REG-Zoetis Inc. Zoetis to Acquire Nexvet for US$6.72 in Cash Per Share <Origin Href="QuoteRef">ZTS.N</Origin> - Part 5

ZoetisAnnouncement

13/04/2017 14:30

- Part 5: For the preceding part double click  ID:nBw2hg9DYd 

Target
Alternative Proposal and shall indicate the material terms and conditions of
such Target Alternative Proposal and the identity of the person making any
such Target Alternative Proposal, and thereafter shall promptly keep Zoetis
reasonably informed of any material change to the terms of any such Target
Alternative Proposal. Target shall provide to Zoetis as soon as reasonably
practicable after receipt or delivery thereof (and in any event within
24 hours of receipt or delivery) copies of all written correspondence and
other written material exchanged between any member of the Target Group (or
any of their respective Representatives) and the person making a Target
Alternative Proposal (or such person’s Representatives) that describes the
material terms or conditions of such Target Alternative Proposal, including
draft agreements, indications of interest or term sheets submitted by either
party in connection therewith. Target shall not, and shall cause its
Subsidiaries not to, enter into any confidentiality agreement with any person
following the date hereof that prohibits Target from providing such
information to Zoetis.

(d) Except as set forth in Clause 5.2(e), neither the Target Board nor any
committee thereof shall:

(i) withdraw (or modify in any manner adverse to Zoetis), or propose publicly
to withdraw (or modify in any manner adverse to Zoetis), the Scheme
Recommendation;

(ii) approve, recommend or declare advisable, or propose publicly to approve,
recommend or declare advisable, any Target Alternative Proposal (any of the
foregoing actions in this Clause 5.2(d) being a “Target Change of
Recommendation”) (it being agreed that the provision by Target to Zoetis of
notice or information in connection with a Target Alternative Proposal or
Target Superior Proposal as required or expressly permitted by this Agreement
shall not, in and of itself, constitute a Target Change of Recommendation); or

(iii) cause or allow any member of the Target Group to execute or enter into,
any expenses reimbursement or break fee payment agreement, letter of intent,
memorandum of understanding, agreement in principle, merger agreement,
acquisition agreement, transaction agreement, implementation agreement, option
agreement, joint venture agreement, alliance agreement, partnership agreement
or other agreement constituting or with respect to, or that would reasonably
be expected to lead to, any Target Alternative Proposal, or requiring, or
reasonably expected to cause, Target to abandon, terminate, delay or fail to
consummate the Acquisition other than as contemplated by Clause 9.1(a)(ix)
and other than a confidentiality agreement referred to in Clause 5.2(b).

(e) Nothing in this Agreement shall prohibit or restrict the Target Board from
making a Target Change of Recommendation if the Target Board has given not
less than 48 hours’ notice to Zoetis of the holding of a meeting of the
Target Board (or a committee thereof) at which a Target Change of
Recommendation is to be considered and has concluded, in good faith (after
consultation with Target’s outside legal counsel and financial advisers)
that:

(i) the relevant Target Alternative Proposal constitutes a Target Superior
Proposal; and

(ii) that the failure to make a Target Change of Recommendation would be
inconsistent with the directors’ fiduciary duties under applicable Law,

provided that (x) promptly (and in any event within 48 hours) following the
Target Board’s determination (after consultation with Target’s outside
legal counsel and financial advisers) that the relevant Target Alternative
Proposal constitutes a Target Superior Proposal, Target has provided a written
notice to Zoetis (a “Superior Proposal Notice”) advising Zoetis that
Target has received a Target Alternative Proposal and specifying the material
terms of such Target Alternative Proposal, the identity of the person making
such Target Alternative Proposal and such other information with respect
thereto required by Clause 5.2(c) and including written notice of the
determination of the Target Board that such Target Alternative Proposal
constitutes a Target Superior Proposal, (y) Target has provided Zoetis with an
opportunity, for a period of five Business Days following the time of delivery
to Zoetis of the Superior Proposal Notice (as it may be extended pursuant to
the last sentence of this Clause 5.2(e), the “Notice Period”), to discuss
in good faith the terms and conditions of this Agreement and the Transactions,
including an increase in, or modification of, the Consideration, and such
other terms and conditions such that the relevant Target Alternative Proposal
no longer constitutes a Target Superior Proposal, and (z) following the
expiration of such Notice Period, the Target Board has determined in good
faith (after consultation with Target’s outside legal counsel and financial
advisers) that the relevant Target Alternative Proposal continues to
constitute a Target Superior Proposal taking into account all changes proposed
in writing by Zoetis during the Notice Period and has provided to Zoetis a
further written notice to such effect (a “Final Recommendation Change
Notice”). If, during the Notice Period any material revision is made to the
financial terms or other material terms and conditions of the relevant Target
Alternative Proposal in writing, Target shall, promptly following each such
revision, deliver a new Superior Proposal Notice to Zoetis and comply with the
requirements of this Clause 5.2(e) with respect to such new Superior Proposal
Notice, except that the Notice Period shall be the greater of two Business
Days and the amount of time remaining in the initial Notice Period.

(f) Nothing contained in this Agreement shall prohibit or restrict Target or
the Target Board from (a) making any disclosure to the Target Shareholders
required by Law (after consultation with Target’s outside legal counsel)
provided such disclosure does not constitute a Target Change of Recommendation
or (b) taking and disclosing to the Target Shareholders a position
contemplated by Rule 14e-2(a), Rule 14d-9 or Item 1012(a) of Regulation M-A
promulgated under the Exchange Act (or any similar communication to
shareholders); provided, however, that in no event shall this Clause 5.2(f)
affect the obligations of Target set forth in Clauses 5.2(a) through 5.2(e),
inclusive; provided, further, that any such disclosure pursuant to
sub-clause (b) above shall constitute a Target Change of Recommendation
unless such disclosure (i) expressly states that the Scheme Recommendation
has not changed, (ii) expressly states that the Target Board rejects the
applicable Target Alternative Proposal or (iii) is a “stop, look and
listen” communication contemplated by Rule 14d-9(f) promulgated under the
Exchange Act.

