prompt notice results in a material monetary detriment to the indemnifying Party, then any amount which the indemnifying Party is otherwise required to pay the indemnified Party pursuant to this Agreement shall be reduced by the amount of such detriment.

Section 9.02Control of Tax Contests.

(a)Separate Returns. In the case of any Tax Contest with respect to any Separate Return, the Party having liability for the Tax pursuant to Section 2 hereof shall have exclusive

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control over the Tax Contest, including exclusive authority with respect to any settlement of such Tax liability, subject to Section 9.02(c) and Section 9.02(d) below.

(b)Joint Return. In the case of any Tax Contest with respect to any Joint Return, Lilly shall have exclusive control over the Tax Contest, including exclusive authority with respect to any settlement of such Tax liability, subject to Section 9.02(c) and Section 9.02(d) below.

(c)Settlement Rights. The Controlling Party shall have the sole right to contest, litigate, compromise and settle any Tax Contest without obtaining the prior consent of the Non-Controlling Party. Unless waived by the Parties in writing, in connection with any potential adjustment in a Tax Contest as a result of which adjustment the Non-Controlling Party may reasonably be expected to become liable to make any indemnification payment to the Controlling Party under this Agreement: (i) the Controlling Party shall keep the Non-Controlling Party informed in a timely manner of all actions taken or proposed to be taken by the Controlling Party with respect to such potential adjustment in such Tax Contest; (ii) the Controlling Party shall timely provide the Non-Controlling Party copies of any written materials relating to such potential adjustment in such Tax Contest received from any Tax Authority; (iii) the Controlling Party shall timely provide the Non-Controlling Party with copies of any correspondence or filings submitted to any Tax Authority or judicial authority in connection with such potential adjustment in such Tax Contest; (iv) the Controlling Party shall consult with the Non-Controlling Party and offer the Non-Controlling Party a reasonable opportunity to comment before submitting any written materials prepared or furnished in connection with such potential adjustment in such Tax Contest; and (v) the Controlling Party shall defend such Tax Contest diligently and in good faith. The failure of the Controlling Party to take any action specified in the preceding sentence with respect to the Non-Controlling Party shall not relieve the Non-Controlling Party of any liability and/or obligation which it may have to the Controlling Party under this Agreement except to the extent that the Non-Controlling Party was actually harmed by such failure, and in no event shall such failure relieve the Non-Controlling Party from any other liability or obligation which it may have to the Controlling Party. In the case of any Tax Contest described in Section 9.02(a) or Section 9.02(b), “Controlling Party” means the Party entitled to control the Tax Contest under such Section and “Non-Controlling Party” means the other Party.

(d)Tax Contest Participation. Unless waived by the Parties in writing, the Controlling Party shall provide the Non-Controlling Party with written notice reasonably in advance of, and the Non-Controlling Party shall have the right to attend, any formally scheduled meetings with Tax Authorities or hearings or proceedings before any judicial authorities in connection with any potential adjustment in a Tax Contest pursuant to which the Non-Controlling Party may reasonably be expected to become liable to make any indemnification payment to the Controlling Party under this Agreement. The failure of the Controlling Party to provide any notice specified in this Section 9.02(d) to the Non-Controlling Party shall not relieve the Non-Controlling Party of any liability and/or obligation which it may have to the Controlling Party under this Agreement except to the extent that the Non-Controlling Party was actually harmed by such failure, and in no event shall such failure relieve the Non-Controlling Party from any other liability or obligation which it may have to the Controlling Party.

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(e)Power of Attorney. Each member of the Company Group shall execute and deliver to Lilly (or such member of the Lilly Group as Lilly shall designate) any power of attorney or other similar document reasonably requested by Lilly (or such designee) in connection with any Tax Contest (as to which Lilly is the Controlling Party) described in this Section 9. Each member of the Lilly Group shall execute and deliver to the Company (or such member of the Company Group as the Company shall designate) any power of attorney or other similar document requested by the Company (or such designee) in connection with any Tax Contest (as to which the Company is the Controlling Party) described in this Section 9.

Section 10.Effective Date. This Agreement shall be effective as of the date hereof.

Section 11.Treatment of Payments.

Section 11.01Treatment of Tax Indemnity Payments. In the absence of any change in Tax treatment under the Code or except as otherwise required by other applicable Tax Law, any Tax indemnity payments made by a Party under this Agreement shall be reported for Tax purposes by the payor and the recipient as distributions or capital contributions, as appropriate, occurring immediately before the Deconsolidation (but only to the extent the payment does not relate to a Tax allocated to the payor in accordance with Section 1552 of the Code or the Treasury Regulations thereunder or Treasury Regulations Section 1.1502-33(d) (or under corresponding principles of other applicable Tax Laws)) or as payments of an assumed or retained liability. Except to the extent provided in Section 11.02, any Tax indemnity payment made by a Party under this Agreement shall be increased as necessary so that after making all payments in respect of Taxes imposed on or attributable to such indemnity payment, the recipient Party receives an amount equal to the sum it would have received had no such Taxes been imposed.

Section 11.02Interest Under This Agreement. Notwithstanding anything herein to the contrary, to the extent one Party (“Indemnitor”) makes a payment of interest to another Party (“Indemnitee”) under this Agreement with respect to the period from the date that the Indemnitee made a payment of Tax to a Tax Authority to the date that the Indemnitor reimbursed the Indemnitee for such Tax payment, the interest payment shall be treated as interest expense to the Indemnitor (deductible to the extent provided by Law) and as interest income by the Indemnitee (includible in income to the extent provided by Law). The amount of the payment shall not be adjusted to take into account any associated Tax Benefit to the Indemnitor or increase in Tax to the Indemnitee.

Section 12.Disagreements.

Section 12.01Discussion. The Parties mutually desire that friendly collaboration will continue between them. Accordingly, they will use good faith efforts, and they will cause their respective Group members to use good faith efforts, to resolve in an amicable manner all disagreements and misunderstandings connected with their respective rights and obligations under this Agreement, including any amendments hereto. In furtherance thereof, in the event of any dispute or disagreement (a “Dispute”) between any member of the Lilly Group and any member of the Company Group as to the interpretation of any provision of this Agreement or the

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performance of obligations hereunder, the Tax departments of the Parties shall negotiate in good faith to resolve the Dispute.

Section 12.02Escalation. If such good faith negotiations do not resolve the Dispute, then the matter, upon written request of either Party, will be referred for resolution to representatives of the Parties at a senior level of management of the Parties pursuant to the procedures set forth in Section 8.02(a) of the Separation Agreement.

Section 12.03Referral to Tax Advisor. If the Parties are not able to resolve the Dispute through the escalation process referred to above, then the matter will be referred to a Tax Advisor acceptable to each of the Parties to act as an arbitrator in order to resolve the Dispute. In the event that the Parties are unable to agree upon a Tax Advisor within 15 Business Days following the completion of the escalation process, the Parties shall each separately retain an independent, nationally recognized law or accounting firm (each, a “Preliminary Tax Advisor”), which Preliminary Tax Advisors shall jointly select a Tax Advisor on behalf of the Parties to act as an arbitrator in order to resolve the Dispute. The Tax Advisor may, in its discretion, obtain the services of any third-party appraiser, accounting firm or consultant that the Tax Advisor deems necessary to assist it in resolving such disagreement. The Tax Advisor shall furnish written notice to the Parties of its resolution of any such Dispute as soon as practical, but in any event no later than 30 Business Days after its acceptance of the matter for resolution. Any such resolution by the Tax Advisor will be conclusive and binding on the Parties. Following receipt of the Tax Advisor’s written notice to the Parties of its resolution of the Dispute, the Parties shall each take or cause to be taken any action necessary to implement such resolution of the Tax Advisor. Each Party shall pay its own fees and expenses (including the fees and expenses of its representatives) incurred in connection with the referral of the matter to the Tax Advisor (and the Preliminary Tax Advisors, if any). All fees and expenses of the Tax Advisor (and the Preliminary Tax Advisors, if any) in connection with such referral shall be shared equally by the Parties.

Section 12.04Injunctive Relief. Nothing in this Section 12 will prevent either Party from seeking injunctive relief if any delay resulting from the efforts to resolve the Dispute through the process set forth above could result in serious and irreparable injury to either Party. Notwithstanding anything to the contrary in this Agreement, Lilly and the Company are the only members of their respective Group entitled to commence a dispute resolution procedure under this Agreement, and each of Lilly and the Company will cause its respective Group members not to commence any dispute resolution procedure other than through such Party as provided in this Section 12.

Section 13.General Provisions.

Section 13.01Counterparts; Entire Agreement; Conflicting Agreements.

(a)This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement, and shall become effective when one or more counterparts have been signed by each Party and delivered to the other Party. Execution of this Agreement or any other documents pursuant to this Agreement by facsimile or other electronic copy of a signature shall be deemed to be, and shall have the same effect as being, executed by an original signature.

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(b)Except as provided in this Section 13.01(b), (i) the Transaction Documents and the exhibits, schedules and appendices thereto contain the entire agreement between the Parties with respect to Taxes and supersede all previous agreements, negotiations, discussions, writings, understandings, commitments and conversations with respect to such subject matter, and (ii) there are no agreements or understandings between the Parties or their respective Groups with respect to such subject matter other than those set forth or referred to herein or therein. All such other agreements shall be of no further effect between the Lilly Group, on the one hand, and the Company Group, on the other hand, and any rights or obligations between the Parties’ respective Groups existing thereunder shall be fully and finally settled, calculated as of the date hereof; provided, that any existing Tax sharing, Tax allocation or similar agreement in respect of any consolidated, combined, unitary or similar group that includes one or more members of the Lilly Group and one or more members of the Company Group shall remain in effect with respect to such Company Group member(s) until the date on which such Company Group member(s) cease to be included in such consolidated, combined, unitary or similar group, and any rights or obligations between the Parties’ respective Groups existing thereunder as of such date shall be fully and finally settled, calculated as of such date. Any payments made pursuant to such agreements shall be disregarded for purposes of computing amounts due under this Agreement; provided, that to the extent appropriate, as determined by Lilly, payments made pursuant to such agreements shall be credited to Lilly or the Company, as applicable, in computing their respective obligations under this Agreement, in the event that such payments relate to a Tax liability that is the subject matter of this Agreement for a Tax Period that is the subject matter of this Agreement.

(c)In the event and to the extent that there shall be a conflict between the provisions of this Agreement and the provisions of any other Ancillary Agreement, a Local Transfer Agreement or an agreement described in Section 13.01(b), in each case with respect to Taxes, this Agreement shall control.

Section 13.02No Construction Against Drafter. The Parties acknowledge that this Agreement and all the terms and conditions contained herein have been fully reviewed and negotiated by the Parties. Having acknowledged the foregoing, the Parties agree that any principle of construction or rule of Law that provides that, in the event of any inconsistency or ambiguity, an agreement shall be construed against the drafter of the agreement shall have no application to the terms and conditions of this Agreement.

Section 13.03Governing Law. This Agreement shall be governed by and construed and interpreted in accordance with the Laws of the State of Indiana, without regard to the conflict of laws principles thereof that would result in the application of any Law other than the Laws of the State of Indiana.

Section 13.04Assignability. This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns; provided, however, that no Party may assign its respective rights or delegate its respective obligations under this Agreement without the express prior written consent of the other Party; provided, further, that this Agreement shall be binding on and inure to the benefit of any successor by merger, acquisition of assets, or otherwise, to either of the Parties (including but not limited to any successor of Lilly or the Company succeeding to any Tax Attributes of either Party under Section 381 of the Code), to the same extent as if such successor had been an original party to this Agreement.

Section 13.05Third Party Beneficiaries. Except for the indemnification rights under this Agreement of any Affiliate of Lilly or the Company in their respective capacities as such, (a) the provisions of this Agreement are solely for the benefit of the Parties and are not intended to confer upon any Person (including employees of the Parties) except the Parties any rights or remedies hereunder, and (b) there are no third party beneficiaries of this Agreement and this Agreement shall not provide any third person (including employees of the Parties) with any remedy, claim, liability, reimbursement, claim of action or other right in excess of those existing without reference to this Agreement.

Section 13.06Notices. All notices or other communications under this Agreement shall be in writing and shall be deemed to be duly given when (a) delivered in person or (b) deposited in the United States mail or private express mail, postage prepaid, addressed as follows:

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If to Lilly, to:

Eli Lilly and Company

Lilly Corporate Center

Indianapolis, Indiana 46285

Attention:General Counsel

If to the Company to:

Elanco Animal Health Incorporated

2500 Innovation Way

Greenfield, Indiana 46140

Attention:General Counsel

Any Party may, by notice to the other Party, change the address to which such notices are to be given.

Section 13.07Severability. If any provision of this Agreement or the application thereof to any Person or circumstance is determined by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions hereof or the application of such provision to Persons or circumstances or in jurisdictions other than those as to which it has been held invalid or unenforceable, shall remain in full force and effect and shall in no way be affected, impaired or invalidated thereby, so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner adverse to any Party. Upon such determination, the Parties shall negotiate in good faith in an effort to agree upon such a suitable and equitable provision to effect the original intent of the Parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated by this Agreement be consummated as originally contemplated to the greatest extent possible.

Section 13.08Force Majeure. No party shall be deemed in default of this Agreement to the extent that any delay or failure in the performance of its obligations under this Agreement results from any cause beyond its reasonable control and without its fault or negligence, such as acts of God, acts of civil or military authority, embargoes, epidemics, war, riots, insurrections, fires, explosions, earthquakes, floods, unusually severe weather conditions, labor problems or unavailability of parts, or, in the case of computer systems, any failure in electrical or air conditioning equipment. In the event of any such excused delay, the time for performance shall be extended for a period equal to the time lost by reason of the delay.

Section 13.09Late Payments. Except as expressly provided to the contrary in this Agreement, any amount not paid when due pursuant to this Agreement (and any amounts billed or otherwise invoiced or demanded and properly payable that are not paid within thirty (30) days of such bill, invoice or other demand) shall accrue interest at a rate per annum equal to the Prime Rate plus 5%.

Section 13.10Expenses. Except as otherwise specified in this Agreement and except as otherwise agreed in writing between Lilly and the Company, Lilly and the Company shall each be responsible for its own fees, costs and expenses paid or incurred in connection with

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preparation of Tax Returns, Tax Contests, and other matters related to Taxes under the provisions of this Agreement.

Section 13.11Further Action. The Parties shall execute and deliver all documents, provide all information, and take or refrain from taking action as may be necessary or appropriate to achieve the purposes of this Agreement, including the execution and delivery to the other Parties and their Affiliates and representatives of such powers of attorney or other authorizing documentation as is reasonably necessary or appropriate in connection with Tax Contests (or portions thereof) under the control of such other Parties in accordance with Section 9.

Section 13.12Headings. The table of contents and article, section and paragraph headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

Section 13.13Survival. The covenants and other agreements contained herein and the indemnification obligations and liability for the breach of any obligations contained herein, shall survive the Separation and the IPO, and shall remain in full force and effect.

Section 13.14Waivers of Default. Waiver by either Party of any default by the other Party of any provision of this Agreement shall not be deemed a waiver by the waiving Party of any subsequent or other default, nor shall it prejudice the rights of the other Party.

Section 13.15Specific Performance. In the event of any actual or threatened default or breach of, any of the terms, conditions and provisions of this Agreement, the party or parties who are or are to be thereby aggrieved shall be entitled to seek an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof, in each case (a) without the requirement of posting any bond or other indemnity and (b) in addition to any other remedy to which it or they may be entitled, at Law or in equity. Such remedies shall be cumulative with and not exclusive of and shall be in addition to any other remedies which any party may have under this Agreement, or at Law or in equity or otherwise, and the exercise by a party hereto of any one remedy shall not preclude the exercise of any other remedy.

Section 13.16Amendments. No provision of this Agreement shall be deemed waived, amended, supplemented or modified by any Party, unless such waiver, amendment, supplement or modification is in writing and signed by the authorized representative of the Party against whom it is sought to enforce such waiver, amendment, supplement or modification.

Section 13.17Interpretation. Interpretation of this Agreement (except as specifically provided in this Agreement, in which case such specified rules of construction shall govern with respect to this Agreement) shall be governed by the following rules of construction: (a) words in the singular shall be held to include the plural and vice versa, and words of one gender shall be held to include the other gender as the context requires; (b) references to the terms Article, Section, paragraph and Exhibit are references to the Articles, Sections, paragraphs and Exhibits to this Agreement unless otherwise specified; (c) the terms “hereof”, “herein”, “hereby”, “hereto” and derivative or similar words refer to this entire Agreement, including the Schedules and Exhibits hereto; (d) references to “$” shall mean U.S. dollars; (e) the word “including” and

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words of similar import shall mean “including without limitation,” unless otherwise specified; (f) the word “or” shall not be exclusive; (g) references to “written” or “in writing” include in electronic form; (h) provisions shall apply, when appropriate, to successive events and transactions; (i) a reference to any Person includes such Person’s permitted successors and permitted assigns; (j) any reference to “days” means calendar days unless Business Days are expressly specified; and (k) when calculating the period of time before which, within which or following which any act is to be done or step taken pursuant to this Agreement, the date that is the reference date in calculating such period shall be excluded and, if the last day of such period is not a Business Day, the period shall end on the next succeeding Business Day.

Section 13.18Waiver of Jury Trial. SUBJECT TO ARTICLE VIII AND SECTIONS 11.15 AND 11.19 OF THE SEPARATION AGREEMENT, EACH OF THE PARTIES HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY COURT PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF AND PERMITTED UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH OF THE PARTIES HEREBY (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 13.18.

Section 13.19Submission to Jurisdiction; Waivers. With respect to any Action relating to or arising out of this Agreement, subject to the provisions of Section 12, each Party irrevocably (a) consents and submits to the exclusive jurisdiction of the courts of the State of Indiana and any court of the United States located in the State of Indiana; (b) waives any objection which such Party may have at any time to the laying of venue of any Action brought in any such court, waives any claim that such Action has been brought in an inconvenient forum and further waives the right to object, with respect to such Action, that such court does not have jurisdiction over such Party; and (c) consents to the service of process at the address set forth for notices in Section 13.06 herein; provided, however, that such manner of service of process shall not preclude the service of process in any other manner permitted under applicable Law.

Section 13.20The Company Subsidiaries. If, at any time, the Company acquires or creates one or more Subsidiaries that are includable in the Company Group, they shall be subject to this Agreement and all references to the Company Group herein shall thereafter include a reference to such Subsidiaries.

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IN WITNESS WHEREOF, each Party has caused this Agreement to be executed on its behalf by a duly authorized officer on the date first set forth above.

ELI LILLY AND COMPANY
By:	/s/ David A. Ricks
Name:	David A. Ricks
Title:	Chairman, President and Chief Executive Officer
ELANCO ANIMAL HEALTH INCORPORATED
By:	/s/ Michael-Bryant Hicks
Name:	Michael-Bryant Hicks
Title:	Executive Vice President, General Counsel and Corporate Secretary

EX-10.4

Exhibit 10.4

EMPLOYEE MATTERS AGREEMENT

This EMPLOYEE MATTERS AGREEMENT (this “Agreement”), dated as of September 24, 2018, is by and between Eli Lilly and Company, an Indiana corporation (“Lilly”) and Elanco Animal Health Incorporated, an Indiana corporation (the “Company”). Lilly and the Company are sometimes referred to herein individually as a “Party” and collectively as the “Parties.”

RECITALS:

WHEREAS, the Board of Directors of Lilly has determined that it is in the best interests of Lilly and its stockholders to separate the Animal Health Business (as such term is defined in the Master Separation Agreement, dated as of the date hereof (the “Separation Agreement”)) from the other businesses conducted by Lilly;

WHEREAS, the Separation Agreement sets forth the terms and conditions applicable to the IPO;

WHEREAS, after the IPO, Lilly intends to effect a Distribution or Other Disposition; and

WHEREAS, in furtherance of the foregoing, the Parties have entered into this Agreement, which is an Ancillary Agreement, to govern the rights and obligations of the Parties with respect to employment, compensation, employee benefits and related matters in connection with the Transactions, and to ratify actions previously taken in connection with the Contribution, as set forth herein.

NOW, THEREFORE, in consideration of the foregoing and the covenants and agreements set forth below, the Parties hereto agree as follows:

ARTICLE I

SCOPE OF AGREEMENT; DEFINITIONS

Capitalized terms used but not defined herein shall have the meaning ascribed to them in the Separation Agreement. For purposes of this Agreement the terms set forth below shall have the following meanings:

1.1.Company 401(k) Plan shall have the meaning set forth in Section 5.2.

1.2.Company Employee means any individual who is (i) employed by Lilly or any of its Affiliates (including the Specified Entities and Transferred Entities) on or immediately prior to the applicable Employee Transfer Date and who provides services wholly or substantially with respect to the Animal Health Business, including those employees on an approved leave of absence, including but not limited to, medical leave, maternity leave, family leave, military leave or personal leave under the policies of Lilly or any of its Affiliates, as applicable, but excluding those U.S. employees on long-term disability leave or (ii) set forth on Annex 1.2.

1.3.Company Group shall have the meaning set forth in the Separation Agreement.

1.4.Company Plan means any written or unwritten plan, policy, program, payroll practice, arrangement, contract, trust, insurance policy, or any agreement or funding vehicle providing compensation or benefits to employees, former employees, individual consultants or directors of a member of the Lilly Group or the Company Group and which is sponsored or maintained by a member of the Company Group.

1.5.Company Transferred Employee means any Company Employee (i) who is employed by a Specified Entity or a Transferred Entity, (ii) whose employment transferred to a member of the Company Group by operation of Law or (iii) who accepted an offer of employment from a member of the Company Group, in each case as of the applicable Employee Transfer Date.

1.6.Disposition Date has the meaning set forth in the Separation Agreement.

1.7.Employee Transfer Date means, as applicable, (i) the date on which a Company Employee becomes an employee of the Company Group or (ii) the effective date of an accepted offer of employment from a member of the Company Group; for a U.S. employee (including Company Employees employed by a Transferred Entity), this date is the Effective Date or such other date that a Lilly Employee is offered employment by the Company Group and transfers employment to the Company Group, and for a non-U.S. employee (including Company Employees employed by a Transferred Entity) this date is the Effective Date, or such other date pursuant to a Local Transfer Agreement or otherwise as agreed upon by the Parties in respect of specified jurisdictions.

1.8.Effective Date has the meaning set forth in the Separation Agreement.

1.9.ERISA means the Employee Retirement Income Security Act of 1974, as amended from time to time.

1.10.Lilly 401(k) Plan shall have the meaning set forth in Section 5.2.

1.11.Lilly Employee means an employee other than a Company Employee who, on the Employee Transfer Date is actively employed by, or on leave of absence from, any member of the Lilly Group.

1.12.Lilly Group shall have the meaning set forth in the Separation Agreement.

1.13.Lilly Plan means any written or unwritten plan, policy, program, payroll practice, arrangement, contract, trust, insurance policy, or any agreement or funding vehicle providing compensation or benefits to employees, former employees, individual consultants or directors of a member of the Lilly Group or the Company Group and which is sponsored or maintained by a member of the Lilly Group.

1.14.Local Transfer Agreement has the meaning set forth in the Separation Agreement.

1.15.Plan Transition Date means, except as agreed upon by the Parties in respect of specified jurisdictions, the date that is the earlier to occur of (i) January 1, 2019, (ii) with respect to a Lilly Plan sponsored or maintained primarily for Company Employees in the U.S., the date that the Company is no longer a member of the “controlled group” of corporations of Lilly (as defined in Section 414(b) of the Code) or (iii) such other date, which Lilly and the Company shall mutually agree in writing.

1.16.Separation Agreement has the meaning set forth in the recitals.

ARTICLE II

GLOBAL PROVISION; GENERAL ALLOCATION OF LIABILITIES

2.1 In General. All provisions herein shall be subject to the requirements of all applicable Law and any collective bargaining, works council or similar agreement or arrangement with any labor union. The provisions of this Agreement shall apply in respect of all jurisdictions wherever situated; provided, however, that to the extent a Local Transfer Agreement addresses employment, compensation and

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employee benefit matters and the terms of such Local Transfer Agreement conflict with the terms of this Agreement, the terms of such Local Transfer Agreement shall govern in respect of matters relating to employees employed in the applicable jurisdiction.

2.2 Employee Liabilities. On the Effective Date, the Company or another member of the Company Group shall assume and thereafter shall pay, perform, fulfill, and discharge, except as expressly provided in this Agreement, (i) all employment or service-related Liabilities with respect to all Company Transferred Employees and former Company Employees (and, in each case, their dependents and beneficiaries) arising prior to, on or after the applicable Employee Transfer Date, excluding Liabilities related to the Lilly Plans unless this Agreement or the Transition Services Agreement expressly provides for such Liabilities to be assumed by the Company or a member of the Company Group, and (ii) any Liabilities expressly transferred to the Company or a member of the Company Group under this Agreement.

2.3 Plan Liabilities. Except as expressly set forth herein, the Company Group shall assume or retain all obligations and Liabilities with respect to each Company Plan arising prior to, on or after the Effective Date.

ARTICLE III

GENERAL PLAN MATTERS

3.1 Lilly Plans.  Except as otherwise set forth herein in Article VII (Annual Incentive Plans) and Article VIII (Equity Compensation), until the applicable Plan Transition Date, the Company shall continue to be a participating employer in the Lilly Plans in which Company Transferred Employees participate, subject to the terms and conditions provided herein and in said Plans.  Except as otherwise set forth herein in Section 5.1 (United States Defined Benefit and Retiree Medical Plans), effective as of the applicable Plan Transition Date, all Company Transferred Employees shall cease participating in any Lilly Plans and shall cease accruing benefits in respect of such plans.  Nothing in this Agreement shall preclude Lilly, at any time, from amending, merging, modifying, terminating, eliminating, reducing, or otherwise altering in any respect any Lilly Plan or any benefit under any Lilly Plan, including but not limited to, any trust, insurance policy, funding vehicle or contract for services related to any Lilly Plan.

3.2 Company Plans.  Effective as of the applicable Plan Transition Date, the Company, or another member of the Company Group, shall establish, administer and make effective Company Plans that are comparable, with respect to the benefits provided in general, under Lilly Plans in which the Company Employees (and their dependents and beneficiaries) participated immediately prior to the Plan Transition Date, which shall be substantially similar to the applicable Lilly Plan, except in the case of plans for life insurance and long-term disability benefits, which shall be fully-insured, and as otherwise provided in Article V (Retirement, Retiree Medical and Nonqualified Plans); provided, however, that the Company, or a member of the Company Group, shall not be required to establish any defined benefit pension plan, retirement medical plan or nonqualified plans for the benefit of Company Employees in the U.S., except to the extent required by Law or any collective bargaining agreement.

3.3 Transfers of Plan Assets.  Except as otherwise specified in this Agreement, nothing in this Agreement shall require Lilly to transfer assets of any Lilly Plan.

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3.4 Non-Duplication of Benefits.  The Company Plans shall not provide benefits that duplicate benefits provided to Company Transferred Employees by the corresponding Lilly Plans.  Lilly and the Company shall agree on methods and procedures, including amending the respective plan documents, to prevent Company Transferred Employees from receiving duplicate benefits from the Lilly Plans and the Company Plans.

ARTICLE IV

EMPLOYMENT MATTERS FOR COMPANY TRANSFERRED EMPLOYEES

4.1 Terms and Conditions of Employment. Subject to applicable Law where applicable Law is more favorable for the relevant Company Employee, for the period ending on December 31, 2019, each Company Transferred Employee shall be entitled to receive while in the employ of the Company Group, (i) at least the same salary, wages and cash incentive or bonus opportunities at target, (ii) equity incentive commitments (measured on the date of grant) equal to the equity budget value (based on the Company Transferred Employee’s role) and (iii) other material terms and conditions of employment as were provided to such Company Transferred Employee immediately prior to January 1, 2019.  The term “other material terms and conditions” in the preceding sentence is limited to practices which, if changed or eliminated, could reasonably give rise to a claim for monetary damages under applicable Law or contract and, with respect to Company Transferred Employees on assignment outside the U.S., includes such other terms governing such international assignment, including tax equalization, housing allowances and other perquisites.  In addition, for the period ending on December 31, 2019, the Company Group shall provide the Company Transferred Employees with employee benefits and perquisites (other than cash incentive or bonus opportunities, equity incentive commitments, defined benefit pension, retiree medical benefits and nonqualified benefits) substantially comparable in the aggregate to the employee benefits and perquisites provided under the applicable Lilly Plans in effect immediately prior to January 1, 2019. In the case of Company Transferred Employees not primarily based in the U.S., the Company Group shall, in addition to meeting the requirements of this Section 4.1, comply with any additional obligations or employment standards arising under applicable Laws governing the terms and conditions of employment.

4.2 Liabilities Related to Transfers of Employment.

(a) No Acceleration of Entitlements; No Severance. No provision of this Agreement, the Separation Agreement, or any Ancillary Agreement shall be construed to create any right, or accelerate entitlement, to any compensation or benefit whatsoever on the part of any Company Employee, Company Transferred Employee or other future, present or former employee of Lilly or the Company under any Lilly Plan or Company Plan, applicable Law or otherwise.

(b) Assumption of Liability. Lilly shall retain and be solely responsible for the administration of severance, indemnity or other termination pay or other similar benefits in accordance with the terms and conditions of the applicable Lilly severance plan or policy in effect as of the date of any termination of employment (i) relating to or resulting from the Company Group’s failure to offer employment to any Company Employee as of the applicable Employee Transfer Date (or failure to continue the employment of any Company Employee prior to the Plan Transition Date) or failure to offer or continue employment on terms and conditions which would preclude any claims of constructive dismissal or similar claims under any applicable Law or other failure to comply with the terms of this Agreement prior to the Plan Transition Date or (ii) where such severance, indemnity or termination pay or other benefits are required to be paid under applicable Law or a Lilly Plan upon the Employee Transfer Date without regard to such terms and conditions or such continuation of employment. The Company shall indemnify Lilly against

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any claims and Losses for payments in lieu of notice or severance payments, penalties, compensation or expenses made pursuant to this Section 4.2(b).

4.3 Assumption of Employment Agreements; Certain Other Terms of Employment. As of the applicable Employee Transfer Date, the Company or another member of the Company Group shall have used reasonable efforts to assume all employment agreements, individual supplemental benefit agreements and other individual agreements entered into between a Company Transferred Employee and a member of the Lilly Group, and the Company shall indemnify and hold harmless Lilly and each member of the Lilly Group against any Liabilities pursuant to any such agreement. In addition, nothing in the Separation Agreement, this Agreement or any Ancillary Agreement should be construed to change the at-will status of any of the employees of the Lilly Group or the Company Group.

4.4 Consultation with Unions; Collective Bargaining Agreements. The Parties shall cooperate to inform and consult with any union or works council representatives to the extent required by Law or an applicable collective bargaining, works council or similar agreement or arrangement with any labor union or works council or which covers the Company Transferred Employees as of the Employee Transfer Date. As of the Employee Transfer Date, the Company, or another member of the Company Group, shall have assumed any collective bargaining or works council agreements in effect with respect to any Company Transferred Employee, and the Company shall indemnify and hold harmless Lilly and each member of the Lilly Group against any Liabilities pursuant to any such agreement.

4.5 Employees with Work Visas or Permits. The Company Group shall take all necessary steps intended to continue the visa or immigration status for Company Transferred Employees, as applicable.

