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identified information, indicated by [*****], has been excluded from the exhibit because it is both (i) not material and (ii) would likely cause competitive harm if publicly disclosed.
MASTER SEPARATION AGREEMENT
Dated as of March 30, 2022
| Page | ||||||
| SCHEDULES | iv | |||||
| EXHIBITS | iv | |||||
| ARTICLE I DEFINITIONS | 2 | |||||
| ARTICLE II THE SEPARATION | 18 | |||||
| 2.1 | Transfer of Assets and Assumption of Liabilities | 18 | ||||
| 2.2 | SpinCo Assets; Parent Assets | 20 | ||||
| 2.3 | SpinCo Liabilities; Parent Liabilities | 24 | ||||
| 2.4 | Separation Date | 26 | ||||
| 2.5 | Approvals and Notifications | 26 | ||||
| 2.6 | Assignment and Novation of Liabilities | 30 | ||||
| 2.7 | Release of Guarantees | 32 | ||||
| 2.8 | Termination of Agreements | 33 | ||||
| 2.9 | Treatment of Shared Contracts | 34 | ||||
| 2.10 | Bank Accounts; Cash Balances | 35 | ||||
| 2.11 | Ancillary Agreements | 36 | ||||
| 2.12 | Transition Committee | 36 | ||||
| 2.13 | Disclaimer of Representations and Warranties | 36 | ||||
| 2.14 | SpinCo Financing Arrangements | 37 | ||||
| ARTICLE III THE IPO | 37 | |||||
| 3.1 | Sole and Absolute Discretion; Cooperation | 37 | ||||
| 3.2 | Actions Prior to the IPO | 37 | ||||
| 3.3 | Conditions Precedent to Consummation of the IPO. | 39 | ||||
| ARTICLE IV THE DISTRIBUTION | 41 | |||||
| 4.1 | Sole and Absolute Discretion; Cooperation | 41 | ||||
| 4.2 | Actions Prior to the Distribution | 41 | ||||
| 4.3 | Conditions to the Distribution | 43 | ||||
| 4.4 | The Distribution | 44 | ||||
| ARTICLE V MUTUAL RELEASES; INDEMNIFICATION | 45 | |||||
| 5.1 | Release of Pre-Separation Claims | 45 | ||||
| 5.2 | Indemnification by SpinCo | 48 | ||||
| 5.3 | Indemnification by Parent | 49 | ||||
| 5.4 | Indemnification Obligations Net of Insurance Proceeds and Other Amounts | 50 | ||||
| 5.5 | Procedures for Indemnification of Third-Party Claims | 51 | ||||
| 5.6 | Additional Matters | 53 | ||||
| 5.7 | Right of Contribution | 54 | ||||
| 5.8 | Covenant Not to Sue | 55 | ||||
| 5.9 | Remedies Cumulative | 55 |
| 5.10 | Survival of Indemnities | 55 | ||||
| 5.11 | Management of Actions | 55 | ||||
| ARTICLE VI CERTAIN OTHER MATTERS | 55 | |||||
| 6.1 | SpinCo Financial Covenants | 55 | ||||
| 6.2 | Auditors and Audits; Annual Financial Statements and Accounting | 59 | ||||
| 6.3 | Parent Financial Information Certifications | 60 | ||||
| 6.4 | Covenants Relating to the Incurrence of Indebtedness | 61 | ||||
| 6.5 | Other Covenants | 62 | ||||
| 6.6 | Product Names and Untransferred Product Codes Following the Separation | 64 | ||||
| 6.7 | Insurance Matters | 65 | ||||
| 6.8 | Late Payments | 68 | ||||
| 6.9 | Inducement | 68 | ||||
| 6.10 | Post-Separation Time Conduct | 68 | ||||
| 6.11 | Director Elections | 69 | ||||
| ARTICLE VII EXCHANGE OF INFORMATION; CONFIDENTIALITY | 69 | |||||
| 7.1 | Agreement for Exchange of Information | 69 | ||||
| 7.2 | Ownership of Information | 70 | ||||
| 7.3 | Compensation for Providing Information | 70 | ||||
| 7.4 | Record Retention | 71 | ||||
| 7.5 | Legal Materials | 72 | ||||
