STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated as of November 5, 2006 (this “Agreement”), among ABBOTT LABORATORIES, an Illinois corporation (“Acquiror”), and Michael Jaharis, Kathryn Jaharis, Steven Jaharis, Daniel Bell and Steven K. Aronoff (each a “Seller” and collectively, “Sellers”). Capitalized terms used but not defined herein shall have the meanings given to such terms in the Merger Agreement.
WHEREAS, Sellers legally and beneficially own all the issued and outstanding shares of common stock, par value $0.01 per share (the “Shares”), of Kos Investments, Inc., a Delaware corporation (“Kos Investments”);
WHEREAS, Kos Investments legally and beneficially owns all of the issued and outstanding capital stock of Kos Holdings, Inc., a Delaware corporation (“Kos Holdings”);
WHEREAS, Kos Investments, directly or indirectly through Kos Holdings legally and beneficially owns 8,570,069 shares of common stock, par value $0.01 per share (the “Company Common Stock”), of Kos Pharmaceuticals, Inc., a Florida corporation (the “Company”);
WHEREAS, Acquiror, S&G Nutritionals, Inc., a direct wholly-owned subsidiary of Acquiror (“Merger Sub”), and the Company are, concurrently with the execution and delivery of this Agreement, entering into an Agreement and Plan of Merger dated the date hereof (the “Merger Agreement”);
WHEREAS, Acquiror and certain shareholders of the Company (collectively, the “Jaharis Family”) are, concurrently with the execution and delivery of the Merger Agreement, entering into a Shareholders Agreement dated the date hereof (the “Shareholders Agreement”); and
WHEREAS, as a condition to their willingness to enter into the Shareholders Agreement, the Jaharis Family has requested that Acquiror enter into this Agreement with Sellers pursuant to which Acquiror shall purchase the Shares subject to the terms and conditions hereof (such purchase and sale of the Shares is referred to in this Agreement as the “Acquisition”), which Acquisition is intended to be consummated immediately subsequent to the consummation of the Offer.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants, agreements and representations herein contained, and intending to be legally bound hereby, the parties hereto hereby agree as follows:
ARTICLE I
Purchase and Sale of Shares; Closing
SECTION 1.01. Purchase and Sale of the Shares. On the terms and subject to the conditions of this Agreement, at the Closing, each Seller shall sell, transfer and deliver to Acquiror, and Acquiror shall purchase from such Seller, the Shares owned by such Seller free and clear of all Liens for a purchase price to such Seller (with respect to each such Seller, the “Purchase Price”), in cash, without interest, equal to the product of (a) the Closing Payment and (b) the Pro Rata Portion of such Seller.
SECTION 1.02. Closing. Subject to the provisions of Article V, the closing (the “Closing”) of the Acquisition shall take place at the offices of Cravath, Swaine & Moore LLP, 825 Eighth Avenue, New York, New York 10019, on the date of payment by Acquiror for shares of Company Common Stock tendered pursuant to the Offer, or if the conditions set forth in Article V are not satisfied or waived at such time, as soon as practicable thereafter. The date on which the Closing occurs is referred to in this Agreement as the “Closing Date”.
SECTION 1.03. Escrow. Simultaneously with the execution of this Agreement, (x) Acquiror, each Seller and an escrow agent to be mutually agreed (the “Escrow Agent”) shall enter into an Escrow Agreement in the form attached hereto as Exhibit A (the “Escrow Agreement”) and (y) each Seller shall (and Sellers shall cause Kos Investments and Kos Holdings to) deposit with the Escrow Agent (collectively, the “Share Certificates”) (i) certificates representing the Shares owned by Sellers, which certificates shall be duly endorsed in blank or accompanied by stock powers duly endorsed in blank in proper form for transfer, with appropriate transfer tax stamps, if any, affixed, (ii) certificates representing all of the issued and outstanding capital stock of Kos Holdings and (iii) certificates representing the 5,960,069 shares of Company Common Stock directly or indirectly owned by Kos Investments.
SECTION 1.04. Transactions To Be Effected at the Closing; Payment of Purchase Price.
(a) At or prior to noon (New York City time) on the Expiration Date, Sellers shall deliver (or caused to be delivered) (i) to Acquiror (x) each Seller’s Closing Certificate, (y) the Resignation Letters and (z) the Payoff Letters and (ii) to Acquiror and the Escrow Agent, the Closing Payment Certificate.
(b) Pursuant to the Escrow Agreement, upon receipt by the Escrow Agent of a notice that the Offer has been consummated and that payment of the Purchase Price has been received by the Sellers, the Escrow Agent shall release and deliver the Share Certificates to Acquiror.