4.6 WARN Act and Other Notices. The Company shall provide any required notice under the Worker Adjustment and Retraining Notification Act (“WARN”) and any similar foreign, state, local or other applicable Law and otherwise to comply with any such requirement with respect to any “plant closing” or “mass layoff” (as defined in WARN) or similar event occurring on or after the Employee Transfer Date and affecting Company Employees. The Company shall indemnify and hold harmless the members of the Lilly Group against any such Liabilities relating to WARN and any similar state or other applicable Law with respect to any events occurring on or after the Employee Transfer Date.  Lilly and the Company shall share, or cause to be shared, information that is reasonably necessary or appropriate in order for the Company to comply with its obligation under this Section 4.6.

4.7 Employees on Long-Term Disability. With respect to any U.S. Company Transferred Employee who is on long-term disability leave under the policies of Lilly or any of its Affiliates immediately prior to the Plan Transition Date and who is employed by a member of the Company Group, the Company or a member of the Company Group shall cause the employment of such employee to transfer to Lilly or a member of the Lilly Group immediately prior to the Plan Transition Date.

ARTICLE V

RETIREMENT, RETIREE MEDICAL AND NONQUALIFIED PLANS

5.1 United States Defined Benefit and Retiree Medical Plans.  Effective as of the Plan Transition Date, the Company Transferred Employees shall, subject to, and to the extent permitted under, the terms of the Lilly Retirement Plan and the Eli Lilly and Company Retiree Health Plan, as applicable (as amended or modified from time to time), be eligible to receive credit for service for purposes of vesting and eligibility service (but not benefit service) with the Company or a member of the Company Group

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following the Plan Transition Date, through a date not to extend beyond December 31, 2023, under the Lilly Retirement Plan and the Eli Lilly and Company Retiree Health Plan, as applicable.

5.2 United States Defined Contribution Plan.  Lilly shall amend The Lilly Employee 401(k) Plan (the “Lilly 401(k) Plan”) to provide that (i) the Company Transferred Employees shall be 100% vested in their account balances under the Lilly 401(k) Plan as of the Plan Transition Date and (ii) effective December 31, 2018, Company Transferred Employees shall not be eligible for contributions from Lilly with respect to any benefits earned for services provided in 2019 or thereafter. The Company shall establish a qualified defined contribution plan (the “Company 401(k) Plan”), effective as of the Plan Transition Date, with terms that are substantially similar to the Lilly 401(k) Plan; provided, that the Company 401(k) Plan shall provide for a three percent (3%) non-elective employer contribution in addition to a dollar-for-dollar match of employee contributions up to six percent (6%) of base pay (up to IRS limits).  The Company Transferred Employees shall be eligible to commence participation in the Company 401(k) Plan on the Plan Transition Date, subject to the requirements of the Company 401(k) Plan.  Any Company Transferred Employee whose Employee Transfer Date is on or before January 1, 2019 shall be fully vested in the Company 401(k) Plan. Not later than thirty (30) days following the Plan Transition Date (or such later time as mutually agreed by the Parties), Lilly shall cause the accounts (including any outstanding participant loan balances) in the Lilly 401(k) Plan attributable, in each case, to Company Transferred Employees as of the Plan Transition Date and the assets related thereto to be transferred in-kind to the Company 401(k) Plan.  The Company shall cause the Company 401(k) Plan to accept such transfer of accounts and underlying assets, effective as of the date of such transfer, to assume and to perform, pay and discharge, all obligations of the Lilly 401(k) Plan relating to the accounts of Company Transferred Employees.

5.3 United States Nonqualified Plans. Lilly shall amend the Lilly Excess Savings Plan and The Lilly Deferred Compensation Plan as of the Plan Transition Date such that Company Transferred Employees shall not be eligible for additional contributions with respect to benefits earned for services rendered in 2019 and thereafter. Effective as of the Plan Transition Date, the Company Transferred Employees shall, subject to, and to the extent permitted under, the terms of The Lilly Excess Benefit Plan Retirement (as amended or modified from time to time), be eligible to receive credit under such plan for service for purposes of vesting and eligibility service (but not benefit service) with the Company or a member of the Company Group following the Plan Transition Date, through a date not to extend beyond December 31, 2023. No member of the Company Group shall assume any Liability allocable to the Company Transferred Employees with respect to any Lilly Plan that is a nonqualified plan; provided, however, that to the extent that (i) any act or omission of the Company directly results in the inability of Lilly to administer such Lilly Plans in compliance with Section 409(A) of the Code or any other Law or regulation and the terms of the respective Lilly Plan with respect to any Company Transferred Employee who participated in the Lilly Plan and (ii) any related Liability is imposed on any member of the Lilly Group, the Company shall indemnify such member of the Lilly Group for such Liability. The treatment of benefits under any Lilly Plan that is a nonqualified plan shall comply with Section 409(A) of the Code, to the extent subject thereto, and shall be paid in accordance with such Lilly Plan.

5.4 Non-U.S. Retirement Benefit Arrangements.  Except as otherwise agreed by the Parties, Lilly and the Company agree that where a Transferred Employee located in a jurisdiction outside of the U.S. participates in, or has Liability in respect of, a Lilly Plan that is a retirement benefit arrangement (including, without limitation, retirement pension or welfare benefits), any plan, contract, policy, agreement, obligation or arrangement in respect of such retirement benefit arrangement and any Liability (whenever accrued) under such retirement benefit arrangement shall transfer to the Company,

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so that all Liability attributable to the Company Transferred Employees (and their dependents and beneficiaries) in respect of the retirement benefit arrangement shall transfer from Lilly to the Company, and Lilly and the Company agree to use reasonable efforts to ensure that Lilly’s obligations and Liabilities in respect of the retirement benefit arrangement shall be so transferred.

5.5 Information Sharing. The Company shall provide, or cause to be provided, all information as may be required by Lilly to implement and administer the Lilly Plans for benefits to a Company Transferred Employee during the respective period applicable to such Lilly Plans.  Subject to applicable Law, Lilly and its third party vendors shall be given reasonable and timely access to, and may make copies of, all information relating to the subjects of this Agreement.  To the extent that (i) any act or omission of the Company directly results in the inability of Lilly to administer the Lilly Plans consistent with the terms of such Lilly Plans, all applicable Laws and regulations and (ii) any related Liability is imposed on any member of the Lilly Group, the Company shall indemnify such member of the Lilly Group for such Liability.

ARTICLE VI

HEALTH AND WELFARE PLANS

6.1 Allocation of Liabilities. With respect to covered claims incurred by Company Transferred Employees and their dependents under each Lilly Plan providing for health, welfare and life insurance benefits prior to the Plan Transition Date, Company shall reimburse Lilly in the manner agreed to by the Parties. The Company, or each Company Plan providing for health, welfare and life insurance benefits, shall assume and be responsible for all Liabilities with respect to covered claims incurred prior to, on and after the Plan Transition Date by Company Transferred Employees and their dependents under a Lilly Plan or a Company Plan.  For these purposes, a life insurance claim shall be deemed to have occurred on the date of the death of the insured person and a healthcare claim shall be deemed to have occurred at the time professional services, equipment or prescription drugs covered by the applicable plan are obtained by the insured person.  Lilly, or a Lilly Plan, shall provide information as may be reasonably requested by the Company or the Company Plans to confirm the amount of such Liabilities, as determined by Lilly.

6.2 Coverage and Contribution Elections. On and after the Plan Transition Date, the Company shall use commercially reasonable efforts to cause all waiting periods and pre-existing condition exclusions and actively-at-work requirements to be waived with respect to the Company Transferred Employees who were not subject to any such waiting periods, exclusions or requirements under a Lilly Plan in which such employees participate immediately prior to the Plan Transition Date. For the avoidance of doubt, nothing herein shall prevent the Company from conducting open enrollment and accepting elections under Company Plans.

6.3 Service Credit. The Company Group shall credit Company Transferred Employees for service earned on and prior to the Employee Transfer Date with the Lilly Group, or any of their respective predecessors, in addition to service earned with the Company Group on or after the Employee Transfer Date (i) for purposes of eligibility and vesting under all employee benefit plans, programs or arrangements of the Company Group or the calculation of vacation, sick days or severance benefits and (ii) for such additional purposes as may be required by applicable Law; provided that nothing herein shall result in a duplication of benefits with respect to the Company Transferred Employees.

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6.4 Disability Plans. Lilly shall retain all Liabilities with respect to Company Transferred Employees who become eligible for benefits under the Lilly plan or policy providing for long-term disability benefits before the Plan Transition Date.

6.5 Leave of Absence Programs. Effective as of the Plan Transition Date, (i) the Company Group shall honor all terms and conditions of leaves of absence that have been granted by Lilly to any Company Transferred Employee under a leave of absence program maintained by the Lilly Group or applicable Law regarding leave of absence before the Plan Transition Date, including such leaves that are to commence after the Plan Transition Date and (ii) the Company Group shall be solely responsible for administering any such leave of absence and complying with applicable Laws regarding leave of absence with respect to Company Transferred Employees.

6.6 Workers Compensation Program.  The Company shall retain all existing Liabilities and assume all future Liabilities with respect to workers’ compensation claims made or Liabilities incurred under similar plans outside of the U.S. before, on or after the Plan Transition Date by all Company Transferred Employees. For these purposes, a claim shall be deemed to have been made at the time the covered person applies for benefits.

ARTICLE VII

CASH INCENTIVE PLANS

7.1 Cash Incentive Plans. As of the Effective Date, the Company Group shall assume or retain all Liabilities with respect to the participation of each Company Transferred Employee who is participating in any cash-based bonus or other cash incentive compensation plan of a Lilly Group member or a Company Group member as applicable, with respect to performance periods that are ongoing as of the Effective Date and completed performance periods as of the Effective Date. The Company Group shall pay the Company Transferred Employees such incentive compensation on the same basis as in effect prior to the Effective Date for the applicable performance measurement period which include the Effective Date.

ARTICLE VIII

EQUITY COMPENSATION

8.1 Treatment of Lilly Equity. Prior to the Effective Date, the Board of Directors of Lilly shall determine the treatment of equity, equity-related and long-term performance awards granted to Company Transferred Employees under Lilly Plans.

8.2 Company Equity Plan. Effective as of the Effective Date, the Company shall establish, adopt and maintain a plan or plans, for the benefit of selected Company Transferred Employees, providing for stock options, restricted stock, other equity-related awards and long-term performance awards.

ARTICLE IX

SEPARATION PAY; VACATION; UNEMPLOYMENT INSURANCE

9.1 Separation Pay. Except as specified otherwise in this Agreement, the Company shall assume and be solely responsible for all Liabilities with respect to severance or termination benefits attributable to the termination of employment after the Employee Transfer Date of Company Transferred Employees,

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to the extent such individual is eligible for severance pursuant to the terms of the applicable Lilly or Company severance pay plan or policy as in effect as of the date of the employee’s termination of employment. Notwithstanding anything to the contrary in this Agreement, the Company Group shall provide severance benefits to any Company Transferred Employee who is laid off, made redundant or whose employment is otherwise terminated during the one (1) year period ending December 31, 2019 in an amount that is equal to the greater of (i) the severance benefits (including severance payments, transition payments and continued health coverage) that such employee would have been entitled to pursuant to and under circumstances consistent with the terms of the applicable Lilly Plans as in effect immediately prior to January 1, 2019, and (ii) the severance benefits provided under the severance arrangements of the Company Group applicable to similarly situated employees, in each case, to be calculated, however, on the basis of the employee’s compensation and service at the time of the layoff, redundancy or other termination.

9.2 Paid Time Off Benefits. For the period ending December 31, 2019, , each Company Transferred Employee shall be entitled annually to at least the number of vacation hours, holidays, floating holidays, and year-end Company shutdown days to which such Company Transferred Employee was entitled under the applicable Lilly Plan immediately prior to January 1, 2019.

ARTICLE X

CERTAIN PAYROLL, TAX AND OTHER EMPLOYMENT-RELATED MATTERS

10.1 Payroll and Withholding.

(a) Accrued Payroll. Except as otherwise agreed by the Parties, the Company Group shall retain all Liabilities related to payroll with respect to the Company Transferred Employees whether such Liabilities relate to service prior to or after the Employee Transfer Date, and shall pay such amounts in accordance with its standard payroll practices. Effective as of the Employee Transfer Date, the Company Group shall establish its own payroll system for Company Transferred Employees.

(b) Income Reporting, Withholding. Lilly and the Company shall, to the extent practicable, (i) treat the Company (or a member of the Company Group designated by the Company) as a “successor employer” and Lilly (or the appropriate Lilly Group member) as a “predecessor,” within the meaning of Sections 3121(a)(1) and 3306(b)(1) of the Code, with respect to Company Transferred Employees for purposes of taxes imposed under the United States Federal Unemployment Tax Act or the United States Federal Insurance Contributions Act, and (ii) cooperate with each other to avoid, to the extent possible, the filing of the more than one IRS Form W-2 with respect to each Company Transferred Employee for the year in which the Effective Date occurs. Without limiting in any manner the obligations and Liabilities of the parties under the Tax Matters Agreement, Lilly, each Lilly Group member, the Company and each Company Group member shall each bear its responsibility for payroll tax obligations and for the proper reporting to the appropriate governmental authorities of compensation earned by their respective employees after the Employee Transfer Date, including compensation related to the exercise of options or the vesting or exercise of other equity awards.

(c) Delivery of, and Access to, Documents and Other Information. Concurrently with the Employee Transfer Date, Lilly shall cause to be delivered to the Company the employee information set forth on all withholding certificates executed by Company Transferred Employees as of the Employee Transfer Date. For such period as Lilly and the Company may mutually agree in writing, Lilly shall make reasonably available to the Company all forms, documents or information, no matter in what

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format stored, relating to compensation or payments made to any Company Transferred Employee. Such information may include, but is not limited to, information concerning employee payroll deductions, payroll adjustments, records of time worked, tax records (e.g., Forms W-2, 1099, W-4, 940 and 941 and applicable counterparts in other jurisdictions), and information concerning garnishment of wages or other payments.

(d) Consistency of Tax Positions; Duplication. Lilly and the Company shall individually and collectively make commercially reasonable best efforts to avoid unnecessarily duplicated federal, state or local payroll taxes, insurance or workers’ compensation contributions, or unemployment contributions arising on or after the Employee Transfer Date. Lilly and the Company shall cooperate with a view toward taking consistent reporting and withholding positions with respect to any such taxes or contributions.

10.2 Personnel and Pay Records. Notwithstanding anything to the contrary in the Separation Agreement, to the extent permitted by applicable Law, the original of all records created prior to the Employee Transfer Date (or such later date of transfer of employment, as applicable) set forth in the personnel files of the Company Transferred Employees (including, but not limited to, information regarding such employee’s ranking or promotions, the existence and nature of garnishment orders or other judicial or administrative actions or orders affecting the employee’s compensation, and performance evaluations) shall be transferred to the applicable member of the Company Group as of the Employee Transfer Date (or such later date of transfer of employment, as applicable). The originals of all personnel records of all former Company Employees shall remain with the applicable member of the Lilly Group; provided that Lilly shall permit the Company or its Affiliates or successors or their authorized representatives to have full access to all such personnel records to the extent reasonably necessary in order for the members of the Company Group or its successors to respond to a subpoena, court order, audit, investigation or otherwise as required by applicable Law or in connection with any pending or threatened lawsuits, actions, arbitrations, claims, complaints, investigations or other proceedings. The Company or its Affiliates (or their respective successors) shall retain the personnel records for a period of at least ten (10) years following the IPO. The members of the Company Group shall permit Lilly and its authorized representatives to have full access upon reasonable notice during normal business hours to all the personnel records during the ten (10) year retention period in order for the members of the Lilly Group to respond to a subpoena, court order, audit or investigation, to obtain data for pension or other benefits, or otherwise as required by applicable Law, and the members of the Company Group shall provide Lilly, upon the reasonable request of Lilly and at the expense of Lilly, with copies of such personnel records.

10.3 Confidentiality and Proprietary Information. No provision of the Separation Agreement or any Ancillary Agreement shall be deemed to release any individual for any violation of the Lilly non-competition guidelines or any agreement or policy pertaining to confidential or proprietary information of any member of the Lilly Group, or otherwise relieve any individual of his or her obligations under such non-competition guidelines, agreement or policy.

ARTICLE XI

ADMINISTRATIVE PROVISIONS

11.1 Sharing of Participant Information. In addition to the responsibilities and obligations of the Company specified in this Agreement, the Separation Agreement and the schedules thereto, the

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Company shall share, or cause to be shared, all participant information that is requested by Lilly that is reasonably necessary or appropriate for the efficient and accurate administration of the Lilly Plans during the periods applicable to such Lilly Plans, subject to applicable Laws (including those with respect to privacy, confidentiality and data protection). Subject to such Laws, Lilly and its respective authorized agents shall be given reasonable and timely access to, and may make copies of, all information relating to the subjects of this Agreement in the custody of the Company or its agents, to the extent necessary or appropriate for such administration.

11.2 Regulatory Matters. Lilly and the Company shall make such filings and applications to regulatory agencies, including the IRS and the Department of Labor, as may be necessary or appropriate in connection with the transactions contemplated by this Agreement. The Company and Lilly shall reasonably cooperate with one another on any issue relating to the transactions contemplated by this Agreement for which Lilly and/or the Company elects to seek a determination letter or private letter ruling from the IRS, an advisory opinion from the Department of Labor or other ruling from a local regulatory agency.

11.3 Fiduciary Matters. Lilly and the Company each acknowledge that actions contemplated to be taken pursuant to this Agreement may be subject to fiduciary duties or standards of conduct under ERISA or other applicable Law, and no party shall be deemed to be in violation of this Agreement if such party fails to comply with any provisions hereof based upon such party’s good faith determination that to do so would violate such a fiduciary duty or standard.

11.4 Consent of Third Parties. If any provision of this Agreement is dependent on the consent of any third party (such as a vendor) and such consent is withheld, Lilly and the Company shall use their commercially reasonable best efforts to implement the applicable provision. If any provision of this Agreement cannot be implemented due to the failure of such third party to consent, Lilly and the Company shall negotiate in good faith to implement the provision in a mutually satisfactory manner.

ARTICLE XII

GENERAL PROVISIONS

12.1 Cooperation.

(a) Duties of Company. Following the Effective Date, the Company shall reasonably cooperate, and shall cause the members of the Company Group to reasonably cooperate, with the members of the Lilly Group in the prosecution, defense and settlement of any claims for which any member of the Lilly Group retains Liability under this Agreement. Such cooperation shall include (i) affording the applicable member of the Lilly Group, its counsel and its other representatives reasonable access, upon reasonable written notice during normal business hours, to all relevant personnel, properties, books, contracts, commitments and records, (ii) furnishing promptly to the applicable member of the Lilly Group, its counsel and its other representatives such information as they reasonably requested, and (iii) providing any other assistance to the applicable member of the Lilly Group, its counsel and its other representatives as they reasonably request. Lilly shall reimburse the Company for reasonable costs and expenses incurred in assisting Lilly pursuant to this Subsection 12.1(a).

(b) Duties of Lilly. Following the Effective Date, Lilly shall reasonably cooperate, and shall cause the members of the Lilly Group to reasonably cooperate, with the members of the Company Group in the prosecution, defense and settlement of any claims for which any member of the Company

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Group assumes Liability under this Agreement. Such cooperation shall include (i) affording the applicable member of the Company Group, its counsel and its other representatives reasonable access, upon reasonable written notice during normal business hours, to all relevant personnel, properties, books, contracts, commitments and records, (ii) furnishing promptly to the applicable member of the Company Group, its counsel and its other representatives such information as they reasonably request, and (iii) providing any other assistance to the applicable member of the Company Group, its counsel and its other representatives as they reasonably request. The Company shall reimburse Lilly for reasonable costs and expenses incurred in assisting the Company pursuant to this Subsection 12.1(b).

12.2 Relationship of Parties. Nothing in this Agreement shall be deemed or construed by the Parties or any third party as creating the relationship of principal and agent, partnership or joint venture between the Parties, the understanding and agreement being that no provision contained herein, and no act of the Parties, shall be deemed to create any relationship between the Parties other than the relationship set forth herein.

12.3 Affiliates. Each of Lilly and the Company shall cause to be performed, and hereby guarantee the performance of, any and all actions of the members of the Lilly Group or the Company Group, respectively.

12.4 Assignability. This Agreement shall be binding upon and inure to the benefit of the Parties hereto and their respective successors and permitted assigns; provided, however, that no Party hereto may assign its respective rights or delegate its respective obligations under this Agreement without the express prior written consent of the other Party or Parties hereto.

12.5 Third Party Beneficiaries.  Except for the indemnification rights under this Agreement of the members of the Lilly Group, the provisions of this Agreement are solely for the benefit of the Parties hereto and are not intended to confer upon any Person (including employees of the Parties hereto) except the Parties any rights or remedies hereunder, and there are no third party beneficiaries of this Agreement and this Agreement shall not provide any third person (including employees of the Parties hereto) with any remedy, claim, Liability, reimbursement, claim of action or other right in excess of those existing without reference to this Agreement.

12.6 No Construction Against Drafter. The Parties acknowledge that this Agreement and all the terms and conditions contained herein have been fully reviewed and negotiated by the Parties.  Having acknowledged the foregoing, the Parties agree that any principle of construction or rule of law that provides that, in the event of any inconsistency or ambiguity, an agreement shall be construed against the drafter of the agreement shall have no application to the terms and conditions of this Agreement.

12.7 Governing Law. This Agreement shall be governed by and construed and interpreted in accordance with the Laws of the State of Indiana, without regard to the conflict of Laws principles thereof that would result in the application of any Law other than the Laws of the State of Indiana.

12.8 Severability. If any provision of this Agreement or the application thereof to any Person or circumstance is determined by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions hereof or the application of such provision to Persons or circumstances or in jurisdictions other than those as to which it has been held invalid or unenforceable, shall remain in full force and effect and shall in no way be affected, impaired or invalidated thereby, so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner

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adverse to any party.  Upon such determination, the Parties shall negotiate in good faith in an effort to agree upon such a suitable and equitable provision to effect the original intent of the Parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated by this Agreement be consummated as originally contemplated to the greatest extent possible.

12.9 Amendments. No provision of this Agreement shall be deemed waived, amended, supplemented or modified by any Party, unless such waiver, amendment, supplement or modification is in writing and signed by the authorized representative of the Party against whom it is sought to enforce such waiver, amendment, supplement or modification.

12.10 Counterparts; Entire Agreement; Conflicting Agreements.

(a) This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement, and shall become effective when one or more counterparts have been signed by each Party and delivered to the other Party.  Execution of this Agreement or any other documents pursuant to this Agreement by facsimile or other electronic copy of a signature shall be deemed to be, and shall have the same effect as being, executed by an original signature.

(b) This Agreement, the Separation Agreement, the Ancillary Agreements, the exhibits, the schedules and appendices hereto and thereto contain the entire agreement between the Parties with respect to the subject matter hereof, supersede all previous agreements, negotiations, discussions, writings, understandings, commitments and conversations with respect to such subject matter and there are no agreements or understandings between the Parties with respect to such subject matter other than those set forth or referred to herein or therein.

(c) Except as otherwise set forth in Section 2.1 herein, in the event of any conflict between the provisions of this Agreement and the Separation Agreement, any Ancillary Agreement, any Company Plan, or any Lilly Plan, the provisions of this Agreement shall control.

12.11 Notices.  All notices or other communications under this Agreement shall be in writing and shall be deemed to be duly given when (a) delivered in person or (b) deposited in the United States mail or private express mail, postage prepaid, addressed as follows:

If to Lilly, to:

Eli Lilly and Company

Lilly Corporate Center

Indianapolis, Indiana 46285

Attention:General Counsel

If to the Company to:

Elanco Animal Health Incorporated

2500 Innovation Way

Greenfield, Indiana 46140

Attention:General Counsel

Any Party may, by notice to the other Party, change the address to which such notices are to be given.

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12.12 Force Majeure. No Party shall be deemed in default of this Agreement to the extent that any delay or failure in the performance of its obligations under this Agreement results from any cause beyond its reasonable control and without its fault or negligence, such as acts of God, acts of civil or military authority, embargoes, epidemics, war, riots, insurrections, fires, explosions, earthquakes, floods, unusually severe weather conditions, labor problems or unavailability of parts, or, in the case of computer systems, any failure in electrical or air conditioning equipment.  In the event of any such excused delay, the time for performance shall be extended for a period equal to the time lost by reason of the delay.

12.13 Late Payments. Except as expressly provided to the contrary in this Agreement, any amount not paid when due pursuant to this Agreement (and any amounts billed or otherwise invoiced or demanded and properly payable that are not paid within thirty (30) days of such bill, invoice or other demand) shall accrue interest at a rate per annum equal to the Prime Rate plus 5%.

12.14 Headings. The table of contents and article, section and paragraph headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

12.15 Survival of Covenants. The covenants and other agreements contained herein and the indemnification obligations and liability for the breach of any obligations contained herein, shall survive the Separation and the IPO, and shall remain in full force and effect.

12.16 Waivers of Default. Waiver by any Party of any default by the other Party of any provision of this Agreement shall not be deemed a waiver by the waiving party of any subsequent or other default, nor shall it prejudice the rights of the other Party.

12.17 Specific Performance. In the event of any actual or threatened default or breach of, any of the terms, conditions and provisions of this Agreement, the Party or Parties who are or are to be thereby aggrieved shall be entitled to seek an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof, in each case (a) without the requirement of posting any bond or other indemnity and (b) in addition to any other remedy to which it or they may be entitled, at Law or in equity.  Such remedies shall be cumulative with and not exclusive of and shall be in addition to any other remedies which any party may have under this Agreement, or at Law or in equity or otherwise, and the exercise by a party hereto of any one remedy shall not preclude the exercise of any other remedy.

12.18 Interpretation. Interpretation of this Agreement (except as specifically provided in this Agreement, in which case such specified rules of construction shall govern with respect to this Agreement) shall be governed by the following rules of construction: (a) words in the singular shall be held to include the plural and vice versa, and words of one gender shall be held to include the other gender as the context requires; (b) references to the terms Article, Section, paragraph and Exhibit are references to the Articles, Sections, paragraphs and Exhibits to this Agreement unless otherwise specified; (c) the terms “hereof”, “herein”, “hereby”, “hereto” and derivative or similar words refer to this entire Agreement, including the Schedules and Exhibits hereto; (d) references to “$” shall mean U.S. dollars; (e) the word “including” and words of similar import shall mean “including without limitation,” unless otherwise specified; (f) the word “or” shall not be exclusive; (g) references to “written” or “in writing” include in electronic form; (h) provisions shall apply, when appropriate, to successive events and transactions; (i) a reference to any Person includes such Person’s permitted

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successors and permitted assigns; (j) any reference to “days” means calendar days unless Business Days are expressly specified; and (k) when calculating the period of time before which, within which or following which any act is to be done or step taken pursuant to this Agreement, the date that is the reference date in calculating such period shall be excluded and, if the last day of such period is not a Business Day, the period shall end on the next succeeding Business Day.

12.19 Waiver of Jury Trial.  SUBJECT TO ARTICLE VIII OF THE SEPARATION AGREEMENT AND SECTIONS 12.17 AND 12.20 HEREIN, EACH OF THE PARTIES HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY COURT PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF AND PERMITTED UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.  EACH OF THE PARTIES HEREBY (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 12.19.

12.20 Submission to Jurisdiction; Waivers. With respect to any Action relating to or arising out of this Agreement, subject to the provisions of Article VIII of the Separation Agreement, each Party to this Agreement irrevocably (a) consents and submits to the exclusive jurisdiction of the courts of the State of Indiana and any court of the United States located in the State of Indiana; (b) waives any objection which such Party may have at any time to the laying of venue of any Action brought in any such court, waives any claim that such Action has been brought in an inconvenient forum and further waives the right to object, with respect to such Action, that such court does not have jurisdiction over such Party; and (c) consents to the service of process at the address set forth for notices in Section 12.11 herein; provided, however, that such manner of service of process shall not preclude the service of process in any other manner permitted under applicable Law.

IN WITNESS WHEREOF, each of the Parties have caused this Agreement to be executed on its behalf by its officers thereunto duly authorized on the day and year first above written.

Eli Lilly and Company
By:	/s/ David A. Ricks
Name:	David A. Ricks
Title:	Chairman, President and Chief Executive Officer
Elanco Animal Health Incorporated
By:	/s/ Michael-Bryant Hicks
Name:	Michael-Bryant Hicks
Title:	Executive Vice President, General Counsel and Corporate Secretary

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EX-10.5

Exhibit 10.5

ELANCO UK AH LIMITED

AND

ELI LILLY EXPORT S.A.

TOLL MANUFACTURING AND SUPPLY
AGREEMENT

Dated as of September 24, 2018

TABLE OF CONTENTS

ARTICLE		PAGE
ARTICLE I Definitions		1
1.01	Definitions	1
ARTICLE II General Terms of Supply		7
2.01	Agreement to Manufacture Product	7
2.02	Manufacture of Product	7
2.03	Key Personnel	8
2.04	Technical Transfer Services	9
2.05	Forecasting and Yield	9
2.06	Orders	10
2.07	Delivery	11
2.08	Title and Risk	12
2.09	Acceptance and Rejection of Product	12
2.10	Use of Intellectual Property	12
2.11	Disaster Recovery and Business Continuity Plan	13
ARTICLE III Joint Manufacturing Committee		13
3.01	Joint Manufacturing Committee	13
ARTICLE IV Tolling Fee		13
4.01	Tolling Fee	13
ARTICLE V Payment		15
5.01	Product Payments	15
5.02	Exit Payments	15
5.03	Payment Guidelines	15
ARTICLE VI Quality Control		16
6.01	Quality Control	16
6.02	Product Recall	16
6.03	Complaints and Returns	16
6.04	Regulatory Responsibility	16
6.05	Stability Testing	16
ARTICLE VII Books and Records; Audits and Inspections		17

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7.01	Books and Records	17
7.02	Quality Audits	17
7.03	Financial Audits	17
7.04	Regulatory Inspections	18
ARTICLE VIII Representations and Warranties		18
8.01	Representations and Warranties	18
8.02	Supplier’s Representations, Warranties and Covenants	18
8.03	No Further Representations or Warranties	19
ARTICLE IX Indemnification; Limitation of Liability; Conduct of Third Party Claims		19
9.01	Indemnification	19
9.02	Limitation of Liability	20
9.03	Conduct of Third Party Claims	21
9.04	Insurance	22
ARTICLE X Term		22
10.01	Term and Termination	22
ARTICLE XI Confidentiality		23
11.01	Confidentiality	23
ARTICLE XII Further Assurances		24
12.01	Further Assurances	24
ARTICLE XIII Miscellaneous Provisions		24
13.01	Counterparts; Entire Agreement; Conflicting Agreements	24
13.02	No Construction Against Drafter	25
13.03	Governing Law	25
13.04	Assignment	25
13.05	No Third-Party Beneficiaries	25
13.06	Notices	26
13.07	Severability	26
13.08	Force Majeure	27
13.09	Headings	27
13.10	Waivers of Default	27
13.11	Specific Performance	27
13.12	Amendments	27
13.13	Interpretation	28

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13.14	Waiver of Jury Trial	28
13.15	Submission to Jurisdiction; Waivers	28

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TOLL MANUFACTURING AND SUPPLY AGREEMENT

THIS TOLL MANUFACTURING AND SUPPLY AGREEMENT (this “Agreement”), dated as of September 24, 2018 (the “Effective Date”), is entered into by and between Elanco UK AH Limited, a corporation organized under the laws of the United Kingdom (the “Supplier”), and Eli Lilly Export S.A., a company organized under the laws of Switzerland (the “Purchaser”) (Supplier and Purchaser hereinafter referred to individually as a “Party” or collectively as the “Parties”).