6. Warranties

6.1 Target Warranties

Except (i) as fairly and accurately disclosed in Part A of the Target
Disclosure Letter, which identifies items of disclosure by reference to a
particular Clause or sub-clause of this Agreement, as applicable, or any other
part of Part A of the Target Disclosure Letter where it is reasonably apparent
on its face based on the substance of such disclosure or the context in which
such disclosure is made that such disclosure shall be deemed to be disclosed
with respect to any other Clause or sub-clause of this Agreement, and (ii) as
disclosed in Target’s Annual Report on Form 10-K for the fiscal year ended
on June 30, 2016 filed with the SEC, Target’s Quarterly Report on Form 10-Q
for the quarter ended December 31, 2016 filed with the SEC, or disclosed in a
Target Current Report on Form 8-K filed with or furnished to the SEC (in each
case, excluding any disclosures in any “risk factors” section, any
disclosures in any “forward-looking statements” section and any other
disclosures included therein to the extent they are predictive or
forward-looking in nature), Target represents and warrants to Zoetis Group as
of the date hereof as follows:

(a) Organisation; Organisational Documents. Each of Target and each of its
Subsidiaries is a legal entity duly organised, validly existing and, where
relevant, in good standing under the Laws of its respective jurisdiction of
organisation and has all requisite corporate or similar power and authority to
own, lease and operate its properties and assets and to carry on its business
as presently conducted and is qualified to do business and is in good standing
as a foreign corporation in each jurisdiction where the ownership, leasing or
operation of its assets or properties or conduct of its business requires such
qualification. Target has delivered to Zoetis, prior to the date hereof, true
and correct copies of the Organisational Documents of Target and each of its
Subsidiaries, including the Articles of Association as amended to the date
hereof. The Articles of Association are in full force and effect and Target is
not in violation of any of the provisions of the Articles of Association. No
Subsidiary of Target is in violation of any of the provisions of its
Organisational Documents in any material respect.

(b) Subsidiaries. Clause 6.1(b) of Part A of the Target Disclosure Letter
contains a true and correct list of all members of the Target Group, their
place of organisation, the ownership interest of Target in each such
Subsidiary and the ownership interest of any other Person or Persons in each
such Subsidiary, including the number and type of ownership interests or other
voting interests in such Subsidiary. All the issued and outstanding shares of
capital stock of, or other equity interests in, each Subsidiary of Target have
been validly issued and are fully paid and non-assessable and are owned,
directly or indirectly, by Target free and clear of all Encumbrances, other
than Permitted Encumbrances.

(c) Capitalisation.

(i) The authorised share capital of Target consists of 100,000,000 Target
Shares, 400 Euro Deferred Shares with a nominal value of €100 each, and
10,000,000 Preferred Shares of $0.01 each. As at April 12, 2017 (the
“Capitalisation Date”):

(A) 11,910,615 Target Shares were issued and outstanding;

(B) 400 Euro Deferred Shares (partly paid) with a nominal value of €100 each
in the capital of Target were issued and held by the Persons identified in
Clause 6.1(c)(i)(B) of Part A of the Target Disclosure Letter (with the
amount of Euro Deferred Shares held by such Person opposite such Person’s
name);

(C) no Target Shares were held in treasury;

(D) 76,595 Target Shares were reserved for issuance pursuant to the Target
2013 Plan, of which number (A) 3,650 Target Shares were subject to
outstanding Target RSUs, each with a conversion price equal to $0.125 and
(B) 72,945 Target Shares were issuable upon the exercise of outstanding
Target Options granted under the Target 2013 Plan, each with an exercise price
equal to $0.125;

(E) 1,191,061 Target Shares were reserved for issuance pursuant to the Target
2015 Plan, of which number (i) 650,391-Target Shares were subject to
outstanding Target RSUs, each with a conversion price equal to $0.125, and
(ii) 420,000-Target Shares were issuable upon the exercise of outstanding
Target Options granted under the Target 2015 Plan, including (x)
60,000 Target Shares issuable upon the exercise Target Options each with an
exercise price equal to $5.10, and (y) 360,000-Target Shares issuable upon
the exercise of outstanding IPO Options each with an exercise price equal to
$15.00;

(F) 145,069 Target Shares are subject to outstanding Buyback Options, each
with an exercise price equal to $6.35;

(G) no Target Shares were beneficially owned by any Subsidiary of Target;

(H) no Target Shares are issuable pursuant to the Target 2012 Plan or the
Target 2013 Australian Plan. The Target 2012 Plan and the Target 2013
Australian Plan have been terminated and there are no outstanding Target RSUs,
Target Options, restricted share units, warrants, options or other instruments
convertible or exercisable for Target Shares under the Target 2012 Plan or the
Target 2013 Australian Plan;

(I) 1,766,998 Target Shares were reserved for issuance upon exercise of the
Warrants and that the grant date and exercise prices for such Warrants are
correct as set out in the definition of Warrants in Clause 1.1; and

(J) no Preferred Shares were issued and outstanding.

(ii) Clause 6.1(c)(ii) of Part A of the Target Disclosure Letter sets
forth, at the Capitalisation Date:

(A) the number of Target Shares that were subject to each Target Option
outstanding under the Target 2013 Plan and Target 2015 Plan and the exercise
price per Target Share of each such Target Option;

(B) the number of Target Shares that were subject to Target RSUs; and

(C) the number of Target Shares that were subject to the Warrants and the
exercise price per Target Share of each such Warrant.

(iii) All of the outstanding Target Shares are, and all Target Shares
available for issuance as noted above shall be, when issued in accordance with
the respective terms thereof, duly authorised, validly issued, fully paid and
non-assessable and free of pre-emptive rights.

(iv) The Target Plans (together with any related forms of agreements, each of
which have been previously provided to Zoetis) are the only understandings,
arrangements or agreements, under which restricted share units, warrants,
options, awards or other instruments convertible or exercisable for Target
Shares were issued that are currently issued and outstanding, except for
agreements regarding the Warrants. Full details of the exercise price of all
such restricted share units, warrants, options, awards or other instruments
convertible or exercisable for Target Shares have been disclosed to Zoetis.