(c) The Acquiror and the Sellers shall give effect to the arrangements negotiated between them prior to the closing for the payment to Wachovia Bank N.A. of the aggregate amount of all indebtedness of Kos Investments to Wachovia Bank N.A. (as reflected
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on the Payoff Closing Certificate) and the termination and release of any pledge or other security interests in favor of Wachovia Bank N.A. (or its affiliates) encumbering shares of Company Common Stock held directly or indirectly by Kos Investments.
ARTICLE II
Representations and Warranties of Sellers
Except as set forth in the corresponding sections or subsections of the disclosure letter delivered to Acquiror by Sellers on the date hereof (the “Disclosure Schedule”) (it being understood that each item in a particular section of the Disclosure Schedule applies only to such section and to any other section to which its relevance is readily apparent), each Seller hereby jointly and severally represents and warrants to Acquiror that as of the date hereof and as of the Closing Date, except to the extent such representations and warranties relate to an earlier date (in which case such representations and warranties are made as of such earlier date):
SECTION 2.01. Execution and Delivery; Enforceability. Each Seller has the legal capacity to execute and deliver this Agreement and to consummate the transactions contemplated hereby. Each of the persons executing this Agreement on behalf of each Seller has full power and authority to execute and deliver this Agreement on behalf of such Seller and to thereby bind such Seller. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all necessary action on the part of each Seller. This Agreement has been duly executed and delivered by each Seller and constitutes its valid and binding obligation, enforceable against it in accordance with its terms (except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and general equity principles). If a Seller is married and the Shares set forth below such Seller’s signature to this Agreement constitute community property under applicable laws, this Agreement has been duly authorized, executed and delivered by, and constitutes the valid and binding agreement of, such Seller’s spouse.
SECTION 2.02. No Conflicts; Consents.
(a) Except as set forth in Section 2.02(a) of the Disclosure Schedule, the execution, delivery and performance of this Agreement by each Seller does not and will not (i) conflict with or violate the articles of incorporation or bylaws of Kos Investments or Kos Holdings, (ii) assuming that all applicable requirements under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), and the Securities Exchange Act of 1934, as amended (the “Exchange Act”), have been satisfied, conflict with or violate any federal, state, local or foreign statute, law, ordinance, rule, regulation, order, judgment, decree or legal requirement (“Law”) applicable to the Sellers, Kos Investments or Kos Holdings or by which any of their respective properties are bound or (iii) (A) result in any breach or violation of or constitute a default (or an event which with notice or lapse of time or both would become a default), or (B) result in the loss of a benefit under, or give rise to any right of termination, cancellation, amendment or acceleration of, or (C) result in the creation of any Lien on any of the
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Shares or any other properties or assets of any Seller, Kos Investments or Kos Holdings under, any Contract to which any Seller, Kos Investments or Kos Holdings is a party or by which and Seller, Kos Investments or Kos Holdings or any of their respective properties are bound.
(b) Except pursuant to the applicable requirements under the HSR Act and the Exchange Act, no consent, approval, authorization or permit of, action by, filing with or notification to, any federal, state, local or foreign governmental or regulatory (including stock exchange) authority, agency, court, commission, or other governmental body (a “Governmental Entity”) or any other person (including with respect to individuals, any spouse, and with respect to trusts, any co-trustee or beneficiary) is required to be obtained or made by Sellers, Kos Investments or Kos Holdings in connection with the execution, delivery and performance of this Agreement or the consummation of the transactions contemplated hereby.
SECTION 2.03. The Shares. Except as set forth in Section 2.03 of the Disclosure Schedule, each Seller owns and has good and valid title to the number of Shares set forth below such Seller’s signature to this Agreement, free and clear of all Liens other than Permitted Liens. Assuming Acquiror has the requisite power and authority to be the lawful owner of the Shares, upon delivery to Acquiror at the Closing of certificates representing the Shares owned by Seller, duly endorsed by Seller for transfer to Acquiror, and upon Seller’s receipt of the applicable portion of the Closing Payment, good and valid title to such Shares will pass to Acquiror, free and clear of any Liens, other than those arising from acts of Acquiror or its Affiliates. Other than this Agreement, the Shares are not subject to any voting trust agreement or other Contract, including any Contract restricting or otherwise relating to the voting, dividend rights or disposition of the Shares, and no proxies with respect to the Shares have been granted by Sellers.
SECTION 2.04. Organization, Standing and Power. Each of Kos Investments and Kos Holdings is duly organized, validly existing and in good standing under the laws of Delaware and has all requisite corporate power and authority to own the Assets. Sellers have delivered to Acquiror true and complete copies of the certificate of incorporation and by-laws of Kos Investments and Kos Holdings, in each case as amended through the date of this Agreement.