RECITALS

WHEREAS, Eli Lilly and Company Limited (“Historical Supplier”), an Affiliate of Eli Lilly and Company (“Lilly”) historically manufactured Product at the Facility for delivery to Purchaser;

WHEREAS, pursuant to that certain Master Separation Agreement by and between Lilly and Elanco Animal Health Incorporated (“Elanco”), dated on or about the date hereof (the “Separation Agreement”), and the Ancillary Agreements, Lilly has transferred the Animal Health Business to Elanco in contemplation of the Separation and IPO;

WHEREAS, the transactions contemplated by the Separation Agreement include (i) the transfer to Elanco of the assets previously used by Historical Supplier to manufacture Product and (ii) control of the Facility; and

WHEREAS, Supplier, an Affiliate of Elanco, has agreed to continue to provide certain manufacturing services to Purchaser, an Affiliate of Lilly, with respect to Product at the Facility until the manufacture and Delivery of Product for and to Purchaser has been successfully transferred to a New Product Supplier in accordance with the terms of this Agreement.

NOW, THEREFORE, the Parties agree as follows:

ARTICLE I

DEFINITIONS

1.01Definitions

Capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed to such terms in the Separation Agreement.  In this Agreement, the following words and expressions shall have the following meanings:

“Affiliate” of any Person means a Person that controls, is controlled by, or is under common control with such Person. As used in this definition, “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such entity, or the power to appoint and remove a majority of the directors, managers or persons holding similar power in respect of such entity, whether through ownership of voting securities or other interests, by contract or otherwise. It is expressly agreed that, from and after the Effective Date, solely for purposes of this Agreement, (i) no member of the Purchaser’s Group shall be deemed to be an Affiliate of any member of the Supplier’s Group and (ii) no member of the Supplier’s Group shall be deemed to be an Affiliate of any member of the Purchaser’s Group.

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“Agreement” has the meaning set forth in the Preamble.

“Annual Total Tolling Fee Margin” means the planned annual total U.S. Dollar amount of the Tolling Fee Margin, as mutually agreed upon by the Parties.

“Batch” means a specific quantity of manufactured material processed either in one (1) process or a series of processes so that it is expected to be homogenous.

“Binding Order” has the meaning set forth in Section 2.05(c).

“Binding Period” means a period of six (6) months, beginning on the first day covered by the applicable Forecast.

“Business Day” means any day other than a Saturday, Sunday or a day on which banking institutions are authorized or obligated by Law to be closed in New York, New York.

“Certificate of Analysis” means a document identifying the results of the methods of analysis for a specific Batch of Product in the form agreed by the Parties.

“cGMP” means, to the extent applicable to the manufacture of Product, the then-current good manufacturing practices as set forth in applicable Laws relating to the manufacture of Product.

“Claim” means any demand, action, claim, dispute, suit, countersuit, arbitration, inquiry, proceeding or investigation by or before any Governmental Authority.

“Claiming Party” has the meaning set forth in Section 9.02(f).

“Compliance Requirements” means applicable Law, the Marketing Authorizations, the terms of the Quality Agreement, the instructions and requirements set forth in the MRD, the specifications for the Product (as provided in writing by Purchaser to Supplier), the Purchaser’s Global Quality Standards, the Purchaser’s Global Ethics and Compliance Policies and cGMP, each as may be amended or replaced from time to time.

“Confidential Information” means, with respect to a Party, all confidential and proprietary information of such Party, its Affiliates and its or their Representatives that is provided to the other Party, its Affiliates or its or their Representatives pursuant to this Agreement; provided that Confidential Information shall not include information that (i) is or becomes part of the public domain through no breach of this Agreement by the recipient Party or its Affiliates or its or their respective Representatives, (ii) was independently developed following the Effective Date by employees or agents of the recipient Party, its Affiliates or its or their respective Representatives who have not accessed or otherwise received the applicable information; provided that such independent development can be demonstrated by competent, contemporaneous written records of the recipient Party or any of its Affiliates or (iii) becomes available to the recipient Party or any of its Affiliates following the Effective Date on a non-confidential basis from a Third Party who is not known by such Person to be bound directly or indirectly by a confidentiality

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agreement or other contractual, legal or fiduciary obligation of confidentiality to the disclosing Party of any of its Affiliates.

“Currency” means the lawful currency of the United States of America, or U.S.D., U.S. Dollar or $.

“Currency Conversion Rate” means the relevant exchange rate between the relevant currency of origin and U.S. Dollars as reported by The Wall Street Journal (New York Edition) on the date of the relevant invoice.

“Default Interest” means interest at a rate per annum equal to the Prime Rate plus five percent (5%).

“Delivery” means a delivery to Purchaser or its designated carrier of a Batch of Product by Supplier under Section 2.07 in accordance with the Shipping Terms, and “Deliver” and “Delivered” have corresponding meanings.

“Effective Date” has the meaning set forth in the Preamble.

“Elanco” has the meaning set forth in the Recitals.

“Estimated Delivery Schedule” is defined in Section 2.05(b).

“Exit Expenses” means any costs and expenses as they are incurred in connection with (i) the return or destruction of, or reimbursement for, unused Granules, raw materials, resins or intermediates, (ii) the decommissioning process and (iii) Facility employee termination costs.

“Facility” means the animal health manufacturing plant located at Speke Operations, Fleming Road, Speke, Liverpool, United Kingdom, L24 9LN.

“For Cause Audit” means an audit in the case of an emergency (such as material Product defects or regulatory actions) or material non-compliance with any of the Compliance Requirements.

“Forecast” has the meaning set forth in Section 2.05(a).

“Governmental Authority” means any U.S. federal, state or local or any supra-national or non-U.S. government, political subdivision, governmental, regulatory or administrative authority, instrumentality, agency, body or commission, self-regulatory organization or any court, tribunal, or judicial or arbitral body.

“Granules” means the starting granules fermented and developed by Lilly at its Puerto Rico facility (PR05) that are necessary to manufacture the Product.

“Group” means the Purchaser’s Group or the Supplier’s Group, as the context requires.

“Historical Supplier” has the meaning set forth in the Recitals.

“Improvements” means improvements, developments, modifications and enhancements.

“Intellectual Property” means all rights, title and interest in or relating to intellectual property, whether protected, created or arising under the laws of the United States or any other foreign jurisdiction, including all: (a)(i) patent applications (along with all patents issuing thereon) and issued patents, invention disclosures, certificates of invention and statutory invention registrations; (ii) reissues, renewals, extensions, substitutions, continuations, continuations-in-part, and divisions, all results of oppositions, reexaminations, supplemental examinations,

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supplementary protection certificates, and other review procedures (including ex parte reexamination, inter partes review, and post grant review) with respect to (i), and (iii) rights to claim priority with respect to (i) and (ii); (b) Know-How; (c) trademarks, service marks, names, corporate names, trade names, certification marks, service names, brand names, brand marks, trade dress rights, trade styles, slogans, identifying symbols, logos, emblems, monograms and signs or insignia, and other similar designations of source or origin and all applications and registrations therefor and all reissues, extensions and renewals of any of the foregoing, together with the goodwill symbolized by any of the foregoing; (d) Internet domain names; (e) works of authorship, copyrights, database and design rights, whether or not registered, published or unpublished, and registrations and applications therefor along with all reversions, renewals and extensions thereof; (f) software, data and databases and (g)(i) all rights in and to all income, royalties, damages and payments previously, now or hereafter due or payable, (ii) all Claims, causes of action, rights of recovery and rights of set-off of any kind against any Person, and (iii) the right to recover for past, present and future infringement against any Person, in each case of (i) to (iii) with respect to the foregoing (a) through (f).

“JMC” has the meaning set forth in Section 3.01.

“Know-How” means all existing and available technical information, know-how and data, including inventions (whether patentable or not), patent disclosures, discoveries, trade secrets, specifications, instructions, processes and formulae, including all biological, chemical, pharmacological, biochemical, toxicological, pharmaceutical, physical, safety, quality control, preclinical and clinical data (which includes anonymized data as it relates to individuals).

“Law” means any United States or non-United States federal, national, international, multinational, supranational, state, provincial, local or similar law (including common law and privacy and data protection laws), statute, ordinance, regulation, rule, code, order, treaty (including any income tax treaty), license, permit, authorization, registration, approval, consent, decree, injunction, judgment, notice of liability, request for information, binding judicial or administrative interpretation or other requirement or rule of law or legal process, in each case, enacted, promulgated, issued, entered or otherwise put into effect by a Governmental Authority or any rule or requirement of any national securities exchange.

“Lilly” has the meaning set forth in the Recitals.

“Local Value Added” means all direct costs, and an allocable portion of indirect costs, incurred by Supplier pursuant to the fulfillment of Supplier’s obligations under this Agreement.

“Losses” means any and all damages, losses, deficiencies, Liabilities, penalties, judgments, settlements, payments, fines, charges, interest, costs and expenses, whether or not resulting from Third Party Claims, including the costs and expenses of any and all Claims and demands, assessments, judgments, settlements and compromises relating thereto and the costs and expenses of attorneys’, accountants’, consultants’ and other professionals’ fees and expenses incurred in the investigation or defense thereof or the enforcement of rights hereunder.

“Marketing Authorizations” means marketing authorizations issued, or applications for marketing authorizations, with respect to the Product and all supplements, amendments and revisions thereto.

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“Measure” means any quarantine, stop-sale, field alert, withdrawal or recall concerning any Product Delivered by Supplier under this Agreement.

“MRD” means the mutually agreed Manufacturing Responsibilities Document to be entered into by the Parties within thirty (30) calendar days after the Effective Date that sets forth written instructions regarding the manufacture of the Product and other technical matters including testing procedures and Delivery of the Product under this Agreement.

“New Product Supplier” means a third party manufacturer designated by Purchaser to manufacture Product.

“Order” means an order for Product submitted through a Purchase Order.

“Parties” has the meaning set forth in the Preamble.

“Party” has the meaning set forth in the Preamble.

“Person” means an individual, a general or limited partnership, a corporation, a trust, a joint venture, an unincorporated organization, a limited liability entity, any other entity and any Governmental Authority.

“Preamble” means the preamble to this Agreement.

“Prime Rate” means the rate last quoted as of the time of determination by The Wall Street Journal as the “Prime Rate” in the United States or, if The Wall Street Journal ceases to quote such rate, the highest per annum interest rate published by the Federal Reserve Board in Federal Reserve Statistical Release H.15 (519) (Selected Interest Rates) as the “bank prime loan” rate as of such time, or, if such rate is no longer quoted therein, any similar rate quoted therein (as determined by Purchaser) or any similar release by the Federal Reserve Board (as determined by Purchaser).

“Product” means Humatrope drug substance.

“Purchase Order” means a purchase order for Product given by Purchaser under Section 2.06 to Supplier.

“Purchaser” has the meaning set forth in the Preamble.

“Purchaser’s Global Ethics and Compliance Policies” means the Global Policy on Compliance and Global Policy on Ethical Interactions with External Parties disseminated within the Purchaser’s Group’s organization detailing required compliance and ethics behavior.

“Purchaser’s Global Quality Standards” means requirements developed and disseminated within the Purchaser’s Group’s organization for the design, execution, and monitoring of product quality.

“Purchaser’s Group” means Purchaser and its current and future Affiliates (but excludes any member of Supplier’s Group).

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“Quality Agreement” means the mutually agreed Quality Agreement to be entered into by the Parties within thirty (30) calendar days after the Effective Date.

“Recitals” means the recitals to this Agreement.

“Representatives” means, when used with respect to any Person, such Person’s directors, officers, employees, agents, accountants, attorneys, consultants and other advisors and representatives.

“Separation Agreement” has the meaning set forth in the Recitals.

“Shipping Terms” means “Ex Works” (as defined in Incoterms 2010).

“Specified Delivery Date” has the meaning set forth in Section 2.06(b)(ii).

“Starting Material Reimbursement Price” means a U.S. Dollar amount per gram of Granules that is mutually agreed upon by the Parties.

“Supplier” has the meaning set forth in the Preamble.

“Supplier’s Bank Account” means the bank account information provided by Supplier to Purchaser within thirty (30) calendar days after the Effective Date.

“Supplier’s Group” means Supplier and its current and future Affiliates (but excludes any member of Purchaser’s Group).

“Surviving Provisions” means Article I, Section 2.10(c), Section 2.10(d), Article V, Article VI, Section 7.01, Section 8.01, Section 10.01(d), Section 10.01(e), Article IX, Article XI, Article XII, and Article XIII.

“Technical Transfer Services” means services to support the transfer of manufacturing and Delivery of Product from Supplier to the New Product Supplier including transfer of technical documentation, specifications and procedures.

“Term” has the meaning set forth in Section 10.01.

“Territory” means worldwide.

“Third Party Claim” has the meaning set forth in Section 9.03.

“Tolling Fee” means the consideration per gram of Product due to Supplier for the manufacture of Product at the Facility and Delivery thereof to Purchaser, as mutually agreed upon by the Parties.

“Tolling Fee Margin” has the meaning set forth in Section 4.01(c).

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ARTICLE II

GENERAL TERMS OF SUPPLY

2.01Agreement to Manufacture Product

(a)Subject to and in accordance with the terms and conditions of this Agreement, during the Term, Supplier shall manufacture the Product at the Facility for Delivery exclusively to Purchaser or its designated Affiliates.  During the Term, Supplier shall not (and shall cause its Affiliates not to) develop, assist in the development of, manufacture, assist in the manufacture of, Deliver, supply, distribute or sell Product for or to any Person (including Supplier or its Affiliates) other than Purchaser or its designated Affiliates.

(b)Subject to Section 2.04, Supplier shall manufacture the Product at the Facility in the physical form that Product was manufactured by Supplier for Purchaser immediately prior to the Effective Date, unless otherwise agreed in writing by the Parties.

(c)Supplier may not sub-contract all or any part of the manufacture or Delivery of the Product or any of its rights or obligations under this Agreement to any Person (including to any Affiliates) without Purchaser’s prior written consent (such consent to be granted or withheld in Purchaser’s sole discretion); provided, however, that Supplier may sub-contract all or any part of Delivery of the Product to any sub-contractors used by Historical Supplier in the delivery of the Product to Purchaser in the twelve (12) months immediately preceding the Effective Date.

(d)Purchaser and its Affiliates shall have the right to use, sell, distribute or otherwise exploit the Product for any purpose in the Territory.

2.02Manufacture of Product

(a)Supplier shall manufacture the Product at the Facility and shall Deliver the Product to Purchaser in accordance with the Compliance Requirements (including the Anti-Bribery Commitments for Lilly Procurement Contracts, as revised by Purchaser or its Affiliate from time to time and published at https://www.lilly.com/suppliers/new-and-existing-suppliers/supplier-notifications or otherwise made available to Supplier).  Supplier shall also obtain and maintain in force during the Term all licenses, permissions, authorizations, consents and permits needed to manufacture and Deliver the Product in accordance with the terms of this Agreement.

(b)Supplier shall be responsible for procuring all materials (including raw materials and the ordering of Granules as set forth in Section 2.05(e)) used in the manufacture of Product at the Facility and shall be the importer of record for any such materials.  Except as otherwise set forth herein, Supplier shall bear all costs and expenses associated with or resulting from such manufacture and Delivery of Product to Purchaser (including procurement of all necessary materials other than the Granules).

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(c)Supplier may not make any changes (including technical, manual or analytical changes) to the Product or the manufacturing or Delivery process of Product (as such processes existed immediately prior to the Effective Date) without Purchaser’s prior written consent (such consent to be granted or withheld in Purchaser’s sole discretion) unless any such change: (i) is required under the Compliance Requirements (including applicable Law); or (ii) is the result of a non-discriminatory, universal change with respect to the Facility or the Animal Health Business that does not affect the manufacture or Delivery of the Product (including its production or quality).  Except as otherwise set forth herein, Supplier shall bear all costs and expenses associated with or resulting from any such change.

(d)The cost and expenses of consumables required to maintain compliance with the Compliance Requirements shall be borne by Supplier.

(e)Any capital expenditure required to maintain compliance with the Compliance Requirements shall be borne by Supplier if such capital expenditure relates to manufacturing of products other than or in addition to the Product or the amount of such capital expenditure is below a U.S. Dollar amount that the Parties mutually agree in writing is a de minimis expense.  If such capital expenditure relates exclusively to the manufacturing of the Product and the amount of capital expenditure is greater than such agreed de minimis amount, the Parties will engage in a good faith discussion as to which Party should bear such amount of capital expenditure prior to the payment of any such capital expenditure.

2.03Key Personnel

(a)During the Term, Supplier shall not, without Purchaser’s prior written consent, alter the assignment of any senior technical employee or contractor who has historical and technical knowledge of the manufacturing process of the Product at the Facility and, as of the Effective Date, is employed or contracted at the Facility.  In addition, at all times during the Term, Supplier shall employ or contract at least one (1) employee or contractor that has technical knowledge of the manufacturing process of the Product at the Facility to ensure the successful manufacture and Delivery of Product to Purchaser in accordance with the terms of this Agreement.

(b)The Parties shall discuss in good faith any retention strategy (including the offer of a retention package) to be offered to any employee or contractor of Supplier to the extent such strategy, in Supplier’s good faith belief, is required in connection with Supplier’s obligations under Section 2.03(a).  Such good faith discussion will take place prior to the implementation of any such strategy and will include a discussion as to which Party shall bear the costs and expenses of offering and implementing any such strategy.

(c)Upon Purchaser’s reasonable prior notice, Supplier shall allow up to two (2) Representatives of Purchaser to have access to the Facility at any given time during the Term solely for purposes related to the manufacture and Delivery of the Product; provided, however, that such access shall be limited to normal working hours at the Facility.

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2.04Technical Transfer Services

(a)Subject to Section 2.04(b), from time to time during the Term Supplier shall (or shall procure that any of its Affiliates shall), if requested by Purchaser, provide Technical Transfer Services to the New Product Supplier.  If so requested, Supplier (or its Affiliate) and Purchaser shall, and Purchaser shall cause the New Product Supplier to, meet to discuss and agree on a plan that sets out the respective obligations of the Parties and the New Product Supplier in relation to those Technical Transfer Services.  The Parties shall (and shall cause each of their Affiliates to and in the case of Purchaser, the New Product Supplier to) act reasonably when working together to produce a plan in relation to any Technical Transfer Services under this Section 2.04(a).

(b)If the New Product Supplier receives more than two hundred (200) hours in aggregate of Technical Transfer Services from Supplier or its Affiliates in respect of the Product, Purchaser shall reimburse Supplier for any direct out-of-pocket costs and expenses incurred by Supplier or its Affiliates in the provision of any such Technical Transfer Services in excess of that two hundred (200) hour threshold, together with a margin of 10 percent (10%).

2.05Forecasting and Yield

(a)Beginning on October 1, 2018 and on the first (1st) day of each calendar quarter thereafter during the Term, Purchaser shall give Supplier a written, rolling forecast of the amount of Product (in grams) it will purchase during the Term (each such forecast, a “Forecast”).  Each such Forecast shall break down the quantity (in grams) Purchaser expects to be Delivered each month.  Purchaser shall act in good faith when forecasting its requirements for Product.

(b)Within thirty (30) calendar days of Supplier’s receipt of each Forecast, the Parties shall discuss in good faith the amount (in grams) of Product to be Delivered during each month of the Binding Period and agree on the same (the “Estimated Delivery Schedule”).

(c)The amount of Product included in a Forecast for the Binding Period shall be deemed to be binding upon the Parties, committing the Purchaser to purchase and the Supplier to sell such amount of Product, as broken down per month in the relevant Forecast, and Purchaser shall issue a Purchase Order for that Binding Period accordingly (each such Purchase Order, a “Binding Order”).

(d)Any change to a Binding Order or the Estimated Delivery Schedule may only be made with the written consent of both Parties.  This consent shall not be unreasonably withheld by either Party.

(e)Based on Purchaser’s Forecasts, Supplier may, in good faith, order reasonably sufficient amounts of materials (including the Granules in accordance with Section 2.05(f)) used in the manufacture of the Product to fulfill Purchaser’s requirements for Product during the applicable Binding Period.  Purchaser shall bear the good faith costs and expenses incurred or committed with respect to any of these materials to the extent they are not,

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or cannot be, used due to a change in Purchaser’s Forecasts, or any change in the Compliance Requirements or industry requirements.

(f)Subject to and in accordance with the terms and conditions of this Agreement, Purchaser shall deliver (or procure the delivery of) the Granules to Supplier in accordance with Supplier’s orders for such Granules, free of charge, solely for use in Supplier’s manufacture of Product pursuant to this Agreement.  All Granules delivered under this Agreement by Purchaser shall be shipped on the basis of the Shipping Terms.  Delivery of the Granules shall be completed on delivery of such Granules in accordance with the Shipping Terms and receipt thereof by Supplier.  Except as otherwise set forth herein, Purchaser shall bear all costs and expenses associated with or resulting from delivery of the Granules to Supplier; provided, however, that (subject to Section 9.02) Supplier shall bear all costs and expenses associated with or resulting from the loss or impairment of the Granules once such Granules have been delivered to Supplier in accordance with this Section 2.05(f) (including reimbursement of any costs and expenses borne by Purchaser to replace such lost or impaired Granules).

(g)For each one-thousand (1,000) grams of Granules that Purchaser delivers to Supplier in accordance with Section 2.05(f), Supplier shall manufacture one hundred fifty (150) grams of Product and if Supplier is not in good faith able to do so, it shall reimburse Purchaser for the cost and expense of manufacturing any additional Granules required for Supplier to achieve the above-referenced yield in this Section 2.05(g).

2.06Orders

(a)Purchase orders that were placed with Supplier by or on behalf of Purchaser or its Affiliates before the Effective Date and are unfulfilled as at the Effective Date shall be fulfilled in accordance with the terms of the Transitional Services Agreement.

(b)Each Purchase Order shall:

(i)be consistent with the quantities of Product set out in the then current Estimated Delivery Schedule and set forth such quantities in grams; and

(ii)specify the date on which Delivery of the Order is required (the “Specified Delivery Date”).

(c)By the first (1st) day of each calendar quarter, Purchaser shall issue a Purchase Order to Supplier for the amount of Product falling within the Binding Period of the most recent Estimated Delivery Schedule, for which a Purchase Order has not yet been issued under Section 2.05(c).

(d)Purchaser shall assign an Order number to each Order it submits and notify Supplier of such Order number.  Supplier and Purchaser shall use the relevant Order number in all subsequent correspondence relating to the Order.

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2.07Delivery

(a)Subject to this Section 2.07, Supplier shall Deliver the Product by the Specified Delivery Date in accordance with each Purchase Order and shall bear all costs and expenses related to such Delivery.  Unless otherwise agreed, Deliveries of Product shall be made by forwarders used by Historical Supplier within the twelve (12) months immediately preceding the Effective Date, provided that Purchaser or Supplier may request the replacement of a forwarder (e.g., for reasonable quality reasons) in which case the Parties shall discuss and agree in good faith on a solution acceptable for both Parties. All transport packaging and preparation for Delivery will be done in accordance with the standards used at the Facility immediately prior to the Effective Date, the Compliance Requirements and applicable good storage and good distribution practices, including the use of data loggers, packaging dimensions and transport protection.  Any change thereof shall be deemed a change to be handled and reimbursed in accordance with Section 2.02(c).

(b)If Supplier or Purchaser becomes aware of any unexpected problem that may require the Specified Delivery Date to be rescheduled, it shall promptly inform the other Party and submit a commercially reasonable proposal for a new delivery date.  Supplier and Purchaser shall cooperate to agree upon such new delivery date in good faith.  If Supplier is unable to fulfill the applicable Purchase Order within three (3) months after the Specified Delivery Date or another mutually agreed delivery date, as applicable, Purchaser may, in its sole discretion, without incurring any cost, expense, or penalty, cancel such Purchase Order.

(c)All Product Delivered under this Agreement by Supplier shall be shipped on the basis of the Shipping Terms and Delivery of Product shall be completed upon delivery of the Product in accordance with the Shipping Terms.

(d)Supplier shall have no liability for any failure or delay in Delivering an Order to the extent that the failure or delay is caused by Purchaser’s failure to deliver Granules in accordance with Section 2.05(g).

(e)Each delivery of an Order shall be accompanied by a delivery note from Supplier showing the Order number, the date of the Order and the quantity of Product (in grams) included in the Order.

(f)If, in respect of an Order, Supplier Delivers up to and including 10 percent (10%) more or less than the quantity of the Product set forth in that Order:

(i)Purchaser shall not be entitled to reject the Order, but a pro rata adjustment shall be made to the amount of the Order invoice; and

(ii)the Delivery shall be deemed to be a complete fulfillment of the Order, and no amount of Product shall be considered outstanding from the Order.

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2.08Title and Risk

Purchaser shall own all right, title and interest in, to and under the Granules, and does not grant to Supplier under this Agreement any right in, to or under such Granules except as expressly set forth in Section 2.05(f).

2.09Acceptance and Rejection of Product

(a)The Product Delivered by Supplier under this Agreement shall be accompanied by a Certificate of Analysis.

(b)Purchaser shall notify Supplier within thirty (30) Business Days from the date of Delivery of each Order whether the Product so Delivered conforms to the Certificate of Analysis. If Purchaser does not notify Supplier within such period, it shall be deemed to have accepted the Order of Product Delivered to it and Purchaser can no longer file a Claim in respect of such Order of Product, except in respect of any latent defects that are not apparent from a reasonable physical inspection of such Order of Product, in which case Purchaser shall have thirty (30) Business Days from the date of discovery of the latent defect to notify Supplier as to the non-conformance of such Order of Product to the Certificate of Analysis.

(c)If Purchaser notifies Supplier that the Product does not meet the specifications set out in the Certificate of Analysis in accordance with Section 2.09(b), Supplier shall carry out a good faith analysis from the control sample of the notified Batch of the Product and if Supplier is satisfied after analysis of the control sample that there are manufacturing defects in the Batch notified by Purchaser, Supplier shall replace the quantity of that notified Batch free of charge and reimburse Purchaser for the related Starting Material Reimbursement Price.  Once Supplier has complied with its obligations under this Section 2.09(c), it shall have no further liability to Purchaser in respect of the Product’s failure to comply with the Certificate of Analysis.

(d)If Supplier’s analysis of the control sample is different than Purchaser’s analysis, then either Party may refer the matter for final analysis to a third party specialized laboratory of international reputation reasonably acceptable to both Parties.  Any determination by the laboratory shall be final and binding on Supplier and Purchaser.  The cost and expense of the independent laboratory including testing charges, shall be borne by the Party whose Certificate of Analysis has not been upheld by the independent laboratory.

2.10Use of Intellectual Property

(a)Each Party hereby grants (and shall cause its Affiliates, as applicable, to grant) to the other Party a limited, non-exclusive, non-sublicensable, revocable, royalty-free license under such granting Party’s Group’s Intellectual Property during the Term solely to enable the other Party to fulfill its obligations under this Agreement.

(b)Except as expressly set forth in this Agreement, neither Party grants the other Party any right or license in, to or under such Party’s Group’s Intellectual Property, whether by implication, estoppel or otherwise.

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(c)Purchaser shall own all right, title and interest in, to and under any Improvements made to the Product, whether made individually by a Party or jointly by the Parties.  Supplier shall promptly disclose to Purchaser any such Improvements to the Product and hereby assigns and agrees to promptly assign to Purchaser all right, title or interest in, to or under any such Improvements to the Product.

(d)The Parties shall jointly own all right, title and interest in, to and under any Improvements made to the manufacturing process of the Product, whether made individually by a Party or jointly by the Parties, with each Party having an equal fifty percent (50%) ownership in such Improvement.

2.11Disaster Recovery and Business Continuity Plan

At all times during the Term, Supplier shall maintain and adequately support a disaster recovery and business continuity program that ensures the continuous operation and, in the event of an interruption, the recovery of all material business functions needed to meet Supplier’s obligations under this Agreement.

ARTICLE III
JOINT MANUFACTURING COMMITTEE

3.01Joint Manufacturing Committee

Within thirty (30) calendar days following the Effective Date, the Parties shall establish a Joint Manufacturing Committee to oversee the manufacturing and Delivery of Product under this Agreement (the “JMC”).  The JMC shall be composed of five (5) Representatives from each Party or its Affiliates (each Representative as selected by such Party in its sole discretion), and shall meet (whether in person or by teleconference) twice per calendar year starting from the Effective Date to ensure the orderly fulfillment of both Parties’ obligations under this Agreement.

ARTICLE IV
TOLLING FEE

4.01Tolling Fee

(a)Supplier shall invoice Purchaser, and Purchaser shall pay the Tolling Fee for the Product, in the Currency (as converted through the Currency Conversion Rate).

(b)The Tolling Fee is based on Delivery in accordance with the Shipping Terms, and is inclusive of all applicable Taxes, all of which shall be listed separately on each invoice issued under Section 5.01; provided, however, that for the avoidance of doubt, each Party shall bear its own income Tax costs with respect to the activities covered by this Agreement.  The Tolling Fee is inclusive of all costs and expenses of the supply chain

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or Delivery and insurance of the Product (including raw materials, components, utilities, equipment or services which are used in the manufacture or Delivery of Product), which such costs and expenses shall be borne by Supplier.

(c)The Tolling Fee shall be sufficient for Supplier to be reimbursed for its Local Value Added plus a reasonable arm’s length mark-up (the “Tolling Fee Margin”), with such:

(i)Local Value Added to be calculated on the basis of standard costs and planned variances consistent with the fees paid by Purchaser to Historical Supplier for the Product in the twelve (12) months immediately prior to the Effective Date; and

(ii)Tolling Fee Margin to be mutually agreed upon by the Parties.

(d)During the fourth (4th) calendar quarter of each calendar year during the Term and in any event by December 1 of each such calendar year, Supplier shall provide Purchaser with a report containing a good faith reconciliation estimate of such the Tolling Fee previously invoiced for supply of Product during such year and actual Local Value Added plus the Tolling Fee Margin for such Product. The Parties shall thereafter discuss and agree on any balancing payment that may be due from either Party to the other so that the Tolling Fee paid for supply in that calendar year is as close as practicable to the amount equal to Supplier’s Local Value Added plus the Tolling Fee Margin.  The Party owed a balancing payment, as agreed by the Parties, shall then provide the other Party with an invoice for such balancing payment by January 31 of the subsequent calendar year, with such balancing payment being made within sixty (60) calendar days of the date of receipt of such invoice. The elements of such reconciliation shall be calculated based on certain variances calculated in accordance with U.S. GAAP consistently applied, including the following variances set forth in (i) through (iv); provided, however, that such variances shall not be included to the extent the subject variance is a result of Supplier’s gross negligence (in which case Supplier shall be solely responsible for the costs associated with such variance(s) and such variance(s) shall not be included in calculating the relevant true-up surcharge):

(i)expense variances relative to the underlying Tolling Fee calculation;

(ii)unabsorbed expenses not considered as part of the Tolling Fee calculation;

(iii)manufacturing losses (but not the cost of replacement Batches or related Starting Material Reimbursement Price); and

(iv)production variances such as use, yield and purchase price variances.

(e)By October 1 of each calendar year during the Term, the Parties shall mutually agree upon a new Tolling Fee to be effective for the duration of the following calendar year beginning on January 1 of such following calendar year.