| 7.6 | Limitations of Liability | 72 | ||||
| 7.7 | Other Agreements Providing for Exchange of Information | 72 | ||||
| 7.8 | Production of Witnesses; Records; Cooperation | 72 | ||||
| 7.9 | Privileged Matters | 73 | ||||
| 7.10 | Confidentiality | 75 | ||||
| 7.11 | Protective Arrangements | 77 | ||||
| ARTICLE VIII DISPUTE RESOLUTION | 77 | |||||
| 8.1 | Good Faith Officer Negotiation | 77 | ||||
| 8.2 | Good-Faith Negotiation | 78 | ||||
| 8.3 | Arbitration | 78 | ||||
| 8.4 | Litigation and Unilateral Commencement of Arbitration | 79 | ||||
| 8.5 | Conduct During Dispute Resolution Process | 79 | ||||
| ARTICLE IX FURTHER ASSURANCES AND ADDITIONAL COVENANTS | 79 | |||||
| 9.1 | Further Assurances | 79 | ||||
| ARTICLE X TERMINATION | 80 | |||||
| 10.1 | Termination by Mutual Consent | 80 | ||||
| 10.2 | Other Termination | 80 | ||||
| 10.3 | Effect of Termination | 81 | ||||
| ARTICLE XI MISCELLANEOUS | 81 | |||||
| 11.1 | Counterparts; Entire Agreement; Corporate Power | 81 |
| 11.2 | Governing Law | 82 | ||||
| 11.3 | Assignability | 82 | ||||
| 11.4 | Third-Party Beneficiaries | 82 | ||||
| 11.5 | Notices | 83 | ||||
| 11.6 | Severability | 84 | ||||
| 11.7 | Force Majeure | 84 | ||||
| 11.8 | No Set-Off | 84 | ||||
| 11.9 | Expenses | 84 | ||||
| 11.10 | Headings | 85 | ||||
| 11.11 | Survival of Covenants | 85 | ||||
| 11.12 | Waivers of Default | 85 | ||||
| 11.13 | Specific Performance | 85 | ||||
| 11.14 | Amendments | 85 | ||||
| 11.15 | Interpretation | 85 | ||||
| 11.16 | Limitations of Liability | 86 | ||||
| 11.17 | Performance | 86 | ||||
| 11.18 | Mutual Drafting | 86 | ||||
| 11.19 | Ancillary Agreements | 86 |
| Schedule 1.1 | Bausch Marks | |
| Schedule 1.2 | Parent Intellectual Property Rights | |
| Schedule 1.3(a) | Parent Retained Marks | |
| Schedule 1.3(b) | SpinCo Product Marks | |
| Schedule 1.4(l) | Other SpinCo Contracts | |
| Schedule 1.5 | SpinCo Products | |
| Schedule 1.6(a) | SpinCo Real Property | |
| Schedule 1.6(b) | SpinCo Leases | |
| Schedule 1.7 | SpinCo Registered IP | |
| Schedule 1.9 | Transferred Entities | |
| Schedule 1.10 | Parent Products | |
| Schedule 2.2(a)(xvii) | Other SpinCo Assets | |
| Schedule 2.2(a)(xviii) | Excluded SpinCo Assets | |
| Schedule 2.2(b)(xii) | Other Parent Assets | |
| Schedule 2.3(a)(vii) | SpinCo Liabilities; Third-Party Claims | |
| Schedule 2.3(a)(ix) | Excluded SpinCo Liabilities | |
| Schedule 2.3(b)(iv) | Parent Liabilities; Third-Party Claims | |
| Schedule 2.3(b)(v) | Other Parent Liabilities | |
| Schedule 2.8(b)(ii) | Intercompany Agreements | |
| Schedule 5.11 | Management of Actions | |
| Schedule 11.9 | Expense Allocation |
MASTER SEPARATION AGREEMENT
This MASTER SEPARATION AGREEMENT, dated as of March 30, 2022 (this Agreement ), is by and between Bausch Health
Companies Inc., a corporation continued under the laws of the Province of British Columbia, Canada ( Parent ), and Bausch + Lomb Corporation, a company incorporated under the laws of Canada ( SpinCo ). Capitalized
terms used herein and not otherwise defined shall have the respective meanings assigned to them in Article I.