(v) Except as set forth in Clauses 6.1(c)(i) and 6.1(c)(ii), as of the
Capitalisation Date: (i) no shares in the share capital of Target or other
voting securities of Target were issued, reserved for issuance or outstanding,
and (ii) there were no outstanding subscriptions, options, warrants, puts,
calls, exchangeable or convertible securities or other similar rights,
agreements or commitments relating to the issuance of shares of capital to
which any member of the Target Group is a party obligating any member of the
Target Group to (A) issue, transfer or sell any shares in the capital or
other equity interests of any member of the Target Group or securities
convertible into or exchangeable for such shares or equity interests (in each
case other than to any member of the Target Group); (B) grant, extend or
enter into any such subscription, option, warrant, put, call, exchangeable or
convertible securities or other similar right, agreement or commitment;
(C) redeem or otherwise acquire any such shares in its capital or other
equity interests; or (D) provide a material amount of funds to, or make any
material investment (in the form of a loan, capital contribution or otherwise)
in, any Subsidiary that is not wholly owned.

(vi) No member of the Target Group has outstanding bonds, debentures, notes or
other similar obligations, the holders of which have the right to vote (or
which are convertible into or exercisable for securities having the right to
vote) with the Target Shareholders on any matter.

(vii) There are no voting trusts or other agreements or understandings to
which any member of the Target Group is a party with respect to the voting of
the shares in the capital or other equity interest of any member of the Target
Group.

(viii) No “fair price,” “moratorium,” “control share acquisition”
or other similar anti-takeover statute or regulation or any anti-takeover
provision in the Articles of Association is, or at Completion will be,
applicable to Target or the Transactions.

(d) Corporate Authority.

(i) Target has all requisite corporate power and authority to enter into this
Agreement and the Expenses Reimbursement Agreement, subject (in the case of
this Agreement) to receipt of the Target Shareholder Approval to consummate
the Transactions in accordance with the terms of this Agreement and the
Expenses Reimbursement Agreement. The execution and delivery of this Agreement
and the Expenses Reimbursement Agreement and the consummation of the
Transactions have been duly and validly authorised by the Target Board and,
except for (i) the Target Shareholder Approval, (ii) the filing of the
required documents and other actions in connection with the Scheme with, and
the receipt of the required approval of the Scheme by, the High Court, and
(iii) the filing of the Court Order with the Registrar of Companies, no other
corporate proceedings on the part of Target are necessary to authorise the
consummation of the Transactions. On or prior to the date hereof, the Target
Board has determined that the Transactions are fair and reasonable and in the
best interests of Target and the Target Shareholders and has adopted a
resolution to make, subject to Clause 5.2 and to the obligations of the
Target Board under the Takeover Rules, the Scheme Recommendation. This
Agreement has been duly and validly executed and delivered by Target and,
assuming this Agreement constitutes the valid and binding agreement of Zoetis,
constitutes the valid and binding agreement of Target, enforceable against
Target in accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency, moratorium and other similar laws affecting
creditors rights generally and by general principles of equity.

(ii) Other than in connection with or in compliance with (i) the provisions
of the Act, (ii) the Takeover Panel Act and the Takeover Rules, (iii) the
Securities Act, (iv) the Exchange Act, (v) any applicable requirements of
NASDAQ, no Governmental Authorisation is necessary, under applicable Law, for
the consummation by Target of the Transactions, except for such Governmental
Authorisations, (A) that, if not obtained or made, would not reasonably be
expected to materially impede or materially delay Completion, or prevent the
consummation of the Acquisition or have a material adverse effect on the
Target Group, or (B) as may arise as a result of facts or circumstances
solely relating to Zoetis or its Affiliates or Laws or Contracts binding on
Zoetis or its Affiliates.

(iii) Assuming compliance with the Scheme, Chapter 1 of Part 9 of the Act and
any directions or orders of the High Court, none of the execution, delivery or
performance of this Agreement or the consummation of the Transactions,
including the Acquisition, will: (i) contravene, conflict with or result in a
violation of any of the provisions of the Articles of Association or other
Organisational Documents of any member of the Target Group; (ii) contravene
or conflict with, or result in a violation of, any applicable Law or any
order, ruling, writ, injunction, judgment, arbitration award or decree to
which Target, or any of the material assets owned by any member of the Target
Group, is subject; or (iii) result in the creation of an Encumbrance (other
than Permitted Encumbrances) on any of the properties or assets of Target or
any of its Subsidiaries, except, in the case of each of clauses (ii) and
(iii), for any conflicts, violations, breaches, defaults, alterations,
terminations, amendments, accelerations, cancellations or liens, or where the
failure to obtain any consents, in each case, would not reasonably be expected
to have, individually or in the aggregate, a material adverse effect on the
Target Group.

(e) Investment Company. No member of the Target Group is required to register
as an “investment company” within the meaning of the US Investment Company
Act of 1940, as amended.

(f) Legal Compliance. Each member of the Target Group and each of their
respective businesses and their respective directors and officers (in their
capacities as such) are, and during the last 36 months have been, in
compliance in all material respects with all applicable Laws, Industrial
Instruments, Contracts, policies and all applicable orders, rulings, decrees,
writs, injunctions, assessment, decisions, codes of conduct, judgments or
arbitration awards of any court or arbitrator or of any Governmental Body
(collectively, “Orders”), including with respect to employment, employment
practices, terms and conditions of employment, wages, hours, WARN Act (in the
United States) and other comparable applicable non-US Laws, and all applicable
Laws and applicable Orders covering discrimination, equal employment
opportunity, labour relations, leave of absence, occupational and work health
and safety, workers’ compensation, wrongful termination or discharge or
violation of the personal rights of employees, privacy, data protection,
advertising, consumer protection, anti-corruption (e.g. the UK Bribery Act of
2010 and the US Foreign Corrupt Practices Act of 1977), antitrust, fair
competition, securities, corporate, disclosure, reporting, Taxes (provided
that, as to Taxes, such Laws shall be limited to those governing the filing of
Tax Returns, the payment and collection of Taxes and the determinations of
amounts in respect of such filings, payments and collections), the Act,
regulatory requirements (including the Federal Food, Drug, and Cosmetic Act
(21 U.S.C. §§ 301 et seq.), the Virus-Serum-Toxin Act (21 U.S.C. §§ 151
et. seq.), the Animal Welfare Act (7 U.S.C. §§ 2131 et seq.) and their
implementing regulations, environmental and Intellectual Property. Each member
of the Target Group holds all material Governmental Authorisations required to
lawfully operate its business as currently conducted, including those required
to research, develop, test or manufacture any of the Target Products, to lease
and operate the properties and assets of any member of the Target Group,
otherwise required to carry on the business of the Target Group as it is now
currently being conducted or any third-party services as they are now
currently being conducted, or that are otherwise material to the business or
third-party services of any member of the Target Group. Assuming compliance
with the provisions of this Agreement, none of the execution, delivery or
performance of this Agreement or the consummation of the Acquisition will give
any Governmental Body the right to revoke, withdraw, suspend, cancel,
terminate, modify, or otherwise take any action against or with respect to any
material Governmental Authorisation that is held by any member of the Target
Group, except for the consent of the Australian Government Department of
Industry, Innovation and Science and the Irish Department of Jobs, Enterprise
and Innovation (through its agency Industrial Development Agency (Ireland)).