SECTION 2.05. Assets.
(a) Kos Investments owns and has good and valid title to (i) 960,069 shares of Company Common Stock and (ii) all of the issued and outstanding capital stock of Kos Holdings, in each case, free and clear of all Liens other than as set forth in Section 2.05(a) of the Disclosure Schedule.
(b) Kos Holdings owns and has good and valid title to 7,610,000 shares of Company Common Stock, free and clear of all Liens other than as set forth in Section 2.05(b) of the Disclosure Schedule.
(c) Except for (i) 960,069 shares of Company Common Stock owned by Kos Investments, (ii) the shares of Kos Holdings owned by Kos Investments and (iii) 7,610,000
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shares of Company Common Stock owned by Kos Holdings (collectively, the “Assets”), neither Kos Investments nor Kos Holdings (A) owns, directly or indirectly, any capital stock, partnership interest, limited liability company interest, joint venture interest or any other equity in any person or any other asset or (B) has since January 1, 1999, directly or indirectly owned any other asset, in each case except as set forth in Section 2.05(c) of the Disclosure Schedule. Other than the Merger Agreement, the Shareholders Agreement and the other agreement set forth in Section 2.05(c) of the Disclosure Schedule, the Assets are not subject to any voting trust agreement or other Contract, including any Contract restricting or otherwise relating to the voting, dividend rights or disposition of the Assets, and no proxies have been granted in respect of the Assets.
SECTION 2.06. Capitalization of Kos Investments and Kos Holdings.
(a) The authorized capital stock of Kos Investments consists of 50,000 shares of common stock, par value $0.01 per share, of which only 27,200 shares, constituting the Shares, are issued and outstanding. All of the Shares were validly issued, fully paid and nonassessable and were issued free of preemptive rights and in accordance with all applicable Laws.
(b) Except as set forth in clause (a) of this Section 2.06 or as set forth in Section 2.06(b) of the Disclosure Schedules, (i) there are not outstanding or authorized any (A) shares of capital stock or other voting securities of Kos Investments, (B) securities of Kos Investments convertible into or exchangeable for shares of capital stock or voting securities of Kos Investments or (C) options or other rights to acquire from Kos Investments, or any obligation of Kos Investments to issue, any capital stock, voting securities or securities convertible into or exchangeable for capital stock or voting securities of Kos Investments; and (ii) there are no other options, calls, warrants or other rights, agreements, arrangements or commitments of any character relating to the issued or unissued capital stock or other voting securities of Kos Investments to which Kos Investments or any Seller is a party.
(c) The authorized capital stock of Kos Holdings consists of 50,000 shares of common stock, par value $0.01 per share, of which only 10,000 shares are issued and outstanding. All of the shares of Kos Holdings were validly issued, fully paid and nonassessable, were issued free of preemptive rights and are owned beneficially and of record by Kos Investments.
(d) Except as set forth in clause (c) of this Section 2.06, (i) there are not outstanding or authorized any (A) shares of capital stock or other voting securities of Kos Holdings, (B) securities of Kos Holdings convertible into or exchangeable for shares of capital stock or voting securities of Kos Holdings or (C) options or other rights to acquire from Kos Holdings, or any obligation of Kos Holdings to issue, any capital stock, voting securities or securities convertible into or exchangeable for capital stock or voting securities of Kos Holdings; and (ii) there are no other options, calls, warrants or other rights, agreements, arrangements or commitments of any character relating to the issued or unissued capital stock or other voting securities of Kos Holdings to which Kos Holdings, Kos Investments or any Seller is a party.
