Exchange Offer and Consent Solicitation Statement

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1 Exchange Offer and Consent Solicitation Statement Exchange Offer and Consent Solicitation for $195,164, % Senior Secured Notes due 2016 Regulation S Notes: Common Code , ISIN Number XS Rule 144A Notes: Common Code , ISIN Number XS issued by Novasep Holding S.A.S. in exchange for euro-denominated Unsecured Notes due 2019 with Warrants attached (obligations à bons de souscription d actions) As set forth in this exchange offer and consent solicitation statement (the Exchange Offer and Consent Solicitation Statement ), in connection with a refinancing of financial indebtedness of Novasep Holding S.A.S. ( Novasep, and such refinancing, the Refinancing ), Novasep is offering to exchange (the Exchange Offer ) any and all of its outstanding 8.00% Senior Secured Notes due 2016 in the aggregate principal amount of $195,164,000 (the Existing Notes ), plus all accrued and unpaid interest thereon to the Closing Date (as defined under Important Dates ), for eurodenominated unsecured notes (the Exchange Notes ) with warrants attached (obligations à bons de souscription d actions) (the Warrants ) issued by Novasep, plus a cash payment. References herein to the Exchange Notes with Warrants shall refer to the Exchange Notes and the attached Warrants. For each $1,000 principal amount of Validly Tendered Existing Notes (as defined below) that is accepted for exchange, tendering holders will receive: (A) Exchange Notes in a principal amount equal to the Euro Equivalent of $1,000 plus accrued but unpaid interest on such Existing Notes (the Euro Equivalent being defined as the amount of Euros obtained by converting the relevant amount of U.S. dollars into Euros at the spot rate for the purchase of Euros with U.S. Dollars published under Currency Rates in the section of the Financial Times entitled Currencies, Bonds & Interest Rates on the third (3rd) Business Day (as defined herein) prior to the Closing Date, with the resulting amount being rounded down to the nearest denomination of 1 and no cash or other consideration delivered to the holder in lieu of such rounded down amount). The Exchange Notes will mature on May 31, 2019 (the Maturity Date ) and will pay 5% interest per annum in cash on the Senior Outstanding Principal Amount (as defined herein) of the Exchange Notes, payable quarterly in arrears, as well as an additional (i) 3% Senior Capitalized Interest (as defined herein) per annum on the Senior Outstanding Principal Amount of the Exchange Notes, which interest will be capitalized on each anniversary of the Closing Date and be payable on the Maturity Date and (ii) (A) 3% Junior 1 Capitalized Interest (as defined herein) per annum on the Senior Outstanding Principal Amount of the Exchange Notes, which interest will be capitalized annually on each anniversary of the Closing Date and (B) 11% Junior 2 Capitalized Interest (as defined herein) per annum on the Junior Capitalized Amounts (as defined herein) of the Exchange Notes, which interest will be capitalized annually on each anniversary of the Closing Date, starting with the second anniversary of the Closing Date, and in each case which Junior Capitalized Interest (as defined herein) shall be payable on the Maturity Date, subject to the prior payment in full to Bpifrance of the Blockage Payment (as defined and more fully described in Condition 2 Status in Terms and Conditions of the Exchange Notes ). (B) 300 Warrants (initially attached to the Exchange Notes). The Warrants will detach from the Exchange Notes immediately upon issue on the Closing Date. Each Warrant will entitle its holder, subject to certain conditions, to subscribe for one newly-issued ordinary share of Novasep at an exercise price per newlyissued ordinary share equal to the ordinary share par value at the time of exercise (such par value being equal to Euro on the Closing Date) (any such ordinary share issued upon exercise of a Warrant, a Warrant Share ). Warrants that have not been exercised will expire on the Maturity Date. (C) a cash payment. The cash consideration for each $1,000 principal amount of Validly Tendered Existing Notes accepted for exchange shall be $5 (the Tender Cash Consideration ). In addition, for Existing Notes that are Validly Tendered on or prior to 5:00 p.m., New York City time, on October 7, 2016 (such time, as may be extended, the Early Deadline ) and accepted for exchange, an additional cash payment of $5 shall be paid for each $1,000 of principal amount of such Validly Tendered Existing Notes accepted for exchange (the Early Tender Cash Consideration; the Cash Payment with respect to any Validly Tendered Existing Notes that are accepted for purchase shall refer to the Tender Cash Consideration and, only if it is due in accordance with the terms described herein with respect to such Validly Tendered

2 Existing Notes accepted for exchange, the Early Tender Cash Consideration). The Cash Payment shall be paid directly through Euroclear or Clearstream, as applicable, for the account of the relevant holders of Existing Notes. The above components are referred to collectively as the Exchange Consideration. Novasep s obligation to consummate the Exchange Offer and pay the Exchange Consideration is subject to certain conditions, as set forth under the heading The Exchange Offer and Consent Solicitation Conditions to the Exchange Offer. The Exchange Consideration will be paid to each holder that validly tenders its Existing Notes in accordance with the terms and conditions set forth herein, which shall require both delivery of an Electronic Exchange Instruction (as defined herein) through Euroclear and/or Clearstream, as applicable, and delivery of a properly completed and fully executed Letter of Transmittal (as defined herein) and each of the attachments thereto on or prior to the Expiration Date (as defined herein), and does not validly revoke its tender of Existing Notes prior to the Withdrawal Deadline (such Existing Notes being Validly Tendered and, such Existing Notes, Validly Tendered Existing Notes ) and has such Validly Tendered Existing Notes accepted for exchange. Concurrently, and as an integrated proposal with the Exchange Offer, Novasep is soliciting consents (such consents, the Consents and such solicitation, the Consent Solicitation ) from the holders of Existing Notes to amend certain of the terms and conditions of the Existing Notes and of the indenture that governs the Existing Notes (the Indenture ) as described in Proposed Amendments (Successful Consent Solicitation) (the Proposed Amendments (Successful Consent Solicitation) and the Existing Notes as amended thereby, the Amended Existing Notes ). By validly tendering Existing Notes in the Exchange Offer, a holder will be deemed to have also delivered valid Consents with respect to such Existing Notes. Except to the limited extent described below, holders of Existing Notes will not be permitted to deliver Consents without tendering their related Existing Notes in the Exchange Offer. In order to consummate the Refinancing on the terms set forth herein, Novasep requires at least 90% of the total outstanding principal amount of the Existing Notes held by persons other than Novasep or any of its Affiliates (as defined in the Indenture and further described herein) to grant Consents (the Success Threshold ). Existing Notes held by Novasep or any of its Affiliates (as defined in the Indenture and further described herein) are deemed not to be outstanding for the purposes of the right to Consent in respect of the Consent Solicitation contemplated by this Exchange Offer and Consent Solicitation Statement. See The Exchange Offer and Consent Solicitation Affiliates. If the Consent Solicitation achieves the Success Threshold, non-tendering holders of Existing Notes will remain holders of the Existing Notes but in amended form, under which their principal and interest rate thereunder will be significantly reduced, the maturity date will be extended, substantially all restrictive covenants and events of default will be removed and the Existing Notes will no longer have the benefit of any guarantee or collateral, among other amendments. See Proposed Amendments (Successful Consent Solicitation) and Summary Summary Comparison of the Existing Notes Versus the Amended Existing Notes. Certain holders of Existing Notes who are Affiliates (as defined in the Indenture) of Novasep (the Cornerstone Bondholders ) have agreed to take certain actions in support of the Refinancing (the Cornerstone Bondholders Commitment ), including a commitment to tender their Existing Notes. As part of the Cornerstone Bondholders Commitment, the Cornerstone Bondholders have agreed to waive the Cash Payment with respect to their Existing Notes or return to Novasep any Cash Payment received in respect thereof. The aggregate amount of Existing Notes held by these Cornerstone Bondholders represents approximately 75.6% of the total outstanding principal amount of the Existing Notes. The participation of the Cornerstone Bondholders demonstrates the support of a major contingent of our creditor group for the Refinancing. To receive the Exchange Consideration, a holder of Existing Notes will need to deliver both an Electronic Exchange Instruction (as defined below) and a properly completed and fully executed letter of transmittal (the Letter of Transmittal ), which shall include an accession by such holder to the Novasep Securityholders Agreement (as defined herein) as an Investor (the Accession Agreement ) and a grant of a power of attorney to Novasep to execute amendments to the Novasep Securityholders Agreement on behalf of such holder to make the Novasep Securityholders Agreement consistent with the terms and conditions of this Refinancing as contemplated by this Exchange Offer and Consent Solicitation Statement (the Power of Attorney ). Holders of Existing Notes who submit an Electronic Exchange Instruction but do not deliver a properly completed and fully executed Letter of Transmittal (and each of the attachments thereto) in physical form in accordance with the procedures set forth herein will be deemed not to have made a valid tender and will not receive the Exchange Consideration, but will be deemed to have validly delivered Consents for purposes of the Consent Solicitation. In the event the Success Threshold is achieved, any such holders would thus hold Amended Existing Notes. Holders should read the sections entitled The Exchange Offer and Consent Solicitation Terms of the Exchange Offer and Consent Solicitation, The Exchange Offer and Consent Solicitation Procedures for Tendering Notes and Delivery of Consents, The Exchange Offer and Consent Solicitation Consequences of Failure to Exchange and Proposed Amendments (Successful Consent Solicitation) for further information. ii

3 None of the Exchange Notes, the Warrants or the Warrant Shares have been or will be registered under the U.S. Securities Act of 1933, as amended (the Securities Act ), or the securities laws of any state in the United States of America or any other jurisdiction and none of the Exchange Notes, the Warrants or the Warrant Shares may be offered or sold, directly or indirectly, within the United States of America except in transactions exempt from, or not subject to, the registration requirements under the Securities Act and any applicable state securities laws. Accordingly, each of the Exchange Notes, the Warrants and the Warrant Shares offered hereby are being offered and sold only (i) in the United States of America in private transactions in reliance on an exemption from the registration requirements of the Securities Act to persons who are qualified institutional buyers ( QIBs ) as defined in Rule 144A under the Securities Act ( Rule 144A ) that are acquiring such securities for their own account or for a discretionary account or accounts on behalf of one or more QIBs and (ii) in offshore transactions as defined in, and in accordance with, Regulation S under the Securities Act ( Regulation S ), and in each case in accordance with any applicable securities laws of any state of the United States of America. The Exchange Notes with Warrants will not be offered, sold or transferred, directly or indirectly, to the public in France. They may be offered, sold or transferred, directly or indirectly only to qualified investors (investisseurs qualifiés) acting for their own account and to a closed circle of investors (cercle restreint d investisseurs) acting for their own accounts, as defined in and in accordance with Articles L.411-1, L.411-2,D and D of the French Code monétaire et financier. In any member state of the European Union, the Exchange Notes with Warrants may be offered, sold or transferred, directly or indirectly, only (a) to qualified investors under Directive 2003/71/EC of the European Parliament and of the Council of November 4, 2003 and amendments thereto, including Directive 2010/73/EU (the Prospectus Directive ) and (b) to fewer than 150 natural or legal persons per member state (other than qualified investors as defined in the Prospectus Directive), as permitted under the Prospectus Directive. See Risk Factors beginning on page 42 for a discussion of certain risks you should consider before you decide to participate in the Exchange Offer and Consent Solicitation. THE FULL PRINCIPAL AMOUNT OF THE EXISTING NOTES WILL BE DUE AND PAYABLE ON DECEMBER 15, NOVASEP DOES NOT EXPECT TO HAVE THE FUNDS AVAILABLE TO REPAY THIS AMOUNT ON OR BEFORE SUCH DATE. IF THE EXCHANGE OFFER IS NOT CONSUMMATED ON THE TERMS SET OUT IN THIS EXCHANGE OFFER AND CONSENT SOLICITATION STATEMENT, NOVASEP OR OTHER MEMBERS OF THE NOVASEP GROUP MAY HAVE TO INITIATE FRENCH SAFEGUARD PROCEEDINGS (PROCEDURE DE SAUVEGARDE) OR SOME OTHER FORM OF PRE-INSOLVENCY OR INSOLVENCY PROCEEDINGS. THE PROCEEDS AVAILABLE TO CREDITORS OF NOVASEP AND ITS SUBSIDIARIES (THE GROUP ) (INCLUDING HOLDERS OF THE EXISTING NOTES) UNDER SUCH CIRCUMSTANCES WOULD BE UNCERTAIN AND MAY BE NIL OR CONSIDERABLY LESS THAN THE POTENTIAL VALUE OF THE CONSIDERATION SUCH CREDITORS WOULD HAVE RECEIVED UNDER THE EXCHANGE OFFER AND CONSENT SOLICITATION. SEE RISK FACTORS RISKS RELATED TO THE REFINANCING. Disclaimers There is currently no public market for the Exchange Notes with Warrants. Application is expected to be made to list the Exchange Notes (but not the Warrants or Warrant Shares) on the Official List of the Luxembourg Stock Exchange and to admit the Exchange Notes (but not the Warrants or Warrant Shares) to trading on the Euro MTF. No application will be made to list the Warrants or Warrant Shares. There are no assurances that the Exchange Notes will be admitted to the Official List of the Luxembourg Stock Exchange. The Euro MTF of the Luxembourg Stock Exchange is not a regulated market within the meaning of Directive 2004/93/EC on markets in financial instruments. The Euro MTF falls within the scope of Regulation (EC) 596/2014 on market abuse and the related Directive 2014/57/EU on criminal sanctions for market abuse. Neither the United States Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this Exchange Offer and Consent Solicitation Statement. Any representation to the contrary is a criminal offense. The date of this Exchange Offer and Consent Solicitation Statement is September 26, iii

4 TABLE OF CONTENTS Incorporation of Certain Documents By Reference... v Notice to Participants... v Notice to Certain European Participants... vii Forward Looking Statements... ix Notice Regarding the Agents Responsibility... xi Presentation of Financial and Other Information... xii Currency Presentation and Exchange Rate Information... xiii Summary... 1 Risk Factors Use of Proceeds Capitalization The Refinancing Our Business The Exchange Offer and Consent Solicitation Proposed Amendments (Successful Consent Solicitation) Terms And Conditions Of The Exchange Notes Terms And Conditions Of The Warrants Description of Other Indebtedness and Certain Financial Arrangements Description of Novasep Share Capital Management Exchange Agent and Information Agent Taxation Transfer Restrictions ERISA Considerations Plan of Distribution Independent Statutory Auditors Enforceability of Judgments Certain Insolvency Considerations Listing and General Information iv

5 INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE We are incorporating into this Exchange Offer and Consent Solicitation Statement by reference the following documents: (1) our annual reports for the years ended December 31, 2014 (including comparative information for the years ended December 31, 2013) and 2015, including our audited consolidated annual financial statements for such periods incorporated by reference therein, and (2) our interim report for the six months ended June 30, 2016, including our unaudited interim financial statements for such period incorporated by reference therein. The information incorporated by reference is an important part of this Exchange Offer and Consent Solicitation Statement. The documents incorporated by reference herein are available to you upon request from Lucid Issuer Services Limited (the Exchange Agent ). NOTICE TO PARTICIPANTS We have prepared this Exchange Offer and Consent Solicitation Statement solely for use in connection with the Exchange Offer and Consent Solicitation based on information we have or have obtained from sources we believe to be reliable. Except as provided below, we accept responsibility for the information contained in this Exchange Offer and Consent Solicitation Statement. We additionally confirm that the opinions and intentions expressed herein are honestly held and that there are no other facts, the omission of which would make this Exchange Offer and Consent Solicitation Statement as a whole or any of such information or the expression of any such opinions or intentions misleading in any material respect. The information in this Exchange Offer and Consent Solicitation Statement is current only as of the date on the cover and the business and financial condition of Novasep or any of its subsidiaries and other information in this Exchange Offer and Consent Solicitation Statement may change after that date. You should base your decision to participate in the Exchange Offer and Consent Solicitation on the total mix of information available to you, recognizing that Novasep can provide no assurance as to the reliability or accuracy of any information except for the information contained or incorporated by reference into this Exchange Offer and Consent Solicitation Statement. We have not authorized anyone to provide you with any different information. The information contained under the heading Currency Presentation and Exchange Rate Information and certain other information contained in this Exchange Offer and Consent Solicitation Statement and in the documents incorporated by reference herein includes extracts from information and data publicly released by official and other sources. Although we accept responsibility for the accurate extraction and summarization of such information and data, we accept no further responsibility in respect of such information. In addition, this Exchange Offer and Consent Solicitation Statement contains summaries believed to be accurate with respect to certain documents but reference is made to the actual documents for complete information. All such summaries are qualified in their entirety by such reference. Copies of certain of these documents will be made available to holders of the Existing Notes upon request. We will provide you with a copy of any related amendments or supplements to this Exchange Offer and Consent Solicitation Statement. By participating in the Exchange Offer and Consent Solicitation, you will be deemed to have acknowledged that you have reviewed this Exchange Offer and Consent Solicitation Statement and have had an opportunity to request, and have received, all additional information that you need from us. Neither we nor any of our or their respective representatives or affiliates are making any representation to you regarding the legality of your participation in the Exchange Offer and Consent Solicitation, including an investment in the Exchange Notes, the Warrants and/or the Warrant Shares and you should not construe anything in this Exchange Offer and Consent Solicitation Statement as legal, business, tax or other advice. You should consult your own advisors as to the legal, tax, business, financial and related aspects of an investment in the Exchange Notes, the Warrants and/or the Warrant Shares. Laws in certain jurisdictions may restrict the distribution of this Exchange Offer and Consent Solicitation Statement and the offer of the Exchange Notes, the Warrants and/or the Warrant Shares. You must comply with all laws applicable in any jurisdiction in which you buy, offer or sell the Exchange Notes, the Warrants and/or the Warrant Shares or possess or distribute this v

6 Exchange Offer and Consent Solicitation Statement and you must obtain all applicable consents and approvals; we shall not have any responsibility for any of the foregoing legal requirements. You may not use any information herein for any purpose other than considering your participation in the Exchange Offer and Consent Solicitation and you may not make photocopies of this Exchange Offer and Consent Solicitation Statement or any documents referred to herein or transmit them electronically to other persons. You agree that you will hold the information contained in this Exchange Offer and Consent Solicitation Statement and the transactions contemplated hereby in confidence. This Exchange Offer and Consent Solicitation Statement is personal to each offeree and does not constitute an offer to any other person or to the public generally to subscribe for or otherwise acquire the Exchange Notes, the Warrants or the Warrant Shares. Distribution of this Exchange Offer and Consent Solicitation Statement to any person other than the offeree and any person retained to advise such offeree with respect to its investment is unauthorized and any disclosure of any of its contents, without our prior written consent is prohibited. We intend to make an application to list the Exchange Notes (but not the Warrants or the Warrant Shares) on the Official List of the Luxembourg Stock Exchange and to admit them to trading on the Euro MTF, and will submit a version of this Exchange Offer and Consent Solicitation Statement to the Luxembourg Stock Exchange in connection with the listing application. Comments by the Luxembourg Stock Exchange may require significant modification or reformulation of information contained in this Exchange Offer and Consent Solicitation Statement or may require the inclusion of additional information, including financial information in respect of our group. We may also be required to update the information in this Exchange Offer and Consent Solicitation Statement to reflect changes in our business, financial condition or results of operations and prospects. We cannot guarantee that our application for admission of the Exchange Notes to the Official List of the Luxembourg Stock Exchange and to trading on the Euro MTF will be approved as of the Closing Date or any date thereafter, and settlement of the Exchange Notes is not conditioned on obtaining this listing. No application will be made to list the Warrants or the Warrant Shares. None of the Exchange Notes, the Warrants or the Warrant Shares have been or will be registered under the Securities Act or the securities laws of any state in the United States of America or any other jurisdiction and none of the Exchange Notes, the Warrants or the Warrant Shares may be offered or sold, directly or indirectly, within the United States of America except in transactions exempt from, or not subject to, registration under the Securities Act and any applicable state securities laws. Accordingly, each of the Exchange Notes, the Warrants and the Warrant Shares are being offered and sold only (i) in the United States of America only in private transactions in reliance on an exemption from the registration requirements of the Securities Act to persons who are QIBs (as defined in Rule 144A) that are acquiring such securities for their own account or for a discretionary account or accounts on behalf of one or more QIBs and (ii) in offshore transactions as defined in, and in accordance with, Regulation S, and in each case in accordance with any applicable securities laws of any state of the United States of America. Neither the U.S. Securities and Exchange Commission, any state securities commission nor any non- U.S. securities authority has approved or disapproved of these securities or determined that this Exchange Offer and Consent Solicitation Statement is accurate or complete. Any representation to the contrary is a criminal offense. The Exchange Notes, the Warrants and the Warrant Shares, are subject to restrictions on transferability and resale and may not be transferred or resold except as permitted under the Securities Act pursuant to registration or exemption therefrom and applicable securities laws of any other jurisdiction. See Transfer Restrictions. Prospective participants should be aware that they may be required to bear the financial risks of this investment for an indefinite period of time. By accepting delivery of this Exchange Offer and Consent Solicitation Statement, you agree to the foregoing restrictions. vi

7 NOTICE TO CERTAIN EUROPEAN PARTICIPANTS European Economic Area. This Exchange Offer and Consent Solicitation Statement has been prepared on the basis that all offers of the Exchange Notes with Warrants in any member state of the European Economic Area ( EEA ) (each, a Member State ) will be made pursuant to an exemption under the Prospectus Directive from the requirement to publish a prospectus for offers of the Exchange Notes with Warrants. Accordingly, any person making or intending to make any offer in that Member State of the Exchange Notes with Warrants attached may only do so in circumstances in which no obligation arises for us to publish a prospectus for such offer pursuant to Article 3 of the Prospectus Directive. We have not authorized, nor do we authorize, the making of any offer of Exchange Notes with Warrants through any financial intermediary. In relation to each Member State, with effect from and including the date on which the Prospectus Directive was implemented in that Member State (the Relevant Implementation Date ), the offer of any Exchange Notes with Warrants which is the subject of the Exchange Offer contemplated by this Exchange Offer and Consent Solicitation Statement is not being made and will not be made to the public in that Member State, other than at any time to: (a) a qualified investor as defined in the Prospectus Directive; and (b) fewer than 150 natural or legal persons per member state (other than qualified investors as defined in the Prospectus Directive), as permitted under the Prospectus Directive; provided that no such offer of the Exchange Notes with Warrants shall require Novasep to publish a prospectus pursuant to Article 3 of the Prospectus Directive. For the purposes of the foregoing provisions, the expression an offer of the Exchange Notes with Warrants to the public in relation to the Exchange Notes with Warrants in any Member State means the communication in any form and by any means of sufficient information about the terms of the Exchange Offer and the Exchange Notes with Warrants, to be offered so as to enable an investor to decide to exchange its Existing Notes for the Exchange Notes with Warrants, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State and the expression Prospectus Directive means Directive 2003/71/EC, as amended, including by Directive 2010/73/EU, and includes any relevant implementing measure in the Member State. United Kingdom. This Exchange Offer and Consent Solicitation Statement is for distribution only to, and is only directed at, persons who (i) have professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended, (the Financial Promotion Order ), (ii) are persons falling within Article 49(2)(a) to (d) (high net worth companies, unincorporated associations, etc.) of the Financial Promotion Order or (iii) are persons to whom an invitation or inducement to engage in investment activity (within the meaning of section 21 of the Financial Services and Markets Act 2000) in connection with the issue or sale of any Exchange Notes with Warrants may otherwise lawfully be communicated or caused to be communicated (all such persons together being referred to as Relevant Persons ). This Exchange Offer and Consent Solicitation Statement is directed only at Relevant Persons and must not be acted on or relied on by persons who are not Relevant Persons. Any investment or investment activity to which this document relates is available only to Relevant Persons and will be engaged in only with Relevant Persons. Any person who is not a Relevant Person should not act or rely on this document or any of its contents. The Exchange Notes with Warrants are being offered solely to qualified investors as defined in the Prospectus Directive or in circumstances that do not require an approved prospectus to be made available to the public in accordance with Section 86 of FSMA and accordingly the offer is not subject to the obligation to publish a prospectus within the meaning of the Prospectus Directive. Germany. The Exchange Offer and Consent Solicitation is not a public offering in the Federal Republic of Germany. The Exchange Notes with Warrants may only be offered, sold and acquired in accordance with the provisions of the Securities Prospectus Act of the Federal Republic of Germany as amended, (the Securities Prospectus Act, Wertpapierprospektgesetz, WpPG), and any other applicable German law. No application has been made under German law to publicly market the Exchange Notes with Warrants in or out of the Federal Republic of Germany. The Exchange Notes with Warrants are not registered or authorized for distribution under the Securities Prospectus Act and accordingly may not be, and are not being, offered or advertised publicly or by public promotion. vii

8 Therefore, this Exchange Offer and Consent Solicitation Statement is strictly for private use and the offer is only being made to recipients to whom the document is personally addressed and does not constitute an offer or advertisement to the public. The Exchange Notes with Warrants will only be available to and this Exchange Offer and Consent Solicitation Statement and any other offering material in relation to the Exchange Notes with Warrants is directed only at persons who are qualified investors (qualifizierte Anleger) within the meaning of Section 2, No. 6 of the Securities Prospectus Act. Any resale of the Exchange Notes with Warrants in Germany may only be made in accordance with the Securities Prospectus Act and other applicable laws. France. This Exchange Offer and Consent Solicitation Statement has not been prepared in the context of a public offering of financial securities in France within the meaning of Article L of the French Code monétaire et financier and Title I of Book II of the Règlement général of the Autorité des marchés financiers (the AMF ) and therefore has not been and will not be filed with the AMF for prior approval or submitted for clearance to the AMF. The Exchange Notes with Warrants may not be, directly or indirectly, offered or sold to the public in France and offers and sales of the Exchange Notes with Warrants will only be made in France to qualified investors (investisseurs qualifiés) acting for their own accounts and to a closed circle of investors (cercle restreint d investisseurs) acting for their own accounts as defined in and in accordance with Articles L.411-2, D and D of the French Code monétaire et financier. Neither this Exchange Offer and Consent Solicitation Statement nor any other offering material may be released, issued or distributed to the public in France or used in connection with any offer for subscription on sale of the Exchange Notes with Warrants to the public in France. The subsequent direct or indirect retransfer of the Exchange Notes with Warrants to the public in France may only be made in compliance with Articles L.411-1, L.411-2, L and L through L of the French Code monétaire et financier and Title I of Book II of the Règlement Général of the AMF. Luxembourg. This Exchange Offer and Consent Solicitation Statement has not been approved by and will not be submitted for approval to the Luxembourg Financial Services Authority (Commission de Surveillance du Secteur Financier) for the purposes of public offering or sale in the Grand Duchy of Luxembourg ( Luxembourg ). Accordingly, the Exchange Notes with Warrants may not be offered or sold to the public in Luxembourg, directly or indirectly, and neither this Exchange Offer and Consent Solicitation Statement nor any other circular, prospectus, form of application, advertisement or other material may be distributed, or otherwise made available in any form, or published in, Luxembourg except for the sole purpose of the admission to trading of the Exchange Notes on the Euro MTF and to listing of the Exchange Notes on the Official List of the Luxembourg Stock Exchange and except in circumstances that do not constitute a public offer of securities to the public, subject to prospectus requirements, in accordance with the Luxembourg Act of July 10, 2005 on prospectuses for securities, as amended from time to time. THIS EXCHANGE OFFER AND CONSENT SOLICITATION STATEMENT CONTAINS IMPORTANT INFORMATION WHICH YOU SHOULD READ BEFORE YOU MAKE ANY DECISION WITH RESPECT TO YOUR PARTICIPATION IN THE EXCHANGE OFFER AND CONSENT SOLICITATION. viii

9 FORWARD LOOKING STATEMENTS This Exchange Offer and Consent Solicitation Statement includes forward looking statements within the meaning of the securities laws of certain applicable jurisdictions. These forward looking statements include, but are not limited to, all statements other than statements of historical facts contained in this Exchange Offer and Consent Solicitation Statement, including, without limitation, those regarding our future financial position and results of operations, our strategy, plans, objectives, goals and targets, future developments in the markets in which we participate or are seeking to participate or anticipated regulatory changes in the markets in which we operate or intend to operate. In some cases, you can identify forward looking statements by terminology such as aim, anticipate, believe, continue, could, estimate, expect, forecast, guidance, intend, may, plan, potential, predict, projected, should, or will or the negative of such terms or other comparable terminology. By their nature, forward looking statements involve known and unknown risks, uncertainties and other factors because they relate to events and depend on circumstances that may or may not occur in the future. We caution you that forward looking statements are not guarantees of future performance and are based on numerous assumptions and that our actual results of operations, including our financial condition and liquidity and the development of the industries in which we and the members of our group operate, may differ materially from (and be more negative than) those made in, or suggested by, the forward looking statements contained in this Exchange Offer and Consent Solicitation Statement. In addition, even if our results of operations, including our financial condition and liquidity and the development of the industry in which we operate, are consistent with the forward looking statements contained in this Exchange Offer and Consent Solicitation Statement, those results or developments may not be indicative of results or developments in subsequent periods. Important risks, uncertainties and other factors that could cause these differences include, but are not limited to: our ability to consummate the Refinancing and potential adverse publicity in connection therewith; the risks and uncertainties associated with pre-insolvency or insolvency proceedings if the Refinancing is not successful; our ability to improve operating performance; our ability to make scheduled payments on our indebtedness; the impact of unfavorable economic conditions and the global economic downturn; the impact of competition on our business; our dependence on global financial market; our ability to maintain major supply contracts and generate additional future sales; our ability to manage operational risks; the adequacy of our insurance coverage against claims; our ability to follow various current and future government regulations in the relevant industries; our exposure to risks related to product liability litigation and negative publicity as a result thereof; our exposure to environmental regulations and claims; our dependence on customer demands and research and development and investment strategies; the impact of mergers on the pharmaceutical market; the impact of the global economic environment on our customers; the significantly greater financial resources of some of our competitors; the success of new classes of therapeutics; the impact of changes to healthcare reimbursements; the impact of equipment malfunctions or changes in the supply of materials; the adequacy of our security measures for the handling of hazardous materials; our exposure to various political, economic, and fiscal regimes; our ability to improve our current offerings and develop new offerings successfully; the impact of unforeseen events such as natural disasters or other catastrophic events; ix

10 our exposure to volatile raw material, water and energy prices; the impact of IT system failures or interruptions or breaches of our network security; our ability to successfully acquire or divest business units in the future; our ability to adequately protect our intellectual property; the risk from potential infringements on third-parties intellectual property rights; the impact of costs related to patent litigation; the impact of employment regulations, particularly in Belgium, France and Germany; our reliance on key executives and technical personnel; our exposure to exchange rate volatility; tax risks; and other factors as described in this Exchange Offer and Consent Solicitation Statement, including factors set forth in the section entitled Risk Factors. We urge you to read the section of this Exchange Offer and Consent Solicitation Statement entitled Risk Factors for a more complete discussion of the factors that could affect our future performance and the markets in which we operate. In light of these risks, uncertainties and assumptions, the forward looking events described in this Exchange Offer and Consent Solicitation Statement may not occur. These forward looking statements speak only as of the date on which the statements were made. We undertake no obligation to update or revise any forward looking statement or risk factors, whether as a result of new information, future events or developments or otherwise. x

11 NOTICE REGARDING THE AGENTS RESPONSIBILITY None of the trustee under the Existing Notes (the Trustee ), the collateral agent under the Existing Notes ( Collateral Agent ), the principal paying agent and transfer agent under the Existing Notes (the Principal Paying Agent ), the Luxembourg registrar, paying agent and transfer agent under the Existing Notes (the Registration Agent ), any agent with respect to the Exchange Notes with Warrants or the Exchange Agent (also acting as information agent in connection with the Exchange Offer and Consent Solicitation Statement) (collectively, the Agents ) have independently verified or make any representation or warranty, express or implied, or assume any responsibility, as to the accuracy or adequacy of the information contained in this Exchange Offer and Consent Solicitation Statement. The Trustee will be relying solely on the certification of the Exchange Agent that the requisite voting majorities have been obtained. The Agents shall have no responsibility or liability for monitoring, tabulating or verifying compliance with deadlines or other formalities in connection with the delivery or withdrawal of tenders and will be relying on Novasep and the Exchange Agent, as applicable. None of the Agents takes any responsibility for the accuracy or completeness of the information contained in this Exchange Offer and Consent Solicitation Statement, or for any failure by Novasep to disclose events or circumstances which may have occurred or may affect the significance or accuracy of any such information. None of the Agents or any of their directors, employees or affiliates, makes any recommendation as to whether holders of the Existing Notes should tender their Existing Notes and consent pursuant to this Exchange Offer and Consent Solicitation Statement. Recipients of this Exchange Offer and Consent Solicitation Statement should not construe its contents as legal, business or tax advice. Each recipient should consult its own attorney, business adviser and tax adviser as to legal, business, tax and related matters concerning the Exchange Offer and Consent Solicitation. Further, by tendering its Existing Notes and consenting pursuant to the Exchange Offer and Consent Solicitation, each participating holder hereby acknowledges that the Exchange Offer and Consent Solicitation and the other transactions contemplated hereby shall not be deemed to be investment advice or a recommendation as to a course of conduct by the Agents or any of their respective officers, directors, employees or agents; each participating holder further represents that, in delivering a tender and consent, it has made an independent decision in consultation with its own professional advisors to the extent that it considers it necessary. Each holder of Existing Notes is responsible for assessing the merits of the Exchange Offer and Consent Solicitation with respect to the Existing Notes held by it. In accordance with normal practice, the Agents express no opinion as to the merits of the Exchange Offer and Consent Solicitation (which they were not involved in the negotiation of). Accordingly, the Agents urge holders of the Existing Notes who are in doubt as to the impact of the implementation of the Exchange Offer and Consent Solicitation (including any tax consequences) to seek their own independent advice. The Agents have not made and will not make any assessment of the merits of the Exchange Offer and Consent Solicitation or of the impact of the Exchange Offer and Consent Solicitation on the interests of any other party including holders of the Existing Notes either as a class or as individuals. The entry into the Amended Indenture (as defined herein) and the issuance of the Exchange Notes with Warrants and following instructions pursuant to the Amended Indenture and the Exchange Notes with Warrants will not require the Agents to, and the Agents shall not, consider the interests of any other party including the holders of the Existing Notes either as a class or as individuals. The Agents will assess any direction they are given hereunder in accordance with their rights and duties under the documents which govern their relationship with the holders of the Existing Notes, to the extent applicable and Novasep, including the Indenture. xi

12 PRESENTATION OF FINANCIAL AND OTHER INFORMATION Novasep s audited consolidated financial statements as of and for the years ended December 31, 2014 (including comparative financial statements for the year ended December 2013) and December 31, 2015 are incorporated by reference in this Exchange Offer and Consent Solicitation Statement and English translations thereof are attached hereto as Annex C and Annex B, respectively. Other than the consolidated interim financial statements as of and for the six months ended June 30, 2016, the financial statements of Novasep, and the statutory auditors reports related thereto, incorporated by reference in this Exchange Offer and Consent Solicitation Statement or attached hereto, are uncertified English translations and were originally issued in French and are provided solely for the benefit of English-speaking users. The audited consolidated financial statements as of and for the years ended December 31, 2014 and December 31, 2015 of Novasep have been prepared in accordance with IFRS as adopted by the EU ( IFRS ). The consolidated interim financial statements as of and for the six months ended June 30, 2016 of Novasep have been prepared in accordance with IFRS as adopted in the European Union and have been subject to a limited review by our auditors in accordance with the professional standards applicable in France and are also incorporated by reference in this Exchange Offer and Consent Solicitation Statement and an English original thereof is attached hereto as Annex A. On October 1, 2014, Novasep completed the divestiture of the Bahamian facility and related business of its wholly-owned subsidiary, Pharmachem Technologies (Grand Bahama) Ltd ( Pharmachem ), to a local investor. In accordance with the prescriptions of IFRS 5, the 2014 consolidated income statement and consolidated statement of cash flows, and the comparative data for the year 2013 included in those statements, are presented excluding the Pharmachem business, which is disclosed in these statements as discontinued operations. Our consolidated financial statements are presented in Euros. Certain numerical figures set out in this Exchange Offer and Consent Solicitation Statement, including financial data presented in millions or thousands and percentages describing market shares, have been subject to rounding adjustments and, as a result, the totals of the data in this Exchange Offer and Consent Solicitation Statement may vary slightly from the actual arithmetic totals of such information. Our financial information is prepared in accordance with our internal financial reporting procedures. You should exercise caution in comparing our financial information directly with that of other companies (including our competitors) as other companies may use differing accounting standards for differing purposes and items are often calculated in ways that reflect the circumstances of those companies. This Exchange Offer and Consent Solicitation Statement contains non-ifrs measures and ratios, including EBITDA (defined as Adjusted EBITDA less other non-recurring net expenses) and Adjusted EBITDA (defined as Operating income plus depreciation of fixed assets) that are not required by, or presented in accordance with, IFRS. We present non-ifrs measures because we believe that they and similar measures are widely used by certain investors, securities analysts and other interested parties as supplemental measures of performance and liquidity. The non-ifrs measures may not be comparable to other similarly-titled measures of other companies and have limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of our operating results as reported under IFRS. Non-IFRS measures such as EBITDA and Adjusted EBITDA are not measurements of our performance or liquidity under IFRS and should not be considered as alternatives to operating income or net profit or any other performance measures derived in accordance with IFRS or any other generally accepted accounting principles or as alternatives to cash flow from operating, investing or financing activities. You should also refer to our annual reports to our bondholders for the years ended December 31, 2014 and December 31, 2015 and our interim report for the six months ended June 30, 2016 which are incorporated by reference into this Exchange Offer and Consent Solicitation Statement. See Incorporation of Certain Documents by Reference. xii

13 CURRENCY PRESENTATION AND EXCHANGE RATE INFORMATION In this Exchange Offer and Consent Solicitation Statement, all references to Euro, EUR or are to the single currency of the participating member states of the European and Monetary Union of the Treaty Establishing the European Community, as amended from time to time, and all references to U.S. Dollars, USD and $ are to the lawful currency of the United States of America. The following table sets forth, for the periods set forth below, the high, low, average and period end Bloomberg Composite Rate expressed as U.S. Dollars per The Bloomberg Composite Rate is a best market calculation, in which, at any point in time, the bid rate is equal to the highest bid rate of all contributing bank indications and the ask rate is set to the lowest ask rate offered by these banks. The Bloomberg Composite Rate is a mid-value rate between the applied highest bid rate and the lowest ask rate. The rates may differ from the actual rates used in the preparation of the consolidated financial statements and other financial information appearing in this Exchange Offer and Consent Solicitation Statement. We do not represent that the U.S. Dollar amounts referred to below could be or could have been converted into Euro at any particular rate indicated or any other rate. The average rate for a year means the average of the Bloomberg Composite Rates on the last day of each month during a year. The average rate for a month, or for any shorter period, means the average of the daily Bloomberg Composite Rates (New York) during that month, or shorter period, as the case may be. The Bloomberg Composite Rate of the Euro on September 23, 2016 was $ per U.S. Dollars per 1.00 Average High Low Period End Year Month January February March April May June July August September 2016 (through September 23) xiii

14 Overview SUMMARY Through the Refinancing, we will be able to reprofile our capital structure to improve our liquidity position and enhance our capital levels, while providing adequate time to execute our business strategy. Upon the terms and subject to the conditions set forth in this Exchange Offer and Consent Solicitation Statement and the accompanying Letter of Transmittal (and the Accession Agreement and Power of Attorney attached thereto), we are offering holders of Existing Notes the opportunity to exchange their Existing Notes for the Exchange Notes with Warrants plus a cash payment, as described herein. To receive the Exchange Consideration, a holder of Existing Notes will need to deliver both an Electronic Exchange Instruction and a properly completed and fully executed Letter of Transmittal, which shall include the Accession Agreement to the Novasep securityholders agreement originally dated March 15, 2012 (the Novasep Securityholders Agreement ), as well as a power of attorney in favor of Novasep to execute amendments to the Novasep Securityholders Agreement that may be required in the context of this Refinancing to make the Novasep Securityholders Agreement consistent with the terms and conditions of this Refinancing as contemplated by this Exchange Offer and Consent Solicitation Statement. In order to consummate the Refinancing on the terms set forth herein, we will need the Consent Solicitation to achieve the Success Threshold, meaning we will need at least 90% of the total outstanding principal amount of the Existing Notes held by persons other than Novasep or any of its Affiliates (as defined in the Indenture and further described herein) to grant Consents. If the Consent Solicitation achieves the Success Threshold, non-tendering holders of Existing Notes will remain holders of the Existing Notes but in amended form. In such amended form, the principal and interest rate of the Existing Notes will be significantly reduced, the maturity date will be extended, substantially all restrictive covenants and events of default will be removed and the Existing Notes will no longer have the benefit of any guarantee or collateral, among other amendments. See Proposed Amendments (Successful Consent Solicitation) and Summary Summary Comparison of the Existing Notes Versus the Amended Existing Notes. Cornerstone Bondholders holding approximately 75.6% of the total principal amount of the Existing Notes have agreed to tender their Existing Notes to support the Refinancing; however, the Cornerstone Bondholders are Affiliates of Novasep for purposes of the Consent Solicitation integrated with the Exchange Offer and their participation will not contribute to the Success Threshold defined herein for purposes of the Consent Solicitation. See The Exchange Offer and Consent Solicitation Affiliates. The participation of the Cornerstone Bondholders nevertheless demonstrates the support of a major contingent of our creditor group for the Refinancing and the Contingency Plan (as defined in The Refinancing Unsuccessful Exchange Offer Contingency Plan ) that may be pursued if the Exchange Offer and Consent Solicitation contemplated by this Exchange Offer and Consent Solicitation Statement are not successful and we choose to pursue the Contingency Plan. If the Consent Solicitation fails to achieve the Success Threshold, we will not be able to implement the Proposed Amendments (Successful Consent Solicitation) through the Consent Solicitation and Novasep or other members of the Novasep group may have to initiate French safeguard proceedings (procédure de sauvegarde) or some other form of pre-insolvency or insolvency proceedings. See The Refinancing Unsuccessful Exchange Offer Contingency Plan. Our Business We are a leading global provider of integrated purification and manufacturing solutions to pharmaceutical and other life science industries. Our customers in the life science industries require specific ingredients that are either derived from living organisms (biomolecules) or synthetically produced (synthetic molecules) for the production of their end-products. To support our customers 1

15 ingredient needs, we develop and use a broad portfolio of technologies to develop manufacturing solutions, provide both custom manufacturing services (outsourcing solutions) and purification processes (in-sourcing solutions). Our offerings help our customers enhance product quality, reduce production costs and shorten time-to-market. We operate through three complementary business units ( BUs ): Synthesis, Biopharma and Industrial Biotech. The Synthesis BU uses a large range of chemical synthesis and purification technologies to develop and produce high value-adding active ingredients and advanced intermediates for the pharmaceutical, crop science and other fine chemical industries. Our Biopharma BU develops and supplies innovative purification equipment for the pharmaceutical and biopharmaceutical industries and provides contract manufacturing services for biopharmaceuticals. The Industrial Biotech BU is based on a central engineering platform which is organized around two main offerings: design and supply of single and combined purification units for our clients in-sourcing needs, and also complete process lines that provide turn-key, comprehensive engineering solutions for our clients insourcing needs and is characterized by much larger projects. We believe we are well positioned to develop and provide complete purification processes for the industrial biotechnology industry. Our business units marketing and technological expertise are integrated: we select among our technologies the best combination to provide the most time-efficient, cost-efficient and/or environmentally friendly manufacturing process for our customers. Background In 2010, Novasep faced challenging market conditions and a steady decline in sales from historical products in the synthesis segment. While Novasep reported consolidated results for 2010 in line with the guidance provided at the time of its immediately preceding earnings release, it published, together with the 2010 results, anticipated lower earnings guidance for the year 2011 and began to engage in discussions with the holders of its two series of existing high-yield notes issued in 2009 (the 2009 Notes ) with respect to a potential restructuring. Novasep completed a major restructuring transaction in March 2012 (the 2012 Restructuring ), pursuant to a consensual restructuring agreement that was signed on December 14, 2011, between Novasep, its main bondholders, its financial shareholders and Bpifrance Financement, a French société anonyme incorporated under no RCS Créteil with its registered office at 27-31, avenue du Général Leclerc, Maisons-Alfort France, (previously Fonds Stratégique d'investissement, the French strategic investment fund) ( Bpifrance ). Under the terms of the 2012 Restructuring, holders of the 2009 Notes were offered the opportunity to exchange their 2009 Notes for equity securities and the Existing Notes. Bondholders representing over 99% of the total principal amount of the 2009 Notes participated in the exchange, thereby enabling Novasep to significantly reduce its debt from approximately 415 million to approximately 150 million (denominated in USD, for an amount of $195.2 million) and its cash interest expenses from approximately 40 million to approximately 12 million per year (8% interest rate). In addition, new investments were provided by Bpifrance in the amount of 30 million (in exchange for B Preference Shares (as defined herein)), and by Middle Market Fund III (represented by its management company, Azulis Capital) ( Azulis ), one of Novasep's financial shareholders, in the amount of 3 million (in exchange for ordinary shares of Novasep). In 2013, Novasep announced the appointment of Michel Spagnol as its new President and CEO. Prior to joining Novasep, Mr. Spagnol was President and Chief Technology Officer at Shasun and was also a former executive at Rhodia (Lyon, France) and Cranbury (New Jersey, USA). Whereas Novasep had used acquisitions for growth in the past, after Mr. Spagnol s arrival, Novasep implemented a new strategy that focused on rebuilding Novasep s core by developing the Back to Basics strategy. Over the past two years, Novasep has made progress on this strategy. On October 1, 2014, Novasep sold all outstanding shares of its wholly-owned subsidiary PharmaChem, which reduced the size of the Group and modified its financial profile. Because Novasep does not expect to have the funds available to repay the amounts owed under the Existing Notes in December 2016, Novasep has considered refinancing the Existing Notes and has explored the options under which such a refinancing could be effected since the second half of

16 To this end, banks and other financing providers have been approached and advisors have been retained. Discussions between Novasep and certain shareholders have also occurred, with the goal of increasing the likelihood of success of Novasep s refinancing and proposing a transaction that Novasep believes is in its best corporate interest and fair to all of its stakeholders, including the holders of the Existing Notes and its shareholders. Following these discussions, Novasep, certain of its shareholders and certain holders of its Existing Notes entered into various agreements to formalize their understanding as to the principles governing the Refinancing, the steps to be followed to implement the Refinancing, and the undertakings to effect the Refinancing. These agreements include: The Cornerstone Bondholders Commitment, pursuant to which the Cornerstone Bondholders holding approximately 75.6% of the principal amount of the Existing Notes agreed, inter alia, to a lock-up and agreed to tender their Existing Notes in the Exchange Offer and to waive the Cash Payment with respect to their Existing Notes or return to Novasep any Cash Payment received in respect thereof; The NVHL Commitment (as defined herein), pursuant to which NVHL (as defined herein) agreed, inter alia, to support the issuance of the Exchange Notes with Warrants, the proposed amendment to the terms and conditions of the B Preference Shares to increase the Taux Applicable of the B Preference Shares by 100 basis points, from 13% per annum to 14% per annum, and certain dividend distributions; The BPI Commitment (as defined herein), pursuant to which Bpifrance agreed, inter alia, to support the proposed amendment to the terms and conditions of the B Preference Shares to increase the Taux Applicable of the B Preference Shares by 100 basis points, from 13% per annum to 14% per annum and certain dividend distributions, as well as to waive its antidilution rights under the Novasep Securityholders Agreement with respect to the Refinancing; and Agreements among Novasep, NVHL and Bpifrance formalizing the parties agreement with respect to a payment protection for Bpifrance as described in The Refinancing Agreement on Ranking and Condition 2 Status in Terms and Conditions of the Exchange Notes and with respect to the dividend distributions described below in Principal Terms of the Refinancing. Principal Terms of the Refinancing The Refinancing will principally consist of the following steps: Novasep will offer holders of Existing Notes the opportunity to exchange their Existing Notes for Exchange Notes with Warrants (obligations à bons de souscription d actions) plus a cash payment pursuant to the Exchange Offer and Consent Solicitation. For each $1,000 principal amount of Validly Tendered Existing Notes (as defined below) that is accepted for exchange, tendering holders will receive: Exchange Notes in a principal amount equal to the Euro Equivalent of $1,000 plus accrued but unpaid interest on such Existing Notes. The Exchange Notes will mature on the Maturity Date and will pay 5% interest per annum in cash on the Senior Outstanding Principal Amount (as defined herein) of the Exchange Notes, payable quarterly in arrears, as well as an additional (i) 3% Senior Capitalized Interest (as defined herein) per annum on the Senior Outstanding Principal Amount of the Exchange Notes, which interest will be capitalized on each anniversary of the Closing Date and be payable on the Maturity Date and (ii) (A) 3% Junior 1 Capitalized Interest (as defined herein) per annum on the Senior Outstanding Principal Amount of the Exchange Notes, which interest will 3

17 be capitalized annually on each anniversary of the Closing Date and (B) 11% Junior 2 Capitalized Interest (as defined herein) per annum on the Junior Capitalized Amounts (as defined herein) of the Exchange Notes, which interest will be capitalized annually on each anniversary of the Closing Date starting with the second anniversary of the Closing Date, and in each case which Junior Capitalized Interest shall be payable on the Maturity Date, subject to the prior payment in full to Bpifrance of the Blockage Payment (as defined and more fully described in Condition 2 Status in Terms and Conditions of the Exchange Notes ); 300 Warrants (initially attached to the Exchange Notes). The Warrants will detach from the Exchange Notes immediately upon issue on the Closing Date. Each Warrant will entitle its holder, subject to certain conditions, to subscribe for one newly-issued ordinary share of Novasep at an exercise price per newly-issued ordinary share equal to the ordinary share par value at the time of exercise (such par value being equal to Euro on the Closing Date) (any such ordinary share issued upon exercise of a Warrant, a Warrant Share ). Warrants that have not been exercised will expire on the Maturity Date; a cash payment. The cash consideration for each $1,000 principal amount of Validly Tendered Existing Notes that is accepted for exchange shall be $5. In addition, for Existing Notes that are Validly Tendered on or prior to the Early Deadline and accepted for exchange, an additional cash payment of $5 shall be paid for each $1,000 of principal amount of such Validly Tendered Existing Notes accepted for exchange. These cash payments shall be paid directly through Euroclear or Clearstream, as applicable, for the account of the relevant holders of Existing Notes. The Cornerstone Bondholders have agreed to waive the Cash Payment with respect to their Existing Notes or return to Novasep any Cash Payment received in respect thereof; upon receipt of Consents with respect to at least 90% of the total outstanding principal amount of the Existing Notes held by persons other than Novasep or any of its Affiliates (as defined in the Indenture), the Indenture governing the Existing Notes will be amended to significantly reduce the principal and interest rate thereunder, extend the maturity date thereof, eliminate or amend substantially all of the restrictive covenants, modify certain of the events of default and amend various other provisions contained in the Indenture and the Existing Notes and release the guarantees and collateral which secure the Existing Notes, as more fully described in Proposed Amendments (Successful Consent Solicitation). By validly tendering Existing Notes in the Exchange Offer (or solely delivering an Electronic Exchange Instruction), a holder will be deemed to have also delivered a valid Consent; except to the limited extent described herein, holders will not be permitted to deliver Consents without tendering their Existing Notes for exchange. Novasep will pay, after the closing of the Refinancing, a dividend to holders of its ordinary shares in an aggregate amount equal to 2 million and a 2 million dividend to the holder of its B Preference Shares, in each case by way of a distribution of share premium. Holders of Warrant Shares, however, will not be entitled to these dividends; the terms and conditions of the B Preference Shares will be amended, inter alia, to increase the Taux Applicable of the B Preference Shares by 100 basis points, from 13% per annum to 14% per annum, and the Novasep Securityholders Agreement may consequently be amended to reflect the amended terms of the B Preference Shares, as well as other adjustments to reflect the terms of the Refinancing as set forth in this Exchange Offer and Consent Solicitation Statement; and certain shareholders who do not hold Existing Notes will be given the right to purchase Exchange Notes with Warrants at a price equal to 100% of the principal amount of such Exchange Notes in proportion to their respective shareholding in Novasep prior to the Refinancing. Any such purchases will be in addition to the Exchange Notes with Warrants 4

18 issued in exchange for the Existing Notes, and will increase the aggregate principal amount of Exchange Notes outstanding and the number of Warrants outstanding following the Refinancing. Each of NVHL and Bpifrance will undertake actions to cause, and reasonable efforts to permit, a sale process beginning in the first quarter of 2017 (subject to certain conditions) for the purpose of identifying potential buyers for all of Novasep s equity or assets (the Sale Process ). It is expected that Novasep will request the President of the Court of Dijon to appoint a Supervisor (Rapporteur) to supervise the Exchange Offer and Consent Solicitation and to report back to such court at the consummation of the Exchange Offer and Consent Solicitation. Contingency Plan If, by the Expiration Date, the Consent Solicitation has not achieved the Success Threshold, then Novasep or other members of the Novasep Group may have to initiate French safeguard proceedings (procédure de sauvegarde) or some other form of pre-insolvency or insolvency proceedings, which involves uncertainties, potential delays, and litigation risks. See The Refinancing Unsuccessful Exchange Offer Contingency Plan. 5

19 Summary Corporate Structure The following diagram sets forth our simplified corporate structure following the Exchange Offer and Consent Solicitation. NVHL is NVHL S.A., a Luxembourg public limited liability company (société anonyme) established for the purpose of holding the Novasep shares issued by Novasep in the 2012 Restructuring, and which at the time of closing of the 2012 Restructuring owned 97.69% (on a non-diluted basis) of the ordinary shares issued by Novasep. The equity owners of NVHL primarily comprise the bondholders that exchanged their bonds for the Existing Notes in the 2012 Restructuring. Free Shares (to be issued) Consenting Bondholders RMN Romafi Management Manco Company warrants Exchange Notes with Warrants NVHL (Luxembourg) ordinary shares 97.69% Preference shares with warrants attached 2.31% ordinary shares Bpifrance FSI Azulis 2009 Bondholders (who did not exchange) 2009 Notes Novasep Holdings (France) 100% Amended Notes Non- consenting Bondholders Groupe Novasep (France) Novasep Deutschland GmbH (Germany) 100% 100% Novasep Process (France) Finorga (France) Seripharm (France) Henogen SA (Belgium) DNES GmbH (Germany) French tax integrated group Equity Debt 6

20 Summary of the Refinancing Below is a summary of the principal features of the Refinancing. Please see The Refinancing for more information. Tendering and Consenting Holders Eligible tendering and consenting holders of Existing Notes will receive Exchange Notes with Warrants and the applicable Cash Payment (the Exchange Consideration ) in exchange for Validly Tendered Existing Notes that are accepted for exchange. Non-Tendering and Non- Consenting Holders If the Consent Solicitation achieves the Success Threshold, non-tendering holders of Existing Notes will hold Amended Existing Notes. Capital Structure of Novasep following Refinancing Ordinary Shares: The ordinary shares issued by Novasep will be held as follows: (i) 97.69% by NVHL, and (ii) 2.31% by Azulis, the foregoing subject to dilution by (a) the existing Management Incentive Plan (as defined herein) as it may be further amended in the context of the Refinancing and, as the case may be, the Sale Process, (b) the warrants attached to the B Preference Shares, (c) the Romafi warrants and (d) the Warrants. Exchange Notes with Warrants attached (obligations à bons de souscription d actions): holders of the Exchange Notes will hold 100% of the Warrants; if 100% of the Existing Notes are tendered pursuant to the Exchange Offer and accepted for exchange, 58,549,200 Warrants would be issued pursuant to the Exchange Offer, which represent the right to subscribe for ordinary shares of Novasep representing up to approximately 25% of the ordinary share capital of Novasep after taking into account the potential dilution resulting from the BSA A, BSA B and C Shares according to their terms and conditions, on the basis of an estimate of Novasep equity value as of today, but for the avoidance of doubt, without accounting for any adjustments to securities that may be triggered by certain operations within the context of the Refinancing. B Preference Shares with warrants attached: Bpifrance owns 100% of the B Preference Shares issued by Novasep with warrants attached (which entitle the holder thereof to up to 5% of the equity value of Novasep). The exercise price of the warrants attached to the B Preference Shares is equal to 293,604,000 / 171,135,849 less the amount of any distribution of dividends, reserves or premiums made by the Company to holders of ordinary shares as from March 15, Management Free Shares: Novasep has adopted the Management Incentive Plan (as defined herein) pursuant 7

21 to which certain of the managers of Novasep and its subsidiaries and affiliates have been and may be granted Free Shares (as defined below) (within the maximum limit to 10,000 Free Shares). As of June 30, 2016, Novasep has issued to Managers (as defined in the Novasep Securityholders Agreement) 4,726 C Shares (as defined below) in the context of this Management Incentive Plan. It is expected that part of the C Shares will be contributed to the Management Company following the Closing Date. Romafi Warrants: Pursuant to the Management Incentive Plan, Romafi ( Romafi ), a Luxembourg société anonyme represented by the former President of Novasep, Roger-Marc Nicoud, subscribed on March 14, 2012, for 100 management warrants to subscribe to ordinary shares of Novasep upon a change of control or an initial public offering of the securities of Novasep or NVHL. The exercise price of such management warrants is 0.05 EUR. Under certain circumstances, holders of the Free Shares and warrants issued under the Management Incentive Plan may receive between 0% and 20% of the equity value of Novasep (other than the B Preference Shares held by Bpifrance) upon an Exit (as defined below), subject to legal and contractual adjustments which may be triggered by certain operations within the context of the Refinancing based on the modification of the allocation of benefits between each of the share classes. 8

22 Summary Comparison of the Existing Notes Versus the Amended Existing Notes The following summarizes certain differences between the Existing Notes and the Amended Existing Notes that non-tendering holders of Existing Notes will hold as a result of the Exchange Offer and Consent Solicitation in the event that the Success Threshold is achieved. This comparison is provided for convenience only, and you should review the full description of the Proposed Amendments (Successful Consent Solicitation) in the section Proposed Amendments (Successful Consent Solicitation). Principal Amount and Accrued and Unpaid Interest Interest Rate Interest Payment Existing Notes Principal amount is $195,164,000 with unpaid interest having accrued thereon. Interest rate for the Existing Notes is 8.00% per annum. Cash only. Amended Existing Notes The principal amount of each Existing Note will be reduced to 25% of its original principal amount and all accrued but unpaid interest to the date of the amendment will be cancelled. 1.00% per annum Novasep will be permitted to elect to pay interest (i) in cash or (ii) by increasing the principal amounts of the Existing Notes by an amount equal to the amount of cash interest that would otherwise be payable ( PIK Interest ) on the Amended Existing Notes and thereby increase, without the consent of holders, the outstanding principal amount under the Amended Existing Notes pursuant to the Amended Indenture. Maturity December 15, December 15, 2032 Guarantees Guaranteed. No guarantee. Security Secured. Unsecured. Ranking Senior Indebtedness. The Amended Existing Notes will be subordinated to all Senior Indebtedness (as defined herein), including the Exchange Notes. Covenants Contain restrictive covenants. Restrictive covenants eliminated. Change of Control Events of Default Contain change of control put right. Contain multiple events of default. Any obligation to make an offer to repurchase upon change of control will be eliminated. Events of default removed except with respect to obligation to pay interest, principal, or premium, if any. 9

23 Summary of the Exchange Offer and Consent Solicitation Below is a summary of the principal features of the Exchange Offer and Consent Solicitation. Please see the information contained throughout this Exchange Offer and Consent Solicitation Statement, and in particular Use of Proceeds, The Refinancing," The Exchange Offer and Consent Solicitation, Proposed Amendments (Successful Consent Solicitation), Terms and Conditions of the Exchange Notes, Terms and Conditions of the Warrants, Taxation, Exchange Agent and Information Agent, and Transfer Restrictions for more information. Background The Exchange Offer The Exchange Notes with Warrants will form part of the Exchange Consideration for the 8% Senior Secured Notes due 2016, originally issued by the Company in All holders of the Existing Notes will be permitted to participate in the Exchange Offer; provided, that they agree to execute the Letter of Transmittal (including the attachments thereto) and represent and warrant, among other things, that they are (i) either (A) a QIB (as defined in Rule 144A) that is acquiring the Exchange Notes, the Warrants and the Warrant Shares for its own account or for a discretionary account or accounts on behalf of one or more QIBs or (B) acquiring the Exchange Notes, the Warrants and the Warrant Shares in offshore transactions as defined in, and in accordance with, Regulation S; (ii) if they are in France, investisseurs qualifiés as defined under French law; and (iii) if they are in a member state of the European Union, a qualified investor under the Prospectus Directive. You should read the discussion under the heading The Refinancing. We are offering holders of Existing Notes the opportunity to exchange their Existing Notes for Exchange Notes with Warrants (obligations à bons de souscription d actions) plus a cash payment. The principal amount of Exchange Notes issued to a participating holder will be equal to the Euro Equivalent of each $1,000 principal amount of the Existing Notes tendered by such holder plus accrued but unpaid interest thereon. For each $1,000 principal amount of Validly Tendered Existing Notes that is accepted for exchange, 300 Warrants will be attached to the Exchange Note that is issued in exchange therefor. The Warrants will detach from the Exchange Notes immediately upon issue on the Closing Date. Each Warrant will entitle its holder, subject to certain conditions, to subscribe for one newly-issued ordinary share of Novasep at an exercise price per newly-issued ordinary share equal to the ordinary share par value at the time of exercise (such par value being equal to Euro on the Closing Date). Warrants that have not been exercised will expire on the Maturity Date. Each holder that validly tenders Existing Notes that are accepted for exchange pursuant to the Exchange Offer will also receive the applicable Cash Payment. The cash consideration for each $1,000 principal amount of Validly Tendered Existing Notes accepted for exchange shall be the Tender Cash Consideration. In addition, for Existing Notes that are Validly Tendered on or prior to the Early Deadline and accepted for exchange, an additional cash payment equal to the Early Tender Cash Consideration shall be paid for each $1,000 of principal amount of such Validly Tendered Existing Notes accepted for exchange. The Cash Payment 10

24 shall be paid directly through Euroclear or Clearstream, as applicable, for the account of the relevant holders of Existing Notes. The Cornerstone Bondholders have agreed to waive the Cash Payment with respect to their Existing Notes or return to Novasep any Cash Payment received in respect thereof. Denominations of Exchange Notes The Consent Solicitation The Exchange Notes will be issued in denominations equal to the Euro Equivalent of the principal amount of, plus the accrued and unpaid interest on, the Existing Notes exchanged therefor, subject to a minimum denomination of 1. There is no requirement for an individual holder to tender a minimum principal amount of Existing Notes in the Exchange Offer, provided, however, that, in the event a tendering and consenting holder would otherwise be entitled to receive pursuant to the Exchange Offer an Exchange Note in a principal amount that is not a whole multiple of 1, the principal amount of such Exchange Note will be rounded down to the next whole multiple of 1 and no cash or other consideration will be delivered to such holder for or in lieu of such rounded down amount. Novasep is soliciting Consents from holders of the Existing Notes with respect to various amendments to the Indenture and the Existing Notes, in order to facilitate the Refinancing on the terms set forth herein. If the Consent Solicitation achieves the Success Threshold, an amended or supplemental indenture relating to the Existing Notes that gives effect to the Proposed Amendments (Successful Consent Solicitation) will be executed as of the Closing Date. If the Consent Solicitation fails to achieve the Success Threshold or should any conditions of the Exchange Offer and Consent Solicitation set forth under The Exchange Offer and Consent Solicitation Conditions to the Exchange Offer not be satisfied or waived, Novasep or other members of the Novasep Group may have to initiate French safeguard proceedings (procédure de sauvegarde) or some other form of pre-insolvency or insolvency proceedings. You should read the discussion under the heading Proposed Amendments (Successful Consent Solicitation) for further information regarding the Consent Solicitation. Withdrawal Deadline Expiration Date Tenders and consents in respect of Existing Notes may be withdrawn at any time prior to 5:00 p.m., New York City time, on October 25, 2016 (the Withdrawal Deadline ), unless the Withdrawal Deadline is extended or reinstated, in which case the Withdrawal Deadline means the latest time and date to which it is so extended or reinstated. A valid withdrawal of tendered Existing Notes and related consents requires a withdrawal prior to the Withdrawal Deadline. The Exchange Offer will expire at 5:00 p.m., New York City time, on October 25, 2016 unless we extend or terminate the Exchange Offer, in which case the Expiration Date will mean the latest date and time to which we extend the Exchange Offer and the latest time 11

25 by which a properly completed and fully executed original Letter of Transmittal (including the attachments thereto) must be received by the Exchange Agent. Early Deadline Closing Date Conditions to the Exchange Offer Support for the Refinancing Procedures for Validly Tendering In order to receive the Early Tender Cash Consideration, Exchange Notes must be Validly Tendered and all necessary instructions and documentation received by the Exchange Agent as of or prior to 5:00 p.m., New York City time, on October 7, 2016 unless we extend such early tender period, in which case the Early Deadline will mean the latest date and time to which we extend the early tender period. The closing date of the Exchange Offer and Consent Solicitation will be as soon as practicable after the Expiration Date. Our obligation to consummate the Exchange Offer is subject to certain conditions, which we may assert or waive. See The Exchange Offer and Consent Solicitation Conditions to the Exchange Offer. Cornerstone Bondholders holding approximately 75.6% in aggregate principal amount of Existing Notes have agreed to tender their Existing Notes and to support the Refinancing; however, the Cornerstone Bondholders are Affiliates of Novasep for purposes of the Consent Solicitation and their participation will not contribute to the Success Threshold defined herein for purposes of the Consent Solicitation. See The Exchange Offer and Consent Solicitation Affiliates. The participation of the Cornerstone Bondholders nevertheless demonstrates the support of a major contingent of our creditor group for the Refinancing and the Contingency Plan that may be pursued if the Exchange Offer and Consent Solicitation contemplated by this Exchange Offer and Consent Solicitation Statement are not successful. If you elect to have your Existing Notes exchanged pursuant to this Exchange Offer, you must Validly Tender your Existing Notes prior to 5:00 p.m., New York City time, on the Expiration Date. To Validly Tender their Existing Notes, each holder of Existing Notes must, no later than the Expiration Date: submit an Electronic Exchange Instruction via Euroclear or Clearstream (as defined below); and properly complete a Letter of Transmittal and return an executed wet ink original to the Exchange Agent in physical form (including the Accession Agreement and Power of Attorney attached thereto) containing a Unique Instruction Reference, as defined below. The Unique Instruction Reference is, in the case of Existing Notes held directly through: Euroclear: the worksheet reference obtained when the Euroclear direct participant instructs Euroclear in 12

26 respect of the Exchange Offer and Consent Solicitation; and Clearstream: the reference allocated by Clearstream when such direct participant instructs Clearstream in respect of the Exchange Offer and Consent Solicitation. Each Letter of Transmittal must include the Unique Instruction Reference obtained from either of Euroclear or Clearstream which identifies such holder s position in the Existing Notes. Any questions in respect of this Unique Instruction Reference should be addressed to the Exchange Agent. Failure to receive the Exchange Consideration due to a holder s failure to complete all of the steps outlined herein to validly tender will render such holder s tender defective and such holder will not receive the Exchange Consideration. Such holders invalidly-tendered Existing Notes will be rejected or returned to it and Novasep shall make no payment to it in respect of the Exchange Consideration. Novasep will have the right to deem such tender to be a delivery of the Consents with respect to the relevant Existing Notes notwithstanding that such Existing Notes are not accepted for exchange, and no consideration will be provided in lieu of the Exchange Consideration. In the event that the Consent Solicitation achieves the Success Threshold, any such holders will thus hold Amended Existing Notes by virtue of the Proposed Amendments (Successful Consent Solicitation), which will be materially less valuable than the Existing Notes. Holders of Existing Notes are advised to check with any bank, securities broker or other intermediary through which they hold Existing Notes regarding when such intermediary would need to receive instructions from a beneficial owner of Existing Notes in order for that beneficial owner to be able to participate in, or withdraw their instruction to participate in, the Exchange Offer by the deadlines specified in this Exchange Offer and Consent Solicitation Statement. The deadlines set by any such intermediary and by Euroclear and Clearstream for the submission and withdrawal of instructions will be earlier than the relevant deadlines specified in this Exchange Offer and Consent Solicitation. For more details, please read The Exchange Offer and Consent Solicitation Terms of the Exchange Offer and Consent Solicitation and The Exchange Offer and Consent Solicitation Procedures for Tendering Existing Notes and Delivery of Consents. All Existing Notes Validly Tendered and not properly withdrawn are expected to be accepted for exchange. Consequences of Failure to Exchange If we successfully complete the Exchange Offer and Consent Solicitation and you do not participate in it, then your Existing Notes will be subject to the amendments effected as part of the Consent Solicitation, including the reduction of principal, reduction of the interest rate and 13

27 permitting Novasep to pay interest in kind, an extension of the maturity date, and the elimination of the guarantees and security. See Proposed Amendments (Successful Consent Solicitation) and Summary Summary Comparison of the Existing Notes Versus the Amended Existing Notes. In addition, the liquidity of the market for your Existing Notes could be adversely affected. See Risk Factors Risks Related to the Exchange Offer If the Exchange Offer is consummated, there will be less liquidity in the market for non-tendered Existing Notes, and the market prices for non-tendered Existing Notes may therefore decline and the volatility of such prices may increase and Risk Factors Risks Related to the Exchange Offer If the Exchange Offer is consummated, proposed amendments to the debt instruments governing the Existing Notes and the Indenture will reduce the protections afforded to non-tendering holders of Existing Notes. U.S. Taxation European Taxation Use of Proceeds Exchange Agent For a general discussion of certain tax consequences of an investment in the Exchange Notes with Warrants, see Taxation Certain U.S. Federal Income Tax Consequences of Refinancing. For a general discussion of certain tax consequences of an investment in the Exchange Notes with Warrants see Taxation Certain French Tax Considerations. We will not receive any cash proceeds from the issuance of the Exchange Notes with Warrants in the Exchange Offer. Lucid Issuer Services Limited is the Exchange Agent for the Exchange Offer and Consent Solicitation. 14

28 Summary of the Exchange Notes and Warrants Below is a summary of the principal terms and conditions of the Exchange Notes and the Warrants. It is qualified in its entirety by reference to the full terms and conditions of the Exchange Notes and the Warrants, respectively. Please see Terms and Conditions of the Exchange Notes and Terms and Conditions of the Warrants for more information. EXCHANGE NOTES Issuer Exchange Notes Novasep Holding S.A.S. Issue outside of the Republic of France of euro-denominated unsecured notes due May 31, 2019 (the Maturity Date ) in an aggregate principal amount equal to the Euro Equivalent of up to $195,164,000 plus accrued and unpaid interest on the Existing Notes up to, and including, the Issue Date (as defined below) (the Exchange Notes ), to which will be attached warrants (bons de souscription d actions) (each such warrant, a Warrant ). The Euro Equivalent means the amount of Euros obtained by converting the relevant amount of U.S. dollars into Euros at the spot rate for the purchase of Euros with U.S. Dollars as published under Currency Rates in the section of the Financial Times entitled Currencies, Bonds & Interest Rates on the third (3rd) Business Day prior to the Issue Date (as defined below), with the resulting amount being rounded down to the nearest denomination of 1 and no cash or other consideration delivered to the holder in lieu of such rounded down amount). Issue Date Form, Denomination and Title The Exchange Notes will be issued upon the closing of the Exchange Offer in connection with the refinancing by the Issuer of its financial indebtedness (the date the Exchange Notes are issued, the Issue Date ). The Exchange Notes are issued in dematerialized bearer form (au porteur) in a denomination equal to the Euro Equivalent of $1,000 plus an amount equal to the accrued and unpaid interest as at the Issue Date on the Existing Notes that are exchanged for such Exchange Note pursuant to an exchange offer and consent solicitation (the Exchange Offer ). Three hundred (300) Warrants will be attached to each Exchange Notes. Each Warrant will entitle the holder to subscribe for one (1) ordinary share of the Issuer. Warrants will detach from the Exchange Notes immediately upon issue on the Issue Date. Title to the Exchange Notes will be evidenced by book entries (inscription en compte). The number of Exchange Notes and the final denomination of such Exchange Notes shall be published on the Issuer s website ( at the latest on the Issue Date. To receive Exchange Notes with Warrants on the Issue Date, each investor must submit a duly-executed accession agreement to accede to the Novasep Securityholders Agreement dated March 15, 2012 (as the same may be amended from time to time, the Novasep Securityholders Agreement ) as an Investor, which agreement shall be in 15

29 the form attached to the Letter of Transmittal with respect to the Exchange Notes. By receiving Exchange Notes with Warrants on the Issue Date, each Noteholder will, irrespective of the receipt of the accession agreement, be deemed to have irrevocably agreed to the terms and conditions set forth in the Novasep Securityholders Agreement. Status The principal and interest in respect of the Exchange Notes constitute direct, unconditional, unsecured and unsubordinated obligations of the Issuer and will at all times rank pari passu without any preference among themselves and (subject to such exceptions as are from time to time mandatory under French law) equally and rateably with any other present or future unsecured and unsubordinated obligations of the Issuer; except that (i) the Junior Capitalized Amounts (as defined below) and the Junior Capitalized Interest (as defined below) accrued under the Exchange Notes which has not been capitalized and default interest (if any) accrued thereto (the Junior Amounts ) shall constitute direct, unconditional, unsecured and subordinated obligations of the Issuer and will rank junior to the obligation of the Issuer to pay to Bpifrance the Blockage Payment (as defined and more fully described in Condition 2 Status in Terms and Conditions of the Exchange Notes ) and (ii) on the Maturity Date or the redemption date or purchase date fixed for the Exchange Notes, the Issuer will make payments in respect of any Junior Amounts only to the extent that Bpifrance has previously received since March 15, 2012 in consideration of its B Preference Shares (as defined and more fully described in Condition 2 Status in Terms and Conditions of the Exchange Notes ) an aggregate amount equal to the Blockage Payment (as defined and more fully described in Condition 2 Status in Terms and Conditions of the Exchange Notes ). By subscribing or purchasing any Exchange Notes, Noteholders will be deemed to have accepted the above provisions in respect of Junior Amounts. In the event any Noteholder receives any amount in respect of Junior Amounts before Bpifrance has received an aggregate amount of payment with respect to its B Preference Shares (as defined and more fully described in Condition 2 Status in Terms and Conditions of the Exchange Notes ) (including any amount to be paid to Bpifrance with respect to the B Preference Share Dividend Distribution (as defined in Condition 7 Asset Sales in Terms and Conditions of the Exchange Notes )) equal to the Blockage Payment, any such Noteholder shall be required to turn over and transfer such amount to Bpifrance, at the account designated by Bpifrance. Details of such account shall be available upon request to Bpifrance at the following address: 6-8 boulevard Haussmann, Paris, France. Liens The Issuer will not and will not cause or permit any of its Significant Subsidiaries (as defined in Condition 11 Event of Default in Terms and Conditions of the Exchange Notes ) to, 16

30 directly or indirectly, create, incur, assume or otherwise cause or suffer to exist or become effective any Lien (as defined in Condition 7 Asset Sales in Terms and Conditions of the Exchange Notes ) of any kind securing Indebtedness (as defined in Condition 7 Asset Sales in Terms and Conditions of the Exchange Notes ) or trade payables upon any of their property or assets, now owned or hereafter acquired, except Permitted Liens as defined and more fully described in Condition 3 Liens in the Terms and Conditions of the Exchange Notes. Interest The Exchange Notes shall bear Cash Interest, Senior Capitalized Interest, Junior 1 Capitalized Interest and Junior 2 Capitalized Interest. Cash Interest: the Exchange Notes shall bear cash interest on the Senior Outstanding Principal Amount (as defined below) from, and including, the Issue Date to, but excluding, the Maturity Date at a fixed rate of 5 per cent. per annum (the Cash Interest ) payable quarterly in arrears on May 31, August 31, November 30 and February 28 in each year, commencing on February 28, The amount of Cash Interest payable in respect of each Exchange Note on each Cash Interest Payment Date and in respect of the first Cash Interest Payment Date shall be published on the Issuer s website ( at the latest on the Issue Date. Senior Outstanding Principal Amount means an amount equal to the outstanding principal amount of Exchange Notes from time to time including the aggregate amount of Senior Capitalized Interest which has been capitalized into such outstanding principal amount from time to time and default interest (if any) accrued in respect of Senior Capitalized Interest which has been capitalized in accordance with Condition 4 Interest in Terms and Conditions of the Exchange Notes ). Senior Capitalized Interest: the Exchange Notes shall bear senior capitalized interest on the Senior Outstanding Principal Amount, at a fixed rate of 3 per cent. per annum (the Senior Capitalized Interest ) capitalized annually and payable on the Maturity Date. Such Senior Capitalized Interest shall be compounded annually on the first Capitalized Interest Compounding Date and the second Capitalized Interest Compounding Date and shall be payable on the Maturity Date. Capitalized Interest Compounding Date means each anniversary date of the Issue Date. Outstanding Principal Amount means an amount equal the outstanding principal amount of Exchange Notes, from time to time, including the aggregate amount of Capitalized Interest which has been capitalized into such principal amount of Exchange Notes and default interest (if any) accrued thereon which has been capitalized. Junior Capitalized Interest: The Exchange Notes shall bear 17

31 junior 1 capitalized interest on the Senior Outstanding Principal Amount at the rate of 3 per cent. per annum (the Junior 1 Capitalized Interest ) from, and including, the Issue Date to, but excluding, the Maturity Date and shall bear junior 2 capitalized interest on the Junior Capitalized Amounts (as defined below) from time to time at the rate of 11 per cent. per annum (the Junior 2 Capitalized Interest, together with the Junior 1 capitalized Interest, the Junior Capitalized Interest and together with the Senior Capitalized Interest, the Capitalized Interest ) from and including the first Capitalized Interest Compounding Date to, but excluding, the Maturity Date. Such Junior Capitalized Interest shall be compounded annually on each Capitalized Interest Compounding Date and shall be payable, subject to Condition 2 Status and Condition 4 Interest in Terms and Conditions of the Exchange Notes, on the Maturity Date. Junior Capitalized Amounts mean amounts equal to the Junior Capitalized Interest which has been previously capitalized with respect to an earlier Capitalized Interest Period (as defined in Condition 4(b) Senior Capitalized Interest in Terms and Conditions of the Exchange Notes ) from time to time and default interest (if any) accrued thereon which has been capitalized. In the event the Issuer redeems all, but not some only, of the Exchange Notes prior to the payment in full to Bpifrance of the Blockage Payment, the principal amount of the Exchange Notes will be reduced to an amount equal to the New Junior Outstanding Principal Amount (as defined below) and the Exchange Notes shall bear interest on such New Junior Outstanding Principal Amount at a rate equal to the Junior 1 Capitalized Interest Rate (subject to Condition 11 Event of Default in Terms and Conditions of the Exchange Notes in which case the rate shall equal the Junior 1 Capitalized Interest Rate plus one (1) per cent.) and such interest shall continue to (i) accrue, from, and including, the date of such redemption to, but excluding the date on which the Blockage Payment is made to Bpifrance and the unconditional and irrevocable payment of all amounts due under the Exchange Notes has been made and (ii) be compounded and capitalized annually on each Capitalized Interest Compounding Date. The aggregate amount of Junior Capitalized Interest that has accrued but has not yet been capitalized into the Junior Capitalized Amounts as of the date of such redemption shall be added to the interest that accrues on the New Junior Outstanding Principal Amount in accordance with the terms hereof following such redemption and shall be capitalized into the Junior Capitalized Amounts on the next succeeding Capitalized Interest Compounding Date. In the event the Issuer redeems or purchases only some, but not all, of the Exchange Notes prior to the payment in full to Bpifrance of the Blockage Payment, the Issuer shall issue and deliver at no cost to the Noteholders New Subordinated Exchange Securities (as defined below) in respect of any Junior Amounts outstanding. Following any redemption of all, but not some only, of the 18

32 Exchange Notes, Junior Amounts outstanding from time to time shall become due and payable immediately following and on the same date as that date on which the Blockage Payment is made in full by the Issuer to Bpifrance. New Junior Outstanding Principal Amount means any Junior Capitalized Amounts provided that in the event the Issuer redeems all, but not some only, of the Exchange Notes before the first Capitalized Interest Compounding Date, the New Junior Outstanding Principal Amount on which Junior 1 Capitalized Interest shall be calculated shall be equal, in respect of the period from, and including, the redemption date of the Exchange Notes, to, but excluding, the first Capitalized Interest Compounding Date, to the outstanding principal amount of the Exchange Notes as of such redemption date. New Subordinated Exchange Securities means, in connection with any partial redemption or purchase of Exchange Notes, subordinated securities to be issued by the Issuer (i) which shall constitute direct unconditional, unsecured and subordinated obligations of the Issuer and rank junior to the obligation of the Issuer to pay to Bpifrance an amount equal to the Blockage Payment, (ii) in respect of which the Issuer shall undertake that it will make any payments in respect of such subordinated securities only to the extent that Bpifrance has previously received since March 15, 2012 in consideration of its B Preference Shares (as defined and more fully described in Condition 2 Status in Terms and Conditions of the Exchange Notes ) (including any amount to be paid to Bpifrance with respect to the B Preference Share Dividend Distribution (as defined and more fully described in Principal Terms of the Refinancing and in the The Refinancing-Agreement on Ranking )) an aggregate amount equal to the Blockage Payment, (iii) which shall have a nominal amount equal to the Junior Amounts outstanding on the redemption date or closing date of any exchange or purchase offer in respect of the Exchange Notes, (iv) which shall bear interest at a rate of 3 per cent. per annum compounded and capitalized annually and whose terms and conditions shall be, to the fullest extent practicable, substantially similar to the Terms and Conditions of the Exchange Notes. Default Interest: If the Issuer fails to pay any amount due and payable under the Exchange Notes on its due date, Cash Interest and Capitalized Interest will continue to accrue, to the fullest extent permitted by law, on such overdue amounts from, and including, the due date up to, and excluding the date on which such overdue amount is paid, at an interest rate one per cent. (1%) higher than the relevant Interest Rate(s) (as defined in Condition 4(e) Default Interest in Terms and Conditions of the Exchange Notes ). If more than one Interest Rate is applicable in respect of overdue amounts, the increase of one (1) per cent. shall be divided equally between the Interest Rates. Redemption and Purchase Unless earlier redeemed or purchased, the Exchange Notes will be redeemed in full by the Issuer at their Outstanding Principal 19

33 Amount together with any accrued interest, on the Maturity Date, provided that if payment to Bpifrance in respect of the Blockage Payment has not been made in full on or prior to the Maturity Date, the Issuer shall redeem all, but not some only, of the Exchange Notes outstanding at a price equal to the Senior Amounts (as defined below); it being understood that following any such redemption, the principal amount of the Exchange Notes shall be reduced to the New Junior Outstanding Principal Amount and the Exchange Notes shall bear Junior Capitalized Interest at a rate of 3 per cent. per annum compounded and capitalized annually. Senior Amounts means an amount equal to the Senior Outstanding Principal Amount, together with any Cash Interest accrued, Senior Capitalized Interest accrued and not capitalized into the Senior Outstanding Principal Amount and any default interest thereto up the relevant redemption date or closing date of any exchange or purchase offer in respect of the Exchange Notes. Redemption for taxation reasons: early redemption by the Issuer will be permitted for taxation reasons, after giving the relevant notice to the Noteholders. The Exchange Notes (i) may be redeemed in whole but not in part at the option of the Issuer if by reason of a change in any law or regulation of the Republic of France the Issuer would not be able on the occasion of the next payment of principal or interest due in respect of the Exchange Notes, to make such payment without having to pay additional amounts as specified in Condition 10 Taxation in the Terms and Conditions of the Exchange Notes and (ii) shall be redeemed in whole but not in part by the Issuer if the Issuer would on the next payment of principal or interest in respect of the Exchange Notes be prevented by French law from making payment to the Noteholders of the full amount then due and payable, in each case at their Outstanding Principal Amount together with any accrued interest up to the date fixed for redemption (which in respect of Capitalized Interest shall include Capitalized Interest not capitalized into the Outstanding Principal Amount). If the Issuer decides to redeem all, but not some only, of the Exchange Notes outstanding for taxation reasons and payment to Bpifrance in respect of the Blockage Payment has not been made in full on or prior to the due date for redemption, such Exchange Notes shall be redeemed at a price equal to the Senior Amounts; it being understood that (x) following any such redemption, the nominal amount of the Exchange Notes shall be reduced to the New Junior Outstanding Principal Amount and the Exchange Notes shall bear Junior Capitalized Interest at a rate of 3 per cent. per annum compounded and capitalized annually and (y), with respect to a redemption according to (ii) above, that the provisions of Condition 10 Taxation in Terms and Conditions of the Exchange Notes with respect to the requirement for the Issuer to pay additional amounts shall not apply in respect of any payment to be made on such Exchange Notes which falls due after the due date for redemption and payment of all amounts on such Exchange Notes shall be made subject to the deduction or withholding of 20

34 any French taxation required to be withheld or deducted. Optional Redemption: the Issuer may, after giving the relevant notice to the Noteholders, redeem all or some only the thenoutstanding Exchange Notes at a price equal to the Outstanding Principal Amount together with any accrued interest up to the date fixed for redemption (which in respect of Capitalized Interest shall include Capitalized Interest not capitalized into the Outstanding Principal Amount). If the Issuer decides to redeem all, but not some only, of the Exchange Notes and payment to Bpifrance in respect of the Blockage Payment has not been made in full on or prior to the due date for redemption, such Exchange Notes shall be redeemed at a price equal to the Senior Amounts; it being understood that following any such redemption, the principal amount of the Exchange Notes shall be reduced to an amount equal to the New Junior Outstanding Principal Amount and the Exchange Notes shall bear Junior Capitalized Interest at a rate of 3 per cent. per annum compounded and capitalized annually. If the Issuer decides to redeem some only of the Exchanges Notes and payment to Bpifrance in respect of the Blockage Payment has not been made in full on or prior to the due date for redemption, the consideration in respect of such Exchange Notes shall be equal to (i) the Senior Amounts and (ii) New Subordinated Exchange Securities to be issued by the Issuer on the relevant redemption date or closing date of any exchange offer. Offer to Purchase Upon Change Of Control: the Issuer will be required to make an offer to purchase or exchange, as applicable, the Exchange Notes at a price equal to 101% of the principal amount thereof together with any accrued interest up to the date fixed for redemption (which in respect of Capitalized Interest shall include Capitalized Interest not capitalized into the Outstanding Principal Amount) in the event of a Change of Control (as such term is defined in Condition 5(d) Offer to Purchase Upon Change Of Control in Terms and Conditions of the Exchange Notes ) of the Issuer. If payment to Bpifrance in respect of the Blockage Payment has not been made in full on or prior to the closing date of the change of control offer, the consideration in respect of the Exchange Notes validly tendered shall be equal to (i) an amount in cash equal to 101% of the Senior Amounts and (ii) New Subordinated Exchange Securities to be issued by the Issuer on the closing date of the change of control offer, provided that their initial nominal amount shall be equal to 101% of the Junior Amounts outstanding on the closing date of the change of control offer. Purchase: the Issuer may, at any time, without limitation as to price or quantity, purchase Exchange Notes either on or off market, subject to compliance with any applicable laws and regulations; provided, however, that if payment to Bpifrance in respect of the Blockage Payment has not been made in full on or prior to the closing date of the relevant date of purchase, the consideration in respect to any offer to purchase of Exchange Notes shall be equal to that provided in the last paragraph of Condition 5(c) Optional Redemption of the Terms and 21

35 Conditions of the Exchange Notes. Limitation on Restricted payments Asset Sales Transactions with affiliates Taxation The Issuer and its subsidiaries will be restricted from, inter alia, making dividends and certain investments, subject to limited exceptions, as described in Condition 6 Limitation on Restricted Payments in Terms and Conditions of the Exchange Notes. The Issuer and its subsidiaries will be restricted from, inter alia, selling their assets unless certain obligations in respect of the proceeds received therefrom are complied with, as described in Condition 7 Asset Sales in Terms and Conditions of the Exchange Notes. The Issuer will not, and will not cause or permit any of its subsidiaries to, make any payment to or sell, lease, transfer or otherwise dispose of any of its properties or assets to, or purchase any property or assets from, or enter into or make or amend any transaction, contract, agreement, undertaking, loan, advance or guarantee with, or for the benefit of, any affiliate of the Issuer subject to certain exceptions, as described in Condition 8 Transactions with Affiliates in Terms and Conditions of the Exchange Notes. Withholding Tax Exemption: All payments of principal, interest and other revenues by, or on behalf of, the Issuer in respect of the Exchange Notes shall be made free and clear of, and without withholding or deduction for, any taxes or duties of whatever nature imposed, levied or collected by or on behalf of France or any authority therein or thereof having power to tax, unless such withholding or deduction is required by law. Additional Amounts: If French law or regulation should require that payments of principal of, or interest on, any of the Exchange Notes be subject to deduction or withholding for or on account of any present or future taxes or duties of whatever nature, the Issuer shall, to the extent permitted by law, pay such additional amounts, subject to certain exceptions. Event of Default The representative of the masse (see below) or the representative of the masse acting upon request of any holder(s) of the Exchange Notes holding in total at least 25% of the Outstanding Principal Amount of the Exchange Notes, may, upon written notice to the Issuer (with a copy to the Fiscal Agent), cause all, but not some only, of the Exchange Notes to be redeemed (i) at a price equal to the Outstanding Principal Amount together with any Cash Interest, Capitalized Interest (to the extent it has not previously been capitalized into the Outstanding Principal Amount) and default interest (if any) accrued thereto up to, but excluding, the redemption date or (ii) if payment to Bpifrance in respect of the Blockage Payment has not been made in full on or prior to such redemption date, at a price equal to, or for the consideration equal to that, provided in the last two paragraphs of Condition 5(c) Optional Redemption of the Terms and Conditions of the Exchange Notes in the event of any of the following: a default in the payment of the outstanding principal amount of the Exchange Notes, if not paid on the due 22

36 date thereof (excluding any Capitalized Interest that has been previously capitalized into the Outstanding Principal Amount); a default in the payment of interest (including (i) any Senior Capitalized Interest and, if payment to Bpifrance in respect of the Blockage Payment has been made in full on or prior to the redemption date, any Junior Capitalized Interest, in each case that have been previously capitalized into the Outstanding Principal Amount, as applicable) or other amounts due under the Exchange Notes, if not paid on the due date thereof and such default is not remedied within thirty (30) calendar days; default in the performance or compliance with, any other obligations of the Issuer under the Exchange Notes within a period of sixty (60) calendar days following written notification of such default; a default of the Issuer or any of its Significant Subsidiaries (as defined below) under any indebtedness prior to the expiration of any grace period or resulting in the acceleration of such indebtedness prior to its stated maturity if such indebtedness under which there has been such default or acceleration exceeds 15,000,000 in the aggregate; a default of the Issuer or any of its Significant Subsidiaries under a final judgment in an amount of more than 15,000,000 in the aggregate after a period of 60 days during which a stay of enforcement of such judgment shall not have been in effect; certain other events affecting the Issuer or its Significant Subsidiaries relating to insolvency, preinsolvency or bankruptcy proceedings; failure to comply with the requirement for an offer to repurchase upon a change of control. Until payment by the Issuer to Bpifrance of the Blockage Payment, the occurrence of an Event of Default shall not lead to the acceleration of the Junior Amounts outstanding on the early redemption date. However, if any judgment were issued for the judicial liquidation (liquidation judiciaire) of the Issuer or if the Issuer were liquidated for any other reason, then the then-outstanding Junior Amounts would become immediately due and payable, subject to Condition 2 Status of the Terms and Conditions of the Exchange Notes. Significant Subsidiary means each of (i) each of DNES, Finorga and Novasep Process for so long as the relevant entity (together with any of its subsidiaries) represents (A) more than 10% of the group s consolidated sales in any fiscal year or (B) more than 10% of the group s consolidated tangible assets as of the end of any year or any half-year; and (ii) any other subsidiary of Novasep that (together with any subsidiaries of such subsidiary) represents (A) more than 10% of the group s 23

37 consolidated sales in any fiscal year or (B) more than 10% of the group s consolidated tangible assets as of the end of any year or any half-year. Statutes of limitation Representation of Noteholders Further Issues and Assimilation Governing Law and Jurisdiction Any claims against the Issuer for the payment of principal and interest in respect of the Exchange Notes shall become barred by statute of limitation ten (10) years (in the case of principal) and five (5) years (in the case of interest) from the due date for payment thereof. The Noteholders will be grouped automatically for the defense of their respective common interests in a masse governed by the provisions of Article L of the French Code de Commerce, subject to certain exceptions. The Issuer may from time to time without the consent of the Noteholders issue further Exchange Notes to be assimilated (assimilables) with the Exchange Notes. The Exchange Notes are governed by, and shall be construed in accordance with, the laws of the Republic of France. Any claim, legal action or proceeding arising out of or in connection with Exchange Notes shall be brought before the competent courts in Paris. Fiscal Agent, Paying Agent and Calculation Agent Rating Central Depositary Clearing systems Listing Société Générale The Exchange Notes will not be rated. Euroclear France S.A. Euroclear France S.A., Euroclear Bank S.A./N.V. and Clearstream Banking, société anonyme. Application is expected to be made to list the Exchange Notes (but not the Warrants) on the Official List of the Luxembourg Stock Exchange and to admit the Exchange Notes (but not the Warrants) to trading on the Euro MTF. WARRANTS Issuer Warrants Number, form of Warrants Negotiability Novasep Holding S.A.S. Issue of up to 58,549,200 Warrants attached to the Exchange Notes on the Issue Date of the Exchange Notes. Warrants are securities giving access to ordinary shares of the Issuer with a par value of Euro on the Closing Date (the Shares ) and, subject to adjustments set forth below, each gives the right to subscribe for one (1) newly-issued Share. Warrants shall, when detached from the relevant Exchange Note, be held in registered form (nominatif). Title to the Warrants held by holders of Warrants will be established and evidenced by book-entries (inscription en compte). At the option of the relevant holder of Warrants, the Warrants may be held either in administered registered form (au nominatif 24

38 administré) or, in fully registered form (au nominatif pur). Warrants will detach from the Exchange Notes immediately upon issue on the Issue Date. Any transfer of Warrants must comply with the provisions of the Novasep Securityholders Agreement and shall be subject to the accession by the relevant transferee as Investor to the Novasep Securityholders Agreement pursuant to a duly executed accession agreement in the form contemplated by Schedule 10 to the Novasep Securityholders Agreement. Rights attached to Warrants Parity and exercise price Each Warrant will entitle its holder to subscribe for one (1) newly-issued Share at an exercise price equal to the par value of a Share, on the exercise date (such par value being equal to Euro on the Closing Date) (the Exercise Price ), per newly-issued Share, subject to any adjustment. The Exercise Price shall be fully paid up in cash upon subscription. The Warrants may only be exercised in exchange for a whole number of Shares. No fractional Share will be issued upon exercise of a Warrant. If a holder of Warrants would be entitled to receive a fractional interest in a Share in respect of all Warrants exercised by such holder (such fractional interest being calculated after adding all Warrants exercised by such holders of Warrants), the Issuer will round down to the nearest whole number the number of Shares to be issued to such holder of Warrants and the holder of Warrants shall receive no compensation in respect of such fractional Share. Conditions of exercise of the Warrants and Exercise Period The Warrants shall be exercisable from the Issue Date until May 31, 2019 (the Maturity Date ). The Warrants not exercised at 5 p.m., Central European Time, on the Maturity Date shall be deemed null and void and shall be automatically cancelled. Delivery of Shares issued upon exercise of Warrants shall take place at the latest on the fifth (5th) Business Day after their exercise date. Suspension of exercise of Warrants In the event that new equity securities or new securities giving access to the capital of the Issuer or other financial transactions with a preferential subscription rights are issued, as well as in the case of merger (fusion) or of spin-off (scission) involving the Issuer, the Supervisory Board (Conseil de Surveillance) of the Issuer, upon giving the relevant notice to the holders of Warrants, reserves the right to suspend the exercise of Warrants for a maximum period of three (3) months or any other timeframe fixed by the applicable French laws and regulations. In the event of any suspension of the exercise of Warrants, the Maturity Date shall be extended to the extent necessary to ensure there are no less than thirty (30) days after the expiration of such suspension period during which holders of Warrants can subscribe for Shares. Where circumstances occur allowing the exercise of drag along rights as contemplated by section 11 of the Novasep Securityholders Agreement (including, subject to the terms 25

39 and conditions of the Novasep Securityholders Agreement, an offer relating to Transfer (as defined in the Novasep Securityholders Agreement) of at least 95% of the Shares, or an offer relating to the Transfer (as defined in the Novasep Securityholders Agreement) of 100% of the equity securities in NVHL, a société anonyme organized under the laws of the Grand Duchy of Luxembourg, having its registered office at 20 rue de la Poste, L-2346, Luxembourg and registered with the Luxembourg Register of Commerce and Companies under number B ), the Issuer shall provide a notice (the Notification ) to the holders of warrants by providing notice to any relevant clearing system and by way of an avis financiers or equivalent in one major French financial newspaper and in one major international financial newspaper, which Notification shall: (a) notify investors that a Drag Along Notice (as defined in the Novasep Securityholders Agreement) has been issued in accordance with the Novasep Securityholders Agreement; (b) notify such holders of Warrants that, in accordance with the provisions of the Novasep Securityholders Agreement and subject to the terms of the Novasep Securityholders Agreement, except with the prior consent of the Majority Investor (as defined in the Novasep Securityholders Agreement) (i) their Warrants are inalienable and (ii) they may not exercise their Warrants, in each case until the first to occur of the following events: (i) the completion of the Drag-Along Transfer (as defined in the Novasep Securityholders Agreement), (ii) the date on which the Majority Investor notifies the Issuer in writing of its decision to no longer pursue the Drag-Along Transfer or (iii) twelve (12) months as from the date on which that the Drag-Along Notice was sent by the Majority Investor; and (c) notify such holders of Warrants that if a holder of Warrants has failed to transfer any of its Warrants to the buyer or to fulfill any of its other obligations under the provisions of the Novasep Securityholders Agreement with respect to any of its Warrants as of the time of the completion of the Drag-Along Transfer (if any), any such Warrants that are not properly transferred will automatically become null and void and holders of any such Warrants will not receive any compensation or indemnity with respect to such Warrants. For the avoidance of doubt, the Notification to the Warrant Holders shall be provided by the Issuer immediately after the Drag-Along Notice is sent by the Majority Investor. New Shares resulting from the Warrants exercise The Shares subscribed upon exercise of the Warrants shall grant all rights attached to Shares; provided, however, that such Shares will not entitle its holders to any right with respect to the Ordinary Share 2016 Dividend Distribution (as defined in The Refinancing ). Subject to the foregoing these newly issued Shares shall be fully assimilated (assimilées) to the existing Shares as from their issue date. 26

40 Protection of holders of Warrants rights In accordance with the provisions of Article L of the French Code de commerce, the Issuer may change its corporate form or purpose without requesting authorization from the general assembly of the holders of Warrants. Subsequent to any of the following transactions, the Issuer shall provide for an adjustment of the rights of Warrant Holders: financial transaction involving the issue of securities by the Issuer conferring preferential subscription rights; free allotment of Shares, or any division or consolidation of the Shares; distribution of reserves or issue premiums in kind or in cash (other than the Ordinary 2016 Share Dividend Distribution and the B Preference Share Dividend Distribution (as defined in The Refinancing )); modification of the distribution of profits and/or creation of new preference shares; absorption of the Issuer by another company or merger (fusion) with one or more companies in a new company or spin-off (scission); increase of capital by incorporation of reserves, profits or issue premiums effected by increasing the nominal value of the Shares; reduction of the share capital by a decrease in the number of Shares; or reduction of the share capital resulting from losses and effected through the decrease in the par value or of the number of Shares comprising the share capital. Representation of holders of Warrants Governing law and jurisdiction The holders of Warrants will be grouped automatically for the defense of their respective common interests in a masse. The Warrants are governed by, and shall be construed in accordance with, the laws of the Republic of France. Any claim, legal action or proceeding arising out of or in connection with the Warrants shall be brought before the competent courts in Paris. Registration Agent and Centralizing Agent Calculation Agent Central Depositary Clearing systems Listing Société Générale ConvEx Advisors Limited Euroclear France S.A. Euroclear France S.A., Euroclear Bank S.A./N.V. and Clearstream Banking, société anonyme No application will be made to list the Warrants. 27

41 Summary of the Novasep Shares Below is a summary of the material rights and terms of the share capital of Novasep, based on Novasep s articles of association and the Novasep Securityholders Agreement, each to be in effect upon the completion of this Refinancing, and the French Commercial Code taking into account any proposed amendments described herein with respect to the Refinancing. See Description of Novasep Share Capital for more information. This summary does not contain all information that may be important to investors and remains subject in its entirety to Novasep s articles of association and the Novasep Securityholders Agreement, copies of which are available to you upon request from the Exchange Agent. Issuer Novasep Shares Novasep Holding S.A.S. Novasep share capital amounts to 38,584,117.27, which is divided into 175,182,565 ordinary shares with a par value of each, 30,000,000 B Class preference Shares with a par value of 1 each (the B Preference Shares ) and 4,726 C Class preference shares with a par value of each (the C Shares ). Holders of the Exchange Notes will also hold Warrants entitling them, subject to certain conditions, to subscribe for ordinary shares of Novasep as described further below. Share Capital Dividends Each ordinary share has one vote per share. B Preference Shares have no voting rights. Each C Share has 1/100 vote per share. Ordinary shares have dividend rights subject to the Priority Dividends being paid on the B Preference Shares. B Preference Shares have rights to a priority, cumulative and exclusive dividend which takes priority over payment of all other dividends except authorized distributions to ordinary shareholders. Authorized distributions up to 350,000 per year will not be subject to the B Preference Shares priority to dividends. The holders of Warrant Shares are not entitled to any right with respect to the Ordinary Share 2016 Dividend Distribution at the close of the Refinancing. Liquidation In the event of Novasep s liquidation, the balance of liquidation proceeds following payment to third parties shall first be paid to the holders of B Preference Shares up to the value of the sum of (i) the subscription price of 30,000,000, (ii) the Annual Amount (as defined below) for the current financial year (calculated at the date of distribution) and (iii) any previous Annual Amounts not distributed to the B Preference Shares, including interest thereon calculated at an annual interest rate of 13%, which will be increased to 14% as from closing of the Refinancing (or such other amended rate then applicable). The Annual Amount is equal to the subscription price of 30,000,000 multiplied by an annual interest rate of 13%, which will be increased to 14% as from closing of the Refinancing, (or such other amended rate then applicable), which is calculated at the end of each financial year. 28