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ARTICLE V

PAYMENT

5.01Product Payments

Supplier shall issue an invoice in the Currency (as converted through the Currency Conversion Rate) to Purchaser on the date of Delivery of any Order of Product and Purchaser shall pay the full amount of each such invoice issued to it by Supplier within sixty (60) calendar days of the date of its receipt of such invoice; provided, however, that Purchaser may withhold payment of any amount that it may reasonably dispute in good faith until such dispute is resolved (including as the result of the Product’s non-compliance with the Compliance Requirements).

5.02Exit Payments

(a)Beginning on October 1, 2018 and on the first (1st) day of each calendar month thereafter during the Term until Supplier has been reimbursed in full, Supplier shall issue a pro-rated invoice (based on the length of the then-current Term) to Purchaser in the Currency (as converted through the Currency Conversion Rate) for reimbursement of the accelerated depreciation on the HGH Assets, which such total amount of depreciation shall be agreed upon by the Parties in good faith by October 1, 2018.  Purchaser shall pay the full amount of each such invoice issued to it by Supplier within sixty (60) calendar days of the date of its receipt of such invoice; provided, however, that Purchaser may withhold payment of any amount that it may reasonably dispute in good faith until such dispute is resolved.

(b)Upon the termination or expiration of this Agreement, Supplier shall issue an invoice to Purchaser in the Currency (as converted through the Currency Conversion Rate) for any Exit Expenses it has incurred under this Agreement for which it has not yet been reimbursed by Purchaser.  Purchaser shall pay the full amount of each such invoice issued to it by Supplier within sixty (60) calendar days of the date of its receipt of such invoice; provided, however, that Purchaser may withhold payment of any amount that it may reasonably dispute in good faith until such dispute is resolved.

5.03Payment Guidelines

(a)Any payment to be made pursuant to this Agreement by Purchaser shall be made to Supplier’s Bank Account in the Currency, without any deduction of transmission fees, bank charges or early payment discounts or rebates (unless otherwise agreed by the Parties in writing).

(b)Payment under Section 5.03(a) shall be in immediately available funds by electronic transfer by the due date for payment.  Receipt of the amount due shall be an effective discharge of the relevant payment obligation.

(c)If any sum due for payment in accordance with this Agreement is not paid by the due date for payment (and such payment is not the subject of a good faith dispute), the Party

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in default shall pay Default Interest on that sum from but excluding the due date to and including the date of actual payment calculated on a daily basis until such payment is settled.

ARTICLE VI
QUALITY CONTROL

6.01Quality Control

The Parties shall enter into the Quality Agreement within thirty (30) calendar days after the Effective Date. The Quality Agreement shall, as may be revised and amended from time to time as mutually agreed by the Parties, describe certain quality expectations and responsibilities relating to the manufacture, release testing, quality control testing (including stability testing) and quality oversight and supply of the Product to Purchaser.

6.02Product Recall

In respect of any Measure in the Territory related to Product that is required or recommended by a Governmental Authority or reasonably deemed advisable by any member of the Purchaser’s Group in good faith, such Measure shall be promptly implemented, directed and administered by the Purchaser’s Group in a manner which is appropriate, reasonable and in accordance with applicable Law and Supplier shall reasonably cooperate in good faith with the Purchaser’s Group in connection with such implementation, direction or administration.  Subject to Section 9.01(b), all costs and expenses related to a Measure shall be borne by the Purchaser’s Group.

6.03Complaints and Returns

(a)From the Effective Date, the Purchaser’s Group shall be responsible for handling any complaints associated with the Product and dealing with and processing any returns of Product and Supplier shall reasonably cooperate in good faith with the Purchaser’s Group in connection with resolution of any such complaints and returns.

(b)Each Party shall notify the other promptly after receiving any complaint in relation to, or return of, the Product and provide the other Party with a complete copy of the complaint and all other relevant information.

6.04Regulatory Responsibility

All matters related to the Parties’ regulatory responsibilities, including regulatory communications and quality assurance, shall be governed by this Agreement or the Quality Agreement.

6.05Stability Testing

Supplier shall perform or procure the performance of stability testing of all Product manufactured at the Facility in accordance with the Quality Agreement to confirm the Product’s

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compliance with the Compliance Requirements.  Supplier’s obligation as set forth in this Section 6.05 shall apply to all Batches of Product manufactured under this Agreement (and any Product manufactured by Historical Supplier at the Facility) and shall extend beyond the duration of the Term solely to the extent required in connection with the completion of the stability testing of any such Batch of Product.  Purchaser shall bear all costs and expenses associated with or resulting from any such stability testing conducted under this Section 6.05.

ARTICLE VII

BOOKS AND RECORDS; AUDITS AND INSPECTIONS

7.01Books and Records

At its own expense, Supplier shall create and maintain all books and records as required by this Agreement or the Compliance Requirements that relate to this Agreement and to Supplier’s performance hereunder (for any period prescribed by such Compliance Requirement or otherwise as set forth in this Agreement), and such books and records shall be sufficient to demonstrate that all changes in the Tolling Fee or any other expenses invoiced to Purchaser hereunder are accurate and proper in both kind and amount.

7.02Quality Audits

(a)Supplier will allow Purchaser to reasonably audit Supplier and the Facility for the purposes of evaluating and verifying compliance with the Compliance Requirements.  Any audit undertaken pursuant to this Section 7.02(a) shall be subject to the following conditions: (i) Supplier shall be given no less than two (2) Business Days’ prior notice of any For Cause Audit, and no less than fifteen (15) Business Days’ prior notice of any other proposed audit; (ii) each such audit shall be conducted during normal working hours and shall take no longer than three (3) Business Days, so long as Supplier furnishes all information requested by Purchaser in a timely fashion; and (iii) each Party shall bear its own costs and expenses incurred in connection with any such audit.

(b)Purchaser may exercise its audit rights under Section 7.02(a) once per calendar year during the Term or otherwise on a frequency as mutually agreed by the Parties and additionally, as may be necessary, in the case of For Cause Audits.

7.03Financial Audits

(a)Supplier will allow a Purchaser-appointed auditor to reasonably inspect (and, upon request, Supplier will furnish copies of) the books and records which Supplier is required to create or maintain under Section 7.01 for the purposes of evaluating and verifying the accuracy of and changes in the Tolling Fee.  Any audit undertaken pursuant to this Section 7.03(a) shall be subject to the following conditions:  (i) Supplier shall be given no less than fifteen (15) Business Days’ prior notice of any such proposed audit; (ii) each such audit shall be conducted during normal working hours and shall take no longer than three (3) Business Days, so long as Supplier furnishes all books and records requested by Purchaser in a timely fashion; and (iii) such audit shall

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be performed by an internationally recognized independent auditor reasonably acceptable to both Parties acting under such obligations of confidentiality owed to Supplier as Supplier may reasonably require.

(b)Purchaser may exercise its audit rights under Section 7.03(a) once per calendar year during the Term and additionally upon its reasonable belief that the Tolling Fee has been incorrectly calculated or invoiced.

(c)Purchaser shall bear all costs and expenses incurred in connection with any audit under this Section 7.03; provided, however, that if any such audit correctly identifies overpricing or overcharges (of any nature) by Supplier to Purchaser, any adjustments or payments owed to Purchaser shall be made by Supplier to Purchaser within a reasonable amount of time (not to exceed ninety (90) calendar days) from presentation of the audit findings to Supplier and Supplier shall also reimburse Purchaser for all reasonable costs and expenses incurred by Purchaser in connection with such audit inspection.

7.04Regulatory Inspections

Supplier shall notify Purchaser within three (3) Business Days of the date of any notification received by it from any Governmental Authority to conduct an inspection of the Facility.

ARTICLE VIII

REPRESENTATIONS AND WARRANTIES

8.01Representations and Warranties

Each of Purchaser and Supplier represents and warrants to the other that: (a) it has the requisite corporate power and authority to enter into and perform its obligations under this Agreement; (b) it has taken all corporate actions necessary on its part required to execute and deliver this Agreement, to consummate the transactions contemplated hereby and to perform its obligations hereunder; and (c) this Agreement has been duly executed and delivered on behalf of such Party, and assuming that this Agreement constitutes a valid and binding obligation of the other Party, this Agreement constitutes a legal, valid and binding obligation of such Party that is enforceable against it in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar applicable Laws affecting or relating to the enforcement of creditors’ rights generally, and general principles of equity, regardless of whether asserted in a proceeding in equity or at Law.

8.02Supplier’s Representations, Warranties and Covenants

Supplier represents, warrants and covenants to be, at all time during this Agreement, in possession of any and all approvals, permits and other documents required by all legislative and regulatory requirements on health, safety, working conditions and environment which are applicable to equipment and activities related to the manufacturing of the Product at the Facility and necessary to operate such equipment and activities at the Facility.  Upon Purchaser’s request, Supplier shall provide Purchaser with any document evidencing such possession.

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8.03No Further Representations or Warranties

Other than as expressly set forth in this Article VIII, neither Party makes any representation or warranty under this Agreement and all further representations and warranties are excluded to the maximum extent permitted under applicable Law.

ARTICLE IX

INDEMNIFICATION; LIMITATION OF LIABILITY; CONDUCT OF THIRD PARTY CLAIMS

9.01Indemnification

(a)Purchaser shall indemnify, defend and hold harmless Supplier and its Affiliates against all Losses (including Supplier’s own Losses and those resulting from Third Party Claims) resulting from, or otherwise relating to:

(i)Purchaser’s gross negligence or willful misconduct in connection with this Agreement;

(ii)any breach by Purchaser of any of its representations and warranties and any material breach by Purchaser of its obligations under this Agreement;

(iii)any Third Party Claim that any method of manufacturing implemented by Supplier at the request of and as directed by Purchaser (regardless of whether such request or direction was made prior to or after the Effective Date) infringes, misappropriates or otherwise violates any third party’s Intellectual Property rights;

(iv)any violation of the Compliance Requirements by Purchaser or its Affiliates in its or their performance under this Agreement; or

(v)any product liability Claims arising from manufacturing defects in any Batch of Granules delivered to Supplier;

in each case except to the extent such Losses result from, or otherwise relate to, circumstances that give rise to Supplier’s liability in accordance with Section 9.01(b).

(b)Supplier shall indemnify, defend and hold harmless Purchaser and its Affiliates against all Losses (including Purchaser’s own Losses and those resulting from Third Party Claims) resulting from, or otherwise relating to:

(i)Supplier’s gross negligence or willful misconduct in connection with this Agreement;

(ii)any breach by Supplier of any of its representations and warranties and any material breach by Supplier of its obligations under this Agreement;

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(iii)any violation of the Compliance Requirements by Supplier or its Affiliates in its or their performance under this Agreement;

(iv)any Third Party Claim that any method of manufacturing implemented by Supplier after the Effective Date without Purchaser’s consent infringes, misappropriates or otherwise violates any third party’s Intellectual Property rights; or

(v)any product liability Claims arising from manufacturing defects in the Product Delivered hereunder except to the extent such Claims result from defects in the Granules.

9.02Limitation of Liability

(a)Notwithstanding anything contained in this Agreement, neither Party shall be liable to the other for any Losses for any punitive, incidental, special or indirect damages or for any consequential damages or damages for loss of future profits, revenue or income, diminution in value or loss of business reputation or opportunity, whether in contract, tort or otherwise, that arise under or in connection with this Agreement (including under any Purchase Order).

(b)Except as otherwise set forth in this Agreement, with respect to any particular Batch of Product, the total liability of each Party under or in connection with this Agreement for all claims (including Claims), whether in contract, tort or otherwise in relation to any such particular Batch of Product, shall not exceed the U.S. Dollar amount of the Tolling Fee Margin applicable to such Batch.

(c)Except as otherwise set forth in this Agreement, the total aggregate liability of each Party under or in connection with this Agreement for all claims (including Claims), whether in contract, tort or otherwise in relation to the Product, shall not exceed the Annual Total Tolling Fee Margin; provided, however, that for any such claims that arise in calendar year 2018, the relevant Annual Total Tolling Fee Margin shall be pro-rated on a three (3) month basis.

(d)The limitations in Sections 9.02(a) through 9.02(c) shall not apply to:

(i)Purchaser’s obligation to make payments under Sections 5.01 or 5.02 of this Agreement;

(ii)Supplier’s obligation to reimburse Purchaser pursuant to Section 2.09(c) of this Agreement;

(iii)either Party’s obligation to make any payment under Section 2.02(e), Section 2.03(b) or Section 2.09(d);

(iv)any liability arising from fraud, breach of Article XI, gross negligence, willful misconduct or personal injury; or

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(v)any other liability that cannot be excluded by applicable Law.

(e)The limitations in Section 9.02(b) shall not apply to Third Party Claims subject to indemnification under Sections 9.01(a) or 9.01(b), it being understood by the Parties that Section 9.02(a) shall not act to limit a Party’s obligation to provide such indemnification, regardless of the character or nature of the Losses asserted by the third party in the Third Party Claim subject to such indemnification.

(f)Subject to Section 9.03, a Party (the “Claiming Party”) shall notify the other in writing within thirty (30) calendar days of the date on which it becomes aware of any grounds for any Claim against the other.  Failure to give notice within thirty (30) calendar days shall not affect the validity of any Claim, but in the absence of notification, the other Party’s liability for any loss or damage for the Claim shall not exceed any liability it would have incurred for the loss or damage if the Claiming Party had duly notified the other Party on or before the thirtieth (30th) calendar day after becoming aware of the grounds for the Claim.

(g)The Claiming Party shall, for any Loss that may give rise to a Claim against the other Party, take all reasonable steps to avoid and mitigate that Loss, including by pursuing any relevant third party, or claiming under any relevant insurance policy or bond in respect of the loss or damage.

9.03Conduct of Third Party Claims

If either Party becomes aware of any claim or potential claim by a third party (a “Third Party Claim”), or of any other matter or circumstance, which in either case might result in a Claim being made against such Party, such Party shall:

(a)promptly (and in any event within ten (10) Business Days of becoming aware of it) give notice of the Third Party Claim or other matter or circumstance to the other Party and ensure that the other Party and its Representatives are given all reasonable information and facilities to investigate such Third Party Claim, matter or circumstance;

(b)not (and ensure that each of its Affiliates shall not) admit liability or make any agreement or compromise in relation to the Third Party Claim without prior written approval of the other Party; and

(c)subject to the notifying Party or its relevant Affiliates being indemnified by the other Party against all reasonable out of pocket costs and expenses incurred in respect of that Third Party Claim, ensure that it and each of its Affiliates shall:

(i)take any action as the other Party may reasonably request to avoid, resist, dispute, appeal, compromise or defend the Third Party Claim;

(ii)allow the other Party (if it elects to do so) to take over the conduct of all proceedings or negotiations arising in connection with the Third Party Claim (provided that the other Party may not admit liability nor make any agreement or compromise in relation to the Third Party Claim without prior written

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approval of the notifying Party, such approval not to be unreasonably withheld, unless the agreement or compromise imposes no ongoing obligations or liability on the notifying Party); and

(iii)provide any information and assistance as the other Party may reasonably require in connection with the preparation for and conduct of any proceedings or negotiations relating to the Third Party Claim.

9.04Insurance

At all times during the Term for the Product, each Party shall maintain sufficient self-insurance or insurance with a reputable insurer in an amount appropriate for the business and Product that is the subject of this Agreement, and its obligations under this Agreement.

ARTICLE X

TERM

10.01Term and Termination

(a)Subject to Section 10.01(c), this Agreement shall commence on the Effective Date and shall remain in effect through December 31, 2020 (the “Term”) unless earlier terminated in accordance with Section 10.01(b).

(b)This Agreement may be terminated upon the written agreement of both Parties.

(c)If, by March 31 of each calendar year during the Term (beginning with March 31, 2020 and ending, at the latest and if applicable, on March 31, 2022), the New Product Supplier has failed to reasonably demonstrate to Purchaser’s satisfaction that it (i) is capable of manufacturing Product (in compliance with the Compliance Requirements) at the volume that Historical Supplier manufactured Product for Purchaser in the twelve (12) months immediately preceding the Effective Date or (ii) has received all necessary approvals from applicable Governmental Authorities to manufacture and Deliver Product to Purchaser, Purchaser shall have the right to extend the Term for additional one (1) year periods (for a maximum of three (3) additional one (1) year periods).  Any such one (1) year extensions, if timely elected by Purchaser, shall extend the duration of the Term accordingly and any references to the Term in this Agreement shall thereafter include the period of any such extensions.

(d)The Surviving Provisions, together with any other Section or Article reasonably intended to survive expiration or termination, shall survive expiration or termination of this Agreement.

(e)Supplier hereby covenants and agrees that it shall not (and shall cause its Affiliates not to):

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(i)for a period of five (5) years after the expiration of termination of this Agreement, develop, assist in the development of, manufacture, assist in the manufacture of, deliver, supply, distribute or sell any product (including any active pharmaceutical ingredient) that is competitive to the Product; and

(ii)during the Term, conduct manufacturing of any product at the W10 or B118 buildings of the Facility other than the Product without Purchaser’s prior written consent.

ARTICLE XI

CONFIDENTIALITY

11.01Confidentiality

(a)Each Party shall keep confidential any Confidential Information of the other Party disclosed in connection with this Agreement or its implementation, except as expressly agreed upon in writing by the other Party.

(b)The confidentiality obligations in Section 11.01(a) shall not apply to information which any Party can demonstrate is required to be disclosed by applicable Law or the rules of any stock exchange or any Governmental Authority provided that in this event the Party which is obliged to disclose shall to the extent permitted by applicable Law use its commercially reasonable efforts to consult with the other Party in advance as to its form, content and timing.

(c)Each of Supplier and Purchaser undertakes that it (and its Affiliates) shall only disclose Confidential Information to its Representatives if it is reasonably required for purposes connected with this Agreement and only if the Representatives are informed of the confidential nature of the Confidential Information and the confidentiality obligations related thereto.  Each of Supplier and Purchaser undertakes that it (and its Affiliates) shall not use or permit the use of, any Confidential Information of the other Party, except in furtherance of such Party’s (or its Affiliate’s) exercise of its rights and the performance of such Party’s (or its Affiliate’s) obligations under this Agreement.

(d)If this Agreement terminates or expires, except as and solely to the extent required to remain in compliance with applicable Law, each Party shall as soon as practicable on request by the other Party:

(i)return to the other Party all written documents and other materials relating to the Product or this Agreement (including any Confidential Information) which the other Party (or its Representatives) has provided to it (or its Representatives), or which has been provided on the other Party’s (or its Representatives’) behalf, without keeping any copies of them;

(ii)destroy all information or other documents derived from the other Party’s Confidential Information; and

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(iii)so far as it is practicable to do so, expunge the other Party’s Confidential Information from any of its computers, word processors or other devices.

ARTICLE XII

FURTHER ASSURANCES

12.01Further Assurances

In addition to the actions specifically provided for elsewhere in this Agreement, each of the Parties will cooperate with each other and shall use its (and shall cause its Affiliates to use their) commercially reasonable efforts, prior to, on and after the Effective Date, to take, or cause to be taken, all actions, and to do, or cause to be done, all things, reasonably necessary, proper or advisable under applicable Laws, regulations and agreements to implement and give effect to this Agreement.

ARTICLE XIII

MISCELLANEOUS PROVISIONS

13.01Counterparts; Entire Agreement; Conflicting Agreements

(a)This Agreement may be executed in one (1) or more counterparts, all of which shall be considered one (1) and the same agreement, and shall become effective when one (1) or more counterparts have been signed by each Party and delivered to the other Party.  Execution of this Agreement or any other documents pursuant to this Agreement by facsimile or other electronic copy of a signature shall be deemed to be, and shall have the same effect as being, executed by an original signature.

(b)This Agreement, the Quality Agreement, the Separation Agreement, the other Ancillary Agreements, the exhibits, the schedules and appendices hereto and thereto contain the entire agreement between the Parties with respect to the subject matter hereof, supersede all previous agreements, negotiations, discussions, writings, understandings, commitments and conversations with respect to such subject matter and there are no agreements or understandings between the Parties with respect to such subject matter other than those set forth or referred to herein or therein.

(c)In the event of any inconsistency between this Agreement and any other agreement entered into in connection with the Transaction (including the Separation Agreement), the Separation Agreement shall prevail.  In the event and to the extent that there shall be a conflict between the provisions of this Agreement and the provisions of the Separation Agreement, the Separation Agreement shall control.

(d)If there is any conflict between the terms of this Agreement and the Quality Agreement, this Agreement shall prevail, with respect to non-quality related terms, and the Quality Agreement shall govern with respect to all quality related terms.  If any provisions of

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the Quality Agreement or this Agreement are inconsistent with the terms of the Compliance Requirements, the Compliance Requirements shall prevail.

13.02No Construction Against Drafter

The Parties acknowledge that this Agreement and all the terms and conditions contained herein have been fully reviewed and negotiated by the Parties.  Having acknowledged the foregoing, the Parties agree that any principle of construction or rule of Law that provides that, in the event of any inconsistency or ambiguity, an agreement shall be construed against the drafter of the agreement shall have no application to the terms and conditions of this Agreement.

13.03Governing Law

This Agreement shall be governed by and construed and interpreted in accordance with the Laws of Switzerland, without regard to the conflict of laws principles thereof that would result in the application of any Law other than the Laws of Switzerland.

13.04Assignment

(a)This Agreement shall be binding upon and inure to the benefit of the Parties hereto and their respective successors and permitted assigns; provided, however, that no Party hereto may assign its respective rights or delegate its respective obligations under this Agreement without the express prior written consent of the other Party hereto.

(b)Notwithstanding Section 13.04(a), Supplier may assign all or any part of its rights under this Agreement to any third party acquirer of (i) the whole or a substantial part of Supplier’s equity or business or (ii) the Facility; provided, however, that such acquirer agrees in writing to be bound by the terms and conditions of this Agreement and Purchaser is provided with written notice sixty (60) calendar days prior to any such assignment.

(c)Notwithstanding Section 13.04(a), Purchaser shall be entitled to assign all or any part of its rights under this Agreement to one or more of its Affiliates, provided that if such assignee subsequently is anticipated to cease being a member of Purchaser’s Group, Purchaser shall ensure that it shall re-assign all such rights to Purchaser or to another continuing member of Purchaser’s Group.

13.05No Third-Party Beneficiaries

Except for the indemnification rights under this Agreement as set forth in Article IX, (a) the provisions of this Agreement are solely for the benefit of the Parties hereto and are not intended to confer upon any Person (including employees of the Parties hereto) except the Parties any rights or remedies hereunder, and (b) there are no third party beneficiaries of this Agreement and this Agreement shall not provide any third person (including employees of the Parties hereto) with any remedy, claim, liability, reimbursement, claim of action or other right in excess of those existing without reference to this Agreement.

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13.06Notices

All notices or other communications under this Agreement shall be in writing and shall be deemed to be duly given when (a) delivered in person or (b) deposited in the United States mail or private express mail, postage prepaid, addressed as follows:

If to Purchaser, to:

Eli Lilly Export S.A.
Air Center

16 Chemin des Coquelicots

1214 Vernier/Geneva, Switzerland
Attention:Chief Financial Officer

With a copy to:

Eli Lilly and Company

Lilly Corporate Center

Indianapolis, Indiana 46285

Attention:General Counsel

If to Supplier to:

Elanco UK AH Limited
Speke Operations

Fleming Road, Liverpool, L24 9LN

Speke, United Kingdom
Attention:Chief Financial Officer

With a copy to:

Elanco Animal Health Incorporated

2500 Innovation Way

Greenfield, Indiana 46140

Attention:General Counsel

Any Party may, by written notice to the other Party, change the address to which such notices are to be given.

13.07Severability

If any provision of this Agreement or the application thereof to any Person or circumstance is determined by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions hereof or the application of such provision to Persons or circumstances or in jurisdictions other than those as to which it has been held invalid or unenforceable, shall remain in full force and effect and shall in no way be affected, impaired or invalidated thereby, so long as the economic or legal substance of the transactions contemplated hereby is not

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affected in any manner adverse to any Party.  Upon such determination, the Parties shall negotiate in good faith in an effort to agree upon a suitable and equitable provision to effect the original intent of the Parties as closely as possible in a mutually acceptable manner in order that the rights and obligations contemplated by this Agreement be fulfilled as originally contemplated to the greatest extent possible.

13.08Force Majeure

No Party shall be deemed in default of this Agreement to the extent that any delay or failure in the performance of its obligations under this Agreement results from any cause beyond its reasonable control and without its fault or negligence, such as acts of God, acts of civil or military authority, embargoes, epidemics, war, riots, insurrections, fires, explosions, earthquakes, floods, unusually severe weather conditions, or labor problems, or, in the case of computer systems, any failure in electrical or air conditioning equipment.  In the event of any such excused delay, the time for performance shall be extended for a period equal to the time lost by reason of such delay.

13.09Headings

The table of contents and article, section and paragraph headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

13.10Waivers of Default

Waiver by any Party of any default by the other Party of any provision of this Agreement shall not be deemed a waiver by the waiving Party of any subsequent or other default, nor shall it prejudice the rights of the other Party.

13.11Specific Performance

In the event of any actual or threatened default or breach of, any of the terms, conditions and provisions of this Agreement, the Party or Parties who are or are to be thereby aggrieved shall be entitled to seek an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof, in each case (a) without the requirement of posting any bond or other indemnity and (b) in addition to any other remedy to which it or they may be entitled, at Law or in equity.  Such remedies shall be cumulative with and not exclusive of and shall be in addition to any other remedies which any Party may have under this Agreement, or at Law or in equity or otherwise, and the exercise by a Party hereto of any one remedy shall not preclude the exercise of any other remedy.

13.12Amendments

No provision of this Agreement shall be deemed waived, amended, supplemented or modified by any Party, unless such waiver, amendment, supplement or modification is in writing and signed by the authorized representative of the Party against whom it is sought to enforce such waiver, amendment, supplement or modification.

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13.13Interpretation

Interpretation of this Agreement (except as specifically provided in this Agreement, in which case such specified rules of construction shall govern with respect to this Agreement) shall be governed by the following rules of construction: (a) words in the singular shall be held to include the plural and vice versa, and words of one gender shall be held to include the other gender as the context requires; (b) references to the terms Article, Section, paragraph and Exhibit are references to the Articles, Sections, paragraphs and Exhibits to this Agreement unless otherwise specified; (c) the terms “hereof”, “herein”, “hereby”, “hereto” and derivative or similar words refer to this entire Agreement, including the Schedules and Exhibits hereto; (d) references to “$” shall mean U.S. dollars; (e) the word “including” and words of similar import shall mean “including without limitation,” unless otherwise specified; (f) the word “or” shall not be exclusive; (g) references to “written” or “in writing” include in electronic form; (h) provisions shall apply, when appropriate, to successive events and transactions; (i) a reference to any Person includes such Person’s permitted successors and permitted assigns; (j) any reference to “days” means calendar days unless Business Days are expressly specified; and (k) when calculating the period of time before which, within which or following which any act is to be done or step taken pursuant to this Agreement, the date that is the reference date in calculating such period shall be excluded and, if the last day of such period is not a Business Day, the period shall end on the next succeeding Business Day.

13.14Waiver of Jury Trial

SUBJECT TO SECTIONS 13.11 AND 13.15 HEREIN, EACH OF THE PARTIES HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY COURT PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF AND PERMITTED UNDER OR IN CONNECTION WITH THIS AGREEMENT.  EACH OF THE PARTIES HEREBY (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 13.14.

13.15Submission to Jurisdiction; Waivers

With respect to any Claim relating to or arising out of this Agreement, each Party to this Agreement irrevocably (a) consents and submits to the exclusive jurisdiction of the courts of Switzerland, (b) waives any objection which such Party may have at any time to the laying of venue of any Claim brought in any such court, waives any claim that such Claim has been brought in an inconvenient forum and further waives the right to object, with respect to such Claim, that such court does not have jurisdiction over such Party and (c) consents to the service of process at the address set forth for notices in Section 13.06 herein; provided, however, that such manner of service of process shall not preclude the service of process in any other manner permitted under applicable Law.

[Signature Page Follows]

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IN WITNESS WHEREOF, each of Supplier and Purchaser have duly executed this Agreement as of the date first written above.

ELI LILLY EXPORT S.A., as Purchaser
By:	/s/ Philip L. Johnson
Name:	Philip L. Johnson
Title:	Vice President
ELANCO UK AH LIMITED, as Supplier
By:	/s/ Nilesh Sukumar Ambani
Name:	Nilesh Sukumar Ambani
Title:	Director

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EX-10.6

Exhibit 10.6

REGISTRATION RIGHTS AGREEMENT

This REGISTRATION RIGHTS AGREEMENT, dated as of September 24, 2018 (this “Agreement”), is by and between Elanco Animal Health Incorporated, an Indiana corporation (“Elanco”), and Eli Lilly and Company, an Indiana corporation (“Eli Lilly”).

WHEREAS, Eli Lilly currently owns all of the issued and outstanding shares of common stock, no par value per share, of Elanco (“Elanco Common Stock”);

WHEREAS, Eli Lilly intends for an offer and sale to the public of shares of Elanco Common Stock (the “IPO”) to take place pursuant to a registration statement on Form S-1 (the “IPO Registration Statement”);

WHEREAS, after the IPO, Eli Lilly may transfer shares of Elanco Common Stock to holders of shares of Eli Lilly’s common stock by means of one or more distributions by Eli Lilly to holders of shares of Eli Lilly’s common stock, one or more offers to holders of Eli Lilly’s common stock to exchange their shares of Eli Lilly common stock for shares of Elanco Common Stock, or any combination thereof (the “Distribution”);

WHEREAS, from time to time, Eli Lilly may sell or offer to sell some or all of the outstanding shares of Elanco Common Stock then owned directly or indirectly by Eli Lilly, in one or more transactions Registered under the Securities Act; and

WHEREAS, Elanco desires to grant to Eli Lilly the Registration Rights for the Registrable Securities, subject to the terms and conditions of this Agreement.

NOW, THEREFORE, in consideration of the foregoing and the mutual promises, covenants and agreements of the parties hereto, and for other good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

ARTICLE I
DEFINITIONS

1.1Defined Terms.  As used in this Agreement, the following terms shall have the following meanings:

“Action” means any demand, action, suit, countersuit, arbitration, inquiry, proceeding or investigation by or before any federal, state, local, foreign or international Governmental Authority or any arbitration or mediation tribunal.

“Affiliate” shall mean, when used with respect to a specified Person, another Person that controls, is controlled by, or is under common control with the Person specified; provided, however, that, for purposes of this Agreement, Elanco and its Subsidiaries shall not be considered to be “Affiliates” of Eli Lilly and its Subsidiaries (other than Elanco and its Subsidiaries), and Eli Lilly and its Subsidiaries (other than Elanco and its Subsidiaries) shall not be considered to be “Affiliates” of Elanco or its Subsidiaries.  As used herein, “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the

management and policies of such person, whether through the ownership of voting securities or other interests, by contract or otherwise.

“Agreement” has the meaning set forth in the preamble to this Agreement.

“Business Day” shall mean any day that is not a Saturday, Sunday or other day on which banking institutions doing business in New York, New York are authorized or obligated by law or required by executive order to be closed.

“Convertible or Exchange Registration” has the meaning set forth in Section 2.7.

“Demand Registration” has the meaning set forth in Section 2.1(a).

“Distribution” has the meaning set forth in the recitals to this Agreement.

“Elanco” has the meaning set forth in the preamble to this Agreement and shall include its successors, by merger, acquisition, reorganization or otherwise.