(g) Litigation and Claims. During the prior 36 months, (a) there has been no
material investigation or review pending (or, to the Knowledge of Target,
threatened) by any Governmental Body with respect to any member of the Target
Group or any of their businesses or properties, and (b) there have been no
material Actions pending (or, to the Knowledge of Target, threatened) against
any member of the Target Group or any of their respective businesses or
properties.

(h) Liabilities. Except (a) as and to the extent disclosed, reflected or
reserved against on the Most Recent Balance Sheet (including any notes
thereto), (b) for liabilities incurred in the ordinary course of business
consistent with past practice since the date of the Most Recent Balance Sheet,
(c) as expressly permitted or required by this Agreement or incurred in
connection with the preparation and negotiation of this Agreement and/or the
Transactions, including Target’s associated strategic process, but in each
case not involving any breach of any Contract, and (d) for liabilities which
have been discharged or paid in full in the ordinary course of business, no
member of the Target Group has any material obligations or material
liabilities, whether accrued, contingent or otherwise, that would be required
by US GAAP to be reflected on a consolidated balance sheet of Target and its
consolidated Subsidiaries (or in the notes thereto).

(i) Sufficiency. The Target Group owns, licenses or leases all properties,
assets and rights used to conduct the business of the Target Group. Such
properties, assets and rights are sufficient to conduct the business of Target
and its Subsidiaries substantially in the same manner as it is conducted as of
the date of this Agreement by Target and its Subsidiaries. The properties,
assets and rights owned, licensed and leased by Target and its Subsidiaries
are in all material respects adequate for the purposes such properties, assets
and rights are currently used or held for use, and are in reasonably good
repair and operating condition (subject to normal wear and tear).

(j) Contracts.

(i) Clause 6.1(j)(i) of Part A of the Target Disclosure Letter contains a
list of all Contracts in effect as of the date hereof (as amended or
supplemented) to which any member of the Target Group is a party, or by which
any property or asset of any member of the Target Group is bound (each a
“Material Contract”) that (i) provides by its terms for payments in
excess of $200,000 per annum or receipts in excess of $400,000 per annum;
(ii) is a “material contract” (as such term is defined in Item
601(b)(10) of Regulation S-K of the SEC); (iii) imposes on any member of the
Target Group any material restriction or prohibition with respect to:
(A) competing with any other Person; (B) acquiring any product or other
asset or any services from any other Person; (C) developing, selling,
supplying, distributing, offering, supporting or servicing any product or any
other asset; (D) performing services for or investing in any other Person; or
(E) other than as required by applicable Law, engaging in any business
anywhere in the world; (iv) grants a right of first refusal, first offer or
similar right with respect to a material asset or material portion of
Target’s business; (v) provides for any joint venture, off-balance sheet
partnership or any similar arrangement (including any Contract relating to any
transaction or relationship between or among any member of the Target Group,
on the one hand, and any unconsolidated Affiliate, including any structured
finance, special purpose or limited purpose entity or Person, on the other
hand, or any “off-balance sheet arrangements” (as defined in Item
303(a) of Regulation S-K)), where the result, purpose or effect of such
Contract is to avoid disclosure of any material transaction involving, or
material liabilities of, any member of the Target Group in Target’s
published financial statements or any Target SEC Documents; (vi) except for
this Agreement and the agreements contemplated hereby, imposes or, to the
Knowledge of Target, purports on its face to impose any material obligation on
Zoetis or any of its Subsidiaries (other than, after Completion, any member of
the Target Group); (vii) is an employment or consulting Contract with any (A)
current or former Executive Officer, (B) member of the Target Board, or
(C) employee of any member of the Target Group providing for an annual base
salary in excess of $200,000, (viii) provides for indemnification or any
guaranty by any member of the Target Group or for any increase or supplement
to any remuneration, compensation or benefit of an employee or consultant that
is material to Target or any of its Subsidiaries; (ix) is an employee
collective bargaining agreement or other Contract with any labour union; (x)
is a mortgage, indenture, guarantee, loan or credit agreement, security
agreement or other Contract, in each case relating to indebtedness for
borrowed money, whether as borrower or lender, in each case in excess of
$200,000; (xi) relates to the sale, disposition or acquisition, directly or
indirectly, by any member of the Target Group after the date of this Agreement
of assets with a fair market value in excess of $500,000; or (x) is a licence,
covenant or other right or agreement with respect to any third-party
Intellectual Property used in, used in the development of or related to any
Target Products. Target has made available to Zoetis true and correct copies
of all Material Contracts.

(ii) (A) all the Material Contracts are valid and binding on Target or its
applicable Subsidiary, enforceable against it in accordance with its terms,
and is in full force and effect, (B) neither Target nor any of its
Subsidiaries nor, to the Knowledge of Target, any third party has violated any
provision of, or failed to perform any obligation required under the
provisions of, any Material Contract, and (C) neither Target nor any of its
Subsidiaries nor, to the Knowledge of Target, any third party is in breach, or
has received written notice of breach, of any Material Contract.