42 Warrants Certain warrants to subscribe to ordinary shares of Novasep ( BSA A ) are attached to the B Preference Shares. One BSA A is attached to each B Preference Share. The BSA A entitle their holders to subscribe for up to 5% of the share capital of Novasep against a strike price based on a 450,000,000 enterprise value and, if exercised, would dilute the percentage of ordinary shares in Novasep held by the other shareholders. The exercise price of the BSA A is equal to 293,604,000 / 171,135,849 less the amount of any distribution of dividends, reserves or premiums made by the Company to holders of ordinary shares as from March 15, BSA A may only be transferred with the consent of NVHL or following the exercise of the drag along or proportional tag along provisions in the Articles of Association. The warrants will be exercised during the period starting from the date the BSA A are issued (inclusive) and expiring on the first to occur of (i) the date seven years after the date the BSA A are issued (inclusive), (ii) the day following exercise of the drag along provisions in the Articles of Association, (iii) the day following a transfer of more than 95% of the share capital of Novasep to a third party and (iv) the day following completion of an initial public offering of the shares of Novasep. Novasep also created a further set of warrants to subscribe to ordinary shares of Novasep ( BSA B ) to the benefit of Romafi in the context of the Management Incentive Plan. The right under the BSA B to subscribe to the new ordinary shares will be effective for a five (5) Business Day period starting on the date of (i) a transfer of securities or subscription of new securities entailing a change of control of Novasep or of NVHL or (ii) an initial public offering of the securities of Novasep or of NVHL, (i) and (ii) being hereinafter referred to as an Exit. Pursuant to this Exchange Offer and Consent Solicitation, Novasep is issuing the Warrants as part of the Exchange Consideration ( BSA C ). See Summary of the Exchange Notes and Warrants and Terms and Conditions of the Warrants. The ordinary shares of Novasep (including those that may be issued as a result of the exercise of the BSA A and BSA C) could be diluted by the exercise of the BSA B following an Exit. The BSA B give their holders rights to capture a percentage (between 0% and 7.49%) of the equity value of Novasep (other than the B Preference Shares subscribed to by Bpifrance) upon an Exit, subject to legal and contractual adjustments which may be triggered by certain operations within the context of the Refinancing based on the modification of the allocation of benefits between each of the share classes. Free Shares Pursuant to the Management Incentive Plan, the Managers (as defined in the Management Incentive Plan) have been and may further be granted free shares under the French 29

43 specific regime set forth under Articles L and seq. of the French Commercial code (the Free Shares ). The Free Shares allocated to the managers, once issued, shall be C Shares. The Free Shares each have 1/100 th of the voting rights allocated to an ordinary share. The Free Shares give their holders rights to capture a percentage (between 0% and 12.5%) of the equity value of Novasep (other than the B Preference Shares subscribed to by Bpifrance) upon an Exit, subject to legal and contractual adjustments which may notably be triggered by certain operations within the context of the Refinancing based on the modification of the allocation of benefits between each of the share classes. If exercised, and provided the equity value upon Exit is higher than certain thresholds, the Free Shares would dilute the percentage of ordinary shares in Novasep held by NVHL and other shareholders. Governance of Novasep Novasep is managed by a President, appointed or removed by a simple majority vote of the shareholders (subject to a reinforced consultation right during the Specific Period in favor of Bpifrance with respect to the appointment of a new President), under the supervision of a Supervisory Board consisting of between three and nine members. NVHL may appoint up to five members, Bpifrance (as long as it holds B Preference Shares) may appoint up to two members, the President acts as one member and an independent member is jointly appointed by NVHL with, for so long as it holds company equity securities, the mutual agreement of Bpifrance. Azulis may appoint a non-voting observer provided it holds at least 80% of the equity securities of Novasep to which Azulis has subscribed on or prior to the date of the Novasep Securityholders Agreement. During the period starting from the date of the Novasep Securityholders Agreement and ending on the date Bpifrance ceases to hold the B Preference Shares (the Specific Period ), any replacement President may be proposed by NVHL and appointed by the Supervisory Board, in consultation with Bpifrance. After the Specific Period, any replacement President may be appointed by a simple majority vote of the shareholders of Novasep. Novasep Securityholders Agreement Each holder of the shares and other equity securities of Novasep entered into the Novasep Securityholders Agreement on March 15, Each holder of the Exchange Notes with Warrants will be required to accede to the Novasep Securityholders Agreement due to their acquisition of the Exchange Notes with Warrants. In addition, to the extent the Novasep Securityholders Agreement has not been amended to reflect certain amendments required in the context of this Refinancing prior to the Closing Date, the holders of the Existing Notes, through the Letter of Transmittal, will thereby grant a power of attorney to Novasep to execute amendments to the Novasep Securityholders Agreement on their behalf to 30

44 make the Novasep Securityholders Agreement consistent with the terms and conditions of this Refinancing as contemplated by this Exchange Offer and Consent Solicitation Statement. Important Decisions Specific Decisions Information Rights Certain important decisions require approval by simple majority of the Supervisory Board prior to being taken by the President or requested by the shareholders. See Description of Novasep Share Capital for a list of such decisions. Certain specific decisions made during the Specific Period ( Specific Decisions ) require the approval of a simple majority of the Supervisory Board and shall not be adopted if at least one of the members of the Supervisory Board designated for appointment by Bpifrance has not voted in favor of such decision. See Description of Novasep Share Capital for a list of such decisions. The President is required to send to NVHL information similar to the reports that Novasep has historically sent to its noteholders. NVHL is required to regularly provide information to Novasep and, for so long as it holds equity securities, Bpifrance, with respect to the identity of the five main shareholders of NVHL and the details of the key managers thereof. Transfer Restrictions Unless the prior consent of NVHL has been obtained, (i) none of the Managers (or the Management Company), Romafi or Roger-Marc Nicoud may transfer Novasep equity securities held by them; (ii) Bpifrance or any of its affiliates may not transfer any B Preference Shares or BSA A prior to an Exit and (iii) the Managers (as defined in the Novasep Securityholders Agreement) may not transfer the Free Shares prior to the expiry of the later of (i) an Exit and (ii) the expiry of the inalienability period for such shares. During the Specific Period, none of the holders of equity securities (including holders of Warrants) shall transfer shares to a third party which is a competitor of Novasep other than with the consent of Bpifrance and of NVHL or in the context of an Exit. Provisions of the Novasep Securityholders Agreement regarding temporary inalienability, exit, pre-emption, tag along and drag along shall not apply to any transfer of equity securities by NVHL, Bpifrance and Azulis to an affiliated entity, Free Shares by the Managers (as defined in the Novasep Securityholders Agreement) to the Management Company, or transfers by way of contribution (but not sales for cash) by Azulis of equity securities to an entity controlled by Roger-Marc Nicoud. The Warrant Shares are subject to certain transfer restrictions under applicable law. See Terms and Conditions of the Warrants and Transfer Restrictions. 31

45 Lock Up Restrictions The prior consent of NVHL is required for any transfer of (i) equity securities by Romafi, Roger-Marc Nicoud or the Managers (or the Management Company), (ii) B Preference Shares, BSA A or BSA B by their holders prior to a change in control or an initial public offering and (iii) Free Shares issued to the Managers prior to the expiry of the later to occur of (x) a change of control of NVHL or of Novasep, or of an IPO of Novasep and (y) the expiry of the inalienability period attached to such Free Shares. Transfer of equity securities to a trade competitor of Novasep during the Specific Period is subject to the prior consent of Bpifrance and NVHL unless in the context of a change of control of NVHL or of Novasep, or an IPO of Novasep. Exit and Initial Public Offerings The Novasep Securityholders Agreement contains provisions which require NVHL, provided that it holds more than 50% of the voting rights in Novasep, and Bpifrance, provided it holds B Preference Shares or holds 5% or more of the ordinary share capital of Novasep, to work together with advisers appointed by NVHL to assess the suitability of an offer if NVHL receives an unsolicited offer which would result in a change of control of Novasep. For so long as NVHL holds more than 50% of the voting rights in Novasep, it shall have the right to decide in its entire discretion on the method and implementation of the exit process. NVHL has the right at any time to propose to the Supervisory Board that it consider an initial public offering ( IPO ) of the shares of Novasep. If the Supervisory Board decides that an IPO is appropriate, the Supervisory Board shall be responsible for appointing one or more investment banks to advise Novasep on the IPO. Commission and fees of the investment bank involved on the IPO are payable by shareholders pro rata to the number of shares they sell. Each holder of equity securities other than ordinary shares (which shall include holders of Warrants) undertakes to convert or request redemption of all equity securities to facilitate the IPO and to eliminate any potential dilution of the share capital of Novasep. Pre-emption Right NVHL shall have a right of pre-emption over any ordinary shares proposed to be transferred by Bpifrance, Azulis, the Managers (or the Management Company), Romafi, Roger- Marc Nicoud or any holder of Warrant Shares (the Warrant Exercise Shareholders ), such that in the event that any of Bpifrance, Azulis, the Managers (or the Management Company), Romafi, Roger-Marc Nicoud or Warrant Exercise Shareholders proposes to transfer any of their shares in Novasep, such shares shall first be offered to NVHL. NVHL, or at its direction any of its shareholders or affiliated entities, may exercise a right to purchase all or part of such shares which are proposed to be transferred on 32

46 the same terms as those offered by the third party. Tag Along Right Drag Along Right In the event of a transfer of more than 50% of the share capital and voting rights of NVHL to one or more third parties in one transaction or a series of related transactions or a transfer by NVHL of more than 50% of the share capital and voting rights held by NVHL in Novasep to one or more third parties in one transaction or a series of related transactions, Bpifrance, Azulis, the Managers (or the Management Company) Romafi, Roger-Marc Nicoud and/or any Investor under the Novasep Securityholders Agreement (which includes any and all holders of Warrants and Warrant Exercise Shareholders) will benefit from a proportional tag along right. In the event NVHL receives an offer from a potential purchaser which is not (i) an affiliate of NVHL or (ii) one of its two largest shareholders, relating to the transfer of at least 95% of the ordinary shares of Novasep that it wishes to accept, NVHL shall be entitled to require Bpifrance, Azulis, the Managers (or the Management Company), Romafi, Roger-Marc Nicoud and any Investor under the Novasep Securityholders Agreement (which includes any and all holders of Warrants and Warrant Shares) to transfer their securities to the buyer. In the event NVHL receives a notice from its two largest shareholders that they have received an offer to transfer 100% of NVHL s equity securities that they wish to accept, NVHL shall be entitled to require Bpifrance, Azulis, the Managers (or the Management Company), Romafi, Roger- Marc Nicoud and any Investor under the Novasep Securityholders Agreement (which includes any and all holders of Warrants and Warrant Shares) to transfer their Novasep securities to that potential buyer. Transfer of Free Shares and of Management Securities The Managers undertake to transfer all of their Free Shares to the Management Company following the inalienability period of such shares. During the inalienability period of the Free Shares, the Free Shares held by the Managers are not subject to the tag along and drag along rights and in the event of an Exit (other than an IPO) occurring before the expiry of the inalienability period of the Free Shares, the Managers undertake to sell their Free Shares to the potential purchaser upon expiry of the inalienability period of the Free Shares at a price calculated on the basis of the price paid per ordinary share by the potential purchaser, calculated taking into account the number of ordinary shares to which the holders of Free Shares will be entitled to subscribe as of the Exit date. During the inalienability period of the Free Shares and in the event of an IPO, Free Shares may not be transferred prior to the expiry of such inalienability period of the Free Shares. Upon the later of an Exit or the expiry of the inalienability period, the prior consent of NVHL is required to transfer the Free Shares. It is expected that part of the C Shares will 33

47 be contributed to the Management Company following the Closing Date. Anti-dilution In case of issuances by Novasep of new equity securities in which NVHL participates, Bpifrance, Azulis, the Managers (and/or the Management Company) or Roger-Marc Nicoud shall have the right to participate in such issuance at the same price and under the same conditions as NVHL, prorata their respective shareholding in Novasep. No new Novasep equity securities shall be issued through suppression of the preferential subscription right (droit préférentiel de souscription), to NVHL, the majority shareholders of NVHL and/or their affiliates if Bpifrance, Azulis, Roger-Marc Nicoud and the Managers (and/or the Management Company) are not entitled to participate at the same price and under the same conditions as the subscribers, pro-rata their respective shareholding in Novasep. Accession Complex Sales Buyback of Preference Shares A person who is not already a shareholder is required to agree to adhere and comply with the full terms of the Novasep Securityholders Agreement prior to and following a transfer of equity securities to them. Any disagreements on valuation of consideration for the transfer of Novasep securities, which is not exclusively cash or liquid securities, offered by a potential purchaser pursuant to the drag along or tag along provisions may be referred to an international audit firm for the purposes of valuing the consideration being offered, the costs of which shall be borne equally between NVHL and the disagreeing party. At any time, Novasep may notify the holders of B Preference Shares that it wishes to buy-back and cancel all or part of the outstanding B Preference Shares. If one or more holders of B Preference Shares refuses to transfer their holding (the Remaining Holders ), such Remaining Holders irrevocably undertake to adopt a revised preference dividend (which means a revised interest rate determined in accordance with a specified leverage grid which shall in no event be lower than 8% or higher than 14% per annum) and shall, following each anniversary of the adoption of the revised preference dividend, vote in favor of the adjusted revised performance dividend calculated for the next twelve (12) months. If adoption of the revised preference dividend cannot be implemented as a result of a failure by one or more Remaining Holder to vote in favor of it, Novasep may, by notice to the Remaining Holders, elect to buy back the B Preference Shares at their subscription price plus unpaid dividends and cancel them by way of reduction of its share capital. Novasep shall have the right to buy back and cancel all of the B Preference Shares held by Bpifrance within two (2) months upon a failure by the member of the Supervisory 34

48 Board appointed by Bpifrance to vote in favor of (i) a Specific Decision where such Specific Decision has been approved by a majority of the other members of the Supervisory Board or (ii) the appointment of a candidate proposed by NVHL as a replacement President. Novasep shall also have the right to buy back and cancel Bpifrance s B Preference Shares within thirty (30) days of delivery of a drag along notice. The price of such shares bought back shall be the subscription price plus unpaid dividends. Bpifrance Put Option Dividends Duration Governing Law Additional Information Where an offer is received pursuant to the drag along provisions of the Novasep Securityholders Agreement and the consideration offered does not consist of exclusively cash or liquid securities, Bpifrance has the right to transfer all of its B Preference Shares to Novasep at the subscription price plus unpaid dividends. Novasep s dividend policy is to proceed with an annual distribution of at least 350,000, subject to availability of funds, to the existence of distributable amounts and to capacity to make such payments under finance documents which bind Novasep and unless otherwise determined by the shareholders meeting. The Novasep Securityholders Agreement shall last for a period of ten (10) years from March 15, 2012, except that it shall expire (i) on the listing date in the event of an IPO, (ii) the date on which equity securities are transferred by NVHL pursuant to drag along rights or (iii) following a change of control of Novasep, provided that NVHL, Roger- Marc Nicoud and Azulis are treated pari passu with respect to their liquidity rights under the new contractual documentation entered into with the new controlling shareholder. The Novasep Securityholders Agreement is governed by French law and any dispute shall be exclusively submitted to the jurisdiction of the Commercial Court in Paris. See the section below entitled Description of Novasep Share Capital, the articles of association of Novasep and the Novasep Securityholders Agreement to be in effect upon the completion of this Refinancing, copies of which can be made available to you by the Exchange Agent upon request, for additional information. 35

49 Important Dates All times shown in this document are references to New York City time, unless otherwise stated. References to a Business Day in this Exchange Offer and Consent Solicitation Statement shall be to any calendar day other than a Saturday or Sunday on which banks in New York City and Paris are open for business. The deadlines set forth below are subject to change as a result of any extension, withdrawal, termination or amendment as described under The Exchange Offer and Consent Solicitation Expiration Date, Withdrawal Deadline; Extensions; Amendments; Termination and The Exchange Offer and Consent Solicitation Conditions to the Exchange Offer. Holders of Existing Notes are advised to check with the broker, dealer, bank, custodian, trust company, or other service provider or nominee through which they hold their Existing Notes as to the deadlines by which such intermediary would require receipt of instructions from holders of Existing Notes to participate in, or to withdraw their instructions to participate in, the Exchange Offer as described in this Exchange Offer and Consent Solicitation Statement in order to meet the deadlines set out below and the corresponding deadlines set by the relevant clearing system. Date Calendar Date Event Launch date September 26, Commencement of the Exchange Offer and Consent Solicitation. Early Deadline Withdrawal Deadline Expiration Date Announcement of results Closing Date 5:00 p.m., New York City time, on October 7, 2016, unless extended. 5:00 p.m. New York City time, on October 25, 2016, unless extended or reinstated. 5:00 p.m. New York City time, on October 25, 2016, unless extended or terminated. Promptly after the Expiration Date. Promptly after the Expiration Date. The time by which Existing Notes must be Validly Tendered and Consents given to receive the Early Tender Cash Consideration, including submission of an Electronic Exchange Instruction to Euroclear or Clearstream, as applicable, and receipt of a properly completed and fully executed original Letter of Transmittal (including the attachments thereto) by the Exchange Agent. The time by which Validly Tendered Existing Notes and Consents may be validly withdrawn. The time by which Existing Notes must be Validly Tendered to receive the Exchange Consideration, including submission of an Electronic Exchange Instruction to Euroclear or Clearstream, as applicable, and receipt of a properly completed and fully executed original Letter of Transmittal (including the attachments thereto) by the Exchange Agent. The results of the tender offer are announced by Novasep via press release and by sending a notice via the clearing systems. The date on which the Exchange Notes with Warrants are issued, the Amended Indenture is executed and the Existing Notes become subject to the Proposed Amendments (Successful Consent Solicitation) and the Cash Payments are made. 36

50 Please refer to The Refinancing below for greater detail concerning the closing of the Refinancing. 37

51 Summary Consolidated Financial Data The tables below set forth the following summary consolidated financial information: 1. summary consolidated financial information of Novasep and its subsidiaries as of and for the fiscal years ended December 31, 2014 (with comparative information for the fiscal year ended December 31, 2013) and December 31, 2015; and 2. summary consolidated financial information of Novasep as of and for the six months ended June 30, 2015 and June 30, The summary consolidated income statement, balance sheet and cash flow information of Novasep and its subsidiaries as of and for the fiscal years ended December 31, 2014 (with comparative information for the fiscal year ended December 31, 2013) and December 31, 2015 set forth below has been derived from audited consolidated financial statements prepared in accordance with IFRS, uncertified English translations of which are incorporated by reference into this Exchange Offer and Consent Solicitation Statement. The summary consolidated income statement, balance sheet and cash flow information of Novasep and its subsidiaries as of and for the six months ended June 30, 2015 and June 30, 2016 set forth below, has been derived from interim consolidated financial statements for the period ended June 30, 2016, prepared in accordance with IFRS, which have been subject to a limited review by our auditors, and are incorporated by reference into this Exchange Offer and Consent Solicitation Statement. Financial information for the six months ended June 30, 2016 is not necessarily indicative of the results that may be expected for the year ended December 31, Our consolidated historical financial statements and the selected consolidated historical financial information presented below were prepared on the basis of IFRS. You should read this section together with the information contained in (i) Use of Proceeds (ii) Capitalization and (iii) our consolidated financial statements and the notes to those consolidated financial statements attached hereto as Annexes and included in our annual report for the years ended December 31, 2014 and December 31, 2015 and our interim report for the six months ended June 30, 2016, each of which are incorporated by reference into this Exchange Offer and Consent Solicitation Statement. 38

52 As of and for the six months As of and for the year ended December 31, ended June 30, (Euros in thousands) 2013 (1) (audited) (unaudited) Revenue , , , , ,165 Cost of sales... (210,423) (193,673) (206,207) (96,021) (100,740) Gross profit... 52,023 55,011 59,635 32,097 29,425 Selling, research and development and administration costs, expenses and depreciation... (45,999) (46,258) (49,141) (24,227) (24,713) Other operating income and expenses... (382) (157) 665 (402) (61) Operating income... 5,642 8,596 11,160 7,468 4,651 Other non-recurring net expenses... (3,823) (7,033) (2,624) (321) (441) Amortization (2) and impairment (3,525) (2,390) (1,236) (506) (554) Income/(loss) from operating activities... (1,706) (827) 7,300 6,641 3,656 Currency adjustment on US bonds... 6,454 (19,534) (18,848) (12,725) 3,029 Other financing costs-net (incl. exchange gains/losses). (14 613) (11 965) (12 730) (6,388) (7,799) Income before tax... (9,865) (32,326) (24,278) (12,472) (1,114) Income tax expense (2,401) (2,100) (491) (710) (1,888) Income tax differed... (380) 8,231 (1,655) (140) (227) Net income/(loss) for the period from continuing operations (1)... (12,646) (26,195) (26,424) (13,322) (3,229) Net income/(loss) for the period from discontinued operations... (2,485) 7,252 2,741 1, Net income/(loss) for the period... (15,131) (18,942) (23,684) (11,616) (2,745) Attributable to the owners of Novasep... (15,119) (19,158) (24,148) (11,854) (2,775) Attributable to non-controlling interests... (12) (238) 30 Summary Consolidated Balance Sheet Information: Cash and cash equivalents... 39,753 52,922 41,547 41,009 30,642 Net working capital (3)... 27,456 12,632 18,882 30,487 34,303 Total assets , , , , ,252 Net debt , , , , ,889 Total equity and Preference Shares... 71,877 47,158 25,182 36,487 21,097 Other financial data EBITDA (4)... 18,438 19,626 28,067 17,302 12,580 Adjusted EBITDA (5)... 22,261 26,659 30,691 17,623 13,021 Depreciation of fixed assets... 16,619 18,062 19,531 10,155 8,370 Capital expenditure (6)... 33,850 18,732 18,572 4,825 8,013 (1) Following the divestiture of the Pharmachem business in October 2014, the income statement for the year ended December 31, 2013 has been restated in accordance with the IFRS 5. For the years ended December 31, 2013, December 31, 2014 and December 31, 2015 and the six months ended June 30, 2015 and June 30, 2016, the impact of the discontinued activities (Pharmachem business) has been presented on the caption Net Income/(loss) from discontinued operations. (2) Amortization of assets recognized on business combinations. (3) Net working capital means inventories plus trade receivables less trade payables. (4) EBITDA means Adjusted EBITDA less other non-recurring net expenses. Adjusted EBITDA means operating income plus depreciation of fixed assets. EBITDA is not a measurement of performance under IFRS and you should not consider EBITDA as an alternative to (a) operating income or net income (as determined in accordance with IFRS) as a measure of our operating performance, (b) cash flows from operating investing and financing activities as a measure of our ability to meet our cash needs or (c) any other measures of performance under generally accepted accounting principles. We believe that EBITDA is a useful indicator of our ability to incur and service our indebtedness and can assist securities analysts, investors and other parties to evaluate Novasep. EBITDA and similar measures are used by different companies for differing purposes and are often calculated in ways that reflect the circumstances of those companies. You should exercise caution in comparing EBITDA as reported by Novasep to EBITDA of other companies. The reconciliation of our operating income/(loss) to EBITDA is as follows: 39

53 As of and for the nine As of and for the year ended December 31, months ended June 30, (Euros in thousands) Operating income 5,642 8,596 11,160 7,468 4,651 Depreciation of fixed assets 16,619 18,062 19,531 10,155 8,370 Adjusted EBITDA 22,261 26,659 30,691 17,623 13,021 Non recurring expenses net (3,823) (7,033) (2,624) (321) (441) EBITDA 18,438 19,626 28,067 17,302 12,580 (5) We present Adjusted EBITDA as a further supplemental measure of our performance. We prepare Adjusted EBITDA by adding Operating income to depreciation of fixed assets. In evaluating Adjusted EBITDA, you should be aware that, as an analytical tool, Adjusted EBITDA is subject to all of the limitations applicable to EBITDA. In addition, you should be aware that we may incur expenses similar to the adjustments in this presentation in the future and adjust those expenses in a way appropriate to arrive at a future Adjusted EBITDA result. You should not infer from our presentation of Adjusted EBITDA that our future results will be unaffected by unusual or non-recurring items. (6) Capital expenditure means new additions in intangible assets and property, plant and equipment. 40

54 RISK FACTORS You should consider carefully the following information about these risks, together with the other information contained in this Exchange Offer and Consent Solicitation Statement. If any of the following risks actually occur, our business, financial condition, operating results or cash flow could be materially and adversely affected. Additional risks or uncertainties not presently known to us, or that we currently believe are immaterial, may also impair our business operations. We cannot assure you that any of the events discussed in the risk factors below will not occur and if such events do occur, you may lose all or part of your investment in the Exchange Notes with Warrants. Risks Related to the Refinancing If the Refinancing is not consummated, we may be unable to successfully refinance or restructure our debt by alternative means, including through any insolvency proceeding that may result from a failure to consummate the Refinancing. The Existing Notes mature on December 15, We do not expect to have the funds available to repay the Existing Notes on such date. Therefore, our future is dependent upon our ability to refinance or restructure our debt. We do not expect to have the means to repay the amounts that are payable under the Indenture. Based on its current estimations, we believe that we will not run out of cash prior to completion of the Refinancing. However, we also believe that we are currently not likely to find a material source of financing sufficient to fund the interest and principal payments on the Existing Notes if the Refinancing is not consummated. If the Refinancing is not consummated, we or other members of our Group may have to initiate French safeguard proceedings (procédure de sauveguarde) or some other form of pre-insolvency or insolvency proceedings. If the Refinancing is unsuccessful, we may opt to implement the Contingency Plan. See The Refinancing Unsuccessful Exchange Offer Contingency Plan. The Contingency Plan may be implemented in a manner which provides a substantially equivalent economic result to the exchange of Existing Notes for Exchange Notes and Warrants (except that no consideration in respect of or corresponding to the Cash Payment would be paid to holders of Existing Notes); however, we provide no assurances that this will be the case. The Cornerstone Bondholders, NVHL and Bpifrance have each agreed to take actions to support the Contingency Plan under certain conditions if we choose to pursue it, but there can be no assurance that such support will be sufficient for the Contingency Plan to be implemented in its proposed form or at all. There can be no assurance that the Contingency Plan will be implemented, or in what manner it will be implemented. The uncertain circumstances of pre-insolvency or insolvency proceedings may result in the liquidation of some or all of the members of our Group, as we could be forced to operate in the proceeding(s) for an extended period of time, which could materially adversely affect the relationships between us and our customers, suppliers and employees. Whether or not the Refinancing or any other revised plan is consummated, we may be subject to litigation from creditors or shareholders of Novasep. We believe it is likely that each holder of the Existing Notes would incur significant losses if the Refinancing or any other refinancing alternative is not consummated or we are forced to liquidate. Under French insolvency law, all holders of bonds or notes, regardless of the issue and the governing law, are automatically gathered into a single assembly of holders (the Bondholders Single Assembly ) in the event that one of the following proceedings is opened in France with respect to Novasep: a safeguard procedure (procédure de sauvegarde), an accelerated safeguard procedure (procédure de sauvegarde accélérée), an accelerated financial safeguard procedure (procédure de sauvegarde financière accélérée) or a judicial reorganization procedure (procédure de redressement judiciaire). Pursuant to Article L of the French Commercial Code, in case a proposed safeguard plan (projet de plan de sauvegarde), accelerated safeguard plan (projet de plan de sauvegarde accélérée), accelerated financial safeguard plan (projet de plan de sauvegarde financière accélérée) or judicial reorganization 41

55 plan (projet de plan de redressement judiciare), as the case may be, has been adopted by the creditor committees, if any, the Bondholders Single Assembly is convened to vote on the relevant plan. The plan may treat creditors differently if it is justified by the differences in their situation and may, inter alia, include a rescheduling or cancellation of debts (subject to the specific regime of claims benefiting from the privilege of conciliation), and/or debt-for-equity swaps (debt-for-equity swaps requiring the relevant shareholder consent). All decisions made by the Bondholders Single Assembly must be taken by a two-thirds majority (calculated as a proportion of the amount of the claim held by the holders expressing a vote). No quorum is applicable. If the creditors refuse the proposals that were submitted to them, the court that approves the plan can impose on them a uniform rescheduling of their claims over a maximum period of ten (10) years. Adverse publicity relating to the Refinancing or the financial condition of Novasep and its subsidiaries or of other participants in the market(s) in which it operates may adversely affect Novasep customer and supplier relationships and/or the market perception of Novasep and its business. Adverse publicity relating to the Refinancing or the financial condition of Novasep and its subsidiaries or of other participants in the market(s) in which it operates may have a material adverse effect on Novasep customer and supplier relationships and/or the market perception of its business. Customers may choose not to (and it may be more difficult to convince such customers to) continue with, or enter new contractual agreements relating to, Novasep services. Specifically, Novasep may be unable to enter into future capital leases and receivables factoring arrangements on satisfactory terms. Existing suppliers may choose not to do business with Novasep, may demand quicker payment terms and/or may not extend normal trade credit. Novasep and its subsidiaries may find it difficult to obtain new or alternative suppliers. Ongoing negative publicity may also have a long-term negative effect on the brand name of Novasep and its subsidiaries, which may make it more difficult for Novasep to market its services in the future. Risks Related to the Exchange Offer and Consent Solicitation The consummation of the Exchange Offer and Consent Solicitation may be delayed or may not occur. We are not obligated to complete the Exchange Offer and/or the Consent Solicitation under certain circumstances and unless and until certain conditions are satisfied, as described more fully below in The Exchange Offer and Consent Solicitation Conditions to the Exchange Offer. Even if the Exchange Offer and Consent Solicitation are completed, they may not be completed on the schedule described herein. Accordingly, holders of Existing Notes may have to wait longer than expected to receive their Exchange Consideration, during which time those holders of Existing Notes will not be able to effect transfers of their Existing Notes tendered in the Exchange Offer. If the Consent Solicitation fails to achieve the Success Threshold, we will not be able to implement the Proposed Amendments (Successful Consent Solicitation) and Novasep or other members of the Novasep Group may initiate French safeguard proceedings (procédure de sauveguarde) or some other form of preinsolvency or insolvency proceedings. If the Exchange Offer and Consent Solicitation are consummated, the proposed amendments to the debt instruments governing the Existing Notes and the Indenture will reduce the protections afforded to non-tendering holders of Existing Notes. If the Exchange Offer and Consent Solicitation are consummated, then the Indenture and debt instruments governing non-tendered Existing Notes will be amended and holders of Existing Notes will be bound by the terms of the amended debt instruments even if they did not Consent to the Proposed Amendments (Successful Consent Solicitation). The Proposed Amendments (Successful Consent Solicitation) would modify the debt instruments governing non-tendered Existing Notes, including the guarantees, security, principal amounts, interest, 42

56 maturity, ranking and priority, and other covenants. In addition, claims with respect to non-tendered Existing Notes will be contractually subordinated to claims with respect to the Exchange Notes and all other Senior Indebtedness (as defined herein). See Proposed Amendments (Successful Consent Solicitation). If the Exchange Offer is consummated, there will be less liquidity in the market for non-tendered Existing Notes, and the market prices for non-tendered Existing Notes may therefore decline and the volatility of such prices may increase. If the Exchange Offer is consummated, the aggregate principal amount of Existing Notes will be substantially reduced. This may adversely affect the liquidity and market price for Existing Notes that are not Validly Tendered in the Exchange Offer. The reduced float also may make the trading price of Existing Notes that are not exchanged more volatile. If a holder fails to complete all the steps to validly tender its Existing Notes, it will not receive the Exchange Consideration and, in certain circumstances, may be deemed to have delivered Consents even if its Existing Notes are not accepted for exchange pursuant to the Exchange Offer. In order to validly tender Existing Notes and be eligible to receive the Exchange Consideration, a holder must submit both an Electronic Exchange Instruction to Euroclear and Clearstream, as applicable, and a properly completed and executed original Letter of Transmittal (including all attachments thereto) in physical form, each of which must be received by the Exchange Agent on or prior to the Expiration Date. See The Exchange Offer and Consent Solicitation Procedures for Tendering Existing Notes and Delivery of Consents. In the event all required documents and instructions with respect to a holder s tender are not received by the Exchange Agent on or prior to the Expiration Date, or any such document or instruction is improperly completed or, if applicable, not validly executed, or the holder otherwise fails to follow all procedures to validly tender as set forth herein, any such invalidly-tendered Existing Notes may be rejected and be promptly be returned to such holder and such holder will not receive the Exchange Consideration with respect to any such invalidly-tendered Existing Notes. Notwithstanding the foregoing, a holder of Existing Notes who fails to receive the Exchange Consideration because the Exchange Agent did not timely receive a validly executed and properly completed Letter of Transmittal (including the Unique Instruction Reference and the Accession Agreement and Power of Attorney) in physical form with respect to such tender on or prior to the Expiration Date, but otherwise validly tenders electronically through submission of an Electronic Exchange Instruction to Euroclear or Clearstream as applicable, will be deemed to have validly delivered Consents with respect to the Existing Notes to which such Electronic Exchange Instruction refers for purposes of the Consent Solicitation, notwithstanding the fact that such holder s Existing Notes have not been accepted for exchange pursuant to the Exchange Offer and have been rejected or returned to them and they have not received the Exchange Consideration. Such holders will not be entitled to any consideration on account of such Consents. In the event that the Consent Solicitation achieves the Success Threshold, the Existing Notes that have been returned to such holders will be Amended Existing Notes by virtue of the Proposed Amendments (Successful Consent Solicitation) and will be materially less valuable than the Existing Notes. See Proposed Amendments (Successful Consent Solicitation). Questions and requests for assistance with respect to the procedures for tendering Existing Notes should be directed to the Exchange Agent at the address set forth in Exchange Agent and Information Agent and in the Letter of Transmittal. We have not obtained or requested a fairness opinion with respect to the Exchange Consideration. We have not obtained or requested, and do not intend to obtain or request, a fairness opinion from any banking or other firm as to the fairness of the Exchange Consideration or of the relative value of the Existing Notes to the Exchange Consideration. If you tender your Existing Notes and deliver your consent, there is no assurance that the value of the Exchange Consideration you receive will be equal to or greater than the value of your Existing Notes. The Novasep shares and any warrants to subscribe for Novasep shares are subject to the Novasep Securityholders Agreement. 43

57 Holders of Novasep shares and any warrants to subscribe for Novasep shares, including the Warrants, will be subject to the Novasep Securityholders Agreement, which confers certain rights and obligations on holders of such Novasep shares and warrants relating to the governance of Novasep, including, but not limited to, drag-along and tag along rights. Our majority shareholder exercises significant control over certain corporate decisions and may have interests that conflict with our noteholders. NVHL is the majority shareholder of Novasep and, as a result, exercises significant control over our major policy decisions and all matters requiring shareholder approval. The Cornerstone Bondholders together hold a majority of the shares of NVHL, and as a result have significant control over the major policy decisions of NVHL and all matters requiring NVHL shareholder approval. NVHL and its shareholders may have interests that conflict with our interests or the interests of our noteholders and may take or block actions with respect to our business by exercising their control that would not be in the interest of other noteholders. For example, NVHL could delay, defer or cause a change of our control or a change in our capital structure, delay, defer or cause a merger, consolidation, takeover or other business combination involving us, or discourage or encourage a potential acquirer from making a tender offer or otherwise attempting to obtain control of us. Risks Related to our Market and our Business We have a history of significant net operating losses and may continue to suffer net operating losses in the future. We incurred consolidated net losses of 23.7 million for the fiscal year ended December 31, 2015 and 18.9 million for the fiscal year ended December 31, Our consolidated net income/(losses) for the six month periods ended June 30, 2016 and June 30, 2015 were (2.7) million and (11.6) million, respectively. EBITDA decreased by 4.7 million, or 27%, for the six months ended June 30, 2016, as compared to the same period in the previous year. Improving our operating performance and attaining profitability depends on the strength and stability of general economic conditions in the pharmaceutical and other life science industries, customer confidence in our viability going forward, and our ability to continue to maintain and expand our customer base, the availability of adequate financing on acceptable terms from our suppliers and their continuing business relationships with us, our ability to sell non-productive assets at favorable prices and our ability to develop new products and new uses for our products. Our failure to achieve any one or more of the foregoing could further adversely affect our operating performance and increase our net operating losses. If we cannot improve our operating performance and become profitable, our financial condition will deteriorate and we may be unable to achieve our business objectives or make payments on our debt obligations. Our ability to make scheduled interest and principal payments on the Exchange Notes will depend upon our ability to achieve profitability levels to support our new debt, which may be dependent upon an improvement in the current economic environment in the industries we operate. The amount of our interest payment requirements could adversely affect our business in a number of ways, including but not limited to, the following: (1) we may have less cash available to expand and improve our business, since we are required to dedicate a significant portion of our cash flow from operations to the payment of interest on our debt; (2) our ability to obtain additional debt financing may be limited and the terms on which such financing is obtained may be negatively affected; and (3) our ability to compete effectively against better-capitalized competitors and to withstand downturns in our business may be affected since a significant portion of our cash flow from operations is required to be dedicated to making interest payments. As a result, we may lose market share and 44

58 experience lower sales, which, in turn, could result in a material adverse effect on our financial condition, results of operations and liquidity. Any additional indebtedness we may incur is likely to place further restrictions on our business. Indebtedness under any future credit facilities and the terms of other indebtedness would likely include financial covenants that would require us to maintain, among other things, a minimum leverage, interest coverage and/or cash flow coverage ratio and comply with other terms that are customary for comparable financings. If we breach the covenants under such financing arrangements and are unable to cure the breach or obtain a waiver from our lenders, we would default under the terms of such arrangements, which could cause a default under other financing arrangements, including the Exchange Notes, and could cause the lenders under other financing arrangements or the holders of the Exchange Notes to accelerate such financing arrangements. In case of acceleration, there can be no assurance that our assets would be sufficient to repay in full that indebtedness and the other indebtedness of the group including the Exchange Notes. We will be dependent both on the state of the financial markets and on the profitability of our business for successful refinancing of the Exchange Notes prior to their scheduled maturity in Our ability to refinance the Exchange Notes will depend on many factors including, but not limited to, the state of our business (as discussed further herein), the state of the financial markets and the overall economic and political environment. Inability to refinance the Exchange Notes in a timely manner and/or on attractive terms may become a deterrent to customers. If we are not successful in refinancing the Exchange Notes prior to their scheduled maturity we may need to enter discussions with the holders of the Exchange Notes, the outcome of which is difficult to predict. We are also dependent on European financial markets for on-going lease and factoring financing needs. We depend on a limited number of major contracts with certain of our customers which generate a substantial portion of our revenues and a loss of one of our major contracts could have a material adverse effect on our business, financial condition, operating results or cash flow. We generated 42% of our group sales with our ten top customers for the fiscal year ended December 31, 2015 and 46% for the fiscal year ended December 31, We rely on a limited number of major contracts which generate a substantial portion of our revenues. Our largest customer generated 10.5% of our sales for the fiscal year ended December 31, Each year we need to acquire a significant amount of business and prior business is no guarantee of future business. We must continually develop new offerings and products to remain competitive and attract evolving client business. Our major contracts may be breached by our counterparties, we may not be able to renegotiate the applicable terms of our major contracts and we may not be able to renew our major contracts under acceptable terms following their expiration. We can lose or suffer a non-renewal of a major contract due to, among other things, a withdrawal of one of our customers products from the market, due to expiry of customers patents, due to failure of the United States Food and Drug Administration ( FDA ) to approve a product that is in clinical trials or in the registration phase, due to significant safety issues or failure of our customers products in development to reach regulatory approval, due to inadequate demand for customer s product, due to customer operating, compliance, marketing or sales issues, due to customer s choosing to use a different supplier through geographic preference, contract terms or cost structure and pricing. In case of drugs in clinical trials we may incur meaningful costs and capital expenditure preparing for eventual commercial production which may not materialize if the FDA or other regulatory agencies do not approve the product or if the customer chooses an alternate manufacturing strategy. Additionally, we have some substantial revenues based on purchase orders which are susceptible to changes in our customers strategies or other factors. A loss of one of our major contracts can produce unevenness in our revenues or otherwise have a material adverse effect on our business, financial condition, operating results or cash flow. 45

59 Failure to effectively manage our operations in response to a variety of customer needs and market conditions could adversely affect our business, financial condition, operating results or cash flow. We serve customers in a large number of industries and countries, each of which is affected by relevant regulation and supply/demand dynamics. Changes in the market conditions within any industry or geographical region, or a change in the mix of our customers among industries and geographic regions, could have an adverse impact on the company and/or a specific division. Moreover, our business is exposed to emerging markets and we may be adversely affected by the greater economic, political, social and regulatory instability and other risks characteristic of doing business in emerging markets. We sell a variety of products with widely varying levels of profitability. Therefore changes in mix of product sales could have an adverse impact on our overall results. Moreover, the demand by our customers for our services is uneven and difficult to predict and the sales cycle is typically long. In particular, it can be affected by significant overstocking issues in our customers end markets, thereby leading to significant decreases in demand in the short term. Furthermore, we have a limited set of facilities, many of which are running at capacity, and we may be unable to accommodate growing customer demand, which will hurt our growth prospects and may lead to loss of existing business with customers. In addition, our facilities are highly specialized and we have very limited ability to move business from one facility to another. Thus we are dependent on finding customers needing the types of manufacturing capabilities and volume of available capacity on hand. Availability and factors impacting demand of and from such customers may be different from factors driving the pharmaceutical industry more broadly. Decreased volumes or loss of one or several contracts at one of our production sites may severely affect the performance of that site, which could lead us to partially or completely stop operations at that site. This could in turn result in high restructuring or site closure costs. Any failure by us to effectively manage one or more of these operational risks, react to changes in market conditions or customer needs and efficiently allocate our operational resources could adversely affect our ability to maintain and grow our business and could have an adverse effect on our profitability and financial condition. We are subject to product and other liability risks that could adversely affect our business, financial condition, operating results or cash flow. We are subject to significant product liability and other liability risks that are inherent in the design, development, manufacture and marketing of our offerings. Moreover, certain of our contracts include exclusivity clauses and/or other restrictions on our existing and future operations. We may be named as a defendant in product liability or contract breach lawsuits, which may allege that our offerings have resulted or could result in an unsafe condition or injury to customers and customers of our clients or consumers. Such lawsuits could be costly to defend and could result in reduced sales, significant liabilities and diversion of management s time, attention and resources. Even claims without merit could subject us to adverse publicity, result in subsequent loss of business and require us to incur significant legal fees. Such claims and lawsuits, regardless of their ultimate outcome, could have a material adverse effect on our business, financial condition, operating results or cash flow, and on our reputation and ability to attract and retain customers. We have historically sought to manage this risk through the combination of product liability insurance and contractual indemnities and liability limitations in our agreements with customers and vendors. However, there can be no assurance that a successful product liability claim or other liability claim would be adequately covered by our applicable insurance policies or by any applicable contractual indemnity or liability limitations, which in turn could have a material adverse effect on our business, financial condition, operating results or cash flow. Failure to comply with existing and future regulatory requirements could adversely affect our results of operations and financial condition. 46

60 We are subject to various local, state, federal, foreign and transnational laws and regulations, which include the operating and security standards of the FDA, the United States Department of Health and Human Services, the European Medicines Agency, the French Agence nationale de sécurité du médicament et des produits de santé ( ANSM ), the German national and local regulatory authorities, the Belgian Agence Fédérale des Produits de Santé, and other comparable regulatory authorities and accrediting bodies in the European Union member states and in each of the jurisdictions in which we operate (the Regulatory Authorities ). We are subject to laws and regulations concerning good manufacturing practices and drug safety. Our subsidiaries may be required to register for permits and/or licenses with, and will be required to comply with the laws and regulations of the Regulatory Authorities depending on the type of operations and location of product distribution, manufacturing and sale. The manufacture, distribution and marketing of our offerings for use in our customers products are subject to extensive ongoing regulation by Regulatory Authorities. While we believe that our operations are in compliance in all material respects with the regulations under which our facilities are governed, the regulatory framework is complex and we cannot assure you that the Regulatory Authorities will not determine that some violations exist. Failure by us or by our customers to comply with the requirements of the Regulatory Authorities could result in warning letters, product recalls or seizures, monetary sanctions, injunctions to halt manufacture and distribution, restrictions on our operations, civil or criminal sanctions or withdrawal of existing or denial of pending approvals, including those relating to products or facilities. In addition, such a failure could expose us to contractual and product liability claims as well as contractual claims from our customers, including claims for reimbursement for lost or damaged active pharmaceutical ingredients or for pharmaceutical product recall, the cost of which could be significant. Although we believe that we are in compliance in all material respects with applicable laws and regulations, there can be no assurance that a regulatory agency or tribunal would not reach a different conclusion. In addition, there can be no assurance that we will be able to maintain or renew existing permits, licenses or any other regulatory approvals or obtain, without significant delay, future permits, licenses or other approvals needed for the operation of our businesses. Any non-compliance by us with applicable laws and regulations or the failure to maintain, renew or obtain necessary permits and licenses could have an adverse effect on our business, financial condition, operating results or cash flow. Our customers are also subject to various laws and regulations concerning good manufacturing practices and drug safety and may be required to register for permits and/or licenses with, and be required to comply with the law and regulations of Regulatory Authorities. We have no control over the compliance of our customers with such laws and regulations. Failure by our customers to comply with laws and regulations could have a material adverse impact on our business, financial condition, operating results or cash flow. Failure to provide quality offerings to our customers could have an adverse effect on our business and subject us to regulatory actions and costly litigation. Our results depend on our ability to continue to deliver quality products and processes to our customers on time, on budget and at required quality and in compliance with regulatory, industry and specific contractual requirements. While we have a network of quality systems throughout our business units and facilities, quality and safety issues may occur with respect to any of our offerings. A quality or safety issue could have an adverse effect on our business, financial condition, operating results or cash flow and may subject us to regulatory actions, including product recalls, product seizures, injunctions to halt manufacture and distribution, restrictions on our operations, civil sanctions, including monetary sanctions, and criminal actions. Even though our customer contracts contain liability limitation provisions, such an issue could subject us to costly litigation, including claims from our customers for reimbursement for the cost of lost or damaged active pharmaceutical ingredients or any adverse effect which such quality defect has on their production or provision of their services, the cost of which could be significant. Further, any such issue could materially affect our reputation in the market or a relationship with our customers who may cease to purchase our offerings following a discovery of a 47

61 quality defect. Failure to provide quality offerings to our customers could have a material adverse effect on our business, financial condition, operating results or cash flow. We are subject to environmental, health and safety laws and regulations, which could increase our costs and restrict our operations in the future. Our operations are subject to a variety of environmental, health and safety laws and regulations, enforced by the European Chemicals Agency which manages the technical, scientific and administrative aspects of the Registration, Evaluation, Authorization and Restriction of Chemicals ( REACH ) initiative and equivalent local, state, and other international regulatory agencies in each of the jurisdictions in which we operate. Under REACH, certain substances identified as particularly harmful to human health or the environment can be banned either completely or in certain applications, whereas other substances can be subject to temporary authorization. We are subject to various other environmental, health and safety laws and regulations. These laws and regulations govern, among other things, air emissions, wastewater discharges, the use, handling and disposal of, and exposure to, hazardous substances and wastes, soil and groundwater contamination and employee health and safety. Any failure by us to comply with environmental, health and safety requirements could result in the limitation or suspension of production or subject us to monetary fines or civil or criminal sanctions or to other future liabilities in excess of our reserves. We are also subject to laws and regulations governing the destruction and disposal of raw materials and non-compliant products, the handling of regulated materials that are included in our offerings and the disposal of our offerings and the products in which they are used at the end of their useful life. In addition, compliance with environmental, health and safety requirements could restrict our ability to expand our facilities or require us to acquire costly pollution control equipment, incur other significant expenses or modify our manufacturing processes. Our manufacturing facilities use, to varying degrees, hazardous substances in their processes. Contamination and pollution can result in liability for us. In the event of the discovery of new or previously unknown contamination either at our facilities or at third-party locations, including facilities we formerly owned or operated, the issuance of additional requirements with respect to existing contamination, or the imposition of other clean-up obligations for which we may be responsible, we may be required to take additional, unplanned remedial measures for which no reserves have been recorded. A number of our facilities have been in operation for a long period of time, producing a broad range of substances under regulatory regimes much weaker than that currently existing. The environmental impact of such operation is not fully assessed. In addition, if we had to close down one of our manufacturing units due to the application of environmental regulations, we could suffer temporary or permanent interruption in the manufacture of our products and considerable delays in obtaining the regulatory authorization required to reopen the manufacturing unit and resume operations. The demand for our offerings depends in part on our customers research and development and our customers investment strategies. We provide services, active ingredients and advanced intermediates as well as equipment and systems to our customers who use them to develop and produce pharmaceutical and biopharmaceutical drugs, agrochemicals, other fine chemicals and food supplements and other industrial biotechnology ingredients. We rely on the development of new products such as those developed by our customers, their ability to obtain the relevant authorizations to manufacture and sell these products and their commercial success in their respective markets. As we supply products which are part of the composition of such products and provide processes used in their manufacture, a change in our customers strategy in research and development may have a material adverse effect on our business, financial condition, operating results or cash flow. In addition, as we have experienced with certain clients and with certain products in the past, pharmaceutical and other companies to which we currently supply outsourcing solutions might engage in 48

62 new production contracts with other suppliers to diversify their sourcing or for other reasons or decide to produce their ingredients and intermediates in-house if they have the financial and technical resources to do so. As a consequence, we might not be able to renew some of our current contracts with pharmaceutical and other companies, which may have a material adverse effect on our business, financial condition, operating results or cash flow. Finally, pharmaceutical and other companies to which we sell purification processes and technologies might reduce or postpone their investment in production capacity. As a consequence, sales of purification processes and technologies to pharmaceutical and other companies might decrease. Decisions by our customers to decrease or postpone investments might adversely affect our business, financial condition, operating results or cash flow and there have been in recent years a number of such capital investment postponements by our customers. Our business may be affected by mergers and acquisitions of our customers. There has been a continuous trend towards mergers and acquisitions in the pharmaceutical and biopharmaceutical markets in which we generate most of our revenue. This merger and acquisition activity involves large companies as well as mid-size companies and biotechnology companies. Mergers and acquisitions involving our customers in these markets may result in delayed commitments, project cancellations or drastic changes in sourcing or purchasing strategies of our customers, which could have a material adverse effect on our business, financial condition, operating results or cash flow. Our revenues may be significantly affected by our customers spending decisions, which may be in turn affected by global economic conditions. Many of our largest customers are major pharmaceutical companies whose research and development and capital expenditure budgets change over time and the focus of whose activities changes over time. We also generate a substantial portion of our revenues from small and mid-size companies which have more trouble accessing capital, especially during periods of lower economic activity or market volatility. These conditions may result in the cancellation of contracts or delays or breaches of their payment obligations which may substantially adversely affect our business, financial condition, operating results or cash flow. We participate in a competitive market and increased competition may adversely affect our business. We face competition in each of our markets. Competition is driven in our industry by available facilities and staff, proprietary technologies and know-how, quality, price, value and efficiency, among other factors. Some competitors may have greater financial, research and development, operational and marketing resources than we do. Competition may also increase as new companies begin to enter our markets or use their existing resources to compete directly with us. Increased competition from manufacturers in low-cost jurisdictions such as India and China may in the future impact our results of operations or prevent our growth. The increasing presence of Asian suppliers in our markets creates downward pressure on prices in European and North American markets where we generate most of our sales. Moreover, our competitors may respond more quickly to our customers needs with new technologies that may render our offerings obsolete or non-competitive. The increased competition and pressure on prices could have material adverse effects on our business, financial condition, operating results or cash flow. Our business is engaged in innovative developmental therapies for which the market potential is still theoretical. We currently supply development and manufacturing services for innovative classes of therapies that are still in development, including viral vectors for gene therapies, novel vaccines and antibody-drug conjugates for cancer treatment. We have made a major investment in antibody-drug conjugates ( ADCs ), and we are considering investing to expand our viral vector production capabilities. While these developmental fields are generally considered to have substantial market potential, the therapies are 49

63 in the development phase and typically have limited or no demonstrated pharmaceutical proof of concept. A general failure of a new class of therapeutics could materially affect the development and profitability of our operations and force us to write-off substantial investments. Changes in healthcare reimbursement in the European Union or the United States or internationally could adversely affect our results of operations and financial condition in our Synthesis and Biopharma businesses. Changes in food manufacturing restrictions and regulations worldwide can significantly impact our Industrial Biotech business. Adverse changes in government funding of healthcare products and services, legislation or regulations governing the privacy of patient information or the delivery or pricing of pharmaceuticals and healthcare services or mandated benefits may cause healthcare industry participants to reduce the amount of our offerings they purchase or the price they are willing to pay for our offerings. Changes in the healthcare industry s pricing, selling, inventory, distribution or supply policies or practices could also significantly reduce our revenue and results of operations. In particular, volatility in individual product demand may result from changes in public or private payer reimbursement or coverage. Adverse changes in food manufacturing regulations could also affect our Industrial Biotech business. For example the sugar quotas regulations may change in E.U. and that could impact our ability to deliver new purification equipment and engineering services to the sugar industries. If such changes were to occur, our business, financial condition, operating results or cash flow could be materially adversely affected. Our services and offerings are highly exacting and complex, and if we encounter problems providing the services or support required, our business could suffer. Our offerings are highly exacting and complex due in part to strict regulatory requirements. From time to time, problems may arise in connection with facility operations or during preparation or provision of an offering, in both cases for a variety of reasons including equipment malfunction, failure to follow specific protocols and procedures, problems with supply or variability of raw materials or other purchased components. Such problems could affect production of a product or equipment or the supply of a particular service which may lead to us having to destroy or dispose of materials, halt facility production altogether or lead to us having to suspend the provision of a service. This could, among other things, lead to increased costs, lost revenue, damage to customer relations, reimbursement to customers for lost active pharmaceutical ingredients, time and expense spent investigating the cause and, depending on the cause, similar losses with respect to other batches or products. If problems are not discovered before the product is released to the market, recall and product liability costs may also be incurred. If we encounter problems providing the services or support required, our business, financial condition, operating results or cash flow could be materially adversely affected. We handle, stockpile and produce volatile or hazardous materials which generate environmental and safety risks. Our research and development and our production facilities handle and produce and we transport volatile or hazardous materials. Operational risks associated with such materials include: Explosions and fires; Leakage from pipelines, vehicles and tanks; Pollution; Exposure of our employees to dangerous substances; and Emissions of toxic or dangerous gases and substances. 50

64 These operational risks can entail injuries or deaths, material damage and environmental contamination. Serious events could trigger the closure of one or more of our facilities and the interruption of our operations and could expose us to civil and penal sanctions. While we believe we have implemented reliable security measures, any such event may have a material adverse effect on our business, financial condition, operating results or cash flow. Our global operations are subject to a number of economic, political and regulatory risks. We conduct our operations in various regions of the world, including mainly Europe, North America and the Asia-Pacific region. Our Industrial Biotech and Biopharma business segments from time to time conduct material sales and installations in regions such as Africa, Near/Middle-East and South America. Global political and regulatory developments affect businesses such as ours in many ways. Local jurisdiction risks include regulatory risks arising from local laws. Our global operations are also affected by local economic environments, including inflation and recession. Political changes, some of which may be disruptive, can interfere with our supply chain and customers and all of our activities in a particular location. Other risks include, among other things: risks related to change or lack of harmonization of regulation, fiscal and commercial legislation; credit risks and risks related to financial situation of clients and suppliers; risks related to potential restrictions on investments, exports and imports; risks related to potential restrictions on supply of certain goods by foreign companies; risks related to insufficient protection of our intellectual property; risks related to political, economic and social changes in a particular region or country, and particularly hyperinflation and political instability; risks related to the lack of international agreements on regulatory norms ruling our activity; and risks related to currency controls and repatriation of cash. We may not be able to develop and implement strategies to appropriately mitigate such risks in each country where we have operations. This could limit our ability to sell our products or provide services in some of these countries. While some of these risks can be hedged using derivatives or other financial instruments and some are insurable, such attempts to mitigate these risks are costly and not always successful. Also, fluctuations in foreign currency exchange rates can impact our consolidated financial results. Such risks may have a material adverse effect on our business, financial condition, operating results or cash flow. If we do not enhance our existing technology or introduce new technology or service offerings in a timely manner, our offerings may become obsolete over time, customers may not buy our offerings and our revenue and profitability may decline. The life science industries are characterized by technological change. Demand for our offerings may change because of such evolving industry standards as well as a result of evolving customer needs that are increasingly sophisticated and varied and the introduction by others of new offerings and technologies. Several of our higher margin offerings are based on proprietary know-how, processes or technologies. We cannot guarantee that current competitors or new entrants to the market will not be able to offer competing or superior services to our own processes or technologies. In addition, the patents for some of our technologies will ultimately expire and these offerings may become subject to increased generic competition. Without the continued introduction of enhanced or new offerings, our offerings may become obsolete over time, in which case our revenue and operating results would suffer. For example, if we are unable to respond to changes in the nature or extent of the technological or other needs of our customers through enhancing our offerings, our competitors may develop product portfolios that are more competitive than ours and we could find it more difficult to renew or expand existing agreements or obtain new agreements. Innovations directed at continuing to offer enhanced or new offerings generally will require substantial investment before we can determine their commercial viability and we may not have the financial resources necessary to fund these innovations. The success of enhanced or new offerings will depend on several factors, including our ability to: 51

65 properly anticipate and satisfy customer needs, including increasing demand for lower cost products; enhance, innovate, develop and manufacture new offerings in an economical and timely manner; differentiate our offerings from competitors offerings; achieve positive clinical outcomes for our customers new products; meet safety requirements and other regulatory requirements of government agencies; obtain valid and enforceable intellectual property rights; avoid infringing the intellectual property rights of third parties; and create the facilities and infrastructure necessary to deliver new offerings. Even if we succeed in creating enhanced or new offerings from these innovations, they may still fail to result in commercially successful offerings or may not produce revenue in excess of the costs of development and they may be quickly rendered obsolete by changing customer preferences or the introduction by our competitors of offerings embodying new technologies or features. Finally, innovations may not be accepted quickly in the marketplace because of, among other things, entrenched patterns of clinical practice, the need for regulatory clearance and uncertainty over third-party reimbursement. If we do not enhance our existing technology or introduce new technology or service offering in a timely manner, our business, financial condition, operating results or cash flow could be materially adversely affected. Our activities are subject to natural disasters which are beyond our control. Our activities are subject to natural disasters and extreme weather including heavy rains, floods and earthquakes. If, following such an event, we could not quickly resume operations in one of our facilities, we may be forced to relocate part of its operations. Because of the complexity of the offerings we supply, such relocation might prove lengthy and costly, or may not be possible at all. While these risks are covered by specific insurance policies, particularly with respect to damage to manufacturing equipment, business interruption and civil responsibility to an extent we believe appropriate, our insurance coverage might prove insufficient and certain risks and events are uninsurable. Any business interruption or other damage not covered by our insurance policies might adversely affect our assets, results and financial situation. One or more of our sites might be subject to terrorist attack. In the recent past, chemical and other industrial sites, including in France, have been the target of terrorist attacks. While we believe that we have adequate security measures in place, we may be subject to a terrorist attack, which could cause casualties among our personnel or our contractors personnel, cause material damage at a plant and/or temporarily or permanently affect the production at one or more of our sites. While these risks are covered by specific insurance policies, particularly with respect to damage to manufacturing equipment, business interruption and civil responsibility to an extent we believe appropriate, our insurance coverage might prove insufficient and certain risks and events are uninsurable. Any business interruption or other damage not covered by our insurance policies might adversely affect our assets, results and financial situation. Our future results of operations are subject to fluctuations in the costs, availability and suitability of the raw materials and energy we use. Each year we need to invest significant funds into maintenance or new facilities, failure to make such investments timely could lead to issues or lead to us not winning business. We purchase various raw materials, including solvents, reagents and stainless steel components, as well as large quantities of energy and water from various sources. Raw material and energy prices fluctuate and are highly cyclical. We are therefore exposed to the volatility of raw materials and energy prices. In particular, prices of natural gas, oil and other hydrocarbons have varied significantly in recent years. We usually purchase from suppliers with long term contracts with prices indexed to market prices. If raw material, energy and water prices were to increase, and if we are not capable of passing on such increases to our clients, our business, financial condition, operating results or cash flow could be materially adversely affected. 52

66 Historically, we have not always been able to fully pass on price increases to our clients and not all of our contracts expressly provide a mechanism for doing so. Moreover, some of our contracts require us to pass on certain cost savings when the price of raw materials decreases. In addition, while we have processes intended to reduce volatility in component and material pricing, we may not be able to successfully manage price fluctuations and future price fluctuations or shortages may have an adverse effect on our business, financial condition, operating results or cash flow. Raw material and the equipment we use are sourced from specific suppliers and sometimes singlesourced. We may not be able to renew our supply contracts on competitive terms and conditions, and qualifying new suppliers may be a lengthy process due to regulatory constraints. As a consequence, we could face higher purchasing costs and delays or interruptions in our sourcing and may not be able to comply with our contractual obligations vis-à-vis our customers or face higher production costs. Fluctuation in the costs and the availability and suitability of the raw material we use may have a material adverse effect on our business, financial condition, operating results or cash flow. We depend on global supply chain for components and raw materials and we typically carry the risk associated with ability to acquire the necessary materials in a timely fashion. Risks generally associated with our information systems could adversely affect our results of operations. We rely on information systems in our business to obtain, rapidly process, analyze and manage data to: facilitate the manufacture and distribution of inventory items to and from our facilities; receive, process and ship orders on a timely basis; manage the accurate billing and collections for customers; manage the accurate accounting and payment for vendors; and schedule and operate our global network of manufacturing and development facilities. Our business, financial condition, operating results or cash flow could be adversely affected if these systems are interrupted, damaged by unforeseen events or fail for any extended period of time, including due to the actions of third parties. We may in the future engage in acquisitions and other transactions that may complement or expand our business or divest of non-strategic businesses or assets. We may not be able to complete such transactions and such transactions, if executed, could pose significant risks and could have a negative effect on our operations. Our future success may be dependent on opportunities to buy other businesses or technologies and possibly enter into joint ventures that could complement, enhance or expand our current business or offerings and services or that might otherwise offer us growth opportunities. We may face competition from other companies in pursuing acquisitions. We may not be able to gain financing at sufficiently attractive terms. Our ability to acquire targets may also be limited by applicable antitrust laws and other regulations in the European Union, the United States and other jurisdictions in which we do business. To the extent that we are successful in making acquisitions, we may have to expend substantial amounts of cash, incur debt and assume loss-making divisions. Any transactions that we are able to identify and complete may involve a number of risks, including diversion of management s attention to integrate the acquired businesses or joint ventures, the possible adverse effects on our operating results during the integration process, the potential loss of customers or employees in connection with the acquisition and our potential inability to achieve the intended objectives of the transaction. In addition, we may be unable to maintain uniform standards, controls, procedures and policies, which may lead to operational inefficiencies and we may become subject to new standards of regulation. To the extent that we are not successful in completing divestitures, we may have to expend substantial amounts of cash, incur debt and continue to absorb loss-making or under-performing divisions or sites. Any divestitures that we are unable to complete may involve a number of risks, including diversion of management s attention, a negative impact on our customer relationships, potential loss of key employees 53

67 of these operations, costs associated with retaining the targeted divestiture, closing and disposing of the impacted business or transferring business to other facilities. We and our customers depend on know-how, trade secrets, patents, copyrights and other forms of intellectual property protections and these protections may not be adequate. We rely on a combination of know-how, trade secret, patent, and other forms of intellectual property protection, including but not limited to, non-disclosure, confidentiality and other contractual provisions as well as technical measures to protect a number of our products, processes, technologies and intangible assets. There can be no assurance that this protection will prove meaningful against competitive offerings or otherwise be commercially valuable or that we or our clients, for which we manufacture custom products or implement custom processes, will be successful in obtaining additional intellectual property or enforcing our intellectual property rights against unauthorized users. We do not know whether third parties will independently develop similar or alternative products, technologies or processes, or duplicate any of our products, technologies or processes. Although certain purification technologies and processes are principally protected by know-how, our patent rights for some of these technologies and processes are due to expire in the near term, which could affect our revenue and profitability. When patents covering an offering expire, loss of exclusivity may occur and this may force us to compete with third parties, thereby affecting our revenue and profitability. Our proprietary rights or the proprietary rights of our clients for which we provide custom products and processes may be invalidated, circumvented or challenged. We or our clients may in the future be subject to patent challenges in Europe and in the United States or similar challenges in other jurisdictions in which we or our clients hold patent rights. These challenges whether or not successful might result in substantial costs and diversion of resources and management attention. In addition, we may need to take legal actions to enforce our intellectual property rights or to determine the validity and scope of the proprietary rights of others. The outcome of any such legal or administrative action may be unfavorable to us. These legal and administrative actions regardless of outcome might result in substantial costs and diversion of resources and management attention. Although we use reasonable efforts to protect our proprietary and confidential information, there can be no assurance that our non-disclosure, confidentiality and other contractual agreements will not be breached or violated, the technical protective measures we have will prove effective, our trade secrets will not otherwise become known by competitors or that we will have adequate remedies in the event of unauthorized use or disclosure of proprietary information. In addition, non-patentable industrial processes and confidential know-how are also important to our business. We cannot guarantee that these industrial processes and know-how will not be divulged or that third parties will not independently develop or obtain know-how identical or similar to ours, or even obtain patents covering some of our know-how and operations, which in the future could prevent us from continuing or expanding such operations. Nor can we assume that third parties will not design around our patent claims to produce competitive offerings. The use of our technology or similar technology by others could reduce or eliminate any competitive advantage we have developed, cause us to lose sales or otherwise harm our business. Our use of certain intellectual property rights is also subject to license agreements with third parties for certain patents, software and information technology systems and proprietary technologies. If these license agreements were terminated for any reason, it could result in the loss of our rights to this intellectual property, our operations may be materially adversely affected and we may be unable to commercially produce certain offerings. In addition, many of our pharmaceutical customers rely on patents to protect their branded products from generic competition. Because incentives exist in some countries, including the European Union countries and the United States, for generic pharmaceutical companies to challenge these patents, pharmaceutical and biotechnology companies are under ongoing threats of challenges to their patents. If our customers patents were successfully challenged and as a result subjected to generic competition, the market for our 54

68 customers products could be significantly impacted and such impact could affect our profitability and revenue. If we or our clients are not able to protect our know-how, trade secrets, patents, trademark, and copyrights and other forms of intellectual property adequately, our business, financial condition, operating results or cash flow may be materially adversely affected. Our offerings and our customers products may infringe on the intellectual property rights of third parties. From time to time, third parties have asserted intellectual property infringement claims against us and our customers and there can be no assurance that third parties will not assert infringement claims against us or our customers in the future nor can there be any assurance that we would not be found to infringe on the proprietary rights of others. Patent applications in the European Union, the United States and some other countries are generally not publicly disclosed until the patent is issued or published, and we may not be aware of currently filed patent applications that relate to our existing or prospective offerings or processes. If patents are later issued on these applications, we may be found liable for subsequent infringement. Any claims that our offerings or processes infringe these rights (including claims arising through our contractual indemnification of our customers), regardless of their merit or resolution, could be costly and may divert the efforts and attention of our management and technical personnel. We may not prevail in such proceedings given the complex technical issues and inherent uncertainties in intellectual property litigation. If such proceedings result in an adverse outcome, we could, among other things, be required to: pay substantial damages; cease the manufacture, use or sale of the infringing offerings or processes; discontinue the use of the infringing technology; expend significant resources to develop non-infringing technology; license technology from the third party claiming infringement, which license may not be available on commercially reasonable terms, or may not be available at all; or lose the opportunity to license our technology to others or to collect royalty payments based upon successful protection and assertion of our intellectual property against others. In addition, our customers products may be subject to claims of intellectual property infringement and such claims could materially affect our business if their products cease to be manufactured and they have to discontinue the use of the infringing technology which we may provide. Any of the foregoing could have a material adverse effect on our business, financial condition, operating results or cash flow. We may be required to file lawsuits or take other actions to protect or enforce our patents which could be expensive and time consuming. Competitors or others may infringe our intellectual property rights. To counter infringement or unauthorized use, we may be required to assert claims of infringement against third parties that can be expensive and time-consuming. In addition, in a patent infringement proceeding, a court may decide that one of our patents is not valid or is unenforceable or may refuse to stop the other party from using the technology or process at issue on the grounds that one of our patents does not cover the technology or process in question. An adverse outcome in any litigation or defense proceedings for a given product or process could also put our intellectual property for related products and processes at risk. Failure to successfully defend or enforce our intellectual property rights and failure by our customers to successfully defend or enforce their intellectual property rights could materially affect our business. We have to comply with strict labor laws in some countries where we have operations, and relations with employees might deteriorate. 55

69 Labor law in some countries where we operate, particularly France, Germany and Belgium, ensures a high level of protection to employees. In addition, in such countries, some employees are members of trade unions and in some instances all of our employees are collectively represented. In many cases, we have a legal obligation to ask for the opinion or the agreement of employees, their representing bodies or trade unions on strategic and operational business decisions. These labor laws and consultation procedures might limit our flexibility to pursue new operations or technologies, our reactivity in rapidly changing market conditions, and our capacity to reduce our workforce if necessary. Failure by us to comply with such labor laws and consultation procedures could lead to litigation or other forms of claim. From time to time, we have experienced strikes at our French sites (which so far have not been material in terms of duration and impact) in relation to negotiations of employment redundancy plans or for other reasons. While we have reached agreements with the workers council regarding such plans, we may experience in the future strikes in relation to other social plans or events. Most of our employees are members of employee collective agreements. We may not be able to negotiate future collective agreements on mutually satisfactory terms, and this may lead to difficulties in employee relations which in turn may result in interruption to our operations. If employees were to strike or take actions in relation with the negotiation of future collective agreements or any other negotiations, our financial performance and market reputation might be adversely impacted. We are dependent on key personnel. We depend on senior executive officers and other key personnel, including our technical personnel, to run and grow our business and to develop new enhancements, offerings and technologies. The loss of any of these officers or other personnel or the failure to attract and retain suitably skilled technical personnel could adversely affect our operations, our capacity to develop innovative products and technologies and our relationships with customers and we may encounter difficulties in finding suitably qualified replacements. Fluctuations in the exchange rate of the Euro against the U.S. Dollar and other foreign currencies could have a material adverse effect on our financial performance and results of operations. As a company with many international entities, certain revenues, costs, assets and liabilities are denominated in currencies other than Euro. As a result, changes in the exchange rates of these currencies or any other applicable currencies to Euro will affect our revenues, earnings and cash flows and could result in exchange losses despite our efforts to manage or mitigate our exposure to foreign currency fluctuations. Fluctuations in exchange rates may result from changes in economic conditions, investor sentiment, monetary and fiscal policies, the liquidity of global markets, international and regional political events, and acts of war or terrorism. We may incur liabilities that are not covered by insurance. We carry insurance of various types, including property damage, general liability, business interruption, workers compensation, employment practice, pension-related and general liability coverage. Not all claims are insurable and there can be no assurance that we will not experience major incidents of a nature that are not covered by insurance. In addition, our insurance costs may increase over time in response to any negative development in our claims history or due to material price increases in the insurance market in general. There can be no assurance that we will be able to maintain its current insurance coverage or do so at a reasonable cost. Changes in regulations in the pharmaceutical, biopharmaceutical and industrial biotechnology industries, the crop science industry and in the food and functional ingredient industries could have a material adverse effect on us. Significant changes in regulations in the pharmaceutical industry, biopharmaceutical and industrial biotechnology industries, the crop science industry and in the food and functional ingredient industries may adversely affect the ability of our customers to develop or market certain products that either we manufacture for them or for the production of which they would otherwise purchase our purification 56

70 processes, and this could materially affect our business, financial condition, operating results or cash flow. In addition, significant changes in regulations for some products including commodities have occurred in the past and changes in the future may substantially affect certain markets in Europe, the United States, China or other markets where we operate. This could cause project delays or cancellations, and could materially affect our business, financial condition, operating results or cash flow. Changes in tax and duty regulations (especially in France and China) could significantly impact the company performance. Novasep reduces the amount of tax it pays each year through use of NOLs (Net Operating Losses carried forward). Changes in usability of NOLs or the general taxation regime would significantly impact Novasep s cash flow. In addition, Novasep utilizes financing from the French government for its tax receivables. Changes to this financing program could negatively affect Novasep. Novasep receives substantial research tax credit from the French government. Such favorable tax incentives may be reduced or may end in the future, resulting in a substantial increase in our net research and development expense, or force us to reduce it with potential adverse consequences to our future competitiveness. Lastly, Novasep conducts significant operations in Asia, where it is both an importer and exporter. Changes to regulatory environment that could limit Novasep s ability to act in this way could impact Novasep s performance. Risks Related to the Exchange Notes None of our subsidiaries will guarantee or secure the Exchange Notes and the Exchange Notes will be structurally subordinated to the liabilities of our subsidiaries. At the Closing Date, the Exchange Notes will not be guaranteed by any of our subsidiaries, and the Exchange Notes will be structurally subordinated to the liabilities of our subsidiaries. As none of the subsidiaries are guarantors, no subsidiary will have any obligations to pay amounts due under the Exchange Notes or to make funds available for that purpose. Generally, holders of indebtedness and trade creditors of any of our subsidiaries, including lenders under bank financing agreements, are entitled to payments of their claims from the assets of such companies before these assets are made available to us or any of our other subsidiaries. Accordingly, in the event that any subsidiary becomes insolvent, is liquidated, reorganized or dissolved or is otherwise wound up other than as part of a solvent transaction: a) our creditors (including the holders of the Exchange Notes) will have no right to proceed against the assets of such subsidiary; and b) creditors of such subsidiary, including trade creditors, will generally be entitled to payment in full from the sale or other disposal of the assets of such company before we or any of our other subsidiaries, as a direct or indirect shareholder, will be entitled to receive any distributions from such subsidiary. As such, the Exchange Notes will be structurally subordinated to the creditors (including trade creditors) and any preferred stockholders of any of our subsidiaries. Junior Amounts payable under the Exchange Notes are subordinated obligations of Novasep. The Junior Amounts (as defined in Condition 2 Status in Terms and Conditions of the Exchange Notes )) payable under the Exchange Notes constitute direct unconditional, unsecured and subordinated obligations of Novasep and will rank junior to the obligation of Novasep to pay Bpifrance the Blockage Payment (as defined in Condition 2 Status in Terms and Conditions of the Exchange Notes ). As further described in Terms and Conditions of the Exchange Notes, on the Maturity Dates or the date fixed for redemption or purchase of the Exchange Notes, Novasep will make payments in respect of any Junior Amounts only to the extent that Bpifrance has previously received since March 15, 2012 in consideration of its B Preference Shares an aggregate amount equal to the Blockage Payment. Upon early 57

71 or final redemption of all, but not some only, of the Exchange Notes prior to the payment in full to Bpifrance of the Blockage Payment, the Exchange Notes will be redeemed at a price equal to the Senior Amounts (as defined in Condition 5(a) Final Redemption in Terms and Conditions of the Exchange Notes ) and the principal amount of the Exchange Notes will, in accordance with the Conditions of the Exchange Notes, be reduced to the New Junior Outstanding Principal Amount (as defined in Condition 4 Interest in Terms and Conditions of the Exchange Notes ) and remain subordinated to Novasep s obligation to pay the Blockage Payment to Bpifrance. Upon redemption of some only, but not all, of the Exchange Notes or upon redemption of the Exchange Notes in accordance with Condition 5(d) Offer to repurchase upon change of control or Condition 5(e) Purchase in Terms and Conditions of the Exchange Notes, prior to the payment in full to Bpifrance of the Blockage Payment, Novasep will pay Senior Amounts to holders of the Exchange Notes and, in accordance with the Conditions of the Exchange Notes and issue New Subordinated Exchange Securities (as defined in Condition 4 Interest in Terms and Conditions of the Exchange Notes ) with a principal amount equal to any Junior Amount remaining outstanding, which will be subordinated in right of payment to Novasep s obligation to pay the Blockage Payment to Bpifrance. Furthermore, until Novasep has paid the Blockage Payment to Bpifrance, the occurrence of an Event of Default under the Exchange Notes shall not lead to the acceleration of the Junior Amounts outstanding. In the event any judgment were issued for the judicial liquidation (liquidation juridiciaire) of Novasep or if Novasep were liquidated for any other reason, the rights of holders of Exchange Notes to payments of Junior Amounts due under the Exchange Notes or the New Subordinated Exchange Securities will be subordinated to Bpifrance s right to the full payment of the Blockage Payment. Thus, the holders of Exchange Notes, face a higher recovery risk with respect to Junior Amounts due under the Exchange Notes or New Subordinated Exchange Securities than with respect to unsubordinated obligations of Novasep. If the Blockage Payment (as defined in Condition 2 Status in Terms and Conditions of the Exchange Notes ) has not been paid in full on or before the Maturity Date (as defined in Condition 4 Interest in Terms and Conditions of the Exchange Notes ), Novasep will pay holders of the Exchange Notes only the Senior Amounts and either the nominal amount of the Exchange Notes will be reduced to the New Junior Outstanding Principal Amount, or Novasep will issue New Subordinated Exchange Securities in respect of Junior Amounts. Novasep will only be obligated to make payment in respect of such Junior Amounts due under the Exchange Notes or the New Subordinated Exchange Securities immediately following (but on the same date as) the date on which it makes the Blockage Payment in full to Bpifrance. Holders of Exchange Notes will have no right to require payment of such Junior Amounts or redemption of such New Subordinated Exchange Securities unless and until the Blockage Payment has been paid in full to Bpifrance. Therefore, prospective investors should be aware that they may not recover the Junior Amounts for an extended period. Novasep is a holding company and will depend on receiving payments from its subsidiaries to meet its obligations under the Exchange Notes. Novasep is a holding company that conducts substantially all of its operations through its direct and indirect subsidiaries. Consequently, Novasep has no material amount of independent operations and derives substantially all of its consolidated revenues from its direct and indirect operating subsidiaries. As a result, its ability to meet its debt service obligations, including its obligations under the Exchange Notes, depends upon its subsidiaries cash flow and payment of funds to it by its subsidiaries in the form of dividends, loans, advances or other payments, as well as its own credit arrangements. Applicable laws and regulations and the terms of other agreements to which our subsidiaries may be or become subject could restrict the ability of our subsidiaries to provide funds to us. Under German law, subsidiaries that are organized in the form of German limited liability companies (GmbH) or limited partnerships with a limited liability company as general partner (GmbH & Co KG) are prohibited from making payments (or granting other financial advantages) to their direct and indirect shareholders unless such payments are made out of the company s free net assets, i.e. such payments must not cause such subsidiary s net assets (assets minus liabilities) to fall below the amount of its registered share capital (Stammkapital). If applicable, this would mean that Novasep would be unable to use the earnings of these subsidiaries to the extent they face restrictions in Germany on distributing funds to Novasep. According to case law of the German Federal Supreme Court, the ability of a limited liability 58

72 company to make payments to its direct or indirect shareholders is also limited where the granting of benefits to shareholders would deprive the company of the liquidity necessary to properly meet its obligations towards third parties (so-called insolvency-causing interference ). Further, under Belgian and French law, the ability of a Belgian or French subsidiary to make payments to its parent company is subject to corporate benefit rules as well as applicable Belgian or French rules on financial assistance. In addition and more generally, each form of upstream payment by a subsidiary (including, but not limited to, dividend distributions) is also subject to additional restrictions and requirements set forth by law applicable to such type of upstream payment. In addition to any legal restrictions and restrictions contained or that may be contained in agreements, any failure to comply with the covenants and restrictions contained in such agreements could trigger defaults under those agreements, which could delay or preclude the distribution of dividend payments or other similar payments to Novasep. As a result, we might not have access to the assets or cash flows of our subsidiaries. We may be able to incur more indebtedness in the future. Subject to the terms of the Exchange Notes, Novasep and its subsidiaries are not prohibited from incurring additional indebtedness in the future, including indebtedness which will rank senior (both contractually and in some cases, structurally) to the Exchange Notes. Certain of this indebtedness may be secured. Any such incurrence of further indebtedness will increase Novasep s finance costs and expenditures. In addition, to the extent Novasep defaults on any additional indebtedness, such default may have an adverse effect on the holders of the Exchange Notes and risk the repayment or refinancing of the Exchange Notes in the future. There is no public trading market for the Exchange Notes and therefore your ability to transfer them will be limited. There is no existing trading market for the Exchange Notes. We expect to make an application to list the Exchange Notes (but not the Warrants or Warrant Shares) on the Official List of the Luxembourg Stock Exchange and to admit them to trading on the Euro MTF; however, we cannot assure you that such a listing will be obtained. We cannot assure you that a market for the Exchange Notes will develop. Similarly, we cannot assure you of the ability of holders of the Exchange Notes to sell the Exchange Notes or the price at which holders may be able to sell the Exchange Notes. If a public market were to develop, the Exchange Notes could trade at prices that may be lower than the initial offering price, depending on many factors, the changes in the overall market for high yield securities and changes in our financial performance or in the markets where we operate. Historically, the markets for non-investment grade debt such as the Exchange Notes have been subject to disruptions that have caused substantial volatility in their prices. The market, if any, for the Exchange Notes, may be subject to similar disruptions, any of which may have an adverse effect on the holders of the Exchange Notes. The transfer of the Exchange Notes, the Warrants and the Warrant Shares, is restricted, which may adversely affect their liquidity and the price at which they may be sold. None of the Exchange Notes, the Warrants or the Warrant Shares have been registered under, and we are not obliged to register any such securities under, the Securities Act or the securities laws of any other jurisdiction and, unless so registered, none of the Exchange Notes, the Warrants or the Warrant Shares may be offered or sold except pursuant to an exemption from, or a transaction not subject to, the registration requirements of the Securities Act and any other applicable securities laws. As such, the Exchange Notes, the Warrants and the Warrant Shares may only be transferred outside the United States in offshore transactions as defined in, and in accordance with, Regulation S or to QIBs within the United States to QIBs that are acquiring such securities for their own account or for a discretionary account or accounts on behalf of one or more QIBs in reliance on Rule 144A or pursuant to another exemption from, or transaction not subject to, the registration requirements of the Securities Act. Therefore, you may be required to bear the risk of your investment for an indefinite period of time. See 59

73 Transfer Restrictions for further discussion of the restrictions applicable to transfers of the Exchange Notes, the Warrants and the Warrant Shares. Legal investment considerations may restrict certain investments The investment activities of certain investors are subject to legal investment laws and regulations, or review or regulation by certain authorities. Each noteholder should consult its legal advisers to determine whether and to what extent (i) Exchange Notes with Warrants are legal investments for it, (ii) Exchange Notes can be used as collateral for various types of borrowings and (iii) other restrictions apply to its purchase or pledge of any Exchange Notes with Warrants. Financial institutions should consult their legal advisors or the appropriate regulators to determine the appropriate treatment of Exchange Notes with Warrants under any applicable risk-based capital or similar rules. An investment in the Exchange Notes may be subject to exchange rate risks and exchange controls Novasep will pay principal and interest on the Exchange Notes in Euro. This presents certain risks relating to currency conversions if an investor s financial activities are denominated principally in a currency or currency unit (the Investor s Currency ) other than Euro. These include the risk that exchange rates may change significantly (including changes due to devaluation of Euro or revaluation of the Investor s Currency) and the risk that authorities with jurisdiction over the Investor s Currency may impose or modify exchange controls. An appreciation in the value of the Investor s Currency relative to the Euro would decrease (i) the Investor s Currency-equivalent yield on the Exchange Notes, (ii) the Investor s Currency-equivalent value of the principal payable on the Exchange Notes and (iii) the Investor s Currency-equivalent market value of the Exchange Notes. Government and monetary authorities may impose (as some have done in the past) exchange controls that could adversely affect an applicable exchange rate. As a result, investors may receive less interest or principal than expected, or no interest or principal. Changes in applicable law may have an adverse effect on holders of the Exchange Notes and the Warrants The terms and conditions of the Exchange Notes and the terms and conditions of the Warrants are governed by the laws of France. No assurance can be given as to the impact of any possible judicial decision or change to the laws of France or administrative practice after the date of this Exchange Offer and Consent Solicitation Statement. Furthermore, Novasep operates in a heavily regulated environment and has to comply with extensive regulations in France and elsewhere. No assurance can be given as to the impact of any possible judicial decision or change to laws or administrative practices after the date of this Exchange Offer and Consent Solicitation Statement. Noteholders rights may be adversely affected by modifications of the terms and conditions of the Exchange Notes, in some cases without their consent Noteholders will be grouped automatically for the defense of their common interests in a Masse, as defined in Terms and Conditions of the Exchange Notes Representation of the Noteholders, and a general meeting of noteholders can be held. In certain cases, the provisions of the French Code de commerce (Commercial Code) permit defined majorities to bind all noteholders including noteholders who did not attend and vote at the relevant general meeting and noteholders who voted in a manner contrary to the majority. The general meeting of noteholders may deliberate on any proposal relating to the modification of the Terms and Conditions of the Exchange Notes, including on any proposal, whether for arbitration or settlement, relating to rights in controversy or which were subject of judicial decisions. Risks Related to the Warrants and the Novasep Shares Novasep shares may be diluted through the Management Incentive Plan, the BSA A and the Warrants. The issuance of the Free Shares to the Managers and any future issuances by us pursuant to the exercise of management warrants under our Management Incentive Plan, the exercise of the BSA A, the exercise of the BSA B or the exercise of the Warrants, may lead to the dilution of participants shareholdings in Novasep and may adversely affect the trading price of the Novasep shares and warrants. In addition, any 60

74 perception by participants that such issuances might occur could also affect the trading price of Novasep shares and Warrants. The Novasep shares and Warrants are subject to transfer restrictions. For a period starting on the date of the Novasep Securityholders Agreement and ending on the date Bpifrance ceases to hold B Preference Shares, no Novasep equity securities may be transferred or issued to a third party which is a competitor to Novasep or its group companies without the prior consent of NVHL and Bpifrance or in the context of an initial public offering of Novasep s securities or change of control of Novasep. In addition, sales of Novasep ordinary shares made following this period must first be offered to NVHL. NVHL retains the right, in consultation with Bpifrance, to decide on the implementation of an IPO or other liquidity event. Further, there is no public trading market for the Novasep shares or Warrants and they will not be listed on a publicly tradable exchange and therefore the ability of NVHL, holders of Warrants and Warrant Exercise Shareholders to transfer shares or Warrants will be limited. There is no existing trading market for the Novasep shares or Warrants and we cannot assure you that a market for the Novasep shares or Warrants will develop. Therefore, we cannot assure you of the ability of NVHL, holders of Warrants and Warrant Exercise Shareholders to sell the Novasep shares or Warrants or the price at which NVHL may be able to sell the Novasep shares and Warrants. The Warrants and Warrant Shares will also be subject to transfer restrictions in accordance with applicable securities laws. See Transfer Restrictions. The Novasep shares and Warrants are subject to tag along rights. In the event of a transfer of more than 50% of the share capital and voting rights of NVHL or a transfer by NVHL of more than 50% of the share capital and voting rights in Novasep, Bpifrance, Azulis, the Managers, Romafi, Roger-Marc Nicoud and other securityholders (including holders of Warrants and Warrant Exercise Shareholders) will be entitled to benefit from proportional tag along rights. If a holder of Novasep shares or warrants chooses to exercise its tag along rights, we cannot guarantee that the consideration NVHL receives for its shares would be adequate or readily tradable if in the form of securities. If a holder of Novasep shares or warrants chooses not to exercise its tag along right (and NVHL does not exercise its drag-along right), the holders of Novasep shares or warrants will remain securityholders in Novasep. There can be no assurance that the interests of the new securityholders will be aligned. In addition, we cannot assure you that the events triggering the tag along right will not have an adverse effect on our business and financial results. Certain reserved corporate actions may not be taken by management of Novasep or its subsidiaries without the consent of a Supervisory Board composed of holders of the Novasep shares. Certain corporate events, such as mergers, acquisitions, disposals, joint venture operations, the incurrence of indebtedness or the granting of liens on our assets require the approval of our Supervisory Board, which is composed of representatives of the holders of the Novasep shares. As a result, the management of Novasep and its subsidiaries will be severely limited in connection with the aforementioned reserve matters. In addition, our principal shareholders may have significant influence over the determination of matters requiring the approval of our Supervisory Board. Any future issuance of B Preference Shares, C Shares or additional shares of ordinary shares could adversely affect the rights of holders of our ordinary shares, which may negatively impact your investment in our ordinary shares. Our board of directors is authorized to issue additional ordinary shares and additional classes or series of preference stock without any action on the part of the stockholders. If we issue shares of preference stock in the future that have a preference over the ordinary shares with respect to the payment of dividends or upon liquidation, dissolution or winding up, or if we issue shares of preference stock with voting rights 61

75 that dilute the voting power of the ordinary shares, the rights of holders of the ordinary shares or the market price of the ordinary shares could be adversely affected. There is currently no market for the Warrants and since they are not expected to be admitted to trading on any financial market, a market for the Warrants may not develop, which would adversely affect the liquidity and price of the Warrants There is currently no market for the Warrants. The price of the Warrants in the secondary market could vary due to general economic conditions and forecasts, Novasep s general business condition and the release of financial information by Novasep. Since no application to list the Warrants is expected to be made, you may be unable to sell Warrants unless a market can be established and maintained. The Warrants can only be exercised during their exercise period and to the extent a holder has not exercised its Warrants before the end of their exercise period those Warrants will lapse without value You should be aware that the subscription rights attached to the Warrants are exercisable only during their exercise period, with each Warrant giving the right to its holder to purchase one newly-issued ordinary share of Novasep for an exercise price per newly-issued ordinary share equal to the ordinary share par value at the time of exercise, subject to any adjustment in accordance with the terms and conditions set out in the Warrants (such par value being equal to Euro on the Closing Date). To the extent a holder of Warrants has not exercised his/her/its Warrants before the end of the exercise period those Warrants will lapse without value. Any Warrants not exercised on or before the final exercise date for the Warrants will lapse without any payment being made to the holders of such Warrants and will, effectively, result in the loss of the holder s entire investment in relation to the Warrants. The market price of the Warrants may be volatile and there is a risk that they may become valueless. The right to exercise the Warrants and receive the Warrant Shares is subject to certain conditions. In order to exercise the Warrants and receive Warrant Shares, holders of Warrants will be required to make certain acknowledgements, representations and warranties to Novasep as of the date of the exercise of such Warrants to ensure that such issuance is not unlawful and not subject to the registration requirements of the Securities Act or any applicable securities law. If a holder of Warrants is unable to provide such acknowledgements, representations and warranties as Novasep deems necessary or advisable for such purposes, such holder will be unable to exercise its Warrants and may lose the entire value of the Warrants. See Transfer Restrictions and Terms and Conditions of the Warrants. The Warrants will become exercisable from the Closing Date, which may increase the number of ordinary shares and result in further dilution for the current shareholders The Warrants will become exercisable as from their issue date, which shall be the Closing Date. To the extent that 100% of the Existing Notes are exchanged pursuant to the Exchange Offer, all Warrants are exercised and based on an ordinary share price of 0.049, the Company would increase by 58,549,200 ordinary shares the total aggregate number of ordinary shares, which would dilute the existing shareholders. Holders of Warrants who are shareholders of Novasep and that do not exercise their Warrants or that sell their Warrants could experience an additional dilution resulting from the exercise of Warrants. Holders may not be able to realize returns on their Warrants within a period that they would consider to be reasonable Investments in Warrants may be relatively illiquid. There may be a limited number of holders of Warrants and this factor, together with the number of Warrants to be issued, may contribute both to infrequent trading in the Warrants and to volatile price movements of the Warrants. The holders of Warrants should not expect that they will necessarily be able to realize their investment in Warrants within a period that they would regard as reasonable. 62

76 Risks Related to Taxation Tax legislation initiatives or challenges to our tax positions could adversely affect our results of operations and financial condition. We are a large multinational corporation with operations in France, Germany, Belgium, the United States and other jurisdictions, including in the Asia-Pacific region. As such, we are subject to the tax laws and regulations of the European Union, of France, of Germany, of Belgium, as well as of the United States federal, state and local governments and of many other jurisdictions. From time to time, various legislative initiatives may be proposed that could adversely affect our tax positions. There can be no assurance that our effective tax rate or tax payments will not be adversely affected by these initiatives. In addition, European, French, German, Belgian and American federal state and local, as well as other international tax laws and regulations are extremely complex and subject to varying interpretations. There can be no assurance that our tax positions will not be challenged by relevant tax authorities or that we would be successful in any such challenge which could have a material adverse effect on our business, financial condition, operating results or cash flow. Taxation statements The holders should be aware that the exchange of Existing Notes in the Exchange Offer for Exchange Notes with Warrants may be subject to taxation depending on tax laws applicable to them. The tax summary contained in this Exchange Offer and Consent Solicitation Statement does not address the tax consequences for holders arising from the exchange of Existing Notes in the Exchange Offer for Exchange Notes. Holders should consult their own tax advisers regarding the tax consequences of the exchange of their Existing Notes and the receipt pursuant to the Exchange Offer of Exchange Notes. Furthermore, potential purchasers and sellers of the Exchange Notes should be aware that they may be required to pay taxes or documentary charges or duties in accordance with the laws and practices of the country where the Exchange Notes are transferred or other jurisdictions. In some jurisdictions, no official statements of the tax authorities or court decisions may be available for financial instruments such as the Exchange Notes. Potential investors are advised not to rely upon the tax summary contained in this Exchange Offer and Consent Solicitation Statement but to ask for their own tax adviser s advice on their individual taxation with respect to the acquisition, holding, sale and redemption of the Exchange Notes. Only these advisors are in a position to duly consider the specific situation of the potential investor. This investment consideration has to be read in connection with the taxation sections of this Exchange Offer and Consent Solicitation Statement. Financial Transaction Tax On February 14, 2013, the EU Commission published a proposal (the Commission s Proposal ) for a Directive for a common financial transactions tax (the EU FTT ) to be implemented under the enhanced cooperation procedure by Belgium, Germany, Estonia, Greece, Spain, France, Italy, Austria, Portugal, Slovenia and Slovakia (the Participating Member States ). However, Estonia has since stated that it will not participate. The Commission s Proposal has very broad scope and could, if introduced, apply to certain dealings in bonds (including secondary market transactions) in certain circumstances. The issuance and subscription of bonds should, however, be exempt. It would call for the Participating Member States to impose a tax of generally at least 0.1% on all such transactions, generally determined by reference to the amount of consideration paid. The mechanism by which the tax would be applied and collected is not yet known, but if the proposed directive or any similar tax is adopted, transactions involving bonds would be subject to higher costs, and the liquidity of the market for the bonds may be diminished. Under the Commission s Proposal, the EU FTT could apply in certain circumstances to persons both within and outside of the Participating Member States. Generally, it would apply to certain dealings in Notes where at least one party is a financial institution, and at least one party is established in a Participating Member State. A financial institution may be, or be deemed to be, established in a Participating Member State in a broad range of circumstances, including (a) by transacting with a person 63

77 established in a Participating Member State or (b) where the financial instrument which is subject to the dealings is issued in a Participating Member State. The EU FTT proposal remains subject to negotiation between Participating Member States. It may therefore be altered prior to any implementation, the timing of which remains unclear. Additional EU Member States may decide to participate. On June 17, 2016 meeting of the Council of the European Union for Economic and Financial Affairs, the EU FTT proposal was discussed and it was agreed that work on the issue would continue during the second half of Prospective holders of the Exchange Notes should consult their own tax advisors concerning the implementation of the EU FTT. 64

78 USE OF PROCEEDS We will not receive any cash proceeds from the issuance of the Exchange Notes with Warrants. The Exchange Notes with Warrants will form part of the Exchange Consideration for Existing Notes as described in this Exchange Offer and Consent Solicitation Statement upon our receipt of the Existing Notes. We will cancel all of the Existing Notes surrendered in exchange for Exchange Notes with Warrants. 65

79 CAPITALIZATION The following table sets forth Novasep s capitalization as of June 30, 2016, both on a historical basis and pro forma to reflect the completion of the Exchange Offer and Consent Solicitation, assuming 100% of holders of the Existing Notes participate in the Exchange Offer and Consent Solicitation (see footnote 1 below). These pro forma adjustments assume and give effect to the consummation of the Exchange Offer and Consent Solicitation and the payment of related fees and expenses, including the expected payment of the Cash Payments. They do not include the impact of the exercise of any warrants, including the Warrants, or the rights of certain shareholders who do not hold Existing Notes to purchase Exchange Notes with Warrants at a price equal to 100% of the principal amount of such Existing Notes in proportion to their respective shareholding in Novasep prior to the Refinancing. Any such purchases will be in addition to the Exchange Notes with Warrants issued in exchange for the Existing Notes, and will increase the aggregate principal amount of Exchange Notes outstanding and the number of Warrants outstanding following the Refinancing. You should read this table in conjunction with (i) Summary Summary Consolidated Financial Data, (ii) Description of Certain Indebtedness, (iii) Proposed Amendments (Successful Consent Solicitation), (iv) our annual report for the year ended December 31, 2015 and (v) our interim report for the six months ended June 30, 2016, each of which are included elsewhere or incorporated by reference into this Exchange Offer and Consent Solicitation Statement. This table does not reflect our capitalization in case the Contingency Plan is implemented, nor does it reflect the exercise of any Warrants, warrants attached to the B Preference Shares, rights attached to the Free Shares or any other right to acquire equity of Novasep. As of June 30, 2016 Historical Pro Forma (Euros in millions) (unaudited) (unaudited) Cash and cash equivalents (1)... (30,642) (20,642) Existing debt: Existing Notes 176,355 - Dollar-denominated Existing Notes (2)(3) ,981 - Associated accrued interest Of which unamortized costs and premium... (241) - Finance leases... 6,701 6,701 Other debt, net... 6,475 6,475 Debt to be incurred in connection with the Exchange - 170,596 Offer: Exchange Notes ,596 Unamortized costs and premium (4)... - (6,000) Total debt 189, ,772 Total debt net of cash , ,130 Equity and preference shares attributable to the 20,295 16,054 owners of Novasep:... Non-controlling interests Total Equity (5)... 21,097 16,856 Capitalization , ,986 (1) Reflecting a cash decrease of 6.0 million resulting from fees and expenses related to the Refinancing and 4.0 million of dividends being paid as part of the Refinancing ( 2 million on ordinary shares (other than the Warrant Shares), 2 million on the B Preference Shares) and assuming the other Refinancing costs would be capitalized and depreciated over the life of the Exchange Notes. (2) Excludes accrued and unpaid interest which will be exchanged or waived as part of the Refinancing. Assuming that the Exchange Offer is successful but less than 100% of holders of the Existing Notes take part in the Exchange Offer and Consent Solicitation the remaining Existing Notes that will be amended pursuant to the terms of this Exchange Offer and Consent Solicitation Statement would appear in this table as Amended Existing Notes. The Proposed Amendment (Successful Consent Solicitation) would result in a 75% reduction in the principal amount of Existing Notes. 66

80 (3) Converted into Euros at an exchange rate of $ per 1.00, the end of period exchange rate. (4) This reflects estimated costs associated with the refinancing process. Novasep has assumed that these costs would be capitalized and depreciated over the duration of the Exchange Notes. (5) Historical Total Equity adjusted for debt refinancing costs at the end of June Pro forma Total Equity adjusted for the 4.0 million in dividends being paid as part of the Refinancing ( 2 million on ordinary shares (other than the Warrant Shares), 2 million on the B Preference Shares). Variation in Total Equity includes the write off of unamortized costs and premium on the Existing Notes. 67

81 THE REFINANCING The Refinancing comprises the various elements described in this section, each of which are interconditional and will only become final and effective upon the satisfaction of all of the conditions provided for under the Refinancing (or waiver of those conditions in accordance with the terms of the Refinancing). Refinancing Steps The Refinancing will principally consist of the following steps: Novasep will offer holders of Existing Notes the opportunity to exchange their Existing Notes for Exchange Notes with Warrants (obligations à bons de souscription d actions) plus a cash payment pursuant to the Exchange Offer and Consent Solicitation. For each $1,000 principal amount of Validly Tendered Existing Notes (as defined below) that is accepted for exchange, tendering holders will receive: Exchange Notes in a principal amount equal to the Euro Equivalent of $1,000 plus accrued but unpaid interest on such Existing Notes. The Exchange Notes will mature on the Maturity Date and will pay 5% interest per annum in cash on the Senior Outstanding Principal Amount of the Exchange Notes, payable quarterly in arrears, as well as an additional (i) 3% Senior Capitalized Interest per annum on the Senior Outstanding Principal Amount of the Exchange Notes, which interest will be capitalized on each anniversary of the Closing Date and be payable on the Maturity Date and (ii) (A) 3% Junior 1 Capitalized Interest per annum on the Senior Outstanding Principal Amount of the Exchange Notes, which interest will be capitalized annually on each anniversary of the Closing Date and (B) 11% Junior 2 Capitalized Interest (as defined herein) per annum on the Junior Capitalized Amounts of the Exchange Notes, which will be compounded annually on each anniversary of the Closing Date, starting with the second anniversary of the Closing Date, and in each case which Junior Capitalized Interest shall be payable on the Maturity Date, subject to the prior payment in full to Bpifrance of the Blockage Payment (as defined and more fully described in Condition 2 Status in Terms and Conditions of the Exchange Notes ); 300 Warrants (initially attached to the Exchange Notes). The Warrants will detach from the Exchange Notes immediately upon issue on the Closing Date. Each Warrant will entitle its holder, subject to certain conditions, to subscribe for one newly-issued ordinary share of Novasep at an exercise price per newly-issued ordinary share equal to the ordinary share par value at the time of exercise (such par value being equal to Euro on the Closing Date). Warrants that have not been exercised will expire on the Maturity Date; a cash payment. The cash consideration for each $1,000 principal amount of Validly Tendered Existing Notes accepted for exchange shall be the Tender Cash Consideration. In addition, for Existing Notes that are Validly Tendered on or prior to the Early Deadline and accepted for exchange, an additional cash payment equal to the Early Tender Cash Consideration shall be paid for each $1,000 of principal amount of such Validly Tendered Existing Notes accepted for exchange. These cash payments shall be paid directly through Euroclear or Clearstream, as applicable, for the account of the relevant holders of Existing Notes; upon receipt of Consents with respect to at least 90% of the total outstanding principal amount of the Existing Notes held by persons other than Novasep or any of its Affiliates (as defined in the Indenture), the Indenture governing the Existing Notes will be amended to significantly reduce the principal and interest rate thereunder, extend the maturity date thereof, eliminate or amend substantially all of the restrictive covenants, modify certain of the events of default and amend various other provisions contained in the Indenture and the Existing Notes and release the guarantees and collateral which secure the Existing Notes, as more fully described in Proposed Amendments (Successful Consent Solicitation) herein. By validly tendering Existing 68