“Elanco Common Stock” has the meaning set forth in the recitals to this Agreement.

“Elanco Public Sale” has the meaning set forth in Section 2.2(a).

“Elanco Notice” has the meaning set forth in Section 2.1(a).

“Elanco Takedown Notice” has the meaning set forth in Section 2.1(g).

“Eli Lilly” has the meaning set forth in the preamble to this Agreement and shall include its successors, by merger, acquisition, reorganization or otherwise.

“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended, and any successor thereto, and any rules and regulations promulgated thereunder, all as the same shall be in effect from time to time.

“Governmental Authority” means any nation or government, any state, municipality or other political subdivision thereof, and any entity, body, agency, commission, department, board, bureau, court, tribunal or other instrumentality, whether federal, state, local, domestic, foreign or multinational, exercising executive, legislative, judicial, regulatory, administrative or other similar functions of, or pertaining to, government and any executive official thereof.

“Holder” shall mean Eli Lilly or any of its Subsidiaries, so long as such Person holds any Registrable Securities, and any Person owning Registrable Securities who is a permitted transferee of rights under Section 3.3.

“Initiating Holder” has the meaning set forth in Section 2.1(a).

“IPO” has the meaning set forth in the recitals to this Agreement.

“IPO Registration Statement” has the meaning set forth in the recitals to this Agreement.

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“Loss” or “Losses” has the meaning set forth in Section 2.9(a).

“Person” means any individual, firm, limited liability company or partnership, joint venture, corporation, joint stock company, trust or unincorporated organization, incorporated or unincorporated association, government (or any department, agency or political subdivision thereof) or other entity of any kind, and shall include any successor (by merger or otherwise) of such entity.

“Piggyback Registration” has the meaning set forth in Section 2.2(a).

“Prospectus” means the prospectus included in any Registration Statement, all amendments and supplements to such prospectus, including post-effective amendments, and all other material incorporated by reference in such prospectus.

“Registrable Securities” means any Shares and any securities issued or issuable directly or indirectly with respect to, in exchange for, upon the conversion of or in replacement of the Shares, whether by way of a dividend or distribution or stock split or in connection with a combination of shares, recapitalization, merger, consolidation, exchange or other reorganization.  The term “Registrable Securities” excludes any security (i) the sale of which has been effectively Registered under the Securities Act and which has been disposed of in accordance with a Registration Statement, (ii) that have been sold or disposed of pursuant to Rule 144 (or any successor provision) under the Securities Act, (iii) that may be sold pursuant to Rule 144 (or any successor provision) under the Securities Act without being subject to the volume limitations in subsection (e) of such rule or (iv) that have been sold by a Holder in a transaction in which such Holder’s rights under this Agreement are not, or cannot be, assigned.

“Registration” means a registration with the SEC of the offer and sale to the public of Elanco Common Stock under a Registration Statement.  The terms “Register,” “Registered” and “Registering” shall have a correlative meaning.

“Registration Expenses” shall mean all expenses incident to Elanco’s performance of or compliance with this Agreement, including all (i) registration, qualification and filing fees; (ii) expenses incurred in connection with the preparation, printing and filing under the Securities Act of the Registration Statement, any Prospectus and any issuer free writing prospectus and the distribution thereof; (iii) the fees and expenses of Elanco’s counsel and independent accountants; (iv) the reasonable fees and expenses of not more than one firm of attorneys acting as legal counsel for all of the Holders in the relevant Registration and sale; (v) the fees and expenses incurred in connection with the registration or qualification and determination of eligibility for investment of the Shares under the state or foreign securities or blue sky laws and the preparation, printing and distribution of a Blue Sky Memorandum (including the related fees and expenses of counsel); (vi) the costs and charges of any transfer agent and any registrar; (vii) all expenses and application fees incurred in connection with any filing with, and clearance of an offering by, Financial Industry Regulatory Authority, Inc.; (viii) expenses incurred in connection with any “road show” presentation to potential investors; (ix) printing expenses, messenger, telephone and delivery expenses; (x) internal expenses of Elanco (including all salaries and expenses of employees of Elanco performing legal or accounting duties); and (xi) fees and expenses of listing any Registrable Securities on any securities exchange on which shares of

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Elanco Common Stock are then listed; but excluding any internal expenses of the Holder, any underwriting discounts or commissions attributable to the sale of any Registrable Securities and any stock transfer taxes.

“Registration Period” has the meaning set forth in Section 2.1(c).

“Registration Rights” shall mean the rights of the Holders to cause Elanco to Register Registrable Securities pursuant to this Agreement.

“Registration Statement” means any registration statement of Elanco filed with, or to be filed with, the SEC under the rules and regulations promulgated under the Securities Act, including the related Prospectus, amendments and supplements to such registration statement, including post-effective amendments, and all exhibits and all material incorporated by reference in such registration statement.

“Registration Suspension” has the meaning set forth in Section 2.1(d).

“SEC” has the meaning set forth in the recitals to this Agreement.

“Securities Act” means the U.S. Securities Act of 1933, as amended, and any successor thereto, and any rules and regulations promulgated thereunder, all as the same shall be in effect from time to time.

“Shares” means all shares of Elanco Common Stock that are beneficially owned by Eli Lilly or any permitted transferee from time to time, whether or not held immediately following the IPO.

“Shelf Registration” means a Registration Statement of Elanco for an offering to be made on a delayed or continuous basis of Elanco Common Stock pursuant to Rule 415 under the Securities Act (or similar provisions then in effect).

“Subsidiary” shall mean, with respect to any Person, any corporation, limited liability company, joint venture or partnership of which such Person (i) beneficially owns, either directly or indirectly, more than fifty percent (50%) of (A) the total combined voting power of all classes of voting securities of such Person, (B) the total combined equity interests or (C) the capital or profit interests, in the case of a partnership, or (ii) otherwise has the power to vote, either directly or indirectly, sufficient securities to elect a majority of the board of directors or similar governing body.

“Takedown Notice” has the meaning set forth in Section 2.1(g).

“Underwritten Offering” means a Registration in which securities of Elanco are sold to an underwriter or underwriters on a firm commitment basis for reoffering to the public.

1.2General Interpretive Principles.  Whenever used in this Agreement, except as otherwise expressly provided or unless the context otherwise requires, any noun or pronoun shall be deemed to include the plural as well as the singular and to cover all genders.  Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to

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be followed by the words “without limitation.”  Unless otherwise specified, the terms “hereof,” “herein,” “hereunder” and similar terms refer to this Agreement as a whole (including the exhibits hereto), and references herein to Articles and Sections refer to Articles and Sections of this Agreement.  Except as otherwise indicated, all periods of time referred to herein shall include all Saturdays, Sundays and holidays; provided, however, that if the date to perform the act or give any notice with respect to this Agreement shall fall on a day other than a Business Day, such act or notice may be performed or given timely if performed or given on the next succeeding Business Day.  References to a Person are also to its permitted successors and assigns.  The parties have participated jointly in the negotiation and drafting of this Agreement and, in the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as jointly drafted by the parties, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provision of this Agreement.

ARTICLE II
REGISTRATION RIGHTS

2.1Registration.

(a)Request.  Any Holder(s) of Registrable Securities (collectively, the “Initiating Holder”) shall have the right to request that Elanco file a Registration Statement with the SEC on the appropriate registration form for all or part of the Registrable Securities held by such Holder once such Registrable Securities are no longer subject to the underwriter lock-up applicable to the IPO (which may be due to the expiration or waiver of such lock-up with respect to such Registrable Securities) by delivering a written request to Elanco specifying the number of shares of Registrable Securities such Holder wishes to Register (a “Demand Registration”).  Elanco shall (i) within five (5) days of the receipt of such request, give written notice of such Demand Registration to all Holders of Registrable Securities (the “Elanco Notice”), (ii) use its reasonable best efforts to file a Registration Statement in respect of such Demand Registration within forty-five (45) days of receipt of the request, and (iii) use its reasonable best efforts to cause such Registration Statement to become effective as expeditiously as possible.  Elanco shall include in such Registration all Registrable Securities that the Holders request to be included within the ten (10) days following their receipt of the Elanco Notice.

(b)Limitations of Demand Registrations.  There shall be no limitation on the number of Demand Registrations pursuant to Section 2.1(a); provided, however, that the Holders may not require Elanco to effect more than two (2) Demand Registrations, in the aggregate, in a twelve (12)-month period (it being understood that the IPO Registration Statement shall not be treated as a Demand Registration).  In the event that any Person shall have received rights to Demand Registrations pursuant to Section 2.7 or Section 3.3, and such Person shall have made a Demand Registration request, such request shall be treated as having been made by the Holder(s).  The Registrable Securities requested to be Registered pursuant to Section 2.1(a) must represent (i) an aggregate offering price of Registrable Securities that is reasonably expected to equal at least $10,000,000 (or its equivalent if the Registrable Securities are to be offered in an exchange offer) or (ii) all of the remaining Registrable Securities owned by the requesting Holder and its Affiliates.

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(c)Effective Registration.  Elanco shall be deemed to have effected a Registration for purposes of Section 2.1(b) if the Registration Statement is declared effective by the SEC or becomes effective upon filing with the SEC, and remains effective until the earlier of (i) the date when all Registrable Securities thereunder have been sold and (ii) ninety (90) days from the effective date of the Registration Statement (the “Registration Period”).  No Registration shall be deemed to have been effective if the conditions to closing specified in the underwriting agreement, if any, entered into in connection with such Registration are not satisfied by reason of Elanco.  If, during the Registration Period, such Registration is interfered with by any Registration Suspension, stop order, injunction or other order or requirement of the SEC or other Governmental Agency, the Registration Period shall be extended on a day-for-day basis for any period the Holder is unable to complete an offering as a result of such Registration Suspension, stop order, injunction or other order or requirement of the SEC or other Governmental Agency.

(d)Delay in Filing; Suspension of Registration.  If the filing, initial effectiveness or continued use of a Registration Statement would, as reasonably determined in good faith by Elanco, require the disclosure of material non-public information that Elanco has a bona fide business purpose to keep confidential and the disclosure of which would have a material adverse effect on any active proposal by Elanco or any of its Subsidiaries to engage in any material acquisition, merger, consolidation, tender offer, other business combination, reorganization or other material transaction, Elanco may, upon giving prompt written notice of such action to the Holders, postpone the filing or effectiveness of such Registration (a “Registration Suspension”) for a period not to exceed thirty (30) days; provided, however, that Elanco may exercise a Registration Suspension no more than two (2) times in any twelve (12)-month period.  Notwithstanding the foregoing, no such delay shall exceed such number of days that Elanco determines in good faith to be reasonably necessary.  Elanco shall (i) immediately notify the Holders upon the termination of any Registration Suspension, (ii) amend or supplement the Prospectus, if necessary, so it does not contain any untrue statement or omission therein and (iii) furnish to the Holders such numbers of copies of the Prospectus as so amended or supplemented as the Holders may reasonably request.

(e)Underwritten Offering.  If the Initiating Holder so indicates at the time of its request pursuant to Section 2.1(a), such offering of Registrable Securities shall be in the form of an Underwritten Offering and Elanco shall include such information in the Elanco Notice.  In the event that the Initiating Holder intends to distribute the Registrable Securities by means of an Underwritten Offering, the right of any Holder to include Registrable Securities in such Registration shall be conditioned upon such Holder’s participation in such underwriting and the inclusion of such Holder’s Registrable Securities in the underwriting.

(f)Priority of Securities in an Underwritten Offering.  If the managing underwriter or underwriters of a proposed Underwritten Offering, including an Underwritten Offering from a Shelf Registration, pursuant to this Section 2.1 informs the Holders with Registrable Securities in the proposed Underwritten Offering in writing that, in its or their opinion, the number of securities requested to be included in such Underwritten Offering exceeds the number that can be sold in such Underwritten Offering without being likely to have an adverse effect on the price, timing or distribution of the securities offered or the market for the securities offered, then the securities to be included in such Underwritten Offering shall be

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reduced to such number that can be sold without such adverse effect and the securities to be included in such Underwritten Offering shall be: (i) first, Registrable Securities requested by Eli Lilly to be included in such Underwritten Offering; (ii) second, Registrable Securities requested by all other Holders to be included in such Underwritten Offering on a pro rata basis; and (iii) third, all other securities requested and otherwise eligible to be included in such Underwritten Offering (including securities to be sold for the account of Elanco) on a pro rata basis.

(g)Shelf Registration.  At any time after the date hereof when Elanco is eligible to Register the applicable Registrable Securities on Form S-3 (or a successor form) and the Holder may request Demand Registrations, the requesting Holders may request Elanco to effect a Demand Registration as a Shelf Registration.  There shall be no limitations on the number of Underwritten Offerings pursuant to a Shelf Registration; provided, however, that the Holders may not require Elanco to effect more than four (4) Underwritten Offerings, in the aggregate, in a twelve (12)-month period.  Any Holder of Registrable Securities included on a Shelf Registration shall have the right to request that Elanco cooperate in a shelf takedown at any time, including an Underwritten Offering, by delivering a written request thereof to Elanco specifying the number of shares of Registrable Securities such Holder wishes to include in the shelf takedown (“Takedown Notice”).  Elanco shall (i) within five (5) days of the receipt of a Takedown Notice for an Underwritten Offering, give written notice of such Takedown Notice to all Holders of Registrable Securities included on such Shelf Registration (“Elanco Takedown Notice”), and (ii) take all actions reasonably requested by such Holder, including the filing of a Prospectus supplement and the other actions described in Section 2.4, in accordance with the intended method of distribution set forth in the Takedown Notice as expeditiously as possible.  If the takedown is an Underwritten Offering, Elanco shall include in such Underwritten Offering all Registrable Securities that that the Holders request to be included within the two (2) days following their receipt of the Elanco Takedown Notice.  If the takedown is an Underwritten Offering, the Registrable Securities requested to be included in a shelf takedown must represent (i) an aggregate offering price of Registrable Securities that is reasonably expected to equal at least $10,000,000 or (ii) all of the remaining Registrable Securities owned by the requesting Holder and its Affiliates. Notwithstanding anything else to the contrary in this Agreement, the requirement to deliver a Takedown Notice and the piggyback rights described in this Section 2.1(g) shall not apply to an Underwritten Offering that constitutes a block trade.

(h)SEC Form.  Except as set forth in the next sentence, Elanco shall use its reasonable best efforts to cause Demand Registrations to be Registered on Form S-3 (or any successor form), and if Elanco is not then eligible under the Securities Act to use Form S-3, Demand Registrations shall be Registered on Form S-1 (or any successor form) or Form S-4 (in the case of an exchange offer).  If a Demand Registration is a Convertible or Exchange Registration, Elanco shall effect such Registration on the appropriate Form under the Securities Act for such Registrations.  Elanco shall use its reasonable best efforts to become eligible to use Form S-3 and, after becoming eligible to use Form S-3, shall use its reasonable best efforts to remain so eligible.  All Demand Registrations shall comply with applicable requirements of the Securities Act and, together with each Prospectus included, filed or otherwise furnished by Elanco in connection therewith, shall not contain any untrue statement of material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading.

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2.2Piggyback Registrations.

(a)Participation.  If Elanco proposes to file a Registration Statement under the Securities Act with respect to any offering of Elanco Common Stock for its own account and/or for the account of any other Persons (other than a Registration (i) under Section 2.1 hereof, (ii) pursuant to a Registration Statement on Form S-8 or Form S-4 or similar form that relates to a transaction subject to Rule 145 under the Securities Act, (iii) pursuant to any form that does not include substantially the same information as would be required to be included in a Registration Statement covering the sale of Registrable Securities, (iv) in connection with any dividend reinvestment or similar plan, (v) for the sole purpose of offering securities to another entity or its security holders in connection with the acquisition of assets or securities of such entity or any similar transaction or (vi) in which the only Elanco Common Stock being Registered is Elanco Common Stock issuable upon conversion of debt securities that are also being Registered) (an “Elanco Public Sale”), then, as soon as practicable (but in no event less than fifteen (15) days prior to the proposed date of filing such Registration Statement), Elanco shall give written notice of such proposed filing to each Holder, and such notice shall offer such Holders the opportunity to Register under such Registration Statement such number of Registrable Securities as each such Holder may request in writing (a “Piggyback Registration”).  Subject to Section 2.2(a) and Section 2.2(c), Elanco shall include in such Registration Statement all such Registrable Securities that are requested to be included therein within fifteen (15) days after the receipt of any such notice; provided, however, that if, at any time after giving written notice of its intention to Register any securities and prior to the effective date of the Registration Statement filed in connection with such Registration, Elanco shall determine for any reason not to Register or to delay Registration of such securities, Elanco may, at its election, give written notice of such determination to each such Holder and, thereupon, (i) in the case of a determination not to Register, shall be relieved of its obligation to Register any Registrable Securities in connection with such Registration, without prejudice, however, to the rights of any Holder to request that such Registration be effected as a Demand Registration under Section 2.1, and (ii) in the case of a determination to delay Registration, shall be permitted to delay Registering any Registrable Securities for the same period as the delay in Registering such other shares of Elanco Common Stock.  No Registration effected under this Section 2.2 shall relieve Elanco of its obligation to effect any Demand Registration under Section 2.1.  If the offering pursuant to a Registration Statement pursuant to this Section 2.2 is to be an Underwritten Offering, then each Holder making a request for a Piggyback Registration pursuant to this Section 2.2(a) shall, and Elanco shall use reasonable best efforts to coordinate arrangements with the underwriters so that each such Holder may, participate in such Underwritten Offering.  If the offering pursuant to such Registration Statement is to be on any other basis, then each Holder making a request for a Piggyback Registration pursuant to this Section 2.2(a) shall, and Elanco shall use reasonable best efforts to coordinate arrangements so that each such Holder may, participate in such offering on such basis.  Elanco’s filing of a Shelf Registration shall not be deemed to be an Elanco Public Sale; provided, however, that the proposal to file any Prospectus supplement filed pursuant to a Shelf Registration with respect to an offering of Elanco Common Stock for its own account and/or for the account of any other Persons will be an Elanco Public Sale unless such offering qualifies for an exemption from the Elanco Public Sale definition in this Section 2.2(a); provided, further that if Elanco files a Shelf Registration for its own account and/or for the account of any other Persons, Elanco agrees that it shall use its reasonable best efforts to include in such Registration Statement such disclosures as may be required by Rule

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430B under the Securities Act in order to ensure that the Holders may be added to such Shelf Registration at a later time through the filing of a Prospectus supplement rather than a post-effective amendment.

(b)Right to Withdraw.  Each Holder shall have the right to withdraw such Holder’s request for inclusion of its Registrable Securities in any Underwritten Offering pursuant to this Section 2.2 at any time prior to the execution of an underwriting agreement with respect thereto by giving written notice to Elanco of such Holder’s request to withdraw and, subject to the preceding clause, each Holder shall be permitted to withdraw all or part of such Holder’s Registrable Securities from a Piggyback Registration at any time prior to the effective date thereof.

(c)Priority of Piggyback Registration.  If the managing underwriter or underwriters of any proposed Underwritten Offering of a class of Registrable Securities included in a Piggyback Registration informs Elanco and the Holders in writing that, in its or their opinion, the number of securities of such class which such Holder and any other Persons intend to include in such Underwritten Offering exceeds the number which can be sold in such Underwritten Offering without being likely to have an adverse effect on the price, timing or distribution of the securities offered or the market for the securities offered, then the securities to be included in such Underwritten Offering shall be reduced to such number that can be sold without such adverse effect and the securities to be included in the Underwritten Offering shall be (i) first, all securities of Elanco or any other Persons for whom Elanco is effecting the Underwritten Offering, as the case may be, proposes to sell; (ii) second, Registrable Securities requested by Eli Lilly to be included in such Underwritten Offering; (iii) third, Registrable Securities requested by all other Holders to be included in such Underwritten Offering on a pro rata basis; and (iv) fourth, all other securities requested and otherwise eligible to be included in such Underwritten Offering (including securities to be sold for the account of Elanco) on a pro rata basis.

2.3Selection of Underwriter(s), Etc.  In any Underwritten Offering pursuant to Section 2.1 or Section 2.2 that is not an Elanco Public Sale, Eli Lilly, in the event Eli Lilly is participating, or the Holders of a majority of the outstanding Registrable Securities being included in the Underwritten Offering, in the event Eli Lilly is not participating, shall select the underwriter(s), financial printer, solicitation and/or exchange agent (if any) and Holder’s counsel for such Underwritten Offering. In any Elanco Public Sale, Elanco shall select the underwriter(s), financial printer, solicitation and/or exchange agent (if any) and Eli Lilly, in the event Eli Lilly is participating, or the Holders of a majority of the outstanding Registrable Securities being included in the Elanco Public Sale, in the event Eli Lilly is not participating, shall select Holder’s counsel.

2.4Registration Procedures.

(a)In connection with the Registration and/or sale of Registrable Securities pursuant to this Agreement, through an Underwritten Offering or otherwise, Elanco shall use reasonable best efforts to effect or cause the Registration and the sale of such Registrable Securities in accordance with the intended methods of disposition thereof and:

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(i)prepare and file the required Registration Statement including all exhibits and financial statements required under the Securities Act to be filed therewith, and before filing with the SEC a Registration Statement or Prospectus, or any amendments or supplements thereto, (A) furnish to the underwriters, if any, and to the Holders, copies of all documents prepared to be filed, which documents will be subject to the review of such underwriters and such Holders and their respective counsel, and (B) not file with the SEC any Registration Statement or Prospectus or amendments or supplements thereto to which Holders or the underwriters, if any, shall reasonably object;

(ii)except in the case of a Shelf Registration or Convertible or Exchange Registration, prepare and file with the SEC such amendments and supplements to such Registration Statement and the Prospectus used in connection therewith as may be necessary to keep such Registration Statement effective and to comply with the provisions of the Securities Act with respect to the disposition of all of the Shares Registered thereon until the earlier of (A) such time as all of such Shares have been disposed of in accordance with the intended methods of disposition set forth in such Registration Statement or (B) the expiration of nine (9) months after such Registration Statement becomes effective, plus the number of days of any Registration Suspension;

(iii)in the case of a Shelf Registration, prepare and file with the SEC such amendments and supplements to such Registration Statement and the Prospectus used in connection therewith as may be necessary to keep such Registration Statement effective and to comply with the provisions of the Securities Act with respect to the disposition of all Shares subject thereto for a period ending on thirty-six (36) months after the effective date of such Registration Statement;

(iv)in the case of a Convertible or Exchange Registration, prepare and file with the SEC such amendments and supplements to such Registration Statement and the Prospectus used in connection therewith as may be necessary to keep such Registration Statement effective and to comply with the provisions of the Securities Act with respect to the disposition of all of the Shares subject thereto until such time as the rules, regulations and requirements of the Securities Act and the terms of any applicable convertible securities no longer require such Shares to be Registered under the Securities Act;

(v)notify the participating Holders and the managing underwriter or underwriters, if any, and (if requested) confirm such advice in writing and provide copies of the relevant documents, as soon as reasonably practicable after notice thereof is received by Elanco (A) when the applicable Registration Statement or any amendment thereto has been filed or becomes effective, when the applicable Prospectus or any amendment or supplement to such Prospectus has been filed, (B) of any written comments by the SEC or any request by the SEC or any other Governmental Authority for amendments or supplements to such Registration Statement or such Prospectus or for additional information, (C) of the issuance by the SEC of any stop order suspending the effectiveness of such Registration Statement or any order preventing or suspending the use of any preliminary or final Prospectus or the initiation or threatening of any proceedings for such purposes, (D) if, at any time, the representations and warranties of Elanco in any applicable underwriting agreement cease to be true and correct in all material respects, and (E) of the receipt by Elanco of any notification with respect to the

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suspension of the qualification of the Registrable Securities for offering or sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose;

(vi)subject to Section 2.1(d), promptly notify each selling Holder and the managing underwriter or underwriters, if any, when Elanco becomes aware of the occurrence of any event as a result of which the applicable Registration Statement or the Prospectus included in such Registration Statement (as then in effect) contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements therein (in the case of such Prospectus and any preliminary Prospectus, in light of the circumstances under which they were made) not misleading or, if for any other reason it shall be necessary during such time period to amend or supplement such Registration Statement or Prospectus in order to comply with the Securities Act and, in either case as promptly as reasonably practicable thereafter, prepare and file with the SEC, and furnish without charge to the selling Holder and the managing underwriter or underwriters, if any, an amendment or supplement to such Registration Statement or Prospectus which will correct such statement or omission or effect such compliance;

(vii)use its reasonable best efforts to prevent or obtain the withdrawal of any stop order or other order suspending the use of any preliminary or final Prospectus;

(viii)promptly incorporate in a Prospectus supplement or post-effective amendment such information as the managing underwriters, if any, and the Holders may reasonably request in order to permit the intended method of distribution of the Registrable Securities; and make all required filings of such Prospectus supplement or post-effective amendment as soon as reasonably practicable after being notified of the matters to be incorporated in such Prospectus supplement or post-effective amendment;

(ix)furnish to each selling Holder and each underwriter, if any, without charge, as many conformed copies as such Holder or underwriter may reasonably request of the applicable Registration Statement and any amendment or post-effective amendment thereto, including financial statements and schedules, all documents incorporated therein by reference and all exhibits (including those incorporated by reference);

(x)deliver to each selling Holder and each underwriter, if any, without charge, as many copies of the applicable Prospectus (including each preliminary Prospectus) and any amendment or supplement thereto as such Holder or underwriter may reasonably request (it being understood that Elanco consents to the use of such Prospectus or any amendment or supplement thereto by each selling Holder and the underwriters, if any, in connection with the offering and sale of the Registrable Securities covered by such Prospectus or any amendment or supplement thereto) and such other documents as such selling Holder or underwriter may reasonably request in order to facilitate the disposition of the Registrable Securities by such Holder or underwriter;

(xi)on or prior to the date on which the applicable Registration Statement is declared effective or becomes effective, use its reasonable best efforts to register or qualify, and cooperate with each selling Holder, the managing underwriter or underwriters, if any, and their respective counsel, in connection with the registration or qualification of such

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Registrable Securities for offer and sale under the securities or “Blue Sky” laws of each state and other jurisdiction of the United States as any selling Holder or managing underwriter or underwriters, if any, or their respective counsel reasonably request in writing and do any and all other acts or things reasonably necessary or advisable to keep such registration or qualification in effect for so long as such Registration Statement remains in effect and so as to permit the continuance of sales and dealings in such jurisdictions of the United States for so long as may be necessary to complete the distribution of the Registrable Securities covered by the Registration Statement; provided that Elanco will not be required to qualify generally to do business in any jurisdiction where it is not then so qualified or to take any action which would subject it to taxation or general service of process in any such jurisdiction where it is not then so subject;

(xii)in connection with any sale of Registrable Securities that will result in such securities no longer being Registrable Securities, cooperate with each selling Holder and the managing underwriter or underwriters, if any, to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be sold and not bearing any restrictive Securities Act legends; and to register such Registrable Securities in such denominations and such names as such selling Holder or the underwriter(s), if any, may request at least two (2) Business Days prior to such sale of Registrable Securities; provided that Elanco may satisfy its obligations hereunder without issuing physical stock certificates through the use of the Depository Trust Company’s Direct Registration System;

(xiii)cooperate and assist in any filings required to be made with the Financial Industry Regulatory Authority and each securities exchange, if any, on which any of Elanco’s securities are then listed or quoted and on each inter-dealer quotation system on which any of Elanco’s securities are then quoted, and in the performance of any due diligence investigation by any underwriter (including any “qualified independent underwriter”) that is required to be retained in accordance with the rules and regulations of each such exchange, and use its reasonable best efforts to cause the Registrable Securities covered by the applicable Registration Statement to be registered with or approved by such other governmental agencies or authorities as may be necessary to enable the seller or sellers thereof or the underwriter or underwriters, if any, to consummate the disposition of such Registrable Securities;

(xiv)not later than the effective date of the applicable Registration Statement, provide a CUSIP number for all Registrable Securities and provide the applicable transfer agent with printed certificates for the Registrable Securities which are in a form eligible for deposit with The Depository Trust Company; provided that Elanco may satisfy its obligations hereunder without issuing physical stock certificates through the use of the Depository Trust Company’s Direct Registration System;

(xv)obtain for delivery to and addressed to each selling Holder and to the underwriter or underwriters, if any, opinions from outside counsel and the general counsel or deputy general counsel for Elanco, in each case dated the effective date of the Registration Statement or, in the event of an Underwritten Offering, the date of the closing under the underwriting agreement, and in each such case in customary form and content for the type of Underwritten Offering;

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(xvi)in the case of an Underwritten Offering, obtain for delivery to and addressed to Elanco and the underwriter or underwriters and, to the extent requested, each selling Holder, a comfort letter from Elanco’s or other applicable independent certified public accountants in customary form and content for the type of Underwritten Offering, dated the date of execution of the underwriting agreement and brought down to the closing under the underwriting agreement;

(xvii)use its reasonable best efforts to comply with all applicable rules and regulations of the SEC and make generally available to its security holders, as soon as reasonably practicable, but no later than ninety (90) days after the end of the twelve (12)-month period beginning with the first day of Elanco’s first quarter commencing after the effective date of the applicable Registration Statement, an earnings statement satisfying the provisions of Section 11(a) of the Securities Act and the rules and regulations promulgated thereunder and covering the period of at least twelve (12) months, but not more than eighteen (18) months, beginning with the first month after the effective date of the Registration Statement;

(xviii)provide and cause to be maintained a transfer agent and registrar for all Registrable Securities covered by the applicable Registration Statement from and after a date not later than the effective date of such Registration Statement;

(xix)cause all Registrable Securities covered by the applicable Registration Statement to be listed on each securities exchange on which any of Elanco’s securities are then listed or quoted and on each inter-dealer quotation system on which any of Elanco’s securities are then quoted;

(xx)provide (A) each Holder participating in the Registration, (B) the underwriters (which term, for purposes of this Agreement, shall include a Person deemed to be an underwriter within the meaning of Section 2(11) of the Securities Act), if any, of the Registrable Securities to be Registered, (C) the sale or placement agent therefor, if any, (D) counsel for such underwriters or agent, and (E) any attorney, accountant or other agent or representative retained by such Holder or any such underwriter, as selected by such Holder, the opportunity to participate in the preparation of such Registration Statement, each Prospectus included therein or filed with the SEC, and each amendment or supplement thereto, and to require the insertion therein of material, furnished to Elanco in writing, which in the reasonable judgment of such Holder(s) and their counsel should be included; and for a reasonable period prior to the filing of such Registration Statement, upon receipt of such confidentiality agreements as Elanco may reasonably request, make available upon reasonable notice at reasonable times and for reasonable periods for inspection by the parties referred to in (A) through (E) above, all pertinent financial and other records, pertinent corporate documents and properties of Elanco that are available to Elanco, and cause all of Elanco’s officers, directors and employees and the independent public accountants who have certified its financial statements to make themselves available at reasonable times and for reasonable periods to discuss the business of Elanco and to supply all information available to Elanco reasonably requested by any such Person in connection with such Registration Statement as shall be necessary to enable them to exercise their due diligence responsibility, subject to the foregoing;

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(xxi)to cause the executive officers of Elanco to participate in customary “road show” presentations that may be reasonably requested by the managing underwriter or underwriters in any Underwritten Offering and otherwise to facilitate, cooperate with, and participate in each proposed offering contemplated herein and customary selling efforts related thereto; and

(xxii)take all other customary steps reasonably necessary to effect the Registration, offering and sale of the Registrable Securities.