WHEREAS, the board of directors of Parent (the Parent Board ) has determined that it is advisable and in the best interests
of Parent and its stakeholders, including its shareholders and creditors, to create a new publicly traded company that shall operate the SpinCo Business;
WHEREAS, in furtherance of the foregoing, the Parent Board and the board of directors of SpinCo (the SpinCo Board ) have
determined that it is appropriate and desirable for Parent and its applicable Subsidiaries to transfer the SpinCo Assets to SpinCo and its applicable Subsidiaries, and for SpinCo and its applicable Subsidiaries to assume the SpinCo Liabilities, in
each case, as more fully described in this Agreement and the Ancillary Agreements (the Separation );
Parent Board and the SpinCo Board have further determined that it is appropriate and desirable, on the terms and conditions contemplated hereby, for Parent to make an offer and sale of Initial Common Shares pursuant to a registration statement on
Form S-1 and the Canadian Prospectus, as more fully described in this Agreement and the Ancillary Agreements (the IPO ), immediately following which offering and sale Parent will own 80.1% or
more of the outstanding Initial Common Shares;
WHEREAS, Parent currently intends to, after the IPO, transfer all or a portion of the
equity interest in SpinCo to its shareholders by way of a plan of arrangement under applicable corporate law (the Arrangement ) to be implemented in accordance with the terms and subject to the conditions set out in the plan of
arrangement to be appended to the Arrangement Agreement (as it may be amended from time to time, the Plan of Arrangement ) (such transactions, collectively, the Distribution );
WHEREAS, it is intended that, for U.S. federal income tax purposes, (a) if effected, certain of the transactions described in the Plan of
Arrangement preceding the Amalgamations, taken together, shall be treated as an integrated series of steps constituting a distribution by Parent of stock of a corporation (constituting control of such corporation, within the meaning of
Section 368(c) of the Code) that, together with the other members of its separate affiliated group (within the meaning of Section 355(b)(3) of the Code), conducts the SpinCo Business, to which Section 355(a) of the Code
applies, and (b) if effected, the amalgamations resulting in the formation of Amalco and the Resulting Entity (together, the Amalgamations ), separately or taken together, shall be treated as one or more reorganizations within
the meaning of Section 368 of the Code, and that this Agreement, the Arrangement Agreement and the Plan of Arrangement, together with the documents effecting the Amalgamations, are intended to be, and are hereby adopted as, a plan of
reorganization with respect to the Amalgamations within the meaning of Treasury Regulations Section 1.368-2(g) (collectively, the Intended U.S. Tax Treatment ); and
WHEREAS, each of Parent and SpinCo has determined that it is appropriate and desirable to
set forth the principal corporate transactions required to effect the Separation, the Contribution, the IPO, the Plan of Reorganization and the Distribution (the Transactions ) and certain other agreements that will govern certain
matters relating to the Transactions and the relationship of Parent, SpinCo and the members of their respective Groups following the consummation of the Transactions.
NOW, THEREFORE, in consideration of the mutual agreements, provisions and covenants contained in this Agreement, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, hereby agree as follows:
For the purpose of this Agreement, the following terms shall have the following meanings:
Accounts Payable shall mean any and all trade and non-trade accounts payable of
either Party or member of its Group.
Accounts Receivable shall mean any and all trade and non-trade accounts receivable of either Party or member of its Group.
mean any demand, action, claim, dispute, suit, countersuit, arbitration, inquiry, subpoena, proceeding or investigation of any nature (whether criminal, civil, legislative, administrative, regulatory, prosecutorial or otherwise) 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, a Person that, directly or indirectly, through one or
more intermediaries, controls, is controlled by or is under common control with such specified Person as of the date on which, or at any time during the period for which, the determination of affiliation is being made. For the purpose of this
definition, control (including, with correlative meanings, controlled by and under common control with ), when used with respect to any specified Person, shall mean 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, agreement, obligation, indenture, instrument, lease, promise, arrangement,
release, warranty, commitment, undertaking or otherwise. It is expressly agreed that, prior to, at and after the Separation Time, solely for purposes of this Agreement and the Ancillary Agreements, (a) no member of the SpinCo Group shall
be deemed to be an Affiliate of any member of the Parent Group and (b) no member of the Parent Group shall be deemed to be an Affiliate of any member of the SpinCo Group.
Agent shall mean the trust company or bank to be duly appointed by Parent to act
as distribution agent in connection with the Distribution.
Amalco shall mean the corporation resulting from the
amalgamation of TC and Numberco pursuant to the Plan of Arrangement.
Ancillary Agreements shall mean all agreements
(other than this Agreement) entered into by the Parties or the members of their respective Groups (but as to which no Third Party is a party) in connection with the Separation, the Contribution, the IPO, the Plan of Reorganization, the Distribution
or the other transactions contemplated by this Agreement, including the Transition Services Agreement, the Real Estate Matters Agreement, the Tax Matters Agreement, the Employee Matters Agreement, the IP Matters Agreement, the Registration Rights
Agreement, the Arrangement Agreement, the Plan of Arrangement and the Transfer Documents.
Approvals or Notifications
shall mean any consents, waivers, approvals, permits or authorizations to be obtained from, notices, registrations or reports to be submitted to, or other filings to be made with, any third Person, including any Governmental Authority.
Arrangement shall have the meaning set forth in the Arrangement Agreement.