82 Notes in the Exchange Offer (or solely delivering an Electronic Exchange Instruction), a holder will be deemed to have also delivered a valid Consent; except to the limited extent described herein, holders will not be permitted to deliver Consents without tendering their Existing Notes for exchange; Novasep will pay after the closing of the Refinancing a dividend to holders of its ordinary shares in an aggregate amount equal to 2 million (the Ordinary Share 2016 Dividend Distribution ) and a 2 million dividend to the holder of its B Preference Shares (the B Preference Share Dividend Distribution ), in each case by way of a distribution of share premium; holders of Warrant Shares, however, will not be entitled to these dividends; the terms and conditions of the B Preference Shares will be amended to increase the Taux Applicable of the B Preference Shares by 100 basis points, from 13% per annum to 14% per annum, and the Novasep Securityholders Agreement may consequently be amended to reflect the amended terms of the B Preference Shares, as well as other adjustments to reflect the terms of the Refinancing as set forth in this Exchange Offer and Consent Solicitation Statement; certain shareholders, who do not hold Existing Notes will be given the right to purchase Exchange Notes with Warrants at a price equal to 100% of the principal amount of such Exchange Notes in proportion to their respective shareholding in Novasep prior to the Refinancing. Any such purchases will be in addition to the Exchange Notes with Warrants issued in exchange for the Existing Notes, and will increase the aggregate principal amount of Exchange Notes outstanding and the number of Warrants outstanding following the Refinancing; and each of NVHL and Bpifrance will undertake actions to cause, and reasonable efforts to permit, the Sale Process to be launched in the first quarter of 2017 (subject to certain conditions). Obligations under the Cornerstone Bondholders Commitment Certain holders of Existing Notes (the Cornerstone Bondholders ) have agreed to take certain actions in support of the Refinancing (the Cornerstone Bondholders Commitment ), including a commitment to tender their Existing Notes. The combined interests of the Cornerstone Bondholders represent approximately 75.6% of the total principal amount of the Existing Notes. The participation of the Cornerstone Bondholders demonstrates the support of a major contingent of our creditor group for the Refinancing. Under the Cornerstone Bondholders Commitment, each Cornerstone Bondholder agreed to: participate in the Exchange Offer and tender all of its Existing Notes in exchange for Exchange Notes with Warrants; retain all of, and not sell any of, its Existing Notes until it tenders its Existing Notes in exchange for Exchange Notes with Warrants, except that they may transfer Existing Notes if the transferee is bound or agrees to be bound by the terms of the Cornerstone Bondholders Commitment; waive its right to the Cash Payment with respect to its Existing Notes, or turn over any amounts received in respect of the Cash Payment to Novasep; if the Consent Solicitation is not successful and Novasep chooses to implement the Contingency Plan, to support the transactions contemplated thereby under certain circumstances, and in particular to vote in favor of amending the terms and conditions of the Existing Notes as set forth therein; forebear and refrain from providing any instructions to the Trustee and/or Collateral Agent which would support any action inconsistent with the transactions contemplated by the Exchange Offer and Consent Solicitation Statement, including any declarations of any defaults or events of default or any acceleration of the Existing Notes (as contemplated in the Indenture); and 69

83 more generally take all actions and do all things as may be necessary to facilitate the implementation of the Refinancing contemplated under the Cornerstone Bondholders Commitment. NVHL s Commitment Concurrently with the Cornerstone Bondholders Commitment, NVHL agreed (the NVHL Commitment ) to: vote in favor of the proposed amendment to the terms and conditions of the B Preference Shares, which will result in in an increase of the Taux Applicable of the B Preference Shares by 100 basis points, from 13% per annum to 14% per annum; if necessary, to vote in favor of the amendment of the single B Preference Share following a Redemption (as defined below) as contemplated in Agreement on Ranking ; to make all endeavors and take measures as may be necessary to make such amendments effective or as reasonably requested by Novasep, including, if applicable, executing an amendment to the Securityholders Agreement to reflect such amendment; vote in favor of the issuance of the Exchange Notes with Warrants issued pursuant to the Exchange Offer and any additional Exchange Notes with Warrants that may be issued in the event that certain shareholders, who do not hold Existing Notes, exercise their right to purchase Exchange Notes with Warrants at a price equal to 100% of the principal amount of such Exchange Notes in proportion to their respective shareholding in Novasep prior to the Refinancing; vote in favor of the Ordinary Share 2016 Dividend Distribution and the B Preference Share Dividend Distribution; if the Consent Solicitation is not successful and Novasep chooses to implement the Contingency Plan, to support the transactions contemplated thereby under certain circumstances, and in particular to vote in favor of the issuance of the free warrants, the amendment of the terms and conditions of the B Preference Shares, the Ordinary Share 2016 Dividend Distribution and the B Preference Share Dividend Distribution, in each case as contemplated thereby; and more generally take all actions and use all reasonable endeavors that may be necessary to facilitate the implementation of the transactions contemplated by the NVHL Commitment. Bpifrance s Commitment Concurrently with the Cornerstone Bondholders Commitment, Bpifrance agreed (the BPI Commitment ) to: vote in favor of the proposed amendment to the terms and conditions of the B Preference Shares, which will result in in an increase of the Taux Applicable of the B Preference Shares by 100 basis points, from 13% per annum to 14% per annum; if necessary, to vote in favor of the amendment of the single B Preference Share following a Redemption as contemplated in Agreement on Ranking ; to make all endeavors and take measures as may be necessary to make such amendments effective or as reasonably requested by Novasep, including, if applicable, executing an amendment to the Securityholders Agreement to reflect such amendment; waive certain of its anti-dilution rights under the Novasep Securityholders Agreement with respect to the issuance of the Exchange Notes with Warrants; 70

84 if the Consent Solicitation is not successful and Novasep chooses to implement the Contingency Plan, to support the transactions contemplated thereby under certain circumstances, and in particular to vote in favor of the amendment of the terms and conditions of the B Preference Shares and to support the issuance of free warrants and the Ordinary Share 2016 Dividend Distribution and the B Preference Share Dividend Distribution, in each case as contemplated thereby; and more generally take all actions and use all reasonable endeavors that may be necessary to facilitate the implementation of the transactions contemplated by the BPI Commitment. Agreement on Ranking Concurrently with the Cornerstone Bondholders Commitment, the BPI Commitment and the NVHL Commitment Novasep, NVHL and Bpifrance entered into an agreement (the Agreement on Ranking ) pursuant to which: Novasep undertook to make the Ordinary Share 2016 Dividend Distribution and the B Preference Share Dividend Distribution, and NVHL and Bpifrance undertook to support the same, subject to and in accordance with the terms and conditions set forth in the Agreement on Ranking; and Novasep undertook to Bpifrance that it will not make any payments to holders of Existing Notes in respect of any Junior Amounts (whether at maturity, upon refinancing, in case of early redemption of some or all of the Exchange Notes or otherwise), unless and until Bpifrance has received in consideration of its B Preference Shares and in aggregate since March 15, 2012, including any amounts paid to Bpifrance in respect of the Preference Share Dividend Distribution, a total amount of payment equal to the Blockage Payment: Blockage Payment means the sum of: o o the priority dividend (dividende préciputaire) under the B Preference Shares to which Bpifrance would have been entitled if the Taux Applicable, as defined in the terms and conditions of the B Preference Shares, were equal to 13% per annum, notwithstanding any increase of such rate to 14% as contemplated in connection with the Refinancing (the 13% Dividend ); plus the amount that BPI is entitled to in accordance with the terms of the Securityholders Agreement following the sale or redemption of 29,999,999 (i.e. all but one) B Preference Shares subscribed for by BPI on March 15, 2012, (the Redemption ). Following the Redemption, unless BPI has been paid in full for all amounts due to it under the B Preference Shares and all B Preference Shares have been redeemed, it is expected that the terms and conditions of the single remaining B Preference Share will be amended to provide that this single B Preference Share will, as from Redemption, give right to: a priority dividend (dividende préciputaire) equal to the difference between (i) an amount equal to the priority dividend (dividende préciputaire) that Bpifrance was entitled to on the date of the Redemption with respect to all the B Preference Shares held on the date of Redemption (immediately prior to Redemption) and based on a Taux Applicable of 14% per annum (the 14% Dividend ) and (ii) the 13% Dividend (such difference, the Lump Sum Dividend ); plus a priority dividend (dividende préciputaire) equal to interest based on a Taux Applicable of 1% per annum applied on an amount equal to the aggregate of (x) 30,000,000 plus the Lump Sum Dividend as from the date of the Redemption and capitalized annually and for the first time on the first anniversary of the Redemption. 71

85 For the avoidance of doubt, the priority dividend (dividende préciputaire) of the single remaining B Preference Share will have a ranking vis-à-vis the dividends of ordinary shares of Novasep that will be identical to the current ranking of the B Preference Shares priority dividend (dividende préciputaire) visà-vis the dividends of ordinary shares of Novasep in accordance with Novasep s by-laws and the Securityholders Agreement. MFN Agreement Concurrently with the Cornerstone Bondholders Commitment, the BPI Commitment, the NVHL Commitment and the Agreement on Ranking, Novasep and the Cornerstone Bondholders entered into an agreement whereby Novasep agreed that, in the event it were to offer to any holder of Existing Notes any consideration in addition to that set forth in this Exchange Offer and Consent Solicitation Statement following the launch of the Exchange Offer to induce such holder to participate in the Exchange Offer, the Cornerstone Bondholders would also receive such additional consideration in accordance with their respective holdings of Existing Notes. 72

86 Share Ownership of Novasep following the Refinancing Type of equity Percentage Ownership Ordinary shares NVHL Azulis B Preference Shares 100 Bpifrance Free Shares 1 /C Shares 100 Managers and, following the expiry of the inalienability period, Management Company BSA A warrants Bpifrance BSA B warrants Romafi Warrants attaching to the 100 Owners of the Exchange Notes Exchange Notes 4 1 Giving the right to subscribe to ordinary shares of Novasep under certain circumstances. See Description of Novasep Share Capital Articles of Association Transfer of Free Shares/C Shares. 2 Giving the right to subscribe to ordinary shares of Novasep under certain circumstances. See Description of Novasep Share Capital Articles of Association Rights of the BSA A. 3 Giving the right to subscribe to ordinary shares of Novasep under certain circumstances. See Description of Novasep Share Capital Articles of Association Rights of the BSA B. 4 In the aggregate, if 100% of the Existing Notes are tendered pursuant to the Exchange Offer and accepted for exchange, 58,549,200 Warrants would be issued pursuant to the Exchange Offer, which represent the right to subscribe for ordinary shares of Novasep representing up to approximately 25% of the ordinary share capital of Novasep after taking into account the potential dilution resulting from the BSA A, BSA B and C Shares according to their terms and conditions, on the basis of an estimate of Novasep equity value as of today, but for the avoidance of doubt, without accounting for any adjustments to securities that may be triggered by certain operations within the context of the Refinancing. Conditions to the Refinancing The consummation of the Exchange Offer and Consent Solicitation is subject, inter alia, to receipt by Novasep of valid Consents representing at least 90% of the total outstanding principal amount of the Existing Notes held by persons other than Novasep or any of its Affiliates (as defined in the Indenture) on or prior to the Expiration Date in accordance with the terms and conditions in this Exchange Offer and Consent Solicitation Statement, which Consents shall not have been revoked. For a discussion of additional conditions to the consummation of the Exchange Offer and Consent Solicitation, see The Exchange Offer and Consent Solicitation Conditions to the Exchange Offer. Release By tendering Existing Notes pursuant to the Exchange Offer and Consent Solicitation by delivering a properly completed and fully executed Letter of Transmittal and an Electronic Exchange Instruction, each consenting holder agrees, in favor of Novasep, the Trustee, the Collateral Agent, any other Agent for the Existing Notes, NVHL and each of their respective subsidiaries, directors, officers and employees, (collectively, the Released Parties ), in relation to any and all claims arising out of or in connection with the Existing Notes, the Indenture, the guarantees of the Existing Notes and the collateral securing the Existing Notes (or related documentation), that the Released Parties shall, to the fullest extent permitted by law, be irrevocably and unconditionally released fully and absolutely, in each case from the Closing Date. For the avoidance of doubt the releases and waivers effected pursuant to the Letter of Transmittal shall not extend to: 73

87 (i) (ii) any liability arising from any fraud; or any rights and benefits of the participating holders with respect to the Exchange Consideration. The consenting holder will not be entitled to take any step or proceeding or make or assert any claim (whether by way of litigation or proof of debt or otherwise howsoever) against: a) any Released Party or the property of any such person by way of execution or any similar process or otherwise for the purpose of establishing liability for, or the amount of, or obtaining payment of, any loss or damage which any person may have suffered or incurred in connection with or in any way arising out of the Existing Notes, any guarantee or collateral of the Existing Notes or otherwise by virtue of a consenting holder s holding of Existing Notes; or b) any person (not being a person to whom paragraph (a) above applies) or the property of any such person by way of execution or any similar process or otherwise for the purpose of establishing liability for, or the amount of, or obtaining payment of, any loss or damage of the nature referred to in paragraph (a) above in circumstances in which such person is or may be entitled to make a claim against any Released Party or the property of any such person for the purpose of (i) seeking contribution or indemnity or (ii) recovering any loss which such person may sustain as a result of being found liable at the suit of the consenting holder, and without prejudice to the foregoing and to give effect to the foregoing, the consenting holders hereby release absolutely any claim that they possess or may possess falling within paragraph (a) or (b) above to the intent and effect that such release shall operate in favor of and be enforceable by all or any of the Released Parties. The consenting holder shall agree to submit to the jurisdiction of any court before which any Released Party shall seek to enforce this undertaking and release. Preferential Subscription Rights Typically, in the case of an increase in capital by issuance of shares in exchange for a cash contribution, the existing shareholders have preferential subscription rights to the newly issued shares in proportion to their existing shareholdings in Novasep. Shareholders may waive their preferential subscription rights, or preferential subscription rights may be excluded, in whole or in part, by a collective decision of the shareholders. The preferential subscription rights with respect to Exchange Notes with Warrants will be waived by shareholders at Novasep s shareholders meeting (the Shareholders Meeting ) voting on the issuance of the Exchange Notes with Warrants. Subscription of Exchange Notes with Warrants will be reserved to holders of the Existing Notes, considered as a group (suppression des DPS au bénéfice d une catégorie de personnes). For these purposes, the Shareholders Meeting will consist of a single meeting of all shareholders of Novasep, including holders of (i) ordinary shares (with one vote per share); (ii) B Preference Shares (with no vote); and (iii) Class C shares (with 1/100 vote per share). For the avoidance of doubt, there will be no separate vote of any special meeting of holders of any single class of shares or other equity securities for the purposes of authorizing the issuance of the Exchange Notes with Warrants. Unsuccessful Exchange Offer If, by close of business on the Expiration Date, the Consent Solicitation is not successful, then Novasep or other members of the Novasep Group may have to initiate French safeguard proceedings (procédure de sauvegarde) or some other form of pre-insolvency or insolvency proceedings. Contingency Plan 74

88 If, by close of business on the Expiration Date, the Consent Solicitation is not successful, Novasep may choose to file with the Commercial Court of Dijon a request to open safeguard proceedings (procédure de sauvegarde) intended to achieve substantially the same economic result as the refinancing of the Existing Notes for Exchange Notes and Warrants as described in this Exchange Offer and Consent Solicitation Statement (the Contingency Plan ), except that no consideration in respect of or corresponding to the Cash Payment contemplated by this Exchange Offer and Consent Solicitation Statement would be proposed to be paid to holders of Existing Notes under the Contingency Plan. If Novasep chooses to implement the Contingency Plan, the Cornerstone Bondholders, NVHL and Bpifrance have each committed, under certain conditions, to support the implementation of the transactions contemplated thereby. In particular, under certain conditions they will vote in favor of these transactions at any shareholders meeting and any Bondholders Single Assembly of Novasep. However, there is no assurance that Novasep will choose to pursue the Contingency Plan and, if it does, that it will be implemented without any amendment or at all. Any safeguard plan, including in the context of the Contingency Plan, would be subject to the approval of the French courts and the success of the Contingency Plan is therefore subject entirely to the court process (See Certain Insolvency Considerations ). 75

89 Our Business We are a leading global provider of integrated manufacturing solutions to pharmaceutical and other life science industries. Our customers in the life science industries require specific ingredients that are either derived from living organisms (biomolecules) or synthetically produced (synthetic molecules) for the production of their end-products. Our offerings help our customers enhance product quality, reduce production costs and shorten time-to-market. To support our customers ingredient needs we develop and use a broad portfolio of technologies to provide both contract manufacturing organization services ( CMOs ) (outsourcing solutions) and purification processes and equipment (in-sourcing solutions). We operate in seven key markets throughout the world through three business units. Our differentiated business model combines custom manufacturing services and the supply of purification processes and equipment. These two business activities are commonly supported by our central innovation and communication teams. We strive to select the best combination from among our technologies to provide the most timeefficient, cost-efficient and/or environmentally friendly manufacturing process for our customers. We believe we operate a business model that enables us to develop long and productive collaborations with our customers, from the development phase through to the production phase of their products. During the development phase of pharmaceutical ingredients, our customers key focus is short time-tomarket to maximize the future patent-protected lifetime of their products. We provide process development services to these customers who generally have not determined an appropriate manufacturing process at this stage. We also produce and supply them with active pharmaceutical ingredients ( APIs ) for clinical trials in a timely manner. This offering of process development services is essential to our business plan because it enables us to create a pipeline of future commercial projects, which can include equipment and systems sales or contract manufacturing, depending on our customers strategy. The majority of our revenues are linked to contract manufacturing of products in their commercial production phase and to revenues made to the pharmaceutical industry. We also help our customers improve production costs of their mature products to help them face future generic competition or we supply them with products such as generic APIs that we manufacture using our proprietary technologies. By supplying purification technologies as well as manufacturing services, we are involved in the production of a number of widely-used patented drugs as well as high profile generic drugs used in various therapeutic areas including depression, epilepsy, cardiovascular disease, HIV infection, diabetes, cancer and allergy. Such drugs include Lexapro/Cipralex, Keppra, Xyzal, Kadcyla, Tamiflu, Vascepa, sertraline, insulins, nitroglycerin, paclitaxel, efavirenz and numerous synthetic peptides. We are also involved in various projects for developing and manufacturing APIs in advanced clinical trials in some key growing therapeutic areas including the treatment of cancer and infectious disease. In recent years, we have focused our biopharmaceutical contract manufacturing business on the process development and clinical production of innovative therapeutic strategies, such as viruses and viral vectors for gene therapy and novel vaccines (such as cancer vaccines), as well as monoclonal antibodies ( mabs ) for orphan indications and ADCs, resulting in growth of our business in these areas. We believe our innovative technologies, our leadership in purification technologies, our extensive portfolio of products and services, our strong customer relationships and our exposure to growing markets provide a solid basis for our future development. In 2015, we launched a key account management program, aimed at accelerated development of our sales and profitability with several key customers across our three business units. We continually seek to understand and monitor the level of satisfaction of our customers. We have measured satisfaction for two years and as a result of our efforts, we improved both customer engagement (more answers), and global satisfaction (higher score). Furthermore, 96% of our customers who responded indicated they are likely to work with Novasep again. 76

90 Our Back to Basics strategy was implemented in 2014 to foster the growth of our business. The key tenet of this strategy is a new market positioning of the company as a top tier value-adding service partner to the life science industries. The strategy grounds its differentiation on pursuing innovation by combining a wide range of technologies and services. The new Passion & Smart Processes motto communicates this message while underlining the importance of our critical asset, our employee s knowledge, skills and passion to serve our customers and business. We decided to relocate the Group s management center to the heart of the bio-district of Lyon, the 2 nd largest European pharmaceutical and biotech hub. Novasep operates in seven markets We use a large range of chemical synthesis and purification technologies to develop and produce high value-adding active ingredients and advanced intermediates for the pharmaceutical market and provide contract manufacturing services for biopharmaceuticals. We also develop and supply innovative purification equipment and systems for these markets, called GMP markets in reference to the stringent regulatory standards to which they are commonly subject (Good Manufacturing Practices ( GMP ), including regular inspections from the various national and international health authorities). The non-gmp markets such as crop science ingredient manufacturing, other fine chemical industries and industrial biotechnology ingredient purification processes are characterized by much larger volumes than GMP markets and require highly cost-effective manufacturing processes, which can be useful to our pharmaceutical operations. We use our know-how in non-pharmaceutical markets to develop innovative, highly efficient technologies for pharmaceutical manufacturing. The key trends and other important characteristics of our main end-markets are detailed and discussed below. Below is a breakdown for the years ended December 31, 2013, 2014 and 2015 of Group gross sales by category and percentage of total gross sales represented by each category, respectively. Synthetic API manufacturing market The synthetic API market is characterized by positive drivers of demand including: i) increasing number of drugs developed by small pharmaceutical companies (emerging pharmaceutical/biotech) that do not have in-house manufacturing capabilities and ii) the strategic decision of some large pharmaceutical companies to focus on their core competencies (i.e., drug discovery and marketing) and outsource manufacturing. However, the decisions of certain large pharmaceutical companies to insource some or all of their API production and fill their existing large manufacturing capacities can reduce the available market and hence demand for third parties, such as ourselves, to produce APIs or other pharmaceutical chemicals or products for them. 77

91 Certain companies from India, China and South East Asia have been entering the API and intermediate outsourcing market over the course of the last 10 years, which has had a significant effect on Western CMOs. However, in recent years, a number of market trends have been advantageous to European CMOs. First, regulatory agencies such as the U.S. Food and Drug Administration (the FDA ) and the European Medicines Agency (the EMA ) have issued increasingly stringent quality guidelines and have enforced them more thoroughly than in the past. This has resulted in an increasing number of Asian API manufacturers sites receiving warnings or being banned from exporting products in Western countries, which presents potentially favorable opportunities for Western manufacturers. Secondly, synthetic APIs have become increasingly complex, and their production requires more expertise and sophisticated manufacturing and purification technologies, for which a number of life science companies increasingly rely on specialized CMOs. For instance, high-potency API ( HPAPI ) manufacturing remains a differentiating niche segment for Western CMOs because production of HPAPIs to internationallyrecognized safety standards requires specific skills and sophisticated facilities. While the global life science intermediate and API production market is divided among a great number of CMOs, not all companies have established the necessary competencies to supply the highly-regulated Western markets and pursue these increasingly complex manufacturing processes. Finally, the difference of price between APIs produced by CMOs from India, China and South East Asia and APIs produced by Western CMOs is no longer as attractive as it once was due to the increase of labor costs in those regions. We address the synthetic APIs manufacturing market through the development and scale-up of chemistry and purification processes, contract synthesis and purification of commercial APIs and advanced intermediates, or the sale of chromatography equipment to customers that choose to in-source their production. As part of our Back to Basics strategy, we have shifted our existing portfolio of products toward higher margin products and we have a reorganized our sales team under regional management. The aim was to focus the sales force on the acquisition of late stage (i.e., products in phase II and III clinical trials, registration and commercial phases) and large volume projects. This focus on higher margin products temporarily reduced pharmaceutical CMO sales in 2014 but resulted in increased research and development activities and in a subsequent increase in our sales to the pharmaceutical market in We have made significant investments with the aim of supporting this growth in the coming years. Between we invested approximately 28 million to build the largest chromatography plant in the worldwide pharmaceutical market to produce Vascepa, a highly purified omega-3 polyunsaturated fatty acid for heart disease therapy, for which we have a ten-year contract with one key customer (see below We operate through three business units ( BUs ): Synthesis, Biopharma and Industrial Biotech Synthesis Major contract ). We are currently building an approximately 10 million dedicated production unit that will enable us to become one of only a handful of fully integrated CMOs producing ADCs for clinical and future commercial phases. ADCs are a fast growing new class of cancer therapeutics which combine a highly potent payload with mabs. This new capability leverages Novasep s expertise and market position as a producer of cytotoxic APIs and biopharmaceuticals. Biopharmaceutical manufacturing Biopharmaceuticals are drugs that are purified from natural sources such as plants or animals (e.g., blood products), or are produced using genetically modified cells or micro-organism fermentation. By revenues, biopharmaceuticals are the fastest growing class of branded pharmaceuticals in the market in general. Biopharmaceuticals include complex molecules such as proteins (the largest biological drug class being mabs), peptides (such as insulin and synthetic peptides) as well as viruses and viral vectors for vaccines and gene therapy. As most biopharmaceuticals are injectable drugs, their manufacturing process requires adherence to very stringent protocols and quality guidelines preventing any contamination. Production costs of biopharmaceuticals are generally higher than those of synthetic APIs. In particular, biopharmaceutical downstream processing generally involves several stringent purification steps and may represent the majority of the production cost. We address the biopharmaceutical manufacturing market both (i) through process development and custom manufacturing services, and (ii) through the sale of chromatography and filtration equipment as 78

92 well as consumables for downstream processing of biopharmaceutical molecules to clients who need to produce in-house. The Back to Basics strategy for Biopharma led us to focus on certain key markets which Novasep has a leading expertise, such as viral vectors and virus and monoclonal antibodies production. This focus has resulted in an increase of the sales in our biopharmaceutical CMO activity since Agrochemicals Agrochemicals are synthetic molecules which are used for crop protection purposes, such as pesticides, fungicides, herbicides, insecticides and rodenticides. This is a mature market with six participants controlling more than 70% of the market. These participants are Monsanto, Syngenta, Bayer Crop Science, BASF, Dow and Dupont. Volumes of production for these markets can reach thousands of tons per year. Smaller volumes are required for development phases or niche products. The main drivers for increasing the yields of crops and hence the production of agrochemicals are demographic growth as well as environmental concerns, which drive innovators to develop molecules that are less toxic, or biodegradable. The agrochemical market presents challenges for outsourcing manufacturers, as agrochemicals demand is subject to seasonal variations and regional economic trends, and make-or-buy decisions can shift the need for outsourcing rapidly. The production of most basic generic agrochemicals has shifted to South East Asia. However, like pharmaceuticals, agrochemicals are becoming increasingly complex and some require sophisticated chemistry. Also, intellectual property protection concerns lead certain market leaders to produce in-house or outsource some of their key molecules to Western CMOs. We address the agrochemical market through the sale of custom manufacturing services of complex agrochemical molecules or advanced intermediates thereof. The sales trend in our agrochemical business has been declining in 2014 and 2015, primarily as a result of a major customer to which we sold large volumes deciding to largely shift their sourcing to Asia. In the first six months of 2016, some supplies have also been delayed due to temporary overstocking issues faced by our customers in some emerging end-markets. Fine chemicals Fine chemicals are a much broader market than agrochemicals, and we have selected relevant niches within this market to investigate based on its technologies, assets and know-how. Examples include: Novel additives for polymers: our hazardous chemistry expertise enables us to develop and operate more efficient synthesis paths to produce a molecule cheaper than with other synthesis routes. Pharma-like fine Chemicals: Novasep can leverage its assets and pharmaceutical quality systems to produce chemicals for medical devices, nutraceuticals, or electronic chemicals. Industrial Biotechnology markets: food and functional ingredients, fermentation and chemical commodities industries ( Bio industries ). Industrial biotechnologies cover a wide range of products and applications to convert agricultural feedstock and their derivatives into industrial products. Food and feed ingredients are produced starting from crops: examples include generating sugar from cane or beets and starch and alternative sweeteners from corn or wheat through hydrolysis or enzymatic conversion. The dairy industry generates whey and other derivatives. Fermentation and chemical commodities markets cover a number of products such as amino acids, organic acids, antibiotics and vitamins, obtained by fermentation, as well as biofuel and chemical building blocks and intermediates obtained from renewable feedstock (also called bio-based chemicals), and chemical commodities produced by organic synthesis. 79

93 Although most industrial biotechnologies products such as sugar, citric acid, amino-acids or antibiotics are said to be commodities, these products require exacting processes to achieve high purity, yield and stringent operating performance. With a typical modern plant sized at between 10,000 to 100,000 tons per year, cost efficiency at each step of the production is essential to ensure a fast return on investment in a capital-intensive industry and reduce operating (e.g., energy and waste treatment) costs. Many emerging markets have experienced growing income levels among their population and this is generally accompanied by a correlated increase in demand for safe and processed foods. Such increasing market demand for new or alternative products drives our clients to expand production capacities or build new plants. China and South East Asia are regions where we have been observing strong activity in the last few years (e.g., purification plants for sweeteners such as high fructose syrup or organic acid production). Demand is also growing in regions such as Eastern Europe and India. Europe and North America have been slowly growing regions for the last twenty years, but we are currently observing a recovery in demand. Environmental concerns are also creating business opportunities as firms focus on extracting value out of products that previously were wastes and effluents, as well as on optimizing their overall processes to reduce their usage of consumables and energy. We address the industrial biotechnology market through the development and sale of processes, technologies and consumables for the purification and the separation of large volume ingredients. We specialize in providing cost-effective purification processes with a particular focus on energy efficiency and the recycling of side streams and chemicals, leveraging our strong engineering and sourcing bases in France and China. As part of our Back to Basics strategy, in the Bio industries markets, in addition to our traditional offering of single or combined units, we have developed a new complete process line ( CPL ) offer which aims to provide a turn-key engineered solution for these manufacturing processes by supplying multiple key process steps, on-site commissioning and connection to the technical networks of the facility, management the start-up of the process and guarantees of process performance. In 2015 food industry sales were affected by the low prices of the sugar market which led our major customers to delay their investment decisions. However, a turnaround started mid-2015 and the BU gained its first significant CPL contract in the sugar market, allowing the level of activity in the first six months of 2016 to increase back to levels more in line with performance in 2013 and Our sales are widely spread throughout the world The graphs below show the value (in euro millions) and percentage of our total sales based across our geographic regions. Most of our GMP customers are EU- and US-based, whereas our non-gmp customers, for which the markets are largely driven by the growing needs of the middle classes in emerging countries, are more globalized. We operate through three business units ( BUs ): Synthesis, Biopharma and Industrial Biotech 80

94 The history, activities, technologies, sites, key contracts, sales and profitability evolutions, and other key features of these business units are discussed hereafter. The sales (excluding Pharmachem in 2013 and 2014, see below) and EBITDA of these business units, which were created in 2013, have progressed as follows during the last three years. Synthesis Novasep Synthesis uses a wide range of chemical synthesis and purification technologies to develop and produce high value-adding active ingredients and advanced intermediates for the pharmaceutical, crop science and other fine chemical industries. History Novasep Synthesis was created following the acquisition of Seripharm in 2003 and Dynamic Synthesis (including Finorga and DNES) in The Pharmachem site was acquired in 2007 and was divested in September 2014 because the business was dedicated to a single client, Gilead, and a single product, Tenofovir (an API present in several AIDS treatments), which was at risk of becoming a generic drug after The creation of this business unit was based on the principle that our historical strength in the purification and separation of chemical molecules could provide a key competitive advantage in the manufacturing of molecules and other fine chemicals and pharmaceuticals. As a result, we have been able to supply higher-margin synthesis services based on a number of specialized chemical technologies, knowing that many synthesis processes require efficient purification processes downstream. This enables us to minimize the production costs and time to market of drugs we synthesize at our facilities and it is a driver for pharmaceutical companies to further outsource their manufacturing steps to specialized firms like ours. Custom manufacturing for small molecules Most of Novasep Synthesis relates to custom manufacturing services. However, a small portion of the sales, approximately 5 million, relates to proprietary products. These sales of proprietary products are mostly based on our experience and know-how in nitroglycerin-related products, which are used primarily for heart attack prevention, as well as on other reactions involving hazardous chemicals to produce various fine chemicals and reagents. We develop processes and perform custom manufacturing of patented molecules for pharmaceutical companies at each stage of production from early development (pre-clinical) to clinical supply and finally to the commercial stage of production. We also provide services to our customers for a number of their products whose patents have expired and which generally continue to provide recurrent sales due to the preferential market position generally kept by the originator on the market even after generic introduction. While we are focusing business development on the acquisition of late-stage pharmaceutical projects, we recently installed a chemical kilo-lab at our Boothwyn, PA, USA facility (an investment of approximately 1 million) to provide local development and small scale production services for early 81

95 stage APIs. The goal is to improve our market penetration and further develop our customer relationships in the key US pharmaceutical market. Customers engaged in this activity include large pharmaceutical companies (which include blue-chip customers such as Sanofi, Syngenta, Bayer, Novartis, Roche/Genentech, Pfizer and Astrazeneca) and mid-size or smaller biotech companies primarily based in Europe and in the United States that outsource production of molecules requiring specific know-how or technologies performed by our company. Our customers value our technical expertise and our processing capacity, which is the result of our combination of custom manufacturing and purification equipment and the know-how that is required to develop time-effective and cost-efficient manufacturing routes, which they may not have internally. Smaller companies are generally unable to manage complex supply chains and value our ability to perform many complex syntheses and to support them from early development to commercial scale manufacturing. Our regulatory inspection track record and our reliability, recognized by several industry awards, our project management skills and our customer relationships also enable us to get a number of contract manufacturing projects which do not involve special technologies. Technologies used by Novasep Synthesis Novasep Synthesis has expertise in three high-entry-barrier synthesis technologies, resulting from the early specialization in their respective fields of each business that we have acquired. The main synthesis technologies in which we specialize are: (i) chiral and multistep synthesis, (ii) hazardous chemistry and (iii) the manufacturing of highly potent substances, used primarily for the manufacturing of HPAPIs. Chiral and multistep synthesis Requirements for increased purity of APIs have been implemented by the FDA and other regulatory agencies since the late 1980s. In particular, APIs need to be produced as single isomers of so-called chiral compounds, which would otherwise exist as 50/50 mixtures of their two optical isomers. Our chiral chemistry operations supply synthesis and separation solutions to pharmaceutical companies for the production of pure single isomers. We believe we are competitive in the development of optically pure molecules. The Synthesis business unit benefits from the expertise of our biopharmaceutical business unit engineers to further optimize purification steps, reducing time-to-market and improving yields. We believe we have a wide range of technologies to manufacture chiral molecules. Our position as one of the leading suppliers of pharmaceutical ingredients through the use of chiral technologies, together with privileged access to our proprietary innovative separation technologies, enhances our opportunity for future growth in the synthesis of pharmaceutical ingredients. In particular, we believe we are one of the three CMOs in the world operating a combination of synthesis and continuous chromatography that produce tens to hundreds of tons of single isomers per year. Hazardous chemistry and cryochemistry Our hazardous chemistry operations are undertaken primarily in our Leverkusen site in Germany, acquired at the end of The increasing complexity of molecules combined with the need for pharmaceutical firms to reduce costs and decrease time-to-market is prompting a greater use of hazardous reactions. Hazardous reactions are increasingly required by our customers as they reduce the number of synthesis steps, result in lower cost for raw materials and significantly improve the yield of numerous chemical reactions. Our hazardous chemistry technologies portfolio includes the handling of highly energetic reactions such as nitration, azide, carbonylation and hydrazine chemistries, as well as the ability to perform reactions with diborane and diazomethane gas on a large scale. We believe that only a few companies are capable of producing this variety of hazardous chemistries required to produce pharmaceuticals on a very large scale. Furthermore, we have diversified our hazardous technologies offerings by developing reactions that involve toxic reagents, such as ozonolysis, which gives us access to a number of valuable molecules. A key complementary technology is cryochemistry, the ability to perform complex coupling reactions under extremely low temperatures (down to -80 C) at commercial scale; which are increasingly used in the manufacture of late stage APIs. Some of our technologies have been implemented at our Chasse-sur- Rhône facility. 82

96 Highly Potent APIs Our HPAPI operations are developed at our Le Mans site. This site handles both the synthesis and purification of highly potent substances, from the laboratory to the industrial scale. The site was founded 20 years ago as a contract research organization specializing in the development of anti-cancer APIs, such as paclitaxel. In 2009, the site became the seventh facility in the world to receive the SafeBridge potent compound certification recognizing the high levels of safety and the sophistication of the technologies and know-how we have developed at this site. As a consequence, through our expertise in anti-cancer molecules, and due to internal research and development and substantial investment, we believe we have established ourselves as a leader in the manufacture of HPAPIs. Furthermore, the adjunction of our Biopharma BU s mammalian cell culture technology and expertise in producing mabs, and its combination with our existing HPAPI manufacturing capabilities, make us one of the only companies worldwide capable of providing integrated development and manufacturing services for immuno-conjugates such as ADCs, a rapidly expanding class of anticancer compounds, with more than 150 currently in preclinical and clinical development stages. As mentioned above, we are investing approximately 10 million in a new unit dedicated to conjugation of antibodies with highly potent payloads on our Le Mans site, to produce clinical and future commercial ADCs. We believe this will allow Novasep to become a key player in this fast growing new market. Synthesis BU Facilities We operate four production facilities in the synthesis segment, three located in France and one in Germany. All of these facilities are approved by the FDA and other relevant regulatory bodies for manufacturing APIs for research and development and commercial use. Our capabilities range from very small scale synthesis of very potent compounds for pre-clinical phases (e.g., one gram) to large scale production of commercial APIs (e.g., 100 tons or more). Our multiple plants and the range of our synthesis technologies enable us to manage an extensive range of complex, multi-step chemical syntheses. Our facility in Leverkusen, Germany specializes in applying hazardous chemistry to the synthesis of pharmaceutical compounds. Created by Alfred Nobel in 1871, this site progressively transitioned away from its initial explosives business to develop pharmaceutical and agrochemical synthesis services. Its expertise in safely handling highly potent reactions enables the whole Synthesis BU to provide its customers with fast, innovative and cost-efficient options for the manufacture of broad ranges of molecules, such as heterocyclic compounds. The site is primarily focused on the development of innovative and cost-efficient synthesis routes for the manufacturing of molecules present in several types of medicines, including for instance Tamiflu. In addition, management believes that this facility is a leading supplier of pharmaceutical-grade nitroglycerin. A large majority of our Leverkusen site s current projects are based on hazardous processes or materials. Our facility in Le Mans, France, acquired from Aventis in 2003, is specialized in the handling of synthesis and purification of HPAPIs from pre-clinical to commercial scale. During the 21 years the Le Mans site has been developing HPAPIs and in particular anti-cancer ingredients, it has built expertise in the development of efficient routes for the production of generic paclitaxel. We also produce the payload of one of the two ADCs recently approved for certain cancer treatments by US and European health authorities. The facility plans to leverage its success to gain new manufacturing contracts for HPAPIs. Today s key projects include process development and clinical manufacturing of several anticancer agents and in particular ADC payloads. Our facilities in Mourenx and Chasse-sur-Rhône, France, are among the leading suppliers of chiral and multistep synthesis solutions for pharmaceutical companies for pilot and commercial scale chiral separation, including our proprietary Varicol continuous chromatography and Hipersep Prochrom high performance liquid chromatography (HPLC) systems. These facilities feature multiple large pilot and commercial scale equipment for multistep complex synthesis. Low temperature chemistry was pioneered at the Chasse-sur-Rhône site for commercial manufacturing of APIs and was upgraded in 2008 with a dual low temperature reactor set-up which is, to our knowledge, unique in the industry. Large 83

97 scale ozone chemistry (an efficient though potentially very toxic reagent used for accessing certain classes of molecules) was commissioned in 2007 to enable a highly cost-efficient synthesis of high-value compounds such as epoxide derivatives. A large process development group in Chasse-sur-Rhône supports the acquisition and development of a growing pipeline of new projects in the clinical phase of development. Our facility in Boothwyn, Pennsylvania, United States, which is shared between the Synthesis and Biopharma divisions, principally supports the domestic and regional business in North America, which is potentially a very large market for us to develop and expand our business into further. To stay closer to our customers needs, we completed the investment in a kilo-lab facility. We now provide small scale development and synthesis services at this location for the development of manufacturing processes, in close collaboration with our customers. Key evolutions of the last three years As part of our Back to Basics strategy, we have shifted our existing portfolio of products toward higher margin products and reorganized our sales team under close local management. The target was to focus the sales force on the acquisition of large and late-stage projects. This was successful in 2014 and 2015 and resulted in an increase in our sales to the pharmaceutical market in 2015, while some consolidation on higher margin products reduced sales in As a result, the Synthesis BU EBITDA has increased by one third over these three years from 14.4 million in 2013 (9.2% of sales) to 19.2 million in 2015 (12.6% of sales). Major contract In July 2012, Novasep signed an agreement to develop a large scale purification process, build a dedicated facility and supply commercial volumes of Vascepa API. The product, owned by Amarin Pharmaceuticals Ireland, Ltd., was approved by the FDA in 2012 for treating patients with very high triglyceride levels, as an adjunct to eating a balanced diet. The API of Vascepa is icosapent ethyl, a highly purified omega-3 polyunsaturated fatty acid. Novasep produces it from an intermediate derived from fish oil, through a multistep process based on its Varicol continuous and Prochrom Hipersep HPLC proprietary chromatography technologies. Amarin selected Novasep over several competitors due to our competitive pricing enabled by our proprietary large scale chromatography technologies, and our unique engineering capabilities, which allowed us to build and get regulatory approvals for the manufacturing plant, an approximately 28 million investment, in approximately two years. Four patents were filed to protect our manufacturing process. The supply contract is a 10-year agreement, with significant minimum purchase commitments. Large scale production started in Market share of Vascepa has been growing steadily in the last two years, reaching approximately 20% by the end of June Biopharma Our Biopharma BU develops and supplies innovative purification equipment for the pharmaceutical and biopharmaceutical industries and provides contract manufacturing services for biopharmaceuticals. History Our biopharma division is part of our former Novasep Process segment that was created in The creation of this business segment was based on the innovative idea that processes used in the refining of oil could be applied to the purification and separation of chemical molecules used in the pharmaceutical industry. As a result, Novasep Process has been a pioneer in the development of chromatography systems for pharmaceutical (synthetic molecule) applications. Through acquisitions of selected targets, we have continued to develop innovative purification processes and technologies, including chromatography, membrane filtration, ion exchange and evaporation, which have been regrouped since 2013 in our Industrial Biotech division. Novasep Process has built an innovative, coherent and wide range of technologies, initially developed for specific applications and operating scales, which can also be applied to other markets we serve to provide more efficient purification processes, with the support of our central innovation team. Overall, we have an installed base of more than 2,000 purification equipment and 84

98 processes worldwide. The acquisition of Henogen in June 2009 has considerably broadened the scope of services of Novasep Process for biopharmaceuticals along with the integration of new upstream processing capabilities. This has enabled us to provide global bioprocessing development and manufacturing services of biopharmaceuticals which have been regrouped since 2013 in our Biopharma BU, which provides two sets of offerings: purification equipment and custom manufacturing services. Supply of purification equipment We believe we are a leading supplier of preparative chromatography equipment and systems to the pharmaceutical industry for the separation and purification of APIs and other high value synthetic molecules. Our customers in this field include many large pharmaceutical companies, including Novartis, Sanofi and Merck & Co. We also have more than 25 years of experience in designing, building and using preparative chromatography systems and have developed innovative technologies from small-scale laboratory to industrial scale pharmaceutical and biopharmaceutical purifications. Both our chromatography and filtration technologies can be applied to most types of biopharmaceutical purifications. We pioneered the development of the simulated moving bed chromatography ( SMB ), a multicolumn continuous chromatography technology particularly efficient in separating single isomers from so-called chiral mixtures. Since then, we developed Varicol, a more efficient multicolumn continuous process, which was introduced in the early 2000s. An increasing number of APIs including Keppra, Zoloft, Cipralex and Xyzal are produced on a commercial scale using this technology that we installed on a number of production sites (including our own sites in Pompey, Chasse-sur-Rhône and Mourenx). To support the increasing trend of the biopharmaceutical industry towards continuous processing, we have developed BioSC TM, an innovative multicolumn chromatography technology for the continuous purification of biologicals, including mabs. BioSC Predict TM, its companion computer simulation software, was granted an Innovation Award at the 2015 Achema world chemical fair. We have protected our continuous chromatography franchise by obtaining a number of patents that protect our position as a world leading provider of commercial scale continuous chromatography systems in the pharmaceutical industry. Since the acquisition of Prochrom in 1999, we have a strong position in preparative high performance liquid chromatography with our Prochrom DAC columns and Hipersep automated equipment. We believe we are a leader in supplying this technology to the synthetic peptide and the recombinant insulin manufacturing industries, and in general to life science customers requiring efficient technology for purifying complex synthetic mixtures on a large scale. We have also developed preparative supercritical fluid chromatography, a specialized chromatographic technology which is particularly suited to need for quick separation of APIs and synthetic intermediates at laboratory scale. Some applications have also demonstrated its application at a large scale as well. Beyond our range of chromatographic technologies, we leverage our expertise and our ability to develop and optimize purification processes in our laboratories, using our proprietary computer simulation software that has been developed since our inception. Our strong engineering capability also allows us to successfully implement these technologies at our customers and at our own sites (See We operate through three business units ( BUs ): Synthesis, Biopharma and Industrial Biotech Synthesis Major contract ), and to integrate efficient solvent recovery systems to make these technologies environmentally friendly and cost-effective. We actively market customer service, providing preventative maintenance, expertise and curative maintenance, both remotely and on-site and generate recurrent sales of consumables such as spare parts. Biopharma custom manufacturing We have identified the biopharmaceutical market as the largest single growth potential for our business. Biopharmaceuticals are the fastest growing class of branded pharmaceutical compounds and the majority of the manufacturing costs of these complex molecules are associated with chromatography and membrane technologies, in which we specialize. Since 2005, we have invested substantial resources to develop a range of innovative purification technologies and specialist services, building on our 85

99 technological capabilities and know-how acquired previously with certain biopharmaceutical applications and from our expertise in both the synthetic molecule and the industrial biotechnology purification markets. Our customer base covers the whole range of biopharmaceutical companies and consists of large and mid-size biopharmaceutical groups and start-up companies, including international clients such as GlaxoSmithKline Biologicals, Sanofi, Pfizer and Merck Serono and a number of emerging biopharmaceutical companies including Cerenis Therapeutics. We are able to provide global development and manufacturing solutions for a range of biopharmaceutical ingredients, such as viral vectors and viruses, mabs, recombinant proteins and extracted biomolecules. This enables us to support the various needs of our customers for developing and obtaining biopharmaceutical bulk APIs or formulated and ready-to-inject drug products for preclinical, clinical and commercial phases. Our offerings encompass bioprocess development (upstream and downstream processing, formulation, fill & finish), and contract manufacturing services, from master cell bank to the clinical product and commercial production, including process validation and regulatory support. As part of our Back to Basics strategy, we decided to focus our commercial development on two main categories of biopharmaceuticals with potential for growth: viruses and viral vectors for novel vaccines and gene therapy, as well as mabs. This strategy has contributed to growth in our biopharma CMO revenues from 25.1 million in 2013 to 32.1 million in Major contract In 2007, we entered a long-term supply agreement with one of the top five pharmaceutical companies worldwide (the Stanislas Project ). This project started in 2006, when we entered a first contract to provide for the development of the downstream process of a biopharmaceutical ingredient. This ingredient is used in the composition of several products that are currently in late stage clinical phases and one which has been approved for marketing in a number of countries. This collaborative project has since evolved into a long-term CMO contract requiring us to build a new facility in Pompey, France to process our customer s product. The manufacturing process uses some of our HPLC purification equipment. Our engineering capability allowed us to complete the building and commissioning of the plant in just two years and we believe this was a key factor in the customer s decision-making process. Approximately 70% of the 22.1 million investment made by Novasep in the facility has been provided by the client. This contract provides for pre-agreed annual volumes and margins until December 31, We believe risks associated with this project are limited since we are the only external supplier of this ingredient except for our customer s internal capacities, which we believe are limited. We are currently discussing with our customer a significant investment to increase production capacities. Novasep Biopharma Facilities Our facility in Gosselies, Belgium, features development and manufacturing suites for early to late-stage clinical phase recombinant proteins such as mabs, viruses and viral vaccines, in a secure environment, allowing the safe and simultaneous processing of multiple products. Our facility in Seneffe, Belgium, specializes in producing mabs, recombinant proteins viral vectors using mammalian cell culture up to late-stage clinical phases. The site features a new automated fill and finish capability. Our facility in Pompey, France, is the center of expertise for our chromatographic technologies and downstream processing services. We can develop and optimize unit operations based on BioSC and Varicol, our continuous chromatography technologies, our Prochrom Hipersep HPLC technologies and complete downstream processes. The facility is a multi-purpose plant where we conduct purification process development projects including several bio manufacturing contracts. We believe our expertise resulting from both development and use of our own chromatography technologies continues to make us an attractive partner for many companies within the pharmaceutical industry. Following the construction of the Stanislas Project facility, we have an additional 1,500 m 2 of unused space which is free and we intend to use for implementing future bio manufacturing projects, including a possible extension of the Stanislas Project facility itself. We plan to further develop the manufacturing of monoclonal antibodies on the Pompey site including small and large scale capacities to meet growing therapeutic field. 86

100 Our facility in Boothwyn, Pennsylvania, USA, principally supports the domestic and regional business in those regions and is shared between the Biopharma and the Synthesis divisions. The site features research and development laboratories for the development of purification processes, project management and after-sales service teams to support the supply and servicing of purification units installed locally, in close collaboration with our customers. TangenX, our subsidiary in Shrewsbury, Massachusetts, USA, is our center of expertise for our tangential flow filtration ( TFF ) membranes and cassettes for biopharmaceutical applications, with a particular focus on single-use devices. This stand-alone unit within the Biopharma BU manufactures, sells, distributes and services these filtration products which are mainly sold in North America and Europe. Industrial Biotech We believe we are well positioned for developing and providing complete purification processes for the industrial biotechnology industry. The application of our processes covers the production of large scale (i) food ingredients such as purified sugar, sweeteners and dairy products, (ii) functional ingredients such as anti-oxidants, vitamins, pre-biotics and pharmaceutical excipients and (iii) bio-industrial and white biotechnology products such as bulk fermentation products (including amino-acids); organic acids and precursors of antibiotics, bio-ethanol and bio-fuels side products; and chemical commodities (including synthetic amino-acids and other building blocks). Our customers in this market include Südzucker, Nordzücker, Cargill, ADM, Friesland Campina, Dupont, Roquette, Bongrain, Tate & Lyle, YiXing Union Biotechnology Co., DYG, China Sun and CJ Corp. Our offering to the industrial biotechnology market is supported by our process research and development expertise and extensive engineering capabilities. These in turn are served both by our large selection of industry standard processes which are widely used (ion exchange, tangential flow filtration or TFF, evaporation, crystallization, enzymatic reactions) and by our own proprietary processes such as Applexion CIEX continuous ion exchange, a process that we patented in 2006, and Applexion SSMB, sequential SMB technology. Both these continuous technologies are derived from technologies that we also use for synthetic molecule and biopharmaceutical separation. We have been successful in providing cost efficient manufacturing processes with solutions for reducing chemical consumption through proprietary recycling processes and reducing energy consumption. We actively market customer service, providing preventative maintenance, expertise and troubleshooting, both remotely and on-site, and generate recurrent sales of consumables, such as ion exchange, chromatography resins and ceramic TFF membranes. In 2015 the Industrial Biotech BU s organization evolved globally. It is based on a central engineering platform encompassing the teams of Saint-Maurice-de-Beynost, France, and Shanghai, China, and three regional business and technical centers based in France, China and USA to serve the three regions Europe, Asia and the Americas, respectively. Furthermore, commercial, engineering and production teams have been organized around two main offerings: design and supply of single units (SU) and combined units (CU) on one hand, and on the other hand, complete process lines (CPL) that are much larger projects. We believe we are strongly positioned in the market to capture the growing number of potential highvalue projects and we have successfully developed businesses relating to functional ingredients by integrating the purification process expertise of the Industrial Biotech BU and the capabilities of the Synthesis BU. An example of such an integrated project involved our operations for a proprietary noncaloric sweetener of a large U.S. company. That project consisted of the development of a purification process by the Industrial Biotech BU and required an investment in a workshop on the Chasse-sur-Rhône site of the Synthesis BU for the production of pre-launch quantities of the product. The project was completely funded by the customer. Since then, this workshop has been used for several projects of the Synthesis BU. This demonstrates the validity of our differentiated business model, based on providing both out-sourcing and in-sourcing solutions to our customers, and the synergies that can be generated. 87

101 Industrial Biotech sites Our facility in Saint-Maurice de Beynost, France, is our main engineering center. Our teams of engineers and technicians design and manage the supply and commissioning of unit operations or complete multistep purification processes at our customers sites. Research and development teams develop processes and perform pilot-scale demonstrations of new processes. Our facility in Shanghai, China, principally supports the domestic and regional business of industrial biotech in Eastern Asia. We have research and development laboratories at this location for the development of purification processes and engineering teams that perform a substantial part of the procurement and project management for purification units installed locally, in close collaboration with our customers. This site also serves as a low-cost engineering center to increase our competitiveness. Key trends of the last three years In the industrial biotech markets which are described above (food industry, bio industries, functional ingredients) our sales and the EBITDA were significantly affected in 2015 by the low prices of the sugar market, which is one of our key markets in that area. The turnaround in sugar prices since mid-2015, together with the acquisition of a large CPL project (see below), has contributed to our activity and profitability for the first six months of 2016 catching up with the historical levels of 2013 and Major contract In December 2015, we signed our largest contract ever with a European customer. This approximately 21 million CPL contract consists of two phases (the second phase was launched in April 2016). In total we are engineering and will supply, beginning in 2017, three complete process lines, comprising a maltodextrin, a glucose and a fructose purification lines, with guaranteed process performances. The supply also includes utilities and site installation and piping. Contractual Arrangements We sign confidential disclosure agreements with our customers, suppliers, consultants or other business partners prior to entering discussions involving potential disclosure of any of our proprietary information. These agreements are also important to our customers so as to protect their own proprietary information. We generally enter into a broad range of contractual arrangements across our customer base, the nature of which include, among other things, feasibility studies and development services, product, equipment and process supply and long-term contract manufacturing arrangements. The terms of these contracts vary significantly depending on the offering. Our contracts may include a variety of revenue arrangements such as fee-for-service, royalties, profit sharing and fixed fee arrangements. Our typical supply agreements include indemnification from our customers for product liability and intellectual property matters and caps on our contractual liabilities, subject in each case to negotiated exclusions. For custom manufacturing contracts, we generally secure pricing and contract mechanisms in our agreements that allow for periodic resetting of pricing terms and, in some cases, these agreements provide for our ability to renegotiate pricing in the event of certain price increases for the raw materials underlying our products. In addition, our typical supply agreement terms range from two to five years with regular renewals of one to three years although some of our agreements are terminable upon much shorter notice periods, such as 30 or 90 days. For equipment and process supply contracts, we generally secure payment by installments in order to avoid or limit cash negative positions, advanced payments generally being covered by us providing a bank guarantee. Sales to customers in less developed countries are typically supported by letters of credit or similar securities. Performance guarantees, when provided as part as a process supply, are generally limited to 5% of the total contract price with a maximum of 10% and we take appropriate accounting provisions for those. We also have global contracts (covering all French operations) with certain key suppliers, for certain raw materials and solvents and facility management services. Key suppliers for custom manufacturing are 88

102 chemical suppliers such as Univar, Aceto, Island Weer Chemie, DSM and Nantong Tendency and other suppliers such as SOBEGI, Energieversorgung, Dalkia and Vinci Facility for energy and facility management respectively. Employees As of December 31, 2015, the Group had a total of 1,166 full time employees, including temporary employees, which were divided as follows: 737 for Novasep Synthesis, 286 for Biopharma, 121 for Industrial Biotech and 22 for the corporate headquarters. National workers councils and/or unions are active at all of our European facilities consistent with labor laws in European countries. Our management believes that our employee relations are satisfactory. Research and Development We operate worldwide research and development operations at six main sites, and at three smaller or secondary sites, with a total of 167 staff as of December 31, Our research and development effort is dedicated to the development of our customers projects, our purification technologies and our proprietary products activity. Our research and development team reports to a single executive within each segment and specialized teams perform research and development projects. In 2013 we established a corporate innovation team. These manage our intellectual property with staff currently across four sites, and also led to us utilizing decentralized operating budgets. Several open innovation projects involve one or several (industrial and academic) partners, including projects subsidized by the French government, and one Horizon 2020 project subsidized by the European Union. Key innovation directions include the development of continuous flow synthesis and modeling of chemical processes to facilitate scale-up (Synthesis BU), new chromatography processes and multicolumn technologies (Biopharma BU), and advanced process control for purification processes (Industrial Biotech BU). A scientific advisory board was established in 2015, to help steer innovation. Our main research and development sites are as follows: City Country Entity Division Scope Gosselies Belgium Henogen Biopharma Biomanufacturing process development (cell banking, virus and viral vectors, downstream processing) Seneffe Belgium Henogen Biopharma Biomanufacturing scale-up Pompey France Novasep Process Biopharma Chromatography processes and equipment, computer modeling, Purification process development, innovation (biopharmaceutical molecules) Chasse-sur-Rhône France Finorga Synthesis Chemical and purification process development, chiral synthesis (APIs), continuous reaction Le Mans France Seripharm Synthesis Chemical process development, HPAPI, ADC Leverkusen Germany DNES Synthesis Chemical process development, hazardous chemistry, (API, agrochemicals, fine chemicals) Our secondary research and development sites are as follows: City Country Entity Division Scope 89

103 Saint-Maurice de Beynost France Novasep Process Industrial Biotech Shanghai China Novasep Asia Industrial Biotech Boothwyn, PA USA Novasep Inc Biopharma & Synthesis Purification process development (industrial biotech) Purification process development (industrial biotechnology, Biopharma) Purification and chemical process development (biopharmaceutical & synthetic molecules) Manufacturing Capabilities We operate manufacturing facilities and research and development centers throughout the world. We have 11 facilities in Europe, America and Asia. We own all of the facilities except our sites in Gosselies, Boothwyn, Shrewsbury, Saint-Maurice-de-Beynost and Shanghai, which we lease. Our manufacturing capabilities encompass a full suite of competencies including sales and after-sales, engineering, research and development, regulatory and quality assurance. The following table sets forth our manufacturing and laboratory facilities by area and region: City Country Size (hectares) Entity Division Main Operations Pompey France 7 Novasep Process Biopharma Purification research and development, engineering, equipment assembly, ceramic membrane testing and clinical and commercial purification processes Saint-Mauricede-Beynost France 0.65 Novasep Process Industrial Biotech Purification research and development and Engineering Seneffe Belgium 2.5 Henogen Biopharma Contract manufacturing and process development of clinical biopharmaceuticals Gosselies Belgium 0.3 Henogen Biopharma Contract manufacturing and process development of clinical biopharmaceuticals Shrewsbury, MA USA 0.1 TangenX Corp. Biopharma Membranes for Biopharmaceuticals Le Mans France 2 Seripharm Synthesis HPAPI synthesis and purification Chasse-sur- Rhône France 8 Finorga Synthesis Exclusive synthesis services from early stage to commercial supply Mourenx France 9 Finorga Synthesis Multi-ton scale exclusive synthesis services Leverkusen Germany 40 DNES Synthesis Exclusive synthesis services and proprietary chemicals from early stage to commercial supply Boothwyn, PA USA <0.2 Novasep, Inc. Biopharma Purification research and & Synthesis development, engineering, sales office Shanghai China <0.2 Novasep Asia Industrial biotech 90 Purification research and development, engineering, sales office We operate our plants involved in pharmaceutical and biopharmaceutical development and manufacturing in accordance with current good manufacturing practices utilizing the same stringent standards as our large pharmaceutical and biotechnology customers. Five manufacturing plants are regularly inspected by the FDA and have never failed to pass an inspection: Pompey, Le Mans, Chassesur-Rhône, Mourenx, and Leverkusen. Each of these facilities has been successfully inspected by the FDA since mid Some of our manufacturing and purification facilities are also registered with other regulatory agencies, such as the EMEA, the Belgian AFMPS, the French ANSM, the German

104 Bezirksregierung Köln and Japanese and Korean food and drug administrations. In addition, our pharmaceutical and biopharmaceutical manufacturing facilities are regularly audited by our customers. We believe that all of our facilities and equipment are in good condition, are well maintained and are able to operate above present capacity levels. We are focused on ensuring that our manufacturing operations are based on principles of regulatory compliance, continuous improvement, process standardization and excellence in execution. In 2015, we launched Transform, a continuous improvement program consisting of a lean management program and ad hoc lean 6-sigma projects. This program was extended in In addition, in 2015 we launched the IMPACT project, a corporate social responsibility initiative. In particular, we are committed to monitoring and reducing our consumption of solvent and natural resources (including water and energy) in our operations and the impact of our operations, as well as those of our customers, on the environment in all of our facilities. Raw Materials and Components We use a broad and diverse range of raw materials and components in our manufacturing and purification operations, as well as large quantities of energy and water. Equipment and engineering services purchase manufacturing components, machined or welded stainless steel vessels, pumps and instrumentation. Custom manufacturing purchases intermediate ingredients, reagents, solvents and other chemical products and packing materials. Raw materials purchased in large quantities, such as certain solvents, are procured on a group basis and redistributed to our facilities, thereby allowing us to benefit from discounted large scale purchases. Most other raw materials are sourced locally and independently by each facility. When our customers purchase intermediates, ingredients or APIs from us, often they will dictate the raw material specifications, and sometimes they will dictate specific suppliers. We work closely with our suppliers to assure continuity of supply while maintaining excellence in material quality and reliability. We endeavor to diversify our supplier base in order to remain independent from any particular supplier. Furthermore, our largest supplies of critical raw materials are covered by dual sourcing strategies. We believe that we are not significantly exposed to risks associated with lack of availability or high concentration in the supply of raw material. We also continually evaluate alternate sources of supply, particularly in Asia or Eastern Europe, to reduce our sourcing costs. We have in recent years switched significant portions of our sourcing to Chinese, Eastern European and Indian manufacturers. We believe that we are protected against substantial raw material price increases as some of our longterm contracts include provisions to share increases with, or pass such increases on to, our customers. However, we cannot always fully pass on price increases to our customers and not all of our contracts expressly provide a mechanism for doing so. Moreover, some of our contracts require us to pass on certain cost savings when the price of raw material decreases. Regulatory Matters Pharmaceutical Regulations The manufacture, distribution and marketing of our offerings for our customers products in the pharmaceutical and biopharmaceutical industries are subject to extensive ongoing regulation by the FDA, the EMEA and other countries authorities. Market authorization filings of drugs that include our APIs either include extensive information on our sites and manufacturing processes or refer to drug master files (DMFs) that we file and maintain with the FDA, as well as similar filings with other regulatory agencies, to maintain confidentiality of our proprietary information vis-à-vis our customers. Regulatory compliance is therefore significant, but in turn it provides a significant barrier to exit for our customers. Certain of our subsidiaries may be required to register for permits and/or licenses with, and will be required to comply with operating and security standards of, the FDA, the European Union member states and various health agencies and certain accrediting bodies, depending upon the type of operations and location of product distribution, manufacturing and sale. 91

105 In addition, our international manufacturing operations are subject to certain local certification requirements, including compliance with domestic and/or foreign good manufacturing practices and quality system regulations established by the FDA, the EMEA and/or applicable other countries Regulatory Authorities. In addition, certain of our subsidiaries may be subject to the U.S. Federal Food, Drug, and Cosmetic Act, as well as the Public Health Service Act and comparable European Union Member States regulations, and the U.S. Needlestick Safety and Prevention Act. Parts of these regulations refer to regular and ad hoc onsite inspections performed by professional auditors. The following inspections have been carried out in the last four years on our sites. All these inspections have proved to be satisfactory. FDA: Food & Drug Administration, US authorities DQS: German authorities for ISO certification Bezirksregierung: District government, German authorities ANSM: Agence Nationale de Sécurité du Médicament, French authorities DREAL : Direction Régionale de l Environnement, de l Aménagement et du Logement, French authorities National Drug Authority: Uganda authorities (inspection combined with customer audit) Health, Safety and Environmental Regulations We are also subject to laws and regulations of the ECHA, which manages the REACH initiative. REACH requires the generation of data on the intrinsic properties of certain chemical substances by the private sector (namely, the EU manufacturers, EU-based importers and, in limited circumstances, EU downstream users of those substances) followed by the registration of such substances accompanied by their testing data with ECHA. The data required to be submitted to ECHA depends on two main factors: (i) the volume of substance manufactured or imported (the REACH registration obligation only applies to those substances manufactured or imported in quantities greater than one ton per annum); and (ii) the intrinsic harmfulness of the substance. If no data are submitted for a substance subject to REACH, it can no longer be sold within the EU. The equipment we supply and operate is also subject to a number of regulations and codes, such as ASME in the United States and the Pressure Equipment Directive 97/23/EC in Europe for mechanical engineering practices and high pressure vessels, NEC codes in the United States and ATEX in the EU for electrical engineering practices for equipment installed in hazardous locations, and various other regulations in the United States, Europe and other countries. We are also subject to various European Member States, U.S. federal, U.S. state, local, foreign and transnational laws, regulations and recommendations relating to safe working conditions, laboratory and manufacturing practices and the use, transportation and disposal of, and exposure to, hazardous or potentially hazardous substances. Our operations are subject to a variety of environmental, health and safety laws and regulations in each of the jurisdictions in which we operate. These laws and regulations govern, among other things, air emissions, wastewater discharges, the use, handling and disposal of and exposure to, hazardous substances and waste, soil and groundwater contamination and employee health and safety. Our 92

106 manufacturing facilities use, in varying degrees, hazardous substances in their processes. As at our current facilities, contamination at formerly owned or operated properties can result in liability to us. See Risk Factors Risks Related to our Market and our Business We are subject to environmental, health and safety laws and regulations, which could increase our costs and restrict our operations in the future. Novasep Social Responsibility Novasep, like many businesses, is facing growing pressure and increasingly stringent requirements to monitor and account for the social, societal and environmental impacts of its goods and services. This increased attention to the effects of its supply chain and business have arisen from a variety of sources: Consumers are demanding increased equity in trade and insight into the liability and responsibility of various companies in the supply chain; Public policymakers are introducing new and more stringent social and environmental requirements in public procurement and strengthening applicable regulations; The financial community is interested in the link between companies adopting their own sustainable development policy and their financial performance; The international community has adopted, by consensus, a framework that requires organizations to strengthen the social responsibility of their value chains; and The notion of integrated reporting is becoming more widely accepted, indicating a growing demand for transparency in the reporting of the financial results of an organization. Both companies and their suppliers are subject to this changing environment and are therefore required to focus on corporate social responsibility issues across all business functions. A real or perceived deficiency in the performance of corporate social responsibility obligations by one link in the value chain may significantly affect the reputation and credibility of downstream businesses with their end customers and thus affect business at other levels of the value chain. As a result, our corporate social responsibility includes a responsibility for our suppliers, subcontractors and partners as well. Social responsibility is a way to conduct business and enhance our excellence in restoring customer confidence, which essential in a changing world. We view the increasing attention on corporate Social Responsibility as an opportunity for Novasep to focus and innovate in its operations to ensure that it is generating a positive social footprint and continuing to strive to have more positive impacts than negative ones. It is also an opportunity for Novasep to differentiate itself from competitors by providing products and services in line with customer expectations and to be socially responsible. Legal Proceedings Wheyco litigation Our subsidiary Novasep Process received a claim, in June 2011, from a German customer called Wheyco, which has been brought in front of a commercial court of competent jurisdiction (Landgericht Neubrandenburg). This customer claims that the industrial equipment sold by Novasep Process is unfit for its intended purpose and has a certain number of defects. The amount of the claim is approximately 1.3 million. This proceeding could result in a payment obligation for Novasep Process. We expect that judgment will be rendered in BioAmber litigation Our subsidiary Novasep Inc. was served on March 8, 2016, with a statement of claim in the Ontario Superior Court of Justice from one of its customers (BioAmber Sarnia Inc.) in relation to the manufacture and delivery of purification equipment which the customer claims were defective. BioAmber Sarnia Inc. claims damages of CAD 1.5 million and other costs and interest. Novasep Inc. has filed a statement of defense and crossclaim to deny the allegations contained in the client's statement of claim. A decision is not expected before

107 Eurodia Industrie litigation On December 9, 2015, our subsidiary Novasep Process filed a claim in the commercial court of Avignon (tribunal de commerce d'avignon) against Eurodia Industrie SA ( Eurodia ) for certain acts of unfair competition made by Eurodia. Novasep Process is seeking damages of over 7.6 million. Eurodia has filed a crossclaim against Novasep Process seeking 300,000 in damages as it contends the Novasep Process claim is manifestly abusive. A decision is not expected before Other proceedings in the ordinary course of business From time to time, we may be involved in legal proceedings arising in the ordinary course of business, including, without limitation, inquiries and claims concerning environmental contamination as well as litigation and allegations in connection with acquisitions, product liability, materials, manufacturing or packaging defects, defective performance of equipment or processes and claims for reimbursement for the cost of lost or damaged active pharmaceutical ingredients or other products, the cost of which could be significant. We intend to vigorously defend ourselves against such other litigation and do not currently believe that the outcome of any such other litigation will have a material adverse effect on our financial statements. Insurance We currently have group-wide insurance policies, including insurance against general, public and product liability, directors and officers liability and employment-related liability and losses in connection with all our activities, other than as described below. Our subsidiaries maintain additional insurance, including automobile insurance, buildings and contents and workers compensation policies as required by local laws or regulations. To ensure consistency, quality and coverage, we have appointed AON, an international firm, as our insurance broker for all non-life insurance policies. The total sum insured under our first line master general liability policy is 50 million per claim for outside USA/Canada and 50 million in the annual aggregate for USA/Canada for public liability, with certain product liability sublimits for USA and Canada of 20 million in the annual aggregate. Potential liability we may have to our customers is generally governed by the contracts we have entered into with them. The terms of these contracts vary, but as a general rule we do not accept unlimited liability or take responsibility for consequential, indirect or any other special damages. Nevertheless, no assurances can be given that we will not be responsible for damages such as these. We believe that our insurance coverage is consistent with industry standards. However, no assurance can be given that we will continue to maintain current levels of insurance cover. A successful claim of sufficient magnitude that is not covered, or only partially covered, by insurance could have a material adverse effect on our business, financial condition, operating results or cash flow. See Risk Factors Risks Related to our Market and our Business We may incur liabilities that are not covered by insurance. 94

108 THE EXCHANGE OFFER AND CONSENT SOLICITATION Novasep, in connection with the Refinancing and pursuant to the Exchange Offer, is offering to exchange any and all of its Existing Notes, including all accrued and unpaid interest thereon to the Closing Date, for the Exchange Notes with Warrants and the applicable Cash Payment. All holders of the Existing Notes will be permitted to participate in the Exchange Offer; provided that they properly complete, validly execute and deliver the Letter of Transmittal (as defined herein) in physical form to the Exchange Agent and submit an Electronic Exchange Instruction to Euroclear or Clearstream, as applicable. The Letter of Transmittal will include, inter alia, representations that they are (i) either (A) a QIB (as defined under Rule 144A) that is acquiring the Exchange Notes, the Warrants and the Warrant Shares for its own account or for a discretionary account or accounts on behalf of one or more QIBs or (B) acquiring the Exchange Notes, the Warrants and the Warrant Shares in an offshore transaction as defined in, and in accordance with Regulation S, (ii) if they are in France, investisseurs qualifiés as defined under French law and (iii) if they are in a member state of the European Union, a qualified investor under the Prospectus Directive, in each case as set forth in the Letter of Transmittal, and will include the Accession Agreement to the Novasep Securityholders Agreement and the Power of Attorney. Terms of the Exchange Offer and Consent Solicitation Upon the terms and subject to the conditions set forth in this Exchange Offer and Consent Solicitation Statement and the related Letter of Transmittal, each as may be amended from time to time, in the Exchange Offer Novasep is offering to exchange any and all of the outstanding Existing Notes for the Exchange Consideration, which is composed of Exchange Notes with Warrants (obligations à bons de souscription d actions) and a Cash Payment. For each $1,000 principal amount of Validly Tendered Existing Notes (as defined below) that is accepted for exchange, tendering holders will receive: (A) Exchange Notes in a principal amount equal to the Euro Equivalent of $1,000 plus accrued but unpaid interest on such Existing Notes. The Exchange Notes will mature on May 31, 2019 (the Maturity Date ) and will pay 5% interest per annum in cash on the Senior Outstanding Principal Amount (as defined herein) of the Exchange Notes, payable quarterly in arrears, as well as an additional (i) 3% Senior Capitalized Interest per annum on the Senior Outstanding Principal Amount of the Exchange Notes, which interest will be capitalized on each anniversary of the Closing Date and be payable on the Maturity Date and (ii) (A) 3% Junior 1 Capitalized Interest (as defined herein) per annum on the Senior Outstanding Principal Amount of the Exchange Notes, which interest will be capitalized annually on each anniversary of the Closing Date and (B) 11% Junior 2 Capitalized Interest per annum on the Junior Capitalized Amounts (as defined herein) of the Exchange Notes, which interest will be capitalized annually on each anniversary of the Closing Date starting with the second anniversary of the Closing Date, and in each case which Junior Capitalized Interest shall be payable on the Maturity Date, subject to the prior payment in full to Bpifrance of the Blockage Payment (as defined and more fully described in Condition 2 Status in Terms and Conditions of the Exchange Notes ). (B) 300 Warrants (initially attached to the Exchange Notes). The Warrants will detach from the Exchange Notes immediately upon issue on the Closing Date. Each Warrant will entitle its holder, subject to certain conditions, to subscribe for one newly-issued ordinary share of Novasep at an exercise price per newly-issued ordinary share equal to the ordinary share par value at the time of exercise (such par value being equal to Euro on the Closing Date). Warrants that have not been exercised will expire on the Maturity Date. (C) a cash payment. The cash consideration for each $1,000 principal amount of Validly Tendered Existing Notes accepted for exchange shall be the Tender Cash Consideration. In addition, for Existing Notes that are Validly Tendered on or prior to the Early Deadline and accepted for exchange, an additional cash payment equal to the Early Tender Cash 95

109 Consideration shall be paid for each $1,000 of principal amount of such Validly Tendered Existing Notes accepted for exchange. These cash payments shall be paid directly through Euroclear or Clearstream, as applicable, for the account of the relevant holders of Existing Notes. Concurrently, and as an integrated proposal with the Exchange Offer, Novasep is soliciting Consents from the holders of Existing Notes to implement the Proposed Amendments (Successful Consent Solicitation). By validly tendering Existing Notes in the Exchange Offer (or solely delivering an Electronic Exchange Instruction), a holder will be deemed to have also delivered a valid Consent. Each holder s valid tender of Existing Notes electronically through the relevant clearing system via an Electronic Exchange Instruction will constitute such holder s grant of the Consents sought in the Exchange Offer and Consent Solicitation (whether or not such holder shall have executed a Letter of Transmittal). If Consent Solicitation achieves the Success Threshold, non-tendering holders of Existing Notes will remain holders of the Existing Notes but in amended form, under which the principal and interest rate of such Existing Notes will be significantly reduced, the maturity date will be extended, substantially all restrictive covenants and events of default will be removed and the Existing Notes will no longer have the benefit of any guarantee or collateral, among other amendments. See Proposed Amendments (Successful Consent Solicitation) and Summary Summary Comparison of the Existing Notes Versus the Amended Existing Notes. There is no requirement for an individual holder to tender and deliver Consents for a minimum principal amount of Existing Notes in the Exchange Offer. However, in the event that a tendering and consenting holder of Existing Notes would otherwise be entitled to receive pursuant to the Exchange Offer an Exchange Note in a principal amount that is not a whole multiple of 1, the principal amount of such Exchange Note will be rounded down to the next whole multiple of 1 and no cash or other consideration will be paid to such holder for or in lieu of any such rounded down portion of the principal of an Exchange Note. Novasep s obligation to pay the Exchange Consideration for Existing Notes tendered and Consents delivered pursuant to the Exchange Offer is subject to several conditions referred to below under Conditions to the Exchange Offer. In order to tender Existing Notes pursuant to the Exchange Offer and receive the Exchange Consideration, a holder must both submit an Electronic Exchange Instruction to Euroclear or Clearstream, as applicable, and submit a properly completed and executed original Letter of Transmittal (including all attachments thereto) in physical form to the Exchange Agent. See Procedures for Tendering Existing Notes and Delivery of Consents. In the event a holder fails to follow all of the procedures set forth herein to validly tender its Existing Notes, such holder will not receive the Exchange Consideration and any invalidly-tendered Existing Notes will be rejected and will be promptly be returned to such holder and Novasep will make no payments in respect of the Exchange Consideration with respect to such Existing Notes. Each holder of Existing Notes who fails to receive some or all of the Exchange Consideration because it did not validly execute and deliver a properly completed Letter of Transmittal (including the Unique Instruction Reference and the Accession Agreement and Power of Attorney) in physical form to the Exchange Agent, but otherwise validly tenders through submission of an Electronic Exchange Instruction, will be deemed to have validly delivered Consents with respect to all Existing Notes to which such Electronic Exchange Instruction refers for purposes of the Consent Solicitation, notwithstanding the fact that their Existing Notes have not been accepted for exchange pursuant to the Exchange Offer and have been rejected or returned to them and they have not received the Exchange Consideration. Such holders will not be entitled to any consideration on account of such Consents. In the event that the Consent Solicitation achieves the Success Threshold, any such holders will hold Amended Existing Notes by virtue of the Proposed Amendments (Successful Consent Solicitation), which will be materially less valuable than the Existing Notes. The allocation of Exchange Notes with Warrants will be determined by reference to only those participating holders who validly execute and deliver a properly completed Letter of Transmittal (including the Unique Instruction Reference and the required Accession Agreement and Power of Attorney) in physical form to the Exchange Agent on or before the Expiration Date. 96

110 Exchange Notes with Warrants will be delivered in book-entry form to the respective accounts of Euroclear and/or Clearstream in Euroclear France, for onward credit to the Euroclear account or Clearstream account, as the case may be, of the tendering holder or the tendering holder s custodian on the Closing Date. Failure to provide the information necessary to effect delivery of Exchange Notes with Warrants will render such holder s tender defective only with respect to delivery of Exchange Notes with Warrants. Novasep will have the right to treat such tender as otherwise effective with respect to delivery of the Consents. Under no circumstances will any additional consideration be payable because of any failure to deliver the Exchange Notes with Warrants resulting from a holder s failure to provide such information or documentation necessary to effect such delivery. Accrued and Unpaid Interest Tenders of the Existing Notes include any rights to accrued but unpaid interest on such Existing Notes. The principal amount of the Exchange Notes issued in exchange for Existing Notes will include the Euro Equivalent of the accrued and unpaid interest on such Existing Notes. All such accrued and unpaid interest will be converted from U.S. Dollars to the Euro Equivalent and such amount will be included as part of the principal amount of the Exchange Notes received pursuant to the Exchange Offer. Novasep will not pay any additional consideration in respect of such accrued and unpaid interest outside of the Exchange Consideration. Affiliates The Refinancing contemplated by this Exchange Offer and Consent Solicitation Statement is subject to at least 90% of the total outstanding principal amount of the Existing Notes held by persons other than Novasep or any of its Affiliates (as defined in the Indenture) having granted Consents. Under the terms of the Indenture for the Existing Notes, for purposes of determining whether or not holders representing at least 90% of the total outstanding principal amount of Existing Notes have granted their Consents as contemplated in connection with the Consent Solicitation, Existing Notes which are held by or on behalf of Novasep or any Affiliate (as defined in the Indenture) of Novasep shall be deemed not to be outstanding. The term Affiliate is defined in the Indenture as follows: Affiliate of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, control, as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise; provided that beneficial ownership of 10% or more of the voting stock of a Person shall be deemed to be control. For purposes of this definition, the terms controlling, controlled by and under common control with have correlative meanings. Due to the size of their equity holdings in NVHL, certain holders of Notes, including each of the Cornerstone Bondholders, qualify as Affiliates under the Indenture and thus their Notes will not count in determining whether or not the Success Threshold as defined for purposes of the Consent Solicitation integrated with the Exchange Offer has been met. Each holder of Existing Notes must specify in the Letter of Transmittal if it qualifies as an Affiliate for the purposes of the Consent Solicitation integrated with the Exchange Offer. Novasep Recommendation Novasep makes no recommendation as to whether holders of Existing Notes should tender, or refrain from tendering, their Existing Notes for exchange pursuant to the Exchange Offer or grant the Consents contemplated by the Consent Solicitation. The effectiveness of the Exchange Offer and Consent Solicitation forms part of the Refinancing which, upon completion, will result in the refinancing of Novasep s capital structure. The Trustee, Exchange Agent and the other Agents for the Existing Notes (or their respective agents, advisors or counsel) have not made, nor will they make, any recommendation to any holder as to whether 97

111 such holder should exchange its Existing Notes pursuant to the Exchange Offer or grant its consent to the Proposed Amendments (Successful Consent Solicitation). You must make your own investment decision whether to exchange any Existing Notes and grant the Consents with respect thereto pursuant to the Exchange Offer and Consent Solicitation. Expiration Date; Withdrawal Deadline; Extensions; Amendments; Termination For purposes of the Exchange Offer and Consent Solicitation, the term Expiration Date means 5:00 p.m., New York City time, on October 25, 2016 subject to our right to extend that time and date with respect to the Exchange Offer and Consent Solicitation in our absolute discretion, in which case the Expiration Date means the latest time and date to which the Exchange Offer and Consent Solicitation is so extended. If extended, we will announce the extension of the Expiration Date with a disclosure of the approximate principal amount of Existing Notes tendered as of such date. Such announcement shall be issued no later than 9:00 a.m., New York City time on the next Business Day after the scheduled Expiration Date. For purposes of the Exchange Offer and Consent Solicitation, the term Withdrawal Deadline means 5:00 p.m., New York City time, on October 25, 2016, subject to our right to extend or reinstate the withdrawal time and date in our absolute discretion, in which case the Withdrawal Deadline means the latest time and date to which it is so extended or reinstated. Except in certain circumstances in which withdrawal rights may be amended or reinstated, as described in Withdrawal of Tenders and Consents, Existing Notes that are Validly Tendered and Consents that are validly delivered prior to the Withdrawal Deadline and that are not validly withdrawn prior to the Withdrawal Deadline may not be withdrawn on or after the Withdrawal Deadline, and Existing Notes that are Validly Tendered and Consents that are validly delivered on or after the Withdrawal Deadline may not be withdrawn. For purposes of the Exchange Offer and Consent Solicitation, the term Early Deadline means 5:00 p.m., New York City time, on October 7, 2016 subject to our right to extend that time and date with respect to the Exchange Offer and Consent Solicitation in our absolute discretion, in which case the Early Deadline means the latest time and date to which the Exchange Offer and Consent Solicitation is so extended. We expressly reserve the right, subject to applicable law, to (i) amend, extend or terminate the Exchange Offer and Consent Solicitation and the period during which the Exchange Offer and Consent Solicitation is open as we determine necessary or appropriate, as well as to extend the Early Deadline and the Withdrawal Deadline; provided, that we will not amend or waive the requirement to receive Consents representing at least 90% of the total outstanding principal amount of the Existing Notes hold by persons other than Novasep or any of its Affiliates (as defined in the Indenture); and (ii) to reject for exchange any Existing Notes in the event any of the conditions of the Exchange Offer are not satisfied. In the event that the Exchange Offer is terminated, withdrawn or otherwise not consummated on or prior to the Expiration Date, no consideration will be paid or become payable to holders who have Validly Tendered their Existing Notes and delivered Consents pursuant to the Exchange Offer. In any such event, the Existing Notes previously tendered pursuant to the Exchange Offer will be promptly returned to the tendering holders and no payment will be made by Novasep in respect of the Exchange Consideration for such Existing Notes. Any waiver, amendment or modification of the Exchange Offer or Consent Solicitation will apply to all Existing Notes tendered pursuant to the Exchange Offer and Consent Solicitation. We will give written notice of material changes, including the extension of the Expiration Date or Withdrawal Deadline, to the Exchange Agent and will disseminate additional offer documents and extend the Exchange Offer and Consent Solicitation and withdrawal rights as we determine necessary and to the extent required by law. If any changes are made to the Exchange Consideration, the Expiration Date for the Exchange Offer will be extended so that the Exchange Offer remains open for at least ten (10) Business Days from the date of such change. For other material changes to the terms and conditions of the Exchange Offer and Consent Solicitation, the Expiration Date for the Exchange Offer will be extended so that the Exchange Offer or Consent Solicitation, as applicable, remains open for at least five (5) Business Days from the date of such change. 98

112 There can be no assurance that we will exercise our right to extend, terminate or amend the Exchange Offer or the Consent Solicitation. During any extension and irrespective of any amendment to the Exchange Offer or the Consent Solicitation, all Existing Notes previously validly tendered and not withdrawn and not accepted for exchange or withdrawn thereunder will remain subject to the Exchange Offer and Consent Solicitation and may be accepted thereafter by us, subject to compliance with applicable law. We may waive conditions without extending the Exchange Offer, in accordance with applicable law. Closing Date We will deliver the Exchange Consideration on the Closing Date. We will not be obligated to deliver or cause to be delivered any portion of the Exchange Consideration unless the conditions to the Exchange Offer and Consent Solicitation have been satisfied (or, if applicable, waived) and the Exchange Offer is consummated. Effect of Tender Any tender by a holder, and our subsequent acceptance of that tender, of Existing Notes will constitute a binding agreement between that holder and us upon the terms and subject to the conditions of the Exchange Offer described in this Exchange Offer and Consent Solicitation Statement and in the Letter of Transmittal. The acceptance of the Exchange Offer by a tendering holder of Existing Notes will constitute the agreement by that holder to deliver good and marketable title to the tendered Existing Notes, free and clear of any and all liens, restrictions, charges, pledges, security interests, encumbrances or rights of any kind of third parties and, by such acceptance, a tendering holder shall be deemed to make the representations and warranties described and set forth herein and in the Letter of Transmittal, including in the sections entitled Content of the Letter of Transmittal and Transfer Restrictions. Absence of Dissenters Rights Holders of the Existing Notes do not have any appraisal or dissenters rights in connection with the Exchange Offer. Proposed Amendments (Successful Consent Solicitation) to Existing Notes The Proposed Amendments (Successful Consent Solicitation) will modify the principal amount, interest rate and maturity date of the Existing Notes, eliminate or amend substantially all of the restrictive covenants and modify certain of the events of default and various other provisions contained in the Indenture and release guarantees and collateral which secure the Existing Notes, as more fully described in Proposed Amendments (Successful Consent Solicitation). Acceptance of Existing Notes for Exchange and Delivery On the Closing Date, Exchange Notes to be issued as part of the Exchange Consideration for Existing Notes in the Exchange Offer, if consummated, will be delivered in book-entry form. We will be deemed to accept Validly Tendered Existing Notes that have not been validly withdrawn as provided in this Exchange Offer and Consent Solicitation Statement when, and if, we give written notice of acceptance to the Exchange Agent. Subject to the terms and conditions of the Exchange Offer, delivery of the Exchange Notes with Warrants will be made by or on behalf of Novasep on the Closing Date following receipt of that notice. If any tendered Existing Notes are not accepted for any reason described in the terms and conditions of the Exchange Offer, such unaccepted Existing Notes will be returned without expense to the tendering holders as promptly as practicable after the expiration or termination of the Exchange Offer and Novasep shall make no payment in respect of the Exchange Consideration for such Existing Notes. Market and Trading Information We expect to make an application to list the Exchange Notes (but not the Warrants or Warrant Shares) on the Official List of the Luxembourg Stock Exchange and to admit them to trading on the Euro MTF. 99

113 Procedures for Tendering Existing Notes and Delivery of Consents General To participate in the Exchange Offer, your Existing Notes must be validly tendered to the Exchange Agent as described below. We will only issue Exchange Notes with Warrants in exchange for Existing Notes that are Validly Tendered such that all necessary instructions and documentation, including a properly completed and executed original Letter of Transmittal (and the Accession Agreement and Power of Attorney attached thereto) have been received by the Exchange Agent on or prior to the Expiration Date. Therefore, you should allow sufficient time to ensure timely delivery of the documentation required to tender your Existing Notes, and you should follow carefully the instructions on how to tender your Existing Notes. You are advised to check with any bank, securities broker or other intermediary through which you hold Existing Notes whether such intermediary would require receipt of instructions to participate in, or revoke their instruction to participate in, the Exchange Offer before the deadlines specified in this Exchange Offer and Consent Solicitation Statement. The deadlines set by such intermediaries and the relevant clearing systems for the submission and withdrawal of instructions will be earlier than the relevant deadlines specified in this Exchange Offer and Consent Solicitation Statement. It is your responsibility to properly tender your Existing Notes. We have the right to waive any defects. However, we are not required to waive defects, and neither we nor the Exchange Agent is required to notify you of defects in your tender. In all cases, whether you hold your Existing Notes through Euroclear or Clearstream, in order for your Existing Notes to be considered Validly Tendered and for you to receive the Exchange Consideration, you must submit or deliver, so as to be received by the Exchange Agent on or prior to the Expiration Date, both: (i) an Electronic Exchange Instruction to Euroclear or Clearstream, as the case may be, and (ii) by physical delivery, a properly completed and executed original Letter of Transmittal. Any tender of Existing Notes that is not represented by both an Electronic Exchange Instruction and a properly completed and executed original Letter of Transmittal (including the Unique Instruction Reference and the Accession Agreement and Power of Attorney attached thereto) is an invalid tender and will not be accepted. The Unique Instruction Reference is, in the case of Existing Notes held directly through: Euroclear: the worksheet reference obtained when the Euroclear direct participant instructs Euroclear in respect of the Exchange Offer and Consent Solicitation; and Clearstream: the reference allocated by Clearstream when such direct participant instructs Clearstream in respect of the Exchange Offer and Consent Solicitation. Your Unique Instruction Reference must be quoted on the Letter of Transmittal to be received by the Exchange Agent on or prior to the Expiration Date. Submission of instructions to Euroclear or Clearstream does not constitute delivery to the Exchange Agent. Beneficial holders of the Existing Notes are required to direct their accountholder (the bank, broker or other entity that holds the Existing Notes on behalf of the beneficial holder) to contact the relevant depository to submit an Electronic Exchange Instruction. By directing their accountholder to submit an Electronic Exchange Instruction, the beneficial holders of the Existing Notes agree to disclose their name and authorize their accountholders to mention their name in the Electronic Exchange Instruction. Direct participants with Euroclear or Clearstream are to obtain a Unique Instruction Reference by following the directions provided by the relevant depository. Accountholders must obtain and include separate Unique Instruction References for each position in the Existing Notes that they hold and should do so for each beneficial owner for whom they hold the Existing Notes. By submitting an Electronic Exchange Instruction to Euroclear or Clearstream, direct participants agree to disclose their account name and account number to the Exchange Agent (and for the Exchange Agent to share such details with Novasep). Your properly completed and executed original Letter of Transmittal (including the Unique Instruction Reference and the Accession Agreement and the Power of Attorney attached thereto) must be received in physical form by the Exchange Agent on or prior to the Expiration Date. If you 100

114 do not deliver a timely, properly completed, wet ink original executed copy of the Letter of Transmittal in physical form, including the Unique Instruction Reference and the Accession Agreement and the Power of Attorney attached thereto, you will not receive the Exchange Consideration (and will not be entitled to any consideration in lieu thereof). If you have otherwise validly submitted an Electronic Exchange Instruction, you will be treated as having delivered Consents for purposes of the Consent Solicitation with respect to the Existing Notes to which such Electronic Exchange Instruction refers. In such a case, in the event the Success Threshold is achieved, you will thus hold Amended Existing Notes. See Consequences of Failure to Exchange. If you have any questions or need help in exchanging your Existing Notes, please contact the Exchange Agent at the address or telephone numbers set forth below. Existing Notes Held Through Euroclear or Clearstream If you hold Existing Notes through Euroclear or Clearstream, you must comply with the procedures of Euroclear or Clearstream, as the case may be. You should first submit your acceptance to Euroclear or Clearstream, as the case may be, who will verify the acceptance and send to the Exchange Agent an electronic exchange instruction (an Electronic Exchange Instruction ) as part of a book-entry confirmation including your Unique Instruction Reference, which states that Euroclear or Clearstream, as applicable, has received an express acknowledgment from a holder tendering Existing Notes that the holder has received and agrees to be bound by the terms and conditions of the Letter of Transmittal and that we may enforce the Letter of Transmittal against such participant. The Letter of Transmittal must then be properly completed and received in physical form by the Exchange Agent at the address set forth in Exchange Agent and Information Agent. In order for your tender of Existing Notes held through Euroclear or Clearstream to constitute a Valid Tender, the Exchange Agent must receive, on or before the Expiration Date, both an Electronic Exchange Instruction from Euroclear or Clearstream, as applicable, and an original, properly completed and executed Letter of Transmittal by physical delivery. Contents of Letter of Transmittal Receipt of an Electronic Exchange Instruction by the Exchange Agent will confirm the agreement by a holder, or the beneficial holder of Existing Notes on behalf of which the holder has tendered, to be bound by the terms of the Letter of Transmittal and to make all the representations and warranties contained therein. As part of the Letter of Transmittal, each holder, or the beneficial holder of Existing Notes on behalf of which the holder has tendered, subject to that holder s ability to withdraw its tender, and subject to the terms and conditions of the Exchange Offer generally, will thereby agree, among other things, to: (1) irrevocably sell, assign and transfer to or upon our order or the order of our nominee all right, title and interest in and to, and any and all claims in respect of or arising or having arisen as a result of the holder s status as a holder of, all Existing Notes tendered thereby, such that thereafter the holder shall have no contractual or other rights or claims in law or equity against us or any fiduciary, trustee, collateral agent or any agent or other person connected with the Existing Notes arising under, from or in connection with those Existing Notes; (2) grant the Consents sought in this Exchange Offer and Consent Solicitation Statement to the Proposed Amendments (Successful Consent Solicitation); (3) authorize and direct the Trustee, Collateral Agent, Agents and Depositaries to take all actions contemplated by the Proposed Amendments (Successful Consent Solicitation), including release of collateral and guarantees and execution of the Amended Indenture, and to rely solely on an Officers Certificate from Novasep and an Opinion of Counsel, delivered pursuant to the terms of and containing the statements set out in the Indenture to the effect that they are authorized and directed to grant any waiver, consent, authorization or change under the terms of the Consents granted by the undersigned; 101

115 (4) waive any and all rights with respect to the Existing Notes tendered thereby, including, without limitation, any defaults or events of default and their consequences in respect of the Existing Notes or the Indenture existing prior to or arising in connection with Novasep s refinancing; (5) waive and consent to the amendment of any and all other provisions of the Indenture and the Existing Notes that would prevent the consummation of the Refinancing and the transactions contemplated in connection therewith; further consent to and expressly authorize the Refinancing and the transactions contemplated in connection therewith notwithstanding any provisions of the Indenture or the Existing Notes; further direct the Trustee, the Collateral Agent and the Agents to take any action necessary to consummate the Refinancing and the transactions contemplated in connection therewith; further consent to make any and all changes to the Indenture, the Existing Notes and any documents relating thereto resulting from the Proposed Amendments (Successful Consent Solicitation), including authenticating the Amended Existing Notes; (6) irrevocably appoint Novasep as its attorney to execute an amendment to the Novasep Shareholders Agreement and/or an amended and restated Novasep Shareholders Agreement, in either case, as may be necessary or useful in the context of the Refinancing to make the Novasep Securityholders Agreement consistent with the terms and conditions of the Refinancing as contemplated by the Exchange Offer and Consent Solicitation Statement, pursuant to the Power of Attorney; and (7) release and discharge Novasep and the Trustee, the Collateral Agent and any other Agent for the Existing Notes from any and all claims the holder may have, now or in the future, arising out of or related to the Existing Notes tendered thereby, including, without limitation, any claims that the holder is entitled to receive additional principal or interest payments with respect to the Existing Notes tendered thereby, other than as expressly provided in this Exchange Offer and Consent Solicitation Statement and in the Letter of Transmittal, or to participate in any redemption or defeasance of the Existing Notes tendered thereby. Each holder of Existing Notes shall also identify in the Letter of Transmittal if they qualify as an Affiliate for the purposes of the Consent Solicitation integrated with the Exchange Offer. In order to effect the exchange, the Letter of Transmittal includes, among others, the following commitments, representations and warranties and instruments, to which you must agree to and/or deliver to receive the Exchange Notes with Warrants: a confirmation that you, or the beneficial holder of Existing Notes on behalf of which you have tendered, are either (i) a QIB (as defined in Rule 144A) that is acquiring the Exchange Notes, the Warrants and the Warrant Shares for its own account or for a discretionary account or accounts on behalf of one or more QIBs or (ii) acquiring the Exchange Notes, the Warrants and the Warrant Shares in an offshore transaction as defined in, and in accordance with, Regulation S and you represent and warrant to that effect; a confirmation that, if you are in France, you are a qualified investor (investisseur qualifié) acting for your own account in accordance with Articles L.411-1, L and D of the French Code monétaire et financier and you represent and warrant to that effect; a confirmation that if you are in a member state of the European Union, you are a qualified investor under the Prospectus Directive, and you represent and warrant to that effect, or that you are not incorporated or situated in any member state of the European Union; an Accession Agreement to the Novasep Securityholders Agreement. Following execution of the Accession Agreement you will become party to the Novasep Securityholders Agreement as a result of the receipt of the Exchange Notes with Warrants; a Power of Attorney to Novasep to execute, on behalf of the applicable holder of Exchange Notes and Warrants, amendments to the Novasep Securityholders Agreement to the extent the Novasep Securityholders Agreement has not been, and should be, amended to reflect the 102

116 amendments required to make the Novasep Securityholders Agreement consistent with the terms and conditions of this Refinancing as contemplated by this Exchange Offer and Consent Solicitation Statement prior to or after the Closing Date; and a deed of release pursuant to which each consenting holder agrees, in favor of the Released Parties, subject to the occurrence of, and as from, the Closing Date, that the Released Parties are to be irrevocably and unconditionally released fully and absolutely from any and all claims arising out of or in connection with the Existing Notes, the Indenture, the guarantees of the Existing Notes and the collateral securing the Existing Notes (or related documentation). See The Refinancing Release. To receive the Exchange Consideration, the Exchange Agent must receive on or prior to the Expiration Date: (i) by electronic delivery, an Electronic Exchange Instruction confirming each holder s participation through the relevant clearing system and each holder s agreement to be bound by the terms and conditions contained in the Letter of Transmittal, and (ii) by physical delivery, a properly completed and original executed copy of the Letter of Transmittal executed by each holder and including a signed Accession Agreement as Investor to the Novasep Securityholders Agreement and a Power of Attorney. Any validly received Electronic Exchange Instruction will constitute a delivery of Consents, binding on the tendering holder, even if such holder fails to receive any or all of the Exchange Consideration because the Letter of Transmittal (including the Unique Instruction Reference and the required Accession Agreement and Power of Attorney) is not properly completed, validly executed and returned in physical form as provided therein. Determinations under the Exchange Offer We will determine in our sole discretion all questions as to the validity, form, eligibility, time of receipt, acceptance of tendered Existing Notes and withdrawal of tendered Existing Notes. Our determination will be final and binding. We reserve the absolute right to reject any Existing Notes not properly tendered or any Existing Notes our acceptance of which would, in the opinion of our counsel, be unlawful. We also reserve the right to waive any defect, irregularities or conditions of tender as to particular Existing Notes. Our interpretation of the terms and conditions of the Exchange Offer, including the instructions in the Letter of Transmittal, will be final and binding on all parties. Unless waived, all defects or irregularities in connection with tenders of Existing Notes must be cured within such time as we shall determine. Although we intend to notify holders of defects or irregularities with respect to tenders of Existing Notes, none of we, the Exchange Agent or any other person will incur any liability for failure to give such notification. Tenders of Existing Notes will not be deemed made until such defects or irregularities have been cured or waived. Any Existing Notes received by the Exchange Agent that are not properly tendered and as to which the defects or irregularities have not been cured or waived will be returned to the tendering holder as soon as practicable after the Expiration Date of the Exchange Offer and Novasep will not make any payment in respect of the Exchange Consideration for such Existing Notes. Withdrawal of Tenders and Consents Tenders of Existing Notes and delivered Consents may be withdrawn at any time prior to the Withdrawal Deadline, but Consents and tenders of Existing Notes may not be withdrawn separately. Any withdrawal of a tender of Existing Notes will also be a withdrawal of the related Consents. Holders of Existing Notes wishing to exercise any withdrawal rights should do so by submitting an electronic withdrawal notice in accordance with the procedures of Euroclear or Clearstream, as applicable. Beneficial holders of Existing Notes that are held through an accountholder are advised to check with such entity when it would be required to receive instructions to withdraw an Electronic Exchange Instruction in order to meet the Withdrawal Deadline. We will determine all questions as to the validity, form, eligibility and time of receipt of a notice of withdrawal. Our determination shall be final and binding on all parties. We will deem any Existing Notes and Consents so withdrawn not to have been validly tendered for exchange and delivered, respectively, for purposes of the Exchange Offer and Consent Solicitation. 103

117 Any Existing Notes that have been tendered for exchange but that are not exchanged for any reason will be returned to the holder thereof without cost to such holder, or, as applicable, credited to an account maintained with Euroclear or Clearstream for the Existing Notes. This return or crediting will take place as soon as practicable after withdrawal, rejection of tender, expiration or termination of the Exchange Offer. You may retender properly withdrawn Existing Notes by following the procedures described under Procedures for Tendering Existing Notes and Delivery of Consents at any time on or prior to the Expiration Date of the Exchange Offer. Conditions to the Exchange Offer Notwithstanding any other provision of this Exchange Offer and the Consent Solicitation Statement and in addition to (and not in limitation of) Novasep s right, subject to applicable law, to terminate, extend or amend the Exchange Offer and the Consent Solicitation, Novasep will have no obligation to accept for exchange any Existing Notes, or make any payments in respect of the Exchange Consideration, unless it has determined, in its sole discretion, that it has received valid Consents representing at least 90% of the total outstanding principal amount of the Existing Notes held by persons other than Novasep or any of its Affiliates (as defined in the Indenture and further described herein), pursuant to the Consent Solicitation. Existing Notes held by Novasep or any of its Affiliates (as defined in the Indenture and further described herein) are deemed not to be outstanding for the purposes of determining whether or not holders representing at least 90% of the total outstanding principal amount of Existing Notes have delivered their Consents as contemplated by this Exchange Offer and Consent Solicitation Statement. For the avoidance of doubt, the requirement to receive Consents representing at least 90% of the total outstanding principal amount of the Existing Notes held by persons other than Novasep or any of its Affiliates (as defined in the Indenture and further described herein) may not be waived. In addition, notwithstanding any other provisions of the Exchange Offer and the Consent Solicitation and in addition to (and not in limitation of) Novasep s right, subject to applicable law, to terminate, extend or amend the Exchange Offer and the Consent Solicitation, Novasep may terminate the Exchange Offer and the Consent Solicitation, treat any tenders as null and void and have no obligation to accept for exchange any Existing Notes or to make any payments in respect of the Exchange Consideration if any of the following has occurred and be continuing after the date of the Exchange Offer and Consent Solicitation Statement and before the Expiration Date and has not been waived by Novasep in its sole discretion: (1) there shall have been instituted, threatened or be pending any action or proceeding (or there shall have been a material adverse development to any action or proceeding currently instituted, threatened or pending) before or by any court, governmental, regulatory or administrative agency or instrumentality, or by any other person, in connection with the Exchange Offer and the Consent Solicitation, that either (a) is, or is reasonably likely to be, in the reasonable judgment of Novasep, materially adverse to the business, operations, properties, condition (financial or otherwise), assets, liabilities or prospects of the Novasep Group or any of its affiliates, in each case, individually or taken as a whole, or (b) which would or might, in the reasonable judgment of Novasep, prohibit, prevent, restrict or delay consummation of the Exchange Offer and the Consent Solicitation; (2) an order, statute, rule, regulation, executive order, stay, decree, judgment or injunction shall have been proposed, enacted, entered, issued, promulgated, enforced or deemed applicable by any court or governmental, regulatory or administrative agency or instrumentality that, in the reasonable judgment of Novasep, would or might be reasonably likely to prohibit, prevent, restrict or delay consummation of the Exchange Offer and the Consent Solicitation, or that is, or is reasonably likely to be, materially adverse to the business, operations, properties, condition (financial or otherwise), assets, liabilities or prospects of Novasep; (3) there exists any other actual or threatened legal impediment to the Exchange Offer and Consent Solicitation Statement, as the case may be, or any other circumstances that would materially adversely affect the transactions contemplated by the Exchange Offer and Consent Solicitation or the contemplated benefits of the Exchange Offer and Consent Solicitation to Novasep; or 104