(b)As a condition precedent to any Registration hereunder, Elanco may require each Holder as to which any Registration is being effected to furnish to Elanco such information regarding the distribution of such securities and such other information relating to such Holder, its ownership of Registrable Securities and other matters as Elanco may from time to time reasonably request in writing.  Each such Holder agrees to furnish such information to Elanco and to cooperate with Elanco as reasonably necessary to enable Elanco to comply with the provisions of this Agreement.

(c)Eli Lilly agrees, and any other Holder agrees by acquisition of such Registrable Securities, that, upon receipt of any written notice from Elanco of the occurrence of any event of the kind described in Section 2.4(a)(vi), such Holder will forthwith discontinue disposition of Registrable Securities pursuant to such Registration Statement until such Holder’s receipt of the copies of the supplemented or amended Prospectus contemplated by Section 2.4(a)(vi), or until such Holder is advised in writing by Elanco that the use of the Prospectus may be resumed, and if so directed by Elanco, such Holder will deliver to Elanco (at Elanco’s expense) all copies, other than permanent file copies then in such Holder’s possession, of the Prospectus covering such Registrable Securities current at the time of receipt of such notice.  In the event Elanco shall give any such notice, the period during which the applicable Registration Statement is required to be maintained effective shall be extended by the number of days during the period from and including the date of the giving of such notice to and including the date when each seller of Registrable Securities covered by such Registration Statement either receives the copies of the supplemented or amended Prospectus contemplated by Section 2.4(a)(vi) or is advised in writing by Elanco that the use of the Prospectus may be resumed.

2.5Holdback Agreements.  To the extent requested in writing by the managing underwriter or underwriters of any Underwritten Offering, Elanco agrees not to, and shall exercise commercially reasonable efforts to obtain agreements (in the underwriters’ customary form) from its directors, executive officers and beneficial owners of five percent (5%) or more of Elanco Common Stock not to, directly or indirectly offer, sell, pledge, contract to sell (including any short sale), grant any option to purchase or otherwise dispose of any equity securities of Elanco or enter into any hedging transaction relating to any equity securities of Elanco during the ninety (90) days beginning on pricing date of such Underwritten Offering (except as part of such Underwritten Offering or any Distribution or pursuant to registrations on Form S-8 or S-4 or any successor forms thereto) unless the managing underwriter or underwriters otherwise agrees to a shorter period.

2.6Underwriting Agreement in Underwritten Offerings.  If requested by the managing underwriters for any Underwritten Offering, Elanco shall enter into an underwriting

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agreement with such underwriters for such offering; provided, however, that no Holder shall be required to make any representations or warranties to Elanco or the underwriters (other than representations and warranties regarding such Holder and such Holder’s intended method of distribution) or to undertake any indemnification obligations to Elanco or the underwriters with respect thereto, except as otherwise provided in Section 2.9 hereof.

2.7Convertible or Exchange Registration.  If any Holder of Registrable Securities offers any options, rights, warrants or other securities issued by it or any other Person that are offered with, convertible into or exercisable or exchangeable for any Registrable Securities, the Registrable Securities underlying such options, rights, warrants or other securities shall be eligible for Registration pursuant to Section 2.1 and Section 2.2 hereof (a “Convertible or Exchange Registration”).

2.8Registration Expenses Paid By Elanco.  In the case of any Registration of Registrable Securities required pursuant to this Agreement (including any Registration that is delayed or withdrawn) or proposed Underwritten Offering pursuant to this Agreement, Elanco shall pay all Registration Expenses regardless of whether the Registration Statement becomes effective or the Underwritten Offering is completed.

2.9Indemnification.

(a)Indemnification by Elanco.  Elanco agrees to indemnify and hold harmless, to the full extent permitted by law, each Holder, such Holder’s Affiliates and their respective officers, directors, employees, advisors, and agents and each Person who controls (within the meaning of the Securities Act or the Exchange Act) such Persons from and against any and all losses, claims, damages, liabilities (or actions in respect thereof, whether or not such indemnified party is a party thereto) and expenses, joint or several (including reasonable costs of investigation and legal expenses) (each, a “Loss” and collectively “Losses”) arising out of or based upon (i) any untrue or alleged untrue statement of a material fact contained in any Registration Statement under which the sale of such Registrable Securities was Registered under the Securities Act (including any final or preliminary Prospectus contained therein or any amendment thereof or supplement thereto or any documents incorporated by reference therein), or any such statement made in any free writing prospectus (as defined in Rule 405 under the Securities Act) that Elanco has filed or is required to file pursuant to Rule 433(d) of the Securities Act, (ii) any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein (in the case of a Prospectus, preliminary Prospectus or free writing prospectus, in light of the circumstances under which they were made) not misleading; provided, however, that Elanco shall not be liable to any particular indemnified party in any such case to the extent that any such Loss arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in any such Registration Statement in reliance upon and in conformity with written information furnished to Elanco by such indemnified party expressly for use in the preparation thereof.  This indemnity shall be in addition to any liability Elanco may otherwise have.  Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such Holder or any indemnified party and shall survive the transfer of such securities by such Holder.

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(b)Indemnification by the Selling Holder.  Each selling Holder agrees (severally and not jointly) to indemnify and hold harmless, to the full extent permitted by law, Elanco, its directors, officers, employees, advisors, and agents and each Person who controls Elanco (within the meaning of the Securities Act and the Exchange Act) from and against any Losses arising out of or based upon (i) any untrue or alleged untrue statement of a material fact contained in any Registration Statement under which the sale of such Registrable Securities was Registered under the Securities Act (including any final or preliminary Prospectus contained therein or any amendment thereof or supplement thereto or any documents incorporated by reference therein), or any such statement made in any free writing prospectus that Elanco has filed or is required to file pursuant to Rule 433(d) of the Securities Act, or (ii) any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein (in the case of a Prospectus, preliminary Prospectus or free writing prospectus, in light of the circumstances under which they were made) not misleading to the extent, but, in each case (i) or (ii), only to the extent, that such untrue statement or omission is contained in any information furnished in writing by such selling Holder to Elanco specifically for inclusion in such Registration Statement, Prospectus, preliminary Prospectus or free writing prospectus.  In no event shall the liability of any selling Holder hereunder be greater in amount than the dollar amount of the net proceeds received by such Holder under the sale of the Registrable Securities giving rise to such indemnification obligation.  This indemnity shall be in addition to any liability the selling Holder may otherwise have.  Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of Elanco or any indemnified party.

(c)Conduct of Indemnification Proceedings.  Any Person entitled to indemnification hereunder will (i) give prompt written notice to the indemnifying party of any claim with respect to which it seeks indemnification (provided that any delay or failure to so notify the indemnifying party shall relieve the indemnifying party of its obligations hereunder to the extent that it is materially prejudiced by reason of such delay or failure) and (ii) permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party; provided, however, that any Person entitled to indemnification hereunder shall have the right to select and employ separate counsel and to participate in the defense of such claim, but the fees and expenses of such counsel shall be at the expense of such Person unless (i) the indemnifying party has agreed in writing to pay such fees or expenses, (ii) the indemnifying party shall have failed to assume the defense of such claim within a reasonable time after receipt of notice of such claim from the Person entitled to indemnification hereunder and employ counsel reasonably satisfactory to such Person, (iii) the indemnified party has reasonably concluded (based on advice of counsel) that there may be legal defenses available to it or other indemnified parties that are different from or in addition to those available to the indemnifying party, or (iv) in the reasonable judgment of any such Person, based upon advice of its counsel, a conflict of interest may exist between such Person and the indemnifying party with respect to such claims (in which case, if the Person notifies the indemnifying party in writing that such Person elects to employ separate counsel at the expense of the indemnifying party, the indemnifying party shall not have the right to assume the defense of such claim on behalf of such Person).  If such defense is not assumed by the indemnifying party, the indemnifying party will not be subject to any liability for any settlement made without its consent, but such consent may not be unreasonably withheld, conditioned or delayed.  If the indemnifying party assumes the defense, the indemnifying party shall not have the right to settle such action without the consent

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of the indemnified party, which consent may not be unreasonably withheld, conditioned or delayed.  No indemnifying party shall consent to entry of any judgment or enter into any settlement that does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of an unconditional release from all liability in respect to such claim or litigation.  It is understood that the indemnifying party or parties shall not, in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the reasonable fees, disbursements and other charges of more than one separate firm admitted to practice in such jurisdiction at any one time from all such indemnified party or parties unless (x) the employment of more than one counsel has been authorized in writing by the indemnified party or parties, (y) an indemnified party has reasonably concluded (based on advice of counsel) that there may be legal defenses available to it that are different from or in addition to those available to the other indemnified parties or (z) a conflict or potential conflict exists or may exist (based on advice of counsel to an indemnified party) between such indemnified party and the other indemnified parties, in each of which cases the indemnifying party shall be obligated to pay the reasonable fees and expenses of such additional counsel or counsels.

(d)Contribution.  If for any reason the indemnification provided for in Section 2.9(a) or Section 2.9(b) is unavailable to an indemnified party or insufficient to hold it harmless as contemplated by Section 2.9(a) or Section 2.9(b), then the indemnifying party shall contribute to the amount paid or payable by the indemnified party as a result of such Loss in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and the indemnified party on the other hand.  The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the indemnifying party or the indemnified party and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such untrue statement or omission.  Notwithstanding anything in this Section 2.9(d) to the contrary, no indemnifying party (other than Elanco) shall be required pursuant to this Section 2.9(d) to contribute any amount in excess of the amount by which the net proceeds received by such indemnifying party from the sale of Registrable Securities in the offering to which the Losses of the indemnified parties relate (before deducting expenses, if any) exceeds the amount of any damages which such indemnifying party has otherwise been required to pay by reason of such untrue statement or omission.  The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 2.9(d) were determined by pro rata allocation or by any other method of allocation that does not take account of the equitable considerations referred to in this Section 2.9(d).  No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation.  The amount paid or payable by an indemnified party hereunder shall be deemed to include, for purposes of this Section 2.9(d), any legal or other expenses reasonably incurred by such indemnified party in connection with investigating, preparing to defend or defending against or appearing as a third party witness in respect of, or otherwise incurred in connection with, any such loss, claim, damage, expense, liability, action, investigation or proceeding.  If indemnification is available under this Section 2.9, the indemnifying parties shall indemnify each indemnified party to the full extent provided in Section 2.9(a) and Section 2.9(b) hereof without regard to the relative fault of said indemnifying parties or indemnified party.

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2.10Reporting Requirements; Rule 144.  Elanco shall use its reasonable best efforts to be and remain in compliance with the periodic filing requirements imposed under the SEC’s rules and regulations, including the Exchange Act, and any other applicable laws or rules, and thereafter shall timely file such information, documents and reports as the SEC may require or prescribe under Section 13 or 15(d) (whichever is applicable) of the Exchange Act.  If Elanco is not required to file such reports during such period, it will, upon the request of any Holder, make publicly available such necessary information for so long as necessary to permit sales pursuant to Rule 144 or Regulation S under the Securities Act, and it will take such further action as any Holder may reasonably request, all to the extent required from time to time to enable such Holder to sell Registrable Securities without Registration under the Securities Act within the limitation of the exemptions provided by (a) Rule 144 or Regulation S under the Securities Act, as such Rules may be amended from time to time, or (b) any rule or regulation hereafter adopted by the SEC.  From and after the date hereof through the first anniversary of the date upon which no Holder owns any Registrable Securities, Elanco shall forthwith upon request furnish any Holder (i) a written statement by Elanco as to whether it has complied with such requirements and, if not, the specifics thereof, (ii) a copy of the most recent annual or quarterly report of Elanco, and (iii) such other reports and documents filed by Elanco with the SEC as such Holder may reasonably request in availing itself of an exemption for the sale of Registrable Securities without registration under the Securities Act.

2.11Other Registration Rights.  Elanco shall not grant to any Persons the right to request Elanco to Register any equity securities of Elanco, or any securities convertible or exchangeable into or exercisable for such securities, whether pursuant to “demand,” “piggyback,” or other rights, unless such rights are subject and subordinate to the rights of the Holders under this Agreement.

ARTICLE III
MISCELLANEOUS

3.1Term.  This Agreement shall terminate upon such time as there are no Registrable Securities, except for the provisions of Section 2.8 and Section 2.9 and all of this Article III, which shall survive any such termination.

3.2Notices.  All notices or other communications under this Agreement shall be in writing and shall be deemed to be duly given when (a) delivered in person or (b) deposited in the United States mail or private express mail, postage prepaid, addressed as follows:

If to Eli Lilly, to:

Lilly Corporate Center

Indianapolis, Indiana 46285

Attention: General Counsel

If to Elanco, to:

Elanco Animal Health Incorporated

2500 Innovation Way

Greenfield, Indiana 46140

Attention: General Counsel

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Any party may, by notice to the other party, change the address to which such notices are to be given.

3.3Successors, Assigns and Transferees.  This Agreement and all provisions hereof shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns.  Elanco may assign this Agreement at any time in connection with a sale or acquisition of Elanco, whether by merger, consolidation, sale of all or substantially all of Elanco’s assets, or similar transaction, without the consent of the Holders; provided that the successor or acquiring Person agrees in writing to assume all of Elanco’s rights and obligations under this Agreement.  A Holder may assign its rights and obligations under this Agreement to any transferee that acquires at least five percent (5%) of the number of Registrable Securities beneficially owned by Eli Lilly immediately following the completion of the IPO and executes an agreement to be bound hereby in the form attached hereto as Exhibit A, an executed counterpart of which shall be furnished to Elanco.  Notwithstanding the foregoing, if such transfer is subject to covenants, agreements or other undertakings restricting transferability thereof, the Registration Rights shall not be transferred in connection with such transfer unless such transferee complies with all such covenants, agreements and other undertaking.

3.4GOVERNING LAW; NO JURY TRIAL.

(a)This Agreement shall be governed by and construed and interpreted in accordance with the laws of the State of New York, without regard to the conflict of laws principles thereof that would result in the application of any law other than the laws of the State of New York.  EACH OF THE PARTIES HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY COURT PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF AND PERMITTED UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.  EACH OF THE PARTIES HEREBY (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, AS APPLICABLE.

(b)With respect to any Action relating to or arising out of this Agreement, each party to this Agreement irrevocably (a) consents and submits to the exclusive jurisdiction of

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the courts of the State of New York and any court of the United States located in the Borough of Manhattan in New York City; (b) waives any objection which such party may have at any time to the laying of venue of any Action brought in any such court, waives any claim that such Action has been brought in an inconvenient forum and further waives the right to object, with respect to such Action, that such court does not have jurisdiction over such party; and (c) consents to the service of process at the address set forth for notices in Section 3.2 herein; provided, however, that such manner of service of process shall not preclude the service of process in any other manner permitted under applicable law.

3.5Specific Performance.  In the event of any actual or threatened default in, or breach of, any of the terms, conditions and provisions of this Agreement, the party or parties who are or are to be thereby aggrieved shall have the right to seek specific performance and injunctive or other equitable relief of its rights under this Agreement, in addition to any and all other rights and remedies at law or in equity, and all such rights and remedies shall be cumulative.

3.6Headings.  The article, section and paragraph headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

3.7Severability.  If any provision of this Agreement or the application thereof to any Person or circumstance is determined by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions hereof or the application of such provision to Persons or circumstances or in jurisdictions other than those as to which it has been held invalid or unenforceable, shall remain in full force and effect and shall in no way be affected, impaired or invalidated thereby, so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner adverse to any party.  Upon such determination, the parties shall negotiate in good faith in an effort to agree upon such a suitable and equitable provision to effect the original intent of the parties.

3.8Amendment; Waiver.

(a)This Agreement may not be amended or modified and waivers and consents to departures from the provisions hereof may not be given, except by an instrument or instruments in writing making specific reference to this Agreement and signed by Elanco and the Holders of a majority of the Registrable Securities; provided that if Eli Lilly or any of its Affiliates owns Registrable Securities, no amendment to or waiver of any provision in this Agreement will be effected without the written consent of Eli Lilly if such amendment or waiver adversely affects the rights of Eli Lilly or such Affiliates of Eli Lilly.

(b)Waiver by any party of any default by the other party of any provision of this Agreement shall not be deemed a waiver by the waiving party of any subsequent or other default, nor shall it prejudice the rights of the other party.

3.9Further Assurances.  Each of the parties hereto shall execute and deliver all additional documents, agreements and instruments and shall do any and all acts and things reasonably requested by the other party hereto in connection with the performance of its obligations undertaken in this Agreement.

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3.10Counterparts.  This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement, and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other party.  Execution of this Agreement or any other documents pursuant to this Agreement by facsimile or other electronic copy of a signature shall be deemed to be, and shall have the same effect as, executed by an original signature.

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first written above.

ELI LILLY AND COMPANY
By:	/s/ David A. Ricks
	Name:	David A. Ricks
	Title:	Chairman, President and Chief Executive Officer
ELANCO ANIMAL HEALTH INCORPORATED
By:	/s/ Michael-Bryant Hicks
	Name:	Michael-Bryant Hicks
	Title:	Executive Vice President, General Counsel and Corporate Secretary

EXHIBIT A

THIS INSTRUMENT forms part of the Registration Rights Agreement (the “Agreement”), dated as of [·], 2018, by and among Elanco Animal Health Incorporated, an Indiana corporation, and Eli Lilly and Company, an Indiana corporation (“Eli Lilly”).  The undersigned hereby acknowledges having received a copy of the Agreement and having read the Agreement in its entirety, and for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and intending to be legally bound, hereby agrees that the terms and conditions of the Agreement binding upon and inuring to the benefit of Eli Lilly shall be binding upon and inure to the benefit of the undersigned and its successors and permitted assigns as if it were an original party to the Agreement.

IN WITNESS WHEREOF, the undersigned has executed this instrument on this day of                   .

(Signature of Transferee)

Print Name

EX-10.7

Exhibit 10.7

TRANSITIONAL TRADEMARK LICENSE AGREEMENT

This TRANSITIONAL TRADEMARK LICENSE AGREEMENT (this “Agreement”), dated as of September 24, 2018 and effective as of the Effective Date (as defined in the Separation Agreement), is entered into by and among Eli Lilly and Company, an Indiana corporation (the “Licensor”); Elanco Animal Health Incorporated, an Indiana corporation (the “Licensee”); and, solely for the purposes of Section 11(a)(iii), Elanco US Inc., a Delaware corporation (“Elanco US”).

WHEREAS, pursuant to that certain Master Separation Agreement by and between Licensor and Licensee, dated on or about the date hereof (the “Separation Agreement”), and the Ancillary Agreements, Licensor has transferred the Animal Health Business to Licensee in contemplation of the Separation and IPO;

WHEREAS, Licensor and Elanco US previously entered into that certain Trademark License Agreement, dated as of July 14, 2016 (the “Trademark License Agreement”), pursuant to which Licensor granted to Elanco US a license under certain of its Trademarks and the Parties and Elanco US now desire to wholly supersede and replace the Trademark License Agreement with the terms of this Agreement; and

WHEREAS, in order to provide for an orderly transition from the Animal Health Business operating as a division of Licensor to operating as a standalone publicly-traded company, Licensor and Licensee have agreed to enter into this Agreement, pursuant to which Licensor has agreed to grant to Licensee limited rights to use the “LILLY” and “ELI LILLY AND COMPANY” Trademarks (including word, logo and design versions) on a transitional basis in accordance with the terms, and subject to the conditions, set forth in this Agreement.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the Parties hereby agree as follows:

1.Definitions.  Capitalized terms used herein and not otherwise defined herein shall have the meanings set forth for such terms in the Separation Agreement.  For the purpose of this Agreement, the following capitalized terms have the following meanings:

(a)“Advertising Materials” means advertising and promotional materials in any medium, including any websites, that Licensee uses in connection with the sale and distribution of the Products.

(b)“Licensed Territory” means, with respect to each Licensed Trademark, the countries in which Licensee conducts the Animal Health Business or distributes, directly or indirectly, Products that use such Licensed Trademark in any manner.

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(c)“Licensed Trademarks” means, collectively, the trademarks “LILLY” and “ELI LILLY AND COMPANY” (including all word, logo and design versions thereof), to the extent used on or in connection with the Products or the Animal Health Business as of the Effective Date, as shown in Schedule A.

(d)“Party” means Licensor and Licensee individually, and “Parties” means the Licensor and Licensee collectively.

(e)“Product Packaging” means (i) the primary packaging in which Products are packaged (e.g., blister packs or bottles with labels), (ii) the secondary packaging in which Products are packaged (e.g., boxes containing blister packs or bottles) and (iii) any leaflets contained inside the secondary packaging.

(f)“Products” means any products sold by or through the Animal Health Business.

(g)“Regulatory Approval” means the approval, registration, license or authorization of a Governmental Authority necessary for the manufacturing, distribution, use, promotion or sale of a Product for one or more indications in a country or other regulatory jurisdiction, including approval of Biologics License Applications (as defined by applicable Law) in the United States and Marketing Authorizations in the European Union or other European countries.

(h)“Third Party” means any Person other than Licensor, Licensee, or one of their Subsidiaries.

2.License Grants.

(a)License to Use Licensed Trademarks on Product Packaging.

(i)Beginning on the Effective Date and solely for the term set forth in Section 2(a)(iii), Licensor hereby grants to Licensee a non-exclusive, non-transferable (subject to Section 11(d)), sublicensable (subject to Section 2(d)), fully paid-up, royalty-free, temporary (in accordance with Section 2(a)(iii)), limited right and license to use the Licensed Trademarks on Product Packaging for the Products, subject to the terms of this Agreement and solely in the Licensed Territory, in each case in a manner consistent with the operation of the Animal Health Business for the six (6) month period immediately prior to the Effective Date or as otherwise approved in writing by Licensor (the “Product Packaging License”).

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(ii)Re-branding.  The Product Packaging License is granted solely for transitional purposes, and Licensee shall use commercially reasonable efforts to cease its use of all of the Licensed Trademarks as quickly as practicable after the Effective Date, including by seeking labeling approval from a Governmental Authority to change the Product Packaging so that such Product Packaging no longer displays any Licensed Trademarks or by completing the transfer of the Regulatory Approvals and replacing the Licensed Trademarks with Licensee’s name or house mark.

(iii)Term.  Unless terminated earlier under Section 10, the Product Packaging License will terminate, on a Product-by-Product and (to the extent applicable) country-by-country basis, after the receipt by Licensee of labeling approval from the relevant Governmental Authority for any such Product to change the Product Packaging so that such Product Packaging no longer displays any Licensed Trademarks, consistent with the timelines specified in regulations or guidance from such Governmental Authority on implementation of labeling changes. Notwithstanding the foregoing, under no circumstances shall the Product Packaging License expire later than four (4) years after the Effective Date; provided, however, that upon the Parties’ mutual agreement, the term of the Product Packaging License can be extended for one (1) additional year (beyond the four (4) year period immediately following the Effective Date).

(iv)Notice Obligations of Licensee.  Licensee shall provide written notice to Licensor promptly upon Licensee’s receipt of any labeling approval from the relevant Governmental Authority with respect to any Product to change the Product Packaging so that such Product Packaging no longer displays any Licensed Trademarks.

(b)License to Use Licensed Trademarks in Advertising Materials. Beginning on the Effective Date and solely for the term of the Product Packaging License, Licensor hereby grants to Licensee a non-exclusive, non-transferable (subject to Section 11(d)), sublicensable (subject to Section 2(d)), fully paid-up, royalty-free, temporary (in accordance with Section 2(a)(iii)), limited right and license to use the Licensed Trademarks in Advertising Materials, including advertising online and via social media outlets, in connection with the Products, subject to the terms of this Agreement and solely in the Licensed Territory, in each case in a manner consistent with the operation of the Animal Health Business for the six (6) month period immediately prior to the Effective Date or as otherwise approved in writing by Licensor.

(c)License to Use Licensed Trademarks in the Animal Health Business.  Beginning on the Effective Date and solely for the term of the Product Packaging License, Licensor hereby grants to Licensee a non-exclusive, non-transferable (subject to Section 11(d)), sublicensable (subject to Section 2(d)), fully paid-up, royalty-free, temporary (in accordance with Section 2(a)(iii)), limited right and license to use the Licensed Trademarks, including as a trade name, in connection with the distribution and sale of the Products and in Licensee’s business records used in connection with the day-to-day operation of the Animal Health Business (including Company Books and Records, human resource records,

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bank statements, invoices and Regulatory Approval applications), subject to the terms of this Agreement and solely in the Licensed Territory, in each case in a manner consistent with the operation of the Animal Health Business for the six (6) month period immediately prior to the Effective Date or as otherwise approved in writing by Licensor.

(d)Sublicensing.  Licensee may sublicense (i) rights it receives under Sections 2(a) through 2(c) to its Affiliates and (ii) rights it receives under Sections 2(a) and 2(b) to (A) distributors of Product or (B) buyers of any divested Product lines, in each case if, at the time of distribution by any such distributor or purchase by any such buyer, such Products (or Product lines) are still subject to such licenses (each such sublicense recipient in (i) or (ii), a “Sublicensee”), on the condition that each Sublicensee agrees in a written sublicense agreement to be bound by terms of use and obligations with respect to the Licensed Trademarks that are no less restrictive than those set forth in this Agreement.  Licensee is liable to Licensor and, as between the Parties, to all other Persons, for the failure of any Sublicensee to comply with its sublicense agreement to the same extent that Licensee would have been liable had Licensee failed to comply with this Agreement.  Any sublicenses granted under this Section 2(d) shall automatically terminate upon the termination of the relevant license to Licensee hereunder.

3.Reservation of Rights.  Licensor reserves all rights in and to the Licensed Trademarks.  Licensee acknowledges and agrees that as between Licensor and Licensee, Licensor is the sole and exclusive owner of all right, title and interest in, to and under the Licensed Trademarks, including all goodwill of the business connected with the use of, or symbolized by, the Licensed Trademarks.  All goodwill generated by Licensee’s use of the Licensed Trademarks inures solely to the benefit of Licensor.  Nothing in this Agreement grants Licensee any ownership or other proprietary interest in any Licensed Trademarks.

4.Restrictions on Use.  Without limiting the generality of Section 3 of this Agreement, Licensee will not nor attempt to, nor permit, enable, or request any of its Subsidiaries to:

(a)use any Licensed Trademarks in any manner, or engage in any other act or omission, that would be reasonably likely to impair any right of Licensor in, to or under the Licensed Trademarks, including any act or omission that would be reasonably likely to invalidate or cause the cancellation or abandonment of any Licensed Trademarks;

(b)file, acquire or otherwise obtain any registration for or application to register any Trademark or Internet domain name, or acquire, create or otherwise obtain any social media account that consists of, incorporates, uses, or is confusingly similar to any Licensed Trademarks, whether with any Governmental Authority, Internet domain name registrar, social media platform or otherwise (each of the foregoing, a “Registration”);

(c)adopt or use any variation, derivation or acronym of the Licensed Trademarks or any word, symbol or Trademark confusingly similar to the Licensed Trademarks (each, a “Variation”);

(d)use any Licensed Trademarks together with any other word, symbol or Trademark so as to form a composite Trademark (each, a “Composite”);

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(e)represent to any other Person that Licensee, any of its Subsidiaries or any other Person (other than Licensor or its successors in interest to the Licensed Trademarks) has or will have any ownership interest in any Licensed Trademarks;

(f)grant or attempt to grant a security interest in or lien on, record any security interest or lien on, or otherwise encumber, any Licensed Trademarks or this Agreement; or

(g)contest, challenge or otherwise make any claim or take any action adverse to Licensor’s ownership of or interest in, or the validity of, the Licensed Trademarks, including in any proceeding before any Governmental Authority.

5.Transfer of Rights.  If Licensee has or acquires any rights in, to or under the Licensed Trademarks, or any Registrations, Composites or Variations, Licensee hereby irrevocably assigns all such rights to Licensor.  At the reasonable request of Licensor, Licensee will execute any document, and perform any act reasonably necessary to obtain or confirm, Licensor’s or its designee’s exclusive ownership interest in and to the Licensed Trademarks and Registrations, in each applicable jurisdiction, including executing and delivering applications, oaths, declarations, affidavits, waivers, assignments and other documents.

6.Compliance with Laws.  Licensee will comply with all applicable Laws in connection with its use of the Licensed Trademarks, including the sale, distribution, promotion and advertising of Products, in connection with its use of the Advertising Materials, and in connection with any other exercise of the rights and licenses granted to it under this Agreement.

7.Quality Control.

(a)Licensee will use the Licensed Trademarks under the terms of this Agreement solely in a manner consistent with the operation of the Animal Health Business for the six (6) month period immediately prior to the Effective Date or as otherwise approved in writing by Licensor.

(b)Licensee will comply with any specifications, standards and directions that Licensor may provide in writing from time to time relating to the use of the Licensed Trademarks under this Agreement.

(c)Concerning any Products manufactured by Licensor or its Subsidiaries, or by any Third Party in privity of contract with Licensor or its Subsidiaries, Licensee will not tamper, modify or otherwise take any action to affect the quality of such Products.

(d)Concerning any Products manufactured by Licensee or its Subsidiaries, or by any Third Party in privity of contract with Licensee or its Subsidiaries, Licensee will ensure that such Products at all times meet or exceed (i) the quality and manufacturing standards of similar products in the Products’ industry, (ii) the then-current Good Manufacturing Practices applicable to such Products, (iii) any other standards imposed by the applicable Governmental Authorities and (iv) any specifications and quality provisions set forth in any agreement entered into by the Parties.  Licensee will notify Licensor in writing in the event that any Product does not meet such standards.

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(e)Inspection.  Licensee will permit Licensor to enter any place used for the storage or distribution of the Products, Advertising Materials or Company Books and Records to inspect (at reasonable times and on reasonable advance notice) the methods of storage and distribution to ensure compliance with the quality standards, or any other specifications or requirements, described in this Agreement.  Licensee will promptly cease all use of any Licensed Trademark identified by Licensor that does not comply with this Agreement.

(f)Notice.  Except where Product Packaging or Advertising Materials originate with Licensor or Licensor’s Subsidiary, Licensee will, to the extent physically practicable, include on all Product Packaging and Advertising Materials that bear a Licensed Trademark (i) a statement that the Licensed Trademark used thereon is a trademark of Licensor and used under license (or any similar statement required by Licensor concerning the status of the Licensed Trademarks), and (ii) the symbols “®,” “™” or other notice required by Licensor and/or the applicable Governmental Authority in proximity to each prominent use of such Licensed Trademark.

8.Enforcement and Maintenance.

(a)Notification. Licensee will promptly notify Licensor upon becoming aware of any use of, or any application or registration for, a Licensed Trademark by any Third Party which Licensee considers might be (i) an infringement, dilution or other violation of such Licensed Trademark or (ii) a claim asserted by any Person that such Licensed Trademark is invalid or that Licensee’s use of such Licensed Trademark infringes, dilutes or otherwise violates any Person’s Trademark or other rights.

(b)Enforcement.  Licensor has the sole right, but not the obligation, to take action against other Persons in the courts, administrative agencies or otherwise, at Licensor’s cost and expense, to (i) prevent or terminate infringement, dilution or other violation of the Licensed Trademarks, (ii) oppose or cancel applications or registrations for any Trademarks that may conflict with any Licensed Trademarks, or (iii) otherwise defend the Licensed Trademarks (each of (i)-(iii), an “Action”).  Licensee may not initiate or maintain any Action on its own.