(iii) None of the execution, delivery or performance of this Agreement or the
consummation of the Acquisition will contravene or conflict with in any
material respect, or result in a material violation or breach of, or result in
a default under, any Material Contract, or give any Person the right (with or
without notice or lapse of time) to: (i) declare a default or exercise any
material remedy under any Material Contract; (ii) accelerate the maturity or
performance of any Material Contract; or (iii) cancel, terminate or modify in
any material respect any Material Contract.

(k) Financial Controls and Statements; SEC Documents.

(i) Target has filed or furnished all reports, schedules, forms, statements,
registration statements, prospectuses and other documents (including exhibits
and other information incorporated therein) required to be filed or furnished
by Target with the SEC under the Securities Act or the Exchange Act since
January 1, 2015, except as may not reasonably be expected to result in a
material adverse effect on Target. No Subsidiary of Target is, or has at any
time since January 1, 2015, been, subject to the periodic reporting
requirements of the Exchange Act or is or has been otherwise required to file
any form, report, statement, schedule, certificate or other document with the
SEC.

(ii) Target maintains a system of “internal control over financial
reporting” (as defined in Rules 13a-15(f) and 15d-15(f) under the
Exchange Act) reasonably designed to provide reasonable assurance that:
(i) transactions are recorded as necessary to permit preparation of financial
statements in conformity with US GAAP; (ii) receipts and expenditures are
executed only in accordance with the authorisation of management and the
directors of Target; and (iii) any unauthorised acquisition, use, or
disposition of the Target Group’s assets that could have a material effect
on Target’s financial statements would be detected or prevented in a
reasonably timely manner. Target maintains, with respect to the Target Group,
a system of “disclosure controls and procedures” (as defined in
Rules 13a-15(e) and 15d-15(e) under the Exchange Act) designed to ensure
that all material information concerning the Target Group is made known on a
reasonably timely basis to the individuals responsible for the preparation of
the Target SEC Documents and other required public disclosure documents, and
otherwise to ensure that information required to be disclosed by Target in the
reports that it files or furnishes under the Exchange Act is recorded,
processed, summarised and reported within the time periods specified in the
SEC’s rules, to allow timely decisions regarding required disclosure and to
make the required certifications in connection therein.

(iii) Target has disclosed to Target’s outside auditors and the audit
committee of Target (and made copies of such disclosures available to Zoetis):
(i) all “significant deficiencies” and “material weaknesses” in the
design or operation of internal controls over financial reporting (as defined
in Rule 13a-15(f) of the Exchange Act) of which Target has Knowledge and
that are reasonably likely to adversely affect in any material respect
Target’s ability to record, process, summarise and report financial data;
and (ii) any fraud, whether or not material, that involves management or
other employees who have a significant role in Target’s internal controls
over financial reporting. Target has not received from its independent
accountants any notification of any: (A) “significant deficiency” in the
internal controls over financial reporting; (B) “material weakness” in
the internal controls over financial reporting; or (C) fraud, whether or not
material, that involves management or other employees who have a significant
role in the internal controls over financial reporting. For purposes of this
Agreement, the terms “significant deficiency” and “material weakness”
shall have the meanings assigned to them by the Public Company Accounting
Oversight Board in Auditing Standard No. 5.

(iv) The financial statements (including any related notes) contained in the
Target SEC Documents, other than the financial information furnished as part
of Target’s periodic earnings releases, (A) were prepared in accordance
with US GAAP applied on a consistent basis throughout the periods covered
(except as may be indicated in the notes to such financial statements or, in
the case of unaudited statements, as permitted by the SEC, and except that the
unaudited financial statements may not contain footnotes and are subject to
normal and recurring year-end adjustments that are not expected to be,
individually or in the aggregate, material in amount); and (B) fairly present
in all material respects the consolidated financial position of the Target
Group as of the respective dates thereof and the consolidated results of
operations and cash flows of the Target Group for the periods covered thereby
(subject, with respect to unaudited interim statements, to normal and
recurring year-end adjustments that are not expected to be, individually or in
the aggregate, material in amount).

(v) As of its respective date, or, if amended prior to the date hereof, as of
the date of the last such amendment, each of the Target SEC Documents complied
when filed or furnished (or, if applicable, when amended) in all material
respects with the requirements of the Securities Act, the Exchange Act and the
Sarbanes-Oxley Act of 2002 and the related rules and regulations promulgated
thereunder or under the Exchange Act (the “Sarbanes-Oxley Act”), in each
case to the extent applicable to such Target SEC Documents, and none of the
Target SEC Documents when filed or furnished (or in the case of a registration
statement under the Securities Act, at the time it was declared effective)
contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.

(l) Tax Matters. Each of the Tax Returns required to be filed by or on behalf
of Target and each member of the Target Group: (i) has, in the case of any
Tax Return for material Taxes, been timely filed (after giving effect to any
valid extensions of time in which to make such filing); and (ii) is accurate
and complete in all material respects. Target has made available to Zoetis:
(A) accurate and complete copies of all Tax Returns of Target and each member
of the Target Group relating to Taxable periods ended on or after December 31,
2012 that are listed in Clause 6.1(l) of Part A of the Target Disclosure
Letter; and (B) any audit report issued by a Governmental Body within the
last three years relating to any Taxes due from or with respect to Target and
each member of the Target Group. Target and each member of the Target Group
have, within the time and manner prescribed by applicable Law, paid all Taxes
required to be paid by any of them, including any Taxes required to be
withheld from amounts owing to any employee, creditor, or third party (in each
case, whether or not shown on any Tax Return), except with respect to matters
being contested in good faith through appropriate proceedings or for which
adequate reserves have been established in accordance with US GAAP. All Taxes
due and payable by Target and each member of the Target Group have been
adequately provided for, in accordance with US GAAP, in the financial
statements of Target and each member of the Target Group for all periods
ending on or before the date of such financial statements. During the last
three years, no claim has been made in writing by a Tax Authority in a
jurisdiction where any of Target or any member of the Target Group does not
file Tax Returns that such Person is or may be subject to taxation by that
jurisdiction There are no Encumbrances for Taxes (other than Permitted
Encumbrances). There are no unsatisfied liabilities for Taxes with respect to
any notice of deficiency or similar document received by Target or any member
of the Target Group with respect to any Tax.