118 (4) an event or events or the likely occurrence of an event or events that would or might reasonably be expected to prohibit, restrict or delay the consummation of the Exchange Offer and Consent Solicitation, as the case may be, or materially impair the contemplated benefits of the Exchange Offer and Consent Solicitation. In the event of any of the foregoing, Novasep, prior to the Expiration Date, may: (i) terminate the Exchange Offer and the Consent Solicitation; if the Exchange Offer and the Consent Solicitation is terminated, all tenders with respect to the Existing Notes will be void; (ii) to the extent permitted by applicable law, extend the Exchange Offer and the Consent Solicitation and retain all tenders delivered and not validly withdrawn until the Expiration Date of the extended Exchange Offer and the Consent Solicitation; and/or (iii) to the extent permitted by applicable law, waive the unsatisfied conditions with respect to the Exchange Offer and the Consent Solicitation (other than the required 90% Consent level) and accept all tenders properly delivered and not validly withdrawn. The foregoing conditions are for the sole benefit of Novasep, may be asserted by Novasep regardless of the circumstances giving rise to any such condition (including any action or inaction by Novasep) and (other than the required 90% Consent level) may be waived by Novasep, in whole or in part, at any time and from time to time before the Closing Date, in its sole discretion. Any determination made by Novasep concerning an event, development or circumstance described or referred to above shall be conclusive and binding. The failure by Novasep at any time to exercise any of the foregoing rights will not be deemed a waiver of any other right and each right will be deemed an ongoing right that may be asserted at any time and from time to time. Announcements Any extension, termination or amendment, in whole or in part, of the Exchange Offer or the Consent Solicitation will be followed as promptly as practicable by announcement thereof, such announcement in the case of an extension of the Exchange Offer to be issued no later than 9:00 a.m., New York City time, on the next Business Day following the previously scheduled Expiration Date. If we amend the Exchange Offer in a manner that we determine constitutes a material change, we will promptly disclose such amendment to the holders of Existing Notes. Without limiting the manner in which we may choose to make such announcement, we will not, unless otherwise required by law or the terms of Existing Notes, have any obligation to publish, advertise or otherwise communicate any such announcement other than by making a release to an appropriate news agency or another means of announcement that we deem appropriate. Transfer Taxes Transfer taxes could apply on transfer of Exchange Notes or Warrants (for a general discussion relating to French or U.S. transfer taxes, please refer to Taxation ). Consequences of Failure to Exchange If we complete the Exchange Offer and you do not participate in it, then your Existing Notes will be subject to the amendments effected as a result of the Consent Solicitation. See Proposed Amendments (Successful Consent Solicitation) and Summary Summary Comparison of the Existing Notes Versus the Amended Existing Notes. In addition, the liquidity of the market for your Existing Notes could be adversely affected. See Risk Factors Risks Related to the Exchange Offer If the Exchange Offer is consummated, there will be less liquidity in the market for non-tendered Existing Notes, and the market prices for non-tendered Existing Notes may therefore decline and the volatility of such prices may increase and Risk Factors Risks Related to the Exchange Offer If the Exchange Offer is consummated, proposed amendments to the debt instruments governing the Existing Notes and the Indenture will reduce the protections afforded to non-tendering holders of Existing Notes. 105

119 Consequences of Termination of Exchange Offer In the event the Exchange Offer is terminated, withdrawn or not completed because we receive Consents representing less than 90% of the total outstanding principal amount of the Existing Notes held by persons other than Novasep or any of its Affiliates (as defined in the Indenture and further described herein) or other conditions precedent to the consummation of the Refinancing are not fulfilled, we would not consummate the Exchange Offer, Novasep or other members of the Novasep Group may have to initiate French safeguard proceedings (procédure de sauvegarde) or some other form of pre-insolvency or insolvency proceedings, which involves uncertainties, potential delays, and litigation risks. See Risk Factors Risks Related to the Exchange Offer The consummation of the Exchange Offer may be delayed or may not occur. If we commence a safeguard procedure or other form of pre-insolvency or insolvency proceedings, one or more terms of the Refinancing may fail to be implemented, and holders of Existing Notes may receive consideration that is less than what is offered in this Exchange Offer or no consideration at all. See Risk Factors Risks Related to the Refinancing If the Refinancing does not occur, the board of Novasep or other members of the Group may have to enter one or more insolvency proceedings. 106

120 PROPOSED AMENDMENTS (SUCCESSFUL CONSENT SOLICITATION) Set forth below is a description of the Proposed Amendments (Successful Consent Solicitation) that will be adopted if the Success Threshold is achieved. Pursuant to the terms of the Indenture, it shall not be necessary for the consent of the holders of Existing Notes to approve the particular form of any proposed amendment, supplement or waiver, but it is sufficient if such consent approves the substance thereof. Therefore, while the below provides an overview of the material proposed amendments to the Indenture, Novasep reserves the right to make additional amendments in line with the substance of the amendments set forth below. Consents to the Proposed Amendments (Successful Consent Solicitation) (including waivers and acknowledgements) are sought as an integrated proposal with the Exchange Offer. Holders may not tender their Existing Notes pursuant to the Exchange Offer without providing Consents with respect to their Existing Notes, and the tender of Existing Notes pursuant to the Exchange Offer will constitute the giving of Consents by such holder to the Proposed Amendments (Successful Consent Solicitation). Accordingly, (i) a tender purporting to consent to only a portion of the Proposed Amendments (Successful Consent Solicitation) will not be valid, and (ii) the Proposed Amendments (Successful Consent Solicitation) will not become effective if the Exchange Offer is terminated or withdrawn or the necessary number of Existing Notes are not accepted for exchange hereunder. If given effect, the Proposed Amendments (Successful Consent Solicitation) would (i) facilitate the consummation of the Refinancing, (ii) significantly reduce the principal amount, interest rate and extend the maturity date of the Existing Notes, and (iii) eliminate or amend substantially all of the restrictive covenants and modify certain of the events of default and various other provisions contained in the existing Indenture. Notes held by Affiliates (as defined in the Indenture and further described herein) of Novasep will be deemed not to be outstanding for the purposes of the determination as to whether or not the Success Threshold has been achieved for purposes of the Consent Solicitation. If the Proposed Amendments (Successful Consent Solicitation) become effective, they will be binding on all holders of Existing Notes, which following the Refinancing, will comprise those holders of Existing Notes that did not Validly Tender their Existing Notes and have such notes accepted for exchange in the Exchange Offer and Consent Solicitation. Each capitalized term appearing below that is not defined herein has the meaning assigned to such term in the Indenture, as the context requires. Proposed Amendments/Deletions The Proposed Amendments (Successful Consent Solicitation) will modify the aggregate amount of outstanding principal and accrued interest, interest rate and maturity date of the Existing Notes as follows: Principal and accrued interest amounts: The principal amount of any Existing Notes not tendered in the Exchange Offer will be reduced to 25% of their original face value. All rights to payment in respect of accrued and unpaid interest up to the Closing date will be waived. Interest rate: The interest rate on the Existing Notes will be reduced from 8.00% per annum to 1.00% per annum, commencing on the Closing Date. PIK interest payments: For any interest payment period commencing after closing of the Refinancing, Novasep will be permitted to elect to pay interest on the Amended Existing Notes in kind by increasing the principal amounts of such Amended Existing Notes by an amount equal to the amount of cash interest that would otherwise be payable (the PIK Interest ) and thereby increase, without the consent of the holders, the outstanding principal amount under the Indenture. Unless the context requires otherwise, references to principal amount of the Amended Existing Notes include any increase in the principal amount of the Amended Existing Notes as a result of any PIK Interest. With respect to each interest payment period, Novasep will elect the portion, if any, of the interest payment that will be paid in PIK Interest by delivering a notice to the holders and the Trustee prior to the beginning of such period. In the absence of such 107

121 a determination, the entire interest payment on the Amended Existing Notes will be payable in PIK Interest. Interest on any increase in principal amount from PIK Interest will only accrue from and after the date of such increase. Maturity date: The fixed maturity of the Existing Notes will be amended from December 15, 2016 to December 15, The Proposed Amendments (Successful Consent Solicitation) will modify the guarantee obligations of the Existing Notes as follows: 1. All Guarantors will be released from all obligations under the Existing Notes, the Indenture and any documents related to the guarantee. 2. Article 11 (Note Guarantees) will be deleted in its entirety and the resulting conforming modifications throughout the Indenture will be made. 3. The Amended Existing Notes will not be guaranteed and will be obligations of Novasep only. The Proposed Amendments (Successful Consent Solicitation) will modify the Liens securing the Existing Notes as follows: 1. All Liens on any Collateral granted for the benefit of holders will be released to the extent such release does not occur automatically in connection with consummation of the Refinancing. 2. Article 10 (Collateral and the Collateral Agent) will be deleted in its entirety and the resulting conforming modifications throughout the Indenture will be made. 3. The Amended Existing Notes will be unsecured obligations of Novasep. The Proposed Amendments (Successful Consent Solicitation) will modify the priority of the Existing Notes by adding a subordination provision, as follows: The Amended Existing Notes will be unsecured obligations of Novasep and will be subordinated in right of payment to the prior payment in full of all of our Senior Indebtedness (as defined below), including the Exchange Notes. In the event of any insolvency, bankruptcy, receivership, liquidation, reorganization or similar proceedings relative to Novasep or its creditors or assets, or any liquidation, dissolution or winding up of us, whether voluntary or involuntary, or any assignment for the benefit of our creditors or other marshalling of our assets and liabilities (each, an Insolvency Event ), the holders of Senior Indebtedness will be entitled to receive payment in full, or provision shall be made for such payment, before holders of Amended Existing Notes will be entitled to receive any payment or distribution of any kind or character, on account of principal or interest, if any, on the Amended Existing Notes or on account of any purchase or other acquisition of Amended Existing Notes by Novasep or any of its subsidiaries (all such payments, distributions, purchases and acquisitions being, individually and collectively, a Subordinated Payment ) on any Amended Existing Notes. If a holder of Amended Existing Notes receives a Subordinated Payment with knowledge of an Insolvency Event and prior to payment in full of all Senior Indebtedness, such holder will hold in trust for the benefit of holders of Senior Indebtedness any such Subordinated Payment, or pay over or deliver such Subordinated Payment to the trustee in bankruptcy, receiver or other person distributing Novasep s assets for purposes of paying in full all Senior Indebtedness remaining unpaid. In the event of Novasep s insolvency, upon any distribution of its assets, its unsecured creditors who are not holders of Amended Existing Notes or Senior Indebtedness may recover less, ratably, than holders of Senior Indebtedness and may recover more, ratably, than the holders of Amended Existing Notes. 108

122 The term Senior Indebtedness will mean: (a) the principal (including redemption payments), premium, if any, interest and other payment obligations with respect to (i) Novasep s indebtedness for money borrowed and (ii) indebtedness evidenced by debentures, bonds, notes or other similar instruments issued by Novasep, including any such securities issued under any indenture or other instrument to which Novasep is a party (including, for the avoidance of doubt, indentures pursuant to which subordinated debentures have been or may be issued); (b) all of Novasep s capital, operating or other lease obligations; (c) all of Novasep s obligations issued or assumed as the deferred purchase price of property, all of our conditional sale obligations, all hedging agreements and agreements of a similar nature thereto (including interest rate, currency or commodity swap agreements and commodity purchase and sale agreements) and all agreements relating to any such agreements, and all obligations under any title retention agreement (but excluding trade accounts payable arising in the ordinary course of business); (d) all of Novasep s obligations for the reimbursement of amounts paid pursuant to any letter of credit, banker s acceptance, security purchase facility or similar credit transaction; (e) all obligations of the type referred to in clauses (a) through (d) above of other persons for the payment of which Novasep is responsible or liable as obligor, guarantor or otherwise and (f) all obligations of the type referred to in clauses (a) through (e) above of other persons secured by any lien on any of Novasep s property or assets, (whether or not such obligation is assumed by Novasep); in each case of clauses (a) through (f) whether outstanding at the date of the Indenture or thereafter incurred; provided, however, that the term Senior Indebtedness will not include any indebtedness that contains express terms, or is issued under an indenture or other instrument which contains express terms, providing that it is subordinate to or ranks pari passu with the Amended Existing Notes or any series thereof. Such Senior Indebtedness will continue to be Senior Indebtedness and be entitled to the benefits of the subordination provisions of the Indenture irrespective of any amendment, modification or waiver of any term of such Senior Indebtedness and notwithstanding that no express written subordination agreement may have been entered into between the holders of such Senior Indebtedness and the Trustee or any of the holders of Amended Existing Notes. No payment of principal (including redemption payments) or interest, if any, on any Amended Existing Notes may be made: (a) if any Senior Indebtedness is not paid when due; (b) if any applicable grace period with respect to a payment default on Senior Indebtedness has ended and such default has not been cured or waived or ceased to exist; or (c) if the maturity of any Senior Indebtedness has been accelerated because of a default and such acceleration has not been rescinded and annulled or such Senior Indebtedness repaid in accordance with its terms. The Proposed Amendments (Successful Consent Solicitation) will eliminate the following restrictive covenants and other provisions of the Existing Notes and the Indenture (which are also identified below by their respective Section references in the Indenture) in their entirety (with resulting conforming changes to be made throughout the Indenture): Section 3.12 Section 4.03 Section 4.07 Section 4.08 Section 4.09 Section 4.10 Section 4.11 Section 4.12 Section 4.13 Section 4.14 Section 4.15 Section 4.16 Section 4.18 Section 4.19 Section 4.20 Section 4.22 Section 5.01 Offer to Purchase by Application of Excess Proceeds Reports and Other Information Limitations on Restricted Payments Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries Limitation on Incurrence of Indebtedness and Issuance of Preferred Stock Asset Sales Transactions with Affiliates Liens Business Activities Offer to Repurchase Upon Change of Control Designation of Restricted and Unrestricted Subsidiaries Limitation on Issuance of Guarantees of Indebtedness by Restricted Subsidiaries Maintenance of Listing No Impairment of Security Interests Payments for Consent Collateral Sharing Agreement (Merger, Consolidation or Sale of Assets) 109

123 Section 5.02 Section 7.09 Successor Corporation Substituted Eligibility The Proposed Amendments (Successful Consent Solicitation) will also delete Section 6.01 (Events of Default) by deleting all clauses other than clauses (i) and (ii). Section 6.02 (Acceleration) will be deleted in its entirety. The Proposed Amendments (Successful Consent Solicitation) will also (i) delete certain definitions from the Indenture and the Existing Notes and (ii) delete certain references within other terms and conditions of the Indenture to such definitions or concepts, in each case when necessary to ensure consistency with the foregoing amendments. Proposed Waivers Section 4.01 Payment of Notes. By tendering their Existing Notes and delivering Consents, holders of Existing Notes will be deemed to have authorized a waiver of the payment of all accrued and unpaid interest on the Existing Notes pursuant to the consent of holders representing at least 90% of the aggregate outstanding principal amount of the Existing Notes held by persons other than Novasep or any of its Affiliates (as defined in the Indenture and further described herein). Section 6.01 Events of Default. By tendering their Existing Notes and delivering Consents, holders of Existing Notes will be deemed to have voted to authorize a waiver, as of the Closing Date, of all defaults or Events of Default, if any, existing prior to the Closing Date or arising in connection with the Refinancing. Proposed Authorizations and Instructions; Amended Indenture By tendering their Existing Notes and delivering Consents, holders of Existing Notes will be deemed to agree that, upon the execution of the Amended Indenture executed after completion of the Consent Solicitation and Exchange Offer, the Proposed Amendments (Successful Consent Solicitation) shall become immediately effective. By tendering their Existing Notes and delivering Consents, holders of Existing Notes will be deemed to authorize and direct the Trustee, Collateral Agent, Agent, and depositary to (a) take all actions contemplated by the Consent Solicitation and the Proposed Amendments (Successful Consent Solicitation), including release of the collateral and guarantees and execution of the Amended Indenture, and (b) rely solely on an Officers Certificate from Novasep and an opinion of counsel, delivered pursuant to the terms of, and containing the statements set out in, the Indenture, to the effect that they are authorized and directed to grant any waiver, consent, authorization or change under the terms of the Consent Solicitation and the Consents granted by the consenting holders. In the event that the Consent Solicitation achieves the Success Threshold, Novasep, the Trustee, the Collateral Agent, the other Agents and the guarantors with respect to the Existing Notes will execute an amended and restated or supplemental indenture with respect to the Existing Notes giving effect to the Proposed Amendments (Successful Consent Solicitation) as described herein (the Amended Indenture ) as of the Closing Date in accordance with the terms and conditions set forth in the Indenture. 110

124 TERMS AND CONDITIONS OF THE EXCHANGE NOTES Please be aware that terms defined in these Terms and Conditions of the Exchange Notes may not have the same definition as used elsewhere in this Exchange Offer and Consent Solicitation Statement and readers should read this section as a standalone section. The following section is an English translation of the Terms and Conditions of the Notes. The final Terms and Conditions of the Exchange Notes will be in French and will be the governing terms of the Exchange Notes. Copies of the final Terms and Conditions of the Exchange Notes in French shall be available (i) upon request at the specified office of the Exchange Agent during normal business hours and (ii) on the website of Novasep ( at the latest two Business Days before the Withdrawal Deadline (as defined in the Exchange Offer and Consent Solicitation Statement) of the Exchange Notes. The issue outside of the Republic of France of euro-denominated notes in an aggregate principal amount equal to the Euro Equivalent (as defined below) of up to $195,164,000 plus accrued and unpaid interest on the Existing Notes (as defined below) up to, and including, the Issue Date (as defined below) (the Exchange Notes ), to which will be attached warrants (bons de souscription d actions) (each such warrant, a Warrant ) by Novasep Holding S.A.S. (the Issuer ) has been authorized by a decision of its Supervisory Board (Conseil de Surveillance) dated September 23, 2016 and will be submitted to the approval of the General Meeting of the Shareholders (Assemblée Générale des Associés) of the Issuer to be held prior to the Issue Date. The Euro Equivalent means the amount of Euros obtained by converting the relevant amount of U.S. dollars into Euros at the spot rate for the purchase of Euros with U.S. Dollars as published under Currency Rates in the section of the Financial Times entitled Currencies, Bonds & Interest Rates on the date that is three (3) Business Days (as defined in Condition 9(b)) prior to the Issue Date. The Exchange Notes are issued with the benefit of an agency agreement to be dated no later than the Issue Date (the Agency Agreement ) between the Issuer, and Société Générale as fiscal agent and principal paying agent (the Fiscal Agent or Paying Agent, as the context requires, which expression shall, where the context so admits, include any successor for the time being as Fiscal Agent or Paying Agent), and Société Générale as calculation agent (the Calculation Agent, which expression shall, where the context so admits, include any successor for the time being as Calculation Agent). References below to Conditions are, unless the context otherwise requires, to the numbered paragraphs below. In these Conditions, holder of Exchange Notes, holder of any Exchange Note or Noteholder means the person whose name appears in the account of the relevant Account Holder (as defined below) as being entitled to such Exchange Notes. 1. Form, Denomination and Title The Exchange Notes are issued in accordance with Articles L and L et seq. of the French Code de commerce in dematerialized form in a denomination equal to the Euro Equivalent of $1,000 plus an amount equal to the accrued and unpaid interest as at the Issue Date on the Issuer s existing 8.00 per cent. senior secured notes due December 15, 2016 (the Existing Notes ) that are exchanged for such Exchange Note pursuant to an exchange offer and consent solicitation (the Exchange Offer ), rounded downwards to the nearest whole multiple of 1. Three hundred (300) Warrants will be attached to each Exchange Note. Each Warrant will permit to subscribe for one (1) ordinary share of the Issuer. Warrants will detach from the Exchange Notes immediately upon issue on the Issue Date. The number of Exchange Notes and the final denomination of such Exchange Notes shall be published on the Issuer s website ( at the latest on the Issue Date. The Exchange Notes are issued in dematerialized bearer form (au porteur) and title to the Exchange Notes will be evidenced in accordance with Article L et seq. of the French Code monétaire et financier by book entries (inscription en compte). No physical document of title (including certificats représentatifs pursuant to Article R of the French Code monétaire et financier) will be issued in respect of the Exchange Notes. 111

125 The Exchange Notes will be issued upon the closing of the Exchange Offer in connection with the refinancing by the Issuer of its financial indebtedness(as such date may be extended and notice thereof given in accordance with Condition 14 prior to the consummation of such refinancing) (the date the Exchange Notes are issued, the Issue Date ). The Exchange Notes will not be rated. The Exchange Notes will be admitted to the operations of Euroclear France; the ISIN and common code attributed to the Exchange Notes shall be published on the Issuer s website ( at the latest on the Issue Date. For the purpose of these Conditions, Account Holder shall mean any authorized financial intermediary institution entitled to hold, directly or indirectly, accounts on behalf of its customers with Euroclear France, and includes Euroclear Bank S.A./N.V. ( Euroclear ) and the depositary bank for Clearstream Banking, société anonyme ( Clearstream, Luxembourg ). Subject to the paragraph below, title to the Exchange Notes will pass upon, and transfer of the Exchange Notes may only be effected through, registration of the transfer in the books of Account Holders. To receive Exchange Notes with Warrants on the Issue Date, each investor must submit a duly-executed accession agreement to accede to the Novasep Securityholders Agreement dated March 15, 2012 (as the same may be amended from time to time, the Novasep Securityholders Agreement ) as an Investor. The accession agreement shall be in the form attached to the letter of transmittal issued by the Issuer in connection with the Exchange Offer (the Letter of Transmittal ) with respect to the Exchange Notes. By receiving Exchange Notes with Warrants on the Issue Date, each Noteholder will, irrespective of the receipt of the accession agreement, be deemed to have irrevocably agreed to the terms and conditions set forth in the Novasep Securityholders Agreement. 2. Status The principal and interest in respect of the Exchange Notes constitute direct, unconditional, unsecured and unsubordinated obligations of the Issuer and will at all times rank pari passu without any preference among themselves and (subject to such exceptions as are from time to time mandatory under French law) equally and rateably with any other present or future unsecured and unsubordinated obligations of the Issuer; except that (i) the Junior Capitalized Amounts (as defined in Condition 4(c)(i)), the Junior Capitalized Interest (as defined in Condition 4) accrued under the Exchange Notes which has not been capitalized pursuant to Condition 4(c) and Default Interest (as defined in Condition 4(e)) (if any) accrued thereto (the Junior Amounts ) shall constitute direct, unconditional, unsecured and subordinated obligations of the Issuer and will rank junior to the obligation of the Issuer to pay to Bpifrance (as defined below) the Blockage Payment (as defined below) and (ii) on the Maturity Date (as defined in Condition 4 (a)) or the date fixed for redemption or purchase in accordance with Conditions 5(a) to (e), Condition 7(d) or Condition 11, as applicable, the Issuer will make payments in respect of any Junior Amounts only to the extent that Bpifrance has previously received since March 15, 2012 in consideration of its B Preference Shares (as defined below) an aggregate amount (including any amount to be paid to Bpifrance with respect to the B Preference Share 2016 Dividend Distribution (as defined in Condition 7)) equal to the Blockage Payment. By subscribing or purchasing any Exchange Notes, Noteholders will be deemed to have accepted the above provisions in respect of Junior Amounts. In the event any Noteholder receives any amount in respect of Junior Amounts before Bpifrance has received an aggregate amount of payment with respect to its B Preference Shares (including any amount to be paid to Bpifrance with respect to the B Preference Share 2016 Dividend Distribution) equal to the Blockage Payment, any such Noteholder shall be required to turn over and transfer such amount to Bpifrance at the account designated by Bpifrance. Details of such account shall be available upon request to Bpifrance at the following address: 6-8, boulevard Haussmann, 75009, Paris, France. 112

126 Bpifrance means, Bpifrance Participations a French société anonyme having its registered office at 27, avenue du Général Leclerc, Maisons Alfort, France, registered with the Commercial and Company Registry of Créteil under number Blockage Payment means the sum of the following: (i) the priority dividend (dividende préciputaire) under preferred class B shares issued by the Issuer (the B Preference Shares ) to which Bpifrance would have been entitled if the Taux Applicable, as defined in the terms and conditions of the B Preference Shares attached to the Issuer s by-laws, were equal to 13% per annum (notwithstanding any increase of such rate to 14% as contemplated by the terms and conditions of the B Preference Shares); plus (ii) the amount Bpifrance is entitled to in accordance with the terms of the Novasep Securityholders Agreement following the sale or redemption of 29,999,999 (i.e., all but one) B Preference Shares subscribed for by Bpifrance in Liens The Issuer will not and will not cause or permit any of its Significant Subsidiaries (as defined in Condition 11) to, directly or indirectly, create, incur, assume or otherwise cause or suffer to exist or become effective any Lien (as defined in Condition 7) of any kind securing Indebtedness (as defined in Condition 7) or trade payables upon any of their property or assets, now owned or hereafter acquired, except Permitted Liens. Permitted Liens means: (1) Liens in favor of the Issuer or any of its Subsidiaries (as defined in Condition 7); (2) Liens on property (including Capital Stock (as defined in Condition 7)) of a Person (as defined in Condition 7) existing at the time such Person becomes a Subsidiary of the Issuer or is merged with or into or consolidated with the Issuer or any Subsidiary of the Issuer; provided that such Liens were in existence prior to the contemplation of such Person becoming a Subsidiary of the Issuer or such merger or consolidation and do not extend to any assets other than those of the Person that becomes a Subsidiary of the Issuer or is merged with or into or consolidated with the Issuer or any Subsidiary of the Issuer; (3) Liens on property (including Capital Stock) existing at the time of acquisition of the property by the Issuer or any Subsidiary of the Issuer; provided that such Liens were in existence prior to such acquisition and not incurred in contemplation of, such acquisition; (4) Liens to secure the performance of statutory obligations, trade contracts, insurance, surety or appeal bonds, workers compensation obligations, and pension obligations, performance bonds or other obligations of a like nature incurred in the ordinary course of business (including Liens to secure letters of credit issued to assure payment of such obligations); (5) Liens existing on the Issue Date; (6) Liens for taxes, assessments or governmental charges or claims that are not yet due and payable, or that are being contested in good faith by appropriate proceedings promptly instituted; (7) Liens imposed by law, such as carriers, warehousemen s, landlord s and mechanics Liens, in each case, incurred in the ordinary course of business; (8) survey exceptions, easements or reservations of, or rights of others for, licenses, rights-of-way, sewers, electric lines, telegraph and telephone lines and other similar purposes, or zoning or other restrictions as to the use of real property that were not incurred in connection with Indebtedness and that do not in the aggregate materially adversely affect the value of said properties or materially impair their use in the operation of the business of such Person; 113

127 (9) Liens on insurance policies and proceeds thereof, or other deposits, to secure insurance premium financings; (10) Liens created for the benefit of (or to secure) the Exchange Notes (or any guarantees in respect of the Exchange Notes); (11) any interest or title of a lessor under any Capital Lease Obligation (as defined in Condition 7) of the Issuer or its Subsidiaries; provided that such Liens do not extend to any property or assets which is not leased property subject to such Capital Lease Obligation; (12) Liens on specific items of inventory or other goods (and the proceeds thereof) of any Person securing such Person s obligations in respect of bankers acceptances issued or created in the ordinary course of business for the account of such Person to facilitate the purchase, shipment or storage of such inventory or other goods; (13) Leases, licenses, subleases and sublicenses of assets in the ordinary course of business; (14) Liens arising out of conditional sale, title retention, consignment or similar arrangements for the sale of assets entered into in the ordinary course of business; (15) mortgages, liens, security interests, restrictions, encumbrances or any other matters of record that have been placed by any developer, landlord or other third party on property over which the Issuer or any Significant Subsidiary has easement rights or on any real property leased by the Issuer or any Significant Subsidiary and subordination or similar agreements relating thereto and any condemnation or eminent domain proceedings or compulsory purchase order affecting real property; (16) Liens on property or assets under construction (and related rights) in favor of a contractor or developer or arising from progress or partial payments by a third party relating to such property or assets; (17) Liens securing or arising by reason of any netting or set-off arrangement entered into in the ordinary course of banking or other trading activities; (18) pledges of goods, the related documents of title and/or other related documents arising or created in the ordinary course of the Issuer or any Significant Subsidiary s business or operations as Liens only for Indebtedness to a bank or financial institution directly relating to the goods or documents on or over which the pledge exists; (19) Liens over cash paid into an escrow account pursuant to any purchase price retention arrangement as part of any permitted disposal by the Issuer or a Significant Subsidiary on condition that the cash paid into such escrow account in relation to a disposal does not represent more than 15% of the net proceeds of such disposal; (20) bankers Liens, rights of setoff or similar rights and remedies as to deposit accounts, Liens arising out of judgments or awards not constituting an Event of Default and notices of lis pendens and associated rights related to litigation being contested in good faith by appropriate proceedings and for which adequate reserves have been made; (21) Liens on cash, Cash Equivalents (as defined in Condition 7) or other property arising in connection with the defeasance, discharge or redemption of Indebtedness; (22) Liens on specific items of inventory or other goods (and the proceeds thereof) of any Person securing such Person s obligations in respect of bankers acceptances issued or created in the ordinary course of business for the account of such Person to facilitate the purchase, shipment or storage of such inventory or other goods; 114

128 (23) Liens arising out of conditional sale, title retention, consignment or similar arrangements for the sale of goods entered into in the ordinary course of business; (24) Liens on Securitization Assets (as defined in Condition 7) and related assets incurred in connection with any Qualified Receivables Financing (as defined in Condition 7); (25) Liens securing non-speculative Hedging Obligations (as defined in Condition 7); and (26) Liens incurred in the ordinary course of business of the Issuer or any Significant Subsidiary with respect to obligations (other than Indebtedness) that do not exceed 10 million at any one time outstanding. 4. Interest The Exchange Notes shall bear interest (i) at a fixed rate of 5 per cent. per annum payable quarterly in arrears (the Cash Interest ) as further described below, (ii) at a fixed rate of 3 per cent. per annum (the Senior Capitalized Interest ) capitalized annually, in accordance with Article of the French Code civil and payable on the Maturity Date as further described below and (iii) at a fixed rate of 3 per cent. per annum (the Junior 1 Capitalized Interest ) capitalized annually, in accordance with Article of the French Code civil and payable, subject to Condition 2, on the Maturity Date, as further described below; provided that the Junior Capitalized Amounts (as defined below) will bear interest at a fixed rate of 11 per cent. per annum (the Junior 2 Capitalized Interest and together with the Junior 1 Capitalized Interest, the Junior Capitalized Interest ), capitalized annually, in accordance with Article of the French Code civil and payable, subject to Condition 2, on the Maturity Date, as further described below. The Junior Capitalized Interest and the Senior Capitalized Interest shall be referred to herein as the Capitalized Interest. (a) Cash Interest The Exchange Notes shall bear Cash Interest on the Senior Outstanding Principal Amount (as defined below) from, and including, the Issue Date to, but excluding, May 31, 2019 (the Maturity Date ) at the rate of 5 per cent. per annum (the Cash Interest Rate ) payable quarterly in arrears on May 31, August 31, November 30, and February 28 in each year (each a Cash Interest Payment Date ) commencing on February 28, There will be therefore a first long coupon in respect of the first Cash Interest Period (as defined below) from, and including, the Issue Date up to, but excluding, February 28, The amount of Cash Interest payable in respect of each Exchange Note on each Cash Interest Payment Date and in respect of the first Cash Interest Payment Date shall be published on the Issuer s website ( at the latest on the Issue Date. Cash Interest Period means the period from, and including, the Issue Date to, but excluding, the first Cash Interest Payment Date and each successive period from, and including, a Cash Interest in Payment Date to, but excluding, the next succeeding Cash Interest Payment Date. Senior Outstanding Principal Amount or Senior OPA means an amount equal to the outstanding principal amount of Exchange Notes from time to time, including the aggregate amount of Senior Capitalized Interest which has been capitalized into such outstanding principal amount from time to time in accordance with Condition 4(b) and Default Interest (if any) accrued in respect of Senior Capitalized Interest which has been capitalized in accordance with Condition 4(e). (b) Senior Capitalized Interest The Exchange Notes shall bear Senior Capitalized Interest on the Senior Outstanding Principal Amount, from, and including, the Issue Date to, but excluding, the Maturity Date, at the rate of 3 per cent. per annum (the Senior Capitalized Interest Rate ). Such Senior Capitalized Interest shall be compounded annually on the first Capitalized Interest Compounding Date (as defined below) and on the second 115

129 Capitalized Interest Compounding Date in accordance with the paragraphs below, and shall be payable on the Maturity Date. Senior Capitalized Interest on the Exchange Notes shall be calculated by the Calculation Agent for each relevant Capitalized Interest Period (as defined below) from, and including, the first day of such Capitalized Interest Period by applying the following formula: Senior Capitalized Interest = where: (SSSSSS OOO x SSSSSS CCCCCCCCCCC IIIIIIII RRRR) x J [365 oo 366, aa the cccc mmm bb] J means the actual number of days elapsed during the Capitalized Interest Period; Capitalized Interest Period means the period from, and including, the Issue Date to, but excluding, the first Capitalized Interest Compounding Date and each successive period from, and including, a Capitalized Interest Compounding Date to, but excluding, the next succeeding Capitalized Interest Compounding Date. On the last day of any Capitalized Interest Period, the aggregate Senior Capitalized Interest accrued during such Capitalized Interest Period on each Exchange Note shall be added to the Senior Outstanding Principal Amount and the Outstanding Principal Amount of each Exchange Note and the Senior Outstanding Principal Amount and the Outstanding Principal Amount of each Exchange Note shall increase accordingly. Capitalized Interest Compounding Date means each anniversary date of the Issue Date. Outstanding Principal Amount means an amount equal to the outstanding principal amount of Exchange Notes, from time to time, including the aggregate amount of Capitalized Interest which has been capitalized into such principal amount of Exchange Notes in accordance with this Condition 4(b) and Condition 4(c) and Default Interest (if any) accrued thereon which has been capitalized in accordance with Condition 4(e). (c) (i) Junior Capitalized Interest The Exchange Notes shall bear Junior 1 Capitalized Interest on the Senior Outstanding Principal Amount at the rate of 3 per cent. per annum (the Junior 1 Capitalized Interest Rate ) from, and including, the Issue Date to, but excluding, the Maturity Date and shall bear Junior 2 Capitalized Interest on the Junior Capitalized Amounts from time to time at the rate of 11% per cent. per annum (the Junior 2 Capitalized Interest Rate ), from and including, the first Capitalized Interest Compounding Date to, but excluding, the Maturity Date Such Junior Capitalized Interest shall be compounded annually on each Capitalized Interest Compounding Date in accordance with the paragraphs below, and shall be payable, subject to Condition 2 and paragraph (ii) below, on the Maturity Date. Junior Capitalized Interest on the Exchange Notes shall be calculated by the Calculation Agent for each relevant Capitalized Interest Period from, and including, the first day of such Capitalized Interest Period by applying the following formula: Junior 1 Capitalized Interest = (Senior OPA x Junior 1 Capitalized Interest Rate) x J [365 or 366, as the case may be] Junior 2 Capitalized Interest = (Junior Capitalized Amounts Junior 2 Capitalized Interest Rate) x J [365 or 366, as the case may be] 116

130 where: Junior Capitalized Amounts mean amounts equal to the Junior Capitalized Interest which has been previously capitalized with respect to an earlier Capitalized Interest Period pursuant to this Condition 4(c) from time to time and Default Interest (if any) accrued thereon which has been capitalized in accordance with Condition 4(e). On the last day of any Capitalized Interest Period, the aggregate Junior Capitalized Interest accrued during such Capitalized Interest Period on each Exchange Note shall be added to the Junior Capitalized Amounts and the Outstanding Principal Amount of each Exchange Note and the Junior Capitalized Amounts and the Outstanding Principal Amount of each Exchange Note shall increase accordingly. (ii) (iii) (iv) In the event the Issuer redeems all, but not some only, of the Exchange Notes in accordance with these Conditions prior to the payment in full to Bpifrance of the Blockage Payment, the principal amount of the Exchange Notes will be reduced to an amount equal to the New Junior Outstanding Principal Amount (as defined below) and the Exchange Notes shall bear interest on such New Junior Outstanding Principal Amount at a rate equal to the Junior 1 Capitalized Interest Rate (except in the event of a redemption pursuant to Condition 11 in which case the rate shall equal the Junior 1 Capitalized Interest Rate plus one (1) per cent.) and such interest shall continue to (i) accrue, from, and including, the date of such redemption to, but excluding, the unconditional and irrevocable payment of all amounts due under the Exchange Notes on the date on which the Blockage Payment is made to Bpifrance and (ii) be compounded and capitalized annually on each Capitalized Interest Compounding Date. The aggregate amount of Junior Capitalized Interest that has accrued but has not yet been capitalized into the Junior Capitalized Amounts as of the date of such redemption shall be added to the interest that accrues on the New Junior Outstanding Principal Amount in accordance with the terms hereof following such redemption and shall be capitalized into the Junior Capitalized Amounts on the next succeeding Capitalized Interest Compounding Date. In the event the Issuer redeems or purchases only some, but not all, of the Exchange Notes in accordance with these Conditions prior to the payment in full to Bpifrance of the Blockage Payment, the Issuer shall issue and deliver at no cost to the Noteholders New Subordinated Exchange Securities (as defined below) in respect of any Junior Amounts outstanding. Following any redemption of all, but not some only, of the Exchange Notes in accordance with these Conditions, Junior Amounts outstanding from time to time shall become due and payable immediately following and on the same date as that on which the Blockage Payment is made in full by the Issuer to Bpifrance. New Junior Outstanding Principal Amount means any Junior Capitalized Amounts, provided that in the event the Issuer redeems all, but not some only, of the Exchange Notes in accordance with these Conditions before the first Capitalized Interest Compounding Date, the New Junior Outstanding Principal Amount on which Junior 1 Capitalized Interest shall be calculated shall be equal, in respect of the period from, and including, the redemption date of the Exchange Notes to, but excluding, the first Capitalized Interest Compounding Date, to the outstanding principal amount of the Exchange Notes as of such redemption date. New Subordinated Exchange Securities means, in connection with any partial redemption or purchases of Exchange Notes, subordinated securities to be issued by the Issuer (i) which shall constitute direct, unconditional, unsecured and subordinated obligations of the Issuer and rank junior to the obligation of the Issuer to pay to Bpifrance an amount equal to the Blockage Payment, (ii) in respect of which the Issuer shall undertake that it will make any payments in respect of such subordinated securities only to the extent that Bpifrance has previously received since March 15, 2012 in consideration of its B Preference Shares an aggregate amount (including any amount to be paid to Bpifrance with respect to the B Preference Share 2016 Dividend 117

131 Distribution) equal to the Blockage Payment, (iii) which shall have a nominal amount equal to the Junior Amounts outstanding on the redemption date or closing date of any exchange or purchase offer in respect of the Exchange Notes, (iv) which shall bear interest at the Junior 1 Capitalized Interest Rate compounded and capitalized in accordance with provisions substantially similar to Condition 4(c)(i) and (v) more generally, whose terms and conditions shall be, to the fullest extent practicable, substantially similar to these Conditions. (d) Cash and Capitalized Interest Payments Each Exchange Note will cease to bear Cash Interest and Capitalized Interest from the date of redemption or repurchase, unless payment of principal is improperly withheld or refused on such date. In such event, Cash Interest and Capitalized Interest on the Outstanding Principal Amount of such Exchange Note shall continue to accrue in accordance with Condition 4(e) below to the fullest extent permitted by law. However, notwithstanding the foregoing, Junior Capitalized Interest shall continue to accrue in accordance with Condition 4(c)(i) notwithstanding the redemption or repurchase in accordance with the terms hereof until payment of the Blockage Payment has been made in full to Bpifrance and all amounts due to Noteholders in respect of the Junior Amounts have been paid in full. (e) Default Interest If the Issuer fails to pay any amount due and payable under the Exchange Notes on its due date, Cash Interest and Capitalized Interest shall accrue, to the fullest extent permitted by law, on the overdue amounts from, and including, the due date with respect to such amounts up to, but excluding, the date on which all sums due in respect of such Exchange Notes are received by or on behalf of the relevant Noteholder before and after judgment and at a rate which is one (1) per cent. higher than the Interest Rate(s) (as defined below); provided, however, that in no event shall the Issuer be obliged to pay more than one (1) additional per cent. on the total applicable Interest Rate(s). If more than one Interest Rate are applicable in respect of overdue amounts, the increase of one (1) per cent. shall be divided equally between the Interest Rates (e.g. if the Issuer fails to pay any amount due in respect of Cash Interest and Senior Interest, such overdue amounts shall bear interest at a rate equal to the Cash Interest Rate plus 0.5 per cent. and the Senior Capitalized Interest Rate plus 0.5 per cent.). Any interest accruing under this Condition 4(e) (the Default Interest ) shall be immediately due and payable notwithstanding anything to the contrary contained herein. Default Interest (if unpaid) arising on an overdue amount will be compounded with the overdue amount only if, within the meaning of Article of the French Code civil, such interest is due for a period of at least one year, but will remain immediately due and payable. Interest Rate(s) means the Cash Interest Rate and/or Senior Capitalized Interest Rate and/or the Junior 1 Capitalized Interest Rate and/or Junior 2 Capitalized Interest Rate applicable from time to time on any overdue amounts in respect of the Exchange Notes. (f) Calculation of Cash Interest and Capitalized Interest Cash Interest and Capitalized Interest shall be calculated on an Actual/Actual - ICMA basis: if the Accrual Period is equal to or shorter than the Cash Interest Period or the Capitalized Interest Period, as the case may be, during which it falls, the Actual/Actual-ICMA basis will be the actual number of days in the Accrual Period divided by the product of (x) the number of days in such Cash Interest Period or Capitalized Interest Period and (y) the number of Cash Interest Periods or Capitalized Interest Periods normally ending in any year. Accrual Period means the relevant period for which interest is to be calculated (from, and including, the first such day to, but excluding, the last). 5. Redemption and Purchase The Exchange Notes may not be redeemed or purchased otherwise than in accordance with this Condition and with Condition 11, subject to Condition

132 (a) Final Redemption Unless previously redeemed or purchased and cancelled as provided below, the Exchange Notes will be redeemed in full by the Issuer at their Outstanding Principal Amount together with any accrued interest, on the Maturity Date, provided that if payment to Bpifrance in respect of the Blockage Payment has not been made in full on or prior to the Maturity Date, the Issuer shall redeem all, but not some only, of the Exchange Notes outstanding at a price equal to the Senior Amounts (as defined below); it being understood that following any such redemption, the principal amount of the Exchange Notes shall be reduced to the New Junior Outstanding Principal Amount and the Exchange Notes shall bear Junior Capitalized Interest all in accordance with Condition 4(c)(ii). Senior Amounts means an amount equal to the Senior Outstanding Principal Amount, together with any Cash Interest accrued, Senior Capitalized Interest accrued and not capitalized into the Senior Outstanding Principal Amount in accordance with Condition 4(b) and any Default Interest thereto up the relevant redemption date or closing date of any exchange or purchase offer in respect of the Exchange Notes. (b) (i) Redemption for Taxation Reasons If, by reason of a change in any law or regulation of the Republic of France or any political subdivision or authority therein or thereof having power to tax, or any change in the official application or interpretation of such law or regulation (including a holding by a competent court) becoming effective after the Issue Date, the Issuer would, on the occasion of the next payment of principal or interest due in respect of the Exchange Notes, not be able to make such payment without having to pay additional amounts as specified in Condition 10, the Issuer may, in its sole discretion, at any time, subject to having given not more than sixty (60) nor less than thirty (30) calendar days' prior notice to the Noteholders in accordance with Condition 14 (which notice shall be irrevocable) redeem all, but not some only, of the Exchange Notes outstanding at their Outstanding Principal Amount, together with any Cash Interest, Capitalized Interest accrued and not capitalized into the Outstanding Principal Amount in accordance with Condition 4(b) and Condition 4(c)(i) and Default Interest (if any) accrued thereto up to the date fixed for redemption provided that the due date for redemption for which notice hereunder may be given shall be no earlier than the latest practicable date on which the Issuer could make payment of principal or interest without withholding for French taxes. If the Issuer decides to redeem all, but not some only, of the Exchange Notes outstanding pursuant to this Condition 5(b)(i) and payment to Bpifrance in respect of the Blockage Payment has not been made in full on or prior to the due date for redemption, such Exchange Notes shall be redeemed at a price equal to the Senior Amounts; it being understood that following any such redemption, the nominal amount of the Exchange Notes shall be reduced to the New Junior Outstanding Principal Amount and the Exchange Notes shall bear Junior Capitalized Interest all in accordance with Condition 4(c)(ii). (ii) If the Issuer would on the next payment of principal or interest in respect of the Exchange Notes be prevented by French law from making payment to the Noteholders of the full amount then due and payable, notwithstanding the undertaking to pay additional amounts contained in Condition 10, then the Issuer shall forthwith give notice of such fact to the Fiscal Agent and the Issuer shall, subject to having given not less than seven (7) calendar days' prior notice to the Noteholders in accordance with Condition 14 (which notice shall be irrevocable), redeem all, but not some only, of the Exchange Notes outstanding at their Outstanding Principal Amount, together with any Cash Interest, Capitalized Interest accrued and not capitalized into the Outstanding Principal Amount in accordance with Condition 4(b) and Condition 4(c)(i) and Default Interest (if any) accrued thereto up to the date fixed for redemption, provided that the due date for redemption shall be no earlier than the latest practicable date on which the Issuer could make payment of the full amount of principal and/or interest payable in respect of the Exchange Notes or, if such date has passed, as soon as practicable thereafter. 119

133 If the Issuer redeems all, but not some only, of the Exchange Notes outstanding pursuant to this Condition 5(b)(ii) and payment to Bpifrance in respect of the Blockage Payment has not been made in full on or prior to the due date for redemption, such Exchange Notes shall be redeemed at a price equal to the Senior Amounts; it being understood that (x) following any such redemption, the nominal amount of the Exchange Notes shall be reduced to the New Junior Outstanding Principal Amount and the Exchange Notes shall bear Junior Capitalized Interest all in accordance with Condition 4(c)(ii) and (y) that the provisions of Condition 10 with respect to the requirement for the Issuer to pay additional amounts shall not apply in respect of any payment to be made on such Exchange Notes which falls due after the due date for redemption and payment of all amounts on such Exchange Notes shall be made subject to the deduction or withholding of any French taxation required to be withheld or deducted. (c) Optional Redemption The Issuer may, at any time prior to the Maturity Date, subject to having given not more than sixty (60) nor less than ten (10) calendar days' prior notice to the Noteholders in accordance with Condition 14 redeem all, or some only, of the then-outstanding Exchange Notes, at a price equal to the Outstanding Principal Amount together with any Cash Interest, Capitalized Interest (to the extent it has not previously been capitalized into the Outstanding Principal Amount pursuant to Condition 4(b) and Condition 4(c)(i)) and Default Interest (if any) accrued thereto up to, but excluding, the date fixed for redemption under this Condition 5(c). In the event of any redemption of some only of the Exchange Notes outstanding pursuant to this Condition 5(c), Exchange Notes will be redeemed from Noteholders pro rata in accordance with their respective holdings of Exchange Notes. If the Issuer decides to redeem all, but not some only, of the Exchange Notes pursuant to this Condition 5(c) and payment to Bpifrance in respect of the Blockage Payment has not been made in full on or prior to the due date for redemption, such Exchange Notes shall be redeemed at a price equal to the Senior Amounts; it being understood that following any such redemption, the nominal amount of the Exchange Notes shall be reduced to the New Junior Outstanding Principal Amount and the Exchange Notes shall bear Junior Capitalized Interest all in accordance with Condition 4(c)(ii). If the Issuer decides to redeem some only of the Exchanges Notes pursuant to this Condition 5(c) and payment to Bpifrance in respect of the Blockage Payment has not been made in full on or prior to the due date for redemption, the consideration in respect of such Exchange Notes shall be equal to (i) the Senior Amounts and (ii) New Subordinated Exchange Securities to be issued by the Issuer on the relevant redemption date or closing date of any exchange offer. (d) (i) Offer to repurchase Upon Change of Control If a Change of Control (as defined below) occurs, each Noteholder will have the right to require the Issuer to repurchase or exchange, as applicable, all or part of that Noteholder s Exchange Notes pursuant to an offer (the Change of Control Offer ), at a price in cash equal to 101% of the aggregate Outstanding Principal Amount of the Exchange Notes repurchased, together with any Cash Interest, Capitalized Interest (to the extent it has not previously been capitalized into the Outstanding Principal Amount pursuant to Condition 4(b) and Condition 4(c)(i)) and Default Interest (if any) accrued thereto up to, but excluding, the closing date of the Change of Control Offer. If payment to Bpifrance in respect of the Blockage Payment has not been made in full on or prior to the closing date of the Change of Control Offer, the consideration in respect of the Exchange Notes validly tendered shall be equal to (i) an amount in cash equal to 101% of the Senior Amounts and (ii) New Subordinated Exchange Securities to be issued by the Issuer on the closing date of the Change of Control Offer, provided that their initial nominal amount shall be equal to 101% of the Junior Amounts outstanding on the closing date of the Change of Control Offer. 120

134 The price and the consideration provided in paragraphs above shall be referred to as the Change of Control Payment. Within 30 days following any Change of Control, the Issuer will publish a notice in accordance with Condition 14, describing the transaction or transactions that constitute the Change of Control and offering to repurchase or exchange Exchange Notes on the date (the Change of Control Payment Date ), specified in the notice, which date will be no earlier than 30 days and no later than 60 days from the date such notice is published pursuant to Condition 14. (ii) (iii) The Issuer will comply with the requirements of Rule 14e-l under the U.S. Exchange Act and any other applicable securities laws and regulations to the extent those laws and regulations are applicable in connection with the repurchase or exchange of the Exchange Notes as a result of a Change of Control. To the extent that the provisions of any securities laws or regulations conflict with the Change of Control provisions described herein, the Issuer will comply with the applicable securities laws and regulations and will be deemed not to have breached its obligations under these Conditions by virtue of such compliance. On the Change of Control Payment Date, the Issuer will, to the extent lawful: (A) accept for payment and/or exchange (as the case may be) all Exchange Notes validly tendered pursuant to the Change of Control Offer; (B) pay an amount, and where applicable, deliver New Subordinated Exchange Securities, equal in the aggregate to the portion of the Change of Control Payment attributable to the Exchange Notes validly tendered. The Issuer will publicly announce the results of the Change of Control Offer on or as soon as practicable after the Change of Control Payment Date. (iv) (v) (vi) The provisions of this Condition 5(d) that require the Issuer to make a Change of Control Offer following a Change of Control will be applicable whether or not any other provisions of these Conditions are applicable. The Issuer will not be required to make a Change of Control Offer upon a Change of Control if (1) a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in these Conditions applicable to a Change of Control Offer made by the Issuer and purchases or exchanges all Exchange Notes validly tendered and not withdrawn under the Change of Control Offer, or (2) notice of redemption has been given pursuant to Condition 5(c), unless and until there is a default in payment of the applicable redemption price. Notwithstanding anything to the contrary contained herein, a Change of Control Offer may be made in advance of a Change of Control, conditioned upon the consummation of such Change of Control. If and for so long as the Exchange Notes are listed on the Luxembourg Stock Exchange and the rules and regulations of the Luxembourg Stock Exchange so require, the Issuer will publish notices relating to the Change of Control Offer in a daily leading newspaper of general circulation in Luxembourg (which is expected to be the Luxemburger Wort) or, to the extent and in the manner permitted by such rules and regulations, post such notices on the official website of the Luxembourg Stock Exchange ( 121

135 (vii) For purposes of this Condition 5(d) Beneficial Owner has the meaning assigned to such term in Rule 13d-3 and Rule 13d-5 under the U.S. Exchange Act, except that in calculating the beneficial ownership of any particular person (as that term is used in Section 13(d)(3) of the U.S. Exchange Act), such person shall be deemed to have beneficial ownership of all securities that such person has the right to acquire by conversion or exercise of other securities, whether such right is currently exercisable or is exercisable only after the passage of time. The terms Beneficially Owns and Beneficially Owned have a corresponding meaning. Change of Control means the occurrence of any of the following: (1) the direct or indirect sale, lease, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the properties or assets of the Issuer and its Subsidiaries taken as a whole to any Person (including any person (as that term is used in Section 13(d)(3) of the U.S. Exchange Act)) other than one or more Permitted Holders; (2) the adoption of a plan relating to the liquidation or dissolution of the Issuer; (3) the consummation of any transaction (including, without limitation, any merger or consolidation), the result of which is that any Person (including any person as defined above), other than the Permitted Holders, becomes the Beneficial Owner, directly or indirectly, of more than 50% of the issued and outstanding Voting Stock (as defined in Condition 7) of the Issuer, measured by voting power rather than number of shares; (4) after an initial public offering of the Issuer or the Parent Entity (as defined in Condition 7), the first day on which a majority of the members of the Supervisory Board (Conseil de Surveillance) of the Issuer (or any analogous body of the Issuer) of the Issuer are not Continuing Directors. Continuing Directors means, as of any date of determination, any member of the Supervisory Board (Conseil de Surveillance) of the Issuer (or any analogous body of the Issuer) who: (1) was a member of such Supervisory Board (Conseil de Surveillance) of the Issuer (or analogous body of the Issuer) on the Issue Date; or (2) was (a) appointed by a Sponsor or a controlled Affiliate (as defined in Condition 7) of such Sponsor or (b) nominated for election or elected to such Supervisory Board (Conseil de Surveillance) of the Issuer (or analogous body of the Issuer) with the approval of a majority of the Continuing Directors who were members of such Supervisory Board (Conseil de Surveillance) of the Issuer (or analogous body of the Issuer) at the time of such nomination or election. Management Group means the group consisting of the directors, executive officers and other management personnel of the Issuer on the Issue Date together with (1) any new directors whose election by such boards of directors or whose nomination for election by the shareholders of the Issuer was approved by a vote of a majority of the directors of the Issuer then still in office who were either directors on the Issue Date or whose election or nomination was previously so approved, (2) executive officers and other management personnel of the Issuer hired at a time when the directors on the Issue Date together with the directors so approved constituted a majority of the directors of the Issuer, and (3) a Related Party (as defined in Condition 7) of any of the foregoing. Permitted Holders means at any time, each of (i) the Sponsors, (ii) the Management Group and (iii) any other holder of Subordinated Shareholder Loans (as defined in Condition 7) on the Issue Date. Any person or group whose acquisition of beneficial ownership constitutes a Change 122

136 of Control in respect of which a Change of Control Offer is made in accordance with the requirements of these Conditions shall thereafter, together with its controlled Affiliates (as defined in Condition 7), constitute an additional Permitted Holder. Sponsors means (i) any holder of the ordinary shares of the Issuer or NVHL S.A., a public limited liability company (société anonyme) governed by the laws of the Grand Duchy of Luxembourg, registered with the Luxembourg Trade and Companies Register under number B , on the Issue Date, (ii) any controlled affiliates of Persons named in clause (i), and (iii) all funds managed, advised or operated by any Persons named in clause (i) and (ii). U.S. Exchange Act means the U.S. Securities Exchange Act of 1934, as amended. (e) Purchase The Issuer may at any time, without limitation as to price or quantity, purchase Exchange Notes either on or off market, subject to compliance with any applicable laws and regulations; provided, however, that if payment to Bpifrance in respect of the Blockage Payment has not been made in full on or prior to the closing date of the relevant date of purchase, the consideration in respect to any purchase of Exchange Notes shall be equal to that provided in the last paragraph of Condition 5(c). (f) Cancellation All Exchange Notes which are redeemed, purchased or exchanged for cancellation by, or on behalf of, the Issuer pursuant to this Condition 5 will forthwith be cancelled (together with rights to Cash Interest, Capitalized Interest and any other amounts relating thereto) by transfer to an account in accordance with the rules and procedures of Euroclear France. Any Exchange Notes so cancelled may not be reissued or resold and the obligations of the Issuer in respect of any such Exchange Notes shall be discharged. 6. Limitations on Restricted Payments (a) (i) (ii) (iii) The Issuer will not, and will not cause or permit any of its Subsidiaries to, directly or indirectly: declare or pay any dividend or make any other payment or distribution on account of the Issuer s or any of its Subsidiaries Equity Interests (as defined in Condition 7) (including, without limitation, any payment in connection with any merger or consolidation involving the Issuer or any of its Subsidiaries) or to the direct or indirect holders of the Issuer s or any of its Subsidiaries Equity Interests in their capacity as such (other than (1) dividends or distributions payable in Equity Interests (other than Disqualified Stock (as defined in Condition 7)), (2) dividends and distributions payable in Subordinated Shareholder Loans (as defined in Condition 7) of the Issuer and (3) dividends or distributions payable to the Issuer or a Subsidiary); purchase, redeem or otherwise acquire or retire for value (including, without limitation, in connection with any merger or consolidation involving the Issuer) any Equity Interests of the Issuer or any Parent Entity (as defined in Condition 7); make any principal payment on or with respect to, or purchase, redeem, defease or otherwise acquire or retire for value any Indebtedness of the Issuer that is contractually subordinated to the Exchange Notes (excluding any other intercompany Indebtedness between or among the Issuer and any of its Subsidiaries), other than the purchase, repurchase, redemption, defeasance or other acquisition or retirement of any Indebtedness of the Issuer that is contractually subordinated to the Exchange Notes (other than Subordinated Shareholder Loans) purchased in anticipation of satisfying a sinking fund obligation, principal installment or final maturity, in each case due within one year of the date of purchase, repurchase, redemption, defeasance or other acquisition or retirement; provided that this Condition 6(a)(iii) shall not prohibit payments on Subordinated Shareholder Loans permitted by Condition 6(a)(v) below; 123

137 (iv) (v) make any Restricted Investment (as defined in Condition 7), or make any payment in respect of any Subordinated Shareholder Loans (other than by capitalization to principal or through the issuance of additional Subordinated Shareholder Loans); (all such payments and other actions set forth in these clauses (i) through (v) above being collectively referred to as Restricted Payments ), unless, at the time of and after giving effect to such Restricted Payment: (vi) (vii) (viii) no Event of Default (as defined in Condition 11) has occurred and is continuing or would occur as a consequence of such Restricted Payment; the Fixed Charge Coverage Ratio (as defined in Condition 7) for the Issuer s most recently ended four full fiscal quarters for which internal financial statements are available immediately preceding the date on which such Restricted Payment is made would have been at least 2.0 to 1.0, determined on a pro forma basis, as if such Restricted Payment was made at the beginning of such four-quarter period; such Restricted Payment, together with the aggregate amount of all other Restricted Payments made by the Issuer and its Subsidiaries since the Issue Date (excluding Restricted Payments permitted by clauses (i), (ii), (iii), (v), (vi), (vii), (x), (xii), (xiii), (xiv) and (xv) of Condition 6 (b)), is less than the sum, without duplication, of: (A) 50% of the Consolidated Net Income (as defined in Condition 7) of the Issuer for the period (taken as one accounting period) from January 1, 2016 to the end of the Issuer s most recently ended fiscal quarter for which internal financial statements are available at the time of such Restricted Payment (or, if such Consolidated Net Income for such period is a deficit, less 100% of such deficit); plus (B) 100% of the aggregate net cash proceeds and the Fair Market Value (as defined in Condition 7) of marketable securities received by the Issuer since the Issue Date as a contribution to its common equity capital or from the issue or sale of Equity Interests of the Issuer (other than Disqualified Stock) or from the issue or sale of convertible or exchangeable Disqualified Stock of the Issuer or convertible or exchangeable debt securities of the Issuer, in each case that have been converted into or exchanged for Equity Interests of the Issuer or from the issue or sale of Subordinated Shareholder Loans (other than Equity Interests (or Disqualified Stock or debt securities) sold to a Subsidiary (as defined in Condition 7) of the Issuer); plus (C) to the extent that any Restricted Investment that was made after the Issue Date is (1) sold, disposed of or otherwise cancelled, liquidated or repaid, 100% of the aggregate amount received in cash and the Fair Market Value of the marketable securities or property received by the Issuer or any Subsidiary, or (2) made in an entity that subsequently becomes a Subsidiary, 100% of the value of the Restricted Investment of the Issuer and its Subsidiaries as of the date such entity becomes a Subsidiary. (b) (i) The provisions of Condition 6(a) will not prohibit: (x) the payment of any dividend or the consummation of any irrevocable redemption within sixty (60) days after the date of declaration of the dividend or giving of the redemption notice, as the case may be, if at the date of declaration or notice, the dividend or redemption payment would have complied with this Condition 6, (y) the payment (in one or more installments) of the Ordinary Share 2016 Dividend Distribution (as defined in Condition 7), (z) the payment (in one or more installments) of the B Preference Share 2016 Dividend Distribution (as defined in Condition 7) and (aa) the payment (in one or more installments) to Bpifrance of the Blockage Payment; 124

138 (ii) (iii) (iv) (v) (vi) (vii) (viii) (ix) the making of any Restricted Payment in exchange for, or out of or with the net cash proceeds of the sale within thirty (30) days prior to such payment (other than to a Subsidiary of the Issuer) of, Equity Interests of the Issuer (other than Disqualified Stock) and Subordinated Shareholder Loans or from the substantially concurrent contribution of common equity capital to the Issuer; provided that the amount of any such net cash proceeds that are utilized for any such Restricted Payment will not be excluded from Condition 6(a)(viii)(B); the repurchase, redemption, defeasance or other acquisition or retirement for value of Indebtedness of the Issuer that is contractually subordinated to the Exchange Notes with the net cash proceeds from a substantially concurrent incurrence of Permitted Refinancing Indebtedness; so long as no Event of Default has occurred and is continuing, the repurchase, redemption or other acquisition or retirement for value of any Equity Interests of the Issuer or any Subsidiary held by any current or former officer, director or employee of the Issuer or any of its Subsidiaries pursuant to any equity subscription agreement, stock option agreement, shareholders agreement or similar agreement; provided that the aggregate price paid for all such repurchased, redeemed, acquired or retired Equity Interests may not exceed 1 million in any twelve-month period; provided, further, that such amount in any twelve-month period may be increased by an amount not to exceed the cash proceeds from the sale of Equity Interests of the Issuer to members of management, directors or consultants of the Issuer, any of its Subsidiaries or any of its direct or indirect parent companies to the extent the cash proceeds from the sale of Equity Interests have not otherwise been applied to the making of Restricted Payments pursuant to Condition 6(a)(viii) or 6(b)(ii); the repurchase of Equity Interests deemed to occur upon the exercise of stock options to the extent such Equity Interests represent a portion of the exercise price of those stock options; the declaration and payment of regularly scheduled or accrued dividends to holders of any class or series of Disqualified Stock of the Issuer issued on or after the Issue Date; payments of cash, dividends, distributions, advances or other Restricted Payments by the Issuer or any of its Subsidiaries to allow the payment of cash in lieu of the issuance of fractional shares upon (1) the exercise of options or warrants or (2) the conversion or exchange of Capital Stock of any such Person; advances or loans to any management equity plan or stock option plan or any other management or employee benefit or incentive plan or unit trust, provided that the total aggregate amount of Restricted Payments made under this Condition 6(b)(viii) does not exceed 1 million; payment of any dividend (or, in the case of any partnership or limited liability company, any similar distribution) by a Subsidiary to the holders of its Equity Interests on a pro rata basis; (x) the payment of Sponsoring Fees (as defined in Condition 7); (xi) (xii) so long as no Event of Default has occurred and is continuing or would be caused thereby, following a Public Equity Offering (as defined in Condition 7) that results in a Public Market (as defined in Condition 7) of the Capital Stock of the Issuer or any Parent Entity, the payment of dividends on the Capital Stock of the Issuer up to 6% per annum of the net cash proceeds received by the Issuer in any such Public Equity Offering or any subsequent public offering of such Capital Stock, or the net cash proceeds of any such Public Equity Offering or subsequent public offering of such Capital Stock of any Parent Entity that are contributed in cash to the Issuer s equity (other than through the issuance of Disqualified Stock); provided that if such Public Equity Offering was of Capital Stock of an Parent Entity, the net proceeds of any such dividend are used to fund a corresponding dividend in equal or greater amount on the Capital Stock of such Parent Entity; so long as no Event of Default has occurred and is continuing, the payment of any Restricted Payment, provided that, on the date of such payment, the Consolidated Leverage Ratio (as defined in Condition 7) is less than 4.00 to 1.00 after giving effect to the Restricted Payment; 125

139 (xiii) (xiv) (xv) so long as no Event of Default has occurred and is continuing or would be caused thereby, the payment of any dividend on the B Preference Shares; so long as no Event of Default has occurred and is continuing, other Restricted Payments in an aggregate amount not to exceed 5 million since the Issue Date; and the payment of dividends, loans, advances or distributions to any Parent Entity or other payments by the Issuer or any Subsidiary in amounts equal to (without duplication): (a) (b) the amount required for any Parent Entity to pay any Parent Expenses (as defined in Condition 7) or any Related Taxes (as defined in Condition 7); or amounts constituting or to be used for purposes of making payments of fees and expenses incurred in connection with the Refinancing. (c) The amount of all Restricted Payments (other than cash) shall be the Fair Market Value on the date of the Restricted Payment of the asset(s) or securities proposed to be transferred or issued by the Issuer or such Subsidiary, as the case may be, pursuant to the Restricted Payment. 7 Asset Sales (a) (i) (ii) The Issuer will not, and will not cause or permit any of its Subsidiaries to, directly or indirectly, consummate an Asset Sale (as defined below) unless: the Issuer (or the Subsidiary, as the case may be) receives consideration at the time of the Asset Sale at least equal to the Fair Market Value (measured as of the date of the definitive agreement with respect to such Asset Sale) of the assets or Equity Interests issued or sold or otherwise disposed of; and at least 75% of the consideration received in the Asset Sale by the Issuer or such Subsidiary is in the form of cash or Cash Equivalents. For purposes of this provision, each of the following will be deemed to be cash: (A) any liabilities, as shown on the Issuer s most recent consolidated balance sheet, of the Issuer or any Subsidiary (other than contingent liabilities and liabilities that are by their terms subordinated to the Exchange Notes) that are assumed by the transferee of any such assets pursuant to a customary novation or indemnity agreement that releases the Issuer or such Subsidiary from or indemnifies against further liability; (B) any securities, notes or other obligations received by the Issuer or any such Subsidiary from such transferee that are converted by the Issuer or such Subsidiary into cash or Cash Equivalents within ninety (90) days following the closing of the Asset Sale, to the extent of the cash or Cash Equivalents received in that conversion; (C) consideration consisting of Indebtedness of the Issuer or any of its Subsidiaries which is either repaid in full or cancelled in connection with such Asset Sale; (D) any Capital Stock or assets of the kind referred to in Condition 7(b) (ii) and 7(b)(iv); and (E) any Designated Non-cash Consideration (as defined below). (b) (i) Within three hundred and sixty-five (365) days after the receipt of any Net Proceeds (as defined below) from an Asset Sale, the Issuer (or the applicable Subsidiary, as the case may be) may apply such Net Proceeds: to repay, repurchase, prepay or redeem (1) Indebtedness of a Subsidiary, (2) other Indebtedness of the Issuer or any Subsidiary that is not subordinated in right of payment to the Exchange Notes (and if such other Indebtedness repaid is revolving credit Indebtedness, to correspondingly reduce commitments with respect thereto) or (3) the Exchange Notes pursuant to an offer to all holders of Exchange Notes at a purchase price no greater than 100% of the Outstanding Principal Amount together with any Cash Interest, Capitalized Interest (to the extent it has not previously 126

140 been capitalized into the Outstanding Principal Amount pursuant to Condition 4(b) and Condition 4(c)(i)) and Default Interest (if any) thereto up to, but excluding, the date of purchase (an Exchange Notes Offer ); (ii) (iii) (iv) (v) (vi) (c) (d) to acquire all or substantially all of the assets of, or any Capital Stock of, another Permitted Business (as defined below), if, after giving effect to any such acquisition of Capital Stock, the Permitted Business is or becomes a Subsidiary of the Issuer; to make a capital expenditure; to acquire other assets (other than Capital Stock) that are not classified as current assets under IFRS and that are used or useful in a Permitted Business; enter into a binding commitment to apply the Net Proceeds pursuant to clause (ii), (iii) or (iv) of Condition 7(b); provided that such binding commitment shall be treated as a permitted application of the Net Proceeds from the date of such commitment until the earlier of (1) the date on which such acquisition or expenditure is consummated, and (2) the 180th day following the expiration of the aforementioned 365 day period; or any combination of any of the actions described in Condition 7(b)(i) to 7(b)(v). Pending the final application of any Net Proceeds, the Issuer (or the applicable Subsidiary) may temporarily reduce revolving credit borrowings or otherwise invest the Net Proceeds in any manner that is not prohibited by these Conditions. Any Net Proceeds from Asset Sales that are not applied or invested as provided in Condition 7(b) will constitute Excess Proceeds. When the aggregate amount of Excess Proceeds exceeds 20 million, within ten (10) days thereof, the Issuer will make an offer (an Asset Sale Offer ) to all Noteholders and may make an offer to all holders of other Indebtedness that is not subordinated in right of payment to the Exchange Notes containing provisions similar to those set forth in these Conditions with respect to offers to purchase, prepay or redeem with the proceeds of sales of assets, to purchase, prepay or redeem the maximum principal amount of (i) Exchange Notes at a price equal to 100% of the Outstanding Principal Amount of Exchange Notes validly tendered together with any Cash Interest, Capitalized Interest (to the extent it has not previously been capitalized into the Outstanding Principal Amount pursuant to Condition 4(b) and Condition 4(c)(i) and Default Interest (if any) accrued thereto up to, but excluding, the closing date of the Asset Sale Offer and (ii) such other Indebtedness that is not subordinated in right of payment to the Exchange Notes (plus all accrued interest on such Indebtedness) that may be purchased, prepaid or redeemed out of the Excess Proceeds. If payment to Bpifrance in respect of the Blockage Payment has not been made in full on or prior to the closing date of Asset Sale Offer, (A) the consideration in respect of the Exchange Notes validly tendered shall be equal to (i) 100% of the Senior Amounts and (ii) New Subordinated Exchange Securities, representing 100% of the Junior Amounts outstanding (if any) on the closing date of the Asset Sale Offer, to be issued by the Issuer on the closing date of the Asset Sale Offer. If any Excess Proceeds remain after consummation of an Asset Sale Offer, the Issuer may use those Excess Proceeds for any purpose not otherwise prohibited by these Conditions. If the aggregate Outstanding Principal Amount of the Exchange Notes and the aggregate principal amount of the other Indebtedness that is not subordinated in right of payment to the Exchange Notes required to be prepaid or redeemed in connection with such Asset Sale Offer tendered into such Asset Sale Offer exceeds the amount of Excess Proceeds, or if the aggregate Outstanding Principal Amount of the Exchange Notes and the aggregate principal amount of the other Indebtedness that is not subordinated in right of payment to the Exchange Notes tendered into an Exchange Notes Offer exceeds the amount of Net Proceeds so applied, the Issuer will, subject to compliance with any other applicable laws or stock exchange requirements, reduce the 127

141 number or amounts, as the case may be, of Exchange Notes or other Indebtedness that is not subordinated in right of payment to the Exchange Notes tendered and accepted for exchange for the purposes of the Exchange Notes Offer on a pro rata basis based on the amounts tendered or required to be prepaid or redeemed. The first and the second paragraphs of this Condition 7(d) shall apply to the Exchange Notes validly tendered into any Exchange Notes Offer or Asset Sale Offer mutatis mutandis. (e) (f) For the purpose of calculating the principal amount of any such Indebtedness that is not denominated in euro, such Indebtedness shall be calculated by converting any such principal amount into their euro equivalent determined as of the Business Day immediately prior to the date on which the Asset Sale Offer is announced. Upon completion of each Asset Sale Offer, the amount of Excess Proceeds will be reset at zero. The Issuer will comply with the requirements of Rule 14e-l under the U.S. Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated pursuant thereto; and any other applicable securities laws and regulations to the extent those laws and regulations are applicable in connection with each repurchase of Exchange Notes pursuant to an Exchange Notes Offer, or an Asset Sale Offer. To the extent that the provisions of any securities laws or regulations conflict with the Exchange Notes Offer, or Asset Sale provisions of these Conditions, the Issuer will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under the Exchange Notes Offer or Asset Sale provisions of these Conditions by virtue of such compliance. For the purpose of Conditions 6 and 7 above: Affiliate of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, control, as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise; provided that beneficial ownership of 10% or more of the Voting Stock (as defined below) of a Person shall be deemed to be control. For purposes of this definition, the terms controlling, controlled by and under common control with have correlative meanings. Asset Sale means: (1) the sale, lease, conveyance or other disposition of any assets or rights (including by way of a Sale/Leaseback Transaction (as defined below) by the Issuer or any of its Subsidiaries; provided, that the sale, lease, conveyance or other disposition of all or substantially all of the assets of the Issuer and its Subsidiaries taken as a whole shall be governed by Condition 5(d) and not by the provisions of Condition 7; and (2) the issuance of Equity Interests by any Subsidiary or the sale by the Issuer or any of its Subsidiaries of Equity Interests in any of the Issuer s Subsidiaries (in each case, other than (i) directors qualifying shares and shares issued to third parties to the extent required by law and (ii) the Warrants issued in connection with the Refinancing and (iii) any ordinary shares of the Issuer issued upon the exercise of any Warrant in accordance with its terms). Notwithstanding the preceding, none of the following items shall be deemed to be an Asset Sale: (1) any single transaction or series of related transactions that involves assets having a Fair Market Value of less than 10 million; (2) a transfer of assets between or among the Issuer and its Subsidiaries; (3) an issuance, sale, assignment or other disposition of Equity Interests by a Subsidiary to the Issuer or to a Subsidiary; 128

142 (4) the sale, lease, assignment or other transfer of products, inventory, equipment, services or accounts receivable in the ordinary course of business and any sale or other disposition of damaged, wornout or obsolete assets in the ordinary course of business (including the abandonment or other disposition of intellectual property that is, in the reasonable judgment of the Issuer, no longer economically practicable to maintain or useful in the conduct of the business of Issuer and its Subsidiaries taken as whole); (5) licenses and sublicenses by the Issuer or any of its Subsidiaries of software, intellectual property and know-how in the ordinary course of business; (6) any surrender or waiver of contract rights or settlement, release, recovery on or surrender of contract or other claims in the ordinary course of business; (7) the granting of Liens not prohibited by these Conditions; (8) the sale or other disposition of cash or Cash Equivalents; (9) a Restricted Payment that does not violate Condition 6 or a Permitted Investment or any transaction specifically excluded from the definition of Restricted Payment; (10) any sale, transfer or other disposition of Securitization Assets in connection with any Qualified Receivables Financing; (11) the disposition of receivables in connection with the compromise, settlement or collection thereof in the ordinary course of business or in bankruptcy or similar proceedings and exclusive of factoring or similar arrangements; (12) (i) operating leases of excess manufacturing facilities or (ii) operating leases of manufacturing facilities to strategic partners (in case of the clause (ii)) in furtherance of a Permitted Business; and (13) the foreclosure, condemnation or any similar action with respect to any property or other assets or a surrender or waiver of contract rights or the settlement, release or surrender of contract or other claims of any kind. B Preference Share 2016 Dividend Distribution means the dividend in respect of the priority dividend (dividende préciputaire) under the B Preference Shares equal to 2 million (in the aggregate) to be paid by the Issuer by way of a distribution of share premium after the closing of the Refinancing to holder of B Preference Shares. Capital Lease Obligation means, at the time any determination is to be made, the amount of the liability in respect of a capital lease that would at that time be required to be capitalized on a balance sheet prepared in accordance with IFRS, and the stated maturity thereof shall be the date of the last payment of rent or any other amount due under such lease prior to the first date upon which such lease may be prepaid by the lessee without payment of a penalty. Capital Stock means: (1) in the case of a corporation, corporate stock; (2) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock; (3) in the case of a partnership or limited liability company, partnership interests (whether general or limited) or membership interests; and (4) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person, but excluding from all of the foregoing any debt securities convertible into Capital Stock, whether or not such debt securities include any right of participation with Capital Stock. Cash Equivalents means: 129

143 (1) direct obligations (or certificates representing an interest in such obligations) issued by, or unconditionally guaranteed by, the government of a member state of the European Union or of the United States of America (including any agency or instrumentality thereof), as the case may be, the payment of which is backed by the full faith and credit of the relevant member state of the European Union or the United States of America, as the case may be, and which are not callable or redeemable at the Issuer s option; (2) overnight bank deposits, time deposit accounts, certificates of deposit, banker s acceptances and money market deposits with maturities (and similar instruments) of twelve (12) months or less from the date of acquisition issued by a bank or trust company which is organized under, or authorized to operate as a bank or trust company under, the laws of a member state of the European Union or of the United States of America or any state thereof; provided that such bank or trust company has capital, surplus and undivided profits aggregating in excess of 250 million (or the foreign currency equivalent thereof as of the date of such investment) and whose long-term debt is rated A-3 or higher by Moody s Investor Service, Inc. ( Moody s ) or A or higher by Standard & Poor s Ratings Group ( S&P ) or the equivalent rating category of another internationally recognized rating agency; (3) repurchase obligations with a term of not more than thirty (30) days for underlying securities of the types described in clauses (1) and (2) above entered into with any financial institution meeting the qualifications specified in clause (2) above; (4) commercial paper at the time of investment having one of the two highest ratings obtainable from Moody s or S&P and, in each case, maturing within one year after the date of acquisition; (5) money market funds at least 95% of the assets of which constitute Cash Equivalents of the kinds described in clauses (1) through (4) of this definition; (6) securities maturing not more than one year after the date of acquisition issued by, or unconditionally guaranteed by, the government of any state, commonwealth or territory (including any agency or instrumentality thereof) of any member state of the European Union or of the United States of America, the payment of which is backed by the full faith and credit of the relevant state, commonwealth or territory and which is rated P-2 (or, if such ratings categories are changed, the substantially equivalent ratings) or higher by to Moody s or A-1 (or, if such ratings categories are changed, the substantially equivalent ratings) or higher by to S&P s or the equivalent rating category of another internationally recognized rating agency; and (7) any other instrument or instruments not included in clauses (1) to (6) above at any time not exceeding in aggregate 25 million. Consolidated EBITDA means, with respect to any specified Person for any period, the Consolidated Net Income of such Person for such period plus, without duplication: (1) provision for taxes based on income or profits of such Person and its Subsidiaries for such period, to the extent that such provision for taxes was deducted in computing such Consolidated Net Income; plus (2) the Fixed Charges of such Person and its Subsidiaries for such period, to the extent that such Fixed Charges were deducted in computing such Consolidated Net Income; plus (3) any expenses, charges or other costs related to the issuance of any Capital Stock, Permitted Investment, acquisition, disposition, recapitalization, listing or the incurrence of Indebtedness whether or not successful, including (a) such fees, expenses or charges related to any incurrence of Indebtedness issuance and (b) any amendment or other modification of any incurrence; plus (4) depreciation, amortization (including amortization of intangibles but excluding amortization of prepaid cash expenses that were paid in a prior period) and other non-cash charges and expenses (excluding any such non-cash charge or expense to the extent that it represents an accrual of or reserve for cash charges or expenses in any future period or amortization of a prepaid cash charge or expense that was paid in a prior period) of such Person and its Subsidiaries for such period to the 130

144 extent that such depreciation, amortization and other non-cash charges or expenses were deducted in computing such Consolidated Net Income; minus (5) non-cash items increasing such Consolidated Net Income for such period, other than the accrual of revenue or the reversal of a reserve for cash charges in a future period in the ordinary course of business, in each case, on a consolidated basis and determined in accordance with IFRS. Consolidated Leverage means, with respect to any Person as of any date of determination, the total amount of Indebtedness of such Person and its Subsidiaries on a consolidated basis, determined in accordance with IFRS. Consolidated Leverage Ratio means with respect to any Person as of any date of determination, the ratio of (a) the Consolidated Leverage of such Person on such date to (b) the Consolidated EBITDA of such Person for such Person s most recently ended four full fiscal quarters for which internal financial statements are available immediately preceding such date. In the event that the specified Person or any of its Subsidiaries incurs, assumes, guarantees, repays, repurchases, redeems, defeases or otherwise discharges any Indebtedness (other than ordinary working capital borrowings) or issues, repurchases or redeems Disqualified Stock or preferred stock subsequent to the commencement of the period for which the Consolidated Leverage Ratio is being calculated and on or prior to the date on which the event for which the calculation of the Consolidated Leverage Ratio is made (the Calculation Date ), then the Consolidated Leverage Ratio shall be calculated giving pro forma effect to such incurrence, assumption, guarantee, repayment, repurchase, redemption, defeasance or other discharge of Indebtedness, or such issuance, repurchase or redemption of Disqualified Stock or preferred stock, and the use of the proceeds therefrom, as if the same had occurred at the beginning of the applicable four-quarter reference period. For the purposes of calculating Consolidated EBITDA for such period, if, as of such date of determination, (1) acquisitions that have been made by the specified Person or any of its Subsidiaries, including through mergers or consolidations, or any Person or any of its Subsidiaries acquired by the specified Person or any of its Subsidiaries, and including all related financing transactions and including increases in ownership of Subsidiaries, during the four-quarter reference period or subsequent to such reference period and on or prior to the Calculation Date, or that are to be made on the Calculation Date, shall be given pro forma effect (as determined in good faith by the Issuer s responsible accounting or financial officer, shall include anticipated expense and cost reduction synergies) as if they had occurred on the first day of the four-quarter reference period; and (2) the Consolidated EBITDA attributable to discontinued operations, as determined in accordance with IFRS, and operations or businesses (and ownership interests therein) disposed of prior to the Calculation Date, shall be excluded; (3) any Person that is a Subsidiary on the Calculation Date shall be deemed to have been a Subsidiary at all times during such four-quarter period; and (4) any Person that is not a Subsidiary on the Calculation Date shall be deemed not to have been a Subsidiary at any time during such four-quarter period. For purposes of this definition, whenever pro forma effect is to be given to any transaction or calculation under this definition, the pro forma calculations shall be as determined in good faith by a responsible financial or accounting officer of the Issuer (including, in respect of anticipated expense and cost reductions and synergies). Consolidated Net Income means, with respect to any specified Person for any period, the aggregate of the net income (loss) of such Person and its Subsidiaries for such period, on a consolidated basis, determined in accordance with IFRS; provided that: (1) any net gain (or loss) realized upon the sale or other disposition of any asset or disposed operations of the Issuer or any Subsidiaries (including pursuant to a Sale/Leaseback Transaction) which is not 131

145 sold, or otherwise disposed of in the ordinary course of business (as determined in good faith by the Issuer) or in connection with the sale or disposition of securities shall be excluded; (2) (a) any extraordinary, exceptional or unusual gain, loss or charge, or any non-recurring cost or expense (including any Parent Expenses), including in connection with the Exchange Offer, (b) any asset impairment charges, or the financial impacts of natural disasters (including fire, flood, storm and related events) and (c) any charges or reserves in respect of any restructuring (including in connection with the Exchange Offer), redundancy, winding-up of Subsidiaries, closing of facilities and relocations of plant, property and equipment, integration or severance shall be excluded; (3) any non-cash based compensation charge or expense arising from any grant of stock, stock options or other equity based-awards will be excluded; (4) the net income (loss) of any Person that is not a Subsidiary or that is accounted for by the equity method of accounting shall be included only to the extent of the amount of dividends or similar distributions paid in cash to the specified Person or a Subsidiary of the Person; (5) solely for the purpose of determining the amount available for Restricted Payments under Condition 6(a)(viii)(A), any net income (loss) of any Subsidiary if such Subsidiary is subject to restrictions, directly or indirectly, on the payment of dividends or the making of distributions by such Subsidiary, directly or indirectly, to the Issuer by operation of the terms of such Subsidiary s charter or any agreement, instrument, judgment, decree, order, statute or governmental rule or regulation applicable to such Subsidiary or its shareholders; except that the Issuer s equity in the net income of any such Subsidiary for such period will be included in such Consolidated Net Income up to the aggregate amount of cash or Cash Equivalents actually distributed or that could have been distributed by such Subsidiary during such period to the Issuer or another Subsidiary as a dividend or other distribution (subject, in the case of a dividend to another Subsidiary, to the limitation contained in this clause); (6) any capitalized interest on Subordinated Shareholder Loans will be excluded; (7) the cumulative effect of a change in accounting principles will be excluded; (8) all deferred financing costs written off and premium paid or other expenses incurred directly in connection with any early extinguishment of Indebtedness and any net gain (loss) from any writeoff or forgiveness of Indebtedness will be excluded; (9) any unrealized foreign currency translation or transaction gains or losses in respect of Indebtedness of any Person denominated in a currency other than the functional currency of such Person will be excluded; (10) any one time non-cash charges or any increases in amortization or depreciation resulting from purchase accounting, in each case, in relation to any acquisition of another Person or business or resulting from any reorganization or restructuring involving the Issuer or its Subsidiaries will be excluded; (11) any goodwill or other intangible asset impairment charge will be excluded; and (12) any unrealized gains or losses in respect of Hedging Obligations or any ineffectiveness recognized in earnings related to qualifying hedge transactions or the fair value or changes therein recognized in earnings for derivatives that do not qualify as hedge transactions, in each case, in respect of Hedging Obligations, will be excluded. Designated Non-cash Consideration means the Fair Market Value of non-cash consideration received by the Issuer or one of its Subsidiaries in connection with an Asset Sale in an aggregate amount not to exceed 30 million that is so designated as Designated Non-cash Consideration pursuant to an Officer s Certificate, setting forth the basis of such valuation. Disqualified Stock means any Capital Stock that, by its terms (or by the terms of any security into which it is convertible, or for which it is exchangeable, in each case, at the option of the holder of the Capital Stock), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a 132

146 sinking fund obligation or otherwise, or redeemable at the option of the holder of the Capital Stock, in whole or in part, on or prior to the date that is ninety-one (91) days after the date on which the Exchange Notes mature. Notwithstanding the preceding sentence, any Capital Stock that would constitute Disqualified Stock solely because the holders of the Capital Stock have the right to require the Issuer to repurchase such Capital Stock upon the occurrence of an Asset Sale shall not constitute Disqualified Stock if the terms of such Capital Stock provide that the Issuer may not repurchase or redeem any such Capital Stock pursuant to such provisions unless such repurchase or redemption complies with Condition 6. The amount of Disqualified Stock deemed to be outstanding at any time for purposes of these Conditions shall be the maximum amount that the Issuer and its Subsidiaries may become obligated to pay upon the maturity of, or pursuant to any mandatory redemption provisions of, such Disqualified Stock, exclusive of accrued dividends. Equity Interests means Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any debt security that is convertible into, or exchangeable for, Capital Stock). Fair Market Value means the value that would be paid by a willing buyer to an unaffiliated willing seller in an arm s length transaction not involving distress or necessity of either party, determined in good faith by (i) the chief executive officer, executive, chief financial officer, or responsible accounting or financial officer of the Issuer, or (ii) with respect to any such transaction involving aggregate consideration in excess of 25 million, the Supervisory Board (Conseil de Surveillance) of the Issuer (or any analogous body of the Issuer). Fixed Charge Coverage Ratio means with respect to any specified Person for any period, the ratio of (a) the Consolidated EBITDA of such Person for the most recent four fiscal quarters ending prior to the date of such determination for which internal consolidated financial statements of such Person are available to (b) the Fixed Charges of such Person for such period. In the event that the specified Person or any of its Subsidiaries incurs, assumes, guarantees, repays, repurchases, redeems, defeases or otherwise discharges any Indebtedness (other than ordinary working capital borrowings) or issues, repurchases or redeems preferred stock subsequent to the commencement of the period for which the Fixed Charge Coverage Ratio is being calculated and on or prior to the date on which the event for which the calculation of the Fixed Charge Coverage Ratio is made (the Calculation Date ), then the Fixed Charge Coverage Ratio will be calculated giving pro forma effect (as determined in good faith by the Issuer s chief financial officer or a responsible financial or accounting officer of the Issuer) to such incurrence, assumption, guarantee, repayment, repurchase, redemption, defeasance or other discharge of Indebtedness, or such issuance, repurchase or redemption of preferred stock, and the use of the proceeds therefrom, as if the same had occurred at the beginning of the applicable four-quarter reference period. In addition, for purposes of calculating the Fixed Charge Coverage Ratio: (1) acquisitions of business entities or property and assets constituting a division or line of business of any Person, acquisitions that have been made by the specified Person or any of its Subsidiaries, including through mergers or consolidations, or any Person or any of its Subsidiaries acquired by the specified Person or any of its Subsidiaries, and including all related financing transactions and including increases in ownership of Subsidiaries, during the four-quarter reference period or subsequent to such reference period and on or prior to the Calculation Date, or that are to be made on the Calculation Date, shall be given pro forma effect (as determined in good faith by the Issuer s chief financial officer or chief accounting officer and may include anticipated expense and cost reduction synergies) as if they had occurred on the first day of the four-quarter reference period; (2) the Consolidated EBITDA attributable to discontinued operations, as determined in accordance with IFRS, and operations or businesses (and ownership interests therein) disposed of prior to the Calculation Date, shall be excluded; (3) the Fixed Charges attributable to discontinued operations, as determined in accordance with IFRS, and operations or businesses (and ownership interests therein) disposed of prior to the Calculation Date, shall be excluded, but only to the extent that the obligations giving rise to such Fixed Charges shall not be obligations of the specified Person or any of its Subsidiaries following the Calculation Date; 133

147 (4) any Person that is a Subsidiary on the Calculation Date shall be deemed to have been a Subsidiary at all times during such four-quarter period; (5) any Person that is not a Subsidiary on the Calculation Date shall be deemed not to have been a Subsidiary at any time during such four quarter period; and (6) if any Indebtedness bears a floating rate of interest and such Indebtedness is to be given pro forma effect, the interest expense on such Indebtedness shall be calculated as if the rate in effect on the Calculation Date had been the applicable conversion rate for the entire period (taking into account any Hedging Obligation applicable to such Indebtedness if such Hedging Obligation has a remaining term as at the Calculation Date in excess of twelve (12) months, or, if shorter, at least equal to the remaining term of such Indebtedness). Fixed Charges means, with respect to any specified Person for any period, the sum, without duplication, of: (1) the consolidated interest expense of such Person and its Subsidiaries for such period, whether paid or accrued, including, without limitation, amortization of debt issuance costs and original issue discount, non-cash interest payments, the interest component of any deferred payment obligations, the interest component of all payments associated with Capital Lease Obligations, commissions, discounts and other fees and charges incurred in respect of letter of credit or bankers acceptance financings, and net of the effect of all payments made or received pursuant to Hedging Obligations in respect of interest rates and net of actual interest income for such period; plus (2) the consolidated interest expense of such Person and its Subsidiaries that was capitalized during such period; plus (3) any interest on Indebtedness of another Person that is guaranteed by such Person or one of its Subsidiaries or secured by a Lien on assets of such Person or one of its Subsidiaries, whether or not such Guarantee or Lien is called upon; plus (4) the product of (a) all dividends, whether or not in cash, on any series of preferred stock of such Person or any of its Subsidiaries, other than dividends on Equity Interests payable solely in Equity Interests of the Issuer (other than Disqualified Stock) or to the Issuer or a Subsidiary, times (b) a fraction, the numerator of which is one and the denominator of which is one minus the then current combined federal, state and local statutory tax rate of such Person, expressed as a decimal, in each case, determined on a consolidated basis in accordance with IFRS; provided that Fixed Charges shall not include interest on Subordinated Shareholder Loans, dividends paid on the B Preference Shares, the Parent Expenses. Hedging Obligations means, with respect to any specified Person, the obligations of such Person under: (1) interest rate swap agreements (whether from fixed to floating or from floating to fixed), interest rate cap agreements and interest rate collar agreements; (2) other agreements or arrangements designed to manage interest rates or interest rate risk; and (3) other agreements or arrangements designed to protect such Person against fluctuations in currency exchange rates or commodity prices or prices of raw materials. Guarantee means a guarantee other than by endorsement of negotiable instruments for collection in the ordinary course of business, direct or indirect, in any manner including, without limitation, by way of a pledge of assets or through letters of credit or reimbursement agreements in respect thereof, of all or any part of any Indebtedness (whether arising by virtue of partnership arrangements, or by agreements to keep-well, to purchase assets, goods, securities or services, to take or pay or to maintain financial statement conditions or otherwise). 134

148 IFRS means International Financial Reporting Standards promulgated from time to time by the International Accounting Standards Board or any successor board or agency and as adopted by the European Union. Indebtedness means, with respect to any specified Person, any indebtedness of such Person (excluding accrued expenses and trade payables), whether or not contingent: 1. in respect of borrowed money; 2. evidenced by bonds, notes, debentures or similar instruments or letters of credit (or reimbursement agreements in respect thereof); 3. in respect of banker s acceptances; 4. representing Capital Lease Obligations; 5. representing the balance deferred and unpaid of the purchase price of any property or services due more than six (6) months after such property is acquired or such services are completed; and 6. representing any Hedging Obligations of such Person (the amount of any such obligation to be equal at any time to the termination value of such agreement or arrangement giving rise to such Hedging Obligation that shall be payable by such Person at such time), if and to the extent any of the preceding items (other than letters of credit and Hedging Obligations) would appear as a liability upon a balance sheet (excluding the footnotes thereto) of the specified Person prepared in accordance with IFRS. In addition, the term Indebtedness includes all Indebtedness of others secured by a Lien on any asset of the specified Person (whether or not such Indebtedness is assumed by the specified Person); provided that the amount of such Indebtedness shall be the lesser of the Fair Market Value of such asset at such date of determination and the amount of such Indebtedness of such Person, and, to the extent not otherwise included, the Guarantee by the specified Person of any Indebtedness of any other Person. The term Indebtedness shall not include: 1. Subordinated Shareholder Loans; 2. any lease of property which would be considered an operating lease under IFRS; 3. in connection with the purchase by the Issuer or any Subsidiary of any business, any post-closing payment adjustments to which the seller may become entitled to the extent such payment is determined by a final closing balance sheet or such payment depends on the performance of such business after the closing; provided, however, that, at the time of closing, the amount of any such payment is not determinable and, to the extent such payment thereafter becomes fixed and determined, the amount is paid within thirty (30) days thereafter; 4. Subsidies; and 5. any contingent obligations in respect of workers compensation claims, early retirement or termination obligations, pension fund obligations or contributions or similar claims, obligations or contributions or social security or wage taxes. Investments means, with respect to any Person, all direct or indirect investments by such Person in other Persons (including Affiliates) in the form of loans (including guarantees or other obligations, but excluding advances or extensions of credit to customers or suppliers made in the ordinary course of business), advances or capital contributions (excluding commission, travel and similar advances to officers and employees made in the ordinary course of business), purchases or other acquisitions for consideration of Indebtedness, Equity Interests or other securities, together with all items that are or would be classified as Investments on a balance sheet (excluding footnotes) prepared in accordance with IFRS. If the Issuer or any Subsidiary sells or otherwise disposes of any Equity Interests of any direct or indirect Subsidiary such that, after giving effect to any such sale or disposition, such Person is no longer a Subsidiary, the Issuer shall be deemed to have made an Investment on the date of any such sale or 135

149 disposition equal to the Fair Market Value of the Issuer s Investments in such Subsidiary that were not sold or disposed of in an amount determined as provided in Condition 6(c). The acquisition by the Issuer or any Subsidiary of a Person that holds an Investment in a third Person shall be deemed to be an Investment by the Issuer or such Subsidiary in such third Person in an amount equal to the Fair Market Value of the Investments held by the acquired Person in such third Person in an amount determined as provided in Condition 6(c). Except as otherwise provided in these Conditions, the amount of an Investment shall be determined at the time the Investment is made and without giving effect to subsequent changes in value. Lien means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law, including any conditional sale or other title retention agreement, any lease in the nature thereof, any option or other agreement to sell or give a security interest in and any filing of or agreement to give any financing or similar statement under the laws of any jurisdiction. Net Proceeds means the aggregate cash proceeds and Cash Equivalents received by the Issuer or any of its Subsidiaries in respect of any Asset Sale (including, without limitation, any cash or Cash Equivalents received upon the sale or other disposition of any non-cash consideration received in any Asset Sale), net of the direct costs relating to such Asset Sale, including, without limitation, legal, accounting and investment banking fees, and sales commissions, and any relocation expenses incurred as a result of the Asset Sale, taxes paid or payable as a result of the Asset Sale, in each case, after taking into account any available tax credits or deductions and any tax sharing arrangements, and any reserve for adjustment or indemnification obligations in respect of the sale price of such asset or assets established in accordance with IFRS. Officer means, with respect to any Person, the chairman of the board of directors, the chairman of the Supervisory Board (Conseil de Surveillance), the chief executive officer, the president, the chief operating officer, the chief financial officer, the treasurer, any assistant treasurer, the controller, the secretary, any managing director or any vice-president of such Person. Officer s Certificate means a certificate signed on behalf of any Person by an Officer. Ordinary Share 2016 Dividend Distribution means the dividend equal to 2 million (in the aggregate) to be paid by the Issuer by way of a distribution of share premium after the closing of the Refinancing to holders of the ordinary shares of the Issuer (other than, for the avoidance of doubt, the ordinary shares of the Issuer underlying the Warrants). Parent Entity means any direct or indirect parent company or entity of the Issuer. Parent Expenses means: (1) costs (including all professional fees and expenses) incurred by any Parent Entity in connection with reporting obligations under or otherwise incurred in connection with compliance with applicable laws, rules or regulations of any governmental, regulatory or self-regulatory body or stock exchange, these Conditions or any other agreement or instrument relating to Indebtedness of the Issuer or any Subsidiary; (2) customary indemnification obligations of any Parent Entity owing to directors, officers, employees or other Persons under its charter or by-laws or pursuant to written agreements with any such Person to the extent relating to the Issuer and its Subsidiaries; (3) obligations of any Parent Entity in respect of director and officer insurance (including premiums therefor) to the extent relating to the Issuer and its Subsidiaries; (4) fees and expenses payable by any Parent Entity in connection with the Exchange Offer; (5) general corporate overhead expenses, including (a) professional and management fees and expenses and other operational expenses of any Parent Entity related to the ownership or operation of the business of the Issuer or any of its Subsidiaries or (b) costs and expenses with respect to any 136

150 litigation or other dispute relating to the Exchange Offer or the ownership, directly or indirectly, by any Parent Entity; and (6) other fees, expenses and costs relating directly or indirectly to activities of the Issuer and its Subsidiaries or any Parent Entity or any other Person established for purposes of or in connection with the Exchange Offer. Permitted Business means (i) any business, services or activities engaged in by the Issuer and its Subsidiaries on the Issue Date and (ii) any other business or activity which is ancillary, reasonably related or complementary thereto. Permitted Investments means: (1) any Investment in the Issuer or in a Subsidiary; (2) any Investment in cash and Cash Equivalents; (3) any Investment by the Issuer or any Subsidiary in a Person, if as a result of such Investment: a) such Person becomes a Subsidiary; or b) such Person is merged, consolidated or amalgamated with or into, or transfers or conveys substantially all of its assets to, or is liquidated into, the Issuer or a Subsidiary; (4) any Investment made as a result of the receipt of non-cash consideration from an Asset Sale that was made pursuant to and in compliance with Condition 7; (5) any acquisition of assets or Capital Stock solely in exchange for the issuance of Equity Interests (other than Disqualified Stock) of the Issuer and any Investment to the extent made using as consideration the Subordinated Shareholder Loans made to the Issuer; (6) any Investments received in compromise or resolution of (A) obligations of trade creditors or customers that were incurred in the ordinary course of business of the Issuer or any of its Subsidiaries, including pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of any trade creditor or customer; or (B) litigation, arbitration or other disputes with Persons who are not Affiliates; (7) Investments in receivables owing to the Issuer or any Subsidiary created or acquired in the ordinary course of business; (8) Investments represented by Hedging Obligations; (9) repurchases of the Exchange Notes; (10) any Guarantee of Indebtedness; (11) any Investment existing on, or made pursuant to binding commitments existing on, the Issue Date and any Investment consisting of an extension, modification or renewal of any Investment existing on, or made pursuant to a binding commitment existing on, the Issue Date; provided that the amount of any such Investment may be increased (a) as required by the terms of such Investment as in existence on the Issue Date or (b) as otherwise permitted under these Conditions; (12) Investments acquired after the Issue Date as a result of the acquisition by the Issuer or any Subsidiary of another Person, including by way of a merger, amalgamation or consolidation with or into the Issuer or any of its Subsidiaries in a transaction that is not prohibited by these Conditions after the Issue Date to the extent that such Investments were not made in contemplation of such acquisition, merger, amalgamation or consolidation and were in existence on the date of such acquisition, merger, amalgamation or consolidation; (13) loans, guarantees of loans, advances or other extensions of credit to officers, directors, employees or consultants of the Issuer and any Subsidiary not to exceed 1 million in the aggregate at any time outstanding; 137