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SECTION 2.07. Taxes. Except as set forth in Section 2.07 of the Disclosure Schedules, since July 1, 1997 (i) all Tax Returns required to be filed by or with respect to Kos Investments and Kos Holdings have been timely filed and such Tax Returns are true, correct and complete in all material respects, (ii) all Taxes of Kos Investments and Kos Holdings that are due and payable have been paid, (iii) since July 1, 1997, neither Kos Investments nor Kos Holdings has received written notice of any Proceeding against or audit of, or with respect to, any Taxes of Kos Investments or Kos Holdings that has not been finally resolved, (iv) there are no liens for Taxes (other than statutory liens for Taxes not yet due and payable) upon any of the assets of Kos Investments or Kos Holdings, (v) since July 1, 1997, neither Kos Investments nor Kos Holdings has been a “distributing corporation” or a “controlled corporation” in a distribution intended to qualify under Section 355(a) of the Code or otherwise as part of a “plan (or series of related transactions)” (within the meaning of Section 355(e) of the Code) of which the Merger is also a part, (vi) neither Kos Investments nor Kos Holdings is a party to or is bound by any Tax sharing, allocation or indemnification agreement or arrangement (other than solely between Kos Investments and Kos Holdings), (vii) for any period beginning on or after July 1, 1997, neither Kos Investments nor Kos Holdings (A) has been a member of a group filing a consolidated, combined or unitary Tax Return (other than a group consisting solely of Kos Investments and Kos Holdings or (B) has any liability for the Taxes of any person under Treasury regulation section 1.1502-6 (or any similar provision of state, local or foreign Law), (viii) Kos Investments is an S corporation as defined in Section 1361 of the Code and has been since July 1, 1997, Kos Holdings is a qualified subchapter S subsidiary as defined in Section 1361(b)(3)(B) of the Code and has been since July 1, 1997, (ix) neither Kos Investments nor Kos Holdings has been a party to a transaction that, as of the date of this Agreement, constitutes a “reportable transaction” for purposes of Section 6011 of the Code and applicable Treasury regulations thereunder (or a similar provision of state Law), (x) Kos Investments and Kos Holdings have properly and timely withheld all Taxes required to be withheld, and properly remitted to the applicable Taxing Authorities all Taxes required to be remitted for, with respect to amounts paid or owed to any employee, independent contractor, stockholder or other party , and (xi) neither Kos Investments nor Kos Holdings will be required to include in a taxable period ending after the Closing Date taxable income attributable to income that accrued in a prior taxable period (or portion of a taxable period) but was not recognized for tax purposes in any prior taxable period as a result of (A) a disposition by Kos Investments, nor Kos Holdings made by on or before the Closing Date that was accounted for as an “open transaction”, (B) a prepaid amount received on or prior to the Closing Date, (C) the installment method of accounting, (D) the completed contract method of accounting, (E) the long-term contract method of accounting, (F) the cash method of accounting or Section 481 of the Code or (G) any comparable provisions of state, local, or foreign tax law.
SECTION 2.08. Accounts; Safe Deposit Boxes; Powers of Attorney; Officers and Directors. Section 2.08 of the Disclosure Schedule sets forth (i) a true and correct list of all bank and savings accounts, certificates of deposit and safe deposit boxes of Kos Investments and Kos Holdings and those persons authorized to sign thereon, (ii) a true and correct list of all powers of attorney granted by Kos Investments or Kos Holdings and those persons authorized to act thereunder and (iii) a true and correct list of all officers and directors of Kos Investments and Kos Holdings.
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SECTION 2.09. Brokers; Schedule of Fees and Expenses. Except as set forth in Section 2.09 of the Disclosure Schedule, no broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the Acquisition and the other transactions contemplated by the Merger Agreement based upon arrangements made by or on behalf of or with respect to Kos Investments or Kos Holdings.
SECTION 2.10. Private Offering. None of the Sellers, Kos Investments, Kos Holdings, their affiliates and their representatives has issued, sold or offered any security of Kos Investments or Kos Holdings to any person under circumstances that would cause the sale of the Shares, as contemplated by this Agreement, to be subject to the registration requirements of the Securities Act. None of the Sellers, Kos Investments, Kos Holdings, their affiliates and their representatives will offer the Shares or any part thereof or any similar securities for issuance or sale to, or solicit any offer to acquire any of the same from, anyone so as to make the issuance and sale of the Shares subject to the registration requirements of Section 5 of the Securities Act. Assuming the representations of Acquiror contained in Section 3.04 are true and correct, the sale and delivery of the Shares hereunder are exempt from the registration and prospectus delivery requirements of the Securities Act.
SECTION 2.11. Information. None of the information relating to Kos Investments, Kos Holdings or the Sellers provided by or on behalf of the Sellers for inclusion in the Offer Documents, the Schedule 14D-9 or any Proxy Statement will, at the respective times such documents are filed with the SEC or are first published, sent or given to shareholders of the Company, contain any untrue statement of material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.
SECTION 2.12. Reliance. Sellers understand and acknowledge that Acquiror is entering into the Merger Agreement and the Shareholders Agreement in reliance upon the Sellers’ execution and delivery of this Agreement.
ARTICLE III
Representations and Warranties Relating to Acquiror
Acquiror represents and warrants to Sellers that:
SECTION 3.01. Organization, Standing and Power. Acquiror is a corporation duly organized, validly existing and in good standing or active status under the laws of the jurisdiction in which it is incorporated and has all requisite corporate power and authority to own, operate and lease its properties and to carry on its business as it is now being conducted. Acquiror is duly qualified or licensed to do business, and is in good standing, in each jurisdiction where the character of the properties owned, leased or operated by it or the nature of its activities makes such qualification or licensing necessary.