(m) Intellectual Property.

(i) Clause 6.1(m)(i) of Part A of the Target Disclosure Letter contains an
accurate and complete list of (a) all registered Intellectual Property, (b)
all unregistered Intellectual Property, and (c) all unregistered Intellectual
Property for which an application is currently pending, in each case, that is
owned singularly or jointly with a third party, purported to be owned
singularly or jointly with a third party, licensed to, licensed from, owned
by, or otherwise authorised for use, or held for use by Target, and is
specified as such in Part A of the Target Disclosure Letter, by Target
(collectively “Target Intellectual Property”). The Target Disclosure
Letter identifies the Target Intellectual Property by title, by owners (for
third-party Intellectual Property), by type, by country, by application filing
number (if applicable) and if registered, by any registration number, and
includes any additional information needed to identify any listed unregistered
Intellectual Property.

(ii) Target exclusively owns and exclusively possesses all right, title and
interest in and to the Target Intellectual Property, except for the
Intellectual Property disclosed in the Target Disclosure Letter as licensed to
Target, and such ownership or possession is free and clear of all
Encumbrances. The Target Intellectual Property includes all Intellectual
Property necessary and sufficient for, or otherwise material to, the current
and contemplated conduct of the business of Target. Each registered item of
the Target Intellectual Property is valid, subsisting and enforceable, and,
except for the Intellectual Property disclosed in the Clause 6.1(m)(i) of
Part A of the Target Disclosure Letter as abandoned, each application within
the Target Intellectual Property is active and pending. Each item of Target
Intellectual Property owned by, purported to be owned by, licensed to or used
by Target immediately prior to the Effective Date will be owned or available
for use by Target on the same terms and conditions immediately after the
Effective Date.

(iii) Clause 6.1(m)(iii) of Part A of the Target Disclosure Letter contains
an accurate and complete list of all Contracts in which Target is granted
rights to any third party Intellectual Property (with the exception of
commercially available off-the-shelf, shrink wrap or click wrap licences to
use Software with a value of less than ($150,000)) or Target grants a third
party rights in the Target Intellectual Property (the “IP Agreements”).
Target has not (a) transferred ownership of, or entered into any Contract
under which it has, or may have, the obligation to transfer any ownership of,
or granted any licence to use or distribute (or entered into any Contract
under which it has, or may have, the obligation to grant any licence to use or
distribute), or authorised the retention of any rights to use or joint
ownership of, any Target Intellectual Property, to any other Person, (b)
permitted the rights of Target in any such Target Intellectual Property to
lapse or enter the public domain, (c) entered into any Contract under which it
has granted any covenant not to sue, assert or exploit any such Target
Intellectual Property, or (d) entered into any Contract under which it has
granted any Person the right to bring a lawsuit for Infringement of any such
Target Intellectual Property.

(iv) Neither the conduct of the business of Target, nor the use or practice of
any Target Intellectual Property, or making, using, or selling any Target
Products has constituted or does constitute unauthorised use,
misappropriation, infringement or other violation of the Moral Rights or
Intellectual Property rights of any other Person anywhere in the world (an
“Infringement”). To the Knowledge of Target, there are no third party
pending patent applications, which, if issued, would reasonably be expected to
result in a claim of Infringement. Target has not received any written notice
(a) that the conduct of the business of Target, or use or practice of the
Target Intellectual Property, or making, using or selling Target Products,
constitutes or potentially constitutes an Infringement or (b) of any pending
or threatened Action against Target alleging an Infringement.

(v) There is no Action pending with respect to any item of the Target
Intellectual Property challenging its legality, validity, enforceability,
scope or ownership, and, to the Knowledge of Target, no circumstances or
grounds exist that would give rise to such an Action.

(vi) To the Knowledge of Target, no Person has used, Infringed,
misappropriated, diluted or otherwise violated and no Person is infringing,
violating, misusing or misappropriating any Target Intellectual Property.

(vii) No current or former directors, officers, employees, consultants,
contractors, agents or other representatives of Target own or has claimed any
rights or interest in (nor to Target’s Knowledge has any of them made
application for) any material Target Intellectual Property. All current
directors, officers, employees, consultants, contractors, agents or other
representatives of Target whose duties or responsibilities could reasonably be
anticipated to result in the creation of Intellectual Property have entered
into agreements assigning to Target all rights in any Intellectual Property
developed within the scope of such duties and responsibilities. Target has
provided Zoetis a schedule that completely and accurately lists any Target
Intellectual Property which has not yet been assigned to Target.

(viii) Target has used commercially reasonable efforts to preserve and protect
Target Intellectual Property prior to the Effective Date. Target has used
commercially reasonable efforts to preserve the confidentiality of all Trade
Secrets, included in the Target Intellectual Property. All maintenance,
annuity, registration, renewal and other similar fees, and actions due ninety
(90) days after the Effective Date related to the registered Intellectual
Property have been paid or actions have been completed.

(ix) Clause 6.1(m)(ix) of Part A of the Target Disclosure Letter contains a
complete and accurate list of Software owned by, licensed to or used by
Target, with the exception of commercially available off-the-shelf, shrink
wrap or click wrap licences to use Software with a value of less than
$150,000. This Software is stored and run on hardware, equipment and networks
which are owned by or licensed to Target on reasonable commercial terms and in
compliance with all applicable Laws. To Target’s Knowledge, such Software
does not contain (a) any undisclosed program routine, device or other feature,
including viruses, worms, bugs, time locks, Trojan horses or back doors, in
each case that is designed to delete, disable, deactivate, interfere with or
otherwise harm such Software or (b) any virus or other intentionally created,
undocumented contaminant that may, or may be used to, access, modify, delete,
damage or disable any hardware, system or data (collectively “Disabling
Code”). Target has taken commercially reasonable steps, including using
current industry standard security measures and antivirus tools, to protect
against Disabling Code; protect Software, systems and data from misuse,
interference and loss, and protect Software, systems and data from
unauthorised access, modification or disclosure.