Arrangement Agreement shall mean the Arrangement Agreement, to be made between Parent, SpinCo, TC, TC Sub and Numberco in
connection with the Arrangement, as it may be amended from time to time.
Assets shall mean, with respect to any
Person, the assets, properties, claims and rights (including goodwill) of such Person, wherever located (including in the possession of vendors or other third Persons 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 such Person, including rights and benefits pursuant to any
contract, license, permit, indenture, note, bond, mortgage, agreement, concession, franchise, instrument, undertaking, commitment, understanding or other arrangement.
Bausch Marks shall mean SpinCo s and/or Parent s corporate names, corporate Trademarks, or corporate logos of
either Party or any member of its Group at any time prior to the Separation Time, including the Trademarks containing the terms Bausch, Bausch Health, Bausch & Lomb, Bausch + Lomb,
B&L or B+L, as set forth in Schedule 1.1.
BCBCA shall mean the
British Columbia Business Corporations Act, as amended.
Business Day shall mean a day other than a Saturday, a Sunday
or a day on which banking institutions located in Montreal, Qu bec, Toronto, Ontario or New York, New York are authorized or obligated by Law or executive order to close.
Canadian Prospectus shall mean, as applicable, the preliminary base PREP
prospectus, the amended and restated base PREP prospectus, the final base PREP prospectus and the supplemented base PREP prospectus containing the information that has been omitted from the final base PREP prospectus in accordance with National
Instrument 44-103 Post Receipt Pricing, including any applicable amendments thereto, in the English and French languages.
Canadian Securities Authorities shall mean the Canadian securities authorities in each of the provinces or territories of
Canada, and any of their successors.
CBCA shall mean the Canada Business Corporations Act, as amended.
Change of Control shall mean, with respect to a Party: (a) a transaction whereby any Person or group (within the
meaning of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended) would acquire, directly or indirectly, voting securities representing more than fifty percent (50%) of the total voting power of such Party; (b) a merger,
consolidation, recapitalization or reorganization of such Party, unless securities representing more than fifty percent (50%) of the total voting power of the legal successor to such Party as a result of such merger, consolidation, recapitalization
or reorganization are immediately thereafter beneficially owned, directly or indirectly, by the Persons who beneficially owned such Party s outstanding voting securities immediately prior to such transaction; or (c) the sale of all or
substantially all of the consolidated assets of such Party s Group. For the avoidance of doubt, no transaction contemplated by this Agreement or the Ancillary Agreements shall be considered a Change of Control.
Code shall mean the Internal Revenue Code of 1986, as amended.
Effective Date shall have the meaning set forth in the Arrangement Agreement.
Employee Matters Agreement shall mean the Employee Matters Agreement to be entered into by and between Parent and SpinCo or
the members of their respective Groups in connection with the Transactions and the other transactions contemplated by this Agreement, as it may be amended from time to time.
Environmental Law shall mean any Law relating to pollution, protection or restoration of or prevention of harm to the
environment or natural resources, including the use, handling, transportation, treatment, storage, disposal, Release or discharge of Hazardous Materials or the protection of or prevention of harm to human health and safety.
Environmental Liabilities shall mean all Liabilities relating to, arising out of or resulting from any Hazardous Materials,
Environmental Law or contract or agreement relating to environmental, health or safety matters (including all removal, remediation or cleanup costs, investigatory costs, response costs, natural resources damages, property damages, personal injury
damages, costs of compliance with any product take back requirements or with any settlement, judgment or other determination of Liability and indemnity, contribution or similar obligations) and all costs and expenses, interest, fines, penalties or
other monetary sanctions in connection therewith.
Exchange Act shall mean the U.S. Securities Exchange Act of 1934, as
amended, together with the rules and regulations promulgated thereunder.
Final Order shall have the meaning set forth
in the Arrangement Agreement.
Force Majeure shall mean, with respect to a Party, an event beyond the reasonable
control of such Party (or any Person acting on its behalf), which event (a) does not arise or result from the fault or negligence of such Party (or any Person acting on its behalf) and (b) by its nature would not reasonably have been
foreseen by such Party (or such Person), or, if it would reasonably have been foreseen, was unavoidable, and includes acts of God, acts of civil or military authority, acts of terrorism, cyberattacks, embargoes, epidemics, pandemics or diseases
(including COVID-19) or other health crises or public health events, or any worsening of any of the foregoing, quarantine or government health alert that prohibits or restricts travel or prevents any
individual from reporting to a work location, 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 significant and
prolonged failure in electrical or air conditioning equipment. Notwithstanding the foregoing, for the avoidance of doubt, the receipt by a Party of an unsolicited takeover offer or other acquisition proposal, even if unforeseen or unavoidable, and