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SECTION 3.02. Authority; Execution and Delivery; Enforceability. Acquiror has all requisite power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby. The execution and delivery by Acquiror of this Agreement and the consummation by it of the transactions contemplated hereby have been duly authorized by all necessary action of Acquiror, and no other corporate proceedings on the part of Acquiror are necessary to authorize this Agreement, to perform its obligations hereunder, or to consummate the transactions contemplated hereby. Neither the approval or adoption of this Agreement nor the consummation of the transactions contemplated hereby requires any approval of the shareholders of Acquiror. This Agreement has been duly executed and delivered by Acquiror and constitutes its valid and binding obligation, enforceable against it in accordance with its terms (except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and general equity principles).
SECTION 3.03. No Conflicts; Consents.
(a) The execution, delivery and performance of this Agreement by Acquiror does not and will not (i) conflict with or violate the articles of incorporation or bylaws of Acquiror, (ii) assuming that all applicable requirements under the HSR Act and the Exchange Act have been satisfied, conflict with or violate any Law applicable to Acquiror or by which any of its properties are bound or (iii) (A) result in any breach or violation of or constitute a default (or an event which with notice or lapse of time or both would become a default), or (B) result in the loss of a benefit under, or give rise to any right of termination, cancellation, amendment or acceleration of, or (C) result in the creation of any Lien on any of the properties or assets of Acquiror under, any Contract to which Acquiror or its subsidiaries is a party or by which Acquiror or its subsidiaries or any of their respective properties are bound.
(b) Except pursuant to applicable requirements under the HSR Act and the Exchange Act, no consent, approval, authorization or permit of, action by, filing with or notification to, any Governmental Entity is required to be obtained or made by Acquiror in connection with the execution, delivery and performance of this Agreement or the consummation of the transactions contemplated hereby.
SECTION 3.04. Securities Act. Acquiror is an Accredited Investor, as defined in Regulation 501 under the Securities Act. The Shares purchased by Acquiror pursuant to this Agreement are being acquired for investment only and not with a view to any public distribution thereof, and Acquiror shall not offer to sell or otherwise dispose of the Shares so acquired by it in violation of any of the registration requirements of the Securities Act.
SECTION 3.05. Available Funds. Acquiror has sufficient funds to (i) consummate the Acquisition, (ii) pay the applicable Purchase Price to each Seller and (iii) pay any and all fees and expenses incurred by Acquiror in connection with the Acquisition or the financing thereof.
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SECTION 3.06. No Other Representations. Acquiror is not relying on any statement or representation made by or on behalf of Sellers with respect to its acquisition of the Shares other than the representations made in this Agreement.
ARTICLE IV
Covenants and Agreements
SECTION 4.01. Covenants Relating to Conduct of Business. Sellers covenant and agree that, during the period from the date hereof until the Closing or earlier termination of this Agreement, neither Kos Investments nor Kos Holdings shall (and Sellers shall cause neither of Kos Investments nor Kos Holdings to) (i) acquire any additional assets or (ii) carry on any business or conduct any operations other than (A) those actions incidental to holding the Assets that are consistent with past practice and (B) performing its obligations under, and consummating the transactions contemplated by, this Agreement (including engaging counsel and other advisors the fees of which will be paid by Sellers) and repaying or causing to be repaid the following indebtedness: (a) a $75,000,000 line of credit between Kos Investments and Wachovia Bank N.A. (on which approximately $60,000,000 is outstanding as of the date hereof) and (b) a $25,000,000 Promissory Note dated August 2, 2006 between Kos Investments and Mary Jaharis. Without limiting the generality of the foregoing, between the date of this Agreement and the Closing, Sellers covenant and agree that none of Sellers shall, and Sellers shall cause Kos Investments or Kos Holdings to not, without the prior written consent of Acquiror:
(a) amend or otherwise change the articles of incorporation or bylaws or any similar governing instruments of Kos Investments or Kos Holdings;
(b) issue, deliver, sell, pledge, dispose of or encumber (whether by merger or otherwise by operation of law) any shares of capital stock, voting securities, or other equity interests, or any options, warrants, convertible securities or other rights of any kind to acquire or receive any shares of capital stock, voting securities, or other equity interests, of Kos Investments or Kos Holdings;
(c) adjust, recapitalize, reclassify, combine, split, subdivide, redeem, purchase or otherwise acquire any shares of capital stock of Kos Investments or Kos Holdings;
(d) in the case of Kos Investments and Kos Holdings only (i) enter into any business or (ii) make any capital contribution or investment in any other person;
(e) (i) grant any proxies or enter into a voting trust or other agreement or arrangement with respect to the voting of any of the Assets or (ii) Transfer, grant a Lien on, or enter into any Contract, option or other arrangement or understanding with respect to any Transfer (whether by actual disposition or effective economic disposition) of any of the Assets or any rights thereto or therein;
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Agreement, and in any document delivered in connection herewith, or by Acquiror shall survive until the applicable Indemnification Expiration Dates.