(x) All Open Source Software used by Target is set forth in Clause 6.1(m)(x)
of Part A of the Target Disclosure Letter, is fully segregable and such Open
Source Software is independent from Target’s proprietary Software. Target
has not used Open Source Software in any manner that (a) requires the
disclosure or distribution of any source code of any of Target’s proprietary
Software, (b) requires the licensing of any Intellectual Property for the
purpose of making derivative works, (c) imposes any restriction on the
consideration to be charged for the distribution of any Intellectual Property,
(d) creates, or purports to create, obligations on Target with respect to any
Intellectual Property or grants, or purports to grant, to any third party any
rights or immunities under any Intellectual Property, or (e) imposes any other
material limitation, restriction, or condition on the right of Target to use
or distribute any Intellectual Property. With respect to any Open Source
Software that is or has been used by Target in any way in the operation of the
business, Target has been and is in material compliance with all applicable
licences with respect thereto.

(xi) Target has materially complied with all applicable Laws, as well as the
Target’s own rules, policies and procedures, relating to the collection,
use, storage, disclosure and disposal of personal information (including
health information) collected used, or held for use by Target in connection
with the business of Target (collectively, the “Data Privacy Rules”). No
Action has been (a) asserted or (b) threatened, in each case in writing,
alleging a violation of any Data Privacy Rules by Target, and, to Target’s
Knowledge the consummation of the Transactions will not breach or otherwise
cause any material violation of any Data Privacy Rules by Target. To
Target’s Knowledge, Target has not suffered any material data security
breach in the twenty-four (24)-month period prior to the date of this
Agreement.

(xii) The consummation of the Transaction will not result in the loss or
impairment of, or payment of any additional amounts with respect to, nor
require the consent of any other Person in respect of, any Target’s rights
or obligations under any licensed Target Intellectual Property, and will not
result in invalidity, unenforceability, or impairment of any Contract related
to Target Intellectual Property, and will not result in invalidity,
unenforceability, or impairment of any Target Intellectual Property.

(xiii) Target possesses, and Zoetis shall obtain as of Effective Date,
documentation relevant to the Trade Secrets that is current, accurate and
sufficient in detail and content to identify and explain it and allow its full
and proper use without relevance on the special knowledge or memory of others.

(xiv) Target has not disclosed algorithms used or held for use in connection
with research, developments, products and use thereof.

(n) Benefits.

(i) Clause 6.1(n)(i) of Part A of the Target Disclosure Letter sets forth a
correct and complete list of all material Target Benefit Plans. Target has
delivered or made available to Zoetis true, correct and complete copies of the
following documents, with respect to each of the Target Benefit Plans, to the
extent applicable: (i) all plan documents (or to the extent no plan document
exists and is not required by applicable Law, a written summary of the
material plan terms); (ii) all filings with a Governmental Body; (iii) trust
agreements, other funding arrangements, and the most recent actuarial reports;
and (iv) the most recent summary plan descriptions, plan summaries and other
written communications provided to plan participants.

(ii) The Target Group and Paychex have performed in all material respects
their respective obligations under the agreement between Nexvet US, Inc. and
Paychex dated July 22, 2015 (the “Paychex Agreement”). There are no
circumstances pursuant to which any member of the Target Group could have any
actual or contingent material liability to (i) Paychex or any of its
Affiliates, or (ii) any current or former employee of any member of the Target
Group or their dependents or beneficiaries with respect to any Paychex Plan.
The Target Group’s participation in each Paychex Plan can be discontinued at
any time without material liability to the Target Group.

(iii) No material suit, actions or other litigation have been brought, nor to
the Knowledge of Target, threatened against or otherwise related to any Target
Benefit Plan, and to the Knowledge of Target, there are no facts or
circumstances that could reasonably to give rise to any such action, suit, or
other litigation.

(iv) Each Target Benefit Plan has been maintained and administered in
compliance with all applicable Laws and all applicable plan terms in all
material respects. All contributions to Target Benefit Plans that have been
required to be made under such Target Benefit Plans have been made, and all
benefits accrued under any unfunded Target Benefit Plan have been paid,
accrued or otherwise adequately reserved in accordance with US GAAP.

(v) With respect to each Target Benefit Plan maintained in the United States,
(A) each such Target Benefit Plan intended to be “qualified” within the
meaning of Section 401(a) of the Code, (I) is so qualified and to the
Knowledge of Target there are no existing circumstances or any events that
have occurred that would reasonably be expected to adversely affect the
qualified status of any such plan and (II) has received a favourable
determination letter or opinion letter as to its qualification, which has been
provided or made available to Zoetis; and (B) no such Target Benefit Plan is a
“multiemployer plan” (as defined in Sections 3(37) and 4001(a)(3) of
ERISA). Each Target Benefit Plan that is a “nonqualified deferred
compensation plan” (as defined under Section 409A(d)(1) of the Code) has
been operated and administered in material compliance with Section 409A of the
Code, to the extent applicable. Target has not entered into any agreement or
arrangement to, and does not otherwise have any obligation to, indemnify or
hold harmless any Person for any liability that results from the failure to
comply with the requirements of Section 409A of the Code.

(vi) No Target Benefit Plan maintained in the United States is a defined
benefit pension plan (within the meaning of Section 414(j) of the Code). No
entity that would be deemed a single employer with any member of the Target
Group under Section 414(b), (c), (m) or (o) of the Code sponsors, maintains or
contributes to a defined benefit pension plan. No Target Benefit Plan provides
health, accident or death benefit coverage beyond the termination of
employment or other service, except as required by law.

(vii) No Target Benefit Plan maintained outside of the United States is a
defined benefit scheme (within the meaning given to that term by Section 2(1)
of the Pensions Act 1990 (the “Irish Pensions Act”)) or otherwise in the
nature of a defined benefit pension arrangement or unfunded (partially or
fully) deferred compensation arrangement and no member of the Target Group
sponsors, maintains or contributes to any such scheme or arrangement. Each
Target Benefit Plan maintained in Ireland which is a defined contribution
scheme (within the meaning given to that term by Section 2(1) of the Irish
Pensions Act) is exempt approved by the Irish Revenue Commissioners for the
purposes of Section 774 of the Taxes Consolidation Act 1997 and there are no
circumstances which might give the Irish Revenue Commissioners reason to
withdraw such approval. There are no excluded employees in respect of whom a
member of the Target Group is obliged to provide access to a standard personal
retirement saving account in accordance with Section 121 of the Irish Pensions
Act.