151 (14) negotiable instruments held for deposit or collection in the ordinary course of business; (15) payroll, travel or similar advances to cover matters that are expected at the time of such advances ultimately to be treated as expenses for accounting purposes and that are made in the ordinary course of business; (16) any Investment in connection with a Qualified Receivables Financing; (17) Investments in joint ventures having an aggregate Fair Market Value (measured on the date each such Investment was made and without giving effect to subsequent changes in value), when taken together with all other Investments made pursuant to this clause (17) that are at the time outstanding, not to exceed the greater of 10 million and 3.25% of Total Fixed and Intangible Assets (as defined below); and (18) other Investments in any Person having an aggregate Fair Market Value (measured on the date each such Investment was made and without giving effect to subsequent changes in value), when taken together with all other Investments made pursuant to this clause (18) that are at the time outstanding not to exceed the greater of 10 million and 3.25% of Total Fixed and Intangible Assets, provided, that if an Investment is made pursuant to this clause in a Person that is not a Subsidiary and such Person subsequently becomes a Subsidiary such Investment, if applicable, shall thereafter be deemed to have been made pursuant to clause (3) of the definition of Permitted Investments and not this clause. Permitted Refinancing Indebtedness means, any Indebtedness of the Issuer or any of its Subsidiaries issued in exchange for, or the net proceeds of which are used to renew, refund, refinance, replace, defease or discharge other Indebtedness of the Issuer or any of its Subsidiaries (other than intercompany Indebtedness); provided that: (1) the principal amount (or accreted value, if applicable) of such Permitted Refinancing Indebtedness does not exceed the principal amount (or accreted value, if applicable) of the Indebtedness renewed, refunded, refinanced, replaced, defeased or discharged (plus all accrued interest on the Indebtedness and the amount of all fees and expenses, including premiums, incurred in connection therewith); (2) such Permitted Refinancing Indebtedness has (a) a final maturity date that is either (i) no earlier than the final maturity date of the Indebtedness being renewed, refunded, refinanced, replaced, exchanged, defeased or discharged or (ii) after the final maturity date of the Exchange Notes and (b) has a Weighted Average Life to Maturity (as defined below) that is equal to or greater than the Weighted Average Life to Maturity of the Indebtedness being renewed, refunded, refinanced, replaced, defeased or discharged; (3) if the Indebtedness being renewed, refunded, refinanced, replaced, defeased or discharged is expressly, contractually, subordinated in right of payment to the Exchange Notes, such Permitted Refinancing Indebtedness is subordinated in right of payment to the Exchange Notes on terms at least as favorable to the holders of Exchange Notes as those contained in the documentation governing the Indebtedness being renewed, refunded, refinanced, replaced, exchanged, defeased or discharged; and (4) such Indebtedness is incurred either by the Issuer (if the Issuer was the obligor on the Indebtedness being renewed, refunded, refinanced, replaced, defeased or discharged) or by the Subsidiary that was the obligor on the Indebtedness being renewed, refunded, refinanced, replaced, defeased or discharged and is guaranteed only by Persons who were obligors on the Indebtedness being renewed, refunded, refinanced, replaced, defeased or discharged; Person means any individual, corporation, partnership, joint venture, association, joint stock company, trust, unincorporated organization, limited liability company or government or other entity. Public Equity Offering means a bona fide underwritten public offering of the Capital Stock (other than Disqualified Stock) of the Issuer or a Parent Entity (i) where such Capital Stock is listed or quoted on a recognized securities exchange in a member of the European Union or (ii) pursuant to an effective 138

152 registration statement under the U.S. Securities Act of 1933, as amended, and the rules and regulations of the Securities Exchange Commission promulgated thereunder (other than a registration statement on Form S-8 or otherwise relating to Equity Interests issued or issuable under any employee benefit plan). Public Market means any time after: (1) a Public Equity Offering has been consummated; and (2) at least 20% of the total issued and outstanding ordinary shares or common equity of the Issuer or a Parent Entity has been distributed to investors other than the holders of Exchange Notes, any of their respective Affiliates or any other direct or indirect shareholders of the Issuer as of the Issue Date pursuant to one or more Public Equity Offerings. Qualified Receivables Financing means any financing pursuant to which the Issuer or any of its Subsidiaries may sell, convey or otherwise transfer to any other Person or grant a security interest in, any accounts receivable (and related assets) in any aggregate principal amount equivalent to the Fair Market Value of such accounts receivable (and related assets) of the Issuer or any of its Subsidiaries; provided that (a) the covenants, events of default and other provisions applicable to such financing shall be customary for such transactions and shall be on market terms (as determined in good faith by the Supervisory Board (Conseil de Surveillance) of the Issuer (or any analogous body of the Issuer) or senior management) at the time such financing is entered into, (b) the interest rate applicable to such financing shall be a market interest rate (as determined in good faith by the Supervisory Board (Conseil de Surveillance) of the Issuer (or any analogous body of the Issuer) or senior management) at the time such financing is entered into and (c) such financing shall be non-recourse to the Issuer or any of its Subsidiaries except to a limited extent customary for such transactions. Refinancing means the exchange offer and consent solicitation for the Existing Notes in exchange for the Exchange Notes, in connection with a refinancing of financial indebtedness of the Issuer as described in the Exchange Offer and Consent Solicitation Statement dated September 26, Related Party means, with respect to any individual: (1) the parents or spouse of such individual, the parents of such individual s spouse and any of such individual s, his or her spouse s or their parents direct descendants; or (2) any trust, corporation, partnership, limited liability company or other entity, the beneficiaries, shareholders, partners, members, owners or Persons beneficially holding greater than 50.0% controlling interest of which consist of any one or more of such individuals and/or such other Persons referred to in the immediately preceding clause (1). Related Taxes means: (1) any taxes, including sales, use, transfer, rental, ad valorem, value added, stamp, property, consumption, franchise, license, capital, registration, business, customs, net worth, gross receipts, excise, occupancy, intangibles or similar taxes (other than (i) taxes measured by income and (ii) withholding imposed on payments made by any Parent Entity), required to be paid (provided such taxes are in fact paid) by any Parent Entity by virtue of its: a) being incorporated or otherwise being established or having Capital Stock outstanding (but not by virtue of owning stock or other equity interests of any corporation or other entity other than, directly or indirectly, the Issuer or any of the Issuer s Subsidiaries); b) issuing or holding Subordinated Shareholder Loans; c) being a holding company parent, directly or indirectly, of the Issuer or any of the Issuer s Subsidiaries; d) receiving dividends from or other distributions in respect of the Capital Stock of, directly or indirectly, the Issuer or any of the Issuer s Subsidiaries; or 139

153 e) having made any payment in respect of any of the items for which the Issuer is permitted to make payments to any Parent Entity pursuant to Condition 6(b). (2) if and for so long as the Issuer is a member of a group filing a consolidated combined tax return with any Parent Entity, any taxes measured by income for which such Parent Entity is liable up to an amount not to exceed with respect to such taxes the amount of any such taxes that the Issuer and its Subsidiaries would have been required to pay on a separate company basis or on a consolidated basis if the Issuer and its Subsidiaries had paid tax on a consolidated, combined, group, affiliated or unitary basis on behalf of an affiliated group consisting only of the Issuer and its Subsidiaries. Restricted Investment means an Investment other than a Permitted Investment. Sale/Leaseback Transaction means an arrangement relating to property now owned or hereafter required by the Issuer or a Subsidiary whereby the Issuer or a Subsidiary transfers such property to a Person and the Issuer or such Subsidiary leases it from such person, other than leases between the Issuer and a Subsidiary of the Issuer or between Subsidiaries of the Issuer. Securitization Assets means any accounts receivable, subject to a Qualified Receivables Financing. Sponsoring Fees means (a) customary annual fees for the performance of monitoring services (including any board of directors membership fees payable to any holder of Exchange Notes or an agent thereof) by any holder of Exchange of Notes for the Issuer or any of its Subsidiaries or (b) fees for any financial advisory, financing, underwriting or placement services or in respect of other investment banking activities, including, without limitation, in connection with acquisitions or divestitures, which payments are approved by a majority of the Supervisory Board (Conseil de Surveillance) of the Issuer (or any analogous body of the Issuer) in good faith; provided that such fees paid under (a) and (b) shall not, in the aggregate, exceed 1.5 million in any fiscal year (inclusive of out-of-pocket fees). Subordinated Shareholder Loans means, collectively, any debt provided to the Issuer by any direct or indirect parent of the Issuer or any holder of Exchange Notes or Related Party, in exchange for or pursuant to any security, instrument or agreement other than Capital Stock, together with any such security, instrument or agreement and any other security or instrument other than Capital Stock issued in payment of any obligation under any Subordinated Shareholder Loan; provided that such Subordinated Shareholder Loan: (1) does not (including upon the happening of any event) mature or require any amortization, redemption or other payment of principal or any sinking fund payment prior to the first anniversary of the Maturity Date (other than through conversion or exchange of any such security or instrument for Equity Interests of the Issuer (other than Disqualified Stock), or for any other security or instrument meeting the requirements of the definition); (2) does not (including upon the happening of any event) require, prior to the first anniversary of the Maturity Date, payment of cash interest, cash withholding amounts or other cash gross-ups, or any similar cash amounts or the making of any such payment; (3) does not (including upon the happening of any event) provide for the acceleration of its maturity, nor confers on its shareholders any right (including upon the happening of any event) to declare a default or event of default or take any enforcement action, in each case, prior to the first anniversary of the Maturity Date; (4) is not secured by a Lien on any assets of the Issuer or any Subsidiary and is not Guaranteed by any Subsidiary of the Issuer; (5) is subordinated in right of payment to the prior payment in full in cash of the Exchange Notes pursuant to its terms or the terms of an intercreditor agreement or to subordination, payment blockage and enforcement limitation terms which are customary in all material respects for similar funding; 140

154 (6) does not (including upon the happening of any event) restrict the payment of amounts due in respect of the Notes or compliance by the Issuer with its obligations under the Exchange Notes and these Conditions; (7) does not (including upon the happening of an event) constitute Voting Stock; and (8) is not (including upon the happening of any event) mandatorily convertible or exchangeable, or convertible or exchangeable at the option of the holder, in whole or in part, prior to the date on which the Exchange Notes mature other than into or for Capital Stock (other than Disqualified Stock) of the Issuer; provided, however, that any event or circumstance that results in such Indebtedness ceasing to qualify as a Subordinated Shareholder Loan, such Indebtedness shall constitute an incurrence of Indebtedness by the Issuer, and any and all Restricted Payments made through the use of the Net Proceeds from the incurrence of such Indebtedness since the date of the original issuance of such Subordinated Shareholder Loan shall constitute new Restricted Payments that are deemed to have been made after the date of the original issuance of such Subordinated Shareholder Loan. Subsidiary means, with respect to any specified Person: (1) any corporation, association or other business entity of which more than 50% of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency and after giving effect to any voting agreement or stockholders agreement that effectively transfers voting power) to vote in the election of directors, managers or trustees of the corporation, association or other business entity is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person (or a combination thereof); and (2) any partnership or limited liability company of which (a) more than 50% of the capital accounts, distribution rights, total equity and voting interests or general and limited partnership interests, as applicable, are owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person or a combination thereof, whether in the form of membership, general, special or limited partnership interests or otherwise, and (b) such Person or any Subsidiary of such Person is a controlling general partner or otherwise controls such entity. Subsidies means subsidies from government or supranational agencies which do not require immediate repayment, such repayment contingent on certain conditions relating to the results of the relevant research and development. Total Fixed and Intangible Assets means the consolidated total fixed and intangible assets (excluding goodwill) of the Issuer and its Subsidiaries as shown on the most recent consolidated balance sheet (excluding the footnotes thereto) of the Issuer. Voting Stock of any specified Person as of any date means the Capital Stock of such Person that is at the time entitled to vote in the election of the board of directors of such Person or in respect of the Issuer, the Supervisory Board (Conseil de Surveillance). Weighted Average Life to Maturity means, when applied to any Indebtedness at any date, the number of years obtained by dividing: (1) the sum of the products obtained by multiplying (a) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect of the Indebtedness, by (b) the number of years (calculated to the nearest onetwelfth) that will elapse between such date and the making of such payment; by (2) the then outstanding principal amount of such Indebtedness. 8 Transactions with Affiliates (a) The Issuer will not, and will not cause or permit any of its Subsidiaries to, make any payment to or sell, lease, transfer or otherwise dispose of any of its properties or assets to, or purchase any property or assets from, or enter into or make or amend any transaction, contract, agreement, 141

155 understanding, loan, advance or guarantee with, or for the benefit of, any Affiliate of the Issuer (each, an Affiliate Transaction ), unless: (i) (ii) (b) (i) (ii) (iii) (iv) (v) the Affiliate Transaction is on terms that are no less favorable to the Issuer or the relevant Subsidiary than those that would have been obtained in a comparable arm s length transaction by the Issuer or such Subsidiary with a Person who is not an Affiliate of the Issuer or any of its Subsidiaries; and the Issuer delivers to the Representative (as defined in Condition 13 below) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of 10 million, a resolution of the Supervisory Board (Conseil de Surveillance) of the Issuer (or any analogous body of the Issuer) set forth in an Officer s Certificate certifying that such Affiliate Transaction complies with this Condition 8 and that such Affiliate Transaction has been approved by a majority of the disinterested members of the Supervisory Board (Conseil de Surveillance) of the Issuer (or any analogous body of the Issuer). The following items will not be deemed to be Affiliate Transactions and, therefore, will not be subject to the provisions of this Condition 8(a): any employment agreement, collective bargaining agreement, consultant, employee benefit arrangements with any employee, consultant, officer or director of the Issuer or any of its Subsidiaries, including under any stock option, stock appreciation rights, stock incentive or similar plans, entered into in the ordinary course of business; transactions between or among the Issuer and/or any of its Subsidiaries; transactions with a Person that is an Affiliate of the Issuer solely because the Issuer owns, directly or through a Subsidiary, an Equity Interest in, or controls, such Person; payment of reasonable and customary fees and reimbursements of expenses (pursuant to indemnity arrangements or otherwise) of Officers, directors, employees or consultants of the Issuer or any of its Subsidiaries; any issuance of Equity Interests (other than Disqualified Stock) to Affiliates of the Issuer; (vi) Restricted Payments that do not violate the provisions of Condition 6; (vii) Permitted Investments (other than Permitted Investments described in clauses (3), (17) and (18) of the definition thereof); (viii) (ix) (x) (xi) (xii) transactions pursuant to, or contemplated by any agreement in effect on the Issue Date and transactions pursuant to any amendment, modification or extension to such agreement, so long as such amendment, modification or extension, taken as a whole, is not materially more disadvantageous to the Noteholders than the original agreement as in effect on the Issue Date; issuance of any Subordinated Shareholder Loans and the Exchange Notes (and any payment of interest thereon); transactions with customers, clients, suppliers, or purchasers or sellers of goods or services, in each case in the ordinary course of business and otherwise in compliance with the terms of these Conditions that are fair to the Issuer and/or its Subsidiaries, in the reasonable determination of the members of the Supervisory Board (Conseil de Surveillance) of the Issuer (or any analogous body of the Issuer) or the senior management thereof, or are on terms at least as favorable as might reasonably have been obtained at such time from an unaffiliated Person; payment of Sponsoring Fees, Parent Expenses or any Related Taxes; any transaction or series of related transactions where the Issuer delivers to the Representative an opinion as to the fairness to the Issuer or Subsidiary of such transaction from a financial point of view issued by an accounting, appraisal or investment banking firm of international standing; and 142

156 (xiii) loans and advances, or guarantees of third party loans, to the Issuer s or any Subsidiary s officers, directors and employees for travel, entertainment, moving and other relocation expenses. 9. Payments (a) Method of Payment Any payment of principal or interest in respect of Exchange Notes shall be made by transfer to an account denominated in Euro held with the Account Holders for the benefit of the Noteholders. The Issuer s payment obligations shall be discharged upon such payments being duly made to such Account Holders or such bank. Payments of principal, interest and other amounts in respect of the Exchange Notes will be made subject to any fiscal or other laws and regulations or orders of courts of competent jurisdiction applicable thereto, but without prejudice to the provisions described in Condition 10. No commission or expenses shall be charged to the Noteholders in respect of such payments. (b) Payments on Business Days If the due date for payment of any amount of principal or interest in respect of any Exchange Note is not a Business Day, payment shall not be made of the amount due and credit or transfer instructions shall not be given in respect thereof until the next following Business Day and the relevant Noteholder shall not be entitled to any interest or other sums in respect of such postponed payment. For the purposes of these Conditions, Business Day means any day, not being a Saturday or a Sunday, (i) on which foreign exchange markets and commercial banks are open for business in Paris, (ii) on which Euroclear France, Euroclear and Clearstream, Luxembourg are operating and (iii) on which the Trans-European Automated Real-Time Gross Settlement Express Transfer (known as TARGET 2) system (the TARGET System ) or any successor thereto is operating. (c) Fiscal Agent, Paying Agent and Calculation Agent The name and specified offices of the initial Fiscal Agent, initial Calculation Agent and the initial Paying Agent are as follows: FISCAL AGENT, PAYING AGENT AND CALCULATION AGENT SOCIETE GENERALE 32, rue du Champ de Tir CS Nantes Cedex 3 France The Issuer reserves the right at any time to vary or terminate the appointment of the Fiscal Agent, the Calculation Agent or any Paying Agent and/or to appoint a substitute Fiscal Agent or Calculation Agent, additional or other Paying Agents or approve any change in the office through which the Fiscal Agent, the Calculation Agent, any Paying Agent acts, provided that, for so long as any Exchange Note is outstanding, there will at all times be (i) a Fiscal Agent and a Paying Agent having a specified office in a major European city, and (ii) a Calculation Agent). No such agent may resign its duties without a successor agent having being appointed. Noteholders shall be notified of any such appointment or termination in accordance with Condition Taxation 143

157 (a) Withholding Tax Exemption All payments of principal, interest and other revenues by, or on behalf of, the Issuer in respect of the Exchange Notes shall be made free and clear of, and without withholding or deduction for, any taxes or duties of whatever nature imposed, levied or collected by or on behalf of France or any authority therein or thereof having power to tax, unless such withholding or deduction is required by law. (b) Additional Amounts If French law or regulation should require that payments of principal of, or interest on, any of the Exchange Notes be subject to deduction or withholding for or on account of any present or future taxes or duties of whatever nature, the Issuer shall, to the extent permitted by law, pay such additional amounts as will result in the receipt by the Noteholders of the amounts which would have been receivable by them in the absence of such requirement to deduct or withhold; provided, however, that the provisions mentioned above shall not apply to payment of interest and other amounts to, or to a third party on behalf of, a Noteholder, in respect of such Exchange Notes which are subject to taxes by reason of his having some connection with France other than the mere holding of such Exchange Notes. 11 Events of Default The Representative or the Representative acting upon request of any holder(s) of the Exchange Notes holding in total at least 25% of the Outstanding Principal Amount of the Exchange Notes, may, upon written notice to the Issuer (with a copy to the Fiscal Agent) and unless all defaults shall have been cured, cause all, but not some only, of the Exchange Notes to be redeemed (i) at a price equal to the Outstanding Principal Amount together with any Cash Interest, Capitalized Interest (to the extent it has not previously been capitalized into the Outstanding Principal Amount pursuant to Condition 4(b) and Condition 4(c)(i)) and Default Interest (if any) accrued thereto up to, but excluding, the redemption date under this Condition 11 or (ii) if payment to Bpifrance in respect of the Blockage Payment has not been made in full on or prior to such redemption date, at a price equal to, or for the consideration equal to, that provided in the last two paragraphs of Condition 5(c), in the event of any of the following (each, an Event of Default ): a) default in the payment when due of the outstanding principal amount of the Exchange Notes from time to time (excluding any Capitalized Interest that has been previously capitalized into the Outstanding Principal Amount in accordance with Condition 4(b) and Condition 4(c)) (at maturity, upon redemption or otherwise); or b) if any amount in respect of interest (including (i) any Senior Capitalized Interest and (ii) if payment to Bpifrance in respect of the Blockage Payment has been made in full on or prior to the redemption date under this Condition 11, any Junior Capitalized Interest, in each case that has been previously capitalized into the Outstanding Principal Amount in accordance with Condition 4(b) and Condition 4(c), as applicable) on or any other amounts due and payable on, any Exchange Note is not paid on the due date thereof and such default is not remedied within a period of thirty (30) calendar days from such due date; or c) if any other obligations of the Issuer under the Exchange Notes is not complied with or performed within a period of sixty (60) calendar days from the date the Issuer receives written notice (with a copy to the Fiscal Agent) from the Representative acting alone, or the Representative acting upon request from any holder(s) of the Exchange Notes holding in total at least 25% of the aggregate Outstanding Principal Amount of the Exchange Notes of such noncompliance or non-performance; or d) if the Issuer or any of its Significant Subsidiaries (as defined below) defaults under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any indebtedness for money borrowed or the payment of which is guaranteed by the Issuer or any Significant Subsidiary, if that default: 144

158 (A) is caused by a failure to pay the principal of or interest under such indebtedness prior to the expiration of any grace period provided in such indebtedness with respect to such default; or (B) results in the acceleration of such indebtedness prior to its stated maturity, and in each case, the principal amount of any such indebtedness, together with the principal amount of any other such indebtedness under which there has been such a payment default or the maturity of which has been so accelerated, exceeds 15,000,000 in the aggregate; e) if the Issuer or any of its Significant Subsidiaries fails to pay final judgments entered by a court of competent jurisdiction in an amount of more than 15,000,000 in the aggregate, which judgment is not paid, discharged or stayed after a period of sixty (60) days during which a stay of enforcement of such judgment, by reason of any appeal, waiver or otherwise, shall not have been in effect; f) the Issuer or any of its Significant Subsidiaries: (i) makes any proposal for a general moratorium in relation to its debt, or (ii) a judgment is issued for the judicial liquidation (liquidation judiciaire) or for a judicial transfer of the whole of the business (cession totale de l entreprise) of the Issuer or such Significant Subsidiary, as the case may be, or (iii) to the extent permitted by law, the Issuer or any of its Significant Subsidiary is subject to any other insolvency or prebankruptcy or bankruptcy proceedings under any applicable laws, or (iv) the Issuer or any of its Significant Subsidiaries makes any conveyance, assignment or other arrangement for the benefit of its creditors or enters into a composition with its creditors; or g) failure by the Issuer to comply with the terms of Condition 5(d). Until payment by the Issuer to Bpifrance of the Blockage Payment, the occurrence of an Event of Default shall not lead to the acceleration of the Junior Amounts outstanding on the early redemption date. However, if any judgment were issued for the judicial liquidation (liquidation judiciaire) of the Issuer or if the Issuer were liquidated for any other reason, then the then-outstanding Junior Amounts would become immediately due and payable, subject to Condition 2. For the purposes of this Condition 11: Significant Subsidiary means shall mean (i) each of DNES, Finorga and Novasep Process for so long as the relevant entity (together with any of its subsidiaries) represents (A) more than 10% of the group s consolidated sales in any fiscal year or (B) more than 10% of the group s consolidated tangible assets as of the end of any year or any half-year; and (ii) any other subsidiary of the Issuer that (together with any subsidiaries of such subsidiary) represents more than (A) 10% of the group s consolidated sales or (B) more than 10% of the group s consolidated tangible assets as of the end of any year or any half-year. 12. Statutes of limitation Any claims against the Issuer for the payment of principal and interest in respect of the Exchange Notes shall become barred by statute of limitation ten (10) years (in the case of principal) and five (5) years (in the case of interest) from the due date for payment thereof. 13. Representation of the Noteholders The Noteholders will be grouped automatically for the defense of their respective common interests in a masse (hereinafter referred to as the Masse ). The Masse will be governed in accordance with Article L of the Code de Commerce (French Commercial Code) (the Code ) by the provisions of the Code applicable to the Masse (with the exception of the provisions of Articles L , L , L , R , R , R and R thereof) subject to the following provisions: 145

159 (a) Legal Personality The Masse will be a separate legal entity, by virtue of Article L of the Code, acting in part through a representative (the Representative ) and in part through a general meeting of Noteholders (the General Meeting ). The Masse alone, to the exclusion of all individual Noteholders, shall exercise the common rights, actions and benefits which now or in the future may accrue with respect to the Exchange Notes. (b) Representative The office of Representative may be conferred on a person of any nationality. However, the following persons may not be chosen as Representative: i. the Issuer, the members of its Supervisory Board (Conseil de Surveillance), its President, its general managers (directeurs généraux), its statutory auditors, its employees and their ascendants, descendants and spouses; ii. iii. iv. companies guaranteeing all or part of the obligations of the Issuer, their respective managers (gérants), general managers (directeurs généraux), members of their board of directors, executive board or supervisory board, their statutory auditors, employees and their ascendants, descendants and spouses; companies of which the Issuer possesses at least ten (10) per cent. of the share capital or companies possessing at least ten (10) per cent. of the share capital of the Issuer; or persons to whom the practice of banker is forbidden or who have been deprived of the right of directing, administering or managing a business in whatever capacity. The initial Representative shall be: MASSQUOTE S.A.S.U. RCS Nanterre 7 bis, rue de Neuilly F Clichy Mailing address: 33, rue Anna Jacquin Boulogne Billancourt France Represented by its Chairman The alternate representative (the Alternate Representative ) shall be: Gilbert Labachotte 8 Boulevard Jourdan Paris In the event of incompatibility, resignation or revocation of the Representative, such Representative will be replaced by the Alternate Representative. The Alternate Representative shall have the same powers as the Representative. In the event of death, incompatibility, resignation or revocation of the Alternate Representative, a replacement will be elected by a meeting of the General Meeting. The Representative (or the Alternate Representative, as the case may be) will be entitled to a remuneration of 500 per year, with respect to its duties. 146

160 The appointment of the Representative (or the Alternate Representative, as the case may be) shall terminate automatically on the date of final redemption in full of the Exchange Notes. Such appointment shall, if applicable, be automatically extended until the final resolution of any proceedings in which the Representative (or the Alternate Representative, as the case may be) may be involved and the enforcement of any judgments or settlements relating thereto. All interested parties will have the right to obtain the name and the address of the Representative and the Alternate Representative at the head office of the Issuer and at the offices of any of the Paying Agents. (c) Powers of the Representative The Representative shall, in the absence of any decision to the contrary of the General Meeting, have the power to take all acts of management to defend the common interests of the Noteholders. All legal proceedings against the Noteholders or initiated by them, in order to be valid, must be brought against the Representative or by it. The Representative may not interfere in the management of the affairs of the Issuer. (d) General Meeting of Noteholders The General Meeting may be held at any time, on convocation either by the Issuer or by the Representative. One or more Noteholders, holding together at least one-thirtieth of the Outstanding Principal Amount of the Exchange Notes may address to the Issuer and the Representative a demand for convocation of the General Meeting; if such General Meeting has not been convened within two (2) months from such demand, such Noteholders may commission one of themselves to petition the relevant competent court to appoint an agent (mandataire) who will call the General Meeting. Notice of the date, hour, place, agenda and quorum requirements of any meeting of a General Meeting will be published as provided under Condition 14 not less than fifteen (15) calendar days prior to the date of the General Meeting for a first convocation and not less than six calendar days prior to the date of the General Meeting for a second convocation. Each Noteholder has the right to participate in General Meeting of the Masse in person or by proxy. Each Exchange Note carries the right to one vote. (e) Powers of General Meetings A General Meeting is empowered to deliberate on the fixing of the remuneration, dismissal or replacement of the Representative and the Alternate Representative and may also act with respect to any other matter that relates to the common rights, actions and benefits which now or in the future may accrue with respect to the Exchange Notes, including authorizing the Representative to act at law as plaintiff or defendant. A General Meeting may further deliberate on any proposal relating to the modification of the Conditions of the Exchange Notes including any proposal, whether for arbitration or settlement, relating to rights in controversy or which were the subject of judicial decisions, it being specified, however, that a General Meeting may not increase amounts payable by Noteholders, nor establish any unequal treatment between the Noteholders, nor decide to convert the Exchange Notes into shares. The General Meeting may deliberate validly on first convocation only if Noteholders present or represented hold at least one-fifth (1/5) of the principal amount of the Exchange Notes then outstanding. On second convocation, no quorum shall be required. Decisions at meetings shall be taken by a twothirds (2/3) majority of votes cast by the Noteholders attending such meeting or represented thereat. In accordance with Article R of the Code, the right of each Noteholder to participate in General Meetings will be evidenced by the entries in the books of the relevant Account Holder of the name of 147

161 such Noteholder as of 0:00, Paris time, on the second (2nd) business day preceding the date set for the meeting of the relevant General Meeting. Decisions of the General Meeting must be published in accordance with the provisions set out in Condition 14 not more than ninety (90) calendar days from the date thereof. (f) Information to the Noteholders Each Noteholder or representative thereof will have the right, during the fifteen (15) calendar day period preceding the holding of each General Meeting, to consult or make a copy of the text of the resolutions which will be proposed and of the reports which will be presented at the General Meeting, which will be available for inspection at the principal office of the Issuer, at the offices of the Paying Agents and at any other place specified in the notice of the General Meeting. (g) Expenses The Issuer will pay all duly evidenced and reasonable expenses incurred in the operation of the Masse, including expenses relating to the calling and holding of General Meetings and the expenses which arise by virtue of the remuneration of the Representative, and more generally all administrative expenses resolved upon by a General Meeting, it being expressly stipulated that no expenses may be imputed against interest payable on the Exchange Notes. 14. Notices Any notice or notification addressed to the Issuer should be sent to the following address: Novasep Holdings SAS, 39 rue St Jean de Dieu, Lyon, France. The Issuer shall deliver all notices concerning the Exchange Notes (i) so long as the Exchange Notes are listed on the Luxembourg Stock Exchange and the rules of that exchange so require, in a leading newspaper having general circulation in Luxembourg or on the Luxembourg Stock Exchange s website ( and (ii) via the Paying Agent, to Euroclear France, Euroclear, Clearstream, Luxembourg and/or any other clearing system through which the Exchange Notes are for the time being cleared for communication by such clearing systems to the Noteholders. Any such notice shall be deemed to have been given and shall become effective to the Noteholders on the day on which such notice was published on the Luxembourg Stock Exchange s website. If the Exchange Notes are admitted to trading or listed on any other stock exchange and the rules of such stock exchange so require, all notices of the Issuer concerning the Exchange Notes shall also be published in accordance with the rules of such stock exchange. A failure to publish any notices in accordance with the rules of any stock exchange shall not affect the effectiveness of notices issued in accordance with the previous paragraph. 15. Further Issues and Assimilation The Issuer may from time to time without the consent of the Noteholders issue further Exchange Notes to be assimilated (assimilables) with the Exchange Notes as regards their financial service, provided that such further Exchange Notes and the Exchange Notes shall carry rights identical in all respects (or in all respects save for the amount and date of the first payment of interest thereon) and that the terms of such further Exchange Notes shall provide for such assimilation. In the event of such an assimilation, the Noteholders and the holders of such further Exchange Notes will be grouped together in a single masse for the defense of their common interests. 16. Governing Law and Jurisdiction (a) Governing Law The Exchange Notes are governed by, and shall be construed in accordance with, the laws of the Republic of France. 148

162 (b) Jurisdiction Any claim, legal action or proceeding arising out of or in connection with the Exchange Notes shall be brought before the competent courts in Paris. 149

163 TERMS AND CONDITIONS OF THE WARRANTS Please be aware that terms defined in these Terms and Conditions of the Warrants may not have the same definition as used elsewhere in this Exchange Offer and Consent Solicitation Statement and readers should read this section as a standalone section. The following section is an English translation of the Terms and Conditions of the Warrants. The final Terms and Conditions of the Warrants will be in French and will be the governing terms of the Warrants. Copies of the final Terms and Conditions of the Warrants in French shall be available (i) upon request at the specified office of the Exchange Agent during normal business hours and (ii) on the website of Novasep ( at the latest two Business Days before the Withdrawal Deadline (as defined in the Exchange Offer and Consent Solicitation Statement) of the Warrants. This document defines the terms and conditions of the issue of up to 58,549,200 warrants (the Warrants ) attached to the Exchange Notes (as defined below) (obligations à bons de souscription d actions) issued on the issue date of the Exchange Notes (the Issue Date ) by Novasep Holding S.A.S. (the Issuer ). The issue of the Exchange Notes and Warrants have been authorized by a decision of its Supervisory Board (Conseil de Surveillance) dated September 23, 2016 and will be authorized by the general meeting of the shareholders (assemblée générale des associés) of the Issuer to be held prior the Issue Date. The Warrants are issued with the benefit of an agency agreement to be dated no later than the Issue Date between the Issuer and Société Générale as registration agent and centralizing agent (the Registration Agent or Centralizing Agent, as the context requires, which expression shall, where the context so admits, include any successor for the time being as Registration Agent or Centralizing Agent). The Issuer shall also enter into a calculation agency agreement (the Calculation Agency Agreement ) to be dated no later than the Issue Date with Conv-Ex Advisors Limited (the Calculation Agent, which expression shall include any successor as calculation agent under the Calculation Agency Agreement) whereby the Calculation Agent has been appointed to make certain calculations in relation to the Warrants. References below to Conditions or Condition are, unless the context otherwise requires, to the numbered paragraphs below. The decision to issue the Warrants entails that the shareholders automatically waive their preferential right of subscription for Shares (as defined below), which will be issued upon exercise of these Warrants. 1. DEFINITIONS In these Conditions, the capitalized terms shall have the following meaning: Account Holder Business Day means any authorized financial intermediary institution entitled to hold, directly or indirectly, accounts on behalf of its customers with Euroclear France, and includes Euroclear Bank S.A./N.V. ( Euroclear ) and the depositary bank for Clearstream Banking, société anonyme ( Clearstream, Luxembourg ). means any day, not being a Saturday or a Sunday, (i) on which foreign exchange markets and commercial banks are open for business in Paris, (ii) on which Euroclear France, Euroclear and Clearstream, Luxembourg are operating and (iii) on which the Trans-European Automated Real-Time Gross Settlement Express Transfer (known as TARGET 2) system (the TARGET System ) or any successor thereto is operating. Exchange Notes refers to the euro-denominated notes due May 31, 2019 issued by the Issuer to which the Warrants are attached 150

164 (obligations à bons de souscription d actions). Exercise Date Exercise Price Exercise Ratio Expert Maturity Date Ordinary Share 2016 Dividend Distribution Priority 2016 Dividend Distribution Refinancing Share Warrant Holder(s) means, in respect of any Warrant, the date on which such warrant is exercised. means in respect of each newly-issued Share which a Warrant Holder would be entitled to subscribe for upon exercise thereof, an amount equal to the par value of a Share from time to time, such par value being equal to Euro on the Issue Date. means, in respect of each Warrant, 1 (one), subject to adjustments from time to time pursuant and subject to Condition 2.6. refers to an independent expert chosen by the Company with substantial knowledge and experience with respect to the valuation of businesses and companies. refers to May 31, 2019, or such other date as may be set in accordance with Condition 2.4. means the dividend equal to 2 million (in the aggregate) to be paid by the Issuer by way of a distribution of share premium (prime d émission) after the closing of the Refinancing (as defined below) to holders of the Shares (other than, for the avoidance of doubt, Shares underlying the Warrants), but in principle no later than February 15, means the dividend equal to 2 million (in the aggregate) to be paid by the Issuer by way of a distribution of share premium (prime d émission) after the closing of the Refinancing (as defined below) to holders of the preferred class B shares issued by the Issuer, but in principle no later than February 15, means the exchange offer and consent solicitation for the Existing Notes in exchange for the Exchange Notes, in connection with a refinancing of financial indebtedness of the Issuer as described in the Exchange Offer and Consent Solicitation Statement dated September 26, refers to an ordinary share issued by the Issuer with a par value of Euro on the Issue Date with rights (jouissance) as set forth herein. refers to holder(s) of Warrants. 2. TERMS AND CONDITIONS OF THE WARRANTS 2.1 Number, form of Warrants Negotiability (a) Each Warrant, subject to adjustments set forth below, gives the right to subscribe for one (1) newly-issued Share. An aggregate of up to to 58,549,200 Warrants will be attached to the Exchange Notes. 151

165 (b) (c) (d) (e) Warrants shall, when detached from the relevant Exchange Note, be in registered form (nominatif). Title to the Warrants held by Warrant Holders will be established and evidenced in accordance with Article L of the French Code monétaire et financier by bookentries (inscription en compte). No physical document of title (including certificats représentatifs pursuant to Article R of the French Code monétaire et financier) will be issued in respect of the Warrants. At the option of the relevant Warrant Holder, the Warrants may be held either in administered registered form (au nominatif administré), entered in the books of an Account Holder designated by the relevant Warrant Holder, or in fully registered form (au nominatif pur), entered in an account in the books of Euroclear France S.A. ( Euroclear France ) maintained by the Registration Agent. Warrants will detach from the Exchange Notes immediately upon issue on the Issue Date. The Warrants will be admitted to the operations of Euroclear France; the ISIN and common code attributed to the Warrants shall be published on the Issuer s website ( at the latest on the Issue Date. Any transfer of Warrants must comply with the provisions of the Novasep Securityholders Agreement dated March 15, 2012 (as may be amended from time to time, the Novasep Securityholders Agreement ) and shall be subject to the accession by the relevant transferee as Investor to the Novasep Securityholders Agreement pursuant to a duly executed accession agreement in the form contemplated by Schedule 10 to the Novasep Securityholders Agreement in accordance with Section 13.2 thereof (such form being obtainable upon request at the registered office of the Issuer). Subject to Condition 2.1(d) above, title to the Warrants in administered registered form (au nominatif administré) shall pass, and such Warrants may only be transferred, by registration of the transfer in the accounts of the Account Holders. Subject to Condition 2.1(d) above, title to Warrants in fully registered form (au nominatif pur) shall pass upon, and transfer of such Warrants may only be effected through, registration of the transfer in the accounts maintained by the Registration Agent. 2.2 Rights attached to Warrants Parity and Exercise Price (a) (b) Each Warrant will entitle its Warrant Holder to subscribe for a number of newly-issued Shares equal to the Exercise Ratio, at a price per each such newly-issued Share so subscribed equal to the Exercise Price. The Exercise Price shall be fully paid up in cash upon subscription. The Warrants may only be exercised in exchange for a whole number of Shares. No fractional Share will be issued upon exercise of a Warrant. If a Warrant Holder would be entitled to receive a fractional interest in a Share in respect of all Warrants exercised by such holder (such fractional interest being calculated after adding all Warrants exercised by such Warrant Holder), the Issuer will round down to the nearest whole number the number of Shares to be issued to such Warrant Holder and the Warrant Holder shall receive no compensation in respect of such fractional Share. 2.3 Conditions of exercise of the Warrants and Exercise Period (a) (b) The Warrants shall be exercisable from the Issue Date until the Maturity Date (the Exercise Period ). The Warrants not exercised as of or prior to 5 p.m. Central European Time on the Maturity Date shall be deemed null and void and shall be automatically cancelled. To exercise Warrants, each Warrant Holder must: (i) in the case of Warrant(s) in fully registered form (nominatif pur), send a request to the Centralizing Agent stating the number of Warrant(s) exercised and the amount 152

166 payable in respect of the Shares to be subscribed as a result of the exercise of the such Warrant(s); and (ii) (iii) (iv) (v) in the case of Warrant(s) in administered registered form (au nominatif administré), send a request to the financial intermediary in the books of which such Warrant(s) are inscribed; and pay the amount due to the Issuer as a result of the exercise of such Warrant(s). as of the date of exercise of any Warrant, make such acknowledgements, representations and warranties to the Issuer as the Issuer deems necessary or advisable to ensure that the issuance of Shares upon the exercise of such Warrant will be a transaction exempt from, or not subject to, any registration requirements, prospectus requirements or other filing requirements under the securities laws of any jurisdiction and is lawful under applicable securities laws; and execute and submit to Novasep or its agent any documents deemed necessary or advisable by Novasep to document the acknowledgements, representations and warranties required pursuant to clause (iv). The Exercise Date of any Warrant shall be the date on which the last of the following conditions is met: (i) (ii) (iii) (iv) in the case of Warrants in administered registered form (au nominatif administré) the Centralizing Agent has received the valid exercise request transmitted by the financial intermediary in the books of which the Warrants are inscribed; in the case of Warrants in fully registered form (nominatif pur), the Centralizing Agent has received a valid exercise request; where the Warrants are held in administered registered form (au nominatif administré), the Warrants in respect of which the exercise have been requested have been transferred to the Centralizing Agent; and the amount due to the Issuer as a result of the exercise of the Warrants is received by the Centralizing Agent. Delivery of Shares issued upon exercise of Warrants shall take place at the latest on the seventh (7th) Business Day after their exercise date. 2.4 Suspension of exercise of Warrants (a) In the event that new equity securities or new securities giving access to the capital of the Issuer or other financial transactions with a preferential subscription rights are issued, as well as in the case of merger (fusion) or of spin-off (scission) involving the Issuer, the Supervisory Board (Conseil de Surveillance) of the Issuer reserves the right to suspend the exercise of Warrants for a maximum period of three (3) months or any other timeframe fixed by the applicable French laws and regulations, and such suspension shall in no way cause the Warrant Holders to lose their right to subscribe to new Shares. In this case, notice to the Warrant Holders of the date from which the exercise of Warrants shall be suspended and the date on which it shall resume shall be given at least seven (7) days before the entry into force of the suspension in accordance with Article R of the French Code de commerce notwithstanding anything to the contrary contained herein. In the event of any suspension pursuant to this Condition 2.4, the Maturity Date shall be extended to the extent necessary to ensure there are no less than thirty (30) days after the expiration of such suspension period during which Warrant Holders can subscribe for Shares. 153

167 (b) Where circumstances occur allowing the exercise of drag along rights as contemplated by Section 11 of the Novasep Securityholders Agreement (including, subject to the terms and conditions of the Novasep Securityholders Agreement, an offer relating to Transfer (as defined in the Novasep Securityholders Agreement ) of at least 95% of the Shares, or an offer relating to the Transfer (as defined in the Novasep Securityholders Agreement) of 100% of the equity securities in NVHL S.A., a société anonyme organized under the laws of the Grand Duchy of Luxembourg, having its registered office at 20 rue de la Poste, L-2346, Luxembourg and registered with the Luxembourg Register of Commerce and Companies under number B ), the Issuer shall provide a notice (the Notification ) to the Warrant Holders by providing notice to any relevant clearing system through which the Warrants are for the time being cleared in accordance with Condition 5(b)(i) and by way of an avis financiers or equivalent in one major French financial newspaper and, in one major international financial newspaper, which Notification shall: (i) (ii) (iii) notify investors that a Drag Along Notice (as defined in the Novasep Securityholders Agreement) has been issued in accordance with the Novasep Securityholders Agreement; notify such Warrant Holders that, in accordance with the provisions of the Novasep Securityholders Agreement and subject to the terms of the Novasep Securityholders Agreement, except with the prior consent of the Majority Investor (as defined in the Novasep Securityholders Agreement) (i) their Warrants are inalienable and (ii) they may not exercise their Warrants, in each case until the first to occur of the following events : (i) the completion of the Drag-Along Transfer (as defined in the Novasep Securityholders Agreement), (ii) the date on which the Majority Investor notifies the Issuer in writing of its decision to no longer pursue the Drag-Along Transfer or (iii) twelve (12) months as from the date on which that the Drag-Along Notice was sent by the Majority Investor; and notify such Warrant Holders that if a Warrant Holder has failed to transfer any of its Warrants to the buyer or to fulfill any of its other obligations under the provisions of the Novasep Securityholders Agreement with respect to any of its Warrants as of the time of the completion of the Drag-Along Transfer (if any), any such Warrants that are not properly transferred will automatically become null and void and holders of any such Warrants will not receive any compensation or indemnity with respect to such Warrants. For the avoidance of doubt, the Notification to the Warrant Holders shall be provided by the Issuer immediately after the Drag-Along Notice is sent by the Majority Investor. 2.5 New Shares resulting from the Warrants exercise (a) The Shares subscribed upon exercise of the Warrants shall grant all rights (including dividend distributions) attached to Shares from the time as from the date of their subscription; provided, however, that such Shares will not entitle its holders to any right with respect to the Ordinary Share 2016 Dividend Distribution, irrespective of the issue date of such Share. Subject to the preceding paragraph, the Shares subscribed upon the exercise of the Warrants be subject to all provisions of the Issuer s bylaws, the decisions of the general meeting of the Issuer s Shareholders and the provisions of the Novasep Securityholders Agreement. (b) Subject to paragraph (a) above, these newly issued Shares shall be fully assimilated (assimilées) to the existing Shares as from their issue date. 2.6 Protection of Warrant Holders rights (a) In accordance with the provisions of Article L of the French Code de commerce, the 154

168 Issuer may change its corporate form or purpose without requesting authorization from the general assembly of the Warrant Holder. (b) (c) (d) Pursuant to Article L of the French Code de commerce, the Issuer may without the authorization of the general meeting of the Warrant Holders (i) modify the rules regarding the distribution of its profits (ii) redeem its share capital, and/or (iii) issue preference shares, provided that for as long as Warrants are outstanding, it shall take the measures necessary to preserve the rights of Warrant Holders, such measures being set out below. If the Issuer decides to issue new shares or securities giving access to the capital, conferring preferential subscription rights to its shareholders, to distribute reserves (in cash or in kind) or share premium or to change the distribution of its profits by creating preference shares or any transaction which may give rise to an adjustment, it shall inform the Warrant Holders in accordance with Article R of the French Code de commerce to the extent required by applicable laws and regulations. For the avoidance of doubt no such information shall be given in connection with the Ordinary Share 2016 Dividend Distribution and the Priority 2016 Dividend Distribution. In the event of any financial transaction involving the issue of securities by the Issuer conferring preferential subscription rights, the new Exercise Ratio will be equal to the Exercise Ratio in effect prior to the transaction in question multiplied by the following ratio: Value of a Share after detaching the preferential subscription rights + Value of the preferential subscription rights (Value of a Share after detaching the preferential subscription rights) The value of the Share after detaching the preferential subscription rights and or/the Value of the preferential subscription rights shall be determined by the Expert. (e) In the event of any free allotment of Shares, or any division or consolidation of the Shares, the new Exercise Ratio will be equal to the Exercise Ratio in effect prior to the transaction in question multiplied by the following ratio: Number of Shares comprising the share capital after such event Number of Shares comprising the share capital before such event (f) In the event of a distribution of reserves or issue premiums in kind or in cash by the Issuer, the new Exercise Ratio will be equal to the Exercise Ratio in effect prior to the transaction in question multiplied by the following ratio: Value of a Share prior to the relevant distribution (Value of a Share prior to the relevant distribution Amount per Share of the distribution or value of securities or assets distributed per Share) provided, however, that the Ordinary Share 2016 Dividend Distribution and the Priority 2016 Dividend Distribution shall not give rise to any adjustment of the Exercise Ratio pursuant to this Condition 2.6(f). (g) The value of the Share prior to the relevant distribution and or/the value of securities or assets distributed per Share shall be determined by the Expert. In case of modification of the distribution of profits and/or creation of new preferred shares resulting in such modification by the Issuer, the new Exercise Ratio shall be equal to the Exercise Ratio before the start of the transaction considered and the following ratio: Value of a Share before modification (Value of the Share before modification reduction per Share of the right to profits) The value of the Share before modification and/or the value of the reduction per Share on the right to profits shall be determined by the Expert. 155

169 If however these preferred shares are issued with preferential subscription rights of shareholders, the new Exercise Ratio shall be adjusted in accordance with Condition 2.6 (d) above. (h) (i) (j) In the case of absorption of the Issuer by another company or merger (fusion) with one or more companies in a new company or spin-off (scission), the exercise of the Warrants shall allow attribution of shares of the absorbing company or the new one or the companies that benefit from the spin-off. The new Exercise Ratio shall be determined by multiplying the Exercise Ratio applicable before the start of the transaction considered by the exchange ratio of the Shares against the shares of the absorbing company or the new one or the companies that benefit from the spin-off. These last companies shall be fully subrogated in the rights of the Issuer in its obligations towards the Warrant Holders. In the event of an increase of capital by incorporation of reserves, profits or issue premiums effected by increasing the nominal value of the Shares, the Exercise Ratio will not be adjusted, but the nominal value of the Shares which may be delivered to Warrant Holders upon exercise of any Warrant will be increased accordingly. In the event of a reduction of the share capital by a decrease in the number of Shares, the new Exercise Ratio will be equal to the product of the Exercise Ratio in effect before the decrease in the number of Shares and the following ratio: Number of Shares comprising the share capital after the reduction Number of Shares comprising the share capital before the reduction (k) In accordance with Article L of the French Code de commerce, in the event of a reduction of the share capital resulting from losses and effected through the decrease in the par value or of the number of Shares comprising the share capital, the rights of the Warrant Holders will be reduced accordingly, as if they had exercised their right to subscribe to new Shares in the Issuer before the date such share capital reduction occurred. (l) In the event that the Issuer would complete transactions for which an adjustment has not been made pursuant to Conditions 2.6(d) to 2.6(k) above and for which future laws or regulations would provide for an adjustment, this adjustment will be made in accordance with applicable laws and regulations and French market practices. A single transaction will not in any circumstances give rise to the application of more than one adjustment pursuant to Conditions 2.6(d) to 2.6(k) above. In the event that the Issuer would complete a transaction to which several adjustment events described above could apply, the first adjustments to be applied will be those provided by law. (m) (n) Any adjustment provided above will be determined as soon as possible by the Calculation Agent, in accordance with the above provisions, on the basis of the last previously determined Exercise Ratio calculated in accordance with the provisions above (or, if none, the initial Exercise Ratio), rounded to the nearest whole multiple of (with being rounded upwards) and notified to the Issuer. In the event of an adjustment of the Exercise Ratio, the Issuer will inform Warrant Holders by means of a notice addressed under the terms of Condition 5 no later than five (5) Business Days following the effective date of the new adjustment. Adjustments, calculations and determinations performed by the Calculation Agent or the Expert, pursuant to these Conditions shall be final and binding (save in the case of gross negligence (faute lourde), willful misconduct (dol) or manifest error) on the Issuer and, the Warrant Holders and (in the case of an calculation or determination by an Expert) the Calculation Agent. 156

170 The Calculation Agent may, subject to the provisions of the Calculation Agency Agreement, consult, on any matter (including but not limited to, any legal matter), with any legal or other professional adviser the Calculation Agent may, acting properly, deem necessary, and it shall be able to rely upon, and it shall not be liable and shall incur no liability as against the Issuer or the Warrant Holders in respect of anything done, or omitted to be done, relating to that matter in good faith in accordance with that adviser s opinion. The Calculation Agent shall not be under any duty to monitor whether any event or circumstance has happened or exists or may happen or exist and which requires or may require an adjustment to be made to the Exercise Ratio. The Calculation Agent (and any Expert appointed pursuant to these Conditions) shall act solely upon request from and as agent of the Issuer, and in accordance with these Conditions, and will not thereby assume any obligations towards or relationship of agency with, and it shall, to the extent permitted by law, not be liable and shall incur no liability as against, the Warrant Holders. 2.7 Representation of the Warrant Holders In accordance with Article L of the French Code de commerce, Warrant Holders will be grouped automatically for the defense of their respective common interests in a masse, which is a separate legal entity and will be governed by Article L et seq. of the French Code de commerce (hereinafter referred to as the Masse ). Warrants being attached to the Exchanges Notes issue outside of the Republic of France, the Masse will be also governed by the Articles L to L , L of the French Code de commerce and their respective applicable regulations. In accordance with Article L of the French Code de commerce, all decisions of the general assembly of the Warrant Holders require two-thirds (2/3) majority of the votes of the Warrant Holders present or represented. The initial Representative (the Representative ) shall be: MASSQUOTE S.A.S.U. RCS Nanterre 7 bis, rue de Neuilly F Clichy Mailing address: 33, rue Anna Jacquin Boulogne Billancourt France Represented by its Chairman The alternate representative (the Alternate Representative ) shall be: Gilbert Labachotte 8 Boulevard Jourdan Paris In the event of incompatibility, resignation or revocation of the Representative, such Representative will be replaced by the Alternate Representative. The Alternate Representative shall have the same powers as the Representative. In the event of death, incompatibility, resignation or revocation of the Alternate Representative, a replacement will be elected by a meeting of the general assembly of the Warrant Holders. The Representative (or the Alternate Representative, as the case may be) will be entitled to a remuneration of 500 per year, with respect to its duties. 157

171 The Representative (or the Alternate Representative, as the case may be), subject to the approval of two-thirds (2/3) majority of the votes of the Warrant Holders present or represented at the general assembly of the Warrant Holders, will be authorized to accept any amendment to the Novasep Securityholders Agreement in the name of and on behalf of all of the Warrant Holders. For the avoidance of doubt, each Warrant Holders shall comply with such decision of the general assembly of the Warrant Holders and with the amended provisions of the Novasep Securityholders Agreement. The appointment of the Representative (or the Alternate Representative, as the case may be) shall terminate automatically on the date of expiration of the Warrants. Such appointment shall, if applicable, be automatically extended until the final resolution of any proceedings in which the Representative (or the Alternate Representative, as the case may be) may be involved and the enforcement of any judgments or settlements relating thereto. 3. REGISTRATION AGENT, CENTRALIZING AGENT AND CALCULATION AGENT The name and specified offices of the initial Registration Agent, initial Centralizing Agent and the initial Calculation Agent are as follows: REGISTRATION AGENT AND CENTRALIZING AGENT SOCIETE GENERALE 32, rue du Champ de Tir CS Nantes Cedex 3 France CALCULATION AGENT Conv-Ex Advisors Limited 30 Crown Place London EC2A 4EB United Kingdom The Issuer reserves the right at any time to vary or terminate the appointment of the Registration Agent, the Centralizing Agent and/or the Calculation Agent and/or to appoint a substitute Registration Agent, Centralizing Agent and/or Calculation Agent, provided that, for so long as any Warrant is outstanding, there will at all times be a Registration Agent, a Centralizing Agent and a Calculation Agent. No such agent may resign its duties without a successor agent having being appointed. Warrant Holders shall be notified of any such appointment or termination in accordance with Condition FURTHER ISSUES AND ASSIMILATION The Issuer may from time to time without the consent of Warrant Holders issue further warrants to be assimilated (assimilables) with the Warrant, provided that such further warrants and the Warrants shall carry rights identical in all respects and that the terms of such further warrants shall provide for such assimilation. In the event of such an assimilation, the Warrant Holders and the holders of such further warrants will be grouped together in a single masse for the defense of their common interests. 5. NOTICES (a) Any notice or notification addressed to the Issuer should be sent to the following address: Novasep Holdings SAS, 39 rue St Jean de Dieu, Lyon, France. 158

172 (b) Any notification related to the Warrants after the Issue Date may be made (i) if the Warrants are being cleared through a Clearing System, the Centralizing Agent to Euroclear France, Euroclear, Clearstream, Luxembourg and/or any other clearing system through which the Warrants are for the time being cleared for communication by such clearing systems to the Warrant Holders or (ii) by mail to the Warrant Holders at their respective addresses as recorded in the book entry registration kept in accordance with Article L of the French Code monétaire et financier, in which case they will be deemed to have been given on the fourth (4th) weekday (being a day other than a Saturday or a Sunday) after the mailing or (iii) by in-person delivery. A notification directly handed shall be presumed sent and received at the date of the receipt. 6. GOVERNING LAW AND JURISDICTION 6.1 Governing Law The Warrants are governed by, and shall be construed in accordance with, the laws of the Republic of France. 6.2 Jurisdiction Any claim, legal action or proceeding arising out of or in connection with the Warrants shall be brought before the competent courts in Paris. 159

173 DESCRIPTION OF OTHER INDEBTEDNESS AND CERTAIN FINANCIAL ARRANGEMENTS Senior Secured Notes The outstanding Senior Secured Notes (the Existing Notes ) are due in December 2016 in the aggregate principal amount of $195,164,000. Interest on the Existing Notes accrues at 8% per annum and is paid semi-annually, each December 15 and June 15. The Existing Notes have been admitted for trading on the Euro MTF and are listed on the Official List of the Luxembourg Stock Exchange. The Indenture governing the Existing Notes contains a number of restrictive covenants which impose certain restrictions and limitations on its corporate actions, in particular relating to the incurrence of indebtedness, the granting of guarantees and security, the making of dividends and investments and the sale of assets. The Existing Notes are guaranteed by certain members of the Group and are secured by assets of the Group. See note 32.3 to Novasep s consolidated financial statements as of and for the year ended December 31, 2015 (attached hereto as Annex B). Cash Pooling Agreement To the extent possible, cash is managed by Groupe Novasep S.A.S. ( Groupe Novasep ) as a centralizing entity under our cash pooling agreement entered into on January 9, 2007, to which the following Group companies are parties; Groupe Novasep (the central cash pooler), Novasep Process SAS, Seripharm SAS, Finorga SAS, Dynamit Nobel Explosivstoff und Systemtechnik GmbH (DNES), Novasep, Inc., TangenX Technology Corporation, Novasep Holding, Henogen SA, and Novasep Deutschland GmbH. Advances made under the cash pooling agreement bear interest at 3-month EURIBOR (in case of EURdenominated advances) or 3 month LIBOR (in case of dollar-denominated advances), in each case increased by 2.10% per annum in case of advances made by any Group company to Groupe Novasep or by 2.15% per annum in case of advances made by Groupe Novasep to any other Group company. Interest is payable quarterly in arrears. The interest rates payable in respect of advances made by any group company may be amended each quarter by Groupe Novasep in case there is a change of the bank interest rates. Factoring arrangements Two factoring agreements were in place during the fiscal year ended December 31, 2015: (i) (ii) The French factoring agreement between the French operating entities of the Group and the factor (HSBC); and The German factoring agreement between the German entity and the factor (HSBC). Under these agreements, these entities are entitled to assign to the factor (HSBC), by way of subrogation and on a non-recourse basis, certain of its commercial receivables against pre-approved debtors, subject to eligibility criteria and within the limit of a maximum amount specified by the factor for each assigned debtor. The eligibility conditions as well as the maximum amount specified for each assigned debtor can be modified from time to time by the factor (HSBC). More information is available on the factoring in note 13 to Novasep s consolidated financial statements as of and for the year ended December 31, 2015 (attached hereto as Annex B). Capital Leases Our capital leases relate to tangible fixed assets such as buildings, industrial equipment and real estate, and, to a lesser extent, intangible fixed assets such as software. Under the terms of these capital leases, 160

174 the leasing company is the legal owner of the respective asset in some instances and a guarantee by a parent company of the entity entering into the leasing contract may be required by the leasing company. The term of the capital lease contracts varies between three and 15 years and we usually have an option to purchase the asset at the end of contract (generally at a purchase price of 1 or 1% of the cost of the related asset). Such financings may carry either fixed or variable interest rates; in some cases, when interests are variable, we may decide to cover the interest rate fluctuations risk by entering into interest rate hedges. We record such capital lease contracts in accordance with applicable IFRS standards, as described in the notes to our 2015 consolidated financial statements. More information is available on the capital leases in note 26.2 and note 9 to Novasep s consolidated financial statements as of and for the year ended December 31, 2015 (attached hereto as Annex B). Remaining amended notes formerly due 2016 As part of the 2012 Restructuring, the non-validly tendered notes were left outstanding following amendment. Approximately $196,800 remains outstanding under these notes, which mature in 2031 and accrue interest at 3% per annum, which can be payment-in-kind at the option of Novasep, and such notes do not benefit from any guarantees or security. 161

175 DESCRIPTION OF NOVASEP SHARE CAPITAL The following is a summary of the material rights and terms of the share capital of Novasep, based on Novasep s articles of association and the Novasep Securityholders Agreement, each to be in effect upon the completion of this Refinancing, and the French Commercial Code taking into account any proposed amendments described herein with respect to the Refinancing. In this section, we refer to Novasep s articles of association and the Novasep Securityholders Agreement, each to be in effect upon the completion of this Refinancing (subject to the approval by the respective parties or by the shareholders meeting of Novasep, as the case may be), as the Articles of Association and the Novasep Securityholders Agreement, respectively. The rights and terms of the share capital of Novasep may differ from those typically provided to shareholders of companies incorporated in the United States of America. This summary does not contain all information that may be important to you. To fully understand the rights and terms of the share capital of Novasep, you should refer to the Articles of Association and the Novasep Securityholders Agreement, copies of which can be made available to you by the Exchange Agent upon request. Capitalized terms used and not otherwise defined herein have the meanings attributed thereto in the Articles of Association or the Novasep Securityholders Agreement, as the context requires. Articles of Association General Novasep is a French société par actions simplifiée (a simplified joint stock company). Novasep s legal name is Novasep Holding and it was incorporated on February 27, Novasep is registered with the Trade and Companies Register of Nancy under number and its registered office is at Site Eiffel, boulevard de la Moselle, Pompey, France. Share Capital The share capital of Novasep following completion of the Refinancing will amount to 38,584, divided into 175,182,565 ordinary shares with a nominal value of each, 30,000,000 B Class preference Shares of 1 each (the B Preference Shares ) and 4,726 C Class shares of each (the C Shares ). Novasep has also issued (i) BSA A (as defined below) attached to the B Preference Shares issued to the benefit of Bpifrance, (ii) BSA B (as defined below) to the benefit of Romafi and (iii) Free Shares to the benefit of Managers. Type of equity Percentage Ownership Ordinary shares NVHL Azulis Free Shares 1 /C Shares 100 Managers and, following the expiry of the inalienability period and contribution of the C Shares, Management Company B Preference Shares 100 Bpifrance BSA A warrants Bpifrance BSA B warrants Romafi BSA C warrants Holders of the Exchange Notes 162

176 1 Giving the right to subscribe to ordinary shares of Novasep under certain circumstances. See Transfer of Free Shares. 2 Giving the right to subscribe to ordinary shares of Novasep under certain circumstances. See Rights of the BSA A. 3 Giving the right to subscribe to ordinary shares of Novasep under certain circumstances. See Rights of the BSA B. 3 Giving the right to subscribe to ordinary shares of Novasep. See Terms and Conditions of the Warrants. The shares may only be in registered form and ownership is evidenced by their registration in the shareholder s account in Novasep s share transfer register. Modification of Share Capital Novasep s share capital may be increased, reduced or redeemed by a collective decision of the shareholders. However, any modification to Novasep s articles of association (such as a modification of its share capital) is an Important Decision (as defined below) that requires the approval by a simple majority vote of the Supervisory Board prior to being requested by the shareholders. In addition to the pre-emptive and anti-dilution rights described below, in the case of an increase in capital by issuance of shares in exchange for a cash contribution, the existing shareholders have preferential subscription rights to the newly issued shares in proportion to their existing shareholdings in Novasep. Shareholders may waive their preferential subscription rights, or preferential subscription rights may be excluded, in whole or in part, by a collective decision of the shareholders. Rights of the Ordinary Shares Voting Each ordinary share entitles the holder thereof to one vote in collective decisions. Shareholders may be represented and vote by proxy in collective decisions. They may be represented by a proxy of their choice, regardless of whether such person is a shareholder of Novasep or not. Shareholders who have not voted or have not transmitted their vote within the requisite time period, if the consultation is in writing, are deemed to have voted against the proposed resolution. Share of Profits, Assets and Surplus The right of each holder of ordinary shares to the profits, corporate assets and liquidation surplus of Novasep is subject to the specific right attached to the B Preference Shares, and the contribution of each holder of ordinary shares to Novasep s losses is on a pro rata basis of the percentage of the capital it represents. Rights of the B Preference Shares held by Bpifrance Voting The B Preference Shares do not confer any voting rights. Transfer rights B Preference Shares may be transferred only in accordance with the Articles of Association and the Novasep Securityholders Agreement, namely with the consent of NVHL or following the exercise of the drag along or proportional tag along provisions in the Novasep Securityholders Agreement and Articles of Association. 163

177 Dividends and Distributions B Preference Shares have rights to a priority, cumulative and exclusive dividend, which is exclusive to any other right to a dividend distribution (the Priority Dividend ). The payment of the Priority Dividend takes priority over the payment of all distributions other than authorized distributions, which are defined as distributions drawn from distributable income or distributable reserves or premiums up to a limit of 350,000 per year and which B Preference Shares do not have the right to receive. Any payment of a Priority Dividend is deemed to be paid first on any prior unpaid Priority Dividend from previous financial years (including any capitalized interest accrued on such Priority Dividends). The right to a Priority Dividend is subject to (i) the existence of distributable funds (ii) the capacity to make such payments under finance documents which bind Novasep and (iii) to the decision of the holders of the ordinary shares to proceed with the distribution of the Priority Dividend and (iv) after allocations to the legal reserves have been made. Liquidation Preference In the event of Novasep s liquidation, the balance of proceeds following payment to third parties shall first be paid to the holders of B Preference Shares up to the value of the sum of (i) the subscription price of 30,000,000, (ii) the Annual Amount for the current financial year (calculated at the date of distribution) and (iii) any previous Annual Amounts not distributed to the B Preference Shares, including interest thereon calculated at an annual interest rate of 13%, which annual interest rate shall be increased to 14% as from closing of the Refinancing (or such other amended rate then applicable). The Annual Amount is equal to the subscription price of 30,000,000 multiplied by an annual interest rate of 13%, which annual interest rate shall be increased to 14% as from closing of the Refinancing (or such other amended rate then applicable), which is calculated at the end of each financial year. Rights of the C Shares Novasep implemented a Management Incentive Plan, under which the Managers have been or may be granted free shares under the French specific regime set forth under Articles L and seq. of the French Commercial code (the Free Shares ). Each right to Free Shares give right to one C Share. The Free Shares each have 1/100 th of the voting rights allocated to an ordinary share. The Free Shares/C Shares give their holders rights to capture a percentage (between 0% and 12.5%) of the equity value of Novasep (other than the Preference Shares subscribed to by Bpifrance) upon an Exit, subject to legal and contractual adjustments which may be triggered by certain operations within the context of the Refinancing based on the modification of the allocation of benefits between each of the share classes. If exercised, and provided the equity value upon Exit is higher than certain thresholds, the Free Shares would dilute the percentage of ordinary shares in Novasep held by NVHL and other shareholders. Voting Each C Share entitles the holder thereof to 1/100th of the voting rights allocated to an ordinary share. Transfer The Managers undertake to transfer their Free Shares to the Management Company following the inalienability period of such Free Shares. The Free Shares have a two (2) year vesting period and a two (2) year inalienability period. It is expected that part of the C Shares will be contributed to the Management Company following the Closing Date. In case of an Exit (other than an initial public offering of Novasep s securities) occurring before the expiry of the inalienability period of the Free Shares, the proportional drag along and tag along rights shall not apply to the Free Shares and the Managers shall be required to sell such shares to the potential purchaser upon expiry of the inalienability period at a price calculated on the basis of the price paid per ordinary share by the potential purchaser, calculated taking into account the number of ordinary shares for which the holders of Free Shares will be entitled to subscribe as at the Exit date. During the 164

178 inalienability period of the Free Shares and in the event of an initial public offering of Novasep s securities, Free Shares may not be transferred prior to the expiry of such inalienability period. The prior consent of NVHL is required to transfer the Free Shares prior to the expiry of the later of (i) an Exit or (ii) the last day of the inalienability period of the Free Shares. Conditions to Exercise of the C Shares The right under the C Shares to subscribe to the new ordinary shares will be effective on the later of: (i) completion of an Exit and (ii) the Business Day following the expiry of the inalienability period of the Free Shares, and will expire ten (10) Business Days thereafter. The economic value attached to the Free Shares varies depending on pre-determined ratios set forth in the terms and conditions of the C Shares (included in the Articles of Association). The ordinary shares in Novasep (including those issued as a result of the exercise of the C Shares) could be diluted by exercise of the Free Shares following an Exit. The Free Shares give their holders rights to capture a percentage (between 0% and 12.5%) of the equity value of Novasep (other than the B Preference Shares held by Bpifrance) upon an Exit. If exercised, and provided the equity value upon Exit is above certain thresholds, the Free Shares would dilute the percentage of ordinary shares in Novasep held by NVHL and other shareholders. Rights Attaching To New Shares Following Exercise Shares acquired following exercise of the BSA A will be subject to the Articles of Association, the collective decisions of the shareholders and the Novasep Securityholders Agreement, and will have the same rights as existing ordinary shares, as of the issuance. Rights of the BSA A Novasep has issued warrants to subscribe to ordinary shares ( BSA A ) which are attached to the B Preference Shares held by Bpifrance. The BSA A entitle their holders to subscribe in the aggregate to a number of ordinary shares such that, given the fixed strike price paid, their holders capture up to 5% of the total equity value of Novasep which is in excess of the equity value calculated on the basis of a 450,000,000 enterprise value. The exercise price of the BSA A is equal to 293,604,000 / 171,135,849 less the amount of any distribution of dividends, reserves or premiums made by the Company to holders of ordinary shares as from March 15, Transfer The BSA A shall only be transferred with the consent of NVHL or following the exercise of the drag along or proportional tag along provisions in the Novasep Securityholders Agreement and Articles of Association. Conditions to Exercise of the BSA A The BSA A may be exercised at any time during the period starting from the date the BSA A were issued (inclusive) and expiring on the first to occur of (i) the date seven (7) years after the date the BSA A were issued (inclusive), (ii) the day following exercise of the drag along provisions in the Articles of Association, (iii) the day following that of a transfer of more than 95% of the share capital of Novasep to a third party and (iv) the day following completion of an initial public offering of the shares of Novasep. If the BSA A are not exercised during the period above they shall lapse automatically and no amount shall be owed to BSA A holders. Rights Attaching To New Shares Following Exercise Shares acquired following exercise of the C Shares will be subject to Novasep s Articles of Association, the collective decisions of the shareholders and the Novasep Securityholders Agreement, and will have the same rights as existing ordinary shares, as of the issuance. 165

179 Conditions to Exercise of the BSA B The BSA B may be exercised at any time during the five (5) Business Day period following completion of the first to occur of (i) an initial public offering of NVHL or Novasep s securities or (ii) any transfer of securities or subscription of new securities entailing a change of control of NVHL s or Novasep s securities ( Exit ). The economic value attached to the BSA B varies depending on pre-determined ratios set forth in the terms and conditions of the BSA B (included in the Articles of Association). The exercise price of the BSA B is The ordinary shares in Novasep (including those issued as a result of the exercise of the BSA A) could be diluted by exercise of the BSA B following an Exit. The BSA B give their holders rights to capture a percentage (between 0% and 7.49%) of the equity value of Novasep (other than the B Preference Shares held by Bpifrance) upon an Exit. If exercised, and provided the equity value upon Exit is above certain thresholds, the BSA B would dilute the percentage of ordinary shares in Novasep held by NVHL and other shareholders. Rights of the Warrants Each Warrant will entitle its holder to subscribe for one (1) newly-issued ordinary share of the Issuer at an exercise price equal to its par value from time to time (such par value being equal to Euro on the Issue Closing Date) (the Exercise Price ), subject to any adjustment. The Exercise Price shall be fully paid up in cash upon subscription. The ordinary shares subscribed upon exercise of the Warrants will grant all rights attached to such ordinary shares; provided, however, that such shares will not entitle its holders to any right with respect to the Ordinary Share 2016 Dividend Distribution (as defined in The Refinancing ). Subject to the foregoing, these newly issued ordinary shares will be fully assimilated (assimilées) to the existing ordinary shares as from their issue date. Each Warrant will, when detached from the relevant Exchange Note, be held in registered form (nominatif). Title to the Warrants held by holders of Warrants will be established and evidenced by bookentries (inscription en compte). At the option of the relevant holder of Warrants, the Warrants may be held either in administered registered form (au nominatif administré) or, in fully registered form (au nominatif pur). Warrants will detach from the Exchange Notes immediately upon issue on the Issue Date. Conditions of Exercise of Warrants The Warrants will be exercisable from the Issue Date until the Maturity Date. The Warrants not exercised at 5 p.m., Central European Time, on the Maturity Date shall be deemed null and void and shall be automatically cancelled. Delivery of Shares issued upon exercise of Warrants shall take place at the latest on the fifth (5th) Business Day after their exercise date. Suspension of Exercise of Warrants In the event that new equity securities or new securities giving access to the capital of the Issuer or other financial transactions with a preferential subscription rights are issued, as well as in the case of merger (fusion) or of spin-off (scission) involving the Issuer, the Supervisory Board (Conseil de Surveillance) of the Issuer, upon giving the relevant notice to the holders of Warrants, reserves the right to suspend the exercise of Warrants for a maximum period of three (3) months or any other timeframe fixed by the applicable French laws and regulations. In the event of any suspension of the exercise of Warrants, the Maturity Date shall be extended to the extent necessary to ensure there are no less than thirty (30) days after the expiration of such suspension period during which holders of Warrants can subscribe for ordinary shares of the Issuer. Where circumstances occur allowing the exercise of drag along rights as contemplated by section 11 of the Novasep Securityholders Agreement (including, subject to the terms and conditions of the Novasep Securityholders Agreement, an offer relating to Transfer (as defined in the Novasep Securityholders Agreement) of at least 95% of the Shares, or an offer relating to the Transfer (as defined in the Novasep 166

180 Securityholders Agreement) of 100% of the equity securities in NVHL, a société anonyme organized under the laws of the Grand Duchy of Luxembourg, having its registered office at 20 rue de la Poste, L- 2346, Luxembourg and registered with the Luxembourg Register of Commerce and Companies under number B ), the Issuer shall provide a notice (the Notification ) to the holders of warrants by providing notice to any relevant clearing system and by way of an avis financiers or equivalent in one major French financial newspaper and in one major international financial newspaper, which Notification will: (a) notify investors that a Drag Along Notice (as defined in the Novasep Securityholders Agreement) has been issued in accordance with the Novasep Securityholders Agreement; (b) notify such holders of Warrants that, in accordance with the provisions of the Novasep Securityholders Agreement and subject to the terms of the Novasep Securityholders Agreement, except with the prior consent of the Majority Investor (as defined in the Novasep Securityholders Agreement) (i) their Warrants are inalienable and (ii) they may not exercise their Warrants, in each case until the first to occur of the following events: (i) the completion of the Drag-Along Transfer (as defined in the Novasep Securityholders Agreement), (ii) the date on which the Majority Investor notifies the Issuer in writing of its decision to no longer pursue the Drag-Along Transfer or (iii) twelve (12) months as from the date on which that the Drag-Along Notice was sent by the Majority Investor and (c) notify such holders of Warrants that if a holder of Warrants has failed to transfer any of its Warrants to the buyer or to fulfill any of its other obligations under the provisions of the Novasep Securityholders Agreement with respect to any of its Warrants as of the time of the completion of the Drag-Along Transfer (if any), any such Warrants that are not properly transferred will automatically become null and void and holders of any such Warrants will not receive any compensation or indemnity with respect to such Warrants. For the avoidance of doubt, the Notification to the Warrants Holders will be provided by the Issuer immediately after the Drag-Along Notice is sent by the Majority Investor. Transfer Rights Any transfer of Warrants must comply with the provisions of the Novasep Securityholders Agreement and shall be subject to the accession by the relevant transferee as Investor to the Novasep Securityholders Agreement pursuant to a duly executed accession agreement in the form contemplated by Schedule 10 to the Novasep Securityholders Agreement. For a description of the terms and conditions applicable to the Warrants, see Terms and Conditions of the Warrants. Transfer Price The transfer price for equity securities including the Free Shares but excluding B Preference Shares is equal to the purchase price of the equity securities being transferred (without applying a majority premium or a minority discount) less the subscription price of the ordinary shares. The transfer price for B Preference Shares is equal to the subscription price of such B Preference Shares (i.e. nominal value plus the amount of the issue premium relating to such B Preference Shares) plus the amount of the corresponding preference dividend unpaid to the holder of such shares on the date of the transfer. Collective Decisions of Shareholders Decisions on any of the following matters must be made by a collective decision of the shareholders: increase, reduction or redemption of share capital; issuance of any type of securities; merger, spin-off or partial hive-down; 167

181 dissolution or extension of the term of Novasep; appointment of the statutory auditors; approval of the annual accounts, related party agreements and allocation of profits; appointment, remuneration, renewal of term of office and dismissal of the President; amendment of the Articles of Association except for the transfer of the registered office; change in the form of Novasep; or appointment of a liquidator or liquidation. All other decisions are within the powers of the Supervisory Board or the President. Form of Collective Decisions Shareholders collective decisions are taken as often as it is in the interest of Novasep either upon request of the President, the Supervisory Board, one or more shareholders or the incumbent statutory auditor. Collective decisions may be made at a shareholders meeting, in a written consultation or in a private agreement. Any means of communication may be used to vote, except for decisions made by written agreement which must be executed by all holders of ordinary shares. In the case of a meeting, the shareholders, the incumbent statutory auditor and the President must be notified by any means of communication (including orally) at least seven (7) days prior to the meeting. However, it is generally admitted that, if all shareholders are present or represented, the meeting may be validly held notwithstanding any failure to give proper notice. In the case of a written consultation, the initiator of the written consultation will provide the agenda by any means of communication to all shareholders and the incumbent statutory auditor, with a copy to the President. The shareholders shall vote by providing notice to the President within five (5) Business Days from the date the agenda was provided. A collective decision may also be taken by a written agreement in the form of minutes that has been signed by all holders of ordinary shares. Quorum and Approval Collective decisions taken during a meeting or by written consultation may only be adopted if the shareholders present, represented by proxy or voting by any other means of communication own at least 50% of the voting rights. Unless otherwise provided, collective decisions must be approved by more than half of the voting rights held by the shareholders present, represented or voting by any other means of communication at such meeting. Each holder of ordinary shares shall have a number of votes equal to the number of ordinary shares owned. However, in accordance with the French Code de Commerce, the adoption or amendment of any provision of the Articles of Association regarding the following requires unanimous consent by all shareholders: temporary inalienability of shares (not exceeding ten (10) years); consent to share transfers; exclusion of a shareholder and/or suspension of non-pecuniary rights of the shareholder; exclusion of a shareholder in the event of a change in control of such shareholder and/or suspension of non-pecuniary rights of the shareholder; or 168

182 change in the form of the company into a société en nom collectif. Merger and Division During the period starting from the date of the Novasep Securityholders Agreement and ending on the date Bpifrance ceases to hold the B Preference Shares (the Specific Period ), any merger, acquisition, disposal, joint venture transaction or the creation of subsidiaries involving any group companies over an amount equal to Novasep s consolidated EBITDA for the most recent 12-month period is a Specific Decision and requires the approval by a simple majority vote of the Supervisory Board and shall not be adopted if at least one of the members of the Supervisory Board designated for appointment by Bpifrance has not voted in favor of the relevant Specific Decision. Any decisions relating to merger, demerger, spin-off or partial hive-down of Novasep shall be made by a collective decision of the shareholders. Liquidation and Winding-Up The shareholders are only liable for the debts and liabilities of Novasep up to the amount of their contributions to the share capital. If, as a result of losses recorded in the accounts, shareholders equity in Novasep falls to an amount lower than one half of the share capital, the President must call for a collective decision of the shareholders within four (4) months following the approval of the accounts showing such losses, to decide whether it is appropriate to wind up Novasep. If shareholders decide against winding up Novasep, the share capital must be reduced in an amount equal to the losses which could not be set off against the reserves at the latest on the closing date of the second financial year following the financial year in which the losses were recorded. Upon expiration of the term set by the Articles of Association or if Novasep is wound up before its term, the shareholders shall settle the terms and conditions of the liquidation and appoint one or several liquidators and decide on their powers and remuneration. The winding-up shall end the office of the President. The office of statutory auditor shall continue unless otherwise decided by the shareholders. Subject to the specific rights of the B Preference Shares to the liquidation preference described above, the net profit of the liquidation, after repayment to the shareholders of the nominal value before depreciation of their shares, is split among the shareholders in proportion to their participation in the share capital. Distributions and Dividends After approval of the annual accounts and determination of the profits available for distribution, subject to the rights of the B Preference Shares described above, the shareholders may decide how to allocate, use, carry forward or distribute such profits. The shareholders may decide to distribute dividends out of the available reserve accounts, however dividends shall first be deducted from profits available for distribution in the current year. The shareholders may decide to grant the option of payment in cash or in shares for all or part of the dividends or interim dividends to be distributed. Certain Rights and Obligations Under the Articles of Association, Novasep shareholders have certain of the same rights and obligations as provided in the Novasep Securityholders Agreement and described below, including pre-emption, tag along and drag along rights, provisions regarding complex sales, provisions regarding management including the manner of taking Important Decisions and Specific Decisions, restrictions on transfer and temporary inalienability of certain shares. The Novasep Securityholders Agreement Corporate Governance 169

183 President Novasep is managed and represented in dealings with third parties by a President under the supervision of a Supervisory Board. The current President appointed pursuant to the Novasep Securityholders Agreement is Mr. Michel Spagnol. The President is appointed or removed by shareholders by a simple majority vote. If the President is removed during the Specific Period, the Supervisory Board in consultation with Bpifrance shall identify suitable candidates to act as a new President. NVHL shall also identify candidates it wishes to appoint as President. During this time an interim President may be appointed by a simple majority vote of the shareholders for a period of up to nine (9) months. If after the end of nine (9) months a suitable candidate cannot be found, the shareholders may appoint by a simple majority vote any candidate proposed by NVHL, or any candidate having a graduate degree and management experience in the pharmaceutical or any similar industry, as President. If the President is removed after the expiry of the Specific Period, the replacement of the President shall be decided by the shareholders meeting by a simple majority vote, without the need to comply with the procedure during the Specific Period, set out above. Composition of the Supervisory Board The Supervisory Board comprises a minimum of three (3) and a maximum of nine (9) members and shall be composed of: (i) (ii) (iii) (iv) one (1) to five (5) members appointed by NVHL; one (1) to two (2) members appointed by Bpifrance, for so long as it holds B Preference Shares; the President of Novasep; and one (1) independent member designated for appointment by NVHL with, for so long as it holds company equity securities, the mutual agreement of Bpifrance. Each member shall be entitled to one vote, save in the case of NVHL whose appointed members shall have five (5) votes notwithstanding that their number is fewer than five, so that in the event of NVHL appointing a number less than five, each of its members shall have such number of votes as is equal to five divided by the total number of members appointed by NVHL. For so long as it holds B Preference Shares, Bpifrance s appointed members shall have two (2) votes notwithstanding that their number is fewer than two, so that in the event of Bpifrance appointing a number less than two, each of its members shall have such number of votes as is equal to two divided by the total number of members appointed by Bpifrance. For so long as Bpifrance holds equity securities, the independent member may only be removed or, in the event of vacancy, replaced, with the approval of NVHL and Bpifrance. For so long as it holds at least 80% of the equity securities of Novasep that it subscribed for on or prior to March 15, 2012, Azulis shall have the right to appoint a non-voting observer who shall be entitled to attend all meetings of the Supervisory Board and receive the same information as the voting members. Meetings and Decisions of the Supervisory Board Supervisory board meetings shall only be quorate if members of the Supervisory Board representing at least 50% of the voting rights at the Supervisory Board are present, represented, or take part in the voting through any other means. All decisions of the Supervisory Board shall be taken by a simple majority vote of such members present, represented, or taking part in the voting through any other means. Important Decisions The following decisions (the Important Decisions ) require approval by simple majority of the Supervisory Board prior to being taken by the President or requested by the shareholders: 170

184 adoption of or modification to the annual budget and business plan; any acquisition, subscription, exchange or transfer by Novasep, in one or several installments, directly or indirectly through a subsidiary, and in any form whatsoever, whose amount would exceed 1 million per transaction, unless this transaction has been identified and planned in the annual budget; any acquisition or transfer by Novasep, directly or indirectly through a subsidiary, of property assets for an amount, per transaction, exceeding 1 million; the issue or transfer of any security of a subsidiary; any transaction or operation affecting share capital of any group company, including but without limitation, the admission of the shares of any Group Company to trading on a regulated market, the choice of the public offering procedure and the investment bank; unless planned in the annual budget, any conclusion of, amendment of or any early repayment of borrowings of a principal amount greater than 1 million per transaction; the giving of any charge, pledge, security or guarantee for any amount in excess of 1 million per transaction; any acquisition or transfer by Novasep in one or several installments, directly or indirectly through a subsidiary, of a shareholding in an entity where the liability of the shareholder is not limited to its contributions; the creation, dissolution, merger, de-merger, transfer of all assets and liabilities, contribution, acquisition or disposal or restructuring of any entity; entry into joint ventures or co-operation agreements having a significant impact on the activity of the Group companies or which would result in a maximum annual commitment greater than 500,000; any agreement between one of the Novasep Group companies and one of its direct or indirect shareholders or partners which is not an ordinary transaction and any amendment to, or waiver of, a right or condition by a Novasep group company under such an agreement; commencement, management or conclusion of judicial, administrative or arbitration proceedings where the amount claimed is greater than 200,000; any modification of the Articles of Association; the appointment or dismissal of any statutory auditor of any of the Novasep Group companies; approval of annual accounts and any change pertaining to the accountings methods and principles used with regards to the preparation of the Company s or any Subsidiary s accounts; any act or omission which would constitute an event of default, cause acceleration or cause the enforcement of security interests under financing documentation; the implementation or modification of any equity or bonus plan for employees; the appointment, recruitment and removal of the top five senior executive officers of the companies in Novasep s Group; any decision outside the normal course of business; the direction of voting rights with regards to the interest in the share capital in any other entity relating to decisions similar to those described above; and any undertaking to perform any of the acts referred to above. Specific Decisions Decisions which, during the Specific Period, require the approval of a simple majority of the Supervisory Board and all of the members of the Supervisory Board appointed by Bpifrance include the following (the Specific Decisions ): any merger, acquisition, disposal, joint venture or the creation of subsidiaries above a specified level; any investments and divestments in an individual amount above a specified level; incurring new indebtedness above a specified level and any distributions of dividends above a specified level; the transfer of the registered office of Novasep or its subsidiaries outside of France; 171

185 any transactions between group companies on the one hand and shareholders of Novasep or NVHL or any of their respective affiliates on the other hand which are not in the ordinary course of business and on an arm s length basis; replacement of the President during the Specific Period according to the provisions of the Novasep Securityholders Agreement described above; amendment to the Articles of Association of any group company negatively affecting Bpifrance s rights; any fundamental change of business strategy or activities; and the transfer or issue of shares in one of Novasep s subsidiaries to a third party that is a competitor other than in the context of a change in control or initial public offering. Business Plan and Budget Policy The President shall submit to the Supervisory Board, at the latest thirty (30) days prior to the end of each financial year, a detailed draft annual budget for the Group companies with segmentation per Group company. The annual budget shall be prepared in coordination with the management bodies of the Group companies in a form to be defined by the Supervisory Board and may not be adopted or implemented prior to its approval by the Supervisory Board. For each financial year, the President shall revise, in coordination with the management bodies of the Group companies, the then-current business plan for the next three (3) financial years of operation of the Group companies The President must submit the revised business plan to the Supervisory Board for approval at the latest sixty (60) days after the end of each financial year. Periodic Information The President is required to post on Novasep s website and send to NVHL information similar to the reports that Novasep has historically sent to its noteholders. NVHL is required to regularly provide information to Novasep and, for so long as it holds equity securities Bpifrance, with respect to the identity of the five main shareholders of NVHL and details of the key managers thereof. Transfer Unless the prior consent of NVHL has been obtained, none of Bpifrance, Azulis, the Managers, Romafi, Roger-Marc Nicoud or holders of equity securities in Novasep (including holders of Warrants and Warrant Shares) may transfer Novasep equity securities held by them unless the transferor transfers an equal percentage of all other Novasep equity securities they hold at the relevant time in order to maintain the ratio of different securities held by them. Provisions of the Novasep Securityholders Agreement regarding temporary inalienability, exit, preemption, tag along and drag along shall not apply to any transfer of equity securities by NVHL, Bpifrance, Azulis and Romafi to an affiliated entity, Free Shares by the Managers to the Management Company, or to transfers (by way of contribution in kind and not by sale for cash) by Azulis of equity securities to an entity controlled by Roger-Marc Nicoud. All such transfers are subject to the transferee acceding to the Novasep Securityholders Agreement. A person who is not already a shareholder is required to adhere to and comply with the full terms of the Novasep Securityholders Agreement prior to a transfer of equity securities to them (see Accession below). Temporary Inalienability The prior consent of NVHL is required for any transfer of (i) equity securities by Romafi, Roger-Marc Nicoud (other than to an entity he controls) or the Managers (or the Management Company), (ii) B Preference Shares or BSA A by their holders prior to a change in control or an initial public offering and (iii) Free Shares/C Shares issued to the Managers prior to the expiry of the later to occur of a change of 172

186 control of NVHL or of Novasep or an initial public offering of Novasep s securities and the expiry of the inalienability period attached to such shares. Transfer of equity securities to a trade competitor of Novasep during the Specific Period is subject to the prior consent of Bpifrance and NVHL unless in the context of a change of control of NVHL or of Novasep or an initial public offering of Novasep s securities. The temporary inalienability restrictions described above shall not prevent NVHL s securityholders from transferring their equity securities in NVHL. Pre-emption Rights NVHL shall have a right of pre-emption over any ordinary shares proposed to be transferred by Bpifrance, Azulis, the Managers (or the Management Company), Romafi, Roger-Marc Nicoud or Warrant Exercise Shareholders. Prior to any such transfer, the transferor is required to send a notice to NVHL, together with a copy of the offer to purchase specifying the material terms and conditions of the transfer. NVHL may elect to exercise its right of pre-emption within thirty (30) days of receipt of the notice and the transfer of the offered securities of NVHL is required to be completed within a further period of three (3) months from the date the pre-emption right was effectively waived. NVHL may elect to substitute in whole or in part any of its shareholders or of its affiliated entities in the exercise or the benefit of its right of pre-emption. If NVHL elects not to exercise its right of pre-emption, all the ordinary shares (but not part only) may be transferred to the potential purchaser subject to such transfer taking place within a further period of three (3) months according to the terms and conditions indicated in the notice. A failure on the part of the transferor or the potential purchaser to complete the purchase of the ordinary shares within a period of three (3) months, or in the event of modification of the terms and conditions indicated in the notice, shall require such shares to be re-offered to NVHL. Tag Along Rights In the event of a transfer of more than 50% of the share capital and voting rights of NVHL to one or more third parties in one transaction or a series of related transactions or a transfer by NVHL of more than 50% of the share capital and voting rights in Novasep to one or more third parties in one transaction or a series of related transactions, Bpifrance, Azulis, the Managers, Romafi, Roger-Marc Nicoud, and any holders of equity securities in Novasep (including holders of Warrants and Warrant Exercise Shareholders) shall be entitled to benefit from proportional tag along rights, subject to delivery to them of a notice specifying the material terms and conditions of the offer, including the consideration offered by the potential purchaser and if such consideration does not consist exclusively of cash or liquid securities, a valuation of the consideration being offered. The tag along beneficiaries shall have a period of fifteen (15) days to notify NVHL of their wish to exercise their proportional tag along right and the shares they wish to transfer failing which such beneficiaries shall be deemed to have waived their tag along right. Drag Along Rights In the event NVHL receives an offer from a buyer which is not (i) an affiliate of NVHL or (ii) one of its two largest shareholders, relating to the transfer of at least 95% of the ordinary shares of Novasep that it wishes to accept, NVHL shall be entitled to require Bpifrance, Azulis, the Managers, Romafi, Roger- Marc Nicoud, and holders of equity securities in Novasep (including holders of Warrants and Warrant Exercise Shareholders) to transfer their equity securities in Novasep to the buyer. NVHL shall deliver a notice to such investors and Novasep specifying the material terms and conditions of the offer, including the consideration offered by the buyer and if such consideration does not consist exclusively of cash or liquid securities, a valuation of the consideration being offered. Upon receipt of such notice, Novasep s equity securities shall be inalienable except with the prior consent of the NVHL, and any equity securities that give or may give access, whether directly or indirectly, immediately or in future, to the share capital of Novasep, may not be converted, exchanged, reimbursed or exercised in any manner whatsoever, until the earliest of (i) the completion of the drag-along transfer, (ii) the date on which NVHL notifies of its decision to no longer pursue the drag-along transfer or (iii) twelve (12) months as from the date of sending of the notice. In the event NVHL receives a notice from its two largest shareholders that they have received an offer to transfer 100% of NVHL s equity securities that they wish to accept, NVHL shall be entitled to require 173

187 Bpifrance, Azulis, the Managers, Romafi, Roger-Marc Nicoud, and holders of equity securities in Novasep (including holders of Warrants and Warrant Exercise Shareholders) to transfer their Novasep equity securities to the buyer. NVHL shall deliver a notice to such investors and Novasep specifying the name of the buyer, the number of equity securities that are the subject of the transfer, the price offered by the buyer and any other material terms and conditions of the offer, including the consideration offered by the buyer and if such consideration does not consist exclusively of cash or liquid securities, a valuation of the consideration being offered. Exit and Initial Public Offerings Exit Process The Novasep Securityholders Agreement contains provisions which require NVHL, provided that it holds more than 50% of the voting rights in Novasep, and Bpifrance, provided it holds B Preference Shares or holds 5% or more of the ordinary share capital, to work together with advisers appointed by NVHL to assess the suitability of an offer if NVHL receives an unsolicited offer which would result in a change of control of Novasep. For so long as NVHL holds more than 50% of the voting rights in Novasep, it shall have the right to decide in its entire discretion on the method and implementation of the exit process. Initial Public Offering NVHL has the right at any time to propose to the Supervisory Board that it consider the admission of the shares of Novasep to trading on the Paris market of Euronext or any other regulated market having a similar liquidity. If the Supervisory Board decides that an initial public offering ( IPO ) is appropriate, it shall be responsible for appointing one or more investment banks to advise Novasep on the IPO. Commission and fees of the investment bank involved on the IPO are payable by shareholders pro rata based on the respective number of shares they sell. Each holder of equity securities other than ordinary shares undertakes, at the request of NVHL, to convert, exchange, exercise or request redemption of all equity securities or take all necessary measures in order to facilitate the IPO and to eliminate any potential dilution of the share capital of Novasep. A failure by such holder to vote in favor of any conversion or redemption shall entitle Novasep to purchase all such shares at a price per B Preference Share of 50% of the subscription price plus the amount of unpaid preference dividend, and a price per ordinary share equal to the price received by the selling shareholders in the IPO. If, at the time of an exit, Roger-Marc Nicoud is no longer the President and an auction to sell Novasep is being undertaken, NVHL agrees to provide Roger-Marc Nicoud with relevant information pertaining to the auction. Roger-Marc Nicoud shall not be entitled to receive such information if he has resigned in the preceding 12-month period. Transfer of Free Shares/C Shares The Managers have agreed to transfer their Free Shares to the Management Company following the inalienability period of such Free Shares. It is expected that part of the C Shares will be contributed to the Management Company following the Closing Date. In case of an Exit (other than IPO) occurring before the expiry of the inalienability period of the Free Shares, the proportional drag along and tag along rights shall not apply to the Free Shares and the Managers shall be required to sell such shares to the potential purchaser upon expiry of the inalienability period at a price calculated on the basis of the price paid per ordinary share by the potential purchaser, calculated taking into account the number of ordinary shares that the holders of Free Shares will be entitled to subscribe as at the Exit date. During the inalienability period of the Free Shares and in the event of an initial public offering of Novasep s securities, Free Shares may not be transferred prior to the expiry of such inalienability period. Upon the expiry of the Inalienability Period, the prior consent of NVHL is required to transfer the Free Shares prior to the expiry of the later of (i) an Exit or (ii) the last day of the inalienability period of the Free Shares. 174

188 The right under the Free Shares to subscribe to the new ordinary shares will be effective on the later of: (i) completion of an Exit and (ii) the Business Day following the expiry of the inalienability period of the Free Shares, and will expire ten (10) Business Days thereafter. The economic value attached to the Free Shares varies in accordance with pre-determined ratios set forth in the Articles of Association. The Free Shares give their holders rights to capture a percentage (between 0% and 12.5%) of the equity value of Novasep (other than the B Preference Shares subscribed to by Bpifrance) upon an Exit, subject to legal and contractual adjustments which may be triggered by certain operations within the context of the Refinancing based on the modification of the allocation of benefits between each of the share classes. If exercised, and provided the equity value upon Exit is higher than certain thresholds, the Free Shares would dilute the percentage of ordinary shares in Novasep held by NVHL and other shareholders. Anti-dilution In case of issuances by Novasep of new equity securities to which NVHL participates, Bpifrance, Azulis, the Managers (and/or the Management Company), Roger-Marc Nicoud shall have the right to participate to that issuance at the same price and under the same conditions as the NVHL, pro-rata their respective shareholding in Novasep. No new Novasep equity securities shall be issued through suppression of the preferential subscription right (droit préférentiel de souscription), to the NVHL, the majority shareholders of NVHL and/or their affiliates if Bpifrance, Azulis, Roger-Marc Nicoud and the Managers (and/or the Management Company) are not entitled to participate at the same price and under the same conditions as the subscribers, pro-rata their respective shareholding in Novasep. Complex Sales The Novasep Securityholders Agreement contains provisions dealing with disagreements on valuation of consideration, which is not exclusively cash or liquid securities, offered by a potential purchaser pursuant to the drag along or tag along provisions. Any such disagreement may be referred by the disagreeing party(ies) to an international audit firm for the purposes of valuing the consideration being offered. The costs of the valuation shall be borne equally between NVHL and the disagreeing party(ies). Buy-Back At any time, Novasep may notify the holders of B Preference Shares that it wishes to buy-back and cancel all or part of the outstanding B Preference Shares. A notice by Novasep shall include the total number of B Preference Shares which it proposes to buy back, the date of completion of the buy back, which is to be no later than four (4) months from the date of the notice, and the price per B Preference Share. Each holder of B Preference Shares has a period of fifteen (15) days to decide whether or not they agree with the proposed buy back. If one or more holders of B Preference Shares refuses to transfer their holding (the Remaining Holders ), such Remaining Holders irrevocably undertake to adopt a revised preference dividend (which means a revised annual interest rate that shall in no event be lower than 8% or higher than 14% per annum) and shall following each anniversary of the adoption of the revised preference dividend, vote in favor of the adjusted revised performance dividend calculated for the next twelve (12) months. If adoption of the revised preference dividend cannot be implemented as a result of a failure by one or more Remaining Holder to vote in favor of it, Novasep may, by notice to the Remaining Holders, elect to buy back the B Preference Shares at their subscription price plus unpaid dividends. Following receipt of such notice, the Remaining Holders undertake to transfer all of their B Preference Shares to Novasep and the buyback shall be completed within six (6) months. Novasep shall have the right to buy back and cancel Bpifrance s B Preference Shares within two (2) months following any failure by the member of the Supervisory Board appointed by Bpifrance to vote in favor of (i) a Specific Decision where such Specific Decision has been approved by a majority of the other members of the Supervisory Board or (ii) the appointment of a candidate proposed by NVHL as a 175

189 replacement President. Novasep shall also have the right to buy back and cancel Bpifrance s B Preference Shares within thirty (30) days of delivery of a drag along notice. The price of such shares bought back shall be the subscription price plus unpaid dividends. Novasep shall be deemed to have waived its right to buy back Bpifrance s B Preference Shares in the event it does not provide Bpifrance with notice of the buy back within applicable time notices. Any exercise by Novasep of its right to purchase Bpifrance s B Preference Shares must be completed within four (4) months to twelve (12) months of the notification, depending on the buy-back trigger. Bpifrance Put Option Where an offer is received pursuant to the drag along provisions of the Novasep Securityholders Agreement and the consideration offered does not consist of exclusively cash or liquid securities, Bpifrance has the right to transfer all of its B Preference Shares to Novasep. Following receipt by Novasep of notice of Bpifrance s desire to transfer its B Preference Shares, Novasep shall be required to purchase such shares at subscription price plus unpaid dividends. The completion of the buyback of the B Preference Shares shall be completed on the same date as the transfer of equity securities pursuant to the drag along provisions. Any disagreement on price of the B Preference Shares may be referred to an international audit firm established in Paris and appointed by mutual agreement between Bpifrance and Novasep (or, if they fail to agree within eight (8) days, by order of the president of the commercial court of Paris upon filing of a writ of urgent summary proceedings) which shall value the shares, the costs of which shall be borne equally by Bpifrance and Novasep. Dividend Policy Novasep s dividend policy is to proceed with an annual distribution of at least 350,000, subject to availability of funds, to the existence of distributable amounts and to capacity to make such payments under finance documents which bind Novasep and unless otherwise determined by the shareholders meeting. Accession In the event of a contemplated transfer of Novasep equity securities (including Warrants and Warrant Shares), other in the context of a change of control, a drag-along transfer or an IPO, to an entity which is not a party to the Novasep Securityholders Agreement, the parties to this transfer may complete it only if, prior to the contemplated transfer, they send to Supervisory Board, with a copy to each of the parties to the Novasep Securityholders Agreement, an unreserved accession agreement to the Novasep Securityholders Agreement duly executed by the beneficiary of the transfer. The accession agreement will be deemed to be approved when it shall be countersigned by Supervisory Board and purchaser of the Novasep equity securities and each of the other parties are notified as soon as possible. Any entity which is not a party to the Novasep Securityholders Agreement and which acceded to the Novasep Securityholders Agreement, shall acquire, for the purpose of the Novasep Securityholders Agreement, the status of Investor (except in certain specific cases). Duration The Novasep Securityholders Agreement shall last for a period of ten (10) years from March 15, 2012 except that it shall expire (i) on the listing date in the event of an IPO, (ii) the date on which equity securities are transferred by NVHL pursuant to drag along rights or (iii) following a change of control of Novasep, provided that NVHL, Roger-Marc Nicoud and Azulis are treated pari passu with respect to their liquidity rights under the new contractual documentation entered into with the new controlling shareholder. Governing Law The Novasep Securityholders Agreement is governed by French law and any dispute shall be exclusively submitted to the jurisdiction of the Commercial Court in Paris. Miscellaneous French law provisions relating to Novasep Share Capital 176

190 Ownership of Shares by Non-French Residents and foreign investment control Neither the French Commercial Code nor the Articles of Association presently imposes any restrictions on the right of non-french residents or non-french shareholders to own and vote shares. However, residents outside of France, as well as any French entity controlled by non-french residents, must file an administrative notice with French authorities in connection with the acquisition of a controlling interest, or leading non-french residents to hold a controlling interest, in Novasep or the acquisition of a controlling interest in any foreign entity holding a controlling interest in Novasep. Pursuant to applicable laws and regulations, ownership of 33.33% or more of Novasep s share capital or voting rights is regarded as a controlling interest. However, any operation resulting in a non-resident company exercising de facto control of a French company is regarded as a controlling interest regardless of the percentage of share capital owned by non-residents. Such operations include the granting of substantial loans and guarantees in amounts evidencing control over financing of the company and granting of patent licenses by an acquiring party or management or technical assistance agreements with such acquiring party that place the French company in a dependent position vis-à-vis such party or its group. Foreign Exchange Controls Under current French foreign exchange control regulations there are no limitations on the amount of cash payments that we may remit to residents of foreign countries. Laws and regulations concerning foreign exchange controls do, however, require that all payments or transfers of funds made by a French resident to a non-resident be handled by an accredited intermediary. All registered banks and substantially all credit institutions in France are accredited intermediaries. Availability of Preferential Subscription Rights Under French law, shareholders have preferential rights to subscribe for cash issues of new shares or other securities giving rights to acquire additional shares on a pro rata basis. Holders of Novasep s securities in the U.S. may not be able to exercise preferential subscription rights for their securities unless a registration statement under the Securities Act is effective with respect to such rights or an exemption from the registration requirements imposed by the Securities Act is available. Novasep may, from time to time, issue new shares or other securities giving rights to acquire additional shares (such as warrants) at a time when no registration statement is in effect and no Securities Act exemption is available. If so, holders of our securities in the U.S. will be unable to exercise any preferential subscription rights and their interests will be diluted. Novasep is under no obligation to file any registration statement in connection with any issuance of new shares or other securities. Novasep intends to evaluate at the time of any rights offering the costs and potential liabilities associated with registering the rights, as well as the indirect benefits to us of enabling the exercise by holders of shares in the U.S. to exercise the rights, and any other factors Novasep considers appropriate at the time, and then to make a decision as to whether to register the rights. Novasep cannot assure you that they will file a registration statement. 177