ARTICLE VIII
General Provisions
SECTION 8.01. Notices. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given (and shall be deemed to have been duly given upon receipt) by delivery in person, by facsimile or by registered or certified mail (postage prepaid, return receipt requested) to the respective parties at the following addresses (or at such other address for a party as shall be specified by like notice):
if to Acquiror:
Abbott Laboratories
200 Abbott Park Road
Abbott Park, Illinois 60064
Attention: President, Pharmaceutical Products Division
Facsimile: 847-937-6683
with a copies (which shall not constitute notice) to:
Abbott Laboratories
100 Abbott Park Road
Abbott Park, Illinois 60064
Attention: Senior Vice President, General Counsel and Secretary
Facsimile: 847-938-6277
Covington & Burling LLP
1330 Avenue of the Americas
New York, NY 10019
Attention: Scott E. Smith
Facsimile: 646-441-9056
if to the Sellers:
Oikos Ventures LLC
c/o Steven K. Aronoff P.C.
499 Park Avenue, 6th Floor
New York, New York 10022
Attention: Steven K. Aronoff
Facsimile: 212-779-7605
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Kramer Levin Naftalis & Frankel LLP
1177 Avenue of the Americas
New York, New York 10036
Attention: Thomas D. Balliett
Facsimile: 212-715-8100
with additional copies (which shall not constitute notice) to:
Milbank
1 Chase Manhattan Plaza
New York, NY 10005
Attention: Bruce Kayle
Facsimile: 212-822-5897
Cravath, Swaine & Moore LLP (only prior to closing of the Merger)
825 Eighth Avenue
New York, NY 10019
Attention: Sarkis Jebejian
Facsimile: 212-474-3700
Holland & Knight LLP (only prior to closing of the Merger)
195 Broadway, 24th Floor
New York, NY 10007
Attention: Steven Sonberg
Facsimile: 212-385-9010
SECTION 8.02. Definitions. For purposes of this Agreement:
An “Affiliate” or “affiliate” of any person means another person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such first person. For purposes of this definition, the term “control” (including the correlative terms “controlling”, “controlled by” and “under common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract or otherwise. For purposes of this Agreement, the Company is not an Affiliate of Sellers, Kos Investments or Kos Holdings.
“Business Day” means any day on which banks are not required or authorized by law to close in New York, New York.
“Closing Payment” means (A) product of (x) the number of shares of Company Common Stock legally and beneficially owned by Kos Investments directly or indirectly through Kos Holdings by (y) $78.00, minus (B) any known Tax liabilities for the Preclosing Period (determined in accordance with Section 7.03(b)) and other existing non-Tax liabilities of Kos
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Investments and Kos Holdings as of the Closing as set forth in the Closing Payment Certificate which will not be paid and discharged at Closing (which shall exclude, for the avoidance of doubt, obligations of Kos Investments and Kos Holdings under this Agreement or the Merger Agreement but shall include Sellers’ best estimate of Taxes allocable to the Preclosing Period under Section 7.03(b)).
“Closing Payment Certificate” means the certificate to be delivered by Sellers to Acquiror setting forth (A) the number of shares of Company Common Stock legally and beneficially owned by Kos Investments directly or indirectly through Kos Holdings, (B) the known tax liabilities of Kos Investments and Kos Holdings and (C) any other known liabilities of Kos Investments and Kos Holdings, in each case as of the Closing Date and, in the case of clauses (B) and (C), which will not be paid and discharged at Closing; provided that prior to delivery of the Closing Payment Certificate, Sellers shall be required to (i) consult with Acquiror as to the information set forth of such certificate and (ii) obtain Acquiror’s reasonable consent to the inclusion of such information on such certificate.
“Code” means the Internal Revenue Code of 1986, as amended.
“Contract” means, whether written or oral, any loan agreement, indenture, letter of credit (including related letter of credit application and reimbursement obligation), mortgage, security agreement, pledge agreement, deed of trust, bond, note, guarantee, surety obligation, warrantee, license, franchise, permit, power of attorney, purchase order, lease, and other agreement, contract, instrument, obligation, offer, commitment, arrangement and understanding.