(c)Procedure.  At the reasonable request of Licensor, Licensee will cooperate with Licensor, at Licensor’s expense, in an Action (including by executing, filing and delivering all documents and evidence requested by Licensor) and will lend its name to that Action if required by Law or if reasonably requested by Licensor.  Licensee will not assert or maintain any claim against Licensor based on or arising out of Licensor’s handling of or decisions concerning any Action or any settlement or compromise thereof, and Licensee hereby irrevocably releases Licensor from all such claims.  All damages or other compensation of any kind recovered in any Action or from any settlement or compromise thereof, are for the sole benefit of Licensor.

(d)Maintenance.  As between Licensor and Licensee, Licensor is responsible for prosecuting, maintaining and renewing applications and registrations for the Licensed Trademarks (“Maintenance”).  Licensor will use commercially reasonable efforts to maintain the Licensed Trademarks during the term of this Agreement.  At Licensor’s request and expense, Licensee will cooperate and provide assistance to Licensor in connection with Maintenance, including (i) supplying specimens and other samples of Licensee’s use of the Licensed

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Trademarks and (ii) executing documents and performing lawful acts as reasonably requested by Licensor.

9.Indemnification.  Each Party hereby agrees to indemnify, defend and hold harmless the other Party and its Subsidiaries, and their respective officers, directors, employees, shareholders, members, partners, agents, representatives, successors, and assigns (collectively, “Indemnitees”), from any losses, liabilities, claims, expenses and damages, including reasonable legal fees and expenses, actually suffered or incurred by such Indemnitee to the extent arising out of or resulting from the breach of any covenant or agreement by the first Party in this Agreement.

10.Term and Termination.

(a)Term.  This Agreement shall be effective as of the Effective Date through the earlier of the date of (A) termination of the last-to-terminate Product Packaging License (as set forth in Section 2(a)(iii)), or (B) four (4) years after the Effective Date (or, if the Parties have agreed to extend the Product Packaging License in accordance with Section 2(a)(iii), five (5) years after the Effective Date), unless earlier terminated under this Section 10.

(b)Termination.  Licensor may terminate this Agreement and any of the rights granted to Licensee under this Agreement at any time by providing written notice of termination to Licensee if Licensee commits a breach of this Agreement and the breach continues unremedied for a period of fifteen (15) Business Days after Licensor provides written notice to Licensee describing the nature of the breach.

(c)Effect of Termination.  After any termination of this Agreement by Licensor pursuant to Section 10(b), (i) all rights of Licensee to use the Licensed Trademarks automatically terminate, and (ii) Licensee will promptly cease using the Licensed Trademarks and will destroy (or modify so as to remove the Licensed Trademarks) the applicable Product Packaging and Advertising Materials as set forth in Sections 2(a) and 2(b).

(d)License-by-License and Product-by-Product Basis for Termination.

(i)In the event of an unremedied, non-material breach that gives rise to Licensor’s right to terminate this Agreement pursuant to Section 10(b), Licensor shall terminate only the specific licenses or Products to which such non-material breach applies.  In such a case, this Agreement will remain in effect as to the non-terminated licenses and Products.

(ii)In the event of an unremedied, material breach that gives rise to Licensor’s right to terminate this Agreement pursuant to Section 10(b), Licensor may, in Licensor’s sole discretion, terminate any and all licenses granted under this Agreement as to any and all Products.

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(e)Survival.  The following sections, together with any sections that expressly survive by their terms, survive expiration or termination of this Agreement:  Sections 1, 2(a)(iv), 3, 4(b), 4(c), 4(d), 4(e), 7, 8, 9, 10(c), 10(e) and 11.

11.Miscellaneous.

(a)Counterparts; Entire Agreement; Conflicting Agreements.

(i)This Agreement may be executed in one (1) or more counterparts, all of which shall be considered one (1) and the same agreement, and shall become effective when one (1) or more counterparts have been signed by each Party and delivered to the other Party.  Execution of this Agreement or any other documents pursuant to this Agreement by facsimile or other electronic copy of a signature shall be deemed to be, and shall have the same effect as being, executed by an original signature.

(ii)This Agreement, the Separation Agreement, the other Ancillary Agreements, the exhibits, the schedules and appendices hereto and thereto contain the entire agreement between the Parties with respect to the subject matter hereof, supersede all previous agreements, negotiations, discussions, writings, understandings, commitments and conversations with respect to such subject matter and there are no agreements or understandings between the Parties with respect to such subject matter other than those set forth or referred to herein or therein.

(iii)The Parties and Elanco US hereby acknowledge and agree that the Trademark License Agreement is wholly superseded and cancelled and replaced with the terms of this Agreement and such Trademark License Agreement is of no further force or effect.

(iv)In the event of any inconsistency between this Agreement and any other agreement entered into in connection with the Transaction (including the Separation Agreement), the Separation Agreement shall prevail.  In the event and to the extent that there shall be a conflict between the provisions of this Agreement and the provisions of the Separation Agreement, the Separation Agreement shall control.

(b)No Construction Against Drafter.  The Parties acknowledge that this Agreement and all the terms and conditions contained herein have been fully reviewed and negotiated by the Parties.  Having acknowledged the foregoing, the Parties agree that any principle of construction or rule of Law that provides that, in the event of any inconsistency or ambiguity, an agreement shall be construed against the drafter of the agreement shall have no application to the terms and conditions of this Agreement.

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(c)Governing Law.  This Agreement shall be governed by and construed and interpreted in accordance with the Laws of Indiana, without regard to the conflict of laws principles thereof that would result in the application of any Law other than the Laws of Indiana.

(d)Assignment.  This Agreement shall be binding upon and inure to the benefit of the Parties hereto and their respective successors and permitted assigns; provided, however, that no Party hereto may assign its respective rights or delegate its respective obligations under this Agreement without the express prior written consent of the other Party hereto.

(e)No Third-Party Beneficiaries.  Except for the indemnification rights under this Agreement as set forth in Section 9, (i) the provisions of this Agreement are solely for the benefit of the Parties hereto and are not intended to confer upon any Person (including employees of the Parties hereto) except the Parties any rights or remedies hereunder, and (ii) there are no Third Party beneficiaries of this Agreement and this Agreement shall not provide any Third Party (including employees of the Parties hereto) with any remedy, claim, liability, reimbursement, claim of action or other right in excess of those existing without reference to this Agreement.

(f)Notices.  All notices or other communications under this Agreement shall be in writing and shall be deemed to be duly given when (a) delivered in person or (b) deposited in the United States mail or private express mail, postage prepaid, addressed as follows:

If to Licensor, to:

Eli Lilly and Company
Lilly Corporate Center
Indianapolis, Indiana 46285
Attention:General Counsel

with a copy (which shall not constitute notice) to:
Trademarks@lilly.com

If to Licensee to:

Elanco Animal Health Incorporated
2500 Innovation Way
Greenfield, Indiana 46140
Attention:General Counsel

Any Party may, by written notice to the other Party, change the address to which such notices are to be given.

(g)Severability.  If any provision of this Agreement or the application thereof to any Person or circumstance is determined by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions hereof or the application of such provision to Persons or circumstances or in jurisdictions other than those as to which it has been held

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invalid or unenforceable, shall remain in full force and effect and shall in no way be affected, impaired or invalidated thereby, so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner adverse to any Party.  Upon such determination, the Parties shall negotiate in good faith in an effort to agree upon a suitable and equitable provision to effect the original intent of the Parties as closely as possible in a mutually acceptable manner in order that the rights and obligations contemplated by this Agreement be fulfilled as originally contemplated to the greatest extent possible.

(h)Force Majeure.  No Party shall be deemed in default of this Agreement to the extent that any delay or failure in the performance of its obligations under this Agreement results from any cause beyond its reasonable control and without its fault or negligence, such as acts of God, acts of civil or military authority, embargoes, epidemics, war, riots, insurrections, fires, explosions, earthquakes, floods, unusually severe weather conditions, or labor problems, or, in the case of computer systems, any failure in electrical or air conditioning equipment.  In the event of any such excused delay, the time for performance shall be extended for a period equal to the time lost by reason of such delay.

(i)Headings.  The table of contents and article, section and paragraph headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

(j)Waivers of Default.  Waiver by any Party of any default by the other Party of any provision of this Agreement shall not be deemed a waiver by the waiving Party of any subsequent or other default, nor shall it prejudice the rights of the other Party.

(k)Specific Performance.  In the event of any actual or threatened default or breach of, any of the terms, conditions and provisions of this Agreement, the Party or Parties who are or are to be thereby aggrieved shall be entitled to seek an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof, in each case (i) without the requirement of posting any bond or other indemnity and (ii) in addition to any other remedy to which it or they may be entitled, at Law or in equity.  Such remedies shall be cumulative with and not exclusive of and shall be in addition to any other remedies which any Party may have under this Agreement, or at Law or in equity or otherwise, and the exercise by a Party hereto of any one remedy shall not preclude the exercise of any other remedy.

(l)Amendments.  No provision of this Agreement shall be deemed waived, amended, supplemented or modified by any Party, unless such waiver, amendment, supplement or modification is in writing and signed by the authorized representative of the Party against whom it is sought to enforce such waiver, amendment, supplement or modification.

(m)Interpretation.  Interpretation of this Agreement (except as specifically provided in this Agreement, in which case such specified rules of construction shall govern with respect to this Agreement) shall be governed by the following rules of construction: (i) words in the singular shall be held to include the plural and vice versa, and words of one gender shall be held to include the other gender as the context requires; (ii) references to the terms Article, Section, paragraph and Exhibit are references to the Articles, Sections,

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paragraphs and Exhibits to this Agreement unless otherwise specified; (iii) the terms “hereof”, “herein”, “hereby”, “hereto” and derivative or similar words refer to this entire Agreement, including the Schedules and Exhibits hereto; (iv) references to “$” shall mean U.S. dollars; (v) the word “including” and words of similar import shall mean “including without limitation,” unless otherwise specified; (vi) the word “or” shall not be exclusive; (vii) references to “written” or “in writing” include in electronic form; (viii) provisions shall apply, when appropriate, to successive events and transactions; (ix) a reference to any Person includes such Person’s permitted successors and permitted assigns; (x) any reference to “days” means calendar days unless Business Days are expressly specified; and (xi) when calculating the period of time before which, within which or following which any act is to be done or step taken pursuant to this Agreement, the date that is the reference date in calculating such period shall be excluded and, if the last day of such period is not a Business Day, the period shall end on the next succeeding Business Day.

(n)Waiver of Jury Trial.  SUBJECT TO SECTIONS 11(k) AND 11(o) HEREIN, EACH OF THE PARTIES HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY COURT PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF AND PERMITTED UNDER OR IN CONNECTION WITH THIS AGREEMENT.  EACH OF THE PARTIES HEREBY (i) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (ii) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 11(n).

(o)Submission to Jurisdiction; Waivers.  With respect to any claim relating to or arising out of this Agreement, each Party to this Agreement irrevocably (i) consents and submits to the exclusive jurisdiction of the courts of Indiana, (ii) waives any objection which such Party may have at any time to the laying of venue of any claim brought in any such court, waives any claim that such claim has been brought in an inconvenient forum and further waives the right to object, with respect to such claim, that such court does not have jurisdiction over such Party and (iii) consents to the service of process at the address set forth for notices in Section 11(f) herein; provided, however, that such manner of service of process shall not preclude the service of process in any other manner permitted under applicable Law.

(p)Further Assurances.  In addition to the actions specifically provided for elsewhere in this Agreement, each of the Parties will cooperate with each other and shall use its (and shall cause its Subsidiaries to use their) commercially reasonable efforts, prior to, on and after the Effective Date, to take, or cause to be taken, all actions, and to do, or cause to be done, all things, reasonably necessary, proper or advisable under applicable Laws, regulations and agreements to implement and give effect to this Agreement.

[Signature page follows]

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IN WITNESS WHEREOF, each of the Parties hereto and Elanco US have caused this Agreement to be duly executed and delivered in its name and on its behalf as of the date first written above.

LICENSOR:		LICENSEE:
Eli Lilly and Company		Elanco Animal Health Incorporated
By:	/s/ David A. Ricks	By:	/s/ Michael-Bryant Hicks
Name:	David A. Ricks	Name:	Michael-Bryant Hicks
Title:	Chairman, President and Chief Executive Officer	Title:	Executive Vice President, General Counsel and Corporate Secretary
Date:	September 24, 2018	Date:	September 24, 2018

ELANCO US:

Elanco US Inc.

By:	/s/ Karen L. DeHaan-Fullerton
Name:	Karen L. DeHaan-Fullerton
Title:	Secretary
Date:	September 24, 2018

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SCHEDULE A

Licensed Trademarks

ELI LILLY AND COMPANY

LILLY

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EX-10.8

Exhibit 10.8

INTELLECTUAL PROPERTY AND TECHNOLOGY LICENSE AGREEMENT

TABLE OF CONTENTS

ARTICLE I Definitions		2
1.01	Definitions	2
ARTICLE II Licenses		6
2.01	License Grant to Elanco	6
2.02	Obligations	7
2.03	Sublicenses	8
2.04	Covenants of Elanco and Lilly	8
2.05	Retained Rights	8
2.06	Right of First Offer	9
ARTICLE III Representations and Warranties		10
3.01	Representations and Warranties	10
ARTICLE IV Patent Prosecution and Enforcement		10
4.01	Patent Separation	10
4.02	Prosecution and Maintenance of Patents	10
4.03	Enforcement	10
4.04	Invalidity Claims	11
4.05	Covenants of Lilly	11
4.06	Liability	11
4.07	Abandonment and Assignment Events	11
ARTICLE V Term and Termination		12
5.01	Term	12
5.02	Termination for Bankruptcy Event	12
5.03	Rights in Bankruptcy	12
5.04	Effects of Termination	12
5.05	Survival of Obligations	13
ARTICLE VI Confidential Information		13
6.01	Confidential License Information	13
6.02	Compelled Disclosure	13
ARTICLE VII Indemnification; Limitation of Liability		14
7.01	Indemnification	14
7.02	Procedures for Indemnification of Third Party Proceedings	14
7.03	Special, Indirect and other Losses	14
ARTICLE VIII Miscellaneous		14

8.01	Counterparts; Entire Agreement; Conflicting Agreements	14
8.02	No Construction Against Drafter	15
8.03	Governing Law	15
8.04	Assignment	15
8.05	No Third Party Beneficiaries	15
8.06	Notices	16
8.07	Severability	16
8.08	Force Majeure	16
8.09	Headings	16
8.10	Waivers of Default	17
8.11	Specific Performance	17
8.12	Amendments	17
8.13	Interpretation	17
8.14	Dispute Resolution	17
8.15	Waiver of Jury Trial	18
8.16	Submission to Jurisdiction; Waivers	18
8.17	Further Action	18

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INTELLECTUAL PROPERTY AND TECHNOLOGY LICENSE AGREEMENT

THIS INTELLECTUAL PROPERTY AND TECHNOLOGY LICENSE AGREEMENT (this “Agreement”), dated as of September 24, 2018 (the “Effective Date”), is entered into by and among Eli Lilly and Company, a corporation organized under the laws of Indiana (“Lilly”), on behalf of itself and the Lilly Subsidiaries; Elanco Animal Health Incorporated, a corporation organized under the laws of Indiana (“Elanco”), on behalf of itself and the Elanco Subsidiaries; and, solely for the purposes of Section 8.01(d), Elanco US Inc., a corporation organized under the laws of Delaware (“Elanco US”).

RECITALS

WHEREAS, Lilly and its Subsidiaries have been engaged in the Animal Health Business;

WHEREAS, pursuant to that certain Master Separation Agreement by and between Lilly and Elanco, dated on or about the date hereof (the “Separation Agreement”), and the other Ancillary Agreements, Lilly has transferred the Animal Health Business to the Company in contemplation of the Separation and IPO;

WHEREAS, Lilly and Elanco US previously entered into that certain Technology License Agreement, dated as of January 1, 2017 (the “Technology License Agreement”), pursuant to which Lilly and Elanco US granted and received certain licenses (or sublicenses, as applicable) under Intellectual Property Rights and Technology and Contributed IP Assets (each as defined in the Technology License Agreement), as applicable and, except as further described herein in Section 8.01, the Parties and Elanco US now desire to wholly supersede and replace the Technology License Agreement with the terms of this Agreement; and

WHEREAS, in order to provide for an orderly separation under the Separation Agreement, Lilly and Elanco have agreed to enter into this Agreement and on the terms set forth herein, Lilly and the Lilly Subsidiaries desire to grant Elanco and the Elanco Subsidiaries, and Elanco and the Elanco Subsidiaries desire to receive, certain licenses (or sublicenses, as applicable) under Intellectual Property Rights and Technology that are (i) used or held for use in the Animal Health Business as of the Effective Date (“Used in the Animal Health Business”), or (ii) made or conceived in the course of certain joint research or development programs of Lilly and Elanco, each as more particularly set forth in this Agreement.

NOW, THEREFORE, the Parties agree as follows:

ARTICLE I

DEFINITIONS

1.01Definitions

Capitalized terms used herein and not otherwise defined herein shall have the meanings set forth for such terms in the Separation Agreement.  As used in this Agreement the following terms shall have the following meanings.

“Abandoned”, with respect to a Licensed Patent, means that a Party, its Subsidiaries or, as applicable, their licensees or sublicensees, has decided to terminate or abandon all activities under or with respect to such Licensed Patent. The Party referred to in the foregoing shall be referred to as the “Abandoning Party”.

“Agreement” has the meaning set forth in the Preamble.

“Animal Health Business” means the business of researching, developing, manufacturing, marketing, selling and distributing (i) vaccines, treatments and other veterinary products for farm, companion and aquatic animals and (ii) parasite control products, in the case of each of (i) and (ii), under the “Elanco” or “Elanco Animal Health” brand names. For the avoidance of doubt, parasite control products do not include antimicrobial or antiviral products.

“Animal Health Field” means the business of researching, developing, manufacturing, marketing, selling and distributing (i) vaccines, treatments and other veterinary products for farm, companion and aquatic animals, or (ii) parasite control products. For the avoidance of doubt, parasite control products do not include antimicrobial or antiviral products.

“Assignable Patents” has the meaning set forth in Section 4.07(a).

“Assignment Agreement” means a written agreement between a Party or a Subsidiary thereof and the other Party or Subsidiary thereof pursuant to which (i) such first Party or such Subsidiary assigns particular Assignable Patents to such other Party or Subsidiary, and (ii) such other Party or Subsidiary receives the right to Prosecute and Maintain, enforce and defend such Assignable Patents at its own expense.

“Assignment Event” has the meaning set forth in Section 4.07(a).

“Bankruptcy Code” has the meaning set forth in Section 5.03.

“Bankruptcy Event” means that a Party in question becomes insolvent, or voluntary or involuntary Proceedings by or against such Party are instituted in bankruptcy or under any insolvency law, or a receiver or custodian is appointed for such Party, which Proceedings, if involuntary, shall not have been dismissed within sixty (60) days after the date of filing, or such Party makes an assignment for the benefit of its creditors, or substantially all of the assets of such Party are seized or attached and not released within sixty (60) days thereafter, or such Party ceases or threatens to cease to carry on business.

“Business Day” means a day other than a Saturday or Sunday or other day on which commercial banks are authorized or obligated by Law to be closed in New York, New York.

“Confidential License Information” means, with respect to a Party, all confidential and proprietary information of such Party, its Subsidiaries or its Representatives that is provided to the other Party, its Subsidiaries or its Representatives pursuant to this Agreement; provided that Confidential License Information shall not include information that (i) is or becomes part of the public domain through no breach of this Agreement by the recipient Party, any of its respective Subsidiaries or its Representatives,

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(ii) was independently developed following the Effective Date by employees or agents of the recipient Party, any of its Subsidiaries or their respective Representatives who have not accessed or otherwise received the applicable Confidential License Information; provided that such independent development can be demonstrated by competent, contemporaneous written records of the recipient Party or any of its Subsidiaries, or (iii) becomes available to the recipient Party or any of its Subsidiaries following the Effective Date on a non-confidential basis from a Third Party who is not known by such Person to be bound directly or indirectly by a confidentiality agreement or other contractual, legal or fiduciary obligation of confidentiality to the disclosing Party or any of its Subsidiaries.

“Controlled” means, with respect to specific Intellectual Property Rights and Technology, that Lilly and/or a Lilly Subsidiary (i) has a license such that it can grant a license or sublicense to such Intellectual Property Rights and Technology as contemplated under this Agreement without violating the terms of any then-existing agreement or other arrangement with, or the rights of, any Third Party or (ii) owns such Intellectual Property Rights and Technology.

“Dispute Notice” has the meaning set forth in Section 8.14.

“Effective Date” means the date set forth in the Preamble.

“Elanco” has the meaning set forth in the Preamble.

“Elanco Field” means all fields of the Animal Health Business.

“Elanco Intellectual Property” has the meaning set forth in Section 2.06(b).

“Elanco Library Products” has the meaning set forth in Section 2.01(b).

“Elanco Offer” has the meaning set forth in Section 2.06(b).

“Elanco Offeror” has the meaning set forth in Section 2.06(b).

“Elanco Products” has the meaning set forth in Section 2.01(a).

“Elanco Subsidiary” means Elanco and its current and future Subsidiaries (but excludes any Lilly Subsidiary).

“Elanco US” has the meaning set forth in the Preamble.

“Governmental Authority” means any U.S. federal, state or local or any supra-national or non-U.S. government, political subdivision, governmental, regulatory or administrative authority, instrumentality, agency, body or commission, self-regulatory organization or any court, tribunal, or judicial or arbitral body.

“Green Book” means the annual publication issued by the U.S. Food and Drug Administration of approved animal drug products.

“Infringement” means actual, threatened or suspected infringement or misappropriation.

“Intellectual Property Rights and Technology” means all (i)(A) patent applications (along with all patents issuing thereon) and issued patents, invention disclosures, certificates of invention and statutory invention registrations, (B) all reissues, renewals, extensions, substitutions, continuations, continuations-in-part, and divisions, all results of oppositions, reexaminations, supplemental examinations, supplementary protection certificates, and other review procedures (including ex parte reexamination, inter partes review, and post grant review) with respect to (A), and (C) rights to claim priority with respect to (A) and (B), in each case whether domestic or foreign (“Patents”); (ii) Know-How; (iii) works

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of authorship, copyrights, database and design rights, mask work rights, whether or not registered, published or unpublished, and registrations and applications therefor along with all reversions, renewals and extensions thereof; (iv) software, data and databases (“Software”); and (v) all rights in and to all income, royalties, damages and payments previously, now or hereafter due or payable with respect to the foregoing (i) through (iv), all claims, causes of action, rights of recovery and rights of set-off of any kind again any Person (whether in law or in equity) with respect to the foregoing (i) through (iv), and the right to sue, counterclaim, and recover for past, present and future Infringement against any Person with respect to the foregoing (i) through (iv). For the avoidance of doubt, for the purposes of this Agreement, Intellectual Property Rights and Technology excludes trademarks, service marks, trade names, certification marks, service names, industrial designs, brand names, brand marks, trade dress rights, identifying symbols, logos, emblems, and signs or insignia, and any applications for the foregoing and Internet domain names.

“Invalidity Claim” has the meaning set forth in Section 4.04.

“Know-How” means all existing and available technical information, know-how,data, reports including inventions (whether patentable or not), Patent disclosures, discoveries, trade secrets, specifications, instructions, processes and formulae, including all biological, chemical, pharmacological, biochemical, toxicological, pharmaceutical, physical, safety, quality control, preclinical and clinical data (which includes anonymized data as it relates to individuals).

“Law” means any United States or non-United States federal, national, international, multinational, supranational, state, provincial, local or similar law (including common law and privacy and data protection laws), statute, ordinance, regulation, rule, code, order, treaty (including any income tax treaty), license, permit, authorization, registration, approval, consent, decree, injunction, judgment, notice of liability, request for information, binding judicial or administrative interpretation or other requirement or rule of law or legal process, in each case, enacted, promulgated, issued, entered or otherwise put into effect by a Governmental Authority or any rule or requirement of any national securities exchange.

“LBC Technology” means Lilly San Diego technology relating to licensed antibodies and biopeptides, including the supply of lead molecules and top variants in an appropriate vector that allows for manipulation and expression.  Notwithstanding the foregoing, LBC Technology specifically excludes technology relating to engineering vectors and methods of using engineering vectors, caninization and methods of using caninization, and engineered cell lines and methods of engineering cell lines.

“Licensed IP and Technology” means all Intellectual Property Rights and Technology (including LBC Technology) to the extent Controlled by Lilly and/or a Lilly Subsidiary and Used in the Animal Health Business as set forth in Annex 1.

“Licensed Patents” means Patents included in the Licensed IP and Technology.

“Lilly” has the meaning set forth in the Preamble.

“Lilly-Owned Animal Health Patents” has the meaning set forth in Section 4.01.

“Lilly Field” means all fields of use excluding the Elanco Field.

“Lilly Indemnitees” has the meaning set forth in Section 7.01.

“Lilly Intellectual Property” has the meaning set forth in Section 2.06(a).

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“Lilly Offer” has the meaning set forth in Section 2.06(a).

“Lilly Offeror” has the meaning set forth in Section 2.06(a).

“Lilly Subsidiary” means Lilly and its current and future Subsidiaries (but excludes any Elanco Subsidiary).

“Losses” means any and all damages, losses, deficiencies, Liabilities, penalties, judgments, settlements, payments, fines, charges, interest, costs and expenses, whether or not resulting from third party claims, including the costs and expenses of any and all Proceedings and demands, assessments, judgments, settlements and compromises relating thereto and the costs and expenses of attorneys’, accountants’, consultants’ and other professionals’ fees and expenses incurred in the investigation or defense thereof or the enforcement of rights hereunder.

“Marketing Authorizations” means marketing authorizations issued, or applications for marketing authorizations, with respect to any products and all supplements, amendments and revisions thereto.

“Orange Book” means the annual publication issued by the U.S. Food and Drug Administration of approved drug products.

“Party” means Lilly and Elanco individually, and “Parties” means Lilly and Elanco collectively.

“Person” means an individual, a general or limited partnership, a corporation, a trust, a joint venture, an unincorporated organization, a limited liability entity, any other entity and any Governmental Authority.

“Proceedings” means any demand, action, claim, dispute, suit, countersuit, arbitration, inquiry, proceeding or investigation by or before any Governmental Authority.

“Prosecution and Maintenance” (including variations such as Prosecute and Maintain) means, with respect to a Patent, preparing, filing and doing all other lawfully permitted acts to initiate an application for and further the pre-grant/pre-issuance prosecution and post-grant/post-issuance prosecution and maintenance of such Patent, and making decisions and taking actions with respect to (i) Patent term extensions (including filing for any supplementary protection certificates and any other extensions that are available) for such Patent, (ii) any regulatory listing (e.g., Orange Book or Green Book in the United States) for such Patent and (iii) inclusion or exclusion of such Patent from the competence of the European Unified Patent Court.

“Purpose” has the meaning set forth in Section 6.01.

“Regulatory Approvals” means the approval, registration, license or authorization of a Governmental Authority necessary for the manufacturing, distribution, use, promotion and sale of a pharmaceutical or biological product for one or more indications in a country or other regulatory jurisdiction, including approval of Biologics License Applications (as defined by applicable Law) in the United States and Marketing Authorizations in the European Union or other European countries, in each case with respect to Elanco Products covered by one or more of the Licensed Patents.

“Representatives” means, when used with respect to any Person, such Person’s directors, officers, employees, agents, accountants, attorneys, consultants and other advisors and representatives.

“Separation Agreement” has the meaning set forth in the Recitals.

“Sublicensed IP and Technology” means Licensed IP and Technology licensed to Lilly and/or a Lilly Subsidiary pursuant to any license agreement.

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“Subsidiary” means, when used with respect to any Person, (i) a corporation in which such Person and/or one or more Subsidiaries of such Person, directly or indirectly, owns Stock having a majority of the total voting power in the election of directors of all outstanding shares of all classes and series of Stock of such corporation entitled generally to vote in such election; and (ii) any other Person (other than a corporation) in which such Person and/or one or more Subsidiaries of such Person, directly or indirectly, has (A) a majority ownership interest or (B) the power to elect or direct the election of a majority of the members of the governing body of such first-named Person.

“Technology License Agreement” has the meaning set forth in the Recitals.

“Territory” means worldwide.

“Third Party” means any Person other than Lilly, Elanco and their respective Subsidiaries.

“Third Party Proceeding” means any claim or the commencement by a Third Party of any Proceeding.

“Used in the Animal Health Business” has the meaning set forth in the Recitals.

ARTICLE II

LICENSES

2.01License Grant to Elanco

(a)Subject to the terms and conditions of this Agreement, Lilly and the Lilly Subsidiaries hereby grant to Elanco and the Elanco Subsidiaries an exclusive, irrevocable and perpetual (subject to ARTICLE V), non-transferable (except pursuant to Section 8.04) license, with the right to sublicense in accordance with Section 2.03, to research, develop, use, manufacture, have manufactured, sell, have sold, import, export or otherwise commercialize or exploit products and services in the Elanco Field that embody or utilize the Licensed IP and Technology (the “Elanco Products”) in the Territory.

(b)Subject to the terms and conditions of this Agreement, Lilly and the Lilly Subsidiaries further hereby grant to Elanco and the Elanco Subsidiaries a non-exclusive, revocable, non-transferable (except pursuant to Section 8.04) and non-sublicensable license, to screen Lilly compound libraries to discover research, develop, use, manufacture, have manufactured, sell, have sold, import, export or otherwise commercialize or exploit products and services in the Elanco Field that embody or utilize the Licensed IP and Technology (the “Elanco Library Products”) in the Territory.  Notwithstanding the foregoing, Elanco shall only screen Lilly compound libraries for Elanco Library Products that:

(i)have been terminated by Lilly or, solely as determined by Lilly, are outside of any SARs of any lead compounds in any active Lilly programs;

(ii)are not Third Party compounds or libraries; and

(iii)exist in the Lilly compound libraries as of the Effective Date.

The license granted under this Section 2.01(b) shall expire on the second (2nd) anniversary of the Effective Date, provided that Elanco may, at least thirty (30) calendar days prior to the end of such license period,

6

request a one (1) year extension of such two (2) year license period (for a maximum of three (3) additional one (1) year periods, each to be requested at least thirty (30) calendar days prior to the end of the then-current license period), with approval of each such request being in Lilly’s sole discretion. For the avoidance of doubt, the license granted under this Section 2.01(b) shall not extend beyond the fifth (5th) anniversary of the Effective Date.

(c)The licenses granted to an Elanco Subsidiary pursuant to this Section 2.01 shall terminate automatically if such Elanco Subsidiary ceases (i) to be a Subsidiary of Elanco or (ii) to engage in the Animal Health Business.

(d)Elanco shall remain responsible to Lilly for the performance of the Elanco Subsidiaries’ obligations and for all acts or omissions of the Elanco Subsidiaries as if they were acts or omissions of Elanco.

(e)Elanco shall have no rights to any improvements to the Licensed IP and Technology that are made by Lilly or any Lilly Subsidiary after the Effective Date without Lilly’s express prior written consent.  If Elanco or any Elanco Subsidiary makes any improvements to the Licensed IP and Technology, such improvements shall be owned by Elanco or such Elanco Subsidiary; provided, however, that Elanco and the Elanco Subsidiaries hereby grant to Lilly and the Lilly Subsidiaries a non-exclusive, perpetual license to research, develop, use, manufacture, have manufactured, sell, have sold, import, export or otherwise commercialize or exploit products or services that embody or utilize any such improvements in the Lilly Field and anywhere in the Territory.