191 Novasep MANAGEMENT Novasep was formed as a société par actions simplifiée incorporated and organized under the laws of France in November Its corporate name was originally Financière Ginova, and was changed into Novasep Holding on January 9, In accordance with Novasep s by-laws, it is managed by an executive chairman or President (the President ) under the supervision of a supervisory board (the Supervisory Board ). President Subject to specific decisions that shall be decided by the shareholders meeting or require the prior approval of the Supervisory Board, the President of Novasep manages the business activities of Novasep and is vested with authority to make any decisions on behalf of the company and to represent the company vis-à-vis third parties, within the limits of the corporate purpose of Novasep. The President of Novasep is the Group Chief Executive Officer (Group CEO) of the Group. Supervisory Board The persons set forth below were the members of the Supervisory Board of Novasep as of December 31, 2015: Name Position Mr. Michel Spagnol... Chairman of the Supervisory Board and CEO of the Group. Mr. Thomas Banks... Member of the Supervisory Board Mr. Hugues Lecat... Member of the Supervisory Board Bpifrance Participations (represented by Ms. Member of the Supervisory Board Anne-Sophie Herelle) Mr. Geoffrey Jones... Member of the Supervisory Board Mr. Bernard Dubois... Member of the Supervisory Board Mr. Anthony Dinello. Member of the Supervisory Board Azulis Capital (represented by Ms. Christine Mariette)... Observer The secretary of the Supervisory Board is Mr. Pierre-Louis Mikus, Chief Legal Officer. Executive Committee Members of the Executive Committee of Novasep include: Name Position Mr. Michel Spagnol... President and CEO of the Group. Mr. Thierry Van Nieuvenhowe... President, Synthesis BU Ms. Nadège Laborde... President, Industrial Biotech BU Mr. Alain Lamproye... President, Biopharma BU Mr. Christian Thiry... Chief Financial Officer Mr. Pierre-Louis Mikus... Chief Legal Officer Mr. Jean Bléhaut... Chief Innovation Officer Mr. Jean-Claude Romain... Senior Vice President Quality and CSR Executive Committee s practices The role of our Executive Committee is to assist the Group CEO in his operating management of the Group. Certain members of the Executive Committee are in charge of cross-business unit functions (such as finance and quality), while certain members have operations and business responsibilities. Meetings of 178

192 the Executive Committee focus on operational activities, identifying improvement measures, encouraging cooperation between industrial sites and supporting the development of joint projects among our different research teams. Compensation of Members of the Supervisory Board and the Executive Committee The compensation paid to the members of the Supervisory Board and members of the Executive Committee for the year ended December 31, 2015, excluding the pension, retirement and similar benefits, was an aggregate amount of 150,000 to non-executive members of the Supervisory Board who hold voting rights and 1,909,000 to members of the Executive Committee. Variable Remuneration Policy Employees of the Group entitled to variable remuneration are (i) the President or general manager of each business segment (Synthesis, Industrial Biotech and Biopharma) and of our main subsidiaries (DNES, Finorga, Seripharm, Novasep Process) and the members of the Executive Committee of Novasep Holding, (ii) the first line management staff of each segment or of our main subsidiaries, and (iii) our staff having a managing position within the corporate organization. The variable remuneration is calculated on the basis of a percentage of the employees annual gross salary and made of two components: (i) an individual part (upon targets/objectives) and (ii) a company and/or group performance part. The split between individual and company/group parts depends upon the level of the manager. Management Incentive Plan A management incentive plan has been in place since March 15, 2012 (the Management Incentive Plan ). Under this plan, a total of 10,000 shares could be granted to certain managers of the Novasep Group. Of that 8,110 Free Shares have been granted since the inception of the plan. Out of these, 1,585 shares have been left behind by employees leaving the company, 4,726 Free Shares of Novasep Holding have been issued and 1,799 shares not yet issued, pending vesting. Shares are vested to the beneficiaries after a two year acquisition period, in accordance with the terms and conditions of the Management Incentive Plan. 179

193 Exchange Agent EXCHANGE AGENT AND INFORMATION AGENT Lucid Issuer Services Limited has been appointed as Exchange Agent for the Exchange Offer. Questions and requests for assistance, and all correspondence in connection with the Exchange Offer, or requests for additional letters of transmittal and any other required documents, may be directed to the Exchange Agent at the following address, address and telephone number: Lucid Issuer Services Limited Delivery by Registered or Certified Mail, Hand Delivery or Overnight Courier: Tankerton Works 12 Argyle Walk London WC1H 8HA United Kingdom Attention: Thomas Choquet / Sunjeeve Patel By telephone or for information call or novasep@lucid-is.com Attention: Thomas Choquet / Sunjeeve Patel Information Agent Lucid Issuer Services Limited has been appointed as Information Agent for the Exchange Offer and Consent Solicitation. The Information Agent will assist with the distribution of this Exchange Offer and Consent Solicitation Statement and related materials to holders of Existing Notes, respond to inquiries of, and provide information to, holders of Existing Notes in connection with the Exchange Offer and Consent Solicitation, and provide other similar services as we may request from time to time. Requests for additional copies of this Exchange Offer and Consent Solicitation Statement, letters of transmittal and any other required documents may be directed to the Information Agent at the address and telephone number set forth on the back cover of this Exchange Offer and Consent Solicitation Statement. In addition to the Information Agent, our directors, officers and regular employees, who will not be specifically compensated for such services, may contact holders personally or by mail, telephone, or facsimile regarding the Exchange Offer and the Consent Solicitation and may request brokers, dealers and other nominees or custodians to forward this Exchange Offer and Consent Solicitation Statement and related materials to beneficial owners of the Existing Notes. Any holder that has questions concerning the terms of any of the Exchange Offer and Consent Solicitation may contact the Exchange Agent at its address and telephone number set forth on the back cover of this Exchange Offer and Consent Solicitation Statement. Holders of Existing Notes may also contact their broker, dealer, custodian bank, depository, trust company or other nominee for assistance concerning the Exchange Offer and Consent Solicitation. Fees and Expenses We will pay the Exchange Agent reasonable and customary fees for their services (and will reimburse them for their reasonable out-of-pocket expenses in connection therewith). In addition, we will indemnify the Exchange Agent against certain liabilities in connection with their service. The total cash expenditures to be incurred by us in connection with the Exchange Offer and Consent Solicitation, including accounting and legal fees, fees and expenses of the Exchange Agent, fees and expenses of the trustee of the Existing Notes, are estimated to be approximately 6 million. 180

194 Certain French Tax Considerations TAXATION The following is a summary of certain French tax considerations that may be relevant to holders of the Exchange Notes that (i) are not resident in France, (ii) do not hold their Existing Notes (or Exchange Notes) in connection with a business or profession conducted in France through a permanent establishment or a fixed base in France, and (iii) do not concurrently hold shares of Novasep. This summary is based on the tax laws and regulations of France, as currently in effect and applied by the French tax authorities, and all of which are subject to change or to different interpretation. This summary is for general information only and does not address all of the French tax considerations that may be relevant to specific holders of the Exchange Notes in light of their particular circumstances. In particular, the following summary does not address the tax consequences for holders arising from the exchange of Existing Notes in the Exchange Offer for Exchange Notes. Holders are urged to consult their own tax advisers regarding the tax consequences of the exchange of their Existing Notes and the receipt pursuant to the Exchange Offer of Exchange Notes. Furthermore, this summary does not address any French estate or gift tax considerations. PROSPECTIVE INVESTORS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS AS TO FRENCH TAX CONSIDERATIONS RELATING TO THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE EXCHANGE NOTES IN LIGHT OF THEIR PARTICULAR CIRCUMSTANCES. Payments on the Exchange Notes Article 242-ter of the French Code Général des Impôts and Articles 49 I-ter to 49 I-sexies of Appendix III of the French Code Général des impôts, impose an obligation on paying agents based in France to report to the French tax authorities certain information with respect to interest payments made to certain beneficial owners domiciled in another member state of the European Union and certain associated territories, including, among other things, the identity and address of the beneficial owner and a detailed list of the different categories of interest paid to that beneficial owner. Payments of interest and assimilated revenue made by Novasep with respect to the Exchange Notes will not be subject to withholding tax set out under Article 125 A III of the French Code Général des impôts unless such payments are made outside France in a non-cooperative State or territory (Etat ou territoire non coopératif) within the meaning of Article A of the French Code Général des impôts (a Non- Cooperative State ), irrespective of the holder s residence for tax purposes or registered headquarters. Pursuant to Article 125 A III of the French Code Général des impôts, if such payments under the Exchange Notes are made in a Non-Cooperative State, a 75% mandatory withholding tax will be due (subject to certain exceptions certain of which are set forth below and to the more favorable provisions of any applicable double tax treaty). The list of Non-Cooperative States is published by a ministerial executive order, which may be updated on a yearly basis. Furthermore, according to Article 238 A of the French Code Général des Impôts, interest and other assimilated revenues are not deductible from the issuer taxable income if they are paid or accrued to persons domiciled or established in a Non-Cooperative State or paid to on an account opened in a financial institution located in such a Non-Cooperative State. Under certain conditions, any such nondeductible interest or other revenues may be re-characterized as constructive dividends pursuant to Articles 109 et seq. of the French Code Général des Impôts, in which case such non-deductible interest and other revenues may be subject to the withholding tax provided under Article 119-bis 2 of the same Code, at a rate of 30% or 75% subject to the more favorable provisions of any applicable double tax treaty. Notwithstanding the foregoing, neither the 75% withholding tax provided by Article 125 A III of the French Code Général des Impôts, nor (to the extent the relevant interest or income relates to genuine transactions and is not in an abnormal or exaggerated amount) the non-deductibility set out under Article 238 A of the French Code Général des Impôts, nor the withholding tax set out under Article 119-bis 2 of the same Code, will apply in respect of a particular issue of notes provided that the debtor can prove that 181

195 the main purpose and effect of such issue of notes is not that of allowing the payments of interest or income to be made in a Non-Cooperative State (the Exception ). However, pursuant to the Bulletin Officiel des Finances Publiques-Impôts (French administrative guidelines) referenced as BOI-INT-DG n 550 and 990, BOI-RPPM-RCM n 70 and BOI-IR-DOMIC n 10 (the Administrative Guidelines ), an issue of notes will benefit from the Exception without the debtor having to provide any proof of the main purpose and effect of such issue of notes, and accordingly will be able to benefit from the Exception (the Safe Harbor ), if such notes are: (i) offered by means of a public offer within the meaning of Article L of the French Code Monétaire et Financier or pursuant to an equivalent offer in a State other than a Non-Cooperative State. For this purpose, an equivalent offer means any offer requiring the registration or submission of an offer document by or with a foreign securities market authority; or (ii) admitted to trading on a regulated market or on a French or foreign multilateral securities trading system provided that such market or system is not located in a Non-Cooperative State, and the operation of such market is carried out by a market operator or an investment services provider, or by such other similar foreign entity, provided further that such market operator, investment services provider or entity is not located in a Non-Cooperative State; or (iii) admitted, at the time of their issue, to the operations of a central depositary or of a securities clearing and delivery and payments systems operator within the meaning of Article L of the French Code Monétaire et Financier, or of one or more similar foreign depositaries or operators provided that such depositaries or operators are not located in a Non-Cooperative State. Considering that the Exchange Notes will be admitted at the time of their issue to the operations of a securities clearing and delivery and payments systems operator that is not located in a Non-Cooperative State, payments of interest or other revenues made by Novasep with respect to the Exchange Notes will benefit from the Exception according to paragraph (iii) above. Accordingly, such payments made by or on behalf of Novasep to the holders of the Exchange Notes will be exempt from the withholding tax set forth under Article 125 A III of the French Code Général des Impôts. Moreover, under the same conditions since the relevant interest and other revenue should be considered as relating to genuine transactions and not in an abnormal or exaggerated amount, interest and other assimilated revenue in respect of the Exchange Notes paid by or on behalf of Novasep to the holders of the Exchange Notes will not be subject, pursuant to the Administrative Guidelines, to the related non-deductibility rule set forth under Article 238 A of the French Code Général des Impôts and, as a result, will not be subject to the withholding tax set forth under Article 119 bis 2 of the French Code Général des Impôts solely on account of their being paid or accrued to a person domiciled or established in a Non Cooperative State or paid on an account opened in a financial institution established in such a Non-Cooperative State. Withholding tax applicable to French tax resident individuals Pursuant to Article 125 A of the French Code Général des impôts (i.e., where the paying agent (établissement payeur) is located in France), subject to certain exceptions, interest received by French tax resident individuals is subject to a 24% levy withheld at source, which is deductible from their personal income tax liability in respect of the year in which the payment has been made. Social contributions (CSG, CRDS and other related contributions) are also levied at source at an aggregate rate of 15.5% on interest paid to French tax resident individuals. Holders of Exchange Notes who are French tax resident individuals are urged to consult with their usual tax advisor on the way the 24% levy and the 15.5% social security contributions are collected, where the paying agent is not located in France. 182

196 Additional Amounts In certain circumstances, we may have to gross up payment to holders of the Exchange Notes for the deduction caused by withholding or other taxes (See Terms and Conditions of the Exchange Notes Taxation Additional Amount section). Article 1678 quater of the French Code Général des Impôts prohibits the assumption by the debtor of the withholding tax on income from fixed income investments (produits de placement à revenu fixe); in the absence of relevant case law providing guidance as to the interpretation of such article in the context of a notes issuance, it is unclear whether additional amounts (as described in Terms and Conditions of the Exchange Notes Taxation Additional Amount ) may be paid in accordance with French law. Taxation on Sale, Exchange or other Disposition of the Exchange Notes Holders of Exchange Notes who are domiciled or resident for tax purposes outside of France and do not hold their Exchange Notes in connection with a business or profession conducted in France or a permanent establishment or fixed base situated in France will not be subject to any French income tax or capital gains tax on the sale, exchange or other disposition of the Exchange Notes. In addition, no stamp or registration fee or duty or similar transfer taxes will be payable in France in connection with the sale, disposal or redemption of Exchange Notes, except in the case of filing with the French tax authorities on a voluntary basis. Transfer of amount of interest resulting from the undue payment of interest to the holders of Exchange Notes in violation of the Blockage Payment provisions Holders of Exchange Notes are required to turn over to Bpifrance any amount of interest received in violation of the Blockage Payment provisions, set forth in the Terms and Conditions of the Exchange Notes, and are urged to consult their own tax advisors as to the French tax consequences of such payment. Novasep Shares The statements relating to French tax laws set forth below are based on the tax laws and regulations of France, the practice of the French tax authorities and the applicable double taxation conventions or treaties with France, all as currently in force as of the date hereof and all subject to change, possibly with retroactive effect. The following generally summarizes certain French tax consequences for non-french residents for tax purposes of acquiring, holding and disposing of Novasep shares. The following general summary does not purport to be a comprehensive description of all the tax considerations that may be relevant to a decision to purchase, own or dispose of Novasep shares and investors should consult their own tax advisors in determining the tax consequences to them of holding such new shares or rights to their particular situation. The following summary does not address the treatment of shares or rights that are held by a resident of France or in connection with a permanent establishment or fixed base in France, or by a person that owns Novasep shares through a foreign trust. Non-residents of France for tax purposes will have to comply with applicable tax laws of their State of residence and, as the case may be, the applicable tax treaty entered into between France and such State. Taxation of dividends on the Novasep Shares In France, dividends are paid out of after-tax income. Subject to provisions of tax treaties which may apply and subject to the exceptions listed below, the dividends distributed by Novasep are in principle subject to a withholding tax, withheld by the paying 183

197 agent of those dividends, where the tax domicile or registered seat of the effective beneficiary is located outside France. Subject to what is stated below and more favorable provisions of international tax treaties, the withholding tax rate is (i) 21% if the dividends are eligible for the 40% allowance set out in paragraph 3.2 of Article 158 of the French Code Général des Impôts and if the beneficiary is an individual domiciled in a European Union Member State, or in another Member State of the European Economic Area having entered with France into a tax treaty providing for administrative assistance against tax fraud and evasion; (ii) 15% if the beneficiary is a non-profit organization having its registered office in a European Union Member State or in another Member State of the European Economic Area having entered with France into a tax treaty providing for administrative assistance against tax fraud and evasion, to the extent that such organization would be taxed according to the special treatment referred to in paragraph 5 of Article 206 of the French Code Général des Impôts had it its registered office in France and as construed by the Bulletin Officiel des Finances Publiques-Impôts, BOI-IS-CHAMP , n 580 et seq., and relevant case law; and (iii) 30% in all other cases. Furthermore, subject to the provisions of international tax treaties, regardless of the place of residence, the registered office, or the status of the beneficiary, dividends paid outside of France in a noncooperative State as defined in Article A of the French Code Général des Impôts are subject to French withholding tax at a rate of 75%. The list of the non-cooperative States is published by ministerial decree that may be updated each year. Shareholders that are legal persons may benefit from a withholding tax exemption (i) under Article 119 ter of the French Code Général des Impôts which applies under certain conditions to persons having their effective place of management in a Member State of the European Union or in another Member State of the European Economic Area Agreement that has concluded with France a tax treaty providing for administrative assistance against tax fraud and evasion, if they hold at least 10% of the company distributing the dividends during two years and otherwise meet all the conditions of such Article as construed by the guidelines issued by the French Tax Authorities (BOI-RPPM-RCM ), it being however specified that (x) the holding threshold is reduced to 5% of the capital of the French distributing company where the legal person being the beneficial owner of the dividends meets the conditions to benefit from the French participation exemption regime set forth in Article 145 of the French Code Général des Impôts and has no possibility to offset the French withholding tax in its State of residence, and (y) the holding thresholds are assessed taking into account shares held both in full or bare ownership, or (ii) under Article 119 quinquies of the French Code Général des Impôts which applies to legal entities having their effective place of management in a Member State of the European Union or in another State or territory that has concluded with France a tax treaty providing for administrative assistance against tax fraud and evasion, provided that they are subject to a liquidation procedure that is comparable to that mentioned in Article L of the French Commercial Code, (or in a situation of cessation of payments with recovery being manifestly impossible) and otherwise meet all the conditions of Article 119 quinquies of the French Code Général des Impôts as construed by the Bulletin Officiel des Finances Publiques-Impôts, BOI-RPPM-RCM The shareholders concerned should consult their tax advisors to determine whether and under which conditions they may qualify for one of these exemptions. Moreover, dividend income distributed to collective investment undertakings incorporated under foreign law which (i) are located in a Member State of the European Union or in another State that has concluded with France a tax treaty providing for administrative assistance against tax fraud and evasion which meets the conditions specified in Article 119-bis 2 of the French Code Général des Impôts, (ii) raise capital from a certain number of investors with the purpose of investing it in a fiduciary capacity on behalf of such investors, pursuant to a defined investment policy and (iii) have characteristics similar to those required of collective undertakings fulfilling the conditions set forth in Article 119-bis 2, 2 of the French Code Général des Impôts, also benefit from a withholding tax exemption. The investors concerned should consult their usual tax advisors to determine the ways in which these provisions apply to their own specific circumstances. 184

198 Taxation on Sale, Exchange or other Disposition of the Novasep Shares Subject to the provisions of applicable tax treaties, capital gains arising from the disposal of shares or rights by individuals who are not residents of France for tax purposes within the meaning of Article 4 B of the French Code Général des Impôts or by legal entities whose seat is located outside France (and who do not own their shares in connection with a fixed base or a permanent establishment subject to tax in France and on the balance sheet of which the shares are recorded), and provided that the seller has not held directly or indirectly, alone or together with family members in the case of individuals, a stake representing more than 25% of the rights in Novasep earnings (droits aux bénéfices sociaux) at any point in time during the five-years period preceding the disposal, are not subject to French tax under Article 244-bis B and C of the French Code Général des Impôts. Persons who do not meet the conditions of this exemption should consult their usual tax advisors. Moreover, regardless of the percentage of rights held in the earnings of the Company, when such gains are made by persons or organizations domiciled, established or incorporated outside France in a noncooperative State or territory within the meaning of Article A of the French Code Général des Impôts, the capital gains are taxed at 75%. In addition, sales of Novasep shares will, save in specific cases, be subject to French transfer tax. To the extent Novasep is not predominantly invested in French real estate, transfer tax is assessed on the purchase price of the shares or fair market value if higher and the rate is 0.1%. Certain U.S. Federal Income Tax Considerations The following is a description of certain U.S. federal income tax consequences related to the Exchange Offer and the Consent Solicitation and the ownership and disposition by exchanging U.S. holders (as described below) of the Exchange Notes, Warrants and Warrant Shares (as defined herein). This discussion applies only to U.S. holders that hold Existing Notes and, if applicable, Exchange Notes, Warrants and Warrant Shares as capital assets (generally, assets held for investment), and does not describe all of the tax consequences that may be relevant in light of a U.S. holder s particular circumstances, including alternative minimum tax and Medicare contribution tax consequences, as well as differing tax consequences that may apply to U.S. holders subject to special rules, such as: certain financial institutions, insurance companies, regulated investment companies, dealers or traders in securities who use a mark to market method of tax accounting, persons holding Existing Notes or Exchange Notes as part of a straddle or integrated transaction or persons entering into a constructive sale with respect to Existing Notes or Exchange Notes, tax-exempt entities, persons whose functional currency for U.S. federal income tax purposes is not the U.S. dollar, or entities classified as partnerships for U.S. federal income tax purposes. If a partnership or other entity that is classified as a partnership for U.S. federal income tax purposes holds Existing Notes, Exchange Notes, Warrants or Warrant Shares, the U.S. federal income tax treatment of a partner generally will depend upon the status of the partner and the activities of the partnership. Partnerships holding Existing Notes, Exchange Notes, Warrants or Warrant Shares and partners therein should consult their tax advisers as to the U.S. federal income tax consequences of the 185

199 Exchange Offer and the Consent Solicitation and the ownership and disposition of the Exchange Notes, Warrants and Warrant Shares. This summary is based on the Internal Revenue Code of 1986, as amended (the Code ), administrative pronouncements, judicial decisions and final, temporary and proposed Treasury regulations (the Regulations ) as of the date of this Exchange Offer and Consent Solicitation Statement, changes to any of which subsequent to the date of this Offering Memorandum may affect the tax consequences described herein. This summary does not address any aspect of state, local or non-u.s. taxation, or any taxes other than income taxes. Holders should consult their tax advisers with regard to the application of the U.S. federal income tax laws to their particular situations, as well as any tax consequences arising under the laws of any state, local or non-u.s. taxing jurisdiction. As used herein, the term U.S. holder means a beneficial owner of an Existing Note, or an Exchange Note and Warrant received in exchange for an Existing Note in the Exchange Offer, that is for U.S. federal income tax purposes: (i) an individual who is a citizen or resident of the United States; (ii) a corporation, or other entity taxable as a corporation, created or organized in or under the laws of the United States, any state therein or the District of Columbia; (iii) an estate the income of which is subject to U.S. federal income taxation regardless of its source; or (iv) a trust if (a) a court within the United States is able to exercise primary jurisdiction over its administration, and one or more United States persons have the authority to control all of its substantial decisions, or (b) the trust has a valid election in effect under applicable Treasury Regulations to be treated as a United States person. Tax Considerations for Exchanging U.S. Holders The tax consequences of the exchange of Existing Notes for Exchange Notes, Warrants, and the Cash Payment pursuant to the Exchange Offer will depend on whether the exchange is treated as resulting in a significant modification of the Existing Notes, and thus, subject to the discussion in the next paragraph, a taxable exchange of the Existing Notes for Exchange Notes, Warrants, and the Cash Payment. The exchange of Existing Notes for Exchange Notes pursuant to the Exchange Offer will constitute a significant modification of the Existing Notes if, based on all of the relevant facts and circumstances and taking into account all of the differences between the terms of the Existing Notes and the terms of the Exchange Notes collectively, the legal rights or obligations of exchanging holders are altered in an economically significant manner as determined under the Regulations. A change in the timing of payments on a debt instrument is a significant modification if such change in timing results in the material deferral of scheduled payments either through an extension of the final maturity or through deferral of payments due prior to maturity. Pursuant to a safe harbor in the Regulations, a deferral of a scheduled payment for a period equal to the lesser of fifty percent (50%) of the original term of the instrument and five (5) years from the original due date of the first payment that is deferred is not treated as a material deferral. The term of the Existing Notes is under five (5) years, and the term of the Exchange Notes is expected to be more than two and a half (2 ½) years. Accordingly, based on term of the Exchange Notes, the exchange of Existing Notes for Exchange Notes, Warrants and the Cash Payments pursuant to the Exchange Offer will constitute a significant modification of the Existing Notes. Accordingly, a U.S. holder will recognize gain or loss on the exchange. The amount of gain or loss recognized will depend on whether the Existing Notes are publicly traded within the meaning of applicable Regulations. Under the applicable Regulations, property is considered to be publicly traded if (i) an executed sale of such debt instrument occurs within the 31-day period ending fifteen (15) days after the issue date and the sales price is reasonably available within a reasonable period of time, or (ii) at least on price quote (whether firm or indicative) is available within such 31-day period. If the Existing Notes are publicly traded, then the FC noncontingent bond method (discussed below under the heading Tax Consequences to U.S. Holders of Holding the Exchange Notes Treatment of the Exchange Notes if the Existing Notes are not Publicly Traded ) applies, and a U.S. holder will recognize gain or loss equal to the difference, if any, between (i) the sum of (A) the issue price of the Exchange Notes received (which will be equal to the fair market value of the Existing Notes on the Closing Date), (B) the fair market value of the Warrants received and (C) the Cash Payments and (ii) the U.S. holder s adjusted tax basis in the Existing Notes (the calculation of which is discussed below). 186

200 If the Existing Notes are not publicly traded, then the FC alternative method (discussed below under the heading Tax Consequences to U.S. Holders of Holding the Exchange Notes Treatment of the Exchange Notes if the Existing Notes are Publicly Traded ) applies and a U.S. holder will recognize gain or loss equal to the difference, if any, between (i) the sum of (A) the fair market value of the Contingent Component of the Exchange Notes plus the issue price of the Noncontingent Components of the Exchange Notes, as described under Tax Consequences to U.S. Holders of Holding the Exchange Notes Treatment of the Exchange Notes if the Existing Notes are not Publicly Traded (other than the portion of the Exchange Notes treated as paid in respect of accrued but unpaid interest), (B) the fair market value of the Warrants received and (C) the Cash Payments and (ii) the U.S. holder s adjusted tax basis in the Existing Notes. A U.S. holder s adjusted tax basis in the Existing Notes generally will equal its original cost, increased by the amount of original issue discount on the Existing Notes that is includible in such U.S. holder s gross income and market discount, if any, that a U.S. holder has elected to include in its gross income, and decreased by the amount of any payment under the Existing Notes other than a payment of qualified stated interest (as defined below). A U.S. holder s initial tax basis in the Warrants will equal their fair market value on the Closing Date. Subject to the application of the market discount rules discussed below, any gain or loss would be capital gain or loss, and would be long-term capital gain or loss if at the time of the exchange the U.S. holder had held the Existing Notes for more than one year. The deduction of capital losses for U.S. federal income tax purposes is subject to limitations. Any gain or loss would generally be U.S.-source income for purposes of computing a U.S. holder s foreign tax credit limitation. A U.S. holder s holding period for such Exchange Notes would commence on the date immediately following the Closing Date. The U.S. holder s initial tax basis in such Exchange Notes will depend on whether the FC noncontingent bond method (discussed below under the heading Tax Consequences to U.S. Holders of Holding the Exchange Notes Treatment of the Exchange Notes if the Existing Notes are not Publicly Traded ) or the FC alternative method (discussed below under the heading Tax Consequences to U.S. Holders of Holding the Exchange Notes Treatment of the Exchange Notes if the Existing Notes are Publicly Traded ) applies. If the FC noncontingent bond method applies, the initial tax basis in such Exchange Notes would be equal to their issue price (determined as described below under Issue Price of Exchange Notes ). Alternatively, if the FC alternative method applies, the initial tax basis of the Exchange Notes shall equal the sum of the issue price of the Noncontingent Component (as defined below under Tax Consequences to U.S. Holders of Holding the Exchange Notes Issue Price and Adjusted Basis of the Noncontingent Component ) and the fair market value of the Contingent Component (as defined below under Tax Consequences to U.S. Holders of Holding the Exchange Notes Treatment of the Exchange Notes if the Existing Notes are not Publicly Traded ). Information Reporting Requirements on the Exchange Notes Within ninety (90) days of the issuance of the Exchange Notes we will make reasonably available our determination as to whether the Existing Notes were considered publicly traded as of the Closing Date, as well as the issue price of the Exchange Notes. Novasep s determination of the issue price of the Exchange Notes is binding on each holder, unless the holder explicitly discloses in a statement attached to the holder s U.S. federal income tax return that it is taking a different position. U.S. holders should consult their tax advisors concerning the determination of the issue price of Exchange Notes received in exchange for Existing Notes and the tax consequences thereof. In addition, within forty-five (45) days of the issuance of the Exchange Notes, we will make reasonably available our determination of the amount of original issue discount, comparable yield and projected payment schedule for the Exchange Notes. Tax Treatment of Cash Payment The U.S. federal income tax treatment of the Cash Payment is unclear. The Cash Payment may be treated as part of the consideration for the Exchange Offer. If so, the Cash Payment would be included in the amount realized on the Exchange Offer for purposes of calculating a tendering U.S. holder s gain or loss 187

201 from the Exchange Offer. Alternatively, the Tender Cash Consideration which is payable to all Existing Note holders that validly tender Existing Notes before the Withdrawal Deadline may be viewed as a fee for the Consent because all holders that validly tender Existing Notes in the Exchange Offer will be deemed to have delivered a valid Consent. If the Tender Cash Consideration is characterized as a fee, the Tender Cash Consideration should be taxable as ordinary income to U.S. holders. Additionally, because the Cash Payment will be paid in euro, the U.S. holder will be treated as receiving the U.S. dollar value of the Cash Payment based on the spot rate on the date of the deemed exchange. U.S. holders should consult their tax advisors regarding the U.S. federal income tax consequences of the receipt of the Cash Payment. Receipt of Additional Principal Amount of Exchange Notes for Accrued but Unpaid Interest A U.S. holder that is an accrual method taxpayer and that receives principal amount of the Exchange Notes for the accrued but unpaid interest on the Existing Notes ( Additional Principal Amount ), generally should not recognize any taxable income on the receipt of such Additional Principal Amount. Such a U.S. holder s adjusted tax basis in the portion of the Exchange Notes received that represents the Additional Principal Amount generally should equal the amount of such accrued but unpaid interest. A U.S. holder that is a cash method taxpayer and that receives Additional Principal Amount generally will recognize an amount of ordinary income equal to the fair market value of the Additional Principal Amount received on the Closing Date, which value should represent such U.S. holder s adjusted tax basis in the portion of the Exchange Notes received in the exchange that represents the Additional Principal Amount. A U.S. holder s holding period for the portion of the Exchange Notes that represents the Additional Principal Amount would commence on the date immediately following the Closing Date. Market Discount Subject to a de minimis rule, any gain recognized on the exchange of Existing Notes for Exchange Notes and Warrants generally would be characterized as ordinary income to the extent of the accrued market discount, if any, on such Existing Notes as of the Closing Date. U.S. holders who acquired their Existing Notes other than at original issuance should consult their own tax advisors regarding the possible application of the market discount rules of the Code to a tender of the Existing Notes pursuant to the Exchange Offer. Tax Consequences to U.S. Holders of Holding the Exchange Notes U.S. Tax Treatment of the Exchange Notes Because the Junior Amounts of the Exchange Notes is only payable after Bpifrance has received the Blocking Payment, the Exchange Notes will be treated as contingent payment debt instruments ( CPDIs ). Under the Regulations for foreign currency denominated CPDIs ( Foreign Currency Regulations ), a U.S. holder s consequences of holding the Exchange Notes will depend on whether the Existing Notes are publicly traded (as described above under Tax Considerations for Exchanging U.S. Holders ). If the Existing Notes are publicly traded, then the Exchange Notes would be subject to the noncontingent bond method described under the CPDI Regulations as modified by the Foreign Currency Regulations (the FC noncontingent bond method ); if the Existing Notes are not publicly traded, then the Exchange Notes would be subject to the alternative method under the CPDI Regulations as modified by the Foreign Currency Regulations (the FC alternative method ). Treatment of the Exchange Notes if the Existing Notes are Publicly Traded The Exchange Notes will be subject to the FC noncontingent bond method if the Existing Notes are publicly traded. Under the FC noncontingent bond method, a U.S. holder will be required to accrue interest income, which will be treated as original issue discount ( OID ) on the Exchange Notes in the amount described below, regardless of whether the U.S. holder uses the cash or accrual method of tax 188

202 accounting. Accordingly, a U.S. holder will be required to include OID in taxable income in each year in excess of the accruals on the Exchange Notes for non-tax purposes and, possibly, in excess of any amounts received in that year. A U.S. holder will be required to determine the amount of OID for United States federal income tax purposes for each accrual period prior to and including the maturity date of the New Senior Notes that equals: the product of (i) the adjusted issue price (as defined below) of the Exchange Notes as of the beginning of the accrual period, and (ii) the comparable yield to maturity (as defined below) of the Exchange Notes, adjusted for the length of the accrual period; divided by the number of days in the accrual period; and multiplied by the number of days during the accrual period that the U.S. holder held the Exchange Notes. The adjusted issue price of an Exchange Note is its issue price (as determined above under Issue Price of the Exchange Notes ) increased by any interest income previously accrued, determined without regard to any adjustments to interest accruals described below and decreased by the amounts of any noncontingent payment and the projected amount of any contingent payments previously made on the Exchange Notes. Special rules under the Code may apply to a U.S. holder who purchases the Exchange Notes at a time other than the initial offering or at a price other than the issue price. Such a U.S. holder should consult its tax advisor as to the possible applicability of these rules. The comparable yield of the Exchange Notes is based on the rate, as of the initial issue date, at which Novasep would issue a fixed rate debt instrument with no contingent payments but with terms and conditions similar to the Exchange Notes, including the level of subordination, term, timing of payments and general market conditions. The projected payment schedule would set forth all of the noncontingent and contingent payments on the Exchange Notes. Payments of PIK interest should not be treated as a payment for this purpose. The projected payment schedule must produce the comparable yield. Generally, U.S. holders should determine the U.S. dollar amount includible in income as OID for each accrual period by (a) calculating the amount of OID allocable to each accrual period in euros by applying the FC noncontingent bond method described above, with the comparable yield, projected payment schedule and comparable fixed rate debt instrument determined in euros, and (b) translating the amount of euros so derived at the average exchange rate in effect during that accrual period (or portion thereof within a U.S. holder s taxable year) or, at the U.S. holder s election (which must be applied consistently to all debt instruments from year to year and cannot be changed without the consent of the U.S. Internal Revenue Service (the IRS ), at the spot rate of exchange on the last day of the accrual period (or the last day of the taxable year within such accrual period if the accrual period spans more than one taxable year), or at the spot rate of exchange on the date of receipt, if such date is within five (5) business days of the last day of the accrual period. Because exchange rates may fluctuate, a U.S. holder may recognize a different amount of OID income in each accrual period than would the holder of an otherwise similar note denominated in U.S. dollars. Each U.S. holder is urged to consult their tax advisor with respect to the application of the Foreign Currency Regulations to its particular circumstance. Adjustments to Interest Accruals on the Exchange Notes If the actual contingent payments made on the Exchange Notes (including on maturity) differ from the projected contingent payments, adjustments will be require to be made to the taxable income of a U.S. holder for the taxable year in which the contingent payment is made. If during any taxable year a U.S. holder of an Exchange Notes receives actual payments with respect to the Exchange Notes for that taxable year that in the aggregate exceed the total amount of projected payments for the taxable year denominated in euro, such U.S. holder will incur a net positive adjustment equal to the amount of such excess denominated in euro. Such net positive adjustment will be treated as additional OID in such 189

203 taxable year denominated in euro. Such net positive adjustment will be translated into U.S. dollars at the spot rate on the last day of the taxable year in which such adjustment is taken into account, or if earlier, the date the Exchange Note is disposed on or otherwise terminated. If, however, a U.S. holder of an Exchange Note receives in a taxable year actual payments with respect to the Exchange Notes for that taxable year that in the aggregate are less than the amount of projected payments for that taxable year determined in euro, such U.S. holder will incur a net negative adjustment equal to the amount of such deficit determined in euro. Such an adjustment will be calculated as follows: (1) first, a negative adjustment will reduce the amount of OID required to be accrued (including any OID that was accrued and paid) in the current year determined in euro; (2) second, any negative adjustments that exceed the amount of OID accrued in the current year denominated in euro will be treated as ordinary loss to the extent of your total prior OID inclusions with respect to the Exchange Notes determined in euro, reduced to the extent such prior OID was offset by prior negative adjustments in prior taxable years determined in euro; and (3) third, any excess negative adjustments (i) will be treated as a regular negative adjustment (denominated in euro) in the succeeding taxable year (and such negative adjustment will be attributable to OID accrued and paid in prior taxable years), and (ii) if not used by the time the Exchange Notes are disposed of, will reduce the amount realized on the disposition. The net negative adjustments discussed above under (1) through (3) will be treated and, where necessary, translated from euro to U.S. dollars under the following rules: (i) (ii) (iii) (iv) The net negative amounts described under (1) above shall first reduce current year accrued but unpaid OID and then reduce any accrued and paid OID for the year; such amounts do not need to be translated into U.S. dollars. The negative adjustments described under (2) above first will be attributable to accrued but unpaid OID accrued in prior taxable years, and translated into a U.S. dollars at the same rate used to translate, in each of the respective prior taxable years, accrued OID. Any negative adjustments remaining after the application of (i) and (ii) above will be attributable to accrued OID paid in prior taxable years. Such net negative adjustment applied to such amounts will be translated into U.S. dollars using the spot rate on the date the Exchange Notes were issued, or, if later, acquired. Any negative adjustments remaining after the application of (i), (ii) and (iii) above will be a negative carryforward, which shall be carried forward in euro and applied to reduce OID accruals in subsequent years. In the year in which the Exchange Note is sold, any negative adjustment carryforward not applied to OID will reduce the U.S. holder s amount realized on the sale (in euro). Foreign Currency Gain or Loss Attributable to Cash Interest on the Senior Outstanding Principal Amount Foreign currency gain or loss will be recognized with respect to an Exchange Note only when Cash Interest on the Senior Outstanding Principal Amount are made or received. Generally, no foreign currency gain or loss will be recognized with respect to a net positive or negative adjustment. The amount of foreign currency gain or loss recognized with respect to payments of OID previously accrued on the instrument is determined by translating the amount of Cash Interest paid or received into U.S. dollars at the spot rate on the date of payment and subtracting from such amount the amount determined by translating the Cash Interest paid or received into U.S. dollars at the rate at which such OID was accrued under the rules discussed earlier. For this purpose, the amount of any Cash Interest that is treated as accrued OID shall be reduced by the amount of any net negative adjustment treated as ordinary loss to the U.S. holder as described above. 190

204 Sale, Exchange, Redemption, Retirement or other Taxable Disposition of Exchange Notes Upon the sale, exchange, retirement or other taxable disposition of an Exchange Note, you generally will recognize gain or loss equal to the difference between the amount realized upon the sale, exchange, retirement or other taxable disposition, translated into U.S. dollars as described below and the adjusted tax basis of the Exchange Note determined and maintained in U.S. dollars as described below. The amount realized on a sale of an Exchange Note will be the amount received (denominated in the currency received). With respect to the scheduled retirement of the Exchange Notes, the amount realized by a U.S. holder will be the projected amount of any contingent payment due at maturity, reduced by any negative adjustment carryforwards determined in the taxable year of the retirement (each as determined in euro). With respect to an unscheduled retirement of the Exchange Note, such payment is treated as a repurchase of the Exchange Note by Novasep for the amount paid (determined in euro). The amount realized is translated into U.S. dollars under the following rules: (1) With respect to an instrument held to maturity, a U.S. holder translates the amount realized by separating such amount in the denomination currency into the component parts of interest and principal that make up adjusted basis prior to translation of the adjusted basis pursuant to the discussion below, and translating each of those component parts of the amount realized at the same rate used to translate the respective component parts of basis pursuant to the discussion below. The amount realized first shall be translated by reference to the component parts of basis consisting of accrued interest during the taxpayer's holding period as determined pursuant to the discussion below and ordering such amounts on a last in first out basis. Any remaining portion of the amount realized shall be translated by reference to the rate used to translate the component of basis consisting of principal as determined pursuant to the discussion below. (2) In the case of a sale, exchange, or unscheduled retirement of an Exchange Note, the holder's amount realized first shall be translated by reference to the principal component of basis as determined pursuant to the discussion below, and then to the component of basis consisting of accrued interest as determined pursuant to the discussion below and ordering such amounts on a first in first out basis. Any gain recognized by the holder (i.e., any excess of the sale price over the holder's basis, both expressed in the denomination currency) is translated into functional currency at the spot rate on the payment date. A U.S. holder s adjusted tax basis will generally equal the issue price of the Exchange Note (as discussed above under Tax Considerations for Exchanging U.S. Holders ), increased by any accrued OID previously included in income (translated into U.S. dollars pursuant to method described below) and decreased by the amount of any noncontingent payment and the projected amount of any contingent payment previously made on the Exchange Notes (translated into U.S. dollars pursuant to method described below). Any gain from the disposition of an Exchange Note will be treated as ordinary interest income. Loss from the disposition of an Exchange Note generally will be treated as ordinary loss to the extent of your prior net OID inclusions with respect to the Exchange Note. Any loss in excess of that amount will be treated as capital loss, which will be long term if the Exchange Note was held for greater than one year. The deductibility of net capital losses by individuals and corporations is subject to certain limitations. A U.S. holder s adjusted basis in the Exchange Notes will be translated into U.S. dollars as follows: (i) (ii) A U.S. holder s initial tax basis in the Exchange Note will equal the issue price of the Exchange Note translated into U.S. dollars at the spot rate on the date of the exchange, Any increase in basis attributable to OID accrued on the Exchange Note in euro will be translated into U.S. dollars at the average exchange rate in effect during that accrual period (or portion thereof within a U.S. holder s taxable year) or, at 191

205 the U.S. holder s, at the spot rate of exchange on the last day of the accrual period (or the last day of the taxable year within such accrual period if the accrual period spans more than one taxable year), or at the spot rate of exchange on the date of receipt, if such date is within five (5) business days of the last day of the accrual period, (iii) (iv) Any noncontingent payment and the projected amount of any contingent payments determined in euro that decrease the U.S. holder's basis in the Exchange Notes will be first attributable to the most recently accrued OID to which prior amounts have not already been attributed, and translated into U.S. dollars at the rate at which the OID was accrued, and second, any remaining amounts will be attributable to principal, and translated into U.S. dollars using the spot rate on the date the Exchange Note was issued, or if later, acquired. Any amounts of accrued OID income that is reduced as a result of a negative adjustment carryforward shall be treated as principal and translated at the spot rate on the date the Exchange Note was issued or, if later, acquired. Gain or loss realized by a U.S. holder on the sale, exchange, retirement or other disposition of an Exchange Note will generally be treated as U.S. source gain or loss. Foreign Currency Gain or Loss upon the Sale, Exchange, Redemption, Retirement or other Taxable Disposition of Exchange Notes Gain or loss realized upon the sale, exchange, redemption, retirement or other taxable disposition of an Exchange Note that is attributable to fluctuations in currency exchange rates generally will be U.S. source ordinary income or loss and generally will not be treated as interest income or expense. Gain or loss attributable to fluctuations in currency exchange rates generally will equal the difference, if any, between the U.S. dollar value of the issue price of the Exchange Note, determined at the spot rate of exchange on the date the U.S. holder disposes of the Note and the U.S. dollar value of the issue price for the Note, determined at the spot rate of exchange on the Closing Date of the Exchange Offer. In addition, upon the sale, exchange, redemption, retirement or other taxable disposition of an Exchange Note, a U.S. holder may realize foreign currency exchange gain or loss attributable to amounts received with respect to accrued and unpaid stated interest and accrued OID, if any, which will be treated as discussed above under Interest Payments on the Exchange Notes / Original Issue Discount. However, upon a sale, exchange, redemption, retirement or other taxable disposition of an Exchange Note, a U.S. holder will recognize any foreign currency exchange gain or loss (including with respect to accrued interest and OID) only to the extent of total gain or loss realized by such U.S. holder on such disposition. Treatment of the Exchange Notes if the Existing Notes are not Publicly Traded The Exchange Notes will be subject to the FC alternative method if the Existing Notes are not publicly traded. Under the FC alternative method, the Exchange Note will be separated into its component payments. Each noncontingent payment or group of noncontingent payments which is denominated in a single currency shall be considered a single component treated as a separate debt instrument denominated in the currency of the payment or group of payments ( Noncontingent Component ). Each contingent payment shall be treated separately as a separate non-debt component as provided below ( Contingent Component ). U.S. holders of Exchange Notes should consult their tax adviser as to what aspects of the Exchange Notes are considered the Contingent Component and what aspects are considered the Noncontingent Component. Issue Price and Adjusted Basis of the Noncontingent Component Under the Foreign Currency Regulations, the issue price of the Noncontingent Component of a debt instrument is the sum of the present values of the noncontingent payments contained in the Noncontingent Component. The present value of any noncontingent payment shall be determined by discounting the payment from the date it becomes due to the date of the sale or exchange at the test rate of interest, which must be based on the same compounding period. The test rate shall be determined using the lowest applicable Federal long-term rate in effect for any month in the three-calendar-month 192

206 period ending with the calendar month of the exchange. For debt instruments denominated in a currency other than the U.S. dollar, such as the Exchange Notes, the applicable Federal rate for the debt instrument is a foreign currency rate of interest that is analogous to the applicable Federal rate described in Treasury Regulation Section No interest payments on the Noncontingent Component are qualified stated interest payments) and the de minimis OID rules do not apply. OID income is translated, and exchange gain or loss is recognized on the separate debt instrument as provided above under the heading Treatment of the Exchange Notes if the Existing Notes are Publicly Traded. A U.S. holder will initially have an adjusted basis in the Noncontingent Component equal to its issue price, and an adjusted basis in the Contingent Component equal to the fair market value of the Contingent Component. Noncontingent Component of the Exchange Notes The Noncontingent Component of the Exchange Notes will be treated as being issued with OID in an amount equal to the difference between (i) the sum of all payments of principal and stated interest under the Noncontingent Component of the Exchange Notes, and (ii) the issue price of the Noncontingent Component of the Exchange Notes (as discussed above). U.S. holders of the Exchange Notes must include OID in their gross income as ordinary income calculated on a constant-yield method before the receipt of cash attributable to the income, and generally will have to include in income increasingly greater amounts of OID over the life of the Exchange Notes. The amount of OID includible in income by a U.S. holder is the sum of the daily portions of OID with respect to the Noncontingent Component of the Exchange Note for each day during the taxable year or portion of the taxable year on which the U.S. holder holds the Exchange Note ( accrued OID ). The daily portion is determined by allocating to each day in any accrual period a pro rata portion of the OID allocable to that accrual period. Accrual periods with respect to the Noncontingent Component of an Exchange Note may be of any length selected by the U.S. holder and may vary in length over the term of the Exchange Note as long as (i) no accrual period is longer than one year, and (ii) each scheduled payment of interest or principal on the Noncontingent Component of the Exchange Note occurs on either the final or first day of an accrual period. The amount of OID allocable to an accrual period equals the product of the Noncontingent Component of an Exchange Note s adjusted issue price at the beginning of the accrual period and the Noncontingent Component of an Exchange Note s yield to maturity (determined on the basis of compounding at the close of each accrual period and properly adjusted to reflect the length of the accrual period). The adjusted issue price of the Noncontingent Component of the Exchange Notes at the beginning of any accrual period will generally be the issue price of the Noncontingent Component of an Exchange Note increased by (x) the amount of accrued OID for each prior accrual period and decreased by (y) the amount of any payments previously made on the Noncontingent Component of an Exchange Note (other than the PIK interest). Generally, U.S. holders should determine the U.S. dollar amount includible in income as OID for each accrual period by (a) calculating the amount of OID allocable to each accrual period in euros using the constant-yield method, and (b) translating the amount of euros so derived at the average exchange rate in effect during that accrual period (or portion thereof within a U.S. holder s taxable year) or, at the U.S. holder s election (which must be applied consistently to all debt instruments from year to year and cannot be changed without the consent of the IRS, at the spot rate of exchange on the last day of the accrual period (or the last day of the taxable year within such accrual period if the accrual period spans more than one taxable year), or at the spot rate of exchange on the date of receipt, if such date is within five (5) business days of the last day of the accrual period. Because exchange rates may fluctuate, a U.S. holder may recognize a different amount of OID income in each accrual period than would the holder of an otherwise similar note denominated in U.S. dollars. All such payments on the Noncontingent Component of the Exchange Notes will generally be viewed first as payments of previously accrued OID (to the extent thereof), with payments attributed first to the earliest-accrued OID, and then as payments of principal. Upon the receipt of an amount attributable to OID (whether in connection with a payment of an amount that is not qualified stated interest or the sale or retirement of the Exchange Notes), a U.S. holder will recognize ordinary income or loss measured by the difference between the amount received (translated into U.S. dollars at the exchange rate in effect on the date of receipt or on the date of disposition of the Exchange Notes, as the case may be) and the amount accrued (using the exchange rate applicable to such previous accrual). 193

207 Contingent Component of the Exchange Notes Under the Foreign Currency Regulations, a portion of the interest paid under the Contingent Component (the Contingent Interest ) of an Exchange Note generally will be treated as a payment of principal in an amount equal to the present value of the payment determined by discounting the payment from the date it was made to the issue date of the Exchange Note at the test rate. The test rate shall be determined by reference to the U.S. dollar unless the dollar does not reasonably reflect the economic substance of the contingent component. In such case, the test rate shall be determined by reference to the currency which most reasonably reflects the economic substance of the contingent component. The amount of the contingent payment in excess of the portion determined to be principal is treated as a payment of interest, and is includible in gross income by the holder in the taxable year in which the payment is made. Any amount received in nonfunctional currency from a component consisting of a contingent payment shall be translated into functional currency at the spot rate on the date of receipt. Sale, Retirement or Other Disposition of the Exchange Notes A U.S. holder must allocate the amount realized from the sale, exchange or disposition of an Exchange Note first, to the Noncontingent Component in an amount up to the adjusted issue price of the Noncontingent Component, and would be required to allocate the remaining amount received, if any, to the Contingent Component. A U.S. holder will generally recognize gain or loss on the sale, exchange or other disposition of a Noncontingent Component equal to the difference between (i) the portion of the amount realized allocated to the Noncontingent Component, and (ii) the U.S. holder s adjusted tax basis in the Noncontingent Component, as applicable. The amount realized on a sale, exchange, retirement or other taxable disposition of the Noncontingent Component for an amount in euro will be the U.S. dollar value of this amount based on the spot rate on the date of the sale, exchange or other taxable disposition (or, in the case of a cash basis or electing accrual method taxpayer, the settlement date of the sale, exchange, retirement or other taxable disposition, if the euro notes are traded on an established securities market for U.S. federal income tax purposes). Except as discussed below with respect to foreign currency gain or loss, any such gain or loss will be capital gain or loss. For a non-corporate U.S. holder, the maximum marginal U.S. federal income tax rate applicable to the gain is lower than the maximum marginal U.S. federal income tax rate applicable to ordinary income (other than certain dividends) if such U.S. holder s holding period for the Exchange Notes exceeds one year (i.e., such gain is long-term capital gain). A U.S. holder s gain or loss realized on the sale, exchange, retirement or other disposition of the Noncontingent Component of the Exchange Note generally will be treated as U.S. source gain or loss, as the case may be. Consequently, a U.S. holder may not be able to claim a credit for any foreign tax imposed upon a disposition of an Exchange Note, if any, unless such credit can be applied (subject to applicable limitations) against tax due on other income treated as derived from foreign sources. The deductibility of capital losses is subject to limitations. The amount allocated to a Contingent Component is treated as a contingent payment that is made on the date of the sale, exchange or other disposition and is characterized as interest and principal as described above under the heading Contingent Component of the Exchange Notes. Gain or loss realized by a U.S. holder on the sale, exchange, retirement or other disposition of an Exchange Note will generally be treated as U.S. source gain or loss. Except in the case when the payment becomes fixed more than six months before the payment is due, no foreign currency gain or loss shall be recognized on a contingent payment component. U.S. holders are urged to consult their own tax advisers regarding the U.S. federal income tax consequences of acquiring, holding and disposing of the Exchange Notes, and in particular, the application of the Foreign Currency Regulations to the acquisition, holding and disposition of the Exchange Notes. Potential Treatment of Exchange Notes as Equity Under Proposed Debt-Equity Regulations 194

208 The U.S. Treasury and IRS have issued proposed regulations under Section 385 of the Code (the 385 Proposed Regulations ) that, if adopted in their present form as final regulations, would in certain circumstances treat as equity for U.S. federal income tax purposes Exchange Notes that otherwise would be treated as debt for such purposes, but only during periods in which the Exchange Note is held by a member of an expanded group that includes Novasep. An expanded group is generally a group of corporations or controlled partnerships connected through 80% or greater direct or indirect ownership links. By their terms, the 385 Proposed Regulations may apply to convert debt instruments issued on or after April 4, 2016 (such as the Exchange Notes) that are held by expanded group members to stock starting ninety-one (91) days after the date, if any, on which the 385 Proposed Regulations are published as final regulations. The 385 Proposed Regulations, if adopted as final regulations, may impose certain documentation requirements with respect to Exchange Notes treated as debt for U.S. federal income tax purposes (which documentation would need to be contemporaneous with the issuance of the Exchange Notes) and, if such documentation requirements are not complied with then such Exchange Notes may be reclassified as equity for U.S. federal income tax purposes. Exchange Notes that are treated as equity under these rules may be converted back to debt when acquired by a holder that is not a member of an expanded group that includes Novasep. Exchange Notes that are treated as newly issued under this rule may have tax characteristics differing from Exchange Notes of the same class that were not previously treated as equity. Other rules included in the 385 Proposed Regulations could apply to convert debt into equity where the holder is connected with the issuer of the debt instrument through 50% or greater ownership links, but they are not proposed to apply to debt instruments issued prior to the publication of regulations in final form. These 385 Proposed Regulations are complex and may be changed before they are finalized. U.S. holders should consult with their own tax advisors regarding the possible effect of these 385 Proposed Regulations on the holding of Exchange Notes. Taxation of Warrants Exercise of Warrants A U.S. holder generally will not recognize gain or loss on the exercise of a warrant and related receipt of a warrant share (unless cash is received in lieu of the issuance of a fractional warrant share) ( Warrant Share, which in this case, is a share of Novasep). A U.S. holder s initial tax basis in the Warrant Share received on the exercise of a Warrant should be equal to the sum of (i) the U.S. holder s initial tax basis in the Warrant (determined as described above under Tax Considerations for Exchanging U.S. Holders ) plus (ii) the U.S. dollar value of the exercise price paid by the U.S. holder on the exercise of the Warrant determined at the spot rate of the date of exercise. A U.S. holder s holding period for the Warrant Share received will begin on the day the Warrant is exercised by the U.S. holder. Sale or Disposition of Warrants If a U.S. holder sells or otherwise disposes of its Warrants, the U.S. holder will recognize gain or loss for U.S. federal income tax purposes equal to the difference between the U.S. dollar value of the amount that the U.S. holder realizes (as described more fully below) and its tax basis in its Warrant, if any, determined in U.S. dollars. Such gain or loss will be long-term capital gain or loss if the Warrants are deemed held for more than one year (potentially subject to the discussion below under Passive Foreign Investment Company ). Certain non-corporate U.S. holders (including individuals) may be eligible for preferential tax rates in respect of long term capital gain. The gain or loss will generally be income or loss from sources within the United States for foreign tax credit limitation purposes. The deductibility of capital losses is subject to limitations. The amount realized on a sale or other disposition of Warrants for an amount in euro will be the U.S. dollar value of the euro on the date of sale or disposition, or in the case of Warrants traded on an established securities market that are sold by a cash basis U.S. holder or an accrual basis U.S. holder that so elects, will be based on the exchange rate in effect on the settlement date for the sale. The U.S. holder also may have exchange gain or loss in connection with the sale or exchange of euro received in respect 195

209 of the Warrants. If an accrual basis U.S. holder makes the election described above, it must be applied consistently from year to year and cannot be revoked without the consent of the IRS. Expiration of Warrants without Exercise Upon the lapse or expiration of a Warrant, a U.S. holder will recognize a loss in an amount equal to such U.S. holder s tax basis in the Warrant. Any such loss generally will be a capital loss and will be longterm capital loss if the warrant is held for more than one year. Deductions for capital losses are subject to limitations. Taxation of Warrant Shares Taxation of Dividends. Subject to the discussion below under the heading Passive Foreign Investment Company, distributions on our Warrant Shares, other than certain pro rata distributions of shares to all shareholders, received by a U.S. holder, including amounts withheld in respect of any French withholding tax thereon, will be taxable as dividends to the extent paid out of our current or accumulated earnings and profits as determined under U.S. federal income tax principles. Since we do not maintain calculations of our earnings and profits for U.S. federal income tax purposes, we intend to treat any distribution on our Warrant Shares as a dividend for U.S. federal income tax purposes. Such income (including withheld taxes) will be includable in gross income as ordinary income on the day actually or constructively received. The U.S. dollar value of any distribution on our Warrant Shares made in euros should be calculated by reference to the exchange rate between the U.S. dollar and the euro in effect on the date of receipt of such distribution by the U.S. holder, regardless of whether the euro amount so received is in fact converted into U.S. dollars. If the euro amount so received is converted into U.S. dollars on the date of receipt, such U.S. holder generally should not recognize foreign currency gain or loss on such conversion. If it is not converted into U.S. dollars on the date of receipt, such U.S. holder will have a basis in such euros equal to the U.S. dollar value on the date of receipt. Any gain or loss on a subsequent conversion or other disposition of such euros generally will be treated as ordinary income or loss to such U.S. holder and generally will be income or loss from sources within the United States for U.S. foreign tax credit purposes. Distributions treated as dividends that are received by certain non-corporate U.S. holders (including individuals) from qualified foreign corporations generally qualify for preferential rates so long as certain holding period and other requirements are met. A non-u.s. corporation (other than a PFIC with respect to a U.S. holder) generally will be considered to be a qualified foreign corporation if it is eligible for the benefits of a comprehensive income tax treaty with the United States that the Secretary of the Treasury determines is satisfactory for purposes of this provision and which includes an exchange of information program. Subject to certain conditions and limitations, French taxes withheld from dividends on our Warrant Shares at a rate not exceeding the rate provided in the income tax treaty between the government of the United States of America and the government of the French Republic may be treated as foreign taxes eligible for a credit against the U.S. federal income tax liability of a U.S. holder. For purposes of calculating the foreign tax credit, dividends paid on Warrant Shares will be treated as income from sources outside the United States and will generally constitute passive category income. Further, in certain circumstances, if a U.S. holder holds its Warrant Shares for less than a specified minimum period, the U.S. holder will not be allowed a foreign tax credit for foreign taxes imposed on dividends paid on its Warrant Shares. The rules governing the foreign tax credit are complex. U.S. holders should consult their own tax advisors regarding the availability of the foreign tax credit under their particular circumstances. Taxation of Capital Gains For U.S. federal income tax purposes, a U.S. holder will recognize taxable gain or loss on any sale, exchange or redemption of its Warrant Shares in an amount equal to the difference between the amount 196

210 realized for the Warrant Shares and such U.S. holder s tax basis in the Warrant Shares (as determined above under Taxation of Exercise of Warrants ). Subject to the discussion below under Passive Foreign Investment Company, such gain or loss will generally be capital gain or loss. Capital gains of non-corporate shareholders derived with respect to capital assets held for more than one year are eligible for reduced rates of taxation. The deductibility of capital losses is subject to limitations. Any gain or loss generally will be treated as U.S. source gain or loss. A U.S. holder that receives non-u.s. currency from a sale, exchange or other disposition of our Warrant Shares generally will realize an amount equal to the U.S. dollar value of such non-u.s. currency on the date the Warrant Shares are disposed of. However, if the Warrant Shares are treated as being traded on an established securities market, a cash basis or electing accrual basis taxpayer will determine the U.S. dollar value of the amount realized by translating such amount at the spot rate on the settlement date of the sale. If an accrual basis U.S. holder makes the election described above, it must be applied consistently from year to year and cannot be revoked without the consent of the IRS. A U.S. holder will have a tax basis in any non-u.s. currency received in respect of the sale, exchange or disposition of its Warrant Shares equal to its U.S. dollar value calculated at the exchange rate in effect on the date of such sale, exchange or other disposition (or in the case of a cash basis or electing accrual basis taxpayer the exchange rate in effect on the date of the receipt). Any gain or loss recognized upon a subsequent disposition of non-u.s. currency will be treated as ordinary income or loss to such U.S. holder and generally will be income or loss from sources within the United States for U.S. foreign tax credit purposes. Passive Foreign Investment Company Special U.S. tax rules apply to a company that is considered to be a passive foreign investment company ( PFIC ). Novasep will be classified as a PFIC if, for any taxable year, at least 75% of Novasep gross income is passive income, or if at least 50% of the average value of Novasep s assets at the end of each quarter of its taxable year is attributable to assets that produce passive income or are held for the production of passive income. Passive income for this purpose generally includes dividends, interest, royalties, rents, gains from commodities and securities transactions, the excess of gains over losses from the disposition of assets which produce passive income. If a non-u.s. corporation owns at least 25% by value of the shares of another corporation, the non-u.s. corporation is treated for purposes of the PFIC tests as owning its proportionate share of the assets of the other corporation and as receiving directly its proportionate share of the other corporation s income. Novasep believes that it was not a PFIC for U.S. federal income tax purposes for its taxable year ending December 31, 2015, and, based on Novasep s projected assets and activities, does not expect to be a PFIC for the taxable year ending December 31, 2016, or for the foreseeable future thereafter. U.S. holders that hold our shares during any year during which Novasep is characterized as a PFIC may suffer adverse tax consequences, including having gains realized on the sale of their Warrant Shares treated as ordinary income rather than as capital gain, the loss of the preferential rate applicable to dividends received by individuals, and having interest charges apply to distributions by Novasep and the proceeds of sales of their Warrant Shares. A U.S. holder may avoid these adverse tax consequences by electing to mark our shares to market. U.S holders that make a mark-to-market election will be required in any year in which Novasep is a PFIC to include as ordinary income the excess of the fair market value of their Warrant Shares at year-end over their basis in those shares. In addition, any gain recognized upon the sale of our Warrant Shares will be taxed as ordinary income in the year of sale. If Novasep is a PFIC, Novasep does not anticipate making available the information necessary for a U.S. holder to treat its shares as shares in a qualified electing fund. As discussed in the second preceding paragraph, Novasep does not expect to be a PFIC for the taxable year ending December 31, 2016, or for the foreseeable future thereafter. Although a determination as to 197

211 our PFIC status would need to be made annually, an initial determination that Novasep is a PFIC will generally apply for subsequent years to a U.S. holder who held our shares while Novasep is a PFIC, whether or not Novasep is a PFIC in those subsequent years. A U.S. holder who makes the mark-tomarket election discussed above, however, will not be subject to the adverse tax consequences discussed above in respect to our shares in subsequent years in which Novasep is not a PFIC. On the other hand, if the mark-to-market election is not effective for each of our tax years in which we are a PFIC, and the U.S. holder owns our Warrant Shares, the PFIC rules discussed below will continue to apply to such shares unless the holder makes an election to recognize built in gain on the shares, and pay the interest charge described above, if applicable. If we are determined to be a PFIC, the general tax treatment for U.S. holders described in this section would apply to indirect distributions and gains deemed to be realized by U.S. holders in respect of any of our subsidiaries that also may be determined to be PFICs. A U.S. holder that owns an equity interest in a PFIC must annually file IRS Form 8621, and may be required to file other IRS forms. A failure to file one or more of these forms as required may toll the running of the statute of limitations in respect of each of the U.S. holder s taxable years for which such form is required to be filed. As a result, the taxable years with respect to which the U.S. holder fails to file the form may remain open to assessment by the IRS indefinitely, until the form is filed. U.S. holders should consult their own tax advisor regarding the PFIC rules discussed above and the desirability of making a mark-to-market election in their particular circumstances. Taxation of Non-Tendering U.S. Holders Upon a Successful Consent Solicitation The U.S. federal income tax treatment of a non-tendering U.S. holder following the Proposed Amendments depends upon whether the modification of the debt instruments results in a deemed exchange for U.S. federal income or withholding tax purposes because of an economically significant modification as described in more detail under Tax Considerations for Exchanging U.S. Holders, above (a Deemed Exchange ). Under the Regulations, as discussed earlier (under the Tax Considerations for Exchanging U.S. Holders ), certain types of modifications are not significant modifications. In addition to the significant modification that could result from a change in the timing of a payment on a debt instrument (as discussed in more detail above under Tax Considerations for Exchanging U.S. Holders ), the Regulations provide that a change in yield of a debt instrument is a significant modification if the yield of the modified instrument (determined taking into account any accrued interest and any payments made to the holder as consideration for the modification) varies from the yield on the unmodified instrument (determined as of the date of the modification) by more than the greater of 0.25% or 5% of the annual yield of the unmodified instrument. The Proposed Amendments, including the reduction of the principal amount of and the change in yield on the Existing Notes, should cause a significant modification of the Existing Notes under the Regulations and therefore should result in a Deemed Exchange of the Existing Notes for U.S. federal income tax purposes. Accordingly, a non-tendering U.S. holder will recognize gain or loss equal to the difference, if any, between the issue price of the new notes deemed received in the Deemed Exchange determined in accordance with the rules as described above (see Tax Considerations for Exchanging U.S. Holders ) (the New Notes ) and the U.S. holder s adjusted tax basis in the Existing Notes. A U.S. holder that does not tender all of its Existing Notes should consult its own tax advisors with regard to the likelihood of a Deemed Exchange and the tax consequences to the U.S. holder of (i) disposing of Existing Notes pursuant to a Deemed Exchange and (ii) acquiring, holding and disposing of New Notes received pursuant to a Deemed Exchange, in each case, in light of the U.S. holder s particular circumstances. Taxation of U.S. Holders Resulting from the Proposed Amendments under the Contingency Plan In the event the Exchange Offer is unsuccessful and the Contingency Plan is put into effect, it is expected that the proposed amendments to the Existing Notes in the context of the Contingency Plan will result in 198

212 a significant modification of the Existing Notes and, thus, a deemed taxable exchange of the Existing Notes for new notes with the modified terms ( New Modified Notes ). Accordingly, a U.S. holder of an Existing Notes upon the occurrence of the Contingency Plan will recognize gain or equal to the difference, if any, between (i) the issue price of the New Modified Notes deemed received determined in a manner consistent with the issue price of the Exchange Notes described above under the heading Tax Considerations for Exchanging U.S. Holders and (ii) the U.S. holder s adjusted tax basis in the Existing Notes. A U.S. holder s adjusted tax basis in the Existing Notes generally will equal its original cost, increased by the amount of original issue discount, on the Existing Notes that is includible in such U.S. holder s gross income and market discount, if any, that a U.S. holder has elected to include in its gross income, and decreased by the amount of any payment under the Existing Notes other than a payment of qualified stated interest (as defined above). Subject to the application of the market discount rules discussed above (see Tax Considerations for Exchanging U.S. Holders Market Discount ), any gain or loss would be capital gain or loss, and would be long-term capital gain or loss if at the time of the deemed exchange the U.S. holder had held the Existing Notes for more than one year. The deduction of capital losses for U.S. federal income tax purposes is subject to limitations. Any gain or loss would generally be U.S.-source income for purposes of computing a U.S. holder s foreign tax credit limitation. A U.S. holder s holding period for such New Modified Notes would commence on the date immediately following the Closing Date and the holder s initial tax basis in such New Modified Notes would be equal to their issue price (determined as described above). Tax Consequences to U.S. Holders of Holding the New Modified Notes The U.S. tax federal income tax consequence to a U.S. holder of a New Modified Note generally will be substantially similar to the tax consequences described above under the heading Tax Consequences to U.S. Holders of Holding the Exchange Notes for a U.S. holder that participates in the Exchange Offer. U.S. holders of a New Modified Note should consult their its own tax advisors with regard to the tax treatment to them of holding New Modified Notes in the event of the Contingency Plan is put into effect. U.S. Backup Withholding Tax and Information Reporting A backup withholding tax and information reporting requirements apply to certain payments of principal of, and interest on, an obligation and to proceeds of the sale or redemption of an obligation, Warrants or our Warrant Shares, to certain U.S. holders. Information reporting generally will apply to payments of principal of, and interest on, Exchange Notes, and to proceeds from the sale or redemption of, Exchange Notes, Warrants, or Warrant Shares within the United States, or by a U.S. payor or U.S. middleman, to a U.S. holder (other than an exempt recipient that, if required, establishes its exemption and certain other persons). The payor will be required to backup withhold on payments made within the United States, or by a financial intermediary that is a United States person or has certain connection with the United States, on an Exchange Note, Warrant or Warrant Shares to a U.S. holder, other than an exempt recipient that has certified exempt status, if the holder fails to furnish its correct taxpayer identification number or otherwise fails to comply with, or establish an exemption from, the backup withholding requirements. The backup withholding tax rate is currently 28%. Backup withholding is not an additional tax. A U.S. holder generally will be entitled to credit any amounts withheld under the backup withholding rules against such holder s U.S. federal income tax liability and the U.S. holder may be entitled to a refund, provided the required information is furnished to the IRS in a timely manner. Foreign Asset Reporting Certain U.S. holders who are individuals are required to report information relating to an interest in the Exchange Notes, subject to certain exceptions (including an exception for Exchange Notes held in accounts maintained by financial institutions). U.S. holders are urged to consult their tax advisors regarding their information reporting obligations, if any, with respect to their ownership and disposition of the Exchange Notes. THE ABOVE DESCRIPTION IS NOT INTENDED TO CONSTITUTE A COMPLETE ANALYSIS OF ALL TAX CONSEQUENCES RELATING TO THE OWNERSHIP AND 199

213 DISPOSITION OF THE EXISTING NOTES, EXCHANGE NOTES, WARRANTS OR WARRANT SHARES PURSUANT TO THIS EXCHANGE OFFER. PROSPECTIVE HOLDERS OF EXCHANGE NOTES SHOULD CONSULT THEIR TAX ADVISORS CONCERNING THE TAX CONSEQUENCES OF THEIR PARTICULAR SITUATIONS. 200

214 TRANSFER RESTRICTIONS None of the Exchange Notes, the Warrants or the Warrant Shares have been or will be registered under the Securities Act or the securities laws of any other jurisdiction, and, unless so registered, none of the Exchange Notes, the Warrants or the Warrant Shares may be offered or sold except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and other applicable securities laws. Accordingly, the Exchange Notes, the Warrants and the Warrant Shares offered hereby are being offered (i) in the United States of America only to QIBs (as defined in Rule 144A) that are acquiring such securities for their own account or for a discretionary account or accounts on behalf of one or more QIBs in private transactions in reliance on an exemption from the registration requirements of the Securities Act and (ii) outside the United States of America in offshore transactions as defined in, and in accordance with, in reliance on Regulation S, and in each case in accordance with any applicable securities laws of any state of the United States of America. Terms used in this section that are defined in Rule 144A and Regulation S are used herein as defined therein. The Exchange Notes with Warrants will not be offered, sold or transferred, directly or indirectly, to the public in France. They may be offered, sold or transferred, directly or indirectly only to qualified investors (investisseurs qualifiés) acting for their own account and to a closed circle of investors (cercle restreint d investisseurs) acting for their own accounts as defined in and in accordance with Articles L.411-1, L.411-2, D and D of the French Code monétaire et financier. The Exchange Notes with Warrants will be offered and sold in any member state of the European Union only to qualified investors or to fewer than 150 natural or legal persons per member state (other than qualified investors as defined in the Prospectus Directive) as permitted under the Prospectus Directive. A person who is not already a shareholder or a security holder in Novasep is required to adhere to and comply with the full terms of the Novasep Securityholders Agreement prior to a transfer of equity securities (including the Warrants) to them ( Description of Novasep Share Capital The Novasep Securityholders Agreement Accession above). Each person who tenders hereunder, by its acceptance thereof, will be deemed to have acknowledged, represented to and agreed with us as follows: (1) it is the person that exercises investment discretion with respect to the Existing Notes tendered hereby (the Beneficial Owner ), or is a duly authorized representative of one or more Beneficial Owners of the Existing Notes tendered hereby, and it has full power and authority to tender, exchange, sell, assign and transfer the Existing Notes tendered hereby and execute the Letter of Transmittal; (2) when the Existing Notes tendered hereby are accepted for exchange, Novasep will acquire good, marketable and unencumbered title thereto, free and clear of all liens, restrictions, charges, pledges, security interests, encumbrances, and rights of any kind of third parties, and the Existing Notes tendered hereby are not subject to any adverse claims or proxies when such Existing Notes are accepted for exchange by Novasep; (3) it will not sell, pledge, hypothecate or otherwise encumber or transfer any Existing Notes tendered hereby from the date of the Letter of Transmittal and any purported sale, pledge, hypothecation or other encumbrance or transfer will be void and of no effect; (4) it is, or, in the event that it is acting on behalf of a Beneficial Owner of the Existing Notes tendered hereby, it has received a written certification from that Beneficial Owner, dated as of a specific date on or since the close of that Beneficial Owner s most recent fiscal year, to the effect that such Beneficial Owner is: a. either (a) not an Affiliate of Novasep (as defined in the Indenture) or acting on Novasep s behalf or (b) an Affiliate of Novasep (as defined in the 201

215 Indenture) or acting on Novasep s behalf and has identified itself as such in its Letter of Transmittal; b. either (a) a QIB and is acquiring the Exchange Notes, the Warrants and the Warrant Shares for its own account or for a discretionary account or accounts on behalf of one or more QIBs as to which it has been instructed and has the authority to make the statements contained herein or (b) is acquiring Exchange Notes, the Warrants and the Warrant Shares in an offshore transaction as defined in, and in accordance with, Regulation S under the Securities Act; c. either (a) a qualified investor within the meaning of the Prospectus Directive or (b) not incorporated or situated in any member state of the European Union; d. not located or resident in the United Kingdom or, if a resident of or located in the United Kingdom, a person within the definition of Investment Professionals (as defined in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the Order )) or within Article 43(2) of the Order or is a person to whom the solicitation may lawfully be communicated in accordance with the Order; e. not located or resident in France or, if located or resident in France, a (i) persons licensed to perform investment services relating to portfolio management for the account of third parties and/or (ii) qualified investor (investisseurs qualifiés) acting for its own account in accordance with Articles L.411-1, L and D of the French Code monétaire et financier; and f. not located or resident in the Grand Duchy of Luxembourg or, if located or resident in the Grand Duchy of Luxembourg, considered as a qualified investor within the meaning of the law of 10 July 2005 on prospectus for securities, as amended. (5) The Exchange Notes, the Warrants and the Warrant Shares are being offered in transactions not involving any public offering in the United States of America within the meaning of the Securities Act, that none of the Exchange Notes, the Warrants or the Warrant Shares have been or will be registered under the Securities Act or any securities laws of any jurisdiction and that for so long as the Exchange Notes, the Warrants and/or the Warrant Shares are restricted securities for purposes of the Securities Act: a. it will not offer, sell, pledge or otherwise transfer, directly or indirectly, such Exchange Notes, the Warrants and/or the Warrant Shares, as applicable, except (i) to Novasep or any of its subsidiaries, (ii) within the United States of America to a QIB acting for its own account or for a discretionary account or accounts on behalf of one or more QIBs in a transaction complying with Rule 144A under the Securities Act, (iii) in an offshore transaction as defined in, and in accordance with, Regulation S under the Securities Act, (iv) pursuant to an exemption from registration under the Securities Act (if available) or (v) pursuant to an effective registration statement under the Securities Act, subject, in each of the foregoing cases to compliance with any applicable state securities laws, and any applicable local laws and regulations, and further subject to Novasep s right prior to any such offer, sale or transfer pursuant to clause (iv) to require the delivery of an opinion of counsel, certification and/or other information satisfactory to it; and b. the holder will, and each subsequent holder is required to, notify any subsequent purchaser from it of the Exchange Notes, Warrants and/or the Warrant Shares, as applicable of the resale restrictions set forth in (a) above; 202

216 (6) it agrees on its own behalf and on behalf of any investor account for which it is investing in the Exchange Notes, the Warrants and/or the Warrant Shares and each subsequent holder of the Exchange Notes, the Warrants and/or the Warrant Shares, by its acceptance thereof, will be deemed to agree, to offer, sell or otherwise transfer such Exchange Notes, Warrants and/or Warrant Shares prior to the date (the Resale Restriction Termination Date ) that is one year after the later of the date of the original issue and the last date on which Novasep or any of its affiliates was the owner of such securities (or any predecessor thereto) only (i) to Novasep, (ii) pursuant to a registration statement that has been declared effective under the Securities Act, (iii) for so long as the Exchange Notes, the Warrants and/or the Warrant Shares are eligible pursuant to Rule 144A under the Securities Act, to a person it reasonably believes is a QIB that purchases for its own account or for the account of one or more QIBs to whom notice is given that the transfer is being made in reliance on Rule 144A under the Securities Act, (iv) in an offshore transaction as defined in, and in accordance with, Regulation S under the Securities Act or (v) pursuant to any other available exemption from the registration requirements of the Securities Act; (7) it agrees on its own behalf and on behalf of any investor account for which it is investing in the Warrants, and each subsequent holder of the Warrants by its acceptance thereof will be deemed to agree, that (A) on the date it proposes to exercise such Warrants, and as a condition of its right to exercise such Warrants and receive Warrant Shares, it shall be required to give to Novasep acknowledgements, representations and warranties substantially the same as those contained in paragraphs (4), (5), (6), (9), (11), (12), (13), (14), (15), (17), (19) and (20) and any other representations and warranties that Novasep deems necessary or advisable in connection with such issuance of Warrant Shares to ensure that such issuance is (i) a transaction exempt from, or not subject to, the registration requirements under the Securities Act and any applicable securities laws and (ii) in compliance with all applicable laws, and (B) agrees that it shall be required, as a condition of its rights to exercise such Warrants and receive Warrant Shares, to execute and submit to Novasep or its agent any documents deemed necessary or advisable by Novasep to document such acknowledgements, representations and warranties; (8) it will, upon request, execute and deliver any additional documents deemed by Novasep or the Exchange Agent to be necessary or desirable to complete the exchange, assignment and transfer of the Existing Notes tendered hereby; (9) it is not a person to whom it is unlawful to make an invitation to participate in, or solicit a tender pursuant to, the Exchange Offer and Consent Solicitation under applicable securities laws; (10) in evaluating the Exchange Offer and Consent Solicitation and in making its decision whether to participate in the Exchange Offer and Consent Solicitation by submitting the Letter of Transmittal and tendering its Existing Notes, it has made its own independent appraisal of the matters referred to in this Exchange Offer and Consent Solicitation Statement and the Letter of Transmittal and in any related communications and is not relying on any statement, representation or warranty, express or implied, made to it by Novasep or the Exchange Agent, other than those contained in the Exchange Offer and Consent Solicitation Statement, as amended or supplemented through the Expiration Date; (11) with respect to the acquisition, holding and disposition of Exchange Notes, the Warrants and/or the Warrant Shares, or any interest therein, (i) either (I) it is not, and it is not acting on behalf of (and for so long as it holds such securities or any interest therein will not be, and will not be acting on behalf of), (A) an employee benefit plan as defined in Section 3(3) of the Employee Retirement 203

217 Income Security Act of 1974, as amended ( ERISA ) that is subject to Title I of ERISA, (B) a plan as defined in Section 4975 of the Internal Revenue Code of 1986, as amended (the Code ), (C) a governmental plan as defined in Section 3(32) of ERISA or any other plan that is subject to a law substantially similar to Title I of ERISA or Section 4975 of the Code, or (D) an entity deemed to hold plan assets of any of the foregoing, or (II)(A) the acquisition, holding and disposition of such securities will not result in a non-exempt prohibited transaction under ERISA, Section 4975 of the Code or, in the case of a governmental plan, church plan, non-u.s. or other plan, a violation of any substantially similar applicable law ( Similar Law ); and (B) neither Novasep nor the Trustee nor any of its respective affiliates, is a sponsor of, or a fiduciary (within the meaning of Section 3(21) of ERISA or, with respect to a governmental, church or non-u.s. plan, any definition of fiduciary under Similar Laws) with respect to, the acquirer, transferee or holder in connection with any acquisition, transfer or holding of such securities, or as a result of any exercise by Novasep or any of Novasep s affiliates of any rights in connection with such securities, and no advice provided by Novasep or any of Novasep s affiliates has formed a primary basis for any investment or other decision by or on behalf of the acquirer, transferee or holder in connection with such securities and the transactions contemplated with respect to such securities; (ii) it will not sell or otherwise transfer such securities or any interest therein otherwise than to a purchaser or transferee that is deemed (or if required by the applicable indenture, certified) to make these same representations, warranties and agreements with respect to its acquisition, holding and disposition of such securities or any interest therein; and (iii) it represents and agrees it will be subject to each of the additional representations set forth under ERISA Considerations below; (12) it has such knowledge and experience in financial and business matters, that it is capable of evaluating the merits and risks of participating in the Exchange Offer and Consent Solicitation and that it, and any accounts for which it is acting, are each able to bear the economic risks of its, or their, investment; (13) it is not acquiring the Exchange Notes, the Warrants or the Warrant Shares with a view towards any distribution of the Exchange Notes, the Warrants or the Warrant Shares in a transaction that would violate the Securities Act or the securities laws of any state of the United States or any other applicable jurisdiction; provided that the disposition of its property and the property of any accounts for which it is acting as fiduciary will remain at all times within its control; (14) it understands and acknowledges that none of the Exchange Notes, the Warrants or the Warrant Shares have been or will be registered under the Securities Act or any other applicable securities laws and that the Exchange Notes, the Warrants and the Warrant Shares are being offered in transactions not requiring registration under the Securities Act or any other securities laws, and, unless so registered, none of the Exchange Notes, the Warrants or the Warrant Shares may be offered, sold or otherwise transferred except in compliance with the registration requirements of the Securities Act or any other applicable securities laws, pursuant to an exemption therefrom or in any transaction not subject thereto and, in each case, in compliance with the conditions for transfer set forth in paragraphs (5) and (6) above; (15) it acknowledges that until forty (40) days after the commencement of the Refinancing, any offer or sale of the Exchange Notes, the Warrants and/or the Warrant Shares within the United States of America by a dealer (whether or not participating in the Refinancing) may violate the registration requirements of the 204

218 Securities Act if such offer or sale is made otherwise than in accordance with Rule 144A under the Securities Act; (16) it acknowledges that no agent will be required to accept for registration or transfer any Exchange Notes, Warrants or Warrant Shares acquired by it except upon presentation of evidence satisfactory to Novasep and such agent that the restrictions set forth therein have been complied with; (17) it acknowledges that we and others will rely upon the truth and accuracy of its acknowledgements, representations, warranties and agreements and agrees that if any of the acknowledgements, representations, warranties and agreements deemed to have been made by its purchase of the Exchange Notes, the Warrants and/or the Warrant Shares are no longer accurate, it shall promptly notify us; (18) it acknowledges that none of Novasep, the guarantors, or any person representing any of them, has made any representation to it with respect to themselves or the offer of any of the Exchange Notes, the Warrants or the Warrant Shares other than the information contained in the Exchange Offer and Consent Solicitation Statement, which Exchange Offer and Consent Solicitation Statement has been delivered to it and upon which it is relying in making its investment decision with respect to the Exchange Notes and the Warrants. It acknowledges that it has had access to such financial and other information concerning us and the Exchange Notes and the Warrants as it has deemed necessary in connection with its decision to invest in any of the Exchange Notes and the Warrants including an opportunity to ask questions and request information; (19) it understands that no action has been taken in any jurisdiction (including the United States) by us that would result in a public offering of the Exchange Notes, the Warrants or the Warrant Shares or the possession, circulation or distribution of the Exchange Offer and Consent Solicitation Statement or any other material relating to us or the Exchange Notes, the Warrants or the Warrant Shares in any jurisdiction where action for such purpose is required; (20) it agrees to, and each subsequent holder is required to, notify any participant of the Exchange Notes, the Warrants and/or the Warrant Shares from it, or any transferee, of the resale or transfer restrictions referred to above, if then applicable; and (21) the terms and conditions of the Exchange Offer and Consent Solicitation Statement shall be deemed to be incorporated in, and form a part of, the Letter of Transmittal or the agreement to the terms of the Letter of Transmittal pursuant to an Electronic Exchange Instruction, which shall be read and construed accordingly. 205

219 ERISA CONSIDERATIONS The U.S. Employee Retirement Income Security Act of 1974, as amended ( ERISA ), imposes certain requirements on employee benefit plans (as defined in Section 3(3) of ERISA) subject to Title I of ERISA, including entities such as collective investment funds and separate accounts whose underlying assets include the assets of such plans (collectively, ERISA Plans ) and on those persons who are fiduciaries with respect to ERISA Plans. Investments by ERISA Plans are subject to ERISA s general fiduciary requirements, including, but not limited to, the requirement of investment prudence and diversification and the requirement that an ERISA Plan s investments be made in accordance with the documents governing the plan. Section 406 of ERISA and Section 4975 of the Code prohibit certain transactions involving the assets of an ERISA Plan (Section 4975 of the Code also imposes prohibitions for certain plans that are not subject to Title I of ERISA but which are subject to Section 4975 of the Code, such as individual retirement accounts or an entity deemed to hold the assets of such plans (together with ERISA Plans, Plans )) and certain persons (referred to as parties in interest within the meaning of Section 3(14) of ERISA or disqualified persons within the meaning of Section 4975 of the Code) having certain relationships to Plans, unless a statutory or administrative exemption is applicable to the transaction. A party in interest or disqualified person who engages in a prohibited transaction may be subject to excise taxes and other penalties and liabilities under ERISA and/or Section 4975 of the Code. Accordingly, each original or subsequent purchaser or transferee of any Exchange Note, Warrant and/or Warrant Share that is or may become a Plan fiduciary is responsible for determining that its purchase and holding of such Exchange Notes, Warrants and/or Warrant Shares will not constitute a non-exempt prohibited transaction under Section 406 of ERISA or Section 4975 of the Code. Non-U.S. plans, governmental plans and certain church plans, while not subject to the fiduciary responsibility provisions of ERISA or the prohibited transaction provisions of ERISA and Section 4975 of the Code, may nevertheless be subject to non-us, state, local or other federal laws or regulations that are substantially similar to the foregoing provisions of ERISA and the Code ( Similar Law ). Fiduciaries of any such plans should consult with their counsel before purchasing the Notes to determine the need for, and the availability, if necessary, of any exemptive relief under any such law or regulations. The fiduciary of a Plan that proposes to purchase and hold any Exchange Notes, Warrants and/or Warrant Shares should consider, among other things, whether such purchase and holding may involve (i) the direct or indirect extension of credit to a party in interest or a disqualified person, (ii) the sale or exchange of any property between a Plan and a party in interest or a disqualified person, or (iii) the transfer to, or use by or for the benefit of, a party in interest or disqualified person, of any Plan assets. Such parties in interest or disqualified persons could include, without limitation, the Company, the underwriters, the agents or any of their respective affiliates. Depending on the satisfaction of certain conditions which may include the identity of the Plan fiduciary making the decision to acquire or hold the Exchange Notes, the Warrants and/or the Warrant Shares on behalf of a Plan, Section 408(b)(17) of ERISA or Prohibited Transaction Class Exemption ( PTCE ) (relating to transactions effected by a qualified professional asset manager ), PTCE 90-1 (relating to investments by insurance company pooled separate accounts), PTCE (relating to investments by bank collective investment funds), PTCE (relating to investments by insurance company general accounts) or PTCE (relating to transactions directed by an in-house asset manager) (collectively, the Class Exemptions ) could provide an exemption from the prohibited transaction provisions of ERISA and Section 4975 of the Code. However, there can be no assurance that any of these Class Exemptions or any other exemption will be available with respect to any particular transaction involving the Exchange Notes, the Warrants and/or the Warrant Shares. Each person, including, without limitation, any fiduciary purchasing on behalf of a Plan or a governmental plan, church plan, non-u.s. or other plan will be deemed to have represented that: 206

220 (a) with respect to the acquisition, holding and disposition of Exchange Notes, Warrants and/or Warrant Shares, or any interest therein, (1) either (A) it is not, and it is not acting on behalf of (and for so long as it holds such Exchange Notes, Warrants and/or Warrant Shares or any interest therein will not be, and will not be acting on behalf of), a Plan or a governmental, church or non-u.s. plan which is subject to Similar Laws, and no part of the assets used or to be used by it to acquire or hold such Exchange Notes, Warrants and/or Warrant Shares or any interest therein constitutes the assets of any such Plan or governmental, church or non-u.s. plan which is subject to Similar Laws, or (B)(i) its acquisition, holding and disposition of such Exchange Notes, Warrants and/or Warrant Shares or any interest therein does not and will not constitute or otherwise result in a non-exempt prohibited transaction under Section 406 of ERISA and/or Section 4975 of the Code (or, in the case of a governmental, church or non-u.s. plan, a non-exempt violation of any Similar Laws); and (ii) neither Novasep nor the Trustee nor any of its respective affiliates, is a sponsor of, or a fiduciary (within the meaning of Section 3(21) of ERISA or, with respect to a governmental, church or non-u.s. plan, any definition of fiduciary under Similar Laws) with respect to, the acquirer, transferee or holder in connection with any acquisition, transfer or holding of such Exchange Notes, Warrants and/or Warrant Shares, or as a result of any exercise by Novasep or any of Novasep s affiliates of any rights in connection with such Exchange Notes, Warrants and/or Warrant Shares, and no advice provided by Novasep or any of Novasep s affiliates has formed a primary basis for any investment or other decision by or on behalf of the acquirer, transferee or holder in connection with such Exchange Notes, Warrants and/or Warrant Shares and the transactions contemplated with respect to such Exchange Notes, Warrants and/or Warrant Shares; and (2) it will not sell or otherwise transfer such Exchange Notes, Warrants and/or Warrant Shares or any interest therein otherwise than to a purchaser or transferee that is deemed (or if required by the applicable indenture, certified) to make these same representations, warranties and agreements with respect to its acquisition, holding and disposition of such Exchange Notes, Warrants and/or Warrant Shares or any interest therein; (b) the acquirer and any fiduciary causing it to acquire an interest in any Exchange Notes, Warrants and/or Warrant Shares agrees to indemnify and hold harmless Novasep, the Trustee, and their respective affiliates, from and against any cost, damage or loss incurred by any of them as a result of any of the foregoing representations and agreements being or becoming false; and (c) any purported acquisition or transfer of any Exchange Notes, Warrants and/or Warrant Shares or beneficial interest therein to an acquirer or transferee that does not comply with the requirements of the above provisions shall be null and void ab initio. THE PRECEDING DISCUSSION IS ONLY A SUMMARY OF CERTAIN ERISA IMPLICATIONS OF AN INVESTMENT IN THE EXCHANGE NOTES, WARRANTS AND WARRANT SHARES AND DOES NOT PURPORT TO BE COMPLETE. ELIGIBLE HOLDERS SHOULD CONSULT WITH THEIR OWN LEGAL, TAX, FINANCIAL AND OTHER ADVISORS PRIOR TO DECIDING TO EXCHANGE THEIR EXISTING NOTES FOR EXCHANGE NOTES AND WARRANTS TO REVIEW THESE IMPLICATIONS IN LIGHT OF SUCH HOLDERS PARTICULAR CIRCUMSTANCES. 207

221 PLAN OF DISTRIBUTION We will not receive any proceeds from any sale of Exchange Notes with Warrants by broker-dealers. Exchange Notes or Warrants received by broker-dealers for their own account pursuant to the Exchange Offer may be sold from time to time in one or more transactions in the over-the-counter market, in negotiated transactions, through the writing of options on the Exchange Notes or Warrants or a combination of such methods of resale, at market prices prevailing at the time of resale, at prices related to such prevailing market prices or negotiated prices. Any such resale may be made directly to purchasers or to or through brokers or dealers who may receive compensation in the form of commissions or concessions from any such broker-dealer and/or the purchasers of any such Exchange Notes or Warrants. Any broker-dealer that resells Exchange Notes or Warrants that were received by it for its own account pursuant to the Exchange Offer and any broker or dealer that participates in a distribution of such Exchange Notes or Warrants may be deemed to be an underwriter within the meaning of the Securities Act and any profit of any such resale of Exchange Notes or Warrants and any commissions or concessions received by any such persons may be deemed to be underwriting compensation under the Securities Act. 208

222 INDEPENDENT STATUTORY AUDITORS The consolidated financial statements of Novasep and its subsidiaries as of and for the fiscal years ended December 31, 2014 and December 31, 2015, incorporated by reference in this Exchange Offer and Consent Solicitation Statement, have been audited by Deloitte & Associés and Yzico as stated in their reports appearing herein. English translations of such consolidated financial statements are attached to this Exchange Offer and Consent Solicitation Statement as Annex C and Annex B, respectively. With respect to the unaudited consolidated interim financial statements of Novasep and its subsidiaries as of and for the six months ended June 30, 2016 (which include comparative financial information for the six months ended June 30, 2015), included herein Deloitte & Associés and Yzico have performed a review in accordance with French professional standards. Such unaudited consolidated interim financial statements are attached to this Exchange Offer and Consent Solicitation Statement as Annex A. 209

223 ENFORCEABILITY OF JUDGMENTS Novasep is a société par actions simplifiée incorporated under the laws of the Republic of France. The executive officers of Novasep are, and will continue to be, non-residents of the United States and a large majority of the assets of such company and such persons are located outside the United States. As a consequence, you may not be able to effect service of process on these non-u.s. resident directors and officers in the United States or to enforce judgments against them outside of the United States, including judgments of the U.S. courts predicated upon the civil liability provisions of the U.S. securities laws. We have been advised that there is doubt that a lawsuit based upon U.S. federal or state securities laws could be brought in an original action in France and that a foreign judgment based upon U.S. securities laws would be enforced in France. France The United States and France are not party to a treaty providing for reciprocal recognition and enforcement of judgments, other than arbitral awards rendered in civil and commercial matters. Accordingly, a judgment rendered by any U.S. federal or state court based on civil liability, whether or not predicated solely upon U.S. federal or state securities laws, enforceable in the United States, would not directly be recognized or enforceable in France. A party in whose favor such judgment was rendered could initiate enforcement proceedings (exequatur) in France before the relevant civil court (Tribunal de Grande Instance). Enforcement in France of such U.S. judgment could be obtained following proper (i.e., non-ex parte) proceedings if the civil court is satisfied that the following conditions have been met (which conditions, under prevailing French case law, do not include a review by the French court of the merits of the foreign judgment): the dispute is clearly connected to the country in which the judgment was rendered (U.S.) and the French courts did not have exclusive jurisdiction over the matter; such U.S. judgment does not contravene French international public policy rules, both pertaining to the merits and to the procedure of the case; such U.S. judgment is not tainted with fraud; and such U.S. judgment does not conflict with a French judgment or a foreign judgment which has become effective in France and there are no proceedings pending before French courts at the time enforcement of the judgment is sought and having the same or similar subject matter as such U.S. judgment. In addition, the discovery process under actions filed in the United States could be adversely affected under certain circumstances by French criminal law No of July 26, 1968, as modified by French law No of July 16, 1980 (relating to communication of documents and information of an economic, commercial, industrial, financial or technical nature to foreign authorities or persons), which could prohibit or restrict obtaining evidence in France or from French persons in connection with a judicial or administrative U.S. action. Similarly, French data protection rules (law No of January 6, 1978 on data processing, data files and individual liberties, as modified by law No of August 6, 2004) can limit under certain circumstances the possibility of obtaining information in France or from French persons in connection with a judicial or administrative U.S. action in a discovery context. Furthermore, if an original action is brought in France, French courts may refuse to apply the designated law if its application contravenes French public policy. Further, in an action brought in France on the basis of U.S. federal or state securities laws, French courts may not have the requisite power to grant all the remedies sought. Pursuant to Articles 14 and 15 of the French Civil Code, a French national (either a company or an individual) can sue a foreign defendant before French courts (Article 14) and can be sued by a foreign claimant before French courts (Article 15). For a long time, case law has interpreted these provisions as meaning that a French national, either claimant or defendant, could not be forced against its will to appear before a jurisdiction other than French courts. However, according to recent case law, the French court s jurisdiction towards French nationals is no longer mandatory to the extent an action has been commenced before a court in a jurisdiction which has sufficient contacts with the litigation and the 210

224 choice of jurisdiction is not fraudulent. In addition, the French national may waive its rights to benefit from the provisions of Articles 14 and 15 of the French Civil Code. 211

225 CERTAIN INSOLVENCY CONSIDERATIONS European Union Pursuant to Council Regulation (EC) No. 1346/2000 on insolvency proceedings (the EU Insolvency Regulation ), the court that shall have jurisdiction to open insolvency proceedings in relation to a company is the court of the Member State (other than Denmark) where the company concerned has its center of main interests (as that term is used in Article 3(1) of the EU Insolvency Regulation). The determination of where such company has its center of main interests is generally a question of fact on which the courts of different EU Member States may have differing and even conflicting views. The term center of main interests is not a static, but rather a fact and circumstances based concept and may therefore change from time to time. Although there is a rebuttable presumption under Article 3(1) of the EU Insolvency Regulation that a company has its center of main interests in the Member State in which it has its registered office, Preamble 13 of the EU Insolvency Regulation states that the center of main interests of a debtor should correspond to the place where the debtor conducts the administration of its interests on a regular basis and which is therefore ascertainable by third parties. In that respect, factors such as the location at which board meetings are held and the location where the company conducts the majority of its business, including the perception of the company s creditors of the center of the company s business operations, may all be relevant in determining where the company has its center of main interests, with the company s center of main interests at the time of initiation of the relevant insolvency proceedings being not only decisive for the international jurisdiction of the courts of a certain Member State, but also for the insolvency laws applicable to these insolvency proceedings because each court would, subject to certain exemptions, apply its local insolvency laws (lex fori concursus). If the center of main interests of a company is and will remain located in the state in which it has its registered office, the main insolvency proceedings in respect of such company under the EU Insolvency Regulation would be commenced in such jurisdiction and accordingly a court in such jurisdiction would be entitled to commence the types of insolvency proceedings referred to in Annex A to the EU Insolvency Regulation. Insolvency proceedings opened in one Member State under the EU Insolvency Regulation are to be recognized in the other EU Member States (other than Denmark), although secondary proceedings may be opened in another Member State. If the center of main interests of a debtor is in one Member State (other than Denmark) under Article 3(2) of the EU Insolvency Regulation, the courts of another Member State (other than Denmark) have jurisdiction to open secondary (or territorial ) insolvency proceedings only in the event that such debtor has an establishment in the territory of such other Member State within the meaning of Article 2(h) of the EU Insolvency Regulation. The effects of those secondary insolvency proceedings are restricted to the assets of the debtor located in the territory of such other Member State. If the main insolvency proceedings have been opened by the court of the EU Member State where the center of main interests of the debtor is situated, and are outstanding, then the territorial proceedings ( secondary proceedings) can only be winding-up proceedings. If the company does not have an establishment in any other Member State, no court of any other Member State has jurisdiction to open secondary insolvency proceedings in respect of such Issuer or Guarantor under the EU Insolvency Regulation. Irrespective of whether the insolvency proceedings are main or secondary insolvency proceedings, such proceedings will always, subject to certain exemptions, be governed by the lex fori concursus, i.e., the local insolvency law of the court which has assumed jurisdiction for the insolvency proceedings of the debtor. In the event that the Issuer or any Guarantor experiences financial difficulty, it is not possible to predict with certainty in which jurisdiction or jurisdictions insolvency or similar proceedings will be commenced, or the outcome of such proceedings. Applicable insolvency laws may affect the enforceability of the obligations of the Issuer and the Guarantors. The insolvency, administration and other laws of the jurisdictions in which the respective companies are organized or operate may be materially different from, or conflict with, each other and there is no assurance as to how the insolvency laws of the potentially involved jurisdictions will be applied in relation to one another. A new Council Regulation (EC) no. 2015/848 of May 20, 2015 on insolvency proceedings (the New EU Insolvency Regulation ) came into force on June 26, 2015, and will gradually replace the EU 212

226 Insolvency Regulation, but its main provisions will only become effective on June 26, One of the main changes introduced by the New EU Insolvency Regulation consists in an increased scrutiny in situations where there has been a recent COMI shift. Where a company s COMI has shifted in the preceding 3 months the rebuttable presumption that its COMI is at the place of its registered office will no longer apply. Also, the opening of secondary proceedings in another EU Member State which will no longer be limited only to winding-up proceedings - will be possible not only if the debtor has an establishment in such EU Member State at the time of the opening of main insolvency proceedings, but also if the debtor had an establishment in such EU Member State in the 3-month period prior to the request of opening of main insolvency proceedings. France Novasep should be subject to French laws and proceedings affecting creditors, including Article of the French Civil Code (Code civil), mandat ad hoc, conciliation proceedings (procédure de conciliation), safeguard proceedings (procédure de sauvegarde), accelerated safeguard procedure (procédure de sauvegarde accélérée), accelerated financial safeguard procedure (procédure de sauvegarde financière accélérée) and judicial reorganization or liquidation proceedings (redressement or liquidation judiciaire). In general, French legislation favors the continuation of a business and protection of employment over the payment of creditors. The following is a general discussion of insolvency proceedings governed by French law for information purposes only and does not address specifically all the French law considerations that may be relevant to creditors. Therefore, the contents of these considerations should not be treated as advice relating to legal matters described herein. Grace periods In addition to pre-insolvency and insolvency laws discussed below, the holders of the Exchange Notes could, like any other creditors, be subject to Articles et seq. of the French Civil Code (Code civil). Pursuant to Article of the French Civil Code, French courts may, in any civil or commercial proceedings involving the debtor, whether initiated by the debtor or the creditor, taking into account the debtor s financial position and the creditor s financial needs, defer or otherwise reschedule the payment dates or payment obligations over a maximum period of two years. In addition, pursuant to Article , if a debtor specifically initiates proceedings thereunder, French courts may decide that any amounts, the payment date of which is thus deferred or rescheduled, will bear interest at a rate which is lower than the contractual rate (but not lower than the legal rate, as published annually by the French government) or that payments made shall first be allocated to repayment of principal. If a court order under Article et seq. of the French Civil Code is made, it will suspend any pending enforcement measures, and any contractual default interest or penalty for late payment will not accrue or be due during the period ordered by the court. A creditor cannot contract out of such grace periods. When the debtor benefits from a conciliation proceeding, these statutory provisions shall be read in combination with Article L and Article L of the French Commercial Code (see Conciliation proceedings ). Insolvency test Under French law, a company is considered to be insolvent (en état de cessation des paiements) when it is unable to pay its debts as they fall due with its available assets taking into account available credit lines, existing debt rescheduling agreements and moratoria. Mandat ad hoc proceedings A French company facing difficulties without being insolvent (see Insolvency test ) may request the opening of mandat ad hoc proceedings, the aim of which is to reach an agreement with the debtor s main creditors and stakeholders. French law does not provide for any specific rule in respect of mandat ad hoc proceedings, except that these proceedings (i) are confidential by law and (ii) may only be initiated by the debtor company itself, in its sole discretion. Mandat ad hoc proceedings are not limited in time and are informal proceedings carried out under the aegis of a court-appointed officer (mandataire ad hoc, whose name can be suggested by the debtor) itself under the supervision of the President of the relevant court (usually the 213