“GAAP” means the generally accepted accounting principles in the United States, set forth in the Financial Accounting Standards Board (FASB) Statements of Financial Accounting Standards and Interpretations, FASB Emerging Issues Task Force consensuses, Accounting Principles Board (APB) Opinions, and rules and interpretative releases of the SEC, including SEC Staff Accounting Bulletins and other such statements by such other entity as may be approved by a significant segment of the accounting profession in the United States, in each case, as applicable as of the time for the relevant financial statements referred to herein.
“Liens” means any security interests, liens, claims, pledges, agreements, limitations in voting rights, changes or other encumbrances of any nature whatsoever.
“person” means any individual, firm, corporation, partnership, company, limited liability company, trust, joint venture, association, Governmental Entity or other entity.
“Permitted Liens” means (i) Liens for Taxes, assessments and other lienable services and other governmental charges which are not yet due and payable; and (ii) Liens arising out of this Agreement and the Merger Agreement.
“Pro Rata Portion” means, with respect to any Seller, the quotient of (x) the number of Shares held by such Seller on the Closing Date and (y) the total number of Shares held by all Sellers on the Closing Date.
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“SEC” means the United States Securities and Exchange Commission.
“Securities Act” means the U.S. Securities Act of 1933, as amended and the rules and regulations promulgated thereunder.
A “subsidiary” of any person means another person of which such first person, (i) owns directly or indirectly an amount of the voting securities, other voting ownership or voting partnership interests sufficient to elect at least a majority of such other person’s board of directors or other governing body (or, if there are no such voting interests, 50% or more of the equity interests), (ii) in the case of partnerships, serves as a general partner, or (iii) in the case of a limited liability company, serves as a managing member. For purposes of this Agreement, the Company is not a subsidiary of Kos Investments or Kos Holdings.
“Tax Return” means any return, report, claim for refund, information return or statement filed or required to be filed with any governmental authority with respect to Taxes, including any schedule or attachment thereto or amendment thereof.
“Taxes” means any taxes of any kind, including those on or measured by or referred to as income, gross receipts, capital, sales, use, ad valorem, franchise, profits, license, withholding, payroll, employment, excise, severance, stamp, occupation, premium, value added, alternative minimum, assessment, property or windfall profits taxes, customs, duties or similar fees, assessments or charges of any kind whatsoever, together with any interest and any penalties, additions to tax or additional amounts imposed by any governmental authority, domestic or foreign.
“Taxing Authority” means any domestic, foreign, federal, national, state, county or municipal or other local government, any subdivision, agency, commission or authority thereof, or any quasi-governmental body exercising tax regulatory authority.
SECTION 8.03. Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner adverse to any party.
SECTION 8.04. Entire Agreement; Third Parties; Assignment. This Agreement, taken together with the Disclosure Schedule, (a) constitute the entire agreement among the parties with respect to the subject matter hereof and thereof and supersede all prior agreements and undertakings, both written and oral, among the parties, or any of them, with respect to the subject matter hereof and thereof and (b) except as provided in Section 7.01 and 7.02 are not intended to confer upon any person other than the parties any rights or remedies. This Agreement shall not be assigned by operation of law or otherwise without the prior written consent of each of the other parties, except that Acquiror may assign all or any of its rights and obligations hereunder to any direct or indirect wholly-owned Subsidiary of Acquiror; provided, however, that no such assignment shall relieve Acquiror of its obligations hereunder.
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SECTION 8.05. Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware (without giving effect to choice of law principles thereof). Each of the parties hereto agrees that this Agreement (a) involves at least $100,000.00, and (b) has been entered into by the parties hereto in express reliance upon 6 Del. C. § 2708.
SECTION 8.06. Headings. The descriptive headings contained in this Agreement are included for convenience of reference only and shall not affect in any way the meaning or interpretation of this Agreement.
SECTION 8.07. Counterparts. This Agreement may be executed and delivered (including by facsimile transmission) in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement.
SECTION 8.08. Specific Performance; Jurisdiction. Notwithstanding any other provision of this Agreement, the parties hereto agree that irreparable damage would occur, damages would be difficult to determine and would be an insufficient remedy and no other adequate remedy would exist at law or in equity, in each case in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached (or any party hereto threatens such a breach). It is accordingly agreed that in the event of a breach or threatened breach of this Agreement, the other parties hereto shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement in the Court of Chancery of the State of Delaware or, if under applicable law exclusive jurisdiction over such matter is vested in the federal courts, any court of the United States located in the State of Delaware, this being in addition to any other remedy to which they are entitled at law or in equity. Each party hereto irrevocably waives any defenses based on adequacy of any other remedy, whether at law or in equity, that might be asserted as a bar to the remedy of specific performance of any of the terms or provisions hereof or injunctive relief in any action brought therefor by any other party hereto. In addition, each of the parties hereto (i) irrevocably submits itself to the personal jurisdiction of the Court of Chancery of the State of Delaware or any court of the United States located in the State of Delaware in the event any dispute arises out of this Agreement or any of the transactions contemplated by this Agreement, (ii) agrees that it will not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such court, (iii) agrees that it will not bring any action relating to this Agreement or any of the transactions contemplated by this Agreement in any court other than the Court of Chancery of the State of Delaware or, if under applicable law exclusive jurisdiction over such matter is vested in the federal courts, any court of the United States located in the State of Delaware and (iv) consents to service being made through the notice procedures set forth in Section 8.01. Each of the parties hereby agrees that service of any process, summons, notice or document by U.S. registered mail to the respective addresses set forth in Section 8.01 shall be effective service of process for any Proceeding in connection with this Agreement or the transactions contemplated hereby.