(f)Elanco and the Elanco Subsidiaries shall only use Licensed IP and Technology at locations owned or controlled by Elanco or Elanco Subsidiaries.

(g)The Parties agree that in addition to the Licensed IP and Technology being licensed to Elanco, Lilly and Elanco will make appropriate personnel reasonably available to consult, provide best practice tips, answer questions, and provide advice for one (1) year following the Effective Date.  In the event that Elanco requests any of the foregoing from Lilly, Lilly shall provide such assistance in a manner that Lilly deems reasonable.

2.02Obligations

(a)Notwithstanding anything to the contrary herein, Elanco acknowledges and agrees, on behalf of itself and the Elanco Subsidiaries, that certain of the rights and licenses granted to Elanco and the Elanco Subsidiaries under this Agreement include rights and licenses with respect to Sublicensed IP and Technology and such rights and licenses shall be subject in all respects to all of the terms, conditions and limitations (including all field, sublicensing and term limitations) of each applicable license agreement to the extent disclosed to Elanco and the Elanco Subsidiaries. Unless Elanco provides written notice to Lilly that it desires to terminate a license to particular Sublicensed IP and Technology (in which case Elanco and the Elanco Subsidiaries shall have no further rights hereunder with respect to such Sublicensed IP and Technology) and until such termination takes effect, Elanco and the Elanco Subsidiaries shall comply with, perform, and, with respect to financial obligations, pay when due, all covenants, agreements, obligations, restrictions or other requirements of or under such license agreements to the extent applicable to or arising as a result of Elanco’s and the Elanco Subsidiaries’ exercise of the licenses granted to them under this Agreement, as if they were Lilly or the relevant Lilly Subsidiary (as applicable). For the avoidance of doubt, Elanco’s and the Elanco Subsidiaries’ rights to any Sublicensed IP and Technology shall automatically terminate upon the termination or expiration of the applicable license agreement under which such rights were granted.

(b)Notwithstanding anything to the contrary contained herein, if any Intellectual Property Rights and Technology are Used in the Animal Health Business and would be considered Controlled by Lilly and/or a Lilly Subsidiary if an authorization, approval, consent or waiver were obtained from a Governmental Authority or Third Party, each of Lilly and the Lilly Subsidiaries and Elanco and the Elanco Subsidiaries shall use their respective reasonable efforts to (i) obtain promptly such authorization, approval, consent or waiver, which may include delivery of any notice, or (ii) if such authorization, approval, consent or waiver cannot be obtained, cooperate with each other and take such actions that may be required to obtain for Elanco and the Elanco Subsidiaries the

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benefit of such Intellectual Property Rights and Technology as if they were included in the Licensed IP and Technology.  If any such Governmental Authority or Third Party authorization, approval, consent or waiver referenced in Section 2.02(b) is obtained after the Effective Date, the relevant Intellectual Property Rights and Technology will be automatically licensed to Elanco and the Elanco Subsidiaries hereunder, as Licensed IP and Technology.

(c)Elanco and the Elanco Subsidiaries agree to provide Lilly with any Know-How generated by Elanco or any Elanco Subsidiaries under this Agreement in quarterly reports (or as otherwise agreed upon by the Parties).  Elanco and the Elanco Subsidiaries shall retain all rights in, to and under such Know-How; provided, however, that Elanco and the Elanco Subsidiaries hereby grant to Lilly and the Lilly Subsidiaries a non-exclusive, perpetual license to research, develop, use, manufacture, have manufactured, sell, have sold, import, export or otherwise commercialize or exploit products or services that embody or utilize any such Know-How in the Lilly Field and anywhere in the Territory.

2.03Sublicenses

(a)Elanco and the Elanco Subsidiaries shall not have the right to grant sublicenses under the licenses granted to them under this Agreement, except, subject to the terms and conditions of this Agreement, to any Third Party that provides any products or performs any services for Elanco or an Elanco Subsidiary, in each case solely for the purpose of enabling such Third Party to provide such products to or perform such services on behalf of Elanco or such Elanco Subsidiary.

(b)Each such Third Party sublicensee shall be subject to a written agreement with terms and conditions that are consistent with, and no less protective of Lilly and the Lilly Subsidiaries than, the terms and conditions hereunder. Elanco shall undertake, and shall cause the Elanco Subsidiaries to undertake, to enforce the provisions of any such sublicense and shall remain responsible to Lilly for the performance of its and the Elanco Subsidiaries’ Third Party sublicensees’s obligations and for all acts or omissions of its and their Third Party sublicensees as if they were acts or omissions of Elanco.

(c)Any sublicenses granted by Elanco in accordance with this Section 2.03 shall automatically terminate on the termination of this Agreement. Any sublicenses granted by an Elanco Subsidiary in accordance with this Section 2.03 shall automatically terminate on the earlier of (i) the termination of this Agreement in whole or (ii) the termination of the license to the applicable Elanco Subsidiary that granted the sublicense.

2.04Covenants of Elanco and Lilly

Elanco covenants and agrees that Elanco will not, and will cause and require the Elanco Subsidiaries and Third Party sublicensees hereunder not to, file for any supplemental protection certificates, Patent term extensions or any other form of protection based on a Patent (such as Green Book or Orange Book listings) in any jurisdiction based on any of the Licensed Patents, without Lilly’s prior written consent (not to be unreasonably withheld).

2.05Retained Rights

Any rights under Intellectual Property Rights and Technology not expressly granted to the other Party under the provisions of this Agreement shall be retained by the Party owning such Intellectual Property Rights and Technology, and neither Party grants to the other Party any right or license in any Intellectual Property Rights and Technology of such Party, whether by implication, estoppel or otherwise, except as expressly provided herein. For the avoidance of doubt and notwithstanding anything to the contrary herein,

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(a)Lilly and the Lilly Subsidiaries retain all rights under Licensed IP and Technology to research, develop, use, manufacture, have manufactured, sell, have sold, import, export or otherwise commercialize or exploit any products or services (excluding Elanco Products) in the Territory in the Lilly Field; and

(b)Lilly, Lilly Subsidiaries and their licensees and sublicensees shall have the unrestricted right to research, develop, and/or use any Licensed IP and Technology in animals as deemed necessary, in Lilly’s sole discretion, to research, develop, use, manufacture, have manufactured, sell, have sold, import, export or otherwise commercialize or exploit any products or services (excluding Elanco Products) in the Territory within the Lilly Field.

2.06Right of First Offer

(a)For a period of two (2) years after the Effective Date, if Lilly or a Lilly Subsidiary receives a written offer from a Third Party (the “Lilly Offeror”) that is mainly in the Animal Health Field requesting any right or license to research, develop, use, manufacture, have manufactured, sell, have sold, import, export or otherwise commercialize or exploit products or services that embody or utilize any Intellectual Property Rights and Technology owned by Lilly or a Lilly Subsidiary (the “Lilly Intellectual Property”) anywhere in the Territory (a “Lilly Offer”), Lilly shall provide Elanco with written notice of the existence thereof, identifying the relevant Lilly Intellectual Property that is the subject of such Lilly Offer; provided, however, that Lilly shall not be under any obligation to provide Elanco with any notice as to whether such Lilly Offer is intended for commercialization within the Lilly Field.  Elanco shall have the right to elect to negotiate exclusively with Lilly (for a reasonable period of time to be agreed by the Parties following Lilly’s receipt of such election) for the right or license to research, develop, use, manufacture, have manufactured, sell, have sold, import, export or otherwise commercialize or exploit products or services that embody or utilize such Lilly Intellectual Property in the Animal Health Field and anywhere in the Territory.

(b)For a period of two (2) years after the Effective Date, if Elanco or an Elanco Subsidiary receives a written offer from a Third Party (the “Elanco Offeror”) requesting any right or license to research, develop, use, manufacture, have manufactured, sell, have sold, import, export or otherwise commercialize or exploit products or services that embody or utilize any Intellectual Property Rights and Technology owned by Elanco or an Elanco Subsidiary (the “Elanco Intellectual Property”) in the Lilly Field and anywhere in the Territory (an “Elanco Offer”), Elanco shall provide Lilly with written notice of the existence thereof, identifying the relevant Elanco Intellectual Property that is the subject of such Elanco Offer.  Lilly shall have the right to elect to negotiate exclusively with Elanco (for a reasonable period of time to be agreed by the Parties following Elanco’s receipt of such election) for the right or license to research, develop, use, manufacture, have manufactured, sell, have sold, import, export or otherwise commercialize or exploit products or services that embody or utilize such Elanco Intellectual Property in the Lilly Field and anywhere in the Territory.

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ARTICLE III

REPRESENTATIONS AND WARRANTIES

3.01Representations and Warranties

Neither Party makes any representations nor grants any warranties, express or implied, either in fact or by operation of law, by statute or otherwise related to the Licensed IP and Technology, or the application, operation, ownership or use thereof or otherwise, and each Party specifically disclaims any other representations and warranties, whether written or oral, express, statutory or implied, including any warranty of merchantability, fitness for a particular use or purpose or non-infringement.

ARTICLE IV

PATENT PROSECUTION AND ENFORCEMENT

4.01Patent Separation

As it becomes relevant during the term of this Agreement, Lilly and Elanco shall meet to endeavor in good faith to identify Licensed Patents that cover products of Elanco and its Subsidiaries and do not cover products of Lilly and its Subsidiaries (any such patents, “Lilly-Owned Animal Health Patents”).

4.02Prosecution and Maintenance of Patents

As between Lilly and Elanco and pursuant to Section 4.05, Lilly shall have the sole and exclusive right to control, at its expense, the Prosecution and Maintenance of all Licensed Patents other than Lilly-Owned Animal Health Patents; provided, however, that, subject to Section 2.04,  Elanco shall have the right to list Licensed Patents in the Green Book or Orange Book, as applicable, in accordance with applicable Law.  As between Lilly and Elanco, Elanco shall have the sole and exclusive right to control, at its expense, the Prosecution and Maintenance of all Lilly-Owned Animal Health Patents, provided that Elanco shall provide Lilly with copies of any filings with respect to Lilly-Owned Animal Health Patents with sufficient time for Lilly to confirm that such filing will not be detrimental to any products or Patents of Lilly or its Subsidiaries and that such filing does not contain any confidential information of Lilly or its Subsidiaries.

4.03Enforcement

Elanco shall promptly report in writing to Lilly any Infringement of any Licensed Patents of which it becomes aware. Lilly will have the sole and exclusive right to determine and pursue, at its expense, the appropriate course of action with respect to, and retain any and all proceeds recovered with respect to, any Infringement of Licensed Patents other than Lilly-Owned Animal Health Patents, including the sole and exclusive right to settle or otherwise resolve such Infringement on such terms as it determines in its sole discretion. Elanco shall reasonably assist Lilly and its Subsidiaries in connection with such course at Lilly’s reasonable cost and expense, including, if so requested by Lilly and/or its Subsidiaries and to the extent required to maintain an action, joining as a party to such action.  Lilly shall promptly report in writing to Elanco any Infringement of any Lilly-Owned Animal Health Patents of which it becomes aware. Elanco will have the sole and exclusive right to determine and pursue, at its expense, the appropriate course of action with respect to, and retain any and all proceeds recovered with respect to, any Infringement of Lilly-Owned Animal Health Patents, including the sole and exclusive right to settle or otherwise resolve such Infringement on such terms as it determines, provided that no action taken by Elanco is detrimental in any way to Lilly’s rights with respect to its products or other Patents.  Lilly shall

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reasonably assist Elanco and its Subsidiaries in connection with such course at Elanco’s reasonable cost and expense, including, if so requested by Elanco and/or its Subsidiaries and to the extent required to maintain an action, joining as a party to such action.

4.04Invalidity Claims

If a Third Party at any time asserts a claim that any Licensed Patent is invalid, not patentable, or otherwise unenforceable (an “Invalidity Claim”), Lilly shall have the right, but not the obligation, to control the response and any related Proceedings, including settlement thereof, if any, to any such Invalidity Claim, unless such Invalidity Claim involves a Lilly-Owned Animal Health Patent, in which case the control shall be exercised by Elanco, provided that in exercising such control Elanco may take no action that is detrimental in any way to Lilly’s rights with respect to its products or other Patents.

4.05Covenants of Lilly

In connection with the Prosecution and Maintenance of all Licensed IP and Technology subject to Section 4.01, any courses of action in connection with any Infringement subject to Section 4.03, and any Invalidity Claims subject to Section 4.04, Lilly will act in good faith with respect to the Elanco Field, including by providing Elanco reasonable advance notice of any proposal to narrow any claim within the Licensed Patents that may affect the Elanco Field, and by incorporating all reasonable comments and directions from Elanco and using reasonable efforts to perform such actions, in each case with respect to the Elanco Field.  At Elanco’s reasonable written request, and no more than twice per year, Lilly shall provide information and/or access to information regarding the status of any Licensed IP and Technology that is reasonably requested by Elanco in connection with any Prosecution and Maintenance subject to Section 4.01.

4.06Liability

Neither Party, nor its Subsidiaries, nor its or their Representatives, shall be liable to the other Party or any of its Subsidiaries or its or their Representatives in respect of any good faith act, omission, default or neglect of such Party, any of its Subsidiaries, or its or their Representatives, successors or assigns in connection with Prosecution and Maintenance, enforcement actions, and third-party Invalidity Claims that it performs hereunder and that has not resulted from the bad faith of such Party or its Subsidiaries or its or their Representatives, successors, or assigns. This Agreement shall not obligate either Party to disclose to the other Party, or Prosecute, Maintain, pay for, register, enforce, defend or otherwise manage any Intellectual Property Rights and Technology, except as expressly set forth herein.

4.07Abandonment and Assignment Events

(a)The Abandoning Party will provide the other Party written notice if any of the Licensed Patents will be Abandoned by such Abandoning Party and, if Lilly is the Abandoning Party, such Abandonment will constitute an “Assignment Event”, and such corresponding Licensed Patents, will constitute “Assignable Patents”.

(b)Following receipt of notice of any Assignment Event, Elanco shall have the right to request, by written notice delivered to the Abandoning Party, that the applicable Assignable Patents be assigned to Elanco or an Elanco Subsidiary.  If Elanco so requests, the Parties shall execute an Assignment Agreement with respect to the Assignable Patents.

(c)Following any assignment to Elanco or an Elanco Subsidiary of any Assignable Patents, such Assignable Patents shall no longer constitute Licensed IP and Technology pursuant to this

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Agreement, but Elanco covenants that neither it nor any Elanco Subsidiary shall thereafter sue Lilly, a Lilly Subsidiary, any Representative of Lilly or a Lilly Subsidiary, any sublicensee of Lilly or a Lilly Subsidiary, or any direct or indirect customer or supplier of any such entity (in its capacity as such) for researching, developing, using, manufacturing, having manufactured, selling, having sold, importing, exporting or otherwise commercializing or exploiting products and services in the Lilly Field that embody or utilize any such Assignable Patent in the Territory.

(d)Following any such notice by Elanco or an Elanco Party of its intention to Abandon any of the Licensed Patents, such Licensed Patents shall thereafter no longer constitute Licensed IP and Technology Pursuant to this Agreement, but Lilly covenants that neither it nor any Lilly Subsidiary shall thereafter sue Elanco, an Elanco Subsidiary, any Representative of Elanco or an Elanco Subsidiary, any sublicensee of Elanco or an Elanco Subsidiary, or any direct or indirect customer or supplier of any such entity (in its capacity as such) for researching, developing, using, manufacturing, having manufactured, selling, having sold, importing, exporting or otherwise commercializing or exploiting products and services in the Animal Health Field that embody or utilize any such patent in the Territory

ARTICLE V

TERM AND TERMINATION

5.01Term

This Agreement shall commence on the Effective Date and shall continue until terminated as specifically provided in this ARTICLE V.

5.02Termination for Bankruptcy Event

This Agreement shall automatically terminate as a whole, with no further action required by either Party, if either Party becomes the subject of a Bankruptcy Event.

5.03Rights in Bankruptcy

The licenses granted under or pursuant to this Agreement are, and shall otherwise be deemed to be, for purposes of Section 365(n) of Title 11, US Code (the “Bankruptcy Code”) or any analogous provisions in any other country or jurisdiction, licenses of rights to “intellectual property” as defined under Section 101(35A) of the Bankruptcy Code. The Parties agree that during the term of this Agreement, the licensee of rights under this Agreement, shall retain and may fully exercise all of its rights and elections under the Bankruptcy Code, subject to the continued performance of its obligations under this Agreement.

5.04Effects of Termination

(a)Upon any termination of this Agreement, each Party shall return to the other Party all documents and other material received from the other Party or any Subsidiaries or Representatives of the other Party or its Subsidiaries relating to this Agreement (including copies of any Confidential License Information). All such documents and other material shall be treated in accordance with the terms of ARTICLE VI which shall remain in full force and effect notwithstanding the termination of this Agreement and any other provision hereof to the contrary.

(b)Nothing in this Section 5.04 shall be deemed to release either Party from any liability for any breach by such Party of the terms and provisions of this Agreement prior to termination thereof.

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Termination is not intended to be an exclusive remedy and is without prejudice to any other rights and remedies of the Parties under this Agreement at law or in equity.

5.05Survival of Obligations

Sections 1.01, 2.02, 2.04, 2.05, 4.02 through 4.06, 5.04, and 5.05 and ARTICLE III, ARTICLE VI, ARTICLE VII and ARTICLE VIII and any definitions used in any such Sections and Articles shall survive the termination of this Agreement in accordance with its terms.

ARTICLE VI

CONFIDENTIAL INFORMATION

6.01Confidential License Information

Each Party shall, and shall cause its Subsidiaries and its and their Representatives not to use or permit the use of, any Confidential License Information of the other Party, except in furtherance of the exercise of such Party’s rights and the performance of such Party’s obligations under this Agreement (the “Purpose”). Each Party further agrees that it shall hold Confidential License Information of the other Party in strict confidence, and shall not disclose, nor permit the disclosure of such Confidential License Information to any Person other than in connection with the Purpose to those Subsidiaries, Representatives, and Third Parties (and in the case of Elanco, such Third Parties described in Section 2.03) who, in each case with respect to Confidential License Information, are bound by written obligations of confidentiality and non-use at least as restrictive in scope as those set forth in this ARTICLE VI prior to any such disclosure. Without limiting the foregoing, if, at the time Lilly discloses any Know-How to Elanco, Lilly also advises Elanco of any proposed patent filings or other measures to be taken to protect the intellectual property rights in or to any products or services in the Lilly Field, then Elanco shall not disclose any such Know-How to any Person or Governmental Authority without Lilly’s express written consent until Lilly advises Elanco that it has made such filings or taken such other measures.  For the avoidance of doubt, each Party shall be responsible for any breach of the terms of this ARTICLE VI applicable to such Party’s Subsidiaries, its and their Representatives, and Third Parties to which such Party has disclosed Confidential License Information. Each Party shall promptly notify each other of any unauthorized access, use or disclosure of the other Party’s Know-How and any other Confidential License Information.

6.02Compelled Disclosure

Each of the Parties and its respective Subsidiaries and its and their Representatives may disclose Confidential License Information to the extent required by applicable Law or, subject to the third sentence in Section 6.01, as requested by a Governmental Authority (other than in connection with Prosecution and Maintenance activities or application or maintenance of Regulatory Approvals); provided that in the event that the disclosure of such information is so required by any applicable Law or Governmental Authority, the Party so compelled will provide the other Party with prompt notice to the extent not prohibited by applicable Law or Governmental Authority so that the other Party or its Subsidiaries may seek an appropriate protective order or similar relief or, if appropriate, waive compliance with the provisions of this ARTICLE VI.  Lilly, Elanco or their respective Subsidiaries, as applicable, will, upon request, and to the extent not prohibited from doing so by applicable Law or by such applicable Governmental Authority, use reasonable efforts to assist the other Party or its Subsidiary in obtaining such a protective order or relief. For the avoidance of doubt, any permitted disclosure of any Confidential License Information pursuant to any such requirement of applicable Law or Governmental Authority shall not be deemed to render such Confidential License Information non-confidential.

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ARTICLE VII

INDEMNIFICATION; LIMITATION OF LIABILITY

7.01Indemnification

Elanco shall indemnify, defend and hold harmless Lilly and each of the Lilly Subsidiaries and its and their respective directors, officers, managers, members, agents and employees, and each of the heirs, executors, successors and assigns of any of the foregoing (collectively, the “Lilly Indemnitees”), from and against any and all Losses of the Lilly Indemnitees (including any such Lilly Indemnitee’s own Losses and those resulting from Third Party Proceedings)  relating to, arising out of or resulting from any of the following items (without duplication and including any such Losses arising by way of setoff, counterclaim or defense or enforcement of any Lien):

(a)Elanco Library Products; and/or

(b)Sublicensed IP and Technology (as the result of Elanco’s act or omission with respect to such Sublicensed IP and Technology).

7.02Procedures for Indemnification of Third Party Proceedings

For the avoidance of doubt and subject to the provisions set forth in Section 7.01, the procedures for Elanco’s indemnification obligations under this Agreement with respect to Third Party Proceedings shall be governed, mutatis mutandis, by Sections 4.05 and 4.06 of the Separation Agreement.

7.03Special, Indirect and other Losses

Neither Party nor any of its Subsidiaries shall be liable in contract, tort, negligence, breach of statutory duty or otherwise for any special, indirect, incidental, punitive or consequential damages or for any economic loss or loss of profits suffered by the other party, except for breaches of ARTICLE II or ARTICLE VI.

ARTICLE VIII

MISCELLANEOUS

8.01Counterparts; Entire Agreement; Conflicting Agreements

(a)This Agreement may be executed in one (1) or more counterparts, all of which shall be considered one (1) and the same agreement, and shall become effective when one (1) or more counterparts have been signed by each Party and delivered to the other Party.  Execution of this Agreement or any other documents pursuant to this Agreement by facsimile or other electronic copy of a signature shall be deemed to be, and shall have the same effect as being, executed by an original signature.

(b)This Agreement, the Separation Agreement, the other Ancillary Agreements, the annexes, exhibits, the schedules and appendices hereto and thereto contain the entire agreement between the Parties with respect to the subject matter hereof, and except as set forth in Section 8.01(d), supersede all previous agreements, negotiations, discussions, writings, understandings, commitments and conversations with respect to such subject matter and there are no agreements or understandings

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between the Parties with respect to such subject matter other than those set forth or referred to herein or therein.

(c)In the event of any inconsistency between this Agreement and any other agreement entered into in connection with the Transaction (including the Separation Agreement), the Separation Agreement shall prevail.  In the event and to the extent that there shall be a conflict between the provisions of this Agreement and the provisions of the Separation Agreement, the Separation Agreement shall control.

(d)The Parties and Elanco US hereby acknowledge and agree that with the sole exception of Section 2.05 (License Grant to Lilly) of the Technology License Agreement, which shall explicitly survive and remain in effect, the remainder of the Technology License Agreement is wholly superseded and cancelled and replaced with the terms of this Agreement and such Technology License Agreement is of no further force or effect.

8.02No Construction Against Drafter

The Parties acknowledge that this Agreement and all the terms and conditions contained herein have been fully reviewed and negotiated by the Parties.  Having acknowledged the foregoing, the Parties agree that any principle of construction or rule of Law that provides that, in the event of any inconsistency or ambiguity, an agreement shall be construed against the drafter of the agreement shall have no application to the terms and conditions of this Agreement.

8.03Governing Law

This Agreement shall be governed by and construed and interpreted in accordance with the Laws of the State of Indiana, without regard to the conflict of laws principles thereof that would result in the application of any Law other than the Laws of the State of Indiana.

8.04Assignment

This Agreement and the rights and obligations hereunder may not be assigned, delegated or otherwise transferred by any Party without the prior written consent of the other Party; provided that Elanco shall have the right to assign this Agreement without such consent to an Elanco Subsidiary or in connection with the sale of all or substantially all of Elanco’s assets.  Elanco, with Lilly’s prior written consent, shall also have the right to assign this Agreement in part in connection with a sale or other disposition of Elanco’s rights in any product or line of business, provided that in case of such partial assignment, (a) the rights under this Agreement shall extend solely to the divested product or line of business and not any products or lines of business of the acquiring party, (b) the assignee shall agree in writing to be bound by the provisions of this Agreement, and (c) Elanco shall remain responsible for the acts or omissions of the assignee as though they were those of Elanco.  Any attempted assignment in violation of this Section 8.04 shall be null and void and of no effect. Subject to the foregoing, and except as otherwise provided herein, this Agreement shall be binding upon and inure to the benefit of the Parties hereto and their permitted successors and assigns.

8.05No Third Party Beneficiaries

Except for Section 2.03, (a) the provisions of this Agreement are solely for the benefit of the Parties hereto and are not intended to confer upon any Person (including employees of the Parties hereto) except the Parties any rights or remedies hereunder, and (b) there are no Third Party beneficiaries of this Agreement and this Agreement shall not provide any Third Party (including employees of the Parties

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hereto) with any remedy, claim, liability, reimbursement, claim of action or other right in excess of those existing without reference to this Agreement.

8.06Notices

All notices or other communications under this Agreement shall be in writing and shall be deemed to be duly given when (a) delivered in person or (b) deposited in the United States mail or private express mail, postage prepaid, addressed as follows:

If to Lilly, to:

Eli Lilly and Company
Lilly Corporate Center
Indianapolis, Indiana 46285
Attention:  General Counsel

If to Elanco, to:

Elanco Animal Health Incorporated
2500 Innovation Way
Greenfield, Indiana 46140
Attention:  General Counsel

Any Party may, by written notice to the other Party, change the address to which such notices are to be given.

8.07Severability

If any provision of this Agreement or the application thereof to any Person or circumstance is determined by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions hereof or the application of such provision to Persons or circumstances or in jurisdictions other than those as to which it has been held invalid or unenforceable, shall remain in full force and effect and shall in no way be affected, impaired or invalidated thereby, so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner adverse to any Party.  Upon such determination, the Parties shall negotiate in good faith in an effort to agree upon a suitable and equitable provision to effect the original intent of the Parties as closely as possible in a mutually acceptable manner in order that the rights and obligations contemplated by this Agreement be fulfilled as originally contemplated to the greatest extent possible.

8.08Force Majeure

No Party shall be deemed in default of this Agreement to the extent that any delay or failure in the performance of its obligations under this Agreement results from any cause beyond its reasonable control and without its fault or negligence, such as acts of God, acts of civil or military authority, embargoes, epidemics, war, riots, insurrections, fires, explosions, earthquakes, floods, unusually severe weather conditions, labor problems or unavailability of parts, or, in the case of computer systems, any failure in electrical or air conditioning equipment.  In the event of any such excused delay, the time for performance shall be extended for a period equal to the time lost by reason of such delay.

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8.09Headings

The table of contents and article, section and paragraph headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

8.10Waivers of Default

Waiver by any Party of any default by the other Party of any provision of this Agreement shall not be deemed a waiver by the waiving Party of any subsequent or other default, nor shall it prejudice the rights of the other Party.

8.11Specific Performance

In the event of any actual or threatened default or breach of, any of the terms, conditions and provisions of this Agreement, the Party or Parties who are or are to be thereby aggrieved shall be entitled to seek an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof, in each case (a) without the requirement of posting any bond or other indemnity and (b) in addition to any other remedy to which it or they may be entitled, at Law or in equity.  Such remedies shall be cumulative with and not exclusive of and shall be in addition to any other remedies which any Party may have under this Agreement, or at Law or in equity or otherwise, and the exercise by a Party hereto of any one remedy shall not preclude the exercise of any other remedy.

8.12Amendments

No provision of this Agreement shall be deemed waived, amended, supplemented or modified by any Party, unless such waiver, amendment, supplement or modification is in writing and signed by the authorized representative of the Party against whom it is sought to enforce such waiver, amendment, supplement or modification.

8.13Interpretation

Interpretation of this Agreement (except as specifically provided in this Agreement, in which case such specified rules of construction shall govern with respect to this Agreement) shall be governed by the following rules of construction: (a) words in the singular shall be held to include the plural and vice versa, and words of one gender shall be held to include the other gender as the context requires; (b) references to the terms Article, Section, paragraph and Annex are references to the Articles, Sections, paragraphs and Annexes to this Agreement unless otherwise specified; (c) the terms “hereof”, “herein”, “hereby”, “hereto” and derivative or similar words refer to this entire Agreement, including the Annexes hereto; (d) references to “$” shall mean U.S. dollars; (e) the word “including” and words of similar import shall mean “including without limitation,” unless otherwise specified; (f) the word “or” shall not be exclusive; (g) references to “written” or “in writing” include in electronic form; (h) provisions shall apply, when appropriate, to successive events and transactions; (i) a reference to any Person includes such Person’s permitted successors and permitted assigns; (j) any reference to “days” means calendar days unless Business Days are expressly specified; and (k) when calculating the period of time before which, within which or following which any act is to be done or step taken pursuant to this Agreement, the date that is the reference date in calculating such period shall be excluded and, if the last day of such period is not a Business Day, the period shall end on the next succeeding Business Day.

8.14Dispute Resolution

Any dispute among the Parties arising under this Agreement shall be referred, by written notice setting out brief details of the Dispute (a “Dispute Notice”) given by a Party to the other Party, to the senior executive officers of such Party.  The Party receiving the Dispute Notice shall provide a response in

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writing to the Party that sent the Dispute Notice within fifteen (15) calendar days after the date the Dispute Notice is sent, after which the Parties shall make a good faith effort to resolve such dispute.  Any resolution of the dispute agreed to by such senior executives shall be deemed final.

8.15Waiver of Jury Trial

SUBJECT TO SECTIONS 8.11, 8.14 AND 8.16 HEREIN, EACH OF THE PARTIES HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY COURT PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF AND PERMITTED UNDER OR IN CONNECTION WITH THIS AGREEMENT.  EACH OF THE PARTIES HEREBY (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 8.15.

8.16Submission to Jurisdiction; Waivers

With respect to any Proceeding relating to or arising out of this Agreement, subject to Section 8.14, each party to this Agreement irrevocably (a) consents and submits to the exclusive jurisdiction of the courts of the State of Indiana and any court of the United States located in the State of Indiana, (b) waives any objection which such Party may have at any time to the laying of venue of any Proceeding brought in any such court, waives any claim that such Proceeding has been brought in an inconvenient forum and further waives the right to object, with respect to such Proceeding, that such court does not have jurisdiction over such Party and (c) consents to the service of process at the address set forth for notices in Section 8.06 herein; provided, however, that such manner of service of process shall not preclude the service of process in any other manner permitted under applicable Law.

8.17Further Action

In addition to the actions specifically provided for elsewhere in this Agreement, each of the Parties will cooperate with each other and shall use its (and shall cause its Subsidiaries to use their) commercially reasonable efforts, prior to, on and after the Effective Date, to take, or cause to be taken, all actions, and to do, or cause to be done, all things, reasonably necessary, proper or advisable under applicable Laws, regulations and agreements to implement and give effect to this Agreement.

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IN WITNESS WHEREOF, each of the Parties and Elanco US have duly executed this Agreement as of the date first written above.

ELANCO ANIMAL HEALTH INCORPORATED
By:	/s/ Michael-Bryant Hicks
Name: Michael-Bryant Hicks
Title: Executive Vice President, General Counsel and Corporate Secretary
ELI LILLY AND COMPANY
By:	/s/ David A. Ricks
Name: David A. Ricks
Title: Chairman, President and Chief Executive Officer
ELANCO US INC.
By:	/s/ Karen L. DeHaan-Fullerton
Name: Karen L. DeHaan-Fullerton
Title: Secretary

Annex 1

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