227 Commercial Court), which do not automatically involve any stay of the claims and pending proceedings. The debtor s statutory auditors, if any, shall be notified of the order appointing the mandataire ad hoc for information purposes. The mandataire ad hoc s duties are determined by the order of the President of the court. Such mandataire ad hoc is usually appointed in order to facilitate negotiations with creditors but they cannot coerce the creditors into accepting any proposal. The agreement reached by the parties (if any) with the help of such mandataire ad hoc can be reported by the latter to the President of the court but is not approved by the court. The restructuring agreement between the company and its main creditors will be negotiated on a purely consensual and voluntary basis; those creditors not willing to take part cannot be bound by the arrangement. Creditors are not barred from taking legal action against the company to recover their claims but, in practice, they usually decide not to do so. In any event, the debtor retains the right to petition the relevant judge for a grace period pursuant to Articles et seq. of the French Civil Code, as set forth above. Any contractual provision that modifies the conditions for the continuation of an ongoing contract by reducing the debtors rights or increasing its obligations simply by reason of the designation of a mandataire ad hoc or of a request submitted to this end, and any contractual provision requiring the debtor to bear, by reason only of the appointment of a mandataire ad hoc, more than three-quarters of the fees of the professional advisers retained by creditors in connection with these proceedings, are deemed null and void. Conciliation proceedings A French company facing difficulties without being insolvent, or being insolvent for less than forty-five (45) calendar days (see Insolvency test ), may request the opening of conciliation proceedings (procédure de conciliation), the aim of which is to reach an agreement with the debtor s main creditors and stakeholders. Points that conciliation proceedings have in common with mandat ad hoc proceedings are (i) confidentiality by law and (ii) they may only be initiated by the debtor company itself, in its sole discretion. Main differences include (i) the conditions to open conciliation proceedings, (ii) the limitation in time of conciliation proceedings, (iii) the right to petition the president of the Court for a grace period and (iv) the ability to acknowledge or approve the restructuring agreement. Such company may apply for the opening of conciliation proceedings (procédure de conciliation) with respect to itself if it experiences current or predictable legal, economic or financial difficulties. It petitions the president of the relevant court (usually the Commercial Court) for the appointment of a conciliator (conciliateur) (whose name it can suggest) in charge of assisting the debtor in negotiating with some or all of its creditors and/or trade partners an agreement that provides for the restructuring of its indebtedness. Conciliation proceedings are confidential (subject to certain exceptions, such as the notification to the debtor s auditors of the order appointing the conciliateur) and may last up to four (4) months, although an additional month extension can be requested by the conciliator. During the proceedings, creditors may continue to sue individually for payment of their claims but they usually decide not to do so. In addition, under Article L of the French Commercial Code, the debtor retains the right to petition the president of the Court which rendered the order for a grace period pursuant to Articles et seq. of the French Civil Code, in which case the decision would be taken having heard the conciliator. This agreement may be either acknowledged (constaté) by the president of the court or approved (homologué) by the court. It will become binding upon them and the creditors party thereto may not take action against the company in respect of claims governed by the conciliation agreement. The acknowledgement (constatation) of the agreement by the president of the court upon all parties request, gives the agreement the legal force of a final judgment, which means that it constitutes a judicial title that can be enforced by the parties without further recourse to a judge (titre exécutoire), but the conciliation proceedings remain confidential (i.e., third parties and non-party creditors are not entitled to know about the content of this agreement). So long as the conciliation agreement is in effect, interests accruing on the affected claims can no longer be compounded. 214

228 The conciliation agreement can also be approved by the court upon the debtor s request and under specific conditions. It will make the conciliation public and have the following specific consequences: creditors who provided new money, goods or services designed to ensure the continuation of the business of the distressed company (other than shareholders providing new equity) will have priority of payment over all pre-proceeding and post-proceeding claims (other than certain postproceeding employment claims and procedural costs), in the event of subsequent safeguard proceedings, judicial reorganization proceedings or judicial liquidation proceedings (the New Money Lien ); and; in the event of subsequent judicial reorganization proceedings or judicial liquidation proceedings, the date of the cessation des paiements and therefore the commencement date of the hardening period (période suspecte) (as defined below, see The hardening period (période suspecte) in judicial reorganization and liquidation proceedings ) cannot except in cases of fraud (see Fraudulent conveyance ) be set by the court as of a date earlier than the date of the approval (homologation) of the agreement (see definition of the date of the cessation des paiements in Judicial reorganization or liquidation proceedings ). The court decision approving the conciliation agreement does not make its terms public (save for the information given to the works council or the employees representatives, if any, on the content of the agreement) but makes public the guarantees and the terms of the New Money Lien granted to the creditors under the conciliation agreement. In case of acknowledgement (constatation) or approval (homologation), the President of the court can, at the request of the debtor, appoint the conciliator to monitor the implementation of the agreement (mandataire à l exécution de l accord) during its execution. While the agreement (whether acknowledged or approved) is in force, the debtor retains the right to petition the court that opened conciliation proceedings for a debt rescheduling, pursuant to Article et seq. of the French Civil Code mentioned above, in relation to claims of creditors (other than public creditors) party to the conciliation, in which case the decision would be taken after having heard the conciliator in the event that he has been appointed to monitor the implementation of the agreement. Joint debtors, personal guarantors, or any third party having granted a guarantee (sûreté personnelle) or a security interest (sûreté réelle) to guarantee the debtor s liabilities can benefit from the provisions of the approved or acknowledged conciliation agreement. In the event of a breach of the agreement, any party to the agreement that has been acknowledged or approved in the manner described above can petition the court for its termination. If such termination is granted, grace periods granted in relation to the conciliation proceedings may also be revoked. Conversely, provided that the conciliation agreement is duly performed, any individual proceeding by creditors with respect to the claims included in the agreement are suspended. The commencement of subsequent insolvency proceedings will automatically put an end to the conciliation agreement, in which case the creditors will recover their claims and security interests, except amounts already paid to them. Conciliation proceedings, in the context of which a draft plan has been negotiated and is supported by a large majority of creditors (2/3 vote of each creditors committee, and 2/3 vote of the Bondholders Single Assembly, if any), will be a mandatory preliminary step of the accelerated safeguard and the accelerated financial safeguard proceedings, as described below. In the event of the commencement of subsequent safeguard or judicial reorganization proceedings, within the context of the adoption of a safeguard plan or a recovery plan, the court will not be able to impose a payment deferral to a date later than the date on which the plan is adopted, or debt reductions to creditors with respect to their claims benefiting from the New Money Lien. At the request of the debtor and after the participating creditors have been consulted on the matter, the conciliator may be appointed with a mission to organize the partial or total sale of the debtor. Such sale would be implemented, as applicable, in the context of subsequent safeguard, judicial reorganization or liquidation proceedings; any offers received in this context by the conciliator may be directly submitted to the court in the context of reorganization or liquidation proceedings after consultation of the public prosecutor. 215

229 Any contractual provision that modifies the conditions for the continuation of an ongoing contract by reducing the debtors rights or increasing its obligations simply by reason of the commencement of conciliation proceedings or of a request submitted to this end, and any contractual provision requiring the debtor to bear, by reason only of the commencement of conciliation proceedings, more than threequarters of the fees of the professional advisers retained by creditors in connection with these proceedings, are deemed null and void. Safeguard proceedings A company which experiences difficulties that it is not able to overcome may, in its sole discretion, initiate safeguard proceedings (procédure de sauvegarde) with respect to itself, provided it is not insolvent (see Insolvency test ). Creditors of the company do not attend the hearing before the court at which the opening of safeguard proceedings is requested. Following the opening of safeguard proceedings, a court-appointed administrator (administrateur judiciaire) is usually appointed in accordance with Articles L and L of the French Commercial Code to investigate the business of the company during an observation period (the period from the date of the court decision commencing the proceedings to the date on which the Court takes a decision on the outcome of the proceedings), which may last up to 18 months, and helps the company to elaborate a draft safeguard plan (projet de plan de sauvegarde) that it will propose to its creditors. Creditors do not have effective control over the proceedings, which remain in the hands of the debtor assisted by the court-appointed administrator (administrateur judiciaire) who will, pursuant to the terms of the opening judgment, exercise a control a posteriori over decisions made by the debtor (mission de surveillance) or assist the debtor to make all or some of the management decisions (mission d assistance), all under the supervision of the court. The judgment opening a safeguard or a judicial reorganization proceeding renders due and payable all unpaid share capital of the debtor. The creditor s representative (mandataire judiciaire) is entitled to demand a shareholder to pay its portion of unpaid capital, immediately after the opening of the proceeding. During the safeguard proceedings, payment by the debtor of any debts incurred prior to the opening of the proceedings is prohibited, subject to very limited exceptions. In addition, creditors are required to declare to the court-appointed creditors representative (mandataire judiciaire), appointed by the court in accordance with Article L of the French Commercial Code, the debts that arose prior to the opening of the procedure (as well as the post-opening non-privileged debts) (See Other Rules Applicable in Safeguard, Judicial Reorganization and/or Liquidation Proceedings ). The manner in which the liabilities will be settled, as provided for in the plan (debt remissions and payment times) must be submitted to the creditors during a consultation, prior to the plan being approved by the court. The rules governing consultation vary according to the size of the business. Ordinary consultation: where credit committees have not been established (see below Committeebased consultation ), the court-appointed administrator notifies the proposals for the settlement of debts to the court-appointed creditors representative, who obtains the agreement of each creditor who filed a claim, regarding the debt remissions and payment times proposed. Creditors are consulted individually or collectively. The French Commercial Code does not state whether the proposals for settlement can vary according to the creditor and whether the principle of equal treatment of creditors is applicable at the consultation stage. According to legal commentaries and established practice, in the absence of a specific legislative prohibition, varying treatment of creditors is possible, provided that it is justified by the specific position of the creditors and approved by the court-appointed creditors representative. In practice, it is also possible at the consultation stage to make a proposal for a partial payment of the claim over a shorter time period instead of a full payment of the claim over a maximum period of ten (10) years. Creditors whose payment terms are not affected by the plan or who are paid in cash in full as soon as the plan is approved are not consulted. In the event of a consultation in writing, if a creditor does not respond within thirty (30) days as from 216

230 receipt of the letter from the creditors representative (mandataire judiciaire), the creditor is deemed to have accepted the proposal, except when the proposal includes debt-for-equity swap. The creditors representative keeps a list of the responses from creditors, which is notified to the debtor, the courtappointed administrator and the controllers. Within the framework of an ordinary consultation, if the creditors refuse the proposals that were submitted to them, the court that approves the turnaround plan can impose on them a uniform rescheduling of their claims (subject to the specific regime of claims benefiting from the New Money Lien) over a maximum period of ten (10) years (except for claims with maturity dates of more than the deferral period set by the court, in which case the maturity date shall remain the same), but no waiver of any claim or debt-for-equity swap may be imposed without its creditor s individual acceptance. Following a court imposed rescheduling, the first payment must be made within a year of the judgment adopting the plan (in the third and subsequent years, the amount of each annual installment must be at least 5% of the total amount of the debt claim) or the year following the initial maturity of the claim if it is later than the date of the first anniversary of the adoption of the plan, in which case the amount of the payment is determined in accordance with specific rules in order to ensure that the full amount of the claim is repaid within the ten (10) year period. Committee-based consultation: for debtors whose accounts are certified by a statutory auditor or prepared by a chartered accountant, and who have more than 150 employees or 20 million of revenue, or with the consent of the court at the court-appointed administrator or debtor s request in the case of debtors that do not exceed the aforementioned thresholds, the court-appointed administrator sets up two creditors committees, on the basis of the debts that arose prior to the initial judgment: one for credit institutions (or assimilated institutions and entities having granted credit or advances in favor of the debtor) and their successive assignees having a claim against the debtor, and the other one for suppliers having a claim that represents more than 3% of the total amount of the claims of all the debtor s suppliers and other suppliers invited to participate in such committee by the court-appointed administrator. These committees will be consulted on the safeguard plan drafted by the debtor s management during the observation period. In addition, any member of these committees may submit proposals for drawing up a safeguard plan to the debtor and the court-appointed administrator. If there are any outstanding debt securities in the form of obligations (such as bonds or notes), a Bondholders Single Assembly of all holders of such obligations will be established irrespective of whether or not there are different issuances and of the governing law of those obligations. The Notes constitute obligations for the purposes of safeguard proceedings. The plan must be approved by a two-thirds (2/3) majority vote of each committee and of the Bondholders Single Assembly. Such majority is calculated based on the sum of debt owned by each of the creditors expressing a vote. Each member of the committees and of the Bondholders Single Assembly may vote, including any affiliate of the debtor. The plan submitted to the committees and the bondholders, if any, must take into account subordination agreements entered into by the creditors before the commencement of the proceedings, may treat creditors differently if it is justified by their differences in situation and may, inter alia, include a rescheduling or cancellation of debts (subject to the specific regime of claims benefiting from the New Money Lien), and/or debt-for-equity swaps (debt-for-equity swaps requiring the relevant shareholder consent). If the plan provides for a share capital increase, the shareholders may subscribe to such share capital increase by way of a set-off with their claims against the debtor, as reduced as the case may be according to the provisions of the plan. Creditors which are members of the credit institutions committee or the suppliers committee may also prepare an alternative safeguard or reorganization plan that will also be put to the vote of the committees and of the general bondholders meeting, it being specified that approval of these alternative plans is subject to the same two-thirds majority vote in each committee and in the meeting of holders of notes and gives rise to a report by the court-appointed administrator. Bondholders are not permitted to present their own alternative plan. 217

231 Each creditor member of a creditors committee and each bondholder must, if applicable, inform the court-appointed administrator of the existence of any agreement relating to the exercise of its vote, to the full or total payment of its claim by a third party as well as of any subordination agreement. The courtappointed administrator shall then submit to the creditor/bondholder a proposal for the computation of its voting rights in the creditors committee/ Bondholders Single Assembly. In the event of a disagreement, the creditor/bondholder or the court-appointed administrator may request that the matter be decided by the president of the Court in summary proceedings. The amounts of the claims secured by a trust (fiducie) constituted as a guarantee granted by the debtor are not taken into account. In addition, creditors for whom the plan does not provide any modification of their repayment schedule or provides for a payment of their claims in cash in full as soon as the plan is adopted or as soon as their claims are admitted do not take part in the vote. Following approval by the creditors committees and the Bondholders Single Assembly and determination of a rescheduling or partial cancellation against cash payment of the claim of creditors that are not members of the committees or bondholders, as discussed hereafter, the plan has to be approved (arrêté) by the court. In considering such approval, the court has to verify that the interests of all creditors are sufficiently protected and that relevant shareholder consent, if any is required, has been obtained. Once approved by the court, the safeguard plan will be binding on all the members of the committees and all bondholders (including those who did not vote or voted against the adoption of the plan). Creditors outside the creditors committees or the Bondholders Single Assembly are consulted in accordance with the standard consultation process referred to above. In the event that the debtor s proposed plan is not approved by both committees and the Bondholders Single Assembly within the first six (6) months of the observation period, either because they did not vote on the plan or because they rejected it, this six (6) month period may be extended by the court at the request of the court-appointed administrator, to the extent it does not exceed the duration of the observation period, in order for the plan to be approved by the committee-based consultation process. Absent such extension, the court can still adopt a safeguard plan in the time remaining until the end of the observation period. In such a case, the rules are the same as the ones applicable to creditors who are not part of the committees and who are not bondholders and, in particular, the court can only impose a uniform rescheduling of the repayment of the debts over a maximum period of ten (10) years (as described above). If the court empowers the court-appointed administrator to convene a shareholders meeting in order to take corporate resolutions with respect to the modification of the debtor s share capital required by a safeguard plan, the court may order that, under certain conditions, the shareholders decisions be adopted by a majority vote of the shareholders attending or represented, as long as such shareholders own at least half of the shares with voting rights. If no plan is adopted by the committee and the Bondholders Single Assembly, at the request of the debtor, the court-appointed administrator, the creditors representative (mandataire judiciaire) or the public prosecutor, the court may convert the safeguard proceedings into judicial reorganization proceedings if it appears that the adoption of a safeguard plan is impossible and if the end of the safeguard proceedings would certainly lead to the debtor becoming insolvent shortly thereafter. In certain specific instances, public creditors (creditors that are public institutions, such as financial administrations, social security and unemployment insurance organizations) may agree to grant debt remissions under conditions that are similar to those that would be granted by a private economic operator placed in the same position, under normal market conditions. Public creditors may also decide to enter into subordination agreements for liens or mortgages, or relinquish these security interests. Public creditors are consulted under specific conditions, within the framework of a local administrative committee (Commission des Chefs de Services Financiers). The tax administrations may grant relief from all direct taxes. With respect to indirect taxes, relief may only be granted from default interest, adjustments, penalties or fines. In the event that safeguard (or judicial reorganization) proceedings are opened against Novasep, the holders of the Existing Notes together with the holders of the remaining amended notes (See 218

232 Description of Other Indebtedness and Certain Financial Arrangements Remaining Amended Notes Formerly Due 2016 ) will be treated as bondholders of Novasep and will take part in the Bondholders Single Assembly. Therefore, the holders of the Existing Notes would vote on any draft safeguard plan proposed by Novasep as members of the Bondholders Single Assembly. Accelerated safeguard and accelerated financial safeguard A debtor in conciliation proceedings may request commencement of accelerated safeguard proceedings (procédure de sauvegarde accélérée) or accelerated financial safeguard proceedings (procédure de sauvegarde financière accélérée). The accelerated safeguard proceedings and accelerated financial safeguard proceedings have been designed to fast-track difficulties of large companies which are not insolvent for more than forty-five (45) days and: which publish consolidated accounts in accordance with article L of the French Commercial Code; or which publish accounts certified by a statutory auditor or established by a certified public accountant and have (i) more than twenty (20) employees or (ii) a turnover greater than 3 million excluding VAT or (iii) whose total balance sheet exceeds 1.5 million. The accelerated financial safeguard proceedings apply only to financial creditors (i.e., creditors that belong to the credit institutions committee and to the Bondholders Single Assembly), the payment of whose debt is suspended until adoption of a plan through the accelerated financial safeguard proceedings. As to financial creditors, the debtor will be prohibited from paying any amounts (including interests) in connection with the finance documents that fall due during the observation period. Such amounts may be paid only after the judgment of the court approving the safeguard plan and in accordance with its terms. Creditors other than financial creditors (such as public creditors, the tax or social security administration and suppliers) are not impacted by accelerated financial safeguard proceedings. Their debts will continue to be due and payable in the ordinary course of business according to their contractual or legal terms. In this respect, the court-appointed administrator shall not convene any suppliers committee. To be eligible for accelerated safeguard proceedings or accelerated financial safeguard proceedings, the debtor must fulfill three conditions: (i) (ii) (iii) the debtor must be subject to ongoing conciliation proceedings when it applies for the commencement of accelerated safeguard proceedings or accelerated financial safeguard proceedings; as is the case for regular safeguard proceedings, the debtor must face difficulties which it is not in a position to overcome; and the debtor must have prepared a draft safeguard plan ensuring the continuation of its business as a going concern supported by enough of its creditors, members of, as applicable, its credit institutions or major suppliers committee or its Bondholders Single Assembly, to render likely its adoption by a two-thirds (2/3) majority of the relevant committee(s) and Bondholders Single Assembly within a maximum of three (3) months following the commencement of accelerated safeguard proceedings and of one (1) month following the commencement of accelerated financial safeguard proceedings (that can be extended by an additional month). The regime applicable to accelerated safeguard or accelerated financial safeguard proceedings is broadly the regime applicable to standard safeguard proceedings to the extent compatible with the accelerated timing. In particular, the creditors committees and the Bondholders Single Assembly are required to vote on the proposed safeguard plan within a minimum period of fifteen (15) days of its being sent to the creditors in the case of accelerated safeguard proceedings or within eight (8) days thereof in accelerated financial safeguard proceedings. 219

233 The plan, in the context of accelerated safeguard proceedings or accelerated financial safeguard proceedings, is adopted following the same majority rules as in standard safeguard proceedings and may notably provide for rescheduling, debt cancellation and conversion of debt into equity capital in the debtor (debt-for-equity swaps requiring relevant shareholder consent). If a plan is not adopted by the creditors and approved by the court within the deadlines applicable to each, the court must terminate the proceedings. The court cannot reschedule amounts owed to the creditors outside of the committee process. The list of claims of creditors party to the conciliation proceedings shall be drawn up by the debtor and certified by the statutory auditor and shall be deemed to constitute the filing of such claims for the purpose of the accelerated safeguard proceedings or, as applicable, accelerated financial safeguard proceedings unless the creditors otherwise elect to make such a filing. Judicial reorganization or liquidation proceedings Judicial reorganization or liquidation proceedings (redressement or liquidation judiciaire) may be initiated against or by a company only if it is insolvent (see Insolvency test ) and, with respect to liquidation proceedings only, if the company s recovery is manifestly impossible. The company is required to file for insolvency proceedings (or for conciliation proceedings) within fortyfive (45) days of becoming insolvent if it has not otherwise requested the commencement of conciliation proceedings (as discussed above). If it does not, de jure managers (including directors) and, as the case may be, de facto managers are exposed to incurring civil liability (including the prohibition from managing, running, administrating or controlling, directly or indirectly, any commercial or craftsman's business, any agricultural activity or any legal entity or one or more of these). Protective measures may also be taken in relation to assets owned by de jure or de facto managers of the insolvent company pursuant to Article L of the French Commercial Code, on the basis of an action grounded on mismanagement having caused the insolvency. Where the debtor requested the commencement of judicial reorganization proceedings and the court considers that judicial liquidation proceedings would be more appropriate, after having heard the debtor, the court may order the commencement of the proceedings which it finds most appropriate. The same would apply if the debtor requested the commencement of judicial liquidation proceedings and the court considers that judicial reorganization proceedings would be more appropriate. In addition, at any time during the safeguard proceedings observation period, the court may convert such proceedings into reorganization proceedings (i) upon its own motion, at the request of the creditors representative, the court-appointed administrator or the public prosecutor if the debtor company becomes insolvent; or (ii) at the request of the debtor company, the creditors representative, the court-appointed administrator or the public prosecutor, if the approval of a safeguard plan is manifestly impossible and if the company would become insolvent should safeguard proceedings be closed. In all cases, the court s decision is only taken after having heard the debtor, the court-appointed administrator, the creditors representative, the public prosecutor and the workers representatives (if any). In the event of reorganization, an administrator (administrateur judiciaire) is usually appointed by the court to investigate the business of the company during an observation period, which may last up to eighteen (18) months, and makes proposals either for the reorganization of the company (by helping the debtor to elaborate a reorganization plan, which is similar to a safeguard plan; see above), or the sale of the business or the liquidation of the company. The administrator also assists the debtor to make all or some of the management decisions (mission d assistance) or may be empowered by the court to take over the management and control the company (mission d administration). Committees of creditors and meeting of the noteholders may be created under the same conditions as in safeguard proceedings. At any time during this observation period, the court can order the liquidation of the company. At the end of the observation period, the outcome of the proceedings is decided by the court. In reorganization proceedings, in case a shareholders meeting needs to vote to bring the shareholders equity to a level equal to at least one half of the share capital as required by article L of the French Commercial Code, the court-appointed administrator may appoint a trustee (mandataire en justice) to convene a shareholders meeting and to vote on behalf of the shareholders which refuse to vote in favor 220

234 of such a resolution if the draft restructuring plan provides for a modification of the equity to the benefit of a third party(ies) undertaking to comply with the recovery plan. In addition pursuant to article L of the French commercial code, if during reorganization proceedings, a change in the equity structure seems to be the sole solution to avoid a cessation of business, a dissenting shareholder may be diluted by a capital increase approved at a shareholder assembly convoked by a court appointed trustee (mandataire), who will exercise the voting rights of the dissenting shareholder. The court may also force such dissenting shareholder to sell its shares in the company to a new shareholder who commits to execute the restructuring plan. An expert will be designated by the court to estimate the value of the shares. Such dilution or sale process applies in cases where (i) the company and the entities it controls have more than one hundred and fifty (150) employees, (ii) liquidation would cause serious disruption to the national or regional economy and to regional employment, and (iii) the dilution or sale process is the only solution to avoid cessation of business. If the court decides to order the judicial liquidation of the debtor, the court will appoint a liquidator, who is generally the former creditors representative (mandataire judiciaire). No maximum time period is provided by law to limit the duration of the judicial liquidation process. The liquidator is vested with the power to represent the debtor and perform the liquidation operations (mainly liquidate the assets and settle the liabilities to the extent the proceeds from the liquidated assets are sufficient, in accordance with the creditors priority order for payment). The managers of the company are no longer in charge of the management. Concerning the liquidation of the assets of the debtor, there are two possible outcomes of such liquidation scenario: (i) (ii) a plan for the sale of the business (plan de cession) (in which case the court will usually appoint an administrator to manage the debtor and organize such sale of the business); or a sale of the individual assets of the debtor, in which case the liquidator may decide to: a. launch auction sales; b. sell on an amicable basis each asset for which spontaneous purchase offers have been received (the formal authorization of the bankruptcy judge being necessary to conclude the sale agreement with the bidder); or c. request, under the supervision of the bankruptcy judge, from all potential interested purchasers to bid on each asset, as the case may be, by way of a private competitive process whereby the bidders submit their offers only at the hearing without the proposed prices being disclosed before such hearing (procédure des plis cachetés). When either no overdue liabilities remain, the liquidator has sufficient funds to pay off the creditors (extinction du passif), or continuation of the liquidation process becomes impossible due to insufficiency of assets (insuffisance d actif), the court terminates the proceedings. The court may terminate the proceedings when the interest of the continuation of the liquidation process is disproportionate compared to the difficulty of selling the assets. The court may also appoint a mandataire in charge of continuing ongoing lawsuits and allocating the amounts received from these lawsuits between the remaining creditors. The hardening period (période suspecte) in judicial reorganization and liquidation proceedings The date of insolvency (cessation des paiements) is deemed to be the date of the court order commencing proceedings, unless the court sets an earlier date, which may be no earlier than eighteen (18) months before the date of such court order. Also, except in the case of fraud, the date of insolvency may not be set at a date earlier than the date of the final court decision that approved an agreement (homologation) in the context of conciliation proceedings (see above). The date of insolvency is important because it marks the beginning of the période suspecte (otherwise referred to as hardening period ), being the period between the date of insolvency and the court decision commencing the proceedings. Certain transactions entered into during the hardening period are void as of right or voidable by the court. Automatically void transactions include transactions or payments entered into during the hardening period that may constitute voluntary preferences for the benefit of some creditors to the detriment of other creditors. 221

235 These include transfers of assets for no or nominal consideration, contracts under which the reciprocal obligations of the debtor significantly exceed those of the other party, payments of debts not due at the time of payment, payments made in a manner which is not commonly used in the ordinary course of business and security granted for debts (including a security granted to secure a guarantee obligation) previously incurred and provisional measures (unless the attachment or seizure predates the date of insolvency), operations relating to stock options, the transfer of any assets or rights to a trust arrangement (fiducie) (unless such transfer is made as security for debt incurred simultaneously), any amendment to a trust arrangement (fiducie) that affects assets or rights already transferred in the trust as a guarantee of debt incurred prior to such amendment, and a declaration of non-seizability (déclaration d insaisissabilité). Transactions voidable by the court include payments made on accrued debts, transactions for consideration and notices of attachments made to third parties (avis à tiers détenteur), seizures (saisie attribution) and oppositions made during the hardening period, in each case if the court determines that the creditor knew of the insolvency of the debtor. Transactions relating to the transfer of assets for no consideration are also voidable when entered into during the six (6) month period prior to the beginning of the hardening period. Other rules applicable in safeguard, judicial reorganization and/or liquidation proceedings Contractual provisions pursuant to which the commencement of the safeguard or insolvency proceedings constitutes an event of default are not enforceable against the debtor. Neither, in accordance with a decision of the French Supreme Court dated January 14, 2014, n , are contractual provisions modifying the conditions of continuation of an ongoing contract, diminishing the rights or increasing the obligations of the debtor solely upon the opening of reorganization proceedings (case law which is likely to be extended to safeguard, accelerated safeguard or accelerated financial safeguard proceedings). However, the court-appointed administrator can unilaterally decide to terminate ongoing contracts (contrats en cours) which it believes the debtor will not be able to continue to perform. Conversely, the court-appointed administrator can require that other parties to a contract continue to perform their obligations even though the debtor may have been in default, but on the condition that the debtor fully performs its post-petition contractual obligations (and provided that, in the case of reorganization proceedings, absent consent to other terms of payment, the debtor pays cash on delivery). The commencement of liquidation proceedings, however, automatically accelerates the maturity of all of a debtor s obligations unless the court orders the continued operation of the business with a view to the adoption of a plan for the sale of the business (plan de cession) (which it may do for a period of three months, renewable once), in which case the acceleration of the obligations will only occur on the date of the court decision adopting the plan for the sale of the business or on the date on which the continued operation of the business ends. As from the court decision commencing the proceedings: (i) (ii) (iii) (iv) accrual of interest is suspended, except in respect of loans for a term of at least one (1) year, or of contracts providing for a payment which is deferred by at least one (1) year, with respect to which, however, accrued interest can no longer be compounded; the debtor is prohibited from paying debts incurred prior to the commencement of the proceedings, subject to specified exceptions (which essentially cover the set-off of related (connexes) debts and payments authorized by the insolvency judge appointed by the court to recover assets for which recovery is justified by the continued operation of the business); the debtor is prohibited from paying debts having arisen after commencement of the proceedings unless they are incurred for the purposes of the proceedings or of the observation period or in consideration of services rendered/ goods provided to the debtor; creditors may not pursue any individual legal action against the debtor (or a guarantor of the debtor where such guarantor is a natural person) with respect to any claim arising prior to the court decision commencing the proceedings, if the objective of such legal action is: a. to obtain an order for payment of a sum of money by the debtor to the creditor (however, the creditor may require that a court determine the amount due in order to file a proof of 222

236 (v) claim, as described below); b. to terminate a contract for non-payment of amounts owed by the creditor; or c. to enforce the creditor s rights against any assets of the debtor except where such asset (whether tangible or intangible, movable or immovable) is located in another Member State within the European Union, in which case the rights in rem of creditors thereon would not be affected by the insolvency proceedings, in accordance with the terms of Article 5 Council Regulation (EC) No. 1346/2000; immediate cash payment for services rendered pursuant to an ongoing contract (contrats en cours), absent consent to other terms of payment, will be required only in the context of reorganization or liquidation proceedings. In accelerated safeguard and accelerated financial safeguard proceedings, the above rules only apply to the creditors that are subject to the accelerated safeguard proceedings or the accelerated financial safeguard proceedings respectively (see above). As a general rule, creditors domiciled in France whose debts arose prior to the commencement of proceedings must file a claim with the court-appointed creditors representative within two (2) months of the publication of the court decision in an official gazette (Bulletin Officiel des annonces civiles et commerciales); this period is extended to four (4) months for creditors domiciled outside France. Where the debtor has informed the creditors representative of the existence of a claim and no proof of claim has been filed yet, the claim as reported by the debtor is deemed to be a filing on the claim with the creditors representative on behalf of the debtor. Creditors are allowed to ratify a proof of claim made on their behalf until the insolvency judge rules on the admissibility of the claim. Creditors who have not submitted their claims during the relevant period, whose claims are not deemed filed with the creditors representative are, except with respect to limited exceptions, barred from receiving distributions made in connection with the proceedings. Employees are not subject to such limitations and are preferential creditors under French law. In accelerated financial safeguard proceedings, however, debts owed to creditors other than banks, financial institutions or bondholders should be paid in the ordinary course. In accelerated safeguard and in accelerated financial safeguard, the debtor draws a list of the claims of its creditors having participated in the conciliation proceedings, which is certified by its statutory auditors (failing which, its accountant). Although such creditors may file proofs of claim as part of the regular process, they may also avail themselves of this simplified alternative and merely adjust the amounts of their claims as set forth in the list prepared by the debtor (within the above two (2) or four (4) months time limit). Thus, in the accelerated financial safeguard, the financial creditors who did not take part in the conciliation proceedings (but who would belong to the financial institutions committee or the Bondholders Single Assembly) would have to file their proofs of claim within the aforementioned deadlines. If the court adopts a safeguard plan, accelerated safeguard plan, accelerated financial safeguard plan or reorganization plan, claims of creditors included in the plan will be paid according to the terms of the plan. The court can also set a time period during which the assets that it deems to be essential to the continued business of the debtor may not be sold without its consent. If the court adopts a plan for the sale of the business (plan de cession) of the debtor in judicial reorganization or judicial liquidation proceedings, the proceeds of the sale will be allocated towards the repayment of its creditors according to the ranking of the claims. French insolvency law assigns priority to the payment of certain preferred creditors, including employees, post-petition legal costs (essentially, fees of the officials appointed by the court), creditors benefitting from the New Money Lien, post-petition creditors, certain pre-petition secured creditors in the event of liquidation proceedings and the French State (taxes and social charges). Creditors liability 223

237 Pursuant to Article L of the French Commercial Code as interpreted by case law, where safeguard, judicial reorganization or judicial liquidation proceedings have been commenced, creditors may be held liable for the losses suffered as a result of facilities granted to the debtor only if the granting of such facilities was wrongful and, in the case of fraud, interference with the management of the debtor or if the security interests or guarantees taken to support the facilities are disproportionate to such facilities. In addition, any security interests or guarantees taken to support facilities in respect of which a creditor is found liable in such circumstances can be cancelled or reduced by the court. Other jurisdictions In addition, the Indenture and our other debt instruments allow us, in certain circumstances, to be succeeded by an issuer organized in another jurisdiction. The insolvency laws of other jurisdictions may not be as favorable to the interests of the noteholders as the laws of France. In the event any one or more of us or any of our subsidiaries experiences financial difficulty, it is not possible to predict with certainty in which jurisdiction or jurisdictions, including jurisdictions not set forth below, insolvency or similar proceedings would be commenced, or the outcome of such proceedings. 224

238 Admission to Trading and Listing LISTING AND GENERAL INFORMATION Application is expected to be made to admit the Exchange Notes to listing on the Official List of the Luxembourg Stock Exchange in accordance with the rules and regulations of that exchange and for trading on the Euro MTF. Application may be made to the Luxembourg Stock Exchange to have the Exchange Notes removed from listing on the Official List of the Luxembourg Stock Exchange for trading on the Euro MTF, including if necessary to avoid any new withholding taxes in connection with the listing. The Luxembourg Stock Exchange takes no responsibility for the contents of this Exchange Offer and Consent Solicitation Statement, makes no representations as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this Exchange Offer and Consent Solicitation Statement. The Warrants and Warrant Shares will not be listed. Authorizations The issue of the Exchange Notes with Warrants have been authorized by a decision of its Supervisory Board (Conseil de Surveillance) dated September 23, 2016 and will be submitted to the approval of the General Meeting of the Shareholders (Assemblée Générale des Associés) of Novasep to be held on or around October 25, Luxembourg Listing Information For so long as the Exchange Notes are admitted to trading on the Euro MTF and are listed on the Official List of the Luxembourg Stock Exchange and the rules and regulations of that exchange require, copies of the following documents in English may be inspected and obtained at the specified office of the paying agent in Luxembourg during normal business hours: 1) organizational documents of Novasep; 2) the financial statements incorporated by reference in this Exchange Offer and Consent Solicitation Statement; and 3) any annual and interim financial statements or accounts of Novasep to the extent available. Legal Information Novasep is organized as a limited company société par actions simplifiée incorporated under the laws of France. Its corporate name was originally Financière Ginova, and was changed into Novasep Holding on January 9, Our executive office is registered at Boulevard de la Moselle - Site Eiffel, 54340, Pompey, France and it is registered with the Registre du commerce et des sociétés of Nancy under number Our telephone number is +33 (3) Novasep has obtained all necessary consents, approvals and authorizations in the jurisdiction of its incorporation in connection with the issuance of the Exchange Notes with Warrants. The creation and issuance of the Exchange Notes with Warrants is expected to be authorized by the shareholders meeting of Novasep prior to the closing of the Exchange Offer and Consent Solicitation. Additional Information To the extent required by law, we will, during any period in which we are not subject to Section 13 or 15(d) under the U.S. Exchange Act nor exempt from reporting thereunder pursuant to Rule 12g3-2(b), make available to any holder or beneficial holder of a note, or to any prospective purchaser of a note 225

239 designated by such holder or beneficial holder, the information specified in, and meeting the requirements of, Rule 144A(d)(4) under the U.S. Securities Act upon the written request of any such holder or beneficial owner. Any such request should be directed to Novasep at: 39 rue St-Jean de Dieu, LYON, Attention: Mr. Christian THIRY, Chief Financial Officer. Financial Year and Accounts We prepare and publish annual audited financial statements at the end of our fiscal year. Any future published financial statements we prepare will be available free of charge, during normal business hours, at the offices of Novasep or will otherwise be provided to holders by Novasep. Annual General Meeting Our annual general meeting of shareholders usually takes place in the commune of the registered office at the place specified in the convening notices before June 30 of each year. Significant change Except as disclosed in this Exchange Offer and Consent Solicitation Statement: there has been no material adverse change in our financial position since June 30, 2016; and none of Novasep nor any of its subsidiaries has been involved in any litigation, administrative proceeding or arbitration relating to claims or amounts which are material in the context of the issuance of the Exchange Notes with Warrants except as otherwise disclosed in this Exchange Offer and Consent Solicitation Statement, and, so far as we are aware, no such litigation, administrative proceeding or arbitration is pending or threatened. Novasep accepts responsibility for the information contained in this Exchange Offer and Consent Solicitation Statement. 226

240 Index To Financial Statements ANNEX A Unaudited Interim Financial Statements as of and for the six months ended June 30, 2016 Independent Auditors Report Consolidated Balance Sheet as of June 30, 2016 Consolidated Income Statement for the year ended June 30, 2016 Consolidated Cash Flow Statement for the year ended June 30, 2016 Consolidated Statement of Changes in Equity for the year ended June 30, 2016 Notes to the Consolidated Financial Statements ANNEX B Audited Consolidated Financial Statements as of and for the year ended December 31, 2015 Independent Auditors Report Consolidated Balance Sheet as of December 31, 2015 Consolidated Income Statement for the year ended December 31, 2015 Consolidated Cash Flow Statement for the year ended December 31, 2015 Consolidated Statement of Changes in Equity for the year ended December 31, 2015 Notes to the Consolidated Financial Statements ANNEX C Audited Consolidated Financial Statements as of and for the year ended December 31, 2014, including comparative data as of and for the year ended December 31, 2013 Independent Auditors Report Consolidated Balance Sheet as of December 31, 2014 Consolidated Income Statement for the year ended December 31, 2014 Consolidated Cash Flow Statement for the year ended December 31, 2014 Consolidated Statement of Changes in Equity for the year ended December 31, 2014 Notes to the Consolidated Financial Statements 227

241 ANNEX A Unaudited Interim Financial Statements as of and for the six months ended June 30, 2016

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284 2015 Consolidated Financial Statements March 14, /64

285 Novasep Sites Lyon-Gerland, FR Gosselies, Seneffe, BE 2/64

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287 Table of Content STATUTORY AUDITORS REPORT... 6 CONSOLIDATED STATEMENT OF FINANCIAL POSITION... 8 CONSOLIDATED INCOME STATEMENT CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME CONSOLIDATED STATEMENT OF CASH FLOWS CONSOLIDATED STATEMENT OF CHANGES IN EQUITY CONSOLIDATED STATEMENT OF CHANGES IN EQUITY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS GROUP OVERVIEW AND PERFORMANCE ACCOUNTING METHODS AND PRINCIPLES CONSOLIDATION SCOPE SEGMENT INFORMATION DISCOUNTINUED OPERATIONS GOODWILL INTANGIBLE ASSETS (OTHER THAN GOODWILL) PROPERTY, PLANT AND EQUIPMENT FINANCE LEASE NON-CURRENT AND CURRENT FINANCIAL ASSETS INVENTORY TRADE RECEIVABLES FACTORING CURRENT TAX ASSETS OTHER ASSETS FINANCIAL INFORMATION RELATED TO LONG TERM CONSTRUCTION CONTRACTS DERIVATIVES CASH AND CASH EQUIVALENTS CURRENT AND NON-CURRENT PROVISIONS TRADE PAYABLES OTHER LIABILITIES EQUITY SHARE PURCHASE OPTIONS BUSINESS COMBINATIONS PENSIONS AND SIMILAR BENEFIT PROVISION LONG AND SHORT TERM DEBT RISKS IN TERMS OF INTEREST RATES AND EXCHANGE RATE FLUCTUATIONS DERIVATIVES: HEDGING ACTIVITY ANALYSIS OF THE INCOME STATEMENT REMUNERATION OF MANAGEMENT BODIES CASH FLOW STATEMENT GROUP LIABILITIES CONTINGENT LIABILITIES /64

288 NOVASEP HOLDING Société par Actions Simplifiée Boulevard de la Moselle Site Eiffel POMPEY Statutory auditors report on the consolidated financial statement December 31, 2015 This is a free translation into English of the statutory auditors report on the consolidated financial statements issued in the French language and is provided solely for the convenience of English speaking users. The statutory auditors report includes information specifically required by French law in such reports, whether modified or not. This information is presented below the opinion on the consolidated financial statements and includes explanatory paragraphs discussing the auditors assessments of certain significant accounting and auditing matters. These assessments were made for the purpose of issuing an audit opinion on the consolidated financial statements taken as a whole and not to provide separate assurance on individual account captions or on information taken outside of the consolidated financial statements. This report should be read in conjunction with, and is construed in accordance with, French law and professional auditing standards applicable in France. 5/64

289 Yzico 109, Boulevard d Haussonville Nancy Cedex Deloitte & Associés Espace Européen de l'entreprise 5, allée d'helsinki BP NOVASEP HOLDING Société par Actions Simplifiée Boulevard de la Moselle Site Eiffel POMPEY Strasbourg STATUTORY AUDITORS REPORT Consolidated financial statements for the year ended 31 December 2015 To the associates, In compliance with the assignment entrusted to us by your Articles of Association and your Annual General Meeting, we hereby report to you on: the audit of the accompanying consolidated financial statements of Novasep Holding; the justification of our assessments; the specific verification required by law. The consolidated financial statements have been approved by the President. Our role is to express an opinion on these financial statements, based on our audit. I. Opinion on the consolidated financial statements We conducted our audit in accordance with professional standards applicable in France. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, using sample testing techniques or other selection methods, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made, as well as evaluating the overall financial statement presentation. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. In our opinion the consolidated financial statements give a true and fair view of the assets and liabilities and of the financial position of the Group as at December 31, 2015 and of the results of its operations for the year then ended in accordance with the IFRSs as adopted by the European Union. Without qualifying our opinion, we draw your attention to the matter set out in Note 1.3 Post closing events and Note 2.1 General principles and statement of compliance to the consolidated financial statements regarding the current status of the external debt refinancing which drove the presentation of the consolidated financial statements under the going concern principle. 6/64

290 II. Justification of our assessments In accordance with the requirements of article L of the French Commercial Law (Code de commerce) relating to the justification of our assessments, we bring to your attention the following matters: Note to the consolidated financial statements presents the significant estimates made by the management of the Group. Our procedures consisted in assessing the data and assumptions on which such estimates rely, reviewing the company s calculations, examining management s approval procedures for these estimates and reviewing the appropriateness of the disclosures on the assumptions and options made by the company. Note 6, 7 and 8 to the consolidated financial statements describe the methods used for the impairment tests performed on goodwill, intangible assets and tangible assets. We reviewed the detailed assumptions used for these impairment tests and reviewed for appropriateness the disclosures made in the notes to the consolidated financial statements. These assessments were made as part of our audit approach for the consolidated financial statements taken as a whole and contributed to the expression of our unqualified opinion in the first part of this report. III - Specific verification As required by our professional standards, we also verified the information presented in the Group management report. We have no matters to report regarding its fair presentation and consistency with the consolidated financial statements. Nancy and Strasbourg, March 15, 2016 The Statutory auditors French original signed by Didier Obrecht (Deloitte & Associés) and Patrick Marjollet (Yzico) 7/64

291 CONSOLIDATED STATEMENT OF FINANCIAL POSITION (Amounts in euro thousands except otherwise stated) ASSETS Notes 31/12/ /12/2014 Non-current assets Goodwill 6 55,630 55,630 Intangible assets 7 15,345 16,791 Property, plant and equipment 8 117, ,719 Non-current financial assets 10 17,665 15,395 Deferred tax assets ,483 8,942 Total non-current assets 212, ,477 Current assets Inventory 11 34,254 30,791 Trade receivables 12 29,908 22,630 Current tax assets 14 11,065 10,021 Other assets 15 3,618 2,208 Current financial assets 10 7,980 7,067 Cash and cash equivalents 18 41,547 52,922 Total current assets 128, ,639 TOTAL ASSETS 340, ,116 The accompanying notes are an integral part of these consolidated financial statements 8/64

292 CONSOLIDATED STATEMENT OF FINANCIAL POSITION (continued) (Amounts in euro thousands except otherwise stated) LIABILITIES & EQUITY Notes 31/12/ /12/2014 Equity 22 Issued capital 8,584 8,584 Consolidated reserves 85,658 86,008 Retained earnings and net income attributable to equity holders of (99,847) (77,710) the parent Equity attributable to equity holders of the parent (5,606) 16,882 Non-controlling interests Total equity (4,818) 17,158 Preference Shares ,000 30,000 Total Equity and preference shares 25,182 47,158 Non-current liabilities Pension and similar benefit provisions 25 17,325 18,826 Long-term debt, net of current portion 26 17, ,843 Deferred tax liabilities Total non-current liabilities 34, ,816 Current liabilities Current provisions 19 5,554 5,730 Short-term debt and current portion of long-term debt ,871 7,240 Trade payables 20 45,280 40,789 Derivatives Other liabilities 21 43,911 39,777 Total current liabilities 281,104 94,144 TOTAL LIABILITIES & EQUITY 340, ,116 The accompanying notes are an integral part of these consolidated financial statements 9/64

293 CONSOLIDATED INCOME STATEMENT (Amounts in euro thousands except otherwise stated) Novasep Holding SAS consolidated Notes (1) REVENUE from continuing operations 265, ,685 Material costs, sales commissions and transportation (95,028) (92,411) GROSS MARGIN (CM1) 170, ,274 % Revenue 64.2% 62.8% Manufacturing Personnel costs (58,730) (53,856) Other manufacturing expenses (35,833) (32,479) Depreciation of manufacturing equipment (16,617) (14,928) Cost of sales (206,207) (193,673) GROSS PROFIT 59,635 55,011 % Revenue 22.4% 22.1% Selling expenses (16,352) (15,233) Research & development expenses (10,858) (9,352) Administration expenses (19,017) (18,538) Other operating revenues and expenses (157) Other depreciation (2,914) (3,135) OPERATING INCOME 11,160 8,596 % Revenue 4.2% 3.5% + depreciation 19,531 18,062 = EBITDA adjusted 30,691 26,659 % revenue 11,5% 10.7% Amortization of intangible assets recognized on business combinations 29.2 (1,104) (2,132) Impairment 29.2 (132) (258) Other non-recurring income and expenses 29.4 (2,624) (7,033) Cost of net financial debt 29.5 (14,974) (12,722) Unrealized currency exchange loss on the debt 29.5 Other financial income/expenses (including exchange gain and loss) 29.5 Current income tax expense 29.6 Deferred tax income/(expense) 29.6 (18,848) 2,244 (1,655) (491) (19,534) 757 (2,100) 8,231 NET INCOME/(LOSS) from continuing operations (26,424) (26,194) NET INCOME/(LOSS) from discontinued operations (1) 2,741 7,252 NET INCOME/(LOSS) (23,684) (18,942) * Attributable to the owners of the company (24,148) (19,158) * Attributable to non-controlling interests (1) Following the divestiture of the Pharmachem business, the 2014 and 2015 income statements have been presented in accordance with IFRS 5. The impact of the discontinued activities (Pharmachem business) has been presented on the caption NET INCOME (LOSS) from discontinued activities. Refer to note 5 The accompanying notes are an integral part of these consolidated financial statements 10/64

294 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (Amounts in euro thousands except otherwise stated) Novasep Holding SAS consolidated Notes NET INCOME/(LOSS) FOR THE YEAR (23,684) (18,942) Other comprehensive income Items that will not be reclassified to profit or loss Remeasurement of post-employment benefit obligations 25 1,642 (2,979) Income tax impact on items that will not be reclassified to profit or loss 29.6 (438) 867 Sub-total 1,204 (2,112) Items that may be subsequently reclassified to profit or loss Currency translation differences 804 4,239 Sub-total 804 4,239 TOTAL COMPREHENSIVE INCOME FOR THE YEAR (21,676) (16,815) Total comprehensive income attributable to: Owners of the Company (22,190) (17,064) Non-controlling interests (21,676) (16,815) The accompanying notes are an integral part of these consolidated financial statements 11/64

295 CONSOLIDATED STATEMENT OF CASH FLOWS (Amounts in euro thousands except otherwise stated) Novasep Holding SAS consolidated Notes OPERATING INCOME / (LOSS) FOR THE YEAR 11,160 8,596 Adjustments to reconcile Operating income to net cash provided by operations Depreciation ,531 18,063 Sub-total EBITDA adjusted 30,691 26,659 Other non-recurring income and expenses from operating activities (4,438) (7,033) (Gain)/Loss on disposal of property, plant and equipment 811 Expense recognized in respect of equity-settled share-based payments Taxes paid (2,022) (2,206) Movement in working capital and provision (continuing operations) 31.1 (7,158) 1,143 I. NET CASH PROVIDED BY OPERATING (CONTINUING) 17,933 18,664 ACTIVITIES (a) Of which factoring impact 10, Purchase of property, plant and equipment (18,572) (18,732) Increase/(decrease) in trade payables Capex 2,229 (1,212) Proceeds from disposal of property, plant and equipment 2,098 - II. NET CASH USED IN INVESTING (CONTINUING) ACTIVITIES (14,245) (19,944) (b) Of which Leffe project (payable included) - (10,131) Of which other capex (payable not included) - (12,604) Of which trade payable capex (Leffe not included) - 2,791 Debt Refinancing costs (e) (896) Interest paid (c) 31.4 (15,063) (13,038) Dividend paid (d) 22.4 (350) (1,212) Sub-total Other net debt increase (-) decrease (+) (a+b+c+d+e) 26.1 (12,621) (15,530) Proceeds from long-term debt, net of debt issuance costs ,069 Payments of short-term debt 31.2 (4,610) (5,577) Other financing activities (net) 31.5 (452) 1,038 Sub-total Cash in financing(continuing) facilities (4,853) (3,470) III. NET CASH PROVIDED BY (USED IN) FINANCING (CONTINUING) ACTIVITIES (21,162) (17,720) NET CHANGE IN CASH AND CASH EQUIVALENTS (CONTINUING) (I + II + III) (17,474) (19,000) (1) IV NET CHANGE IN CASH (DISCONTINUED) 2,180 30,197 NET CHANGE IN CASH ( I + II + III + IV) (15, 294) 11,197 Cash and cash equivalents at the beginning of the year (net of bank overdrafts) 52,922 39,753 Effect of exchange rate changes on cash 3,920 1,971 Cash and cash equivalents at the end of the year (net of bank overdrafts) 41,547 52,922 (1) Following the divestiture of the Pharmachem business, the 2014 and 2015 consolidated statement of cashflows have been presented in accordance with IFRS 5. The impact of the discontinued activities has been presented on the caption NET CHANGE IN CASH (DISCONTINUED). Refer to note 5 The accompanying notes are an integral part of these consolidated financial statements 12/64

296 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 2015 (Amounts in euro thousands except otherwise stated) 2015 Issued capital Premiums Equity settled employee benefits reserve Foreign currency translation reserve Retained earnings Attributable to owners of the parent Noncontrolling interests Total Balance at December 31, ,584 86, ,553 (79,716) 16, ,158 Income for the year (24,148) (24,148) 464 (23,684) Other comprehensive income for the year 754 1,204 1, ,008 Total comprehensive income for the year 754 (21,740) (22,190) 514 (21,676) Recognition of share-based payments (1) Dividends (350) (350) (350) Balance at December 31, ,584 85, ,308 (102,660) (5,606) 788 (4,817) (1) By decision of the President, free shares were granted to certain managers of the Group on January These shares vest on expiry of a two-year period of continued service in the Group. The amount of the expense relative to these free shares, which has been calculated and recorded in accordance with IFRS 2, was 0.1 million for the current financial year. Note 23 provides additional information on this free share plan. The accompanying notes are an integral part of these consolidated financial statements 13/64

297 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 2014 (Amounts in euro thousands except otherwise stated) 2014 Issued capital Premiums Equity settled employee benefits reserve Foreign currency translation reserve Retained earnings Attributable to owners of the parent Noncontrolling interests Total Balance at December 31, ,584 87, ,121 (58,447) 41, ,877 Income for the year (19,158) (19,158) 216 (18,942) Other comprehensive income for the year 4,206 (2,112) 2, ,127 Total comprehensive income for the year 4,206 (21,270) (17,064) 249 (16,815) Recognition of share-based payments (1) Reserve recycled on discontinued operations (2) (6,774) (6,774) (6,774) Dividends (1,232) (1,232) (1,232) Balance at December 31, ,584 86, ,553 (79,716) 16, ,158 (1) By decision of the President, free shares were granted to certain managers of the Group on March 15, 2012 and January These shares vest on expiry of a two-year period of continued service in the Group. The amount of the expense relative to these free shares, which has been calculated and recorded in accordance with IFRS 2, was 0.1 million for the current financial year. Note 23 provides additional information on this free share plan. (2) Details on discontinued operations in note5 Discontinued Operations The accompanying notes are an integral part of these consolidated financial statements 14/64

298 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Amounts in euro thousands except otherwise stated) 1 GROUP OVERVIEW AND PERFORMANCE 1.1 Group overview Novasep Holding ( the Group ) is a simplified limited company (société par actions simplifiée or SAS) under French law having its registered address office in Pompey, near Nancy, France. Novasep Holding SAS s consolidated financial statements for the financial year ending December 31, 2015 include the parent company and its subsidiaries (together referred to as the Group ) and the Group s share in associates. The Group provides global manufacturing solutions for synthetic molecules and biomolecules within the life sciences industries with a rich portfolio of technologies and expertise through its different business segments, Synthesis, Industrial Biotech and Biopharma: Synthesis covers development and manufacturing needs for synthetic active pharmaceutical ingredients (APIs) and advanced intermediates, synthetic peptides, agrochemicals and fine chemicals. The offerings of Novasep Synthesis include process development services, custom synthesis and purification ( outsourcing solutions ), the supply of purification systems ( insourcing solutions ) and the supply of special chemical products and generic APIs. Applications of Biopharma cover the development, production and purification of biomolecules in the biopharmaceutical market. The offerings of Biopharma include process development services, custom biopharmaceutical manufacturing and purification ( outsourcing solutions ), the supply of purification processes and systems ( in-sourcing solutions ) and the supply of purification consumables. Applications of Industrial Biotech cover the development, production and purification of biomolecules in the food ingredient, functional ingredient and bio-industries markets. The offerings of Industrial Biotech include process development services, the supply of purification processes and systems and the supply of purification consumables such as filtration membranes, as well as ion exchange and chromatography resins. 15/64

299 1.2 Group performance Over the course of the year, the management has continued to successfully implement its Back to Basics strategy, leading to several key moves: - Decision of strategic investments: ( LEGO ) new ADC conjugation plant, ( NILE ) kilo lab in the US, to be completed in Successful acquisition of business in Synthesis with 31 new projects, of which 60% late phase (> phase 2), contributing to the rejuvenation of the pipeline, - CMO biopharma successful development of gene therapy and vaccines business - Recent project wins confirming the success of the Complete Process Line strategy in IB. This strategy is bearing fruits and has led to solid financial achievements this year: - 7% growth in sales ( 266m) - EBITDA up 15% to 30.7m - Cash in hand at 41.5m, leverage stable due to adverse USD exchange rate impact on bonds Performance overview 2015 is a year of robust growth for Synthesis and Biopharma, Industrial biotech being ready for rebound after sugar market softness: In m % change Synthesis 141,7 152,9 7,9 Bio Pharma external 51,9 62,6 20,6 Bio Pharma internal 5,1 1,8 - Industrial Biotech 55,9 50,9 (9,0) Elimination (5,9) (2,3) SALES: 248,7 265,8 6,9 Synthesis 17,3 19,2 11,0 Bio Pharma 6,0 10,8 80,0 Industrial Biotech 5,9 3,4 (42,4) Corporate (2,5) (2,7) EBITDA (adjusted) : 26,7 30,7 15,0 % Sales 10,7% 11,5% At Group level, Novasep achieved sales of 265.8m in 2015 (a 6.9% growth vs. 2014), and adjusted EBITDA of 30,7m (15% increase vs. adjusted EBITDA for 2014). EBITDA growth is the result of increased activity and improved gross margin (64.2% vs 62.8% last year). In the Synthesis business unit, sales increased by 7.9% to 152.9m as a result of strong business acquisition performed in 2014 and The gross margin rate slightly increased to 71.5% (as compared to 70.7% in FY 2014). Operating costs have increased by 8.8% in order to better serve the new projects acquired. As a result, 2015 EBITDA is at 19.2m, up 11% vs EBITDA margin has improved to 12.6% of sales (as compared with 12.2% last year). The Synthesis business unit continues to win new business with 31 new projects won in 2015 and 36 in 2014, compared to 12 projects won in The Biopharma business unit s external sales increased 21% to 62.6m as a result of booming CMO sales (+35%) and equipment sales growth of 8%. EBITDA was up 80% to 10.8m. The EBITDA margin at 16.7% of sales has significantly improved vs (10.5%). 16/64

300 The Industrial Biotech business unit s sales showed a 9% decrease vs due to sugar market softness that has delayed the decision process in many sugar-related projects. However, at year-end, large project wins (including a complete process line of 15m) have contributed to refill the pipeline which is currently at its highest on a two years period, which suggests a clear rebound in activity in EBITDA dropped to 3.4m in 2015 representing 6.7% of sales. Yet, as this business is low capex consumer, the 2015 free cash flow is still largely positive. Recurring and non-recurring elements of profit and loss can be grouped as follows: SALES % change EBITDA adjusted 26,7 30,7 15,0 % 10,7 11,5 0,8 Depreciation (18,1) (19,5) 7,9 EBITA adjusted 8,6 11,2 29,8 % 3,5 4,2 0,7 Interest charge (12,7) (15,0) 17,9 Other financial expenses / income 0,7 2,2 - Current tax charge (2,1) (1,7) (21,2) Sub total (5,5) (3,2) (41,4) % (2,2) (1,2) 1,0 Deferred tax 8,2 (0,5) (106) Amortization on Biz. Combination (2,1) (1,1) (47,4) NET RESULT recurring 0,6 (4,8) ns % 0,2 (1,8) (2,1) Impairment (0,3) (0,1) (56,0) Non-recurring expenses (7,0) (2,6) (62,5) Discontinued operation (Pharmachem) 7,3 2,7 (62,5) Currency adjustment on $ bonds (19,5) (18,8) (3,3) NET RESULT (18,9) (23,7) 25,3 The depreciation charge increase is due to the full year impact of operation of the new Omega-3 Leffe unit in Mourenx. The EBITA adjusted increases by 30% vs 2014 and amounts to 11,2m representing 4.2% to the sales. The interest charge increase is due to USD increase vs EUR. However, it is compensated by financial income mainly due to positive currency adjustment on USD treasury and assets. After current tax charge and before non-cash items such as deferred tax and amortization of business combination, the net result recurring (before deferred tax and amortization) is negative by 3.2m, compared to a loss of 5.5m in Non-recurring expenses mainly include a non-cash currency adjustment on $ bonds. Indeed the $195.2m high yield bonds have been converted at a USD/EUR rate of 1.08 at the closing. This rate was 1.21 at last year s end and 1.38 at the end of This has generated an unrealized exchange loss of 18.8m in 2015 (19.5m in 2014). 17/64

301 1.2.2 Finance overview The Group cash flow generation shows as follows: In M % change EBITDA adjusted 26,7 30,7 15,0% Taxes paid (2,2) (2,0) (8%) Change in working capital 4,0 (4,9) (221%) Strategic capex (10,1) (2,7) (73%) Capital expenditure without strategic capex (12,6) (13,8) 9% Interest paid (13,0) (15,1) 16% Free cash flow (7,3) (7,8) (7%) Non-recurring income and expenses (7,0) (4,5) (36%) Dividend paid (1,2) (0,4) (71%) Proceeds from discontinued operations (Pharmachem) 30,2 2,2 - Non-recurring cash flow 22,0 (2,7) (112%) Loans pay back (5,6) (5,1) (9%) New loans 2,1 0,2 - Currency adjustment on cash 2,0 3,9 99% Financial cash flow (1,5) (0,9) (38%) Total cash flow 13,2 (11,4) (186%) Opening cash 39,8 52,9 Closing cash 52,9 41,5 The 2015 free cash flow is affected by working capital increase of 4.9m (including accouting payable Capex). This relates mainly to 3.8m stock increase in relationship with the 7% sales increase of the Group in The strategic capex 2014 refers to the Leffe project in Mourenx. In 2015 it relates to the Lego project in Le Mans ( 2.1m) and the Nile project in Boothwyn, pa, USA ( 0.6m). The non-recurring elements mainly refer to restructuring costs and settlement of litigations. 18/64

302 The Group s net debt has increased from 125.0m at the end of 2014 to 150.6m at the end of The net debt splits as follows: In M End 2014 End 2015 Dollar 8% notes M$ 195,2 payable Dec. 15, ,5 179,6 Finance lease debt 13,4 8,9 Other loans 6,0 5,6 RTC funding by BPI/OSEO 8,2 8,9 Total gross debt 188,1 203,0 RTC tax Assets transferred to OSEO/BPI (10,2) (10,9) Cash and cash equivalent (52,9) (41,5) Total net debt 125,0 150,6 Times adjusted EBIDA 4,7 4,8 Other financial elements: Off balance sheet factoring net of retention 17,4 27,6 Derivatives 0,6 0,5 Earn-out asset on sale of Pharmachem Business (8,9) (10,9) As a result of the increase of the value of the $ bonds, the Group s leverage ratio (Net debt / EBITDA) has stayed stable at 4.8 in 2015 vs 4.7 in The total assets have stayed stable at 341m ( 341m last year-end). In M Dec 2014 Dec 2015 Goodwill 55,6 55,6 Intangible 16,8 15,3 Tangible 118,7 117,3 Non current financial assets 15,4 17,7 Deferred tax assets 8,9 6,5 Non current assets 215,4 212,5 Inventories 30,8 34,3 Trade receivables 22,6 29,9 Current tax assets (incl VAT) 10,0 11,1 Other assets 2,2 3,6 Current financial assets 7,1 8,0 Cash and cash equivalents 52,9 41,5 Current assets 125,6 128,4 Total Assets 341,0 340,8 19/64

303 The main change concerning equity and liabilities are the following: - Reclassification in short term debts of the $ bonds for 179,6m. - 19m increase in the $ bonds due to exchange rate variance, which entails a decrease of the same amount in Equity. In M Dec 2014 Dec 2015 Equity attributable to shareholders 16,9 (5,6) Non controlling interest 0,3 0,8 Preference shares 30,0 30,0 Equity & Preference shares 47,2 25,2 Long term debt 180,8 17,2 Employee benefit provision 18,8 17,3 Differed tax liabilities 0,1 - Long term liabilities 199,7 34,5 Current provisions 5,7 5,6 Short term debt 7,2 185,9 Trade payables (excl. capex) 40,8 45,3 Derivatives 0,6 0,5 Other liabilities 39,8 43,9 Short term liabilities 94,1 281,1 Total liabilities & equity 341,0 340,8 1.3 Post-closing events The Dollar Notes issued on March 15, 2012 by Novasep for a total amount of K$ 195,164 are due on December 15, For this reason they are classified as short term debt for an amount of K 178,963 in the balance sheet dated December 31, 2015 (see note 26). Novasep has appointed an investment bank to assist the company in refinancing the Dollar Notes. This is expected to be based on a combination of unitranche secured bonds and subordinated convertible bonds with warrants (both without amortization of principal). A number of financial institutions have expressed their interest for the proposed transaction and the syndication process for such bonds is currently under way. The closing of the refinancing is expected later this year, likely in Q2 or Q3 (See note 2.1). 20/64

304 2 ACCOUNTING METHODS AND PRINCIPLES 2.1 General principles and statement of compliance The Group s financial year ran for a twelve-month period ending December 31, The main accounting methods used to prepare the consolidated financial statements are set out below. Unless otherwise indicated, these methods have been permanently applied to all financial years shown. The principle of continuity of operations has been applied to the consolidated and annual accounts for the period ending December 31 st, As detailed above in 1.3, the refinancing process of the financial indebtedness of Novasep Holding SAS is on-going and the management of the Group is confident in the successful outcome of this process. However, should this process not be successful, the application of this principle might be inappropriate. In accordance with the European Regulation no. 1606/2002 adopted by the European Parliament and the European Council on July 19, 2002, the Group s consolidated financial statements for the year ending December 31, 2015 have been prepared in compliance with the IFRS (International Financial Reporting Standards), as endorsed by the European Union at the date on which these financial statements were prepared. International accounting standards include IFRS (International Financial Reporting Standards), IAS (International Accounting Standards) and the interpretation issued by the SIC (Standing Interpretations Committee) and the IFRIC (International Financial Reporting Interpretations Committee). 2.2 Adoption of new and revised standards New and revised standards adopted and effective from January 1st, 2015: Below is a list of the amendments to IFRSs that are mandatorily effective for the 2015 financial year : - Amendments to IAS 19 Defined Benefit plans: Employee contributions. In 2012, the Group has early applied the amended version of IAS 19 Employee Benefits. - IFRIC 21 Levies IFRIC 21 addresses the issue as to when to recognize a liability to pay a levy imposed by a government. The interpretation defines a levy, and specifies that the obligation event that gives rise to the liability is the activity that triggers the payment of the levy, as identifies by legislation. The interpretation provides guidance on how different levy arrangements should be accounted for, in particular, it clarifies that neither economic compulsion nor the going concern basis of financial statements preparation implies that an entity has a present a present obligation to pay a levy that will be triggered by operating in the future. The Group has applied IFRIC 21 Levies for the first time last year - Amendments to IFRSs Annual improvements to IFRSs Cycle; - Amendments to IFRS Annual improvements to IFRSs Cycle. The annual improvements to IFRS for had no impact on the Group s consolidated financial statements. 21/64

305 2.2.2 Standards, amendments and interpretations adopted by the European Union and early applied by the Group : None Standards, amendments and interpretations adopted by the European Union and not anticipated by the Group A number of new standards, amendments to standards and interpretations, which were adopted by the European Union, allow an early application for annual periods beginning as of January 1, 2015, and have not yet been applied in preparation of these consolidated financial statements. None of these are expected to have a significant effect on the consolidated financial statements of the Group Standard not yet applicable because not yet approved by the European Union as of December 31, 2015 The Group is currently analyzing the impacts and practical consequences of the application of these Standards and Interpretations. 2.3 Accounting policies used for the preparation of consolidated financial statements Measurement bases used in preparing the financial statements The functional and presentation currency for the financial statements is the Euro. All figures set out in the financial statements are rounded to the nearest thousand Euros. The financial statements have been prepared using the historical cost convention Presentation of the financial statements The Group sets out its financial statements in accordance with the principles contained in IAS 1, Presentation of financial statements. The Group segments its assets and liabilities down into current and non-current assets and liabilities. Assets and liabilities which constitute the working capital requirement and are part of the normal operating cycle of the business in question and which are expected to be realized or settled within 12 months of the balance sheet date are presented as current assets or liabilities Fixed assets are presented as non-current assets Financial assets are broken down into current and non-current financial assets Financial liabilities due to be settled within 12 months of the balance sheet date are presented as current liabilities. Conversely, financial liabilities which are due in more than 12 months are presented as non-current liabilities Provisions entering into the normal operating cycle of the business in question, and any proportion of other provisions for liabilities and charges which is due in less than one year, are presented as current liabilities. Provisions not meeting these criteria are presented as noncurrent liabilities Deferred taxes are recorded in full under non-current assets and liabilities Changes in the presentation of the financial statements As compared to the 2014 consolidated financial statements published last year, no change has been made in the presentation of the financial statements. 22/64

306 2.3.4 Use of estimates and judgments In order to prepare its financial statements, the Group is required to make certain estimates and assumptions with respect to the value of assets and liabilities, income and expense items, and information given in the notes to the financial statements. Management has made these estimates and assumptions on the basis of its past experience and other factors deemed reasonable. Amounts appearing in subsequent financial statements may differ materially from these estimates should the assumptions change or if actual conditions are different, particularly given the severe downturn in the current economic and financial environment which may weaken some of our partners and make it difficult to estimate future outlook. These estimates mainly relate to goodwill, intangible assets, employee benefits, deferred taxes, provisions and revenue recognition in respect to long-term contracts Consolidation method Subsidiaries, over which the Group exercises control, either directly or indirectly, are fully consolidated. Control is presumed to exist where the Group holds more than 50% of voting rights or where, in cases where the Group holds up to half of an entity s voting rights, it has: Power over more than half of voting rights by virtue of agreements with other investors; Power to govern the entity s financial and operational policies by virtue of a regulatory text or contract; Power to appoint or remove the majority of members of the Board of Directors or equivalent management body, where control of the entity is exercised by such a Board or body; Power to bring together the majority of voting rights in meetings of the Board of Directors or equivalent management body, where control of the entity is exercised by such a Board or body. Companies over which the Group exercises significant influence, which is presumed to be the case where the Group s interest is greater than 20%, are classified as investments in associates and are consolidated using the equity accounting method. Investments in companies that meet the above mentioned criteria but that are not consolidated are disclosed as non-current financial assets and recognized in accordance with IAS 39. These nonconsolidated investments are booked at their fair value and are subject to an impairment test on a regular basis. The criteria generally used are share of equity and profitability prospects. Non-controlling interests refer to any share in the profit or loss and net assets of a subsidiary which is attributable to interests not held by the parent company either directly or indirectly via its subsidiaries. Subsidiaries accounts are all closed as of December 31 st each year. If the accounting methods used by the subsidiaries and associated companies differ from those used by the Group, the necessary changes are made to their financial statements to make them compliant with the Group s accounting principles, as described in note 2. All material intra-group transactions and balances are eliminated Business combinations In accordance with IFRS 3 and IFRS 3 revised for all combinations entered into on or after July 1 st, 2010, business combinations are accounted for using the purchase method. The cost of an acquisition is based on the fair value of the assets acquired, instruments of issued equity, and liabilities incurred or assumed at the date of the combination, to which are added the costs directly attributable to the combination. Fair value adjustments arising from business combinations are recorded in the corresponding assets and liabilities, together with any non-controlling interests and not only for the share acquired by the 23/64

307 Group. The residual difference between the purchase price (including acquisition-related costs) and the Group s share in the fair value of the underlying net assets acquired is treated as goodwill. If the acquisition cost is lower than the Group s share in the acquired subsidiary s net assets at the fair value, the difference is recorded directly in the income statement. Corrections should be applied to goodwill within the 12 months following the acquisition date in order to take into account definitive estimates of the fair value of assets and liabilities acquired. Once this 12-month period has expired, fair value adjustments are recorded in profit or loss Investments in associates The Group s investments in associates are recognized using the equity accounting method. Associates are entities over which the Group exercises significant influence in terms of operational and financial policy, but which it does not control. The balance sheet value of equity-accounted shares includes the acquisition cost of the shares plus or minus changes in the Group s share in the associate s net assets with effect from the acquisition date. The Group s share in the profit or loss of associates is reflected in the income statement Non-current assets held for sale, discontinued operations and operations in the process of being sold Non-current assets held for sale Non-current assets (or groups of assets intended for sale) are classified as being held for sale where their carrying amount is principally recovered through a sale transaction rather than through continuing use. This classification implies that the assets (or groups of assets intended for sale) are available for immediate sale and that this is highly likely to occur in the short term (12 months). Non-current assets (or groups of assets intended for sale) classified as being held for sale are measured at the lower of their carrying amount and fair value less costs to sell. Any reduction in the value of assets (or groups of assets intended for sale) at fair value less costs to sell is recognized in the income statement Discontinued operations and operations in the process of being sold A discontinued operation or an operation in the process of being sold is a component of the Group which has been separated off from the Group (by being sold or otherwise) or which is being held in view of a sale. Discontinued operations and operations in the process of being sold are clearly distinguished from the rest of the Group in both operating and financial reporting terms, and represent primary, distinct business lines or geographical regions, form part of a single, coordinated disposal or withdrawal plan or are subsidiaries acquired solely for the purpose of resale. Net profit or loss from discontinued and sold operations and those in the process of being sold is shown in a separate line in the income statement. Cash flows relating to these operations are shown separately from cash flows from continuing operations in the cash flow statement Revenue recognition The Group s activities include the following: Sale of equipment, active product ingredient intermediates and spare parts Provision of services including construction contracts 24/64

308 Sales of products Sales income is recorded where it is likely that the economic benefits associated with transactions will flow to the Group, and where the amount of income and costs incurred or to be incurred on a transaction can be reliably measured. Sales are recorded at the fair value of the amount received or to be received, less any applicable commercial, volume-related or similar discounts, discounts in respect of commercial interests and financial discounts. Sales of goods are recognized when a Group company has transferred to the purchaser the risks and benefits inherent to the ownership of an item, usually when the item has been delivered to and accepted by a customer and which recovery of payment is reasonably certain Delivery of services Income from services provided is recognized in proportion to the percentage of completion of the transaction. Revenue from construction contracts is recognized in accordance with IAS 11. For the Group, these contracts usually include a research phase, a production phase and an on-site assembly phase. Where the profit or loss on a construction contract can be reliably estimated, contract revenue and costs are recognized using the percentage of completion method. The percentage of completion equates to the cost incurred for work already carried out as a proportion of the total estimated cost for the contract. When calculating the percentage of completion, any costs incurred during the year but which relate to a future activity under a contract are excluded. Total service costs already incurred in respect of contracts, together with any gains or losses recorded on each contract are compared to interim amounts invoiced as at the balance sheet date. When these costs together with gains or losses are greater than interim amounts invoiced, the net difference is included in trade and other receivables. Otherwise, the net difference is recorded in trade and other payables. Any advances invoiced relative to services to be provided in the future are not included in the above calculation, but are included in other current liabilities. Where a contract is likely to result in a loss, the estimated loss is immediately recognized in the income statement Finance and operating leases Finance leases Assets acquired under finance leases are recognized on the balance sheet when the lease contract transfers substantially all the risks and rewards incidental to ownership to the Group. Criteria used to assess whether a contract should be classified as a finance lease include: the term of the lease compared with the estimated useful life of the asset, total future lease payments compared with fair value of the asset financed, whether or not ownership of the asset is transferred at the end of the lease term, existence of a purchase option favorable to the lessee, type of asset leased. Upon initial recognition the leased asset is measured at an amount equal to the lower of its fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset Operating leases Operating leases are lease contracts that are not classified as finance leases. Rental payments are recognized as expenses when they are incurred. 25/64

309 Grant Grants are not recognized until there is reasonable assurance that the Group will comply with the conditions attaching to them and that the grants will be received. The benefit of a government loan at a below-market rate of interest is treated as a government grant, measured as the difference between proceeds received and the fair value of the loan based on prevailing market interest rates. Government grants whose primary condition is that the Group should purchase, construct or otherwise acquire non-current assets are presented in the financial statements by deducting the grant received from the carrying amount of the asset and transferred to profit or loss on a ratably basis over the useful lives of the related assets. Other government grants are recognized as revenue over the periods necessary to match them with the costs for which they are intended to compensate, on a systematic basis. Government grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the Group with no future related costs are recognized in profit or loss in the period in which they become receivable Foreign currencies The individual financial statements of each group entity are presented in the currency of the primary economic environment in which the entity operates (its functional currency). For the purpose of the consolidated financial statements, the results and financial position of each group entity are expressed in euro, which is the functional currency of the Company and the presentation currency for the consolidated financial statements. In preparing the financial statements of the individual entities, transactions in currencies other than the entity s functional currency (foreign currencies) are recognized at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated. Exchange differences are recognized in profit or loss in the period in which they arise except for: exchange differences on foreign currency borrowings relating to assets under construction for future productive use, which are included in the cost of those assets when they are regarded as an adjustment to interest costs on those foreign currency borrowings; exchange differences on transactions entered into in order to hedge certain foreign currency risks (see Note below for hedging accounting policies); and exchange differences on monetary items receivable from or payable to a foreign operation for which settlement is neither planned nor likely to occur (therefore forming part of the net investment in the foreign operation), which are recognized initially in other comprehensive income and reclassified from equity to profit or loss on disposal or partial disposal of the net investment. For the purpose of presenting consolidated financial statements, the assets and liabilities of the Group s foreign operations are expressed in Euros using exchange rates prevailing at the end of the reporting period. Income and expense items are translated at the average exchange rates for the period, unless exchange rates fluctuated significantly during that period, in which case the exchange rates at the dates of the transactions are used. Exchange differences arising, if any, are recognized in other comprehensive income and accumulated in equity (attributed to non-controlling interests as appropriate). On the disposal of a foreign operation (i.e. a disposal of the Group s entire interest in a foreign operation, or a disposal involving loss of control over a subsidiary that includes a foreign operation, loss of joint control over a jointly controlled entity that includes a foreign operation, or loss of 26/64

310 significant influence over an associate that includes a foreign operation), all of the accumulated exchange differences in respect of that operation attributable to the Group are reclassified to profit or loss. Any exchange differences that have previously been attributed to non-controlling interests are derecognized, but they are not reclassified to profit or loss. In the case of a partial disposal (i.e. no loss of control) of a subsidiary that includes a foreign operation, the proportionate share of accumulated exchange differences are re-attributed to non-controlling interests and are not recognized in profit or loss. For all other partial disposals (i.e. of associates or jointly controlled entities not involving a change of accounting basis), the proportionate share of the accumulated exchange differences is reclassified to profit or loss. Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and translated at the closing rate Post-employment benefits and similar obligations Depending on laws and practices of the countries in which the Group operates, employees may be entitled to compensation when they retire or to a pension following their retirement. The liability corresponding to the employees future rights is covered by: contributions to independent organizations (insurance companies) responsible for paying the pensions or other benefits; Provisions recorded in the balance sheet Defined contribution schemes Defined contribution schemes are funded by contributions to organizations in full discharge of the employer s liability, with these organizations being responsible for paying any amounts due to employees. This means that, once contributions have been paid, no liabilities are recorded in the Group s balance sheet. These contributions are recognized in expenses at the time they are paid Defined benefit schemes Defined benefit schemes are post-employment benefit schemes other than defined contribution schemes. For these plans, the Group s obligation is estimated by external actuaries using the projected unit credit method. Under this method, each period of service gives rise to an additional unit of benefit entitlement and each unit is accounted for separately to build up the final obligation. The final amount of the obligation is then discounted. The main assumptions used to calculate the obligation are: discounting rate; inflation rate; future salary increases; employee turnover. The Group s obligation is estimated annually for all plans. Actuarial gains and losses may arise as a result of changes in actuarial assumptions or experience adjustments (differences between the previous actuarial assumptions and what has actually occurred) to the Group s obligation or the plan s assets. These gains and losses are directly recognized in other comprehensive income. When scheme benefits are improved (further to a legal or contractual change), the share of additional benefits relating to past services rendered by employees is recognized immediately in the income statement. 27/64

311 Other long-term benefits The Group s net liability with respect to long-term benefits other than pension schemes is equal to the value of future benefits acquired by employees in exchange for services rendered during the current period and prior periods. The amount of the liability is calculated using the projected unit credit method and discounted Free shares and share subscription warrants Free share plans and share subscription warrants are granted to certain managers and employees of the Group. In accordance with IFRS 2 Share-based payments, these plans are measured at their fair value on the date of grant. The fair value is expensed in personnel costs on a straight-line basis over the vesting period (period from the date of grant to maturity of the plan) with a corresponding increase in equity. At each closing date, the Group re-examines the number of options likely to become exercisable. If applicable, the impact of the review of the estimates is recognized in profit and loss with a corresponding adjustment to equity Income tax The tax expense shown in the income statement consists in tax payable for the current period and any other deferred tax income or expenses. Deferred taxes are calculated using the balance sheet liability method on temporary differences between the carrying amount of assets and liabilities and their tax value, and on tax losses carried forward. Deferred taxes on tax losses carried forward are not recognized as assets when the consumption of these losses cannot be assessed with sufficient probability because of the economic prospects and uncertainties on the future. Deferred taxes are calculated using the tax rates that have been enacted or substantively enacted at each balance sheet date. All amounts arising from changes in tax rates are recognized in the income statement in the year in which the rate change is voted or to be imminently voted. In addition, the impact may also be recognized in equity where it relates to items previously recognized in equity. Deferred tax assets and liabilities are not discounted and are recorded on the balance sheet under noncurrent assets and liabilities Tangible assets In accordance with IAS 16, expenditure by Group companies on property, plant and equipment is recognized in assets where it meets the following criteria: It is expected that future economic benefits associated with the asset will flow to the Group The cost of the asset can be reliably measured Property, plant and equipment are recognized at cost less the cumulative amount of depreciation and any impairment. Borrowing costs incurred during construction of a qualifying asset are incorporated into the value of the asset. The various components of an item of property, plant or equipment are recognized separately where their estimated useful lives, and therefore their depreciation periods, are significantly different. Given its non-material impact, this component-based approach has only been applied to constructions. 28/64

312 The Group calculates depreciation on property, plant and equipment on a straight-line basis, based on the cost of acquisition or production less any residual value, over a period corresponding to the useful life of each category of asset. The useful life applied to each main type of asset is as follows: Buildings Equipment and developments on land Technical facilities, equipment and tools Office furniture Transport equipment Computer equipment years 7-17 years 4-9 years 2-5 years 3-7 years 2-5 years Maintenance and repair costs are recognized in expenses in the year in which they are incurred. Tangible assets are tested for impairment when an indication of impairment is identified. Where an asset s recoverable value is less than its carrying amount, an impairment charge is recorded against the asset Goodwill Goodwill arising from business combination is not amortized but is tested for impairment annually, or more frequently where events or changes in circumstances indicate that an asset may be impaired. For the purpose of these tests, goodwill is allocated to Cash-Generating Units ( CGUs ) benefitting from the business combination or to a group of CGUs liable to benefit from synergies arising from business combinations. The method to determine these impairments is developed in the note Impairment of assets. Where an impairment loss is recognized against a cash-generating unit, it is firstly recorded as a reduction in the carrying amount of any goodwill allocated to that cash-generating unit, and then as a reduction in the carrying amount of the other assets in the cash-generating unit on a pro rata basis in proportion to the carrying amount of each asset in the unit. Impairment losses on goodwill are recognized in the income statement and are not reversible Intangible assets (other than goodwill) Intangible assets (excluding goodwill) are accounted for at cost, less cumulative amortization and any impairment loss. Intangible assets with a finite useful life are amortized over a period corresponding to their estimated useful lives defined by the Group. Amortization periods are determined depending on the type of asset concerned. Intangible assets with an indefinite useful life are not amortized but tested annually for impairment. In accordance with IAS 38, development costs are capitalized as intangible assets when the Group can demonstrate the following: That it has the intention as well as the financial and technical means to see the development project through to its conclusion That the intangible asset is expected to generate future economic benefits That the cost of the asset can be reliably measured throughout the development phase 29/64

313 The main research and development projects are reviewed based on information available from research departments, in order to identify and analyze projects in progress which may have entered the development phase The useful life applied to each main type of assets is as follows: Concessions, patents and other rights Software Brand Intellectual property rights Customer lists 3-20 years 3-5 years Indefinite 10 years 7-12 years Impairment of assets Impairment tests and definition of Cash Generating Units (CGU) A cash-generating unit is the smallest identifiable group of assets whose continuing use generates cash inflows. These cash inflows are largely independent of cash inflows generated by other assets or groups of assets. According to IAS 36, these tests are performed for each CGU or group of CGUs liable to benefit from synergies arising from business combinations, within a business segment or geographical area Recoverable value Impairment testing consists of comparing a CGU s carrying amount with its recoverable amount. Recoverable amount is the higher of fair value less costs to sell and value in use. Fair value less costs to sell is the amount obtainable from the sale of an asset or cash-generating unit in an arm s length transaction between knowledgeable, willing parties, less the costs of disposal. Value in use is the present value of the future cash flows expected to be derived from continuing use of an asset or cash-generating unit and its ultimate disposal. These cash flows are determined considering the following economic and regulatory assumptions: Future discounted cash flows after tax are calculated based on three-year forecast business plans prepared by Group senior management The terminal value is calculated by discounting cash flows out to infinity, on the basis of standard cash flows and a stable growth rate Cash flows are discounted based on the average cost of capital Borrowing costs Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalization. All other borrowing costs are recognized in profit or loss in the period in which they are incurred Inventory Inventory is valued at the lower of cost and net realizable value. Net realizable value represents the estimated sale price in the normal course of business, less any estimated completion costs and sales costs. 30/64

314 The cost of raw materials, commodities and other supplies is made up of the purchase price excluding VAT less any reductions, discounts and rebates, plus incidental purchase costs (shipping, unloading costs, customs costs, commissions on purchases, etc.). These inventories are valued using the weighted average unit cost method. The cost of work in progress, intermediate products and finished products consists of acquisition and transformation costs and other costs incurred in bringing the inventories to their current location and state, excluding financial costs. Production costs include raw materials, supplies, labour costs incurred in production and direct and indirect industrial overheads attributable to the transformation and production processes, based on normal levels of activity Provisions A provision is recognized when, at the period end, the Group has a present obligation as a result of past events where it is likely that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are measured using the best estimates of forecast expenditure at the closing date. Long-term contracts expected to result in an eventual loss are covered by provisions for losses on completion, recorded in balance sheet liabilities in relation with long term contracts balances. Losses are fully provisioned when they are known and can be reliably estimated regardless of the percentage of completion. The Group measures environmental risks on a case-by-case basis, in accordance with applicable legal requirements, and recognizes provisions based on the best available information, where such information enables probable losses to be identified and reliably estimated. A restructuring provision is recognized when the Group has developed a detailed formal plan for the restructuring and has raised a valid expectation in those affected that it will carry out the restructuring by starting to implement the plan or announcing its main features to those affected by it. The measurement of a restructuring provision includes only the direct expenditures arising from the restructuring, which are those amounts that are both necessarily entailed by the restructuring and not associated with the ongoing activities of the entity. Provisions are discounted where the effect of the time value of money is material (e.g. in the case of provisions for environmental risks). The Group uses a discount rate that represents the current assumptions of markets and the inherent risks of the provision. Any increase in provisions linked to the passing of time is recognized in financial expenses Financial assets Financial assets mainly consist of shares held in non-consolidated investments, loans and long-term receivables or deposits. The Group classifies financial assets in four categories: held for trading (assets that are bought and held principally for the purpose of selling them in the near term) held-to-maturity (assets with fixed or determinable payments and fixed maturity that the Group has a positive intent and ability to hold to maturity) loans and receivables (assets with fixed or determinable payments that are not quoted in an active market) available-for-sale (all other assets). The classification depends on the purpose for which the financial assets were acquired. The classification is determined at initial recognition. All financial assets are reviewed for impairment on an annual basis to assess if there is any indication that the asset may be impaired. Purchases and sales of all financial assets are accounted for at trade date. 31/64

315 Financial assets held for trading Trading investments are measured at fair value with gains and losses recorded as financial profits or expenses. Assets in this category are classified as current assets Held-to-maturity investments Financial assets that are designated as held-to-maturity are measured at amortized cost, in accordance with the effective interest rate method Loans and long-term receivables Loans and long-term receivables accounted for at amortized cost are measured in accordance with the effective interest rate method Available-for-sale financial assets Shares held in equity securities are classified as available-for-sale financial assets and are initially recognized and subsequently measured at fair value. For equity securities listed on an active market, fair value is quoted price. In absence of active market, fair value is generally determined according to the most appropriate financial criteria in each case (comparable transactions, multiples for comparable companies, discounted present value of future cash flows, estimated selling price). If such fair value cannot be reliably measured, equity securities are accounted for at cost. Gains and losses arising from changes in their fair value are recognized directly in equity ( Other Reserves ). When the security is disposed of, the cumulative gain or loss previously recognized in equity is included in the statement of income for the period (Finance income/costs). The Group assesses at the end of each reporting period whether there is any objective evidence that its equity securities are impaired which would lead, if this were to be the case, to recognize in the statement of income the cumulative loss previously recognized in equity. In accordance with IAS, such impairment cannot be subsequently reversed Trade receivables and other current assets Trade receivables are initially measured at fair value, which usually corresponds to the invoiced amount. When including favorable terms for the counterparty (e.g. extended payment terms) or any material discount effect, these loans and receivables are recognized at the present value of future cash flows, discounted using the market rate. They are subsequently valued at amortized cost. Trade receivables are classified as doubtful as soon as legal proceedings or enforced recovery procedures are initiated. Impairment is assessed on a case-by-case basis depending on the age of the receivable and the situation of the customer. An impairment loss is also recognized where receivables are significantly in arrears and a risk of litigation is detected. Current assets are tested for impairment as soon as there is any indication that their recoverable value may be less than their balance sheet value, and tested at least once at each balance sheet date. Impairment losses are recorded in the income statement. 32/64

316 Cash and cash equivalents Cash corresponds to bank account balances (cash and banking facilities) and cash in hand. They are recorded under Cash in the balance sheet assets. Bank overdrafts are recorded under Short term debt and current portion of long term debt in the balance sheet liabilities. Cash equivalents are mutual funds which correspond to highly liquid short-term investments that can be readily converted into known amounts of cash and which are not exposed to any material risk of impairment. In accordance with IAS 39, negotiable securities are measured at fair value at each balance sheet date. Changes in fair value are recognized in the income statement Financial liabilities Upon initial recognition, borrowing is recognized at fair value, to which are added any directly attributable transaction costs. Subsequently they are measured at amortized cost using the effective interest method. In compliance with this principle, any issue or redemption premiums are recognized as loans in the balance sheet and are amortized in net financial income/expenses over the term of the loans. Other financial and operating debts are initially recognized in the balance sheet at fair value. For shortterm debts, this usually corresponds to the invoiced amount Derivatives The Group may use interest rate hedges to manage its interest rate risk and reduce its overall debt costs without incurring speculative risk. It may also hedge against exchange rate risk linked to changes in currency values. These derivatives are traded with financial institutions. Under IAS 39, financial instruments may only be classified as hedges when the Group can demonstrate and document the effectiveness of the hedging relationship at inception and throughout the life of the hedge. The effectiveness of the hedge is determined by reference to changes in the value of the derivative instrument and the hedged item. The ratio must remain within 80% to 125%. Derivative financial instruments are recognized under Derivatives in the balance sheet at their market value on the reporting date. Changes in fair value are recognized as follows: cash flow hedges: the portion of the gain or loss on the financial instrument that is determined to be an effective hedge is recognized directly in equity, with corresponding entries under Derivatives and Deferred taxes under balance sheet assets and liabilities. The ineffective portion is recognized in profit or loss under Financing costs ; fair value hedges and financial instruments not designated as hedges: changes in fair value are recognized in profit or loss under Other operating income and expenses. Market value is the price quoted by independent financial institutions. 33/64

317 3 CONSOLIDATION SCOPE Company Location Head Office Activity Method Interests rate Novasep Holding SAS France Pompey Holding FC 100,00% Groupe Novasep SAS France Pompey Holding FC 100,00% Dynamit Nobel GmbH Explosivstoff- und Systemtechnik Germany Leverkusen Synthesis FC 100,00% Novasep Deutschland GmbH Germany Leverkusen Synthesis FC 100,00% Séripharm SAS France Le Mans Synthesis FC 100,00% Finorga SAS France Chasse sur Rhône Synthesis FC 100,00% Novasep Process SAS France Pompey Process FC 100,00% Novasep Inc USA Boothwyn Process FC 100,00% Novasep KK Japan Tokyo Process FC 100,00% Novasep Asia China Shanghai Process FC 100,00% Tangenx INC USA Boston Process FC 76,00% Henogen SA Belgium Charleroi Process FC 100,00% Novasep Process Engineering Services PCT LTD India Bangalore Process FC 100,00% Novasep Management SAS France Pompey Holding Not consolidated 100,00% Lorraine Aviation SARL France Nancy Other Not consolidated 8,71% Troisdorf Genehmigungshaltergesellschaft mbh Germany Troisdorf Other Not consolidated 3,00% EEBIC SA (ex : Eurobiotech SA) Belgium Anderlecht Other Not consolidated 15,00% (Key: FC= full consolidation / EM = equity method) The 2015 consolidation scope of the Group take into account the divestment of Pharmachem. The investment in the not consolidated Immunotoko has been written off. 34/64

318 4 SEGMENT INFORMATION 4.1 Segments and relevant accounting methods Determination of segments In accordance with IFRS 8, Operating segments, the information presented hereafter by operating segment is the same as that reported to the Chief Operating Decision Maker (the Chief Executive Officer) for the purposes of making decisions about allocating resources to the segment and assessing its performance. The Group operates in the following three segments Industrial Biotech, Biopharma and Synthesis Europe each of which represents separately managed strategic operating segments that have different capital requirements and marketing strategies. Industrial Biotech, Biopharma and Synthesis develop, manufacture and sells distinct products Industrial Biotech The Industrial Biotech BU is organized to serve the food commodity, functional ingredients and bioindustries markets with high performance purification processes and industrial systems. The BU comprises the activities located in Saint-Maurice-de-Beynost, France and Shanghaï, China. US customers can also benefit from the process development and pilot scale production platform in Boothwyn, PA Biopharma The Biopharma BU supplies Biopharma market with process development and custom manufacturing services, in Gosselies and Seneffe, Belgium; Boothwyn, PA, USA; Pompey, France. Asian customers can also benefit from the process development platform in Shanghaï, China. It produces and supplies industrial chromatography and filtration equipment and systems and stationary phases for Life Science industries Synthesis Synthesis develops and produces active ingredients and advanced intermediates for the pharmaceutical, crop science and other fine chemical industries. Synthesis supports its customers throughout the life cycle of pharmaceutical products, including patented active ingredients and generics, from design of synthesis processes to long-term commercial production. Novasep Synthesis Europe has expertise in chiral technologies, the manufacturing of HPAIs (Highly Potent Active Ingredients), hazardous chemistry and multi-stage synthesis and integrates with the purification expertise and technologies of Biopharma Other and holding activities Other and holding activities, not allocated to core operating segments, are summarized in the other segment Accounting policies applied to segments Performance in terms of financing activities and cash (including Financing costs net) and Income tax are monitored at the Group Consolidated level and are not allocated to Segments. The accounting policies applied to segment earnings comply with those described in the Note 2. Inter-Segments transactions are concluded at fair market conditions and prices. 35/64

319 Segment revenues, results, assets and liabilities Year ended December 31, 2015 Profit & Loss Industrial Biotech Biopharma Synthesis Corporate Eliminations Total Revenue from external customers 50,890 62, , ,842 Revenue from transactions w/other segments 1, ,621 (7, 886) Total revenue 50,890 64, , 865 5,621 (7, 886) 265,842 Material costs, sales commissions and transportation (31,733) (21,853) (43,596) 2156 (95,028) GROSS MARGIN (CM1) 19,157 42, ,269 5,621 ( 5,731) 170,815 % CM1 37,6% 66,0% 71,5% 100,0% 68,1% 64,3% Other Recurring Expenses (15,783) (31,713) (90,025) (8,287) 5,682 (140,125) EBITDA adjusted 3,374 10,787 19,244 (2,666) (49) 30,691 % revenue 6,6% 16,8% 12,6% n/a 0,6% 11,5% Depreciation (210) (7,089) (11,605) (741) 113 (19,531) OPERATING INCOME 3,164 3,698 7,639 (3,407) 64 11,160 % Revenue 6,2% 5,7% 5,0% n/a n/a - Other information Capital expenditure (b)(a) 547 3,336 13, (70) 18,571 State of financial situation Segment assets (c) (e) (f) 103,186 52, ,297 68,831 (40,790) 334,343 Unallocated assets (d) 6,483 Total assets 340,826 Segment current and non-current liabilities (c) 28,009 28,009 91, ,027 (40,790) 315,156 Unallocated equity and liabilities (d) 25,670 Total equity and liabilities 340,826 (a) (b) (c) (d) (e) (f) Elimination of inter-segment margin on inventory or capex Capital expenditure is an indicator used by the Chief Operating Decision Maker to allocate resources. It includes all acquisitions financed through a finance lease. Eliminations mainly concern cash pooling balances, intergroup dividends and current receivable/payable balances Deferred taxes assets for the unallocated assets and equity, deferred tax liabilities preference shares and derivative instruments for the unallocated equity and liabilities Corporate assets are netted of investments in affiliated companies Including goodwill 36/64

320 Segments revenues, results, assets and liabilities (continued) 2014 Year ended December 31, 2014 Profit & Loss Industrial Biotech Biopharma Synthesis Corporate Eliminations Total Revenue from external customers 55,939 51, , ,685 Revenue from transactions w/other segments 5, ,206 (11,151) - Total revenue 55,939 57, ,658 5,206 (11,151) 248,685 Material costs, sales commissions and transportation (34,919) (22,177) (41,546) - 6,231 (92,411) GROSS MARGIN (CM1) 21,020 34, ,112 5,206 (4,920) 156,274 % Revenue 37.6% 61.1% 70.7% 100% n/a 62.8% Other Recurring Expenses (15,147) (28,899) (82,812) (8,042) 5,285 (129,615) EBITDA adjusted 5,873 5,958 17,300 (2,836) ,659 % revenue 10.5% 10.4% 12.2% (54.5%) n/a 10.7% Depreciation (432) (5,757) (11,308) (626) 60 (18,063) OPERATING INCOME 5, ,992 (3,462) 425 8,596 % Revenue 9.7% - 4.2% n/a n/a 2.5% Other information Capital expenditure (b)(a) 787 2,545 13,965 1, ,732 State of financial situation Segment assets (c) (e) (f) 93,835 48, ,342 85,186 (35,487) 332,174 Unallocated assets (d) 8,942 Total assets 341,116 Segment current and non-current liabilities (c) 26,073 26,073 87, ,780 (35,487) 293,203 Unallocated equity and liabilities (d) 47,913 Total equity and liabilities 341,116 (a) (b) (c) (d) (e) (f) Elimination of inter-segment margin on inventory or capex Capital expenditure is an indicator used by the Chief Operating Decision Maker to allocate resources. It includes all acquisitions financed through a finance lease. Eliminations mainly concern cash pooling balances, intergroup dividends and current receivable/payable balances Deferred taxes assets for the unallocated assets and equity, deferred tax liabilities preference shares and derivative instruments for the unallocated equity and liabilities Corporate assets are netted of investments in affiliated companies Including goodwill 37/64

321 4.2.1 Revenue by market 2015 Revenue by market can be illustrated by the following graph: 1% 12% 12% 6% 46% Pharmaceutical Biopharmaceutical Fine Chemical 4% 19% Agro chemical Food industry Bio industries Functional ingredients 31/12/ /12/2014 Pharmaceutical 122,664 95,670 Biopharmaceutical 48,809 39,776 Fine chemical 10,894 10,600 Agro chemical 32,584 46,700 Food industry 32,626 42,970 Bio industries 16,572 8,237 Functional ingredients 1,692 4,733 Total 265, ,685 38/64

322 4.2.2 Information by geographical area For the purpose of the information by geographical area, sales of products and services (Revenue) are determined based on the location of customers. Non-current assets are allocated to geographical area based on their location Revenue by geographical can be illustrated by the following graph : Non-current assets comprise goodwill, intangible fixed assets, tangible fixed assets and investments in associates. However, it does not include the deferred tax assets, other non-current and the non-current financial assets. This explains the difference with the line item non-current assets in the Statement of financial position. 31/12/ /12/2014 Revenues Non-current assets (1) Revenues Non-current assets (1) France 28, ,447 31, ,077 Europe other 150,006 38, ,632 37,735 North America 43, , Rest of world 44,023 1,147 51,459 1,289 Total 265, , , ,908 (1) Pharmachem (discontinued assets) not included Information about major customers Top 10 customers represents 41.7% of the total revenues of the Group for year 2015 (2014: 46.3%). Due to the typology of such customers and to the nature and state of our relationship with them, and based on history, we consider that this concentration does not represent a risk for the group. 39/64

323 5 DISCOUNTINUED OPERATIONS 5.1 Profit and loss analysis of discontinued operations PharmaChem business Notes REVENUE 39,223 Material costs, sales commissions and transportation (16,130) Manufacturing Personnel costs (2,317) Other manufacturing expenses (4,210) Depreciation of manufacturing equipment (2,621) Cost of sales (25,278) GROSS PROFIT 13,945 % Revenue 35.6% Administration costs (3,788) Other income Amortization of intangible assets recognized on business combinations (821) OPERATING INCOME 609 9,335 Financial cost 2,132 (53) Non-recurring expenses including transaction costs (642) Loss on transaction / impairment (8,162) Currency transaction adjustments recycling 6,774 NET INCOME/(LOSS) 2,741 7,252 The assets and liabilities transferred to the buyer as part of the transaction can be analyzed as follows; Gain (loss) on transaction (as at 1st of October 2014) K K$ (1) Intangible assets 3,840 4,832 PPE 21,905 27,563 Non current financial assets Non current assets 25,784 32,444 Inventories 14,469 18,206 Trade receivables - - Other assets Trade payables (2,741) (3,449) Other liabilities (434) (546) Current assets less current liabilties 11,411 14,358 Total assets transfered 37,195 46,802 Net cash proceed 20,390 25,657 Earn out (2) 8,643 10,795 Total proceed 29,033 36,452 Gain / loss (8,162) (10,350) (1) Converted at closing date rate 1,2583 $/ (2) The Group is entitled to receive an Earn-Out Consideration during the period from January 1, 2015 to December 31, At December 31st, 2015, the fair value of the Earn-Out Consideration was determined to be $10,795k. 40/64

324 5.2 Cash flow statement of discontinued operations PharmaChem business OPERATING INCOME / (LOSS) FOR THE YEAR 609 9,335 Adjustments to reconcile Operating income to net cash provided by operations Depreciation - 3,442 Sub-total EBITDA adjusted ,777 Other non-recurring income and expenses from operating activities 1,571 (642) Movement in working capital and provision (discontinued operations) (500) (Increase)/decrease in trade receivables - (Increase)/decrease in inventories (3,046) Increase/(decrease) in trade payables 12 Other assets and liabilities 2,534 Provisions-net - I. NET CASH PROVIDED BY OPERATING ACTIVITIES 2,180 11,635 Purchase of property, plant and equipment - (1,828) II. NET CASH USED IN INVESTING ACTIVITIES - (1,828) Net cash proceed - 20,390 III. NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES - 20,390 NET CHANGE IN CASH AND CASH EQUIVALENTS (DISCONTINUED) 2,180 30,197 41/64