(viii) Except as expressly provided in this Agreement, neither the execution
and delivery of this Agreement nor the consummation of the Transactions
(either alone or in conjunction with any other additional or subsequent event)
will (A) result in any payment (including severance), acceleration,
forgiveness of indebtedness, vesting, distribution, increase in benefits or
obligation to fund benefits with respect to any current, or former employees,
officers, consultants, independent contractors or directors of any member of
the Target Group or (B) result in the triggering or imposition of any
restrictions or limitations on the right of any member of the Target Group to
amend or terminate any Target Benefit Plan. Neither the execution and delivery
of this Agreement nor the consummation of the Transactions (either alone or in
conjunction with any other additional or subsequent event) will result in the
payment of any “excess parachute payments” within the meaning of
Section 280G(b)(1) of the Code. No individual is entitled to receive any tax
gross-up as a result of the imposition of the excise taxes required by
Section 4999 of the Code.

(ix) Each individual who is classified by any member of the Target Group as an
independent contractor has been properly classified for all purposes.

(o) Labour Matters. As of the date hereof, (a) neither Target nor any of its
Subsidiaries is a party to any collective bargaining agreement or other
agreement with a labour union or like organisation, (b) to the Knowledge of
Target, there are no activities or proceedings of any labour organisation to
organise any employees of Target or any of its Subsidiaries and no demand for
recognition as the exclusive bargaining representative of any employees has
been made by or on behalf of any labour or like organisation, (c) there is no
pending or, to the Knowledge of Target, threatened labour dispute, strike or
work stoppage against Target or any Subsidiary that may interfere with the
business activities of the Target Group, (d) there is no unfair labour
practice charge against Target or any of its Subsidiaries pending before the
National Labor Relations Board or any comparable labour relations authority
anywhere in the world that would reasonably be expected to result in any
material liability to any member of the Target Group, taken as a whole, (e)
there is no pending or, to the Knowledge of Target, threatened grievance,
charge, complaint, audit or investigation by or before any Governmental Body
with respect to any current or former employees of Target or any of its
Subsidiaries, and (f) in respect of current and former employees of the Target
Group in Australia, each member of the Target Group has accrued and paid all
leave entitlements in accordance with applicable Laws and has made all
superannuation contributions required under any Industrial Instrument as well
as the minimum level of superannuation contributions to avoid being liable for
a charge under applicable Laws up to the date of this Agreement.

(p) Regulatory Matters.

(i) No member of the Target Group nor, to the Knowledge of Target, any
third-party providing services relating to the Target Products have received
any oral or written notice, communication, Form 483 or other inspection
report, warning letter, untitled letter or notice of violation, cyber letter,
or other notice of enforcement action or other allegation from any
Governmental Body or other person or entity, including any review authorities,
such as an Institutional Animal Care and Use Committee (“IACUC”), claiming
or asserting a violation of any applicable Laws, or, to the Knowledge of
Target, policies, guidelines or guidance, issued by a Governmental Body or
such review authority applicable to a study concerning a Target Product
(“Study”), the Target Products, such third-party’s services, or
Target’s operations. No such action against any member of the Target Group
and, to the Knowledge of Target, any third-party providing services relating
to the Target Products, is pending, threatened, or under investigation.
Without limiting the foregoing, neither any member of the Target Group, nor to
the Knowledge of Target, any third-party providing services related to the
Target Products or Studies, have received, had threatened, had asserted, or
have pending any warning letters, untitled letters, cyber letters, notices of
violation, regulatory letters, adverse inspectional findings, FDA Forms 483,
or other notice of enforcement action, including without limitation, any
suspension, consent decree, corporate integrity agreement, monitoring
agreement, assurance of voluntary compliance, settlement order, notice of
criminal investigation, indictment, sentencing memorandum, plea agreement,
court order, target or no-target letter, or other similar agreement or action
relating to a Study, any Target Product, such third-party’s services, or the
operations of any member of the Target Group.

(ii) No member of the Target Group nor, to the Knowledge of Target, any Target
Group officer, director, employee, agent, or third-party providing services
related to the Target Products have been (i) debarred by the FDA pursuant to
21 U.S.C. § 335a or by any other Governmental Body pursuant to a similar
provision of applicable Law, including pursuant to 7 C.F.R. Parts 1.1 et seq.;
(ii) named, charged, convicted, or found liable in any action or proceeding
relating to the regulation of animal health products; or (iii) disqualified or
deemed ineligible by the FDA pursuant to 21 C.F.R. Parts 312, 510, 511, 514,
516 or 812, or by any other Governmental Body pursuant to a similar provision
of applicable Law. No member of the Target Group nor, to the Knowledge of
Target, any Target Group officer, director, employee, agent, or third-party
providing services related to the Target Products (i) are subject to any
pending proceeding or under investigation related to forgoing, (ii) have been
convicted of any crime or engaged in any conduct that may reasonably lead to
the forgoing, or (iii) received any notice or other communication from a
Governmental Body threatening or pursuing the foregoing.

(iii) Each Target Product is and has been researched, developed, tested,
studied, investigated, manufactured and stored, shipped and labelled, as
applicable, in material compliance with all applicable Laws or, to the
Knowledge of Target, policies, guidelines or guidance. No members of the
Target Group nor, to the Knowledge of the Target Group, any third party
providing services relating to the Target Products, is aware of any
information which would provide a basis for any voluntary or mandated recall
or other corrective action of any Target Product.

(iv) All material filings, notices, permits, licences and other submissions
required to be filed, maintained, or furnished to a Governmental Body related
to the research, development, testing, manufacturing, distribution or sale of
the Target Products have been so filed, maintained or furnished and were
complete and correct in all material respects on the date filed (or were
corrected in or supplemented by a subsequent filing).

(v) Target has provided Zoetis all material Study reports, protocols,


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