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SECTION 8.09. Interpretation. When a reference is made in this Agreement to an Article, Section, Exhibit or Schedule, such reference shall be to an Article of, a Section of, or an Exhibit or Schedule to, this Agreement unless otherwise indicated. The table of contents and headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Whenever the words “include”, “includes”, “including” or “such as” are used in this Agreement, they shall be deemed to be followed by the words “without limitation”. The word “will” shall be construed to have the same meaning and effect as the word “shall.” The words “hereof”, “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. The word “or” shall not be exclusive. The word “extent” in the phrase “to the extent” shall mean the degree to which a subject or other thing extends, and such phrase shall not mean simply “if”. The phrase “date hereof” or “date of this Agreement” shall be deemed to refer to November 5, 2006. Whenever used in this Agreement, any noun or pronoun shall be deemed to include the plural as well as the singular and to cover all genders. This Agreement shall be construed without regard to any presumption or rule requiring construction or interpretation against the party drafting or causing any instrument to be drafted. References to “this Agreement” shall include the Disclosure Schedule. All terms defined in this Agreement shall have the defined meanings when used in any certificate or other document made or delivered pursuant hereto unless otherwise defined therein. Any Contract, instrument or Law defined or referred to herein or in any Contract or instrument that is referred to herein means such Contract, instrument or Law as from time to time amended, modified or supplemented, including (in the case of Contracts or instruments) by waiver or consent and (in the case of Law) by succession of comparable successor Law and references to all attachments thereto and instruments incorporated therein. References to a person are also to its permitted successors and assigns.
SECTION 8.10. Waiver of Jury Trial. Each of the parties to this Agreement irrevocably waives any and all right to trial by jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated by this Agreement.
SECTION 8.11. Disclosure Schedule. The parties acknowledge and agree that (i) the Disclosure Schedule may include certain items and information solely for informational purposes for the convenience of Acquiror and (ii) the disclosure by Sellers of any matter in the Disclosure Schedule shall not be deemed to constitute an acknowledgment by Sellers that the matter is required to be disclosed by the terms of this Agreement or that the matter is material.
SECTION 8.12. Legends. Each Seller shall cause the Shares to bear a legend, stating that they are subject to the terms of this Agreement.
[Remainder of Page Left Blank Intentionally]
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IN WITNESS WHEREOF, Acquiror and Sellers have duly executed this Agreement, all as of the date first written above.
| ABBOTT LABORATORIES, |
| | | | |
| | | | |
| By: | /s/ William Dempsey |
| | Name: | William Dempsey |
| | Title: | Senior President, Pharmaceutical Operations |
| | | | |
| | | | |
| MICHAEL JAHARIS, |
| | | | |
| | | | |
| By: | /s/ Michael Jaharis |
| | Name: | Michael Jaharis |
| | Title: | |
| | Shares: | 19,800 |
| | | | |
| | | | |
| KATHRYN JAHARIS, |
| | | | |
| | | | |
| By: | /s/ Kathryn Jaharis |
| | Name: | Kathryn Jaharis |
| | Title: | |
| | Shares: | 2,600 |
| | | | |
| | | | |
| STEVEN JAHARIS, |
| | | | |
| | | | |
| By: | /s/ Steven Jaharis |
| | Name: | Steven Jaharis |
| | Title: | |
| | Shares: | 2,500 |
| | | | |
| | | | |
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| DANIEL BELL, |
| | | | |
| | | | |
| By: | /s/ Daniel Bell |
| | Name: | Daniel Bell |
| | Title: | |
| | Shares: | 2,000 |
| | | | |
| | | | |
| STEVEN K. ARONOFF, |
| | | | |
| | | | |
| By: | /s/ Steven K. Aronoff |
| | Name: | Steven K. Aronoff |
| | Title: | |
| | Shares: | 300 |
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