325 6 GOODWILL 6.1 Change in goodwill during the year Variations Goodwill 31/12/2014 Increase Decrease Impairment Translation rate adjustments 31/12/2015 Industrial Biotech 33,654 33,654 Biopharma 21,976 21,976 55, ,630 Variations Goodwill 31/12/2013 Increase Decrease Impairment Translation rate adjustments 31/12/2014 Industrial Biotech 33,654 33,654 Biopharma 21,976 21,976 55, , Allocation of goodwill to Cash Generating Units and Impairment tests In accordance with the principles set out in note , goodwill relating to the three segments Synthesis, Industrial Biotech and BioPharma was tested for impairment as at Dec. 31, A projection of discounted cash flows was prepared on the basis of business plans by operating segment over the next three years. The weighted average cost of capital (WACC) after tax that was used for the purpose of these impairment tests amounted to 10% for all segments (compared to 10.0% in 2014). The perpetuity rate used in the tests has been assessed at 2% (unchanged from 2014) for all segments, considering the potential market opportunities, the available capacities of the business unit and the rate used by the major competitors of the Group. An analysis of the sensibility to the variance in the weighted average cost of capital and the perpetuity rate has been performed. These impairment tests do not result in any additional impairment or to any release of a part of the impairment processed on the three segments as of December 31, We have also gone through an analysis of the sensitivity to the variance of the WACC by +/- 1 point as well as to the variance of the perpetuity rate by +/- 1 point. Such variances would not result in any material change to the impairment as of December 31, /64

326 7 INTANGIBLE ASSETS (OTHER THAN GOODWILL) Intangible assets are mainly made of concessions, patents, brands, intellectual property rights, capitalized development costs and customer lists. Cost Intangible assets recognized on business combinations Other intangible Intangible Assets At December 31, ,890 41, ,106 Additions - 1,455 1,455 Disposals - (160) (160) Assets divested with the Pharmachem business (27,346) (13,563) (40,909) Transfers and other movements - (1,440) (1,440) Foreign currency exchange differences At December 31, ,544 27,613 93,157 Additions 2,097 2,097 Disposals (2,351) (2,351) Foreign currency exchange differences At December 31, ,544 27,430 92,974 Amortization and impairment At December 31, ,444 22, ,962 Amortization charge - 2,344 2,344 Amortization charge intangible assets recognized on business combinations Assets divested with the Pharmachem business 2,132 2,132 (25,086) (11,983) (37,069) Disposals (102) (102) Foreign currency exchange differences At December 31, ,490 12,875 76,365 Amortization charge 2,913 2,913 Amortization charge intangible assets recognized on business combinations Disposals (2,342) (2,342) Foreign currency exchange differences At December 31, ,093 13,535 77,628 Net carrying amounts At December 31, ,446 18,696 25,144 At December 31, ,054 14,738 16,792 At December 31, ,451 13,895 15,346 (1) Impairment, if any, is included in the Impairment line item in the consolidated income statement. The 2015 and 2014 impairment test did not result in the recognition of any additional impairment to the intangible fixed assets or to the release of the impairment posted in prior periods. 43/64

327 8 PROPERTY, PLANT AND EQUIPMENT Land Constructions and buildings Industrial equipment and machinery Materials and other tangible fixed assets Assets under construction Total Cost At December 31, ,148 87, ,341 17,627 28, ,710 Additions , ,373 17,276 Disposals (1,027) (538) (1,565) Foreign currency exchange differences Asset divested with the Pharmachem business (2,900) (11,640) (39,900) (1,533) (938) (56,911) Transfers and other movements 7,192 15,471 1,110 (22,393) 1,380 At December 31, ,248 84, ,345 17,658 10, ,457 Additions ,607 1,260 12,234 16,475 Disposals (559) (547) (4,538) (2,248) 0 (7,892) Foreign currency exchange differences Transfers and other movements 1,415 3, (5,094) 0 At December 31, ,695 85, ,140 17,044 18, ,546 Accumulated depreciation and impairment At December 31, ,787 43, ,282 11,711 2, ,852 Depreciation charge for the year 94 3,978 10, ,709 Impairment (1) Disposals (2) (896) (535) (1,433) Foreign currency exchange differences Asset divested with the Pharmachem business (5,350) (28,758) (898) (35,006) Transfers and other movements 102 (102) - At December 31, ,881 42, ,643 11,091 2, ,738 Depreciation charge for the year 101 4,393 10,153 1,971 16,618 Amortization Impairment (1) Disposals (3) (324) (4,537) (2,227) (7,091) Foreign currency exchange differences At December 31, ,979 47, ,451 10,909 2, ,215 Net carrying amounts At December 31, ,361 43,876 39,059 5,916 26, ,858 At December 31, ,366 41,394 42,701 6,567 8, ,719 At December 31, ,716 37,950 38,689 6,136 15, ,331 (1) Impairment, if any, is included in the Impairment line item in the consolidated income statement. The 2014 impairment test did not result in the recognition of any additional impairment to the tangible fixed assets except for a building to sale. The 2015 impairment test resulted in the recognition of an additional impairment to the tangible fixed assets (. 0.1 million) In 2014, non-recurring capital expenditures mainly refer to the Leffe Project. 44/64

328 9 FINANCE LEASE As of December 31, 2015 fixed assets financed through finance leases represented a gross value of 32.8 million ( 33.6 million as at December 31, 2014) and a 16.4 million net book value ( 21.0 million as at December 31, 2014). The breakdown of the outstanding principal amount of long and short term debts pertaining to these leases is described in the Note 26. Finance leases mainly relate to buildings and certain items of equipment required for operations. They fulfill the conditions defined in IAS 17 requiring them to be capitalized. 10 NON-CURRENT AND CURRENT FINANCIAL ASSETS At the end of 2015, non-current financial assets were represented by: a 3% investment in Troisdorf Genehmigungshaltergesellschaft mbh; a 15% interest in EEBIC SA (ex : Eurobiotech SA/NV); a 8.7% interest in Lorraine Aviation. a 100% interest in Novasep Management. Since its contribution to the consolidation is negligible, the decision was taken to present that subsidiary as a non-current financial asset. In 2014, Purifonction has been written-off. In 2015, Immunotoko has been written off a) Non-current financial assets Non-consolidated equity interests Earn-Out receivables RTC ETC Other receivables December 31, 2013 (Restated) 70 6, ,831 Acquisitions / Disposals & reimbursements Foreign currency exchange differences Total (70) 7,321 1, , December 31, ,321 7, ,395 Acquisitions / Disposals 111 1, (243) 2,270 December 31, ,092 7, ,665 The table below shows the detail of RTC and ETC: 31/12/ /12/2014 RTC ,950 ETC RTC ,168 3,168 ETC RTC ,871 ETC Total 7,954 7,323 The RTC (Research Tax Credit) and the ETC (Employment Tax Credit) are acquired once a year and are paid 3 years later if any income tax is not due during this period. They are financed by BPI/Oseo for 80% of the amount generally the year after they have been booked. The financed RTC and ETC are presented in non-current financial assets and current financial assets. The corresponding loan are shown in note The non-financed RTC are shown in current tax assets. 45/64

329 b) Current financial assets : Earn-Out receivables Factoring Guarantee RTC-ETC December 31, 2013 (restated) 2,858 3,897 6,755 Acquisitions / Disposals 1,570 (191) (1,067) 312 Foreign currency exchange differences December 31, ,570 2,667 2,830 7,067 Acquisitions / Disposals Foreign currency exchange differences December 31, ,797 3,233 2,950 7,980 Total - - The table below shows the detail of RTC: 31/12/ /12/2014 RTC ,830 RTC ,950 Total 2,950 2, INVENTORY 11.1 Breakdown of inventory 31/12/ /12/2014 Gross value Depreciation Net Net Raw materials 16,829 (1,919) 14,910 12,344 Work in progress 15,981 (5,671) 10,310 6,084 Finished products 11,976 (4,617) 7,359 10,667 Commodities and other 2,333 (658) 1,675 1,695 Total 47,119 (12,865) 34,254 30,791 The increase of our inventory is mainly due to the activity Write down of the year The net write down of the year is detailed as follows: 31/12/ /12/2014 Addition (1,967) (1,615) Reversal 2,133 1,059 Foreign currency exchange differences (12) 16 Total (154) (574) 46/64

330 12 TRADE RECEIVABLES 12.1 Breakdown of trade receivables 31/12/ /12/2014 Trade and other receivables < 1 yr 30,888 23,491 Depreciation (980) (861) Total 29,908 22,630 The change in receivables compared to December 31, 2014 is mainly the consequence of the significant activity increase in the last months 2015 compared to Valuation allowance of trade receivables The net allowance of the year is broken down as follows: 31/12/ /12/2014 Beginning of the year (861) (280) Addition (238) (693) Release Foreign currency exchange differences 14 (18) End of the year (980) (861) 13 FACTORING The Group sells in certain cases trade receivables through off-balance sheet factoring programs. As most of the risks and rewards incidental to the ownership of the sold trade receivables are transferred to the buyers, related trade receivables are derecognized from the balance sheet. This accounting treatment and the underlying analysis were performed in accordance with the dispositions of IAS 39. The factoring amounts compare as follows: 31/12/ /12/2014 Receivable amounts transferred to the factor with no recourse to Novasep 30,832 19, 936 Retention for guarantee (accounted as current financial asset see note 10.b) (3,232) (2,667) Total 27,600 17, CURRENT TAX ASSETS Current tax assets of 11.1 million include Research Tax Credit (RTC) in France of 3.0 million in 2015 and 2.9 million in Only non-financed RTC are shown in current tax assets, financed RTC and ETC are presented in non-current financial assets and current financial assets. 31/12/ /12/2014 RTC ,871 RTC ,013 Total 3,013 2,871 Other current tax assets 8,052 7,150 Total 11,065 10,021 The other current tax assets are mainly related to VAT receivables. 47/64

331 15 OTHER ASSETS 31/12/ /12/2014 Employee related receivables Prepaid expenses 2, Down payments on orders Other receivables (1) Total 3,618 2,208 Allowance - - Net total 3,618 2,208 (1) Other receivables mainly correspond to supplier accounts in debit, primarily in relation to credit notes to be received. 16 FINANCIAL INFORMATION RELATED TO LONG TERM CONSTRUCTION CONTRACTS Balance sheet data Costs incurred plus profits recognized less losses recognized, and intermediate invoicing are determined on a contract by contract basis. If this amount is positive, it is shown on the line construction contracts in progress - assets. If negative, it is shown on the line construction contracts in progress - liabilities. 31/12/ /12/2014 Construction contracts in progress assets 24,266 14,213 Construction contracts in progress liabilities (3,736) (7,510) Net construction contracts in progress 20,529 6,703 Total income and expenses to date, recognized on contracts in progress - Costs incurred plus profits recognized, less losses recognized to date 187, ,350 Less invoices issued (167,204) (159,647) Net construction contracts in progress 20,529 6,703 The advances and payment on account received at the end of 2015 represent 9.6 million ( 10.3 million as at December 31, 2014) and are included in the total above. 17 DERIVATIVES 31/12/ /12/2014 Positive/(negative) fair value of interest rate swaps (1) (120) Fair value of B share subscription warrants (2) (488) (488) Total (488) (608) (1) The only outstanding interest rate swap as at December 31, 2014 concerned finance leases over the period in the Biopharma segment. (2) Further reference is made to note /64

332 18 CASH AND CASH EQUIVALENTS 31/12/ /12/2014 Cash in bank 36,954 30,391 Short-term investments 4,593 21,991 Total cash and cash equivalents 41,547 52,922 Bank overdrafts - - Net 41,547 52,922 The short-term investments are made of short-term deposit at banks that comply with the dispositions of paragraph 7 of IAS7. 19 CURRENT AND NON-CURRENT PROVISIONS 2015 Litigation Other (1) Total At December 31, ,892 1,838 5,730 Additions 2, ,301 Utilizations (2,933) (545) (3,478) Releases At December 31, ,870 1,681 5,553 Of which short term 3,870 1,681 5,553 Of which long term 2014 Litigation Other (1) Total At December 31, ,425 2,007 4,432 Additions 4, ,633 Utilizations (2,513) (560) (3,073) Releases (25) (237) (262) At December 31, ,892 1,838 5,730 Of which short term 3,892 1,838 5,730 Of which long term (1) Other provisions outstanding mainly relate to sundry provisions, customer provision risk as well as severance provisions 20 TRADE PAYABLES 31/12/ /12/2014 Trade and related payables 20,840 19,180 Trade and related payables (Capex) 5,808 3,579 Invoices not yet received (1) 18,633 18,030 Total 45,280 40,789 (1) Amount which is represented by percentage of completion in 2015 ( 7.3 million) and in 2014 ( 9.5 million). 49/64

333 21 OTHER LIABILITIES 31/12/ /12/2014 Employee related liabilities 13,702 14,108 Tax liabilities 4,244 4,457 Advances and deposits (except on LT contracts, see note 16) 16,305 15,013 Prepaid income 5,058 4,423 Customer related liabilities 4,603 1,776 Total 43,911 39, EQUITY 22.1 Changes to the equity The total equity attributable to equity holders of the parent decreased from 16.9 million as of December 31, 2014 to (5.6) million as at Dec. 31, The change of (22,5) million is explained as follows: Net Result for the period: (24,1) million, Exchange differences arising during the period: positive 0.8 million. Distribution of a (0.4) million dividends; Remeasurement of post-employment benefit obligation : 1.2 million in other comprehensive income 22.2 Characteristics of the equity shares Our capital structure is organized as described below. Type of equity Ordinary shares C Preference Shares (allocated under the free shares regime or subscribed) (1) share unit value Number of securities 175,182,565 x (1) = 8,583, Up to 10,000 Ownership NVHL 97,69% : 171,135,848 MMF III Azulis 2.31%: 4,016,717 Managers and, following the expiry of the inalienability period, Management Company. End 2015, 3,975 outstanding shares on 5,560 granted. Additional 2,250 shares were granted last year. See note and 23 for all details on these preference shares Main Characteristics of C preference shares The preference C shares give a preferential right to subscribe to a number of ordinary shares calculated upon exit according to Novasep Holding s equity value. Each preference C share gives right to a 1/100th voting right. Beneficiaries of rights to free shares are not shareholders (and therefore hold no voting rights) and will only become shareholders after expiry of the two year acquisition period, provided that the conditions set forth in the free shares plan are met. Upon becoming shareholders and after expiry of an additional two years inalienability period, such holders must contribute all their C preference shares to the Management Company. 50/64

334 Other financial instruments issued further to the restructuring of the share capital The following financial instruments were also issued at the close of the restructuring in March 2012: 22.3 Preference shares 100 B share subscription warrants ( BSA B ) were issued pursuant to the Management Incentive Plan to the benefit of Romafi. The exercise price is 0.05 euro/share and the number of rights that can be exercised depends on external factors determined by the Terms and Conditions of these warrants included in the Articles of Association of the Company. Since this number is not fixed and cannot be precisely predetermined, these B warrants are to be considered as derivative instruments through profit and loss as per the dispositions of IAS 32 ( 16); 30 million B preference shares (cf below); 30 million A share subscription warrants ( BSA A ). Further detail is provided in 22.3 below. On March 15, 2012, BPI France subscribed 30 million B preference shares for a cash consideration of 30 million. The shareholders agreement signed on March 15, 2012 includes a put option, which can be exercised by the FSI only in case a potential buyer would purchase more than 95% of Novasep Holding ordinary shares through a complex sale (a sale not payable exclusively in cash or through freely tradable securities). Even if the probability of exercise of the put is deemed remote, the put option granted to BPI France creates a liability which prevents the preference shares from being classified as equity according to IAS 32. Attached to these 30 million B preference shares are 30 million of BSA A, which, under certain conditions, give right to a maximum of 9,220,235 ordinary shares at a variable price defined by the Articles of Association and which number depends on the number of ordinary shares existing at the exercise date. Since the number of ordinary shares that can be subscribed at the date is not fixed and not dependent on predictable future events, these BSA A were not considered as equity instruments but as derivatives in accordance with the dispositions of IAS32 ( 16) Dividends paid In 2015, the Board approved a dividend payment ( 0,4 million) to NVHL/Azulis. 51/64

335 23 SHARE PURCHASE OPTIONS 23.1 Expense relating to free shares plan Movements of the years 2015 and 2014 Movements of shares the year Shares outstanding at beginning of the year 6,225 4,050 Shares granted in the year - 2,250 Shares vested in the year - - Shares cancelled in the year - (75) Shares outstanding at year end 6,225 6,225 Further to the authorization given by the Shareholders, the President granted a total of 5,560 preference C shares to certain managers of the company (a total of 10,000 preference C shares was available). These C preference shares give the right to subscribe to a maximum of 61,000,000 ordinary shares at a strike price of 0.05 per share. The expenses associated with this 10,000 preference C shares plan were calculated by an external expert and recognized in accordance with the accounting rules and methods set out in note of the notes to the financial statements. It represents 800,000 in total to be spread over 4 years starting on March 15, As a result, the expense recorded in 2015 and 2014 represented respectively 0.1 and 0.1 million and was recorded against equity in accordance with the dispositions of IFRS 2. Among the 10,000 preference C shares 2,250 shares were granted in 2014 to management. At the end of 2015, the total shares granted are 6,225 accounting for management departure over the last three years. New 10,000 preference C shares were granted in 2015, the allocation to the management will be effective in Share subscription warrants The group issued A and B share subscription warrants. Both are considered as derivative instruments which variations in fair value are booked through profit and loss A share subscription warrants The fair value of A share subscription warrants is nil at the grant date and no variation in fair value could be reasonably determined given the uncertainty around the hypothesis driving the determination of the number and price of shares that can be subscribed at the subscription date as well as the probable subscription date itself. As per the dispositions of IAS 39 47a, such liabilities, including derivatives that are liabilities, shall be measured at fair value except for a derivative liability that is linked to and must be settled by delivery of an equity instrument that does not have a quoted price in an active market for an identical instrument (ie a Level 1 input) whose fair value cannot otherwise be reliably measured, which shall be measured at cost. As a result, the A subscription warrants are measured at cost B share subscription warrants These warrants had a value at the subscription date and the fair value has remained the same as of December 31, /64

336 24 BUSINESS COMBINATIONS No business combinations occurred during the years 2014 and PENSIONS AND SIMILAR BENEFIT PROVISION The breakdown of the pension and similar benefit provision is the following: Notes 31/12/ /12/2014 Post-employment benefits ,491 17,637 Long service awards Early retirement benefits Total liabilities 17,325 18,826 The provision reflects the actual headcount of the Group at the end of December Post-employment benefits Those post-employment benefit schemes granted to Group employees, which are presented as defined benefit schemes are the mandatory lump sum retirement allowance scheme for French companies and internal defined benefit pension schemes within European subsidiaries Changes in the year 31/12/ /12/2014 Change in liability during year France Germany Total France Germany Total Present value of liabilities at beginning of year 3,645 13,992 17,637 3,194 10,940 14,134 Interest costs Cost of services provided during the year Benefits paid (169) (408) (577) (90) (382) (472) Sub-total items recognized in the income statement Actuarial gains and losses for the year (1) (274) (1,290) (1,564) 141 2,934 3,075 Present value of liabilities at year-end 3,680 12,811 16,491 3,645 13,992 17,637 (1) In accordance with IAS 19 revised, actuarial gains and losses for 2015 and 2014 are directly recognized in equity (other comprehensive income) Actuarial assumptions The actuarial assumptions used (likelihood of active employees remaining within the Group, mortality rates, retirement ages, salary increases, etc.) vary according to demographic and economic conditions in the countries in which schemes apply. The main actuarial assumptions concern the discount rate, the rate used to index-link salaries and the employee turnover rate. They correspond to senior management s best estimates as at the balance sheet date. 53/64

337 Main assumptions used are the followings: France Germany Actuarial assumptions Discount rate 2,5% 2,2% 2,5% 2,2% Inflation rate 1,50% 1,75% 1,50% 1,70% Retirement age years years 65 years 65 years Employee turnover rate 0-50% 0-50% % % Mortality rate table TGH - TGF 05 TGH - TGF 05 Richttafel 2005 G Heubeck Richttafel 2005 G Heubeck Wages increase 2% 1,75% 2% 2.25% 25.2 Long service awards Long service awards, which are sometimes allowed for in company agreements, constitute additional gratuities paid to employees who have attained a certain length of service within their companies. 31/12/ /12/2014 Change in liability during the year France Germany Total France Germany Total Present value of liabilities at beginning of year Cost in year Interest costs Benefits paid (110) (110) (110) (110) Actuarial gains and losses for the year (79) (79) (99) (99) Present value of liabilities at year-end Early retirement benefits Under German employment law, employees aged over 55 may benefit from an early retirement scheme under which, by agreement with their employer, they have the option of working part-time for a period from two to six years in return for a reduced salary. The subsidies paid by the German authorities are subject to new employees being taken on to replace beneficiaries of this scheme once they have retired. Pursuant to IAS 19, a provision must be raised for all active employees who may become future beneficiaries of this scheme. 31/12/ /12/2014 Present value of liabilities at beginning of year Cost in the year (12) Benefits paid (383) (537) Present value of liabilities at year-end /64

338 26 LONG AND SHORT TERM DEBT 26.1 Net debt 31/12/ /12/2014 Long-term debt, net of current portion of short-term debt 17, ,843 Short-term debt and current portion of long-term debt 185,871 7,240 Sub-total: gross debt 203, ,083 Tax assets transferred to BPI/OSEO (10,904) (10,153) Cash and cash equivalent (41,547) (52,922) Total Net Debt 150, , Breakdown of the debt by nature and maturity The financial indebtedness corresponds to the Dollar Notes issued on March 15, 2012 following the debt restructuring for a total amount of USD 195,164, fully reimbursable end of An amount of USD corresponds to the former Notes issued on 23 December Up to 1 year From 1 to 5 years Over 5 years Total as at December 31, 2015 Financial indebtedness 178, ,963 Finance lease debt 3,920 5,033-8,953 Accrued interest Other debt - 5,656-5,656 RTC/ETC BPI/OSEO financing 2,361 6,526-8,887 Total gross debt 185,870 17, ,086 Tax assets transferred to BPI/OSEO (2,950) (7,954) - (10,904) Cash and cash equivalent (41,547) - - (41,547) Total net debt 141,373 9, , Up to 1 year From 1 to 5 years Over 5 years Total as at December 31, 2014 Financial indebtedness - 159, ,926 Finance lease debt 4,418 8,936-13,354 Accrued interest Other debt - 6,010-6,010 RTC/ETC BPI/OSEO financing 2,264 5,971-8,235 Total gross debt 7, , ,083 Tax assets transferred to BPI/OSEO (2,830) (7,323) - (10,153) Cash and cash equivalent (52,922) - - (52,922) Total net debt (48,512) 173, ,008 55/64

339 The RTC/ETC BPI/OSEO financing as at December 31, 2015 and 2014 can be detailed as follows. 31/12/ /12/2014 RTC 2011 OSEO financing 2,264 RTC 2012 OSEO financing 2,360 2,360 ETC 2013 OSEO financing RTC 2013 OSEO financing 2,541 2,541 ETC 2014 OSO financing RTC 2014 financing 2,310 ETC 2015 financing 606 Total 8,887 8, Breakdown of Debt fixed and variable rates 31/12/ /12/2014 Debt at fixed rate 198, ,669 Debt at variable rate 4,611 5,414 Total 203, ,083 56/64

340 27 RISKS IN TERMS OF INTEREST RATES AND EXCHANGE RATE FLUCTUATIONS Risks in terms of interest rates fluctuations As our Notes have been subscribed at fixed rate, our exposure to interest rates fluctuations is limited to some of our finance lease. We manage or mitigate our exposure by the way of interest rates hedges. Risks in terms of exchange rates fluctuations Certain revenues, costs, assets and liabilities including the Notes are denominated in currencies other than Euro. As a result, changes in the exchange rates of these currencies or any other applicable currencies to Euro will affect our revenues, earnings and cash flows and could result in exchange losses or gains. Most of the currencies are managed in cash pooling system which allows to monitor and potentially hedge (if risk is anticipated) the currency variance. 28 DERIVATIVES: HEDGING ACTIVITY The Group may make use of derivatives to manage interest and exchange rate risk. The Group chose to apply hedge accounting to interest rate hedges in the 2008 financial year as defined in IAS 39, and applies the accounting rules and methods set out in paragraph above Interest rate hedges During the 2015 financial year, the fair value of interest rate hedges decreased from 120 to 0; the corresponding change is recorded under financial expenses in relation to instruments the effectiveness of which has not been established both retrospectively and prospectively, with corresponding entries under Derivatives in balance sheet liabilities. No additional interest rate hedges were entered into during the year Exchange rate hedges The Group currently has no commitments in relation to current and future exchange rate hedging arrangements as at December 31, /64

341 29 ANALYSIS OF THE INCOME STATEMENT 29.1 Payroll costs, headcount and FTE 31/12/ /12/2014 Salaries and social security contributions 80,015 76,189 Expenses relating to temporary staff 4,499 2,139 Mandatory and voluntary profit sharing 5,230 5,248 Free shares and share subscription warrants Total 90,794 83,678 Group employee headcount may be broken down by employee category as follows: 31/12/ /12/2014 Managers Supervisors/office staff Blue collar workers Total 1,217 1,125 Of which, 35 temps as at December, 2014 and 72 temps as at December Group employee Full Time Equivalent (including temporary people) may be broken down by BU category as follows: 31/12/2015 (unaudited) 31/12/2014 (unaudited) Synthesis Biopharma Industrial Biotech Corporate Total 1,164 1, Amortization and depreciation 31/12/ /12/2014 Amortization on other intangible assets 2,913 2,344 Amortization on intangible assets recognized on business combinations 1,104 2,132 Depreciation 12,132 10,879 Depreciation on finance leases 4,485 4,839 Sub-total 20,634 20,194 Impairment Total 20,766 20,452 58/64

342 29.3 Other operating costs and revenue 31/12/ /12/2014 Net allowance on trade receivables (196) (588) Net change in other provisions Currency exchange gains and losses (455) 99 Other Total 665 (157) The other income concerned mainly revenue from non-core activity Other non-recurring income and expenses from operating activities 31/12/ /12/2014 Restructuring and litigation costs (2,904) (6,550) Other 280 (483) Total (2,624) (7,033) Non-recurring expenses for 2014 and 2015 included primarily litigation costs (including associated lawyers costs), transition and change management as well as severance payments Financial cost net 31/12/ /12/2014 Interest related to the new HYB debt since 2012 restructuring (14,120) (11,843) Other interest expenses (614) (450) Interest on finance lease (240) (429) Cost of net financial debt (14,974) (12,722) Interest costs provisions for retirement allowances (395) (440) Changes in fair value of interest rate derivatives (7) (25) Amortization of borrowing costs and premiums (504) (504) Exchange gain (loss) 3,449 2,060 Other financial expenses / income (300) (334) Other financial income and expenses 2, Unrealized currency exchange loss on the debt (18,848) (19,534) Total Financial costs - net (31,578) (31,499) 59/64

343 29.6 Taxes Tax consolidation in France Since July 1st, 2007, the French subsidiaries Novasep Group SAS, Novasep Process SAS, Séripharm SAS and Finorga SAS have belonged to the tax consolidation group of which Novasep Holding SAS is the head. Since it owns more than 95% of its French subsidiaries (Novasep Group SAS, Finorga SAS, Novasep Process SAS and Séripharm SAS), the parent company Novasep Holding SAS has opted to file a consolidated tax return Tax expenses 31/12/ /12/2014 Current tax (1,655) (2,101) Deferred tax (491) 8,231 Total (2,146) 6, Sources of deferred tax assets and liabilities Opening 01/01/2015 Income / (expense) Other comprehensive Income Effect of discontinued Operation of deferred tax Closing 31/12/2015 Tax loss carry forwards 16,629 (1,813) 14,816 Deferred tax impact of discontinued operation (1393) - Other 2, (428) 2,619 Deferred tax assets 19, (428) (1,393) 17,433 Fixed assets, depreciation and amortization (10,079) (361) (10,440) Other (161) (349) (510) Deferred tax liabilities (10,240) (710) (10,950) Net 8,795 (491) (428) (1,393) 6,483 Deferred tax net assets 8,942 6,483 Deferred tax net liabilities (147) The deferred tax have been netted by tax jurisdiction in the balance sheet. At each period end, the Group reviews the recoverable amount of the deferred tax assets arising from tax losses carryforwards. Deferred tax assets arising on these losses are not recognized under certain circumstances and particularly where the Group cannot assess the probability of the tax loss carryforwards being set off against future taxable profits in a foreseeable future. Unrecognized deferred tax assets can be assessed to 126 million as at December 31, 2015 (at 33,33% as tax rate), it only concerns France Reconciliation between the legal tax rate in France and the effective tax rate in the consolidated income 31/12/ /12/2014 Consolidated profit or loss before tax (21,538) (25,073) Theoretical tax: income/(expense) 7,172 8, % Rate differences 133 2,876 Permanent differences 35 (717) NOL Consumption 2,009 1,217 Unrecognized tax losses (10,796) (5,602) Deferred tax impact of discontinued operation 1,393 Other (2,092) 7 Effective tax: income/(expense) (2,146) 6,130 60/64

344 30 REMUNERATION OF MANAGEMENT BODIES Compensation and benefits in-kind allocated to the eight Novasep Holding Executive Committee members in 2015 (the Novasep Group Executive Committee had eight members in 2014) for their responsibilities within the Group were as follows: 31/12/ /12/2014 Gross annual salaries 1,356 1,373 Annual bonuses Benefits in-kind (company cars, supplementary pensions) Total 1,909 1,955 Provisions relating to post-employment benefits for Executive Committee members amounted to k 125 as at 31 December 2015 (2014: k 85). 31 CASH FLOW STATEMENT 31.1 Working capital variation 31/12/ /12/2014 (Increase)/decrease in trade receivables (3,350) 3,871 (Increase)/decrease in inventories (3,437) (1,367) Increase/(decrease) in trade payables 2,051 (902) Other assets and liabilities (2,781) (1,253) Provisions-net Movement in working capital and provision (continuing operations) (7,158) 1, Payment of short term debt 31/12/ /12/2014 Leasing repayments (4,610) (5,577) Other debt - Total payment of short-term debt (4,610) (5,577) 31.3 Proceeds from long-term debt, net of debt issuance costs 31/12/ /12/2014 Leasing 209 1,069 Total Proceeds from long-term debt, net of debt issuance costs 209 1, Interest paid 31/12/ /12/2014 Leasing (240) (424) Debt from financial institutions (14,080) (12,053) Interest rate swaps - (146) Factoring (533) (317) Other interest paid (210) (98) Total interest paid (15,063) (13,038) 61/64

345 31.5 Other financing activities (net) 31/12/ /12/2014 RTC Financing (99) 39 Other (353) 999 Total other financing activities (net) (452) 1,038 62/64

346 32 GROUP LIABILITIES 32.1 Relative to commercial contracts In the context of its construction contracts business, from the time a contract is signed until it is fully completed, the Group undertakes, by way of contract guarantees taken out with banks, to compensate its customers in the event that it should fail to meet its contractual obligations. These guarantees totaled 4,1 million Euros as at December 31, All costs enabling the Group to meet its obligations are measured on a deal-by-deal basis and form an integral part of the cost to complete. Failing that, all potential risks identified are estimated on a dealby-deal basis, and are covered by provisions in the Group s accounts where appropriate. In order to fund completion of contracts, the Group collects payments from its customers under the terms of contracts. These payments are recorded in balance sheet liabilities. In order to guarantee that payments will be refunded in the event of the Group failing to meet its contractual obligations, the Group may put in place a deposit refund guarantee at the customer s request. Such guarantees totaled 5,3 million Euros as at December 31, Relative to operating leases The Group enters into operating leases where there is no economic benefit in acquiring the leased assets. This mainly applies to vehicle and office equipment leases. Amounts paid in respect of this type of lease continue to be non-material. The Group has no liabilities in respect of the payment of conditional rental payments or subleases Relative to Group debt The collateral implemented in the course of the issuing of the Novasep Holding SAS Senior Secured Dollar Notes following the restructuring as of March 15, 2012 consists of the following: Securities given by Novasep Holding SAS in favor of its lenders in relation to the Notes issued on March 15, 2012: In the context of the indenture governing the Notes issued by Novasep Holding SAS on March 15, 2012, Novasep Holding SAS granted a first-ranking pledge over its shares of the following subsidiaries being part of the agreement as Guarantors: Groupe Novasep SAS, Séripharm SAS,,Novasep Process SAS, Finorga SAS and Novasep Deutschland GmbH. As part of the same arrangement, Novasep Holding SAS also granted a first-ranking pledge over its bank accounts. As part of the same arrangement, Novasep Holding SAS also granted first ranking pledges over its intercompany receivables with Groupe Novasep SAS in the course of intercompany loan agreements. Securities given by Groupe Novasep SAS: In the context of the Indenture governing the Notes issued by Novasep Holding SAS on March 15, 2012, the company granted a first-ranking pledge over its shares of the following subsidiaries being part of the agreement as Guarantors: Séripharm SAS, Novasep Process SAS, Finorga SAS and Henogen SA. As part of the same arrangement, Groupe Novasep SAS also granted a first-ranking pledge over its bank accounts. As part of the same arrangement, the Group also granted a first-ranking pledge over certain intellectual property rights (Novasep Brand). 63/64

347 As part of the same arrangement, Groupe Novasep SAS also granted a first-ranking pledge over its intercompany receivables with all the subsidiaries of the Group, in the course of an intercompany loan and in the course of the Group Cash Management Agreement. Securities given by Novasep Process SAS, and Séripharm SAS: In the context of the Indenture governing the Notes issued by Novasep Holding SAS on March 15, 2012, the companies referred to above also granted a first-ranking pledge over certain intellectual property rights. As part of the same agreement, Novasep Process SAS granted a first-ranking pledge over its shares in Henogen S.A. Securities given by Novasep Deutschland GmbH: In the context of the Indenture governing the Notes issued by Novasep Holding SAS on March 15, 2012, Novasep Deutschland GmbH put in place securities under German law by granting a firstranking pledge over its shares in DNES GmbH. Group liabilities by way of covenants: In the context of the financing agreements governing the Notes issued by Novasep Holding on March 15, 2012, the Group and its restricted subsidiaries are required to comply with a number of rules and limits. The Indenture limits, among other things, the ability of Novasep Holding and its restricted subsidiaries to: incur additional indebtedness; pay dividends on, redeem or repurchase capital stock; make certain restricted payments and investments; create certain liens; in the case of restricted subsidiaries, enter into arrangements that restrict dividends or other payments to Novasep Holding; transfer or sell assets; merge or consolidate with other entities; and enter into transactions with affiliates. Following consummation of the restructuring which occurred on March 15, 2012, the Group was in compliance with these rules and limits as at December 31, Amended and Restated Indenture: The amended and restated notes which were issued under an indenture originally dated December 23, 2009, as amended and restated on March 15, 2012, are unsecured and do not contain limitations on the activities of Novasep Holding or the Group. The Group was in compliance with these rules and limits as at December 31, CONTINGENT LIABILITIES No material contingent liability has been identified as at the balance sheet date. 64/64

348 ANNEX C Audited Consolidated Financial Statements as of and for the year ended December 31, 2014, including comparative data as of and for the year ended December 31, 2013

349 2014 Consolidated Financial Statements April 7, /65

350 Novasep Sites Lyon-Gerland, FR Gosselies, Seneffe, BE 2/65

351 3/65

352 Table of Content STATUTORY AUDITORS REPORT... 6 CONSOLIDATED STATEMENT OF FINANCIAL POSITION... 8 CONSOLIDATED INCOME STATEMENT CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME CONSOLIDATED STATEMENT OF CASH FLOWS CONSOLIDATED STATEMENT OF CHANGES IN EQUITY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS GROUP OVERVIEW AND PERFORMANCE ACCOUNTING METHODS AND PRINCIPLES CHANGE IN CONSOLIDATION SCOPE SEGMENT INFORMATION DISCOUNTINUED OPERATIONS GOODWILL INTANGIBLE ASSETS (OTHER THAN GOODWILL) PROPERTY, PLANT AND EQUIPMENT FINANCE LEASE NON-CURRENT AND CURRENT FINANCIAL ASSETS INVENTORY TRADE RECEIVABLES FACTORING CURRENT TAX ASSETS OTHER ASSETS FINANCIAL INFORMATION RELATED TO LONG TERM CONSTRUCTION CONTRACTS DERIVATIVES CASH AND CASH EQUIVALENTS CURRENT AND NON-CURRENT PROVISIONS TRADE PAYABLES OTHER LIABILITIES EQUITY SHARE PURCHASE OPTIONS BUSINESS COMBINATIONS PENSIONS AND SIMILAR BENEFIT PROVISION LONG AND SHORT TERM DEBT RISKS IN TERMS OF INTEREST RATES AND EXCHANGE RATE FLUCTUATIONS DERIVATIVES: HEDGING ACTIVITY ANALYSIS OF THE INCOME STATEMENT REMUNERATION OF MANAGEMENT BODIES CASH FLOW STATEMENT GROUP LIABILITIES CONTINGENT LIABILITIES /65

353 NOVASEP HOLDING Société par Actions Simplifiée Boulevard de la Moselle Site Eiffel POMPEY Statutory auditors report on the consolidated financial statement December 31, 2014 This is a free translation into English of the statutory auditors report on the consolidated financial statements issued in the French language and is provided solely for the convenience of English speaking users. The statutory auditors report includes information specifically required by French law in such reports, whether modified or not. This information is presented below the opinion on the consolidated financial statements and includes explanatory paragraphs discussing the auditors assessments of certain significant accounting and auditing matters. These assessments were made for the purpose of issuing an audit opinion on the consolidated financial statements taken as a whole and not to provide separate assurance on individual account captions or on information taken outside of the consolidated financial statements. This report should be read in conjunction with, and is construed in accordance with, French law and professional auditing standards applicable in France. 5/65

354 Yzico 109, Boulevard d Haussonville Nancy Cedex Deloitte & Associés Espace Européen de l'entreprise 5, allée d'helsinki BP NOVASEP HOLDING Société par Actions Simplifiée Boulevard de la Moselle Site Eiffel POMPEY Strasbourg STATUTORY AUDITORS REPORT Consolidated financial statements for the year ended 31 December 2014 To the associates, In compliance with the assignment entrusted to us by your Articles of Association and your Annual General Meeting, we hereby report to you on: the audit of the accompanying consolidated financial statements of Novasep Holding; the justification of our assessments; the specific verification required by law. The consolidated financial statements have been approved by the President. Our role is to express an opinion on these financial statements, based on our audit. I. Opinion on the consolidated financial statements We conducted our audit in accordance with professional standards applicable in France. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, using sample testing techniques or other selection methods, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made, as well as evaluating the overall financial statement presentation. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. In our opinion the consolidated financial statements give a true and fair view of the assets and liabilities and of the financial position of the Group as at December 31, 2014 and of the results of its operations for the year then ended in accordance with the IFRSs as adopted by the European Union. II. Justification of our assessments In accordance with the requirements of article L of the French Commercial Law (Code de commerce) relating to the justification of our assessments, we bring to your attention the following matters: Note to the consolidated financial statements presents the significant estimates made by the management of the Group. Our procedures consisted in assessing the data and assumptions on which such estimates rely, reviewing the 6/65

355 company s calculations, examining management s approval procedures for these estimates and reviewing the appropriateness of the disclosures on the assumptions and options made by the company. Note 6, 7 and 8 to the consolidated financial statements describe the methods used for the impairment tests performed on goodwill, intangible assets and tangible assets. We reviewed the detailed assumptions used for these impairment tests and reviewed for appropriateness the disclosures made in the notes to the consolidated financial statements. These assessments were made as part of our audit approach for the consolidated financial statements taken as a whole and contributed to the expression of our unqualified opinion in the first part of this report. III - Specific verification As required by our professional standards, we also verified the information presented in the Group management report. We have no matters to report regarding its fair presentation and consistency with the consolidated financial statements. Nancy and Strasbourg, April 7, 2015 The Statutory auditors French original signed by Didier Obrecht (Deloitte & Associés) and Patrick Marjollet (Yzico) 7/65

356 CONSOLIDATED STATEMENT OF FINANCIAL POSITION (Amounts in euro thousands except otherwise stated) Novasep Holding SAS consolidated ASSETS Notes 31/12/ /12/ /01/2013 Restated (1) Restated (1) Non-current assets Goodwill 6 55,630 55,630 55,630 Intangible assets 7 16,791 25,143 41,597 Property, plant and equipment 8 118, , ,111 Non-current financial assets 10 15,395 6,831 4,559 Deferred tax assets , Total non-current assets 215, , ,529 Current assets Inventory 11 30,791 41,056 47,694 Trade receivables 12 22,630 32,575 24,229 Current tax assets 14 10,021 7,930 10,071 Other assets 15 2,208 5,196 6,550 Current financial Assets 10 7,067 6,755 2,688 Cash and cash equivalents 18 52,922 39,753 41,178 Total current assets 125, , ,410 TOTAL ASSETS 341, , ,939 (1) Financial statements as at December, 31 st, 2013 and January 1 st, 2013 have been restated following the change in presentation of Factoring guarantee and RTC/ ETC. Refer to note The accompanying notes are an integral part of these consolidated financial statements 8/65

357 CONSOLIDATED STATEMENT OF FINANCIAL POSITION (continued) (Amounts in euro thousands except otherwise stated) Novasep Holding SAS consolidated LIABILITIES & EQUITY Notes 31/12/ /12/ /01/2013 Equity 22 Issued capital 8,584 8,584 8,584 Consolidated reserves 86,008 87,240 92,908 Retained earnings and net income attributable to equity holders of (77,710) (53,974) (36,643) the parent Equity attributable to equity holders of the parent 16,882 41,850 64,849 Non-controlling interests Total equity 17,158 41,877 64,890 Preference Shares , ,000 30,000 Total Equity and preference shares 47,158 71,877 94,890 Non-current liabilities Pension and similar benefit provisions 25 18,826 15,894 15,927 Long-term debt, net of current portion , , ,540 Deferred tax liabilities Total non-current liabilities 199, , ,036 Current liabilities Current provisions 19 5,730 4,432 2,302 Short-term debt and current portion of long-term debt 26 7,240 10,102 10,200 Trade payables 20 40,789 46,175 41,704 Derivatives Other liabilities 21 39,777 47,394 35,856 Total current liabilities 94, ,833 91,013 TOTAL LIABILITIES & EQUITY 341, , ,939 The accompanying notes are an integral part of these consolidated financial statements 9/65

358 CONSOLIDATED INCOME STATEMENT (Amounts in euro thousands except otherwise stated) Novasep Holding SAS consolidated Notes (1) REVENUE from continuing operations 248, ,446 Material costs, sales commissions and transportation (92,411) (107,164) GROSS MARGIN (CM1) 156, ,282 % Revenue 62.8% 59.2% Manufacturing Personnel costs (53,856) (55,777) Other manufacturing expenses (32,479) (33,669) Depreciation of manufacturing equipment (14,928) (13,813) Cost of sales (193,673) (210,423) GROSS PROFIT 55,011 52,023 % Revenue 22.1% 19.8% Selling expenses (15,233) (14,965) Research & development expenses (9,352) (9,115) Administration expenses (18,538) (19,112) Other operating revenues and expenses 29.3 (157) (382) Other depreciation (3,135) (2,807) OPERATING INCOME 8,596 5,642 % Revenue 3.5% 2.1% + depreciation 18,062 16,619 = EBITDA adjusted 26,659 22,261 % revenue 10.7% 8.5% Amortization of intangible assets recognized on business combinations 29.2 (2,132) (2,146) Impairment 29.2 (258) (1,379) Other non-recurring income and expenses 29.4 (7,033) (3,823) Cost of net financial debt 29.5 (12,722) (12,678) Unrecognized currency exchange rate on the debt 29.5 (19,534) 6,454 Other financial income/expenses (including exchange gain and loss) (1,935) Current income tax expense 29.6 (2,100) (2,401) Deferred tax income/(expense) ,231 (380) NET INCOME/(LOSS) from continuing operations (26,194) (12,646) NET INCOME/(LOSS) from discontinued operations (1) 7,252 (2,485) NET INCOME/(LOSS) (18,942) (15,131) * Attributable to the owners of the company (19,158) (15,119) * Attributable to non-controlling interests 216 (12) (1) Following the divestiture of the Pharmachem business, the 2013 and 2014 income statements have been presented in accordance with the IFRS 5. The impact of the discontinued activities (Pharmachem business) has been presented on the caption NET INCOME (LOSS) from discontinued activities. Refer to note 5 The accompanying notes are an integral part of these consolidated financial statements 10/65

359 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (Amounts in euro thousands except otherwise stated) Novasep Holding SAS consolidated Notes NET INCOME/(LOSS) FOR THE YEAR (18,942) (15,131) Other comprehensive income Items that will not be reclassified to profit or loss Remeasurement of post-employment benefit obligations 25 (2,979) (344) Income tax impact on items that will not be reclassified to profit or loss Sub-total (2,112) (240) Items that may be subsequently reclassified to profit or loss Currency translation differences 4,239 (2,156) Sub-total 4,239 (2,156) TOTAL COMPREHENSIVE INCOME FOR THE YEAR (16,815) (17,527) Total comprehensive income attributable to: Owners of the Company (17,064) (17,513) Non-controlling interests 249 (14) (16,815) (17,527) The accompanying notes are an integral part of these consolidated financial statements 11/65

360 CONSOLIDATED STATEMENT OF CASH FLOWS (Amounts in euro thousands except otherwise stated) Novasep Holding SAS consolidated Notes OPERATING INCOME / (LOSS) FOR THE YEAR 8,596 5,642 Adjustments to reconcile Operating income to net cash provided by operations Depreciation ,063 16,619 Sub-total EBITDA adjusted 26,659 22,261 Other non-recurring income and expenses from operating activities (7,033) (3,823) Expense recognized in respect of equity-settled share-based payments Taxes paid (2,206) (1,776) Movement in working capital and provision (continuing operations) ,143 6,243 I. NET CASH PROVIDED BY OPERATING (CONTINUING) 18,664 23,086 ACTIVITIES (a) Of which factoring impact 79 1,189 Purchase of property, plant and equipment (18,732) (33,850) Increase/(decrease) in trade payables (1,212) 4,003 Proceeds from disposal of property, plant and equipment - 35 II. NET CASH USED IN INVESTING (CONTINUING) ACTIVITIES (19,944) (29,812) (b) Of which Leffe project (payable included) (10,131) (16,937) Of which other capex (payable not included) (12,604) (12,875) Of which trade payable capex (Leffe not included) 2,791 - Interest paid (c) 31.4 (13,038) (12,607) Dividend paid (d) 22.4 (1,212) (5,668) Sub-total Other net debt increase (-) decrease (+) (a+b+c+d) 26.1 (15,530) (25,001) Proceeds from long-term debt, net of debt issuance costs ,069 8,611 Payments of short-term debt 31.2 (5,577) (5,954) Other financing activities (net) ,038 6,334 Sub-total Cash in financing(continuing) facilities (3,470) 8,991 (1) III. NET CASH PROVIDED BY (USED IN) FINANCING (CONTINUING) ACTIVITIES (17,720) (9,284) NET CHANGE IN CASH AND CASH EQUIVALENTS (CONTINUING) (I + II + III) (19,000) (16,010) (1) IV NET CHANGE IN CASH (DISCONTINUED) 30,197 15,040 NET CHANGE IN CASH ( I + II + III + IV) 11,197 (970) Cash and cash equivalents at the beginning of the year (net of bank overdrafts) 39,753 41,178 Effect of exchange rate changes on cash 1,971 (453) Cash and cash equivalents at the end of the year (net of bank overdrafts) 52,922 39,753 (1) Following the divestiture of the Pharmachem business, the 2013 and 2014 consolidated statement of cashflows have been presented in accordance with the IFRS 5. The impact of the discontinued activities has been presented on the caption NET CHANGE IN CASH (DISCONTINUED). Refer to note 5 The accompanying notes are an integral part of these consolidated financial statements 12/65

361 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (Amounts in euro thousands except otherwise stated) 2014 Issued capital Premiums Equity settled employee benefits reserve Foreign currency translation reserve Retained earnings Attributable to owners of the parent Noncontrolling interests Total Balance at December 31, ,584 87, ,121 (58,447) 41, ,877 Income for the year (19,158) (19,158) 216 (18,942) Other comprehensive income for the year 4,206 (2,112) 2, ,127 Total comprehensive income for the year 4,206 (21,270) (17,064) 249 (16,815) Recognition of share-based payments (1) Reserve recycled on discontinued operations (2) (6,774) (6,774) (6,774) Dividends (1,232) (1,232) (1,232) Balance at December 31, ,584 86, ,553 (79,716) 16, ,158 (1) By decision of the President, free shares were granted to certain managers of the Group on March 15, These shares vest on expiry of a two-year period of continued service in the Group. The amount of the expense relative to these free shares, which has been calculated and recorded in accordance with IFRS 2, was 0.1 million for the current financial year. Note 23 provides additional information on this free share plan. (2) Details on discontinued operations in note5 Discontinued Operations The accompanying notes are an integral part of these consolidated financial statements 13/65

362 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (Amounts in euro thousands except otherwise stated) 2013 Issued capital Premiums Equity settled employee benefits reserve Foreign currency translation reserve Retained earnings Attributable to owners of the parent Noncontrolling interests Total Balance at December 31, ,584 92, ,275 (43,088) 64, ,890 Income for the year (15,119) (15,119) (12) (15,131) Other comprehensive income for the year (2,154) (240) (2,394) (2) (2,396) Total comprehensive income for the year (2,154) (15,359) (17,513) (14) (17,527) Recognition of share-based payments (1) Dividends (5,668) (5,668) (5,668) Balance at December 31, ,584 87, ,121 (58,447) 41, ,877 (1) By decision of the President, free shares were granted to certain managers of the Group on March 15, These shares vest on expiry of a two-year period of continued service in the Group. The amount of the expense relative to these free shares, which has been calculated and recorded in accordance with IFRS 2, was 0.1 million for the current financial year. Note 23 provides additional information on this free share plan. The accompanying notes are an integral part of these consolidated financial statements 14/65

363 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Amounts in euro thousands except otherwise stated) 1 GROUP OVERVIEW AND PERFORMANCE 1.1 Group overview Novasep Holding ( the Group ) is a simplified limited company (société par actions simplifiée or SAS) under French law having its registered address office in Pompey, near Nancy, France. Novasep Holding SAS s consolidated financial statements for the financial year ending December 31, 2014 include the parent company and its subsidiaries (together referred to as the Group ) and the Group s share in associates. On October 1st, 2014, Novasep has completed through an asset deal the divestiture of the Bahamian facility and related business of its fully-owned subsidiary, Pharmachem Technologies (Grand Bahama) Ltd ( Pharmachem ), to a local investor. In accordance with the prescriptions of IFRS 5, the 2014 consolidated income statement and consolidated statement of cash flows are presented excluding the Pharmachem business, which is disclosed in these statements as discontinued operations. The impacts of this transaction on the 2014 accounts are detailed in note 5. The Group provides global manufacturing solutions for synthetic molecules and biomolecules within the life sciences industries with a rich portfolio of technologies and expertise through its different business segments, Synthesis, Industrial Biotech and Biopharma: Synthesis covers development and manufacturing needs for synthetic active pharmaceutical ingredients (APIs) and advanced intermediates, synthetic peptides, agrochemicals and fine chemicals. The offerings of Novasep Synthesis include process development services, custom synthesis and purification ( outsourcing solutions ), the supply of purification systems ( insourcing solutions ) and the supply of special chemical products and generic APIs. Applications of Biopharma cover the development, production and purification of biomolecules in the biopharmaceutical market. The offerings of Biopharma include process development services, custom biopharmaceutical manufacturing and purification ( outsourcing solutions ), the supply of purification processes and systems ( in-sourcing solutions ) and the supply of purification consumables. Applications of Industrial Biotech cover the development, production and purification of biomolecules in the food ingredient, functional ingredient and bio-industries markets. The offerings of Industrial Biotech include process development services, the supply of purification processes and systems and the supply of purification consumables such as filtration membranes, as well as ion exchange and chromatography resins. 15/65

364 1.2 Group performance Over the course of the year, the management has continued to successfully implement its Back to basics strategy, leading to several pivotal moves: - Divestment of the Pharmachem business leading to a 30m positive cash flow impact and removing a non-core activity of the Group; - Release to operations of a 28m Omega 3 unique purification facility on time and on budget (referred to as the Leffe project in the Consolidated Statement of Cash Flows); - Customer focused sales reorganization; - Creation of new management center in Gerland in the Lyon area, a thriving area for biotech industries. This strategy is bearing fruits and has led to solid financial achievements this year: - Close to 250m of sales for the Group outside Pharmachem, focusing the portfolio of all divisions on attractive products and projects; - Gross margin (CM1) improved by 4 points at lower sales volumes; - Adjusted EBITDA up 20% at 26.7m, representing 10.7% of revenue (vs 8.5% last year) thanks to a successful cost control policy; - Cash on hand up 33% at 53m Performance overview 2014 is a year of robust operating and financial performance across all business units, with EBITDA growing in all segments: In m % change Synthesis 141,7 155,1-8,6 Bio Pharma external 51,9 50,5 2,8 Bio Pharma internal 5,1 10,7-52,3 Industrial Biotech 55,9 57,5-2,8 Elimination -5,9-11,4 48,2 SALES: 248,7 262,4-5,2 Synthesis 17,3 14,4 20,1 Bio Pharma 6,0 5,4 11,1 Industrial Biotech 5,9 5,7 3,5 Corporate -2,5-3,2-21,9 EBITDA (adjusted) : 26,7 22,3 19,7 % Sales 10,7% 8,5% 2,2% At Group level, Novasep achieved sales of 248.7m in 2014 (5.2% decrease vs. 2013), and adjusted EBITDA of 26.7m (20% increase vs. adjusted EBITDA for 2013). EBITDA growth was achieved through an improved gross margin (62.8%, up 3.6 points vs. 2013), positive change in product mix, and tightly controlled operating costs (2.6% below 2013). In the Synthesis business unit, EBITDA grew strongly despite current year sales being slightly down. Synthesis sales decreased by 8,6% to 141.7m due to the expected expiration and phasing out of certain legacy products. However, the gross margin rate increased to 70.6% (as compared to 64.5% in FY 2013) through a combination of improved product mix and efficiency gains. Operating costs also decreased by 3.4%. As a result, 2014 EBITDA is at 17.3m, up 20% vs EBITDA margin has 16/65

365 improved to 12.2% of sales (as compared with 9.3% last year). The Synthesis business unit continues to win new business. The Biopharma business unit s external sales increased by 2.8% to 51.9m as a result of weak CMO activity (-5%) and strong equipment sales (11%). EBITDA was up 11% to 6.0m FY, impacted by the low level of CMO activity. The EBITDA margin at 10.4% of total sales has significantly improved vs (8.9%). The Industrial Biotech business unit s sales showed a 2.8% decrease vs due to a weak start. The Q4 order entry flow was satisfactory. With EBITDA margin at 10.5% of sales, 2014 was above the 2013 full year basis (at 9.9%) due to good cost management Recurring and non-recurring elements of profit and loss can be grouped as follows: In m % change EBITDA adjusted 26,7 22,3 19,7 % of sales 10,7% 8,5% +2,2% Depreciation - 18,1-16,6 9,0 Amortization on Biz. Combination - 2,1-2,1 0,0 Cost of net financial debt - 12,7-12,7 0,0 Other financial expenses / income 0,7-1,9 ns Net taxes 6,1-2,8 ns NET RESULT recurring 0,6-13,8 ns % of sales 0,2% - 5,3% +5,5% Impairment - 0,3-1,4 - Non-recurring expenses - 7,0-3,8 - Discontinued operation (Pharmachem) 7,3-2,5 - Currency adjustment on USD bonds - 19,5 6,4 - NET RESULT non-recurring - 19,5-1,3 ns NET RESULT - 18,9-15,1 25,2 The group recurring net income is profit (+ 0.6m) vs a 13.8m loss in The depreciation charge increase is due to the start of operation of the new Omega-3 Leffe unit in Mourenx. The interest charge has remained stable. The other financial income of 0.7m relates mainly to exchange gains on foreign currency transactions on the second half of The tax charge benefits from the recognition of 5.8 million of deferred tax assets on Henogen, as a result of the good business prospects. Non-recurring expenses of 7.0 include mainly the cost of the amicable settlement (including associated lawyers costs) of a litigation concerning the group s subsidiary in Belgium, Henogen. This is compensated by the capital gain of 7.3m on the selling of the Bahamian business. The $195.3m high yield bonds have been converted at a USD/EUR rate of 1.21 at the closing. This rate was 1.38 at last year s end. This has generated an unrealized exchange loss of 19.5m. However, the USD raise that has affected mainly the last four months of 2014, should have, if sustained, a positive impact on the Group EBITDA in 2015, as the Group is generating 14% of its sales on the North-American market in /65

366 1.2.2 Finance overview The Group cash flow generation is positively affected by non-recurring elements, as shown in the following summary: In M EBITDA adjusted 26,7 22,3 Taxes paid -2,2-1,8 Change in working capital (factoring not included and payable capex included) 4,0 5,2 Capital expenditure without project Leffe (1) -12,6-12,9 Interest paid -13,0-12,6 Recurring cash flow 2,8 0,2 Capex project Leffe (2) -10,1-16,9 Other non-recurring income and expenses -7,0-3,8 Dividend paid -1,2-5,7 Net cash flow from discontinued operations 30,2 15,0 Non-recurring cash-flow 11,8-11,4 Loans increase (decrease) -3,5 8,9 Non-recourse factoring increase (decrease) 0,1 1,2 Currency adjustment on cash 1,9-0,5 Other elements -1,5 9,7 Total cash variation 13,1-1,4 Opening cash 39,8 41,2 Closing cash 52,9 39,8 (1) Capex payable not included (2) Capex payable included The recurring cash flow amounts to 2.8m in 2014 ( 0.2m in 2013). The positive change in working capital is mainly due to reduction in inventories, consistent with the decrease in volumes sold. The total cash variation amounts to 13.1m. It is mainly due to non-recurring elements for a total of m. These non-recurring elements are composed of: - A cash inflow of 30.2m coming from discontinued operations (see note 5) - A cash outflow of 10.1m spent on the completion of construction of the Omega 3 capex project Leffe - A cash outflow of 7.0m concerning mainly the end of a litigation concerning the group s subsidiary in Belgium, Henogen. - An exceptional dividend of 1.2m issued to shareholders in order to cover tax costs associated with the restructuring of the debt in /65

367 The Group s net debt has increased from 122.0m at the end of 2013 to 125.0m at the end of The net debt splits as follows: In M End 2014 End 2013 Dollar Bonds including accrued interest 160,5 140,7 Finance lease debt 13,4 17,9 Other loans 6,0 5,2 RTC & ETC funding by BPI/OSEO 8,2 8,2 Total gross debt 188,1 171,9 Tax Assets (RTC/ETC) transferred to OSEO/BPI - 10,2-10,2 Cash and cash equivalent - 52,9-39,8 Total net debt 125,0 122,0 Times adjusted EBITDA 4,7 5,5 Other elements that could be considered to be included in net debt are as follows: Off balance sheet factoring net of retention guarantee 17,2 17,0 Earn-out asset on sale of Pharmachem Business - 8,9 Times adjusted EBITDA (including factoring/earn-out asset) 5,0 6.2 At constant perimeter, the Group s leverage ratio (Net debt / EBITDA) has decreased from 5.5 in 2013 to 4.7 in The significant changes are the following: - The Dollar bonds have increased from 140.7m to 160.5m due to the change in exchange rate USD/EUR. - The earn-out asset is part of the total consideration related to the sale of the Pharmachem business. Please refer to note 5.1 for details. The total assets have decreased from 359m to 341m, reflecting mainly the divestiture of the Pharmachem business (refer to Note 5 for details). In M Dec 2014 Dec 2013 Goodwill 55,6 55,6 Intangible assets 16,8 25,1 Tangible assets 118,7 137,9 Non-current financial assets 15,4 6,8 Differed tax assets 8,9 0,1 Non-current assets 215,5 225,5 Inventory 30,8 41,1 Trade receivables 22,6 32,6 Current tax assets (incl. VAT) 10,0 7,9 Other assets 2,2 5,2 Current financial assets 7,1 6,8 Cash and cash equivalents 52,9 39,8 Current assets 125,6 133,4 Total Assets 341,1 358,9 Some reclassifications have been made as compared to last year end information. Please refer to note 19/65

368 2.3.3 for details. The other reason for the decrease is due to the sale of the Pharmachem assets. Please refer to note 5.1 for details. The non-current financial assets include the long term portion of the Pharmachem earn-out receivable of 7.3m. The main change concerning equity and liabilities is to the 20m of exchange rate driven increase in the long term debt, which entails a decrease of the same amount in Equity. Other decreases are due to the sale of the Pharmachem business. In M Dec 2014 Dec 2013 Equity attributable to shareholders 16,9 41,9 Equity : non-controlling interest 0,3 - Preference shares 30,0 30,0 Equity & preference shares 47,2 71,9 Long term debt 180,8 161,8 Employee benefit provision 18,8 15,9 Differed tax liabilities 0,2 0,4 Long term liabilities 199,8 178,1 Current provisions 5,7 4,4 Short term debt 7,2 10,1 Trade payables 40,8 46,2 Derivatives 0,6 0,7 Other liabilities 39,8 47,4 Short term liabilities 94,1 108,8 Total liabilities & equity 341,1 358,8 1.3 Post-closing events An adverse verdict was rendered in April 2014 in a commercial litigation in first instance concerning Henogen, a subsidiary of the group, which Henogen appealed. An amicable settlement of the dispute has been signed on the 9th of January The cost of this settlement is included in the nonrecurring expenses of See note 29.4 for details. On the 20 th of March 2015, Novasep and Celladon Corporation (Nasdaq:CLDN), a clinical-stage cardiovascular gene therapy company, signed a Development, Manufacturing and Supply Agreement pursuant to which, if supported by upcoming MYDICAR clinical data, Novasep would manufacture MYDICAR drug substance through 2018 with extension options through /65

369 2 ACCOUNTING METHODS AND PRINCIPLES 2.1 General principles and statement of compliance The Group s financial year ran for a twelve-month period ending December 31, The main accounting methods used to prepare the consolidated financial statements are set out below. Unless otherwise indicated, these methods have been permanently applied to all financial years shown. In accordance with the European Regulation no. 1606/2002 adopted by the European Parliament and the European Council on July 19, 2002, the Group s consolidated financial statements for the year ending December 31, 2014 have been prepared in compliance with the IFRS (International Financial Reporting Standards), as endorsed by the European Union at the date on which these financial statements were prepared. International accounting standards include IFRS (International Financial Reporting Standards), IAS (International Accounting Standards) and the interpretation issued by the SIC (Standing Interpretations Committee) and the IFRIC (International Financial Reporting Interpretations Committee). 2.2 Adoption of new and revised standards New and revised standards adopted and effective from January 1st, 2014: In the current year, the Group has applied a number of amendments to IFRSs and a new interpretation issued by the International Accounting Standards Board (IASB) that are mandatorily effective for an accounting period that begins on or after 1 January Amendments to IFRS 10, IFRS 12 and IAS 27 Investment Entities. The Group has applied the amendments to IFRS 10, IFRS 12 and IAS 27 Investment Entities for the first time in the current year. The amendments to IFRS 10 define an investment entity and require a reporting entity that meets the definition of an investment entity to consolidate its subsidiary but instead to measure its subsidiaries at fair value through profit and loss in its consolidated and separate financial statements. To qualify as an investment entity, a reporting entity is required to: Obtain funds from one or more investors for the purpose of providing them with investment management services Commit to its investor(s) that its business purpose is to invest fund solely for returns from capital appreciation Measure and evaluate performance substantially all of its investments on a fair value basis. Consequential amendments have been made to IFRS 12 and IAS 27 to introduce new disclosure requirements for investment entities. As the Company is not an investment entity (assessed based on the criteria set out in IFRS 10 as at 1 January 2014), the application of the amendment has had no impact on the disclosures or the amounts recognized in the Group s consolidated financial statements. Amendments to IAS 32 Offsetting Financial Assets and Financial Liabilities. The Group has applied the amendments to IAS 32 Offsetting Financial Assets and Financial Liabilities for the first time in the current year. The amendments to IAS 32 clarify the requirements relating to the offset of financial assets and financial liabilities. In particular, the amendments clarify 21/65

370 the meaning of currently has a legally enforceable right of set-off and simultaneous realization and settlement. The amendments have been applied retrospectively. As the Group does not have any financial assets and liabilities that qualify for offset, the application of the amendments has no impact on the disclosure or on the amounts recognized in the Group s consolidated financial statements. The Group has assessed whether certain of its financial assets and financial liabilities qualify for offset based on the criteria set out in the amendments and conducted that the application of the amendments has had no impact on the amounts recognized in the Group s consolidated financial statements. Amendments to IAS 36 Recoverable Amount Disclosures for Non-Financial Assets. The Group has applied the amendments to IAS 36 Recoverable Amount Disclosures for Non- Financial Assets for the first time in the current year. The amendments to IAS 36 remove the requirement to disclose the recoverable amount of a cash-generating unit (CGU) to which goodwill or other intangible assets with indefinite useful lives had been allocated when there has been no impairment or reversal of impairment of the related CGU. Furthermore, the amendments introduce additional disclosure requirements applicable to when the recoverable amount of an asset or a CGU is measured at fair value less cost of disposal. These new disclosures include the fair value hierarchy, key assumptions and valuation techniques used which are in line with the disclosure required to IFRS 13 Fair value Measurements. The application of the amendments has had no material impact on the disclosures in the Group s consolidated financial statements. Amendments to IAS 39 Novation of Derivatives and Continuation of Hedge Accounting. The Group has applied the amendments to IAS 39 Novation of Derivatives and Continuation of Hedge Accounting for the first time in the current year. The amendments to IAS 39 provide relief from the requirement to discontinue hedge accounting when a derivative designated as a hedging instrument arising from the novation should be included in the assessment and measurement of hedge effectiveness. The amendments have been applied retrospectively. As the Group does not have any derivatives that are subject to novation, the application of these amendments has had no impact on the disclosures or on the amounts recognized in the Group s consolidated financial statements. IFRIC 21 Levies The Group has applied IFRIC 21 Levies for the first time in the current year. IFRIC 21 addresses the issue as to when to recognize a liability to pay a levy imposed by a government. The interpretation defines a levy, and specifies that the obligation event that gives rise to the liability is the activity that triggers the payment of the levy, as identifies by legislation. The interpretation provides guidance on how different levy arrangements should be accounted for, in particular, it clarifies that neither economic compulsion nor the going concern basis of financial statements preparation implies that an entity has a present a present obligation to pay a levy that will be triggered by operating in the future. IFRIC 21 has been applied retrospectively. The application of this interpretation has had no material impact on the disclosures or on the amount recognized in the Group s consolidated financial statements Standards, amendments and interpretations adopted by the European Union and early applied by the Group : None. 22/65

371 2.2.3 Standards, amendments and interpretations adopted by the European Union and not anticipated by the Group A number of new standards, amendments to standards and interpretations, which were adopted by the European Union, allow an early application for annual periods beginning as of January 1, 2014, and have not yet been applied in preparation of these consolidated financial statements. None of these are expected to have a significant effect on the consolidated financial statements of the Group Standard not yet applicable because not yet approved by the European Union as of December 31, 2014 The Group is currently analyzing the impacts and practical consequences of the application of these Standards and Interpretations. 2.3 Accounting policies used for the preparation of consolidated financial statements Measurement bases used in preparing the financial statements The functional and presentation currency for the financial statements is the Euro. All figures set out in the financial statements are rounded to the nearest thousand Euros. The financial statements have been prepared using the historical cost convention Presentation of the financial statements The Group sets out its financial statements in accordance with the principles contained in IAS 1, Presentation of financial statements. The Group segments its assets and liabilities down into current and non-current assets and liabilities. Assets and liabilities which constitute the working capital requirement and are part of the normal operating cycle of the business in question and which are expected to be realized or settled within 12 months of the balance sheet date are presented as current assets or liabilities Fixed assets are presented as non-current assets Financial assets are broken down into current and non-current financial assets Financial liabilities due to be settled within 12 months of the balance sheet date are presented as current liabilities. Conversely, financial liabilities which are due in more than 12 months are presented as non-current liabilities Provisions entering into the normal operating cycle of the business in question, and any proportion of other provisions for liabilities and charges which is due in less than one year, are presented as current liabilities. Provisions not meeting these criteria are presented as noncurrent liabilities Deferred taxes are recorded in full under non-current assets and liabilities Changes in the presentation of the financial statements As compared to the 2013 consolidated financial statements published last year, the following changes have been made to the asset side of the opening balance sheet. Reclassification of factoring guarantees: - Factoring guarantees of an amount of. 2,858 have been reclassified from Non-current financial assets to Current financial assets. The factoring guarantees amount is calculated on the amount of trade receivable transferred to the factor with no recourse, the factor currently applies retention of about 15% in funding the receivables transferred. These amounts are cashed by the factor when it is paid by the client. Thus, these amounts are short term and should be accounted as current financial assets. 23/65

372 Reclassification of financed Tax credit in France: The RTC receivable (Research Tax Credit in France) and the ETC receivable (Employment Tax Credit in France) corresponding to the accounting financial year can be deducted from income tax payable for that year or will be paid three years later by the tax authorities if any income tax is not due during this period. When a financing facility is granted by OSEO/BPI, the receivable to the tax authorities is transferred to BPI/OSEO, who will retain 20% of its value for guarantee and pay cash for 80% of the amount (85% for ETC) to the company. At the end of the three years period, BPI/OSEO shall then be paid directly by the tax authorities for the full amount, and shall return to the company the 20% of value it retained. For such reasons, the receivables transferred to BPI/OSEO are classified as financial assets. The 2013 impacts of these reclassifications are presented here below. ASSETS Non-current assets Notes Novasep Holding SAS consolidated 31/12/ /12/2013 Restated Goodwill 6 55,630 55,630 Intangible assets 7 25,143 25,143 Property, plant and equipment 8 137, ,858 Non-current financial assets 10 6,831 3,426 Deferred tax assets Total non-current assets 225, ,124 Current assets Inventory 11 41,056 41,056 Trade receivables 12 32,575 32,575 Current tax assets 14 7,930 18,090 Other assets 15 5,196 5,196 Current financial Assets 10 6,755 0 Cash and cash equivalents 18 39,753 39,753 Total current assets 133, ,670 TOTAL ASSETS 358, ,794 - RTC related to the years 2011, 2012 and ETC 2013 of a total amount. 6,262 have been reclassified from Current tax assets to Non-current financial assets. These tax credit have been financed by BPI/OSEO and are expected to be paid by tax authorities after 12 months - RTC related to the year 2010 of a total amount of. 3,897 has been reclassified from Current tax assets to Current financial assets. This tax credit has been financed by BPI/OSEO and is expected to be paid by tax authorities within 12 months. 24/65

373 2.3.4 Use of estimates and judgments In order to prepare its financial statements, the Group is required to make certain estimates and assumptions with respect to the value of assets and liabilities, income and expense items, and information given in the notes to the financial statements. Management has made these estimates and assumptions on the basis of its past experience and other factors deemed reasonable. Amounts appearing in subsequent financial statements may differ materially from these estimates should the assumptions change or if actual conditions are different, particularly given the severe downturn in the current economic and financial environment which may weaken some of our partners and make it difficult to estimate future outlook. These estimates mainly relate to goodwill, intangible assets, employee benefits, deferred taxes, provisions and revenue recognition in respect to long-term contracts Consolidation method Subsidiaries, over which the Group exercises control, either directly or indirectly, are fully consolidated. Control is presumed to exist where the Group holds more than 50% of voting rights or where, in cases where the Group holds up to half of an entity s voting rights, it has: Power over more than half of voting rights by virtue of agreements with other investors; Power to govern the entity s financial and operational policies by virtue of a regulatory text or contract; Power to appoint or remove the majority of members of the Board of Directors or equivalent management body, where control of the entity is exercised by such a Board or body; Power to bring together the majority of voting rights in meetings of the Board of Directors or equivalent management body, where control of the entity is exercised by such a Board or body. Companies over which the Group exercises significant influence, which is presumed to be the case where the Group s interest is greater than 20%, are classified as investments in associates and are consolidated using the equity accounting method. Investments in companies that meet the above mentioned criteria but that are not consolidated are disclosed as non-current financial assets and recognized in accordance with IAS 39. These nonconsolidated investments are booked at their fair value and are subject to an impairment test on a regular basis. The criteria generally used are share of equity and profitability prospects. Non-controlling interests refer to any share in the profit or loss and net assets of a subsidiary which is attributable to interests not held by the parent company either directly or indirectly via its subsidiaries. Subsidiaries accounts are all closed as of December 31st each year. If the accounting methods used by the subsidiaries and associated companies differ from those used by the Group, the necessary changes are made to their financial statements to make them compliant with the Group s accounting principles, as described in note 2. All material intra-group transactions and balances are eliminated Business combinations In accordance with IFRS 3 and IFRS 3 revised for all combinations entered into on or after July 1 st, 2010, business combinations are accounted for using the purchase method. The cost of an acquisition is based on the fair value of the assets acquired, instruments of issued equity, and liabilities incurred or assumed at the date of the combination, to which are added the costs directly attributable to the combination. Fair value adjustments arising from business combinations are recorded in the corresponding assets and liabilities, together with any non-controlling interests and not only for the share acquired by the 25/65

374 Group. The residual difference between the purchase price (including acquisition-related costs) and the Group s share in the fair value of the underlying net assets acquired is treated as goodwill. If the acquisition cost is lower than the Group s share in the acquired subsidiary s net assets at the fair value, the difference is recorded directly in the income statement. Corrections should be applied to goodwill within the 12 months following the acquisition date in order to take into account definitive estimates of the fair value of assets and liabilities acquired. Once this 12-month period has expired, fair value adjustments are recorded in profit or loss Investments in associates The Group s investments in associates are recognized using the equity accounting method. Associates are entities over which the Group exercises significant influence in terms of operational and financial policy, but which it does not control. The balance sheet value of equity-accounted shares includes the acquisition cost of the shares plus or minus changes in the Group s share in the associate s net assets with effect from the acquisition date. The Group s share in the profit or loss of associates is reflected in the income statement Non-current assets held for sale, discontinued operations and operations in the process of being sold Non-current assets held for sale Non-current assets (or groups of assets intended for sale) are classified as being held for sale where their carrying amount is principally recovered through a sale transaction rather than through continuing use. This classification implies that the assets (or groups of assets intended for sale) are available for immediate sale and that this is highly likely to occur in the short term (12 months). Non-current assets (or groups of assets intended for sale) classified as being held for sale are measured at the lower of their carrying amount and fair value less costs to sell. Any reduction in the value of assets (or groups of assets intended for sale) at fair value less costs to sell is recognized in the income statement Discontinued operations and operations in the process of being sold A discontinued operation or an operation in the process of being sold is a component of the Group which has been separated off from the Group (by being sold or otherwise) or which is being held in view of a sale. Discontinued operations and operations in the process of being sold are clearly distinguished from the rest of the Group in both operating and financial reporting terms, and represent primary, distinct business lines or geographical regions, form part of a single, coordinated disposal or withdrawal plan or are subsidiaries acquired solely for the purpose of resale. Net profit or loss from discontinued and sold operations and those in the process of being sold is shown in a separate line in the income statement. Cash flows relating to these operations are shown separately from cash flows from continuing operations in the cash flow statement Revenue recognition The Group s activities include the following: Sale of equipment, active product ingredient intermediates and spare parts Provision of services including construction contracts 26/65

375 Sales of products Sales income is recorded where it is likely that the economic benefits associated with transactions will flow to the Group, and where the amount of income and costs incurred or to be incurred on a transaction can be reliably measured. Sales are recorded at the fair value of the amount received or to be received, less any applicable commercial, volume-related or similar discounts, discounts in respect of commercial interests and financial discounts. Sales of goods are recognized when a Group company has transferred to the purchaser the risks and benefits inherent to the ownership of an item, usually when the item has been delivered to and accepted by a customer and which recovery of payment is reasonably certain Delivery of services Income from services provided is recognized in proportion to the percentage of completion of the transaction. Revenue from construction contracts is recognized in accordance with IAS 11. For the Group, these contracts usually include a research phase, a production phase and an on-site assembly phase. Where the profit or loss on a construction contract can be reliably estimated, contract revenue and costs are recognized using the percentage of completion method. The percentage of completion equates to the cost incurred for work already carried out as a proportion of the total estimated cost for the contract. When calculating the percentage of completion, any costs incurred during the year but which relate to a future activity under a contract are excluded. Total service costs already incurred in respect of contracts, together with any gains or losses recorded on each contract are compared to interim amounts invoiced as at the balance sheet date. When these costs together with gains or losses are greater than interim amounts invoiced, the net difference is included in trade and other receivables. Otherwise, the net difference is recorded in trade and other payables. Any advances invoiced relative to services to be provided in the future are not included in the above calculation, but are included in other current liabilities. Where a contract is likely to result in a loss, the estimated loss is immediately recognized in the income statement Finance and operating leases Finance leases Assets acquired under finance leases are recognized on the balance sheet when the lease contract transfers substantially all the risks and rewards incidental to ownership to the Group. Criteria used to assess whether a contract should be classified as a finance lease include: the term of the lease compared with the estimated useful life of the asset, total future lease payments compared with fair value of the asset financed, whether or not ownership of the asset is transferred at the end of the lease term, existence of a purchase option favorable to the lessee, type of asset leased. Upon initial recognition the leased asset is measured at an amount equal to the lower of its fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset Operating leases Operating leases are lease contracts that are not classified as finance leases. Rental payments are recognized as expenses when they are incurred. 27/65

376 Grant Grants are not recognized until there is reasonable assurance that the Group will comply with the conditions attaching to them and that the grants will be received. The benefit of a government loan at a below-market rate of interest is treated as a government grant, measured as the difference between proceeds received and the fair value of the loan based on prevailing market interest rates. Government grants whose primary condition is that the Group should purchase, construct or otherwise acquire non-current assets are presented in the financial statements by deducting the grant received from the carrying amount of the asset and transferred to profit or loss on a ratably basis over the useful lives of the related assets. Other government grants are recognized as revenue over the periods necessary to match them with the costs for which they are intended to compensate, on a systematic basis. Government grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the Group with no future related costs are recognized in profit or loss in the period in which they become receivable Foreign currencies The individual financial statements of each group entity are presented in the currency of the primary economic environment in which the entity operates (its functional currency). For the purpose of the consolidated financial statements, the results and financial position of each group entity are expressed in euro, which is the functional currency of the Company and the presentation currency for the consolidated financial statements. In preparing the financial statements of the individual entities, transactions in currencies other than the entity s functional currency (foreign currencies) are recognized at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated. Exchange differences are recognized in profit or loss in the period in which they arise except for: exchange differences on foreign currency borrowings relating to assets under construction for future productive use, which are included in the cost of those assets when they are regarded as an adjustment to interest costs on those foreign currency borrowings; exchange differences on transactions entered into in order to hedge certain foreign currency risks (see Note below for hedging accounting policies); and exchange differences on monetary items receivable from or payable to a foreign operation for which settlement is neither planned nor likely to occur (therefore forming part of the net investment in the foreign operation), which are recognized initially in other comprehensive income and reclassified from equity to profit or loss on disposal or partial disposal of the net investment. For the purpose of presenting consolidated financial statements, the assets and liabilities of the Group s foreign operations are expressed in Euros using exchange rates prevailing at the end of the reporting period. Income and expense items are translated at the average exchange rates for the period, unless exchange rates fluctuated significantly during that period, in which case the exchange rates at the dates of the transactions are used. Exchange differences arising, if any, are recognized in other comprehensive income and accumulated in equity (attributed to non-controlling interests as appropriate). On the disposal of a foreign operation (i.e. a disposal of the Group s entire interest in a foreign operation, or a disposal involving loss of control over a subsidiary that includes a foreign operation, loss of joint control over a jointly controlled entity that includes a foreign operation, or loss of 28/65

377 significant influence over an associate that includes a foreign operation), all of the accumulated exchange differences in respect of that operation attributable to the Group are reclassified to profit or loss. Any exchange differences that have previously been attributed to non-controlling interests are derecognized, but they are not reclassified to profit or loss. In the case of a partial disposal (i.e. no loss of control) of a subsidiary that includes a foreign operation, the proportionate share of accumulated exchange differences are re-attributed to non-controlling interests and are not recognized in profit or loss. For all other partial disposals (i.e. of associates or jointly controlled entities not involving a change of accounting basis), the proportionate share of the accumulated exchange differences is reclassified to profit or loss. Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and translated at the closing rate Post-employment benefits and similar obligations Depending on laws and practices of the countries in which the Group operates, employees may be entitled to compensation when they retire or to a pension following their retirement. The liability corresponding to the employees future rights is covered by: contributions to independent organizations (insurance companies) responsible for paying the pensions or other benefits; Provisions recorded in the balance sheet Defined contribution schemes Defined contribution schemes are funded by contributions to organizations in full discharge of the employer s liability, with these organizations being responsible for paying any amounts due to employees. This means that, once contributions have been paid, no liabilities are recorded in the Group s balance sheet. These contributions are recognized in expenses at the time they are paid Defined benefit schemes Defined benefit schemes are post-employment benefit schemes other than defined contribution schemes. For these plans, the Group s obligation is estimated by external actuaries using the projected unit credit method. Under this method, each period of service gives rise to an additional unit of benefit entitlement and each unit is accounted for separately to build up the final obligation. The final amount of the obligation is then discounted. The main assumptions used to calculate the obligation are: discounting rate; inflation rate; future salary increases; employee turnover. The Group s obligation is estimated annually for all plans. Actuarial gains and losses may arise as a result of changes in actuarial assumptions or experience adjustments (differences between the previous actuarial assumptions and what has actually occurred) to the Group s obligation or the plan s assets. These gains and losses are directly recognized in other comprehensive income. When scheme benefits are improved (further to a legal or contractual change), the share of additional benefits relating to past services rendered by employees is recognized immediately in the income statement. 29/65

378 Other long-term benefits The Group s net liability with respect to long-term benefits other than pension schemes is equal to the value of future benefits acquired by employees in exchange for services rendered during the current period and prior periods. The amount of the liability is calculated using the projected unit credit method and discounted Free shares and share subscription warrants Free share plans and share subscription warrants are granted to certain managers and employees of the Group. In accordance with IFRS 2 Share-based payments, these plans are measured at their fair value on the date of grant. The fair value is expensed in personnel costs on a straight-line basis over the vesting period (period from the date of grant to maturity of the plan) with a corresponding increase in equity. At each closing date, the Group re-examines the number of options likely to become exercisable. If applicable, the impact of the review of the estimates is recognized in profit and loss with a corresponding adjustment to equity Income tax The tax expense shown in the income statement consists in tax payable for the current period and any other deferred tax income or expenses. Deferred taxes are calculated using the balance sheet liability method on temporary differences between the carrying amount of assets and liabilities and their tax value, and on tax losses carried forward. Deferred taxes on tax losses carried forward are not recognized as assets when the consumption of these losses cannot be assessed with sufficient probability because of the economic prospects and uncertainties on the future. Deferred taxes are calculated using the tax rates that have been enacted or substantively enacted at each balance sheet date. All amounts arising from changes in tax rates are recognized in the income statement in the year in which the rate change is voted or to be imminently voted. In addition, the impact may also be recognized in equity where it relates to items previously recognized in equity. Deferred tax assets and liabilities are not discounted and are recorded on the balance sheet under noncurrent assets and liabilities Tangible assets In accordance with IAS 16, expenditure by Group companies on property, plant and equipment is recognized in assets where it meets the following criteria: It is expected that future economic benefits associated with the asset will flow to the Group The cost of the asset can be reliably measured Property, plant and equipment are recognized at cost less the cumulative amount of depreciation and any impairment. Borrowing costs incurred during construction of a qualifying asset are incorporated into the value of the asset. The various components of an item of property, plant or equipment are recognized separately where their estimated useful lives, and therefore their depreciation periods, are significantly different. Given its non-material impact, this component-based approach has only been applied to constructions. 30/65

379 The Group calculates depreciation on property, plant and equipment on a straight-line basis, based on the cost of acquisition or production less any residual value, over a period corresponding to the useful life of each category of asset. The useful life applied to each main type of asset is as follows: Buildings Equipment and developments on land Technical facilities, equipment and tools Office furniture Transport equipment Computer equipment years 7-17 years 4-9 years 2-5 years 3-7 years 2-5 years Maintenance and repair costs are recognized in expenses in the year in which they are incurred. Tangible assets are tested for impairment when an indication of impairment is identified. Where an asset s recoverable value is less than its carrying amount, an impairment charge is recorded against the asset Goodwill Goodwill arising from business combination is not amortized but is tested for impairment annually, or more frequently where events or changes in circumstances indicate that an asset may be impaired. For the purpose of these tests, goodwill is allocated to Cash-Generating Units ( CGUs ) benefitting from the business combination or to a group of CGUs liable to benefit from synergies arising from business combinations. The method to determine these impairments is developed in the note Impairment of assets. Where an impairment loss is recognized against a cash-generating unit, it is firstly recorded as a reduction in the carrying amount of any goodwill allocated to that cash-generating unit, and then as a reduction in the carrying amount of the other assets in the cash-generating unit on a pro rata basis in proportion to the carrying amount of each asset in the unit. Impairment losses on goodwill are recognized in the income statement and are not reversible Intangible assets (other than goodwill) Intangible assets (excluding goodwill) are accounted for at cost, less cumulative amortization and any impairment loss. Intangible assets with a finite useful life are amortized over a period corresponding to their estimated useful lives defined by the Group. Amortization periods are determined depending on the type of asset concerned. Intangible assets with an indefinite useful life are not amortized but tested annually for impairment. In accordance with IAS 38, development costs are capitalized as intangible assets when the Group can demonstrate the following: That it has the intention as well as the financial and technical means to see the development project through to its conclusion That the intangible asset is expected to generate future economic benefits That the cost of the asset can be reliably measured throughout the development phase 31/65

380 The main research and development projects are reviewed based on information available from research departments, in order to identify and analyze projects in progress which may have entered the development phase The useful life applied to each main type of assets is as follows: Concessions, patents and other rights Software Brand Intellectual property rights Customer lists 3-20 years 3-5 years Indefinite 10 years 7-12 years Impairment of assets Impairment tests and definition of Cash Generating Units (CGU) A cash-generating unit is the smallest identifiable group of assets whose continuing use generates cash inflows. These cash inflows are largely independent of cash inflows generated by other assets or groups of assets. According to IAS 36, these tests are performed for each CGU or group of CGUs liable to benefit from synergies arising from business combinations, within a business segment or geographical area Recoverable value Impairment testing consists of comparing a CGU s carrying amount with its recoverable amount. Recoverable amount is the higher of fair value less costs to sell and value in use. Fair value less costs to sell is the amount obtainable from the sale of an asset or cash-generating unit in an arm s length transaction between knowledgeable, willing parties, less the costs of disposal. Value in use is the present value of the future cash flows expected to be derived from continuing use of an asset or cash-generating unit and its ultimate disposal. These cash flows are determined considering the following economic and regulatory assumptions: Future discounted cash flows after tax are calculated based on three-year forecast business plans prepared by Group senior management The terminal value is calculated by discounting cash flows out to infinity, on the basis of standard cash flows and a stable growth rate Cash flows are discounted based on the average cost of capital Borrowing costs Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalization. All other borrowing costs are recognized in profit or loss in the period in which they are incurred Inventory Inventory is valued at the lower of cost and net realizable value. Net realizable value represents the estimated sale price in the normal course of business, less any estimated completion costs and sales costs. 32/65

381 The cost of raw materials, commodities and other supplies is made up of the purchase price excluding VAT less any reductions, discounts and rebates, plus incidental purchase costs (shipping, unloading costs, customs costs, commissions on purchases, etc.). These inventories are valued using the weighted average unit cost method. The cost of work in progress, intermediate products and finished products consists of acquisition and transformation costs and other costs incurred in bringing the inventories to their current location and state, excluding financial costs. Production costs include raw materials, supplies, labour costs incurred in production and direct and indirect industrial overheads attributable to the transformation and production processes, based on normal levels of activity Provisions A provision is recognized when, at the period end, the Group has a present obligation as a result of past events where it is likely that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are measured using the best estimates of forecast expenditure at the closing date. Long-term contracts expected to result in an eventual loss are covered by provisions for losses on completion, recorded in balance sheet liabilities in relation with long term contracts balances. Losses are fully provisioned when they are known and can be reliably estimated regardless of the percentage of completion. The Group measures environmental risks on a case-by-case basis, in accordance with applicable legal requirements, and recognizes provisions based on the best available information, where such information enables probable losses to be identified and reliably estimated. A restructuring provision is recognized when the Group has developed a detailed formal plan for the restructuring and has raised a valid expectation in those affected that it will carry out the restructuring by starting to implement the plan or announcing its main features to those affected by it. The measurement of a restructuring provision includes only the direct expenditures arising from the restructuring, which are those amounts that are both necessarily entailed by the restructuring and not associated with the ongoing activities of the entity. Provisions are discounted where the effect of the time value of money is material (e.g. in the case of provisions for environmental risks). The Group uses a discount rate that represents the current assumptions of markets and the inherent risks of the provision. Any increase in provisions linked to the passing of time is recognized in financial expenses Financial assets Financial assets mainly consist of shares held in non-consolidated investments, loans and long-term receivables or deposits. The Group classifies financial assets in four categories: held for trading (assets that are bought and held principally for the purpose of selling them in the near term) held-to-maturity (assets with fixed or determinable payments and fixed maturity that the Group has a positive intent and ability to hold to maturity) loans and receivables (assets with fixed or determinable payments that are not quoted in an active market) available-for-sale (all other assets). The classification depends on the purpose for which the financial assets were acquired. The classification is determined at initial recognition. All financial assets are reviewed for impairment on an annual basis to assess if there is any indication that the asset may be impaired. 33/65

382 Purchases and sales of all financial assets are accounted for at trade date Financial assets held for trading Trading investments are measured at fair value with gains and losses recorded as financial profits or expenses. Assets in this category are classified as current assets Held-to-maturity investments Financial assets that are designated as held-to-maturity are measured at amortized cost, in accordance with the effective interest rate method Loans and long-term receivables Loans and long-term receivables accounted for at amortized cost are measured in accordance with the effective interest rate method Available-for-sale financial assets Shares held in equity securities are classified as available-for-sale financial assets and are initially recognized and subsequently measured at fair value. For equity securities listed on an active market, fair value is quoted price. In absence of active market, fair value is generally determined according to the most appropriate financial criteria in each case (comparable transactions, multiples for comparable companies, discounted present value of future cash flows, estimated selling price). If such fair value can not be reliably measured, equity securities are accounted for at cost. Gains and losses arising from changes in their fair value are recognized directly in equity ( Other Reserves ). When the security is disposed of, the cumulative gain or loss previously recognized in equity is included in the statement of income for the period (Finance income/costs). The Group assesses at the end of each reporting period whether there is any objective evidence that its equity securities are impaired which would lead, if this were to be the case, to recognize in the statement of income the cumulative loss previously recognized in equity. In accordance with IAS, such impairment cannot be subsequently reversed Trade receivables and other current assets Trade receivables are initially measured at fair value, which usually corresponds to the invoiced amount. When including favorable terms for the counterparty (e.g. extended payment terms) or any material discount effect, these loans and receivables are recognized at the present value of future cash flows, discounted using the market rate. They are subsequently valued at amortized cost. Trade receivables are classified as doubtful as soon as legal proceedings or enforced recovery procedures are initiated. Impairment is assessed on a case-by-case basis depending on the age of the receivable and the situation of the customer. An impairment loss is also recognized where receivables are significantly in arrears and a risk of litigation is detected. Current assets are tested for impairment as soon as there is any indication that their recoverable value may be less than their balance sheet value, and tested at least once at each balance sheet date. Impairment losses are recorded in the income statement. 34/65

383 Cash and cash equivalents Cash corresponds to bank account balances (cash and banking facilities) and cash in hand. They are recorded under Cash in the balance sheet assets. Bank overdrafts are recorded under Short term debt and current portion of long term debt in the balance sheet liabilities. Cash equivalents are mutual funds which correspond to highly liquid short-term investments that can be readily converted into known amounts of cash and which are not exposed to any material risk of impairment. In accordance with IAS 39, negotiable securities are measured at fair value at each balance sheet date. Changes in fair value are recognized in the income statement Financial liabilities Upon initial recognition, borrowing is recognized at fair value, to which are added any directly attributable transaction costs. Subsequently they are measured at amortized cost using the effective interest method. In compliance with this principle, any issue or redemption premiums are recognized as loans in the balance sheet and are amortized in net financial income/expenses over the term of the loans. Other financial and operating debts are initially recognized in the balance sheet at fair value. For shortterm debts, this usually corresponds to the invoiced amount Derivatives The Group may use interest rate hedges to manage its interest rate risk and reduce its overall debt costs without incurring speculative risk. It may also hedge against exchange rate risk linked to changes in currency values. These derivatives are traded with financial institutions. Under IAS 39, financial instruments may only be classified as hedges when the Group can demonstrate and document the effectiveness of the hedging relationship at inception and throughout the life of the hedge. The effectiveness of the hedge is determined by reference to changes in the value of the derivative instrument and the hedged item. The ratio must remain within 80% to 125%. Derivative financial instruments are recognized under Derivatives in the balance sheet at their market value on the reporting date. Changes in fair value are recognized as follows: cash flow hedges: the portion of the gain or loss on the financial instrument that is determined to be an effective hedge is recognized directly in equity, with corresponding entries under Derivatives and Deferred taxes under balance sheet assets and liabilities. The ineffective portion is recognized in profit or loss under Financing costs ; fair value hedges and financial instruments not designated as hedges: changes in fair value are recognized in profit or loss under Other operating income and expenses. Market value is the price quoted by independent financial institutions. 35/65

384 3 CHANGE IN CONSOLIDATION SCOPE No change in the consolidation scope of the Group occurred during the 2014 year. Company Location Head Office Activity Method Interests rate Novasep Holding SAS France Pompey Holding FC 100,00% Groupe Novasep SAS France Pompey Holding FC 100,00% Dynamit Nobel GmbH Explosivstoff- und Systemtechnik Germany Leverkusen Synthesis FC 100,00% Novasep Deutschland GmbH Germany Leverkusen Synthesis FC 100,00% Séripharm SAS France Le Mans Synthesis FC 100,00% Finorga SAS France Chasse sur Rhône Synthesis FC 100,00% PharmaChem Technologies Ltd (1) Bahamas Bahamas Synthesis FC 100,00% Novasep Process SAS France Pompey Process FC 100,00% Novasep Inc USA Boothwyn Process FC 100,00% Novasep KK Japan Tokyo Process FC 100,00% Novasep Asia China Shanghai Process FC 100,00% Tangenx INC USA Boston Process FC 76,00% Henogen SA Belgium Charleroi Process FC 100,00% Novasep Management SAS France Pompey Holding Not consolidated 100,00% Lorraine Aviation SARL France Nancy Other Not consolidated 8,71% Troisdorf Genehmigungshaltergesellschaft mbh Germany Troisdorf Other Not consolidated 3,00% Immunotoko BV Netherlands Nijmegen Other Not consolidated 100,00% Eurobiotech SA Belgium Anderlecht Other Not consolidated 15,00% (Key: FC= full consolidation / EM = equity method) (1) The divestiture of the Pharmachem business has been realized through an asset deal. 36/65

385 4 SEGMENT INFORMATION 4.1 Segments and relevant accounting methods Determination of segments In accordance with IFRS 8, Operating segments, the information presented hereafter by operating segment is the same as that reported to the Chief Operating Decision Maker (the Chief Executive Officer) for the purposes of making decisions about allocating resources to the segment and assessing its performance. The Group operates in the following three segments Industrial Biotech, Biopharma and Synthesis Europe each of which represents separately managed strategic operating segments that have different capital requirements and marketing strategies. Industrial Biotech, Biopharma and Synthesis develop, manufacture and sells distinct products Industrial Biotech The Industrial Biotech BU is organized to serve the food commodity, functional ingredients and bioindustries markets with high performance purification processes and industrial systems. The BU comprises the activities located in Saint-Maurice-de-Beynost, France and Shanghaï, China. US customers can also benefit from the process development and pilot scale production platform in Boothwyn, PA Biopharma The Biopharma BU supplies Biopharma market with process development and custom manufacturing services, in Gosselies and Seneffe, Belgium; Boothwyn, PA, USA; Pompey, France. Asian customers can also benefit from the process development platform in Shanghaï, China. It produces and supplies industrial chromatography and filtration equipment and systems and stationary phases for Life Science industries Synthesis Synthesis develops and produces active ingredients and advanced intermediates for the pharmaceutical, crop science and other fine chemical industries. Synthesis supports its customers throughout the life cycle of pharmaceutical products, including patented active ingredients and generics, from design of synthesis processes to long-term commercial production. Novasep Synthesis Europe has expertise in chiral technologies, the manufacturing of HPAIs (Highly Potent Active Ingredients), hazardous chemistry and multi-stage synthesis and integrates with the purification expertise and technologies of Biopharma Other and holding activities Other and holding activities, not allocated to core operating segments, are summarized in the other segment Accounting policies applied to segments Performance in terms of financing activities and cash (including Financing costs net) and Income tax are monitored at the Group Consolidated level and are not allocated to Segments. The accounting policies applied to segment earnings comply with those described in the Note 2. Inter-Segments transactions are concluded at fair market conditions and prices. 37/65

386 Segment revenues, results, assets and liabilities Year ended December 31, 2014 Profit & Loss Industrial Biotech Biopharma Synthesis Corporate Eliminations Total Revenue from external customers 55,939 51, , ,685 Revenue from transactions w/other segments 5, ,206 (11,151) - Total revenue 55,939 57, ,658 5,206 (11,151) 248,685 Material costs, sales commissions and transportation (34,919) (22,177) (41,546) - 6,231 (92,411) GROSS MARGIN (CM1) 21,020 34, ,112 5,206 (4,921) 156,274 % Revenue 37.6% 61.1% 70.7% 100% n/a 62.8% Other Recurring Expenses (15,147) (28,899) (82,812) (8,042) 5,285 (129,615) EBITDA adjusted 5,873 5,958 17,300 (2,836) ,659 % revenue 10.5% 10.4% 12.2% (54.5%) n/a 10.7% Depreciation, Amortization & Impairment (432) (7,889) (11,308) (884) 60 (20,453) INCOME / (LOSS) from operating activities (a) 5,441 (1,931) 5,992 (3,720) 425 6,206 % Revenue 9.7% (3.4)% 4.2% n/a n/a 2.5% Other information Capital expenditure (b)(a) 787 2,545 13,965 1, ,732 State of financial situation Segment assets (c) (e) (f) 93,835 48, ,342 85,186 (35,487) 332,174 Unallocated assets (d) 8,942 Total assets 341,116 Segment current and non-current liabilities (c) 26,073 26,073 87, ,780 (35,487) 293,203 Unallocated equity and liabilities (d) 47,913 Total equity and liabilities 341,116 (a) (b) (c) (d) (e) (f) Elimination of inter-segment margin on inventory or capex Capital expenditure is an indicator used by the Chief Operating Decision Maker to allocate resources. It includes all acquisitions financed through a finance lease. Eliminations mainly concern cash pooling balances, intergroup dividends and current receivable/payable balances Deferred taxes assets for the unallocated assets and equity, deferred tax liabilities preference shares and derivative instruments for the unallocated equity and liabilities Corporate assets are netted of investments in affiliated companies Including goodwill 38/65

387 Segments revenues, results, assets and liabilities (continued) 2013 Year ended December 31, 2013 Profit & Loss Industrial Biotech Biopharma Synthesis Corporate Eliminations Total Revenue from external customers 57,470 50, , ,446 Revenue from transactions w/other segments - 10, ,040 (18,281) - Total revenue 57,470 61, ,053 7,040 (18,281) 262,446 Material costs, sales commissions and transportation (35,160) (27,442) (54,983) - 10,422 (107,164) GROSS MARGIN (CM1) 22,310 33, ,070 7,040 (7,860) 155,282 % Revenue 38.8% 55.1% 64.5% 100% n/a 59.2% Other Recurring Expenses (16,601) (28,286) (85,678) (9,550) 7,095 (133,021) EBITDA adjusted 5,709 5,436 14,392 (2,510) (765) 22,261 % revenue 9.9% 8.9% 9.3% n/a n/a 8.5% Depreciation, Amortization& Impairment (642) (9,214) (9,729) (560) - (20,144) INCOME / (LOSS) from operating activities (a) 5,067 (3,778) 4,663 (3,070) (765) 2,117 % Revenue 8.8% (6.2)% 3.0% n/a n/a 0.8% Other information Capital expenditure (b)(a) 377 1,825 32, (765) 33,850 State of financial situation Segment assets (c) (e) (f) 96,454 53, ,327 58,774 (38,527) 314,761 Unallocated assets (d) 67 Total assets 314,828 Segment current and non-current liabilities (c) 29,528 29,527 89, ,421 (38,527) 241,853 Unallocated equity and liabilities (d) 72,975 Total equity and liabilities 314,828 (a) (b) (c) (d) (e) (f) Elimination of inter-segment margin on inventory or capex Capital expenditure is an indicator used by the Chief Operating Decision Maker to allocate resources. It includes all acquisitions financed through a finance lease. Eliminations mainly concern cash pooling balances, intergroup dividends and current receivable/payable balances Deferred taxes assets for the unallocated assets and equity, deferred tax liabilities preference shares and derivative instruments for the unallocated equity and liabilities Corporate assets are netted of investments in affiliated companies Including goodwill 39/65

388 4.2.1 Revenue by market 2014 Revenue by market can be illustrated by the following graph: 31/12/ /12/2013 Pharmaceutical 95, ,514 Biopharmaceutical 39,776 40,162 Fine chemical 10,600 10,000 Agro chemical 46,700 51,300 Food industry 42,970 39,210 Bio industries 8,237 14,008 Functional ingredients 4,733 4,252 Total 248, ,446 40/65

389 4.2.2 Information by geographical area For the purpose of the information by geographical area, sales of products and services (Revenue) are determined based on the location of customers. Non-current assets are allocated to geographical area based on their location Revenue by geographical can be illustrated by the following graph : Non-current assets comprise goodwill, intangible fixed assets, tangible fixed assets and investments in associates. However, it does not include the deferred tax assets, other non-current and the non-current financial assets. This explains the difference with the line item non-current assets in the Statement of financial position. 31/12/ /12/2013 Restated Revenues Non-current assets (1) Revenues Non-current assets (1) France 31, ,077 36, ,004 Europe other 130,632 37, ,325 38,327 North America 35, , Rest of world 51,459 1,289 48,458 1,167 Total 248, , , ,035 (1) Pharmachem (discontinued assets) not included Information about major customers Top 10 customers represents 46,3% of the total revenues of the Group for year 2014 (2013: 40.7% without Pharmachem, 50.8% Pharmachem included). Due to the typology of such customers and to the nature and state of our relationship with them, and based on history, we consider that this concentration does not represent a risk for the group. 41/65

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